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Stringent Licensing Of Cryptocurrency Firms Immediate Necessity :French Central Bank Governor

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The governor of the Bank of France, Francois Villeroy de Galhau, has called for stricter licensing rules for cryptocurrency businesses in France, noting the present unrest in the cryptocurrency markets.

The central bank governor said France shouldn’t wait for impending EU cryptocurrency rules to establish mandatory licensing for regional Digital Asset Service Providers during a speech in Paris on January 5. (DASPs).

In addition to other rules, the Markets in Crypto Assets bill (MiCA) from the European Parliament is anticipated to go into effect at some point in 2024.

In his speech, Villeroy reportedly addressed the nation’s financial sector, making the following remarks,

“All the disorder in 2022 feeds a simple belief: it is desirable for France to move to an obligatory licensing of DASP as soon as possible, rather than just registration.”

The Financial Markets Authority (AMF), the nation’s market regulator, currently requires “registration” from crypto firms offering crypto trading and custody.

A DASP license is voluntary, and those who hold one are obligated to adhere to a number of rules regarding how businesses should be organized, run, and funded.

However, none of the 60 crypto companies registered with the AMF are currently holding a DASP license.

Cryptocurrency Firm Regulation, End Product Of Amendment

Villeroy’s request comes after Hervé Maurey, a member of the Senate Finance Commission, presented an amendment in December 2022 to get rid of a provision allowing businesses to operate without a license.

Even if or when MiCA becomes legislation and institutes a licensing regime, businesses in France are now permitted to operate without a license until 2026.

The measure will be the subject of parliamentary discussion beginning in January.

Since September 2020, MiCA has been slowly making its way through the EU parliament.

Through trilateral talks between the EU Council, European Commission, and European Parliament, it was approved on October 10, 2022, by the Committee on Economic and Monetary Affairs (ECON) of the European Parliament.

The last Plenary vote on MiCA was moved from December 2022 to February 2023. The delay, according to European Parliament member Stefan Berger, was caused by “the enormous amount of work for the lawyer linguists, given the length of the legal text,” he told local media in November 2022.

Overseas Crypto Firms Require Singapore’s Stamp Of Approval

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Singapore’s ambition to be the global hub of crypto received a major boost when the nation’s parliament gave its consent to a law that aimed to bring foreign digital asset firms operating in the city-state under its ambit. According to sources, the new legislation will require overseas virtual asset service providers [VASPs] in the region to be licensed.

At present, such firms fall outside the purview of anti-money laundering and terror financing. The new law passed in the legislature on Tuesday is part of a broader effort to combat money laundering and other criminal activities. However, the move sends mixed signals.

This is because it comes at a time when Singapore’s financial regulator has recently prohibited firms in the cryptocurrency space from advertising their services to the public, which points to its cautious approach.

Apart from that, Singapore’s leading bank DBS Bank has made a complete reversal of its plan to extend crypto trading services to retail customers, a few days back. Many believed the decision was taken under regulatory pressure.

The rumors turned true when in an interview, Chief Executive Officer, Piyush Gupta said the local watchdogs were“rightfully concerned” about allowing digital asset services in the retail sector. Besides that, Singapore’s strict regulatory standards became a source of disillusionment for many in the industry.

Is Singapore’s crypto framework a “tall regulatory wall”?

Patrick Chiu, the founder of Hong Kong’s AP Capital, a fund with an expanding digital asset portfolio license said that the city-state has terms and stipulations that “aren’t typical for global exchanges.” “Everyone was welcome to apply”, said Chiu. “But there’s a tall regulatory wall”.

Even Binance who is the biggest player reportedly felt let down by the moves, as it had withdrawn its application for setting up its local affiliate.

Earlier this year, Singaporean regulators banned direct-to-consumer marketing for exchanges and directed crypto ATM operators to turn off their machines. It also placed DeFiance Capital, one of the larger crypto funds in the city-state, on an investor alert list because it was “wrongly perceived as being licensed or regulated by the Monetary Authority of Singapore.”

That said, the city-state has fared relatively well among its regional peers in welcoming the technologies of cryptocurrency and has launched a framework for legalizing the industry. In contrast to that, other Asian nations such as China have opted for a blanket ban.

FCA grants approval to a crypto firm under AML-CTF norms; Others continue to wait

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UK’s Financial Conduct Authority’s or FCA has accepted registration requests by digital asset market maker Wintermute under anti-money laundering and counter-terrorist financing or AML-CTF regime for crypto firms. According to the Wintermute website, the platform’s cumulative trading volume stood at $1.72 trillion since January 2020.

In addition to that, data from the firm’s site revealed that it trades more than $5B on a daily basis across dozens of different trading platforms and facilitates more than 5,000 trading pairs.

The latest developments assumed significance because it took more than a year and a half of in and out with the FCA to gain approval of the application that encompasses the firm’s over-the-counter [OTC] spot business. Speaking on the news, the company’s chief operating officer Marina Gurevich said

“Wintermute has always held itself to the highest compliance standards and has built rigorous KYC-AML processes.” Reading along similar lines the official tweet stated, “We view this registration as an important step in our continued dialogue with the regulators globally.”

FCA’s stricter rules have led many crypto firms to shift

About 100 crypto firms are still waiting for the green signal to begin their operation in the U.K. As March 31 deadline approaches, it seems FCA‘s delaying tactics might force many crypto service providers to move their business offshore in order to avoid stricter, new anti-money laundering regulations.

A total of 96 crypto firms’ fate hangs in balance, with just six having won full approval, as per sources. More than half of the 153 firms that applied have either been rejected or decided to withdraw to avoid an outright denial that could dent their ability to apply for AML approval in other nations.

Of that, 27 are firms still operating under the temporary approval permissions that are slated to expire next month, and 69 have their applications pending.

The March deadline to win a place on the AML register has the potential to backfire, a representative of Vienna-based cryptocurrency exchange BitPanda told in an interview. Last June, crypto loan provider Celsius said in a blog post that “increased regulatory uncertainty” forced it to shift from the U.K. to the U.S. And had stopped accepting new U.K. clients.

Crypto Firms Have 30 Days to Submit Coronavirus Contingency Plan

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The New York Department of Financial Services (NYDFS) has requested all state-sanctioned cryptocurrency-firms to submit a detailed plan on how to combat the coronavirus menace.

In a letter dated 10 March, NYDFS sets out a comprehensive list of items that it expects entities in the cryptocurrency sector to cover in their’ preparedness plan;’ involving potential risks caused by the historical corona epidemic.

In its letter, NYDFS asked crypto firms to include details on how to deal with operational disruptions, measures taken to protect its employees, the communication strategy for dealing with customers, and details on how to “manage the effects of the outbreak” in addition to other risks. The letter reads:

“COVID-19 has already had adverse economic effects domestically and globally. It is critical that each regulated entity establish plans to address how it will manage the effects of the outbreak and assess disruptions and other risks to its services and operations.”

Moreover, the regulator has given the crypto firms only 30 days to submit the coronavirus contingency plans. The plans should comprehend all the details covering all the systems, facilities, policies and schemes that would be fundamental to keep running operations even in the absence of key staff members.

In particular, there are currently only 18 crypto firms with the highly coveted New York BitLicense, which allows them to deal with digital currencies. These firms include Coinbase, Tagomi, Gemini, Ripple, Square, Coinsource and Circle, among others.

Coinbase submitted ‘preparedness plan’ last month 

Interestingly, giant cryptocurrency exchange firm, Coinbase issued its coronavirus preparedness plan back in February.  As countries, firms and individuals prepare for the worst following the spread of the deadly virus; crypto firm Coinbase already has a contingency plan on how it will navigate through this period of uncertainty. 

Interestingly, Coinbase issued its plan for the preparation of coronavirus back in February.  As countries, firms and individuals prepare for the worst after the spread of the deadly virus; the crypto firm Coinbase already has a contingency plan on how to navigate through this period of uncertainty.

The giant exchange which has offices in the United States, Ireland, Japan, and the U.K.; planned for three phases of the deadly virus. According to the document shared by the firm last month:

“We have a standing Crisis Management Team continually reviewing new information as it comes in. We have established a four tier escalation ladder (from tier 0 to tier 3) in response to changes that impact Coinbase offices.”

As per the document, for instance, there are 100 cases of infection within the commuting radius of a given Coinbase office; the management will ask certain individuals to conduct their operations from home. Moreover, the management will also step up the cleaning schedule of those offices; as well as installing necessary equipment and facilities such as mask disposal bins

Moving forward, the NYDFS  demand provides a quick view of the state’s response to an epidemic that spreads like a wildfire. Even before the request was made, New York City Mayor Bill de Blasio had long declared a state of emergency to counter the spread of a highly communicable disease.

Global Markets hit hard by COVID-19

As a result of the tension created by coronavirus across the world; the cryptocurrency market has suffered huge blows as traditional markets and U.S. stocks; suffer their heaviest plunge in over 30 years. 

The price of the world’s most popular cryptocurrency plummeted by more than 40% within 48 hours. Many technology firms have resolved in asking their employees to work remotely and a number of cryptocurrency events have been canceled world wide.