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G7 Will Host a Discussion on Crypto by the Global Financial Regulators

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The Group of Seven, or G7, central bank governors and finance ministers are allegedly planning to discuss cryptocurrency legislation.

According to a Tuesday report from Reuters, representatives from the United States, Canada, Japan, Germany, France, Italy, and the United Kingdom are expected to speak on issues related to a regulatory framework for cryptocurrencies at a meeting starting on Wednesday in Germany’s cities of Bonn and Königswinter.

Villeroy allegedly stated that recent crypto market volatility had served as a “wake-up call” for global authorities, pointing to several stablecoins de-pegging from the US dollar and the prices of key tokens falling.

G7 will discuss the urgent need for crypto regulations

“Europe paved the way with MiCA,” referring to the European Parliament’s legislation aimed at forming a regulatory framework on crypto. “We will probably discuss these issues among many others at the G7 meeting in Germany this week.”

Villeroy at an emerging markets conference in Paris

Finance ministers and central bank governors will meet in Germany from May 18–20 to discuss policies related to member countries’ recovery and financial stability following the COVID-19 pandemic.

They will also discuss “shaping the upcoming transformation processes in the context of digitalization and climate neutrality” and business policy at the International Monetary Fund, according to the G7 website.

The organization released recommendations for the likely implementation of central bank digital currencies in 2021, as well as a warning that certain stablecoins may pose a threat to the global financial system in 2019.

Given crypto’s expanding importance in regional markets, Villeroy has asked EU officials to build a legislative framework, claiming they only had “one or two years” to act.

Prior to his election victory in France, Emmanuel Macron stated that he backed the European Parliament’s recent moves to regulate cryptocurrency, including MiCA, but that any regulations should not stifle innovation.

SEC commissioner rebels against hike of crypto enforcement staff

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Hester Peirce, a member of the Securities and Exchange Commission (SEC), took to Twitter on Tuesday to express her displeasure with the establishment of 20 additional employees to the regulatory agency’s crypto enforcement unit.

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Earlier on Tuesday, the commission announced plans to raise the number of people working in its newly renamed Crypto Assets and Cyber Unit, which was originally known as the Cyber Unit, from 30 to 50. The team, which is part of the Division of Enforcement, is in charge of “protecting investors in crypto markets and from cyber-related threats,” according to the agency.

Furthermore, Gary Gensler, the chairman of the said Commission, previously stated in September that he intended to expand the unit’s employees.

Peirce, nicknamed “Crypto Mom” by many in the industry for her crypto knowledge, has long been a critic of Gensler’s enforcement-heavy regulatory strategy. Gensler has remained tight-lipped about how crypto firms can adhere to regulations, preferring to regulate using enforcement measures instead.

Peirce also said she wasn’t a part of the cross-government group established by US President Joe Biden’s executive order on crypto in March, in response to an inquiry on Twitter.

SEC tries to curb crypto fraud through additional employment

The Securities and Exchange Commission of the United States plans to hire another 20 staff to oversee coin offerings, non-fungible tokens, and decentralised finance.

With the increases, the commission now has 50 employees committed to investigating law infractions in areas like as coin offers, loans, non-fungible tokens (NFTs), and decentralised finance (DeFi). However, since 2017, the unit has brought over 80 enforcement cases for false and unregistered offerings, resulting in more than $2 billion in monetary relief.

Earlier, Gary Gensler had chastised exchanges like Coinbase (COIN) for failing to register with regulators when offering security-like tokens. He had also stated in September that the expanded area of duty would necessitate “a lot more employees” at the agency.

The latest SEC proposals suggest that enforcement action against DeFi could be expanded, posing significant regulatory dangers. According to sources, the agency is looking into whether or not NFTs should be under its jurisdiction.

Cuba set to bring crypto service providers under the regulatory ambit

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Cuba’s Central Bank [BCC] is all set to issue licenses for virtual asset service providers, according to the latest announcement on the 26th of April. The permit would be available to individuals both Cuban and foreign, read the translated resolution in Cuba’s official gazette.

The approved licenses will be valid for one year and might be extended for a second year, “given the experimental and novel nature of this type of activity,” the BCC said. Without disclosing further details, the BCC resolution stated that only approved crypto providers will be allowed to operate in the nation.

However, it did make it clear that virtual assets “do not include digital representations of fiat currency, securities and other financial assets widely used in traditional banking and financial systems, which are regulated in other provisions of the Central Bank of Cuba.”

Last year, the BCC introduced a resolution that established a clear set of frameworks with regard to the usage of virtual assets in commercial transactions and licensing of service providers in that sector.

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Referencing the previous mandate, BCC recalled that it allowed the bank to grant licenses to “service providers of virtual assets for transactions related to financial, exchange and collection or payment activities, in and from the national territory.”

In comparison to that, the current version remains mum on the crypto tax intricacies.

Cuba’s BCC aims to deal with crypto license requests within 3 months

The latest resolution bestows greater autonomy to the nation‘s top bank giving it the authority to accept or deny the requested license “in a term that in its totality does not exceed ninety working days from the date of receipt of the required documentation”.

Additionally, without BCC’s prior authorization, providers will not be able to shut down operations and will have to keep accounting records of their operations. Any violators would be dealt with under Decree 363.

In a positive development, Brazil’s Senate approved a bill on cryptocurrencies during a plenary session, paving the way for official regulation of crypto in the world’s ninth-largest economy.

The bill is still awaiting approval from the nation’s Chamber of Deputies and then signed off by President Jair Bolsonaro to become law in the Latin country. This is expected to occur by the end of 2022, according to experts.

Russia’s Crypto Regulation is Advancing But There is a Catch

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Russia’s Ministry of Finance is heading closer to finalizing the bill on the mining and circulation of digital assets. As per coverage by Kommersant, the bill contains a comprehensive regulatory framework and for the first time dealt with the mining aspect, at length. 

Kommersant revealed that the current version of the draft law of the Ministry of Finance “On digital currency”, prescribes the rules for trading and mining for such assets. The authenticity of the document was confirmed by two Kommersant sources close to the industry. The Ministry of Finance did not immediately provide a comment.

Coming back to its contents, the draft established a number of aspects such as the terminology associated with digital currency, the legal framework for its circulation, issues, and so forth. Additionally, the document introduces a large number of stringent requirements for identification, accounting, and certification.

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Russia's Crypto Regulation is Advancing But There is a Catch 4

Russia’s crypto bill might drive investors to the black market

Sources close to the industry sought to dispel the fear by saying that these requirements will not affect operations with cryptocurrency outside the Russian information infrastructure. However, Sergei Mendeleev, CEO of InDeFi Smart Bank raised questions about the interpretation of the latter aspect.

Citing an example of the tether website which states that “it does not have an obligated person, but Russian law enforcers believe that it is Tether LTD”.

Apart from that, the document allows only domestic legal entities to carry out the role of both operators. Foreign crypto exchanges, in order to obtain a license to operate in the Russian Federation, must create a business entity.

While many experts hailed the move, believing that the document would provide new opportunities for miners, looking for a way out of “the gray zone,” others, however, feel that this would instead push investors to the black market.

The concerns raised are valid to a certain extent as Russia is known for its high-profile illegal market which has hogged the limelight owing to the current geopolitical situation.

Last week, TronWeekly reported on how Russia’s most dreaded darknet market- Hydra, and a cryptocurrency exchange Garantex have come under US sanctions for their alleged role in ransomware activities. The US Treasury Dept teamed up with the FBI, and German Federal Criminal Police to shut down several Hydra servers in Germany, seizing $25 million worth of bitcoin.

UK on a quest for crypto domination; Unveils plans to mint its own NFT

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The UK government is laying the groundwork for world domination in the crypto realm. On the 4th of April, Britain announced plans to mint its own non-fungible token, in its quest of becoming a “world leader” in the cryptocurrency industry.

This was divulged by City Minister John Glen at a recent fintech event. He said Royal Mint, the government-owned treasury that produces coins for the UK has been directed by Finance Minister Rishi Sunak to create and issue the NFT before summer. “There will be more details available very soon,” he added.

As stated by Glen, the UK’s NFT initiative is part of a larger effort by the government to “lead the way” in crypto. The minister announced a number of steps the nation will take to incorporate digital assets under more regulatory scrutiny.

“We shouldn’t be thinking of regulation as a static, rigid thing. Instead, we should be thinking in terms of regulatory ‘code’ like computer code which we refine and rewrite when we need to.”

Glen said the government was also on the lookout for other aspects of crypto, such as Web3.

Is the UK government’s crypto ambition a mere PR play?

The tall claims however failed to impress some. One of them is Mauricio Magaldi, global strategy director for crypto at 11:FS, who called the government’s NFT plans “nothing more than a strategic PR-play”.

The skepticism is not limited to a few. In fact, several industry insiders have been critical of the U.K.’s position on crypto and called for more regulatory clarity in the space.

In a previous article by TronWeekly, Britain’s top financial institution, the Bank of England [BoE] has taken a conservative approach to digital assets, despite authorities announcing plans to regulate the crypto market.

Similarly, the Financial Conduct Authority [FCA] reportedly refused to engage with a vast majority of crypto firms that have applied for registration with the watchdog. FCA, in its response, claimed that it feared too many “financial crime red flags” were overlooked. As a result, crypto firms have been forced to shut down their U.K. operations and move offshore after failing to make it onto the final register.

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.

Vietnam Paving The Way For Crypto Legalization

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Vietnam’s Deputy Prime Minister Le Minh Khai has entrusted the nation’s Ministry of Finance to lead research for the implementation of a legal framework surrounding digital assets. According to a report by local news agency Vietnamnet, the ministry is tasked to identify specific legal documents requiring amendment or enactment for the management of the evolving asset class.

The research is being conducted in association with the Ministries of Justice, Information and Communications as well as the State Bank of Vietnam. A decision to study and guide policy discussion extends upon multiple research mandates that assess crypto’s impact on the country’s shifting digital economy.

It will also assess the requirements needed to develop legislation aimed at controlling risks but in a way that won’t affect other sectors including e-commerce and information technology, the report said.

Previously, in the Strategy for Development of E-Government towards Digital Government in the period of 2021 – 2025, with a vision to 2030, approved on June 15, 2021, the Prime Minister assigned the State Bank of Vietnam to lead the research and pilot use of virtual money based on blockchain technology in 2021 – 2023.

Vietnam’s flip-flops with crypto regulation

The nation’s crypto relationship has been marred with complications over the past few years. In 2014, the South East Asian nation first banned Bitcoin transactions but did a complete reversal in 2017 when the then PM Nguyen Xuan Phuc approved BTC as a form of payment. However, in 2018 BTC was banned for the second time.

Then in 2020, the then Vietnam’s government established a crypto research group, which was instructed to research various developments in the virtual asset market and recommend legal policy proposals.

Despite the absence of a legal framework for owning, trading, and using cryptocurrencies, the crypto adoption rate of its citizens was among the highest worldwide.

As per the Crypto Adoption Index, in October 2021, Vietnam surpassed most countries in terms of the overall peer-to-peer transaction value, as well as payments made by individuals. In general, remittances have been representing the majority share of Vietnam’s GDP, which might have helped early cryptocurrency to gain a strong foothold in the country.

Canada’s PM Candidate Doubles Down On Crypto

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Canada’s Conservative member Pierre Poilievre on 28 March said that cryptocurrencies like bitcoin and ethereum would “decentralize” the economy and reduce the influence of central bankers. Poilievre who is running for the PM post attempted to woo the crypto community by saying that if he is elected he would legalize crypto and work towards making the country the ‘blockchain capital of the world’.

The news comes at a time when Canada’s present gov has taken a stiff stance toward the digital assets industry during the Freedom Convoy protests. As reported by TronWeekly, Prime Minister Justin Trudeau decided to invoke the 1988 Emergencies Act, freezing crypto transactions in a bid to cut off all funding routes of the trucker blockades.

The prime ministerial candidate spoke fervently at a shawarma shop in London, Ont. that accepts bitcoin as payment, Poilievre rued that after the outbreak of the COVID-19 crisis, the Bank of Canada created “$400 billion in cash out of thin air”. This according to him is the reason why inflation hit a 30-year high and housing prices broke all-time record levels.

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Throwing his weight behind bitcoin, Poilievre said, “Canada needs less financial control for politicians and bankers and more financial freedom for the people. That includes freedom to own and use crypto, tokens, smart contracts, and decentralized finance.”

As the onus of Securities regulation falls in provincial jurisdiction, Poilievre said he’d work with the provinces and territories to eliminate a “cobweb of contradictory rules” that govern crypto and blockchain the system.

Canada’s PM candidate wants crypto to act like gold

The Conservative candidate also said he wants crypto to be treated like gold and other commodities for taxation purposes. Poilievre claims it would help foster “a new, decentralized, bottom-up economy” by creating a more permissive regulatory environment.

In a veiled attack on Trudeau’s administration, the fierce critic called for financial sovereignty in the current system. And reiterated the need for choice and healthy competition.

Poilievre said,

“Choice and competition can give Canadians better money and financial products. Not only that, but it can also let Canadians opt out of inflation with the ability to opt into cryptocurrencies. It’s time for Canadians to take back control of their money and their lives by making Canada the freest country on earth.”

EU cracks whip on anonymous cryptocurrency transactions

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The European Parliament or EU is all set to vote to bring unhosted wallets, such as Ledger or Metamask, in the anti-money laundering [AML] package as part of the Transfer of Funds Regulation [TFR]. This was revealed in a Twitter thread posted by Patrick Hansen, Head of Strategy & Business Development at multi-chain DeFi wallet Unstoppable Finance.

Hansen in a series of threads pointed out the inconsistencies between the initial draft that was introduced and the one which would go under the vote. This according to him is an absolute red flag.

Different from the initial proposal that only required to collect [not verify] personal data from transfers made from/to an unhosted wallet, the draft now requires to verify the accuracy of information with respect to the originator or beneficiary behind the unhosted wallet.

But it doesn’t say how exactly a crypto service provider should be able to verify the unhosted counterpart, he added. The exec claims this would prevent most crypto firms unable and unwilling to transact with unhosted wallets anymore in order to stay compliant.

Secondly, Hansen mentioned that, for every crypto-transfer from an unhosted wallet over 1k EUR, crypto firms are required to inform the “competent AML authorities”. This would include all transactions, even if there is no sign/suspicion of money laundering. It is a gross violation of privacy rights, he exclaimed.

Citing an earlier document where EU members proposed additional restrictions, Hansen said that the European Commission might end up entirely banning transactions to private wallets.

The current Financial Action Task Force [FATF] travel rule requires businesses to verify all transactions that exceed 1,000 euros [$1,098]. However, the draft didn’t include any lower limit, meaning that all cryptocurrency transactions will be undergoing mandatory identity checks.

EU’s draconian crypto legislation enjoys widespread support

Hansen rued that the move to crack down on anonymous transactions enjoys broad support among lawmakers, terming it as concerning.

He then further went on to say that the Economic Affairs Committee is set to vote on de-anonymizing all cryptocurrency transactions to self-hosted wallets on March 29. If the proposal passes, it will then be debated by the “trilogue.”

As reported by TronWeekly, the EU’s last-minute amendment to restrict the use of proof-of-work was voted down after attracting strong pushback from the crypto community.

US Secretary softens stance on crypto but has “a little bit of skepticism”

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U.S Secretary of the Treasury Janet Yellen acknowledged the benefits associated with cryptocurrencies, stating that the Treasury favored regulation that supports innovation in the space. Yellen in an interview on CNBC Friday said that crypto has grown by leaps and bounds, and is now playing a significant role mainly in investment decisions for Americans.

Admitting the growing role of the digital asset industry in the current landscape, Yellen who is also an economist and educator noted, “We recognize the innovation in the payment system can be a healthy thing,”

In early March, President Biden issued an executive order on cryptocurrencies that focused on consumer protection and the mitigation of crimes related to digital assets. Yellen then announced that the treasury is working to bolster itself against cyberattack threats.

“Cyber is a real risk and we recognize we have vulnerabilities, and we’re doing everything we can to be prepared to deal with that, and up to our defense,” Yellen said. The 78th secretary was known for being a vocal critic of the broader cryptocurrency industry during her time as Federal Reserve chair when in 2018, stated that she was “not a fan” of bitcoin.

The growing adoption of crypto might have softened her stance towards the industry. Yellen said she now has only “a little bit of skepticism,” citing concerns about financial stability, consumer investor protection, and crypto’s use for illicit transactions.

US President’s executive order signals regulations are on the way

Yellen’s gradual positive comments poured after the Biden Administration’s executive order earlier this month called for a “whole-of-government” approach to regulating crypto, which acknowledged the need to promote the important innovation that might come from the sector.

A year ago, Yellen, who is a Joe Biden’s pick for the Treasury Secretary sent shivers down investors’ spines when she proposed during her confirmation hearing that the use of digital currencies should be restricted as part of a wider clampdown on money laundering and terrorism financing. In February she again tested the industry’s nerve by issuing a warning that bitcoin is an “extremely inefficient” way to conduct monetary transactions.