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FTX furnishes a framework for crypto regulation ahead of the Financial Committee hearing

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Leading Bahamas-based crypto exchange firm FTX issued a document titled, FTX’s Key Principles for Market Regulation of Crypto-Trading Platforms detailing 10 proposals that will facilitate policymakers to effectively regulate the digital asset ecosystem as well as harping its potential to the maximum. According to the press release, these principles will be part of founder Sam Bankman-Fried’s written cum commentary piece ahead of the congressional hearing scheduled on December 8, 2021.

Commenting on the same, FTX CEO and Co-founder Sam Bankman noted,

We view these principles as a framework for conversation – both in the US and in jurisdictions where regulatory guidance could be more clear. We want to engage in an open dialogue with regulators and help establish a set of rules to level the playing field for everyone in our industry and to allow innovation in our space to continue to flourish. These principles were created with the protection of investors and the public as a top priority. We hope we can work with regulators in the US and ultimately around the world to implement sensible regulatory frameworks.

The latest development follows after Congresswoman Maxine Waters, announced the hearing of the House of Financial Services Committee to be attended by several top-ranking execs across major crypto firms in the United States where there will be a discussion on issues pertaining to the digital assets market and the future of finance.

FTX and a number of crypto firms capturing lawmakers attention

At the other end of the U.S. Capitol building, Senate Banking Committee chairperson Sherrod Brown had called on crypto entities to disclose information regarding consumer and investor protection on stable coins. The notices were issued to several firms such as Coinbase, Gemini, Paxos, TrustToken, Binance.US, Circle, Centre, and Tether requesting the details to be submitted by last Friday.

Likewise in last November, the US president’s Working Group on Financial Markets published a report where it suggested stablecoin issuers ‘should be subject to appropriate federal oversight akin to that of banks and that legislation was urgently needed to address risks‘. It is noteworthy to mention that there has been a widespread discussion on matters surrounding cryptocurrencies, stablecoins, CBDC, etc, and the upcoming meeting is reflective of the growing mainstream interest in the technology.

Israeli trading firm plans to remove Cardano [ADA] and Tron [TRX] by 2022

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In a new twist of events, Israeli trading entity eToro has decided to remove Cardano [ADA] and Tron [TRX] from its platform for US users, by the end of this year. According to the press release, the latest announcement meant that customers in the US would be unable to open new positions or collect staking rewards with regards to the two native tokens. However, the trading firm specified that it will facilitate users to close existing positions, they deemed fit.

With regards to the dates, the blog post revealed that the aforementioned delisting of ADA or TRX positions will commence from December 26, 2021. Along with that, staking for those crypto assets will close by 31st December. The trading entity said the decision to delist from its exchange was taken considering the current unfolding events in the regulatory environment.

The move raised eyebrows especially in the case of layer one blockchain Cardano which did not appear to be under the prying eyes of the regulatory bodies. In fact, a few months ago, Charles Hoskinson of Cardano joined hands with an analytics provider Coinfirm to ensure compliance with regulatory guidelines such as Anti-Money Laundering rules [AML] and Financial Action Task Force [FATF] recommendations. On the price front, ADA too has witnessed a steady surge and is currently the 6th biggest by market capitalization.

Crypto-Trading Firms under the radar

Lately, firms operating in the crypto industry have come under intense scrutiny from regulatory agencies in terms of delisting coins or terminating certain services. Earlier in September, Crypto exchange platform, Coinbase decided to pull the plug on its future lending project after the Security and Exchange [SEC] issued a warning to take legal action. Another case is the Ripple Vs SEC where the blockchain firm has been accused of selling $1.3 billion worth of the crypto asset XRP in unregistered securities offerings. Similarly, Privacy coin Monero is also facing the heat due to rising concern of being misused for illicit activities.

Nevertheless, the burgeoning growth of decentralized exchanges [DEX] and decentralized finance [DeFi] protocols have provided popular alternatives for those seeking to legally avoid such clampdowns.

Cryptocurrency Accounts Linked To North Korea Hacks Set Be Seized By U.S Government

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The US government is boosting its cybersecurity efforts by targeting 280 cryptocurrency accounts linked to North Korea hackers. According to the Reuters report, the U.S. authorities are making efforts to seize crypto accounts believed to have been used by North Korean hackers to steal millions of dollars worth of cryptocurrencies from two virtual exchanges.

This action comes after the hackers have been identified to have been involved in a number of crypto-related cyber crimes in the world. U.S. authorities also believe that hackers use stolen currencies to fund different military operations, such as the missile program.

The U.S Department of Justice filed for a civil forfeiture complaint in a move touted to give the authorities total authority to seize all of the 280 accounts. It is worth noting the North Korea hackers laundered money through Chinese traders who used the accounts to launder over $100 million on their behalf.

North Korea using Hackers to overcome harsh economic effects of sanctions

Following the different sanctions imposed on North Korea since 2006, the country has had to face tough economic times. It is precisely this situation that the U.S. authorities believe prompts North Korea to incorporate state-sponsored hackers to hack and steal funds intended to fund different programs in the country.

The UN Security Council first imposed sanctions on the country, following reports that the government was working on a ballistic missile program. It is also widely believed that the majority of stolen cryptocurrencies are averted towards supporting this program.

Brian Rabbit Who serves as the assistant attorney general for the justice department in a statement insists that the recent expose shows just how much North Korea hackers were embedded with the Chinese gang to scam funds fraudulently.

Hackers have amassed a whopping $2 billion from targeted cyber crimes

According to reports, the North Korea hackers have managed to scam over $2 billion worth of cryptocurrency from their hacks.  The hackers mostly target banks and crypto-exchange platforms. Meanwhile, the infamous Lazarus group has been credited to a number of cyber attacks on financial firms worldwide.

 

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Crypto Firm OSL Receives In-Principle License Approval From Hong Kong’s watchdogs

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The Asian-based cryptocurrency firm, OSL Digital Securities, won the Hong Kong market regulator’s in-principle decision to issue an exchange platform license to operate its crypto-related business in the region.

With this crucial development, the Fidelity-backed BC group is now one step closer to operating as a regulated provider for brokerage and automated trading services, including security tokens. After the latest move, OSL asserted that it would continue to work under the SFC’s regime in a bid to secure a full-provider license in Hong Kong.

Commenting on the authorization, BC Group CEO Hugh Madden stated,

“Securing approval-in-principle for a virtual asset trading platform license in Hong Kong, inclusive of security tokens, underscores our commitment to comprehensively addressing the demands of institutional investors”

In response to growing anti-money-laundering [AML] and know-your-customer [KYC] concerns, Hong Kong’s Securities and Futures Commission expanded its regulatory oversight for cryptocurrency exchange treating them as traditional securities brokerages and allowed these platforms to opt into regulation under its new rules.

Essentially, the “in-principle” decision is the first step of the full authorization process in which the applicant platform is required to satisfy one or more requirements set by the Securities and Futures Commission [SFC] in order to obtain a license.

SFC had unveiled its new set of rules for the cryptocurrency exchanges in November last year. It details how the Platforms must address custody and compliance, in particular with regard to the KYC and AML rules. The published documents also state that exchanges can only offer products to “professional investors.” In addition, they will also be required to file a monthly report to the Commission.

The 61-paged document stated,

“The adoption of the new regulatory framework will enable the SFC to formulate its future
regulatory strategy for virtual assets through close supervisory interactions with an
evolving and dynamic industry.”

The exchanges will need the regulator’s approval for offering new products. Besides, SFC does not consider direct peer-to-peer platforms for licensing. Interestingly, OSL was the first and the only platform to apply for the license.

U.K. Financial Watchdog Registers Gemini Crypto Exchange Firm

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The U.K. financial watchdog has given the green light to U.S. crypto exchange firm Gemini to run its operations in the United Kingdom. The cryptocurrency exchange founded by the Winklevoss twins has registered its U.K. branch with the Financial Conduct Authority.

The Financial Watchdog rolled out mandatory risk assessments for exchanges in January this year to determine their compliance with the Fifth AML Directive (AMLD5) and the Counter-Terrorism Financing (CTF) Regulations of the European Union. The new regulations require all cryptocurrency firms operating in the United Kingdom to report their operations to the FCA. Archax crypto exchange was the first exchange firm to be approved by the authority under the new laws.

All crypto firms are required to comply with new requirements

According to the Financial Conduct Authority, cryptocurrency entities operating in the U.K. have until January 10, 2021, to comply with the new requirements. Gemini’s U.K. branch, Gemini Europe Limited, registered with the financial watchdog early this week. However, the authority has not revealed the exact date when the firm’s new registration will take effect.

Although Kraken claims it is the UK’s first licensed crypto exchange, only a United Kingdom Financial Conduct Authority (FCA) Multilateral Trading Facility (MTF) license was given to its subsidiary Crypto Facilities on 6 July. Moreover, according to FCA.s register, both Archax crypto exchange and Gemini registered their operations in the U.K. this week, and are the only two firms on the entry. However, the Archax’s registration entered into force on August 18, unlike Gemini, which is not specified.

Currently, the Gemini crypto exchange is adopting measures to fortify its oversight tools as it sails through the FCA’s procedures. According to a recent report by Bloomberg, the American exchange had chartered Ventus Systems Inc. to supply the firm with anti-market manipulation tools.

European nations implementing AMLD5 and FATF recommendations

European authorities are currently enforcing the AMLD5 and FATF recommendations.  Ireland is presently structuring its cryptocurrency regulations to combat money laundering and financing of terrorist activities. However, the new cryptocurrency regulations could pose more challenges to the Irish cryptocurrency sector. Notably, the cost of compliance might push some startups out of business.

Proposed Pan-Europe Crypto and Digital Finance Regulation Framework to Boost Crypto Assets Growth

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According to a recent report by the financial news agency IFC Review, the European Commission, the law-making arm of the European Union, is concluding the first-ever crypto and digital finance regulatory structure proposed by Europe. The pan-European structure is intended to strengthen the development of crypto assets in the long run.

If the regulation is successfully passed into law and implemented, its acceptance would give the best possible legal atmosphere for crypto-related entities to thrive and contribute to the European economy.

Bitcoin and stablecoins recognized as financial instruments

Back in 2019, the Commission spent most of the year deliberating with industry experts and specifying crypto terms. Consultations included the acknowledgement of digital assets such as Bitcoin and stablecoins as financing tools and the development of a regulatory structure for blockchain-based entities.

According to the chairman of the European Blocktech Federation, the recognition of cryptocurrency assets as financial tools established them among the broad group of European and national legitimate tools that oversees Europe’s financial market. Moreover, he termed the upcoming crypto and digital finance laws as ‘historic,’ in regards to the immense potential it creates for businesses and individuals to develop digital finance solutions.

The proposal also elaborated a project to develop a single market for digital currencies, to facilitate cryptocurrency trading across all European nations. By comparison, the plan is the same as the launch of the Euro back in 1999, a single currency that united all members of the European Union back then.

Crypto and digital finance regulatory structure will boost European growth

The new crypto and digital finance regulations follow European Commission’s vice president Valdis Dombrovskis sentiment back in June; regulatory uncertainty surrounding digital assets hinder growth and development in the Eurozone. According to the report, the proposed crypto laws are likely to be enacted in Q3 2020. However, the report notes that interruptions can be expected due to the novel coronavirus disaster. 

Indian Prime Minister Endorses Blockchain Technology Publicly as an Investment Opportunity

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The Prime Minister of India, Narendra Modi, has backed blockchain technology as an ‘opportunity in frontier technology’ reviving the desires of the crypto community for the country to be warming up for virtual assets. Like many other countries worldwide, India has seen a surge in the use of crypto assets. However, the conditions are not favorable for cryptocurrencies to thrive; the government is not supportive of crypto.

The Indian Prime Minister ‘s latest sentiments while speaking at the India Idea Summit, which was hosted by the U.S Indian business council on July 24, touched on five different technologies, including blockchain technology. The PM classified Big Data Analytics, 5 G, Quantum Computing, Internet of Things ( IoT), and Blockchain technology as frontier technologies.

Indian Prime Minister urges investors to take advantage of COVID-19

Outwardly, the Indian PM has smudged on an investment opportunity for emerging technologies and is encouraging entrepreneurs, especially from the US, to invest in them. The COVID-19 crisis has badly impacted the economy of India. In particular, the Indian Prime Minister aims to rejuvenate the economy through foreign investment collaborations from developed and promising countries, notably the United States.

The PM urged investors to take advantage of coronavirus damage in India and deploy tech-related investments that will benefit the people of India and the investors. Moreover, the Indian Prime Minister implied a long-term partnership that could flourish even post COVID-19.He noted that:

“American investors often lookout for the perfect timing to enter a sector or a country. To them, I would like to say — there has never been a better time to invest in India.”

Regulatory uncertainty still looms in the Indian cryptocurrency industry

While the future of cryptocurrencies is indistinct, the country is very supportive when it comes to blockchain technology. Skepticism about crypto is very high in India.   Even after the Reserve Bank of India removed the crypto banking ban, some Indian banks are still reluctant to offer their services to crypto-related entities.

In spite of that, the sentiments of the Indian Prime Minister have instilled faith in the cryptocurrencies community, obtaining full green light to operate in the country.

Russian Federation Drops Plot to Outlaw Bitcoin Transactions

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The Digital Financial Assets Bill (DFA), which is scheduled to be read for the second time in the Russian Parliament today, has withdrawn mentions to the administrative and unlawful obligation for bitcoin transactions. The third and ultimate reading will institute the draft as a law. According to the head of parliament’s financial markets committee, Anatoly Aksakov, while speaking to a domestic news outlet, Ria Novosti: “There will be no liability in this bill.” 

Administrative and criminal liabilities withdrawn from DFA bill

Speaking to the media agency, Aksakov noted that the decriminalization of bitcoin investment had been set aside until further notice. He also said: “They have removed everything; there is only a link that the regulation of digital currency will be determined by another law.” The previous edition of the DFA bill intended to introduce financial penalties of up to $7,000 or face seven years in prison.

In addition, the bill suggested penalizing firms that issue or deal with cryptocurrencies without the authorization of the Russian central bank. The proposed financial penalties amounted to approximately $28,000 for violations of the Bitcoin Transactions Act if it is used as a means of payment for goods and services. Initially, the original bill proposed that firms would have to pay up to one million rubles ($13,900), while individuals would be fined at least 200,000 rubles ($2,800) for transactions in virtual assets to pay for goods and services.

Lawmakers planning “special law” to outlaw bitcoin transactions

Moving forward, Aksakov noted that the current draft bill, in its amended structure, now only concerns the challenges surrounding the definition of digital financial assets; and spells the standards for dealing with blockchain tech, among other issues. Besides, Aksakov, who is in charge of sponsoring the bill, anticipates the proposed law to be enacted on January 1, next year after adopting the second and third readings during the State Duma spring section that ends on July 23.

Legislators in Russia are also working on another “special law” on cryptocurrency policing, which may introduce strict penalties for dealing with bitcoin transactions. According to Aksakov, the law could be adopted during the autumn session, which ends in December. Digital currencies in the Russian Federation remain vague. The legality of ICOs, Smart Contracts and Crypto Mining lacks a clear definition despite the high number of proposals submitted to the legislature for this intention.

A New Legislation to Regulate Digital Currency Payment Suggested by G20

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A new digital currency payment bill proposed by the G20 is set to propel the adoption of cryptocurrencies to levels never seen before. The G20 countries announced on 11 July that they might introduce a regulatory framework to payment of digital currencies and allow “digital currency” instead of just cash payment methods.

The Group of Twenty or G20  is an international forum for governments and central bank governors from 19 countries and the European Union. Members of the G20 are Argentina, Australia , Brazil , Canada, China , Germany, India , Indonesia, Italy , Japan, Mexico , Russia, Saudi Arabia, South Africa, Turkey, United Kingdom , United States of America and the European Union.

G20 ‘s attention to cryptocurrencies is a big deal for the entire industry. The successful approval of the proposed new bill is lucid: it will stimulate the mass adoption of digital currencies. This massive adoption is due to the fact that G20 nations account for 90 % of the world’s gross revenues.

In addition, more than 80% of all trade activities worldwide take place in these countries. And also the G20 countries account for more than 50% of the world’s total land area and two-thirds of the world’s total population.

G20 to enact FATF digital currency payments guidelines

The Financial Action Task Force ( FATF) is a body founded in 1989 to battle money laundering. The Authority held its annual Private Sector Consultative Forum in Austria this month, and digital currency payments were among the topics discussed.

The FATF reiterated that the guidelines and recommendations for implementing digital currency payments are still in place. Subsequently, the authority advanced to show its support for virtual assets, stating that crypto assets could have a significant impact on the world economy.

The G20 nations have also accepted  to support the guidelines recommended by the FATF by enforcing them. In particular, Russia, one of the G20 nations, has agreed to establish a regulatory structure for crypto assets in the country. The enactment of a clear structure in line with the FATF Directives was planned for July last year, but Russia is set to implement it this month.

Bottom line

In addition, another G20 member in Japan is actively working to establish a policing guideline for crypto assets in the country. South Korea is also reportedly prioritizing a clear regulatory structure and is working towards the realization of a consistent structure. On the other hand, South Africa and China could potentially see a change in cryptocurrency policing in their respective countries this year.

Wirecard to Resumes Operations After FCA Lifts Restrictions

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The U.K. Financial Conduct Authority ( FCA) announced on 29 June that it would lift the restrictions imposed on the German payment firm Wirecard AG, allowing Wirecard to resume operations. The watchdog noted that it had provided a written agreement to Wirecard ‘s subsidiary, Wirecard Card Solutions, to resume its e-money and payment services, although some limitations remain.

The UK financial watchdog ordered the e-payment firm to halt operations on 26 June, following the submission by its parent company of an insolvency application in Germany. The move to lift the ban allows the users of the firm to access the financial services they have been locked out.

Wirecard’s clients can now access financial services

The limitations imposed on the fintech firm include not being able to dispose of any assets or money, not to run any regulated activity, and put a statement on its official website notifying users that it is no longer authorized to carry out regulated activities. Nevertheless, clients can now use their debit cards freely without interruptions. A statement by FCA reads:

“We know that some people may have faced difficulties over the weekend and we worked with DWP, HMT and the Home Office in order to help anyone suffering financial distress. Anyone who is still in difficulties should see our website for more details.” 

Insolvency proceedings

Despite the lifting of the restrictions by the FCA, experts suggest that the issue could have permanent damage to people’s trust in fintech firms. In particular, firms such as Curve and Anna rely on their e-money licenses to manage payments but do not hold banking licenses to hold client funds. The funds are instead ring-fenced with a third party financial institution.

Germany-based Wirecard has stated that it will continue to operate despite insolvency filings last week. The company also stated that it is exploring whether its subsidiary firms will also be required to apply for insolvency. In addition, the American subsidiary of the company which it acquired from Citigroup in 2016; stated on 29 June that it was looking for a buyer.