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Australian Cryptocurrency Watchdogs’ New Plans To Secure Its Consumers

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Australia sought to expand the regulations and change the regulatory environment surrounding cryptocurrency. In order to determine which digital assets will be subject to legal regulation, the administration declared that it would publish a consultation paper in the early months of 2023.

According to regulators, the paper’s findings will serve as the foundation for a new “strategic strategy” for the payments system. The government was apparently improving the rules governing bitcoin providers among other things.

In order to regulate the cryptocurrency ecosystem in the country, Australia is reportedly considering giving the securities regulator more resources, including staff.

Australian Cryptocurrency Regulatory Aspects

The Australian Securities & Investments Commission [ASIC] is growing its digital asset team and enforcement measures, according to a statement released by Treasurer Jim Chalmers on Friday. The Australian Competition & Consumer Commission [ACCC] is also intensifying its initiatives to limit bitcoin ransomware schemes.

The declaration made a point of how “more crooks” are looking to get paid using this unique asset type. In 2022, losses associated with cryptocurrency payments reached a total of $221 million.

The government is also trying to change how crypto assets are licensed and kept. The portion of bitcoin assets that are now exempt from the regulatory framework for financial services will continue to get the majority of attention. In his statement, Chalmers said,

“We will establish a set of obligations and operational standards for crypto asset service providers to ensure they adequately safe‑keep assets for customers.“

The agency also made it clear that consultations on the framework’s design for custody and licensing will start “mid-2023.” Additionally, the Australian Treasury has published a consultation paper on token mapping. Which components of the cryptocurrency ecosystem will be regulated will be decided by the same.

The three reasons the government is acting on cryptocurrency are “protecting consumers, protecting our financial system, and cracking down on criminals.”

Finally, the nation is using a “multi-stage method” that consists of three components. To be more precise, they entail enhancing consumer protection, enhancing enforcement, and developing a framework for its token mapping reform.

The treasurer claimed that while the previous administration experimented with cryptocurrency policy, it never took the time to future-proof its regulatory structures. He however added,

“We are acting swiftly and methodically to ensure that consumers are adequately protected and true innovation can flourish.“

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.

Cryptocurrency Leash Tightening In UK? Here’s What Ashley Alder Has To Say

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Governments from all over the world are taking the initiative to regulate the cryptocurrency industry. Undoubtedly, the market has become exceedingly unstable as a result of the consecutive failures of crypto businesses this year. Regulators have voluntarily intervened as a result of clients losing billions. For instance, Australia’s crypto rules will probably get stricter in 2023.

Now, it appears that the UK may do the same. In a recent Financial Times article, Ashley Alder, the incoming chair of the Financial Conduct Authority, noted that when the agency obtains expanded regulatory authority over the industry, crypto firms intending to establish enterprises in the UK will face an uphill battle.

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Ashley Ian Alder, Chief Executive Officer of the Securities and Futures Commission

He stated,

“I think it [crypto] should be regulated further.”

Money Laundering Easier With Cryptocurrency Firms

Alder noted that in his opinion, cryptocurrency platforms were “deliberately elusive,” encouraged money laundering on a large scale, and produced “massively unfavorable risk” while speaking at a cross-party Treasury Select Committee.

Alder, the current Chief Executive of the Securities & Futures Commission in Hong Kong, further explained,

“Our experience to date of [crypto] platforms, whether FTX or others, is that they are deliberately evasive, they are a method by which money laundering happens in size.”

The way businesses in the sector “package a whole set of activities which are generally isolated… gives rise to substantially unfavorable risk,” he continued, including the possibility of conflicts of interest and improper asset management.

The FCA has struggled with its current burden, on the other hand. It is currently in the middle of a transformation program. MPs questioned Alder on why only a third of people trusted the FCA’s leadership. Alder responded,

“You could only hope that would improve.”

The new Chair also admitted that there were “perennial doubts about operational efficiency” and a view that the FCA had not “secured appropriate protection for consumers.” Alder declared that he intended to relocate to the UK in January. Notably, the following month, he will take over as FCA Chair.

The UK has stated that it will extend tax benefits for investment managers to cover crypto assets, therefore it is important to keep this in mind. The U.K. should function as a major worldwide hub for cryptocurrency, according to Prime Minister Rishi Sunak. The Treasury declared it will expand its current tax relief to the cryptocurrency sector.

The UK will provide tax benefits for investment managers that use cryptocurrency

The FCA, however, chose not to address whether or not its incoming Chair’s opinions differed from those of the administration.

Senate Banking Committee And Treasury To Join Hands For Crypto Legislation

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The chairman of the US Senate Banking Committee, Sherrod Brown, has urged Treasury Secretary Janet Yellen to collaborate with lawmakers and banking authorities on comprehensive crypto legislation “in the wake of FTX’s downfall.”

In a letter dated Nov. 30 and addressed to Yellen, the Senate Banking Committee Chair, Brown demanded that the Treasury secretary works with authorities to address cryptocurrency by suggestions made by the FSOC. The “alarming fraud,” “liquidity crunch,” and insolvency of the cryptocurrency exchange FTX were referenced by the Senate Banking committee chair as examples of financial dangers that shouldn’t “spillover into traditional financial markets and institutions.”

According to Senate Banking Committee Chair, he requests that they work together with the other financial regulators to further develop the recommendations from the FSOC Report, including the creation of legislation that would give regulators the power to monitor and otherwise control the activities of affiliates and subsidiaries of crypto asset entities. As stated in the FSOC Report, individual regulatory bodies currently do not have a thorough understanding of the operations of crypto-asset businesses.

He further added,

“As the FTX failure makes clear, given crypto asset entities’ broad use of proprietary crypto tokens combined with opaque financial arrangements and the reliance on arbitrary valuation and data sources, the financial regulatory agencies should continue to find ways to enhance entity and crypto asset disclosures, market integrity, and transparency.”

FSOC Recommends Other Regulators Along With Senate Banking Committee

In response to U.S. President Joe Biden’s executive order on cryptocurrencies, the Financial Stability Oversight Council (FSOC) published a report in October that examined potential regulatory gaps and financial stability concerns of digital assets. The council suggested lawmakers enact legislation to specify which “rulemaking authority,” i.e., the Securities and Exchange Commission or the Commodity Futures Trading Commission, will be in charge of policing specific aspects of the cryptocurrency spot market. The report, according to Yellen at the time, offered “a sound framework for policymakers,” but no timetable for action.

Brown’s retort was the most recent from American lawmakers to weigh in on FTX’s insolvency and potential regulatory and legal action. Senators Elizabeth Warren and Sheldon Whitehouse wrote a letter to the Justice Department on November 23 urging them to “examine the collapse of the exchange with the utmost thoroughness” and consider bringing criminal charges against those responsible for misconduct at FTX. In order to address the failure of the cryptocurrency exchange, committees in both the House of Representatives and the Senate will hold separate hearings in December.

Cryptocurrency Regulatory Bill Soon To Be Law In Brazil; Chamber Approves

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A bill governing cryptocurrency transactions was approved by the Brazilian Senate’s full body in April of this year. Senator Flávio Arns’ bill was presented to the Brazilian Chamber of Deputies, which then took a vote on it.

The bill gives cryptocurrency businesses the designation of “virtual service providers,” making them accountable for crimes against the Brazilian financial system in the same ways as traditional financial institutions.

Arns’ bill was accepted by the economic affairs committee of the Brazilian Senate in February, while two other crypto initiatives put up by senators Styvenson Valentim and Soraya Thronicke were shelved.

The bill also establishes a two- to a six-year prison sentence as the maximum punishment for crimes committed using virtual assets. In response to a request from Senate President Rodrigo Pacheco, the sentence that was originally proposed would have ranged between four and eight years.

Cryptocurrency Regulatory Bill Awaits Executive Sanction

On Tuesday, the Chamber of Deputies passed the fundamental language of the Bill, which governs the Brazilian cryptocurrency market. The matter will now be sanctioned by the president.

In accordance with the legislation, businesses have 180 days to adjust to the new regulations before the bill takes effect. The deputies also rejected the focus that demanded segregation of property.

The issue relates to the market authority of regulatory organizations. The project states that the Securities and Exchange Commission will be in charge of overseeing crypto-assets that are classified as securities, while another body that will be chosen by the Executive Branch would be in charge of overseeing assets that do not come under this classification. The selection of the Central Bank is anticipated.

The SEC recently released an opinion to the market with recommendations on how to invest in crypto assets that are regarded as securities in light of the delay by Congress in implementing the PL. The text also outlines the regulator’s scope of authority and suggests methods for standardizing, inspecting, supervising, and disciplining market participants.

The PL that was adopted today had already been authorized by the Senate in April, but it got stuck in the Chamber in June, and even though it repeatedly appeared on the voting agenda, it wasn’t approved again until today, nearly six months later. There was disagreement over some textual issues, particularly those pertaining to patrimonial segregation.

Biden’s urge for cryptocurrency regulation; Congress needs to act instantly

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Congress is urged by the Biden administration to act quickly in order to establish a clear regulatory framework for cryptocurrency. The adoption of cryptocurrencies is seen in various global nations. Investors are very interested in cryptocurrencies despite the unfriendly policies of several nations.

The US Financial Stability Oversight Council (FSOC), a group of the country’s top financial regulators, which includes the Treasury, encouraged Congress to come to agreements on a number of topics in a report released on Monday. This decision-making process also extends to the regulation of bitcoin and other spot-market traded cryptocurrencies.

This holds true for a number of countries where the government is unsure of its position on cryptocurrencies, but investors manage to obtain them. The Biden administration is requesting prompt congressional regulation of cryptocurrencies in the most recent report.

Cryptocurrency sudden collapse a scare for the Biden administration?

The report is released as Congress looks into the stablecoin market and other tax regulations for cryptocurrency traders. The Biden administration is worried that the Terra-LUNA disaster will happen again. The members of Congress claim that appropriate legislation is still months away.

“Some crypto asset businesses may have affiliates or subsidiaries operating under different regulatory frameworks, and no single regulator may have visibility into the risks across the entire business,” the report states.

The study appears just as cryptocurrency values are beginning to sag. The demise of numerous cryptocurrency businesses followed the protracted bear market. The research also noted the absence of a fundamental regulation to reduce the use of undue leverage.

Additionally, according to FSOC, Congress’s regulations ought to address things like cyber security, segregated consumer assets, and unfair commercial practices.

Additionally, the FSOC report asks Congress to pass legislation that would provide regulators access to the subsidiaries of cryptocurrency platforms and create a legal framework for stablecoin issuers.

The study appears just as cryptocurrency values are beginning to sag. The demise of numerous cryptocurrency businesses followed the protracted bear market. The research also noted the absence of a fundamental regulation to reduce the use of undue leverage.

Additionally, according to FSOC, Congress’s regulations ought to address things like cyber security, segregated consumer assets, and unfair commercial practices.

Additionally, the FSOC report asks Congress to pass legislation that would provide regulators access to the subsidiaries of cryptocurrency platforms and create a legal framework for stablecoin issuers.

UK Lawmakers Begin Probe On The Crypto Sector

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The UK government’s “Crypto and Digital Assets All Party Parliamentary Group” [APPG] has begun an inquiry into the nation’s crypto industry in order to prepare a report and recommendations to share with the government.

As per a press release, the APPG revealed that the probe will focus on issues relating to the crypto and digital assets ecosystem in the country, and will have written findings accepted by Sept. 5, this year.

The group consists of MPs and lords from the main political parties and acts as a forum for policymakers and the UK‘s crypto sector in discussing the industry. 

The group will also take into account the views of crypto operators, regulators, industry experts, and the government on the role of regulation, CBDCs, consumer protection, and economic crime. It also intends to hold several evidence sessions in the upcoming months. 

MP Lisa Cameron, who heads the APPG, stated, “It’s vital that the UK does not take its foot off the gas and that government and regulators keep to their commitments when it comes to crypto and digital assets.”

The country has seen major political changes in recent times, such as the resignation of Treasury Minister John Glen, whose April speech supporting the industry gained a lot of attention from a UK official to date.

UK’s Mixed Signal Is Hampering The Growth Of The Crypto Industry

Glen has been vocal about the need for a regulated framework that will essentially focus on fostering the growth of the sector. However, the same cannot be said for other UK institutions, which have, time and again, raised concerns regarding the safety and viability of crypto-assets.

Bank of England Governor Andrew Bailey, for instance, called criticized the crypto market and called it an “opportunity for the downright criminal.”

It’s precisely this sort of mixed messaging that could hinder the industry’s development.

The crypto market holds roughly a $1 trillion market cap and the flip flop within the political circles could act as a roadblock to the industry’s development.

That said, the U.K. is one of Europe’s leading fintech hubs and is fortunate to be equipped with the infrastructure, investment, and talent to drive the crypto industry. But in order to maintain this position, it needs to take a decisive and unilateral stance on cryptocurrency.

South African Reserve Bank Mulls Crypto Regulation After 6 Years

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South Africa’s Central Bank [SARB] has decided to bring crypto under its regulatory ambit in a complete reversal of its earlier policy that kept digital assets outside the scope of a legal framework. The apex bank has revised its previous stance and is considering regulating cryptocurrencies as financial assets.

Speaking on a webinar, SARB’s deputy governor Kuben Naidoo stated,

Our view has changed and we now regard it [crypto-currency] as a financial asset and we hope to regulate it as a financial asset. There has been a lot of money that has flowed in and there is a need to regulate it and bring it into the mainstream.

Naidoo also stressed that it intends to create a safer regulatory environment that has adequate health warnings and investor protection.

Notably, six years back the top bank considered crypto as an asset, rather than a currency. But has reviewed its stance amidst its growing concerns of crypto being used for money-laundering and other illicit activities in South Africa.

“The use of crypto for money-laundering and other illicit activities is a source of concern. 90% of transactions involving crypto-currency in the US are for the purchase of opioids or gambling tokens,” he added.

“South Africa Is In Sync With Global Regulators”- Naidoo

When asked if the change of heart is too late, Naidoo argued that most central banks across the globe took the time to watch and observe the industry, prior to taking regulatory decisions.

“We are doing what most regulators are doing and what most central banks are doing, and pretty closely what advanced economies like the UK, Singapore, and Australia are doing”.

“We are watching them very closely and I don’t believe that we are behind the curve in virtual currency. Most central banks are focused on two things: regulating the broad crypto environment, and secondly, learning from it to see how it can take on board some of those lessons.”

A week ago, a South Africa-based firm- H2O Water Securities launched the world’s first crypto water token, to raise capital to finance global water projects.

H2ON has already secured an investment of $150 million from GEM Digital, a Bahamas-based digital asset management firm that invests in utility tokens listed on over 30 centralized and decentralized exchanges around the world.

Bank Of England Mulls Tougher Crypto Regulation To Mitigate Risks

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The Bank of England [BOJ] has warned that the effect of the crypto meltdown could trigger further price slump in the broader financial market.

The Top bank’s Financial Policy Committee stressed that the $2 trillion [£1.67 trillion] crypto market wipout has created “extreme volatility” and “vulnerabilities” in recent months and tougher regulation is the need of the hour.

“Both the experience that we’ve had in recent weeks and also the work that we’re doing both domestically and internationally, I think further draws out that there are issues both in the unbacked crypto world and the so-called stablecoin,” Bank of England’s Governor Andrew Bailey stated.

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Bank Of England Mulls Tougher Crypto Regulation To Mitigate Risks 3

“These events did not pose risks to financial stability overall. But unless addressed, systemic risks would emerge if cryptoasset activity, and its interconnectedness with the wider financial system, continued to develop,” the BoE said in its latest financial stability report.

“This underscores the need for enhanced regulatory and law enforcement frameworks to address developments in these markets and activities.”

Bank Of England Gov-” Crypto-Assets Has No Intrinsic Value”

Bailey, a long-time crypto skeptic, had recently that the asset class has “no intrinsic value.” His comments came after the UK- based Celsius’s decision to halt transfers and withdrawals, citing “extreme market conditions”. 

Bank of England including other regulators across Europe have been toughening their rhetoric against the crypto industry, warning that the market crash could hurt the wider financial system.

The apex bank began drafting Britain’s first regulatory framework for digital assets in March, cautioning that it is better to put guard rails as its rapid expansion might pose a danger to financial stability if left uncontrolled in the future.

On top of that, the geopolitical tensions following Russia’s invasion of Ukraine had fuelled concerns that crypto assets might be used to circumvent financial restrictions placed on Russia.

“While crypto-assets are unlikely to provide a feasible way to circumvent sanctions at scale at this time,” the Bank of England’s Financial Policy Committee [FPC] said in a statement then.

“The possibility of such behavior underscores the importance of ensuring that innovation in crypto assets is accompanied by effective public policy frameworks to… maintain broader trust and integrity in the financial system,” it added.

Dissecting US’s Leaked Crypto Draft Bill; The Good & Not So Good

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The 600-page copy of the US’s leaked bill focuses on regulators’ concerns surrounding decentralized finance [DeFi], stablecoins providers, decentralized autonomous organizations [DAOs], and crypto exchanges.

The documents titled “EMBARGOED” were posted on Twitter by a user Slam and soon became a hot topic among crypto Twitterati. Some users however pointed out that the draft was earlier reported by local news outlet Barron’s a few days back.

According to the June 3 coverage, the bill contains substantial changes co-authored by Senators Cynthia Lummis [Wyo.] and Kirsten Gillibrand [N.Y.]. It is unclear at the moment if the leaked bill is the newest spin of the earlier versions or is completely different.

Having said that Adam Cochran, Partner at Cinneamhain Ventures tweeted a detailed thread highlighting the key aspects of the draft as well as offered his insight.

In the latest draft, regulators seemed to put more emphasis on all crypto-related firms to get legally registered, or else, it will be viewed as “personally taxable”.

Cochran also cautioned that anon-run projects, non-regulated DAOs, and DeFi might face difficulties to comply with the law.

The bill seeks to offer more clarity on securities laws. Under the Commodity and Futures Trading Commission or CFTC definition -“If there is any debt, equity, profit revenue, or dividend of any variety, then it is now expressly not a digital asset commodity”.

The exec pointed out that strict regulatory oversight might lead to an increase in compliance costs which according to Cochran might, in turn, ensure a better listing and prevent trading violations.

US Draft Bill would provide clarity on a lot of things?

“Bankruptcy definition changes are a win for users making it clear assets deposited would get returned to users and not liquidate,” he added.

Another aspect, the expert noted is the proposed bill would grant depository institutions the right to issue stablecoins which he claimed would provide much-needed clarity on compliance requirements and penalties.

Cochran then concluded his post by saying that the draft bill is still incomplete and there would be further inputs from various lobby groups who would help stitch it into its final shape.

He then stated, “If it passed in this form it’s good in the LONG term for big entities, but super painful near term for 99% of crypto.”