Crypto Regulation News: FinCEN moves forward with a stalled crypto monitoring rule, SEC is looking into Robinhood’s handling of GameStop trading, Phase one of Switzerland’s blockchain law goes into effect, Estonia’s crypto honeymoon at an end as stricter regulations loom, China releases final anti-monopoly rules targeting major tech and payments firms, Philippines’ central bank to license crypto trading and custody firms, and more!

Feb 9 · 15 min read

Vol. 61, 25th January — 9th February


  • The G7 will begin its Feb. 12 meeting on the subject of central bank digital currencies, before moving to digital taxation and accelerating global debt.


G7 to discuss CBDC and digital taxation this week: The G7 will begin its Feb. 12 meeting on the subject of central bank digital currencies, before moving to digital taxation and accelerating global debt.

Central banks representing a fifth of world’s population likely to issue CBDC in 3 years: BIS: Many nations are moving to advanced stages of CBDC engagement, according to the Bank for International Settlements.

In its latest survey of CBDC development, the BIS shows that central banks representing roughly a fifth of the world’s population are set to introduce a “general purpose CBDC in the next three years.”

The 23-page document is based on primary consultations with more than 60 monetary authorities conducted in late 2020. The survey indicates that 86% of global central banks are actively exploring CBDCs. While the majority remain unlikely to issue a digital currency in the foreseeable future, a sizable minority are moving ahead. Roughly 60% of central banks are experimenting with digital currencies, while 14% are moving forward with development and pilot programs.

“Around the globe, interest in CBDCs continues to be shaped by local circumstances,” said authors Codruta Boar and Andreas Wherli. “In emerging market and developing economies, where central banks report relatively stronger motivations, financial inclusion and payments efficiency objectives drive general purpose CBDC work.”

Chainalysis: Criminals moved $34 million in crypto through DeFi in 2020: Chainalysis expects that criminal activity in the DeFi sphere will increase in 2021.


Coinbase IPO a ‘watershed moment’ for crypto regulation: Caitlin Long: The CEO of pioneering digital bank Avanti Bank & Trust, Caitlin Long, has predicted the upcoming Coinbase IPO will force regulators to provide clarity to the crypto sector.

Speaking alongside SEC commissioner Hester Peirce during BlockFi and Real Vision’s “Bitcoin in the Real World” event on Feb. 5, Long speculated the IPO of the United States’ leading crypto exchange is likely to “force” the SEC’s hand to establish a precedent for many outstanding regulatory issues key to the digital asset sector. Long emphasized the SEC will examine Coinbase’s prospectus with a “fine-tooth comb,” stating:

“What the world is going to look at when that prospectus goes effective, is that everything that in it is OK with the SEC.”

Former SEC Official Says There’s a Good Chance Agency Loses Its Case Against Ripple and XRP — Here’s Why: Former U.S. Securities and Exchange Commission (SEC) executive Joseph Hall thinks there’s a strong chance the SEC loses its case against Ripple. Hall, a partner at the law firm Davis Polk, says in a new interview on Thinking Crypto that he found the SEC case “pretty astonishing.”

It’s Now Risky for Institutions To Not Allocate to Bitcoin, Says CoinShares CSO Meltem Demirors: CoinShares chief strategy officer Meltem Demirors is warning that it is now risky for institutional investors to not have Bitcoin in their portfolio.

In an interview with CNBC, the executive of the digital asset management firm addresses concerns that the bullishness surrounding Bitcoin (BTC) has a time limit, and that, eventually, regulators like U.S. Treasury Secretary Janet Yellen will crack down on the crypto industry.

“I think Janet Yellen’s comments were fairly nuanced, there’s an alphabet soup of three-letter agencies that already regulate the Bitcoin industry. I think there’s this misconception that Bitcoin is unregulated which is certainly false. We spend a lot of time on compliance in our organization, but look, what I think is happening is in 2020, it was a risk for investors to allocate to Bitcoin. In 2021 it is a risk to not allocate to Bitcoin.

And it’s not just investors, it’s corporations. MicroStrategy is soaring on the back of its allocation to Bitcoin. It has more than doubled its treasury reserves due to its allocation. They just hosted an event with over a thousand corporate treasurers in attendance and also I think we now have nation-states starting to seriously look at what role Bitcoin could potentially play in the future of their economies.”

Bitcoin is a ‘risk’ rather than ‘safe’ asset, say JPMorgan strategists: It is more appropriate to characterize bitcoin as a “risk” asset rather than a “safe” asset, according to JPMorgan strategists.

Central banks must play ‘pivotal role’ in digital money, says BIS exec: An exec at the Bank for International Settlements wants central banks to helm the evolution of digital money.

BoE Governor: cryptocurrencies of today are destined to fail long term: The U.K. central bank governor believes existing cryptocurrencies will fail over the longer term due to their robust privacy features.

Goldman Sachs CEO: Regulators should be ‘hyperventilating’ at Bitcoin’s success: The CEO of Goldman Sachs believes regulators will not be able to monitor the financial system if Bitcoin is allowed to flourish in its present form.

Ray Dalio: Bitcoin is “gold-like” but governments won’t let it win: The hedge fund manager had lots of good things to say about Bitcoin, but he doesn’t think governments will allow serious competitors to their money issuance.

The year 2021 will bring DeFi into adolescence: 2021 will be a pivotal year for DeFi by transforming the way we see financial services and the future of money.

To see eye-to-eye? Crypto industry should start embracing regulation: Now it’s up to the crypto industry itself to start engaging with and accepting regulations.


With Yellen confirmed, Treasury moves forward with a stalled crypto monitoring rule: The Treasury has opened up the comment period for its self-hosted wallet requirements for another 60 days.

US Library of Congress report highlights proof-of-stake tax blindspot: The taxman still isn’t wise to cryptocurrency earnings made through proof-of-stake. But that could change soon.

New antitrust legislation aims to put an end to tech monopolies in the US: The era of tech giants buying up their up-and-coming competitors will be over if these senators get their way.

SEC is looking into Robinhood’s handling of GameStop trading: Fearing that recent delistings and volatility “undermine market confidence,” the U.S. securities regulator says it is looking into the Robinhood fiasco.

Congress announces hearings on stock market in light of Robinhood vs. Reddit battle: Both the Senate and the House are looking into Wall Street’s market practices, especially short-selling.

New class action against Robinhood alleges oligopoly manipulation: The unfolding short-squeeze on GameStop stock to the detriment of major hedge funds “could not be allowed to continue.”

Robinhood CEO to reportedly testify before US House committee over GameStop: Regulators want to know the details of the GameStop short squeeze.

Yellen convenes SEC, CFTC and Fed leaders on Robinhood question: Treasury Secretary Janet Yellen faces the first major hurdle of her tenure with the question of how to handle social media-driven security trading.

The four horsemen of U.S. financial regulation will meet to discuss market manipulation concerns resulting from the headline-grabbing drama surrounding GameStop stock last week. Per a Feb. 2 report from the Wall Street Journal, Treasury Secretary Janet Yellen is gathering the leadership of the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Federal Reserve.

The SEC already announced that it was looking into recent market manipulation. The inclusion of the CFTC and the Fed suggest that the conversation is going to extend far beyond Robinhood, Reddit and GameStop.

Aside from the spillover effect of that same market volatility into commodities like silver, there is a broader question of the role of social media. Given that the spread of foreign disinformation via social media has been a central concern for national security for several years, there is no question that the ability of social media movements to affect markets is more concerning to regulators than just the fate of Melvin Capital.

At the same time, the SEC and legislators alike indicated great displeasure with the behavior of markets themselves, including the role of Robinhood, which shut off GME buying at a critical point last week.

Ripple Says SEC’s Lawsuit Centered on ‘Unprecedented and Ill-Conceived Legal Theory’ in Official Response to XRP Allegations: Ripple has filed an official response to the U.S. Securities and Exchange Commission’s lawsuit against the company. The SEC says Ripple sold unregistered securities in the form of XRP for years. Ripple counters that XRP can’t be regulated because of its use case as a means of transferring value.

“The Complaint filed by the SEC advances an unprecedented and ill-conceived legal theory — with neither statutory mandate nor congressional authorization — that Ripple’s distributions of the virtual currency XRP constitute ‘investment contract[s]’ and thus ‘securit[ies]’ subject to registration under Section 5 of the Securities Act of 1933. 15 U.S.C. § 77b(a)(1). That theory ignores, among many other things, that XRP performs a number of functions that are distinct from the functions of ‘securities’ as the law has understood that term for decades.

For example, XRP functions as a medium of exchange — a virtual currency used today in international and domestic transactions — moving value between jurisdictions and facilitating transactions. It is not a security and the SEC has no authority to regulate it as one.

Before this case, no securities regulator in the world has claimed that transactions in XRP must be registered as securities, and for good reason. The functionality and liquidity of XRP are wholly incompatible with securities regulation. To require XRP’s registration as a security is to impair its main utility.”

Mystery surrounds bizarre class-action lawsuit against Ripple over $48 loss; Despite filing fees of more than $400, a Ripple investor has launched legal action over a $48 loss. What’s going on?

Florida class action lawsuit alleges Ripple violated securities laws: Already facing a suit from the U.S. SEC, Ripple is now accused of violating securities laws in Florida.

Crypto custodian Protego gets national charter from the OCC: Protego joins Anchorage as the first string of digital asset firms to get national trust bank licensing.

Bitcoin-touting Senator Lummis appointed to Banking Committee: In announcing the appointment, Lummis made clear that she hopes to get digital asset legislation moving.

Senator to launch Financial Innovation Caucus to educate lawmakers on crypto: Cynthia Lummis, a U.S. senator who openly owns Bitcoin, will launch a Financial Innovation Caucus to educate her fellow senators about BTC and crypto assets.

New Hawaii bill seeks to create state-led blockchain working group: Introduced in Hawaii’s House of Representatives last Monday, the bill calls for the formation of a blockchain working group led by the state’s economic development agency.

Miami mayor aiming for ‘the most progressive crypto laws’: “We want to make sure that we believe that if all things are equal, we win,” said Mayor Francis Suarez.

SEC charges promoters of Steven Seagal-spruiked ICO from 2018: The SEC has charged three individuals for defrauding investors out of millions through the Steven Seagal-backed Bitcoiin2Gen ICO.

DoJ, Chainalysis work to break up ransomware network that targets hospitals: The Department of Justice has seized half a million dollars in crypto from NetWalker, in an operation that also involved Bulgarian authorities.

Unlicensed crypto exchange operator faces 25 years for laundering $13M: A California resident is expected to plead guilty to charges of operating an unlicensed exchange and laundering more than $13 million.

Federal Reserve Says Nature of Money and Payments Changing in Increasingly Digital Environment: The U.S. Federal Reserve is working to keep in step with a world that’s going digital. In a new job advertisement, the Fed says that it is looking for a manager for its digital innovations policy program at its reserve bank operations and payment systems (RBOPS) division.

FBI arrests 24-year-old crypto trader for commodities and wire fraud: The trader was both lying to investors and using an unregistered derivatives strategy on BitMEX.


French official wants to change how Europe regulates crypto and blockchain: According to one French official, crypto and blockchain projects should be supervised at the European level.

Phase one of Switzerland’s blockchain law goes into effect: The first phase of Switzerland’s two-part crypto and blockchain regulatory framework is effective as of February 1st, 2020.

Estonia’s crypto honeymoon at an end as stricter regulations loom: After revoking licenses for many crypto firms, Estonia’s parliament is considering even stricter cryptocurrency laws.

According to ERR News, the Estonian Ministry of Finance issued draft legislation back in January to tighten the noose on the country’s crypto industry. As part of the proposed rule changes, the Finantsinspektsioon — Estonia’s Financial Supervisory Authority — will oversee the regulation of cryptocurrency businesses instead of the Financial Intelligence Unit.

This change will bring crypto oversight under the purview of financial regulators as against the current paradigm where the FIU, which is part of the police department handles the monitoring of cryptocurrency businesses.

Crypto firms interested in operating in Estonia will have to pay a licensing fee to the Finantsinspektsioon. The current 381 license holders will also have to reapply for an operating permit from the Financial Supervisory Authority.

Dutch Bitcoin exchange drags central bank to court over wallet KYC rule: One Dutch Bitcoin exchange has taken legal action against the central bank over its controversial crypto wallet verification law.

Bitstamp implements tighter KYC measures for crypto withdrawals in the Netherlands: Crypto exchange Bitstamp has confirmed to The Block that it has implemented stricter know-your-customer (KYC) measures for Dutch users.

Germany’s blockchain initiative: How adoption became a reality in 2020: Germany recognizes the importance of blockchain, but how did it act in 2020, and what effect will this have on its blockchain ecosystem?

Regulatory sandbox and DeFi boom: How Spain pushed crypto adoption despite the pandemic: A summary of the events that marked 2020 in the Spanish crypto space and opinions from different people of the industry who lived it from the inside.


China releases final anti-monopoly rules targeting major tech and payments firms: China’s market regulator finalizes rules that have been three months in the making.

Chinese Blockchain Service Network set to onboard ConsenSys’ Quorum: Ethereum studio ConsenSys has announced that it is integrating its Quorum network into the Chinese Blockchain-based Service Network.

Chengdu is said to give away ~$8 million digital yuan in latest CBDC test: Chengdu is said to be the next place in rolling out a city-wide test of China’s central bank digital currency.

Bank of Korea publishes book on central bank digital currency’s legal issues: South Korea’s central bank has issue a book on legal matters that would need to be addressed to ensure the smooth operations and usefulness of a future central bank digital currency.

Philippines’ central bank to license crypto trading and custody firms: The Bangko Sentral ng Pilipinas has expanded its regulatory remit of the crypto space to include all cryptocurrency financial service providers.

Ethereum dev must face jury for allegedly helping North Korea evade sanctions: Virgil Griffith, a crypto developer accused of helping North Korea evade sanctions through speaking at a Pyongyang crypto conference in 2019, must now face a jury.

Rest of the World

Canadian investment firm Accelerate Financial files for Bitcoin ETF: Calgary-based financial services firm Accelerate Financial Technologies is planning to list its Bitcoin ETF on the Toronto Stock Exchange.

Australia’s eSafety Commissioner touts blockchain as a solution to trolls: Australia’s eSafety Commissioner has suggested blockchain-based digital IDs as a potential solution to fight online abuse and trolling.

Iranian government reportedly moving to block Signal messaging app: Rumors are circulating in Iran that authorities already have access to messages on WhatsApp, one of the few unblocked platforms in the country.

Russia’s regulatory sandbox and the implementation of blockchain tech: The regulatory sandbox that came into effect in Russia last month is aimed at boosting innovative technology implementation.

Indian parliament reportedly considering fast-tracking crypto bill: Government officials may be planning to introduce the law potentially banning crypto “within a month” of the ordinance clearing.

South African regulators issue fresh crypto investment warning: Authorities in South Africa are warning investors to be wary of scams amid the current crypto bull market.

Central Bank of Nigeria bans banks from servicing crypto exchanges: Nigeria’s central bank has prohibited commercial banks from providing account services to crypto exchanges.


Nasdaq-listed Marathon Patent Group buys $150 million worth of bitcoin as part of the company’s treasury reserves: Nasdaq-listed Marathon Patent Group has purchased $150 million worth of bitcoin as part of the company’s treasury reserves, CEO Merrick Okamoto told The Block.

Amid ongoing legal proceedings, Bitfinex announces Tether loan repayment: A half-billion dollar loan has been closed out, but multiple court cases grind on.

Binance quietly drops ‘multi-million’ Forbes defamation lawsuit: Binance Holdings has dropped its defamation lawsuit against Forbes regarding the publication of an article that alleged the exchange purposely sought to evade U.S. regulators.

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In chaos lies the truth


Paradigm is an ecosystem that incorporates a venture fund, a research agency and an accelerator focused on crypto, DLT, neuroscience, space technologies, robotics, and biometrics — technologies that combined together will alter how we perceive reality.


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In chaos lies the truth


Paradigm is an ecosystem that incorporates a venture fund, a research agency and an accelerator focused on crypto, DLT, neuroscience, space technologies, robotics, and biometrics — technologies that combined together will alter how we perceive reality.

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