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Crypto Regulation News: China’s central bank lays regulatory foundation for CBDC, Hong Kong’s SFC will require all crypto exchanges to be regulated, Christine Lagarde solicited input on possible eurozone CBDC, Australia’s central bank launches digital currency project, Iran changes law to use Bitcoin for imports

Vol. 54, 21st October — 4th November

TL;DR

  • The Commodity Futures Trading Commission (CFTC)’s Division of Swap Dealer and Intermediary Oversight published new guidance last Wednesday “regarding the holding of virtual currency in segregated accounts” by futures commission merchants, or FCMs.
  • US AML watchdog wants info on all international crypto transactions over $250.
  • There is a growing concern within the Trump administration that US regulators are dragging their feet as China’s dominance in the digital currency space accelerates, according to a new report.
  • A working group of 25 U.S.-based exchanges released a white paper last week outlining their platform to comply with FATF’s travel rule.
  • U.S. authorities want information from Bain & Company about Visa’s Plaid acquisition.
  • Forbes: Leaked document details Binance plan to avoid U.S. regulatory scrutiny.
  • Binance CEO denies allegations that the exchange’s US arm is a regulatory decoy.
  • SEC-approved crypto IPO issuer INX acquires STO platform OpenFinance.
  • Loan refinancer and BitLicensee SoFi is clear to launch a national bank in the US.
  • Tether’s general counsel doubles down on support for Peter McCormack.
  • SEC director who called Ethereum ‘sufficiently decentralized’ to leave agency later this year.
  • Christine Lagarde invites public comments on eurozone CBDC.
  • EU Invests $1 billion in blockchain tech and Artificial Intelligence.
  • Germany’s central bank is working on a blockchain project, but it’s not a CBDC.
  • The central bank of Russia is outlining its plans to test the digital version of its currency.
  • Iran has become the first country in the world to use cryptocurrencies at a state level for value exchange.
  • The new draft law legitimizes digital yuan and may criminalize the issuance of yuan-backed stablecoins by third parties.
  • Digital yuan will combat US ‘dollarization’ says former PBoC governor.
  • Hong Kong’s government is set to change the rules for cryptocurrency firms operating within the city jurisdiction, according to remarks made Tuesday.
  • South Korean gov’t doesn’t know who will protect crypto exchanges from Kim Jong-Un’s hackers.
  • Malaysian Securities Commission issues revised digital asset guidelines.
  • Philippines’ central bank isn’t ready to pull the trigger on a CBDC.
  • Australia’s central bank is partnering with the Ethereum development studio ConsenSys as it continues to explore the impact and effectiveness of central bank digital currencies.
  • Cayman Islands introduce regulations for virtual asset service providers.
  • Peru is studying crypto exchanges to figure out future laws.
  • Cambodia launches inter-banking platform that runs on blockchain
  • The Governor of the Central Bank of Kenya told reporters the institution is “already feeling left out.”
  • Ethereum researcher Virgil Griffith files motion to dismiss North Korea conspiracy charge.
  • And more!

Reports

Christine Lagarde invites public comments on eurozone CBDC: Former IMF Chief and President of the European Central Bank solicited input on possible CBDC.

Forbes: Leaked document details Binance plan to avoid U.S. regulatory scrutiny: Forbes published a new report last Thursday based on what it said is a leaked document detailing crypto exchange Binance’s efforts to avoid the scrutiny of U.S. regulators.

Binance CEO denies allegations that the exchange’s US arm is a regulatory decoy: “Binance has always operated within the boundaries of the law,” said CZ.

Ethereum researcher Virgil Griffith files motion to dismiss North Korea conspiracy charge: Griffith argues that because his April 2019 conference presentation consisted of widely-available public information, he was not providing a “service” to North Korean officials.

Opinions

Trump Administration Worried China Is Leaping Ahead of US in Adoption of Digital Currency: There is a growing concern within the Trump administration that US regulators are dragging their feet as China’s dominance in the digital currency space accelerates, according to a new report. Just a week after Federal Reserve chair Jerome Powell said it’s more important for the US to implement its own digital currency in the right way than to be first in the world, Breitbart reports that the Trump administration is now worried that unclear and stringent regulatory policies from the Securities and Exchange Commission (SEC) are putting American companies at a disadvantage on the world stage.

Senior administration officials have expressed their frustration about the SEC chairman Jay Clayton’s approach in regulating digital assets.

“So when you look toward the future, digital currency is going to be a major front in the broader economic battle. We need to make sure the SEC is not putting American companies at a disadvantage because China is making a major play in the crypto-space.”

So far, the agency has officially stated that Bitcoin is not a security, but has not commented on the vast majority of the crypto market.

The lack of regulatory clarity is a risk to US national and economic security, Sen. Tom Cotton said in a letter obtained by Breitbart.

“Our government should not voluntarily cede that ground by failing to create a level playing field for US-based companies through the development of clear policy that allows them to compete fairly against foreign competitors.”

US Banks Exploring Whether to Support Bitcoin and Crypto Assets, Says Top Regulator: Acting Comptroller of the Currency Brian Brooks says US banking institutions are investigating ways to support crypto assets for interested clientele.

In an interview with Laura Shin, host of the Unchained podcast, Brooks shares his insights on the ways in which US banks have begun to explore the pathways toward crypto adoption in the wake of the Office of the Comptroller of the Currency’s (OCC) decision to grant banks the right to provide custody for cryptocurrencies.

The OCC’s letter awarding banks custodial rights to crypto assets was released in July, clarifying that banking institutions should be able to safeguard customers’ most valuable assets, which today for many include cryptocurrencies.

Shin addresses the OCC’s determination, asking Brooks if he’s seen a change in attitude towards cryptocurrencies from large financial institutions since the letter’s publication.

“Well what I have heard, in the grapevine and I’ll bet a lot of your listeners have heard the same thing, is that since our letter came out a number of big crypto custodians Anchorage, Coinbase, and a number of others, have been contacted by banks about whether they’d be willing to be like the third-party custody providers for national banks whose customers want to invest in Bitcoin.”

Tether’s general counsel doubles down on support for Peter McCormack: “Tether supports Peter McCormack and believes he’s in the right,” said Stuart Hoegner.

BoE hasn’t ‘made any decision’ regarding a CBDC, says fintech director: “We will continue to explore the pros and cons of CBDC,” said Tom Mutton.

Bahamas strikes first with Sand Dollar amid US–China CBDC faceoff: Fed Chairman Powell sees no urgency to develop a CBDC, but eventually, the world’s top central bank must act, say experts.

Tax professional explains the most important thing for US crypto holders: Tax season is confusing, especially when it comes to crypto.

DLT security standards may turn legacy industries into blockchain innovators: Member-led working groups are helping define security standards for tokenized use cases.

The evolution of crypto exchanges — What’s next for the industry: We are now starting to see the crossover of regulation in the digital asset market and digitalization of the traditional market.

USA

US AML watchdog wants info on all international crypto transactions over $250: The proposed change would cut down FinCEN’s longstanding $3,000 threshold.

CFTC officials publish new crypto advisory for futures commission merchants: The Commodity Futures Trading Commission (CFTC)’s Division of Swap Dealer and Intermediary Oversight published new guidance last Wednesday “regarding the holding of virtual currency in segregated accounts” by futures commission merchants, or FCMs.

How the IRS tracks down people who don’t report their crypto: The United States tax authority doesn’t seem to be very efficient when it comes to tracking down who owes crypto taxes — for now.

U.S. crypto exchanges have a plan for the travel rule. Now they just have to get along: Popular U.S. crypto exchanges have finally published a plan for complying with new global money-laundering rules. Here’s what comes next.

  • A working group of 25 U.S.-based exchanges released a white paper last week outlining their platform to comply with FATF’s travel rule.
  • The group includes some of the most prominent exchanges stateside, suggesting that the plan has legs.
  • Now, the group has to develop a governance structure.

Visa’s foray into fintech provokes DoJ antitrust investigation: U.S. authorities want information from Bain & Company about Visa’s Plaid acquisition.

Visa powers one more crypto card amid ongoing antitrust charges: U.S. regulator’s growing distrust in tech companies is not stopping them from extending their services into the crypto industry.

Loan refinancer and BitLicensee SoFi is clear to launch a national bank in the US: The new bank will be subject to heightened scrutiny from the OCC for at least three years.

SEC-approved crypto IPO issuer INX acquires STO platform OpenFinance: The crypto industry records another major acquisition in 2020.

SEC director who called Ethereum ‘sufficiently decentralized’ to leave agency later this year: An early voice on decentralization and crypto guidance within the Securities and Exchange Commission (SEC) is leaving the agency. Director of the Division of Corporation Finance Bill Hinman will leave his post later this year, according to an SEC statement.

Europe

Christine Lagarde invites public comments on eurozone CBDC: In a Twitter thread on Sunday, Christine Lagarde, former Managing Director of the IMF and current President of the European Central Bank, invited public commentary on a potential eurozone central bank digital currency (CBDC).

“We are still in the review and considerations stage, but we’ve just launched a public consultation so that consumers and Europeans can actually express their preference and tell us whether they would be happy to use a digital Euro just in the way they use a Euro coin or a Euro banknote knowing that it is central bank money that is available and that they can rely upon,” said Lagarde in a video from the thread.

The comments on a possible CBDC were part of a larger series of reflections on what Lagarde described as a “difficult year.”

EU Invests $1 Billion in Blockchain Tech and Artificial Intelligence: A vehicle of the European Union called the European Investment Fund (EIF) has signed six equity agreements with venture capital funds to support businesses under the EU’s InnovFin Artificial Intelligence and Blockchain initiative. These agreements amount to more than $800 million available to support blockchain and AI startups across Europe through the equity funds in Austria, Finland, Germany, Luxembourg and the Netherlands.

Germany’s central bank is working on a blockchain project, but it’s not a CBDC: According to a public notice published in the Supplement to the Official Journal of the European Union, Ocean Protocol, a Singaporean non-profit foundation, was hired to create a decentralized network for Germany’s Bundesbank. The central bank said that the Ocean protocol, which is a project of relatively limited renown, was chosen mostly because they were the only possible contractor for the job, citing a “lack of comparable competitors.”

Asia

Hong Kong’s Securities Watchdog May Soon Regulate All Crypto Trading Platforms: Hong Kong’s government is set to change the rules for cryptocurrency firms operating within the city jurisdiction, according to remarks made Tuesday.

China’s central bank lays regulatory foundation for CBDC: The new draft law legitimizes digital yuan and may criminalize the issuance of yuan-backed stablecoins by third parties.

Digital yuan will combat US ‘dollarization’ says former PBoC governor: “We need to prevent dollarization — this is one of the major designing points of the Chinese DCEP,” said Zhou Xiaochuan.

South Korean gov’t doesn’t know who will protect crypto exchanges from Kim Jong-Un’s hackers: Can anyone hold North Korea responsible for its attacks on the crypto industry?

Malaysian Securities Commission issues revised digital asset guidelines: Regulation for initial exchange offerings and digital asset custodians comes into force.

Philippines’ central bank isn’t ready to pull the trigger on a CBDC: The central bank wants to learn from private-sector digital currencies — but still believes they are inferior to central bank money.

Rest of the World

Australia’s Central Bank Exploring Digital Currency and Ethereum-Based Loans Platform: Australia’s central bank is partnering with the Ethereum development studio ConsenSys as it continues to explore the impact and effectiveness of central bank digital currencies (CBDC). In a press release, the Reserve Bank of Australia (RBA) says it plans to test a proof-of-concept (POC) that will create a tokenized version of fiat currency and repay a loan using an Ethereum-based platform.

Russia’s Central Bank Unveils Plan to Test Digital Currency: The central bank of Russia is outlining its plans to test the digital version of its currency.

Russia’s Gazprombank gets green light for crypto custody in Switzerland: Russian banks tap Bitcoin services abroad while the government at home sees no future for private cryptos.

Digital ruble must ensure privacy, not anonymity: Russia’s central bank: Russia’s digital ruble will not have the same level of anonymity as cash, says official.

Iran Changes Law to Use Bitcoin For Imports: Iran has become the first country in the world to use cryptocurrencies at a state level for value exchange.

Cayman Islands introduce regulations for virtual asset service providers: The notorious tax haven appears to be cleaning up its act on AML and counter terrorist financing ahead of an FATF review.

Peru is studying crypto exchanges to figure out future laws: The pandemic is not stopping Peru’s lawmakers from testing ways of regulating the crypto industry.

Cambodia launches inter-banking platform that runs on blockchain: But don’t call it a CBDC, says central bank reps.

Kenya’s central bank exploring CBDCs due to ‘mushrooming’ of private cryptos: The Governor of the Central Bank of Kenya told reporters the institution is “already feeling left out.”

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Main sources

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