Crypto Regulation News: European Commission officially proposes regulatory framework for crypto-assets and stablecoins, US SEC issues no-action letter on compressed digital asset settlement process, IRS deploying two firms to track crypto transactions, CFTC charges BitMex with illegally operating derivatives exchange

Paradigm

Published in

Paradigm

10 min readOct 5, 2020

Vol. 52, 21st September — 5th October

TL;DR

The US Securities and Exchange Commission (SEC) took a major step toward streamlining digital asset securities settlement by compressing the previous four-step process into three in a bid to reduce operational risk for broker-dealers.
CFTC is looking to make an unregistered foreign platform pay back U.S. investors in its crypto futures, suggesting expanding jurisdictions.
CFTC promises to protect ‘the burgeoning markets for digital assets such as Bitcoin’: The CFTC continues its roll of crypto announcements this week in a recent fraud bust-up.
Congress now has a new bill that, if approved, would open the door to a new regulatory regime for U.S. exchanges. And thus far, the proposed measure is drawing plaudits from industry participants and stakeholders.
A bill from Rep. Emmer wants to amend existing securities laws to clarify securities laws for some tokens.
U.S. Immigration and Customs Enforcement (ICE)’s tech division has put out a request for information for software that the agency could use to beef up its financial auditing management capabilities — and that includes its employees’ interactions with and utilization of bitcoin.
US Treasury warns crypto firms not to reimburse unknown ransomware victims.
FinCEN has warned U.S. banks that it is closely watching how they respond to crypto risk exposure with their AML programs.
The US Internal Revenue Service has selected Texas-based Integra and New York-based Chainalysis to lead its efforts to trace certain cryptocurrency transactions that aim to be anonymous.
SEC wins court bid for summary judgment in ICO lawsuit against Kik.
Gemini, Binance, OKEx and Huobi appear to be the biggest gainers of the BitMex fallout.
PwC’s global crypto tax report reveals the need for further regulatory guidance.
The European Commission has published a wide-ranging set of proposed rules for crypto-assets. Experts say it will put new pressure on the UK.
A new European Central Bank (ECB) report calls for the term “stablecoin” to be reformed or reconsidered because of its ambiguity.
Romania set to auction Bitcoin and Ether confiscated in criminal case.
Israeli regulators propose Bitcoin be taxed as a currency, not an asset.
New Zealand’s tax agency has requested that crypto firms in the country share their customers’ personal details and cryptocurrency asset values.
Chinese Free Trade Zone is open to experimenting with permissionless DeFi applications.
China faces economic risk as illegal gambling operators move 1 trillion yuan in funds from the country, partially in crypto, says a government official.
The Russian Ministry of Finance is targeting cryptocurrency to crack down on tax evasion and other financial misconduct in a newly proposed amendment to an upcoming law.
Russia’s telecom regulator blacklists Binance website.
Venezuela has announced a 90-day trial for a decentralized stock exchange supporting “alternative digital assets” and fiat currencies.
Pro-crypto Colombian congressman highlights legalization challenges.
Kenya’s golf stablecoin highlights need for Africa-wide regulations
And more!

Reports

ECB report says the term ‘stablecoin’ needs reform because of its ambiguity: A new European Central Bank (ECB) report calls for the term “stablecoin” to be reformed or reconsidered because of its ambiguity. The 30-page report the Eurozone’s central bank, published Tuesday, drew a distinction between stablecoins and existing forms of currencies, defining stablecoins by a few key characteristics based on the purposes they serve: as a crypto asset, as a new payment method, and as an alternative store of value. The report referred to stablecoins as digital units of value that are not a form of any currency, and which rely on tools to decrease their price fluctuations against existing, government-issued currencies.

ECB to consider further digital euro study in 2021: The report is only the start of the discussion and raises more questions before officially studying the digital euro.

PwC’s global crypto tax report reveals the need for further regulatory guidance: The majority of global jurisdictions have crypto asset taxation guidelines, yet additional frameworks are required to keep up.

Mainstream lags in crypto understanding, think tank survey finds: The crypto industry exudes more confidence against industry risks than outsiders looking in.

More than half of all crypto exchanges have weak or no ID verification: The highest number of exchanges defying regulatory norms are in Europe.

Opinions

Commissioner Peirce wants to see the SEC approve a Bitcoin ETF: At least one leader at the SEC is in favor of seeing a Bitcoin ETF approved in the US.

CFTC promises to protect ‘the burgeoning markets for digital assets such as Bitcoin’: The CFTC continues its roll of crypto announcements this week in a recent fraud bust-up.

Federal Reserve Leader Reveals Inside Look at Research on Digital Dollar: The head of the Federal Reserve Bank of Cleveland is offering a rare look at the Fed’s research on the creation of a digital dollar. In a keynote speech at the Chicago Payments Symposium, Federal Reserve Bank of Cleveland CEO Loretta Mester revealed the organization is exploring a system that would allow the Fed to easily deposit digital dollars into accounts held by US citizens.

Billionaire Investor Ray Dalio Outlines Looming Threat to US Dollar — Here’s Why He’s Not Buying Bitcoin: Ray Dalio, founder and co-chief investment officer of Bridgewater Associates, says that just like empires of the past, the United States is showing signs of decline and faces major threats to its currency. In an interview with MarketWatch, Dalio outlines three major issues threatening America and the US dollar — money and credit cycle problem, a wealth and values gap problem, and the emerging power of China.

Top Regulator Says US Banks Can Hold Stablecoin Reserves: The Office of the Comptroller of the Currency says that federally regulated banks can continue holding stablecoin reserves from institutions provided that some regulatory conditions are met.

There’s no such thing as a decentralized exchange: Coin Center’s Peter Van Valkenburgh writes about regulation, the law and decentralized finance nomenclature.

Institutionalize crypto markets now: There must be compliance controls: Digital asset markets are subject to various regulations worldwide, but which are the most suitable for the crypto space at the moment?

A minster’s look at regulation and innovation: A necessity to strike a balance: Without constant nurturing through communication and collaborative efforts, the pursuits of legislators and businesses would be fruitless.

Crypto adoption has no future without regulation and law enforcement: Crypto depends on the ability of regulators to create a framework that protects consumers and makes investing in crypto more welcoming.

USA

Congressional bid for new U.S. crypto exchange oversight draws early plaudits: Congress now has a new bill that, if approved, would open the door to a new regulatory regime for U.S. exchanges. And thus far, the proposed measure is drawing plaudits from industry participants and stakeholders.

Lawmakers want to amend the Securities Act to provide more clarity for crypto assets: A new bill from Rep. Emmer wants to amend existing securities laws to clarify securities laws for some tokens.

U.S. Immigration and Customs Enforcement wants to automate its accounting — and that includes transactions in bitcoin: U.S. Immigration and Customs Enforcement (ICE)’s tech division has put out a request for information for software that the agency could use to beef up its financial auditing management capabilities — and that includes its employees’ interactions with and utilization of bitcoin.

BitMEX operator plans to fight U.S. government charges, says spokesperson: HDR Global Trading Limited, the parent company of crypto derivatives exchange BitMEX and one of the defendants named in Thursday’s Commodity Futures Trading Commission (CFTC) civil lawsuit, has vowed to the fight the charges, according to a new statement.

BitMex has bled 45k Bitcoin since US gov charges, allowing other exchanges to benefit: Gemini, Binance, OKEx and Huobi appear to be the biggest gainers of the BitMex fallout.

SEC wins court bid for summary judgment in ICO lawsuit against Kik: U.S. Judge Alvin Hellerstein sided with the U.S. Securities and Exchange Commission on Wednesday, ruling in favor of the agency’s motion for summary judgment in its lawsuit against tech company Kik and the $100 million initial coin offering (ICO) that triggered the long-running legal dispute.

SEC hits Salt Lending with cease-and-desist over $47 million ICO: Salt Lending has been ordered to create a process by which investors in its $47 million initial coin offering (ICO) can seek refunds.

IRS Deploying Two Firms to Track Crypto Transactions in Million-Dollar Deal: The US Internal Revenue Service has selected Texas-based Integra and New York-based Chainalysis to lead its efforts to trace certain cryptocurrency transactions that aim to be anonymous. Earlier this month, the IRS criminal investigation unit put out a call for proposals from companies to develop innovative technologies that can break through the privacy coin Monero’s (XMR) anonymity layers.

CFTC charges crypto futures trading platform for failure to register in the US: The CFTC is looking to make an unregistered foreign platform pay back U.S. investors in its crypto futures, suggesting expanding jurisdictions.

US Treasury warns crypto firms not to reimburse unknown ransomware victims: Malware payouts from insurance companies pose a threat to U.S. national security.

FinCEN director warns banks about cryptocurrency risk exposure: FinCEN has warned U.S. banks that it is closely watching how they respond to crypto risk exposure with their AML programs.

Here’s What Kraken Plans to Do With Its New Crypto Banking License: In a recent installment of the Unchained Podcast with host Laura Shin, Kraken Financial CEO David Kinitsky reveals the services that its retail consumers can expect once the company becomes operational.

Europe

European Commission officially proposes regulatory framework for crypto-assets and stablecoins: The European Commission has officially proposed a regulatory framework for crypto-assets and stablecoins after a leaked draft proposal went viral these week.

Will the ‘unambitious’ UK be left behind by Europe’s sweeping new crypto proposals? The European Commission has published a wide-ranging set of proposed rules for crypto-assets. Experts say it will put new pressure on the UK.

Crypto regulations in the United Kingdom: Are we there yet? For the U.K. to remain attractive to the crypto industry, it should strive to provide more clarity and certainty around compliance.

French police arrest terror financing ring that used Bitcoin coupons: The terror financing ring reportedly bought cryptocurrency coupons in licensed tobacco shops across France.

Romania set to auction Bitcoin and Ether confiscated in criminal case: The winning bidder will need to provide the auction house with a crypto address hosted on a registered, compliant trading platform.

A guide to setting up a crypto business in Switzerland: How to use the opportunities that the Swiss regulatory system provides for crypto projects wisely to speed up the launch of your product.

Bulgarian exchange owner convicted over auction fraud scheme: The owner of a Bulgarian crypto exchange has been convicted of providing money laundering services to a Eastern European cyber fraud syndicate.

Crypto scammers plague Estonia’s e-residency program: Local authorities hope that tackling the issue will restore trust in the e-residency program.

Asia

Chinese state-endorsed public chain to act as a global DeFi bridge, says Conflux Founder: Chinese Free Trade Zone is open to experimenting with permissionless DeFi applications.

Chinese govt. official: Gambling gangs use crypto to transfer funds abroad: China faces economic risk as illegal gambling operators move 1 trillion yuan in funds from the country, partially in crypto, says a government official.

Mandatory KYC verification may contradict privacy laws in South Korea: Will this legal contradiction be resolved before the deadline?

Crypto Exchange Kraken Launching in Japan: Kraken, the San Fransisco-based digital assets exchange, says it will soon relaunch its services in Japan after shuttering its doors in the country for two years.

Rest of the World

Israeli regulators propose Bitcoin be taxed as a currency, not an asset: “The regulatory reality in Israel is not adapted to the existing reality in the field,” the proposed bill states.

New Zealand’s tax authority asks crypto firms to turn over customer info: New Zealand’s tax agency has requested that crypto firms in the country share their customers’ personal details and cryptocurrency asset values.

Russia’s Ministry of Finance proposes higher reporting standards for cryptocurrency: The Russian Ministry of Finance is targeting cryptocurrency to crack down on tax evasion and other financial misconduct in a newly proposed amendment to an upcoming law.

Russia’s telecom regulator blacklists Binance website: The website of the Binance exchange is still available without additional access tools, platform says crypto funds are safe.

Venezuela trials ‘decentralized stock exchange’ that’s open to the world: Venezuela has announced a 90-day trial for a decentralized stock exchange supporting “alternative digital assets” and fiat currencies.

Maduro claims crypto will play role in fighting sanctions against Venezuela: Crypto garnered another mention in one of Maduro’s bombastic speeches.

Pro-crypto Colombian congressman highlights legalization challenges: He went so far as to call for the preconceptions surrounding crypto to be demystified.

Major Indian exchange proposes new regulatory framework to avoid crypto ban: The proposal hopes to avert a blanket ban that some warn would result in the illegal trade of cryptocurrencies

Indian man arrested on charges of crypto fraud via ‘Morris Coin’ scheme: A 36-year-old man from Kerala was arrested under charges of cryptocurrency fraud.

Kenya’s golf stablecoin highlights need for Africa-wide regulations: A stablecoin that will be used to pay entrance fees for the golfing tournaments of a Kenyan ‘entrepreneurs network’ has started testing under the local regulatory sandbox.