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Crypto Regulation News: EU’s MiCA crypto law text ready within 6 weeks, US House’s stablecoin bill may face fatal delays, Thailand toughens crypto ad rules, Georgia to adopt European crypto standards for anti-money laundering, President of Paraguay vetoes crypto regulation law, and more!

Vol. 100, 22d August — 5th September

TL;DR

  • House’s stablecoin bill may face fatal delays for 2022 progress
  • CFTC and SEC open comments for proposal to amend crypto reporting rules for large hedge funds
  • Ripple counsel: SEC’s shakedowns leave consumers holding the bag
  • US Federal Reserve discussion paper takes cold, hard look at DeFi, gives it mixed review
  • EU’s MiCA crypto law text ready within 6 weeks, lead lawmaker says. NFTs not in focus
  • Australian CBDC research project could provide crypto clarity, legal expert says. Australia’s markets regulator to prioritize shielding citizens from crypto harm.
  • Georgia aims to adopt European crypto standards for Anti-Money Laundering. Furthermore, Coinbase mispricing allows users in Georgia to cash out for 100 times rate
  • Thailand SEC to apply strict guidelines for crypto ads
  • South Korea expands its efforts to regulate Metaverse. Furthermore, South Korean central bank eyes MiCA, says future regulations may allow ICOs again
  • Brazilian SEC seeks to change its role in cryptocurrency regulation
  • Indonesia plans to set up its crypto bourse by the end of 2022
  • Singapore MAS examines crypto firms ahead of new regulations
  • President of Paraguay vetoes crypto regulation law
  • Dubai issues crypto marketing rules to better protect investors
  • Russian PM takes cue from Iran’s crypto payment permit for imports
  • Nigeria, Binance in early-stage talks for crypto-friendly economic zone
  • Iranian businesses get the green light to use crypto for imports
  • Argentina’s Mendoza province now accepting crypto for taxes and fees
  • Afghan police close down cryptocurrency exchanges to enforce central bank ban
  • California State Assembly passes bill for licensing and regulating crypto firms
  • US congressman to review all Binance​.US files related to consumer safety
  • US court gives Voyager green light to pay bonuses to key employees
  • New global CBDC platform could cut payment costs, IMF says
  • Crypto’s adaptability, openness key to ideal monetary system, say BIS execs
  • Celsius files to reopen withdrawals for a minority of customers
  • Binance froze 1M corporate account due to law enforcement request
  • DeFi platform Kyber Network discloses 265K exploit, vows to reimburse all funds
  • MakerDAO co-founder recommends DAI-USD depegging to limit attack surface
  • And more!

Opinions

New Global CBDC Platform Could Cut Payment Costs, IMF Says: The International Monetary Fund remains skeptical about a private system, but is pushing for new ideas on state-backed digital currencies.

Crypto’s adaptability, openness key to ideal monetary system, say BIS execs: Some of the biggest flaws preventing present-day cryptocurrencies from mainstream adoption, pointed out by the BIS execs, are bottleneck congestion in DeFi and the reliance on volatile assets.

Celsius bankruptcy proceedings show complexities amid declining hope of recovery: Celsius Network’s bankruptcy proceedings have highlighted that the firm has misrepresented many of its assets with deep complexities in its operations.

Beyond the Silk Road: Crypto Needs a Regulatory Course Correction: The Association of Certified Anti-Money Laundering Specialists’ crypto and illicit finance expert says the industry needs to be more than “reluctant good citizens.” This article is part of CoinDesk’s Sin Week.

US congressman and crypto skeptic explains why a crypto ban won’t work: Sherman said any task force or committee set up to help and protect investors wouldn’t work as long as gullible investors keep investing in meme coins.

Will Ethereum 2.0 be vulnerable to censorship? Industry professional explains: Ryan Berckmans, an Ethereum community member and investor, discussed the potential consequences that the Tornado Cash ban could have on the future of the network.

USA

House’s Stablecoin Bill May Face Fatal Delays for 2022 Progress: One of Congress’ most serious efforts toward stablecoin oversight may have hit an insurmountable snag as negotiations in the House Financial Services Committee drag out further than the calendar is likely to allow. A legislative push toward the crypto industry’s first significant set of U.S. regulations remains bogged down over negotiations between the panel’s Democratic chairwoman and its ranking Republican, despite initial plans that aimed to release a draft of the bill as early as this week, according to three people familiar with the talks. There have been a number of points to iron out, including such thorny topics as the role of state regulators, the possibility of a future digital dollar in the U.S. and the treatment of customer money held by crypto platforms.

While the negotiations are still going between Chairwoman Maxine Waters (D-Calif.) and Rep. Patrick McHenry (R-N.C.), the timeline is tightening for getting a bill through Congress. At this stage — as lawmakers devote more and more attention to the November midterms and as the legislative session winds to a close — the effort is unlikely to make it through this year, the people said. Though there had been some discussion of a bill being marked up — or revised in preparation for a committee vote — by mid-September, it may slip until much later in this session, or not at all. However, because the same lawmakers are likely to win their races in November, the effort could be picked up and dusted off by the new Congress next year. Spokespeople for Waters and McHenry didn’t respond to requests for comment.

“If it’s true that the bill isn’t moving to markup, we’re glad committee leadership has decided not to move forward with what likely would have been a problematic proposal,” said Mark Hays, a policy analyst for Americans for Financial Reform, who advocates a “slower, more deliberate approach” and says there is already “a great deal regulators can do right now to address the risks posed by stablecoins to consumers and the market.”

The industry, however, has been calling for Congress to start establishing federal oversight over crypto. The absence of rules in stablecoins — digital tokens meant to maintain steady value by being tied to assets such as the U.S. dollar — was on wide display in May with the fatal plunge of terra-luna, which gave critical lawmakers something to focus on.

The Waters-McHenry bill had neared the finish line for a draft to be released weeks ago, before Congress’ summer break, but at least one last-minute request from the Treasury Department complicated the talks, a person familiar with that development had said. Treasury Secretary Janet Yellen — concerned with so many crypto investors losing access to their money as firm after firm collapsed in recent months — had insisted that the legislation carry a provision to keep crypto customers’ money legally walled off from the assets of the companies they were dealing with. When Waters announced in late July that an agreement was still out of reach and they would have to revisit the legislation after the recess, she had also said that she wanted the bill to direct the Federal Reserve to do more work toward a digital dollar — a controversial point. McHenry and other Republican lawmakers have asked for caution from the Fed on issuing a central bank digital currency (CBDC), insisting that the central bank ensures it’s worthwhile and allows a leading role for the private sector.

Ripple counsel: SEC’s shakedowns leave consumers holding the bag: The response comes as Ripple Labs and other critics believe the SEC has overstepped its mark on the enforcement of the crypto space.

CFTC and SEC open comments for proposal to amend crypto reporting rules for large hedge funds: The public was invited to comment on whether the regulators should use the term “crypto asset” instead of “digital asset” in proposed changes to Form PF.

US Federal Reserve discussion paper takes cold, hard look at DeFi, gives it mixed review: The authors see DeFi growing despite barriers such as crypto’s volatility; risks to users and TradFi institutions are inherent in the technology as well as incidental.

Controversial Crypto Lawyer Kyle Roche Pulls Out of Nexo, Binance.US, Solana and Dfinity Lawsuits: The new withdrawals come a day after Roche filed to withdraw from class-action lawsuits involving Tether, Bitfinex, TRON and BitMEX.

California State Assembly passes bill for licensing and regulating crypto firms: The bill requires digital asset exchanges and crypto companies to have a license of operation in the state of California.

US congressman to review all Binance​.US files related to consumer safety: The chairman of a congressional subcommittee reached out to the CEO of Binance.US to produce various documents in an attempt to help review the measures taken to protect investors.

US court gives Voyager green light to pay bonuses to key employees: Voyager Digital will pay $1.9 million in retention bonuses to key staff members to ensure the beleaguered cryptocurrency lender can continue operating through bankruptcy proceedings.

Europe & UK

EU’s MiCA Crypto Law Text Ready Within 6 Weeks, Lead Lawmaker Says: The text for the European Union’s landmark Markets in Crypto Assets (MiCA) Regulation could be ready within six weeks, leading lawmaker Stefan Berger said Thursday. Lawmakers and governments had reached agreement on the main outline of the legislation, which requires crypto asset providers to register with regulators in to offer services across the bloc, on June 30. But in the absence of a final legal text there is still considerable uncertainty on the law’s finer points, such as whether the rules will apply to non-fungible tokens (NFT), which offer proof of ownership of assets such as artworks using distributed ledger technology.

The law is set to create parameters for how each of the European Union’s member nations regulates crypto. It’s expected to create a common licensing regime, making it easier for companies operating in one member nation to launch in the others, as well as define rules for issues such as stablecoin issuance. Berger, a German politician who led negotiations for the European Parliament on MiCA, told an online panel hosted by German lobby group Bundesblock that technical work is still underway on the law, which will only start to apply 18 months after being gazetted in the EU’s official journal.

“I’d say in four to six weeks” the text will be ready, Berger said. “We’re all working on it, eight hours a day, it’s in the process … but I think in six weeks we should have something ready to present.”

Under the final deal, any crypto service provider with over 15 million active users would be subject to supervision at the European level, Berger said — suggesting all but the largest players will remain under the watch of national regulators like Germany’s Bafin. But Berger also cast doubt on how exactly NFTs will be treated under the law. The industry is worried premature regulation could choke a nascent and developing sector if the law requires specialized NFT platforms like OpenSea to seek authorization.

“We decided to leave NFTs out” of the law, unless they resemble conventional financial assets, Berger said.

His remarks contrast with those made by European Commission officials — who have suggested the final carveout is narrow, meaning that in practice most NFTs will fall under the law.

MiCA coming in hot in October, NFTs not in focus: EU regulators: In an online panel from the German Bundesblock, local regulators discussed details of upcoming MiCA regulation, along with a brief update on NFTs and stablecoins.

Asia

Thailand Toughens Crypto Ad Rules: Tougher rules governing crypto advertising in Thailand came into effect on Thursday, according to an official notice from the country’s securities regulator. The new restrictions prohibit the inclusion of false or exaggerated information about crypto companies, such as inflated user numbers, and include a requirement to add clear risk warnings about investing in crypto.

The Thai Securities and Exchange Commission (SEC) amended existing regulations after noting that many ads lacked warnings about risks associated with cryptocurrencies and that some showed only “positive information.” The new regulations apply to all new crypto ads that market to local users. Existing advertisements must be revised within 30 days of the publication of the notice, according to the SEC.

Thailand is pushing forward with its work on a central bank digital currency, while local regulators are closely watching the crypto sector. The country’s largest crypto exchange, Bitkub, is under the SEC’s microscope for allegedly flouting local securities law.

South Korea expands its efforts to regulate Metaverse: The country has been very active in the Metaverse development since the beginning of 2022, teasing large investments and a regulatory framework.

South Korean authorities arrest 16 individuals connected to $2B crypto forex transactions: More than $283 million of the $2 billion in crypto transactions were reportedly facilitated through illegal remittance agencies.

South Korean central bank eyes MiCA, says future regulations may allow ICOs again: A Korean translation of the EU regulatory framework gave the Bank of Korea food for thought, and it shared its views on ICOs, stablecoins and protecting innovation.

Singapore MAS examines crypto firms ahead of new regulations: The MAS reportedly asked crypto firms about their owned tokens, top lending and borrowing counterparties, loans and top tokens staked via DeFi.

Rest of the World

Georgia aims to adopt European crypto standards for Anti-Money Laundering: Georgia, one of the world’s most cryptocurrency-friendly countries, is moving to introduce new crypto regulations to pursue its ambitions of becoming a global crypto hub. Georgian lawmakers have prepared a new regulatory framework targeting digital business and cryptocurrency trading in the country, Georgian Minister of Economy and Vice Prime Minister Levan Davitashvili announced.

Davitashvili said that a draft bill has been sent to the parliament and the amendments are expected to be passed in the autumn session, local news agency Business Media Georgia reported on Monday. According to the minister, the draft bill aims to coordinate local cryptocurrency laws with three major European Union directives, includinthe Payment Services Directive (PSD2), the Capital Requirements Directive (CRD) as well as the Virtual Asset Service Provider (VASP) law.

The VASP law aims to provide legal status to entities involved in digital asset trading. The new framework will also prevent the use of cryptocurrencies for money laundering or terrorist financing, the report notes. According to Davitashvili, the adoption of VASP rules is crucial for Georgia to ensure sustainable regulation of the cryptocurrency industry. The minister reportedly emphasized that it’s important to synchronize the Georgian financial legislation with associated rules in the EU. The latest framework is only the first step as Georgia aims to become a crypto hub in the future, in line with the government’s official 2022–2025 development strategy.

Georgia has emerged as one of the most crypto-friendly countries in the world. In a study by Forex Suggest, Georgia was ranked the fourth most crypto-friendly jurisdiction after Hong Kong, the United States and Switzerland as of July 2022. Georgia is specifically associated with a high density of crypto ATMs, allowing users to easily buy and sell crypto in exchange for cash. According to data from CoinATMRadar, Georgia hosts 45 crypto ATMs at the time of writing.

Lawmakers in Georgia have been working on cryptocurrency legislation this year, with central bank governor Koba Gvenetadze noting the lack of crypto regulation in the country in April. The first reports on Georgia’s upcoming new crypto rules came as tens of thousands of Russians flee to Georgia due to Western sanctions on Russia and uncertainty about the economy. Crypto apparently became an important tool for many Russians arriving in Georgia to handle their finances amid sanctions on credit and debit cards.

Coinbase Mispricing Allows Users in Georgia to Cash Out for 100 Times Rate: The bug saw Georgia’s national currency, the lari (GEL), priced at $290 rather than $2.90.

Australian CBDC Research Project Could Provide Crypto Clarity, Legal Expert Says: Michael Bacina discuss what the project’s launch could mean for the country’s financial future.

Australia’s markets regulator to prioritize shielding citizens from crypto harm: Part of its actions will include raising public awareness about the risks inherent in crypto-assets and decentralized finance.

Brazilian SEC seeks to change its role in cryptocurrency regulation: Resistant to overseeing the space in the past, the agency said it now plans to work on the definition of virtual assets.

President of Paraguay vetoes crypto regulation law: The bill was approved by the nation’s Senate in July as low-energy costs continue to boost mining activities in the country.

Dubai issues crypto marketing rules to better protect investors: Dubai’s new Virtual Asset Regulatory Authority requires more clarity and transparency from industry marketers and promoters to protect investors.

Indonesia plans to set up its crypto bourse by the end of 2022: The country’s deputy trade minister confirmed the intention, first voiced last year.

Russian PM takes cue from Iran’s crypto payment permit for imports: The adoption of digital assets provides a good opportunity to ensure uninterrupted payments for imports and exports, Russia’s prime minister said.

Nigeria, Binance in early-stage talks for crypto-friendly economic zone: The proposed partnership aims to build a crypto-friendly digital city similar to the virtual free zone in Dubai.

Iranian businesses get the green light to use crypto for imports: Iran’s Trade Ministry has approved the use of cryptocurrency payments for imports in a bid to bolster trade in the country.

Argentina’s Mendoza province now accepting crypto for taxes and fees: The New Mendoza Tax Administration crypto payment service turned on as of Aug. 24.

Afghan police close down cryptocurrency exchanges to enforce central bank ban: The Afghan central bank declared forex trading un-Islamic and illegal earlier this year, and issued a warning about continuing activities a month later; now arrests have been made.

MISC

Celsius files to reopen withdrawals for a minority of customers: Celsius has motioned for $50 million worth of the total $225 million held in the Custody Program and Withhold Accounts to be released to owners.

Crypto Lender Celsius Network Says $70M Cash Relief Will Bolster Efforts to Survive the Year: The extra cash from loan repayments, previously believed to be in stablecoins, means a much needed boost for the cash-strapped lender.

Binance froze $1M corporate account due to law enforcement request: The crypto exchange accused a Tezos tool contributor of “mislead[ing] the community” by claiming it was unaware of the reason Binance blocked access to its corporate account.

Automated NFT Market Maker Sudoswap to Release Its Governance Token via Airdrop: Holders of XMON, the native token behind the 0xmon NFT collection, will receive 41.9% of SUDO’s initial supply of 60 million.

Decentralized Crypto Exchange dYdX Scraps Promotion Amid ‘Liveness Check’ Backlash: The exchange wanted to prevent users from farming the promo across multiple accounts, but the promotion also raised questions about decentralization.

DeFi Platform Kyber Network Discloses $265K Exploit, Vows to Reimburse All Funds: This most recent attack on a decentralized finance platform resulted from malicious website code.

MakerDAO co-founder recommends DAI-USD depegging to limit attack surface: While revealing the protocol’s inability to comply with regulators, Christensen suggested that “we must choose the path of decentralization.”

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Main sources

Crypto and blockchain regulation in news

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Bitcoin Magazine

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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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