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Paradigm

Crypto Regulation News: Mastercard launches virtual testing environment for CBDC, US legislators approve bills for study of blockchain in commerce, EU to see comprehensive crypto regulation by 2024, The latest on crypto regulation in Asia

Vol. 51, 7th September — 21st September

TL;DR

  • Money services businesses that operate across U.S. state lines will have access to a more streamlined approval process, according to a statement by the Conference of State Bank Supervisors (CSBS).
  • US lawmakers set to vote on two blockchain and cryptocurrency proposals.
  • IRS will pay $625,000 to anyone who can crack Monero, while Binance offers $100,000,000 to coders building on DeFi.
  • FinCEN is preparing to modernize its AML requirements for financial institutions to greater respond to the dynamic threats posed by “illicit finance.”
  • SEC commissioner Peirce dissents on Unikrn ICO action, says approach risks stifling innovation
  • Rep. Emmer says DeFi represents an alternative ‘monetary philosophy’ — and its time is coming.
  • European Commission draft proposal on crypto-assets has stablecoins in its crosshairs: A draft proposal on crypto assets shows the European Commission is looking to nix generated interest on stablecoins, among other planned regulations.
  • European Union official pledges action on stablecoins after calls for new curbs.
  • Bank of France: stablecoins could impact EU financial sovereignty ‘for decades’.
  • New Swiss laws provide solid ground for blockchain and crypto.
  • Enigma files registration statement for its ENG token months after SEC settlement.
  • Gibraltar updates DLT framework to comply with FATF rules.
  • No need for central bank digital currency in Australia says Reserve Bank.
  • No one can refuse China’s digital currency, says central bank exec.
  • Russia’s crypto law is a mixed bag, according to industry execs.
  • India plans to bring law to ban crypto trading.
  • Nigeria to regulate crypto, the country’s SEC issues statement.
  • Abkhazia to lift ban on crypto mining.
  • And more!

Reports

Banks failing to identify up to 90% of suspicious crypto transactions: CipherTrace believes financial institutions are failing to identify up to 90% of suspicious transactions related to crypto assets.

Mastercard launches virtual testing environment for central bank currencies: Mastercard announced the release of a proprietary tool targeted to central banks that wish to test their Central Bank Digital Currency, or CBDC.

Over 70% of central banks are entertaining the idea of a digital currency in some form, a Bank of International Settlements report noted. While few have moved into actual concept and experimentation, the tool released by Mastercard aims to make testing simpler.

The tool simulates various types of transaction environments to let central banks evaluate CBDC use cases. It mimics the issuance, distribution and exchange of CBDCs between banks, financial services companies and consumers.

Mastercard called for partners to use the platform to evaluate the effectiveness of CBDC’s technological designs, proposed use cases and the interoperability with existing payment methods.

Opinions

Pandemic has accelerated adoption of digital currency: ECB President: EU residents are becoming more comfortable with digital and contactless payments.

World Economic Forum Leader to Headline Ripple’s Annual Crypto Conference: Sheila Warren, head of blockchain and data policy at the World Economic Forum, is set to keynote Ripple Swell Global 2020.

Ripple says she will take part in a Q&A exploring how regulatory policies can boost technological innovation in the blockchain and crypto industry while protecting consumers.

In a first step towards making blockchain safe for consumers, Warren took part in the creation of the “Presidio Principles: Foundational Values for a Decentralized Future” in June. The initiative provides guidelines for transparency, user rights, privacy and governance.

Top New York Regulator Calls Crypto an Important Potential Alternative to Current Financial System: Linda Lacewell, New York Department of Financial Services superintendent, considers cryptocurrency an important innovation that deserves support from regulators. During a recent virtual summit on The Evolution of Banking hosted by the Cato Institute, leading policymakers and experts discuss how regulators can best foster innovations that will benefit consumers through policy. Linda Lacewell, in particular, talks about the importance for regulators to stand back, allowing entrepreneurs to lead innovations especially in the crypto industry.

Rep. Emmer says DeFi represents an alternative ‘monetary philosophy’ — and its time is coming: Congress may not be paying attention to the world of decentralized finance. But Representative Tom Emmer certainly is.

Former Ripple Executive Says Banks Need XRP After Global Settlement Platform Suffers Major Delay: A recent delay to an international bank-led payment settlement initiative is just more evidence that legacy financial institutions need to adopt XRP, according to a former Ripple executive. First proposed in 2015 by Swiss bank UBS Group AG and London-based blockchain R&D company Clearmatics, the payments project — originally known as the “Utility Settlement Coin” — is designed to provide bank-backed digital versions of major currencies.

Interview: Caitlin Long and David Kinitsky on crypto’s big win with Kraken Financial bank charter: Avanti CEO and Kraken Financial Managing Director discuss Wyoming’s progressive steps in blockchain regulation

How banks are integrating crypto AML software for compliance: Virtual asset service providers (VASPs) are looking for effective cryptocurrency compliance solutions as new regulations are introduced globally to combat illicit activity on the blockchain. What solutions are available to them?

Privacy laws might prove to be a blessing in disguise for crypto: With government agencies getting more savvy at tracing blockchain transactions, laws like the EU’s GDPR may play a role.

Why we need evolutionary, not revolutionary, regulatory initiatives: Clearing regulatory hurdles is important for forward-leaning jurisdictions that aim to attract the most innovative firms.

USA

US legislators approve bills for study of blockchain in commerce: The Committee on Energy and Commerce has just approved two pieces of legislation to spur more in-depth analysis of blockchain technology in government, clearing the way for their vote in the House of Representatives.

In an online debate moderated by Chamber of Digital Commerce founder Perianne Boring on Sept. 9, Democratic Representative of Florida’s 9th District Darren Soto announced that after “nearly two years of pushing,” the Committee on Energy and Commerce had passed the Digital Taxonomy Act. In addition, the committee approved the American COMPETE Act. Both pieces of legislation will now go to the main floor of the U.S. House of Representatives for a vote.

The Digital Taxonomy Act, if passed in Congress, would instruct the Department of Commerce in consultation with the Federal Trade Commission (FTC) to conduct and submit a study on the state of blockchain technology to various committees in the House of Representatives and the Senate. It would also require the FTC to report on recommendations regarding unfair and deceptive practices related to digital tokens.

US Lawmakers Set to Vote on Two Blockchain and Cryptocurrency Proposals: The Consumer Safety Technology Act now incorporates the Digital Taxonomy Act and Blockchain Innovation Act — and is set to be debated in the House of Representatives. Introduced by Rep. Jerry McNerney of California and Michael Burgess of Texas, the Consumer Safety Technology Act, which is the recently amended version of the AI for Consumer Product Safety Act, will mandate that the Consumer Product Safety Commission utilize artificial intelligence in tracking and identifying consumer product-related injuries and hazards. It will also use AI to screen the sale of products that have been recalled and label imported products that are deemed unsafe.

Federal payments licensing push could boost crypto adoption: Brian Brooks, Coinbase’s former chief legal officer and the current U.S. Comptroller of the Currency, is pushing to consolidate licensing regulations for payment companies at the federal level in the United States.

State bank regulators approve ‘comprehensive exam’ for payments, crypto firms seeking MSB approvals: Money services businesses that operate across U.S. state lines will have access to a more streamlined approval process, according to a statement by the Conference of State Bank Supervisors (CSBS).

IRS Will Pay $625,000 to Anyone Who Can Crack Monero, While Binance Offers $100,000,000 to Coders Building on DeFi: The US Internal Revenue Service says it’s ready to give a cash reward of $625,000 to anyone who cracks Monero (XMR) and other privacy coins that aim to make financial transactions untraceable. The proposal by the IRS Criminal Investigation (IRS-CI) comes as illicit actors increasingly use privacy-focused cryptocurrencies. The report notes that in April, the ransomware-type program Sodinokibi revealed that it would be using Monero instead of Bitcoin (BTC) in future ransom request payments to hide traces of their transactions.

FinCEN announces sweeping money laundering regulations overhaul: FinCEN is preparing to modernize its AML requirements for financial institutions to greater respond to the dynamic threats posed by “illicit finance.”

Tassat will be able to launch Bitcoin swaps after all, says CFTC: The fintech firm was supposed to reinstate its CFTC registration after 12 months of no trading but will not have to face an enforcement action.

Unikrn ICO faces further SEC action: Another remnant of 2017 gets hit by regulation.

SEC commissioner Peirce dissents on Unikrn ICO action, says approach risks stifling innovation: Hester Peirce, a commissioner for the Securities and Exchange Commission, said that she dissented with the agency’s previously announced settlement with blockchain-powered e-sports startup Unikrn.

Enigma files registration statement for its ENG token months after SEC settlement: Enigma, the blockchain startup that settled with the Securities and Exchange Commission (SEC) earlier this year over its 2017 token sale, has filed a registration statement with the agency.

Stripe to pay $120K to Massachusetts to resolve allegations stemming from PlexCoin ICO fraud: Stripe, the U.S.-based payment processor, moved to resolve allegations this week brought forward by the Massachusetts Attorney General’s office in relation to PlexCoin, a fraudulent initial coin offering.

US ramps up enforcement actions against global crypto scams: The U.S. Justice Department has announced sanctions against two Russians, and the arrest of two Malaysians, over separate seven-figure crypto scams.

Binance US on track to launch in all 50 states by 2021: ‘100% coverage is our goal,’ said Binance US.

FATF hints at Binance as example of an exchange avoiding regulation: The FATF doesn’t seem to like frequent jurisdiction hoppers, notably Binance.

Europe

EU to see comprehensive crypto regulation by 2024: The European Union, or EU, plans to incorporate crypto and blockchain technology into its main processes by 2024. Over the next four years, the economic union aims to firm up fresh regulations that will promote blockchain and digital asset usage for international money transfers, according to internal documents that Reuters reported on Friday.

The documents detailed:

“By 2024, the EU should put in place a comprehensive framework enabling the uptake of distributed ledger technology (DLT) and crypto-assets in the financial sector […] It should also address the risks associated with these technologies.”

Finding that almost 80% of its population transacts in paper money, the European Commission, the union’s governing entity, wants to see digital payments become more common, while aiming for immediate transaction times, Reuters explained.

European Commission draft proposal on crypto-assets has stablecoins in its crosshairs: A draft proposal on crypto assets shows the European Commission is looking to nix generated interest on stablecoins, among other planned regulations.

European Union official pledges action on stablecoins after calls for new curbs: A senior official for the European Union’s executive branch said that concerns among the bloc’s finance ministers about stablecoins will be addressed in future legislation.

Bank of France: stablecoins could impact EU financial sovereignty ‘for decades’: Banque de France Governor François Villeroy de Galhau warned about the threat of “Big Tech” stablecoins.

New Swiss laws provide solid ground for blockchain and crypto: Crypto and blockchain get better legal clarity in the alpine country.

Owning a Bitcoin ATM is about to get a lot harder in Germany: Blockchain regulation continues to increase and it isn’t likely to slow down any time soon.

Gibraltar updates DLT framework to comply with FATF rules: Once again, Gibraltar is taking the lead in crypto regulations.

Why technology assurances are a must for crafting EU crypto regulation: Why we need regulatory frameworks in the crypto space, with a focus on regulating the financial aspects of cryptocurrency-based operations.

Asia

From open arms to full bans: The latest on crypto regulation in Asia: A look at the legal status of crypto in Asia, where new crypto hubs are emerging and thriving despite uneven regulation.

South Korean police seize Bithumb shares in third raid this month: The plot thickens as Bithumb director’s shares are seized after he had applied for the seizure of the chairman’s shares.

Philippines SEC warns of ‘cloud mining’ Ponzi related to Bitcoin Vault: The Philippines SEC has identified Mining City as a Ponzi scheme and warned promoters of the scam that they could face up to 21 years imprisonment.

No one can refuse China’s digital currency, says central bank exec: The digital renminbi is legally compensatory to China’s fiat currency.

Chinese authorities charge six people over $5.8B PlusToken ponzi scheme: Six individuals associated with the multi-billion dollar PlusToken Ponzi scheme have been prosecuted by Chinese police.

Where does the next Japanese prime minister stand on crypto?: Yoshihide Suga is set to replace retiring PM Shinzo Abe.

Singapore man pleads guilty to stealing $360K in fake Bitcoin sale: The cases of the robber’s two accomplices are still pending.

Rest of the World

No need for central bank digital currency in Australia says Reserve Bank: Unlike China, Sweden, and Canada, Australia is reluctant to issue a CBDC.

Russia’s crypto law is a mixed bag, according to industry execs: Crypto businesses are unsure how to react to new regulations in the Russian Federation.

Russian blockchain voting system shows up on GitHub: The Russian government keeps betting on blockchain for elections.

Fresh reports of Indian crypto ban are ‘clickbait,’ says local source: Local sources speculate on the possibilities of a cryptocurrency ban in India.

India plans to bring law to ban crypto trading: Report: Bloomberg reported the news, citing “people familiar with the development.” India’s union cabinet, or the council of ministers, is said to be discussing the crypto bill “shortly” before sending it to Parliament.

Iran’s crypto mines could be used to help fund car imports: It seems that the private sector is not satisfied with the country’s local fiat money.

Nigeria to regulate crypto, the country’s SEC issues statement: Nigeria’s Securities and Exchange Commission (SEC) has issued an official statement, saying that it would supervise the country’s cryptocurrency sector.

Abkhazia to lift ban on crypto mining: That may not necessarily be a good thing for the struggling state.

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Main sources

Crypto and blockchain regulation in news

The Block

Daily Hodl

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Bitcoin Magazine

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