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The Scenius State of Regulation (Issue #10)
Crypto Policy & Regulation: May 2023
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United States 🇺🇸, Canada 🇨🇦, & Caribbean 🌎
Poloniex LLC, a U.S. entity previously affiliated with the Poloniex crypto exchange, will remit $7.59 million to settle sanctions violations allegations with the U.S. Treasury Department's Office of Foreign Asset Control (OFAC), the sanctions watchdog said.
The bitcoin kiosk company, its subsidiary Up Global and the CEO of both entities were accused of conducting "unregistered offers and sales of securities."
Crypto lender Celsius Network is seeking to mingle its U.K. and U.S. entities as court filings allege the distinction between the two was a “sham.”
The Biden administration is campaigning for a tax first sought in a recent federal budget proposal, advocating that crypto miners pay an amount equal to 30% of their energy costs.
Florida Governor Ron DeSantis took another swing at a U.S. digital dollar today even as he defended crypto as a whole, unveiling a series of state legislative proposals that would combat "woke politics."
N.Y. Attorney General Letitia James said Mashinsky misled investors about the health of the now-bankrupt crypto lender.
The legislation includes revisions to laws aimed at prohibiting discriminatory electrical rates for mining firms and not allowing taxation for crypto used as a method of payment.
The DOJ’s national security division is conducting an inquiry into whether Binance allowed Russian customers to access the exchange in violation of U.S. sanctions related to Russia's invasion of Ukraine, according to a Bloomberg report that cites five people familiar with the matter.
Voyager’s creditors will recover an estimated 36% of their assets – a far smaller slice of the pie than they would have received if the platform’s sale to FTX or Binance US went through.
Craig Wright, who has claimed to be the founder of Bitcoin, has shown “prima facie evidence” of contemptuous conduct in court proceedings for failing to correctly provide information linked to $143 million in disputed cryptocurrency.
The New York Department of Financial Services would have stronger authority to regulate digital assets, with exchanges having to reimburse customers if they’re the victims of fraud, under a bill proposed by Attorney General Letitia James on Friday.
FTX founder Sam Bankman-Fried filed pretrial motions to dismiss a majority of the charges he faces late Monday.
Crypto exchange Bittrex has filed for bankruptcy in the U.S. state of Delaware on Monday, months after announcing it would wind down operations in the country and weeks after being sued by the SEC.
Garlinghouse reportedly told onlookers at the Dubai Fintech Summit that he would not advise crypto entrepreneurs to set up in the U.S., adding that the country puts politics ahead of policy.
The SEC went too far when it proposed a new rule demanding investment firms safeguard all of their clients’ assets – including crypto – with approved custodians, according to an array of critics not often in alignment.
Jane Street Group and Jump Crypto — two of the world’s top market-making firms — are pulling back from trading digital assets in the US as regulators crack down on the industry.
Ishan Wahi was arrested in July 2022 and charged with insider trading for providing his brother with insider information about upcoming crypto listings at Coinbase.
The company filed for bankruptcy protection earlier this week, but says no customer funds were re-used and that liabilities meet assets.
Watchdog group Empower Oversight Whistleblowers & Research has filed suit against the SEC to force the agency to comply with a Freedom of Information Act request for access to communications between former SEC officials and their former and future employers.
The SEC has so far disregarded congressional requests for information on its interactions with crypto platforms seeking registration as exchanges, according to Republican lawmakers in the House of Representatives, who threatened a hearing if they’re ignored any longer.
The IRS Criminal Investigation division is supporting Ukrainian investigators by providing blockchain analysis tools.
As the exchange tries to force an answer from the Securities and Exchange Commission on digital assets regulation, crypto groups and the Chamber of Commerce leap in.
A further $375 million that users tried to transfer out of interest-bearing accounts after Nov. 10 still belongs to the estate, Bankruptcy Judge Michael Kaplan said.
The largest of the claims includes a $20.4 billion claim against Alameda Research LLC, which details nearly $20 billion in unpaid partnership taxes.
While the SEC continues to rain enforcement fire onto the crypto industry, Kraken’s chief legal officer, Marco Santori, says a specific legal doctrine could undermine the regulator’s authority.
House Democrats are considering their own version of a long-anticipated stablecoin bill. The proposal, a successor to a version spearheaded by Reps. Maxine Waters (D-Calif.) and Patrick McHenry (R-N.C.) last year, comes weeks after Waters said lawmakers need to start from scratch on legislation addressing this corner of the crypto market.
The world’s largest crypto exchange by volume said new guidance related to stablecoins and investor limits prompted the exit.
Texas state legislators are introducing a bill to ban CBDC due to cyber risk and unprecedented government surveillance.
As the regulatory environment in the U.S. grows dark and stormy, American crypto companies are looking east to Bermuda and its friendlier digital asset framework.
Criminal extortion charges against Steven Nerayoff, an early adviser to the Ethereum network, were dismissed by a New York judge on May 5, ending a three-and-a-half year legal battle that included explosive allegations he made against U.S. investigators.
Fund recoveries for clients and creditors of bankrupt crypto lender BlockFi will depend heavily on the firm's claims against its commercial counterparties including FTX and Alameda, court filings from Friday show.
Representatives for the seven advanced economies signaled a commitment to following norms set by standard-setters FSB and IMF on crypto and central bank digital currencies.
The regulator cited LBRY's "lack of funds and near-defunct status," as reasons for withdrawing its previous request for fine.
The American Institute for Economic Research, in fact, was evidently displeased enough with the Biden administration’s latest crypto initiative that it gave a failing grade to the president’s Council of Economic Advisors (CEA) — the federal agency that put out the proposal on May 2.
The SEC told an appeals court that crypto exchange Coinbase hadn't proven the regulator needs to create a new regulatory framework for the digital asset industry late Monday.
During a Senate Banking Committee hearing on May 16, United States Senator Cynthia Lummis lashed out at Scott Shay, the former chairman of the now-defunct bank, in relation to his prepared statement on what led to his bank’s collapse.
Grayscale announced last month that the SEC suggested FIL might be a security.
Asset managers Grayscale Investments and Bitwise appear to be pulling back on plans for Ether-futures ETFs, just days after their applications for such a product made a splash in the exchange-traded-funds world.
Crypto exchanges that want to do business in Texas will need to maintain enough reserves to fulfill all obligations to their customers, according to a newly-approved piece of legislation.
Republicans focused on the chances for legislative compromise while Democrats characterized their stablecoin positions as a deepening divide.
President of the global financial crimes watchdog, T. Raja Kumar, urged G-7 leaders to "effectively" implement FATF's crypto anti-money laundering norms ahead of their meeting this weekend.
A Delaware bankruptcy court judge had previously denied a motion to appoint a neutral examiner to avoid a lengthy and costly investigation that would slow the progress of the bankruptcy proceedings.
Central bank digital currency (CBDC) systems operating on different types of networks can be used for cross-border and cross-currency payments, a new report published by researchers with the New York Federal Reserve and Monetary Authority of Singapore (MAS) said on Thursday.
Brooklyn-based crypto trading platform Coin Cafe is paying back $4.3 million to defrauded investors, according to a Thursday statement from the New York Attorney General’s office, which accused the company of misleading customers about “exorbitant and undisclosed” fees.
“The Securities Clarity Act inserts a key term, the ‘investment contract asset,’ into existing securities law to enable crypto projects to reach their full potential in a compliant way,” Emmer tweeted.
Gemini says it is working with Genesis, DCG, and creditors to provide forbearance to DCG in order to avoid a default.
As the industry fights with the U.S. regulator over “impossible” demands, Prometheum Capital and others win approvals to deal in crypto securities.
A U.S. bankruptcy court ordered the estate to issue a letter saying that statements relating to a May 13 disclosure were not authorized, and that it was not allowed to solicit support for a reorganization plan at the time.
When Washington, D.C., lawmakers tune into their favorite Sunday morning political shows this week, they’ll also get a dose of crypto messaging, thanks to a Coinbase (COIN) campaign that’s part of the next stage in the industry’s attempt to influence U.S. policy.
Florida Governor Ron DeSantis, who launched his presidential campaign in a Twitter Spaces event with Elon Musk on Wednesday, said he’d protect bitcoin if he’s elected.
The Arrington Capital-backed grouping beat fellow bidder NovaWulf for Celsius’ assets, with the Blockchain Recovery Investment Consortium selected as back-up.
Bankrupt crypto lender Genesis Global Capital and exchange platform Gemini are asking a U.S. court to dismiss a lawsuit by the Securities and Exchange Commission alleging the two sold unregistered securities, court filings from Friday show.
As lawmakers scramble to get to an agreement before the June 5 deadline to raise the debt ceiling, two new crypto-focused bills debuted on Capitol Hill last week.
The SEC settled charges with a former Coinbase (COIN) product manager and his brother tied to 2022 allegations of insider trading on certain cryptocurrencies listed by Coinbase, the regulator announced Tuesday.
The derivatives agency said that clearing organizations need to address risks as they move into the crypto space, and Commissioner Johnson suggests it's time for agency rules on this point.
The government has joined a bipartisan grouping of Senators to call for an independent inquiry into the fall of Sam Bankman-Fried’s empire, despite warnings from FTX’s new management the probe could cost the estate around $100 million in legal costs.
U.S. Sen. Elizabeth Warren (D-Mass.) cited the rampant use of cryptocurrency in the Chinese fentanyl trade during a Wednesday Senate hearing, arguing for legislation to help break that pipeline.
Latin America 🌎
Argentina’s central bank dealt cryptocurrencies a blow Thursday, prohibiting financial institutions in the South American country from offering clients any operations involving unregulated digital assets.
The Central Bank of Brazil selected 14 selected institutions to participate in the pilot of the digital real, the country’s central bank digital currency (CBDC).
The company will begin operations in Uruguay in partnership with an unnamed "local licensed company," it announced Tuesday. Tether declined to comment on the name of the local company.
Middle East & Africa 🌍
Nigeria’s SEC is considering allowing tokenized coin offerings backed by equity, debt or property – but “not crypto” – on licensed digital asset exchanges.
OPNX, a bankruptcy claims exchange set up by the founders of collapsed hedge fund Three Arrows Capital (3AC), has been formally reprimanded by Dubai's crypto regulator for operating an unregulated exchange.
Israeli authorities say the accounts on crypto exchange Binance belonged to individuals affiliated with Daesh and Hamas.
Kenya's Finance Ministry, the National Treasury, has proposed a 3% tax on the transfer of digital assets for the coming budget year, according to a Bloomberg report that cites proposals presented to lawmakers. The nation's budget will be presented on June 8.
The Reserve Bank of Zimbabwe (RBZ) invited individuals and financial institutions in the country to subscribe to its upcoming gold-backed digital token, which is meant to combat volatile local inflation.
“I think the U.S. right now is a little bit behind in terms of regulatory clarity and some of the rhetoric from the top," said Brian Armstrong at the Dubai FinTech Summit.
The Whampoa Group, a family office based in Singapore, will open a digital bank in Bahrain, the kingdom’s Economic Development Board said on May 18. The Group expects to open the bank by the end of the year and is aiming for a global client base.
Pakistan's government has hardened its stance against cryptocurrencies, even as retailers continue to hedge their financial bets against a devaluing Pakistani rupee partly due to a volatile political situation in the nation.
The Financial Action Task Force (FATF) does "not require countries to indiscriminately ban virtual assets and virtual asset service providers," it told CoinDesk in an email after Pakistan's finance minister reportedly said the global money laundering watchdog had set such a condition for the South Asian nation.
Crypto companies looking to operate in South Africa will need to apply for a license from the country’s Financial Sector Conduct Authority (FSCA) in the six months starting June 1.
The UAE Central Bank has issued new anti-money laundering and counter-terrorism financing guidance for financial institutions when dealing with virtual assets, such as cryptocurrencies and non-fungible tokens, it said on Wednesday.
The move is part of Prime Minister Rishi Sunak's strategy to tackle financial fraud in the country.
Lawmakers in the French National Assembly are seeking to effectively ban social media crypto promotions, but a key Senate committee appears to favor lighter restrictions.
The amendment would allow crypto companies that are already registered with the country’s financial watchdog under its anti-money laundering regime to be able to approve their own ads, something they would otherwise not be able to do.
Robert F. Kennedy Jr., the latest presidential candidate and a member of one of the most famous U.S. political families, raised a number of crypto issues in his newly announced campaign to challenge President Joe Biden.
Nate Chastain, the former head of product at non-fungible token (NFT) platform OpenSea, was convicted of money laundering and wire fraud in a federal court in New York. He made approximately $50k by buying and trading NFTS with insider knowledge gained from his position at OpenSea.
FTX wants to claw back nearly $4 billion in funds from similarly bankrupt Genesis Global Capital, the company said in a court filing.
The SEC took one small step backwards in regulating the crypto sector on Wednesday when it erased what would have been its first formal definition of “digital asset” from its latest hedge fund rule.
Five U.S. states are ordering TruthGPT Coin promoters to cease and desist using images of Elon Musk, Changpeng Zhao and Vitalik Buterin to promote what they describe as an investment scam.
The regulator, along with local police, raided sites in Exeter, Nottingham and Sheffield, saying that the cash-to-crypto converters are unlawful and a money laundering threat.
Under the plans, any crypto received will immediately be exchanged for Swiss francs, Prime Minister Daniel Risch told German news publication Handelsblatt.
Bit4You, the oldest crypto exchange in Belgium, was already facing loss of its registration or prosecution, even before it announced it was suspending activities in April, according to a Monday statement by the country’s financial regulator.
Regulators in the tech-friendly nation say they’ll now return to business-as-usual monitoring after money laundering fears led it to take a tough line.
Berlin-based fintech startup Unstoppable Finance, currently most well known for its self-custodial crypto wallet called Ultimate, announced today it will be rolling out Europe’s first compliant "DeFi-native bank" alongside a fiat-backed Euro-pegged stablecoin following MiCA’s guidance.
New European Union rules allowing tax authorities to share data on people's crypto holdings have been unanimously supported by the bloc’s member states, meaning formal agreement on the law is likely next week, a senior official has said.
Hungary sees no urgent need for a widely available central bank digital currency (CBDC) but is experimenting to see if one could help the unbanked, a senior official said on Wednesday.
Central banks should veto large stablecoins if they have fears they could upend monetary policy, the chair of the European Banking Authority (EBA) has said, citing fears that the use of permissionless blockchains could prove financially unsound.
Crypto lender Nexo is dissolving two of its UK-based entities as it faces a period of legal uncertainty elsewhere in Europe.
Bail conditions prohibit Kwon from leaving his apartment in the country as the trial continues.
The EU’s Council, which represents 27 member states, unanimously approved the Markets in Crypto Assets regulation (MiCA), making the bloc set to be the first major jurisdiction in the world with a crypto licensing regime. It also agreed new anti-money laundering measures on crypto funds transfers.
The U.K. Treasury Committee seemingly opposed the government’s proposal to treat crypto as regulated financial activities in a Wednesday report.
Crypto companies fleeing U.S. regulatory uncertainty have been offered a welcome in France, by officials boasting a regulatory framework that offers relative predictability.
The Treasury is still adamant it will regulate digital assets like financial services but its plans will rely on parliamentary support.
The European Commission's plans could moderate a push from Parliament to discourage crypto holdings as it debates new capital requirements for banks.
The Web3 fantasy sports game is collaborating with the French National Gaming Authority to create a framework for France-based players who face a tighter regulatory regime.
A Montenegro high court has annulled a decision by a lower court to release Terraform Labs co-founder Do Kwon on bail as he faces charges of attempting to travel with falsified documents.
Lawyers for the privacy protocol developer facing money laundering charges in the Netherlands have disputed the evidence purporting to prove links to criminal money.
Norway should consider a national strategy for crypto regulation, said Norges Bank, the country's central bank, in a Thursday report.
A final compromise appears to allow registered crypto firms to advertise through social media influencers, potentially easing industry fears.
Risks from smart contracts, high leverage and crypto staking and lending may imply a need for new regulations, the European Systemic Risk Board said.
A lower court had determined the value of Kwon's property based on "statements" and not concrete evidence, a high court cited in a decision to scrap his bail approval.
The World Economic Forum has released a white paper on crypto asset regulation, assisted by its Digital Currency Governance Consortium. The need for regulation is urgent and cooperation is key, the paper found.
European Union authorities should curb leveraged bets on crypto assets by introducing limits for investment funds, exchanges and other firms to stop shocks in that industry from jeopardising financial stability elsewhere, an EU watchdog said on Thursday.
Investment firms in the European Union that offer crypto alongside more traditional products could be misleading their consumers into a false sense of security, the European Securities and Markets Authority (ESMA) said in a Thursday statement.
The European Central Bank (ECB) has finalized prototypes for a digital euro as it prepares to take a decision later this year over whether to develop the EU's fiat currency in a new format, according to reports released on Friday.
The European Union formally signed its landmark Markets in Crypto Assets (MiCA) regulation into law on Wednesday, taking the bloc closer to becoming the first major jurisdiction in the world with tailored rules for the sector.
Crypto companies should watch out for customers using privacy coins or self-hosted wallets as they try to spot potential money laundering activity, the European Banking Authority said in draft guidance published Wednesday.
Bhutan’s investment arm and Nasdaq-listed company Bitdeer Technologies Group plan to seek investors for a fund worth up to $500 million that will be used to develop green crypto mining in the Himalayan kingdom.
Local media reports Democratic Party lawmaker Kim Nam-kuk had previously co-sponsored a bill seeking to defer taxation on crypto profits.
The order, dated May 5 prohibits Hayes from using "threatening, abusive or insulting words" and "making any threatening, abusive or insulting communication, that would cause the Su Zhu harassment, alarm or distress."
The Chinese government continues to push blockchain development for industrial use, signalling a belief in the technology despite Beijing’s cryptocurrency ban.
South Korean prosecutors searched accounts at major exchanges Upbit and Bithumb, relating to the transfers made by former lawmaker Kim Nam-kuk on Monday.
The move comes as Coinbase takes steps to bolster its international presence, in direct response to a crackdown by regulators in the U.S. — where the company is based.
An Indian crypto exchange and a policy firm have separately asked the government to let crypto firms access the national Unified Payments Interface (UPI) after it was ostensibly suspended in 2022.
NFT collections, targeted in new published guidelines, have been gaining popularity in China since the country prohibited the trading of cryptocurrencies.
Malaysia’s leading securities regulator, the Securities Commission announced that it has ordered Seychelles-based crypto exchange Huobi to shutter operations in the country.
Hong Kong said retail investors can trade crypto under its new rulebook for the sector, stepping up a drive to develop a digital-asset hub even as the industry and regulators clash elsewhere in Asia.
A derivatives exchange launched by crypto trading platform Gemini Trust Co. last month has allegedly been operating without authorization in one of its jurisdictions, the Philippines’ Securities and Exchange Commission said in a warning to investors.
The parliamentary floor leader of South Korea's ruling People Power Party wants a new bill requiring lawmakers and high-level government officials to declare their cryptocurrency-related assets to take effect within two months, earlier than originally planned.
The regulator has agreed to allow licensed virtual asset providers to serve retail investors, provided that operators assess understanding of the risks involved, according to a report on its consultation on policy recommendations released Tuesday.
The International Organization of Securities Commissions (IOSCO) opened up its policy recommendations for crypto and digital asset markets for public comment on Tuesday.
Japan is set to implement stricter anti-money laundering measures, including the so-called "travel rule" of the Financial Action Task Force (FATF) from June 1, according to local news outlet Kyodo News.
The world's second-largest crypto exchange by trading volume and a leading Web3 technology company, has enhanced its app to offer safe and secure spot trading of virtual assets to Hong Kong users in accordance with the requirements for virtual asset service providers (VASPs) in the city.
Lawmakers in South Korea passed legislation on Thursday that will require officials to report their crypto holdings, local outlet News1 reported.
Binance announced that its joint venture with Gulf Innova Co., Ltd. has received digital asset operator licenses from the Ministry of Finance of Thailand, opening the way for the launch of a crypto exchange and broker.
Beijing, China's capital city, reportedly released a white paper this morning aimed at promoting innovation and development of the web3 industry.
Indian crypto exchanges are in survival mode, cutting costs wherever possible, re-negotiating partner contracts, suspending employee pay-hikes, conducting lay-offs, exploring new revenue models and rebranding themselves, all in an effort to extend their financial runways – when they run out of money.
Huobi HK is now offering crypto spot trading to retail and institutional clients in Hong Kong, having now applied for a virtual asset exchange license.
Japan-headquartered crypto exchange bitFlyer is implementing tough anti-money laundering measures in line with global financial crime watchdog FATF's "Travel Rule" for information sharing on transfers, the company announced on Tuesday.
The Reserve Bank of India (RBI) is trying to expand the global narrative around cryptocurrencies beyond "financial stability and integrity to macro-financial and cross-sectoral implications and risks of crypto-assets," the central bank said in its annual report published on Tuesday.
The core team of Trust Reserve (formerly CNHC Group), which issues two stablecoins, was detained by police in China on May 29, according to PANews.
Hong Kong-based qualified custodian and trust company First Digital is introducing a new stablecoin that will be pegged to the U.S. dollar but regulated in Asia.