FATF Releases Updated Guidance on Crypto Covering P2P, Stablecoins, DeFi, and NFT

Financial Action Task Force (FATF), the agency that makes anti-money laundering (AML) rules for governments to follow worldwide, released its updated guidance for crypto on Thursday.

Based on prior guidelines issued in 2019 and the follow-up report from last year, the FATF has laid down new rules on everything from custodians to crypto exchanges. They “expect that the countries will implement this as soon as possible.” The members of the organization come from about 200 countries.

In its guidelines, the global watchdog said, the involvement of smart contracts on a blockchain “does not relieve the controlling party of obligations.”

FATF says many of these parties may be defined as Virtual Asset Service Providers (VASPs), and they will have to abide by related anti-money-laundering rules, be licensed or registered, and be supervised.


On stablecoins, FATF said its providers, along with custodians and exchanges that support them, will have to conduct AML and anti-terrorism-financing checks throughout.

The agency urges countries to mitigate risk before new stablecoins are launched and continue monitoring the efforts even after that. It also asks them to take into account the evolving risk if the stablecoins become mass-adopted.

“Reduction of volatility could encourage their widespread use as a means of payment or transferring funds, particularly where they are sponsored by large technology, telecommunications or financial firms that could offer global payment arrangements.”

Peer-to-Peer Transactions

FATF wants countries to impose requirements such as additional record-keeping or limiting transactions to only certain approved addresses because these could potentially be used to avoid AML/CFT controls in the FATF Standards.

“The rapid evolution of this sector means that changes in the level and nature of the risk are likely to come quickly and to merit concerted supervisory attention.”

FATF further notes that while it hasn’t observed a distinct trend towards their increased usage, it remains a potential risk as VA transactions may move to P2P to avoid regulations/supervision as more jurisdictions implement the standard as such related ML/TF risks should be monitored in an ongoing and forward-looking manner.

It urges countries to understand what types of P2P transactions pose a higher or lower risk and understand their drivers and different risk profiles.

DeFi & NFT

According to FATF, a DeFi application is not a VASP; however, “creators, owners, and operators or some other persons who maintain control or sufficient influence in the DeFi arrangements,” even if they seem decentralized, may fall under their VASP definition where they are providing or actively facilitating VASP services.

While NFTs are not considered VASPs either, here as well, the agency says, it is important to consider their nature and its function in practice.

“Some NFTs that on their face do not appear to constitute VAs may fall under the VA definition if they are to be used for payment or investment purposes in practice,” it said, noting those NFTs that are digital representations of other financial assets are excluded from the FATF definition of VA but would be covered by their Standard of a financial asset.

Non-Binding Guidance

The good part of this guidance is the FATF clearly describes who may qualify as VASP. It explicitly states that persons who “merely provide ancillary infrastructure,” including “verifying the accuracy of signatures,” will not be within the scope of surveillance obligations. As for the travel rule, the new guidance concedes that the

“full requirements of [the travel rule] apply to [a traditional wire transfer] and [a virtual asset transfer between two VASPs] but not [a virtual asset transfer between a VASP and an “unhosted wallet”].”

“It clarifies that fees paid to miners and validators are not subject to travel rule originator and beneficiary information collection,” noted Peter Van Valkenburgh of CoinCenter. He further said that these travel rule changes, however, don’t go far enough and keep the VASP definition extremely verbose.

A silver lining is that this guidance is entirely non-binding.

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Author: AnTy

FATF to Publish Detailed Crypto Guidelines Late Next Week

The Financial Action Task Force (FATF) will be publishing its revised guidance for cryptocurrency firms very soon, said President Marcus Pleyer.

The outcomes of the October plenary meeting of the FATF were released this week, in which the agency shared that it has finalized its guidance and plans to publish the updated version on October 28.

“This guidance that we finalized for a risk-based approach to virtual assets and investments will be published next week,” Pleyer told reporters during a press conference following the agency’s latest meeting.

Back in March, the global anti-money laundering (AML) watchdog issued draft guidance (VASPs) at a plenary meeting. However, the final revised guidance was delayed as the regulatory agency attempted to cover the areas like decentralized finance (DeFi) and non-fungible tokens (NFTs).

As such, the revised guidance will now include the definition of VASP in DeFi as well. Also, FATF will share its take on NFTs this time.

While the standards related to virtual assets or VASPs aren’t amended, the guidance will provide “more detailed information on how countries and the private sector can implement the FATF standards.”

Additionally, the guidance will provide further clarification on the definition of VASPs and how the standards will apply to stablecoins, Player said. He further shared FATF’s expectation that countries will implement standards for the “Travel Rule” for crypto transactions “as soon as possible.”

Under the travel rule, VASPs are required to collect and transmit information on those involved in a transaction.

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Author: AnTy

NY Court Dismisses Half of Class Action Plaintiffs’ “Baseless” Claims Against Tether and Bitfinex

NY Court Dismisses Half of Class Action Plaintiffs’ “Baseless” Claims Against Tether and Bitfinex

This week, Judge Katherine Polk Failla dismissed half of the class action plaintiffs’ claims that were filed about two years back against the cryptocurrency exchange Bitfinex and the sister company Tether, a stablecoin USDT issuer.

The Judge of the US District Court for the Southern District of New York issued a 127-page opinion regarding the dismissal of the complaint that included RICO claims as well, stated both Bitfenix and Tether on Wednesday.

As for the remaining claims, the court has raised substantial issues, making them “meritless.”

Bitfinex said,

“With half their case now dismissed, their primary expert debunked, and their lead law firm embroiled in its own internecine war – with its partners and former partners trading allegations of fraud and ethics violations – this case is doomed.”

It further said that they would not be settling the remaining of the “baseless” claims either as the litigation exposes the case to be a “clumsy attempt at a money grab, which recklessly harms the whole cryptocurrency ecosystem.”

In other news, on Thursday, the exchange halted trading for over two hours with its status page reading, “investigating issues with the platform.” The incident is now resolved after the company’s intervention.

Handling more than $715 million trading volume in the last 24 hours makes Bitfinex the world’s ninth-largest spot crypto exchange, as per CoinGecko.

The Fee Fiasco

Earlier this week, Bitfinex mistakenly paid $23.7 million in fees for sending $100,000. The transaction was made using a hardware wallet from DeversiFi, a non-custodial exchange that spun out of Bitfinex about two years back.

While, as we reported, the miner has given back $22.1 million, DeversiFi noted in its post mortem that it was due to underlying issues in the EthereumJS library coinciding with gas fee changes associated with the EIP-1559 upgrade in some transactions.

Combined with the fact that Ledger hardware wallet displayed fees in an unreadable manner,

“Only wallets with very large quantity of funds would be impacted, all other users would see a failed transaction.”

DeversiFi offered the miner to keep 50 ETH as a return fee. As for ensuring that it doesn’t happen again, the platform is working with the Ethereum community and Ledger to patch issues that may have contributed to this occurrence.

“On our platform we’ll be implementing stronger defensive measures when interfacing with external libraries, reviewing how we treat failed transactions and also enforcing a ceiling value for any max transaction fees as additional protection.”

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Author: AnTy

Canadian Regulator Takes Action Against Bybit Over Alleged Violations Of Securities Law

Canadian Regulator Takes Action Against Bybit Over Alleged Violations Of Securities Law

The Ontario Securities Commission is pursuing a regulatory action against Bybit Fintech Ltd, a company incorporated in the British Virgin Islands, that operates a cryptocurrency platform in the country.

The regulator accused Bybit of disregarding and flouting the Canadian securities law.

Regulator Files Statement Of Allegations Against Bybit

According to the statement of allegation filed by the regulator, Bybit failed to comply with the registration requirements even though the OSC cautioned unregistered trading platforms in March.

The OSC had issued an April 19 deadline for crypto exchanges to register before offering derivatives products in Ontario, but Bybit failed to do so.

As a result, the regulator has now added Bybit to its investor warning list and has set a hearing date of July 15. The OSC said,

“Entities such as Bybit, which flout this compliance process, expose Ontario investors to unacceptable risks and create an uneven playing field within the crypto asset trading platform sector.”

Potential penalties include payment of not more than $1 million in fines for each failure to comply with Ontario securities law. It may also include penalties stipulating Bybit to cease trading for a given period of time.

OSC’s action against Bybit comes after it took similar enforcement action against another exchange, KuCoin, earlier this month. Last month, the OSC also alleged that crypto exchange Poloniex had not completed its registration process.

The regulator’s reasons have remained the same across all three instances – the exchanges offered securities and derivatives to Ontario residents without complying with the province’s securities laws.

Founded in 2008, Bybit is one of the biggest crypto exchanges with millions in trading volume. Headquartered in Singapore and registered in the British Virgin Islands, Bybit is the third-largest Bitcoin futures exchange by open interest.

Bybit Faces Similar Enforcement Action In Japan, UK

Regulators around the world have become more cautious about cryptocurrency services as exchanges, and trading platforms are now more scrutinized.

Bybit seems to be familiar with these actions. The exchange has not only gotten in trouble in Canada but is also having issues with regulators in Japan.

A few weeks ago, the crypto derivatives platform received a warning from Japan’s Financial Services Agency (FSA) over unregistered operations.

Bybit has also previously received a similar warning in the United Kingdom. Earlier on Feb. 24, the UK Financial Conduct Authority (FCA) issued a notice alerting the public that the exchange has been operating in the UK without authorization.

A week later, Bybit announced on March 5 that it would stop servicing UK residents from March 31.

Despite these recent hurdles, Bybit still ranks in the top five in terms of the largest Bitcoin (BTC) futures exchanges volume of trades.

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Author: Jimmy Aki

Block.one Settles its Class Action Lawsuit for $27.5 Million

Block.one Settles its Class Action Lawsuit for $27.5 Million

Block.one has made a $27.5 million settlement to resolve the class-action lawsuit launched by the Crypto Assets Opportunity Fund.

The lawsuit was related to the company’s token sale that took place between June 2017 and June 2018, in which it raised the biggest ever initial coin offering (ICO) funding of $4 billion and various subsequent matters. The company in a statement said,

“Block.one believes this lawsuit was without merit and filled with numerous inaccuracies. However, accepting this settlement allows us to focus more time and energy on running our business and delivering new products.”

Block.one is the creator of EOSIO and has been behind the cryptocurrency EOS, which has fallen to 26th place in the cryptocurrency market with a market cap of $4.5 billion.

From its all-time high of $2.71 on April 29, 2018, EOS is currently down more than 79%, trading at $4.71, as per CoinGecko.

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Author: AnTy

Poloniex To Face Regulatory Action For Violating Securities Laws In Canada

Poloniex To Face Regulatory Action For Violating Securities Laws In Canada

The Canadian securities regulator, the Ontario Securities Commission, has accused the cryptocurrency exchange Poloniex of flouting Ontario securities law.

Ontario Regulator Files Statement Of Allegations Against Poloniex

The regulator filed a statement of the allegation on Tuesday, claiming that Poloniex failed to seek approval as a crypto trading platform operating in the province.

The Canadian agency identified Poloniex’s crime of holding digital assets in custody as a third party and argued that any assets held on a trading platform could be securities. The regulator went on to explain:

“While Poloniex purports to facilitate the trading of the crypto assets in its investors’ accounts, in practice, Poloniex only provides its investors with instruments or contracts involving crypto assets. These instruments or contracts constitute securities and derivatives.”

The regulator currently seeks CA$1 million ($830,000) fines for each “failure to comply.” The first hearing on the matter is scheduled for June 18.

The OSC had previously warned crypto exchanges in the province that trade securities and derivatives to get in contact with the regulator or face regulatory action.

The agency set a deadline of April 19, 2021, for exchanges to comply with the registration requirement, which had more than 70 exchanges in compliance. However, Poloniex did not take part.

Cryptocurrencies Labelled As Securities

As the crypto market encounters a volatile period amid worldwide support, regulators have become more cautious about enforcing regulations.

However, one thing that has stirred confusion regarding cryptocurrency regulations is identifying what type of digital assets are labeled as securities. In the US, regulators like the Securities and Exchange Commission have targeted crypto firms for selling tokens as unregistered securities.

A good example is Ripple Inc, the payment solutions provider sued by the SEC in December last year for allegedly selling its XRP tokens in unregistered security offerings to investors. In March, the SEC also sued crypto startup LBRY Inc, accusing the company of selling unregistered securities in the form of its token.

Unlike the US, Canada has been more friendly regarding crypto regulations. The North American country is also the first to support Bitcoin exchange-traded funds (ETF) in the region.

This year the OSC already approved three Bitcoin ETF issuers. The first two approved include the Purpose Bitcoin ETF (BTCC) and the Evolve Bitcoin ETF (EBIT), both listed on the Toronto Stock Exchange.

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Author: Jimmy Aki

Digital Asset Manager Grayscale Says It Is ‘100% Committed To Converting GBTC Into An ETF’

On conversion of GBTC into an ETF, the holders of GBTC shares won’t need to take any action, and the management fee, currently at 2%, will be reduced. Meanwhile, the world’s first Bitcoin ETF (BTCC) holds 16,462 BTC without a single outflow since its debut.

Today, the world’s largest digital asset manager clarified its intentions for a bitcoin ETF: they are fully committed to converting its Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF).

Launched in 2013, GBTC is currently a publicly-traded Bitcoin fund in the US and an SEC-reporting company.

Today, with $34 billion in AUM, GBTC only stands behind SPDR Gold Trust in terms of global commodity ETPs. With $2.6 billion in weekly volume, it stands in third place behind only GLD and iShares Silver Trust.

For several years now, Grayscale has been examining ETFs closely from both a commercial and regulatory perspective, said the fund in its official announcement on Monday.

Grayscale actually submitted an application for a Bitcoin ETF in 2016 and has been in conversation with the SEC since then. But they later withdrew the application because the regulatory environment for digital assets wasn’t advanced enough. So far, not a single Bitcoin ETF has been approved either.

This year, however, many applications for the same have been filed, and the market has high expectations from the SEC, especially with President Joe Biden’s nominee for the SEC chair Gary Gensler. The company said,

“While several firms have submitted Bitcoin ETF applications in the form of an S-1 or 19b-4 to the SEC, we are confident in our current positioning and engagement with the SEC.”

When GBTC converts to an ETF, the company says, the holders of GBTC shares won’t be needed to take any action. Also, the management fee, currently at 2%, will also get reduced accordingly.

Since late Feb., GBTC’s coveted premium has been running in the negative, which has been attributed to the rise of other products, including several Bitcoin ETFs trading in Canada.

The first-ever Bitcoin ETF from Purpose Investments (BTCC) currently holds 16,462 BTC, with $1.22 billion in AUM. Launched in mid-February, the Purpose Bitcoin ETF has seen only inflows, and not a single outflow has been recorded yet.

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Author: AnTy

Taco Bell Joins in on NFT Action as Non-Fungible Tokens Mani Goes Mainstream

Taco Bell Joins in on NFT Action as Non-Fungible Tokens Mani Goes Mainstream

The NFT space sees impressive growth with $91 million in crypto art sold last month, 8x of January.

Taco Bell, a popular fast-food chain, is the latest to join the non-fungible tokens (NFT) mania.

The restaurant chain created five different NFTs that were released late Sunday on the marketplace Rarible. The tokens were put on sale for 0.001 ETH worth just $1.79, with the highest bid on them going to 0.4 WETH ($700).

All profits were donated to the Taco Bell Foundation.

Taco Bell is the just latest one to join the digital art and collectibles ecosystem. Last week, the band King of Leons released its latest album with an NFT. The largest crypto collectible brand, NBA TopShot, has recorded $300 million in all-time sales. Currently, a Snoop Dogg Niftydudes NFT has bidding of $1.4 million.

Lindsay Lohan is particularly making use of NFTs, minting and selling her “Mean Girls” images for thousands of dollars. Musician Grimes, partner of Bitcoin fan and Tesla CEO Elon Musk, and Dallas Mavericks owner Mark Cuban are also getting in on the action around NFTs.

Popular collectibles CryptoPunks, one of the earlier crypto art blockchain projects created by larva Labs in 2017, have also gone parabolic, surpassing 66k in all-time ETH sales ($105 million).

“There wasn’t a way to own things or know that you owned them online before this,” said Matt Hall, the co-founder of CryptoPunks. “The miracle of digital is that copying was perfect and free. This is reversing part of that — which is kind of weird.”

Another project is Hashmasks, whose index funds allow investors to get exposure without owning an entire NFT themselves, which are currently 825 in NFTX.

There are currently four artists with more than $10 million in artwork value.

According to Dune Analytics, one of the popular NFT marketplace Opensea’s monthly transaction volume in February reached a record-high of $93.9 million, about 11.68x of the volume recorded in the previous month. Its users have also exceeded 50k.

Overall, $91 million in crypto art was sold last month, 8x of January, as per CryptoArt.

“NFT projects are soaring! Since the beginning of the year, the combined market cap of the top NFTs has increased 5x, holding a whopping $4.4bil of value today!” notes The TIE.

NFTs are expected to drive crypto adoption as it gains so much of the mainstream attention.

“NFTs are a big statement on the longevity of blockchain technology, cryptocurrencies, and the monetization of content creation,” said Douglas Boneparth, president of Bone Fide Wealth, a New York-based financial advisory firm.

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Author: AnTy

MoneyGram Hit With Class Action Lawsuit over Ripple Partnership

MoneyGram Hit With Class Action Lawsuit over Ripple Partnership

Popular payments firm MoneyGram has been sued with a class action over allegations of misrepresentation in its partnership deal with Ripple Labs as well as the legal standing of XRP token.

The class-action suit comes following the statement that MoneyGram International provided following a partnership deal with fintech startup Ripple Labs which also involved XRP token.

Rosen Law Firm filed the class action suit representing MoneyGram’s shareholders that bought their stock from June 17, 2019, to February 22, 2021. The law firm located in New York states that MoneyGram provided false information to investors regarding their agreement with Ripple Labs, specifically the legal standing of XRP token.

According to the court documents, the US Securities and Exchange Commission (SEC) has said that XRP is an unregistered security over the last couple of years. Therefore, if the securities regulator decides to take action against Ripple, MoneyGram International will lose a highly lucrative revenue stream in terms of market development fees. This, the lawyers present is vital to the payments firm’s financial results and position.

The court filings also present that Ripple offered $38 million to MoneyGram in 2020 as market development fees which translated to 15% of its earnings. The law firm also claims that its clients suffered damages after the agreement’s real details became public.

MoneyGram International inked a strategic deal with Ripple Labs in June 2019. The deal involved Ripple committing to remit about $50 million to the payments company. After the deal’s signing, MoneyGram became a member of Ripple’s international payment network dubbed xRapid that was later renamed as On-Demand Liquidity (ODL) which utilizes XRP token for international payments.

At the end of last year, and after the SEC accused Ripple of raising $1,3 billion by offering an unregistered security, Ripple held approximately 17% of MoneyGram’s available shares.

MoneyGram released statements stating that the case filed against Ripple was unlikely to affect the partnership deal negatively. However, last month, MoneyGram suspended its partnership deal with Ripple Labs.

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Author: Joseph Kibe

SEC vs Ripple Pretrial Conference Set for Feb; Majority of Customers & XRP Volume Not in the US

Ripple says the action against it is “an attack on the entire crypto industry” and the lawsuit has “affected countless innocent XRP retail holders” that have no connection with the company.

The list of crypto service providers announcing no more support for XRP in light of the SEC suing Ripple and its top two executives now include Coinbase, Bittrex, OKCoin, Crypto.Com, Bitstamp, OSL, Beaxy, Swipe, CrossTower, Stex, Ziglu, Eobot, Sarson Funds, Jump Trading, Galaxy, B2C2, Bitwise, 21Shares, Bitcoin Suisse, Wirex, Simplex, and Grayscale.

An Indonesia-based exchange is also informing its customers of the risk of XRP delisting “in connection with the United States Securities and Exchange Commission (SEC) lawsuit against Ripple Labs, Inc which was deemed to have violated the regulations regarding securities.”

In response to market-wide delisting, Ripple published a statement where it says the “majority of our customers aren’t in the U.S. and overall XRP volume is largely traded outside of the U.S.”

While Ripple will continue to operate and support all products and customers in the U.S. there are “clear rules of the road for using XRP in the UK, Japan, Switzerland, and Singapore,” says the San Francisco-based company.

The company further reiterated that the SEC action against Ripple is “an attack on the entire crypto industry here in the United States.”

This lawsuit has “already affected countless innocent XRP retail holders with no connection to Ripple” and muddled the waters for traders, exchanges, and market makers said the fintech company adding that they will defend themselves and get clarity for the US crypto industry.

Meanwhile, the initial pretrial conference of SEC vs Ripple Labs Inc. is set for February 22nd, 2021.

“The point of this conference is to determine if there is a hope of settling and discovery dates,” said Jesse Hynes, an NJ Attorney.

In this process, the parties will basically learn everything they can about the other side’s facts and get to request documents and take depositions (interviews). “Judge Torres generally sets a 120 day period for fact discovery (which may be shortened if there are exigent circumstances),” said Hynes adding from there, another 45 days are allowed for Expert discovery.

It is after the final pretrial submission date, which is 30 days after, that the trial is set. As such, if case this goes to trial, at best the market is looking at September 5, 2021, “but that is unlikely” because “there are always delays and consents to push back dates and extend discovery.”

So, it will be a long battle that could take years to come to a result. Meanwhile, XRP price is suffering, having fallen to levels not seen since 2017, currently trading around $0.20.

In the meantime, XRP enthusiasts have launched a petition “Granting Ripples (XRP) token as a non security by the SEC” on Change.org. So far, the petition has only got 132 signatures.

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Author: AnTy