FinCEN’s Updated Travel Rule Proposal for Crypto Open to Public Comment

Last week, the Financial Crimes Enforcement Network (FinCEN) and the Federal Reserve invited comments on the proposed rule that would change the recordkeeping and travel rule regulations under the Bank Secrecy Act.

Under the current rules, financial situations must collect information related to funds transfers and transmittals of funds over $3,000. The information to be collected includes the name and address of the transmitter, the amount of the payment, its execution date, any payment instructions from the originator, and the beneficiary’s bank or recipient’s financial institution’s identity.

But as per the amendment, this limit is lowered to $250 for international transactions while the threshold for domestic transactions remains unchanged. This applies to transactions involving “convertible virtual currencies” (CVC) and “digital assets with legal tender status.” It further proposes to clarify the meaning of “money.”

The official report notices that “public use of CVCs has grown significantly in recent years.” Estimated transactions in Bitcoin alone were about $366 billion in 2019 and $312 billion in 2020 through August.

It further stated that malign actors have been using them for all sorts of illegal activities.

The proposed modifications will help them gain information in criminal, tax, or regulatory investigations and protect against international terrorism.

“FinCEN is aware that the CVC industry is working on developing systems and processes to achieve full compliance with the Travel Rule as applied to virtual currency transactions as a result of the distinctive characteristics of CVCs.”

They “welcome” comments on these efforts that will be accepted only for 30 days.

Read Original/a>
Author: AnTy

Fed Reveals Details About Digital Cash ‘Without The Anonymity Of Physical Currency’

Federal Reserve Bank of Cleveland President Loretta Mester revealed that each American would receive digital dollars directly. She said,

“Legislation has proposed that each American have an account at the Fed in which digital dollars could be deposited, as liabilities of the Federal Reserve Banks, which could be used for emergency payments.”

This was revealed on Wednesday when Mester delivered a speech to the Chicago Payment Symposium titled “Payments and the Pandemic,” in which she talked about “Central Bank Digital Currencies.”

Here she wrote about how during the pandemic, CBDCs have gained traction around the world (China, Bahamas, Brazil, Bermuda, South Korea, Russia, UK, France, Thailand, Japan, and many more).

Fed Digital Cash

Other proposals include creating digital cash — which is just like the physical currency issued by central banks but in digital form and “potentially, without the anonymity of physical currency.”

Digital cash wouldn’t require the involvement of commercial banks as they would be directly issued to the users’ digital wallets with central-bank-facilitated transfer and redemption services.

However, the demand for and use of such instruments is to be further considered, she said, adding the potential risks and policy issues surrounding CBDC also needs to be better understood and costs and benefits evaluated.

Mester also said that the Fed has been researching about issuing CBDC for some time, and already the technology lab of the Board of Governors has been testing the benefits and tradeoffs of distributed ledger platforms.

While the Federal Reserve Bank of Boston is working with MIT on different technologies for the CBDC, the New York Fed has collaborated with BIS to understand the relevance of fintech for central banks.

Although the authorities have been doing all the research, she said it “does not signal any decision” by the Fed to adopt such currency as they need to first better understand the issues related to financial stability, market structure, security, privacy, and monetary policy.

Metser concluded her speech by saying that the payment system, which is a critical part of the US infrastructure, must remain modern, resilient, and able to adapt to changing customer needs as they evolve.

Read Original/a>
Author: AnTy

National Banks & FSAs Can Hold Reserves for Stablecoin Issuers: US Federal Banking Regulator & SEC

The Office of the Comptroller of the Currency (OCC) issued new guidance regarding stablecoins on Monday.

“National banks and federal savings associations currently engage in stablecoin-related activities involving billions of dollars each day,” said Acting Comptroller of the Currency Brian P. Brooks.

“This opinion provides greater regulatory certainty for banks within the federal banking system to provide those client services in a safe and sound manner.”

As per the letter from the US federal banking regulator, national banks and federal savings associations (FSA) are allowed to hold “reserves” on behalf of their customers who issue stablecoins, and those coins are held in hosted wallets, those controlled by a trusted third party.

This means unhosted wallets, which are controlled by the individual user who owns the cryptos being stored, are not part of this announcement.

The SEC also issued a response to OCC’s guidance, in which it says whether a stablecoin is security will depend on “facts and circumstances determination,” which will require the analysis of the instrument.

The regulator asked the market participants to structure and sell a digital asset in such a way that “it does not constitute a security and implicate the registration, reporting, and other requirements of the federal securities laws.”

Bullish!

Jeremy Allaire, the co-founder and CEO of Circle, which along with Coinbase, has launched its own stablecoins called USD Coin (USDC), called this a “significant progress for the advancement of digital dollar stablecoins in the US financial system.”

This will “help the United States and the US dollar to continue its leadership role in the world economic system,” he said.

According to him, national banks allowing to hold reserves for fiat-backed stablecoins will provide businesses, fintech firms, and banks have “more confidence in building on this innovation.”

In 2020, stablecoins have exploded, currently around $20 billion, with Tether (USDT) accounting for more than $15.5 billion of it and USDC with 500% growth YTD $2.3 billion.

Market participants see it as bullish news, with one trader commenting, “Basically enables a LOT more money to funnel into crypto, if stablecoin providers don’t have to scramble for banks to hold the reserves.”

Related: European Countries Support EU Stablecoin Regulation

Also Read: BoE Gov. Calls for Global Standards for Stablecoins, Instead of Playing Catch Up

Read Original/a>
Author: AnTy

US Congressional Members Ask The Govt To Support Blockchain Tech For COVID-19 Relief

  • U.S. Congressmen lobby the federal government to increase support and hasten the integration of blockchain technologies across the economy to ease the effects of the COVID-19 global pandemic.
  • Blockchain technology innovations aimed at improving authorization of individual identity, supply chains, and medical registries.

A letter from lawmakers in Congress addressed to the US. President Donald J. Trump and directors handing the COVID-19 response strategies ask the top federal government executives to look into blockchain technologies as a solution to the pandemic.

According to the lawmakers (all members of the Congressional Blockchain Caucus) urge the use of blockchains to improve the country’s economic interactions, enhance digital identification, manage supply chains and ensure credibility in medical registries and certifications. The letter reads,

“The membership of the Congressional Blockchain Caucus urges your consideration, support, and implementation of utilizing blockchain technology that could greatly mitigate the effects of the Coronavirus.”

The members of the Congressional Blockchain Caucus who presented the letter are Bill Foster, Tom Emmer, David Schweikert, and Darren Soto – who lead the Caucus. Other members include Stephen Lynch, Warren Davidson, Jerry McNerney, Matt Gaetz, and Ro Khanna.

There is a growing need for verification and identity digitization as the world embraces social distancing. According to the statement, blockchains provide digital identity solutions that assist in authentication and verification of individuals, for example, when the U.S. distributed the CARES Package. Furthermore, blockchains offer strong encryption and a secure system hence protecting sensitive users’ data.

Blockchain can also improve the deployment of essential kits and medical equipment – especially during the times of the pandemic. These technologies could enhance the management of supply chains, identification of where supplies originate, transportation, and arrival times, the statement reads.

Additionally, medical registries, certifications, and licenses could all be deployed on a blockchain improving the medical field and professionals in the space. This could help these medical professionals securely and confidentially share critical information and deploy essential services in times of need.

This also points to the financial systems world whereby the U.S. Congress has continually called for more innovative technologies to be implemented to solve slow transactions and payments. In April, members of Congress reintroduced the “Digital dollar Act” to create a network of digital payments and distribute the CARES Act stimulus efficiently.

Read Original/a>
Author: Lujan Odera

Russia Missing the ‘Unique’ Opportunity to Invest in BTC as it Focuses on Hoarding Gold

While on one side, Russia is regulating digital currencies, on the other hand, Roskomnadzor, a federal executive body responsible for overseeing the media, is banning the crypto, fiat, and e-currencies exchange monitoring website Bestchange.

While the site is blocked by RKN, Bestchange advises people to use the blocking bypass tools like VPN, mirror site, and extensions to access the site. Other crypto sites affected include ProstocCoin and CryptoRussia.

The step has been taken by RKN because these sites promote the use of other currencies besides the ruble in the country. This is because the money can only be issued by the Central Bank of the Russian Federation, and the introduction of other funds in the Russian Federation is not allowed, states the court document.

The court found these websites guilty of allowing the use of Bitcoin to purchase goods and services which violate Federal Laws. Besides the preventing financing of terrorist activities with Bitcoin, it also states the decentralized nature of bitcoin’s issuance eliminates the “possibility of its regulation.”

Amidst this anti-cryptocurrency move, economist Vladislav Ginko wrote that the country is missing the “unique” chance of stacking bitcoin as Russia focuses on gold hoarding with “the looming severe sanctions from the United States may provoke a cascade selling out of Russia’s debt.”

Ginkgo is a former vice-rector of Moscow-based Jewish University, currently an analyst and lecturer at Russia’s leading state think-tank, Presidential Academy.

He points out how some of Russia’s elite believe new sanctions are almost inevitable while the share of foreign investors plummeted from 34.9% in March this year to 29.8%. Russia’s central bank has also slashed the key rate to 4.25%.

In response, Russia’s state has become the biggest buyer of domestic produced gold. In August, Russia’s banking system accumulated 97.7 tons of gold, up 21% from one month earlier.

However, according to Ginko, the banks should invest in bitcoin instead, as some Russian elites also believe. Some of them reportedly bought BTC in January 2019 when BTC was around $3,500. He said,

“The current price of Bitcoin is not $500,000 yet, but $11,700, which means a 330% return for less than two years. Russia may miss an opportunity to catch a lucky ‘Bitcoin ticket’ to the future, and instead of it falls into the gold trap.”

Read Original/a>
Author: AnTy

FBI Prevents Ransomware Attack At Tesla’s Gigafactory; Hacker Sought $4M Bitcoin Payment

US-based electric carmaker Tesla working closely with the Federal Bureau of Investigations (FBI) has thwarted a planned ransomware attack that involved millions worth of Bitcoin payments.

According to a complaint that was filed by the FBI, the attackers were targeting Tesla’s Gigafactory situated in Nevada.

The FBI revealed that it arrested a 27-year-old Russian. Pavel Kriuchkov, who was residing in Los Angeles. he had lived almost a month in the United States looking to rope in as a Tesla employee for what he called a ‘special project.’

The FBI’s claim states that the ‘special project’ involved a lucrative incentive of a bribe amounting to $500,000, which was later upgraded to $1 million. An advance bribe was to be paid into the employee’s Bitcoin wallet that was installed via a Tor browser to avoid detection.

The Tesla employee was to help in the installation of malware into Tesla’s servers that were to be carried out in two stages consisting of a distributed denial-of-service attack as well as stealing of sensitive company data.

The attack was to involve holding Tesla to a ransom with threats of making vital private data and information public. The FBI states that Kriuchkov was eyeing a $4 million ransom from Tesla.

However, the Tesla employee who remains anonymous alerted the company’s management following the first meeting with Kriuchkov. It is at this juncture that Tesla informed the FBI about the hacking plot.

The FBI then went ahead to surveil a number of meetings in August between Kriuchov and the anonymous employees. This allowed the FBI to collect vital intelligence in regards to the hacking plot against Tesla and other related cyberattacks by Kriuchov and his accomplices.

The conspirator was planning to deposit a $1 million to the Russian-speaking anonymous Tesla employee’s Bitcoin account. Kruichov revealed to the staffer that the money would be deposited in a few days but was to leave the country on August 22. However, the hacker was arrested by the FBI on August 22.

Read Original/a>
Author: Joseph Kibe

Winklevoss Twins Make a Case for $500,000 per Bitcoin as Fed Sends Markets Higher & Dumps Dollar

Although there was nothing “historic” about the Federal Reserve Chairman Jerome Powell’s speech yesterday, as of yet, the much-hyped Jackson Hole speech failed to cool down the markets.

The stock market continued to roar higher, making new all-time highs. Every asset reacted to Fed’s announcement that it would allow inflation to run above its longstanding 2% target but only for the markets to retrace.

However, except for Nasdaq, both the S&P 500 and Dow Jones Industrial Average closed higher than the previous day.

The US yield curve also steepened sharply, promising improved interest margins for banks. This steepening also reflects investors’ disappointment over the lack of detail about the Fed’s bond-buying program.

“Be careful what you wish for,” said David Kelly, chief global market strategist of JPMorgan Asset Management. “There is a risk that overall inflation will overshoot [the central bank’s] target, and they won’t have the political will to pull in the reins before it becomes a problem.”

Maybe Next Time

Bitcoin and gold price charts meanwhile are identical.

The largest digital currency had declined to under $11,300 when Jackson Hole speech took it to over $11,600 only for bitcoin to crash harder to $11,150. Similarly, the precious metal spiked 2.3% but dropped almost 3.3%.

Today, both the assets have recovered with BTC trading near $11,500 and gold above $1,950.

When it comes to the US dollar, it managed to jump to 93.3 level but today made its way back to 92.2. Ever since the introduction of the Fed in 1913, the USD has lost over 90% of its purchasing power.

Analysts and economists were anticipating a groundbreaking campaign on inflation, but Powell delivered less than expected dovishness. According to analyst Mati Greenspan, maybe not this time, but “if the markets are demanding stronger action, the Fed will be there to serve it… perhaps next time.”

Making a case for $500,000 Bitcoin

Although not as much as expected, Fed’s speech was the symbol of central bank’s support to Wall Street, that it has been providing since the pandemic began.

However, “even before COVID-19, and despite the longest bull run in U.S. economic history, the government was spending money like a drunken sailor, cutting taxes like Crazy Eddie, and printing money like a banana republic,” wrote the Winklevoss twins in their latest blog where they make a case for $500,000 Bitcoin.

According to them, there are fundamental problems with gold, oil, and the U.S. dollar as stores of value going forward.

Meanwhile, with inflation coming, money stored in a bank will get run over, those invested in the stocks market will keep pace and money stored in gold and bitcoin will outrun where that in “bitcoin will run the fastest, overtaking gold,” which has a market cap of $9 trillion.

And if the digital currency continues on its path, going from whitepaper to over $200 billion in market cap in under a decade, the price of bitcoin could appreciate 45x from where it is today, which means we could see a price of $500,000 U.S. dollars per bitcoin.

Read Original/a>
Author: AnTy

Bitcoin & Gold Make An Inverted V on Fed’s Inflation Sacrifice; Stocks Roared Even Higher

The Federal Reserve will allow inflation to run above 10%, said Fed Chairman Jerome Powell during the much-awaited virtual speech from the central bank’s annual Jackson Hole, Wyoming symposium.

Bitcoin’s price responded to the news quite visibly, forming an inverted V, as the digital asset jumped from $11,290 to just above $11,600. But only to come back down under $11,400, so it was all for nothing.

The good thing is Bitcoin has lately been reacting to the macro events in line with other assets. The digital gold acted exactly like the precious metal as gold pumped over 2% only to retrace it whole within the next minutes.

The US stocks meanwhile opened higher — S&P 500 made a new all-time high at 3,494, the ever-rising Nasdaq went to $11,688, and the Dow Jones Industrial average also went higher but is still down about 2% from its peak hit in February.

“Yields are spiking, driving the dollar up and metals down, together with crypto. Financial stocks are roaring, helping indices stay up,” noted trader and economist Alex Kruger.

Source: @ClassicMarco

“Even more central bank stimulus: That’s what markets–across the board–have taken away, at least for now, from Fed Chair Powell’s remarks on changes to the Monetary Policy framework,” said Mohamed A. El-Erian, Chief Economic Adviser at Allianz.

This means everything that has already been going up will continue to go up.

However, tech stocks showed a weakness with Amazon, Facebook, Netflix, and Alphabet falling. Meanwhile, bank stocks moved higher.

The yields on benchmark 10-year Treasury notes dropped to 0.734% after the Fed said it would stop the practice of preemptively lifting interest rates to prevent inflation from rising.

The US dollar index, however, enjoyed the Fed’s dovish tone to make a strong rebound from 92.5 to over 93.

The chairman clarified that the “Fed will not hesitate to act if inflation rises above levels consistent” with its goal to support the labor market and broader economy. He also said that there is no particular method to define average inflation, moreover, “policy will not be dictated by any formula.”

“Many find it counterintuitive that the Fed would want to push up inflation,” Powell said in prepared remarks. “However, inflation that is persistently too low can pose serious risks to the economy.” And we need to support workers from the most affected sectors, he said.

Read Original/a>
Author: AnTy

Boston Federal Reserve Seeks Top Blockchain Networks That Could Support A Digital Dollar

The Federal Reserve Bank of Boston partnership with Massachusetts Institute of Technology (MIT) is currently testing over 30 blockchain projects to find the best one for a digital dollar. The tests aim at finding an already established project instead of building it from scratch with the Fed looking for a stable, secure, and scalable blockchain for the digital dollar project.

The Boston Fed started its study on central bank digital currencies back in 2015, releasing several published research papers on the possibilities and risks CBDCs pose to the U.S. economy. However, the practical bit is still some time from launch with statements from executives at the Boston Fed, confirming the timeline of the digital dollar launch is yet to be definite.

Speaking to Coindesk, Jim Cunha, the Senior Vice President at the Boston Fed, said, the project is still in its infancy stage hence the continuing in-depth research and learning on how CBDCs affect policy and the economy in general.

A long road ahead: Development of a digital dollar

BEG reported last week the partnership between Boston Fed, the Digital Currency Institute (DCI), and MIT to enhance efforts in research on the digital dollar. The collaboration with MIT and DCI offers the Boston Fed a stable group to dive deeper into blockchains.

Neha Narula, director of the DCI, stated the partnership aims at extensively researching multiple blockchains to find the best fit for the digital dollar. The developers will leverage a “ready-made” blockchain to avoid “taking some brand-new consensus algorithm or cryptographic protocol and use it for a country’s national currency,” Narula said. In support, Cunha said the developers are working on

“30 to 40 blockchain projects either open source or private solutions at a very high level first, and then doing a deeper dive into a few of them.”

This is to promote a more comprehensive view of the blockchains allowing researchers to make steady conclusions on the privacy, scalability, throughput, security, and fees of each platform.

‘A different path to other CBDCs.’

The digital dollar will differ from other central bank currencies due to the U.S. laws on privacy as well as differences in challenges across the banks. In respect to this, Cunha expects the development of a U.S. CBDC to take “years” with the development distributed across players in the ecosystem.

“We’re not getting granular with this. We’re not trying to design and think about product design down to the level of ‘how would someone unbanked use this?” he said. “[Boston Fed] we’re trying to be flexible enough to allow innovation to answer some of those problems.”

Cunha maintained his stance that the digital dollar has no set timeline despite the advancement in the Chinese CBDC and private digital currencies such as Libra. Instead of competition, Cunha believes the introduction of other central bank digital currencies offers a collaborative spirit across the ecosystem, gaining the attention of people.

“It just creates more interest in the project,” he said.

As one of the 12 country-wide Fed branches, Boston Fed provides a reliable partner in understanding the digital currency systems, Neha said. Having formed a solid partnership, the DCI executive states the two will come up with the right questions and answers to research on the launch of a CBDC extensively.

“We’re excited about this collaboration because DCI’s goal is to answer the fundamental questions necessary to determine under what circumstances a CBDC is a good idea, and how we might deploy one should a central bank decide to do so.”

Read Original/a>
Author: Lujan Odera

Boston Federal Reserve Partners With MIT To Experiment On The Launch Of A Digital Dollar

  • The U.S. is taking accelerated steps in its launch of digital currency as the Federal Reserve investigates distributed technologies and how to digitize the dollar.

According to a statement by Federal Reserve Board Governor, Lael Brainard, during the San Francisco’s Innovation Office Hours, the Bank is partnering with several institutions to research the possible effects of launching a central bank digital currency (CBDC).

Touching on various issues in the CBDC research, including the impact of COVID-19, the accelerated efforts with Libra, and also China’s digital RMB, Brainard stated the Federal Reserve is actively researching its digital dollar. She said,

“With these important issues in mind, the Federal Reserve is active in conducting research and experimentation related to distributed ledger technologies and the potential use cases for digital currencies.”

The Federal Reserve of Boston has been a close partner with the Massachusetts Institute of Technology in its research efforts on the CBDC over the past years. The teams have been testing the opportunities and risks of implementing a range of distributed ledger technologies and a digital dollar. Brainard further states,

“This multidisciplinary team, with application developers from the Federal Reserve Banks of Cleveland, Dallas, and New York, supports a policy team at the Board that is studying the implications of digital currencies on the payments ecosystem, monetary policy, financial stability, banking and finance, and consumer protection.”

Brainard critically notes that any development made will be shared with the public “for anyone to use for experimentation.”

“The research project will explore the use of existing and new technologies as needed. Lessons from this collaboration will be published, and any codebase that is developed through this effort will be offered as open-source software for anyone to use for experimentation.”

The objectives of the research project include assessing the overall safety and efficiency of introducing digital currency payments. she said,

“Digital currencies, including central bank digital currencies (CBDCs), present opportunities but also risks associated with privacy, illicit activity, and financial stability.”

“This prospect has intensified calls for CBDCs to maintain the sovereign currency as the anchor of the nation’s payment systems.”

Brainard further singles out the development of Libra; the Facebook backed token, and China’s efforts to launch their digital currencies as the reason for the Fed’s research program. Her comments offer hopes of a possible launch of a digital dollar in the coming days. This view has been echoed by the former CFTC Chairman, Christopher J. Giancarlo on a digital dollar project.

In a supportive tone, the Federal Reserve Bank of New York released a statement on digital currencies stating classifications of these assets are vital as they could be both account-based and token-based. The statement reads,

“The main allure of distinguishing between account-based and token-based is to highlight a defining feature of certain new, emerging forms of digital currency. But if a digital currency can be both token-based and account-based, then the classification loses its power to distinguish between new and existing methods of digital payments meaningfully.”

Read Original/a>
Author: Lujan Odera