FinCEN Extends Public Comments Period on Crypto Regulation by 45 Days; Into Biden Administration

FinCEN Extends Public Comments Period on Crypto Regulation by 45 Days; Into the Biden Administration

FinCEN cites “the robust responses” provided so far for extending the comment period on its proposed rule.

The Financial Crimes Enforcement Network (FinCEN) has announced reopening the public comment period on the proposed midnight rulemaking on certain transactions of cryptocurrencies.

Under this rule, banks and money service businesses like crypto exchanges would be required to keep records, submit reports, and verify customers’ identity in transactions above a certain threshold, $10,000.

According to the regulator, the rule aims at closing anti-money laundering regulatory gaps for convertible virtual currency and digital asset transactions.

The regulator received “robust responses” and has reviewed over 7,500 comments submitted during this original comment period of this midnight rulemaking.

As such, FinCEN is now extending the period (again) to 45 days to continue “its active engagement with the cryptocurrency industry to ensure innovation with integrity that appropriately addresses anti-money laundering and national security risks,” reads the official announcement.

The cryptocurrency industry has been vehemently against this rule, along with several congress makers who wrote an open letter to the Treasury asking for an extension arguing that hasty decisions could curb the innovation and leave the US behind.

“This doesn’t guarantee the rule won’t go through, but takes us well past January 20 & into the Biden administration,” said Jake Chervinsky, General Counsel at Compound Finance.

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Author: AnTy

New Zealand’s Financial Markets Authority Warns Crypto Investors to Watch Out for Scams

New Zealand’s Financial Markets Authority Warns Crypto Investors to Watch Out for Scams

New Zealand’s Financial Markets Authority (FMA) has become the latest financial watchdog to issue cryptocurrency risk warnings to crypto holders and investors.

The warning is coming as the crypto market is witnessing a gradual contraction in market prices. The financial watchdog has warned citizens dealing with crypto assets to be wary of the risks since digital assets are not regulated in the country. FMA stated,

“Cryptocurrencies are not regulated in New Zealand and are often exploited by scammers and hackers.”

A rise in crypto scams

Based on NZ Herald’s report, the FMA has expressed worries about the increasing cryptocurrency scams in New Zealand, with several unregulated digital exchanges promising unusually high returns that are unrealistic.

This latest announcement from the FMA is coming barely 24 hours after the UK’s Financial Conduct Authority (FCA) issued a warning about the risk of cryptocurrency investments in the country.

Highly volatile market

The watchdog added that New Zealanders looking to invest in Bitcoin and cryptocurrencies should be very careful because they are highly volatile and risky investment vehicles.

The FMA said it shares the FCA concerns, and crypto holders and investors should be prepared to lose all their invested funds if they continue in the highly volatile crypto market.

Many cryptocurrency exchanges based overseas are not regulated, as they carry out their business exclusively online. As a result, investors of such exchanges are at high risk of losing their entire investments if something goes wrong in the market. The FMA noted that there is no assurance that their funds will be safe since it’s difficult to find out who is selling, buying, exchanging, or offering the cryptocurrencies.

In the past year, the crypto market has risen substantially, as almost all the digital assets added considerable gains. Now the overall market cap of crypto assets stands at over $1 trillion, with Bitcoin having about 70% of the share.

In 2020, the world’s most valuable cryptocurrency rose by more than 300%. But with the rise in the value of cryptocurrencies, more people became interested in the crypto market. As a result, crypto scams more than doubled as well.

Elliptic, a crypto assets risk management provider, reported recently that threat actors are hiding stolen Bitcoin in privacy wallets. Some criminals are also using pictures and details of famous people to deceive crypto holders on fake news websites.

The threat actors have used scam Bitcoin ads featuring unauthorized pictures of celebrities and personalities like Waleed Aly, Chris Hemsworth, and Andrew Forest to lure their victims to part ways with their cryptocurrencies. The report revealed that these cybercrimes are linked to threat groups from Moscow.

Verifying registration status of the exchange

New Zealand’s watchdog has also issued an advisory to crypto investors who deal with crypto exchanges. According to the regulator, users should verify whether the exchange holds their New Zealand dollars in a trust account. They should also ensure that the exchange is dully registered with the Financial Service Providers Register (FSPR), which is required in the case of a dispute resolution.

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Author: Ali Raza

Anchorage Secures Trust Charter from OCC; Becomes First Crypto Bank

Anchorage Secures Trust Charter from Outgoing OCC Brian Brooks; Becomes First Crypto Bank

Crypto custody and financial services firm Anchorage has received a conditional trust charter from the OCC.

Anchorage, a crypto custody and financial services provider, is the first crypto native company to secure a bank charter.

According to a press release, the Office of the Comptroller of the Currency (OCC) announced on Wednesday that it had granted Anchorage a conditional license to operate as the first digital bank in the U.S.

A First for the Industry

The development is a landmark event, as it allows traditional banks to offer Bitcoin and other cryptocurrencies to their customers via Anchorage.

Anchorage was established in 2017 by Diogo Mónic and Nathan McCauley, two former employees at payment processor Square.

While it started as a custody service, the company has expanded its offering to include crypto trading and lending. It already went through two funding rounds, with the most recent involving companies like Andreessen Horowitz and VISA. It filed for the bank charter late last year, citing the need for adequate sub-custodial services in the crypto space.

Anchorage chief executive Nathan McCauley stressed that this was a significant development nonetheless. Speaking with Forbes, McCauley explained that the trust charter would make traditional banks more comfortable dealing with cryptocurrencies.

“It will let all sorts of people come to the table who until now have been hesitant to come in. It marks a big shift in the availability of crypto assets,” he added, claiming that several large companies will be more willing to invest in crypto in the future.

Industry news sources have added that a full bank charter will depend on some unique requirements. For one, Anchorage will need to fulfill certain liquidity and capital requirements. The company will also need to meet the OCC’s risk management standards.

Banks Warming Up to Crypto

Traditional banks have already shown an appetite for dealing with cryptocurrencies. JPMorgan, the country’s largest investment bank, has adopted a significantly pro-Bitcoin stance in the past few months, with several analyses detailing the possibility of the leading cryptocurrency usurping gold as the global reserve asset.

At the same time, New York-based Morgan Stanley recently increased its Bitcoin exposure after upping its stake in business intelligence solutions company MicroStrategy. A filing with the Securities and Exchange Commission (SEC) last week showed that Morgan Stanley had acquired 792,627 shares in MicroStrategy, giving it 10.9 percent ownership of the latter. MicroStrategy made significant Bitcoin plays last year, with the company owning 70,470 BTC as of December 21.

The OCC also ruled to allow banks to run independent stablecoin nodes earlier this year. In an interpretive letter, the agency explained that banks could use stablecoins for their permissible activities, including but not limited to making payments. More developments like these show that banks are gearing up to embrace digital assets, and Anchorage hopes to be a big part of that.

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Author: Jimmy Aki

Bitcoin Supporter Gary Gensler, Who Called XRP A ‘Security’ to Be Named SEC Chairman

Bitcoin Supporter Gary Gensler, Who Called XRP A ‘Security’ to Be Named SEC Chairman

Former Commodity Futures Trading Commission (CFTC) Chair Gary Gensler is expected to be named the Chairman of the US securities and exchange Commission by President-elect Joe Biden, reported Reuters.

Gensler has been leading Biden’s transition planning for financial industry oversight since November.

This is good news for the crypto market as Gensler, who was a blockchain professor at MIT, has shared crypto-friendly views.

“Gary Gensler deeply understands crypto & has strongly supported bitcoin for years. His selection as SEC chair signals a policy shift in favor of a bitcoin ETF,” said Jake Chervinsky, General Counsel at Compound Finance.

While bullish for the Bitcoin BTC 7.35% Bitcoin / USD BTCUSD $ 37,348.49
$2,745.117.35%
Volume 69.69 b Change $2,745.11 Open $37,348.49 Circulating 18.6 m Market Cap 694.67 b
2 h German Police Shut Down Dark Market that Facilitated $170 Million in Cryptocurrency Transactions 4 h Bitcoin Supporter Gary Gensler, Who Called XRP A ‘Security’ to Be Named SEC Chairman 4 h Big Uptick in 1k BTC Addresses Shows Institutions Bought the Dip; Goldman Sachs says Still Just 1% of Institutional Money
and board cryptocurrency market, this might not be that good for XRP XRP 2.50% XRP / USD XRPUSD $ 0.31
$0.012.50%
Volume 4.87 b Change $0.01 Open $0.31 Circulating 45.4 b Market Cap 13.9 b
4 h Bitcoin Supporter Gary Gensler, Who Called XRP A ‘Security’ to Be Named SEC Chairman 7 h Acting SEC Enforcer Leading Ripple Lawsuit to Step Down; XRP Fights to Stay on Exchanges 1 d Ripple Hires Former Amazon Executive As SVP Of Engineering to Strengthen Cross Border Payments
as he has publicly called it a security. Last month, the SEC sued Ripple and its two top executives for selling unregistered XRP security.

Gensler “went on record in 2018 saying there’s “a strong case” that XRP is a security, signaling no shift on that issue,” noted Chervinsky.

Gensler is a former Goldman Sachs banker and is prompting concerns among Wall Street firms of tougher regulation. In contrast, Jay Clayton, who left his SEC Chairman post on Dec. 23rd, a former Wall Street lawyer, was criticized by Democrats for his ties to many companies he was overseeing.

While the crypto market is looking to win some, it may lose some as well as it is speculated that the Acting Comptroller Brian Brooks, the former general counsel at crypto exchange Coinbase, might leave the top US banking regulators office this week.

During Brook’s term, OCC took a crypto-friendly approach, with the most notable one being allowing crypto companies to secure national banking charters. This Tuesday, Brooks also wrote about regulators needing to get ready for self-driving banks, aka decentralized finance (DeFi).

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Author: AnTy

UK’s FCA New Law Prohibiting Sale of Crypto Derivatives to Retail Traders Takes Effect

UK’s FCA New Law Prohibiting Sale of Crypto Derivatives to Retail Traders Takes Effect

  • The U.K Financial Conduct Authority (FCA) law prohibiting the sale of crypto derivatives products to retail investors comes into effect today. The law has raised divided opinions across the crypto players claiming the law will send retail investors to unregulated exchanges.

In October 2020, the FCA introduced a new set of crypto laws to govern the sale of derivatives on these assets, – which have become effective as of January 6th, 2021. According to the law, cryptocurrency service providers are prohibited from selling, marketing, and distributing crypto-related investment products to retail customers given the risk these assets hold.

“The FCA considers these products to be ill-suited for retail consumers due to the harm they pose,” FCA’s statement in October 2020 reads.

The financial regulator questioned the valuation metrics of the underlying crypto assets, market interference, proceeds from financial crime, and extreme volatility of crypto prices as reasons to stop the sale to retail customers. Notwithstanding, retail customers do not clearly understand these assets, the report read the “customers lack a legitimate investment need in these products.”

The FCA statement claims that investment in crypto ETNs and CFDs could cause customers to, “suffer harm from sudden and unexpected losses.”

With the ban kicking off today, the crypto community is in a divided territory as critics come out strongly claiming the flawed nature of the law, while others praise the steps taken by the financial authority. Critics argue that the rule limits retail investors (even the seasoned ones) from investing in crypto derivatives. They further argue that retail clients should be given equal opportunities as institutions.

Additionally, Komodo’s director of business development, Jason Brown stated the laws were made in a rush and didn’t involve other authorities and jurisdictions. The lack of involvement of any other country or region in creating these policies, according to Brown, distorts blockchain regulation across jurisdictions.

“What the blockchain industry needs the most is consistent regulations across jurisdictions,” Brown stated.

Other critics argued the prohibitive law will set individual customers to look for unregulated avenues and offshore cryptocurrency exchanges to invest in crypto derivatives which will make it even harder for the FCA to regulate them. This could cause even bigger harm to retail consumers than trading on regulated crypto exchanges, Dermot O’Riordan, partner of Eden Block explained.

Despite the criticism, some players in the crypto field are welcoming the law positively as a risk management tool for “reckless retail investors.” Speaking on the positive effects of the law, Gunnar Jaerv, COO of First Digital Trust said,

“More people would have to buy the ‘actual’ assets meaning that there would be real money going into the assets and will be priced into the market.”

This will stabilize the extreme volatility in the market as well as having stable prices, volumes, and market capitalization across the crypto market, he added.

The FCA in December extended the temporary registration regime period to July this year allowing crypto services providers in the process of obtaining a license to continue with their operations.

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Author: Lujan Odera

FinCEN’s ‘Proposed Rule’ Response Period Closes; 6,537 Comments Criticize The Changes

FinCEN’s ‘Proposed Rule’ Response Period Closes; 6,537 Comments Criticize The Changes

The cryptocurrency community widely questioned the “Proposed Rule” on non-custodial crypto wallets by the US Treasury as the public comment period closed on Monday 4th January. Coinbase, Gemini, Square, and other top crypto firms were part of the 6,537 comments submitted to the Treasury – dismissing the proposed changes that would see ‘convertible virtual currencies’ or ‘digital assets with legal tender’ service providers submit reports, keep records, and verify the identity of customers concerning transactions involving crypto assets.

On December 23rd, the Financial Crimes Enforcement Network (FinCEN) released a 72-page document on the proposed requirements for running a cryptocurrency exchange to curb illegal transactions. This new rule was not well received by cryptocurrency investors, exchanges, congress members, and a Senator.

In a letter to FinCEN, Coinbase stated the period given to the public to comment on the proposed rule change was not enough. The 15-day period following the document release runs through two federal holidays and weekends – not giving ample time to the public to analyze the rules, the letter reads.

“The 15-day period violates the Administrative Procedure Act. […] Coinbase has not had enough time to analyze this Proposed Rule, let alone identify and comment on all the issues the Rule raises.”

Cameron Winklevoss, a co-founder of Gemini exchange, shared similar views to Coinbase further stating the Proposed Rule – as it is – “won’t meet FinCEN’s stated intention of stemming illicit financial activity.”

The Rule is also “replete with ambiguity” which may undermine the overall compliance efforts currently in place across regulated exchanges, Cameron added. In their written statement to Treasury, Square Inc., also blasted the Proposed Rule claiming it will cause “unnecessary friction” in the industry as bad actors move away from regulated exchanges to private non-custodial wallets, which makes it more difficult to trace them.

Gemini, Coinbase, and Square also agreed that the proposed Rule is not technology-neutral – with a target on cryptocurrency exchanges. As per the Rule, if imposed, every cryptocurrency transaction above $3,000 will be subject to record-keeping, which differs from bank transactions above $3,000. Furthermore, only cryptocurrency exchanges will be required to record and report counter-party names and addresses on transactions above $10,000 to Treasury while filling currency transaction reports (CTRs).

With the current US Treasury regime on its closing days, as Biden’s team takes over, many see this Proposed Rule as a forced agenda to pass before the team leaving office. The Rule, if implemented, will introduce practical problems to the current compliance systems, while curbing the innovation across the crypto ecosystem, Cameron said.

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Author: Lujan Odera

FinCEN to Amend FBAR Rules Regarding Foreign Accounts Holding Crypto

FinCEN Intends to Amend the FBAR Rules Regarding Foreign Accounts Holding Cryptocurrencies

The Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Department of the Treasury shared its intent to amend the FBAR for cryptocurrencies.

The official document “Report of Foreign Bank and Financial Accounts (FBAR) Filing Requirement for Virtual Currency” notes that currently, FBAR regulations do not define a foreign account holding virtual currency as a type of reportable account.

This means, at the time, a foreign account holding cryptocurrencies is not reportable on the FBAR.

But now, FinCEN is sharing its intention to propose to amend the regulations implementing the Bank Secrecy Act (BSA) regarding reports of foreign financial accounts (FBAR) to include virtual currency as a type of reportable account under 31 CFR 1010.350, it states.

“This seems targeted at users of non-US exchanges & shouldn’t apply to assets in self-custody,” said Jake Chervinksy, General Counsel at Compound Finance.

According to him, it could be primarily about tax evasion and bringing non-US crypto companies into compliance with the BSA.

“Anyone claiming to have blocked US citizens (as BitMEX claimed) will have a tough time if/when hundreds of FBARs come flooding in.”

Jake Chervinksy General Counsel at Compound Finance

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Author: AnTy

Congress Members Request Treasury to Extend Comment Period on FinCEN’s Crypto Regulation

Congress Members Request Treasury to Extend Comment Period on FinCEN’s Latest Crypto Regulation

3,257 comments have been submitted so far to FinCEN’s midnight rulemaking.

Nine congress members have sent a letter to Treasury Secretary Mnuchin requesting an extension of the 15 day comment period on FinCEN’s proposed rulemaking related to “Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets.”

Tom Emmer, Tom Cotton, Bill Foster, David Schweikert, Darren Soto, Warren Davidson, Suzan K. DelBene, Ted Budd, and Tulsi Gabbard are the congress members who shared their concerns.

The letter states the concern that the midnight rulemaking does “not afford the American public a reasonable opportunity to respond” in what is “highly complex rulemaking.”

The members say while they do support the law enforcement in their efforts to combat criminals engaging in money laundering and illicit financing, “it would be impossible for the public to give meaningful comment with so little time.”

Not only a rushed process threatens the legitimacy of this rule but it would make the new regulations susceptible to legal challenges, reads the document.

They asked the department to extend the review period to 60 days and consider an extension of potentially six months to the proposed rule.

Meanwhile, the crypto community can submit their comments before the end of day on Jan. 4 on the government’s site. So far, 3,257 comments have been submitted.

“If we can get enough substantive comments in, they won’t have time to consider all of them adequately before Jan 20 and it will be out of Mnuchin’s hands,” advised Jerry Brito, executive director of CoinCenter while urging the community to comment no matter what part of the world they live in.

Joe Biden is to be sworn in as the President of the US on Jan. 20 and the Biden admin has announced that they will halt ongoing midnight rulemaking the day they get into office.

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Author: AnTy

NYDFS Approves Internet Giant, GMO, to Offer The First Japanese Yen (JPY) Pegged Stablecoin

NYDFS Approves Internet Giant, GMO, to Offer The First Japanese Yen (JPY) Pegged Stablecoin

Tokyo-based internet conglomerate, GMO Internet has been cleared by New York Financial Services (NYDFS) to provide two stablecoins; a Yen-pegged stablecoin (GYEN) and a dollar-pegged stablecoin (ZUSD).

The NYFDS allowed GMO Internet to set up a limited purpose trust company, GMO-Z.com which will issue the two stablecoins. In order for the company to gain approval, it had to meet various strict rules from the NYFDS and also adhere to the federal anti-money laundering (AML) rules and economic sanctions.

Although there are various regulated stablecoins, there aren’t any pegged to the Japanese yen. In this case, GMO Internet becomes the pioneer company to issue the world’s first JPY-pegged coin.

According to the company, both ZUSD and GYEN stablecoins can be bought and redeemed using GMO-Z.com. The two stablecoins will be powered by the Ethereum network and will be available from Jan. 2021. The firm also clarified that the two stablecoins will be available to both institutional and individual clients and are ideal for trading, payments, hedging, settlements, and arbitrage. GMO-Z.com Trust Company’s SVP of business development, Kurt Bierbower, explained further,

“We seek to dramatically reduce execution times and expand the digital options for retail and institutional clients in trading, settlements, payments, lending and remittances.”

GMO Trust also stated that it had entered into strategic partnerships with various global virtual asset exchanges to guarantee the liquidity of the digital currencies. Bierbower also clarified that the firm started to develop GYEN in 2018. However, the two stablecoins will not be offered in Japan.

The licensing means that GMO is one of the 27 firms that are regulated to engage in digital currency activities in New York.

GMO has been in the crypto space for a couple of years. The firm owns a licensed crypto exchange operating in Japan and also a Bitcoin mining outfit. The company also states that it runs the globe’s biggest online forex trading outfit apart from their main internet services business. The firm also has an Internet bank that is regulated by the Japanese Financial Services Agency (FSA).

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Author: Joseph Kibe

Indian Government Weighs Imposing 18% GST Tax On Every Bitcoin Trade

Indian Government Weighs Imposing 18% GST Tax On Every Bitcoin Trade

This could potentially bring in just under $1 million to the government in taxes.

The Indian government may not be ready to regulate cryptocurrencies yet but it doesn’t want to let go of the opportunity to fill up its coffers by levying heavy taxes on them. Bitcoin transactions are estimated to be around Rs 40,000 crore ($5.45 million USD) annually in the country.

The government is weighing a proposal to impose 18% goods and services tax (GST) on bitcoin transactions that could potentially provide them with Rs 7,200 crore (nearly $981k) annually on BTC trading in the country.

The Central Economic Intelligence Bureau (CEIB), an arm of the finance ministry is the one that has put forward the proposal in front of the Central Board of Indirect Taxes & Customs (CBIC). CEIP has conducted a study on levying GST on crypto assets.

According to local sources, CEIB has suggested that Bitcoin can be categorized under the “intangible assets” class and a GST can be imposed on all transactions.

Earlier this month, the Enforcement Directorate (ED) arrested a crypto trader in connection with a money-laundering probe linked to an online betting racket worth about Rs 1,000 crore ($136.2 million) with Chinese operators.

Back in 2018, the Reserve Bank of India (RBI) virtually banned crypto trading which was quashed by the Supreme Court which then asked the government to come with crypto regulation policies last year.

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Author: AnTy