Major US Banking Regulators Finish “Policy Print” and Release 2022 Crypto Roadmap

Major US Banking Regulators Finish “Policy Print” and Release 2022 Crypto Roadmap

Top US banking regulator said on Tuesday that banks must seek and obtain written permission from their bank supervisors before engaging in cryptocurrencies.

The Office of the Comptroller of the Currency said that before taking on activities like providing custody services for crypto assets, banks must demonstrate they have appropriate risk management tools.

“I said the next few years will be the most important in the history of crypto policy,” commented Jake Chervinsky, head of Policy Blockchain Association. “Here’s proof: the major US banking regulators just finished a crypto “policy sprint” & say 2022 will be a big year. Get ready.”

On Tuesday, the Federal Reserve, Federal Deposit Insurance Corporation, and OCC released a joint statement, saying that they see the potential opportunities presented by the emerging crypto asset sector, but at the same time, they recognize the risks for banking organizations, their customers, and the overall financial system.

To provide clarity, the agencies recently conducted a series of inter-agency “policy sprints” focused on crypto and are now providing a roadmap of future planned work.

The focus of the sprint work included developing a commonly understood vocabulary, identifying and assessing key risks, including considering legal permissibility related to potential crypto activities conducted by banking organizations, and analyzing the applicability of existing regulations and guidance.

The staff also reviewed and analyzed activities banks may be interested in, such as crypto asset custody, facilitation of customer purchases and sales of crypto, loans collateralized by crypto, activities involving payments and stablecoins, and those that may result in the holding of crypto on a banking organization’s balance sheet.

The agencies said they would also evaluate the application of capital and liquidity standards to crypto for US banks. In addition, they will continue to engage with the Basel Committee on Banking Supervision and other relevant authorities.

“Based on this preliminary and foundational staff-level work, the agencies have identified a number of areas where additional public clarity is warranted.”

As a result, the agencies have developed this roadmap for cryptocurrencies. Throughout 2022, they plan to provide greater clarity on whether certain crypto-related activities conducted by banks are permissible, compliance with existing laws and regulations, and expectations for safety and soundness.

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Author: AnTy

After State Regulators, Now SEC is Scrutinizing BlockFi for Offering Yield Much Higher Than Banks’ 0.06%

After State Regulators, Now The SEC is Scrutinizing BlockFi for Offering Yield Much Higher Than Banks’ 0.06%

The US Securities and Exchange Commission (SEC) is now scrutinizing crypto lender BlockFi over its yield generating account that offers as much as 9.5% annual yield, which dwarfs the 0.06% average interest rate for bank savings accounts.

As we reported, BlockFi Interest Accounts (BIA) has already been gaining scrutiny from the regulators in different states, and it has been in “active dialogue” with respective regulators.

Unlike bank deposits, crypto accounts aren’t insured by the federal government, which is one of the regulators’ concerns.

The securities regulators at the state level have launched a broad examination of crypto lending firms that includes Celsius Network. In July, New Jersey’s Bureau of Securities demanded that BlockFi cease and desist from offering its accounts. Kentucky took a similar action, while authorities in Texas, Alabama, and Vermont told the firm to demonstrate why their states shouldn’t ban its lending product.

But BlockFi believes “it is lawful and appropriate for crypto market participants” and has been saying that “appropriate regulation of this industry is key to its future success.”

BlockFi supports a number of stablecoins, including BUSD, DAI, GUSD, PAX, USDC, and USDT.


Backed by Bain Capital and Tiger Global Management, BlockFi boasts over 500,000 retail accounts and was recently valued at more than $4 billion. Amidst the growing scrutiny, the company is on pace to make $475 million in gross revenue this year, as per BlockFi CEO and co-founder Zac Prince.

“Things aren’t slowing down,” said Prince during a recent interview at Bloomberg’s Financial Innovation Summit earlier this month.

The SEC is now reviewing whether the BlockFi accounts are securities and need to be registered with the regulator, reported Bloomberg, citing a person with knowledge of the matter.

The regulator, however, hasn’t accused the lender of any wrongdoing. Also, not all agency investigations lead to enforcement actions.

SEC Chair Gary Gensler, meanwhile, has repeatedly asserted that he believes crypto firms are selling products that should be registered with the agency. Cryptocurrency exchange Coinbase has already dropped its plans for its Lend product which would have paid a fixed 4% interest on crypto holdings after the SEC threatened to sue it.

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Author: AnTy

New Jersey Regulators Extend Enforcement on BlockFi BIA Ban to December 1st

New Jersey Regulators Extend Enforcement on BlockFi BIA Ban to December 1st

The enforcement of the cease-and-desist order on BlockFi’s Interest Accounts (BIAs) has been postponed yet again by the New Jersey Bureau of Securities (NJ BOS). This marks the third extension of the enforcement of the ban on BIA.

Third Extension Since July

The cease-and-desist order, which was issued in early July by the New Jersey regulator, and was scheduled to come into effect on July 22. The state regulator frowned at BlockFi’s BIAs, stating that it was an “unregulated” security under the New Jersey Securities Law.

However, the order was delayed to Sept 2 with a further extension putting it on Sept. 30.

Meanwhile, the government agency has once again postponed the enforcement of the order to Dec. 1, per reports from BlockFi with the crypto company saying they are still in dialogue with the regulator.

BlockFi has insisted that its services are “lawful and appropriate for crypto market participants.” The crypto company made this known despite not being insured by either the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC), or any US regulator.

The securities arm in New Jersey had taken offense at the blockchain company’s floating of the interest-yielding accounts without requisite approval and informed the company to stop onboarding new customers.

As BlockFi explained in the past, the order doesn’t affect existing BIA customers.

Meanwhile, the NJ BOS is not the only regulator looking to pick a bone with BlockFi. Regulators from Texas, Alabama, Vermont, and Kentucky have also red-flagged the BIA initiative, with BlockFi still noting that its services were lawful and do not fall under the securities definition.

Interest-Yielding Accounts Not Accepted

Despite regulatory fogginess, the crypto scene in the US is at an all-time high as investors search for channels to increase their wealth in the aftermath of the global pandemic.

Also, inflation concerns have seen institutional investors like MicroStrategy add deflationary virtual currencies like Bitcoin to their balance book.

Meanwhile, mainstream adoption of cryptocurrencies is still way behind, with crypto companies looking to bolster the growth of the nascent industry. Given this, interest yields and return on investments (ROI) are unusually high, with BIA averaging 7.5% annual percentage yield (APY) on staked digital assets.

However, regulators have taken offense at this and are looking to quell the move. Like BlockFi, crypto-lender Celsius is facing a similar fate after receiving cease-and-desist orders from the NJBOS and the Texas State Securities Board (TSSB).

Top US crypto exchange Coinbase has also seen its “Lend” offering shut down after the US Securities and Exchange Commission (SEC) threatened to open legal proceedings against the publicly-listed company.

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Author: Jimmy Aki

Treasury Secretary Urges Regulators to ‘Act Quickly’ in Drafting Stablecoin Rules

Treasury Secretary Urges Regulators to ‘Act Quickly’ in Drafting Stablecoin Rules

Jeremy Allaire, co-founder & CEO of Circle, the issuer of USDC stablecoin, called this meeting an “extraordinary and positive” movement as “It’s a sign of how far we’ve come and how fast this is all happening.”

Treasury Secretary Janet Yellen met with the top US financial regulators and urged them to accelerate their consideration of new rules to regulate stablecoins.

“The secretary underscored the need to act quickly to ensure there is an appropriate U.S. regulatory framework in place,” the Treasury Department said in a statement following Yellen’s meeting with the President’s Working Group on Financial Markets on Monday.

The group discussed the rapid growth of stablecoins, whose total market cap has surpassed $110 billion, with Tether (USDT) dominating with 57.13% market share followed by USDC at 23.57%, and BUSD at 10.22%.

“The demand for stablecoins comes from the ability to use dollars in new ways,” Robert Leshner, CEO of DeFi lending protocol, Compound Finance, tweeted to the Treasury Secretary.

“Stablecoins are unlocking a wave of innovation with the potential to change every facet of finance; to make markets cheaper, faster, fairer, and more transparent.”

US regulators also discussed their potential uses as well as risks to the financial system.

The group “expects to issue recommendations in the coming months,” according to the statement.

Jeremy Allaire, co-founder & CEO of Circle, called this meeting an “extraordinary and positive” movement as “It’s a sign of how far we’ve come and how fast this is all happening.”

“Crypto, public chains, DeFi, stablecoins and other digital currency models pose many complex questions, and requires significant engagement with policy makers if we hope to achieve global mainstream scale and adoption.”

According to him, stablecoins should achieve mainstream scale far ahead of any CBDC project. And it’s critical that national governments take a view on this, but they shouldn’t “try and fit a square peg in a round hole.”

He said this engagement offers an enormous opportunity for the US government and the global digital currency industry.

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Author: AnTy

Bybit Updates Trading Platform With New KYC Rules As Global Regulators Clamp Down

Bybit Updates Trading Platform With New KYC Rules As Global Regulators Clamp Down

Major crypto derivatives exchange Bybit has updated its know-your-customer (KYC) rules.

The new KYC policies would improve security compliance for traders while also helping to protect users’ funds.

New KYC Policies Start July 12

Bybit revealed that the new policies would be implemented from July 12, 2021. Documents containing proof of origin (passport/ID), full name, date of birth, and others would now be mandatory as part of the individual KYC requirements.

According to its updated FAQ, Bybit users withdrawing more than 2 BTC in a day will have to undergo facial recognition and share an identity document.

Users who take out more than 50 BTC will also have to show proof of address.

Bybit is revamping its KYC procedures ahead of its planned introduction of Spot trading, Options, and the upgrade of its cold wallet.

The firm plans to roll out trading pairs and assets for its crypto spot trading in the third quarter of this year (Q3), while the options would come much later before the end of the year.

Founded in 2018 by Ben Zhou, Bybit is headquartered in Singapore. The crypto derivatives exchange claims to have about 2.5 million global trading clients in more than 200 countries around the world.

The platform has grown significantly since the beginning of this year. Bybit claims to have recorded more than $1 trillion in total overall trading volume in Q1 2021.The platform also claims to facilitate about $76 billion in daily trading volume.

Bybit Under Regulatory Clampdown

Similar to exchanges like Binance, Bybit has also received warnings from regulators. In May, Japanese financial regulator, the Financial Services Agency (FSA), issued a warning to Bybit for operating without registration.

The FSA had claimed that Bybit allowed residents of Japan access to the exchange without getting permission from authorities.

Bybit has also faced regulatory action in the United Kingdom. Earlier this year, the UK’s Financial Conduct Authority (FCA) issued a warning against Bybit. The regulator also alerted the public that the firm had been operating in the country without authorization. Subsequently, Bybit suspended its services to UK residents from March 31.

In Canada, Bybit also faced scrutiny over accusations surrounding the violations of Ontario securities law. The Ontario Securities Commission filed a statement of allegations against the exchange last month, accusing it of operating an unregistered cryptocurrency trading platform.

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Author: Jimmy Aki

UK’s Financial Regulator’s Notice has ‘No Direct Impact’ on Binance, says Exchange after FCA Ban

UK’s Financial Regulator’s Notice has ‘No Direct Impact’ on Binance, says Exchange after FCA Ban

The leading cryptocurrency exchange, Binance, said that they are aware of the recent report about a notice sent by the UK’s financial regulator in relation to Binance Markets Limited (BLM) that ruled that the firm cannot conduct any “regulated activity” in the UK.

“The FCA UK notice has no direct impact on the services provided on Our relationship with our users has not changed,” clarified Binance.

According to the exchange, BML, acquired by the Binance Group in May 2020, is a separate legal entity and does not offer any products or services via the website.

Binance hasn’t launched its UK business or used its FCA regulatory permissions yet, said the exchange.

“We take a collaborative approach in working with regulators and we take our compliance obligations very seriously. We are actively keeping abreast of changing policies, rules and laws in this new space.”

Over the weakened, as we reported, Binance gave its Ontario, Canada-based users six months to exit their positions and leave after the Ontario Securities Commission (OSC) accused it and several other crypto trading platforms of failing to comply with provincial regulations.

Last week, Japan’s Financial Services Agency (FSA) also warned Binance for the second time in three years that it is operating in the country without permission.

Now, the Financial Conduct Authority (FCA) has ruled that they can’t operate in the UK while issuing a consumer warning, advising people to be wary of adverts promising high returns on crypto asset investments.

The FCA said that BML is not currently permitted to undertake any regulated activities without the prior written consent of the FCA and has until Wednesday, June 30, to comply with the ruling.

The exchange must also clarify its website, social media channels, and other communications that it is no longer permitted to operate in the UK.

Moreover, no entity in the Binance Group holds any form of authorization, registration, or license to conduct a regulated activity in the UK, said the regulator. Binance Markets won’t be able to resume its UK operations without prior written consent.

While people in the UK are not allowed to use Binance’s services to speculate, they can still use the website to purchase and sell cryptocurrencies, analyst Colin Stone told BBC.

“A significantly high number of cryptoasset businesses are not meeting the required standards under the money laundering regulations, which has resulted in an unprecedented number of businesses withdrawing their applications,” an FCA spokesperson said. More than 90% of the firms assessed have withdrawn applications following the FCA’s intervention.

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Author: AnTy

Sichuan, China Regulators Meeting up with Power Companies Regarding Crypto Mining

Sichuan, China Regulators Meeting up with Power Companies Regarding Crypto Mining

Sichuan, which is the largest hydropower mining area in China and accounts for 10% of China’s hash rate, is not the only province gathering information on crypto mining.

The situation in China about crypto mining hasn’t become clear yet but the good thing is the Sichuan government is holding a virtual currency mining research symposium where it will meet local power companies regarding crypto mining.

Sichuan is not the only province gathering information on crypto mining, an official at the Sichuan Energy Regulatory Office of National Energy Administration told Reuters.

To be held on June 2nd, the energy regulator is aiming to analyze the impact of shutting down mining on the consumption of wastewater and gather suggestions, as per local publication Wu Blockchain.

Sichuan is the largest hydropower mining area in China and accounts for 10% of China’s hash rate.

As we reported, Chinese miners have already started to make their way overseas ahead of the government providing clarity on crypto mining. Some large miners have booked the mines in North America, Kazakhstan, and Russia. However, compared to China, these regions will cost them much more.

According to Chinanews, Binance’s hash rate coin BTCST has also reportedly invested $3.1 million to acquire a mine in Tbilisi, Georgia, with a capacity of 29 million watts.

Amidst this, Spartan Black of crypto fund The Spartan Group shared that the date July 1st is of significance in China’s context as this marks the 100th year anniversary of the founding of the Chinese Communist Party. He said,

“The CCP needs to ensure stability ahead of the CCP centennial celebrations on July 1st. Heads will roll if there are any social disturbances ahead of one of the most important events in CCP history.”

This could further explain the sudden “change” in the government’s stance toward crypto assets, which the PBOC governor termed as an alternative asset class only last month.

Meanwhile, after reacting negatively to China banning Bitcoin and mining, the price of BTC is now showing signs of recovery.

But while BTC has gone past $40,000, the market is not sure about what’s to come next. It is expected that Bitcoin can very much continue to trade sideways for months before it goes on to hit new highs.

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Author: AnTy

Nebraska Passes a Crypto Banking Bill

While at the Federal level, regulators can’t seem to wrap their heads around Bitcoin and crypto, still, on the state level, significant strides have been made towards the adoption of cryptocurrencies.

As we reported, Wyoming, Miami, Kentucky, and many other states have taken big steps towards providing a friendly regulatory environment for crypto activities and business to grow.

Nebraska is the latest one whose unicameral state legislature has passed a bill to create a state bank charter for digital asset depository institutions, similar to Wyoming’s special purpose depository institutions such as Kraken Financial and Avati Financial.

Bill 649, which is now headed to Nebraska Gov. Pete Ricketts, would create a charter that will provide institutions with places to custody their crypto assets,

“When the bill was introduced in January, there was a distance between the banking industry and the digital asset deposit institutions’ proponents,” said state Sen. Matt Williams, chairperson of the legislature’s Banking, Commerce and Insurance Committee. “It was 18 weeks of constant negotiations,” with the largest disagreement about using the word “bank.”

As such, unlike Wyoming SPDI banks, the Nebraska bill would require crypto-related institutions to use “digital assets” before “bank.”

Additionally, Nebraska’s digital asset banks won’t be allowed to accept fiat deposits. They also have a minimum reserve capital requirement of $10 billion.

Both Wyoming and Nebraska’s digital asset banks cannot lend in fiat and are required to hold 100 of its assets in reserves. Digital asset banks in Nebraska are allowed to apply for access to the Federal Reserve’s payments system.

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Author: AnTy

OCC Mulling Partnership with Feds and FDIC To Regulate Crypto

  • US financial regulators are ramping up efforts to regulate the burgeoning crypto industry.
  • The new head of the Office of the Comptroller of Currency (OCC), Michael Hsu, has made this known in a recent House Committee on Financial Services hearing.

Joint Task Force On Crypto

According to the Treasury Secretary Janet Yellen appointee, a combination of the OCC, Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) may soon end cryptocurrencies’ regulatory uncertainty.

Hsu mentioned this in a virtual hearing titled “Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions.”

According to Hsu, the OCC has spoken with the Feds and the FDIC to create an “interagency sprint team.” The joint task force would focus on creating a regulatory framework for the nascent industry.

This was in response to Rep. Tom Emmer (R-MN), who pressed each regulator on what their respective agencies were doing to combat bad practices in the crypto space.

Also in attendance was Vice-Chair of the Federal Reserve Board of Governors Randal Quarles and FDIC Chair Jelena McWilliams.

Confirming Hsu’s comments, Quarles said that the agencies in question were focused on the crypto issues at hand and aim to have answers and joint views soon.

The lack of regulatory clarity has served as a red flag to institutional investors from staking in the emerging technology.

Calls for a dynamic regulatory framework have been on for some time, with Securities and Exchange Commission (SEC) commissioner Hester Peirce saying the SEC needs to step up to the task.

But Hsu said that a “fragmented” approach to crypto regulation might not work out in the long term. He is deeply concerned as the lack of collaboration among regulators on this financial innovation is a pain point for many investors.

Too Many Cooks Spoil The Broth

The US crypto space has been fraught with many views on how cryptocurrencies should be regulated. Each government agency has used an independent rule book in determining what constitutes a security or a commodity.

An example is the SEC classifying Ripple’s XRP a “security” and the Commodity Futures Trading Commission (CFTC) calling Bitcoin and Ethereum “commodities.”

These disjointed efforts by regulators have seen many crypto startups setting up elsewhere, as noted by Ripple CEO Brad Garlinghouse.

But the most pro-crypto regulatory agency has been the OCC under the helms of new Binance US head Brian Brooks. Brooks, who had a stint with US largest crypto exchange Coinbase, permitted banks in an interpretive letter to offer crypto custodial services to their clients. Alongside this, he also said they could issue their stablecoins – digital assets that monitor fiat price action.

But the new OCC head may not continue on this lane as he has called for a staff review of the agency’s actions in the crypto space.

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Author: Jimmy Aki

Grayscale Is Interested in Launching A US Bitcoin ETF and So Are Its Investors, says CEO

Michale Sonnenshein says it is a “matter of when not if” US regulators approve a Bitcoin ETF but waiting for a green signal from the regulators.

Grayscale Investments, the world’s largest digital asset manager, is betting on the approval of a US Bitcoin exchange-traded fund (ETF) in the near future.

The company is interested in launching a Bitcoin ETF, that is if the authorities give it the green light to do so. Chief executive Michael Sonnenshein told Insider,

“When we get the signal that perhaps they have greater comfort and have seen some of [the] elements in the market mature, we would continue to look to be engaged in those discussions.”

The asset manager has $43.55 billion in AUM, of which north of $37 billion is in Grayscale Bitcoin Trust (GBTC).

GBTC has been trading at a discount for over ten days now, currently at 7%, as per YCharts.


As we reported, the company has posted a number of ETF-related jobs, which has been in response to “customer demand,” sparking the speculation that Grayscale is planning to file for an ETF. Zac Prince, co-founder and CEO of BlockFi, one of the largest holders of the Grayscale Bitcoin Trust (GBTC), called Grayscale’s ETF job postings’ “an interesting signal.”

“The race to launch the first Bitcoin ETF is heating up,” said Todd Rosenbluth, director of ETF research for CFRA Research.

As we saw in Canada, the first-mover advantage is “tremendous” in the ETF space, and “whichever comes out of the gate first will have a leg up,” Rosenbluth said.

While several such proposals have been filed in the past, the US Securities and Exchange Commission (SEC) has yet to approve one. Canada has already listed three Bitcoin ETFs. Jake Chervinksy, General Counsel at Compound Finance said,

“Although several proposals have been submitted, most are still incomplete & none have been published in the Federal Register yet. Publication is the event that triggers the SEC’s deadlines to evaluate a proposal (240 days maximum).”

And while Grayscale is interested in applying for approvals for an ETF, the company is waiting for a stronger signal from the regulators before taking action.

Still, it is a “matter of when, not if” US regulators approve a Bitcoin ETF, said Sonnenshein. But he doesn’t want to second-guess the SEC, as “ultimately those decisions are in the hands of regulators.”

Back in 2017, Grayscale made the push to convert its close-ended GBTC fund into an exchange-traded fund but pulled out of the process voluntarily. According to the CEO, a Bitcoin ETF would be “well-received by the investment community” because of the product structure, which is popular, and their familiarity with it.

“We’re certainly seeing positive receptivity from our investors… and as a result of that, we certainly want to make sure we can continue to stay in front of investor demand.”

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Author: AnTy