US Bank Regulators to Roll Out Uniform Rules for Crypto & FinTech Firms; Streamlining Licensing

  • In efforts to ease the regulatory process for payment services and crypto firms, the United States is set to introduce a unified set of regulations that will be used in about 48 states.

As per a press statement shared with Bitcoin Exchange Guide, money services businesses based in the United States, composed of crypto firms, will in the near future enjoy easy regulatory processes. The press statement explains that the Conference of State Bank Supervisors (CSBS) is set to launch a group of state regulators which will oversee all the licensing work.

CSBS will bring together 48 state regulators who have agreed to come up with a unitary set of supervisory rules. Until today, crypto-based firms as well as payment service companies were forced to adhere to numerous individual state regulations.

About 78 firms will benefit from the fresh simplified format and according to an official at CSBS, these companies move more than $1 trillion per year combined. The enactment of the unified state regulations will help ease operations across many states.

John Ryan, CSBS’s CEO, stated that the new initiative will come with numerous opportunities which will help businesses operating in the country to expand their services. Ryan also quipped that the new model will work safely just like in the old regime.

He explained that the states will not be giving up their authority but will realize efficiencies through sharing of information. Ryan also explained that although states will be sharing information, every state has the right to conduct and independent examination when the regulators deem it necessary.

The new initiative comes after several complaints were filed by crypto and fintech firms as they try to get a solution on having a state-by-state supervisory regime that delayed the licensing process. CSBS embarked on testing various approaches to determine what could work well in efforts to come up with a lasting solution. The current unified approach led to promising results which culminated in the establishment of a pilot initiative last year.

Western Union’s Rosemary Gallagher whose firm participated in the pilot program praised the initiative saying it will lead to a faster licensing process.

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Author: Joseph Kibe

USPS Patents A Blockchain-Based Mail-In Voting System Despite President Trump’s Critics

The United States Postal Service (USPS) might have a blockchain-based plan for the U.S mail-in voting suggestion. According to a patent made public by the U.S Patent and Trademark Office on August 13, the USPS had filled an intellectual property application for a blockchain ecosystem dubbed ‘Secure Voting System’ back in February.

Interestingly, this development coincides with President’s Trump recent sentiments towards shutting down the USPC, a move that could ultimately stall mail-in voting.

The USPS patent features blockchain as a fundamental tech that will serve as a means towards a ‘trustworthy’ 2020 election in the U.S. Ideally, this blockchain voting ecosystem should leverage the aspects of reliability and security to enhance voting logistics as well as data transmission and storage of the same. The patent notes that registered voters will receive a computer-readable code, which in turn ought to confirm their identity and ballot information. The patent reads,

“The system separates voter identification and votes to ensure vote anonymity, and stores votes on a distributed ledger in a blockchain.”

Industry stakeholders, including Hedera Hashgraph Technical Lead, Paul Madsen, have since weighed in on the USPS blockchain-focused mail-in voting patent. In his opinion, such a move would be beneficial to everyone involved in the election process, but most importantly, to voters.

“The votes of individual voters would be recorded, either on the blockchain or effectively timestamped and then recorded elsewhere – and so both help to mitigate the risk of double voting, or vote manipulation as well as give the voter confidence through the transparency of the process.”

Successful Blockchain-Based Voting in the U.S

While the stakes are higher on U.S 2020 elections, the use of blockchain cannot be ruled out given the tech has been used in other instances. Some notable events in which stakeholders voted through blockchain include delegate selection for the Republican National Convention in the states of Utah and Arizona.

It was also used for absentee ballots in the 2018 West Virginia elections in representing the military who are overseas. Now that the USPS is looking to join this bandwagon, its Inspector General Office (OIG) has suggested other areas like supply chain, identity services, device, and financial management where it could further leverage blockchain.

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Author: Edwin Munyui

U.S Banks and Big Tech Ask the OCC for More Clarification to Issue Crypto Services

The United States Office of the Comptroller of the Currency (OCC) has received over 90 responses from various stakeholders’ in the financial services sector on its advanced notice of proposed rulemaking (ANPR) issued last month.

This independent bureau which operates under the U.S Treasury made highlights in July after it was approved for banks within its jurisdiction to act as crypto custodians. From the responses on the ANPR, some banks including PNC and the U.S are actually interested in scaling operations into the crypto scene.

With the OCC still at the initial stages towards rulemaking, some figures in the industry believe that now is the best time for innovators to give their input to the agency. Prominent firms that aired their views on the OCC ANPR for digital currency policies include Visa, Facebook’s Novi, Stripe, ConsenSys and Google which even suggested that the OCC should incentivize FinTech developments through hackathons, pilots and innovation competitions.

Industry Stakeholders Take!

A few issues appeared to have been more common for most of the stakeholders who gave their feedback before the August 3 deadline. The American Bankers Association (ABA) which wrote a letter as part of its contribution mainly highlighted the need for a consensus in taxonomy and terminology amongst other areas for the integration to happen seamlessly. The ABA letter reads,

“Effective policy analysis on crypto assets is essential to maintaining banks’ capacity to innovate, but it may be inhibited by the lack of common terminology. A common taxonomy and understanding of crypto assets’ risks and features, broadly consistent and coordinated across all the relevant regulators, is essential to fostering prudent innovation within a sound risk management framework.”

User protection policies were also highlighted in terms of privacy and security given the delicate balance needed to maintain some fundamental aspects of cryptocurrencies. Coin Center’s Research Director, Peter Van Vulkenburgh, was of the opinion that banks can actually provide privacy and surveil their clients’ activities through private coin and other features within crypto ecosystems. These sentiments on privacy and security were also echoed by MasterCard’s Tina Woo as she went to highlight the underlying potential,

“We believe cryptocurrencies and blockchain technology hold the potential to enhance operational resiliency, improve auditability, and enable new functionalities.”

Finally, an interesting perspective was raised by 3rd party crypto service providers which appear to be in favor of banks sub-contracting for critical crypto services. BitGo which has been a crypto custodian for over a year is one of the stakeholders’ who are of this view. Interestingly, the firm has the backing of payments giants Visa and MasterCard which are both eyeing the crypto card market and have been making strategic moves in the recent past. Ky Tran-Trong, Visa’s VP for Global Regulatory Affairs, confirmed this position,

“Our objective is to enable digital currency users to spend from their digital currency balance using a Visa debit or prepaid credential anywhere Visa is accepted.”

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Author: Edwin Munyui

CAOF to be Lead Plaintiff in Block.one ICO Lawsuit After Others File Inaccurate Data

A United States Court Judge Kaplan has now ruled that the class action suit brought against EOS developer Block.one ought to be represented by a lead plaintiff. This was after five of the investors of Block.one ICO displayed a lack of goodwill and commitment to make them the lead plaintiff of the case.

“Raises further concerns that the application is being driven by the lawyers, rather than the plaintiffs.”

The lead plaintiff often brings forth the interests of other plaintiffs in court in the case of a class-action suit. Hence, they get to pick the attorneys to handle the suit as well as picking up the legal tab. In this case, Judge Kaplan was keen to highlight that the case drags on for years which is potentially lucrative for the lead plaintiff’s attorneys.

CAOF declared the biggest Block.one loser

Law firm of Grant & Eisenhofer P.A has been chosen as the lead counsel in the case. This was decided upon by the Crypto Assets Opportunity Fund (CAOF) and rubber-stamped by the U.S. District Court for the Southern District of New York. This was after an August 4th hearing was able to confirm the losses suffered by CAOF and determined that they were the biggest losers.

The Williams Group that had filed a similar suit however had their motion shot down after the Judge deemed the evidence submitted inaccurate and unsubstantiated. Their trading data didn’t quantify how much they really had lost from the ICO. Data submitted indicated that they had lost more tokens than they acquired in the Initial Coin offering.

In a similar scenario, plaintiff Token Fund I, was incorporated only 2 days prior to filing the motion to lead the class action. They failed to produce intricate details of their previous trading activities, especially with Block.one.

The motion clarifies that considerations such as previous collaborations amongst group members and how they intend to move forward with the class action have to be made when a group makes an application for lead plaintiff.

Notably, Block.one launched an ICO last year raising north of $4 Billion. They were later on involved in a legal tussle with the Securities and Exchange Commission (SEC) that saw them remitting $24 million in fines. They have been implicated in several class-action suits for allegedly issuing unregistered securities.

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Author: Lujan Odera

USMC Bans Crypto Mining Apps From Govt Issued Phones Due to Privacy & Security Issues

The United States Marine Corps (USMC) released a memo on Tuesday in guidance to all holders of government-furnished equipment (GFE) mobile phones. The memo further prohibits the installation and use of these mobile phones from a select group of apps, including mining cryptocurrencies apps.

The set prohibition laws come up as a security and privacy concern for the Marine Corps, the memo states. Some of the major categories of apps forbidden from the installation on the GFEs include gaming, dating, gambling, security/monitoring bypass tools, rooting or jailbreak tools, and bitcoin/cryptocurrency mining applications. The statement reads,

“Users will not see or be able to install prohibited applications to their GFE device from Google Play or the Apple Store. If the user has an app installed that later becomes prohibited, it will be automatically removed/blocked by the management server.”

No direct reason is offered for prohibiting crypto-mining tools or any other apps rather than they raise security and privacy concerns to the USMC.

“The collection, use, and disposition of information for account creation or made available through mobile applications (e.g., physical locations, significant life events, images, videos, etc.) is a privacy and security concern.”

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Author: Lujan Odera

JP Morgan Chase Set to Pay $2.5 Million in Crypto Class-Action Lawsuit for Overcharging

The largest bank in the United States, JP Morgan Chase has agreed to pay $2.5 million to settle a class-action lawsuit related to charging higher fees in crypto transactions, reported Reuters on Thursday.

The lawsuit was over the bank’s 2018 decision to start treating the cryptocurrency purchases made with Chase credit cards as cash advances that result in higher fees for crypto customers.

As per the motion filed in Manhattan federal court on Tuesday, plaintiffs said the settlement would result in the members getting 95% of the fees that they were unlawfully charged. JP Morgan will be paying the fees but hasn’t admitted the wrongdoing.

Earlier this month, JP Morgan started offering its services to two crypto exchanges Coinbase and Gemini.

While Jamie Dimon, the CEO of the sixth-largest bank in the world by total assets called bitcoin a “fraud,” JP Morgan launched a stablecoin dubbed “JPM Coin” last summer.

The bank has even released its own blockchain platform called Quorum. Open-sourced in 2016, this Ethereum-based blockchain is designed for processing transactions within a permissioned network to solve performance and privacy challenges.

This week, another banking giant Goldman Sachs made headlines in the crypto space after it shared in its clients’ call that “bitcoin is not an asset class,” while categorizing it as nothing better than Tulipmania which is used for illicit activities and is prone to attacks and hacks.

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Author: AnTy

Will Blockchain Voting Be Used As A Solution In US Congress During COVID-19 Outbreak?

The United States Congress released a staff memo dated April 30th, which suggests that they are considering the use of a blockchain-based voting system to conduct remote voting for upcoming senate elections as the COVID-19 outbreak has made it impossible to conduct the election in the traditional way.

The memo was drafted after the “Roundtable on Continuity of Senate Operations and Remote Voting in Times of Crisis,” hosted by the Permanent Subcommittee on Investigations and chaired by Senator Rob Portman of Ohio.

The staff memo revealed that Congress is looking to use end-to-end encryption along with blockchain to ensure security and privacy of votes. Although the memo did not endorse blockchain directly, the main focus of the topic was on authentication and encryption. The memo did note that “the Senate may consider blockchain.”

The Finer Details of the Memo

The staff memo noted that both chambers of Congress have always met in person to conduct all types of business be it committee hearing, floor deliberation or voting and they have no plans to conduct these critical functions remotely. However, given the critical times that the world is facing, they are looking into encrypted distributed ledger.

The memo discussed that encrypted blockchain can ensure the transmission of vote securely while verifying the correct vote. The memo explained:

“With its encrypted distributed ledger, blockchain can both transmit a vote securely and also verify the correct vote. Some have argued that these attributes make blockchain useful for electronic voting broadly. Blockchain can provide a secure and transparent environment for transactions and a tamper-free electronic record of all the votes. It also reduces the risks of incorrect vote tallies. Moreover, some firms have already begun to deploy blockchain-like technology to help countries, like Estonia, run elections entirely online.”

The memo further also discusses certain risks involved with using blockchain technology, especially the majority control. The memo noted that if majority control of the blockchain falls into the wrong hands, it might be manipulated.

Given the small size of the senate, any remote voting system based on blockchain would be required to set up with utmost care eliminating risks of 51% attack, so that no bad actor can get their hands on the voting chip.

However, this is not the first attempt to use a blockchain-based system for remote voting, prior to this discussion, the blockchain-like system was deployed for Estonia’s 2019 parliamentary elections which saw 44% of the total vote being cast using the system.

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Author: James W

Crypto Rating Council Adds IOTA, BAT and USDC, While Ripple Gets Ignored

The Crypto Rating Council (CRC) is a consortium of United States-based crypto firms who advocates for better regulatory clarity in the crypto space and is backed by the likes of Coinbase, Kraken, Bittrex, and others.

Given the growing debate over whether cryptocurrencies fall under the security category apart from Bitcoin (BTC) and Ethereum (ETH) (they are considered as assets, given the level of decentralization and transparency), they analyzed a number of digital assets to determine whether they possess traits of Security.

In a blog post dated 2nd April, CRC revealed that they have inducted three new cryptocurrencies in its list with different ratings which include Basic Attention Token (BAT), USDCoin (USDC), and Iota (IOTA). The blog post also revealed that the recent analysis was based on reviewing their previous ratings along with new developments and available information in the public domain. CRC also updated the scores for Maker and Polymath tokens.

How Do CRC Ratings Work?

CRC rates each token on a scale of 1-5, the higher the rating, the higher its chances of showing traits of security. Security ratings are important since it ensures that these are not sold unregulated. Every country has different security laws and they must adhere by them and have a regulatory clearance before making it into the market. However, it is also important to note that CRC is not affiliated to any government body and its ratings are not endorsed by any developers, regulators or third-parties.

The CRC rating gave IOTA an overall score of 2.00 which makes it unlikely for it to be considered as a form of security. IOTA has always claimed to be among the decentralized projects and belive the current rating by CRC would really help it expand its credibility in the US market. The firm responded to their rating of 2.0 saying,

“With our Crypto Ratings Council rating, we believe the US market and CRC’s partner organizations will feel more comfortable and confident engaging with the IOTA token and protocol.”

Apart from IOTA, even BAT scored a 2.00 rating on CRC while USDC scored the lowest of 1.00 suggesting it inhabits the least qualities of security. USDC which is a US Dollar backed stablecoin, even DAI, the decentralized stablecoin scored 1.00 on CRC ratings suggesting stablecoins shows the least traits of security.

Ripple Shows High Traits of Security

Ripple backed XRP token when evaluated by the CRC back in 2019 scored 4.00 rating that suggest it shows high traits of Security. While CRC ratings are not taken into consideration by any government-affiliated agency or security regulators and probably won’t change any of their opinions, but Ripple is facing a lawsuit for being security in the United States. XRP still maintains a rating of 4.00 on CRC.

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Author: James W

Netflix’s ‘Tiger King’ Villian, Carole Baskin at The Big Cat Rescue Accepts Crypto Donations

With the Coronavirus (COVID-19) running rampant in the United States, Americans are drooling over the hot new docuseries on Netflix; “Tiger King: Murder, Mayhem and Madness” which features Carole Baskin as one of the costars. Baskin is the proprietor of Big Cat Rescue sanctuary which is based in Tampa, Florida.

Now Baskin and the Big Cat Rescue have announced that the public can donate towards its efforts of ensuring that big cats are not kept in captivity, and they can do so through cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH) and Bitcoin Cash (BCH).

Crypto-Donate-Big-Cat-Rescue
Source: Big Cat Rescue

Over the last couple of days, the television series has opened up a lid of rivalry between Tiger King and Carole Baskin. However, the interesting part of the intriguing story about the two is that they have used the internet to raise funds mostly from social media users for their goals.

Carole Baskin has been relying on the online community to keep her sanctuary afloat. Following the widespread publicity that the series has given Big Cat Rescue, the organization is now seeking to ride on the fame and is now accepting crypto donations through Bitpay.

Although Big Cat Rescue has been accepting crypto donations for a while now, people may not be willing to contribute to Baskin’s work after learning about some atrocities associated with her. Crypto enthusiasts may have been enlightened by the docu-series in regards to Big Cat Rescue’s main goal and may call upon other crypto users to shun away from the project.

Despite the series showing some negative aspects of Carole Baskin, she has come out to deny the allegations stating that facts were distorted. In fact, Carole is encouraging her supporters to come out in numbers and donate to save the exotic cats.

If you are persuaded to contribute to Big Cat Rescue’s agenda, the nonprofit outfit has made it even easier to do so. You can now donate Bitcoin, BCH or ETH through Bitpay.

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Author: Joseph Kibe

FATF Rates US As ‘Largely Compliant’ In Crypto AML/CTF Report, But Still Has Work To Do

In its recent revaluation on whether the United States is compliant with the set worldwide regulations on counter-terrorist financing (CFT) as well as anti-money laundering (AML), the Financial Action Task Force (FATF), has rated the US as ‘largely compliant’.

According to a FATF report that was released on March 31, the US was evaluated on its laws and regulations dealing with virtual assets and cryptocurrencies and was rated as largely compliant. The evaluation exercise mostly focused on recommendation 15 which deals specifically with crypto.

The ranking means that the US’s compliance with the recommendations has not changed since the last assessment that was conducted in 2016. However, FATF has updated its guidelines severally since then with the recent one being in October last year on FATF travel rules. Therefore, the latest assessment involved deeper scrutiny than the previous one.

The report noted some notable awareness about the risks posed by digital currencies as depicted by different regulators. The report singles out the different task forces as well as reports that have been looking at money laundering and crime financing through cryptocurrencies.

The FATF also notes that the current US regulations are working well in dealing with various Virtual Asset Service Providers (VASP) as per the FATF guidelines as they cover crypto exchanges and custodians. Nevertheless, the FATF is concerned that the regulations do not adequately deal with a VASP which is incorporated within the US but does not operate in the country, Cointelegraph reports.

Firms dealing with cryptocurrencies are categorized as Money Services Businesses (MSB) and are subjected to a higher compliance standard. Majority of MSBs have to come up with their own AML as well as CTF standards and, according to the FATF they are generally sufficient.

The report concludes that the US regulators have been lax in pointing out crypto service providers when they are enforcing regulation. However, the issues identified by the body seems to be minor making the US to be awarded a ‘B’ as per the FATF grading system.

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Author: Joseph Kibe