IMF Warns of DeFi & Stablecoin Risks, Biden Administration Taking ‘Aggressive’ Approach to Crypto

IMF Warns of DeFi and Stablecoin Risks, Biden Administration Taking ‘Aggressive’ Approach to Crypto

A senior White House official says the administration ensures a “smart and effective regulatory system” for crypto. Meanwhile, for the IMF, because DeFi is one of the main drivers of the rapid growth of stablecoins, it “warrants close attention.”

The Biden administration is ramping its regulatory scrutiny of cryptocurrency and will make a move to address a range of risks, reported the Wall Street Journal, citing a senior White House official.

Peter Harrell, senior director for international economics and competitiveness with the National Security Council at the WSJ Risk & Compliance Forum on Tuesday, said,

“You’re really seeing the administration at the beginning of what we expect will be an ongoing, quite aggressive effort to make sure we understand and address the whole range of risks that we see in the cryptocurrency space.”

At the same time, the administration seeks to position the U.S. as a leader in digital asset innovation.

According to Harrel, the agencies do think the cryptocurrency industry has “some potential benefits,” such as financial inclusion, but added, “there are clearly a whole range of risks.”

“I think you’re really seeing the administration kind of moving out on a number of different lines of work to make sure that we have a smart and effective regulatory system in place for cryptocurrency.”

A Sound Regulatory Framework

Elsewhere, the International Monetary Fund warned that the rapid growth of cryptocurrencies poses several risks to both investors and policymakers.

While the “crypto ecosystem offers an exciting new world of opportunities,” it also has its challenges in the form of risks to consumers from lack of operational or cyber resilience and anonymity and limited global standards creating data gaps for regulators, which in turn pose a threat to financial integrity, it said.

Moreover, “the advent of crypto assets and stablecoins in emerging markets and developing economies may accelerate dollarization risks,” said the IMF adding these markets can face “destabilizing capital flows” because cryptos are used to circumvent capital controls.

The report also mentions investor protection risks for DeFi, which it says is “gaining momentum by offering new services to users,” and inadequate reserves and limited disclosure for some stablecoins.

Decentralized finance (DeFi), according to the IMF, is actually one of the main drivers of the rapid growth of stablecoins as such “warrants close attention.”

“A sound regulatory framework for crypto assets, and decentralized finance markets more generally, must be a priority on the global policy agenda.”

When it comes to stablecoins, the IMF says regulations should correspond to the risks they pose and the economic functions they perform.

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Author: AnTy

National-Security Officials Warns Against Aggressive Crypto Regulation in Infrastructure Bill

National-Security Officials Warns Against Aggressive Crypto Regulation in Infrastructure Bill

National-security officials are warning that the crypto provision in the $1 trillion bipartisan infrastructure bill proposal could push illicit cryptocurrency transactions into markets where the US government has no reach, reported the WSJ.

Like some industry participants, national-security officials feel this will only add to the threat to American individuals, companies, and government agencies.

As we reported, the bill with its broad definition of “broker” that covers even miners, developers, and stakers to report the gross proceeds along with the names and addresses of the parties to the Internal Revenue Service, is currently in the House.

The IRS intends to capture billions of dollars in tax revenue through this crypto tax provision.

Given that developers, miners, and other parties do not have the required information to report, the crypto community pushed back hard against the bill and got support from some Senators.

According to crypto supporters, including market participants and now some intelligence and law-enforcement officials feel if the bill gets passed, it will drive economic activity overseas; as such, they are now “warning policy makers against overly aggressive regulations that risk exacerbating national-security hazards.”

Republican Senator from Wyoming Cynthia Lummis, an ardent supporter of cryptocurrencies and a bitcoin holder since 2013, was also involved in introducing an amendment to the bill in the Senate, which was blocked due to one single vote.

Her state has also been at the forefront of regulating the fast-evolving digital asset sector after passing crypto-friendly laws, including laying the groundwork for the chartering of Wyoming’s crypto banks, or SPDI banks — the first fully regulated financial institutions in the U.S. that hold crypto in addition to fiat currency.

“Wyoming, in fact, had so successfully innovated in this regulatory and legislative space that it was ready for prime time, in a very big way,” said Lummis in an interview, who cites Wyoming as a model for federal regulation of the $2 trillion crypto market.

According to Chris Rothfuss, a Wyoming state senator who chairs the chamber’s blockchain committee, the state needs to do something that doesn’t depend on waning industries, and “cryptocurrency provides an alternative store of value as well as the technology that diversifies our economy,” he said.

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Author: AnTy

Argentina’s Central Bank Warns of ‘Significant Financial Losses’ from Crypto Investing

Argentina’s Central Bank Warns of ‘Significant Financial Losses’ from Crypto Investing

The people of Argentina are actually investing in crypto to hedge themselves against the devaluation of its fiat currency peso, which has lost 80% of its value in the past four years.

The Argentine central bank and securities regulator released a joint statement Thursday warning the people about the problems associated with crypto investing.

Cryptocurrency “can cause significant financial losses for its holders, including the possibility of losing the totality of the resources invested,” said the statement. It then goes on to remind potential investors that digital assets aren’t legal tender.

The warning comes from a country that is struggling with currency turmoil and sovereign defaults. One of the biggest economies in Latin America has a history of currency devaluations and hyperinflation, making the citizens’ savings worthless.

Its fiat currency, the peso, has lost more than 80% of its value in the past four years. Because of this, despite strict controls on exchanging pesos for US dollars, Argentines largely keep their savings in USD.

Despite the risks, crypto trading isn’t at “significant levels of use and acceptance” in the country, said the government bodies in their statement.

Argentines have been shifting their focus on cryptocurrencies in the light of the decline in the economy that saw the number of crypto users in the country rising in the last 12 months, as per AFP.

Maximiliano Hinz, the head of Binance in Latin America, had reported a tenfold increase in active crypto trading accounts in the region. Hinz estimated that there were about 2 million registered trading accounts in the country.

Not only as a hedge against the currency devaluation, but people are also using their BTC, ETH, USDT, and DAI to pay for commodities.

Bitcoin and crypto have been serving as an inflation hedge against the backdrop of money printing by central banks.

In Nigeria as well, where the regulators have been letting the fiat currency weaken through multiple currency regimes, people are turning to BTC.

Besides the currency issues, Santiago R Santos of Parafi Capital also noted that crypto is the answer to remove innovation aversion and wealth distribution.

In Mexico, “wealth is very concentrated,” and the few controlling families don’t invest in innovation.

“Enter crypto where capital moves at the speed of information & finds the best talent across global open-source communities. Crypto is shattering this local inefficiency,” he said. “The Internet-connected the world with information. DeFi is connecting the world with capital.”

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Author: AnTy

Australian Financial Minister Warns Users On Crypto Investing Risks, But Govt Won’t Stand In the Way

Australian Financial Minister Warns Users On Crypto Investing Risks, But Govt Won’t Stand In the Way

The Australian Minister for Financial services and the digital economy, Senator Jane Hume, has sounded a warning to crypto investors telling them to be aware of the risks associated with the assets.

Hume said this while speaking at the Stockbrokers and Financial Advisers Association Conference in Sydney on Thursday.

Australia Is Not Against Crypto

The minister was also quick to point out the risks associated with cryptocurrencies while also revealing that the government won’t stand in the way of crypto investors but would rather give them the chance to make their own decisions.

Hume also hinted at the possible regulation of cryptocurrencies in the country when she said that digital currency transactions are also subject to Australian law.

Recent reports suggest that a parliamentary inquiry committee headed by Liberal senator Andrew Bragg is set to investigate likely ways to regulate cryptocurrencies.

The committee will look at the present policy and legal backdrop surrounding cryptocurrencies in Australia while also considering approaches taken by Canada, Singapore, the United Kingdom, and the European Union.

According to Bragg, the committee aims to identify the type of policy provision and legal certainty needed to scale up private investment into digital assets in Australia.

Bragg said the ultimate goal would be to develop a comprehensive regulatory framework for digital assets. Bragg also said that he would appreciate the formation of a licensing regime to protect the interests of consumers.

Bitcoin Freefall Prompts New Warnings From Governments

This new move taken by the Australian government could be traced to the recent crypto market crash. The current activities in the crypto market have seen governments reiterate their positions on cryptos; advising their citizenry to tread carefully.

Bitcoin saw a massive drop from its previous all-time high of $65,000 to below $40,000 this week. This drop had been attributed to Elon musk’s announcement that Tesla would suspend Bitcoin payments for Tesla cars.

The dip in prices also saw Chinese regulators warn local investors against trading cryptocurrencies. The Asian country also banned banks and payment firms from offering clients crypto-related services.

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Author: Jimmy Aki

BaFin Warns Binance of Offering “Stock Tokens’ Without ‘Necessary Prospectuses’

BaFin Warns Binance of Offering “Stock Tokens’ Without ‘Necessary Prospectuses’

This is in violation of European Union securities law, as per Germany’s financial regulator, while Binance says it is “committed to following local regulator requirements.”

Germany’s financial regulator is warning that Binance risks being fined for offering its tokenized stocks without filing a prospectus before offering the assets. The regulator said in a statement,

“BaFin has grounds to suspect that Binance Germany is selling shares in Germany in the form of ‘share tokens’ without offering the necessary prospectuses.”

“Please bear in mind that securities investments should only ever be carried out on the basis of the necessary information.”

Earlier this year, the leading stock exchange announced the launch of zero-commission stock trading, starting with Tesla (TSLA). Binance then announced the listing of competitor Coinbase’s COIN shares, and then this Monday, MicroStrategy (MSTR) joined Apple (AAPL) and Microsoft (MSFT) on the platform.

These “stock tokens” are denominated in the exchange’s own stablecoin BUSD.

The Federal Financial Supervisory Authority (BaFin) said this week that there is no prospectus on the exchange’s website for MicroStrategy, Tesla, and Coinbase issues, which is a violation of European Union securities law.

The violation can result in Binance being fined 5 million euros ($6 million). A spokesperson for the UK’s financial watchdog said,

“The firm offers a number of regulated and unregulated products and services across multiple jurisdictions … We are working with the firm to understand the product, the regulations that may apply to it, and how it is marketed.”

The synthetic shares, backed by actual stock, allow investors to reap the economic gains of a company’s stock performance and dividends, according to Binance. A Binance spokesperson said,

“Binance takes its compliance obligations very seriously and is committed to following local regulator requirements wherever we operate. We will work with regulators to address any questions they may have.”

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Author: AnTy

Monetary Authority of Singapore Warns: Crypto is ‘Highly Risky’ & ‘Not Suitable for Retail Investors’

Monetary Authority of Singapore (MAS) Warns: Crypto is ‘Highly Risky’ & ‘Not Suitable for Retail Investors’

Singapore is warning the public about the risks of trading cryptocurrencies. Tharman Shanmugaratnam, the chairman of the Monetary Authority of Singapore, in response to a parliamentary question on Monday said,

“Cryptocurrencies can be highly volatile, as their value is typically not related to any economic fundamentals.”

“They are hence highly risky as investment products, and certainly not suitable for retail investors.”

Crypto funds are not authorized for sale to retail investors, he added.

Tharman, a senior minister and coordinating minister for social policies, said the MAS has powers to impose additional measures on digital asset service providers, under which crypto exchanges are regulated, as needed.

At the beginning of the last year, Singapore introduced new payments legislation, The Payment Services Act, which allows the global crypto firms to expand their operations in the country by applying for operating licenses.

MAS Chairman’s comments came as the total cryptocurrency market cap surged past $2 trillion amidst the rising prices while BTC continues to trade around $58,500. While crypto trading in the country surged significantly over the past year, it remains small compared to traditional markets.

The combined peak daily trading volumes of Bitcoin, Ether, and XRP accounted for just 2% of the average daily trading volume of securities on the main stock exchange last year, said Tharman.

Amidst all this, authorities have stepped up efforts to combat money-laundering and terrorism financing risks associated with crypto assets, he said. In similar news, Singapore-based crypto trading platform Torque is shutting down after at least 70 police reports were lodged against it as investors claimed to lose millions in cryptos.

For this, MAS is raising awareness on the risks of investing in crypto and has increased surveillance of the sector to identify suspicious networks and higher-risk activities that may need further scrutiny, Tharman said.

“The crypto-assets space is constantly evolving.”

“MAS has been closely monitoring developments and will continue to adapt its rules as needed to ensure that regulation remains effective and commensurate with the risks posed. Investors, on their part, should exercise extreme caution when trading cryptocurrencies.”

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Author: AnTy

DC Comics Launches Batman-Themed NFT’s; Warns Developers from Copying its Characters

DC Comics Launches Batman-Themed NFT’s; Warns Developers from Copying its Characters

  • Comic publisher DC Comics plans to launch a line of non-fungible tokens (NFTs), report states.
  • Developers and freelancers are warned against creating NFTs resembling DC Comics characters or projects.

According to reports arising last week, comic book publisher DC Comics is trying out the NFT marketplace, with a plan to launch their own line of unique NFTs. In a story first reported by Gizmodo, DC Comics is “exploring opportunities in the NFT marketplace” in a bid to combat freelancers and NFT developers using their intellectual property images such as Batman and Wonder Woman to sell their NFTs.

On March 11, DC Comics announced a partnership with Veve App, which creates digital NFTs, to launch its “Black and White statues of Batman” NFTs. The “Series 4” Batman collection comprises 4 different schemes each color scheme has a limited number of digital copies, increasing the rarity and value.

NFTs hype has grown exponentially in the past few weeks as sports teams, musicians, and players create their own tokens for sale. These assets are essentially digital certificates representing art, music, videos, or creative pieces, with the data stored using a unique token on a blockchain like Ethereum.

While the Batman NFT projects have launched, the letter did not timeline when DC Comics releases its batch of NFT tokens of other characters. The company is yet to respond to any questions on their NFT launch at the time of writing.

The news seems to collide with the recent sale of a “Wonder Woman-themed NFT” that fetched $1.85 million last week. The letter warns any developer and freelancer from issuing NFTs that bear any likeness to any DC Comic character. This probably due to DC not getting any share of the proceeds despite Wonder Woman’s creator.

The leaked letter states the company is “examining the complexities of the NFT marketplace” with a plan to stop unauthorized sales of NFTs bearing DC Comics characters. The company detests any sale of NFTs with DC characters from freelancers and employees as well. The letter states,

“Please note that the offering for sale of any digital images featuring DC’s intellectual property with or without NFTs, whether rendered for DC’s publications or rendered outside the scope of one’s contractual engagement with DC, is not permitted.”

“If you are approached by anyone interested in including any of your DC art in an NFT program, please let Lawrence Ganem, DC’s VP, Talent Services know.”

The trail of NFTs in sports can be traced back to the NBA’s Top Shot platform, which has sold thousands of NFTs, and recently NFL superstar running back Rob Gronkowski also launched his NFTs representing his four super bowl wins.

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Author: Lujan Odera

New York Attorney General Warns Against Crypto Investing, says It ‘Could Cause Devastating Losses’

New York Attorney General Warns Against Crypto Investing, says It ‘Could Cause Devastating Losses’

New York Attorney General Letitia James has issued a warning against investing in cryptocurrencies.

“There are extreme risks in investing in virtual or cryptocurrencies,” she said. According to her, it is imperative that they act to protect the wallets of the investors, and as such,

“I’m warning New Yorkers and investors across the country that investing in this unstable market is not prudent and could cause devastating losses.”

“What should New Yorkers invest in? The lottery? Dollars? How about negative-yielding bonds?” commented trader and economist Alex Kruger on her warning.

While the NYAG office is being bearish on cryptocurrencies, lately, banks like BNY Mellon, Goldman Sachs, JPMorgan, and Citi are indulging in the crypto market and releasing their reports on the market’s bullish future.

The same day, Cboe also filed with the SEC to list a Bitcoin Exchange Traded Fund (ETF). Trader Jonny Moe said,

“It is beyond disappointing that the AG of the state that led financial innovation for the prior century is this shortsighted. NY continues to prove that they will likely not continue to be the world financial leader through the next century, and as a local, that’s sad to see.”

James especially directed her warning towards cryptocurrency trading platforms.

“Let this also serve as a warning to those facilitating these trades: If you don’t play by the rules, we will not hesitate to shut down your operations.”

These comments came after last week NYAG settled with Tether and Bitfinex with the companies not admitting or denying any wrongdoing.

“We’re ending Bitfinex and Tether’s virtual currency trading in New York,” she said at the time. “Those trading virtual currencies in New York cannot avoid our laws, period.”

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Author: AnTy

Global Digital Finance Warns Hong Kong’s Proposed Rule Will Send Crypto Investors to Unregulated Exchanges

Global Digital Finance Warns Hong Kong’s Proposed Rule Will Send Crypto Investors to Unregulated Exchanges

Recently, the crypto industry players in Hong Kong have focused on fighting a proposed law that limits crypto trading only to professional investors, which will practically see about 93% of the populace locked out of the crypto market.

A key cryptocurrency advocacy group, Global Digital Finance (GDF), is warning that if the proposed law goes through, most retail investors and traders will move to unregulated and unlicensed platforms.

Global Digital Finance is made up of leading crypto exchanges such as Coinbase, BitMex, OKCoin, and Huobi, steering the efforts against the proposed new legislation.

Their caution comes after the independent Financial Services. The Treasury Bureau (FSTB) came up with a crypto regulation framework late last year that seeks to ban all retail traders from participating in the crypto market. At the time, the regulator stated that the proposal was in line with the Financial Action Task Force (FATF) recommendations. At the time, the regulator explained that the new law was also meant to tighten Anti-Money Laundering (AML) as well as counter-terrorism financing measures.

However, the proposed law exceeds FATF’s recommendations and is in tandem with the stringent stance against crypto trading in mainland China.

The new law is under the public participation phase and is set to end soon before the legislation becomes law.

“Restricting cryptocurrency trading to professional investors only is different to what we have seen in other jurisdictions, such as Singapore, the UK, and the US, where retail investors can buy and sell virtual assets,” Said GDF’s chair, Malcolm Wright.

Wright explained that Hong Kong risks joining other crypto-hostile destinations stating that other FATF members such as the United States, United Kingdom, and Singapore all permit retail investors to participate in the crypto market.

A recent survey conducted by CitiBank found that only 504,000 people (7%) owned enough assets that meet a professional investor’s requirements.

The group also explained that the restrictions would also curtail innovation and even financial inclusion.

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Author: Joseph Kibe

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