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A Bank Can Not Levy Money From Protected Assets

Crypto Regulation News: India to ban crypto as payment method, European Council approves two digital asset proposals, Biden signs infrastructure bill, WEF releases resource suite for CBDCs and stablecoins, and more!

Paradigm

Vol. 82, 15th November — 29th November

TL;DR

  • US regulators plan to define legal bank activities around crypto in 2022: The interagency sprint team was composed of the OCC, FDIC and Fed
  • SEC still doesn't like spot bitcoin ETFs. SEC open meeting on Dec 2 to include crypto panel discussion
  • President Biden signs infrastructure bill containing crypto broker reporting requirement into law. Biden picks Jerome Powell to be next Fed chair
  • WEF releases resource suite for CBDCs and stablecoins aimed at regulators and businesses leaders
  • IMF said bitcoin should not be used as legal tender in El Salvador
  • European Council approves two digital asset proposals. While ECB sounds alarm over linkages between stablecoins and conventional financial markets
  • India has no plans to recognize bitcoin as currency. Furthermore, India to ban crypto as payment method but regulate as asset. Indian central bank may pilot test CBDC in 2022
  • UK Law Commission affirms English and Welsh laws apply to smart contracts
  • Bank of England sees CBDCs as a revolution for the future of money
  • New German government cites crypto in coalition agreement
  • Finnish regulators published stricter rulings regarding crypto marketing
  • South Korean regulator proposes strict new rules for token issuers. The financial authority rules that NFTs are taxable
  • Chinese local government warns of digital yuan fraud. While Chinese crypto news site ChainNews shuts down
  • Thai lawmakers urged to approve tourism crypto to entice digital nomads
  • US Justice Dept is selling 56M in crypto to compensate victims of BitConnect's fraud
  • Bank of Russia plans to take fees for CBDC transactions. Russians transact 5B in crypto each year, Bank of Russia says
  • Commonwealth Bank of Australia recognizes risks in missing out on crypto
  • Fidelity clears regulatory hurdle to become Canada's first institutional Bitcoin custodian
  • Two Bitcoin funds launched in Singapore by MAS-regulated fund manager
  • Nigeria's eNaira wallet nears 500,000 downloads in first 3 weeks
  • Tanzania plans to launch CBDC after eNaira launch
  • Argentina to tax crypto exchanges
  • Peru's central bank is developing a CBDC
  • Israel reportedly adopts new AML rules for crypto
  • Ripple outlines possible regulatory framework for crypto industry in US
  • Republic of Palau joins hands with Ripple to develop digital currency strategy
  • Japanese Consortium plans to issue bank deposit-like digital Yen
  • eToro to delist Cardano by 2022 for US users due to regulatory concerns
  • Binance seeks investments from sovereign wealth funds. CZ reveals how many users left Binance after mandatory KYC
  • Manchester City officials sign and suspend partnership with mysterious crypto firm
  • And more!

Reports

WEF releases resource suite for CBDCs and stablecoins aimed at regulators and businesses leaders : On Friday, the World Economic Forum announced its Digital Currency Governance Consortium White Paper Series, a resource suite created by 85 organizations from 40 countries around the world. The publication contains eight separate white papers exploring topics such as the impact of lawmakers regulating stablecoins and central bank digital currencies, or CBDCs, as well as informing readers about their risks, benefits and alternatives. In addition, the suite addresses regulatory gaps for digital assets and their potential uses in further financial inclusion and cross-border aid.

"Investor and consumer protections continue to be imperative for cryptocurrency and stablecoins," said Anne Richards, CEO of Fidelity International, one of the companies that contributed to the publication. "The Digital Currency Governance Consortium focuses on this important topic, making a valuable contribution in mapping consumer risks and regulatory gaps to inform future policy-making."

According to the WEF, different world governments could benefit from collaborations on CBDCs and stablecoins in addressing the prevention of illicit activity, consumer protection and cross-border arrangements regarding CBDCs where regulatory gaps might exist. The organization's white paper on addressing regulatory gaps specifically cites a potential lack of cybersecurity having the ability to create a "full-blown systemic financial crisis" should a digital currency be compromised by a bug or other exploit.

The framework the WEF proposes to prevent and address gaps and inconsistencies in stablecoins and CBDCs involves having agencies form a task force composed of senior leaders focused on certain risk areas and those involved in setting some of the current standards on digital assets. According to the white paper, this approach could "lay the foundation for sustainable innovation, align regulatory frameworks and foster greater levels of international collaboration."

The new resource suite follows the WEF releasing guidance for regulators and policy-makers concerning regulations in decentralized finance in June. The organization said at the time the publication offered a foundational basis for examining critical factors concerning DeFi regulations.

Bitcoin Should Not Be Legal Tender in El Salvador: IMF : The financial institution said the Central American country's plans to acquire more bitcoin will require a "very careful analysis" of implications for its financial stability.

Opinions

El Salvador: Who Needs the IMF When You Have Bitcoin? The IMF is a brutal bully constantly declaring its virtue. It's about time someone pushed back.

Biden and the Fed: Why Powell or Brainard Won't Change Much for Crypto: Both candidates are seen as taking a tough stance on crypto regulation, but they're also both seen as dovish — possibly beneficial for bitcoin's inflation narrative.

Public Banking vs. Open-Source Money: What Omarova for OCC Means: The controversial nominee to lead the national banking regulator has been a critic of this controversial industry.

Stablecoin issuers poised to be banks of the future on road to adoption : Stablecoins are destined to grow, experts suggest, but are regulations the only way for the market to reach its full potential?

US Bitcoin ETF favors Australian approval, but Aussies need to go further : If Australia can embrace the crypto asset class, it could very realistically see an injection of new capital into its markets and the broader economy.

A Few Unorthodox Thoughts on DeFi Regulation: Why not try a "scorecard" for protocols?

VanEck's Bitcoin spot ETF shunt solidifies SEC's outlook on crypto : The SEC rejecting VanEck's spot ETF started a price reversal for Bitcoin as the regulator's outlook on cryptocurrencies is revealed further.

Bitcoin bulls in City Hall: Meet America's crypto mayors : A wave of political goodwill and support for Bitcoin is building up. Is this just hype, or will there be long-lasting support for crypto?

US is not moving fast enough to develop a CBDC, says former CFTC chair : "We should act now to improve access to financial services through other means as well — the need is too great," said Tim Massad.

Australian Tax Office says it can't rely on crypto users' own records : "Our main concern is that many taxpayers believe their cryptocurrency gains are tax-free or only taxable when the holdings are cashed back into Australian dollars," said the ATO commissioner.

Crypto poses no big risk to economy so far, Bank of Canada official says : Canada is one of the first countries to approve a Bitcoin ETF and is the fourth-largest nation in terms of hash rate.

Canada Needs a Loonie-Linked Digital Currency, Policy Experts Say: Policy think tank C.D. Howe Institute sees Canadian-dollar-linked stablecoins, issued by the Bank of Canada, becoming attractive to Canadians by making them convertible into cash.

Russia's Chief Taxman Says Crypto Could Erode State Taxation Profits: Head of the Federal Tax Service said tax evasion via crypto needs to be fought.

Indian Central Bank Governor Says Blockchain Technology Can Thrive Without Cryptocurrencies: There are far deeper issues involved with cryptocurrencies, RBI's Shaktikanta Das said.

Digital currencies won't impact US sanctions, Treasury exec says : Russia's digital ruble won't help the country avoid U.S. sanctions because the global economy is "interconnected," an official said.

Ripple case with SEC to 'likely' reach a conclusion in 2022, says CEO : "The judge realizes this is not just about Ripple, this will have broader implications," Ripple CEO Garlinghouse said.

USA

US Regulators Plan to Define Legal Bank Activities Around Crypto in 2022: The interagency sprint team was composed of the OCC, FDIC and Fed.

A group of U.S. bank regulators plans to announce how banks can interact with digital assets and what types of activities are legal in the coming year, according to a joint statement published Tuesday.

The Office of the Comptroller of the Currency (OCC), the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) summarized their policy sprint team's work over 2021 in the statement, saying the group studied crypto custody, sale, loans and payment activities that banks and similarly regulated entities might want to take part in. The interagency sprint team focused on creating a common vocabulary around digital assets, identifying possible risks to consumers and evaluating how regulations currently apply to digital assets, the document said.

"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 a crypto-asset roadmap that is summarized below," the document said.

Over the next year, the group plans to "provide greater clarity" on whether custody, purchase/sale, loan, stablecoin issuance and holding crypto assets are legally permissible for regulated institutions, and how banks should comply with laws if so.

"The agencies also will evaluate the application of bank capital and liquidity standards to crypto assets for activities involving U.S. banking organizations and will continue to engage with the Basel Committee on Banking Supervision on its consultative process in this area," the document said.

Bank of America Sees Stablecoin Regulation as Catalyst to Mass Adoption: Stablecoins are viewed as a systemically important asset with a market value of around $141 billion.

OCC Wants Banks to Seek Permission Before Offering Crypto Services: The letter comes as the OCC gears up for further digital asset regulation alongside other bank regulators.

What's the SEC Saying About Crypto?: Interpreting statements from SEC officials may really be just like reading tea leaves.

The SEC Still Doesn't Like Spot Bitcoin ETFs : The latest rejection shows how far the bitcoin ETF war has left to go.

SEC open meeting on Dec. 2 to include crypto panel discussion : The SEC is opening discussion on crypto and blockchain technology with regard to American investors.

Senate Banking Committee chair seeks information from stablecoin issuers and exchanges, suggesting possible hearing : The senator said he had "significant concerns with the non-standardized terms applicable to redemption of particular stablecoins" in separate letters to eight crypto firms.

President Biden Signs Infrastructure Bill Containing Crypto Broker Reporting Requirement Into Law : Sen. Cynthia Lummis and others are now attempting to narrow the scope of the law's crypto broker clause with a separate bill.

President Biden picks Jerome Powell to be next Fed chair : During his time as Fed chair, Powell has said the agency was "working proactively to issue a CBDC" but was unlikely to support a blanket ban on crypto.

US Senator Pat Toomey supports digital dollar, nomination of Powell as Fed chair : "The idea of having a tokenized dollar that is capable of being exchanged on a peer-to-peer basis on a platform where developers can innovate and develop new products and services… I think there's a strong case for that," said Pat Toomey.

Democratic senators oppose President Biden's OCC Omarova nomination : Saule Omarova's nomination for Comptroller of the Currency faces policy objections from Democrats and Senate banking committee members.

US Congressmen Introduce Bill to Modify Crypto Tax Provision in Infrastructure Law: U.S. President Joe Biden signed the infrastructure bill into law on Monday.

Hillary Clinton: Regulate crypto to stop manipulation by Russia and China : The former Secretary of State warns that if left unregulated, cryptocurrency markets and social media platforms could destabilize the U.S. dollar as the reserve currency.

US lawmakers introduce bill to 'fix' crypto reporting requirement from infrastructure law : The bill proposes pushing back the mandated reporting requirements to 2026 as well as changing the definition of broker.

Fed Governor Waller praises stablecoins as a genuine innovation that makes the development of CBDCs redundant : The total market capitalization of stablecoins increased five-fold in the past year alone.

US Justice Dept is selling $56M in crypto to compensate victims of BitConnect's fraud : "This liquidation is the largest single recovery of a cryptocurrency fraud by the United States to date," said the Justice Department.

Ripple outlines possible regulatory framework for crypto industry in US : Innovation sandboxes, applying existing frameworks on crypto, and communication between the public and private sectors were included in Ripple's suggestions.

Europe & UK

European Council approves two digital asset proposals : The European Union's planned framework for regulating cryptocurrencies is one step closer to becoming official. The European Council, which guides the EU's political agenda, announced its position on the Markets in Crypto Assets (MiCA) framework and the Digital Operational Resilience Act (DORA).

Following the deal, which must then be ratified, the European Council and Parliament may now begin discussions on the initiative before it is finally approved as legislation.

The MiCA framework is designed to safeguard investors and consumers from fraud, including guarantees that investors' money is secure in the event of a hack. If authorities believe that certain virtual currency exchange platforms are posing a threat to investors or users, they could impose more stringent regulations on them under MiCA. The MiCA's other major aim is to govern stablecoin issuers, following Facebook's desire to establish a stablecoin, initially dubbed "Libra," backed by a basket of fiat currencies.

The European Central Bank (ECB) has said that the new regulations will establish comparable cultural standards for payment service providers to guarantee user safety. According to the ECB's most recent announcement, the framework will also contain provisions addressing company governance and risk management, as well as prohibitions on providing services such as high-risk payment instruments.

The European Council's own MiCA negotiation mandate, which is over 400 pages long, suggests that the EU will not be relaxing its stance on asset-referenced token issuers. It says they should be subject to more stringent obligations than issuers of other crypto assets.

A number of exclusions were included in the negotiation mandate for MiCA. The Council has agreed that asset-referenced tokens authorized under the EU's capital requirements directive "should not require another authorization under [MiCA] to be issued." Under MiCA, the banks and other financial institutions that provide settlement services to stablecoins should be exempt from capital requirements.

According to the Council, nonfungible tokens, including digital art and collectibles that are valued based on each crypto asset's distinctive characteristics and thbenefits it offers, are not subject to MiCA rules. The rules do not apply to tokens that represent unique services or real assets, such as "product guarantees or real estate."

ECB Sounds Alarm Over Linkages Between Stablecoins and Conventional Financial Markets: The central bank said exotic market segments, such as crypto, remain subject to "speculative bouts of volatility."

New German government cites crypto in coalition agreement : The new German coalition is aiming to make the "European financial market supervisory law" fit for crypto assets and businesses.

UK digital services tax targets crypto exchanges : Britain's crypto exchanges will be levied with a 2% tax that is likely to be passed on to investors, warned CryptoUK.

Bank of England sees CBDCs as a revolution for the future of money : The Bank of England estimates that 20% of retail and consumer deposits could potentially move toward CBDCs.

Bitcoin too volatile to be adopted as legal tender, says BoE chief : The Bank of England promotes CBDCs as a "revolution of money," while Brits are not really willing to use it.

UK Law Commission affirms English and Welsh laws apply to smart contracts : "The Law Commission's analysis demonstrates the flexibility of the common law to accommodate technological developments, particularly in the context of smart legal contracts," said the announcement.

Spanish regulator raises alarm on Binance promo by soccer star Iniesta : A Binance promotion post by soccer legend Andrés Iniesta has so far amassed over 270,000 likes on Instagram.

Finnish regulators tighten the screw on digital currency marketing : The Finnish Financial Supervisory Authority published stricter rulings regarding crypto marketing.

Swedish call to ban crypto mining 'completely misinformed,' says fund manager : "The claim that Bitcoin miners jeopardize the electricity network is completely misinformed," says EU-based fund manager Melanion Capital.

Asia

South Korean regulator proposes strict new rules for token issuers : South Korea's Financial Services Commission (FSC) has issued a report outlining its new definition of cryptocurrencies, along with proposed procedures for token issuers and punishments for non-compliance. The mooted rules could impose onerous regulations on individuals or platforms that mint non-art nonfungible tokens (NFT) intended for trading, as well as decentralized finance projects among others.

The Tuesday report by the FSC details items it proposed in the Act on the Protection of Cryptocurrency Users that have been sent to the National Assembly for consideration. It lays down rules for token issuers who wish to have their tokens traded on Korean exchanges and suggested punishments for those the FSC has deemed to be making "undue profit through market manipulation or trading on undisclosed information."

The report first addresses token-issuing businesses, which include initial coin offering operators, decentralized autonomous organizations, NFT minting services and potentially others. The FSC would require these entities to submit a white paper, obtain a favorable rating from a recognized token evaluation service, obtain a legal review of the project, and disclose regular business reports to users.

Previously, the FSC had not recognized NFTs as assets to be regulated, but that decision changed earlier this week. It also considers privacy tokens, such as Monero (XMR) and stablecoins such as Tether (USDT) to be cryptocurrencies, while central bank digital currencies are not.

Failure to comply with the rules would carry a penalty of at least five years in prison plus three to five times the amount of the "unfair profit" made. Unfair profit would be considered any profit made while the businesses were in non-compliance with the law. These punishments echo those from the existing Capital Market Act.

The new proposals are in response to what the FSC has evaluated to be deficiencies in the ability of the Special Reporting Act to thoroughly protect investors. The act is the legislation that led to the closure of most of the country's crypto exchanges due to strict requirements to remain in operation.

Mixed messages on crypto tax rules create confusion in South Korea : Government officials waffling about the crypto tax that's set to come into effect in 2022 has created a maelstrom of conflicting reports that even officials can't seem to keep track of.

S. Korean Regulators Call for Criminal Punishments for Crypto Market Manipulation: The law is unlikely to go through Parliament this year.

Thai lawmakers urged to approve tourism crypto to entice digital nomads : The rollout of the Tourism Authority of Thailand's TAT Coin is coming closer to fruition, and is now awaiting government approval according to local figures.

China warns state-owned enterprises to cease involvement in Bitcoin mining : China is considering imposing harsh penalties on state-owned firms that continue mining cryptocurrencies.

Chinese Local Government Warns of Digital Yuan Fraud: Earlier in November, 11 people were arrested for using the e-CNY to launder money from Cambodia.

Chinese Crypto News Site ChainNews Shuts Down: The space for crypto media in China is shrinking.

Huobi Co-Founders Set Up New Chinese Entity: The crypto exchange deregistered a Beijing entity in July, amid a regulatory crackdown on crypto.

Japanese Consortium Plans to Issue Bank Deposit-Like Digital Yen by End of Next Year: Mitsubishi Corp. will lead a trial that is expected to start in January.

Rest of the World

India Has No Plans to Recognize Bitcoin as Currency; RBI Working on CBDC Rollout: The Indian parliament kicked off its winter session on Monday, during which key crypto legislation will be discussed.

The Indian government does not plan to recognize bitcoin as a currency, finance minister Nirmala Sitharaman said on Monday. During a question and answer session in the parliament, Nirmala Sitharaman also said that the government does not collect data on bitcoin transactions, according to a report from local news site Mint.

The Reserve Bank of India (RBI) is also working on the phased implementation of a central bank digital currency (CBDC), the ministry of finance said, according to a report from the Economic Times (ET) on Monday. The central bank was reportedly planning to pilot test a CBDC in 2022. The RBI has already proposed an amendment a 1934 act to include digital currencies in the definition of bank notes, according to ET.

The Indian parliament will discuss a highly-anticipated bill for cryptocurrencies, proposed by the government, in its winter session. The bill will ban all private cryptocurrencies, only allowing some to promote the underlying technology, but will also look to set up a framework for a RBI-backed digital currency, according to a Nov. 23 parliament bulletin.

India to Ban Crypto as Payment Method but Regulate as Asset: The Modi government will also ban active solicitation from crypto firms, such as ads.

Indian Central Bank May Pilot Test CBDC in 2022: Report : A digital currency is an offshoot of a legal tender issued by the central bank with potential wide use by households and businesses.

Experts divided on how far India's 'private crypto' ban will go : Previous documents from the Indian government indicate that it believes any cryptocurrencies not issued by the government are considered private and, therefore, could be banned.

Crypto prices in India tumble after crypto bill announced : The token prices on the Indian crypto exchange WazirX crashed following the announcement of a bill that would ban all private crypto.

India's crypto unicorn CoinDCX has no immediate plans for IPO : CoinDCX reached a $1.1 billion valuation by raising $90 million in a Series C funding round in August.

Singaporean crypto exchange enters India amid regulatory uncertainty : Singapore's Coinstore crypto exchange has allotted $20 million to open three new offices in the Indian market.

Two Bitcoin funds launched in Singapore by MAS-regulated fund manager : The new Bitcoin funds aim to provide simple and secure exposure to Bitcoin for professional investors.

Bank of Russia plans to take fees for CBDC transactions: The Bank of Russia views CBDCs as a responsible alternative to Bitcoin and wants to take fees from CBDC transactions.

Russians Conduct $5B Worth of Crypto Transactions a Year, Central Bank Says : The regulator said it is worried people will start putting their savings into stablecoins.

Digital ruble should not affect inflation, Bank of Russia says : According to official data, Russia's inflation rate reached 8.1% in October, the highest level in almost six years.

Commonwealth Bank of Australia recognizes risks in missing out on crypto : "We see risks in participating, but we see bigger risks in not participating," said CBA CEO Matt Comyn on the bank's recent crypto adoption play.

Proposed Australian exchange licensing could stifle competition: Kraken : Kraken Australia's managing director is concerned that a proposed new licensing regime for crypto exchanges could collapse the vibrancy of the industry down under.

RBA Steps Up CBDC Research but Is Not Convinced There Is a Policy Case Yet: The Reserve Bank of Australia thinks it's plausible that crypto becomes "niche" once stablecoins and CBDCs are in full force.

Fidelity clears regulatory hurdle to become Canada's first institutional Bitcoin custodian : The service would only be available to institutional investors for now, but Fidelity is also launching Bitcoin ETFs to cater to retail interest.

Tanzania Plans to Launch CBDC After eNaira Launch: The country's central bank has reportedly begun preparations for its own CBDC.

Argentina to Tax Crypto Exchanges : The Latin American country will levy a 0.6% tax on the exchanges on cryptocurrency purchases and sales.

Peru's Central Bank Is Developing a CBDC : The central bank's president said that the country is partnering with other central banks in the issuance of a domestic CBDC.

Israel reportedly adopts new AML rules for crypto : The Israeli government is now reportedly in the process of reviewing several crypto firms to issue operating licenses.

Israel's New AML Rules May Help Banks Onboard Crypto Clients : Regulators still need to issue guidance for banks on how to deal with crypto-related transactions

Republic of Palau Joins Hands With Ripple to Develop Digital Currency Strategy: The fintech company will explore the country's first digital currency strategy and its use case.

Crypto Miner Xive Shuts Down South Kazakhstan Mine Due to Electricity Woes: Mining in south Kazakhstan is no longer possible, Xive co-founder Didar Bekbau said.

'We are the number two crypto miner in the world, and we see practically no financial return,' says Kazakhstan President Tokayev : In addition to calling for greater regulation in the cryptocurrency industry, President Tokayez contemplated the introduction of a digital Kazakhstani tenge.

Nigerian Payments App Reportedly Suspending Operations Due to Government Crackdown on Crypto: Payments platform KurePay plans to suspend services to Nigerian users starting in 2022.

Nigeria's eNaira Wallet Nears 500,000 Downloads in First 3 Weeks: Africa's first CBDC launched in late October.

MISC

Not All NFTs Are Securities: When non-fungible tokens should be regulated under securities laws, and when they shouldn't.

The 'Bitcoin City' Fantasy: How might the low-tax, net-zero startup municipality play out?

eToro to delist Cardano by 2022 for US users due to regulatory concerns : The move surprised some users as ADA has not been typically on regulators' radars as of late.

Binance Seeks Investments From Sovereign Wealth Funds: The cryptocurrency exchange's global entity is looking to ameliorate its relationships with governments.

CZ reveals how many users left Binance after mandatory KYC : Binance CEO Changpeng Zhao shed new light on the exchange's compliance roadmap and its users' take on KYC so far.

Inflationary winds from around the world spell a sea change for Bitcoin : If inflation is taking a deeper hold on the global economy, could Bitcoin become less a speculative tool and more a safe haven?

Blockchain Association Raises $4M to Grow Its Presence on Capitol Hill: Kraken, Digital Currency Group (DCG) and the Filecoin Foundation participated in the round.

OKEx shared insights on trading, regulation, DeFi and more during recent Markets Pro AMA : Among many features, OKEx staff demonstrated how users could automate their trading process with no required coding knowledge on the namesake platform.

Manchester City officials sign and suspend partnership with mysterious crypto firm within a week : It is unusual for an organization such as a Premier League football club to publicly announce a partnership with a relatively unknown company in the crypto space and then quickly back out without explanation.

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A Bank Can Not Levy Money From Protected Assets

Source: https://medium.com/paradigm-fund/crypto-regulation-news-india-to-ban-crypto-as-payment-method-european-council-approves-two-53fc698a76d1