Global Regulations, 16th October – Coinfirm takes a look back at a week rocked by numerous influential international bodies publishing compliance and regulatory recommendations. The statements and reports from the BIS, OECD and G7 touch on a number of current crypto and blockchain talking points.
BIS and 7 Central Banks Issue Report on CBDCs
The Bank for International Settlements (BIS) and 7 other central banks have issued a report on Central Bank Digital Currencies: foundational principles and core features which began with pointing out that “Central banks have been providing trusted money to the public for hundreds of years.” whilst listing out three foundation principles of issuing a CBDC being; “(i) a central bank should not compromise monetary or financial stability by issuing a CBDC; (ii) a CBDC would need to coexist with and complement existing forms of money; and (iii) a CBDC should promote innovation and efficiency.”
The other central banks which co-issued the report were; Bank of Canada, European Central Bank, Bank of Japan, Sveriges Riksbank, Swiss National Bank, Bank of England and the Board of Governors Federal Reserve System. The race to adopt a CBDC has heated up after China, which is not part of the BIS, began testing the ‘Digital Yuan’ this year. – READ MORE
OECD Publishes Comprehensive Global Crypto Tax Report
The OECD has published a 69-page report titled Taxing Virtual Currencies covering a range of topics and “emerging issues” related to cryptocurrency assets including; hard forks, decentralised finance and stablecoins. The report found that different jurisdictions view cryptocurrency assets in a wide variety of manners such as “financial instruments” or “commodities” and that global tax laws are highly inconsistent.
The report also touched on the regulatory concerns of DeFi due to “ fraudulent transactions and money laundering issues. There have been some recent examples where DeFi has been associated with the 2017-2018 ICO period where a lack of regulation has created instances of rapid boom and bust. An example is the YAM project, with unaudited code, which went from boom to bust within 48 hours. In addition, as for other blockchain-based technologies, the DeFi ‘industry’ suffered several important hacks in 2019 and 2020 resulting in major losses, in addition to the sale of several fake tokens suggesting they were affiliated to well-known dApps.” – READ MORE
G7 Cites FATF Crypto Guidelines to Counter Ransomware
In a statement the group raised concerns over the growing wave of ransomware attacks feeding illicit crypto fund flows and paid attention to FATF’s ‘Travel Rule’ as a beneficial method of combating the threat.
“The fact that criminals often demand that ransoms be paid in virtual assets is of particular concern,” the G7 statement warned whilst also advising “all countries to effectively implement the Financial Action Task Force (FATF) standards to reduce criminals’ access to and exploitation of financial services, particularly the updated FATF standards on virtual assets.” – READ MORE
FSB Issues ‘High-Level’ Recommendations on Stablecoins
The Financial Stability Board (FSB), an international regulatory body that makes recommendations on the global financial system issued the paper Regulation, Supervision and Oversight of “Global Stablecoin” Arrangements on Tuesday of this week.
The paper on global stablecoins (GSC) noted the potential risks to the financial system – “Exposures of financial institutions might increase in scale and […] may be a source of market, credit and operational risks to those institutions and, eventually, may end up having systemic implications.” – Whilst conceding that they “have the potential to enhance the efficiency of the provision of financial services.” – READ MORE
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