Today in Regulatory Update, we look at the recent developments in South Dakota, India, and Europe regarding cryptocurrency regulations. In South Dakota, Governor Noem vetoed House Bill 1193, which adopted the definition of money excluding cryptocurrencies. Meanwhile, the Indian Ministry of Finance released a notice letter informing the public that virtual currency activities are now subject to AML law. Lastly, the European Commission announced the launch of a European Regulatory Sandbox for Blockchain that will run from 2023 to 2026 and support 20 projects annually.
🇺🇸 The Impact of Governor Noem’s Veto on Crypto Regulation in South Dakota
In South Dakota, House Bill 1193 was delivered to Governor Kristi Noem on March 7th, 2023, which adopts the definition of money as “a medium of exchange that is currently authorized or adopted by a domestic or foreign government”, excluding thus cryptocurrencies; however, it includes CBDCs.
The Governor rejected the bill for several reasons:
- The exclusion of cryptocurrencies would put “South Dakota citizens at a business disadvantage”;
- CBDCs would become the only viable digital currency;
- The US government is still in the exploration phase of adopting a CBDC. Thus the bill would regulate “something that does not yet exist”
The bill can be accessed here.
Governor Noem’s veto letter can be accessed here.
🇮🇳 The Impact of AML Regulations on Virtual Currencies in India
On March 7th, the Indian Ministry of Finance released a notice letter informing the public that virtual currency activities are now subject to AML law.
The named activities are:
(i) „exchange between virtual digital assets and fiat currencies;
(ii) exchange between one or more forms of virtual digital assets;
(iii) transfer of virtual digital assets;
(iv) safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets; and
(v) participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset.”
All obliged entities under Indian AML law must perform KYC on their clients, transaction monitoring, abide by record keeping timeframe of 10 years, provide reports of the client data to regulators upon request and many more.
The notification letter can be accessed here.
The Prevention of Money Laundering Act of 2002 (PMLA) can be accessed here.
🇪🇺 The European Regulatory Sandbox for Blockchain
The European Commission announced the launch of a European Regulatory Sandbox for Blockchain, which will run from 2023 to 2026 and will support 20 projects annually. The first call closes on April 14th, 2023.
“Sandboxes are controlled environments where companies can test their products and services while engaging with relevant regulators.”
The selection process will be based on the following:
- the maturity of the business case,
- legal/regulatory relevance
- their contribution to the EU’s wider policy priorities.
The most innovative regulator participating in the sandbox will be awarded a prize every year.
Details about the project can be accessed here.
Details about documentation required in the application process can be accessed here.
The FAQ page can be accessed here.
