In today’s crypto regulatory update, we have some interesting news from around the world. The Philippines Securities and Exchange Commission (SEC) has issued a consultation paper on crypto assets; Panama approved bill 697 to regulate virtual asset service providers; South Korea is introducing a virtual currency tracking system; the Federal Reserve Board published a policy statement regarding banks under federal supervision; Indonesia postponed its launch of national crypto exchange and finally, the European Union seeks to regulate crypto-related smart contracts. All these events indicate that governments are taking an active interest in regulating cryptocurrencies.
🇵🇭 The Philippines Securities and Exchange Commission (SEC) has issued a consultation paper on crypto assets
The Philippines Securities and Exchange Commission (SEC) has issued a consultation paper covering all financial products, services and financial service providers under the jurisdiction and bringing into its scope crypto assets: “Implementing Rules and Regulations (IRR) of Republic Act No. 11765” (IRR).
The IRR is said to “operationalize the newly signed law that aims to protect the interests of financial consumers by strengthening the country’s financial regulators by providing them with rule-making, surveillance, inspection, market monitoring, and more enforcement powers.”
The proposals mention that:
- under the securities definition, tokenized securities products will be included
- individuals acting as an investment adviser within the jurisdiction, representing, or identifying themselves as investment advisers must register with the Commission.
- Financial service providers must establish a Financial Consumer Protection Assistance Mechanism (FCPAM), under which they would offer free assistance regarding financial transaction concerns for financial users to file complaints and make inquiries and requests.
- enforcement actions to be taken:
- “the restriction on the ability of the financial service provider to collect excessive or unreasonable interests, fees, or charges;
- disqualification and/or suspension of directors, trustees, officers, or employees;
- the imposition of fines, suspension, or penalties;
- issuance of cease-and-desist orders;
- suspension of operation;
🇵🇦 Panama approved the bill 697, regulating the Marketing and Use of Virtual Assets and Virtual Asset Service Providers
In 2022 Panama approved bill 697, regulating the Marketing and Use of Virtual Assets and Virtual Asset Service Providers, including other provisions.
Under Panama’s President, Laurentino Cortizo, the crypto legislation was sent to the Supreme Court of Justice for revision. This development is an alleged violation of the constitution’s core principles by articles 34 and 36, rendering the bill unenforceable.
The press release mentioned that “the legislative initiative requires “adaptation” to the norms that regulate the financial system and the Panamanian monetary model.”
🇰🇷 The South Korean Ministry of Justice announced its plans to introduce “Virtual Currency Tracking System”
The South Korean Ministry of Justice announced its plans to introduce by mid-2023 a “Virtual Currency Tracking System” with the scope of countering money laundering and recovering funds linked to criminal activities.
Its functionalities will include:
- monitoring transaction history,
- transaction data extraction
- the source of funds (SOF) checks pre and post remittance
🇺🇸 The FRB ( Federal Reserve Board) issued a policy statement regarding all banks under federal supervision.
The scope is to ensure that both “uninsured and insured banks supervised by the Board will be subject to the same limitations on activities, including novel banking activities, such as crypto-asset-related activities”, thus promoting a “level playing field and limit regulatory arbitrage.”
Australian government issued consultation paper
The Australian government has issued a consultation paper to protect consumers and allow innovation. Feedback is welcome until March 3, 2023.
Main discussion points cover:
- strengthening enforcement;
- bolstering consumer protection;
- establishing a framework for reform.
🇮🇩 The Indonesian Ministry of Trade postponed the launch of national crypto exchange
The Indonesian Ministry of Trade had previously announced it would be launching a national crypto exchange by December 2022. However, the deadline has now been moved to June 2023.
The Ministry’s exchange’s scope would be acting as a clearing house and custodian in the local crypto market.
Currently, there are five crypto exchange entities registered in the jurisdiction. The Ministry aims to incorporate them within its exchange, and to this end, they are currently under revision to identify if they meet all criteria.
A representative of the Ministry stated, “Let us not rush because if it is not ready, things will get messy. The government does not want this to massively take a toll on the public because people do not know much [about crypto trading].”
🇪🇺 The European Union seeks to regulate crypto-related smart contracts.
The European Union seeks to regulate crypto-related smart contracts under its broader strategy on data markets.
The European Parliament has re-drafted regulations on smart contracts amending the following:
- sellers or offerers of smart contracts will not need to perform a conformity assessment nor sign a mandatory declaration that they comply with EU requirements.
- smart contracts will not need to meet technical compliance specifications
- the new rules will apply only to the contractual party offering a smart contract, instead of groups of vendors or professionals partaking in the deployment of smart contracts