Europol and DOJ Assess Threats, SEC Open to Innovation & More

This Week in Crypto Compliance & Regulations | by Coinfirm

Global Regulations, 9th October – Coinfirm has an overview of the week’s compliance and regulatory moves affecting our stakeholders.  

FCA Bans Retail Crypto Derivatives Citing Investor Losses

The UK’s Financial Conduct Authority has informed companies on Tuesday that they will no longer be able to offer cryptocurrency derivatives products such as futures, options and exchange-traded notes, or ETNs, to retail customers. 

The FCA’s release cited; “inherent nature of the underlying assets, which means they have no reliable basis for valuation, prevalence of market abuse and financial crime in the secondary market (eg cyber theft), extreme volatility in cryptoasset price movements, inadequate understanding of cryptoassets by retail consumers and lack of legitimate investment need for retail consumers to invest in these products.” – READ MORE

US SEC Willing to Try a Tokenised ETF

Jay Clayton, Securities and Exchange Commission Chair, has motioned that the regulatory body would be willing to explore a tokenised exchange-traded fund. 

Saying that “It may very well be the case that […stocks] all become tokenized.”, Clayton went on to be positive on the idea of a token-based ETF – “We’re willing to try that; our door is wide open. If you want to show how to tokenize the ETF product in a way that adds efficiency, we want to meet with you, we want to facilitate that.”- READ MORE

DOJ Believes Crypto Poses Threat & Transformation

According to the newly released report entitled “Cryptocurrency: Enforcement Framework” by the US Department of Justice yesterday, the space is being seen as a potential threat to law enforcement in the United States. The paper cites cryptocurrency uses in supporting terrorism, purchasing illicit items, conducting blackmail and extortion, cryptojacking and laundering of funds. 

But the DOJ does not see crypto as purely a risk. 

“Cryptocurrency is a technology that could fundamentally transform how human beings interact, and how we organize society.  Ensuring that use of this technology is safe, and does not imperil our public safety or our national security, is vitally important to America and its allies”, noted a statement by Attorney General William Barr. – READ MORE

China CBDC First Results Emerge

Fan Yifei, deputy governor of the People’s Bank of China has revealed the first results of the Digital Yuan CBDC project. The Digital Yuan has been widely hailed as the most advanced trial of blockchain infrastructure in a government-sanctioned fiat environment. 

The Digital Yuan has so far encompassed 6,700 types of use cases, where wallets processed RMB 1.1 billion ($162 million) across 3.1 million transactions. 113,300 consumer digital wallets and 8,859 corporate digital wallets have been opened. 

The initiative was previously trialled in just a few areas; Shenzhen, Suzhou, Xiong’an and Chengdu. There are now plans for further expansion to the rest of the country.- READ MORE

South Korea Sets 2021 as CBDC Test

The Bank of Korea (BoK), South Korea’s central bank has said that it will begin ‘phase 3’ of their Central Bank Digital Currency (CBDC). 

The distribution and circulation test is the final part of the three-step pilot program. Phase 2, which focuses on analyzing related processes and seeking outside consulting, started recently. Phase 1, designing and checking the technology, ended in July. In phase 3 the BoK will distribute the digital currency and oversee its circulation process. – READ MORE

Europol Sees Crypto Mixers as a Serious Hindrance

Europol’s 2020 Internet Organised Crime Threat Assessment (IOCTA) report has conjoin wallets (those with innate mixing/tumbler abilities) as being a serious threat to law enforcement as more darknet marketplaces (DNMs) integrate with them for their heightened anonymisation techniques. 

Alongside conjoin wallets Europol has pinpointed privacy coins, certain decentralized marketplaces and cryptocurrency mixers as additional threats to law enforcement. – READ MORE