World’s First CBDC, Crypto Volcker Rule and More

This Week in Crypto Compliance & Regulations | by Coinfirm

Global regulations, 23rd October – Coinfirm takes a look at the past week’s crypto and blockchain policy changes, compliance mishaps and other issues that bear on our stakeholders across the globe.

The Sand Dollar Becomes World’s First CBDC

The Central Bank of the Bahamas has created the world’s first official Central Bank Digital Currency (CBDC) – the ‘Sand Dollar’. According to the Sand Dollar website, the Digital B$’s aim is to “advance more inclusive access to regulated payments and other financial services for under-serviced communities and socio-economic groups as well as to reduce service delivery costs and increase transactional efficiency for financial services across the Bahamas.”

A number of nations have recently been making noise about CBDC, with China’s ‘Digital Yuan’ being through widespread testing but not fully rolled out. – READ MORE 

CFTC Cracks Down on Crypto Derivatives Practises

The Commodity Futures Trading Commission (CFTC) has warned of the dangers of businesses trading in crypto derivatives to hold customer funds very carefully in a recently published press release. In what could be seen as the formulation of a ‘crypto Volcker Rule’, Cointelgraph has determined “that customer crypto funds remain safe and untouched, barring FCMs [Futures Commission Merchants] from trading such funds in order to make collective gains.”

Noting in the accompanying letter “the Division has determined that receiving virtual currency from a customer and holding that currency as segregated funds creates additional risks for the other customers in the same origin. Specifically, virtual currencies present a degree of custodian risk that is beyond what is currently present with depositories, such as banks and trust companies.” – READ MORE 

Latvia Concerned About Crypto Fraud

The Latvian Financial and Capital Market Commission (FCMC), the country’s financial conduct regulator, has warned about the risk of cryptocurrency fraud in a note on Monday.

The FCMC wrote that – “Fictitious companies may offer you investments in bonds, stocks, forex products and cryptocurrencies that are either not traded on exchanges, are worthless, exaggerated, or even non-existent” and thus beware as “cryptocurrencies operate in an infrastructure that is currently characterized by lower regulation than in the financial and capital markets.”- READ MORE

FinCEN Sets ‘Mixers’ In Its Sights

In a regulatory first, the Financial Crimes Enforcement Network (FinCEN) has targeted a Bitcoin ‘mixing’ service provider for money laundering. The founder of Helix and Coin Ninja, Larry Dean Harmon, has been ordered to pay $60 million for a more than $300 million laundering scheme through a number of mixers or ‘tumblers’.

Mix or tumbler services attempt to anonymize cryptocurrencies and by sending them through a large series of transactions involving many wallets. The process aims to obscure the origins of coins as well as the entity in control of them when they come out of mixing. Harmon’s mixers were only accessible via the dark web. 

FinCEN’s announcement notes that “Mr. Harmon operated Helix as a bitcoin mixer, or tumbler, and advertised its services in the darkest spaces of the internet as a way for customers to anonymously pay for things like drugs, guns, and child pornography.” – READ MORE

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