Crypto News and Regulatory Roundup: January 13th, 2023 – February 03rd, 2023

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February 3, 2023 a16z crypto regulatory team

Editor’s Note: The a16z Crypto Global Regulatory Roundup is a series that highlights the latest regulatory and policy developments relevant to builders in web3 and crypto, as tracked and curated by the a16z Crypto regulatory team. The roundup is based on recent news, latest updates, new guidance, ongoing legislation and frameworks issued by regulatory agencies/bodies, industry consortia and professional associations, banks, governments and other entities as they affect the crypto industry (or applications) . Worldwide. We also occasionally selectively include other resources such as talks, posts, or other commentary – along with updates – from us or others. [Past edition of the roundup this year: December 16 ā€“ January 13.]

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domestic
Commodity Futures Trading Commission Commissioner Carolyn D. Pham said he had participated in “advanced discussions” with international regulators on the development of global crypto regulatory standards. Discussing the FTX bankruptcy, Commissioner Christy Goldsmith Romero said that lawyers, accountants, auditors, compliance professionals and other gatekeepers had “failed” clients in their essential duties, and that she had failed to comply with the due diligence procedures of FTX’s large equity investors. But questioned. Commissioner Kristin N. Johnson called for new legislation and regulation that would formalize obligations to segregate client assets, ensure that the CFTC imposes appropriate risk-based financial resource requirements for firms operating in the markets, and be consistent and effective. Introduce governance and risk management controls. He similarly told CoinDesk TV that it is important for the CFTC to modernize its regulations.

Congress House Representative Warren Davidson (R-Ohio) described the SEC as “asleep at the wheel” and not doing enough to regulate crypto. House Representative French Hill (R-Ark.) called the FTX collapse a “clear catalyst” for both Democrats and Republicans to develop a crypto regulatory framework. He also said that stablecoin legislation will be a top priority for his new subcommittee on digital assets, and that the broader House Financial Services Committee should consider developing a new privacy regime. Senator Elizabeth Warren (D-Mass.) said that the solution to crypto fraud “starts with the SEC,” and she urged the SEC to “double down and use its tools to enforce regulations.” Senator Ted Cruz (R-Tex.) proposed a congressional bill that would require vendors on Capitol Hill to accept cryptocurrencies as payment. Senators Elizabeth Warren (D-Mass.) and Ron Wyden (D-Ore.) called on the Public Company Accounting Oversight Board to maintain “rigorous standards for audit firms” in light of the FTX collapse. House Representative Tom Emmer (R-Minn.) called crypto a “great restoration of individual freedom and opportunity,” while emphasizing the important distinction between centralized and decentralized finance. Senators Elizabeth Warren (D-Mass.), Roger Marshall (R-Kan.), and John Kennedy (R-La.) sent a letter to Silvergate Bank asking about its connection to FTX and saying that similar questions Previous answers were “preventive and incomplete.” Senator Tim Scott (RS.C.) announced plans to work on a bipartisan regulatory framework for crypto.

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Department of Justice Bitzlato Ltd. A Russian citizen and senior executive was accused of running a money transmitting business that transported and transmitted $700 million worth of illicit funds, including funds linked to Conti ransomware threat actors. (Led by Russia-based Threat Actors, the Conti ransomware variant was first noticed in or around February 2020, and collectively became one of the most active groups in the ransomware space. For a detailed description of the history and modus operandi of Conti See this article.) The founder of the “My Big Coin” cryptocurrency and payment service was sentenced to more than 8 years in prison for marketing and selling fraudulent virtual currency and operating an unlicensed virtual currency exchange .

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has sued Bitzlato Ltd. in connection with Russian illicit finance. identified as a “priority money laundering concern”. This is the first order issued under Section 9714(a) of the Combating Russian Money Laundering Act. Check out our latest Web3 Weekly newsletter for more on this topic. FinCEN Acting Deputy Director Jimmy Kirby said that money from scam real estate transaction schemes is being laundered into crypto, and that digitally native financial services “largely pose challenges to the patchwork of paper-based identifiers and credentials”. Presents.” The Department of the Treasury’s Office of Foreign Assets Control blacklisted a bitcoin and ether address linked to Russian sanctions-evasion efforts.

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Federal Reserve The Federal Reserve rejected Custodia Bank’s application for membership of the Federal Reserve System on the grounds that its “novel business model and proposed focus on crypto-assets present significant security and soundness risks.”

Florida Miami Mayor Francis Suarez said that cryptocurrency “screams for regulation” and that the lack of regulatory certainty hurts the United States because it drives crypto companies offshore.

New Hampshire Governor Chris Sununu’s Commission on Cryptocurrencies and Digital Assets released a final report and recommendations. Key findings include: (1) blockchain technology is an important innovation with many potentially important applications, (2) legal and regulatory uncertainty in the industry materially undermines innovation and economic growth, and (3) New Hampshire Resources must be devoted to establishing a legal system. Which will provide an attractive jurisdiction for blockchain innovators.

The New York Department of Financial Services published guidance for crypto companies related to custody and disclosure requirements to better protect consumers in the event of bankruptcy or similar proceedings. The Manhattan District Attorney announced an indictment of a New York resident for allegedly using cryptocurrency to fund a Syria-based terrorist group.

The Securities and Exchange Commission has agreed to pay a $45 million fine to settle charges with the SEC and state regulatory authorities related to the unregistered offering and sale of Nexo’s crypto asset lending product, the Earned Interest Product. The SEC charged Avraham Eisenberg with planning to commit market manipulation in connection with his trading activity on the Mango Markets exchange and lending platform. Commissioner Hester M. Pierce called the SEC’s “regulation-by-arbitrary-and-slow-enforcement-actions” “contrary to a rational regulatory framework”, and called on the SEC to conduct “better, more accurate and more transparent legal practices”. Urgent analysis.” She similarly told CoinDesk TV that an “enforcement-focused approach” to regulating the crypto market is “clearly not the right way.” The SEC has made a second attempt to list the ARK 21Shares Bitcoin ETF. rejected, because it “failed to demonstrate that its proposal is consistent” with the anti-fraud and anti-manipulation requirements of the Securities and Exchange Act.

The White House The White House published a “roadmap” to reduce crypto risks, asking Congress to “step up its efforts” to protect consumers and not usher in digital asset markets, among other things To give the go-ahead to “mainstream institutions” to do.

international
A statement from the EU Eurogroup said that the introduction of a digital euro requires a decision-making and an appropriate legal basis at the political level, involving the European Parliament and other European institutions. It also states that a digital euro must ensure a high degree of privacy. European Commissioner Mairead McGuinness hailed progress on Europe’s MICA regulation, but said that “there is no point in Europe being on its own” and that regulators face “greater problems” if the global regulatory approach fails. have to do it. European Central Bank executive board member Fabio Panetta said that “the digital euro will never be programmable money,” and in remarks to the European Parliament’s Economic and Monetary Affairs Committee that “central banks issue money, not vouchers”. .

French legislators passed legislation that would allow crypto companies to continue operating without a full license until the EU’s MiCA bill comes into force.

Indonesia Indonesia has passed a law that transfers cryptocurrency regulatory jurisdiction from the Indonesian commodity regulator to its financial services authority, Otoritas Jasa Keuangan, which regulates and supervises the financial services sector, including banking, capital markets and non-bank financial industries. Is.

International Monetary Fund šŸŒ World Economic Forum Crypto highlights from the World Economic Forum include: Klas Knut (President of the Netherlands Central Bank), Mairead McGuinness (EU Commissioner for Financial Services), Omar Sultan Al Olama (Minister of State for Artificial Intelligence) A regulatory panel featuring ), and Brad Garlinghouse (CEO of Ripple) Ukraine’s deputy prime minister discussed the impact of cryptocurrencies on the country’s war effort against Russia Finland’s communications minister urged the EU to consider legislation Urges Who Will Recognize The DAO While A Panel Is Discussing Tokenized Economies

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