Schlagwort: blockchain regulation

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EU regulator opens consultation on first MiCA standards

  • ESMA has released a consultation paper on MiCA implementation requirements.
  • Industry players are requested to provide feedback by September 20.
  • The EU regulator will present the final proposals to the European Parliament by June 30, 2024.

The European and Securities Markets Authority (ESMA) has published a consultation paper on the first requirements as outlined in the recently adopted Markets in Crypto Assets (MiCA) regulation.

ESMA’s “Technical standards specifying certain requirements of the Markets in Crypto Assets Regulation (MiCA),” seeks industry feedback on the proposals set to be presented before the EU parliament latest by June 30, 2024.

According to the regulator’s timeline, the consultation will be open for crypto industry’s responses and comments up to September 20, 2023. 

Verena Ross, Chair of ESMA, stated:

“This first consultation package is an important milestone for ESMA in the implementation of the MiCA framework. It translates our ambition to set high regulatory standards in the EU for crypto-asset related activities into concrete requirements. We are determined to ensure entities involved in crypto-asset related activities understand that the EU is not a place for forum-shopping.  We also want to remind consumers that, even with the implementation of MiCA, there will be no such thing as a safe crypto-asset.”

Draft proposals include rules on conflict of interest

According to ESMA, MiCA regulation requires that the regulator develops both regulating technical standards (RTS) and implementing technical standards (ITS).

This is the first consultation paper the regulator has released for MiCA and details seven proposals – five are draft RTSs while two are ITS.

Specifically, the RTSs requirements include notification by financial providers if they plan to offer crypto-asset services; regulatory approval for digital assets service providers; and crypto-asset service providers (CASPs) handling of customer complaints. The draft also covers disclosures of conflict of interest.

On requirements for segregation of client funds and assets, the regulator points to Article 62(2)(k) of MiCA. According to it, CASP applicants are obliged to ensure this is the case, with a description of how this is done.

“Some of the recent collapses in the crypto world have shown a misuse of clients’ funds and crypto-assets. This seems to have been permitted by a lack of governance and internal controls,” ESMA noted in the paper.

The ESMA proposals are a collaboration between the regulator and the European Banking Authority (EBA), which also released its first standards package on Wednesday, July 12.

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South Korean companies to disclose crypto holdings from 2024

Key takeaways

  • South Korean financial regulator wants companies to disclose their crypto assets in their financial statements.

  • The aim is to improve accounting transparency amongst companies operating in the country.

South Korea introduces a new crypto bill.

South Korea would soon require companies that own or issue cryptocurrencies to disclose their holdings in financial statements. 

The country’s financial regulator released this draft on Tuesday, and if approved, companies that hold cryptocurrencies would be required to disclose their holdings starting in 2024. 

Per the new rules, companies would be required to provide investors with information about the quantity, characteristics, business models and accounting policies regarding the sale of cryptocurrencies. 

Companies will also need to provide other information such as profits, volume and market value of their crypto.

South Korea seeks to boost accounting transparency

While commenting on this latest cryptocurrency news, the Financial Services Commission (FSC) said it is making this move to improve accounting transparency following the passing of the Virtual Asset User Protection Act last month.

In the past, companies and auditors differed regarding the timing and criteria for determining whether the sale of cryptocurrencies to customers is regarded as profit. However, the new rules stipulate that if companies sell cryptocurrencies and other virtual assets, the sales would be recognised as profit after the company fulfills obligations to its holders.

Furthermore, the regulatory agency said costs incurred while developing virtual assets and platforms would not be classified as intangible assets. 

South Korea remains one of the countries in the world with clear cryptocurrency regulations. In May, the National Assembly approved a bill that requires South Korean officials to disclose their cryptocurrency holdings. 

Per the bill, government officials must declare all crypto holdings that amount to $760 or more. The requirement was already in place for cash, stocks, and bonds, among other assets.

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Former SEC Chair says Bitcoin ETF approval ‘hard to resist’

  • Jay Clayton shared his opinion during an interview with CNBC on Monday.
  • The former SEC chair says if applicants demonstrate efficacy and have surveillance, it would be hard for the SEC to deny a spot Bitcoin ETF.
  • BlackRock, Fidelity and others have market surveillance agreements with Coinbase.

The US Securities and Exchange Commission (SEC) has so far denied all the applications for a spot Bitcoin ETF to come before it.

But now might be the time the regulator gives a seal of approval to the product, former SEC Chair Jay Clayton said on Monday. 

“If they’re right that the spot market has similar efficacy to the futures market, it would be hard to resist approving a bitcoin ETF,” Clayton told CNBC’s Squawk Box.

SEC’s approval of futures ETFs

This is the argument that applicants have put forth, particularly with BlackRock, Fidelity and others taking steps to comply with requirements previously cited as reasons for SEC’s disapproval. 

Notably, proposals by the Cboe and Nasdaq have included market surveillance agreements – the so-called surveillance sharing agreement (SSA) with major cryptocurrency exchange Coinbase.

Noting this, and the fact that the SEC has approved futures-based ETFs on this basis, Clayton added:

“When the SEC approved a futures-based ETF, they said ‘let’s look at the futures market, we see the surveillance, we see the protections in that market for the investor, that are sufficient. We don’t see them in the spot market, so we’re going to make that distinction’. I think what the institutions are arguing is that those distinctions have gone away and that the spot product is now less drag, more efficient for the investor.”

With no delta in regulation and efficacy, the SEC will have to approve a first spot Bitcoin ETF for the US market. As highlighted earlier, Clayton believes it would be “hard” for SEC to “resist” a spot ETF any further if applicants prove efficacy.

As CoinJournal reported last week, analysts at $650 billion asset manager Bernstein noted that chances of a spot Bitcoin ETF approval are “fairly high.”

The crypto market has been largely optimistic of an approval ever since BlackRock filed its proposal in mid-June. The optimism was reflected in the price of Bitcoin rallying after the news to reach a new year-to-date high above $31k last month.

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Australian regulator searched Binance Australia’s offices

Key takeaways

  • Australian Securities and Investments Commission searched Binance Australia’s office on Tuesday.

  • The cryptocurrency exchange maintains that it is focused on complying with rules. 

ASIC searched Binance Australia’s offices

The offices of Binance Australia, the Australian arm of Binance, were searched on Tuesday by the country’s financial markets regulator.

This latest cryptocurrency news comes as governments around the world are scrutinising the cryptocurrency exchange’s activities.  

According to a Bloomberg report, the Australian Securities and Investments Commission searched several Binance Australia locations on Tuesday. The search was part of an ongoing investigation into the cryptocurrency exchange’s now-defunct derivatives business, sources close to the matter revealed to Bloomberg. 

Binance has been experiencing crackdowns from governments in Europe and the United States. Last month, the US SEC sued Binance and its CEO, Changpeng Zhao, for breaking securities laws. 

On June 22nd, Brazilian authorities revealed that they were investigating Binance for suspected pyramid schemes. Binance is also being investigated for helping customers get around a restriction on crypto derivatives investments in Brazil.

A few days later, Binance dropped its licence application in Austria after the German regulators denied its application to operate in the country. 

External pressure is hurting Binance, says CZ

At a Twitter Space on Wednesday, Binance CEO, CZ, admitted that the external pressure is hurting the company. He stated that;

“Many of those things are outside of our control, but short term, they have negative impacts on our business.”

Despite the pressure, Binance remains the number one cryptocurrency exchange in the world. However, its global share of crypto spot trading fell for a fourth consecutive month in June. Data obtained from CCData showed that Binance now controls 42% of the global crypto spot trading volume, a 10-month low for the company. 

The ASIC investigation comes after Binance Australia announced in April that it would wind down the local derivatives exchange while keeping its spot platform open. 

At the time, Binance said it closed the derivative positions of numerous Australian users because they were falsely classified as wholesale investors.

A spokesperson for ASIC stated that

“We are unable to confirm or deny any operational detail such as possible searches. ASIC’s review of the company is ongoing.”

The cryptocurrency exchange said it is working with local authorities, and its sole focus is to meet local regulatory standards in order to serve its Australian users in a fully compliant manner.

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SEC’s spot Bitcoin ETF approval “fairly high”: Bernstein

  • $650 billion asset manager Bernstein believes there’s a good chance of a spot Bitcoin ETF approval.
  • The SEC’s argument for denial of a spot ETF while approving futures ETFs is unlikely to convince the court in the Grayscale vs SEC case.
  • The regulator is likely to approve a spot ETF by a regulated Wall Street giant than deal with OTC products like GBTC, analysts at Bernstein noted.

On July 2, Gemini co-founder Cameron Winklevoss tweeted that it has been 10 years since the Winklevoss twins filed the first spot Bitcoin ETF. Over the decade, the SEC has denied multiple proposals, a scenario that continues even as the crypto market’s outlook shifts increasingly optimistic.

The case is even more pronounced after a flurry of applications involving mainstream Wall Street giants like BlackRock, Fidelity and Invesco.

Among those to voice the latest optimistic tone over the approval of a spot Bitcoin ETF is brokerage firm Bernstein, CoinDesk reported today.

According to experts at the firm, who shared their insights in a research report, the SEC’s approval of futures Bitcoin ETFs and the leveraged futures ETF allowed last week, all leave the regulator with little room to maneouvre in terms of continuing to deny a spot ETF.

The case for a spot ETF

The SEC’s contention that futures pricing is from regulated exchanges such as the CME, as opposed to spot prices that come from crypto exchanges like Coinbase, remains. However, with major asset managers signaling towards market surveillance agreements to address possible manipulation, basically puts the SEC in the spot.

Grayscale’s case against the SEC, which relates to the regulator’s disapproval of a proposal to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF, is another reason why an approval is highly likely.  

[Read more: Grayscale to convert its GBTC to a Bitcoin ETF]

Analysts at Bernstein say that the court is likely not to be “convinced that the futures price is not derived from the spot price.” They also opine that allowing the futures ETFs and not disapproving spot ones could be “a difficult pill to swallow for the courts.”

Their report sums up the outlook thus:

“SEC would rather bring in a regulated bitcoin ETF led by more mainstream Wall Street participants and with surveillance from existing regulated exchanges, than having to deal with a Grayscale OTC product filling the institutional gap.”

Market experts see the SEC’s recent quick feedback on recently filed proposals, which has seen Cboe BZX refile spot ETFs for several firms naming Coinbase as the exchange they are having a surveillance sharing agreement with, as a good first step.

Nasdaq has also refiled BlackRock’s ETF proposal, naming Coinbase as the crypto exchange with the SSA.

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