Schlagwort: blockchain regulation

US Congressman Tom Emmer (R-MN) wants answers from the Treasury Department over the sanctions the agency imposed on Tornado Cash.

In a letter addressed to Treasury’s Janet Yellen on Tuesday, Rep. Emmer highlighted his take on the sanctions, noting the implication of the US government’s move to national security as well as individuals’ privacy rights.

The lawmaker shared the letter on Twitter.

Sanctioning ‘privacy-enabling’ code

According to Rep. Emmer, while the Office of Foreign Assets Control (OFAC)’s sanctions target illicit funds linked to crypto heists and other cyberattacks, they were however unique in that the agency did not levy them “against a person or an entity, but against ‘privacy-enabling’ code.”

The sanctions are thus against “a neutral, open-source, decentralised technology,” which raised a lot of questions that the Treasury needs to clarify, he noted.

Emmer wants the US Treasury to explain whether OFAC’s sanctions undertook that the banned Tornado Cash addresses indeed belong to individuals. He also seeks clarification on exactly who or what entity the agency believes controls the mixing service’s smart contracts.

Also on his list of questions is the recourse for users whose funds are locked, as well as those who might receive unsolicited money from the blacklisted addresses.

OFAC sanctioned Tornado Cash, a decentralised transaction anonymising platform, early this month over claims it had enabled multiple money laundering transactions involving North Korea-linked hackers.

The blacklisting has forced several crypto platforms to stop Tornado Cash functionality on their sites, and seen wider outcry over the same across the crypto space following the arrest of a developer in the Netherlands.

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• Australia’s crypto mapping exercise seeks to help authorities know about which crypto assets are used in the country. 
• The review is also meant to offer insights into how to better protect investors amid potentially harmful crypto advertisements.
• The government will soon introduce a consultation paper.

Australia is looking to map all crypto tokens in the country as one of the steps towards proper regulation of the crypto sector.

The review exercise looks to identify every token – from the flagship Bitcoin to the meme-inspired Dogecoin and so forth, with the aim of understanding what cryptocurrencies are used in the country.

Why map all crypto assets?

On Monday, Australia’s Treasurer Jim Chambers revealed that the country was prioritising token mapping to identify what cryptocurrencies were being used in the country.

The exercise is expected to help authorities and other stakeholders better understand the industry, with the goal being consumer protection via a broader framework. Per Chambers, the public will soon be able to participate in the activity, noting that a consultation paper over the same is imminent.

Caroline Bowler, CEO of Australia-based crypto exchange BTC Markets noted that “token mapping is a good step forward,” stating in a tweet that this is an opportunity for the country to ramp up crypto registrations.

Among things authorities are looking to bring under control include the regulatory and licensing mechanisms and undertakings. The government will also look at crypto custody offerings and obligations of third-party providers.

Also important to regulators is the need to ensure investors enjoy safeguards against potential harm related to the proliferation of crypto adverts. 

Earlier this year, the Australian Competition and Consumer Commission, a competitions market watchdog, filed a case against Meta (formerly Facebook) over its role in promoting fraudulent crypto promotions, citing several adverts that were largely scams.  

The Australian government’s move comes at a time the country’s central bank is working on efforts to roll out a central bank digital currency (CBDC).

The Reserve Bank recently announced the digital currency plan, revealing it would first have a pilot.

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• FDIC sent the cease and desist letter to five companies, including FTX US and mentioned alleged misleading tweets from FTX US president Brett Harrison.
• The agency wants the crypto company to ensure any misleading details are removed and compliance confirmed in writing within fifteen days.

The Federal Deposit Insurance Corporation (FDIC), a US government agency that offers deposit insurance to customers of insured banks, has warned crypto exchange FTX US over what it calls “false and misleading statements about FDIC deposit insurance.”

The agency’s cease and desist letter to the US-based crypto platform comes after the FDIC sent a similar warning to FTX US president Brett Harrison.

And other than the exchange, other four crypto-related companies also received letters from the US watchdog, according to details shared in a press release on Friday. 

The others warned are Cryptonews.com, Cryptosec.info, SmartAsset.com and FDICCrypto.com.

FTX US is not FDIC-insured 

FDIC says evidence shows the listed firms misrepresented or offered false claims “including on their websites and social media accounts,” about the insurance by FDIC of some crypto–related products or stocks.

“In one case, a company offering a so–called cryptocurrency also registered a domain name that suggests affiliation with or endorsement by the FDIC. These representations are false and misleading,” the agency warned,

On Thursday, the FDIC had written to FTX US about the issue, and highlighted a tweet Harrison shared on 20 July. In the tweet, the FTX US boss had noted that “direct deposits from employers to FTX US are stored in individually FDIC-insured bank accounts in the users’ names.”

The agency also flagged the claim that “stocks are held in FDIC-insured and SIPC-insured brokerage accounts.”

Similarly, FTX US had been described as being FDIC-insured on two of the above websites. The regulatory body says such allegations are likely to mislead and/or harm consumers. The agency said FTX US is not FDIC-insured.

In a tweet acknowledging the FDIC warning, Harrison said:

“Per the FDIC’s instruction I deleted the tweet. The tweet was written in response to questions raised on twitter regarding whether direct USD deposits from employers were held at insured banks (i.e. Evolve Bank).”

In its cease and desist demand, the FDIC asked FTX US to remove all reference to the deposit insurance claims shown to be false.

Also, other than ensuring this is not repeated at any other time or form, the exchange has to within fifteen days of receiving the letter, write to the agency to confirm compliance.

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The government of Colombia has revealed that it is planning to launch a digital currency to curb tax evasion and enhance the traceability of citizens’ transactions

The plan for the digital currency was revealed through a statement given by Luis Carlos Reyes, who is the head of the Colombian tax authority DIAN. The move comes amid a move by many countries towards digitizing their economies to better understand and control the flow of money.

According to Reyes, this would be one of the proposals of the newly inaugurated president Gustavo Petro to curb tax evasion which is currently estimated to be between 6% and 8% of Colombian GDP. In essence, the digital currency will enhance the traceability of merchants’’ transactions to ensure that they do not evade taxes.

Cash payments restrictions

Among the other measures expected to follow the introduction of the digital currency is the restriction of cash payments over $2,400 (10 million Colombian pesos).

While the government is focused on curbing tax evasion, the changes might disrupt the payment channels of a majority of Colombians, especially after the cash crunch caused by the Covid-19 pandemic. Colombians are also currently dependent on cash transactions and shifting to digital payments could be difficult.

According to data from the Financial Superintendency, Colombians prefer cash as their main means of payment method for groceries and transportation.

But the Central Bank of Colombia has shown that the circulation of bills has shot to the heist level in the past seventeen months.

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The Federal Reserve Board wants to see banks take time to understand the cryptocurrency space first before diving in.

The US Federal Reserve Board has warned banks looking to engage in crypto-related activities or offer such services to ensure they are familiar with applicable regulatory requirements and guidelines.

The Fed’s caution to Board-supervised banking institutions was announced in a letter released on Tuesday, and comes after recent high-profile crypto-related engagements involving the world’s largest asset investment manager BlackRock.

“The emerging crypto-asset sector presents potential opportunities to banking organisations, their customers, and the overall financial system,” the Fed noted in the press release. However, the central banks’ take is that crypto can pose certain risks, including consumer protection and financial stability.

So, while the overall opportunity for investors is there, the regulator wants banks to ensure they understand the legal environment and related requirements before they get involved.

Fed outlines steps banks need to follow

In its supervisory letter, the Fed therefore calls on banks to take such steps as assessing whether the crypto activity of interest is “legally permissible.” 

They also need to determine whether there are any regulatory filings to be made, with banking organisations now required to notify the central bank before diving into crypto-related activities.

Another key consideration banking institutions need to look at is whether they are adequately prepared in terms of having required safety systems and controls.

Last month, the Federal Deposit Insurance Corporation (FDIC) warned crypto users that the agency’s deposit protections do not apply to cryptocurrencies or crypto firms. This came as the government agency asked companies not to mislead consumers.

In 2021, the Fed Board, FDIC, and the Office of the Comptroller of the Currency (OCC), jointly released a statement on crypto policy, while the push to bring clarity to the industry continues across the world.

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