Editor’s note: The a16z crypto Regulatory Update is a series that highlights the latest regulatory and policy happenings relevant to builders in web3 and crypto, as tracked and curated by the a16z crypto regulatory team. The roundups are based on recent news, the latest updates, new guidance, ongoing legislation, and frameworks released by regulatory agencies/bodies, industry consortia and professional associations, banks, governments, and other entities as they impact the crypto industry (or applications) around the world. We also occasionally include select other resources such as talks, posts, or other commentary – from us or from others – with the updates.
- The U.S. House Financial Services and Agriculture committees released a discussion draft for a digital asset market structure bill.
- The SEC filed 13 charges against Binance, its cofounder and CEO Changpeng Zhao (“CZ”), and affiliated entities.
- The SEC also charged Coinbase with operating as an unregistered securities exchange, broker, and clearing agency; and for an unregistered offer and sale of securities in connection with its staking-as-a-service program.
🌽 Commodity Futures Trading Commission
- The CFTC charged five defendants for a scheme involving the false promotion of bitcoin and other crypto-trading services that targeted the Spanish-speaking community.
- The CFTC’s Division of Clearing and Risk issued a staff advisory on the risks associated with the expansion of Derivatives Clearing Organizations’ clearing of digital assets.
- CFTC Chair Rostin Behnam told the House Agriculture Committee that the proposed digital asset market structure bill’s focus on decentralization as a key characteristic is essential, and that it could take at least one to two years to implement crypto-specific rules.
- CFTC Chair Rostin Behnam appeared on a Bloomberg podcast to discuss crypto regulation.
- The U.S. House Financial Services and Agriculture Committees released a discussion draft for a digital asset market structure bill.
- House Representatives Tom Emmer (R-Minn.), Darren Soto (D-Fla.), and Ro Khanna (D-Cal.) introduced the bipartisan Securities Clarity Act to provide a definition of assets like digital tokens and other emerging technologies under current securities laws.
- Senator Elizabeth Warren (D-Mass.) said that Congress should consider her proposed anti-money laundering legislation to prevent the use of cryptocurrency in the Chinese fentanyl trade.
- S. House Representatives held a hearing on potential stablecoin legislation.
⚖️ Department of Justice
- An Illinois man pleaded guilty to leading a conspiracy to sell stolen financial information on dark web marketplaces that required users to conduct transactions in digital currencies, including bitcoin.
- A Nevada man was charged for his alleged participation in CoinDeal, an investment fraud scheme that defrauded more than 10,000 victims of more than $45 million.
- A former co-owner of the Minnesota Vikings was sentenced to 75 months in prison for providing shadow banking services to crypto exchanges.
💵 Department of the Treasury
- The Office of Foreign Assets Control (OFAC) added 22 individuals and 104 entities to the sanctions list for helping Russia circumvent sanctions and other economic measures. OFAC also sanctioned an Ethereum wallet address belonging to an Irish resident who allegedly helped high-net-worth Russian citizens obtain passports from other countries and move funds across borders.
- OFAC sanctioned Binance-hosted wallets with alleged ties to the North Korean government.
💰 Federal Reserve
- The Federal Reserve’s report, “Economic Well-Being of U.S. Households in 2022,” briefly discusses Americans’ usage of cryptocurrencies in the last year.
📈 Securities and Exchange Commission
- As mentioned above, the SEC filed 13 charges against Binance, CZ, and affiliated entities. The charges include operating unregistered exchanges, broker-dealers, and clearing agencies; misrepresenting controls and oversight on the Binance.US platform; and the unregistered offer and sale of securities.
- As also mentioned, the SEC charged Coinbase with operating as an unregistered securities exchange, broker, and clearing agency; and for an unregistered offer and sale of securities in connection with its staking-as-a-service program.
- Prometheum Ember Capital announced that it received a first-of-its-kind approval from the Financial Industry Regulatory Authority (FINRA) to operate as a special purpose broker-dealer for digital asset securities.
- The SEC settled civil charges against a former Coinbase product manager who pleaded guilty to criminal charges relating to insider trading with respect to nine cryptocurrencies.
- SEC Chair Gary Gensler told CNBC, “We don’t need more digital currency…we already have digital currency, it’s called the U.S. dollar…We have not seen, over the centuries, that economies and the public need more than one way to move value.”
- The SEC obtained a default judgment (a ruling in favor of a plaintiff when a defendant does not respond to a summons or appear in court) against Chicago Crypto Capital LLC, its owner, and a former salesman for conducting a fraudulent and unregistered offering of crypto-asset securities.
🗽 New York
- Crypto trading platform Coin Cafe agreed to pay $4.3 million to the New York Attorney General’s Office to settle charges that it defrauded investors by routinely charging and increasing fees without properly informing investors.
- The Central Bank of Brazil selected 14 institutions to participate in its central bank digital currency pilot.
- China’s Supreme People’s Procuratorate published guidelines for the treatment of non-fungible tokens that recommends stronger “risk research and judgment” and calls for accurate punishments for those who commit crimes in the name of “pseudo-innovation.”
- The city of Bejing’s Municipal Science and Technology Commission published a white paper on web3 development.
🇪🇺 European Union
- The European Systemic Risk Board issued a report finding that crypto’s broader economic impact has been minimal despite recent market turbulence, and proposing policy options for how to monitor the crypto sector and mitigate future risks.
- The European Securities and Markets Authority issued a public statement to warn investors of risks that arise when investment firms offer both regulated and unregulated products and services, including those relating to crypto assets.
- The European Parliament published a study on the potential crypto regulatory challenges that will remain after the European Union adopts the Markets in Crypto-Assets (MiCA) regulation and revises the Transfer of Funds regulation, and whether additional legislation is needed to address decentralized finance.
🚨 Financial Action Task Force
- FATF President T. Raja Kumar called on the Group of Seven advanced economies to regulate crypto to ensure that “no virtual safe havens exist for illicit financial transactions,” and he advocated that countries adopt the “travel rule,” which would require virtual asset service providers to collect and share information on certain transactions.
- Secretary General of the Autorité des Marchés Financiers Benoît de Juvigny said that the French are “proud to be pioneers,” and that American crypto participants are “welcome” to benefit from the French regime.
🇭🇰 Hong Kong
- Hong Kong’s Securities and Futures Commission announced that it will begin accepting applications for crypto trading platform licenses and that its Guidelines for Virtual Asset Trading Platform Operators would become effective as of June 1, 2023. The Guidelines set forth standards and requirements relating to custody of assets, segregation of client assets, avoidance of conflicts of interest, and cybersecurity for licensed trading platforms, among other things.
- The Reserve Bank of India’s annual report said that India intends to shape a “coordinated and comprehensive policy approach” to crypto while it holds the G-20 presidency.
- As of June 1, 2023, Japan will enforce the “travel rule” against virtual asset service providers, which will require them to collect and share information on certain transactions.
- The Central Bank of Kenya said that the allure of central bank digital currencies (CBDCs) is “fading” on the global stage, and that CBDCs “may not be a compelling priority” but that the bank would continue to monitor developments in the space.
- Securities Commission Malaysia ordered Huobi Global to stop operations in the country on the basis that Huobi is operating a digital asset exchange without registration.
- A report from the Norwegian Central Bank said that Norway should consider a national strategy for crypto regulation if it finds that a regulation like the European Union’s Markets in Crypto-Assets bill is inadequate for the country’s crypto regulatory needs.
- Pakistan’s Minister of State for Finance and Revenue Aisha Ghaus Pasha told the country’s Senate Standing Committee on Finance that cryptocurrencies will “never be legalized in Pakistan.”
- Crypto.com announced that it received its Major Payment Institution license for Digital Payment Token services from the Monetary Authority of Singapore.
- Switzerland’s canton of Zug increased the limit for tax payments in bitcoin and ether to CHF 1.5 million from the previous CHF 100,000.
🇦🇪 United Arab Emirates
- The Central Bank of the United Arab Emirates issued new guidance relating to anti-money laundering and countering the financing of terrorism measures for crypto businesses.
- The Central Banks of Hong Kong and the United Arab Emirates announced plans to strengthen financial cooperation and work together on digital assets regulation.
🇬🇧 United Kingdom
- The U.K. House of Commons Treasury Committee released a report, which recommended that the U.K. regulate consumer trading of unbacked cryptocurrencies like it regulates gambling.
- The U.K.’s Crypto and Digital Assets All Parliamentary Group released a report that offered 53 recommendations regarding how the U.K. should approach crypto regulation, while stressing the importance of urgent action.
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