Crypto news & regulatory update: April 5 – April 19, 2024

a16z crypto Regulatory Team

4.22.24

Editor’s note: Our Regulatory Updates series highlights the latest regulatory, legal, 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, guidance, legislation, and frameworks released by regulators, industry consortia, professional associations, banks, governments, and other entities as they impact the crypto industry (or applications) around the world. We also occasionally include select resources such as talks, posts, or other commentary — from us or from others — with the updates.

🧠 tl;dr

  1. In the government’s first open-market manipulation case, a Manhattan federal jury found a crypto trader guilty of commodities fraud, commodities market manipulation, and wire fraud in connection with the manipulation of the Mango Markets decentralized exchange.
  2. In the first conviction for the hack of a smart contract, a federal judge sentenced a former security engineer to three years in prison and three years of supervised release for hacking two decentralized exchanges.
  3. Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) introduced the “Lummis-Gillibrand Payment Stablecoin Act,” which would create a regulatory framework for stablecoins.

🦅 Congress

  • As mentioned in “tl;dr,” Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) introduced the “Lummis-Gillibrand Payment Stablecoin Act,” which would create a regulatory framework for stablecoins.
  • Senators Thom Tillis (R-N.C.) and Bill Hagerty (R-Tenn.) released a discussion draft of the “Ensuring Necessary Financial Oversight and Reporting of Cryptocurrency Ecosystems (ENFORCE) Act,” which would reinforce and establish new regulatory frameworks relating to illicit finance and digital assets.
  • Senator Elizabeth Warren (D-Mass.) wrote to House Financial Services Committee Patrick McHenry (R-N.C.) and Ranking Member Maxine Waters (D-Cal.) urging them to consider risks associated with stablecoins in considering potential regulatory frameworks. Senator Warren also wrote to Treasury Secretary Janet Yellen, expressing her support for the implementation of additional anti-money laundering authorities for any new regulatory framework for stablecoins.
  • Senators Chuck Grassley (R-Iowa) and Elizabeth Warren (D-Mass.) wrote to CFTC Chair Rostin Behnam, renewing requests for an accounting of all meetings and correspondence between him and Sam Bankman-Fried during Behnam’s tenure as CFTC Chair.

🛡️ Consumer Financial Protection Bureau

  • The Consumer Financial Protection Bureau released a report on issues related to banking in video games and virtual worlds, including business practices involving gaming currencies, crypto, and commerce on gaming platforms.

⚖️ Department of Justice

  • As mentioned in “tl;dr,” in the government’s first open-market manipulation case, a Manhattan federal jury found a crypto trader guilty of commodities fraud, commodities market manipulation, and wire fraud in connection with the manipulation of the Mango Markets decentralized exchange.
  • As also mentioned above, in the first conviction for the hack of a smart contract, a federal judge sentenced a former security engineer to three years in prison and three years of supervised release for hacking two decentralized exchanges.
  • The Department of Justice announced an indictment of a Nebraska resident for operating a large-scale illegal “cryptojacking” operation in which he allegedly defrauded two providers of cloud computing services of more than $3.5 million worth of computing resources in order to mine crypto worth nearly $1 million.

💵 Department of the Treasury

  • Deputy Secretary of the Treasury Wally Adeyemo asked the Senate Banking, Housing, and Urban Affairs Committee for additional legal authorities to build an enforcement and oversight regime relating to the use of digital assets in illicit finance.
  • The Financial Crimes Enforcement Network sent a letter to Coinbase CEO Brian Armstrong, recognizing Coinbase’s contributions to one of seven significant criminal cases.
  • The IRS’s criminal investigation chief spoke to CNBC about potential crypto tax evasion crimes in the coming year.

💰 Federal Reserve

  • Federal Reserve staff published a working paper on the financial stability implications of a central bank digital currency.

📈 Securities and Exchange Commission

  • SEC Commissioner Hester Peirce discussed various crypto regulatory issues in an interview with CoinDesk TV.
  • The SEC delayed its decision on allowing the listing of spot bitcoin ETF options on the New York Stock Exchange. 

🌍 International

🇪🇺 European Union

  • The European Securities and Markets Authority published a report on secondary-market crypto asset trading and potential areas of risk.

🌐 International Organization of Securities Commissions

  • The International Organization of Securities Commissions published its 2024 workplan, which includes a focus on financial asset tokenization.

🇳🇿 New Zealand

  • New Zealand’s Minister for Commerce and Consumer Affairs submitted a written response to a parliament committee’s inquiries relating to crypto and other issues.

🇹🇼 Taiwan

  • Taiwanese prosecutors indicted the founder of ACE Exchange, a crypto exchange in Taiwan, as well as six other suspects, on charges of money laundering and fraud involving assets worth more than $10 million.

🇦🇪 United Arab Emirates

  • Crypto.com’s Dubai entity announced that it received a full operational approval from Dubai’s Virtual Assets Regulatory Authority.

🇬🇧 United Kingdom

  • UK Economic Secretary Bim Afolami said that the UK plans to publish new stablecoin and staking legislation by July.
  • Financial Conduct Authority Executive Director Sarah Pritchard said that lower standards for registering crypto firms in the UK could damage market confidence and leave the market open to illicit finance abuses. 

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