US puts stablecoins at the top of its political agenda

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Last week, senior officials from all U.S. regulators came together to discuss the future of stablecoins – and to push forward the development of a regulatory framework for stablecoins.

On July 19, the president’s financial markets task force called a meeting on stablecoins – a sure sign that crypto issues are high on the agenda of top financial officials in the U.S. government. The meeting included heads of the US Treasury, Securities and Exchange Commission (SEC), Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Federal Reserve and other key regulators.

According to a reading from the meeting, attendees discussed stablecoin use cases, as well as financial stability and national security risks. The reading indicates that the US Treasury will release a stable coin report soon, with policy options recommended to address regulatory loopholes.

The meeting took place just as Federal Reserve attorney Jeffery Zhang released a paper outlining policy options on stablecoins – including recommendations that stablecoin issuers should be regulated like banks. .

Separately, SEC Chairman Gary Gensler said in a speech that security-backed stablecoins fall under the purview of the SEC and that the SEC expects centralized and decentralized exchanges to offer them to. comply with applicable securities laws.

It’s no surprise that stablecoins are the subject of discussion at the highest level of the US government. Since Facebook announced its intention in 2019 to launch a stablecoin – now known as Diem – senior U.S. officials have publicly expressed concerns about the economic and security risks associated with stablecoins.

Global watchdogs have consistently said that large stablecoin projects should not be allowed to launch until they address regulators’ concerns. Among these concerns are fears that large-scale stablecoin projects could create systemic vulnerabilities in money laundering and terrorist financing – a concern examined in a July 2020 report by the Financial Action Task Force (FATF ), the global anti-money laundering standards body (LAM).

At Elliptic, we believe that the financial crime risks associated with stablecoins can be managed through reasonable and proportionate regulation and the application of practical compliance solutions in the private sector. We welcome these high-level political efforts to create a coordinated regulatory response to stablecoins – but hope to see this regulation implemented in a way that allows private sector innovation to continue to flourish.

Our blockchain analysis solutions have enabled crypto-asset exchanges and financial institutions to launch stablecoins and offer stablecoin trading services while mitigating the risks of money laundering, sanctions and the financing of terrorism. By providing comprehensive coverage of major stablecoins, such as USDC, Tether, XSGD and many more, Elliptic equips stablecoin issuers and related service providers – such as crypto exchanges offering trading services or banks. holding stablecoin reserves – to ensure compliance and AML risk mitigation.

Contact us to learn more about how our enterprise-grade blockchain analysis solutions can enable your business to launch and manage stablecoins in a secure and compliant manner.

EU and UK propose additional travel rules

On July 20, the European Commission published proposals to strengthen anti-money laundering measures across the EU. Among the proposals is the requirement for crypto-asset companies to apply the FATF travel rule and identify the initiators and beneficiaries of crypto transfers over $ 1,000.

On July 22, the UK Treasury HM followed up by issuing a consultation on the travel rule with a proposed framework for implementation. The UK implemented the travel rule in 2020 because compliance solutions were not ready at the time, but believes “now is the time” to move forward with it. the deployment of the travel rule.

According to HM Treasury’s proposal, the travel rule will apply to transfers over 1,000, and businesses will be given a grace period to implement compliance solutions after the official regulatory update. While the exact dates for the travel rule’s rollout in the EU and UK are not yet determined, crypto firms should start preparing now for their final implementation.

At Elliptic, we have partnered with leading travel rules solution providers Sygna Bridge and Notabene to provide the crypto industry with comprehensive solutions to ensure these measures are adhered to. Contact us for more information on how we can help you with your travel compliance needs.

China releases CBDC white paper

China released a white paper with an update on its progress in developing e-CNY, or digital yuan – China’s attempt to launch a central bank digital currency (CBDC). In the white paper, the People’s Bank of China (PBOC) describes how the e-CNY, which is currently in a pilot phase, will fuel the development of a digital infrastructure for retail payments in China.

While the PBOC claims that a CBDC will enable it to drive innovation in payments and financial inclusion, others argue that the e-CNY will primarily strengthen China’s ability to conduct national surveillance of the financial activity and poses a direct threat to the dominance of the US dollar in the world market. financial system.

US accuses China of crypto-based cybercrime

On July 19, US President Joe Biden formally accused China of engaging in state-sponsored cybercrime activities, including ransomware and crypto-jacking. According to the White House statement, “Chinese government-affiliated cyber operators have carried out ransomware operations against private companies that have included ransom demands of millions of dollars.”

The announcement comes just a week after reports revealed that a White House task force is studying how to counter the use of crypto in ransomware attacks.

Be sure to read our recent study on how ransomware attacks are conducted and register for our webinar on ransomware tracking with blockchain analytics on July 29.

Hong Kong issues warning over unregistered crypto activity

On July 16, the Hong Kong Securities and Futures Commission (SFC) issued a warning regarding unregulated crypto firms. The SFC statement warns investors that trading on unregulated exchanges poses major risks and threatens to take enforcement action against unregulated exchanges that offer trading services in Hong Kong. The SFC statement marks the latest in a wave of global crypto enforcement activity that we recently reported.

To learn more about the crypto regulatory landscape in Hong Kong, watch our webinar with Clara Chiu, Director of Licensing and Head of SFC’s Fintech Unit.

Zodia lands on UK crypto registry

On July 15, Zodia, the crypto-safekeeping arm of Standard Chartered, was added to the list of UK registered crypto-asset companies. This makes Zodia only the seventh company to receive approval from the UK’s Financial Conduct Authority (FCA) since the FCA launched its crypto-asset registration scheme in January 2020.

Crypto firms in the UK have called on the FCA to speed up its registration process, but the regulator said companies need to improve their AML compliance if they want its approval. Contact us to learn more about how Elliptic can help your businesses meet FCA’s AML standards for cryptoassets.

Did you miss our update of the last few weeks? Catch Up Here: White House Ransomware Task Force to Tackle Crypto Payments

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