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Crypto Firms Announce New Product Launches in Custody, Stablecoins, Wallets
By Keith R. Murphy
According to a recent press release, Prometheum Capital has received the first-ever approval from the Financial Industry Regulation Authority (FINRA) to operate as a special purpose broker for digital asset securities. The press release notes that the approval allows the company to serve as a qualified custodian of digital asset securities on behalf of institutional and retail clients and that this is the first time that digital asset securities will be held. at a FINRA member firm and registered broker-dealer. with the United States Securities and Exchange Commission (SEC). According to the company’s co-CEO, “[d]Digital asset investors in the US are currently holding cryptocurrencies that are securities through platforms that don’t offer the same [Securities Exchange Act] 15c3-3 client protections required by federal securities laws. In contrast, he expects custody of assets at an SEC-registered brokerage to provide regulatory protections to restore investor confidence, among other benefits.
Another recent press release announced that a cryptocurrency exchange/copycat platform is partnering with a digital asset custodial provider to provide institutional clients with an off-exchange settlement solution. The crypto exchange will join the ClearLoop network, which would allow institutional users of both companies to hold assets within the custody provider’s infrastructure, but simultaneously delegate those assets to be traded on the crypto exchange. The integration should enable active trading on 450 coins and 580 trading pairs.
In a third press release, stablecoin issuer Circle announced the launch of Euro Coin on the Avalanche network. The press release notes that the launch is the first in a series of expected multi-chain launches for the euro-backed stablecoin.
A recent press release announced that Magic, a leading wallet-as-a-service (WaaS) provider, raised $52 million in a funding round that included the venture capital arm of a large American financial technology company. According to the press release, “Magic is enabling mass adoption of web3 by serving as the de facto WaaS provider for enterprises looking for safe and easy ways to bring their customers to web3.”
For more information, please see the following links:
New Crypto Guidelines Released by CFTC, European Banking Agency, UAE
By Robert A. Musiala Jr.
The Clearing and Risk Division (DCR) of the U.S. Commodity Futures Trading Commission (CFTC) recently issued a staff advisory addressing “risks associated with the expansion of digital asset clearing by Derivatives Clearing Organization (DCO)”. According to a press release from the CFTC, the notice “reminds registrants and applicants that when expanding lines of business, changing business models, or offering new and innovative products, DCR will remain focused on potentially increased risks that may be associated with some of those activities DCR expects DCOs and applicants to actively identify new, changing or unique risks and implement risk mitigation measures appropriate to the risks these products or changes in compensation structure may present. Among other things, the notice notes that “due to the heightened cyber risks and other operational risks that may be associated with digital assets, the DCR will emphasize compliance system protection requirements under the Trade in Goods Act and Part 39 of the Commission Regulations”.
In foreign regulatory news, the European Banking Agency (EBA) recently published a consultation seeking public comment on proposed changes to the EBA’s Guidelines on Money Laundering and terrorism (ML/FT) which would extend the scope of the guidelines to crypto-asset service providers (CASPs). Among other things, the amendments would introduce new industry guidance for PSAPs, including on risk assessments and customer due diligence, and provide guidance to financial institutions on the risks to consider. when entering into a business relationship with a PSAP.
And in the United Arab Emirates (UAE), the UAE Central Bank recently issued new guidelines for licensed financial institutions on risks related to virtual assets and virtual asset service providers. The 44-page guidance document is intended to assist in the understanding and effective performance by financial institutions licensed in the UAE of their anti-money laundering obligations related to virtual assets and service providers. virtual assets, as those terms are defined by the Financial Action Task Force. .
For more information, please see the following links:
Several financial agencies publish reports on the crypto market
By Robert A. Musiala Jr.
The International Organization of Securities Commissions (IOSCO) recently released its consultation report on policy recommendations for crypto and digital asset markets. According to the report, IOSCO aims to finalize its policy recommendations to address market integrity and investor protection issues in crypto-asset markets by early Q4 2023. In another recent release, the Economic Forum (WEF) published a white paper titled Pathways to Crypto-Asset Regulation: A Holistic Approach. According to a press release, the WEF white paper “aims to understand and highlight the needs and challenges of developing a holistic approach to crypto-asset regulation.”
In a third recent publication, the Bank for International Settlements recently published an article discussing the policy outlook on central bank digital currencies (CBDCs). Among other things, the paper finds that (1) developing the work of CBDCs requires careful consideration and engagement with a wide range of stakeholders, including the private sector and legislators; (2) a CBDC ecosystem should enable a wide range of private and public actors to participate and, in doing so, provide services that benefit end users; (3) the complex design issues and potential risks arising from the implementation of any CBDC require careful consideration; and (4) the changing payments landscape is forcing central banks to think about how CBDCs can be used for wholesale and cross-border use cases.
In a recent release, the New York branch of the U.S. Central Bank released the Phase II report of Project Cedar, an ongoing pilot project to improve cross-border payments using ledger technology. distributed. According to a press release, among other things, the report discusses findings related to the interconnection of simulated central bank currency ledgers; “atomic settlement” where “transactions were only settled if all stages of the cross-currency payment chains were successfully executed”; and “near real-time settlement” where a “simulated payment scenario reached end-to-end settlement in less than thirty seconds on average”.
For more information, please see the following links:
OFAC adds new public encryption keys to SDN list
By Christopher Lamb
According to a recent press release from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), four entities and one individual involved in “obfuscated revenue generation and malicious cyber activities that support the government of the Republic Democratic People’s Republic of Korea” have been added to OFAC’s Specially Designated Nationals (SDN) list. As part of the action, OFAC also added two Bitcoin addresses and two Ethereum addresses to the SDN list.
In another recent press release issued by OFAC, pursuant to Executive Order 14024, OFAC reinforces its use of “Russia-related sanctions”, including “designation[ing] or identifier[ying] as property blocked nearly 200 people, entities, ships and aircraft. According to the press release, as part of the action, an Ethereum wallet address, which had “received over $5.2 million in tether stablecoin since the war began,” was added to the SDN list. . According to OFAC, this individual “helped wealthy Russian citizens obtain passports from other countries.”
For more information, please see the following links:
CFTC accuses Digital Asset Fraud Scheme, NY AG accuses wallet provider
By Michelle N. Tanney
According to a May 24, 2023 press release from the Commodity Futures Trading Commission (CFTC), the CFTC has filed a civil action in the U.S. District Court for the Central District of California against five defendants doing business as Icomtech. The CFTC complaint alleges that between August 2018 and December 2019, the defendants and other Icomtech agents misappropriated funds from investors by fraudulently soliciting hundreds of thousands of dollars under the guise that Icomtech would trade bitcoin and other digital assets with daily returns between 0.9% and 2.8%. % on customers’ money. The CFTC alleges that the defendants used the investors’ money to pay personal expenses and to pay themselves commissions and bonuses. The press release notes that there is parallel action underway by the US Department of Justice in relation to the Icomtech scheme.
On May 23, 2023, during a fireside chat at the New York City Bar White Collar Crime Institute, CFTC Commissioner Christy Goldsmith Romero said that if “[t]there’s just a lot of fraud “in the cryptocurrency space”, “there’s just no way to control all the fraud”. Romero also noted that cryptocurrency business makes up around 20% of the CFTC’s portfolio, including business against Binance and FTX. Addressing the idea that there is a jurisdictional “turf war” between the CFTC and the (SEC) when it comes to crypto regulation, Romero said that while there is no turf war , many cryptocurrency and digital asset products are so new they boil down to the CFTC and SEC “just trying to figure it out.”
In a recent notable post, a recent press release from New York Attorney General Letitia James announced that the Attorney General’s office had secured a $4.3 million settlement from a New York-based cryptocurrency firm. Brooklyn, Coin Cafe, for defrauding investors. According to the press release, Coin Cafe charged its customers “exorbitant and undisclosed fees to use its wallet storage, despite marketing its wallet storage as ‘free’ on its website.” Based on the settlement, “Coin Cafe will pay compensation to all investors who were misled, including more than $508,000 to more than 340 New York investors who were unknowingly charged fees.”
For more information, please see the following links:
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