Global Regulators Strengthen Rules for Crypto Assets; Crypto Firms Face Legal Issues
Summary:
Several major financial regulators around the globe have introduced new guidelines for decentralized assets. Key entities, including the European Banking Authority and the US Treasury Department, propose stricter guidelines and transparency levels for managing crypto assets, including cryptocurrency blending transactions. Meanwhile, regulatory adjustments in Hong Kong aim to make certain digital currency products available only to professional investors. In legal updates, FTX's ex-General Counsel testified in a criminal trial admitting unawareness of the exchange's funds' interfusion with Alameda Research. Also, a proposed two-year ban on crypto mining was withdrawn in Pennsylvania, following labor union pressure. Lastly, Gemini, Genesis, and the Digital Currency Group face a lawsuit accusing them of defrauding investors of more than $1 billion through their investment program.
Several key financial regulators both globally and domestically have concurrently issued new regulations concerning decentralized assets this past week. Both The European Banking Authority and The European Securities and Markets Authority have suggested criteria for evaluating the fitness of management staff in crypto firms, focusing on aspects such as knowledge, professionalism, reliability, and commitment to their duties. In addition, The Basel Committee on Banking Supervision of The Bank for International Settlements(BIS) has urged banks to supply both quantitative and qualitative facts and figures on their involvement with crypto assets and the necessary liquidity and capital requirements. According to The BIS, this standardized reporting format will invigorate market discipline and curb banks' information advantage. The US Treasury Department’s Financial Crimes Enforcement Network has identified cryptocurrency blending as a significant concern in money laundering, following Hamas' attack on Israel. The network suggests implementing specific record-keeping and reporting obligations for cryptocurrency mixing transactions. The Hong Kong Securities and Futures Commission plans to limit some digital currency products only to professional investors, classifying them as “complex products” and thereby imposing the same conditions as those attached to similar financial products. FTX's ex-General Counsel, Can Sun, expressed unawareness of the exchange's interfusion of funds with Alameda Research in Sam Bankman-Fried’s criminal trial. He said he learned about Alameda's exception from the liquidation system from colleagues in August 2022. An accounting professor, Peter Easton, has provided a detailed explanation of FTX and Alameda Research's alleged funds integration since 2021. Democratic Representative Greg Vitali has withdrawn a two-year ban on crypto mining from a bill proposed to govern the sector’s energy use, revealing that labor unions influenced the change. New York’s attorney general has sued cryptocurrency companies Gemini, Genesis and Digital Currency Group for purportedly cheating investors of more than $1 billion through the Gemini Earn investment scheme.
Published At
10/23/2023 7:00:00 PM
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