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From Canada to the UK to Japan to the US, regulators are stepping up their enforcement efforts and punishing non-compliance in the crypto sector.
In a series of actions in June, the Ontario Securities Commission (OSC) called out crypto exchanges KuCoin and Bybit for failing to register with the OSC, and ordered them to stop providing unauthorized services to customers in Canada. The OSC’s warning to Bybit comes less than a month after the derivatives trading platform received a similar sting warning from the Japan Financial Services Agency (JFSA) at the end of May for conducting unapproved activities in Japan.
Similarly, crypto exchange Binance received warnings from JFSA, the UK Financial Conduct Authority (FCA)and regulators in Thailand and the Cayman Islands that he must cease all activities for which he is not authorized to perform in those countries.
These actions point to a growing trend: Regulators in major financial centers are now focusing on identifying regulatory violations by crypto companies and ensuring that violations are called out.
All of this goes against the common and false notion that cryptospace is an unregulated “Wild West.” While countries like Japan, the United Kingdom, Thailand and Canada are newer to crypto regulation, Elliptic’s research shows that regulators in the US have already imposed fines and penalties totaling more than $2.5 billion over the past decade.
These increasing enforcement actions show that crypto is in fact a highly regulated space. The industry can expect enforcement efforts to accelerate globally and the magnitude of fines and penalties issued for non-compliance to become greater.
At Elliptic, we believe that the best way for any business to avoid conflict with regulators is to adopt a compliance-first mindset. Companies can position themselves for success by keeping regulatory considerations front of mind and fostering a strong culture of compliance.
Contact us to learn more about how our industry is leading blockchain analytics solutions can help your businesses successfully scale with confidence while remaining compliant.
🇺🇸 FinCEN declares crypto-enabled cybercrime a national priority
On June 30, the US Treasury’s Financial Crimes Enforcement Network (FinCEN) issued the first ever set of government policy priorities to tackle financial crime. The document cites eight specific threats from illicit financing that the US government believes deserve special attention – threats that range from corruption to terrorist financing to drug trafficking. One of the eight priorities FinCEN calls for is “cybercrime, including relevant cybersecurity and virtual currency considerations.” According to FinCEN, “Treasury is particularly concerned about cyber-enabled financial crime, ransomware attacks, and the misuse of virtual assets that exploit and undermine their innovative potential, including money laundering.” FinCEN plans to issue regulations at an unspecified time in the future, clarifying how businesses should address these priorities within their compliance frameworks. FinCEN will review and evaluate its priorities at least every four years. In the meantime, read about Elliptic recent analysis of cybercrime, including ransomware, and how our solutions can enable the tracking of property benefits obtained from these criminal acts.
🚨 FATF warns of crypto risks in weapons proliferation and extremist financing
This week the Financial Action Task Force (FATF), a global financial crime watchdog, released two reports that point to the use of cryptocurrencies in new areas of illicit financing. U report on financing weapons proliferation, FATF describes how North Korea used cryptocurrencies to avoid sanctions and funds its proliferation activities. In a separate report on Ethnically and Racially Motivated Terrorist Financing, the FATF highlights how far-right extremists have used cryptocurrencies, including privacy coins, to fund their activities. Crypto asset businesses and financial institutions should be alert to these risks and should ensure that they can detect related activities. Contact us today to learn how our solutions can help identify risks such as extremist financing and North Korean weapons proliferation.
🇩🇪 Coinbase gets the first German license to store cryptocurrencies
On June 28, the German regulator BaFin granted Coinbase a license to perform cryptocurrency custody services. This makes Coinbase the first ever holder of a cryptocurrency custody license in Germany since BaFin introduced its own licensing framework in early 2020. Congratulations to Coinbase on this milestone achievement!
🇺🇦 Ukrainian central bank calls for rapid crypto regulation
This week, the Ukrainian central bank invited country to speed up the finalization efforts the long-awaited crypto regulation. Ukraine intends to finalize a draft law this summer that would regulate cryptocurrencies across the country. On May 26, Elliptic’s Director of Policy and Regulatory Affairs David Carlisle gave a presentation on anti-money laundering regulation and compliance at the event hosted by the Stellar Development Foundation, the Ukrainian Ministry of Digital Transformation and the Association of Ukrainian Banks. You can watch the video from the presentation here.
Missed our last week’s update? See here: The US House of Representatives passed a bill requiring the study of cryptoassets
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