red 
On April 20, members of the European Parliament cast their votes to launch the EU into the global race to regulate cryptoassets.
In an overwhelming vote of 517 to 38, the Parliament adopted the EU Regulation on Markets in Crypto-assets (MiCA). This is a comprehensive regulatory framework that will bring greater oversight to stablecoin arrangements, as well as requiring cryptoasset service providers (CASPs) to meet strict measures regarding market conduct, detecting market manipulation, ensuring consumer protection and adhering to prudential regulation.
As we specifically noted, this means that MiCA is now on track to become part of EU law this summer. Provisions in the MiCA relating to stablecoins are expected to come into force at the end of June 2024, while provisions affecting CASP are expected to come online from the end of December of that year.
The adoption of MiCA is a milestone in the effort to introduce greater oversight and transparency to the crypto markets, and it has become increasingly important since the collapse of the FTX crypto exchange at the end of last year. MiCA is often seen as a blueprint for how other jurisdictions can implement comprehensive regulatory frameworks for digital assets in the future, and its adoption has been welcomed by the crypto industry.
Although CASPs will face strict licensing requirements and ongoing compliance requirements under MiCA, the industry has pointed to it as an example of regulatory clarity that offers a clear understanding of the rules of the road. This is an approach that the industry points out is at odds with the strict enforcement style that has prevailed in the US and some other jurisdictions.
In parallel with the vote on MiCA, on 20 April the European Parliament also passed an update on the EU’s anti-money laundering and countering the financing of terrorism (AML/CFT) measures, which will require CASPs to comply with the data exchange requirement of the Travel Rules and conduct due diligence on transactions involving non-hosted wallets.
Read more of the Elliptic team’s analysis of MiCA and related developments here and here , and stay tuned for further updates as MiCA implementation approaches over the next 12 to 18 months.
SEC files lawsuit against Bittrex while Chair testifies before Congress
The U.S. Securities and Exchange Commission (SEC) has continued its relentless crackdown on crypto-influenced cryptocurrencies, bringing charges against the Bittrex crypto exchange.
On April 17, the regulator announced that it had accused Bittrex of operating as an unregistered exchange, broker and clearing agency. The SEC alleges that between 2017 and 2022, Bittrex facilitated the trading of cryptoassets that were securities, and that during that time the exchange’s CEO required issuers of tokens traded on the platform to remove statements from their public marketing that could lead regulators to charge stock exchange offer of unregistered securities trading.
This is not the first enforcement measure Bittrex has faced. Last year, the exchange was the subject of a joint enforcement action by the US Treasury’s Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) related to non-compliance with sanctions and AML/CFT. That action resulted in Bittrex paying a $29 million fine.
The SEC case came just as Bittrex announced it was ceasing operations in the US due to a perceived lack of regulatory clarity.
In this context, on April 18, SEC Chairman Gary Gensler testified before the US Congress. There, Republican lawmakers blasted him for his approach to enforcing laws against the crypto industry, which drew criticism as anti-innovation. Gensler countered that the SEC has been clear about its expectations of crypto firms, which he argued have often relied on regulatory non-compliance as part of their business models.
Russia suggests it will step up cryptocurrency mining efforts
In an announcement that could raise alarm among sanctions watchdogs, the Russian government has indicated that it will look to bitcoin mining as a source of financing to enable cross-border trade. Elvira Naiullina – an official of the Central Bank of Russia – said on April 17 that the country will establish an experimental regime for the use of crypto-assets in international trade, which will be facilitated by a regulatory framework for licensing Bitcoin miners to operate in the country. .
As we noted in our recently reissued “Cryptocurrency Sanctions Compliance” In the report, other countries facing heavy sanctions, such as Iran, looked to bitcoin mining as a source of income. In the case of Iran, it used mining to generate revenue from bitcoins, which it began using to settle payments for imports – a method of circumventing the restrictions it faced on accessing US banks. Russia, it seems, may be preparing to take a page from Iran’s book and adopt a similar approach.
As we noted earlier, press coverage has also previously suggested that Iran and Russia have explored the potential creation of stable money to facilitate their bilateral settlement.
UAE opens up VASP licensing
Federal regulators in the UAE now mandate licensing among exchanges and virtual asset service providers (VASPs). In a press release dated April 17, the UAE Securities and Commodities Authority (SCA) stated that it will begin accepting licensing applications from firms wishing to offer crypto services in the UAE, and that local VASPs will need to adhere to a number of regulatory requirements that the SCA requires of securities and commodity trading platforms.
The measures will not apply to VASPs that are specifically licensed in the UAE’s free trade zones, such as Dubai and Abu Dhabi, but companies holding SCA licenses will still need to obtain approval from regulators in those zones, such as Dubai Virtual Assets Regulatory Authority (VARA). As we specifically noted, VARA recently established a regulatory framework that aims to position Dubai as a leader in crypto innovation.
New York publishes valuation framework for crypto companies
The New York Department of Financial Services (NYDFS) has finalized assessment criteria that will align its oversight of virtual currency operations with that of banks and other financial institutions.
On April 17, the NYDFS indicated in a statement that it had adopted a provision that would allow it to collect supervisory inputs from crypto exchanges and other virtual currency businesses licensed by the NYDFS, and that the regulator would use the fees to help expand its virtual currency team to ensure continued oversight of the sector.
You can read Elliptic’s previous analysis of NYDFS efforts on virtual assets here and here.
Bank of Canada supervisor consults on stablecoins
Canada’s top banking supervisor holds consultation on stablecoin arrangements. On April 17, the Canadian Office of the Superintendent of Financial Institutions (OSFI) published its consultation on stablecoins, which runs until mid-June and seeks input on the appropriate treatment of stablecoin arrangements in Canada.
Regulatory Compliance Stablecoins
