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🇨🇳 China continues its crackdown on the crypto industry
China’s crypto-asset industry remains reeling as it feels the effects of the government’s decision earlier this month to ban the vast majority of cryptocurrency-based exchange transactions. The decline of China’s cryptocurrency sector has been a boon for competitors in the Asia-Pacific region, with miners and other service providers seeing significant increases in profitability following China’s exit.
Both Binance and Huobi, the two largest cryptoasset exchanges by daily volume, have begun to mend their relationships with Chinese citizens. Binance is committed to preventing the onboarding of any new Chinese users, and Huobi has stated that it will exit its Chinese user base by early next year.
China’s decision earlier this year to ban domestic financial institutions from providing crypto-asset services was reinforced when, recently, foreign companies were also banned from offering crypto-asset products to Chinese people. Guidance issued by the Central Bank of China – along with a host of other regulatory agencies – made it clear that if foreign entities do not comply, they will face legal action and their China-based employees may face personal criminal liability. .
Even indirect participants in China’s crypto industry are heeding the anti-crypto signals coming from Beijing; major e-commerce platforms, for example, have begun banning the sale of equipment that could be used to facilitate the exchange or mining of cryptoassets. Similarly, sites like CoinMarketCap are placed behind China’s infamous internet firewall, limiting the spread of information relevant to cryptocurrencies. Such moves show that the mood in the country is such that business should distance itself from the sector, so as not to run afoul of China’s powerful and omnipresent regulatory authorities.
From a practical perspective, however, it is effectively impossible to prohibit the transfer of cryptoassets in a given jurisdiction. While significant regulatory and operational hurdles can be raised, the decentralized nature of most cryptoassets and the methods by which they can be transferred mean that there will likely always be a method by which dedicated individuals can facilitate the transfer of cryptovalue.
🇰🇵 Famous Ethereum developer pleads guilty to North Korea sanctions
Virgil Griffith, called the Roman poet, pleaded guilty for conspiracy to violate the International Emergency Economic Powers Act this week and faces up to 78 months in prison. Griffith, who was arrested in 2019, spoke at a North Korean conference on cryptoassets, against the guidelines of the US Office of Foreign Assets Control. While there, he allegedly attempted to transfer a monetary equivalent from North Korea to another country, further violating relevant sanctions controls.
🇨🇠The Swiss regulator approved the first crypto fund
This week, the Swiss Financial Market Supervisory Authority (FINMA) approved the first regulated crypto fund under Swiss law. Although the fund will be limited to qualified investors, greatly limiting retail participation, it sets the stage for future offerings of crypto-asset investment products and sends a positive signal from a Swiss regulatory perspective. In regulating the fund, known as the Crypto Market Index Fund, Swiss regulators will apply existing financial markets laws in an attempt to maintain a technology-agnostic approach to regulation.
🇺🇸 Proposed US Senate bill would require the Treasury to report on cryptocurrencies
Senators Maggie Hassan and Joni Ernst introduced legislation this week that would require the US Treasury Department to issue ongoing reports detailing the state of the crypto-asset industry and its global impact. The bill seeks to “require the Secretary of the Treasury to report to Congress on virtual currencies and global competitiveness” and to “enhance oversight of cryptocurrencies.” Given the bill’s bipartisan sponsorship, it’s clear that both sides of the political spectrum recognize the need for the US to take a more proactive role in understanding and shaping the future of cryptocurrencies.
🇰🇷 South Korean regulators close 37 crypto exchanges
South Korea’s recently implemented law on the reporting and use of certain financial transaction information (which imposes a requirement for cryptoasset exchanges to obtain an information security management system certificate and report to the Financial Intelligence Unit) will result in the closure of 37 exchanges, South Korea’s Financial Services Commission announced. While many exchanges have to close, 25 others have been able to comply and can operate on a crypto-to-crypto basis. Only four exchanges were able to meet the additional requirement of partnering with a fiat bank, which allowed them to provide both crypto-crypto and crypto-fiat services.
The Crypto Decoded Podcast is now available
The fourth episode of our new podcast: Crypto Decoded is now available, along with the previous three episodes, from Spotify and Apple.
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