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Last week, the top representatives of all US regulatory agencies met to discuss the future of stablecoins – and to advance the development of the stablecoin regulatory framework.
The President’s Financial Markets Task Force convened a meeting on stablecoins on July 19 – a sure sign that crypto issues are at the top of the agenda for the top financial officials in the US government. The meeting included leaders of the US Treasury, Securities and Exchange Commission (SEC), the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Reserve and other key regulatory bodies.
According to a reading During the meeting, participants discussed stablecoin use cases, as well as financial stability and national security risks. The reading indicates that the US Treasury Department will soon release a report on stablecoins, with recommended policy options to close regulatory gaps.
The meeting took place just as Federal Reserve Attorney Jeffery Zhang released paper outlining policy options for stablecoins – including recommendations that stablecoin issuers should be regulated like banks.
Separately, SEC Chairman Gary Gensler he said in a speech that securities-backed stablecoins fall under the purview of the SEC and that the SEC expects both centralized and decentralized exchanges that offer them to comply with applicable securities laws.
It should come as no surprise that stablecoins are a topic of discussion at the highest levels of the US government. Since Facebook announced plans in 2019 to launch a stablecoin – now known as Diem – are high-ranking American officials publicly expressed concerns on the economic and security risks of stablecoins.
Global guardians have been consistent in stating that large stablecoin projects should not be allowed to launch until the concerns of regulators are addressed. Among those concerns is concern that large stablecoin projects could create systemic weaknesses in money laundering and terrorist financing — a concern explored in July 2020. report by the Financial Action Task Force (FATF), the global anti-money laundering (AML) standard setter.
At Elliptic, we believe that the financial crime risks of stablecoins can be managed through sensible, proportionate regulation and the implementation of practical compliance solutions across the private sector. We welcome these high-level political efforts to create a coordinated regulatory response to stablecoins – but we hope to see that regulation implemented in a way that allows private sector innovation to continue to flourish.
Our blockchain analytics solutions have enabled cryptoasset exchanges and financial institutions to launch stablecoins and offer stablecoin trading services while reducing the risks associated with money laundering, sanctionsand financing of terrorism. By providing comprehensive coverage of major stablecoins such as USDC, Tether, XSGDand many others, Elliptic equips stablecoin issuers and related service providers – such as crypto exchanges that offer trading services or banks that hold stablecoin reserves – to ensure AML compliance and risk mitigation.
Contact us to learn more about how our enterprise-class blockchain analytics solutions can enable your business to launch and handle stablecoins in a secure and compliant manner.
🇪🇺 EU and 🇬🇧 UK propose travel rules
On July 20, the European Commission announced suggestions strengthen anti-money laundering measures across the EU. Among the proposals is a requirement that cryptoasset companies apply the FATFs Travel rule and identify originators and users of crypto transfers over $1000.
On 22 July, HM Treasury of Great Britain subsequently announced a consultations on the Travel Rule with a proposed framework for implementation. The UK wanted to implement the Travel Rule as early as 2020 as compliance solutions were not ready at the time, but believes that “now is the right time” to move forward with the introduction of the Travel Rule.
Under HM Treasury’s proposal, the Travel Rule will apply to transfers of more than £1,000 and businesses will be allowed a grace period to get up and running with compliance solutions after the regulations are formally updated. Although the exact dates for the introduction of the EU and UK Travel Rules have not been set, crypto companies should now start preparing for their final implementation.
At Elliptic, we’ve partnered with leading providers of travel policy solutions Sygna Bridge and Notabene provide the crypto industry with comprehensive solutions to ensure compliance with these measures. Contact us for more information on how we can help you meet your Travel Policy compliance needs.
🇨🇳 China publishes CBDC White Paper
China issued a white paper with updates on its progress in developing the e-CNY, or digital yuan – China’s attempt to launch central bank digital currency (CBDC). In a white paper, the People’s Bank of China (PBOC) describes how e-CNY, which is currently in the pilot phase, will drive the development of digital infrastructure for retail payments in China.
While the PBOC claims that the CBDC will enable it to drive payment innovation and financial inclusion, others discuss that e-CNY will primarily improve China’s ability to conduct domestic supervision of financial activities and present direct threat to the dominance of the US dollar in the global financial system.
🇺🇸 US accuses China of crypto-enabled cybercrime
On July 19, US President Joe Biden formally the accused China engaging in state-sponsored cybercrime activities, including ransomware and cryptocurrencies. According to a statement from the White House, China’s “state-linked cyber operators conducted ransomware operations against private companies that involved ransom demands of $1 million.”
The announcement comes just a week after reports emerged that a White House task force is studying how to counter the use of cryptocurrencies in ransomware attacks.
Be sure to read it our recent research about how ransomware attacks are carried out and register for our webinar on Tracking Ransomware Using Blockchain Analytics on July 29th.
🇭🇰 Hong Kong issues warning on unregistered crypto activity
The Securities and Futures Commission of Hong Kong (SFC) issued on 16 July warning statement about unregulated crypto businesses. The SFC’s statement warns investors that trading on unregulated exchanges poses great risks and threatens to take enforcement action against unregulated exchanges that offer trading services in Hong Kong. The SFC statement represents the latest in a wave of global crypto-regulatory enforcement activity that we reported on recently.
To learn more about Hong Kong’s crypto regulatory environment, check out our webinar with SFC Licensing Director and Head of Fintech, Clara Chiu.
🇬🇧 Zodia is coming to the UK crypto registry
On July 15 ZodiaStandard Chartered’s cryptocurrency custody arm has been added to the UK list of registered cryptocurrency firms. This makes Zodia only the seventh company to receive approval from the UK’s Financial Conduct Authority (FCA) since the FCA launched cryptoasset registration regime in January 2020.
UK Crypto Businesses have called on the FCA to speed up the registration process, but the regulator he said that companies must improve their AML compliance if they want its approval. Contact us to learn more about how Elliptic can help your businesses meet the FCA’s AML standards for cryptoassets.
Missed our last week’s update? See here: White House Ransomware Task Force to Address Crypto Payments
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