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The Financial Crimes Enforcement Network (FinCEN) announced last week that Michele Korver has joined FinCEN as its inaugural Chief Counsel for Digital Currencies. Korver will work in government groups to promote “strategic and innovative solutions to prevent and mitigate illegal financial practices and exploitation.”
Prior to joining FinCEN, Korver worked in the Criminal Division of the United States Department of Justice as their digital currency advisor. In that capacity, she was responsible for advising federal prosecutors and law enforcement agencies on issues related to prosecutorial strategy and legal interpretation related to the digital assets space.
Concurrent with her prosecutorial work, Korver served on the US Treasury Department’s Financial Stability Oversight Council and was a member of the US delegation to the Financial Action Task Force, focusing on financial crime policy related to cryptocurrencies. Earlier in her career, she prosecuted cases involving darknet drug trafficking and predicate money laundering offenses, many of which had a crypto-connection.
The elevation of a senior Justice Department attorney to this newly created role marks a concerted effort by FinCEN to address the recent spate of cybercrime and ransomware attacks, whose sponsors often use cryptocurrencies as their exclusive means of payment. Korver’s experience in prosecuting cybercrime and violations of the Bank Secrecy Act will allow her to vigorously fight these attacks, as she is familiar not only with the applicable legal standards but also with the underlying technologies used to fuel these incidents.
This increase in regulatory and law enforcement oversight should be considered a net positive for the industry, as stronger oversight sends a signal to the market that the digital assets sector is maturing into a safer and healthier space. By working hand-in-hand to root out bad actors and identify fraud, the public and private sectors can accelerate cryptocurrency adoption and help prevent the reputational damage caused to digital assets by criminals and other nefarious parties.
FinCEN’s continued engagement in the digital asset sector makes it clear that they believe the industry is here to stay. Combating financial crime related to digital assets requires the implementation of tools and processes designed to identify the originators and beneficiaries of digital asset transactions, as well as the beneficial ownership of the wallets associated with those transactions.
Solutions such as Navigator and Lens from Elliptic enable regulatory and law enforcement agencies to monitor prominent digital asset ecosystems and monitor transactions for indications of suspicious activity.
📜 FATF publishes second 12-month review of virtual assets
The Financial Action Task Force published its “Second 12-month review of revised FATF standards – virtual assets and VASPs[,]” which helps set global standards for AML and KYC regulations related to digital assets.
The updated guidance highlights the fact that AML/KYC controls are critical to digital asset compliance and are still somewhat lacking in the industry. This is particularly relevant when it comes to the adoption of Travel Rules, which are still rarely enforced by VASPs.
The FATF guidelines also include a statement that there is no need at this time to amend the applicable guidelines to cover peer-to-peer transactions. This is a relief for many industry participants, who have struggled to understand how the FATF recommendations can be applied to all non-hosted wallets, many of which are owned by individuals.
David Carlisle, Elliptic’s director of global policy and research, provides an in-depth analysis of the updated FATF recommendations here.
🇺🇸 Wyoming Secretary of State approves the first legally recognized DAO in the United States
The state of Wyoming, which has been at the forefront of developing crypto regulation in the United States, this week approved the US CryptoFed DAO to operate as a limited liability entity under the newly enacted laws.
The American CryptoFed DAO issues an algorithmic stable token “Ducat”, which aims to appreciate against the dollar relative to the amount of inflation the dollar creates.
Wyoming’s regulatory leadership in this space has previously been demonstrated through the implementation of the Special Purpose Depository Institution program, which allows crypto exchanges to obtain state banking charters.
👨⚖️ Former European Trade Commissioner will join Astra Protocol Advisory Board
Phil Hogan, who previously served as European Trade Commissioner, is set to join the Advisory Board of the Astra Protocol. Astra, which provides an anti-fraud and compliance layer for certain blockchains, acts as an intermediary between crypto partners, helping to resolve any disputes as a pseudo-arbitrator.
Hogan will help provide regulatory insight and strategic guidance for Astra while championing mainstream and institutional adoption.
🇪🇺 The European Commission proposes an Anti-Money Laundering Authority for cryptocurrencies
The EU leadership will seek to develop a new agency, with the specific task of dealing with money laundering and transparency issues related to digital assets. Documents obtained by Reuters show that “money laundering, terrorist financing and organized crime remain significant problems that need to be addressed at the EU level[.]”
The agency will provide an international-level framework for digital asset AML compliance and will seek to mitigate the impacts of digital assets on financial crime by requiring meaningful transaction and beneficial ownership disclosures.
🇨🇦Canadian regulator seeks comments on prudent treatment of crypto assets
The Office of the Superintendent of Financial Services (OSFI), Canada’s federal functional bank regulator, published a letter this week seeking feedback from industry stakeholders on regulatory issues and opportunities in the crypto space. OSFI seeks insight into the use cases of cryptocurrencies within the legacy financial system, as well as the scope and evolution of regulatory risks that financial institutions may face. You can find the complete letter and list of questions here.
Missed our last week’s update? See here: Regulators around the world crack down on cryptocurrency mismatch
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