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FinCEN Focuses on Ransomware
This week, the US Treasury’s Financial Crimes Enforcement Network (FinCEN) sounded the alarm about ransomware. In a Virtual FinCEN Exchange held on November 12, FinCEN brought together US government agencies, cryptoasset companies, blockchain companies, banks and others to discuss ransomware trends, emerging typologies and challenges, and strategies to respond to the threat. Elliptic participated in the meeting along with our colleagues and partners across the crypto-asset industry.
The FinCEN summit is just the latest in a series of actions the US government has taken to curb ransomware as a source of illicit financing. As we noted last monthissued by the Treasury’s Office of Foreign Assets Control (OFAC). advisory on the risks of ransomware sanctions, and The G7 called that companies with cryptoassets are warned about the risks related to ransomware. In October, FinCEN also flagged money laundering typologies and ransomware red flags in a notice to the private sector outlining the obligation to submit suspicious activity reports (SARs) related to ransomware.
These actions show that the US is taking an increasingly aggressive stance against ransomware. Cryptocurrency businesses must be aware of the risk of facilitating ransomware payments and be able to detect related transactions and file relevant SARs. Elliptic’s solutions for blockchain analytics enable our customers to identify ransomware campaigns, including those associated with sanctioned actors, so that they can take appropriate action. Contact us for a demo to learn more about how our solutions can help our business manage ransomware risks.
And be sure to sign up for ours upcoming webinar with FinCEN Director Kenneth Blanco November 18th!
ShapeShift removes privacy coins
This week, Colorado-based exchange ShapeShift decided to remove privacy coins from its platform. The company announced this week that it removed Zcash, Dash, and Monero to “take the company out of the regulatory standpoint.”
This is no surprise. ShapeShift has made headlines in the past for money laundering activities including privacy coins. In 2017, North Korean cybercriminals behind the WannaCry ransomware attack used ShapeShift to convert Bitcoin from Attack to Monero. ShapeShift cooperated with law enforcement and the company in that case since then it has been working to meet the AML requirements.
At Elliptic, we’ve been following the privacy coin debate closely for years. Our priority was providing blockchain analytics capabilities for privacy coins like Zcash which are not private by default. Unlike Monero, which anonymizes all transactions, Zcash allows for open, traceable transactions in the manner of Bitcoin.
Cryptocurrency businesses do not need to delist Zcash to remain compliant. Instead, they can use Elliptic’s AML-compliant Zcash transaction tracking solutions, allowing them to list them securely.
Contact us today to learn how Elliptic can help your business list privacy coins like Zcash remain compliant.
UK sets its sights on Stablecoins
In Great Britain, another type of coin is attracting attention. This week Chancellor of the Exchequer Rishi Sunak hinted that stablecoins would feature heavily in Britain’s plans for financial services innovation.
According to the chancellorfor the UK to innovate its financial services sector, it must be “leading the global conversation on new technologies like stablecoins and Central Bank digital currencies. . . . New technologies like stablecoins. . .could change the way people store and exchange their money, making payments cheaper and faster.”
He made it clear, however, that innovating the financial sector by embracing stablecoins must be balanced with prudent regulation. “To harness the potential benefits of stablecoins, while managing risks to consumers and financial stability, the Government will propose a regulatory approach for relevant stablecoin initiatives that ensures they meet the same minimum standards we expect from other payment methods.”
While the exact timetable remains unclear, the UK is expected to launch a consultation soon to get private sector views on appropriate policy responses to stablecoins.
This focus on stablecoins is not surprising. As we have noted in recent weeksglobal finance chiefs draw attention to risks posed by stable coccs, which have also been on Financial Action Task Force Radar. Spurred on by Facebook’s Libra, regulators are keeping a close eye on stablecoins, worried that these new projects could create new systemic risks if they achieve rapid, large-scale adoption.
These concerns are understandable, but ultimately manageable. We look forward to working with UK policy makers to help them understand how the opportunities of stablecoins can be embraced while mitigating risk.
In Elliptic, our Blockchain analytics solutions are already enabling businesses with cryptoassets track activity in many of the largest stablecoins as part of their compliance and anti-money laundering (AML) risk management. Contact us to learn more.
New Jersey looks to New York for inspiration on crypto regulation
This summer we wrote about it steps New York State regulators are taking to update their BitLicense framework.
Just across the Hudson River, New Jersey is working to follow in New York’s footsteps.
The New Jersey state legislature is considering the billThe “Digital Assets and Blockchain Technology Act,” which would give the Garden State a crypto regulatory framework similar to that of the neighborhood. If passed, it would bring cryptoasset service providers operating in the state under the supervision of the New Jersey Department of Banking and Insurance. Cryptocurrency businesses would have to obtain a license to operate in New Jersey or face fines of up to $500 a day.
While the timeline for the debate and possible passage is uncertain, crypto companies operating or serving customers in New Jersey should closely monitor these developments. At Elliptic, we already work with a number of companies that are licensed to bit Licensed in New York State – so contact us to learn more about how we can help you prepare for potential state-level regulatory changes in New Jersey.
The Netherlands is busy reviewing cryptocurrency registration applications
This week, the Dutch Central Bank announced that it had received thirty nine applications from crypto companies seeking regulatory approval.
I like it 17 other EU member statesThe Netherlands was late in implementing the EU’s Fifth Money Laundering Directive (5AMLD), which required regulation of crypto exchanges and custodial wallet providers. He missed January 20th 5AMLD deadline and it only brought its crypto regulation online in May. Crypto companies must now register with the Central Bank and must be prepared to demonstrate their willingness to comply with anti-money laundering requirements.
Despite the late start, the Netherlands has now received more than three dozen applications and has already approved several firms for work. Companies that were operating in the Netherlands before May can continue to do so pending registration approval from the Central Bank.
Elliptic, we are already working with cryptoasset companies in the Netherlands to provide them with blockchain analytics solutions that enable them to respond to the requirements under 5AMLD. Contact us to learn more about how we can help, and read our e-book on compliance with 5AMLD.
Missed last week’s update? catch up here: Crypto regulatory affairs: APAC regional regulators flex their crypto muscles
