The UK
The Financial Conduct Authority (FCA) has set out its expectations for UK cryptoasset businesses to comply with the Travel Rule, aiming to bring greater transparency to cryptoasset transfers and make it harder for criminals to use them for illicit activities. The FCA expects UK crypto businesses to take «all reasonable steps» to comply with the Travel Rule from September 1. The following are the FCA's expectations for firms:
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Responsibility for compliance: Firms remain responsible for achieving compliance with the Travel Rule, even when using third-party suppliers. This means that businesses must ensure their third-party providers are also compliant with the Travel Rule.
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Full compliance: Firms are expected to fully comply with AML/CFT procedures, which includes implementing robust Know Your Customer (KYC), reporting clients’ suspicious transactions, as well as establishing clear communication channels with other Virtual Asset Service Providers (VASPs) for information sharing.
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Reasonable steps: UK crypto businesses are expected to take all reasonable steps to comply with the Travel Rule. This may include utilizing technological solutions to facilitate compliance and ensuring that their internal processes and systems are aligned with the Travel Rule requirements.
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Preventing money laundering and other crimes: The FCA aims to stop money laundering and other illicit activities through the enforcement of the Travel Rule. Firms must ensure that their compliance efforts are focused on preventing such activities and maintaining the integrity of their operations.
By meeting these expectations, UK cryptoasset businesses can contribute to a more transparent and secure industry.
USA
A Coinbase-backed group recently lost a lawsuit arguing that the U.S. Treasury Department's sanctions on Tornado Cash, a virtual currency mixer, overstepped its authority. The lawsuit was funded by Coinbase and brought by six individuals who were financially harmed by the Treasury's decision to sanction Tornado Cash. The Treasury Department imposed sanctions on Tornado Cash one year ago, alleging that it had laundered more than $7 billion worth of virtual currency, with some of those proceeds going to North Korean government-backed hackers. Coinbase CEO Brian Armstrong argued that the Treasury Department had gone too far «by sanctioning an entire technology instead of specific individuals».
Tornado Cash is an open-source software running on the Ethereum blockchain that preserves privacy by allowing users to deposit assets from one crypto address and withdraw them using a different crypto address. The Treasury sanctioned the Tornado Cash software because it was being used by criminals, including North Korean hackers.
However, a federal judge denied the motion supported by crypto market participants, including Coinbase Global Inc., siding with the Treasury Department in the lawsuit. The outcome of this case highlights the ongoing debate over the balance between privacy and security in the cryptocurrency space, as well as the role of government authorities in regulating emerging technologies.
El Salvador
El Salvador's dollar bonds have experienced a significant surge in value, with a 70% return, making it the highest among developing markets. This surge can be attributed to several factors:
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El Salvador's bonds due in 2027 have gained 62% in the last six months, as the country finds itself on a better financial footing.
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The surge in bond value has occurred alongside a price surge for Bitcoin, which has been adopted as legal tender in the country.
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The country's bold decision to adopt Bitcoin as legal tender has attracted attention from financial institutions and investors, contributing to the parallel surge in El Salvador's bonds.
The surge in El Salvador's bond value highlights the potential impact of adopting cryptocurrencies on a nation's financial stability and growth. However, it is essential to consider the risks and uncertainties associated with such a decision, as the cryptocurrency market is known for its volatility.
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