Crypto regulation in the world: weekly digest #114

Germany

German law enforcement, led by the Federal Criminal Police Office and the Central Office for Combating Internet Crime, has seized 47 cryptocurrency exchange services hosted in the country that were facilitating money laundering activities for cybercriminals, including ransomware gangs.

The platforms allowed users to exchange cryptocurrencies anonymously without following KYC regulations, creating a low-risk environment for criminals to launder their proceeds. The seized exchanges had a combined total of over 1.7 million users and 4.6 million transactions. Among seized services there are such Russian-language crypto exchangers as 60cek, Ychanger.net and others. As for now, there is no crypto-regulation in Russia, that makes it easier to operate such services especially for Russian speaking community in Russia itself and CIS countries.

During the operation, authorities secured extensive user and transaction data from the platforms, which will aid in future investigations and prosecutions of cybercriminals. However, German authorities acknowledge the difficulty of prosecuting the perpetrators, as they often reside in countries with lax money laundering regulations.

This crackdown is part of Germany's broader efforts to disrupt cybercrime networks by targeting the infrastructure that enables these crimes. In recent years, German authorities have seized the ChipMixer darknet crypto mixer, taken down illegal Bitcoin ATMs, and dismantled malware like Qakbot and Emotet. Earlier, German authorities successfully seized the servers of Hydra Market, a prominent Russian-language darknet marketplace, in a significant operation that took place on April 5, 2022. This marketplace was notorious for facilitating the sale of illegal drugs, forged documents, and other illicit services.

Brazil

The integration of stablecoin USDC into Brazil's financial system is gaining momentum, especially with the introduction of new mechanisms to purchase USDC using the PIX payment system. This development presents several significant opportunities for both businesses and consumers in Brazil. Circle has expanded access to USDC in Brazil by enabling transactions through the PIX payment system. This allows businesses to acquire USDC directly from local financial institutions without the need for international wire transfers, which can be time-consuming and costly. The integration with PIX facilitates faster access to USDC, reducing transaction times from days to mere minutes, thereby enhancing liquidity for businesses.

With this integration, Brazilian businesses can now utilize USDC for various corporate purposes and also offer it as a payment option to their customers. This move not only streamlines the process of acquiring stablecoins but also positions USDC as a viable alternative for transactions that traditionally rely on fiat currencies.

The availability of USDC through local payment systems like PIX makes it more cost-effective for businesses engaged in international trade, as it eliminates the need for currency conversion that typically incurs additional fees. This is particularly beneficial in a country where a significant portion of foreign trade is dollar-denominated.

As stablecoins like USDC become more integrated into Brazil's financial landscape, they are likely to attract more users. This could lead to an increase in digital currency adoption among consumers and businesses alike, fostering a more robust digital economy.

India

The recent report from the Financial Action Task Force (FATF) highlights both progress and ongoing challenges in India's approach to cryptocurrency regulation. The FATF commended India for its advancements in anti-money laundering measures, particularly in asset seizure and addressing illicit financial flows. However, it pointed out significant gaps in the regulation of Virtual Asset Service Providers (VASPs), which could pose risks to the financial system.

The report emphasizes that while India has made strides in aligning its financial intelligence and enforcement agencies with international standards, the regulatory framework for VASPs remains underdeveloped. This lack of robust oversight is seen as a vulnerability that could facilitate financial crimes, especially as the crypto market continues to expand.

In response to these concerns, India has taken steps to enhance its regulatory framework. VASPs were officially recognized as reporting entities under the Prevention of Money Laundering Act in early 2023, and guidelines have been issued to ensure compliance with AML/CFT obligations. Despite these efforts, challenges persist, including issues related to counterparty identification and compliance with the FATF's Travel rule, which mandates sharing transaction information between VASPs.

News from other countries:

• Belarus has implemented changes that prohibit residents from purchasing cryptocurrencies through foreign exchanges. This regulation is part of a broader effort to tighten control over cryptocurrency transactions and ensure that all crypto activities occur within the framework established by the High Technologies Park (HTP).

• China's highest judicial bodies have recently classified cryptocurrency transactions as a method of money laundering, significantly heightening the legal risks associated with crypto trading in the country. This new interpretation was announced on August 19, 2024, by the Supreme People's Court and the Supreme People's Procuratorate, marking a notable revision to the country's anti-money laundering (AML) laws.

We continue to highlight the news of the world of crypto regulation worldwide. Please stay with us!