Crypto regulation in the world: weekly digest #79
The European Union (EU) Council and Parliament have reached an agreement on new anti-money laundering rules, aiming to strengthen the EU's framework to combat money laundering and terrorist financing. The agreement includes measures to improve the organization of national anti-money laundering systems, enhance vigilance regarding ultra-rich individuals, and impose an EU-wide limit on large cash payments of 10,000 euros.
The rules also include crypto thresholds for due diligence checks on transactions. Crypto firms are required to conduct due diligence on transactions of 1,000 euros or more. The agreement covers most of the crypto sector, forcing all crypto-asset service providers (CASPs) to conduct due diligence on their transactions. It also addresses the risks associated with self-hosted wallets, which are not subject to the same regulatory oversight as centralized exchanges.
The agreement, which is part of the sixth Anti-Money Laundering (AML) directive will need to go through the formal adoption process before it can be enforced. The new directive will raise the standards for the prevention of money laundering and terrorism financing across the European Union, contributing to the establishment of an EU single rulebook against money laundering and terrorist financing.
The EU has been regularly updating its anti-money laundering framework through directives issued by the European Parliament. The sixth AML directive, which came into effect in December 2020, aims to harmonize the definition of predicate offences against money laundering and place higher responsibility on financial institutions to prevent money laundering. The new rules will be applied by banks and other obliged entities to protect the EU internal market from money laundering and terrorist financing.
Donald Trump, a candidate in the 2024 presidential elections, has made promises not to allow the creation of central bank digital currency in the United States. He has stated that such a currency would give the federal government absolute control over people's money, posing a dangerous threat to freedom. Trump's vow to block any effort by the Federal Reserve to launch a digital dollar has been met with support from his followers.
Previously, many U.S. politicians and companies have expressed opposition to the creation of an American CBDC. Some of them include:
Tom Emmer: A Minnesota legislator and the Republican whip, Emmer introduced the «CBDC Anti-Surveillance State Act» in September.
Warren Davidson: A Republican representative from Ohio, Davidson has issued a condemnation of states legalizing CBDCs.
Ted Cruz: A Senator from Florida in March, 2023 has also introduced legislation to prohibit the Fed from developing a direct-to-consumer central bank digital currency but there is lack of information about that bill’s future fate.
Independent Community Bankers of America (ICBA): This organization has expressed its opposition to a U.S. CBDC, citing privacy and cybersecurity risks, potential damage to the Fed's ability to conduct monetary policy, and the introduction of significant costs and risks.
Cato Institute: This think tank has published a paper on CBDCs and found that most Americans oppose the government issuing a CBDC.
While there are no official plans for the creation of a digital dollar, Trump's stance on this issue has become a significant talking point in U.S. politics, particularly in the context of the 2024 presidential election.
This week the Financial Institutions (Miscellaneous Amendments) Bill 2024 was introduced in Parliament in Singapore. If passed the Bill is to have far-reaching implications for the cryptocurrency sector, particularly for those holding Capital Markets Services Licenses (CMSL). The Bill, also known as the FIMA Bill, aims to enhance and rationalize the Monetary Authority of Singapore's (MAS) investigative, reprimand, supervisory, and inspection powers across various Acts under MAS's jurisdiction.
The bill specifically targets CMSL holders engaged in unregulated business activities, compelling them to adhere to stricter standards and practices. The MAS aims to foster a more secure and reliable environment for investors and market participants by focusing on unregulated business activities, which have often been criticized for their lack of transparency and regulatory oversight.
The FIMA Bill is a significant move by Singapore to strengthen its grip on cryptocurrency regulations. By expanding MAS's powers, the bill aims to ensure that the activities of CMSL holders and MPI licensees are conducted within a consistent and regulated framework. This move will likely influence cryptocurrency exchanges' and related entities' operational practices, as they will need to comply with the stricter standards and practices set by the MAS.
By the way, MAS has taken a firm stance against the listing of spot Bitcoin ETFs. The MAS has emphasized that spot Bitcoin ETFs lack approval because crypto trading is inherently volatile and speculative. MAS maintains a cautious approach, focusing on managing risks and ensuring a secure environment for investors and market participants.
News from other countries:
The European Banking Authority (EBA) has issued new guidelines for crypto-asset service providers to effectively manage their exposure to ML/TF risks. The guidelines highlight ML/TF risk factors and mitigating measures that CASPs need to consider, and will apply from December 30, 2024.
The US SEC has postponed its decision on Fidelity's spot Ethereum ETF application. The original deadline for the decision was set for January 21, 2024, but the SEC has extended the deadline to March 5, 2024. This decision was expected, given the SEC's response in the past and the ongoing legal battle with Grayscale.
Someone paid 4 BTC (approximately $174,000) in transaction fees to transfer only 2.9 BTC. This costly mistake was due to an error in setting the transaction fee. The high fee was over 133% of the actual transfer amount, as per blockchain data. This is not a first incident of such a kind and it has gained attention in the crypto community due to the significant loss incurred in transaction fees. We continue to highlight the news of the world of crypto regulation worldwide. Please stay with us!