Crypto regulation in the world: weekly digest #31

USA

SEC issued a press release related to enforcement actions against Kraken crypto exchange. According to the SEC’s statement the two Kraken entities agreed to immediately cease offering or selling securities through crypto asset staking services or staking programs and pay $30 million in disgorgement, prejudgment interest, and civil penalties.

According to the SEC’s complaint, since 2019, Kraken has offered and sold its crypto asset «staking services» to the general public, whereby Kraken pools certain crypto assets transferred by investors and stakes them on behalf of those investors.

But not everyone agrees with the decision of the regulator, not even all of its employees. SEC Commissioner Hester Pierce, who has long advocated the adoption of cryptocurrencies, issued a statement disagreeing with the regulator's position. In her opinion, it is necessary to prepare regulations, issue proper guidelines, and not act with prohibitions. Prohibitions in a growing industry is a bad way to regulate. The main thing is that the program worked well and gave people income, but was completely closed in the USA.

Nevertheless, the SEC is not the only agency attacking crypto industry. The New York Department of Financial Services (NYDFS) is reportedly investigating stablecoin issuer Paxos. Paxos is the company behind the issuance of the third-largest stablecoin, Binance USD (BUSD).

U.S. financial regulators have been accused of a heavy-handed approach and regulating crypto by enforcement. For example, SEC Chairman Gary Gensler said at the beginning of the year that crypto assets and other emerging technologies are on the agency’s top priorities for 2023. One of the tasks will be to study the compliance of firms working with digital assets with appropriate standards of protection in the preparation of recommendations and investment advice.

Argentina

In Argentina, where many crypto-currency companies have been working for a long time, they also thought to create a comprehensive legal frameworks for the crypto industry for a long time. This need has taken on new urgency since the collapse of the FTX exchange.

With digital assets becoming increasingly popular among Argentines, local traders have been hit hard by FTX's collapse and Argentines themselves have lost their savings.

In this regard, the government believes that cryptocurrency companies must prove their solvency and protect customers from the risks of losing funds due to bankruptcy. First of all, regulatory rules will focus on cryptocurrency exchanges and services, and not on issuers of crypto assets.

The Argentinian financial watchdog Comisión Nacional de Valores (CNV) will create a working group that is going to discuss the proposed rules with industry participants. CNV is also seeking to expand its powers to regulate the cryptocurrency industry in the country. The bill proposed by CNV will be voted on in Congress in the coming weeks.

The Argentine government is looking to increase regulation of the crypto industry ahead of a Financial Action Task Force (FATF) visit to the country scheduled for September. Officials and regulators are inclined to ensure that crypto companies comply with the requirements that apply to the traditional financial market. First of all, this is the introduction of the KYC (Know Your Customer) procedure, transparent business conduct and reporting on suspicious transactions in the amount of more than $1,000.

Russia

Russia has suspended consideration of a bill proposal to regulate cryptocurrencies, but is still thinking about using them in international transactions.

The country's government believes that with the help of cryptocurrencies, it will be able to circumvent the financial sanctions imposed on the country by Western states.

At the same time, the Central Bank of Russia states that the idea of settlement under international contracts in stablecoins also requires deep study. The regulator treats this idea with caution, as well as the idea of legalizing cryptocurrencies in Russia.

Probably, Russia is following the path of India, where there is also still no full-fledged solution to cryptocurrencies, however, many crypto-currency businesses are operating.

News from other countries:

• Virtual Assets Regulatory Authority of Dubai issued a new set of rulebooks for crypto companies establishing a clear regulatory framework for all types of crypto activities from issuance and exchange services to marketing and advertising.
• The Securities and Exchange Commission of the Philippines, together with the University of the Philippines Law Center, will investigate digital currencies and work on creating regulatory framework.
• The Central Bank of Brazil is going to conduct a series of tests of its own CBDC (Real Digital) by the end of 2023, promising to make it private and secure.
• The Financial Services Commission of South Korea (FSC) has published guidelines on security tokens, according to which they should be treated as securities and regulated in accordance with the Capital Markets Law. We continue to highlight the news of the world of crypto regulation worldwide. Please stay with us!