Crypto regulation in the world: weekly digest #43
We have already reported about the U.S. forthcoming comprehensive regulation on crypto assets. There are also some other bill proposals awaited to pass Senate later this year: the U.S. stablecoin bill and the Digital Anti-Money Laundering Act, introduced by well-known Senator Elizabeth Warren.
Both acts are under consideration but it is clear that the Anti-Money Laundering Act will be delayed as it should be assessed for its potential impact on the crypto industry. The Act itself has been actively criticized by lawmakers and industry players for being unworkable and unconstitutional. For example, the current edition of the bill contains an offer for the U.S. AML/CFT watchdog FinCEN to treat developers of crypto software and regular users who simply run open-source crypto software as «financial institutions». The proposal that is not supported even by the regulator. In February, Warren promised to submit a revised version of the document, but it has not yet been made public.
This week U.S. lawmakers have submitted a bipartisan bill against terrorist financing through cryptocurrencies and financial technology. The bipartisan Financial Technology Protection Act would create the Independent Financial Technology Working Group to Combat Terrorism and Illicit Financing. It would research transactions related to terrorism and financial technology like cryptocurrency and make proposals to improve anti-money laundering and counter-terrorist financing efforts.
The task force will investigate suspicious transactions, including cryptocurrency transactions, and make suggestions for improving the measures taken. The group will include one representative each from different U.S. law enforcement agencies. The group will submit to Congress an annual report on its research and make appropriate recommendations. Also, the bill will ensure that financial system is ready to combat sanctions circumvention, terrorist financing and money laundering using the latest financial technologies.
We follow Hong Kong’s crypto news as China’s Special Administrative Region is progressing in cryptocurrency adoption developing the transparent regulation framework to become a new global crypto hub.
Hong Kong has already invited Chinese banks to serve Chinese crypto firms, and has also issued guidance for crypto companies to better understand which cryptocurrencies to work with.
The Hong Kong Monetary Authority (HKMA) believes that the greatest risks of illicit transactions and money laundering are associated with the use of stablecoins. Therefore, a special regulation for stablecoins will be created in the very near future. At the same time, the development of decentralized finance and its integration into the financial system is closely connected with stablecoins.
The new rules, which will be developed as soon as possible, should prevent the dangers associated with the use of stablecoins and further increase the attractiveness of the region for crypto companies.
From the other side, there is a concern about balancing between the priorities of protecting investors and supporting innovation. According to the Financial Times report, the number of crypto-related scams in Hong Kong increased by 67% last year compared to the previous year of 2021. Crypto scammers committed frauds worth HK$1.7 billion ($217 million) in 2022. Hence, Hong Kong’s lawyers are working with regulators for better crypto investors’ protection in a way that does not harm innovation.
News from other countries:
- The Italian government has introduced a 26% tax to be levied on profits generated by cryptocurrency transactions.
- Zimbabwe plans to launch its gold-backed national token next week.
- The Central Bank of Argentina in its statement prohibited all payment providers to offer crypto-related services. This was done to mitigate risks. This means that major fintech platforms that provide various financial services will no longer offer to their customers possibilities to buy crypto assets including bitcoin.
- South Korea is working on tightening crypto regulation as country’s citizens have heavy exposure to cryptoassets. The new regulations aimed to protect crypto users from scums and frauds similar to Do Kwon’s TerraUSD.
We continue to highlight the news of the world of crypto regulation worldwide. Please stay with us!
The TokenScope Team