Crypto regulation in the world: weekly digest #68

The UK

On October 26, in the United Kingdom received Royal Assent and became a law the Economic Crime and Corporate Transparency Act (ECCT). The act is a broad and comprehensive piece of legislation that aims to tackle the use of the UK's corporate, real estate, and business sectors by criminals for nefarious purposes and address the reputation London sometimes has as a place where money laundering and fraud are commonplace. The act introduces world-leading powers that allow UK authorities to proactively target organized criminals and others seeking to abuse the UK's open economy. The act also introduces provisions to increase transparency over corporate entities and prevent the creation of fraudulent companies.

One of the key provisions of the ECCT Act is the increased power given to law enforcement agencies to seize, freeze, and recover crypto assets. British police and the National Crime Agency (NCA) now are able to seize crypto assets more easily and convert them into money before a forfeiture hearing has taken place. In exceptional circumstances, there will also be a power to destroy seized cryptocurrency.

The ECCT Act is especially important because the crypto industry is still largely unregulated in the UK. The act will principally amend the Proceeds of Crime Act 2002 (POCA) to more effectively tackle criminal use of crypto assets. It will become another major amendment to the UK’s legal framework for crypto assets.

USA

Recently, US lawmakers have called for a Department of Justice (DOJ) investigation into Binance and Tether on suspicions of abetting illicit finance, including financing terrorism. In a letter to Attorney General, Sen. Cynthia M. Lummis and French Hill called for «decisive action» if the firms are found complicit. The lawmakers argued that Binance's history of ties to illicit financing and its failure to freeze accounts linked to Hamas may constitute providing material support to terrorists under federal law.

Meanwhile, Tether faces its own compliance questions despite reportedly freezing addresses connected to Hamas at Israeli authorities' request. The investigation is focused on potential connections between Binance and Tether with terrorist financing and sanctions violations. Tether has denied any violations of sanctions laws or terrorist ties.

If Binance and Tether are found guilty of terrorism financing, they could face severe consequences, including criminal charges and fines. Additionally, they could face reputational damage, which could lead to a loss of customers and investors.

This call can be seen as another attempt by US lawmakers to tighten control over cryptocurrency companies. It is also possible that the accusations against Binance are a continuation of the regulatory pressure of the US authorities on the world's largest crypto exchange. What is certain is that everyone should carefully verify the sources of origin of their cryptocurrency to avoid the risk of being involved in money laundering or terrorist financing.

Taiwan

Taiwan has been working on a new crypto law to regulate the crypto industry on the island. Currently, cryptocurrencies are not accepted by the Central Bank of the Republic of China (Taiwan) as currency, and no laws, regulations, or rulings have been officially issued to specifically deal with the rise of cryptocurrencies, except for the regulations governing the offering and issuance of any tokens with the nature of securities. However, Taiwan's Financial Supervisory Commission (FSC) has been stepping up its regulation of the crypto industry. In July 2021, the FSC introduced anti-money laundering rules for virtual asset services providers. In September 2023, the FSC published guiding principles for crypto issuers and firms to strengthen industry oversight.

Recently, Taiwan officially proposed a draft crypto act for first reading in the parliament. The proposed legislation, supported by 17 lawmakers, would require all crypto platforms operating in Taiwan to apply for a permit. Non-compliance could result in regulators ordering them to cease operations.

The proposed legislation is necessary to regulate crypto-related businesses, according to Yung-Chang Chiang, an official in the Legislative Yuan of Taiwan. He says crypto assets differ from traditional financial products and need to be governed via a special law. Chiang held a public hearing in the Taiwanese parliament in October 2023, including digital asset service providers, academics, and others in the industry, to discuss the draft proposal. Earlier we wrote that legislation regulating cryptocurrencies in Hong Kong was also passed this year.

News from other countries:

• The Financial Action Task Force (FATF) updated its «grey list» of the Jurisdictions under Increased Monitoring. Albania, Cayman Islands, Jordan and Panama were excluded from the list. The list was also amended with Bulgaria and the country should work to implement its FATF action plan which includes the obligation to establishing market entry controls for VASPs.

• Bitcoin reached $35,000 this week, its highest level since May 2022, due to the optimism around the possibility of a Bitcoin ETF approval by SEC. The BlackRock exchange-traded fund for bitcoin appeared on a list controlled by the Depository Trust and Clearing Corp., a Nasdaq-operated clearing house for stocks and ETFs, which hinted at a potential SEC approval.

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