Crypto regulation in the world: weekly digest #69

FTX Update

Sam Bankman-Fried, the founder of the FTX Exchange, is currently on trial for fraud and conspiracy charges. The trial has been ongoing for several weeks, and the jury began deliberating on November 2nd. On November 3rd, Bankman-Fried was found guilty on all seven counts against him and now he faces a maximum sentence of 115 years in prison.

Throughout the trial, Bankman-Fried has been accused of deceiving investors and lying about the financial health of his company. His ex-girlfriend and ex-CEO of the investing firm Alameda Research Caroline Ellison testified against him. Bankman-Fried himself took the stand and was cross-examined by prosecutors.

The verdict has been eagerly awaited, and its announcement has been covered by multiple news sources. The trial of Sam Bankman-Fried is a significant event in the world of cryptocurrency and finance. It highlights the importance of transparency and honesty in business dealings and serves as a reminder that fraudulent behavior will not be tolerated.

The UK

The UK Treasury has recently published a consultation paper on the future financial services regulatory regime for cryptoassets. The proposals seek to deliver on the ambition to place the UK's financial services regulatory regime for cryptoassets within the existing Financial Services and Markets Act (FSMA) rather than create entirely new legislation.

The proposals include plans to regulate core activities such as custody and lending, and to bring centralised crypto exchanges into financial services regulation for the first time. This means that the exchanges will be subject to the same regulatory standards as traditional financial services. The UK remains committed to creating a regulatory environment in which firms can innovate, while crucially maintaining financial stability and clear regulatory standards so that people can use new technologies both reliably and safely.

Hong Kong

Hong Kong has issued regulations for asset tokenization, treating tokenized securities like traditional securities, subject to the same legal and regulatory norms.

The Securities and Futures Commission (SFC) of Hong Kong has issued two circulars to regulate digital asset tokenization, offering instructions to intermediaries participating in tokenized securities activities and outlining the criteria for tokenizing investment products authorized by the SFC. Tokenized securities offerings must adhere to the Companies Ordinance’s Prospectus Regime and the Securities and Futures Ordinance on offers of investment. Intermediaries providing advice on tokenized securities, managing tokenized funds, and facilitating secondary market trading on virtual asset trading platforms must comply with the existing conduct requirements for securities-related activities. Trading platforms with licenses must establish SFC-approved compensation arrangements to safeguard against potential security token losses.

Hong Kong's securities regulator has emphasized the benefits of tokenization in improving operational efficiency and mitigating intermediary dependence. The SFC sees the potential benefits of tokenization to the financial markets, particularly in increasing efficiency, enhancing transparency, reducing settlement time, and lowering costs for traditional finance, but it is also aware of the new risks arising from using this technology.

News from other countries:

• PayPal has received a subpoena from the U.S. SEC requesting documentation about its USD stablecoin. The subpoena asked PayPal to produce documents tied to the project, and the company is cooperating with the probe.

• Switzerland’s central bank is launching its CBDC program.

• Valkyrie Funds has taken steps to bolster its chances of receiving approval from the SEC for a Bitcoin ETF. Valkyrie has amended its spot Bitcoin ETF application with the SEC to provide new details. The shares are scheduled to be traded on the Nasdaq Stock Market under the ticker symbol “BRRR” and represent units of fractional undivided interest and ownership of the funds.

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