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Crypto Weekly Update #29

MARK COLLINS & DEMETRIOS TSEAS

Regulatory 

FATF to provide countries with enhanced tools to more effectively freeze, seize and confiscate criminal property: During its fourth Plenary in Paris (Oct 25-27) the Plenary agreed on major amendments to the FATF Recommendations that will provide countries with enhanced tools to more effectively freeze, seize, and confiscate criminal property, both domestically and through international cooperation. The revised Recommendations require countries to have policies and operational frameworks that prioritize asset recovery and establish non-conviction-based confiscation regimes in their legal systems. They also provide new features, such as the power to suspend transactions related to money laundering, terrorist financing and serious crime. The FATF will now work to revise relevant parts of its assessment Methodology for the next round of mutual evaluations to take into account the changes to the Recommendations.

Germany’s BaFin grants crypto custody license to BitGo: On Nov 01, U.S. crypto custody firm BitGo was granted a crypto custody license by Germany’s BaFin.  BitGo’s Germany entity is BitGo Europe Gmbh, with a BaFin Id: 50085544.   BitGo, which received approval from the New York Department of Financial Services (NYDFS) for a New York trust charter in 2021, has been storing crypto assets for its customers since 2019, also under BaFin supervision, as part of a transitional regime.

UAE’s Central Bank issues guidance on combating the use of unlicensed VASPs: On Nov 6, UAE’s National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organizations Committee (NAMLCFTC), in collaboration with UAE supervisors, has issued guidance on combating the use of unlicensed virtual asset service providers, which is prepared by the supervisory subcommittee.  The guidance aims to educate licensed financial institutions (LFIs) and the wider public sector, while among other, the supervisors remind the sector that VASPs operating in the UAE without a valid license will be subject to civil and criminal penalties including, but not limited to, financial sanctions against the entity, owners, and senior managers. Furthermore, reporting entities that demonstrate willful blindness in their dealings with unlicensed VASPs and have weak AML/CFT and Counter Proliferation Financing controls may be subject to enforcement action

Kazakhstan’s regulators block access to Coinbase website within the country for violating new digital assets law: On Nov 8, Coinbase has been reportedly blocked in Kazakhstan for violating the country’s new digital assets law. The law, which came into effect earlier in 2023, prohibits the issuance, circulation, and trading of “unsecured digital assets” outside of the Astana International Financial Center (AIFC), a designated economic zone in Kazakhstan. Permits to operate crypto trading platforms within the AIFC are issued by the Astana Financial Services Authority (AFSA).

UK’s FCA issues discussion paper planning to regulate fiat-backed stablecoins: On Nov 06, UK’s Financial Conduct Authority (FCA), issued a discussion paper, to help develop UK’s regime for fiat-backed stablecoins, including when used as a means of payment.  The Government has announced plans to legislate for a future financial services regime for cryptoassets. It is taking a phased approach, focusing initially on fiat-backed stablecoins that may be used as a form of payment, followed by the wider cryptoasset regime.  The FCA has mandated that fiat-backed stablecoins used in the country must adhere to uniform standards, regardless of the issuer’s location. The discussion period ends Feb 06, 2024.

Crypto News

Ordinals back in vogue as BTC transaction fees spike: Bitcoin transaction fees have surged to their highest level in almost six months, reaching an average of nearly $6 as of November 7. The increase is attributed to the return of Bitcoin Ordinals, nonfungible tokens (NFTs) that store data on the blockchain, causing congestion in the mempool and intensifying competition for confirmations, resulting in higher fees and increased profits for Bitcoin miners. Large exhanges such as Binance, KuCoin, and Gate.io have begun listing Ordinals. BitInfoCharts

Caitlin Long launches BTC custody at Custodia: Custodia Bank has launched its Bitcoin custody platform, targeting fiduciaries, investment advisers, fund managers, and corporate treasurers. The cryptocurrency-friendly bank received approval from the Wyoming Division of Banking and offers segregated custody accounts, distinguishing itself from the omnibus custody model. Whitepaper

Binance to discontinue Russian ruble deposits: Binance is set to cease accepting Russian ruble deposits from November 15, 2023, with ruble withdrawals expected to be terminated on January 31, 2024. Users are encouraged to transfer funds to CommEX, the crypto exchange that acquired Binance’s Russian division. Announcement

Hacks

Poloniex: Poloniex, owned by Justin Sun, experienced a significant hack with $126 million drained from its hot wallets. Sun assured users of full reimbursement, announced a whitehat bounty of 5%, and initiated an investigation, while Arkham’s intel market offered a $4,000 bounty for the hacker’s identification. The attack involved draining assets across Ethereum, TRON, and BTC, with unexpected consequences like a 25% increase in TRX price when the hacker swapped stolen USDT to TRX. It is suspected that this incident is yet another case of private key compromise. Decrypt

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