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May 30, 2020

FinCEN SAR Update | Argentine Crackdown | Crypto Debit Cards | BitMEX Lawsuit | Iran & Russia

  • FinCEN Reduces Suspicious Activity Report Burden for Financial Institutions  
  • Argentina Enacts New Crypto Monitoring to Shore Up Peso’s Value 
  • Crypto Debit Card Allows 40 Million Merchants to Accept Crypto Payments 
  • Iran Moves to Categorize All Crypto Businesses as Engaged in “Smuggling” Activity 
  • BitMEX Accused of Criminal Activity in Suit Brought by Serial Filer 


FinCEN Updates Burden Estimates for Writing Suspicious Activity Reports (SARs) 

On March 26, the Financial Crimes Enforcement Network (FinCEN) released a notice requesting comments regarding a proposed renewal of currently-approved information collections relating to Suspicious Activity Reports (SARs). Under Bank Secrecy Act (BSA) regulations, financial institutions are required to report suspicious transactions to FinCEN. Although no changes are proposed to the information collections process for SARs, the request for comments covers a proposed updated burden estimate for the total time to prepare, file and record SARs. FinCEN now proposes that instead of taking 120 minutes per SAR, the time estimate can range between 25 to 315 minutes. Eighty-three percent of SARs would fall in the 45-75 minutes range. 

Why it matters: VASPs operating in the United States, or accepting US customers, are financial institutions under FinCEN’s regulations. As such, FinCEN’s new proposal effects the burden VASPs—such as cryptocurrency exchanges—have in writing their suspicious activity reports. The addition of granular data on the time burden by sector could further refine FinCEN’s proposed new estimates. Written comments to this proposal must be received on or before July 27, 2020. 

Read the full notice: 


Argentina Cracks Down on Crypto Transactions to Prevent Peso Devaluation 

On May 25, Decrypt reported that Argentina’s Financial Information Unit (FIU) is enacting new monitoring of cryptocurrency transactions. The official reason for the new order is to prevent money laundering and other financial crimes using cryptocurrencies, though the Argentine newspaper El Cronista suggests that the real reason for this government action is to prevent further devaluation of the Argentine peso (ARS). 

The official exchange rate is currently about 67 pesos per dollar, but dollars are trading at almost 120 pesos in black markets. The peso’s devaluation has sparked a rush for dollars that further inhibits government efforts to stabilize its sovereign currency. Argentinians have been using cryptocurrency exchanges to buy bitcoin to trade for US dollarsa more trusted store of value. 

Franco Amati, founder of the Buenos Aires Bitcoin Center, took to Twitter, posting, “Argentine government wants to stop the bitcoin dollar (buying BTC with ARS inside Argentina and converting those BTC to USD abroad).” Meanwhile, Mexican lawyer and investor Micky Sierra advised traders in Argentina to be on alert, as this recent action by the FIU could foreshadow cryptocurrency seizures with the justification being involvement in suspicious activity. 

Why It Matters: The appeal of bitcoin in places where trust in the sovereign currency is low demonstrates why digital currencies will continue to play a role in the global monetary policy. Rather than prohibiting their use, governments would be wise to accept cryptocurrency’s role as an alternative to fiat while ensuring that exchanges and other money service businesses maintain strong AMLCTFand sanctions compliance. 

Read the coverage in Decrypt here: 


Eidoo Partners with Visa to Issue Debit Card that Allows for Cryptocurrency Payments 

Eidoo, a Swiss DeFi startup, has partnered with Visa to issue a debit card that allows people to make daily purchases using cryptocurrencies. According to coverage by Cointelegraph, the “new card will enable 40 million Visa merchants to accept crypto-derived fiat currencies, including the British pound (GBP) and euro (EUR).” 

Eidoo CEO Thomas Bertani explained how it works: “People have a given crypto token, they sell it for the stablecoin via DeFi DEXes like Uniswap. Then the regulated stablecoin obtained from there is topped up with a 1:1 exchange rate (1 Moneyfold EUR = 1 EUR) on the crypto card when the payment occurs.” 

Why It Matters: The availability of crypto debit cards will speed up the process of mass adoption by merchants and consumers. Usability has long been a hindrance to cryptocurrency growth in the retail sector, Eidoo’s Visa-powered card makes accepting crypto payments much easier for merchants and convenient for consumers 

Read the coverage in Cointelegraph here: 


Iran Incorporates Cryptocurrency into Updated Smuggling Laws 

The Iranian parliament recently passed proposals amending the law on combating the smuggling of goods and currency. The new proposal included a note that ensures the law also applies to all cryptocurrencies. According to the proposal, the entry or exit of foreign currency (including cryptocurrency) from the country via unauthorized routes, or buying and selling (cryptocurrency) by persons other than exchange offices, banks or credit financial institutions licensed by the Central Bank, are all considered “smuggling” activity. The criteria related to the manner and amount of entry or exit will be determined by the Central Bank and shall be made public.  

According to BTC Manager, “If the law is passed, crypto-exchanges would seek necessary licenses from the Central Bank of Iran for operations, while additionally following guidelines relevant for currency exchange providers.” 

The Iran chapter of LocalBitcoins and other businesses could be forced to shut down entirely should the new rules pass, though most crypto businesses with operations in Iran are headquartered outside of the country, including LocalBitcoins. The proposal is not clear as to how such businesses should be treated. 

Why It Matters: The staunch anti-crypto mentality exhibited by the Iranian government illustrates one extreme of the regulatory spectrum—a position that stifles innovation and punishes entrepreneurship. Russian lawmakers recently took similar actions, proposing that transacting in bitcoin should be illegal. Ideally, a middle ground can be found wherein cryptocurrency payments are legal and crypto businesses can thrive while meeting all compliance requirements to prevent illicit finance. 

Read BTC Manager’s coverage of the story here: 

Read more on Russia’s proposed ban on bitcoin transactions in Bitcoin News: 


Crypto Exchange BitMEX Sued, Denies Charges 

According to a May 27 report in Cointelegraphcrypto derivatives exchange BitMEX is being sued in the state of California by Puerto Rican company BMA LLCsmall law firm known for filing similar suits against FTX and Ripple. 

BMA’s lawsuit alleges that BitMEX engages in a range of criminal activities, including money laundering and wire fraud, though BitMEX complies with Know Your Customer and Anti-Money Laundering requirements. The most substantial claims in the suit allege that BitMEX manipulates the market by fabricating outages, and operates in the United States without licensedespite notices on their website barring citizens or residents of the US from operating on their platform. 

In an email to Cointelegraph, a spokesperson for BitMEX’s parent company, HDR Global Trading, said: “Having reviewed a draft version of their complaint, which is clearly rehashed from information culled from the internet, we confirm we will be defending ourselves vigorously against this spurious claim. BMA has recently emerged as a serial filer of claims against companies operating in the cryptocurrency space. 

Read the full story on Cointelegraph: 

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