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Regulatory and Legislative Analysis #4

Regulatory and Legislative Analysis – Global

The Financial Stability Board (FSB) issues statement on international regulation and supervision of crypto-asset activities

On July 11th, the FSB issued a statement following “recent turmoil in the crypto-asset markets”. Click here for a detailed overview. The key insights are as follows:

  • The recent turmoil in the crypto-assets markets highlights their intrinsic volatility, structural vulnerabilities and increasing interconnectivity with the traditional financial system;
  • Crypto-assets and markets must be subject to effective regulation and oversight commensurate to the risks they pose, both at the domestic and international level;
  • Crypto-asset service providers must at all times ensure compliance with existing legal obligations in the jurisdictions in which they operate;
  • Stablecoins should be captured by robust regulations and supervision of relevant authorities if they are to be adopted as a widely used means of payment or otherwise play an important role in the financial system;
  • FSB members support the full and timely implementation of existing international standards;
  • The FSB will report to the G20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and other crypto-assets.
The Bank of International Settlements (BIS) issues a joint report to the G20 – ‘Options for access to and interoperability of Central Bank Digital Currencies (CBDCs) for cross-border payments’ (Press Release Link and Report Link)

In 2020 the G20 supported a roadmap to improve and enhance cross-border payments due to their characteristics of being high-cost, low-speed, and limited-accessibility. Conclusions for general ways to achieve interoperability included compatibility of CBDC systems, interlinking CBDC systems, or a single CBDC system. Additionally, there is “no one-size-fits all” solution to interoperability; each jurisdiction will have different motivations for developing and potentially implementing a CBDC.

Regulatory and Legislative Analysis – United States

US Treasury and other agencies deliver a Framework for International Engagement on Digital Assets

Required by the March 9th Executive Order on Ensuring Responsible Development of Digital Assets, this framework for international cooperation focuses on key engagements with multiple parties, including the G7, G20, Financial Stability Board, Financial Action Task Force, International Monetary Fund and World Bank. Its objectives include:

  • Enhanced protection for consumers, investors, and businesses in the US and globally;
  • Increased US and global financial stability and risk mitigation;
  • Mitigating illicit finance and national security risks;
  • Supporting technology advancement for the responsible development and use of digital assets.
Securities and Exchange (SEC) Commission Chairman, Gary Gensler, conducts interview and states “Noncompliance” across the industry

On July 19th, Chairman Gensler discussed the future of virtual asset regulation and how the SEC fits into this effort. Concerns around the number of non-compliant platforms was front-of-mind, and he reinforced that the SEC will continue to work with the industry, and “bring robust enforcement actions as well”.

Regulatory and Legislative Analysis – EMEA

UK Financial Services and Markets Bill introduced to unlock growth and investment and to regulate certain stablecoins

On July 20th, the Financial Services and Markets Bill was introduced. It provides the UK with legislation that will enhance the competitiveness of UK financial services, giving financial regulators greater responsibility for setting the requirements for UK financial services, and promoting UK growth and competitiveness. It also includes regulation for certain types of stablecoins as a form of payment, and the creation of infrastructure sandboxes allowing firms to responsibly test new technologies.

Government of Dubai launches Metaverse strategy

On July 18th, the Government of Dubai launched its vision to be one the world’s top 10 metaverse economies and a global hub for the metaverse community. The strategy includes supporting global standards and regulation to build safe and secure platforms for users, and to better develop metaverse infrastructure. Its goal to create over 40,000 metaverse jobs & contribute approx. $5T to the global economy by 2030.

Dutch Central Bank, De Nederlandsche Bank (DNB), Imposes $3.3M fine on Binance (CNBC Link and Reuters Link)

On July 17th, the DNB issued a fine against Binance, equating to $3.3M Euros. The fine reflected Binance’s size and prolonged history of operating in the Netherlands without proper registration. This follows a public warning from the DNB on August 18, 2021, that Binance was operating without required legal registration. Binance has registered in France and Italy in recent months.

Regulatory and Legislative Analysis – LATAM

Paraguay’s Senate approves bill that regulates the commercialization of crypto activities

In edition #2, we shared how Paraguay’s Chamber of Deputies (Congress second chamber) approved a bill to regulate crypto mining and trading on May 25, 2022. On July 15th, the Paraguay Senate approved this version of the bill. This will regulate “the mining, commercialization, intermediation, exchange, transfer, custody, and administration of crypto assets or instruments that allow control over crypto assets”. The next step will be submission to the executive branch where it can be approved or vetoed.

Regulatory and Legislative Analysis – APAC

Central Bank of Singapore to release comprehensive digital asset plans in August

In a press release on July 19th, Monetary Authority of Singapore’s (MAS) Managing director, Ravi Menon, noted how Singapore is viewed as being at the forefront of crypto with “clear licensing and regulatory framework”, particularly in the space of mitigating illicit finance. However, he stated the ongoing need for enhanced local and global regulation in consumer protection, market conduct, and stablecoin reserve.

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