Matrixport View_Regulation #4

While the economies in many countries around the globe come back slowly to normal, regulators are warming up to crypto as they embrace innovation for economic recovery. Many governments are either in the initial planning phase of a CBDC or are already in an advanced testing phase. We will certainly see real circulating CBDCs in some countries within the next 6 to 12 months. From the AML/CTF side, FATF held a virtual meeting in regard to the famous “travel rule” for VASPs on June 24th. We will certainly learn more concrete actions needed to be implemented in the following months. Here below is what it looks like in the crypto regulatory landscape in June 2020:

Policies and regulations around the globe:


The U.K.’s Financial Conduct Authority is urging all crypto businesses operating in the country to submit their applications by June 30 to make it for the 2021 deadline. According to the FCA’s statement, firms must submit completed applications by June 30. The regulator says that the anticipated deadline is necessary to ensure that all applications are processed by the end of the grace period on Jan. 10, 2021. Companies doing business in the United Kingdom will need to establish both monitoring and control systems to eliminate potential AML and CTF threats.


New acting head of U.S. bank regulator talks about innovation expands financial inclusion and the government’s role in building frameworks for crypto. Days into his term as acting head of the Office of the Comptroller of the Currency, Brian Brooks spoke with Cointelegraph on how he hopes to update legacy systems with crypto technology. Brooks came to the OCC from a role running Coinbase’s legal team only months ago.

Around the world, governments are rapidly experimenting with and deploying blockchain to improve efficiency, secure platforms and promote transparency in areas such as supply chain management, identification, titles, bookkeeping, energy consumption, voting and more. The United States, however, represents one such government that continues to lag behind its innovative counterparts. The Advancing Blockchain Act is a bill proposed by Rep. Brett Guthrie, a Republican from Kentucky. It is the third blockchain bill introduced by Guthrie, following the Blockchain Promotion Act of 2018 and the Blockchain Promotion Act of 2019, both of which stalled. If passed, the bill would initiate a comprehensive survey of blockchain technology and compile a report with legislative recommendations to promote the growth and adoption of blockchain, address regulatory barriers and advance the U.S. as a global leader in blockchain technology.


Three months after the Supreme Court ruling to lift the banking ban, India’s Ministry of Finance has proposed to ban cryptocurrencies by law. The Indian Ministry of Finance has proposed to legally ban cryptocurrencies within the subcontinent. With this, the Indian crypto community is met with yet another unexpected turn. The proposal will first be sent to the Union Council of Ministers and then be forwarded to the parliament for final review.

Previously it was reported that in a recent response to a Right to Information query, the Reserve Bank of India, the Indian central bank, has stated that there is no prohibition on banks to provide bank accounts to cryptocurrency traders. But some banks have been arbitrarily denying services to crypto users and are still doing so.


A former senior official of the People’s Bank of China said that the country has completed the backend architecture development of its digital currency.

Rumour has it that Chinese banks are freezing client accounts that have a history of buying and selling cryptocurrencies. According to a Chinatimes report on June 13, banks in China have clarified that they are not shutting down any legit fiat to crypto accounts. According to the report, China Merchants Bank, Bank of China, Agricultural Bank of China, China Construction Bank and industrial and Commercial Bank of China all responded that: “As long as the operation is legal, the channel is legal, the virtual currency source is legal and if the web page also supports the bank card service, the bank will not actively freeze the user’s funds. Unless there is any involvement of money laundering and fraud and other illegal related cases.”


Estonia is withdrawing permits from hundreds of crypto companies following Europe’s biggest money laundering scandal. The country, one of the European Union’s most crypto-friendly ones, is cracking down on hundreds of licensed crypto companies in response to a $220 billion money laundering scandal, according to Bloomberg. Estonia was among the first EU countries to license crypto companies but has been forced to clamp down after hundreds of billions of dollars of dirty money was detected in the Estonian unit of Denmark’s largest lender Danske Bank A/S. It’s put the country at the center of Europe’s biggest money laundering scandal.

At the height of the unprecedented crypto boom of 2017, Estonia emerged as the digital trailblazer of the European Union, issuing hundreds of licenses to crypto companies. The country’s regulators moved to authorize the issuance of operating permits to crypto companies back in 2017 under Estonia’s e-Residency permit program. As a result, over 1,400 permits were issued in three years.


The Bank of Thailand launched a project to pilot test its CBDC payment system with the largest building material provider in the country. The bank said in its official statement that before it launches the CBDC payment system for all businesses, it plans to test it with large-scale enterprises. They have partnered with the largest cement and building material provider in Thailand, Siam Cement Group (SCG), and Thailand-based fintech firm Digital Ventures Company Limited to pilot test their payment prototype system. The project is scheduled to start in July 2020 and the pilot test with SCG is expected to conclude by the end of this year.


Cryptocurrency exchanges and payment processors are now legally recognized as Money Service Businesses (MSB) within Canada. June 1 saw the enactment of amendments to Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act that were passed in June 2019 to address holes in the then-existing framework. Candian crypto firms must now report all transactions exceeding 10,000 Canadian dollars ($7,403), and register and comply with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

South Korea:

The South Korean Finance Minister, Hong Nam-Ki, announced plans to impose a tax on cryptocurrency, while speaking to the parliamentary finance committee on June 17. According to a report from local news outlet, Korea JoongAng Daily, the ministry will reveal further details of the plan next month. Hong told the committee that the government: “Has continued to realign its tax system to reflect changes in market conditions, but it is especially working to refine its list of taxable items and types of tax this year.” As reported previously, the ministry was considering a 20% tax on cryptocurrency income back in January this year.


Lawmakers in the Kyrgyz Republic are considering a bill to tax and regulate cryptocurrency mining activities. The bill, On Amending the Tax Code of the Kyrgyz Republic, seeks to increase government revenue by establishing taxation obligations for miners, in addition to establishing clear definitions for the terms “virtual assets” and “mining” within the context of cryptocurrencies. If passed, the new taxation regime would comprise the first major step taken towards cryptocurrency liberalization on the part of the Kyrgyz Republic, with the country explicitly prohibiting crypto assets as a means of payment in July 2014.

Updates and news on the most important players in the industry:


In a sudden turn of events, Russia’s communications watchdog — Roskomnadzor — issued a public statement on June 18, announcing that it has lifted its ban on the popular messaging app Telegram. This decision comes after a two-year period of the Russian government unsuccessfully attempting to block the popular social media messaging app and its various activities within its borders.


The Libra Association, the group behind Facebook’s digital asset endeavor, unveiled an update to its brass. The association announced Sterling Daines as the chief compliance officer of the outfit, said a statement provided to the press. Daines will leave his post at Credit Suisse at some point in 2020 to assume his role at the Libra Association.

Bitcoin ATMs

Experts predict that Bitcoin ATMs (BATMs) will face stricter regulations worldwide, with countries including Canada and Germany already moving to tighten up anti-money laundering requirements. A June 2 report from CipherTrace estimates that 74% of transactions made from U.S.-based Bitcoin ATMs were sent out of the country during 2019. The report also found that 88% of funds sent from U.S. crypto ATMs to virtual currency exchanges were transferred overseas. The figure has seen exponential growth over recent years, doubling annually since 2017.


The Financial Action Task Force (FATF) has a plenary meeting scheduled on June 24 to assess the progress of Virtual Asset Service Providers (VASPs) worldwide in enforcing the organization’s “travel rule”. According to Pawel Kuskowski at Forbes, the FATF meeting will be held virtually in two weeks to discuss the organization’s guidelines intended to make VASPs compliant with anti-money laundering (AML) and Anti-Terrorist Financing (ATF) regulations. He says FATF member jurisdictions “must demonstrate progress” on implementing the travel rule, as their efforts will be reviewed at the June 24 meeting.

Crypto ETF

WisdomTree Investments, a New York-based exchange-traded fund (ETF) provider, has filed for an ETF that would invest up to 5% of its portfolio in cash-settled Bitcoin (BTC) futures contracts offered by Chicago Mercantile Exchange (CME). The application, which was filed on June 16, asserts that the proposed fund will invest in the futures markets of four commodity sectors spanning agriculture, industrial metals, precious metals and energy. No direct investments will be made in the underlying physical assets.



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