Crypto Compliance Weekly Roundup | May 15, 2024

Welcome to the Crypto Compliance Weekly, where we highlight key regulatory updates from around the world.

This week, ???? Taiwan is tightening regulations with new anti-fraud and money laundering laws. The ???? EBA has published comprehensive final technical standards for asset-referenced tokens under MiCA. Meanwhile, ???? Robinhood has received an SEC Wells Notice, which has significant implications for crypto regulation and ETF approvals.

There's much more to cover, so let's dive in.

APAC

???? Taiwan Tightens Regulations with New Anti-Fraud and Money Laundering Laws

Taiwan’s Executive Yuan has introduced four pivotal laws aimed at combating fraud and enhancing anti-money laundering measures, with a significant focus on the digital asset sector. Among these, the revised Money Laundering Prevention Law stands out by setting stringent registration and compliance requirements for virtual asset service providers (VASPs). Non-compliance can lead to severe penalties, including up to 2 years in prison for registration failures and fines up to NT$50 million for money laundering offenses involving virtual assets.

The law also mandates both domestic and foreign currency dealers operating in Taiwan to adhere to rigorous anti-money laundering protocols, ensuring their operations are fully registered or properly established within the country. This move, part of a broader regulatory framework that includes the Technology Investigation and Security Law and the Communications Security and Supervision Law, underscores Taiwan’s commitment to safeguarding financial integrity and establishing a secure environment for digital transactions.

Taiwan has been progressively establishing a regulatory framework for its cryptocurrency sector. Since introducing anti-money laundering rules for cryptocurrency service providers in July 2021, Taiwan has continued to enhance its oversight. Notably, the Financial Supervisory Commission (FSC) announced plans in March 2024 to implement new laws for digital assets by September of the same year. Additionally, Taiwan's crypto industry is strengthening its structure through the formation of an industry association, approved by the Ministry of the Interior in March 2023. Marking a significant regulatory milestone, on November 9, 2023, the FSC issued the first security token offering license to Cathay Securities, allowing it to issue tokenized green bonds biannually, advancing Taiwan’s position in regulated digital asset offerings.

EMEA

???? EBA Publishes Comprehensive Final Technical Standards for Asset-Referenced Tokens Under MiCA

The European Banking Authority (EBA) has released three sets of final draft regulatory technical standards (RTS) and implementing technical standards (ITS) under the Markets in Crypto-assets Regulation (MiCA). These documents focus on the authorization of issuers of asset-referenced tokens (ARTs), the criteria for assessing acquisitions in such issuers, and the approval procedures for related white papers.

Key points include:

1. Authorization Requirements: The RTS outlines the necessary information for entities applying to publicly offer or admit ARTs to trading, emphasizing that only EU-based legal persons or undertakings can apply. The issuance itself does not require authorization, only the public offering or admission to trading.
2. Application Procedures: The ITS details the standard application letter and template, clarifying the process for assessing the completeness of these applications by the competent authority. Notably, credit institutions are excluded from these authorization requirements but must obtain approval to publish a white paper.
3. Acquisition Assessment: Another set of RTS describes the required information for notifications about acquiring direct or indirect qualifying holdings in ART issuers. This includes evaluating the acquirer's reputation, financial soundness, and the management quality of the target undertaking post-acquisition, with a focus on preventing money laundering or terrorist financing.
4. White Paper Approval for Credit Institutions: Specific RTS set the timelines for the approval process of crypto-asset white papers by credit institutions, their competent authorities, and central banks such as the European Central Bank (ECB).

These standards, developed in collaboration with the European Securities and Markets Authority (ESMA) and the ECB, aim to ensure a thorough vetting process for market entrants and maintain oversight of significant crypto-asset activities.

These regulations will come into effect from June 30, 2024.

AMERICAS

???? Robinhood Receives SEC Wells Notice: Implications for Crypto Regulation and ETF Approvals

Robinhood Markets disclosed receiving a Wells notice from the U.S. Securities and Exchange Commission (SEC) on May 4. This notice signals potential enforcement action over the trading of crypto tokens, which the SEC may classify as unregistered securities. Robinhood, however, remains steadfast in its stance, with Chief Legal Officer Dan Gallagher expressing confidence in their position that the traded assets are not securities and indicating readiness to contest the SEC’s claims if necessary. This action aligns with the SEC’s approach towards cryptocurrency oversight, reinforcing their view that most crypto tokens fall under its regulatory umbrella.

The issuance of the Wells notice to Robinhood is pivotal as it comes at a time when the SEC is also considering the approval of spot ether exchange-traded funds (ETFs). Analysts from JPMorgan, including Nikolaos Panigirtzoglou, have weighed in, suggesting that the regulatory actions against Robinhood are unlikely to impede the approval of these ETFs. They draw a parallel with the previously approved futures-based Ethereum ETFs, proposing that if the SEC were to deny spot ETFs, it might face similar legal challenges and possibly lose, much like it has with bitcoin. This ongoing regulatory saga underscores the complexities and evolving nature of digital asset classifications and market interventions by regulatory bodies.

Thread of the Week ??

Elsewhere ??

• ???? India Approves Crypto Exchanges Binance and Kucoin as Registered Virtual Asset Service Providers
• ???? Comply With Anti-Money Laundering Norms: FIU-IND Director To Crypto Platforms
• ???? Virtual Asset (Amendment) Bill, 2024 passes on St. Kitts and Nevis’s Federal Parliament In A Move To Enhance Anti-Money Laundering Measures
• ???? The EBA will start collecting information on natural persons through its AML/CFT database, EuReCA
• ???? Cayman Islands Update: AML Amendment Regulations 2024
• ???? Canadian Regulator Slaps Binance With 4M In Fines Over AML, Anti-Terrorism Financing Violations
• ???? IMF Urges Nigeria to License Global Cryptocurrency Exchanges
• ???? Nigerian court postpones money laundering trial of Binance and execs
• ???? Tornado Cash Developer Alexey Pertsev Found Guilty, Sentenced to 64 Months in Prison by Dutch Court

Reads & Listens ??

• EU crypto regulations undermined by lack of enforcement, say observers
• Everything You Need to Know About Crypto Regulations in 2024: Podcast Ep. 108

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