TRM Weekly Roundup | August 15, 2024
Welcome back to another edition of The Weekly Roundup! This week’s stories take us around the world, with analysis from Ari Redbord , Isabella Chase , and Angela Ang on these headlines:
Let’s dig in ??
???? Thailand launches digital asset regulatory sandbox
Last Friday, the Securities and Exchange Commission, Thailand launched its digital asset regulatory sandbox , with the goal of reducing the barriers to entry for innovative digital asset businesses and increasing the variety of services for investors.
The sandbox will cover six types of digital asset services: exchanges, brokers, traders, fund managers, consultants, and custody service providers.
In order to qualify, businesses must contribute to the development of digital assets in the Thai capital market or participate in a pilot project with a financial market regulator. The Thai SEC will look at factors such as capital, risk management, innovativeness, and operational readiness in considering applications.
If approved, applicants will enjoy a one-year approval to operate within "flexible regulatory criteria" in the sandbox.
?????Indonesia releases development roadmap for fintech and crypto
In tandem with its new supervisory mandate for fintech, crypto, and digital assets, the Otoritas Jasa Keuangan (OJK) has released a roadmap for developing and strengthening the sector.
The roadmap will see the OJK implementing a slew of strategic initiatives, including regulatory frameworks, regtech and suptech capabilities, establishing an innovation center, and strengthening its existing regulatory sandbox.
The Roadmap also highlighted the growth of Indonesia's crypto market, which has 20.24 million crypto investors as of June 2024, a 9.5% increase from January. Transaction volumes in 1H24 alone stood at IDR 301.75 trillion (USD 19.26 billion), approximately double the volume for the whole of 2023. The most frequently traded crypto assets are foreign tokens such as Tether, Bitcoin, Ethereum, Solana, and Render.
When it comes to crypto regulation, the OJK said that it was "proactively developing regulations that promote innovation while protecting consumers and financial stability," and highlighted the vital role of regulatory sandboxes in promoting such innovation within a controlled environment.
?????The good, the bad, and the ugly: The FCA reports on compliance with the financial promotions regime
Last week, the FCA reported on the progress crypto firms are making complying with its Financial Promotions Regime, introduced in October 2023. At the point of introduction, the regime was quite negatively received by the industry with several big brands leaving the UK due to complexities with compliance. Ten months on, what has the FCA learned about the success of the new regime? First, they recognize the need “for additional clarity on our expectation for these rules,” and second, they underscore the importance of firms engaging with the FCA to derive case-by-case clarification to avoid seeking industry benchmarks which do not meet the FCA’s expectations.
The main outcome of the review is an update to the good and bad practices guidance that the FCA issues for the regime. The guidance covers recommendations for the cooling-off period, personalized risk warning, client categorization, appropriateness, record keeping, and due diligence requirements within the regime. Going forward, this guidance should be the starting point for firms looking to meet and exceed the expectations of this regime.
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???? No proposal to regulate the "sales and purchase" of crypto in India, says Finance Ministry
In response to a parliamentary query last week on available data regarding the state of virtual assets in India, Minister of State for Finance Shri Pankaj Chaudhary said that the "government does not collect data on these assets" as they are "unregulated in India."
He also said that "there is no proposal to bring legislation for regulating the sales and purchase of virtual digital assets," but highlighted the existing requirement for VASPs to register with India's FIU since March 2023.
At first glance, this contrasts with Economic Affairs Secretary Ajay Seth's statement earlier this month on a September discussion paper, which would cover the government's thinking on potentially widening the scope of crypto regulation in India. However, the Minister's reply was scoped to cover sale and purchase of virtual assets, which leaves other areas open—such as the provision of exchange and custody services.
???? Ripple ordered to pay USD 125 million—much less than the penalty sought by SEC—as watershed case likely moves to court of appeals
Last week, District Judge Analisa Torres of the Southern District of New York ordered Ripple to pay USD 125 million in civil penalties for securities law violations. The fine, which comes after Ripple was found to have violated securities law through 1,278 institutional sale transactions of XRP, is substantially lower than the USD 1 billion in disgorgement and prejudgment interest and the USD 900 million civil penalty initially sought by the SEC. The Court’s order essentially ends the years-long litigation in District Court and will move the proceedings to the Court of Appeals.
The ruling follows Judge Torres's July 2023 decision, which found that Ripple's direct sale of XRP to institutional clients violated federal securities laws. However, importantly, the Court ruled that Ripple's programmatic sales of XRP to retail clients through exchanges did not violate securities laws. This was a win for Ripple and other crypto businesses listing various assets.
While the Court previously denied the SEC's attempt to appeal the Court's decision on the violation (the SEC maintains that retail sales also are a violation of Section 5 of the Securities Act), the judge imposed an injunction against future securities law violations by Ripple, highlighting a reasonable probability of future violations.
The injunction mandates that Ripple must file a registration statement if it plans to sell any securities. With the penalties and injunction now in place, the SEC is expected to appeal the July 2023 ruling. While the decision marks a pivotal moment in the ongoing legal battle between the SEC and various crypto entities for securities laws violations, we are likely to see continued activity in the courts of appeal and beyond.
?? How national security agencies are using BLOCKINT to disrupt threat actors
Over the last few years, we’ve seen a move to a digital battlefield, where wars, in part, are fought in cyberspace and across blockchains. The promise of blockchain technology—cross-border value transfer at the speed of the internet for humanitarian aid, remittances, and payments—is being weaponized by malign actors who also seek to move funds for sanctions evasion, weapons proliferation, terrorist financing, ransomware, and other illicit activity.
The native properties of public blockchains—data that is transparent, traceable, and permanent—enables government agencies to leverage blockchain intelligence, or BLOCKINT, to identify risks more readily and more effectively so they can take action against illicit actors. Not unlike conventional battlefield intelligence, the tools of blockchain intelligence capture threat activity, threat intent, and threat vulnerabilities. Through this advantage, intelligence analysts and officials can deny, degrade, and disrupt threat actors on the digital battlefield.
Learn how national security agencies are using BLOCKINT in TRM’s latest white paper, here .
Global Head of Policy and Government Affairs at TRM Labs
3 个月Another big week in the #crptoverse!