TRM Weekly Roundup | May 30, 2024
In this edition of The Weekly Roundup, we’re taking a closer look at this week’s top stories involving global crypto policy and regulation:
Let’s dive in ??
??? US House of Representatives passes market structure bill for crypto
Last week, the US House passed the Financial Innovation and Technology for the 21st Century Act (HR 4763) with a 279-136 vote, marking a major legislative step for the crypto industry. However, the bill's future in the Senate is uncertain.
Here’s the TL;DR of the 253-page bill ??
The Act provides a regulatory framework for digital assets, dividing responsibilities between the SEC and CFTC based on factors like decentralization.
Key points include:
Key provisions:
Impact:
The FIT Act aims to balance innovation with regulation, fostering a stable US digital asset market. The next step is Senate approval.
?? SEC approves rule change, paving way for Ether ETF
Last week, the SEC approved a rule change allowing for the listing and trading of eight spot Ether exchange-traded funds, or ETFs.
The approval doesn’t allow the ETFs to immediately begin trading. The SEC still needs to review individual applications from asset managers for each of the eight ETFs that were given initial approval—and that could take several weeks. But the stage is totally set.
So what is an ETH ETF? An Ether ETF is an investment fund that tracks the price of Ether (ETH), offering a way to invest in Ether without directly buying or managing the cryptocurrency.
Benefits include:
This makes Ether ETFs a simpler, safer way to invest in Ether, and could result in broader adoption and potentially greater interest in DeFi and other services that are part of the Ethereum ecosystem.
?????Crypto license withdrawals peak in Hong Kong as regulator plans onsite inspection from June 1
This week, Hong Kong’s Securities and Futures Commission (SFC) issued a statement previewing its plans for the crypto sector, ahead of a key deadline on June 1: the end of the transitional grace period for virtual asset trading platforms (VATPs) to operate without a license. From June 1, all VATPs still in the SFC application process will be "deemed-to-be-licensed."
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In its latest statement, the SFC emphasized that deemed VATPs are not formally licensed. Even though they have committed to complying with regulatory requirements, they “still need to demonstrate the actual implementation and effectiveness of these measures to the SFC's satisfaction." The SFC also reminded the deemed VATPs of their obligation to comply with prevailing laws and regulatory requirements, including not servicing mainland Chinese residents.
The SFC also shared its plans to conduct onsite inspections of VATPs to "ascertain compliance." It warned that any non-compliance with key regulatory requirements for investor protection in particular would lead to a swift refusal of pending license applications.
Ahead of the deadline, there has been a flurry of application withdrawals, with six of 29 applicants withdrawing their applications this month.
?? TRM Insights: A high number of application withdrawals is not unusual in the crypto space. 71% of cryptoasset registration applications submitted to the UK Financial Conduct Authority have been withdrawn, and the Monetary Authority of Singapore (MAS) has seen over 100 of 170 crypto applicants withdraw as well.
However, a withdrawal decision is usually the lesser of two evils. As TRM’s Senior Policy Advisor Angela Ang told the South China Morning Post SCMP , “[b]usinesses do not invest time and money into a licensing process only to withdraw. […] They will typically only withdraw if it’s clear they will not meet the bar for approval, perhaps as clear as being directly told by the regulator.” The withdrawals could thus represent a push by the SFC to clean house ahead of the June 1 deadline, and “should be seen as a barometer of the SFC’s regulatory expectations, and the type of crypto hub they want to be.”
???? Police disrupt forex and crypto scam syndicate that laundered millions in Malaysia
Last Friday, the Royal Malaysia Police announced the bust of a syndicate involved in large-scale money laundering associated with forex and cryptocurrency scams. Police arrested ten suspects and seized assets worth RM 51 million (USD 10 million).
Allegedly known as "Gang Wong," police said that the syndicate has been operational since 2017 in an unnamed Asian country, and laundered illicit gains, including investment scam proceeds, through various methods such as:
???? South Africa continues working on its digital finance future
In the week South Africa goes to the polls for its general election, its central bank has decided not to issue a report on its CBDC feasibility study. As reported by Bitcoin.news, it appears the South African Reserve Bank will instead progress with the next phase of their CBDC project—which looks at the development of both a retail and a separate wholesale CBDC—to better understand whether or not these are appropriate for the country.
Last month, South Africa’s Financial Sector Conduct Authority (FSCA) began ramping up licensing approvals for crypto asset businesses in the country. Since its licensing regime was strengthened back in June 2023, it hopes to have 60 such businesses licensed in the coming months to foster a secure and compliant industry in the country.
As the country decides on its next leader, what this will mean for its digital financial future is still up for grabs.
???Balancing crypto mining and energy consumption
Abu Dhabi's Agriculture and Food Safety Authority (ADAFSA) this week banned cryptocurrency mining on agricultural farms. Despite the UAE’s pro-mining stance, concerns over energy consumption and the potential impact on food production was given as the jurisdiction’s main concern. ADAFSA emphasized that the priority is to ensure agricultural resources are used effectively to support food security, rather than cryptocurrency activities.
The UAE is not the only jurisdiction struggling with this balance at the moment. Earlier this month, Venezuela’s Ministry of Electric Power declared that all cryptocurrency mines be disconnected from power lines, to reduce the high energy consumption from mining activities and ensure a reliable power supply for all citizens. Although much more extreme, these early examples provide an interesting insight into what could become a greater concern for policymakers around the world: finding the right balance between digital finance and green agendas.
?????7.5 year sentence in ￡5 billion crypto money laundering case
On Friday, the accused at the heart of a GBP 5 billion money laundering case finally received their sentence. Following a five-year investigation led by specialist economic crime officers in the Met, Jian Wen was convicted for her involvement in a massive fraud and money laundering scheme. As part of the investigation, the Met Police seized Bitcoin wallets storing about 61,000 bitcoin, now worth over GBP 4.3 billion, making it the largest seizure of its kind in UK history.
During the course of the trial, the court heard testimony on how the source of the cryptocurrency was an investment fraud scheme in China, for which Wen knowingly laundered the proceeds. Detectives from the Met were able to trace and track the flow of illicit proceeds in order to build their investigation; unravel the elaborate, large-scale network of transactions; and ultimately seize the illicit proceeds.
Have thoughts or questions on this week’s news? Drop us a comment ?? and tag our global policy experts: Ari Redbord , Isabella Chase , and Angela Ang . We’d love to hear from you!