Veriscope Regulatory Recap - 27th March to 2nd April
Welcome to another edition of the Veriscope Regulatory Recap.
Welcome to another edition of the Veriscope Regulatory Recap. This week, we delve into South Dakota's unsuccessful attempt to pass a crypto regulation bill, the SEC Chairman's concerns over cryptocurrency compliance in the market, the EU's implementation of a 1,000 Euro ceiling on crypto transfers, and the Central Bank of Bahrain's updated crypto asset framework.
Let’s dive into this week’s recap without forgetting that along the ever-evolving regulatory landscape, we need to safeguard the ecosystem's true ethos.
South Dakota Fails to Pass Crypto Regulation Bill
The South Dakota House could not overturn Governor Kristi Noem's veto of a proposed bill to establish government regulations for utilizing cryptocurrency within the state. This means there are no changes to South Dakota's regulatory approach towards cryptocurrency, resulting in the state maintaining its current policy.
Although the bill had made its way through the legislative process, it faced opposition from some who perceived the proposed regulations as a means of enabling government surveillance and overstepping boundaries.
The opponents argued that they require more time to observe the outcomes of similar legislation in other states before making a final decision.
SEC Chairman Cites Cryptocurrency Compliance Concerns in the Market
Speaking at the House Appropriations Subcommittee on Financial Services and General Government, US SEC Chairman Gary Gensler said that rules for the crypto market already exist and are called securities regulations. However, the industry is still “rife with noncompliance.”
He also reiterated his stance that the majority of coins should be classified as securities.
In its dealings with the cryptocurrency industry, the SEC has adopted a “regulation by enforcement” strategy, targeting firms and projects dealing with what the agency deems as unregistered securities.
Gensler further emphasized that the SEC needs new tools, expertise, and resources to address misconduct in emerging and new areas, including the crypto space.
He added that the additional staff would allow the SEC's Enforcement Division to investigate wrongdoing on a larger scale and accelerate the pace of enforcement investigations to resolution.
EU Implements 1,000 Euro Ceiling on Crypto Transfers
The European Parliament is implementing a large-scale overhaul of money laundering laws with the approval of three new draft bills.
The first adopted text requires crypto asset managers to identify their customers and associated risks, limiting anonymous crypto transfers to 1000 euros.
Lawmakers have approved limits on payments by unverified crypto users as part of the money laundering overhaul.
The second text requires EU member-states to establish a financial intelligence unit to combat money laundering and terrorist financing.
The third text establishes a new supervisory and investigative money laundering authority to directly supervise the riskiest crypto service providers in the EU bloc.
The upcoming MiCA bill will complement these new bills, introducing a new legislative framework for cryptocurrency businesses and incorporating the FATF's Travel Rule for crypto assets.
Central Bank of Bahrain Updates Crypto Asset Framework
The Central Bank of Bahrain (CBB) has introduced updates to its Crypto-assets ("CRA") Module. The amendments were made after due consultation with industry stakeholders to cater to ongoing developments in the crypto market and comply with industry best practices.
Their objective is to bolster investor protection and align the crypto-assets market's development with the Kingdom's Economic Recovery Plan, as outlined by the CBB.
The amendments expand the scope of the framework to include digital token offerings, which the CBB will regulate if they exhibit the characteristics of security.
The CBB will determine whether a digital token qualifies as security by examining its underlying economic purpose, structure, characteristics, and rights attached to the token.
The amendments also outline new requirements to enhance safeguarding clients’ assets and allow crypto-assets licensees to engage in additional activities after obtaining the CBB’s approval.
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