SEC boss worries crypto bill undermines financial protections

June 15, 2022 Coin Telegraph

CFTC

A provision in the bill gives authority over some cryptocurrencies to the Commodity Futures Trading Commission (CFTC), with the agency head saying it cares about having “rigorous oversight of markets.”

United States Securities and Exchange Commission (SEC) Chairman Gary Gensler said he’s worried that a proposed bill to create a regulatory framework for cryptocurrencies could weaken investor protections in the traditional financial market.

Speaking at The Wall Street Journal’s CFO Network Summit on June 14 Gensler was asked his thoughts regarding a recent bill introduced on June 7 by Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY).

He responded saying “we don't want to undermine the protections we have in a $100 trillion capital market,” adding:

“We don't want our current stock exchanges, mutual funds, or public companies to, sort of inadvertently by a stroke of a pen, say ‘you know what, I want to be non-compliant as well, I want to be outside of this regime that I think has been quite a benefit to investors and economic growth over the last 90 years.’”

The bipartisan Lummis-Gillibrand “Responsible Financial Innovation Act” aims to address many facets of crypto regulation such as tax treatment of digital assets, stablecoins, and agency jurisdiction.

One provision of the bill gives “clear authority” to the Commodity Futures Trading Commission (CFTC) over digital asset spot markets, Gensler has long been adamant in declaring most cryptocurrencies are securities, subject to the SEC’s authority.

The Senators have mostly agreed with Gensler’s point, saying some altcoins would likely be considered securities under the proposed law, with Bitcoin (BTC) and Ethereum (ETH) considered commodities.

At the summit, Gensler said the SEC wasn’t looking to extend its jurisdiction and that some cryptocurrencies are already under the jurisdiction of the agency since they qualify as being a security.

“We’re just looking out for the retail public […] these tokens are being offered to the public, and the public is hoping for a better future. That’s the characteristics of an investment contract.”

Meanwhile CFTC commissioner Christy Goldsmith Romero — who says she hasn’t yet read the Lummis-Gillibrand bill — welcomed regulatory action by Congress when speaking at an event on June 14.

Romero, also a former senior counsel in the SEC's enforcement division, was asked if the view that the CFTC was a more laissez-faire regulator in comparison to the SEC was accurate.

“No, not at all […] they're actually pretty similar,” she said, adding that the CFTC has brought multiple enforcement actions in the crypto space and each agency cares about having “rigorous oversight of markets.”

Explaining the differences she's witnessed, Romero said the CFTC has allowed more cryptocurrency products to trade on its regulated exchanges with 18 products trading across 11 regulated entities:

“What that means is that the CFTC is pretty experienced and how to regulate trading in this market, and that's really, really helpful as we move forward. It's still going to take cooperation and coordination with the SEC, I'm 100% committed to that, that’s my former home.”

Colombia Takes First Steps Toward Regulating Cryptocurrency Exchanges

June 9, 2022 Bitcoin.com

New York State Assembly passes ban on new BTC mines that don’t use green power

April 27, 2022 Coin Telegraph

Bitcoin mining ban

The bill will now be carried with support to the Senate for passing before a final sign-off into law by Governor Hochul.

The New York State Assembly passed a bill late on Tuesday April 26 that would place a two-year ban on all new proof-of-work (PoW) cryptocurrency mining facilities in the state that use a carbon based fuel to power their operations.

The bill sponsored by Anna Kelles would not only impose a two-year hold on approval of any new Bitcoin mines, the proposed moratorium would also prevent the renewal of permits issued to existing PoW cryptocurrency miners using carbon sourced energy if they seek to increase the amount of electricity consumed.

Thrilled that my bill with Senate champion @kevinparkernyc A7389C/S6486D just passed in the Assembly as part of the #EarthDay Package! Thank you to all of cosponsors and advocates who helped get this bill to the floor for a vote! pic.twitter.com/NhVnMo3FJE
— Anna Kelles (@annakelles) April 27, 2022

The bill gathered the support it needed to pass, with 95 in favor, 52 against and will now be carried by Senator Kevin Parker for a vote in the Senate. If successful it will then be delivered to Governor Kathy Hochul who can veto the bill or sign it into law.

Current status of Bill A7389C as of April 27. Source.

The Department of Environmental Conservation (DEC) would be tasked by the bill with preparing a “generic environmental impact statement” to number, locate and asses the energy consumption and greenhouse gas emissions of PoW miners and their impact on the public health.

Cryptocurrency industry advocacy group the Blockchain Association had previously called on “pro-tech, pro-innovation, pro-crypto” residents of New York to mount an opposition to the bill, which they claim resulted in thousands of messages to legislators.

The association said that around three hours of debate took place over the bill, demonstrating what they believe is a “greater opposition to the mining ban than proponents believed.” In a tweet today the team said it will direct its energy to the New York Senate to defeat what it calls the “anti-technology bill”.

Proposed bans on proof-of-work cryptocurrencies on environmental grounds are becoming more common. A similar proposal called the Markets in Crypto Assets (MiCA) bill was narrowly defeated in the European Parliament in late March, with legislators there even considering a ban on Bitcoin trading to enforce the proposed ban on mining.

Senator Warren seizes on fears over crypto and sanctions with new bill

March 9, 2022 Coin Telegraph

Coin Telegraph

If passed, Elizabeth Warren’s new draft crypto bill will require local crypto exchanges to submit “detailed records” to the Treasury Department of customers' identities and transfers to private crypto wallets.

Democratic Senator Elizabeth Warren is preparing a bill to crack down on the use of crypto as a way to avoid economic sanctions.

Warren’s latest anti-crypto move comes alongside a push from the U.S. government to stamp out the possibility of Russia using crypto to skirt a host of economic sanctions placed on the nation.

According to a March. 8 report from NBC News, one of the provisions of Warren’s new crypto bill — which is still in draft form — will require local crypto exchanges to submit “detailed records” to the Treasury Department of customers' identities and transfers to private crypto wallets.

It also aims to “force companies to choose between doing business in the U.S. or with sanctioned people and entities by threatening secondary sanctions on foreign crypto exchanges.”

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is also working towards drafting similar requirements based on Warren’s bill according to NBC.

Ukraine's deputy minister of digital transformation Alex Bornyakov has been calling for crypto exchanges to ban Russian users for the past week or so, however top crypto exchanges such as Binance, Coinbase and Kraken have all said they won't implement a blanket ban but have emphasizing their commitment to being compliant with U.S. sanctions.

Senator Warren has been highly skeptical of the sector for quite some time now, and in 2021 alone she labeled DeFi as the “most dangerous” part of crypto, introduced a bill to study crypto’s role in ransomware and slammed the Ethereum network for its high fees during a committee hearing. So it's little surprise to industry observers she has seized the opportunity to push for tougher regulations.

Warren, who was among a group of Senators to write to Treasury Secretary Janet Yellen about the issue last week, noted on Twitter earlier today that her bill will “ensure crypto isn't used by Putin and his cronies to undermine our economic sanctions.”

I'll be speaking soon with @Mitchellreports on @MSNBC about my new bill to ensure crypto isn't used by Putin and his cronies to undermine our economic sanctions. Hope you'll tune in! https://t.co/H8iTnA5Ulw
— Elizabeth Warren (@SenWarren) March 8, 2022

While the idea of Russia using crypto to evade sanctions has been grabbing the headlines, experts such as Jake Chervinsky, head of policy at crypto policy promoter the Blockchain Association have argued that the nation “can’t and won’t use crypto to avoid sanctions.

Chervinsky cited the scale of the Russian state's monetary needs exceeding the capabilities of crypto markets, sanctions barring U.S. businesses and citizens from transacting with Russia regardless of the payment used and a lack of Russian crypto infrastructure to support the demand. His arguments did not address the question of individual Russians using crypto to evade sanctions however.

Warren’s regulatory push comes just a week after Federal Reserve Chair Jerome Powell and a group from the House of Representatives called for congressional action on crypto in relation to Russia.

Powell stated that the situation with Russia emphasizes the need to introduce robust regulatory frameworks in the sector “to prevent these unbacked cryptocurrencies from serving as a vehicle for terrorist financing and just general criminal behavior, tax avoidance and the like."

Earlier this week FinCEN sent out an alert for “all financial institutions to be vigilant against” Russia’s efforts to evade the U.S.’s sanctions, as it outlined a series of red flags to be able to identify any evasion activity.

The types of means listed included the use of corporate vehicles to obscure asset ownership and sources of funds, shell companies to conduct international wire transfers, use of third parties to shield identity and newly established accounts to send or receive funds from a sanction institution. The FinCEN alert stated:

“It is critical that all financial institutions, including those with visibility into CVC flows, such as CVC exchangers and administrators [...] identify and quickly report suspicious activity associated with potential sanctions evasion, and conduct appropriate risk-based customer due diligence or, where required, enhanced due diligence.”

Bill to regulate crypto in Brazil for first time heads to Senate vote

February 23, 2022 Coin Telegraph

Brazil

The largest Latin American country could soon be the latest to regulate crypto, which lawmakers hope will increase its uses across the country.

The Brazilian Senate is set to vote on a bill which would make the country the biggest in Latin America to regulate cryptocurrency.

The crypto bill was unanimously approved by the Senate’s Economic Affairs Committee on Feb. 22, potentially increasing the chances that it will pass a vote on the Senate floor. Once passed by both the Senate and the lower house, it will be sent to President Jair Bolsonaro to be signed into law.

The legislation states that it provides “guidelines for the provision of virtual asset services.” Brazilian Senator Irajá Abreu said on Feb. 22 that he hopes the bill will curb various financial crimes that have been committed with crypto.

“The intention of the project is to curb or restrict illegal practices, such as money laundering, tax evasion and many other crimes. There is a market that is licit, legal, which is the vast majority of this market, but there are exceptions.”

Senator Abreu, who originally proposed the bill in 2019, also told Bloomberg on Feb. 22 that

“Once this regulation is approved, the trend is that (crypto) will be increasingly adopted in the supermarket, in commerce, in a car dealership.”

In the works for almost three years now, the bill defines various aspects of what constitutes a virtual asset (VA), a broker or exchange, and which arms of the Federal government would have jurisdiction over the matter.

The Brazilian crypto bill is set to be voted on by the Senate.

The bill defines a virtual asset as a “digital representation of value that can be traded or transferred by electronic means and used to make payments or for investment purposes.”

According to the bill, a crypto broker or exchange is a legal entity that allows “participation in financial services and provisions,” and performs exchanges between VA and fiat currency, VA and other VA, transfer of VA, and custody of VA.

If the bill passes, it will make Brazil the largest country in Latin America to regulate cryptocurrency. Probably the most well-known LATAM nation to have such regulations is El Salvador, whose President Nayib Bukele has been vocal about his ambitions to make the country independent of U.S. dollar reliance through the use of Bitcoin (BTC).

There can be unexpected benefits from embracing crypto. In El Salvador, the tourism industry has seen a 30% increase since last September, when BTC was made legal tender.