Canadian regulatory body clarifies stablecoin rules for exchanges and issuers

October 6, 2023 Coin Telegraph

Canada

The umbrella organization for Canada's securities regulators has set out conditions for the trading and issuance of stablecoins.

The Canadian Securities Administrators (CSA) has provided guidance to exchanges and cryptocurrency issuers on its interim approach to what it calls value-referenced crypto assets, with a particular focus on stablecoins.

On Oct. 5, the umbrella organization of Canada’s provincial and territorial securities regulators published a clarification saying it may allow trading of certain cryptocurrencies that reference the value of a single fiat currency, subject to terms and conditions.

In February, the CSA reaffirmed its view that stablecoins “may constitute securities and/or derivatives” which Canadian crypto exchanges are prohibited from trading.

However, if issuers maintain an appropriate reserve of assets with a qualified custodian and crypto exchanges offering stablecoins make “certain information related to governance, operations, and reserve of assets publicly available,” then the CSA could allow for those assets to be traded.

CSA Chair and Chair and CEO of the Alberta Securities Commission, Stan Magidson, said in a statement:

“This interim framework, which we will build upon in the future, sets certain standards to help ensure that investors receive the information they need about the assets they are purchasing, including the risks associated with them.”

The CSA cautioned that fiat-backed crypto assets satisfying the terms are still risky and should not be viewed as endorsed or risk-free.

In August, Cointelegraph reported that regulatory clarity in Canada has generated greater interest in crypto from institutions.

In July, the CSA issued guidance on staking stating that it was allowed but lending opportunities are limited and the proportion of “illiquid” assets is restricted.

Stablecoin market capitalization has been in decline over the past 18 months or so and is currently at $123 billion representing around 11% of the total crypto market cap.

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Bitget mandates KYC requirements in line with tightening global regulations

August 21, 2023 Coin Telegraph

Bitget

The exchange operator is instituting new KYC requirements for users from September 2023 to comply with developing global regulatory guidelines.

Seychelles-based cryptocurrency derivatives exchange Bitget is updating its Know Your Customer (KYC) requirements for users to stay in step with global regulatory guidelines.

According to the company, the new KYC requirements are being instituted to protect user rights and interests, shape a secure cryptocurrency trading environment and comply with regulatory recommendations from various global watchdogs.

BitGet will adjust its KYC verification requirements from September 2023, with newly registered users required to complete level 1 KYC verification to access a variety of Bitget’s services including deposits and trading of cryptocurrencies.

*Bitget's updated KYC mandate. Source: Bitget*

Users that signed up to the platform before Sept. 1 are required to complete KYC verification by Oct. 1, 2023. The derivatives exchange notes that users that have not completed the process through September will still be able to deposit, withdraw and trade.

However from October onwards users that have not carried out the KYC verification process will be limited to withdrawals, cancel orders, redeem subscriptions and closing positions and will be restricted from being able to create new trading orders.

Bitget also noted that it would follow through with KYC procedures to verify customers identities for risk assessment purposes in line with a majority of mainstream financial institutions and regulated organizations.

The Seychelles-based platform is the latest exchange to announce that it would be updating its KYC policy.

KuCoin instituted similar requirements in July 2023, introducing mandatory identity checks for all new users to align with global anti-money laundering (AML) regulations. Users that failed to complete KYC checks are unable to access KuCoin’s services and products. KuCoin users are required to provide their names, ID numbers, ID photo and complete a facial recognition process.

OKX is also requiring users to carry out a KYC process to verify identities, with a similar deadline to Bitget in September. The three step process mirrors that of KuCoin, while users that fail to carry out the verification process would be unable to access OKX’s services from the Sept. 21.

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Canada’s regulatory clarity is bringing institutions to crypto — WonderFi CEO

August 16, 2023 Coin Telegraph

Canada

Dean Skurka stated that although regulations have increased costs, they have also led to greater interest in crypto from institutions.

Canadian financial institutions are increasingly taking an interest in crypto as regulatory clarity emerges in the country, according to WonderFi CEO Dean Skurka, who met up with Cointelegraph at the Blockchain Futurist Conference in Toronto.

Skurka claimed that his exchange had seen an uptick in trading by institutions as opposed to retail investors. “What we have seen in the first half of this year is growth in our OTC institutional segment,” he stated, referring to over-the-counter trades. “These institutional investors, more sophisticated investors, are [more] immune to sentiment and trends in the market, and they’re more fundamental in their investment approaches. [...] We’re starting to see, [...] through clear regulation, that the segment of our client base is shifting quite a bit.”

*Cointelegraph’s Sam Bourgi (left) and WonderFi CEO Dean Skurka (right) at the Blockchain Futurist Conference in Toronto, Aug. 16, 2023. Source: Cointelegraph*

The Canadian government has been criticized for allegedly making regulations that are too difficult for crypto exchanges to follow, and some major crypto exchanges have left the market altogether. For example, Bybit announced on May 30 that it would no longer allow new Canadian accounts to be opened due to “recent regulatory development,” and Binance closed its service to Canadians on May 12, citing new stablecoin regulations as the reason.

But in Skurka’s view, clear regulations in Canada have been a boon for WonderFi. He stated:

“Through the platforms that we own and operate, having the licenses that we do, there are fewer venues that can offer [crypto services] to an institutional audience. [...] We’ve seen an increase in activity, not only on the institutional side, but also on products that we’ve rolled out that are catered to long-term holders like staking.”

Skurka emphasized that until recently, long-term holders in Canada were left without services that suited their needs, as lending platforms like Celsius and Voyager had gone bankrupt. On the other hand, new regulations created in reaction to these bankruptcies have increased the cost of running an exchange. In Skurka’s view, this meant that the crypto market needed to consolidate in order to be able to handle the new costs. He said WonderFi has been attempting to “use this opportunity to bring these platforms together really on the basis that [...] you're creating a clear market leader that has the scale to operate in a compliant environment.”

WonderFi has been gobbling up smaller Canadian crypto exchanges over the past two years. It acquired Bitbuy and Coinberry in 2022, then announced a merger with Coinsquare and CoinSmart in April 2023.

The WonderFi CEO stated that he thinks this new trend of institutional interest will continue into the future, thanks to the direction the Canadian government is taking. “As that infrastructure is established, you’re going to see institutional participants continue to take it more seriously,” he claimed.

This article is based on an interview conducted by Sam Bourgi.

US regulatory clarity has begun in court after Ripple win: CFTC commissioner

July 18, 2023 Coin Telegraph

CFTC

CFTC Commissioner Caroline Pham says recent court opinions around digital assets and securities are a first step to crypto regulatory clarity.

Caroline Pham, one of five commissioner of the Commodities Futures Trading Commission, believes the path to United States crypto regulatory clarity has been laid out following Ripple’s partial victory.

Speaking on Bloomberg TV on July 17, Commissioner Pham said recent big court decisions regarding the classification of crypto assets will eventually lead to regulatory clarity.

“You know, last year I said that we were going to see regulatory clarity first in the courts around the definition of a security, and I think we’ve seen that with some very big court opinions that have been released.”

Pham said that she was looking forward to participating in regulatory working groups and hoped other United States regulators, such as the Securities and Exchange Commission, would work together to come up with a “holistic approach” to crypto regulation.

Pham's comments come a few days after San Francisco fintech firm Ripple won a key partial victory in an ongoing court battle in which the SEC accused it of selling unregistered securities.

Judge Analisa Torres of the Southern District of New York ruled on July 14 that XRP (XRP) was not a security when sold to retail investors on digital asset exchanges.

Thank you @BloombergTV for the opportunity to talk about our important GMAC initiatives! Beyond crypto, institutional markets & central banks are looking at tokenization of real assets like bonds. Today, we heard about international, US & EU developments & key takeaways. https://t.co/cWTShDy2Bf
— Caroline D. Pham (@CarolineDPham) July 18, 2023

The ruling was not well received by SEC Chair Gary Gensler, who called it disappointing at a July 17 press conference. Gensler has previously suggested that every digital asset aside from Bitcoin is a security, though his agency has not gone as far as to say the same.

Despite this, Gensler has vowed to continue with enforcement actions following the recent Ripple triumph.

Commissioner Pham also highlighted the importance of real-world asset (RWA) tokenization. She said there were “real opportunities” to modernize financial markets through the tokenization of money market funds on the blockchain.

Traditional finance companies have been increasing their engagement with real-world asset protocols, resulting in several RWAs outperforming DeFi assets recently.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

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Japan’s crypto Anti-Money Laundering measures to start in June: Report

May 24, 2023 Coin Telegraph

AML

The Japanese parliament has decided to roll out tougher AML procedures in line with the “travel rule.”

Lawmakers in Japan have decided to enforce stricter Anti-Money Laundering (AML) measures to trace cryptocurrency transactions from June 1.

On May 23, the Japanese parliament made the decision to roll out tougher AML procedures from next month, according to a report the same day from local media outlet Kyodo News.

The move aims to bring Japan’s legal framework in line with global crypto regulations.

Lawmakers revised the AML legislation in December after it was deemed insufficient by the international financial watchdog, the Financial Action Task Force (FATF).

According to reports, a vital feature of the new measures is the enforcement of the “Travel Rule” to keep a more accurate track of criminal proceeds.

The travel rule requires any financial institution processing a crypto transfer greater than $3,000 to pass on customer information to the recipient exchange or institution. The data should include the name and address of the sender and recipient and account information.

The Travel Rule was discussed by global leaders in mid-May at the G7 meeting held in Japan, with the G7 Committee clear in its support of the Travel Rule for crypto transactions.

It supported FATF initiatives on accelerating global standards for crypto “including the ‘travel rule’, and its work on emerging risks, including from DeFi arrangements and peer-to-peer transactions.”

“G7 countries should lead by example and regulate the crypto sector so that no safe havens exist for illicit crypto transactions”#FATF President T. Raja Kumar´s message to #G7 leaders ahead of the summit in Japan
Read article: https://t.co/l1OTdjGgLY
: https://t.co/GqHhVwoqY9 pic.twitter.com/uDurg1QSDu
— FATF (@FATFNews) May 18, 2023

Japan was one of the early adopters of crypto, legalizing it as property. Crypto regulations in Japan are some of the most stringent globally.

Japan’s financial regulator, the Financial Services Agency, tightened rules on crypto exchanges following the major hacks of the exchanges Mt.Gox and Coincheck.

The FSA has several rules for exchanges to protect customers including separate holdings of customer and company assets, with holdings verified in annual audits.

Investors cannot borrow more than twice their investments for leveraged trades on exchanges. Licensed crypto exchanges are also required to hold at least 95% of customer funds in cold wallets.

In April, the Web3 project team of Japan’s ruling Liberal Democratic Party released a white paper proposing ways to expand the country’s crypto industry.

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Stablecoin issuers have spent over $1.3M lobbying Congress since 2022

May 19, 2023 Coin Telegraph

Stablecoin issuers have spent over .3M lobbying Congress since 2022

Circle

Tether and Circle have been leading lobbying efforts among stablecoin issuers as they push for legislation and regulations for stablecoins.

Stablecoin issuers including Tether, Circle, and others have spent well over a million dollars lobbying lawmakers on Capitol Hill since the start of 2022, according to recent data.

Stablecoins have become the center of attention in Washington recently as pressure mounts to roll out a regulatory framework for dollar-pegged digital assets.

Tether uses the law offices of Michael Jason Lee for its lobbying efforts, which are carried out through FTI Government Affairs, a consulting firm with bipartisan connections.

According to public interest outlet ProPublica, Tether has spent around $600,000 since the beginning of 2022, with a quarterly spend of $120,000 for lobbying the U.S. Senate and House of Representatives.

*Annual lobbying amounts for Tether. Source: Open Secrets*

The lobbying efforts have been to support legislation related to stablecoins. Tether issues the world’s dominant stablecoin, USDT (USDT), which has a market share of 63% and a circulation of $83 billion.

Government transparency group Open Secrets added that Tether spent another $270,000 on lobbying in the first quarter of 2023.

Meanwhile, rival stablecoin issuer Circle has also been spending big on lobbying efforts. The firm began lobbying with strategic consulting firm Invariant in late 2021 and has spent at least $560,000 since then, according to ProPublica.

Circle’s lobbying efforts have revolved around educating policymakers on its business model, educating members of Congress on stablecoin and cryptocurrency issues, and monitoring cryptocurrency proposals.

The company has lobbied the Senate, House of Representatives, Treasury, Office of the Comptroller of the Currency, Commodity Futures Trading Commission and Securities and Exchange Commission.

Circle’s quarterly lobbying budget is currently $100,000. The firm issues USDC (USDC), the world’s second-largest stablecoin, with a market share of 22.6% and circulation of $29.5 billion. On May, 18, Circle CEO Jeremy Allaire reiterated the need for stablecoin legislation and safe access to digital dollars.

Dollar access, safety and competitiveness are paramount for the US on the global stage. https://t.co/IqlRHCQFrl
— Jeremy Allaire (@jerallaire) May 18, 2023

Paxos, the former issuer of the Binance stablecoin BUSD, has spent around $300,000 on lobbying since early 2022. Paxos uses bipartisan public policy firm Mindset for its lobbying efforts focused on issues related to drafting stablecoin legislation.

Crypto industry lobbying expenses surged 120% in the United States in 2022, as reported by Cointelegraph earlier this year.

The amount pledged by stablecoin issuers is, however, dwarfed by that spent by other major crypto companies. Coinbase has spent around $5.5 million since it began lobbying in 2015, and Binance.US spent almost $1 million in 2022.

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Blockchain arms race risks being won by ‘adversarial nations’ — US crypto lobby group

May 19, 2023 Coin Telegraph

Blockchain

The Chamber of Digital Commerce has urged Congress to set up a Digital Asset and Blockchain Technology Solarium Commission to develop crypto regulation.

A blockchain lobbying group backed by the likes of Goldman Sachs, Citi Group, Circle, and Fidelity has urged the United States Congress to pass a legal framework for digital assets or risk falling behind other nations.

On May 19, the U.S. Chamber of Digital Commerce sent a call to action to Congress and the Senate to prioritize passing a national approach to crypto regulation.

The organization added that it requests that Congress organize a “Digital Asset and Blockchain Technology Solarium Commission” to develop a “national strategic approach to digital assets and blockchain technology” in the U.S.

There was a stark warning that failure to act would enable “adversarial nations” to further their activities in the space that “endanger U.S. leadership and dollar primacy.”

*Excerpt of Chamber of Digital Commerce call to action –* *digitalchamber.org*

It mentioned China as an example of such adversarial action with the development of an internationally focused Blockchain-based Services Network (BSN) to “incorporate global development and trade and fill the U.S.-created vacuum.”

It also cited the growing number of countries considering or choosing to trade with China directly in yuan and ditching the U.S. dollar. These include Saudi Arabia, Russia, France, Brazil, and India, it wrote.

Today, the @DigitalChamber issued a call to action urging Congress to organize a Digital Asset and Blockchain Technology Solarium Commission to develop a national strategic approach to these technologies in the U.S.

Let's ensure U.S. leadership in the #blockchain industry.
— Chamber of Digital Commerce (@DigitalChamber) May 18, 2023

On a similar note, the organization mentioned the potential BRICS digital currency and other developments regarding gold-backed digital currencies by Russia and Iran.

The brief concluded that regulatory and legal opacity in the U.S. is “hampering the nation’s ability to lead and take advantage of this innovation revolution,” adding:

“This abdication is severely hampering domestic development and ceding advantages to other nations at the expense of the U.S. innovator and investor.”

The name of the proposed commission references Project Solarium which was created in the wake of World War II and the dawning of the Cold War by President Eisenhower to counter the threat of Soviet expansion.

The Cyberspace Solarium Commission, created in 2019, was created to develop a strategic approach to defend against cyber attacks. The crypto advocacy group wants a similar strategy on digital assets and blockchain technology which “desperately needs consensus in the wake of other nations’ advances.”

The Chamber of Digital Commerce is an American advocacy group founded in 2014 that promotes emerging technologies in the blockchain sector.

On May 19, the group backed Senator Tom Emmer for introducing the Securities Clarity Act which aims to provide much-needed regulatory clarity for the crypto asset and blockchain industry in the U.S.

The @DigitalChamber applauds @GOPMajorityWhip for introducing The Securities Clarity Act with @RepDarrenSoto. Clear definitions of #digitalassets will provide much-needed certainty for investors, consumers, and businesses while prospering innovation in the U.S. pic.twitter.com/LuLqutVMr1
— Chamber of Digital Commerce (@DigitalChamber) May 18, 2023

Meanwhile, the Securities and Exchange Commission remains adamant that the existing rules that were formed decades ago still apply to this new form of digital finance and its underlying technology.

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