February 27, 2023

Veriscope Regulatory Recap - 20th February to 26th February

Veriscope Regulatory Recap - 20th February to 26th February

It’s Monday, so it’s time for the Veriscope Regulatory Recap. What have we covered this week? FATF’s call for global adoption of the Crypto Travel Rule, Hong Kong plans to legalize retail crypto trading, Israel sets clear guidelines for stablecoins, and the EU considers speeding up crypto holding rules for banks. So, let’s dive straight into it.

FATF Calls for Global Adoption of Crypto Travel Rule

The global anti-money laundering watchdog Financial Action Task Force (FATF) has called for greater adoption of the Crypto Travel Rule to curb the use of virtual assets for illicit purposes, such as terrorism financing and money laundering.

During its recent Plenary in France, the FATF presented a roadmap for improving virtual asset regulation in member-states and FATF-style Regional Bodies (FSRBs). It will allow the application of the Travel Rule and other AML recommendations to cryptocurrencies. 

Moreover, the delegates had agreed on an action plan to promote the enforcement of standards on the "transmission of originator and beneficiary information.”  

Hong Kong’s New Rules Changing the Asia Crypto Space  

Hong Kong is introducing rules that will allow retail investors to trade certain large-cap tokens on licensed exchanges. The start date is  June 1, 2023. With this move, Hong Kong is positioning itself as a contender for the title of Asia's crypto hub, which is currently held by Singapore.

Hong Kong wants crypto exchanges to comply with certain requirements, which include safe custody of assets, conflicts of interest, cybersecurity, KYC, AML/CFT, accounting and auditing, prevention of market misconduct, risk management, and ensuring suitability in onboarding clients and token admission.

The city-state has also launched a consultation on the proposals for virtual asset trading platforms (VATPs), through which it is seeking views on whether to allow licensed crypto platform operators to serve retail investors. 

(Image Source)

Also, in a separate budget plan that promised "abundant opportunities" for the city, Financial Secretary Paul Chan outlined a need for Hong Kong to seize the "golden opportunity" of Web3.

EU to Expedite Crypto Capital Laws for Banks 

The European Union's executive branch has called for fast-tracking stringent capital rules for banks holding crypto assets. This aligns with the globally-agreed January 2025 deadline for implementing capital requirements for banks' exposures to crypto.

(Image Source)

The European Commissioner has observed that banks currently have limited involvement in cryptocurrency. However, it's evident that the banks are interested in exploring the emerging virtual asset market.

The informal discussion paper also states that the EU could enforce Basel's crypto rules by proposing a new law or expanding the current banking laws. The  EU Parliament and member-states are due to start negotiating the final text, which could include provisions on crypto.

Israel Publishes Stablecoins Rules

The central bank of Israel published a set of requirements for "stablecoin" issuers, including needing permission to operate from the Capital Market Authority and covering "100 percent of its liabilities to the coin holders."

While algorithmic stablecoins are not widely used for payment, the document said that if they become too popular, "issuers will be required to hold full collateral," and the Central Bank may even prohibit them.

The initiative aims to legalize stablecoins and take management of their inherent risks, prudential requirements, and consumer protection into consideration. 

Interesting Reads

Compliant DeFi - the way out of Commingling Clean and Illicit Funds in a Decentralized Finance Economy


VASPs need a Travel Rule Solution to comply with the FATF Travel Rule. So, have you zeroed in on it yet? Check out Veriscope, the only frictionless crypto Travel Rule compliance solution. 

Visit our website to read more: https://www.shyft.network/veriscope, and contact our team for a discussion: https://www.shyft.network/contact.

Also, follow us on Twitter, LinkedIn, Discord, Telegram, and Medium for up-to-date news from the world of crypto regulations. Also, sign up for our newsletter to keep up-to-date on all things crypto regulations.