Welcome to another edition of Veriscope's weekly recap. The regulatory landscape continued buzzing with many interesting events last week. So, without further ado, let’s dive straight into it.
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The latest U.S. legislative effort aims to steer most of the crypto industry's oversight to the Commodity Futures Trading Commission. However, it still doesn't define what makes a token a security or a commodity. If the Senate bill becomes law, crypto firms involved in digital commodities trading will have to register with the CFTC.
The bill defines crypto as a digital form of property that can be directly transferred between people without having institutions as middlemen, but it doesn't go into detail and only gives Bitcoin (BTC) and Ether (ETH) as examples.
"We are at a critical inflection point where new legislative authority is needed to clarify ambiguities and provide a regulatory framework," CFTC Chair Rostin Behnman said in a statement.
The Law Commission of England and Wales want to extend property rules to cover crypto and NFTs, according to a consultation paper published by the independent statutory body tasked with reviewing and updating the law.
The proposed crypto-friendly reforms could make it easier for crypto investors to claim losses in scams or hacks through legal action, the commission said in a statement. At the same time, it added that they could help the U.K. government turn the country into a global crypto hub.
The paper, which invites views from legal and tech experts until Nov. 4, only focuses on digital assets that can be traded and steer clear of those (stablecoins) that function as a means of payment.
Following the recent crypto market turmoil that resulted in the suspension of withdrawals and halted operations by some crypto companies, the FDIC has issued an "Advisory to FDIC-insured institutions Regarding Deposit Insurance and Dealings with Crypto Companies."
The FDIC addresses the risks and concerns in the advisory regarding instances when FDIC deposit insurance applies and what products are insured. As per the advisory, FDIC deposit insurance covers deposit products offered by insured banks and doesn't apply to crypto. Also, the insurance does not protect non-bank customers against the default, insolvency, or bankruptcy of any non-bank, including crypto exchanges, custodians, brokers, wallet providers, or neobanks.
In the second portion of the advisory, FDIC says insured banks must assess, manage, control, and monitor risks arising from crypto companies. Besides, crypto companies are also advised to communicate clearly about deposit insurance to their customers.
India's law enforcement and economic intelligence agency have frozen the bank accounts containing $8.16 million worth of assets of the crypto exchange WazirX. The Directorate of Enforcement (E.D.) said it is investigating WazirX's alleged role in assisting instant loan app firms in laundering proceeds of crime through the exchange.
"Despite giving repeated opportunities, WazirX failed to give the crypto transactions of the suspect fintech APP companies and reveal the KYC of the wallets," said the E.D. adding that most of the transactions aren't even recorded on the blockchain.
WazirX, meanwhile, said that it has been "fully cooperating" with the E.D. and is not guilty of the charges. However, trading volume on the exchange has plunged by half since E.D.'s announcement.
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There was a fair share of positive and negative developments in the crypto market last week. It shows that although authorities are taking steps to promote growth & innovation in the crypto market, they won't be lenient towards those who fail to play by the rules. Thus, Virtual Asset Service Providers (VASPs) must comply with relevant international & national crypto regulations.
Take the FATF Travel Rule, for instance, which only a few countries have adopted so far. But with the FATF urging countries to accelerate Travel Rule adoption, sooner or later, almost all countries will adopt it. This is why VASPs must stay prepared for it, regardless of the status of Travel Rule adoption in their country of operation.
All VASPs here is a Travel Rule Solution (TRS). And we have the best solution to suggest: Veriscope! Check it out here: https://www.veriscope.network/ and reach out to our BizDev team for a discussion here: https://www.veriscope.network/contact
Also, follow us on Twitter, LinkedIn, Facebook, Discord, Telegram, and Medium for regular updates on the ever-changing world of crypto regulations.
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