Welcome to another edition of Veriscope’s Weekly Regulatory Recap. In this week's recap, we will look at ECB's new guidelines over crypto asset licensing, compulsory pre-registration undertaking for Canadian virtual assets exchanges, the South Korean financial authority's decision to ban sixteen exchanges, and a yearly crypto investment limit set by two Ontario-based exchanges. So, without further ado, let’s dive straight into it.
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Last Wednesday, the European Central Bank (ECB) released criteria they are considering to streamline digital asset regulations as the crypto-related activities and services are currently not governed by a unified regulatory framework in the EU.
The European central bank will take into account the internal governance, crypto firms' business models, and "fit and proper" assessments in line with the licensing mechanism that other corporations have to follow.
This new guideline is a big step toward ensuring financial stability in the 27-nation economic bloc, considering how several banks are seeking permission to offer crypto services and products.
The Canadian Securities Administrators (CSA) announced that crypto trading platforms from now on should provide pre-registration undertakings in order to continue operating while their application is being considered.
“By giving these undertakings, crypto trading platforms agree to comply with terms and conditions that address investor protection concerns,” the announcement states.
Currently, the initial pre-registration undertakings of Coinsquare Capital Markets Ltd. and Crypto.com are published by the Ontario Securities Commission.
But, CSA is also negotiating pre-registration filings with other crypto trading platforms that will be made available on the CSA website.
If a crypto trading platform fails to file an undertaking or does not adhere to the requirements of an undertaking, CSA may pursue legal action against the firm.
The South Korean Financial Services Commission (FSC) has announced that it will ban sixteen unregistered crypto exchanges providing services to its citizens without authorization.
According to the press release, KuCoin, MEXC, Phemex, XT.com, Bitrue, ZB.com, Bitglobal, CoinW, CoinEX, AAX, ZoomEX, Poloniex, BTCEX, BTCC, DigiFinex, and Pionex are under FSC’s radar.
The officials were concerned about the crypto exchanges’ lack of the information security management system (ISMS) certificate, which puts consumers at risk of having their personal data compromised.
South Korean authorities view the involvement of unregistered financial institutions as a severe breach of law.
Any unregistered firms engaging in illicit economic activities in South Korea carry a sentence of up to five years in prison or a fine of up to 50 million won ($38,000).
Recently, Canada-based crypto exchanges Newton and BitBuy announced a CA$30K annual ‘buy limit’ for ‘restricted coins’ for Ontario users.
According to the new rules by Newton, users in Ontario will have a CA$30,000 "net buy limit" on all cryptocurrencies, except for Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), and Litecoin (LTC).
According to Newton, these adjustments are being made to "protect crypto investors like yourselves" and ensure that investors are informed of the risks involved with investing in digital assets.
Users will be categorized as Retail Investors, Eligible Investors, or Sophisticated Investors.
The buy limit for retail investors is CA$30,000, whereas, for eligible investors, it’s CA$100,000, and for accredited investors, there is no buy limit.
There's no stopping the regulatory blitzkrieg. In fact, the authorities have just begun, and there is a lot more to come. Speaking of regulations, the most important piece of crypto regulation is the Travel Rule. Although only a few countries have adopted it currently, the day is not far when most countries will adopt it. After all, FATF is urging countries to adopt it on an urgent basis. That is why Virtual Asset Service Providers must prepare for the Travel Rule compliance regardless of their home country's Travel Rule adoption status.
All VASPS will need for Travel Rule Compliance is a Travel Rule Solution (TRS). Veriscope is the only frictionless Crypto Travel Rule compliance solution. Visit our website to read more about Veriscope: https://www.veriscope.network/ and contact our BizDev team for a discussion here: https://www.veriscope.network/contact.