Welcome to another exciting edition of Veriscope Regulatory Recap. This week’s crypto regulatory updates mostly revolve around different agencies, authorities, and commissions, such as the US FSOC, BaFin (Germany), G20 committee, and Basel committee on banking, insisting on stricter crypto regulations, and the response of the ecosystem.
After a dramatic year, we decided to lighten up the spirits and give back to the community through an edutaining Shyft holiday raffle fest and a special competition for creatives. For the most knowledgeable and curious, lucky and talented, there are amazing gifts awaiting.
Now, without further ado, let’s dive straight into this week’s recap.
The United States Financial Stability Oversight Council (FSOC), in its 2022 annual report, suggested U.S. legislators address the crypto regulatory gaps.
According to Treasury Secretary Janet Yellen crypto-asset activities “could pose risks to the stability of the U.S. financial system” and stressed the “importance of appropriate regulation,” including the “enforcement of existing laws.”
FSOC scans new risks and weaknesses of American financial stability while offering mitigation suggestions. And this year, the council has identified digital assets as one of the five market risk and credit risk vulnerabilities.
First identified as a priority area in February 2022, the council further red-flagged the crypto lending and borrowing as a significant risk in October this year.
In a meeting - held for the first time under India’s presidency from December 13th to 15th in Bengaluru, Karnataka - G20 finance and central bank deputies sat together to build a policy consensus on crypto assets for improved global regulation.
“One of the priorities which have been put on the table is to help countries build a consensus for a policy approach to crypto assets,” clarifies Ajay Seth, India’s economic affairs secretary.
The key agendas to be taken up for the G20 would also include the global usage of Central Bank Digital Currencies (CBDCs).
BaFin, Germany’s financial market regulator, has joined the voices demanding global crypto regulation. Mark Branson, BaFin President, negated the efficacy of self-regulation and said it was wrong to have a hands-off approach towards the industry and think of it as a “playground for grownups.”
Besides advocating a ‘serious cryptocurrency regulation’ and ‘worldwide solution’ to the patchy regulatory framework prevailing across the industry, Branson also expressed the need for licenses for German banks to deal with cryptocurrency.
BCBS has recommended that a bank’s exposure to certain crypto assets must not exceed 2% and said it is even better if it is lower than 1%. These crypto assets include NFTs, stablecoins, and unbacked crypto assets that do not satisfy classification conditions.
The regulation goes even further.
Assets falling under the same bracket are also “subject to capital requirements based on the risk weights of underlying exposures.” They have to undergo a redemption risk and basis risk test.
The current test ensures that the level of reserve assets is always maintained at a level that keeps crypto assets redeemable at all times, while the new test will aim at ensuring that the crypto asset holder can sell the asset in a market for an amount that closely tracks the peg value.
After Shyft DAO approved the Veriscope VASP grant proposal, an aggregate of 10,000 SHFT has been granted for Virtual Asset Service Providers (VASPs) that integrate into the Veriscope mainnet by September 30, 2022. The fund will enable VASPs to pay the Shyft Network gas fees while using Veriscope. This offer will remain valid until December 31, 2022, or till the VASP exhausts its SHFT grant.
Crypto Industry Dubs Sen. Warren and Marshall's Crypto Bill "Regressive"
FSB Insists on Global Standards to Regulate Crypto
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