Welcome to another edition of Veriscope Regulatory Recap! A lot of exciting news this week, from California's new digital asset-focused law to the FBI's warning over DeFi protocols. There's also an update on several significant changes to Veriscope. So, without further ado, let's dive straight into it.
A newly passed law titled "Digital Financial Assets Law" seeks to make it mandatory for Virtual Asset Service Providers (VASPs), including crypto exchanges, to seek a license to operate in California.
The ball is in California Governor Gavin Newsom's court now. He has two options, either sign it or veto it.
In case Governor Newsom decides to green-light the proposed law, it will become operative in January 2025.
Once the bill is enacted, digital asset issuers will have to comply with many variables, including liquid reserves against tokens issued, risk exposure, leverage ratios, and more.
No California-licensed businesses will be allowed to offer stablecoins unless the stablecoin-issuing entity is a DFPI-licensed firm or the stablecoin has been issued by an authorized bank.
According to South Korea's Central Bank, the Bank of Korea (BOK), the country will have to institutionalize initial coin offerings (ICO) while drafting its new cryptocurrency law, which is now known as the Digital Asset Basic Act (BOK).
This is a significant move, considering the ban on ICOs in the country. However, the Central Bank noted that the ban didn't prove effective.
After all, many South Korean projects, including Paycoin and Terra-LUNA, issued new coins abroad and listed them on domestic exchanges to get around the restrictions.
Thus, the BOK insists that South Korea institutionalize ICOs like the EU, where tokens issued abroad are also required to establish a local presence and adhere to local regulations to be traded domestically.
The Georgian government has established a legal framework to regulate crypto firms on similar lines to the European Union (EU) framework standards.
Levan Davitashvili, Georgia's Minister of Economy and Sustainable Development, stated that the bill is now with the Parliament and is likely to be adopted during the autumn session, according to the news report published by the local news portal Business Media.
How Will This Framework Affect VASPs?
With the help of the new regulatory framework, it will be possible to clearly define the legal status, rights, and obligations of VASPs.
The Federal Bureau of Investigation (FBI) warned investors of security flaws in DeFi systems in a public statement on Monday.
The FBI urged people to contact them via the Internet Crime Complaint Center (IC3) or their local FBI office if they believe their investments in DeFi protocols have been affected.
Why is this Warning Significant?
The FBI noted, "Between January and March 2022, cybercriminals stole $1.3 billion in cryptocurrencies, almost 97 percent of which was stolen from Defi platforms, according to the US blockchain analysis firm Chainalysis."
The FBI also noted that attackers exploit flaws in flash loans, signature validation, and cryptocurrency price pairs to attack DeFi protocols.
The security agency also red-flagged code errors in crowdsourced and decentralized platforms.
In this week’s Regulatory Recap, we are also adding updates on latest Veriscope releases.
With the launch of Sandbox Environment, VASPs can now conduct end-to-end as Originator VASP or Beneficiary VASP without coordinating with another node.
Visit the Sandbox Environment section of docs for more information.
The "Managers Users and Attestation Admin "section was removed from the Veriscope dashboard. This section caused confusion among many VASPs. This section was introduced to create a random user during product demos and was not meant to be utilized in production systems.
The "Register Jurisdictions" section (part of "Manage Organization") was also removed.
UI Error Messages have been improved.
From now onwards, VASPs won't have to refresh after being offline for a significant period of time to sync nodes.
VASPs will likely need to perform name & wallet screening to determine if they wish to proceed with a transfer. Veriscope is integrated with a number of screening providers so VASPs can easily incorporate this into their overall design & implementation.
Visit the Integrations section for more information on Blockchain Analytics providers Veriscope supports.
VASPs need a Travel Rule Solution to begin complying with the FATF Travel Rule. So, have you zeroed on it yet? We have the best solution to suggest: Veriscope! Veriscope is the only frictionless Crypto Travel Rule compliance solution.
Visit our website to read more: https://www.veriscope.network/ and contact our BizDev team for a discussion here: https://www.veriscope.network/contact.