Welcome to another edition of Veriscope Regulatory Recap! We are back with exciting news from the world of crypto regulations this week, from US Treasury Chief and Indian Finance Minister discussing crypto regulations to FATF’s push for Travel Rule implementation before the "No Money For Terror" meeting on November 18-19.
Shyft’s Veriscope also rolled out a new feature, “Address Proofs,” last week, enabling beneficiary VASPs to prove they control the respective crypto wallet address. This, in turn, would ensure that Originator VASPs share critical user data with only the right counterparty VASP for Travel Rule compliance. So, let’s dive straight into it without further ado.
The FTX fiasco has got everyone in the crypto space on their toes, compelling virtual asset service providers (VASPs) to come out clean on their exposure to the erstwhile 3rd largest crypto exchange and its native token.
Speaking of the impact of FTX’s meltdown, it will be multifold. On the one hand, the expectation for sound crypto regulations has also been blown away. And now, instead of regulations that could have spurred crypto innovation, we will get “knee-jerk reactionary” regulation, as per Shyft Network co-founder Joseph Weinberg.
On the other hand, the losses that major institutional investors like Ontario Teacher’s Pension Fund and sequoia Capital experienced with FTX’s collapse will impact the institutional activity within the crypto space.
However, amid accelerating regulations, Shyft Network will prove itself as a “Vital Balancer” between centralized and decentralized finance. Wishing for the demise of either of these options can strain the crypto industry, as both are required to prevent the upcoming regulatory onslaught.
US Treasury Secretary Janet Yellen met Indian Finance Minister Nirmala Sitharaman to discuss crypto regulation at the 9th India-U.S. Economic and Financial Partnership meeting.
According to a joint statement by Yellen and Sitharaman after the meeting, the US and India look forward to discussing… digital assets, payment system modernization, and sustainable finance.
Both promised to strengthen their cooperation in AML/CFT efforts through increased information sharing and coordination, including expediting digital evidence and information sharing for ML/TF investigations.
Following the meeting, Yellen noted that crypto regulation had been a "tremendous focus" of the Biden administration, and while "a good deal of progress" has been made, there's still some way to go. She also called on taking steps to reduce the cost of cross-border payments.
According to the latest media reports, Indonesia plans to grant crypto regulatory oversight to the Financial Service Authority (OJK) from Trade Ministry and the Commodity Futures Trading Regulatory Agency to better protect investors.
The new plan, which would regulate and supervise all digital asset-related activities in Indonesia, was presented by Sri Mulyani Indrawati, the country's finance minister, as part of financial sector legislation currently being debated in parliament.
"We need to build a mechanism of supervision and investor protection that is quite strong and reliable, especially for investment instruments that are high risk," she told a parliamentary hearing.
The bill was submitted in September and will be enacted into law once greenlighted by the legislative and executive branches.
The much-publicized collapse of centralized crypto exchange FTX and the subsequent filing of bankruptcy may be the wake-up call US lawmakers need, said SEC commissioner Hester M. Peirce.
While the incident has brought much negative attention to the crypto industry, this act as a "catalyst" that will compel government agencies to "sit down" and create clear and "more comprehensive" regulations, she said.
According to her, if the SEC and CFTC work together, the difficulty of regulating crypto can be solved more efficiently as "having one regulator devoted to crypto could be problematic."
Peirce suggested that crypto and the underlying blockchain technology could be "integrated into the back end of the financial system," which requires SEC jurisdiction.
"The SEC would be a good regulator for spot crypto markets if we got our act together," she said.
With India ready to host the "No Money For Terror" meeting on November 18-19, the Financial Action Task Force (FATF) is urging countries to implement the crypto Travel Rule to prevent the misuse of virtual assets by terrorist groups.
The upcoming meeting will focus on the misuse of virtual assets and crowd-funding platforms, as well as encourage strong cooperation between financial intelligence units (FIUs) to improve the sharing of information.
The Paris-based financial watchdog recently warned that the implementation of its standard is "going far too slowly." Out of over 200 countries, only 60 have started to regulate and supervise crypto, while more than 50% "have not even started the process," said FATF vice president Elisa de Anda Madrazo during the CTC meeting in New Delhi.
"This is very concerning because while standards take time to be implemented, there is a sense of urgency here. Until most countries implement these new rules, it will not be possible to start implementing the travel rule," she said.
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 to 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.
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VASPs need a Travel Rule Solution to begin complying with the FATF Travel Rule. So, have you zeroed in on it yet? Check out Veriscope, the only frictionless crypto Travel Rule compliance solution.
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