Regulatory News
European Union
EBA consults on Regulatory Standards for approval of Asset-Reference Tokens White Papers - The European Banking Authority (EBA) has released on 20 October a Consultation Paper on draft regulatory technical standards (RTS) concerning the approval process for white papers of asset-reference tokens (ARTs) issued by credit institutions. These draft RTS aim to standardize the approval procedure across the EU, establishing steps and timeframes for credit institutions and competent authorities. The consultation period is open until January 22, 2024. The proposed steps and timeframes are similar to those under Article 17(1)(b) of the Markets in Crypto-Assets Regulation (MiCAR) for notifying other information by credit institutions issuing ARTs. The publication is part of the second batch of MiCAR policy products, with more expected in November 2023.
EU crypto investor protections delayed until late 2024, warns ESMA - Cryptocurrency investors in Europe will have to wait for regulatory protections under the European Union's Markets in Crypto-Assets Regulation (MiCA). The European Securities and Markets Authority (ESMA) stated that these protections won't be in effect until at least December 2024. Even after that date, there is no assurance that full protections will be in place until July 1, 2026, due to potential transitional periods granted to crypto service providers by member states. ESMA warned that MiCA does not address all the risks associated with crypto-assets, emphasizing their speculative nature.
ECB Officials move to 'Preparation Phase' for Digital Euro - Officials at the European Central Bank (ECB) have entered the "preparation phase" for the digital euro project, following a two-year investigation. While the issuance of a central bank digital currency (CBDC) is not confirmed, the ECB aims to establish the foundation for its potential issuance, starting on November 1. This two-year phase will involve finalizing digital euro rules and selecting potential issuers. It will also include testing, experimentation, and user feedback. The final decision on issuing a digital euro will be considered by the ECB's Governing Council after the European Union's legislative process is complete, with a proposal already made by the European Commission.
EU Data Protection Regulators recommend anonymity for small Digital Euro transactions - The European Data Protection Board (EDPB) and the European Data Protection Supervisor (EDPS) have issued a joint opinion on the regulation of the digital euro, proposed by the European Commission in July 2023. In their statement, the regulators recommend enhancing personal data protection standards for the central bank digital currency (CBDC). They suggest clarifying the verification procedure for the maximum digital euro amount held in individual accounts and question the necessity of a singular access point for user data. The EDPB and EDPS also urge the establishment of a 'privacy threshold' for online transactions, exempting low-value transactions from anti-money laundering and terrorism financing tracking, without specifying a specific amount.
Lack of regulatory framework limits the future of DAOs - The European Central Bank's Occasional Paper highlights that decentralized autonomous organizations (DAOs) face limitations in their future without a comprehensive regulatory framework in the financial sector. This paper, titled "The Future of DAOs in Finance - In Need of Legal Status," emphasizes that the rapid advancement of technology has outpaced regulation, affecting the safety and sustainability of DAOs. Existing registration frameworks are inadequate in addressing the unique challenges presented by DAOs, impeding their growth. The paper stresses the necessity of global regulatory solutions to ensure financial stability and consumer protection before DAOs can play a significant role in the financial sector. Additionally, ECB executive board member Fabio Panetta supports the digital euro as a means to keep public payment options available in the face of increasing private payment services.
Council of the EU adopts DAC8 crypto tax reporting rule - The Council of the European Union has officially adopted the eighth version of the Directive on Administrative Cooperation (DAC8), a cryptocurrency tax reporting rule, on October 17. This regulation will become effective upon publication in the Official Journal of the EU. DAC8 was approved in May 2023 following the enactment of the Markets in Crypto-Assets (MiCA) legislation. It grants tax authorities the authority to monitor and assess all cryptocurrency transactions taking place within the EU's member states, aligning with the Crypto-Asset Reporting Framework and MiCA regulations. In the United States, regulators are also pushing for the swift implementation of crypto tax collection procedures.
BCBS Consultation on Disclosure of Crypto-Asset Exposure - The Basel Committee on Banking Supervision (BCBS) has released a consultative document on the "Disclosure of crypto-asset exposures." This document seeks feedback on the need for more detailed disclosure requirements for various classification conditions. BCBS is proposing that banks disclose both period-end and daily average values of crypto-asset exposures to improve transparency. Additionally, the committee is exploring the definition of "material exposure" in the context of crypto-assets and is considering appropriate thresholds for such exposures. These efforts aim to enhance transparency and risk management in the banking sector's involvement with crypto-assets.
Finland pursues instant payments system and digital euro - The Bank of Finland is actively leading the development of a Finnish instant payment solution in line with European standards. This initiative is part of the broader push for new payment methods. The Bank of Finland is working on a payment solution based on credit transfers, distinct from traditional payment card rails. The digital euro is a key focus for the Bank of Finland, with the potential to enable central bank money for electronic payments. In a related development, the European Central Bank's governing council has initiated a two-year "preparation phase" for the digital euro project, aiming to finalize rules and select potential issuers.
United Kingdom (UK)
UK's 'Help with Fees' scheme won't consider cryptocurrency as disposable income - The UK's Ministry of Justice has clarified that cryptocurrency holdings will not be considered as disposable income in the proposed "Help with Fees" (HwF) scheme. The HwF scheme aims to provide financial support for court and tribunal fees for individuals with low income and minimal savings, ensuring access to the justice system. In a public consultation, most respondents supported the proposal to amend the definition of disposable capital to include savings and investments, including cryptocurrencies. The government emphasized that it would not provide an exhaustive list of capital types and confirmed that cryptocurrencies are already covered by the current definition. The UK is progressing toward regulating cryptocurrencies similarly to traditional assets through the Financial Services and Markets Bill.
Global News
IMF Director urges digitalization as key to expanding financial inclusion - IMF Managing Director Kristalina Georgieva emphasized the pivotal role of digitalization in advancing financial inclusion during a seminar in Marrakesh, Morocco. She highlighted the digital tools' ability to facilitate economic growth and assist people. Georgieva called for the formulation of comprehensive national strategies for financial inclusion while acknowledging the associated financial stability risks linked to digitalization. The IMF has actively engaged in evaluating cryptocurrency regulations, proposing a crypto-risk assessment matrix and advocating for comprehensive oversight instead of an outright ban. On Sept. 29, the IMF published a working paper titled “Assessing Macrofinancial Risks from Crypto Assets.” The IMF’s Synthesis paper — jointly prepared with the Bank for International Settlements (BIS) — was unanimously adopted by the “G20 Finance Ministers and Central Bank Governors Communique” in October.
Industry News
European Union
Bitpanda obtains license in Norway amid European expansion efforts - Bitpanda, a prominent European cryptocurrency exchange based in Vienna, has been granted a VASP license in Norway. This marks a significant step in the exchange's expansion in Europe, as it already holds licenses in Austria, Germany, France, Czechia, and Sweden. Bitpanda, with over 4 million users, aims to provide a trusted investment platform in the region.
Coinbase chose Ireland as its EU crypto hub - According to CNBC, Coinbase, the U.S.-based cryptocurrency exchange, has chosen Ireland as its primary European hub to comply with the Markets in Crypto-Assets Regulation (MiCA), the European Union's significant cryptocurrency regulatory framework. Coinbase has applied for a license with the Central Bank of Ireland, which, if approved, will enable it to "passport" its services across EU member states. MiCA, set to be enforced in late 2024, will allow Coinbase to serve a massive market of 450 million people in 27 countries under a single regulatory framework and national supervision. Currently holding various licenses across Europe, Coinbase cites Ireland's supportive regulatory environment and strong reputation as the reasons for this strategic move.
Binance restores Euro services with new fiat partners - Binance has resumed euro payments, deposits and withdrawals for its European users after losing its previous partner, PaySafe, in September - according to Cointelegraph. The exchange announced agreements with new regulated and authorized fiat partners to provide these services. It has also expanded its offerings, including euro deposits and withdrawals via Open Banking and SEPA/SEPA Instant, as well as trading in euro spot pairs. Binance had previously urged European users to convert their euros into Tether (USDT) before the end of October but may no longer require this. However, some users are still experiencing issues with euro deposits. Additionally, Binance is yet to find fiat partnerships for its UK exchange, where British users cannot deposit pounds.
Binance France director resigns, adding to list of exits from crypto exchange - Binance's director in France, Stéphanie Cabossioras, has resigned, marking the 10th senior executive departure from the exchange this year - Cointelegraph announced. She initially joined as the head of legal in April 2022 and was later promoted to executive director. Cabossioras' departure comes as Binance faces regulatory scrutiny, including investigations by the Paris Prosecutor's Office for alleged money laundering. Despite the executive departures, Binance insists that its French operations remain unaffected. The exchange's legal troubles have also grown, with lawsuits from U.S. regulators, including the Commodities Futures Trading Commission and the Securities and Exchange Commission.
LATAM
Brazil sees institutional crypto demand decline in 2023, Chainalysis reports - Preliminary data from Chainalysis' 2023 Geography of Cryptocurrency Report reveals a decrease in institutional demand for crypto in Brazil during the first half of the year. The decline was observed in the number of large institutional-sized transfers, though a recovery began in May. Despite this, professional and retail transaction volumes remained steady, indicating potential for the return of institutional users in the next cycle. Chainalysis also compared crypto purchases with Brazilian Real and Argentinian Peso, finding that Argentinians favored USDT stablecoins, while Brazilians preferred bitcoin, ether, and altcoins, reflecting the distinct macroeconomic conditions in the two countries.
MENA
First Abu Dhabi Bank and Bank of China sign Digital Currency Agreement - The Bank of China (BoC) and First Abu Dhabi Bank (FAB) have signed cooperation agreements related to digital currencies at the Belt and Road Summit, said Ledger Insights. Chinese firms favor using the digital yuan (eCNY), making the BoC-FAB partnership strategically significant, especially with a significant Chinese presence in the UAE. The UAE is actively working on central bank digital currency (CBDC) projects, including cross-border payments, to enhance efficiency, especially for its large migrant workforce.
Middle East regulatory clarity drives crypto industry growth - Binance FZE's general manager, Alex Chehade, explained in an interview with Cointelegraph that the Middle East, particularly the UAE, Dubai, and Bahrain, is becoming a hub for cryptocurrency businesses due to its clear and progressive regulatory environment. The region's regulatory certainty and acceptance of cryptocurrencies have attracted both startups and established players. Chehade mentioned that Binance plays a pivotal role in supporting Web3 companies in the region. The Middle East and North Africa (MENA) is experiencing rapid growth in the cryptocurrency market, with substantial transaction volumes and a positive regulatory outlook. This interview underscores the Middle East's emergence as a cryptocurrency industry hotspot.
