Regulatory News
European Union
European Banking Institution: The EBA is set to release its second batch of consultations on MiCA level 2 regulatory measures in mid-October, allowing for a 3-month response period. These consultations will focus on Regulatory Technical Standards (RTS) related to whitepapers. If the EBA adheres to its timeline, the third batch of consultations will follow in mid-November. A public hearing for the remaining consultations from the first batch is scheduled for September 21.
Institute of International Finance: The IIF has assessed the European Commission's proposed digital euro legislation, finding that while some concerns raised by member firms have been partially addressed, others remain unaddressed. These concerns include the need for a comprehensive cost-benefit analysis, maintaining financial stability, economic and liability challenges, privacy controls, AML/CFT compliance, and cybersecurity. Governance and conflicts of interest remain unaddressed issues, and commercial banks and PSPs are concerned about potential risks and operational costs. Ongoing industry consultation will be vital as the framework develops.
Latvia - Cointelegraph: In a recent interview with Cointelegraph, Marine Krasovska, the head of financial technology at Latvijas Banka (Bank of Latvia), discussed how the country is quietly supporting fintech projects and adopting emerging technologies. Latvia's Innovation Hub provides a valuable entry point for fintech companies, and despite a recent decline in local crypto investments, Latvia is looking to international standards like MiCA to ensure high-quality regulation and services in the crypto sector.
Malta - Malta Financial Services Authority: Malta's Financial Services Authority (MFSA) is revising its crypto regulations to align with the EU's MiCA, effective December 2024, seeking public input until 29 September, 2023. Proposed changes include removing systems audit requirements, reducing capital requirements for certain licenses, and aligning rules with MiCA. France is also adapting its crypto regulations to MiCA, effective early 2024.
United Kingdom
UK Parliament: The UK House of Lords has passed a bill that aims to enhance authorities' ability to target illicit cryptocurrency use, focusing on financial crimes. The Economic Crime and Corporate Transparency Bill, introduced on 22 September 2022, is now in the final stages of approval. The House of Lords made certain amendments to clarify its focus on monetary proceeds from fraud and financial crimes, while also addressing corporate transparency and overseas business registrations. The bill will provide additional powers to law enforcement, enabling them to more quickly and easily seize and recover crypto assets associated with illicit activities like money laundering, fraud, and ransomware attacks. These changes are amending criminal confiscation and civil recovery powers under the Proceeds of Crime Act 2002 (POCA) to combat crypto-related crimes more effectively.
Financial Conduct Authority: The Financial Conduct Authority (FCA) has initiated discussions between banks and crypto firms facing difficulties accessing banking services, addressing the issue of debanking in the UK. The FCA's report highlights that certain payment providers do not grant banking access to the crypto industry. While the FCA has limited influence in helping businesses obtain bank accounts, it aims to ensure market integrity through dialogue between crypto firms and banks, promoting a balanced approach, clarifying decision-making processes, exploring risk mitigation strategies, and ensuring fairness. The report found no evidence that banks closed accounts due to customers' political stances.
Financial Conduct Authority: This week the FCA has issued a final warning letter to unregistered crypto asset firms about the incoming financial promotions regime. The letter highlights concerns for firms’ readiness for the regime and poor engagement from many unregistered, overseas crypto asset firms who have UK customer. Once the regime enters into force, unregistered crypto asset firms must cease making illegal financial promotions to UK consumers. The letter sets out the steps firms can take to comply with the regime and the actions we may take against firms if they fail to comply. It also sets out our expectations of businesses supporting unregistered crypto asset firms such as social media platforms, app stores, search engines and payments firms. In particular the risks these businesses will be exposing themselves to in supporting firms illegally promoting to UK consumers.
LATAM
Brazil - Chamber of Deputies: In Brazil, legislators are considering a bill that could shield cryptocurrencies within debtors' protected assets, expanding personal savings safeguards. Bill 4.420/2021, currently under review, aims to protect individual savings up to 40 minimum wages from creditor seizures. This development follows the enactment of Brazil's crypto framework in June 2023, reflecting changing investment behaviors.
Industry News
Global
DTCC: DTCC, Clearstream, and Euroclear have published a paper addressing challenges in the digital asset industry, including fragmented standards, regulatory variations, and limited integrations. They emphasize the need for increased collaboration to overcome these obstacles and promote the digitalization of global financial markets. The financial market infrastructures intend to work with traditional and new market participants to define DLT network characteristics, data access, privacy, and smart contracts, ultimately fostering broad adoption of standards and operational resilience in the industry.
PayPal: PayPal USD (PYUSD), a dollar-denominated stablecoin fully backed by U.S. dollar deposits, short-term U.S. Treasuries, and similar cash equivalents, is now available on Venmo for select users. Venmo users can purchase PYUSD and send it to friends and family on PayPal, Venmo, and compatible external wallets. This marks the first instance of a stablecoin enabling wallet interoperability between PayPal and Venmo with fast and free transfers. PYUSD is also available on various exchanges, wallets, custodians, and decentralized applications, making it more broadly accessible in the crypto ecosystem.
Citi: Citi Treasury and Trade Solutions (TTS) has introduced Citi Token Services, utilizing blockchain and smart contracts to offer digital asset solutions for institutional clients. The service provides 24/7 cross-border payments, liquidity management, and automated trade finance solutions. Citi partnered with Maersk and a canal authority to digitize trade finance, allowing instant payments through smart contracts. The technology aims to reduce transaction processing times from days to minutes. Citi Token Services also improves global cash management, enabling clients to transfer liquidity between Citi branches without time constraints. The service uses Citi's private/permissioned blockchain technology.
Crypto News: Microsoft is reportedly planning to offer improved support for crypto wallets in its next generation of hardware products, including consoles, phones, web browsers, PCs, and a new cloud system. While Microsoft has not officially confirmed these plans, such a move could have a significant positive impact on the crypto industry by making web3 services more accessible to non-crypto users. This follows Microsoft's recent initiatives in the blockchain and crypto space, including partnerships with Aptos and LeverFi.
Cointelegraph: Asset tokenization, discussed at the Swiss Web3 Fest, has transformative potential in areas like agriculture. It's expected to be a $16 trillion industry and offers benefits such as quicker payouts for farmers in countries like Kenya. It also democratizes access to financial products and assets. Experts anticipate widespread adoption with the rise of central bank digital currencies and regulatory advancements.
