- Dark Web Securities Fraud Using Bitcoin
- Securities Settlement Bridge in Germany
- South Korea implements AML regulation
- India’s New Crypto Reporting Regulations
- Bank of Jamaica announces current Central Bank digital pilot program
Regulatory developments in the United States
Dark Web Securities Fraud Using Bitcoin
For the first time, the Securities and Exchange Commission (SEC) brought an action against an individual, James Roland Jones, in connection with dark web activity that the SEC said constituted securities fraud within the meaning of 10 (b) and 10b-5 of the Securities Act of 1933, as amended. Mr Jones is accused of accepting Bitcoin in exchange for selling falsified information on Dark Web markets. The SEC’s March 18, 2021 complaint describes Mr. Jones’ attempts to first obtain material non-public information about the public securities markets and then, after failing, to sell false non-public information about public securities markets. Although Mr. Jones did not actually obtain any non-public information, the SEC claims he was successful in selling a bogus tip for which he received $ 20,000 in Bitcoin as compensation. Mr. Jones has previously pleaded guilty to criminal charges brought by the United States Attorney General for the Middle District of Florida, to which Mr. Jones has pleaded guilty.
International regulatory developments
Securities Settlement Bridge in Germany
Deutsche Bundesbank, the independent central bank of the Federal Republic of Germany, has announced the successful development and testing of a cross-platform settlement technology that enables the settlement of securities transactions between distributed ledger (DLT) technologies and the traditional German financial system. This “technology bridge” between blockchain technology and established payment systems in Germany enables settlement “in central bank money without the need to create a central bank digital currency”. Deutsche Bundesbank press release.
In the cross-platform test, the German financial agency issued a 10-year federal bond on the DLT system. The DLT then tracked both primary and secondary market transactions and communicated directly with the Trans-European Automated Real-Time Gross Settlement Express Transfer System (TARGET2), the Eurosystem’s high-value payment system for trigger the transfer of assets. The digital “bridge” allows transactions on the DLT trigger chain managed by the Deutsche Bundesbank to automatically trigger transactions on TARGET2. These protocols are based on a delivery versus payment method of settlement, which prevents transactions from being processed until all parties have confirmed the transaction.
This development is part of an ongoing debate in Europe on the development of a central bank digital currency. Burkhard Balz, Member of the Executive Board of the Bundesbank responsible for the Directorate-General for Payments and Settlement Systems, argued that this technological development can be adopted by the Eurosystem in a relatively short period of time compared to the development of a currency digital central bank.
Deutsche Bundesbank press release
South Korea implements anti-money laundering regulations
On March 25, 2021, the Financial Services Commission of South Korea (FSC) implemented changes to its Law on Reporting and Use of Specified Financial Transaction Information (Specific Financial Transactions Law) intended for to virtual asset service providers operating in South Korea. These changes require Virtual Asset Service Providers (VASPs), including all “virtual asset trading service providers, virtual asset custody and administration service providers, and service providers. digital portfolio of virtual assets which are engaged in the buying and selling, trading and transferring, custody and administration, intermediation and brokerage of virtual assets and virtual asset transactions’ report their activities to the Korea Financial Intelligence Unit (KoFIU). KoFIU is the FSC unit responsible for implementing anti-money laundering practices in Korea. To address concerns about significant illegal and money laundering activity using digital assets, VASPs in South Korea must now thoroughly identify their customers and report any suspicious transactions to KoFIU. The law provides for a six-month period for existing VASPs to become compliant.
FSC press release
KoFiu AML frame
India’s New Crypto Reporting Regulations
On March 24, 2021, India’s Ministry of Commercial Affairs (MCA) passed amendments to the Companies Act 2013 that require companies operating in India to disclose their crypto holdings and report profits and losses from transactions of cryptocurrency. Additionally, businesses will need to share details of any person’s deposits or advances for the purpose of trading or investing in cryptocurrency or virtual currency. These rules will come into effect on April 1, 2021. Earlier, in March 2020, the Supreme Court of India overturned the RBI’s ban on cryptocurrencies.
Notification of the Ministry of Corporate Affairs
Economic time article
Bank of Jamaica announces Central Bank digital currency pilot program
On March 23, 2021, the Bank of Jamaica announced that eCurrency Mint Incorporated (eCurrency) has been chosen to help the bank test a central bank digital currency (CBDC) solution as part of the Fintech Regulatory Sandbox pilot program from May to the end of December 2021. The bank also announced that “eCurrency Mint will also be the provider when the nationwide rollout of CBDCs begins in early 2022”. eCurrency has developed a “turnkey” solution for implementing CBDC and “has been working with central banks and international organizations to define the CBDC, understand the implications and assess design options to build the solution since 2011.” ECurrency website.
Bank of Jamaica announcement
About eCurrency Mint Incorporated