White House Tackles Crypto Risk; Blockchain firm wins Air Force contract
By Keith R.Murphy
The White House released a statement last week outlining the Biden administration’s roadmap for mitigating cryptocurrency risk, which relates to last year’s March 9, 2022 Executive Order on the Security Guarantee. responsible development of digital assets. According to the statement, the administration is focused on “continuing to ensure that cryptocurrencies cannot undermine financial stability, protect investors, and hold bad actors accountable.” The statement notes that “administration experts have laid out the first-ever framework for developing digital assets in a safe and responsible manner while addressing the risks they pose.” The statement also notes examples of risk, including cryptocurrency entities that ignore financial regulations and risk controls, cryptocurrency platforms and promoters that mislead consumers or commit outright fraud. simple, and poor cybersecurity that leads to significant theft of assets.
Among other things, the statement highlights increasing enforcement by multiple agencies and issuing guidance where more is needed, such as advising on the need to separate risky digital assets from the banking system and help consumers understand the risks of buying cryptocurrencies. The statement notes that the administration plans to unveil priorities for research and development of digital assets, and it further calls on Congress to take positive steps to provide assistance for those goals, including expanding the powers of regulators to prevent the misuse of client assets and strengthening transparency and disclosure requirements for cryptocurrency companies to allow investors to make more informed decisions.
In other news, according to a press release, an enterprise blockchain solutions provider recently won a $30 million contract with the United States Air Force (USAF) to provide development and deployment of blockchain solutions. blockchain in supply chain management. Previously, the company was developing blockchain applications to improve crucial USAF activities, including tokenizing the organization’s budget to improve accounting as well as tracking critical USAF components, as noted in the release.
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SEC Issues Order Disapproving Spot Bitcoin ETF App
By Robert A. Musiala Jr.
Late last week, the U.S. Securities and Exchange Commission (SEC) issued an “Order Disapproving a Proposed Amendment to the Listing and Trading Rule for ARK 21Shares Bitcoin ETF Shares.” The SEC order (the order), which is the latest in a series of rejections by the SEC of attempts to seek approval for a bitcoin exchange-traded fund (Bitcoin ETF), which would seek to allow retail investors to buy shares in a publicly traded fund that invests in the bitcoin spot market. According to the order, the Bitcoin ETF plaintiff “has failed to fulfill its obligation under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal complies with the requirements of Section 6( (b)(5) of the Exchange Act, which requires, in relevant part, that the rules of a national securities exchange be “designed to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest”.
The order cited previous SEC orders rejecting bitcoin exchange-traded products (ETPs) and noted that “an exchange that lists bitcoin-based ETPs may fulfill its obligations under Section 6(b) (5 ) of the Exchanges Act by demonstrating that the exchange has a supervisory sharing agreement with a regulated market of significant size related to the underlying or reference bitcoin assets. According to the order, “in this context, the terms ‘significant market’ and ‘market of significant size’ include a market (or group of markets) for which (a) there is a reasonable probability that a person attempting to manipulate The ETP would also need to trade in this market to successfully manipulate the ETP, such that a surveillance sharing agreement would help detect and deter misconduct, and (b) trading is unlikely on the ETP exerts the predominant influence on the prices in this market.
The order further noted that “a surveillance sharing agreement with a ‘significant market’ assists in detecting and deterring manipulation of the ETP, because a person attempting to manipulate the ETP is reasonably likely to s ‘also engage in trading activity in this “significant market”. The Order then explained these standards and concluded that the current Bitcoin ETF application fails to meet the standards and fails “to establish that other means to prevent fraudulent and manipulative acts and practices will be sufficient”.
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OFAC Adds Bitcoin and Ethereum Public Keys to OFAC’s SDN List
By Christopher Lamb
According to a press release issued this week by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), pursuant to Executive Order (EO) 14024, OFAC is “imposing full blocking sanctions against 22 individuals and entities in several countries linked to a sanctions busting network supporting the Russian military-industrial complex. As part of the action, OFAC added a new Bitcoin public key and a new Ethereum public key to OFAC’s Specially Designated Nationals (SDN) list. The actions relate to OFAC’s commitment to the Russian Elites, Proxies, and Oligarchs (REPO) Task Force, “a multilateral effort to identify, freeze, and seize the assets of sanctioned Russians around the world. “. OFAC continues to cooperate with the Treasury’s Financial Crimes Enforcement Network (FinCEN) to identify other Russian assets and proxies in an effort to continue to “prevent Russia from evading or circumventing U.S. and partner sanctions.” According to OFAC’s press release, the blackout sanctions were imposed for their involvement in a “Russian sanctions evasion ring run by Russia- and Cyprus-based arms dealer Igor Vladimirovich Zimenkov.” OFAC’s press release provides further details on the apparent violations committed by the 22 individuals as well as OFAC’s considerations and analysis.
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UK and Hong Kong financial regulators address digital assets
By Amos Kim
This week, the UK’s HM Treasury released a consultation paper outlining proposals for a new regulatory regime for cryptocurrency assets. This consultation builds on previous UK Treasury proposals, which focused on stablecoins and the financial promotion of cryptocurrency assets. According to a press release, “The proposals [in the consultation papers] seek to achieve the ambition of placing the UK financial services industry at the forefront of crypto-asset technology and innovation and creating the conditions for crypto-asset service providers to operate and grow in the UK, while managing potential risks to consumers and stability. The press release further notes that the measures proposed in the consultation “have been informed by recent market events – including the failure of FTX – which strengthen the case for effective regulation and the commitment of the sector”. According to the press release, the objectives of the consultation “include[] a proposal to bring centralized crypto-asset exchanges into the regulation of financial services for the first time, along with other core activities such as custody and lending.
In other foreign regulatory news, the Hong Kong Monetary Authority (HKMA) released the “Conclusion of Consultation” of a previously released discussion paper on crypto-assets and stablecoins, “summarizing comments received regarding the document and the HKMA’s response”. The conclusion of the consultation is the result of 58 responses “from industry, public bodies, trade and professional organisations, individuals, etc. According to a press release from the HKMA, in general there was broad support for “the need to take into account the latest market developments and draw inspiration from the discussions of international regulators when developing the regime”. relevant regulations”. HKMA’s press release states that HKMA will “review comments received, latest market developments[s] and international debate. . . [including] engage[ments] with stakeholders and market players” when creating future “regulatory provisions”.
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Founder of Crypto Fraud Convicted; Exchange of raids between South Korean prosecutors
By Lauren Bass
According to a press release issued this week by the US Department of Justice (DOJ), the founder of My Big Coin, an alleged cryptocurrency and virtual payment services company, has been sentenced to more than eight years in prison. and ordered to pay forfeiture/restitution of approximately $7.6 million after a federal jury found him guilty of four counts of wire fraud, three counts of illegal monetary transactions and one count of exploitation from an unlicensed money transfer business. According to the DOJ press release, the founder’s fraudulent scheme lasted more than three years and defrauded investors of more than $7.5 million. Civil lawsuits previously filed against the founder by the Commodity Futures Trading Commission, which have been stayed pending the outcome of the criminal case, are now expected to proceed.
According to recent reports, as part of the Seoul Southern District Prosecutor’s Office’s investigation into price manipulation, the offices of a major South Korean cryptocurrency exchange were raided and their records searched. According to Seoul prosecutors, the search was to “secure transaction details of a specific room, and…has nothing to do with [the exchange].” However, according to reports, the exchange itself is under investigation by South Korean tax authorities for tax evasion, and separately several executives of the exchange have been charged with embezzlement, breach of trust and fraudulent illegal transactions.
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