Crypto Reg: TerraUSD Collapse sounds alarm

The 800-pound gorilla in any crypto-regulatory talk this week was the $ 45 billion secession and the collapse of stablecoin TerraUSD.

The G-7 is preparing to ask the International Financial Stability Board (FSB) to press for the creation and adoption of a comprehensive and internationally unified set of cryptocurrency rules, Reuters reported. Thursday 19 May.

Of course, the FSB has been shouting this message out loud for some time – most recently in mid-February, when it addressed a formal appeal to governments around the world to speed up the regulation of crypto in general and stablecoins in particular.

Also see: The FSB sounds the alarm about growing threats to cryptocurrencies

“Crypto-asset markets are evolving rapidly and may reach a point where they pose a threat to global financial stability due to their scale, structural vulnerabilities and growing interconnection with the traditional financial system,” the FSB said. “Reported stable assets in circulation correspond to almost 20% of the total size of US assets held in high quality institutional and retail money market funds … [while] concerns about compliance with legislation, quality and adequacy of reserve assets and risk management and governance standards, “remain unaddressed.

Read more: The FSB urges national regulators to act more quickly with regard to Stablecoin regulation

Still, the call from finance ministers and central bankers from the Group of Seven, made “in light of the recent turmoil in the cryptocurrency market,” could inspire regulators and lawmakers to listen.

Europe is ahead of the United States, with its Markets in Crypto Assets (MiCA) regulatory framework on the way to a vote. The United States first began its efforts with President Joe Biden’s March announcement urging U.S. agencies to submit a proposal by September.

It is underway, but only barely, as proposed by the Ministry of Commerce’s call on 19 May for public comment on the executive order – which will remain open until 5 July.

Meanwhile, South Korean regulators have begun “emergency” inspections of local crypto exchanges, the Yonhap News Agency reported on Tuesday (May 17).

“Last week, financial authorities requested data on the volume of transactions and investors and assessed relevant measures from exchanges,” said a local cryptocurrency exchange official, according to Yonhap. “I think they did it to take measures to minimize damage to investors in the future.”

Prepare to rumble

After noting in congressional testimony that TerraUSD and its sister currency LUNA have fallen “from $ 50 billion to almost zero” in recent weeks, Securities and Exchange Commission (SEC) Chairman Gary Gensler reiterated his warning to unregistered crypto exchanges. coming out of the cold and threatening to continue law enforcement actions.

The SEC recently achieved its first victory in this area when Coinbase revealed its record in its Q1 2022 earnings announcement on May 10th.

Referring to a desire to “have better access to capital markets quickly and efficiently when needed”, the company said it would also be “able to offer and sell securities in the future” – adding that she did not had such plans at the moment.

Related: Coinbase registers with the SEC to avoid regulatory setbacks

Gensler also said he needed a bigger budget to devote even more resources to crypto.

Also on May 18, The Wall Street Journal reported that the chairman of the Commodity Futures Trading Commission, Rostin Behnam, said his agency was increasing enforcement as the number of suspected cases of fraud and market manipulation of cryptography accelerated.

Also see: In Senate hearing, CFTC Chairman Behnam escalates the fight with the SEC over crypto-monitoring

“The headlines about the loss of tens of millions of dollars in digital assets due to protocol exploitation, phishing attacks, attacks on vulnerable people and other fraudulent and manipulative schemes have become far too much. Flows,” he said. “I have said it many times, crypto markets have unique characteristics that would benefit from federal market surveillance.”

Then there is the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), whose associate director of enforcement, Alessio Evangelista, has warned the industry to be more aggressive in blacklisting digital wallets. “Problematic,” CoinDesk reported.

Stock exchanges often ignore these wallets “until the day of the OFAC designation or the criminal indictment,” he said, warning that they often ignore “the clearly observable red flags they could and should have taken note of long ago.”

Hi Crypto.

In Australia, the tax authorities have issued a public warning that the sale of cryptocurrencies – and even non-fungible tokens (NFTs) – could result in capital gains tax.

“Remember, you can not offset your cryptocurrencies with your paycheck and payroll,” Australian Tax Office (ATO) Assistant Commissioner Tim Loh reminded taxpayers.

Meanwhile, The Guardian reported that the country’s largest financial institution, the Commonwealth Bank of Australia, announced a halt in the rollout of a planned cryptocurrency trading feature in its banking app.

“As the events of the past week have intensified, this is clearly a very volatile sector, which remains of great interest,” said CEO Matt Comyn. “But alongside that volatility and awareness, and I guess on a scale, certainly on a global scale, you can see that there is a lot of interest from regulators and people who are thinking of the best way to regulate this.”

A time frame for resuming implementation has not been announced.

Hesitation and enthusiasm

In Panama, President Laurentino Cortizo said on Tuesday that he was considering vetoing a bill passed by the National Assembly that would allow Panamanians to use cryptocurrencies for payments, CoinDesk reported.

Calling the bill a good law, he said it was not enough given the country’s drive to emerge from the Financial Action Task Force (FATF) ‘gray list’ of countries whose fight against money laundering (AML) is weak or inadequate and to fight against the Terrorist Financing Regulation (CFT).

“I have to be very careful if the law contains clauses related to money laundering activities or activities against money laundering,” Cortizo said. “It’s very important to us.”

Meanwhile, bitcoin’s experience as a legal tender in El Salvador is not going too well – its billion-dollar bitcoin bond issuance is frozen, bitcoin use for payments remains very low, and his investment in BTC lost tens of millions of dollars. dollars – but that has not stopped President Nayib Bukele from trying to export it. At a meeting of the Alliance for Financial Inclusion (AFI) this week, he said advised that the 44 developing countries present plan to follow suit.

just say no

In Europe, the head of capital markets and transparency supervision at the Dutch Financial Markets Authority (AFM) said retail investors should be banned from trading in cryptocurrency derivatives, citing opaque and market-independent market manipulation, CoinDesk reported.

The report also notes that the senior AML official at the German financial regulator BaFin has called for new rules on decentralized finance (DeFi) and says that “experience shows that DeFi is not as popular and altruistic as fans of space describe it” , and that it can not thrive without targeted regulations.

In India, the Reserve Bank of India (RBI), which tackles crypto, said in a report that crypto could lead to “dollarization” of the economy.

“Almost all cryptocurrencies are denominated in dollars and issued by foreign private entities, this could ultimately lead to the dollarization of part of our economy, which would be contrary to the sovereign interests of the country,” the Economic Times of India reported. Cryptocurrencies “can replace part of the monetary system [and] will also compromise the RBI’s ability to regulate the flow of money through the system.

Read more: India launches payment interface Coinbase days after market access

Indian Prime Minister Narendra Modi has made it clear that he wants to protect the rupee and has said that the use of crypto for payments will not be allowed.

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