Weekly focus:

  • US Senate confirms Janet Yellen as Secretary of the Treasury
  • FinCEN extends the comment period for creating rules for cryptocurrency transaction requirements
  • Hawaii’s digital currency innovation lab reopens for applications
  • The Central Bank of the Philippines issues anti-money laundering guidelines for cryptocurrency
  • Bank of International Settlements publishes survey on central bank digital currency
  • Coinbase is announcing more details on its proposed public offering
  • Valkyrie Investments submits application for Bitcoin ETF

Regulatory developments in the USA

US Senate confirms Janet Yellen as Secretary of the Treasury

The US Senate approved the appointment of Janet Yellen as Treasury Secretary after a vote on Monday. Secretary Yellen was previously the chairman of the Federal Reserve and was the first woman to hold the office.

Secretary Yellen has previously given mixed reviews on bitcoin, cryptocurrencies, and blockchain technology in general. In her testimony to the House Committee on Financial Services in 2016, Secretary Yellen stated that blockchain technologies “could be extremely useful and beneficial to society,” and reiterated that belief in later statements. However, in a speech to the Canada Fintech Forum in 2018, Yellen stated that she was “not a fan” of Bitcoin and went on to explain that many of the transactions that “take place with Bitcoin are illegal, illegal transactions”.

In her confirmation hearing, Secretary Yellen stated that she believes that many cryptocurrencies are “primarily used for illegal funding, at least in a transactional sense, and I think we really need to look into how we can limit their use and ensure that anti-money laundering takes place through them Channels do not take place. “

You can find the confirmation hearing from Secretary Yellen here.

An article outlining Secretary Yellen’s earlier statements on bitcoin, cryptocurrencies, blockchain and regulation can be found here.

FinCEN extends the comment period for creating rules for cryptocurrency transaction requirements

FinCEN has extended the comment period for a proposed rule creation in connection with cryptocurrency and transactions with digital assets. The first communication dated December 23, 2020 set a deadline of January 4, 2021 for the submission of comments. Following public criticism, the comment period was extended by a further fifteen days, and following an announcement on Tuesday, the comment period was again extended to March 29, 2021.

The proposed rule would include “record-keeping, reviewing and reporting requirements for certain deposits, withdrawals, exchanges or other payments or transfers from [convertible virtual currencies] or [legal tender digital asset] from, through or to a bank or [money services business]. ”The proposed rule would target transactions with non-hosted wallets, impose record-keeping and reporting requirements and redefine cryptocurrencies as“ monetary instruments ”within the meaning of the Banking Secrecy Act.

The announcement of the proposed rulemaking can be found here, and the press release and the announcement of the extension can be found here.

Hawaii’s digital currency innovation lab reopens for applications

In a press release on Monday, the Department of Commerce and Consumer Protection of the State of Hawaii, Department of Financial Institutions (the Department) announced the reopening of applications for Hawaii’s Digital Currency Innovation Lab, a “sandbox” program for regulating digital currencies. In the press release, the Division’s Commissioner Iris Ikeda said the Division wanted to expand the program given the “strong start” and “positive traction with the first cohort of companies”. The application deadline is February 26, 2021 at 5 p.m. (HST).

The program enables businesses to provide money transfer services in the state of Hawaii without obtaining the required license. Upon acceptance of the program, the department will issue a no action letter stating that the department will not take action against participating companies as long as they comply with the reporting and consumer protection requirements contained in the letter. There are currently eleven companies participating in the sandbox program and nineteen have applied.

You can find a copy of the press release here.

We previously discussed the impact of regulatory sandboxes here.

International regulatory developments

The Central Bank of the Philippines issues anti-money laundering guidelines for cryptocurrency

The Central Bank of the Philippines (Bangko Sentral ng Pilipinas) published guidelines on “Virtual Asset Service Providers” and replaced previous guidelines on the exchange of virtual currencies. The guidelines contain a set of rules and regulations governing the cryptocurrency business in the Philippines, as recommended by the Financial Action Task Force. In discussing the policy behind the guidelines, the bank discussed the balance between the benefits of innovations in virtual currencies and the risks posed by cryptocurrencies, such as: B. use for money laundering and terrorist financing.

Virtual asset service providers must obtain a “Certificate of Authority” before they can operate as money service providers in the Philippines. Approval of a certificate requires the provider to meet the minimum capital requirements and pay an annual service fee. In addition, vendors must meet minimum security standards for risk management, cybersecurity, internal controls and supplier management. Once operational, vendors are required to record and report transaction information, subject customers to due diligence, and comply with consumer financial protection requirements.

You can find the guidelines here.

Bank of International Settlements publishes survey on central bank digital currency

The Bank for International Settlements (BIS) published the results of a survey on digital currencies from the Central Bank (CBDCs). The survey, conducted in late 2020, was an attempt to measure current central bank interest and activity related to CBDCs. 60 central banks were interviewed.

Several highlights emerged from the survey results. In particular, the “vast majority” (86%) of the central banks surveyed are currently analyzing the use, benefits and consequences of CBDCs, and the report also indicated that the Bahamian Central Bank is issuing the first general purpose CBDC as a major milestone. In addition, the survey found that the number of central banks doing general research increased in each of the three years studied – 2018, 2019 and 2020. The number of central banks conducting experiments with CBDCs, as well as the number of developing pilot programs, increased after a decline in 2019.

The full text of the survey can be found here.

Industry developments

Coinbase is announcing more details on its proposed public offering

Coinbase Global, Inc. provided additional background information on the nature of the planned public offering in a press release dated January 29, 2021. As previously reported, Coinbase submitted a draft registration statement on December 17, 2020. After the registration statement was announced, press offices speculated about the type of listing and possible ratings. In a January 29 press release, Coinbase “confirmed its intention to become a publicly traded company under a proposed direct listing of its Class A common shares”.

You can find the press release here.

Valkyrie Investments submits application for Bitcoin ETF

Valkyrie Digital Assets LLC submitted an application for a Bitcoin-based “Exchange Traded Fund” (ETF). The filing for registration for the Form S-1 was filed with the Securities and Exchange Commission (SEC) on Friday, January 22, 2021. The application is one of a long line of previous applications for a Bitcoin ETF, all of which have been denied. Although the SEC has asked for a comment on Bitcoin ETFs, it has yet to approve one of the filings.

The registration declaration “Valkyrie Bitcoin Fund” can be found here.

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