BitOoda Global & Regulatory Analysis, 2/24/2020: Global roundup hints at maturation of international regulatory environment
While pundits continue to debate the merits and shortfalls of SEC Commissioner Pierce’s safe harbor proposal and the Commission continues its crusade against ICOs, we thought it would be a good time to offer a roundup of some of this week’s global developments that we see as potentially relevant for our customers and partners:
· Binance Singapore applied for a license under the country’s new payment services regulation. However, the company did not seem to have a logical response to the announcement by the government of Malta that the firm was not regulated or authorized to operate there.
· In Germany, Bank von der Heydt announced that it had partnered with Bitbond to tokenize digital securities and to develop a Euro-based stablecoin. Both firms were early recipients of licenses from the German Federal Financial Supervisory Authority (BaFin) following implementation of the country’s new banking law requiring digital asset custodians to be licensed by BaFin.
· Sweden is testing its CBDC via a one-year pilot program, making it the latest in a growing group of countries that have officially launched development programs for a digital national currency.
· A month after leaving Europe for Panama to get away from the EU’s new KYC/AML requirements, Deribit launched daily Ether options. While we welcome the continued expansion of digital asset derivative offerings and the growth of the options market, we continue to encourage our customers to work through regulated exchanges whenever possible.
· The Director of FinCEN was among a group of 50 senior officials from Financial Intelligence Units who participated in a meeting to discuss the international ramifications of virtual assets. Consistent with these agencies’ mandates, the discussion focused on stemming the use of virtual assets for criminal activity.
· IOSCO released a report assessing the issues and risks with crypto trading platforms. The report identified the following as areas for continued global regulatory focus: (1) access and onboarding; (2) safekeeping of assets; (3) conflicts of interest; (4) transparency of operations; (5) market integrity; (6) price discovery; and (7) technology, including cyber security.
We see these largely as positive developments that reflect the continued maturation of the global crypto ecosystem. We are particularly encouraged by announcements demonstrating the growing trend toward the use of regulated, licensed platforms for new products and services, facilitated by legislative efforts intended to clarify how market participants should operate in particular jurisdictions, such as Germany and Singapore. We continue to welcome the development of well-informed international standards for trading platforms and activities, which is consistent with our efforts through ADAM to establish industry norms for market conduct as part of our continued push to build fair and orderly markets to enable broader institutional participation in the space.
Although we continue to hope for improved regulatory clarity here in the U.S., developments such as Peirce’s proposal and FinCEN’s hiring of a senior rep from Chainanalysis as its first Digital Innovation Officer demonstrate a desire by U.S. regulators to learn more about the issues they are charged with overseeing, which is an noble effort until the country’s overall regulatory architecture is better defined.