Crypto Weekly Update #30

Crypto Weekly Update #30

Time Stamp: November 21, 2023 10:32 AM
Source Node: 2972338

Crypto Weekly Update #30

November 21, 2023

CipherTrace

MARK COLLINS & DEMETRIOS TSEAS

Regulatory

JP Morgan’s customers can use JPM Coin to program their accounts and make payments automatically: On Nov 10, JP Morgan Chase reportedly allow their clients to program their accounts by setting conditions, enabling them to move funds to cover payments and margin calls via JPM Coin – a permissioned blockchain, that allow clients transfer fiat payments within the system. In October, JPM reached a milestone of handling $1 billion of transactions daily via JPM Coin.

Swan Bitcoin to terminate accounts using mixing services: On Nov 12, U.S. domiciled services platform Swan Bitcoin sent an email to its users stating that accounts depositing or withdrawing Bitcoin directly from mixing services, may be terminated. Yan Pritzker, Swan Bitcoin’s co-founder explained via X (formerly Twitter), that although the company is not against mixing, has no any anti-mixing policies, and there is no anti-mixing law or regulation yet, it works with qualified custodians which interface with multiple banking institutions to provide fiat services, which are subject to rules and guidelines from FinCEN, FATF and other international bodies.

Basel Institute Publishes AML Index 2023: On Nov 13, The Basel Institute on Governance published the 12th edition of the Basel AML Index: “Ranking money laundering and terrorist financing risks around the world”.  The Basel AML Index is an independent ranking that assesses ML/TF risks of countries and their capacity to counter such risks.

Bitget Hong Kong halts operations, decides not to apply for a local crypto license: On Nov 13, Bitget Hong Kong reportedly, will halt operations on Dec 13, after deciding not to apply for a local crypto license.  Bitget KG will be allowing its customers to withdraw their assets until the platform shuts down in December.

Crypto.com granted VASP license by Dubai’s VARA: On Nov 14, Crypto.com announced it has been granted a Virtual Asset Service Provider (VASP) License by Dubai’s Virtual Assets Regulatory Authority (VARA). The license is subject to the company fully satisfying select conditions and localization requirements defined by VARA, and will be able to commence operations thereafter subject to operational approval notice from the regulator.

Hill delivers remarks at hearing on breaking down the illicit activity in digital assets: On Nov 15, the U.S. House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion, led by Chairman French Hill (AR-02), hold a hearing entitled “Crypto Crime in Context: Breaking Down the Illicit Activity in Digital Assets.”  Invited witnesses shared their expertise and discussed the issues at hand.

Commerzbank AG obtains a crypto custody license in Germany: On Nov 15, Commerzbank AG announced it has obtained a crypto custody license in Germany.  Commerzbank is the first German full-service bank to be granted the Crypto Custody License pursuant to Article 1 Section 1a Sentence 1 No 6 German Banking Act (KWG). The license will enable the Bank to build up a broad range of digital asset services, with particular emphasis on crypto assets.

BlackRock files for an Ethereum Exchange-Traded Fund: On Nov 16, BlackRock, the world’s largest asset manager, filed with the Securities and Exchange Commission for a spot Ethereum Exchange-Traded Fund (ETF). The iShares Ethereum Trust, was registered as a Delaware Trust and will be listed on Nasdaq if approved. Crypto ETFs track the price performance of one or more cryptocurrencies, giving investors access to the underlying asset (Ether in this instance), without directly owning it.

Canada’s FINTRAC says that Canadian financial institutions must begin reporting high-priority illicit payments close to real time: On Nov 16, FINTRAC Director Sarah Paquet speaking at the Assembly Canada conference in Toronto, hosted by ACAMS, said that financial institutions must begin flagging and reporting terrorist financing-linked payments and other high-priority suspicious transactions closer to “real time”.  She also highlighting the need for financial institutions to update their systems accordingly.

IOSCO finalizes its policy recommendations for crypto and digital assets: On Nov 16, the International Organization of Securities Commissions (IOSCO) finalized its policy recommendations for crypto and digital asset markets.  These are central to the delivery of a coordinated global regulatory response to the global regulatory response, to the significant investor protection and market integrity risks posed by centralized crypto-asset intermediaries called crypto asset service providers (CASPs). The Recommendations cover six key areas: Conflicts of interest arising from vertical integration of activities and functions; Market manipulation, insider trading and fraud; Custody and client asset protection; Cross-border risks and regulatory cooperation; Operational and technological risk; and Retail distribution.

Paxos receives in principal approval from Singapore’s MAS for a new entity that will issue USD backed stablecoin in Singapore: On Nov 16, Paxos announced it received in principle approval from Monetary Authority of Singapore (MAS), for a new entity: Paxos Digital Singapore Pte., that will issue USD-Backed Stablecoin in Singapore.  MAS has acknowledged that the new US dollar stablecoin will be substantively compliant with MAS’ proposed stablecoin regulatory framework, in advance of coming into force.

Crypto News

Pro-Bitcoin candidate Javier Milei wins Argentinian election: Argentina’s newly elected president, Javier Milei, known for his pro-bitcoin stance and populist views, secured a decisive victory with 55% of the votes, positioning him as a strong opponent to central banking. Milei’s plans for economic reform involve shutting down the central bank, adopting the US dollar, and embracing decentralized finance, signaling a radical departure from traditional economic policies and potentially paving the way for bitcoin adoption. Forbes

Mastercard’s acknowledges challenges in CBDC adoption: Mastercard’s blockchain and digital assets lead for Asia-Pacific, Ashok Venkateswaran, expressed that the widespread adoption of CBDCs faces challenges due to consumers’ comfort with traditional money. While acknowledging the potential utility of CBDCs in countries with less robust domestic payment networks, Venkateswaran emphasized the difficulty of justifying CBDC adoption when current payment systems are already efficient, citing Singapore as an example. CNBC

FBI charges three men with money laundering with crypto: Zhong Shi Gao, Naifeng Xu, and Fei Jiang have been arrested and charged in connection with a scheme to steal over $10 million from U.S. banks and financial institutions. The trio allegedly recruited individuals to open bank accounts, orchestrated fraudulent fund transfers, and exploited unauthorized-transfer reports to withdraw double the deposited amount, converting the funds into cryptocurrency and transferring them to foreign exchanges, resulting in losses for nearly a dozen institutions. FBI Press Release

Tether to become player in Bitcoin mining space: Tether plans to invest approximately $500 million over the next six months in expanding into Bitcoin mining, with mining facilities to be established in Uruguay, Paraguay, and El Salvador. Paolo Ardoino, the expected incoming CEO, revealed that Tether aims to grow its computing power to 1% of the Bitcoin mining network, reaching 120 megawatts by the end of 2023 and targeting 450 megawatts by the end of 2025. Bloomberg

South Korean pension fund adds sizeable Coinbase position to balance sheet: South Korea’s National Pension Service (NPS), one of the world’s largest pension funds, made its first investment in cryptocurrency by purchasing over 280,000 shares of Coinbase during Q3 2023. The investment, valued at $27.7 million, has yielded a 39% profit since the purchase, and while the NPS has a policy of not directly investing in cryptocurrencies due to volatility, this move reflects its increasing involvement in the crypto industry. SEC

Bitgin faces money laundering investigation: Taiwanese cryptocurrency exchange Bitgin is facing a money laundering investigation, with the arrest of its COO, Yuting Zhang, in connection to the “Eighty-Eight Guild Hall” money laundering incident. The exchange, part of the Virtual Asset Service Provider Preparatory Office for self-regulation, emphasized that its operations remain normal, and it is fully cooperating with the investigation, hoping to clarify the facts soon. Bitgin Statement & Press Release

Hacks and Exploits

Raft: Raft, a decentralized U.S. dollar stablecoin protocol, suffered a security exploit resulting in a $6.7 million loss, despite having been audited by blockchain security firms Trail of Bits and Hats Finance. The vulnerability allowed a hacker to borrow 6,000 Coinbase-wrapped staked Ether on Aave, transfer it to Raft, and mint 6.7 million R tokens using a smart contract glitch, with the unauthorized funds later being swapped and depegging Raft’s stablecoin. Post-Mortem

dYdX: DeFi exchange dYdX suffered a targeted attack resulting in $9 million in user liquidations but used their v3 insurance fund to cover the losses. dYdX founder Antonio Juliano stated that the attack involved market manipulation of the Yearn.finance token (YFI), and the platform is investigating the incident in collaboration with partners while ensuring user funds remain unaffected. Cointelegraph

Time Stamp:

More from Ciphertrace