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Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Category Archives: Blockchain, Crypto, Digital Assets Regulations
[Brookings Event, Oct 6, 2023]: Payments in America for a Digital Century
Brookings | Sep 20, 2023
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Image: Unsplash/Igal Ness
Event Overview
Date & Time: October 6, 2023, from 9:00 am to 1:00 pm EDT.
Location (In-person or Online): The Brookings Institution, Falk Auditorium, 1775 Massachusetts Ave NW, Washington, D.C. 20036.
Overview: America was once a leader in the adoption of new payment technologies, introducing innovations like credit cards and ATMs. However, in recent times, the country has fallen behind in terms of payment infrastructure. The current system is slow and often imposes costs on users.
See: Payments Canada Delays Launch of Real-Time Rails Again (without a timeline)
With the rise of digitization and technological advancements, there's a significant opportunity to reform the payment system to benefit the economy, promote financial access, and facilitate commerce and trade. However, these innovations also bring regulatory challenges and questions about the role of government and central banks. The event will delve into the current state of U.S. payments and emerging digital asset technologies that could disrupt them. The event is a collaboration between Brookings, Cornell Law, and Vanderbilt Law.
Discussion topics topics include public and private real-time payment systems (FedNow and Real-Time Payments), cryptocurrencies, stablecoins, central bank digital currencies, and more.
See: Could FedNow Outperform Virtually All Existing Cryptocurrency Projects?
Sample Speakers:
Rohit Chopra: Director of the Consumer Financial Protection Bureau.
Christopher J. Waller: Federal Reserve Governor.
Register --> here
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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New York’s DFS Remove Ripple and Dogecoin from Greenlist
Crypto Regulation | Sep 19, 2023
Image: Unsplash/Shubham Dhage
The New York Department of Financial Services (DFS) has revamped its crypto oversight, notably removing Ripple, Dogecoin, and Litecoin from its approved "greenlist."
While DFS continues to lead in digital asset supervision, the crypto world is witnessing varied regulatory approaches globally. From Solana Labs emphasizing robust U.S. regulations to Hong Kong's potential tightening after the JPEX probe, 2023 is shaping up to be a landmark year for crypto governance and regulation.
What recent changes did the New York Department of Financial Services (DFS) announce regarding its virtual currency oversight?
- Yesterday, the New York Department of Financial Services (DFS) revealed an update to its virtual currency oversight regime. This update introduced new criteria for how digital firms licensed by the agency can list different cryptocurrencies.
- As a significant part of this overhaul, DFS removed over two dozen tokens from its “greenlist” of approved tokens. Notably, Ripple, Dogecoin, and Litecoin were among those removed. However, eight tokens, including Bitcoin, Ether, and the new PayPal Dollar, remain on the list.
See: Decoding Judge Rakoff’s Opinion: What It Means for Future Crypto Regulations
How has DFS positioned itself in the crypto regulation landscape?
- DFS has emerged as a nation-leading digital asset supervisor, primarily due to its BitLicense program and virtual currency unit.
- While the crypto industry often criticizes DFS for its rigorous licensing process, the recent guidance showcases DFS's balanced approach to crypto regulation. This is in contrast to other state and federal agencies that lean more towards enforcement actions.
What was the purpose of the DFS greenlist, and how has it changed?
- The DFS greenlist was created as an integral part of its broader crypto supervision. Previously, firms licensed by DFS could gain approval to custody and list tokens through a self-certification system. This system streamlined the process while still granting DFS a supervisory role.
- Once two firms had self-certified a token for either custody or listing, it would be added to the DFS greenlist.
- This meant that any DFS-licensed firm could approve the token for custody or listing, further speeding up the process. However, with the new guidance, the greenlist has been significantly reduced, now featuring only eight tokens.
How does the international crypto regulation landscape look in 2023?
- Internationally, the crypto regulation landscape is evolving rapidly. For instance, Anatoly Yakovenko, co-founder of Solana Labs, has emphasized the importance of comprehensive cryptocurrency regulations in the United States to maintain its leadership in the blockchain and Web3 sectors.
- Also, Hong Kong, a significant player in the crypto world, is considering tightening its crypto regulations. This comes in the wake of an investigation into the crypto exchange JPEX, which led to six arrests and numerous reports of financial losses.
Crypto regulations in the future
As the crypto industry continues to grow and evolve, regulatory bodies worldwide will likely introduce more stringent and detailed guidelines to protect investors and ensure market stability.
See: New U.S. Crypto Accounting Rules Come Into Effect in 2024
The recent actions by DFS and other global entities highlight the importance of a balanced approach to regulation, ensuring innovation while safeguarding investor interests.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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SEC Accuses Binance.US of Not Cooperating With Investigation as Executives Exit
Crypto | Sep 15, 2023
Image: Unsplash/Loic Leray
Binance.US grapples with heightened SEC scrutiny and internal upheavals, marking a tumultuous phase for the leading crypto exchange
- The U.S. Securities and Exchange Commission (SEC) has accused Binance.US of not cooperating in an ongoing probe.
- The SEC alleges that the company's staking, clearing, and brokerage services violate federal securities law.
- The regulatory body is particularly concerned about Binance.US's use of Ceffu, a custody service offered by Binance's international arm. This, according to the SEC, violates a previous agreement intended to ensure that only local U.S. staff have access to funds.
Executives Exit and Internal Changes
- Adding to the complexity, key risk executives are leaving or recently exited Binance.US. company:
- Krishna Juvvadi, the head of legal;
- Sidney Majalya, the chief risk officer;
- This comes on the heels of the departure of Binance.US CEO Brian Shroder, who left the company amid layoffs of roughly a third of its workforce.
- Norman Reed, Binance.US's chief legal officer and general counsel, will step in as interim CEO.
- Reed is an alum of the SEC, having spent six years as special counsel in its market regulation division.
- His appointment follows Brian Brooks, who left the role citing differences over strategic direction.
See: SEC’s Sealed Court Filing Raises Eyebrows for Potential Binance Setback
The regulatory challenges facing Binance.US are a microcosm of the broader issues affecting the cryptocurrency industry. As the SEC tightens its grip, the company is undergoing significant internal changes, including executive departures and layoffs.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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SEC Charges ‘Stoner Cats’ For Selling $8M of Unregistered Crypto Securities
Enforcement | Sep 15, 2023
Image: Unsplash/Wayne Low
The U.S. Securities and Exchange Commission (SEC) has taken action against the creators of the popular animated web series, Stoner Cats.
What Are Stoner Cats?
Stoner Cats is a popular adult animated web series that has garnered significant attention in both the entertainment and crypto worlds. The concept of "Stoner Cats" involves house cats that gain sentience after being exposed to their owner's medical marijuana. This marijuana is used to alleviate the symptoms of early Alzheimer's disease. The series released six episodes from July 2021 to December 2022, and boasts a cast of well-known actors, including Jane Fonda, Mila Kunis, Ashton Kutcher, Seth MacFarlane, and Chris Rock.
See: LA-Based Entertainment Company, Impact Theory, Faces SEC Charges Over Unregistered NFT Securities Offering
The creators introduced a unique concept where the Non-Fungible Tokens (NFTs) provided holders with exclusive access to watch the series online. These NFTs were marketed as tickets, with the idea being that the more successful the show became, the more valuable the NFTs would be.
Over 10k NFTs Sold in 35 Minutes
On July 27, 2021, SC2 offered and successfully sold over 10,000 NFTs at approximately $800 each, raising a staggering $8 million from investors. This sale was completed in a record 35 minutes. The NFTs were marketed as a ticket to the Stoner Cats web series, with the promise that the success of the show would directly correlate with the success of the NFTs.
Charge and Settlement
The SEC has formally charged Stoner Cats 2 LLC (SC2) for conducting an unregistered offering of crypto asset securities in the guise of NFTs. This move by the SEC was aimed at ensuring that the creators of Stoner Cats adhered to the federal securities laws. Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized that regardless -of the nature of the offering, it's the economic reality that determines its classification as an investment contract and, consequently, a security. The SEC's primary concern was that Stoner Cats marketed its expertise in crypto projects and led investors to believe they would profit from selling the NFTs in the secondary market.
See: SEC Chair Gensler’s Mixed Feedback at Senate Hearing
Without admitting or denying the SEC’s findings, SC2 has agreed to a cease-and-desist order. They will also pay a civil penalty amounting to $1 million. As part of the settlement, SC2 has committed to destroying all NFTs in its possession and will publish a notice of the order on its official platforms.
The SECs Regulation by Enforcement Continues
This case underscores the SEC's increasing scrutiny of the rapidly evolving NFT space. The regulatory body aims to ensure that firms involved in the production or trading of digital assets adhere to the necessary securities laws. The Stoner Cats case serves as a reminder that while the world of NFTs offers immense potential, it is not exempt from regulatory oversight.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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SEC Chair Gensler’s Mixed Feedback at Senate Hearing
Regulatory Insights | Sep 13, 2023
Image: Unsplash/Harold Mendoza
SEC Chair Gary Gensler recently appeared before the Senate Banking Committee on Tuesday, September 12, 2023, where he faced both praise and criticism regarding the oversight of his department.
Some key takeaways from the hearing:
Oversight and Regulatory Approach
- Gensler was questioned about the oversight of the Securities and Exchange Commission (SEC).
- His regulatory approach drew criticism, especially from Republican Senator Tim Scott. Scott accused Gensler of potentially increasing costs for public companies with climate disclosure rules and hindering pro-growth initiatives.
- Scott emphasized a need for a slower regulatory pace, stating:
"The breakneck pace you are pumping out regulations should not be applauded."
Grayscale Bitcoin Trust Ruling and Crypto Oversight
- Gensler was asked about a judge's ruling in favor of Grayscale in its bid to convert its Grayscale Bitcoin Trust (GBTC) into an ETF. Gensler mentioned that his team is still reviewing the decision.
- Gensler commented on the crypto field, mentioning that it is rife with noncompliance. He stated:
"..in [my] 44 years in financial markets, [I haven't] seen noncompliance to this extent in any other field, calling it "daunting."
See: Wall Street Opposes a Controversial Retail Investor Proposal by SEC Chair Gary Gensler
Climate Disclosure Rules
- Gensler faced questions regarding the SEC's proposed climate disclosure rule. Critics, including Senator Scott, believe that this rule could quadruple costs for public companies.
- Democratic Senator Jon Tester also expressed concerns about the impact of these rules on local Montana farm ranchers.
Watch the On-demand Video
The hearing highlighted the challenges and responsibilities faced by the SEC under Gensler's leadership. While some praised his efforts, others expressed concerns about the pace and direction of regulations, especially concerning climate disclosure rules and cryptocurrency oversight.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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FTX’s Potential $3.4B Liquidation Sparks Crypto Price Concerns
Crypto | Sep 12, 2023
Image: Unsplash/Kanchanara
The crypto market is anticipating a potential sell-off due to the implosion of FTX in 2022 and the subsequent bankruptcy proceedings. The Delaware bankruptcy court is expected to rule on the $3.4 billion asset sale on September 13.
In the wake of recent events surrounding the FTX exchange's collapse, the cryptocurrency market is facing renewed pressure. The once-prominent FTX, which imploded in November 2022, is gearing up to appear in Delaware Bankruptcy Court on September 13.
The exchange seeks approval to liquidate $3.4 billion in Bitcoin and other cryptocurrencies.
See: Trust Fallacy: 75% of Payment Fraud in Crypto is Carried Out by KYC-verified Accounts
This move follows the company's proposal to employ blockchain firm Galaxy Digital to supervise the sale and management of reclaimed user funds.
If sanctioned, FTX could unload up to $100 million of crypto tokens weekly, potentially ramping up to $200 million for specific assets.
As the crypto community awaits the court's verdict, there's growing apprehension that an FTX-driven fire sale might bear a negative impact on already-vulnerable cryptocurrencies, especially those in FTX's possession.
FTX has the following cryptocurrencies in its possession that may be sold:
- Solana (SOL): $685 million in locked Solana tokens.
- FTT: $529 million.
- Bitcoin (BTC): $268 million.
- Ethereum (ETH): $90 million.
- Dogecoin (DOGE): $42 million.
See: Digital Asset Classification vs Wire Fraud: What’s the Most Powerful Law in Crypto Right Now
This impending action has heightened concerns within the crypto community, as such a massive sell-off could further destabilize an already sensitive market. The situation underscores the volatility and unpredictability inherent in the cryptocurrency sector.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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New U.S. Crypto Accounting Rules Come Into Effect in 2024
Regulation | Sep 7, 2023
Image: Unsplash/Kelly Sikkema
The U.S. Financial Accounting Standards Board (FASB) has unanimously voted to introduce new accounting rules for businesses with significant crypto holdings. These rules will provide guidelines on measuring the value of Bitcoin, Ethereum, and other cryptocurrencies in company assets.
Under the new rules, companies that invest in cryptocurrency will be required to report their holdings at fair value. This approach aims to capture the most current value of an asset, including any rebounds in value after price dips. This is a significant shift from the current practice where companies record their crypto at the historical price they paid.
Thescope of the FASB's focus remains narrow, covering assets based on blockchain technology and secured through cryptography. Notably, non-fungible tokens (NFTs), stablecoins, and wrapped tokens are not covered by these rules.
See: Digital Assets Research: Blockchain Accounting and Tax Solutions
The new accounting rules are expected to be published by the end of the year and will go into effect for fiscal years starting after December 15, 2024. However, companies will have the option to apply them early.
Major companies like Tesla and MicroStrategy, which have invested heavily in Bitcoin, will benefit from these new rules. The fair-value approach will provide a more accurate representation of a company's financial position, allowing investors to make more informed decisions.
Impact
Michael Saylor, the founder and former CEO of MicroStrategy:
"..highlighted that these new rules eliminate a significant barrier to corporate adoption of Bitcoin as a treasury asset."
The introduction of these new accounting rules marks a significant step forward in the integration of cryptocurrency into mainstream financial practices.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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