Exploring cryptoasset regulation

share save 171 16 - Exploring cryptoasset regulation

Investment Executive | James Langton | Oct 12, 2018

cryptoassets - Exploring cryptoasset regulationMoney laundering and tax evasion are key concerns

Canadian policy-makers initially took a hands-off approach to cryptoassets. Now, in the wake of a bitcoin boom-and-bust and continuing growth in the cryptoassets market, policy-makers are taking a second look at the emerging phenomenon.

In 2015, the Standing Senate Committee on Banking, Trade and Commerce issued one of Canada’s first reports examining the emerging cryptocurrency industry; that report recommends that policy-makers keep an eye on the space.

Since then, the cryptoassets market has continued to grow. According to a report from the Bank of Canada (BoC), the global market capitalization for cryptoassets “grew rapidly” in 2017 and the daily transaction volume now is more than 75 times higher than it was in early 2017 – i.e., more than $25 billion a day.

At this point, the BoC report states, traditional financial services institutions don’t have much, if any, direct exposure to cryptoassets, but the report cautions that these institutions could become exposed due to their clients’ trading in cryptoassets or through exchange trading in crypto-based derivatives.

“Cryptoasset markets are evolving quickly and could have financial stability implications in the future if their size and links to the financial system continue to grow,” the BoC report states. “The markets are largely unregulated in many countries and are characterized by high price volatility, fragile liquidity, and frequent fraud and cyberattacks.”

See:  International Anti-Money Laundering Standards for Crypto Expected in October

The Senate committee’s original report in 2015 acknowledged risks, such as money laundering and tax evasion, that could accompany widespread use of cryptocurrencies. The report also recognized that a heavy-handed approach to regulation could stifle innovation and lead to missed opportunities – opportunities resulting from the development of the underlying financial technology that enables the creation of cryptocurrencies (via blockchain [a.k.a. distributed ledger] technology) and improves inclusion and enhances the efficiency and security of cryptocurrencies in financial transactions.

Now, as the cryptoassets market continues to flourish, the Senate committee is revisiting the subject. However, the committee has had its financial services sector expertise bolstered since its initial report with the addition of Howard Wetston, former chairman of the Ontario Securities Commission, and Sabi Marwah, former vice chairman and chief operating officer at Bank of Nova Scotia.

The Senate committee began questioning federal Finance Minister Bill Morneau in late September about the current condition of the cryptoassets market and its evolution in the three years since the committee issued its recommendations as part of its overall mandate to review the state of the financial services system.

During that hearing, Morneau said that because the cryptoasset phenomenon is global in nature, the policy response must be co-ordinated at the global level: “The world’s financial systems are highly integrated and it’s easy for sophisticated users of cryptoassets to adapt their practices – for initial coin offerings or subsequent exchanges – to avoid regulation.”

However, a report from the Financial Stability Board (FSB), a global umbrella group for fi- nancial services sector policy- makers, concluded in July that at this point, the cryptoassets market is too small to represent any systemic risk to the global financial services system.

See:  Don Tapscott urges ‘sensible’ cryptocurrency regulations

According to the BoC’s report, the total worldwide market value of all cryptoassets peaked at more than $1 trillion at the beginning of 2018. In contrast, the market capitalization of global equities markets was more than $75 trillion. Notably, the market value of cryptoassets has fallen substantially since that peak.

Given the FSB’s report’s conclusion, Morneau noted, most countries (including Canada) still are taking a restrained approach to regulation. They remain wary of suppressing innovation by cracking down too hard on the industry, but also now are beginning to erect defences due to long-standing concerns about tax evasion and money laundering.

Indeed, Morneau indicated that money laundering has emerged as the central concern for global policy-makers in regard to cryptoassets.

“We have had this discussion literally every time the G7 finance ministers and central bank governors get together,” Morneau told the Senate committee. “The focus has been on trying to find ways we can work together because this is an area [in which] we have no choice but to work together.”

Later this month, the global intergovernmental Financial Action Task Force on Money Laundering (FATF) is expected to issue guidance that would establish how its regulatory standards for fighting money laundering and terrorist financing should be applied in the cryptoassets industry.

“This is a significant step forward,” Morneau said, noting that this step will mean the FATF is going beyond simply monitoring the issues, and taking action.

Over the summer, the Department of Finance Canada launched a consultation on proposed changes to Canada’s anti-money laundering (AML) rules that aim to capture dealers of cryptoassets and virtual currencies under the existing framework for monitoring financial transactions in Canada.

When those changes take effect, financial services firms will be required to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and develop compliance strategies for detecting and reporting suspicious transactions.

At the same time, the revised AML regulations aim to define “cryptoassets” and draw a line between these investment instruments and traditional currencies.  “This approach will improve regulatory certainty surrounding cryptoassets without regulating the underlying technology, in keeping with our goal of mitigating risk without stifling innovation,” Morneau said.

Yet, the Senate committee questioned if extending FINTRAC rules to the cryptoassets space is enough. Marwah noted that cryptoassets are designed to evade regulation. He also wonders whether simply applying the AML requirements from the traditional financial system to the emerging cryptoassets markets is adequate. He questioned whether Canada should require that cryptoassets be traded on securities exchanges, where those investment instruments can be more easily monitored.

See:  CIBC Has Frozen $28 Million of Vancouver Crypto Exchange’s Funds Since January

During the Senate hearing, Rob Stewart, associate deputy minister of finance and G7/G20 deputy for Canada, indicated that there are ongoing discussions among Finance Canada, the BoC and the provincial securities regulators about tracking cryptoasset trading activity.

“At this point, the judgment has not been that we need to, collectively or at an individual level, tighten the rules further than we have currently proposed to do in the AML rules,” Stewart said.

Wetston told the hearing that there appears to be an appetite for regulation among firms establishing the cryptoassets market: “My discussion with some of the digital currency firms suggests they want a framework. They want to function in a legitimate environment.”

Wetston also noted the global financial crisis highlighted the risks in allowing certain financial activities to grow unchecked: “I implore you to think about our experiences in the past and avoid the delay that’s necessary to put this framework in place [to] ensure these businesses can function on a platform and have the regulatory audit, tracking, tracing and transparency necessary.”

Stewart believes the cryptoassets market is receiving “greater scrutiny” as a result of the financial crisis. But, he said, the industry is not considered significant enough to warrant a major effort to regulate the space tightly: “The judgment call at this point in time is that the scale of the activity at a market level has not come anywhere near the scale of the activity of derivatives or asset-backed commercial paper.”

Thus, policy-makers aren’t yet prepared to impose an overarching regulatory framework on the cryptoassets industry.

“We are enhancing consumer protections and disclosure,” Stewart noted, adding that securities regulators are focusing on investor protection and federal authorities are targeting the money laundering concern.

The Standing Senate Committee on Banking, Trade and Commerce plans to study the concept of “open banking,” which is an approach to enhancing competition in the financial services sector that the federal government also is set to explore.

Continue to the full article --> here


NCFA Jan 2018 resize - Exploring cryptoasset regulation 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, 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

Latest news - Exploring cryptoasset regulationFF Logo 400 v3 - Exploring cryptoasset regulationcommunity social impact - Exploring cryptoasset regulation

JOIN US THUR, AUGUST 13 CURRENCY WARS, DIGITAL ASSETS, THE RISE OF DEFI WEEK!


GET TICKETS NOW
More Info


Week 6 Currency Wars Digital Assets and DeFi resize - Exploring cryptoasset regulation



NCFA COVID 19 letter to government to support Fintechs and SMEs - Exploring cryptoasset regulation

NCFA Newsletter subscribe600 - Exploring cryptoasset regulation

IMF | By Tobias Adrian speech | July 22, 2020 I will focus on public-private partnerships to provide central bank digital currency — CBDC. The goal of these partnerships is to preserve comparative advantages: for the private sector to interface with customers and innovate, and for the public sector to regulate, supervise, and ultimately provide trust. In so doing, I cannot emphasize too strongly the importance of regulatory clarity and consistency — domestically and internationally — to encourage innovation. Note that public-private partnerships are not new, even for the provision of money. Cash is designed by central banks but distributed by commercial banks. And most of the money we use — in the form of commercial bank deposits — is created by the private sector; is a private liability; and is settled in great part through private clearinghouses, all under the strict supervision of the central bank. So what would a public-private partnership look like for the provision of CBDC? Two models stand out. The first model is “synthetic CBDC” (or “sCBDC,” for short), introduced last summer in my paper with Tommaso Mancini-Griffoli. And the second model — explored by various central banks, including the People’s Bank of China (PBOC) ...
Read More
CBDCs and the IMF - Exploring cryptoasset regulation
Tech UK | Georgina Maratheftis  | Jul 31, 2020 Yesterday, the Mayor of London Sadiq Khan tasked his Chief Digital Officer, Theo Blackwell, and the Smart London Board with developing an Emerging Technologies Charter, which will set out the criteria which innovations should meet before they are deployed in the capital.  The Charter will seek to ensure Londoners are engaged and listened to in the process of developing new technologies, so their concerns and the likely effects these innovations will have on their lives are fully understood. Areas it is expected to cover include: Ways of working – We want to ensure that trialling new technologies is conducted openly and responsibly, actively engaging with the public, authorities and other relevant bodies. Data – We'll make recommendations on the collection, use, and sharing of data collected by emerging technologies via city data platforms such as at TfL or City Hall's London Datastore, so data can be used for shared purposes such as climate change adaptation or resilience planning. ​ Design – Promoting the best in design and ensuring all Londoners are heard when new technologies are developed and deployed, to ensure digital inclusion and accessibility at the heart of future innovations. Privacy and security – Promoting privacy-by-design to ensure emerging technologies ...
Read More
tech UK - Exploring cryptoasset regulation
NCFA Canada | Team FFCON20 | Aug 9, 2020 Join us Thursday, August 13, 2020!    (Add to Google Calendar) Learn how traditional banking and payment sectors are being enhanced through digital assets The future of CBDCs, digital assets and trading Stability in finance – the profound impact of stablecoins The Rise of Decentralized Finance (DeFi) – the fastest growing crypto tokens, infrastructure and markets The anatomy of digital securities; how they work now, their evolution, use cases and are they right for our venture   FFCON20 Week 6:  In Focus NEXT UP --> Aug 13, 2020 Currency Wars, Digital Assets and DeFi Time remaining before registration closes ...
Read More
Week 6 Currency Wars Digital Assets and DeFi resize - Exploring cryptoasset regulation
Guest Post | Aug 7, 2020 As a business owner, you'll always be on your toes to ensure that your business succeeds. However, this may not always be the case. There are financial liabilities that could cost your business a great deal. These may include debts, payable interests, overdrafts, and other various acquired expenses. Liabilities can be categorized into current liabilities, contingent liabilities, and non-current liabilities just to mention but a few. All these could mean disaster for your business especially if you had not had a contingency plan. Now, this could either spell catastrophe for your business or the start of something new. In this informative guide, we'll be shedding more light on what you need to do if your business is on the edge of bankruptcy. 1. File for Bankruptcy If you've been running your business unsuccessfully and are found to be in debt, you shouldn't spend sleepless nights lamenting over it. Just file for bankruptcy and you'll find the help that you need. In doing so, it will help to shield you against creditors. This simply means that when creditors try to collect accumulated debts from you, you'll have been granted immunity by the courts. This, however, ...
Read More
bankrupt image - Exploring cryptoasset regulation
Norton Rose Fulbright | July 2020 Financial institutions, including banks, asset/fund managers and insurers, as well as established FinTech businesses and start-ups, have been presented with major disruptive events with the advent of COVID-19 and national lockdowns, and with the impending risk of global or regional recessions. How are financial institutions and FinTechs responding to such challenges? What role might new business models, strategic collaborations, investment and M&A, outsourcing, regulatory considerations, and the risk of litigation play in addressing such challenges? See:  Fintech Reports and Research To find out, in May and June we undertook a survey of a range of banks, asset/fund managers, insurers, established FinTech businesses, FinTech start-ups and venture capital and consulting firms across the globe. We invite you to read the findings of the survey which cover the following subject areas: FinTech as a strategic priority New FinTech use cases FinTech strategic collaborations FinTech investment and M&A Outsourcing and FinTech Regulatory impact in relation to FinTech initiatives FinTech areas of potential dispute Download the 23page PDF Report --> Now 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 ...
Read More
Norton Rose Fulbright Fintech and institutions covid lockdown recession Survey - Exploring cryptoasset regulation
OSC | Press Release | Jul 31, 2020 Toronto – The Canadian Securities Administrators (CSA) today announced that in light of COVID-19 and the challenges it presents to small businesses seeking to raise capital, the Ontario Securities Commission (OSC) made an interim local order that adopts the start-up crowdfunding regime currently in place in certain other Canadian jurisdictions (the Interim Order). The Interim Order, which takes effect in Ontario on July 30, 2020, provides registration and prospectus exemptions for start-up crowdfunding that are substantially similar to the local exemptions in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick and Nova Scotia. On February 27, 2020, the CSA published for comment National Instrument 45-110 Start-Up Crowdfunding Registration and Prospectus Exemptions (the Proposed National Instrument), which will replace and harmonize the local start-up crowdfunding exemptions in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia (as well as those in Ontario adopted through the Interim Order). The comment period on the Proposed National Instrument ended on July 13, 2020. “The adoption of the Interim Ontario order will better facilitate access to capital for start-ups and other small businesses, while still providing appropriate investor protection,” said Louis Morisset, Chair of the ...
Read More
OSC 1 - Exploring cryptoasset regulation
NCFA Canada | Team FFCON20 | Aug 3, 2020 Join us Thursday, August 6, 2020!  As the digital economy grows and the world increasingly moves online, the future of digital identity will deliver new frameworks and infrastructure to support digital commerce, online interactions and social identification in more secure and robust ways than ever thought before. This future is here today where individuals and businesses can establish digital representations of their identities to serve as the gateway to store and protect sensitive data, manage permissions and ultimately enable the future of Convergence Marketplaces. Why digital identity matters globally in 2020 – where is it taking us and what’s the future How businesses and government need to adapt to consumer ownership of data Are consumers ready to control their own data? How blockchain technology and other core tenants are the foundation for Convergence Marketplaces – A peak into the future Liquid Avatar and and convergent marketplace DEMOs   FFCON20 Week 5:  In Focus NEXT UP --> Aug 6, 2020 Digital Identity & Convergence Marketplaces Time remaining for this deal ...
Read More
Week 5 Digital Identity and Convergence Marketplaces resize2 - Exploring cryptoasset regulation
NCFA | Samuel He | July 28, 2020 With technical job creation outpacing the rate of technical studies graduates, demand for software developers is high. As a result, competition for in-house software development talent is expensive. The rapidly growing Fintech space requires top-notch development teams to push the limits of new financial experiences. Ideas in fintech are plentiful, but the challenge is a lack of technical capability. Recognizing this need, Finnovate.io was founded in 2016 to provide digital innovation services to customers in the Fintech ecosystem. Finnovate.io specializes in web, mobile, and blockchain application development. They have a track record of providing technical expertise at all stages of product development. See:  Fearless: How Technology Helps Conquer our Fear of the Unknown Acting as a trusted software development partner, the company leverages its expertise in software technology and finance by working closely with a client’s core team. Their mission is to deliver results while cutting time to completion, costs, and stress. As a part of their product mix, they also deliver technical training to their Fintech partners. Finnovate.io’s training initiatives involved gamifying financial literacy training in the classroom for Junior Achievement. They also delivered a budget simulation experience that changes the way ...
Read More
finnovate.io home - Exploring cryptoasset regulation
NCFA | FFCON20 Team | July 28, 2020 Join us Thursday, July 30, 2020!  Leaders inspire a vision of the future, motivate and coach others, and bring together the resources and skills to achieve a vision.  They must overcome challenges and obstacles as they lead people, technology, markets and navigate regulation towards transformative change. How humans can adapt during crisis and how to unleash it How to understand and lead in culturally diverse and different environments What are the 'People lessons' learned for growing organizations? How can a dynamic leader capitalize on their vision, market and relationships? Interactive Networking Breakouts!  Network and learn with experts on the topics of 'Pitching & Funding During Covid-19, Fintech Innovation and Growth Mentoring' ...
Read More
Leadership image 1 - Exploring cryptoasset regulation
NCFA Canada | Craig Asano | July 28, 2020 TORONTO, JUL 28, 2020 – The National Crowdfunding & Fintech Association of Canada (NCFA) today announced that Michelle Beyo, Founder and CEO of Finavator, has joined the Association`s growing Advisory Group to advise on the areas of payments and financial inclusivity. Michelle Beyo is Founder & CEO of Finavator INC, Money2020 RiseUp Alumni, WomeninPayments Global Console & Award Committee Member, FinTech Advisor, CPPO Member, Amazon Prime Docu-Series Associate Producer and Participate on season two of The Social Movement. Michelle started Finavator as she is passionate about payments & financial inclusion. Her background in Telecoms, E-commerce, Prepaid and Loyalty programs nurtures her passion for the world of tech. She has 20 years of extensive industry experience driving innovation across the retail and payments industry. Her most recent roles were as Chief Client Officer for a Blockchain startup focused on consent-based data sharing, Senior Director of Sales and Marketing at InComm, and Director of Loyalty Solutions for Aeroplan Division at International Marketing Company. Her company, Finavator (www.finavator.com), helps Enterprise and Fintech companies present their customers with innovative payment and digital services. Finavator's team has experience and expertise in Payments, Open Banking, Prepaid Solutions, ISO 20022, Challenger Banks, , Affiliate Marketing, Micro Loans, E-Commerce, ...
Read More
Michelle.Beyo 320 - Exploring cryptoasset regulation

 

share save 171 16 - Exploring cryptoasset regulation