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Banks And Financial Institutions Can Now Accept Stablecoin Payments According To The OCC

By
Adam Barry
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0

According to the Officer of the Comptroller of the Currency (OCC) banks can now conduct “bank-permissible functions” including payment activities using stablecoins.

Stablecoins accepted as a payment method

The OCC published an interpretive letter addressing regulated federal banks on whether they can take part in independent node verification networks (INVN) or use stable coins. According to the letter the banks can take part as nodes on blockchains and use them to validate payments. The OCC warned that any financial institution participating in an INVN should be wary of the compliance, fraud, and operational risks. Also, the OCC added that INVNs could be more resilient compared to other payment networks because of the large number of nodes required to verify transactions which can be limit tampering.

This is a massive step for the cryptocurrency industry considering stablecoins were initially meant for use as a payment method. With the announcement, banks and financial institutions will now accept and use stable coins as a payment means similar to customers. When Bitcoin was launched in 2008 as a “whitepaper form” the idea behind it was it could be used as a means of payment of goods and services. However, this has been challenging because of the volatility associated with cryptocurrencies.

Banks changing sentiment towards crypto

According to the OCC letter, banks and financial institutions’ intermediary activities have changed in response to the changing economic needs. As a result, banks have adopted new tech to perform bank-permissible activities that include payment activities. These changing financial needs are show by growing demand in the market for quick and efficient methods of payment such as the use of blockchains to validate and records transactions including for stablecoins.

Anderson Kill law firm partner, Stephen Palley opines that he is not surprised by the newfound sentiment in crypto. Palley says that banks have often been slow to adopt new financial tech forms but in the end, they give in. He explains that the same was experienced with the internet and online banking in the 1990s, but at last, they followed protocol.

South Korean Government Gives Timeline For 20% Cryptocurrency Capital Gains Tax Proposal

By
Adam Barry
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0

South Korea will start taxing cryptocurrency trading profits by 20% in 2023. The government issued the amendment introducing taxes on crypto trading profits on Wednesday after several delays on the proposal.

The tax proposal to start working in 2023

According to a report by Asia Today the amendment could be enacted in February and start working by 2023. The proposal introduces a range of taxes on profits with a progressive stocks taxation schedule for gains. The report indicates that crypto holders making an annual income of over 2.5 million won ($2,300) through crypto profits will have to pay 20% tax. Interestingly this threshold is lower compared to stocks where the government will only tax gains of more than 50 million won ($46,000).

However, for crypto owned before the tax schedule begins to work, authorities will consider the higher of the market price before 2023 or the actual acquisition price. The proposal expected last year was delayed severally following lobbying from crypto advocates. This forced the government to push the implementation of the proposal to 20222 but it now seems it has set a date that still accommodates a further delay.

Korean government working on blockchain initiatives

Despite cryptocurrency popularity declining in Korea following the bear market of 2018 demonstrated by the failure of Binance Korea to establish itself, there is still strong crypto adoption. The government has been pushing for a range of blockchain-initiatives in the blockchain voting and digital identity fields. Equally, it has designated Busan which is a major population center as a “blockchain” city even though according to some reports the categorization lacks substance. 

The Korean government has at the same time adopted a firm stance regarding certain classes of digital assets most notably the delisting of privacy coins by local exchanges. It also put Bithumb exchange executives under a probe for alleged fraud.

The proposals from the Korean government comes as Bitcoin value continues to soar having hit the $41,000 mark having rallied over 300% in 2020. Currently, BTC is viewed as some sort of “digital gold” which has attracted institutional investors.

BTSE Launch Privacy-Centric Wrapped Monero On Ethereum Blockchain

By
Adam Barry
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0

BTSE exchange has unveiled a privacy-centric ERC-20 token representing Monero (XMR) on the Ethereum blockchain called Wrapped Monero (WXMR). The launch of the token will give investors access to privacy-centric coins even as exchanges increasingly delist several privacy-centric tokens.

WXMR to offer enhanced liquidity in DeFi

The token whose ticker is WXMR is designed to offer enhanced liquidity to the decentralized finance ecosystem. Monero backs the assets fully on a ratio of 1:1 and secured by BTSE. It is similar to other BTC-backed ERC tokens such as RenBTC and Wrapped Bitcoin (WBTC). British Virgin Island-based BTSE will custody the privacy of WXMR issued on Ethereum blockchain.

In a press announcement, BTSE indicated that WXMR will give Monero holders enhanced flexibility to use their tokens without selling them for stablecoins or Ethereum to leverage opportunities in the DeFi sector. Monero represents one of the cryptocurrencies’ most compelling use cases and its supporters see XMR as meeting one of the main tenets of decentralized networks by guaranteeing privacy.

Although there has been growing adoption of virtual assets such as Ether (ETH) and Bitcoin (BTC), there has been skepticism regarding privacy coins such as Zcash (ZEC) and XRM.  Due to growing concerns about KYC and AML regulations, most exchanges have started delisting privacy coins to avoid coming into crosshairs with the law.

WXMR giving users ways to meet KYC and AML requirements

BTSE indicated that Monero’s greatest strength is its privacy feature often seen as a disadvantage. Therefore holding Wrapped Monero will give users the required transparency to meet KYC and AML requirements which are increasingly becoming omnipresent in cryptocurrency trading. In response to criticism that having a Wrapped Monero could negate its privacy, BTSE said that it doesn’t betray Monero’s privacy since it is an optional way of helping users unlock liquidity without having to sell their Monero.

Going by the wrapped version of Bitcoin then it means the WXMR will give Monero a massive boost. WBTC lets users use BTC as collateral which is a move that has resulted in the DeFi boom.

Bitcoin Custodian Bakkt Could Go Public Through $2 Billion Merger With VPC Impact Acquisition Holdings

By
Adam Barry
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0

Intercontinental Exchange (ICE) owned crypto trading platform, Bakkt could circumvent the traditional initial public offering paths and instead start trading directly on a public exchange. The regulated bitcoin futures platform could go public through a merger with VPC Impact Acquisition Holdings.

Bakkt to go public through $2 billion merger

Bakkt is in advanced talks to merge with VPC Impact Acquisition according to people familiar with the matter. A transaction could cost around $2 billion with an announcement expects as early as next week. Bloomberg published a report on January 7 citing sources claiming that Bakkt could finalize the deal as soon as next week.  However, there have been no comments regarding the merger from either VPC or Bakkt.

VPC which is closely affiliated with alternative investment firm Victory Park Capital is a special purpose acquisition company  (SPAC) which is more of a “blank check” company meant to take other firms public. It is important to note that SPACs help investors in investing in private equities and this potential merger could mean they can easily trade Bakkt shares on the open market. VPC CEO John Martin says that the company’s core strategy is identifying, partnering with, and helping grow businesses in the fintech industry.

Bakkt raised $300 Million last year through ICE

Bakkt launched in 2019 as a platform focused on offering “physically-delivered” Bitcoin futures and options contracts. Last year the platform raised $300 million from ICE as well as other investors and also acquired loyalty programs provider, Bridge2 Solution.  Once a deal is finalized that could mean an exit for current shareholders that have invested around $300 million on the Bitcoin custodian platform. Over the past week, the exchange’s futures drove a trading volume of $286 million. Despite its mammoth valuates, Bakkt is still a humble player in the industry having commenced operations last year after several delays.

David Clifton who is ICE’s VP of M&A and integration is the interim CEO of Bakkt taking over from its outgoing founding CEO, Senator Kelly Loeffler who lost Georgia’s run-off elections last week.

UK Treasury Seeks Clarity On Crypto Regulations Surrounding Stablecoins Following Brexit

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admin
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0

Cryptoassets such as stablecoins could be vital going forward in facilitating cross border payment following the UK’s Brexit. Since the stablecoins fall outside regulatory realms, the UK is looking for ways of having its crypto laws close to other nations besides trying to define stablecoins.

The UK seeks to align its crypto regulations with other nations

As a result, the UK treasury has requested the crypto industry’s contribution o prospective regulation. In an announcement on Thursday of open consultation, the UK’s department for finance policy asked the crypto community to contribute to a series of the crypto regulation proposal. The announcement indicated that the government was inviting views from different stakeholders and more so from crypto assets firms on the proposals.

The UK voted to leave the European Union early last year and the freedom to work and live between the UK and European Union countries ended on New Year’s eve. As a result, there is a dilemma regarding how the country’s cryptocurrency rules should reflect those of other countries in Europe. The UK Treasury is seeking to understand the views of stakeholders regarding the extent to which the country’s approach should be in tandem with regulations in other jurisdictions.

Treasury wants to define stablecoins

Interestingly there is a proposal requiring all firms marketing stablecoins in the UK to have UK registration. The proposal reads, “due to the digital, decentralized and cross-border nature of stable tokens, the government and UK authorities are considering whether firms actively marketing to UK customers should be required to have a UK establishment and be authorized in the UK.”

Additionally, the consultation lays out existing regulations plus the new proposals. According to the Treasury, more focus is on stablecoins that currently don’t have a legal definition in the UK. Among the central proposals is defining what stablecoins entail. However, the Treasury has not proposed tying the new stablecoins definition to underlying blockchain infrastructure. Apart from defining stablecoins, the Treasury has also laid out potential areas requiring regulation including those that operate stablecoins and how they will report reserves. 

Congress Members Question Treasury Secretary Steve Mnuchin’s Rush Of Crypto Proposal

By
Adam Barry
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0

Nine congress members have sent a letter to Treasury Secretary Steve Mnuchin asking for an extension of the comment period for the proposed FinCEN cryptocurrencies law.

Congress members ask for an extension of the comment period

The congress members led by Tom Emmer have told Mnuchin to hold horses as most industry players have complained that the 15 days comment period over the holidays wasn’t sufficient. The legislators were responding to the proposal from the treasury to make registered cryptocurrency businesses hold more information about customers more so when it comes to self-hosted wallet transactions. The legislators have asked Mnuchin to extend the comment period to around 60 days for the proposed KYC regulation. According to the letter a rushed process is likely to threaten the legitimacy of the KYC rule.

The official letter stated, “We write to express concerns regarding the respond process to the FinCEN Notice of Proposed Rulemaking (NPRM) related to requirements of transactions that involved digital or crypto assets.” It further indicated that the congress members are concerned regarding the Treasury’s approach to setting up complex new regulations for reporting and recordkeeping of convertible Digital currency and legal tender crypto transactions. The congress members said that the periods offered to comment on the proposal does not give the American public adequate opportunity to respond.

New KYC proposal wasn’t given a 60-days comment period

There has been widespread outrage from the cryptocurrency period regarding the comment period. Usually, a new rule proposal invites public comment for 60 days but in this case, the Treasury gave a comment period of 15 days. The period expires on Monday which is the reason the legislators have signed the letter. Critics have accused Mnuchin of trying to push the rule weeks before the Joe Biden administration takes office and with his possible replacement, Janet Yellen.

Among the congress members that signed the letter include AI caucus leader Bill foster and Blockchain Caucus members Tom Emmer, Warren Davidson, Darren Soto, Ted Budd, and David Schweikert. Also incoming New Democrat Coalition chair Suzan DeBene, Sen. Tom Cotton, and Tulsi Gabbard signed the letter.

Bittrex Becomes The Latest US Crypto Exchange To Suspend XRP Trading

By
Adam Barry
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0

US cryptocurrency exchange Bittrex popular for listing almost all cryptos has joined Coinbase in delisting all XRP trading pairs following the legal implications surrounding the token after the SEC sued the XRP’s developer Ripple Labs.

Bittrex joins major exchanges in suspending XRP trading

Bittrex’s decision comes as major exchanges in the US scramble to dissociate with Ripple which the SEC is suing for issuing unregistered securities. Bittrex announced that it will remove all XRP trading pairs from its platform effective January 15, 2021. The trading pairs include ETH/XRP, BTC/XRO, USD/XRP, and USDT/XRP.  However, customers will continue accessing their XRP wallet on Bittrex even after the exchange removes the markets.

The decision comes days after Coinbase indicated that it will suspend XRP trading effective January 19, 2021. XRP has nosedived considerably since the US SEC filed a lawsuit against Ripple Labs. The SEC is suing the blockchain company and its CEO Brad Garlinghouse and Chairman Chris Larsen for illegally raising $1.3 billion since 2013 by selling unregistered XRP tokens falling under the category of securities.

Several digital currency exchanges and funds have delisted XRP token from their platforms. The first to delist XRP is CrossTower which did so before the SEC confirmed the suit with other exchanges the following suit. Although it is the small exchanges that reacted first to dissociate with XRP, other big names such as Coinbase and now Bittrex have joined the list.

Ripple claims XRP is not a security

Ripple fire back on Thursday stating that SEC’s move is an “attack” on the company in its attempt to cripple the crypto industry in the US. The company denied that XRP is security as the SEC alleges and added that most of the XRP holders are not US residents. Ripple added that it will continue operating and supporting its products across other jurisdictions.

Despite the assertions from Ripple, that has not helped in boosting investor confidence and XRP shed another 10% to close at $0.2. Before the announcement, XRP was riding high and had hit a yearly high of $0.67 in November.

Cover Protocol Unveils Compensation Plans For Liquidity Providers And Tokenholders Affected By The COVER Token Hack

By
Adam Barry
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0

DeFi insurance protocol, Cover Protocol has come up with a compensation plan for liquidity providers and tokenholders following the recent white hat hack. The company also took a snapshot at block height 11,541,218 as part of the process. This was the last transaction block before the hack began.

Cover Protocol to compensate tokenholders and liquidity providers

Following the hack, a considerable amount of COVER protocol token was minted with the hacker later selling part of the hacked Cover protocol token for around 4,350 ETH which is worth $3 million, and burning the remaining tokens. The hack also returned funds generated for the sake of the token to the developer. The Cover Protocol team has announced refurbishment plans based on a snapshot of block 11,541,218.

The liquidity providers eligible for new COVER tokens include SushiSwap, Unisiwap, and Balancer who will receive new tokens depending on their liquidity pol shares on those platforms. Uniswap and SushiSwap liquidity providers will also receive a share of Ether (ETH) that the white hat hackers like Grap.Finance returned.

Cover Protocol has also revealed that the compensation plans will see tokenholders receive new tokens on a 1:1 ratio relative to their previous wallet balance. While commenting on reimbursement of tokens held in centralized exchanges, the peer-to-peer coverage market stated that they are working with the exchanges to give users that were holding COVER tokens in their balances at the 11,541,218 block the exact number of tokens they held.

Binance to compensate users affected by the COVER hack

Binance crypto exchange has indicated that it will recompense users whose tokens became worthless following the hack. The exchange announced the plan on Thursday revealing that the $10 million compensation will be from its SAFU Fund that will be split between Ether and Finance USD (BUSD). The exchange said that it reached the decision considering most of the affected Binance customers were not covered by the Cover Protocol compensation plan. Binance has promised to reimburse around 2,581.16 ETH and 8.17 million BUSD for a total of around $10.1 million. 

Binance and eToro Join Cryptocurrency Exchanges In Delisting XRP Trading Following SEC Lawsuit Against Ripple

By
Adam Barry
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0

The number of US crypto exchanges suspending XRP token trading continues to increase following SEC’s lawsuit against Ripple Labs, the token developer. After the like of Coinbase, Bittrex, OkCoin, and Crypto.com which suspended XRP, Binance exchange, and digital currency trading service eToro are the latest to join the list of platforms suspending XRP trading in the US.

eToro and Binance delist XRP

eToro released a statement on Thursday stating that its customers in the US will not be trading XRP as of January 3, 2021. The platform indicated that users with existing trade have around three weeks from January 3, to close all open positions. On the other hand, Binance US said that it will delist XRP trading effective January 13, 2021, but withdrawals will remain unaffected. The exchange said that the delisting process will not impact the claims for Flare’s Spark (FLR) token airdrop distribution occasion.  Coinbase which had early halted XRP trading for US traders on its platform is subject to a suit from an unhappy trader accusing the exchange of selling XRP knowingly as an unlicensed security token.

The move by crypto exchanges comes in the wake of SEC’s enforcement action against Ripple Labs. SEC is suing the company for violating securities laws by selling XRP as security despite not registering it or seeking its exemption as a token. Ripple currently holds 50 billion XRP in escrow and its Chairman Chris Larsen and CEO Brad Garlinghouse have sold over $1.3 billion in XRP in the last six years.

Investment companies also dumping XRP

Besides the suspending or delisting of XRP trading by the exchanges, US-based investment companies holding XRP positions have also started liquidating their XRP holdings. For instance, crypto-asset manager Grayscale liquidated recently around $5.77 million worth of XRP. At the beginning of December 2020, Bitwise Asset Management also liquidated all its XRP holdings and removed XRP from the Bitwise 10 Crypto Index fund.

Ripple has said that it will fight back calling the allegations unproven with its Garlinghouse saying the SEC action benefits china directly.

BitGo Agrees $98,830 settlement With The US Treasury For Facilitating Transactions In Sanctioned Regions

By
Adam Barry
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0

Cryptocurrency firm BitGo has reached a settlement with the US Treasury over charges that the company facilitated transactions through its crypto wallet of users in sanctioned jurisdiction from 2015 through 2019.

OFAC fines BitGo for violations of the sanctions program

According to the Treasury’s Office of Foreign Assets Control (OFAC), the company failed to conduct due diligence to block crypto wallet users from sanctioned areas such as Cuba, Iran, Crimea, Syria, and Sudan. OFAC states that the company apparently violated sanctions programs and processed around 183 cryptocurrency transactions totaling around $9,130 from these sanctioned jurisdictions.

A statement from the office stated that BitGo didn’t conduct due care or caution of sanctions compliance obligations by apparently failing to prevent individuals in sanctioned regions from opening accounts and sending crypto through its platform. OFAC says that the company failed to implement necessary, risk-based sanctions regulatory controls.

Treasury maintains that the 183 transactions were “apparent violations” of its sanctions program because the company knew where the users were located through their IP address. However, BitGo deliberately failed to apply compliance controls. Since the company failed to voluntarily self-disclose these “apparent violation” it now has to pay a fine of $98,830 to settle its civil liability.

Penalty for sanctions violation can be up to $53 million

OFAC indicated that penalties for such offenses can be up to $53 million. If the case had gone to court the civil penalty could have between $183,000 and $53 million However BitGo’s case is “non-egregious” because the institutional cryptocurrency wallet operator cooperated with investigators and took steps to correct the same by hiring a compliance officer.

The OFAC action is an important warning to other crypto firms that Treasury will be closely looking at their services. The action demonstrates that all crypto companies offering crypto services just like other financial service providers should take the sanctions programs seriously. They should beware of associated risks with offering their services to sanctioned jurisdiction and must take necessary controls to mitigate the risks. US regulators have increased scrutiny on crypto companies indicating that they need to know their customers.

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