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Elizabeth Warren’s Wake Up Call: Iran, Crypto & Controversy

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Senator Elizabeth Warren has raised significant concerns about the lack of anti-money laundering [AML] laws applicable to certain sanctioned countries potentially profiteering by participating as validators in cryptocurrency transactions. In her recent post, Warren posted a scenario to Deputy Secretary of the Treasury Wally Adeyemo inquiring about the possibility of sanctioned nations like Iran being involved in the validation of digital asset transactions.

After Adeyemo’s confirmation, the conversation explored the correlation between the growth of the crypto market with increased revenues for countries like Iran from such digital activities. Adeyemo implied there is a possibility. Following these revelations, Elizabeth Warren suggested implementing a regulatory framework for stablecoins to ensure users comply with AML laws.

Warren’s post received mixed responses with some blaming her insights as exaggerated or misplaced, especially considering the broader and more direct ways in which sanctioned countries might gain financially from interactions with the United States and other nations. Others took on a more nuanced approach.

XRP lawyer John E Deaton acknowledged Elizabeth Warren’s call for a regulatory framework for stablecoins that would bring users under AML laws. However, he proposed that the responsibility of complying with these laws should primarily lie with the stablecoin issuers rather than the users.

By concentrating on the issuer, it will guarantee the presence of necessary safeguards such as FDIC insurance, collateral, and capital prerequisites, limitations on the issuer’s investment of user funds, risk management standards for issuers operating within the US banking system to prevent systemic risk, and additional measures.

Elizabeth Warren’s Post Reflects Over-Scrutiny Of Crypto- Senator Scott

On the other side, Senator Tim Scott argued that digital assets frequently face an excessive level of scrutiny from the current administration, implying that this focus detracts from larger concerns regarding illicit financing. He pointed out the hypocrisy of blaming cryptocurrencies for cradling illicit transactions, citing the U.S. government’s history of transactions with sanctioned nations, such as the $6 billion cash transfer to Iran, which was not facilitated by cryptocurrency.

Elizabeth Warren
Elizabeth Warren's Wake Up Call: Iran, Crypto & Controversy 2

Echoing Senator Scott’s sentiment, Coinbase’s chief lawyer Paul Grewal believed that the debate over digital assets might be hiding larger issues of illicit financing that goes beyond the realm of cryptocurrencies.

Binance Sets Mandatory ID Verification For Users Amid Regulatory Shifts

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Binance, the popular cryptocurrency exchange known all over the world has made a remarkable step to improve user security and compliance with the regulations; the company declared that mandatory identity verification will be established for all users. This comes in the wake of growing regulations in different jurisdictions, particularly amidst allegations of money laundering and tax evasion in Nigeria.

The famous cryptodadaist Colin Wu through his Wu Blockchain X post has brought to light the fact that Binance in its recent move requires every sub-account created under the Binance Link Program to pass a strict process of identity verification. This step also emphasizes the platform’s interest in creating a trading environment that is not only safe but also compliant. All exchange users have until May 20 to provide the necessary Know Your Customer (KYC) documentation, beyond which they will have restrictions on their account.

Binance’s Enhanced Verification Initiative

These strict verification processes show Binance’s proactive approach in dealing with threats associated with financial crimes, for instance, fraud and money laundering. In this way, Binance strives to protect its platform and its clients from the consequences of illegal actions by demanding compliance with KYC procedures, which is in line with its mission to offer a safe and clear trading environment.

Yet, the security measures improvement efforts by Binance happen when the company finds itself in a situation where it is surrounded by a number of regulatory controversies, especially in Nigeria. The Nigerian government accused the exchange of money laundering and tax evasion, thus resulting in the ban of its activities within the country. The arrest of two Binance executives in Nigeria also indicates the extent of the regulatory troubles that the exchange is beset with.

The regulatory difficulties in Nigeria highlight the complex and often inconsistent regulatory environment of the cryptocurrency sector marked by the rapidly changing and sometimes ambiguous regulatory frameworks. Balancing compliance with Binance’s determination to keep its position as a leading cryptocurrency trading platform worldwide should be the most important for this exchange as it copes with these challenges.

Although some positive moves have been made in the direction of improving security and compliance, the reaction of the market was lukewarm. Binance ecosystem’s native cryptocurrency, BNB, slid by 1.69%, with the asset trading at $575.20. Simultaneously, its trading volume narrowed by 0.75%, to $2.22 billion. However, it should be noted that BNB price has shown a remarkable growth of more than 37.25% over the past 30 days which is a high performance in terms of the ongoing regulatory and operational challenges.

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Crypto AML Rules Scrapped From US Defense Bill

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The US government has opted to eliminate two crypto-related provisions from the National Defense Authorization Act (NDAA), a pivotal legislative framework that delineates the allocation and utilization of the defense department’s budget.

The two provisions were aimed at addressing the anti-money laundering (AML) challenges posed by digital currencies, especially the use of anonymous transactions. The first provision would have required the US Treasury Secretary to work with other regulators to establish a risk-based examination and review system for crypto activities of financial institutions.

The second provision would have mandated producing a report on the volume and nature of digital currency transactions linked to sanctioned entities and other countries’ regulatory approaches. The report would have also included recommendations for legislation or regulation relating to the technologies and services.

Crypto Amendments From Previous Bills

The crypto provisions were derived from two previous bills that were introduced in 2022: the Digital Asset Anti-Money Laundering Act and the Responsible Financial Innovation Act.

The former bill sought to enhance the AML and counter-terrorism financing (CTF) framework for digital assets, while the latter bill aimed to prevent another FTX-style incident where the exchange was accused of facilitating illegal trades and market manipulation.

The amendments were proposed by a group of senators, including Cynthia Lummis, Elizabeth Warren, Kirsten Gillibrand, and Roger Marshall. The removal of the crypto provisions from the NDAA comes when the US government is increasingly concerned about the illicit use of digital assets for money laundering and terrorist financing.

On November 15, the Financial Services Committee of the US House of Representatives held a hearing to examine the illegal activities within the crypto ecosystem. The hearing also discussed how the exchanges and decentralized finance (DeFi) platforms comply with the existing AML and CTF regulations.

The US is not the only country grappling with the crypto AML issues. Several other jurisdictions, such as the European Union, the United Kingdom, and Australia, have recently introduced or proposed stricter crypto transaction and service provider rules.

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Cyprus Considers Stricter Crypto Regulations Amid Global Pressure

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In a bid to bolster its reputation as a crypto-friendly destination, Cyprus is contemplating tighter regulations for the burgeoning cryptocurrency industry. The Cyprus Ministry of Finance has proposed significant amendments to the Prevention and Suppression of Money Laundering Law, signaling a shift towards aligning the nation with international anti-money laundering and counter-terrorism financing standards.

According to a recent report by the Cyprus Mail, the Ministry of Finance has submitted its comprehensive amendments package to the Parliamentary Committee on Legal Affairs. This move aims to align with the rigorous guidelines established by the Financial Action Task Force (FATF) and the recommendations outlined in the MONEYVAL report, released in November 2022.

Key among the proposed amendments is the requirement for all crypto service providers to register with the Cyprus Securities and Exchange Commission (CySEC). Non-compliance with these regulations could result in severe penalties, ranging from substantial fines of up to €350,000 to imprisonment for up to five years or a combination of both.

Cyprus Bar Association Concerned About Cross-Border Crypto Rules

The proposed changes have sparked some reservations within the Cyprus Bar Association, particularly concerning the obligation for crypto service providers holding licenses from other European countries to register with CySEC. This provision was included in the amendments at the behest of CySEC itself.

Despite these potential changes, many crypto companies have reported smooth registration processes in the country. In September, the renowned crypto brokerage firm eToro obtained a Crypto Asset Service Provider (CASP) registration from CySEC, following in the footsteps of ByBit, which secured the same license in June.

Notably, Binance, the world’s largest cryptocurrency exchange, withdrew from the Cyprus market in July. This move came as part of Binance’s strategy to focus on larger, more heavily regulated European Union markets amidst increasing regulatory scrutiny.

Cyprus’s contemplation of stricter cryptocurrency regulations highlights the ongoing global trend of governments and regulatory bodies seeking greater control over the digital asset space. As the industry continues to evolve, striking the right balance between fostering innovation and ensuring security remains at the forefront of these discussions. Cyprus’s potential regulatory adjustments testify to the ever-evolving landscape of cryptocurrency regulation on the international stage.

Related Reading: | SEC’s Rhetoric On Crypto Assets Fuel Heated Debates

Singapore Forms Committee to Bolster AML Measures, Crypto Impact Looms

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The Singapore government has embarked on a bold step by forming an inter-departmental committee comprising members from key ministries including MAS [Monetary Authority of Singapore], MHA [Ministry of Home Affairs], MinLaw [Ministry of Law], MOM [Ministry of Manpower], and MTI [Ministry of Trade and Industry]. The committee’s primary mandate is to strengthen anti-money laundering measures. This move is expected to have a significant impact on crypto assets, aligning with the global trend of increased scrutiny of digital currencies and transactions.

Singapore
Singapore Forms Committee to Bolster AML Measures, Crypto Impact Looms 6

In a comprehensive statement recently delivered to Parliament, the government highlighted a three-pronged strategy, encompassing prevention, detection, and enforcement specifically focusing on the real estate and corporate sectors. This comes after Singapore investigated one of its biggest cases of suspected money laundering, in which the value of assets seized stood at over $2 billion.

The seized assets include 152 properties, 62 vehicles, thousands of bottles of liquor, cryptocurrencies, gold bars, and jewelry. In addressing anti-money laundering safeguards in the real estate sector, the Minister highlighted the role of gatekeepers, such as property agents, and developers. He explained the Customer Due Diligence [CDD] checks and the importance of reporting suspicious transactions to the Police.

Singapore’s MAS Defends Crypto Access to FAST System

Moving to the corporate sector, the Singapore minister emphasized putting additional measures for foreign-owned companies, like inquiring into the legitimacy of the entity’s purpose. Moreover, the government has taken steps to ensure the identification of beneficial owners, enhancing transparency and aiding law enforcement agencies in their investigations.

In the realm of digital assets, Singapore has granted operational licenses to cryptocurrency enterprises demonstrating robust AML controls. Some of the leading players that have recently secured full MPI licenses include San Francisco-based blockchain firm Ripple, crypto exchange Coinbase, and Swiss digital asset bank Sygnum.

Singapore
Image Credit: Bitcoin News

Not long ago, a letter in the Financial Times criticized Singapore for allowing virtual asset firms access to the Fast and Secure Transfers [FAST] interbank payment system. Despite the criticism, MAS defended its decision, stating that any entity with a valid banking infrastructure, including crypto businesses, can use the FAST system. MAS firmly denied any connection between the increase in malware scams in Singapore and the cryptocurrency sector. They contended that these scams are more common in the fiat economy, emphasizing that cryptocurrencies are not inherently more vulnerable to fraud than traditional financial systems.

Coinbase’s AML Victory Ignites European Crypto Revolution

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In a significant move for the cryptocurrency industry, Coinbase, one of the world’s leading cryptocurrency exchanges, has obtained Anti-Money Laundering (AML) compliance registration from the Bank of Spain. This development marks a crucial step in Coinbase’s European expansion strategy, granting it the ability to offer its services to both retail and institutional investors in Spain.

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Source: Coinbase Blog

Spanish crypto enthusiasts now have the opportunity to securely store their digital assets on Coinbase while seamlessly trading in euros. This registration ensures that the exchange’s offerings are fully compliant with Spain’s national legal framework, ensuring peace of mind for users and regulators alike.

The timing couldn’t be better, as the appetite for cryptocurrencies in Spain continues to grow. Recent surveys show that nearly 29% of Spanish adults view cryptocurrencies as the future of finance, reflecting a widespread optimism in the country’s crypto landscape. Furthermore, cryptocurrencies have become Spain’s second-favorite payment method, outpacing traditional bank transfers.

Nana Murugesan, Vice President of International and Business Development at Coinbase, emphasized the company’s commitment to global regulatory compliance. Coinbase has been diligently securing Virtual Asset Service Provider (VASP) registrations in various European countries, including Italy, Ireland, and the Netherlands, while expanding its presence worldwide.

This achievement closely follows the approval of another major cryptocurrency exchange, Crypto.com, by the Bank of Spain earlier this year. The momentum in regulatory approvals indicates the growing acceptance and recognition of the cryptocurrency industry within the Spanish financial system.

Coinbase Leads Charge

Coinbase’s expansion in Europe aligns with a broader trend, as it recently made headlines with its attempts to acquire the defunct crypto exchange FTX Europe. This expansion strategy underscores the exchange’s determination to establish a strong foothold in the European crypto market.

However, as cryptocurrencies continue to gain traction globally, concerns over regulatory oversight persist. The European Parliamentary Research Service (EPRS) has highlighted the need for stricter regulatory frameworks for crypto markets outside the European Union. With the Markets in Crypto-Assets Regulation (MiCA) Act on the horizon, the EPRS urges a more rigorous regulatory framework for non-EU jurisdictions to safeguard the EU’s financial system and autonomy.

Coinbase’s AML registration in Spain serves as a pivotal moment not only for the exchange but also for the broader cryptocurrency industry in Europe. As regulatory clarity and acceptance continue to expand, the crypto space is poised for further growth and mainstream adoption on the continent.

Singapore Grants Licenses To Crypto Firms With Strong AML Measures

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In the latest stride against money laundering, Singapore has granted operational licenses to cryptocurrency enterprises demonstrating robust Anti-Money Laundering (AML) controls. The move signifies the MAS’s unwavering commitment to maintaining the highest standards of financial integrity.

Contrary to recent criticisms, MAS asserted that businesses still need to meet the criteria for participation in its FinTech Regulatory Sandbox as cryptocurrency payment providers. Addressing concerns raised in a letter published by the Financial Times, the MAS clarified that Singapore does not possess a dedicated “crypto sandbox.” Instead, the nation boasts a versatile sandbox supporting various fintech innovations.

As per the recent report, the letter chastised Singapore for its purportedly unwise decision to grant crypto companies access to the Fast and Secure Transfers (FAST) interbank payment system. This electronic funds transfer system facilitates seamless dollar transactions between participating entities.

Singapore’s Inclusive Crypto Regulation

MAS stood firm, asserting that any entity equipped with a legitimate banking infrastructure can harness the power of the FAST system, extending this privilege to crypto enterprises. Their resolute position emphasizes inclusivity within the financial landscape, reinforcing accessibility for all sectors, including the burgeoning crypto realm. The regulator underscored, “Payments through FAST are in fiat currencies, not cryptocurrencies.”

The MAS unequivocally refuted a correlation between rising malware scams in Singapore and the cryptocurrency sector. They argued that such scams are more prevalent in the fiat economy, asserting that cryptocurrencies aren’t inherently more susceptible to fraud than traditional financial systems.

“These scams entail fraudsters taking control of customers’ mobile devices and effecting unauthorized transfers through the banking system in fiat currencies.”

The MAS has been actively engaging the public in soliciting feedback on comprehensive regulatory measures designed to mitigate potential risks posed by cryptocurrencies to retail customers. This demonstrates a proactive approach to ensuring a secure and well-regulated environment for crypto-related activities.

Former MAS Chair Tharman Shanmugaratnam, known for his cautious stance on crypto assets, secured victory in Singapore’s presidential race. Shanmugaratnam, who had previously labeled crypto assets as “highly volatile” and “highly risky as investment products,” offered a further indication of Singapore’s nuanced approach towards the crypto sphere. His election is significant in Singapore’s evolving relationship with digital currencies.

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