Month: February 2023

FATF Agrees on Action Plan to Regulate Global Crypto Norms

27. February 2023

• The Financial Action Task Force (FATF) has agreed on an action plan to drive the implementation of its global standards for crypto.
• This includes a stock take of current levels of implementation across the global network and a report regarding the findings due in the first half of 2024.
• The FATF also noted that strong crypto regulation is key to disrupting financial flows from ransomware and other cybercrimes.

Global Crypto Norms

The Financial Action Task Force (FATF) is a global money-laundering and financial crimes watchdog made up of 206 members, including observer organizations such as the International Monetary Fund, United Nations and Egmont Group of Financial Intelligence Units. In their recent plenary meeting, they agreed on an action plan to drive timely implementation of their global standards for cryptocurrency.

Action Plan

The action plan includes taking stock of what countries have been doing so far when it comes to implementing their norms, including their controversial “travel rule” which requires services providers to collect and share information on cryptocurrency transactions. They also noted that strong crypto regulation is key to disrupting financial flows from ransomware and other cybercrimes. A report based on these findings is due in the first half of 2024.

Travel Rule

The FATF published its updated standards for crypto in 2019, but last June, it said only 11 out of 98 surveyed jurisdictions were enforcing the travel rule and urged them to act faster. The travel rule requires services providers to collect and share information about cryptocurrency transactions greater than 1 000 USD or equivalent in value with foreign recipients or senders.

Stock Take

In order to strengthen implementation of FATF standards on virtual assets and virtual asset service providers, a road map was agreed upon by the plenary which will include a stocktake of current levels of implementation across the global network. This stocktake will help monitor progress towards full compliance with all relevant FATF recommendations related to cryptocurrencies worldwide.

Conclusion

Overall, this agreement shows that there is an effort being made by the FATF to ensure that proper regulations are put into place when it comes to cryptocurrencies worldwide in order further disrupt any potential financial flows from ransomware attacks or other cybercrime activities. This could potentially be beneficial for both investors as well as those who use cryptocurrencies as payment methods since it would help create more trust in digital currencies as well as reduce fraudulent activity associated with them.

Paxos Under Investigation by New York Regulator for Stablecoin Issues

13. February 2023

• The New York Department of Financial Services (NYDFS) is investigating stablecoin issuer Paxos.
• Paxos’ stablecoins include the Pax dollar (USDP) and Binance USD (BUSD).
• NYDFS has issued guidance for asset-backed stablecoins, following the collapse of the terraUSD/luna ecosystem.

Investigation into Stablecoin Issuer Paxos

The New York Department of Financial Services (NYDFS) is investigating stablecoin issuer Paxos. The scope of the crypto-related investigation is not yet clear, but NYDFS has issued guidance for asset-backed stablecoins, following the collapse of the terraUSD/luna ecosystem.

Paxos’ Stablecoins

Paxos’ stablecoins include the Pax dollar (USDP) and Binance USD (BUSD), a Binance-branded stablecoin offered through a white-label service. The company holds a virtual currency license – commonly referred to as BitLicenses – issued by NYDFS, as well as a provisional bank charter from the U.S Office of the Comptroller of the Currency in 2021.

Rumors Regarding OCC Application Withdrawal

Recently there have been rumors that suggest that U.S Office of the Comptroller of the Currency may ask it to withdraw its application for a full banking charter, which Paxos has denied. However, an ongoing investigation by a state regulator suggests that this may be under closer scrutiny than its peers may be facing.

Stablecoin Guidance from NYDFS

In June 2020, NYDFS published guidance directed at stablecoin issuers to ensure their stablecoins are fully backed with assets segregated from their funds and regularly attested to by auditors or other third parties. This precautionary measure was implemented after TerraUSD/Luna collapsed in order to prevent similar situations in future cases.

Conclusion

Overall, Paxos is currently under investigaton by NYDFS due to its involvement with certain types of crypto assets such as USDP and BUSD coins. The agency’s recent guidance on asset-backed stablecoins serves as an indication that they are taking steps towards ensuring similar collapses do not happen again in future cases involving cryptocurrency or digital assets managed by companies like Paxos .

Crypto Exchange Bittrex Cuts 80+ Jobs Amid Crypto Market Downturn

5. February 2023

• Bittrex, a Seattle-based crypto exchange, is cutting more than 80 people from its staff due to the “new economic environment”.
• The job cuts come as part of a wider trend across the crypto industry due to falling cryptocurrency prices and the collapse of FTX exchange.
• Since April, more than 29,000 jobs have been lost across the crypto industry.

Bittrex Crypto Exchange Laying Off More Than 80 People

Seattle-based cryptocurrency exchange Bittrex is reducing its staff by more than 80 people, the company confirmed Thursday, citing market conditions. In a leaked email on Twitter, Bittrex CEO Richie Lai told employees that the team had been working “aggressively” to reduce expenses and increase efficiencies but were not successful.

Reasons For Job Cuts

CEO Richie Lai cited the “new economic environment” as the primary reason for the cuts. He said that “the market downturn triggered by multiple failures in the crypto ecosystem became an outright collapse by the end of the year” which led them to reset their strategy and balance their investments with this new economic environment.

Part Of A Wider Trend

The reductions affected at least some employees in most departments across Bittrex and it is part of a wider trend across other exchanges like Gemini and Coinbase who also announced layoffs in January due to sharp declines in cryptocurrency prices and other prominent crypto firms collapsing.

Crypto Industry Job Losses

CoinDesk estimates that since April more than 29,000 jobs have been lost across the crypto industry based on media reports and press releases. These job losses are likely to continue if market conditions don’t improve soon.

Conclusion

The news of Bittrex laying off more than 80 people serves as another reminder that market conditions can drastically affect businesses within this space and highlights how important it is for investors to be aware of potential risks associated with investing in cryptocurrencies.