During the US House Financial Services Committee meeting on September 30, the chairman of the Federal Reserve, Jerome Powell, confirmed that he doesn’t have any intention to ban private cryptocurrency.
For months now, many US crypto investors have been concerned that the government could ban bitcoin and other cryptocurrencies on the issuance of a central bank digital currency, as seen with China. This was based on Powell’s comment in July, where he precisely said: “You wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital US currency.”
However, in the recent meeting, Powell claimed he had “misspoken”. In his words, there is “no intention to ban” cryptocurrencies in the US; however, stablecoins need to be regulated.
Stablecoins are like money market funds, they’re like bank deposits, but they’re to some extent outside the regulatory perimeter, and it’s appropriate that they be regulated.
Jerome Powell, US Federal Reserve chairman
China Took a Different Approach to Crypto
Evidently, the Chinese government’s approach to crypto is similar to the previous statement made by the US FED chairman. While China is in the pilot phase of testing its long-planned central bank digital currency, it has prohibited the trading, investing, and use of private cryptos in the country. Several mining pools and exchanges have ceased supporting users from China following the latest announcement by the central bank.
Nevertheless, the crypto market was pleased with Powell’s clarification, as bitcoin and other crypto began to spike thereafter. Just a day after the FED chairman clarified his previous statement, the price of bitcoin spiked to nearly US$48,000, resulting in the liquidation of over US$47 million short positions within an hour.
Melbourne, September 30, 2021: Australia’s longest-running cryptocurrency exchange CoinJar has become one of the first in the world to be officially registered by the UK’s Financial Conduct Authority (FCA) as a Cryptoasset Exchange Provider and Custodian Wallet Provider, as per the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs).
CoinJar, which is based in Melbourne, is now advocating for a similar licence to be implemented in Australia to help build corporate and consumer confidence and monitor cryptocurrency businesses at large.
The UK is a world leader in fintech and a progressive regulator, so we are very pleased to have received this recognition as part of our commitment to offering people a safe and positive experience of buying and selling digital currencies. With the establishment of the UK-Australia Fintech bridge, we hope that a similar scheme is replicated here via ASIC and AUSTRAC, with learnings from the two-year process taken into account.
Asher Tan, CEO, CoinJar
Tan continues: “As the industry grows and innovates at a rapid pace, it’s vital that legitimate businesses are nurtured further while cowboy operators are swiftly removed to prevent reputational damage to the industry caused by consumer scams and fraudulent behaviour. Cryptocurrency is not the Wild West, it’s here for good. Regulation brings long-term certainty and a wealth of investment and job opportunities to the market.”
With CoinJar embracing innovation and regulation in equal measure, it has been collaborating with the government on future legislation through industry-led submissions. CoinJar is a member of Blockchain Australia, which champions the adoption of blockchain technology by industry and governments across the country, as well as Fintech Australia, the country’s peak advocacy body for fintech.
Tan continues: “While we are willing, ready and organised for cryptocurrency regulation in Australia, until it is brought into effect we aim to set the benchmark for best-practice in self-regulation by adhering to the spirit of the FCA obligations on home soil.”
The FCA approval means that CoinJar will be an attractive partner for more companies and neobanks. Following the recent launch of the CoinJar Card Mastercard, which allows users to spend the crypto in their wallet like cash, online and in-store, a number of ASX 500 partnerships are currently being finalised. A range of new products is also set to be unveiled this year, including a white label service for businesses that will provide state-of-the-art backend digital currency processing.
Last week, CoinJar made its AFL Grand Final debut through its partnership with the Melbourne Demons, whilst in London, it has signed a sponsorship agreement with Brentford Football Club, who have made a winning start in their debut English Premier League season.
Earlier this week, two of the 12 regional Federal Reserve Bank (Fed) presidents resigned following disclosures about insider trading activity in 2020, a year characterised by a waft of sweeping economic policies driven largely by the Fed. The irony of the situation was not lost on crypto Twitter.
Fed officials & many congresspeople do insider trading on the regular.
Many life long politicians are mega-wealthy due to their proximity to the money printer.
Those claiming insider trading argue that both officials helped implement policies which which they are likely to have known would benefit themselves.
In an official press release, the Boston Federal Reserve noted that president, Eric Rosengren, would retire. Interestingly, it cited health reasons. Hours later, the Dallas Federal Reserve Bank issued a notice saying that its president, Robert Kaplan, was leaving to “eliminate any distraction” relating to his personal investment activities.
As per official disclosures, both officials traded in securities while determining the nation’s monetary policy. Rosengren was active in the real estate sector which raised suspicion, particularly after some of his comments relating to the overheated housing market. Kaplan it appears was more brazen, making multiple million-dollar trades in individual equities in 2020 including Apple, Amazon and Delta Airlines.
Sven Henrich, an outspoken market commentator, pulled no punches:
If you get caught insider trading you lose your job & may end up in jail. Except when you are a Fed governor. Then it's legal.
Some may say it's not only ridiculous, but also unethical & worse, using your position to enrich yourself.
If you are tuned into the macroeconomic environment, you’ll know that crypto is often on the receiving end of persistent fear, uncertainty and doubt (FUD) promulgated by those in power who stand to lose the most from its global adoption. The response to this scandal within the Fed was therefore predictable:
Don’t ever forget the Fed had two presidents “quit” yesterday bc of how damning the evidence of their insider trading was, and Gensler doesn’t want you to get 4% on a crypto savings account.
Reddit users had similar feelings on the matter, mostly entirely predictable:
Crypto users would probably be the first to admit that insider trading is not limited to traditional markets. Recently, OpenSea confirmed that a product manager was frontrunning NFT launches to flip them for a tidy profit.
But still, for the average person, it is likely far more concerning that those in charge of a nation’s monetary policy are front running retail investors. Events like these erode what little trust is left in traditional institutions such as the Fed. It’s no wonder that so many have turned to crypto, particularly when faced with record inflation despite persistent claims that it is “transient”.
On Friday, September 24, the People’s Bank of China (PBOC) issued a notice effectively banning a host of crypto-related activities, including trading. For those keeping count, this is now the 19th occasion that China has either banned or restricted crypto. Chances are it won’t be last.
If this is your first China #bitcoin#crypto ban then understand 👇 1 China has been trying and failing since 2013 2 no one can shut crypto down 3 China bans all the cool stuff, just makes it cooler 4 this too shall pass 5 this dip will be slurped deeply by those in the know
The PBOC claims that “virtual currency trading hype activities have risen, disrupting economic and financial order, breeding illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering”.
Activities that are prohibited include: running an exchange, trading coins and tokens (including overseas exchanges), issuing tokens, and providing financial services to businesses that use virtual currencies.
Tellingly, the notice euphemistically speaks of strengthening “management of Internet information content and access related to virtual currency”. Others call that censorship.
The ‘China Bans Crypto’ Meme
Each time that China bans crypto, it appears to have an increasingly reductive effect. So much so that it has become somewhat of a meme:
With the latest news, close to US$200 billion was wiped off the crypto market though most of the losses have since been regained as at the time of publication. Interestingly, decentralised exchange tokens proved to be beneficiaries of the ban with UNI’s 20 percent gain leading the charge.
Crypto market cap illustrating the drop and recovery. Source: Coinmarketcap
Experienced crypto investors have however seen this movie before and aren’t selling.
#BTC investors who have been in the market for a while have heard many different iterations of FUD from China
But newer investors, unarmed with this experience, are the ones who are affected most
Their panic selling is what is fuelling this recent downside#Crypto#Bitcoin
Rather than viewing this latest ban as a systemic risk, most investors are considering it as an opportunity to buy the dip as historically that has proven to be a rewarding strategy in the long run.
The same thing happened in September 2017. China said they were banning #Bitcoin and it dropped by over 30%. But #BTC made a full recovery in few weeks then hit new all time highs in December that year.
Allan Flynn, a trader and owner of local exchange BitcoinCanberra, is claiming A$250,000 from two of Australia’s biggest banks after they terminated banking services with him on the basis that he operated a crypto trading platform.
According to the Sydney Morning Herald, Flynn will now have his day in court so to speak. His matter has been scheduled for next month before the ACT Civil and Administration Tribunal’s Discrimination Tribunal where he will argue that both ANZ and Westpac breached his human rights and discriminated against him on the basis that he was a crypto trader and offered trading services to his clients.
Flynn, as the applicant, seeks compensation from the respondent (the banks) for discrimination by reason of his occupation or profession, contrary to the Act, and claims that the respondent(s) refused to provide banking services to him because he is a cryptocurrency dealer or exchanger, in direct violation of his human rights
The applicant holds a ‘protected attribute’ within the meaning of …the Act because he is a cryptocurrency trader; and cryptocurrency trading is a ‘profession, trade, occupation or calling’.
Richard McGilvray, Flynn’s solicitor, from law firm Lexmerca
A successful claim is likely to have implications not only for the crypto sector, but also those that have routinely suffered debanking, specifically those in the adult entertainment industry.
Regulatory Clarity Needed
The timing of Flynn’s case is opportune, considering the recent hearings before the Select Committee on Australia as a Technology and Financial Centre where it was revealed that Australian crypto businesses were being ‘debanked’ by written notice without the ability to appeal.
As Australia increasingly moves towards becoming a cashless society, there may be growing arguments in favour of including banking as a human right. While this may appear counter-intuitive at face value, how does one expect citizens to operate within an economy if they are denied access to banking or cash?
Some would say crypto is the solution. However, as long as digital assets are considered by the ATO as property (and not cash), the punitive tax consequences, accounting administration and inconvenience of using crypto far outweigh any potential transactional benefits.
Much like the experiences of crypto brokerage businesses such as Bitcoin Babe, Flynn says he has been debanked more than 60 times. Remarkably, the banks have gone as far as terminating financial services of his relatives:
Another bank closed my brother’s term deposit account without warning only for the fact that I was a signatory, for family oversight purposes.
Allan Flynn
While banks have a legitimate interest in complying with their statutory anti-money laundering (AML) and counter-terrorism financing (CTF) obligations, there is a growing sense that alternative forces such as hindering competition may be in play.
Flynn’s case is scheduled to be heard in late October. The Senate Committee’s final report is also due around that time. Hopefully, by the end of 2021, we’ll have a coherent and sensible regulatory framework.
Leading cryptocurrency exchange Coinbase has suspended its plans to launch a high-yield lending product, called Lend, after the US Securities and Exchange Commission (SEC) threatened the company with a lawsuit.
As Crypto News Australiareported earlier this month, Coinbase announced plans for launching Lend but the company immediately received a warning from the SEC, which viewed the product as a “security”.
The SEC told us they consider Lend to involve a security, but wouldn’t say why or how they’d reached that conclusion. Rather than get discouraged, we chose to continue taking things slowly. In June, we announced our Lend program publicly and opened a waitlist but did not set a public launch date. But once again, we got no explanation from the SEC. Instead, they opened a formal investigation.
In a series of tweets, Coinbase CEO Brian Armstrong expressed his frustration as to why the SEC didn’t disclose the reason it viewed the lending product as a security.
6/ They refuse to tell us why they think it's a security, and instead subpoena a bunch of records from us (we comply), demand testimony from our employees (we comply), and then tell us they will be suing us if we proceed to launch, with zero explanation as to why.
Coinbase to Submit a Regulatory Proposal, Confirms COO
The Twitter thread sparked rumours about Armstrong working on a regulatory proposal submitted to the regulatory institution. These rumours were confirmed by Coinbase COO Emilie Choi, who also expressed her concerns for the lack of regulatory certainty in the US.
We are regulated by more than 50 regulators right now, [though] I think it’s actually much more than that. If we’re struggling with this, then what is your audience going to be able to do?
Emilie Choi, COO, Coinbase
By “audience” Choi was referring to other crypto companies that are under scrutiny for their lending offerings, some of whom have complied after cease and desist letters from US authorities. The regulatory proposal will have a series of pillars to make it fair for all parties, among them fairness and regulatory clearance.
We just want to make sure that there’s an even playing field, and when we talk about that, I’m talking about traditional financial services and crypto. There should be even playing fields in these different industries.
Emilie Choi, COO, Coinbase
A month ago, several US legal firms joined forces to file class action lawsuits against Coinbase and its executives, including Armstrong, and other officers, for “securities fraud” in relation to Coinbase’s public listing in April.
A bitcoin ATM was burned and defaced with anti-BTC messages that read “democracy is not for sale” as protesters demonstrated resistance towards El Salvador’s pro-crypto President Nayib Bukele.
Protesters destroyed the Chivo machine in the Plaza Gerardo Barrios, located in the nation’s capital city centre. The government has installed 200 BATMs throughout the country as part of the reform to allow bitcoin as legal tender as El Salvador implemented the Central American republic’s Bitcoin Law on September 7.
Thousands of pro-democracy Salvadoreans took to the streets to protest against the government’s acceptance of cryptocurrency. The September 15 demonstration coincided with the bicentenary of El Salvadorean independence.
Protesters marched through the central square in San Salvador holding placards reading “Respect the Constitution” and “No to Bitcoin”, denouncing a perceived dictatorship.
The Australian government has passed its new amendments to the Surveillance Legislation Bill, giving the Australian Federal Police (AFP) and the Australian Criminal Intelligence Commission (ACIC) new powers over online accounts and communication. This has spurred various ethics and law groups to comment on the rationality of the bill.
The Surveillance Legislation Amendment (Identify and Disrupt) Bill 2020 was revised and amended earlier this month, giving the AFP and ACIC powers to surveil, intercept data, and alter data online.
Concerns have been raised by various groups and, according to the Human Rights Law Centre, the bill has insufficient safeguards for free speech and press freedom.
Given the powers are unprecedented and extraordinarily intrusive, they should have been narrowed to what is strictly necessary and subject to robust safeguards. That is why the committee unanimously recommended significant changes.
Kieran Pender, senior lawyer, Human Rights Law Centre
New Updates to Surveillance Legislation
Data disruption warrant: gives police the power to “disrupt data” by modifying, copying, adding, or deleting it.
Network activity warrant: allows police to collect intelligence from devices or networks used, or likely to be used, by those subject to the warrant.
Account takeover warrant: allows police to take control of an online account (eg, social media) for the purposes of gathering information for an investigation.
The two Australian law enforcement bodies will soon have the authority to modify, add, copy or delete your data should you become a suspect in the investigation of a serious crime.
It is alarming that, instead of accepting the committee’s recommendations and allowing time for scrutiny of subsequent amendments, the Morrison Government rushed these laws through Parliament in less than 24 hours.
Kieran Pender, senior lawyer, Human Rights Law Centre
The wording enables police to investigate any offence that is punishable by imprisonment of at least three years, including terrorism, sharing child abuse material, violence, acts of piracy, bankruptcy and company violations, and tax evasion.
In fact, refusing to comply could see offenders end up in jail for up to 10 years, according to the new bill.
Australian Privacy Projects Voice Concerns
The Australian surveillance bill has been heavily criticised by Senator Lidia Thorpe, the Greens spokesperson for Justice:
The Richardson review concluded that this bill enables the AFP and ACIC to be ‘judge, jury and executioner’. That’s not how we deliver justice in this country. The bill does not identify or explain why these powers are necessary and our allies in the US, the UK, Canada and New Zealand do not grant law enforcement these rights.
Senator Lidia Thorpe, Greens spokesperson for Justice
Enabling law enforcement agencies to modify potential evidence in a criminal proceeding is also a major issue of concern.
Under the Identify and Disrupt Bill, access can be gained to encrypted data that could be copied, deleted, modified and analysed even before its relevance can be determined. This significantly compromises users’ privacy and digital rights.
What’s more, legal hacking by law enforcement may make it easier for criminal hackers to illegally access computer systems via the same vulnerabilities exploited by the government.
How to Protect Yourself Using Privacy Apps
Due to insufficient safeguards contained within the recently passed Identify and Disrupt Bill, Australia is failing to uphold its commitment to protect the privacy of its citizens. This means that individuals need to find ways to secure their own privacy through the use of technology such as decentralised services.
Many of these already exist, but Melbourne-based Oxen is a private messaging, anonymous web browsing and instant, private transactions project with privacy and security at its core.
A global network of staked Oxen Service Nodes power Oxen’s second-layer privacy tools and services, including Session, the end-to-end encrypted anonymous messenger.
Decentralisation is at the heart of Session’s design. The service has 1,500 community-operated servers that are currently routing Session messages for more than 200,000 users across the globe.
No other app can do what a private messenger does.
Blink, Oxen’s instant anonymous payment mechanism, powers instant transactions with absolutely no privacy or security compromises.
As methods for surveillance become more prevalent through the internet and financial channels, individuals who value their privacy are moving toward technologies such as these to avoid surveillance as far as possible.
The US Securities and Exchange Commission (SEC) has threatened to sue cryptocurrency exchange Coinbase if it proceeds to launch its planned Lend program. Following the development on September 8, the price of the NASDAQ-listed shares of Coinbase ($COIN) dropped markedly.
1/ Some really sketchy behavior coming out of the SEC recently. Story time…
Coinbase planned to launch the Lend program to the public in a few weeks. Lend is an interest-earning service that will enable qualified users to lend USDC stablecoin and passively earn about four percent APY. “But today, all we know is that we can either keep Lend off the market indefinitely without knowing why or we can be sued,“ the exchange wrote in a recent blog post.
In a bid to maintain its proactiveness with the regulator, Coinbase reached out to the SEC, providing information about the product before launch. However, the SEC concluded that Lend was a security “but wouldn’t say why or how they’d reached that conclusion”.
6/ They refuse to tell us why they think it's a security, and instead subpoena a bunch of records from us (we comply), demand testimony from our employees (we comply), and then tell us they will be suing us if we proceed to launch, with zero explanation as to why.
Coinbase continued to slowly prepare Lend for public launch while also trying to engage the SEC on how it concluded the offering to be a security. This caused the SEC to issue a Wells notice, which is an official way it notifies a company that it is planning to bring an enforcement action.
Shutting these down would arguably be harming consumers more than protecting them, and by preventing Coinbase from launching the same thing that other companies already have live, they’re creating an unfair market.
Brian Armstrong, Coinbase CEO
Coinbase shares slumped by 4.1 percent to US$256 on NASDAQ following the development. At the time of writing, COIN was down 0.69 percent to US$256.42.
At hearings before the Australian Senate Committee on September 8, several domestic crypto-related businesses shared their experience of financial institutions denying or terminating banking services without notice, or offering up any reason for doing so.
‘Debanking’ is a relatively new phenomenon that is not well known among the broader population. Quite simply, it’s the process whereby financial institutions, usually retail banks, decide for whatever reason to terminate services to a particular customer.
Banks tend to be risk-averse and often claim they are merely complying with their statutory anti-money laundering (AML) and counter-terrorism financing (CTF) obligations. In Australia, under the Anti-Money Laundering and Counter-Terrorism Financing Act, 2006, failing to do so carries a maximum penalty of up to A$22.5 million per breach.
Transparency and Communication Lacking
The common denominator underlying many of the complaints was a lack of transparency and communication.
Rebecca Schot-Guppy, CEO of Fintech Australia, told the Senate Committee that around 150 of her organisation’s members were debanked without reason or the ability to appeal. A local remittance business, Nium, described its position:
Nium has bank relationships in 40 countries around the world and yet Australia is the only market where we’ve been debanked.
Michael Minassian, VP, regional head of consumer business, Australia & Oceania, Nium
Bitcoin Babe founder Michaela Juric told the committee her banking services had been terminated 91 times since founding her crypto brokerage business seven years ago. Remarkably, even some of her family members were affected, making it difficult to access everyday utilities such as internet, electricity, water and insurance.
Local brokerage Aus Merchant was debanked four times over the past year, leading managing director Mitchell Travers to conclude that anti-competitive practices might indeed have been the real reason for the banks’ actions.
With the sort of anti-competitive nature of the banks, it’s somewhat buying them time…It could be considered a stopgap for them as they sort of educate and find a way to enter the space in a more profound manner.
Mitchell Travers, managing director, Aus Merchant
Senator Andrew Bragg, chair of the Senate Committee, acknowledged the issues raised but was quick to distinguish debanking within crypto from the remittance industry in general.
There are a range of reasons, including a lack of regulation, driving debanking in crypto, which is something this committee can help solve. In relation to remittance, I suspect there are anti-competitive drivers behind that, as banks have had a monopoly on ripping people off for remittances forever. Both of these issues are solvable, but they will require different tools.
Senator Andrew Bragg, Senate Committee chair
Hearings continue in the hope of gaining further insight into this matter. On the plus side, it appears as if the Senate Committee is committed to providing clarity on how crypto and other fintech businesses can work with traditional financial institutions going forward.
