Category: Regulation

Categories
CBDCs Crypto News Cryptocurrencies Regulation

Bahamas to Allow Citizens to Pay Taxes with Digital Assets

Citizens of the Bahamas will be able to pay their taxes using cryptocurrency, as per this week’s release of a white paper from the Bahamian government.

Bahamian Government Pushing Broader Crypto Adoption

The government will allow Bahamians to pay taxes by collaborating with the nation’s central bank as well as the private sector. It will also encourage broader adoption of the nation’s CBDC (Central Bank Digital Currency) and access to crypto through the Bahamian Dollar.

The government will endeavour to ensure that digital assets are not used for the evasion of taxes or sanctions, and will seek to ensure compliance with all applicable tax information exchange agreements (TIEA) and domestic laws and agreed OECD standards.

Bahamian government white paper

The white paper outlines the island nation’s strategy to become a “leading digital assets hub in the Caribbean” from now until 2026, according to Bahamian Prime Minister Philip Davis. As part of the plan, the government will establish a digital asset policy committee and a digital advisory panel, with the latter chaired by Davis:

Caribbean Crypto Paradise

The Bahamas was one of the first to implement proper regulations for the digital assets landscape. In 2020, the government created the Digital Assets and Registered Exchanges Act (DARE), allowing crypto companies to operate legally within the nation.

Some of the policy objectives outlined in the white paper are seeking to improve the attractiveness of the Bahamas as a well-regulated jurisdiction and to explore new opportunities in the digital assets landscape.

A few months ago, Crypto News Australia reported that the Tourism Authority of Thailand (TAT) was looking to attract crypto millionaires to revive visitor numbers to an industry adversely affected by the pandemic.

Categories
Australia Banking Crypto News ETFs Regulation

Australian Regulator Lays Out Crypto Industry Regulatory Roadmap

The Australian Prudential Regulation Authority (APRA) this week revealed its preliminary risk management expectations for regulated entities dealing with crypto assets, along with a policy roadmap for the next three years.

The roadmap outlines plans to introduce operational risk standards by 2024 and, tentatively, crypto asset requirements and stored value facility standards by 2025. APRA also announced that it would be looking at “possible approaches to the prudential regulation of payment stablecoins, among others”.

Need For Due Diligence and Risk Assessments

APRA, which supervises Australian banking, insurance and superannuation institutions, stressed the need for due diligence and risk assessments in a letter from chairman Wayne Byres.

APRA chairman Wayne Byres. Source: theislanderonline.com.au

In the letter, APRA specifies that regulated entities:

  • consider the principles and requirements of prudential standards when relying on a third party in conducting activities involving crypto assets; and
  • apply clear accountabilities and relevant reporting to the board on the key risks associated with new ventures.

Financial Watchdog Also Bares Its Teeth

Along with APRA’s prescription, the Australian Transaction Reports and Analysis Centre (AUSTRAC) – the country’s financial watchdog – released its own set of guidelines on preventing the criminal abuse of digital currencies. 

This follows a statement released late last year by AUSTRAC in which it directed Australian banks to adopt better systems to deal with assessing risk rather than simply debanking customers. “Businesses vulnerable to exploitation should not automatically have their accounts closed simply to avoid managing risk,” AUSTRAC said at the time.

And in July 2021, the Australian Securities and Investments Commission (ASIC) set out a range of proposals relating to the inclusion of cryptos in exchange-traded products (ETPs), seeking market participants’ input to shape its position within the regulatory landscape.

This week also saw ETF issuer 21Shares announce Australia’s first spot exchange-traded funds.

Categories
Australia Banking Crypto News Cryptocurrency Law Regulation Scams

AUSTRAC Releases Guide to Detect and Prevent Illicit Crypto Activity

The Australian Transaction Reports and Analysis Centre (AUSTRAC) published two guides this week with hopes of helping Aussies detect and prevent illicit crypto activity.  

Focus on Ransomware, Debanking

AUSTRAC is helping companies identify when their customers are being forced to take part in paying ransomware creators or illicitly engaging with crypto. This assistance comes in the form of two guides and a warning that debanking customers without evidence is a harmful practice.

In what can be considered another positive step the government is taking to embrace cryptocurrency, the financial watchdog has been prompted to act after a recent increase in ransomware-related attacks and cases of debanking.

https://www.linkedin.com/in/stevevallas/overlay/photo/

Open dialogue, pro-active guidance, and strong relationships between government and industry are necessary to ensure businesses can identify and report behaviour that puts Australians at risk of harm.

Steve Vallas, Blockchain Australia CEO

The release of these documents follows guides from the Australian Securities and Investments Commission (ASIC) and AUSTRAC’s critical infrastructure bill.

ASIC and AUSTRAC Go After Scammers and ‘Finfluencers’

AUSTRAC and ASIC began investigating scammers deceiving crypto investors in March 2021. The investigation discovered that British scammers were stealing millions of dollars of crypto from Aussies.

The latest AUSTRAC guides come only weeks after ASIC released its guide warning Australian ‘Finfluencers’ of impending tighter regulations.

Categories
Australia Crypto News Regulation

Australian Blockchain Start-Up ‘Lygon’ Secures $12.75 Million from Major Banks

‘Lygon‘, a blockchain start-up created as a joint venture between three of Australia’s ‘Big Four’ banks, IBM, and retail conglomerate the Scentre Group, has secured an additional A$12.75 million in its latest round of funding.

Lygon, the creator of the world’s first digital bank guarantee, was founded after its corporate partners realised they needed to collaborate to solve a problem that has caused significant inefficiencies over decades: 200-year-old paper bank-based guarantees.

Process Reduced From a Month to a Day

Guarantees are common commercial contracts in which banks vouch that a customer is able to repay a debt, and they are still regularly used in the commercial property industry. Lygon suggests that it has turned the “paper-based, slow and costly” process into digital form and can thus reduce the time it takes to issue a bank guarantee from one month to one day.

According to Lygon chairman Nigel Dobson, “The commercialisation of the Lygon platform represents a significant milestone for blockchain technology in Australia and globally.” He added:

We’ve gone from a proof-of-concept to a newly incorporated company and commercially available platform in two years – at a time when the demand for digital has never been stronger.

Nigel Dobson, chairman, Lygon

Traditional Guarantees Eat Up 80,000 Courier Deliveries and Four Tonnes of Paper Annually

The paper-based nature of guarantees slows down processing, causing logistical problems for companies such as Scentre, and Lygon has estimated that bank guarantees currently require 80,000 courier deliveries each year and use four tonnes of paper.

Based on IBM’s Hyperledger technology, the Lygon innovation will allow ANZ, Westpac and the Commonwealth Bank to store their instruments on one platform that can be accessed by multiple users.

Lygon’s Capital Pushes It into New Sectors

Lygon originally set out to raise A$10 million, but chief executive Justin Amos said it increased the capital target due to higher than expected demand from backers. The extra funding will be used to hire more staff (at least 30 more this year), fund research and development work, and push into new industries such as insurance and environmental, social and governance.

Lygon is also working on digitising rehabilitation bonds, commonly used in the mining sector and designed to ensure government has funds to restore a mine, exploration site or quarry if an operator fails.

According to Amos, “We have a built, fit-for-purpose bank guarantee platform, but our customers are coming to us and saying they want us to do more.” He added:

[The Lygon innovation is] a game-changer from a customer experience perspective. In terms of [traditional] bank guarantees, they were paper-based systems that are not good for anyone. They’re expensive, prone to delay, and there is operational fraud everywhere.

Justin Amos, CEO, Lygon

Australian Banking Industry Needs to Back Blockchain

As interest in cryptocurrencies and blockchain technology surges in Australia and the world over, the crypto community fears that outdated regulations may prevent businesses and investors from getting involved. Recently, the Australian Prudential Authority revealed it was in the final stages of drafting a letter to the country’s financial institutions that will outline its expectations for the future of digital assets.

Categories
Bitcoin Crypto News Regulation

Brazil Inches Closer to Passing Historic Bitcoin Bill

Brazil has edged one step further to regulating Bitcoin and cryptocurrencies. The South American country will be overseen by a more complete regulatory framework as different sectors of the government strive to pass an amended draft bill in the first half of this year.

Regulation of Bitcoin and other cryptocurrencies might come sooner than first thought as the draft bill creeps closer to law. Originally, there were two separate draft bills being discussed in parallel, but only one will keep advancing – the House Bill 4401/21.

First Round Approval for Legislation

The legislation, which has been the subject of talks in the Chamber of Deputies since 2015, has been approved in the first round of consideration. The Senate has attached itself to a different crypto-focused bill, which has already been granted approval by the Economic Affairs Committee of the Senate.

Senator Iraja Abreu and Deputy Aureo Ribeiro, two legislators and rapporteurs of the proposals, are drafting a unified text of the bill that will be sent to the full Senate for voting.

Senator Abreu has said: “I’m doing everything in contact with the Chamber’s rapporteur, who did a very good job. The Central Bank’s technical team has also been very helpful. The texts are similar and [have] converged into one.”

Abreu also pointed out that the president of the Senate, Rodrigo Pacheco, was expected to put the bill to a vote this month, adding: “By joining the projects together, we have accelerated the approval of this cryptocurrency milestone. There is a market demand for a safer business environment and the need for criminal classification to avoid fraud, in addition to adjusting Brazil to international agreements.”

Bitcoin Will Not Become Legal Tender in Brazil

The approval of the bill does not mean that bitcoin will be accepted as legal tender in Brazil. The proposed law would simply allow the Brazilian president, Jair Bolsonaro, to determine a federal entity responsible for regulating digital assets. Bolsonaro would either establish a new regulator or may delegate regulation to the nation’s Securities and Exchange Commission, or the Central Bank of Brazil.

Other Jurisdictions Attempting to Regulate Digital Assets

Earlier this week, Crypto News Australia reported that a former Blockstream executive had announced three jurisdictions that were set to make Bitcoin legal tender. Roatan in Honduras, Madeira in Portugal, and Mexico are in talks to make the cryptocurrency legal tender in its territories.

This is a very bullish sign as countries begin to see the benefit of adopting digital assets. A prime example is Ukraine, whose president Volodymyr Zelenskyy last month signed into law a bill that legalised the cryptocurrency market and established a more favourable regulatory framework for the war-torn country.

Categories
Australia Bitcoin ETFs Investing Regulation

Australian Crypto ETF Stalled by High Collateral Requirements

The creation of Australian-based spot Bitcoin ETFs is being hampered by what some fund managers regard as excessively high collateral requirements being imposed by traditional clearing houses. 

High collateral obligations mean many clearing participants are reluctant to agree to trade Bitcoin ETFs, with only three out of 35 acceding to the requirements. The ASX’s internal, independent clearing house, ASX Clear, requires at least four to get involved before Bitcoin ETFs can be made available to investors.

Spot Bitcoin ETFs are backed by actual Bitcoin, as opposed to Bitcoin Futures ETFs which are backed by Bitcoin Futures contracts. Generally, crypto futures ETFs have faced lower regulatory hurdles and are therefore currently more common, but spot ETFs have several advantages that make them more attractive to many investors.

High Collateral Costs Intended to Offset Risk

ASX Clear sets collateral requirements for different investment products based on risk. Following an assessment of the risks and volatility of Bitcoin, ASX Clear decided that a Bitcoin ETF would require a 42 percent margin to be lodged against each trade, which is very high compared to other investment products.

To get a sense of just how high these collateral requirements are, the BetaShares Crypto Innovators ETF, which invests not in cryptocurrencies but in 34 companies involved in the digital asset industry, faces collateral requirements of under 15 percent.

Speaking to the Australian Financial Review, the ASX’s chief risk officer Hamish Treleaven explained the high requirements:

In all of our decision-making on this we have remained focused on appropriate risk management for the clearing house – that’s our regulatory obligation.

Hamish Treleaven, chief risk officer, Australian Securities Exchange

Lucrative Prize Awaits First Bitcoin ETF

There are currently several fund managers racing to launch the first Australian Bitcoin ETF, including Betashares, Cosmos Assets Management, ETF Securities, Monochrome Asset Management and VanEck Australia. 

ETF Securities announced its planned launch of Australia’s first spot Bitcoin ETF last year, but like those of all such products, this has been delayed due to regulatory issues.

Many in the industry believe the first fund to launch could attract over A$1 billion of capital, with some predicting over A$100 million could pour in on launch day alone – more than double the funds BetaShares Crypto Innovators ETF attracted on its first day of trade last November.

Categories
Australia CBDCs Crypto News Investing Regulation Trading

Australia and Singapore Create New FinTech Bridge to Grow Digital Finance

The Monetary Authority of Singapore (MAS) and the Australian Treasury have come together to sign the Australia-Singapore FinTech Bridge Agreement, which an MAS media release describes as a measure to strengthen cooperation between both countries’ FinTech ecosystems:

Building a FinTech Bridge

The agreement will see two industry regulators facilitating trade and investment in their respective sectors. These regulators will also develop ties among industry groups, policy officials and other regulators, with further plans to develop FinTech companies in each other’s markets to create new opportunities and minimise entry barriers.

https://www.lawyersweekly.com.au/biglaw/24799-investment-groups-in-singapore-and-australia-acquire-figtree-grove-shopping-centre
MAS and the Australian Treasury have flagged a FinTech agreement.

The Bridge Agreement is likely to explore joint innovation projects in other emerging areas including blockchain, sustainable finance, data portability, and cross-border data connectivity. However, the first step for the partnership is to develop a framework for bilateral collaboration and joint projects.

Australian CBDC Partnerships

The agreement comes less than a month after the central banks of Australia, Malaysia, South Africa, Singapore, and the Bank for International settlements (BIS) announced plans to explore multi-CBDC platforms.

On March 25, BIS released a report announcing the results of two multi-CBDC platforms it had been working on, finding that while these platforms were technically viable, they faced governance, coordination, and jurisdictional challenges. Opportunities are available, although more exploration into the application of these platforms is required.

To learn more about CBDCs, Crypto News Australia has put together a guide on CBDCs and stablecoins.

Categories
Celsius Crypto News Regulation

Crypto Lender Celsius Halts Interest Accounts for Retail Investors Amid Regulations

Effective April 15, non-accredited US retail investors will no longer be paid rewards on any new deposits into Celsius interest accounts. The news comes in a statement from Celsius, which also notes that these rules will not impact customers outside the US.

Celsius Prioritises Regulation

The move by Celsius, a leader in centralised finance (CeFi), sees it fall into line with crypto regulations. From April 15, only accredited investors will be able to receive rewards and add new assets to the company’s Earn platform.

The update only applies in the US, and to be considered “accredited” an investor must have a net worth greater than US$1 million or a minimum annual income of $200,000. After April 15, those who aren’t accredited will have their coins held in custody, meaning they can still swap, borrow and transfer, but cannot earn interest.

As we previously have acknowledged, Celsius has been working closely with regulators around the world. It is our intention to be as transparent with our community as possible.

Celsius custody solution statement

Any US non-accredited Celsius users who were intending to use their crypto as loan collateral prior to April 15 will have their assets returned to their account on completion of the loan.

Other Offers and Rates

In March, Crypto.com slashed its return rates on token deposits, its second cut in a month. More recently, digital asset exchange Zipmex launched its ZipUp+ program, which offers Aussies very attractive yield returns. Zipmex is one of the major regulated Australian exchanges and may become even more popular with this new offer as the project allows interest of up to 10 percent APY without a lock-in period.

Categories
Crypto News ETFs Investing Regulation Surveys

Nasdaq Reveals 72% of Financial Advisers Will Use Crypto After Spot ETF Approval

A survey of financial advisers commissioned by Nasdaq has found that 72 percent would be more likely to invest client assets in crypto if a spot ETF product were available in the US.

The survey was conducted throughout March 2022 and involved 500 US-based financial advisers who are currently, or are considering, allocating assets to crypto.

What Is a Crypto Spot ETF?

A crypto spot ETF is an exchange-traded fund (ETF) that allows an investor to gain exposure to crypto without actually having to own any digital assets. Unlike a futures ETF, a spot ETF is backed by the actual commodity, in this case digital assets, rather than by the value of the futures contracts tied to the commodity, which may diverge significantly from the actual asset price.

The advantages of investing in a crypto ETF over owning crypto directly are primarily:

  • exposure to crypto through a regulated product offering higher levels of consumer protection;
  • easier access for non-technical investors; and
  • no need to store crypto or deal with private keys, etc.

Crypto-based spot ETFs have so far not been approved by US authorities due to regulatory concerns, mostly around consumer protections and the risk of market manipulation.

Advisers Excited, But Most Expect To Wait

Although most of the financial advisers surveyed were excited about the prospect of a crypto-based spot ETF product, most aren’t holding their breath with only 38 percent considering it likely such a product will launch in 2022.

However, the lack of spot ETF products doesn’t mean financial advisers aren’t finding other ways to help their clients invest in crypto. According to Jake Rapaport, head of Digital Asset Index Research at Nasdaq, advisers are making do right now, but he expects investment products such as spot ETFs to become necessary soon to keep up with client demand:

The vast majority of advisers we surveyed either plan to begin allocating to crypto or increase their existing allocation to crypto. As demand continues to surge, advisers will be looking for an institutional solution to the crypto question that now dominates client conversations.

Jake Rapaport, head of Digital Asset Index Research, Nasdaq

Of the advisers surveyed, 50 percent reported they’re already using Bitcoin futures ETFs and 86 percent expected to increase their crypto allocations in the next 12 months.

This survey is just the latest to show that institutional investors are clamouring for crypto-based ETFs. Another survey released last September found 84 percent of institutional investors throughout Europe, US and Asia wanted to see more crypto ETFs, and a survey released earlier this month found almost nine out of 10 Australian financial advisers reported being asked about investing in crypto by clients.

Categories
Australia Crypto News Cryptocurrencies Regulation

Australian Opposition Party Called Out for Lack of Clear Crypto Policy

With the starter’s gun for the 2022 Australian federal election having been fired on the weekend, the Labor Opposition party is already dodging bullets about lacking a crypto policy.

Stephen Jones, Labor’s shadow minister for financial services, quickly returned fire by declaring that the Opposition wants stronger consumer protections and regulation of exchanges.

“The broad principles we would take to crypto regulation are safety and transparency,” Jones said. “That inevitably leads to greater regulation of exchanges.”

Jones added that if Labor were to win power from the ruling Liberal-Nationals Coalition, crypto would be considered as part of a broader overhaul of the payments system.

Crypto Should Be at the ‘Centre of the Election’

Last week, expatriate crypto investor Mark Carnegie said that crypto “should be at the centre of the election” because digital currency and blockchain infrastructure were shaping to be an US$8 trillion (A$10.6 trillion) to US$13 trillion industry by 2030.

Carnegie, a venture capitalist currently based in Singapore, told the Australian Financial Review Cryptocurrency Summit that Labor lacked a policy on crypto and “it just shows you the lack of leadership” on the issue.

At the summit, he and former Australian Securities and Investment Commission (ASIC) chairman Greg Medcraft urged Australian regulators to develop a plan that encouraged digital asset technology and investment.

Carnegie accused the government and regulators of moving too slowly on the issue. Jones has since responded by saying that putting crypto under financial services regulation “made sense”, and that he would consult on the precise details if Labor won government.

‘Seven Words is Not a Crypto Policy,’ says Liberal Senator

Pro-crypto Liberal Senator Andrew Bragg (NSW) echoed Carnegie in claiming Labor has “no real policy” in place. “My sense is they’re running a small-target strategy,” Bragg said. “They’re not saying much and my sense is this agenda is at risk and that is very concerning.”

In a return salvo, Jones pointed out that the Coalition had been in government for almost nine years and that it was hypocritical for it to blame Labor for a lack of crypto policy.

The fact that 43 percent of Australians polled in a 2021 Gemini survey said they had invested in crypto says this is an election issue that cannot be ignored.

However, another recent survey revealed that nine in 10 Australian financial advisers had been asked by clients about investing in cryptocurrencies but only a third were willing to allow them to do so.

With the election due on May 21, it’s time for both sides of Australian politics to clearly declare their hands on crypto.