Two new patents from Microsoft reveal that the tech giant is looking to bolster its blockchain solutions with the use of trusted execution environments (TEEs), according to two filings published by the U.S. Patent and Trademark Office (USPTO) August
U.S. crypto exchange and wallet provider Coinbase has been given the green light from regulators to resume its services in the state of Wyoming, according to an official announcement publishedAugust 3.
The exchange has now reportedly successfully renewed its money transmitter license in the state of Wyoming. The license had been suspended as of mid-2014 due to stipulations in state law that required all exchanges to “double reserve” the digital assets of state residents with fiat currency.
As Coinbase outlined at the time, the exchange had chosen to suspend its services as soon as its operations as a cryptocurrency exchange were deemed by legislators to fall subject to certain conditions for licensure stipulated under the Wyoming Money Transmitters Act (specifically, Chapter 22 of Title 40 – Trade and Commerce, which was introduced in the Wyoming Statutes of 2011 and came into effect by 2014).
According to Coinbase, the Act had hitherto been interpreted by the Wyoming Division of Banking as requiring “licensees [to] maintain dedicated fiat currency reserves in amount equal to the aggregate face value of all bitcoin [sic.] held on behalf of customers,” something the exchange found to be “impractical, costly, and inefficient.”
Having now resumed its services for Wyoming residents, Coinbase credits the state legislature, Governor Matt Mead and members of the Blockchain Task Force with enabling a new bill to be signed into state law that has now effectively removed these restrictions.
In March, House Bill 19 regarding the exemption of virtual currencies from the Wyoming Money Transmitter Act was passed with a majority of 28-3 by the Wyoming state legislature on March 5 of this year, allowing Coinbase to apply for a license under which it can resume operations as a compliant and regulated exchange.
Alongside House Bill 19, Wyoming has also this March passed House Bill 70 that exempts certain blockchain tokens from securities regulations and money transmission laws, as well as passing a further cryptocurrency related bill, Senate Bill 111, in February that exempts virtual currencies from state property taxation.
Coinbase, the major US cryptocurrency exchange and wallet provider, has entered the cryptocurrency gift card market, which will allow customers in certain countries to exchange their crypto points for gift cards according to their blog post on July 25.
Coinbase conference through a partnership with a UK-based startup WeGift, that the whole allow cryptocurrency users to pay for goods and services through brands like Google Play, Nike, Uber, Ticketmaster, and Zalando.
Starting immediately, Coinbase customers in Europe and Australia will be able to instantly spend their cryptocurrency balance on e-gift cards making it the first trading platform to offer immediate withdrawals to gift cards.
The service will initially be available to Coinbase users in the UK, France, Italy, Spain, Netherlands, and Australia with plans to expand the number of retailers and markets within the next 3 months. They also plan to expand to other countries within the year.
God’s Unchained is the first competitive e-sports game on the Ethereum network. The game recently launched with backing from Coinbase, the world’s largest cryptocurrency exchange and wallet provider.
Currently, the blockchain game has mainly been limited to a few collectibles which can be purchased inside the application where users buy and sell digital assets just like they would baseball cards.
The game has undoubtedly caught the attention of investors, however current data shows that daily active users are still rather low at time of this release.
UPDATE (8/1/2018): Guide To Purchasing Card Packs & Get Started Playing located below.
The development company behind this revolutionary game, Fuel Games, previously launched another popular Ethereum based game by the name of Etherbots . It operated on the Ethereum network as a full on-chain game where every piece of data was created and sent to the Ethereum blockchain.
However, developers of God’s Unchained took a different approach to this game by including a hybrid on-chain and off-chain system. This allows information to be processed in batches and will prevent congesting the Ethereum network as well as provide users with a seamless experience.
The cofounder of the game, Robbie Ferguson explained…
|“The cards are stored on the Ethereum blockchain, however players in God’s unchained will only initiate transactions on the network once they purchase cards or transfer existing ones. All other gameplay elements will run off-chain, which will allow gameplay to be indistinguishable from other games that do not utilize distributed ledger’s. This will permit millions of users to play without any noticeable waiting down of the network.”|
Most notably , Fuel Games secured an investment from Coinbase ventures within its equity round of investing. Ferguson emphasized that having Coinbase involved with the launching of the game was clear validation regarding the efforts of the developers as well as the $50 billion industry of game asset trading on the Ethereum blockchain.
Recently, the entire open source Ethereum development community has been focusing on Sharding and Plasma technologies. These are two-layer to scaling solutions which are expected to increase the capacity of the Ethereum network to over 1 million transactions per second.
However, Ferguson stated that Gods Unchained is not relying on the completion of these two developments in order to settle large amounts of data on the decentralized ecosystem. Fuel Game developers will be building their own unique system to cope with the current landscape of the Ethereum network.
Ferguson also states…
|“The impact of Sharding and Plasma will be an extremely useful development for the Ethereum network in the near future. However, this is not necessary for Gods Unchained to run well. Trading may become a lot easier with these developments, however we’ve already made the necessary choices in order to ensure that gameplay will be seamless, regardless if Ethereum scales or not. Sharding and Plasma should not be rushed and it’s much better for developers and gamers to not rush into releasing these upgrades until they are fully tested.”|
Currently, there isn’t much known about Gods Unchained, however we do know that it will be free to play. There will be a series of game cards which can be won, as well as various rare assets that can be purchased with ether. The value of these digital assets can be changed once a developer decides to release more assets or offer special deals.
There will also be e-sports features to ensure that participants get a full multiplayer experience. Like most other blockchain based games, users will be able to exit the game whenever they like and make back or even generate a positive ROI by selling purchases they make or earn.
Check out the gameplay video here…
Early adopters have a chance to build their card deck right away with their current rebate. Every day, the rebate lowers so take advantage of the early adopter special while you can.
You have a great opportunity to make a return on investment if you invest in the Genesis cards before their official launch.
If RPGs are more your style, check out our review on Ether Online. This solid, turn based MMORPG has been getting a lot of attention within the Ethereum based gaming community.
Like most Ethereum based games, you’ll need to connect to the Metamask extension. This browser extension will allow you to purchase Gods Unchained playing cards. You can download it here for Chrome, Firefox, and Opera browsers.
If you need help installing the extension, check out the video guide located here.
The card packs include five cards. Each pack includes up to one higher level playing card (rare, epic, legendary, shiny legendary) depending on the amount you paid.
Typically Legendary packs are the most powerful, followed by Shiny Legendary, Epic, Rare, and then Common.
Choose the type of packs you want to order and select from 1,6,18,50, or 100. We chose the rare pack to start, but was pleasantly surprised to find that we received 2 higher level cards in our pack of 5.
The Metamask notification will enable you to submit your purchase to the Ethereum blockchain. Just click on the green submit button to continue.
You’ll also notice gwei, which is the ethereum transaction fee, also known as Gas. Typically a few gwei is enough to conduct a fast transaction. You can make adjustments to the gas transactions (faster or slower) on the ETH Gas Station.
Typically the websites will display a notification regarding the transaction wait time, which will usually take a few minutes to complete.
Once the transaction has completed, players will have full control of their playing cards as they are purchased on the ethereum blockchain and are not centrally controlled by a company like other games such as Hearthstone.
Select the top right hand menu in order to open your cards. Next, drag the pack to the center pedestal in order to open it.
You’ll view a few cool animations and sound effects before opening your pack.
Click on each card to reveal them. Your cards will now be entirely viewable. We received 2 shiny legendary cards which were marked by blue arrows next to the name. Three Common cards were received, which are not marked with any particular color next to the name.
Your cards will now be reflected within your inventory. Click on the 5th link in the top left menu to view your cards.
If you’d like to view all the Genesis Set cards inside the game, click here.
Gods Unchained also provides you with an Advanced Gameplay strategy section , which will help you better prepare for battle with other players. I highly recommend you read up on this if you plan on getting started on the right foot.
I doubt most other players will read up on this section before playing, so take advantage of it while you can.
Coinbase has become the first crypto industry organisation in the USA to form a Political Action Committee (PAC). This was revealed on July 20 in a filing by the United States Federal Election Commission (FEC). The move is the latest in a series of bold moves by the crypto exchange and wallet provider as it looks to secure its long term future.
Under American federal law, an organization is classified as a PAC if it collects donations worth more than $1,000 from its members and channels them into campaign funds with the intention of influencing an electoral process. Such organizations must register with the FEC under the provisions of the Federal Election Campaign Act 1974.
Political Action Committees are formed to support election candidates whose policies or ideological viewpoints tie in with the objectives of PAC members. They also exist to provide a platform for dialogue between social, political or economic interests and political office holders in order to establish points of understanding and cooperation.
The biggest motive for Coinbase is of course access to the politicians that have substantial influence over financial regulatory policy. The American political and financial establishment has historically viewed cryptocurrency with suspicion, and so it could be useful to establish dialogue with politicians and support candidates with a “light touch” regulatory ideology.
At a time when there is a substantial amount of uncertainty in the crypto market because of regulatory attention, a crypto industry PAC could effectively go over the regulators’ heads to engage with the politicians that influence policy.
Some key points of agreement resulting from such dialogue could include regulatory clarity, protection of the crypto industry as a job creator and promotion of blockchain technology solutions to public service challenges.
While forming a PAC is an industry first, Coinbase is no stranger to the strategy of political engagement and donations in furtherance of a pro-business agenda. Co-founder Fred Ehrsam has a well documented Republican leaning, donating a total of $12,800 to Republican candidates over the years. Notably, he made multiple donations to former Republican presidential candidate Mitt Romney between 2007 and 2011.
Coinbase was engaging with the SEC about becoming a regulated brokerage firm and trading platform. The company recently signed up a $20 billion hedge fund for its institutional brokerage service, which counts as a major win.
Carrying out brokerage services alongside its crypto exchange services could be seen by SEC as a possible conflict of interest, and this could potentially be yet another area of dialogue to be facilitated by the PAC.
Coinbase announced today that will be exploring 5 new cryptocurrencies for its trading’s products including Basic Attention Token (BAT), Cardano (ADA), Zcash (ZEC), 0x (ZRX), and Stellar Lumens (XLM).
There is no guarantee that the list visual currencies will be added, however the team is currently exploring the technicalities behind each asset. Coinbase provides a detailed FAQ within their Twitter announcement regarding the reasoning why they decided to choose the 5 cryptocurrency projects as candidates.
A few weeks ago, Coinbase announced plans to add Ethereum Classic (ETC) to their list of coins to trade. Within announcement, Coinbase notated the similarities between Ethereum and Ethereum Classic which helps make the process much simpler. Given that the tokens are technically different, there is additional work that needs to be done before moving forward.
Currently there is no indication or timeline regarding the potential listing for any of the projects.
Coinbase, the major US cryptocurrency exchange, announced its newest business regarding digital assets for institutional investors has now been launched according to their blog post on July 2.
The exchange first revealed its plans to open “Coinbase Custody” back in late 2017. The company stated that they were seeking to address what they consider to be the number one concern of institutional investors, which was primarily security.
Coinbase Custody will most notably be secured through an SEC compliance Electronic Transaction Clearing (ETC). This addresses institutional investor concerns by abiding by the terms of US regulations, the SEC, as well as Wall Street financial industry regulatory Authority (FINRA).
Institutions from the US and Europe can now store cryptocurrency on Coinbase custody which will support Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Bitcoin Cash (BCH). Coinbase stated that they plan to continue adding more cryptocurrency assets as well as open the service to Asian institutional investors by the end of the year.
The exchange will employ a wide range of security measures including “on chain segregation of cryptocurrency”, off-line multi-sig and geographically distributed transaction protection, and extensive cold storage auditing and reporting.
Coinbase custody is the first to launch its suite of products which could potentially unlock $10 billion worth of institutional investor money sitting on the sidelines.
The exchanges is also attempting to become fully a SEC regulated broker-dealer through there are recent acquisition of the financial services firms as well as pursuing their own federal banking license.
Coinbase has also recently revealed the plans to do broaden their user base to the Japanese cryptocurrency market. However, amidst their consistent expansion, the online tech website Mashable uncovered 134 pages of complaints filed by Coinbase users which included harsh criticism of the company for allegedly being underprepared for their fast-paced growth.
Stablecoin, a new stabilized cryptocurrency project that functions like normal money, has received new support and investments from Peter Thiel, Coinbase, Distributed Global, and 40 others according to the press release on June 20.
The development stage of the coin is dubbed “Reserve” and closed a collective of $5 million to develop a fully decentralized cryptocurrency which works by securing other crypto assets in a smart contract. Cryptocurrencies will then provide backing via the reserve token in order to stabilize its price.
According to the cofounder of the Reserve, Nevin Freeman, the initial funding was intentionally kept small as the focus was more on partnership building rather than amassing capital.
Reserve token offers a solution to countries that have value decreasing fiat currencies and high inflation rates jeopardize citizens savings and security.
While cryptocurrency is currently decentralized and protects its citizens from government control, the price volatility of most crypto limits it from serving most retail uses.
|“Simply put, nobody wants to spend money on it token that may be worth less one month and then another value another month. Nobody wants to store their savings on a token that will be worth nothing in a year.”|
In related news, Circle is focused on creating a fiat stabilized coin which recently closed $110 million in fund raising. The company also partnered with the mining hardware manufacturer Bitmain with regard to the development of the stablecoin.
Tether, the most popular and infamous of all stablecoins, confirmed today that there Tether tokens (USDT) are proven to be back by the USD according to a major US law firm.
Earlier this week, the cryptocurrency markets slumped: Bitcoin (BTC) lost its $6,500 support, and Ethereum (ETC) dropped well below the $400 mark (rates stand at $6,620 and $319 respectively by the press time). While it’s important to remember that on such a volatile and scarcely regulated market, news might affect the prices to a lesser degree, and the recent drop correlated with the U.S. Securities and Exchange Commission (SEC) decision to postpone its verdict on the listing and trading of a Bitcoin exchange-traded fund (ETF) until late September.
The SEC has gained the reputation of being a major news-maker in the cryptocurrency field: The watchdog’s decisions toward the market have been associated with a number of price drops and bull runs.
When: July 2017
Alleged reaction: Slightly bearish
In July 2017, the SEC came through with a major decision, putting its mark of interest on the crypto market. The regulator reviewed the infamous decentralized autonomous organization (DOA) case and concluded that DAO tokens, issued via its Initial Coin Offering (ICO) back in 2016, were in fact securities and hence had to register with the SEC beforehand.
By making that move, the SEC effectively showed that many other ICOs, which were abundant during their unregulated, ‘free run’ throughout the 2016-2017 period, might be in trouble as well. In order to determine if an ICO constitutes a security or not, the SEC usually applies the Howey Test — essentially, if a token is marketed as a profit-oriented asset, most likely it will be deemed a security being offered by the agency. However, the watchdog has explained that such decisions are made on a case-by-case basis, as the facts and circumstances of any investment transaction — including economic realities — will determine whether the transaction constitutes the offer of sale of a security.
Even though the SEC decided not press any charges that time, it gave a clear signal that the ICO frenzy could be over. Nevertheless, the market barely reacted: While the top five coins fell in price on the day of the announcement, the overall reaction wasn’t dramatic. Ethereum went down about 10 percent, but soon bounced back to its previous value. It might have been the result of market volatility rather than the SEC news, as such.
When: July 2018
Alleged reaction: Slightly bearish
The prospect of getting an authority-sanctioned, crypto-backed ETF has been widely discussed in the crypto community. Some believe it will provoke mass adoption, and the prices will ascend, while others remain skeptical — leaning toward crypto-anarchic sentiments. The SEC gets to decide if the industry is ready for an ETF, and the watchdog hasn’t been particularly optimistic thus far.
In either case, the market tends to react to most ETF-related news. A stark example is the recent SEC’s denial of the Winklevoss twins second application on July 26, which happened just prior to the latest ETF-induced panic in the market. The SEC wasn’t convinced by the Winklevoss’ plea that Bitcoin markets are “inherently resistant to manipulation,” which was among the primary reasons for the rejection.
As mentioned above, the Winklevoss brothers had tried registering a Bitcoin ETF before — their first attempt dates back to 2013. That time, it took the SEC four years to come up with a decision: Finally, on March 10 of last year, the agency denied the initial application based on concerns “that significant markets for Bitcoin are unregulated.”
Both times, the market reacted negatively. In March 2017, the price of Bitcoin fell from $1,300 to around $1,100 in a single day. In July 2018, BTC lost over $400 within the span of just three hours, although it managed to regain its value within the following 24 hours — SEC Commissioner Hester M. Peirce’s statement of official dissent, which was published soon after the hearing, could have helped in that rebound. In it, she opined that the agency’s move “sends a strong signal that innovation is unwelcome in our markets, a signal that may have effects far beyond the fate of Bitcoin ETPs [Exchange Traded Products],” recognizing the SEC’s influence in the market.
When: August 2018
Alleged reaction: Strongly bearish
Similarly, this catastrophic week on the crypto market is largely associated with the SEC postponing its decision on the listing and trading of a Bitcoin ETF powered by investment firm VanEck and financial services company SolidX until Sept. 30.
The VanEck SolidX ETF application was submitted in June and was generally considered to be the most promising among crypto-backed ETFs: It didn’t feature bold assumptions akin to the one submitted by the Winklevoss twins that claimed BTC markets are “inherently resistant to manipulation.” Moreover, the VanEck SolidX fund is physically backed — meaning that it will actually hold BTC — and both firms have reassured that this will protect against the loss or theft of the cryptocurrency. According to their filing with the SEC, each share of the VanEck SolidX Bitcoin Trust is set to cost a hefty $200,000. As SolidX CEO Daniel Gallancy explained to CNBC, the price is set at a higher rate to focus on institutional investors, and the fund hopes to get listed on the Cboe BZX Equities Exchange.
On Aug. 7, the SEC issued a document citing their right to extend the review period. It also stated that the agency had received more than 1,300 comments on the proposed rule change to list and trade the VanEck SolidX BTC shares. Per the document, within 45 days of the filing of a proposed rule change — the trust submitted their application on June 6 — or within 90 days, should the Commission deem necessary, the Commission will approve, disapprove or extend the period of consideration.
While the news seemed rather neutral, and essentially meant that the SEC simply needs more time to rule whether the crypto industry is suitable for an ETF at the moment, panic induced and the markets plummeted: After solid growth to break above the $7,000 mark earlier that day, BTC saw a loss of around $500 in six hours and has lost around 12 percent this week. Similarly, other coins crashed as well — e.g., Ripple (XRP) lost as much as 23 percent of its value since the news was announced.
On the other hand, bullish news on the market that came out recently, like the announcement of upcoming cryptocurrency project Bakkt by the Intercontinental Exchange (ICE), which operates 23 large global exchanges — including New York Stock Exchange (NYSE) — appeared to be largely ignored. In an interview with CNBC, Pantera Capital CEO Dan Morehead claimed that investors were “overreacting” to the SEC postponing the ETF hearing. He predicted that a Bitcoin ETF approval will take “quite a long time,” citing the nascent stage of crypto adoption. The hedge fund manager also stressed that the most recent asset that gained approval from the SEC for ETF certification was copper, a metal that “has been on earth for 10,000 years.”
When: February 2018
Alleged reaction: Strongly bullish
On Feb. 6, the SEC — along with the Commodities and Future Trading Commission (CFTC) — held a highly anticipated joint hearing in which they elaborated on their stance toward cryptocurrencies, ICOs and blockchain technology. During the meeting, the regulators gave credit to the cryptocurrency industry for adding a new paradigm to the financial system, stressed the importance of fair regulatory frameworks and famously said that “if there was no Bitcoin, there would be no blockchain.”
Consequently, that promoted a bullish trend, and the community reaction following the hearing had a positive effect on the crypto market — which was staggering at the time, likely due to China reiteration of it’s zero-tolerance of crypto, rumors of a ban in India and some mainstream banks prohibiting cryptocurrency purchases with their credit cards. After the SEC/CFTC showed their positive stance in regard to some crypto industries features, Bitcoin and Ethereum saw 20 percent growth in value, and the rest of the cryptocurrency market rallied into the green.
When: June 2018
Alleged reaction: Slightly bullish
The SEC’s approach to cryptocurrencies is still not crystal clear. However, at this point it becomes evident that, while the agency considers most ICOs to be securities, the two leading cryptos — Bitcoin (BTC) and Ethereum (ETH) — are not seen as such. That sentiment was recently voiced by Jay Clayton, the chair of the SEC, who declared that BTC is not a security because it acts as a replacement for sovereign currencies:
|“Replace the dollar, the yen, the euro with Bitcoin. That type of currency is not a security.”|
Soon after the news broke, Bitcoin’s price went from $7,525 up to $7,728 within 24 hours, showing a slight growth.
A couple of days after that, William Hinman, the director of the SEC’s division of corporation finance, claimed that Ethereum (ETH) isn’t a security either, putting an end to a months-long dilemma that could have potentially ended up with Ethereum’s 2014 ICO being outlawed:
|“Putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions[…] And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value.”|
That signal was positive for ETH, meaning that it wouldn’t face any charges. Consequently, the coin’s price rose as much as 11 percent, up to $520.68.
When: March 2018
Alleged reaction: Slightly bearish
In March 2018, the SEC issued a public warning aimed at crypto exchanges. The watchdog explicitly stated that platforms who trade “securities” — and the SEC deems many altcoins as such — “must register with the SEC as a national securities exchange or be exempt from registration.” The announcement read:
|“The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not. Many platforms refer to themselves as ‘exchanges,’ which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.”|
Hence, major crypto exchanges were urged to comply with the SEC’s regulations, entailing a strick Know Your Customer (KYC) and Anti-Money Laundering( ATL) approach, among other things — some major U.S.-based exchanges, like Coinbase, have since tried to register with the authority.
The news coincided with a noticeable downtrend in the market: For instance, BTC went down 8.6 percent from 24 hours earlier, losing its $10,000 support. However, the surge could have been initiated by other factors, such as rumours about an alleged Binance security breach that were spreading around the time.
It’s not entirely clear what exactly is going on in Facebook’s nascent cryptocurrency division, but several reports suggest that something is afoot.
The first comes from Business Insider, who reports that Facebook’s blockchain research group recently met with Stellar to discuss how the social media conglomerate could leverage distributed ledger technology (DLT) as it explores potentially building out a payments network.
According to unnamed sources, the two parties discussed how Facebook could fork the public Stellar blockchain, much as chat app Kik did after it decided to create an independent blockchain for its Kin cryptocurrency rather than piggyback on the main Stellar network. The task force is also said to have met with other unnamed cryptocurrency projects.
The publication also reports that Facebook has rapidly been expanding its blockchain division. One job posting said that the endeavor “is a startup within Facebook, with a vision to make blockchain technology work at Facebook scale and improve the lives of billions of people around the world.”
Further stoking the coals of the rumor mill is the announcement, first reported by CoinDesk, that David Marcus, a Facebook vice president and the former head of its Messenger division, has stepped down from his post on Coinbase’s board of directors, a role he originally took on at the cryptocurrency exchange giant last December.
Marcus left his role at Messenger in May to lead Facebook’s blockchain division, where he reports directly to Facebook CTO Mike Schroepfer.
A Coinbase spokesperson told the publication that Marcus had stepped down to avoid the appearance of a conflict of interest, leading to speculation that Facebook is preparing to make a major announcement regarding its cryptocurrency plans.
Earlier this year, financial news outlet Cheddar reported that multiple sources had said that Facebook is “specifically interested in creating its own digital token, which would allow its more than two billion users to facilitate transactions without government-backed currency.”
Cryptocurrency has also been on the mind of Facebook CEO Mark Zuckerberg, who said that one of his personal challenges for 2018 is to learn more about technologies “like encryption and cryptocurrency.”
Kenneth A. Blanco, director of the U.S. Financial Crimes Enforcement Network (FinCEN), has revealed that the agency has seen a surge in filings of crypto-related Suspicious Activity Reports (SARs). The number of complaints now exceeds 1,500 per month, according to him.
Blanco’s remarks were made as part of a speech he delivered at the 2018 Chicago-Kent Block Legal Tech Conference August 9.
The director outlined FinCEN’s ongoing role in regulation and law enforcement for the emerging crypto space, which it coordinates in tandem with the Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC). He noted that,
|“[While] innovation in financial services can be a great thing… we also must be cognizant that financial crime evolves right along with it, or indeed sometimes because of it, creating opportunities for criminals and bad actors, including terrorists and rogue states.”|
Blanco emphasized that in order to safeguard the “incredible innovations” of the fintech frontier, actors’ compliance with specific regulatory measures is critical, given that “harm can be done with devastatingly increasing speed, breadth, and obscurity in the digital world.”
As indicated in FinCEN’s March 2013 guidelines, any acceptance or transfer of value that substitutes for fiat currency – including crypto – is considered to be money transmission, and entails specific regulatory obligations under the U.S. Bank Secrecy Act (BSA).
As money transmission businesses (MSBs), crypto exchanges are therefore required to report both SARs and Currency Transaction Reports (CTRs), as well as to comply with anti-money laundering (AML) and countering the financing of terrorism (CFT) frameworks.
Blanco clarified that identical obligations pertain to businesses that provide anonymizing services — often dubbed “mixers” or “tumblers” — that seek to conceal the source of the transmission of crypto. Exchanges located outside of the U.S. but that nonetheless do business in part with residents of the country are also monitored by the agency.
The director gave the example of FinCENs action in 2017 against Russian crypto exchange BTC-e for flouting AML laws as a case in which SARs had “played a critical role,” with filings by both banks and other crypto exchanges providing crucial leads for law enforcement.
He commented that while SARs are increasingly being submitted, the agency has been “surprised” to see businesses taking appropriate steps to meet their regulatory requirements “only after they receive notice [that an examination is forthcoming].” “Let this message go out clearly today: This does not constitute compliance,” he stressed.
According to Blanco, FinCEN, BSA examiners and the Internal Revenue Service (IRS) have examined over 30 percent of all registered crypto exchangers and administrators since 2014.
Blanco further devoted attention to initial coin offerings (ICOs), stressing that while they may fall under overlapping jurisdictions of different U.S. regulatory agencies, their AML/CFT obligations remain “absolute.”
At a recent hearing on crypto and ICOs in Washington DC, Coinbase’s Chief Legal and Risk Officer called out the gamut of American regulators — including the SEC, CFTC, IRS, and FinCEN — over an extreme “lack of coordination” that he considered to be negatively impacting innovation.
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