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Coincover's regulatory roundup - July 2023

Coincover's regulatory roundup - July 2023
July was far from quiet for the growing blockchain industry, full of developments and regulatory updates. Europe and Asia established solid legislative paths for secure crypto growth, while institutional players fueled excitement, and the Securities and Exchange Commission’s (SEC) continued crackdown potentially slows US progress. ETFs also advanced, with BlackRock's Spot Bitcoin ETF applications entering formal review, further closing the gap between traditional and decentralised finance solutions.

 

Thailand and Singapore

3rd July: Regulators in Thailand and Singapore independantly unveiled measures to bolster investor protection and market integrity in the crypto sector. The Thai SEC introduced rules prohibiting the use of customer crypto assets for lending and investment, responding to the aftermath of the crypto lending crisis.

Meanwhile, Singapore's MAS mandated crypto service providers to hold customer assets in trusts by year-end and considered restrictions on lending and staking services for retail customers to enhance industry transparency and safeguard investor interests.

26th July: The Singapore High Court ruled that Crypto is a personal property, and OFSI is proposing new regulation that seeks to provide Banks and Insurers with “clarity on how to treat crypto-asset exposures when it comes to capital and liquidity”.

 

Europe

 12th July: The European Securities and Markets Authority (ESMA) released the first of three consultation papers. These papers mark the start of a long, but significant, journey to determine how obligations under MiCa are implemented by European Regulators. Among these papers is a proposed requirement for custodians to supply a ‘detailed description of the approval system for cryptographic keys and safeguarding of cryptographic keys, such as multi-signature wallets’.

19th July: Forge, a subsidiary of the third largest French bank, Société Générale, were the first company to obtain the highest access license for providing crypto services in the country. This helped reaffirm institutional interest.

20th July: The FSB (Financial Stability Board) finalised a global regulatory framework for crypto-asset activities. The FSB state, ‘same activity, same risk, same regulation’ which reflects the approach taken by the UK.  This was an approach which the Treasury doubled down on by firmly disagreeing with the “Committee’s recommendation to regulate retail trading and investment activity in unbacked crypto assets as gambling rather than as a financial service.”

 

US

July 13th: This ruling, which will most likely be appealed, creates a change of direction against the SECs statement – Everything but BTX is a security.

Most importantly, in the past it’s been argued that once a security always a security - the Judge in the Ripple case differentiates between the types of XRP sales and allocates them an individual Securities status on that basis. This could be great news for organisations such as Coinbase, who are currently fighting similar cases.

"Judge Torres separately analysed each category of transaction under the Howey test and held that only Ripple’s institutional sales were in fact securities offerings."

 

 Transaction

Ruling

Howey analysis

Institutional sales pursuant to contracts

Securities transactions

Each prong satisfied

Programmatic sales into the market

   Not securities transactions

No reasonable expectation of profits derived from efforts of others

Distributions in exchange for services and similar benefits

   Not securities transactions

No investment of money

Sales by individuals into the market

   Not securities transactions

No reasonable expectation of profits derived from efforts of others

 

This has since been refuted by Jed Rakoff in the case of Terraform, in which he claimed there should be no distinction.

15th July: The SEC accept BlackRock’s Spot Bitcoin ETF application, which will now enter formal review. The SEC faces 10 Spot Bitcoin ETFs seeking approval, including from crypto players like Valkryie's $BRRR and institutional giants like BlackRock, VanEck, and Fidelity. Grayscale presses for fair treatment, urging simultaneous acceptance to avoid bias.

20th July: The Lummis-Gillibrand bill was reintroduced to Congress along with a new rival, the Financial Innovation and Technology for the 21st Century Act The bill aims to provide a process that will help decide if a digital asset is a commodity or security.

28th July: Further developments on regulation at the SEC. The SEC adopted new rules for the US, stating cyberattacks must be disclosed within four days of discovery. You can read more about this development in our recent blog.

 

Indonesia

July 20th: After a long delay, Indonesia launched a national crypto exchange to regulate transactions. It will be countries the sole platform for crypto trades. The exchange is already approved by the government; therefore, we expect it to resemble a regulated securities market more than a typical crypto exchange.

 

Africa

July 21st: The VASP (Virtual Asset Service Providers) regulating law was inserted into the Gazette of the Republic of Namibia after previously being approved in Namibia’s National Assembly on July 6 and signed by President Hage Geingob on July 14th. On July 21st, the VASP (Virtual Asset Service Providers) regulating law was inserted into the Gazette of the Republic of Namibia after previously being approved in Namibia’s National Assembly.

 

Other 

11th July: Aspen Digital and PwC released a joint report titled “state of Digital Asset Custody – Understanding and implementing digital asset custody for institution investors”. The report highlights the significance of custody in facilitating the exploration of the digital asset ecosystem for Asian institutional investors.On the 11th July, Aspen Digital and PwC released a joint report titled “state of Digital Asset Custody – Understanding and implementing digital asset custody for institution investors”. The report highlights the significance of custody in facilitating the exploration of the digital asset ecosystem for Asian institutional investors.

The constantly evolving landscape held a focus in the US with The SEC still dominating crypto regulation updated. It’s exciting to demonstrate another month of traditional financial interest in the crypto world. BlackRock’s Spot BTC ETF could mark another step of maturity for the industry. This traditional financial development could show a new wave of adoption for cryptocurrencies. However, this does call for a pressing need for continued regulation, with businesses advised to make sure that they are doing everything possible to keep their customers safe rather than waiting to be led by regulation.

As the blockchain protection company, Coincover provides a complete protection solution to remove the risk of hacking and lost access. Reach out to a member of the team to protect your assets today.

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