FATF’s guidelines were officially adopted by G20 nations, leading to intensified discussion of regulation and compliance in the crypto space.
According to research by major investment house Fidelity, 22% of institutional investors are already engaged with Crypto. Financial advisors (74%) and family offices (80%) view the characteristics of digital assets most favorably.
“Digital assets are a fuel driving innovation in finance.” If you missed it, listen to Solidus CEO Asaf Meir’s Coindesk Webinar on crypto market surveillance and why it matters.
Lior Prosor of Hanaco Ventures, Solidus Labs’ lead investors, on why they believe crypto-native compliance tools are critical for the industry’s growth.
In London’s CryptoCompare summit and in Tel Aviv’s FinTech Junction conference – Solidus joined industry leaders like Binance and Kraken to discuss market integrity challenges and how to improve transparency.
We are delighted to announce the official opening of our Tel Aviv offices next month.Nimrod Hauser, Solidus’ new Head of Data, will also serve as GM in Israel. Solidus is currently hiring for various positions – see our careers page to explore opportunities.
FATF adopted by G20: During their annual summit in Japan, G20 nations officially welcomed the Financial Action Task Force guidelines for digital assets, including a requirement for exchanges to share customer data known as the “travel rule.” The decision is viewed as one of the biggest regulatory hurdles for crypto exchanges so far, and will, among other implications, compel countries to register and supervise cryptocurrency-related firms while requiring detailed checks on customers and reports on suspicious transactions. While the move raised concerns among crypto exchanges, many regulators, including U.S. Treasury Secretary Steve Mnuchin,welcomed the guidelines.
In the aftermath of Facebook’s announcement that it would issue a crypto currency called Libra, supported by major backers like Visa, MasterCard, PayPal and Uber, regulators are raising concerns: Germany’s BaFin calls for setting digital asset standards to accommodate such developments and the U.S. Senate Banking Committee scheduled a hearing to examine potential risks. In the meantime, Facebook’s move is reportedly pushing China to consider issuing its own digital currency. This week, U.S. Fed Chairman Jerome Powell expressed “serious concerns.”
United States and Canada:
Following their failure to acquire BitLicense and asking NY clients to withdraw funds,Bittrex expands its digital asset trading platform to Liechtenstein.
Following reports that FINRA is holding off on roughly 40 crypto broker-dealer applications, America’s securities industry self-regulatory organization released a joint statement with the SEC clarifying custody requirements.
FINRA fined and suspended an ex-Merill Lynch investment adviser over undeclared crypto mining activities.
U.S.-based exchange Gemini announced plans to apply for a broker dealer license as part of an effort to achieve Alternative Trading System status.
For a survey of additional enforcement actions currently taking place in the U.S., check out Law360’s analysis.
Japan: Line Corp, provider of Japan’s largest messaging app, is reportedly nearing approval for a crypto exchange that will serve its 80 million users. Simultaneously, the Japanese FSA charges Fisco, owner of crypto exchange Zaif, with “legal violations,” and for ignoring “the importance of legal compliance.”
South Korea: A major bank says it will crack down on accounts linked to crypto exchanges, while five crypto exchanges respond to regulatory demands and increase their liability for loss of user funds.
China: Major Chinese Financial News Provider quietly adds crypto index. While crypto is still largely illegal in China, a recent Deloitte survey showed 73% of Chinese enterprises see blockchain as a top-five strategic priority.
A United Arab Emirates crypto exchange receives initial regulatory approval from authorities.
Singapore’s tax agency plans to remove goods and services taxation from cryptocurrency transactions.
After IMF Managing Director Christine Lagarde was tapped for the presidency of the European Central Bank, many wonder whether her comments back in April, alleging that crypto assets are “shaking the system,” may mean the EU will soon be more inclined to accommodate digital assets.
UK based broker TP ICAP will soon begin selling CME’s Bitcoin futures.
UK regulators approve Prime Factor Capital as the first crypto hedge fund approved as a full-scope alternative investment fund manager.
Regulation is gradually moving from talking and deliberation to action, with significantly more enforcement cases, formation of international standards like FATF’s guidelines and materialization of licensing regimes. As the stakes of non-compliance increase, so does the benefit of good behavior, due diligence and transparency. The result is increasing demand from institutional and retail investors for credible crypto services, which we at Solidus are experiencing as increased demand for crypto-native compliance and market surveillance tools.
During its annual summit, CryptoCompare released an extensive study of crypto market integrity concerns, and proposed a new methodology to rank exchanges. The report also includes due diligence recommendations. Among the key findings:
Volume-based rankings can be highly misleading. Instead, the report suggests a “Trusted Volume” framework whereby investors can calculate market volumes based on their risk appetites
There is a positive correlation between due diligence scores and market quality scores
There is a relationship between factors like the exchange’s funding, geographic location, MSB licensing, number of employees and market integrity rankings
Measuring an exchange’s quality by focussing on trading patterns is still very challenging
A report by Alameda Research explores ways some exchanges are allegedly reporting fake volume, and concludes that close to 70% of volume traded in major arenas is manipulative. Some of the findings include:
68% of cryptocurrency trading volume is fake
Trading volume for many exchanges showed clear evidence of wash trading
Some exchanges are creating replicas of trading history, printing the same numbers delayed by a few seconds in order to present volume
Some exchanges are sneaking in large, fake transactions amid a flurry of smaller ones
Some exchanges are printing transactions that fall in the middle of the bid and ask prices
The industry continually comes to terms with the disturbing levels of trade manipulation and the need for additional transparency. It’s increasingly clear new frameworks, tools and rules are necessary to measure and improve market integrity. We’re proud to be leading this effort – alongside companies like CryptoCompare – as co-chairs of Global Digital Finance’s Market Integrity Code of Conduct Working Group.
Bank of International Settlements Chief switches from criticizing crypto to acknowledging Central Banks will likely need to issue their own digital currencies.
Goldman Sachs explores creating a digital coin after CEO David Solomon reiterates undeniable disruptive potential of blockchain and cryptocurrencies.
Coinbase launches cryptocurrency debit card in Spain, Germany, France, Italy, Ireland, and Netherlands.
The largest bank in South Korea, KB Kookmin, prepares to launch a digital asset custody offering.
Xetra, a Deutsche Börse-operated trading venue, lists first blockchain company.
Other mainstream players increasing their engagement with blockchain and digital assets this past month include: Budweiser, Kodak, Apple, Microsoft, Target, US Federal Government, Visa, Amazon, Major Brazilian Bank Bradesco, General Motors, FDA with IBM, Walmart and Merck, The State of Rhode Island, Samsung, Japan’s 100 Major Businesses, Italy’s Banks, Salesforce, LVMH, Central Banks, Walmart China,Germany’s Political Parties, Google, and another 50.
Interest from institutional investors and mainstream corporations in both digital asset and blockchain investments and integrations is growing at an accelerating pace, as the market is still getting over a prolonged bear market. A stable bull market may lead to growth and adoption becoming exponential.