Edition No. 33

Congress petitioned by crypto groups; Nepal blocks crypto websites; UAE implements virtual asset law; Coinbase settles; Feds urge crypto caution; and more. Here's what happened from 1/9/23 - 1/14/23

Christopher Foreman

Around the Blockchain News

Tamara Szulc

, and

Nick Corso

Jan 16, 2023

Welcome back to Around the Blockchain, the weekly letter dedicated to keeping readers like you up to date on the fast-paced world of Crypto & Law by airdropping current stories directly to your browser. We took last week off for finals and holiday shenanigans, but we’re back and better than ever.

1. On the Docket (Top Stories of the Week)

2. Podcasts, Videos, & Blogs (The faces, voices, and pens of Web3’s brightest contributors)

3. Bird Watching (Tweet, tweet!)

4. The Public Ledger

5. Closing Statements

On the Docket

Five things you might have missed last week:

1. Crypto Coalition Advocates for “Pro-Privacy” Future

Don’t Tread On… Our Privacy

A coalition of cryptocurrency-related organizations is urging US lawmakers to prioritize data protections when developing legislation to promote "a pro-privacy future". Signatories to the letter, include crypto wallet provider Ledger, the developer of privacy-protecting digital currency Zcash, and peer-to-peer crypto payment platform MobileCoin. They voiced concern that the recent collapse of the crypto exchange FTX will put pressure on lawmakers to establish guardrails for the emerging industry. Fight for the Future has come out against a bill that would require customer identity checks by digital wallet providers and limit the use of tools like mixers that are meant to make cryptocurrency transactions more anonymous. The letter calls on Congress to support end-to-end encryption and passage of "long overdue" legislation focused on safeguarding consumer privacy online.

2. Nepal Orders Internet Providers to Block Crypto-Related Websites

NP Tells ISP to NIMBY Web3

Nepal's telecommunications regulator ordered internet service providers (ISPs) to block all crypto-trading websites and threatened legal action against anyone flouting this order. The country's central bank also encouraged citizens not to engage in crypto trading as it would be punishable by law, after Nepal banned crypto trading and mining.

Nepal is one of nine countries along with China, Algeria, Bangladesh, Egypt, Iraq, Morocco, Qatar, and Tunisia to have instituted an absolute bans on crypto, according to a report by the Library of Congress.

Even with the negative treatment of crypto by the government, Nepal is still ranked 16th in crypto adoption.

See Also: FinancialExpress; IndiaToday

brown wooden i love you print board on green grass during daytime — Photo by Discover Savsat on Unsplash

3. New Virtual Asset Law in United Arab Emirates Introduces Federal-Level Rules For Crypto-Related Activities

Setting Their Stage For Success

The United Arab Emirates (UAE) passed a new law governing virtual assets and creating the country's first regulatory regime for the cryptocurrency space at the federal level. The law requires licensure for entities engaging in crypto activities and carries penalties of up to $2.7 million and possible criminal liability for non-compliance. Expected to become effective January 14th, the new law entails widespread mandatory compliance for all sorts of crypto entrepreneurs operating in the UAE. It also sets minimum requirements for virtual asset service providers (VASPs) regarding anti-money laundering and the financing of unlawful organizations or terrorism. Legal entities deemed VASPs will have three months to adapt and comply with the new law. Crypto industry analysts and participants anticipate the federal recognition and regulatory clarity will encourage more web3 businesses to build in the UAE.

The UAE Cabinet also said that the regulation would support the efforts of the state to provide an attractive investment economic and financial environment for international companies and institutions operating in the virtual assets sector to provide their services in the state.

Burj Al-Arab, Dubai — Photo by Christoph Schulz on Unsplash

4. Coinbase Settles with NYDFS for $100 Million Over Lax AML Protections

Compliance Crackdown Costs Coinbase a Pretty Penny

Coinbase, Inc., recenly settled with the New York State Department of Financial Services (NYDFS) over allegations of lax anti-money laundering (AML) standards to the tune of $50 million. The company also agreed to invest an additional $50 million to "improve its compliance function over the next two years." The NYDFS asserts Coinbase violated New York banking law by failing to maintain an adequate compliance program, as evidenced by alleged deficiencies in its customer due diligence, transaction monitoring, sanctions screening, risk assessment, and case management.

5. Federal Banking Agencies Signal Cautious Approach to Crypto Banking Activities

Banking on Crypto? Feds Say Not So Fast

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) issued a joint statement on January 3, 2023 that reiterates certain aspects of prior crypto-asset-related guidance and highlights risks to banking organizations. The statement signals that the agencies will take an increasingly cautious approach to reviewing crypto-asset activities and business models of banking organizations to ensure that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system.

[T]he Agencies warn that they have “significant safety and soundness concerns with business models that are concentrated in crypto-asset-related activities or have concentrated exposures to the crypto-asset sector.” The Joint Statement does not define what level of concentration in crypto-asset-related activities would give rise to safety and soundness concerns.

The Joint Statement identifies eight key risks for banking organizations associated with crypto-assets and the crypto-asset sector, including: risk of fraud and scams, legal uncertainties related to custody, inaccurate or misleading representations and disclosures, significant volatility in crypto-asset markets, stablecoins susceptibility of risk, contagion risk within the crypto-asset sector, inadequate risk management and governance practices in the crypto-asset sector, and heightened risks for banking associated with open, public, and/or decentralized networks.

yellow and black plastic pack — Photo by Jessica Tan on Unsplash

Podcasts, Videos, and Blogs

The brightest voices & sharpest pens:

Bird Watching

Tweet, Tweet, Tweet!

The Public Ledger

Highlights from the hundreds of sources gathered each week by our research AI. Always DYOR - but in case you don’t have time, here’s some of ours:

General News and Opinion

U.S. - Federal

U.S. - State Law

International

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Closing Statements

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Quote of the Week:

"Perfection Is The Enemy Of Perfectly Adequate" - Saul Goodman

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The articles and opinions in this newsletter are not legal or financial advice. For legal and financial guidance, please consult a qualified attorney or financial advisor.

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