December 17, 2022
a16z crypto Regulatory Team
Editor’s note: The a16z crypto Global Regulatory Roundup is a series that highlights the latest regulatory and policy happenings relevant to builders in web3 and crypto, as tracked and curated by the a16z crypto regulatory team. The roundups are based on recent news, the latest updates, new guidance, ongoing legislation, and frameworks released by regulatory agencies/bodies, industry consortia and professional associations, banks, governments, and other entities as they impact the crypto industry (or applications) around the world. [Past 2022 editions of this roundup: September 27 – October 17; October 18 – November 9; November 9 – 18].
We also occasionally include select other resources such as talks, posts, or other commentary – from us or from others – with the updates. For this week, see the comment letter we sent to the Financial Stability Board in reply to their Request for Comment on “International Regulation of Crypto-asset Activities: A proposed framework”.
- Department of Justice: A federal grand jury returned an indictment charging SBF with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations.
- Commodity Futures Trading Commission: The CFTC charged SBF, FTX, and Alameda with fraud and material misrepresentations in connection with the sale of digital commodities (naming bitcoin, ether, and tether). The agency asserted that defendants’ actions caused the loss of more than $8 billion in FTX customer deposits.
- Securities and Exchange Commission: The SEC charged SBF with orchestrating a scheme to defraud equity investors in FTX, and announced that investigations into other securities law violations and other entities and persons relating to the alleged misconduct are ongoing.
- Senate Banking Committee held a hearing, as did the House Financial Services Committee
🌽 Commodity Futures Trading Commission
- Commissioner Summer K. Mersinger said more than one government agency will likely have jurisdiction over crypto, and that the CFTC would probably have to work more closely with other agencies, including the SEC and state officials.
- Commissioner Christy Goldsmith Romero said blockchain would experience “explosive growth” outside of cryptocurrencies, such as for tracing agricultural commodities.
- The federal judge in the Ooki DAO matter ordered the CFTC to serve legal papers on the DAO’s original founders, if possible. He will delay entering a subsequent order on the more general issue of whether the CFTC provided the DAO with adequate notice of the lawsuit by posting in an online discussion forum until the CFTC makes the attempt.
- Senators Ed Markey (D-Mass.) and Jeff Merkley (D-Ore.) and Congressman Jared Huffman (D-Calif.) introduced a draft bill that would direct the Environmental Protection Agency to study the energy usage and environmental impact of crypto mining.
- Senators Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kans.) introduced the Digital Asset Anti-Money Laundering Act that seeks to impose KYC requirements on blockchain infrastructure providers and participants in the U.S., including developers creating software for decentralized protocols, as well as miners and validators that support those protocols.
- Congressman Patrick McHenry (R-N.C.) wrote to Secretary of the Treasury Janet Yellen asking for a delay on the implementation of crypto tax provisions in last year’s Infrastructure Investment and Jobs Act until there is further clarity on who the bill covers.
🛡️ Consumer Financial Protection Bureau
- CFPB Director Rohit Chopra said he did not anticipate expanding enforcement in crypto at this time, and he called stablecoins the “number one issue” that would affect consumers and consumer financial protection.
⚖️ Department of Justice
- The DOJ charged 21 U.S. citizens for their roles in transnational crypto money laundering networks that included romance scams, business email compromises, technical support schemes, and other fraud schemes.
- A co-founder of OneCoin pleaded guilty to wire fraud and money laundering charges in connection with the company’s multi-billion dollar fraud scheme.
🏦 Department of the Treasury
- The U.S. Department of the Treasury announced a settlement with Kraken for $362,158.70 to settle its potential civil liability for apparent violations of sanctions against Iran.
🛒 Federal Trade Commission
- FTC spokeswoman Juliana Gruenwald Henderson said in a statement to Bloomberg that the FTC was investigating several firms for possible misconduct concerning crypto.
💲 Financial Crimes Enforcement Network
- Acting FinCEN Director Himamauli Das said the digital asset ecosystem is a “key priority area” for FinCEN and that the agency is considering whether additional regulations or guidance is necessary, paying particularly close attention to DeFi and companies that engage in traditional depository lending activity.
📊 Financial Industry Regulatory Authority
- FINRA announced it is conducting a targeted exam of firm practices regarding retail communications concerning crypto asset products and services.
💵 Financial Stability Oversight Council
- The FSOC published its annual report for 2022, which notes that traditional financial institutions remain largely insulated from the crypto downturn, but there are still gaps in crypto oversight.
🗽 New York
- New York imposed a two-year moratorium on new and renewed air permits for fossil fuel power plants used for “proof-of-work” cryptocurrency mining.
- The New York Department of Financial Services issued guidance that requires New York State-registered banks to seek regulatory permission 90 days before getting involved in any new or significantly different crypto activities.
💸 Office of the Comptroller of the Currency
- The OCC issued a semiannual risk perspective that addresses digital assets, listing risks it associates with the crypto market — including immature risk management practices, potential volatility of stablecoins, and contagion risks.
📈 Securities and Exchange Commission
- The SEC released its Strategic Plan for fiscal years 2022 to 2026, outlining the agency’s objectives, which include continuing to enhance its expertise in crypto and examining strategies that address risks relating to crypto.
- The SEC’s Division of Corporation Finance published a sample comment letter it may issue to companies regarding disclosure obligations relating to recent events and conditions in the crypto markets.
🏦 Bank for International Settlements
- The BIS published two papers regarding DeFi. The first paper argues that a new form of systemic fragility could arise from collateralized lending under a DeFi architecture. The second paper argues that DeFi does not fully fix the problem of centralized intermediaries overcharging for services.
🌐 Basel Committee on Banking Supervision
- The BCBS endorsed global crypto banking rules that suggest exposure limits for banks with respect to crypto.
- The Belgian Financial Services and Markets Authority said cryptocurrencies without an issuer, like bitcoin and ether, are not securities. However, the agency clarified that instruments that have a payment or exchange function may be subject to other regulations.
- Brazil’s Congress passed a bill that would regulate cryptocurrency use as a payment mechanism, which would give legal status to payments in crypto for goods and services without granting them the status of legal tender.
- Canada’s Manitoba province enacted an 18-month moratorium on new crypto mining. The existing 37 mining facilities will not be affected.
- The Canadian Securities Administrators announced it is strengthening its approach to oversight of crypto trading platforms by expanding existing requirements for platforms operating in Canada.
- The Canadian Securities Administrators announced it will prohibit crypto firms from offering leveraged trading to its citizens.
- The Banc de France (France’s central bank) and the Banque Centrale du Luxembourg (Luxembourg’s central bank) announced they jointly conducted a successful wholesale CBDC initiative.
- The Bank of Japan announced it plans to engage in experiments relating to a digital yen with three megabanks and regional banks in the country.
🌐 Organisation for Economic Co-operation and Development
- The OECD published a report calling for “urgent policy action” in light of the crypto winter and international collaboration to avoid regulatory arbitrage and fragmentation in regulations between different authorities.
- An official from Singapore’s Monetary Authority said Singapore’s banks are required to hold $125 of capital against an exposure of $100 to cryptocurrencies like bitcoin or ether.
- Banco de España (Spain’s Central Bank) opened calls for proposals on a wholesale CBDC project, which seeks to simulate the use of a CBDC in wholesale transactions.
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