Weekly Recap: Interesting Regulatory Developments Industry-wide
EU Mulls Over New Crypto AML Authority
The European Union is set to put together a new regulatory unit that will directly oversee crypto service providers. This falls beneath an anti-money laundering legislative package. It is part of the EU’s long-running goal to build a comprehensive regulatory structure around the cryptocurrency industry.
The new watchdog called the Anti-Money Laundering Authority (AMLA) has been in talks since last year. If successfully established, the AMLA will combat money laundering in Europe’s financial industry. It will also have authority over certain types of credit and financial institutions as well as suspicious or risky crypto businesses.
Several signs point toward the AMLA’s eventual emergence. However, the institution will be a major change for all the nations involved, hence, negotiations are still underway.
Coin Center May Oppose Tornado Cash Sanctions in Court
Last week, US-based crypto policy non-profit Coin Center spoke up concerning the Treasury’s sanctions on crypto mixer Tornado Cash. Recently, the Treasury Department’s Office of Foreign Asset Control (OFAC) blacklisted the crypto platform on account of its role in money laundering operations.
According to Coin Center, the OFAC’s ban comes under question as it may be unconstitutional. The advocacy group alleged that the regulator possibly crossed the legal boundaries of its authority. Coin Center’s release pointed out that this occurred due to the OFAC dealing with autonomous code as if with a person.
Coin Center has shared plans to first review the situation with the OFAC. They will also work to aid Tornado Cash users with funds stuck on any of the platform’s 44 frozen addresses. Following this, the advocacy group will begin exploring challenging the ban in court.
Celsius CEO Controls Trading Months Before Bankruptcy
A recent publication from the Financial Times claims CEO Alex Mashinsky took over Celsius’ trading strategy a few months before it collapsed. Mashinsky reportedly expressed concerns in January that rising interest rates would reflect poorly on crypto prices.
Following this, he allegedly vetoed decisions from more experienced traders, eventually taking the reins himself. This was a move that saw the platform lose up to $50M in January alone. Sources claim Celsius’ chief investment officer Frank van Etten clashed with the CEO, and ultimately left the platform in February.
PoW Team Disrupts Community with Plans to Freeze Selected Smart Contracts
Opponents of Ethereum’s forthcoming merge have continued to push their plans for a hard fork to keep the proof-of-work chain alive. In less than a month, the Ethereum network is set to go through its transition to proof-of-stake. Ahead of this, PoW advocates revealed on Wednesday that they intend to freeze certain LP contracts.
According to the team, ETHW Core, freezing the contracts is a necessary move to secure users’ funds post-fork until they can find a better way. The team believes that after the fork, user assets on DEX liquidity pools and lending protocols will be vulnerable.
The idea has sparked some backlash among community members with some saying it doesn’t seem to uphold decentralization, a core tenet of PoW supporters.
Crypto.com Partners with Gas Station for Crypto Payments Across Australia
In an August 18 release, exchange platform Crypto.com announced a partnership with the leading Australian gas station and convenience store chain On The Run (OTR).
Through this collaboration, Australian residents will now be able to make everyday purchases with crypto across 175 OTR branches in the country. The announcement revealed that users only need a Crypto.com wallet to do this. Additionally, Peregrine Corp, the OTR parent company has plans to extend this payment model to 250 retail locations all over the nation.
Karl Mohan, Melbourne-based General Manager of the exchange Asia & Pacific, spoke on the partnership. According to Mohan, this move comes alongside rising demand for crypto assets. Reportedly, more Aussie merchants are choosing to use virtual currency.
Hodlnaut Dismisses 80% of its Staff to Reduce Expenditure
Crypto lending platform Hodlnaut revealed that they have laid off 80% of its staff. This reportedly comes to about 40 personnel as the company works to cut down its expenses. The team is also trying to reduce their burn rates, hence, they will change all open-term interest rates to 0% APR starting Monday.
Hodlnaut shared an update on its application for judicial protection as it caves to market pressure during the crypto winter.
The company halted withdrawals at the start of this month and last week, sought a judicial manager to monitor their operations ahead of recovery. Their release noted that a tentative date for a hearing regarding their application has been set on Monday, August 22. Hodlnaut continues to take steps to stabilize its liquidity.
South African Central Bank Encourages Banks to Accept Crypto Clients
The South African Reserve Bank has issued instructions asking banks throughout the nation to process crypto operations.
SARB released a guideline calling for financial institutions to avoid enforcing a blanket ban on crypto assets. Instead, the central bank has requested that fiscal bodies carry out due diligence when faced with crypto-using customers.
SARB’s directions come shortly after some of the nation’s banks set out to shut down accounts with ties to digital assets. These firms highlighted the absence of regulation in the nation’s crypto sector as their main reason. They also claimed that these accounts had greater risk exposure.
However, while SARB accepted that the crypto industry does carry risks, they maintained that the banks must conduct a full review. “Banks must ensure that they maintain adequate records in respect of all customer transactions, including fiat-to-fiat, fiat-to-crypto, and crypto-to-fiat transactions,” SARB said.
