The Policy Pulse: 27 February 2023

The IMF’s “Nine Point Plan” for Crypto

On February 23rd, the International Monetary Fund (IMF) released a paper outlining nine key elements for effective policies surrounding cryptocurrency assets.

The paper outlines nine elements that the IMF claim “can help members develop a comprehensive, consistent and coordinated policy response”.

Some of the recommendations included not granting crypto official currency or legal tender status, adopting unambiguous tax treatment, and establishing legal certainty for cryptocurrencies.

Read the full article here.

FATF Calls for Increased Regulation of Crypto and Implementation of the “Travel Rule”

The lack of regulation for crypto and crypto service providers has created an opportunity for criminals and the proliferation of terrorist financing, according to this year’s Financial Action Task Force (FATF) Plenary session.

Delegates from over 200 countries attended the annual conference, which concluded on Thursday in Singapore.

The FATF decided to strengthen its Recommendation 15, which addresses virtual assets and virtual asset service providers. It also urged countries to implement these revised requirements, including the controversial “travel rule” that requires obtaining, holding, and transmitting originator and beneficiary information related to transactions.

Hong Kong Regulator Launches Public Consultation for Crypto Licencing Regime

On February 20th, the Securities and Futures Commission (SFC) of Hong Kong launched a consultation on new licensing requirements for virtual asset trading platforms.

Under the proposed regime, all centralized crypto exchanges operating in Hong Kong or marketing to Hong Kong investors will need to be licensed by the SFC, with the new rules set to take effect from 1 June 2023.

The proposed regulatory requirements for exchanges are based on the existing regime under the Securities and Futures Ordinance and, according to the SFC, are similar to those for licensed securities brokers and automated trading venues.

The SFC is seeking views on whether licensed operators:

• should be allowed to cater to retail investors?
• what additional measures would be required to protect investors?

Read the full article here.

US Court rules emojis could be considered financial advice

A recent ruling by a US District Court judge has found that certain emojis can indicate a “financial return on investment.” The ruling came as part of a court filing regarding Dapper Labs’ NBA Top Shot Moments NFTs, which were alleged to have violated security laws. The emojis in question included a rocket ship, a stock chart, and money bags.

Former US Securities and Exchange Commission Enforcement Branch Chief, Lisa Braganca, also warned via Twitter of the potential legal consequences of using emojis that may indicate future gains.

It’s important to note that this ruling is specific to this particular case, and the interpretation of emojis in other cases may differ. As the use of emojis becomes more prevalent in digital communication, it is essential to be mindful of their potential legal implications. This ruling serves as a reminder that even seemingly innocent emojis can carry legal weight in certain contexts.

US Federal Reserve, FDIC, and OCC release joint statement on crypto and liquidity risks to banks

On February 23rd, 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) released a joint statement highlighting liquidity risks that crypto poses to banks.

The risks highlighted by the US agencies were mainly related to the unpredictable scale and timing of deposit inflows and outflows associated with crypto assets. These risks can have a significant impact on the liquidity of banking organizations, especially in times of market stress or volatility.

Nigeria’s Central Bank Hoping to Improve CBDC Uptake

We also reported that the Nigerian Central Bank (CBN) are in talks with R3, the consortium behind DLT Corda, in order to develop a new system for its central bank digital currency (CBDC), the eNaira. The CBN is rethinking its strategy after uptake of less than 0.5%.

Read the full article here.

This is the web version of part of Ledgernomic’s weekly newsletter, The Policy Pulse, your go-to source for the latest developments in the crypto and blockchain industry, policy, and regulatory landscape. Every weekend, we’ll bring you an update on the most significant policy and regulatory changes affecting the industry, as well as analysis and commentary on the implications of these developments for the crypto and blockchain community. Whether you’re a crypto enthusiast, an investor, or a business leader, you’ll find valuable insights and information in every edition of The Policy Pulse.