Weekly Crypto Policy News Roundup, 11 February 2022

Every week we report on cryptocurrency policy news from around the world. Subscribe to our weekly newsletter to keep up to date on this rapidly evolving space.

International

IMF on CBDC Policy Lessons

On 9 February 2022 the International Monetary Fund (IMF) published a report titled ‘Behind the Scenes of Central Bank Digital Currency Emerging Trends, Insights, and Policy Lessons‘ in which it reflects on CBDC trials run by the central banks of the Bahamas, Eastern Caribbean, China, Uruguay, Sweden, and Canada. The report concludes that
issues with CBDCs remain, including competition with bank deposits, sufficient incentives for the participation of the private sector, and their off-line capacity.

Prior to the publication of the paper, the Atlantic Council GeoEconomics Center had a discussion on it, which you can see here.

Africa

Kenya Considers CBDC

A number of African countries are pushing ahead with implementing or exploring central bank digital currencies (CBDC). We previously reported that Nigeria became the first country in Africa to pilot a CBDC, the eNaira. Zambia is also considering a CBDC.

On 10 February, Kenya’s central bank published a discussion paper on a possible Kenyan CBDC.

The discussion paper stated that “Rapid technological innovations and developments are accelerating the pace of digitalization. New digital payment methods have emerged to facilitate transactions, including CBDC, issued by central banks to serve as money in a digital form. Naturally, the balance of risks and benefits of CBDCs will vary from one economy to
another.“

Feedback was requested to be submitted by 20 May 2022.

United States

FDIC to greenlight certain banks for crypto

On 7 February 2022, the FDIC (ie. Federal Deposit Insurance Corporation) published its priorities for 2022 which will include an evaluation of the risks posed by crypto-assets to determine which banks can safely engage in crypto-asset-related activities.

Canada

Canada to grow crypto sector

On 9 February 2022 Bill C-249 on the encouragement of the growth of the crypto-asset sector received its first reading in Parliament. The Bill, if enacted, would require the Canadian Minister of Finance to develop a national framework to encourage the growth of the crypto-asset sector in Canada by focusing on lowering barriers to entry into the sector while protecting those working in the sector and minimizing the administrative burden.

A very exciting development for Canada!

European Union

EU Regulators on Digital Finance

On 7 February the European Supervisory Authorities (ESAs) (being the EBA, ESMA, and
EIOPA) published their joint report to the EU Commission’s call for advice on digital finance, identifying areas where legislative action could improve the regulation and supervision of digital finance.

A detailed summary of the ESAs joint report can be found here.

EBA on Digital Finance

On 7 February, the European Banking Authority (EBA) gave its views on the EU
regulator’s response to the EU Commission’s call for advice on digital finance. In the EBA’s view EU regulators must improve their understanding of platform-based business models, and value chain evolutions, particularly in the context of interdependencies between financial institutions and technology companies, and ‘mixed activity groups’ (MAGs) providing both financial and non-financial services.

CBI “very unlikely” to approve crypto funds

On 8 February, the Central Bank of Ireland published a report on the securities market, in which it stated that it is currently highly unlikely that it would approve an EU mutual fund for retail investors with exposure crypto-assets due to the high risks associated with crypto-assets and the lack of expertise amongst retail investors.

ESMA Intends to Monitor Influencers

On 9 February 2022 the EU’s equivalent of the Securities and Exchange Commission, the European Securities and Markets Authority (ESMA), gave its thoughts on the impact of digital
technology on the financial sector, and mentioned that it intends to monitor the activities of
influencers.

United Kingdom

Crypto-asset Firms not registering as per AML rules

On 2 February 2022, the UK Parliament’s House of Commons Treasury Committee issued a report on economic crime, including a chapter on increased consumer protections for crypto-assets. The report submitted that it is unacceptable that, having introduced AML regulations for crypto-asset firms in 2020, there are so many firms that have not yet been registered. It noted that large numbers have not even applied for registration.

BoE CBDC Minutes

On 9 February 2022 the Bank of England published the minutes of the meeting of the CBDC Technology Forum released on 24 January 2022 including discussions on accounts and token-based CBDC systems, comparing different ledger data structures across a range of design areas to understand the advantages and disadvantages of each.

Russia develops crypto framework

As we reported previously, the Russian government overruled the Central Bank of Russia’s proposal for a complete ban on crypto, and on 8 February the government set out principles
for the regulation of cryptocurrencies that it has developed with input from the Central Bank of Russia.

Kazakhstan Electricity Price Rise

On 3 February 2022 legislative proposals to address the energy supply issues caused by increased crypto-mining in the country were put forward. The proposals seek to raise the price of electricity for crypto-miners, introduce a tax on crypto-mining equipment and remove mining hardware from an exemption on value-added tax.