The Policy Pulse: 29 January 2023


EU Parliament approves crypto capital requirements

Earlier this week, the European Parliament’s Economics and Monetary Affairs Committee (ECON) passed a draft law to implement the Basel III rules on banking capital and liquidity requirements. The draft legislation includes capital requirement rules for crypto assets, which require banks to hold one euro of balance sheet capital for every euro worth of crypto asset. 

Some key points to note are:

  • The legislation calls for a 1-for-1 capital requirement for crypto assets, but the term “crypto assets” is not yet defined.
  • The industry body AFME suggests that the definition of crypto assets may be ironed out during the EU’s trilogue process.
  • The draft law also requires banks to disclose their activities related to crypto assets and takes ESG impact into consideration when assessing bank risks.

Stay Tuned: The final vote and implementation date have yet to be determined, and more details on the definition of “crypto assets” are expected to be presented by the European Commission by June 2023.

Coinbase fined 3.3 million by Dutch Regulator

On January 26th, the Dutch Central Bank (DNB) announced that it fined Coinbase Europe €3.3 million for providing crypto services in the Netherlands without a license.

Under the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft) crypto firms that want to provide services in the Netherlands are required to register with the DNB.

The registration requirement for crypto businesses was introduced in May 2020. The DNB said in their press release that Coinbase’s non-compliance with the Wwft may have resulted in a large number of unusual transactions going unnoticed by investigative authorities. Coinbase has until March 2, 2023, to object to the fine.

This is the second high-profile crypto exchange that has come under the scrutiny of the Dutch Central Bank. Last year, Binance was also fined 3.6 million for failing to comply with the same law.

SEC rejects Ark and 21Share’s BTC ETF application for a second time

Also this week, the SEC rejected a second attempt by Ark Investment and 21Shares to list a spot bitcoin ETF on the Cboe BZX Exchange. The SEC’s reasoning for the rejection was that the exchange failed to show that the ETF proposal met requirements for preventing fraud and other harmful practices.

A previous attempt by Ark and 21Shares in April was also rejected, however, a new ETF application was filed in May. To date, the SEC has rejected several applications for a bitcoin ETF. Grayscale Investments, which also had its ETF application rejected, is currently taking legal action against the SEC. In a court filing earlier this year, the crypto investment firm said that the SEC’s decision for rejecting the bitcoin ETF was “illogical” and “fundamentally unreasonable”.

Senators Warren and Wyden Call for Increased Oversight of Cryptocurrency Auditing Firms

Earlier this week, we reported that Elizabeth Warren and Ron Wyden wrote a letter to the Public Company Accounting Oversight Board (PCAOB) urging it to increase its oversight of auditing firms that assess cryptocurrency businesses. 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.

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