Veriscope — Weekly Regulatory Recap

A quick review of past week’s most important news and updates on crypto regulation.

Welcome to the first Veriscope Regulatory Recap, a quick review of past week’s most important news and updates on crypto regulation. Our goal is to raise awareness of the growing global effort to bring crypto under regulation, and the push from the industry’s best and brightest to make sure that it is done in a constructive and intelligent way.

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European Union may Remove the €1000 Threshold for Implementation of FATF’s Travel Rule

The EU parliament is currently discussing the proposal to remove the €1,000 threshold set by FATF for the Travel Rule to kick in. If the proposal receives green light from the EU parliament, virtually all crypto transactions will have to go through the Travel Rule scanner, no matter the amount.

In a recent video published on PYMNTS.com, Ajinkya Tulpule, Chief Compliance Officer at crypto exchange bitFlyer, said that a lot of crypto exchanges are lobbying against this proposal as they see it as an extreme measure. Yet, there is a significant chance of the proposal getting approved. After all, most MEPs (Members of the Parliament) favor it.

Tulpule believes that the proposal may turn out to be a “Headache” for virtual asset exchanges if it comes into force. That said, a robust Travel Rule Solution Provider (TRSP) such as Veriscope can make Travel Rule compliance easier for exchanges.

A Fall-out of Terra-Luna Fiasco: South Korea to Form a new Regulatory Body for Digital Assets

South Korea will launch a regulatory body to oversee the nascent digital asset sector in the country. Recent reports indicate that the South Korean government is fast-tracking the launch of a crypto regulatory body because of the Terra-Luna debacle that led to investors losing millions of dollars.

The news was first reported by Newspim, which mentioned that the regulatory body named “Digital Assets Committee” is likely to launch early next month. It will be distinct from the other two major financial authorities, namely Financial Services Committee (FSC) and Financial Supervisory Service (FSS).

Currently, the Financial Services Committee and its financial intelligence unit monitor and ensure that the crypto industry plays by South Korean rules. But once the Digital Assets Committee is launched, it will be the sole authority to ensure strict compliance by the virtual asset companies operating in the country.

European Council & Parliament Come to an Agreement on Digital Operational Resilience Act

The European Council issued a press release on 11th May 2022, announcing that it has come into a provisional agreement with the European Parliament on Digital Operational Resilience Act.

Popularly known by its moniker, DORA, the law aims to strengthen the European financial industry. Once the law comes into the implementation, a range of industries, from virtual assets to payment providers, will have to begin complying with it.

The first thing DORA would do is bring uniformity to financial companies’ networks and information infrastructure security. It will compel financial companies to maintain an extensive risk-tackling mechanism, a thorough record of any ICT breaches, and conduct regular preventive exercises to test the resiliency of the system. Besides, it will also bring in the third-party service providers of these financial companies within the regulatory net.

European Financial regulatory Bodies Call for “License Revocation” of Crypto Exchanges Violating AML Rules

Three European Financial bodies, namely European Banking Authority, European Insurance and Occupational Pension Authority, and European Securities and Markets Authority, recently published a 73-page report titled “On the withdrawal of authorization for serious breaches of AML/CFT rules.”

In the report, the financial bodies overseeing securities, pension, insurance, and banking sectors in the 27-nation bloc called for stringent action against virtual asset companies for violating anti-money laundering provisions. That said, the report also notes that license revocation should only be used as a last resort and that, too, in severe cases only.

Governments are coming together to regulate the digital assets industry globally. Thus, complying with crypto regulations is no longer an option but a must-do. The most prominent piece of regulation that virtual asset companies must start complying with is FATF’s Travel Rule, which will sooner or later be adopted by all countries globally. And that’s where a Travel Rule Solution Provider (TRSP), such as Veriscope, comes into the picture. Visit Veriscope’s website for more information: https://www.veriscope.network/

Get in touch with our BizDev team for further information on how Veriscope can help you comply with the Travel Rule.

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