Veriscope Weekly Regulatory Recap (June 6 — June 10)

Welcome to the second edition of Veriscope’s Weekly Regulatory Recap. Amid the current crypto market turmoil, the regulatory landscape is heating up even further. So, let’s dive straight into it. We hope you enjoy it.

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Japan may Soon Approve a Proposal to Seize Stolen Virtual Assets

With the crypto space experiencing considerable growth, the number of hacking-related too experienced an uptick. Reports suggest that crypto thefts amounted to $14 billion in 2021 compared to $3.2 billion in 2020.

Japan, one of the most important markets in the crypto world, is among the most-affected countries in terms of crypto hacks. For example, Liquid, a Japanese crypto exchange, lost $100 million to hackers in mid-2021.

Despite increasing incidents of crypto-related hacks, there are no laws that empower Japanese authorities to seize stolen digital assets.

Well, that is about to change, as per Nippon, a local media outlet. Nippon reported that Japan’s Ministry of Justice is contemplating approving a proposal to confiscate stolen digital assets.

US Senators Kirsten Gillibrand & Cynthia Lummis Unveiled the “Responsible Financial Innovation Act” Aimed at Regulating Digital Assets

After a long wait, two US Senators, Kirsten Gillibrand & Cynthia Lummis, have finally introduced a bill to regulate digital assets in the country. Officially titled “Responsible Financial Innovation Act” or “Lummis-Gillibrand,” the bill was announced by Senator Gillibrand through a press release.

Senator Gillibrand believes the “Responsible Financial Innovation Act” will bring the same success at the federal level that her home state, Wyoming, has experienced, thanks to its crypto-friendly approach.

The bill has a lot in the store for the nascent crypto space. For instance, if the bill comes into force, the Commodity Futures Trading Commission will become the go-to authority of virtual currencies. It will also make it easier to identify the digital assets that are securities and the ones that are commodities.

Stablecoins, too, will be brought within the regulatory net. The bill states that stablecoin issuers must meet strict reserve requirements before issuing the asset-backed digital assets. Click here to read more about what aspects are covered under the Lummis-Gillibrand bill.

Lithuania to Crack Down on Digital Assets, Will ban Anonymous Accounts

To prevent misuse of Lithuania’s lax regulations around digital assets, the country’s various ministries came together to approve the legal amendment to Anti-Money Laundering (AML) provisions, as announced by the Ministry of Finance.

Once approved, it will effectively outlaw anonymous accounts and further strengthen the user identification mechanism. The bill will also implement strong regulatory requirements for cryptocurrency exchanges.

For instance, the company operating the crypto exchange must have a minimum capital of €125000. And the company’s senior executive management must only consist of Lithuanian citizens.

South Korean Exchanges may Soon Have to Comply With Guidelines for Listing & Delisting of Digital Assets

The Terra-Luna debacle initiated a chain of regulatory events worldwide, especially in South Korea. First, the country announced that it would establish a new regulatory body to oversee the digital assets market.

Now, reports indicate that South Korean authorities have asked crypto exchanges to prepare guidelines on the listing & delisting of cryptocurrencies.

Yun Chang-Hyun, a South Korean Lawmaker from the virtual assets committee, has called for a second meeting with Upbit, Bithumb, Coinone, Korbit, and Gopax, the top-most crypto exchanges in the country. The main theme of the discussion would be the guidelines.

Although the crypto market is experiencing a downturn at the moment, the regulators are in no mood to let the nascent industry stay outside of the regulatory framework any longer. Thus, country after country is coming up with regulations to ensure that sanctioned individuals and entities do not turn to digital assets to circumvent the sanctions.

Thus, now is the right time to begin complying with the current regulations, if you haven’t already. It will enable you to stay clear of any possible violations now or in the future. Start with FATF’s Travel Rule, as it is the most significant piece of global regulation around digital assets today.

You will need a robust Travel Rule Service Provider (TRSP) to begin complying with the rule. And there’s no better solution than Veriscope. Go ahead and check it out here: https://www.veriscope.network/. Contact our BizDev team for a discussion.

Also, follow us on Twitter, LinkedIn, Facebook, Discord, Telegram, and Medium to stay up-to-date on all regulatory evolution around the global digital assets market.

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