Blockchain Week in Review – March 2022 #2 | Perkins Coie

Weekly Blockchain Focus

Zelenskyy Indicators Digital Belongings Invoice Into Regulation, Legalizing Crypto in Ukraine
Japan Units Penalties on Crypto Exchanges in Case of Violations of Sanctions on Russia
SEC Rejects Spot Bitcoin ETF Proposals From NYDIG, International X
Bipartisan Reward for Biden’s Govt Order on Crypto
Crypto Apps break 100M Downloads in Fourth Quarter
EU Parliament Committee Votes Towards Proof-of-Work Ban and Helps Various Modification on Crypto Belongings

Additional Studying

Andreessen Horowitz Hires Michele Korver, Former FinCEN Chief Foreign money Advisor
CNBC: Senate Banking Committee holds listening to on crypto and illicit finance
The Block: ConsenSys raises $450 million Sequence D at $7 billion valuation
The Washington Post: Sarah Bloom Raskin withdraws nomination for Fed vice chair for supervision

Zelenskyy Indicators Digital Belongings Invoice Into Regulation, Legalizing Crypto in Ukraine

 On March 16, Ukrainian President Volodymyr Zelenskyy signed the Regulation on Digital Belongings. Based on a statement by the Ministry of Digital Transformation, the regulation determines the authorized standing, classification, possession, and regulators of digital belongings, and units forth registration necessities for service suppliers. Ukraine’s Nationwide Fee on Securities and the Inventory Market is tasked with regulating the market the place international and Ukrainian crypto exchanges will now be allowed to function legally and banks permitted to open accounts on their behalf. Zelenskyy had rejected an earlier model of the invoice, which was permitted in September 2021.

Lately, Ukraine has obtained not less than $100 million in crypto donations from these hoping to assist defensive and humanitarian efforts through the nation’s battle with Russia.

Japan Units Penalties on Crypto Exchanges in Case of Violations of Sanctions on Russia

Japan’s Monetary Providers Company and Ministry of Finance issued a joint statement on March 14, setting forth penalties crypto exchanges might face ought to they fail to adjust to sanctions in opposition to Russia, as reported by Reuters. Exchanges making unauthorized funds to sanctioned people could also be fined as much as 1 million yen ($8,500) and executives may resist three years in jail. Exchanges are actually additionally required to report any suspected situations of such transfers.

To this point, exchanges have differed on whether or not to wholly block Russian addresses from utilizing their providers.

President Biden Points Govt Order Calling for the Examination of Crypto on a Coordinated Foundation Throughout the Federal Authorities

President Joe Biden unveiled a sweeping directive on March 9—a “first-ever whole-of-government strategy” to digital belongings which orders parts of the Federal Authorities to coordinate their efforts in creating steering for the rapidly-growing trade.

The executive order, which requires coordinated interagency motion and communication to states that the administration locations “the best urgency on analysis and growth efforts into the potential design and deployment of choices of a United States CBDC [and further calling for analysis of the potential risks and benefits].” Inside 180 days of the order, “the Secretary of the Treasury, in session with the Secretary of State, the Legal professional Common, the Secretary of Commerce, the Secretary of Homeland Safety, the Director of the Workplace of Administration and Finances, the Director of Nationwide Intelligence, and the heads of different related companies, shall undergo the President a report on the way forward for cash and cost techniques, together with the circumstances that drive broad adoption of digital belongings; the extent to which technological innovation might affect these outcomes; and the implications for the US monetary system, the modernization of and adjustments to cost techniques, financial development, monetary inclusion, and nationwide safety.” The order calls for extra stories to be produced by varied companies, in coordination with the Secretary of the Treasury, together with stories concerning “the implications of developments and adoption of digital belongings and adjustments in monetary market and cost system infrastructures for United States customers, buyers, companies, and for equitable financial development;” “a technical analysis of the technological infrastructure, capability, and experience that will be essential at related companies to facilitate and assist the introduction of a CBDC system ought to one be proposed;” “a report on the position of regulation enforcement companies in detecting, investigating, and prosecuting legal exercise associated to digital belongings;” and a report concerning the impacts of distributed ledger know-how on quick, medium, and long run power transition. The order additionally focuses on learning the “dangers and regulatory gaps posed by varied sorts of digital belongings and offering suggestions to handle such dangers.” Different stories are due in lower than 180 days, comparable to a report “providing further views on illicit finance dangers posed by digital belongings, together with cryptocurrencies, stablecoins, CBDCs, and traits in the usage of digital belongings by illicit actors” which can be saved labeled as is due in 90 days.

Senate Banking Committee rating member, Sen. Pat Toomey (R-Pa.), was “inspired” by the administration’s acknowledgment of the sector and its development. Chairman of the Banking Committee, Sen. Sherrod Brown (D-Ohio), expressed comparable accolades for the order, stating it’s “crucial we strengthen our monetary resilience and nationwide safety” by stopping the usage of cryptocurrency to evade the regulation.

Chairwoman of the Home Monetary Providers Committee, Rep. Maxine Waters (D-Calif.), referred to as the directive “an essential step” in understanding how digital belongings might form American society and the monetary system. She acknowledged households throughout the nation seeking to rebuild from the COVID-19 pandemic might flip to monetary alternate options like cryptocurrency, and it’s crucial they’re shielded from fraud, manipulation, and abuse.

Rating member on the Home committee, Rep. Patrick McHenry (R-N.C.), referred to as for bipartisan insurance policies on regulating digital belongings. He acknowledged, “As Congress contemplates regulatory frameworks for digital belongings, we should additionally absolutely acknowledge their advantages—just like the essential position they’ve performed in ushering help to Ukrainians—and their underlying applied sciences, which is basically lacking on this announcement.”

Whereas McHenry additionally pushed again in opposition to claims cryptocurrency could also be utilized by Russian oligarchs to evade sanctions, Sen. Elizabeth Warren (D-Mass.), member of the Senate Banking Committee, referred to as on the Treasury Division to make clear how crypto will likely be prevented from use as a device to get round such sanctions.

Spokespersons and leaders with finance regulators together with the Commodity Futures Buying and selling Fee, the Securities and Trade Fee, the Client Monetary Safety Bureau, and the Division of Homeland Safety echoed the significance of the directive, together with supporting “accountable” innovation and guaranteeing shopper safety, and welcomed the chance to collaborate with their colleagues within the sector to perform these targets. Extra protection from Coindesk.

SEC Rejects Spot Bitcoin ETF Proposals from NYDIG, International X

On March 10, the Securities and Trade Fee disapproved two spot bitcoin exchange-traded fund proposals submitted by NYDIG and Global X. As with prior proposal rejections (e.g., First Trust and Skybridge, VanEck, and WisdomTree) regulatory filings cited a scarcity of surveillance-sharing agreements and the perceived lack of ability to curb fraud and manipulative practices out there. Protection by The Block.

Crypto Apps Break 100M Downloads in Fourth Quarter

Based on a report launched on March 17, the final three months of 2021 noticed greater than 100 million downloads of crypto functions comparable to Coinbase, Crypto.com, Binance.US, Binance, and Voyager. These apps allow mainstream buyers to work together with blockchains and handle their holdings in a much less advanced manner than the “wallet” most well-liked by savvier customers.

In 2021, downloads grew by 400% over the prior yr (in distinction to development of 64% in 2020). Periods had been up 567% over the prior yr, topping 4 billion within the fourth quarter.

Based on Sensor Tower, downloads of the highest 5 apps are down in early 2022 versus the prior quarter; nonetheless, they’re nonetheless up 770% over January/February of 2020.

In February, Crypto apps additionally took three of the highest 5 spots for strongest obtain development over the prior week amongst mobile-first manufacturers promoting through the Tremendous Bowl, per Sensor Tower. Protection by AXIOS.

EU Parliament Committee Votes Towards Proof-of-Work Ban and Helps Various Modification on Crypto Belongings

The EU’s Committee on Financial and Army Affairs (ECON) thought of the proposed Markets in Crypto Belongings (MiCA) framework, which included an modification prohibiting proof-of-work blockchains comparable to Bitcoin. Based on a series of tweets by Patrick Hansen, head of technique at Unstoppable Finance, the committee finally voted in opposition to “the POW ban,” with 23 members in favor, 30 in opposition to, and 6 abstaining. Your entire MiCA draft obtained 31 votes in favor, 4 in opposition to, and 23 abstentions. Outcomes of the votes on the amendments can be found here.

Hansen explained that the teams supporting the POW ban have one final possibility—to “veto a fast-track process of MiCA by means of the trilogues [and] deliver the dialogue to the plenary of the Parliament” for which they would want, and at the moment seem to have, 1/10 of the votes of the EP.

Bitcoin advocates voiced concern that such a ban would have deleterious penalties for Bitcoin. Jake Chervinsky, Govt Vice President and Head of Coverage at Blockchain Affiliation, opined that the ban resembled “a pretext for a bitcoin ban” and “in the event that they handle to ban POW, they’ll come for POS [proof-of-stake] subsequent, and each different Sybil resistance mechanism after that.”

Another modification from member Stefan Berger, which obtained assist and was accepted by the European Parliament, reads: “By 1 January 2025, the Fee shall current to the European Parliament and to the Council, as acceptable, a legislative proposal to amend Regulation (EU) 2020/852, in accordance with Article 10 of that Regulation, with a view to together with within the EU sustainable finance taxonomy any crypto asset mining actions that contribute considerably to local weather change mitigation and adaptation.” Protection by BITCOIN.COM.

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