Cryptocurrencies have digitised a significant amount of global monetary flow in a matter of years. But unfortunately, this transition has also provided a medium for scammers. Many criminals take advantage of blockchains to launder money. Because of this reason, anti-money laundering (AML) laws have become more relevant today.

Investors are at more risk of fraud from Ponzi scheme-based projects than ever. That’s why introducing such laws in crypto has become crucial to keep investors and the overall industry safe. 

In this article, we will learn about the role of AML in crypto and why it has become necessary for the regulatory authorities.

## Understanding AML in crypto

Money laundering is defined as an illegal act of cleaning money that is obtained through illicit means. Fraudsters conceal their actual source of earnings and change it to a legal one to escape from laws. To impede such crimes, governments have AML laws.
 
AML for crypto is the set of similar regulations that applies to the traditional laundering of money. These help stop the fraudulent conversion of illegally gained digital assets into fiat currencies. 

In many countries where crypto is regulated, AML is supervised by financial crime authorities. For instance, in the United States, [FinCEN](https://www.fincen.gov/) handles AML. Likewise, in the United Kingdom, [FCA](https://www.fca.org.uk/) ensures accountability.

## How does AML work in crypto?

The Financial Action Task Force [(FATF)](https://www.fatf-gafi.org/) is a global organisation. It defines the rules each country has to follow to prevent the misuse of finances. In 2014, the organisation also incorporated virtual assets into its code. Following that, the financial authorities of many countries included it in their regulations. 

Authorities are working with virtual asset service providers (VASPs) to implement these laws. VASPs include cryptocurrency exchanges, NFT marketplaces, token issuers, and some DeFi firms. These are required to register themselves to the regulatory bodies. 

Furthermore, they must follow the know-your-customer (KYC) standard to get user information. This way, regulators can easily track suspicious transactions as they have access to necessary user information. 

## AML and KYC for crypto

The KYC procedure is one of the most critical parts of identifying illegal transfers. The decentralised distributed ledgers maintain transparency and traceability. That’s why they allow irregularities to be easily spotted. Once the authorities know the public wallet address, they can track down the person or entity behind it through blockchains. 

However, digital asset companies have a different KYC standard than traditional firms. Here, face and biometric verification are not required. Instead, you must provide your legal name, authentic address, and ID card. But, these standards differ from one service provider to another. The reason is that not all of them are regulated by one authority.

## AML Consulting services for crypto 

In the digital assets market, anti-money laundering (AML) measures have become so necessary that now there are consultants in this domain. Various firms have emerged that provide P2P services for compliance with laws. These firms operate to ensure compliance with AML and protection against terrorist financing regulations. 

One leading firm among them is the [Digital Officer](https://digiofficer.com/about-us), a team of specialists in the AML domain. The firm can protect you against scams and assist in complying with the set code by the local authorities and FATF. Their services cater for both P2P and B2B, such as VASPs. 

## Why does AML crypto matter?

Cryptocurrencies have reshaped the entire world economy. But, it has also posed several challenges for financial regulators. Since the dawn of blockchain technology, criminals have relied on it for their illegal activities. Financing terrorism, running Ponzi schemes, and other [scams](/news/tag/scam) have become prevalent. Definitive measures became mandatory to stop the crime. And so, AML regulations took shape. 

Now, the financial authorities in many countries have [crypto regulations](/news/article/crypto-regulations) for penalising criminals. By regulating VASPs, they get information about the investors. Then track the suspicious transactions and withdrawals to prevent crimes. 

This has opened up a new area of the market for compliance consulting business. Now many service providers specialise in anti-money laundering laws. They assist clients in complying with local and international laws and protect their funds from scammers. Make sure you're covered with crypto compliance with firms such as Digital Officer.



Crypto AML & its importance in the industry

The Financial Conduct Authority (FCA), responsible for crypto regulation in the UK, has reiterated the unauthorised status of FTX. Recently,[FCA issued a warning](https://www.fca.org.uk/news/warnings/ftx) for the consumers in the country that the exchange is working without approval. The regulating body has added the company to the list of unregistered digital asset firms. Following this, the FTX UK ban is expected. 

The crypto exchange had planned to seek [expansion into the UK](/news/article/ftx-europe-uk-expansion) and European markets in March 2022. The Sam Bankman-Fried exchange pursued approval from the British regulators. However, FCA’s strict enforcement of anti-money laundering laws has not allowed the business to get the registration.

## FCA’s warning for consumers

The warning issued by the crypto market watchdog says, “We believe this firm may be providing financial services or products in the UK without our authorisation.” It cautioned the investors that they would not get their money back in case of losses. 

It also mentioned that the consumers of this service would not be eligible for Financial Ombudsman Service or the Financial Services Compensation Scheme (FSCS). Moreover, regulators advised that consumers must deal with registered firms to protect themselves financially. 

## Enforcement of crypto regulations in the UK

This is not the first instance of such a warning from the British regulating body. Earlier, they issued warnings for several virtual asset service providers. Among them, a famous firm is Binance. Last year, in June, regulators deemed the activities of Binance to be unauthorised, which led the firm to relocate its headquarters to Ireland.

Meanwhile, FCA received around 248 applications for authorisation. But only 37 are registered cryptocurrency and digital asset companies in the country. Recently, Crypto.com has been one firm to get approval. Other known names to get the approval are eToro UK, Rubicon Digital Limited, DRW Global Markets LTD, Uphold Europe Limited, etc.

## Will it lead to an FTX UK ban?

Britain’s policies have been strict for the enforcement of [regulations](/news/article/fca-crypto-regulation). The list of unapproved firms indicates that. FTX has become the latest company on the list. Regardless of the strict enforcement, the regulators have not yet pushed for a complete ban on any firm. Therefore, an FTX UK ban also looks unlikely. Nonetheless, this step may affect the company’s operations in the region. 


FTX UK ban expected, FCA iterates unlicensed status

The [crypto market](/news/article/crypto-market-crashing) has been going through a dreadful winter since the beginning of the year. But amid this, it is also experiencing a global wave of regulatory changes. The governments that were rather dubious about digital assets are now looking for ways to regulate them. And some are even launching their fiat currency-pegged tokens to ensure stability in the market. 

The G7 crypto regulations are notable in this regard. Recently, after the Terra LUNA fiasco, the Group of Seven countries’ finance heads held a meeting to discuss the situation. The meeting established that “[consistent and comprehensive regulation](https://www.reuters.com/technology/g7-countries-urge-swift-regulation-crypto-assets-draft-2022-05-19/)” has become essential for the world economy. For this reason, they also urged the [Financial Stability Board (FSB)](https://www.fsb.org/) to take swift measures to implement regulations. 

Meanwhile, in July, FSB revealed the course of action it will take to mitigate the risks for investors. It highlighted digital asset volatility and structural vulnerabilities and how it affects the traditional market. 

## Prompt initiatives by G7 crypto regulators

Among the G7 countries, the United Kingdom and the United States have seen the most developments. In the US, where the SEC continues to probe digital asset firms for illegal activities, the Biden administration has introduced [a new regulatory act](https://www.gillibrand.senate.gov/imo/media/doc/Lummis-Gillibrand Section-by-Section %5bFinal%5d.pdf). It establishes the definition of cryptocurrency commodities and securities. Also, it elaborated the role of SEC and CFTC and put forth a legal framework for DAOs, exchanges, and brokerages. 

As the UK is looking to become a global crypto hub, it has advanced crypto regulations and several related policies. FCA has continued its work for registering crypto asset firms in the UK. The country is also exploring the possibility of a central bank digital currency (CBDC), which will be pegged to the pound. Meanwhile, it might also get a new regulatory framework for stablecoins in September. 

Moreover, the [UK and US regulators](/news/article/uk-crypto-regulation) are working together to introduce better policies in the entire region. On the other hand, in Canada, cryptocurrencies are legal, and firms providing related services are required to register themselves. The authorities that deal with digital assets are FinTRAC and CSA. Recently, CSA has made the pre-registration undertaking mandatory for firms. 

Germany is another leading country in the crypto space. It is only behind the US in the global rankings. It is a crypto-friendly country, which introduced an almost no-tax policy on cryptocurrency trading. Also, BaFin, the country’s Financial Supervisory Authority, has registered various cryptocurrency firms.

As the EU approved the MiCA regulations, France became the first EU country to regularise digital assets. It provides the registration as Digital Asset Service Provider (DASP). Binance was the first exchange to get the registration. 

Italy has also advanced the G7 crypto regulations. In 2022, Italy registered numerous crypto asset firms like Coinbase. Crypto.com, and Binance. Moreover, it has also announced $46mn for supporting blockchain projects.

Lastly, the Japanese self-regulatory authority ([JVCEA](https://jvcea.or.jp/)) is also working towards this goal. However, its efforts have not been as remarkable for virtual asset regularisation. Nonetheless, Japan’s Ministry of Economy wants to make policies for web3-related businesses.

## Crypto regulations in other countries

Many other countries also have been proactive in regularising the virtual asset market. Australia, South Africa, New Zealand, Russia, and South Korea are notable names among these countries. Meanwhile, China remains the country which is relatively cold toward cryptocurrency adoption.




G7 crypto regulatory measures in 2022

The Securities and Exchange Commission (SEC) has filed charges against [Zipmex](https://zipmex.com/th/en/) Thailand. The police complaint reports that the exchange is violating the regulatory framework of the SEC. The charges involve the business and its Chief Executive Officer and co-founder, Akalarp Yimwilai.
 
Zipmex Thailand is a crypto exchange that suffered from an industry-wide downturn caused by high debts and leverages. It loaned money to the faltered crypto companies: Celsius and Babel Finance. 

It lent a total of over $50 million to these firms. However, both have failed to pay back the exchange, and Celsius has even filed for [bankruptcy](/news/article/celsius-bankruptcy-protection). This led Zipmex to [freeze withdrawals](/news/article/zipmex-creditor-protection). 

## Thai SEC allegations on Zipmex

The SEC has released an [official statement](https://www.sec.or.th/TH/Pages/News_Detail.aspx?SECID=9597&NewsNo=147&NewsYear=2565&Lang=TH) about the charges against the cryptocurrency firm. According to the report, the regulatory body claimed to order the concerned firm to declare transactional details about digital assets. It gave the firm’s officials an apt timeframe for providing the information. 

However, the firm did not follow the order and provided incomplete transactional information after the deadline. The firm also failed to give any reasonable excuse for it. This led the regulators to take action and file charges against it. 

The regulators also said that these actions are deemed as non-compliance. Moreover, they mentioned that it could be penalised under Section 75 of the Digital Assets Act.

## Zipmex Thailand’s stance

On the other hand, the company also responded to these charges via a [press release.](https://zipmex.com/th/en/announcements/pr-holding-statement-th-060922/) According to it, the company received a letter from the SEC for the declaration of transactional details of digital assets on 2 September 2022. 

It clarified that the company is currently compiling the pertinent documents for this matter. They said that Zipmex Thailand is further reviewing the records of Zipmex Pte. Ltd., which does not fall under the Thai regulator’s jurisdiction. 

Moreover, the statement emphasised that information disclosure must be handled with diligence for the company’s data privacy. It also assured the customers that the company was taking the matter by prioritising their interests.




SEC charges Zipmex Thailand for regulatory breaches

According to a recent [report published by the International Monetary Fund (IMF)](https://www.crypto-news-flash.com/imf-report-says-crypto-assets-are-no-longer-niche-products-calls-for-comprehensive-regulation/), crypto assets have shifted from being specialized products to being more widely used in recent years (IMF). Therefore, the government must adopt more specific policies to manage the industry.

The report's co-authors, Aditya Narain (director of capital markets at the IMF) and Marina Moretti, his assistant, stated that crypto assets are now valuable as payment tools, speculative investments, and hedges against weak currencies. Both of these observations were made in the report.

In addition, the authors mentioned that the recent failures of virtual asset providers (crypto exchanges, issuers, and hedge funds) constitute the impetus for regulators to adopt applicable crypto policies.

However, Narain and Moretti point out that various challenges make it difficult for regulators to design proper BTC rules. These challenges include the inability of regulators to use their talents effectively, the rapid evolution of the market, and the effort to monitor the actions of the market.

The regulatory bodies have several competing goals, and their resources are quite limited. Because of this, they are having trouble acquiring the knowledge and capabilities necessary to keep up with the rapid rate of industrial change.

The paper also issues a call to action to the various regulatory bodies, urging them to adopt a unified and coordinated strategy regarding cryptocurrency regulation. As a result, there is the potential for a global regulatory framework consistent with cryptocurrencies.

IMF's Narain and Moretti observed that crypto regulation is a "white whale" due to rapid innovation, inconsistent nomenclature, and a lack of staffing and data collecting, and this refers to the ETH merge. So, what are some of the options?

## IMF warns that BTC regulators face many challenges

The above authors also argued that standard financial regulation does not cover various issues of BTC legislation. As a result, they propose that the process of creating the policies be distributed among the many regulators.

The regulators will then be able to merge the policies into a single worldwide crypto policy that is comprehensive. Some people may concentrate on the BTC actors, such as those who build protocols, mine cryptocurrencies, and validate transactions. Others can focus on the safety of consumers, the integrity of the financial system, or both. 

There have been multiple meetings organized by global financial authorities to discuss the most effective methods for regulating the BTC industry. Within the next month and a half, Europe intends to publish the final text of the Markets in Crypto Assets (MiCA) BTC regulation that has received significant attention.

The United States' response to the most pressing concerns regarding BTC business is proposed legislation called the "responsible financial innovation act." Even MPs opposed to BTC, who had previously pushed for a complete prohibition on the use of cryptocurrencies, now embrace the idea of regulating the market rather than outright prohibiting it.

US Congressman [Brad Sherman is the latest anti-crypto congressman to change his position](/news/article/us-crypto-congress-ban), shifting from calling for a complete ban on cryptocurrency to calling for the sector to be regulated. Sherman believes that an absolute prohibition cannot be enacted since the industry has amassed so much wealth and power in recent years. If the authorities consider the recommendations made by the IMF in this study, it will be in everyone's best interest, including investors, players, ETH merge, and regulators.



ETH merge is the obstacle to crypto regulation

An American lawmaker has stated that cryptocurrency has "too much money and power" behind it to be banned. "There's too much money and influence behind it," said Representative Brad Sherman of the United States, explaining why Congress has not banned BTC.

Specifically, he elaborated: "Money for lobbying and campaign contributions works, or else people wouldn't do it, and that is why we haven't prohibited crypto."

## Regulation and the Reasons Why Congress Won't Ban Crypto

In an interview [published on Sunday by the Los Angeles Times](https://news.bitcoin.com/us-lawmaker-says-too-much-money-and-power-behind-crypto-to-ban-it/), Congressman Brad Sherman, a Democrat from California, discussed his thoughts on BTC and its regulation. The member of Congress from California who is in charge of a House subcommittee on investor protection has expressed a desire to criminalize cryptocurrencies like bitcoin and Ethereum. Still, he does not expect Congress will act on his proposal.

He told the news source, "I don't think we're going to ban crypto any time soon," and he was correct. "Money for lobbying and campaign contributions works, or people wouldn't do it," Sherman remarked, expanding on his previous statement as he continued: "and that's why we haven't prohibited crypto." We didn't stop it in the beginning because we didn't understand how significant it would become, and we aren't putting a stop to it now because there's too much money and power invested in it.

The congressman is concerned not just about the possibility of individual investors being cheated but also about the possibility of bitcoin being a risk to the national security of the United States. He believes that BTC poses a systemic risk, provides opportunities for criminals, and undermines the US currency's dominance. The congressman expresses a heightened concern regarding cryptocurrency mixing businesses like Tornado Cash.

The Office of Foreign Asset Control (OFAC) of the United States Treasury Department issued a ban on the Ethereum mixing program in August. The reason for the prohibition was the OFAC's accusation that the application assisted North Korean hackers, such as the hacking syndicate known as the Lazarus Group.

He believes BTC is a fad that people invest in with the expectation of making a profit by trading it for another asset before its value plummets. That's one of the perks of participating in a Ponzi scheme. After that, Sherman continued his discussion on the regulation without a prohibition.

Comparing BTC to a stock or other type of investment, he believes that the Securities and Exchange Commission (SEC) ought to supervise the BTC industry. He bases this opinion on the SEC's size, competence, and aggressive enforcement measures.

However, to make the Commodity Futures Trading Commission (CFTC) the primary regulator of the cryptocurrency business in the United States, [three different measures have been presented in Congress in 2018](/news/article/congress-crypto-protection).
 



US Legislator says why there's no Congress crypto ban

Under new rules enacted in response to concerns that Bitcoin and other crypto assets are used to circumvent sanctions imposed in Russia due to their invasion of Ukraine, [digital assets exchanges must report suspected sanctions violations](https://www.theguardian.com/technology/2022/sep/04/crypto-exchanges-suspected-sanction-breaches-russia) to UK authorities.

On August 30, official guidance by the UK authority for digital assets was updated to explicitly include "crypto assets" as assets that must be frozen if sanctions are imposed on a person or company. Cryptoassets, in addition to digital currencies such as Bitcoin, Ether, and Tether, could include other hypothetically valuable digital assets such as non-fungible tokens (NFTs).

According to the rules established by the Treasury's Office of Financial Sanctions Implementation, [crypto exchanges](/news/article/best-exchanges-for-crypto-uk) will commit a criminal violation if they fail to report clients designated for sanctions. According to the rules, crypto exchanges must act immediately if they suspect that one of their customers is subject to sanctions or if they suspect a breach of sanctions, putting them in the same category as estate agents, accountants, lawyers, and jewellers.

Using cryptocurrencies to avoid sanctions and move money around the world was already prohibited in the United Kingdom under laws that apply to all "economic resources." However, the change highlights authorities' concern about the relatively new assets, which could help evade sanctions because users do not conduct transactions through regulated entities.

## UK's response to Russian digital assets activity 

Financial sanctions against individuals and companies associated with Vladimir Putin's regime have been among the UK's most visible responses to the invasion of Ukraine. Cryptoassets are subject to sanctions regulations, according to a joint statement from UK financial regulators released in March. The EU forbade significant cryptocurrency transactions with Russia in April.

Sanctions have been aimed at oligarchs and family members with direct ties to cryptocurrency. Among them was Vladimir Potanin, the "nickel king" and former second-richest person in Russia, who supported the Swiss blockchain company Atomyze. 

Son of oligarch Mikhail Gutseriev said he held a stake in a cryptocurrency exchange in Belarus until August 2021 before being subjected to sanctions on the same day as Potanin in June. Oleg Deripaska, a billionaire in the metals industry, has previously pleaded with Russia's central bank to permit the use of bitcoin as a payment method. They have not been implicated in using crypto assets to circumvent sanctions.



UK digital assets firms to report sanction breaches

Recently, the United Kingdom and the European Union have introduced significant legislation to regulate cryptocurrencies. Both are working towards providing a safer environment to consumers. However, the divergence between EU and UK crypto regulations is becoming apparent. 

Since Brexit, the UK has been formulating new legal frameworks for different domains. Earlier, the [regulatory divergence](https://www.engage.hoganlovells.com/knowledgeservices/news/uk-and-eu-regulatory-divergence_1) for financial service providers gained much attention. Naturally, this divergence extended to virtual currency regularisation. 

The differences between the laws include the definition of crypto assets, virtual asset service providers (VASP), focus points in the enforcement strategy, and various others.

## How does UK crypto regulation differ?

One of the major differences between the EU and UK [crypto regulation](/news/article/crypto-regulations) is the definition. Britain’s Financial Conduct Authority (FCA) focuses more on “digital settlement assets”. It mainly includes stablecoins as a payment method. However, it does not declare them as a form of investment. On the other hand, the MiCA act of the EU has a broader definition which allows a variety of new tokens to be included. 

Similarly, there are differences in the definition of service providers too. The MiCA framework also proposes a broader interpretation of VASPs. It expands from fiat to crypto to crypto exchanges. Moreover, it covers advisory, trading, and custody services too. In comparison, FCA legal framework covers only custody and exchanges as VASP.

Last month, the [US and UK crypto regulation](/news/article/uk-crypto-regulation) authorities began collaborating to foster the cryptocurrency and NFT market, acknowledging the importance of regulatory partnerships for a safe market.     

## Differences in enforcement strategy

Currently, FCA’s primary focus is on stablecoins to mitigate consumer risk. It is also working with the regulatory bodies of the United States to regularise the market and foster financial innovation. Moreover, like the US’s SEC, it might act against scams and declare some coins and tokens as securities. On the other hand, MiCA focuses on a broad approach that includes the AML laws and establishing a risk-free environment for regional investors. 



UK crypto regulation diverging from the EU

The proposed Australian crypto regulation plan unveils the world's first token mapping of digital assets, ranging from Bitcoin to [Dogecoin](/coins/doge), as an audit procedure to accelerate the regulatory framework for its crypto ecosystem. Token mapping is the process of determining the characteristics of all available digital tokens in the country.

## Australian crypto regulation to implement token mapping

According to Treasurer Jim Chalmers, Australia is seeing increased crypto activities and advertisements. Token mapping will allow the government to identify the characteristics of digital currencies used within the jurisdiction and develop a better regulatory strategy for them.

"As it stands, the crypto sector is largely unregulated- we need to do some work to get the balance right, so we can embrace new and innovative technologies while safeguarding consumers," he stated.

In addition to prioritising token mapping this year, the Australian government plans to review the country's current regulatory and licensing frameworks for service providers. They also intend to review the custody requirements for digital asset custodians to ensure local users' safety.

Jim Chalmers stated: "With the increasingly widespread proliferation of crypto ¬assets- to the extent that crypto advertisements can be seen plastered all over big sporting events- we need to make sure customers engaging with crypto are adequately informed and protected."

## Cryptocurrency adoption in Australia

Australia is one of the crypto-friendly jurisdictions where the adoption and ownership of digital assets has been skyrocketing. Digital currency adoption in the country increased by more than 56% between 2022 and 2021, according to a [Banklesstimes report](https://www.banklesstimes.com/cryptocurrency/cryptocurrency-adoption-statistics-in-australia/). According to a Finder.com report, more than 22% of Australians own digital currency, which is higher than the global average of 15%.

Australia's central bank launched a one-year pilot programme for its digital currency earlier this month to assess the business benefits and potential drawbacks of launching a CBDC.



Australia's crypto regulation plan explained

[Monochrome](https://monochrome.co/), a capital growth fund, has been granted an Australian financial services licence (AFSL). It has become the first crypto firm in the country to secure approval. Now, Monochrome can expand its services by offering [Bitcoin spot Exchange-traded Fund](/news/article/btc-etf-approval) (ETF) in Australia. 

Former Binance Australia CEO Jeff Yew established Monochrome in 2021. Since February, the firm has been working on the crypto Exchange-traded fund. For this, they partnered up with the [Vasco Trustees](https://vascofm.com/), which helped the firm to get the licensing from the country’s authorities. The Australian Securities and Investments Commission (ASIC) granted permission for Monochrome to launch the crypto spot exchange traded fund. 
 
## The first AFSL-approved crypto ETF Australia

Monochrome crypto ETF will be the first AFSL-approved one in the country. Though the Australian ETF market is quite saturated, no asset managers are dealing with cryptocurrencies directly. Most fund managers operate as general financial asset managers and do not offer digital assets directly. Also, these firms are only compliant with the regions financial regulations to offer a crypto based product.

With Monochrome receiving an Australian financial services licence. This will allow it to offer a crypto spot ETF in the publicly traded and regulated Australian financial market, making it the first exchange to achieve it.  

## Jeff Yew on the AFSL approval

While sharing his views on the approval, Monochrome’s CEO said it is a significant move that will introduce direct dealings with the cryptocurrencies in the country. He also mentioned that their fund will be a secure option for the investors as it will work within the ASIC’s regulations. 

Moreover, Jeff Yew disclosed that the investors can not only deal with Bitcoin but can also invest in other cryptocurrencies like Ethereum (ETH), Binance coin (BNB), and others. 

The final date for the Bitcoin spot ETF Australia launch is not yet finalised. However, it is has been said that it is likely to be launched next month. This move will give crypto trading exposure to the Australian market with substantial transparency and security.
 



Monochrome to offer crypto spot ETFs in Australia

The [senate bill proposed on Wednesday](https://www.protocol.com/bulletins/senate-bill-cftc-crypto) by Michigan Democrat Sen. Debbie Stabenow and Arkansas Republican Sen. John Boozman is the latest attempt in Washington to establish more defined government laws for digital assets. Under this law, the Commodity Futures Trading Commission would be given power over the markets for Bitcoin and Ether, the two major cryptocurrencies.

The CFTC and the SEC have been wrangling for control of cryptocurrencies. Tensions recently heightened when the SEC classified a list of crypto tokens as securities in an insider trading lawsuit, triggering public criticism from Caroline Pham, a CFTC commissioner.

## Senate bill could give clarification

The senate bill proposed could give some clarification. It would give the CFTC direct authority over tokens classified as "digital commodities." According to the bill summary, this covers bitcoin and ether.

Online exchanges and other businesses that assist in token trading would have to register with the CFTC. The bill would also mandate the CFTC to verify crypto businesses, avoid abusive trading practices, have adequate financial resources and appropriate cybersecurity safeguards.

The bill also acknowledges the role of other financial bodies in regulating digital assets that are not commodities but act more like securities or means of payment.

The emphasis on Ether and Bitcoin as commodities is consistent with the views of SEC Chair Gary Gensler, who has stated that most other tokens are likely to be securities.

However, the bill only briefly mentions the classification and uses the examples of Bitcoin (BTC) and Ether (ETH), which the SEC previously classified as commodities. In addition, the law states that any crypto assets that are not deemed as securities by the SEC may bear the CFTC's commodities stamp.

Rostin Behnman, the head of the CFTC, has been vying for a new authority to oversee digital commodities spot markets, where the assets are traded directly. The new legislation would give that power. The bill states that the CFTC would have "exclusive authority over any account, agreement, contract, or transaction involving a digital commodities trade."

A broader [crypto regulation](/news/article/us-sec-regulation) bill submitted in June by Senators Kirsten Gillibrand and Cynthia Lummis considers the CFTC to play a leading role in crypto regulation. Gillibrand and Lummis recently admitted that the complete legislative package was unlikely to pass this year but that some provisions, such as those defining the function of the CFTC, may go through Senate committees.



Senate bill to strengthen CFTC's crypto authority

The UK’s Financial Conduct Authority (FCA), said it plans to implement a few changes. One is about the caps on individual Bitcoin holdings, while the other regards the way of how risky assets can be marketed.

According to the [official document](https://www.fca.org.uk/news/press-releases/fca-clamps-down-marketing-high-risk-investments-consumers), companies will be obliged to use more blatant warnings of cryptocurrencies being risky investment options. Also, all incentives to invest in crypto, such as referral bonuses, are becoming banned. New guidelines are, for now, limited to marketing of high-risk financial products such as some speculative illiquid assets, and peer‑to‑peer (P2P) platforms. However, even though guidelines don’t apply to cryptocurrency ‘per se’, the FCA warned they are also considered to be very risky.

The FCA asserted people are investing in digital assets without understanding how volatile and, therefore, risky this is – just because “a friend” referred it to them. Therefore, the FCA advised all potential investors, not to put more than 10% in risky assets. 

After the recent crash of the crypto market that washed out almost $2 trillion of the market, the regulator said that it is now, more than ever, be assured cryptocurrencies are a very speculative and high risk asset class.

“Consumers should only invest in crypto assets if they understand the risks involved and are prepared to lose all of their money. We expect to take a consistent approach to crypto assets that is taken for other high risk investments,” the report said.

## FCA says all directions must be clear and simple

The FCA’s executive director for markets, Sarah Pritchard, said it’s important for people to be able to “invest with confidence, understand the risks involved, and get the investments that are right for them which reflect their appetite for risk”.

Recently, however the United Kingdom said it would like to become a [global crypto-asset hub](https://news.monitalks.io/news/article/fca-crypto-regulation). It will be interesting to see how the development of the FCA’s regulation heightens or hinders the crypto industry in the United Kingdom.

The FCA added it “looks forward” to the direction given by the authorities of how crypto marketing should look and that the “qualifying of cryptoassets” rules would follow after the legislation is complete.

Pritchard added that all the risk warnings must be easy to follow and written in simple language so all can understand them.

 “Where we see products being marketed that don’t contain the right risk warnings or are unclear, unfair or misleading, we will act,” she added.



UK FCA: Crypto investments are risky

Israeli authorities implemented further restrictions on cash payments to combat illegal activity and promote the use of [digital payment methods](/news/article/mastercard-crypto-asia).

Due to the Law for the Reduction in the Use of Cash, which came into effect in January 2019, businesses and consumers in Israel are no longer allowed to make payments in cash.

People and businesses are encouraged to use digital payments, making it easier for the government to track illegal activity, tax evasion, and money laundering in the country's black market and elsewhere.

According to the Israeli Central Bank, 6,000 New Israeli Shekels (NIS) for business transactions and 15,000 New Israeli Shekels (NIS) for personal transactions will be the [new limit for cash payments](https://cointelegraph.com/news/israel-puts-the-brakes-on-cash-to-spur-digital-payments) effective August 1, 2022. Additional restrictions, such as a ban on storing more than NIS 200,000 shekels ($58,660) in cash in private residences, are expected shortly.

According to Tamar Bracha, the Israel Tax Authority's (ITA's) head of law enforcement, limiting the availability of cash will make criminal activity more difficult. As a result, "the goal is to reduce market cash fluidity, particularly because criminal organizations tend to rely on cash."

Some have interpreted it as a positive sign of the country's new limits on hard-cash transactions. According to Lark Davis, a crypto influencer with over a million followers on Twitter, Israel is neither the first nor the last country to impose such restrictions. According to the founder of Lyn Alden Investment Strategy, the trend "will probably continue to other countries in the future."

## Cryptocurrency regulation and CBDCs

Central bank digital currencies (CDBCs) are also being explored in the region, with the country first considering a CBDC at the end of 2017. After conducting a public consultation in May, the Bank of Israel released the results of the responses, which indicated strong support for further research into CBDCs and how they would affect the payments market, financial and monetary stability, and legal and technological issues.

In June, the Bank of Israel revealed that it had conducted its first technological experiment with a CBDC, examining user privacy and the use of smart contracts in payments. In addition, a framework for regulating digital assets is being developed in the country.

According to Oz Finance's Jonathan Shek at this year's Israel Crypto Conference in May, Israel's financial regulators have prepared a comprehensive and holistic regulatory framework for digital assets.

Shek hinted that it would happen soon, but he didn't give a specific date, saying that the Israeli government wanted to encourage the development of the crypto industry in their country if it was done responsibly.


Israel halts cash to encourage digital payments

US and UK crypto regulation authorities collaborate to foster and regulate the cryptocurrency and NFT market. The joint forces of these countries will be working on different initiatives to regulate crypto. This recent development will focus on promoting stablecoins and bringing financial innovation. 

Recently, the US Department of the Treasury released a joint statement regarding the UK and US collaborative financial regulatory working group. The virtual meeting was held on 21 July. 

The HM Treasury and the [US Department of the Treasury](https://home.treasury.gov/news/press-releases/jy0888) members took part in the meeting. Besides, the Bank of England (BOE), the Board of Governors of the Federal Reserve System, the Financial Conduct Authority (FCA), the Commodity Futures Trading Commission (CFTC), the Office of Comptroller of the Currency (OCC), the Securities and Exchange Commission (SEC), and the Federal Deposit Insurance Corporation (FDIC) were also part of the meeting. 

## US and UK crypto regulation focus points

In general, the crypto regulators from the UK and US discussed seven themes. These include a cooperative international and bilateral approach, financial innovation, secure financing, and non-bank financial intermediation (NBFI). Moreover, benchmark transition, operational resilience, and developments in the Russia-Ukraine war. 

The Working group meeting established that it will focus on promoting financial stability to reduce the risk and uncertainty from the market. Regarding the issue of Non-Bank Financial Intermediation, the meeting decided that liquidity risk management must be prioritised. 
Besides that, the Working Group also discussed the situation of stablecoins in detail. The developments in central bank digital currencies (CBDCs) were also a key discussion point. For this, all participants showed commitment to promoting safe monetary innovations and regulatory measures for stablecoins that can be followed throughout the jurisdiction. 

The officials from both countries acknowledged the importance of the US and UK crypto regulation partnership. Also, the members from both sides pledged that they would work together to introduce long-term crypto-asset regulations for a robust and safe market. Earlier, UK lawmakers confirmed to broaden [property rules](/news/article/uk-assess-crypto-law) to the crypto space and NFT. Such developments will help the government in becoming a crypto hub in the future. 

US and UK crypto regulation officials join forces

The Law Commission of England and Wales, an independent body created to review and recommend law reforms if needed, confirmed it wants to broaden property rules to the crypto space, including non-fungible tokens as well.

According to the official consultation paper, the government had been asking for a complete review of  the law regarding cryptocurrencies in order to enable their development.

“The Commission’s proposals aim to deliver wider recognition and legal protections for digital assets, allowing a more diverse range of people, groups and companies to interact online and benefit from them,” the [announcement](https://www.lawcom.gov.uk/law-commission-proposes-reforms-for-digital-assets-including-crypto-tokens-and-nfts/) said.

Beside characterizing cryptocurrencies as personal property, reform would include crypto investors  being protected by law in case of losses in hacks or scams.

## Plenty of NFT investors

Commercial and Common Law Commissioner Sarah Green commented there are plenty of [NFT](/news/category/nft-news) investors nowadays who never ask “what happens when things go wrong?”.
“It's not clear at all what happens if you hack into my wallet and take my bitcoin or if ... this system fails and I can't access my Bitcoin,” Green asserted.

The seemingly crypto-friendly proposal is aimed, in part, at helping the U.K. government’s goal of turning the country into a global crypto hub, the commission said in a statement. The commission's proposals, however, would not apply in Scotland or Northern Ireland, which have their own legal systems.

The paper claims the law must acknowledge all unique features of digital assets, including NFTs, that will create a stable legal basis for the crypto industry and its users. With this transformation, the legal system can help create a legally safe environment for cryptocurrencies and the overall market.

This comes in the light of recent announcements by the UK’s Financial Conduct Authority (FCA) that confirmed it has some severe intentions to strengthen cross-border crypto-asset regulation.

It is expected that the UK will become a crypto hub, meaning being more collaborative and innovative when it comes to the supervision of cryptocurrencies in the future.


UK to assess new law defining crypto as property

If you ask Nikhil Rathi, the new chief executive, FCA crypto regulation may become a new item on its agenda. According to him, the UK’s Financial Conduct Authority (FCA), has some severe intentions to strengthen cross-border crypto-asset [regulation](/news/article/crypto-regulations). 

David Hamilton of Pinsent Masons commented on [Rathi’s recent speech](https://www.fca.org.uk/news/speeches/how-uk-will-regulate-future) on how the US and the UK had “agreed to deepen ties”, regarding financial development. He also added that both countries were “exchanging views on crypto-asset regulation and market developments”. 

“Intensive dialogue between our nations is essential to ensure we deliver consistent outcomes,” said Rathi. He added that since the UK had left the European Union, it got the rare opportunity to connect its regulation to today’s market challenges.

Rathi also confirmed FCA primarily invested in data and technology, and kept scanning 100,000 websites for fraud on a daily level.

“The US and UK will deepen ties on crypto-asset regulation and market developments – including relation to stablecoins and the exploration of central bank digital currencies,” Rathi concluded.

## FCA crypto regulation to be more innovative 

Recently, the UK, US and Singapore launched the International Organization of Securities Commissions (IOSCO) governance body on DeFi and crypto market integrity risks. 

Hamilton commented that Rathi’s speech was vital, especially if viewed in the context of the G20 Financial Stability Board’s (FSB) [announcement](https://www.fsb.org/2022/07/fsb-statement-on-international-regulation-and-supervision-of-crypto-asset-activities/) earlier this month on establishing a new regulatory framework for crypto supervision.

Hamilton also added that Rathi’s speech showed just how important it is for companies to have adequate policies and procedures to comply with the Money Laundering Regulations.
Rachael Preston of Pinsent Masons asserted the speech shows FCA’s intention to become an essential player of the regulatory game. 

“Expect to see a more collaborative, innovative and adaptive style of supervision in the future, with the FCA continuing to push the boundaries of the role of a financial regulator in modern society,” Preston said.

She also added that technology solutions will play a substantial leading role in the FCA’s transformation plans, and will be a key factor regarding its effectiveness. 
 
“The question is whether such an approach can deliver the right outcomes to what is an ever more complex, nuanced and user experience-led market,” Preston said.



FCA crypto regulation – new item in the UK-US financial co-lab

In crypto news from Australia, the [Australian Competition and Consumer Commission (ACCC)](https://www.accc.gov.au/) is testing automated scam site removal.

After more than 300 reports, ACCC's trial has taken down various scam sites, including ones linked to cryptocurrency.

Cybersecurity experts believe this measure will help regularly take down fraudulent sites that pose a cyber threat to consumers.

## Crypto News Australia

On Tuesday, the ACCC's chair, Gina Cass-Gottlieb, announced the trials at the 2022 Law Council Australia. This followed crypto news from Australia that, last year, there was a loss of around 113 million (AUD) because of cryptocurrency scams in the country. That's why ACCC thinks that action against such scams is mandatory.

ACCC is currently working with the Australian Securities and Investment Commission (ASIC) to remove crypto scam sites from the internet. To take an efficient and automated action against scammers, ACCC is taking help from Netcraft, a UK-based firm. Netcraft is an experienced firm for cybersecurity as it has been working with the UK’s National Cyber Security Network for the last four years. 

Cass-Gottlieb said more than 300 scam sites have been reported and removed from the internet in the last three weeks. These sites include phishing, tech support, puppy, and cryptocurrency investment scams.

## Australia Introducing Strict Crypto Regulations

Other crypto news from Australia suggests that the country's crypto regulators are introducing strict policies for criminals. Along with taking action against scam sites, the Australian courts have announced severe sentences for criminals who will use crypto in their illegal activities.

The ruling came after a recent study on Crime and Cryptocurrency in Australian courts. According to this study, using blockchain for crimes indicates considerable planning and technical knowledge. That's why the court concluded that the crimes involving crypto are more offensive to the law. 

Australia is now also looking to shape a formidable framework for cryptocurrencies to ensure a safer environment for investors. Previously, many other countries like the UK, Russia, South Africa, and others have made amendments to their cryptocurrency regulations.

Read more crypto news at [Latest Moni](/news).



Crypto News Australia: Regulator Trials Automated Scam Site Removal

US SEC chairman outlines what to expect from the authority regarding crypto regulation. SEC’s duties being the primary watchdog for securities, finance, and investments will expand. 

## Global cryptocurrency regulations

The need for crypto laws arose after a down market and the [collapse of Terra UST](/news/article/terra-luna-collapse), which caused investors to lose a massive amount of their investments. As a result, China openly prohibited the use of cryptocurrencies, while Russia prohibited its use as a payment alternative.

The US remained hesitant to finalise the proposed crypto regulations until Biden requested the crypto regulation draft from the US SEC authority. The regulation draft is submitted for review and is anticipated to be deployed shortly.

As the deadline for implementing crypto laws approaches, the SEC has geared itself for the duties that will fall on its shoulders soon. US SEC chairman spoke to Yahoo Finance about the details of their forthcoming duties once the laws are implemented.

## US SEC and cryptocurrency regulation

Gensler stated that the new cryptocurrency regulation would assist investors and customers by protecting them from any difficulties caused by service providers. Their primary focus areas, according to Gensler, will be exchanges, brokerage, and loans. He stated that they are contacting stakeholders to notify them of their needs.

While stating that they are open to conversations and discussions, he also invited exchangers, lenders, and other dealers to come and speak with them. 

He noted that Congress had given the SEC authority to change some laws to better safeguard investors, stating:

“We do have robust authorities from Congress also to use our exemptive authorities that we can tailor investor protection.”

They even have the authority, he claims, to request tokens for disclosures. He stated that the public has the right to comprehensive and honest disclosures, which would serve as their primary safeguard.

Because the SEC is obliged to cover tokens, stablecoins, and volatile coins, they will also have the power to consult with banking authorities and the CFTC. He has emphasised that Bitcoin is not a security coin and that the CFTC would decide the remainder of the coins and tokens status. He has also cautioned that many crypto coins will fail, so investors should exercise caution.







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