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Bernie Sanders is so concerned about climate change that he spent nearly $ 300,000 on private air travel in October so he could speak to audiences in nine battleground states prior to November’s midterm elections.
Russia’s Federal Financial Monitoring Service has revealed that it will regulate cryptocurrency-related transactions in the country, with a senior official saying that the agency will also oversee the broader cryptocurrency industry, in accordance with recommendations issued by the Financial Action Task Force (FATF).
Rosfinmonitoring to License
Exchanges and ICO Platforms
Rosfinmonitoring, as the regulator is known in Russia, plans to register, license and monitor cryptocurrency exchanges, crowdfunding platforms and providers of wallet services for digital assets, Russian media outlets have reported. Pavel Livadny, the agency’s deputy director, said that all states participating in the FATF are expected to amend their legislation to introduce registration and licensing regimes for companies that trade cryptocurrencies and launch initial coin offerings (ICOs).
The intergovernmental organization, originally tasked with developing measures to prevent money laundering, recently updated its recommendations and glossary to include “virtual assets.” The FATF uses the term to refer to “digital representations of value that can be digitally traded or transferred and can be used for payment or investment purposes, including digital representations of value that function as a medium of exchange, a unit of account, and/or a store of value.” It emphasized that virtual assets are distinct from fiat currencies and said that it will continue to review them to determine if further updates to its standards are necessary.
The financial watchdog will regulate the exchange of cryptocurrencies and fiat money, as well as transactions between digital assets. It will also monitor the transfer, custody and issuance of digital coins, the Izvestia newspaper reported. The minimum value of cryptocurrency transactions that will trigger regulatory action has yet to be determined, but the agency has said that it will track deals involving the transfer of 600,000 rubles (~$ 9,000) or more. It has been reported, however, that transactions below 15,000 rubles, or around $ 230, may remain anonymous.
Industry Organizations Criticize
The Russian cryptocurrency industry is still largely operating in an atmosphere of legal uncertainty. This past spring, lawmakers in the State Duma, the lower house of Russia’s parliament, supported on first reading three bills aimed at regulating the sector, but then postponed their final adoption for the fall session. The main draft law, “On Digital Financial Assets,” has since been revamped, with legislators removing key terms such as “cryptocurrency” and “mining.”
The Russian Union of Industrialists and Entrepreneurs (RSPP) recently sent regulatory proposals to Prime Minister Dmitry Medvedev, the Speaker of the Duma Vyacheslav Volodin and Andrei Belousov, an aide to President Vladimir Putin. In the documents, RSPP President Alexander Shokhin criticized the current draft legislation, arguing that it sets unreasonably high standards and introduces complicated regulatory procedures. He has called for the adoption of a consolidated position, to be approved by all market participants and state regulators. An alternative bill, drafted by the RSPP, not only mentions cryptocurrencies but also grants them “special status.” According to the Kommersant newspaper, the RSPP’s proposals will soon be discussed by three different ministries.
Meanwhile, Yuri Pripachkin, the president of the Russian Association of Cryptoindustry and Blockchain, warned that implementing the regulatory framework without taking the industry’s views into account would lead to an exodus of investment capital and young talent. “There is no point in adopting the legislation in its current form,” he said, as quoted by the Vedomosti business daily.
Pripachkin added that the bills in the Duma do not even deal with the areas that determine the development of the new industry — including cryptocurrency, mining, smart contracts — but merely focus on the vague term “digital assets.” Adopting a law that addresses only tokens circulating within companies could put an end to the cryptocurrency economy, he said.
Do you think Russia’s financial watchdog should also be responsible for regulating the crypto industry? Share your thoughts on the subject in the comments section below.
Images courtesy of Shutterstock.
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A framework has been developed for the G20 countries to “monitor the financial stability implications of crypto-assets markets.” The Financial Stability Board says cryptocurrencies “do not pose a material risk to global financial stability” but supports their “vigilant monitoring.”
G20’s Crypto Monitoring Framework
The Financial Stability Board (FSB) announced Monday that it “has developed a framework and identified metrics to monitor the financial stability implications of crypto-assets markets.” The framework was developed in collaboration with the Committee on Payments and Market Infrastructures (CPMI).
The board also published and submitted a report detailing its work on crypto-assets to the G20 as requested by finance ministers and central bankers at the G20 meeting on March 19 and 20 in Buenos Aires.
The FSB is an international body that monitors and makes recommendations about the global financial system to G20, an international forum for governments and central bank governors. The CPMI supports financial stability by promoting the safety and efficiency of payment, clearing, settlement and related arrangements.
“The objective of the framework is to identify any emerging financial stability concerns in a timely manner,” the report states, adding:
The framework discusses the primary risks within crypto-assets and potential transmission channels to financial stability risks. The framework identifies which metrics the FSB might usefully monitor in the short-to-medium term.
The report also notes that “in general, monitoring the size and rate of growth of crypto-asset markets is critical to understanding the potential size of wealth effects, should a decline in valuations occur.” Furthermore, “the use of crypto-assets for payment or settlement is another transmission channel to be monitored.”
FSB’s Proposed Metrics
Citing that the crypto market and its public data sources, which the proposed monitoring metrics are based on, are “rapidly evolving,” the FSB warned that “the quality of the underlying data can vary, and might not always be satisfactory.” The report explains:
Market-related figures, such as metrics on prices, trading volumes, and volatility may be manipulated by generally prohibited practices such as ‘wash trading,’ ‘spoofing,’ and ‘pump and dump,’ the existence of which cannot be ruled out at this stage.
The FSB also pointed out that “the proposed metrics may not fit all types of crypto-assets equally.” Nonetheless, it believes that they “provide a useful picture of crypto-asset markets and the financial stability risks they may present.” Over time, the FSB and the CPMI will consider improvements to the metrics as well as add new ones at a later stage.
No Material Risk to Financial Stability
The FSB report refers to decentralized, unbacked cryptocurrencies and crypto-assets as “first generation private digital tokens,” which are dismissed as “unsafe money.” However, it notes that “safer central bank issued cash may be less convenient in an era of electronic payments.” The report continues:
Crypto-assets do not pose a material risk to global financial stability at this time…At present, like crypto-assets in general, crypto-asset platforms do not pose global financial stability risks. Nevertheless, they raise other significant concerns, including consumer and investor protection, market integrity and money laundering/terrorism financing, among others.
The FSB further revealed that the Basel Committee on Banking Supervision is currently “conducting an initial stocktake on the materiality of banks’ direct and indirect exposures to crypto-assets.”
While the FSB does not believe crypto-assets pose a material risk to global financial stability, it supports “vigilant monitoring in light of the speed of developments and data gaps,” the report details.
What do you think of the FSB’s crypto monitoring framework? Let us know what you think in the comment section below.
Images courtesy of Shutterstock, BIS, and FSB.
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