Regulators from many countries seem to be interested in cryptocurrencies lately. Here are the latest highlights…
US targets banks that offer cryptocurrency services
As we reported on cryptokoin.com, the US Federal Reserve Board said on January 27 that both insured and uninsured banks will be subject to restrictions on certain activities, including those associated with crypto assets. The statement also announced that institutions would be subject to restrictions on “certain activities” that fall under the auspices of the Monetary Supervisory Authority (OCC). According to the statement, the board is trying not only to “promote an even playing field” by imposing restrictions on the activities of financial institutions, but also to “limit regulatory arbitrage.”
The policy statement, which went into effect following its publication in the Federal Register, emphasizes that banks must conduct their operations “safely and soundly.” This can be achieved by mastering risk management processes, internal controls and information systems. As to why it decided to publish its policy statement, the Fed Board said it has seen an increase in the number of reviews or proposals from financial institutions seeking to engage in unconventional activities. Meanwhile, the statement clarified that the board’s recent action does not prevent a state member bank or prospective applicant from offering crypto-asset custody services.
Proposed ban on crypto mining in Russia
Kremlin advisors suggested that home crypto mining should be banned in Russia or some of its regions. The stated rationale for the proposal was to prevent fires in buildings. Amateur miners are blamed for high loads that cause grid failures and power outages. The idea is to completely ban the production of cryptocurrencies, at least in power-off regions of Russia. Among them is Moscow and the Moscow Oblast, the region adjacent to the Russian capital.
Crypto-related activity, which is an additional source of income for many Russians, especially in places with access to cheap electricity, has not yet been regulated. A bill prepared for this purpose is currently being examined in the State Duma, the lower house of the Russian parliament. Energy experts also suggested that the federal government should authorize regional authorities to impose additional taxes on cryptocurrency mining.
Sao Paolo introduces Blockchain in data space
The Brazilian city of Sao Paolo introduced the concept of Blockchain in its municipal data access and transparency law. The concept of blockchain is defined as a technology that can be used in this field. Because the city drew attention to structures or applications for future use. In legislation, Blockchain is defined as an immutable ledger that can record transactions and track assets using a computer network. While technology is cited as a useful tool, the law does not define what ways it can be used to make data access and transparency tasks more efficient.
The European Union has also moved
Lawmakers in the European Union supported legislation introducing new capital requirements for financial institutions, including strict rules to cover crypto-related risks. The legislation is expected to enter into force in January 2025. Members of the European Parliament’s Committee on Economic and Monetary Affairs (ECON) supported this bill, designed to implement the latest global bank capital rules. In a report, Reuters noted that lawmakers also included specific requirements that address risks from crypto assets.
The general rules are part of the Basel III reforms, a set of internationally recognized measures developed by the Basel Committee on Banking Supervision following the financial crisis of 2007-2009. Their main purpose is to strengthen the supervision and risk management of banks. Other jurisdictions, including the US and UK, are moving in a similar direction. However, ECON introduces additional regulations with the European draft law, obliging banking institutions to have sufficient capital to fully cover their crypto-asset holdings.
The changes, in line with the recommendations of global banking regulators, represent a temporary measure pending further legislation. An earlier version of the bill has already been approved by member states and the European Parliament will have to negotiate the final draft with them. EU countries have taken a more conciliatory approach to when foreign banks serving European customers should open a branch or convert a branch into a more capitalized subsidiary. According to the report, ECON members took a tougher stance.
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