Cryptocurrencies

United States Senate passes resolution urging SEC to repeal rule on cryptocurrency firm deals

The United States Senate has passed a joint resolution calling on the Securities and Exchange Commission (SEC) to repeal a rule that affects financial institutions engaged in business with cryptocurrency firms. The resolution, known as H.J.Res. 109, seeks to nullify the SEC’s Staff Accounting Bulletin No. 121, which mandates that banks include customers’ digital assets on their balance sheets. Critics argue that this rule stifles innovation in the cryptocurrency sector.

The resolution passed the Senate on a vote of 60 to 38. This marks the first instance of standalone cryptocurrency legislation this session of Congress and represents an unusual bipartisan move, with a split of 51-49 in favor of Democrats. The resolution could have broader implications for the regulation of digital assets, particularly regarding the Financial Innovation and Technology for the 21st Century Act.

Before the resolution was passed in the House of Representatives, President Joe Biden stated his intention to veto the bill. He cited the need to protect investors in the cryptocurrency market and secure the overall financial system as his rationale. If the President does veto the legislation, it will return to Congress and require a two-thirds majority vote to pass again.

The Blockchain Association, a leading industry group, argues against the threat of a presidential veto, highlighting a growing awareness among the public, especially young people, regarding the significance of cryptocurrencies. They emphasize the importance of elected officials acknowledging and understanding the implications of cryptocurrencies.

North Korea’s alleged $147.5 million crypto laundering revealed by UN

According to confidential findings by UN sanctions monitors, North Korea utilised the virtual currency platform Tornado Cash to launder $147.5 million in March, following its theft from a cryptocurrency exchange last year. The monitors revealed to a UN Security Council sanctions committee that they had been investigating 97 suspected cyberattacks by North Korea on cryptocurrency companies between 2017 and 2024, totalling approximately $3.6 billion.

As can be seen in these confidential findings, one notable incident involved the theft of $147.5 million from the HTX cryptocurrency exchange late last year, which was then laundered in March. The monitors cited information from crypto analytics firm PeckShield and blockchain research firm Elliptic. In 2024 alone, they investigated 11 cryptocurrency thefts valued at $54.7 million, suggesting possible involvement by North Korean IT workers hired by small crypto-related companies.

North Korea, officially known as the Democratic People’s Republic of Korea (DPRK), has faced UN sanctions since 2006, aimed at curbing funding for its ballistic missile and nuclear programs. The US has previously sanctioned Tornado Cash over alleged support for North Korea, with two co-founders charged with facilitating money laundering. Virtual currency ‘mixer’ platforms like Tornado Cash blend cryptocurrencies to obscure their source and ownership.

Additionally, the monitors highlighted ongoing concerns about illicit arms trade between North Korea and Russia, with suspected shipments between North Korea’s Rajin port and Russian ports. There were also reports of North Korean cargo ships offloading coal in Chinese waters, potentially evading sanctions. Both China and Russia declined to comment on the monitors’ findings.

Philippines approved stablecoin pilot program in regulatory sandbox framework

The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, has granted approval to digital currency exchange Coins.ph to conduct a pilot program for a stablecoin called PHPC. This Philippine Peso-backed stablecoin will operate under the BSP’s Regulatory Sandbox Framework.

Coins.ph will back the stablecoin with its own cash and cash equivalents held in Philippine bank accounts, ensuring a one-to-one peg with the Philippine Peso. The pilot program aims to assess the benefits of the PHPC and its impact on the existing financial ecosystem. Coins.ph plans to make the PHPC stablecoin available on its platform by early June. The company’s CEO, Wei Zhou, previously served as CFO at Binance. Coins.ph received approval to publicly test the stablecoin in April and hopes to obtain full approval if certain metrics are met, allowing the PHPC to operate outside of the pilot phase.

Coins.ph’s approval to conduct the pilot program demonstrates the BSP’s openness to exploring digital and cryptocurrencies. Operating within the Regulatory Sandbox Framework allows the central bank to observe the real-world applications while ensuring consumer protection and financial system stability.

The Philippine government recently blocked Binance from operating in the country, indicating regulatory concerns and a cautious approach towards digital currency exchanges. Additionally, the Philippines plans to issue a wholesale central bank digital currency (CBDC) within two years.

Rwanda to start the central bank digital currency (CBDC) pilot

The Central bank of Rwanda call the public consultation on the future Central Bank Digital Currency (CBDC) pilot. The Central Bank call for the inputs of all stakeholders via online questionnaire available on their official website. 

The launch of the Rwanda’s CBDC might get fast trajectory after the government commitment to improve financial system in the country. In particular in relation to e-commerce, online payments systems, and related features. 

Global tendencies towards implementation of the Central Bank Digital Currency is highlighted in the latest BIS report on the CBDC implementation, released earlier this year. The BIS innovation center follow closely developments around CBDC implementation and the coordination work needed, 

Canada fines Binance $4.38 million for money laundering violations

Canadian cryptocurrency exchange Binance has been fined nearly CAD 6 million ($4.38 million) by Canada’s anti-money laundering agency, FINTRAC, for violating money laundering and terrorist financing laws. According to FINTRAC, despite several deadlines, Binance failed to register as a foreign money services business with the intelligence body. Additionally, the exchange did not report receiving virtual currency worth 10,000 or more on 5,902 separate occasions between 1 June 2021 and 19 July 2023.

The legal measure against Binance comes after a recent sentencing of the former CEO Changpeng Zhao to four months in prison for violating US money laundering laws. Binance agreed to pay a massive penalty of $4.32 billion, with Zhao also paying a $50 million criminal fine and an additional $50 million to the US Commodity Futures Trading Commission.

Binance’s decision to cease operations in Canada last year does not absolve them of the responsibility to comply with the country’s laws during their active period.

Why does it matter?

The ongoing scrutiny and legal action against Binance underscore the increasing global regulatory pressure on the cryptocurrency industry. Governments and financial institutions worldwide are prioritising the implementation of robust anti-money laundering measures to prevent illicit financial activities, including money laundering and terrorist financing within the cryptocurrency sector.

While cryptocurrencies offer benefits such as decentralisation, anonymity, and ease of cross-border transactions, they also pose challenges in terms of regulation and monitoring. The fines and legal consequences faced by Binance serve as a warning to other exchanges and entities operating in the crypto space to uphold stringent compliance standards.

Embracing central bank digital currencies is inevitable

In a recent interview, Joachim Nagel president of the Bundesbank and a member of the European Central Bank (ECB), said that the future of central banks is dependent on their ability to adapt their business models and embrace the use of central bank digital currencies (CBDCs). During a panel session at the Bank for International Settlements (BIS) Innovation he expressed concern about the uncertain future of central banks and emphasized the need for them to redefine their business models in the face of a changing financial landscape.

He added that distributed ledger technology (DLT), such as blockchain, is seen as a tool that can help central banks navigate this changing landscape and find new solutions. He stated that central banks need to accelerate their efforts in this regard and consider developing a new core product to address the decreasing attractiveness of physical money.

Another advocate for digital currencies in central banking is Francois Villeroy de Galhau, an ECB member from France. During the same conference, Galhau suggested that central banks should explore the use of central bank digital currencies for both wholesale and retail transactions.

The European Central Bank (ECB) is already actively working on the development of a digital version of the euro. The investigation phase has been completed, and the ECB aims to finalize the project by October 2025, determining the design and technical details along the way. This initiative demonstrates the ECB’s commitment to exploring the potential of CBDCs and adapting to the changing financial landscape.

A final version of stablecoin bill in the US could be ready soon

US House Representative Maxine Waters, a top Democrat on the House Financial Services Committee, has indicated that the final version of the stablecoin bill could be ready soon. In an interview with Bloomberg, Waters expressed optimism about the progress made towards getting the bill in the short run. This is a significant development, considering Waters had previously criticised a version of the same bill.

Waters now emphasises the importance of protecting investors and ensuring that cryptocurrency known as stablecoins have proper backing. This focus on investor protection underscores the need for robust regulation in the rapidly growing market.

Both the Senate and the House of Representatives have seen an acceleration in the movement towards a legislation in the past few weeks. Waters mentioned that the US Federal Reserve, the Treasury Department, and the White House have all had input in shaping the bill, underscoring the extensive collaboration involved.

In addition to progress within the House, a new stablecoin bill has been introduced in the Senate by Senators Cynthia Lummis and Kirsten Gillibrand. The bill proposed a ban on algorithmic stablecoins and requirements for issuers’ tokens to be fully backed by reserve assets. This bipartisan effort demonstrates the growing interest in regulating stablecoin cryptocurrency and ensuring their stability and transparency.

Notably, there is mention of a possible pairing of the stablecoin legislation with a marijuana banking bill. It is suggested that Waters is hopeful of overcoming potential opposition to the marijuana banking bill from Republican leader Mitch McConnell, which could facilitate further progress on both fronts.

Executives of the cryptocurrency wallet Samourai indicted for money laundering

Keonne Rodriguez and William Lonergan Hill, the CEO and CTO of cryptocurrency company Samourai Wallet, have been indicted and charged with conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business. The charges stem from their alleged involvement in the development, marketing, and operation of a cryptocurrency mixer that facilitated over $2 billion in unlawful transactions and enabled more than $100 million in money laundering activities from illegal dark web markets.

The indictment accuses Rodriguez and Hill of knowingly facilitating the laundering of criminal proceeds from sources such as Silk Road and Hydra Market, as well as from various wire fraud and computer fraud schemes, including a web-server intrusion and a spearphishing scheme. They are also alleged to have been involved in schemes to defraud multiple decentralized finance protocols.

Rodriguez was arrested and is expected to appear before a U.S. Magistrate Judge in the Western District of Pennsylvania, while Hill was arrested in Portugal, and the United States intends to seek his extradition for trial. In coordination with law enforcement authorities in Iceland, Samourai’s web servers and domain were seized, and a seizure warrant for Samourai’s mobile application was served on the Google Play Store. As a result, the application will no longer be available for download in the United States.

U.S. Attorney Damian Williams emphasized that Rodriguez and Hill are accused of operating a cryptocurrency mixing service that enabled criminals to engage in large-scale money laundering.

FBI Assistant Director in Charge James Smith explained that Rodriguez and Hill allegedly operated a mobile cryptocurrency mixing platform for almost a decade, providing a virtual haven for criminals to exchange illicit funds. Smith stated that Samourai’s services facilitated over $2 billion in illegal transactions and $100 million in dark web money laundering.

According to the indictment, from around 2015 to February 2024, Rodriguez and Hill developed, marketed, and operated the cryptocurrency mixing service known as Samourai. While promoting wallet as a “privacy” service, persecutors argue that the defendants were aware that it was used by criminals to launder large amounts of money and evade sanctions. The indictment alleged that Samourai processed over $100 million of criminal proceeds.

Illegal Samourai features

Samourai’s mobile application, allowed users to store their private keys for Bitcoin (BTC) addresses. Although Samourai employees did not have access to these private keys, the company operated a centralized server that facilitated transactions between users and created new BTC addresses. The indictment highlighted two features of Samourai that were allegedly designed to assist individuals engaged in criminal conduct to conceal the source of their proceeds. The first feature, called “Whirlpool,” was a cryptocurrency mixing service that coordinated batches of exchange between Samourai users to prevent law enforcement tracing on the Blockchain. The second feature, known as “Ricochet,” added unnecessary intermediate transactions, called “hops,” when transmitting cryptocurrency between addresses to prevent detection by law enforcement and cryptocurrency exchanges.

Over the years, over 80,000 BTC (worth over $2 billion at the relevant time) passed through these two services provided by Samourai. The defendants collected fees of approximately $3.4 million for Whirlpool transactions and $1.1 million for Ricochet transactions over the same period. Furthermore, Rodriguez and Hill operated Twitter accounts associated with Samourai.

Cryptocurrency exchange Binance faces class-action lawsuit in Canada

Cryptocurrency exchange Binance is facing a class-action lawsuit in Canada for allegedly violating local securities laws. The lawsuit, filed in the Ontario Superior Court of Justice, claims that cryptocurrency exchange sold crypto derivative products without proper registration, breaching the Ontario Securities Act and federal law.

Plaintiffs, are seeking damages and the rescission of unlawful derivatives trades. They argue that tens of thousands of Canadian users invested in Binance’s cryptocurrency derivatives products. The certification motion highlights the significant involvement of retail investors in cryptocurrency derivatives trading.

The class-action lawsuit follows Binance’s announcement in June 2021 to cease operations in Ontario after a warning from the Ontario Securities Commission. Despite Binance’s departure from Canada in May 2023, the investigation into its activities by local authorities has continued. The court motion confirms that the Ontario Securities Commission is actively examining the defendants.

Notably, no comment or response from Binance regarding the class-action lawsuit has been provided in the news text. Therefore, the official stance of Binance on the allegations remains undisclosed.

Thailand to block unauthorized cryptocurrency platforms

Thailand has announced plans to block “unauthorized” cryptocurrency platforms in order to enhance law enforcement efforts to combat online crime. The decision was made following a meeting of the Technology Crime Prevention and Suppression Committee, which instructed the country’s Securities and Exchange Commission (SEC) to submit information about unauthorised digital asset service providers to the Ministry of Digital Economy and Society. The goal is to block access to these platforms.

To facilitate a smooth transition, users will be provide with sufficient time to manage their accounts before losing access to the services. In an announcement, the SEC urged users of affected platforms to promptly withdraw their assets. The Thai SEC also cited previous actions taken by countries such as India and the Philippines, which have blocked unauthorized cryptocurrency platforms.

Thai regulators have been striving to strike a balance between supporting the cryptocurrency ecosystem and preventing fraud. While institutional investors and high-net-worth individuals have been allowed to invest in cryptocurrency exchange-traded funds (ETFs), and retail investors have been able to invest without limitations in digital tokens backed by real estate or infrastructure, custodians are required to have contingency plans in place in case of unforeseen issues.

The move to block unauthorized crypto platforms in Thailand reflects the global trend towards regulation in the cryptocurrency industry. The aim is to enhance the efficiency of law enforcement in addressing online criminal activities associated with cryptocurrencies, while also ensuring a secure and trustworthy environment within the crypto space.