Blockchain Week in Review – March 2022 #2 | Coie Perkins
Weekly Focus on Blockchain
- Zelenskyy signs virtual assets bill, legalizing crypto in Ukraine
- Japan Imposes Sanctions On Crypto Exchanges Over Russia Sanctions Violations
- SEC Rejects Spot Bitcoin ETF Proposals From NYDIG, Global X
- Bipartisan praise of Biden’s executive order on crypto
- Crypto Apps Surpass 100 Million Downloads in Q4
- European Parliament Committee Votes Against Proof-of-Work Ban, Supports Alternative Amendment on Crypto Assets
- Andreessen Horowitz Hires Former FinCEN Senior Currency Advisor Michele Korver
- CNBC: Senate Banking Committee Holds Hearing on Crypto and Illicit Finance
- The block: ConsenSys Raises $450M Series D at $7B Valuation
- The Washington Post: Sarah Bloom Raskin withdraws nomination as Fed Vice President for Supervision
Zelenskyy signs virtual assets bill, legalizing crypto in Ukraine
On March 16, Ukrainian President Volodymyr Zelenskyy signed the Virtual Assets Law. According to A declaration by the Ministry of Digital Transformation, the law determines the legal status, classification, ownership and regulators of virtual assets, and sets out registration requirements for service providers. The Ukrainian National Commission for Securities and Stock Market is in charge of regulating the market where foreign and Ukrainian crypto exchanges will now be allowed to operate legally and banks allowed to open accounts in their name. Zelenskyy had rejected an earlier version of the bill, which was approved in September 2021.
Recently, Ukraine received at least $100 million in crypto donations of those who hope to support defensive and humanitarian efforts during the country’s war with Russia.
Japan Imposes Sanctions On Crypto Exchanges Over Russia Sanctions Violations
The Financial Services Agency of Japan and the Ministry of Finance have issued a declaration on March 14, setting out the penalties that crypto exchanges could face if they fail to comply with sanctions against Russia, as reported Reuters. Exchanges making unauthorized payments to sanctioned individuals can be fined up to 1 million yen ($8,500) and executives can face up to three years in prison. Exchanges are now also required to report any suspected cases of such transfers.
To date, exchanges have diverged on whether to completely block Russian addresses from using their services.
President Biden Issues Executive Order Calling for Crypto Review on a Coordinated Basis Across the Federal Government
President Joe Biden unveiled a sweeping directive March 9 – a “first-ever whole-of-government approach” to digital assets that directs parts of the federal government to coordinate efforts to create direction for the rapidly growing industry.
the Executive Decreewhich calls for coordinated interagency action and communication to states that the administration places “highest urgency on research and development efforts in the design and potential deployment of options for a CBDC in the United States [and further calling for analysis of the potential risks and benefits].” Within 180 days of the order, “the Secretary of the Treasury, in consultation with the Secretary of State, Attorney General, Secretary of Commerce, Secretary of Homeland Security, Director of the Office of Management and Budget , the Director of National Intelligence and the heads of other relevant agencies are to report to the President on the future of monetary and payment systems, including the conditions that lead to broad adoption of digital assets; the extent to which the Technological innovation may affect these outcomes; and the implications for the United States financial system, modernization and changes to payment systems, economic growth, financial inclusion, and national security. The order calls for additional reports to be produced by various agencies, in coordination with the Secretary of the Treasury, including reports regarding “the implications of developments developments and adoption of digital assets and changes in financial market infrastructures and payment systems for consumers, US investors, businesses and for equitable economic growth; “a technical assessment of the technology infrastructure, capacity and expertise that would be needed in relevant agencies to facilitate and support the introduction of a CBDC system if one were proposed;” “a report on the role of law enforcement in detecting, investigating and prosecuting criminal activity related to digital assets;” and a report on the impacts of distributed ledger technology on the energy transition in the short, medium and long term. The order also focuses on studying the “risks and regulatory gaps posed by various types of digital assets and providing recommendations to address those risks.” More reports are expected in less than 180 days, such as a report “offering additional insights into the illicit financial risks posed by digital assets, including cryptocurrencies, stablecoins, CBDCs, and trends in the use of digital assets by illicit actors” which can be kept classified as due in 90 days.
Sen. Pat Toomey (R-Pa.), a senior member of the Senate Banking Committee, was “encouraged” by the administration’s recognition of the industry and its growth. Banking Committee Chairman Sen. Sherrod Brown (D-Ohio) expressed similar praise for the order, saying it is “imperative to strengthen our financial resilience and national security” by preventing the use of the cryptocurrency to evade the law.
House Financial Services Committee Chair Rep. Maxine Waters (D-California) called the guideline “an important step” in understanding how digital assets can shape American society and the financial system. She said families across the country looking to rebuild after the COVID-19 pandemic may turn to financial alternatives like cryptocurrency, and it is imperative that they are protected from fraud, manipulation and abuse.
Ranking member of the House committee, Rep. Patrick McHenry (RN.C.), called for bipartisan policies on the regulation of digital assets. He said: “As Congress considers regulatory frameworks for digital assets, we must also fully recognize their benefits – such as the important role they have played in helping Ukrainians – and their underlying technologies, which are largely absent from this announcement.”
While McHenry also pushed back against claims that cryptocurrency could be used by Russian oligarchs to evade sanctions, Sen. Elizabeth Warren (D-Mass.), a member of the Senate Banking Committee, called on the Department of Treasury to clarify how the use of crypto will be prevented. as a tool to circumvent these sanctions.
Spokespersons and leaders of financial regulators including the Commodity Futures Trading Commission, Securities and Exchange Commission, Consumer Financial Protection Bureau, and Department of Homeland Security echoes the importance of the Directive, including supporting ‘responsible’ innovation and ensuring consumer protection, and welcomed opportunity to work with their industry colleagues to achieve these goals. Additional coverage from Coindesk.
SEC Rejects Spot Bitcoin ETF Proposals From NYDIG, Global X
On March 10, the Securities and Exchange Commission disapproved two cash bitcoin exchange-traded fund proposals submitted by NYDIG and Overall X. Similar to previous proposal rejections (e.g., First Trust and Skybridge, VanEckand WisdomTree) regulatory filings cite the lack of oversight-sharing arrangements and the perceived inability to address fraud and manipulative practices in the marketplace. Coverage by The block.
Crypto Apps Surpass 100 Million Downloads in Q4
According to a report released on March 17, the last three months of 2021 saw over 100 million downloads of crypto apps such as Coinbase, Crypto.com, Binance.US, Binance, and Voyager. These applications allow traditional investors to interact with blockchains and manage their holdings in a way that is less complex than the “wallet” preferred by advanced users.
In 2021, downloads increased by 400% compared to the previous year (compared to a growth of 64% in 2020). Sessions grew 567% year over year, topping four billion in the fourth quarter.
According to Sensor Tower, downloads of the top five apps are down at the start of 2022 compared to the previous quarter; however, they are still up 770% from January/February 2020.
In February, Crypto apps also took three of the top five spots for the strongest download growth over the previous week among top mobile brands advertising during the Super Bowl, per sensor tower. Coverage by AXIOS.
European Parliament Committee Votes Against Proof-of-Work Ban, Supports Alternative Amendment on Crypto Assets
The EU’s Economic and Military Affairs (ECON) committee reviewed the proposed Framework for Crypto Asset Markets (MiCAs), which included an amendment banning proof-of-work blockchains such as Bitcoin. According to a series of tweets by Patrick Hansen, head of strategy at Unstoppable Finance, the committee ultimately voted against the “POW ban”, with 23 members in favour, 30 against and six abstentions. The entire MiCA project received 31 votes for, four against and 23 abstentions. The results of the votes on the amendments are available here.
Hansen Explain groups supporting the POW ban have one last option: “veto a fast-track MiCA process through trilogues [and] bring the discussion to Parliament’s plenary” for which they would need, and currently seem to have, 1/10 of the EP vote.
Bitcoin advocates have expressed concern that such a ban would have deleterious consequences for Bitcoin. Jake Chervinsky, executive vice president and chief policy officer of the Blockchain Association, felt the ban looked like “a pretext for a bitcoin ban” and “if they get the POWs banned, they will come for Outlets”. [proof-of-stake] next, and all other Sybil resistance mechanics after that.
An alternative amendment by MEP Stefan Berger, which received support and was accepted by the European Parliament, reads: “By 1 January 2025, the Commission shall submit to the European Parliament and to the Council, as appropriate, a legislative proposal to amend Regulation (EU) 2020/852, pursuant to Article 10 of that Regulation, to include in the EU Sustainable Finance Taxonomy any crypto asset mining activity that contributes substantially to climate change mitigation and adaptation Coverage by BITCOIN.COM.