CFTC Issues Digital Currency Guidance to Futures Commission Traders


The Commodity Futures Trading Commission (CFTC) has issued a warning to futures commission (FCM) traders, providing clarity on how to take care of users' digital currencies in segregated accounts.

  • According to a press release on Wednesday from the CFTC's Swap And Intermediate Supervision Trading Division, the consultancy informs FCMs on how to maintain and report certain digital assets held by clients in connection with physically delivered futures contracts or swaps.
  • A segregated account means that the client's funds are strictly separate from the company's money.
  • The CFTC noted that keeping client assets as segregated funds can allow greater risks to arise for other clients under the same banner.
  • Financial watchdog consulting also provides guidance on the best practices FCMs should follow when designing and maintaining risk management programs when dealing with digital assets such as client funds.
  • The consultancy does not refer to the custody of digital assets of foreign FCMs of client assets in relation to futures or futures options trading.
  • CFTC Division Director Joshua B. Sterling said in a statement that the commission is "committed to promoting responsible fintech innovation" as it works to create a "holistic framework for digital asset derivatives."


Has The U.S. Government Just Agreed to Start Financing a Cryptocurrency?


While there is nothing official yet, a US digital dollar has become a legitimate discussion in cryptocurrency, to supplement the money.

In a historic move, Federal Reserve Chairman Jerome Powell said on Monday that the Fed is open to collaboration with private companies in creating a U.S. digital dollar. Could this be an official cryptocurrency?

Not yet. While Powell was sure the United States government was not committed to launching a cryptocurrency, he took note of projects such as Facebook's Libra, which prompted banks to take a closer look at the digital currency space. The President of the Federal Reserve also pointed out that there are issues and issues related to monetary policy, including monetary policy limitations. He also mentioned that cybernetics and illegal activities should be a concern.

Powell said at an International Monetary Fund panel:

"We will have many conversations with industry and the involvement of the parties investigated, and this will help us in our work with international currencies and payments. In fact, I think this is one of the issues that is more important for the United States to get right than to be the first"

Real-time payments have been a problem for the Fed, as the U.S. is behind other countries in space. Mexico launched Cobro Digital, which allows users and merchants to make online transactions at digital weights last year, and China began testing a digital renminbi. The Bahamas is the last country to enter the digital fray, announcing on Tuesday that it would launch a national digital currency later this month.

While the Fed is not committing to a digital dollar at the moment, they are in full swing to bolster payments in real-time. The Fed expects to maintain its FedNow system to allow real-time payments 24 hours a day, no later than 2024. So far, the project still seems to be working on time, according to those who are involved.

Despite the Fed's neutral response, a U.S. digital dollar seems almost inevitable. Last January, a survey of 60 central banks conducted by the Bank of International Settlements found that 80% of central banks work in their own digital currencies. That said, only 10% of the banks surveyed believe they disclose a digital currency in the short term, and 20% say they plan to launch something in the medium term.

When an official US cryptocurrency will hit the market, no one knows, but don't play for those notes yet. As Powell emphasized in his statements, any digital dollar would serve as a complement to physical money, not a replacement.

Powell also said:

"Unlike some jurisdictions, here in the United States continues to see strong demand for money. We think it's important that any potential CBDC serve as a complement, not a substitute for, money and the private sector's current digital forms of the dollar, such as commercial bank money"


The U.S. Sanctions Australian Gem Trader Over Links to Al-Qaeda


The US has sanctioned an Australian gems trader for helping al-Qaeda transfer funds internationally, the Treasury Department said in a statement yesterday.

Ahmed Luqman Talib, 30, used his international gemstone business to facilitate the transfer of funds from the terrorist organization around the world.

Talib has been accused of facilitating al-Qaeda's financial transactions in Brazil, Colombia, Sri Lanka, Tanzania, Turkey, the Persian Gulf and Australia, where his company operates.

The 30-year-old company was surprising for its innovative use of gems as a conduit for al-Qaeda's financial transactions, a New York Times report said, marking a departure from traditional transnational financing for terrorist organizations.

"Terrorist groups like al-Qaeda use financial facilitators to move money around the world to help carry out terrorist activities," Treasury Secretary Steven Mnuchin said in a statement.

He added: "The Treasury Department remains committed to disrupting al-Qaeda's financial activities and networks around the world and appreciates collaboration with our Australian partners."

Under the sanctions, Talib will have all assets it holds in the U.S. frozen and will be legally barred from doing business with U.S. individuals or companies.

Secretary of State Mike Pompeo said yesterday that the move is a continuation of U.S. efforts to disorganize financial and logistical networks that support terrorist organizations such as al-Qaeda around the world.

"The United States has made significant progress in degrading AQ support networks around the world," Pompeo said, quoted by UPI. "We will not give in to our efforts to target the terrorist activities of AQ and those who support them."

The new set of sanctions follows the U.S. Department of Justice's announcement in August that it seized about $2 million in Bitcoin and other types of cryptocurrency from al-Qaeda.

The large sum of electronic money was seized from accounts that sent or received funds as part of alleged funding schemes for three foreign terrorist organizations, including al-Qaeda.

The seizure was the largest cryptocurrency confiscation ever connected to terrorism, federal officials said at the time.

Other groups, such as Daesh (ISIS), have also found ways to circumvent typical transfer restrictions through non-traditional financial channels, such as crowdsourced online fundraising, private donations and kidnapping for ransom, according to a United Nations report.

Daesh, for example, has about $100 million in financial reserves, the report states.


UK Limit For Cryptocurrency Derivatives Draws Attention in US


The regulator justified the ban by saying that cryptocurrencies are difficult to price, volatile and vulnerable to fraud

The UK's decision this month to limit retail access to cryptocurrency-linked financial derivatives has caught the attention of legal experts in the United States and is fueling a debate over whether Washington could follow the decision in London, especially if Democrat Joe Biden wins the presidency.

Robert Hockett, a professor at Cornell Law School, may be an atypical one in the debate, but he says the Financial Conduct Authority's ban on trading derivatives based on cryptocurrencies like bitcoin and ether in the United States. The FCA oversees the UK regulatory financial sector

Hockett told CQ Roll Call that the restrictions could be a first step towards preventing another financial crisis.

Derivatives can greatly increase payout or loss when the value of an asset increases or decreases. In the United States, it is legal for retail investors to trade futures and options on cryptocurrencies, allowing them to bet on long-term trends or gain more leverage than buying the currencies directly.

The UK regulator justified the ban, which will come into force next year, saying cryptocurrencies are difficult to price, volatile and vulnerable to fraud. It's allowing larger, more sophisticated investors to continue trading them.

Hockett said the ban represents the UK's first "foray" into combating digital currencies, even if it covers a small part of the cryptocurrency market.

The ban signals to the industry that regulators will not "sit back and watch you set fire to everything again," Hockett said. "We're watching and we're going to start introducing limits now, like requiring you to have fire extinguishers and limiting the amount of flammable material you can have when playing with matches."

Protection has a price

Others working with cryptocurrencies said limiting retail investors' access to derivatives may be a fair approach, but disagreed with Hockett on its significance.

Ariel Zetlin-Jones, professor of economics at Carnegie Mellon University, said she did not believe cryptocurrency markets would reach a size that could threaten financial stability without the significant involvement of banks, which would have to comply with existing regulations.

Regulators have good reason to think about investor protection when it comes to cryptocurrency-linked derivatives, he said in an interview but noted that these protections come at a cost.

"These derivatives markets are extremely complex. While the cryptocurrency exchanges that create them trade in an easy-to-understand way for retail investors, I think they're anything but," he said. But they make cryptocurrencies more liquid or easier to trade, which makes prices fairer for the underlying assets.

Zetlin-Jones said he did not think the US would follow the UK's lead and ban products because futures and options based on digital currencies are already available through regulated exchanges and trading platforms.

Richard Levin, president of the technology practice and financial regulation at Polsinelli PC, said the use of cryptocurrency derivatives in retail is so small that the UK ban probably won't have much impact.

For the most part, institutional investors, such as investment firms or hedge funds, not retail investors, are trading derivatives. The FCA is protecting less sophisticated investors from new and complex products that they may not understand, he said.

"It's not going to stifle innovation. It's just a reasonable reaction to concerns about a sophisticated product being offered to people who lack the sophistication to market the product."

Levin said he doesn't believe there's more regulation on cryptocurrency derivatives in the United States because the Securities and Exchange Commission and commodity futures trading commission already limit retail investors' access to swaps, which must be offered by regulated exchanges and trading platforms.

These layoffs miss the main point, Hockett argued. There is "growing concern" that encryption could become "the next domain of the shadow banking system," he said.

The term, coined by economist Paul McCulley in 2007, refers to non-bank companies that provide services similar to those of a commercial bank outside of the regulations. The idea gained prominence during the last financial crisis, partly due to the role that the shadow banking system played in the recession.

At the time, the parallel banking system described by McCulley was largely involved in products such as derivatives and complex securitized assets, among others. While much of this activity was handled by the Dodd Frank Act of 2010, there is now concern that this behaviour may appear elsewhere, including cryptocurrency, Hockett said.

Hockett compared the market to mortgage-backed securities, a derivative that grouped residential mortgages and contributed to the 2008 crash. At the moment, cryptocurrency markets have been eased by the popularity of mortgage-backed securities in 1999 or 2000 - a "small but rapidly growing player," he said.

"If the pace is the same, then it seems to me that in three to four years we will be looking at a possible systemic danger. It may end up happening faster than that because, in a way, encryption seems to be spreading faster than [mortgage-backed securities]."

Disclosure is the key

Thomas Chippas, CEO of ErisX, called the UK to ban unfair. He said it keeps cryptocurrency products in a different pattern from other complex investment vehicles. ErisX offers bitcoin futures, although it is unlikely that the company will be directly affected by the ban because its customers in the UK are institutional investors, Chippas said in an interview.

"I think disclosure is always a much better approach than the total ban," Chippas told CQ Roll Call, adding that there is a lot of data available on the cryptocurrencies underlying derivatives - and in some ways, it is more extensive than the information available on other commodities.

"Everyone knows how many bitcoins will be produced. Everyone knows how often they're being produced. Everyone knows the incentives of miners and the network. All the data is there. You can't tell me how many ounces of gold will come out of the earth."

In addition, investors have no shortage of complex financial products that they can already access, such as leveraged exchange-traded funds. The same approach, which relies on disclosure, should be used for investment products linked to bitcoin and other cryptocurrencies, Chippas said.

At the very least, the UK ban highlights what U.S. regulators, particularly the CFTC under President Heath Tarbert's leadership, are hitting, Chippas said.

The narrative has changed since a few years ago when the cryptocurrency's complaint was that regulators had made it too costly to get approval for new products, he said.

"We've moved on to now. And it turns out that if you just lower your head and put your back down, you can. In fact, regulators have improved things along the way."


The Quick Regulation of Cryptocurrencies


As technology continues its hasty integration into every aspect of our lives, regulators around the world struggle to keep pace with balancing cutting-edge technology with the use of traditional regulatory schemes.

The technology sector is constantly growing and improving; therefore, it is essential that regulators consistently monitor and seize market dynamics in order to adapt traditional infrastructure to better meet industry needs. Although the financial sector is no stranger to technological development, using the logic behind inventions dating back to 1300 BC with an abacus, the sudden popularity of technologies such as blockchain and cryptocurrencies has forced financial institutions to quickly confront the evolving era of financial technology ("FinTech").

In this article, we'll take a look at one of the most prominent technologies emerging in the FinTech industry, cryptocurrencies, providing a snapshot of the current state of legislation regarding cryptocurrencies in the international arena and turkey and exploring the obstacles faced by regulators in developing such legislation.

Blockchain Technology and Distributed Ledger

To fully understand cryptocurrencies, we must first explore the heart of any FinTech: Blockchain transaction. Blockchain is a type of Distributed Ledger Technology ("DLT"), which is a generic term that covers all types of technology used to facilitate value exchanges between users on a given platform and is essentially a decentralized database system that collects digital information stored in the form of a block.

On the blockchain, users create blocks of data containing information such as the participants involved and the time and date the transaction occurred, which are written to a peer-to-peer network using a trust and assurance cryptographic mechanism. This data block is later connected to other users' data blocks, thus creating a chain. Each block in the chain receives a unique identifier called "hash", which operates as a fingerprint because it is used to differentiate the data stored in that specific block from other blocks in the chain.

Blockchain technology is known for its additional security benefits, fast transaction time, economic nature and decentralized networks. In this article, we will focus on one of the most discussed forms of blockchain: cryptocurrencies.

Roadblock regulation

One of the most unique features of cryptocurrencies is that they operate without a central regulatory authority. The traditional banking system runs the risk of slow approval processes and high rates for transactions that can take days to complete. Decentralization allows financial transactions to occur almost instantly at little or no fee, mitigates bankruptcies and bank failures, and offers the benefit of using wallets that store offline cryptocurrencies (cold storage), further protecting consumers from data breaches.

However, this does not mean that cryptocurrencies should not be regulated. Because of these unique attributes, regulators around the world are trying to figure out how best to apply the regulations to cryptocurrencies. In some countries such as Switzerland and Malta, legislation has already been implemented that has defined the legislative framework for other nations that create their own cryptocurrency regulations, such as the United States and China, whose legislation needs to be refined, while for many others, such as Turkey, the regulations do not yet exist.

Regulation is important for a number of reasons. Regulators have a legitimate interest in monitoring the use of cryptocurrencies to minimize risks such as market manipulation, customer security breaches and the use of cryptocurrencies in illicit activities, among others. As such, regulators are working to determine the best method that finds a balance between reducing the risks associated with using cryptocurrencies without minimizing the benefits of the mechanism.

How to regulate

When it comes to deciphering the appropriate regulations for this unprecedented phenomenon, many regulators look to pre-existing asset categories to shed light on proper supervision, asking the question: Should cryptocurrencies be classified as a currency, title or commodity? The response will greatly influence how regulatory agencies in different jurisdictions oversee cryptocurrency activities.

Given that cryptocurrencies are often used in place of traditional currency as an exchange for goods or services, there is an argument to be made that cryptocurrencies should be classified as a currency and therefore would be regulated by the central bank of a state, but some officials have found that cryptocurrencies do not fit the legal definition of currency.

For example, in 2015, the European Central Bank published a report entitled "Virtual currency schemes", which argues that cryptocurrencies cannot be classified as currencies because they are merely a digital representation of value and are not issued by a central bank credit institution or electronic currency institution.

However, a decision issued by the European Court of Justice, dated 22 October 2015, stated that for tax purposes virtual currencies (including cryptocurrencies) should be treated as currencies. Of course, experts are still at odds with each other about whether a cryptocurrency can be qualified as a currency in certain circumstances, but where do they meet in terms of seeing cryptocurrencies as securities?

Securities are essentially tangible evidence of ownership or debt to which a value has been assigned and can be sold, including shares and debt instruments. In the United States, the President of the Securities Exchange Commission ("SEC" said in an interview with CNBC that cryptocurrencies do not qualify as securities because they do not represent the ownership of an entity.

In addition, he stated that the bonds are financed by public investors with the promise of a future reward (i.e. owned by a company for economic gain), while Bitcoin was financed through research and donation funding.6 If other regulators adhere to this interpretation, a final traditional regulatory scheme remains to be considered - commodities.

Commodities can be defined as raw materials from the land, such as gold, silver, oil, natural gas, copper, as well as agricultural products such as corn, coffee and sugar, which can be used and exchanged.

Regulators who strictly follow this conventional definition may have difficulty incorporating cryptocurrencies under the same umbrella as agricultural products and natural resources, especially since cryptocurrencies only hold exchange value and are not considered valuable to the underlying product itself.

In the United States, the Commodity Futures Trading Commission ("CFTC") stated in a press release on October 8, 2018, that cryptocurrencies are in fact commodities in certain cases, and some exchanges, such as the Chicago Mercantile Exchange ("CME"), have already begun offering Bitcoin futures.

In China, courts have already ruled that cryptocurrencies are actually commodities, indicating that there may be a strong argument for cryptocurrencies to be housed under commodity regulations.

In light of the trends we have seen from regulators around the world, the EU has announced that a draft for the framework for cryptocurrency regulation is planned to be published by the end of 2020, which can insert cryptocurrencies into an existing subset or create an entirely new set of rules.

As there does not seem to be a perfect fit for cryptocurrencies under these existing regulatory schemes, some leading countries in the crypto space, such as Malta and Switzerland, have already adopted a new way of looking at cryptocurrencies.

Maltese and Swiss Regulations

Malta was the first EU Member State to enact a comprehensive legal framework regulating DLTs, Virtual Financial Assets ("VFAs") and entities providing certain VFAs-related services. In 2018, the Maltese parliament issued three acts that were the first of its kind: the Malta Digital Innovation Authority Act, the Innovative Technology Services and Arrangements Act, and the Virtual Financial Assets Act (VFA Law). , the supply and issuance of VFAs and the provision of certain VFAs-related services.

The VFA Act qualifies all forms of cryptocurrencies as DLT assets and defines as assets that are "intrinsically dependent on, or use Distributed Ledger Technology". DLT assets can be:

  • Virtual tokens, also known as utility tokens;
  • Virtual financial assets;
  • Electronic Money; Or
  • Financial Instruments.

The VFA Act also describes the Maltese Financial Instruments Test, which is used to determine in which category a DLT asset falls and should be carried out by all companies using DLT assets in or from Malta, as well as persons conducting activities that fall under the VFA Act or other DLT-related legislation.

In Switzerland, in its explanatory report on the DLT Bill, the Swiss Federal Council stated that the best current approach is to rely on token categories, which were introduced by the Swiss Financial Market Supervisory Authority (FINMA) in its Guidelines published on February 16, 2018.

Token categories include 1) Payment tokens, 2) Utility tokens, and 3) Asset tokens. Payment tokens, which FINMA has declared to be synonymous with "pure cryptocurrencies", involve cryptocurrencies that are intended to be used as a means of payment to acquire goods or services. When compared to traditional financial instruments, they correspond more closely to currencies.

Utility tokens, on the other hand, include tokens that are intended to provide digital access to an application or service through a blockchain-based infrastructure. Finally, asset tokens, also called stable currencies, represent assets such as debts or property rights against the issuer and are analogous to stocks, securities or derivatives.

The UK and Germany are among the other countries that have also implemented legislation that categorizes cryptocurrencies into different token groups. We continue to monitor whether this modern approach to banking techniques will gain momentum in other European countries, including Turkey.

Turkey's efforts to keep up with global trends

On the date of this article, no legislation or regulations explicitly allowing, prohibiting or classifying cryptocurrencies exist in Turkey. Several official institutions have made statements and issued press releases to shed light on the Turkish government's approach to cryptocurrencies and provide insight into possible future approaches.

The Turkish Banking Regulation and Supervision Agency ("BRSA" confirmed in a press release dated November 25, 201318 that Bitcoin and other cryptocurrencies are not considered "currencies" or "virtual currencies" under Law No. 6493 on Payments and Securities Reconciliation Systems, payment services and electronic money institutions, as they are not issued by an authorized institution.

The press release itself was preventive in nature, reminding cryptocurrency users of the potential dangers associated with the use of alternative payment methods that are not subject to BRSA's authority.

In a letter addressed to the Turkish Capital Markets Association, the Turkish Capital Markets Council ("CMB") made it clear that the performance of spot transactions and derivatives made on the basis of

cryptocurrencies are not explicitly permitted by the Turkish Capital Market Act20 and are therefore prohibited. The CMB has also stated that cryptocurrencies cannot be classified as securities as they are not tangible property.

In relation to the statements of BRSA and CMB mentioned above, it can be inferred that the current trend of Turkish officials is to classify cryptocurrencies as commodities.

However, VAT is applicable to cryptocurrency purchases in Turkey. We assume that the Turkish authorities may also need to decide and determine the tax regime applicable to cryptocurrencies. Until then, the official treatment of cryptocurrencies remains unclear.

Consolidating Patchwork Legislation

In line with the seemingly global trend, the regulations covering blockchain and cryptocurrencies in Turkey are very sparse. We believe that government institutions are closely monitoring the attraction of Turkish users for the rapid development of these new technologies and currencies.

The Financial Stability Committee, at its meeting of January 10, 2018, decided to form a working group to draft a regulation on cryptocurrencies. In early January 2020, news agencies reported that the CMB began working on a new regulation for cryptocurrencies.

As the use of cryptocurrencies in place of traditional banking and financing mechanisms is spreading widely, regulators may soon consider shedding more light on these ubiquitous ambiguities and issuing legislation that best suits the unique aspects of the industry in order to protect consumers and financial institutions alike.


Cryptocurrency ETFs: U.S. Securities and Exchange Commission Wants to Facilitate Tokenized Products


The U.S. Securities and Exchange Commission (SEC) wants to facilitate tokenized exchange-traded funds (ETFs), according to President Jay Clayton. The agency is collaborating with other U.S. regulators to determine how to regulate different cryptographic products.

SEC open for Tokenization of ETFs

SEC Chairman Jay Clayton spoke about the committee's approach to regulating cryptographic products during a panel discussion organized by the Digital Chamber of Commerce earlier this month. The event, titled "The Two Sides of the American Currency: Innovation and Regulation of Digital Assets," also features acting Currency Controller Brian Brooks.

The SEC is "actively working on regulations that may one day allow cryptographic versions of ETFs," the Financial Times reported on Friday, citing Clayton. The SEC is collaborating with other U.S. regulators, such as the Office of the Controller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC), to determine which regulator has jurisdiction over different cryptographic products.

Clayton pointed out that the usefulness of the token is what decides which regulator should take the lead. While banking regulators should oversee tokens specifically intended to make payments, such as some stablecoins, Clayton said the tokenization of ETFs should be under the purview of the SEC. Emphasizing that the SEC should and is willing to regulate them, he said:

"Our door is open if you want to show how to tokenize the ETF product in a way that adds efficiency, we want to meet with you, we want to facilitate that. Of course, you have to register it and do what you would do with any other ETF"

"Tokenization allows a designated cryptocurrency asset - similar to bitcoin [BTC] - to represent a single bond, such as a stock or a basket of securities, such as a fund or an ETF", explained the Financial Times.

Wisdomtree Investments CEO Jonathan Steinberg said during a separate panel at the same event that tokenized investments are "an opportunity to do something better than the ETF". Franklin Templeton Investments filed paperwork with the SEC last year for a government financial market fund with traditional and tokenized shares, the publication reported.

Clayton states that the SEC's regulatory framework "is time-tested… through many innovations." Noting that trading today is electronic and traders use digital entries instead of stock certificates as they did 20 years ago, he said, "It may be very well the case that everyone becomes tokenized". However, the president warned, "But you need to stay true to the principles," adding that stock issuers and insiders, for example, have responsibilities. He described:

"One of the problems we had was that we got off on the wrong foot in this innovation… I think now, three years later, four years later, we are in a much better position"

"There was the theory that because it was so efficient because it could be very promising, we could put aside some of these principles of accountability and transparency", he recalled. The president now says, "We're seeing the promise of blockchain technology, distributed ledger technology, to bring efficiency to what I say is a time-tested structure".

One of the areas Clayton and Brooks discussed is how to clearly define what a title is. "If you're not trying to fund your network, you're not trying to give people a return on your network, it's probably not security," the SEC president said. "But if what you're trying to do is finance building your network with your token or provide people with a return by using the network with your token… it's clear that it's a security." He added, "we are working to make clear where these lines are so that people can mature the payment system".

The SEC president continued, "What we don't like is when someone says, 'you know the function are payments, so you really should put aside the issues of securities law.' I can't do that, you know, I wouldn't be doing my job".


DOJ Launches Framework For Cryptocurrency Application


On October 8, 2020, the US Department of Justice (“DOJ”) released the publication “Cryptocurrency: An Application Framework,” (“Framework”) which describes the emerging threats and application challenges associated with cryptocurrency. The DOJ Digital Cyber ​​Task Force produced the Framework to highlight important relationships the DOJ has built with other national and international regulatory and enforcement partners, and its strategic response to address emerging issues related to cryptocurrency and blockchain technology or “Distributed reason” underlying it.

The Structure's stated objective is to ensure that cryptocurrencies and associated technologies are secure and do not jeopardize public or national security. Although the DOJ explicitly recognizes the potential of cryptocurrency in the Framework, it also describes the illicit threats and opportunities that the cryptocurrency provides for nefarious actors. The Framework is divided into three parts.

Part I

Part I of the Framework begins with an overview of the potential threats posed by the use of cryptocurrency and an acknowledgment of the unique challenges it presents due to the inherent resources that may allow illicit use (decentralized operation and a high degree of anonymity). While also describing the legitimate uses of cryptocurrency (for example, allowing worldwide transfers of value without using a financial intermediary, thereby minimizing transaction costs), the report goes on to identify three categories into which illicit uses of a cryptocurrency typically fall:

  • Financial transactions associated with the commission of crimes, such as buying and selling drugs or weapons on the dark web, renting servers to commit cybercrimes or soliciting funds to support terrorist activities;
  • Money laundering and illegal protection of legitimate tax activities, reporting obligations or other legal requirements; or
  • Crimes that directly involve the cryptocurrency market, such as stealing cryptocurrencies from exchanges through hacking or defrauding investors through the use or promise of cryptocurrencies.

Part II

Part II of the Framework describes the legal and regulatory tools available to the DOJ to address these threats. The section describes typical federal crimes accused of misconduct involving cryptocurrency and highlights the DOJ's goal of promoting enforcement by leveraging relationships with other federal regulatory and supervisory agencies, such as the Securities and Exchange Commission ("SEC"), Commodity Futures Trading Commission ("CFTC") and Treasury Department components, including the Financial Crimes Enforcement Network ("FinCEN"), Foreign Assets Control Office ("OFAC"), Currency Controllership ("OCC") and the Federal Revenue Service (“IRS”). The coordination of the DOJ with state attorney generals and international law enforcement agencies was also highlighted.

Part III

The third and final section of the Framework details the challenges the government faces in applying cryptocurrencies. He points out that complex technologies present new issues for law enforcement and describes the facets of cryptocurrency business models (for example, point-to-point exchanges, Bitcoin kiosks and virtual casinos) and evasive measures (for example, "mixing" cryptography or "falling" assets to hide their origin) that often facilitate criminal activity.

The report ends with responsive strategies that the DOJ is actively employing, including ongoing aggressive investigation and prosecution of malicious actors, maintaining relationships with other enforcement agencies and engaging with the private sector to detect and punish bad actors.


Trump’s Security Hawks Call Distributed Ledgers “Critical” in The US-China Technological Arms Race


The Trump administration included “distributed reason technologies” (DLT), the grandfather technology behind cryptocurrency and blockchain, in its strategy to preserve America's technological supremacy over China and Russia.

  • DLT is one of the 20 areas of focus on the National Security Council's list of "critical and emerging technologies" released Thursday.
  • The NSC's strategy is to invest, develop, adopt and promote priority technologies.
  • Also on the list: AI, data science, quantum computing and “space technologies”, technologies for mitigating weapons of mass destruction and others.
  • Absent from the document: concrete numbers and a concrete roadmap for implementation.
  • US government pockets are already investing in blockchain infrastructure, the Department of Homeland Security most publicly.
  • The US military is also examining the DLT for combat operations, but efforts are still in its early stages.
  • Chinese officials have long been optimistic about DLT. A state-sanctioned distributed network to host dapps and Internet services debuted months ago.
  • It is not so clear where Russia stands in state-sponsored DLT use cases.


Bitcoin Thieves Transfer Part of The $1.4 Billion Bitcoin Loot


Bitcoin thieves transferred part of their loot containing 119,756 Bitcoins.

As the price of BTC approaches the $11,500 resistance level, Bitcoin thieves a few hours ago transferred part of their withdrawal containing 119,756 Bitcoins worth $1.4 billion at today's price.

The information was released by the advanced cryptic analytical tracker Whale Alert, in a series of tweets seen by Nairametrics. The registered transactions took place 4 times.

In 2016, a senior Bitfinex employee, in a statement seen by Nairametrics, revealed that 119,756 Bitcoins were stolen from users' accounts. So far, the BTC thieves responsible for these robberies have only managed to move 1 to 2% of the funds in the exchange.

At the time of this writing, Bitcoin was trading at $11.508.92, with a daily trading volume of $20 billion. The price of BTC has risen 0.9% in the last 24 hours. It has a circulating stock of 19 million coins and a maximum supply of 21 million coins.

What you should know

It should be noted that Bitcoin is not really anonymous because all BTC transactions are kept permanently and publicly on the blockchain or reason system. Therefore, it is very easy for anyone to view transactions and balances from any BTC address.

What this means

Blockchain security and safety agencies have flagged BTC wallets containing stolen BTCs, making it very difficult to move 119,756 BTC without being noticed.


Starbucks and McDonalds Do Not Use Crypto Money From China


The Chinese government's national cryptocurrency project, the digital yuan, was also promoted by two giant American companies. Consequently, Starbucks and McDonalds will not start receiving digital payments in yuan for a while.

It was alleged that the subsidiaries of Starbucks, McDonalds and Subway in China started to test the country's national cryptocurrency project. In today's statement, it is stated that these companies are not yet at a stage where they can accept payments with digital yuan. In addition to the statement, the relevant companies are currently allowing payment transactions through platforms such as WeChat, Alipay and QuickPass.

The exact date is not clear

Project officials, the Central Bank of China and the country's Ministry of Commerce, have yet to announce when the Chinese cryptocurrency will be fully used. While the test phases of the project continue, it is estimated that there are about 3 thousand jobs involved in the process. The full integration of the digital yuan is planned to accompany the 2022 Winter Olympics in Beijing, if all goes well. However, it is a matter of curiosity whether such delays in the testing phase will prolong this period.

The successful implementation of the project is interpreted by many economists as China's pioneering position in the global financial world. Ripple founder Chris Larsen, who has managed to be the center of attention with his statement in recent months, is one of the names that carefully follows the yuan yuan. The digital yuan may even dethrone the dollar, thanks to China-based payment companies like Alibaba, according to Larsen.