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Chainalysis reported that criminal activity represented 0.34% of all 2020 crypto-asset transaction volume (versus 2.1% in 2019). One of the reasons for the decline is due to overall economic activity nearly tripling between 2019 and 2020. Scams made up the majority of such flows at 54% of funds received for illicit activity, followed by darknet markets (35%). Although ransomware accounted for only 7% of all funds received by criminal addresses, it was up 311% from 2019.

U.S. President Joe Biden has frozen all Federal regulatory processes, including the self-hosted crypto wallet regulations proposed by former Administration. The announcement came in a White House memorandum for the heads of various federal agencies, the Financial Crimes Enforcement Network (FinCEN) included. The edict doesn't specify the crypto wallet proposal, but places a general freeze on all agency rulemaking pending review, effective for 60 days from the date of the memorandum.

The Bangko Sentral ng Pilipinas (BSP) released new guidelines for the virtual asset service providers (VASPs) operating in the country, imposing many new restrictions and mandating licenses for operations. The new framework aims to curb money laundering and terror financing using digital currencies. The document highlighted that the regulations are in line with the recommendations of the Financial Action Task Force (FATF).

The U.S. Financial Crimes Enforcement Network (FinCEN) is extending further the comment period for its recent proposed rulemaking regarding certain crypto-asset transactions. The proposed rule would impose new know-your-customer requirements on crypto-asset transfers to personal ("unhosted") wallets. Users would have to provide detailed personal information for transactions greater than $3,000, and exchanges would be required to report either individual or groups of transactions that add up to more than $10,000 during a day to FinCEN. The original comment period was only 15 days, most of which were holidays, and then on January 14, it gave stakeholders now have an extra 45 days to comment on the first ("$3,000") rule proposal, and 15 days on the second ($10,000) one. Now the deadline has been extended to 60 days from when the January 26 extension notice is published in the Federal Register.

Binance has deployed CipherTrace Traveler to enable the exchange's compliance with global "travel rule" regulations. Traveler is designed to support Virtual Asset Service Providers (VASPs), including cryptocurrency exchanges, custody providers, OTC trading desks, banks and other financial institutions, to achieve compliance with the Financial Crimes Enforcement Network's (FinCEN) and the Financial Action Task Force's (FATF) travel rule regulations.

"I'm tepidly in favor of current anti-money laundering standards. First, I support the criminalization of money laundering. And second, I accept that we need a minimum set of rules and standards to out the Jacks of the world. Third, I'm not sure if our current standard is the best. Maybe it is, maybe it isn't. I'd like to learn more. If we can squeeze out a bit more privacy while still catching the same number of money launderers, I'm all for it."

The European Commission is proposing to prohibit cash transactions higher than EUR10,000 and ban anonymous crypto-asset wallets, saying that crypto-assets should be governed by the same rules as regular bank wire transfers. The proposed rules would also oblige financial institutions that facilitate crypto-asset transfers to collect various personal data of senders and recipients, essentially expanding the so-called Financial Action Task Force (FATF) "travel rule" to crypto-asset transactions.

On Tuesday, besides prohibiting anonymous crypto transactions, the EU's executive arm also added anonymous crypto asset wallets to its prohibition list, requiring the full application of AML/CFT rules to ensure complete traceability. This created some confusion as to what exactly the crypto wallets meant here, which the European Commission confirmed is not applicable to non-custodial privacy wallets rather only to exchanges. Indeed, open-source, non-custodial wallets, will not be covered by the prohibition.

Although the U.S. dollar is the world's reserve currency, the U.S.'s ability to apply strong and effective sanctions has very little to do with the U.S. dollar itself.

The Cryptocurrency Indicators of Suspicion Working Group Report details 86 indicators of suspicious activity, or patterns of transactions on the blockchain, to provide details of how criminals have laundered $3.7 billion in 2019 so far. Project Participate is comprised of a crack team of compliance officers from firms active in the crypto space, including major banks and crypto exchanges companies, plus blockchain investigation firms Chainalysis and Bitfury Crystal.

Iran's President Hassan Rouhani has proposed creating a cryptocurrency for Muslim countries as an alternative to the US dollar. Rouhani said the U.S. has used economic sanctions as the "main tools of domineering hegemony and bullying" of other nations. Last month, BRICS nations also proposed creating a cryptocurrency for settling payment transactions between the group "

U.S. crypto-asset users hoping to transfer their holdings from an exchange to their own personal wallets may need to comply with new know-your-customer (KYC) requirements under a rule proposed by the U.S. Treasury. Users would have to provide detailed personal information for transactions greater than $3,000, and exchanges would be required to report either individual or groups of transactions that add up to more than $10,000 during a day to the Financial Crimes Enforcement Network (FinCEN). The Treasury has given stakeholders 15 days to respond with comments.

According to Circle CEO Jeremy Allaire, in the world of crypto assets, on the Treasury's proposed crypto-asset wallet rule: a report that includes a blockchain address essentially gives law enforcement a data feed that includes identity + blockchain addresses and the ability to monitor, in real-time, all of the that customer's flows. This is without any consent. Digital bearer assets with public chains combined with identity is a level of surveillance that does not exist in the existing financial system.

BitMEX has completed its User Verification Programme, claiming to start 2021 with "a fully verified active user base." BitMEX ramped up the rollout of its know-your-customers (KYC) program on October 21, after the Commodity Futures Trading Commission (CFTC) filed money-laundering and other civil charges against it. The BitMEX Programme had some theet behind it as, according to BitMEX's initial announcement, all its customers who remained unverified by December 4 would have lost the ability to deposit, trade, and withdraw their funds.

"We appreciate the fact that this proposal avoids technology-specific standards like the Swiss-rule and draconian restrictions like those FATF has contemplated. Nonetheless this rulemaking takes a bulk warrantless surveillance regime and applies it to an innovative technology with little opportunity for public comment. This is especially problematic given the complicated implications of the proposed recordkeeping requirements which may, as described in the next section, meaningfully stymie innovation. A fifteen day period is simply not enough time to work through these implications."

Here's MoneyGram's pocket guide to the FINCEN reporting requirements.

The Caymans' Ministry of Financial Services kicked off Phase One of its anti-money laundering (AML) and countering the financing of terrorism (CFT) regulatory framework for virtual asset service providers (VASPs). Phase Two, slated to come into force in June 2021, will introduce licensing requirements and prudential supervision for VASPs. https://www.mfs.ky/news/government-commences-framework-for-virtual-asset-service-providers/

The Hong Kong Securities and Futures Commission (SFC) will propose a new regime on licensing for virtual assets by end-2020. It will require all platforms that trade any types of crypto assets, including both operating in Hong Kong and targeting Hong Kong investors, to apply an SFC license. Under the current legislative framework if a platform operator wants to operate completely off the regulatory radar it can do so simply by ensuring that its traded crypto-assets are not within the legal definition of a security.

South Korea's Financial Services Commission (FSC) will ban anonymous digital currencies that possess a high-risk of money laundering. Furthermore, the FSC will mandate KYC and AML policies on all domestic crypto-asset exchanges. Additionally, the exchanges need to report their operational activities with the regulator. The new rules will come into force in March next year, barring all domestic crypto-asset exchanges from offering services with such privacy coins. https://www.fsc.go.kr/info/ntc_news_view.jsp?bbsid=BBS0030&page=1&sch1=&sword=&r_url=&menu=7210100&no=34226

Algorand has linked up with Chainalysis to help bake regulatory compliance into their blockchains. Chainalysis will provide a know-your-transaction solution, allowing its foundation to monitor large volumes of on-chain activity for the native ALGO token and report any suspicious transactions to the authorities. It will not provide a comprehensive solution to "travel rule" compliance, but it will help Algorand pick out transactions that trigger the rule, as well as identifying relevant senders and receivers.