Ant Group has called a halt on its huge initial public offering (IPO), delaying the November 5 debut on the Shanghai and Hong Kong stock exchanges, less than 48 hours before the highly anticipated start of trading. A meeting earlier this week between Ant Group's senior executives and China's top financial regulators led to "significant change" to Ant's business environment, which may result in the fintech company not fulfilling the listing requirements or disclosure rules of the exchange, according to Ant Group's statement to the Shanghai bourse operator.
This Bank of Canada note outlines what is technologically feasible for privacy in a central bank digital currency (CBDC) system. Privacy in a CBDC goes beyond binary choices of anonymity or full disclosure. System designers have a range of choices around the type of information to keep private and who to keep it private from. Because privacy is not in the sole purview of the Bank, defining it requires consultation with external parties. Our approach in this note is to: develop a framework to evaluate different privacy models, understand the technical tools to enact various privacy models, suggest a design approach for CBDC privacy, and list the key risks and trade-offs.
On a general level, self-sovereign identity is intended to preserve the right for the selective disclosure of different aspects of one's identity and the various components thereof, in different domains and contextual settings. This right should apply irrespectively of whether these aspects and components have been issued by a particular government, company, or organization. More specifically, self-sovereign identity also refers to the idea that individuals shall retain control over their personal data and, to a certain degree, over the representations of their identities (or personas) within a particular identity management system. This requires giving them the ability to establish (and control) who has the right to access specific pieces of information about them, with a high degree of granularity.
While this guidance does not create any new obligations or modify existing disclosure obligations, it does summarize a number of Staff concerns that have been reflected in previous SEC comment letters. As SPAC sponsors are normally quite keen to have their registration statements reviewed as expeditiously as possible, SPAC sponsors will need to consider their proposed SPAC structures and registration statements in light of the new guidance.
In regulatory filings published on SEDAR, the Purpose Bitcoin ETF disclosed that the OSC had issued a receipt for its long-form prospectus. To offer securities to the public, an investment fund must first receive approval from the OSC for a preliminary prospectus, after which a final prospectus can be submitted. If the final prospectus is approved, the securities can be publicly issued. Under the passport model, an investment fund approved by its principal regulator gains automatic access to capital markets in other provinces and territories, subject to continuous disclosure requirements.
"The National Bank of Tajikistan informs that it has not signed any cooperation agreement with Fantom Foundation on Digital Currency Platform (CBDC) and has no intentions to do so. The information on introduction of Digital Currency Platform (CBDC) through the National Bank of Tajikistan in the Republic of Tajikistan is incorrect and untrue, therefore the National Bank of Tajikistan has already sent a letter to the Fantom Foundation concerning the disclosure of false information."
Australian Securities and Investments Commission (ASIC) recently released information for product issuers and market operators on how they can meet their regulatory obligations in relation to crypto-asset exchange traded products (ETPs) and other investment products. It covers good practices in how these products are admitted and supervised by market operators, and good practices in how product issuers establish and operate them. It also includes good practice guidance on admission and monitoring standards, custody of crypto-assets, pricing methodologies, disclosure and risk management.
According to a new IMF Fintech Note, the rapid and significant expansion of BigTechs in financial services and their interconnectedness with financial service firms are potentially creating new channels of systemic risks. To achieve effective implementation and multiple objectives of financial regulation and supervision, a hybrid approach, combining a mix of entity- and activity-based approaches, is needed. Home supervisors should establish an entity-based approach to cover the global activities of a BigTech group, while host supervisors could in principle address local risks and concerns mainly through activity-based regulations. Cross-sector and cross-border cooperation are key in determining the future of the regulatory architecture. However, it can take several years before regulators have achieved a sufficiently robust legal and regulatory framework to address all risks arising from BigTech in financial services, and short-term solutions may be needed. In the interim, regulatory authorities should actively use all existing regulatory powers to manage risks, while BigTech should adopt and improve governance frameworks through industry codes of conduct and enhanced disclosures. Options should be explored to promote global consistency in the treatment of BigTechs, through existing or new global bodies with a broad mandate. The note recommends that the Joint Forum's 2012 Principles for the Supervision of Financial Conglomerates be reviewed to address regulatory gaps.
While "buy now, pay later" (BNPL) can offer benefits compared to credit cards, there are lurking issues that could present challenges to the companies this holiday shopping season. In complaints to the U.S. Consumer Financial Protection Bureau, consumers have said that they've had problems with purchases, either because they couldn't make a return or get a refund, or got charged with fees they didn't understand. Right now, BNPL is not regulated in the way that credit cards are in the United States. That means there are no standards for disclosures on fees, amounts owed, credit reporting and payments. Even the due dates of payments are not as clear as a credit card with a consistent payment date. The U.K. and Australia, where BNPL has taken off even faster than in the United States, have placed these products under a regulatory regime. U.S. regulators are likely to follow suit.
"The Ripple ruling, on its face, seems to make it very hard to protect retail investors from crypto fraud or to mandate any sort of disclosures about new crypto projects. Reversing that ruling on appeal and endorsing the SEC's view that most crypto tokens are securities would solve that problem - but would also probably lead to more or less a ban on crypto in the US. A legislative compromise that lets somebody regulate crypto, but not the SEC, seems more likely now than it was a few days ago."
The CCP Global PQD Newsflash provides an overview of the risk management provided by CCPs across the globe and complements public statistics such as the BIS derivatives statistics. This PQD Newsflash offers an overview of the key statistics, scale and nature of financial market infrastructure risk management from a global perspective and allows market participants to gain a clearer view of the CCP ecosystem. The data is aggregated directly from the CCPs themselves according to the CCP Global standardized template, carrying information stipulated in global regulatory guidance. Further details for individual CCPs can be found in links provided on the CCP Global website.
The Atlantic Council published new research that categorizes and explains how the world's largest economies are regulating cryptocurrencies. It looks at 25 countries-G20 member countries, in addition to countries with the highest rates of cryptocurrency adoption including Iran, Pakistan, Philippines, Thailand, Ukraine and Vietnam. Each country is assigned one of three regulatory statuses: legal (where all activities are permitted), partial ban (where one or more activity is not permitted), and general ban (where all activity is limited). It breaks regulations down by tax policy, requirements to combat money laundering and terrorist financing, consumer protection rules, and licensing and disclosure obligations.
"In this work, we put forth a new model for CBDCs and an efficient construction that, for the first time, fully addresses privacy and regulatory compliance simultaneously. Moreover, recognizing the importance of avoiding a single point of failure, our construction is distributed so that all its properties can withstand a suitably bounded minority of participating entities getting corrupted by an adversary. Achieving all the above properties efficiently is technically involved; among others, our construction uses suitable cryptographic tools to thwart manin-the-middle attacks, it showcases a novel traceability mechanism with significant performance gains compared to previously known techniques and, perhaps surprisingly, shows how to obviate Byzantine agreement or broadcast from the optimistic execution path of a payment, something that results in an essentially optimal communication pattern and communication overhead when the sender and receiver are honest. Going beyond "simple" payments, we also discuss how our scheme can facilitate one-off large transfers complying with Know Your Transaction (KYT) disclosure requirements. Our CBDC concept is expressed and realized in the Universal Composition (UC) framework providing in this way a modular and secure way to embed it within a larger financial ecosystem."
The Biden administration published a statement urging Congress to "step up its efforts" with respect to regulating the cryptocurrency market. Other suggestions included strengthening transparency and disclosure requirements for crypto companies, strengthening penalties for violations of illicit-finance rules, and working more closely with international law enforcement partners. The officials also made suggestions about what Congress should not do in terms of crafting new crypto regulation, including "greenlight[ing] mainstream institutions, like pension funds, to dive headlong into cryptocurrency markets." https://www.whitehouse.gov/nec/briefing-room/2023/01/27/the-administrations-roadmap-to-mitigate-cryptocurrencies-risks
The Hong Kong Monetary Authority (HKMA) published a paper on volatility spillover from asset-backed stablecoins to money market instruments, focusing on Tether. Stablecoins bear liquidity mismatch risks similar to money market funds, which may expose them to a fire-sale of reserve assets in times of crypto ecosystem instability and in turn increase the volatility of these reserve assets. It finds that, in extreme circumstances, these fire-sales could have material impacts on the traditional financial system such as the money market. The paper proposes regulations that require stablecoin issuers to provide standardized and regular disclosures of their reserve assets holdings, and possibly imposing restrictions on the composition of reserve assets and requiring well- defined redemption rights
This St. Louis Fed article explores non-custodial crypto asset mixers such as Tornado Cash. We analyze what types of mixers exist and how they work. We discuss opportunities and risks and offer an approach, based on voluntary disclosure, that would allow financial market regulators to combat money laundering and illicit activities, while allowing honest users to interact with privacy-enhancing protocols. We explain how crypto asset mixers play an important role on public blockchains and that privacy may be difficult to attain without them.
"This St. Louis Fed article explores non-custodial crypto asset mixers such as Tornado Cash. We analyze what types of mixers exist and how they work. We discuss opportunities and risks and offer an approach, based on voluntary disclosure, that would allow financial market regulators to combat money laundering and illicit activities, while allowing honest users to interact with privacy-enhancing protocols. We explain how crypto asset mixers play an important role on public blockchains and that privacy may be difficult to attain without them."
The Monetary Authority of Singapore (MAS) published two consultation papers proposing strict regulatory measures to reduce the risk to consumers from cryptocurrency trading while supporting the development of stablecoins as a credible medium of exchange. One of the papers is focused on reducing the risk to consumers from speculative trading in cryptocurrencies, requiring that digital payment token (DPT) service providers ensure proper business conduct and adequate risk disclosure. The other paper is focused on ensuring that stablecoins have a high degree of value stability, including imposing capital requirements on nonbank issuers.
The Bank for International Settlements (BIS) published an executive summary of the Basel Committee on Banking Supervision (BCBS) standard on the prudential treatment of crypto-asset exposures published in December 2022. The standard outlines minimum regulatory, supervisory review and disclosure requirements of banks' crypto-asset exposures under Pillars 1, 2 and 3 of the Basel Framework. Internationally active banks in BCBS member jurisdictions are expected to adopt the standard by 1 January 2025.
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