Coinbase

EU Ratifies MiCA; The World’s Largest Custodian Goes Live; SWIFT Acts Swiftly to Cement its Role in Blockchain Global Finance

Thomas Murray Digital Newsletter

Photo by Alexandre Lallemand on Unsplash

In this issue:

  • The EU’s landmark Markets in Crypto Assets legislation has finally been published and ratified, and the Transfer of Funds Regulation receives preliminary approval
  • SWIFT makes a play to keep itself at the heart of linking financial institutions in the developing DLT-based financial system by piloting a framework to link tokenisation and settlement systems and a system to ensure interoperability between digital and traditional finance
  • BNY Mellon, the world’s largest custodian, begins rolling out its digital asset custody service to select clients as more leading name banks including Société Générale announce and launch their own digital asset servicing offerings
  • OECD launches global Crypto-Asset Reporting Framework; EU extends Russia crypto sanctions; Basel Committee crypto reserve pushback continues; Coinbase partners with Google and continues service expansion; digital Euro plans updated

Major Digital Asset Developments

        EU ratifies MiCA, and TFR is Approved
Following provisional agreement in July by the European Parliament and Council, the text of the Markets in Crypto Assets Regulation (MiCA) has been finalised and the bill has been ratified. The lawmakers of each European member state voted 28 to 1 in favour of the new laws, which are expected to enter into force within 18 months after publication in the Official Journal of the European Union (OJEU), slated for next spring. The regulatory package earmarks the first multi-jurisdictional approach to regulating crypto assets, as well as what it terms Crypto Asset Service Providers (CASPs). For an overview of MiCA’s scope, please see our previous newsletter.
Soon after the MiCA deal was reached, the independent – but very much related – Transfer of Funds Regulation (TFR) was also preliminarily agreed. In keeping with the anti-money laundering expectations set by Financial Action Task Force Recommendation 16 and supported by MiCA, known commonly as the Travel Rule, the EU’s Civil Liberties Committee confirmed that the tracing of cryptocurrency transfers remains crucial to preventing money laundering and fraudulent activity. As such, information on the source of assets and the beneficiary are to ‘travel’ together with the transaction instruction itself, which is to be stored and monitored by both sides of the exchange. CASPs such as regulated exchanges would be required to provide this information to the competent authorities if required. Furthermore, much to the concern of some crypto industry insiders and commentators, there will not be a minimum threshold or exemption for low-value transfers, as originally proposed, which means that all transactions that interface with or flow through a regulated/hosted wallet will be subject to scrutiny. Importantly, this will not apply for the time being to private/unhosted wallets, unless they interact with hosted wallets managed by a regulated CASP.
Coinbase CEO Brian Armstrong first responded to the initial proposal in April 2022, articulating his belief that this goes against the EU’s work to be a global leader regarding privacy (Cointelegraph). With the low-value exemption removed in the final MiCA text, this concern has been heightened. Beyond privacy, a further issue is that this measure will dramatically increase compliance costs for regulated entities and banks, which Armstrong further suggests may not even be able to comply from a cost or technical perspective. There is a chance that the parameters of the TFR could change given the continued pushback and the technical challenges, though given the concerted effort to tackle AML this seems unlikely. Still, the technical aspects of the text will need to be approved by the Economic and Monetary Affairs and Civil Liberties and Justice Committees and the EU Parliament before it can enter into force.

SWIFT Forges Ahead with Blockchain Development and Integration
The Society for Worldwide Interbank Financial Telecommunications (SWIFT) has announced a number of recent trials, experiments, and product enhancements aimed at reaffirming its role in the broader financial system. Recent projects have included a pilot in which it successfully implemented a common framework that was able to link asset tokenisation systems between Central Securities Depositories (CSDs) and Global Custodians. This was completed in partnership with Clearstream, Northern Trust, and SETL, a DLT technology and settlement platform. The pilot successfully demonstrated the ease with which tokenised assets, which included bonds and equities, could be issued and settled on a delivery-versus-payment basis (DvP), as well as redeemed, with settlement undertaken using fiat payment systems as well as with a Central Bank Digital Currency (CBDC).
SWIFT is also exploring the concept of interoperability, the ability to integrate traditional finance with native blockchain systems that do not necessarily easily communicate with one another today. Through a partnership with Chainlink Labs, a leading cross-chain interoperability protocol, the Cross-Chain Interoperability Protocol (CCIP) proof of concept is expected to enable SWIFT to instruct on-chain token transfers across all blockchain environments which, if successful, would mean that public blockchains could, subject to regulatory approval, be used to facilitate digital asset servicing and transfers of assets as well as securities.
BNY Mellon Switches On Crypto Custody
Just over a year and a half since it first announced its intention to build a multi-asset digital platform (BNYM) to service bitcoin and other digital assets, last week BNY Mellon went live with the first elements of its much anticipated solution. Select institutional clients are being offered access to bitcoin and ether on its new platform, with the intention to roll this out to a wider audience over time, much like Blackrock’s approach in partnership with Coinbase (Coinbase) unveiled in August this year. This development comes at a time when numerous high-profile traditional banking, investment and infrastructure organisations are similarly releasing their own solutions to meet the needs of the rapidly growing digital assets industry. In the last year alone, Société Générale (SG Forge), BBVA, CACEIS, State Street, Citigroup, Nomura (Komainu), Nasdaq, BlackRock, DBS, Google, Invesco, Standard Chartered (Zodia), BNP Paribas, Schroders, Northern Trust, Bank Itaú, Deutsche Bank, ANZ, J.P. Morgan, U.S. Bank, Goldman Sachs, Commerzbank, Clearstream, and SIX (SIX Digital Exchange), among many others, have all announced or launched their digital asset solutions.
Legal and regulatory agency pressures, particularly in the US, have in part limited the flow of investment and activity in the institutional end of the sector. Banks have found it increasingly difficult to meet customer demands for crypto asset solutions, as articulated by State Street (see previous newsletter, first item) last month, primarily as a result of the SEC’s Staff Accounting Bulletin 121 (SEC) which expects banks to hold clients’ crypto assets as liabilities on their balance sheets, resulting in significantly increased regulatory capital requirements. Further, the Bank for International Settlements has continued to propose punitive capital requirements for banks and credit institutions which are also receiving industry-wide pushback. That said, the momentum is clear, and with BNY Mellon now firmly involved in supporting the ecosystem, and other industry behemoths firmly on its heels, it may well lead to a race for control between the global custodians and leading FinTechs such as Coinbase who have hitherto stolen a march on their traditional counterparts. This may too lead to a turnaround in fortunes for the digital asset market as a whole, which has been struggling much like most asset classes due to the tumultuous macro environment but also due to the dampening pressures applied by poorly-applied or delayed regulatory policies.

Other News and Links

OECD Releases New Global Tax Reporting Framework for Crypto Assets (CoinDesk)
The Organisation for Economic Co-operation and Development (OECD) has released a tax reporting framework for crypto assets. The Crypto-Asset Reporting Framework (CARF) was presented to the G20 last week, and attempts to address how crypto assets should be considered in context of the G20’s Common Reporting Standard (CRS), designed to foster greater global transparency and eliminate tax evasion.
  Uzbekistan Introduces Monthly Fees for Cryptocurrency Companies (Bitcoin.com)
A new law has been adopted in Uzbekistan which requires digital asset service providers and cryptocurrency miners to pay monthly fees to the state depending on the service performed. Exchanges will reportedly be expected to pay as much as USD 11,000 per month, with failure to pay resulting in the suspension of their licences. Miners will be required to pay approximately USD 270 a month, while custodians will benefit from the lowest fee of approximately USD 135 per month.
UK Shuts Down Temporary Crypto Company Licensing Program (CoinDesk)
Following Copper Technologies’ retraction of its attempted registration with the Financial Conduct Authority (FCA), and Revolut’s successful application last month, the Temporary Registration Regime (TRR) has now come to an end. Subsequently, any and all firms looking to engage with certain types of crypto assets, or provide services for them, is required to seek full FCA registration.
EU Issues Bitcoin, Crypto Ban on Russia with New Sanctions (Bitcoin Magazine)
The EU has doubled down on its crypto sanctions against Russia by prohibiting the transfer of crypto assets from Russian-based cryptocurrency wallets. This comes a month after the Russian Ministry of Finance conceded that cryptocurrencies are needed to support its cross-border settlement needs.
TRON Becomes Legal Tender in Dominica (CryptoSlate)
The Commonwealth of Dominica has legalised the use of the TRON blockchain’s native tokens as a medium of payment in the country, in order to boost tourism as well as better position it within the context of an emerging global digital economy.
France Approves its Third-Biggest Bank to Operate Digital Asset Services (The Block)
Société Générale’s subsidiary, SG Forge, has received regulatory approval from the French financial markets regulator, Autorité des Marchés Financiers (AMF), to operate as a digital asset service provider (DASP), offering custody and exchange services.
Crypto Exchange Binance Receives Licence to Operate in Kazakhstan (CoinDesk)
Industry Pushes Back Again on Basel Committee’s Crypto Reserve Measures (Finextra)
For the second time, the Bank for International Settlements’ Basel Committee on Banking Supervision has received further push back from industry associations including the Global Financial Markets Association, the Futures Industry Association and the International Swaps and Derivatives Association regarding its second consultation document published on 30 June on the ‘prudential treatment of cryptoasset exposures’. In 2021, the Basel Committee issued a proposal – largely viewed by the industry as unviable and even punitive – to require banks to reserve capital to cover the whole value of cryptocurrency holdings. Following stiff resistance, as we reported last November, the BIS withdrew that model and went back to the drawing board. The second proposal appeard to take a more refined and pragmatic approach, however, it has continued to be met with stiff resistance by numerous industry groups who argue yet again that the rules would reduce, and in some cases ‘preclude banks from utilising the benefits of distributed ledger technology (“DLT”) to perform certain traditional banking, financial intermediation and other financial functions more efficiently.’ Significant to the proposal is the idea of exposure limits to Group 1a/b (akin to traditional assets or those with effective stabilisation mechanisms, i.e. stablecoins) and Group 2a/b type crypto assets (unbacked crypto assets such as cryptocurrencies, as well as other assets that are not covered under Group 1). However, the proposal does not, according to the associations, take into account hedging that is often performed by financial institutions to limit their short and long term exposure. As such, they would still be subject to a 100% capital charge for Group 2 assets, which for all intents and purposes are the predominant digital asset type in circulation today, and those most in client demand.
Coinbase Gets Singapore Digital Payment Token License (CoinDesk)
Coinbase Expands Services in Australia, Calling Country a ‘Priority Market for Us’ (CoinDesk)
Coinbase Commences Partnership with Signature Bank to Provide Real Time Settlement via Signet (Business Wire)
Coinbase Hires Fintech Executive to Lead European Expansion (Bloomberg UK)
Germany’s 2nd Largest Bank DZ to Launch Crypto Custody (Ledger Insights)
Google Selects Coinbase to take Cloud Payments with Cryptocurrencies and Will Use Its Custody Tool (CNBC)
Google is set to enable certain clients to pay for cloud services using digital currencies, reportedly as soon as early next year. It has appointed Coinbase (NASDAQ: COIN) to support it with the payment process and is also considering Coinbase’s Prime services for trading and custody. With reciprocity in mind, Coinbase is said to be moving some of its applications from Amazon’s Web Services to Google’s cloud.
Paxos Wins Custody Deal for Fidelity, Schwab-backed Digital Asset Exchange EDXM (Ledger Insights)
Custodian Anchorage Adds to Asia Push with Batch of Institutional Crypto Partners (CoinDesk)
JPMorgan and Visa Link Blockchain Payment Networks (Finextra)
J.P. Morgan (JPM) and Visa are due to establish a link between their proprietary blockchain networks, Liink and B2B Connect respectively, with Visa expected to benefit from JPM’s account validation tool, Confirm.
SIX Integrates CryptoCompare’s Cryptocurrency Data Feed (Finance Feeds)

Key: Legal/Regulatory             Technology            Ecosystem              Markets 

CBDC Corner

Progress on the Investigation Phase of a Digital Euro (European Central Bank)
A digital Euro will not be released until at least 2026. It will come with restrictions designed to slow the disintermediation of banks through conversions of bank deposits into CBDC holdings, and with an interest structure that disincentivises holding high digital Euro balances.
India Preps Digital Rupee Pilot (Finextra)
RBA and Digital Finance Cooperative Research Centre White Paper: Australian CBDC Pilot for Digital Finance Innovation (Reserve Bank of Australia)
Project Icebreaker: Central Banks of Israel, Norway and Sweden Team Up with the BIS to Explore Retail CBDC for International Payments (Bank for International Settlements)
Anchors and Catalysts: Central Banks’ Dual Role in Innovation – Speech by François Villeroy de Galhau, Governor of the Banque de France (Bank de France)
In this speech at the Conference on Opportunities and Challenges of the Tokenisation of Finance in Paris, the Banque de France announced wholesale CBDC projects to improve CBDC liquidity through automated market makers in DeFi markets and to issue and trade tokenised bonds.
The Banque de France has also joined a consortium of 14 banks and market infrastructures launched by SWIFT to conduct a new CBDC experiment for interbank settlement purposes.
Innovation in Post Trade Services – Opportunities, Risks and the Role for the Public Sector − Speech by Sir Jon Cunliffe (Bank of England)
The post-trade sector could see huge consolidation and disintermediation as smart contracts operated by single centralised or decentralised entities replace custodians, exchanges, CCPs and CSDs, removing settlement risk but reducing the ability to correct erroneous transactions and increasing liquidity risk. The FMI Sandbox being launched by the Bank of England, Financial Conduct Authority and HM Treasury will focus initially on testing DLT securities settlement systems and their integration with trading platforms.

Thomas Murray Digital

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SEC Guidance to Hold Client Cryptoassets on Balance Sheet Meets Resistance and Dampens Bank Plans; Staking Raises Prospect of Ether Being Classified as a Security

Thomas Murray Digital Newsletter

Securities and Exchange Commission Headquarters (SEC)

Reverberations from the SEC’s back-door attempt to move cryptoassets onto banks’ balance sheets – as we reported in May – continue as banks push back while their plans to offer digital asset services in the US falter. And the Ethereum Merge – a major and long-planned upgrade to the most widely used blockchain – passed uneventfully a week ago, shifting its operating model from Proof of Work to Proof of Stake and drastically reducing its energy consumption by an estimated 99.9%. While the change is welcome for environmental reasons, we examine whether the blockchain’s native ether token could be walking into a regulatory trap in which it could be reclassified from a commodity to a security.

Major Digital Asset Developments

      

      		SEC Accounting Guidance Issue Rumbles On
According to an article by Reuters, the US Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SEC), published in March earlier this year, is having a material dampening effect on banks looking to engage with digital assets. While ostensibly more of an expectation for organisations wishing to remain on good terms with the regulator than a rule, the accounting guidance requires public companies including banks to hold clients’ crypto assets as liabilities on their balance sheets, rather than off them as is customary for custodians of traditional client assets. This is problematic for banks which are subject to strict regulatory capital ratio rules.
Many of the largest banks in the US have announced intentions to support digital assets in one way or another, with some services already live, albeit primarily with select or private wealth clients. Nonetheless, the article makes clear that banks’ efforts in this space are undermined by the financial burden the capital requirements place on them, and some have had to ‘cease moving forward with [their] plans’. Both State Street and Bank of New York Mellon are reported to have been disrupted.
Nadine Shakar, head of State Street Digital, previously suggested at a recent Fund Forum panel discussion that this was no great imposition, and hinting that it could be an opportunity for large institutions like State Street to gain market share, saying ‘unless you have larger custodians moving into the space and be the big kids at the table, it’s [digital assets] unlikely to see institutional adoption’. It is now reported that she sees the SEC’s expectations as an issue for the bank, one that does not necessarily prevent them from custodying digital assets but that reduces its economic viability: ‘We do have an issue with the premise of doing that, because these are not our assets. This should not be on our balance sheet.’ (Reuters) U.S. Bancorp has paused onboarding new crypto custody clients, and anecdotally several European banks are pulling back from US advances until the issue is addressed.
Until there is clearer guidance, or changes to the capital impact faced by supporting crypto assets for banks – which seems unlikely in the short term – there may be a decline in ecosystem development, which is perhaps already being reflected in the value of the cryptocurrency market.
The Ethereum Merge and Securities Implications
The Ethereum blockchain successfully merged with the Beacon Chain on 15 September (CoinDesk), transforming it from a proof-of-work (PoW) to a proof-of-stake (PoS) protocol. The transition, which was many years in the making, has been welcomed as Ethereum is expected to consume 99.9% or so less energy as a result of the change (see previous newsletter). This, according to Bank of America (FXStreet), is an opportunity for greater institutional adoption of the blockchain’s native ether token, as those that were prohibited from investing in PoW systems due to ESG considerations may now acquire the cryptocurrency.
Ethereum and the thousands of tokens it supports have now removed themselves from potential moves by jurisdictions such as the EU and the US to ban or de-incentivise PoW: the EU has flip-flopped on including a ban in its pending Markets in Crypto-assets (MiCA) regulation, adding (The Block) then ultimately removing (CoinDesk) such clauses; the State of New York has implemented a moratorium on PoW mining using carbon-based energy sources (CoinDesk); and earlier this month one of the first responses to President Biden’s Executive Order on cryptoassets – from the White House Office of Science and Technology – asked the Environmental Protection Agency and the Department of Energy to consider a ban if the US cannot meet its climate goals through other means (Blockchain News).
However, by transitioning to PoS, with its reliance on the process of staking to secure and validate the network and its transactions, ether may have walked directly into the SEC’s securities oversight purview. In return for delegating ether to network validators (if they do not have enough tokens to qualify them to run staking nodes themselves), token-holders are rewarded in more ether tokens, which according to Chairperson Gensler of the SEC (Decrypt) and other regulatory agencies could constitute an investment contract under the US Howey test: ‘a contract, transaction, or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party’ (US Supreme Court).
While the SEC has not presented any formal analysis of the issue, it is assumed it does not consider ether to be a security, although the fundamentals are much harder to assess now and there is considerable scope for questions of consistency of approach to arise. Earlier this month, Gensler announced qualified support for Congress to hand more power to the Commodity Futures Trading Commission (CFTC) to regulate non-securities digital assets such as cryptocurrencies (Crypto Slate) so long as the move would not reduce the SEC’s power to regulate securities. He and the SEC have been the subject of notable dissatisfaction from the digital asset community and even the Commissioner of the CFTC due to the SEC’s failure to proactively shape a robust digital asset framework, receiving criticism for frequent cases of ‘regulation by enforcement’. Handing greater responsibility to the CFTC for such assets is seen by the community as a welcome development.
Bolstering the argument that ether and similar tokens should remain classed as commodities, Coin Center, a non-profit research and blockchain advocate, points out that the SEC looks at the economic realities underlying a project, rather than the terms and technologies used to create it, and given that the participation in the consensus mechanism is explicitly designed to be open to anyone, and not reliant solely on the efforts of others (Coin Center), staking, or mining for that matter, should not meet the criteria.

Other News and Links

White House Releases Inaugural Framework for Crypto Regulation (Crypto Slate)
Following President Biden’s Executive Order in March this year (described previously in our newsletter here), The White House has released a framework which offers a number of recommendations including how to approach the regulation of crypto assets, ways in which to mitigate fraud perpetrated using digital assets, and how to improve standards across the financial industry more broadly. The framework pays particular attention to fraud and fighting illicit finance, and suggests the President may call upon Congress to amend the Bank Secrecy Act so that digital asset exchanges and non-fungible token (NFT) platforms would explicitly fall subject to it.
US Banks Must Maintain Cautious Approach to Crypto, Says Acting OCC Head (Crypto Slate)
Michael Hsu, Acting Head of the Office of the Comptroller of the Currency (OCC), believes that US banks should remain caution when considering digital assets. The OCC was the first to green-light the provision of crypto custody services by national banks and federal savings associations when it issued its Interpretive Letter #1170 in July 2020, which in all likelihood contributed to the crypto bull market. That said, in his speech at the TCH + BPI Annual Conference Hsu made clear that he is much more cautious than the previous head of the OCC, and sees ‘red flags in crypto’s rapid growth’. As such, the agency has reportedly tightened its criteria for acceptance, indicating that these institutions can only engage in certain crypto activities so long as they can demonstrate the activities can be performed in a ‘safe, sound and fair manner.’
Crypto Oversight Should Resemble Traditional Bank Rules, Fed Official Says (CoinDesk)
In his first speech since taking office, Fed Vice Chair for Supervision, Michael Barr, articulated the need for greater regulatory oversight, particularly in how banks engage in crypto activities. He reiterated the need to regulate based on the “same activity, same risk” approach cited by multiple regulators and commentators over the preceding months.
UK Introduces Law to Seize, Freeze and Recover Crypto (CoinDesk)
The Economic Crime and Corporate Transparency bill supplements the Economic Crime (Transparency and Enforcement) Act used to impose sanctions against Russia and freeze UK-held assets – both traditional and digital – and is ostensibly designed to prevent sanctioned Russians from using crypto to evade those measures, as well as aid in combatting criminal activities.
Crypto Exchanges in UK Required to Report Sanction Breaches (Finextra)
The UK has updated its guidance towards sanctions reporting, which now brings crypto exchanges into scope for reporting violations and freezing assets. The guidelines were implemented by the Treasury’s Office of Financial Sanctions Implementation (OFSI) to combat potential breaches conducted with the use of cryptocurrencies.
New French Bill Could Give Authorities Powers to Seize Crypto Assets (CoinDesk)
In line with other countries around the world, such as the UK’s Economic Crime Bill, the French state is attempting to make it easier to freeze and seize the digital assets of suspected criminals. The proposal is due to be discussed next week by France’s Constitutional Law Committee.
Korea to Launch Security Token Guidelines, Pilots This Year (Ledger Insights)
SEC, CFTC Propose Amendments for Large Hedge Fund Crypto Reporting (Crypto Slate)
First announced earlier this month, the Securities and Exchange Commission (SEC) and the Commodities and Futures Trading Commission (CFTC) look set to introduce rules that will require hedge funds to report investments more accurately in digital assets. In particular, the Proposed Rule (Federal Register) will seek to distinguish between assets that have similar characteristics such as digital assets and cash and cash equivalents, and establish a new sub-asset class which will help regulators to more easily monitor systemic risks and economic stability.
Russia to Consider Possible Legalization of Cryptos for Cross-border Payments (AMBCrypto)
Due to the impact of financial sanctions on Russia, its Ministry of Finance is considering using cryptocurrencies as a means to support cross-border payments. This comes after Putin signed an order effectively banning the use of crypto-based assets for domestic payments in July earlier this year. Views are said to be softening in light of the ongoing financial situation, with Prime Minister Mikhail Mishustin suggesting the country needs to look to digital assets as a ‘safe alternative’ to support cross-border commerce. The Central Bank has tried to limit the use of crypto assets in the country as it looks to develop its own digital ruble, and once rolled out, may try to impose another ban on cryptocurrencies.
Australian Senator Releases Draft Bill to Push for Crypto Regulation (Crypto Slate)
Australian Senator Andrew Bragg has released a draft Digital Assets (Market Regulation) Bill 2022 (Andrew Bragg). It seeks to apply pressure to the Australian regulatory system in order to push forward with the regulation and oversight of the digital asset market and its constituent components. At a high level, the bill proposes to provide a framework for digital asset exchanges, digital asset custody, issuance of stablecoins, and the protection of consumers while promoting investment in Australia. Interestingly, another objective of the bill is to provide for the reporting of information from banks that facilitate the use or availability of China’s digital yuan in Australia. Consultation on the bill is being received until October 31, 2022.
Colorado Enables Crypto Payment for Taxes (Crypto Slate)
House Stablecoin Bill Would Put Two-Year Ban on Terra-Like Coins (Bloomberg)
Nigeria Plans to Create a Virtual Free Zone with Binance Crypto Exchange (CoinDesk)
Nigeria’s Export Processing Zones Authority (NEPZA) is looking to create a digital city to support the growing digital asset economy. It is reportedly looking to partner with Binance, the largest cryptocurrency exchange by volume, which signed an agreement to assist Dubai with the establishment of a similar industry hub for digital assets in December 2021.
Binance Secures Licence in Dubai to Offer More Crypto Services (CoinDesk)
Coinbase Is Helping Sue the US Treasury Over Tornado Cash Sanctions (Bloomberg UK)
Coinbase is challenging the authority of the US Treasury Department after it publicly declared its intention to pay the legal costs of a lawsuit brought by six individuals who are contesting the legality of the Treasury’s sanction of Tornado Cash. The plaintiffs argue that the move by the US Treasury’s Office of Foreign Assets Control (OFAC) to sanction wallets associated with the application, as well as the smart contract code itself, was unprecedented, as neutral technologies and tools are reportedly out of the scope of sanctions law. Brian Armstrong, CEO of Coinbase, stated that the Treasury issued a blanket-wide sanction rather than targeting the wallets of those known to have committed an offence, further suggesting that it was used by many law-abiding citizens looking for increased privacy, who now have funds trapped on the platform. Crypto Investment firm Paradigm strongly agrees with the action brought by the lawsuit, as it too stated in a legal argument (Paradigm) that blockchain infrastructures and the providers that support them should not be subject to US Treasury sanctions, as monitoring or censoring Specially Designated Nationals and Blocked Persons (SDN List) would jeopardise the neutrality of base blockchain layers and compromise their integrity and core functionality.
Coinbase Gains Regulatory Approval in the Netherlands (Coinbase)
Deutsche Börse to Issue Digital Securities on DLT-ready D7 Platform (Ledger Insights)
Societe Generale Securities Services Extends Its Offer to Funds Investing in Digital Assets (Societe Generale)
SGSS now offers asset managers to act as a fund custodian, valuator and liability manager, and has onboarded its first client, Arquant Capital.
Hong Kong’s HashKey Receives Approval to Manage 100% Crypto Portfolio (CoinDesk)
HashKey, a Hong Kong based asset manager, has received a Type 9 (Asset Management) Licence (Offshorelicense) from the Securities and Futures Commission (SFC) of Hong Kong, permitting it – alongside a growing number of virtual asset managers – to manage portfolios that are 100% invested in digital assets.
Nasdaq Launches Crypto Custody Service (Nasdaq)
Nasdaq is moving into the digital asset business, citing growing institutional demand from its financial institution clients. It is set to launch a digital asset custody offering which, following regulatory approval, will incorporate liquidity and execution services, effectively creating a full-service solution that may take a lead from Switzerland’s SDX.
Royal Family of Dubai Company Seed Group Partners with Coincorner to Facilitate Bitcoin Transactions in the UAE (Bitcoin Magazine)
Brazil Exceeds 1M Registered Crypto Users in July for First Time as Number Grows 68% in a Month (CoinDesk)
Abra Launching First US Regulated Crypto Bank (Blockworks)
Abra, a crypto exchange and lending platform, has successfully acquired a licence to become the first US regulated crypto bank. With the licence comes an ability to offer clients regulated interest-bearing crypto accounts, an activity that some providers have had to discontinue. For example, BlockFi was sued successfully by the SEC for USD 100 million (The Verge) as its offering was considered an unregistered security and the firm was not registered as an investment company. Abra is due to launch in the US in Q1/2 2023.
Tokenization of Illiquid Assets to Reach $16T by 2030: Report (Cointelegraph)
A report by Boston Consulting Group (BCG) and ADDX, a digital asset exchange, estimates that illiquid assets such as pre-IPO stock, real estate, art, and private debt will become a USD 16.1 trillion tokenised market by 2030.
Singapore’s Financial Authority Grants License to SBI’s Digital Asset Arm (Cointelegraph)
The Monetary Authority of Singapore (MAS) has granted Japan-based SBI Holdings a Capital Markets Services licence for its digital subsidiary SBI Digital Markets. In-principal approval was granted in May this year, however the full licence will now permit the firm to offer digital asset custody, capital markets products, and financial advisory services in Singapore as a regulated business.
Singapore’s Largest Bank DBS to Offer Crypto Services to 300,000 Investors (Crypto Slate)
Fidelity to Launch Bitcoin Retail Trading in November (Crypto Slate)
ErisX Introduces Settlement Service for OTC Crypto Transactions (Finextra)
ErisX, a leading digital asset exchange, has launched a new settlement service for OTC transactions that is designed to eliminate counterparty risk by routing orders through a US-licensed crypto spot exchange, thus reducing the risk and operational burden associated with OTC transactions.
Broadridge Integrates with Coinbase (Finextra)
Broadridge, a leading provider of shareholder services, has partnered with Coinbase’s Prime offering, enabling enhanced liquidity and the ability for Broadridge’s clients to route orders to Coinbase Prime via its NYFIX order-routing network.
Crypto Custody Specialist Anchorage Digital Offers Japanese Yen Stablecoin (CoinDesk)
Gunvor, Total Execute First Physical Oil Trade Confirmation using VAKT Blockchain (Ledger Insights)
VAKT, a post-trade blockchain startup backed by oil majors including BP, Saudi Aramco, Shell, Total and Chevron, has launched an electronic trade confirmation solution which is designed to replace manual processing of oil contracts, which according to VAKT’s own analysis is responsible for a 15% error rate.
Major Fund Administrator Apex Offers Blockchain-based Valuation Data for Private Assets (Ledger Insights)
SWIFT Runs Blockchain Pilot for Corporate Actions Data (Finextra)
The banking infrastructure provider is trialling a new blockchain system for corporate actions with the aid of Symbiont, a private technology platform, as well as seven securities market participants. Corporate actions are seen as one of a number of key areas in which post-trade can be better served by blockchain technology, with SWIFT estimating as much as 30% of the costs associated with processing corporate actions are related to manual processing.
CME Group Launches Ether Options (Finextra)

Key: Legal/Regulatory             Technology