Anti-CBDC bill in the US, no algo stablecoins for Canada: Law Decoded, Feb. 20–27
Last week was relatively calm regarding enforcement news but brought some peculiar local developments in regulation. United States Representative Tom Emmer introduced legislation in the U.S. House of Representatives that could prevent the Federal Reserve from issuing a central bank digital currency (CBDC). According to the Minnesota lawmaker, the bill could prohibit the Fed from issuing a digital dollar “directly to anyone,” bar the central bank from implementing monetary policy based on a CBDC, and require transparency for projects related to a digital dollar.
The Canadian Securities Administrators published a notice describing new commitments it expects from crypto asset trading platforms seeking registration in Canada. The new commitments touch on issues that include segregation of assets, leverage, determination of capital, transparency and others. But, most notably, it anticipates a ban on algorithmic stablecoins.
In a joint statement by three U.S. federal agencies, the banking sector was advised against creating new risk management principles to counter liquidity risks from crypto-asset market vulnerabilities. The Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency released a statement reminding banks to apply existing risk management principles when addressing crypto-related liquidity risks.
By July 2023, The Financial Stability Board, the International Monetary Fund (IMF) and the Bank for International Settlements will deliver papers and recommendations establishing standards for a global crypto regulatory framework. The announcement was made by representatives of the 20 biggest economies of the world, collectively known as the G20.
IMF says no crypto as legal tender
The IMF’s executive board endorsed a crypto asset policy framework that did not grant crypto assets an official currency or legal tender status. The “Elements of Effective Policies for Crypto Assets” paper develops a framework of nine policy principles that address macro-financial, legal and regulatory, and international coordination issues. According to the first principle, safeguarding monetary sovereignty and stability, “do not grant crypto assets official currency or legal tender status.”
Emojis count as financial advice and have legal consequences
The United States District Court judge for the Southern District of New York ruled that emojis like the rocket ship, stock chart and money bags indicate a financial return on investment. In his decision on Dapper Labs’ motion to dismiss the amended complaint alleging that its NBA Top Shot Moments violated security laws, federal judge Viktor Marreo wrote: “And although the literal word ‘profit’ is not included in any of the tweets, the ‘rocket ship’ emoji, ‘stock chart’ emoji, and ‘money bags’ emoji objectively mean one thing: a financial return on investment.”
SEC files objection to Binance.US bid for Voyager assets
The U.S. Securities and Exchange Commission (SEC) has objected to Binance.US’ move to acquire over $1 billion of assets belonging to the defunct cryptocurrency lending firm Voyager Digital. The SEC is formally investigating whether Binance.US and related debtors violated anti-fraud, registration and other provisions of the federal securities laws. The agency noted particular concern around the security of assets through the planned acquisition. According to the regulator, the information provided in the planned purchase of Voyager assets fails to adequately outline whether Binance.US or affiliated third parties will have access to customer wallet keys or control over anyone with access to such wallets.
Nigeria in talks with NY-based company for CBDC revamp
After multiple attempts to create an efficient digital currency, the Central Bank of Nigeria is turning to a New York tech firm to revamp the underlying technology. According to sources close to the matter, the Nigerian financial authority has discussed the plans to develop a new and improved system with the New York-based technology firm R3. Although it is one of the first countries to have launched a CBDC, Nigeria’s eNaira got off to a sluggish start, with low adoption among the population. According to some reports, the ambitious project is “crippled,“ with only 0.5% of Nigerians using the CBDC.