New European Crypto ETF Launches, Bitcoin Mining Sees Wider Adoption
By Keith R. Murphy
A well-known digital currency investment services company announced the launch of its first European exchange-traded fund (ETF), according to a press release this week. The ETF, which will be traded on multiple foreign exchanges, reportedly will “offer investors exposure to companies at the intersection of finance, technology, and digital assets” and will track the investment performance of the Bloomberg Grayscale Future of Finance Index.
In Bitcoin mining news, a joint press release by a cryptocurrency infrastructure company and a nonprofit maritime museum in Mobile, Alabama, recently announced their partnership to bring sustainable Bitcoin mining to that city. The mining machines are to be housed in a modified, air-cooled shipping container. The release notes that among the goals of the project are to accelerate bitcoin adoption as it relates to government and to provide funding from mining for infrastructure improvements.
In related news, a recent article suggests that Bitcoin mining is becoming part of the business strategy of many companies, and it identifies companies in multiple sectors that are engaged in Bitcoin mining, including health and wellness companies, shipping logistics companies, asset management companies, electric utilities, cryptocurrency lenders, and small technology companies.
Separately, a proposal to ban Bitcoin mining in Norway was rejected by the Norwegian parliament, according to a recent report. The report further notes that Norway has been viewed as a “green oasis” for Bitcoin mining given its access to abundant, low-cost hydropower electric resources, and that bitcoin has been slowly incorporating into Norway’s financial landscape as cryptocurrency interest swells.
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Sports Leagues and Alcohol Brands Expand Blockchain Partnerships
By Lauren Bass
The nonprofit organization that oversees and governs international soccer competitions has reportedly inked a deal to partner with blockchain technology company Algorand. According to reports, the deal encompasses two distinct components: (i) sponsorship of the organization’s global competitions and (ii) provision of technical solutions – including digital asset strategies and blockchain-supported wallets – to help the organization expand its digital footprint.
In other news, the CMO of one of the largest privately held, family-owned spirit companies in the world recently discussed the brand’s use of non-fungible tokens (NFTs) as part of its overall marketing strategy. According to an interview, the brand has not only used strategic partnerships with popular artists and influencers to expand its market reach but also championed the pairing of NFTs with real-life consumptive items, such as limited-edition bottles of alcohol or bespoke fashion accessories, to enhance the consumer experience.
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Congress Addresses CBDC, Commerce Dept. Seeks Input on Digital Assets
By Kayley B. Sullivan
Ahead of next week’s meeting to examine a U.S. central bank digital currency (CBDC), a group of Republican members of Congress sent a letter to Jerome Powell, chair of the U.S. central bank system, reiterating points made the previous year to guide the adoption of a CBDC. The letter gives general support for the potential of a CBDC but outlines issues that it requests be evaluated more thoroughly. These areas include the impact on the U.S. payment system, whether a CBDC would increase financial inclusion of unbanked and underbanked communities, private sector innovation, the impact on monetary policy and the role of the U.S. central bank system, and privacy and security issues.
A recent report by the Congressional Research Service provided a summary of the recent market crash of the TerraUSD (UST) algorithmic stablecoin. Among other things, the report describes the mechanisms that were supposed to keep UST pegged to the dollar, and the factors that led to UST being pulled from cryptocurrency exchanges in a “run-like” scenario.
In response to President Joe Biden’s recent Executive Order on Digital Assets, this week the U.S. Department of Commerce published in the Federal Register a Request for Comment (RFC) asking for input from the public on establishing a framework for enhancing U.S. economic competitiveness in, and leveraging of, digital asset technologies. The RFC consists of 17 questions on digital assets that cover topics including “Competitiveness,” “Comparisons to ‘Traditional’ Financial Services and Financial Inclusion Considerations” and “Technological Development.”
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SEC and FinCEN Officials Comment on Cryptocurrency Sector Risks
By Joanna F. Wasick
Representatives from both the U.S. Securities and Exchange Commission (SEC) and the Financial Crimes Enforcement Network (FinCEN) made statements this week warning about risks posed by cryptocurrencies and the need for better governmental enforcement and protections.
SEC Chair Gary Gensler spoke on May 17, 2022 before the North American Securities Administrators Association, and discussed the need for greater investor protection of crypto markets, specifically calling out crypto trading and lending platforms and the risk that they may be selling unregistered securities. “As it relates to crypto tokens, if investors are putting money behind a group of entrepreneurs raising money from the public in anticipation of profits, that’s the hallmark of an investment contract or a security under our jurisdiction,” he said. In remarks made on the same day during testimony at a hearing before the Subcommittee on Financial Services and General Government U.S. House Appropriations Committee, Gensler said that the “highly volatile and speculative crypto marketplace has mushroomed” and that the expanded SEC Cyber Unit will provide the SEC with more capacity to investigate misconduct and accelerate enforcement actions.
At a May 19 Chainalysis Links conference, Alessio Evangelista, the associate director of FinCEN’s Enforcement and Compliance Division, said that keeping illicit activity out of the cryptocurrency sector was a “key focus” for FinCEN, and one that it would continue to target with help from other government bodies including the U.S. Treasury, law enforcement, other regulators and Congress. Evangelista said, “Responsible innovation means that financial institutions that operate in the cryptocurrency space have the same obligations as all other financial institutions to ensure that their new offerings can leverage innovations while still protecting consumers, reducing cybercrime, combating illicit financial activity, and ensuring their platforms are not used to harm our national security interests.” He went on to warn that “too often” crypto service providers have opted to keep their heads in the sand about blatantly suspect wallets “right up until the day of an OFAC designation or criminal indictment.”
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US Law Enforcement Targets Crypto Scams and Sanctions Evasion
By Alexandra Karambelas
In a recent press release, the U.S. Department of Justice (DOJ) announced charges against Eddy Alexandre, the alleged operator of a cryptocurrency and forex trading platform called EminiFX. According to the press release, Alexandre is alleged to have stolen more than $59 million from hundreds of investors, with fraudulent promises of large returns through use of a proprietary trading method. “In reality, no such technology existed, as Alexandre is alleged to have invested very little of their money—most of which he lost—and transferred most of it to his own personal accounts to pay for luxury items for himself,” said U.S. Attorney Damian Williams in the press release. Alexandre is charged with one count of wire fraud and one count of commodities fraud, according to the DOJ press release.
According to recent reports, in an unprecedented decision, a U.S. federal judge recently approved a criminal complaint against an American citizen accused of using cryptocurrency to evade sanctions in violation of Office of Foreign Assets Control (OFAC) regulations. The unnamed defendant is alleged to have sent more than $10 million in bitcoin to a country currently under U.S. sanctions. In the nine-page decision, U.S. Magistrate Judge Zia Faruqui of the U.S. District Court for the District of Columbia addressed the issue of cryptocurrency in the broader regulatory landscape. “The question is no longer whether virtual currency is here to stay (i.e., FUD) but instead whether fiat currency regulations will keep pace with frictionless and transparent payments on the blockchain,” wrote Faruqui.
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