Tag: Cryptocurrencies

(Reuters) – The Russian ruble’s near complete recovery in recent weeks is not a signal that the Russian economy is weathering the sanctions Washington and its allies have imposed since Russia invaded Ukraine, U.S. Treasury Secretary Janet Yellen said on Wednesday.

The Russian economy is “reeling” from the sanctions imposed after the late February invasion, Yellen told the House Financial Services Committee. The market for rubles has become so distorted by actions of the Russian government and its central bank to limit capital outflows that “you should not infer anything” from the value of the ruble, which fell to a record low against the U.S. dollar immediately after the invasion but has since retraced most of those losses.

(Reporting By Dan Burns)

(Reuters) – Crypto exchange Binance.US said on Wednesday it had raised more than $200 million in a seed funding round at a pre-money valuation of $4.5 billion.

Launched in 2019, the company is operated by BAM Trading services, the U.S. partner of Binance, the world’s biggest crypto exchange by trading volume. Binance.US and Binance have a licensing agreement but operate as separate legal entities.

Binance.US said RRE Ventures, Foundation Capital, Original Capital, VanEck and Circle Ventures were among the investors that participated in the fundraise, which was its first external funding round.

It added that the funds would be used to invest in its spot trading platform and toward the development of new products and services.

Last month, Binance rejected calls for a blanket ban on all Russian users after Moscow invaded Ukraine.

Its decision last month to stay in Russia, which was a divergence from mainstream finance firms such as PayPal Holdings Ltd and Visa Inc, had irked the Ukrainian government.

Binance has also been trying to deepen links with the United Arab Emirates as the country tries to style itself as the world’s new digital assets hub.

The crypto industry continues to face the wrath of regulators internationally, who worry about how a meltdown in crypto assets, seen as highly volatile and opaque, will feed into the wider financial sector, leading to a global push for more regulation.

(Reporting by Niket Nishant in Bengaluru; Editing by Shounak Dasgupta and Amy Caren Daniel)

By Elizabeth Howcroft

LONDON (Reuters) – Crypto exchange Binance is leading investors’ contribution to a bailout of victims of a $615 million digital coin theft, the company targeted in the heist said on Wednesday.

The Vietnam-based company Sky Mavis, which runs the game Axie Infinity, said last week it had been hit by one of the largest crypto heists on record.

Sky Mavis said it would reimburse the lost money to users through a combination of its own balance sheet funds and $150 million raised by investors including cryptocurrency exchange Binance and venture capital firm a16z.

“Sky Mavis is committed to reimbursing all of our users’ lost funds and implementing rigorous internal security measures to prevent future attacks,” said Trung Nguyen, CEO of Sky Mavis.

Binance CEO Changpeng Zhao said “we strongly believe Sky Mavis will bring a lot of value and growth for the larger industry and we believe it’s necessary to support them as they work hard to resolve the recent incident.”

Binance and Sky Mavis did not put a figure on how much of the $150 million Binance would provide.

(Reporting by Elizabeth Howcroft; Editing by Mark Potter)

(This April 5 story removes reference to investment by venture capital firm M13 in paragraph 1 after the company clarifies)

By Lisa Pauline Mattackal

(Reuters) – Ethereum blockchain scaling platform Boba Network raised $45 million in its series A round, with participation from investors including Will Smith-led Dreamers VC, Paris Hilton and husband Carter Reum and cryptocurrency exchange Crypto.com, the company said on Tuesday.

The funding round gives Boba a valuation of $1.5 billion, with former football quarterback Joe Montana and crypto funds Hypersphere and Infinite Capital also making investments.

Boba allows users to develop decentralized apps on the ethereum blockchain with more features and at lower fees, and also transfer non-fungible tokens (NFTs) across ethereum’s different layers.

The company plans to use the funds to expand Web3 offerings and invest in projects built on its ecosystem, founder Alan Chiu said.

The market capitalization of Boba Network’s crypto token rose over 19% to $272.1 million after the announcement, while its price rose to $1.71 from $1.44, according to CoinMarketCap.

Ethereum’s “gas” fees, or the price of executing transactions, has risen steeply over the past few years as the blockchain became more popular, giving rise to platforms designed to reduce expenses and speed up transactions.

Venture capital firms have plowed money into blockchain technology startups with SoftBank’s Vision Fund 2 and Bain Capital Ventures among those who have launched crypto-focused funds or invested in blockchain tech companies since the start of 2022.

(Reporting by Lisa Pauline Mattackal in Bengaluru; Editing by Krishna Chandra Eluri)

By Hannah Lang

(Reuters) – Last week, a top U.S. banking regulator warned of growing risks as banks start to capitalize on the popularity of cryptocurrencies to offer related services to clients.

Here is how some of the biggest banks operating in the United States have gotten involved in crypto:

CUSTODY SERVICES

Bank of New York Mellon announced in February 2021 that it would hold, transfer and issue bitcoin for asset management clients, one of the first announcements of its kind for a major Wall Street bank. The launch is expected later this year.

Clients will be able to store bitcoin and ether, the two largest cryptocurrencies, in BNY Mellon crypto wallets, which will be created in partnership with crypto infrastructure company Fireblocks.

U.S. Bancorp went live in October with bitcoin custody services. Bitcoin company NYDIG is acting as a sub-custodian for the bank. The services are geared toward institutional investment managers with private funds.

State Street Corp in March said it intends to offer cryptocurrency custody services in partnership with crypto infrastructure platform Copper.co, although it cautioned that the offering was subject to regulatory approval.

Meanwhile, Deutsche Bank quietly revealed plans to develop a service to hold and trade cryptocurrencies for institutional investors in a 2020 report published by the World Economic Forum, adding it had already completed a proof of concept.

Also in 2020, BNP Paribas completed a proof of concept with crypto wallet provider Curv to develop a secure method to transfer tokenized securities. It said the development was a step toward creating an integrated custody solution for both traditional and digital assets.

Deutsche Bank and BNPP did not provide an update on these projects when contacted by Reuters.

WEALTH MANAGEMENT

A slew of big banks began offering wealth management clients exposure to crypto in 2021, with Morgan Stanley leading the pack. CNBC reported in March that Morgan Stanley was enabling access to three bitcoin funds for clients with at least $2 million in assets held at the bank.

In July, JPMorgan Chase & Co allowed its financial advisers to accept buy and sell orders from its wealth management clients for five cryptocurrency products, according to Business Insider.

Wells Fargo & Co also began offering its wealthy clients cryptocurrency exposure in the summer of 2021, as did State Street.

JP Morgan and Wells Fargo both registered private bitcoin funds in partnership with NYDIG in August.

Citigroup Inc’s wealth management unit created a digital assets group in June to facilitate investments in cryptocurrencies, stablecoins, non-fungible tokens and central bank digital currencies, according to media reports.

In March of this year, regulatory documents revealed that Goldman Sachs is offering wealthy clients access to an ethereum fund through crypto company Galaxy Digital.

TRADING

In March 2021, Goldman rebooted its cryptocurrency trading desk after mothballing it in 2019. That team, which sits within the bank’s Global Markets division, deals bitcoin futures and nondeliverable forwards, a derivative that allows the bank’s clients to take a view on bitcoin’s future price.

In March of this year, Goldman Sachs went a step further and became the first major U.S. bank to carry out an over-the-counter crypto trade in partnership with Galaxy Digital, a crypto-focused asset manager.

Bank of America in July 2021 green-lit trading bitcoin futures for certain clients through a partnership with CME Group Inc, according to a report https://www.coindesk.com/business/2021/07/16/bank-of-america-approves-bitcoin-futures-trading-for-some-clients-sources from CoinDesk. Bank of America declined to comment on the report, but said in a statement that it was “currently considering strategies related to cryptocurrency and other digital assets.”

Citigroup said last August the bank was considering offering bitcoin futures trading for some institutional clients, although media reports said the bank was awaiting regulatory approval. Citi had no immediate comment. IFR reported in December that Citi had recently cleared its first bitcoin futures trade through CME Group.

PNC Financial Services Group is also waiting for the OK from regulators to allow its customers to trade crypto.

RESEARCH COVERAGE

Banks are also plowing money into research.

Bank of America kicked off digital assets research coverage for clients in October.

Morgan Stanley stood up a new crypto research division in September, in what the bank said was a recognition of the “growing significance of cryptocurrencies … in global markets.”

Citigroup in November said it was looking to create this year 100 new roles focused on digital assets, including blockchain and digital currencies, at its institutional division.

(Reporting by Hannah Lang in Washington; Editing by Michelle Price and Matthew Lewis)

By Katanga Johnson

WASHINGTON (Reuters) – Gary Gensler, the head of the U.S. securities regulator, said on Monday the agency is weighing how it could extend investor protections afforded to users of exchanges and alternative trading platforms to crypto trading platforms.

The expanded Securities and Exchange Commission (SEC) oversight would require the agency to register and regulate platforms on which the trading of securities and non-securities is “intertwined,” Gensler said in a virtual speech to an audience at the University of Pennsylvania, his alma mater.

The agency will also collaborate with the Commodity Futures Trading Commission–its sister market regulator–to scrutinize platforms that trade both crypto-based security tokens and commodity tokens, said Gensler, adding that a potential “segregation” of token custody between trading platform assets and customers’ assets would also be considered to help stave off theft.

“Any token that is a security must play by the same market integrity rulebook as other securities under our laws.”

(Reporting by Katanga Johnson in Washington)

LONDON (Reuters) – Britain’s finance ministry said on Monday it intended to legislate to regulate some stablecoins when they are used as a means of payment.

The ministry said it intended to consult later this year on creating regulations for a wider set of crypo-asset activities.

Stablecoins are cryptocurrencies designed to have a stable value relative to traditional currencies, or to a commodity such as gold, to avoid the volatility that makes bitcoin and other digital tokens impractical for most commerce.

“We see enormous potential in crypto, UK financial services minister John Glen said, adding that regulatory standards won’t be compromised.

“We have a detailed plan… this is a new world for the newly regulated and the regulators,” Glen told UK Fintech Week.

Regulation will help consumers use stablecoins for payments with confidence, he said.

Britain will consult on a “world leading” regime for the rest of the crypto market as well, Glen said.

(Reporting by William James and Huw Jones; Editing by William Schomberg)

By Hannah Lang

(Reuters) – Almost half of all cryptocurrency owners in the United States, Latin America and Asia Pacific purchased the digital assets for the first time in 2021, according to a new survey from U.S. cryptocurrency exchange Gemini.

The survey of nearly 30,000 people across 20 countries, which was conducted between November 2021 and February 2022, shows 2021 was a blockbuster year for crypto, with inflation in particular driving adoption in countries that have experienced currency devaluation, the report found.

Brazil and Indonesia lead the world in crypto adoption, Gemini found, with 41% of people surveyed in those countries reporting crypto ownership, compared with 20% in the United States and 18% in the United Kingdom.

Gemini found that 79% of people who reported owning crypto last year said they chose to purchase the digital assets for their long-term investment potential.

People who do not currently own crypto and live in countries that have experienced currency devaluation against the U.S. dollar were more than five times as likely to say they planned to purchase crypto as a hedge against inflation.

Only 16% of respondents in the United States and 15% in Europe agreed that cryptocurrencies hedge against inflation, compared with 64% in Indonesia and India, for example.

The Indian rupee has declined 17.5% against the dollar in the last five years, while the Indonesian rupiah depreciated 50% against the dollar between 2011 and 2020.

Only 17% of Europeans reported that they owned digital assets in 2021, and only 7% of those who do not currently own crypto said they intended to buy digital assets at some point.

It remains to be seen if the adoption momentum can keep pace this year.

While the most popular cryptocurrency, bitcoin, hit an all-time high of more than $68,000 in November, helping to push the value of the cryptocurrency market to $3 trillion, according to CoinGecko, it has traded in the narrow range of $34,000-$44,000 for most of 2022 so far.

(Reporting by Hannah Lang in Washington; Editing by Leslie Adler)

SHANGHAI (Reuters) – China’s central bank said on Saturday it will further expand a pilot scheme of its digital currency to more areas, including cities in the eastern Zhejiang province which is set to host the Asian Games later this year.

The People’s Bank of China (PBOC) said it will promote the research and development of the digital currency, dubbed e-CNY, and expand the scope of the pilot scheme, according to an online statement.

Tianjin, Chongqing, Guangzhou, Fuzhou, Xiamen and six cities in the coastal Zhejiang province will be added to the existing 10 major “pilot” cities to test the use e-CNY, it said.

The six cities in Zhejiang, which included the provincial capital of Hangzhou, will host the Asian Games in September.

The PBOC has ramped up testing of the digital currency in recent years and hoped to take advantage of the Beijing Winter Olympics as an opportunity to promote the yuan globalisation.

However, Beijing’s aim to make an Olympic splash with its digital currency was thwarted by a COVID 19-induced exclusion of foreign spectators. Instead, it has been taken up by a captive audience of locals unable to use their usual digital payment apps.

The PBOC statement also said Beijing and Zhangjiakou, which co-hosted the Winter Games in February, will also become e-CNY’s pilot cities.

(Reporting by Winni Zhou and Ryan Woo; Editing by Mike Harrison)

By Jonathan Stempel

NEW YORK (Reuters) – A federal judge on Thursday dismissed a lawsuit accusing Binance, the world’s largest cryptocurrency exchange by trading volume, of violating U.S. securities laws by selling unregistered tokens and failing to register as an exchange or broker-dealer.

The lawsuit had been brought in Manhattan by digital token investors who had bought nine tokens – EOS, QSP, KNC, TRX, FUN, ICX, OMG, LEND and ELF – through Binance’s online exchange starting in 2017, and which soon lost much of their value.

In a 327-page complaint, the investors claimed that Binance “wrongfully engaged in millions of transactions” and failed to warn them about the “significant risks” of buying the tokens, and sought to recoup what they paid.

U.S. District Judge Andrew Carter, however, said the investors sued too late, having waited more than one year after their purchases.

He also said domestic securities laws did not apply because Binance was not a domestic exchange, even if it used Amazon computer servers and Ethereum blockchain computers in the United States.

“Plaintiffs must allege more than stating that plaintiffs bought tokens while located in the U.S. and that title passed in whole or in part over servers located in California that host Binance’s website,” Carter wrote.

Kyle Roche, a lawyer for the investors at Roche Freedman, declined to comment. Binance and its lawyers did not immediately respond to requests for comment.

The investors claimed the statute of limitations began running exactly one year before their April 2020 lawsuit, when the U.S. Securities and Exchange Commission released a “framework” characterizing their tokens as securities.

Binance has an opaque corporate structure, with a holding company registered in the Cayman Islands. Founder and Chief Executive Changpeng Zhao said in October that Binance planned to establish “a few headquarters” around the world.

The case is Anderson et al v Binance et al, U.S. District Court, Southern District of New York, No. 20-02803.

(Reporting by Jonathan Stempel in New York; Editing by Nick Zieminski)

By Michelle Price

WASHINGTON (Reuters) – U.S. listed companies that hold cryptocurrencies on behalf of users and customers should account for those assets as a liability on their balance sheet and disclose the related risks to investors, the securities regulator said on Thursday.

The U.S. Securities and Exchange Commission (SEC) guidance would apply to a range of listed entities, including crypto exchanges and traditional firms such as retail brokers and banks that are increasingly providing cryptocurrency services and holding digital assets on behalf of a range of clients.

While there is a well-established standard under accounting rules for safeguarding traditional assets on behalf of clients, there is no explicit standard for safeguarding crypto assets and companies diverge in their treatment of these arrangements.

In its guidance, the SEC said there are “significant” technological, legal and regulatory risks associated with safeguarding crypto-assets and as a result they should be reflected as a liability on companies’ balance sheets.

“The technological mechanisms supporting how crypto-assets are issued, held, or transferred, as well as legal uncertainties regarding holding crypto-assets for others, create significant increased risks…including an increased risk of financial loss,” the SEC wrote.

Companies should also disclose “the nature and amount” of crypto assets they are responsible for holding, with separate disclosures for each significant crypto-asset, and any vulnerabilities resulting from concentration in such activities.

The underlying crypto assets should be accounted for at fair value, the SEC said.

Cryptocurrency platforms and wallets continue suffer major breaches, with hackers just this week stealing $615 million worth of cryptocurrency from blockchain project Ronin.

In addition, U.S. regulators remain undecided on how to treat cryptocurrencies, with regulators still discussing new rules for how banks should handle digital assets.

(Reporting by Michelle Price; Editing by David Gregorio)

By Hannah Lang

(Reuters) – Circle Internet Financial has selected Bank of New York Mellon Corp as primary custodian for its reserves of USD Coin, a stablecoin cryptocurrency whose value is directly pegged to the U.S. dollar, the crypto operator said on Thursday.

The new partnership will help link the traditional capital market with the market for digital assets, Circle said in a news release.

As cryptocurrencies rise in popularity — surpassing $3 trillion in value in November, according to crypto data provider CoinGecko — the banking system is slowly warming to the idea of working more closely with digital currency companies.

“We are at a point in the evolution of our industry where the digitization of assets is presenting new and exciting opportunities to a broad range of market participants,” Roman Regelman, BNY Mellon’s chief executive officer of asset servicing and head of digital, said in the release.

Circle is the principal operator of USD Coin (USDC), which has a nearly $52.4 billion market capitalization, according to CoinGecko.

The Boston-based company in February said it was valued at $9 billion under new deal terms with Concord Acquisition Corp, a blank-check firm. Blank-check firms, or special purpose acquisition companies (SPACs), are shell companies that raise funds through a listing to acquire a private company and take it public.

Last summer, Grayscale, the world’s largest digital currency manager, chose BNY Mellon to run accounting and administration of its Grayscale Bitcoin Trust.

BNY Mellon also announced last year that it would hold, transfer and issue bitcoin for its asset management clients, in one of the first announcements of its kind by a major Wall Street bank.

In January, BNY Mellon Chief Financial Officer Emily Portney said in an interview that U.S. regulators should provide more clarity on the rules of the road for cryptocurrencies and other digital assets amid confusion over what activities are allowed.

(Reporting by Hannah Lang in Washington; editing by Jonathan Oatis)

By Huw Jones and Carolyn Cohn

LONDON (Reuters) – Britain’s finance ministry flagged several reforms on Thursday and defended regulators from criticism they are too slow to license firms, saying flawed applicants must not get through.

The ministry and regulators face pressure to make financial rules more flexible to keep London globally competitive after Britain’s departure from the European Union.

The Financial Conduct Authority has been criticised for being slow in authorising crypto firms as it grapples with an internal revamp and pay structure that has disillusioned some staff.

Financial services minister John Glen said he has a “very high regard” for the leadership at the FCA and its counterpart at the Bank of England, and that some people criticised regulators just because they don’t get what they want.

Glen said he was aware of frustration over licensing waiting times and has told FCA CEO Nikhil Rathi that the complexity of new types of financial firms like crypto means that some thought needs to be given to being more responsive.

Some applicants, however, had no experience of dealing with regulators and needed to recognise they must adhere to high standards, he said.

“Just not responding quickly to a request isn’t necessarily a bad thing if there are underlying flaws in the business model of an applicant,” Glen told a House of Lords committee.

“We should not be looking to be nimble at all costs.”

He faces pressure to use “freedoms” from Brexit and has been been considering rules for sectors like cryptoassets.

Glen said he may comment further next week on crypto, and a consultation paper is due after Easter on reform of the so-called matching adjustment in insurance solvency rules.

Legislation on a new framework for writing financial rules could be brought to parliament imminently, Glen said, which would help regulators respond faster to market changes.

But having a primary, rather than secondary objective for regulators to consider any impact of a proposed rule on the competitiveness of the industry was a “non-starter”, he added.

A change in rules could allow for the growth in Britain of “captives” or licensed in-house insurers set up by corporates looking to cut costs through self-insurance, he said.

“It’s ripe for further work to be done. I hope that we would see that evolution in the way insurance and reinsurance is offered to big corporates,” Glen said.

(Reporting by Huw Jones;Editing by Elaine Hardcastle)

By Huw Jones and Tom Wilson

LONDON (Reuters) – European Union lawmakers were set on Thursday to back tougher safeguards for transfers of bitcoin and other cryptocurrencies, in the latest sign that regulators are tightening up on the freewheeling sector.

Two committees in the European Parliament have thrashed out cross-party compromises to be voted on. Crypto exchange Coinbase Global Inc has warned the rules would usher in a surveillance regime that stifles innovation.

The $2.1 trillion crypto sector is still subject to patchy regulation across the world. Concerns that bitcoin and its peers could upset financial stability and be used for crime have accelerated work by policymakers to bring the sector to heel.

Under the proposal first put forward last year by the EU’s executive European Commission, crypto firms such as exchanges would have to obtain, hold, and submit information on those involved in transfers.

That would make is easier to identify and report suspicious transactions, freeze digital assets, and discourage high-risk transactions, said Ernest Urtasun, a Spanish Green Party lawmaker helping to steer the measure through the parliament.

The Commission had proposed applying the rule to transfers worth 1,000 euros ($1,116) or more, but under the cross-party agreement this ‘de minimis’ rule has been scrapped – meaning all transfers would be in scope.

Urtasun said removing the threshold brings the draft law into line with rules from the global Financial Action Task Force that sets standards for combating money laundering. Those rules mean crypto firms must collect and share data on transactions.

An exemption for low value transfers is not appropriate, as crypto users could dodge the rules by creating an almost unlimited number of transfers, Urtasun said, also citing the small amounts involved in transfers linked to some crime.

The lawmakers’ committees have also agreed on new provisions on crypto wallets held by individuals, not exchanges, and on the creation of an EU list of high-risk or non-compliant cryptoasset service providers.

Coinbase Chief Legal Officer Paul Grewal said in a blog on Monday that traditional cash, not crypto, was by far the most popular way to hide financial crime.

EU states have joint say with parliament on the final version of the law and countries have already agreed among themselves there should be no de minimis.

($1 = 0.8961 euros)

(Reporting by Huw Jones and Tom Wilson; Editing by Catherine Evans)

(Reuters) – Financial sanctions imposed on Russia threaten to gradually dilute the dominance of the U.S. dollar and could result in a more fragmented international monetary system, Gita Gopinath, IMF’s First Deputy Managing Director, told The Financial Times.

Russia has been hit with a plethora of sanctions from the United States and its allies for its late-February invasion of Ukraine. Russia has called the invasion a ‘special operation’ to disarm its neighbour.

“The dollar would remain the major global currency even in that landscape but fragmentation at a smaller level is certainly quite possible,” Gopinath told the newspaper in an interview, adding that some countries are already renegotiating the currency in which they get paid for trade.

She said that the war will also spur the adoption of digital finance, from cryptocurrencies to stablecoins and central bank digital currencies.

The IMF did not immediately respond to a Reuters request for comment.

Gopinath told the FT that the greater use of other currencies in global trade would lead to further diversification of the reserve assets held by national central banks.

She had earlier said the sanctions against Russia do not foreshadow the demise of the dollar as the reserve currency and that the war in Ukraine will slow global economic growth but will not cause a global recession.

(Reporting by Juby Babu in Bengaluru; Editing by Muralikumar Anantharaman)

By Leika Kihara and Takahiko Wada

TOKYO (Reuters) – G7 policymakers must speed up creation of a common framework to regulate digital currencies, as the Ukraine war heightens the need to avoid them being used as a loophole against sanctions, a senior Bank of Japan official said.

Cryptoassets and stablecoins have come under the regulatory spotlight amid concerns they could be used to evade financial sanctions imposed on Russia since its invasion of Ukraine.

Such digital currencies could upend the global settlement system as they make it easier to circumvent conventional payment means using the U.S. dollar, euro and yen, said Kazushige Kamiyama, the head of the BOJ’s payment and settlement systems department.

“By using stablecoins, it’s not very difficult to create an individual global settlement system,” Kamiyama told Reuters in an interview.

Policymakers of the Group of Seven advanced economies must act quickly in laying out a common understanding on how to update current rules, which do not sufficiently take into account the growing presence of digital currencies, he said.

“G7 nations are now working together on this front, while sharing information on current developments,” said Kamiyama, who is involved in G7 discussions on digital currencies.

U.S. allies including Japan imposed sanctions against Russia for invading Ukraine on Feb. 24, including the removal of many Russian banks from the global payments system SWIFT.

But regulating cryptoassets and stablecoins isn’t easy, as holders can transfer funds across borders far more easily than through legal tender.

The need to balance privacy and money-laundering concerns will also affect debate on the design of a digital yen, said Kamiyama, whose department is charged with the BOJ’s experiments on issuing a central bank digital currency (CBDC).

The BOJ will begin the second phase of experiments from April, which will last about a year and check features such as whether to set a limit on the sum each entity can hold, he said.

While BOJ Governor Haruhiko Kuroda has said a decision on whether to issue CBDC may come by 2026, Kamiyama said the timing will depend partly on how quickly other central banks move.

“Given how so many advanced nation central banks are moving collectively, dramatically and simultaneously on CBDC, it could cause big changes in the settlement system in the future,” he said. “Japan needs to make sure it’s not left behind.”

(Reporting by Leika Kihara and Takahiko Wada; Editing by Lincoln Feast.)

WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission (SEC) on Wednesday flagged crypto-assets, information security, the private fund sector and environmental, social and governance issues among its examination priorities in 2022.

The SEC’s examinations division, tasked with monitoring risks and ensuring investor protection, will also review whether funds’ proxy votes align with their ESG-related disclosures and mandates, and whether there are misrepresentations of ESG factors being considered, the agency said.

(Reporting by Chris Prentice; Editing by Chris Reese)

LONDON (Reuters) – Britain’s financial watchdog said on Wednesday it has extended temporary licences for only a “small number” of cryptocurrency firms ahead of an April 1 cut-off date to prove sufficient money laundering controls.

Crypto firms must have a licence showing they have sufficient checks and controls to stop money laundering or terrorist financing.

“We have concluded our assessments, and the temporary registration regime will close on 1 April, for all but for a small number of firms where it is strictly necessary to continue to have temporary registration,” the Financial Conduct Authority said on its website.

“This is necessary where a firm may be pursuing an appeal or may have particular winding-down circumstances.”

Placing the firms on its list with temporary registrations does not mean they have been assessed as fit and proper, the watchdog said.

Firms still operating under a temporary licence https://register.fca.org.uk/servlet/servlet.FileDownload?file=0154G0000062BtF on Wednesday include relatively large players such as Copper Technologies and Revolut.

David Raw, an FCA policy official, said this month that 90% of crypto firms seeking approval for their anti-money laundering controls have either withdrawn their applications or been refused because they could not meet the standards.

“It won’t be the case that you suddenly have to cease trading,” Raw had said regarding firms whose licence applications could not be fully processed by the April 1 deadline.

(Reporting by Huw Jones, editing by Ed Osmond)

By Francesco Guarascio and Jan Strupczewski

BRUSSELS (Reuters) – The European Commission is readying new sanctions against the Kremlin over Russia’s invasion of Ukraine, EU sources told Reuters on Wednesday, with the magnitude of the new measures depending on Moscow’s stance on gas payments in roubles.

Russia’s President Vladimir Putin has said he wants “unfriendly” countries, including EU states, to pay their gas bills in roubles, a request rejected by Western nations.

The new package of EU sanctions could be ready as early as next week, two of the sources said.

The executive Commission is consulting with EU governments on a “compliance package,” they said. This would apply what European leaders agreed at a summit last week about ensuring that existing sanctions are not by-passed, especially those against blacklisted individuals.

Officials have repeatedly said sanctions against oligarchs could be circumvented using family members, cryptocurrencies, trusts and shell companies in offshore jurisdictions.

Other sanctions imposed by the EU are harder, if not impossible, to evade. These include the freezing of assets held by the Russian central bank in the EU, the exclusion of Russian banks from the SWIFT banking system, and a ban on EU companies exporting high-tech products to Russia.

SELF-IMPOSED BAN ON GAS EXPORT?

What will be eventually proposed is still under discussion, but sources said that far stricter sanctions could be added to the new package if Putin insisted on rouble payments for gas supplies. EU countries now import 40% of their gas from Russia.

The Kremlin said on Wednesday that payments in roubles would be required gradually and not immediately after the deadline set by Putin for March 31.

One of the EU sources said the possible EU reaction would hinge on the timing and details set by Moscow for gas payments.

A euro zone official told Reuters that euro zone finance ministers were expected to discuss on Monday how to retaliate if Putin goes ahead with his threat on rouble payments.

A fifth EU source said that if Putin were true to his words on rouble payments, that could result in Russia effectively imposing a ban on its own natural gas exports.

The EU has so far refrained from banning any fossil fuel imports fuels from Russia because of member states’ heavy reliance on them.

Only a ban on coal was provisionally included in a list of possible sanctions earlier this year, but it never made it into sanctions because Germany struck it down, EU sources told Reuters last week.

(Reporting by Francesco Guarascio @fraguarascio; Editing by Gareth Jones)