anti-money laundering

40 Banks in Germany Declare Intent to Offer Crypto Services Under New Law

11/02/2020 by Idelto Editor

More than 40 financial institutions in Germany have reportedly declared to the country’s financial regulator, BaFin, their interest to offer cryptocurrency services under the new German law. News.Bitcoin.com reached out to the regulator for some more information. The law, which went into effect early this year, enables banks to offer crypto services after obtaining a license from BaFin.

Also read: Bitcoin, Tesla Stock, Tron: How Warren Buffett Got His First Bitcoin

Declaration Submitted by 40 Financial Institutions

BaFin has received more than 40 “expressions of interest” from banks for approval to operate a crypto custody business in the future, German publication Handelsblatt reported Monday.

News.Bitcoin.com reached out to BaFin for more details. A spokesperson for the regulator clarified that expressions of interest are not applications for permission. He explained that even before the new law came into force, BaFin had asked companies that were already providing crypto custody services and are therefore subject to BaFin’s mandatory authorization to submit informal, non-binding expressions of interest. The spokesperson, however, would not comment on the number of banks that have submitted this expression of interest.

The new German Money Laundering Act which went into effect at the beginning of the year allows financial institutions to offer their customers cryptocurrencies alongside traditional investment products, such as stocks and bonds.

Expressions of Interest to Offer Crypto Services

BaFin explained that companies will not receive an immediate acknowledgment of receipt or an assessment of the information submitted on their expression of interest. This voluntary action does not replace the formal notification of intent pursuant to Section 64y KWG, the regulator noted, adding:

The law implementing the amendment to the Fourth EU Money Laundering Directive … came into force on January 1, 2020 … These companies are therefore subject to money laundering law from 01.01.2020 regardless of the time of submitting the notification of intent.

Solarisbank

One of the first financial institutions to offer cryptocurrency services is Solarisbank in Berlin. The bank launched a subsidiary, Solaris Digital Assets, in December last year to drive the adoption of digital assets. “As a subsidiary of Solarisbank AG, Solaris Digital Assets plans to fulfill the regulatory requirements of the German market and ensure the compliant storage of digital assets, so that partners do not have to apply for a license themselves,” the company affirmed at the time. In the event of a successful application for a custody license from BaFin, the bank plans to store bitcoin and other cryptocurrencies on behalf of the customer, Handelsblatt conveyed.

Solarisbank has a full banking license and has been providing services to numerous German fintech startups. “Digital assets will fundamentally change the financial market,” Michael Offermann, Managing Director for crypto banking activities at Solarisbank, told the news outlet. “As soon as it becomes easier to buy and store bitcoin … we expect strong growth.” He elaborated:

We have been dealing intensively with the topic of crypto custody for a year and a half … The new regulation in the new Money Laundering Act is a good time to start practically. After all, we are not a research institute, but a commercial bank.

What do you think of all these banks eager to offer crypto services? Let us know in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Images courtesy of Shutterstock.

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312 Crypto Exchanges Registered in Australia, Regulator Confirms

10/02/2020 by Idelto Editor

A growing number of cryptocurrency exchanges have been registered with Australia’s crypto regulator. A spokesperson for the government agency overseeing the crypto industry confirmed to news.Bitcoin.com on Monday that the regulator has already registered 312 crypto exchanges.

Also read: Bitcoin, Tesla Stock, Tron: How Warren Buffett Got His First Bitcoin

312 Registered Crypto Exchanges

The Australian Transaction Reports and Analysis Centre (AUSTRAC), the country’s financial intelligence agency and anti-money laundering regulator, has been regulating the crypto industry since April 2018. A spokesperson for the regulator told news.Bitcoin.com on Monday that “Since April 2018, AUSTRAC has regulated digital currency exchange providers to minimize the risk of criminals using them for money laundering, terrorism financing and cybercrime,” adding:

Currently, there are 312 digital currency exchange providers registered and enrolled with AUSTRAC.

This latest number represents a 27% increase, or 66 more crypto exchanges, from the number a spokesperson for the regulator told news.Bitcoin.com in February last year. At that time, 246 entities had been registered with AUSTRAC.

Crypto Regulatory Framework in Australia

The spokesperson further explained that Australia’s “Anti-Money Laundering and Counter-Terrorism Financing Act 2006 requires digital currency exchange providers to formally register with AUSTRAC and implement anti-money laundering and counter-terrorism financing controls within their business.” According to the agency’s website:

If you are a digital currency exchange provider, you must be registered with AUSTRAC before you can provide digital currency exchange services. It is against the law to provide digital currency exchange services in Australia without being registered.

If registered crypto exchanges do not meet their obligations for anti-money laundering and counter-terrorism financing, AUSTRAC can take steps to enforce compliance and seek a penalty.

So far, the regulator has canceled the registration of three companies: Webpark Pty. Ltd., Auscoin ATM Pty. Ltd., and ACN 625 238 735 Pty. Ltd. In addition, the registration of Cryptocurrency Transaction Machines Pty. Ltd. has been suspended. Three more companies were refused registration: Jwon1 Pty. Ltd., Easy Bitcoin Trading Pty. Ltd., and The Gold Buying Company Pty. Ltd. The regulatory, however, does not publish the list of all approved crypto exchange service providers.

Meanwhile, the Australian Securities and Investments Commission (ASIC) is responsible for regulating crypto assets and tokens that fall under the definition of financial products, including companies seeking to raise funds through initial coin offerings (ICOs). Australian securities laws may apply, including the requirement to hold an Australian financial services license, which is needed to conduct a financial services business in the country.

What do you think of the number of registered crypto exchanges in Australia? Let us know in the comments section below.

Images courtesy of Shutterstock and AUSTRAC.

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EU Countries Commence Crypto Regulations as Mandated by New Directive

11/01/2020 by Idelto Editor

EU Countries Start Regulating Cryptocurrency as Mandated by New Directive

The European Union’s 5th Anti-Money Laundering Directive mandates that member states start regulating crypto assets by Jan. 10. Crypto exchanges and custodial wallet providers are now covered by the same regulatory requirements as banks and other financial institutions.

Also read: Regs Roundup: SEC Actions, Crypto Tax-Free in Korea, New Chinese Laws

EU’s Regulatory Deadline: Jan. 10

The 5th Anti-Money Laundering Directive (AMLD5), which amends the 4th Anti-Money Laundering Directive, extends the EU’s anti-money laundering and counter-terrorism financial rules to virtual currencies. The amendment was published in the Official Journal of the European Union on June 19, 2018, and mandates member states to transpose this directive by Jan. 10, 2020. The EU currently has 28 member countries.

The European Commission explained that “In the EU, credit institutions and other financial institutions are subject to obligations to apply CDD [customer due diligence] measures in accordance with Directive (EU) 2015/849 (AMLD4),” elaborating:

Directive (EU) 2018/843 (AMLD5), once transposed into member state legislation, will extend the list of obliged entities to virtual currency exchanges and custodian wallet providers.

As “obliged entities,” crypto service providers are now covered by the same regulatory requirements as banks and other financial institutions, including registering with financial authorities. “The rules will now apply to entities which provide services that are in charge of holding, storing and transferring virtual currencies,” the European Commission clarified. “These new actors will have to identify their customers and report any suspicious activity to the Financial Intelligence Units.”

The amendment also proposes that member states create central databases comprised of crypto users’ identities and wallet addresses and authorize national FIUs to access the information stored in them. “To combat the risks related to the anonymity, national Financial Intelligence Units (FIUs) should be able to obtain information allowing them to associate virtual currency addresses to the identity of the owner of virtual currency,” the directive states.

EU Member States Complying

A number of EU member states have been preparing for this deadline for some time, transposing the AMLD5 into national laws. Some countries wait until the last minute to make announcements. As Brexit talks continue, the U.K. Financial Conduct Authority (FCA) announced Friday that it has become the AML and CFT supervisor of the country’s crypto-asset activities, stating:

From 10 January 2020, we are the anti-money laundering and counter-terrorist financing (AML/CTF) supervisor of UK cryptoasset businesses.

The FCA detailed that crypto exchanges, ATMs, peer-to-peer platforms, custodian wallet providers and token issuers, including initial coin offerings (ICOs) and initial exchange offerings (IEOs), must comply with its rules starting from Jan. 10.

The Austrian Financial Market Authority (FMA) announced Thursday that it is now the regulator of virtual currencies in Austria. Effective Jan. 10, companies that issue, sell, transfer, trade, and exchange cryptocurrencies must register with the FMA. They include in-kind crypto service and custodian wallet providers. Registrants will comply with the due diligence and reporting obligations for the prevention of money laundering and terrorist financing. Noting that it began accepting registration applications from Oct. 1, 2019, the regulator elaborated:

Unregistered providers may no longer offer their service in Austria from this date onwards … A fine of up to €200,000 is prescribed in the event that a provider fails to make the registration.

France is ahead of many other countries, as it adopted a regulatory framework for crypto assets in April last year. The French financial markets regulator, the Autorité des Marchés Financiers (AMF), published its new rules for digital asset service providers on Dec. 20. The AMF also recently approved the country’s first initial coin offering.

Finland started regulating the country’s crypto industry in May, and the Financial Supervisory Authority (Fin-FSA) approved the country’s first five crypto service providers, including Localbitcoins, in November.

In the Netherlands, the Dutch central bank, De Nederlandsche Bank, has been preparing to regulate crypto businesses, requesting their information in September last year. “Firms offering services for the exchange between cryptos and regular money, and crypto wallet providers must register with De Nederlandsche Bank,” the bank noted. However, the regulator said on Jan. 10 that the legislation has not entered into force.

Germany is another country that has been active in transposing the AMLD5 into its laws, which allow financial institutions to sell and store cryptocurrencies for customers alongside traditional investments such as stocks and bonds. Authorization from the Federal Financial Supervisory Authority (BaFin) is required.

Strict Regulations Crowding Out Crypto Companies

As EU member states start transposing the new EU directive into their national laws, a number of crypto service providers have been feeling the effect of increased oversight. Some have chosen to relocate their businesses. Some EU member countries are adopting even tougher crypto rules than the new AML directive requires, such as Lithuania.

Crypto derivatives trading platform Deribit, for example, announced on Thursday that from Feb. 10 its platform will no longer be operated by Dutch company Deribit B.V. due to increased oversight. Instead, it will be operated by DRB Panama Inc., a 100% subsidiary of the Dutch entity. The company explained that complying with the new regulations would be costly and it will also have to “demand an extensive amount of information from our current and future customers.” Noting that “crypto markets should be freely available to most,” the company concluded:

The implementation of these changes would greatly affect the exchange and its customers. Therefore, we have decided to operate the platform from Panama.

Several other crypto service providers have already shut down in anticipation of the AMLD5 implementation in their countries. U.K.-based custodial bitcoin wallet provider Bottle Pay shut down on Dec. 31. The company explained that it would have to comply with the AMLD5 to remain in operation, emphasizing that “The amount and type of extra personal information we would be required to collect from our users would alter the current user experience so radically, and so negatively, that we are not willing to force this onto our community.” Crypto mining pool Simplecoin and bitcoin gaming platform Chopcoin also shut down ahead of the AMLD5 coming into effect.

What do you think of the EU directive requiring all member states to regulate crypto assets? Let us know in the comments section below.

Images courtesy of Shutterstock, the FCA, and the AMF.

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Germans Rush to Buy Gold as Draft Bill Threatens to Restrict Purchases

27/12/2019 by Idelto Editor

Germans Rush to Buy Gold as Draft Bill Restricts Purchases

Reports have emerged depicting long lines in front of a physical gold sales location in Germany, in view of pending legislation which would once again lower the anonymous purchase limit, this time from €10,000 to €2,000. The last drop happened in 2017 when the limit was set at €15,000. A draft bill from the German finance ministry is being pointed to as the reason for the change, which is scheduled to take effect from Jan. 10, 2020.

Also Read: Someone Redeemed a 100 BTC Casascius Bar Worth Over $700K

Germans Rush to Buy Gold

In a tweet posted Wednesday, precious metals consultant and analyst Dan Popescu shared a picture of a long line of people waiting in front of “Degussa store to buy gold in Köln.” Popescu described, “From Jan. 1, 2020, the limit to buy gold anonymously drops from €10,000 down to €2,000. Only two years ago the limit was €15,000.” One user posted his own photo and replied “This is me line at Degussa in 23rd. The employees said they haven’t seen anything like it before.” To give an idea of the relatively small amount of gold €2,000 (~$2,224) can buy, even a 50g gold bar is currently too expensive.

Germans are queuing at Degussa store to buy #gold in Köln. From Jan. 1, 2020, the limit to buy gold anonymously drops from €10,000 down to €2,000. Only two years ago the limit was €15,000. pic.twitter.com/vhuZTBPA0Y

— 🇪🇺 🇲🇨🇨🇭Dan Popescu 🇫🇷🇮🇹🇷🇴 (@PopescuCo) December 24, 2019

After the new legislation takes effect, reports from German media state that purchases of the precious metal over €2,000 will now require customer identification for buyers, including criminal background checks for businesses. The news outlet details:

If a dealer suspects, he must report his potential customer to the authorities. If a trader fails to adequately comply with these obligations, he may face severe fines.

If given final approval, the German draft bill designed to implement EU guidelines as laid out in the anti-money laundering directive AMLD5, will take effect on Jan. 10. This is the stated deadline for member states to implement legislation accommodative of the directive.

Residents of the country appear to be very concerned about the impending limitation, as the European Central Bank (ECB) continues to draw fire for its controversial economic polices such as negative interest rates. Also for newly installed ECB President Christine Lagarde’s recent criticism of perceived German conservatism. Skeptical reactions were voiced on Reddit as well, with one user stating:

They don’t want normal people to bank run their scam paper. Gold and hard assets is how you protect yourself from inflation. They want to know every single person that tries to get out of their cage.

Germans Rush to Buy Gold as Draft Bill Threatens to Restrict Purchases — Gold prices in Germany at press time. Source: http://www.livepriceofgold.com/germany-gold-price-per-gram.html

The Far Reaching Arm of AMLD5

As news.Bitcoin.com previously reported, the 5th EU anti-money laundering directive has big implications for holders of crypto and crypto businesses. Its impending policies have already squeezed some out of the industry, at least temporarily, but crypto is far from the only area that will be affected.

Per the legislation, non-transparent assets, accounts, and even private safety deposit boxes will now be subject to state information gathering by law. Gold is a bastion for private value storage, so the stricter limits come as no surprise. AMLD5 focuses on combating the financing of terrorism (CFT) and preventing money laundering (AML), but given the state of economic affairs in the EU, skeptics maintain the new laws are part of a larger bid to establish financial control and force users to remain stuck in a faltering system.

The fact that the ECB is now also in development of its own digital currency system amplifies these concerns, as one of the last remaining escapes from bank-imposed negative interest rates is to hold paper cash privately. With central bank digital currencies (CBDCs), negative rates can be applied directly to the asset, effectively closing this escape route.

Gold is thus seen as one of the final hedges against irresponsible government policy, and the proposed new limits on the precious metal will leave residents of Germany with even fewer options. The encroaching ECB and German policies have many on social media suggesting permissionless cryptocurrencies, which can be traded privately, as a means to hedge against the growing surveillance state.

What are your thoughts on the draft bill’s limitations for anonymous gold purchases in Germany? Let us know in the comments section below.

Image credits: Shutterstock, fair use.

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Mnuchin Affirms $1.5 Trillion Unaccounted For, Still Demands Strict Bitcoin Regulation

23/12/2019 by Idelto Editor

U.S. Treasury Secretary Steven Mnuchin remarked last week that a reported $1.5 trillion in missing cash — mostly one hundred dollar bills — was “sitting in bank vaults all over the world.” The famously anti-bitcoin U.S. official noted that “there’s a lot of ‘Benjamins’ all over the world” and emphasized the strength of the currency as the main reason many in other countries wish to possess it. The remarks come off as flippant to some, considering Mnuchin is one of the leading pushers for financial regulation and anti-money laundering rhetoric.

Also Read: The Myth of Authority: Mnuchin Denies USD Is Used Criminally

$1.5 Trillion in Cash Unaccounted For

In a recent interview with Fox News’ Lou Dobbs, U.S. Treasury Secretary Steven Mnuchin brushed off a question regarding a reported $1.5 trillion divot in the global cash supply. The “disappearing and unaccounted for” cash is mostly U.S. 100 dollar bills. Mnuchin prefaced his answer about the missing $1.5 trillion by saying that “the dollar is the reserve currency of the world and everybody wants to hold dollars.” He notes that in his view the U.S. is a safe place for holding and investing money. “Literally, you know, a lot of these hundred dollar bills are sitting in bank vaults all over the world. And particularly in a world of negative interest rates, you know, you can hold U.S. dollars and you don’t have to lose money,” Mnuchin stated:

So, uh, there’s a lot of Benjamins all over the world.

Anti-Bitcoin Rhetoric

Mnuchin’s nonchalant fielding of the question is interesting given his track record of decidedly pro-surveillance, pro-strict regulation of other currencies such as bitcoin. In July, Mnuchin assured the press that “Cryptocurrencies, such as bitcoin, have been exploited to support billions of dollars of illicit activity like cybercrime, tax evasion, extortion, ransomware, illicit drugs, human trafficking. Many players have attempted to use cryptocurrencies to fund their malign behavior.” He went on to call bitcoin a “national security issue.”

When confronted the same month with the fact that USD is used for the similar things by NBC’s Joe Kernen, a defensive Mnuchin retorted: “I don’t think it’s been successfully done with cash. I’ll push back on that. We’re going to make sure that bitcoin doesn’t become the equivalent of Swiss-numbered bank accounts.”

With two things now established according to Mnuchin — one, that USD is strong, and two, that it has not been used successfully for nefarious activities — it’s not to surprising that a cool $1.5 trillion that could be in the hands of criminals is of little concern to the top U.S. official.

The Strength of the USD

There’s little contention from market experts that compared to many other assets, the USD is relatively strong. Examining the steady, massive devaluation over the last 100 years of the world’s fiat currencies, however, paints a different picture than Mnuchin presents. Although the treasury secretary contrasts the dollar’s strength with negative interest rate policies across the globe, he does not mention the U.S. Federal Reserve’s current massive stimulus project, which has created over $3 trillion in freshly printed USD since September, or the fact that the interest rate in the U.S. is also heading back toward the zero bound again.

A lesser discussed notion is that — in essence — the government with the most guns wins in a world where value is determined by state decree (lit. “fiat”) and not by a currency actually possessing economically sound properties. The recent release of the declassified “Afghanistan Papers” may point to this reality, with nearly $1 trillion spent since 2001 on a conflict that, according to those involved, was without direction and which has now cost the lives of over 43,000 Afghan civilians alone. An unnamed executive with the U.S. Agency for International Development stated:

We were burning $400 million per month at one point. We lost objectivity. We were given money, told to spend it and we did, without reason.

With the above factors playing into the strength indicated by Mnuchin, it’s not hard to wonder why many wish to opt out of the “strong” currency, and utilize sound, non-violent money in the form of permissionless, peer-to-peer cash like bitcoin. After all, if Mnuchin and company are free to spend and use currencies as they wish, the argument is that peaceful people should be able to as well.

What do you think of Mnuchin’s statements on the missing cash? What about his statements on bitcoin? Let us know in the comments section below.

Image credits: Shutterstock, mark reinstein, fair use.

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