cryptocurrency

Harmonizing international regulations in the digital economy – MENAFN.COM


(MENAFN – Caribbean News Now) By Caribbean News Now contributor

CHANTILLY, France – Last month, led by the United States, the Financial Action Task Force, known as FATF, the global standard-setter for AML/CFT, adopted comprehensive measures on how countries must regulate and supervise activities and providers in this space.

The G7 finance ministers and Central Bank governors met on July 17-18, 2019 in Chantilly, France. One of the items on the agenda was competition and the digital economy. The United States was represented by Secretary of the Treasury Steven Mnuchin and focused primarily on the serious concerns that Treasury has regarding the growing misuse of virtual currencies by money launderers, terrorist financiers, and other bad players.

In preparation for this meeting, assistant attorney general Makan Delrahim met on June 5 with his G7 counterparts in Paris and drafted a common understanding of G7 competition authorities on competition and the digital economy to inform the discussion in Chantilly.

The common understanding was public as follows:

‘The common understanding acknowledges that competitive markets are key to well-functioning economies and can help unlock the benefits of digital transformation for innovation and growth while safeguarding consumer welfare. The paper notes that competition law is flexible and can adapt to the challenges the digital economy presents to competition enforcers. 

‘It also states that ‘[f]or effective enforcement and policy engagement, it is important that competition authorities have the tools and means to deepen their knowledge of new business models and their impact on competition, for example, through market studies or sector inquiries and by adding in-house capabilities to keep current with issues raised by the digital economy.’

‘The paper recognizes that ‘…G7 competition authorities will pursue their efforts in this area by continuing their cooperation in existing international fora and group exchanges to deepen their common understanding’ and ‘where considered useful and relevant, the G7 competition authorities will continue to assist G7 on these issues.’

‘Digital technologies improve our lives in a myriad of ways, but also present challenges for competition authorities,’ said assistant attorney general Makan Delrahim, and welcomed the opportunity to work closely with our G7 counterparts and other competition agencies to address the important issues arising from the digital economy.

Meantime digital currency could become one of the world’s biggest financial entities, the Caribbean region and their financial institutions model for consumer relevance.

The Eastern Caribbean Central Bank (ECCB) and the Barbados-based Fintech Company, Bitt Inc. (Bitt), have signed a contract to conduct a blockchain-issued central bank digital currency pilot within the Eastern Caribbean Currency Union. The contract was signed on 21 February at the ECCB’s Headquarters in Basseterre, St Kitts.’

The island of Bermuda with a population of just 70,000 people already known as a destination for insurance companies, and an international financial services centre is set on becoming a significant destination for cryptocurrency businesses.

The Cayman Islands Investment Group Ltd., announced the immediate availability of Cryptocay.ky, enabling traders of all levels of expertise to immediately register and use the Digital Asset Trading platform.

‘We are truly excited to release this platform to the world,’ said Malcolm Hurlston, Chief Marketing Officer at The Cayman Islands Investment Group Ltd.

‘Cryptocay.ky is just the beginning of adaptation in the Caribbean,’ continued Hurlston. ‘We want to become the central hub for everything crypto-related in the Caribbean. We at CIIG are dedicated to creating new products that benefit the investors and entrepreneurs of the future, including an ERC-20 based Money Transfer system!’


A visual representation of a cryptocurrency coin on display in front of the logos for Facebook and Libra. Chesnot | Getty Images

Last month, Facebook announced that it will roll out in 2020 a global digital currency to be known as Libra. A simple global currency and financial infrastructure that empowers billions of people.

It is a decision that has profound implications for all financial institutions everywhere, raises new regulatory concerns for Central Banks and governments, and challenges Caribbean financial sovereignty.

Libra is intended to reinvent money. Transform the global economy. So people everywhere can live better lives, and in the process become a ‘global currency and financial infrastructure’ powered by Facebook’s encrypted blockchain technology. It will, once operational, offer banking through Calibra, a smartphone digital app, either on a standalone basis or through WhatsApp and Facebook Messenger.

US Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell both said they have ‘serious concerns’ about the potential for the digital currency to be misused by terrorists, in addition to money laundering and privacy risks.

‘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. This is indeed a national security issue. The United States has been at the forefront of regulating entities that provide cryptocurrency. We will not allow digital asset service providers to operate in the shadows and will not tolerate the use of cryptocurrencies in support of illicit activities.

 ‘Treasury has been very clear to Facebook, Bitcoin users, and other providers of digital financial services that they must implement the same anti-money laundering and countering the financing of terrorism — known as AML/CFT — safeguards as traditional financial institutions. Money transmitters of cryptocurrency must comply with the relevant Bank Secrecy Act obligations, known as BSA, and register with the Financial Crimes Enforcement Network, known as FinCEN.’

‘To be clear: FinCEN will hold any entity that transacts in Bitcoin, Libra, or any other cryptocurrency to its highest standards. 

‘I also recently established the Financial Stability Oversight Council’s Working Group on Digital Assets. This FSOC group enables US financial regulators, such as FinCEN, the Fed, OCC, CFTC, CFPB, SEC, and other key stakeholders to work together to combat risks posed by cryptocurrencies’, secretary Mnuchin said.

Finding a way to regulate the digital payment system and ascertain how it is different from cryptocurrencies like bitcoin, is a matter the US Senate and House of Representatives are trying to understand.

Meltem Demirors, chief strategy officer at CoinShares, a digital asset management firm, speaking to CNBC’s CNBC’s’Fast Money’right after her testimony, last week said, questions persisted around Libra’s fate.

“I think the big concern of everyone in this hearing [House hearing] was the fact that Facebook has such tremendous size and such a massive impact on the digital economy,” she said. “We’re talking about 2.7 billion users. That’s a lot of influence and a lot of power, and so there are questions about systemic risk, there are questions about anti-competitiveness, there are questions about who this consortium is and how it’s selected, and that’s really what lawmakers are trying to untangle.”

“Everyone wants to facilitate more innovation, to enable the quote-unquote ‘digital economy’ to grow through things like cryptocurrencies. Nobody is arguing with that,” she said. “I think what we are trying to determine is how do we make the United States a place where innovators continue to build businesses, and how do we create a regime, a regulatory regime, that reduces the burden on small start-ups and firms and allows them to compete with really large corporations who have great lobbyists, very expensive lawyers, and large war chests?”

That being said, with respect to Facebook’s Libra and other developments in cryptocurrencies, secretary Mnuchin said:

‘Our overriding goal is to maintain the integrity of our financial system and protect it from abuse. Treasury takes very seriously the role of the US dollar as the world’s reserve currency, and we’ll continue our efforts to protect our country and secure the US and global financial systems.’

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