Coinbase and top execs face securities class action over Nasdaq listing

Alongside Coinbase itself, the class action names CEO Brian Armstrong, CLO Paul Grewal, other top executives and several of its venture capital backers as defendants.

A Coinbase shareholder has filed a securities class action against Coinbase for allegedly misleading investors ahead of its public listing about the company’s financial state and resilience as a crypto trading platform.

Filed by law firm Scott + Scott in California Northern District Court on Thursday, the class action names Coinbase shareholder Donald Ramsey as a plaintiff, both individually and on behalf of all other investors similarly situated. 

Ramsey is pursuing his claims under the United States Securities Act and has presented evidence drawn from Coinbase’s regulatory filings with the Securities and Exchange Commission (SEC), company press releases, analyst reports and other publicly disclosed information about the exchange.

Alongside the company itself, the class action names CEO Brian Armstrong, CLO Paul Grewal and other top executives as defendants, as well as several of its venture capital backers.

Ramsey accuses Coinbase and its executives of making “materially misleading statements” in their offering materials at the time of the public listing and offering positive statements that “lacked a reasonable basis.” The class action alleges that:

“At the time of the Offering: (1) the Company required a sizeable cash injection; (2) the Company’s platform was susceptible to service-level disruptions, which were increasingly likely to occur as the Company scaled its services to a larger user base.”

Ramsey further alleges that once the alleged discrepancies between self-presentation and reality came to public light, Coinbase’s share price fell accordingly. Citing events in mid-May, when Coinbase conceded it needed to raise funds and announced plans to raise $1.25 billion through a convertible bond sale, Ramsey emphasizes that the company’s stock sharply declined by close to 10% over two trading sessions.

The class-action marshals evidence from contemporary media reports in mid-May, citing a Forbes’ report on the bond sale announcement:

“Investors were also likely surprised by the timing of the issue, considering that Coinbase just went public in mid-April via a direct listing (which doesn’t involve issuing new shares or raising capital), signaling that it didn’t require cash. So the company’s decision to issue bonds a little over a month later is likely raising some questions.

Ramsey’s class action also points to the technical difficulties on the platform on May 19, when a surge of traders hoping to “get their money out” during a bearish period in the crypto markets experienced “delays [...] due to network congestion.”

As Cointelegraph reported at the time, delays in Ether (ETH) and ERC-20 token withdrawals ostensibly due to congestion on the Ethereum network were experienced that day by users on both Coinbase and Binance. While not indicating the reason, the Gemini exchange also announced that it would be taking emergency maintenance actions to correct ongoing issues. 

Related: ETH developer Virgil Griffith back in jail after allegedly checking Coinbase account

The class action argues that these kinds of service-level technical issues are critical and damaging for the company’s claims to be the easiest place to buy and sell crypto in the retail market. The complaint emphasizes this all the more so, given that the company is reliant on transaction fees to “generate nearly all of its revenues.” 

By the time Ramsey commenced the class action, Coinbase stock was trading at $208 per share compared to its opening price of $381 on April 14.

Counsel for the defendants had reportedly not yet appeared as of Thursday. Cointelegraph has reached out to Coinbase representatives for comment and will update this article accordingly.

Nigeria to pilot central bank digital currency in October

The Central Bank of Nigeria will start the pilot of its central bank digital currency, which runs on the Hyperledger Fabric blockchain, on October 1.

For much of 2021, the Central Bank of Nigeria (CBN) has been in the headlines for its anti-cryptocurrency measures. Yet, the institution has this week redoubled its investment and research into crypto’s underlying technology, blockchain, and has set a clear date for the pilot scheme of its blockchain-powered central bank digital currency (CBDC).

On October 1, CBN will reportedly launch a pilot scheme for “GIANT” – a CBDC project in development since 2017, which runs on the open-source blockchain Hyperledger Fabric.

Rakiya Mohammed, CBN’s information technology director, said the bank might conduct a proof-of-concept before the end of 2021. In a webinar this week with stakeholders, CBN representatives reportedly emphasized that the institution could not afford to be left behind while the vast majority of central banks worldwide make headway with their own CBDC research and development.

Among the motivations cited for the project, CBN has noted that a CBDC would be beneficial for macro and growth management, cross-border trade support, and financial inclusion.

Potential benefits could still extend further, in CBN’s view, ranging from higher efficiency for payments and remittances, better monetary policy transmission, improved tax revenue collection, and the facilitation of targeted social policies.

Related: Nigeria’s comms minister links blockchain to national digital innovation efforts

Alongside CBN, the Bank of Ghana has this summer been moving rapidly towards the pilot stage for its own central bank digital currency. The country has positioned itself as a pioneer in CBDC development on the continent and considers central bank-issued digital currencies to be superior to and less risky than decentralized cryptocurrencies.

However, Ghana’s wariness of crypto is overshadowed by Nigeria’s more aggressive measures, which include a ban on commercial banks and other financial institutions from servicing crypto exchanges. Despite this, Bitcoin adoption and BTC peer-to-peer trades have remained high in the country.

Fund management firm Global X files with the SEC for a Bitcoin ETF

As Bitcoin hovers around $30,000, fund managers are pressing ahead in an effort to get the first American Bitcoin ETF approved.

New York-headquartered fund manager Global X Digital Assets has filed an application for a Bitcoin (BTC) exchange-traded fund (ETF) with the United States Securities and Exchange Commission. 

Filed on Wednesday, the application indicates that the proposed Global X Bitcoin Trust — a Delaware statutory trust formed in mid-July of this year — would, if approved, trade on the Cboe bZx exchange. The Bank of New York Mellon would serve as the trust’s administrator. As per the filing:

“The Trust’s investment objective is to reflect the performance of the price of bitcoin less the expenses of the Trust’s operations. The Trust will not seek to reflect the performance of any benchmark or index.”

Investors in the fund, or their authorized financial agents, would receive Bitcoin from the trust through an unnamed BTC custodian. While unnamed, Global X indicates that the custodian is a limited purpose trust company authorized by the New York State Department of Financial Services to provide digital asset custody services. The filing stipulates that the trust itself “will not purchase or, barring a liquidation or extraordinary circumstances described herein, sell bitcoin directly.”

Global X Digital Assets, the trust’s sponsor, is affiliated with Global X Management Company, also known as Global X, and Mirae Asset Global Investments. The latter, based in Seoul, South Korea, manages assets worldwide whose value exceeded $560 billion as of March 2021.

Related: Grayscale ‘100% committed’ to turning GBTC into Bitcoin ETF — CEO

Earlier this week, Greg King, CEO of Osprey Funds, argued that the high number of Bitcoin ETF applications in the U.S. earlier this year contributed to Bitcoin’s extraordinary 2021 bull run.

The SEC’s persistent reluctance to approve a crypto ETF, alongside hawkish regulatory remarks in the U.S. regarding various crypto assets like stablecoins, has, for King, played a role in the coin’s subsequent price downturn. King has suggested that 2022 would be the earliest the U.S. regulator would approve a Bitcoin ETF application.

Digital yuan pilots expand to insurance industry for the first time

China's central bank digital currency can now be used on insurance policies that offer various levels of compensation for diagnosis of or death due to COVID-19.

China's nascent central bank digital currency, the digital yuan, has already been deployed for an extensive array of successful pilot schemes, ranging from e-commerce to salary payments and to festive traditional lotteries.

This week has reportedly seen the currency debut in the insurance industry, in the city of Shenzhen, where it is being piloted by the local branch of the People’s Bank of China together with a local subsidiary of China’s leading insurer, Ping An.

The project involves a new insurance policy tailored to medical workers in Shenzhen’s Nanshan district, offering them various levels of compensation for diagnosis of or death due to COVID-19.

Workers are being incentivized to use the digital yuan wallet to make their insurance premium payments by being offered the prospect of preferential allowance, according to the report.

Wang Peng — an assistant professor at the Gaoling School of Artificial Intelligence at the Renmin University of China — has said that the pilot is significant as it extends the use of the digital yuan well beyond e-commerce and retail payments and can demonstrate its feasibility in a much wider range of more complex application scenarios. Peng told local reporters:

“As more users get used to making payments with the digital yuan and the market matures, the application scenarios will be able to expand from the insurance industry to more scenarios such as financial services, life services, and even the purchase of funds and trading in securities." 

Ping An will reportedly further explore the integration of the digital yuan for insurance claims, payments and other scenarios in the insurance sector.

Related: China’s digital yuan deploys at speed, leaving dust in its path

This week has notably seen the digital yuan enter the fray of geopolitical tensions between China and the United States, following several senators’ submission of a letter requesting that officials from the U.S. Olympic and Paralympic Committee board prevent U.S. athletes from using or accepting the Chinese digital currency.

In response, Chinese Foreign Ministry spokesperson Zhao Lijian has called for a lowering of tensions, appealing to senators to “stop making sports a political matter and stop making troubles out of the digital currency in China.” 

Osprey Funds CEO says US will approve Bitcoin ETF in 2022 ‘at earliest’

Greg King, CEO of Bitcoin trust issuer Osprey Funds, thinks the U.S. SEC has too many things on its plate this year to get to the issue of crypto ETF approvals.

The CEO of Osprey Funds — the issuer of over-the-counter Bitcoin trust OBTC —isn’t holding his breath for a Bitcoin (BTC) exchange-traded fund (ETF) approval in the United States this year.

Speaking to Yahoo Finance’s Jared Blikre and Seana Smith on July 19, Greg King said he believes that the U.S. Securities and Exchange Commission (SEC) under the leadership of Gary Gensler has so many things on its plate in 2021 that a BTC ETF approval is unlikely to make the cut.

King recalled the hype in the crypto industry surrounding Gensler’s appointment, who, while fairly noncommittal in his statements about crypto regulation thus far, is nonetheless well-known for his work teaching courses on blockchain at the Massachusetts Institute of Technology in recent years. 

“You saw a flurry of filings, from established companies to sort of newcomers, chasing that Bitcoin ETF idea,” said King. The CEO has himself been in conversation with SEC staff for several years, as Osprey — the parent firm of Osprey Funds — had filed for its own Bitcoin ETF back in 2017. King argued:

“If a Bitcoin ETF is coming through the Gensler administration, my view is it's not going to happen this year [...] There's also been quite a bit of sort of a body of language and rhetoric and points that have been made by the staff with previous applications that need to be addressed. And so this isn't a slam dunk.”

Disappointed expectations of a “slam dunk” may, moreover, have played a role in the market’s correction this summer, with King claiming that the “market's partially calibrating” to these frustrations.

While for King, the high number of Bitcoin ETF applications in the U.S. earlier in the year fed into Bitcoin’s extraordinary 2021 bull run, with their stalling later contributing to a downturn, he also added that recent hawkish regulatory remarks in the U.S. regarding private stablecoins has not been “particularly helpful for Bitcoin or Ethereum.”

This week, U.S. Treasury Secretary Janet Yellen has told members of the President's Working Group on Financial Markets — a.k.a the “Plunge Protection Team” — that the government must act quickly to establish a regulatory framework for stablecoins. Earlier this year, Yellen had also warned that the abuse of crypto has been an ever-growing problem.

Over at the Federal Reserve, Jerome Powell has echoed Yellen’s calls, saying that if stablecoins are “going to be a significant part of the payments universe, then we need an appropriate regulatory framework which, frankly, we don’t have.”

Related: Grayscale ‘100% committed’ to turning GBTC into Bitcoin ETF — CEO

Looking at this landscape — and given that crypto ETFs have already been approved in Canada, Europe and other jurisdictions — King said that the U.S. is “decidedly behind” but that “that's obviously by choice”:

“I think they're thinking about this, if I had to guess, more holistically, beyond just whether a Bitcoin ETF makes sense or not at this point, but really, more along the lines of what precedent are we going to set when we approve one.”

South China Morning Post to tokenize 118-year-old archive with NFTs

Hong Kong landmarks like the Kowloon Walled City will be tokenized and showcased in The Sandbox Ethereum-based metaverse.

Veteran Hong Kong-based newspaper South China Morning Post (SCMP) is creating a series of NFTs using a new token standard called “ARTIFACT,” designed to preserve historical assets on the blockchain.

In its ARTIFACT Litepaper, SCMP presents an overview of the project, which is a standardized metadata structure that can be used to ensure that key moments from SCMP’s 118-year-old archive of media assets can be preserved through distributed ownership and circulation.

Gary Liu, SCMP’s CEO, has said that “blockchain offers immense potential to immutably preserve journalism that witnesses and explains history. The ‘ARTIFACT’ project is an opportunity to discover, collect, showcase, trade, and reanimate meaningful moments and objects from our collective human experience.”

SCMP’s NFTs will be broadly inspired by the newspaper’s archive of documentary photography, visual illustrations, data visualizations and infographics. Representing journalistic “first drafts of history,” these include text, photographs, cartoons and illustrations amassed by SCMP over more than a century.

While the token standard will be blockchain-agnostic in the long term, SCMP has chosen a few blockchains to begin its project and unfold its possibilities. To help to reanimate its history and engage a wide audience, it has entered into partnership with the Ethereum-based metaverse The Sandbox, a subsidiary of the blockchain startup Animoca Brands. 

In collaboration with local game studios and digital artists, The Sandbox will create a series of 3D voxel-based interactive gaming and cultural experiences based on modern and historic landmarks and artifacts in Hong Kong and mainland China. 

Landmarks like the Kowloon Walled City and the Star Ferry will be integrated into the blockchain-based metaverse. Liu has indicated that players will, for example, be able to virtually experience scenes from Hong Kong in the 1950s and learn about its historical complexities through SCMP’s reporting from the time.

Related: Nifty News: The Walking Dead invades Sandbox, mining lease NFTs, CryptoPunk in art gallery

The Sandbox has announced that on July 22, players will be able to purchase plots adjacent to the SCMP project in the form of the metaverse’s native LAND tokens. Speaking of the partnership, Liu told the SCMP today that “our hope is that over time, we will create metaverse environments for people to experience historical Hong Kong, historical China and to learn about the beauty and the complexity of this part of the world.”

Within The Sandbox’s metaverse, LAND tokens can be grouped and assembled into virtual estates by various of The Sandbox’s partners or users. For example, game developer Atari has used these scarce, digital spaces to host 3D voxelized versions of its classic games.

Individual players can also buy LAND themselves and use them as locations for constructing and launching their own independent gaming content. 

To date, The Sandbox has had over 40 million global installs on mobile and brought in over 1,300 Ether (ETH) with the first and second of its LAND presales. The metaverse is scheduled for an Alpha public launch this summer.

Binance stops stock token sales, ‘effective immediately’

The crypto exchange gave no indication as to the reason, stating only that it would be shifting its “commercial focus to other product offerings.”

Binance’s highly popular stock tokens, a relatively recent offering, are being wound down immediately. In an announcement published on Friday, the exchange announced that “effective immediately,” stock tokens are unavailable for purchase on Binance.com. As of October 14, 2021, at 7:55 pm UTC, the exchange will no longer support stock tokens at all. 

Existing stock token holders will have some time to adjust:

“Users who currently hold stock tokens may sell or hold them over the next 90 days. Users will no longer be able to manually sell or close their positions after 2021-10-14 19:55 (UTC). Thereafter all stock token positions on Binance.com will be closed at 2021-10-15 13:30 (UTC).” 

While unconfirmed as of the time of writing, Walter Bloomberg has claimed in a tweet that:

If true, the development would confirm that mounting regulatory pressure on the world’s largest cryptocurrency platform is continuing to hit its operations hard.

In late April, there had already been reports that European and British regulators were scrutinizing Binance’s offering of stock tokens — which represent fractions of equity shares in firms such as Tesla and Coinbase — for possible non-compliance with securities laws. While initially not commenting on Binance in particular, Germany’s Federal Financial Supervisory Authority (BaFin) went on record at the time, stating that:

“Fundamentally [...] the following applies: if tokens are transferable, can be traded at a crypto exchange and are equipped with economic entitlements like dividends or cash settlements, they represent securities and are subject to the obligation to publish a prospectus.”

BaFin soon mentioned Binance explicitly, noting its absence of published prospectuses for the stock tokens.

Related: Binance and FTX list Coinbase stock tokens ahead of exchange’s Nasdaq debut

Spring and summer of 2021 have been difficult for Binance on the regulatory front, with multiple countries taking action against it or reportedly investigating its operations from various compliance perspectives.

In the United Kingdom, the Financial Conduct Authority ordered the exchange to halt all “regulated activity” in the country in June. That same month, Japan’s Financial Services Agency accused Binance of operating in the country without proper registration, and new measures against crypto exchanges in the Canadian province of Ontario prompted the exchange to cease all its operations there.

China’s central bank says crypto gave impetus to the creation of its CBDC

A working paper released in English by the People's Bank of China cites cryptocurrencies as an important context for the digital yuan's development and reveals that the digital currency will use smart contracts to allow for programmability.

Much attention has been paid to the global, geopolitical implications of China’s rapid and pioneering development of its digital yuan, also provisionally known as e-CNY.

Yet in a new white paper published by the Working Group on E-CNY Research and Development of the People’s Bank of China (PBoC), the institution gave a more domestic-focused and technologically-driven vision of the new currency’s background and key objectives.

Recapping the currency’s research and development timeline, the paper notes that the PBoC first set up a task force to study digital fiat currency back in 2014. By 2016, it had established a Digital Currency Institute, which developed the first-generation prototype for the new currency. With the State Council’s approval, the bank began to collaborate with commercial institutions on further developing and testing the e-CNY at the end of 2017.

Notably, these years coincided with the steep growth of the decentralized cryptocurrency markets and their first major bull run in winter 2017, alongside significant transformations of the domestic and international digital economy transformations.

Big data, cloud computing, artificial intelligence, blockchain and the Internet of Things are the key innovations singled out in the white paper and the bank notes that the Covid-19 pandemic has markedly sped up the digital transformation of Chinese enterprises and payment services.

The PBoC is drawing on many of these developments for the e-CNY, including using smart contracts to allow for programmability, as the new paper reveals for the first time. 

Yet while the institution takes a positive view of technological change and far-reaching innovations to retail payment services, its characterization of decentralized cryptocurrencies is scathing:

“Cryptocurrencies such as Bitcoin are claimed to be decentralized and entirely anonymous. However, given their lack of intrinsic value, acute price fluctuations, low trading efficiencies and huge energy consumption, they can hardly serve as currencies used in daily economic activities. In addition, cryptocurrencies are mostly speculative instruments, and therefore pose potential risks to financial security and social stability.”

Moreover, the PBoC notes that concerns about price volatility have spurred some private actors to launch stablecoins, pegged to fiat currencies or other assets. Plans to launch a global stablecoin by commercial institutions, in the PBoC’s view, will “bring risks and challenges to the international monetary system, payment and clearing system, monetary policies, cross-border capital flow management, etc.”

Related: China’s digital yuan deploys at speed, leaving dust in its path

In this context, Beijing’s preference for state-led innovation of retail payment infrastructure and the creation of a centralized, two-tier management model for the e-CNY is to be expected:

“The right to issue e-CNY belongs to the state. The PBOC lies at the center of the e-CNY operational system. It issues e-CNY to authorized operators which are commercial banks, and manages e-CNY through its whole life cycle. Meanwhile, it is the authorized operators and other commercial institutions that exchange and circulate e-CNY to the public.”

In its strictly technical design, the currency integrates both centralized and distributed architectures, however. This has been used to great effect in various trials, implemented in over 1.32 million scenarios to date and with transaction volume totaling 70.75 million at a total value of roughly RMB 34.5 billion ($5.34 billion).

The white paper also considers the intensifying interest by central banks worldwide in the development of central bank digital currencies (CBDCs), noting that the PBoC has been engaged in extensive consultations with international organizations like the BIS, IMF and World Bank. It takes a cautious stance towards the use of e-CNY for cross-order use, stressing “​​various complicated issues such as monetary sovereignty, foreign exchange policies [...] as well as regulatory and compliance requirements.”

Given that the e-CNY is already technically ready for cross-border use, the PBoC says it will nonetheless actively respond to initiatives from the G20 and other organizations and explore possible pilots for cross-border payments, “preconditioned on mutual respect to monetary sovereignty and compliance.”

Bitcoin may have played a role in Tesla’s decorrelation from Big Tech

The 20-day correlation between Tesla stocks and the Nasdaq 100 index has sharply dropped from 0.83 in mid-June to 0.14 as of this week.

Market analysts are arguing that Tesla's exposure to Bitcoin (BTC) may be the reason for its sharp decorrelation from Big Tech in recent weeks. As of Wednesday, July 14, the 20-day correlation between the company's price and the Nasdaq 100 index has dropped from 0.83 on June 17 down to 0.14. 

Whereas Tesla has shed almost 4% this month, the Nasdaq 100 is up by over 2%. Weakened correlation between Tesla shares and the NYSE FANG+ index is also observable, as BNN Bloomberg reported. Amy Wu Silverman, a derivatives strategist at RBC Capital Markets, told reporters:

“Tesla is highly correlated to megacap tech [...] this relationship has really decoupled in the near term. When I ask around, the feedback I get is that this is related to their Bitcoin exposure and how it will have to be accounted for when they report earnings.”

The EV maker's earnings report is due July 26. Tesla's eventful and controversial relationship with Bitcoin dominated headlines — and arguably catalyzed a crypto market bull run — in February of this year, when the company disclosed a strategic acquisition of $1.5 billion worth of Bitcoin, worth 7.7% of its gross cash position at the time. It soon announced it would begin accepting BTC payments for its vehicles, indicating plans to hold, rather than convert, the Bitcoin. 

The company sold a portion of its Bitcoin in Q1 2021, generating net proceeds of $272 million, although Musk was keen to stress he had not himself sold any of his own BTC holdings. By May, the close link between Tesla and the veteran cryptocurrency began to unravel, with Musk announcing Tesla would be pulling back from BTC payments acceptance due to environmental concerns about energy-intensive Bitcoin mining. 

Related: Elon Musk and Bitcoin: A toxic relationship

Time will tell whether Tesla's near-term weakened correlation with Big Tech stocks will become an established dynamic. In the crypto space, many have been more focused on the oversized impact Musk himself has had on the crypto market as a whole, most strikingly when it comes to Bitcoin and the meme cryptocurrency, Dogecoin (DOGE).

Brazilian securities regulator approves Ether ETF

The fund, which will trade on Brazil's B3 stock exchange, uses custodial services provided by the Winklevoss twins' United States-based Gemini.

Brazil's Comissão de Valores Mobiliários (CVM), the country's securities regulator, has approved an Ether (ETH) exchange-traded fund (ETF), according to an announcement by QR Capital, the holding company of QR Asset Management.

The fund, which trades under the ticker QETH11 will trade on Brazil's highly reputable B3 stock exchange, which operates as a regional exchange and serves customers worldwide. QETH11 will use the same Ether index as that used by CME Group and uses institutional custodial services provided by the Winklevoss twins' Gemini.

In its announcement, the fund's issuer pitches the product as “a simple, safe and regulated option for any investor to gain direct exposure to Ethereum through their preferred brokerage, without worrying about registrations in exchanges, wallets or private keys.” QR Asset Management buys physical ETH for the product and pledges to assure a high level of transparency and security for QETH11  investors.

Related: New Bitcoin ETF approved in Canada

News of the CVM's green light follows hot on the heels of two earlier cryptocurrency ETF approvals this March, one 100% Bitcoin and the other composed of five cryptocurrencies, in addition to Bitcoin (BTC). Both are also traded on B3 and the Bitcoin-only product is similarly managed by QR Asset Management. It began trading under the ticker QBTC11 in late June.

One month prior, in February, Canada's Ontario Securities Commission gave the green light for the world's first physically settled Bitcoin ETF. Elsewhere, particularly in the United States, securities regulators are still delaying crypto ETF approvals, despite consistent demand.

Japanese police arrest alleged masterminds behind $55M ‘AI-led‘ crypto scam

Four men have been arrested in Aichi Prefecture for allegedly running a fraudulent crypto scheme that drew in 20,000 Japanese investors and raised 6 billion yen.

Four men have reportedly been arrested in Japan's Aichi Prefecture for running an allegedly fraudulent crypto investment scheme that persuaded investors they could reap returns on the basis of an artificial intelligence (AI)-led trading system.

Roughly 20,000 Japanese investors nationwide are thought to have been drawn into the scheme, which raised an estimated total of 6 billion yen ($55 million). The four suspects: Shoji Ishida, Yukihiro Yamashita, Takuya Hashiyada, and Masamichi Toshima, were arrested on July 12, according to Japanese newspaper Asahi Shimbun.

The alleged scam, dubbed the "Oz Project" promised that the automated, AI-based system would result in investors receiving 100% of their initial investment back, with assured profits of two-and-a-half times its original value over the course of four months. Several of the scheme's investors have filed civil lawsuits in Nagoya and Tokyo seeking damages, Asahi reported.

To solicit investors, the Oz Project had a dedicated team member who held seminars and briefings for participants and encouraged participants to create and engage in a dedicated investor group on the popular Japanese messaging app LINE. This strategy is thought to have spurred numerous participants to have onboarded their friends and relatives to the scheme.

Prior to yesterday's arrests, Nagoya-based investors had already filed criminal charges with the prefectural police as early as Sept. 2019. Asahi notes that the police have also been searching the suspects' properties in search of further evidence. 

Related: Crypto criminals got away with $5B less in 2020 as scam revenue falls

While artificial intelligence and other new technologies continue to be exploited by malign actors to vest their schemes with a seductive appeal, the technology has conversely also been used to target such criminals. As early as 2018, police in Dubai successfully used smart programs and AI technology to swiftly trace a gang behind a $1.9 million armed Bitcoin (BTC) heist.

In the United Kingdom, the country's Advertising Standards Authority this week revealed it is increasing its capacity to track suspect crypto ads online using technologies like scraping and artificial intelligence.

UK will hold back action against crypto ‘pockets of exuberance’ for now

The Bank of England's latest Financial Stability Report took stock of the massive increase in crypto prices and trading activity this year.

The Bank of England (BoE)'s latest Financial Stability Report, released twice yearly, acknowledges that increased crypto trading action and price volatility in 2021 signals that the sector is harboring “potential pockets of exuberance.”

The report notes that the top market cryptos, Bitcoin (BTC) and Ether (ETH), saw a sharp appreciation in value over the 12 months to April 2021 and that their subsequent drop by roughly 50% in May has left them “particularly volatile,” with prices skewed to the downside as of last month.

When it comes to the risks all this poses for financial stability, however, the central bank took a relatively sanguine line, noting that spillovers from the 2021 crypto bull run into wider financial markets were limited. The fact that the crypto market remains relatively insulated and confined to retail investors means that the bank does not feel that the risk potentially posed by the sector has begun to crystallize, warranting active intervention, in the words of BoE deputy governor Jon Cunliffe. 

The report summarizes the central bank's position and the likely shifts that would need to occur for this position to change in the future, outlining: 

“Market intelligence suggests cryptoassets are largely held by retail investors, with institutional investors having limited exposure at present. However, there are some signs of growing interest in cryptoassets and related services from institutional investors, banks, and key payment system operators. These developments could increase the interlinkages between cryptoassets and other systemic financial markets and institutions.”

BoE Governor Andrew Bailey has, however, indicated that the central bank is well aware that the sector and its relationship to the wider institutional financial world is fluid and fast-changing, meaning that the BoE will continue to watch it closely.

Related: BoE tackles ‘difficult and pertinent’ questions about digital money

The United Kingdom has begun to take a more interventionist approach to parts of the crypto sector, with the country's Financial Conduct Authority recently ordering major crypto exchange Binance to cease all regulated activities in the country.

Major and rapid shifts in the private currency landscape — including cryptocurrencies — have also prompted Cunliffe to argue this year that general access to a digital form of central bank money could become crucial for ensuring financial stability in the future.

Former Bitmain CEO Jihan Wu: Regulatory crackdown may be good for crypto

Wu also pitched Singapore, where his current company Matrixport is based, as a strong contender to serve as "a hub for crypto innovations."

Jihan Wu, crypto billionaire and the co-founder and ex-CEO of Bitcoin (BTC) mining giant Bitmain, believes that the current wave of regulatory interventions in the crypto industry may be “a good thing in the long term.”

Speaking to CNBC during the Asia Tech x Singapore conference this week, Wu noted that the sector had already grown almost to “a trillion dollar market cap industry,” with over 10% of United States citizens having some involvement with the new asset class. In these conditions, he argued that stronger regulatory involvement would be a net gain for crypto over time:

“I think the regulatory pressure is stronger than before but it will get a lot of bad actors out of the industry and make sure that the industry's reputation is much better than without it. So I think this kind of a crackdown may be a good thing for the industry in the long term.”

The recent crackdown on crypto has been most striking in China, which has a long track-record of attempting to strictly limit and even suppress the trading of decentralized digital currencies. Yet other developments — including several jurisdictions' recent actions against the operations of top crypto exchange Binance — point to a more interventionist approach gradually gaining momentum worldwide. 

Earlier today, Caitlin Long, founder and CEO of the crypto-focused Avanti Bank & Trust, tweeted that in the United States, the regulatory crackdown on crypto “has begun.” Long claimed that regulators would likely go after “intermediaries” and “access points” for U.S. dollars into the sector, rather than targeting assets like Bitcoin and Ether (ETH) directly.

Wu, however, proposed that more engagement between regulators, governments and companies in the crypto sector is both necessary and likely to be positive in its outcomes. He singled out Singapore as a case in point, characterizing its government as "reasonable," highly efficient and "approachable" when it comes to dealings with the industry.

Related: Will regulation adapt to crypto, or crypto to regulation? Experts answer

Especially in a small country like Singapore, he said, as long as crypto industry actors don't harm local citizens, the authorities are likely to leave them be and refrain from taking any legislative measures against them. "There are many good reasons for Singapore to be a hub for crypto innovations," he claimed.

After Wu's somewhat controversial departure from Bitmain, where he laid the basis for his estimated $1.8 billion fortune, the former CEO went on to found a digital asset financial services platform called Matrixport, which was initially based only in Singapore but has since also expanded to establish a Europe-facing office in Zurich

IMF, World Bank and BIS champion central bank digital currencies at G20

A new report released by the triumvirate of global finance argues that central bank digital currencies will benefit worldwide development.

In a joint report, the International Monetary Fund (IMF), the World Bank and the Bank of International Settlements (BIS) have proposed to the G20 that a cross-border network of central bank digital currencies (CBDC), underpinned by efficient technological integration and proactive international cooperation, could be of significant benefit to the world economy.

The report focuses on broadening the horizon beyond central banks’ individual studies of CBDCs for domestic needs, emphasizing that it is crucial to coordinate work at a global scale and to find common ground between various national efforts to reap the full benefits of digital currency.

If tackled astutely, the IMF, the World Bank and the BIS believe that the creation of CBDCs could offer a “clean slate” that would enable the global financial system to significantly enhance the efficiency of cross-border payments.

The report paints a bleak picture of the current system for cross-border payments, which is beset by long transaction delays and high costs due to an excessive number of intermediaries operating across different time zones across the correspondent banking process.

Moreover, cross-border flows are often opaque and difficult to trace, presenting a problem for Anti-Money Laundering (AML) and combating the financing of terrorism (CFT) implementation. Over the past decade, the attenuation of cross-border banking relationships has left some countries struggling to integrate into the global financial system fully.

The report weighs the significant benefits that CBDCs could present for increased efficiency and enhanced economic inclusion against the potential global macro-financial implications and risks involved in the widespread use of CBDCs for cross-border flows.

These challenges include dealing with the sudden capital flow reversals enabled by more frictionless cross-border flows and the potential impact on countries’ ability to manage their exchange rates. If the foreign currency becomes easier to obtain, store and spend, widespread currency substitution could potentially undermine states’ monetary policy independence and pose risks to both issuing and receiving countries.

A worldwide push for CBDC issuance, the report notes, would therefore require tight integration of multiple CBDCs and uniformity of design choices, alongside specific measures designed to mitigate these macro risks.

The groundwork would not only be conceptual and design-focused but would imply coordinated strategies, standardized practices and a degree of structural integration, ranging from the creation of new international payment infrastructures to targeted policies. The latter, for example, could include introducing limits on foreign CBDC holdings or transfers.

Related: UK chancellor names CBDC on list of financial reforms for Treasury

In addition to extensive infrastructural cooperation on technological interoperability and payment system access, there would need to be a similar level of regulatory coordination, implying the alignment of supervisory and oversight frameworks for cross-border flows and the coordination of AML and CFT measures.

While most countries are studying or developing pilots for CBDCs, central banks have taken a wide variety of distinct approaches to CBDC design and have paced their research and development efforts differently. China’s digital yuan is well ahead of the international game, and multiple countries have piloted CBDCs for cross-border use, including France, Switzerland, Singapore and Bahrain, to name just a few.

Israeli defense minister authorizes seizure of Hamas-tied crypto accounts

Hamas' efforts to raise funds via crypto had reportedly accelerated following the 11-day war between Israel and the organization in May of this year.

Israeli defense minister Benny Ganz has signed an order authorizing security forces to seize cryptocurrency accounts believed to be tied to the militant wing of Hamas, the de facto ruling authority of the Gaza Strip in Palestine. 

Ganz has said that a joint security operation between the Ministry of Defense's National Bureau for Counter Terror Financing and the security forces had “uncovered a web of electronic wallets” thought to be tied to Hamas and its ongoing fundraising efforts using Bitcoin (BTC) and other cryptocurrencies. 

Hamas' long-running efforts to raise funds via crypto had reportedly recently accelerated following the 11-day war between Israel and the organization in May of this year. In his statement, Ganz presented “the intelligence, technological and legal tools" that had enabled the authorities to intercept the funds as "an operational breakthrough.”

Details of the wallets seized by the ministry reveal that they contained Tether (USDT), Ether (ETH), Dogecoin (DOGE), XRP, Binance Coin (BNB), Zcash (ZEC), Litecoin (LTC) and multiple other altcoins. A significant number of wallets have been linked to named individuals but the majority have been designated by the authorities as anonymous.

Hamas has turned to cryptocurrencies due to its financial isolation, which stems from its classification as a terrorist organization, in whole or in part, by several countries and international blocs — including the United States and the European Union. Russia, Turkey and China are among those who do not designate Hamas as a terrorist entity. 

Related: Hamas’ militant wing reportedly using multiple BTC wallet addresses to elude authorities

Having governed the Gaza Strip since 2007, the organization comprises a social service arm, “Dawah” and a militant wing, “Izz ad-Din al-Qassam Brigades,” the latter of which has been behind much of Hamas' documented Bitcoin fundraising activities. Over the years, the al-Qassam Brigades have evolved increasingly sophisticated strategies to prevent investigative authorities from red-flagging wallets associated with their campaign.

According to a cyber desk report from the IDC’s International Institute for Counter-Terrorism (ICT) published in 2020, digital wallets allegedly tied to both Hamas and the Iran-affiliated al-Nasser Salah al-Deen Brigades (the military wing of the Palestinian Popular Resistance Committees) had succeeded in raising almost 3,370 BTC over a four-year period

Survey: 21% of UK crypto investors say they know almost nothing about it

A new survey reveals that nearly two in five crypto investors in the U.K. admit their understanding of the sector was "poor or non-existent" when they first purchased cryptocurrency.

A new survey paints a bleak picture of British crypto investors' motivations, knowledge and exposure when it comes to their investments.

Almost two in five (36%) of retail crypto investors in the country have conceded that their understanding of the sector was "poor or non-existent" when they made their first investments. As time has gone on, 21% of investors holding crypto still rated their knowledge of the sector as being equally low.

The survey was conducted by Oxford Risk, a commercial software firm whose focus is on products for wealth managers and financial services firms.

While small – just 1,038 respondents – the research sample for the survey was reportedly weighted to reflect the United Kingdom's demographic profile.

In addition to low levels of investment literacy when it comes to crypto, the survey indicated that demand for digital assets was driven by FOMO, or fear of missing out. Some 35% of respondents said they read widely about skyrocketing crypto prices and 15% said they had been encouraged to invest in the sector by their friends or family. Greg B Davies, head of behavioural finance at Oxford Risk, said:

“The concern is that too many people are buying blind without knowing what they’re doing and are being influenced to invest by rising prices and other people encouraging them to have a go. That is worrying if people have substantial amounts invested in cryptos and do not understand what they have bought.” 

A large minority are also still unsure about the market’s future: 45% responded that they don’t know whether there will be continued price appreciation, 32% were unconvinced there would be, and 24% were firm believers that there would. Regardless, 21% of respondents plan to either buy crypto for the first time this year or increase their current holdings. 

Notably, most investors have put in relatively small amounts of cash into the sector: 81% said they’d bought just a bit of crypto in the spirit of “see what happens,” 76% have invested less than 5% or less of their total savings and 41% less than 1%. 7% of investors, however, have staked as much as 20% of their total assets in crypto, whereas 10% have staked more than 10%.

According to a recent study by the U.K.’s Financial Conduct Authority, 2.3 million adults in the country held crypto assets as of June 2021, up from 1.9 million last year. In addition to the increased number of investors, the FCA found that median holdings had risen to £300 ($420), up from £260 ($370) in 2020.

This uptick was accompanied by an increase in awareness levels, with 78% of U.K. adults saying they’d heard of crypto — again, up from 73% the previous year. However, just like Oxford Risk, the FCA remarked on a notable decline in the understanding of crypto, similarly suggesting that many consumers did not understand the technology and industry.

Young Koreans’ debt soars as they turn to crypto, stocks and real estate

Millennials and Gen Z in South Korea have been struggling to survive an economy characterized by high asset inflation and suppressed wages.

Household debt for younger Koreans — those born from the 1980s onward — has surged to $22.7 billion, up from $3.9 billion from last year. 

Data from South Korea's Financial Supervisory Service (FSS), released today by Representative Kim Han-jeong of the Democratic Party of Korea, reportedly indicates that the high levels of lending are attributable to an increase in investments in cryptocurrencies, stocks and real estate.

While millennials and Gen Z accounted for roughly 34% of total household debt in Korea in 2019, that figure grew to 45.5% by 2020 and is now at 50.7%. Rep. Kim has called for government measures to help manage the debt and reduce the risks of default, stating:

“They have been lending excessively to buy real estate amid surging asset prices. The young generations have been burying themselves in stock investment and buying cryptocurrencies.”

The FSS data provides a degree of granularity, revealing that these generations’ home-backed lending has soared from $2.8 billion to $16 billion, while credit loans increased from $1.1 billion to $6.7 billion on the year.

Rising debt has become a fundamental part of the wider socio-economic story of younger Koreans. A Bloomberg article published in fall 2020, aptly titled “Broke Millennials Turn to Day Trading to Strike It Rich in Korea,” cited one 27-year old who said:

“In Korea, us 20-somethings only have two ways to get rich: Either we win the lottery or trade shares. We know we will never be rich on whatever wages we earn. We will never earn enough to buy a home.”

While the article focused on the turn to day trading in traditional stocks on apps like Robinhood, the same underlying dynamic — suppressed wages, a “frozen job market” and rising real-estate prices — is fueling their reliance on bank loans to make other investments they believe could pay off in the medium- or long-term, such as crypto and real estate.

Lee Han Koo, an economics professor at the University of Suwon, characterized this dynamic as “desperate,” noting that this socio-economic environment has fueled a perception among youth that trading represents a “once-in-a-lifetime opportunity” to break out of an insurmountable impasse. 

Related: South Korea's 'Kimchi premium' is back: Is the Bitcoin rally starting to heat up?

According to an IMF report from August 2020, Koreans’ household debt-to-disposal income of 180% is now the highest among OECD countries. House prices, as in many OECD countries, have been on an uninterrupted tear since 2014. Whereas the country’s gross national income per capita is $32,047, the median price of apartments in Seoul — where half of the population lives and half of the firms are based — was close to $800,000 last fall.

Locked out of the housing market and trapped by stagnant wages, Koreans’ turn to speculation — ranging from hedge funds to biotech to crypto — was central to Bitcoin’s (BTC) infamous “Kimchi bubble” of 2017. With longer-term economic trends now exacerbated by the pandemic, Bitcoin’s premium in Korea again surged to yearly highs this spring.

Report: Vietnam’s PM asks State Bank to trial digital currency on blockchain

Vietnamese news outlets have reported that the country's prime minister, Phạm Minh Chính, has tasked the State Bank with studying and conducting a pilot for a digital currency.

The State Bank of Vietnam is reportedly set to become the latest central bank to delve into explorations of the feasibility and operationally of central bank digital currencies (CBDCs). 

Its brief, distinct from some other countries, is to trial a digital currency that would expressly be built on blockchain technology, rather than a centralized protocol.

According to a July 3 report from the English-language daily Viet Nam News, Prime Minister Phạm Minh Chính announced the initiative as part of his wider e-government development strategy. The central bank is expected to work on the development and implementation of the pilot from 2021–2023.

Vietnamese politicians' embrace of blockchain technologies in principle remains distinct from their broad hostility to the decentralized currencies that have popularized the underlying protocols. The country banned Bitcoin (BTC) as a means of payment in 2018, while retaining individuals' and enterprises' rights to privately invest in crypto.

The ban was soon followed by a directive to credit institutions to restrict services provided to digital currency-related activities in order to mitigate money laundering risks. Despite both moves, there has not been a formal regulatory framework in place for crypto exchanges operating in the country.

Since spring 2020, this hostile but relatively off-hands approach has begun to shift. In May of that year, Vietnam's Ministry of Finance agreed to establish a research group charged with studying and making policy proposals regarding cryptocurrencies and digital assets. That group, which includes the State Bank, also includes the country’s securities regulator, the Department of Banking and Financial Institutions, the General Department of Vietnam Customs and others.

Huỳnh Phước Nghĩa, deputy director of the Institute of Innovation at the University of Economics Ho Chi Minh City (UEH), told reporters that as cashless payments continue to increase in the country, recognition of digital currencies by the State Bank would help to further accelerate this process. In Nghĩa's view, “digital money is an inevitable trend” and conducting the pilot will help the government to assess the pros and cons of various approaches and to explore appropriate management mechanisms.

Related: Vietnam’s ministry of education to record certifications on blockchain

Another interviewee, Lê Đạt Chí, who is deputy head of UEH’s Finance Faculty, stressed that acting fast would be necessary for the country to be competitive as momentum behind CBDCs continues to grow. 

 Viet Nam News contends that CBDC issuance could be useful for smaller countries in a global system dominated by the United States dollar, and, to a lesser extent, the euro and yen. Chí however, in addition to calling for an acceleration of CBDC study and development, stressed the potential risks for the country's financial and monetary security. A representative from NextTech Group — a group of companies focused on digitized commerce across South East Asia— argued that it is necessary for Vietnam to determine an official definition for cryptocurrency.

Prior to the government setting up its research group in May 2020, Vietnamese police officials urged citizens not to participate in crypto investment schemes. This March, Vietnam's Ministry of Finance itself warned the public about the risks of cryptocurrency investment, given the industry's still-unregulated status in the country.

Indian IT giant Tech Mahindra partners on blockchain system for vaccine tracing

Aiming to tackle the supply chain issues that impact the stock and expiry of COVID-19 vaccines, Tech Mahindra and blockchain firm StaTwig will roll out a “VaccineLedger” solution worldwide.

As mass vaccination programs against COVID-19 become increasingly critical to many governments' strategies for pandemic management, blockchain firms are acting fast to propose ways in which the technology could offer solutions to some of the logistical hurdles involved.

Blockchain company StaTwig — a graduate of the UNICEF Innovation Fund — was already trialing its blockchain-based solution VaccineLedger in 2019, in both India and the United States. Fast forward to 2021 and the global vaccination drive against COVI-19, the company has now partnered with Indian IT giant Tech Mahindra to roll out the solution worldwide.

VaccineLedger is focused on improving the transparency of vaccine supply chains at the vial level, aiming to predict and prevent issues such as stock expiry, counterfeiting, quality control and availability. Just days after an attempted vaccine swap deal between Israel and the United Kingdom failed to come together — resulting in the imminent waste of 1 million Pfizer doses — the need for such a solution is more conspicuous than ever.

StaTwig's solution supports the integration of smart contracts and IoT technologies in order to detect products due to expire and ensure temperature control for sensitive units. By partnering with Tech Mahindra, StaTwig will draw on the company's expertise in resource scale and system integration in order to support the solution's implementation worldwide.

In addition, both companies have co-developed enterprise several security modules for the solution's mobile and web application, designed to meet the various requirements of manufacturers and governments in different jurisdictions.

The challenges faced by various countries remain uneven: in the United States, millions of COVID-19 vaccine doses are currently at risk of expiring this summer due to vaccine hesitancy in many states. Most countries in the Global South face an even more critical problem — a lack of vaccines altogether. Whereas countries in the Global North account for 85% of shots administered worldwide, the lowest-income countries currently account for just 0.3% of vaccine doses administered to date.

Related: Tech Mahindra to build multiple blockchain solutions on Amazon’s blockchain

While a globally integrated, efficient ledger solution cannot overcome vaccine inequality, whose roots are political, it can aim to help global actors mitigate the worst effects of waste, red tape and delivery delays due to logistical inefficiencies. In areas where vaccines remain scarce, these efficiency gains could help to ensure that what little is available is swiftly and maximally used. Tech Mahindra's Rajesh Dhuddu has clarified the product's scope and goals, stating:

“Wastage of life saving drugs such as vaccines should be addressed on priority and we need to come together in order to effectively find a solution here. Our strategic partnership with StaTwig will provide supply chain participants with a single application to enhance traceability, and chain of custody. This will not only ensure safety and validity of vaccine supply but also help in adherence to complex regulatory requirements, set up by Drug Administration Authority in any country.”

As previously reported, the U.K.'s National Health Service has already used, at a limited scale, a system based on Hadera Hashgraph to monitor vaccine cold storage. Meanwhile, blockchain technologies are being used to manage vaccination records and digital health passports

Xapo co-founder gets regulators’ green light for new crypto startup

Licechtenstein's Financial Market Authority has approved a new startup called Lirium, which was founded by a Xapo co-founder and aims to streamline the integration of crypto services by banks and fintechs.

The latest project from one of wallet provider Xapo's co-founders, Federico Murrone, has secured the go-ahead from Liechtenstein's financial regulator for his new startup Lirium to provide its crypto solution for banks, fintechs and marketplaces worldwide.

The project, called Lirium, offers a plug & play backend solution that aims to enable various partners – whether they be neobanks, fintechs or traditional banks – to include crypto in their product offerings without the headache of themselves developing technical capabilities or dealin with compliance matters.

Lirium removes the need to manage crypto liquidity or implement their own security measures, as the solution runs the gamut of their regulatory, technical, operational and security needs. It's hoped that the regulated provision of Lirum's backend solution will remove barriers to various neobanks, banks or marketplaces choosing to enable their clients to buy, sell, send and securely store crypto.  

Murrone has emphasized that the goal of the solution is to help bridge the gap between increasingly popular neobanks, various digital wallets and mobile apps and the crypto sector.

Lirium's approval by Liechtenstein's Financial Market Authority (FMA) will mean that its partners will not need to themselves obtain licenses in their jurisdictions. To get the go-ahead from the FMA, Lirium was required to prove it can meet a host of European compliance and legal standards encompassing data security, governance, the safeguarding of customer funds and customer rights.

Some of these requirements demand that Lirium segregates all customer funds from its own, is subject to ongoing audits and oversight, and retains a team that has been thoroughly vetted for its experience and reputation.

Related: Liechtenstein’s Parliament Unanimously Approves New Blockchain Act

Alongside Murrone, who serves as Lirium's CEO, the Lirum team includes Martin Kopacz, formerly chief compliance officer at Xapo, who will be the company's chief operating officer. 

Liechtenstein's FMA has also been a backer of tokenized stock offerings in the European Economic Area and continues to consolidate the country's established position as a crypto- and blockchain-friendly jurisdiction.

Huobi imposes 24 hr crypto withdrawal delay to dampen speculation

The exchange's decision aligns squarely with Beijing's ongoing and multi-pronged crackdown on the country's cryptocurrency investors in its attempt to prevent both capital outflows and volatility in the crypto sector.

Huobi Global, currently the world's second-largest crypto exchange by daily traded volume, has introduced a 24-hour token withdrawal delay for all over-the-counter (OTC) trades. 

The decision strikes a blow to all Huobi users, some of whom will moreover be prevented from withdrawing their tokens for as long as 36 hours if the exchange's assessment system judges them to be at particularly high risk. Huobi has said the move forms part of its attempt to “gradually introduce a number of risk control strategies encompassing a larger section of users." It adds that it expects the delay to "effectively avoid user losses caused by the inflow of risky funds and protect the safety of users' assets."

Notably, Huobi had been implementing a narrower version of this measure since August last year, when it first imposed a token withdrawal delay of up to 36 hours on specific, higher-risk users. 

The new, more comprehensive initiative seems to align squarely with Beijing's ongoing and multi-pronged crackdown on the country's cryptocurrency investors, which has recently targeted the mining sector, banking services and crypto's online footprint. In response to these restrictions, a large volume of crypto trading in the country has shifted to the OTC market, which is relatively unregulated and ensures that the transfer of fiat currency does not take place directly on exchanges' trading desks.

High levels of activity on the OTC market during regulatory clampdowns are an established pattern in China: back in 2017, when Beijing first took action against crypto exchanges, investors had similarly adapted by making the shift to OTC trades. Huobi itself first rolled out its OTC service in Nov. 2017 amid a series of ever-tighter restrictions on crypto trading in the country.

Related: Huobi bans crypto derivatives trading for users in China

Today's news goes against some analysts' predictions, who had expected Beijing to take a lighter-touch approach to OTC trading given that the sector is judged to pose lower capital flight risks than regular exchanges. Yet the South China Morning Post today reported that the OTC sector is perceived by the authorities to be a gateway for both capital outflows and money laundering, as well as a spur to high volatility in the crypto markets.

Late last month, Huobi updated its user agreement document, banning crypto derivatives trading for all existing customers in China and a host of other jurisdictions. Earlier in June, the platform had already intervened to prevent new users from trading derivatives in parallel to reducing the allowable trading leverage from 125x to less than 5x.

Binance tackles Travel Rule compliance after multiple bans

Following bans in Japan, the U.K. and Ontario, Binance is ramping up its compliance efforts with a specialized tool developed by crypto intelligence firm CipherTrace.

Binance, the world's top-ranked crypto exchange by daily trading volume, has faced a quick succession of bans on its operations in three different jurisdictions: Ontario, Canada; Japan; and the United Kingdom. While affected users continue to adjust to these quickfire developments, the platform appears to be stepping up its efforts to comply with international regulatory requirements — specifically, the industry-shaping so-called “Travel Rule.”

The Travel Rule, introduced by the Financial Action Task Force (FATF), requires regulators and virtual asset providers (VASPs) — including crypto exchanges, custody providers and over-the-counter trading desks — to gather and share customer data during transactions. The rule came into effect in 2020 and broadly parallels the requirements already in place for money transmitters in countries like the United States, where money transmitters are required to record identifying information of all parties engaged in fund transfers made between financial institutions.

However, adherence to the rule has been complicated for many crypto exchanges worldwide due to the discrepancies between various countries' particular transpositions of the FATF's framework. For this reason, Binance — following in the steps of other VASPs — is choosing to implement a specialized tool developed by crypto intelligence firm CipherTrace that has been adapted to tackle some of the challenges that VASPs are faced with. 

Dubbed "Traveler" — named after the rule it has been designed to address — the tool continues CipherTrace's longer-term work on an open-source Travel Rule Information Architecture — and is designed to handle the counterparty VASP due diligence demanded by the FATF. The company's CEO, Dave Jevans, said that CipherTrace is "confident that Traveler will help Binance to continue to meet the highest standards for global Anti-Money Laundering compliance, particularly as regulation of VASPs tightens in jurisdictions around the world." He added that the solution aims to enable AML compliance "without compromising security or operational continuity."

Traveler aims to simplify the process by which VASPs vet transactions, automatically identifying VASP-to-VASP transfers along with the recipient VASP. The tool is designed to ensure that sensitive, personal and identifiable information associated with confirmed crypto transactions remains confidential and is only shared between institutions that are compliant with the Travel Rule themselves. Using an encrypted, mutually authenticated infrastructure, Traveler also issues Know Your Customer VASP digital certificates and automates the onboarding and vetting of new counterparty VASPs, including those in jurisdictions that have not yet implemented the required information sharing regulations.

Related: Crypto firms still not widely adopting ‘Travel Rule,’ says FATF deputy

As reported, the first regulatory action targeting Binance's operations this month was imposed on June 25 in Japan, where the Financial Services Agency issued a warning to the exchange, accusing the company of offering its services to Japanese users without the necessary registration. On the same day, Binance announced that it would cease providing services to users located in Ontario, where the province's regulator has been extremely proactive in scrutinizing and taking action against crypto firms for their operations. 

Soon after these developments, the U.K.'s Financial Conduct Authority ordered Binance to cease all regulated activities in the country. Binance’s U.K. customers are currently unable to use the popular fiat on-ramp service Faster Payments to withdraw British pounds from the platform.

Australian regulators seek public input on crypto ETPs

The Australia Securities and Investments Commission has indicated that Bitcoin and Ether are the only two crypto assets likely to meet its evolving criteria for a regulated crypto ETP.

The Australia Securities and Investments Commission (ASIC) is seeking public feedback on on crypto-asset exchange-traded products (ETPs), stating that it is aware of rising interest and demand in their launch on regulated Australian markets.

In a consultation paper released June 30, the regulator said its top priority was to assess whether the “unique and ever evolving features” of crypto-asset ETPs could meet existing regulatory obligations in a consistent fashion. Given this complexity and the fast pace of change in the industry, ASIC notes it deems it necessary to consult widely in order to assess the two key issues at stake:

“(a) whether these products can meet existing expectations for ETPs, including whether crypto-assets are appropriate underlying assets, whether crypto-assets can be reliably priced, and how crypto-assets should be classified with respect to underlying asset rules; and (b) how product issuers can ensure these products are compliant with our regulatory framework, including with respect to custody, risk management and disclosure.”

ASIC's paper indicates that the regulator does not consider that all crypto assets are currently able to serve as appropriate underlying assets for an ETP, taking into account its assessment of the maturity of the industry's spot and the level of regulation of its futures market. However, the regulator is open to approving a crypto asset ETP that could meet all its relevant assessment criteria. Here, the regulator notes:

"At this point in time, in our view, the only crypto-assets that are likely to satisfy these factors are bitcoin (BTC) and ether (ETH)."

ASIC's initiative appears to have been galvanized both by the recent listing of an Ethereum ETP on the Toronto Stock Exchange — something that ASIC explicitly notes in its paper — and ongoing considerations by the Australian Securities Exchange (ASX) of several crypto ETP applications.

In recent months, ASIC has become increasingly proactive in reaching out to domestic blockchain and crypto firms and has been attempting to build trust and collaborate with the crypto economy. The regulator has, however, received criticism from some of these firms for the perceived opacity of existing regulations and crypto companies' compliance obligations.

In its statement, ASIC stresses that the way in which crypto assets themselves are classified and regulated in Australia is a question for the government. The Senate Select Committee on Australia has been assessing options for the development of a comprehensive regulatory framework for crypto and digital assets, and ASIC emphasizes that its paper does “not seek to pre-determine any decision the Committee may make.”

Related: VanEck and BetaShares apply for Aussie crypto ETFs as family offices snap up BTC

Feedback from the public will need to be submitted to ASIC by July 27. Respondents can choose to submit their responses openly, anonymously or using an alias. 

Speaking with Cointelegraph, BetaShares founder and CEO Alex Vynokur addressed ASIC's consultation question as to whether it would be appropriate to offer retail investors exposure to crypto assets underlying ETPs through a licensed Australian market. Vynokur said that BetaShares, as a local provider of ETP's and other ASX-traded funds, holds the view that this approach would offer consumers better protection than direct access through exchanges.

Vynokur also agreed with the proposal that regulated investment products like ETPs should be limited to a “small subset of crypto-assets, that can demonstrate robust liquidity, transparency and price discovery.”

Expect even more oversight of crypto from regulators, says eToro

Yonni Assia believes that unprecedented retail investor interest will push regulators to be more proactive about crypto regulation.

Crypto-friendly trading platform eToro is expecting regulators to ratchet up their oversight of the crypto industry, given the increasingly high levels of participation by retail traders and smaller investors. In comments for the Financial Times, the Israel-based company's CEO, Yonni Assia, said:

“We are seeing a significant increase in the interest of retail investors and traders in the crypto market. As a part of that growth we should expect also regulators to carefully look at this growing business of retail investors in the crypto markets.”

At the start of this year, eToro had itself struggled to keep up with “unprecedented” demand from crypto traders, with over 380,000 new users opening accounts over the span of 11 days.

Assia's comments to the United Kingdom's leading financial newspaper also follow hot on the heels of an intervention by the country's  Financial Conduct Authority, which this week ordered leading crypto exchange Binance to cease all regulated activities in the U.K.

While more regulation is a foregone conclusion, in Assia's view, he also argued that “the most important thing for regulators is to understand crypto, and understand that it is here to stay.” The eToro CEO has a perspective that spans several different jurisdictions. Based in Israel, almost 70% of eToro's users are in Europe, and the company now has its sights on the United States, where it hopes to go public following a merger with a special purpose acquisition company (Spac).

Crypto literacy is not only key for regulators, Assia said, but traders themselves need to be sober about the risks they are courting in a fast-paced industry. He stated, "An asset that went up 100 per cent can very easily go down 50 per cent. There’s no doubt that if something went up 1,000 per cent it’s very volatile, and you should understand that as part of your portfolio allocation.”

Founded in 2007, eToro has supported Bitcoin (BTC) trading since 2013. Crypto assets reportedly accounted for 16% of its revenue in 2020 and the platform's users number 20.6 million as of the first quarter of this year. In that same quarter, the company saw new registrations hitting the three-million mark — a major uptick, as during the course of 2020, eToro had onboarded roughly five million new users in total. 

Related: eToro going public: CEO Yoni Assia reveals key details behind the move

Assia has previously characterized 2020 as a “big year for stocks,” but noted that 2021 has been “dominated by crypto headlines.” Already in late January, he noted that crypto trading volumes at eToro were up more than 25 times compared with the same period last year.

While Assia has attributed likely regulation to increased consumer demand, other industry experts have a different view. Speaking to Cointelegraph earlier this month, Marc Powers, a law professor and former attorney at the Securities and Exchange Commission, said:

"Regulation [...] will be primarily for the benefit of the sovereigns and banks, not truly for consumers or investors. As a result, I see a continuation of a dual system, one crypto-owned, used and managed by the people, the other — the traditional financial system, which will eventually offer central bank digital currencies to its population.”

Crypto exchanges could sue Korean gov’t for ‘passing the buck‘ to banks

With many crypto exchanges in South Korea now on a precipice as a new regulatory framework kicks in, some are threatening to sue the government over its alleged shirking of key responsibilities.

With the implementation of new rules from South Korea’s Financial Services Commission (FSC), many smaller cryptocurrency exchanges in the country fear they will be forced to shut down. 

These rules require that each exchange must prove it has a real-name account held at a Korean bank by Sept. 24 2021 — the hitch being that domestic banks are refraining from engaging in any risk assessment for applicant exchanges, save for the country's top four trading platforms. 

Smaller exchanges are now reportedly considering suing the government for its alleged failure to take responsibility for much of its regulatory remit, according to a report from Business Korea. As part of the FSC's new rules, domestic banks are required to refuse their services to any crypto exchange client they deem to have failed to comply with ID verification measures or to report suspicious activities.

In the words of one industry official, the government and financial authorities have essentially passed on much of the responsibility for the vetting of crypto exchanges onto banks, who are thereby being “forced to take responsibility for issuing real-name accounts.”  

Given that the Korea Federation of Banks and several commercial lenders have already appealed to the FSC against the new rules — fearing their own prospective liabilities for financial crimes on crypto exchanges — the government could thus soon be facing pressure on all sides. 

Business Korea claims that an undisclosed number of exchanges are considering filing a constitutional appeal against the government and financial regulators for their perceived abdication of responsibility in regulating the industry and ensuring best practices.

K Bank, NH Bank and Shinhan Bank are all reportedly engaged with vetting the Korean crypto industry's big names: UPbit, Bithumb, Coinone and Korbit. Yet a similar engagement is being withheld from lesser-known platforms, for whom banks are loath to assume responsibility. One anonymous crypto exchange representative told reporters:

“These days, banks are refusing to initiate their cryptocurrency exchange verification processes without clear reasons and most exchanges are failing to get a chance to prove themselves [...] The Financial Services Commission needs to step in right away.”

Related: Korean banks will need to classify crypto exchange clients as ‘high risk’

Twenty crypto exchanges in Korea had already met for a closed-door meeting with the FSC's Financial Intelligence Unit earlier this month, where they had already reportedly expressed their concerns about obstacles to satisfying the real-name account requirements, among other operational difficulties. Then as now, only the “big four” exchanges appeared to have any chances of securing a future under the new guidelines.

In addition to the absence of engagement, the fees involved in forging such banking partnerships are prohibitively expensive for most smaller operators. It is estimated that the changes wrought by the new rules, as part of a larger suite of new crypto-specific regulations, are set to affect roughly 60 exchanges in the country. 

Palestine monetary authority mulls digital currency as ‘political signal‘

Analysts note that the occupied territories' macroeconomic and political conditions don't allow for a digital currency to operate as a means of exchange but stress its potential value at a symbolic level.

Palestinian Monetary Authority (PMA) Governor Feras Milhem has revealed that the proto-central bank — which does not issue a domestic currency and operates under highly restrictive political and economic conditions — is exploring the idea of issuing a Palestinian digital currency.

Raja Khalidi, director of the Palestine Economic Policy Research Institute, told Bloomberg that “the macroeconomic conditions don’t exist to allow a Palestinian currency — digital or otherwise — to exist as a means of exchange.”

Khalidi argued, however, that the PMA’s issuance of some form of digital currency may “send a political signal to show apparent appearance of monetary autonomy from Israel.” Khalidi’s view has been echoed by Barry Topf, former senior adviser to the Bank of Israel's governor, who has claimed that any Palestinian digital currency is “not going to replace the shekel or the dinar or the dollar. It’s certainly not going to be a store of value or a unit of accounting.”

The occupied territories of the West Bank and Gaza may not seem to be the most propitious place to launch a centrally issued digital currency. The former has been subject to a 14-years blockade that has brought its economy to near collapse, subjected to severe Israeli restrictions and enduring four wars since 2008. 

The latter is under the jurisdiction of the Palestinian Authority (PA), which has only limited — administrative but not military — powers of governance in under 40% of the West Bank. The PMA's jurisdiction is distinct from that of the PA's, extending to Gaza and West Bank areas under full Israeli control.

Under the terms of the Paris Protocol of 1994, the PMA has central bank-like powers but cannot issue its own currency. The West Bank and Gaza remain primarily reliant on the Israeli shekel, alongside the Jordanian dinar and the U.S. dollar. 

In an interview with Bloomberg Television on June 24, Milhem said that the PMA was now studying the issue of digital currencies, in line with central banks worldwide, but that no decision has been taken to proceed to issuance. Asked about the potential benefits of such a move, Milhem addressed the specific challenges faced by the institution:

“We aim to limit the use of cash, especially Israeli cash. We have excessive Israeli cash in our market that we have problems transferring to the Israeli side [...] our strategy is to use a digital currency for payments systems in our country and hopefully [...] to use it for cross-border payments.”

The shekels glut in Palestinian banks is due to Israeli restrictions on large cash transactions, which were imposed citing Anti-Money Laundering concerns. Israel also restricts how many Palestinian banks are able to transfer back into Israel each month, presenting a significant difficulty given that both economies overlap in extensive and complex ways.

At various junctures, Israeli banks have also threatened to suspend correspondent services to Palestinian banks. With shekels in overabundance, Palestinian banks are sometimes forced to take on additional loans to meet their foreign exchange liabilities to third parties.

Israel also manages the Palestinians' taxes, and belatedly released $1.14 billion in revenue collected on the PA's behalf in December 2020, after a seven-month-long political crisis surrounding Israel's bid for further illegal annexations of West Bank territories that would be de jure and not only de facto, as now.

Related: Palestinian Authority Considering Crypto to Replace Israeli Shekel

In this fraught political, institutional and macroeconomic context, with the occupied territories still heavily reliant on aid donations and Israeli remittances and the economy strained by both Israeli actions and the impact of the global pandemic, analysts have noted that digital currency issuance may be more a question of political symbolism than monetary pragmatism.

Back in 2019, then Palestinian Prime Minister Mohammad Shtayyeh Raif said that, in a bid to try to better insulate the Palestinian economy from Israeli restrictions and political threats, he would consider using cryptocurrency as an alternative to the shekel

Then as now, however, analysts argued that “the problem of the Palestinian economy is not the currency but rather a complex economic and political reliance on Israel,” noting that a different currency could lift neither import/export blockades nor the withholding of tax clearance funds.

NYC’s mayoral frontrunner pledges to turn city into Bitcoin hub

Eric Adams, who has outstripped the better-known crypto advocate Andrew Yang in New York City's mayoral race, has made his own Bitcoin pledge as he retains his first-place lead.

Within the same month, talk of the United States' budding capital of crypto has seemingly shifted its center from Miami to New York City.  June opened with feverish excitement about the largest Bitcoin (BTC) event in history being hosted in Miami, and the city's mayor, Francis Suarez, has taken a series of steps to strengthen his bid to make Miami the top spot for crypto not just nationally but globally.

Yet with U.S. pundits now focused on New York City's mayoral race, the current frontrunner for the Democratic nominee, Eric Adams, has — at least momentarily — stolen the limelight from Suarez and his plans. On election night on Tuesday, soon after voting had closed for the primaries, Adams pledged:

“I'm going to promise you: In one year — one year — you're going to see a different city. [...] We're going to become the center of life science, the center of cybersecurity, the center of self-driving cars, drones, the center of Bitcoins. We're going to be the center of all the technology.”

In a city known for its overwhelmingly Democrat-leaning voting record, successful candidacy as Democratic nominee is viewed by most commentators as a surefire route to becoming the city's actual mayor once elections are held in November later this year. 

Adams' frontrunner status, moreover, was cemented soon after another candidate, Andrew Yang — himself a staunch crypto advocate — conceded defeat after the first vote count results indicated that his rival was well in the lead. Within hours, Adams had seemingly taken the words out of Yang's mouth — literally.

Related: Andrew Yang says he'll transform NYC into a Bitcoin hub if elected mayor

Adams is a former police officer and was a self-described “conservative Republican” early in his political career. He has successfully tapped big donor funds, positioned himself as tough on crime and aligned himself with the real estate industry, all the while appealing to local unions, parties and churches by pitching his fidelity to “values instilled in him by his single mother when he struggled with hunger and homelessness as a young man.” 

While progressives have, unsurprisingly, been highly critical of Adams, his strategy also had the effect of ensuring that Yang continued to tack right. Yang's recent political history has been intense, including a rumored shortlisting for the role of commerce secretary in President Joe Biden's cabinet and a high-profile presidential campaign, neither of which ended up positively for his crypto community fans. With Yang now out of the mayoral contest, what may have seemed a blow to the industry may just as quickly have turned out to be a hopeful opportunity.

Bank of Israel steps up CBDC efforts with reported tests on Ethereum

The Bank of Israel has experimented with using Ethereum and nonfungible tokens for a pilot as part of its ongoing digital shekel research, a local report claims.

Israel's central bank has allegedly completed a pilot — under the radar — for a central bank digital currency (CBDC) using Ethereum's technology. The claim was made by the Israeli financial news site Globes and later reported by BNN Bloomberg.

Globes' sources for its claims are not disclosed: the report alleged that the Bank of Israel (BOI) completed its pilot in an experimental, closed environment based on Ethereum's architecture, involving the trial issuance of tokens representing digital shekels and their transfer between digital wallets. 

Globes also claimed that as part of its pilot, the BOI successfully tested its ability to program a car ownership certificate transfer using nonfungible digital tokens (NFTs) and completed a transaction wherein NFT payment was made the condition of the certificate's transfer and vice versa. The transaction was instantaneous without any risk or need for a central intermediary or trustee.

This application, the report stated, represents just one possible example of what payment services providers, tasked with providing digital wallets for the public, could be able to build. The BOI has reportedly asked industry actors to propose various smart applications that could prospectively be built upon the infrastructure of a future digital shekel.

Globes however contended that, broadly speaking, the central bank has not been forthcoming about its current experimental CBDC research. As reported by Cointelegraph, the BOI's deputy governor only revealed that a preliminary CBDC pilot was in fact already being conducted during a discussion held at the Fair Value Forum at Herzeliya IDC earlier this month. 

Globes characterized the deputy governor's concession as the result of his having been “pushed into a corner” and criticized the central bank for not reaching out to local industry sufficiently as it begins to investigate the highly complex issue of CBDCs.

The BOI did, however, publish an in-depth report last month outlining its analysis and examination of various alternatives and models for a prospective CBDC, all the while emphasizing that the document and its proposed draft CBDC model was only meant to serve as a basis for discussion, not as a blueprint: 

”This draft does not represent a decision of the Bank of Israel regarding the characteristics of the digital shekel, if issued. The draft model forms the basis for discussion and examination of alternatives by the working teams dealing with the issue at the Bank of Israel, and, following the publication of this document, it will also serve as a basis for discussion in the professional community in Israel about the characteristics required for the digital shekel.”

Related: Israel's central bank floats possible digital shekel with new action plan

This engagement with CBDCs signals renewed momentum and interest in CBDCs at the institution, after a team led by former governor Dr. Karnit Flug had recommended against issuing a digital shekel in late 2018. 

While the BOI's report from May makes no mention of Ethereum, it does note that “the various opportunities that a digital shekel could offer for the innovation of the payments system in the Israeli economy include smart contracts, programmable money, and the like.”

Nor does the BOI's report from May make any mention of either smart applications or NFTs. It does, however, note the possible benefits of using distributed ledger technologies as compared to existing, centralized technologies, for different parts of the digital shekel ecosystem. 

The bank's report also stressed the interdependence of developments in digital identity technologies and CBDCs and pointed to the benefits of conducting proofs-of-concept that could help the institution to gauge the relevance, risks and benefits of a digital shekel for the Israeli economy at large. 

Denied electricity, world’s 5th-largest mining pool leaves China for Kazakhstan

Crypto mining pool BTC.com is leaving China after local authorities withdrew its power supply.

BTC.com — a major crypto mining pool that is operated by BIT Mining and owned by the NYSE-listed Chinese lottery service provider 500.com — has announced the successful relocation of its first batch of mining machines to Kazakhstan. 

BTC.com was founded by Jihan Wu and was operated by Bitmain and Bitdeer until its acquisition by 500.com this February. As of the time of writing, the pool is the world's fifth-largest, validating 10.4% of blocks on the Bitcoin (BTC) blockchain. 

The relocation comes after the company was notified by the state grid in western Sichuan province that the power supply serving one of its local data centers would be suspended imminently. In its announcement yesterday, BIT Mining stated:

“On June 19, 2021, the Company's indirectly held subsidiary, Ganzi Changhe Hydropower Consumption Service Co. Ltd [...] received notice [...] from State Grid Sichuan Ganzi Electric Power Co., Ltd. [...] informing Ganzi Changhe Data Center, that its power supply would be suspended, effective 9:00pm Beijing time, June 19, 2021. Ganzi Changhe Data Center has since suspended its operations. Data centers in Sichuan, including the Ganzi Changhe Data Center, contributed approximately 3% of the Company's total revenues in the month of May 2021.”

The intervention from the state grid comes amid an ongoing crackdown on crypto mining by the Chinese state due to concerns over the mining industry’s carbon footprint, which runs counter to China's decarbonization targets.

In areas such as Inner Mongolia, once popular with crypto miners, regional authorities have even established a dedicated hotline for the local public to directly report any suspected illicit mining activities. Amid these pressures, at least three mining firms — BTC.TOP, Huobi and HashCow — have recently been driven to cease their activities on the mainland

BIT Mining CEO Xianfeng Yang has gestured towards this backdrop, claiming that the company is “committed to protecting the environment and lowering our carbon footprint. We have been strategically expanding our operations overseas as part of our growth strategy. Following our investments in cryptocurrency mining data centers in Texas and Kazakhstan, we are accelerating our overseas development for alternative high-quality mining resources.”

Related: Bitcoin mining in China set for 'stricter supervision' due to carbon concerns

While China has been an early mover against crypto miners, authorities elsewhere are increasingly signaling their concerns about power-guzzling mining sites; for the most part less on climate grounds than for their impact on local energy provision. In late April, a former government official argued that crypto mining was a major driver of the energy crisis in Kyrgyzstan.  Similar concerns have been voiced in the Caucasus and Iran

In line with China, global regulators and nonprofits, Elon Musk this year made a notorious intervention when he announced the company would no longer be accepting BTC as payment for vehicles due to concerns about the high energy consumption of Bitcoin mining. 

Banks fall in line as China’s central bank cracks down on crypto accounts

AgBank — the world's third-largest bank by assets — has indicated it will follow the PBoC's cue and work to stamp out its clients' crypto-related activities.

The Agriculture Bank of China (AgBank) — the world's third-largest bank by assets — is set to implement Beijing's firm anti-cryptocurrency measures and rigorously vet its clients to ensure they are not engaged in any form of illegal activities involving crypto transacting, trading or mining.

Agbank's statement today followed the institution's meeting with the People's Bank of China (PBoC), which convened major domestic banks and mobile payment service providers and ordered them to ensure that banking and settlement services are denied to clients engaged in crypto-related transactions. An official PBoC statement today reiterated that all banks and payment institutions “must not provide account opening or registration for [virtual currency]-related activities.” It outlined:

“Institutions must comprehensively investigate and identify virtual currency exchanges and over-the-counter dealers’ capital accounts, and cut off transaction funds payment links in a timely manner; they must analyze the capital transaction characteristics of virtual currency trading hype activities [...] and ensure that relevant monitoring and handling measures are implemented.”

In addition to AgBank, the Industrial and Commercial Bank of China, the Construction Bank of China, Postal Savings Bank of China and the Industrial Bank, alongside mobile payments app AliPay, were all present at the PBoC meeting.

AgBank's statement is the first made by a Chinese state bank in line with the tenor of this year's renewed suite of anti-crypto measures, which have included the State Council’s Financial Stability and Development Committee decision in late May to curtail Bitcoin (BTC) mining amid financial risk concerns. 

Regional financial regulators in China have also upped their game and issued warnings against illegal crypto- and blockchain-focused financing platforms or advertising campaigns, as well as banning financial and payment institutions from “directly or indirectly [providing] services related to virtual currencies.” 

Agbank has indicated that it will immediately shut accounts and suspend ties with any clients found to be involved in cryptocurrency trading. The megabank initially appealed to its clients to report any suspected crypto-related frauds, although this request has reportedly since been deleted from the bank's statement.

Related: Bitcoin price dips to $32.5K on 'consistent' new China FUD

Having banned token issuance and crypto trading as early as 2017, during the market's first major bull run, this year has seen a consolidation of Beijing's antagonistic stance towards decentralized cryptocurrencies. In mid-May, three major Chinese trade associations — The China Internet Finance Association, China Banking Association and China Payment and Clearing Association — issued a joint statement warning the public about the risks of investing in cryptocurrencies.

Beijing's major crackdown on crypto mining has cited concerns over the industry’s carbon footprint, especially in areas such as Inner Mongolia. At least three mining firms — BTC.TOP, Huobi and HashCow — have been driven to cease their activities on the mainland. Social media networks and internet companies in the country have also fallen into line with the center's anti-crypto stance and have, over the last few months, censored crypto-related search results and banned crypto-related profiles.