Legal Round-Up (16/08-20/08)

Adam Berker

The 4th issue of our legal round-up.

The 4th issue of our legal round-up.

We continue with a series of weekly round-ups prepared by Mercuryo Legal Counsel Adam Berker to keep you updated on cryptocurrency rules.

DeFi Faces Strict Monitoring

The SEC will strengthen control of DeFi projects, even if they do not include fiat transactions in their business schemes. One of the reasons for applying a more intensive regulatory approach is that most DeFi platforms do not identify customers before providing services to them. In this case, services may be provided to US residents. 

The SEC may oblige DeFi companies to obtain a federal registration and fully comply with applicable Anti-Money Laundering regulation to control this flow.

Canada, Spain, Australia Are Tightening the Crypto Grip

Regulators all over the world impose restrictions on unregulated crypto companies. For example, the Canadian regulator alleged that the OKEx operator violated securities law, Spanish officials issued a warning on Huobi and Bybit for providing unregulated investment services, and the Australian regulator turned its attention towards unlicensed crypto businesses.

This approach illustrates that more and more governments try to expand their control on the industry. Nevertheless, there is still inconsistency between regulations in different countries, and it is a serious obstacle for businesses as most crypto companies conduct their activity globally. The best solution for this problem is to work out a unifying agreement between countries.

 For example, the European Union may implement a passporting system, which is now used for financial institutions. This system enables companies authorized in any EU or EEA state to conduct their activity freely in any other state with minimal additional authorization.

El Salvador Specifies How to Deal with Bitcoin

El Salvador issues draft bills for crypto regulation. The two proposed bills not only will declare Bitcoin as legal tender, but also set requirements for companies that plan to provide crypto services. Thus, such companies will be obliged to register with the Central Bank and observe the Know-Your-Customer procedure. Still, it is unclear what requirements will the KYC procedure include.

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