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The United States updates its crypto AML/CFT laws

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Against great push back from the crypto industry and as the price of Bitcoin (BTC) reached new all-time highs several times during the last couple of months, the United States has updated its cryptocurrency Anti-Money Laundering/Combating the Financing of Terrorism laws.

Related: COVID-19 pandemic spurs crypto law updates in J5 countries

The Anti-Money Laundering Act of 2020 and the Corporate Transparency Act

Last December, the Senate approved the National Defense Authorization Act and, as part of that legislation, passed the Anti-Money Laundering Act of 2020 and the Corporate Transparency Act.

Related: EU amends AML laws for crypto trading as US ponders

The Act’s provisions broaden and update the Bank Secrecy Act, or BSA, and the U.S. AML/CFT regime by:

  • Codifying existing FinCEN guidance related to digital currencies by expanding and modifying several definitions and provisions within the BSA to encompass “value that substitutes for currency.” Thereby, it requires businesses that operate with cryptocurrency to qualify as money transmitters to register with the Financial Crimes Enforcement Network and establish reporting and recordkeeping requirements for transactions involving certain types of digital currencies as detailed in proposed regulations issued by FINCEN (see below).
  • Requiring many smaller companies to disclose beneficial ownership information to FinCEN.
  • Prohibiting a person from knowingly concealing or attempting to concealing, falsifying or misrepresenting, from or to a financial institution, a material fact concerning the ownership or control of assets involved in a monetary transaction if “(1) the person or entity who owns or controls the assets is a senior foreign political figure, or any immediate family member or close associate of a senior foreign political figure” and “(2) the aggregate value of the assets involved in 1 or more monetary transactions is not less than $1,000,000.”
  • Creating awards to whistleblowers — up to 30% of monetary penalties recovered from an entity where the tip led to penalties over $1 million — who report actionable information about BSA AML/CFT violations.

Related: Better regulation needed to stop crypto tax evaders from running wild

Proposed AML/CFT cryptocurrency regulations

At the end of last year, the U.S. Treasury Department’s Financial Crimes Enforcement Network also issued proposed regulations looking to subject convertible digital currency or digital asset transactions to similar AML/CFT reporting requirements placed on other financial institutions by the BSA.

The new regulations, if adopted, would require entities covered by AML/CFT, including payments involving “unhosted wallets” (not held by a third-party financial system), to obtain and report the identities of parties engaging in cryptocurrency transactions if the transaction exceeds $3,000.

This information would include:

  • The name and address of the financial institution’s customer.
  • The type of cryptocurrency used in the transaction.
  • The amount of cryptocurrency in the transaction.
  • The time of the transaction.
  • The assessed value of the transaction, in U.S. dollars, based on the prevailing exchange rate at the time of the transaction.
  • Any payment instructions received from the financial institution’s customer.
  • The name and physical address of each counterparty to the transaction of the financial institution’s customer.
  • Other counterparty information the secretary may prescribe as mandatory on the reporting form.
  • Any other information that uniquely identifies the transaction, the accounts and, to the extent reasonably available, the parties involved.
  • Any form relating to the transaction that is completed or signed by the financial institution’s customer.

The new regulations will also require banks and money service businesses to report the same information for cryptocurrency transactions above $10,000 to FinCEN 15 days from the date on which a reportable transaction occurs. Structuring transactions to avoid the reporting requirements is strictly prohibited under the proposed rules.

Related: US crypto regulations will return Bitcoin to its digital cash origins

According to an official press release, Secretary Steven Mnuchin explained:

“This rule addresses substantial national security concerns in the CVC [convertible virtual currency] market, and aims to close the gaps that malign actors seek to exploit in the recordkeeping and reporting regime.”

As a result of the COVID-19 pandemic, governments around the world have been forced to focus on integrating blockchain technology into their financial services. As Secretary Mnuchin added:

“The rule, which applies to financial institutions and is consistent with existing requirements, is intended to protect national security, assist law enforcement, and increase transparency while minimizing impact on responsible innovation.”

Related: Cybercrime task force monitoring the global digital financial system

Separately, FinCEN announced its intention to amend the BSA’s Foreign Bank and Financial Accounts regulations to mandate U.S. individuals and entities to report cryptocurrency as part of their foreign financial accounts if they have more than $10,000 in cryptocurrencies with foreign financial or digital asset service providers.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Selva Ozelli, Esq., CPA, is an international tax attorney and certified public accountant who frequently writes about tax, legal and accounting issues for Tax Notes, Bloomberg BNA, other publications and the OECD.

Source: https://cointelegraph.com/news/the-united-states-updates-its-crypto-aml-cft-laws

Blockchain

Polkadot Gears Up for Parachains Launch: Unveils ‘Common Good’ Parachains

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Polkadot, the interoperable blockchain protocol spearheaded by Ethereum co-founder Gavin Wood, has announced its forthcoming parachain launch.

Parachains – application-specific blockchains that connect to the main network and benefit from its security and computing capacity – are viewed as the building block of Polkadot’s ecosystem. Initially, the plan was for 100 parachain slots, with an auction process determining who gets to ‘lease’ parachains for defined time periods.

However, according to a blog post published by the team on February 25, some slots will be made available for ‘governance-allocated parachains,’ also known as common good parachains. These common good parachains have been conceived to address the so-called “free rider” problem, wherein parachains can forgo contributing to elements (such as bridges) that may benefit the ecosystem as a whole.

Solving the Free-rider Problem

The free-rider problem is best understood with reference to an analogy. Supposing a levy is imposed on car manufacturers to offset pollution: in turn, vehicles’ cost is increased, and all drivers are forced to pay extra.

Although everyone will subsequently benefit from a less toxic atmosphere, only those who actually buy a car will have contributed: the others (cyclists, for example) are considered free riders.

Polkadot’s governance process will essentially earmark parachain slots for consideration outwith the auction process, with a Council and Technical Committee representing passive stakeholders and supplying technical guidance. Both groups will then decide whether to accept or reject the direct registration of certain parachains.

According to the blog post, both system-level chains and public-utility chains may emerge as blockchain categories that qualify as common good chains.

Any parachain, in other words, that the Polkadot team deem beneficial for the overall ecosystem – bridges, identity projects, and smart contract platforms and governance would all theoretically be under consideration.

Chains that help remove transactions from the Relay Chain and enable more efficient parachain processing seem the likeliest to be considered ‘common good.’

As noted in Polkadot’s blogpost:

“By allocating a subset of parachain slots to common good chains, the entire network can realize the benefit of valuable parachains that would otherwise be underfunded due to the free-rider problem.

Polkadot’s governance system is on the bleeding edge of social coordination and it will be exciting to see how it helps the network evolve to meet the needs of its constituent parachains and stakeholders.”

Polkadot Gears Up for Parachain Launch

The Polkadot team recently published a roadmap noting that all upcoming parachains will be tested on regular parachain testnets, like Rococo and on Kusama Network. The latter being Polkadot’s canary network.

Kusama is a proving ground for parachains, allowing developers to build and deploy them and experiment with Polkadot’s governance, staking, nomination, and validation functionality.

Once parachains are live, community members will have their say on which additional features and network upgrades should be incorporated over time.

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Source: https://cryptopotato.com/polkadot-gears-up-for-parachains-launch-unveils-common-good-parachains/

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Blockchain

Cardano Price Analysis: 28 February

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While a majority of the assets are still trying to recover from the recent price drop, Cardano managed to record a new all-time high over the past week. Clocking in a value of $1.48 yesterday, Cardano is currently one of the top three assets in the world and while the asset has registered a 10% drop over the past few hours, it has maintained its 3rd position with a market cap of $38 billion.

Cardano 6-hour chart

Source: ADA/USD on Trading View

The 6-hour chart of Cardano continued to indicate a rising price but the asset was moving within the trendlines of an ascending channel. With a couple of higher highs witnessed, the asset has dipped over the past 24-hours, and the correction may go even further in the charts. A bearish breakout should allow the asset to recover its position at a previously held range before addressing the higher range again in the future.

At press time, the 50-day Moving Average has continued to act as underlying support but a possible move below $1.12 is likely.

According to the VPVR range, the support range at $0.90-$0.95 could be tested since the trading volume at the price point has been significant over the past few weeks.

Market Indicators

Source: ADA/USD on Trading View

Market Indicators appeared a little on the neutral side at press time but considering the pattern was bearish, the indicators may head in the same direction.

Relative Strength Index or RSI is currently holding a position above 50 but the indicator suggested an increasing selling pressure in the chart. Stochastic RSI is exhibiting a bearish pullback at press time, with the signal line hovering the bullish line.

MACD appeared bullish at press time, but a potential trend reversal is in the charts, with the MACD line converging towards the bearish line.

Important levels to watch out for

Resistance: $1.48
Support: $1.30, $0.92-$0.90
Entry Position for Short: $1.325
Stop-Loss: $1.48
Take Profit: $0.90-$0.92
Risk/Reward Ratio: 2.43x

Conclusion 

Cardano’s price action has been within the ascending channel formation and a bearish breakout in the coming week should not be discounted.


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Source: https://ambcrypto.com/cardano-price-analysis-28-february

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Blockchain

Bitcoin Cash, Uniswap, Zcash Price Analysis: 28 February

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Bitcoin Cash looked uncertain to flip its press time resistance as the indicators gave mixed signals regarding its future trajectory. Uniswap could move southbound from its descending triangle pattern as momentum rose on the selling side. Zcash showed some indecision in its market as the price continued to trade within a range, with a breakout unlikely over the coming sessions.

Bitcoin Cash [BCH]

Source: BCH/USD, TradingView

With weekly losses of over 33%, Bitcoin Cash slipped to the 12th position on the crypto-rankings with a market cap of $8.6 billion. On the 4-hour timeframe, the price slipped below $464 support but the bulls eyed a comeback on the charts. The RSI avoided the oversold territory but pointed lower from the 35-mark at the time of writing. The MACD was bullish-neutral as the fast-moving line floated just above the Signal line.

It was doubtful whether the aforementioned resistance mark could be flipped over the next few sessions as trading volumes and buying activity remained muted.

Uniswap [UNI]

Source: UNI/USD, TradingView

A descending triangle formed on Uniswap’s 4-hour chart after the price formed lower highs post record levels. Prices usually tend to break downwards from this pattern on low trading volumes. The Awesome Oscillator showed that momentum rested with the selling side as the red bars rose below the half-line. A fall below the lower trendline could see UNI move towards the $15 mark.

The Stochastic RSI disagreed with the AO and suggested that UNI could be up for some gains after a bullish crossover in the oversold zone. However, a move above the upper trendline was unlikely considering the state of the broader market.

Zcash [ZEC]

Source: ZEC/USD, TradingView

Zcash continued to move within a fixed channel on the 4-hour chart as equilibrium was maintained between the buyers and sellers. The Bollinger Bands also reflected the consolidation as volatility remained low in the market. The MACD line was superimposed on the signal line, reflecting the indecision in the market.

However, a sharp move in either direction could see the market tilt strongly in the favor of the side that enforces the breakout. A bullish scenario could see ZEC move towards the next resistance mark at $138.4. Conversely, a fall could see the price move towards $98.1 support.


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Source: https://ambcrypto.com/bitcoin-cash-uniswap-zcash-price-analysis-28-february

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