Investment Education

According to Odaily, the Swiss Central Bank recently announced that it will extend its pilot project for selling the first batch of tokenized bonds settled with its experimental digital currency, also known as wholesale Central Bank Digital Currency (CBDC), for another two years. The bank described the project as 'very successful'. The Swiss Central Bank stated that using CBDCs for settling and clearing financial transactions could eliminate credit risk. In contrast, all digital bonds issued in the United States so far have been settled with private digital tokens, which do not have the same safeguards as central bank-backed currencies. Moody's Corporation stated in a declaration that the lack of digital cash compatible with distributed ledger technology is often a significant barrier to the development of this technology, and Switzerland is the most advanced country in this field.

According to BlockBeats, on June 21, a US regional court judge dismissed all four collective lawsuits against Ripple, but allowed one state lawsuit to continue. The jury will continue to discuss whether Ripple CEO Brad Garlinghouse made 'misleading statements' related to securities sales in a television interview in 2017. Previously, a civil lawsuit for securities claims against Brad Garlinghouse was heard in a California court. The decision by the judge marks a significant development in the ongoing legal battles faced by Ripple and its CEO. The dismissal of the four collective lawsuits provides some relief for the company, but the continuation of the state lawsuit indicates that Ripple's legal troubles are far from over. The focus of the ongoing discussion is on the statements made by Garlinghouse in 2017, which are alleged to have been misleading in relation to securities sales. The outcome of this case could have significant implications for Ripple and the broader cryptocurrency industry.

According to BlockBeats, Richmond Federal Reserve Chair, Barkin, stated on June 21 that the Federal Reserve needs to further clarify the path of inflation before it can cut interest rates. Barkin, who has voting rights on monetary policy this year, said the current policy positioning is good and added that the Federal Reserve has the strength needed to curb inflation.When asked if the Federal Reserve could cut interest rates once and maintain them at that level, Barkin said it depends on economic data. If the current situation continues, now may not be the best time to provide guidance on the timeline for subsequent policy adjustments. 'Sometimes we want to provide forward-looking guidance and we do,' he said, 'In my view, it doesn't seem like that time now. It doesn't feel like the time to release forward-looking guidance. Let's see where the data will lead us.'

According to Foresight News, a recent statement submitted by the Financial Securities Crime Joint Investigation Department of the Southern Seoul Local Prosecutor's Office reveals that in a conversation between Do Kwon and Shin in May 2019, they discussed the possibility of creating seemingly real but fraudulent trades. The prosecutors believe that this indicates that Do Kwon and Shin had the intention to manipulate trades related to Terra from the beginning of their venture, with the aim of defrauding investors. They allegedly used these fraudulent trades to inflate trading volumes, thereby attracting investors and expanding their business. In a previous report by Foresight News, it was revealed that Judge Jed Rakoff of the U.S. District Court in New York had approved a settlement agreement of $44.7 billion between Terraform and the U.S. Securities and Exchange Commission (SEC). As per the agreement, Terraform will pay nearly $36 billion in forfeiture, $4.2 billion in civil penalties, and an estimated $4.67 billion in interest. On the basis of cooperation with Terraform, Do Kwon agreed to pay $110 million in forfeiture, $14.3 million in pre-trial interest, and $80 million in civil penalties.

According to Foresight News, the Ministry of Science and ICT in South Korea, in collaboration with the Korea Internet & Security Agency (KISA), is set to launch a blockchain support plan in 2024. The estimated investment for this year is 20 billion Korean won, approximately 14.5 million USD. The funds will be used to develop public blockchain services and promote the commercialization of products from blockchain companies. The plan will support public blockchain projects including digital coupons related to Central Bank Digital Currency (CBDC), digital badges, and online voting systems.

According to Odaily, South Korea's financial authorities are planning to reassess the status of approximately 600 cryptocurrencies traded on domestic exchanges. This rigorous review aims to ensure compliance with the new 'Virtual Asset User Protection Law' that came into effect on July 19. Recent local media reports suggest that the South Korean government has finalized a best practice plan to support virtual asset trading. The plan outlines strict new requirements for cryptocurrencies to be listed on domestic exchanges. The current system allows exchanges to conduct their internal reviews, but the authorities will establish a more stringent review process as a supplement. The core focus of the new regulations is on listing screening. Under the current system, exchanges individually review and list cryptocurrencies. However, by implementing the best practice plan, the authorities will establish standards that all listed cryptocurrencies must meet. A financial authority official explained, 'Exchanges review every six months whether to maintain support for virtual asset trading.' Subsequent reviews will take place every three months.

In a groundbreaking move, the government of El Salvador has proposed a reform of the current banking law aimed at introducing a new type of bank dedicated to offering Bitcoin and other cryptocurrency services. This initiative aligns with El Salvador's pioneering efforts to integrate Bitcoin into its financial system and the broader economy.  Details of the Proposed Reform - New Type of Banks: The proposed reform will allow the establishment of new banks specifically designed to lend Bitcoin and provide crypto services. - Private Investment: The initiative encourages private investors to form specialized banks focused on Bitcoin and stablecoin services for sophisticated investors. - Comprehensive Services: These new banks are expected to offer a range of financial services, including:  - Economic Risk Management: Tools and strategies to manage financial risks associated with investments.  - Purchase of Financial Products: Facilitation of buying a variety of financial products.  - Investment Management: Services to manage and optimize investment portfolios.  - Hedging: Techniques to protect against potential losses in investments.  - Other Financial Derivatives: Access to advanced financial instruments. Supported Currencies The services provided by these new banks would support any legal currency in El Salvador, including the U.S. dollar and Bitcoin, which was officially adopted as legal tender in the country in 2021.  Implications for El Salvador's Financial Landscape - Financial Innovation: The introduction of banks specializing in Bitcoin and cryptocurrency services marks a significant step in financial innovation, reflecting El Salvador's commitment to leveraging digital currencies. - Investment Opportunities: This reform is likely to attract sophisticated investors interested in the burgeoning crypto economy, offering them tailored banking services. - Economic Diversification: By integrating cryptocurrency services with traditional banking, the reform could contribute to a more diversified and resilient financial system. - Risk and Regulation: The initiative will require careful regulation to manage the unique risks associated with cryptocurrency, ensuring stability and protecting investors. El Salvador's proposal to reform its banking law to accommodate Bitcoin and cryptocurrency services underscores the nation's forward-thinking approach to digital finance. If approved, this initiative could set a precedent for other countries considering similar integration of cryptocurrencies into their financial systems.

According to PANews, the U.S. Securities and Exchange Commission (SEC) has dismissed the latest arguments from Ripple Labs to reduce its fines, insisting on a total penalty of nearly $2 billion. This includes $198.2 million in pre-judgment interest, $876.3 million in civil penalties, and another $876.3 million in refund amounts. Last month, Ripple attempted to seal part of its financial information, but the SEC opposed this, believing the company should disclose the revenue obtained through XRP. Last week, Ripple proposed to Judge Analisa Torres of the New York District Court a fine 'not exceeding $10 million', far less than the $876.3 million civil penalty proposed by the SEC. Ripple cited the SEC's settlement agreement with Terraform Labs as a basis. However, the SEC emphasized in its response that its settlement with Terraform was based on the company's bankruptcy, agreement to refund, and dismissal of relevant responsible persons, measures that Ripple has not taken. The SEC stated that Ripple's fine should be calculated based on the gross profit of its violations, not the total sales. If the penalty ratio of Terraform (close to 12%) is applied to Ripple, its fine should be $102.6 million. The SEC believes that such a low fine cannot meet the purpose of civil penalty regulations. Since the SEC accused Ripple of selling unregistered securities in 2020, the two parties have been arguing in court. Judge Torres has confirmed Ripple's illegal behavior, but only when selling to institutional investors. Currently, the legal battle between the two parties continues.

According to Golden Finance: Evolve Bank and Trust has entered into a cease-and-desist agreement with the Federal Reserve, prompted by findings of unsafe and unsound operations within the bank's fintech collaborations and inadequate anti-money laundering (AML) controls. The order follows scrutiny arising from the failure of intermediary Synapse Financial Technologies, which led to account freezes for numerous FinTech users. Details of the Cease-and-Desist Order The Federal Reserve's cease-and-desist order against Evolve Bank addresses several critical issues: - Unsound Operations: The Federal Reserve highlighted unsafe and unsound operations in Evolve’s fintech collaborations. - AML Deficiencies: The bank was found to lack adequate anti-money laundering controls, a significant compliance lapse given its role in the financial ecosystem. - Synapse Financial Technologies Failure: The failure of Synapse Financial Technologies, an intermediary, resulted in the freezing of many fintech user accounts, exacerbated by disagreements over account balances between Synapse, Evolve, and other fintech entities. Impact on the Cryptocurrency Ecosystem Evolve Bank plays a crucial role in the cryptocurrency landscape, providing financial services to platforms such as BlockFi and FTX. The cease-and-desist order could have broader implications for these services, potentially affecting their operational stability and customer confidence. Compliance and Due Diligence Requirements As part of the cease-and-desist order, Evolve Bank is required to: - Submit a Detailed Compliance Plan: Evolve must present a comprehensive compliance plan that addresses the operational deficiencies identified by the Federal Reserve. - Update Due Diligence Procedures: The bank needs to upgrade its due diligence procedures to ensure robust customer information verification and compliance with regulatory requirements. Broader Implications - Enhanced Regulatory Scrutiny: This move by the Federal Reserve signals heightened scrutiny on banks involved in fintech and cryptocurrency sectors, emphasizing the need for stringent AML controls and sound operational practices. - Increased Compliance Costs: Evolve Bank will likely incur significant costs to implement the mandated compliance enhancements, which could impact its financial performance and operational efficiency. - Operational Disruptions: The requirement to improve due diligence procedures and customer information handling may cause temporary operational disruptions as Evolve Bank works to comply with the Federal Reserve’s directives. The cease-and-desist order against Evolve Bank underscores the critical importance of sound operational practices and robust anti-money laundering controls, particularly for institutions involved in the fintech and cryptocurrency realms. As Evolve Bank works to address these regulatory requirements, the broader industry will likely observe increased regulatory scrutiny, necessitating proactive compliance measures to mitigate similar risks.

According to Odaily, the Australian Treasury Department is planning to include stablecoin regulations in its draft crypto bill. A representative from the Australian Securities and Investments Commission (ASIC) has stated that they have held meetings with regulatory bodies such as the SEC to discuss the legal stance on crypto technology. The Treasury Department had previously announced plans to release a legislative draft by the end of 2024, covering licensing and custody rules for crypto asset providers. Based on the latest developments, this draft may include a framework for regulating stablecoins. The inclusion of stablecoin regulations in the draft bill signifies the Australian government's recognition of the growing influence of cryptocurrencies and their commitment to ensuring a regulated and secure environment for its use.