Crypto Compliance Weekly Newsletter: January 30, 2023
Updated: Mar 10
This week, Coinbase fined by the Dutch Central Bank, Australia becomes the world’s 3rd in crypto ATMs, Basel Committee finalizes Crypto Standard, bankers fined for misusage of personal messaging tools, and five cryptocurrency exchanges funnel most of the crypto used for criminal purposes.
1. Coinbase fined $3.6 million by the Dutch Central Bank
The U.S. cryptocurrency exchange Coinbase has been fined $3.6 million for failing to duly register their activities in the Netherlands before offering services. According to the Dutch AML rules, cryptocurrency companies have been obliged to register as money transmitters since May 2020, meaning that “Coinbase was out of compliance between November 2020 and ‘at least’ August 2022, before it successfully registered on Sept. 22, 2022”.
According to the Dutch Central Bank, the fine was applied because there was a violation period of almost two years, and “Coinbase, as a globally operating provider of crypto services, should have been aware of the applicable laws and regulations”.
2. Australia overtakes Spain as the world's 3rd in crypto ATM installations
Australia has installed 234 crypto ATMs, putting the country in the third spot after the United States and Canada. Previously the third place was Spain, which possessed 222 crypto ATMs. This represents a huge jump for Australia since 99 of those crypto ATMs were deployed within the last 3 months of 2022 and “since Jan. 1, Australia has installed 16 new machines”.
3. Basel Committee finalizes Crypto Standard
The Basel Committee on Banking Supervision (“Basel Committee”) has finalized on December 16, 2022, a standard for banks to monitor and manage their exposure to cryptoassets, which “amends the Basel Committee’s comprehensive framework for prudential regulation to set out the prudential treatment of banks’ exposures to cryptoassets”.
The main changes from the previous release include: (i) infrastructure risk add-on; (ii) basis risk test, redemption risk test and the supervision/regulation requirement; (iii) Group 2 exposure limit; (iv) responsibility for assessing the classification conditions; and, (v) custodial assets.
4. Morgan Stanley bankers fined up to $1 million for misuse of personal messaging tools
Certain banks, like Morgan Stanley, have implemented policies and rules of behavior entailing the misuse of personal messaging tools like WhatsApp for business chat, with up to $1 million in fines for individuals at the bank.
These penalties are the result of an investigation started by US regulators over the use of personal phones and unapproved apps, “with the company last year agreeing to pay $200mn to the Securities and Exchange Commission and Commodity Futures Trading Commission”.
5. Five cryptocurrency exchanges funnel most of the criminal usage of cryptocurrency
The cryptocurrency-tracing firm Chainalysis has found that for 2022, “just five cryptocurrency exchanges now handle nearly 68 percent of all black market cash-outs”. That narrowing of crypto crime comes as a result of an ongoing government crackdown on crypto money laundering. However, Chainalysis’ data reveals that, despite the decline in cryptocurrency exchange rates, the use of cryptocurrency for illegal purposes and money laundering is increasing.
Canaria Consulting LLC is a boutique consultancy specializing in the development, enhancement, and maintenance of regulatory compliance programs for virtual currency firms. Canaria Consulting was founded in an effort to help virtual currency firms meet their regulatory obligations in a way that is tailored to the unique characteristics of virtual currency and decentralized blockchain technologies.