Financial Firms Announce Crypto Initiatives, Stablecoin Growth Continues
By Robert A. Musiala Jr.
A major U.S. crypto investment company recently announced the launch of its Avalanche Trust, which “offers investors the opportunity to gain exposure to Avalanche (AVAX), a three-chain smart contract platform designed to simultaneously optimize for scalability, network security, and decentralization.” According to the press release, the trust is open to eligible accredited investors and “is solely investing in the token underpinning the Avalanche network (AVAX).”
According to recent reports, a major global financial services and bank holding company recently announced a partnership with Taurus, a Swiss crypto company, to offer various new digital asset services. The partnership will reportedly allow the financial services company to hold clients’ crypto assets and assist clients in creating tokenized assets.
In stablecoin developments, according to reports Tether, the issuer of the USDT stablecoin, recently minted $1 billion USDT on the Tron network. This reportedly brings the total USDT tokens minted by Tether in the past year to 33 billion.
And Circle, the issuer of the USDC stablecoin, recently published a technical paper introducing the “Token Capital Adequacy Framework (TCAF), a risk-based capital framework designed for stable value tokens, including stablecoins, deposit tokens, and tokenized cash.” According to an abstract of the paper, “TCAF quantifies the capital needed to absorb losses stemming from technological, infrastructure, and operational risks, particularly in an environment marked by rapid innovation and limited historical loss data.” The paper argues that “TCAF is a more effective prudential tool compared to fixed-ratio or single factor capital frameworks.”
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U.S. Dept. of Treasury Regulatory Agenda Includes Proposed Crypto Rules
By Christopher Lamb
The U.S. Department of the Treasury recently released its semi-annual regulatory agenda. Among other topics, the agenda reveals proposed future efforts of U.S. federal agencies to revise rules and regulations related to cryptocurrency. Included in the agenda is a revised proposal by the Board of Governors of the U.S. central bank and the Financial Crimes Enforcement Network (FinCEN) to clarify the meaning of “money” as used in the Bank Secrecy Act (BSA) to include domestic and cross-border transactions involving convertible virtual currency (CVC), “which is a medium of exchange (such as cryptocurrency) that either has an equivalent value as currency, or acts as a substitute for currency, but lacks legal tender status.” In addition, FinCEN plans to amend BSA regulations to require money service businesses (MSBs) and banks to submit reports, keep records and verify customer identities in relation to transactions involving CVC “or digital assets with legal tender status … held in unhosted wallets, or held in wallets hosted in a jurisdiction identified by FinCEN.”
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DOJ Seizes $5M from Crypto Scam; ASIC Disrupts 615 Crypto Scams in Past Year
By Keith R. Murphy
A recent press release by the U.S. Department of Justice announced the seizure of nearly $5 million worth of USDT “traced to cryptocurrency addresses allegedly associated with the laundering of criminally derived proceeds stolen from victims of cryptocurrency investment scams, commonly known as ‘pig butchering.’” According to the press release, the scammers “recruited victims through the guise of a romantic relationship” and would then “claim to have a technique to quickly make large profits trading cryptocurrency.” The scammers would then introduce the victim to a fictitious cryptocurrency trading platform that would display “a fictitious investment portfolio with abnormally large investment returns” designed to encourage more investment. When victims attempted to withdraw funds they would be told they must pay a “tax” or “penalties” to release the funds, thereby inducing even more losses.
According to a recent press release marking its one-year anniversary of investment scam disruption, the Australian Securities and Investments Commission (ASIC) announced that it has coordinated the takedown of more than 7,300 phishing and fake investment platform scams in the past year. According to the release, of the approximately 7,300 scams taken down by ASIC since July 2023, 615 were cryptocurrency investment scams.
Chainalysis recently issued its 2024 Crypto Crime Mid-Year Update, which provides updates concerning illicit activity growth. The Update states that while overall there was a decline in illicit transactions compared with the same time last year, two categories of illicit activity – stolen funds and ransomware – continue to grow. With respect to stolen funds, the Update notes an 80% increase in the amount of stolen cryptocurrency per heist, due in part to the rise in the value of bitcoin. As to ransomware, the Update notes that 2024 may be the highest-grossing year for ransomware payments, with a focus on larger businesses and infrastructure providers that may be more likely to pay higher ransoms.
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