Global Digital Assets Digest: August 2023

Welcome to this month's Global Digital Assets Digest.

In Australia, we have the release of Draft Prudential Practice Guide, which includes guidance in relation to activities associated with crypto assets released. We also have news of the use of a digital version of AUD to trade and pay for real certificates of deposit.

Ahead of the Travel Rule for cryptoassets entering into force in the UK in September 2023, there are a number of important communications from the regulators for cryptoasset service providers.

Stateside, there has been a lot of activity in Congress in relation to digital assets legislation, including the Financial Innovation and Technology for the 21st Century Act.

UPDATES AND GUIDANCE: INTERNATIONAL BODIES

1. European Commission: Joint Statement on the EU-U.S. Financial Regulatory Forum

2. G20: Third meeting of G20 Finance Ministers and Central Bank Governors under the Indian G20 Presidency

3. IMF Blog: Crypto needs comprehensive policies to protect economies

4. FSB: Framework for the regulation of cryptoasset activities

UPDATES AND GUIDANCE: UK

5. FCA Webpage: Expectations for UK cryptoasset businesses complying with the Travel Rule

6. HM Treasury: Updated webpage on CBDC Taskforce

7. PSR: Annual report and accounts 2022/23

8. HM Treasury: Consultation response: Payments Regulation and the Systemic Perimeter

9. FCA: New webpage on digital Sandbox pilots

10. House of Commons: Answer to a written question on cryptocurrency regulation

11. JMLSG: Consultation paper on cryptoassets transfers ("Travel Rule")

12. BoE: Speech by Victoria Cleland, Executive Director for Banking, Payments and Innovation: Payments: it’s all change

13. FCA: Annual Report and Accounts 2022/23

14. FCA: Perimeter webpage update

UPDATES AND GUIDANCE: EUROPE

15. Digital Money: Monthly report of the Deutsche Bundesbank

16. MiCAR implementation: BaFin and Deutsche Bundesbank provide current recommendations regarding the Markets in Crypto-assets Regulation

UPDATES AND GUIDANCE: APAC

17. MAS: Stablecoin regulatory framework finalised

18. SFC: Warning statement on virtual asset trading platforms engaging in improper practices

19. UK and Singapore Enhance Cooperation in Sustainable Finance and FinTech

UPDATES AND GUIDANCE: AUSTRALIA

20. Westpac and Commonwealth Bank: Use of digital version of AUD to trade and pay for real certificates of deposit

21. APRA: Draft Prudential Practice Guide containing guidance in relation to activities associated with crypto assets released

22. National Australia Bank: Plans to block payments to high-risk cryptocurrency exchanges

UPDATES AND GUIDANCE: NORTH AMERICA

23. FDIC: 2023 Risk Review

24. Crypto-Asset National Security Enhancement and Enforcement Act of 2023

25. FDIC: Statement requiring entity to cease making false or misleading representations about deposit insurance

26. Digital Asset Anti-Money Laundering Act reintroduced

27. SEC: Investor Bulletin on crypto asset markets

28. US Committees introduce Financial Innovation and Technology for the 21st Century Act

29. US Senate: Lummis-Gillibrand Responsible Financial Innovation Act reintroduced

30. CFTC: Opening Statement of Commissioner Christy Goldsmith Romero at the Technology Advisory Committee

UPDATES AND GUIDANCE: MIDDLE EAST

None

PRESS/ARTICLES

31. FT: Nasdaq halts plans for crypto custody service

32. FT: OpenAI nears $100mn funding for Worldcoin crypto project

UPDATES AND GUIDANCE: INTERNATIONAL BODIES

1. European Commission: Joint Statement on the EU-U.S. Financial Regulatory Forum

On 20 July 2023, the Joint Statement on the EU-U.S. Financial Regulatory Forum was published. The Forum provides a space for participants to exchange views on financial regulatory framework topics. EU participants include representatives from the European Commission; ESMA; ECB, while US participants include staff from the FDIC, Board of Governors of the Federal Reserve System, SEC and CTFC. Areas discussed include market developments concerning the cryptoassets sector, as well as updates on enforcement initiatives in the EU and UK concerning cryptoassets. The Forum noted the adoption of legislative proposal for the digital euro, as well as other developments concerning CBDCs. The Forum noted the importance of continued dialogue on the cross-border implications of policies.

2. G20: Third meeting of G20 Finance Ministers and Central Bank Governors under the Indian G20 Presidency

On 18 July 2023, a press release was published in relation to the third meeting of G20 Finance Ministers and Central Bank Governors (FMCBG) under the Indian G20 Presidency held in July 2023. This reiterates priority areas and summarises approaches to be adopted in a number of areas, including cryptoassets.

Notable points

The Indian Presidency has prioritised the importance of looking at the macro financial implications of cyptoassets along with financial stability concerns.

• The Presidency has focused on highlighting the specific concerns of the Global South in relation to the crypotassets agenda (this resulted in the IMF February 2023 paper on macro financial implications of cryptoassets, which contained sections on the concerns of emerging markets).
• G20 members welcome the July 2023 high-level recommendations of the FSB on cryptoasset activities and global stablecoin arrangements.
• The G20 looks forward to receiving the IMF-FSB Synthesis Paper, along with the Roadmap on cryptoassets, before the Leaders’ Summit in September 2023.

3. IMF Blog: Crypto needs comprehensive policies to protect economies

The IMF has published a blog calling for comprehensive regulatory framework to address the risks posed by cryptoassets. The blog argues that momentum has increased in this regard under the Indian G20 Presidency. The blog refers to recent high profile collapses of cryptoasset service providers. It also refers to the IMF's assessment of the macro implications of cryptoassets presented to the G20 in 2023, as well as the IMF's Elements of Effective Policies for CryptoAssets. The blog states that the IMF approach consists of three pillars: a sound macro-policy foundation; clear legal treatment and granular rules; and effective implementation. Policy recommendations include the following: crypotassets should not be granted official currency or legal tender status; and policymakers should integrate cryptoassets within existing regimes and rules managing capital flows in order to address the volatility of capital flows associated with cryptoasssets.

4. FSB: Framework for the regulation of cryptoasset activities

On 17 July 2023, the FSB confirmed it had finalised its global regulatory framework for the regulation of activities concerning crypotassets. This follows an October 2022 consultation. The framework consists of two sets of recommendations:

• High level recommendations for the regulation, supervision, and oversight of cryptoasset activities and markets (the Cryptoasset Recommendations).
• Revised high level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements (the GSC Recommendations).

Both Recommendations been informed by high profile developments occurring over the last year involving stablecoin issuers and cryptosset service providers.

The GSC Recommendations focus on addressing risks to financial stability and so do not cover areas such as AML/CTF considerations and data privacy. Aspects covered include: authorities’ readiness to regulate and supervise global stablecoin arrangements; comprehensive oversight of GSC activities and functions by authorities; cross-border cooperation, coordination and information sharing by authorities; governance structures and decentralised operations; risk management frameworks; and recovery and resolution of global stablecoin arrangements.

The Cryptoasset Recommendations are designed to apply to cryptoasset issuers and service providers in a manner proportionate to their risk, size, complexity and systemic importance. They cover many of the same areas as the GSC Recommendations.

UPDATES AND GUIDANCE: UK

5. FCA Webpage: Expectations for UK cryptoasset businesses complying with the Travel Rule

On 18 August 2023, the FCA published a webpage on its expectations for UK cryptoasset businesses in respect of complying with the Travel Rule. The Travel Rule, as introduced in the UK by the Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 (SI 2022/860), is intended to encourage greater transparency for cryptoasset transfers and prevent the use cryptoassets for illicit activity. From 1 September 2023, cryptoasset businesses in the UK will be required to collect, verify and share information about cryptoasset transfers.

The FCA expects firms to:

• take all reasonable steps and exercise all due diligence to comply with the Travel Rule;
• remain responsible for achieving compliance with the Travel Rule, even when using third-party suppliers;
• fully comply with the Travel Rule when sending or receiving a cryptoasset transfer to a firm that is in the UK, or any jurisdiction that has implemented the Travel Rule; and
• regularly review the implementation status of the Travel Rule in other jurisdictions and adapt business processes as appropriate.

6. HM Treasury: Updated webpage on CBDC Taskforce

HM Treasury has updated its webpage in relation to the CBDC Engagement Forum. This states that HM Treasury and BoE are making changes to the forum, including updates to the format and reopening membership applications, as well as launching a new Academic Advisory Group. It states that the Engagement Forum and Academic Advisory Group membership list will be updated in due course.

7. PSR: Annual report and accounts 2022/23

On 8 August 2023, PSR issued its annual report and accounts 2022/23. The report summarises the PSR's activities in the 2022/2023 period. The report comments on work undertaken by the PSR including providing input on HM Treasury's consultation on a digital pound, as well as preparations to regulate a distributed ledger payment system (Sterling Finality), which the PSR considers could offer alternatives to existing payment systems. The report contains a section assessing commitments made by PSR in for the 2022/2023 period in relation to cryptoassets, stablecoins and central bank digital currencies against actual activity undertaken by the PSR.

8. HM Treasury: Consultation response: Payments Regulation and the Systemic Perimeter

On 7 August 2023, HM Treasury published a response to its call for evidence summarising the feedback received to its call for evidence on the payments regulation and the systemic perimeter. The consultation explained the Government's approach to co-supervision of systemic payment actors (under which the BoE would take primacy of systemic entities for reasons of financial stability) and extending this approach to systemically important digital settlement assets as set out in the Government's 2022 consultation response on stablecoins The Government confirms that it will: legislate to amend the systemic payments perimeter of the BoE as set out in Part 5 of the Banking Act 2009; and publish a further statement on its legislative approach. The BoE will set out its approach to supervision in relation to its expanded remit when the relevant legislation is finalised.

9. FCA: New webpage: Digital Sandbox pilots

On 1 August 2023, the FCA published a webpage in relation to two pilots of the Digital Sandbox it had held: the Digital Sandbox Pilot, which ran between October 2020 and February 2021 and focused on challenges in relation to the COVID-19 pandemic; and the second pilot (the Digital Sandbox sustainability pilot), which ran between November 2021 and March 2022 and focused on testing and developing new products and services in relation to ESG data and disclosure.

10. House of Commons: Answer to a written question on cryptocurrencies regulation

On 26 July 2023, the House of Commons published a response to a written question in relation to whether HM Treasury planned to give the FCA further powers to regulate companies operating in the cryptoasset sector. This confirms that HM Treasury issued a consultation on the regulation of cryptoasset service providers which would impose conduct of business requirements.

11. JMLSG: Consultation paper on cryptoassets transfers ("Travel Rule")

On 28 July 2023, the JMSLG published proposed amendments to section 22 (cryptoasset providers and custodian wallet providers) in Part II of its guidance. These amendments reflect changes brought about by the Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 (SI 2022/860). This implements FATF's recommendation 16 on information sharing requirements in respect of cryptoasset transfers to require cryptoasset transfers to be accompanied by certain information concerning the person initiating the cryptoasset transfer and the intended recipient of the cryptoasset (the Travel Rule). The Travel Rule is being implemented in the EU via the recast Wire Transfer Regulation, which comes into application in 2024.

The deadline is 25 August 2023.

12. BoE: Speech by Victoria Cleland, Executive Director for Banking, Payments and Innovation: Payments: it’s all change

On 20 July 2023, the Bank of England published a speech by Victoria Cleland, Executive Director for Banking, Payments and Innovation, in which she provides an overview of the multi-year programme to renew the RGTS and highlights key benefits/aspects of the programme, including the move to ISO 20022. Ms Cleland argues that the transition to ISO 20022 represents a major step in increasing transparency and interoperability in order to enhance domestic and cross-border payments. She confirms that the BoE is working with UK finance on how payments should be prioritised during the ISO 20022 transition, and confirms that the BoE expects firms to meet the standards set by the CPMI on ISO 20022 by 2025 where possible (and 2027 at the latest). The speech also confirms that the new infrastructure and user interface for the new core settlement engine for RGTS will be opened up for testing by participants in Autumn 2023.

13. FCA: Annual Report and Accounts 2022/23

On 20 July 2023, the FCA published its Annual Report and Accounts 2022/23. This provides an overview of actions undertaken by the FCA to meet strategic and operational objectives, as well as a summary of progress made in the first year of the FCA's 3-year strategy.

Notable points

• The FCA is continuing to design and will consult on prudential requirements for firms that are carrying out activities involving cryptoassets once the Treasury and Parliament bring those activities under the FCA regulation.
• The FCA has been working with law enforcement to intervene against illegal cryptoactivity, this includes collaborating with Regional Organised Crime Units to address unregistered cryptoasset businesses.
• The FCA chairs the IOSCO Fintech Taskforce Crypto and Digital Assets workstream and has been leading the development of IOSCO recommendations in relation to the regulation of cryptoassets. The FCA is also working with the Government and the BoE on proposals issued by HM Treasury in relation to further regulation of cryptoassets and plans to develop the Financial Market Infrastructure Sandbox.

14. FCA: Perimeter webpage update

The FCA published an updated version of its webpage on the perimeter report in July 2023. The webpage was last updated in March 2023. The report sets out the specific issues around the regulatory perimeter and the action the FCA is taking in response.

Notable points

• MLRs and cryptoassets: The FCA has issued 2 consumer focused warnings related to specific firms and 3 notices to firms reminding them about their obligations including sanctions under the MLRs.
• Registrations for CASPs under the MLRs: From 1 September 2023, cryptoasset firms who are executing transfers of funds will be required to collect and submit information when executing any cryptoassets transfer in order to comply with the Financial Action Taskforce "travel rule". The .FCA welcomes the Government's planned review of regime for cryptoasset service providers (CASPs) under MLRs (including a review of the existing regime whereby CASPs do not come within the SMCR and CASPs are not subject to Threshold Conditions).

UPDATES AND GUIDANCE: EUROPE

15. Digital Money: Monthly report of the Deutsche Bundesbank

On 17 July 2023, the German Central Bank (Deutsche Bundesbank) published its Monthly Report with an analysis on "Digital money: options for the financial industry".

The report explores the available options to the financial industry for payment settlement in an environment where digital transaction technologies are increasingly being used. CBDC, tokenised deposits and stablecoins are being considered as the primary options. The Report, however, questions whether stablecoins will meet with broad acceptance for transactions in the financial sector. The report notes that, while some banks are working on tokenised deposits, many legal and practical questions remain unanswered. For this reason, many central banks around the world have turned their attention to wholesale CBDC. Although the Report points out that it would also be possible for third parties to operate a DLT infrastructure for settling payments in digital central bank money, it would be essential to guarantee the continued control over central bank money from a central bank perspective. Therefore, there is a focus on interoperability solutions in the Eurosystem, e.g. a tokenised central bank money on its own Eurosystem DLT platform.

16. MiCAR implementation: BaFin and Deutsche Bundesbank provide current recommendations regarding the Markets in Crypto-assets Regulation

On 12 July 2023, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) together with the German Central Bank (Deutsche Bundesbank) published information on the implementation of MiCAR. BaFin and Deutsche Bundesbank stress that relevant entities active or intending to become active in the cryptoassets sector should take precautionary measures in due course. In particular, these entities should take into consideration that MiCAR will enter into force on 30 June 2024. BaFin and Deutsche Bundesbank also provide initial details regarding communication with the competent authorities as regards MiCAR and refer to the specific website covering topics of MiCAR created by BaFin.

UPDATES AND GUIDANCE: APAC

17. MAS: Stablecoin regulatory framework finalised

On 15 August 2023, the Monetary Authority of Singapore (MAS) announced that the Singapore regulatory framework for stablecoins had been finalised. This follows an October 2022 consultation. MAS confirms that the stablecoin regulatory framework will apply to single currency stablecoins pegged to the Singapore Dollar or any G10 currency issued in Singapore. Obligations for in-scope issuers of stablecoins include: minimum base capital and liquid asset requirements; and disclosure requirements on areas such as the value stabilising mechanism for stablecoins, rights of stablecoin holders and audit results of reserve assets

18. SFC: Warning statement on virtual asset trading platforms engaging in improper practices

On 7 August 2023, the Securities and Futures Commission (SFC) published a warning statement which observes unlicensed virtual asset trading platforms (VATPs) engaging in improper practices. This statement warns VATPs of the potential legal and regulatory consequences of these improper practices and reminds investors to be wary of the risks of trading virtual assets on unregulated VATPs.

Points to note:

• The SFC observed that unlicensed VATPs have (i) claimed to have submitted licence applications when in fact they have not done so; (ii) set up shell companies to provide virtual assets services in Hong Kong; (iii) launched ineligible virtual assets for trading, launched virtual asset derivatives for trading, which are not permissible under the regime.
• These non-compliant activities may raise concerns about the VATPs' intention to comply with the SFC's legal and regulatory requirements and fitness and properness to be licensed, amongst other issues.
• The SFC noted that it may take a dim view of past non-compliant behaviours which result in the need to unwind client transactions or withdraw a virtual asset admitted for retail trading if such unwinding or withdrawal could have reasonably been avoided in anticipation of the legal and regulatory requirements under the new regime.

19. UK and Singapore Enhance Cooperation in Sustainable Finance and FinTech

On 27 July 2023, details of the 8th UK-Singapore Financial Dialogue were published. The event is intended to serve as forum to exchange views and identify opportunities for collaboration on joint projects in priority areas such as FinTech and innovation.

Notable points

• Both countries discussed developments in relation to CBDC in their respective jurisdictions, with the UK updating on the digital pound consultation and Singapore providing an update on its work on wholesale CBDC for cross-border foreign exchange settlement.
• Singapore provided an update on Project Guardian, its private-public initiative testing the feasibility of asset tokenisation. The UK welcomed the outcome of MAS' review of e-wallet caps, including the increase to relevant limits imposed on e-wallets.

UPDATES AND GUIDANCE: AUSTRALIA

20. Westpac and Commonwealth Bank: Use of digital version of AUD to trade and pay for real certificates of deposit

On 25 July 2023, it was announced that Westpac and Commonwealth Bank have used a digital version of the Australian dollar backed by the Reserve Bank to trade and pay for real certificates of deposit, which are debt instruments issued by each bank. Imperium Markets hosted the trades last week on its marketplace. Imperium was one of 14 pilots using the RBA Central Bank Digital Current (CBDC), announced in March, with the Digital Finance Co-operative Research Centre. CBDCs look to eliminate settlement risk through a process known as "atomic settlement" which allows a payment and the transfer of title for a security to be exchanged at the same time.

21. APRA: Draft Prudential Practice Guide containing guidance in relation to activities associated with cryptoassets released

On 17 July 2023, APRA released a Draft CPG 230 Operation Risk Management Integrated Version Prudential Practice Guide (Practice Guide), which includes guidance in relation to activities associated with crypto-assets. The purpose of this Practice Guide is to set out guidance for APRA-regulated entities to assist in complying with Prudential Standard CPS 230 Operational Risk Management (CPS 230), which focuses on ensuring that APRA-regulated entities are capable of effectively managing operational risks and are able to continue to deliver critical operations through disruptions.

In relation to cryptoassets, as per the Practice Guide, APRA expects that entities and/or their Boards will:

• conduct appropriate due diligence and a comprehensive risk assessment before engaging in activities associated with crypto-assets;
• apply robust risk management controls when engaging in activity associated with crypto assets;
• treat any service providers that are relied upon or associated with crypto-assets activities as material, given the novel operational risks that they give rise to; and
• pay particular attention to significant new ventures that may give rise to material or novel operational risks, in relation to activities associated with crypto assets.

22. National Australia Bank: Plans to block payments to high-risk cryptocurrency exchanges

On 17 July 2023, it was announced that National Australia Bank will block payments to high-risk cryptocurrency exchanges in an effort to reduce the instances of fraud and scams at the financial institution. It continues a crackdown on digital currency at all the major banks, which say scammed money is increasingly siphoned into cryptocurrency that makes it near impossible to recover for victims.

UPDATES AND GUIDANCE: NORTH AMERICA

23. FDIC: 2023 Risk Review

On 14 August 2023, the FDIC published its 2023 Risk Review, which outlines conditions in the U.S. economy, financial markets and banking industry. Section 6 of the report summarises activity undertaken by the FDIC (as well as other federal banking agencies) in relation to the cryptoasset-related markets and activities. The review notes that growth in cryptoasset industry was met with an increasing interest by some banks to engage in cryptoasset activities. The FDIC states that monitoring of risks related to this sector counts as one of the FDIC's top priorities and that it will issue additional statements related to the involvement of the banking sector in cryptoasset related activities.

24. Crypto-Asset National Security Enhancement and Enforcement Act of 2023

US senators have introduced bipartisan legislation requiring decentralised finance to comply with the same anti money laundering obligations as other financial companies (such as maintain AML programs, carrying out due diligence). The Crypto-Asset National Security Enhancement and Enforcement (CANSEE) Act (S. 2355) was introduced by U.S. Senators Jack Reed, Mike Rounds Mark Warner, and Mitt Romney. This follows a recent Treasury Department report on the risk assessment of decentralised finance.

25. FDIC: Statement requiring entity to cease making false or misleading representations about deposit insurance

On 4 August 2023, the FDIC issued statement confirming it had taken measures in relation to an entity concerning communications it issued suggesting that FDIC insurance is available for cryptocurrency; and FDIC insurance would protect against crypto-currency related losses. The FDIC states that false representations were made on the entity's website, in promotional materials and on social media -platforms stating or suggesting its crypto-related products and services were FDIC-insured.

26. Digital Asset Anti-Money Laundering Act reintroduced

On 28 July 2023, US Senators Elizabeth Warren, Roger Marshall, Joe Manchin and Lindsey Graham, reintroduced the Digital Asset Anti-Money Laundering Act. The Bill, which was first introduced in 2022, would: extend Bank Secrecy Act responsibilities to digital asset wallet providers, miners and validators; tackle unhosted digital wallets; and extend BSA rules on foreign bank accounts to include digital assets (among other things).

27. SEC: Investor Bulletin on crypto asset markets

On 27 July 2023, the SEC’s Office of Investor Education and Advocacy, along with the Office of the Chief Accountant, published an Investor Bulletin on the reliance placed on audits not conducted following SEC rules and Public Company Accounting Oversight Board (PCAOB) standards.

The Bulletin refers to the use of “proof of reserves” valuation, and calculation reports and discusses the requirements of audit reports conducted under PCAOB standards.

28. US Committees introduce Financial Innovation and Technology for the 21st Century Act

On 20 July 2023, Chairman of the House Committee on Agriculture and the Chairman of the Subcommittee on Commodity Markets, Digital Assets, and Rural Development introduced the Financial Innovation and Technology for the 21st Century Act. The Bill: provides the CFTC with jurisdiction over digital commodities and clarifies the SEC’s jurisdiction over digital assets offered as part of an investment contract; enables digital asset trading platforms to be registered as Digital Asset Trading Systems; creates a Digital Commodity Exchange Framework; and creates a Digital Commodity Broker and Digital Commodity Dealer framework. The House Financial Services Committee voted on the Bill later in the month.

29. US Senate: Lummis-Gillibrand Responsible Financial Innovation Act reintroduced

In July 2023, U.S senators Cynthia Lummis, member of the Senate Banking Committee and Kirsten Gillibrand, member of the Senate Agriculture Committee reintroduced the Lummis-Gillibrand Responsible Financial Innovation Act. The Bill, which was first introduced in 2022, requires registration of cryptoasset exchanges; introduces definitions for crypto asset, payment stablecoins, smart contracts, distributed ledger technology; sets the criteria for determining which cryptoassets are securities and which are commodities; classifies algorithmic stablecoins as hybrid instruments under CFTC jurisdiction; requires all crypto asset intermediaries to maintain proof of reserves and undergo an annual verification; introduces notice and risk management standards for cryptoasset lending and bans rehypothecation; and creates advertising standards for cryptoasset marketing.

30. CFTC: Opening Statement of Commissioner Christy Goldsmith Romero at the Technology Advisory Committee

On 18 July 2023, the opening statement of Commissioner Christy Goldsmith Romero at the Technology Advisory Committee was published. The Technology Advisory Committee is one of Advisory Committees overseen by the CFTC set up to offer advice and recommendations to the CFTC on regulatory and market issues. The speech contains some observations in relation to DeFi and DAO.

Notable points

• TAC's examination of regulatory issues related to DeFi has assumed greater importance given increasing shift of the digital asset market to DeFi, and additional legislation by Congress that includes DeFi.
• With DeFi, the central issue is accountability. Financial regulators are accustomed to central actors but there is a need to consider the meaning of decentralisation.
• DeFi is not one size fits all, and can assume take different forms, including a decentralized autonomous organization . The CFTC had a recent enforcement case in this area.

At the meeting, TAC introduced subcommittees approved by the CFTC, including the newly constituted subcommittees on: Digital Assets and Blockchain Technology; and Emerging and Evolving Technologies.

UPDATES AND GUIDANCE: MIDDLE EAST

None

PRESS/ARTICLES

31. FT: Nasdaq halts plans for crypto custody service

This article reports that Nasdaq has put its plans for launching a cryptocurrency custody service on hold. According to the report, Nasdaq, which launched a Digital Assets Division in September 2022, cited regulatory uncertainty as the main cause for the development. The article reports that Nasdaq planned to custody client holdings of Bitcoin and Ether. The article argues that the development is a setback for the industry in light of high profile cases stressing the importance of safeguarding client assets and the need for credible custodians in the sector.

32. FT: OpenAI nears $100mn funding for Worldcoin crypto project

This article reports that funding looks to be secured in respect of iris-scanning technology to create a global currency called Worldcoin. According to the article, the eye-ball scanning technology would create a global identification system.

Contributors: Tobias Bauerfeind, Senior Associate; Cornelius Hille, Associate; Anna He, Associate; Zach McLoughlin, Associate; Daphne Chung, Associate; Gréta Müller, Junior Associate; Ankita Rao, Trainee.