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Coinbase reached a $100M settlement, including a $50M fine, with the New York State Department of Financial Services. The popular crypto exchange will pay the fine for concerns over its anti-money laundering and know-your-customer practices. More: - Coinbase is regulated by state financial statutes that grew exponentially as the price of Bitcoin soared past $60,000 during the pandemic.
- "Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth," says Adrienne Harris, superintendent of the New York Department of Financial Services.
- Coinbase had a backlog of 100,000 unreviewed transaction monitoring alerts and over 14,000 customers that required more protection.
- The regulator stepped in to install an independent monitor for the company.
- Regulators say they found problems with the exchange's anti-money-laundering controls going as far back as 2018.
- Coinbase agreed to pay $50M for allowing customers to open accounts without doing a background check.
- It also agreed to invest $50M to improve its compliance program.
- Shares rose 12% following the news.
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The U.K.'s National Crime Agency (NCA) is launching a new cryptocurrency investigation unit. The team will consist of five officers investigating new and existing cases; the regulator is looking for candidates with specialist cryptocurrency experience. More: - The new unit is called the National Cyber Crime Unit (NCCU) Crypto Cell to investigate U.K cyber incidents involving cryptocurrencies.
- The unit has an increased focus "on policing crypto assets."
- Candidates will need a background in blockchain forensic investigation are encouraged to apply until Jan. 10.
- National Police Chiefs' Council detective chief superintendent Andy Gould says police forces have been trained for crypto enforcement actions since October 2022.
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U.S. regulators have warned banks about the potential fraud and "contagion risk" involved in the crypto industry. The U.S. central bank says crypto poses a "significant risk" to the current banking system. More: - In the wake of the FTX collapse, U.S. regulators are keeping a close eye on the crypto industry.
- A joint statement was released by the U.S. Federal Reserve, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, emphasizing that "the events of the past year have been marked by significant volatility and the exposure of vulnerabilities in the crypto-asset sector."
- Banks are advised to take measures and avoid issues in a broader financial system.
- The watchdog said that issuing or holding crypto tokens is inconsistent with current banking practices.
- Banks are advised to be aware of the risk of fraud and scams.
- U.K. financial regulators, including the Financial Conduct Authority, have also issued repeated warnings about the risks associated with investing in crypto.
- Ashley Alder, chair of the U.K. financial regulator, the Financial Conduct Authority (FCA), explained that crypto is also used for money laundering.
- Laith Khalaf, head of investment analysis at AJ Bell, says, "Crypto is the new version of the disreputable mortgage-backed security, a complex financial product which permeated the banking industry and helped to foment the global financial crisis."
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The Italian government approved a budget law for 2023 that imposes a 26% tax on cryptocurrency gains. The new rules apply to profits made from trading virtual assets and are subject to income tax for individuals or corporation tax for companies. More: - Senators approved a 26% tax law for cryptocurrency gains above 2,000 euros during a given tax period.
- Traders and investors must pay capital gains tax on their profits.
- There are incentives for taxpayers to declare their cryptocurrency holdings, which include amnesty on gains achieved, paying a "substitute tax" of 3.5%, and adding a 0.5% fine each year.
- Taxpayers can also cancel their capital gains tax at 14% of the price of cryptocurrency held starting Jan. 1, 2023.
- If Italians think the new tax is high, it's worth noting that Iceland is charging a 46% rate on gains over the value of $7,000.
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Luke Dashjr, the core developer for Bitcoin, claims that he lost all of his Bitcoin holdings due to a hack that occurred on Dec. 31. He wrote a statement on Twitter saying, "My PGP is compromised, and at least many of my bitcoins stolen." More: - The PGP (Pretty Good Privacy) key is a common security method that uses two keys to gain access to encrypted information.
- Hackers were able to retrieve the security information somehow. "I have no idea how. Help, please," says Dashjr.
- On Nov. 17, Dashjr wrote that his server was compromised by a "new malware on the system," which could offer some clues as to how the hack occurred.
- Others believe that the lax security might be the cause of the hack.
- The hack gained the attention from the media and Binance CEO Changpeng "CZ" Zhao, who responded, "Sorry to see you lose so much. Informed our security team to monitor. If it comes our way, we will freeze it."
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The Grayscale Ethereum Trust (ETHE) is trading at a discount of 60% to the underlying value of its assets. Growing concern around liquidity has caused Grayscale's Ethereum, Litecoin, and Bitcoin cash trust to offer steep discounts. More: - There are many reasons for the decline, some of which concern the fallout from parent company Digital Currency Group's debt of approximately $1.675B to troubled crypto lender Genesis.
- The Grayscale Bitcoin Trust (GBTC) is trading at a 45% discount.
- The co-founder and CIO of Valkyrie Investments, Steven McClurg, also announced that he wants to take over the Grayscale Bitcoin Trust.
- The company issued a statement saying, "We understand that Grayscale has played an important role in the development and growth of the Bitcoin ecosystem with the launch of GBTC, and we respect the team and the work that they have done."
- Valkyrie reinstated that the company is best positioned to manage the GBTC.
- Grayscale's Ethereum fund is also down by 69% over the past year and holds 3M ETH.
- The two Grayscale Trusts still trading at a premium include Filecoin Trust at 108% and the Chainlink Trust at 24%.
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 |  | Gia Mattu is based in Calgary, Alberta. She is an entrepreneur with experience in climate technology, drones, AI, machine learning, and blockchain technology. When she's not working, she loves to hike the Canadian Rockies, try new cuisine, and travel. | | | | Editor | Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 and 1972 Fords. | |
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