Bancor to Restrict Access to US-based Traders

Decentralized cryptocurrency exchange (DEX) Bancor has announced that it stop providing its trading service to US-based clients.

Bancor Stops Servicing the U.S.

According to the announcement, a lack of clarity from regulators is the main reason behind the decision to ban all users with a U.S. IP address from exchanging digital currencies.

“US citizens, domiciliaries or users from US IPs will no longer be able to use Bancor’s web application, https://www.bancor.network, to convert tokens,” the announcement noted. “This decision has been made in light of increased regulatory uncertainty; at this time, we believe this is the most judicious decision for all the members of our ecosystem.”

Bancor runs as a decentralized protocol using a peer-to-peer (P2P) architecture. This is the latest development in the uncertain regulatory market for decentralized trading applications.

Previously, DEX Ether Delta’s founder was charged with operating an unregistered exchange, resulting in a fine of $300,000. It’s not clear what the regulator requirements are for firms offering decentralized financial services, in which users trade peer-to-peer.

The company also clarified that any clients, who have been identified as US citizens and not staying in the country, cannot use its trading services, while people from overseas staying in the US can still trade on the platform.

“We would like to clarify that this functionality will be blocked to users accessing the website bancor.network, which offers an interface to blockchain activity. As the Bancor Liquidity Network is a collection of smart contracts on the blockchain, and a non-custodial system, we cannot restrict users from accessing the blockchain itself. This cannot be blocked.”

U.S. Being Excluded From Several Platforms

The non-existent regulatory guidelines from official institutions in the U.S. are forcing many cryptocurrency companies to stop servicing the region. Recently, Binance one of the largest crypto exchanges in terms of trading volume, announced that it will halt trading in the U.S. starting September 12th.

Another U.S.-based crypto exchange, Poloniex, delisted nine digital currencies from its trading platform only for US-based clients, citing the same unclear regulations. It is expected that the SEC and other financial regulators in the U.S. are preparing a regulatory framework that will see many digital currencies classified as securities.

New international recommendations from the Financial Action Task Force, set for publication this week, will place stringent new ID requirements on any entity facilitating cryptocurrency trading, both in the U.S. and elsewhere.

Binance.com Closes Doors to Restricted Jurisdictions

The world’s largest cryptocurrency exchange platform Binance has announced it is updating its internal policies.

The global crypto exchange announced Friday morning that it was reviewing user accounts to confirm they follow Binance’s terms of use and know-your-customer (KYC) procedures and will consequently remove deposit and trading permissions for anyone in violation of its policies.

The updated statement in Binance’s Terms of Use notably reads that the company is unable to provide services to any U.S. person.

The news follows after Binance announced it was formally launching a separate, fully regulated fiat-to-crypto platform for the U.S. market. Prior to this, the exchange stated it would strengthen its compliance and security practices through a number of partnerships, most notably with software provider Chainalysis and KYC/AML tool provider IdentityMind.

According to the news, the company has stated that it “constantly reviews user accounts to improve our platform security and to comply with global compliance requirements.” It is further added that users may be required to provide evidence that shows that their account registrations are consistent with the company’s Terms of Use. The exchange will not continue serving users who are found to have been in violation of terms and conditions or unable to provide evidence that states otherwise.

The exchange further stated that users who are not in accordance with Binance’s Terms of Use by September 12 will continue to have access to their wallets and funds, but will no longer be able to trade or deposit on Binance.com.

Previously, Binance listed 15 countries and six U.S. states (including New York) on a restricted countries list page. At any given month, Binance.com receives approx. 15% of traffic coming from U.S. customers, having halved since early 2018 when the figure was approximately 30%. It currently offers trading of more than 150 different cryptocurrencies.

In a tweet published yesterday, Binance CEO Changpeng Zhao said of the new exchange’s evolving global structure:

“Some short term pains may be necessary for long term gains. And we always work hard to turn every short term pain into a long term gain.”

Whilst Binance traditionally offers crypto-to-crypto trading, it has already launched fiat-to-crypto exchanges in Uganda, Singapore, and Jersey, all of which only support trading of Bitcoin (BTC), Ether (ETH), and BNB. It has plans to have two fiat-to-crypto exchanges on every continent, which will likely also only support trading of BTC and ETH primarily.

G20 Committed to Crypto Regulations Framework

Global finance ministers and central bankers from the G20 have reaffirmed their multilateral support of crypto-industry regulations, including anti-money laundering (AML) as well as countering the funding of terrorism (CTF).

Following the G20 Finance Summit in Fukuoka, Japan this weekend, the financial leaders made the commitment to applying the rules in a communique published on the website of the Japanese Ministry of Finance on Sunday. The crypto regulations will be finalized by the Financial Action Task Force (FATF) this month.

In the Communique, the G20 finance leaders have reiterated their commitment to the various initiatives underway. They support regulatory efforts that protect consumers and investors, support market integrity and clamp down on AML and CFT.

According to the reports, the FATF standards are expected to set tough operating procedures for crypto exchanges, going beyond the basic know your customer (KYC) regulations that most major exchanges are currently using.

In addition to verifying and keeping records of their users’ identities, exchanges and other service providers would have to pass customer information to each other when transferring funds, just as banks are required to do so, which is known as “travel rule” in the US.

The leaders that co-signed the document state that they urge relevant institutions to give greater consideration to crypto assets and consider appropriate action:

“We ask the FSB and standard setting bodies to monitor risks and consider work on additional multilateral responses as needed.”

The joint statement highlights as well that “technological innovations, including those underlying crypto-assets, can deliver significant benefits to the financial system and the broader economy.” The finance leaders put their support behind crypto-assets whilst also remaining vigilant in monitoring the risks they pose.

“While crypto-assets do not pose a threat to global financial stability at this point, we remain vigilant to risks, including those related to consumer and investor protection, anti-money laundering (AML) and countering the financing of terrorism (CFT).”

It is further noted that the finance ministers and central bank governors are seeking possible additional measures and welcome ongoing work concerning crypto such as regulatory approaches and potential gaps in crypto-asset regulation carried out by international regulatory bodies, the International Organization of Securities Commissions and the FSB.

Notably, all involved parties look forward to the adoption of the Financial Action Task Force’s (FATF) Interpretive Note and guidance on crypto assets “at its [FATF’s] plenary later this month.”

Last but not least, the G20 have addressed the issue of hacks within the crypto community, stating:

“We also continue to step up efforts to enhance cyber resilience, and welcome progress on the FSB’s initiative to identify effective practices for response to and recovery from cyber incidents.”

Australian Tax Office Reveals Ongoing Investigation on Crypto Tax Avoidance

Australia’s tax agency – the Australian Tax Office (ATO) – is currently investigating 12 major international tax avoidance schemes, with a key focus on cryptocurrency-enabled activities. The news was reported by local news outlet on June 6th.

Senior officials from the Australian Criminal Intelligence Commission (ACIC) and Australian Taxation Office (ATO) have met in Washington, DC, this week to mark the one-year anniversary of the formation of the Joint Chiefs of Global Tax Enforcement (J5).

The ATO’s cross-border investigations were officially revealed following a meeting of the J5.

Joining Australian leaders was the Canada Revenue Agency (CRA), the Dutch Fiscal Intelligence and Investigation Service (FIOD), Her Majesty’s Revenue & Customs (HMRC), as well  Internal Revenue Service Criminal Investigation (IRS-CI).

The J5 was formed in July of 2018 to serve as an international taskforce following growing concern over the escalation of tax avoidance, cybercrime and cryptocurrency abuse. The taskforce focuses on tackling cross-national tax crime threats including cybercrime, crypto-currency, and global tax evasion, whilst working on sharing intelligence and data with the other members of the taskforce.

Following today’s announcement, ATO deputy commissioner Will Day has stated that 60 investigations were underway by the J5 members, with Australia directly involved in 12. At least one of those being targeted was a global financial institution and its intermediaries, which are believed to have enabled taxpayers hide assets and income details.

 “We’re seeing the use of cryptocurrencies in ways that we haven’t seen before. At the Australian level, there is definitely legitimate use for investment in cryptocurrencies, but we’re also seeing the use of them to facilitate tax crimes.”

He further added that there was clear evidence of people based in Australia who were facilitating the avoidance of tax or partnering with others in overseas jurisdictions in criminal activity.

“At no other time have criminals been at greater risk of being caught,” Day said. “In Australia, they are often intermediaries who are playing a role between the tax evader and an offshore entity.”

The J5’s cooperation has enabled more organized and intensive data exchange and analysis across borders. Most recently, it has been reported that Dutch tax authorities took out a crypto mixer due to the combined efforts of the J5 members.

As previously reported, the ATO has disclosed that it is seeking to contact crypto traders personally about tax issues as part of a new data collection scheme. Together with the Australian Securities and Investment Commission and the Australian Transaction Reports and Analysis Centre, the agency is trying to identify crypto traders using data sourced from domestic cryptocurrency exchanges.

Cases involving money laundering, the smuggling of illicit commodities, personal tax frauds and evasion are also being collaborated on, and there have already been more data exchanged in the past year than the previous 10 years combined between J5 partner agencies.

The taskforce focuses on using platforms that enable each country to share information in an organized manner, without needing to surrender data or control to a central database. As a result of its leadership in this space, the J5 are making it harder for people to dodge taxes by hiding their money abroad.

BitMex Ventures Invests in Philippines-Based Crypto Exchange

Philippines Digital Asset Exchange (PDAX), a Philippines-based cryptocurrency exchange platform recently received an undisclosed sum of funding from BitMEX Ventures.

Founded in 2017, PDAX currently works closely with selected regulators to ensure safe and secure buying and selling of digital assets. Besides regulatory developments, the cryptocurrency exchange also seeks to enable the trading of commodities, real estate equities, and debt securities in tokenized form.

PDAX obtained its virtual currency exchange (VCE) license from the Philippine central bank Bangko Sentral ng Pilipinas (BSP) last year, enabling the exchange of Philippine Piso against cryptocurrencies, such as Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC), among others.

The co-founder and CEO of PDAX, Nichel Gaba, says a limited infrastructure in the country has left consumers struggling to access financial products and services. He added:

“Through digital assets and blockchain, we want to even the playing field to give every Filipino from all walks of life the ability to grow their hard-earned wealth.”

PDAX says it is working closely with regulators to ensure the safe and secure buying and selling of cryptocurrencies and other digital assets at the best price on the market.

BitMEX Ventures – the investment arm of the popular BitMex trading platform – has made a number of investments since inception in 2018, and is committed to advancing financial inclusion and accessibility to trading cryptocurrencies.

Arthur Hayes, the co-founder and CEO of BitMEX, said the cryptocurrency trading platform sees a large amount of trading volume from consumers in the Philippines — adding he was confident in PDAX’s ability to increase cryptocurrency adoption in the country while helping the public learn more about digital assets.

In April, payment services firm Bitspark announced plans to release a cryptocurrency pegged to the Philippine Piso.

And earlier in the year, Western Union partnered with the Philippines-based Coins.ph to enable consumers to conduct cross-border money transfers and receive funds directly into their e-wallets.