Weekly summary calendar week 50 – 2022 | 17/12/22

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What has happened this week around blockchain and cryptocurrencies? The most relevant local and international events as well as appealing background reports in a pointed and compact way in a weekly review. Featured Article of the Week: The FTX scandal is considered the preliminary low point of the “contagion effect” in the crypto industry, which has been ongoing since mid-2022. In this case, the lack of liquidity that led to the collapse of the former second-largest crypto exchange is accompanied by misappropriation of customer funds and other potentially illegal behavior. A day ahead of FTX founder Sam Bankman Fried’s (SBF) scheduled hearing before the US Congress, US law enforcement authorities began arresting the self-proclaimed altruist in the Bahamas. Fried is charged with multiple counts of wire fraud, conspiracy to commit wire fraud, securities fraud, conspiracy to commit wire fraud and money laundering. The lawsuits by the Department of Justice, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) could result in a maximum penalty of 115 years in prison if convicted. The local court in Nassau denied a request for bail. Ultimately, extradition to the United States is expected. Former FTX CEO Sam Bankman-Fried (SBF) arrested in the Bahamas One month after FTX filed for bankruptcy, authorities in the Bahamas arrested founder and former CEO Sam Bankman-Fried. Read more Market participants’ confidence in crypto exchanges and other key crypto service providers was understandably badly damaged after the FTX insolvency. The trading places feel compelled to restore the lost trust through so-called “proofs of reserves”. While the proof of assets verified by blockchain is a start to better transparency, it represents insufficient transparency due to the lack of commitments to customers.Binance, the undisputed market leader in terms of trading volume, took a step towards expanded trading volumes in partnership with the audit company Mazars Transparency. But the venture left a number of unanswered questions, reflected in subsequent customer withdrawals of over $5 billion in assets. Binance’s Proof-of-Reserves Leave Questions Unanswered Financial experts and competitors are questioning the completeness and credibility of Binance’s Proof-of-Reserves. Read more Outspoken crypto opponents in the US Congress are using the FTX debacle to emphasize their position. Senator Elizabeth Warren is trying to push through a bipartisan approach to money laundering in the crypto industry. According to their own statement, their efforts are aimed at creating equal conditions. The legislation would direct the Financial Crimes Enforcement Network (FinCEN) of the Treasury Department to designate digital asset providers (custodians), miners, validators and NFT marketplaces as money service providers. This will in turn extend the responsibilities of the Bank Secrecy Act to the crypto industry, including customer identification (KYC) requirements. FinCEN is also said to keep records, monitor markets and produce reports on digital asset transactions involving “non-hosted” wallets. Elizabeth Warren Introduces Anti-Money Laundering Bill Senator Elizabeth Warren is trying to push through a bipartisan approach to money laundering in the crypto industry in the US Congress. Read more Blockchain technology has the potential to drastically improve the existing financial infrastructure in terms of transparency and efficiency. Major players in the Swiss financial sector (UBS, Credit Suisse, Vontobel, Pictet and more) have successfully developed and tested a new settlement mechanism for tokenized investment products on a public blockchain infrastructure for the first time. The proof of concept involves issuing tokenized investment products hosted on an Ethereum test blockchain. A new settlement mechanism makes it possible to trade and settle the products on a regulated Swiss exchange via a smart contract. A milestone for the Swiss financial centre. Swiss financial center tests tokenized investment products on a public blockchain The company CMTA is testing a new settlement mechanism for tokenized investment products with various Swiss banks. Read more Also: UK wants to establish itself as a “stablecoin hub”. To this end, the British Treasury wants to issue a legal framework for the use of stablecoins. The recently announced “FSM Bill” aims to expand the current rules for cryptoassets and create clear rules for the new technology. The move is part of the current Prime Minister’s efforts to position the UK in the global competition in the sector. The UK Treasury issues regulatory guidelines for stablecoins. The United Kingdom is planning a new reform to further regulate cryptocurrencies to protect consumers from fraud and mismanagement. Would you like our weekly review conveniently delivered to your inbox on Saturday? Subscribe to the CVJ.CH newsletter Email address:

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