Wisly Industry News Update — 17 July 2021
The crypto industry has seen another interesting week with some noteworthy developments making for fascinating conversations in crypto circles. UK authorities crackdown on misleading crypto adverts; South Korea enforces anti-money laundering laws for crypto investors; New Argentinian bill proposes salary payments in cryptocurrencies, and Robinhood fined $15 million for flouting anti-money laundering regulations.
UK authorities crackdown on misleading crypto adverts
The Advertising Standards Authority (ASA) in the UK is cracking down on misleading cryptocurrency adverts within its borders. As part of its overall efforts, it plans to include cryptocurrency campaigns as a “red alert” priority in the financial marketing department. The ASA wants to be more proactive regarding misleading cryptocurrency adverts by contacting companies and issuing warnings in the future.
Taking a tough stance on this practice, the ASA promised that any advert that does not comply with the standards issued by the regulator will be removed permanently. ASA’s Director of Complaints and Investigations, Miles Lockwood, said “We see this as an absolutely crucial and priority area for us. Where we do find problems, we will crack down hard and fast.”
The authority has measures in place to increase oversight of cryptocurrency adverts and has recently observed that most cryptocurrency adverts in the UK do not fulfil the conditions required by the regulator. While the regulator typically relies on consumer complaints before taking action, it has decided to play a more proactive role in the oversight of these marketing initiatives, including social media.
South Korea enforces anti-money laundering laws for crypto investors
In a new development affecting South Koreans, the government has stated that all overseas cryptocurrency exchanges that facilitate South Korean currency must register with anti-money laundering authorities in the country. Chairman of the Financial Services Commission, Eun Sung-soo, recently told South Korean lawmakers, “If a cryptocurrency exchange serves local customers with the won-currency settlement, it must register with the Korea Financial Intelligence Unit.”
The recently revised law was effective from March 2021 with a 6-month grace period and requires banks to issue real-name accounts using more stringent guidelines to prevent money-laundering activities. With this amendment to the law, South Korean banks will now be expected to evaluate a cryptocurrency exchange’s transparency, business risk and vulnerability to criminal activity.
It is estimated that more than 100 minor cryptocurrency exchanges in South Korea have used opaque accounts in an effort to attract investors. These types of accounts allow cryptocurrency exchanges to manage the funds of investors with their own bank accounts. These minor cryptocurrency exchanges have been dealt a blow, however, as they will be banned from withdrawing money for cryptocurrency trading in South Korea, effective 25 September 2021, if they do not have a real-name bank account.
New Argentinian bill proposed salary payments in cryptocurrencies
A prominent lawmaker in Argentina has proposed a bill that will enable its citizens to get their salary paid in digital currencies. The proposed bill hopes to allow service exporters and employees to get some or all of their salaries paid in digital currencies in an effort to preserve its purchasing power. This proposal comes as Argentina has experienced its highest inflation levels in recent years, sparking a flurry of interest in digital currencies from investors in the country.
The bill was proposed by José Luis Ramón, a member of the Argentine Chamber of Deputies, who said,” The idea is that they [the workers] can strengthen their autonomy and conserve the purchasing power of their remuneration.” He continued,” This initiative stems from the need to promote greater autonomy and governance of wages, without this implying a loss of rights or exposure to situations of abuse within the framework of the employment relationship.”
Currently, in Argentina, all payments received in foreign currencies must be converted to Peso upon receipt and have a 30% tax imposed on that amount. It is rumoured that this new arrangement would exempt digital currencies from the tax imposition. Employees and service exporters could, therefore, make significant savings if they received their salaries in digital currencies.
Robinhood fined $15 million for flouting anti-money laundering regulations
Global online brokerage company, Robinhood, has found itself on the wrong side of the law and was forced to pay a $15 million fine to a New York regulator after an anti-money laundering investigation. The regulator found loopholes in Robinhood’s anti-money laundering and cybersecurity protocols.
Together with the hefty fine, Robinhood will now have a monitor who will carefully observe all anti-money laundering and cybersecurity practices at the brokerage. Incidentally, this is not the first time that Robinhood has found itself in breach of regulations as they recently were forced to pay out $70 million in penalties to the Financial Industry Regulatory Authority (FINRA) for system-wide outages, misleading communication and ambiguous trading practices.
In a statement released by FINRA, they said, “FINRA considered the widespread and significant harm suffered by customers, including millions of customers who received false or misleading information from the firm, millions of customers affected by the firm’s system outages in March 2020, and thousands of customers the firm approved to trade options even when it was not appropriate for the customers to do so.”
Robinhood recently filed an application to go public and plans to trade under the ticker, Hood. While the recent scandals have dented its reputation, it has continued to experience solid growth.