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CFTC Grants Temporary Relief To Market Participants, Warns Investors About Scammers Taking Advantage Of Coronavirus News: In light of the spread of COVID-19, The Commodity Futures Trading Commission (CFTC) is offering temporary no-action relief for selected market participants.

In a message addressing the CFTC’s actions related to COVID-19 — the disease caused by the coronavirus — the commission announced that it had granted temporary no-action relief to a range of companies under its remit. The list includes futures commission merchants, floor brokers, retail foreign exchange dealers, swap dealers, swap execution facilities, and designated contract markets. Its most recent form of targeted relief came on March 20, according to a public statement.

As a result of the relief, market participants are temporarily exempt from certain compliance regulations that are difficult to achieve due to health measures like remote work and social distancing.

“In connection with an industry-wide response to the COVID-19 pandemic, no-action relief has been requested for failure to comply with certain Commission regulations where compliance is anticipated to be particularly challenging or impossible because of displacement of firm personnel from their normal business sites due to community nonpharmaceutical interventions such as social distancing and closures in response to the COVID-19 pandemic,” said a memo detailing the relief.

Additionally, the CFTC has warned investors about fraudsters who seek to profit off of the current market volatility triggered by concerns about the current pandemic. Specifically, the agency said it had observed a high number of fraudulent actors who are using COVID-19 related news events to manipulate investors.

“The common advice is ‘if it looks too good to be true, it probably is,’” the CFTC added.

DHS Coronavirus Memo Says ‘Blockchain Managers’ Involved In Food Distribution Are Essential Critical Infrastructure Workers: The U.S. Department of Homeland Security has included “blockchain managers” in food and agriculture distribution as essential Critical Infrastructure workers, according to a March 19 memo focused on the coronavirus crisis.

The memory was published by the Cybersecurity and Infrastructure Security Agency (CISA), which was established in 2018 with a focus on digital security.

In the memo, CISA recommended that “[i]f you work in a critical infrastructure industry, as defined by the Department of Homeland Security, such as healthcare services and pharmaceutical and food supply, you have a special responsibility to maintain your normal work schedule.”

Notably, the list includes the following item: “Employees and firms supporting food, feed, and beverage distribution, including warehouse workers, vendor-managed inventory controllers and blockchain managers.”

“This list was developed in consultation with federal agency partners, industry experts, and State and local officials,” the memo said. “CISA will continually solicit and accept feedback on the list and will evolve the list in response to stakeholder feedback.”

Hawaii Testing Digital Currency Plan — No Money Transmitter License Required: Hawaii is launching a pilot program for a digital currency. The collaborative initiative is backed by the Department of Commerce and Consumer Affairs, Division of Financial Institutions (DFI) and Hawaii Technology Development Corporation (HTDC).

The “Digital Currency Innovation Lab” is a two-year effort designed to explore the use of a digital currency in the real world. Digital currency issuers will be able to conduct business in Hawaii without having to obtain a state money transmitter license during the effective period of the pilot program.

Legislators will examine data from the trial to shape informed decisions about the practicalities of implementing a digital currency in the future.

The state will tap various companies for the pilot test.

Says Iris Ikeda, Commissioner of Financial Institutions,

“DFI is leveraging its statutory authority to provide an innovative way to introduce digital currency issuers into the State of Hawaii, while ensuring the safety of our consumers. By acknowledging digital currencies as a transmission vehicle of the future, we will be able to craft legislation that is conducive to its development in Hawaii.”

Len Higashi, acting executive director of HTDC, is pushing for Hawaii to become a leader in the digital economy by being an early adopter.

“By spearheading the Digital Currency Innovation Lab, Hawaii can position itself on the forefront of financial technology and potentially, reap the economic benefits that accompany the leadership stance taken.”

The Digital Currency Innovation Lab will be accepting applications from till May 1, 2020 online.

Mayors Lock Down NYC and LA, Fed Reduces Interest Rates to Zero, Launches $700 Billion QE Program As Coronavirus Outbreak Continues: In a series of tweets, New York City Mayor Bill de Blasio announced that he will sign an executive order on Monday to shut down a string of businesses across the city, effective on Tuesday, March 17 at 9:00 a.m., including restaurants, bars and cafes that will remain open for take-out and delivery only. The mayor will also close nightclubs, movie theaters, small theater houses and concert venues to stop the spread of the coronavirus.

Says de Blasio,

“This is not a decision I make lightly. These places are part of the heart and soul of our city. They are part of what it means to be a New Yorker. But our city is facing an unprecedented threat, and we must respond with a wartime mentality.”

Los Angeles Mayor Eric Garcetti is also closing movie theaters, bars, nightclubs, gyms and entertainment venues until March 31, a date that is subject to change depending on the outbreak.

The announcements coincide with the Federal Reserve’s emergency measures revealed on Sunday. The central bank has lowered its benchmark interest rate to zero. The dramatic move is part of a sweeping plan to stimulate the economy and combat the effects of the coronavirus outbreak, with the Federal Reserve rebooting its quantitative easing program. The new round of QE means the Fed will purchase a minimum of $700 billion in Treasury bonds and mortgage-backed securities.

Amidst a shrinking number of levers to pull to stabilize the economy following the drastic restrictions impacting travel, tourism, entertainment and hospitality, the Federal Reserve has set a new rate target of 0% to 0.25%, down from 1% to 1.25%.

Chairman Jerome Powell says the central bank will also support banks that provide small business loans in order to reduce the pain of the economic fallout from the global pandemic.

Says Powell,

“US banks are strong, have high levels of capital and liquidity, and are well positioned to provide credit to households and businesses. Against this favorable backdrop, the virus presents significant economic challenges. Like others, we expect that the illness and the measures now being put in place to stem its spread will have a significant effect on economic activity in the near term.”

The announcement triggered a lackluster response from the markets as concerns mount over the nature of the virus, uncertainty about its duration, severity and the people it will affect, and the Fed’s limited number of remaining options should the stimulus plan fail. Dow futures slid 1,041 points, down 4.6% as the S&P 500 futures dropped 4.8% and the Nasdaq Composite futures slid 4.6%.

NY Regulator Sends Letter to Coinbase, Ripple, Square Requesting Coronavirus Preparedness Plan: Coinbase, Ripple, Circle, Robinhood, Gemini, Genesis Global Trading, BitPay and Square are among 18 registered crypto-related businesses that received a request from the New York State Department of Financial Services (NYDFS) to submit their coronavirus preparedness plans.

In July of 2019, the regulator opened a new department focused on licensing and regulating crypto-related businesses in the state of New York, overseeing crypto services such as buying, selling, storing, sending and receiving digital assets on behalf of New York residents.

According to the letter, issued on Tuesday, the DFS is asking crypto firms under its jurisdiction to provide assurance relating to operational and financial risks arising from the outbreak.

“It is critical that each regulated entity establish plans to address how it will manage the effects of the outbreak and assess disruptions and other risks to its services and operations.”

Firms must submit a response within 30 days of the notice, outlining how they plan to manage the risk of disruption to their services and operations.

Each company is expected to submit a detailed strategy describing how it will respond to the impact of the outbreak in stages, so that efforts can be “appropriately scaled, consistent with the effects of a particular stage of the outbreak.”

Firms are also asked to map out an assessment of the potential increased risk of cyber-attacks and fraud due to an outbreak.

“DFS would underscore, in particular, the risk to Virtual Currency businesses of increased instances of hacking, cybersecurity threats, and similar events, as bad actors attempt to take advantage of a COVID-19 outbreak, and the possible resulting need for heightened security measures, such as enhanced triggers for fraudulent trading or withdrawal behavior.”

The letter gives some insight into how state officials plan to manage the ongoing economic disruption in New York, where the coronavirus has infected a cluster of people in New Rochelle, making it the second-largest cluster of Covid-19 cases in the United States after Seattle, Washington.

Officials in the state are currently rolling out the state’s first drive-through testing center.

US Banks Closing Branches: Banks across the United States are closing or cutting back on their branch operations, while others remain open in an attempt to foster trust in the banking system during the crisis. Many banks have restricted operations to drive-throughs and ATMs only.

Says Philip Flynn, president and CEO of Associated Banc-Corp in Green Bay, Wisconsin,

“If we’re going to prevent a really bad outcome, really the only tool we have right now is to emphasize keeping people safe and away from each other as best as we can. It’s all about reducing the odds of spreading this.”

Consulting firm Deloitte suggests in a report issued last Monday that all banks close their lobbies and make sure ATMs are full, reports American Banker.

Capital One Financial has closed all of its cafe locations, along with 120 branches in certain locations. Nebraska Bankers Association and the North Carolina Bankers Association are closing lobbies or limiting walk-in access. Core Bank in Omaha, Nebraska is allowing lobby access through appointment only. Reading Cooperative in Massachusetts is allowing drive-through only.

Bank of America, Citigroup and Citizens Financial Group have not closed any branches while Wells Fargo is planning to shutter two branches in North Carolina.

According to a spokesman at Citizens Financial, the bank is committed to staying fully operational.

“We intend to keep our branches open as normal in order to ensure that our customers remain able to access their banking services.”

Some branches inside grocery stores will close, leaving only ATMs available, while others will remain open with a limited staff.

President and CEO of Reading Cooperative Julieann Thurlow says, via American Banker,

“Our biggest concern is that there becomes a hysteria around banking like there was around groceries. The banking system is stronger and more resilient than it’s ever been.”

US Congressman Revamps Proposal to Legitimize Bitcoin and Other Crypto Assets: Last Monday, representative Paul Gosar (R-AZ) introduced the latest proposal that aims to give clarity and legitimacy to Bitcoin and digital assets. The Crypto-Currency Act of 2020 is attempting to address a number of regulatory issues for cryptocurrencies.

Currently, the US has no comprehensive framework for cryptocurrencies to support related businesses, entrepreneurs or investors. The lack of clarity continues to cast some confusion over what a cryptocurrency is, how one may differ from another, and which US regulator should oversee Bitcoin versus Tether versus Ethereum. Gosar’s bill, an updated version of a proposal that leaked in December, attempts to answer these questions.

According to the new draft, regulators would be tasked with categorizing digital assets into three distinct categories: crypto-commodity, crypto-currency and crypto-security. The approach would put the three US regulators covering commodities, currencies and securities — the Commodity Futures Trading Commission (CFTC), the Secretary of the Treasury and the Securities and Exchange Commission — in charge of different digital assets.

The bill defines “crypto-currency” as a representation of a US currency, such as a stablecoin, as opposed to Bitcoin, which is not backed by any government and does not represent any national currency. Under the proposal, Tether (USDT), USD Coin (USDC), TrueUSD (TUSD) and similar digital assets pegged to the US dollar would be governed by the US Treasury through the Financial Crimes Enforcement Network (FinCEN).

Crypto-commodities are economic goods or services that are on a blockchain or decentralized cryptographic ledger. This definition appears to apply to digital assets such as Bitcoin.

Crypto-securities are defined as “all debt, equity, and derivative instruments that rest on a blockchain or decentralized cryptographic ledger.”

You can check out the latest proposal for the Crypto-Currency Act of 2020 here.

Minnesota Lawmakers Renew Push To Ban Crypto Political Donations: Lawmakers in the U.S. state of Minnesota are seeking to breathe new life into an effort if successful, would outlaw campaign contributions in the form of cryptocurrency.

Last May, a group of members of Minnesota’s House of Representatives filed a bill that, if passed, would ban “from any source a contribution or donation of any digital unit of exchange, including but not limited to bitcoin, that is not backed by a government-issued legal tender.” But as public records show, that bill hasn’t advanced in any meaningful way.

Yet, according to LegiScan, a group of five members of the Minnesota Senate filed a nearly identical piece of legislation. The bill has since been referred to the Senate State Government Finance and Policy and Elections Committee.

If either bill were to pass, those who knowingly solicit digital currencies would face a civil penalty of up to $3,000. In addition, those who knowingly accept such donations would be guilty of a felony.