USA

US SEC, FinCEN, CFTC Jointly Warn Against Illicit Use of Crypto Assets: The chairmen of the three primary financial regulators in the United States have released a joint statement warning crypto users of anti-money laundering (AML) and countering the financing of terrorism (CFT) obligations.

The statement, published Oct. 11, is a rare instance of joint action from the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN) and the Securities and Exchange Commission (SEC).

In the statement, the regulators remind those involved in the crypto trade of their reporting obligations under the Bank Secrecy Act, specifically relating to illicit use of crypto, which has been a priority for regulators recently. Regarding AML and CFT law, the statement reads:

“Among those AML/CFT obligations are the requirement to establish and implement an effective anti-money laundering program (AML Program) and recordkeeping and reporting requirements, including suspicious activity reporting (SAR) requirements.”

Signatories to the statement were Chairman of the CFTC Heath Tarbert, FinCEN Director Kenneth A. Blanco, and SEC Chairman Jay Clayton.

US IRS Adds Question on Crypto Usage to New Income Tax Form Draft: The United States Internal Revenue Service (IRS) has added a question on crypto ownership to the standard 1040 income tax form for the coming tax season.

On Oct. 11, a draft of the “Additional Income and Adjustments to Income” section of the new 1040 form surfaced that included a change was made to the ‘Additional Income and Adjustments to Income’ section. On the new 1040 form, the additional question reads:

“At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”

The question expects a straightforward yes or no, with no additional details requested.

Cointelegraph previously reported that the IRS had issued new guidelines for tax reporting on cryptocurrency airdrops and hard forks. The tax agency’s guidance answered questions about cryptocurrency transmissions for investors that hold cryptocurrencies as a capital asset and set general principles of tax law to determine that virtual currency is property for federal tax purposes.

SEC Rejects Bitwise Bitcoin ETF, Citing Concerns About Fraud and Manipulation: The United States Securities and Exchange Commission (SEC) has rejected the Bitcoin ETF (exchange-traded fund) proposal from Bitwise Asset Management and NYSE Arca following repeated delays. Bitwise had initially filed the proposal for a rule change in January.

In the 112-page, in-depth statement released on Wednesday, the Commission states that the filing failed to meet the necessary requirements, particularly those related to market manipulation and illicit activities.

According to the decision,

“Rather, the Commission is disapproving this proposed rule change because, as discussed below, NYSE Arca has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section6(b)(5), and, in particular, the requirement that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices.”

US SEC Halts TON Launch Over $1.7B ICO — Highest-Level Action Yet?: the United States Securities and Exchange Commission (SEC) announced that it is suing two offshore entities, Telegram and its wholly owned subsidiary, TON Issuer, for holding an unregistered token sale.

According to the complaint filed in the federal district court in Manhattan on the same day, Telegram sold approximately 2.9 billion crypto tokens, called Grams (GRM) to 171 buyers for a total of $1.7 billion. Around a quarter of that sum, $424.5 million, allegedly belonged to 31 purchasers based in the U.S.

As a result, the SEC has obtained a temporary restraining order against Telegram and TON, seeking “certain emergency relief,” as well as permanent injunctions, disgorgement with prejudgment interest and civil penalties. Now, the official Telegram channel for TON investors is suggesting that the launch, could be postponed.

Telegram Responds to Investors on SEC Action, Hearing Set for Oct. 24: Telegram Open Network (TON) developers responded to its investors after American regulators abruptly announced that its $1.7 billion token sale was illegal.

According to a TON letter to investors obtained by Cointelegraph, the firm has been trying to solicit feedback from the United States Securities and Exchange Commission (SEC) for the past 18 months regarding the TON blockchain and does not agree with the recent action. It wrote:

“We were surprised and disappointed that the SEC chose to file the lawsuit under these circumstances, and we disagree with the SEC’s legal position.”

Telegram Writes Investors to Counter FUD Before Feb. SEC Hearings: In a letter to investors, Telegram encouraged investors to view the United States Securities and Exchange Commission (SEC) hearing recently rescheduled for February as “a positive step.”

Fidelity Digital Assets Opens to All Qualified Investors: Fidelity Digital Asset Services (FDAS) is “now engaged in a full rollout” of its custody and trading services, expanding from the limited trial users in the platform’s final test stage, according to a Financial Times interview.

The business had initially been expected to be open in the first quarter of 2019.

In an interview with Fidelity Investments CEO Abigail Johnson, the FT said:

“Fidelity started adding clients in the first quarter and is now engaged in a full rollout of its custody and trading services for digital assets — a boon to what is a fragmented and complicated industry, Ms Johnson told the FT in a rare interview.”

FINRA Approves Grayscale’s Public Quote for Crypto Fund Shares: New York-based digital asset management fund Grayscale Investments has received regulatory approval to publicly quote the shares of its diversified cryptocurrency fund.

Grayscale was approved by the United States Financial Industry Regulatory Authority (FINRA) to publicly quote its Grayscale Digital Large Cap Fund (GDLCF) on over-the-counter (OTC) markets, according to a press release on Oct. 14.

The recent approval purportedly enables the first publicly-quoted security based on a selection of digital currencies in the U.S., the firm stated. The shares will be available for purchase through investment accounts similar to other unregistered securities.

SEC Enters Settlement Talks With Alleged Fraudulent Firm Veritaseum: The United States Securities and Exchange Commission (SEC) has entered settlement talks with alleged fraudulent cryptocurrency firm Veritaseum.

After filing a complaint against Veritaseum CEO Reginald Middleton and his two companies in August 2019, the SEC said that it is engaged in settlement talks with the defendants.

According to the report, the regulator filed a motion to adjourn the initial conference at the New York Eastern District Court earlier in October. Following the motion, the court reportedly agreed to reschedule the conference for Nov. 14, 2019.

US Senators Send Ominous Letters Signaling Potential Liabilities Over Facebook’s Crypto Project Libra: Facebook’s business partners may be putting themselves in the proverbial hot seat, according to letters issued by members of the US Senate to members of Facebook’s Libra Association, the nonprofit organization that is overseeing the tech giant’s stablecoin project Libra.

The letters, issued on Tuesday by two members of the US Senate Banking Committee, Senator Sherrod Brown of Ohio and Senator Brian Schatz of Hawaii, warn the chief executive officers of Visa, Mastercard and Stripe about their affiliation with Facebook’s controversial project and their membership in the Libra Association.

They write,