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On August 12, 2024, the Securities and Exchange Commission (SEC) took decisive action against OTC Link LLC, a New York-based broker-dealer, for neglecting to file mandatory Suspicious Activity Reports (SARs) over a period exceeding three years. The firm has agreed to pay $1.19 million to settle the charges, marking a significant enforcement effort by the SEC to ensure adherence to anti-money laundering (AML) regulations within the securities industry. SARs are vital for detecting potential violations of securities laws and money laundering activities. Broker-dealers like OTC Link are legally required to file these reports when they identify transactions that appear suspicious. However, according to the SEC's findings, OTC Link failed to submit a single SAR from March 2020 through May 2023, despite operating three active alternative trading system (ATS) platforms—OTC Link ATS, OTC Link ECN, and OTC Link NQB. These platforms facilitate tens of thousands of transactions daily, many...

On 26 July 2024, the Securities Commission of the Bahamas (SCB) announced the Digital Assets and Registered Exchanges Act, 2024 (DARE Act) which came into effect on 29 July, 2024. It aims to establish a clear legal framework for the issuance, sale, and trade of digital assets, including NFTs and stablecoins, and to oversee the operations of digital asset businesses and exchanges. The Act replaces the Digital Assets and Registered Exchanges Act, 2020, providing more detailed regulations to adapt to the growing complexities of digital assets and their associated technologies. The Act establishes a comprehensive regulatory framework for various key structures in the digital asset industry. It mandates that Digital Asset Businesses, including exchanges, custody services, and staking operations, must be registered and regulated. The Act also enforces transparency and investor protection in Token Offerings and imposes stringent requirements on Stablecoins, including adequate reserves and...

On August 9, 2024, the Internal Revenue Service (IRS) released an early draft of the much-anticipated Form 1099-DA, a new tool designed to streamline and enhance the reporting of digital asset transactions. This form will become mandatory for brokers beginning in 2025, marking a significant advancement in the agency's efforts to ensure that digital assets are accurately reported and taxed in accordance with federal laws. Form 1099-DA, officially titled "Digital Asset Proceeds From Broker Transactions," represents the IRS's response to the growing complexity of digital asset transactions and the need for clearer reporting mechanisms. Brokers will be required to use this form to report sales and exchanges of digital assets, starting with transactions that occur in calendar year 2025. The finalized versions of these forms will be distributed to both taxpayers and the IRS in early 2026. However, it is important to note that Form 1099-DA is still a work in progress and should not be used...

On 1 August 2024, the Monetary Authority of Singapore (MAS) introduced its Guidelines on Licensing and Conduct of Business for Fund Management Companies (FMCs), with significant changes taking effect from 1 August, 2024 itself. These revisions are designed to address the evolving landscape of financial markets, particularly with the rising prominence of digital assets like cryptocurrencies. The new guidelines aim to ensure that all entities engaged in fund management within Singapore operate under stringent regulatory standards that prioritize transparency, investor protection, and market integrity. A FMC is broadly defined as any entity involved in managing investment portfolios on behalf of clients, which can range from individual investors to large institutional clients such as pension funds or insurance companies. The primary role of an FMC is to make informed investment decisions, oversee portfolio construction, and manage the execution of trades to achieve specific financial...

On July 26, 2024, the Monetary Authority of Singapore (MAS) issued a circular i.e. AMLD 08/2024, aimed at financial institutions (FIs) operating in the wealth management sector. The circular provides detailed guidance on establishing the sources of wealth (SOW) of customers, a critical component in mitigating money laundering and terrorism financing (ML/TF) risks. As Singapore continues to attract high-net-worth individuals (HNWIs) seeking wealth management services, this circular emphasizes the need for rigorous due diligence to ensure that the influx of funds remains legitimate. Singapore has long been recognized as a premier financial center for HNWIs, offering access to global and regional financial markets through a wide range of services and expertise. However, the wealth management business is inherently susceptible to higher ML/TF risks due to the nature of its clientele, the size of transactions, and the complexities involved in managing substantial wealth. Given this, MAS...

On August 8, 2024, the Commodity Futures Trading Commission (CFTC) advanced efforts to enhance data transparency within the financial sector by proposing new technical data reporting standards. Developed in collaboration with major financial regulatory agencies, this initiative aims to establish uniform standards for collecting and reporting financial information. The agencies involved include the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Consumer Financial Protection Bureau, the Federal Housing Finance Agency, the Securities and Exchange Commission, and the Department of the Treasury. These standards will also apply to data collected on behalf of the Financial Stability Oversight Council. The proposed rule, now open for public comment, introduces common identifiers for legal entities, financial instruments, and other critical data points. The goal is to enhance consistency...

On August 08, 2024, the Commodity Futures Trading Commission (CFTC) announced a whistleblower award exceeding $1 million to an individual who provided crucial information and assistance that significantly contributed to a successful enforcement action in the digital asset markets. Director of Enforcement Ian McGinley highlighted the significance of the CFTC’s focus on digital asset-related misconduct, stating, "Identifying unlawful conduct in the digital asset marketplace is a major priority for the CFTC, especially as everyday Americans are increasingly victimized by digital asset scams." McGinley also noted that digital asset cases made up nearly half of the CFTC’s enforcement docket in the last fiscal year, emphasizing the critical role that whistleblowers play in uncovering violations within this rapidly evolving sector. The whistleblower in this case provided specific and credible information that the CFTC had not previously known, directly leading to the agency's enforcement...

On 08 August 2024, the Commodity Futures Trading Commission (CFTC) announced a landmark decision by the U.S. District Court for the Southern District of New York, which ordered FTX Trading Ltd. and Alameda Research LLC to pay a staggering $12.7 billion in monetary relief to victims of their fraudulent activities. This judgment is one of the largest in the history of financial fraud cases, reflecting the scale of the misconduct orchestrated by Samuel Bankman-Fried and his associated entities. The court's order requires FTX and Alameda to pay $8.7 billion in restitution to customers who suffered losses due to the misappropriation of their funds. An additional $4 billion is to be paid in disgorgement, which will be used to further compensate the victims through a supplemental remission fund. This resolution comes after a series of legal actions taken against Bankman-Fried and his companies, which began with the CFTC filing a complaint on 13 December 2022. The initial complaint alleged...

On 2 August 2024, Ripple, a leading provider of enterprise blockchain and crypto solutions, announced its partnership with the DIFC Innovation Hub, a key innovation ecosystem within the Dubai International Financial Centre (DIFC). This strategic collaboration aims to accelerate blockchain and digital asset innovation in the UAE, marking a significant step in the region's fintech development. The new partnership will connect the next generation of developers with the DIFC Innovation Hub, which hosts over 1,000 growth-stage tech firms, innovation companies, digital labs, venture capital firms, regulators, and educational entities. This initiative is designed to drive blockchain and crypto adoption among early-stage companies and scale-ups, while also introducing and positioning the technology with traditional large strategic institutions. Ripple has committed one billion XRP to accelerate development and new global use cases on the XRP Ledger (XRPL), the decentralized, layer-1...

On 6 August 2024, the International Monetary Fund (IMF) issued a statement following discussions with Salvadoran authorities, led by Mr. Raphael Espinoza. These conversations, held both in person and virtually over the past months, centered on policies aimed at addressing macroeconomic imbalances and enhancing El Salvador’s medium-term growth prospects and resilience. Significant progress has been made in negotiations for a Fund-supported program. The focus areas include strengthening public finances, boosting bank reserve buffers, improving governance and transparency, and mitigating risks associated with Bitcoin. On the fiscal front, preliminary agreements aim to improve the primary balance by around 3.5% of GDP over three years, setting public debt on a sustainable path. This fiscal consolidation will be achieved through a balanced set of measures, initially focusing on rationalizing the public wage bill while ensuring critical social and infrastructure spending is maintained....

On 6 August, 2024, in a move to further integrate cryptocurrency assets into the regulated financial system, the Securities and Exchange Commission (SEC) has announced two proposed rule changes. Filed by Nasdaq ISE, LLC, these changes aim to enhance the trading landscape for Ether and Ethereum-based financial products. The proposals focus on listing and trading options on units representing interests in Ether-holding trusts and the iShares Ethereum Trust, potentially transforming market dynamics and investor access. The first proposal, submitted on 22 July 2024, seeks to amend Options 4, Section 3, allowing Nasdaq ISE to list and trade options on units that represent interests in a trust holding Ether, known as Ether Exchange-Traded Products (ETPs). By classifying these Ether ETPs as Exchange-Traded Fund Shares (ETFs), the Exchange intends to offer investors a more streamlined and cost-efficient way to gain exposure to Ether. This approach aims to bypass the complexities and direct...

On 29 July 2024, conceptual artist Brian Frye and musician Jonathan Mann filed a pre-emptive lawsuit against the United States Securities and Exchange Commission (SEC) concerning the regulation of non-fungible tokens (NFTs). This legal action follows previous SEC enforcement actions against Impact Theory, LLC, and Stoner Cats, highlighting the increasing scrutiny of NFTs under federal securities laws. In their complaint, Frye and Mann argue that NFTs, which are unique digital assets often used to verify the authenticity of art and music, should not be regulated as securities. They question whether artists should be required to register their digital art with the SEC and make public disclosures about potential risks, comparing such requirements to the absurdity of demanding traditional artists like Warhol or Hendrix to do the same. The complaint suggests that imposing these regulations on NFTs would stifle creativity and innovation in the digital art space. The plaintiffs' digital art...