There is a gap in the regulation of crypto-assets that Congress needs to fix. The gap is contributing to fraud and weak investor protection in the distribution and trading of crypto-assets. In “It’s time to strengthen the regulation of crypto-assets,” Timothy G. Massad discusses how better regulation will benefit crypto investors, further the development of new technologies, curtail the use of crypto-assets used for illicit payments, and reduce the risk of cyber attacks, which can result in collateral damage elsewhere in our financial system.
Crypto-assets cut across current jurisdictional boundaries and thus fall into gaps between regulatory authorities. While each of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) has some authority over crypto-assets, neither has sufficient jurisdiction, nor do they together.
The hype surrounding Bitcoin and other crypto-assets has contributed to regulatory distraction. Bitcoin’s creators promised it would solve the “trust problem” and reduce our reliance on centralized financial intermediaries. However, it has not reduced our reliance on financial intermediaries or eroded the power of our largest institutions. Indeed, crypto-assets have created new financial intermediaries that are less accountable than the big banks.
New crypto exchanges and trading platforms are not subject to the traditional standards required of securities and derivatives market intermediaries. As a result, investor protection is weak and allegations of fraud and conflicts of interest are frequent.
There are no specific rules to ensure protection of customer assets. One supposed virtue of distributed ledger technology (DLT) is to provide an immutable record of ownership. Yet some platforms do not actually record customer interests on the blockchain and may operate without sufficient assets to cover customer claims. It is like fractional reserve banking without the regulatory framework or insurance that protects depositors. There are no rules regarding how trades are executed.
Crypto exchanges are not required to have systems to prevent fraud and manipulation, nor are there rules to prevent or minimize conflicts of interest. Crypto exchanges can engage in proprietary trading against their customers, something the New York Stock Exchange cannot do. Regulations to minimize operational risk and ensure system safeguards are needed, just as with securities and derivatives intermediaries.
Inadequate regulatory oversight creates broader societal risks with respect to cyber security and illicit payments. Unlike banks and exchanges, crypto intermediaries do not face any specific cyber security requirements, and cyber hacks are common: “Hacking [against crypto institutions] is on the rise because it works.”
Source: The Brookings Institution.
In a special March issue of RUBEZH magazine, the founder Internet-Rozysk, Igor Bederov told about six main trends and products that will determine the vector of development of information and analytical services developed for law enforcement agencies and private security services.
From January to November 2018, law enforcement agencies of the Russian Federation registered 156,307 crimes committed by means of information and telecommunication technologies. Less than a quarter solved and submitted to the court. IT investigative solutions are gaining popularity. Moreover, startups are ready to offer government customers prices that are 5-10 times lower than the cost of already used software products.
For example, trend 6: Control cryptocurrency turnover
Along with the growing popularity of cryptocurrency operations in the world, their appeal to criminals is also increasing. In August 2018, the Federal Financial Monitoring Service Rosfinmonitoring), whose task is to counter financial frauds and the financing of terrorism, ordered an analytical tool to track operations with cryptocurrencies, in particular Bitcoin.
According to information from the state procurement website, by the end of 2018, the system should have a mechanism for receiving and processing information about transactions in bitcoins and electronic wallets. A government contract worth 196 million rubles for the development of the platform was obtained by the Institute for Security Problems and Information Analysis (SPI).
A similar product designed for assessing the reliability of cryptowallets and conducting investigations of crimes committed using cryptocurrencies is being developed in St. Petersburg.
The project is actively seeking investors. It has the working title “SICP” (Security Intelligence Cryptocurrencies Platform). At the time of writing, the SICP is the only working domestic service for evaluating cryptotransactions. The free alpha version of the service is shared on the link: http://sicp.ueba.su
Source: RuBezh.
At the beginning of the year, KPMG surveyed more than 100 of the largest companies and found out which technologies the Russian business is implementing, which budgets of the organization are willing to spend on such projects and how they generally approach the management of digital transformation.
Main conclusions:
63% of respondents indicated that they have developed a digital transformation program, but in reality this more often means a set of short-term pilot projects;
77% of responding companies expect increased operational efficiency and reduced costs through digitization of processes;
The most popular technologies that have already been tested by Russian companies: big data analysis and predictive analytics (68%), chat bots (51%), robotization of office processes (50%);
The position of the CDO (Chief Digital Officer) is only in 16% of companies, the committee on digitalization - in 13%. In most Russian companies, decisions on digitalization projects are made by individual consideration at the top management level;
65% of companies attract startups to implement pilot projects;
In 2019, 36% of companies are ready to invest more than 100 million rubles in the implementation of projects on digitization of processes, while 55% of respondents plan to spend less than 50 million rubles;
51% of companies expect that the investment will pay off in less than 2 years, another 43% expect return on investment within 2-5 years.
Source: KPMG | RU.
Washington D.C., Dec. 20, 2018 - The Securities and Exchange Commission's Office of Compliance Inspections and Examinations (OCIE) today announced its 2019 examination priorities. OCIE publishes its exam priorities annually to promote transparency of its examination program and provide insights into the areas it believes present potentially heightened risk to investors or the integrity of the U.S. capital markets. This year, particular emphasis will be on digital assets, cybersecurity, and matters of importance to retail investors, including fees, expenses, and conflicts of interest.
OCIE is steadfast in its commitment to protect investors, ensure market integrity and support responsible capital formation through risk-focused strategies that improve compliance, prevent fraud, monitor risk, and inform policy. They believe our ongoing efforts to improve risk assessment and maintain an open dialogue with market participants advance these goals to the benefit of investors and the U.S. capital markets.
This year, OCIE's examination priorities are broken down into six categories:
1. compliance and risk at registrants responsible for critical market infrastructure;
2. matters of importance to retail investors, including seniors and those saving for retirement;
3. FINRA and MSRB;
4. digital assets;
5. cybersecurity; and
6. anti-money laundering programs.
The published priorities for 2019 are not exhaustive and will not be the only issues OCIE addresses in its examinations, Risk Alerts, and investor and industry outreach. While the priorities drive OCIE’s examinations, the scope of any examination is determined through a risk-based approach that includes analysis of the registrant’s operations, products offered, and other factors.
The collaborative effort to formulate the annual examination priorities starts with feedback from examination staff, who are uniquely positioned to identify the practices, products, and services that may pose significant risk to investors or the financial markets. OCIE staff also seek advice of the Chairman and Commissioners, staff from other SEC divisions and offices, and the SEC's fellow regulators.
OCIE is responsible for conducting examinations of entities registered with the SEC, including more than 13,200 investment advisers, approximately 10,000 mutual funds and exchange traded funds, roughly 3,800 broker-dealers, about 330 transfer agents, seven active clearing agencies, 21 national securities exchanges, nearly 600 municipal advisors, FINRA, the MSRB, the Securities Investor Protection Corporation, and the Public Company Accounting Oversight Board, among others. The results of OCIE’s examinations are used by the SEC to inform rule-making initiatives, identify and monitor risks, improve industry practices, and pursue misconduct...
Source: SEC.gov
Get Certified today (CyberPOL Cyber Essentials Certification)...
The Cyber Risk Management Certifications and Assessment can help you comply with GDPR and is an absolute necessity if you are under GDPR regulations compliance.
CYBERPOL Partnership Training Programs in accreditation with CYBERPOL The International Cyber Policing Organization approved by Decree (D-U-N-S Number 371018431). They provide four basic cyber training modules ranging from €499 to €1299 per certification in which the candidates on completion receives the certification, in some cases valid for one year and must be renewed annually.
The Accreditation QA (Quality Assurance) is in accordance with the use of accreditation class 42 of the trademarks act for academicals purposes. Thus ensuring such certification can only be issued by the license holders of such certifications.
Who Should Attend
All those wishing to act the Role of DPA/CSO/SSO/ IT manager along with all Personnel involved in IT & OT systems.
The following courses:
1. CyberPOL Cyber Essentials Cyber Security Essentials Awareness Training - Level I (SYBC1)
2. CyberPOL Cyber Essentials Cyber Security Essentials Awareness Training - Level II (CYB2)
3. CyberPOL Cyber Essentials PCI Compliance Security Awareness Training - Level I (CYBCPCI1)
4. CyberPOL Cyber Essentials PCI Compliance Security Awareness Training Level II (CYBPCI2)
5. CyberPOL Cyber Essentials Cyber Security Awareness Certifications and re-certifications ( coming soon)
6. CYBERPOL HIPAA Compliance Security Awareness Training (CYBHIPAA)
Accreditation By CYBERPOL The International Cyber Policing Organization by Decree and endorsed by ECIPS The European Centre for Information Policy and Security.
Policy and Compliance
Regulatory Reference: BIMCO Guidelines on Cyber Security, EU Regulation 2016/679, IMO MSC-FAL.1/Circ.3, ISO 27032:2012, Policy Letter 08_2016, TMSA, UK Department of Transport Code of Practice Cyber Security for Ships, USCG Cyber Security Strategy, GDPR.
All courses are European Centre for Information Policy and Security (ECIPS) endorsed.
Source: CyberPOL Academy.
Source: European Centre for Information Policy and Security (ECIPS).
The Swiss fintech market grew by 62 percent in 2018, according to a recent study by the Lucerne University of Applied Sciences published on February, 27.
In the IFZ FinTech Study 2018 of the Lucerne University of Applied Sciences and Arts, the project team provides a comprehensive overview of the Swiss FinTech sector.
The entire 140 page study can be downloaded free of charge from Swiss Bankers Prepaid Services Ltd.
Source: Swiss Bankers.
FATF public statement of February 22, 2019...
Democratic People's Republic of Korea (DPRK). The FATF reaffirms its 25 February 2011 call on its members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with the DPRK, including DPRK companies, financial institutions, and those acting on their behalf. In addition to enhanced scrutiny, the FATF further calls on its members and urges all jurisdictions to apply effective counter-measures, and targeted financial sanctions in accordance with applicable United Nations Security Council Resolutions, to protect their financial sectors from money laundering, financing of terrorism and WMD proliferation financing (ML/FT/PF) risks emanating from the DPRK. Jurisdictions should take necessary measures to close existing branches, subsidiaries and representative offices of DPRK banks within their territories and terminate correspondent relationships with DPRK banks, where required by relevant UNSC resolutions.
Iran. Country will remain on the FATF Public Statement until the full Action Plan has been completed. Until Iran implements the measures required to address the deficiencies identified with respect to countering terrorism-financing in the Action Plan, the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system. The FATF, therefore, calls on its members and urges all jurisdictions to continue to advise their financial institutions to apply enhanced due diligence with respect to business relationships and transactions with natural and legal persons from Iran, consistent with FATF Recommendation 19, including: (1) obtaining information on the reasons for intended transactions; and (2) conducting enhanced monitoring of business relationships, by increasing the number and timing of controls applied, and selecting patterns of transactions that need further examination.
Sanctions against Iran prohibit the export to Iran of nuclear, missile and a significant part of military products, foreign direct investment in Iran’s oil and gas and petrochemical industries, export of refined petroleum products, as well as any contacts with the Islamic Revolutionary Guard Corps (IRGC), banks and insurance companies, financial transactions and cooperation with the Iranian navy.
February 2019, while the crypto ecosystem continues to make considerable progress in building out its infrastructure and 'institutionalising' the space, many crypto players are facing challenges due to a broad range of issues, from a fall in cryptoasset prices to more regular start-up challenges.
This is forcing many crypto firms into situations of financial distress. In this article, they set out the ten things that any director or senior executive of a crypto entity needs to know when its solvency status is in doubt.
Download Crypto Insolvency...
15 January 2019 - Initial Coin Offerings (ICOs) are one of the most prominent applications of blockchain for finance, allowing for an innovative and inclusive way of financing small and medium-sized enterprises (SMEs).
Although the lack of regulatory clarity currently exposes ICO participants to some risks, appropriately regulated and supervised ICOs offer a potential new way to raise capital for projects enabled by Distributed Ledger Technologies and the blockchain.
This report analyses the emergence and potential of ICOs as a financing mechanism for start-ups and SMEs, examines the benefits and challenges of this mechanism for small businesses and investors, and discusses the policy implications of ICO activity for the inclusive financing of SMEs and the real economy...
Source: OECD.
February 14, 2019. AmCham SPb News and Events...
The meeting featured three presentations by Igor Bederov, Internet-Rozysk, Yuri Ivanov, Hyundai Motors and by Alexander Podobnykh, SICP and convened around 20 security specialists from member companies.
Presentations:
1. Risks prevention at the first contact stage. What can contact details reveal? (in Russian).
2. Access control and access management systems: new technologies in security provision (in Russian).
3. Prevention and investigation of crypto currency turnover related crime (in Russian).
Source: AmCham Russia.
Released today, Chainalysis latest crypto crime research on $1.6B in hacks, darknet market activity, and Ethereum scams shows how they decoded each type of crime and what it means for AML compliance and investigations.
Crypto crime increased in 2018, but it made up a smaller slice of a much larger market. Indeed, according to they analysis, illicit transactions comprised less than 1% of all economic bitcoin activity in 2018, down from 7% in 2012.
Even so, crime remains a significant problem in the cryptocurrency ecosystem. Exchange hacks have generated billions of dollars in criminal proceeds, darknet market activities have netted hundreds of millions of dollars in illicit revenues, and scams targeting individuals have stolen tens of millions of dollars.
Moreover, criminal use of cryptocurrencies has become far more sophisticated. As a result, in this second edition of their Crypto Crime Report, they go deeper in analysis to seek out granular insight into three categories of criminal activity.
Then, they examine the surprising resilience of darknet markets as law enforcement takes aggressive action against them. In a report on the “whack-a-mole” problem with the darknet, they look at how transaction activity briefly subsides then quickly reroutes itself to new platforms when major darknet markets are closed down.
They also examine changing trends in Ethereum scams, where individuals are targeted, as last year’s phishing schemes lose their effectiveness and more complex Ponzi and ICO exit scams emerge to make outsized gains.
Finally, they discuss the role of cryptocurrency in the broader context of money laundering and highlight the importance of different types of services that are used to integrate illicit cryptocurrency into the clean economy...
Source: Chainalysis Research.
Mind Smith has prepared an overview of key materials, analytical reports, research, reports and research articles. All the most interesting in the industry for the month...
37 analytical studies and reports, 27 scientific articles, 5 documents of international organizations.
Since 2018, Mind Smith has been implementing strategic blockchain consulting. Helps answer the question about the use of technology blockchain in business, conducts research and strategic sessions for top managers.
The company believes in the blockchain technology, but understand its limitations. For effective implementation of a well-coordinated work of the business and technical team. Mind Smith is ready to go all the way from the search for possible scenarios and the preparation of the concept to the implementation of the pilot and the implementation of the solution in the business.
Корпоративная система аналитики Транзакция Криптовалюта Актив - кибербезопасность инфраструктуры блокчейнов и антифрод в криптовалютной сфере (антискам, прозрачность, комплаенс).
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