Brazil’s largest private bank Launches Crypto Trading Platform in Brazil

A Step Into the Cryptocurrency Market

The biggest private bank in Brazil, Itaú Unibanco, has just made a substantial entry into the bitcoin industry. In a significant step toward the integration of conventional banking with digital assets, the bank introduced a cryptocurrency trading service on December 4, 2023. This event marked a significant milestone. This action is a response to the growing demand for cryptocurrencies from organizations and people with high net worth all around the globe.

Offerings Made Initially and Plans for the Future

Trading in Bitcoin (BTC) and Ethereum (ETH), the two most significant cryptocurrencies, is initially available via the site. Guto Antunes, who is the head of digital assets at Itaú Unibanco, said that this is only the beginning, and he indicated that there are plans to extend to additional crypto assets in the future. This policy is in line with the changing regulatory environment as it pertains to cryptocurrencies in Brazil.

The Environment of Regulation

The clarity of the regulatory environment in Brazil was a significant factor in the bank’s decision to provide services related to cryptocurrency trading. The Brazilian Securities and Exchange Commission (CVM) will be in charge of supervising assets that are classified as “securities,” while the Central Bank of Brazil will be in charge of overseeing crypto laws. Since July 2022, this legal framework has been under review, which has provided a strong platform for financial institutions such as Itaú Unibanco to go into the realm of crypto services.

The Landscape of Competition

The arrival of Itaú Unibanco into the cryptocurrency trading market positions it to compete with other local firms such as the cryptocurrency exchange MB and the digital assets subsidiary Mynt of the investment bank BTG Pactual. Itaú, on the other hand, is attempting to distinguish itself by providing crypto custody services, which are aimed at protecting the assets of its consumers. The one-of-a-kind strategy that it takes places it in a favorable position in comparison to global titans such as Binance.

The Currency Exchange Market in Brazil

In the year 2023, Brazil had around 37.72 million users of cryptocurrencies, making it a sizable user base. In accordance with Statista’s projections, this number is anticipated to increase to 54.46 million by 2020. It is obvious from these statistics that Brazilians are showing an increasing interest in cryptocurrency, which indicates that the market for Itaú Unibanco’s new initiative is likely to be quite lucrative.

Final Thoughts

The entry of Itaú Unibanco into the cryptocurrency market is a significant event that serves as a symbol of the growing awareness and acceptance of cryptocurrencies within the mainstream financial sector. The bank is well positioned to become a significant participant in Brazil’s rapidly developing cryptocurrency market because to its all-encompassing strategy, which includes securities trading and custody services.

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Circle Formally Refutes Allegations of Illicit Financing and Connections to Justin Sun

Circle, a leading issuer of stablecoins, has recently addressed and strongly refuted allegations regarding its involvement in illicit financing and alleged connections with Justin Sun, the founder of Tron. These claims, brought forward by the nonprofit watchdog organization, Campaign for Accountability (CfA), prompted Circle’s Chief Strategy Officer and Head of Public Policy, Dante Disparte, to write a formal response to U.S. Senators Elizabeth Warren and Sherrod Brown.

In the letter, Disparte emphatically denies any involvement of Circle in facilitating or financing activities related to Hamas or any other illicit actors. He highlights Circle’s unwavering commitment to combating illicit financial activities. Circle has been an active partner with regulators and law enforcement in the United States, Israel, and other jurisdictions, ensuring that their stablecoin, USDC, is not used for illicit activities. The company’s dedication to legal compliance was recently acknowledged by the U.S. Secret Service, recognizing Circle’s efforts in identifying fraud and assisting in fund recovery.

Addressing specific allegations, Disparte referred to an incident where the National Bureau for Counter Terror Financing of Israel identified digital wallets linked to the Palestinian Islamic Jihad (PIJ) with assets amounting to $93 million. A report by the blockchain firm Elliptic initially suggested that all assets in these wallets were used to finance PIJ, but this was later corrected. Public blockchain ledgers revealed that of the $93 million, only $160 in USDC was transferred among those wallets, and none of that amount originated from Circle. This example underscores Circle’s stance against the misrepresentation of its role in alleged illicit activities.

Furthermore, Circle clarified its relationship with Justin Sun, stating that it does not provide banking services to him or his associated entities, including the TRON Foundation or Huobi Global. Despite the absence of specific designations by the U.S. government, Circle terminated all accounts associated with Mr. Sun and his affiliated companies in February 2023.

Circle also emphasized its status as a highly regulated financial entity. It operates under the regulatory frameworks of multiple U.S. states and federal bodies, including the Ohio Department of Commerce Division of Financial Institutions and the New York Department of Financial Services. As a Money Services Business registered with FinCEN, Circle adheres to the Bank Secrecy Act, anti-money laundering laws, and other regulatory standards. This regulatory compliance is a cornerstone of Circle’s operations, reflecting its commitment to legal and ethical business practices.

In its advocacy for regulatory reforms, Circle has been a vocal proponent for a comprehensive federal framework governing stablecoins. The firm has actively participated in legislative processes, seeking to establish robust reserving, redemption, disclosure, liquidity, and operational risk management standards for stablecoin issuers. Circle’s CEO, Jeremy Allaire, has testified before Congress, advocating for standards that would elevate the safety and reliability of stablecoin issuers.

Circle’s response to the allegations made by the CfA is a strong affirmation of its dedication to regulatory compliance and ethical practices in the digital assets space. The company remains committed to collaborating with regulatory bodies to enhance the regulation of digital asset markets and to combat money laundering and terrorism financing effectively.

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Fireblocks Introduces ‘Off Exchange’ to Address Exchange Counterparty Risk, Integrates with Deribit

On November 28, 2023, Fireblocks, an innovative digital asset operations platform, announced the introduction of ‘Off Exchange’, a first-of-its-kind solution aiming to revolutionize the way institutional traders interact with digital asset exchanges. This groundbreaking platform is designed to mitigate the inherent counterparty risks that have long plagued the crypto trading market.

Exchange counterparty risk in digital assets trading encompasses a range of potential pitfalls, including the threat of cyber hacks, the risk of bankruptcy, and the potential for misappropriation of client funds. These risks are amplified in the crypto trading market due to the dual role of exchanges as both custodians and trading venues. Past incidents, such as the FTX collapse, have starkly highlighted these vulnerabilities.

Fireblocks’ Off Exchange platform represents a significant technological leap forward, employing multi-party computation (MPC) technology. This innovative approach enables traders to directly trade on centralized exchanges from a shared, on-chain MPC wallet. The shared wallet model ensures that traders maintain control over their assets, significantly reducing the risk of loss due to exchange-related issues like hacks, bankruptcy, and fraud.

The integration of Fireblocks Off Exchange with Deribit, a leading digital asset derivatives trading platform, marks a significant milestone in the journey towards more secure and efficient digital asset trading. This collaboration signifies the increasing recognition of the need for enhanced security measures in the burgeoning field of digital asset derivatives.

Fireblocks Off Exchange promises several key benefits for the trading community. Firstly, it offers enhanced security by allowing traders to retain control over their assets in a shared wallet, thereby reducing the risk of asset misappropriation. Secondly, it increases market liquidity by enabling real-time settlement of trades, allowing traders to move capital quickly and efficiently between various trading venues and counterparties.

Since its announcement, Off Exchange has garnered significant interest from the institutional trading community. Hundreds of hedge funds, market makers, liquidity providers, and brokerages have joined the waitlist to be onboarded onto the platform. The integration with Deribit is just the beginning, with plans to extend support to additional global exchanges, further broadening the impact and reach of this innovative solution.

The launch of Fireblocks Off Exchange is a pivotal moment in the quest to create a more secure and efficient digital asset trading environment. By leveraging the latest advancements in MPC and blockchain technology, Fireblocks is leading the charge in reducing counterparty risk, a move that is likely to encourage more traditional financial institutions to enter the crypto market.

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Australian Taxation Office Clarifies CGT on DeFi and Crypto Wrapping

The Australian Taxation Office (ATO) has provided pivotal guidance on the capital gains tax (CGT) treatment concerning decentralized finance (DeFi) and the process of wrapping crypto tokens. This move is part of the ATO’s ongoing efforts to clarify tax obligations in the evolving domain of digital assets and blockchain-based finance.

DeFi, a form of finance leveraging blockchain technology to operate without traditional financial intermediaries, predominantly runs on the Ethereum blockchain. In DeFi, capital gains can occur, and the ATO has highlighted several CGT events (A1, E2, C2, H2) that might be relevant, depending on the specific arrangement’s nature.

A critical factor in determining CGT events is whether a trust relationship is established within the DeFi arrangement. This becomes significant in scenarios where the legal person holds the same type of asset for other beneficiaries, impacting the sole beneficiary status.

The ATO’s guidance clarifies that many DeFi lending and borrowing arrangements could trigger a CGT event, primarily when beneficial ownership of a crypto asset changes. This can occur through either asset exchange or a future rights exchange.

In DeFi, liquidity pools are mechanisms for pooling crypto assets to facilitate lending and add liquidity to trading. Providers who contribute to these pools receive new assets or rights, representing their pool share. The ATO clarifies that depositing into and withdrawing from these pools can constitute CGT events, determined by the market value of the assets involved.

Rewards or returns from DeFi platforms are treated similarly to interest income for tax purposes. The market value of any crypto asset reward at the time of receipt must be reported as assessable income.

Wrapped tokens, representing another crypto asset, are subject to CGT upon wrapping or unwrapping. This is based on the market value of the wrapped token at the exchange time.

Following the ATO’s clarification, there’s been notable industry response. Chloe White from Genesis Block and Blockchain Australia criticized the ATO’s stance for violating the principle of technological neutrality, potentially impacting the financial future of young Australians.

Adding to the complexities, CoinSpot, a local cryptocurrency exchange, reportedly experienced a security issue leading to a significant financial loss. This incident adds another layer of concern for Australian crypto users in the current regulatory landscape.

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US House Committee to Probe Crypto Crimes in November Hearing

The Financial Services Committee (FSC) of the United States House of Representatives is gearing up for a critical hearing on November 15, 2023, diving deep into the shadowy corners of cryptocurrency. Entitled “Crypto Crime in Context: Breaking Down the Illicit Activity in Digital Assets,” this session aims to unravel the complexity of illegal activities within the digital asset ecosystem.

At the forefront are notable witnesses including Mr. Bill Hughes from ConsenSys, Ms. Jane Khodarkovsky from Arktouros, and Mr. Jonathan Levin from Chainalysis, each bringing a unique perspective from their extensive experience in both the crypto industry and legal enforcement.

The hearing’s central theme emerges from the FSC’s intent: comprehending the extent of illicit activities in digital assets to effectively counteract them. Discussions will revolve around identifying gaps in the current system and exploring tools to prevent and detect criminal activities.

Highlighting the gravity of the situation, the FSC will delve into the concerning trends of money laundering and the funding of terrorist organizations through cryptocurrencies. The hearing will utilize data from Chainalysis, which indicates a surge in illegal crypto transactions despite increased sanctions and hacking attempts.

A significant part of the discussion will be dedicated to assessing the anti-money laundering and counter-terrorist financing measures employed by crypto exchanges and decentralized finance providers. Moreover, the roles of the Financial Crimes Enforcement Network, the Office of Foreign Assets Control, and the Department of Justice (DOJ) will be under scrutiny.

In parallel, the hearing will also touch upon legislative efforts, notably the markup of legislation for stablecoin regulation. Simultaneously, the DOJ is intensifying its focus on crypto-related crimes, merging two of its teams to form a specialized unit targeting ransomware offences.

This hearing marks a pivotal moment for the crypto industry, as it faces stringent scrutiny from lawmakers and regulators. The outcome could significantly influence the future regulatory landscape for digital assets.

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Cboe Digital Set to Launch Bitcoin and Ether Futures Trading in January 2024

Cboe Global Markets, Inc. has announced a groundbreaking development in cryptocurrency trading, according to Prnewswire. Beginning January 11, 2024, Cboe Digital will launch margin futures trading for Bitcoin and Ether. This initiative positions Cboe Digital as the first U.S.-regulated crypto native exchange and clearinghouse to offer both spot and leveraged derivatives trading on a single platform, representing a significant advancement in the integration of cryptocurrency into the broader financial market.

The introduction of margin futures trading by Cboe Digital is a strategic move that combines the robustness of traditional financial market infrastructure with the burgeoning field of digital assets. This approach allows traders to engage in futures trading without the need to post full collateral upfront, thus offering greater capital efficiency compared to traditional non-margined futures trading. This margin model not only enhances capital efficiency but also marks an evolutionary step in crypto trading, catering to both institutional and individual investors.

The launch is backed by a coalition of 11 leading firms from both the cryptocurrency and traditional financial sectors, including B2C2, BlockFills, CQG, Cumberland DRW, Jump Trading Group, Marex, StoneX Financial, Talos, tastytrade, Trading Technologies, and Wedbush. These partnerships reflect a strong industry support and a shared vision for advancing secure and transparent trading in digital assets.

John Palmer, President of Cboe Digital, emphasized the milestone this launch represents in building trusted and transparent crypto markets. He highlighted the importance of derivatives in providing liquidity and hedging opportunities in the crypto space. Supporting voices from the industry, including Nicola White of B2C2 and Chris Zuehlke of Cumberland DRW, also stressed the role of Cboe Digital’s initiative in enhancing institutional adoption of cryptocurrencies and maturing the crypto asset class.

Cboe Digital’s expansion into Bitcoin and Ether futures trading complements its existing offerings in the spot crypto market, including Bitcoin, Bitcoin Cash, Ether, Litecoin, and USDC. The platform will provide detailed margin requirements and risk management tools on its website, ensuring a comprehensive and transparent trading experience.

Cboe Global Markets is renowned for delivering market infrastructure and tradable products across multiple asset classes, including equities, derivatives, FX, and digital assets. Cboe Digital operates in compliance with regulatory standards set by the CFTC and is licensed by the New York State Department of Financial Services. Looking ahead, Cboe Digital is exploring expansion into physically delivered products, contingent on regulatory approvals, signaling its commitment to innovation and growth in the digital asset space.

Cboe Digital’s launch of Bitcoin and Ether margin futures is a landmark event that bridges the gap between traditional finance and the evolving world of digital assets. This initiative is set to enhance trading efficiency, liquidity, and accessibility in the cryptocurrency market, marking a new chapter in the integration of digital currencies into the global financial ecosystem.

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Nomura’s Laser Digital Launches Ethereum Adoption Fund for Institutional Investors

Laser Digital, a subsidiary of financial services giant Nomura, has launched an Ethereum Adoption Fund aimed at institutional investors, as announced on 9th November 2023. This fund, centered in London and Dubai, is a strategic move to bolster the presence of Ethereum in the investment portfolios of institutions, enhancing the digital asset’s footprint in the global financial market.

Laser Digital has been actively supporting cryptocurrency and digital asset initiatives. In 2023, the company introduced its first cryptocurrency fund, the Bitcoin Adoption Fund, offering institutional investors long-only exposure to Bitcoin. The company’s asset management unit was formed in February 2023, with team members in London, Zurich, and Dubai. In July 2023, the company received full crypto licensing from Dubai’s Virtual Asset Regulatory Authority. Laser Digital’s entry into fund management focused on digital assets was initiated in 2020 with the crypto custodian Komainu.

This Ethereum-focused fund is the latest in a sequence of digital asset solutions initiated by Laser Digital Asset Management. The series began with the introduction of the Bitcoin Adoption Fund in September. This new fund, titled ‘Laser Digital Ethereum Adoption Fund SP’, is set up as a segregated portfolio under Laser Digital Funds SPC, registered in the Cayman Islands, signaling a structured approach to digital asset investment.

The fund’s assets are secured and regulated through Komainu, a custodian regulated by both the UK Financial Conduct Authority and the Dubai Virtual Asset Regulatory Authority. This highlights the fund’s commitment to ensuring compliance with financial regulatory standards and asset security.

Under the leadership of Sebastian Guglietta, former Chief Scientist Officer at Nomura, and Fiona King, previously of Nickel Digital Asset Management, the fund aims to leverage Ethereum’s potential in driving the economy’s shift from analogue to digital. Guglietta and King bring extensive experience in investment strategies and institutional business to Laser Digital.

With this launch, Laser Digital accentuates its belief in Ethereum as a pivotal technology in the ongoing digital transformation of the economy. The fund is designed not only to invest in Ethereum but also to implement a yield enhancement strategy through staking, catering to the evolving needs of institutional investors in the digital age.

Backed by Nomura, Laser Digital has been actively working to create opportunities in the realm of digital assets, combining the rigor of traditional investment banking with the agility of a crypto-native team. Headquartered in Switzerland, the firm is focused on responsible and compliant engagement in the digital asset market.

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Tom Emmer’s Nonpartisan Amendment to Limit SEC’s Enforcement on Digital Assets Passes House

U.S. Representative Tom Emmer, currently serving as the GOP Majority Whip, has been a prominent figure in the debate over the regulation of digital assets. His legislative efforts have consistently focused on clarifying and limiting the regulatory scope of agencies like the Securities and Exchange Commission (SEC) in the digital asset space. Emmer’s stance reflects a broader push within certain political circles to establish clearer legal frameworks for cryptocurrencies and related technologies, aiming to encourage innovation while providing investor protection.

On November 9, 2023, Emmer’s latest nonpartisan amendment, designed to restrain the SEC from using taxpayer funds for enforcement actions against the digital asset industry, was passed in the House of Representatives. This amendment comes at a crucial time when the SEC, under the leadership of Gary Gensler, has been intensifying scrutiny and enforcement actions in the cryptocurrency sector.

The relationship between Emmer and SEC Chair Gary Gensler has been marked by disagreements over the SEC’s approach to digital asset regulation. Emmer has been vocal in criticizing what he perceives as the SEC’s overreach and lack of clear regulatory guidelines, which, according to him, stifles innovation in the burgeoning digital asset market. Gensler, on the other hand, has advocated for robust SEC oversight in the sector, citing investor protection and market integrity as top priorities.

Emmer’s amendment puts a temporary halt on SEC’s enforcement actions in the digital asset domain, pending the passage of specific legislation that defines the SEC’s regulatory authority. This move is seen by many as a bid to bring legislative clarity to an area that has been mired in uncertainty. It also represents a significant shift in the power dynamics between Congress and regulatory bodies like the SEC, emphasizing the role of elected representatives in shaping the regulatory landscape.

As the digital asset industry continues to evolve, the interplay between legislative bodies and regulatory agencies will be crucial in shaping its future. Emmer’s amendment signals a legislative intent to take a more active role in this domain, potentially leading to more comprehensive and well-defined laws governing digital assets.

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SEBA Bank Secures SFC License, Expanding Crypto Services to Hong Kong

Switzerland-based cryptocurrency bank SEBA Bank has marked a significant milestone by obtaining a license from the Hong Kong Securities and Futures Commission (SFC). The license, granted on November 3rd, represents a crucial step for SEBA in expanding its cryptocurrency services in the Asia Pacific region. SEBA Hong Kong, a subsidiary of SEBA Bank, is now authorized to offer a range of cryptocurrency-related services within the area, as confirmed by the SFC’s official website.

SEBA Bank established its first Hong Kong office in November 2022, underlining its strategy to broaden its service spectrum in Asia. Following an initial permission in principle from the SFC in August 2023 for virtual asset trading services, the recent licensing confirms SEBA’s operational expansion outside its home country, including a presence in Abu Dhabi.

With this new license, SEBA can engage in the trading and distribution of all securities, encompassing digital asset-related products like over-the-counter (OTC) derivatives. Moreover, the license allows SEBA to provide advisory services on securities and digital assets and manage assets for discretionary accounts, which include both traditional and digital assets.

SEBA’s services, facilitated by this license, will cater to institutional and professional investors such as corporate treasuries, funds, family offices, and high-net-worth individuals. Franz Bergmueller, the Chief Executive Officer of SEBA, expressed enthusiasm in an official statement, highlighting Hong Kong’s pivotal role in the cryptocurrency economy since Bitcoin’s inception and the bank’s eagerness to contribute to Hong Kong’s digital asset market.

Hong Kong’s rigorous licensing system permits only a select few platforms to cater to both local and foreign clients, including retail customers. Upon the government’s announcement to license crypto-related businesses, approximately one hundred firms showed interest in establishing Hong Kong branches. However, only a handful have successfully navigated the regulatory landscape to obtain clearance.

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Kazakhstan Blocks Coinbase, Citing Digital Asset Law

Kazakhstan’s Ministry of Culture and Information has clarified its decision to block the global cryptocurrency exchange, Coinbase, within the nation’s borders. The ministry asserts that the trading of cryptocurrencies on Coinbase is in direct violation of the Kazakhstani law on Digital Assets. This clarification was provided in response to an inquiry from “Kursiv,” following a request from the Ministry of Digital Development, Innovations, and Aerospace Industry. The request was made to block access to Coinbase, which contravened section 5 of Article 11 of the country’s Digital Assets Law.

This particular section of the law prohibits the issuance and trading of unsecured digital assets, as well as the operations of cryptocurrency exchanges dealing with such assets, outside of the Astana International Financial Centre (AIFC). Only a select group of cryptocurrency exchanges, including Binance and Bybit among others, are licensed to operate in Kazakhstan, with the AIFC’s Committee for Regulation of Financial Services being the authorizing body.

The move to block Coinbase was in accordance with the nation’s communication laws that oblige providers to limit access to websites containing prohibited content. This has raised questions about the regulatory environment for digital assets within Kazakhstan and the implications for global cryptocurrency operations.

The Ministry also addressed the earlier blocks imposed on the websites of Interactive Brokers and the New York Mercantile Exchange (NYMEX), both of which were subsequently lifted. The restoration of access to these sites occurred after significant feedback from the financial community and a request from the Financial Monitoring Agency to resume access to

The AIFC offers a unique regulatory sandbox environment, allowing both local and international companies to apply for operation within the center with minimal initial resources. These companies can offer FinTech and RegTech services, with the opportunity to develop regulatory requirements in collaboration with the AFSA. The reinstatement of access to Interactive Brokers and NYMEX, despite their previous infractions, signifies the delicate balance Kazakhstan seeks to maintain between stringent financial regulations and the fostering of an innovative financial technology ecosystem.

In an unrelated but simultaneous report, the telegram channel first highlighted the widespread blocking of foreign brokers and cryptocurrency exchanges in Kazakhstan on September 14. This has been a topic of heated discussion among financial analysts, with some, like Rasul Rysmambetov, calling it an “absolute mistake” attributable to potential technical errors.

Interactive Brokers, a major U.S. brokerage firm, and NYMEX, a primary American futures exchange, both now have restored access in Kazakhstan. Interactive Brokers is known for its extensive electronic trading platform in the U.S., while NYMEX holds a prominent position in crude oil futures trading.

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