A Dynamic Week in Crypto

In the fast-paced world of cryptocurrencies, the past week witnessed several significant developments and challenges. The SEC has extended its review of Fidelity’s Ethereum ETF until March 5. Fidelity Investments wants to integrate Ethereum into its portfolios, and the SEC’s decision might affect cryptocurrency regulation. Meanwhile, Coinbase and the SEC fighting over securities violations but the judge has delayed the decision. The hearing may establish a legal guideline for the SEC’s jurisdiction over crypto operations, which could affect the regulatory structure. The EBA took steps to tackle money laundering and terrorism in the crypto industry. The EBA now covers crypto-asset service providers, emphasizing the need for collaboration to combat financial fraud.

In another significant development, Flare, a data blockchain platform, has a groundbreaking partnership with Google Cloud. Google Cloud’s role as a network validator and contributor in the Flare Time Series Oracle (FTSO) advances blockchain technology. Lastly, the South Korean Financial Intelligence Unit (FIU) is considering crypto mixer rules to prevent virtual asset money laundering. Criminal organizations use mixers, making police monitoring harder. The cryptocurrency industry’s evolution emphasizes the need for regulation, legal certainty, and international collaboration to shape digital assets’ future.

SEC Extends Evaluation of Fidelity’s Ethereum ETF Proposal to March 5

The cryptocurrency market advanced as the Securities and Exchange Commission (SEC) extended its evaluation of Fidelity’s proposed Ethereum ETF to March 5. Fidelity Investments applied for the Fidelity Ethereum Fund in November to include cryptocurrencies like Ethereum in traditional investment portfolios. Given the complexity of crypto-related financial products, the SEC’s decision is prudent. The extended review period allows the SEC to evaluate Fidelity’s request and decide whether to approve, reject, or commence further Ethereum ETF proceedings.

This ruling affects Ethereum and the cryptocurrency sector. Approval would boost Ethereum’s adoption and integration into conventional financial instruments, while rejection or delay might hurt market sentiment and investor trust in similar cryptocurrencies. Since Fidelity’s application could set a precedent for future bitcoin ETFs, industry parties closely monitor the SEC’s handling. A positive outcome may signal regulatory openness to integrate cryptocurrencies into the financial ecosystem, affecting the entire regulatory framework. After the approval of Bitcoin spot ETFs, the chances of Ethereum ETF approval have increased.

SEC Accuses Coinbase of Violating Securities Laws

After the hearing on Coinbase’s motion to dismiss the lawsuit, the legal disagreement between Coinbase and the SEC reached a key moment. The SEC charged Coinbase with violating securities laws in June by marketing 13 cryptocurrencies, including FIL, SAND, AXS, SOL, and ADA, without proper registration. The SEC also classed Coinbase’s staking service as a security. Coinbase fought for dismissal, arguing that its assets are not securities since users do not trade investment contracts. On this week’s hearing, the judge delayed the decision and the case might see a couple of months gap.

Both sides argued before New York District Judge Katherine Polk Failla. Coinbase used the Major Questions Doctrine to argue that the SEC lacks legislative authority over the ever-changing crypto market. After the session ended, Coinbase’s Chief Legal Officer, Paul Grewal, expressed confidence in the company’s position and expected government involvement to clarify crypto legislation. A Coinbase victory in this action might set a precedent for the SEC’s authority over crypto operations. This would affect the entire cryptocurrency regulatory structure.

EBA Takes Steps to Counter Money Laundering and Terrorism Financing in Crypto Sector

The European Banking Authority (EBA) has expanded its money laundering (ML) and terrorist financing (TF) laws to include crypto-asset service providers. The ever-changing crypto-asset business has unique dangers, thus the EBA seeks to improve protections against money laundering (ML) and terrorism financing (TF) by crypto-asset service providers (CASPs).

The EBA recommendations list many risk factors for CASPs due to their inherent susceptibility to financial violations. These factors include customer profiles, offered products, delivery channels, and operational regions. Understanding these components helps Certified Anti-Money Laundering Specialists (CASPs) identify and reduce money laundering and terrorist financing risks in their firm. The guidelines recommend that CASPs use blockchain analytics tools to monitor and evaluate crypto-asset transactions to reduce risk. The EBA stresses making risk-based adjustments. The criteria also encompass banks and credit companies, demonstrating the financial industry’s interdependence. This addition recognizes that domain deficiencies can affect the entire sector, underlining the need for coordinated financial misbehaviour intervention.

Flare Blockchain Partners with Google Cloud

Flare, the innovative blockchain for data, has entered a groundbreaking collaboration with Google Cloud, signaling a transformative step forward. This relationship is essential for Flare since Google Cloud is now a network validator and contributor to the Flare Time Series Oracle (FTSO). Google Cloud will recommend and validate new Flare blockchain blocks as a network validator, maintaining the chain’s proof-of-stake consensus mechanism. This collaboration makes Google Cloud one of 100 firms that validate and contribute to the FTSO on Flare.

This twin job involves confirming Flare’s network security and providing publicly accessible pricing data to the FTSO, Flare’s decentralized price oracle. Flare needs collaboration to offer decentralized applications premium access to price and time series data, blockchain event and state data, and Web2 API data. Flare promises scalability, low latency, and cost-effective Ethereum Virtual Machine (EVM) smart contracts with decentralized data. Flare uses network validators to provide decentralized data, making blockchain more accessible to developers and consumers and promoting its use.

South Korea Eyes Regulation of Crypto Mixers to Combat Money Laundering

The South Korean Financial Intelligence Unit (FIU) is considering regulating crypto mixers, which criminal groups like the Lazarus Group use, to combat virtual asset money laundering. Mixers spread digital assets, making it hard for authorities to track criminal operations. Criminal groups can exploit South Korea’s lack of mixer punishments.

The FIU is considering ways virtual asset operators can limit mixer transactions. Mixers pose a substantial risk of money laundering, hence authorities stress the need for strict regulation. The US has passed money laundering laws targeting mixers. The theft of $81 million in Ozis virtual assets has raised significant suspicions, emphasizing the necessity for rules. South Korea is closely monitoring global advancements to address virtual asset mixing challenges through international partnerships. Although conversations are early, the focus is on solving these issues. The strategy reduces money laundering and secures the virtual asset market.