In this issue:

• Crypto Products Launch in Debit Cards, Payment Gateways, Trading Platforms
• EU Blockchain Observatory Publishes Report on Blockchain for Supply Chains
• US Banking Official Addresses Approach to Regulating Crypto-Assets
• BIS Publishes Report on Progress of Multi-CBDC Platform Pilot
• Securities Regulators Bring Action Against NFTs Tied to Metaverse Gambling
• DOJ Charges Detail Bitcoin Bribes and Crypto Paid for ‘Malware as a Service’

Crypto Products Launch in Debit Cards, Payment Gateways, Trading Platforms

By Joanna F. Wasick

This week, two cryptocurrency financial services and trading platforms announced partnerships with traditional financial services companies to offer new crypto debit cards. Blockchain.com’s card, initially available only to U.S. residents, will be linked to a verified Blockchain.com account and will enable users to spend cryptocurrencies in transactions that settle in fiat for the merchant. BitOasis, a leading crypto platform for the Middle East and North Africa, announced a similar crypto debit card linked to users’ crypto wallets to enable fiat-settled payments across 90 million global locations. Ola Doudin, BitOasis’ CEO and co-founder, said, “We continue to witness sustained demand amongst our customers for crypto to be integrated into, and relevant for, their daily lives. Research tells us that 47% of the Middle East population now believes crypto is the future of money.”

Anchorage Digital, a digital asset platform, infrastructure provider and federally chartered digital asset bank, recently launched “Build With Anchorage,” a full-stack infrastructure offering that facilitates crypto payment gateways, financial products and market participation. According to a press release, Build With Anchorage can enhance partner product and service development “through a combination of flexible Anchorage APIs – which partners can connect to programmatically [and] include[e] trading, settlement, staking, and custody APIs – and a dedicated team of industry-leading solution architects, integration engineers, and deployment strategists.”

Earlier this week, Prometheum Ember ATS, a broker-dealer and alternative trading system (ATS) regulated by FINRA and the U.S. Securities and Exchange Commission, announced the launch of its new ATS enabling institutions to trade digital asset securities compliant with federal securities laws. According to a press release, Prometheum ATS is built to integrate with legacy securities trading systems by connecting directly with qualified custodians to facilitate quick, efficient and compliant digital asset security trades. The underlying blockchain technology reportedly eliminates intermediaries and provides same-day settlement. “For too long, digital asset trading has been conducted on unregulated platforms instead of on a platform which works within the current SEC framework for digital asset securities,” stated Prometheum Founder and Co-CEO Aaron Kaplan. “Prometheum sets itself apart by maintaining the ability to be sustainably compliant under current securities laws, ensuring the multilayer protections and standards required on Wall Street.”

For more information, please refer to the following links:

EU Blockchain Observatory Publishes Report on Blockchain for Supply Chains

By Robert A. Musiala Jr.

A recently published report by the EU Blockchain Observatory and Forum addresses issues and use cases related to the use of blockchain to enable transparency in supply chains. Among other things, the report addresses problems in supply chain transparency; ongoing changes in supply chain management and ethics, including working conditions, environmental issues and extended supply chains; specific use cases where blockchain can be implemented to achieve supply chain transparency, including in the carbon markets; the impact of certain technical concepts, including public vs. private blockchain networks, layer-2 solutions, zero-trust technologies, and interoperability between blockchains and with other technologies such as IoT networks; and an overview of existing blockchain solutions currently being used in different supply chain contexts.

For more information, please refer to the following links:

US Banking Official Addresses Approach to Regulating Crypto-Assets

By Robert A. Musiala Jr.

The acting Chairman of a US federal agency that supplies deposit insurance to U.S. depository institutions recently gave a speech addressing the regulation of crypto-assets. Among other things, the Chairman noted that federal banking regulators are taking “a cautious and deliberate approach … to bank participation in crypto-asset-related activity … for several reasons: (a) the risk of these activities to safety and soundness, consumer protection, and financial stability; (b) the lack of history and familiarity with these assets both in the marketplace and within regulated financial institutions; and (c) the dynamic nature of these assets.” According to the Chairman, “before banks engage in crypto-asset-related activities, it is important to ensure that: (a) the specific activity is permissible under applicable law and regulation; (b) the activity can be engaged in [in] a safe and sound manner; (c) the bank has put in place appropriate measures and controls to identify and manage the novel risks associated with those activities; and (d) the bank can ensure compliance with all relevant laws, including those related to anti-money laundering/countering the financing of terrorism and consumer protection.”

Addressing stablecoins, among other things the Chairman said, “Thus far … stablecoins have predominantly been used as a vehicle to buy and sell crypto-assets for investment and trading purposes – there has been no demonstration so far of their value in terms of the broader payments system.” However, the Chairman noted, “there may be merit in continuing to examine the potential benefits associated with payment stablecoins … designed specifically as an instrument to satisfy the consumer and business need for safe, efficient, cost-effective, real-time payments.”

The Chairman cited “three important features that could make payment stablecoins significantly safer than the stablecoins currently in the marketplace”: (1) ensuring prudential regulation and separation from deposit taking by issuance of a payment stablecoin through a bank subsidiary; (2) requiring payment stablecoins to be backed dollar for dollar by high-quality, short-dated U.S. Treasury assets; and (3) transacting payment stablecoins on permissioned ledger systems with robust governance and compliance mechanisms. The Chairman also noted that to the extent a payment stablecoin system is developed, it should complement the forthcoming FedNow system and the potential future development of a U.S. central bank digital currency.

For more information, please refer to the following link:

BIS Publishes Report on Progress of Multi-CBDC Platform Pilot

By Robert A. Musiala Jr.

The Bank for International Settlements (BIS) recently published a joint report with the BIS Innovation Hub Hong Kong Centre, the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China and the Central Bank of the United Arab Emirates to provide findings from Project mBridge, a pilot that “experiments with cross-border payments using a common platform based on distributed ledger technology (DLT) upon which multiple central banks can issue and exchange their respective central bank digital currencies (multi-CBDCs).” According to a press release, “Over the course of six weeks in 2022, the mBridge platform was put to the test through a pilot involving real-value transactions among 20 commercial banks from four different jurisdictions … facilitating over 160 payment and FX PvP transactions totaling more than US$22 million in value.” According to the BIS report, “the mBridge pilot and accompanying analysis confirmed that a common multi-CBDC platform can improve cross-border payment speed and efficiency, reduce settlement risks and support the use of local currencies in international payments.” The mBridge pilot will continue in 2023 and 2024 “in an effort to move from the current pilot phase towards MVP and eventually a production-ready system.”

For more information, please refer to the following links:

Securities Regulators Bring Action Against NFTs Tied to Metaverse Gambling

By Keith R. Murphy

According to a press release from the Texas State Securities Board and related reports, the state securities regulators of New Jersey, Kentucky, Alabama and Texas have commenced coordinated enforcement actions against Slotie, a company based in the country of Georgia. According to the press release, “The actions accuse Slotie NFT (“Slotie”) of illegally and fraudulently selling nonfungible tokens, often referred to as NFTs, to raise capital for online and metaverse casinos.”

The company is alleged to be soliciting investors online to purchase Slotie NFTs that purportedly provide the investors with ownership interests in online and metaverse casinos and the right to share passively in the income of the casinos. Slotie also is alleged to be illegally offering and selling WATTS, which according to the press release is another type of NFT that “plays a key role in the illegal scheme” by purportedly enabling investors to double profits, along with granting ownership of a plot of land in the metaverse.

The Texas State Securities Board characterized the NFTs as an “unregistered DeFi [g]ambling investment.” According to the press release, Slotie is “illegally and fraudulently dealing in Slotie NFTs” by “concealing its assets and liabilities, its anticipated use of capital, the identity of partnering casinos, and key risks tied to the metaverse casinos.” Cease and desist orders entered against the company by the various states provide further information concerning the purported violations.

For more information, please refer to the following links:

DOJ Charges Detail Bitcoin Bribes and Crypto Paid for ‘Malware as a Service’

By Shade Quailey

This week, the U.S. Department of Justice (DOJ) issued a press release announcing the unsealing of a criminal complaint in which intelligence officers from the People’s Republic of China (“PRC”) were charged with attempting to obstruct a criminal prosecution in the Eastern District of New York. According to the press release, Guochun He and Zheng Wang are alleged to have orchestrated a scheme to steal files and information from the U.S. Attorney’s Office for the Eastern District of New York that are related to an ongoing federal criminal investigation and prosecution of a PRC-based global telecommunications company. In furtherance of this scheme, Guochun He and Zheng Wang, among other things, allegedly paid approximately $61,000 in bitcoin as a bribe to a U.S. government employee who worked as a double agent for the FBI and the PRC.

Another recent DOJ press release announced an indictment charging a defendant for his alleged involvement with Raccoon Infostealer, an international cybercrime operation that used malware to infect millions of computers globally. According to the press release, the defendant conspired to use Raccoon Infostealer as malware as a service or MaaS that enabled users to steal data from their victims for approximately $200 per month in cryptocurrency. The DOJ press release noted that the FBI has created a website, raccoon.ic3.gov, “where anyone can input their email address to determine whether it is contained within the U.S. government’s repository of Raccoon Infostealer stolen data.”

For more information, please refer to the following links: