News Updates October 19, 2022

1. Bitcoin to Bring Another Massive Bear Storm, Data Shows. The fate of the Bitcoin (BTC) market hangs in the balance and could soon hit another massive bear storm according to crypto market intelligence firm Messari.  In a series of tweets, Messari analyzed the market using the BitMex 30-day volatility index (BVOL). The metric shows that Bitcoin volatility is at its lowest level in over two years.  With the reduced volatility, BTC has been trading only sideways despite several recent developments that had a substantial impact on market-wide risk premium/liquidity. However, Messari does not consider the data to mean that BTC has decoupled from the greater market. 
   According to Messari, the BTC market could potentially nosedive when volatility returns to the market as historical BVOL data suggests. Conversely, the price could also surge as it has done two previous times at similar volatility levels in the market. The report said:
2. U.S. authorities indict alleged money laundering ring that sold Venezuelan oil for USDT. 

   The Department of Justice has hit an alleged criminal ring for violating sanctions through the use of shell companies and cryptocurrencies to launder Venezuelan oil sale profits and purchase equipment for the Russian military. 

   The Justice Department arrested two participants and indicted five others, according to an Oct. 19 press release. "We are looking to arrest everyone named in the indictment," a press representative told The Block.

   Filed in the Eastern District of New York, the complaint outlines a trading scheme focused around Petroleos de Venezuela S.A., the government-owned oil company that the U.S. sanctioned during President Donald Trump's tenure, as well as a commodity trading company based in Hamburg and operated by Russian nationals. 

   The latter company, Nord-Deutsche Industrieanlagenbau GmbH, allegedly used its position to find parts for Russian military equipment, including Sukhoi and MiG-29 fighter planes. As for the Venezuelan oil company, they sought to monetize their product, which U.S. sanctions have cut off from much of the world market. 

   Among a number of alleged violations, the Justice Department says that three of the indicted "consummated a transaction involving 500,000 barrels of Venezuelan oil from PDVSA through Tether ("USDT"), a cryptocurrency pegged to the U.S. dollar."

3. US Alleges 5 Russian Nationals Used Crypto as Part of Sanctions Evasion, Smuggling Scheme
   Defendants allegedly laundered "millions of dollars" of an unspecified crypto. Federal prosecutors alleged that five Russian nationals laundered "millions of dollars" worth of unnamed cryptocurrency as part of a scheme to smuggle military technology and oil.
   Yury Orekhov, Artem Uss, Svetlana Kuzurgasheva (also known as “Lana Neumann”), Timofey Telegin and Sergey Tulyakov are being charged with attempting to evade sanctions against Venezuelan oil producers and obtaining technology used in the U.S. F-22, an air superiority fighter. The defendants allegedly used shell companies and cryptocurrencies to launder the funds involved in this scheme, though a Department of Justice press release did not specify the amounts or types of cryptocurrency used. Defendants Orekhov and Uss were arrested on Monday, according to the press release. The charges were brought by Task Force KleptoCapture, a DOJ initiative focused on sanctions and economic countermeasures focused on Russia after the nation invaded Ukraine.
4. US Chamber of Commerce Rips SEC for Denying Proposed Grayscale Bitcoin ETF
   Coinbase and Blockchain Association have both filed amicus briefs as the lawsuit against the commission moves forward. 

   The largest lobbying group in the US is backing Grayscale Investments’ lawsuit against the SEC, which claims the agency unfairly disapproved the proposed conversion of the firm’s bitcoin trust (GBTC) to an ETF. 

   US Chamber of Commerce lawyers wrote in an amicus brief filed Tuesday that the SEC’s decision to deny Grayscale’s planned fund reflects “a paternalistic belief that the agency knows better than investors.” The organization, which claims to directly represent 300,000 members, added that the agency’s policy decisions often “depart drastically” from SEC precedent.

   “This approach has enabled the commission to pick winners and losers without having to account for its reasoning to the interested public or to the courts, thereby depriving investors of the freedom to make their own investment choices and businesses of the certainty they need to innovate and meet investor demand,” the brief states. 

   Hours after the SEC rejected Grayscale’s application in June to morph its flagship product into an ETF, the company asked the US Court of Appeals for the District of Columbia Circuit to review the decision. 

   The amicus brief filed by the US Chamber of Commerce, as well as other briefs by crypto exchange Coinbase and the Blockchain Association, come after Grayscale filed its opening brief in the suit last week. 

   The 100-page document claims that the regulator is making an “arbitrary and capricious” action as defined by the Administrative Procedure Act (APA). It points out the SEC’s approval of ETFs holding bitcoin futures contracts — the price of which, Grayscale says, is subject to identical risk of fraud and manipulation as the spot price of bitcoin.

5. Bank of England Must Consider Private Stablecoins in Developing Digital Pound, Lobbyist Says
   Adam Jackson addressed lawmakers on a committee that is weighing a bill that would regulate the coins. The bill, which was introduced by the government in July, would ensure that the Financial Conduct Authority considers the country’s economic growth and international competitiveness when creating rules for the crypto sector. That provision would also apply to the Prudential Regulation Authority, a division of the Bank of England that ensures commercial banks remain stable.
6. South Africa Classifies Crypto Assets as Financial Products
   The move brings digital assets more under the purview of the country’s regulators. South Africa has declared crypto assets to be a financial product, according to a new notice from the country’s Financial Sector Conduct Authority.
   The change brings digital assets more under the purview of South Africa’s regulators.
   The notice defines a crypto asset as a “digital representation of value” that is not issued by a central bank but can be traded, transferred or stored electronically “for the purpose of payment, investment and other forms of utility.”
    
   The change, which takes effect immediately and falls under the Financial Advisory and Intermediary Services Act, 2022, comes as countries around the world are moving to regulate cryptocurrencies more strictly, particularly amid the recent volatility in prices and the collapse of several important crypto firms. The deputy governor of South Africa’s central bank said this summer the bank had come to view cryptocurrency as a financial asset and was looking into regulating the sector.
7. Hong Kong Soon To Launch Its CBDC. The global adoption of Central Bank Digital Currency (CBDC) is on the surge amid the increasing volatility in the crypto market. However, Hong Kong has decided to add to this list of nations utilizing CBDC. 

   Hong Kong lays down regulation for CBDC
   As per reports, the Hong Kong Monetary Authority (HKMA) is carrying out preparations for a roll out of the “digital Hong Kong dollar”. Lee Ka Chiu John, Chief Executive of HKSAR informed that he is studying the market’s view on regulating stablecoin. With this, the authority has started preparatory work for the Digital HKD.

   He added that the Government has submitted a draft proposal in order to introduce a statutory licensing regime for virtual assets. However, the Monetary Authority is specifically deployed to attain knowledge from the market’s perspective on the regulation of stablecoins.

   This is done in order to keep the regulations in line with international regulatory recommendations. However, the rules are being made keeping local circumstances in mind.

   The Monetary Authority of Hong Kong has begun preparatory work on the Digital Hong Kong Dollar. While the authority is also working with the Mainland institution to expand the testing.