Welcome to the 200th edition of Yaka Stuff, our weekly newsletter with news, industry perspectives, and updates on the Hard Yaka ecosystem. What initially started as an internal team email is now on Substack. If you know anyone who’d be interested in joining our community of builders, visionaries, and risk takers, direct them this way.
If you have any tips, updates, or feedback you’d like to share, shoot me an email!
This week:
Building TRUST with regulators
The price of clarity
TGV backs first female entrepreneur
Stuff happens
1. Building TRUST with regulators
Last week, crypto companies took over the Super Bowl. Now, they’re looking to get ahead on regulations.
A coalition of industry titans including Coinbase, Fidelity, and Circle are teaming up to take on “travel rule” compliance with an information sharing agreement—what they’re calling the TRUST platform.
Here’s Coindesk:
In total, there are some 18 virtual asset service providers (VASPs) participating in the launch of the Travel Rule Universal Solution Technology (TRUST). Announced Wednesday, the TRUST platform was created in response to AML data sharing requirements recommended by the Financial Action Task Force (FATF) and prescribed by the Financial Crimes Enforcement Network (FinCEN).
The current U.S. TRUST membership includes: Anchorage, Avanti, Bitgo, bitFlyer, Bittrex, BlockFi, Circle, Coinbase, Fidelity Digital Assets, Gemini, Kraken, Paxos, Robinhood, Standard Custody & Trust, Symbridge, Tradestation, Zero Hash and Zodia Custody.
…
“There are two components to this solution,” said Gemini’s Chief Compliance Officer Elena Hughes in an interview. “There’s the ability to identify who’s on the other side of the transfer prior to initiating it. Secondly, there’s no centralized storage of personal data. So we don’t send it via a centralized repository; instead the information is exchanged on a bilateral basis.”
The plan, said Hughes, is to expand to other global jurisdictions, with building currently taking place in Canada, Singapore and Germany. The group’s goal is also to become an industry standard for complying with the travel rule. (Until now there has been only one standard agreed upon by the crypto industry, the Inter-VASP Messaging Standard, known as IVMS 101.)
Expect this to be the ongoing trend—as crypto firms work toward greening the industry.
And while this addresses compliance concerns over custodial offerings in the ecosystem, the need for non-custodial solutions continues.
Stay tuned.
Relevant:
Via /rcb—Circle, the company behind the USDC stablecoin, doubles valuation to $9 billion in updated SPAC deal
Global financial watchdog calls for ‘urgent’ action to contain crypto risks
Coinbase, Robinhood and Other Big Crypto Firms Announce Plan on Money Laundering, Privacy - Decrypt
2. The price of clarity
Elsewhere in rules for crypto: For a mere $100 million, BlockFi now has regulatory clarity.
Here’s the WSJ:
BlockFi Lending LLC, which held as much as $14.7 billion in assets at its peak last year, will pay the highest fine ever agreed to by a cryptocurrency company, Securities and Exchange Commission officials said. The settlement is the first enforcement action targeting a crypto lending platform, according to the SEC. The company neither admitted nor denied wrongdoing.
…
BlockFi will stop offering the accounts in the U.S. and will seek to register a new product, BlockFi Yield, under SEC rules.
That will require BlockFi to file a public registration statement that spells out how BlockFi Yield works as well as the risks associated with investing in it. The SEC will review the disclosure before the product can be sold, and if it signs off, the company will be able to sell the new product in the U.S.
The settlement had one prominent dissenting voice in Commissioner Hester Pierce:
We often tell companies wanting to offer products that could implicate the securities laws to “come in and talk to us.” To make that invitation meaningful, however, we need to commit to working with these companies to craft sensible, timely, and achievable regulatory paths. Working with an earnest desire to reach a prudent, properly calibrated regulatory outcome is important for a number of reasons. First, these products matter to people. A program that allows people—and not just affluent people—to keep their crypto assets, while still earning a return is valuable to many Americans, as evidenced by the programs’ popularity in the United States to date. The investor protection objective of today’s settlement will be poorly served if retail investors are ultimately shut out from participation in these products. Second, our process speaks volumes about our integrity as a regulator. Inviting people to come in and talk to us only to drag them through a difficult, lengthy, unproductive, and labyrinthine regulatory process casts the Commission in a bad light and thus makes us a less effective regulator. Third, a company that tries to do the right thing should be met across the table by a regulator that tries to get to a sensible result in a reasonable timeframe. For the sake of the American public, our own reputation, and the companies that heed our call to come in and talk to us, we need to do better than we have so far at accommodating innovation through thoughtful use of the exemptive authority Congress gave us.
And here’s Matt Levine in his Money Stuff newsletter:
I think that you can read this story as “BlockFi did something illegal and got in trouble,” or you can read it as “BlockFi has worked with the SEC to develop the first U.S. regulated crypto lending product, giving it a competitive advantage,” but I do not really think you have to choose. BlockFi ventured out into the gray area, which got it (1) a big fine and (2) clarity.
Relevant:
BlockFi Submitting to Rules Shows SEC Tightening Grip on Crypto
BlockFi to Pay Record Penalty to Settle SEC Probe of Crypto Lending Business
3. TGV backs first female entrepreneur
From their LinkedIn post:
True Global Ventures 4 Plus Fund has invested US$8.3 million into Chronicled, a company that focuses on establishing trust and automating transactions between trading partners in the Life Sciences Industry vis-a-vis the MediLedger Network.
In the whole history of TGV, this is the first time we are finally backing a female entrepreneur and what a serial entrepreneur!
Rarely can one find someone like Susanne Somerville, CEO of Chronicled, who has such deep pharma/healthcare knowledge AND blockchain competence.
4. Stuff happens
'Freedom Convoy': Trudeau's move to freeze funds catches banks off guard
Meta to Pay $90 Million to Settle Decade-Old Facebook Data Privacy Lawsuit
U.S. Congressman Warren Davidson Introduces The “Keep Your Coins Act”
Trudeau vows to freeze anti-mandate protesters' bank accounts
Crypto’s Town Square Has Become “a Scammer’s Paradise.” Why Isn’t Discord Doing More to Clean It Up?
British authorities just seized NFTs for the first time, in a £1.4 million fraud probe
Via /m—FBI to form digital currency unit, Justice Dept taps new crypto czar