US Regulator Wants to Adopt Blockchain to Maintain Pace with Market Manipulators

The chair of the U.S. Commodity Futures Trading Commission (CFTC) has said that he wants to adopt blockchain to “keep pace with those who attempt to defraud, distort, or manipulate” financial markets.CFTC Chairman Giancarlo Envisions Compliance Built into Business Operations Through Smart ContractsJ. Christopher Giancarlo spoke about the use of blockchain and machine learning for regulatory purposes at Georgetown University. The head regulator is confident the digital era will prove to be a positive factor to better oversee financial markets.“These tools will become even more paramount as emerging blockchain technologies seek to decentralize markets or disintermediate traditional actors. It is critical that we have the ability to keep pace with those who attempt to defraud, distort, or manipulate.”Giancarlo gave several examples of adoption of new technologies at the regulatory level.These include “using machines to independently identify segments of the markets where concentration risks or unrecognized counterparty exposures are emerging and flag them for staff consideration and action” and “new machine-learning based surveillance tools” designed to “sniff out patterns of likely illegal trading activity or attempts to manipulate markets for enforcement analysis.”The CFTC chair said the ongoing digital revolution in the world’s trading markets have far-ranging implications for capital formation and risk transfer. He added that he expects the majority of standard tasks to be managed by machines as automation technologies are paired with blockchain to standardize and distribute data to market actors and regulators.“We can also envision the day where rulebooks are digitized, compliance is increasingly automated or built into business operations through smart contracts, and regulatory reporting is satisfied through real-time DLT networks. The machines here at the CFTC would have the ability to communicate regulatory requirements and consume and analyze the data that comes in through such systems.”Giancarlo has recently stated that cryptocurrencies “are here to stay” and that many countries across the globe are hungry for functioning currencies, which shows there is a market for digital currencies. He is, however, skeptical about cryptocurrencies’ ability to rival the dollar or other hard currencies.While the U.S. CFTC is yet to adopt blockchain technology to better oversee financial markets, the financial watchdog has won its first Bitcoin fraud action. A  New York federal court has ordered Gelfman Blueprint and its CEO Nicholas Gelfman to pay over $2.5 million in civil monetary penalties and restitution over their +$600,000 Ponzi scheme.Related Reading: CFTC Chair: Cryptocurrencies Have a Future, They Are Here to StayFeatured image from Shutterstock.

South Korean Financial Watchdog Releases Stricter AML Guidelines for Virtual Currencies

South Korea’s top financial regulator has released a set of revised anti-money laundering (AML) guidelines for virtual currencies, according to a press releasepublished this week.

The press release notes that the Financial Services Commission (FSC) conducted on-site inspections of three domestic banks – Nonghyup, Kookmin, and Hana Bank – the results of which prompted the update to AML guidelines.

The new guidelines note that cryptocurrency exchanges must conduct Customer Due Diligence (CDD) and Enhanced Customer Identification (EDD) to ensure the trade purposes and funding sources of users are legitimate. If a business refuses or is unable to provide information for customer verification, the guidelines note that any transactions from that entity must be rejected or terminated.

According to the revised guidelines, crypto exchanges are also responsible for making certain that foreigners are not using local crypto exchanges, criminals are not using the personal accounts of other people to launder money, and that there are no suspicious transactions and payment processing, CCN news site writes.

In May, the FSC joined a cryptocurrency probe already initiated by South Korea’s Financial Supervisory Service (FSS) into AML compliance with crypto exchanges.

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Source: Cointelegraph

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