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Russian officials must now declare crypto holdings

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Russia’s public officials will be mandated to declare all private crypto assets holdings from New Year’s Day, 2021.

The requirements were announced on Oct. 20 by the office of Russian prosecutor general, Igor Krasnov, following a meeting with 15 fellow prosecutor generals representing member states of the Shanghai Cooperation Organization (SCO).

“Starting next year, civil servants will be required to declare [virtual] currencies on an equal basis with other assets,” Krasnov said.

In 2018, Russia’s labor ministry announced that public officials would not need to declare virtual asset holdings in their tax reports due to the unregulated status of crypto. As such, concerns have lingered that crypto assets may be the financial instrument of choice for bribery and corruptions

Over the past three years, the Prosecutor General’s Office claims to have confiscated more than $440 million worth of undisclosed, non-crypto assets from public officials.

The new requirements follow new laws signed by President Vladimir Putin in July that will classify crypto assets as akin to physical commodities from 2021 — recognizing virtual currencies in the country for the first time.

While the laws do not recognize cryptocurrencies as legal tender, they will legitimize crypto-related activities across Russia.

Alongside SCO member states Russia, India, Kazakhstan, China, Kyrgyzstan, Pakistan, Uzbekistan, and Tajikistan, the prosecutor generals of Afghanistan, Belarus, Mongolia, Iran, Azerbaijan, Cambodia, and Armenia — which are non-member partners and observer states to the SCO — were also present at the meeting. The gathering centered on the topic of combating corruption.

The Russian announcement on crypto reporting suggests similar laws may soon be enacted across the Eurasian region.

In August, Russia’s Federal Financial Monitoring Service claimed it had developed a way to “partially” de-anonymize transactions using Bitcoin (BTC), Ethereum (ETH) and the popular privacy coin Monero (XMR). The agency also noted that several “overseas countries have also shown interest in the system,” suggesting it is looking to sell the system to allied nations.



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Regulation

New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.