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CFTC sets a new record for lawsuits in crypto this year

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The Commodity Futures Trading Commission, or CFTC, is having a banner year in crypto enforcement.

Per the commission’s annual review released on Tuesday, fiscal year 2020 featured seven monetary relief actions against firms engaged in illegal activity in crypto, which is a new record.

The review said: “In conjunction with the Division’s Digital Asset Task Force, the Commission brought a record setting seven cases involving digital assets.” These included charges against PanForex for offering leveraged trading to U.S. persons without registering in the United States, as well as against Digital Platinum for classic fraud.

The CFTC is the U.S. federal commodities regulator, but it really only involves itself in the spot market in cases of overt manipulation or deception. As its name suggests, it has a great deal more power in futures and derivatives markets for commodities, but the question of which cryptocurrencies fall into this category is still uncertain. Broadly, the commission has treated Bitcoin (BTC), Ether (ETH) and Litecoin (LTC) as part of its purview, rather than as securities. 

Interestingly, fiscal year 2020 ended on Sept. 30. Likely, the CFTC’s most bombastic action in recent memory, as far as the crypto community is concerned, was against BitMEX — which only happened on Oct. 1 and, so, did not factor into the report’s figures.

Cointelegraph has previously noted that a number of actions around the end of fiscal year 2020 may herald a new crackdown. Then again, government agencies peg their budgets and expenditures to the fiscal year, so Sept. 30 does end up being the epicenter of a great deal of action.

The CFTC’s report also applauded its $920 million fine against JPMorgan Chase for market manipulation and spoofing, the largest relief action in the commission’s history. 

Gary Gensler, formerly chair of the CFTC, seems set to take a high-level position within the financial team of President-elect Joe Biden’s administration. Gensler was known as being especially hawkish in relation to Wall Street, but after leaving the CFTC he found himself teaching courses on blockchain at MIT. 



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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.