Governments Look to Cast a Wider Net on Crypto

Old AML/KYC Laws Aim To Stay Relevant in 2020

● All Eyes on Q4 Fiscal Policies

Hello again and thanks for joining this week’s edition of Overbit Insights. Whilst the cryptocurrency market is holding its breath, waiting for Bitcoin to move up or down from the $13,000 level, we’d like to jump right in on some insights surrounding finance, outside of market movements. We kick things off in the United States, where federal authorities are, like they are in many countries, seeking to cast a wider net for surveillance on cryptocurrency transactions.

Just on Friday, 23 September, the US Federal Reserve proposed a rule change in regards to the surveillance requirements concerning so-called ‘virtual currency’ money transfers. This proposal would reduce the threshold at which banks must collect transaction information on, from $3,000 all the way to $250, which is quite the increase in scrutiny for transactions.

Additionally, this proposal would expand the Federal Reserve’s definition of money to include cryptocurrencies explicitly. As of now, this proposal still stands in the ‘public review’ period, allowing anyone to voice their opinion online or through the mail where it will stand for 30 days. This review period means, of course, this rule change is nothing but a proposal for now. However, this move clearly shows a dominant trend for how governments view cryptocurrency - something increasingly within their control and purview.

This new scrutiny brings us into our next story of the day. Where the last topic focused on expanding regulation to control cryptocurrency, this next one is about governments using their same old tools to crack down on digital currencies, queue, AML laws.

AML laws originally evolved out of the Bank Secrecy Act, which was initially passed in the 1970s, and serves as a foundation for allowing the US Federal Government to monitor the exchange of money between parties. While the Bank Secrecy Act was the origin, the control laws surrounding money laundering increased with the Money Laundering Control Act of 1986, making money laundering a federal offence. Since then, many other countries have passed similar laws.

These laws, while old, and possibly outdated for the current technology landscape, still exist, and regulators are looking for ways to enforce “old laws” on “new tech”. These efforts are all part of a global effort to enact sweeping reforms into the burgeoning cryptocurrency ecosystem.

In our last story of today, we switch focus to the events happening between today and the end of the Fiscal year - a few short months away. A recent report by ActionForex notes just how critical these next two months will be to closing off such a turbulent year in financial markets. GDP data from Q3 is set to be released in a matter of days, or weeks for most countries, which should paint a comprehensive picture of how countries are faring nearly half a year since the COVID-pandemic took hold.

GDP growth is expected to show a sharp recovery, at least in the United States - nearly 31%. This growth would almost wipe out the losses sustained in the US GDP during Q2. Across the pond, the EU-UK negotiations seem to be taking a positive step, now that both sides are explicitly seeking to avert a no-deal situation. All of the countries mentioned above (and more not listed) are also anxiously trying to work out their fiscal policy and possible stimulus plans amidst the pandemic, as millions of citizens struggle to make ends meet during this unprecedented economic shutdown.

In short, ActionForex views these next few weeks as a “deal-making” time. The clock is ticking down on negotiations like the EU-UK Brexit Talks and fiscal stimulus in the United States, the European Union, the United Kingdom and elsewhere. We also anxiously await COVID-related recovery news, both in terms of economic upturn and a cure or vaccine itself.

On top of all these events, the United States election is barely two weeks away - some may say one of the most critical elections in decades in the US. To put it lightly, a massive amount of catalysts lie ahead on the horizon, “ensuring a fascinating end to an otherwise horrific year”.

While it’s impossible to say precisely what will happen with any of these events, we will always strive to keep you updated, and maybe even ahead of the curve when we can, here at Overbit. Thanks for reading and good luck with another week in the markets.

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