In the Dynamic World of Crypto: A Former Regulator’s Bold Prediction, Export Confusion, and UK Crypto Travel Rule Takes Effect
U.S. Spot Bitcoin ETF: “Inevitable,” Says Former SEC Chief
Jay Clayton, the former head of the United States Securities and Exchange Commission (SEC), recently made a striking proclamation in the world of cryptocurrencies. In an exclusive interview with CNBC, Clayton boldly stated that the approval of a spot Bitcoin Exchange-Traded Fund (ETF) in the United States is “inevitable.” Clayton’s comments come in the wake of the SEC’s approvals of Bitcoin futures ETFs, leaving many in the crypto community eagerly anticipating the green light for a spot product.
The “dichotomy” in question refers to the SEC’s favoring of Bitcoin futures ETFs while hesitating on spot product approvals due to concerns surrounding potential market manipulation. The regulator has consistently denied several spot Bitcoin ETF applications and recently extended its decision on seven pending applications, including one from global asset manager BlackRock. Applications from other major players such as WisdomTree, ARK Invest, Bitwise Asset Management, VanEck, Invesco, Galaxy Digital, Fidelity, and Valkyrie are also currently in regulatory limbo.
U.S. Regulators Address AI Chip Export Concerns
Amidst the buzz surrounding the global tech industry, U.S. regulators have responded to concerns over AI chip exports to the Middle East. On August 31, the United States Department of Commerce clarified that the Biden administration had “not blocked chip sales to the Middle East,” dismissing reports of export restrictions.
While the Department of Commerce did not specify which U.S. companies would be affected, the new regulations have raised questions regarding chip sales to “some Middle Eastern countries,” potentially impacting firms like Nvidia and AMD. Whether these companies have sought the required licenses or received feedback remains undisclosed.
Notably, Nvidia expressed concerns in its quarterly report about potential adverse effects on its long-term performance should it be “effectively excluded from all or part of China.” The U.S. government initiated export controls in October 2022 with the aim of curbing China’s development of advanced AI systems powered by U.S.-made semiconductor chips. Furthermore, Washington is contemplating stricter regulations that could limit computing power in chips available in the Chinese market.
These moves have garnered significant international attention, leading to agreements with countries like the Netherlands and Japan to restrict semiconductor manufacturing equipment exports to China. Meanwhile, officials in the U.K., France, and Germany have openly discussed screening Chinese foreign direct investments in crucial sectors, particularly AI.
In response, China has signaled its intent to control the export of key raw materials required for AI chip production, specifically gallium and germanium products.
UK Crypto Travel Rule Takes Flight
In the United Kingdom, a significant regulatory development has unfolded in the cryptocurrency space as the new Crypto Travel Rule took effect on September 1. This rule will have a profound impact on crypto-asset businesses operating in the UK.
Enacted by the Financial Conduct Authority (FCA) on August 17, the rule is designed to target virtual asset service providers (VASPs) and requires them to “collect, verify, and share information” pertaining to crypto-asset transfers.
One notable provision within the Travel Rule stipulates that if a VASP receives an inbound payment from an individual or entity in a jurisdiction that has not implemented the Travel Rule, the VASP must undertake a “risk-based assessment” regarding whether to make the cryptoassets available to the recipient. This rule equally applies to UK residents looking to send payments abroad.
The Travel Rule was originally conceived by the United Nations agency, the Financial Action Task Force, in June 2019. The UK passed legislation to enforce this rule in July 2022, emphasizing its commitment to combatting money laundering and counter-terrorism financing within on-chain crypto activities.
As the crypto world continues to evolve, these developments in the United States and the United Kingdom are sure to capture the attention of both crypto enthusiasts and regulatory experts worldwide.
