Scary EU Crypto Regulations Passed

Check out the biggest breaking crypto market updates for today:

Russia Blocks Access To OKX Website For Alleged Unreliable Financial Info

According to reports, Russia’s state media monitoring service Roskomnadzor has blocked access to the website of crypto exchange OKX at the request of the Prosecutor General’s Office. 

The agency stated that the ban was due to the dissemination of “unreliable socially significant information of a financial nature.” 

The agency stated that the exchange published information related to the activities of financial pyramids, as well as information on the provision of financial services by persons who do not have the right to provide them under Russian law. 

However, Russian citizens can still access the website using VPNs, though OKX has advised against doing so due to risks of triggering security measures that may lead to account bans. 

OKS, which was founded in China and is currently based in Seychelles, is not observing Western sanctions against Russia. Recently, it reportedly failed to respond to a request by South Korean authorities to freeze accounts attributed to Terraform Labs co-founder Do Kwon, and is otherwise known for its sponsorships of Manchester City soccer and auto racing. 

Similar website blockings have occurred before and have been successfully challenged in Russian courts. Binance was blocked in Russia between September 2020 and January 2021 before a regional court reversed the Roskomnadzor’s decision. 

Russia blocked six crypto news websites in 2020, but at least one of the sites,, was able to have the block lifted a week later by a district court decision – though it remained on the agency’s blacklist. 

Roskomnadzor blocked Cointelegraph shortly in 2019 after it had been on the blocked list for two years without effect.

European Council Passes MiCA, EU’s Comprehensive Crypto Regulation

The European Council’s Permanent Representatives Committee has reportedly approved the full legal text of its all-encompassing, all-knowing, all-seeing and omnipresent crypto legislation – known as the Markets in Crypto Assets Regulation (MiCA). 

This regulation will dictate what you can and can’t do with your crypto if you are in the EU – according to people who wrote into the regulations that the regulations do not apply to them (more on that in a second). 

The text is now being sent to the chair of the European Parliament Committee on Economic and Monetary Affairs for a final vote set to take place on October 10th. 

Once approved, MiCA will be formally adopted and will be enforceable as early as 2024. 

MiCA is a significant (and some might say, scary) step in establishing rules governing how digital asset exchanges and other service providers must operate in EU member countries. 

While the regulation is in some ways welcomed by the industry for harmonizing an otherwise fragmented legislative landscape on the European continent, there are many concerns about the limitations set on non-euro denominated stablecoins. 

The harsher measures regarding stablecoins were removed at first, but swiftly made their way back into the legislation last Wednesday in a last-minute move by French officials who were worried about the euro’s sovereignty. 

The European institutions reached a political agreement on MiCA back in June, and over the summer they negotiated the technical details of the regulation. 

Now, once MiCA reaches the EU’s official journal early next year, further details on how to implement the rules for crypto-asset service providers will be ironed out by the European supervisory bodies. 

Whatever ends up in this legislation, we can expect the US to pass something similar down the line. 

If you are a European citizen involved with cryptocurrencies, reading all 350 pages of the MiCA might be a good choice – albeit very dry and boring. Here are a few initial points that stood out in the document: 

One false rumor that has been spreading is that the MiCA regulations are making it illegal to generate a bitcoin wallet in the EU without KYC – which actually isn’t true. But they definitely are ramping up information-gathering as much as possible. 

If you hold crypto on a centralized exchange, for example, a large majority of your personal information is now their business. 

The MiCA also talks a lot about stablecoins, essentially saying that if stablecoins are allowed to continue as they are, they could be very attractive to retail investors – and as such become a risk to sovereignty of the Euro. 

So if stablecoins become too big, the MiCA gives the Central Bank of Europe the ability to either wipe the stablecoin out totally, or place limits on how many coins can be issued. 

Again, not very free-market of them, but when have governments ever looked out for your freedom of choice?

There is also a lot of information in the new regulations about centralized crypto exchanges – which require them to collect a lot more personal info about their users if they’re based in the EU. There was a lot of interesting language saying centralized exchanges cannot use user funds on their own account. Probably easier said than done to enforce that though (just like a large majority of this regulation).

A large part of the early-adopter crypto community is not excited about such heavy-handed regulation and authoritarian influence over the beautiful free market that cryptocurrencies have come to be. 

This regulation is also likely going to encourage a lot of people to become lax with how they handle their crypto – thinking that if the EU is regulating it, there are no more risks or scammers. 

But scammers are everywhere. They will always find ways to scam people regardless of whether they’re being regulated or not. A reliance on a big centralized entity to protect your interests doesn’t always work out. The big centralized entity will always look out for number one: themselves. 

The new regulations on stablecoins show just that. But that’s not even the worst part:

There’s also language in the MiCA stating that “certain entities” will be exempt from any and all regulations contained in the document: 

Who are those entities? The International Monetary Fund, the Bank of International Settlements, and any future Central Bank Digital Currency. 
But don’t worry. They only made sure they were completely above the law they’re subjecting you to because they’re looking out for your best interests.

Three Arrows Capital’s NFT Collection Set To Be Liquidated

Teneo, the business advisory firm leading Three Arrows Capital’s (3AC) bankruptcy proceedings, issued a statement on Oct 5th that it was behind the movement of 3AC’s Starry Night Capital NFT collection. 

Starry Night Capital spent tens of millions of dollars acquiring high-value NFTs, such as Art Blocks, CryptoPunks, and Rare Pepe assets. The NFTs are now in the possession of Teneo, who is liquidating them to cover 3AC’s bankruptcy obligations. 

Teneo further stated that the transfer of NFTs was part of the liquidator’s duty of identifying assets and maximizing recoveries on behalf of all creditors. The firm also credited pseudonymous collector Vincent Van Dough for facilitating the transfer of the NFTs, by stating: 

“We would like to make clear that VVD [pseudonymous NFT collector Vincent Van Dough]  has cooperated with the JLs [Joint Liquidators] in an effort to protect the value of these assets for the benefit of all relevant stakeholders, and has sought to ensure that no Starry Night Portfolio assets would be disposed of improperly, or without the sanction of the BVI Court if required.” 

Once a high-profile hedge fund in the crypto space, Three Arrows Capital became insolvent last May following the collapse of Terra’s UST and LUNA ecosystem, in which the firm was heavily invested. 

Three Arrows Capital cited other recent bad bets, including on staked Ethereum and the Grayscale Bitcoin Trust, that founders Su Zhu and Kyle Davies said were also a factor. 

Three Arrows filed for Chapter 15 bankruptcy proceedings in June, and claimed that it owed $3.5 billion dollars to creditors following its collapse. In August, Singapore’s high court approved a deeper probe into the firm’s collapse. 

The hedge fund’s Starry Night Capital was announced in August 2021 as the NFT market soared to new heights, with plans to raise as much as $100 mil;lion to purchase and hold high-value NFTs. 

THe fund was announced alongside its purchase of an Art Blocks Ringers NFT from Dimitri Cherniak for $5.66 million dollars worth of ETH at the time. 

The collection expanded with an array of other Art Blocks NFTs, along with CryptoPunks, Rare Pepes, and other valuable pieces. An incomplete list of Starry Night’s holdings from data platform Dune suggests that the firm spent at least $35 million on NFTs in 2021. 

However, valuing the collection amid the sinking NFT market – with valuations and trading volume down significantly amid the wider crypto market decline – is challenging due to a lack of liquidity and comparable recent sales for some of the NFTs. 

Crypto analytics firm Nansen pegged the value of the collection at about $846,000 worth of ETH, but many of the individual estimates are well below the last purchase price. 

More likely, given the continued demand for CryptoPunks and artwork from prominent generative art creators, Teneo could recover millions of dollars worth of ETH by liquidating the NFT holdings.

Luke Baldwin

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