PayPal Secures Crypto Registration in the UK

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Daily News:

Visa Completes Digital HK Dollar Pilot Test

PayPal Secures Crypto Registration in the UK

SafeMoon Accused of Securities Fraud in SEC Lawsuit

Visa Completes Digital HK Dollar Pilot Test:

• Visa, in collaboration with HSBC and Hang Seng Bank, has successfully completed the Hong Kong Monetary Authority's pilot program for the central bank digital currency (CBDC), known as the e-HKD. This program involved tokenizing deposits on a blockchain ledger backed by the firm’s balance sheet, ensuring secure and transparent transactions.

• The pilot utilized global blockchain networks and was conducted with utmost privacy; while transactions were viewable on blockchain explorers, participants' identities, account balances, and transaction amounts remained confidential to non-bank users. This approach highlights the potential of blockchain technology in maintaining transaction transparency while ensuring user privacy.

• Following the success of the pilot, Visa is looking to expand its exploration of tokenized asset markets and programmable finance, aiming to streamline and automate financial processes. For instance, in a property payments scenario, the buyer's payment to the property developer could be automated and executed upon the contract's completion, significantly reducing the process's closure time. The e-HKD project is set to progress to Phase 2, building on the positive outcomes of the initial pilot.

PayPal Secures Crypto Registration in the UK:

• PayPal has successfully registered with the U.K.'s Financial Conduct Authority (FCA) as a crypto service provider, enabling the firm to offer cryptocurrency-related services and products to British users. This registration follows a temporary pause in crypto purchases for British customers due to new regulatory requirements, ensuring that PayPal aligns with FCA regulations against money laundering.

• The registration is a result of the Fifth Money Laundering Directive (AMLD5) introduced in 2020, which mandates firms operating in the U.K. to notify and gain approval from the FCA. With this approval, PayPal also gains the authority to validate its cryptocurrency-linked promotional materials, ensuring adherence to the latest marketing standards and regulations.

• PayPal has been actively expanding its crypto services, with the introduction of a native, dollar-pegged stablecoin called PayPal USD, running on Ethereum, and various crypto-related services for users and merchants. However, the firm must comply with the FCA's strict regulations, as failure to do so could result in severe penalties, including unlimited fines and up to two years of imprisonment.

US State Regulators Grant MTL license to Bastion:

• The SEC has filed a lawsuit against SafeMoon and its top executives, including creator Kyle Nagy, CEO John Karony, and CTO Thomas Smith, accusing them of conducting a fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon. The complaint alleges false assurances were given to investors regarding the locking of tokens in a liquidity pool, while large portions of the pool were never actually locked.

• The SEC complaint details the misappropriation of millions of dollars by Karony, Smith, and Nagy, which were allegedly used for extravagant personal expenditures, including luxury cars, travel, and homes. Furthermore, it alleges market manipulation tactics such as wash trading and large purchases of SafeMoon to artificially inflate its price.

• The regulatory body classifies SafeMoon as a security under the Howey test, asserting that investors reasonably expected profits from the managerial efforts of others. This lawsuit is part of the SEC's ongoing legal crackdown on crypto companies, following actions against Binance and Coinbase, although they have faced challenges in court, as seen in the partial win for Ripple.

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