Cryptocurrency and Blockchain
Cryptocurrency platforms and traditional financial institutions are pushing further into overlapping services, with Kraken offering U.S. stock trading in Europe and Citigroup launching institutional Bitcoin custody. Meanwhile, regulatory shifts are underway as World Liberty Financial gained conditional trust charter approval for its stablecoin and the SEC proposed new token offering exemptions. However, security vulnerabilities persist in the sector, as Bits of Gold reported a data breach affecting 200,000 customers.
The US Office of the Comptroller of the Currency granted conditional approval for World Liberty Financial to establish a national trust bank. The newly formed World Liberty Trust Company will issue and redeem the firm's USD1 stablecoin in-house, taking over operations previously handled by BitGo Bank & Trust. The narrow charter authorizes the entity to manage reserves, custody digital assets, and settle payments, but excludes retail deposits and commercial lending. The OCC conditioned the approval on a minimum capital requirement of $20 million and other preopening terms. The decision immediately drew fierce pushback from lawmakers, with Senator Elizabeth Warren and nine colleagues introducing the Ending Presidential Corruption in Banking Act in response to the approval.
The U.S. Securities and Exchange Commission issued a proposed rule called "Regulation Crypto Assets" to establish the first permanent regulatory framework for digital assets. The proposal creates two registration exemptions for crypto securities offerings, permitting a one-time offering of up to $5 million over a four-year period and offerings of up to $75 million during each 12-month period. Issuers utilizing the second exemption must provide financial statements and adhere to ongoing reporting requirements, while both tracks require principles-based narrative disclosures. The framework also includes a conditional safe harbor excluding a crypto asset from being deemed an investment contract once an issuer ceases essential managerial efforts. SEC Chairman Paul Atkins advanced the proposal following stalled congressional efforts to pass a market structure law. The public has 60 days to submit comment letters after the proposal is published in the Federal Register.
Bits of Gold suffered a data breach affecting approximately 200,000 customers after an unauthorized party accessed a third-party software system used for customer support and data analysis. The intrusion exposed sensitive personal and financial data, including names, Israeli identification numbers, email addresses, telephone numbers, IP addresses, bank account details, and public cryptocurrency wallet addresses. Customer funds, cryptocurrencies, passwords, scanned identification documents, complete credit-card numbers, and CVV security codes remained uncompromised. The company blocked the unauthorized access, disconnected the affected system, and notified the Capital Market, Insurance and Savings Authority. While trading services remain operational, the exposed information creates severe risks for targeted social engineering and phishing attacks.