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    Antoinette o Gorman Private Crypto Assests CBDC

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    Bombit
    This document discusses private crypto assets and central bank digital currencies from a regulatory perspective. It outlines some of the challenges regulators face, including the anonymity of digital wallets, the potential for money laundering through structuring transactions, and security issues like hacking of wallets. The document also notes concerns about market integrity due to issues like wash trading and pump and dumps. It concludes that a systematic, global approach to cryptocurrency regulation is needed, including new governance protocols, cross-border cooperation, and more education.

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    Antoinette o Gorman Private Crypto Assests CBDC

    Uploaded by

    Bombit
    262 views36 pages
    This document discusses private crypto assets and central bank digital currencies from a regulatory perspective. It outlines some of the challenges regulators face, including the anonymity of digital wallets, the potential for money laundering through structuring transactions, and security issues like hacking of wallets. The document also notes concerns about market integrity due to issues like wash trading and pump and dumps. It concludes that a systematic, global approach to cryptocurrency regulation is needed, including new governance protocols, cross-border cooperation, and more education.

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    This document discusses private crypto assets and central bank digital currencies from a regulatory perspective. It outlines some of the challenges regulators face, including the anonymity of digital wallets, the potential for money laundering through structuring transactions, and security issues like hacking of wallets. The document also notes concerns about market integrity due to issues like wash trading and pump and dumps. It concludes that a systematic, global approach to cryptocurrency regulation is needed, including new governance protocols, cross-border cooperation, and more education.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    262 views36 pages

    Antoinette o Gorman Private Crypto Assests CBDC

    Uploaded by

    Bombit
    This document discusses private crypto assets and central bank digital currencies from a regulatory perspective. It outlines some of the challenges regulators face, including the anonymity of digital wallets, the potential for money laundering through structuring transactions, and security issues like hacking of wallets. The document also notes concerns about market integrity due to issues like wash trading and pump and dumps. It concludes that a systematic, global approach to cryptocurrency regulation is needed, including new governance protocols, cross-border cooperation, and more education.

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    of 36

    Private Crypto Assets & Central Bank Digital Currencies

    International Monetary Fund


    Law & Financial Stability Seminar
    September 2018
    Agenda
    AML vulnerabilities inherent in
    blockchain technology

    Cybersecurity risk considerations and


    limitations

    Market manipulation, market integrity


    Financial Connectors (“Gateways”)
    Financial Connectors (“Gateways”)
    The Fundamentals
    The Fundamentals
    • Digital wallets relatively easy to establish
    Digital Wallets

    rkmLJN5D28dHuH8vZNUZpMC43pEHpocV

    1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2
    The Fundamentals
    • Digital wallets relatively easy to establish

    • Anonymity / pseudo-anonymity
    The Fundamentals
    • Digital wallets relatively easy to establish

    • Anonymity / pseudo-anonymity

    • Thousands of cryptocurrency exchanges (‘gateways’) connected to blockchains


    The Fundamentals
    • Digital wallets relatively easy to establish

    • Anonymity / pseudo-anonymity

    • Thousands of cryptocurrency exchanges (‘gateways’) connected to blockchains

    • Instant, irreversible transactions


    The Fundamentals
    • Digital wallets relatively easy to establish

    • Anonymity / pseudo-anonymity

    • Thousands of cryptocurrency exchanges (‘gateways’) connected to blockchains

    • Instant, irreversible transactions

    • Unlimited potential for structuring / layering funds through multiple wallets


    The Fundamentals
    • Digital wallets relatively easy to establish

    • Anonymity / pseudo-anonymity

    • Thousands of cryptocurrency exchanges (‘gateways’) connected to blockchains

    • Instant, irreversible transactions

    • Unlimited potential for structuring / layering funds through multiple wallets

    • Use of mixers, tumblers, shufflers, privacy coins


    The Fundamentals
    • Digital wallets relatively easy to establish

    • Anonymity / pseudo-anonymity

    • Thousands of cryptocurrency exchanges (‘gateways’) connected to blockchains

    • Instant, irreversible transactions

    • Unlimited potential for structuring / layering funds through multiple wallets

    • Use of mixers, tumblers, shufflers, privacy coins

    • Issuances of digital “IOUs”


    The Fundamentals
    • Digital wallets relatively easy to establish

    • Anonymity / pseudo-anonymity

    • Thousands of cryptocurrency exchanges (‘gateways’) connected to blockchains

    • Instant, irreversible transactions

    • Unlimited potential for structuring / layering funds through multiple wallets

    • Use of mixers, tumblers, shufflers, privacy coins

    • Issuances of digital “IOUs”

    • Hardware crypto wallets


    Examples of Blockchain-based Activity
    01 LAYERING 02 STRUCTURING 03 REPORTS
    funds through multiple transactions to avoid of hacking and cyber
    gateways, rapidly known U.S. reporting thefts from digital
    moving funds on/off the thresholds wallets
    Blockchain

    04 FUNNELING 05 PHISHING 06 PYRAMID SCHEMES


    Many-to-one, one-to- Fraudulent emails Third-party sales of crypto
    many transactions And/or websites designed through illegal marketing
    through digital wallets to compromise digital schemes
    wallets
    Financial Connectors (“Gateways”)
    Cybersecurity
    Cybersecurity Challenges
    • ‘Private Key’ controls access to the funds
    Digital Wallets

    rkmLJN5D28dHuH8vZNUZpMC43pEHpocV

    1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2
    Private Keys

    rkmLJN5D28dHuH8vZNUZpMC43pEHpocV
    sh8i9d2YRnEjJ3fpFkL8txQSCVo79

    1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2
    5KJvsngHeMpm884wtkJNzQGaGErckhHJBGFsvd3VyK5qMZXj3hS
    Cybersecurity Challenges
    • ‘Private Key’ controls access to the funds

    • Security vulnerabilities rarely seen at the blockchain protocol level


    • typically caused by user error
    Cybersecurity Challenges
    • ‘Private Key’ controls access to the funds

    • Security vulnerabilities rarely seen at the blockchain protocol level


    • typically caused by user error

    • Target credentials to exchanges’ security protocols


    Cybersecurity Challenges
    • ‘Private Key’ controls access to the funds

    • Security vulnerabilities rarely seen at the blockchain protocol level


    • typically caused by user error

    • Target credentials to exchanges’ security protocols

    • Custody solutions
    Cybersecurity Challenges
    • ‘Private Key’ controls access to the funds

    • Security vulnerabilities rarely seen at the blockchain protocol level


    o typically caused by user error

    • Target credentials to exchanges’ security protocols

    • Custody solutions

    • Effectiveness of cybersecurity regulation


    Example
    NYDFS 23 NYCRR Part 500, Section 500.01(d)

    “A Cybersecurity Event means any act or attempt, successful or


    unsuccessful, to gain unauthorized access to, disrupt or misuse
    an Information System or information stored on such
    Information System”

    “Information System means a discrete set of electronic information


    resources organized for the collection, processing, maintenance,
    use, sharing, dissemination or disposition of electronic
    information…. “
    Cybersecurity Challenges
    • ‘Private Key’ controls access to the funds

    • Security vulnerabilities rarely seen at the blockchain protocol level


    o typically caused by user error

    • Target credentials to exchanges’ security protocols

    • Custody solutions

    • Effectiveness of cybersecurity regulation

    • Cyber attacks on a global scale


    Market Integrity
    Market Integrity
    • Off-ledger exchanges
    Market Integrity
    • Off-ledger exchanges

    • Dark Pool trading


    Market Integrity
    • Off-ledger exchanges

    • Dark Pool Trading

    • Whale Trades
    Market Integrity
    • Off-ledger exchanges

    • Dark Pool trading

    • Whale trades 

    • Wash Trading
    Market Integrity
    • Off-ledger exchanges

    • Dark Pool trading

    • Whale trades 

    • Wash Trading
    • Pump and Dumps 
    Market Integrity
    • Off-ledger exchanges

    • Dark Pool trading

    • Whale trades 

    • Wash Trading
    • Pump and Dumps 
    • Shilling
    Closing Thoughts
    • Systematic, global approach to cryptocurrency regulation

    • New protocols for governance of blockchain tech


    o national variability but not tied to any specific geography
    o rooted in a multi‐stakeholder model
    o emphasizing ethics and security as core values

    • Collaborative cross-border regulatory and law enforcement partnerships

    • Information sharing (trends, typologies, etc.) between industry and agencies

    • More education
    o regulators
    o lawyers
    o bankers
    Questions?

    Antoinette O’Gorman
    Crypto / Fintech Compliance Advisor

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