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Hong Kong’s ZA Bank becomes first virtual bank to get SFC license
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3 hours agoon
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adminZA Bank becomes the first Hong Kong digital-only bank to gain a license from the Securities and Futures Commission for Type 1 regulated activity.
According to Hong Kong news outlet HKEJ, on Sept. 30 a ZA Bank spokesperson said that ZA Bank has received approval from the China Securities Regulatory Commission to allow the company to add new conditions for virtual asset transactions to its Type 1 license.
This news follows a year-long process the bank has undertaken since Hong Kong financial regulators tightened restrictions on unlicensed exchanges and the development of a regulated crypto ecosystem.
The bank plans to implement an investment fund service and operate under crypto regulations set by the country’s financial regulators.
CEO of ZA Bank, Rockson Hsu, stated in a press release that the firm remains committed to becoming a “game changer” for the banking sector two years after its official launch. He also highlighted the bank’s plan to launch an investment fund service.
“We look forward to further enhancing users’ experience with our game-changing investment fund services!” said Hsu.
Hong Kong introduced new regulations in 2022, requiring all crypto exchanges operating in the city to submit license applications by February 2024. Since then, over 24 companies struggled to get licenses. By Aug. 2024, around 12 applications have been withdrawn, including those from Bybit, Huobi HK, and OKX.
In May, 2024, the SFC warned investors to only use licensed platforms. The country’s cryptocurrency regulations came into effect in June 2023.
On July 18, 2024, ZA Bank began offering banking services to stablecoin issuers after the Hong Kong Monetary Authority unveils a list of approved companies for its stablecoin sandbox initiative.
In a press release on July 18, ZA Bank partnered with RD InnoTech, one of the first companies listed by the HKMA for sandbox trials. At that time, ZA Bank managed to onboard around ten additional stablecoin clients.
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Wells Fargo Customers’ Bank Account and Social Security Numbers Exposed, Used for Fraud in Mysterious Data Breach
Published
2 days agoon
September 28, 2024By
adminA data breach at Wells Fargo is affecting an unknown number of the banking giant’s customers.
A new filing with the Office of the Vermont Attorney General shows the lender is warning customers that an insider at the bank has accessed and used their information to perpetrate fraud.
The San Francisco, California-based bank has not issued a public statement, but a copy of a letter sent to customers says the bank confirmed in July that a former employee had accessed sensitive data for illicit purposes.
The bank began sending out notices last month.
“The personal information accessed between May 2022 and March 2023 may have included your name, address, date of birth, phone number, email address, social security number, driver’s license number, bank account number(s), credit/debit card number(s), brokerage account number(s), and/or loan/line of credit number(s)…
We are taking measures to monitor your account(s) for suspicious events or changes and continually review our security measures to reduce the likelihood of this happening in the future.”
A similar breach affected Wells Fargo customers in April.
At the time, Wells Fargo notified its customers that another former employee had accessed sensitive personal information and mortgage account numbers belonging to customers and sent the data to his personal account.
The April data breach triggered at least one law firm to initiate investigations into the incident with a view of potentially filing a class action lawsuit.
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Ahead of today’s Congressional hearing on SEC oversight, Republicans urged Gensler to repeal SAB 121
Published
6 days agoon
September 25, 2024By
adminRepublican lawmakers have strongly requested that the U.S. Securities and Exchange Commission repeal a controversial rule for banks that deal with crypto.
Yesterday, Sept. 23, a group of more than 40 members of Congress sent signed letters to the heads of four major United States regulators. The letters demand that the regulators communicate across agencies about a particularly controversial SEC bulletin from 2022, known as SAB 121.
One of the letters was addressed to SEC Chair Gary Gensler — just a day before Gensler would join all of his fellow SEC commissioners in a U.S. House Financial Services Committee hearing on the agency’s oversight. The timing and the message were clear — ahead of today’s broader SEC oversight hearing, the letter has a single focus for the SEC in particular: to “urge” Chair Gensler to repeal Staff Accounting Bulletin No. 121.
The Chairman of the Fed, the FDIC Chair, and the Acting Comptroller of the Currency also all received letters about SAB 121 from the members of Congress.
The letters’ authors include House Financial Services Committee Chairman Patrick McHenry and crypto advocate Senator Cynthia Lummis. Among the letters’ signatories are Republicans from the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee.
The letter addressed to SEC Chair Gensler makes clear and bold claims that by issuing SAB 121, the SEC not only twisted the rules for issuing its guidance, but that with SAB 121, the agency is actually hindering consumer protection and financial innovation in the U.S.:
“We urge you to rescind SAB 121 and work with Congress to ensure Americans have access to safe and secure custodial arrangements for digital assets.”
What is SAB 121?
SAB 121 is an SEC staff bulletin that was issued in April 2022. Per the SEC website, the bulletin does not represent official SEC guidelines or rules, but rather “staff interpretations.” The document makes it clear that the SEC considers custody of crypto particularly high-risk, compared with other assets. Given that risk, the agency argues in the bulletin that there should be specific rules for U.S. institutions that custody crypto.
The main guidance laid out in SAB 121 is, firstly, that any U.S.-regulated bank that offers crypto custody must reflect the cryptocurrency as a liability on its balance sheet. Secondly, as yesterday’s letter to Gensler explains, the bank must also “hold a corresponding offset on their balance sheets, measured at the fair value of the customer’s digital assets.” The letter continues with a scathing critique aimed at the implications of the staff interpretation:
“This accounting approach, which deviates from established accounting standards, would fail to accurately reflect the underlying legal and economic obligations of the custodian, and place consumers at a greater risk of loss.”
The “interpretive guidance” in SAB 121 also affects accounting expenses for banks — as it differs from their standard process — and thus arguably deters them from providing crypto custody services at all.
The result is particularly crippling for U.S. crypto firms, which require a banking parter that deals with cryptocurrency. As the number of banks willing to work with crypto companies decreases, U.S.-based crypto startups are arguably also being deterred from doing business in the U.S., thereby weakening the potential of the U.S. crypto industry’s development.
SAB 121 drew criticism from crypto and Congress
In yesterday’s letter to SEC Chairman Gensler, the members of Congress summarize their criticisms of the bulletin, echoing those of the wider crypto industry. The letter accuses the SEC of bureaucratic trickery, claiming that the regulator, having issued this rule under the guise of a “staff recommendation,” was able to bypass the notice and comment process required by the Administrative Procedure Act:
“SAB 121 was issued without consulting any of the prudential regulators.”
Moreover, the letter claims that effectively requiring U.S. financial institutions to do liability reporting for crypto custody specifically “deviates from established accounting standards.” Ultimately, the lawmakers argue, discouraging U.S. banks from custodying crypto and working with crypto firms — given the high cost required to follow the specific rules of SAB 121 — ends up putting U.S. consumers at risk.
The letter’s authors also note that instead of admitting that the bulletin was a mistake and repealing it, the SEC’s Office of the Chief Accountant has invited more backlash by working with certain institutions to avoid balance sheet reporting requirements:
“These consultations, completed on a case-by-case and confidential basis, do not provide the transparency or certainty needed to ensure SAB 121’s requirements are consistently applied across different institutions.”
Previous attempts to revise SAB 121 have failed
Back in February, four industry organizations asked the SEC to soften the document’s provisions. The agency’s commissioner, Hester Peirce, called the bulletin and related management recommendations “a noxious weed.”
In May, the Senate passed a resolution to repeal SAB 121. The bill passed in the House of Representatives as well. But despite the a bipartisan vote in Congress, in June, President Joe Biden vetoed the bill that would rescind SAB 121, to the crypto community’s dismay.
The House attempted to override the veto on July 10 but fell 60 votes short of the coveted two-thirds majority required to do so.
The SEC introduces new rules of the game
Citing an SEC source familiar with the matter, Bloomberg previously reported that SEC staff had begun distributing recommendations among institutions and brokers on how to get around SAB 121 by avoiding reflecting cryptocurrencies as liabilities on their balance sheets.
Then an exciting twist was revealed this week: Bank of New York Mellon, the largest custody bank in the U.S., was reportedly granted an exemption from SAB 121. The report came from a Wyoming legislative hearing last week. Politicians were quick to criticize the SEC’s Office of the Chief Accountant, accusing it of playing favorites.
Bitcoin bull Michael Saylor, the founder of MicroStrategy, also hinted that one or more mainstream banks could soon get the green light to store cryptocurrencies.
Is Operation Choke Point 2.0 coming to an end?
For years, under Biden’s presidency, the crypto industry has been calling out U.S. regulators for pursuing what’s broadly known in the industry as Operation Choke Point 2.0 — a term coined by crypto VC and industry figure Nic Carter in 2022 to refer to the U.S. government’s unofficial attack on the crypto industry. The broad “operation” consists of a series of perhaps seemingly small policies, guidelines and rules — such as SAB 121 — that critics argue systematically deter banks from dealing with cryptocurrencies.
While traditional financial institutions in the U.S. are not openly banned from dealing with cryptocurrencies or crypto companies, the policies that make up Operation Choke Point 2.0 effectively discourage banks and other financial institutions from touching crypto. As a result of these policies, several banks that primarily dealt with digital assets — most notably Signature Bank and Silvergate Bank — have ended up being forced to shutter their businesses.
The rumors about the Bank of New York Mellon’s exemption and numerous calls for a repeal of SAB 121 — yesterday’s letters being the most recent example — may mean a softening of federal measures against cryptocurrencies in the U.S. is gaining momentum.
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JPMorgan Chase Allows 35 Strangers To Access Customer’s Credit Card in Financial ‘Fiasco’: Report
Published
1 week agoon
September 20, 2024By
adminA JPMorgan Chase customer is looking for answers after the bank abruptly allowed 35 unauthorized users to access her credit card.
Northern California-based Jodi Hayes says she discovered a long list of unknown names were granted access to her card while she was on vacation, reports ABC 7 News.
While on a cruise, Hayes says she received an email from the U.S. Postal Service letting her know that dozens of credit cards were being sent to her address in the names of the unauthorized users.
Hayes immediately contacted Chase to alert them to the fraud and after speaking with the bank multiple times, she says there’s no explanation on how it happened.
I wanted them to send an email asking, ‘Did you authorize all these people to be on your credit card?’ And I wanted them to say, ‘We’ll investigate it.’
This fiasco ruined the end of our vacation.”
Hayes contacted the bank before any unauthorized users made charges.
But after she came home, Hayes says she began receiving credit card applications from other companies including Capital One, Discover and Citi – also in the names of unauthorized individuals.
However, those applications were denied due to “not enough credit history.”
U.S. Postal Inspector Matthew Norfleet says it sounds like Hayes is the victim an identity fraud scheme.
Chase has issued a statement on the incident and apologized for the inconvenience.
“We monitor customer accounts for suspicious activity and promptly contact them if something unusual is detected. In this instance, our vigilant customer alerted us first.
We closed the unauthorized cards, issued a new account and card, and apologized for the inconvenience caused during her vacation.”
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