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Louisiana becomes the latest US state to ban central bank digital currency (CBDC), Israel cracks down on crypto-based money laundering and terrorist financing, and the US offers a $5m bounty for the "Crypto Queen".
Louisiana has become the fourth US state to enact legislation banning the use of CBDC, following in the footsteps of Florida, Alabama and Indiana.
On June 19, Louisiana’s Republican governor Jeff Landry signed the Blockchain Basics Act into law, following near-unanimous votes in the State Senate and House of Representatives.
In the House, the bill passed with 104 votes in favour, no votes against and one abstention; in the Senate, it passed with 37 votes in favour, one vote against and one abstention.
Mark Wright, Republican House member and author of the bill, thanked Landry, who holds veto power over state legislation, for his personal support.
The Blockchain Basics Act prohibits “governing authorities” from requiring use, payment or testing of CBDC. As per the bill, a governing authority is defined as any board, commission, department or other agency of the state.
CBDC is defined as a “digital currency, a digital medium of exchange, or a digital monetary unit of account issued by the Federal Reserve System or a federal agency which is made directly available to a consumer”.
It can also mean a digital currency that is “processed or validated directly” by such federal agencies.
In a list of exemptions, the bill notes that CBDC “does not mean a digital asset backed by legal tender or government treasuries and issued by a private entity.”
In addition to prohibiting the use of CBDC, the bill establishes new protections on the rights of Louisiana citizens to hold, store, stake, mine and transact in “digital assets”.
Digital assets are defined as “virtual currency, cryptocurrencies, natively electronic assets, including stablecoins and non-fungible tokens (NFTs), and other digital-only assets that confer economic, proprietary, or access rights or powers”.
The bill prohibits all Louisiana governing authorities from restricting or impairing the ability of individuals or businesses to accept digital assets as a method of payment.
Authorities are also prohibited from restricting individuals or businesses from self-custodying digital assets using a self-hosted or hardware wallet.
Anti-CBDC legislation gathers momentum
The Blockchain Basics Act is a clear rejection of the Federal Reserve’s ongoing experimentation with both retail and wholesale CBDC.
It is also another triumph for Republican lawmakers at the state level, whose efforts to ringfence their jurisdictions from a potential federal CBDC continue to gain momentum.
In Louisiana, the House of Representatives leans heavily Republican, with a 73-32 majority in the House and a 28-11 majority in the Senate.
Similarly, in North Carolina, another Republican stronghold, the legislature this week adopted an anti-CBDC bill, with the House voting 109-4 in favour and the Senate voting 39-5 in favour.
The No Central Bank Digital Currency Payments to State bill will now head to the desk of Democrat governor Roy Cooper, who will either sign or veto the bill.
Other US states currently considering legislation to either ban or limit the use of CBDC include South Dakota, Hawaii, Nebraska, Utah, Wisconsin, Oklahoma, Tennessee, Missouri and New Hampshire.
Israel tightens AML/CTF guidance, targeting crypto-assets
Israel’s Capital Markets Authority (CMA) has published a new draft directive that aims to improve the effectiveness of the country's anti-money laundering and counter-terrorist financing (AML/CTF) framework for regulated financial institutions (FIs).
The draft directive prohibits regulated FIs from providing services to any entity that they believe ought to hold a financial services licence but does not hold such a licence.
In such cases, the regulated FI will be required to report the entity to the CMA and the Authority for the Prohibition of Money Laundering (APML).
The draft directive also states that regulated FIs are prohibited from carrying out any action if there is a “reasonable basis” for fearing that the action is related to money laundering or terrorist financing.
Amit Gal, acting commissioner of the CMA, said the draft directive will assist FIs’ in determining whether to transact with crypto-asset service providers.
Under Israel’s Financial Services Law, virtual currency is defined as a financial asset, which means crypto-asset service providers are expected to be licensed by the CMA.
The draft directive also marks the introduction of the Financial Action Task Force (FATF) travel rule in Israel.
The travel rule requires that crypto-asset service providers obtain, hold and exchange information about the originators and beneficiaries of crypto-asset transfers.
Israel’s AML/CTF framework for crypto-assets has come under increased international scrutiny since October 7 last year, when Hamas fighters resumed hostilities against the country.
US lawmakers have drawn attention to the use of crypto by groups such as Hamas, Hezbollah and Islamic State, which have been able to use platforms such as Binance and Tether’s USDT stablecoin to fund their activities.
$5m bounty offered for vanished 'Crypto Queen'
The US State Department has stepped up its efforts to locate one of crypto’s most infamous alleged scammers, who has spent almost eight years on the run.
This week, the department announced a reward of up to $5m for information that could lead to the arrest or conviction of Ruja Ignatova, 44, in any country.
Dubbed the "Crypto Queen", Ignatova was last seen in 2017 after being indicted on suspicion of orchestrating a multi-billion-dollar Ponzi scheme known as OneCoin.
Ignatova, a Bulgarian national with German citizenship, travelled from Sofia to Athens in October 2017, the department said, and has not been seen since.
She is believed to have defrauded victims of more than $4bn and, in 2022, she was added to the FBI’s Ten Most Wanted Fugitives List.
