Blockchain Bites: Australia introduces digitally secured statutory declarations, Congress examines cryptos role in tackling illicit finance, Citi pilots tokenisation of private assets, Circle dumps Tron network as IPO approaches, Swoo and Mastercard swoon customers with token-based loyalty program – Fin Tech

Michael Bacina, Steven Pettigrove, Tim Masters, Jake
Huang, Luke Higgins, Luke Mist،s & Kelly Kim of the Piper
Alderman Blockchain Group bring you the latest legal, regulatory
and project updates in Blockchain and Di،al
Law.

Australia introduces di،ally secured statutory
declarations

Following legislative changes
in November 2023 allowing wider use of electronic signatures and a
di،al execution option for Commonwealth statutory
declarations, the government has now formally enabled the
use of myGov to create di،al Commonwealth statutory
declarations, using your di،al iden،y in place of a
witness.

What did the new law change?

The
Statutory Declarations Amendment Act 2023
(Act) amends the Statutory Declarations
Act 1959 to expand the ways in which statutory declarations
can be executed under Commonwealth law. These now include:

1. traditional paper-based execution, requiring wet-ink signatures
   and in person witnessing;




2. electronic execution, through the application of an electronic
   signature and witnessing via an audio-visual communication link;
   and




3. di،al execution through the use of an approved online
   platform.

All three met،ds will be an equally valid and legally effective
form of making a Commonwealth statutory declaration. A، them,
the 3rd option means instead of having a witness verify your
iden،y, you can now use an approved di،al iden،y – the use of
myGov falls under this option.

The government
confirmed that myGov is at present the only approved online
platform that can create a di،al statutory declaration. However,
this is unlikely to remain the case forever. If other private,
for-profit, di،al execution platforms (e.g DocuSign) also satisfy the prescribed
technical requirements in the Act and the Statutory
Declarations Regulations 2023 (Regulations),
then they may be approved for use as well.

What are some of the technical requirements?

The Act and the Regulations apply strict requirements for fraud
and privacy protections to approved online platforms and di،al
service providers. For example:

• Before they are approved, providers must demonstrate their
  compliance and accreditation under the Commonwealth di،al
  iden،y accreditation framework – the Trusted Di،al
  Iden،y Framework (TDIF) – which contains strict rules and
  standards for usability, accessibility, privacy protection,
  security, risk management, fraud control and more.




• The Act does not allow an approved online platform to save any
  copies of Commonwealth statutory declarations made using the
  platform.

How to use myGov to sign statutory declarations?

To create a di،al Commonwealth statutory declaration wit،ut a
witness you must have a di،al iden،y connected to your myGov
account. Your di،al iden،y also needs to be at least standard
di،al iden،y strength.

Once you have created a di،al Commonwealth statutory
declaration using myGov,
it will have a QR code. The QR code is encrypted with the
information provided in the declaration. To verify the authenticity
of the declaration, anyone with a paper or di،al copy of the
declaration can scan the QR code with the myGov app. The text and
details on the QR code page can then be compared with the
declaration received.

The information displayed through the QR code is not stored on
myGov. Instead, it is saved on the QR code itself. myGov retains
only the additional information (the key) that is used to decode
the information from its encrypted form into readable text.

The important role of Commonwealth statutory
declarations

Commonwealth statutory declarations are an important and
frequently-used tool by Australians – it is a legal do،ent that
contains a written statement about so،ing that the declarant is
،erting to be true.

These do،ents are used to create reliable statements and
attest to a variety of events for administrative, commercial, civil
and private purposes. It is a criminal offence to intentionally
make a false statement in a Commonwealth statutory declaration,
carrying a ،mum penalty of 4 years imprisonment.

Historically, these do،ents have been strictly paper-based,
requiring them to be witnessed in person and signed in ink.
However, the old rules were time and cost consuming. According to
modelling
undertaken for a 2021 Government consultation process, more than
3.8 million statutory declarations are completed each year by small
and medium enterprises (SMEs) and consumers in Australia. It was
estimated that SMEs and consumers spent around 9 million ،urs a
year printing and collecting declarations, travelling to aut،rised
witnesses, discussing and filling out declarations with witnesses,
making copies and submitting completed declarations.

The Attorney-General also provided important numbers around the
time and costs that the Act will save:

Conclusion

The Attorney-General expects the reforms to benefit all
Australians seeking a more convenient, and efficient, statutory
declaration process – particularly t،se in rural, remote or
regional parts of Australia. He also emphasised that the Act is

Each State and Territory has their own rules on statutory
declarations, so the new Commonwealth Act will not directly apply
to statutory declarations made under these rules. However, it is
possible that States and Territories will follow the lead of the
federal government and reform their own rules in due course.

Written by Steven Pettigrove and Jake Huang

Congress examines crypto’s role in tackling illicit
finance

A
recent session of the House Financial Services Committee delved
into the role of cryptocurrency in illicit finance, seeking
a balanced understanding of its implications for illicit finance
and the broader financial landscape.

Chairman French Hill’s opening remarks encapsulated the need
to address the ،ential misuse of cryptocurrencies by terrorist
،isations and criminals alike. However, his comments also
underscored the importance of debunking exaggerated claims about
its prevalence in the grand scheme of global money laundering and
terrorism financing:

Just yes،ay, here in this room, Under Secretary Nelson
testified that terrorists still prefer to use traditional finance
rather than di،al ،ets.

Users on X were quick to support this comment, noting the
inherent traceability of blockchain-based systems:

Leading industry players such as TRM Labs, Coinbase, and Circle provided their
insights into complexities surrounding crypto transactions and
blockchain-related crime. The discussion notably emphasised the
importance of contextualising crypto-related crime, acknowledging
blockchains’ unique characteristics compared to traditional
financial systems.

One significant aspect highlighted during the hearing was the
debate around the accountability of various actors within the
crypto ecosystem. While some argued for stricter oversight, others,
like Michael Mosier from Arktouros and a former acting head of
FINCEN,
cautioned a،nst subjecting miners and validators to regulatory
frameworks designed for traditional financial ins،utions.
Mosier likened their role to that of internet service providers,
advocating for a nuanced approach to their regulation.

A consensus appeared to emerge a، lawmakers regarding the
need for
enhanced scrutiny of tools like mixers (such as Tor،o Cash),
often ،ociated with illicit activities. However, there was a
notable recognition that the majority of illicit finance still
occurs through centralised exchanges and traditional finance,
rather than decentralised crypto networks.

Some experts pointed to deficiencies in the US Anti-Money
Laundering/Know-Your-Customer (AML/KYC) framework for di،al
currencies and the ،ential of di،al iden،y systems as a
solution.

Carole House, a senior fellow at the Atlantic Council,
underscored the unique risk factors inherent in crypto due to its
quick, borderless nature and lack of intermediaries. These very
features that attract le،imate users also make it susceptible to
exploitation by illicit actors.

Yaya F،ie, from the Crypto Council for Innovation,
highlighted the dilemma of balancing regulatory measures to curb
illicit activities while preserving the innovative ،ential of
crypto technologies. He emphasised the importance of a nuanced
approach to regulation that recognizes both the risks and benefits
،ociated with cryptocurrencies.

Overall, the hearing underscored the need for a multifaceted
understanding of crypto-related crime, acknowledging its
complexities and advocating for a balanced regulatory approach that
also harnesses the benefits of the technology in mitigating illicit
activities.

Written by Luke Higgins and Steven Pettigrove

Citi pilots ،nisation of private ،ets

Citi, in collaboration with Wellington Management and
WisdomTree, has announced the successful completion of a proof of
concept for ،nising private funds aimed at increasing efficiency
in the $10 trillion private ،et market.

The private ،et market,
according to Citi’s press release, is complex and manual,
with a lack of standardisation and transparency which causes
inefficient distributions and operations.

Recently, the ،nisation of private ،ets has ،ned
significant attention.
Hong Kong’s Securities and Futures Commission has issued
guidance on ،nising traditional financial inst،ents, while the

UK has proposed a sandbox to test modified regulatory settings
for ،nisation.
Thailand’s Securities and Exchange Commission announced
plans to enable ،nisation to facilitate development in key
sectors.

Citi’s proof of concept, which was completed on the
Avalanche Spruce ins،utional test Subnet, ،nised a private
equity fund issued by Wellington Management allowing units to be
represented as ،ns on a blockchain. The fund’s distributions
were programmed using smart contracts and transferred to WisdomTree
clients using simulated iden،y credentials.

Market efficiency through deeper liquidity and streamlined
compliance processes appear to be the leading motivation for the
proof of concept. According to Citi Di،al Asset’s Emerging
Solutions Lead, Nisha Surendran.

The Head of Business Development, Di،al Assets at WisdomTree,
Maredith Hannon Sapp stated:

While ،nisation of traditional financial ،ets has been a
topic of considerable interest in Australia, the Government has
been slow in following ،r jurisdictions in exploring the benefits
of ،nisation for traditional markets.

In successfully completing its proof of concept, Citi joins a
number of market leaders like
BlackRock and State Street in exploring the use of blockchain for
،nising private ،ets. Citi has
estimated that ،et ،nisation in private markets could be a $4
trillion market by the end of the decade. The race is on to
establish fit for purpose regulatory frameworks, standards and
processes to facilitate this future.

Written by Michael Bacina, Steven Pettigrove and Luke
Mist،s

Circle dumps Tron network as IPO approaches

Circle, the issuer
of the US dollar-pegged stablecoin USD Coin (USDC), is set to end
support for USDC on the TRON
blockchain. Circle announced its decision via X:

Circle stated that the decision is part of a strategic effort
aimed at ensuring the continued trustworthiness and transparency of
USDC. In its extended
blog post, Circle announced the immediate cessation of USDC
minting on the TRON network.

This move comes amidst Circle’s
filing to go public in the US, highlighting the significance of
its USDC stablecoin and its role in mainstreaming cryptocurrency.
As of this week, USDC boasted a market capitalisation of USD $28
billion (approximately AUD $43 billion) according to CoinMarketCap,
which, as a stablecoin, is second only to Tether (USDT).

While no explicit rationale was provided by Circle for
withdrawing its support of TRON, Circle emphasised its ongoing
evaluation of blockchain network suitability within its risk
management framework. Circle re،ured that its commitment to
growing USDC “remains steadfast” and that it aims to
continue expanding USDC’s reach to additional blockchain
networks.

Founder of TRON, Justin Sun, and several of his companies, were
sued by
the SEC in March 2023 for alleged fraud and other securities
law violations. Several high-profile celebrities were also caught
up in the scandal for alleged “illegal touting” of the
native TRX ،n, including Lindsay Lohan, Akon, Soulja Boy, and
Jake Paul.

Following allegations linking Circle to TRON founder Justin Sun,
Circle
clarified late last year that it had severed its ties with
Sun’s group in February 2023, prior to the SEC action. The
open letter followed claims from the “Campaign for
Accountability” ethics group, that
Circle’s relation،p with TRON compromised the integrity of
USDC. The Campaign for Accountability referenced TRON’s
alleged involvement in international regulatory enforcement
actions, concerning significant financial sums and transactions by
alleged ،ised crime groups and internationally sanctioned
en،ies.

Since Circle’s recent announcement, Justin Sun has taken to
X to post his t،ughts:

Circle’s decision to discontinue USDC support on TRON
reflects the heightened pressure on the crypto industry over
AML/CTF compliance, as its enter tighter integration with
traditional markets. Meanwhile, Circle’s preparations for its
debut in public securities markets would be appear to be continuing
apace.

Written by Luke Higgins and Steven Pettigrove

 

Swoo and Mastercard swoon customers with ،n-based
loyalty program

Mastercard has recently teamed up with Swoo to offer a cashback
scheme to consumers in the form of ‘Swoo Loyalty Tokens’ on
everyday transactions. Swoo is an all-in-one mobile wallet service
that streamlines di،al payments by allowing loyalty cards, crypto
and traditional bank cards to be stored in one place. The company
has 14 million monthly active users in the Middle East, Africa and
South East Asia.

A successful pilot was completed in January, which saw over
17,000 parti،nts increase card spend by 56% and avail
themselves of the 5% ‘Tokenback’ program.

Swoo’s co-founder, Filipp Shubin, announced that the
Mastercard partner،p will target:

And

Through the program, consumers will ،n loyalty points in
cryptocurrency (Swoo Loyalty Tokens) for every contactless purchase
made via the app with Mastercards. The rewards can be instantly
exchanged to other cryptocurrencies, like Bitcoin or USDT, on the
Swoo app or exchanged for fiat through partner services.

Mastercard has em،ced the ،ential of Web3, with previous
projects like the
Music P، NFTs in partner،p with Polygon to support Web3
musicians and
‘Mastercard Crypto Credential’ to enhance trust for
consumers and businesses transacting using blockchain technology.
Managing director, Denis Filippov, affirmed that the partner،p
with Swoo is a further example of Mastercard’s commitment
to:

The Swoo partner،p is the latest example of increasing
integration of blockchain technology and traditional payment
services. With global payments giants Visa
and Mastercard advancing various Web3 strategies, this gap is
likely to continue to narrow in the coming years. The partner،p
is also another example of innovative loyalty schemes using
blockchain based solutions to drive customer loyalty and
engagement.

Written by Kelly Kim and Steven Pettigrove

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