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Digital rights non-profit is tired of the shadowy practices used by many centralized exchanges

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The Electronic Frontier Foundation, or EFF, is calling out Coinbase for its lack of transparency. At the same time, the group pointed to Coinbase’s rival exchange, Kraken, as an example of responsible behavior. The EFF was founded in 1990 with the goal of promoting internet civil liberties. In today’s post, the EFF said that it has growing concerns about payment processors being forced to turn over user information to the law enforcement, while the public has no mechanisms available to audit those requests:

“That’s why we are calling on Coinbase — one of the largest cryptocurrency exchanges in the country — to start releasing regular transparency reports that provide insight into how many government requests for information it receives, and how it deals with them.”

It observers that financial data is some of the most private personal information. They say that the way exchanges choose to comply with the governmental requests for such data may have a deep impact on users, noting that crypto users especially value privacy:

“Cryptocurrency exchanges should especially understand the importance of the privacy of this information, as their users tend to prize both the cash-like anonymity of cryptocurrency, and its inherent resistance to censorship.”

The article also pointed to Coinbase’s competitor Kraken as an example of responsible behavior:

“At least one of Coinbase’s competitors, Kraken, has already recognized the importance of being open on this topic, and publicly released information on [the] global law enforcement requests it receives.”

The post mentions that the courts apply a so-called “third-party doctrine” to allow law enforcement to obtain an individual’s financial records from intermediaries like crypto exchanges without a warrant. The assumption is that an individual can expect to lose some of his privacy once he decides to store data with a third-party. This was formulated in U.S. v. Gratowski, the U.S. Court of Appeals for the Fifth Circuit, which also involved Coinbase.

The EFF urged Coinbase to leverage its power and reputation in the cryptocurrency industry to stand up for its users and set an example for other exchanges.





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Regulation

London Stock Exchange-listed firm inks FCA’s approval for crypto services

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Mode Global Holdings, a London Stock Exchange-listed fintech group, has secured major regulatory approvals for cryptocurrency and fintech operations in the United Kingdom.

The company announced Thursday that Mode has secured its Electronic Money Institution license and AMLD5 registration from the U.K. Financial Conduct Authority.

The AMLD5 registration has been granted to Mode’s crypto arm Fibermode Limited, establishing it as an official crypto asset firm in the United Kingdom, pursuant to the amended regulations on money laundering, terrorist financing and transfer of funds.

The AMLD5 registration is a requirement for crypto-related businesses in the country that fall within the scope of money laundering regulations. According to the announcement, Mode is the fifth company to have received this registration to date since the FCA became the official AML supervisor of the crypto industry in the U.K. in January 2020.

Alongside the AMLD5, Mode’s subsidiary Greyfoxx Limited also acquired the EMI license, which enables Mode to offer a “range of innovative financial services” to both businesses and consumers in the United Kingdom, the announcement notes.

Following the acquisition of new regulatory approvals, Mode is planning to further expand its crypto services, including decommissioning its investment product known as the “Bitcoin Jar.” The product aims to allow Mode customers to use Bitcoin (BTC) to generate BTC interest rather than simply holding it in a wallet or on an exchange.

Mode CEO Ryan Moore noted that the new regulatory developments provide a major step in Mode’s mission to deliver a trusted and regulated environment. “It means we now have the ability to scale our operations and continue delivering innovative payments products for our customers under our own EMI licence. Both the EMI licence and the AMLD5 registration ensure business transparency, strong oversight and give our customers confidence in our offering,” he said.

Related: UK regulator warns against 111 unregistered crypto companies… and FOMO

The latest news comes shortly after a member of the British Parliament pointed out major difficulties in the process of registering crypto firms under the FCA’s AML regulations in late May. Economic secretary John Glen elaborated that FCA was not able to process and register all applications by its previous deadline due to a significant number of firms failing to adopt robust AML control frameworks as well as employ proper staff.