Tether seeks Big Four firm for its first full financial audit — Report  

The US Federal Deposit Insurance Corporation, an independent agency of the federal government, is reportedly moving to stop using the “reputational risk” category as a way to supervise banks. According to a letter sent by the agency’s acting chairman, Travis Hill, to Rep. Dan Meuser on March 24, banking regulators should not use “reputational risk” to scrutinize firms. “While a bank’s reputation is critically important, most activities that could threaten a bank’s reputation do so through traditional risk channels (e.g., credit risk, market risk, etc.) that supervisors already focus on,” notes the letter, first reported by Politico. According to the document, the FDIC has completed a “review of all mentions of reputational risk” in its regulations and policy documents and has “plans to eradicate this concept from our regulatory approach.”Reputational risk and debankingThe Federal Reserve defines reputational risk as “the potential that negative publicity regarding an institution’s business practices, whether true or not, will cause a decline in the customer base, costly litigation, or revenue reductions.”The FIDC letter specifically mentioned digital assets, with Hill noting that the agency has generally been “closed for business” for institutions interested in blockchain or distributed ledger technology. Now, as per the document, the FDIC is working on a new direction for digital asset policy aiming at providing banks a way to engage with digital assets.The letter was sent in response to a February communication from Meuser and other lawmakers with recommendations for digital asset rules and ways to prevent debanking.Industries deemed as “risky” to banks often face significant challenges in establishing or maintaining banking relationships. The crypto industry faced such challenges during what became known as Operation Chokepoint 2.0. The unofficial Operation led to more than 30 technology and cryptocurrency companies being denied banking services in the US after the collapse of crypto-friendly banks earlier in 2023.Related: FDIC resists transparency on Operation Chokepoint 2.0 — Coinbase CLO

Web3 gaming platform Immutable says the US Securities and Exchange Commission has closed its investigation into the company, clearing it of any further action. Immutable — the firm behind the Ethereum layer-2 ImmutableX — said in a March 25 statement that the SEC shut its inquiry into the firm without finding wrongdoing and “closes the loop on the Wells notice issued by the SEC last year.”In November, Immutable said it received a Wells notice from the regulator — a letter informing that the SEC is considering an enforcement action, typically sent after it concludes there is evidence of possible securities law violations.“We are pleased the SEC has concluded its inquiry. This marks a significant milestone for the crypto industry and gaming as we advance towards a future with regulatory clarity,” Immutable president and co-founder Robbie Ferguson said in a statement.An Immutable spokesperson told Cointelegraph that the SEC sent it a letter of termination that didn’t explain why it had concluded its probe. The spokesperson said the letter was unprompted and that the SEC’s review of information Immutable had sent “appears to have resulted in them closing the investigation.”Immutable said in a November blog post that it believed the SEC was targeting the 2021 “listing and private sales” of its self-titled Immutable (IMX) token.Immutable’s X post after receiving a Wells notice in November 2024. Source: Immutable The company said it had a 10-minute call with the SEC after it had issued the notice where it alleged a 2021 Immutable blog post stating a pre-launch investment made in the IMX token at a price of $0.10, which was issued at a “$10 pre-100:1 split,” was inaccurate and implied there was no exchange of value between the parties.At the time, Immutable said it was “confident in its position” and would fight the regulator’s claims.The SEC has dropped many pending and in progress enforcement actions against crypto companies under President Donald Trump, whose administration has worked to defang the agency to make good on his promise to alleviate the crypto industry from regulatory action.Last month, the SEC stopped its investigations into non-fungible token marketplace OpenSea, trading platform Robinhood, decentralized exchange developer Uniswap Labs and crypto exchange Gemini.Related: Will new US SEC rules bring crypto companies onshore?The regulator has also dropped a slew of its high-profile lawsuits against crypto firms, including those against Ripple Labs, Coinbase and Kraken.Despite the SEC backing off from Immutable, the Manhattan-based Rosen Law Firm has cited the Wells notice in trying to spin up a securities class-action lawsuit against the firm over its IMX token offering, which Immutable’s spokesperson said it’s “not concerned about.”In its statement, Immutable said that major triple AAA gaming studios “have previously cited legal and compliance risks as key barriers to entry” into the Web3 gaming space.“However, with a clear regulatory framework on the horizon, this is expected to unlock further investment and opportunities to tokenize the now more than $100 billion market for in-game purchases,” it added.Web3 Gamer: Classic Sega, Atari and Nintendo games get crypto makeovers

Brazil’s data protection agency has upheld its decision to restrict cryptocurrency compensation tied to the World ID project, citing user privacy concerns. The National Data Protection Authority (ANDP) rejected a petition by World ID developer Tools For Humanity to review its ban on offering financial compensation to users who provide biometric data through iris scans, the agency said in a March 25 announcement.  ANDP will “maintain the suspension of the granting of financial compensation, in the form of cryptocurrency (Worldcoin – WLD) or in any other format, for any World ID created by collecting iris scans of personal data subjects in Brazil,” a translated version of the announcement reads.  The company faces a daily fine of 50,000 Brazilian reais ($8,800) if it resumes data collection activities. Cointelegraph reached out to Tools for Humanity but had not received a response at the time of publication.World ID verification in Brazil was short-lived, with the ANDP banning data collection more than two months after it was launched in the country. Source: WorldcoinANDP’s investigation into World, formerly known as Worldcoin, began in November of last year amid concerns that financial rewards could compromise users’ ability to consent to offering sensitive biometric data. The controversial “World ID” is created when users agree to iris scans, which generates a unique digital passport that can authenticate humans online. As Cointelegraph reported, Tools For Humanity was ordered to stop offering services to Brazilians as of Jan. 25. Related: Blockchain identity platform Humanity Protocol valued at $1.1B after fundraiseRace for digital identity solution heats upAlthough World ID has run afoul of Brazilian law, the use of digital identification methods is growing in other markets due to the rise of AI deepfakes and Sybil attacks.The rise of bots and AI is also watering down online discourse on social media platforms such as X and Facebook. As Cointelegraph reported, up to 15% of X accounts are believed to be bots. Research from blockchain analytics firm Chainalysis also showed that generative AI is making crypto scams more profitable by enabling the creation of fake identities. Some companies are attempting to create digital identity solutions without triggering privacy concerns and regulatory crackdowns. Earlier this year, Billions Network launched its own digital identity platform that doesn’t require biometric data. The platform is based on a zero-knowledge verification technology known as Circom and has already been tested by major financial institutions such as HSBC and Deutsche Bank.Magazine: 9 curious things about DeepSeek R1: AI Eye