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Law Professor’s Paper Targets US Regulatory Confusion over Crypto

Law Professor's Paper Targets US Regulatory Confusion over Crypto

A professor from the University of Arkansas School of Law has written a paper essentially claiming that US regulators are in a state of confusion over exactly what cryptocurrency is.

The article, entitled ‘U.S. Law: Crypto is Money, Property, a Commodity, and a Security, all at the Same Time’, written by professor Carol Goforth for the Journal of Financial Transformation, has recently been published in the University of Oxford’s Business Law blog.

The article is raising eyebrows as it outlines what many some academics and lawmakers are already thinking across the US, that the SEC really doesn’t know how to proceed over cryptocurrency legislation as the commission can’t really classify it.

Goforth claims that part of the problem which prevents correct legislation is the fact that a broad definition does not cover the requirements of the four entities in US government currently dealing with cryptocurrency. The Internal Revenue Service (IRS) defines cryptocurrency assets as property, the Department of Treasury through its Financial Crimes Enforcement Network (FinCEN) “very much like money”, the Commodity Futures Trading Commission (CFTC) as commodities, while the Securities and Exchange Commission (SEC) lumps cryptocurrency assets into its “securities” basket.

Here lies the problem claims Goforth; this diverse set of contradictory definitions make a broader definition impossible, in fact as she points out cryptocurrencies also have other functions not even covered by these four definitions.

Putting aside these four bodies, jurisdictions of individual US states are also bringing in their own guidelines regarding virtual assets, adding even more uncertainty to an already confused area, claims Goforth. Registering an exchange in New York, for example, will require a different process for completing the same activity in, for example, California.

The professor explains that in view of such a diversity of cryptocurrency functions a monolithic approach to defining and therefore regulating virtual currency should be abandoned to make way for far more nuanced thinking by government agencies; an approach which examines the functionality of the crypto asset along with the requirements of the agency issuing guidelines for its use.

 

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Ex-US Presidential Candidate: Gold and Crypto Should Replace US Dollar

Ron Paul, a previous US presidential candidate and now retired but respected politician, has suggested that a combination of gold and cryptocurrencies could eventually replace the US dollar, writes Bitcoinist.

Paul, who ran for the US presidency in 1998, serving in the US Congress for Texas several times between 1976 and 2013, once said famously:

“I am concerned about the erraticness of the dollar. The dollar is up, the dollar is down. We print a lot of dollars. The dollar gets devalued. That is really the concern. If people think the gold price up and down is a reflection of something wrong with gold, no – I say it is something wrong with the dollar.”

Paul, a known critic of the federal government’s fiscal policies, especially the existence of the Federal Reserve, sees a worldwide monetary crisis as inevitable. He suggests that the world is currently in a “dangerous financial situation”.

“This is why the call for monetary reform is getting louder. These dangers prompt a growing number of people to plan for an alternative monetary system. This is good news,” he argued.

The ex-congressman has been active in encouraging monetary change, backing his views with action, encouraging people to invest in Bitcoin-based retirement accounts. His son Senator Rand Paul, who followed in his father’s footsteps running as a presidential candidate, even accepted Bitcoin contributions during his presidential campaign.

Paul suggests that competition with the dollar should be legalized, using an alternative model combining gold and cryptocurrencies using blockchain.  He acknowledges that a similar process is already underway with many countries as they look to their own currencies.

He refers to the Federal Reserve Bank, the Treasury Department, the Securities and Exchange Commission, and the Commodity Futures Trading Commission as protectors of “monetary elites”. Paul has clearly changed his views on cryptocurrency since comments he made in back 2013 when he said of Bitcoin:

“If I can’t put it in my pocket, I have some reservations about that. But it has been designed in the free market. If it is a means of exchange, it would not ever be illegal. You shouldn’t regulate it in the free market, but I do not think it fits the definition of money, which has been around for 6,000 years.”

 

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Ethereum Could Get Major Lift from Plasma, Sharding Developments, SEC Boost

Ethereum has currently created an environment for some positive movement due to current developments in hand and positive SEC rulings over the past few days, according to NewsBTC. Although the price of Ether continues to reflect the current market, there are some positive developments such as its Plasma updates and sharding solutions.

Sharding, also known as horizontal partitioning is a design principle whereby rows of a database table are held separately, rather than splitting by columns (as for normalization). Each partition forms part of a shard, which may, in turn, be located on a separate database server or physical location, explains Stackoverflow.

Plasma itself is a collection of standard smart contracts used to create a tree of side-chains aptly called Plasma chains. This collection of smart contracts includes a multitude of key innovations that together make up a powerful tool in the battle towards scaling Ethereum’s capacity, explains Coincentral.

If Plasma is successful, it will successfully help Ethereum scale to a whole new level, and there has been some talk regarding Plasma Debit, which has the potential of introducing payment channels to Plasma Cash.

Ethereum can also gain a lift up after US Commodity Futures Trading Commission (CFTC) commissioner Rostin Beham’s recent unexpected remarks that cryptocurrency is a “technological revolution” that will one day be a part of every national economy, tagging blockchain as life “transforming”.

Add to that the statement of director of division of corporation finance at SEC, William Hinman, which lifted market hopes considerably:

“And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value.”

Such views from the SEC are empowering for Ethereum, Bitcoin and the blockchain, clearly adding much-needed and long-awaited legitimacy to crypto space, and along with new projects in hand, are certainly a step in the right direction for Ethereum investors.

 

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US Regulators Support Blockchain Development as Snoop Dog Plays Them Out

As the Coindesk Consensus 2018 in New York drew to a close, it was time for US regulators to have their say, all agreeing that they did not want to interfere unduly with blockchain or the tokens built on the nascent technology, reports Coindesk.

As US regulators continue to look into cryptocurrencies and ICOs, one event at the conference saw three of them on stage together, joined by Kiran Raj, chief strategy officer at crypto exchange Bittrex, and attorney Steve Bunnel as panel moderator. Commodity Futures Trading Commission (CFTC) enforcement director James McDonald, Securities and Exchange Commission (SEC) Enforcement Division Cyber Unit chief Robert Cohen and associate deputy attorney general Sujit Raman answered questions regarding industry regulation.

While the members of the panel made it quite clear they weren’t there to represent their respective agencies, they all agreed that the wanted to see the crypto space unhindered by over-regulation.

They agreed that one of the major concerns continued to be fraud and misuse of the cryptocurrency and blockchain space by criminal activity. Cohen and Mcdonald claimed that their particular agencies had “open-door policies” for ICOs:

“The SEC has been open about meeting with people from the industry, to come in and meet with the staff, to talk about the ideas you have, the new developments, and have a dialogue about the new technology. The commission encourages ways to raise capital, we don’t regulate the technology – we regulate the financial industry and the markets.”
On regulation, McDonald commented:

“Our mission is to foster financially sound markets, and we understand as a regulator that requires a certain amount of [flexibility] in our approach. We’re doing it in a way that doesn’t hinder innovation and doesn’t interfere with other regulatory priorities.”

Associate deputy Attorney General Sujit Raman asserted that Americans need to be protected by the Department of Justice, commenting that ” large sums of money flowing through the market without touching financial institutions… we have to investigate from a national security perspective.”

Asked about his concerns, Bittrex’s Raj suggested that more certainty was needed regarding regulatory processes to combat fraud, agreeing that it was not welcome in the industry, asking, “The problem is how do we take guidance and apply it to what you’re doing when it’s so far away from what the fraud people are doing?”

In contrast to the suited regulators earlier stage performance,  the conference came to a close with an after bash party as promised with a performance by Snoop Dog, who arrived at the half-filled event space in Manhattan’s Meatpacking District, clad in Patagonia fleeces, button-up shirts and Team Ripple tees. He performed to a group of cryptocurrency believers downing champagne and blood orange margaritas.

This wasn’t Snoop dog’s first encounter with cryptocurrency, once tweeting, “My next record is available in Bitcoin n delivered in a drone”.

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