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SEC Announces Second Forum on Crypto and Blockchain

SEC Announces Second Forum on Crypto and Blockchain

The United States’ Securities and Exchange Commission is set to launch its second public forum on cryptocurrency and blockchain on 31 May.

The forum held in conjunction with the SEC’s Strategic Hub for Innovation and Financial Technology (FinHub) has caused the industry to speculate if major changes in regulation are being considered by the regulatory body.

Until now the SEC has bordered on hindering any progress that the cryptocurrency industry’s major institutions and exchanges have fought for in attempting to bring digital currency into mainstream use. This includes delays on exchanges’ ETF approvals which are still waiting for green stamping and a lack of clear guidelines for the industry as a whole.

On a positive note, it’s thought that the fact the forum is open to the public and follows the SEC announcement of a “crypto tour” to engage with industry professionals, shows that the regulators are moving towards dealing with some of the growing regulatory issues which until now have been stalled.

One of the SEC’s concerns has been the risk of driving potentially innovative startups overseas in order to seek more relaxed regulations; a reason that the SEC, whilst it has been unclear on rulings and guidelines for the industry, has largely kept a hands-off approach. A change in attitude is clearly emerging over the past year following the SECs fairly intractable view regarding both security and utility tokens in the past. SEC Chairman Jay Clayton recently commented that a cryptocurrency can be sold as a security if it meets the definition of an investment contract after launch, and that the digital asset can later be sold without being defined as an investment.

The forum itself will include a live online broadcast and a panel of industry professionals and academics who are yet to be announced. Topics such as ICOs, crypto platforms, and blockchain will be the main focus of the event.

 

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Bank Of Mexico Further Complicates Its Crypto Rules

Mexico’s Central Bank has published new crypto related rules which has left many industry players confused as to the ramifications of the new provisions.

The new rules which were published by the central bank in the federations official gazette before the weekend stated that the Bank of Mexico (Banxico) “stipulated that they wouldn’t authorize any cryptocurrency to be offered by regulated financial companies.”

The confusion lies in the fact that fintech law brought in 12 months ago simply requires exchanges to put in an application for an operating license. Toma Alvarez, CEO of Mexican exchange Volabit explains how that law operates:

“This law stipulates that services that hold custody of users’ fiat money or cryptocurrencies (most brokers and exchange business models require this) have to apply for a license issued by the Mexican equivalent of the SEC (CNBV).”

Alverez adds that the idea at the time was that the responsibility would be with the central bank to determine which cryptocurrencies were to be offered by the regulated companies and come up with a workable framework to facilitate this. The new ruling is in complete contradiction to this.

A catch-22 scenario now exists as a result because the law requires you to become a regulated financial institution (otherwise you would be operating illegally). However, once you obtain this license, you would not have the authorization to list cryptocurrencies, thereby making it legally impossible to operate an exchange in Mexico under the new law. The Central Bank explains:

“Institutions may only enter into transactions with virtual assets that correspond to internal transactions, subject to the prior authorization granted by the Bank of Mexico.” and adds, “They will not be eligible for obtaining the authorization” to directly provide their clients with cryptocurrency exchange, transmission or custody services.

Alvarez explained that exchanges are awaiting further clarification as to how this impasse might be overcome for current exchanges and comments:

“Fintech companies in Mexico are operating with a special waiver until the process for registration is ready thus allowing companies to register for the license. This will happen in around 6 months.”

However how useful this license will be when issued remains to be clarified. This is not the first punitive ruling affecting the industry after financial entities were required to identify customers involved in cryptocurrency trading late last year.

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Crypto the Movie Now Due for 12th April Release

Crypto the Movie Now Due for 12th April Release

With the current rise of cryptocurrency, people are finding new ways to exploit the financial system and the global economy. After discovering evidence of fraud, a young US government agent named Martin is tasked with following a long trail of corruption and theft. During his investigation, he finds that the people involved are more powerful than he could have ever imagined, and have become skilled in the use of cryptocurrency.

This is the plot of the latest “crypto on film” development. The much-awaited film, Crypto, starring Kurt Russell, has finally arrived; the trailer is out, and the big screen depiction of the wonderful ups and downs of a nascent industry taking the financial world by storm is due for release on 12 April.

Of course, all should be taken with just a grain of salt, and it’s all simply good fun. How much the script bears up in terms of verisimilitude to actual cryptocurrency world is left for others to comment. How likely criminals are to leave files clearly marked “Kickbacks” is also left for compliance officers to comment on.

An anti-money laundering expert’s trip to small-town America and a subsequent run-in with the Russian mob is the basic meat and bones on which the plot is hung upon with Kurt Russell in the central role.

The movie world still awaits another crypto project starring Michael Keaton a film about the life of controversial crypto advocate John McAfee, the man who made millions creating antivirus software. It appears that Johnny Depp was the original choice, but was fired before the Birdman star was drafted in to play.

 

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Canada Revenue Agency’s Crypto Audit Raises Some Hackles

canada, cryptocurrency, taxes

Canada’s tax department appears to be ramping up the pressure on cryptocurrency holders with its latest questionnaire to taxpayers.

Canada Revenue Agency (CRA), the government body responsible for tax collection across the provinces has sent out a detailed questionnaire to those suspected of owning cryptocurrencies. The survey targets those who may not have revealed the total and circumstances of their crypto holdings.

Taxpayers are asked if they use a cryptocurrency mixing service and whether any transactions have passed through a Bitcoin tumbler. A Bitcoin mixer or Bitcoin tumbler is a cryptocurrency anonymization service that breaks the link between a user’s old and new address and makes it impossible to track transactions in the Bitcoin network.

Canada is certainly not alone as it probes into its residents and their activities around cryptocurrency. Both the US and the UK have recently upgraded their taxation legislation to incorporate a more thorough investigation of taxpayers’ cryptocurrency dealings and holdings through the annual tax return.

In one set of questions the CRA questionnaire asks:

Do you use any cryptocurrency mixing services and tumblers? If so, which services do you use? Can you please provide us with the tracing history, along with all the cryptocurrency addresses you ‘mixed’? Why do you use these services?

What is different about the CRA’s approach is the depth of questioning into crypto activity which has certainly raised the bar over other jurisdictions. The whole idea of using a ‘mixer’ is defeated by taxpayers revealing their tracing history and is sure to go down badly within the industry, as once again user privacy is in danger of being infringed by the government.

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The Year of Blockchain Is Here Claims Capitol Hill Top Gun

Congressional Blockchain Caucus chairman on Capitol Hill, Tom Emmer is making waves again, this time predicting that 2019 will be blockchain’s year.

He was addressing an audience on the initial day of this year’s Washington DC Blockchain Summit. Emmer has become the main voice in Washington’s political circles when it comes to criticizing the heavy-handedness of SEC regulators regarding all things cryptocurrency. Emmer commented that this year:”…stands to be the year of blockchain, the year we separate hype from reality, and begin harnessing blockchain in the right-use cases to lower costs and increase efficiency,”

Notably, Emmer introduced the Blockchain Regulatory Certainty Act bill (H.R.528 ) in January, which if it goes through will save blockchain developers from money transmitter registrations in US states. Another recent Emmer bill would provide tax relief for forked asset holders and a non-binding resolution backing blockchain and cryptocurrencies.

Emmer was stating his point for clear cryptocurrency and blockchain regulations, not for the first time, and warned delegates of the threat of what he called “a patchwork of regulations” by the government. He argued that with this approach:“…the industry will suffer, and prove government to be ineffective. This confusion will undoubtedly lead to more regulation, which will only stifle innovation and potential application of the technology.”

Commenting on the money transmitter laws which his bill was introduced to challenge back in January, he suggested that the laws were originally enacted for a completely different purpose and don’t relate to blockchain, arguing, “If no funds are being entrusted to another, it should be certain that these regulations do not apply.”

He ended his comments on a topical, if not well-worn note; concerns of the government that Bitcoin was still being used for illegal activity. Emmer warned:

“Many, including those in this town, would like to focus only on blockchain and ignore or criticize cryptocurrency,” he said. “They will tell us the bitcoin is used by criminals, and the blockchain is the real innovation. It’s true there are illicit transactions. But that should not be reason to totally dismiss cryptocurrency.”

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Philadelphia Doesn’t Want Cashless Society Just Yet: New Laws from July

Philadelphia Doesn't Want Cashless Society Just Yet: New Laws from July

The US city of Philadelphia has joined both the states of Massachusetts and New Jersey in the introduction of new laws concerning how cash can be utilized in retail stores.

From July of this year, most Philly retailers are now required to accept cash, as the city cuts down on electronic retailing. The Democrats’ new law is aimed at allowing those residents without credit or debit cars to be able to make easy payments.

The concern amongst some cryptocurrency circles is that this may have a drip down effect on crypto adoption and indeed its continued use in US cities if it becomes a widespread phenomenon. New York City councilman Ritchie Torres told the Wall Street Journal that despite these recent moves he still sees electronic payment as the future and was “not a fad”.

Massachusetts requires all stores to accept cash, while New Jersey has taken a further step by banning cashless stores altogether in an attempt to keep cash in circulation and retain paying cash as a service to those who have no other means of payment.

As Bitcoin News reported this week, retail chain Kroger has axed their Visa credit card payments due to excessive fees. This has somewhat opened the door for other payments apart from cash, such as Bitcoin or other cryptocurrency alternatives, although transfer time still remains an issue. This continues to remain a dilemma for crypto in its efforts to become a natural successor to cash; although many see stable coins offering a payment solution to rival cash in the future.

 

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Israel Securities Authority Recommends Crypto Regulation

Israel Securities Authority Recommends Crypto Regulation

The Israel Securities Authority (ISA) has published its final report on the cryptocurrency industry and it may be moving forward with regulations.

The news as reported by local business outlet Globes detailed the findings of the committee tasked with the responsibility of drafting a regulatory framework for the industry. It recommended bringing the industry under the purview of the security laws as concerning the issuance, and trading of cryptocurrencies that constitute securities.

The committee, headed by Securities Authority chief economist Dr Gitit Gur-Gershgoren and former corporate finance department Adv Moti Yamin, has also said that supervision can contribute to progress in the cryptocurrency sector considering that there is a significant connection between the regulator and the cryptocurrency industry.

It, however, seems the regulator will be keeping an open mind towards the emerging digital assets. However, for the industry to continue functioning in the jurisdiction, operators have been urged to contact the securities authority before engaging in any form of cryptographic asset offering, and cryptocurrency exchanges will as well be supervised.

The committee had submitted an earlier report in March 2018, however, according to the recent report, so much has changed in the industry. The report identified changes in both the technological aspects and the nature of tokenized asset offerings, especially how they are conducted in the western markets – in accordance with the securities laws. Gur-Gershgoren summarily said:

“The cryptographic assets field proved to us over the past year that a careful and prolonged consideration of this dynamic and innovative sector enables us to make decisions that preserve the balance between the need to promote innovation and the obligation to preserve investors’ interests. The excitement that permeated the sector in 2017 has cooled, but the technology is here to stay.”

He further noted that the changing trends in the industry although require as much supervision as possible, reinforces the idea of formulating regulations that support its development. While he pointed out that technological innovation can potentially streamline, improve, and enhance competition in the capital market and the entire economy, the place for a sandbox regulatory environment was considered pivotal to shaping the regulations alongside the innovations brought about by the technology.

For many jurisdictions, a sandbox has been the preferred route towards regulation before issuing a comprehensive rule book in order to better understand the sector. Recently, Bahrain’s central bank launched its blockchain sandbox program to allow operators to continue with their activities under supervision while consultations for prospective framework proceeds.

Last year, Hong Kong’s regulator said it would allow a sandbox environment to determine its regulatory stance.

 

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Taiwan Promises STO Fundraising Mechanism in 2019

Taiwan Promises STO Fundraising Mechanism in 2019

Taiwan’s Financial Supervisory Commission (FSC) has said that a new Security Token Offering (STO) based fundraising mechanism will be established, according to an article published on Taiwan Economic Daily.

Administrated by the Executive Yuan of the Republic of China (Taiwan), FSC is an independent government agency. According to the report, the FSC has provided a detailed road map to adopt an STO-related fundraising mechanism as well. In order to listen to the opinions of the industrial stakeholders on the issue, a symposium will be held at the end of April 2019. By the end of June 2019, relevant issuance standards and norms will be formulated.

The chairman of Taiwan’s FSC, Gu Lixiong, highlighted the point that apart from existing stock exchanges, there can be different exchanges for STOs. He regarded them as a next generation product for the capital markets, adding that the region’s new creative teams’ popularity may be affected by STOs in the international market in the next five to ten years.

In October 2018, media reports revealed that Taiwan’s financial regulator was set to revise its hands-off crypto policy that was adopted in 2017. The regulator is expected to announce official regulations for initial coin offerings by June 2019.

 

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35 Countries Advised to Review, Implement Banking-Like Regulations for Crypto

FATF

The FATF (Financial Action Task Force) in a recent assembly in France has called for tightening supervision over cryptocurrency exchanges in a way similar to commercial banks. The body advised all its 35 member countries to supervise the exchanges to prevent cryptocurrencies from being misused for unlawful transactions.

The new FATF guidelines are aimed at ensuring regulation and supervision of cryptocurrency service providers. The body has urged all its members to regulate cryptocurrency exchanges and associated transactions in the same way they regulate commercial banking institutions. The inter-governmental organization has made it obligatory for its member nations to adopt these changes, finalizing the necessary implementations for the supervision and regulation of virtual currency providers. These measures can be officially and formally adopted as a part of the FATF requisites from June.

To make effective use of the suggestions made by the FATF, member nations have to contemplate virtual assets and digital currency as “property”, “proceeds, “funds”, or other different “corresponding value”.

In addition, members will have to adopt relevant measures against virtual assets and their providers. They must now require virtual asset providers to realize and assess the potential terror financing and money laundering risks, and take effective actions to mitigate the same.

The FATF has established standards to promote effective implementation of the legal, regulatory and functioning measures for standing against money laundering, terrorist funding and other threats imposed on the integrity of the international finance system.

However, the taskforce has clarified that member nations need not establish a separate licensing or registration system for a person or persons who are already licensed and registered in this manner as financial institutions. These financial institutions already have obligations apart from the new suggestions, and hence they are permitted to accept crypto assets providers.

 

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Thai SEC Approves ETC, LTC, BCH for ICOs, Trading

Thai SEC Approves ETC, LTC, BCH for ICOs, Trading

Thailand’s Securities and Exchange Commission (SEC) has expanded its list of approved cryptocurrencies for use in initial coin offerings (ICOs) and as base trading pairs, according to an official statement from the SEC today.

These latest updates to the SEC’s approved list include Ethereum Classic (ETC), Litecoin (LTC), and Bitcoin Cash (BCH), joining Bitcoin (BTC), Ethereum (ETH), Ripple (XRP) and Stellar (XLM) as cryptocurrencies that can be used in compliance with the country’s national regulations. The SEC reiterated that it does not, however, class any of the above as legal tender, as stipulated in its statement.

The decision comes in accordance with the Royal Decree on Digital Asset Business BE 2561 but does not accord either of the currencies a guarantee of any other status.

Thailand is slowly moving its policies in a pro-cryptocurrency direction, last December announcing a public hearing to attempt to remove the obstacles associated with holding ICOs whilst keeping investors protected. The SEC hopes to allow private ICOs to take place without the registration statements and draft prospectus’ that are currently required.

A recent amendment to the Securities and Exchange Act also allows for tokenized securities such as stocks and bonds to be issued via blockchain, effective later this year.

 

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