Category Archives: US cryptocurrency news

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SEC Chair Jay Clayton Affirms ETH No Longer a Security

Jay Clayton, the US Securities and Exchange Commission (SEC) chairman, has backed up his colleague’s earlier analysis that the world’s second-largest cryptocurrency by market cap, Ethereum network’s Ether (ETH), does not qualify as a security.

Last year, SEC Director of Corporation Finance William Hinman made a similar statement, elaborating that Ethereum doesn’t exhibit the properties of a security. He added that he didn’t observe a central group as responsible for the cryptocurrency.

In a bid to clarify the issue, Congressman Ted Budd, along with industry advocacy group Coin Center, asked Clayton for a clarification, who now has responded that he agrees “that the analysis of whether a digital asset is offered or sold as a security is not static and does not strictly inherent to the instrument”.

Clayton elaborated in a letter that a cryptocurrency can be sold as a security if it meets the definition of an investment contract after the launch. But the digital asset can later be sold without being defined as investments. He added:

“I agree with Director Hinman’s explanation of how a digital asset transaction may no longer represent an investment contract if, for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. Under those circumstances, the digital asset may not represent an investment contract under the Howey framework.”

The letter did not point out Ethereum by name, however. Clayton’s latest observations echo his earlier comments, where he compared digital assets to tickets for a new theatre play. He explained how a group of investors might be offered “a suite of tickets” in return for funding the “play”, and then these tickets can be taken as securities. However, if the tickets are only sold to each theatergoer individually at a later date, “that’s decentralized”, which does not fit within the designation of securities.

 

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US Marshals to Manage Confiscated Crypto

US Marshals to Manage Confiscated Crypto

United States federal law enforcement agency, the US Marshals Service (USMS), is currently looking to set up infrastructure and mechanisms for managing confiscated illegal cryptocurrency.

This was revealed in two draft documents published by the USMS, stating procedures about the Request for Information (RFI) for legal proceedings and the management and disposal of forfeited crypto assets.

This is part of the department’s Asset Forfeiture Program (AFP) working under the US Department of Justice (DoJ). The USMS will be looking for an agent or contractor who will manage and dispose of the forfeited or seized virtual currency. RFI intendeds to improve USMS’s current custodial operations as it will maintain an accurate account of the USMS’ virtual currency inventory.

In the first document, titled the Performance Work Statement (PWS), USMS elaborates on the complete range of forfeited virtual currency disposal and management, which includes general procedures and responsibilities of the contractor.

As per the documents, the contractor will be required to ensure the accuracy and safety of all the cryptocurrency transactions, which includes a return to the owner, the direct exchange of virtual currencies into US dollars, and the exchange into a more liquid form of virtual currency among other things.

The PWS contract also sheds light on the major activities related to the management of virtual currencies such as audit compliance, accounting, customer management, wallet creation, etc.

The second document, titled Quality Assurance Surveillance Plan (QASP), briefs about the establishment of an evaluation system for the contractor’s performance. QASP discusses major authorities like Contracting Officer and Contracting Officer’s Representative and deems them responsible for the effective evaluation and performance measurement of contractor compliance.

The USMS also pointed out that the RFI is drafted solely for information and planning purposes and should not be taken as a Request for Proposal (RFP) or as a definite promise for any RFP in the near future.

 

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IBM Strikes Deal with US Credit Unions to Use Hyperledger Blockchain

IBM Strikes Deal with US Credit Unions to Use Hyperledger Blockchain

CU Ledger, consisting of a consortium of US credit unions known for experimenting with multiple private blockchains, has recently added IBM’s Hyperledger Fabric solution to its blockchain list.

As Big Blue revealed on Monday, the consortium will employ IBM’s technology to create “an immutable audit trail that can be used to create new business models and transform existing business processes for credit unions”.

The new enhancements will focus on services like lending and payments, identity authentication, and compliance with know-your-customer (KYC) regulations, with the first blockchain services available to CULedger members “later in 2019”.

However, the consortium also revealed that they aim to continue their relationships with previous partners R3, Hedera and Evernym.

Julie Esser, CULedger’s chief experience officer, said in an interview:

“The use of a specific blockchain platform will be dependent on each particular application or use case that is being developed. Our partners, such as IBM, Evernym, and Sovrin, each play a role within our overall strategy and solutions.”

She added that this would not replace any prior relationships as the group was building a “network of networks” to facilitate P2P for digital entities.

She also revealed that CULedger is building an identity solution for the members leveraging the Hyperledger Indy platform. Evernym developed the code for the platform with contributions from the Sovrin Foundation. But, the new KYC-related product will instead employ Fabric, for which IBM contributed to the open-source Hyperledger project.

In May of 2018, the consortium revealed that it would use Hedera’s Hashgraph distributed ledger technology (DLT) to create a public system for cross-border payments. And in December of the same year, CULedger announced the collaboration with R3’s global network of companies to build on the open-source Corda platform. At this time, CULedger is not using Corda, but as Esser stated, “there is an opportunity in the future for the consortium to leverage R3’s tech.”

 

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Colorado Governor Signs Crypto Exemptions into Law

The Colorado Digital Token Act has been signed into law by Jared S Polis, the Governor of the state of Colorado, on 6 March 2019.

Democrat Steve Fenberg and Republican Jack Tate initially proposed the new legislation in January at the state Senate level. The act aims at providing limited exemptions for securities traders and registration. Moreover, exemptions from licensing requirements for persons dealing in digital tokens were also included.

Cryptocurrency was identified in the bill as a digital unit secured through a decentralized database or ledger having specific characteristics. These units are exchangeable for services or goods and people can transfer or trade it without a custodian of value or intermediary.

In May 2018, a bill intended to govern cryptocurrencies was voted down by Colorado’s senators. The bill aimed at exempting specific “open blockchain tokens” to be identified as securities. The rejection of the bill disappointed many private sector investors. However, venture capitalist David Gold maintained that Colorado should say that it is looking to provide lucidity for the crypto sector and it will be difficult for fraudsters to breach security laws.

Recently, a bill was filed by Senator Jack Tate along with representatives Marc Catlin and Jeni James Arndt that tasked Colorado Water Institute at Colorado State University to study the possible integration of blockchain technology into the present system in order to manage water rights’ database.

In addition to Colorado, the US state of Wyoming also passed two crypto-related bills. One was related to depositories serving blockchain businesses while the other pertained to the tokenization of assets. These bills will come into effect by the end of 2019.

 

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US SEC’s FinHub Ready to Hit the Road to Engage Crypto Entrepreneurs

SEC

The US Securities and Exchange Commission (SEC) will arrange a road trip to reach more and more crypto entrepreneurs around the country and get their feedback according to an official notice.

The SEC’s branch responsible for interactions with tech startups, known as FinHub, will visit major US cities and set up face-to-face meetings with crypto entrepreneurs.

On 26th March, the road trip will begin at the SEC’s local office in San Francisco. Next stop will be Denver.

SEC’s senior advisor for digital assets and innovation, Valerie Szczepanik, explained that FinHub staffers will not provide any legal advice during the meeting. They will only answer startups’ projects related queries. Primary purpose is to provide general guidance, maintained Szczepanik.

In the past, crypto startups have self-reported potential securities law violations to SEC. One such example is that of Gladius Network LLC, which reported irregularities itself and SEC refrained from fining the startup. Moreover, other startups which cooperated with the agency were charged relatively less.

Szczepanik stated that “Local P2P” aims at helping crypto startups to “put a human face on the regulator”. It is important to collect data regarding “friction points” directly from the stakeholders. SEC can then think about the appropriate regulatory response to those friction points, believed Szczepanik.

However, it is still unclear that how many startups will be interested in the meeting, scheduled on 26th March. According to the reports, only a few startups have provided feedback to FinHub so far.

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North America: Crypto and Blockchain News Roundup 3rd to 9th March, 2019

North America

North America

Welcome to another weekly blockchain news roundup from around the world. Here we present to you all the latest Bitcoin news continent by continent and country by country.

The United States

Utah’s Lawmakers Make Efforts to Encourage Blockchain Growth: In order to exempt blockchain firms from the application of Money Transmitters Act, a bill has been pushed by Utah’s lawmakers. The bill is presented to encourage the growth of crypto sector in Utah.

As per the act, a money transmitter license has to be obtained by any firm issuing payment instruments to be put up for sale. Bill no. 213 was filed in the Senate by Daniel Hemmert (Republican senator) to exempt digital currencies from obtaining the said license. It is yet unclear what kind of backing this latest pro-crypto bill will have in the state’s legislature and things will become clearer once the debate starts on the floor.

Kroger to Drop Visa Credit Card Payment Option: Kroger will stop accepting Visa credit card payments from next month, reports the media. The largest supermarket chain in the US, with 108 fuel center locations and 142 supermarkets, cited “excessive transition fees” as the reason to drop credit card payments. However, Kroger has not announced any alternative payment method. According to rumors, the company is considering Bitcoin (BTC) as a replacement due to the cryptocurrency’s universal appeal.

Anthony Pompliano, Morgan Creek Digital partner, has purportedly suggested Kroger Digital representatives use BTC as an alternative option. However, the company itself has not spoken on the matter and we await further details on it.

Philadelphia to Facilitate Cash Payments Along With New Jersey and Massachusetts: After the states of New Jersey and Massachusetts, Philadelphia has now announced the introduction of new laws for the utilization of cash in retail stores. The move is expected to affect the adoption of a cashless future in the state as it may slow down its pace.

From July 2019 onwards, Philly retailers will be required to accept cash as payment. The city has decided to facilitate residents who do not own a debit or credit card. Previously, New Jersey announced a ban on all cashless stores in order to keep cash in circulation.

However, the decision has raised considerable questions regarding digital currency adoption in the state. In case cash payments become a widespread phenomenon, it may negatively affect the appeal of cryptocurrencies but the state may change its stance because of the pressure from companies for a more cashless future.

Bahamas

Bahamas Central Bank Announces Collaborators for Its Digital Currency Project: With the aim of developing a virtual fiat currency system for the Bahamas, the country’s Central Bank has announced its collaborating members, noted an official document.

As per the document, NZIA.io (transaction provider) and Zynesis (software development firm offering blockchain solutions) will join the project, which is named as “Project Sand Dollar”.

The project will deal with reducing service delivery and cash transaction costs. Moreover, the overall operational efficiency of the financial system will be enhanced. Digital currency will integrate communities across the Bahamas (currently lacking a proper banking system) into the financial system.

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Utah Bill Exempts Blockchain Firms from Money Transmitter Act

In a bid to encourage and simplify the use of cryptocurrency in the region, lawmakers from the US state of Utah have pushed a bill that will exempt blockchain firms from the application of the money transmitters act.

According to the actany entity issuing payment instruments to be sold or put up for sale are required to obtain a money transmitter license. The definition of a payment instrument includes a check, money order, traveler’s check, draft, or other instruments, but now this doesn’t include cryptocurrencies.

Republican senator Daniel Hemmert filed the bill no. 213 in Senate last week and proposed that any entity who “facilitates the creation, exchange, or sale” of cryptocurrency or any other blockchain products must be exempted from the state’s Money Transmitter Act.

The bill will also create a legislative group, the Blockchain Pilot Project Evaluation Task Force, that will research the potential of the technology in government services. This 12-member strong task force will work on a pilot project employing the blockchain technology in Utah at a state or municipal level and discuss the commercial applications of blockchain for “future economic development in Utah”.

The task force will also be required to prepare a report, that includes any proposed legislation, to the Business and Labor Interim Committee and the Legislative Management Committee, up to 30 November.

More US states have been moving in a similar direction, with Pennsylvania ratifying the same liberty for crypto transactions in January. However, there is also some opposition for the proposition, such as North Carolina state taking an opposite stance in 2016 and passing an update to the state’s Money Transmitters Act that required the cryptocurrencies transactors to obtain a money transmitter license.

 

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North America: Crypto and Blockchain News Roundup 23rd February to 2nd March 2019

North America

North America

Welcome to another weekly blockchain news roundup from around the world. Here we present to you all the latest Bitcoin news continent by continent and country by country.

Canada

Regulations Proposed After Quadriga CEO Reportedly Takes USD 140 Million to His Grave: Canadian public and regulators are calling for new regulations to be put in place after CEO Gerald Cotton died without giving the whereabouts of the USD 140 million worth of private crypto stash that belonged to investors of the exchange.

The bizarre incident caused the exchange to go into bankruptcy and seek creditor protection. The cautionary tale is forcing the community and the government to ensure that digital assets can still be accessed after a person’s death to distribute to his heirs.

Crypto Ponzi Scheme Banned in Ontario: USI Tech, a US-based Ponzi scheme claiming to deal in forex and cryptocurrency has been banned in Ontario by the Ontario Securities Commission. The abrupt closure comes after the company’s management threw its Canadian affiliates under the bus.

Last month, the OSC had issued a Cease Trade Order against the platform without any reason and the company tried to get out of it by saying that it hadn’t sold any product in Canada directly but only through local independent traders. That is when OSC came to the conclusion that USI Tech was dishonest and warranted a blanket ban.

USA

Congressman Tells Federal Reserve Chair That Cryptocurrencies Will Improve Innovation in the Country: Representative Warren Davidson (R-OH) has told the Federal Reserve chairman that cryptocurrencies can help innovate the fintech space in the country in a recent congressional hearing.

He said:

“Bitcoin doesn’t represent blockchain anymore than a website represents the internet. It is one use…..Capital has fled the United States where this innovation [was] initially off to a good start. Do you believe that regulatory certainty could foster innovation in this market…in the token economy?”

Davidson also cited the development of the internet as a similar example to that of the crypto sector and suggested the Federal Reserve Chair allow it to do so. The response of some of the other lawmakers was not as encouraging as Davidson’s.

Ripple Lawsuit to Remain in Federal Court: Ripple scored a minor legal victory last week when it announced that the securities lawsuit against the company’s XRP cryptocurrency was to remain in Federal court despite a move by the prosecution.

Lawyer Jake Chervinsky announced the development through a tweet on 1st March 2019 and said that the plaintiff’s motions were denied by the court and termed it as a minor victory. The case currently being fought by Ripple is a class action lawsuit against Ripple CEO Brad Garlinghouse and Ripple for illegally selling unregistered securities in the country.

Specific Tokens to Be Exempted from Securities Law in Rhode Island: A new bill tabled in the Rhode Island legislature suggests that some digital tokens should be excluded from securities laws of the state.

The bipartisan effort H5595 recommends a series of amendments to the Rhode Island Securities Act and suggests several revolutionary changes. According to the new bill, tokens for consumptive use including receipt of services, goods or content may not fall within the securities laws.

But, the bill clearly suggests that tokens are not allowed to be used for investment purposes and so, it makes the adoption of the new bill a tricky subject up for debate in the state assembly.

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Specific Tokens to Be Exempted from Securities Law in Rhode Island

Rhode Island

A new bill tabled in Rhode Island suggests that specific tokens will be excluded from Securities Law currently enforced in the state. The said bill was introduced in the state legislature on 27 February 2019.

According to the bipartisan bill H5595, various amendments to the Rhode Island Securities Act have been suggested. If certain conditions are met, a seller or developer of a cryptocurrency token will not be considered as the issuer of a security.

However, tokens are allowed to be used only for consumptive purposes such as the receipt of services, content or goods. It may also include rights of access to content, goods or services.

Furthermore, the said bill explains that tokens are not allowed to be used as an investment. Buyers must refrain from reselling the tokens if they are not usable for a “consumptive purpose” during a trade. The entities facilitating the exchange of token from broker-dealer will also be excluded, given that they file a notification with the Secretary of State.

The bill defined blockchain token as a mathematically verified, decentralized and digitally recorded entity which can be traded or transferred without a custodian or intermediary of value.

Following the bill’s introduction, it was referred to the House Finance Committee, noted Legiscan (legislation info portal). However, information regarding further votes has not been reported yet.

Recently, a similar bill (SB023) was passed by the Colorado General Assembly, offering limited extra freedom to cryptocurrencies. However, their governor is yet to sign the bill in order for it to become a law.

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North America: Crypto and Blockchain News Roundup 9th to 15th February 2019

North America

North America

Welcome to another weekly blockchain news roundup from around the world. Here we present to you all the latest Bitcoin news continent by continent and country by country.

The United States

JP Morgan Launches New Cryptocurrency: JP Morgan, one of the biggest investment banks in the country has launched a new crypto token called JPM Coin. The new coin is more like a stablecoin and will be backed by USD.

The move was surprising because JP Morgan has long called cryptocurrencies unreliable and a scam but the latest move suggests that the mindset is currently changing and the bank is eagerly looking on to join the stablecoin bandwagon.

The coin drew a mixed response from the crypto community with Ripple’s boss Brad Garlinghouse calling it out for its lack of innovation. However, confusion surrounds much of the new JPM coin’s details.

Virginia Police Fund Invests Millions in Bitcoin: Virginia’s Police Retirement Fund of Fairfax County has announced that it will invest some of its money in Bitcoin.

The funds will be invested through Morgan Creek which will use it to invest in companies like Coinbase and Bakkt. More than USD 40 million from these pension funds will be eventually invested by Morgan Creek. This is the first time in USA that a police retirement fund is looking to invest in cryptocurrencies.

UC Berkeley Announces Accelerator for New Blockchain Startups: One of the top public universities in the US UC Berkeley has announced a new accelerator program for new blockchain startups trying to gain a footing.

The 12-weeks long program is being launched with a partnership between Berkeley Blockchain Xcelerator, Haas School for Business and Blockchain and Venture Capitalist fund Berkeley X-lab Fund. The program is open for everyone and new startups can apply to it. The selected startups will be mentored by entrepreneurs, students, alumni and investors from the industry.

IBM Looking to Fight California Drought with Blockchain: IBM is looking to employ blockchain to tackle the issue of drought in some parts of California. The project will initially observe one of the largest and at-risk aquifers in the area using sensors and blockchain to record the data.

IBM is joining hands with the University of Colorado Boulder and non-profit The Freshwater Trust (TFT) for this project and looks to test the initial effort for a potential expanded investment.

Canada

Quadriga Investors Still Unsure About their Funds: Quadriga exchange’s curious case is unfolding further as more details are emerging from the case. This week saw a flurry of new information being released to the public.

Quadriga exchange’s case is unique because its owner Gerald Cotten died with access to a cold storage wallet that had a majority of the exchange’s crypto assets. Now those funds are difficult, nearly impossible to access. At first, this week the government announced that it would do as much as it could to help the victims and retrieve funds, but it has proven to be an extremely difficult task.

Cutton’s widow may reportedly have the keys to the cold storage wallet but nothing is certain for now. A local judge has reportedly given the exchange’s operators 30 days to try and access the wallet.

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