Crypto Regulation Digest: Deloitte report, Google ads will be allowed simultaneously with launch of Bakkt, pound-backed stablecoin Paradigm Follow Oct 10, 2018 · 12 min read

25th September — 9th October

Deloitte Outlines Five Major Obstacles to Blockchain’s Mainstream Adoption.

Google To Allow Crypto Ads For Regulated Exchanges Next Month.

US SEC Sets November 5 Deadline for Reviewing Nine Bitcoin ETF Applications.

London Block Exchange Launching Crypto Pound-backed Stablecoin.

Reports

Deloitte Outlines Five Major Obstacles to Blockchain’s Mainstream Adoption: “Big Four” audit and consulting firm Deloitte has outlined five basic areas of development for blockchain technology in order achieve widespread adoption, according to a study published September 28. According to Deloitte, in order to be adopted by enterprises on a mass scale, blockchain technology should overcome five major obstacles — the possibility of time-consuming operations, lack of standardization, high costs and complexity blockchain applications, regulatory uncertainty, as well as the absence of collaboration between blockchain-related firms.

Opinions

Why A Bill To Define Blockchain Could Be ‘Dangerous’: After a bill aimed at establishing a definition for blockchain technology was introduced in Congress, a few in the crypto community raised concerns. Drew Hinkes, lawyer and co-founder of startup investment bank Athena Blockchain, was one of them.

Five Years After The Silk Road, Things Are Worse: Five years after the closure of the Silk Road, bitcoin has changed dramatically. No longer does society see it as an underground currency used by addicts, dealers and pornographers. Today it is the third pillar of futurism alongside Virtual Reality and Artificial Intelligence. Not only is it the digital cash that will power the online economy, but it is developing entirely new business models and economic systems. One thing that hasn’t changed from that day is that the creator of the Silk Road is in jail for the rest of his life.

Blockchain and Cryptocurrency — Its Future in China: More than 90 different cryptocurrency exchanges and about 85 ICOs have closed in China in the past 12 months. Where is China headed? The answers to that question are best answered in the light of the Chinese government’s 2-pronged efforts: first, to protect the integrity of the yuan while devaluing against the USD and, secondly, to curtail capital flight from out of the country. Cryptocurrencies in their raw form challenge the stature of inflationary fiat currencies and encourage capital flight from fiat to crypto.

USA

From California to Colorado: How the US Regulates Political Donations in Crypto: On Sept. 20, the crypto community was rattled by the news that California’s political campaign regulator ruled in favor of an outright ban of any and all cryptocurrency donations. It came across as a surprise for many that the progressive state, which is home to the world’s largest technology hub as well as to a politician whom Bloomberg calls the ‘Crypto Candidate for Congress,’ has suddenly set such a hard-handed regulatory precedent in the run-up to November’s elections.

US Lawmakers Ask SEC to Clarify ICO Regulations: A group of U.S. lawmakers are asking Securities and Exchange Commission (SEC) chairman Jay Clayton to clarify when initial coin offerings (ICOs) are considered securities sales. In the letter, Representatives Ted Budd, Warren Davidson, Tom Emmer and Darren Soto, along with 11 co-signers, request that Clayton clarify how it is approaching token sales, saying that “current uncertainty surrounding the treatment of offers and sales of digital tokens is hindering innovation in the United States and will ultimately drive business elsewhere.”

US SEC Sets November 5 Deadline for Reviewing Nine Bitcoin ETF Applications: The U.S. Securities and Exchange Commission (SEC) has outlined a time frame for reviewing proposed rule changes related to a series of applications to list and trade various Bitcoin (BTC) exchange-traded funds (ETFs). The review period affects nine separate ETFs that have been proposed by three different applicants, according to documents filed by the SEC Oct. 4.

US Lawmakers Seek Common Definition Of Blockchain Technology: Two US representatives have introduced a bill that would create a common definition of blockchain. Proposed by representatives Doris Matsui and Brett Guthrie, bill H.R. 6913, dubbed the Blockchain Promotion Act of 2018, would direct the Department of Commerce to establish a blockchain working group to recommend a consensus-based definition of the technology. The group would also consider recommendations for the National Telecommunications and Information Administration (NTIA) and Federal Communications Commission (FCC) to study the potential impact of blockchain across the policy spectrum.

US House Passes Bill for Task Force to Combat Crypto Use by Terrorists: The U.S. House of Representatives passed a bill on September 26 that would establish a crypto task force to combat terrorist use of cryptocurrencies, public records indicate. House Resolution (H.R.) 5036, which represents an amended version of the bill proposed by Rep. Ted Budd (R-NC) to the Committee on Financial Services in January, establishes an “Independent Financial Technology Task Force” to fight the illicit use of cryptocurrency.

SEC, CFTC Charge Bitcoin Futures Firm 1Broker With Securities Law Violations: The U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are suing a Marshall Islands-based securities dealer for allegedly violating federal law through a bitcoin-based security swap scheme.

CFTC Meeting Hears Renewed Calls for Crypto Self-Regulation: The CFTC’s Technology Advisory Committee (TAC) subcommittee on cryptocurrencies discussed securing digital assets during the hour-long session, highlighting issues with protecting investors’ assets and how regulators may be able to assist in that area. Panelists at a CFTC meeting explained that stronger regulations or self-enforcement may help protect crypto investors.

US Senators Seek Stronger Sanctions on Venezuela’s ‘Petro’ Cryptocurrency: A bipartisan group of U.S. senators is pushing for tighter sanctions against Venezuela’s state-backed cryptocurrency, known as the petro. The bill, known as the Venezuela Humanitarian Relief, Reconstruction and Rule of Law Act of 2018, covers a range of areas related to Venezuela, including proposed humanitarian aid to migrants from the country and efforts to support “restoring democracy” amidst its long-running economic crisis.

A Bitcoin Mining Moratorium Was Just Avoided in Montana: Public officials in Missoula County, located in the U.S. state of Montana, have decided to look into new regulations around cryptocurrency mining rather than seek to ban the activity entirely.

Wyoming Eyes Creation of Blockchain-Friendly Bank to Lure Bitcoin Startups: With regulations being one of the main reasons why traditional commercial banks give bitcoin a wide berth, state senators and representatives in Wyoming are eyeing a legislative fix to the problem.

Europe

EU Markets Regulator Extends Restrictions on Selling Crypto-Based Derivatives: The European Securities and Markets Authority (ESMA) has decided to extend its restrictions on contracts for differences (CFDs), including crypto-based ones. The agency has announced its decision in an official release published Friday, September 28. A CFD is a contract signed between a buyer and a seller, which stipulates that the difference between the current value of an asset and its value at contract time will be compensated by the seller if positive, or by the buyer if negative.

EU Markets Regulator Examines ICOs to Determine Regulations: The European Securities and Markets Authority (ESMA) has announced it is examining Initial Coin Offerings (ICOs) to determine how they should be regulated, Reuters reported Oct. 8. The ESMA was established in 2011 in Paris, France, with an objective to develop a common rulebook for European Union (E.U.) financial markets and supervise them. The ESMA also works closely with the other European Supervisory Authorities competent in the field of banking (EBA), and insurance and occupational pensions (EIOPA).

London Block Exchange Launching Crypto Pound-backed Stablecoin: The London Block Exchange said they have permission to launch a new virtual currency, the LBXPeg. The stablecoin would be backed by UK Pound Sterling reserves.

Austria to Auction €1.15 billion Worth of Bonds on Ethereum’s Blockchain: The Austrian government announced on September 27, 2018, the auction of €1.15 billion ($1.35 billion) worth of government bonds on the Ethereum blockchain. The sale begins on October 2 with operations overseen by Oesterreichische Kontrollbank (OeKB), one of Austria’s biggest banks.

Malta’s Prime Minister Hails Crypto as ‘Future of Money’ in UN Speech: Malta’s prime minister, Joseph Muscat, has used his platform at the U.N. to speak out on the potential of blockchain and cryptocurrency, calling them an “inevitable” part of a digital future. In a speech at the general debate of the 73rd Session of the General Assembly of the U.N. on Sept. 27, Muscat raised Malta’s move to set up as a “Blockchain Island” and said that the nation is the “first jurisdiction worldwide” to regulate the technology that “previously existed in a legal vacuum.”

Malta Financial Regulator Looks to Bolster Cryptocurrency Industry: Having earned the reputation of “Blockchain Island”, Malta is taking steps to preserve the industry by investing heavily in supervisory technology in order to protect the blockchain industry. Such investments according to authorities are aimed at ensuring that the inherent risks associated with virtual currencies are kept at a minimal level in Malta.

Swiss Financial Watchdog Issues Country’s First Crypto Asset Management License:The Swiss Financial Market Supervisory Authority (FINMA) has issued the country’s first cryptocurrency asset management license to a crypto investment fund, Swiss-centered media outlet Swissinfo reports Oct. 9. The recipient is Crypto Fund, a subsidiary founded in 2017 by Zug-based Crypto Finance AG. The fund has reportedly until now only been able to distribute offshore-based cryptocurrency funds under FINMA rules. The new license, however, will permit the firm to legally offer a wide spectrum of collective investment products that track Bitcoin (BTC) and other crypto assets, including domestic funds.

France Accuses Intelligence Agent of Selling State Secrets for Bitcoin: A French security official was arrested last week on charges of selling state secrets on the dark web and accepting bitcoin in return. An unnamed agent with the Direction Générale de la Sécurité Intérieure (DGSI) was indicted last Wednesday and taken into custody two days later after allegedly peddling economic information and potentially falsifying administrative documents.

‘Huge Cash Flows’: Lithuania Voices Concern Over ICO, Crypto Trading: Lithuanian authorities held a seminar examining the “threats and potential benefits” of Initial Coin Offerings (ICO) to the country’s economy, a press release reported Wednesday, October 3, amid an ongoing investigation into cryptocurrency trading habits. The Financial Crime Investigation Service (FCIS) organized the meeting, which included representatives from government ministries, the central bank, and the General Prosecutor. According to the press release, the gathering revealed that Lithuanian processes “huge” turnover from crypto to fiat.

Asia

South Korea’s Policy Chief Calls for Legalization of ICOs: The chairman of Korea’s National Policy Committee has called for the legalization of initial coin offerings (ICOs), provided that a regulatory framework is put in place. According to a report from CoinDesk Korea on Tuesday, Min Byung-Doo, who is a member of the country’s governing Democratic party, said that, with token sales becoming a global trend, “I do not want the ICO door closed completely … The state should not ignore [the issue].”

Major Chinese Tech Magazine Adds Payment in Bitcoin to Show Blockchain ‘Practicality’: Beijing Sci-Tech Report (BSTR), China’s oldest media publication covering the tech industry, has announced it will offer subscriptions payable with Bitcoin (BTC), local media outlet Guangming reported Sunday, September 30. An evidently rare occurrence from China, were government pressure has forced crypto exchanges and Initial Coin Offering (ICO) operators to halt activities over the past year, BSTR says it wishes to promote blockchain and crypto use through “practical actions.”

Japan: Self-Regulatory Group of Crypto Exchanges Set to Tighten Rules on Online Digital Asset Storage: The self-regulatory Japan Virtual Currency Exchange Association (JVCEA) plans to stricten its customer asset management measures. The Japan Times outlet reported this news Sunday, September 30, citing “informed sources.”

Shanghai Court Rules Ethereum is Protected Under the Law as Property: A Chinese court has ruled that Ethereum enjoys the same legal protection as a property.

Crypto Trading Platform BitMEX Appoints Veteran Hong Kong Regulator as COO: Major crypto trading platform BitMEX has appointed a veteran Hong Kong regulator as its chief operating officer (COO), Hong Kong English-language newspaper the South China Morning Post (SCMP) reports October 2. BitMEX was founded in 2014 and sees almost $1.8 billion in daily traded volume, making it one of the world’s largest crypto exchanges. The exchange is not, however, included in CoinMarketCap’s exchange rankings, as it is “a [Bitcoin-only] derivatives market NOT actually spot trading Bitcoin [BTC].” BitMEX works as a “peer-to-peer trading platform that offers leveraged contracts that are bought and sold in Bitcoin,” according to its official website.

Rest of the World

UN Food Program to Expand Blockchain Testing to African Supply Chain: The United Nations World Food Programme (WFP) is expanding its blockchain testing from refugee aid in the Middle East to supply chain management in Africa. Following the agency’s well-publicized pilot of an ethereum-based system for cash transfers in Jordanian refugee camps — a project known as Building Blocks — it now plans to test blockchain for the tracking of food delivery in East Africa, Robert Opp, the WFP’s director of innovation and change.

UAE Securities Regulator to Introduce ICOs for Capital Markets in 2019: The United Arab Emirates (UAE)’s national securities regulator plans to introduce Initial Coin Offerings (ICO) for capital markets in 2019, Reuters reported Oct. 8. Reuters notes that the regulator has embraced the innovative fundraising model to diversify the means through which companies can raise capital, noting that in recent years, “weak” equity markets, coupled with low oil prices, have been adversely impacting Initial Public Offerings (IPOs) in the country and wider region.

Russia’s ‘Disappointing’ Cryptocurrency Legislation: Why Experts Consider the Bill a Failure: Russia has been trying to pass cryptocurrency legislation since the beginning of January 2018, with no success as of yet. The government’s main bill, “On Digital Technologies,” which was expected to be passed by July 1 — according to the wishes of President Vladimir Putin — will instead most likely be pushed back until an October Duma session.

Ukrainian Legislator Urges Parliament to Cut Crypto Taxes Until 2030: A Ukrainian legislator has urged parliament during a speech on Monday, October 1 to review his alternative bill on cryptocurrencies that offers to freeze taxes for crypto traders up to 2030. MP Yuriy Derevyanko, a member of the anti-corruption Movement of New Forces founded back in 2017 by former Georgian politician Mikheil Saakashvili, introduced his version of the bill at the conciliation board of The Verkhovna Rada of Ukraine, the country’s unicameral parliament.

Ukrainian Ministry of Finance Creates Working Group to Develop Crypto Taxation: The Ukrainian Ministry of Finance is creating a working group to discuss and develop a legal framework for crypto taxation, according to an Oct. 8 announcement on the ministry’s official website. The group will start its work beginning Oct.16 to identify crypto-related tax regulation options within the existing legal framework. The group of experts will also identify possible instances in which new or revised legislation is necessary.

Turkey Plans to Expand ICOs While US Lawmakers and Crypto Industry Meets: Turkey’s Finance Minister, Berat Albayrak, has launched a New Economics Program for 2019–2021 which mentions Initial Coin Offerings (ICO). Under the heading of Policies and Measures, it says according to a rough translation: “Funding innovative projects by promoting digital transformation for Crowdfunding and IPO. Modern and new generation such as ICO (Initial Coin Offering) financing methods will be expanded.”

Australia’s Science Agency Claims Breakthrough in Global Blockchain Test: An Australian federal science agency has completed a global test on a blockchain network it developed with the University of Sydney, which, the two said, indicated the system can process 30,000 cross-border transactions per second. The Commonwealth Scientific and Industrial Research Organization (CSIRO) released the test results in an announcement, which was deployed using the Amazon Web Services (AWS) global cloud infrastructure.

Dash Making Inroads With Venezuelan Merchants Thanks To Local Entrepreneurs: A group of Venezuelan businessmen has achieved what some believed impossible for a country in dire economic straits: they have popularized the use of the Dash cryptocurrency and have more than one hundred daily transactions recorded in shops as a means of payment, for goods ranging from sandwiches to automotive parts.

Brazil: Antitrust Watchdog Sends Questions to Crypto Exchanges After Bank Account Closures: Brazil’s antitrust regulator has sent a questionnaire to crypto exchanges whose banks accounts have previously been closed, major Brazilian financial newspaper Valor Economico reportsTuesday, October 2. The Brazilian Administrative Council for Economic Defense (CADE), operated by the local Ministry of Justice, sent the questionnaire to ten companies: Bitcoin Market, Bitcambio, BitcoinTrade, Foxbit, Walltime, Braziliex, BitBlue, Open Digital Capital (OTC), e-juno, and Profitfy.

Chilean MPs Present Blockchain Adoption Resolution to Parliament: Two Chilean deputies have presented a resolution on blockchain adoption to the lower house of the country’s parliament (Camara de Diputados) on Thursday, October 4, local news website Fortin Mapocho reported. The proposed blockchain resolution project was first registered in late August. In the project proposal, the two presenting members of parliament (MPs) Miguel Angel Calisto and Giorgio Jackson, along with eight other MPs, appeal to the Chilean president Sebastian Pinera, urging him to implement blockchain in all public areas of the country. The document also offers to carry out studies on the advantages of blockchain-based security and energy solutions.

India’s Central Bank Denies ‘Formal Creation’ of Blockchain Unit: The RBI has denied the “formal creation” of a unit to research AI and blockchain technology, according to a report. The clarification after an investigation by Coin Crunch India comes weeks after the central bank was rumored to have set up the supposed unit to “research and possibly draft rules” for the emerging technologies.

Middle East’s First Central Bank-Backed Crypto Exchange to Launch in 2019: Two blockchain veterans are gearing up to launch what could be the first cryptocurrency exchange in the Persian Gulf to be licensed by a central bank. Revealed exclusively to CoinDesk, Rain Financial has opened its public waiting list after a year in the Central Bank of Bahrain’s fintech sandbox. Co-founded by Saudi blockchain consultant Abdullah Almoaiqel and Egyptian investor-turned-meetup organizer Yehia Badawy, along with their business partners Joseph Dallago and AJ Nelson, Rain aims to offer both a brokerage for retail crypto investors and an institutional platform along the lines of Coinbase Pro in Silicon Valley.