Bain-backed Crypto Startup, Basis Says it’s Shutting Down

Basis, a crypto startup and once a high profile project which had bagged $133 million from top VCs announced that it is shutting down and also returning the money to investors. According to the report, it was an N.J-based cryptocurrency project which was started eight months ago and was working on ‘stable coin’. In fact, there was a lot of hype and interest it captures from the investors.
No Ways To Escape From Security Classification
Ventures capitalists that lend funds to this project was one-time Federal Reserve governor Kevin Warsh, longtime hedge fund manager Stan Druckenmiller, Digital Currency Group, NFX Ventures, Valor Capital, Bain Capital Ventures, GV, WingVC, Ceyuan, Andreessen Horowitz,one-time  Lightspeed Venture Partners, Zhenfund, Sky9 Capital, Foundation Capital, and other
A note mentioned on its officials website states as follows;
Unfortunately, having to apply US securities regulation to the system had a serious negative impact on our ability to launch Basis.

The basis was the brainchild of Nader Al-Naji who started it with former Princeton classmates Lawrence Diao and Josh Chen. However, the key reason behind closure is that the firm is unable to cope with the security status of token imposed by the U.S regulators. In fact, Basis founders also mentioned that they cannot assume what regulatory frameworks regulators may roll in future and henceforth its technology roadmap and regulations didn’t mix.
CEO Al Naji said that “enforcing transfer restrictions would require a centralized whitelist, meaning our system would not only lose its censorship resistance, but also those on-chain auctions would have significantly less liquidity.”
He writes that since their token is not registered as securities yet, they realized ‘there is no reason to escape from the regulations”. He went on to say that;
“due to their status as unregistered securities, bond and share tokens would be subject to transfer restrictions, with [Basis] responsible for limiting token ownership to accredited investors in the U.S. for the first year after issuance, and for performing eligibility checks on international users.”
These processes would result in a ‘fewer participants’ within a platform and thus affect the stability of Basis’. He asserted that ‘it modifies the whole point’ here. However, many things are still unclear about basis platform as to investors didn’t respond yet. Stay tuned with Coingape to know more about this.
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Source: CoinGape

Bahrain’s Central Bank Issues Draft on Crypto Regulations, Nations Attempts To Become “Crypto Oasis”

Regulations have been a critical hurdle that limited growth and adoption of cryptocurrency across the globe. But as cryptocurrencies are getting popular and the positives of it becoming more visible, regulators are trying their best to regulate it than eliminate it. The recent addition to this list is Bahrain, where the Central Bank has issued draft rules to regulate cryptocurrencies.
Bahrain crypto regulation to bolster Fintech in the country
According to the news published in the National, Bahrain’s central bank has issued draft rules on the trade in cryptocurrencies for consultation, setting up a framework to regulate virtual currencies as GCC countries look to increasingly tap into such assets.
With regards to the same Bahrain News Agency quoted Khalid Hamad, Executive Director of Banking Supervision saying that
“This regulatory framework will address the demand from the market for these services and the need to also recognize this innovation in financial services. The CBB’s [Central Bank of Bahrain] experience with the participants within the Regulatory Sandbox was insightful in shaping these rules,”
The “sandbox” in the statement refers to Bahrain FinTech Bay which made for companies to test ideas under tighter regulations. These guidelines are released with an aim of boosting the number of companies as part of diversification efforts to reduce government expenditure through technology.
The comprehensive draft regulatory framework introduced by the CBB will cover requirements for licensing, financial resources, as well as measures to safeguard client or customer interests, technology standards, and cybersecurity risk, management measures, the statement added. The draft consultation paper is available for viewing on the central bank’s website. The CBB is open to feedback on the draft rules until year-end.
Bahrain has been laying special emphasis to bolster fintech revolution in the country- the creation of Fintech Bay is one of those initiatives. The FinTech Bay, inaugurated in February, is home to about 30 firms working on cryptocurrencies, the blockchain, digital payments, and other financial technology.
The Middle East has slowly become an attractive destination for Startups due to the availability of superior infrastructure and geographical proximities. According to the latest report by Wamda Research Lab, the number of MENA startups is expected to more than double by 2020 from 2015. And it’s not just Bahrain, Abu Dhabi and Dubai are investing to boost the growth of FinTech start-ups.
With regulations in place, Will Bahrain become the “Silicon Valley “ for crypto businesses? Do let us know your views on the same.
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Source: CoinGape

Regulatory hurdles reducing Europe, Promising Crypto Christmas in Europe

All news that affects the crypto markets significantly usually comes either from Far East Asia (Japan and Korea) or Far West (Majorly USA). But the recent news flow from the past couple of months has shifted all eyeballs to Europe as the countries are making some serious attempts to make crypto investing friendlier.
Regulatory hurdles reducing Europe
Europe has been a very small crypto market in Europe despite huge potential thanks to regulatory hurdles presented by certain countries and regulators at European Union. But with recent news flow that is coming in shows that finally things are changing as Europe marches ahead to claim a much bigger role in the world of cryptocurrencies.
The biggest market in Europe has been Germany and the nation hasn’t disappointed when it came to cryptos as well. According to the news Germany’s second-largest stock exchange, Boerse Stuttgart Group, is set to launch a cryptocurrency trading platform in the first half of 2019. The firm announced this week it has partnered with a local fintech company solarisBank to create an engineering infrastructure for digital assets trading. solarisBank, which operates with a banking license in the country, will also be Boerse’s banking partner for the venture.
Another news that hit the markets again came from Germany where German blockchain start-up Bitwala announced that it has launched crypto banking in Germany. With this move, Bitwala claims to “close the gap between crypto and traditional banking,” The banking solution for Bitwala was (again) developed in partnership with local fintech start-up SolarisBank, which has a banking license and is fully regulated by the German financial regulatory authority Federal Financial Supervisory Authority (BaFin) and the European Central Bank (ECB).
Moving from German to Switzerland, where the world got its first crypto-based exchange-traded product (ETP). This move of listing a crypto-based ETP by SIX exchange in Switzerland ended almost a 2-year wait to get an exchange-traded product for cryptos. While the SEC is still far from approving a BTC ETF, Swiss Exchange has just moved ahead by a few steps as the volumes on the exchange for this crypto product are at all times highs.
Moving ahead and Sweden’s Nasdaq already has Bitcoin ETN. In August 2018, the Swedish exchange of Nasdaq launched a new alternative, an overseas-listed instrument which allows U.S. investors to take a secure route to trade and investing in bitcoin. Although an exchange-traded note (ETN) — called the Bitcoin Tracker One — has been trading on the Nasdaq Stockholm exchange since 2015, It has recently started quoting in U.S. dollars. Though it was listed on the Swedish stock exchange, a U.S. dollar-denominated version was capable of allowing. global brokerages to offer it to American investors.
These news flows haven’t gone unnoticed and even Joseph Young tweeted about the same

Europe's crypto market has been relatively small for years possibly due to regulatory uncertainty. Some changes are starting to happen.
1. Germany's stock market investors to be able to trade crypto by next year2. Switzerland has Amun crypto ETP3. Sweden Nasdaq has Bitcoin ETN https://t.co/QsfBTfc7Gu
— Joseph Young (@iamjosephyoung) December 13, 2018

With so much of fundamentally positive news flow coming in from Europe it looks like the continent is in the right direction towards becoming a crypto friendly region. As more countries open up to cryptos, the adoption and use of the coins will be way beyond just trading and speculating.
Will Europe be able to set an example for other regions on how to move mainstream with cryptos? Do let us know your views on the same
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Source: CoinGape

Ex-Chief of MtGox Exchange Sentenced to Ten Years in Prison

The latest report from a local media of Japan unveiled that Former CEO of MtGox bitcoin Exchange has fraudulently manipulated data and scammed $3million worth of virtual currencies – henceforth, prosecutors proposes 10 years prison term at the Tokyo District Court.
Manipulation of Trading System
Mt. Gox Co., was once the largest cryptocurrency exchange of Japan and became bank corrupt in the year 2014. The exchange was first launched by US programmer Jed McCaleb and later purchased by Mark Karpeles in 2011.
Though exchange appears to be among the market king, it was struggling behind the scene. Prosecutors in Tokyo claim that Mark Karpeles diverted his company’s funds into other business and pocketed a huge amount of cryptocurrencies for his personal use. They reported that the funds of about ¥340 million as equivalent as $3 million worth of virtual currencies was kept in the bank account of Mt.Gox. It was being transferred to Mark’s own account from September to December 2013.
On top of these charges, the platform was asserted the lost cryptos are likely the drudged. Karpeles negated prosecutor’s claim and earlier, he said court which a report reads that “ I swear to God I am not guilty’.
However, the charges are not directly pointing to the lost coins of worth US$480million but the national broadcaster NHK media report prosecutor’s statement which goes as;
Karpeles’s alleged acts “were extremely vicious, as they completely undermined confidence in trading,”
It wasn’t the end here, the company comes with a claim, speaking about the bug within the software that might be the reason for hackers to steal those bitcoins. Moreover, Karpeles asserted that some 20000 lost coins appeared in a “cold wallet”.
however, untill today, the lawsuit case of Mt.Gox is still pending for the final decision, stay tuned with Coingape to read the next phase of hearing. 
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Source: CoinGape

CFTC Plans to Seek Public Feedback on Ether

The latest report on Ethereum future contract unveiled that the Commodity Futures Trading Commission (CFTC) is looking for an in-depth analysis of Etherum blockchain. Official announcement which was released on December 11, 2018 states that the commission would need a better understanding of ETH and how it goes beyond Bitcoin future. The statement reads as;
The Commodity Futures Trading Commission (CFTC) is seeking public comment and feedback in order to better inform the Commission’s understanding of the technology, mechanics, and markets for virtual currencies beyond Bitcoin, namely Ether and its use on the Ethereum Network.
Public Comments To Understand ETH Blockchain
Envisioned to decide better, CFTC is opening a public comment in the Federal Register for a period of 60 days. Consequently, the commission has also outlined “Request for Information (RFI)” with Federal Reserve which would eventually be aimed at seeking the strength of Ethereum over Bitcoin and the possible risk, challenges and opportunities concerned with Ethereum network. Moreover, the document will have a list of 25 various questions regarding ether and its network. The report further adds that;
The CFTC is asking for public feedback on a range of questions related to the underlying technology, opportunities, risks, mechanics, use cases, and markets, related to Ether and the Ethereum Network. All comments must be received within 60 days of publication in the Federal Register.
However, it is also rumored that the numerous exchanges would soon begin Ether futures and this bet was followed by a statement of William Hinman who worked with SEC’s division of Corporation finance. Bloomberg reported his claim which he has made six months ago,
He didn’t believe the token in its current form was a security that his agency had jurisdiction over.
In a similar regard, CFTC put forward to Hinman on Tuesday stating, it was his “personal views”.
The result of such report would help LabCFTC, fintech initiative of CFTC to finalize the matter regarding Ethereum futures. In addition, LabCFTC also deals with creating awareness about crypto assets to the masses and interacting with regulators as well.
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Source: CoinGape

Expert Opinion: Crypto Tale of Two Countries – India and China

Note: “This analysis is an adaptation from the work of Mati Greenspan, Senior Market Analyst at eToro
Key Highlights:

India and China still have a hide and seek a relationship with cryptos
Recent political and regulatory developments in India show a ray of hope
China toughens stand on cryptos as it imposes a ban on Security Token Offerings (STO)

Ray of Hope for Indian Cryptocurrency regulations
In a recent turn of events, the Indian Central Bank Governor surprised everyone by putting down his papers. Even though the Governor mentioned that he’s stepping down for personal reasons, it hasn’t stopped pundits from speculating as to why he’s leaving the post after serving the shortest term since 1992. The most common theory is that Patel was facing increased pressure from the government to employ a looser monetary policy, something he presumably was not prepared to do.
The reason why these turns of events are important for cryptos because India is by far one of the largest potential markets for crypto adoption and it was the RBI who had set up the current crypto-blockade in the first place. There is now a committee to select the next RBI Governor and this can actually be a good thing for crypto outlook in the country, depending on who they pick. Well, it can’t be worse anyway. In any case, the new Governor, whoever it may be will probably have their hands full with everything else going on anyway. As well as the finance ministry. So, unfortunately, this whole thing could get swept up in politics. However, this new progression might prove to be a wild card for crypto enthusiasts.
China steps up its rhetoric against digital assets
Meanwhile, it seems that China, the largest potential market for crypto adoption, has stepped up their rhetoric against digital assets. The People’s Bank of China is showing how on top of things they are by clarifying that STO’s (a term that has only recently gained popularity) will not be tolerated. Though there are no Chinese laws against Security Token Offerings, it seems the punishment is now banishment. The above two updates may not have much effect on short-term prices but the second one is proving to be a popular talking point on crypto social media as all leading coins continue testing the lows and searching for the floor.
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Source: CoinGape

Designate BTC & Cryptocurrencies as a Separate Asset Class: Bobby Lee Seconds Davidson’s View

US Congressmen Warren Davidson is planning to introduce a new legislation which will create a new unique asset class for the cryptocurrency. And he has found support from Bobby Lee, who took on Twitter to second the thought put forward by the congressman.
Bill could get in regulatory clarity towards cryptocurrencies and ICO’s
As certain sections of media reported that US congressman from Ohio was planning to introduce a bill that could create a new asset class to cryptocurrencies and ICO ’s, Bobby Lee took onto Twitter to give a thumbs up to this thought. According to Lee, Bitcoin and cryptocurrencies (as opposed to tokens) need to be designated as a completely new asset class as this is the way forward for them and would help them grow in a much-regulated fashion

Yep, I fully agree. #Bitcoin and true cryptocurrency (as opposed to tokens) should indeed be designated as a completely new asset class. That’s the only way forward. https://t.co/aYJaP4Skk9
— Bobby Lee (@bobbyclee) December 6, 2018

The news was reported by Cleveland.com which said that the Republican from the 8th District says he plans to introduce legislation in the House of Representatives that would create a new, unique asset class for cryptocurrencies and initial coin offerings (ICOs), allowing for a clearer path to government regulation. The bill would prevent crypto assets from being classified as securities and empower the federal government to “regulate initial coin offerings more effectively.”
This was not the first time the Congressman had put forward a request to legitimize and regulate blockchain technology. He was part of the group of US lawmakers who had written a letter to the SEC in September 2018, asking for more clarity on regulations before confused tech companies start leaving the country. The letter than had stated 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. We believe that the SEC could do more to clarify its position.”
The legislation has not yet been introduced, but should become public soon said Davidson, who announced his plans at the Blockland Solutions conference, held in downtown Cleveland. Davidson was also quoted saying
“What this does for entrepreneurs is it gives people an ability to raise capital a different way,”
 The news report also quoted that though the conference focuses on uses outside of cryptocurrency, the main point is how blockchain can be used in government. Lt. Governor-elect Jon Husted spoke Sunday evening about how blockchain technology could be incorporated into InnovateOhio, a plan to modernize Ohio’s governance processes.
Well, regulatory clarity is always welcome in the crypto industry as it provides a direction to crypto business by drawing a line between what is legal and illegal. Defining an asset class for cryptos will protect them from being termed as securities and would effectively bring in better regulation that would act as a catalyst for growth for cryptos.
Will we soon see a designated asset class for cryptocurrencies? Do let us know your views on the same.
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Source: CoinGape

Stablecoins The Way Ahead on “Blockchain Island” says Malta’s Prime Minister

Malta has come up as a new crypto hub by providing much-required banking support to cryptocurrency businesses. As bringing changes to the banking regulations were not possible due to the risk associated with cryptocurrencies, the Maltese Prime Minister mentioned stable coins as a way for crypto businesses on the island to move ahead.
Won’t intervene in banking regulation asserts PM
According to the report published on Chinese website CNgold.org, all seems to be not going smoothly for crypto business at the “blockchain island” Malta. All their hopes to getting banking support were in high spirits when Joseph Cuschieri, an official at the Malta Financial Services Authority (MFSA), promised to take action against the bank’s conservative attitude towards cryptocurrency companies.  But now everything seems to have hit a roadblock when the Maltese Prime Minister Joseph Muscat proposed crypto businesses to shift towards stable coins.
“We’re obviously not going to intervene in banking policies because they have to deal with issues such as correspondent banking and risk assessments,” Muscat told while addressing the press. “Our job as a government is to create this new market and not allow a vacuum to form within it. Some platforms are already banking in cryptocurrencies and new sectors, such as stable coins, are being set up that is being viewed as more secure. That’s the way the sector is evolving and we look forward [to such developments] positively.”
“Also, whenever people come to Malta to do business in the regulated cryptocurrency sector, I always urge them to maintain their previous banking arrangements.”
Muscat’s interference comes very shortly after MFSA chief executive Joseph Cuschieri promised action in light of banks’ conservative approach towards crypto companies.
“It is abundantly clear that Malta needs more banks to participate in the development of our economy, particularly in the digital and FinTech space,” Cuschieri said. “I am not happy with the current situation on various fronts and doing nothing is not an option for me. Our banking strategy and policy review to be published next year will address this challenge in a holistic fashion and we will consult with all stakeholders before any decisions are taken.”
These comments do come as a slight setback for crypto business as, since early 2018, Malta has been focused on building an ecosystem that improves and is friendlier to crypto and blockchain-related companies. Striving to turn the Mediterranean nation into “Blockchain Island,” the government had opened its doors to blockchain and other so-called distributed ledger technologies. Malta always worked with a vision that the island could become a haven for cryptocurrencies like Bitcoin. On Legislative front as well, In July 2018, the Maltese parliament had passed three bills to set a regulatory framework and drive innovation in blockchain-like technologies with a hope that these laws will attract foreign financial tech companies to establish themselves in the country.
The only thing that it couldn’t turn in its favor was the banking regulation and the support of banks as it would have to deal with a series of issues such as correspondent banking and risk assessment. And now it doesn’t seem to happen anytime soon.
Will crypto business turn to stable coins or will Malta lose its status of being blockchain friendly? Do let us know your views on the same
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Source: CoinGape

Japan to Set New Crypto Tax System to Reveal Cryptocurrency Tax Evaders

The latest report reveals that the Tokyo Government is set to present a new crypto tax system to prevent people from escaping from the huge profit tax made out of cryptocurrency. As per the related source on the matter, the National Tax Agency (NTA) will be demanding information regarding cryptocurrency transactions that have evaded taxes on their crypto earnings.
Suspected Tax Evaders and New Tax System
The new tax evading system on crypto earning will begin from Japan’s upcoming fiscal year – 1 April – 31 March.
It has been informed earlier that earning from cryptocurrency is considered as the miscellaneous income which falls under the Income Tax Act. Salaried individuals with least income of 200,000 yen per annum must disclose the matter to law and regard it as income.
Following the new reform, Japanese cryptocurrency exchanges will be accountable to legally share the information about their customers which must include customer name, his address, and 12-digit personal identification numbers. However the year 2018 was a rash for almost every user in the crypto market but in the year 2017, over 300 individuals have gained at least 100 million yet as per the data collected by NTA. This is because, during 2017, bitcoin and other cryptocurrencies were shooting the highs and this year trading with a negative graph.
As for now, only individuals who have earned a minimum of 10 million yen through crypto transactions and also if the authority feels that individual denies disclosing at least half of that income, must share their information. Individuals with below 10 million yen or those seem small-time holders need not worry about.
Japan has been in the crypto bulletin for a quite long – earlier this year, Japanese Financial Services Agency (FSI) established a self-regulatory status that enables industry leaders to form rules and safeguard the assets of customers as well as prevent possible money laundering activities.
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Source: CoinGape

Italian Court Denies Registering Businesses Using Cryptocurrency

Businesses in Italy using cryptocurrency may no longer enjoy the mainstream benefits of decentralized economy. According to the reports, companies based on the crypto mechanism or employing cryptocurrency will not be eligible to register their business with Business Register.
The news first broke out when an Italian Joint Stock company, named S.r.l (‘società a responsabilità limitata’) found using a specific cryptocurrency which was not registered in any of the main exchanges. Moreover, the company refused to register itself with the Business Register of Italy – although, several other companies already using cryptocurrency were never discriminated to do so. As a result, if the specific cryptocurrency is already listed across trading platforms, law enforcement wouldn’t censure – but the cryptocurrency used by S.r.l is listed under one platform which conflicts the assessment of the country’s economy. As per the legal bureaucracies addressing cryptocurrency “All asset items must have a measurable economic value’.
Furthermore, Article 2465 of the Civil code relating to conferment states;
Those who confer assets in kind or credits should attach a report containing an indication of the evaluation criteria adopted and the attestation that their value is at least equal to that attributed to them for the purposes of determining the capital share”.
It states that while cryptocurrency being used at only one platform has shown the “uncertainty about the confer-ability of the asset types”. However, the digital asset is not also verifiable objectively and hence it questioned why ambiguous assets can be operated within the territory.
Following the firm’s application, the court claimed materials that would need to examine the business and approve its commercial operation with Business Register. However, the firm failed to provide the sufficient materials and hence S.r.l would not be registered under Business Register. Since the cryptocurrency is decentralized in nature, it’s quite difficult to deal with businesses employing cryptocurrency within the nation. Furthermore, the court feels that the “improved regulatory frameworks” are needed to effectively handle crypto processes within the country.
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Source: CoinGape

Two Rancho Cordova residents allegedly charged for Selling Narcotics on Social Media In Exchange for Bitcoin Payment

Local media of California region disclosed that a pair from Califonia’s city Rancho Cordova was indicted in possession of selling marijuana and psilocybin mushrooms on social media in exchange for the partial payment in cryptocurrency. Announced on November 29, 2018, by the U.S Attorney McGregor W.Scott, both residents of Rancho Cordova, namely Nathan Paul Barnes and Tiarra Maureen Jackson are held responsible for seven-count indictment.
Officially released a report stating that these individuals were operating an enterprise dealing with drug distribution. Barnes and Jackson used to promote their enterprise, called “Fine Cali Herb” across social networking platforms. Using social networks including Instagram and Snapchat, they caught selling large quantities of drugs including THC products, marijuana and psilocybin mushrooms to various parts of the world.
It was reported that the payment for narcotics was received in the form of Bitcoin. However, while conducting the investigation during July 2018 on their social media accounts and emails over the uncovered purchase of drug products. Though, it does not yet claim is not yet confirmed because the individuals have yet to agree but if convicted, Rancho Cordova duo would face fine of huge amount i.e $1 million and a maximum statutory penalty of 20 years in prison.
The statement notes that;
Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
This is not the first time that crypto is being used for selling drugs. Since the cryptocurrency is decentralized and the transactions are recorded over the distributed ledger, it is quite easy to use crypto for illegal activities.
What do you think the best way to avoid illegal use of cryptocurrency? Share your thoughts
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Source: CoinGape

Floyd Mayweather and DJ Khaled Charged By US Regulators For Promoting ICOs

Securities and Exchange Commission has charged professional boxer and a rapper. Reports recently revealed that former welterweight champion Floyd Mayweather Jr. and a music producer DJ Khaled has allegedly caught by SEC while failing to reveal the payment received to promote ICOs.
Press release published on November 29 state that boxer Mayweather received the payment of $300,000 to promote three ICOs including Centra Tech. Following it, coingape reported that one of its ICO, Centra Tech was charged on fraud case by the federal prosecutors in Manhattan earlier this year. In contrast, Music director, DJ Khaled accused of failing to disclose a payment of $50,000 from the same firm, Centra Tech.
Both, music producer and boxer found promoting the fraudulent crypto project across their social media pages. They call it “game changer” to encourage social enthusiasts to get involved with the ICO. In the year 2017, ICO promotion via celebrities was on hype, investigating which, SEC warned tokens/coins distributed during ICOs will fall under securities Act.
Fines Over Promoting ICO
However, if the payment received by Mayweather and Khaled would have been disclosed, the case would be different. But by failing to reveal, SEC has brought charges against them.
“With no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.” Said by Stephanie Avakian, co-director of the SEC’s enforcement division.
While questioning about the payement and ICO promtion, neither the attorney of Mr. Khaled nor Mr. Mayweather was open to the discussion. As a result, both settled civil charges from SEC on Thursday. Specifically, they couldn’t deny SEC’s claim and agreed to pay $614,775 (Mayweather) and $152,725 (Khaled) to SEC prosecutors. Along with such huge fine, they have also been warned not to promote any crypto project until three years for Mayweather and two years for Khaled.
This initiative by SEC indicates regulator’s concern to protect investors and the funds of individuals. However, it also acts as a warning to celebrities that may involve in the promotion of any digital securities.
Steven Peikin, the co-director of the SEC’s Enforcement Division said in a note that;
“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements,”
He also explains that the social media posts on investment shouldn’t be considered as the advice. It may often come under advertisement within respective social network. He advised to have due diligence stating;
“Social media influencers are often paid promoters, not investment professionals, and the securities they’re touting, regardless of whether they are issued using traditional certificates or on the blockchain, could be frauds,”
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Source: CoinGape

Smart Contracts Premier Released by US CFTC to Bolster Innovation and Participation in Fintech

While the world has seen some harshness from the SEC towards cryptocurrencies, the other regulatory that looks after commodities in the USA, The Commodity Futures Trading Commission (CFTC) has been quite welcoming. In a recent move to bolster innovation in the space, the CFTC has released premier on smart contracts.
CFTC premier makes effort to engage market participants  
The primer released by Commodity Futures Trading Commission’s LabCFTC sets out to define “smart contracts,” including by exploring their history, characteristics, and potential applications that may eventually impact daily life. The primer also includes graphics to help explain early self-executing software logic evolving into current smart contract technology – for example, starting with a simple vending machine illustration and then discussing more complex examples, including credit default swap contracts
The official announcement quoted LabCFTC Director Daniel Gorfine saying
“Smart contracts are being used to drive further automation in our markets and may have an impact across a range of economic activities,” “This primer is focused on explaining smart contracts, exploring how they may impact our markets and highlighting potentially novel risks and challenges.”
The premier also includes a section which mentions a range of operational, technical, cybersecurity, fraud and manipulation, and governance risks and challenges as the regulator believes that it is critical to understand and mitigate risks and challenges to enjoy the potential benefits of the new innovation.
The premier also highlights CFTC’s role to protect market users and their funds, consumers, and the public.
The premier is a work of LabCFTC which was launched in 2017 and is dedicated to facilitating market-enhancing financial technology (FinTech) innovation, informing policy, and ensuring the agency has the regulatory and technological tools and understanding to keep pace with changing markets. LabCFTC was designed to make the CFTC more accessible to FinTech innovators and serves as a platform to inform the Commission’s understanding of emerging technologies. LabCFTC also enabled the CFTC to be proactive and forward-thinking as FinTech applications continue to develop and to help identify related regulatory opportunities, challenges, and, risks.
While CFTC is clear on its stance with blockchain and cryptocurrencies, now its time for SEC to do the same for innovation to flourish in the US.
Will SEC follow CFTC’s roadmap in allowing cryptocurrencies to flourish in the US? Do let us know your views on the same.
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Source: CoinGape

Cryptocurrencies Among Nine Major Risk Factors For Money Laundering In South Korea

A job of a regulator is not just to facilitate a business-friendly environment but also to keep a tab on malicious activities that spoil the environment. Exactly what the South Korean regulators are doing with cryptocurrencies. Despite providing a friendlier environment to cryptos, the regulators have added cryptocurrencies to a recently released list of 9 major risk factors for money laundering.
South Korea’s list in compliance with International body FAFT
According to the report released by a Korean Daily, Money Today, the South Korean Government has begun preparations for the mutual evaluation by the international body Financial Action Task Force (FAFT) which is a global body that overlooks and helps nations towards developing policies to combat money laundering and terrorism financing.
From January next year to February 2020, South Korea is expected to receive a FATF evaluation on anti-money laundering and anti-terrorism funding operations. If the evaluation is negative, it may affect the credibility of the country, the financial cost of the export company, and the exchange rate.
Hence, the government said that it conducted a domestic money laundering and terror financing risk assessment from 2017 to August 2018 and found that the risk of terrorist financing was relatively low but confirmed nine major money laundering risks.
Apart from cryptos, the other eight items that included on the list as risk factors for money laundering are Tax evasion, Illegal gambling, Financial fraud such as voice phishing, Corruption crime (arrest, bribery, arrange, etc.), Unfair transaction such as stock price manipulation, Escape from property using trade transaction, Embezzlement and Fiat cash transactions.
A financial official working very closely on this list was quoted saying by the local media (loosely translated from Korean using Google Translate)
“The actual performance of how the money was laid off and sanctioned through the anti-money laundering system is also an important evaluation item. It is necessary to actively detect and sanction money laundering risk activities. “
Many analysts believe, being on the vigilance list would be actually beneficial for cryptocurrencies in Korea, as FAFT is focused on how effectively the system for money laundering and terrorist financing prevention is operating in a country and this will help South Korean regulators to cover aspects that were left out, in order to make the regulations more vigilant and also help to clean the environment from malicious aspects of business.
South Korean regulators have been vigilant enough on cryptocurrencies so that the innovation that is slowly becoming part of the society, is not misused in any way.  A clever way regulates cryptocurrencies.
Should regulators in other countries follow the footsteps of South Korea?  Do let us know your views on the same
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Source: CoinGape

Nigeria’s Authorities Seek Cryptocurrency Regulatory Frameworks Against Criminal Activities

The anonymous digital cash is widely used for criminal activities – for instance, Coingape reported, ISIS ruins war due to the huge investment in crashing crypto marke. A conference conducted by the Presidential Advisory Committee against Corruption (PACAC) in Nigeria calls for regulatory frameworks on the usage of cryptocurrency for criminal activities.
It was discussed during the conference in Abuja, named “understanding the interface between cryptocurrency and money laundering”. The panel was occupied by Central Bank of Nigeria (CBN) Governor Godwin Emefiele, Senate Committee on Anti-Corruption Chairman Senator Chukwuka Utazi and Prof Itse Sagay Presidential Advisory Committee against Corruption (PACAC).
Prof. Itse Sagay – PACAC
Prof. Itse Sagay who is a chairman of the community took stage stating the cryptocurrencies have often used for criminal activities and hence regulation must be adopted to tackle the challenge. Amidst the benefits one can leverage from blockchain and cryptocurrency, Sagay’s statement cautioned its adverse effect too. He encourages the increasing adoption of blockchain and cryptocurrency, and also concerned over its decentralized mechanism.
He said;
“Also there is a bad side, which is the use of virtual currencies for criminal activities. Because of the encrypted nature of virtual currencies, it is necessary therefore that there should be some regulations provided in this sector, in order to prevent it from being a new avenue for criminal activity and evasion of social responsibility,”
Sagay explains that the regulation is necessary not just to safeguard the stake of individual or companies to use cryptocurrencies but also to protect investors and to look at the tax matter over the profit generated out of online transactions.
Isa Ali Ibrahim Pantami – NIDA
With Sagay, Isa Ali Ibrahim Pantami, Director General of Nigeria Information Technology Development Agency (NIDA) join the panel and discussed;
Currently, cryptocurrency is not accepted as a legal tender by most countries. Some jurisdictions treat it as a commodity for the purpose of taxation while others see it as money.
Governor Godwin Emefiele – CBN
Addressing the Fintech, Godwin Emefiele, CBN Governor said the sustainability can be balanced if the risks associated with virtual currency are taken care. He moreover seeks financial entities to safeguard their interest against direct and indirect vulnerabilities.
“Information from coinmarket.com indicates that crypto-currencies global market capitalization currently stands at approximately 203 billion US dollars as at end of October 2018. This is an indication that crypto-currencies may become a major part of the financial system and it’s currently offering new and exciting opportunities as well as challenges to the industry and regulators, hence the need for regulatory and legislative frameworks to address the challenges became imperative.” He eloborates
Senator Chukwuka Utazi
He said virtual currency has become new order and the people continued hiding the”ill-acquired assets and began utilizing it for “illegal means”. He explains that;
“In an age where people hide ill-acquired assets and use same for illegal means to sponsor terrorism and all manner of threats to human existence, there should be legislative and regulatory frameworks that understand the dynamics of this genre of economic activity to place society a step ahead of its rapid evolution.” He adds,“there is, therefore, a yawning need for tighter regulation.”
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Source: CoinGape