Stablecoins Pose More Issues Than Benefits – G7 Task Force Report

The G7 task force has finally released its report. The latter highlights the shortcomings in the prevailing cross- border payment systems. However, the force is still wary if stablecoins will be able to resolve the same owing to their operational challenges.
Member Nations To Allow GSC Launch Post Ensuring Regulatory Compliance
The report alleges that the adoption of global stablecoins is uncertain and the same will challenge the financial stability and the international monetary system. Also, regardless of their size, they will pose risks to anti-money laundering efforts across states and will hinder tax compliance and consumer data protection.
Furthermore, the task force alleges that the G7 nations will not allow any launch of a stablecoin without first ensuring the challenges and risks. The report first despised the cryptocurrencies and said that they have failed to provide an attractive means of payment or store of value. While the task force did consider stablecoins as a means of payment or store of value, the former considers that the cons outweigh the pros. Per the report, that the launch of the same will be a threat to the global financial stability and monetary system.
The report further says that central banks, standard-setting bodies such as CPMI should keep up with their efforts to promote faster and low-cost payment systems.  Moreover, issuance of stablecoins will include governance, management entities and underlying technologies such as DLT, smart contracts or conventional FMI technology such as bank accounts.
The report mentions,
Governance plays a key role in stabilization because a central agent or group of agents must design, and set rules for, how the value of the stablecoin will be stabilized. For example, a governmental agency must set the rules that asset managers or stablecoin issuers should follow in order to ensure that any stability target is maintained.
The report further elaborated on the role of management entities on the issuance of stablecoins
Management entities also play a key role in the issuance and stabilization of stablecoins. They manage the issuance and redemption of the stablecoin, the stability of the stablecoin, or the custody of reference assets according to the rules designed by the governance layer. Management entities can also include custodians that hold reference assets, such as fiat currencies, commodities, and other financial assets. In addition, management entities could comprise a stablecoin mint that issues new stablecoins.
While stablecoins may eventually solve the same as owing to their technological prowess, there is no guarantee that the public sector and the regulators will finally put stablecoins to use as a store of value and use it as a payment system. The report seems to agree with the Financial Action Task Force(FATF). However, the FATF still shows some relaxation and is willing to approve certain new crypto-based payment systems.
Yesterday, European Central Bank Director, Benoit Coeure claimed that Global financial regulators have no plans to ban Facebook’s Libra or other stablecoins. However, digital currency projects will have to meet the highest regulatory standards. He said,
In the case of Europe, neither the Commission nor the ECB intends to make Europe a no-fly zone for stablecoins. But stablecoins will have to meet the highest regulatory standards and adhere to broader public policy goals,”
Will stablecoins eventually get their rightful place in the economy, or will they vanish into oblivion, owing to regulatory issues? Let us know, what you think in the comments below!
The post Stablecoins Pose More Issues Than Benefits – G7 Task Force Report appeared first on Coingape.
Source: CoinGape

CFTC, FinCEN, and SEC Issue Warnings to Crypto Firms on Regulatory Compliance

The Chairman of CFTC and SEC, along with FinCEN director issue a joint statement to firms engaging in digital assets to follow their guidelines.
Emphasis was laid on obligations under the Bank Secrecy Act (BSA), anti-money laundering and countering terrorist funding through cryptocurrencies.

Digital assets firm has often avoided following specific rules riding on the ambiguity of the nature of the assets. The most common among them are bypassing registration as securities.
Nevertheless, the joint statement aims to keep no stone unturned. It explicitly defines the various financial instruments like derivatives, Money Services Businesses (MSB), mutual funds, etc., while directing the firms engaging with them to procure compliance soon.
The joint statement issued by the agencies states that the “financial institutions” must register with the specific agency. It is being done to counter the money laundering and terrorist funding via cryptocurrencies.
The firms must adhere to the Bank Secrecy Act (BSA) which promotes collaboration with the U.S. government in cases of suspected money laundering and fraud. The press release noted,
the AML/CFT activities of a futures commission merchant will be overseen by the CFTC, FinCEN, and the National Futures Association (NFA);
those of an MSB will be overseen by FinCEN;
those of a broker-dealer in securities will be overseen by the SEC, FinCEN and a self-regulatory organization, primarily the Financial Industry Regulatory Authority (FINRA)
Hence, the firms must clearly define their products and seek permission from these regulators. Therefore, a firm or asset sold by a firm meets the definition of “securities” under federal law must comply with federal securities law.
The firms engaging in finance are also “required to report suspicious activity and implement reasonably-designed AML Programs.”
The use of cryptocurrencies in illicit activities and cyber theft is not a surprising occurrence. Hence, the warnings issued by the Government agencies must be adhered to strictly by the firms to avoid security and economic threats to nations. The three regulators have also been considerably inclusive of activities around digital assets. However, their emphasis on the need for compliance was considerable.
What do you think about the warnings, and how will it affect the crypto markets? Please share your views with us. 
The post CFTC, FinCEN, and SEC Issue Warnings to Crypto Firms on Regulatory Compliance appeared first on Coingape.
Source: CoinGape

Telegram’s $1.7 Billion ICO Halted by SEC

The Securities and Exchange Commission (SEC)  in a recent announcement has filed an emergency action and obtained a temporary restraining order against two major offshore entities backing Telegram’s TON digital token offering.
Are Telegram Tokens Securities?
Per Telegram’s plan of action, it had promised the delivery of Gram tokens to initial purchasers by October 31, 2019.  SEC has alleged that the former failed to register the sale and offering of Grams. The reason given for not registering was states as the tokens are securities. 
Telegram, a cloud messaging service with over 200 million users had announced its Telegram Blockchain Network (TON) in early 2018. It conducted the sale of its’ cryptocurrency – Gram through a private ICO in February and March 2018.  
The SAFT (Simple Agreement for Future Tokens) sale, which was only sold to accredited investors. The deal brought in about $1.7 billion. Gram tokens were sold at a price of around $1.33 and $0.67 initially in the private ICO. 
 Leading Data Researcher, Larry Cermak said that Telegram planned to spend $400 million on developing TON. Several months later, Telegram also said that it would refund investors’ money if TON doesn’t launch by October 2019. 
Source- Twitter
Reportedly, in August reports for a Gram token’s secondary black market started surfacing. There were many over-the-counter (OTC) desks, sales on small cryptocurrency exchanges, and at least one investment fund which were allegedly selling those tokens in the market.
Coinbase announced a couple of days ago that it’s adding Grams to their custody offering. Today, the SEC announced Grams are securities. How could the Crypto Rating Council not prevent this? 
Coinbase Announced Adding Grams to Custody Offering
A few days back Coinbase announced adding Grams to its custody offering.  Interestingly, the SEC announced today that Grams are securities and the crypto rating council could not do anything to prevent this. 
Source- Twitter
From the Co- Director’s Desk 
“Our emergency action today is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold. “We allege that the defendants have failed to provide investors with information regarding Grams and Telegram’s business operations, financial condition, risk factors, and management that the securities laws require. 
said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement. 
He further added 
“We have repeatedly stated that issuers cannot avoid the federal securities laws just by labeling their product a cryptocurrency or a digital token. Telegram seeks to obtain the benefits of a public offering without complying with the long-established disclosure responsibilities designed to protect the investing public.”
Was the Whole Idea of ICO Farce? 
TON was expected to go live by the end of Q3 of 2019. The only positive development around it was the Testnet launch earlier this year.
Francis Pouliot, a leading Entrepreneur in the space and Founder of BullBitcoin noted,
Where are the 1.7 billion dollars of the Telegram ICO? Afaik all they have to show for their 1,700,000,000$ of financing is this and as far as I can tell nobody seems to give a shit
Moreover, the ton.org site has not been developed as well. Pouliot also accused the issuers and investors of the token of scheming “shady public financing schemes” to launder money and dupe investors.
What will be SEC’s new verdict? Let us know, what you think in the comments below? 
The post Telegram’s $1.7 Billion ICO Halted by SEC appeared first on Coingape.
Source: CoinGape

Bitcoin and Crypto Derivatives Risks are Comparable to Oil and Natural Gas: Report

The Financial Regulator in the UK, the FCA (Financial Conduct Authority), recently proposed a ban on the sale of crypto ETNs to retail investors. Coinshares, Europe’s largest digital assets manager, presented a Response to the proposed rule – FCA CP19/22.
The FCA argues that cryptocurrencies are highly volatile, lack price discovery and intrinsic value. Hence, to protect retail investors from its adverse effects, FCA proposes a ban on all derivates or exchange notes.
However, CoinShares, which is lobbying against the proposal, affirmed that the ban should be restricted to CDFs and other high margin derivate products, and not 1:1 ETNs. The proposal letter noted,
CoinShares believes it is inappropriate to include delta 1:1q ETNs in the FCA’s proposal to ban CFDs and derivatives due to their fundamentally different risk profiles and investment characteristics.
Furthermore, the report also compared the volatility index of ETNs backed by traditional assets. It pointed out that some of the Commodity Deposit Forms (CDF) and other highly leveraged ETNs on “natural gas and oil pose similar volatility risks but are not being considered in the context of any retail ban.” The report also cited that,
“[Delta 1] ETNs pose similar risks to derivatives on tokens,” and we believe a ban on
ETNs should be considered separately from a ban on investor products that involve leverage, margin trading and are issued under an entirely different regulatory framework.
The brief raised numerous arguments on the validity of crypto markets. While the FCA noted that these are loss inducing assets, Coinshares reports healthy gains from these assets.
CoinShares Report on Performance of Crypto-derivatives
The FCA also argued that most retail investors are still in the dark on the utility of cryptocurrencies. The working mechanism and the pricing model is also unclear. However, the report cited that crypto is far better understood than other derivatives on the likes of ‘rhodium or EU carbon credits.’
Limited Institutional Interest
While 2019 saw a flurry of institutional level platforms for investment in Bitcoin and crypto, participation has been limited. Thomas Lee, the co-Founder of Funstrat, recently argued that the crypto space is “too small for the institutional world.” Even a 1% allocation to crypto from institutional firms will equate to massive proportions compared to the other trillion dollar markets.
He also tweeted,
we est Bitcoin active holders makes <500k today vs consensus of 25 million.
– means market is much earlier stage than widely viewed and thus much greater upside. Visa/Mastercard is 4-5 billion users
Hence, while the mediums of investment are opening up, Lee thinks that it is not more than a hobby.
Last but not least, even with a bubble, the previous ten years of crypto markets have been primarily led by retail investors. Therefore, there is a huge opportunity for further financial inclusion.
Do you think FCA’s views are justified given the market characteristics or retail investors must not be excluded from crypto investments? Please share your opinions with us. 
The post Bitcoin and Crypto Derivatives Risks are Comparable to Oil and Natural Gas: Report appeared first on Coingape.
Source: CoinGape

Funds Worth $1.2 Million From BTC Ponzi Stuck Because of India’s Crypto Banking Ban

The Pune Police in a recent update has sought a court directive to transfer a sum of Rs 85 million ($1.2 million). The sum was seized from a Bitcoin (BTC) Ponzi scheme last year. 
Funds Worth $1.2 Million Blocked
Per an article by leading national daily, Times of India, the cyber police have revealed that 244 cryptocurrency units (worth $1.2 million) have been blocked in the bank account of company Discidium Internet.  However, owing to regulatory uncertainty in India, the Central Bank of India is unable to transfer the money to the State Bank of India’s treasury branch in Pune; the reason being that the account of the Discidium Internet was frozen by the Reserve Bank of India (RBI). 
District government pleader Ujjwala Pawar said, 
“The police’s plea is pending before the sessions court. The RBI has furnished its reply to the court’s notice of September 17 to Praneeth Panjaria, the manager of the Department of Payment and Settlement Systems in Mumbai.”
Subsequently, the firm has challenged RBI’s order which has prohibited Indian residents from dealing in any sort of virtual currencies and requested the RBI to help with unfreezing the account. 
On the other hand, RBI in its reply on the 20th of September replied that the latter’s account was not frozen and nor had Central Bank been directed to do so. 
The Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019”, has proposed a 10-year prison sentence for anyone who holds, mines sell, transfers or deals in cryptocurrencies.  
A Ray of Hope For Crypto Asset Holders
While the regulatory uncertainty in India continues to prevail, Bitcoin pioneer, Member of Parliament and the founder of the BitInstant & Bitcoin Foundation, Rajeev Chandrasekhar in a recent interview said that India has the potential to become one of the largest crypto industries in the world. Furthermore, he said that the Indian government is not entirely against crypto – but it will take some time before it joins the crypto party. 
Will cryptocurrencies see the green light in the Indian sub-continent? Let us know what you think in the comments below!
The post Funds Worth $1.2 Million From BTC Ponzi Stuck Because of India’s Crypto Banking Ban appeared first on Coingape.
Source: CoinGape

Block.One Vs SEC – How EOS’ Parent Company Got Away With a Small Fine For its Unregistered ICO

EOS’ parent company, the Block.One was in the soup with the US SEC for conducting an unregistered Initial Coin Offering (ICO) in the US. While the crypto community was expecting the SEC to impose several penalties on the company, Block.One was let off rather lightly with just a $24 MM fine. Katherine Wu, former Director of Business Development at Messari, and the current Principal at Notation Capital have dissected Block.One’s settlement with the SEC to reveal that the key to getting away with violating SEC’s regulations is “be cooperative”.
Katherine Wu’s Take on the Waiver Letter from EOS’ Lawyers to SEC
The SEC had proposed a “Cease and Desist” order against Block.One for violating SEC’s regulations and conducting an unregistered Initial Coin Offering (ICO). The proposed order could have led potentially forced Block.One to put a stop to their operations.
The letter that was sent from EOS’ lawyers to the SEC sought “a waiver of any disqualification that will arise under Regulation A and Regulation D with respect to Block.one or any of its affiliates as a result of the entry of the Proposed Order.” The letter admits that the Block.One’s activities violated sections 5(a) and 5(c) of the Securities Act as the company sold unregistered securities to US-based persons.
But, the letter also points to the fact that the proposed order had described “activities that involve the offer and sale of a security, but do not involve a criminal conviction or a violation of any anti-fraud statutes – scienter or nonscienter based”. Therefore, “Block.one will not be held to a “greater” burden under the Division’s waiver policy”. According to Katherine Wu, this is a big win for EOS as the SEC said that there was no fraud or criminal conviction in the sale.
Source: https://static1.squarespace.com
The letter further explains how Block.One ensured the “Responsibility of Conduct”. It first explains how Block.One tried to disable US-based persons from purchasing the ERC20 tokens by using “geoblock” to prevent anyone with a US-based IP address from buying tokens on the EOS.IO website. It also stated that the company had made it clear in their purchase agreement that US-based persons were prohibited from buying the ERC20 tokens in the token sale, and that those purchasing the tokens had to establish that they were not US residents.
Then the letter tried to establish how Block.one had try to fix the damage done. The letter says that Block.One has hired new executives after the token sale – its new Chief Legal Officer, Chief Financial Officer and current General Counsel are “primarily responsible for ensuring compliance with securities laws generally and Regulation D or Regulation A specifically”. The letter also reveals that the members of the executive committee have been “educated by experienced outside securities counsel on procedures required for compliance with securities regulations generally and Regulation D specifically”.
Further, the letter elaborates on how Block.One’s team members are working towards ensuring legal and regulatory compliance. Wu takes a dig at Block.One by saying that it is trying to show that “there are grown-ups are EOS today.”
After establishing the strength of the EOS team, the letter tries to convince the SEC that its intention is to digital assets that are true cryptocurrencies and ensure that they are fully compliant with the requirements of the US securities laws. Block.One says that with a special reference to the Voice platform which it started on the EOSIO blockchain software in June this year.
“If the Voice tokens or any future digital asset developed by Block.one are made available to U.S.-based individuals by Block.one, or if Block.one allows for distribution or transfer of any such digital asset to U.S.-based individuals, Block.one has engaged and will continue to engage experienced U.S. securities counsel to work with its internal legal and compliance team to consider and apply such guidance in structuring the Voice platform, designing any distribution of the Voice token and managing public statements by Block.one.”
The letter repeatedly emphasizes on how it will not repeat its previous mistakes again – it will work closely with its securities counsel in any activities involved with Regulation D. Wu says that this is how Block.One got away with just a $24 MM fine – by being “cooperative”.
Block One’s Billion-dollar Fund
Next, the letter talks about how Block.One and third parties would be affected if the waiver was denied. It shares that a $1 Bn from the Token Distribution proceeds has been allocated towards offering “developers and entrepreneurs the funding they need to create community-driven businesses leveraging EOSIO software”. It further tries to convince the SEC that the denial of the waiver will lead to an inability of the company “to deploy capital for investment in securities issued by U.S.-based small businesses and growth-stage companies”. The same would not be beneficial for Block.one’s shareholders “as capital may be forced to sit idle rather than being deployed to growth-stage technology companies across the globe”.
However, the company also shirks off responsibility for delivering products that can be deployed. The letter says –
“Block.one is a growth stage company focused on developing novel, innovative technology. Block.one has spent and will spend large amounts of capital to invest in the research and development of new technology, but as in any R&D program, it is possible that many of these efforts may never be deemed viable for deployment.”
Block.One also stresses that disqualification from reliance on Regulation D will also limit the company’s fundraising options. According to the letter, the denial of the waiver is likely to be disadvantageous to Block.one as it will hinder “strategic growth partners, technology partners or acquisition targets that are essential to Block.one continuing to innovate, grow, support the EOSIO blockchain software and create value for its shareholders”.
Finally, the letter arrives at the request for a waiver from the disqualification of Block.one from relying on Regulation A and Rule 506 of Regulation D. The letter says that it is not “necessary”.
Source: https://static1.squarespace.com
The SEC Settlement
Block.One’s lawyers undoubtedly did a good job with convincing the SEC of the importance of letting go off Block.One without a harsh penalty.
The order mentioned various instances of Block.One’s violation of the laws. First, it mentioned that EOS has not ascertained from purchasers of tokens on the EOS.IO website if they were US-based persons or not. Secondly, it pointed to the fact that Block.One had actively marketed its ICO in the US. Block.One had participated in many conferences in the US, including a major one held in New York on May 2017, and marketed its ICO in the conferences. The company had also advertised EOSIO on a billboard in the Times Square around the same time. The EOS website, its white paper, social media handles, promotional statements, etc. were available to US-based persons.
Thirdly, during the token sale, the tokens were listed on many trading platforms that were available to US-based persons as well, and Block.One did not try to “prevent the ERC-20 Tokens from being immediately re-sellable to U.S.-based purchasers in secondary market trades”.
The order also described how the purchases of Block.One’s ERC20 tokens could have reasonably expected that they would profit from the efforts of the company. Firstly, Block.One was raising funds to build a profitable enterprise and it was easy for token holders to understand that if the company was successful in doing so, they would profit from the tokens.
Secondly, purchasers of tokens would have understood that Block.One was a for-profit entity. Thirdly, Block.One had announced the billion-dollar fund that it had allocated to help initiatives that “returned value to the network.” This could also be assumed as third-party efforts in aiding the growth of EOS tokens.
Fourthly, Block.One had “actively engaged U.S. purchasers and potential U.S. purchasers on social media, online message boards, and other outlets”. In marketing the EOSIO software, Block.one had also influenced US-based purchasers to rely on the expertise and vision of the EOS founders “to secure the widespread adoption of the EOSIO software and anticipated launch of one or more EOSIO blockchains”.
The order then established that in doing all of the aforementioned things, Block.One had violated section 5(a) and section 5(c) of the Securities Act. In simple words, it had offered unregistered securities to US-based persons.
However, despite having a very strong case against Block.One, the SEC let the company off with just a $24 MM fine and a warning to not engage in any violations of Section (a) and Section (c) of the Securities Act in the future. The $24 MM will be transferred to the general fund of the US Treasury.
SEC’s Decision Leaves Community Bewildered
The light penalty that Block.One has been given has left the crypto community bewildered with many questions. As Katherine Wu stated, perhaps, companies can get away with violations simply by being “cooperative”.
Marco Santori, the President and Chief Legal Officer also shared his analysis of the SEC order which seemed to suggest that the SEC had not looked at all the aspects of the token sale. According to Santori, the SEC had focused on the intermediary ERC20 token and not on the native EOS token which was ultimately launched on the blockchain. Secondly, Block.One’s token raised money from global investors, while the SEC was concerned only with US-based investors. The small fine amount could have been calculated on the basis of the money Block.One raised by US investors. The complete analysis can be found here.
Eric Voorhees, the CEO of Shapeshift.com tweeted that the most important part of the SEC settlement was the way the pre-product, pre-launch token and the post-product, the post-launch token was treated.
Source: Twitter
Crypto Researcher Larry Cermak took a dig at the SEC with his OP-ED piece titled “Don’t ask for permission, hire good lawyers and then ask for forgiveness”.
What do you think about SEC’s decision on EOS? Should EOS have been given a harsher penalty? Has the SEC done the crypto community a favor by not clamping down EOS’ operations? Share your views with us in the comments below!
The post Block.One Vs SEC – How EOS’ Parent Company Got Away With a Small Fine For its Unregistered ICO appeared first on Coingape.
Source: CoinGape

Libra May Lead To Creation of Separate Economy – EU AntiTrust Chief

The EU antitrust chief is all set to scrutinize Facebook Inc.’s plan as Libra could possibly lead to the creation of an entirely separate economy. 
Non- Users Will Be At A Potential Disadvantage
Per a recent Bloomberg report, the European Union antitrust- chief in an interview with Denmark’s finance industry union, Finansforbundet said that the EU is all geared up to unravel the real intentions behind Libra. 
“It’s a new thing that we’ve begun to ask questions about something that doesn’t yet exist. But it’s because we want to be far enough ahead that we can say whether this will be a problem.”
She has already started an investigation into Libra for the fact that it has a potential for anti-competitive behavior. This implies putting the parties who don’t use Libra at a disadvantage. Furthermore, she said that there are inherent financial stability concerns as the competition kicks in. It is highly likely that central banks will be the ones most interested in it. 
In a recent report, Cœuré, Member of the Executive Board of the ECB expressed the fact that while stablecoins are specifically designed to fulfill one more of the problems described, Libra was designed to efficiently solve those pertinent issues. 
A number of so-called “stablecoin” initiatives, backed by large technology or financial firms and built on blockchain technology, are designed to address at least one and, in the case of Libra, both of these failings. Although private digital forms of money have been around for decades, these new initiatives have access to large networks of existing users and customers, which suggests that they could be the first to have a truly global footprint.”
The interview is due to be published in full on the 11th of October. Some of the few questions which Vestager has been asked include the company plans to become a platform for commercial businesses to sell their products and services; what currencies will be accepted; and what does it mean for a company to have its own currency.
What will be Libra’s ultimate plight? Will it see green light by regulatory authorities? Let us know, what you think?
The post Libra May Lead To Creation of Separate Economy – EU AntiTrust Chief appeared first on Coingape.
Source: CoinGape

BitLicense May be Enforced in 5 More US States; Receives Pushback From a Lobbying Group

BitLicense may soon become a regulatory requirement for crypto businesses in 5 more US states. The Aquarian Advocacy Group (TAAG) which was officially launched the previous week is all set to defeat BitLicense legislation before it spreads its wings and tries to “crush innovation.”
Adverse Affect for Crypto and Blockchain-Based Business
Presently, only New York and Washington have BitLicense as a regulatory requirement. However, as per the Aquarian Advocacy Group, California, Hawaii, Nevada, Rhode Island, and Oklahoma could soon be adopting this regime. This, in turn, could adversely affect the crypto businesses in these states.  
The former was first introduced in New York in 2015 and is a business license that companies involved with crypto must receive if they are to carry out business activities in a given jurisdiction.
However, the regulation excludes those that utilize digital currency only for the purchase or sale of goods or services. Also, “firms chartered under the New York Banking Law to conduct exchange services and are approved by DFS to engage in Virtual Currency business activity” aren’t required to have BitLicense. Each firm that has BitLicense has to submit its quarterly financial statements within 45 days.
Furthermore, in order to deal with money-laundering, fraud, and cybersecurity, BitLicense requires companies to fulfill several requirements and compliance with its processes and policies.
Crypto Companies Would Need To Share Customer Data
The latest lawsuit filed by Pierre Ciric, the plaintiff’s lawyer stated,
“DFS, of its own initiative, and without the New York State Legislature’s mandate instructions, adopted a regulatory scheme (commonly called the ‘BitLicense’) to quash the growth of cryptocurrency-based businesses in New York.”
If in case the bill is passed, blockchain and crypto-based companies will have no option but to hand over consumer data to regulators. The companies will have to shell out expensive fines if they don’t comply. Additionally, the companies would need to incur the costs of enforcing such regulations. 
TAAG Executive Director Margaux Avedisian said, 
“We’ve seen in New York and Washington what happens when BitLicenses pass—a mass exodus of crypto companies from the states. There are already federal requirements, so adding unnecessary state requirements only serves to crush innovation. We are organizing the community to defeat these BitLicenses”
The group further states that the BitLicense’s implementation in California could be detrimental for the state of California as it is home to a large number of crypto startups. 
Part of California’s bill reads: 
“This bill would… enact the Uniform Supplemental Commercial Law… which would provide rights to virtual currency businesses and their customers based on Uniform Commercial Code provisions. In this regard, among other things, the bill would provide that a licensee or registrant… is a securities intermediary.”
Heavy Penalties for Crypto Companies
If the bill becomes the law, crypto companies in California would need to pay penalties worth  $50,000 per day for each violation. While TAAG is still in its nascent stage, the group is composed of both industry professionals and crypto investors throughout the U.S.. The group supports new legislation which seeks to boost crypto innovation while protecting individual rights. 
While the bill had its first reading in February, only a few people know about the bill’s existence. Interestingly, a large number of compliance officers had no clue about the bill.
TAAG Retains Support For The Battle Against BitLicense
The bill still has a strong chance of passing. It is backed by the American Bar Association, which has one of the most powerful lobbying groups in the country. However, TAAG is confident of defeating the bill. For the same, the group has retained political consultants that have experience in managing complex regulatory issues for a variety of industries.
This gives them time till January 2020 to garner support for their campaign and create a unified team before the bill gets its second reading in 2020. Now that TAAG has launched,  it is also likely that regulators could try and push the bill through early in the next session.  
Will BitLicense see daylight or will TAAG combat its ill-effects? Let us know, what you think?
 
The post BitLicense May be Enforced in 5 More US States; Receives Pushback From a Lobbying Group appeared first on Coingape.
Source: CoinGape

ECB Focuses On The Good Side Of Libra During Latest Hearing

The European Central Bank (ECB), in their latest hearing of Benoît Cœuré organized by the committee on the Digital Agenda on the topic of Digital currencies majorly focused on Libra. The testimony of Cœuré, Member of the Executive Board of the ECB, contained useful information as to the importance of a payment system like Libra and other similar initiatives, collectively known as stablecoins.
Libra And Stablecoins Initiative Designed To Solve Pertinent Issues
According to the report of the testimony, the current financial policies surrounding traditional banks are being disrupted from all sides. First, by tech start-ups and then by big tech firms that have a substantial digital footprint, whose business propositions have been so far based on non-financial activities.
Furthermore, as the traditional financial systems undergo active technological advancement, major problems are yet to be addressed; access and cross-boarder retail payments. It is on this premise that payment systems Libra was said to be of major importance.
The testimony of Cœuré expressed the fact that while stablecoins are specifically designed to fulfil one more of the problems described, Libra was designed to efficiently solve those pertinent issues. According to the report,
“A number of so-called “stablecoin” initiatives, backed by large technology or financial firms and built on blockchain technology, are designed to address at least one and, in the case of Libra, both of these failings. Although private digital forms of money have been around for decades, these new initiatives have access to large networks of existing users and customers, which suggests that they could be the first to have a truly global footprint.”
Problems Posed By Libra And Similar Currencies
However, there are major concerns around the adoption of Libra and other stablecoins initiatives. According to the hearing, stablecoins maintain substantial challenges across a broad range of policy domains. Top consideration issues include the possibilities of money laundering and financing of terrorism. Also, consumer and data protection, cyber resilience, fair competition and tax compliance. According to the hearing,
These initiatives raise formidable challenges across a broad range of policy domains. Of particular concern are the risks related to anti-money laundering and countering the financing of terrorism, as well as consumer and data protection, cyber resilience, fair competition and tax compliance.
Regulatory Effort To Globally Adopt Stablecoins
The committee further discussed regulatory procedure necessary to improve the adoption and use of Libra and other stablecoins initiatives. According to the hearing, in response to these concerns, an active group has been delegated by G7 finance ministers and central bank governors in order to examine global “stablecoins” into details.
The group is also expected to design and present policy recommendations during the IMF-World Bank Annual Meetings in October this year. The Financial Stability Board has also started looking into the regulatory implications of these initiatives and is expected to report to G20 ministers and governors.
The post ECB Focuses On The Good Side Of Libra During Latest Hearing appeared first on Coingape.
Source: CoinGape

Crypto Regulations: SEC Finds Itself in a Paradox in the Senate Meeting

The SEC Commissioners meeting with the House of Financial Services Committee in the US is underway and provides some insight on the crypto regulations in the space.
The Committee headed by Chairwomen Maxine Waters divulged on the issues related to retail investor protection from crypto-investments, share buy-backs, capital infusion and the shift from public to private investing space.
The panel consisted of the five commissioners of SEC: Jay Clayton, Rebert J. Jackson. Jr., Hester M. Pierce aka ‘crypto mom,’ Elad L. Roisman, and Allison Herren Lee. The concerns of the housing committee were focused on investor protection but also seeks the inclusion of investment opportunities for retail investors.
On Libra
Remember the Libra Senate hearing with its’ head David Marcus? The senators don’t seem to have changed their minds. Chairwoman Waters cited that the US, France, Germany and many other countries have raised opposition to it.
Senator Brad Sherman was particularly dismissive of the project. He said,
It is clear that Libra will be a mutual fund. Mark Zuckerberg has a lot of money, but he does not have the power to print more.
Furthermore, the Senator was also not in favor of the ideas of cryptocurrencies and digital assets in general as they provide avenues for tax evasion, terrorist funding, and Ponzi schemes.
On Crypto Regulation and Token Taxonomy
One of the most pressing questions of the Committee were around token taxonomy. While the panel avoided speaking specifically about assets. Chairman Jay Clayton told the senate in an important note,
Crypto Assets while they have benefits, including eliminating friction alike.. can present a great deal of risk…
Particularly in cases where in-form they are the same as securities or same as currencies or same as payment systems, but they are not regulated in the same way… We have a developed an ecosystem of financial regulations over the years: securities, commodities, currencies…
The extent a crypto-asset will be used to evade those regulations. I have a problem with it.
Interesting Paradox in-front of Regulators
Due to the ambiguity in projects like Libra and crypto assets, the SEC suggested that they have to view the performance of these assets before making any comments.
However, it raises a paradoxical situation, as the current guidelines of the SEC are not enforcing and do not clearly define a ‘black and white’ test.
Senator Anthony Gonzales pointed to this dilemma faced by investors. He said,
What I heard is ‘we’re not going to know if it’s a security till we see it operate,’ and what I’m hearing from companies is ‘we’re not going to operate until we know whether we’ll be dinged for a security or not.’
The Senate expects the agency to expedite the process of defining crypto-laws more clearly.
Nevertheless, Clayton also mentioned that the SEC doors are open to innovators and entrepreneurs alike. They just require to register a particular asset and then they are good to go.
How do you think this meeting will shape crypto-laws? Please share your views with us. 
The post Crypto Regulations: SEC Finds Itself in a Paradox in the Senate Meeting appeared first on Coingape.
Source: CoinGape

“Indian Govt. Will Eventually Join the Crypto Party ” Says Indian Billionaire & Politician

Bitcoin pioneer and the founder of BitInstant & Bitcoin Foundation feels that India has the potential to become one of the largest crypto industries in the world. In an interview with Rajeev Chandrasekhar, an Indian billionaire and Member of Parliament, he found out that the Indian government is not entirely against crypto – but it will take some time before it joins the crypto party. 
How is the Rise of Crypto Different From That of the Internet?
India is a country which is still grappling with the issue of how to regulate cryptocurrencies – to ban them or not to ban them. The central bank of the country, The Reserve Bank of India (RBI), imposed a banking ban on crypto last year and since then, a lot of cryptocurrency startups have either shifted their base out of the country or closed operations. There have been numerous Supreme Court hearings around the ban, but so far, no resolution has been reached.
Bitcoin pioneer Charlie Shrem recently interviewed Indian billionaire and politician, Rajeev Chandrasekhar to discuss the situation of crypto in India. One of the topics discussed was how the rise of cryptocurrencies is different from the early internet in the last two decades of the 20th century. To that, Chandrasekhar said that during the early days of the internet, there were no regulators to check the internet. But, the internet is far more evolved now, and regulators in the internet space are already involved in all the developments that are concerned with the internet. He says, 
“But, in this case, in the crypto space, is given… There’s almost like a perfect storm that is facing the growth and the innovation momentum of crypto. Which is, you have the law and order and the terrorism, and the cyber security concerns on one hand, and you have the particularly heightened awareness about the internet not being all good, and having some potential of these little evil pockets of sort of resting within them. And therefore, the regulators using that as justification to, sort of, snoop around or get more involved.”
Charlie Shrem agreed with Chandrasekhar and mentioned the “India Wants Crypto” movement which had got millions of impressions. He remarked that the Indian government was just trying to protect people, but on the other hand, the government had also not tried to involve crypto supporters in developing regulations around cryptocurrencies. Shrem then asked Chandrasekhar if going to be regulations around crypto in India, the way they had been developed when cellular technology had made it to the country.
To this, Chandrasekhar responded that the “policy framework and our ability architecture is really playing catch-up”. 
India Played Safe by Shutting the Door on Crypto
Shrem commented that the crypto community across the world was growing India had the power to become one of the largest crypto industries in the world. He then asked Chandrasekhar about why did RBI take the stance of banning crypto. 
To this, Chandrasekhar responded that it was hard for the government or anyone in the public space to respond to the problems posed by cryptocurrencies with the same kind of efficiency as the innovators in that space. Therefore, they made an instinctive response by “bolting it into some room and shutting the door.” He also expressed his displeasure at the way things were handled on that front. 
“It is not the way that, I would like it. I would not want innovation to be trampled by a paranoid approach to regulation. Because, paranoid approach to regulation just means let’s… You know, safest way to handle things is just shut the door on everything, and just say no innovation, and nobody will be worried about anything except in the consumer room, who suffer with limited choice in terms of innovation.”
Indian Govt. Will Join the Crypto Party Eventually
On the topic of how the government was going to tackle the issue of regulating cryptocurrency, Chandrasekhar cited the example of how the present government had dealt with the issue of net neutrality and how it had decided to not distort the free and open nature of the internet because a few telecoms wanted it. Chandrasekhar said that the government was going to deal with this issue too like any other issue. He even encouraged crypto enthusiasts to talk to him and have confidence in his ability to present their views to people in the government to persuade them to do the “right thing”. 
“So, that conversation applies even to crypto, and I think, it is in sort of making this about government versus innovators, I actively encourage people to come sit with me, and believe in my ability to articulate their positions, and their points of view to people in government and their leadership of the government, and hopefully persuade them to do the right thing.”
He also expressed that the biggest issue the government with cryptocurrency was crypto’s association with unaccounted wealth, a problem that India had been struggling with for several decades.
“So, when you talk about crypto, the natural concern, or paranoia, would be, by creating this, are we going back? Or are we moving, transitioning from a cash economy, cash black economy to something that is even less traceable, and more difficult to crack. Because, cash is, at the end of the day, you can always, you know, go to somebody’s house and find out stacks of cash, currency also been piling up there, or not. This is, a lot more sophisticated, and definitely not something that a normal constable on the beat can pick up on, so.”
Shrem then questioned Chandrasekhar about how what percentage of politicians had a crypto-friendly stance. To this, Chandrasekhar responded –
“You can safely assume that, a lot of the government and members of parliament will come a little late to that party and they will, sort of eventually get there,” 
Do you think that the Indian government will eventually accept crypto? Or will the banking ban on crypto turn into a strict blanket ban? Share your views with us in the comments!
The post “Indian Govt. Will Eventually Join the Crypto Party ” Says Indian Billionaire & Politician appeared first on Coingape.
Source: CoinGape

Crypto Adoption: Australia Grants Financial Services License to This Crypto Company

Living Room of Satoshi (LRoS) is the first Bitcoin company in Australia which has been granted an Australian Financial Services License.
LRoS officially broke out this announcement on August 22, claiming itself as the “first bitcoin company in the burgeoning Australian cryptocurrency industry” to get this license.  It’s important to note that the Australian financial Service Licenses (AFSL) are issued by the Australian Securities and Investments Commission (ASIC). Every Australian business that is involved in the provision of financial services must obtain an AFSL license.
Living Room of Satoshi Becomes the First AFSL Licensed Bitcoin Company
Source: Twitter
While Australia is known for its positive attitude towards crypto-blockchain startups, the country has strict regulations in place for crypto-focused businesses to operate legally within the nation. LRoS, by becoming the first bitcoin company to get the AFSL license, has reaffirmed Australia’s crypto-friendly stance. Launched in May 2014, LRoS is the oldest crypto payment company which has reportedly processed over $100 million worth of Australian bills using Bitcoins. LRoS enables customers to pay cryptocurrency for various utilities including phone bills, electricity bills, credit cards, school fees, taxes and more.
Daniel Alexiuc, the CEO of Living Room of Satoshi (LRoS) excitedly said in a statement
“This achievement is the first of its kind in Australia and is a testament to our great team”, noted Alexiuc. “The license allows us to expand the scope of Bitcoin payments in Australia, with larger bill payments for consumers, and full-service payment facilities and APIs for businesses.”
Crypto Eco-system in Australia
While most countries are still grappling with the question of how to regulate crypto, Australia is already formulating regulations around cryptocurrencies that allow them to grow in a secure environment. Similar to Switzerland and Singapore, Australia’s stance on the crypto industry is attracting investments in the space from global players. U.S based crypto exchange, Gemini, with its new branch, is the latest to join the list of crypto companies that are serving the crypto savvy Australians.
Gemini exchange is initially offering crypto trading services for five cryptocurrencies including Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Zcash on its Australian crypto trading platform.
Coingape had reported in early February 2019 that crypto trading platforms operating in the country must get registered with the country’s financial authority, AUSTRAC (The Australian Transaction Reports and Analysis). AUSTRAC, though it is encouraging pro-crypto regulations, it also wants to ensure that the crypto exchanges operating within the country must comply with KYC-AML rules and take measures to prevent the use of cryptocurrencies for crime.
The post Crypto Adoption: Australia Grants Financial Services License to This Crypto Company appeared first on Coingape.
Source: CoinGape

China Expedites its Digital Currency Plans to Special Economic Zone in Shenzhen

China which is working on the ‘Digital Renminbi,’ popularly known as Chinese Yuan in the west. Reportedly, the Central Committee of the Communist Party of China and the State Council, China’s cabinet, has issued a new set of guidelines for one of the four Special economic zones in China – Shenzhen.
According to the guidelines, the authorities will,
Support innovative applications such as digital currency research and mobile payment in Shenzhen. Promote interoperability with Hong Kong and Macao financial markets and mutual recognition of financial (fund) products.
Shenzhen is the hardware manufacturing hub of the country and one of the most important industrial areas in the country. It has some degree of economic freedom given by China as an exclusive economic zone.
The PBoC had not revealed the complete design of its Digital Renminbi plans. Mu Changchun, the Central Bank’s Chief Deputy, had said earlier this month that the currency is ‘nearly ready’ for launch.
However, it had asserted two critical characteristics of it. It won’t be a cryptocurrency. Nevertheless, it will be interoperable with all payment systems in the world, including cryptocurrencies.
China is promoting digitalization of its currency intending to ‘internationalize’ the Renminbi. This would benefit the economy of China as its currency demands would increase. It added in the guidelines,
In the promotion of the internationalization of the renminbi, we will pilot and explore innovative cross-border financial regulations.
It comes at the wake of the Libra announcement, which aimed to provide a global currency to the world backed by a basket of currency/assets. China, which has already implemented digital payments through Alipay, Tencent, and Ant Financial, now further aims to expand the Renminbi globally.
Do you think that China will be successful in developing a global interoperable currency without using cryptography? Please share your views with us. 
The post China Expedites its Digital Currency Plans to Special Economic Zone in Shenzhen appeared first on Coingape.
Source: CoinGape

Crypto vs RBI – Latest Hearing Reveals Central Bank’s Ban on Crypto is Illegal

Ahead of its 73rd Independence Day, there was a hearing on cryptocurrencies in the Indian Supreme Court today. While the court has adjourned the case to August 20 with mixed statements on crypto regulations, a significant point that emerged in the hearing was that the banking ban imposed on cryptocurrencies by India’s central bank, RBI, is illegal.
RBI’s Circular Banning Banks To Deal Crypto Was Illegal
On 15th August 2019, India will celebrate its 73rd Independence Day, but unfortunately, the Indian crypto community is still beset with the banking ban on Crypto. According to a thread published by Crypto Kanoon, an Indian platform for crypto regulatory news, today’s hearing highlighted that “RBI’s involvement to restrict banks dealing with crypto during April 2018 was illegal”.
Indian crypto investors, enthusiasts, and traders have been waiting for over a year to hear from the Supreme Court on its stance on cryptocurrencies after RBI’s banking ban. Though the rise of P2P exchanges have paved alternative ways to invest and trade in cryptocurrencies in India, however, the lack of a regulatory framework around cryptocurrencies is not conducive to their development. Despite many discussions between the Supreme Court and industry bodies, the issue remains unresolved.
On August 14, 2019, the case was listed and Mr Ashim Sood, Counsel for IAMAI took charge and explained why crypto needs support from the banks. It is worth noting that the RBI cracked down on banking support towards cryptocurrencies in India in 2018 and since then, investors have been unable to use their bank accounts for accessing the services of crypto platforms. Counsel Mr Ashim points out that the RBI taking actions against consumers’ interest is not within the scope of legality. Following the Counsel’s view, the Judge quickly remarked that RBI’s action against Private businesses in the form of 6th April circular is illegal.

Judgement summarises that RBI cant step out of its powers as set out in Banking regulation Act. Therefore its action against private buisinesses in the form of 6th april circular is illegal.
— Crypto Kanoon (@cryptokanoon) August 14, 2019

RBI Has No Power To Exercise Ban on Crypto
In the hearing, it was explained by the counsel that RBI’s banking ban doesn’t comply with the banking regulation Act which means that the central bank can only rule the inner working of banks and not private businesses. The counsel asserted that the RBI could not step out of its powers set out in the banking regulation Act.
The counsel also pointed to how the RBI has overstepped its role. In India, since there are no specific regulations around cryptocurrencies as yet, and so, they are neither coins nor currencies. Therefore, the RBI Act and Payment Settlements Act do not apply to Cryptos.
Counsel says that RBI in its reply itself admits that RBI does not have jurisdiction to speak on the legality of Crypto as it is neither coins nor currency and RBI Act and Payment Settlements Act are not applicable on Cryptos.
Also, the counsel strongly urged that “the decision to ban or regulate should have come from the legislature instead of RBI”.
The counsel also presented to the court facts about how other G20 nations including Japan, Australia, USA, UK and Saudi Arabia were regulating cryptocurrencies. They (Counsel) referred to UK’s regulatory body Financial Conduct Authority’s (FCA) announcement that classified crypto tokens into three categories; exchange tokens, utility tokens, and security tokens. CryptoKanoon also stated that New York’s approach to crypto regulations were put forth in detail and the Judge found that interesting.
With this, the counsel urged the court to consider regulations for crypto assets in India.
The hearing ended with the Counsel saying that cryptocurrency, like every other technology had “detrimental effects”, but these detrimental effects needed to be regulated like other countries were doing.
So readers, what do you expect from the upcoming hearing on crypto v/s India? Let us know in the comments below
The post Crypto vs RBI – Latest Hearing Reveals Central Bank’s Ban on Crypto is Illegal appeared first on Coingape.
Source: CoinGape

Roubini’s “The Great Crypto Heist”, Amid CFTC Probe BitMex Bleeds $524M in Outflows

Nouriel Roubini’s aka Dr. Doom’s severe censure of the crypto derivatives platform, BitMEX, has reportedly landed the company in serious trouble. BitMEX, amid rumors of a full-fledged CFTC probe, experienced $524M in outflows in July while the rest of crypto community enjoyed a bull-market. 
Did Arthur make a mistake by meddling with Permabear Roubini?
The chain of events leading to BitMEX losing over half a billion dollars started with a debate between Nouriel Roubini, economist and crypto skeptic and Arthur Hayes, CEO of BitMEX. 
At the 2019 Asia Blockchain Summit at Taipei, Roubini was invited to debate with Hayes on the subject of cryptocurrencies – whether they are a scam or the future. Just a few days before the debate, Roubini had tweeted on an update by BitMEXResearch about BitMEX achieving over $9 billion in trading volume and $1 billion in open interest on the Bitcoin perpetual swap contract. Roubini’s comment implied that these figures were not reliable as 95% of all bitcoin transactions on a typical exchange were fake.
Source: Twitter
In the debate, Roubini maintained his typical hostile attitude towards cryptocurrencies.
He claimed that the cryptocurrency industry was characterized by “shitty behavior” with scammers and criminals and that Bitcoin was not “not secure, not decentralized and is not even scalable”. 
He also shared his view on other emerging technologies including artificial intelligence (AI), Big Data, the Internet of Things (IOT) saying that the revolution in the fintech space was already happening with these technologies and it did not need cryptocurrencies. “We don’t need that cesspool of stinking shi*coins,” stated Roubini. 
Hayes argued for the value propositions offered by cryptocurrencies, especially digitization of money and decentralization. “In 50 years, if Alibaba, Facebook, and Google control everything, people will like that thing that isn’t controlled by the large companies. Bitcoin won’t be a niche market,” Hayes emphasized.
The debate also saw discussion around fake volumes on crypto exchanges, regulatory uncertainty and Facebook’s upcoming Libra cryptocurrency.
Roubini’s “The Great Crypto Heist”
Nearly two weeks after the debate, Roubini attacked cryptocurrencies again with his article “The Great Crypto Heist”. The article began with inflammatory remarks on cryptocurrencies and regulators’ attitude towards them –
“Cryptocurrencies have given rise to an entire new criminal industry, comprising unregulated offshore exchanges, paid propagandists, and an army of scammers looking to fleece retail investors. Yet, despite the overwhelming evidence of rampant fraud and abuse, financial regulators and law-enforcement agencies remain asleep at the wheel.”
The article went on to describe the problems with BitMEX, namely, its unregulated nature and that it’s business model that involved “ peddling to “degenerate gamblers” (meaning clueless retail investors) crypto derivatives with 100-to-one leverage”. Roubini further explained that “with 100-to-one leverage, even a 1% change in the price of the underlying assets could trigger a margin call and wipe out all of one’s investment”.
Further, Roubini accused the platform of charging high fees and drawing the investors’ savings into a “liquidation fund” that was disproportionately large for avoiding counter-party risk. The crypto skeptic also shared that BitMEX insiders had revealed to him that the exchange was not doing anything to stop terrorists and other criminals from Russia and Iran who were using the exchange for money-laundering at a massive scale. 
The platform’s condemnation continued with Dr. Doom saying that it was not following adequate AML/KYC regulations and that US and UK investors, who were not allowed to use the platform due to regulations, were using it anyway by masking their IP addresses with standard VPN applications.
The severe consequences for BitMEX
Rumors suggest that the article and the Taipei tangle triggered CFTC’s probe into BitMEX’s operations. The probe, reportedly aimed at investing US investors’ accounts on BitMEX was announced on July 19, and by the end of July, the platform had experienced over half a billion dollars in outflows. 
BitMEX’s website has also dropped in popularity. From its #11,851 rank on July 19, it has dropped to #12,763 on Alexa.com. BitMEX’s Twitter account was last updated on July 15, while Arthur Hayes also went silent on Twitter on July 12 and updated his account with a cryptic tweet on July 31. 
Hayes’ tweet has been trolled by Twitter users and they have accused him of being a coward and going undergoing when his company is going through a probe. 
The post Roubini’s “The Great Crypto Heist”, Amid CFTC Probe BitMex Bleeds $524M in Outflows appeared first on Coingape.
Source: CoinGape