QuadrigaCX Prompts Regulators to Move: Will Canada Clampdown on Crypto?

The QuadrigaCX debacle that has gripped the crypto space so far this year has evidently not gone unnoticed by Canadian financial regulators. In a consultation paper, the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) appealed for the input of various crypto market participants to help with a proposed regulatory framework to address investor protection in the space.
The paper seeks input on areas including custody, asset verification, price determination, and market surveillance. All comments regarding the paper must be submitted by May 15.
CSA and IIROC Seek Input on Crypto Regulatory Framework
Canadian regulators have been spurred into action following the recent QuadrigaCX case in which the CEO of a Canada-based crypto exchange supposedly died with the only access to the company’s funds in cold storage. After various twists and turns in the narrative, including allegations of “fake death mafias” and the missing crypto never being there to begin with, those QuadrigaCX customers that have lost out due to the fiasco are still no closer to having their money returned.
Presumably in response to this (or at least accelerated by it), IIROC and the CSA published a joint consultation paper earlier today seeking members of the cryptocurrency community to comment on a range of issues that would potentially impact upon how the space is eventually regulated.
The paper goes by the catchy title of: “Joint Canadian Securities Administrators/Investment Industry Regulatory Organization of Canada Consultation Paper 21-402 Proposed Framework for Crypto-Asset Trading Platforms”. It proposes that crypto exchanges be required to be registered as marketplaces, investment dealers, or both. This will depend on the nature of assets traded at the platform, as well as other considerations.
In a summary of the paper, CSA Chair and President and CEO of the Autorité des marchés financier, Louis Morisset, is reported to have said:
“Platforms have told us that a tailored regulatory framework is welcome as they seek to build consumer confidence and expand their businesses across Canada and globally.”
The CEO and President of IIROC, Andrew J. Kriegler added:
“The emergence of digital and crypto assets continues to be a growing area of interest for regulators, investors and marketplaces – and, together, securities regulators are taking steps to deepen our understanding of this area.”
He went on to state that it was important to adapt to technological innovations such as cryptocurrency and that regulations should be tailored to “unique business models”. Yet he asserted that maintaining investor protection was also paramount to the role of regulators.
The paper goes on to state that both the CSA and IIROC are keen to work with international regulators and welcome discourse on a variety of different approaches.
From the wording on the crypto consultation paper, despite the fact that hundreds of millions of dollars are currently in limbo thanks to the mismanagement of QuadrigaCX’s custody solution, it still seems that Canada’s lawmakers are keen to nurture the ever-growing digital asset industry, rather than clampdown hard on it. The kind of tailor-made regulatory approach that it calls for is certainly encouraging for the future of the space.
 
Related Reading: After QuadrigaCX Fiasco, Another Shady Bitcoin Exchange Surfaces in Canada
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NASSCOM-Avasant calls for ‘proactive, consultative and defined regulatory approach’ to cryptocurrency

India’s National Association Software and Services Companies (NASSCOM) released a comprehensive report before a panel detailing the present scenario in India’s blockchain and more specifically, the cryptocurrency space.
At the recent NASSCOM Technology and Leadership Forum 2019 in Mumbai, Vice President of NASSCOM, Sangeeta Gupta and Akshay Khanna, presented the report ‘Blockchain: Hype to Hope,’ which elaborated on the current state of the blockchain market as well as emphasized the opportunities present across both India and globally.
This report stated,
“India needs to act fast & work with key stakeholders to provide regulatory certainty around Blockchain & Cryptocurrencies”
The NASSCOM-Avasant report stated that few sizable home-grown crypto exchanges suffered after the RBI directive to disable trading.
NASSCOM President, Debjani Ghosh, stated that the expenditure in the technology space had been the highest in the past five years. However, stats revealed that the funds deployed into the blockchain sector have not been utilized to drive growth due to the lack of legal clarity. The NASSCOM Report stated,
“Despite VC investments pouring in blockchain, India had less than 0.2% of global investments due to uncertain policy & regulatory environment”
The report further provided insight into the Indian states that have forayed into blockchain by developing new projects. The governments of these states have taken an initiative to provide a ‘conducive framework’ to bolster growth and investment for the firms.
The findings of the report also observed that the BFSI [banking, financial services and industrial] sector identified the use cases and initiated experimenting in the blockchain space. Healthcare, retail and logistics sectors also witnessed a soar in adoption.
Many countries employ existing trade regulations for blockchain and 7 countries developed exclusive Blockchain/DLT-specific regulation, while Japan recognizes crypto assets including Bitcoin [BTC] registered under the Japanese Financial Services Agency, as legal tender.
Paving the way for active adoption with legal clarity is what the country’s investors and the stakeholders anticipate in order to steer India’s blockchain startup industry forward. Swapnil Bhatnagar, Avasant’s Research Director and lead author of the report, stated,
“Blockchain projects now go through stringent business case evaluations and this is a true indicator that there is, indeed, hope beyond hype for blockchain.”
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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

Coinfloor Becomes First Exchange Licensed Under Groundbreaking Gibraltar Legislation

The U.K.’s oldest cryptocurrency exchange has become the first company to be licensed by Gibraltar’s progressive blockchain legislation.
The rules are a first for Europe and highlight the British Overseas Territory’s commitment to exploring technological innovations.
Gibraltar Focusing on “Quality Not Quantity,” Coinfloor Proves Itself Worthy
According to a report in the Financial Times, Coinfloor has proved itself worthy enough to receive the first licence from Gibraltar under its groundbreaking blockchain legislation.
The exchange will be regulated as a “distributed ledger technology (DLT) provider.”
Just as they did with online gambling early this century, Gibraltar have taken the lead when it comes to legislating the digital currency and blockchain startup space.
The British Overseas Territory has long been an attractive location for virtual casinos since it demands incredibly low taxes from firms based there. With the blockchain-specific rules introduced earlier this year, they are hoping to have similar successes with companies focusing on the fintech innovation.
The legislation is a first for Europe.
However, the likes of Malta have been working on similarly attractive regulations to try and lure startups to the island.
Some believe that Malta will eventually prove a more suitable hub for blockchain firms to base themselves since there is considerable uncertainty over how Gibraltar will be impacted by the U.K.’s decision to leave the EU next spring.
Obi Nwosu, the CEO of Coinfloor, commented on the new licence to the Financial Times. He told the publication that the exchange platform was tested on “nine principles”.
The aim of these is to ensure that firms licensed in Gibraltar have sufficient anti-money laundering (AML) and know-your-customer (KYC) protections in place. The exchange also had to prove its security is robust enough to withstand the kind of cyber attacks that have plagued the cryptocurrency exchange industry over the years.
Nwosu commented on the licensing process under Gibraltar’s new legislation:
“What impressed us was that this [legislation] was in the works for a long time… It’s been well thought out, well considered. They are focusing in on quality over quantity.”
Despite landing the first license of its kind from Gibraltar, like many companies, Coinfloor has been having something of a hard time during the bear market of 2018. In the wake of lessening demand, the U.K. exchange platform has had to lay off around 40 jobs. Nwosu commented on the restructuring:
“It’s never desirable to make these changes, but it’s a natural part of the market cycle… The market has contracted and you should make appropriate changes to your team . . . It’s happening across this space.”
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Bitcoin [BTC] and other cryptos need to have regulations that do not harm them says US regulator

On 14th September, in an interview with CNBC, J. Christopher Giancarlo, the Chairman of the United States Commodity Futures Trading Commission [CFTC] spoke about regulations and how they need to be conducted in such a way that the commodities are not harmed.
The Chairman stated that the world, financial bodies, in particular, was at a very different place than what it was 10 years ago. He stated that the circumstances and situations were at very different polarities right now compared to the catastrophic market crash that occurred back in 2008. He also talked about how financial perspectives and regulations had changed after the crash of Lehman Brothers and its resulting blowup of the Great Recession.
The Commodity Futures Trading Commission was one of the first bodies that had called cryptocurrencies a ‘commodity’ bringing it into the fore of marketable trade entities. The body is also responsible for overseeing other commodities, trade futures, and the derivatives market.
Giancarlo also spoke about how quickly the United States had allowed Bitcoin futures to be traded within the country and rebutted arguments that stated that the US was too slow in processing matters related to Bitcoin and other cryptocurrencies. The official also went on to say that “no other regime in the world would have allowed the futures program to go forward.”
This statement was backed up by the fact that Crypto Facilities, a Financial Conduct Authority [FCA] regulated authority had stated that the organization would be launching new future contracts for major cryptocurrencies like Bitcoin [BTC], Ethereum [ETH, Litecoin [LTC], Bitcoin Cash [BCH] and XRP. Crypto Facilities’ tweet stated:
“We have just launched Perpetual Futures on XBT/USD. And world’s first Perpetual BCH/USD, ETH/USD, XRP/USD, LTC/USD, and XRP/XBT contracts Use Bitcoin, Ether, Litecoin, XRP & BitcoinCash as collateral to trade 24/7!”
Christopher Giancarlo was candid in stating that the population enjoys commodities such as the internet because of the ‘do no harm’ approach taken by regulatory bodies. He went on to say that such an approach is what governmental bodies are taking towards cryptocurrencies too. According to him, people need to be careful of entities like cryptocurrencies because of its volatility as well as the sheer number of scams and frauds affecting it. He said:
“When it comes to fraud and manipulation, we need to be strong. When it comes to policy making, I think we need to be slow and deliberate and well informed.”
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Waves Platform Negotiating with Malta Government Amidst Growing Relocation Trend

The Waves Project’s CEO, Sasha Ivanov, is engaged in negotiations with the Maltese government in an effort to gain all the proper accreditation in order to run their operations on the island. The news comes amidst a growing trend of cryptocurrency and blockchain companies moving to Malta in order to be in a country with a friendly regulatory environment.
‘Blockchain Island’ Growing in Popularity
In a Medium post from Wave’s official blog, the blockchain company explained that they are in the process of moving their platform to the Mediterranean island nation and are currently discussing what benefits the company’s blockchain solutions can bring to the island’s infrastructure.
The Medium post notes that:
“Waves attended a meeting with government representatives and other interested parties on the island to discuss technological cooperation in the fields of healthcare, land registry, voting and other areas, as well as proposals to use Waves as a platform for tokenised financial instruments.”
The Waves Project was founded in 2016, and currently offers a crypto wallet, a decentralized exchange platform (DEX) and a tool for releasing tokens. They also offer a crypto token – WAVES – that can be used to trade with fiat currencies and to purchase various cryptocurrencies offered on their platform.
The Waves founder and CEO spoke about the move to Malta:
“We are interested in this accreditation and are ready to start working with Malta’s legal experts to bring our ready-to-use blockchain solutions here: Waves for the financial sector and Vostok for the government and corporate sectors.”
The Growing Trend of Crypto Companies Moving to Malta
The Waves Project is currently based in Moscow, and the move to Malta is due to the crypto and blockchain friendly environment. Recently, multiple other cryptocurrency companies have moved their operations to Malta, including Binance and BitPay.
Many countries, including Japan and South Korea, have increased their regulatory requirements for cryptocurrency exchanges, which has led many of these companies to find countries that offer more benefits to crypto companies in order to increase their economic output.
Malta’s Prime Minister, Joseph Muscat, discussed Malta becoming a blockchain hub, saying that:
“Over the last months, the Maltese government has actively solved how to position Malta as a major hub in terms of the digital economy, which will play a central role in the economic sustainability of the years to come. The Maltese government has legislated three acts that will provide legal certainty to this space, involving DLT and digital financial products and services such as virtual currencies and ICOs.”
The move to encourage blockchain companies to base their operations out of Malta, which is an incredibly small country, is strategic, as these companies will add jobs and economic stimulus to the country, while also increasing the government’s tax revenue.
The Junior Minister for Malta’s Financial Services, Silvio Schembri, spoke about Waves’ move to the island, saying:
“Malta is going through exciting times with world-renowned names associating themselves with us,” adding that he is “looking forward for even further cooperation with the Waves Platform in the coming weeks.”
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Report: EU Finance Ministers Should Introduce Common Crypto Regulations

A new report prepared for European Union finance ministers has found that the government’s regulatory authorities should introduce common rules regarding crypto regulations, including how they are bought, sold, and traded.
The report comes just a couple days before the EU members finance ministers meet in Vienna to discuss cryptocurrency regulatory frameworks.
The report, which was prepared by Bruegel, a Brussels-based think tank, argues that the EU ought to develop clearer rules regarding cryptocurrencies and Initial coin oOfferings (ICOs) in order to better control investor risks and incubate growth for the industry.
Document Comes Days Before EU Meeting Regarding Cryptocurrency Regulations
The new document, which was exclusively seen by Reuters, will be presented to regulatory authorities this Friday and Saturday during the Vienna meeting. The meeting’s sole goal is to better develop a cohesive regulatory framework for cryptocurrencies, which are thriving in Europe.
Although it is unclear how harsh the regulatory measures taken by the EU finance members will be, many European regulators have taken a positive stance towards cryptocurrencies. In a meeting note obtained by Bloomberg, regulators notably mentioned that they see ICOs as an “efficient way to raise capital” and that they must consider how cryptocurrencies can affect, and even modernize, the current economic system.
European companies have been taking unprecedented steps to research the effectiveness of ICOs as a means of fundraising, which was likely one of the catalysts that sparked the meeting. Currently, 30% of the projects funded through an ICO are based in Europe, making it one of the largest geographic markets for ICOs.
In their report, Bruegel recommends looking at regulating cryptocurrency exchanges rather than cryptos themselves, mainly due to the virtual and decentralized nature of cryptocurrencies, which makes them incredibly difficult to regulate.
Other countries are notably taking similar actions to regulate the instruments for buying, selling, and trading cryptocurrencies. The Japanese regulatory authority, the Financial Services Agency (FSA), has been taking measures to hold cryptocurrency exchanges to higher standards. It is doing so by developing operational licenses and conducting regular exchange inspections.
The increase in regulations by multiple countries is inspiring many crypto exchanges to relocate their headquarters to locations with lax regulations. Binance, one of the largest cryptocurrency exchanges in the world, made the move to Malta earlier this summer, mainly due to the crypto-friendly environment fostered by the Maltese government.
As reported by Reuters, Bruegel discusses exchanges moving to regulatory friendly countries like Malta, saying:
“…the report also said exchanges seeking jurisdictions with lighter regulation might need to be tolerated for some time ‘to experiment and learn about the best approaches to this fast-developing technology.’”
Bitcoin’s price dropped 5% to just over $7,000 from its 24-hour highs of nearly $7,400 earlier today, but it is unclear if the price action is in any way related to the potential increase in regulations by the European Union.
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Bank of England Slammed for Falling Behind Regulating Crypto

The Bank of England (BoE) has been criticized in a UK Treasury Committee during a hearing on Digital Currencies on July 4. Three senior government and banking officials denied the claim, arguing that a taskforce is underway to provide clear guidance over what crypto regulations need to be imposed.

MP: “Facebook Leading the Way”

In the hearing, Labour MP Wes Streeting praised Facebook for ‘having to lead the way’ in banning crypto adverts even though it has recently reversed its position. He argued that private companies are getting on with controlling the market while regulators were falling behind. This led to a defence by all three panel members who said that the BoE is keeping up.

The MP said: “There is a concern that regulators are not moving as fast and are not as front‑footed as you could and perhaps ought to be. Is it fair to say that you have been sleeping at the wheel while Facebook has been getting on with banning the advertisements in this space?”

Martin Etheridge, Head of Note Operations, BoE, responded by saying it the BoE is leading on the international stage and that there will be ‘vigilant monitoring’ on a global basis. David Geale, Director of Policy, FCA, recognized some positives in the work by Facebook and Google but claimed they haven’t been ‘entirely effective’ because they are still receiving reports of people signing up through those channels.

The committee raised concerns over the ‘daily bombardment’ of crypto adverts and what the regulators are doing regarding misleading adverts. Geale responded that their usual powers apply which requires adverts to be fair, clear and not misleading. However, Streeting presented an easyJet advert which he claimed had no warnings that funds may go down.

Streeting said:

“I have just been passed this advertisement from easyJet’s magazine. ‘Ladies and gentlemen, give your bitcoin wings.’ Do you see what they did there? There is no warning that products are unregulated and no warning about prices going up and down. ‘In 2017, we have witnessed the bitcoin rise from $1,000 to $19,000.’ That is a 1,800% increase; that is what they are suggesting there.”

MP: Treasury is Being “Complacent” With Crypto Regulation

Conservative MP Charlie Elphicke raised concerns over terrorist financing and money laundering. David Raw, Deputy Director Banking and Credit, HM Treasury, argued that past assessments show that there is low risk for both issues. He said that using crypto potentially creates a ‘more transparent record of the transaction, which is potentially auditable.’

Elphicke said: “But let me challenge that. Is that not complacent? If you send a cash courier, a cash courier can be caught. A key can be transferred by text message. If I am over in Syria or wherever, I simply send a text message with a wallet passcode to someone who lives in London. Hey presto, they have access to all this cash so they can get up to all the terrorist financing stuff they need to do.”

Raw denied complacency but accepted that there is a potential risk to be examined. He referenced the MP to the task force which will release a report in September.

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