Countries regulations related to exchanges, crypto currencies and ICOs

adrienbe (25)in #crypto • 7 years ago

Regulations in the crypto currency eco-system is something rather confusing. I'll clarify the aims of the regulations first, explain why they could work or not, then dive into the "interesting" country regulations (I won't cover countries that have minor impact on the crypto eco-system).

Note: this is a work in progress but I still posted it since there is still a lot to research

Clarifications

Clarification: regulation of exchanges

The regulation of exchanges is typically designed to try to protect the users living in the same country. As in, I doubt people writing laws for exchanges based in New York state care about users based in Japan. However, even if users are based abroad, they will still benefit of some of the advantages of trading on a regulated exchange: more control by a non-corrupted (well, let's say "less corrupted") government.

Why could it work? We all like to know our money is safe, having your a part of your life savings in crypto can be stressful enough, so having it on a regulated exchange can take some of that pressure off.

Why could it fail? A given country/state can only try to regulate the exchanges that are based in their own country/state. So nothing stops everyone to stop using those regulated exchanges (use only the ones located outside that country/state)

Clarification: regulation on crypto currencies

So that's the thing about crypto currencies, if you read the previous point on "Clarification: regulation of exchanges" then you will understand that unless there is worldwide ban on crypto exchanges, there is no way to stop people from trading crypto currencies.

And soon enough (there are many projects in the makings), there will be many decentralised crypto exchanges: exchanges that are not running on a server, but simultaneously on each computer of users of the exchange. This will make crypto currency trading truly unstoppable.

Clarification: regulation on companies launching ICOs

That's a funny one since it has very meaningful economical impact.

Each country deciding to ban ICOs to happen in their country prevent a huge amount of money to pour into their economy.

In the opposite way, each country legalizing/regulating ICOs is opening the door for truck loads of money and hundreds of talented cutting edge companies who are dying to find a decent jurisdiction to launch their ICO.

ICOs have been completely disrupting the VC model and are challenging the way people think, not only about money, but about the value attached to a stock. Stock is something very regulated and formatted, while ICOs have "no set format", they challenge every pre-conception about "how should holders be rewarded, should they have any power at all, and so on". The ICO world is wild and it does come with a lot of excitement, confusion and risks: not something every government likes.

Clarification: regulation on persons participating in ICOs

Nowadays you see many ICOs putting warnings such as "citizens from USA & China are not allowed to participate".

Although it seems to work since users participating to ICOs often need to go through KYC/AML verification, it does not stop people from those nations to trade the relevant tokens once it is released on crypto currency exchanges.

Regulation per country

Japan

businessinsider.de/bitcoin-price-spikes-as-japan-recognizes-it-as-a-legal-payment-method-2017-4 - April 2017 - Bitcoin spikes after Japan says it's a legal payment method

Japanese regulated exchanges:

quoine.com - Quoine (Quoinex and Qryptos)
bitflyer.jp
bitcoinbank.co.jp - Bit Bank Corporation
sbivc.co.jp - SBI Virtual Currencies
bittrade.co.jp - Bit Trade
btcbox.co.jp - BTC Box
bitpoint.co.jp - Bit point Japan
fisco.co.jp - Fisco Virtual Currency Exchange
techbureau.jp - Tech Bureau
coin.z.com/jp/index.html - GMO coin
moneypartners-group.co.jp/english - Money Partners

Japanese regulated exchanges: https://www.techinasia.com/japan-approved-crypto-exchanges
Japanese regulated exchanges: https://cryptocoinmastery.com/japan-just-licensed-11-cryptocurrency-exchanges

USA

New Yorks state Granted licenses and charters:
"After rigorous review, DFS has approved five firms for virtual currency charters or licenses, while denying those applications that did not meet DFS’s standards. In addition to Coinbase, DFS has granted licenses to XRP II and Circle Internet Financial, and charters to Gemini Trust Company and itBit Trust Company.” dfs.ny.gov/about/press/pr1701172.htm

Regarding "chartered" entities:
"An entity chartered under the New York Banking Law must receive the prior approval of the Department to engage in virtual currency business activity. However, such a chartered entity is not required to apply for a BitLicense." dfs.ny.gov/legal/regulations/bitlicense_reg_framework_faq.htm

New York state Denied licenses:
"The companies that have received application denial letters ordering them to stop any New York operations are ChangeCoin Inc., Ovo Cosmico Inc., Snapcard Inc. and OKLink PTE. LTD.” dfs.ny.gov/about/press/pr1701172.htm

Entities that fled New York:
"Genesis-Mining, Kraken, ShapeShift and Bitfinex, did not apply for the BitLicense but rather left New York and took their business elsewhere in order to avoid the obligation to apply for the BitLicense" fx-mm.com/news/69292/calls-digital-currency-licensing-after-cyberattacks

UK

"In 2016, online payments app Circle received an electronic money license from the Financial Conduct Authority (FCA) in the UK, a license for e-money providers (not digital currency specific). A partnership with Barclay’s enabled Circle to provide cross-currency transactions (between GBP and USD)." fx-mm.com/news/69292/calls-digital-currency-licensing-after-cyberattacks

EU

"In the EU, virtual currencies (considered units of account) do not (yet) require a license, although they will be subject to the EU Anti-Money Laundering Directive, following its recent revision resulting in customer due diligence which will need to be applied to virtual currency exchange platform." fx-mm.com/news/69292/calls-digital-currency-licensing-after-cyberattacks

Singapore

"all virtual-currency intermediaries in Singapore such as exchange operators are required to comply with requirements to combat money laundering and terrorism financing" - [forbes.com/sites/outofasia/2017/11/22/putting-singapores-dollar-on-blockchain-may-prove-its-the-most-crypto-friendly-place-on-earth/#3ff5c33a573e](http:// forbes.com/sites/outofasia/2017/11/22/putting-singapores-dollar-on-blockchain-may-prove-its-the-most-crypto-friendly-place-on-earth/#3ff5c33a573e)