Crypto Legal Digest: September 2018
Stay updated with our monthly blockchain industry news and regulation overview.
Europe is in no rush to regulate crypto market and European Commission representatives claim crypto is here to stay, although cryptocurrencies need classification. France compiled new ICO framework to attract global innovators and UK government is researching distributed ledger technology for securing digital evidence. CFTC Chair Giancarlo thinks crypto needs “Do No Harm” approach that regulators gave the early internet and Silicon Valley investor Ben Horowitz believes crypto will find ways to become more efficient and compete against existing platforms. Wall Street is stepping up in entering crypto, as Morgan Stanley, CBOE, NASDAQ and Winklevoss twins all work towards various cryptocurrency offers, from Bitcoin swap trading to ETH futures and coins listings.
Europe
Crypto ‘Here to Stay’ but Needs Classification, Says European Commission Vice President: According to EC VP Valdis Dombrovskis, crypto assets are “here to stay” and the crypto market still “continues to grow” despite “recent turbulence”. The Commissioner claims the E.U. will focus on how to “categorize and classify” crypto assets this year and he suggests that initial coin offerings (ICOs) have the potential to become a “viable form of alternative financing”. Risks were also highlighted, including “lack of transparency”, market integrity, as well as money laundering, fraud, and hacking. Due to rapid market development, the sphere still needs monitoring, in cooperation with global partners at Financial Stability Board, although the FSB this summer claimed that crypto assets do not pose any material risk to global financial stability.
France Finalizes New ICO Framework to ‘Attract Innovators Globally’: As finance Minister Bruno Le Maire states, the French stock markets regulator Autorité des marchés financiers (AMF) is now empowered to give licenses to companies that want to raise funds via an ICO, with the legislation aiming to help protect contributors’ interests. Le Maire also hopes that this legal framework for ICOs will “attract investors from all over the world”, as France’s President Emmanuel Macron aims to convert France into a startup nation, saying France was ready for a “blockchain revolution”.
UK Gov’t Researching Distributed Ledger Technology for Securing Digital Evidence: Her Majesty’s Courts and Tribunals Service (HMCTS) and the Open Innovation team at the Cabinet Office held a meeting focused on the use of DLT in securing digital evidence. Balaji Anbil, Head of the Digital Architecture and Cyber Security team at HMCTS, says that “the Service is looking to apply new technology to traditional procedures like evidence sharing, identity management, and providing more control over individual’s identity data.” Anbil says that DLT has a “critical capability” in securing digital evidence and ensuring the integrity of evidence chains.
Think Tank Report Argues for Standardized Crypto Rules Within EU: Belgian think tank Bruegel believes “EU should create a single standard for cryptocurrency rules”, as well as how tokens are distributed and traded. The proposal argues for clearer rules on ICOs (Initial Coin Offerings) to control risks and exploit the potential of the industry and blockchain technology. If adopted, the rules would allow startups to raise funds and operate in each of the EU member nations, rather than just out of specific country they’re based in.
Europe Is in No Rush to Regulate Crypto Market, Officials Say: Finance ministers gathering in Vienna at the beginning of September agreed that “they won’t rush with steps to further regulate the market, and that they’ll wait for the outcome of a thorough analysis by European authorities before deciding on any steps.” EU policy makers have moved to increase transparency in the market, yet have stopped short of introducing rules to protect investors or shield traditional financial firms from the risks posed by the crypto market.
Rest of the World
CFTC Chair: Crypto Needs ‘Do No Harm’ Approach That Regulators Gave the Early Internet: U.S. Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo took the precedent from the early days of the Internet and said that “internet was able to develop and mature because of the government’s minimal interventions”: “I’m advocating the same approach to cryptocurrencies and all things having to do with this new digital revolution of markets, and of currencies, and of asset classes.” He added his views on the approach to tackle illicit activity and impactful decisions on policy making: “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.”
Wall Street is stepping up in entering crypto: Morgan Stanley is joining Wall Street firms in creating ways for clients to play the digital currency market and plans to offer Bitcoin swap trading for clients. CBOE Global Markets is planning to launch ETH futures by the end of 2018. CBOE will reportedly base its ETH futures on Gemini’s underlying market; the operator also based its Bitcoin futures on the New York-based crypto exchange run by the Winklevoss twins. The NASDAQ is attempting to be the first mover in crypto exchange governance, order execution, and at the forefront of institutional movement into the crypto ecosystem, as they also plan to list several coins in 2019.
Cryptocurrency industry opens a D.C. lobbying arm: Cryptocurrency companies Coinbase, Circle, tech veterans and investors, such as Digital Currency Group and Polychain Capital, are among the founding members of the Blockchain Association, the first fully fledged lobbying group in Washington, representing entrepreneurs and investors who are building off the technology behind bitcoin. Their aim is to become the cryptocurrency industry’s top lobbying organization in Washington on policy issues, representing the voice for companies that want to work within the political system.
Industrial and Commercial Bank of China To Embrace Blockchain Technology: ICBC as the largest bank in China, and its Chairman Yi Huiman said that “the financial institution will focus on innovations in cloud computing, big data, artificial intelligence (AI), blockchain, and Internet of Things (IoT)”. While China still has negative views on digital currencies, they are starting to embrace the benefits of blockchain and are actively working to develop and apply the technology in various industries.
From the Eastern part of the crypto world, Singapore Stock Exchange Taps Blockchain for Faster Settlements. Tinku Gupta, the project chair and SGX’s head of technology, said in a statement: “This initiative will deploy blockchain technology to efficiently link up funds transfer and securities transfer, eliminating both buyers’ and sellers’ risk in the DvP process.” Japan’s Financial Regulator Wants Crypto Industry to ‘Grow Under Appropriate Regulation’, as Toshihide Endo, commissioner of Japan’s FSA, told Reuters he sees the agency’s goal for developing the crypto industry as finding a “balance” between consumer protection and technological innovation. Samsung also unveiled its blockchain based platform, BankSign, to allow people to make transactions at different banks more easily.
Alternative Crypto Bills Presented in Ukraine and Russia: A bill that leaves crypto-to-crypto trade outside of the scope of government regulation has been filed in the Ukrainian parliament. A bill classifies cryptocurrency as a virtual asset that can function as a means of exchange and can store value, while tokenized assets certify property or other rights of their holders that correspond to the obligations of an issuer. The authors of the bill believe the government should be responsible only for regulating those transactions that involve the exchange of cryptocurrency to fiat money. In Moscow, the managers of leading Russian enterprises have prepared their own version of the law on digital financial assets which contains the legal term “cryptocurrency” and differentiates it from tokens. The issuers of ICO tokens will not be required to apply for licenses from Centrobank, while the issuers of security tokens will have to abide by the rules applicable to traditional securities.
From Qatar to Palestine: How Cryptocurrencies Are Regulated in the Middle East. The Middle East seems to be on its way to become the global blockchain powerhouse: From Dubai to Tel Aviv, the technology is being thoroughly researched and adopted, as presented in a comprehensive list by Cointelegraph. It contains cryptocurrency legal frameworks, regulation and blockchain development reviews from countries of Bahrain, Turkey, Qatar, Saudi Arabia, Iran, Iraq, Kuwait, United Arab Emirates, Egypt, Cyprus, Israel, Jordan, Oman, Palestine and Lebanon.
Legendary Investor: Crypto is Seeing Highest Developer Activity Since Internet. Ben Horowitz, the co-founder of Andreessen Horowitz, a venture capital company, considers cryptocurrency and blockchain technology as “a new computing platform that allows the development of various decentralized systems and financial networks”, as he explained at the TechCrunch Disrupt conference. Horowitz thinks that most blockchain networks are currently inferior to centralized alternatives, but the same case was with smartphones and computers a decade ago. He believes that “crypto will find ways to become more efficient and compete against existing platforms”.
“I think that there is probably more developer activity in crypto than in anything we’ve seen since the Internet and the right way to think about it is, it’s a new computing platform. Once every decade or two, a new computing platform comes along. The thing that is deceptive about is that when the new platform at the time is generally worse in most ways than the old platform but has some new capabilities.” — Ben Horowitz
This is the third edition of our Monthly updates on regulation in blockchain and news from the crypto industry. For regular blog updates follow this Steemit blog or Medium space.
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