As bitcoin and other cryptocurrencies begin to grow in the collective minds of regulators globally, the industry continues to see a substantial increase in scrutiny. Yet due to the unprecedented nature of the technology, regulators are struggling to apply old rules to new technology in a meaningful way.
While well intentioned, many of these regulations echo the comical “Red Flag Traffic Laws” that were passed around the time of the invention of the automobile. Presumably for safety reasons, this law mandated that there be at least three people employed to drive, including one who precedes the vehicle “on foot by…
For the first time in history, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) identified two bitcoin addresses on its Specially Designated Nationals And Blocked Persons List (SDN). This development officially puts bitcoin and other virtual currencies on the sanctions map, and raises complex challenges in this space.
Recall that the bitcoin blockchain is completely open for anyone to inspect and verify. Since the ledger is open and public, anyone with the necessary skills can trace bitcoin transactions from one address to another, especially if the user is not particularly interested in keeping her transactions private…
A few days ago, Colorado issued guidance that clarifies the legal status of certain cryptocurrency exchanges. Specifically, the Division of Banking now expressly excludes pure crypto-to-crypto trading from the definition of “money transmission”, so long as no fiat currency is involved. Interestingly, the guidance distinguishes between centralized and decentralized exchanges:
Broadly speaking, the primary difference is that the former requires the user to surrender control of his or her cryptocurrency to a third party in order to place trades on the third party’s platform, while the latter does not.
Attorney reporting on the latest FinTech developments (for fun). All thoughts solely my own; nothing herein constitutes professional, legal or financial advice.