Crypto Regulation Update — January

US Representatives Warren Davidson(R) and Darren Soto(D)

This update is brought to you by Bridge Protocol (TOLL) as part of a series on cryptocurrency regulations.

Bridge is a RegTech company specializing in identity services and compliance for Know-Your-Customer (KYC), Anti-Money-Laundering (AML) and more on the blockchain.

Read last month’s update here.

United States

  1. U.S. Congress proposes bill to change Securities law for cryptocurrencies. The main and first categorical demand to this bill is the exclusion of “digital tokens” from being defined as securities. Amending both the Securities Act of 1933 and the Securities Exchange Act of 1934. Read our article here for more details.

2. 2018 — Sees 550% Uptick in Exempt ICO Securities Offerings Filed With the United States SEC. According to MarketWatch, the 287 ICOs registered in 2018 under a Form D exemption had a combined declared value of $8.7 billion — considerably higher than in 2017, during which 44 ICOs reportedly registered for the exemption, at a combined declared value of $2.1 billion. 287 represents an over 550 percent increase from 44, with the ICOs’ combined total value rising over 314 percent on the year.

3. Circle CEO Says More Regulatory Clarity From US SEC Will Help Unlock Crypto Markets. Jeremy Allaire, CEO and Co-Founder of Circle, Goldman Sachs backed finance company; took to Reddit on January 10th for an AMA. Privacy coins and regulations were some of the hot topics being asked to the CEO.

Regarding regulation, Jeremy said:

“The biggest and most immediate regulatory hurdle we face is the lack of specific guidance from the SEC on how to classify various crypto assets. We believe many are clearly currencies and commodities, and there needs to be more specificity on what are really securities. This can unlock a lot of market activity, and also clearly enable the growth of a market for crypto-based securities.”

He also noted that Anti-Money Laundering (AML) compliance is high up on regulators’ agenda and is confident that the markets will soon offer better tools to bring transparency and protect users of those assets.

3. Cato Institute along with the Institute for Justice have filed a lawsuit against the SEC — so as to prove that the governing body has been engaging in unlawful activities. The filing claims that “The SEC has been participating in wildly inappropriate use of government power…directly contraindicating to the spirit of accountability that permeates our founding documents.”

The Cato Institute was hired and contractually obligated to publish a book; this book was from notes and experience of an individual that had been dealing with the SEC for a long period of time and feels wrongly accused. The enforcement actions against them includes a “gag order” that bars them from speaking about process and experience with SEC. The Cato Institute is arguing they are contractually obligated to publish the book and that this infringes on the First Amendment rights of the individual who purveyed his story.

Hester Peirce, a lawyer specializing in financial markets and appointed by President Trump said that; “Quite simply, a settlement negotiated by someone to end an investigation that is disrupting or destroying her life should not form the basis on which the law applicable to others is based.”

4. Crypto is Among SEC’s Top Priorities for 2019. In the SEC’s Office of Compliance Inspections and Examinations (OCIE) recent report, digital assets — specified as cryptocurrencies, coins and tokens — are included among the six “themes for OCIE’s 2019 Examination Priorities.”

The report states that the the office is planning to focus on monitoring the emerging market and enforcing compliance with existing laws: “OCIE will continue to monitor the offer and sale, trading, and management of digital assets, and where the products are securities, examine for regulatory compliance.”

5. CARDANO (ADA) MOVING TO WYOMING AS NEW GOVERNOR PRAISES BLOCKCHAIN. Wyoming has positioned itself as unashamedly pro-cryptocurrency over the past year, promulgating bills to support blockchain and crypto-startups. Just this year, the state almost unanimously passed a bill allowing institutions to offer financial services using bitcoin and other blockchain-based assets.

This was despite heavy opposition from the banking industry.


  1. Philippine Securities Regulator Postpones ICO Regulation Release. The Philippine Securities and Exchange Commission (PSEC) is not ready to issue final initial coin offering (ICO) regulation. The legislation was due by the end of 2018, but reports that more time was needed to gather information and study the market before release was the reason for the delay. The draft back in August gave an outline to classify an ICO as securities and exemptions for tokens that sold to less than 20 people in a year. The PSEC Chairperson, Emil Aquino said the technology has its advantages when asked why they did not ban ICOs like China.

2. China to Enforce Regulation for Blockchain Companies in February. China’s internet regulator, the Cyberspace Administration of China(CAC) in a detailed document outlined a final draft of regulations concerning cryptocurrency and blockchain companies. The rules will come into effect starting February 19, and provide a set of guidelines that blockchain companies are required to follow.

Ever since the ICO ban in 2017, China’s stance on cryptocurrency and tokens have not been a mystery nor should the overreach in regulations now. Some of the requirements are User Surveillance, Registering Companies with Authorities, Periodic Inspections and of course Censorship.

Businesses operating in China will be required to register their business and each service through a government portal. The regulators will assess the business and let them know if approved. Requirements to post License numbers online as well. They are also required to keep “communication” with regulators and provide relevant information as requested. Finally, Blockchain service providers are required to be equipped with necessary procedures to tackle content and other information that is unintended for the public. Apart from this, providers are required to formulate a set of rules and conventions, convey them to users and make sure they are followed.

3. Crypto Industry Giants Bitmain and Huobi to Layoff Staff. Mining giant Bitmain and major cryptocurrency exchange, Huobi have reportedly confirmed plans to lay off staff amid the 2018 price rout of the crypto markets. Hong Kong English-language newspaper South China Morning Post (SCMP) reported on the layoffs on Dec. 26. Bitmain said:

“A part of building a sustainable business is having to really focus on things that are core to that mission and not things that are auxiliary. As we move into the new year we will continue to double down on hiring the best talent from a diverse range of backgrounds.”

The report also claims that bitmain has let go of its entire team of Bitcoin Cash (BCH) developers.

4. Cryptocurrency traders are obligated to declare their crypto profits, warns Australian Tax Office (ATO). The ATO is warning once again that profits must be reported from cryptocurrency gains. Australia has also asked exchanges to verify user identity and to report any “suspicious” transactions for any reason. The ATO says this is to protect against money laundering and terrorism; many Australians see this as another tax.

5. Russia puts a limit on ICO contributions. The bill will focus on crowdfunding campaigns, which will be limited to $9,000 (around 600,000 Russian rubles) per individual in a single year. The bill is called “On attracting investments using investment platforms”, and it will directly impact Initial Coin Offerings (ICOs) in Russia.

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