Crypto Regulation Update — October 2019
This update is brought to you by Bridge Protocol (BRDG) 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 identity verification on/off the blockchain.
Read last month’s update here.
United States
Firms that include Kraken, Bittrex and Coinbase (to name a few), have come together to form the Crypto Rating Council (CRC). Their aim is to jointly provide more clarity on the definition of various cryptocurrencies. The vision is to create a process to help rate whether tokens are securities or not.
The council is actively recruiting new members to provide more credibility. They will score cryptocurrencies on a scale of one-to-five (1–5) with a five being most likely to be deemed a security.
Randal K. Quarles, the chair of the Financial Stability Board (FSB), has said that the potential rise of stablecoins could cause regulatory challenges.
“Although there is a small risk to financial stability today, there is no doubt the potential scale of stablecoins and other crypto-assets yet to emerge may pose regulatory challenges,” Quarles said at the European Banking Federation’s summit in Belgium on Thursday.
Philadelphia Federal Reserve Bank president Patrick Harker said he believes it is “inevitable” that central banks will begin issuing digital currencies, Reuters reports.
“Frankly I don’t think we should be the first mover as a nation to do this,” Harker said. However, he conceded that “It is inevitable,” and said, “I think it is better for us to start getting our hands around it.” Harker was responding to questions about the Fed’s move to develop a real-time payment system.
NYDFS is hiring a deputy superintendent with focus on cryptocurrencies.
According to a job posting by the regulator, the position is for its recently created Research and Innovation Division, which oversees the licensing of cryptocurrency firms. The applicant must be able to provide insight on policy decisions regarding cryptocurrency markets and to guide the staff responsible for reviewing and processing applications for licenses, such as BitLicense, by cryptocurrency firms. The application closure date is October 31st.
Visa, Mastercard, PayPal and Stripe hesitate to officially sign on to Facebook’s Libra.
According to Bloomberg, executives at the payments companies have grown concerned with Facebook’s handling of data and privacy issues. The executives also believe that Facebook exaggerated the level of support and comfort exhibited by regulators globally. The project still remains unsure due to increased regulatory scrutiny globally.
The Securities and Exchange Commission (SEC) fined Block.one, creator of EOS, just 0.6% of the total raise after conducting an unregistered security offering in 2017 & 2018.
The SEC announced recently that it has settled charges against Block.one, the issuer of EOS, for conducting an unregistered ICO in 2017–2018. After allegedly raising $4.1 billion, the firm has agreed to pay a $24 million penalty for selling unregistered securities. That’s a slap on the wrist — only 0.6% of the total raise. Block.one says this settles any ongoing questions with the SEC. They do not have to register the original ERC-20 tokens as a security as part of the initial sale.
WorldWide
Chinese Police Reportedly Close Office of Initial Coin Offering (ICO) Startup.
The offices of Chinese initial coin offering (ICO) startup GXChain have reportedly been closed by the local police. Having achieved a market cap over $600m during “hot” times, the token company has a sustainable business behind it. This involved selling personal credit card data, which is a very sensitive topic in China currently.
Andrea Enria, chair of the supervisory board at the European Central Bank (ECB), has urged authorities in Malta to strictly monitor banks amid growing cryptocurrency industry in the country.
“Non-financial risks like conduct, compliance, reputational and IT risks need to be managed in a more stringent and coherent manner, especially in the light of Malta’s leading role in blockchain and crypto technology,” Enria said in an interview with Reuters published Wednesday.
Ukraine Plans to Officially Legalize Bitcoin and Other Cryptocurrencies.
Ukraine’s Ministry of Digital Transformation plans to legalize Bitcoin and other cryptocurrencies to bring them out of their current legal ‘grey area.’ Currently, cryptocurrencies are not banned in the country, but have no official status. The move is part of the country’s modernization efforts led by its new president, Volodymyr Zelensky.
