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Crypto Regulation Digest: PwC report on blockchain regulation, ICO discussion in Capitol Hill, airdrops may become illegal

14th August — 28th August

Reports

PwC: Regulatory Uncertainty and Lack of User Trust Inhibit Blockchain Adoption: Regulatory uncertainty and trust are major barriers to blockchain adoption among businesses, according to a study released August 27 by ‘Big Four’ auditing firm PricewaterhouseCoopers (PwC). A new study examined 600 executives in 15 countries on their development of blockchain and opinions about its potential.

Opinions

How Countries Can Develop Sovereign Crypto Economies Efficiently And Cost-Effectively: There are many countries today that still don’t have a currency of their own including Ecuador and Marshall Islands. Many of them are small countries that can’t afford expensive printed FIAT currency management.

The Future Of Blockchain And Its Potential Impact On Our World on Forbes.com.

Who needs democracy when you have data?: Here’s how China rules using data, AI, and internet surveillance.

USA

Congressman Invites Crypto Industry Leaders to Capitol Hill to Discuss ICOs: Republican Ohio representative Warren Davidson has invited 32 cryptonians to Capitol Hill ahead of his plans to present Initial Coin Offering (ICO) related legislation to Congress this autumn. Davidson’s office has invited Andreessen Horowitz, Union Square Ventures, Intercontinental Exchange, Kraken, Nasdaq, CME Group, Circle, Coin Center, Ripple, Harbor, CoinList, among others, to attend a Sept. 25 forum on Capitol Hill, according to the Politico offshoot Axios.

US Border Officials to Test Blockchain for Certificate Tracking: U.S. Customs and Border Protection (CBP) plans to trial blockchain technology to verify North American Free Trade Agreement (NAFTA) and Central American Free Trade Agreement (CAFTA) certificates.

US Regulator Fines and Halts Activities of Fraudulent Tomahawkcoin Issuer: The U.S. Securities and Exchange Commission (SEC) announced in an order Wednesday, August 14, that it has barred and fined the creator of Tomahawkcoin over a fraudulent Initial Coin Offering (ICO).

SEC ruling suggests cryptocurrency airdrops violate securities law: In an announcement on its website, SEC revealed it has served a lifetime ban and a $30,000 fine to cryptocurrency startup Tomahawk for employing fraudulent marketing strategies to raise funds.

Crypto Leaders Join Forces to Score SEC Approval and Spur Mass Adoption: Major players in the crypto space are uniting to form a new self-regulatory body to improve standards. The Virtual Commodity Association Working Group is planning its first meeting in September 2018. Five cryptocurrency exchanges will join as initial participants: Bitstamp, Inc., bitFlyer USA, Inc., Bittrex, Inc., and Gemini Trust Company, LLC.

Rejected Again: SEC [Predictably] Denies 9 Bitcoin ETF Proposals: The hopes of Bitcoin bulls ate dust once again as the Securities and Exchange Commission (SEC) disapproved nine more Bitcoin ETF applications. The US regulator rejected two ETFs by ProShares that would track Bitcoin future contracts, five inversed and leveraged ETFs from Direxion, and another one from GraniteShares. It continued to hold its stance against the potential fraud and manipulation of Bitcoin markets, citing that the applicants had not met SEC’s requirement of designing rules to prevent these malpractices.

U.S. Senate Hearing: ‘Valuable’ Potential Applications of Blockchain in Energy Sector Exist: The U.S. Senate has held a hearing on the energy efficiency of blockchain and similar technologies, according to an announcement published August 21. The hearing on energy and natural resources, held by the U.S. Senate Committee in Washington, DC, focused on the application of blockchain and related technologies, as well as the cybersecurity possibilities of using such technologies in the energy industry.

U.S. Lawmaker Tulsi Gabbard Discloses Ethereum And Litecoin Investments: U.S. Rep. Tulsi Gabbard (D-HI) has become the second congressperson to disclose cryptocurrency investments, reporting holdings of both ethereum and litecoin. Virginia Republican Robert Goodlatte became the first lawmaker to disclose cryptocurrency holdings in May.

US Government Grants $800K to Blockchain Researchers: Subhashini Sivagnanam, a researcher and software architect with the Data Enabled Scientific Computing division at the San Diego Supercomputing Center, won $818,433 from the National Science Foundation (NSF) to develop the Open Science Chain (OSC), a proposed distributed ledger which will help researchers efficiently access and verify data collected through scientific experiments.

Bank of America Applies for Blockchain-Based Encrypted Crypto Storage System Patent: The U.S.’s second-largest bank, Bank of America (BofA), has applied for another blockchain patent on the development of a secure crypto storage system.

California Legislature Passes Blockchain Bill: A bill requiring the creation of a blockchain study group has passed both houses of the California legislature.

Crypto Lending Firm BlockFi Receives License To Operate In California:Crypto lending platform BlockFi has received approval to operate in the state of California. The latest expansion leads to the crypto-to-USD lender being available in 44 US states.

Telling the truth about defects in technology should never, ever, ever be illegal: EFF is currently suing the US government to invalidate DMCA 1201 and the ACLU is trying to chip away at CFAA, and there will come a day when we succeed, because the idea of suppressing bug reports (even ones made in disrespectful or rude ways) is totally incompatible with the First Amendment.

Tyler Winklevoss: ‘It Will Take Time’ for Wall Street to Make Crypto Jump: Crypto exchange Gemini CEO Tyler believes “it will take time” for the majority of Wall Street to enter the cryptocurrency sector. The Winklevoss brothers also said they won’t be slowing down anytime soon after the Securities and Exchange Commission (SEC) rejected their proposal for a Bitcoin ETF recently.

Canadian Government Launches Ethereum Block Explorer: The National Research Council of Canada (NRC) has launched a blockchain explorer built on Ethereum. The organization said the blockchain explorer application, dubbed Catena, was developed by Bitaccess and will be hosted by its Industrial Research Assistance Program on the InterPlanetary File System (IPFS).

Europe

Member of the European Parliament Suggests New Regulations for Public ICOs: A member of the European Parliament representing the UK, Ashley Fox has written a report on proposed legislation, which would regulate crowdfunding operations, as well as explicitly include ICO’s in its ambit. According to Fox’s note accompanying the legislative language for the proposal, the framework provides an opportunity to regulate token sales in a way that is expressly attempting not to interfere with neither technological innovation nor the raising of capital for crypto projects.

European Insurance Firms ahead of their U.S. Counterparts in Blockchain Adoption: According to research from S&P Global Market Intelligence released on August 23, 2018, European insurance firms trump their U.S. counterparts when it comes to the business attitude towards blockchain technology. The market research agency highlighted in its report that while major financial institutions have been reluctant to imbibe cryptocurrencies in their existing operations, they have taken a major liking towards the distributed ledger technology (DLT).

Blockchain Subcommittee Proposed By Spain’s Left-Wing Political Coalition: Unidos Podemos, a left-wing electoral alliance in Spain, has called on the government to study the benefits of blockchain technology.

‘Bitcoin? Hope and Hype’: Swiss Stock Exchange Isn’t Adding Crypto to Crypto Assets Exchange: Cryptocurrency trading will not be part of the features of Swiss stock exchange’s new digital asset platform. This decision is not due to the lack of capacity to implement such, but basically an issue of priority. “The capability is there to do it, but to be honest it’s not a priority. There are plenty of exchanges currently providing bitcoin trading services”, says Thomas Zeeb, the head of securities and exchanges at the Swiss stock exchange owner SIX Group.

UK Watchdog Grants Third E-Money License to Crypto Company: UK watchdog The Financial Conduct Authority (FCA) has granted its third e-money license to a crypto-related company, Financial Magnates reports August 23. The new license has been issued to the Wirex, whose main product is a prepaid debit card that converts crypto into fiat currency for everyday use.

Oxford Researcher Wants to Open World’s First Blockchain University in Malta: Researcher Joshua Broggi envisions a new university powered entirely by blockchain technology, and is seeking accreditation in Malta to establish what will be a world’s first.

ASX Head Says New DLT System Could Save Billions: The Australian Securities Exchange could save as much as $23 billion in its effort to replace its settlement system with a distributed ledger.

Korea

Jeju Island Aims to Become an ICO-Friendly Blockchain Hub Inspite of South Korea Ban: South Korea’s Jeju island is proposing a plan to become a blockchain haven wherein initial coin offerings (ICOs) would be allowed in the autonomous province despite the ongoing ban in the mainland. The governor of Jeju Island has formally proposed that the central government of South Korea designate the island as “a special zone for blockchain and cryptocurrency” in its interests to become a hub for the blockchain industry.

South Korea Includes Blockchain As Part Of $4.4B USD Domestic Investment Plan For 2019: The South Korean government has announced that it will spending a total of 5 trillion won ($4.4B USD) to nurture eight critical sectors of the domestic economy, including blockchain. The country’s finance ministry unveiled its ‘growth through innovation’ investment plan for 2019. The government opted to increase the amount spent on areas such as blockchain, big data and artificial intelligence (AI) by 65 percent from this year’s estimates.

District Judge Forms Blockchain Law Study Group in South Korea: A group of judges, lawmakers and industry experts in South Korea are forming a new group aimed to discuss legal issues surrounding blockchain technology.

South Korea: Blockchain Law Society to Launch in Order to Develop Legal Framework: A group of South Korean blockchain experts will set up a law-based agency to explore the technology and apply it in various areas of society.

South Korea’s Parliament Discusses ICOs Amid a Race to Establish Regional Crypto Valley: South Korea’s lawmakers have extended the parliamentary session into August to address a number of bills with ICOs high on the agenda according to BusinessKorea.

South Korea Buzzing About Potential ICO Legalization: It appears that the South Korean government is now regulating ICOs and cryptocurrencies in favor of protecting crypto-investors. The government has already taken steps to include a ban that prevents minors and foreigners from opening cryptocurrency accounts. Furthermore, regulated ICOs and the cryptocurrency market will mean the implementation of strict Anti-Money Laundering as well as Know Your Customer policies.

China

Police Arrest Hackers Suspected of Stealing $87 Million in Crypto: Chinese police from multiple cities have arrested three individuals who allegedly stole bitcoins and other cryptocurrencies worth around $87 million.

Who needs democracy when you have data?: Here’s how China rules using data, AI, and internet surveillance.

Y Combinator’s New China Chief Is Bullish on Blockchain: Y Combinator (YC) has just announced a new China division and its chief believes blockchain will bring long-term advantages to startups. The Silicon Valley-based seed investment firm, which has incubated notable startups including Reddit, Dropbox and crypto exchange Coinbase, officially announced its entry into the Chinese market alongside news that Lu Qi — a former chief operating officer of Baidu — will be in charge of the new arm.

China’s Intellectual Property Focus Makes It a Global Blockchain Leader: With national and local authorities in China offering hefty initiatives to tech companies to protect blockchain intellectual property rights, the country has now become a global leader in implementing the technology.

China Tightens the Noose on 124 Offshore Cryptocurrency Exchanges: Citing local financial news outlets, the Hong Kong-based South China Morning Post reports that authorities associated with the Leading Group of Internet Financial Risks Remediation — which was founded in 2016 and run by top central bank officials — will begin blocking IP addresses belonging to 124 cryptocurrency trading platforms that still serve mainland residents, despite local prohibitions on these activities.

China Shuts Down Social Media Accounts Covering Bitcoin, Crypto and Blockchain: The Chinese government has shut down blockchain and Bitcoin related accounts on the popular social media app WeChat. Now one billion people that use the app developed by Tencent will no longer be able to read any content related to cryptocurrency or blockchain.

Chinese Regulators Issue Joint Warning On Fake Crypto Fundraising: In a joint statement, the Banking Regulatory Commission, the People’s Bank of China, the Ministry of Public Security, the State Administration for Market Regulation, and the Central Cyberspace Affairs Commission warn of “lawless entities” seeking to raise funds “using the banner of financial innovation and blockchain” in exchange for crypto assets. The regulators urge Chinese citizens to be “rational” about blockchain-related information and increase their awareness of risks.

Rest of the World

Cointree-Gobbill Partnership Enables Australians to Pay Bills With Cryptocurrency: On Aug. 20, fintech startups Cointree and Gobbill confirmed a partnership that will allow Australians to pay their bills with cryptocurrency.

Russia’s Ministry Of Internal Affairs Proposes Criminalizing Unregistered Crypto Operations: The Russian Ministry of Internal Affairs is reportedly considering making all unregistered cryptocurrency operations in the country a criminally-liable offense. The Internal Affairs Ministry’s Main Directorate for Drugs Control (GUKON) has asked the Ministry of Finance for an amendment to current tax regulations that require persons or entities to register with state tax authorities if they want to conduct crypto transactions.

Venezuela to Use Petro as Unit of Account for Salaries, Goods and Services: Venezuelan President Nicolás Maduro has announced that the national oil-backed cryptocurrency, the Petro, will be used as a unit of account within the country.

Massive currency devaluation adds to chaos in Venezuela: CNBC’s Michelle Caruso-Cabrera reports on the devaluation and the country’s latest policies in an attempt to turn the economy around.

Jamaica Stock Exchange explores cryptocurrencies: The Jamaica Stock Exchange (JSE) has expressed an interest in allowing investors to trade cryptocurrencies on its platform. The JSE advised that it signed a Memorandum of Understanding with Canada-based Blockstation to explore the possibilities of offering cryptocurrency trading to investors.

Cryptocurrency Trading Is Illegal In Saudi Arabia, Officials Warn: A special standing committee in Saudi Arabia has warned that cryptocurrency trading is illegal in the country. The Standing Committee for Awareness on Dealing in Unauthorized Securities Activities in the Foreign Exchange Market declared it was against cryptocurrency trading. The committee assured that cryptocurrencies, such as bitcoin, are illegal in the kingdom and no parties or individuals are licensed for such practices.

Japan’s Financial Regulator Wants Crypto Industry to ‘Grow Under Appropriate Regulation’: The commissioner of Japan’s financial regulator the Financial Services Agency (FSA) said that the agency wants the cryptocurrency industry to “grow under appropriate regulation,” in an interview with Reuters August 22.

Thailand’s SEC ratifies operation of seven new cryptocurrency exchanges: Thai’s SEC has released a statement ratifying organisations like Bitkub Online Co. Ltd, Coin Asset Co. Ltd, Bitcoin Co. Ltd [BX], Cash2Coins Co. Ltd. and Group Co. Ltd. [TDAX]. The approval from SEC will enable them to function as crypto exchanges. Besides, two crypto dealers, namely, Digital Coin Co. Ltd. and Coins TH Co. Ltd. have received approval from the regulators.

Thai Central Bank Defends Cryptocurrencies: In the high-profile Thai crypto fraud case involving an actor, Thailand’s central bank has clarified that the fraud is not related to cryptocurrency trading, but a general misuse of money. Thailand has recently legalized seven cryptocurrencies, authorized seven crypto firms, and the Bank of Thailand has green-lighted commercial banks’ subsidiaries for crypto activities.

Thai SEC Clears Seven Cryptocurrency Operators to Serve Clients, Reviews Two More: Thai regulators announced Thursday, August 16, that they have so far approved seven business entities to conduct cryptocurrency operations as part of the formalization of the country’s domestic market. In a statement, Thailand’s Securities and Exchange Commission (Thai SEC) confirmed Bitcoin Co. Ltd. (BX), Bitkub Online Co. Ltd., Cash2coins Co. Ltd., Group Co. Ltd. (TDAX), and Coin Asset Co. Ltd. were able to operate as legal cryptocurrency exchanges.

Bank of Thailand partners with R3 to use Corda plattform.

Shanghai Stock Exchange Partners With Major Insurance Firms to Improve Industry With Blockchain: The Shanghai Stock Exchange (SSE) and Insurance Asset Management Association of China (IAMAC) have agreed to cooperate on improving the insurance and pension industries with the use of blockchain tech. China Securities Journal wrote that the SSE, the world’s fourth largest stock exchange, was joined by several major insurance industry players, including the IAMAC, Changjiang Pension Insurance Company, Tokyo Maritime Sunshine, and others.

Blockchain Unit Formed By India’s Central Bank: The Reserve Bank of India (RBI), the country’s central bank, has formed a new unit to study emerging technologies such as blockchain and artificial intelligence (AI). According to a source familiar with the RBI’s plans, the central bank set up a unit last month and appointed a chief general manager to lead it. The source added that the new unit will research and possibly draft rules and supervise new emerging technologies in the future.

India Bitconnect Head Arrested: Divyesh Darji, was arrested this week at an airport in Delhi as he arrived from Dubai. He and conspirators are accused of bilking millions of dollars (Rs 88,000 crore) from Indian investors seeking to find financial refuge during the government’s demonetization campaign.

Indonesia Welcomes Blockchain Hub: The Indonesia Blockchain Hub was launched on 16th August, 2018 by the Creative Economy Agency (BEKRAF), the Indonesian Chamber of Commerce (KADIN), the Indonesian Blockchain Association, and blockchain-based agritech startup Hara.

Iran Moves Forward With Creation Of National Cryptocurrency: In February, the head of Iran’s Ministry of Information and Communications Technology, Mohammad-Javad Azari Jahromi, announced the country was creating a “cloud based digital currency.” Although the launch date is still unknown, the Iranian government has released details about the currency, which reportedly is in the final stages of development. These details have been released by Informatics Services Corporation, the Iranian FinTech company that created the currency.

South Africa’s Tax Agency Targets Tax-Evading Cryptocurrency Traders: South Africa’s tax agency is looking into methods for identifying tax-dodging cryptocurrency traders, the acting head of the authority has revealed. The South African Revenue Service (SARS) is studying ways to spot non-compliant cryptocurrency traders in order to investigate any scenario of failure to declare profits from investments, acting Commissioner Mark Kingon said while speaking at the Institute of Internal Auditors SA conference in Johannesburg recently.

Kenya Electoral Commission Eyes Blockchain Tech.

Binance Form Alliance with LCX to Launch Binance LCX Crypto-to-Fiat Exchange: the world’s largest cryptoassets exchange by 24-hour trading volume, has announced the launch of a fiat-to-crypto exchange in the heart of Europe. It will offer trading between the Swiss Franc (CHF) and Euro (EUR) against a handful of established digital assets.

ICE’s Bakkt CEO: Platform Won’t Support Margin Trading, Contracts to Be Fully Collateralized: Bakkt — the forthcoming regulated global ecosystem for crypto assets recently unveiled by Intercontinental Exchange (ICE) — will not support margin trading for its Bitcoin (BTC) contract.

eSports Betting Platform Unikrn Being Sued Over Its ICO: A Las Vegas man is suing Unikrn, claiming the company failed to register the tokens as securities during its ongoing ICO.

Judge Sets Bail At $750,000…In Cryptocurrency: Martin Marsich, a Serbian and Italian national, is currently awaiting trial for allegedly hacking the computer network of San Francisco-based video game company, Electronic Arts. Surprisingly, Marsich has been ordered to post bail using cryptocurrency.

Cryptocurrency Angel Investor Files Complaint Against AT&T For SIM Hijacking: Cryptocurrency angel investor Michael Terpin alleges that AT&T failed to offer identity protection, leading to a theft of $24 million in cryptocurrency.

Bitcoin, Ethereum, Litecoin, Stellar and Verge Coming to 1,000 Stores in Colombia: The big move toward crypto adoption is coming thanks to a partnership between Pundi X (NPXS) and the Colombian investment firm Manticora Capital. The deal will place a Pundi X point-of-sale device inside each store, which will allow them to accept Bitcoin (BTC), Ethereum (ETH), NEM (XEM), Qtum (QTUM), Achain (ACT), Stellar (XLM) and Verge (XVG).

Alleged 19-Year-Old SIM Swapper Used Stolen Bitcoin to Buy Luxury Cars: Police in California continue their investigation in port out scams by arresting a second suspect.

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