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Crypto Regulation News: China is considering the elimination of crypto mining, IMF is concerned about cryptocurrency after a twitter poll, Goldman Sachs rejects development of crypto trading desk, Bakkt’s launch is delayed due to custody uncertainty

8th April — 22rd April



Cambridge Study: Lack Of Standard Terms for Crypto Hampers Global Regulatory Response: The lack of standard global terminology for crypto assets is a major impediment for the adoption of clear regulatory policies in the industry, according to a study by the Cambridge Centre for Alternative Finance (CCAF). According to the report, a variety of major terms in the crypto industry is often used interchangeably and without a clear definition, which hampers global regulatory response. Conducted with support from the Nomura Research Institute (NRI), the research provides a detailed analysis of the regulatory landscape on crypto asset activities in 23 jurisdictions. The research data was collected mainly through desktop research from November 2018 to early February 2019, the report notes.

Industry Players Criticize Initial Exchange Offerings as Alternative to ICOs: A host of crypto industry critics have weighed in on the potential drawbacks of so-dubbed initial exchange offerings (IEOs) — a crypto exchange-hosted alternative to the original model of an initial coin offering (ICO). IEOs offer an alternative model of token offering wherein a crypto exchange acts as a form of underwriter, operating the sale and ostensibly vetting both the projects themselves and prospective investors. The IEO phenomenon has apparently gained traction amid a declining ICO market that has absorbed the adverse impact of a regulatory crackdown and bearish crypto valuations. Bloomberg cites crypto data tracker, whose data reportedly indicates that around $180 million has been raised in 23 IEOs, with most taking place since February. Yet IEOs’ regulatory status is no less clear — and prospectively even less promising — than their ICO predecessors, some critics argue.


IMF Chief Says Cryptocurrencies Are Shaking Up the System As Poll Shows Crypto Takeover in 5 Years: International Monetary Fund managing director, Christine Lagarde, continues to acknowledge the growing impact of cryptocurrencies on traditional financial assets, and is calling for the need to act wisely and with regulatory solutions in mind. Appearing at the IMF’s spring meeting and following a panel discussion on the global network of money and payments, Lagarde made several statements addressing blockchain and crypto.

SEC Chairman Flags Crypto as Continued Regulatory Focus in Latest Speech: The head of United States regulator the SEC reiterated its focus on the cryptocurrency space in a new speech. Speaking at the SEC Speaks conference in Washington, chairman Jay Clayton highlighted the digital currency space while giving a broad overview of the organization’s activities and roles. Clayton chose to touch principally on instances where existing laws had been used to deal with noncompliance from crypto entities. “In the digital assets space, […] the Division of Enforcement has brought cases that demonstrate that there is a path to compliance with the federal securities laws going forward, even where issuers have conducted an illegal unregistered offering of digital asset securities,” he said.

Goldman Sachs CEO Refutes Bank Ever Had Plans to Open Crypto Trading Desk: Goldman Sachs CEO David Solomon has categorically refuted that the bank ever had any plans to open a crypto trading desk and stated that earlier media reports suggesting otherwise were incorrect. Solomon made his remarks before the United States House of Representatives Financial Services Committee on April 10th, during a hearing entitled “Holding Megabanks Accountable: A Review of Global Systemically Important Banks 10 years after the Financial Crisis.”

Leading Crypto Legal Expert: “I’m Not a Fan of the Token Taxonomy Act”: The Token Taxonomy Act has been reintroduced to the United States legislature. If approved, it would exempt cryptocurrencies from being regarded as securities while also providing clear regulations to the crypto space. However, there are some who don’t believe that this bill would lead to proper regulation. One of such personalities is Jake Chervinsky, a leading cryptocurrency legal expert.

‘Onerous’ FATF Recommendations Harmful for Crypto Transparency: Chainalysis: It’s unrealistic and bad for the crypto industry to expect exchanges to send know-your-customer (KYC) information to recipient platforms with every transaction. That’s the gist of a public comment letter filed this week by blockchain analysis firm Chainalysis, in response to a draft recommendation by the Financial Action Task Force (FATF), an intergovernmental organization dedicated to combating money laundering and other financial crimes. In the draft document, published in February, the FATF outlined a number of measures that national governments could adopt to more effectively supervise crypto transactions, and therefore prevent or mitigate money laundering risks. But in Chainalysis’ view, these measures may result in exchanges — or “virtual asset services providers” (VASPs) in FATF parlance — shutting down and decreased visibility into potentially illicit activity.


Bloomberg Sources Reveal Reason for Bakkt’s Bitcoin (BTC) Futures Delay: Bakkt, the widely anticipated crypto trading platform from Intercontinental Exchange, parent company of the New York Stock Exchange, is still on pause, despite hopes that it will usher in a significant wave of institutional investors, from high-net wealth individuals to hedge funds to endowments. According to a new Bloomberg report, unnamed sources say that the regulator’s primary reservation is Bakkt’s ability to provide cryptocurrency custody services for its clients. To meet the regulator’s requirements and to become fully compliant, Bakkt would need to satisfy the Commission’s rules regarding clearinghouses. Those rules stipulate that customers’ funds are deposited at a bank or a trust company. Bakkt is neither.

US SEC and FINRA to Discuss Digital Assets at Joint Broker-Dealer Meeting in June: Two United States regulators, namely the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), will discuss cryptocurrency at a broker-dealer meeting on June 27th. The SEC announced the opening of registration for the event on April 16th on its website. The event will take place at the Federal Reserve Bank of Chicago and will focus on investor protection and “regulatory hot topics,” such as cybersecurity and digital assets.

Winklevoss Twins Reach Settlement With Charlie Shrem: The Winklevoss twins reached a settlement with Charlie Shrem on April 16, 2019, declaring that their case against him has been dismissed with prejudice and will not be reopened. The twins, who founded the Gemini cryptocurrency exchange, originally sued Shrem, the founder of early bitcoin company BitInstant, in November 2018, alleging that Shrem stole 5,000 bitcoin from the pair in 2012. They asserted that Shrem agreed to build a stockpile of cryptocurrency for them at their expense but then came up short by nearly $60,000 in bitcoin at the contemporary market rate, keeping this portion of the hoard secret until its worth grew to the tens of millions of dollars.

US Presidential Candidate Andrew Yang Calls for Clear Crypto Regulations: Andrew Yang, a United States Democratic presidential candidate for the 2020 elections, is advocating for clear regulations on digital assets. Yang put the key operative points in a policy published on his campaign website. Yang — an entrepreneur who contributed $120,000 to establish Venture For America (VFA), an accelerator aimed at building new startups in emerging cities — is running for president in 2020. As part of his presidential campaign, Yang stands for the implementation of cryptocurrency and digital assets regulation in the country.

US Lawmakers Reintroduce Bill Exempting Bitcoin and Crypto From Federal Securities Laws: US Representative Warren Davidson has reintroduced the Token Taxonomy Act (TTA). The bipartisan bill will establish the “digital token” as a new digital asset class, exempting certain cryptocurrencies from federal securities laws and making them subject to a new tax structure. Representatives Davidson and Darren Soto initially introduced the bill in 2018 to prevent cryptocurrencies and digital assets from being classified as securities. The revised Token Taxonomy Act of 2019 (H.R. 2144) provides a more distinct definition of cryptocurrencies and would amend the Securities Act of 1933 and the Securities Exchange Act of 1940.

US Lawmakers Hammer IRS on Bitcoin (BTC) and Crypto Guidelines As France Takes Regulatory Lead in the EU: A bipartisan group of 21 members of the House of Representatives sent a letter to the Internal Revenue Service on April 11th, urging Commissioner Charles Rettig to update its five-year-old guidelines on cryptocurrency-related activities. Led by Representative Tom Emmer from Minnesota, the group wants a written response from the IRS no later than May 15th. The lawmakers are requesting new guidance, given that the government agency’s official document on how tax principles apply to crypto trades and transactions has not included a single frequently asked question since 2014.

In First, FinCEN Penalizes Bitcoin Trader for Violating AML Laws: The Financial Crimes Enforcement Network (FinCEN) has for the first time penalized what it dubs a “peer-to-peer cryptocurrency exchanger” for breaking anti-money laundering (AML) rules. The U.S. regulator announced that California resident and cryptocurrency trader Eric Powers failed to comply with the Bank Secrecy Act’s (BSA) registration and reporting requirements during 2012–2014. While conducting the business of buying and selling bitcoins on the internet, Powers did not register himself as a money transmitter or as a money services business, FinCEN said.

Michigan House of Representatives Votes to Include Cryptocurrencies in Criminal Laws: The Michigan House of Representatives has passed a bill, HB 4102, that would include cryptocurrencies in criminal codes regarding illegal actions for financial gain. Michigan lawmakers have voted to introduce amendments to various sections of the Michigan Penal Code, specifying that cryptocurrency would be included in provisions relating to money laundering, embezzlement, credit card fraud and financial transactions involving the proceeds of a criminal offense. The legislation also prohibits the collection of cryptocurrency — or any currency — for the fighting, baiting or shooting of an animal. State Rep. Ryan Berman told the Detroit News that the bill was inspired by a case of a dog-fighting ring, wherein the organizer was prosecuted, but not individual participants, as they placed their bets using cryptocurrency, which was not expressly prohibited under the law.

Texas Regulator Issues Cease and Desist Order to Crypto Investment Firm FxBitGlobe: An official notice from Texas State Securities Board shows that the regulator has issued an emergency cease and desist order against cryptocurrency and foreign currency trading platform FxBitGlobe. According to the order, the firm, which markets itself as an investment company, reportedly published forged government documents, used a fake address and falsely claimed to be a registered broker-dealer. The document points out that the service offers multiple investment plan tiers — with the highest tier accepting $50,000 or more — payable in fiat money and cryptocurrency. The investment tiers allegedly grant investors access to various “service plans,” each of which promise them corresponding greater daily profits and weekly payouts. The largest tier promising the highest returns guarantees investors a monthly return of 70% alongside a 40% to 45% capital insurance, the document notes.

Bittrex Goes on the Offensive After BitLicense Rejection: Bittrex, a United States–based cryptocurrency exchange platform, has issued a response to the recent setback in its plans to expand to New York. The New York State Department of Financial Services (NYDFS) rejected the exchange’s BitLicense application, a requirement for offering crypto-based services to New Yorkers.

Bitstamp Receives New York BitLicense: Another digital asset platform has received approval to do business in New York. Bitstamp, one of the largest crypto exchange platforms in Europe, has been granted a virtual currency license from the New York State Department of Financial Services (NYSDFS). The exchange became the 19th firm approved to offer crypto-based services in the world’s financial center.

Bitcoin Trader Sentenced to Two-Year Prison Term: Bitcoin trader Jacob Burrell Campos was sentenced on April 8, 2019, to serve a two-year prison sentence and to forfeit more than $800,000 “for operating an unlicensed money transmitting business.” The U.S. Department of Justice (DOJ) announced the conclusion of this case on its official website, claiming that Campos had already been in custody without bail for eight months prior to this verdict.

Former Trading Desk Manager Sues Kraken for $900,000 Over Alleged Failure to Pay: A former employee at United States-based crypto exchange Kraken is suing the firm for over $900,000, claiming the exchange failed to pay him for his work there. Jonathan Silverman — who reportedly joined the exchange in April 2017 to manage institutional sales and its trading desk in New York — claims he reached an oral agreement with exchange founder Jesse Powell to receive a $150,000 salary, as well as 10% commission of the trading desk’s annual profit.


France to Push EU Member States to Adopt Its Cryptocurrency Regulations: France is reportedly going to try to convince other European Union member states to adopt cryptocurrency regulations similar to its own. Bruno Le Maire, French Minister of the Economy and Finance, reportedly stated that France will encourage other EU countries to adopt cryptocurrency regulations similar to those France approved last week. The news rules reportedly aim to attract cryptocurrency issuers and traders to France by providing them some official recognition, while taxing their profits in return. Per the newly adopted regulation, cryptocurrency operators will have to apply for a certification that would purportedly enable authorities to verify who stands behind a new coin’s issuance or a trading platform, also supervising businesses’ plans and Anti-Money Laundering (AML) safeguards.

Lithuanian Finance Ministry to Introduce Legal Amendments for Crypto-Related Firms: The Republic of Lithuania’s Ministry of Finance plans to release legal amendments for operating crypto-related businesses in the country. According to the report, the Lithuanian finance ministry wants to bring more legal certainty to the operation of companies relating to cryptocurrency exchanges, crypto wallet operators, as well as ICOs. By enforcing legal requirements in the industry, the authority reportedly seeks to ensure an efficient policy against money laundering and terrorism financing, as well as to guarantee a due level of consumer protection, the articles writes. The new amendments propose that crypto-related companies will have to be registered with the Center of Registers in order to operate as legal entities. The companies will also have to execute the Law on the Prevention of Money Laundering and Terrorist Financing, as well as to strictly observe KYC laws including reporting high volume financial transactions to the Financial Crime Investigation Service (FCIS).

Wikileaks Founder Julian Assange Arrested in London, Site’s Bitcoin Donations Spike: Julian Assange, co-founder of Wikileaks and early Bitcoin supporter, was arrested at the Ecuadorian Embassy in London and faces extradition to the U.S. on conspiracy charges. Having spent the last seven years seeking asylum in the embassy, Assange has at last lost the support of the Ecuadorian government. He was arrested on April 11th, 2019, for failing to appear in British courts. Originally in hiding due to a Swedish arrest warrant over allegations of sexual assault completely unrelated to his involvement with Wikileaks, these charges have since been dropped altogether. Nevertheless, the British government has sought his arrest for failing to appear in court for these charges.


Japanese Regulators to Introduce New Rules Regarding Exchanges’ Cold Wallets: Japan’s Financial Services Agency (FSA) will reportedly introduce new rules regarding cold wallets for storing cryptocurrencies at crypto exchanges. Citing a source familiar with the matter, Reuters reports that the country’s financial regulator will reportedly require cryptocurrency exchanges to strengthen internal supervision of cold wallets — devices for storing digital currency which are not connected to the Internet. By implementing the new regulation, the FSA purportedly addresses the difficulties of ensuring the security of digital currencies and other risks for the country since it intends to boost the fintech industry to stimulate economic growth.

Japanese Regulator FSA Hears Arguments for not Calling Bitcoin a Virtual Currency: Japanese finance regulator the Financial Services Agency (FSA) no longer wishes to describe Bitcoin as a virtual currency. During a plenary session at the 41st General Assembly of the Financial Council and the 29th Financial Division Meeting, Professor Iwashita Goto of the Public Policy Graduate School of Kyoto University, petitioned members to adapt their view of Bitcoin. The largest cryptocurrency, he argued, has become something beyond a means of transacting, due to its borderless qualities, which have led it to appear throughout the world in its ten-year history.

Japan’s SBI Holdings Invests in Local Crypto Exchange Applicant FXCoin: Japanese crypto startup FXCoin revealed it has completed a third-party allotment of shares with financial services giant SBI Holdings. The development, which contributes to FXCoin’s aim of launching a crypto exchange business in the country. FXCoin, which currently focuses on providing market information for investors, was founded in December 2017 by Tomoo Onishi — the former head of foreign exchange sales at Deutsche Bank. Alongside Onishi, who now serves as FXCoin’s CEO, the startup also reportedly counts Nomura, Mitsubishi UFJ Financial and HSBC veterans in its workforce. FXCoin sealed second tier membership within the Japan Virtual Currency Exchange Association (JVCEA) this February. The membership tier is designed for businesses who are seeking to apply for an official crypto exchange operating license from the country’s financial watchdog, the Financial Services Association.

China’s Proposed Mining Ban Could Be Detrimental to Bitmain: China’s state planning agency, the National Development and Reform Commission (NDRC), has indicated an interest in banning cryptocurrency mining in the country through a notice published online in Mandarin. The report stated that the NDRC will include cryptocurrency mining activities to a list of sectors that could be shut down based on their violation of local regulations, wastefulness, safety concerns or harmful contributions to the environment. The list includes more than 400 other industrial activities.

Will China Ban Crypto Mining? on Cointelegraph.

Thailand Is Opening Up to Crypto, One Step Closer to ICO and STO: Since July, Thailand and its SEC have voiced their intent to legalize the local initial coin offering market and open it to startups. On Dec. 1, 2018, however, the Thai SEC declared Thai-related STOs) in international markets to be illegal and said that it will take appropriate legal action against companies that attempt to distribute STOs created in Thailand to overseas markets. The government’s initial stance toward the approval of STOs in the local market contradicted the Thai SEC’s plans to legalize ICOs and allow companies to raise capital from investors in the public market. This month, the Thai SEC reportedly approved the launch of the country’s first ICO portal, with plans to approve an ICO project in the near future. Archari Suppiroj, the director of the fintech department at the SEC, said that the launch of the ICO portal could lead to the approval of STOs in the local market.

Crypto Exchanges Collaborate With Bithumb to Freeze Stolen Funds After Major Hack: In late March, major South Korean cryptocurrency exchange Bithumb lost around $18 million as a result of a hack. While the details are still sketchy — for instance, it is unclear whether or not it was an inside job, as Bithumb initially claimed — a large portion of the stolen funds have been frozen by various exchanges who received them from hackers attempting to sell the loot. However, despite Bithumb stressing that the hijacked assets belonged to the company and not to its clients, the customers still can’t access their funds, since withdrawals and deposits have been disabled as part of the security measures.

Rest of the World

Chilean Government Introduces New Cryptocurrency and Fintech Regulation Bill to Congress: The Minister of Finance of the Chilean government Felipe Larraín announced the introduction of a bill regulating cryptocurrencies and fintech to Congress. During his recent stay in the United States, Larraín reportedly noted that the requirements introduced by the new regulation will be proportional to businesses. He explained that the rules will take into account that various companies have different business models, and deliver different services that imply different risks for the users and the financial market. Flexibility is among the most important aspects of the bill, since the pace of technological progress is so great. Per the report, Chile is home to a growing number of cryptocurrency exchanges that are currently not regulated.

India Bashes Bitcoin (BTC) and Crypto As ‘Negative’ in Move to Protect Legacy Platforms: In a newly released document from the Reserve Bank of India (RBI), the country’s central bank, officials state that cryptocurrencies are excluded from exploration. The document, “Draft Enabling Framework for Regulatory Sandbox,” outlines which technologies may be tested, eliminating crypto assets and initial coin offerings. In the document, the RBI has compiled a list of products/services/technologies that it calls “negative” and stresses the importance of protecting India’s legacy options.

Cryptos Struggle With Mass Adoption in Pakistan: Almost a year after a blanket ban on cryptocurrencies, Pakistan has come a long way in its attitude toward the space. A recent notice by the State Bank of Pakistan (SBP) declared that institutions willing to work in the sphere of “electronic money” can now get licenced by the SBP to “issue e-money for the purpose of digital payments.” The government hosted a meeting at the Islamabad office of the State Bank of Pakistan for the discussion and formation of crypto regulations, termed Electronic Money Institutions (EMI) regulation. The move toward compliance by the Pakistani government is far from what happened in 2015, when the country was tagged on the Financial Actions Task Force’s (FATF) grey list, which indicated that the country’s laws to counter terrorism financing and money laundering were ineffective. This month, the FATF again voiced concerns, spurring the Pakistan government to take a more serious look at the issues.

Mueller Report: Russia Used Bitcoin to Fund DNC Hacks: An intelligence branch of the Russian government used bitcoin to fund its cyberwarfare efforts to interfere with the 2016 U.S. presidential election, the Mueller Report claims. The culmination of a two-year investigation, the “Report On The Investigation Into Russian Interference In The 2016 Presidential Election” details the findings that Special Counsel Robert Mueller and his team uncovered during their inquiry into whether or not the Trump campaign colluded with Russia to hamper Hillary Clinton’s 2016 run for the presidency.

Mauritius Financial Regulator Issues Guidelines on Security Token Offerings: The Mauritius Financial Services Commission (FSC) has issued a second guidance note concerning security token offering (STO) regulation. In the document, the FSC declared that security tokens are considered digitally represented securities as defined in the Securities Act of 2005. As a consequence, when STOs are conducted in or from Mauritius, the offering is regulated by local security regulations, including the requirement for a prospectus.

Bitcoin and Crypto Bonds on the Horizon As Central Banks Eye Billions in Private-Sector Investment: Speaking at the 2019 annual Spring Meetings in Washington DC. hosted by the World Bank Group and the International Monetary Fund (IMF), the governors of the central banks of Afghanistan and Tunisia explained that they are each striving to issue the world’s first sovereign Bitcoin bond.

This is not financial advice.

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