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Crypto Regulation News: Colorado lawmakers introduced a bill to exempt cryptocurrencies from securities laws, Bitcoin ATM operator is granted NY BitLicense, Japan’s Financial Services Agency May Approve Crypto ETFs

28th January — 11th February



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SEC ‘Crypto Mom’: Delay in Crypto Regulation May Allow More Freedom for Technology: A commissioner of the United States Securities and Exchange Commission (SEC) said, that the delay in establishing crypto regulation may allow more freedom for the industry to move on its own. Heister Peirce, who is widely known as the “Crypto Mom” in the community for her dissent against the SEC’s decision to reject a Bitcoin exchange-traded fund (ETF) proposed by the Winklevoss twins, made the comments in a speech on the issues of state regulation at the University of Missouri School of Law.

SEC Commissioner Jackson Thinks Regulator Will Approve BTC ETF, Leaked Interview Shows: A Bitcoin (BTC) exchange-traded fund (ETF) will most likely ultimately gain approval from the United States securities regulator, according to a commissioner. The comments were reported by political journal Congressional Quarterly in a forthcoming interview leaked on Twitter on Feb. 5. Robert J. Jackson Jr., the Securities and Exchange Commission (SEC)’s only Democratic commissioner, said that despite its string of rejections of ETF applications last year, the practice will ultimately change.

Stablecoins: Why We Need Asset-Backed Multi-Currency Options by Kain Warwick, Founder, Synthetix.

Security Tokens Must Be Driven By Demand by Benjamin Tsai, Managing Partner, Wave Financial Group.


US SEC Seeking Big Data Tool for Major Blockchains: The U.S. Securities and Exchange Commission (SEC) is seeking a tool to provide a Big Data view across major blockchains. The regulator said it is looking for both small and large businesses who can provide data for the “most widely used” blockchain ledgers based on transaction volume, in order to “monitor risk and improve compliance” related to cryptocurrencies. The SEC said it requires the data in an “easily reviewable” format, along with an overview of how the information is extracted and converted to ensure “there is no loss in data completeness and accuracy due to the data transformation tools and processes applied.” Notably, the agency is seeking to identify transaction details among “the universe of available information.” Interested vendors should respond to the SEC by Feb. 14, according to the announcement.

US Congress Passes Bill to Require Study of Crypto in Sex, Drug Trafficking: The United States House of Representatives has passed a bill to commission a study into how cryptocurrencies and online marketplaces can be used to facilitate sex and drug trafficking. The bipartisan bill — known as “the Fight Illicit Networks and Detect (FIND) Trafficking Act of 2019 (H.R. 502) — passed 412–13. H.R. 502 will require the Comptroller General of the U.S. to investigate how cryptocurrencies and online marketplaces may (in)directly enable sex or drug trafficking, and — based upon the study’s findings — recommend regulatory and legislative actions that would impede such illicit use.

Colorado Digital Token Act Exempts Cryptocurrencies From Some Securities Laws: Colorado lawmakers have introduced a new bill to exempt cryptocurrencies from certain securities laws. The new bill, called Colorado Digital Token Act, was proposed by Republican Jack Tate and Democrat Steve Fenberg. It provides limited exemptions from the securities registration and securities broker-dealer and salesperson licensing requirements for persons dealing in cryptocurrencies. The bill defines cryptocurrency as a digital unit with specified characteristics, secured through a decentralized ledger or database, exchangeable for goods or services, and capable of being traded or transferred between persons without an intermediary or custodian of value.

New York Financial Regulators Grant BitLicense to Bitcoin ATM Operator: The New York State Department of Financial Services (NYDFS) has granted a virtual currency license, or BitLicense, to Cottonwood Vending LLC. Cottonwood Vending is a Bitcoin (BTC) ATM operator with terminals in New York City and the surrounding area. According to the tweet, the granting of such licenses “continues to advance responsible innovation in New York’s fintech industry.”

Crypto Task Force Formed By New York: Clyde Vanel, an assemblyman of the New York state (NYS) legislature, has announced that the state will officially launch a task force to study how to properly regulate, define and use cryptocurrency.

Florida Appeals Court Reinstates Felony Charges for Unregistered Bitcoin Sale: A United States appellate court in the state of Florida has reinstated charges against a man who sold Bitcoin (BTC) to an undercover police officer. According to the report, the Third District Court of Appeal ruled that a judge who dismissed charges against the defendant, Michell Espinoza, was wrong. Espinoza is a website designer who was charged with allegedly transmitting and laundering $1,500 worth of BTC without a money transmitter license.

Under Fire: Kik Is Gearing Up for a Fight With the SEC: Canadian-based social media startup Kik is gearing up to challenge a proposed enforcement action from the United States Securities Exchange Commission (SEC) over a fundraising initiative in 2017. The American securities regulator believes that Kik’s Token Distribution Event (TDE) two years ago violated securities laws. The company raised $97 million during its fundraising phase, a princely sum for a platform that has garnered millions of users since its inception. Following the SEC’s recommendation of an enforcement action in November 2018, Kik was served with a “Wells Notice,” a letter to the company that needs to be responded to in 30 days.

Crypto Holder, Congressional Rep. Tulsi Gabbard Formally Launches US Presidential Campaign: Crypto holder Tulsi Gabbard, the United States Representative for Hawaii’s 2nd congressional district, has formally launched her campaign for the forthcoming 2020 U.S. presidential elections. Gabbard — a Democrat who resigned as Vice Chair of the Democratic National Committee (DNC) in order to endorse Senator Bernie Sanders for the party’s presidential nomination back in 2016 — had first confirmed her own intent to join the 2020 race for president in an interview with CNN in early January. With Gabbard’s campaign officially launching on Feb. 2, commentators from the crypto space have been quick to note that the candidate has declared a number of investments in cryptocurrencies, alongside stock indexes.


European Union Regulators Call For EU-Wide Crypto Rules: The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) have called for an EU-wide approach to cryptocurrency and initial coin offerings (ICO) regulation in order to protect investor. The EBA published the results of its assessment of EU laws and how they relate to cryptocurrencies earlier this week. The report found that cryptoassets typically fall outside the scope of EU financial laws since specific services relating to crypto custodian wallet provision and crypto trading platforms do not constitute regulated activities. According to the EBA, these factors give rise to potential issues, including regarding consumer protection, operational resilience, market integrity and the level playing field.

UK Financial Watchdog: $255 Mln Lost in Crypto-Related, Other Investment Scams in 2018: The United Kingdom Financial Conduct Authority (FCA) has reported that common investment scams’ losses — including those crypto-related — amounted in total to over £197 million ($255 million) in 2018. According to data from the FCA call center, the most common reported scams involved unauthorized investments in shares and bonds, forex markets and cryptocurrencies. Each victim lost an average of £29,000 ($37,000), with such types of fraudulent investments accounting for a total of 4,996 reported cases and constituting 85 percent of the overall number of scam reports in 2018.

Ireland’s Anti-Money Laundering Bill Tackles Use Of Cryptocurrencies In Terrorism: The Irish Cabinet has approved a new bill designed to tackle money laundering, including the use of cryptocurrencies in funding terrorism. The bill, called the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2019, would give effect to the European Union (EU) Fifth Anti-Money Laundering (AML) Directive, which came into force on July 9, 2018. Under the new directive, Financial Intelligence Units (FIU) will be allowed access to information which will enable them to associate cryptocurrency addresses to the identity of the owner of the cryptocurrency. The goal of the EU directive is to prevent risks associated with the use of cryptocurrencies for terrorist financing and to ensure increased transparency of financial transactions. If the bill passes, banks and other financial institutions in Ireland will be required to carry out stricter due diligence before taking on new clients. Credit and financial institutions will be prevented from creating anonymous safe deposit boxes. The bill will also allow the Garda and the Criminal Assets Bureau to access bank records in the course of money laundering investigations.

Isle of Man Gov’t Executive Agency Forms Global Blockchain Office, Regulatory Sandbox: An advisory body for the self-governing British dependency Isle of Man (IoM) has launched a hub to promote the development of blockchain. As a key decision maker for the economic growth of the IoM, Digital Isle of Man initiated the formation of the Blockchain Office, a global blockchain hub to provide a favorable environment for the development of blockchain projects. Along with founding the Blockchain Office, the government executive agency has also launched an Isle of Man Sandbox in order to guide blockchain businesses through the existing and future regulatory frameworks in accordance with relevant legislation and regulation. Blockchain-related firms will reportedly be able to apply to join the IoM blockchain Sandbox from March 2019, with the office expected to be entirely operational in the spring.

Danish Government’s Energinet Signals Iota Deal to Improve Energy Sector Offerings: Danish state-owned energy company Energinet has expanded its partnership with distributed ledger network Iota to investigate use of its technology in new areas. Energinet, which is an independent enterprise under Denmark’s Climate and Energy Ministry, wants to examine how it could leverage Iota’s Tangle technology in the energy and Internet of Things (IoT) markets. The two entities have worked together on a data marketplace initiative since late 2017, a larger project involving other companies.

Malta’s Regulatory Framework Attracts Crypto Players, but Int’l Watchdogs and Local Opposition Are Skeptical: Last week, the International Monetary Fund (IMF) claimed that the growth of blockchain in Malta has created major risks of money laundering and terrorism financing in the island’s economy, as per the local media. Malta is renowned for its crypto-friendly politics, whose efforts in the field have earned it the moniker of “blockchain island.” However, its push for becoming the international crypto hub has attracted criticism from both global watchdogs and local opposition.

HIVE Blockchain Criticizes Norway’s New Crypto Mining Regulation: HIVE Blockchain Technologies Ltd. has provided an update regarding the company’s response to recent regulatory changes proposed by the Norwegian Parliament. In a press release, HIVE, which acquired Kolos Norway AS in May 2017 to build a giant data center in Ballangen, Nordland, said that it is deeply disappointed and frustrated by the proposed changes to the government framework conditions without discussion, consultation, or dialog with the industry. According to the company, the bill represent a significant impediment to attracting long-term foreign investment to the region and creates uncertainty for other global investors.

Italian Financial Regulator Issues Cease And Desist Order Against Crypto Startup Avacrypto: The National Commission for Companies and the Stock Exchange (CONSOB), Italy’s financial regulator, has issued a cease-and-desist order against cryptocurrency startup Avacrypto for offering unauthorized investment services. Avacrypto allegedly offered its services to the Italian public while not registered with any European regulator as a licensed broker. Avacrypto’s website is currently not accessible.


Japan’s Financial Services Agency May Approve Crypto ETFs After Ignoring Futures Contracts: Japan’s Financial Services Agency (FSA) is considering approving cryptocurrency-based exchange-traded funds (ETF). Citing a person familiar with the matter, Bloomberg reported that the FSA abandoned its plans to allow listed derivatives based on cryptocurrencies, but is open to approving crypto ETFs. According to the report, the Liberal Democratic Party will submit draft legislation by March, which could include such a move through amendments to existing financial rules.

Crypto Exchange Body In Japan Adds Five More Exchanges: The Japanese Virtual Currency Exchange Association (JVCEA), a self-regulatory industry body, has added five more crypto exchanges as Type II members. The JVCEA was formed last year by 16 regulated crypto exchanges in Japan. Initially, only registered exchanges could join the self-regulatory body. However, after the association was granted self-regulatory organization (SRO) status by Japan’s Financial Services Agency (FSA) in October 2018, the JVCEA opened up membership to other local crypto exchanges. In its latest announcement, the association said that the new Type II members are Coincheck, Everyone’s Bitcoin, Lastroots Inc., LVC Corporation and Coinage Corporation. According to the JVCEA, Type II members are crypto exchanges that are in the process of applying for virtual currency trader registrations.

South Korea Will Keep ICO Ban, Says Financial Services Commission: South Korea will continue to ban initial coin offerings (ICOs) in the country, state financial regulator the Financial Services Commission (FSC) confirmed in a press release Jan. 30. Unveiling the results of a survey undertaken from September 2018, the body said it had discovered that firms conducting ICOs were making use of foreign jurisdictions, but still raising funds from South Korean nationals.

Korean Central Bank Study: Issuing Digital Currency Poses Financial Risk: Researchers from South Korea’s central bank say issuing a central bank digital currency (CBDC) could have negative ramifications for the economy. The Bank of Korea (BoK) published a study, which modeled how a CBDC issuance might affect on liquidity at commercial banks. It found that if the public could access the theoretical digital currency directly, commercial banks’ demand deposits, or reserves, could be reduced — leaving them with a cash shortfall. That could eventually force them to compensate by raising interest rates on loans, the central bank explained.

Singapore: Regulator Warns of Online Scam Claiming Gov’t Adoption of Crypto: The Monetary Authority of Singapore (MAS) has warned the public against an alleged scam claiming that a cryptocurrency is officially adopted by the government. MAS, which is both Singapore’s central bank and the country’s financial regulator, writes that the fraudulent scheme is being spread through websites that offer crypto investment using false data attributed to the government. The fraudulent websites reportedly claim that Singapore is adopting a cryptocurrency as its official coin, and ask users to provide personal and financial data to buy the crypto on an exclusive basis.

Thailand Issues Digital Asset Licenses To Four Crypto Exchanges: The Finance Ministry of Thailand has granted operating licenses to four digital asset businesses and denied licenses for two companies seeking to become authorized crypto exchanges. In a statement, the Thai Securities and Exchange Commission (SEC) revealed that the ministry approved Bitcoin Co, Bitkub Online and Satang Corporation as authorized crypto exchanges, while Coins TH has been approved as a licensed broker and dealer of cryptocurrencies.

Taiwan Authorities Arrest 15 Suspects Connected To $8 Million IBCoin Scam: Police in Taiwan have arrested 15 individuals for their part in an alleged cryptocurrency scam involving IBCoin. The report states that over 30 investors were defrauded out of 250 million New Taiwan dollars (NT$), the equivalent to about $8 million USD.

Rest of the World

Venezuela: New Crypto Legal Framework Comes Into Force: Venezuela’s new crypto bill, which establishes а legal framework for the industry, officially came into force on Jan. 31. The set of rules for miners, crypto entrepreneurs and regular traders was initially approved by Constituent National Assembly — an alternative to the country’s Parliament, created in 2017 — in November, 2018. The document titled “Constituent Decree on the Integral System of Crypto Assets” contains 63 articles. It gives short definitions of key crypto terms, such as crypto assets, blockchain, mining, cryptography, etc. It introduces the concept of a sovereign crypto asset — any currency issued in Venezuela and authorized by the government.

Eurasian Economic Commission Prepares Report on Cryptocurrencies, Considers Regulation: The Eurasian Economic Commission, which serves as an executive body of the Eurasian Economic Union (EAEU), has prepared a report on cryptocurrencies to promote regulation in the area. The Commission’s minister for integration and macroeconomics, Tatyana Valovaya, said that EAEU — a political and economic union established by Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan in 2014 — aims to create a consolidated financial market by 2025. As the cryptocurrency and blockchain industries are becoming more robust, the EAEU has to study them, she continued.

Top Russian Official Urges Parliament to Discuss Draft Crypto Bill Without Further Delays: The chairman of the upper house of Russian parliament has urged MPs to expedite their work on digital economy bills that include a draft on crypto regulation. Valentina Matvienko, who has headed the Federation Council since 2011, spoke to officials from several institutions, including the Upper House Committee for Economic Policy and Russia’s Ministry of Digital Development, Communications and Mass Media. She asked him to investigate the reasons behind the significant delay with the digital economy bills.

Crypto Regulatory Working Group Established By South African Government: The South African government has established a regulatory working group to investigate all aspects of cryptocurrencies and related blockchain concepts. In a written reply to a parliamentary question by Freedom Front Plus MP Wouter Wessels, South African finance minister Tito Mboweni said that the working group, which includes representatives from multiple South African agencies, will develop a cohesive governmental response to cryptocurrencies and a unified inter-governmental regulatory framework.

Crypto Custody Rules Published By Bermuda Monetary Authority: The Bermuda Monetary Authority (BMA), the country’s financial services regulator, has released a draft regulation for cryptocurrency custodial services. Released last month, the draft law, titled Code of Practice for Digital Asset Custody, aims to ensure a high level of care when safeguarding client’s assets. The code covers both technology and business controls in specific areas like hot and cold storage, key generation, transaction handling, incident reporting and more.

Saudi Arabia, UAE Aim to Cut Payments Costs With Common Digital Currency: The central banks of Saudi Arabia and the United Arab Emirates (UAE) have jointly launched a digital currency trial. The Saudi Arabian Monetary Authority (SAMA) and the Central Bank of the UAE jointly announced that the project is aimed to facilitate blockchain-based financial settlements between the two countries. While the central remittance systems in both countries have “evolved overtime and proved their feasibility,” international remittances have need for improvement, the central banks said.

Iran Criminalizes Use Of Telegram’s Gram Cryptocurrency: The government of Iran has criminalized the use of Gram, the native cryptocurrency of instant messaging app Telegram.

QuadrigaCX Is Filing for Creditor Protection Amid Liquidity Crisis, Community Remains Largely Skeptical: Canadian cryptocurrency exchange QuadrigaCX is in hot water: Following the sudden death of its 30-year-old founder, Gerald Cotten, the exchange has allegedly lost access to its cold wallets, where most of the funds were stored. Now, the exchange has taken to court to avoid the collapse, but some community members suggest that QuadrigaCX’s cold wallets never existed.

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