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Crypto Regulation News: Thailand Approves ICO Portal, Switzerland to Approve Motion for Cryptocurrency Regulations, Russia’s New Digital Rights Legislation

11th March — 25th March



Bitcoin Futures Volume Is More Significant Than You Think, Bitwise Says: The bitcoin futures market is far larger, relative to the spot market, than previously thought, says Bitwise Asset Management. In a wide-ranging report which claims 95 percent of all reported bitcoin trading volume is faked, Bitwise says that nevertheless, the bitcoin “futures market is significant” when viewed in light of the remaining, genuine 5 percent of spot trading that occurs at regulated exchanges. The report was presented earlier this week to the U.S. Securities and Exchange Commission (SEC), which is currently reviewing a bitcoin exchange-traded fund (ETF) proposal Bitwise filed in January this year with NYSE Arca.

Growth of Crypto Industry Could Threaten Banks, Financial Stability: Basel Committee: International banking authority the Basel Committee on Banking Supervision (BCBS) has issued a warning statement on crypto assets on March 13th. The BCBS is a committee of banking supervisory authorities hosted and supported by the Switzerland-based Bank for International Settlements (BIS) — an organization made up of 60 of the world’s central banks. The committee warned that the robust growth of the crypto industry could potentially “raise financial stability concerns and increase risks faced by banks.” The committee noted the risks were present despite the crypto market’s currently small scale in relation to the scope of the global financial system.


SEC Chief: Bitcoin and Crypto Show Significant Promise, ETF Could Satisfy Our Rules: In a new interview with Fox Business, US Securities and Exchange Commission Chairman Jay Clayton says Bitcoin and crypto have a lot of potential, adding there “may be a case where a Bitcoin ETF could satisfy our rules.” “I think this technology has and is already demonstrating pretty significant promise, but it’s demonstrating significant promise in the places where it’s consistent with our approach to capital raising in the past.” Seven comment letters submitted to the SEC offering feedback on the VanEck/SolidX Bitcoin ETF proposal are highlighting concerns about market manipulation. The SEC’s notice of filing for the rule change was met with mixed reviews, mostly negative.

SEC’s Head of Digital Assets Says Crypto Spring Is Coming, Stablecoins May Be Securities: US Securities and Exchanges Commission (SEC) senior advisor for digital assets, Valerie Szczepanik, says stablecoins could face an uphill battle against current securities laws. Decrypt reports that Szczepanik made the statement at Austin’s SXSW conference where she placed stablecoins into three separate categories.

  • Those backed by real assets such as gold or real estate
  • Those tied to fiat currency in reserves
  • Those backed by market financial mechanisms

According to the report, algorithmic and digital-asset backed stablecoins “could raise issues under securities laws.”

Republican Leader McCarthy Proposes Blockchain Transparency in Government: Kevin McCarthy, the Republican leader of the U.S. House of Representatives, has called for an exploration to see if blockchain can make the U.S. government more efficient and transparent. In a speech before the Select Committee on the Modernization of Congress on Tuesday, McCarthy said that blockchain is “revolutionizing” the security of the financial industry and that it can also help transform the “transparency of our own legislative process.”

MIT Bitcoin: Legislators Discuss Regulation, Potential of Blockchain Tech: On March 9–10, 2019, the Massachusetts Institute of Technology hosted a two-day event, the MIT Bitcoin Expo 2019. Put together by the student-organized MIT Bitcoin Club, the conference welcomed more than just Bitcoin voices from every corner of the industry. One of those voices was that of U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce. Peirce sat down with Gary Gensler, ex-chairman of the Commodity Futures Trading Commission, senior lecturer at the MIT Sloan School of Management and senior advisor to the director of the MIT Media Lab, to discuss the progress of the SEC’s efforts to regulate the cryptocurrency industry. Notably, Gensler and Peirce launched into a discussion on what regulators can do better to protect investors from fraud and malicious actors.

Winklevoss Capital Partner Sterling Witzke: Dollar Is Not Designed for the Internet, but Stablecoins Are: Sterling Witzke has been working at Winklevoss Capital — a venture capital firm set up by the famous Winklevoss twins — for five years now. As a professional investor, she is very interested in financing early stage crypto and blockchain projects. She believes that stablecoins are perfectly designed for the needs of internet payments and will steadily gain popularity as the industry evolves.

Bitcoin Critic and BIS Chief Shreds Idea of Central Bank-Issued Cryptocurrenices: Bitcoin critic Agustín Carstens, general manager of the Bank for International Settlements (BIS), delivered a stark message on Friday about the future of money. Despite rapid technological changes, Carstens says central bankers aren’t compelled to overhaul monetary policies. Central bank-issued digital currencies (CBDCs), he adds, are not in demand. Speaking in Dublin at the Central Bank of Ireland, Carstens explains that money and payment systems together make up the monetary system, and that the system is thwarting technology and Bitcoin hype.

Harvard Fellow: Congress Needs to Fix Crypto ‘Gap’, Bitcoin Creates ‘New Financial Intermediaries Less Accountable Than Big Banks’: Timothy Massad, a senior fellow at the John F. Kennedy School of Government at Harvard and former chairman of the Commodity Futures Trading Commission, says US regulators have a big hole on their hands, lying somewhere between the US Securities Exchange Commission and the Commodity Futures Trading Commission. And Bitcoin has slid right down the middle. In a new report published by the Brookings Institute, entitled “It’s Time to Strengthen the Regulation of Crypto-Assets,” Massad argues that neither the SEC nor the CFTC, which do not coordinate, has sufficient jurisdiction to tackle Bitcoin’s regulatory challenges.

Mt Gox Creditors Warn Mass Sale Could Put Bitcoin Fork Prices At Risk: Mt. Gox Legal, a group of around 1,000 creditors of collapsed crypto exchange Mt. Gox, has prepared a draft proposal representing its consensus on how the exchange’s remaining assets should be paid out, according to a document obtained by CoinDesk. Mt. Gox trustee, Nobuaki Kobayashi, released new details this week on the amounts of secured cryptocurrency (in bitcoin and bitcoin cash) and fiat currency it has approved for payouts to the estate’s many creditors as part of the civil rehabilitation process.


House Lawmakers Pass Bill Targeting Bitcoin and Crypto Asset Use by Terrorists: New legislation affecting Bitcoin and crypto just passed the US House of Representatives. The FinCen Improvement Act, introduced by representative Jennifer Wexton (D-VA), passed the House and was received in the Senate. It was subsequently referred to the Senate Committee on Banking, Housing and Urban Affairs. The legislation is designed to protect the country against terrorism, with an eye on cryptocurrencies.

CFTC: We’re ‘Diligently’ Working on All Crypto-Related Applications, Including Bakkt’s: United States regulator the Commodity Futures Trading Commission (CFTC) is actively working to approve multiple crypto-related applications, including for Bitcoin (BTC) futures from institutional trading platform Bakkt. A CFTC commissioner revealed the news in remarks to cryptocurrency news network Blocktv in an interview on March 19. Answering a question about the status of Bakkt’s application, which has seen multiple delays, commissioner Dan Berkovitz avoided a direct update on the project, instead saying that the CFTC was trying to assist all cryptocurrency-related products in obtaining the necessary approval for launch in the U.S.

Bakkt Delay Due to CFTC Concerns Over Its Planned Custody of Clients’ Bitcoin: WSJ: Much-anticipated crypto platform Bakkt’s plans to store customers’ Bitcoin from its Bitcoin futures could cause further delay on obtaining approval from United States regulator the Commodity Futures Trading Commission (CFTC). The news was reported by the Wall Street Journal on March 21st, citing anonymous sources. When Bakkt was first announced back in August, the platform had revealed that its first product would be Bitcoin futures that are physically delivered daily, subject to CFTC approval. Bakkt also said that it planned to hold Bitcoin on behalf of its clients via its “physical warehousing.” According to “people familiar with the matter,” in February, the CFTC told the platform that if it were to have custody over its customers’ crypto, it would have to take additional steps to comply. In particular, the CFTC would “require disclosures of the venture’s business plan and a public comment period, which would have further delayed approval.”

US Securities and Exchange Commission Set to Launch Crypto Road Trip: The US Securities and Exchange Commission will kick off its crypto road trip on March 26th in San Francisco. The SEC’s Strategic Hub for Innovation and Financial Technology (FinHub) will open its doors from 12:00–4:00 p.m. to crypto and blockchain entrepreneurs to field questions about how to determine if an instrument is a security, and how to handle securities registration, trading registration and more. March 26th will mark the first of the Commission’s “local peer-to-peer” meetings around the US, allowing fintech leaders to speak in person with regulators. The outreach effort is designed to open the lines of communication between regulators and innovators in the digital asset space.

Did the SEC Chairman Confirm Ethereum Isn’t a Security? Not Quite, but It’s Optimistic: Ethereum is most likely not a security under existing United States laws, as previously said by U.S. Securities and Exchange Commission Division of Corporate Finance head William Hinman. “Based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions,” Hinman said on June 14, 2018. But, while the statement of SEC Chairman Jay Clayton released on March 12 is certainly positive for the cryptocurrency sector, it did not directly confirm that Ethereum is not a security.

SEC’s Finhub to Host Public Forum on Blockchain, Digital Assets in May: United States regulator the Securities and Exchange Commission has announced that it is hosting a public forum on distributed ledger technology and digital assets this May. The commission’s Strategic Hub for Innovation and Financial Technology has organized the event — dubbed the Fintech Forum — which will take place on May 31st, 2019. The press release reports that the forum will include industry experts as panelists and is “designed to foster greater communication and understanding around issues involving DLT and digital assets.”

Most Respondents File Negative Comments for SEC’s Review of VanEck/SolidX Bitcoin ETF: Multiple respondents have filed comments with the United States Securities and Exchange Commission (SEC) on the latest proposed rule change for the VanEck/SolidX Bitcoin (BTC) exchange-traded fund (ETF). As reported, CBOE’s BZX Equity Exchange — the exchange that would prospectively list the Bitcoin ETF — had temporarily withdrawn its application for a rule change on the ETF in January, citing the negative impact of the U.S. government shutdown on the SEC’s operations. CBOE then resubmitted the application for the SEC’s consideration at the end of the month.

Proposed Texas Bill Would Require ID Verification for Crypto Use: A bill proposed by the Texas legislature will require that all receivers of cryptocurrency in regular transactions verify the identity of the cryptocurrency sender before accepting any payment. If passed, the measure will go into effect on September 1st, 2019. In its current form, the text of the bill itself is brief, providing very few clues as to how such an ambitious task will be carried out. Apart from definitions of basic terms, the bill’s most concrete requirement is that “before accepting payment by a digital currency, a person must verify the identity of the person sending payment,” with an exception to be made if both parties are already using “digital currency that allows the true identities of the sender and the receiver to be known before a person has access to another person’s digital wallet.”

Texas Bill Targets Bitcoin and Crypto Privacy, Would Effectively Ban Monero, Zcash and Grin: Texas Representative Phil Stephenson has introduced House Bill 4371, which would require crypto users to identify themselves before making transactions. According to HB-4371, “Before accepting payment by a digital currency, a person must verify the identity of the person sending payment. A person is not required to verify the identify of a person sending payment if the payment is sent by a verified identity digital currency.” “This state may not use a digital currency that is not a verified identity digital currency.” Cryptocurrencies that use privacy features to mask the identity of senders and recipients would be prohibited. Although the bill does not explicitly name cryptocurrencies that anonymize their users, coins such as Monero, Zcash and Grin which use protocols to ensure private transactions would be banned.

Colorado Lawmakers Introduce Blockchain Agriculture Bill: If passed, a blockchain advisory group would present its findings by January 15th, 2020. Lawmakers from the state of Colorado introduced a bipartisan bill calling for the study of how blockchain technology might be applied to the state’s agricultural industry. House Bill 1247 is championed in the house by representatives Donald Valdez and Mark Catlin, with state senators Kerry Donovan and Don Coram also sponsoring. The bill calls for the state’s commissioner of agriculture to develop an advisory group to study possible use cases for blockchain technology in agricultural operations.

Several Nevada Stakeholders Oppose Uniform Virtual Currency Bill: SB195 was recently heard in the Nevada Senate, but myriad groups are opposed to the bill’s passage. The path toward decentralization is paved with good intentions. Scratch that — it’s paved with well-intended lawmakers who seek to uniformly regulate the ever-evolving blockchain and cryptocurrency industry but, in doing so, may unintentionally stifle its growth and introduce layers of centralization.

Missoula County Commissioners Look To Require Renewable Energy Practices For Mining Operations: County Commissioners Josh Slotnick and Dave Strohmaier of Missoula County, Montana, have drafted regulation proposals regarding zoning policies and renewable energy practices for the county’s crypto mining operations. The county is hoping the regulations will “mitigate the adverse impacts of cryptocurrency mining operations identified by the county, including high energy consumption, noise, and electronic waste.”

US Treasury Sanctions Russian Bank Over Links to Venezuela’s Petro: The U.S. Department of the Treasury has sanctioned a Moscow-based bank over its role in financing Venezuela’s controversial petro cryptocurrency. The Treasury announced that its Office of Foreign Assets Control (OFAC) has added Evrofinance Mosnarbank — which is jointly owned by Russian and Venezuelan state-owned firms — to the Specially Designated Nationals List, as it was the “primary” international bank that helped finance disputed Venezuelan president Nicolas Maduro’s “failed” petro project.


Switzerland’s Parliament Approves Motion for Cryptocurrency Regulations: The Swiss Parliament has passed a motion to include cryptocurrency regulation under the current legislation. The Swiss Federal Assembly, which handles government legislation, approved on March 20th a motion directing the Federal Council to regulate cryptocurrencies. Switzerland has long been recognized as a leading hub of blockchain and cryptocurrency technology, with the Swiss town of Zug internationally referred to as “Crypto Valley.” Liberal Assemblyman Giovanni Merlini will instruct the Federal Council on adapting existing legislation to include and accommodate cryptocurrency and associated risks. The Council approved the motion with 99 to 83 votes in favor and 10 abstentions.

German Bank Association: New Regulation for DLT-Based Securities May Be Necessary: The Association of German Private Banks (Bankenverband) foresees that a need for new regulation may arise from the emergence of distributed ledger technology (DLT)-based securities. Per the post, if securities are issued using new technologies, then there is a need for new safekeeping and settlements processes. According to Bankenverband, corporate actions and securities trading may also be subject to change because of DLT-based securities. The statement further explains that because of the changes that new technologies will create in business processes, “adaptations of civil and regulatory requirements at national and European level may be necessary.”

UK Parliament Presented Showcase of Real-World Blockchain Applications: The U.K. Parliament has been presented demonstrations of real-world blockchain applications designed to educate policymakers. Organized by the All-Party Parliamentary Group on Blockchain (APPG Blockchain), the Monday event featured live presentations from four firms working in the blockchain industry: IOTA, Oracle, Everledger and Lloyd’s of London. Among the audience were members of parliament, government officials and industry leaders, according to a statement from organizers. The live demonstrations highlighted the potential of blockchain in real-life applications in supply chains for olive oil and diamonds (Oracle and Everledger, respectively), international trade (IOTA) and insurance claims and transactions settlement (Lloyd’s).

CipherTrace Partners with Maltese Regulators to Manage Risk of Financial Crimes: CipherTrace, a blockchain analytics company, is partnering with the Republic of Malta’s sole financial regulatory agency to ensure that all crypto transactions within the country are free of money laundering and other similar financial crimes. The Malta Financial Services Authority (MFSA) has enlisted the help of U.S.-based company CipherTrace to audit cryptoasset services that operate within Malta’s jurisdiction.


Japan Throttles Crypto Margin Trading From 25x Down to 2x-4x with New Regulation: Japan is making progressive new regulations that will benefit cryptocurrency trading in the mainstream. Following similar action by Japanese financial authorities last year, the country’s cabinet has approved a new raft of regulation aimed at bringing cryptocurrency trading into the mainstream fold. The Nikkei Asian Review reports that on Friday, the cabinet approved a set of amendments for existing payment services and financial instrument laws. Under the new regulations, cryptocurrency exchanges that offer margin trading will only be able to offer between 2x and 4x leverage. The new regulations also make it compulsory for such exchanges to register with the government in what may be viewed in some quarters as a significant step on the road to cryptocurrency becoming recognized as legal tender in the country. Already one of the world’s most crypto-positive regulatory environments, the new regulations could potentially place Japan at the vanguard of global cryptocurrency regulatory practice.

Japanese Representative Says Taxes Are Crippling the Growth of Crypto and Blockchain: Takeshi Fujimaki, a member of the House of Councillors of Japan and acting President of the Japan Restoration Committee, says the country’s tax system is slowing the development and adoption of cryptocurrency and blockchain technology. The Financial Supervisory Authority is proposing tax reforms that make it possible for crypto enthusiasts who spend, trade or hodl their investments to do so without burdensome tax laws.

Thailand’s SEC Approves ICO Portal Meant To Protect Investors: With the approval of the portal, the country continues to expand its cryptocurrency and blockchain tech regulation. Thailand’s Security and Exchange Commission (SEC) has approved the country’s first ICO portal. The director of the Thai SEC’s FinTech department, stated the portal is now being finalized for official approval from other government bodies, including the Commerce Ministry. The ICO portal’s intended purpose is to protect investors from scam investments. Along with screening ICOs, it will work to verify the projects’ EDCC (i.e., smart contract) source codes and implement know-your-customer processes to help counteract financial crimes. Potential investors will be able to visit the portal to check the legitimacy of an ICO.

Rest of the World

Israeli Court Rebuffs Union Bank’s Blanket Ban On Crypto Accounts: The bank can still refuse service to criminals using cryptocurrency — but not because they’re using crypto. Earlier, a court in Israel ruled against the Union Bank of Israel’s policy that prohibits participants in the cryptocurrency industry from opening bank accounts. Tel Aviv District Court Judge Limor Bibi ruled that the bank did not have reasonable cause to close the account of Ukrainian mining company Yashraminer. However, the judge also ruled that the bank has the right to refuse to deposit money made by converting crypto into fiat. The case was brought before the Israeli court last year when the bank refused to receive the company’s receipts and closed its account. These actions were apparently due to the bank’s “sweeping policy, which completely prohibits the opening of an account for a customer engaged in digital currencies.”

Canadian Financial Authorities Look For Input On Crypto Regulation: Against the backdrop of the QuadrigaCX debacle, the CSA and IIROC look to combine global and Canadian-specific ideas to build a regulatory framework tailored to cryptocurrency platforms. Two Canadian financial authorities have published a consultation paper to solicit feedback from the country’s FinTech community, market participants, and investors regarding the implementation of regulatory frameworks for Canadian cryptocurrency platforms. Published jointly by the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC), the two financial authorities note that Canadian crypto platforms have informed them that a regulatory environment is welcome in order to help “build consumer confidence.”

QuadrigaCX Nightmare Continues As Widow Issues New Statement and Canadian Regulators Revamp Framework for Crypto Platforms: A week after QuadrigaCX CEO Gerald Cotten and Jennifer Robertson arrived in India for their honeymoon on November 30, 2018, Cotten, who suffered from Crohn’s disease, reportedly died. A month later, on January 14, 2019, his death was publicly revealed. Since that time, Cotten’s widow and the exchange have been caught up in scandal, legal drama, audits, allegations, mystery and doubt. The exchange says Cotten, who worked on his laptop, was the only person who had access to Quadriga’s cryptocurrency. Following his death, roughly $145 million in cryptocurrencies is still missing. Robertson has issued a new statement, dated March 13th, revealing that law firm Stewart McKelvey no longer represents QuadrigaCX. Robertson also confirms that her husband’s death was “sudden and unexpected” amidst conspiracy theories that Cotten is still alive and that his death was a ruse to escape financial troubles.

Russia Prepares for Digital and Crypto Asset Revolution, Passes New Digital Rights Legislation: Russia’s parliament has passed a new law designed to develop the country’s digital economy. The law introduces the concept of digital rights using article 141.1 of the Civil Code of the Russian Federation. It also determines rules for digital transactions. According to an announcement, “Digital rights are proposed to mean special ‘obligations and other rights, the content and conditions of which are determined in accordance with the rules of the information system that meets the statutory requirements; the exercise, disposal, including transfer, pledge, encumbrance of a digital right by other means or restriction of disposal thereof is possible only in the information system without recourse to a third party.’ ”

Russia: Central Bank Suggests Limiting Sale of Crypto Assets for ‘Unqualified Investors’: The Central Bank of Russia wants to set an annual limit for so-called “unqualified investors” that want to purchase digital assets. According to the documents obtained by RBC, the bank wants to amend the current draft crypto bill, dubbed “On Digital Financial Assets,” which recently passed a second of three readings in Russia’s parliament, the State Duma. The central bank’s paper recommends equating investor limits to the ones set in a draft bill on crowdfunding, which is also being reviewed by the Russian parliament. The head of the State Duma’s committee on financial markets Anatoly Aksakov told RBC that the threshold will likely be established at around 600,000 rubles (about $9,100) per year — the same as the yearly investment limit in crowdfunding projects.

Australian Government to Help Fund Trade Mission to CoinDesk Consensus: Australia’s government has committed AU$100,000 (US$71,139) funding for a blockchain industry trade mission to CoinDesk’s Consensus event in May. Minister for Industry, Science and Technology Karen Andrews and Minister for Trade, Tourism and Investment Simon Birmingham jointly announced Monday that the federal government funding is aimed to help Australia become “a global leader” in the “burgeoning” blockchain industry.

Bitcoin Exchange: Don’t Believe False Reports that Mexico Banned Crypto: Mexico hasn’t banned Bitcoin — at least not yet. In recent weeks, reports that Mexico has banned bitcoin and cryptocurrencies, in general, have surfaced, leading many investors to worry about the future of the crypto market in the region.

This is not financial advice.

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