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Crypto Regulation News: US Congress schedules Sept 24 hearing with SEC, Germany plans to block private stablecoins, France will not tax crypto-to-crypto transactions, Bakkt exchange’s Bitcoin futures see slow start on first day of trading

9th September — 24th September



Bakkt Trades 71 Bitcoin Futures Contracts in First 24 Hours: Intercontinental Exchange’s (ICE) Bakkt platform has traded 71 Bitcoin (BTC) futures contracts in the first 24 hours following its launch. According to ICE historical data on Bakkt’s Bitcoin/USD futures contract trading, the platform has traded 71 BTC at press time, with the last recorded trading price settling at $9,875 per Bitcoin.

Bakkt Bitcoin (USD) monthly futures contract. Source: ICE

Bitfury’s Crystal Blockchain Analytics Releases International Bitcoin Report: Crystal Blockchain Analytics, a spin-off of the Bitfury Group, has released a report covering the international flow of bitcoin, in light of the new Financial Action Task Force (FATF) guidelines on the global crypto space.

Crystal released this report on September 9, 2019, intending to produce a formal record of the sort of international bitcoin transfers that the new FATF regulations are intended to more closely monitor. The record of their data collection goes back to 2013, and has revealed a number of interesting facts about the dynamic nature of the crypto space.

Latest Pitch to Recover Lost Mt. Gox Bitcoin Has Critics Raising Red Flags: A group of Russian lawyers claims that it has found a path to financial remuneration for victims who lost bitcoin in the historic 2014 Mt. Gox hack. But one blockchain lawyer, as well as other creditors, are cautioning that the deal being offered is more sour than sweet. The news comes after a dizzying saga for victims of the hack, whose only hope of resolution seemed to be through a civil rehabilitation case via the Japanese court system. But now Russian law firm Zheleznikov and Partners alleges that there’s another way.

A member of the Moscow Bar Association, the firm published its “Mt Gox Russian Recoveries Proposal” on September 12, 2019. The document lays out a step-by-step plan to recover between 170,000 to 200,000 bitcoin stolen in the Mt. Gox heist (this represents roughly a fifth of all funds filched from what was the most popular bitcoin exchange at the time). The firm says it would give creditors remuneration in fiat based on the exchange rate at the time of recovery and equal to the number of bitcoin lost in the hack.

The cost? 50–75 percent of the recovered funds and $320 an hour for its services (only to be paid if the funds are recovered). This, among other concerns, has critics screaming, “Run for the hills.”

“Tl;dr, the terms offered by the ‘Russian Recovery’ lawyers are unreasonable and I will not accept them. I also question their motives,” Daniel Kelman, a partner at Kelman PLLC who has worked extensively on the Mt. Gox case, wrote in a Medium post.

New IMF Blog Considers Pros and Cons of Adoption of Stablecoins: The International Monetary Fund (IMF) has released a blog in which it outlines the potential benefits and downsides associated with the adoption of new digital payment methods, including stablecoins. In its recently published blog entitled “The Rise of Digital Money,” the IMF said stablecoins — digital currencies pegged to a physical asset or fiat currency and designed to minimize price volatility — could bring significant benefits to customers and society but are not without risks.


US SEC Chair: BTC Won’t Be on Major Exchanges Without More Regulation: United States Securities and Exchange Commission Chairman Jay Clayton has said Bitcoin needs stronger regulation in order to be traded on a major exchange. CNBC reported on Sept. 19 that Clayton made his remarks at the Delivering Alpha conference. Warning investors to be wary, he added:

“If [investors] think there’s the same rigor around that price discovery as there is on the Nasdaq or New York Stock Exchange… They are sorely mistaken. […] We have to get to a place where we can be confident that trading is better regulated.”

Bakkt CEO: 3 Reasons Why Bitcoin Product Launch Is a Big Deal: Following the launch of Bakkt’s Bitcoin futures, the company listed three reasons why the event is an important milestone for the industry. In a statement on Sept. 23, Bakkt CEO Kelly Loeffler emphasized that the successful launch of Bakkt Bitcoin Futures contracts is the first time when United States-regulated, physically settled Bitcoin futures became available. Loeffler pointed out that the sole fact that such a product now exists may matter more than the precise details of the initiative.

Stressing that the launch of the service is an important step to bringing trusted infrastructure to digital assets, Bakkt CEO outlined the mission of the company as “expanding access to the global economy by building trust in and unlocking the value of digital assets.”

Loeffler further listed three reasons why the product matters. These include:

  • Reliable and regulated infrastructure;
  • Adoption of new digital currency-powered technology and financial instruments;
  • The rapid expansion of innovative methods for managing and transferring digital value.

The CEO explained:

“With operations, cybersecurity and controls, along with end-to-end-regulation demanded by investors and consumers, confidence in using digital currency — not just to invest, but to also use in transacting — will grow.”

Crypto’s Huge Expansion Is ‘Just Going to Get Bigger’, Says US Regulator: Brian Quintenz, a member of the U.S. Commodity Futures Trading Commission, says the crypto industry is expanding and is “just going to get bigger.”

In an interview with CNBC, Quintenz says,

“We’ve traditionally been a principles-based regulator. So we’ve tried not to be a prescriptive regulator where those rules are prescribed at one point in time for a snapshot of the marketplace. Then they fail to evolve and they need to be updated.

So if we can come up with principles that can apply to products, whether they’re the traditional commodities like corn and wheat and oil, whether they’re financial commodities, or whether they’re new cryptographic commodities — just putting guardrails around that. Then let the market decide if there’s a business case, a use case or an investment case for those products. As long as we have comfort that they’re appropriately margined and that they’re not readily susceptible to manipulation.”

Libra Does Not Threaten Sovereignty of Nations, Says Calibra CEO: CEO of Calibra, Facebook’s digital wallet for its proposed Libra stablecoin, has attempted to debunk the notion of Libra’s threat to the global financial system.

Amid the ongoing meeting between Libra founders and 26 global central banks in Basel, Calibra CEO David Marcus has stepped up to protect the position of the Libra Association on Twitter on Sept. 16.

In a Twitter thread titled “About monetary sovereignty of Nations vs. Libra,” Marcus wrote:

US Treasury: Non-Compliant Fintechs Won’t Survive the War on Terror: United States Treasury undersecretary Sigal Mandelker stated that cryptocurrencies could become “the next frontier” in the war on terrorism. According to a press release published on the U.S. Treasury’s website on Sept. 11, Mandelker made her remarks during the 19th annual international conference on counterterrorism.

Libra Must Comply with Anti-Money Laundering Standards: US Treasury: Facebook’s Libra stablecoin must meet the highest Anti-Money Laundering (AML) and terrorism financing standards, according to United States Treasury Under Secretary of Terrorism and Financial Intelligence Sigal Mandelker. Business news outlet Reuters reported Mandelker’s remarks on Sept. 10.

Former US Congressman Calls for Nuanced Cryptocurrency Regulations: Former United States Representative Harold J. Ford has argued that Congress should have a nuanced approach to regulating cryptocurrencies. In an article published on CNBC, Ford said that lawmakers and regulators should develop clear regulations toward digital currencies. He noted a comment from Chris Larsen, the executive chairman and co-founder of blockchain startup Ripple, who asked Congress, “Please do not paint us with a broad brush,” when referring to the crypto industry.

The IRS Is Blindly Coming After Cryptocurrency Traders — Here’s Why by David Kemmerer, the co-founder and CEO of CryptoTrader.Tax, a tax reporting platform for cryptocurrency investors.

Over the past month, we have seen the IRS, the tax collecting agency of the United States, send out more than 10,000 warning and action letters to suspected cryptocurrency holders and traders who may have misreported digital assets on their tax returns. Letters like the 6174-A, 6173 and CP2000 have appeared in the mailboxes of cryptocurrency traders throughout the country, and the crypto tax software company that I run has seen an influx of frantic customers coming to us for tax help out of fear of penalties.

The problem here is that the IRS doesn’t have all of the necessary information. In fact, not only does it not have all the information, but the information that it does have on the cryptocurrency holders that it is sending letters to is extremely misleading. This information, which was supplied to the IRS by cryptocurrency exchanges like Coinbase, is causing the agency to blindly and oftentimes inaccurately come after cryptocurrency traders.

Related: Internal Revenue Service Sends New Round of Letters to Crypto Holders

3 Global Monetary Policies That Are Bullish for Cryptocurrency: Policymakers around the globe are enacting measures that make cryptocurrencies attractive to everyday investors. Some of these policies were drafted to monitor cryptocurrency transactions. However, there are some rules that limit a person’s financial liberties. Thus, such laws add to the appeal of digital assets. In this article, the authors reveal the three monetary policies that are bullish for cryptocurrencies.

Do Crypto Payment Restrictions Undermine Blockchain’s Core Values? in CoinTelegraph.


US Congress Schedules Sept. 24 Hearing With SEC — Crypto on the Agenda: The United States House of Representatives Committee on Financial Services has scheduled a hearing with Securities and Exchange Commission Chairman Jay Clayton and four other SEC commissioners to discuss, among other topics, crypto. In a memorandum from Sept. 19, the Committee on Financial Services stated that it will hold a hearing on Sept. 24 entitled “Oversight of the Securities and Exchange Commission: Wall Street’s Cop on the Beat.” Present alongside Clayton will be Commissioner Hester Peirce (also known as Crypto Mom) and another three officials.

FATF closely monitoring Facebook’s Libra crypto, official says: The Financial Action Task Force (FATF), an international money-laundering watchdog, is having a close watch on Facebook’s planned cryptocurrency, Libra. Xiangmin Liu, president of the FATF, told Reuters that the watchdog wants to ensure “if there are significant risks, they need to be addressed.”

Liu said:

“The anonymity afforded by virtual assets is being exploited by serious criminals. These activities are likely to be growing quickly, as law enforcement agencies are only seeing the tip of the iceberg”.

Bitwise Tells SEC: ‘Bitcoin Now a Regulated Market of Significant Size’: Crypto index fund provider Bitwise Asset Management has given another presentation to the United States Securities and Exchange Commission in its bid for regulatory approval of its proposed Bitcoin exchange-traded fund. In a memorandum, issued Sept. 17, the SEC published Bitwise’s presentation outlining why it believes the regulator’s concerns have been largely addressed.

VanEck, SolidX Drop Bitcoin ETF Race, SEC Approval Until 2020 Unlikely: On Sept. 17, the Chicago Board Options Exchange’s BZX Equity Exchange withdrew its VanEck/SolidX Bitcoin exchange-traded fund proposal a month ahead of the review deadline. The United States Securities and Exchange Commission — the regulator on the matter — had until Oct. 18 to greenlight or reject the financial product. As a result, the race for the first Bitcoin ETF seems to be postponed once again. While the SEC is still reviewing two other proposals of this kind, the VanEck/SolidX Bitcoin ETF was generally perceived as the strongest contestant to get regulatory permission and debut this investment vehicle in the U.S. Chances are the industry will not see a crypto-based ETF until 2020 at the earliest.

CFTC to bring on Coinbase exec to lead division responsible for bitcoin futures regulation: The U.S. Commodity Futures Trading Commission (CFTC) has announced it is appointing Dorothy D. DeWitt, General Counsel of Coinbase’s Business Lines and Markets, to serve as the agency’s Director of the Division of Market Oversight. At CFTC, DeWitt will be responsible for supervising derivatives platforms and evaluating new platform-trade products like bitcoin futures.

SEC Charges Adult Entertainment Token Platform With 2017 ICO Fraud: The U.S. Securities Exchange Commission charged Jonathan Lucas, 27, the CEO of online adult entertainment marketplace, with running a fraudulent initial coin offering scheme. According to the SEC’s lawsuit, the company claimed that investors could purchase its token and use them to request certain actions in a live adult performance on the platform.

Ripple Avoids Securities Question in Motion to Dismiss XRP Lawsuit: Ripple has filed a motion to dismiss a lawsuit claiming it violated U.S. securities laws by selling XRP. In a new filing, attorneys for Ripple pushed back on allegations made by XRP purchasers suing the company, its subsidiaries and executives. Notably, the motion to dismiss specifically claims that the plaintiff, Bradley Sostack, does not have standing to file a complaint, rather than address claims that XRP is a security. In the motion to dismiss, Ripple states that the plaintiff failed to bring a case within three years of the initial offering (which would have been 2013), meaning the statute of repose expired; that the plaintiff did not “plausibly allege” that he purchased XRP during the initial offering; and that the plaintiff did not “plausibly allege” that any of the defendants actually sold the XRP that he bought. Notably absent from the motion to dismiss is a full-fledged argument over why XRP is not a security. Indeed, the filing only addresses the question in a footnote (footnote 19), which states that XRP is not a security “because it is not an ‘investment contract.’”


Switzerland Open to International Cooperation on Libra, Says Watchdog: Switzerland’s financial watchdog says it is open to international cooperation and oversight of the way in which it regulates Facebook’s planned cryptocurrency network. In a Sept. 12 interview with Neue Zürcher Zeitung (NZZ), Financial Market Supervisory Authority (FINMA) director Mark Branson said it was illusory to believe that a single country could regulate a project of Libra’s scope on its own.

Swiss Bitcoin Bank: UBS, Credit Suisse Interest ‘Clearly Picked Up’: Peter Wuffli — the former CEO of major Swiss multinational investment bank UBS — says the advent of new, regulated actors in crypto is drawing the attention of big-name banks. Wuffli made his remarks during an interview with Finews, published on Sept 23. In 2008, he had left his role as CEO of UBS as the bank’s financial crisis losses spiraled, relinquishing over $10 million of his pay one month after the institution was bailed out by the Swiss government.

More than a decade later, the former banker and recently-appointed board member of licensed Swiss cryptocurrency bank Sygnum observed of the crypto sector:

“I don’t see a bubble right now. I see more serious business planning and solutions addressing client needs, having learned from the last initial coin offering and Bitcoin bubble.”

SIX Swiss Exchange Postpones Launch of Blockchain-Powered Digital Exchange: Switzerland’s SIX Swiss Exchange has postponed the launch of its “fully regulated” crypto trading platform SIX Digital Exchange (SDX). According to the official announcement published on Sept. 23, SIX has launched a prototype of its digital exchange and the central securities depository (CSD). The full launch is now expected in Q4 2020. The document explains:

“The objective of the prototype is to showcase the future of financial markets to the community and obtain feedback as well as demonstrate that a distributed CSD — based on DLT — can be integrated with a central order-book stock exchange model to ensure fair market conditions for all.”

Germany Passes National Policy to Explore Blockchain But Limit Stablecoins: Germany’s government has passed a new strategy outlining the ways the leading EU state is planning to use blockchains. Approved by Chancellor Angela Merkel’s cabinet on Wednesday, the strategy sets the government’s priorities in the blockchain space, such as the digital identity, securities and corporate finance. It also sets out that the state won’t tolerate the threat to state money by stablecoins like the Facebook-led Libra. The strategy came out as a result of the broad consultations with the industry, which started this spring and involved 158 experts and company representatives, who submitted a combined 6,261 responses. The approach embraces open-source software and the government as the ultimate arbiter of tech competition.

France Won’t Tax Crypto-Only Trades, Will Tax Crypto-to-Fiat Sales: French economy minister Bruno Le Maire said on Sept. 12 that French authorities won’t tax crypto-to-crypto trades, but will tax when cryptocurrencies are sold for fiat currency. Bloomberg Tax reported on Le Maire’s declarations on Sept. 12. Per the report he noted:

“We believe that the moment the gains are converted into traditional money is the right time to assess tax.”

France ‘Cannot Authorize’ Facebook’s Libra Development in Europe: France plans to block the development of Libra — Facebook’s proposed stablecoin payments network — in Europe. French Finance Minister Bruno Le Maire said that the country cannot permit the launch of Facebook’s proposed cryptocurrency in Europe because the “monetary sovereignty of states is at stake,” CNBC reported Sept. 12. The report notes Le Maire’s apparently resolute stance — delivered at the opening of the OECD Global Blockchain Policy Forum 2019 in Paris — as follows:

“All these concerns around Libra are serious. So I want to say this with a lot of clarity: I want to be absolutely clear: in these conditions, we cannot authorize the development of Libra on European soil.”

Portugal Could Be a Tax Haven — Not Only for Crypto Traders: The Portugal Tax Authority (PTA) announced last month that cryptocurrency trading and payments in crypto would not be subject to value-added tax (VAT). According to the announcement, cryptocurrency payments that are subject to the provision of services under Article 9 (27) (d) of Portuguese tax law are exempt from VAT. This applies only to individuals, as Portugal-based businesses are still subject to several taxes such as VAT, social security and income taxes.

This announcement follows another Portuguese tax benefit for cryptocurrency traders: Ruling 5717/2015, which declares that proceeds from the sale of cryptocurrencies for individuals will be tax free. According to the ruling published in February 2018, the sale of cryptocurrencies does not qualify as capital gains if the tokens are derived from the sale of financial products as defined in Portuguese law, which are normally subject to a 28% tax rate. In addition, cryptocurrency trading will not be considered investment income, which is also subject to a 28% tax rate under other circumstances.

UK Regulators Attempting to Ban Crypto Derivatives, CoinShares Fights Back: CoinShares is responding to UK regulators over a potential ban of various crypto products. The London-based digital asset management firm, which provides financial products and services for professional investors, says that UK regulator are “cherry picking” information about cryptocurrencies to cobble together enough ammunition to stop the sale of certain investment products that reference crypto assets.

According to CoinShares,

“The FCA claims investing in crypto-assets is too dangerous, but they don’t even understand how the sector works!”

CME’s BTC Index Provider CF Benchmarks Wins EU License: CF Benchmarks, CME Group’s Bitcoin index provider, received a benchmark license under the European Benchmarks Regulation (EU BMR). CF Benchmarks’ official Twitter account announced that the firm received its license from the United Kingdom’s Financial Conduct Authority (FCA). In the tweet, the firm also claims to be the first cryptocurrency index provider to reach this goal:


Korea: Opposition Party Boasts Pro-Crypto Policy in Contrast to Gov’t: South Korea’s main opposition party, the Liberty Korea Party (LKP), is poised to unveil its policy for cryptocurrencies and crypto exchanges. As Cointelegraph Korea reported on Sept. 19, the LKP’s stance appears to be more radical and pro-innovation than that of the current government, notably in its support for the authorization of tokenized securities.

Japan’s Central Bank Chief Calls for International Effort on Libra Regulation: The head of Japan’s central bank has called for international cooperation in regulating stablecoins like the Facebook-led Libra. According to a Reuters report, Haruhiko Kuroda, governor of the Bank of Japan, said: “If Libra is introduced, it could have a huge impact on society.”

Chinese Authorities Plan Crackdown on Crypto Mining in Inner Mongolia: Regulators in the Chinese autonomous province of Inner Mongolia have issued a notice demanding a clean-up of the province’s crypto mining enterprises.

Five departments within Inner Mongolia have determined the need to rectify the mining industry within the province. The organizations named were the Development and Reform Commission, the Public Security Department, the Office of the Ministry of Industry, The Financial Office and the Big Data Bureau. According to the report, the regulators’ position is that:

“The virtual currency ‘mining’ industry belongs to the pseudo-financial innovation unrelated to the real economy, and should not be supported.”

PBoC Denies Claims It Will Launch Digital Currency in November: China’s central bank has denied recent reports that it will launch its national digital currency in November. News sources including Forbes made the suggestion in late August, however the People’s Bank of China (PBoC) said on Saturday that the November date was “inaccurate speculation,” as were details of institutions said to be participating in the digital currency project Chinese daily Global Times reports, citing an official statement. The news reports had also suggested that major banks ICBC, the Bank of China and the Agricultural Bank of China, as well as Alibaba, Tencent and UnionPay, would act as outlets for the digital yuan.

OKEX Korea Drops 5 Privacy Cryptocurrencies Citing FATF Rules: Regulatory pressure on cryptocurrency exchanges to stop providing users with access to so-called privacy coins is growing. The South Korean arm of the Malta-based OKEX exchange announced early on Monday that it is to delist five cryptocurrencies that provide extra privacy features for users. From Oct. 10, the exchange will no longer support trading in Monero (XMR), dash, zcash (ZEC), horizen (ZEN) and super bitcoin (SBTC). In its notice, OKEX Korea said it will delist cryptocurrencies that “violate laws or regulations [and] policies of government agencies and major agencies.”

No Rush to Pass Fintech Laws: Philippine Senator Grace Poe: Philippine Senator Grace Poe said that local lawmakers should not be in a hurry to pass financial technology regulation. Poe made her remarks after a hearing by the Senate Committee on Banks, Financial Institutions and Currencies. She said:

“To most of our countrymen, this is alien to them, but in fact some of them have been availing of it through online lending. And without the proper information and education, a lot of them are actually victimized.”

New Bitcoin Mutual Fund Eases Crypto for Wary Asian Investors: Hong Kong-based venture capital group CMCC Global launched its Liberty Bitcoin Fund to provide crypto currency access to accredited investors in Asia who are very interested but have been slow to buy the coins directly. The Liberty Bitcoin Fund is a single-asset passive tracker of Bitcoin and offers services including buying and safekeeping coins.

“We have received more and more questions over the years from our existing investor base about whether we could help them buy Bitcoin,” Martin Baumann, managing partner of CMCC Global, told CoinDesk. “The new fund is really a demand-driven.”

US Sanctions Three Alleged Crypto Hacking Groups From North Korea: The U.S. has sanctioned three North Korean entities for cyber crimes, mentioning cryptocurrency thefts as one of the reasons for the action.

In a Sept. 13 announcement, the U.S. Department of the Treasury identified the Lazarus Group, Bluenoroff and Andariel as entities now on its the sanctions list, who are believed to be responsible for the theft of $571 million worth of cryptos from five exchanges in Asia in 2017 and 2018. The announcement comes just days after the North said that it would be holdings its second cryptocurrency-related conference, inviting the community to share information and do deals next February in Pyongyang.

Rest of the World

Australia’s Securities Cop Braces for ‘Significant Increase’ in Crypto Trading: The Australian Securities and Investments Commission (ASIC), the country’s financial regulator and watchdog, is gearing up for the rapid growth of crypto-asset markets. Speaking to CCN, an ASIC spokesperson indicated that the regulator has identified “significant increases” in cryptocurrency trade volume recently, prompting the regulator to prepare for further expansion in the markets. The spokesperson also revealed that ASIC is actively “sharing information with domestic and international regulators” concerning the “taxation, anti-money laundering, payment systems, and financial activities” pertinent to crypto assets.

Iran Considers New System of Annual Registration for Crypto Miners: Iran’s cabinet is looking into a proposal to register cryptocurrency miners on a year-to-year basis. According to documents reported by Coindesk on Sept. 19, a draft proposal to register crypto mining operations is currently on its way to official approval in Tehran. The proposed licenses would require information on employment, rent agreements and other business activities. The requirements seem designed to allow the Iranian government to curtail unsavory activities related to crypto while continuing to profit from an industry thriving in a country facing international sanctions and inflation — economic factors that have resulted in a rise in national misery.

Bitcoin Ban Means Massive Brain Drain for India, Crypto Industry Warns: India is seeing the first signs of an anticipated brain drain, as the government mulls stark legislation that would criminalize domestic cryptocurrency investments. A Sept. 16 Economic Times report has taken the measure of industry sentiment on the ground, as a proposed blanket ban — currently still in the form of draft legislation — awaits its formal review process by lawmakers.

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