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Regulation

15 Congress Members Want Clarification From SEC Regarding Crypto/ICO Guidelines

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Fifteen members of the Congress are in the crypto news around regulation recently, after signing a letter and asking the Securities and Exchange Commission (SEC) and its Chairman, Jay Clayton, to clarify the guidelines that the agency uses to determine whether cryptocurrency assets are securities under the federal law.

The letter has already been signed by 15 lawmakers across the political spectrum. In it, the members are asking Chairman Clayton what precisely makes an ICO token or a security – and how he is planning to address the concerns that the SEC’s failure to list definitive guidance is leading many startups out of the country.

“Current uncertainty surrounding the treatment of offers and sales of digital tokens is hindering innovation in the United States and will ultimately drive business elsewhere.”

Later in the letter, the legislators also question the SEC’s decision to use enforcement actions and clarify policy on cryptoassets.

“We believe that the SEC could do more to clarify its position. Additionally, we are concerned about the use of enforcement actions alone to clarify policy and believe that formal guidance may be an appropriate approach to clearing up legal uncertainties which are causing the environment for the development of innovative technologies in the United States to be unnecessarily fraught.”

The lawmakers also asked Clayton to answer three specific questions related to the legal status of ICO tokens and other cryptocurrency assets.

The publication of the letter comes days after Representative Warren Davidson – who is one of the co-signers of the latter – hosted an ICO summit on Capitol Hill in which the representatives from the cryptocurrency and mainstream financial industries asked the Congress to provide a clear regulatory framework for blockchain innovation.

You can read the full letter by clicking on this link.

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Regulation

Crypto Law Consultation Period Officially Started By The Swiss Federal Council

Switzerland seems to be a hot topic over the past week for our blockchain news since today we are reporting the official start of the consultation period for the new federal law for blockchain development by the Swiss Federal Council according to a press release published today. With the initiation, the Federal Council aims to improve the regulatory framework and to bring legal certainty for blockchain applications in order for further development of the crypto regulatory framework for the entire crypto industry in Switzerland especially in the world of finance. Per the press release, the consultation will end somewhere in the middle of June this year. Back in December 2018, the Swiss Federal Council went over the report on a legal framework for the blockchain industry and the entire financial sector and it concluded that the existing laws in the country are suitable for the blockchain industry with some minor changes. The main issue that needed resolving is bringing legal clarity for right holders on each blockchain network and also to make sure that every trading platform is following the country’s Anti-Money Laundering (AML) act. After the announcement, the Council was quick to release a draft document on the consultation where you can read about all of the proposed adjustments including digital registration of rights in the Obligations code of Switzerland as well as separating the crypto assets if a bankruptcy ever occurs on Debt Collection and Bankruptcy. The council also had an idea to create another category for distributed ledger technology in order to improve the market’s infrastructure and to create a law for the trading facilities that will be able to provide a regulated financial market. The authority also suggested that the Financial Institutions Act should be adapted to the current legal framework in order to set up a license that will allow for crypto trading facility to be opened as securities firms. The Swiss Federal Council stated that all of the AML policies will be added to the amendment of Anti-Money Laundering Ordinance after the current act is revised. At the start of the week, the Federal Assembly of the Swiss Government gave a green light that allows the Federal Court to start with the consultation process on adapting the current legislation for the improved crypto regulation framework.
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Regulation

Mexico: New Crypto Regulations Could Shake The Country’s Exchanges

The latest news on our DC Forecasts crypto news site show that experts in Mexico have recently warned that the central bank and its newly proposed crypto regulations could derail the progress in the country's burgeoning crypto sector. As the reports show, the central bank in Mexico - known as Bexico - is ready to introduce a new series of reforms that will aim at keeping conventional financial operations and crypto-related businesses "at a healthy distance" from each other. However, another report in the Mexican newspaper El Economista shows that Bexico's proposed reforms could end up doing a lot more harm than good for crypto exchanges selling Bitcoin - potentially driving a wedge between them and the traditional financial sector. As one writer named Fernando Gutierrez noted, one of Bexico's proposed reforms would "limit the use of cryptocurrencies to internal use only for banks and regulated fintech companies.”He also said that this measure would likely force the exchanges without minding the new regulations. The same outlet has quoted the managing director at the fintech regulator named the National Banking and Securities Commission named Rocio Robles. As Robles explained, even unregulated trading may become difficult under the new proposals. Peso withdrawals, for examples, could soon become illegal. Robles stated that the proposes measures wouldn't "kill off" the crypto exchanges in Mexico - but also admitted that Bexico's measures would "put a lot of obstacles in their way" and added that “cryptocurrencies can continue to make progress in Mexico, but they will involve a lot more hard work” if Bexico gets its way. Meanwhile, Coin Center, which is a Washington-based crypto-focused center for research and advocacy, stepped in the talks. As they said, these rules would deny Mexicans the benefits of crypto technology while failing to protect them from the risks. The executive director of Coin Center wrote a statement in which he noted:
"If there are no Mexican-based exchanges, Mexicans will inevitably use exchanges based in other jurisdictions. Some of these foreign exchanges may be sensibly regulated by more forward-looking governments, but others may be rogue operations that deliberately evade any regulatory jurisdiction,"
"The average person has no idea how a car works, and yet people are allowed to drive them," the statement said. Bexico's proposals are subject to a 60-day consultation period during which a lot of things may change. Right now, industry officials and public members should outline their opinions on the case.
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Regulation

The Swiss Federal Assembly Approved A Motion For Crypto Regulation

Just a day ago, the Swiss Federal Assembly approved a motion that was directed to the Federal Council in order for it to regulate cryptocurrencies. Switzerland as previously reported in our crypto news is known to be one of the best blockchain hubs in Europe after the development of the popular city of Zug being called the Crypto Valley. The motion was directed by Giovanni Merlini who is the Liberal Assemblyman and instructed the Federal Council on how to adapt the existing legislation for cryptocurrencies and to go over the possible associated risks. The council approved the motion with 99 votes in favor and 10 abstentions. This decision is a first step towards solving issued like money laundering, fraud, and extortion. While problems like these emerge as a problem in the fiat currency system, the fiat currency system has extremely harsh regulations that allow the government to prosecute criminals and to sanction any unfair practices such as price manipulation or fraudulent market activity. On the other hand, on the crypto market, there is no such regulation which allows the market holders to apply illegal price manipulation methods and not to get sanctioned at the end. The volatility of cryptocurrencies in the past was largely attributed to price manipulations as mentioned. While the ‘’whales’’ use these methods and tactics by placing a huge buy order to create a boom on the market, the crypto scams are much more difficult to prosecute because cryptocurrencies are not recognized as legal tender. For example, money laundering is one of the biggest problems for regulators because it is the easiest one to do. The obtained funds can be cashed out of a BTC ATM, exchanged for privacy coins on decentralized exchanges or multiple other tactics. Also, ICOs that are not regulated are another tunnel for money laundering. The decision to regulate the market comes after the idea to better understand the risks that come out by using crypto as well as how entities trade but also to learn more about market supervision and financial intermediaries. The banks are getting worried that the regulators accept crypto with their arms wide open since the Swiss minister of Economy Johann Schneider-Ammann stated that Switzerland aims to become a ‘’Crypto Nation.’’
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Bitcoin News

Bitcoin ETF: SEC Receives 84% Negative Feedback On Application

It seems like the enthusiasm for a Bitcoin ETF hasn't decreased - and such exchange traded fund is still waning. In the latest crypto news, we are seeing a new letter in a series of ones sent to the Securities and Exchange Commission in support of the investment vehicle. In fact, the SEC received just seven comment letters from the public that come as a response to a solicitation for feedback that it had requested in February 2019. Of these seven, six urged the Securities and Exchange Commission (SEC) to reject the Bitcoin ETF application - which is around 84% in terms of percents. According to the commenter named Dina Pinto:
“It is in my opinion that Bitcoin to date has no solid ground on which to base a serious product such as an ETF on. It is volatile, manipulated by the very few and has no real use case.” “I can see a lot of people getting hurt both financially and in other ways by you accepting this proposal. It is in my humble opinion that this proposal be rejected.”
Another commenter named D. Darnwell sent a letter in which he wrote:
“I would like to voice my disapproval of this Bitcoin ETP and would ask the SEC to take a much longer time horizon to take a ‘watch and wait approach’ to see if Bitcoin is worthy of becoming a financial product with all the positives and draw-downs it entails.” “Decline this ETP without hesitation.”
However, one Bitcoin ETF proponent named Sami Santos was confident, stating:
“Regarding the argument of the SEC that has not yet approved an ETF because of manipulation and mainly appreciates the protection of investors is contradictory, because without an investment fund, the investor is susceptible to buy bitcoins in deregulated exchanges and lose their investments (bitcoins). VanEck already offers insurance to cover possible losses and as such, the investor will show interest in investing in an ETF fund. So I see no reason not to approve VanEck ETF and Bitwise.”
To remind you, the September (2018) Bitcoin ETF application for VanEck SolidX Bitcoin Trust received more than 1,400 comment letters - of which 99% were positive. However, because of the crypto winter, this enthusiasm has dwindled. Currently, no one knows if this Bitcoin ETF will be withdrawn. If that's the case, the 240-day deadline clock will reset itself and be set once a new filing is submitted.
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