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Regulation

Crypto Attorney: A Bill Exempting Cryptocurrencies From Securities Law Is Highly Unlikely

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Jake Chervinsky, a crypto attorney expressed his pessimistic view on the bill that aims to exempt cryptocurrencies and ICO from the US securities law and that it is highly unlikely to be happening in the near future. We are about to find out more about his stance on regulation in today’s crypto news.

Chervinsky added:

 “I don’t know if there’s any validity to the rumor that the Token Taxonomy Act will be reintroduced in Congress on February 14. But even if true, there will be months or years of Committee hearings and revisions before the bill could even possibly see a vote. Don’t hold your breath.”

The Republican Congressman Warren Davidson and the Democratic Representative Daren Sotto have already introduced the legislation in December 2018 and the previously mentioned Token Taxonomy Act would aim to exclude crypto from securities laws.

Congressmen Davidson says that a ‘’light-touch’’ legislation will provide more regulatory clarity and it would make sure that the United States is a strong competition in this industry. He also pointed out the importance of avoiding restrictive laws that will suppress innovation.

Another Republican Congressman Tom Emmer presented three bills that will likely support the development of the blockchain sector in the country such as the Resolution on Supporting Digital Currencies and Blockchain Technology, Safe Harbor for Taxpayers with Forked Assets Act and the Blockchain Regulatory Certainty Act.

Cryptocurrencies are becoming a strong political power as many politicians urge the US to prioritize the development of the blockchain technology and for legislators to embrace emerging technologies and provide a clear regulatory system.

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Regulation

CFTC Commissioner Believes In Creating A Self-Regulatory Crypto Structure

The United States Commodity and Futures Trading Commission (CFTC) Commissioner Brian Quintenz is in today’s crypto news after he suggested that all of the crypto industry participants should create a self-regulatory organization of some kind while he was speaking on the Bipartisan Policy Center Panel a week ago. To be more precise, Quintenz explained that CFTC has a lack of crypto statutory oversight and therefore suggested that all of the crypto platforms should form a type or an organization of some sort that will be self-regulatory where all of the participants can discuss, agree or disagree to implement rules or to audit. According to the commissioner, he believes that an organization of that type could carry out the audits concerning conflicts of interest, insider trading, custody, liquidity and business conduct. However, the CFTC commissioner also says that a self-regulatory organization is charted by Congress and saying that the organization would only be a mutual association between private companies in the crypto industry. A commissioner from the Securities and Exchange Commission, on the other hand, Hester Peirce, was also attending the panel and explained how confusing the current regulation is right now. Peirce said that the lack of regulation of the crypto market and especially bitcoin could be a reason not to approve a BTC ETF:
 “There are lots of markets that aren’t regulated, but we nevertheless build [derivative] products on top of them.”
Hester Peirce also pointed out that the delay in creating a crypto regulatory framework could mean more freedom for the industry to continue on its own.
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Regulation

SEC’s ‘ICO Guide’ With A Gloomy Outlook For Cryptocurrency In 2019

The Securities and Exchange Commission (SEC) is in the crypto news today after tweeting out the guidelines for the people launching and investing in ICOs. Named the 'ICO Guide' - SEC's paper comes a little too late of the cryptocurrency boom market. However, the document still focuses on Bitcoin, altcoins and cryptocurrencies, mimicking a gloomy outlook with at least one possible violation of the First Amendment on the part of the SEC. According to the SEC, a security is:
“A token or offering that promotes the likelihood for future returns based on the entrepreneurship or efforts of others.”
That said, it is no surprise that some prominent crypto executives have already begun declaring themselves as part of a "protocol" rather than a company over the recent months. One of them is Tron's Justin Sun who recently said:
“We can see that Tron is also more like a protocol rather than a company. I think that’s also introduced like a brand new concept of the protocol rather than a company institution or profit or entity.”
Sun also took the opportunity to promote his own projects, TRON and BitTorrent. According to the SEC, however, a crypto exchange would be in violation of securities laws even if it unknowingly facilitates the trade of security coins and tokens.
“If a platform offers trading of digital assets that are securities and operates as an “exchange,” as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration," an excerpt from the document reads.
As SEC also noted, it doesn't matter whether an exchange is centralized, proprietary or decentralized and autonomous - what matters is that unregistered buying and selling happens here.
“The activity that actually occurs between the buyers and sellers—and not the kind of technology or the terminology used by the entity operating or promoting the system—determines whether the system operates as a marketplace and meets the criteria of an exchange under Rule 3b-16(a).”
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Ethereum News

Crypto Exchange ErisX Files A Letter To CFTC To Regulate ETH Futures

Crypto exchange ErisX based in Chicago, filed a letter with the Commodity Futures Trading Commission of the United States that we take a closer look into our crypto news today as a response to the request of the agency for ETH mechanics and market feedback. The letter was submitted yesterday and focuses on the introduction of a regulated futures contract on Ether and how they will positively impact the growth of the market. ErisX is a traditional futures market reboot and will provide full support for BTC trading, eth and litecoin as well as futures contracts in the second half of 2019. The CFTC determined that Bitcoin is a commodity rather than security which makes it falls under the Securities and Exchange Commission rules. However, Ether was cleared of the securities classification in June 2018. ErisX pointed out:
‘’The difference between Ethereum and its predecessor saying that ‘’Ethereum built some of the architectural principles of Bitcoin to extend its functionality of a distributed, secured, record-keeping system to include new computational capabilities for the execution of arbitrary code.’’
The analysis from ErisX on the state of the ethereum market shows that there is lack of regulatory clarity that prevents regulated enterprises from entering the sector which will end up in a preponderance of ‘’unregulated or lightly regulated exchanges.’’ ErisX continued:
 “Not unique to Ether, but [may be exacerbated by] the current fragmented global market structure of trading platforms and ‘exchanges’ with significantly varying degrees of regulatory oversight and operational transparency and integrity.”
The exchange has appointed three veterans from YouTube, Barclays and the Chicago Board Options Exchange for the executive places in the company and is also expecting from Joseph Lubin of ConsenSys to join the board of directors.
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Regulation

New Blockchain Framework Bill Passed Into Law In Luxembourg

The lawmakers of Luxembourg have officially passed the crypto bill 7363 into law that facilitates the use of blockchain technology according to an official announcement that was published yesterday by the parliament, the Chamber of Deputies which is what we are reading today in our blockchain news. The new regulatory bill aims to provide all of the market participants a larger level of transparency and legal certainty regarding securities and blockchain technology in general. The bill will also make the transfer of securities much more efficient and faster by reducing the number of intermediaries. The Luxembourg Time local news outlet, says that the bill grants all of the transaction done with the help of blockchain technology will have the same legal status and protection as if it was done by using traditional means. There were about 60 members of the parliament who voted in favor of the bill despite the two left-wing party votes that voted against the bill. Luxembourg is one of the most attractive places for blockchain technology since back in November 2018, the University of Luxembourg partnered with a local trading platform VNX Exchange that aims to improve the security of digital assets. The university also helps the trading platform develop a much higher level of network security. Back in March, the financial regulator of the country issued a warning against crypto investments and ICOs noting that cryptocurrencies are not backed by a central bank and warned of their volatile nature. In the meantime, the research company Ipsos revealed that only 4 percent of the people owning cryptocurrency are in Luxembourg.
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