A new legal report is in the news on our DC Forecasts crypto news site today – centered around the market in the United Kingdom and the potential regulation of cryptocurrencies. Issued by a UK-based law firm, the report shows that it may take up to two years for such regulations to be introduced.
According to James Kaufmann who is the Legal Director at Reynolds Porter Chamberlain UK (RPC) commented on the subject in a statement published by his company, saying that the main reason for such delay is the approval that needs to be given from several legal bodies within the country.
Meanwhile, RPC is active in UK and Asia, as a firm which has over 80 partners and has been named ‘Law Firm Of The Year’ three times in a row since 2014. According to Kaufmann, the process of regulation needs to move bills that are “lengthy” given that the recent proposals sent to the House of Commons Treasury Committee (HM Treasury) have just begun moving forward.
As Kaufmann said:
“Bringing a complex and fast-evolving area like cryptocurrencies into a regulatory framework is going to be a difficult and lengthy process. Added to this, big issues like Brexit are already occupying a lot of regulator’s time,”
He also pointed out to the past precedents in the release, stating:
“Past precedents show it can take years to make relatively minor regulatory changes to the financial regulatory regime. For example, it took two and a half years from the Treasury’s original announcement (10 May 2004) for the regulation of home reversion plans to come in force (6 November 2006).”
In order to regulate cryptocurrencies, the Treasury Committee will need time to study the industry and know which “specific activities related to cryptocurrencies” would require monitoring, certain proposed regulations, consultation periods and changes.
SEC Shuts Down Two Crypto Startups For Illegal ICOs
“The orders impose $250,000 penalties against each company and include undertakings to compensate harmed investors who purchased tokens in the illegal offerings. The companies also will register their tokens as securities pursuant to the Securities Exchange Act of 1934 and file periodic reports with the Commission for at least one year. Airfox and Paragon consented to the orders without admitting or denying the findings.”The settlement also illustrates one non-fraud ICO case and the point 17 in the Paragon document illustrates a familiarity with token technicalities, reading:
“PRG tokens were distributed to purchasers on October 22, 2017, on the Ethereum blockchain using the ERC-20 protocol.”The Enforcement Co-Director at SEC, Steven Pelkin, also believes that the enforcement actions against Airfox and Paragon will help stimulate the registration of other US-based ICOs in advance of further non-fraud prosecution.
“By providing investors who purchased securities in these ICOs with the opportunity to be reimbursed and having the issuers register their tokens with the SEC, these orders provide a model for companies that have issued tokens in ICOs and seek to comply with the federal securities laws," he stated.
UK Research Shows That Private Blockchains And New EU Privacy Rules Might Go Well Together
“There is a risk that this legal uncertainty will have a chilling effect on innovation, at least in the EU and potentially more broadly. For example, if all nodes and miners of a platform were to be deemed joint controllers, they would have joint and several liability, with potential penalties under the GDPR.”However, blockchain operators could be treated like processors the same way the companies behind cloud technologies control the users’ data. Blockchain networks could store personal data externally to meet the rules of the privacy laws or allow nodes to delete the private key that has encrypted information. GDPR rules are really hard to comply with especially for crypto mining businesses which are why the researches urge the European Data Protection Board to create a guide of the protection law that will be clearer.
Thailand’s Deputy PM Calls For Enhancement Of Cryptocurrency Regulations
“The Revenue Department will waive value-added tax for people trading in cryptocurrencies on exchange markets approved by the Securities and Exchange Commission (SEC),” stated an excerpt of a report at the time.With this, the tax proposals of Thailand's Ministry of Finance also generated controversy over the fact that firms raising funds via ICOs would also be required to pay income tax on those funds.
$68 Million Worth Of Illegal ICOs Brought Down By The SEC Last Year
"Given the explosion of ICOs over the last year, we have tried to pursue cases that deliver broad messages and have the market impact beyond their own four corners.’’In the report also, the Division of Enforcement as a part of the SEC formed a new Cyber Unit that helped this agency focus on cyber-related misconduct. For this reason, the Commission managed to bring down more than 20 cases including those involving ICOs and the Division opened more than 200 cyber-related investigations some of which are still ongoing. Further, in the SEC report, we can read that:
"While many of these cases have involved allegations of fraud, the Division also has pursued enforcement actions to ensure compliance with the registration requirements of the federal securities laws. In the past year, the Division has opened dozens of investigations involving ICOs and digital assets, many of which were ongoing at the close of FY 2018."The Securities and Exchange Commission is now going after other crypto-related entities and startups that are unregistered or show up as unregistered brokers that facilitate token sales.
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