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Regulation

Crypto Regulation In UK May Take Up To 2 Years To Be Drafted

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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.

 

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Regulation

SEC Shuts Down Two Crypto Startups For Illegal ICOs

In the latest crypto news, we have the US Securities and Exchange Commission (SEC) and a new round of regulation efforts from it. A new press release that apparently shuts down two cryptocurrency-related startups which have reached settlements with the agency for failure to register their tokens as securities or their token sales as securities offerings. Since 1934, the United States law sees selling anything that can resemble an investment contract (virtually) without first registering with the SEC or applying for an exemption. The Securities Act of 1934 was designed to prevent future crashes on the order of the crash of 1929 which led to the "Great Depression." Paragon and Airfox (officially registered as CarrierEQ) are the names of the startups which have been banned. Paragon, for example, sold $12 million in tokens but has a market capitalization of not quite $3,000,000 and as such it would seem that there are people interested in pursuing as much. As the press release by the SEC reads:
“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.
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Blockchain News

UK Research Shows That Private Blockchains And New EU Privacy Rules Might Go Well Together

According to a study conducted by the Queen Mary University of London and the University of Cambridge in the UK, private blockchains have a great chance in being compatible with the new EU privacy policies, so it’s no wonder that this information is in the latest blockchain news today. The General Data Protection Regulation act that regulates how personal data is stored for people within the European Union is now in effect since May this year. According to the GDPR act, data controllers are obliged to respect all citizens’ rights in terms of keeping their private information. If a certain controller doesn’t obey the law, the fines vary from 20 million Euros or 4% of global revenues. According to the study, all crypto-related technologies could go under the rules contained in the GDPR since they publicly store private information about the citizens who live in the European Union thus:
 “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.
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Regulation

Thailand’s Deputy PM Calls For Enhancement Of Cryptocurrency Regulations

The Deputy Prime Minister of Thailand named Wissanu Krea-ngam is in the latest cryptocurrency news, this time for calling for the enhancement of cryptocurrency regulations in the country. As he spoke during the fourth regional Counter-Terrism Financing Summit which took place in Bangkok, there is a need for a more domestic and international legal measures to be put in place and prevent the misuse of cryptocurrencies. The summit was hosted by Thailand's Anti-Money Laundering Office in partnership with other regional bodies. According to reports by Bangkok Post, Wissanu urged terrorism and anti-money laundering experts not to be complacent. The Thai English publication, instead reported that they should 'update their knowledge so they will not lag behind criminals’. As Wisanu states, the anonymous nature of cryptocurrencies like Bitcoin makes it difficult for authorities to identify the bad actors. However, Thailand has so far made several moves aimed at regulating the market as well as Initial Coin Offerings (ICOs). In March 2018, the country's cabinet approved two royal decrees centered around capital gains taxes on crypto investments and crypto transactions. One month later, the country's Ministry of Finance unveiled the proposed tax rates with capital gains tax being put at 15% and a value-added tax (VAT) of 7% slapped on cryptocurrency trades.
“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.
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Blockchain News

$68 Million Worth Of Illegal ICOs Brought Down By The SEC Last Year

Today on our DC Forecasts crypto news site we tackle the shutting down of a dozen successful but illegal actions related to token sales by the U.S Securities and Exchange Commission just as the fiscal year ended on September 30. Nearly half of these sales managed to raise more than $68 combined from investors right before getting shut down. However, this is just a small portion of the actual $3.9 billion collected by the SEC for different penalties during fiscal 2018. According to the SEC report:
"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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