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Regulation

US Congressman To Introduce Bills That Support Blockchain And Cryptocurrencies

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There is a lot of steam regarding regulation of cryptocurrencies and blockchain in 2018, mostly because of the involvement of government bodies and agencies that are constantly reviewing the crypto space. In the latest cryptocurrency news in the US, the US Representative Tom Emmer (R-MN) is officially planning to introduce three bills to support blockchain and crypto.

The news are in accordance to a press release that was published on September 21st, where the three upcoming bills are entitled the “Resolution Supporting Digital Currencies and Blockchain Technology”, the “Blockchain Regulatory Certainty Act,” and the “Safe Harbor for Taxpayers with Forked Assets Act.”

This legislation is also focused on the support and development of blockchain technology as well as the establishment of a safe harbor for the taxpayers with “forked” digital assets.

The bills, on the other hand, would prompt the government to provide a “simple legal environment” and restrict any fines for people who report “forked” digital assets – up until the Internal Revenue Service (IRS) presents formal guidance on the appropriate means of reporting.

As Emmer said, “taxpayers can only comply with the law when the law is clear.”

He also announced:

“The United States should prioritize accelerating the development of blockchain technology and create an environment that enables the American private sector to lead on innovation and further growth, which is why I am introducing these bills.”

Earlier this week, many US lawmakers called on the IRS to issue clarified and “comprehensive” crypto taxation guidance. They also argued that while the IRS is proactive in reminding taxpayers of the pentalties for non-compliance with its guidance, they are also failing to introduce a more robust taxation framework that will meet their obligations.

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Regulation

India Reveals A Regulatory Draft For The Cryptocurrency Sector

According to the latest crypto news updates coming from India, the government is considering revealing a regulatory draft for the entire crypto sector before the year ends. A panel by India’s Finance Ministry that is working on regulatory norms and domestic crypto trading, will likely start working on the draft in December. This solution comes to the light right as the government battled a case in the Supreme Court about how India sees the domestic cryptocurrency exchange industry. The country believed that the crypto sector is challenging the banking ban that was enforced by the central bank this year. A piece of the government counter-affidavit reads:
‘’ Serious efforts are going on for preparation of the draft report and the draft bill on virtual currencies, use of distributed ledger technology in (the) financial system and framework for digital currency in India.’’
The affidavit reveals that the draft bill will be forwarded to members of the finance ministry committee. The committee will hold meetings about the draft. Back in 2017, the finance ministry formed another committee that was given a task to examine the global regulatory frameworks for cryptocurrencies and that same committee suggested proposing a regulatory framework for crypto trading and crypto using in India. The ongoing ban which was enforced by the central bank, banned banks from providing services to all crypto exchanges and this decision has massively blocked the industry in India. Crypto exchanges saw no reason why they should continue operations in the country and many of them including the largest one Zebpay moved to Malta.
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Regulation

China: Cryptocurrency Exchange Huobi Creates Communist Party Committee

Huobi Group is in the latest news around regulation and even politics this time on our DC Forecasts crypto news site. The exchange has recently created a Communist Party committee which makes it the first blockchain-based company to do so in China, according to reports from the South China Morning Post. What's interesting is that this community was created through a Huobi subsidiary called Beijing Lianhuo Information Service - registered as a business earlier this year and owned by Li Lin, who is the founder of Huobi. Lin referred to the launch of the committee as a new milestone for his company, hailing the Communists party for its friendly policies towards the blockchain industry and sharing his excitement by stating:
“Under the cordial care of the Party Working Committee of Haidian, the party branch of the Beijing Lianhuo Information Service Ltd. was gloriously established.”
The laws of the Communist party make it compulsory for enterprises, especially state-owned companies (with at least three Communist Party members as employees) to set up a branch of this party. Huobi, however, is not the first one to set up such a committee - before it we saw similar ones from companies like Tencent and Alibaba Group. The Chinese government is still friendly to blockchain while ignoring the crypto space and putting a hold of it. As you probably remember, it was the Communist party that put a blanket ban on crypto earlier last year - leading to an exodus of exchanges to the neighbouring conutries.
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Blockchain Archive

CHFC: Cryptocurrencies Should Be Regulated To Prevent Money Laundering

A recommendation from the Canadian House Finance Committee for regulating cryptocurrencies to prevent money laundering is in the blockchain news today according to a report from the Canadian digital newspaper iPolitics. The Canadian House Finance Committee proposed a suggestion to regulate cryptocurrencies during the review of the Proceeds of Crime Money Laundering and Terrorist Financing Act that happens once in five years. The committee started meetings in February 2018 and came up with a couple of ideas on how the government could regulate cryptocurrencies. The first idea is to control exchanges that allow fiat to cryptocurrency while defining the entity that provides the exchange as a service business. The second idea is backed up by the new regulation released in Canada this summer where cryptocurrencies are defined and exchanges as money-service businesses. The second recommendation is meant for the government to require a license from crypto exchanges much like New York’s BitLicense. In the article there are plenty of suggestions by the IJW financial adviser and law firm Duran Morrisseau which refer the dubious crypto transactions done in an unregulated space:
 “Cryptocurrency transactions may be used by parties to swiftly move large amounts of wealth across borders, and that regulating (exchanges of fiat currencies for cryptocurrencies) would address the (anti-money-laundering) concerns of the cryptocurrency space.”
The last recommendation is to regulate all crypto-wallets to make tracking easier. The government is required to provide an answer to these suggestions in 120 days. Crypto regulation is a major subject around the world and many countries are implementing the regulation.
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Regulation

SEC’s Paragon Ruling And The Possibility Of Sending ICOs To Bankruptcy

As we have seen from the recent crackdown on two initial coin offerings (ICOs) by the US Securities and Exchange Commission (SEC,) Paragon and AirFox, the situation could also lead to many other blockchain and crypto projects that would declare bankruptcy in the coming months. This is what is making headlines in today's crypto news. As we reported earlier, both Paragon and AirFox were served a fine of $350,000 from the SEC and a refund to all the investors who participated in the token sale. The problem, right now, is that the two tokens have been asked by the US SEC to refund $12 million and $15 million accordingly to their investors. Since their ICOs, the prices of cryptocurrencies like Bitcoin and Ethereum has declined substantially, blockchain projects have used most of their funds from their token sales in order to fund operations. The official SEC document reads:
“Both companies have agreed to return funds to harmed investors, register the tokens as securities, file periodic reports with the Commission, and pay penalties.”
Aside from this, another issue for ICOs is the right to sue projects to be compensated for their losses, which the SEC clearly outlined. In other words, if an investor invested in a token and recorded a 80% loss, they are eligible to file a lawsuit against the initiator of the token sale and eventually receive the funds back.
“On a date no later than sixty (60) calendar days… distribute by electronic means reasonably designed to notify each potential claimant,  notice and a claim form, both of which shall be in a form not objected to by Commission staff, informing all persons and entities that purchased PRG potential claims under Section 12 (a) of the Securities Act, including the right to sue “to recover the consideration paid for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if [the purchaser] no longer owns the security.”
Upon this crackdown, the co-director of the SEC's Enforcement Division, Stephanie Avakian, heavily emphasized that the SEC will continue to investigate token sales which violated federal security laws with the intent of bringing down ICOs considered as securities by the commission.
“We have made it clear that companies that issue securities through ICOs are required to comply with existing statutes and rules governing the registration of securities. These cases tell those who are considering taking similar actions that we continue to be on the lookout for violations of the federal securities laws with respect to digital assets," she concluded.
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