Tag: legislation

The Holy Trinity: What Do the ‘Big Boys’ Think of Crypto?

For almost 10 years now, cryptocurrency has been one of the most discussed and controversial buzzwords in the financial sector. While some governments see great potential, even perhaps foreseeing an era of ‘blockchainization’, others are afraid of losing the ‘levers of influence’ on the traditional financial paradigms in their region and around the globe.  Having analysed and reviewed how the big players - including South Korea, the US and China - regulate crypto, we can conclude that all of these jurisdictions are adopting a broadly moderate or moderate-aggressive approach. Today we’ll take a closer look at each of these approaches, as well as the latest regulatory and legal developments in each country mentioned above. So, sit back and stock up on popcorn. The show has just begun! United States According to Cryptocompare, the US handles the second largest volume of Bitcoin transactions (roughly 26%). Another indicator of the US' power and relevance in the space is the number of crypto exchanges based in the country. However cryptocurrency is still not legal tender, as the Financial Crimes Enforcement Network’s guidance states. Right now, the US is losing the ‘crypto war’ due to the ambiguous nature of its legislation. While the United States House of Representatives has gone so far as to say that cryptocurrencies are the ‘future of money’, the same commitment has only been witnessed in some states and by a handful of regulators. For instance, the Securities and Exchange Commission (SEC) considers digital currency to be a security, while the Commodity Futures Trading Commission says crypto is a commodity. Such ambiguities serve to demonstrate, once again, that the US financial sector is overregulated and cumbersome. That’s why the majority of Americans aren't likely to benefit from the full integration of cryptocurrency into the financial system, with its superior simplicity and transparency, in short-term.  Nevertheless, the seeds of crypto development have been sown by the SEC and some local regulators. Last year, following the SEC’s move to regulate ICOs, the value of cryptocurrencies went up, as institutional investors gained more confidence in coin trading. The involvement of the SEC brought legitimacy to crypto trading, giving confidence to both existing and potential traders. Plus, several states have already passed supportive laws related to crypto. These are Arizona (recognition of smart contracts), Vermont (recognition of blockchain) and Delaware (pending initiative authorizing registration of shares of Delaware companies in blockchain-enabled form). South Korea  Lauded as one of the most technologically advanced countries in the world, South Korea has been pioneering within the ‘crypto revolution’. However, the country is currently perhaps most famous for its flirtation with the idea of banning cryptocurrencies and ICOs. To prove how influential the South Korean market is, we can cite the case of the ‘January collapse’.  On January 11 2018, South Korea - which had the world’s third-biggest crypto market at that time - announced plans to ban crypto trading altogether. Just a few minutes after the announcement, around $106 billion was wiped off the crypto market as Koreans withdrew from trading. The move by Korean authorities led to a massive worldwide sell-off throughout the month, sending the value of the top cryptocurrencies to a 2-month low. Despite despising crypto, the South Korean government is actually an ‘avid supporter’ of decentralized technologies. According to recent news, this summer the country pushed through accommodative legislations that would imply both tax reductions for new growth engine investment and the easing of requirements for new technology support, including blockchain technology investment support. China Here's an interesting observation: China is always associated with the color red. Its massive territory, painted in red on geographical maps, is the first thing to jump out at you. The same thing is true of ‘crypto maps’ too. China is famous for saying a hard ‘NO’ to crypto and ICOs.  However, China was actually titled the ‘King of Crypto’ in 2015-2016. The country used to be responsible for a vast majority of the global Bitcoin trade volume (95%) and for controlling about two-thirds of mining operations worldwide.  But then everything went downhill. It all started in the beginning of 2017 when the People’s Bank of China announced the investigation of the four major coin exchanges in the country. Following the announcement, mining faced serious crackdowns in the country, while the price of cryptocurrencies fell dramatically in value. Later in September, the Chinese government announced regulations that implied a ban of ICOs and crypto exchanges. New regulations affected every sphere of crypto, including P2P sales, over-the-counter markets, crypto-to-fiat exchanges, foreign crypto exchanges and ICO websites. Now the Chinese crypto community is expecting new legislation to hit the country. These expectations are possibly being driven by the newly elected governor of the People’s Bank of China, Yi Gang, who expressed a positive attitude towards blockchain and cryptocurrencies. Meanwhile, PBOC’s Institute of International Finance has released a report identifying cryptocurrencies as a top priority for 2018. This release served as a wake-up call for the community, and has breathed new life into the hope that China will come back into the crypto-friendly camp of nations.   Considering current levels of geopolitical uncertainty around the the world and the alarm expressed by some of the largest nations in relation to crypto, only one thing is clear just now: crypto is a priceless, unique, groundbreaking technology. It was once scarcely imaginable that the ‘empty-shell’ technology – as it has been called by naysayers - could create so much hype in the corridors of the world's most important institutions. Yet here we are.

Articles/October 25, 2018

‘Blockchain Islands’: Safe Havens for Crypto Enthusiasts

Welcome once again on board ‘Cryptonomos Airlines’. Our journey around the most crypto-friendly countries is not yet even in full swing, and there’s still a lot to learn. This time, we’ve chosen some rather extraordinary blockchain hotspots to review. So, let’s cut to the chase, dear ladies and gentlemen. Wheels up in a moment! Gibraltar Do you consider Gibraltar just an ordinary tourism-oriented island? I’m sorry to tell you this, but you’re mistaken. Despite its small size and nondescript foreign policy, Gibraltar is an attractive location for blockchain-oriented entrepreneurs, as its government offers win-win terms and a host of friendly legal features. The first thing one notices when entering the legal field of the island is The Distributed Ledger Technology Regulatory Framework of the Gibraltar Financial Services Commission. Publicly available since January 1, 2018, the framework has become an important step towards crypto entrepreneurs’ retention and enhancing consumer and investor trust in ICO startups. Gibraltar’s DLT framework is based on 9 core principles. According to them, every crypto entrepreneur must: Conduct business with honesty and integrity. Offer the utmost standards of customer care, ensure all communications are clear-cut, transparent and not misleading. Maintain adequate resources. Manage and control its business effectively. Put effective arrangements in place for the protection of clients’ funds. Display mindful consideration regarding structure, strategy, procedures and corporate culture. Maintain high-levels of all systems and security access protocols. Maintain cutting edge systems to prevent, detect and disclose financial risks. Be resilient and be fully prepared for all possible contingencies By the way, in 2017 Gibraltar established a Gibraltar Blockchain Exchange, a digital-asset trading platform and a subsidiary of the Gibraltar Stock Exchange. It’s positioning itself as the first crypto exchange that is regulated by an EU-based stock exchange. Considering the above, we can safely say that Gibraltar is now laying down a fertile ground for crypto entrepreneurs. The island has become a textbook example of how to reconcile traditional policies and supportive measures relating to blockchain-powered projects. Mauritius   OK, dear readers, moving right along. Our next destination is Mauritius, a tropical East African island deep in the Indian Ocean. I'm willing to bet $1k you’ve never heard about the island in the news. Interestingly, it's a place where free Wi-Fi is accessible throughout the whole island. OK, seriously, Mauritius is a politically stable jurisdiction, highly ranked for democracy and for economic and political freedom. It is the largest international financial and business hub in the Indian Ocean region with a strong liberal economy and reputable banking system. Even the World Bank complimented the island for its approaches, having described Mauritius as ‘the best country to do business in Africa’. So, what else is the island remarkable for? There’s one piece of legislation that will definitely catch the eye of every crypto entrepreneur. It’s a local Regulatory Sandbox License (RSL). It implies the possibility for an investor to conduct business activity in the absence of any legal framework.  RSL presently allows companies to operate in the fintech sector. For instance, the State Bank of Mauritius has entered into an exploratory relationship with a crypto startup to use blockchain assets as collateral for lending services. We hope you’ve learnt a lot from our ‘crypto journey’. In our next article we’ll discuss the latest stories breaking in Oceania and nearby regions. Stay tuned for that!

Articles/September 25, 2018