Washington [state] regulators recently introduced exchange rules for any firm wanting to allow customers to trade in cryptocurrency. They said they created Senate Bill 5031 to make the ecosystem fair for cryptocurrency exchanges and their customers. However, a number of exchanges have left the area, because they believe the rules were too burdensome. Now Washington lawmakers are defending the bill on the grounds that it helps the exchanges and their clientele.
Poloniex, Bitstamp, Kraken, and Bitfinex are a few of the exchanges that left the area after Washington announced its regulatory requirements in July. Each company provided their reasoning why they stopped servicing Washington area customers.
Bitstamp wrote a letter to its customers back in 2016, saying, “After long and careful deliberation, we are sorry to inform you that due to recent regulatory constraints imposed by the State of Washington, Bitstamp will cease to serve customers from The Evergreen State, effective 20th December 2016.”
Bureaucrats Claim Bill is Good
Charlie Clark, deputy director of the state’s Department of Financial Institutions and director of the authority’s division of consumer services, did not comment on the specific companies that left. He did suggest the restraints were not imposing or negative, though. He mentioned State financial regulators spent months preparing and detailing the bills.
More at: Washington Politicians Defend Regulations as Cryptocurrency Exchanges Flee – Bitcoin News
The Blockchain Conference DC took place in a packed room at the Marvin Center of George Washington University’s campus in Washington, DC on July 28th.
“How many people here work for the US Government?” the host asked.
Over a dozen people raised their hands.
“How about – are there any regulators in the room?”
Nervous laughter followed. Nobody openly admitted that they were a regulator, but the tension was palpable.
This conference took place less than a week after a series of high-profile government actions in the blockchain space. See here, here and here for some detailed pieces on the increasingly aggressive “safeguards” US legislators are taking on the blockchain platforms.
More at: Fear and hope at the DC Blockchain Conference – Crypto Insider – Bitcoin and Blockchain News
Last week, SEC announced that some Initial Coin Offering (ICO) tokens could be considered securities. This means startups catering to US citizens would need to abide by current regulations and register with SEC. However, it appears that many firms may be ignoring SEC’s warnings. They may push forward with their token distribution events regardless of the rules.
According to a tokendata.io, there are about 120 upcoming/active token distribution events for 2017 and roughly 20 announced since SEC issued its warning. A Tech Guam article covered the information:
Some industry participants and analysts had thought such a decision would have a chilling effect on the ICO market. But 20 new ICOs were announced since the SEC’s decision, with more than 120 scheduled to launch this year….
More at: 20+ New ICOs Announced Despite SEC Warnings – Bitcoin News
“Government will soon host a seminar to understand block chains for governance & Bitcoin. If necessary, we will evolve a policy,” tweeted IT-BT minister Priyank Kharge
The Karnataka government is in the process of evolving a policy for cryptocurrencies or virtual currencies, such as Bitcoin. The move has been impelled by the rising market size and investor base of virtual currencies, apart from reports of fraud.
“Government will soon host a seminar to understand block chains for governance & Bitcoin. If necessary, we will evolve a policy,” tweeted IT-BT minister Priyank Kharge. The state feels the industry needs some government oversight and can’t be left unregulated.
More at: cryptocurrencies: Karnataka govt mulls policy on cryptocurrencies – ETtech
U.S. Securities Laws May Apply to Offers, Sales, and Trading of Interests in Virtual Organizations
FOR IMMEDIATE RELEASE
Washington D.C., July 25, 2017—The Securities and Exchange Commission issued an investigative report today cautioning market participants that offers and sales of digital assets by “virtual” organizations are subject to the requirements of the federal securities laws. Such offers and sales, conducted by organizations using distributed ledger or blockchain technology, have been referred to, among other things, as “Initial Coin Offerings” or “Token Sales.” Whether a particular investment transaction involves the offer or sale of a security – regardless of the terminology or technology used – will depend on the facts and circumstances, including the economic realities of the transaction.
The SEC’s Report of Investigation found that tokens offered and sold by a “virtual” organization known as “The DAO” were securities and therefore subject to the federal securities laws. The Report confirms that issuers of distributed ledger or blockchain technology-based securities must register offers and sales of such securities unless a valid exemption applies. Those participating in unregistered offerings also may be liable for violations of the securities laws. Additionally, securities exchanges providing for trading in these securities must register unless they are exempt. The purpose of the registration provisions of the federal securities laws is to ensure that investors are sold investments that include all the proper disclosures and are subject to regulatory scrutiny for investors’ protection.
“The SEC is studying the effects of distributed ledger and other innovative technologies and encourages market participants to engage with us,” said SEC Chairman Jay Clayton. “We seek to foster innovative and beneficial ways to raise capital, while ensuring – first and foremost – that investors and our markets are protected.”
More at: SEC.gov | SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities
A private business in Kosovo is gearing up to install its first bitcoin ATM amid warnings from the country’s central bank.
According to regional news source Balkan Insight, the ATM is expected to be placed in the center of Pristina, the country’s capital city. Operated by IT systems firm Albvision Ltd, the machine will support transactions in bitcoin, and soon, 10 other cryptocurrencies.
The firm also has bitcoin ATMs planned for cities in two other Balkan countries: Tirana in Albania, and Skopje in the Republic of Macedonia.
Still, the decision to launch the unit has attracted attention from the country’s financial regulators, who stressed that cryptocurrencies are lacking consumer protections due to a lack of local regulation.
More at: Kosovo’s First Bitcoin ATM Sparks Central Bank Warning – CoinDesk
On July 13, the Financial Industry Regulatory Authority (FINRA) held its Blockchain Symposium, which brought together regulators and industry leaders to discuss distributed ledger technology, also known as blockchain. A distributed ledger is a database that is synchronized across multiple sites and has potential uses including bitcoin and offerings of newly created coins in initial coin offerings (ICOs).
At the symposium, representatives of FINRA, SEC, CFTC, OCC and the Federal Reserve Board shared their perspectives on distributed ledger technology. As is customary, participants did not represent the formal positions of their agencies. However, they did share some helpful information on how matters presented to their agencies may be evaluated in the future.
Each speaker said their respective agency staffs continue to study applications of the technology and seek further information. When asked about ICOs, representatives of the SEC and CFTC confirmed that any coin should be evaluated based upon its individual characteristics to determine whether it is a security or commodity subject to regulation under federal securities or commodities laws.
More at: Corporate Law Alert – FINRA Holds Blockchain Symposium to Discuss Future of Distributed Ledger Technology – Lexology