Bitcoin Regulations News

SEC’s Overstock ICO Probe ‘Dormant’ Since Late 2018, CEO Says

Patrick Byrne’s exit from Overstock has nothing to do with the allegedly ongoing regulatory investigation, the firm’s interim CEO said.

No requests since December 2018

Overstock’s interim CEO Jonathan Johnson claimed that the alleged probe by the United States Securities and Exchange Commission (SEC) appears to be “almost dormant” to date as the commission has not asked on the matter since December 2018, Fox Business reported on Sept. 3.

Johnson clarified that Overstock has not had requests for information from the SEC’s enforcement division for almost a year, adding that the company spent a “king’s ransom to process their requests for information to put this to bed.”

SEC gives no clarity again

According to the report, Johnson met with SEC officials in late June to put an end to the investigation or at least get a better picture of its status. However, the company is reportedly still awaiting feedback from the federal securities regulator.

While a SEC representative declined to comment on the news to Fox Business, Johnson believes the state of the nearly two-year investigation is not active, according to recent conversations with the regulator, the report notes.

The SEC investigation was first revealed by Overstock’s crypto subsidiary tZERO in mid-December 2017. Following the probe reports, Overstock’s shares saw a significant decline, as reported in March 2018.

Meanwhile, Byrne’s withdrawal from Overstock on Aug. 22 has allegedly caused the company’s key investor Makara Capital to back out from the deal on Aug. 26 after revealing its ambiguous investment plans back in August 2018.

Source Cointelegraph

Japan Grants Crypto Exchange License to Messaging Giant LINE

LVC Corporation, the digital asset- and blockchain-focused arm of Japanese messaging giant LINE, has obtained a crypto exchange operating license from Japan’s financial regulator.

The news was reported by Cointelegraph Japan on Sept 6.

Trading for 5 major cryptocurrencies

As previously reported, LVC Corp.’s trading platform, to be dubbed BITMAX, will enable Line’s 80 million users in Japan to buy and sell multiple major cryptocurrencies. According to CT Japan, the FSA has authorized the trading of Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), Litecoin (LTC) and XRP on the platform.

Per a press release recently shared with Cointelegraph, LINE counts 187 million global users monthly, with an estimated 50 million users registered its mobile payment service, LINE Pay.

In July 2018, LINE had launched the Singapore-based, global user-focused crypto exchange BITBOX — and will reportedly repurpose the platform’s back-end infrastructure for its Japanese FSA-approved platform BITMAX.

Due to Japan’s crypto exchange license requirements — in force since the amendment of the country’s Payment Services Act in April 2017 — BITBOX is not accessible for Japanese traders.

LINE’s native token and mainnet

LINE  launched its native Link cryptocurrency in late summer 2018 and has since continued to develop a token ecosystem based on its service-oriented blockchain, Link Chain. 

The blockchain network also allows for decentralized applications to be directly applied to Line’s messaging platform.

LINK was listed on BITBOX in October 2018. While previous reports indicated that BITMAX, too, will support LINK trades, CT Japan has not indicated that the FSA has formally authorized the token in its list of approved cryptocurrencies for the forthcoming platform. 

This June, LINE partnered with American payment services firm Visa on new blockchain and digital payments solutions.

Source Cointelegraph

Crypto News From Japan: Sept. 2–8

Japan, one of the leading markets for cryptocurrencies, has seen a series of important developments for the cryptocurrency and blockchain industries this week. The country’s financial regulator, the Financial Services Agency (FSA), has licensed crypto-related businesses. Japanese Deputy Prime Minister and Finance Minister Taro Aso noted that regulators need to find new approaches to address emerging technologies like cryptocurrencies and blockchain.

Here is the past week of crypto and blockchain news in review, as originally reported by Cointelegraph Japan.

Deputy Prime Minister addresses regulation approaches

On Sept. 5, Minister Aso was the keynote speaker at the FINSUM fintech conference in Tokyo. In his speech, Aso said that regulations need to be adapted to keep up with new and emerging technologies. He said that financial authorities must respond quickly to new developments in order to avoid getting left behind. Aso added, “New approaches are important without relying on conventional frameworks and approaches.”

SBI Holdings CEO aims to build self-regulatory body for security token offerings

Also speaking at the FINSUM conference, Yoshitaka Kitao, the CEO of Japanese financial services giant SBI Holdings, said he hopes to get regulatory approval for a new self-regulatory body next year. The new organization aims to create standards and practices for security token offerings. Per Kitao, the group will compile a self-regulation proposal by the end of 2019 and aim for certification in April 2020.

Kitao also said that Ripple’s plant to invest $50 million in payments service MoneyGram over the next two years is meaningful for SBI’s business.

LINE messenger subsidiary gets crypto exchange license from FSA

A subsidiary of Japanese messaging service LINE, LVC, has received a license to operate as a cryptocurrency exchange from the FSA. The exchange will purportedly support Bitcoin (BTC), Ether (ETH), XRP, Litecoin (LTC) and Bitcoin Cash (BCH). While LINE had launched its BITBOX exchange in Singapore last year, its lack of proper licensure meant that it could not offer services to clients in Japan and the United States. 

FSA blockchain report notes fast pace of Lightning Network development

A special division of the FSA, the Fintech Innovation Hub, released an activity report on the development of blockchain and artificial intelligence technologies. In the report, the regulator stated that Bitcoin’s Lightning Network is developing at a fast pace. The network is a layer-two protocol that aims to speed up transactions and is seen as a solution for the Bitcoin network’s scalability problem. 

Among its many findings, the report also noted that regulators and blockchain engineers view privacy on blockchain networks in vastly different ways. The FSA stated that a mechanism should be put in place to promote mutual understanding on this subject. 

Governor of Tokyo announces possibility of city digital currency

Yuriko Koike, the Governor of Tokyo prefecture, announced that the city will start a proof-of-concept (PoC) for a municipal digital currency to be issued by March of next year. The PoC will purportedly take place in two locations in the city and will involve awarding digital currency to residents who have made social contributions in environmental conservation and eradicating poverty. A name for the currency is forthcoming.

Source Cointelegraph

Former US Congressman Calls for Nuanced Cryptocurrency Regulations

Former United States Representative Harold J. Ford has argued that Congress should have a nuanced approach to regulating cryptocurrencies.

In an article published on CNBC on Sept. 5, Ford said that lawmakers and regulators should develop clear regulations toward digital currencies. He noted a comment from Chris Larsen, the executive chairman and co-founder of blockchain startup Ripple, who asked Congress, “Please do not paint us with a broad brush,” when referring to the crypto industry.

Separate crypto from Libra

Ford specifically addressed the issue of social media giant Facebook and its not-yet-released Libra stablecoin. Ford urged lawmakers to separate the cryptocurrency industry in general from the Facebook matter.

According to the former Democratic congressman, the lack of regulatory clarity is already causing harm to innovation in the U.S., further noting that some other countries such as Belarus, Malta, Bahrain, and Gibraltar are already working on regulatory frameworks that are attractive to crypto and blockchain projects. Ford stated:

“The U.S. should not be losing the competitive edge on attracting this innovation’s best and brightest. The SEC now has the opportunity to take the lead on regulation that works with industry, not against it.”

Earlier in September, the Financial Integrity Network (FIN) — a Washington D.C.-based advisory firm — urged Congress to regulate firms in the cryptocurrency sector under the Bank Secrecy Act (BSA).

FIN’s vice president for product development and services, David Murray, noted that some virtual asset service providers are currently regulated as money transmitters under the BSA, while others are not regulated at all.

In late August, Rep. Maxine Waters, chair of the U.S. House of Representatives’ Financial Services Committee, said the committee will continue to review Libra and the corresponding digital wallet Calibra.

Source Cointelegraph

Libra Must Comply with Anti-Money Laundering Standards: US Treasury

Facebook’s Libra stablecoin must meet the highest Anti-Money Laundering (AML) and terrorism financing standards, according to United States Treasury Under Secretary of Terrorism and Financial Intelligence Sigal Mandelker.

Business news outlet Reuters reported Mandelker’s remarks on Sept. 10.

Cryptocurrencies must comply

Per the report, Mandelker also told reporters in Geneva that any cryptocurrency operating in the U.S. — including Libra — has to satisfy local regulatory standards.

Regulators are concerned by Libra

Global financial regulators are concerned about Libra, with the European Central Bank’s key legal official Yves Mersch recently saying Facebook’s stablecoin is “beguiling but treacherous” during a speech at an ECB legal conference.

Meanwhile, a delegation of United States politicians visited Switzerland — where the Libra Association is headquartered — to investigate the project and meet local regulators. As Cointelegraph reported in late August, the visit did not assuage their concerns.

Facebook is also attempting to influence U.S. regulators by ramping up its lobbying efforts, hiring a firm at the end of August and two lobbyists.

Mark Carney, the Governor of the Bank of England, suggested a transformation of the global financial system by replacing the United States dollar with a digital currency similar to Facebook’s Libra in August.

Source Cointelegraph

Switzerland Open to International Cooperation on Libra, Says Watchdog

Switzerland’s financial watchdog says it is open to international cooperation and oversight of the way in which it regulates Facebook’s planned cryptocurrency network. 

In a Sept. 12 interview with Neue Zürcher Zeitung (NZZ), Financial Market Supervisory Authority (FINMA) director Mark Branson said it was illusory to believe that a single country could regulate a project of Libra’s scope on its own.

Libra ‘fits perfectly’ into Switzerland’s regulatory framework

Branson argued that Switzerland’s ambitions to evolve into a major financial center would necessarily entail reputational risks and thus draw international attention:

“Shy of these risks, you have less attention, but may end up in insignificance,” he said.

The country has a robust regulatory and supervisory framework that can address the needs of major legacy financial players — and equally, therefore, those of ambitious new fintech projects, he said. 

Branson noted that FINMA does not need foreign pressure to recognize the major challenges that a project of Libra’s scale poses for regulators: “It was crystal clear from the start that this project could have huge dimensions and implications,” he said.

Just as the supervision of large Swiss banks such as UBS or Credit Suisse does not take place in complete isolation, he added, so a project of Libra’s global significance can only be tackled through international coordination and consultation.

Branson also underscored that FINMA’s approach to market regulation is both principle-based and technology-neutral, meaning that Libra, “fits perfectly into our regulatory framework”:

“Switzerland […] does not regulate all forms of institutions and products down to the last detail […] We have just published a guide on how to classify stablecoins under Swiss law. And we show: it does not need new laws. The risks are well known, for example regarding money laundering, customer protection, system stability. There are already regulations for all of these.” 

Not a ‘beauty contest’-like case of regulatory arbitrage 

Branson also took pains to emphasize that the choice of Switzerland as its base was not a case of Facebook shopping around for the most pliant jurisdiction. He told NZZ reporters that:

“Such a ‘beauty contest’ did not exist. Our first contact with the initiators took place after the decision for Switzerland had already been made and communicated. That’s positive. The ‘jurisdiction shopping’ you alluded to would be very sensitive. It would put pressure to get as loose as possible standards.”

As Cointelegraph reported yesterday, Facebook has sought an assessment from FINMA as it prepares for a prospective application for a Swiss payment system license.

As Branson today confirmed, the project as it is currently envisaged would expressly qualify as a payment system, but also potentially trigger additional regulatory requirements corresponding to any further risks that could be posed by the provision of a wider set of services.

Source Cointelegraph

France ‘Cannot Authorize’ Facebook’s Libra Development in Europe: Report

France plans to block the development of Libra — Facebook’s proposed stablecoin payments network —  in Europe.

French Finance Minister Bruno Le Maire said that the country cannot permit the launch of Facebook’s proposed cryptocurrency in Europe because the “monetary sovereignty of states is at stake,” CNBC reported Sept. 12.

The report notes Le Maire’s apparently resolute stance —  delivered at the opening of the OECD Global Blockchain Policy Forum 2019 in Paris — as follows:

“All these concerns around Libra are serious. So I want to say this with a lot of clarity: I want to be absolutely clear: in these conditions, we cannot authorize the development of Libra on European soil.” 

Facebook’s stablecoin an “attribute of the sovereignty of the States” 

This June, Le Maire had said that he would ask for guarantees from Facebook that Libra would not be exploitable for illicit activities such as terrorism financing. 

He also argued that the tech giant’s stablecoin was an “attribute of the sovereignty of the States” and should thus “remain in the hands of the States and not of the private companies which answer to private interests”.

In parallel, U.S. lawmakers have expressed their persistent “concerns […] with allowing a large tech company to create a privately controlled, alternative global currency.”

Source Cointelegraph

US E-Cigarette Ban Stokes Fears Trump Could Target Bitcoin

Bitcoin (BTC) proponents are again mulling the chances of the United States banning cryptocurrency as lawmakers move to outlaw flavored e-cigarettes. 

E-cigarettes: Washington “clears market”

The sudden restrictions, which both the White House and the Food and Drug Administration confirmed on Sept. 12, mean e-cigarettes will disappear from the U.S. market within a month. 

Manufacturers may be able to bring back their products in the future, subject to safety tests proving they are not responsible for a reported surge in lung disease which triggered the government action.

“The Trump Administration is making it clear that we intend to clear the market of flavored e-cigarettes to reverse the deeply concerning epidemic of youth e-cigarette use that is impacting children, families, schools and communities,” Health and Human Services Secretary Alex Azar said in a statement. 

“Nothing out of bounds” for Trump

While not directly pertaining to cryptocurrency, some in the industry nonetheless raised concerns that such executive powers could just as easily extend to Bitcoin. 

“This is un-related but shows White House can issue an ‘executive order’ banning anything. And could even ban bitcoin,” Fundstrat Global Advisors co-founder, Tom Lee, commented.

He added:

“Not expecting it. But with current White House, there is ‘nothing out of bounds nor out of reach.’”

As Cointelegraph reported, President Donald Trump has previously spoken negatively about cryptocurrency, comments which sent shivers through markets and subsequently saw support from senior government officials. 

No policy changes occurred in light of the criticism in July, but the U.S.’s patchwork regulatory approach to the phenomenon continues to worry businesses and consumers alike.

Source Cointelegraph

France Won’t Tax Crypto-Only Trades, Will Tax Crypto-to-Fiat Sales

French economy minister Bruno Le Maire said on Sept. 12 that French authorities won’t tax crypto-to-crypto trades, but will tax when cryptocurrencies are sold for fiat currency.

Bloomberg Tax reported on Le Maire’s declarations on Sept. 12. Per the report he noted:

“We believe that the moment the gains are converted into traditional money is the right time to assess tax.”

Easier transaction tracking

The author of the report also explains that such an approach to taxing cryptocurrency trading would help with tracking transactions, which he believes to be a common challenge in crypto-to-crypto trading. Le Maire also reportedly addressed Value-Added Tax (VAT) application to cryptocurrencies.

More precisely, he explained that VAT is to be applied to cryptocurrency transactions only when they are used to acquire an asset or a service. France is reportedly already implementing the new approach to cryptocurrency taxation.

Meanwhile, in Portugal

As Cointelegraph reported at the end of August, Portugal’s Tax Authority has clarified that both cryptocurrency trading and payments in crypto will not be taxed in the country.

Also in August, a tax bill seeking to allow the exclusion of gain or loss on like-kind exchanges of virtual currency has been introduced in the United States House of Representatives.

Source Cointelegraph