Category: Regulation

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Australia Crypto News Institutions Regulation

Aussie Crypto Companies Call for Regulatory Certainty

More Australian crypto companies are requesting clearer and updated regulations for the digital asset environment, prompting the Australian Fintech Senate to create “innovation-friendly” measures.

These suggestions come after the fintech committee set specific guidelines for submitters to send their requests regarding topics related to technology and finance and how Australia can benefit from emerging technologies, as well as becoming a hub in those fields.

Aussie crypto exchange Swyftx recommended the senate should look at establishing a robust regulatory regime for digital assets in Australia that would remove any uncertainty or doubt for service providers and customers.

A dedicated and harmonised framework is therefore necessary … to provide specific rules for crypto assets and related activities and services and to clarify the applicable legal framework … Such a framework should support innovation and fair competition while ensuring a high level of consumer protection and market integrity in crypto-asset markets.

Swyftx letter to Fintech Senate

Australians are Demanding Access to Crypto Services

The interest in cryptocurrencies in Australia remains strong despite the fact that several high-market cap currencies as Ethereum and Bitcoin have halved while DeFi tokens and altcoins are leading the market.

The crypto community in Australia has already pointed out that the current regulatory measures do not necessarily work for blockchain and cryptocurrencies. According to R3, an enterprise software platform working with blockchain technology, simplicity is key to designing proper frameworks for crypto assets.

Simplicity is key in designing frameworks. Layering additional regulations on top of already robust and effective frameworks would only complicate the industry and inhibit innovation with no resulting upside.

R3 statement

The company noted that the government should align digital asset regulations following the principle of “same risk, same activity, same treatment”.

Australia Has a ‘Unique but Diminishing Opportunity’ to Become a Leader in the Crypto Space

On the other hand, Bitaroo, an Australian BTC-only exchange, suggested Australia should follow El Salvador’s example and recognise bitcoin as a foreign currency.

By recognising bitcoin as a foreign currency and by exempting capital gains tax on foreign currencies, Australia has a unique but rapidly diminishing opportunity to position itself as a global and forward-thinking leader in this space.

Bitaroo statement

In a consultation paper published on June 30, the Australian Securities and Investment Commission (ASIC) laid out guidelines for the inclusion of cryptocurrencies in exchange-traded products (ETPs). ASIC is seeking feedback from market participants to adjust rules for local operators and to protect crypto service platforms and consumers alike.

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Bitcoin Crypto News Institutions Regulation

Up to $435 Billion Could Flow into Crypto as New Legislation is Approved in Germany

Updated regulations around crypto investments in Germany could lead to a US$435 billion inflow to the crypto economy from German institutional funds.

The new Fund Location Act (Fondsstandortgesetz) comes into play from July 1, pending a final decision by the German Bundesrat (Federal Council).

Big Investment Managers Can Now Invest 20% in Crypto

The new act allows existing German special funds (Spezialfonds) to invest up to 20 percent of their portfolios in Bitcoin (BTC) and Ethereum (ETH). Before this new regulation was passed, these funds were prohibited to invest in crypto.

Spezialfonds are considered the German institutional fund vehicle of choice for most liquid asset classes, and for property within distinct structures.

Jacqueline Winter, Blockchain Capital
blocksize-capital

Sven Hildebrandt, CEO of Germany-based Distributed Ledger Consulting (DLC), said there could be a theoretical inflow potential for crypto assets in the order of US$435 billion.

This won’t happen overnight, but we are talking about the largest investment vehicle that we have in Germany – literally all the money is in there.

Sven Hildebrandt, Distributed Ledger Consulting

This amounts to around 20 percent of the estimated assets under management of these wealth and institutional investment fund managers. Their 4,000 open-end domestic special funds currently have an estimated €1.87 trillion tied up, some of which could flow into crypto. This legislation being passed by one of the economic powerhouses of the world could spell good news for wider institutional acceptance.

Coinbase Crypto Services Approved in Germany

According to a report, Coinbase has recently secured a Federal Financial Supervisory Authority (BaFin) licence to conduct business in Germany.

The Nasdaq-listed company holds the first licence issued by BaFin for crypto custody and trading, which is now legally seen as a financial service in Germany.

In an attempt to combat money laundering and fraud, the German government has issued new regulations that require a licence to deal with digital assets. Coinbase can now legally conduct business in Germany and Japan and could open the doors for new investors.

Coinbase Germany will launch in coming weeks to serve both new and existing German customers more effectively, including by localising our service and increasing our product offering.

Coinbase Germany press release

Will we see the German giants put up a fight against the various other institutional powerhouses across the globe? Watch this space …

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Crypto News Regulation

Robinhood Crypto Trading App Fined $70 Million for Misleading Customers

Robinhood Financial has agreed to pay a record US$70 million to resolve a range of allegations, such as misleading customers, allowing ineligible traders to use high-risk strategies, and poorly supervising technology that failed, locking millions of customers out of trading.

The $70 million settlement with FINRA (Wall Street’s self-regulator) includes a $57 million fine and about $12.6 million in payments to customers who were negatively impacted by the US company’s actions.

This is not the first time that Robinhood has had a run-in with a regulatory body. In 2019, FINRA fined the company US$1.25 million for failing to guarantee customers the best price on their trades. And in 2020, Robinhood was fined another $65 million by the SEC for misleading customers about the true costs of trading using its commission-free facility.

High-Risk Strategies

Robinhood was accused of exposing customers to several high-risk trading strategies, such as options and margin trading. Options, which allow traders to buy or sell shares at set prices in the future, can vastly amplify gains or losses. The company allegedly used bots to approve traders for options accounts without a human presence in the middle to properly determine whether they were actually eligible or not.

Robinhood was also charged with failing to disclose to more than 800,000 customers who were approved for options accounts that their trading could involve the use of margin lending, which exposes traders to losses significantly larger than the money invested. Tragically, a 20-year-old customer killed himself last year after he thought he’d lost more than US$700,000 using the app to trade options with margin lending activated. Subsequently, the family took Robinhood to court and settled the matter.

Service Disruptions

In March 2020, just as pandemic panic started wreaking havoc on the stockmarket, Robinhood’s trading platform experienced a series of technological disruptions, including one outage that locked users out of trading for more than 24 hours. Being blocked from trading during one of the worst crashes in recent history resulted in catastrophic losses for many traders.

Rocket Ship or Sinking Ship?

Robinhood, which had fewer than 500,000 users in 2015, has now surged to more than 31 million users. At the start of the year, during the Gamestop short squeeze, Robinhood was a popular choice because it provided easy access to the stockmarket for everyday people, which many regarded as revolutionary or game-changing. However, with its third large fine in as many years, you can’t help but wonder how many cannonballs can this ship take before it starts to take on water?

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Crypto News Cryptocurrencies Regulation United Kingdom

50+ Crypto Companies Withdraw Licence Applications Amid UK Crypto Regulation Fears

More than 50 crypto companies have withdrawn their applications to conduct business in the UK due to demanding requirements set by the Financial Conduct Authority (FCA).

Applicants Not Up to Scratch?

Early in June, the FCA released a report concerning a “significantly high number” of crypto firms that had been warned for not meeting anti-money laundering (AML) standards. This legislation is intended to stop criminals from hiding money used for or gained from criminal activities.

A significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations. This has resulted in an unprecedented number of businesses withdrawing their applications.

FCA

Only 5 crypto asset firms have been admitted to the FCA’s formal register so far. They reportedly had 90 pending registration requests, of which 51 had withdrawn in early June and another 13 have since followed suit.

The FCA had previously issued a notice to UK consumers to inform them there were 111 unregistered crypto companies operating in the country.

Registration Period Extended

At the start of the new year, it was announced that companies that failed to meet the FCA’s AML requirements would be forced to refund all customer deposits and stop services until they could comply with the requirements set up by the regulatory agency.

The FCA has extended the temporary registration regime to 31 March, 2022. This allows businesses that have applied for registration to continue operations while awaiting the outcome of the assessment.

Additionally, there are schemes in the UK that help investors if a company were to go bust, but these don’t apply to those in the crypto industry. This law could possibly sway investors against putting their money in crypto.

It is unlikely that consumers will have access to the Financial Ombudsman Service or Financial Services Compensation Scheme, irrespective of whether a firm has temporary or full registration.

FCA

In January 2020, the FCA became the official AML regulators for the UK’s crypto market. The FCA has since taken action against some major platforms, including Binance. Apart from regulators in the UK and Japan, Canadian authorities have also issued warnings to Binance.

Binance must cease any financial promotions in the UK, but in the meantime its trading services have not been affected.

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Bitcoin Mining China Crypto News Regulation

Why China Closing Bitcoin Mining Operations is a Good Thing

Various factors have been impacting Bitcoin, some of which are due to the ripple effects caused by negative press, heavy regulation, and bans implemented by China.

Bitcoin’s hashrate is one of its most important metrics. Essentially, it is an indication of the processing power of the Bitcoin network. The higher the hashrate, the faster transactions are verified and blocks can be created.

China’s Continual Crackdowns

China currently accounts for roughly 65% of the Bitcoin hashrate. Previously many miners set up shop there because of cheap energy and hardware prices. Additionally, the ability to use excess energy from sustainable sources like hydro power in Sichuan was a positive reason to mine there.

However, during 2021 there have been multiple instances where Bitcoin (BTC) and the crypto market at large have been affected by uncertain regulatory conditions in China. Just last week, the Bitcoin hashrate dropped nearly 17% after a crackdown in Sichuan where power was cut to 26 mining farms.

In April, outages in Xinjiang cut Bitcoin’s hashrate by 30% and contributed to a US$10,000 decline in Bitcoin’s price. But since Xinjiang ordered several crypto mining farms to shut down on June 9 -one of several shutdown orders across the country – it now seems that China is intent on shooing miners out of the country.

Why Redistributed Hashrate is Good News

Firstly, mining difficulty automatically adjusts as per protocol adjustments in the code, which neutralises the effects of less (or more) mining rigs coming on/off-line. This means that the network won’t be heavily affected by the hashrate drop for long.

While there will be a rough patch as Bitcoin re-establishes the lost hashrate out of China, once that is rebuilt there will be many positives to come from this.

Bitcoin mining will become more decentralised, since China holds the majority of the hashrate. Heavily adopting South American countries like El Salvador could pick up some of the slack, along with the increase of sustainable mining operations in the US. This will also lead to Bitcoin miners in other countries becoming more profitable, as they will be able to buy mining rigs from China since there is a worldwide shortage, and because Chinese miners will no longer be using them.

Bitcoin miners around the world could get cheap mining rigs from China sellers if they decide not to relocate. If China ends up completely banning crypto, it will end the continual FUD regarding China’s centralisation of Bitcoin; China using dirty energy to mine; and China’s continual threats to ban Bitcoin, which affects the market.

Miami Enticing Banned Bitcoin Miners

As the government crackdown heats up, Chinese Bitcoin miners are looking for a new home. Places like Texas and Miami, Florida in the US have been shaping up in order to cater for Bitcoin miners by adjusting their laws and regulations around crypto.

Miners want to set up in places with zero regulatory/political uncertainty. As Wayne Lin, founder of Chinese venture capitalist Axia8 Ventures, has stated: “I wouldn’t want to spend millions of dollars setting up my facility if the policies could change suddenly.”

We want to make sure that our city has an opportunity to compete […] We’re talking to a lot of companies and just telling them, ‘Hey, we want you to be here.

Francis Suarez, Miami Mayor

Suarez is promising near-limitless supplies of cheap nuclear energy and a stable home. He told CNBC: “We understand how important this is […] miners want to get to a certain kilowatt price per hour. And so we’re working with them on that.”

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Crypto Exchange Crypto News Korea Regulation

South Korea Exchanges Stop Trading of Certain Cryptos Amid Regulation Pressure

In order to operate in South Korea, exchanges now need an ISMS certificate issued by the Korea Internet and Security Agency (KISA). After receiving this certificate, 11 out of 20 crypto exchanges have either delisted certain coins, or issued warnings about them.

Although it’s been easier for high-volume crypto exchanges to find banks willing to vouch for them, smaller exchanges have been struggling to get their papers in order. The deadline for compliance is early September, by which time all crypto exchanges operating in South Korea must obtain the certificate or cease operations.

Dodgy Exchanges On Notice

According to The Korea Times, banks are now required to treat crypto exchanges as high-risk clients and will be required to deny service to crypto exchanges deemed dodgy. In addition, fines worth a total of US$89,519 have been issued to cryptocurrency exchange employees who trade on the platform they are employed by, in a bid to reduce unfair advantages.

Among the platforms delisting tokens are Upbit, Coinbit and Huobi.

Upbit has delisted tokens such as Paycoin, Maro, Observer, Solve.Care and Quiztok:

Upbit will always do its best for your safe transactions.

Coinbit Suspends Eight, Warns 28 More

Meanwhile, Coinbit has suspended the trade of eight other cryptocurrencies and set in place a warning for 28 more that will appear if a potential customer wants to trade those cryptocurrencies.

Huobi Token Delisted, but for How Long?

A curious case of delisting is Huobi. Despite being one of the first companies to get the necessary paperwork done, Huobi has halted the trade of its proprietary Huobi Token. There is no information on whether this is a temporary delisting or not.

The delisting of coins deemed risky by exchanges in South Korea seems to be part of a bigger trend in the APAC region, with Thailand also banning “meme coins” and some NFTs, and China subjecting cryptocurrencies to the usual scrutiny.

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Crypto Exchange Crypto News Fan Tokens NFTs Regulation Tokens

Thailand Bans Meme Coins, Fan Tokens and NFTs

New regulations for Thai crypto exchanges have been introduced that ban specific digital assets, including meme coins, fan coins, non-fungible tokens (NFTs), and tokens issued by exchanges.

According to a release from the Thailand Securities and Exchange Commission (SEC), new rules have been implemented that will prohibit crypto exchanges in Thailand to offer digital assets that have any of the following characteristics:

  • 1)  Meme token: having no clear objective or substance or underlying, and whose price [is] running on social media trends
  • 2)  Fan token: tokenised by the fame of influencers, such as the Juventus Fan Token (JUV)
  • 3)  Non-fungible token (NFT): a digital creation to declare ownership or grant of right in an object or specific right. It is unique and not interchangeable with digital tokens of the same category and type at the equal amount
  • 4)  Digital tokens which are utilised in a blockchain transaction and issued by digital asset exchanges or related persons

DOGE no exception

There has been no specific mention as to which coins will and won’t be allowed. Meme coins like Dogecoin (DOGE) are likely to be among those prohibited by the ban.

The final item on the list refers to tokens issued by exchanges. This is designed to make it hard for crypto dealers to create tokens they use to trade among themselves, or that their customers can use to make payments for exchanges’ services.

Thai Exchanges “Tokens Must Comply Or Be Delisted”

Additionally, the SEC has called for crypto exchanges to set requirements that token issuers need to meet with their whitepaper and relevant rules; if they can’t comply, the token will be delisted.

The SEC stated that exchanges need to comply with the guidelines prescribed in order to “enhance protection of digital asset traders’ interest”.

The exchanges are required to comply and revise their listing rules in accordance with the Notification within 30 days from the effective date thereof.

Thailand Securities and Exchange Commission press release

Individual Thai investors remain free to use any of the tokens prohibited by the SEC if they wish to, providing they can find someone, or some exchange, willing to handle their trades.

Last year we saw Australian exchanges be forced to delist privacy coins to prevent users performing anonymous transactions.

Crypto: Restrict or Prohibit?

Although Bitcoin is over 10 years old, many countries still do not have declared systems that either restrict, regulate or ban cryptocurrency. Several are still analysing ways to regulate these digital assets. Overall, Bitcoin and crypto in general remain in a legal grey area for much of the world.

This move from the Thailand SEC aims at regulation with the vision of protecting the money of Thai citizens. India had previously indicated it wanted to ban Bitcoin, but has since stated that India would rather regulate it. This is a positive move, considering the millions of dollars India has received in crypto for COVID-19 relief.

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Bitcoin Crypto News Regulation

It’s Official, Bitcoin is Legal Tender in El Salvador – How it Will Work

El Salvador

In a historic move for the story of global Bitcoin adoption, the El Salvador legislative body has officially voted in favour of a bill adopting Bitcoin as legal tender.

On June 9, in a vote of 62 in favour, 19 opposed and 3 abstentions, history was made. All that’s left is for the president to sign it into law, expected to happen June 10.

This news following the breaking news on June 7, where Nayib Bukele, President of El Salvador, at the Bitcoin 2021 conference, announced that he would be submitting a bill to Congress that would effectively treat Bitcoin as legal tender.

Users Won’t Require a Government Issued Wallet

President Nayib Bukele discussed the development with Coindesk columnist Nic Carter, highlighting financial inclusion and noting that users won’t necessarily be required to have a government digital wallet. However, businesses would be mandated to accept Bitcoin for the sale of goods and services.

A Trust Fund Will Manage Bitcoin’s Volatility

To manage the volatility of the cryptocurrency, a trust fund would be set up to instantly convert Bitcoin to US dollars, effectively transferring the volatility risk to the trust. From time to time, the trust would replenish its US dollars through the sale of Bitcoins.

If there’s an ice-cream parlour [and the owner] doesn’t really want to take the risk, he has to accept Bitcoin because it’s a mandated currency but he doesn’t want to take the risk of convertibility, so he wants dollars deposited in his banking account and when he sells the ice cream, he can ask the government to exchange his Bitcoin [for] dollars. Of course he can do that in the markets also but he can ask the government to do it immediately.

Nayib Bukele, President of El Salvador
El Salvador President
Nayib Bukele’s recently updated Twitter profile image: note laser eyes

Government officials are expected to meet with the IMF later in the week. Analysts eagerly await the outcome of the meeting as their response is likely to set the precedent for other nations following suit.

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China Crypto News Regulation

Market FUD Again As Chinese Social Media Blocks Crypto Content

As concerns continue to build about the repression of cryptocurrencies in China, the tolls are visible in the market as crypto opinion leaders have their accounts blocked.

After the news of “Key Opinion Leaders” (KOL) accounts being banned on Weibo, the price of Bitcoin (BTC) and various other cryptos took a sharp dip. The Fear, Uncertainty, and Doubt (FUD) cast on crypto by the Chinese government has released quite a few Bitcoins from individuals fearing to lose their money.

Social Media-Inspired Volatility

When reports of the blocked accounts hit around 5:30am ET (about 9:30 UTC), it triggered a drop in the price of most major cryptocurrencies. The plunge seen in the following price chart of Bitcoin starting at that time sent ripples through various other major cryptocurrencies.

BTC price chart 5 June [Trading View]
Drop during news launch of multiple cryptos [Trading View]

This is not the first time China’s social media platforms have purged influential accounts related to cryptocurrency. In 2019, Weibo banned the accounts of Binance co-founder Yi He and cryptocurrency entrepreneur Justin Sun.

However, does banning a few Weibo accounts actually mean anything? As of less than a week ago, the US also had a ban on crypto advertising on social media, which it has only recently revised.

Beijing’s Logic

According to the South China Morning Post last month, Liu He, Chinese President Xi Jinping’s top economic adviser, said the government would “crack down on Bitcoin mining and trading behaviour, and resolutely prevent the transfer of individual risks to society”. The Chinese government’s reasoning is that one of the risks cryptocurrencies pose is how easily the market can be influenced by individuals.

As Colin Wu, a Chinese journalist who runs a cryptocurrency news site, posted to Twitter: “The accounts blocked by the Chinese government are mainly recommending investment and trading crypto to retail investors.”

“The government makes it clear that no Chinese version of Elon Musk can exist in the Chinese crypto market,” says NYU Law School adjunct professor Winston Ma.

This shows the Chinese government doesn’t need more uncertainty than influencers already bring to the table.

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Bitcoin Crypto News Regulation Worldwide

El Salvador Becomes The First Country To Adopt Bitcoin As Legal Tender

Bitcoiners have long speculated as to which country would be first. Few would have suspected that it would be El Salvador, a small Central American country with a population of 6.4 million and GDP roughly equivalent to Polkadot’s market cap of approximately US$25 billion.

The news came on Saturday at the Bitcoin 2021 conference as Nayib Bukele, President of El Salvador, announced via prerecorded video that he would be submitting a bill to Congress that would effectively treat Bitcoin as legal tender. Bukele also showed support of Bitcoin by updating his Twitter profile image with laser eyes.

Nayib Bukele, President of El Salvador
Nayib Bukele, President of El Salvador

Although not officially law as of yet, given that Bukele enjoys a supermajority in Congress, it is expected that the bill should pass with little difficulty. Bukele cited financial inclusion to the bankless and job creation as part of the bill’s motivation. With the US dollar as his nation’s currency, he went further in saying:

 Central banks are increasingly taking actions that may cause harm to the economic stability of El Salvador. In order to mitigate the negative impact from central banks, it becomes necessary to authorise the circulation of a digital currency with a supply that cannot be controlled by any central bank and is only altered in accord with objective and calculable criteria.

El Salvador to Use Bitcoin Lightning Payments

Jack Mallers, CEO of Zap and Strike, a payments app built on Bitcoin’s Lightning Network, noted that he would be working with the president to implement a plan to help provide relief to the 70 percent of the population who don’t have access to banks. Going further into Bitcoin’s benefits within the context of international remittances, Mallers noted:

Over 6 billion dollars a year are transmitted in remittances and a big chunk of those money transfers are currently lost to intermediaries. We want to make cross-border payments free and solve the remittance problem for places that need it the most.

Jack Mallers, CEO Zap and Strike

If passed, the bill would result in El Salvador becoming the first country to adopt Bitcoin as legal tender and the first government to hold it as a reserve asset.

The inflation rate in Argentina rose to 42.6% recently; could we see it follow suit?