Tag: Legislation

FCA Unveils Guidance on Cryptoasset Promotions Compliance

by Blockchain News

The Financial Conduct Authority (FCA) has unveiled a “finalised non-handbook guidance” document on Cryptoasset Financial Promotions. This release followed observed lapses in adherence to the new laws governing crypto asset promotions, which took effect on October 8, 2023.

On June 8, 2023, the pertinent legislation concerning cryptoasset financial promotions was enacted, and subsequent rules were published under the identifier PS23/6. Central to these rules is the stipulation that financial promotions must embody fairness, clarity, and accuracy to prevent misleading the public. In tandem with these final rules, a consultation on the proposed Guidance was also issued to ensure firms grasp the nuances of this requirement as it pertains to crypto asset promotions.

The consultation phase came to a close on August 10, 2023, paving the way for the FCA to review the feedback and finalize the Guidance which is detailed in Chapter 2 of the document. This finalised Guidance, published on November 2, 2023, doesn’t introduce new obligations but elucidates the existing regulatory obligations of firms. It emphasizes that adherence to this Guidance will be deemed as compliance with the relevant rule or requirement, although it’s not mandatory to follow the Guidance to achieve compliance.

A noteworthy mention in the document is the introduction of a secondary international competitiveness objective, activated on August 29, 2023. Although this objective wasn’t in effect during the publication of the final rules, its spirit was considered in PS23/6. This objective aligns with the broader policy to shield consumers while fostering beneficial innovation that potentially fuels long-term economic growth in the UK.

The Guidance underscores the primary aim of mitigating consumer harm by clarifying the expectations of firms, thereby promoting better compliance with the relevant rules. By doing so, it aims to prevent the erosion of trust in financial services that may arise from consumers not fully grasping the risks associated with cryptoasset purchases. Through clearer and fairer promotions, consumers are envisaged to make well-informed decisions that resonate with their risk profiles and needs.

The transition hasn’t been smooth, with reports indicating a dismal degree of compliance since the rules came into play. Some market participants have even expressed intentions to exit the UK market due to the perceived restrictive nature of these laws. The FCA, however, has been proactive in issuing multiple warnings and reminders since June 8.

Moreover, certain significant technical benchmarks have been slated for January 8, 2024. Amid these developments, the FCA’s Guidance also touches on the Travel Rule, formulated by the Financial Action Task Force, and its implementation in the UK on September 1.

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US House Committee Chair Criticizes SEC on Digital Assets

by Blockchain News

Patrick McHenry, the Chair of the United States House Financial Services Committee, has criticized the Securities and Exchange Commission (SEC) over its approach to digital assets. During an oversight hearing on April 18, McHenry used his opening statement to accuse the SEC of “punishing” digital asset firms through regulation by enforcement without a clear path to compliance. McHenry reiterated his calls for clear legislation on crypto and pressed SEC Chair Gary Gensler for a definitive answer on whether Ether (ETH) qualified as a security or a commodity.

McHenry expressed his concerns over the SEC’s actions, citing the lack of clarity and consistency in the regulatory landscape for digital assets. He accused the SEC of “chasing headlines” and penalizing companies without providing clear guidance on how to comply with regulations. McHenry also called on US lawmakers to create “clear rules of the road” for crypto through legislation.

During the hearing, McHenry pressed Gensler to give a definitive answer on whether Ether was a security or a commodity. He repeatedly interrupted Gensler’s responses that lacked specifics, citing the SEC chair’s previous labeling of Bitcoin (BTC) as a commodity and hinting at private discussions on Ether prior to the hearing.

“Clearly an asset cannot be both a commodity and a security,” said McHenry. “I’m asking you, sitting in your chair now, to make an assessment under the laws as exist, is Ether a commodity or a security?”

The question of whether Ether is a security has been a contentious issue for the crypto industry. In 2018, William Hinman, former SEC Director of Corporate Finance, stated that he did not believe Ether was a security. However, in December 2020, the SEC filed a lawsuit against Ripple Labs, claiming that the firm had sold unregistered securities in the form of its XRP tokens. The lawsuit sparked concerns among crypto enthusiasts that the SEC may also take action against Ether and other digital assets.

McHenry’s criticism of the SEC’s approach to digital assets reflects broader concerns over the lack of clarity and consistency in the regulatory landscape for crypto. The industry has faced regulatory challenges in several jurisdictions, with some countries, such as China and India, imposing outright bans on crypto trading and mining. However, other countries, including the US, are still grappling with how to regulate digital assets in a way that balances innovation and investor protection.

In conclusion, McHenry’s criticism of the SEC’s regulatory approach to digital assets highlights the need for clear and consistent regulations on crypto. While the industry continues to evolve rapidly, it is crucial that regulators provide clear guidance and support for companies to comply with regulations while fostering innovation in the sector.

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Legislation Introduced to Remove SEC Chair Gensler from His Role

by Blockchain News

The Securities and Exchange Commission (SEC) is facing new controversy, as United States Representative Warren Davidson has announced plans to introduce legislation that would remove SEC Chair Gary Gensler from his role. The move follows the SEC’s proposed rule amendments, which could bring certain brokers under additional regulatory scrutiny and redefine an “exchange.” While Gensler has said the proposed changes could benefit investors and markets, SEC Commissioner Hester Peirce has criticized the move, accusing the regulator of stifling new technology and entrepreneurship.

Peirce, who is known as “Crypto Mom” for her pro-crypto positions, has criticized the SEC’s approach to crypto regulations. She believes that the SEC has been expanding its reach to solve problems “that do not exist” and has refused to alter current regulations to allow room for new technologies and new ways of doing business. Peirce has also accused the SEC of using the “notice-and-comment rulemaking process” as a threat. In her opinion, a concept release should have been issued instead of the proposed rule amendments, given the concerns over their ambiguity and scope, and the SEC’s “limited understanding” of the space.

The SEC has faced criticism for using enforcement actions to develop the law on a case-by-case basis, rather than creating clear regulations. The regulator has launched more than a few high-profile actions against crypto companies such as Ripple, LBRY, and Coinbase over alleged violations. It has also taken aim at staking and stablecoins, prompting some critics to argue that the SEC has been stifling innovation in the crypto space.

Meanwhile, Davidson’s proposed legislation to remove Gensler from his role as SEC Chair has raised eyebrows. Gensler is widely regarded as a tough regulator who is committed to protecting investors and ensuring market stability. He has previously served as chairman of the Commodity Futures Trading Commission (CFTC) and is known for his work in implementing the Dodd-Frank Act, which was designed to reform the U.S. financial system after the 2008 financial crisis.

In conclusion, the proposed legislation to remove SEC Chair Gary Gensler from his role is the latest development in a long-running debate over crypto regulations. While Gensler has said that the proposed rule amendments could benefit investors and markets, Commissioner Hester Peirce has accused the SEC of stifling innovation and entrepreneurship. The SEC has faced criticism for using enforcement actions to develop the law on a case-by-case basis, rather than creating clear regulations. It remains to be seen whether Davidson’s proposed legislation will gain traction, but it is clear that the debate over crypto regulations is far from over.

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US House Committee to Discuss Stablecoins Regulation

by Blockchain News

The US House Committee on Financial Services will conduct a hearing on April 19 to evaluate the role of stablecoins as a means of payment and determine whether the payment ecosystem needs supporting legislation. The hearing, titled “Understanding Stablecoins’ Role in Payments and the Need for Legislation,” will focus on various stablecoins and their use in the payments landscape. The committee will explore the need for stablecoin legislation based on their underlying collateral structures.

The hearing will include information collected by various federal government agencies over the last year. Participants testifying at the hearing include Circle’s chief strategy officer and head of global policy, Dante Disparte. Circle’s in-house stablecoin offering, USD Coin (USDC), will likely be discussed, as it recently depegged from the US dollar after it revealed it had $3.3 billion of funds stuck at the collapsed Silicon Valley Bank (SVB). However, following a bailout of SVB depositors by the US government, USDC repegged its value to the US dollar.

During the period when USDC depegged, hackers managed to gain access to Disparte’s Twitter account and started promoting fake loyalty rewards to long-time users of USDC. This situation highlights the potential risks of stablecoins and underscores the importance of legislation to ensure digital dollars on the internet are safely issued, backed, and operated.

Just days before the upcoming hearing, a draft bill providing a framework for stablecoins in the United States was published in the House of Representatives document repository. Speaking about the draft bill, Circle’s CEO Jeremy Allaire said, “There is clearly the need for deep, bi-partisan support for laws that ensure that digital dollars on the internet are safely issued, backed and operated.“

The draft bill proposes that stablecoin issuers must obtain a banking charter and comply with all applicable banking regulations. The bill also seeks to define what constitutes a stablecoin and outlines the requirements for maintaining a stablecoin’s peg to an underlying asset. If passed, this bill could provide regulatory clarity and stability for the stablecoin industry.

In conclusion, the upcoming hearing on stablecoins is an essential step toward ensuring the safety and stability of the payment ecosystem. The hearing will provide lawmakers with the necessary information to make informed decisions about the need for stablecoin legislation. The recent draft bill provides a framework for stablecoins in the United States and could provide regulatory clarity for the stablecoin industry if passed. As the use of stablecoins continues to grow, it is crucial to have clear regulations to ensure the protection of consumers and the stability of the financial system.

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Montana Passes Crypto Miner Rights Bill

by Blockchain News

Montana’s House of Representatives passed a landmark bill that seeks to enshrine the rights of crypto miners and prohibit local authorities from obstructing crypto mining operations. The bill, numbered 178, was passed during its third reading by a vote of 64 to 35 on April 12, and it will become law once Governor Greg Gianforte signs it.

The legislation establishes a “digital asset mining right” for crypto miners and forbids any discriminatory electricity rates charged to them. Additionally, it seeks to safeguard mining operations that take place “at home” and remove the authority of local governments to use zoning laws to impede crypto-mining activities. The bill also bars any extra taxes on using cryptocurrency as a means of payment, and it categorizes “digital assets,” including cryptocurrencies, stablecoins, and nonfungible tokens, as “personal property.“

The legislation’s main aim is to provide a clear framework for crypto miners to operate in Montana, removing any ambiguity and hindrances that local governments might impose. It also limits the power of local authorities by restricting them from imposing different requirements on mining centers compared to those on data centers. Additionally, authorities cannot prevent crypto mining in industrial areas and private homes. The revised version of the bill is much more concise, with section three significantly shortened from its previous length, which was nearly three full pages and included several articles unrelated to crypto mining.

The bill’s sponsor, state Senator Daniel Zolnikov, is a member of the Republican Party, as is Governor Gianforte. Therefore, it is unlikely that Gianforte will veto the bill. Upon signing, Montana will join the ranks of other states in the US, such as Wyoming and Texas, that have passed legislation to promote crypto mining.

The passing of this bill comes at a time when crypto mining is facing increased scrutiny from environmentalists and governments alike. Critics argue that the energy-intensive nature of crypto mining contributes to carbon emissions, which exacerbates climate change. However, supporters of crypto mining argue that it provides economic benefits and job opportunities in areas where traditional industries have declined.

The passing of this bill could boost Montana’s economy, especially in areas where traditional industries have struggled. It will provide clarity to crypto miners and could attract more businesses and investors to the state. Furthermore, the legislation could inspire other states to follow suit and develop a clear framework for crypto mining, ensuring that the US remains competitive in the global crypto market.

In early April, a similar bill protecting crypto miners from discriminatory regulations and taxes passed through the Arizona House of Representatives and Senate and now awaits Governor Doug Ducey’s decision. The passing of these bills highlights a growing trend in the US, where states are taking proactive steps to attract crypto businesses and investors, providing clarity and protection for this burgeoning industry.

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Bank of Russia Delays CBDC Pilot Rollout

by Blockchain News

The Bank of Russia’s central bank digital currency (CBDC) pilot, which was scheduled to begin on April 1, has been delayed indefinitely due to specific legislation only passing through the first reading in the Federal Assembly’s lower house. The legislation is expected to be enacted by early May, according to a report by the state-owned TASS.

The CBDC pilot was initially set to involve 15 private banks, but the number has since been reduced to 13. Some of the employees from these banks, along with one of the country’s largest insurance companies, Ingosstrakh, will become the test participants for CBDC retail payments.

Bank executives have expressed enthusiasm for the project, with the director of innovations at Sinara Bank, Vitaly Kopysov, stating that “the use of smart contracts should reduce the operational load of banks and make the deals transparent, which not only will reduce the chances of the misuse of government and banks’ funds, but ultimately simplify the control over the existing contracts.”

Although the pilot will involve real operations and limited consumers, the general public will be unable to participate in the first stage. The banks will enter the pilot with selected customers, and the Bank of Russia will determine how to scale the digital ruble further following the first stage.

The CBDC pilot was initially scheduled for 2024, but it was moved to an earlier date as the Russian central bank sought an alternative to the SWIFT payments system amid Western economic sanctions against Russia. The digital ruble aims to provide a secure and transparent payment system that reduces the dependence on foreign payment systems and minimizes the risk of financial crimes.

The Bank of Russia has been working on the development of the digital ruble since 2019, and it aims to provide an efficient payment system that can be used for various transactions. The CBDC will be a legal tender that will function similarly to traditional cash, but it will be digital and operate on a blockchain network.

The delay in the CBDC pilot rollout is expected to be a temporary setback, as the Bank of Russia remains committed to implementing the digital ruble. The CBDC will provide a secure and efficient payment system that will benefit the economy and the financial system as a whole.

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New York State Introduces Bill Allowing State Agencies to Accept Crypto

by Blockchain News

A measure that would allow state agencies to accept cryptocurrencies as a means of payment for fines, civil penalties, taxes, fees, and other charges imposed by the state was presented to the New York State Assembly on January 26. This law would take effect if it is passed.

Democratic Assembly Member Clyde Vanel, who is widely regarded as a crypto-friendly legislator, is the person responsible for the introduction of New York State Assembly Bill A523. It gives state agencies the authority to enter into “agreements with persons to provide the acceptance, by offices of the state, of cryptocurrency as a means of payment” for a variety of different types of fees, including “fines, civil penalties, rent, rates, taxes, fees, charges, revenue, financial obligations or other amounts, including penalties, special assessments and interest, owed to state agencies.”

The measure does not mandate that state agencies accept cryptocurrencies as a form of payment; nevertheless, it does make it clear that state entities might legally agree to accept such payments, and that these agreements ought to be enforced by the judicial system.

The term “cryptocurrency” is defined in the proposed legislation as “any kind of digital currency in which encryption methods are employed to govern the formation of units of money including, but not limited to, bitcoin, ethereum, litecoin, and bitcoin cash.”

Stablecoins such as USD Coin (USDC) and Tether may or may not be included in this definition, depending on how the concept is understood (USDT). On the one hand, the issuer of the stablecoin rather than cryptography is often responsible for regulating the supply of the stablecoin. On the other hand, the bill does recognise that certain cryptocurrencies have a “issuer,” and it provides that agencies can charge the payor an extra fee if such a fee is charged by the cryptocurrency’s issuer. Additionally, the bill does recognise that some cryptocurrencies have a “mining pool,” but it does not recognise that some cryptocurrencies have a “mining pool.”

In order for the measure to be enacted into law, it will first need to get approval from both the Assembly and the Senate of New York, and then it will need to be signed by Governor Kathy Hochul.

Many people have the impression that the state government of New York is against cryptocurrencies. It wasn’t until November 2022 that New York became the first state to adopt a statute that effectively outlawed the mining of almost all cryptocurrencies. In addition to this, it has been attacked for the stringent “BitLicense” that it mandates all cryptocurrency exchanges get. In April of 2022, the Mayor of New York made the case that the legislation requiring a BitLicense ought to be overturned.

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Paraguay Senate Passes Bill to Regulate Crypto Mining and Trading

by Blockchain News

The Senate of Paraguay, a South American nation, on Thursday, approved a bill to regulate cryptocurrency mining and trading in the country. 

The passage of the law is part of an approval made in December last year, but was modified in May by the Chambers of Deputies (the lower house of Paraguay’s bicameral legislature) and therefore returned to the upper chamber (the Senate) for further considerations.

Both chambers have now approved the bill and so it must be submitted to the executive branch, which has the power to approve or veto it.

The proposal modified by the Chamber of Deputies and accepted by the Senate designates the Ministry of Industry and Commerce as the main law enforcement authority to penalize individuals or firms conducting mining or offering crypto services without obtaining legal authorization.

The bill further delegated powers to the Secretariat for the Prevention of Money or Asset Laundering to be in charge of supervising the entire investment process conducted by crypto firms. Besides that, the bill designates The National Electricity Administration to be responsible for enabling the energy supply while the National Securities Commission is tasked with overseeing commercial activities involving digital assets. This involves licensing and overseeing crypto mining companies operating within the country. The proposed law does not make any cryptocurrencies legal tender.

The bill states that individual and corporate mining firms are expected to request for approval to use industrial electricity consumption and then apply for a business license. The proposed legislation also creates a registry for any individual or firm seeking to offer cryptocurrency trading or custody services for third parties.

The new legislation also expects crypto exchanges to register their businesses as virtual asset service providers with the anti-money-laundering agency of Paraguay.

Expanding Crypto Legal Framework

The latest Paraguay’s bill appears to build on previous legislations. In July last year, Paraguay became the second country to propose a bill to make Bitcoin legal tender after El Salvador announced the crypto as legal tender last June.

However, the bill was quite different from that of El Salvador. A leaked draft of Paraguay’s crypto bill showed that the country had no intention of making Bitcoin or any other cryptocurrency legal in the country.

Instead, the nation’s focus was on creating a regulatory framework, especially when it comes to taxation. The aim of the legislation was to create a legal certainty, financial and fiscal in the businesses derived from the production and trading of digital assets.

Unlike El Salvador, Paraguay has had a lot of the same concerns that some other nations have had with crypto entities — that of taxation. The nation wanted to ensure that crypto companies are brought under its tax regime and to have traceability for such transactions and investments.

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Brazilian Senate Committee on Economic Affairs Approves Crypto Regulation Bill

by Blockchain News

Crypto regulation on Brazilian soil gained steam after the senate’s economic affairs committee approved a bill, highlighting the ground rules and day-to-day usage of digital currency funds.

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The committee passage is crucial in the legislative process because the bill awaits a vote on the Senate floor. If it sees the light of day, the final stages will entail approval by the lower house and signing into law by President Jair Bolsonaro. 

Per the announcement:

“Under the proposal, the federal government decides which body will be responsible for regulating business with cryptocurrencies.”

Senator Iraja Abreu, the bill’s rapporteur, noted that the mandate of regulating cryptocurrencies would be undertaken by the nation’s central bank, which played a critical role in creating the draft.

If the bill is passed into law, Brazil will emerge as the largest Latin American country to set the crypto regulation ball rolling needed to shield investors from risks and avert money laundering practices. 

Per the report:

“Virtual asset service providers must prevent money laundering and concealment of assets, while combating criminal organizations, the financing of terrorism and the proliferation of weapons of mass destruction.”

If these rules are violated, the bill guarantees fines and imprisonment. 

Nations across the globe are gearing up to the crypto space, with El Salvador already having set foot in the Bitcoin sector by making the leading cryptocurrency legal tender in September last year. Some of the benefits prompted by this move entail El Salvador’s tourism sector surging by 30% as more foreign visitors continue flocking the nation.

On the other hand, Ukraine recently legalized Bitcoin, and this move was seen as a stepping stone towards opening the nation’s doors to crypto companies. 

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Canadian MP introduces bill aimed at encouraging growth in crypto sector

by Cointelegraph

Michelle Rempel Garner, a member of the House of Commons of Canada, has introduced a bill proposing the government set up a framework to encourage the growth of the cryptocurrency sector in the country.

In the first reading of Bill C-249 in the House of Commons on Wednesday, Garner proposed having Canada’s Minister of Finance — currently Chrystia Freeland, a member of the country’s Liberal Party — consult with industry experts to develop a regulatory framework aimed at boosting innovation around cryptocurrencies. The bill, titled the “Encouraging the Growth of the Cryptoasset Sector Act,” would also require the Finance Minister to report on the framework and introduce legislation within three years of passage.

“Cryptoassets have significant economic and innovative potential for Canada,” said the bill. “The framework must, among other things, focus on lowering barriers to entry into the cryptoasset sector while protecting those working in the sector and minimizing the administrative burden.”

Under Canadian law, a bill can become law by undergoing a first, second and third reading in either the House of Commons or the Senate, passed to the other chamber for a similar process, then given Royal Assent — i.e. signed into law by the Governor General. A member of Canada’s Conservative Party, currently a minority in the House of Commons, Garner would need support from other parties for the crypto bill to succeed. She said on Twitter that she hoped to avoid “political polarization” in attempting to grow the space.

“To be a world leader, Canada needs to make sure cryptoasset experts and investors are telling us what policy they need or what policy they don’t need,” said Garner. “This bill creates a mechanism to formally engage the expertise of cryptoasset innovators and investors in policy development and create a framework for growth.”

The bill has the support of Alberta-based crypto miner Hut8, who announced shortly after the reading that it supported “collaborative efforts by Parliament to strengthen the Blockchain ecosystem in Canada.” Shark Tank star Kevin O’Leary — a HODLer who holds Canadian citizenship — hinted at providing “billions of investment” dollars into the country if there were a clear policy framework on crypto.

Related: Protesters migrate to crypto fundraising platform following GoFundMe ban

An MP for Calgary Nose Hill in Canada’s House of Commons, Rempel holds an economics degree and has served in government for 11 years. In December, she reached out to Crypto Twitter users to ask what the Canadian government could do to “improve the space.”

In the last year, the Ontario Securities Commission has been cracking down on crypto exchanges operating in the province, including KuCoin, OKEx, and Bybit. However, Bank of Canada deputy governor Paul Beaudry has suggested that crypto does not pose any significant risk to the country’s financial system given its current level of adoption.

Zhiyuan Sun contributed to this story.