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Tag: Blockchain Regulation

  • Kraken – Eventful day at the exchange

    Kraken has been in the news recently as the exchange is on the crossroads regarding major decisions it has yet to make – or has already made – about its future.

    No direct listing for Kraken?

    Kraken – the leading crypto exchange – is debating its direct listing. Coinbase is the first cryptocurrency exchange that got listed on NASDAQ. The event was regarded as one of the most anticipated ones for the year. However, Coinbase’s direct listing disappointed many. The price of the stock, COIN, skyrocket initially but then settled at a price less than $300. At the time of writing, COIN stands at $220 – trending downwards.

    Coinbase was being hyped-up, other crypto exchanges also started thinking of listing. Kraken originally had plans of getting the exchange-listed on NASDAQ but the exchange thought it better to wait for Coinbase and its performance after the listing. Now, with the poor performance of Coinbase on NASDAQ, Kraken is rethinking its initial plans of listing.

    The CEO of Kraken Jesse Powell has vocalized his doubts on a direct listing in an interview with Fortune. The exchange is set to go public in late 2022 and after Coinbase’s direct listing, Jesse Powell is considering an Initial Public Offering more seriously than Direct Listing. Powell also furthered about the potential shortcomings and dangers of a direct listing.

    Kraken disabling margin trading for US residents

    The exchange has excluded US residents from margin trading citing regulatory concerns. Margin or leverage trading allows traders to bet more liquidity than they have – making it much riskier. The margin trading will be disabled from June 23rd. After which, US citizens would need to get verified on the exchange as well as certify as Eligible Contract Participant under the US regulatory framework to be eligible for margin trading on the platform.

  • IMF – Not a fan of cryptocurrencies

    IMF – Not a fan of cryptocurrencies

    IMF is another addition to the list of anti-crypto organisations. The IMF has taken a proactive stance in El Salvador’s Bitcoin plans. With the addition of another major players list in the crypto-debate, what would it mean for cryptocurrencies’ future?

    As El Salvador becomes the first country in the world to recognize Bitcoin as legal tender, the president’s ambitious plans for cryptocurrencies are revealed. Being a legal tender, Bitcoin has been mandated to be used by retailers and businesses as a mode of payment with an exemption for those who do not have access to an internet connection. Prices can now be pegged in Bitcoin and no capital gains tax is to be levied on Bitcoin.

    Apart from being recognized as a legal tender, president NayibBukele has also revealed instructions to the state-owned energy company LaGeo to make arrangements for Bitcoin mining with renewable energy. El Salvador cannot meet its own energy needs and Bitcoin mining will definitely put a strain on the already-struggling energy industry.

    The plans of El Salvador for Bitcoin have now involved the International Monetary Fund as well. The IMF is not supporting El Salvador’s position citing Bitcoin can lead to larger macroeconomic instability in the country – the spokesperson of IMF, Gerry Rice, revealed in a press conference. Per the spokesperson, the IMF will be closely following the developments in El Salvador and will keep close contact with the authorities.

    The IMF’s general stance on cryptocurrencies is not favorable as well. The organization regards cryptocurrencies as a threat to the existing regulatory frameworks and are cited to complicate things. The IMF’s involvement in El Salvador may stop other countries from following suit with El Salvador. The lending agency’s power in the international sphere is not something up for debate.

  • Senate hearing on CBDC – No CBDC for the US?

    Senate hearing on CBDC – No CBDC for the US?

    The US regulators are torn between their stance on cryptocurrencies. Where one side would like to see the total adoption and acceptance of cryptocurrencies, the other side does not want anything to do with cryptocurrencies.

    After China rolled out its version of central bank digital currency – the digital yuan – the US also took its first step towards the initiative. A senate hearing was organized for discussion on the viability of a CBDC – a digital dollar. However, the session did not go as well as some may have hoped.

    Senator Elizabeth Warren thrashed the cryptocurrencies – throwing even the possibility of a digital dollar out of the window. The speech of Senator Warren was all that was left after the session as the for-side’s arguments failed to convince the senator. Senator Elizabeth Warren called cryptocurrencies “a lousy investment” and a “haven for illegal activities”. The senator’s argument revolved around the volatility of cryptocurrencies and how that makes them unfit to take the role of a digital currency.

    Furthermore, Warren also highlighted the role of cryptocurrencies in the recent ransomware of JBS USA and Colonial Pipeline. Per the senator, cryptocurrencies lack all the characteristics that a digital currency needs to have – wide acceptance, security and stability.

    The arguments of the four witnesses varied but all favored a centrally-issued digital currency. Pros like lower fees and increased efficiency were cited in the support. China was also a major pro-argument. As the country launched its own digital yuan, more developments in the space can be expected from the country. The only way the United States can catch up with China is by taking an initiative in this direction as soon as possible. The digitization of the world would eventually require the US to issue a digital version of the dollar if it wants the dollar to remain the global reserve currency.

  • Chinese provinces banning crypto mining with full force

    Chinese provinces banning crypto mining with full force

    The Chinese government is not a fan of cryptocurrencies – to say the least. The country is responsible for at least 75% of Bitcoin mining or hashrate. The cheap electricity and established supply chains make mining is the country feasible. However, the government has had a strict stance against cryptocurrencies.

    Bitcoin is notoriously known for its high energy consumption. Mining a proof-of-work mechanism cryptocurrency – like Bitcoin – requires high energy. Unless the mining process shifts towards totally renewable sources, it cannot be sustained. China relies heavily on coal for electricity generation and the country has been trying to control its carbon emissions. The process had been hindered by the large Bitcoin mining industry that the country holds.

    In May, the Chinese State Council hinted towards a crackdown on Bitcoin mining in the country in order to facilitate its broader vision of zero net emissions. The vice premier Liu He vocalized that for financial stability in the country, the government will impose a ban on cryptocurrency mining. The news coupled with Elon Musk’s denouncing of Bitcoin as payment for his Tesla cars led to the market crash of cryptocurrency. A number of mining firms halted operations in the country while others stopped their supply of equipment to Chinese miners.

    Now, another province in China – Qinghai – has also imposed a ban on cryptocurrency mining. Qinghai’s Department of Industry and Information Technology has instructed all miners to halt operations and had said that no new miners will be approved. The provincial government will also be conducting random checks in order to ensure compliance with the new regulation.

    The governments of Xinjiang and Inner Mongolia have also ensured similar regulations to curtail cryptocurrency mining. Other provinces can be expected to follow suit – banning cryptocurrency mining. The news does not bode for the cryptocurrency market and a shift of crypto mining to another country seems imminent.

  • Bitcoin ransomware to have the same priority as terrorism

    Bitcoin ransomware to have the same priority as terrorism

    The United States Department of Justice has announced to elevate the status of ransomware. Now, ransomware will have the same priority as terrorism, according to a news report from Reuters. As high-profile cases of ransomware are becoming rampant, the Department of Justice had taken note of the rise.

    The House Committee on Oversight and Reform has also taken notice of the issue. The head of the committee Carolyn Maloney has requested documents from ransomware victims to investigate the issue. Ransomware has now become a political issue – bringing in cryptocurrencies to the negative limelight.

    The advent of blockchain technology and cryptocurrencies may be considered one of the best innovations of the new century. It is believed to possess the potential to change the world. With the globe moving towards digitization, decentralized technologies are the new favorite as institutional behemoths garner increasing control of the world’s resources. However, decentralized technology like cryptocurrencies also come with a lot of issues.

    Recently, cryptocurrencies have become a means of facilitating online ransomware. There has also been observed a spike in illegal activities like money laundering and tax evasion due to cryptocurrencies but ransomware is gaining more popularity.

    A Russian hacker group that goes by the name of DarkSide had recently targeted Colonial Pipeline – the largest pipeline for refined oil products in the U.S – demanding a ransom in Bitcoin. The company reportedly paid a multi-million ransom to the hackers as the hack took out most of the oil and gas supply in the East Coast.

    Another Russian hacker group called REvil targeted JBS USA – a leading meat processing company. The hack took out meat plants throughout the nation. Although the company has not revealed whether or not it paid the ransom, these high-profile hacks have resulted in cryptocurrency ransomware increasing in priority.

  • British regulator extended registration deadline for crypto firms

    British regulator extended registration deadline for crypto firms

    Cryptocurrency regulation has been a sore topic for many. Regulators all over the world have been actively debating the extent of cryptocurrency regulation. UK’s regulatory watchdog, the Financial Conduct Authority, has put forward its concerns regarding the lax regulation in the country, once again.

    The Financial Conduct Authority has stated that a huge number of crypto firms do not meet the anti-money laundering requirements of the country. Cryptocurrency firms have to register with the FCA; however, only five firms have fully registered with the FCA as of yet. While others operate on a temporary license. Ninety firms are operating with a temporary license currently which are deemed to be not fit in terms of anti-money laundering. The inability to meet requirements has also resulted in a lot of withdrawal applications from businesses – 51 to be precise. The FCA has extended its temporary registration regime to March 31, 2022, in order to facilitate the crypto firms.

    The advent of blockchain technology did not raise many red flags initially. However, after the bull run of 2021, it became clear that the technology is here to stay with mass adoption on the radar. The blockchain technology has been becoming more relevant with every passing day. There have been many new developments and innovations in the cryptocurrency sphere. But with every new innovation, comes the cons as well. The decentralized nature of cryptocurrencies has led to a spike in money laundering, tax evasion, and other illegal activities.

    The problems are becoming rampant as cryptocurrencies move towards mass-scale adoption. Some regulators like the Australian regulators have had soft stances while others like South Koreans have launched a crackdown on the crypto sphere. While the regulatory future of cryptocurrencies is uncertain, regulators are becoming increasingly active on the front.

  • China & Iran – Opposite stances on Bitcoin mining

    China & Iran – Opposite stances on Bitcoin mining

    Bitcoin mining in the East

    A report from blockchain analytics firm Elliptic has found out that the regulated mining industry in Iran may be piling up as much as $1 billion in revenues. Iran has been under a lot of scrutiny because of its nuclear program. The United States has placed trade embargos on the country effectively crippling its already struggling oil economy.

    The economy of Iran is almost wholly dependent on the export of oil and petroleum products. The sanctions and economic embargo have pushed the country into a recession with staggeringly high levels of unemployment and inflation. However, as the world observes a shift with the rise in cryptocurrencies and blockchain technology, Iran may have found itself a problem to its solution.

    The report revealed that Iran accounts for 4.5% of the total Bitcoin operations which has earned the country a ton of money – all used to tackle the problems caused by the trade embargoes.

    The Elliptic report furthered that a lot of developments in the crypto sphere in Iran had been with the help of Chinese investors. China has had a very strict stance on cryptocurrencies which has led to investors injecting their money into other economies like Iran. The financial committee in China has announced a total crackdown on Bitcoin mining in the country. This is the first time the committee has outrightly spoken against crypto mining. It has added Bitcoin mining as a crucial sector to watch and monitor in order to mitigate financial risks.

    The news from China broke out as Bitcoin, once again, fell over 12%. The king of the cryptocurrencies had started off on brutal market corrections as Tesla CEO denounced the use of Bitcoin as a mode of payment for Tesla’s electric cars.

  • Lax crypto regulation in Australia once again highlighted

    Lax crypto regulation in Australia once again highlighted

    The Australian government has been supportive of cryptocurrencies. The government had been trying to make the environment as fostering as possible. Where regulators throughout the globe are moving towards increased cryptocurrency and blockchain regulation, the Australian regulators may be moving in the opposite direction.

    Australian senator Andrew Bragg appeared on Sky News where he stressed the need for strict regulation of the cryptocurrency sphere. The senator is also chairing a senate inquiry into Bitcoin and other cryptocurrencies. He is adamant on increased monitoring of the industry in order to protect consumers.

    The senate inquiry has announced to study the regulatory framework of the cryptocurrency sphere in countries like the United States, Canada, EU, and the United Kingdom in order to be able to evaluate the Australian crypto policies. The policies of Australia on cryptocurrencies are said to need more clarification.

    The Australia Securities and Investment Commission (ASIC) has been trying to create a fostering environment for blockchain innovation. The Australian government has been supportive of cryptocurrencies and grants up to $3 million had been issued for blockchain firms working towards mineral certification and excise tax solutions.

    The Australian blockchain industry had been vocal about the lack of regulation as well. At the Australian Blockchain Conference held in mid-April, the ASIC representative Jonathan Hatch did not receive any positive response from crypto industry leaders. Executives urged that the ASIC study the blockchain technology and the cryptocurrency market more deeply in order to be able to understand the ins and out and better regulate it. While others commented on how ASIC may be stifling growth and innovation in the sector because of its proactive regulating role.

  • SEC vs. Ripple Labs: SEC granted permission to continue foreign discovery

    SEC vs. Ripple Labs: SEC granted permission to continue foreign discovery

    The United States Securities Exchange Commission bagged a small win in the lawsuit against Ripple. Ripple Labs CEO Brad Garlinghouse and Chris Larsen had written a joint letter to the presiding judge stating that the SEC’s perusal of foreign regulators for information on Ripple and XRP transactions falls outside the federal rules. The executives argue that SEC is using the Memorandum of Understanding between SEC and foreign regulators improperly. The letter further stated that the involvement of foreign regulators results in intimidation of Ripple Lab’s overseas partners.

    However, magistrate Judge Sarah Netburndisagreed and dismissed the motion of the firm to halt the SEC in their discovery process. The judge stated, after review, that the SEC has not been acting in bad faith; hence, there is no evidence or reason compelling enough to stop the SEC. The SEC also has a precedent for pursuing foreign discovery in a civil lawsuit.

    The SEC is part of the Organization of Securities Commissions’ MoU for cooperation for information sharing. This allows the SEC to easily obtain information from foreign regulators about Ripple and XRP. The SEC revealed that it has issued 11 requests to nine foreign regulators in this matter.

    Magistrate Judge Sarah Netburn has ordered the SEC to obtain all information through formal requests and submit copies of all requests to ensure transparency.

    In December 2020, the US Securities and Exchange Commission filed a lawsuit against Ripple Lab alleging that the firm had been selling XRP as an unregistered security. The firm’s cryptocurrency XRP took a hard hit because of the lawsuit. Ever since then, it has recovered to a larger extent – participating in the bull run of 2021. Ripple Labs had also bagged a few minor victories in the lawsuit up till now which has resulted in the firm and the crypto back on track.

  • US regulators to join hands an interagency crypto regulation team

    US regulators to join hands an interagency crypto regulation team

    The regulation of cryptocurrencies had been a sour topic for regulators all over the world. The blockchain technology is relatively newer and not many people are well-versed in it, which makes navigating it all the more difficult. Moreover, the crypto sphere is also highly dynamic. Every day newer uses and newer innovations emerge in the market which places regulators at even a more difficult place.

    The brutal market crash may have put a lot of things into perspective as regulators in the United States have decided to join hands for a cryptocurrency regulatory body. The new head of the Office of the Comptroller of the Currency, Michael Hsu, revealed that the agency had been in talks with the United States Federal Reserve regarding a regulatory body focused solely on cryptocurrency. The regulatory body is described as an “interagency policy sprint team”.

    During a virtual meeting, Hsu discussed the proposition with the Fed vice chairman of supervision Randal Quarles as well as FDIC chairman, Jelena McWilliams. Randal Quarles also disclosed that the Fed had been actively working with other government agencies for the purpose of cryptocurrency regulation.

    Asian countries have had mixed stances when it comes cryptocurrencies. Turkey is one of the countries on the forefront of war against cryptocurrency-caused problems. The country has announced a new policy which forces crypto exchanges to inform the Financial Crimes Investigation Board (MASAK) of any cryptocurrency transaction exceeding $1,200. On the other hand, South Korea had launched a crackdown of its own on cryptocurrencies. Major regulatory bodies of the country had joined hands against problems like tax evasion and money laundering that are fueled by cryptocurrencies.