Crypto regulation

Zambia to Complete Testing Real-Life Crypto Usage Simulations by June — Government Minister

April 18, 2023 Bitcoin.com

South African Professor Accuses US Regulators of Attempting to ‘Assassinate Crypto’

April 6, 2023 Bitcoin.com

Fed Chair Powell on Crypto: We See Turmoil, Fraud, Lack of Transparency, Run Risk

March 8, 2023 Bitcoin.com

Internal documents reveal Australia’s potential timeline for crypto legislation: Report

March 6, 2023 Coin Telegraph

Australian Financial Review

Internal documents from the Australian Treasury Department have revealed crypto legislation in the country could be a year away at the very least.

Crypto legislation in Australia could be dragged out past 2024 and beyond, with the government seemingly wanting to take its time in order to get a full picture of the industry, internal documents from the government have revealed.

The documents, obtained by The Australian Financial Review under freedom of information laws, reportedly reveal that the government aims to release consultation papers in the second quarter of 2023 and will hold stakeholder roundtables on crypto licensing and custody in the third quarter.

The industry has been waiting to see the next steps of the Australian Labor government’s token mapping exercise, which was announced three months after it came into power last year, with submissions closed on March 3.

Consultation open! Today we released the token mapping consultation paper. This consultation is part of a multi step reform agenda to develop an appropriate regulatory setting for the #crypto sector. Read paper & submit views @ https://t.co/4W2msjhP9B @ASIC_Connect @AUSTRAC pic.twitter.com/OGHuZEGvDp
— Australian Treasury (@Treasury_AU) February 2, 2023

However, according to the documents, final submissions to the cabinet are not expected until late in the year, possibly dragging out any decisions on crypto legislation well into 2024 and beyond.

One briefing from the department has also reportedly acknowledged that they expect frustration from crypto businesses and consumer groups over the long timetable.

“Treasury expects some stakeholders to be disappointed with the perceived delay in implementing a licensing regime,” according to a brief from Australian Treasurer Jim Chalmers, seen by AFR.

“For example, consumer groups seeking immediate protections and businesses seeking regulatory legitimacy.”

However, the Treasury believes that in the wake of FTX’s collapse, the demand for cryptocurrencies has “weakened significantly,” which could give it more time to hash out regulations.

"Treasury considers these concerns are somewhat mitigated by the current market conditions resulting in less consumer demand for crypto assets; and the need to complete the token mapping exercise to provide clarity on how any new licensing framework would operate in practice."

Meanwhile, the government has also revealed through the documents that it has created a dedicated “crypto policy unit” within the Treasury department.

In a meeting with treasury last November, the crypto policy unit reportedly flagged possible requirements for crypto licenses, including “fit and proper person” tests, capital requirements and obligations to report bad actors and scams in the industry. The unit also discussed beefing up consumer protections.

Last year, a survey from Australian crypto exchange Swyftx revealed in September that approximately one million Australians planned to purchase cryptocurrency for the first time over the next 12 months, bringing total crypto ownership in the country to over five million.

*According to Swyftx, 4.2 million Australians own crypto, with more planning to buy some over the next year. Source: Annual Australian Crypto Survey, Swyftx*

Janet Yellen Says ‘Critical’ to Establish Strong Crypto Regulation — ‘We Haven’t Suggested Outright Banning’

February 27, 2023 Bitcoin.com

Crypto lawyers flame Gensler over claims that all crypto are securities

February 27, 2023 Coin Telegraph

Bitcoin

Crypto lawyers weighed in on Gary Gensler’s crypto regulation claims saying the SEC has no legal standing to police the space.

Cryptocurrency lawyers have rebuffed comments made by the head of the United States securities regulator, claiming in a recent interview that every cryptocurrency except Bitcoin (BTC) is a security that falls under its jurisdiction.

In a wide-ranging Feb. 23 New York Magazine interview discussing crypto, the chair of the Securities and Exchange Commission (SEC), Gary Gensler, claimed “everything other than Bitcoin” falls under the agency’s remit.

He added other crypto projects “are securities because there’s a group in the middle and the public is anticipating profits based on that group” which he said is not the case with Bitcoin.

Gensler in @NYMag on crypto:

-everything is a security except bitcoin
-every company out there is in violation
-crypto is pointless but blockchain is kinda neat

Hard to argue you’re acting in good faith if admittedly trying to stamp out an entire industry. pic.twitter.com/Ozw8ZJ3ETO
— Alexander Grieve (@AlexanderGrieve) February 26, 2023

Jake Chervinsky, a lawyer and policy lead at Blockchain Association, a crypto advocacy group, however argued in a Feb. 26 tweet that Gensler’s “opinion is not the law” despite his claimed command over the crypto sector.

Chair Gensler may have prejudged that every digital asset aside from bitcoin is a security, but his opinion is not the law. The SEC lacks authority to regulate any of them until and unless it proves its case in court. For each asset, every single one, individually, one at a time.
— Jake Chervinsky (@jchervinsky) February 26, 2023

He added “until and unless” the SEC “proves its case in court” for its jurisdiction over each individual token “one at a time” then it “lacks authority to regulate any of them.”

Lawyer Logan Bolinger also chimed into the issue, tweeting on Feb. 26 “that Gensler’s opinions on what is or isn’t a security are not legally dispositive” — meaning it’s not the final legal determination.

Friendly reminder that Gensler’s opinions on what is or isn’t a security are not legally dispositive.

In this country, judges - not SEC chairs - ultimately determine what the law means and how it applies.

Doesn’t mean his thoughts are irrelevant. They’re just not dispositive.
— Logan Bolinger (@TheWhyOfFI) February 26, 2023

“Judges — not SEC chairs — ultimately determine what the law means and how it applies” Bolinger added.

The policy lead at advocacy body Bitcoin Policy Institute, Jason Brett, said Gensler’s comments “shouldn't be celebrated, but feared” and stated, “there are ways to win other than via a regulatory moat.”

The Gary Gensler thing is no bueno. There are ways to win other than via a regulatory moat. And anytime this is the way, the script can be flipped and before you know it, everyone is crying due process. Gensler's comments in NY Magazine shouldn't be celebrated, but feared.
— Jason Brett (@RegulatoryJason) February 26, 2023

SEC needs 12,305 lawsuits: Delphi Labs counsel

Meanwhile, Gabriel Shapiro, the general counsel at investment firm Delphi Labs, outlined in a series of tweets the seemingly impossible enforcement the SEC would have to carry out on the industry to cement its rule.

Shapiro analyzed that over 12,300 tokens worth around $663 billion are — according to Gensler — unregistered securities that are illegal in the U.S. and, as mentioned by Chervinsky, the agency would have to file a lawsuit against each token creator.

The SEC had handled crypto in two main ways according to Shapiro: Either fining token creators and requiring the issuer to register, or fining them and ordering the created tokens to be destroyed and delisted from exchanges.

so far, SEC has handled tokens in mainly 2 ways:

(1) fine + registration requirement--this failed every time so far, with the companies becoming bankrupt

(2) fine + order to destroy all premined tokens and delist tokens from all exchanges

both ways, tokens go to $0
— _gabrielShapir0 (@lex_node) February 26, 2023

“SEC registration is not only too expensive for most token creators — there is also no clear path for registration of tokens,” Shapiro said, adding:

“What is the plan here? Since registration is not feasible, it can only be [that] everyone pays huge fines, stops working on the protocols, destroys all dev premines, and delists [tokens] from trading. That would mean 12,305 lawsuits.”

“What is the plan? We are all wondering, and billions of American [dollars] are at risk.”

Hong Kong’s crypto ambition gets subtle nod from Beijing: Report

February 21, 2023 Coin Telegraph

Asia

While China has cracked down on cryptocurrencies in the mainland, it’s apparently taking a softer approach to Hong Kong’s crypto hub aspirations.

Hong Kong’s ambition of becoming a cryptocurrency hub is reportedly seeing subtle support from the Chinese government, in what could be seen as a contrast to the mainland’s hard-line anti-crypto stance.

In October last year, the government of Hong Kong floated the idea of introducing its own bill to regulate crypto and allow retail investors to “directly invest into virtual assets” that could possibly be in contrast to China’s widespread crypto ban.

According to people familiar with the matter, Beijing officials have not been brazenly opposed to the idea. According to a Feb. 20 Bloomberg report, it is understood that representatives from the China Liaison Office have been frequenting Hong Kong crypto gatherings seeking to understand what’s going on.

So far, their encounters with Beijing officials on the matter have been friendly, according to those familiar, which is being perceived by local crypto business operators that Beijing — albeit very subtly — may be open to using Hong Kong as a testbed for crypto.

New Bitcoin narrative brewing: Hong Kong is getting into crypto.

What makes it even more interesting is the People's Bank of China is one of the only central banks in the world cutting rates & easing.

Asia is bidding [sources] pic.twitter.com/n5cwE7jI2l
— Luke Martin (@VentureCoinist) February 16, 2023

Hong Kong is a Special Administrative Region of China, allowing it to have its own laws and governance. The former British colony was transferred back to China in 1997 following a guarantee from Beijing there would be no Chinese interference with the region’s economic and political systems for 50 years, known as the “one country, two systems” principle.

National People’s Congress member and digital asset lawyer Nick Chan was quoted as saying that as long as there are no violations of “the bottom line, to not threaten financial stability in China,” then the city is free to undertake its own pursuits.

On Feb. 20, Hong Kong’s Securities and Futures Commission outlined a new crypto license regime that proposed that all centralized exchanges that operate in the region must be licensed with the regulator.

It also proposed allowing retail traders access to licensed cryptocurrency trading platforms, saying public feedback highlighted that denying access to crypto markets may push Hong Kongers to trade on unregulated overseas platforms.

The new regulatory push has spurred many crypto businesses to seek expansion into the city. Most recently the exchange Huobi Global said it would seek a local license and plans to open a new Hong Kong-only exchange with a focus on institutional and high-net-worth individuals.

Custodia Bank CEO slams Washington’s ‘misguided crackdown’ on crypto

February 18, 2023 Coin Telegraph

Caitlin Long

Caitlin Long revealed that she had warned government agencies of major “fraud” in the crypto space months before several firms went bankrupt.

The CEO of Custodia Bank Caitlin Long has slammed regulators and lawmakers in Washington D.C. for their “misguided crackdown” on the crypto sector, and also for ignoring her warnings of major “fraud” allegedly conducted by now-bankrupted entities.

In a Feb. 17 blog post titled “Shame On Washington, DC For Shooting A Messenger Who Warned of Crypto Debacle,” Long tore into the government for its approach to crypto regulation, failing to protect investors and alienating good actors in the space:

“Washington’s misguided crackdown will only push risks into the shadows, leaving regulators to play whack-a-mole as the risks continuously pop up in unexpected places.”

Long stressed that with her digital asset custody firm, she’s “been calling out the worst of crypto while trying to build a lawful, compliant alternative that relegates scams to the trash heap. But [...] most of today’s policymakers seem intent on killing the high-integrity innovators.”

The Custodia Bank CEO claimed that her efforts to work with government agencies were ultimately thrown back in her face, as she recounted the spate of negative run-ins her firm has had of late.

“Custodia was simultaneously attacked by the White House, the Federal Reserve Board of Governors, the Kansas City Fed and Senator Dick Durbin (who conflated our non-leveraged, 100-percent liquid and solvent bank with FTX in a Senate floor speech),” she said, adding that:

“Custodia tried to become federally regulated – the very result bipartisan policymakers claim to want. Yet Custodia has been denied and now disparaged for daring to come through the front door.”

Her sentiments echo that of figures such as Coinbase CEO Brian Armstrong, who has suggested on multiple occasions that the agencies such as the Securities and Exchange Commission (SEC) have reacted frostily to his firm’s efforts to maintain a dialogue in good faith.

Earlier this month, Armstrong also criticized the lack of regulatory clarity in the U.S. and what appears to be a “regulation by enforcement” approach following the SEC’s move to shut down Kraken’s staking services on Feb. 9.

“Today’s regulators and lawmakers in Washington are no doubt embarrassed that they failed to stop the criminals of crypto. DC is demanding scalps,” Long wrote in the blog post, adding that:

“Calls for a crackdown today are coming from many of the same policymakers who were charmed by the fraudsters. In a 180-degree turn, they’re now throwing the baby out with the bathwater.”

Unheeded warnings

Over on Twitter, Long also suggested that well before the implosion of several crypto firms in 2022, she and many others had tried to warn Washington and “help law enforcement stop” major fraud, but to no avail.

Long stated that she was publicly disclosing for the first time that she had “handed over evidence to law enforcement of probable crimes” committed by an unnamed crypto firm “ months before that company imploded and stuck its millions of customers with losses.”

1/ IT'S TIME FOR ME TO REVEAL A FEW THINGS. I've just published a post "Shame On Washington, DC For Shooting A Messenger Who Warned Of #Crypto Debacle." Link to post is here:https://t.co/yTWWrEk3Os pic.twitter.com/rbo21DzOv3
— Caitlin Long ⚡️ (@CaitlinLong_) February 17, 2023

Kraken co-founder and CEO Jesse Powell responded to Long’s Twitter thread, and essentially corroborated her statements by noting that: “I can't tell you how infuriating it is to have pointed out massive red flags and obviously illegal activity to regulators only to have them ignore the issues for years.”

I can't tell you how infuriating it is to have pointed out massive red flags and obviously illegal activity to regulators only to have them ignore the issues for years. "They're offshore. It's complicated. We're looking at everybody." FOR YEARS. Then to be used as their example. https://t.co/YHdNazM2UE
— Jesse Powell (@jespow) February 18, 2023