Regulatory Roundup: New US Crypto Bill, France’s 1st Approved ICO, Muslim Crypto
December 23, 2019
In this roundup, we cover a wide range of regulatory developments in the crypto space. Much has transpired in the U.S., including a new crypto bill, SEC’s proposal, lawmakers seeking answers from the IRS, and the state of Michigan signing several crypto bills into law. We also cover France’s first-approved initial coin offering, a proposal for a unified Muslim crypto, India’s plans to produce 20,000 blockchain experts, and more.
U.S. lawmakers are reportedly discussing a new bill entitled “Crypto-Currency Act of 2020.” Its stated purpose is to “clarify which federal agencies regulate digital assets, to require those agencies to notify the public of any federal licences, certifications, or registrations required to create or trade in such assets, and for other purposes.”
The bill divides cryptocurrencies into three types: “crypto-commodity,” “crypto-currency,” and “crypto-security.” It proposes that the Commodity Futures Trading Commission (CFTC) regulates the first type, the Financial Crimes Enforcement Network (FinCEN) the second type, and the Securities and Exchange Commission (SEC) the third type.
Meanwhile, the SEC has proposed amending the definition of “accredited investor” to allow additional qualifications such as those based on professional knowledge, experience, or certifications. This will boost access to crypto investments since a number of them are currently only available to accredited investors. The Commission has also postponed its decision on the proposed rule change filed by NYSE Arca to list and trade shares of the “United States Bitcoin and Treasury Investment Trust.” It has now designated Feb. 26 as the date by which it shall either approve or disapprove this proposed rule change.
As for crypto taxation, eight congressmen have sent a letter to the Internal Revenue Service (IRS) asking for clarification on how certain crypto transactions are taxed. The lawmakers pointed out a number of issues in the agency’s latest guidance, including unwarranted tax liabilities for crypto users who unwillingly receive forked or airdropped coins.
US State of Michigan Amends Law to Include Crypto
The Office of Governor Gretchen Whitmer of the U.S. state of Michigan announced on Friday that a number of House Bills and Senate Bills have been signed into law. Among them are House Bills 4102-4107 which “is a package of bills that amends various sections of the Michigan Penal Code to add direct and indirect reference to cryptocurrency and distributed ledger technology,” the announcement describes.
House Bill 4102 prohibits the collection of any property or other valuables, including cryptocurrency, for the fighting baiting, or shooting of an animal. House Bill 4103 modifies the definition of “financial transaction device” to include the use of cryptocurrency and distributed ledger technology.
House Bill 4104 modifies the definition of “racketeering” while House Bill 4105 specifies that “other personal property” would include cryptocurrency. House Bill 4106 makes altering a record made using distributed ledger technology a felony, and House Bill 4107 adds cryptocurrency to the definition of “monetary instrument.”
France’s First Approved ICO
The French financial markets regulator, the Autorité des Marchés Financiers (AMF), has approved the country’s first initial coin offering (ICO). The issuer is a company called French-ICO. French Law No. 2019-486 of 22 May 2019, also referred to as the Action Plan for Business Growth and Transformation (Pacte) law, has introduced a regulatory framework for crypto assets and ICOs in France. The law gives issuers the option to obtain approval for their token sales from the AMF. “Although this approval is optional and ICOs without AMF approval will therefore continue to be legal, only those public offerings that have received the AMF approval may be marketed directly to the public in France,” the regulator explained.
At the four-day Kuala Lumpur Summit, the leaders of a number of Muslim countries discussed creating a unified Muslim cryptocurrency. Iranian President Hassan Rouhani “proposed an Islamic financial payment with Muslim countries trading in local currencies and the creation of a Muslim cryptocurrency to cut reliance on the U.S. dollar and weather the effects of market fluctuation,” the Associated Press detailed. Malaysian Prime Minister Mahathir Mohamad supported the idea. “It is the first time we hear Iran and also Turkey are of the opinion that if we do not have American dollars, we can use our own currency or one common currency that we (Muslim nations) can create if we agree,” he said.
China Questions Crypto Exchanges
Eight crypto companies have reportedly been placed under inquiry by the authorities in Shenzhen, China. Two of them were allegedly trading platform operators and six were associated with initial coin offerings. The authorities reportedly questioned representatives of the companies at a meeting hosted by the Financial Regulatory Bureau of Shenzhen Municipality on Dec. 18, with the participation of 10 other regulatory bodies. The regulators said they have conducted both online and offline investigations. A representative of the bureau clarified that the companies that have been questioned “have troubles,” but emphasized that it does not mean those that have not been questioned have no problem.
ECB’s Eurochain and ‘Anonymous’ CBDC
The European Central Bank (ECB) published a 10-page report entitled “Exploring anonymity in central bank digital currencies” on Dec. 17, showcasing its blockchain technology proof-of-concept. It explains how a central bank digital currency (CBDC) could work. The concept, aimed to contribute to the broader discussion of central bank chains, deploys several features created by R3 and Accenture. The ECB calls the network “Eurochain.”
The report highlights the benefits of the hypothetical network and discusses how anonymity can fit into the logistics. It also describes how the ECB plans to enforce AML/CTF limits on the amount that a CBDC user can spend without the AML authority’s involvement.
Indian State to Produce 20,000 Blockchain Specialists
The Indian state of Kerala is planning to produce thousands of blockchain specialists. The state’s Information Technology Secretary Shri. M Sivasankar declared during the Blockhash Live 2019 conference: “The coming two years are crucial for us as we plan to produce 20,000 blockchain experts. The emphasis is on enhancing the quality of manpower steered by young startup companies.” He believes that blockchain technology is “a promising, new-age cutting edge technological innovation,” noting its potential to disrupt various business sectors including banking, insurance, trade finance, and retail. The event was organized by Kerala Blockchain Academy. It was attended by civil servants and industry representatives who spoke about positioning Kerala as the blockchain hub of India.
Poland Backdates Crypto Tax
The Polish tax administration has clarified that the Civil Law Transactions Tax (PCC) is applicable to crypto trades conducted before last year’s moratorium on its collection. The PCC is a 1% or 2% tax levied on sales of assets outside the scope of Europe’s value-added tax (VAT). The Polish Ministry of Finance imposed a temporary hold on its collection in the summer of 2018, which was extended in July this year until June 30, 2020.
What do you think of the regulatory developments featured in this roundup? Let us know in the comments section below.
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