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The U.S. Securities and Exchange Commission (SEC) does not plan to ban initial coin offerings (ICOs), a top official said on Monday.

SEC Commissioner Robert Jackson said during an interview with CNBC that the agency is instead committed to bringing ICOs into compliance with the country’s current securities framework, which dates back to the 1930s.

“Investors are having a hard time telling the difference between investments and fraud,” Jackson said. “Down the road, I think we will be thinking about ways to make those investments work consistent with our securities laws.”

Jackson chided ICO industry participants for repeatedly flouting federal securities laws in their token sales, arguing that they have effectively acted as though it is an unregulated market.

This, he said, has hurt investors, many of whom have fallen victim to fraud schemes involving cryptocurrency.

“If you want to know what our markets would look like with no securities regulation, what it would look like if the SEC didn’t do its job? The answer is the ICO market,” Jackson said. “Right now we are focused on protecting investors who are getting hurt in this market.”

To date, most ICO operators have described their tokens as “utility tokens,” which they allege are exempt from securities regulations. However, the SEC has said that while utility tokens may exist there are few ICOs that can find safe harbor under this definition.

Last week, SEC Chairman Jay Clayton said that every ICO token he has observed is a security, though he clarified that bitcoin and other “pure” mediums of exchange are exempt from that classification.

Meanwhile, former Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler said that he would classify ethereum and Ripple’s XRP token as securities since they were both initially distributed through sales conducted by centralized entities — and XRP still is.

Featured Image from SEC/Flickr

Crimea Plans Cryptocurrency Fund to Protect Investors from Economic Sanctions

Authorities in Crimea are interested in launching a cryptocurrency fund for investors to circumvent economic sanctions imposed on the Russian-occupied territory.

The deputy prime minister of Crimea, Georgy Muradov highlighted the plans on April 18. He said:

“We are discussing these schemes to circumvent sanctions. One way is the creation of a cryptocurrency investment fund in Crimea where we can accumulate cryptocurrency resources, exchange them into cash, and then use them to implement certain investment projects on Crimean land”.

The plan is for Crimea to create a public investment fund in crypto which can be used to accumulate digital assets for the region.

Muradov made his comments one day before the commencement of the Yalta International Economic Forum, held in Crimea. At the forum, Anatoly Aksakov – who oversees the Committee on the Financial Market in Russia’s lower legislative chamber – gave the green light to the project.

Anatoly said cryptocurrency exchanges and ICOs might be permitted in Crimea, but mining won’t be allowed due to the excessive amount of electricity it consumes.

The move towards cryptocurrency adoption in Crimea is progressing faster than expected. Aksakov said:

“Mining in the Crimea is an illusion, but ICO and crypto-exchanges are quite real,” “[Authorities] are working hard on this issue.”

Russia also has plans to launch a cryptocurrency named CryptoRuble, in a bid to circumvent economic sanctions from the West. This has become necessary as the Russian government seeks to strengthen the economy while reducing the impact of international sanctions.

Russian regulators are currently drafting cryptocurrency regulations which are expected to be released in July 2018, but we should not expect CryptoRuble till mid-2019.

While Russian president Vladimir Putin had initially expressed skepticism towards bitcoin and the rest of the cryptocurrency market because of fears of regulation and the lack of backing by any central bank, the ballooning market and demand for cryptocurrency have since softened his stance.

A couple of Russian companies have started testing the waters as well. Gazprombank, one of the largest bank in Russia has made bold moves towards cryptocurrency adoption as it seeks to conduct crypto transactions through its Swiss subsidiary later this year.

Kraken’s CEO, Jesse Powell, had nothing but strong words for New York regulators who tried to compel the San Francisco based exchange to take part in it’s Virtual Market Integrity Initiative. Kraken and 13 other exchanges were instructed to participate in the Virtual Market Integrity Initiative, with the goal of seeking greater transparency regarding how trading platforms operate.

The New York Attorney General offices Investor Protection Bureau sent letters to the platforms requesting they completed a questionnaire by May 1. The forms included detailed questions on ownership, fees, money laundering and more.

According to the Attorney General, Eric Schneiderman:

“Too often, consumers don’t have the basic facts they need to assess the fairness, integrity and security of these trading platforms.”

Most exchanges were willing to cooperate with the inquiry and are interested in increasing transparency in the space. Tyler Winklevoss, CEO of Gemini whose statement was published on CNBC applauded the Attorney General and  said:

“We look forward to cooperating with and submitting our responses to the questionnaire that has been circulated.”

Powell (Kraken), however, was more critical of the regulators. In an update shared on Twitter, he said:

“Kraken’s BitLicense-prompted exit from New York in 2015 pays another dividend today. When I saw this 34-point demand, with a deadline 2 weeks out, I immediately thought ‘The audacity of these guys — the entitlement, the disrespect for our business, our time! The resource diversion for this production is massive. This is going to completely blow up our roadmap!’ Then I realized that we made the right decision to get the hell out of New York three years ago and that we can dodge this bullet.”

Kraken had ceased operations in New York in 2015 as part of the “Great Bitcoin Exodus” that resulted after the controversial BitLicense was introduced. Powell said that Kraken was open to help New York’s regulators understand their business operations as well as how the crypto space works but he believes the AG’s inquiry is misplaced and blames other crypto exchanges for “kowtowing” to the probe and others before it. Kraken also recently ceased operations in Japan due to regulatory pressure, but still ranks in America’s top 15 by volume list for cryptocurrency trading platforms.

Kraken, one of the largest cryptocurrency exchanges in operation, has just announced that it will be ceasing its operations in Japan for the time being.

The move is as a result of increased regulations and sky-high operational costs in the Japanese cryptocurrency market.

In a report Bloomberg published, Kraken stated:

“Suspending our services for Japan residents will allow us to better focus on our resources to improve in other geographical areas.” They reassured their numerous customers by adding: “This is a localised suspension of service that only affects residents of Japan and does not impact services for Japanese citizens or businesses domiciled outside of Japan”.

For a while now, Japan has been cited as the hub for crypto activity by the cryptocurrency community. A large number of Japanese organizations have been hopping on the cryptocurrency bandwagon. Internet companies have shown growing interest in dipping into the rising market. As an example, Yahoo Japan recently announced the acquisition of a cryptocurrency exchange.

Along with companies, it seems the general public has warmed up to the sector as well. R25 conducted a survey where it was reported that approximately 14% of Japanese males within the age bracket of 25 to 30 own cryptocurrency.

https://twitter.com/business/status/986088052589252608/photo/1

Even while the Japanese public’s acceptance of cryptocurrency is on the rise, increasing government regulations have cropped up after the $560 Million hack of Coincheck. Several calls have been made by investors and members of the public for increased scrutiny of the exchanges to prevent a future occurrence.

The Japanese Financial Services Agency made a move towards protecting the industry by requiring licenses for exchanges and a higher level of security. This led to a lot of closures as some exchanges couldn’t meet these demands.

Kraken, on the other hand, obtained the necessary authority to operate in Japan without a license but the American-based company was never a crowd’s favorite.

Over the course of its 3-year existence in Japan, Kraken was never able to reach the volume it required to justify its existence in Japan. As of April 17th, the BTC/JPY pair accounted for a measly 0.9% of the exchange’s total volume, minuscule when compared to the BTC/USD pair’s total volume.

bitcoin exchange

Today, New York Attorney General Eric T. Schneiderman initiated the Virtual Markets Integrity Initiative, a reality discovering investigation into the arrangements and practices of platforms utilized by purchasers to exchange virtual or “crypto” monetary forms like bitcoin and ether. As a component of a more extensive push to secure cryptographic money speculators and purchasers, the Attorney General’s office sent letters to thirteen noteworthy virtual cash exchanging platforms asking for key data on their activities, inside controls and defends to ensure client resources.

The attorney general is asking for data on the platforms’ activities, inside controls, and safeguards to ensure client resources, as per an announcement from Schneiderman’s office. “As the letters explain, the initiative seeks to increase transparency and accountability as it relates to the platforms retail investors rely on to trade virtual currency, and better inform enforcement agencies, investors, and consumers,” Schneiderman said in a statement.

Platforms

The Investor Protection Bureau of the Office of the Attorney General sent letters to the following virtual currency trading platforms:

The initiative, in which the attorney general’s office sent letters to 13 virtual cash exchanging stages, tries to expand straightforwardness and responsibility as it identifies with the online offices that retail speculators depend on to exchange virtual money and better educate requirement offices, financial specialists, and shoppers.

Virtual Markets Integrity Initiative Questionnaire

The letters sent to the platforms include the questionnaire. It comprised of following sections:

  • Ownership and Control
  • Basic Operation and Fees
  • Trading Policies and procedures
  • Outages and Other Suspensions Of Trading
  • Internal Controls
  • Privacy and Money Laundering
  • Protection against Risks To Customer Funds
  • Written Materials

“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money. Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms,” said Attorney General Schneiderman. “Our Virtual Markets Integrity Initiative sets out to change that, promoting the accountability and transparency in the virtual currency marketplace that investors and consumers deserve.”