us senate

“J. Christopher Giancarlo for president!”

Thus read one of many tweets praising the market regulatory chief following the conclusion of Tuesday’s US Senate hearing on cryptocurrencies.

Giancarlo, who chairs the US Commodity Futures Trading Commission (CFTC), testified for more than two hours alongside Securities and Exchange Commission (SEC) Chairman Jay Clayton before the Committee on Banking, Housing, and Urban Affairs.

At the beginning of Giancarlo’s opening statement, he diverged from his prepared remarks to explain his view on bitcoin — not as a regulator, but as a father.

The CFTC chairman noted that none of his college-aged children had expressed much interest in investing, even though he and his wife had set up brokerage accounts for them when they were teenagers.

“Well, that changed last year,” he said. “Suddenly, they were all talking about bitcoin. They were all asking what I thought, and should they buy it. One of their older cousins, who owns bitcoin, was telling them all about it and they got all excited, and I imagine that many members of this committee may have had some similar experiences in your own families of late.”

This personal story resonated with cryptocurrency enthusiasts, many of whom have grown accustomed to bracing for impact whenever a regulator or entrenched financier opens his or her mouth to discuss bitcoin.

Then Giancarlo made a statement that not only won him their attention but also their hearts.

“It strikes me that we owe it to this new generation to respect their enthusiasm to respect their enthusiasm about virtual currencies with a thoughtful and balanced response, not a dismissive one,” he said. “And yet we must crack down hard on those who try to abuse their enthusiasm with fraud and manipulation, and we must thoroughly educate ourselves and the public about this new innovation, and we must make good policy choices and put in sound regulatory frameworks to reduce risks for consumers.”

The emphasis, of course, has been placed on the former part of that statement, as it represents such a tremendous divergence from the disdain with which so many skeptics view cryptocurrency enthusiasts.

Later in the hearing, Giancarlo tipped his hat to the bitcoin community twice more, first by explaining that his niece is a “hodler” and then by pushing back against a senator’s claim that distributed ledger technology (DLT) could be dealt with separately from bitcoin, a common refrain from the “blockchain not bitcoin” crowd.

“It’s important to remember that if there was no Bitcoin, there would be no DLT,” he said.

Somewhat lost in the enthusiastic response to Giancarlo’s testimony were statements from both him and SEC Chairman Clayton affirming the need for “carefully tailored” regulations to protect investors, making it likely that Congress will eventually adopt measures to regulate cryptocurrency exchanges at the federal level rather than the state level, as is currently the case.

Nevertheless, given the heartfelt tone expressed throughout Chairman Giancarlo’s testimony, cryptocurrency investors may have found an unlikely ally.

Featuerd Image from Wikipedia

hong kong

Hong Kong authorities have said that while they won’t ban the trading of cryptocurrencies, they will educate people on the risks involved instead.

According to the Financial Services and the Treasury Bureau, the public education campaign will highlight that the crypto market is not regulated, is subjected to hacking, and fluctuates in price, reports the South China Morning Post. The campaign is being run together with the Investor Education Centre, a subsidiary of the Securities and Futures Commission.

It’s expected to be rolled out from March via print, digital, and broadcast media in addition to the Mass Transit Railway (MTR) stations, a major public transport network serving Hong Kong.

Joseph Chan Ho-lim, the Treasury’s undersecretary, said that investors in Hong Kong may not know about the risks surrounding cryptocurrencies and initial coin offerings (ICOs).

Julia Leung Fung-yee, executive director of the intermediaries division of the commission, explained by saying:

When we asked some young people why they bought cryptocurrencies, many of them cared less about the projects mentioned in the [ICOs’] White Paper … they just wanted to make quick money by speculating on the cryptocurrency exchange.

Interestingly, while the volatility of the digital currency market remains a concern to policymakers in Hong Kong, that doesn’t mean they’re about to tell investors what they should and shouldn’t invest in.

These comments come at a time when the cryptocurrency market is experiencing heightened attention from traders and authorities concerned about rising prices. At the end of 2017 bitcoin saw its value soar by nearly 2,000 percent before losing half its price at the start of 2018. Speculation that the sector is in a bubble remains; however, this doesn’t appear to have dampened interest in it. Raising funds through ICOs has also increased, which saw crowdsourced fundraising bringing in between $4 billion and $7 billion.

However, unlike Chinese and South Korean authorities, which are cracking down on cryptocurrencies and trading platforms, Hong Kong’s government has indicated that it doesn’t plan to follow suit anytime soon.

One of the measures that authorities have implemented to protect consumers is that ICO issuers are required to follow existing laws and regulations if the coin they are offering falls within the remit of a security or investment.

Yet, according to Leo Weese, chairman of the Hong Kong Bitcoin Association, this is a topic that needs to be talked about.

“We should know the difference between what makes a good ICO [and what doesn’t] and how we differentiate between scams and legitimate projects.”

Featured image from Shutterstock.

Theresa May on crypto crime

Jan. 25, 2018, U.K. Prime Minister Theresa May discusses the need to “seriously” look at Bitcoin and other virtual currencies due to their potential for use in crime during an interview with Bloomberg’s Editor-in-Chief John Micklethwait. During their conversation in Davos, Switzerland, May talks about the importance of continuing the fight against online crime and her concerns regarding the use of cryptocurrencies and other technologies for elicit and illegal purposes.

May on Crypto, Crime and Tech

After May expresses her desire to see more progress in terms of social responsibility in the tech world, specifically mentioning online child pornography and terrorist activities, Micklethwait asks her if she sees digital currency as an area where she “ought to try to clamp down, too?” May replies that she sees the realm of cryptocurrencies as “increasingly developing” and says, “Cryptocurrencies like Bitcoin, we should be looking at these very seriously, precisely because of the way they can be used, particularly by criminals.”

She also says that she feels progress has been made overall in the realms of online social responsibility but calls for more to be accomplished, so that “people can look at the internet and know that it is a force for good.” She says she is positive about tech companies’ abilities to change lives for the better and feels that the UK is already a leader in realms such as AI, electric vehicles and battery technology. “We are already an attractive place for businesses to come and set up,” she adds.

Recent UK Crypto Regulations

In December 2017, the UK and other EU governments committed to increase the regulation of virtual currencies as a means of deterring their use to launder money or fund international crime and terrorism. Established counterterrorism and anti-money laundering finance rules will now be applied to cryptocurrencies and are expected to be made into law by participating countries within 18 months.

 

sec

The US Securities and Exchange Commission (SEC) has thrown cold water on exchange-traded fund (ETF) providers jockeying to list the first bitcoin ETF.

Thought to be a game-changer for cryptocurrency adoption, bitcoin ETFs would provide investors with the ability to obtain exposure to the flagship cryptocurrency through a conventionally-wrapped investment product.

Fund providers have sought SEC approval for cryptocurrency-derived ETFs for years, but the SEC has been reluctant to lend its approval to these products, which would likely be popular among retail investors.

The rush to list a bitcoin ETF intensified following the launch of the first bitcoin futures contracts, as the general consensus among analysts was that the SEC would quickly approve a fund that invested exclusively in futures contracts, which currently trade on two regulated US exchanges.

However, several recent developments indicate that this may not be the case.

Most recently, the SEC sent two investment industry trade groups a lengthy letter outlining a number of “significant investor protection issues” that fund sponsors must answer before the agency will consider approving a bitcoin ETF.

“We believe…that there are a number of significant investor protection issues that need to be examined before sponsors begin offering these funds to retail investors,” Dalia Blass, director of investment management at the SEC, wrote in the letter, which was dated Jan. 18.

Blass said that the SEC was chiefly concerned about the liquidity of the futures markets, as well as how to assign a fair market value to what would be intensely-volatile products. However, she also touched on a variety of other topics, including market manipulation, custodial issues, and arbitrage.

“[T]he innovative nature of cryptocurrencies and related products, as well as their expected use and utility in our financial markets, means that they are, in many ways, unlike the types of investments that registered funds currently hold in substantial amounts. In light of these considerations, we have, at this time, significant outstanding questions concerning how funds holding substantial amounts of cryptocurrencies and related products would satisfy” federal securities laws, Blass said.

Earlier this month, the SEC reportedly asked fund providers to voluntarily withdraw their bitcoin ETF applications, citing some of the concerns outlined in the letter above.

Notably, the agency also pressured the first blockchain-focused funds to remove the word “blockchain” from their names, although these ETFs — which primarily invest in companies experimenting with blockchain technology — were allowed to begin trading this week after complying with this request.

Featured Image from SEC/Flickr

south korea cryptocurrency trading ban

South Korea’s Blue House has clarified that there is not a cryptocurrency ban being considered by the country. Even though two Korean Bitcoin exchanges were raided, the government is not planning to ban cryptocurrency any time soon. They even further clarified that many different government organizations would be coordinating to fully allow regulated cryptocurrency trading.

Yu Yong-seok, a spokesperson for the South Korean Ministry of Justice clarified to Korean press that their previous words were not indicative of the entire South Korean government’s stance he said that the position that cryptocurrency was only used for gambling “[…] is a position of the Ministry of Justice, not a government position.”

South Korea cryptocurrency trading ban won’t be happening in the short term

The political party currently in the Blue House, the South Korean equivalent of the American White House, commented:

“The government announcement should be based on detailed reviews and coordination. If there is a problem, we should warn and prepare in advance. “The behavior we showed today was the opposite. Minister of Justice Park Sang-ki, who is responsible for the announcement today, has lost confidence.”

Some are even petitioning for Attorney General Park’s removal from office. The South Korean Ministry of Strategy and Finance additionally revealed that they first heard of the supposed Korean cryptocurrency trading ban of 2018 through media reports – and were shocked. Cryptocurrency is at a size now that individual arms of government can’t act alone. Even in the United States, the different statuses of Bitcoin in different regulatory bodies has somewhat stifled innovation, even just at the federal level not including individual states’ additional requirements such as the BitLicense.