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.


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.”

In a consultation paper released last week, the Bermuda Monetary Authority (BMA) proposed a framework for developing responsive regulation for the country’s expanding FinTech and cryptocurrency industry.  The paper introduces draft legislation that will apply to businesses providing services within the domestic virtual currency industry, including virtual currency exchanges and wallet providers.

Worldwide, financial regulators have encountered difficulty extending existing securities and financial legislation to virtual currency and related projects.   Attempts to regulate in this area are often motivated by a desire to protect investors or to prevent illicit activities like money laundering.  However, many jurisdictions are also attempting to design regulations that also foster innovation and economic growth. 

In an information session hosted by Wayne Caines, the Bermudan Minister of National Security, and covered by the Royal Gazette, government officials cited an increasing demand for regulatory certainty around cryptocurrency businesses.   While some cryptocurrency businesses and projects focus on decentralization and self-regulatory solutions, other businesses increasingly seek to operate and grow within regulatory environments where their employees, contributors, and clients aren’t exposed to uncertain legal and financial risk.

The Regulatory Sandbox

Notably, Bermuda’s consultation paper proposes allowing innovative businesses in this sector to participate in a “regulatory sandbox” as part of their licensing system.  Regulatory sandboxes allow businesses to consult with regulators while developing innovative products, services, and business models.  The sandbox model also limits exposure to regulatory consequences while a business refines their offerings.  Participation also provides regulators with essential information and feedback for designing effective, responsive and appropriate regulation.   

If the proposals are implemented, Bermuda will join countries like Canada and the United Kingdom in adopting the regulatory sandbox approach to cryptocurrency business.  The 150-page consultation paper and related proposed legislation can be accessed via the BMA’s Notices page.   The paper and its proposals are open for comment from the industry and the public until May 2, 2018.

bitcoin mining

The amount of electricity consumed by bitcoin mining has been grabbing headlines and incurring the ire of environmentalists throughout the nascent technology’s ascendance into the mainstream consciousness. Now, a Silicon Valley legislator says he has found a solution — taxing it.

US Rep. Ro Khanna, a Democrat who represents California’s 17th congressional district, told Business Insider that he believes cryptocurrency miners should have to pay a surtax to account for the environmental impact of their electricity consumption.

“You could have environmental regulations of what could be used or a tax on the use of the mines that are going into the bitcoin, so that if they have externalities that they’re causing the environment, that they have to pay a tax on that,” he said.

The tax, he said, “would provide a disincentive” for people to begin mining. “Just like carbon, you need to have a price on carbon,” he added. “That mining that’s being used for bitcoin, they need to be paying a price on it.”

Of course, as long as the US is regulating cryptocurrency, Khanna says there is no reason legislators should stop at bitcoin mining.

“I think more broadly we need much more regulation, whether it’s against fraud, whether it’s against environmental harms, whether it’s against the use of bitcoin to foster terrorism,” Khanna said. “We need to have much more regulation there and we need to see all the regulations that have come from last hundreds of years for the banks.”

Regulators themselves, however, do not seem to share Khanna’s appetite for adopting a broad framework of cryptocurrency regulations.

As BlockExplorer reported, the chairs of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) recently testified before a US Senate committee that although they believe increased federal regulation of cryptocurrencies may be warranted in some cases, these regulations should be “carefully tailored,” not sweeping rules that fundamentally change the industry.

Notably, Khanna is not the first politician to call for a tax on cryptocurrency mining. After a recent report predicted that more electricity will be used this year in Iceland to fuel cryptocurrency mining operations than to power homes, an Icelandic politician proposed taxing their profits above and beyond the usual rate.

Featured Image from Pexels

In February 2018, U.S. House Rep. Jared Polis (D-CO) announced that he had petitioned the House Committee on Ethics to require Members of Congress to disclose cryptocurrency holdings exceeding  $1,000. Polis argues that cryptocurrencies should be treated by the Ethics Committee much like other financial assets and reminds them that, “Financial disclosures are critical to maintaining public trust in elected officials and the integrity of Congress.”

Polis’ Case for Crypto-disclosure in Congress

Polis points out that several U.S. agencies have already started to regulate cryptocurrencies in some instances; the Internal Revenue Service (IRS) has deemed virtual currencies subject to income tax rules and the Securities Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) both regard cryptocurrencies as commodities. A hearing was held in early February by the Committee on Banking, Housing and Urban Affairs to explore the oversight role of these agencies regarding digital money, especially in relation to initial coin offerings (ICOs).

“The increasing use of cryptocurrency as an alternative to traditional payments and investments necessitates Congress take appropriate action to maintain transparency and deter potential conflicts of interest … ” Polis writes. He mentions that Members of Congress and covered employees are already required to report asset holdings of certain amounts, including commodities holdings of more than $1,000. Also, the Stop Trading on Congressional Knowledge (STOCK) Act requires them to share in real time the purchase, sale or exchange of bonds, stocks, commodities futures or other securities exceeding $ 1,000. Thus, he concludes, Members should follow the same principle with cryptocurrencies and disclose holdings over $1,000.

Polis Is a Proponent of Cryptocurrencies

Polis asks the Committee for additional guidance and suggests they work with the CFTC, SEC, and IRS toward this goal. In the past, he has shown his support for crypto-normalization by accepting bitcoin donations for his campaigns. Also, in 2017, he introduced a bill called the Cryptocurrency Tax Fairness Act of 2017, which would allow consumers to make purchases with cryptocurrency up to $600, “without burdensome reporting requirements.” He is a member of the Congressional Blockchain Caucus.

As previously reported by Block Explorer, many Ukrainian officials have disclosed their ownership of bitcoin in the past two years — 57 have declared over 21,000 bitcoin. The Ukraine government and national bank are also in the midst of forming cryptocurrency regulations.

Featured image from Rep. Polis’ press kit at

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