Regulation

The work of preparing cryptocurrencies for a new Europe-wide program has begun

Published

5 months ago

17 June, 2024

The work of preparing cryptocurrencies for a new Europe-wide program has begun

The end of this month marks the first major compliance deadline for the new EU program for the cryptocurrency industry.

The Markets in Crypto Assets Regulation, or MiCA, was signed last year by EU institutions and will impose a series of new rules on cryptocurrency exchanges and other industry operators to ensure the protection of investors and consumers, along with tighter controls strict on anti-money rules. recycling.

From June 30th the issue of stablecoins will pass to MiCA. Stablecoins refer to cryptocurrencies whose value is pegged to a traditional fiat currency such as the dollar or euro.

Stablecoin issuers are now required to have an e-money license to issue such a crypto token in the EU and demonstrate that they have the reserves in tow to maintain the peg.

Companies are already taking steps to restrict access to some stablecoins in the EU that do not fall under the rules set by MiCA. Binance, the world’s largest cryptocurrency exchange by volume, said it will limit “unauthorized” stablecoins on its platform.

This is what the lawyers of Coinbase, another of the major players in the sector, think.

Paul Grewal, chief legal officer at Coinbase, told The Currency that some cryptocurrency exchanges are likely to have to delist several stablecoins starting June 30.

“The requirements are real and they are coming quickly,” Grewal said.

“For all stablecoins, will there now be explicit standards on what reserve requirements must be in place and how to protect those reserves? What do you need to tell your clients about how those assets are backed by euros or dollars or some other fiat currency?” Grewal said.

It is one of many new, higher standards that Grewal says will help further clean up the industry and bring it more in line with the regulatory foundation of traditional finance.

Coinbase, listed on the Nasdaq, is one of the largest cryptocurrency exchanges in the world and has established a sizable presence in Ireland over the past six years. More recently it confirmed that Ireland will be the main regulatory hub for MiCA in the EU.

“We think this will improve the space as a whole and put an even higher premium on doing things the right way and being transparent with customers and regulators about what you’re doing and what you’re not doing . This is, I think, the most immediate opportunity and problem that the industry will always face.”

In its annual report, the Central Bank said that the implementation of MiCA and “the involvement of companies applying for authorization under the new regime” is a priority for 2024.

While Coinbase has committed to Europe-wide MiCA compliance from Ireland, it is unclear when exactly companies will be able to submit their requests.

The Netherlands has kicked things off and opened up the application process, perhaps giving them an advantage in attracting companies eager to obtain MiCA approvals.

A spokesperson for the Central Bank told The Currency that it plans to open the “authorization portal early in the third quarter” of this year for such requests. The watchdog said it will host an industry event in July to inform companies of what will be expected of them when they apply.

The spokesperson added that it and its counterparts in Europe have collaborated on how to interpret the various provisions of the regulation to ensure consistency.

“It was significant that it is Esma [European Securities and Markets Authority] and the ABE [European Banking Authority] have established supervisory coordination networks to facilitate convergence among regulators. At the Central Bank of Ireland we are active participants and strong supporters of this work,” they said.

While Coinbase has committed to MiCA compliance outside Ireland, others have yet to make such commitments there.

Binance has established a presence in Ireland with staff and several corporate entities, but a spokesperson will not be named for the location decision for the new regulation. “Binance is working to comply with MiCA requirements and will share more details at an appropriate time,” he said.

For Cara Hennessy, location is a key decision for many of her clients. Hennessy is the founder of Provenance Compliance, a consultancy which she set up in the Cayman Islands where she has lived for the past 17 years before recently returning to Ireland.

It is assisting clients in obtaining regulatory approvals in other countries that now wish to join the EU but remain undecided about where to settle.

“These customers say: ‘where should I go in Europe?’ They are looking at Ireland. Ireland has a very strong reputation as a strong governing and regulatory body, however, it takes on average 10 months to process a Vasp registration,” he said, referring to an existing framework for crypto companies.

“If they come into MiCA through Ireland they have to go through the MiCA licensing process and what worries our customers is the time it will take because they won’t be able to operate until they get a licence.”

Hennessy said it welcomed the Central Bank’s latest update on the sector’s commitment.

“This is absolutely necessary and welcomed because the other thing is that there are questions about what constitutes a complete application. We know the documentation as a business plan [are required] but there needs to be a little more detail about what constitutes a complete application so that once you enter the application, there isn’t a lot of back and forth.”

Over the next year, MiCA has several deadlines that companies will need to meet before the scheme is fully operational.

The rules for cryptocurrency service providers, which will include the likes of cryptocurrency exchanges, will come into force in December this year. The Central Bank will then give companies a 12-month grace period to get back on their feet.

Until recently, this was a point of contention among the industry. National regulators had discretion over the grace period, and companies lobbied for the longest 18-month period allowed by the regulation.

Coinbase supported an 18-month grace period in Ireland, as did other major exchanges, Kraken and Gemini.

Coinbase’s Grewal accepts that it now has to work within the constraints of the 12-month period in Ireland, but that anything shorter would have created a lot of “pressure” to comply.

The variability of grace periods can create some challenges for EU companies if some countries have tighter grace periods than others.

“I will say this: the Central Bank of Ireland has a reputation for being a very firm, even tough regulator, and I think that reputation is deserved. Now, for some companies maybe that’s a downside or something less attractive,” Grewal said.

He said fintech and crypto companies can sometimes focus too much on getting a license as quickly as possible, and that jurisdictional searches for “lighter” oversight don’t always work out for the best.

“I don’t think any company that thinks it’s going to have an easier time should be so myopically focused on who can expedite or grant licenses or applications more quickly,” he said.

“When it comes to regulation, and this is a lesson we have seen in traditional finance, I think fintechs and cryptocurrencies are also learning the same, licensing applications, registrations and the like are just the beginning of the journey, not the end. the journey.”

Cathal Houlihan, partner at financial services consultancy Valentia Partners, flagged the different grace periods and the fact that some countries will open applications earlier than others.

“There is a risk, certainly the message from the Central Bank and other regulators is that they are actively working to ensure that there is consistency across jurisdictions,” Houlihan said.

“How to bridge the gap between applications that are already open and those that have not yet been opened [is important]. If the Netherlands, for example, is reviewing applications now and the CBI may not review them for several months, it is difficult to know when that consistency will actually arrive.”

The grace period will become less of an issue as more regulators open their enforcement portals, he said.

“I think the 12-month transition period only becomes really concerning if companies are concerned that they won’t be able to get authorization within that period rather than whether it’s 12 or 18 or six months or whatever it may be,” Houlihan said .

These are priority issues for companies when considering MiCA compliance, he added.

While strengthening anti-money laundering controls are also a factor in regulation, they will be the least controversial for major cryptocurrency companies at this stage. Years of high-profile scandals and collapses – and the resulting scrutiny from lawmakers – have prompted most major players to dramatically improve their AML and KYC controls in recent years.

MiCA formalizes much of this and puts it in black and white.

MiCA will create more work for both companies and start-ups, but others are smelling an opportunity to strike deals under the new regime.

Andrew Forson heads venture investing at The Hashgraph Association, a Swiss cryptocurrency and blockchain development and investment firm.

Forson told The Currency that the MiCA framework gives investors more confidence rather than a feeling of restriction. He said Hashgraph is now actively seeking early-stage cryptocurrency and Web3 startups to invest in Ireland. While MiCA will initially create obstacles for young companies to get off the ground, it will ultimately separate the wheat from the chaff, he said.

Andrea Forson. Photo: Cormac Rowe

“Regulation means that there are barriers to entry and, as cynical as it may seem to some, those companies that are able to demonstrate some degree of regulatory compliance are also able to demonstrate some degree of value protection, so we consider regulation as inevitable,” Forson said. .

“Our interest is to see which companies have been able to navigate these regulatory frameworks and build something that is compliant with the regulations, which makes them a more attractive investment target for us.”

Hashgraph is evaluating a possible physical presence in Ireland to scout deals but, for now, is talking to some early-stage Irish start-ups about investments.

Hashgraph will write checks of between 100,000 and 1.5 million euros to startups in pre-seed and seed rounds, Forson said, with the intention of “investing in them early and often.”

Further reading: Gabriel Makhlouf called them “Ponzi schemes”. Do EU Regulators Have Their Knives Ready for Cryptocurrencies?

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Regulation

Cryptocurrency Regulation in Slovenia 2024

Published

4 months ago

1 August, 2024

Chain Feed Staff

Cryptocurrency Regulation in Slovenia 2024

Slovenia, a small but highly developed European country with a population of 2.1 million, boasts a rich industrial history that has contributed significantly to its robust economy. As the most economically developed Slavic nation, Slovenia has grown steadily since adopting the euro in 2007. Its openness to innovation has been a key factor in its success in the industrial sector, making it a favorite destination for cryptocurrency enthusiasts. Many believe that Slovenia is poised to become a powerful fintech hub in Europe. But does its current cryptocurrency regulatory framework support such aspirations?

Let’s explore Slovenia’s cryptocurrency regulations and see if they can push the country to the forefront of the cryptocurrency scene. My expectations are positive. What are yours? Before we answer, let’s dig deeper.

1. Cryptocurrency Regulation in Slovenia: An Overview

Slovenia is known for its pro-innovation stance, providing a supportive environment for emerging technologies such as blockchain and cryptocurrencies. Under the Payment Services and Systems Act, cryptocurrencies are classified as virtual assets rather than financial or monetary instruments.

Regulation of the cryptocurrency sector in Slovenia is decentralized. Different authorities manage different aspects of the ecosystem. For example, the Bank of Slovenia and the Securities Market Agency supervise cryptocurrency transactions to ensure compliance with financial laws, including anti-money laundering (AML) and counter-terrorist financing regulations. The Slovenian Act on the Prevention of Money Laundering and Terrorist Financing (ZPPDFT-2) incorporates the EU’s Fifth Anti-Money Laundering Directive (5MLD) and aligns with the latest FATF recommendations. All virtual currency service providers must register with the Office of the Republic of Slovenia.

2. Cryptocurrency regulation in Slovenia: what’s new?

This year, there have been several noteworthy developments in the cryptocurrency sector in Slovenia:

July 25, 2024: Slovenia has issued a €30 million on-chain sovereign digital bond, the first of its kind in the EU, with a yield of 3.65%, maturing on 25 November 2024.

May 14, 2024: NiceHash has announced the first Slovenian Bitcoin-focused conference, NiceHashX, scheduled for November 8-9 in Maribor.

3. Explanation of the legal framework for cryptocurrency taxation in Slovenia

Slovenia’s cryptocurrency tax framework provides clear guidelines for both individuals and businesses. According to the Slovenian Tax Administration, tax treatment depends on the status of the trader and the nature of the transaction.

Individuals: Income earned from cryptocurrencies through employment or ongoing business activities is subject to personal income tax. However, capital gains from trading or market fluctuations are exempt from taxation.
Society: Capital gains from cryptocurrency activities are subject to a corporate income tax of 19%. Value added tax (VAT) generally applies at a rate of 22%, although cryptocurrency transactions considered as means of payment are exempt from VAT. Companies are not allowed to limit payment methods to cryptocurrencies only. Tokens issued during ICOs must comply with standard accounting rules and the Corporate Tax Act.

4. Cryptocurrency Mining in Slovenia: What You Should Know

Cryptocurrency mining is not restricted in Slovenia, but the income from mining is considered business income and is therefore taxable. This includes rewards from validating transactions and any additional income from mining operations. Both natural persons and legal entities must comply with Slovenian tax regulations.

5. Timeline of the evolution of cryptocurrency regulations in Slovenia

Here is a timeline highlighting the evolution of cryptocurrency regulations in Slovenia:

2013:The Slovenian Tax Administration has issued guidelines according to which income from cryptocurrency transactions should be taxed.
2017:The Slovenian Tax Administration has provided more detailed guidelines on cryptocurrency taxation, based on factors such as the trader’s status and the type of transaction.
2023The EU has adopted the Markets in Cryptocurrencies Regulation (MiCA), which establishes a uniform regulatory framework for cryptocurrencies, their issuers and service providers across the EU.

Final note

Slovenia’s approach to the cryptocurrency industry is commendable, reflecting its optimistic view of the future of cryptocurrency. The country’s balanced regulatory framework supports cryptocurrency innovation while protecting user rights and preventing illegal activities. Recent developments demonstrate Slovenia’s commitment to continuously improving its regulatory environment. Slovenia’s cryptocurrency regulatory framework sets a positive example for other nations navigating the evolving cryptocurrency landscape.

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Regulation

A Blank Slate for Cryptocurrencies: Kamala Harris’ Regulatory Opportunity

Published

4 months ago

1 August, 2024

Chain Feed Staff

A Blank Slate for Cryptocurrencies: Kamala Harris' Regulatory Opportunity

Photo by The Dhage of Shubham ON Disinfect

As the cryptocurrency landscape continues to evolve, the need for clear regulation has never been greater.

Vice President Kamala Harris is now leading the charge on digital asset regulation in the United States, presenting a unique opportunity for a clean slate. This fresh start can foster innovation and protect consumers. It can also pave the way for widespread adoption across industries, including real estate agencies, healthcare providers, and online gambling platforms like these online casinos in the uk. According to experts at SafestCasinoSites, these platforms have advantages such as bonus offers, a wide selection of games, and various payment methods. Ultimately, all this increased adoption could push the cryptocurrency market forward.

With that in mind, let’s take a look at the current state of cryptocurrency regulation in the United States, which is a complex and confusing landscape. Multiple agencies, including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Financial Crimes Enforcement Network (FinCEN), have overlapping jurisdictions, creating a fragmented regulatory environment. This lack of clarity has hindered innovation, as companies are reluctant to invest in the United States, fearing regulatory repercussions. A cohesive and clear regulatory framework is urgently needed to unlock the full potential of cryptocurrencies in the United States.

While the US struggles to find its footing, other countries, such as Singapore and the UK, are actively embracing the cryptocurrency industry with clear and supportive regulatory frameworks. This has led to a brain drain, with companies opting to set up in more hospitable environments.

Vice President Kamala Harris has a unique opportunity to change this narrative and clean up the future. cryptocurrency regulation. By taking a comprehensive and inclusive approach, it can help create a framework that balances consumer protection with innovation and growth. The time has come for clear and effective regulation of cryptocurrencies in the United States.

Effective regulation of digital assets is essential to fostering a safe and innovative environment. Key principles guiding this regulation include clarity, innovation, global cooperation, consumer protection, and flexibility. Clear definitions and guidelines eliminate ambiguity, while encouraging experimentation and development to ensure progress. Collaboration with international partners establishes consistent standards, preventing regulatory arbitrage. Strong safeguards protect consumers from fraud and market abuse, and adaptability allows for evolution in response to emerging trends and technologies, striking a balance between innovation and protection.

The benefits of effective cryptocurrency regulation are many and far-reaching. By establishing clear guidelines, governments can attract investors and traditional users, spurring growth and adoption. This, in turn, can position countries like the United States as global leaders in financial technology and innovation. Strong protections will also increase consumer confidence in digital assets and related products, boosting economic activity.

A thriving cryptocurrency industry can significantly contribute to GDP and job creation, which has a positive impact on the overall economy. Furthermore, effective regulation has paved the way for the growth of many companies such as tech startups, online casinos, and pharmaceutical companies, proving that clear guidelines can unlock new opportunities without stifling innovation. This is a great example of how regulation can alleviate fears of regressive policies, even if Kamala Harris does not repeal the current progressive approach. By adopting effective regulation, governments can create fertile ground for the cryptocurrency industry to thrive, driving progress and prosperity.

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Regulation

Think You Own Your Crypto? New UK Law Would Ensure It – DL News

Published

4 months ago

1 August, 2024

Chain Feed Staff

Think You Own Your Crypto? New UK Law Would Ensure It – DL News

The UK Law Commission has developed a bill that will address a situation of legal uncertainty.
The commission’s goal is to ensure that cryptocurrencies are legally treated as personal property.

UK law is not entirely clear whether cryptocurrencies can be considered personal property.

This is according to the UK Law Commission, which argues that while most investors assume that when they buy cryptocurrencies, they are “acquiring property rights in the same way as buying, say, a watch or a laptop.”

“As the law currently stands, this is not necessarily the case,” the respected legal body said in a new report on Tuesday.

The report was accompanied by a solution: a new bill to consolidate the legal status of digital assets as personal property.

This could be huge for the estimated 4.7 million Britons valued hold cryptocurrencies.

“This will allow the courts to determine a range of issues,” the report says.

If passed, the law would help clarify how cryptocurrencies are treated in cases of bankruptcy, estate planning or theft.

Flexible law

The commission is an independent body responsible for reviewing UK law. It began investigating whether English and Welsh property laws apply to digital assets in 2020.

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At the time, then-Chancellor of the Exchequer Rishi Sunak expressed ambitions to transform the UK into a cryptocurrency hub as Britons invested more.

In 2023, the commission decided that, in most cases, the legislation of England and Wales is sufficiently flexible to regulate cryptocurrencies.

This means that any asset, from Bitcoin to non-fungible tokens and some types of digital contracts, can be considered personal property, without Parliament having to write extensive new laws.

There was one small area of uncertainty, however: it was unclear whether cryptocurrencies fell within the two categories of personal property recognised under UK law.

These two categories are made up of tangible assets (cars, laptops, bags) and intangible assets (contracts, stocks, and debt).

The bill that will now go to Parliament to be converted into law aims to remedy this situation.

Without that clarification, courts may try to lump cryptocurrencies together with intangible assets, said Adam Sanitt, head of litigation, knowledge, innovation and corporate support EMEA at law firm Norton Rose Fulbright. DL News in March.

This is problematic because intangible assets are creations of the legal system, while cryptocurrencies are not.

“How the law treats digital assets, what rights you have over them, how you own them, how you transfer them to other people—that treatment is different, because digital assets don’t exist by virtue of the legal system, but independently of it,” Sanitt said.

The money in your bank account, for example, is a legal creation. The government could pass a law to cancel it.

However, if the UK passed a law banning Bitcoin, Bitcoin would not cease to exist.

Sanitt said: “That’s why digital assets are so important: neither the government nor the legal system can take them away from you.”

Contact the author at joanna@dlnews.com.

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Regulation

The Solution the Cryptocurrency Industry Needs

Published

4 months ago

1 August, 2024

Chain Feed Staff

The Solution the Cryptocurrency Industry Needs

The cryptocurrency industry has performed remarkably well since its inception, but now faces a critical hurdle that requires careful consideration and regulatory expertise to overcome. Despite the industry’s rapid growth and rate of global adoption, the gap between the industry and global regulation is only widening as new innovations break through into the public domain.

Although efforts are being made on both sides, regulators’ lack of familiarity with cryptocurrencies and the industry’s lack of regulatory expertise are hindering innovation in the sector. To address this issue, traditional financial institutions (TradFi) such as MultiBank Group have started venturing into the cryptocurrency sector.

The regulatory gap

Over the past decade, the cryptocurrency industry has grown dramatically as tech entrepreneurs and forward-thinking thinkers have founded a plethora of crypto platforms and protocols to push the boundaries of the space. The problem faced by these newcomers, who are often unfamiliar with the hurdles posed by financial regulators, can quickly overwhelm and stall operations.

On the other hand, regulators more attuned to TradFi systems may be equally stifled by the complexities of decentralization and blockchain technology. The unfamiliarity experienced by both innovators and regulators creates a stark regulatory divide between both sides, leading to misunderstandings and potential conflicts.

To overcome this lack of communication, a bridge must be built to bridge the gap, ensuring future stability for the cryptocurrency industry and clearer legislation from regulators.

Efforts to bridge the gap between industry

The gap between the cryptocurrency industry and regulators is slowly narrowing as efforts to regulate cryptocurrencies and Web3 space activities are gaining momentum. Specific regulatory actions are taking place in many countries, aimed at providing greater oversight of cryptocurrency transactions, cryptocurrency exchanges, and initial coin offerings (ICOs).

Despite being a positive step in the right direction, these new regulations can differ significantly between jurisdictions around the world. This fragmentation results in a regulatory environment filled with obstacles, bottlenecks, and varying requirements and prohibitions. As cryptocurrency companies and TradFi institutions attempt to navigate the minefield, the regulatory maze becomes increasingly convoluted.

TradFi institutions like MultiBank Group are working to solve this problem, as one of the largest financial derivatives institutions in the world with over 12 licenses across all continents. Founded in 2005, the Group has an impeccable and trustworthy reputation globally, extensive expertise in financial regulation and has now ventured into the cryptocurrency space via MultiBank.io.

MultiBank.io: TradFi Excellence in the Crypto Space

Expanding into the cryptocurrency space via MultiBank.io has enabled MultiBank Group to provide regulatory clarity and trust to the digital asset industry. With a substantial daily trading volume of $12.1 billion, the timely decision to enter the cryptocurrency space has the potential to set regulatory precedents and standards for years to come.

By helping to develop sensible and well-considered regulations, MultiBank.io’s established reputation allows the company to communicate effectively and clearly with regulators. Unlike others in the industry without regulatory expertise, MultiBank.io facilitates the Group’s commitment to rigorous regulatory standards, the scope of oversight and establishes the necessary transparency.

The company’s approach ensures that regulatory licenses are pre-acquired, compliance is met globally without jurisdictional barriers, and transactions remain secure at all times. By helping to create robust regulations that are both clear and innovation-friendly, MultiBank Group looks forward to standardizing the entire cryptocurrency industry for other potential innovators.

One of the biggest challenges in establishing a clearly constructed bridge between regulators and the cryptocurrency industry is effective communication. By leveraging its institutional background TradFi and acting as an intermediary with regulators, MultiBank Group is able to translate the needs of the industry to those who shape it.

This quality of mediation is essential to ensure that regulation helps develop essential technological advances rather than hinders their establishment and growth. Through the lens of TradFi when looking at the complexity of the cryptocurrency industry, MultiBank Group is able to deconstruct unfamiliar crypto arguments for regulation and create a safer and more secure space.

Where TradFi and Crypto Meet

Regulations are crucial for traders, investors, and everyday users of crypto platforms and their safety when participating in crypto markets. While strict regulations are necessary for stable market integrity, innovation should still be considered, something MultiBank Group considers a priority.

Where TradFi and cryptocurrencies converge, the Group is there to provide a balanced approach to ensure promotion for both the cryptocurrency industry and regulators seeking to protect both retail and institutional investors. This balance is critical to maintaining a thriving space where cryptocurrency innovation can thrive without compromising the security of user funds or data.

As more TradFi institutions like MultiBank Group enter the cryptocurrency space with ever-expanding expertise in regulatory understanding, the future of the industry is increasingly encouraged. The financial freedoms of the cryptocurrency space coupled with regulatory oversight for financial security will be the guiding lights for the future success of the entire cryptocurrency industry.

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