Regulation

‘What are we waiting for’? SEC Commissioner Hester Peirce discusses how to move cryptocurrency regulation forward

Published

6 months ago

30 May, 2024

'What are we waiting for'? SEC Commissioner Hester Peirce discusses how to move cryptocurrency regulation forward

The U.S. Securities and Exchange Commission is not a monolithic institution. Look no further than Hester Peirce (aka Crypto Mom), who is currently serving her second term as one of the five supervisory commissioners. In recent years, Peirce has earned a reputation as an advocate for cryptocurrencies and blockchain technology, writing countless dissenting opinions regarding the numerous lawsuits the SEC has taken against crypto protocols and companies.

To some extent, Peirce’s disagreements with SEC Chairman Gary Gensler stem from their different philosophical and political beliefs. Peirce, a Republican and member of the Federalist Society, believes government should have a limited role in regulating trade. While Gensler, who swims in Democratic circles, is often more difficult to define. While Gensler has seemingly evolving views on cryptocurrencies (having appeared as a blockchain advocate while teaching the topic at MIT), Pierce has remained steadfast in his support of economic innovation.

“It is a fundamental American principle that people are free to make choices. The government is not there to protect people from their own choices,” Peirce told CoinDesk in an interview. This view influences Peirce’s views on whether the SEC should block ETH spot exchange-traded funds (ETFs), prosecute U.S.-based exchanges like Coinbase and Kraken, and what role the agency should play in oversight of the cryptocurrency markets.

CoinDesk caught up with Commissioner Peirce ahead of Consensus 2024, where he is expected to speak in May, to discuss the SEC’s enforcement actions, his distaste for big banks, and where US regulation of cryptocurrencies first went wrong.

HI mom. To start simply, would you be able to describe the fundamental difference of opinion you have with SEC Chairman Gary Gensler?

It’s not an easy question.

To begin with, look, the opinions I represent and will reflect are my opinions, not necessarily those of the SEC or my fellow commissioners, so I can’t speak for anyone else on the commission.

Are you talking specifically about cryptocurrencies or the universe of issues?

Perhaps I wanted to broaden the scope of application. What are your key political or philosophical differences?

So in terms of philosophy, I’m of the mind that we don’t necessarily know what’s best for other people. We have our statutory mandates that we must implement. But within these mandates, we are often given discretion. And if we have discretion, my preference is to let market participants make a decision about what they want to do. Now, sometimes there’s a reason why we have to go in the middle of a transaction and say, “No, you can’t do that,” or “Yes, you can do that, but you have to do it this particular way. “But we better have a good reason to meddle in this transaction.

It is a fundamental American principle that people are free to make choices. The government is not there to protect people from their own choices. It is there to protect people if someone else hurts them, but not to make decisions about their lives for them.

You’ve been critical of big banks in the past, but you’ve also argued that the regulatory response to the Great Financial Crisis was misplaced. I wonder if this is somehow related to your interest in cryptocurrencies?

I think my interest in cryptocurrencies stems from a couple of things. First, I think it’s a good test for how we handle innovation, or maybe a bad test in the sense that I think we’re not passing it. Crypto came to us with many new players and many new ideas. I think we had to figure out how to work with these new players and figure out how they could do what they wanted in a way that was compliant, but also allowed them to move forward.

There is a connection in the sense that when I look at the financial crisis – a lot of people looked at it and came to different conclusions about the causes – one of the things that was happening was poor regulatory design. A regulatory plan that led everyone to make the same stupid mistake at the same time. One way to address this is to build resilience into the system, and having heterogeneity in the system is a good way to build resilience. There are some interesting concepts within cryptocurrencies that allow for greater decentralization of the financial system.

So yes, in that sense there is a connection. But do I think the decentralized future will replace centralized intermediaries in the financial system? My prediction would not be; people want to deal with a centralized intermediary. But I think there will be a role for decentralized finance. Maybe it’s in the background. Maybe it’s more than that. I predict that most people will access it through a centralized intermediary. I might be wrong.

You don’t have to answer this question, but do you hold cryptocurrencies?

Because I always work on these topics. I don’t and I wouldn’t even if I could. I feel like there would be a conflict. If you work on these problems, you basically can’t have cryptocurrencies. I speak only for the rules that apply to me.

A question from my publisher: Prometheum; What’s going on there? Is this an example of the SEC picking winners?

I will not speak to any particular entity. Good try.

That’s fair enough. Your Safe Harbor proposal is common sense, but in the years since you published it, I think it has become clear that perhaps three years is too short a time for decentralization of protocols. Solana, Cardano, and even Ethereum to some extent have centralized entities directing development: the non-profit organizations founded alongside the network. Do you think we should think about decentralization over a longer time horizon? Decades?

Again, decentralization is not an end in itself. It’s the right thing in certain circumstances. However, sometimes having a centralized entity is the right thing. We should all take a step back and think about what we are trying to achieve. And basically, what we need to get is the ability for people to know whether or not they’re dealing with a security, so that when they do something or sell something they understand whether it’s a securities offering.

They need to know this in the primary and secondary markets. So if we decide that some crypto assets are securities, or that it doesn’t make sense to change the rules, there is a sensible framework that makes sense for crypto assets. Does it make sense to establish some sort of transparency regime for centralized bodies? This is really a congressional decision. But we can’t even have these conversations at the SEC right now because the bottom line is to just apply exactly the same rules that apply to stocks and be done with it — and I don’t think that works.

But even just taking a step back and thinking about what we’re really trying to solve might take some of the pressure off the decentralization issue.

How closely do you or the other four commissioners work with the Enforcement Division? Do you suggest cases to argue about?

So just to give you an idea of how things work from an application perspective. As with regulation, staff do the bulk of the work. They consider a rule and will propose it to us and we will evaluate it. Voting often takes place in an open, public meeting. With enforcement actions we also receive recommendations. Typically, staff will recommend authorizing an enforcement action and resolving it at the same time. So we often don’t see the case through to the end and aren’t involved in the merits of the matter. Then we will authorize the division to sue or we will authorize you to sue and settle with them on the same day. Most of our cases are resolved immediately. Voting occurs in a process called serietim, where we simply vote on documents, or we vote in a meeting where there is discussion, but such meetings, as you might imagine, are not open to the public.

So, in a sense, if there were a change in the presidential administration in the next election, then could the current regime of control continue, more or less, as it is?

I think these are great questions because the structure of the agency is a little strange. Strange in the sense that it’s not like many other agencies that have a single boss. But even though we are five commissioners, Chairman Gensler has the authority to set the regulatory agenda and the staff reports to him as well. The president can certainly give a push to the direction things go, but you’re right, it’s not like when a new president comes in all the existing oversight investigations stop. The agency is designed to move forward.

Would you accept the job if Trump or Tulsi were elected?

It’s not even on the radar.

Yes, I’m focused on The Now and trying to move us to a better place. I’ve been here for six years and it’s very disheartening to see that we haven’t gone down a productive path at all. For me it is inevitable that sooner or later we will have to embark on a productive path, so why not start now? What are we waiting for?

This isn’t a question about the present, but I’m curious how the agency has changed since your first two stints at the SEC in the early 2000s.

Over the years we have become progressively more prescriptive in our regulatory approach. One issue I raised in a speech last week is that we have become less willing to engage on some of the difficult issues with staff and the public. It was not a set of positive changes.

Is there any reason to believe or hope that the ETH ETF trial on the spot market will not play out similarly to what happened with the bitcoin ETFs on the spot market?

I can’t talk about it because we have some applications under consideration.

Do you think the DAO Report 2017 set cryptocurrency regulation on the wrong foot?

Yes I do it. Because I think the facts of the DAO report are different from the facts of most cryptocurrency offerings we see, right? The facts were unique. And I really don’t think that the legal analysis we applied to the reflection on tokens was useful in really getting to the heart of the matter.

So if I could rewind – I wasn’t here at the time of the DAO report, although I learned a lot in that time – I would change the way we approach things.

Well, again, since this is litigation, I don’t want to talk about the opinion of any particular judge. But as I said, in other contexts, when you think about an investment contract, whether it’s a digital asset or some other type of tangible asset, the asset itself is not the security itself. It’s when you offer that asset along with an investment contract that is what makes a security a security. It becomes the object at the heart of the investment contract. But you still have to think of these two things as distinct. Howey’s orange groves were not secured by themselves.

Your dissenting opinions are often quite astute. Was this your idea or your co-author Mark Uyeda’s idea? include a play in the ShapeShift document?

I can’t answer this question either.

Thanks again for your time.

Well, I appreciate you taking the time and I hope you have a great afternoon.

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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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