High Tech Park Releases ‘Complete Legal Regulations’ for Cryptocurrencies

Belarus High-Technologies Park (HTP), a national special economic zone contributing to the IT business, has established the rules for the operation of the cryptocurrency market in the country, according to documents published by HTP Nov. 30.

The regulatory documents define the requirements for various types of businesses related to cryptocurrencies and Initial Coin Offerings (ICO), as the general rules for industry regulations — Decree No. 8 “On the Development of the Digital Economy” — had already been signed last year.

The HTP, commonly known as the Belarusian Silicon Valley, was responsible for establishing the rules under which the cryptocurrency industry would be regulated in the country. Today, the HTP has published five documents: “Requirements for Applicants,” “Requirements for Cryptoplatform Operators,” “Requirements for Cryptocurrency Exchange Office Operators,” “Requirements for ICO Operators,” and “Requirements for Internal Control Rules.”

Now that these rules have been accepted, they form “a complete legal regulation of cryptocurrency in Belarus,” local Belarusian news outlet Dev.by reports. It also states:

“The cryptocurrency activities of the HTP residents received full comprehensive legislative support from the regulator. The HTP administration, together with the National Bank, the Financial Monitoring Department of the State Control Committee, international experts and other bodies, compiled and signed all the necessary documents.”

Back in the spring, the Belarus government called the digitalization of the national economy “a top priority,” because of its ability to transform “the economy, public administration and social services,” as Cointelegraph reported May 16.

Previously this fall, the deputy foreign minister of Belarus stated that Belarus aimed to establish relations with South Korean investors interested in the so-dubbed “fourth industrial revolution” technologies, focusing on artificial intelligence (AI) and blockchain, Cointelegraph wrote Sep. 6.

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Taiwan is Tightening Regulations on Crypto Exchanges, Possible Pressure From China?

On November 2, Taiwan officially tightened anti-money laundering (AML) policies targeted at crypto exchanges, requesting exchanges to monitor and prevent any illegal transaction processed using digital assets.

According to the newly drafted Money Laundering Control Act and Terrorism Financing Prevention Act approved by the Legislative Yuan, one of the five branches of the Taiwanese government, the country’s Financial Supervisory Commission (FSC) now has authority over crypto exchanges to ban transactions suspected of being tied to fraudulent operations.

Taiwan’s Ministry of Justice (MoJ) released a statement following the approval of the new AML bill, emphasizing that the government is working towards meeting international AML standards by encouraging businesses to foster a “compliance culture and mindset.”

Until this year, the government of Taiwan was skeptical towards regulating the local cryptocurrency exchange market and blockchain sector.

South Korea, the third largest cryptocurrency exchange market, also refrained from implementing practical and efficient regulations to govern its local digital asset market until 2018, because it feared that investors would recognize it as a move to legitimize the cryptocurrency industry.

Based on its recently passed AML bill and the stance of the country’s main financial watchdog towards the cryptocurrency sector, Taiwan is likely leaning towards regulating its local cryptocurrency and blockchain space to prevent fraudulent operations and criminal activities using cryptocurrencies.

China’s complex relationship with Taiwan

For decades, Taiwan has had a complicated relationship with China. The official name of Taiwan is the Republic of China (RoC) and since the RoC’s loss of the mainland to the People’s Republic of China (PRC) governed by the Communist Party of China, the PRC has consistently claimed sovereignty over Taiwan and said that the ROC is no longer in legal existence.

Although Taiwan has claimed to be the legitimate government of China, the loss of Hainan in 1950 has limited the jurisdiction of the Taiwanese government to Taiwan and its two outlying islands Quemoy and Matsu.

In recent years, mostly due to the increasing support of the U.S., the tension between Taiwan and China has continued to increase. On October 22, reports revealed that Taiwan is preparing to pitch for more U.S. arms and weaponry, after the U.S. approved the purchase of $330 million of arms sales to Taiwan in September.

Representatives of Taiwan, the  U.S., and China had drastically contrasting viewpoints on the increasing arms sales from the U.S. to Taiwan.

Lo Chih-cheng, a ruling-party lawmaker on the parliament’s defense committee, said that regardless of the relationship between Taiwan and China, the government of Taiwan must possess credible defense and sufficient weapons to defend the region from potential attacks:

“In the worst case, we have only ourselves to rely on. We should not be so dependent on the U.S. in the long term. But we still need to buy weapons from the U.S. to secure our defenses while we are building our capabilities.”

The Institute for National Defense and Security Research, an organization funded by Taiwan’s defense ministry, noted that the established conflict between the U.S. and China was “a strategic window of opportunity for Taiwan” to build a strong defense system to protect the region.

However, the government of China fiercely opposed the arms sales of the U.S. to Taiwan. The foreign ministry in Beijing said in June of last year that the $1.4 billion deal had “severely damaged China’s security and sovereignty,” describing Taiwan as an “indispensable part of China’s territory.”

At the time, Michael Kovrig of International Crisis Group said, “if this is, in fact, intentional timing, this does represent a change of tone. The Americans would clearly be aware that this is going to irritate the Chinese. It’s not leaving room for the Chinese to save face,” adding that any additional arms sales to Taiwan could worsen the relationship between the U.S. and Taiwan.

Did China have any impact on the new AML bill?

In a period in which the Chinese mainstream media and state-backed publications are accusing U.S. President Donald Trump of playing a high-stakes game backing Taiwan, any activity to fuel the already intensified tension among the U.S., Taiwan, and China could lead to serious international conflicts and what the Chinese government call, “dire consequences.” The China Daily editorial reported on October 24:

“Military hawks in Washington have tried hard to scare Beijing and console Taipei. But they should consider the dire consequences of their country being dragged into a costly confrontation that would in the first place be both unnecessary and avoidable.”  

One of the few common areas the government of Taiwan and China agree on is the prevention of money laundering through the utilization of electronic payment systems including cryptocurrencies.

Recently, in an attempt to completely ban money laundering efforts and fraudulent activities in the global cryptocurrency sector, the government of Japan also called for the establishment of standardized AML regulations regarding cryptocurrencies, specifically concerning anonymous cryptocurrencies like Monero, Zcash, and Dash. An FSA official said on October 24:

“It should be seriously discussed as to whether any registered cryptocurrency exchange should be allowed to use such currencies. It’s nearly impossible for Japan to handle the problem alone. Even if trade is restricted to only domestic transfers or monitoring is enhanced, it’s still not enough to counter money laundering. It would be best if all the group of 20 industrial and emerging nations and regions (G20) would take the same steps toward prevention.”

Over the past several months, led by Taiwan legislator and congressman Jason Hsu, the government of Taiwan has demonstrated a more proactive and open-minded approach towards regulating the local cryptocurrency market.

In an interview, Hsu explained that a parliamentary coalition had been formed in Taiwan to focus on regulating blockchain and crypto with a set of guidelines targeted at cryptocurrency exchanges. He added that Taiwan is set to cooperate with Japan, South Korea, Singapore, Hong Kong, and other Asian countries to facilitate the growth of the local cryptocurrency space.

Hence, rather than China’s direct impact on Taiwan, a collective effort by the lawmakers and Congress of Taiwan to regulate the country’s cryptocurrency space most likely led to the changes in the new AML bill.

“We have set up a parliamentary coalition in Taiwan’s parliament for blockchain, which is a bipartisan alliance designed to help support the industry. I have also launched self-regulatory organizations for blockchain and crypto, where we are working together to come up with a set of guidelines to regulate exchanges. These guidelines will provide basic parameters as to how crypto exchanges and other taxations are defined. When we announce the guidelines in the coming weeks, it will be a regional consensus with Taiwan, Japan and Korea, Singapore, Hong Kong as well as other Asian countries.”

Taiwan legislator and congressman Jason Hsu

Even China is protective of crypto to a certain extent

China officially banned cryptocurrency trading in September 2017, expressing concerns towards money laundering and capital controls. The government has limited the outflow of the Chinese yuan to overseas markets for decades, and through exchanges, investors were able to bring capital outside of the local market prior to the ban.

As Cointelegraph extensively reported, the government actively banned nearly every area in the cryptocurrency sector including events, media, and over-the-counter (OTC) trading, requesting AliPay, the country’s most widely utilized fintech application to block any transaction that is suspected of being connected to cryptocurrency exchanges.

However, on Oct.r 25, 2018 the Shenzhen Court of International Arbitration officially stated that under local regulations, cryptocurrencies like Bitcoin and Ethereum are considered properties and as such, holding or transferring Bitcoin is not illegal in China.

“Chinese court confirms Bitcoin is protected by law. Shenzhen Court of International Arbitration ruled a case involving cryptos. Inside the verdict: China law does not forbid owning and transferring Bitcoin, which should be protected by law because of its property nature and economic value.”

The ruling from the Shenzhen Court of International Arbitration essentially provided merchants with a green light to accept cryptocurrencies as a payment method without being in conflict with existing regulations.

As of November, China’s oldest technology publication, Beijing Sci-Tech Report (BSTR), and several hotels and restaurants accept cryptocurrencies.

Beginning January, BSTR will officially sell its yearly subscription in Bitcoin at a fixed price of 0.01 BTC. But, the publication reaffirmed that the purpose of the integration is to demonstrate the real-world potential and use case of the blockchain, and that if the price of BTC rises substantially, the publication will refund the buyers.

Hence, while cryptocurrency trading remains prohibited in China, technically, owning or transferring cryptocurrencies is not illegal. As such, it can be argued that China, to a certain extent, is not wholly dismissive of crypto, given the government’s optimism towards blockchain technology as a core pillar of the fourth industrial revolution.

The Xiongan government, tasked to build Chinese President Xi Jinping’s dream city, the Xiongan New Area, has made blockchain technology a key component of the project, working with Ethereum-related institutions, including ConsenSys, the largest blockchain software studio in the global sector, led by Ethereum co-creator Joseph Lubin, to develop blockchain-based tools for the government .Lubin said in July:

“As one of our first major projects in the People’s Republic of China, we are excited to help define the many ‘use cases’ that could benefit from the trust infrastructure enabled by ethereum technology.”

Can Taiwan be the next crypto Hub?

Singapore, Hong Kong, South Korea, and Japan, the four regions congressman Jason Hsu mentioned, have already evolved into major markets.

Upbit, South Korea’s second largest cryptocurrency exchange and Binance, the world’s largest digital asset trading platform, according to the Blockchain Transparency Institute, have already established offices in Singapore and entered beta testing of their trading platforms with banking partners secured.

Japan and South Korea, as two of the largest cryptocurrency markets, have demonstrated significant progress in terms of regulation and industry growth.

To compete against the four markets, Taiwan would have to establish a strong selling point to attract cryptocurrency exchanges and blockchain-related businesses.

Recently, the FSC of South Korea declared that banks are free to work with crypto exchanges and the Seoul Central District Court ruled a case between local cryptocurrency exchange Coinis, and major commercial bank Nonghyup, in favor of Coinis, establishing a precedent for the industry.

Attorney Kim Tae-rim, who represented Coinis, said that the case is a milestone for the cryptocurrency sector as it would encourage banks to refrain from unfairly treating digital asset exchanges.

“Cryptocurrency exchanges, by default, have the right to freely deposit and withdraw funds to and from major banks in South Korea, and an abrupt termination of partnership and services by the bank [in this case Nonghyup] without sufficient evidence or reasoning falls under the breach of contract.”

So far, Taiwan has not led sufficient initiatives to lure in some of the biggest cryptocurrency and blockchain-related businesses from other major markets. But, if Hsu and the coalition continue to drive the adoption of crypto in Taiwan, in the mid-term, companies enter the market given that stable banking services and support from the government are guaranteed.

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Malaysian MP Urges Gov’t to Create Regulations Before Approving Political Funding Coin

A Malaysian Member of Parliament has urged the government to implement proper cryptocurrency regulations before undertaking the Harapan Coin (HRP) cryptocurrency project, local English-language news daily the Star reported Nov. 14.

Launched by “a group of patriotic and concerned Malaysian citizens, within and outside of Malaysia,” Harapan Coin claims to be the world’s first political fundraising platform deploying cryptocurrency and blockchain technology. The project’s mission is to raise money for the opposition party of Malaysia. The coin’s creators suggest that HRP has the “potential to become an official currency.”

Fahmi Fadzil, director of the People’s Justice Party (PKR) of Malaysia has reportedly stressed the necessity of appropriate cryptocurrency regulations before they are used to finance political campaigns and initiatives. Fadzil, whose party is part of the ruling coalition, voiced concern over “the anonymous nature of cryptocurrency:”

“The anonymous nature of cryptocurrency may open us up to a number of issues and we need to wait for guidelines from [the country’s central bank] Bank Negara Malaysia (BNM) in regard of cryptocurrency.”

Per Malaysian news portal the New Straits Times, former prime-minister of Malaysia Datuk Seri Najib Razak previously called the creation of HRP in question, asking who would truly benefit from the “HRP scheme.” Razak reportedly ordered Federal Territories Minister Khalid Samad — who had advocated for the coin and proposed it to BNM — to reveal the identities of the individuals behind the project.

As the Star further reports, the paperwork and presentation of HRP will soon be handed over to BNM and Prime Minister Tun Dr Mahathir Mohamad. Though approval may take time, Khalid will purportedly continue to support the project.

BNM initially planned to issue a directive to regulate the use of digital currencies in the country in early 2018, having discussed and worked on proposed cryptocurrency regulation for several months. In February, the country passed legislation requiring crypto exchanges to fully identify traders after the implementation of new central bank Anti-Money Laundering (AML) legislation.

Later in March, BNM hinted it was planning to integrate blockchain in the banking sector, for which reason it had established a dedicated working group “to work on best practices.”

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International Regulations ‘Desirable’ for ICOs

Germany’s financial regulator wants to see an international effort to regulate Initial Coin Offerings (ICO), despite remaining uncertain whether they would ever become more than a “niche issue,” German business outlet Handelsblatt reported Sunday, Oct. 28.

In an interview with the publication, Felix Hufeld, chairman of Federal Financial Supervisory Authority (BaFin), said German regulatory sources remained hawkish on ICOs as a financial instrument.

“The number (of ICOs) and the volume (of money) per ICO are both getting higher. Investors have mostly minimal rights,” he said, adding:

“I can thus only recommend private investors keep away from such things.”

Regulators worldwide have increased scrutiny on ICO tokens this year as investors in many schemes from 2017 see funds evaporate in the ongoing cryptocurrency bear market.

At the same time, authorities in the U.S. in particular have publicly stated they will closely monitor the sector in order to ensure securities law compliance if such tokens constitute securities.

Germany has traditionally taken a global stance on cryptocurrency from a regulatory perspective, with Hufeld explaining regulatory moves should preempt a more mainstream push in future.

“Up to now we’re still talking about a niche issue,” he said, “whether or not (ICOs) become a standard part of the financial economy remains to be seen.”

He added that international standards were also “desirable” in the longer term, and that discussions to that effect were underway in “multiple international forums.”

In June, BaFin signaled its future regulatory path regarding cryptocurrency would focus not on individual investors’ financial security, but the security of the broader financial markets.

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China’s Internet Watchdog Issues Draft Regulations for Blockchain-Based Info Services

China’s top-level internet watchdog, the Cyberspace Administration of China (CAC), published new draft regulations for blockchain-based information service providers Oct. 19.

The draft, open for public consultation until Nov. 2, proposes twenty three articles for the regulation of all companies or entities providing blockchain-based information services to the Chinese public. Under the proposed rules, all such entities would be required to register with the CAC within ten days of launching their platforms.

The regulations would also require service providers to censor content that is deemed to pose a threat to national security or to “disrupt the social order,” and to allow authorities to inspect user data stored on their systems.

Notably, one article would make it mandatory for service providers to ask users to register using their real names, phone numbers and national ID card numbers, in order to mitigate the perceived risks of a pseudonymous blockchain-based system that operates without a centralized entity’s oversight.

As local media the South China Morning Post (SCMP) today further reports, the identity requirement reportedly comes in the wake of a high-profile incident in April, in which a Chinese activist is said to have published an “open letter” onto the Ethereum (ETH) public blockchain regarding the alleged cover-up of sexual harassment at a prestigious local university.

The activist’s choice to attach the letter onto a publicly-visible transaction on Ethereum reportedly came after internet censors had attempted to restrict the post’s circulation on the popular Chinese social media platforms WeChat and Weibo.

SCMP further cites Beijing-based lawyer Xu Kai’s perspective on the draft rules, who has reportedly highlighted the fact that the document does not address the immutable nature of data on blockchain-based systems, and specifically the fact that this immutability is in conflict with Chinese laws on user data. Xu reportedly further notes that the rules do not outline enforcement procedures to “protect the rights” of blockchain platforms.

As reported August 21, WeChat permanently blocked a number of crypto and blockchain related accounts that were suspected of publishing Initial Coin Offering (ICO) and crypto-related “hype” in violation of new regulations that had been introduced by the CAC earlier this summer. The content restrictions were introduced as part of a wider sweep of tightened anti-crypto measures, both online and offline.

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Global AML Watchdog to Release Crypto Regulations By Next June

A global money-laundering watchdog has said it will begin publishing rules for international cryptocurrency regulation by next summer.

According to a Reuters report Friday, the Financial Action Task Force (FATF) – the France-based intergovernmental body founded in 1989 to develop policies for tackling money laundering – said that global jurisdictions will have to bring into force licensing schemes or regulations for crypto exchanges and possibly digital wallet providers under the new rules. Companies offering financial services for initial coin offerings will also be included, the report states.

The news comes after the FATF plenary meeting this week with officials from 204 global jurisdictions to discuss crypto regulations and other matters.

Reuters also reports that FATF’s president, Marshall Billingslea, designated June as the month in which the group will begin publishing its guidelines and enforcement expectations.

He was quoted as saying:

“By June, we will issue additional instructions on the standards and how we expect them to be enforced.”

As reported in July, the G20 member countries had been eyeing at an October 2018 deadline for movement on a global anti-money laundering (AML) standard around cryptocurrency.

With the G20 seeking “vigilant” monitoring of cryptocurrencies, FATF was called on to clarify how its existing AML standards could be applied to cryptocurrency.

In a statement released on Friday, the group said that “there is an urgent need for all countries to take coordinated action to prevent the use of virtual assets for crime and terrorism.”

“As part of a staged approach, the FATF will prepare updated guidance on a risk-based approach to regulating virtual asset service providers, including their supervision and monitoring; and guidance for operational and law enforcement authorities on identifying and investigating illicit activity involving virtual assets,” the FATF explained in its missive.

Magnifying glass image via Shutterstock

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Crypto Regulations for UK Could Take Two Years, Says Legal Expert

Jeff Kaufmann, Legal Director at British law firm Reynolds Porter Chamberlain (RPC), said that the introduction of cryptocurrency market regulations in the U.K. could take two years, according to an RPC press release published Oct. 11.

RPC is a London-based corporate and insurance law firm with offices in Bristol, Singapore, and Hong Kong, and staff amounting to 720 people, including over 80 partners and 330 other lawyers. Since 2014 the firm has been named Law Firm of the Year three times.

Kaufmann said that the implementation of crypto market regulations in the U.K. would take about two years, given that proposals in a recent House of Commons Treasury Committee (HM Treasury) report begin to move forward. Kaufmann notes that past precedents show that even minor changes to the current regulatory regime can take years.

Per Kaufmann, the introduction of new regulations would lead to increased involvement of the country’s financial watchdog, the Financial Conduct Authority (FCA), raising concerns as to whether the FCA has the necessary expertise and funding to regulate the crypto industry.

The regulation of cryptocurrencies is “going to be a difficult and lengthy process,” per Kaufmann, who noted the need to strike a balance “between protecting retail participants and allowing the U.K.’s cryptocurrency market to thrive.” He added:

“The race to establish a workable and regulated regime for cryptocurrencies is surely worth winning as their usage becomes more widespread across Europe and globally. The creation of a cryptocurrency trading hub may also have positive knock-on effects for businesses serving these markets, such as brokers, investment banks, and custodians as well as a potential increase in tax revenues for authorities.”

In September, the Treasury Committee of the House of Commons called for a resolution to certain issues surrounding digital currency such as listing price volatility, poor consumer protection, the risk of hacker attacks, and money laundering. The Committee also urged the FCA to supervise cryptocurrencies, though presently the FCA is not legally enabled to regulate either issuers of digital assets or crypto exchanges.

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EU Markets Regulator Examines ICOs to Determine Regulations

The European Securities and Markets Authority (ESMA) has announced it is examining Initial Coin Offerings (ICOs) to determine how they should be regulated, Reuters reported Oct. 8.

The ESMA was established in 2011 in Paris, France, with an objective to develop a common rulebook for European Union (E.U.) financial markets and supervise them. The ESMA also works closely with the other European Supervisory Authorities competent in the field of banking (EBA), and insurance and occupational pensions (EIOPA).

According to Reuters, the ESMA is assessing ICOs to see how they comply with the existing securities regulations on a “case-by-case” basis, as well as their impact on competition in the fundraising sector.

Steven Maijoor, chair of the ESMA, reportedly said that ICOs have had “difficulty” showing their viability and what extra benefits they bring compared with traditional capital raising. Maijoor added:

“The subsequent question is what do we do with those ICOs that are outside the regulatory world. We will assess that as a board. We expect to report by the end of the year.”

Andrea Enria, chair of the European Banking Authority, said that he considered allowing ICOs to develop without a set of specific E.U. rules but, “This is not working as expected.”

“Consumer warnings don’t seem to be sufficiently effective in raising awareness among consumers that there is a lack of safety net for these investments,” Enria added.

Earlier this month, the ESMA revealed its 2019 Annual Work Program, where the agency cites a 1.1 million euro program and its objectives for the next year, which include the regulation and supervisory treatment of new financial activities, focusing on fintech and crypto assets.

Last month, the ESMA announced its decision to extend its restrictions on contracts for differences (CFDs), including crypto-based ones. The restrictions, which originally came into effect on Aug. 1, will be renewed for another three months on Nov. 1. The agency justified its move with “significant investor protection concern” related to the offering of CFDs to retail clients.

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EU Lawmaker Wants Standard Regulations to Allow ‘Passport’ for ICOs

A European lawmaker believes that new regulations for initial coin offerings (ICOs) are the key to making them more “accessible” within the European Union.

Ashley Fox, a Member of the European Parliament (MEP), held a meeting on Tuesday to discuss proposed regulations that would set in place new rules for ICOs and, more specifically, the people and businesses that conduct them.

Fox said that the rules would be voluntary for projects that engage in token sales, though he hopes that companies will want to abide by them if they are adopted.

The MEP’s proposal would limit the proceeds for ICOs to 8 million euros, mandate know-your-customer/anti-money laundering rules, and provide token startups with access to the entire EU, he explained in an exclusive interview with CoinDesk.

What I’m aiming to do is bring transparency to ICOs, allowing intermediaries to perform the required due diligence. And the effect of this will be to provide an EU-wide law which gives a passport to the whole market,” he said. 

As time goes by, he added, more companies may wish to be regulated under the framework.

Fox went on to say:

“ICOs can carry on, but if they don’t fill the [criteria], they won’t benefit. [Introducing the regulations] will give them a passport to the whole of the EU market, and I also think it increases transparency. Right now you have 28 countries, some have national rules for raising money and some don’t have any rules at all. If you raise money in France, for example, you can only use that money in France.”

Banking boon?

The benefit of Fox’s regulation, he contended, is that companies that do abide by the rules will have access to a wider market.

Banks and other financial institutions in the European Union are also looking forward to the rules, said Lavan Thasarathakumar, a policy advisor to Fox and secretary to the Innovation Group. He said the group spoke to financial institutions and one of the issues that surfaced repeatedly was that of due diligence.

If token projects adhere to stricter KYC/AML controls, banks may be more willing to provide services, though this is “by no means” a guarantee at present, he said.

Indeed, banks are seemingly interested in holding cryptocurrencies directly, should the industry be more regulated than it is today. European Banking Authority director of banking markets, innovation and consumers Piers Haben, speaking at Tuesday’s earlier hearing on Fox’s proposed regulation, said the agency had been discussing the topic with financial institutions.

“We’re looking at in particular how financial institutions are engaging in cryptos. Financial institutions tell us they do want to hold cryptos … for two reasons. Not in order to make money, but to get to grips better with the technology … and secondly, they want to hold cryptos so they themselves can invest in ICOs,” he said at the time.

Looking ahead

The draft proposal was published earlier this month, and members met to discuss it on Tuesday. Now, lawmakers have a week to suggest any amendments, Fox said. After those are presented, the group will meet again to discuss any changes.

In November, the full Committee on Economic and Monetary Affairs will meet to debate and vote on both the original proposal and any amendments made. A plenary meeting would then decide the official position for the European Parliament near the end of November or beginning of December.

Simultaneously, the European Council will develop a position on the proposal. Sometime at the beginning of next year, the two bodies would have to then reconcile any differences in their positions, with a final vote to approve or disapprove the regulation coming by the end of February, Fox expects.

He demurred when asked what changes he thought might be forthcoming.

“I don’t know what parts of my report colleagues will object to yet,” he noted. “I think it’s a good report, I’m not looking to change any parts of it.”

One argument made during Tuesday’s meeting was that the €8 million limit was too low, with some lawmakers suggesting a €10 million limit instead. However, this could make the adoption process more complicated, Fox said, explaining:

“The reason I came to the conclusion for the 8 million euros … was it was in line with the Prospectus Directive. And if we were to go above that limit, we would need to change other pieces of legislation. I think [a] 1 million limit is too low … but I don’t see a consensus for going above 8 million yet.”

Because the regulations would be voluntary, ICOs can still raise more than 8 million euros if they need – they just won’t receive the benefits, Fox said.

Ashley Fox image via Jordan Greenaway

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Belgian Think Tank Calls for Crypto Exchange and ICO Regulations at EU Level

A report from a Belgian think tank that will reportedly be distributed to European Union (E.U.) ministers calls for unified legislation on cryptocurrencies and more scrutiny on how they are distributed to investors, Reuters reported September 5.

The report, ostensibly released by Brussels-based think tank Bruegel, comes ahead of an informal meeting of economic and financial affairs ministers from the E.U. on cryptocurrency investments and taxation of the digital economy. The meeting will take place in Austria from September 7-8.

According to Reuters, the report urges the regulation of cryptocurrency exchanges and Initial Coin Offerings (ICOs) at the E.U. level in order to manage associated risks and harness the potential of blockchain technology.

At the same time, Bruegel reportedly notes that the virtual nature of cryptocurrencies limits the development of regulations, while entities operating crypto trading platforms could face stricter disclosure rules, or even a potential ban.

Drawing on global experience, Bruegel notes the Chinese approach to cryptocurrency market regulation, suggesting “as done in China, mining farms can be forbidden.”

The report added that there may be a “scope for regulatory arbitrage” following the crackdown on crypto business in Asia, citing the upcoming move of crypto exchange Binance to the island state of Malta.

Bruegel notes that regulators should tolerate crypto exchanges that move in order to seek jurisdictions with more laissez faire regulations, stating that there is a need “to experiment and learn about the best approaches to this fast-developing technology.”

On August 30, Bloomberg reported that E.U. ministers plan to discuss the challenges posed by digital assets and the possibility of tightening regulations at the upcoming meeting.  Per a draft note seen by Bloomberg, participants will also discuss a general lack of transparency in the industry and the potential for cryptocurrencies to be used for tax evasion, terrorist financing and money laundering.

Earlier today, Cointelegraph reported that members of the European Parliament along with blockchain experts held a meeting entitled “Regulating ICOs — Is the Crowdfunding Proposal what we were looking for?” on Tuesday to discuss possible regulations for ICOs. The attendees examined potential complications currently arising in the ICO industry.

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