Latest Cryptocurrency Price Bonanza Prompts Regulatory Updates; Governments Differ in Approaches
In years to come, the 2017 Thanksgiving weekend may very well be remembered as a pivotal moment for the legitimisation of cryptocurrency, with many achieving record prices such as Bitcoin (BTC), Ether (ETH), Dash (DASH), Litecoin (LTC), IOTA (MIOTA), and Monero (XMR).
Such surges in price have seen many reap tremendous profits, yet such success inevitably leads to the arrival of opportunistic profiteers. This has prompted fresh discussion over the regulatory status of digital currencies as well as their derivatives products, the first of which is being launched by CME Group on December 18.
With such a revolutionary technology comes a lack of legal precedent to draw upon for regulatory bodies. As such, it comes as little surprise to see such variance between national governments’ recognition of cryptocurrencies, as highlighted by recent announcements from around the world.
In the United States, regulatory developments have been minimal. Exemplifying this is the fact that the oft-outspoken President Donald Trump has yet to mention Bitcoin in the public forum, and that also, the White House had yet to issue any comment until last Thursday.
Even then, it was rather pithy for a first comment, with press secretary Sarah Huckabee Sanders revealing that cryptocurrency “is something that is being monitored by our team here.” When prodded for further detail, she added,
I know that Tom Bossert, with the Homeland Security team, an advisor to the president, has brought this up in a meeting earlier this week. I know this is something he is keeping an eye on.”
Whilst Capitol Hill, like most other countries, gathers more facts and assesses the digital currency landscape further, there are still several regulatory developments occurring every week.
On Friday, a Californian federal court put an end to a case spanning over a year, granting the Internal Revenue Service (IRS) access to the identifying records of over 14,000 Coinbase users who have received over $20,000 through their accounts. This was a far-cry from the estimated 500,000 user-accounts that the IRS initially requested for tax-collection purposes.
Last week, the US Senate Judiciary Committee considered bill S.1241 that aims to criminalise the intentional concealment of ownership or control of a financial account. The bill also proposes amending the definition of ‘financial account’ to include digital currencies, as well as ‘financial institution’ to include digital exchanges. According to ranking committee member Senator Dianne Feinstein, the proposed bill is needed so as to modernise extant anti-money laundering (AML) laws in an effort to deter profiteering behaviour.
In Russia, things appear rather disjointed between institutional bodies, as evidenced by relations between their largest stock exchange – Moscow Stock Exchange (Moex) – and the Central Bank of Russia. Over the weekend it became apparent that Moex is developing new infrastructure to trade cryptocurrency derivatives despite the central bank having reportedly forbid any offering of such financial products, at least until the necessary corresponding legislation has been enacted.
Japan is another to face recent regulatory matters after Friday saw the National Police Agency (NPA) release their first report on cryptocurrency laundering cases since April’s revised laws mandated operators of exchanges to flag and report suspicious transactions. The report revealed that 170 cases were flagged for involving ‘frequent questionable transactions’ over the six-month period between April and October. This requirement was one of many outlined by Japan’s Financial Services Agency (FSA) that were agreed upon by the 11 domestic cryptocurrency exchanges that registered in response to Bitcoin being recognised as legal tender.
Japan’s government has been one of the more proactive in the world, making a concerted effort to actively collaborate with their cryptocurrency exchanges following the embarrassing Mt. Gox disaster of 2014, which saw Japan’s world-leading Bitcoin exchange file for bankruptcy.
With such fast-paced innovation taking place in the cryptocurrency space, it is necessary to spend time monitoring the latest goings-on in nascent financial regulations, particularly with the upcoming launch of multiple derivatives products.
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