Russia’s Digital Economy Bill Supported by State Duma Committee in Move Towards Crypto Regulation

The State Duma’s Committee for Legislative Work will support a digital economy initiative that will “minimize” the risks of citizens using digital assets.

Russian State Duma’s Committee for Legislative Work will support the first reading of an initiative that will add the basic norms of digital economy to the Russian Federation Civil Code.  This is the latest step on the road to regulating cryptocurrency in the country, local news outlet Izvestia reports Wednesday, May 16.

Pavel Krasheninnikov of political party United Russia and head of the Legislative Work committee, told Izvestia that the initiative aims to “minimize the existing risks of using digital objects for transferring assets into an unregulated digital environment for legalization of criminal incomes, bankruptcy fraud or for sponsoring terrorist groups.”

The initiative, which is scheduled to be considered next week, does not mean that digital currencies will now become a legitimate means of payment. Instead, a separate law developed by the Central Bank, the Ministry of Finance, and the Ministry of Economic Development will set conditions for digital currencies to be used as payment “in controlled quantities.” The initiative does assert that digital confirmation by a user in a smart contract is equal to his written consent.

Russia first prepared a bill “On Digital Financial Assets” in March of this year, which would provide federal laws governing cryptocurrencies and Initial Coin Offerings (ICO) inspired by President Vladimir Putin’s decision to begin crypto regulation on July 1.

The March 20 draft defines crypto and digital tokens are assets only to be traded on authorized exchanges, also requiring user account at crypto exchanges to comply with AML and counter terrorism financing regulations. A review draft of the bill from mid-April added that the exchange of crypto for fiat above around $9,600 will be subject to mandatory currency exchange regulation.

Igor Sudets, the director of the program “Blockchain for Lawyers” at the Plekhanov Russian University of Economics in Moscow, told Izvestia that “it is important that the crypto currency and tokens are included in the legal field of the Russian Federation”:

“On the one hand, these are opportunities that we have no right to miss. On the other hand, while they are outside the legal field, they can be used to give bribes, withdraw money in the case of bankruptcy, pay ‘black salaries, and simply get stolen – with no repercussions [for criminals].”

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President of Chile’s Central Bank Considers Cryptocurrency Regulation, Says It Is Useful for ‘Monitoring Risks’

The president of Chile’s Central Bank believes that cryptocurrency regulation could allow better monitory of risks in the market.

Mario Marcel, the president of Chile’s Central Bank, is considering regulating cryptocurrencies in the country in order to monitor risks, local news outlet El Economista reported Tuesday, May 15.

Cryptocurrencies in Chile are not currently considered as money or securities, but there are no laws in place that prevent citizens from exchanging crypto for goods and services.

During a forum of the Finance Commission of Deputies, Marcel said that “incorporating regulation will allow having a registry of participants in these activities and thus have information to monitor the associated risks”:

“These activities could be developed under more robust standards and mechanisms, especially in terms of market transparency, consumer protection, and prevention of money laundering and terrorist financing.”

At the end of March, Chilean crypto exchange Buda and Crypto MKT asked the Chilean Association of Banks (ABIF) to provide a clear position on crypto and crypto trading after some of their accounts were closed by various Chilean banks.

In mid-April, three Chilean crypto exchanges – Buda, Orionx, and Crypto MKT – went to an appeals court to protest this closure, which was seen by some as the banks using their power to curtail the cryptocurrency industry. At the end of April, Chile’s anti-monopoly court ruled that Buda’s accounts must be reopened at state bank Banco del Estado de Chile and Itau Corpbanca.

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Ukraine To Legalize Cryptocurrencies, Invites Citizens To Comment On Proposed Regulations

A Ukrainian member of parliament has invited citizens to comment on a draft legislation document for cryptocurrencies, which should be finished in “two weeks.”

Ukraine is preparing draft legislation to legalize cryptocurrencies, according to a post by a member of the Ukrainian parliament, Alexei Mushak, on his Facebook page Tuesday, May 15.

Mushak attached a copy of the draft legislation document, urging readers to comment on the terms of the regulations proposed for the crypto market:

“We go to the home stretch to create conditions for digital tokens and cryptocurrency in Ukraine. This is the outcome of many meetings and work of many people. There are many more nuances left to figure out. The final version will be ready in two weeks. I ask you to comment and edit. The thoughts of market practitioners are especially important.”

The document notes that the legislation aims to create a “free and transparent” digital asset market in Ukraine, outlining rules for storing, using, and exchanging cryptocurrencies, digital tokens, and smart contracts at a state, entity, and individual level. It proposes regulatory measures for preventing the use of crypto for money laundering, terrorist financing, and other criminal activities.

The document also advocates the use of digital ledger technology (DLT) – also known as blockchain – in the public sphere, singling out public relations, healthcare, and education as areas of particular interest.

Since it was posted, the draft legislation document has already drawn extensive comments from Ukrainian readers, with one raising the suggestion of regulating Initial Coin Offerings (ICOs) separately to other digital assets, given that “widespread fraud” in the ICO space has elicited a generalized distrust of the crypto sphere.

Mushak responded that there is as yet little consensus in the Ukrainian parliament as to how to treat ICOs, noting the concern that excessively stringent measures could stifle development.

In May, the Ukrainian National Securities and Stock Market Commission (SSMCS) announced it would consider recognizing cryptocurrencies as a financial instrument, suggesting that crypto regulations would for now need to be determined on a national level given that “international standards” are still “a long way off.”

In January, the National Bank of Ukraine (NBU) said it was “considering” introducing a digital version of its national currency, the hryvnia, but one that would not be a state-issued cryptocurrency, i.e. not based on a blockchain protocol.

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Japan: Nomura Bank Announces Crypto Custody Solution For Institutional Investors

Japan-based global investment bank Nomura has announced a joint venture to establish a custody offering for digital assets.

Japan-based global investment bank Nomura has announced a venture to establish a custody offering for digital assets, Cointelegraph Japan reports today, May 16. The new project aims at removing barriers to institutional investment in the crypto space.

Nomura’s joint venture will be conducted in partnership with digital asset security company Ledger and investment house Global Advisors, according to reports.

The partners allege that a shortage of robust and legally regulated “safekeeping solutions” is currently preventing traditional asset managers from building investment vehicles in the crypto ecosystem, emphasizing that overcoming custody and security obstacles is crucial given that “one in five finance firms are [allegedly] considering launching digital asset trading and investment businesses in the coming year.”

The new digital asset custody venture is dubbed “Komainu,” and will provide infrastructure and an operational framework for institutional investors to integrate their traditional investment vehicles into the “frontier” crypto industry.

Just yesterday, major US crypto wallet provider and exchange service Coinbase announced its own custodian solution to address security and regulatory compliance concerns, with Coinbase VP Adam White saying that the product could “unlock $10 bln of institutional investor money sitting on the sideline.”

Earlier this month, New York Stock Exchange owner ICE revealed its own plans to offer crypto swap contracts that would be settled in BTC, suggesting it too has come up with an SEC-compliant custody solution for institutional holders.

The narrative that custody and regulatory obstacles are the last remaining obstacle for the crypto market to “mature” and draw major institutional investment is widely shared, and led CNBC’s Robert Kelly to suggest recently that cryptocurrencies now “look to be becoming an emergent asset class,” with custody solutions a significant milestone that could soon herald widespread crypto adoption in the traditional financial sector.

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US Prosecutors Indict Three Co-Founders Of Floyd Mayweather-Backed ICO For Fraud

A US District Court in Manhattan has issued a formal indictment of the three founders of Floyd Mayweather-backed Centra Tech ICO for securities fraud, among other charges.

The three co-founders of cryptocurrency startup Centra Tech have been formally indicted for running fraudulent ICO, according to a statement May 14 from the U.S. Department of Justice.

According to the four-count indictment issued by the U.S. District Court in Manhattan, all three Centra Tech co-founders Sohrab Sharma, Robert Farkas, and Raymond Trapani are being charged with securities fraud, wire fraud and two conspiracy counts.

Centra Tech’s Initial Coin Offering (ICO) raised $32 mln from investors in 2017. The Florida-based defendants had misled investors by falsely claiming that their company had partnered with Visa  MasterCard to issue virtual currency debit cards.

Centra Tech was previously promoted by celebrities Floyd Mayweather and DJ Khaled.

Late last month, US Securities and Exchange Commission (SEC) Commissioner Robert Jackson expressed criticism of ICOs in general, claiming that investors “are having a hard time telling the difference between investments and fraud.”

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Microsoft’s Search Engine Bing Says It Will Ban Crypto-Related Ads By July 2018

Microsoft’s search engine Bing announced it will remove crypto ads from its network by July 2018 to protect customers from ‘bad actors’.

Microsoft-powered search engine Bing has joined other internet giants in announcing it will ban cryptocurrency-related advertisements on its network by July 2018, according to an official blog post today, May 15.

According to the statement, the main reason for the company’s decision to ban “advertising for cryptocurrency” and “cryptocurrency related products” is the current unregulated status of cryptocurrencies, which allegedly increases risk for Bing’s users:

“Because cryptocurrency and related products are not regulated, we have found them to present a possible elevated risk to our users with the potential for bad actors to participate in predatory behaviors, or otherwise scam consumers.”

As the report further says, Bing Ads tool plans to fully implement the ban worldwide between June until early July.

Bing’s crypto ads ban is the latest move in a search engine and social media crypto-boycott, initiated by Facebook in late January of this year. Google announced an analogous crypto ad ban in mid-March, and Twitter confirmed its own ban soon after.

Last week, multiple mainstream media outlets reported that Facebook is reportedly “exploring” the launch of its own cryptocurrency.

Earlier in April, the co-founder of LinkedIn told Cointelegraph that the recent crypto ad bans are, in his opinion, most likely “temporary” and due to the current absence of clear crypto market regulations.

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S. Korea’s Largest Exchange UPbit Runs ‘Internal Audit’, Dispels Fraud Allegations

UPbit, the South Korean exchange which investigators searched last Friday, says it has conducted an internal audit and cleared itself of fraud.

South Korea‘s largest cryptocurrency exchange UPbit said it has conducted an internal audit that disproves suspicions of fraud, local media reported Tuesday, May 15.

UPbit, which saw a sudden visit from financial regulators on Friday, May 11, on suspicion officials had faked balance sheets, has yet to publish the audit data, which it claims demonstrates its coin holdings are real.

Quoting the exchange’s CEO, local news outlet Naver now reports UPbit’s ledgers are “100%” in step with their wallets.

Claims that a “misunderstanding” between government inspectors over multiple wallets caused the suspicions also appear valid, social media commentators added Tuesday.

Friday’s original inspection caused panic on markets and coincided with Mt. Gox trustees apparently selling a further chunk of client liquidation funds, resulting in several days of price drops.

While the matter is not officially settled, responses note, UPbit’s reports about the audit would appear counterproductive if made at a time when no concrete information existed at all.

“We will see how the story unfolds, but I find it highly unlikely that UPbit would spin a narrative of innocence if they were under investigation where proof was easily seen through blockchain transactions,” a Twitter-based Korean cryptocurrency news commentator wrote.

UPbit, owned by a subsidiary of South Korean communications giant Kakao, is the world’s fifth largest crypto exchange by 24-hour trade volume, seeing about $910 mln in trades on the day to press time.

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