Cryptocurrencies & ICOs – Page 11 – FinTech and Blockchain Law Watch

U.S. Government Accountability Office Issues Long-Awaited Report on Fintech Industry

May 01 2017

The U.S. GAO has issued a long-awaited report on the fintech industry, which focuses on the regulation of marketplace lenders, mobile payments, digital wealth management platforms and distributed ledger technology (“DLT” – often referred to as blockchain). For each of these fintech industry “subsectors,” the GAO report details the nature of the subsector and how it operates, as well as its potential benefits and risks. Moreover, the GAO report addresses industry trends, regulation and oversight for each subsector.

Marketplace lenders. The GAO report indicates that marketplace lenders may provide expanded and quick access to credit at lower cost than banks, although the report also notes risks related to loan term transparency and certain protections for small business borrowers. Read More

Jury Finds Two Guilty in Bitcoin Exchange Bribery Scheme; Related Criminal Prosecutions Looming

Mar 23 2017

By Nicole C. Mueller and Clifford C. Histed

On March 17, 2017, a Manhattan federal jury convicted Trevon Gross, a pastor, and Yuri Lebedev, a software engineer, of bribery and of conspiring to operate bitcoin exchange Coin.mx as an unlawful money transmitting business. The jury also convicted Lebedev of fraud. Sentencing is scheduled for July 2017.

Lebedev and Coin.mx operator Anthony Murgio were charged in 2015. Coin.mx allegedly operated as a conduit for cybercrime-related funds, and in violation of state and federal money transmitting laws. Prosecutors argued to the jury that Murgio and Lebedev sought to trick the financial institutions through which Coin.mx processed transactions into believing its unlawful bitcoin exchange business was simply a members-only “collectibles club.” Part of the Coin.mx scheme included processing and profiting from bitcoin transactions conducted on behalf of victims of ransomware attacks by allowing the victims to buy bitcoins to pay ransom payments while generating revenue for Coin.mx. Murgio pleaded guilty before trial.

The Age of Blockchain

Mar 08 2017

Tom Wallace and Tyler Kirk contributed an article to American Lawyer on the impact blockchain is having on companies around the world. The article discusses the potential business development opportunities and the ways companies can leverage the technology including what companies must do in order to capitalize on this emerging area.

To read the article, click here

The world’s first listed regulated bitcoin fund

Jan 16 2017

By Jonathan Lawrence

Global Advisors (Jersey) Limited (“Global Advisors”), the investment manager of the Global Advisors Bitcoin Investment Fund PLC (“GABI”) announced on 19 December 2016 that the Channel Islands Securities Exchange (“CISE”) has approved the admission to listing of all of the redeemable participating no par value shares of the open ended fund. The CISE listing means that GABI becomes the first regulated bitcoin fund to be listed on any exchange globally.

GABI was launched in 2014 as the world’s first regulated bitcoin fund when it received certification as an Expert Fund from the Jersey Financial Services Commission. Its listing on the CISE means that it joins over 2,000 listed securities on the exchange comprising a market capitalisation of over £300 billion. It is the first digital asset-related listing on the exchange.

GABI is the third exchange listing for Global Advisors. The firm currently manages two Bitcoin Exchange Traded Certificates – COINXBT and COINXBE – on NASDAQ’s OMX in Stockholm. The firm is developing as a platform for digital assets combining digital asset management, direct market access and working with start-up firms developing distributed ledger technologies, including Glint, Gradbase and Aventus Systems.

Electronic money: the French Government strengthens financial intermediaries’ obligations

Nov 16 2016

By Claude-Etienne Armingaud

On November 10, 2016, the French Government issued a decree against the financing of terrorism which contains various measures addressing anonymous electronic money [source in French]. This new regulatory measure applies to electronic money issuers as well as their distributors, credit institutions, finance companies, consumers, and to any person who physically transfers money from a certain amount.

In addition to reinforcing the powers of the Ministry of Economic and Financial Affairs agency against money-laundering (TRACFIN) -which will now have access to the wanted person files for the needs of criminal investigations-, the decree removed the duty of care of the financial intermediaries in the absence of any particular suspicion of money laundering and under strict conditions pertaining to electronic money:

Money must only be issued for the acquisition of goods and services.
The maximum monetary value stored must not exceed EUR 250.
These funds must only be used for payments on the national territory.
The electronic money device may neither be reloaded through cash nor through electronic money when the initial owner of such money cannot be identified.

Possible AML implications for FinTechs

Nov 07 2016

By Jim Bulling and Michelle Chasser

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is encouraging FinTech businesses to make contact about Australia’s anti-money laundering and counter-terrorism financing regime (AML/CTF regime) and how it may affect their business. A dedicated online contact form has been established which allows enquiries to be made directly to the Policy and Guidance team.

Businesses which provide a ‘designated service’ are reporting entities which have obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. There are a number of designated services that a FinTech business may provide including making loans, issuing a stored value card, giving effect to remittance arrangements, issuing interests in a managed investment scheme and (in the capacity of an Australian financial services licensee) arranging for a person to receive a designated service.

Currently activities relating to digital currencies such as BitCoin are not designated services. However, in October 2016 the Attorney General’s Department released its draft project plan for the implementation of the recommendations from the statutory review of the AML/CTF regime. Under the project plan, legislative proposals to regulate digital currencies under the AML/CTF regime will be developed by the first half of 2017.

Further developments on Britcoin

Sep 15 2016

By Jonathan Lawrence

Victoria Cleland, Director for Banknotes and Chief Cashier of the Bank of England, gave a speech on FinTech issues on 8 September (see the speech here).

Of particular interest were Ms Cleland’s remarks on the Bank’s long-term research on the wide range of questions posed by the potential of a central bank-issued digital currency (CBDC), including whether a CBDC would be feasible and whether it would benefit the economy and the financial sector, over the medium term. To support its research, the Bank has invited contributions to a set of research questions on the opportunities and challenges that could arise from the introduction of CBDC (see the questions here).

The politicization of encryption: party “platforms” or “platitudes”?

Sep 01 2016

By Tyler Kirk

In the United States, the political stage is set for what may turn out to be one of the most infamous presidential elections in America’s history. As noted in an earlier blog post, the regulation of encryption by U.S. legislators and regulatory agencies may have a damaging impact on FinTech, and in particular, on the adoption of blockchain and other distributed ledger technologies. In this post, we look at the relevant Party Platforms to learn what, if anything, they say about encryption.

Bitcoin heist – alleged $72M stolen from Bitfinex

Aug 05 2016

By Cameron Abbott and Simon Ly

Hong Kong-based bitcoin exchange Bitfinex has suspended trading after discovering an alleged security breach to the tune of $72M! It has been reported that this is the third largest bitcoin breach in history, with the largest being the infamous MtGox breach in early 2014.

Trading has halted on Bitfinex as the company investigates the security breach and cooperates with law enforcement. Although this may come as only a small consolation to many, in its initial response Bitfinex said that the breach was quarantined to “bitcoin wallets; the other digital tokens traded on Bitfinex are unaffected”.

As of today, Bitfinex is still in the process of figuring out what happened, but disputes the total cost of the heist, stating that the “numbers being quoted are erroneous as nothing has been decided as of yet and [Bitfinex] is still in the process of settling positions and balances”.

Are we all more comforted by the fact that they don’t know?

To keep up to date, you can see Bitfinex’s blog updates here.

BritCoin vs BitCoin: Central banks stepping into the digital currency arena

Jul 29 2016

By Jim Bulling and Michelle Chasser

Certain governments around the world are exploring the possibility of central bank issued digital currencies using distributed ledger technology (DLT) which could compete with private digital currency systems such as BitCoin.

Following the release of the Bank of England’s (BofE) paper on central bank issued digital currencies, the Deputy governor of monetary policy appeared before the House of Lords’ Economic Affairs Committee to discuss the effect ‘BritCoin’ would have on the economy. The BofE has previously raised the possibilities of using BritCoin for retail transfers and issuing interest bearing accounts or ‘wallets’ to hold BritCoins.

Category:Cryptocurrencies & ICOs