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Regulation

South Korean Lawmakers are Drafting a Bill to Legalize ICOs

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South Korea cryptocurrency

South Korean lawmakers are drafting new legislation to reverse the government’s ban on initial coin offerings (ICOs), a sign that one of the world’s hottest cryptocurrency markets would ease restrictions on the controversial crowdfunding model.

Lawmakers Drafting Bill

According to The Korea Times, a group of lawmakers is planning to introduce new legislation that would permit citizens to participate in ICOs. The efforts are being led by Rep. Hong Eui-rak, who currently serves as a member of the ruling Democratic Party of Korea. Reports indicate that Hong is working with at least ten other representatives from the Korean government to draft a final bill before the end of 2018.

Though the details of the proposed legislation are not known, Hong said the bill is being developed in close collaboration with the Korea International Trade Association (KITA).

“The bill is aimed at legalizing ICOs under the government’s supervision,” Hong said at a blockchain forum at the National Assembly on Wednesday. “The primary goal (of the legislation) is helping remove uncertainties facing blockchain-related businesses.”

National Assembly Speaker Chung Sye-kyun, who was present at the forum, reiterated the government’s role in removing political uncertainties standing in the way of cryptocurrency adoption.

“Blockchain and cryptos can be used in various public sectors for good causes,” Chung said. “Given their potential, we need to work to help reduce political uncertainties they face.”

Support for Cryptocurrency Grows

The South Korean government issued a blanket ban on ICOs last September and has since introduced new legislation to curb speculation in the cryptocurrency market. Policymakers have indicated they have no intent to ban domestic cryptocurrency exchanges but will instead work within existing frameworks to promote transparency and investor safety. The announcement, which came in late January, ended months of speculation and conflicting reports about South Korea’s intent to supress digital currency trading.

South Korea isn’t the only country adopting more favorable crypto regulations. A host of other nations led by Japan, Switzerland and Malta are positioning themselves as the future center for blockchain and cryptocurrency.

However, the future of international cryptocurrency regulation could depend on how U.S. agencies approach the subject. U.S. regulators have deemed all ICOs to be securities with the SEC broadening its investigation into the market. According to various reports, the SEC is quietly investigating whether cryptocurrencies like Ethereum and Ripple should be classified as securities. In the eyes of former CFTC chairman Gary Gensler, one or both of XRP and ether are “non-compliant securities.”

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 612 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Regulation

Republican Congressman to Propose “Groundbreaking” Legislation in Support of Cryptocurrency, Blockchain Technology

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A U.S. Congressman is planning to introduce a trio of bills to support digital assets and blockchain technology, as well as provide taxpayers with a safe harbor for forked cryptocurrencies, according to a press release published last week. While still a long way from being passed, the proposals are the latest sign of growing mainstream acceptance of the blockchain economy.

“Groundbreaking Proposals”

U.S. Representative Tom Emmer, a Republican from Minnesota is set to unveil the “Resolution Supporting Digital Currencies and Blockchain Technology,” the “Blockchain Regulatory Certainty Act” and the “Safe Harbor for Taxpayers with Forked Assets Act.” The bills are intended to provide a “simple legal environment” for the cryptocurrency market, thereby creating new pathways for blockchain development, innovation and adoption.

Under the proposed legislation, investors with exposure to forked currencies will be protected against tax penalties until the Internal Reserve Service (IRS) provides formal reporting guidelines for these assets. Taxpayers can meet their obligations only when they have a clear understanding of what’s expected of them, Emmer says. Similarly, lawmakers have pressed the IRS to provide more comprehensive guidelines for reporting to ensure investors don’t unknowingly violate tax laws.

“The United States should prioritize accelerating the development of blockchain technology and create an environment that enables the American private sector to lead on innovation and further growth, which is why I am introducing these bills,” Congressman Emmer said in a statement. “Legislators should be embracing emerging technologies and providing a clear regulatory system that allows them to flourish in the United States.”

Crypto Taxes

The IRS has warned investors that a failure to report their cryptocurrency transactions may lead to fines of $250,000 and prison. However, there’s strong reason to believe that many people have underreported their crypto dealings or even failed to disclose their holdings entirely. Data from Credit Karma earlier this year showed only a tiny percentage of tax filers actually reported cryptocurrency gains and losses. While the vast majority of tax filers are not cryptocurrency holders, it seems that a disproportionately high percentage of actual traders are failing to report.

The agency has taken a proactive approach to investigating cryptocurrency transactions. In July 2017, the IRS issued a summons against Coinbase, one of the world’s largest cryptocurrency exchanges, in order to retrieve customers’ information and find unreported income. Later that year, Coinbase integrated tax reporting of capital gains and losses using first in first out (FIFO).

Tax experts say that the failure to report largely stems from confusion over “imputed” income, coin-to-coin transactions and hard forks. It’s also not entirely clear how current tax laws apply to goods and services purchased through cryptocurrencies. Although the IRS considers cryptocurrency to be “intangible property,” users themselves refer to it as digital money despite not being issued by the government. Tax laws do not require people to report capital gains and losses after every purchase, so applying a different standard to cryptocurrencies would be inappropriate. Although it’s not entirely clear how Emmer’s bills will address these issues, compliance without clarity is not feasible.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 612 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Market News

Manipulation, Fraud and Abuse: New York Attorney General Issues Stern Warning Against Cryptocurrency Exchanges

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The New York State Attorney General’s office has ratcheted up its war of words against cryptocurrency exchanges, warning consumers of the myriad of risks they face in depositing money on these platforms.

Crypto Exchanges at Risk of Manipulation

In a lengthy report on the “Virtual Markets Integrity Initiative,”  New York’s Attorney General argues that online cryptocurrency exchanges are vulnerable to manipulation, fraud and other types of abuse. Consumers of these platforms therefore “face significant risks” from hackers and the exchange operators themselves, some of which have been known to exploit “deceptive and predatory practices, market manipulation, and insider abuses.

“[V]irtual asset trading platforms now in operation have not registered under state or federal securities or commodities laws,” the report says. “Nor have they implemented common standards for security, internal controls, market surveillance protocols, disclosures, or other investor and consumer protections. Accordingly, customers of virtual asset trading platforms face significant risks.”

The report, which examines ten cryptocurrency exchanges operating in the U.S. and internationally, concludes a six-month investigation that was initiated by New York Attorney General Eric T. Schneiderman. Back in April, Schneiderman sent letters to 13 exchanges requesting information on their operations and internal controls.

Several Exchanges in the Hot Seat

At least four cryptocurrency exchanges were outed by the Attorney General’s office as being most problematic and possibly operating illegally in the state of New York. Not coincidentally, these exchanges refused to participate in the Attorney General’s request for information.

The report reads:

“Customers should be aware that the platforms that refused to participate in the OAG’s Initiative (Binance, Gate.io, Huobi, and Kraken) may not disclose all order types offered to certain traders, some of which could preference those traders at the expense of others, and that the trading performance of other customers on those venues could be negatively affected as a result.”

According to Forbes, a representative from the Attorney General’s office has referred three of these exchanges – Binance, Gate.io and Kraken – to the New York State Department of Financial Services “for possibly operating unlawfully in New York.”

Kraken has been on the hot seat ever since the company’s CEO publicly denounced the Attorney General’s request for more information. In a series of tweets, CEO Jesse Powell called the request “insulting” and likened it to “abuse.”

He added: “The resource diversion for this production is massive. This is going to completely blow up our roadmap! Then I realized we made the wise decision to get the hell out of New York three years ago and that we can dodge this bullet.”

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 612 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Altcoins

Bitcoin, Ether and Ripple Up in the Air as SEC Delivers a Sobering Reminder

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The U.S Securities and Exchange Commission just delivered a sobering reminder to the crypto community regarding the legal status of Bitcoin and Ethereum. SEC Director of the Division Corporation Finance William Hinman originally told a San Francisco conference in June that:

“…based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value.”

SEC Clarifies Crypto Security Stance

Today the SEC Chairman Jay Clayton released this official statement in which he reminded everyone that media statements made by SEC personnel should not be taken as legal pronouncements. Clayton stated:

“The Commission’s longstanding position is that all staff statements are nonbinding and create no enforceable legal rights or obligations of the Commission or other parties.”

In a particular sentence that may have been included specifically to cool the enthusiasm generated from his colleague Hinman’s original statement, Clayton states:

“…our divisions and offices, including but not limited to the Division of Corporation Finance, the Division of Investment Management and the Division of Trading and Markets, have been and will continue to review whether prior staff statements and staff documents should be modified, rescinded or supplemented in light of market or other developments.”

The last part about ‘modifying, rescinding or supplementing’ future documents suggests that the SEC are starting to worry about the effects their own words have on the very market they’re attempting to regulate.

When the original statement by Hinman hit the headlines in June, Bitcoin immediately surged by around 6%. Ethereum benefitted even more from the news and spiked 10% within the space of an hour.

Consequences for Bitcoin, Ether and Alts

The reminder from the SEC is unlikely to affect the average bag-holder, who in all likelihood disregards much of what comes out of such traditional institutions as the SEC. The news is more likely to strike hesitation into the minds of large-scale, corporate investors who thought all of this uncertainty was already behind them.

It could also spell either good or bad news for Ripple, which is currently fighting five lawsuits – including two federal lawsuits – against claims that its token sale represents a security issuance.

Director Hinman’s original statement back in June suggested that decentralization was key to avoiding being classed as a security. He suggested that coins and tokens from centralized blockchains would have a harder time with the SEC:

“Over time, there may be other sufficiently decentralized networks and systems where regulating the tokens or coins that function on them as securities may not be required. And of course there will continue to be systems that rely on central actors whose efforts are a key to the success of the enterprise. In those cases, application of the securities laws protects the investors who purchase the tokens or coins.”

With XRP being the third largest capped coin in existence, its prominence has made it a prime target for those suspicious of the currency’s relationship to the Ripple company. As the lawsuits began to pile up, many began to question what Hinman’s words would mean for XRP.

Today’s clarification by Chairman Clayton could be seen as a reprieve for XRP, as it essentially shelves the decentralization issue for the time being. On the other hand, it could mean that even if XRP is proved to be wholly decentralized, it may have even larger requirements to fill before gaining a positive classification – as could the rest of the entire crypto market.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 61 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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