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Cryptocurrency

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A press release from Bank Negara Malaysia (BNM), Malaysisa’s central bank, stated that the  “Anti-Money Laundering and Counter Financing of Terrorism Policy for Digital Currencies”  went into effect as of February 27, 2018.   It had been introduced as a draft in December 2017. Reporting institutions are required to conduct customer due diligence on all customers and the persons conducting the transaction when the reporting institution establishes business relationship with a customer and when the reporting…

We have reported in this space about how the SEC has indicated that most ICOs probably qualify as securities under U.S. law. see 1-3 and 1-23.  One of the SEC’s first enforcement actions in this regard was against  Maksim Zaslavskiy for his two initial coin offerings allegedly marketed through his companies REcoin and Diamond Reserve Club.   That was followed by a criminal suit. Yesterday, Zaslavskiy sought to dismiss the criminal case, arguing that the cryptocurrencies…

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has recently published draft anti-money laundering and counter-terrorism financing rules (AML/CTF Rules) which are relevant to digital currency exchange service providers following the passage of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017 (Act) in December 2017. The new laws are scheduled to come into effect on 13 June 2018.  Tthe Act introduces new laws to regulate digital currency exchange service providers in the same way…

With most governments regularly issuing warnings against cryptocurrencies, Venezuela, on Tuesday, became the fist government to issue its own cryptocurrency, with the pre-launch of the Petro.  President Maduro announced on Twitter first-day presales of $735 million, though news outlets reported that the figure could not be substantiated.  The Venezuelan government says that each unit of the petro is pegged to the price of one barrel of Venezuelan oil. Many questions have been raised about the…

Section 12(k) of the Securities Exchange Act of 1934 provides that, “if in [the SEC’s] opinion the public interest and the protection of investors so require, the Commission is authorized by order to (A) summarily to suspend trading in any security (other than an exempted security) for a period not exceeding 10 business days.” In Orders date February 15, the SEC relied on this rule to suspended trading in three penny-stock companies — Cherubim Interests…

In a speech yesterday, Sigal Mandelker, the under secretary for terrorism and financial intelligence for the US Department of the Treasury, pushed for stronger regulation of cryptocurrency.  She stated that Treasury regulates virtual currency exchangers as money transmitters and requires them to abide by Bank Secrecy Act obligations.  Of specific concern is that these exchanges be mindful of the anti-money laundering (AML) and combating the financing of terrorism (CFT) obligations.  She said: Virtual currency businesses…

Consistent with the above post, the European Securities and Markets Authority (ESMA), the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) issued a Warning that warned consumers of the high risks of buying and/or holding cryptocurrencies.  The concern was that an increasing number of consumers buy cryptocurrencies with the expectation that the value will continue to grow, but without being aware of the high risk of losing their money.  The…

We have reported often on statements by various governments concerning cryptocurrency regulation.  Most recently  In an interview with CNN over the weekend, IMF Chief (and former Chairman of our law firm) Christine Lagarde said that such regulation is “inevitable.”  She noted that that there is probably quite a bit of dark activity [in cryptocurrencies] and that the IMF remains focused on anti-money laundering and countering the financing of terrorism, both of which are implicated in…

The Hong Kong Securities and Futures Commission (SFC) issued a statement today repeating an earlier alert to investors to the potential risks of dealing with cryptocurrency exchanges and investing in initial coin offerings. The SFC’s statement echoed similar concerns recently voiced by the U.S. SEC.  That is, the SFC sent letters to seven cryptocurrency exchanges in Hong Kong or with connections to Hong Kong  warning them that they should not trade cryptocurrencies which are “securities”…

Last week, India’s Finance Minster, Arun Jaitley, made the following statement: The government does not recognize cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system in India As Forbes reports, this was reported by many as the banning of cryptocurrency in India but that seems to have been an overstatement.  The issue remains gray and…