Instruments

Bulgarian Stock Exchange Launches 8 Crypto ETNs

20/02/2022 by Idelto Editor

Bulgarians can now invest in crypto assets through their country’s stock market. The Bulgarian Stock Exchange has recently launched eight ETNs based on two digital currencies, bitcoin and ethereum, following the example set by leading European platforms that support such products.

Crypto-Based ETNs Offered to Bulgarian Investors

Bulgarian Stock Exchange (BSE) has started trading crypto instruments tracking the price rates of bitcoin (BTC) and ethereum (ETH). “Investors looking for suitable innovative crypto products may now freely trade in eight crypto exchange-traded notes (ETNs),” according to an announcement published this past Thursday.

With their launch, the Bulgarian stock market follows in the footsteps of major European exchanges such as Deutsche Börse and Euronext, which introduced these instruments two years ago, the BSE noted in the press release. Commenting on the development, BSE Executive Director Prof. Dr. Manyu Moravenov stated:

With the new products of BSE International, we meet the increased market interest in crypto instruments. We are pleased to be able today to offer an alternative asset for trading in cryptocurrencies, making the process easier and simpler for all interested investors.

The ETNs will allow investors to put money into digital assets without the need to create and own crypto wallets and cryptographic keys, Moravenov elaborated. At the same time, they will have access to regulation-compliant crypto instruments, the executive emphasized.

The trading of crypto-based ETNs is in continuation of BSE’s long-term partnership with Deutsche Börse and the market maker Tradegate AG, the Bulgarian stock market body explained. This will ensure the liquidity of the crypto instruments, the announcement noted. The products are traded in euros and during the regular trading session, BSE detailed.

The offering of the ETNs comes after Bulgaria’s Finance Minister Asen Vasilev unveiled in a recent interview with Bloomberg that the Southeast European nation, a member state of the European Union, is exploring options to facilitate cryptocurrency payments.

A crypto payment mechanism may be introduced “in the short to medium term,” said Vasilev who is also deputy prime minister. He added that the executive power in Sofia is discussing the matter with the Bulgarian National Bank and representatives of the country’s crypto industry.

Do you think investors will take advantage of the new crypto instruments offered by the Bulgarian Stock Exchange? Tell us in the comments section below.

Bank of Russia Has Tools to Restrict Crypto Investments, Governor Hints

19/12/2021 by Idelto Editor

The Central Bank of Russia has reaffirmed its opposition to cryptocurrency investments citing the volatility of the digital assets as a key motive for its conservative stance. Governor Elvira Nabiullina has recently indicated that the regulator has the means to restrict them.

Nabiullina Insists Bank of Russia Can Limit Investments in Crypto Assets

Russia’s monetary authority does not welcome investments of Russian citizens in cryptocurrencies, the head of the Central Bank of Russia (CBR), Elvira Nabiullina, said during an online press conference this week. She highlighted their volatility and potential use in criminal activity as major reasons for the regulator’s position.

The governor also noted Bank of Russia’s stance that the Russian financial infrastructure should not be employed to facilitate cryptocurrency transactions. She stressed that the regulator is capable of implementing restrictions and reiterated the bank’s skepticism towards these assets. Quoted by the business news portal RBC, the chair of the Russian central bank elaborated:

Cryptocurrencies carry great risks for retail investors due to high volatility and use in illegal activities, so we cannot welcome investments in such assets.

Nabiullina’s statements come after media reports revealed that Russian authorities are now holding discussions to choose between two very different approaches to the regulation of cryptocurrencies and related activities. While the Bank of Russia is seeking to prohibit crypto purchases, the State Duma is developing rules for coin mining and exchange. These will legalize cryptocurrencies despite the CBR’s opposition to their free circulation including their use in payments.

Earlier this week, Reuters quoted sources close to the CBR who indicated that the monetary authority is in talks with market players over a possible ban on the acquisition of crypto assets by Russian investors in the future. One of them unveiled that the central bank’s current position is one of “complete rejection” of cryptocurrencies. Industry experts have warned that such a move would push crypto investors underground and prevent the state from collecting taxes.

However, according to the head of the parliamentary Financial Market Committee, Anatoly Aksakov, lawmakers are also considering the legalization of crypto trading which would allow the taxation of related profits and incomes. Aksakov remarked that the State Duma has already adopted on first reading a draft law to tax crypto transactions in the Russian Federation. The legislation, which recognizes digital currencies like bitcoin as property for tax purposes, was submitted to the house last December.

Do you think Bank of Russia will convince other authorities to support a ban on cryptocurrency investments? Let us know in the comments section below.

New Guidelines Subject Canadian Crypto Exchanges to Securities Laws

18/01/2020 by Idelto Editor

New Regulatory Guidance Subjects Crypto Exchanges in Canada to Securities Laws

Canadian regulators have issued new guidance determining when current securities legislation applies to operations conducted by cryptocurrency exchanges. According to the clarifications in the document, many domestic and foreign entities serving Canadian users, for example those that provide custodial services, will have to abide by the country’s securities laws and act like securities dealers.

Also read: Canadian Company Commissions 3 Bitcoin Mining Units to Restart Oil Well

CSA Tries to Explain When Cryptos Are Securities

The Canadian Securities Administrators (CSA), a council of the regulatory bodies of Canada’s provinces and territories, published on Thursday Staff Notice 21-327 Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets. The legal interpretation, which comes after a consultation paper proposed a framework for crypto asset trading platforms in March, is supposed to help operators identify situations where Canadian securities laws may or may not apply to their activities.

The CSA explains that in certain cases crypto assets clearly represent securities. A tokenized security, for instance, carries rights that are traditionally attached to common shares such as voting rights and rights to receive dividends, the organization notes. A crypto asset can also be a derivative, the CSA remarks, like when a token provides an option to acquire an asset in the future. The regulator points out:

Securities legislation may apply to platforms that facilitate the buying and selling of crypto assets that are commodities, because the user’s contractual right to the crypto asset may itself constitute a derivative, a security or both.

The agency notes that the relevant determination will depend on the specifics, including “the obligations and intention to provide immediate delivery of the crypto asset.” Trading platforms would not be subject to securities legislation if “the underlying crypto asset itself is not a security or derivative,” or when the contract for the purchase, sale or delivery results in an obligation to make immediate delivery of the asset to the user.

In an attempt to define what constitutes ‘immediate delivery,’ however, the CSA admits there is no “bright-line test” to determine whether a contract or an instrument results in an obligation to make and take immediate delivery of a crypto asset. At the same time, a crypto transaction may be subject to securities laws if it does not clearly result in such an obligation.

The CSA staff will examine the terms of the contractual arrangements between crypto exchanges and their users as well as their typical commercial practices to establish if they create an obligation for immediate transfer of ownership, possession and control of crypto assets. The organization which coordinates the regulation of capital markets across Canada also details:

As part of this analysis, we will consider whether the platform and the user intend, at the time the contract or instrument is entered into, to make and take delivery of the crypto asset on which the contract or instrument is based.

Custodial Platforms to Operate as Securities Dealers

Then there’s the question of how to establish not only whether but also when exactly a crypto asset has been delivered. According to the guide, an immediate delivery occurs when ownership, possession and control is immediately transferred by the exchange and the user is afterwards free to deal with the asset without further participation of the platform. Also, the exchange must not retain any security interest or other legal right to the asset and the user should not be exposed to any risks related to the platform in the future.

Relations with exchanges, domestic and foreign, providing custodial services will be subject to securities regulations as there’s no obligation for immediate delivery of the assets to a user-controlled wallet. Clients remain reliant on the platform and exposed to insolvency, fraud, and other risks on its part. This means that following the new guidance, many of the hundreds of crypto exchanges operating globally will have to apply and be licensed as securities dealers to work in Canada, if they maintain their current business models, the Globe and Mail noted in an article.

The notice issued by the CSA contains many abstract statements such as “focus on substance over form,” “typical commercial practice,” and “intention to make and take immediate delivery.” This highlights how difficult it is to produce clear definitions and apply the traditional set of terms and rules to the trading and exchange of cryptocurrencies and other crypto-related activities. The regulator acknowledges that “new fintech businesses may not fit neatly into the existing framework” and invites such companies to join its regulatory sandbox. Participants in the initiative will enjoy a faster application process for exemptive relief from Canada’s securities law requirements, the CSA promises.

What do you think of Canada’s new regulatory guidance regarding the application of securities laws to crypto trading? Share your thoughts on the subject in the comments section below.

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Danske Bank Bans Investments in Cryptocurrency-Related Instruments

06/04/2018 by Idelto Editor

Leading Danish bank, Danske Bank, has published a document announcing that the company does not wish to “support the investment environment surrounding cryptocurrencies.” Danske bank will “phase out the possibility of” its customers purchasing financial instruments comprising cryptocurrency derivatives. Despite the bank’s concerns pertaining to the risks associated with cryptocurrencies, Danske customers will still be able to purchase virtual currencies via credit card.

Also Read: Iranian Officials Issue Contradictory Statements Regarding Telegram Ban

Danske Publishes Dismissive Appraisal of Cryptocurrency Markets

Danske Bank has published a document outlining its “negative position” with regard to cryptocurrencies. Established in 1871, Danske Bank operates in over a dozen countries and is one of Denmark’s largest retail banks.

The document outlines a number of concerns it holds regarding cryptocurrencies, stating that “They lack the investor and consumer protection typically connected with traditional currencies and investments.”

Danske Bank “Strongly Recommend[s] That [its] Customers Avoid Investing in Cryptocurrencies”

Danske asserts that “the price formation [for cryptocurrencies] is non-transparent,” claiming that “As an investor, [one] ha[s] very limited insight to how the market is developing and what is driving the price.” The high volatility of the virtual currency markets is also emphasized.

“Most importantly,” the bank states, “the lack of transparency and regulatory control have made cryptocurrencies a target for criminal purposes and we know that they on several occasions have been involved in criminal transactions like laundering or extortion.” Danske adds that it has “an obligation to assist in the fight against financial crime and money laundering,” concluding that “At the current stage, cryptocurrencies do not offer the sufficient level of transparency in order for us to live up to our obligations within anti-money laundering regulation.”

“For these reasons,” Danske states, “it is not possible to trade cryptocurrencies on our trading platforms.”

Crypto Derivatives “Phased Out,” Credit Card Crypto Purchases OK

Danske Bank has introduced a number of measures in accordance with its position, stating that it “do[es] not in any way want to support the investment environment surrounding cryptocurrencies.”

As such, Danske has “phase[d] out the possibility to buy financial instruments directly related to the price of cryptocurrencies,” such as “derivatives or ETNs [Exchange Traded Notes]” that mirror the price of a cryptocurrency. “These types of securities,” Danske asserts, “are characterized by high volatility and risk.”

Despite the measures, Danske will “not block the usage of a Danske Bank issued credit cards in connection with trading cryptocurrencies. Danske bank will also treat “deposit funds originating from cryptocurrencies […] the same way as deposit funds stemming from other types of investments.”

Moving forward, Danske bank will “monitor the market closely, and if the cryptocurrency market becomes more transparent and mature, we might reconsider this position.”

What do you think of Danske’s position regarding cryptocurrencies? Share your opinion in the comments section below!

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