Regulations

Ukraine to Oversee Crypto Transactions Above $1,200, Sees Opportunities in Legalization Not Risks

27/01/2020 by Idelto Editor

Cryptocurrency transactions in Ukraine will be strictly monitored by the state, although the country’s finance minister admits that it’s not digital coins but fiat cash that criminals and corrupt officials are more likely to use. The legalization of cryptocurrencies remains a priority in Kiev as the government has indicated its clear understanding that the benefits outweigh the risks.

Also read: New Ukrainian Law Says ‘Virtual Assets’ Can Be Used for Payments

Exchanges and Banks to Collect and Keep User Data

Operations conducted by crypto companies and other entities dealing with digital assets will be examined and verified by Ukraine’s financial regulators, Minister Oksana Markarova announced during a recent press conference. All crypto-related transactions worth 30,000 hryvnias or more, the equivalent of approximately $1,200, will be subjected to government oversight, she emphasized while briefing Ukrainian media about the newly adopted anti-money laundering rules.

Cryptocurrency exchanges, other trading platforms and banks will be obliged to collect, store and provide authorities with detailed information about the identity of their customers, both the sender and the receiver, as well as the origin of the transferred digital money. The data will be gathered only once if a user conducts the same type of crypto transactions.

If a certain transaction raises suspicion, the operator of the platform is required to notify the State Financial Monitoring Service (SFMS). The agency has been charged with establishing the origin of the cryptocurrency and according to the finance minister, the watchdog now has at its disposal “the latest analytical tool” capable of determining where the money comes from and even what it has been spent on previously.

“There have been successful cases,” Markarova said, quoted by crypto outlet Forklog. Currently, the SFMS cannot suspend crypto operations completely but it has the authority to freeze cryptocurrency wallets and seize digital assets that have been obtained illegally or which are intended for illicit purposes, if the agency gets hold of a wallet’s private keys in the course of an investigation.

Parliament Finalizing Regulatory Framework for Cryptocurrencies in Ukraine

The powers of the financial monitoring service were expanded with a law transposing the FATF standards and harmonizing Ukraine’s legislation with European AML directives. It was adopted by the Verkhovna Rada in early December but its provisions will enter into force on April 24, 2020. The Financial Monitoring Bill introduces a set of legal terms pertaining to the crypto space, allocates supervisory duties and details that virtual assets can be traded, transferred and used for payments.

The law lists the different types of entities that can provide exchange, storage, sale, and transfer services for digital assets. It also updates the applicable penalties for various violations such as non-compliance with due diligence and customer identification requirements or breach of procedures for the creation and storage of documents. The maximum fine that can be imposed on these companies has been raised from 34,000 to 204,000 hryvnia (over $8,000). An expert group at the Rada’s Digital Transformation Committee is currently working to finalize the framework that will regulate the circulation of cryptocurrencies in Ukraine.

Oksana Markarova acknowledged there’s no comprehensive data about the amount of cryptocurrency Ukrainian citizens currently hold but experts believe the volume is quite high. According to a 2018 survey, 13% of internet-savvy Ukrainians owned digital coins. It was estimated that the daily turnover on the top three cryptocurrency exchanges operating in the country reached $2 million. Two of the platforms, Exmo and Kuna, already have anti-money laundering and know your customer policies in place while the world’s leading exchange Binance recently opened an account with Ibox Bank providing Ukrainians access to global markets.

Ukraine’s finance minister, representing the country’s young administration that came to power after the election of President Volodymyr Zelensky, thinks the legalization of crypto operations can bring positives to the Ukrainian economy which outweigh the risks of using cryptocurrencies for money laundering. “I think that our criminals and corrupt officials are quite conservative and still keep funds mostly in cash. Therefore, in the legalization of cryptocurrencies, I see opportunities for the development of this industry in our country, and not a threat,” Markarova stated in an interview with the online magazine MC Today.

Cryptocurrency exchanges and digital coin issuers were recently listed among the “key players of the financial ecosystem” in Ukraine’s new Financial Sector Development Strategy 2025. The document, prepared by the country’s financial regulators, including the National Bank and the Finance Ministry, also mentions blockchain development as one of five “strategic goals” of innovation growth.

Do you think Ukraine will attract more crypto businesses by providing greater regulatory clarity for the industry? Share your expectations in the comments section below.

Images courtesy of Shutterstock.

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Uzbekistan Prepares Crypto Tax Exemptions, Launches Licensed Exchange

22/01/2020 by Idelto Editor

A new presidential decree in Uzbekistan envisages the introduction of tax exemptions for income obtained from operations involving crypto assets. The draft document published recently also incorporates proposals for the establishment of a blockchain valley and licensing regime for cryptocurrency miners. The country has just launched its first licensed crypto exchange.

Also read: Uzbekistan to Create National Mining Pool, Launch Licensed Exchange

Tax Free Crypto Operations

The Central Asian Republic of Uzbekistan legalized cryptocurrency trading and introduced licensing for crypto exchanges with a decree signed by President Shavkat Mirziyoyev in the fall of 2018. An earlier decree issued by the head of state in the summer of that year laid the legal grounds for other related activities in order to develop the country’s digital economy.

Uzbekistan now prepares to exempt income obtained in cryptocurrency operations from taxation. A draft-decree containing provisions to that effect has been published last week for public discussion. Furthermore, Presidential Decree ID-12538 “On the measures for further development of the circulation of crypto assets in the Republic of Uzbekistan,” excludes crypto transactions from the scope of the nation’s foreign currency regulations. The draft document details:

Operations of legal entities and individuals related to the circulation of crypto assets, including those carried out by non-residents, are not objects of taxation, and income received from these operations is not included in the tax base for taxes and other obligatory payments.

Earlier this month, the National Agency for Project Management (NAPM), a regulatory body responsible for the oversight of the digital economy including the crypto sector, announced its plans for 2020. One of the key priorities of the agency working under the presidency is to establish a “national mining pool” for all private miners who will enjoy preferential electricity rates. Also, all industrial-scale mining operations, according to the latest decree, will be subject to licensing starting from Feb. 1.

The government in Tashkent also intends to create a regulatory sandbox for testing crypto technologies called Uzbekistan Blockchain Valley. Authorities want to allow entities involved in the development of new financial products and services to implement them and conduct experiments without violating applicable laws. The proposals for the establishment of the pool and the sandbox came from NAPM, the Central Bank of Uzbekistan, the Ministry of Development of Information Technologies and Communications, and the Ministry of Energy.

Licensed Crypto Exchange Launched

Uznex, Uzbekistan’s new digital asset trading platform, is operated by the Korean company Kobea Group. Its launch was announced Monday, Jan. 20 during an opening ceremony in Tashkent where the Korean Cultural Center hosted an international blockchain conference. The event gathered representatives of crypto companies from South Korea, Japan, and Singapore as well as officials from Uzbekistan’s ministries and government agencies, the country’s national information agency Uza reported. Kobea Group also opened its first office in the region.

According to another report, by the local edition of Sputnik, Uzbekistan citizens will be allowed only to sell cryptocurrencies on Uznex.com, while foreign entities and nationals residing in the country will have full access to its services within the framework of the country’s legislation. For the time being, Uznex is the only cryptocurrency exchange operating legally in Uzbekistan and possibly in the whole region.

The platform is now online and offers several trading pairs against bitcoin core (BTC) and the stablecoin tether (USDT). These include bitcoin cash (BCH) and ethereum (ETH). According to the announcement quoted by local media, Uznex should support several fiat options such as Uzbekistan’s national currency, the som (UZS), U.S. dollar (USD), and credit cards. However, the fiat payment and withdrawal methods are not currently available on the Uznex website, which is still in beta.

The exchange will also serve global users in the future who want to invest in digital financial assets, make international transfers or need access to credit. The Korean operator intends to play an active role in Uzbekistan’s socio-economic life. Its plans include the establishment of blockchain departments in the country’s leading universities.

Do you expect Uzbekistan to become a regional leader in the crypto space? Tell us what you think in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Images courtesy of Shutterstock, Uza.

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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.

Images courtesy of Shutterstock.

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Russia’s New Prime Minister Has an Opinion of Cryptocurrencies

17/01/2020 by Idelto Editor

Russia’s New Prime Minister Has His Opinion on Cryptocurrencies

The Russian Federation has a new prime minister, Mikhail Mishustin, with a track record of statements regarding cryptocurrencies and an affection for digitalization. A stated goal of his government will be to turn the country into a digital platform “for the people.” Time will tell, however, whether his plan encompasses the legal use of decentralized digital currencies.

Also read: Direct Democracy Party to Solve Issues With Crypto Rights in Russia

Russian President to Lose Powers, After Putin

Mishustin was appointed head of the Russian government shortly after his nomination this week and the resignation of Dmitry Medvedev’s cabinet. Medvedev, a long-term political ally of Vladimir Putin, is leaving the post after the Russian president announced a constitutional reform during his annual address to the Federal Assembly this past Wednesday.

Russia’s New Prime Minister Has an Opinion of Cryptocurrencies — Vladimir Putin during his address to the Federal Assembly

The changes will give the State Duma, the lower house of Russia’s parliament, more powers and limit those of the president after Putin’s fourth and last term ends in 2024. While the current head of state presently chooses the Russian premier, in the future lawmakers will take the responsibility to select and appoint a candidate and all of their ministers.

The amendments are expected to pass public discussions and eventually be approved in a referendum. Some Russian media reports suggest that Medvedev is leaving because he failed to agree with Putin on the reforms. In his resignation announcement, he noted that when the changes take effect, they will shift the general balance of power in Moscow, saying:

It is obvious that we as the government of the Russian Federation should provide the president of our country with the opportunity to make all the necessary decisions.

According to the Kommersant business daily, Medvedev favored a scenario in which the presidential institution and the government merge, thus giving the president full executive power. Quoting an anonymous source close to the Kremlin, the independent TV channel Dozhd reported that he proposed establishing the post of vice-president and that he might’ve wanted it for himself. Medvedev has now been appointed deputy head of the Russian Security Council under Putin.

What Does This Mean for Cryptocurrencies?

The proposed constitutional amendments can be interpreted differently. Supporters would say they will bring democratization with the Duma, the collective organ of power, gaining more influence in Russia’s internal affairs. Critics fear, however, that these have been designed to allow Vladimir Putin to maintain control even after his last presidential term expires by becoming prime minister again, for example.

Until that happens, the revamped composition of the government can bring other changes to the country, including some that concern the crypto space. At a meeting with members of the parliamentary group of the ruling United Russia party before his appointment, Mikhail Mishustin said he wanted to get on with the “Digital Economy” national project and declared:

The state should undoubtedly be a digital platform created for the people.

Before his appointment as prime minister, Mishustin served as director of the Federal Tax Service (FTS) for 10 years and has been credited with the digitalization of Russia’s tax system. Now he says his first urgent task is to “seriously engage in institutional reforms” and introduce “the most modern information technology.” With a PhD in economics and professional background in IT, he might well be the right person to lead the charge towards achieving these goals.

As the head of the Russian tax agency, Mishustin has made comments about cryptocurrencies on multiple occasions, crypto news outlet Forklog reminded. Nobody trusted paper money when it was introduced into circulation and it had to be backed with the gold reserves of central banks, he noted in 2017 pondering on the moneyness of cryptos. He also made it clear he viewed digital currencies as financial instruments and thought they should be taxed as such.

In February 2019, Mikhail Mishustin spoke in favor of regulating the crypto industry in Russia, stressing that the government has to deal with cryptocurrencies and other forms of payment which the state, in his words, doesn’t notice. Also during his administration, the FTS accepted registering crypto investments as part of a company’s capital, as news.Bitcoin.com reported. And while other institutions like the Central Bank of Russia view bitcoin as an illegal money surrogate, 13% tax on crypto-related incomes is nevertheless due to Mishustin’s administration.

So far, the State Duma has incorporated the concept of “digital rights” that relates to tokens into national law through amendments to the country’s civil code. It also adopted a “crowdfunding law” which entered into force in the beginning of this year. But a key bill, the law “On Digital Financial Assets” which was voted on first reading in the spring of 2018, is yet to be adopted. Earlier this week, the Chairman of the parliamentary Financial Market Committee, Anatoly Aksakov, stated that this is “99.9%” going to happen during the spring session of the Duma.

What kind of changes do you expect in Russia’s policy towards cryptocurrencies after the latest political developments in Moscow? Share your thoughts in the comments section below.

Images courtesy of Shutterstock, Kremlin.ru.

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The post Russia’s New Prime Minister Has an Opinion of Cryptocurrencies appeared first on Bitcoin News.

Direct Democracy Party to Solve Issues With Crypto Rights in Russia

16/01/2020 by Idelto Editor

Direct Democracy Party to Solve Pending Issues With Crypto Rights in Russia

A new political force is being born in Russia out of the country’s tech business circles. The idea has been conceived by representatives of the country’s growing digital economy sector who want to embark on finding solutions to numerous issues that concern the crypto space.

Also read: Eastern Europe Sees More Fiat Options for Trading Crypto

World of Tanks Developer Leads Russian IT Party

The political project was announced by members of the IT industry led by Vyacheslav Makarov, former product manager at Wargaming who was involved in the development of the popular online action game World of Tanks, the Russian business daily Kommersant reported. Markov is the chief ideologist of the group which is working to establish the Direct Democracy Party (abbreviated PPD). The team has already filed for registration with the Russian Ministry of Justice in November. The party building process will culminate in a constituent congress to be held on March 5. PPD plans to take part in Russia’s 2020 regional elections, focusing on constituencies where large IT companies are operating.

Vyacheslav Makarov hopes to attract more developers from these organizations to the project. He points out that in many Russian regions IT companies are the biggest taxpayers and are well acquainted with local problems. His initiative has already won active support from other well-known figures such as Boris Chigidin, deputy head of the legal department at Yandex Money, Unwired Devices Director Oleg Artamonov, and the Director of the Eurasian Communication Center Alexei Pilko, who are members of the party’s organizational committee.

What sets PPD apart from other political projects is that it doesn’t have a favorite political ideology, notes the Russian election information portal Vybor Naroda. The party manifesto offers a “complete overhaul” of the existing political system that corresponds to the popular demand for real democracy. The party turns attention to the high level of property inequality in Russia, which is a leftist political message, but also to the systemic barriers to business and overregulation of all spheres of society, which is more characteristic for right-wing liberal factions.

PPD to Address Rights Pertaining to Cryptocurrencies

The authors of the manifesto have outlined certain groups of specific problems they feel it’s rational to address. One of them covers ownership rights regarding products of the digital economy including those pertaining to cryptocurrencies and blockchain systems. Another set of issues concerns matters related to the anonymity as well as the safety of participants and consumers in the digital economy sphere.

Despite these hints about their intentions, the founders of Direct Democracy Party are not putting forward a predetermined agenda. Instead, they plan to develop a mobile app based on blockchain technology that would allow members to have their say in the party policies. In order to take part in the regional elections this year, the new Russian party must be granted federal registration and establish permanent presence in at least 43 regions. While this may or may not happen within the next three months, the ultimate goal remains to gain seats in the State Duma in the parliamentary elections next year.

PPD can win voters’ attention on several fronts, one of which is the introduction of electronic voting, something authorities did not accomplish in 2019. Crypto regulation is another area. The final voting on a key piece of legislation designed to regulate cryptocurrencies has been postponed multiple times since the spring of 2018 when Russians voted for president. There was plenty of talk about adopting the regulations before that election too. Prime Minister Dmitry Medvedev recently spoke about the need to finally do that, while this week the Chairman of the Financial Market Committee, Anatoly Aksakov, was “99.9%” positive the Law on Digital Financial Assets will be adopted during the spring session of the Duma.

Parties with similar ideas have previously emerged in other countries as well. Sweden’s Pirate Party supports the right to individual privacy and freedom of speech on the internet and calls for greater government transparency and reform of intellectual property laws. The Ukrainian “Democratic Horde” party vowed last year to never accept money from oligarchs, rely solely on crypto donations and work to weaken state control over the economy while expanding civil liberties. The party wants to protect the interests of companies and people employed in the IT sector. And the Uruguay Digital Party recently announced an initiative to implement blockchain technology in its internal voting and governance. Its members believe Uruguayans should be able to audit their political representatives and take advantage of technology to expand citizen influence.

Do you think political organizations like Russia’s Direct Democracy Party can bring positive change to the treatment of cryptocurrencies? Share your thoughts on the subject in the comments section below.

Images courtesy of Shutterstock.

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