rules

Malaysia Announces Digital Asset Guidelines

19/01/2020 by Idelto Editor

Malaysia Publishes Digital Asset Guidelines

The Securities Commission Malaysia has published the country’s guidelines on digital assets which set out the regulatory framework for token sales. All token offerings must now be carried out only through platforms approved by the commission. The guidelines also detail the obligations of approved platforms as well as the requirements token issuers must meet.

Also read: Regulatory Roundup: EU-Wide Crypto Regulations, New Rules in Europe, US, Asia

New Digital Asset Guidelines

The Securities Commission Malaysia (SC) announced on Wednesday that it has released the Guidelines on Digital Assets pursuant to section 377 of the Capital Markets and Services Act 2007. The commission explained that the guidelines incorporate feedback it received after issuing the consultation paper on the subject, adding:

The guidelines set out the requirements for all offerings of digital tokens to be carried out through an initial exchange offering (IEO) platform operator that is registered with the SC.

These platform operators must seek authorization from the commission and have a minimum paid-up capital of 5,000,000 ringgits ($1.23 million). Among other requirements, they must carry out the necessary assessment and due diligence to verify the compliance of the issuer, its board, and the token to be offered, the announcement details.

Implementing the New Rules

The guidelines also set out the requirements for anyone seeking to raise funds through token offerings. A prospective issuer must satisfy governance and capital requirements to be eligible to raise funds using this method. It must be a company incorporated and have its main business in Malaysia, with a minimum paid-up capital of 500,000 ringgits. “Issuers are required to demonstrate that their proposed project or business provides an innovative solution or a meaningful digital value proposition for Malaysia,” the commission further stated, noting:

An issuer may raise funds up to a ceiling of RM100 million and tap on investments from retail, sophisticated as well as angel investors, subject to the investment limits provided in the guidelines.

An offering must be accompanied by a whitepaper furnished to the commission and approved by an approved IEO platform. The whitepaper must contain material information on the issuer, the token, and how the funds are to be used. The commission explained that it will conduct “post issuance monitoring of the utilisation of the proceeds” after the offering has been completed, elaborating:

The guidelines will be brought into force in the second half of 2020 to allow potential issuers, platform operators and investors to familiarise themselves with the requirements in the guidelines … until the coming into force of the guidelines, no person is permitted to offer or issue any digital tokens in Malaysia.

The commission will work with relevant platform operators in assessing eligible issuers during the first phase of implementation of these guidelines. It is accepting feedback on the regulatory framework until May 15. Malaysia is already regulating the crypto sector and has approved several crypto exchange registrations.

What do you think of Malaysia’s guidelines for token sales? Let us know 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.

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With New Regulations, Europe’s Crypto Companies May Be Running Out of Options

13/01/2020 by Idelto Editor

European crypto companies are finding themselves in a changing regulatory environment. The new realities they have to deal with stem from the fifth edition of the European Union’s anti-money laundering directive. AMLD5 introduces stricter customer due diligence requirements and some in the industry have realized their business models, based on key principles of the crypto space, are hardly sustainable under the new rules.

Also read: EU Countries Commence Crypto Regulations as Mandated by New Directive

Netherlands to Introduce Licensing When New Directive Requires Only Registration

Although the amendments had to be transposed into national law by Jan. 10, 2020, member-states are at different stages of their implementation. The approach to complying with the Pan-European directive also varies between countries with some governments opting to expand their regulatory frameworks beyond what Brussels requires at this point. Several EU nations have indicated this is the direction they want to move in and the Netherlands is one of them.

The new Dutch legislation transposing AMLD5 is yet to enter into force. The bill prepared by the government is more restrictive than the directive requires, Luuk Strijers, CCO at Deribit, told news.Bitcoin.com. The Amsterdam-based crypto derivatives exchange announced recently its decision to relocate to Panama because the “new regulations would put too high barriers for the majority of traders, both – regulatory and cost-wise,” the company detailed on its website.

The Senate of the Netherlands is scheduled to discuss the new law on Jan. 28, 2020. Strijers pointed out that the draft framework has the characteristics of a licensing regime, while AMLD5 dictates the obligation to register instead of obtaining a license. “If Deribit falls under these new regulations, this would mean that we have to demand an extensive amount of information from our current and future customers,” the executive said and emphasized:

We believe that crypto markets should be freely available to most, and the new regulations would put too high barriers for the majority of traders, both – regulatory and cost-wise. The implementation of these changes would greatly affect the exchange and its customers.

Therefore, Deribit have decided to operate their platform out of Panama. From Feb. 10, 2020, it will be assigned to a new entity, DRB Panama Inc., a wholly owned subsidiary of the Dutch company, Deribit B.V. “The team and leadership will remain the same, with John Jansen as the CEO,” noted Luuk Strijers. All open client positions, holdings, equity, trade history, fees, rate limits, wallets, portfolio margin arrangements, and other system settings will be transferred from Deribit B.V. to DRB Panama. The platform’s servers, which will also remain the same, will be moved to London. The Deribit CCO explained:

We considered multiple other (EU) jurisdictions in an elaborate regulatory review performed over the past period and came to the conclusion that Panama is the best option for our clients.

Crypto Companies Can Run but Can They Hide?

Despite the relocation, however, certain changes regarding Deribit’s due diligence procedures will be implemented. “As of Feb. 10, 2020 our new KYC requirements will be applicable to all our clients, so our European clients will have to meet the same requirements as clients from (most of the) other counties in the world,” remarked the company executive. Like up until now, residents and citizens of the United States will not be allowed to trade on the exchange. Clients will have to accept DRB Panama as their new contracting partner under a new set of terms and conditions in order to continue to use the services provided by Deribit.

Although various changes in the global regulatory landscape do not apply to Panama, Deribit will introduce two KYC levels. All current users will initially be registered as Level 0 clients, which comes with some restrictions. Withdrawals will be limited to up to 1 BTC per 24 hours. Providing a passport or other government issued ID will raise user status to Level 1, remove the withdrawal limit and unlock portfolio margining, for example. Deribit will use a solution by Jumio aimed at providing client identity verification and services by blockchain forensics firm Chainalysis to monitor transactions for anti-money laundering purposes, Strijers revealed.

The announcement, the company representative assured, “has received positive response from our clients as it clearly outlines the strategy going forward and addresses concerns they might have had.” Deribit’s decision to change the jurisdiction from which it operates shows that relocation can be a solution, but only a partial one for crypto companies that want to keep their privacy-sensitive clients happy. In a world where most governments abide by global standards adopted by international organizations such as the Financial Action Task Force (FATF) and customers’ residence matters, moving a platform to a different jurisdiction is not likely to bring much change for its users.

In December, U.K. crypto payments provider Bottle Pay announced it’s ceasing operations because of the latest update in the EU’s anti-money laundering regulations, despite raising $2 million in seed funding a few months earlier and expanding its user base significantly. “We have taken the painful decision to shut Bottle Pay down completely rather than become subject to these new regulations,” the company stated in a blog post, explaining that “the amount and type of extra personal information we would be required to collect from our users would alter the current user experience so radically, and so negatively, that we are not willing to force this onto our community.”

Panama is one of the alternative destinations suggested to Bottle Pay by members of their Telegram channel. “How come BottlePay can’t just move operations to a new jurisdiction outside of the UK like say Panama?”, asks one of them. “That’s what I also was curious about. But I guess that even they will gonna move to the different jurisdiction people who would want to use bottle in the Europe through the twitter or whatever will not be allowed to do that,” comments another. “So, Malta certifications will not help”…

“Wow sounds more like prison than citizenship,” the conversation goes on. “Bitsahara sent compliance notices yesterday. I can’t help but think that this is EXACTLY everything crypto was created to fight,” remarks someone else. “Why you don’t want to hire attorney to help avoid this stuff?” queries another member, to which Bottle Pay founder Peter Cheyne replies: “we were working on it for months behind the scenes. so we already pursued those kind of avenues, and the feedback led us to the decision we made last week … the trade offs would have been substantial.”

Several other crypto companies operating in Europe have shut down so far due to the new EU regulations, including crypto mining pool Simplecoin and bitcoin gaming platform Chopcoin. News.Bitcoin.com’s questions about Bottle Pay’s plans for the future are as of yet unanswered by the group at the time of publication. On a positive note, however, the Get Started page on its website currently states: “Effortless Bitcoin payments will be back soon.”

What future do you see for crypto companies in Europe and around the world? Share your thoughts on the subject 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.

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Harsh Laws Make Bitcoin Holders Consider Renunciation or Dual Citizenship

28/12/2019 by Idelto Editor

As digital currencies become a mainstay in society, a great number of governments have enforced strict tax guidelines, severe money transmission rules, and tough regulations. Because of a few nation-states’ harsh rules against cryptos, there are individuals who plan to renounce their citizenship in order to become stateless. Some people will also attempt to get double-citizenship, as both of these acts may help sovereign individuals avoid government intrusion and theft.

Also Read: As FATF Regulations Galvanize, Crypto Mixing Applications Are Targeted

A Cryptocurrency Advocate’s Quest for Financial Sovereignty May Involve Hard Choices

It’s been close to 11 years since the inception of Bitcoin and during the last few years government agencies and law enforcement have been cracking down on digital currency holders. In certain areas around the world, a few countries have extremely difficult crypto laws and stringent capital gains taxes. Countries like the U.S. have imposed strict regulatory guidelines across the cryptocurrency ecosystem and when the FATF “travel” rule applies things are only going to get worse. Despite the fact that a good portion of countries enforce horrible regulations against digital currency use, there are plenty of regions that are far more friendly toward the technology. To some people, in order to combat against overreaching statism, renouncing their citizenship or obtaining a second citizenship to a friendlier area is a great way to escape the wrath of the immoral governments.

Renouncing Your U.S. Citizenship

You can renounce your citizenship in a variety of countries, but the U.S. has seen a significant amount of people relinquishing their citizenship. In fact, since 1998, the number of individuals renouncing their U.S. citizenship has been rising exponentially, year after year. The biggest reason Americans are leaving in large numbers is because of tax laws and the Foreign Account Tax Compliance Act (FATCA). The FATCA rule, a law that combats offshore accounts, initiated across the U.S. in 2010 and ever since then, Americans dropping their citizenship grew significantly. Additionally, the U.S. has shown contempt for digital currency holders forcing them to reconsider citizenship in order to find a region with fewer restrictions.

Renouncing your U.S. citizenship is doable, but the process can be lengthy and costly. American residents must pay 20X the average cost other nation-states charge, which can also vary between $1,000 to $5,000 per individual. The person must settle any unpaid taxes too and any government-based debts. Then after all the money is considered, Americans must relinquish their citizenship by showing intent to an authority figure. You must sign an oath declaring voluntary renunciation and then appear before a U.S. consular.

In addition to the consular or diplomatic officer, you also have to state your intentions to the U.S. embassy. Each and every one of these tasks requires patience and waiting for approval from the authorities. “During the interviews, you will have to elaborate on why you want to renounce your U.S. citizenship,” explains the nomadcapitalist.com’s ultimate guide to renouncing citizenship. The nomadcapitalist.com writer Andrew Henderson explains that the last renunciation he witnessed took about five months to process. However, Henderson notes that despite the length of time it takes, the process is rarely denied.

“The certificate is almost guaranteed,” Henderson writes. “While you do have to factor in the possibility that something wasn’t done correctly on the technical side of your renunciation, it is very rare for renunciation to be rejected once the oath is taken and the forms are submitted.”

Individuals who hold cryptocurrencies and don’t want their hard-earned funds stolen from them may consider dropping their citizenship. A number of people who also believe in individualism and have libertarian beliefs think that the manipulative U.S. state and many other strict nations are becoming far too tyrannical. There are various guides and online walkthroughs that can help people complete the process of renouncing their citizenship. Nomadcapitalist.com offers a wide variety of helpful articles (posted below) to get people started down the path toward renunciation.

How to Renounce Your US Citizenship: The Ultimate Guide
4 Reasons to Renounce US Citizenship
Myths About Giving Up American Citizenship
Will I Lose My Government Benefits by Renouncing US Citizenship?
4 Case Studies for Renouncing US Citizenship
Why and How I Renounced My US Citizenship: My Expatriation Story
The Tax Consequences of Renouncing US Citizenship
The 5 Most Famous People to Renounce US Citizenship
Can I Still Use My US Banks if I Renounce My Citizenship

Obtaining Dual Citizenship

Another act a person might consider is dual citizenship which can also help someone avoid an overstepping government. Before 1967, Americans were not allowed to hold dual citizenship but the law has since changed. Currently, U.S. residents can obtain two citizenships in 42 different countries including Australia, Barbados, Czech Republic, United Kingdom, Switzerland, Sweden, and Iceland. One of the top regions in the world for Americans looking for dual citizenship is the islands of Nevis and St. Kitts. In 2018, the top six dual citizenship countries included Ireland, Israel, Hungary, Italy, Peru, and Macedonia. Nomadcapitalist.com columnist Henderson’s recent report explains in great depth the fastest countries in the world to become a citizen. The cost of dual citizenship can be expensive as some regions require you to purchase a home or donate funds to the country’s government.

Billfold writer Amanda McLoughlin also wrote a comprehensive report on the cost associated with dual citizenship. In order to get her dual citizenship between Ireland and the U.S., one year later after waiting for the process to complete and paying $784 McLoughlin became an Irish citizen. However, other studies show the process can take much longer and be extremely expensive for someone to gain another citizenship.

Cryptocurrency holders may choose dual citizenship in order to enjoy the benefits of quickly traveling and living in two countries. They might be able to avoid some strict laws and maybe figure out how to curb harsh taxation if they live in one area longer than the other. Although, dual citizenship might not be as beneficial as renouncing and there’s a potential for double taxation. Check out the variety of articles hosted on nomadcapitalist.com that explain the process of dual citizenship in great detail.

What Are the Benefits of Dual Citizenship?
Does Dual Citizenship Lower Your Taxes?
Which Countries Allow Dual Citizenship in 2020?
Second Passport: How to Get Dual Citizenship

On September 16-19, 2020, at the Nomad Capitalist conference in Playa del Carmen, Mexico, Bitcoin.com’s Roger Ver will speak about the benefits of Bitcoin Cash (BCH) but also “how to relinquish your U.S. citizenship.” The four-day event may be of interest to crypto holders tired of governments stealing their wealth as the conference will teach participants the benefits of offshore tax strategies, overseas banking, second passports, and a sovereign lifestyle. After all, cryptocurrencies and financial sovereignty go hand in hand.

What do you think about cryptocurrency investors renouncing their citizenship or attempting to obtain dual citizenship to avoid tyrannical governments and strict taxation? Let us know what you think about these topics 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 ideas, concepts, content, goods or services mentioned in this article.

Image credits: Shutterstock, nomadcapitalist.com, Wiki Commons, Fair Use, and Pixabay.

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Poloniex Restores Unverified Accounts With Unlimited Trading

22/12/2019 by Idelto Editor

In times of mounting pressure on crypto companies to comply with expanding due diligence requirements, Poloniex has taken a step in the opposite direction. The exchange is lifting restrictions that applied to unverified users in response to customer demand. New and current accounts will enjoy access to unlimited trading and deposits.

Also read: P2P Crypto Trading App Allows You to Protect Your Privacy

Access for Email-Only Accounts

Over the next few months, the current accounts of unverified customers will be unfrozen and upgraded to Level 1 accounts, the platform announced in a tweet this week. These users will have access to unlimited spot trading and deposits, while withdrawals will be restricted to a daily maximum of $10,000. Starting now, all new customers can create an account using only an email address and password and begin trading, Poloniex revealed in a blog post on the matter, stating:

We’ve heard your feedback time and time again about wanting to use Poloniex without giving up your identity. We’ve wanted to make this a reality for a while now and are sorry it has taken us longer than we’d like.

The new account tier means that anyone who signs up for the exchange from now on will be able to start trading immediately and already existing accounts of unverified users will be gradually upgraded to Level 1. “We know how frustrating your experience has been recently and we’re dedicated to improving that for you,” Poloniex emphasizes, addressing its long-time clients. “We are striving to provide the highest level of support and security possible for customers and appreciate your patience,” the exchange adds, advising customers to activate two-factor authentication as well.

Start trading in seconds 🚀

We just introduced a new account tier for new customers! All you need is an email address and a strong password and you’ll be trading in no time

Sign up now https://t.co/xtiQUcimNE pic.twitter.com/YmtZ2fs1We

— Poloniex Exchange (@Poloniex) December 19, 2019

Swimming Against the Tide

Traders with unverified accounts will enjoy some additional benefits. For example, they will be able to participate in competitions, take advantage of staking services and gain access to Trollbox, the platform’s forum for traders. Level 1 users can also buy cryptocurrency with bank cards. The exchange currently supports dozens of digital coins including leading currencies such as bitcoin core (BTC), bitcoin cash (BCH), ethereum (ETH), and litecoin (LTC) as well as new cryptos like the Mimblewimble-based grin.

Poloniex’s move comes amid a global trend towards implementing stricter know-your-customer (KYC) and anti-money laundering (AML) rules in the crypto space which has been traditionally quite sensitive to privacy infringement. Governments around the world have been introducing more stringent regulations to comply with the crypto standards adopted by the Financial Action Task Force (FATF) and the provisions of the European Fifth Anti-Money Laundering Directive (AMLD5).

These developments have forced established platforms in the industry to change their policies requiring clients to provide detailed personal information and pass extensive verification procedures. Poloniex restores access for unverified accounts after its separation from Circle which bought the trading platform in early 2018. The formerly U.S.-based digital asset exchange was reportedly acquired by an Asian investment group and is now operated by the Seychelles-registered company Polo Digital Assets Ltd. On Nov. 1, the platform terminated trading services for customers residing in the United States.

What’s your opinion about Poloniex’s decision to unfreeze unverified accounts? Tell us what you think about the move 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 third party 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.

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SEC to Boost Access to Crypto Investments With Proposed New Accredited Investor Definition

19/12/2019 by Idelto Editor

The U.S. Securities and Exchange Commission (SEC) has proposed amending the definition of “accredited investor” — a move that will increase access to regulated cryptocurrency investments. A number of them are currently only available to accredited investors. Among other changes, a person can qualify based on professional knowledge, experience, or certifications.

Also read: Lagarde Sees Demand for Stablecoins, Plans to Put ECB ‘Ahead of the Curve’

Modernizing SEC’s Approach

The SEC announced on Wednesday that it has proposed “to update accredited investor definition to increase access to investments,” which would result in more people being able to participate in SEC-regulated private capital markets. “The proposal seeks to update and improve the definition to more effectively identify institutional and individual investors that have the knowledge and expertise to participate in our private capital markets,” the Commission’s announcement reads. Chairman Jay Clayton elaborated:

The current test for individual accredited investor status takes a binary approach to who does and does not qualify based only a person’s income or net worth … Modernization of this approach is long overdue.

The proposal also amends the definition of “qualified institutional buyer” in Rule 144A under the Securities Act of 1933. Certain limited liability companies and rural business investment companies (RBICs) will be added to the types of entities that are eligible for the qualified institutional buyer status. There will also be a “catch-all” category aimed at institutional accredited investors.

New Categories to Be Added

“The proposal would add additional means for individuals to qualify to participate in our private capital markets based on established, clear measures of financial sophistication,” Clayton continued. “I also am pleased that the proposal specifically recognizes that certain organizations, such as tribal governments, should not be restricted from participating in our private capital markets.” The SEC added:

The proposed amendments to the accredited investor definition would add new categories of natural persons based on professional knowledge, experience, or certifications.

According to the proposal, natural persons may “qualify as accredited investors based on certain professional certifications and designations, such as a Series 7, 65 or 82 license, or other credentials issued by an accredited educational institution.”

For private fund investments, there would be “a new category based on the person’s status as a ‘knowledgeable employee’ of the fund.” Other proposed additions include those concerning limited liability companies, registered investment advisers, rural business investment companies, family offices, and spousal equivalent. The SEC is accepting public comments on the proposal for 60 days.

More Eligible Investors for Crypto Investments

While the SEC has not approved any bitcoin exchange-traded funds (ETFs), a number of crypto investments are available to accredited investors. According to the SEC’s current definition, an accredited investor includes:

Anyone who earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, or has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).

Among crypto investments available only to accredited investors are those offered by Bitwise Asset Management. “Investors must be accredited and U.S.-based,” the company’s website notes. Bitwise had a proposed rule change filed with the SEC for a bitcoin ETF called Bitwise Bitcoin ETF but it was rejected in October. However, that decision is currently under review.

Another company with crypto investment products for accredited investors is Grayscale Investments. Its website explains that products offered are private investment vehicles that are not registered with the SEC or any other regulatory agencies, adding that their offerings are “made only to certain qualified investors who are ‘accredited investors’ as defined under Regulation D of the Securities Act of 1933.”

What do you think of the SEC amending the definition of “accredited investor”? Let us know in the comments section below.

Images courtesy of Shutterstock.

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