Regulation

South African Regulator Apologizes to Crypto Firm After Issuing Then Withdrawing a Warning in Less Than 24 Hours

09/05/2021 by Idelto Editor

South Africa’s Financial Sector Conduct Authority (FSCA) has apologized to a Cape Town-based crypto start, Ovex, less than 24 hours after warning that the firm was operating outside the law.

Ovex Does Not Require Licence From FSCA

In its May 7 retraction, the financial watchdog said the findings of an investigation into Ovex, which specializes in crypto arbitrage services, suggest that the firm is operating outside the FSCA’s purview. The statement says:

Based on the information provided by Ovex we are satisfied that Ovex does not currently require a licence from the FSCA, as its business activities fall outside the current jurisdiction of the FSCA. The previous media release has been retracted.

Meanwhile, the FSCA’s about-face comes after its head of enforcement, Brandon Topham, was quoted in the local media defending the regulator’s initial handling of the matter. Responding to a media inquiry, Topham admitted that the issuing of the warning did not mean Ovex was “operating unlawfully.” Instead, the warning statement, according to Topham, was intended to urge the investing public to be cautious when dealing with Ovex “as they are making claims of returns.”

However, according to a report, the FSCA executive did admit at the time that the regulator might have “jumped the gun” and that an amendment to its warning statement would be made once more information was obtained.

Regulator Panic

In the meantime, the same report also carried Ovex’s initial response to the “damaging” warning that it said was “issued without giving the company time to respond to questions sent earlier in the week.” In its statement, Ovex said:

It seems [as if] there may have been panic, and the announcement was made without proper process. Ovex always acts in a 100% compliant, legal, and ethical manner, seeking legal and compliance advice with every action.

The crypto firm also said it had stopped its advertising campaign until this issue was resolved and that it expected the FSCA to issue a full retraction.

What do you think of the FSCA’s withdrawal of the public warning against Ovex? Tell us what you in the comments section below.

Iran Warns Crypto Investors Amid Ban on Bitcoin Mined Outside Its Borders

08/05/2021 by Idelto Editor

The Central Bank of Iran has issued a warning against unrestrained crypto trading and reminded investors that only cryptocurrencies minted by licensed miners in the Islamic Republic can be used under limited circumstances. Traders will bear full responsibility for the risks, the bank cautioned, although spending crypto on imports through approved banks and exchanges remains legal.

Central Bank of Iran Speaks Against Crypto Investments Despite Plunging Stock Market

The popularity of cryptocurrencies among Iranians has grown significantly with the rising prices of the decentralized assets in recent months, Fars News Agency noted in a report. Crypto trading platforms have taken advantage of the volatile state of the Iranian stock market, where deals have seen a remarkable decline since last summer. Quoted by ILNA, a member of the High Council of Securities and Exchange which governs the stock market, Mohsen Alizadeh, noted:

The capital outflow is traceable. Liquidity has flown into parallel markets, including digital currency.

According to his figures, 1,500 trillion rials of capital, or $7 billion, has left the Iranian stock market through major shareholders and institutional traders. The Financial Tribune reported that the main index of the Tehran Stock Exchange, TEDPIX, has dropped 50% in the past few months. On this backdrop, the Central Bank of Iran has now recommended that Iranians avoid dealing in cryptocurrency, warning them that crypto investments would be at their own risk.

The CBI has effectively banned the use of foreign-mined cryptocurrencies. In the statement released this week, the financial authority reminded the Iranian public of an earlier government decision, according to which only cryptocurrencies mined in Iran, and in accordance with the law, can be transferred. “Authorized money exchangers and banks can settle forex payments intended for imports through the cryptocurrencies mined inside the country,” detailed the announcement, quoted by Fars.

In April, the CBI permitted the use of decentralized money in cross-border payments to foreign suppliers in accordance with its guidelines. The cryptocurrency spent on imports has to be provided by crypto miners operating in Iran. The mining entities must be licensed by the Ministry of Industry, Mines, and Trade, the institution emphasized.

New Rules and Regulations Apply to Crypto Trading

A report quoted by Bitcoin.com News in April revealed that lenders and licensed currency exchange offices have been notified about the crypto payment regulations. The Central Bank of Iran has adopted the new policy in an attempt to circumvent, or at least minimize the impact of sanctions imposed by the U.S. on Iranian financial transactions with the rest of the world.

The latest CBI announcement suggests that the same rules apply to cryptocurrency trading. “The Central Bank announced that according to the decision of the Cabinet, trading of digital currencies extracted abroad is prohibited and only currencies extracted inside the country can be traded,” reads the unedited English translation of a Farsi tweet by the Iran International news channel.

The CBI is also mulling the launch of its own central bank digital currency (CBDC). Earlier this year, it revealed it’s reviewing different options to issue a digital rial and studying similar projects in countries such as China and the Russian Federation. At the same time, the bank reaffirmed its commitment to implementing laws aimed at curbing money laundering. In January, Governor Abdolnaser Hemmati vowed that the CBI will continue to implement regulations limiting financial transactions through anonymous accounts.

What do you think about Iran’s warning against crypto investments and the ban on the use of cryptocurrency mined abroad? Tell us in the comments section below.

Kenyan Capital Markets Regulator Wants Better Coordination With Other Bodies When Testing Crypto Assets

07/05/2021 by Idelto Editor

Kenya’s Capital Markets Authority (CMA) says the country needs a more encompassing approach that enables it to leverage other regulators’ expertise when testing crypto assets.

Kenyan Crypto Interest

Also, the Kenyan body, which favours a joint financial sector regulatory sandbox, says it is keen to forge “a common stance and joint-messaging with the Central Bank of Kenya (CBK)” when it comes to cryptos.

The CMA’s latest commentary on cryptocurrencies follows the release of the Capital Markets Soundness report of Q1, 2021. According to the quarterly report, which itself relies on the Chainalysis 2020 Geography of Cryptocurrency Report, Kenya “is the top 5 in global crypto-trading activity.” The country’s interest in cryptos is also reaffirmed by a Blockchainnenter.net report which places Kenya’s bitcoin search interest at 94.7%.

Investor Protection Mandate

Yet, despite this acknowledgment of crypto assets’ growing popularity, the Kenyan regulator insists it still has an investor protection mandate to uphold. Concerning its position on this, the regulator says:

This an area of keen interest to the Authority given its investor protection mandate also given the prevalence of scams on this front.

While the CMA concedes that many Kenyans consider cryptocurrencies “an alternative investment class”, it nevertheless insists that such digital assets are now an “area of interest” since they will likely “impact the soundness of Kenya’s capital market.”

With this latest report, the CMA becomes the latest African regulatory body to reiterate an earlier position on crypto assets. Another African regulator to recently restate its stance on cryptocurrencies is Ghana’s Securities and Exchange Commission. As reported by Bitcoin.com News, this regulator wants Ghanaians to stay away from cryptocurrencies. Similarly, Nigerian regulators have issued several statements warning residents of the risks of trading in cryptocurrencies.

What are your thoughts on the latest statements by Kenya’s CMA concerning crypto assets? You can share your views in the comments section below.

SEC Chairman: Bitcoin Is Store Of Value But Needs Greater Investor Protection

07/05/2021 by Idelto Editor

SEC Chairman Gary Gensler recently recognized bitcoin’s value but called for greater investor protection through increased regulation.

Gary Gensler, the new head of the U.S. Securities and Exchange Commission (SEC), told CNBC that he recognizes bitcoin as a “scarce store of value,” distinct from other “crypto tokens” which “are indeed securities.” But he also alluded to a perceived need for additional regulations around its investment and use.

“It’s a digital, scarce store of value, but highly volatile,” Gensler told CNBC. “And there’s investors that want to trade that, and trade that for its volatility, in some cases just because it is lower correlation with other markets. I think that we need greater investor protection there.”

According to Gensler, such investor protection would be similar to what is currently in place in stock and futures exchanges. In addition, he believes there needs to be an authority that brings “anti-fraud and anti-manipulation authority … to the crypto exchanges.”

Gensler, who has taught blockchain and cryptocurrency classes at the Massachusetts Institute of Technology (MIT), later added that he believes the SEC should be “technology neutral” when it comes to market innovations.

“We need to update and freshen our rules to ensure that, while retail investors and any individual has First Amendment rights to speak and so forth, that they’re not misleading the public, they’re not manipulating the public, manipulating the markets,” he said.

The extent of the regulation that Gensler is calling for is unclear. However, the typically-skeptical Bitcoin community could see this as a sign that increased governmental intervention in bitcoin is forthcoming, which could hurt bitcoin adoption and ultimately be detrimental to the U.S. economy and its technological innovation ethos.

Iran Reportedly Bans Trading Of Bitcoin Mined Abroad

07/05/2021 by Idelto Editor

The Central Bank of Iran has reportedly banned its citizens from trading bitcoin mined outside of the country in an attempt to stop capital flight.

According to an announcement shared by Iran International, the Central Bank of Iran (CBI) has banned its citizens from trading bitcoin and other cryptocurrencies mined in foreign countries.

Fatemeh Fannizadeh, a Swiss qualified independent lawyer and advisor on blockchain technology and cryptocurrencies, believes this move by the CBI is an attempt to stop capital flight from Iran.

“Crypto is already regulated in Iran … this just means that Iran wants to export Iranian produced coins more aggressively, encourage mining, and counter capital flight in the face of a depreciating Rial,” Fannizadeh shared on Twitter.

The rial, Iran’s fiat currency, has experienced severe depreciation recently, hitting a record low against the dollar in 2020. Therefore, it seems reasonable that the CBI would act with protectionism on its currency and economy from a monetary standpoint.

Interestingly, the move makes it seems as if the CBI is treating bitcoin mining and trading as regular commodity activities. As a result, the central bank is attempting to maximize exports and minimize imports to favor Iran’s balance of trade, which has been suffering since the pandemic broke out.

Bitcoin, and bitcoin mining in particular, hold unique status in Iran compared to any other country on earth. Access to subsidized power would theoretically make it a great location to mine BTC, but local officials have offered mixed regulations that encourage and discourage the practice. Most recently, Iran has attempted to control the bitcoin mining industry, requiring that mining operations be officially sanctioned and then allowing these miners to use the resulting bitcoin to pay for imports. Cryptocurrencies like bitcoin can be powerful tools to help Iran circumvent international economic sanctions.

But such protectionism, like this reported ban, doesn’t seem very enforceable for Bitcoin users. Given that Bitcoin emission is decentralized and uncensorable, it is unclear how the central bank would enforce these restrictions.