Regulation

International Law Enforcement Conference Addresses Crypto and the ‘Criminal Economy’

15/11/2019 by Idelto Editor

The 2019 National Proceeds of Crime Conference (NPOCC) held in Brisbane, Australia from November 13-15 addressed “Globalisation and Digitisation of the Criminal Economy,” and featured 200+ delegates hearing from representatives of organizations such as the Australian Federal Police, Singapore and New Zealand police, United States Department of Justice, and the Australian Criminal Intelligence Commission. The conference set out to address how to better seize criminal profits and face challenges to law enforcement presented by the darknet and cryptocurrencies like bitcoin.

Also Read: FBI Says Bitcoin Concern Is Getting ‘Bigger and Bigger’

Addressing Crypto Crime

Justine Gough, Acting Assistant Commissioner for the Australian Federal Police (AFP), stated that “Advances in technology, like cryptocurrency and encrypted communications have changed the way criminals acquire and hide their assets” and that “Seizing and removing the profits of crime is one of the most effective capabilities we have in impacting organised criminal networks.”

The international conference, which aimed to address such topics as “the Darknet, trends in money laundering, collaboration in investigations; evidence collection in an age of cloud-based data and the monetisation of cybercrime” focused on how relevant organizations respond to crime in an age where cryptography and digital assets like bitcoin have enabled greater efficiency in skirting law enforcement. The push echoes recent sentiment from the U.S. Federal Bureau of Investigation (FBI) whose director Christopher Wray claimed problems presented by such technologies are getting “bigger and bigger.”

Money Laundering and the Darknet

Since the takedown of infamous darknet marketplace Silk Road in 2013, bitcoin and crypto have been in the mainstream media spotlight, and in the sights of law enforcement and financial regulators worldwide when it comes to money laundering and illegal activities. U.S. Treasury Secretary Steven Mnuchin has claimed that bitcoin and crypto are a “risk to the financial system” while pushing back against the idea that the world reserve U.S. dollar is used comparably. “I don’t think it’s been successfully done with cash. I’ll push back on that. We’re going to make sure that bitcoin doesn’t become the equivalent of Swiss-numbered bank accounts,” Mnuchin stated in July.

AFP Acting Assistant Commissioner Gough says of the NPOCC:

We are honoured to have representatives from law enforcement, government departments and private enterprise … share their insights and to collaborate on how we respond to emerging technologies like cryptocurrency.

The response has already been swift and formidable. From numerous arrests of those transacting and trading in crypto — both criminal and non-criminal elements alike — to powerful tax agencies like the IRS issuing thousands of warning letters to potential crypto non-filers and money launderers, it’s clear law enforcement worldwide means business. The question of what kind of similar enterprise in trafficking, money laundering and tax evasion is being done with the almighty USD remains noticeably off the table, however.

Worldwide Enforcement Efforts

It will be interesting to hear the conclusions of this week’s Brisbane conference, and to see what developments proceed from the talks on monetization of cybercrime via crypto. Already global policymakers and joint enforcement initiatives such as the Financial Action Task Force (FATF) and the Joint Chiefs of Global Tax Enforcement (J5) are working to broaden the intelligence and enforcement dragnet for targeting unauthorized and permissionless financial activity worldwide. As the NPOCC’s problematic “Digitisation of the Criminal Economy” continues, the crypto space can expect even more scrutiny and heightened KYC/AML compliance measures in 2020.

What are your thoughts on the NPOCC conference? Let us know in the comments section below.

Image credits: Shutterstock.

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Indian Government Delays Introducing Crypto Bill

15/11/2019 by Idelto Editor

Indian Government Delays Introducing Cryptocurrency Bill

The Indian government previously told the supreme court that the country’s cryptocurrency bill may be introduced in the Winter session of parliament. However, the crypto bill is not included in the agenda published by Lok Sabha, the lower house of India’s parliament. This gives the community a sigh of relief as many have been campaigning to convince the government to reevaluate the bill.

Also read: Indian Supreme Court Postpones Crypto Case to November, New Date Confirmed

‘Great News’ – Crypto Bill Delayed

The government of India has been deliberating on a draft bill entitled “Banning of Cryptocurrency & Regulation of Official Digital Currency Bill 2019.” The government told the country’s supreme court in August that this bill may be introduced in the Winter session of parliament. However, Lok Sabha, the lower house of the Indian parliament, published the agenda for the Winter session on Thursday which does not include the cryptocurrency bill. Sohail Merchant, CEO of local crypto exchange Pocketbits, remarked on Friday:

Draft bill for banning of crypto is not on the agenda for [the] parliament Winter session. Relief for now, but use this time to come together and present our case to the regulators.

The Winter session starts on Nov. 18 and ends on Dec. 13. Nischal Shetty, CEO of Wazirx crypto exchange, tweeted: “Great news for the crypto ecosystem of India. The draft crypto banning bill will not be included in the upcoming parliament session of November 2019. Great to see [the] Indian government not rushing into this. They’re listening.”

The bill to ban all cryptocurrencies except state-issued ones was drafted by an interministerial committee (IMC) headed by former Secretary of the Department of Economic Affairs Subhash Chandra Garg. It was submitted to the Ministry of Finance in February and made public in July. Following the government’s indication that it planned to introduce this bill in the Winter session of parliament, the supreme court postponed hearing all writ petitions relating to the country’s crypto policies to January next year.

Community Forming One Voice

Since the bill was made public, the Indian crypto community has been tirelessly campaigning for the government to reconsider the recommendations, emphasizing that the bill is flawed. Pocketbits’ CEO also urged all stakeholders in the crypto industry to “Forget competition/ego & echo our thoughts with a single voice.”

A number of crypto stakeholders gathered earlier this month at an event called “Unwind With Crypto.” It was hosted by local crypto exchange Coindcx. The exchange described that the goal of the meeting was to “bring all the important stakeholders in the crypto industry together and build a stronger global community.” Noting that “The event was attended by the pioneers of the crypto and the blockchain industry who have taken India’s crypto competence to the global stage,” the exchange revealed that attendees included representatives from Crypto Kanoon, Matic Network, Marlin Protocol, Woodstock Fund, Cashaa, Hard Fork, as well as top exchanges including Wazirx and Delta.

Crypto Kanoon’s Kashif Raza commented, “It is unfortunate that despite our community’s utmost efforts, the central bank still seems confused regarding the widespread power of crypto assets.”

“The members attending committed to having a larger discussion and engage more in the weeks to come,” Coindcx CEO Sumit Gupta told news.Bitcoin.com. “A set of more meetings have been planned to decide the modus operandi. Another event that we are planning is around engaging with the journalists in the finance and business domain to present a fair picture.” Confirming that the next meeting is scheduled for December, he elaborated:

All members present committed time for more such meetings and a lot of backdoor meetings are already underway.

Meanwhile, Shetty has been running a social media campaign calling for positive crypto regulation which he started 379 days ago. Furthermore, the supreme court is scheduled to hear the writ petitions challenging the banking restrictions by the central bank, the Reserve Bank of India (RBI), on Nov. 19.

When do you think the Indian government will introduce a crypto bill? Do you think the Indian crypto community will be able to convince the government to not ban cryptocurrencies? Let us know in the comments section below.

Images courtesy of Shutterstock, Lok Sabha, and Coindcx.

Did you know you can buy and sell BCH privately using our noncustodial, peer-to-peer Local Bitcoin Cash trading platform? The local.Bitcoin.com marketplace has thousands of participants from all around the world trading BCH right now. And if you need a bitcoin wallet to securely store your coins, you can download one from us here.

The post Indian Government Delays Introducing Crypto Bill appeared first on Bitcoin News.

Ohio Attorney General Finds State Crypto Program Illegal

14/11/2019 by Idelto Editor

The Attorney General of the U.S. state of Ohio has assessed the state’s crypto program and concluded that it is a legal violation of state law. The state’s former treasurer skirted the law to launch a website that allowed 23 types of tax payments in cryptocurrency ahead of other states.

Also read: US State of Ohio Accepts Bitcoin for 23 Types of Taxes

Ohio’s Crypto Program Violates State Law

The U.S. state of Ohio made headlines last year when it began accepting cryptocurrencies for 23 types of tax payments. The crypto program was launched by former Treasurer Josh Mandel before he left office. He set up the Ohiocrypto.com website, operated by the treasurer, to allow tax payments in cryptocurrencies through Bitpay. In January, Mandel was succeeded by Robert Sprague as the state treasurer.

Last month, an internal review raised some legal issues regarding the Ohiocrypto website and the State Board of Deposit proceeded to request the opinion of Attorney General Dave Yost regarding whether Ohiocrypto.com is a financial transaction device subject to the requirement of R.C. 113.40. Sprague shut down the state’s crypto program pending Yost’s opinion.

After evaluation, Yost wrote a letter to Sprague on Nov. 5 declaring his legal assessment of the situation. Noting that “No other statute gives the treasurer authority to use Ohiocrypto.com to collect state taxes,” Yost wrote:

I conclude that Ohiocrypto.com is a financial transaction device, and that it cannot be
used without first being approved by the Board of Deposit.

This means the treasurer must obtain approval from the State Board of Deposit before using the website to collect state taxes. The deposit board has three members: the treasurer who also serves as the chairman of the board, Auditor of State Keith Faber, and Yost. With the attorney general’s legal opinion, the board will now decide what to do about the program. However, at press time, no meeting has been scheduled to discuss this matter.

The Associated Press reported on Wednesday that “Republican Attorney General Dave Yost found then-Treasurer Josh Mandel skirted state law when he launched the Ohiocrypto.com website last year for business tax payments.” The publication added that Dave O’Neil, a spokesman for Yost’s office, clarified that “the opinion on Ohiocrypto.com was advisory in nature, so it would not be appropriate to refer it to law enforcement, despite the finding of a legal violation.”

Paying Ohio Taxes Via Bitpay

When former Treasurer Mandel launched the crypto program in November last year, he said that Ohio was the first state to accept tax payments via cryptocurrency and that it would help the state become a leader in embracing blockchain technology. However, the program did not take off. Sprague recently revealed that, in the 10 months that the website operated, fewer than 10 businesses chose to pay their taxes using cryptocurrency.

Yost explained in his letter that taxpayers wanting to pay in cryptocurrency on Ohiocrypto.com did not pay the treasury directly and at no point did the state treasury actually hold digital coins. Yost, who became Ohio’s 51st Attorney General in January after serving as the 32nd Auditor of State, detailed:

The former treasurer contracted with a third-party company, Bitpay Inc., to process the payments. The taxpayer paid Bitpay in cryptocurrency. Bitpay settled the payment, converted the payment to U.S. dollars, and then paid the treasurer in U.S. dollars.

He added that Bitpay charged a fee for its service which was passed on to taxpayers, noting that payments were ultimately settled using an automated clearing house process between Bitpay and a bank account maintained by the treasurer.

What do you think of Ohio’s crypto program and the state attorney general’s assessment? Let us know in the comments section below.

Images courtesy of Shutterstock and the state of Ohio.

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Russia Prepares Law to Allow Cryptocurrency Confiscation

08/11/2019 by Idelto Editor

According to local reports, Russia’s Ministry of Internal Affairs and other law enforcement agencies are developing proposals to confiscate cryptocurrencies. These proposals could evolve into Russian laws as soon as 2021.

“Russia plans to develop a legal mechanism for the seizure of virtual assets for their confiscation,” according to a translated report from RBC. “The relevant proposals should be prepared by December 31, 2021 by the Ministry of Internal Affairs together with [federal financial monitoring branch] Rosfinmonitoring, the Prosecutor General’s Office, the Investigative Committee, the Justice Ministry … the Federal Customs Service and the Federal Security Service with the participation of the Supreme Court.”

Decentralized, blockchain-based cryptocurrencies like bitcoin would be very difficult, if not impossible, to confiscate. The initial report did not elaborate on how, specifically, the government would seize cryptocurrency under a new regulation.

Russia and Cryptocurrency Regulation

Many Russians have a positive relationship with cryptocurrencies. Ironically, even the government has had its hand in blockchain- and cryptocurrency-based initiatives.

President Vladimir Putin met with Ethereum co-founder Vitalik Buterin in June 2017, leading many to believe it was a signal of support for digital currencies from the Kremlin. The president also attended the St. Petersburg International Economic Forum that same month, where he claimed that enhancing the Russian economy and increasing average income could be achieved through the adoption and acceptance of “innovative technologies.” One of Putin’s aides leased an abandoned aluminum plant located in northern Russia to a Bitcoin mining company.

However, regulation around cryptocurrencies in Russia has been a tad murky.

In May 2019, local news medium Fontanka reported that Dmitry Medvedev, the Russian prime minister, had dismissed the issue of regulating cryptocurrency. While speaking at a legal conference in St. Petersburg, the lawmaker had explained that cryptocurrency may have lost its appeal to the masses.

“Nowadays, the popularity of cryptocurrency has decreased, and regulatory issues may not be so relevant,” he argued.

So, those who advocated for regulations believed that Russia would get its day when crypto prices rose again. And prices did rise. Bitcoin surged to about $13,500 in June 2019, but this didn’t move the Russian government, as many had expected, to regulate the sector.

But some progress toward cryptocurrency regulation clarity in Russia was made this year.

Called Russia’s “digital rights act,” it defines smart contracts and digital tokens in a legal sense. Whether it was due to the involvement of his aides or just a fascination with the technology, President Putin seemed ready to open Russia’s doors to the innovative technologies that he touted in St. Petersburg.

Cryptocurrency Regulation as an Effort to Fight Crime in Russia

However, any cordial relationship between cryptocurrencies and the Russian government appears to be fraying. And this may be exacerbated by the fact that some high-profile crimes in the country have been connected to cryptocurrency.

On November 4, 2019, police in St. Petersburg reportedly got an anonymous letter from a man who threatened to set off explosives at several train stations across the country if he wasn’t paid 50 BTC (worth about $460,000 at press time).

In October 2019, Denis Baykov, a maintenance worker at a nuclear warhead facility in the western town of Sarov, was handed a $7,000 fine after he and two of his co-workers were found trying to mine bitcoin with the facility’s supercomputer. The Sarov nuclear plant is registered as a state secret, and by connecting the supercomputer to the internet, the three men risked compromising the facility’s security to hackers and other external threats.

But instead of reversing the progress that Russia has made with regulations or banning cryptocurrencies (in the way countries like China and India have), the Kremlin is now looking to ensure complete oversight and control over their use.

Can Russia Really Confiscate Cryptocurrencies?

Konstantin Golikov, co-owner and CEO of digital rewards platform DailyRich, explained to RBC that success in a government-led initiative to confiscate cryptocurrencies would require clear regulations on how it classifies digital assets. This may allow cryptocurrency-based businesses to operate more easily in the country.

“If law enforcement agencies begin to discuss the forfeiture of cryptocurrency, then, in fact, they are launching a mechanism for legalizing cryptocurrency on the territory of Russia,” he said, adding that, while the Russian Central Bank might resist this, there are already many precedents for cryptocurrency seizure by a court decision.

As for the prospect of going through with confiscation, there are still plenty of questions. As RBC noted, cryptocurrencies are generally kept on exchanges or in private wallets. These assets can’t be taken by anyone without access to the wallets, and in most cases, only the owners (and perhaps the asset custodians) have access to them.

If the government wants to get its hands on these assets when it pleases, it may require the cooperation of asset holders. In any case, this effort would have to be preceded by more regulatory clarity.

The post Russia Prepares Law to Allow Cryptocurrency Confiscation appeared first on Bitcoin Magazine.

FBI Says Bitcoin Concern Is Getting ‘Bigger and Bigger’

07/11/2019 by Idelto Editor

In a recent U.S. Senate Committee on Homeland Security And Governmental Affairs hearing, Senator Mitt Romney expressed concerns about Bitcoin’s potential as a threat to national security. Federal Bureau of Investigation (FBI) Director Christopher Wray replied that cryptocurrency is a concern that’s “going to become a bigger and bigger one.”

Also Read: Crypto Secularizes Wealth by Returning Power to the People

What Mitt Doesn’t Know Might Affect Crypto

As more nations begin to experiment with or talk about development of their own central bank digital currencies (CBDCs), and regulation of crypto in general, the topic of truly permissionless crypto like bitcoin is becoming hotly debated. According to a report from Forbes, the Republican senator from Utah was admittedly in the dark about the nature of cryptocurrencies, but nonetheless concerned at the hearing Tuesday. Addressing Homeland Security, National Counterterrorism Center and FBI leaders, Romney stated:

I’m not in the Banking Committee. I don’t begin to understand how cryptocurrency works. I would think it is more difficult to carry out your work when we can’t follow the money because the money is hidden from us…

The FBI Director noted that the agency views crypto “from an investigative perspective including tools that we have to try to follow the money.” Though citing the increasing efficiency with which criminals are able to utilize emergent tech and anonymizing tools, Wray was nonetheless reticent to commit to any statements about proposed regulations saying, “Well certainly for us cryptocurrency is already a significant issue and we can project out pretty easily that it’s going to become a bigger and bigger one. Whether or not that is the subject of some kind of regulation as the response is harder for me to speak to.”

Libra, Permissionless Money, and CBDCs

As Facebook’s ongoing battle for Libra seems to demonstrate, U.S. regulators are in no hurry to let just anybody come out with their own digital money. Even some generally opposed to Facebook couldn’t help but take small pity on CEO Mark Zuckerberg as he faced an hours-long bipartisan grilling at an October 23 hearing. Questioned on Facebook’s record of invading user privacy and other shortcomings, Zuckerberg put forth his case, stating of Libra:

The vision here is to make it so that people can send money to each other as easily and cheaply as it is sending a text message.

The topic of easy-to-use digital money is gaining popular currency these days, and even central banks are jumping on the bandwagon. There is political pressure being applied by lawmakers to U.S. Federal Reserve Chairman Jerome Powell, urging openness to the possible development of a U.S. digital currency, and at least 40 other countries working on or considering the development of digital currencies worldwide, according to a study by the Bank of International Settlements.

While central bank digital currencies and Libra are both in the spotlight, the real focus of much government unease seems to be around bitcoin and other decentralized, permissionless variations of digital money. Romney, like other lawmakers in the nation, is concerned with compliance and crime. While CBDCs would be easily monitored and centrally controlled, making things like money laundering and tax evasion challenging, permissionless crypto enables easier disobedience to established laws. Romney stated at the recent hearing “[I] wonder whether there should not be some kind of effort taken in our nation to deal with cryptocurrency.”

What are your thoughts on Romney and the FBI’s remarks? Let us know in the comments section below.

Image credits: Shutterstock, Aaron-Schwartz, fair use.

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