Tag: politics

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Rigid oversight of the blockchain technology is akin to killing its “golden goose,” former US President Bill Clinton stressed in a cryptocurrency industry conference.

“You end up killing the goose that laid the golden egg,” Clinton told attendees of Ripple’s Swell conference in San Francisco, California.

The ex-American president pointed out the “disparity of access” to new technologies such as blockchain since they develop and grow. He also noted the emergence of e-commerce solutions in the late 1990s as a parallel.

“The more you develop new technologies like blockchain … AI technologies, robotic technologies … the more the disparity of access is going to be felt,” Clinton said.

Echoing sentiments of some industry players, Clinton also emphasized that new technologies tend to be abused. For instance, terrorists or other perpetrators can use digital currencies to stage various criminal acts including money laundering.

“You don’t want consumer fraud, you don’t want to finance criminal enterprises, and you certainly don’t want to make it easier to pull off severe attacks by terrorists. That’s the challenge of each new technology,” he added.

Clinton, referring to concerns over technologies such as Global Positioning System (GPS), noted “there needs to be an intelligent effort to identify the downsides” and that “you can’t apply [an] old regulatory regime to a new technology.”

When it comes to blockchain, Clinton stated the entire blockchain hullabaloo “has the potential it does only because it is applicable across national borders, income groups. The permutations and possibilities are staggeringly great. But we could ruin it all by negative identity politics and economic and social policy.”

Clinton, joined by Gene Sperling, a former White House advisor who is one of Ripple’s board of directors, took the stage to offer a handful of advice to the country’s legislators seeking to put a strain on the nascent technology by imposing a much more rigid supervision.

During the question-and-answer portion with Sperling, Clinton tackled various topics such as the cybersecurity challenges facing the American government. He also touched on subjects seemingly beyond the financial technology conference like gun laws, foreign policy, and his recently published novel.

He was the 42nd President of the United States from 1993 to 2001 who served during the internet’s transition from the technological fringe to the commercial mainstream.

Ripple has been particularly enthusiastic in making rounds into establishment circles in recent months. Recently, it was reported that the startup and other entities had instituted the Securing America’s Internet of Value Coalition (SAIV), an advocacy group that would pay its DC lobbying firm partially in XRP.

SAIV will intend to promote “a vision of a fair and equitable Internet of Value,” standard and consistent rules for all major protocols, clarification of custodian rules and “fair and equitable IRS regulations for capital gains, assets and charitable contributions.”

Some of its members include RippleWorks Foundation; Coil, a company developing a solution for digital payments; Hard Yaka, an investment company working on digital assets; and PolySign, a company wanting to be a crypto custodian.

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Nine bitcoin-backed exchange-traded fund (ETFs) are awaiting the Securities and Exchange Commission’s (SEC) green light as the US watchdog is slated to decide on these ETF proposals in the coming weeks or months.

Based on public records, SEC officials are currently deliberating on 10 bitcoin-related funds although the bitcoin ETF backed by blockchain startup SolidX and investment firm VanEck are the only physical fund among all the applications. Aside from the SolidX-VanEck proposal, which was submitted in June, other submissions from ProShares, Direxion and GraniteShares are still pending before the American regulator.

The SEC had scheduled the deadline at the time the proposals are published in the US Federal Register, with initial decision to be promulgated within 45 days. Then, it has the discretion to delay its final decisions to about 240 days upon the publication of these filings in the federal records. The deadline to decide on two funds from ProShares is set on August 23. The rule change giving an avenue for those products was filed by NYSE Arca.

The regulator is expected to rule on bitcoin ETFs as early as September 15, the date by which two ETFs from GraniteShares will either be approved or rejected. For Direxion’s four funds, the deadline is set on September 21.

Earlier, the SEC deferred its ruling on a proposed rule form the Cboe BZX Exchange which would allow listing a bitcoin ETF. In its order issued last month, the officials said they wanted more time to deliberate on the suggestion to have such an ETF in the United States that, if approved, would become the first of its kind in the country.

“Accordingly, the Commission… designates September 30, 2018, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change,” the SEC said at that time.

Over 100 comments were submitted in the middle of July this year for the proposed rule change.

In July, the SEC upheld its March 2017 verdict affirming the rejection of the planned bitcoin ETF by investors Cameron and Tyler Winklevoss. It emphasized the decision was based on the structure of the proposal, not a judgment against blockchain and virtual currencies.

“Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because, as discussed in detail below, BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices,” the SEC explained.

“For example, existing or newly created bitcoin futures markets may achieve significant size, and an ETP listing exchange may be able to demonstrate in a proposed rule change that it will be able to address the risk of fraud and manipulation by sharing surveillance information with a regulated market of significant size related to bitcoin, as well as, where appropriate, with the spot markets underlying relevant bitcoin derivatives,” the agency added.

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India’s highest court is deferring the deliberation on the central bank’s decision to prohibit financial institutions from facilitating any transactions with cryptocurrency firms.

The three-judge bench of the Supreme Court of India has scheduled the final hearing on the Reserve Bank of India’s (RBI) crypto ban to September 11, according to a report by Inc42. “The Supreme Court is likely to dispose of the case on September 11, after hearing the arguments from both the parties,” the local report said, quoting Rashmi Deshpande, an associate partner of Khaitan and Co., who represents Kali Digital.

Judges handling the case want all arguments and submissions from both the RBI and the oppositors to be submitted on that day.

“Our expectation is that the hearing will be on the basis of merit where we get to present the case on why the RBI circular is unconstitutional and should be quashed,” Deshpande said.

Such a circular from the Indian central bank would be a loss for the Indian market and its clients, according to Gopal Subramaniam, senior advocate representing the Internet and Mobile Association of India (IAMAI).

“The bench seemed receptive. We hope to get a longer hearing from the bench on the next hearing,” Abhishek G, co-founder and chief executive officer of Indian cryptocurrency Exchange ThroughBit, said.

“The policy of RBI is of extreme caution,” Bar and Bench reported, quoting a senior advocate representing the RBI, adding virtual currencies could solicit illegal transactions.

In April, the RBI announced that all regulated financial institutions were barred from providing services to crypto exchanges and enterprises. They were given three months to ditch their dealings with such crypto entities that will begin from the ban’s imposition on July 6.

Earlier this month, the country’s highest court backed the RBI ban on transactions between crypto bourses and regulated financial companies.

“It has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling [cryptocurrencies]. Regulated entities which already provide such services shall exit the relationship within a specified time,” the RBI had said in a statement.

In an earlier court proceeding, the Indian central bank had argued that digital coins such as bitcoin and ethereum cannot be classified as currency in the country since the existing laws require coins to be created using metal and to have a stamp by the government.

The central bank announced a creation of a group studying the likelihood of issuing its own virtual currencies.

“Rapid changes in the landscape of the payments industry along with factors such as [the] emergence of private digital tokens and the rising costs of managing fiat paper/metallic money have led central banks around the world to explore the option of introducing fiat digital currencies,” the RBI said at that time.

“While many central banks are still engaged in the debate, an inter-departmental group has been constituted by the Reserve Bank to study and provide guidance on the desirability and feasibility to introduce a central bank digital currency,” it added.

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The US Congress should come up with potential legislative actions pertaining to cryptocurrencies which boasts privacy-enhancing features, a US government official emphasized.

“Congressional attention” is highly needed to deal with the matter, Robert Novy, deputy assistant director for the US Secret Service’s Office of Investigations.

“We should also consider additional legislative or regulatory actions to address potential challenges related to anonymity-enhanced cryptocurrencies, services intended to obscure transactions on blockchains (i.e. cryptocurrency tumblers or mixers) and cryptocurrency mining pools,” Novy told the House of Representatives Committee on Financial Services.

“Some businesses, including providers of information and communications systems, are taking actions that impede timely access to digital evidence. As such, continued Congressional attention is warranted to ensure law enforcement agencies maintain lawful access to critical sources of evidence, regardless of where, or in what form, that information is stored,” he said.

Probing into cryptocurrencies and the transnational organized cybercriminals which maximize its usage requires highly-skilled criminal investigators, according to Nory.

“Hiring, developing, and retaining our investigative workforce, as well as partnering with and training our law enforcement and private sector partners to develop robust investigative capabilities, are all critical priorities for ensuring we are well prepared to address emerging risks resulting from technology innovation, both today and into the future,” he emphasized.

Moving forward, Novy asked legislators to bear this issue in mind. Noting the slow pace of deliberation in the country’s legislative department, he noted the lawmakers won’t likely take any measures to act on it anytime soon.

“As such, continued Congressional attention is warranted to ensure law enforcement agencies maintain lawful access to critical sources of evidence, regardless of where, or in what form, that information is stored,” he said.

“Such legislative or regulatory actions could take the form of new reporting requirements or data collection, retention, and accessibility requirements for certain businesses or business activities,” he added, citing the CLOUD Act as a significant step towards securing privacy of all users.

Although Novy did not indicate any specific privacy-focused coins, American officials have echoed their concerns in the past. In January last year, Joseph Battaglia, a special agent working at the FBI’s Cyber Division in New York City, noted other officials were concerned about cryptocurrency monero as well.

“There are obviously going to be issues if some of the more difficult to work with cryptocurrencies become popular. Monero is one that comes to mind, where its not very obvious what the transaction path is or what the actual value of the transaction is except to the end users,” Battaglia told about 150 law students of the Fordham University in New York.

Monero (XMR) was unveiled in April 2014 with bolstered privacy features. A fork of the Bytecoin codebase, the digital currency heightens identity-obscuring ring signatures, making it unclear which funds have been sent by a certain person and to another. The virtual coin saw its price surge two years ago, soaring 2,760 percent to about $12 from about $0.50 at the beginning of the year to about $12.

 

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It’s not everyday the highest court in the United States notices digital currencies such as bitcoin. But when they do, it is for something important; for instance, an opinion making a reference to cryptocurrencies. 

The Supreme Court did so in its June 21 verdict on the Wisconsin Central Ltd. v. United States case involving a dispute over whether stock options for employees of Wisconsin Central Ltd. can be taxed as a type of compensation in the same manner that money is. 

“The government argues that these stock options qualify as a form of “compensation” subject to taxation under the Act. In its view, stock options can easily be converted into money and so qualify as ‘money remuneration,’” the dissenting opinion said. 

Ballotpedia explained that units of the Canadian National Railway Company lost their initial legal battles. Both district and appellate courts ruled the stock options are taxable under existing tax laws. 

“The fact that cash and stock are not the same things doesn’t make a stock‐option plan any less a ‘form of money remuneration’ than cash. Indeed the railway offers its employees a choice to have an agent exercise an employee’s stock option, sell the shares of stock obtained by that exercise of the option, reserve part of the money received in the sale for taxes and administrative costs, and deposit the balance in the employee’s bank account. An employee who uses this method will thus experience the stock option as a cash deposit,” the appeals court said, backing the district court’s decision. 

But the recent decision promulgated by the high court stated such stocks are not considered a “money remuneration” and the case should be “remanded for further proceedings consistent with this opinion.” It added remuneration is not limited to money because it also covers any kind of reward or compensation. 

The document, crafted by associate justice Stephen Breyer and supported by Justices Ginsburg, Sotomayor and Kagan, stipulates the nature of what comprises money is less rigid than the interpretation of the majority, adding their perception about money “has changed over time” and “perhaps one day employees will be paid in Bitcoin or some other type of cryptocurrency.” 

“Moreover, what we view as money has changed over time. Cowrie shells once were such a medium but no longer are … our currency originally included gold coins and bullion, but, after 1934, gold could not be used as a medium of exchange… [P]erhaps one day employees will be paid in bitcoin or some other type of cryptocurrency,” Breyer said. 

“Nothing in the statute suggests the meaning of this provision should be trapped in a monetary time warp, forever limited to those forms of money commonly used in the 1930’s,” the dissenting opinion added. 

The court opinion has nothing to do with cryptocurrencies per se. However, the document implies some members of the top US court are compassionate to the concept that cryptocurrency is another form of money unlike properties like what the Internal Revenue Service once decided or commodities according to the view of the Commodity Futures Trading Commission (CFTC) and, more recently, an American district court judge. 

Although this is too early to say, questions about the nature of bitcoin and its counterparts could make its way to the portals of the Supreme Court in the not-so-distant future. This, despite cryptocurrencies gaining ground within and outside the country as government and central banks have been enacting rules governing these emerging technologies.

 

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Someone who used to work for the world’s most powerful leader is seeking to break into the world of cryptocurrency, according to a New York Times report. 

Stephen Bannon, a former chief strategist to US President Donald Trump, said he held private meetings with investors and hedge funds to stage initial coin offerings (ICOs) through his investment company, Bannon & Company. 

“Mr. Bannon won’t reveal very much about his cryptocurrency plans — he worries that the controversy that comes with his name could have a bad impact on projects just getting off the ground,” the report said. 

Bannon, Breitbart News’ former executive chairman, told New York Times he had a “good stake” in bitcoin. However, he described cryptocurrencies as “disruptive populism… “It takes control back from central authorities. It’s revolutionary.” 

The ex-Trump aide shared he has been interested in digital currencies as early as 2016 when he discovered it through Brock Pierce, a former child actor who appeared in films such as “The Mighty Ducks” before running a firm in Hong Kong which sold the virtual gold that players use in the video game World of Warcraft. 

He would have gotten into the complex crypto arena if the Trump campaign had not made its way to him. But his fondness for the virtual currency grew after he left the portals of the White House in August last year. 

Prior to joining the Trump campaign team, Bannon credited the Internet Gaming Entertainment, where he served as vice chairman in 2005, for introducing him to young people who gathered online around video games, as well as became the source of strength in the “alt-right movement.” 

In one of his speaking engagements last year, Bannon had said blockchain and cryptocurrency would bring true freedom. 

“Central banks are in the business of debasing your currency. Central governments are in the business of debasing your citizenship. The central technology conglomerates are in the business of debasing your own personal sovereignty and your own personal data,” Bannon previously said. 

Bannon, who spoke at an event in Zurich sponsored by the Swiss newspaper Die Weltwoche, had stated he would like to help other people develop their own digital currencies and touted the likelihood of coming up with one himself, which he would call “deplorables coin.” The term was once used by former First Lady Hillary Clinton to describe her supporters. 

Bannon considered these emerging technologies as the “very heart” of a populist movement in Switzerland. He said cryptocurrency is the right tool to control financial elites, a group of entities he often criticize. 

“We take control of the central banks away. That will give us the power again…Once you take control of your currency, once you take control of your data, once you take control of your citizenship, that’s when you’re going to have true freedom,” he said. 

But the most sensible way to “break” in what he described as the growing globalized culture of economic oppression is with populist, nationalist movements including the one he popularized in America. 

“These guys are visionaries,” he said, referring to the leaders in the crypto industry.

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A recently proposed law in Arizona for protecting operators of network nodes of blockchain is moving closer to passage, according to public records.

HB 2602 (House Bill 2602) which has been sponsored by Jeff Weninger, member of Arizona House of Representatives, received recommendations of “do pass” from the Committee of the Whole and the Committee of State Senate Rules last week, setting up the measure for voting on it by the Senate.

Arizona is the same state that passed HB 1070 which allowed law enforcement to ask suspected illegals if they were illegal or not. This has a fantastic effect. Crime is down in Phoenix. Now people can drive into a Home Depot parking lot and not be harassed anymore while walking into the store or back to their car. Quality of life has improved!

According to information received from LegiScan, which tracks the development of legislature in the US, both caucuses of the Senate have given their approval.

While it is not clear when the vote will happen, the bill passed House of Representatives of the state in February just days after endorsements of the same kind were made.

The measure passed the House previously with a vote of 55 to 4, while one representative abstained from voting, on 20^th February.

Protection against Regulation for Users of Blockchain Nodes

 

The bill will protect users (who run blockchain nodes) from facing any kind of local regulation. It states that any town or city may not restrict or prohibit an individual from operating a blockchain node from their residence. The bill prohibits county-level regulations as well.

It is currently not clear whether the measure is restricted to miners of cryptocurrency, or once signed into law, it will protect the energy-intensive process as well. The text of the law, however, suggests that it will.

The bill states that running nodes on the technology of blockchain means giving computing power to encrypt or validate transactions in blockchains.

Developing Arizona as a Blockchain Hub

 

HB 2603, another bill which was sponsored by Weninger, recently passed the Committee of Senate Transportation and Technology unanimously. If this bill is passed and then signed into law, it will change Arizona’s regulations so that the stored data on a blockchain will become legally recognized.

Weninger has said that the objective behind the bill is to minimize regulation that could create obstacles for the development of the technology of blockchain in Arizona, and thus prevent Arizona from becoming a blockchain hub.

Weninger said that government bureaucrats and politicians who don’t know much about blockchain technology should not put arbitrary regulations on it.

He explained that his interest in the bill is to specifically prevent the interference of the government in the mining of cyptocurrrency in residences.

The bill clearly states that a town, county or a city may not restrict or prohibit any individual running a node in their residence on blockchain technology.

Multiple Bills Introduced in Arizona to Promote Blockchain

 

Weninger said that the wordings used in the bill are typically used when you want to stop the localities from placing regulations on industries. Weninger’s focus is particularly on such industries that have a strong future and which should come to Arizona. Arizona is soaking up lots of jobs and businesses from California which is anti-business.

When asked why HB 2602 covers residences but not commercial sites, his response was that he didn’t have enough time to figure out the implications that it would have caused and provide solutions to address them in the bill.

However, he said that since there are many data centers in the state, and in case they have more capacity, crypto mining farms and operations of digital currency mining could be collocated there.

He remarked that after he came to the conclusion that the law of Arizona allows the collocation of those two kinds of commercial ventures, he had himself encouraged an operator of such a facility to begin mining cryptocurrency.

Weninger has introduced two more bills related to the technology of blockchain: HB 2601, which authorizes conducting of ICOs; and HB 2603, which will allow the corporate registration of different entities using blockchain technology by Arizona Corporation Commission. 

Over the last one year, the state of Arizona has seen the introduction of many other bills relating to cryptocurrency and blockchain technology. It is too bad the NBA made the wrong call when Horry smashed Nash out of bounds in 2007 by suspending Stoudemire for taking one step onto the court but at least Arizona is doing the right thing by being business friendly. This is why Arizona is doing very well compared to other states on the northeast coast and the west coast but this is another topic.

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Recent news out of South Korea about the status of their cryptocurrency exchanges has sent shockwaves across the virtual currency world. Police raided leading digital currency exchanges Bithumb and Coinone last week due to an investigation into purported tax evasion.

Local media in the county recently reported about an alleged bill that would see exchanges in the country be completely shut down, which was seen as a big change from a December announcement about how the government was merely looking to improve security within exchanges.

The announcement came at a time where many in the South Korean government were taking a hard and skeptical stance against virtual currency. Policymakers in recent weeks expressed worry that the cryptocurrency crazy sweeping across the country was introducing citizens to crime and the frenzy of speculation. The Bank of Korea’s Governor Lee Ju-yeol made headlines by mentioning how virtual currency was not legal and also was not being used properly.

News of the legislation drew a swift backlash across South Korean society and within the government. As it spread across the cryptocurrency world, many markets for some of the leading coins plunged into turmoil while thousands of citizens started to sign petitions asking the South Korean president to halt progress of the legislation.

Opposition parties in the government characterized the entire bill as an unfair and illegal crackdown since it was being ushered through the government without any sort of discussion. They said any legislation of this magnitude should be introduced in a way that gives all sides plenty of time to discuss and debate about it. Debate about the fate of cryptocurrency has lead to deep divisions among politicians in the country.

The Presidential office quelled some fears after releasing a follow-up statement about how the move was still not “finalized,” and a lawmaker in the country said that a final decision could come this week about the government’s thoughts on cryptocurrency exchanges.

However, the chairman of the South Korean Fair Trade Commission (KFTC) said on Wednesday that they actually do not have any authority to close digital currency exchanges, even though they are currently investigating 13 of them across the nation.

Chairman Kim Sang-Joo said in an interview how the e-commerce law these exchanges allegedly violated does not give regulators the proper authority to close them. He also said the other laws in place are not clear enough to where they could be applied to close exchanges, seemingly putting to rest questions about if another agency could use their power to close an exchange. Kim also countered a previous claim by the nation’s Justice Minister that investment in digital currency was a form of gambling.

Despite his statements in the interview, Kim maintained that the ongoing investigation into the exchanges has led to a number of illegal activities being uncovered. He pledged that reforms would be rolled out in the first half of the year, and asserted that regulators would ask lawmakers to write and pass specific amendments in the latter half of the year if they still felt like illicit activity was still taking place.

Right now, South Korea’s Financial Services Commission is just thinking about what they can do in the current framework of the law, and is considering ways to either shut down all digital currency exchanges, or just close ones that have blatantly committed crimes.

Amid all the discussion about cryptocurrency exchanges in the country, authorities are also taking a long look at the general merits and drawbacks of virtual currency on the economy. Governor Lee of the Bank of Korea said yesterday how the nation’s Central Bank had joined research at the Bank of International Settlements into the long-term effects of cryptocurrencies. He said the Central Bank decided to participate in the research since there is a potential that central banks could one day start rolling out virtual

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Blockchain technology as a whole has been blowing up in recent months as it has the potential to change and innovate many different industries. Even the government itself is recognizing the potential, as President Donald Trump has recently signed a $700 billion military spending bill. This bill includes an order to perform a blockchain cyber security research study.

The bill passed through senate in late September and calls for the Department of Defense (and other agencies and organizations as well) to look into the “potential offensive and defensive cyber applications of blockchain technology and other distributed database technologies and an assessment of efforts by foreign powers, extremist organizations, and criminal networks to utilize these technologies.”

Simply, the study will look at the various applications and capabilities of the blockchain technology when it comes to the military (both offensively and defensively). The study will also aim to see how others around the world (both good and bad) are using these technologies and how far along they are with them. The study also wants to look at how secure the technology is, and how susceptible it is to cyber-attacks, as the government doesn’t want to have to worry about security issues when dealing with the new technology. Of course, the study will also take a peek at what else the federal government could potentially use the technology for in the future.

The study itself is a part of the larger MGT (Modernizing Government Technology) Act, which looks to mainly focus on the government’s cyber security and IT systems, and how they can be improved over time to ensure the government is keeping up with what’s the best and most secure technology to use. According to the text of the study, the results of the study are set to be delivered by Congress sometime within the next 6 months or so. That is a good sign as it means we don’t have to wait too long at all to find out the results of this study and see how the government may plan to use blockchain technology going forward.

While it is clearly focused on the military applications and is still a small element of a much larger law for now, it is still quite exciting for blockchain technology as it could be the catalyst that could help lead to even bigger uses and applications for blockchain technology in the U.S. government and beyond, as nearly everyone could benefit from blockchain technology in one way or another.

With cryptocurrencies such as Bitcoin, Ethereum and Litecoin skyrocketing in value over the past few weeks, there are more eyes on blockchain technology and its features and benefits than ever before. You would be hard pressed to find a news organization that isn’t talking about cryptocurrency and opening up the technology to millions of new potential users. This is exactly the kind of thing that could help this technology blow up. It has uses in many different areas including finance, government, IT, security, marketing and so much more. The more people know about it, the more demand there is and therefore, the more blockchain technology will continue to explode in terms of growth.

In conclusion, while this blockchain study being authorized by the U.S. government is a great thing and is a big step forward, we hope it is only but the start of a blockchain revolution, whereas people can finally see how so many out-dated transactions, technologies and industries can be brought into the 21^st century with the help of blockchain technology.