November 21, 2018 6:30 PM
Crypto lawsuits are on the rise, UK may snub crypto derivatives business, and India set to clarify stance on crypto.
Here is some of what’s happening, for Wednesday, November 21, 2018:
Crypto Lawsuits on the Rise
The digital currency industry magazine Diar is reporting that crypto-related lawsuits in the United States have mooned, with the number rising from seven in the fourth quarter of 2017 to 22 in the first quarter of 2018 and 23 in the second quarter.
Per Diar, the US Securities and Exchange Commission is a major driver of this change, filing 30 percent of the claims against the crypto community. This may be the opening act; as the SEC becomes more comfortable dealing with cryptocurrencies, more cases could follow.
One recent example is the case of EtherDelta, which the SEC found was operating as an unregistered exchange. The SEC issued an order to EtherDelta stating that the company must register or receive an exemption. The SEC also fined EtherDelta founder Zachary Coburn $300,000 in disgorgement and a $75,000 penalty.
However, the SEC is working to offer options to bring offending firms in compliance. “There is a path to compliance with the federal securities laws going forward, even where issuers have conducted an illegal unregistered offering of digital asset securities,” the SEC stated, as quoted by Diar.
UK Regulators Consider Crypto Derivatives Ban
Per a speech delivered yesterday at the Regulation of Cryptocurrencies event in London, Christopher Woolard, the executive director of strategy and competition for the United Kingdom’s Financial Conduct Authority (FCA), offered that the regulator may consider banning crypto derivatives such as futures in response to current market issues.
“We’re concerned that retail consumers are being sold complex, volatile, and often leveraged derivatives products based on exchange tokens with underlying market integrity issues,” Woolard said. “Given this, the FCA will also consult on a prohibition of the sale to retail consumers of derivatives referencing certain types of cryptoassets (for example, exchange tokens), including contracts-for-difference, options, futures, and transferable securities.”
The UK’s slow response to the popularity and growth of crypto and crypto derivatives has placed the nation in a difficult position, regulation-wise. Various factions have arisen to criticize the FCA’s priorities and intentions. Despite this, Woolard insisted HM Treasury, the Bank of England, and the FCA will all take steps to address identified harms to consumers, to market integrity, and to the risk of financial crime in the coming months. To that effect, the speech also outlined the findings of a dedicated task force created in March to find recommendations regarding crypto regulation.
“My hope is that if someone in 10 years’ time was to pause on the world in 2018, they would see our task force work as a further step along our journey of encouraging beneficial innovation to thrive in the UK, but in a context in which financial crime is combated, market integrity is safeguarded and consumers are adequately protected from harm.”
India to Issue Regulations on Crypto in December
A finance ministry panel established in November 2017 may have draft regulations for crypto use in India by December, Quartz reports. This would likely end confusion about the legal status of crypto in the country.
The push surrounds a legal fight that has been ignited by the Reserve Bank of India’s crypto banking ban. In April, the bank asked lenders to conclude all business relationships with crypto exchanges within three months, which fueled a chain of legal challenges. While it was mandated that draft regulations were to be filed by July, litigation delayed release. The court asked the government to draft a counter-affidavit to assert the government’s position on cryptocurrencies.
The counter-affidavit says that the panel, headed by Subhash Chandra Garg, a secretary in the department of economic affairs, will hold meetings in December and January to deliberate a draft report, which is currently being worked on, and potential crypto regulations.
Happy Thanksgiving! We will be back Monday with your Daily Byte.
Frederick Reese is a politics and cryptocurrency reporter based in New York. He is also a former teacher, an early adopter of bitcoin and Litecoin, and an enthusiast of all things geeky and nerdy.
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