Page 23 - May 2018 Disruption Report Flip Book

REGULATORY MOAT JANMUAAYRY20128018
Europe – ESMA states wherever ICOs qualify as financial instruments, firms involved need to comply with relevant legislation (incl. MiFID and AML laws).
Hong Kong – SFC highlights where sale of digital token falls under definition of ‘securities’, dealing in or advising on such digital tokens will constitute a regulated activity and engaging parties must be registered with the SFC.
Japan – The FSA has clarified that while there are no specific laws on ICOs, they may fall within the scope of the Payment Services Act and Financial Instruments and Exchange Act laws. FSA has warned investors on possible ICO-related risks.
Singapore – MAS released guidelines on digital token offerings (in Nov. 2017) explaining the application of securities laws to these offerings with case studies.
South Korea – FSC issued a complete ban on ICOs, margin trading; a few days after a similar ban imposed by China (Bloomberg)
United Kingdom – FCA stated in Dec. 2017 that it will gather further evidence to check if more is needed beyond the consumer warning issued in Sept. 2017.
United States – SEC ruling on token sales states that U.S. securities laws would apply to offers, sales and trading of interest in virtual organizations. The report confirms that issuers of blockchain technology-based securities must register such securities unless a valid exemption applies.
Regulatory Approaches to Bitcoin
The regulatory definition for Bitcoin is unclear and varies across countries. We believe depending on the use-case for Bitcoin, different regulations are likely to be applied. For instance in remittances and money transfer, Bitcoins are likely to be categorized as a currency, and therefore subject to anti-money laundering (AML) laws. On the other hand, itcoin as a commodity would be subject to tax laws.
Japan – Government recognized Bitcoin as a valid payment method in Apr. 2017 and required crypto-currency exchanges to register with regulators. In Sep. 2017, the FSA officially licensed 11 new operators of crypto-currency exchanges. After the recent hack on Coincheck, the FSA has also stepped up on-site inspections on cryptocurrency exchange operators to check for vulnerability.
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