This week, a host of news on the crypto regulatory front has come out, some making investing more onerous, some making it better. A recent report from the Organisation for Economic Co-operation and Development (OECD) traces the process of initial coin offering (ICO) fundraising and the potential risks for offerors and buyers. The report highlights many ICO benefits, including cost savings, direct access to investors and the active participation of buyers. The identified risks include potential conflicts of interest; lack of standardized, vetted disclosure; and high volatility and counterparty risks. The OECD calls for a "delicate balance" in developing a regulatory scheme that will "not deprive the ICO mechanism of its speed and cost benefits." At the same time, "ICOs are, by nature, not the right solution for every project," and the possibility for ICOs to be "a mainstream financing option" is limited.
The UK's Financial Conduct Authority (FCA) has issued guidance regarding digital assets and their potential interaction with various regulatory schemes, including MiFID II. While the guidance is not binding, the FCA hopes it "will enable firms to understand whether certain crypto assets fall within the regulatory perimeter," giving those companies greater certainty about this space. According to the guidance, certain types of digital assets, such as security tokens, fall under the FCA's purview, while others, such as bitcoin and litecoin, do not.
In the Netherlands, a proposed licensing requirement would end anonymous crypto trading. Under the potential new regs, crypto exchanges and wallet providers would be required to monitor their customers' trades and report suspicious activity and certain information about the customers themselves. The new licensing scheme is being proposed because the Dutch financial authority is concerned that crypto carries "high financial crime risks."
Wyoming legislators have introduced a bill to provide further legal clarity to draw blockchain business to the state. Among other things, the proposed legislation would authorize banks to opt into a digital asset custody supervisory regime designed to meet the SEC's standards for digital assets' "qualified custodians." Virtual currencies would also have the same legal status as fiat currency under the UCC, providing further protection to asset holders.
For more information, please check out the following links:
- Wyoming Introduces Bill Offering Cryptocurrencies Legal Clarity To Attract Blockchain Business
- UK FCA: Guidance on Cryptoassets
- UK Financial Watchdog Plans Oversight of Security Tokens, Some Stablecoins
- Proposed License Requirements End Anonymous Crypto Selling and Buying in the Netherlands
- Dutch Financial Authorities Plan Licensing Scheme for Crypto Exchanges
- Dutch Report: Cryptos: Recommendations for a Regulatory Framework
- OECD: Initial Coin Offerings (ICOs) for SME Financing
- OECD: ICOs Have Financing Benefits But Aren't a Mainstream Option
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