This article is from:Babbitt,author:Jenny Leung,author:
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Jenny Leung is an Australian lawyer who will start working as a blockchain lawyer at Blakemore Fallon LLP in 2019. Previously, she was a lawyer with the Australian Securities and Investments Commission (ASIC) and a privacy consultant with PricewaterhouseCoopers (PwC).
secondary title7. Will the US Securities and Exchange Commission (SEC) define sufficient decentralization?The US SEC released some of the most important regulatory guidance for 2018 through meetings, interviews and personal presentations. In each statement, however, SEC representatives indicated that their views did not necessarily reflect those of the SEC.Take a look back at some of the biggest words from SEC officials, starting with All the ICOs Ive seen are securities,arriveIf the network on which the token operates is sufficiently decentralized...then these assets may not represent an investment contract
,as well as
The US SEC official has not officially confirmed any of the above statements, but clarified that employee opinions are not binding and do not constitute any enforceable legal rights.
While the US SEC has no laws, it is likely to issue official guidance in these areas that would effectively set goals for blockchain networks to achieve sufficient decentralization.
Even though some level of decentralization might allow token sales to fall outside the SECs purview, is SEC Commissioner William Hinman right when he says the ethereum network is sufficiently decentralized? At what stage will token offerings and sales convert from securities to non-securities?
secondary title6. Will a cryptocurrency ETF be approved?The last cryptocurrency-based ETF application, the VanEck/SolidX Bitcoin ETF may get an answer on February 27, 2019. Some key questions that remain though are:
The scope of the term significant market. Quoted from VanEck SolidX Bitcoin Trust
, As an issuer, we are concerned that the SEC staff is setting a moving target when using the word significant. SEC officials have never provided guidance on what significant means. enabling them to move targets indefinitely.
Correct interpretation of Section 6(b)(5) of the Securities Exchange Act of 1934, which requires the rules of the exchange to prevent fraudulent and manipulative acts and practices. Does exchange mean the national stock exchange that trades the ETF, or the bitcoin spot market? See SEC Commissioner Hester Peirces dissent.
Whether the bitcoin (or cryptocurrency) spot market is really immune to fraud and manipulation (and how the DOJ investigation into Tether will affect this analysis).
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5. Are blockchain systems compliant with privacy regulations?
The French Data Protection Authority (DPA), a member of the EU Parliament and the EU Blockchain Observatory and Forum, is one of the few government actors to openly acknowledge the tension between blockchain and the GDPR, particularly with regard to the right to erasure, the right to rectification and Rules for data minimization principles.
A number of GDPR-compliant solutions exist, such as zero-knowledge proofs and private key destruction, but it is unclear whether they constitute methods of erasure or anonymization.
The French Data Protection Agency (DPA) has gone the furthest, proposing solutions such as destroying private keys that will bring data subjects closer to effectively exercising their right to erasure.
Has the EU Data Protection Board issued guidelines and recommendations to ensure that blockchain technology complies with EU law as recommended by the Committee on Civil Liberties, Justice and Home Affairs?
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4. Will international regulators cooperate?As blockchain projects become more geographically decentralized, anonymous, and/or censorship-resistant, domestic regulators must respond by promoting global harmonization, or possibly by harmonizing their securities, commodities, money transmitters, and tax laws Acts that violate its laws.Cryptocurrency investors and blockchain companies really
Flocks Flock to the Blockchain Island – Is Malta Already?
? If so, how will these new crypto-friendly frameworks stack up against more mature, but at the same time more restrictive, regimes such as the U.S. securities law framework and years of mature case law?
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3. Will privacy coins be banned?
While cash and fiat currency transactions can be controlled and monitored by banks, financial institutions and customs agents, privacy coin transactions such as zcash and monero can be more difficult to trace due to cryptography such as zero-knowledge proofs and ring signatures.
Perhaps the most practical way to regulate privacy coins today is to allow them to be traded on regulated cryptocurrency exchanges, which could encourage trading under the watchful eye of regulators and create an initial auditable trail. After all, better up/down ramps than nothing.
For example, Gemini and Coinbase, two regulated cryptocurrency exchanges, recently started offering zcash trading. Both exchanges now only allow zcash withdrawals to transparent addresses, not shielded or private addresses. As a result, traces of the initial transaction can now be found, which would not have existed if it had been traded off-exchange.
Will regulators around the world follow the lead of the United States and approve the listing of privacy coins on regulated exchanges, or follow the example of Japan and encourage the delisting of privacy coins?
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Before 2018, many believed that decentralized exchanges (DEXs) were unstoppable, and few DEXs implemented know-your-customer (KYC) processes. If such a process were implemented, the community would not consider it a true DEX - at best, a non-custodial exchange accessed by central control.
In 2018, the SEC released the Guidelines for Online Platforms for Digital Asset Trading, the ShapeShift exchange reluctantly introduced KYC in the form of mandatory customers, and the SEC also fined the founder of EtherDelta on the grounds that his software violated the requirements of the SEC. Registered laws. Perhaps by 2019, true DEXs will emerge and regulatory headaches will proliferate.
How do you regulate an unstoppable, leaderless platform for unregistered securities exchanges? How do you regulate private coin trading on these platforms? Will recent regulatory guidance drive developer anonymity?
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1. Are the developers responsible for the illegal acts of their products?
In corporate law, the corporate veil allows a company to be treated as a separate legal entity, shielding its owners from personal liability for corporate violations in most cases.
Similarly, the technical veil helps code developers evade liability from state and federal regulations, as well as civil lawsuits arising from errors or malicious use of their code by third parties. Courts willingness to uphold broad disclaimers in open source software licenses maintains this technical veil, underpinned by the principled argument that users, not code writers, ultimately cause and are liable for criminal violations.
However, just as the corporate veil can be pierced in some cases, so can the “technical veil” — and 2018 offers clues as to when that might happen: First, CFTC Commissioner Brian Quintenz suggested that if the smart contract code is clearly foreseeable to be used by Americans to violate CFTC regulations, the code developer of the smart contract may be prosecuted; secondly, the SEC accused Zachary Coburn (EtherDelta founder, author/deployment or) operated an unregistered national stock exchange.
