Crypto and Regulation of The Language- What’s the deal?
Apr 14, 2018 Posted / 1304 Views
Jonathan Chester, the chief executive officer of Bitwage, authored an article recently, which featured the commentary which discussed in detail about the hurdles which have been posted by attempting and bringing up the regulatory language and classification from the bodies so dealing with it.
According to Juan Llanos, the fintech and reg tech lead at consytech, the difference has arisen because of the difference in the level of understanding of the members of the cryptocurrencies and the regulator's community in explaining the language and the terminology.
He stated that “At this point in time, all token distinctions and definitions come from the emerging crypto industry, not regulators. In the eyes of regulators, there are no clear-cut token definitions, only ‘activities’ and ‘products’ regulated under existing law. That is to say, several regulators are claiming jurisdiction over crypto assets inasmuch as these emerging assets fit their subject matter focus.”
He also added to this statement in regards to the consequences which occur with cryptocurrencies which are in the purview of regulation that “Some regulatory agencies have defined ‘virtual currencies’ as ‘monetary equivalents’ for purposes of money transmission and anti-money laundering; others have defined them as digital goods tradable in markets for purposes of ‘commodities’ regulation, yet others have defined them as ‘property’ for taxation purposes”.
According to the assertions of Mr Llanos, “The default position of securities regulators seems to be to consider them securities or investment contracts when they fit the conditions of the Howie test. Also, the crypto industry has been relatively successful in explaining the fundamental differences between virtual/cryptocurrencies on one hand, and protocol, investment or application tokens on the other, depending on the rights they grant, the layer of technology where they reside, and the value or utility they provide.”
These issue shave cropped up because of many reasons which have been seldom followed up with even with the intention of sorting them through. The legal systems in the countries are not working in order to help solve this conflict, and the crypto community is being dragged into this mud for no reason.
He said that, “There is today a global legal vacuum with respect to certain tokens that have a strong utility and consumptive value because they don’t fully fit the definition of ‘investment contract’ under Howie or its international equivalents,” adding that “the challenge for both regulators and entrepreneurs is that some of the digital cryptographically protected units of value known as tokens that are emerging have a dual nature: they’re both consumptive because they grant access to a technology service, for example, and at the same time provide an investment opportunity for purchasers.”
Same was the stand of Thomas Linder, the crypto developer with the Swiss law firm and works there as the senior blockchain developer. His main discussion revolved around legalising and regulating crypto in Switzerland and how it actually works.
The SFMSA or The Swiss Financial Market Supervisory Authority had recently published some immediate regulatory guidelines which pertained to ICO and that too the ones in which all the token were extremely classified and held the view of being assets tokens to the company.
Thomas states that, “Oftentimes projects fall into two or even all three categories and that It seems like the regulatory authority is trying to stretch the law so that everyone is in the bucket.”
The resistance towards bitcoins has however increased when the various government came in support of banning it owing to the lack of regulation. The government in few countries even termed Bitcoin or any other crypto outside their control as an illegal tender.
This gap between two communities has to bridged as soon as possible or else the future of crypto will be jeopardised and the community will sink.
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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