- Uturn for India’s stand on crypto
- Lobbying by crypto industry forges new rules
- New crypto rules could come as early as July
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Facebook Can’t Keep Up the Fight Against Crypto: Non-ICO Ads Allowed Again
Siamak Masnavi
Siamak Masnavi
27 Jun 2018 / 194 views / In #Business , #Regulation
Realizing that there is growing interest in cryptocurrencies and that the ad revenue from crypto-related businesses is potentially huge, Facebook announced on Tuesday (June 26th) that it has decided to relax the ban it introduced on 30 January 2018.
At the end of January 2018, Facebook updated its ads policy to disallow ads that "promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings and cryptocurrency." It said it was doing so because of its belief that "misleading" or "deceptive" ads had no place on Facebook. It acknowledged at the time that this complete ban on all crypto-related ads was perhaps a bit too drastic a measure:
"This policy is intentionally broad while we work to better detect deceptive and misleading advertising practices, and enforcement will begin to ramp up across our platforms including Facebook, Audience Network and Instagram. We will revisit this policy and how we enforce it as our signals improve."
Well, on Tuesday, via another blog post by Rob Leathern, Facebook's Product Management Director, Facebook said that it had updated its ads policy again to "allow ads that promote cryptocurrency and related content from pre-approved advertisers" whilst still prohibiting "ads that promote binary options and initial coin offerings."
Any business wishing to advertise crypto-related products and services must now prove that they are eligible by filling out a form called "Cryptocurrency Products and Services Onboarding Request" as well as providing proof of ownership of the domain(s) associated with this application. Here are two of the more interesting questions that advertisers now need to answer:
"Do you currently hold any required licenses or regulatory certification?"
"Is your company traded in any public stock exchanges?"
For example, in the case of crypto exchanges in United States, how many exchanges are currently able to claim that they have SEC approval?
Facebook's partial reversal of its crypto ads ban seems like a clear sign of admission that the crypto industry is getting much too big to ignore. Therefore, it would be not too surprising if Facebook's closest rival in the advertising business, Google, shortly decided to follow suit by at least partially reversing its own ban on crypto ads (which it introduced on 14 March 2018).
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European Parliament Says Yes to Digital Currencies but No to Crypto
Justine Pope
Justine Pope
27 Jun 2018 / 196 views / In #Regulation
Bitcoin cannot supplant traditional currencies to any significant degree
Digital currency would challenge current banking system at its core
High capital requirements hinted at as an appropriate regulatory response for EU Crypto players
In its latest report, Virtual Currencies, Monetary Dialogue, July 2018, the European Parliament’s Economic and Monetary Affairs Committee has found in favour of supporting digital currencies, but not crypto.
They distinguish between the two and say cryptocurrencies use cryptographic functions in the processes of e.g. authorising or verifying transactions, digital currencies include all currencies that are implemented on computer systems.
The authors believe that cryptocurrencies such as Bitcoin cannot supplant traditional currencies to any significant degree, which echoes Mark Carney's sentiment earlier this year. The available technology faces severe limitations regarding scalability. In particular, it would be prohibitively expensive to conduct even a moderate share of the transactions now handled via traditional currencies through cryptocurrencies.
The report says crypto and related assets are so far used as a vehicle for financial speculation, rather than as a medium of exchange and are not based on any sound underlying values. The associated large swings in value seem to attract speculators looking for outsized returns. Furthermore, it is hard to get a handle on the volatility of these assets in order to implement proper risk management. This fact will suggest and supports high capital requirements as an appropriate future regulatory response.
Central Bank Digital Currencies (CBDC) would allow the public to access non-tangible central bank money. The central bank could guarantee free convertibility of CBDC units to cash at a fixed rate of 1:1 and thereby ensure the same degree of price stability as the official currency from the start.
With a rather trustworthy issuer, the central bank would likely act as a central counterparty to ensure the authenticity of transactions, so possible disadvantages of cryptocurrencies with respect to slow and costly transactions would ease.
While the report favours the issuance of central bank digital currencies it also notes that commercial banks would increasingly lose the ability to attract deposits.
So far, in the Euro area, more than 80 percent of monetary aggregate is sight deposits. As soon as holding and transferring money on CBDC accounts is convenient, safe and frictionless, a growing number of people and businesses would probably prefer to hold liquidity in their CBDC accounts.
Sight deposits are a major and reliable source of funding for commercial banks. In fact, an integral part of the business model of banks consists of collecting short-run deposits and granting long-run loans (maturity transformation). If a substantial share of depositors transferred their money to CBDC accounts, the fractional reserve banking system would be challenged at its core.
India Reverses Stance on Crypto and Plans New Regulatory Regime
Justine Pope
Justine Pope
26 Jun 2018 / 131 views / In #Regulation
Uturn for India’s stand on crypto
Lobbying by crypto industry forges new rules
New crypto rules could come as early as July
Subhash Chandra Garg, Secretary of India’s Department of Economic Affairs (DEA) at the Ministry of Finance, has told reporters this week that draft regulations have been put together for a framework for the use of digital currencies.
Indian authorities have been undecided about the future of cryptocurrencies, and these long-awaited regulations follow the country’s Supreme Court decision to review a petition against the Reserve Bank of India’s (RBI) ban on crypto earlier this year.
In his budget speech in February, Finance Minister Arun Jaitley announced that cryptocurrencies are not legal tender in India and promised that the government would crack down on their use. Since then, the Income Tax Department has issued notices to thousands of crypto investors accusing them of tax evasion. For its part, the RBI ordered all regulated financial institutions to stop all services to businesses and individuals dealing in cryptocurrencies.
Many companies stepped up to challenge the ruling calling it arbitrary, unfair and unconstitutional. Protests by the country’s crypto community have put pressure on the government to reverse their ruling as many believe that the central bank did not provide any reasons for the imposed restrictions.
While in previous comments, Garg said the Indian government “does not read this [cryptocurrency] as currency” and would not allow its use in the country’s payment system, it now recognizes that some people may still find value in cryptocurrencies and will introduce regulations so that crypto transactions are legal and transparent.
Garg also indicated that the new rules would introduce regulation for exchanges in India and implement legal requirements for know your customer (KYC) procedures and record keeping for transactions.
The Supreme Court is scheduled to hear petitions against restrictions imposed on cryptocurrencies by Reserve Bank of India, on July 3 and the new regulatory framework for cryptocurrencies is likely to be presented in the first half of July.
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