US regulation seems to be overweight, but industry insiders have opened up the US SEC: don't use 20th century laws to regulate 21st century technology.
In the past month, the four major exchanges, Gan'an, Gate, Bittrex, and Poloniex, a well-known encryption company, have set limits on US users and stopped their related transaction services in large quantities.
1. Bittrex: 42 currencies stop providing trading services to US users
- Korean or Korean? Bittrex Dreams New York
- Civicex, a cryptocurrency exchange, denied North Korean users trading on their platform
- IEO three times, was criticized by the New York regulator for the credibility of the old exchange Bittrex
On June 15, Bittrex announced that since June 28, US customers will no longer have access to some cryptocurrency markets (pictured), and these markets will be transferred to Bittrex International.
2. Coin Security: More than 7 currencies stop providing trading services to US users
On June 14, the company announced that it would stop providing services to individuals and corporate customers from the United States on Binance.com, and its announcement stated that “the user account will continue to be checked for compliance”.
Current currency security US users cannot obtain trading channels for cryptocurrencies such as AE, HOT, LINK, NANO, ONE, VET and WTC.
3.Gate: 19 currencies stop providing trading services to US users
On June 12th, Gate.io announced that, based on the assessment of the US attorney team, on June 30th, Gate.io will stop providing recharge and transaction services for US users in the following currencies: USDT, CNYX, EOS, XRP, TRX, XTZ, BTM, NAS, QTUM, NEO, GAS, XMR, BCN, XEM, WAVES, DCR, ONT, ONG, THETA, TFUEL.
4.Poloniex: 9 currencies stop providing trading services to US users
On May 17, Poloniex announced that it will stop providing US ARDR, BCN, DCR, GAME, GAS, LSK, NXT, OMNI and REP trading services to US users on May 30th.
Most of the transactions that the four major exchanges shut down for US users are altcoins. The United States, as an important part of the cryptocurrency market, will have a major impact on these currencies, and its trading volume may fall sharply. The uncertainty of US regulation is the reason for the four major exchanges to make the move.
The US regulatory plus code Poloniex pointed out directly in a statement:
"Today's action (limitation of US users) is due to the uncertainty of US market regulation. Specifically, it is not certain whether US regulators will treat these assets as securities."
In an interview, Chan Chang’s CEO Zhao Changpeng also said that due to regulatory uncertainty, the United States is still a market that is difficult for encrypted start-ups and large exchanges to break into . Leading US exchanges such as Coinbase, Kraken and Gemini have been able to maintain their operations with a compliance-first approach, which requires high operating costs and is often not handled by many small startups.
Although Bittrex and Gate did not give clear reasons, it is likely to be under pressure from regulation. In particular, the Gate.io announcement mentions “based on the assessment of the American lawyer team”, which will stop certain users of the US currency. Kind of service.
The FATF, a financial action task force with absolute influence in the field of financial regulation, is about to release a report on Friday on how to monitor virtual assets in participating countries. These exchanges may have to take the initiative before these regulations. The project "keep the distance.
It is worth noting that the above four exchanges are all obtained by the New York State Department of Financial Services (NYDFS) cryptocurrency license BitLicense , while Coinbase, Bitstamp and other licensed exchanges have not been affected.
As early as March 2018, the US SEC had already stipulated that cryptocurrency exchanges must be registered with the SEC or hold a legal license. And according to the SEC Securities Act of 1934, tokens that currently have securities attributes are considered illegal securities if they do not apply to the SEC for registration.
In 2018, the US SEC completed more than a dozen law enforcement actions related to the sale of tokens. The SEC repeatedly charged them with illegal sales of securities, cryptocurrency companies and exchanges. According to the previous article by Scallions, from August to December 2018, the US SEC initiated 12 penalties, the vast majority of which were due to “unregistered” and “illegal sales of securities”.
Insiders open the US SEC:
Don't use the laws of the 20th century to supervise the technology of the 21st century. Although the United States has repeatedly punished and warned cryptocurrency companies or exchanges on the charge of "illegal sales of securities", it is a crucial judgment on whether cryptocurrency is a security. There is never a clear definition.
In 1946, the US SEC based on the Howey test, to determine the tokens issued based on lCO, to determine whether it has securities attributes, in line with the characteristics of the Howey test, can be defined as securities. The test is based on the following four criteria:
1. Use money to invest;
2. Invest in a common company;
3. Expect to make a profit for yourself;
4. Just because of the efforts of the sponsor or a third party. In this regard, Circle, a well-known encryption company, pointed out in an article that "the domineering" should stop using the laws of the 20th century to supervise the technology of the 21st century:
For Circle, the core of a clear, forward-looking cryptographic regulatory framework should be to represent digital currency as a new financial instrument rather than simply categorizing it as securities, commodities, or currency…we also Legislators are constantly urged not to use the laws of the twentieth century to supervise the technology of the 21st century. For example, the main basis for determining whether an encrypted asset can be used as a securities regulator is the "Howey Test" developed by the US Supreme Court in 1946.
Circle also pointed out that "in the US SEC regulatory framework, listed 25 characteristics and considerations related to the evaluation of whether digital assets are securities, but did not give any weight in its application … but so many factors are not clear The weight of the US makes it easier for the US SEC to determine whether digital assets should be recognized as securities for regulation."
In other words, Circle may mean that the identification of a certain currency as a security or not as a security is the "freedom" of the US SEC itself.
Circle added, “On the other hand, there are 11 factors in the US SEC regulatory framework that focus on functionality. These functions are related to the provision and sale of cryptographic assets and are therefore not securities. However, none of these 11 factors are decisive factors. In fact, any of these 25 factors can be used to support crypto assets as securities, but none of the 11 factors is a proof of the inevitable that the assets are not correct."
Some financial and legal practitioners and some politicians have expressed some dissatisfaction with the SEC's ambiguous and defensive regulatory attitude toward cryptocurrencies.
On May 24, US Congressman, Washington DC representative Tre Hollingsworth and Darren Sotoh and four other members of Congress sent a joint letter to the National Economic Council Director Larry Kudlow. The letter pointed out that the law of decades ago is difficult to apply to new technologies, and the lack of regulatory transparency may inhibit investment.
Kik is facing the United States SEC "war" in addition to Circle, social company Kik is a "model" with the US SEC.
Kik is a lightweight social software for younger users in Canada, claiming to be "Western WeChat." In September 2017, Kik issued tokens in the Ethereum, and plans to raise $125 million.
However, on the third day of Kin's release, he received a warning from the SEC that Kik had sold Kin without obtaining the right to issue securities, which had violated the securities laws. But Kik is not convinced, its founder Ted Livingston called the SEC saying: Kin is a currency, not a security.
So, at the end of 2017, Kik began an unproductive marathon negotiation with the SEC. Livingston said in a live broadcast on May 28 that we spent more than $5 million in 18 months trying to work with the SEC.
Kik said that this time on behalf of the entire cryptocurrency industry and the SEC, Livingston hopes to use this lawsuit to urge the SEC to conduct a new Howey test on digital currency to determine which digital currency belongs to the securities.