Every Friday, Law Decoded provides an analysis of the week’s critical stories in the areas of politics, regulation and law.
New developments in cryptocurrencies this week are challenging a number of critical limits on legal authority. Accordingly, we are analyzing several cases that promise to establish new lines for the scope and overreach of the government.
Cassius lamented that Caesar took the narrow world as a colossus. While nothing in today’s newsletter will be as dramatic as the death of the Roman Republic, we actually saw a rather mysterious but strangely comical dress rehearsal by bad actors disguised as state leaders. We will also be looking at some national regulators looking to go beyond their obvious borders.
In last week’s Law Decoded, I pointed out that the cryptocurrency industry has a bad habit of forgetting that regulators who manage cryptocurrencies are managing other colossal financial systems at the same time. In a sense, today’s newsletter is a throwback to that sentiment. There is a lot of power at stake.
Elon Musk won’t give you Bitcoin and other harsh realities
By far the loudest news item to come out of the cryptocurrency world this week was the Twitter hack that although it was ingenious enough to access and tweet from the accounts of many of the world’s most powerful people, he lacked the ingenuity to use that power for anything other than a simple scam, that offered to multiply Bitcoin sent to an address.
As many pointed out, This was an extremely elaborate scam and executed on an extraordinary scale. In fact, as the hack expanded beyond the characters known in the world of cryptocurrencies as CZ, and step towards global figures like Barack Obama, Elon Musk and Jeff Bezos, Many They saw Donald Trump’s profile and became desperate.
Given the the President has used Twitter to announce policies, as well as for engage in high-profile conflicts against the leaders of Iran and North Korea, during which the American troops were suddenly forced to plan new mobilizations, the reminder of Twitter’s vulnerability as a centralized platform was sinister.
For the record, Trump’s profile remained intact. But in the last months There has been a lot of talk about limiting the authority of social media platforms because of their importance to public discourse. But this is almost a reverse problem for government figures like, Joe Biden, who can potentially be hijacked from a high-profile public profile. You can expect this recent trick, and the implicit threat to global order, to play a role in future conversations on the subject.. On the other hand, the Blockchain industry use this to promote decentralized analogues to social media giants.
Either way, Keep in mind that whoever was behind this ruse only got about $ 121,000 net. Certainly not great news for the reputation of cryptocurrencies in the public, But it’s hard to see that this event is primarily about instant winnings.
A Supreme Rupee
The author of an infamous proposed cryptocurrency ban in India has spoken, telling the industry that it is not a total ban at all.
Former Finance Secretary Subhash Chandra Garg said the real objection to cryptocurrencies in the bill it is its use as currency. He said that such a measure It would allow investment in cryptocurrencies as a digital product.
If so, this is a message that the media, including Cointelegraph, have confused in the past. But also, that seems like a remarkably fine line to move. If you can exchange cryptocurrencies as merchandise, What about peer-to-peer transactions? How is it possible to leak all of that into categories like “suspiciously like currency”? And so how do you really hold such a responsible criminal accountable?
Garg’s concerns are very common among regulators, who see cryptocurrencies as a threat to monetary sovereignty. In places like Venezuela or Zimbabwe today, avoiding the current government’s monetary authority is a hugely optimistic argument for Bitcoin. But also, it seems clear that The full implications of such a ban in India, a country with almost 1.4 billion people, have not yet been adequately established.
They are not my citizens, they are still my problem
After considerable tug-of-war rounds, the two US federal investment regulators, the SEC and the CFTC, jointly fined crypto-based app Abra, for its synthetic exchange service, which translated price movements into US stocks and ETFs in changes to the guarantee that investors put on BTC and Litecoin.
The fines themselves were quite nominal, totaling $ 300,000, which is unlikely to stop the app, but the case is definitely a loud warning shot for various reasons, between them, the fact that mixed exchanges are one of those areas that trigger action by the SEC and the CFTC. The nature of the jurisdictional limits of US financial regulators is also in doubt.
Abra had withdrawn its synthetic securities service in February 2019 at the behest of the SEC. The company resumed it later that year, after excluding US investors and registering a subsidiary to offer the service in the Philippines. The new intervention of The SEC and CFTC clearly place a flag on new territory: Neither agency suggests the company offer these services to US investors, but they claim jurisdiction over Abra and its subsidiaries, due to the company’s California offices.
Once again, $ 300,000 is not a particularly draconian deal, but it wasn’t either Block.one. He is a precedent for the expansion of authority.
Peter Van Valkenburgh from, Coin Center, exposes what recent legislative threats to encryption They mean (and don’t mean) for cryptocurrencies and decentralized networks.
JDSupra has updated your information on state and federal laws when it comes to cryptocurrencies to include, among other things, new licenses in Louisiana.
Patrick Tan reflects on how China’s CBDC could provoke a boost to cryptocurrencies by citizens concerned about their privacy.