The Growing World of Cryptocurrency Law: What You Need to Know

Cryptocurrency law continues to develop in accordance with the expansion of the market. Over the last year, the cryptocurrency sector experienced a flood of new legislation. Governments now seek to wrangle in the Wild West crypto atmosphere through a variety of new regulations.

Cryptocurrency Regulation

During the 2017 crypto market rally, many governments decided it was time to look into regulating bitcoin. bitcoin hit all-time highs throughout the year and the crypto market topped $800 billion in trading volume. As you would expect, this influx of new bitcoin capital drew the attention of government officials, some of whom, saw bitcoin as a threat to the current financial system.

Despite their fears, many of these governments embraced the technology, and today, there are an ever growing number of blockchain friendly countries for crypto firms and traders to do business in. It’s never been a better time to get into the blockchain sector.

Regional bitcoin Laws

The world of cryptocurrency law is largely regional. Local governments are left to decide how they feel about cryptos, such as bitcoin, Ethereum and Litecoin. This approach has created a scenario where your Bitcoins are legal tender in some countries, such as Japan, but banned in others, like neighboring China. Here is a look at some of the current regulations and strategies in use.

USA Cryptocurrency Law

The United States has taken a mostly hands-off approach to the crypto space. In June 2018, US Rep. Warren Davidson (R-OH) publicly spoke on the need for more regulation in the industry. He explained that without “regulatory certainty” the market can’t reach optimal development. Also, he took a moment to express how the regulatory framework should be flexible enough to not stifle growth in the sector.

US Rep. Warren Davidson via C-SPAN

Despite the rising number of individuals on both sides of the crypto aisle, US regulators are still assessing their options. Further complicating the debate is the fact that more states are warming up to the concept of cryptocurrencies. Last November, Ohio became the first state to accept tax payments in bitcoin. Just this month, Wyoming passed legislation to officially recognize cryptocurrency as money.

The growing acceptance of bitcoin by local governments, coupled with the desire to be a leader in the blockchain space, puts US lawmakers in a particularly sensitive position. As it stands now, the SEC has started cracking down on ICOs, which they say are actually securities. The SEC even released an ICO guide to help companies determine if they are hosting an ICO or an STO. The latter option requiring strict security law adherence.

EU Current Legislation

Across the Atlantic, the EU continues to see a slew of new crypto legislation. Much like the rest of the globe, EU regulations are regional. One of the few EU-wide cryptocurrency laws is that no member state is able to issue their own cryptocurrency. The EU now enforces a wide range of bitcoin laws.

In July 2018, an EU report advised regulators to not ban, or ignore, the developing crypto sector. By September of the same year, EU finance ministers began to discuss the possibility of a common approach to the space. This is unlikely at this time, as not every member shares the same enthusiasm for the digitized economy.

Swiss Cryptocurrency Laws

Switzerland is considered a leader in developing cryptocurrency regulations. Last year the Swiss Federal Tax Administration (SFTA) announced that cryptocurrencies would be treated as assets. FINMA also published a set of guidelines for ICOs in February 2018. This pro-crypto regulatory environment has spurred growth in the Swiss blockchain sector. This growth has spread to include the Swiss Stock Exchange (SIX) which recently announced plans to host an STO in H2 2019.

bitcoin Government Regulations: Anti-Cryptocurrency Laws

Not everyone is bullish on bitcoin. Last year, the former World Bank Chief Economist, Joseph Stiglitz, predicted that bitcoin will be stifled through intense regulations as the market develops. He is not alone on this vision and some countries are well on their way to accomplishing this goal.

bitcoin Ban

China is one example of this type of anti-crypto behavior affecting the market. Chinese officials have been so effective at slowing their crypto sector that their central bank recently publicly boasted about killing almost all bitcoin trade in the country. While China’s bitcoin ban seems excessive, they are not alone in attempting to squash the emerging crypto market via anti-bitcoin law. In fact, many countries have banned bitcoin in the past.

A perfect example is Taiwan. The country banned bitcoin way back in November 2015 after a billionaire was held for a Bitcoin ransom. In 2018, the government amended the legislation to outlaw anonymous crypto activity. Another example is Columbia. Colombia almost banned bitcoin in January of 2017. Luckily, officials clarified their stance in June of the same year when it was publicly announced that the legislation restricted Columbian banks from using crypto.

bitcoin Law

We may never see a day where universal global bitcoin law exists. Currently, you have a mix of countries with varying levels of blockchain understanding. Ironically, the security and efficiency gained through blockchain technology are sure to create a scenario where those countries that stifle blockchain development suffer severely in the future.

It’s precisely this competitive nature that keeps cryptocurrencies at the forefront of regulators minds. The market is now more active than ever before, and every day more countries seek to be the next epicenter of this digital economic revolution. The crypto space is now too active to ignore and as more regions go pro-crypto, others will need to follow suit in order to remain competitive.

FinTech Revolution

Those countries who are first movers in the crypto sector can expect to reap huge financial rewards. Already, countries such as Japan continue to see a flood of new blockchain investment capital entering their economy. It’s hard to imagine a scenario where other governments don’t want the same.

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Published at Mon, 18 Feb 2019 20:43:57 +0000

August 2, 2017

The Birth of BCH: The First Crazy Days of “Bitcoin Cash”

August 1 saw the birth of a brand-new cryptocurrency: “Bitcoin Cash,” sometimes referred to as “Bcash” and using the currency tickers “BCH” or “BCC.” bitcoin Cash shares a history with bitcoin, but yesterday it forked off to form its own blockchain and currency.

Here’s the story so far.

The Fork

bitcoin Cash, initially defined by the Bitcoin ABC software implementation, was set to fork on August 1 at 12:20 p.m. UTC. Though in reality, because of how bitcoin nodes measure time, the actual fork happened a little bit later.

Starting right when bitcoin block 478,558 was found around 12:35 p.m. UTC, bitcoin miners and bitcoin Cash miners started looking for a different kind of block, each following their own protocol. Unsurprisingly, a bitcoin miner was the first to find one, marking the first block that was rejected by all bitcoin Cash nodes. This effectively realized the “split,” even though no new bitcoin Cash block had yet been found.

Since there weren’t very many bitcoin Cash miners on a network that did maintain bitcoin’s mining difficulty requirements, this first BCH block did not come fast. It took almost six hours, at about 6:15 p.m. UTC, until Chinese mining pool ViaBTC found the first bitcoin Cash block. This, for many, made the “split” official.

At the time of writing, the fork seems to be more or less successful, depending on how “success” is defined in this context. While there were some concerns about the peer-to-peer network — bitcoin ABC nodes initially appeared unable to reach one another — these problems have seemed to resolve over time. And safety precautions like replay protection and wipeout protection seem to be enforced as well.

That said, infrastructure support for BCH is still very limited. Very few wallets and other bitcoin services have adopted the new cryptocurrency so far — this could of course change in the (near) future.

Hash Power Issues

The bigger problem is probably that hash power on the bitcoin Cash chain started out low and has remained low. As a result, confirmation times are extremely slow, often taking hours.

This should improve over time, especially because bitcoin Cash implemented a new difficulty algorithm designed to adjust back to normal faster. However, even with this algorithm, it could take weeks before blocks are found at typical ten-minute block intervals.

Additionally, this difficulty adjustment algorithm could incentivize odd miner behavior. It has been speculated, for example, that miners intentionally mined no blocks for over 12 hours today, as that would help them get back to normal faster. And, notably, similar incentives would exist even once difficulty readjusts to normal on the bitcoin Cash chain.

Market Behavior

As expected, price discovery has been very volatile during these first couple of days. And perhaps more importantly, price discovery is still very limited, for three reasons in particular.

First, as mentioned above, many bitcoin users are still having difficulties accessing their BCH because not many wallets support the new currency. And even if wallets do support it, accessing BCH requires users to give up some level of privacy, security, time and more.

Second, hardly any exchanges have enabled BCH deposits yet. With some exceptions, only users who held BTC on exchanges that credited users with BCH at the time of the fork were able to sell their BCH. All users who controlled their own private keys have had to wait or find someone to sell to themselves.

And third, because bitcoin Cash blocks are slow and the chain insecure, even when exchanges do allow BCH deposits, it can take hours if not days to credit an account.

At time of writing, HitBTC is the only cryptocurrency exchange that allows BCH deposits within a reasonable timeframe. As such, it’s arguably the first “real” BTC/BCH exchange. However, since HitBTC is not a very established name, many may still be hesitant to send their funds to this exchange. (Nor does bitcoin Magazine recommend that you do so.)

Despite all these factors, trading has started, and the market has seen some early price action. Since its launch, the BCH exchange rates on different trading platforms have bounced between some 0.05 BTC per BCH and 0.4 BTC per BCH.

Disclaimer: The author of this article received BCH and has not sold all of it yet.

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