Zilling (ZIL), the token for the Zilliqa ecosystem, has surged 33% following the release of the public testnet of the Zilliqa blockchain. The token is now trading at 0.06 USD/ZIL and has a market capitalization of US$439 million, making it the 41st largest cryptocurrency, according to Coinmarketcap.com. Currently, ZILs are interim ERC-20 tokens based on […]
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In a bid to maintain its position as one of the initial regulators of digital currency, the New York State Department of Financial services is taking specific steps.
With the introduction of the blockchain-focused BitLicense in August 2015, Mario Vullo, the superintendent of NYDFS, displayed her agency’s contribution towards the maturity of the digital currency space.
On April 10 2018, she the agency’s continual efforts to supervise the crypto space, based on statements in at the Conference of State Bank Supervisors spring meeting.
Vullo spoke about BitLicense results, and was sure about the regulation helping in protecting market integrity by introducing “stringent standards applicable to all law-abiding business enterprises.”
Vullo Added:
“The regulatory structure that we created for virtual currency has helped our licensed companies attract greater interest from customers, investors, and potential financial services partners seeking to pursue further innovation.”
Mt.Gox Monopoly Prompted BitLicense Formation
As the problems of Mt. Gox, which was handling 70 percent of bitcoin trades in 2015 and faced security concerns, and allegations of market manipulation,continued to grow, Vullo’s agency considered setting up strict regulations to prevent such problems in the future by US-based crypto-businesses. The agency held multiple public hearings in the early half of 2014.
In 2015, BitLicense got finalized, as the virtual currency business got governing rules drafted by the regulator.
Citing the example of Mt. Gox, where fatal flaws were the reason why investors lost hundreds of millions of dollars worth of bitcoin, she said that the regulation would make sure that the competition amongst newbies will not be a “death race.”
Vullo emphasized the agency’s focus on consumer welfare and industry compliance, saying:
“DFS and the states have helped set the standards through our application and examination processes to ensure that customer protection is taken seriously, and cybersecurity and [anti-money laundering] standards are respected.”
Government Sceptical About the Cryptocurrency Regulator
A good part of the industry sees BitLicense as an imposing regulation body, but, the criticism does not deter Vullo from continuing to work on it.
In February, Ron Kim, an assemblyman at New York State, submitted a bill with the aim to replace the framework as only a few companies have opted for the license.
Earlier in 2015, article 78 was in the Supreme Court of the State of New York challenging the authority of the New York State Department of Financial Services to define a “virtual currency.” The case was recently dismissed in January 2018.
Only Three Companies Are “BitLicensed”
Despite its sheen, few have come forward to be “BitLicensed,” with many businesses mostly getting rejected.
The world’s first BitLicense was granted to bitcoin exchange in 2015. Since then, the company has moved away from its core exchange business to that of a cryptocurrency wallet.
Payments network , the world’s third-largest cryptocurrency by market cap, was awarded the second BitLicense in 2016.
The latest BitLicense was issued in January 2017 to San Francisco-based , one of the most funded startups in the bitcoin industry.
Remarks from the meeting are available .
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Owing to the “Wild West” days- meaning no laws or regulations present – of the cryptocurrency market, Ripple, the world’s third largest digital currency, has encouraged the British regulators to follow Japan’s example of the implementation of new rules to end any crypto-frauds.
Crypto-Markets Need Regulations
The UK regulators were asked to maintain a balance between “capturing risks and enabling innovation” by the head of regulatory relations of , Ryan Zagone.
The three most important backers of lawmakers to be aimed at regulation were highlighted by him, namely; consumer protection, anti-money laundering and financial stability.
Zagone that the cryptomarket is at the stage now where it needs a lot more clarity and rules in place to ensure certainty and reinstate trust in it. He also mentioned that it was a reasonably favorable to start using the ‘wait and watch’ approach practiced by regulators.
Zagone’s statements were in regards to the comparison of the regulatory environment of cryptocurrency to the early days of the internet.
Japan’s Regulations An Example For Other Countries
Zagone deemed Japan to be a “leader” and stated that it could be used as an example and blueprint for other countries including the United Kingdom.
In , Japan completely overturned its rules on cryptocurrency by launching and enforcing laws to protect consumers from cryptocurrency crimes and making it mandatory for cryptocurrency exchanges to adhere to anti-money laundering regulations.
But, the process of revamping rules to include newer crypto-assets has not shown a lot of progress in the United Kingdom.
In March 2018, Chancellor Philip Hammond a new taskforce to help safeguard consumers and included representatives from the Treasury, the Bank of England and financial watchdog the FCA. He stated that this task force could enable the UK to “manage the risks around crypto-assets.”
In contrast, Mark Carney, the Governor of Bank of England, that bitcoin, along with other kinds of cryptocurrency are in line of facing a regulatory suppression, claiming that all of them were seen as the “hallmarks of a bubble.”
However, Zagone compared new regulations to the “guardrails on the highway” that allows new players in the market to enter in, and specifically more of institutional investors.
Retail Investors Most Affected
It is said that retail investors have suffered significant losses in the cryptocurrency market, owing to its ever-so-oft rise and fall. To put this into perspective, the crypto market has seen an indelible rise to the peak of more than $19,500 (£13,700) in December 2017, before falling down to $6,600 in March 2018.
In the absence of regulations, the market is heavily manipulated by ‘whales’ – investors with enormous holdings of digital tokens – and computerized bots, which buy/sell large amounts of cryptocurrencies in short periods.
Regulations will go a long way in making the market more attractive for retail investors while creating an optimum environment for growth.
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