Top 10 Bitcoin Regulatory Developments in 2015

There is less than a month left in 2015, but there have not been many groundbreaking new regulatory developments in the world of digital currencies.

The following are the regulatory proposals that I believe will have the most impact.

10. New Jersey: Digital Currency Job Creation Act

In June of this year, the New Jersey Digital Currency Job Creation Act was introduced into the New Jersey Legislature. In 2015, various states have proposed new regulatory bills, but this is the first bill to provide both carrots (rewards) and sticks (penalties) for digital currency businesses.

The penalties are mild: digital currency businesses do not need a license, only registration with the state, but the rewards are significant: significant tax breaks and incentives to fast-track operations. (I had the honor of drafting the text of the bill.)

At the time of writing, legislation for this bill is still being considered.

9. Hong Kong: Bitcoin regulation is unnecessary

In March this year, the Hong Kong government eased its concerns about digital currencies, issuing an official statement saying that Bitcoin "does not pose a significant threat to the financial system."

As a result, the Financial Services Secretary and the Treasury Department concluded that “there is no need to adopt legislation to regulate virtual commodity trading or to prohibit persons from engaging in such activities.”

Hong Kong is a hub for digital currency activity and the announcement provides much-needed certainty for businesses operating there.

8. CFTC: Bitcoin is a commodity

Since 2013, the U.S. federal government has recognized Bitcoin as a currency for anti-money laundering regulatory purposes, but in September, the U.S. Commodity Futures Trading Commission (CFTC) announced its first civil enforcement action against Bitcoin options trading platform Coinflip.

In the process, the U.S. Commodity Futures Trading Commission considered Bitcoin to be a commodity that should be subject to its supervision. As a result, the Coinflip options exchange was punished for not registering with the CFTC.

7. BSA Audit: FinCEN is Serious About Anti-Money Laundering Laws

If you had any doubts about the U.S. federal government’s seriousness regarding digital currency regulation, something happened in 2015 that should have dispelled your doubts. In May, the Financial Crimes Enforcement Network (FinCEN) announced that the Bank Secrecy Act would apply to companies that register as digital currency transmitters.

CERN regularly audits digital currency companies to ensure they comply with anti-money laundering laws.

It is reported that most companies in the industry have actually been audited by FinCEN.

6. California: Licenses for digital currency businesses

California is one of the most important jurisdictions in the United States when it comes to the transfer of funds or technology.

However, the state has consistently refused to license bitcoin companies and has refused to apply existing money transmission licensing laws to bitcoin businesses in the state.

Finally, in March, the state introduced AB 1326, which clarified that bitcoin businesses would operate under licensing guidelines.

The bill has already passed the California State Assembly and is expected to be introduced to the California State Senate for a vote in 2016.

5. Securities and Exchange Commission (SEC): Some mining contracts are actually securities

Just this month, we learned that Bitcoin mining contracts can also be securities, according to the Securities and Exchange Commission (SEC).

In its enforcement action against bitcoin mining company GAW Miners, the U.S. Securities and Exchange Commission alleges that operator Josh Homero Garza and the company engaged in a Ponzi scheme by selling contracts called ‘ Hashlets ’ to the public.

The agency made it clear that Hashlet is a security, which is regulated by securities laws, and therefore the SEC has jurisdiction over the company’s fraudulent behavior.

The SEC also noted that not all mining contracts are securities, and described specific features of Hashlet that cross the line.

4. New York: BitLicense

If you’ve been paying attention to Bitcoin-related laws, the BitLicense is probably the one you’ve heard about the most.

The BitLicense is a New York money services amendment bill that seeks to create a new technology license for Bitcoin and other virtual currency companies in the state.

The bill was first proposed by the New York Department of Financial Services (NYDFS) in mid-2013, and the Bitcoin industry was consulted on the proposal several times.

The BitLicense, initially seen by many as a positive step toward legitimacy for the digital currency industry, began to lose its luster in 2015, according to some, as the instructions for obtaining the license proved to be vague.

The final BitLicense came into effect in August of this year.

3. ItBit: An alternative to BitLicense

In addition to offering a BitLicense bill, New York State also offers alternative options for legally operating in the state. In 2015, NYDFS granted the first special license for a Bitcoin business: itBit, a Bitcoin exchange.

The structure of this trust license is different from BitLicensee.

For example, a BitLicense holder may only hold the client’s bitcoins for safekeeping, while itBit must act as a trustee for the client and put the client’s interests above its own.

2. European Court of Justice rules that Bitcoin sales are exempt from VAT

In October, the European Court of Justice explicitly ruled that sales of Bitcoin are exempt from VAT, a decision that arose from a dispute between members of the Bitcoin community and the Swedish tax authorities, which the court first dealt with in June last year.

1. UK Treasury: Anti-money laundering regulations for wallets and regulatory regulations for exchanges

It may be controversial to put this bill first, but I believe the most important regulatory development in 2015 came from the UK.

In response to a call for comment, the UK Treasury announced in March that it plans to require digital currency exchanges in the UK to implement anti-money laundering standards similar to other regulated financial intermediaries.

This will make UK business very different and, frankly, UK regulation more sensible than its neighbour across the Atlantic.

2016: What to expect?

In mid-2016, I predicted two pieces of regulatory legislation would be introduced.

First, I expect we will see a federal Virtual Currency Transaction Report (VCTR).

Currently, bitcoin exchanges and custodial wallets must report transactions of paper currency or coins exceeding $10,000 to FinCEN in what we call a Currency Transaction Report (CTR). Because few digital currency companies deal with cash, there are only a handful of CTRs in the entire industry.

This represents a blind spot for FinCEN’s financial regulation, and FinCEN has hinted that it is considering expanding the scope of CTR for Bitcoin, and we may see this regulation soon. It may even be part of a more comprehensive rulemaking.

Secondly, we will see countries develop regulatory laws not only for digital currency businesses, but also for blockchain technology businesses, as a large amount of capital begins to flow into the blockchain technology field.

I believe that every country will try to provide some incentives to attract more businesses to settle within their borders.

Original article: http://www.coindesk.com/top-10-bitcoin-regulatoin-2015/
By Marco Santori
Compilation: Overnight porridge
Source (translation): Babbitt Information (http://www.8btc.com/top-10-bitcoin-regulatoin)