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Crypto Exchange Kraken Says US Subpoenas Becoming ‘Barrier to Entry’

San Francisco-based cryptocurrency exchange Kraken has said that the cost of handling government subpoenas is fast becoming a “barrier to entry” in the U.S.

On Saturday, the exchange tweeted an infographic from its “2018 Transparency Report,” indicating that the law enforcement and other inquiries it has received from various government agencies around the world have almost tripled year on year.

The firm received a total of 475 subpoenas in 2018 compared to 160 in 2017, with the majority (315) coming from U.S. agencies. The U.K. came in second with 61 requests and Germany third with 34.

“You can see why many businesses choose to block US users,” Kraken said in its tweet.

Source: Kraken/Twitter

Breaking down the U.S. figures, the agency making highest number of inquiries at Kraken was Homeland Security Investigations (HSI) with 91 subpoenas. That was followed by the FBI with 67 and the Drug Enforcement Administration (DEA) with 40. The SEC and the CFTC made 29 requests combined.

Kraken said in a Twitter thread that it gets requests for “all transactions, which could be petabytes of data when they actually only need the withdrawals from last week for one guy.” Such inquiries are “taxing” on the firm’s resources as they often require a “significant amount of education and back-and-forth,” it said.

When asked why it received more inquiries from the U.S. than other nations, the exchange replied:

“US is about 1/5 of clients but 2/3 of requests. US agencies are much more active and are much less surgical. For many requests, we have no matches. It wouldn’t be surprising to find that the same subpoenas go out to everyone in the hopes that a match will be found.”

The exchange is famously critical of U.S. officialdom. Back in April, Kraken CEO Jesse Powell told CoinDesk that the exchange would not be complying with an inquiry into crypto exchanges launched by the New York Attorney General (NYAG). “I realized that we made the wise decision to get the hell out of New York three years ago and that we can dodge this bullet,” Powell stated at the time.

Later, in September, when the NYAG report was released, finding that many crypto exchanges are vulnerable to market manipulation, Powell further tweeted that “NY is that abusive, controlling ex you broke up with 3 years ago but they keep stalking you…”

U.S. law image via Shutterstock 

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Business Models Should Be ‘Re-Imaged’ for Blockchain, Says Barclays Rep

A Barclays Intrapreneur said that blockchains should be built with regulatory compliance in mind during a recent industry event.

A Intrapreneur from financial services giant Barclays has expressed the idea that blockchains should be built with regulatory compliance in mind, tech news website The Next Web (TNW) reported Dec. 14.

Speaking at a Hard Fork Decentralized event, Barclays’ Julian Wilson stated that when building blockchains, developers need to “reconfigure our approach and way of thinking.” Wilson argued that not all business models require blockchains and that the tech should not be used, as TNW paraphrased his words, “as bolt-ons or additions to current business models.”

TNW also reports that Wilson presented an integrated concept of regulation and development, arguing that “to make a blockchain legally compliant, it should be built with the law in mind, and not the other way around.”

Speaking about using blockchain at Barclays, he noted that for a bank with over 300 years of activity, changing its business model to a blockchain-based one would not be simple, and that a blockchain solution would need to be “bespoke.”

As Cointelegraph reported in August, Barclays sponsored a blockchain hackathon to explore the technology’s potential in the processing of derivatives contracts.

While this summer Barclays denied plans to open a cryptocurrency trading desk, the banking giant demonstrated interest in crypto and blockchain tech recently, filing two digital currency and blockchain patents with the United States patent office in July.

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Blockchain Policy Development in China Concentrated in Three Cities

One third of national blockchain-related policies in China have been made in three areas: Beijing, Shanghai and Guangzhou.

Beijing, Shanghai and Guangzhou — or BeiShangGuang — has become the most concentrated area of ​​relevant blockchain legislation and policy in China, reports local finance publication Securities Daily Dec. 7.

The Chinese securities newspaper has analyzed blockchain-related policies introduced throughout the country in the recent years, and concluded that there are 32 blockchain-related policies within the country. Meanwhile, 11 projects are concentrated in three areas: Beijing , Shanghai  and Guangzhou. The publications states:

“Blockchain technology [is aimed] to serve the real economy, focusing on the balance between innovation, regulation and security, and clarifying the bottom line of financial stability and information security.”

China has adopted a split policy toward blockchain and cryptocurrencies, praising and adopting blockchain technology — China’s President Xi Jinping has publicly called blockchain a technological priority of the 21 century — while banning cryptocurrencies.

Last month, China’s Ministry of Industry and Information Technology (MIIT) published a document, calling  to “accelerate” the development of standards for blockchain system applications across various domestic industries.

Also last month, a new blockchain alliance, involving 54 different companies, was established in Guangzhou city, aimed to promote and develop blockchain technology in the country.

Meanwhile, the Chinese government has purportedly censored certain materials pertaining to cryptocurrencies. When Andreas Antonopoulos’  book “Mastering Bitcoin” appeared on China’s state-run TV channel, the title had been changed to “Blockchain: the Road to the Digitization of Assets,” and contained no references to Bitcoin (BTC).

The People’s Bank of China (PBoC), the Chinese central bank, had made several warnings against cryptocurrencies, calling them “bubbles” in financing and investment. Earlier this week, the Beijing Municipal Bureau of Financial Work reminded the public that Security Token Offering (STOs) were considered illegal in the jurisdiction.

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Thai Securities Regulator Considers Various STO Classifications for Regulatory Framework

The deputy secretary of the Thai SEC has said the regulator has yet to decide how to regulate STOs.

The deputy secretary of the Thai Securities and Exchanges Commission (Thai SEC) has declared that Thai-related Security Token Offerings (STOs) launched in an international market break the law, English-language daily Bangkok Post reports Nov. 29.

The aforementioned article states that deputy secretary Tipsuda Thavaramara “said the regulator will have to consider how to deal with STOs for issues such as share ownership, voting rights and dividend.”

There still confusion about how to regulate these kind of offerings, Thavaramara reportedly declared:

“At the moment, we have not decided whether STOs fall under the SEC Act or the Digital Asset Act, but it depends on the STO’s conditions and the details in its white paper.”

Bangkok Post reports that Thavaramara noted that a “STO affiliated with Thai investors launching in an international market at this point would be guilty of wrongdoing under the Digital Asset Act” as it would avoid “regulated fund-raising channels.”

Prinn Panichpakdi, managing director of CLSA Securities Thailand, a Thai securities brokerage provider, stated that “the SEC will have to consider how to deal with this” or STOs will “will launch in other markets.”

As Cointelegraph recently reported, Thailand has revealed plans to legalize Initial Coin Offerings (ICO), authorize cryptocurrency exchanges, and regulate cryptocurrency in a way that legitimizes it. The governor of the Bank of Thailand (BoT) also said in late November that it will take between three and five years for cryptocurrencies to replace cash.

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Ohio Becomes First US State to Allow Taxes to Be Paid in Bitcoin

Ohio has become the first U.S. state to allow taxes to be paid in bitcoin.

According to a report from The Wall Street Journal on Sunday, starting this week, companies in the state will be able to pay a variety of taxes, from tobacco sales tax to employee withholding tax to public utilities tax with the cryptocurrency.

The filing process involves three steps: First, businesses will have to register with the Office of the Ohio Treasurer through a dedicated portal called OhioCrypto.com. They then need to enter tax details such as payment amount and tax period, and, finally, the due amount is paid in bitcoin using a “compatible” crypto wallet, according to the portal.

Compatible wallets include the Bitcoin Core client, Mycelium and breadwallet, and others that are compatible with the Bitcoin Payment Protocol.

All tax payments will be processed by Atlanta-based bitcoin payments processor BitPay, which will convert bitcoins to dollars for the Treasurer’s office.

While, for now, the facility is available only for businesses, it is reportedly expected to be made available to individuals in the future.

Lawmakers in other U.S. states have also considered allowing crypto tax payments in the past. Back in March, Illinois and  Arizona were both weighing proposals to allow residents to pay their tax bills in bitcoin. Georgia was also considering the option in February.

However, Arizona’s lawmakers scrapped the plan two months later due to insufficient votes for the proposal. Similarly, Georgia’s proposal also stalled in April, due to a “lack of understanding” about cryptocurrency, said Senator Mike Williams at the time.

Ohio has also been working to bring other aspects of blockchain technology into law. Over the summer, the state legally recognized data stored and transacted on a blockchain, meaning electronic signatures secured through blockchain technology have the same legal standing as any other electronic signatures.

In the same month, Ohio lawmakers also pitched their state as a future hub for blockchain, hoping to both attract companies in the space and blockchain talent to the jurisdiction.

Ohio state flags image via Shutterstock