Regulations Round-Up: Central Bank-Issued Digital Currencies, Regulatory Clarity
In recent regulatory news, Spain’s Central bank has issued a report favoring the development of a central bank-issued digital currency (CBDC), the president of Taiwan’s central bank has advocated caution regarding CBDCs, the Blockchain Research Institute has published a summary of recent roundtable discussions calling for great regulatory clarity, and a Russian court has a warned a publishing company for breaching advertising legislation with an ad pertaining to cryptocurrencies.
Spanish Central Bank Report Favors Central Bank-Issued Digital Currency
Spain’s central bank, Banco de Espana, recently published a report that seeks to consider the potential impacts that cryptocurrency and distributed ledger technology may have upon the Spanish economy.
The report advocates that the introduction of a central bank-issued digital currency would allow Banco de Espana to more efficiently implement monetary policy, stating: “An argument that could be considered at the time of assessing the introduction of CBDC is related to the improvement in the conduction of monetary policy through a better control in the market returns that savers and borrowers have to face. Also, the possibility of eliminating the restrictions associated with the zero level of the interest rate is theoretically attractive, especially in an environment of low interest rates such as the current one.”
Taiwan Central Bank President Advocates Caution Regarding CBDCs
By contrast, the president of Taiwan’s central bank, Yang Jinlong, recently advocated that financial institutions adopt a cautious approach regarding the central bank-issued digital currency.
During the Finance Technology Ecology Summit, Mr. Jinlong stated: “The financial authorities should be cautious about issuing central bank digital currency (CBDC). We will continue to pay attention to this issue, as well as the development of virtual currency, which may also drive out the debating topic of whether the central bank should issue CBDC. At present, the international consensus towards CBDC is that the general CBDC to the general public should be treated with cautious because of the complexity of issues involved, including the technology, security, policies, and user privacy protection issues.”
DLT Think Tank Advocates for Clarity Regarding Cryptocurrency and Blockchain Regulation
Major distributed ledger technology (DLT) think tank, the Blockchain Research Institute, has published a report calling for increased regulatory clarity regarding DLT and cryptocurrencies.
The report, the “2018 Blockchain Regulation Roundtable,” drew upon discussions involving “executives from blockchain start-ups,” “senior representatives of various global banking and securities regulators,” “senior non-regulatory government officials,” “business leaders from various established industries that are experimenting with blockchain in their business models and practices,” and “lawyers, accountants, investment bankers, and other key industry professionals.”
The report emphasized four “core issues” pertaining to regulations that it calls to be addressed: “The lack of regulatory clarity, the obsolescence of statutes and regulations, the lack of a mechanism for meaningful dialogue between regulators and other stakeholders, and the lack of dialogue between financial service providers and blockchain entrepreneurs.”
The report makes six key recommendations, advocating that the roundtable participants “form a multistakeholder action committee, prepare all stakeholders and the public for self-sovereign identities and pass legislation to recognize digital identities as valid, institute a national regulator with oversight of the nascent industry rather than allow individual agencies to create their own regulations piecemeal, agree on distinctions among cryptoassets and regulate accordingly, discourage discrimination against blockchain entrepreneurs and support start-ups in the space, and encourage the formation of special interest groups to move governance issues forward across applications and domains.”
Russian Court Warns Publisher for Breaching Advertising Laws With Crypto Ad
The Eleventh Arbitration Court of Appeal in Moscow has warned a publishing company after one of its newspapers published cryptocurrency-related advertising deemed to be in violation of Russian laws.
The dispute involved Unity NK – the company producing the newspaper Unity Nizhnekamsk, The Office of the Federal Antimonopoly Service (OFAS) for Tatarstan, and the Volga-Vyatka Central Administration of the Central Bank of Russia. The case arose following the discovery of an advertisement in Unity Nizhnekamsk for “Invest[ment] in cryptocurrencies: Bitcoin, Ethereum, Zcash” and the “Creation and setting up mining farms” by employees of Russia’s central bank – which then appealed to the Office of the Federal Antimonopoly Service due to concerns that Unity NK had violated advertising legislation.
The Tatarstan OFAS determined that “From the meaning of the content of the above advertising it follows that Blumchen Richard Timurovich [the owner the phone number provided in the advertisement] provided financial services, and not consulting,” and as such, Unity NK should be brought to administrative responsibility due to the ad’s failure to detail the name of the individual offering to provide financial services, as is mandated by Russian advertising legislation.
After initially considering fining Unity NK 50,000 rubles (approximately $738 USD), the court chose just to warn the company instead. “The court of first instance reasonably considered that the application of a fine of 50,000 rubles will be unjustifiably punitive, not corresponding to the gravity of the offense and the degree of guilt of the person brought to justice,” the judge stated. “The warning meets the general constitutional principles of punishment justice, its individualization, proportionality to the constitutionally established goals and protected legitimate interests, and is sufficient to implement the preventive nature of administrative liability measures.”
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