The issue of Islamic classification of cryptocurrency has been ongoing since the rise of bitcoin’s popularity, with debate over whether or not bitcoin and other cryptocurrencies are considered halal (permitted) or haram (forbidden).

This is due to the stringent guidelines regarding monetary classification laid out in the Muslim faith, with conditions forbidding usury (the act of lending for profit on interest) as well as currency backed by nothing considered to be of value. The fractional reserve banking practices which led to the 2008 global financial crisis and the collapse of the US housing market, for example, are completely forbidden by Islamic law, and Muslim bankers and financial professionals cannot engage in them in accordance with their faith.

CCN has covered previous cryptocurrency developments in Islam such as the first ever mosque in Britain to accept cryptocurrency for alms-giving and the declaration that bitcoin is halal, or Sharia-compliant, according to certain scholars. Today, further progress has been made with Swiss financial technology firm X8 AG becoming certified by Islamic scholars for its digital currency, a certification that will be necessary to accommodate the company’s planned expansion into the Middle East.

Many other fintech firms are applying for and pursuing Sharia-compliant recognition that will grant them access to the Muslim banking world, and Middle Eastern regulators and exchanges are equally open to attracting international business pending scholarly approval. The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) conference of Sharia scholars met in Bahrain earlier this year with the classification of cryptocurrencies one of the major items on the agenda.

x8 cryptocurrency crypto

X8’s Ethereum-based cryptocurrency is backed by a basket of eight fiat currencies and gold, which helps the requirements for currency in terms of being backed by commodities or resources deemed to be inherently valuable. This distinction can be a shaky one — fiat currencies like the dollar are typically unbacked by gold these days and are simply deemed valuable by virtue of mainstream social acceptance and adoption, and indeed gold is valued higher than its utility as a conductor due to socially-held beliefs that it is a precious metal.

The Islamic requirement that cryptocurrencies are only valuable if society agrees may seem like a catch-22, but this is essentially a more formal version of the same process for Western valuation of cryptocurrency as well. In this case, X8’s cryptocurrency and related tokens have been certified by the Shariyah Review Bureau(SRB), an Islamic advisory firm licensed by Bahrain’s central bank.

X8 director and co-founder Francesca Greco said:

“The Gulf region is a really good place for financial technology companies, because they all want to become hubs for fintech,” adding the company would open a regional office in the Middle East later this month.”

Regional Gulf regulators have encouraged fintech innovation over the past few years but are still wary of cryptocurrencies, which Greco states is an opportunity for stablecoins to step in and fulfill their use case of reducing volatility. Equally, Switzerland has embraced blockchain with open arms, establishing the small city of Zug as one of the world’s leading blockchain hubs, collaborating with other nations on blockchain regulation, and rolling out blockchain voting prototype systems.

This post credited to ccn Images from Shutterstock

When Bitcoin was debuted in October of 2008, the world’s first cryptocurrency was slow to garner traction. At the time, only the most eccentric internet users were willing to allocate capital, time, and brain power to bolster the development efforts of the Bitcoin Network, the first true blockchain/decentralized database. However, as time elapsed, the cryptocurrency found an ally in the Chinese people, many of which were open to utilizing BTC in day-to-day commerce.

While the local cryptocurrency economy saw a multi-year boom, which facilitated the rise of Bitmain, as BTC began its monumental run at the start of 2017, rumors began to circulate that China’s financial regulators were poised to crack down on blockchain-based assets.

Sadly, these rumors eventually became a reality, with the Chinese government reportedly establishing a blanket ban on crypto trading and ICOs in late-2017. As reported by NewsBTC, this heavy-handed action saw RMB/CNY-to-crypto volumes all but dissipate, leading many to claim that China’s crypto scene had sadly bitten the dust.

Due to the apparent extent of the ban, some were quick to believe that all crypto-related actions, including owning digital assets, weren’t permitted in the Asian nation. However, reports indicate that a Shenzhen-based court has ruled in favor of Bitcoin, likely bringing clarity to China’s precarious regulatory climate surrounding cryptocurrencies.

Shenzhen Court Rules In Favor Of Crypto, Bitcoin

CnLedger, a prominent crypto and blockchain source within China, recently claimed that members of the Shenzhen Court of International Arbitration moderated a case pertaining to this new technology.

Citing a document posted on WeChat, China’s one-stop shop for internet users, CnLedger claimed that the court’s verdict indicates that Chinese law permits consumers to transact and own Bitcoin. The local source added that the Shenzhen body has ruled the crypto asset legal due to its inherent nature as “property” and its “economic value.”

While this regulatory green light came as a shock to many, what didn’t come as a surprise is that the same court deemed that Bitcoin isn’t a legal currency by any means. However, in spite of the fact that this ruling may sound disconcerting, the lawyers overseeing this case acknowledged that the use of BTC “can bring economic benefits to parties,” and as such, the asset shouldn’t be invalidated in bona fide transactions and legitimate use cases.

However, it is important to note that this case underwent proceedings in Shenzhen, one of China’s special economic zones, which may have skewed the results of the case in favor of crypto assets.

Could This Ruling Turn The Regulatory Tide For Bitcoin?

Regardless, there are many that are still hopeful for crypto’s future within China, even if restrictions on Bitcoin aren’t consistent throughout the nation of 1.4 billion individuals. Per previous reports from NewsBTC, after Beijing’s recent move to double-down on its anti-cryptocurrency trading efforts, which included issuing public warnings regarding ICOs, blocking 124 exchanges, and banning crypto media outlets, traders took to shady over-the-counter (OTC) exchanges to purchase and sell cryptocurrency for fiat currencies.

While the WeChat document didn’t mention these questionable exchanges, the aforementioned court’s ruling to validate the use of Bitcoin in transactions could be a precursor to the reappearance of Chinese cryptocurrency exchanges, which are near-impossible to access in the eastern country.

So although this move isn’t likely to jumpstart China’s second drive for widespread cryptocurrency adoption, this unexpected ruling from Shenzhen’s International Arbitration Court indicates that hope isn’t lost for local Bitcoin fanatics.

This post credited to News BTC  Image source: News BTC

Indian regulators’ clampdown on cryptocurrency businesses is forcing the exchange startup Unocoin to experiment with stablecoins and ATMs to continue receiving fiat deposits from customers.

Unocoin co-founder Sunny Ray told CoinDesk his company hasn’t been able to transact through regular banking channels with its 1.3 million customers for several months, after the Reserve Bank of India (RBI) banned banks from working with crypto or crypto companies in April.

Most recently, Unocoin set up an ATM in a Bangalore mall where customers can deposit rupees to their exchange accounts without a bank or credit card. In the coming weeks, Unocoin will open a few more ATMs in Mumbai and Delhi.

“We’re essentially employing bank-grade ATM machines,” Ray said.

Also, some users are quickly transferring their rupees to the ethereum-based TrueUSD token, which Unocoin began supporting in August, then using it to purchase bitcoin or other assets down the line when the price feels right. As a so-called stablecoin, TrueUSD is designed to maintain parity with the U.S. dollar.

For customers outside Bangalore, support for stablecoins may provide an indirect way to add or hold value in their Unocoin accounts without quite as much volatility, albeit it falls short of a fiat on-ramp. However, that transaction volume is still less than a few thousand TUSD per day.

“We never even considered that [stablecoins] before,” Ray said. “That’s more just like a stop-gap solution. It’s not like an actual, final solution to everything.”

As Unocoin investigates how to scale compliant ATMs, Ray said the team is also looking to expand to Malta and Canada, in case operating in India becomes impossible altogether, all while exploring the options for listing several new stablecoins.

Stepping back, an ongoing legal battle to overturn or alter this ban hasn’t yielded any results to date. Meanwhile, the ban is having a disastrous impact on India’s crypto community, with the popular exchange startup Zebpay abruptly shutting down late last month.

As Kashif Raza, a co-founder of Crypto Kanoon, an Indian regulatory news startup, told CoinDesk:

“The crypto community is suffering from this ban as there have been instances where the bank accounts of individuals have been closed who were found to be dealing in cryptocurrencies.”

The crackdown has been so severe that Raza said it has created a misconception in India that bitcoin itself is outlawed, even though the ban only applies to entities governed by RBI.

“From a regulatory perspective there hasn’t been any real clarity,” Ray said. “We as a company are working on a couple of solutions.”

Silver lining

None of this should imply that Indian crypto startups are now operating in a black market. To the contrary, Raza said exchange accounts can sometimes require more know-your-customer (KYC) paperwork than opening a new Indian bank account. Many see the ban as an inconvenient pause, not a death knell.

“Given the fact that the Indian government seems to be in favor of the technology behind virtual currencies, the crypto community is quite hopeful that [banking crypto companies] will be regulated in future,” Raza said.

Plus, Unocoin’s ATMs allow for regulation-conscious investors like Karthik Reddy of Blume Ventures, who praised the new ATMs in a press statement, to keep detailed records of their crypto portfolios while still depositing fiat currency as needed.

On the other hand, the ban has certainly invigorated peer-to-peer trading. Indeed, the P2P exchange WazirX reached a new daily trading volume peak of 50 BTC in September 2018. At the same time, the global P2P exchange LocalBitcoins reached nearly $1.5 million in weekly Indian trading volume at least three times since August.

And there’s even silver lining for Unocoin, which has seen up to 500 new account registrations every day ever since Zebpay closed its doors.

“It’s almost kind of freeing in a way because there are a lot of people in India that don’t have online banking,” Ray said. “Almost everybody in India uses cash, so it might in an odd way open us up to an even bigger market.”

Still, speaking to how restricting crypto companies that seek to serve a country of 1.3 billion could affect global adoption, Ray concluded:

“Innovation is being squashed in a country where one in seven people live.”

This post credited to Coindesk Image source:  Unocoin. 

North Dakota Securities Commissioner Karen Tyler has issued cease and desist orders against three firms for allegedly offering unregistered and fraudulent securities in the form of Initial Coin Offerings (ICOs), according to an announcement published Oct. 11.

The companies at the center of the orders are Crystal Token, Advertiza Holdings (Pty) Ltd., and Life Cross Coin a/k/a LifecrosscoinGmbH. Per the statement, Crystal Token (CYL) is an “evolutionary multi-utility” ERC-20 token, that promises earnings up to two percent per day. The token’s website allegedly contains fraudulent claims of “excessive unsubstantiated” rates of return on investment. CYL is not authorized to sell securities in North Dakota.

Advertiza Holdings offers cryptocurrency called “Tizacoin,” or “TIZA,” and claims that holders “can expect to make a profit from the appreciation of the value of TIZA tokens.” That, according to the regulator, indicates that the token’s description as a utility token is incorrect, and is instead a security.

According to the North Dakota Securities Department, Advertiza falsely claims to be registered with the U.S. Securities and Exchange Commission (SEC) and is also not registered to sell securities in North Dakota.

The third firm, Life Cross Coin, operates a website from a Berlin IP address associated with ransomware, malware, and identity fraud, and offers a cryptocurrency called “Life Cross Coin,” or “LICO.” The firm claims that the token will be spent on charity, while investors can allegedly get a “huge return on investment.” LICO is not registered in North Dakota, and its site reportedly contains unsubstantiated claims and blatant misrepresentations. Tyler commented on the orders:

“The continued exploitation of the cryptocurrency ecosystem by financial criminals is a significant threat to Main Street investors. In formulaic fashion, financial criminals are cashing in on the hype and excitement around blockchain, crypto assets, and ICOs – investors should be exceedingly cautious when considering a related investment.”

The order is part of Operation Cryptosweep, a coordinated multi-jurisdiction investigation into potentially fraudulent crypto investment programs, that involves 40 U.S. and Canadian state and provincial securities regulators. Since the initiative’s launch in May, investigators discovered about 30,000 crypto-related domain names and conducted over 200 investigations of ICOs.

In May, the Colorado Securities Commissioner launched probes into two companies — California-based Linda Healthcare Corp. and Washington-based Broad Investments LLC — for promoting unlawful ICOs.

 

This post credited to cointelegraph  Image source: Cointelegraph

Kenyan Distributed Ledgers and Artificial Intelligence task force chairman Bitange Ndemo has said that the government should tokenize the economy, local news outlet The Star reported September 25.

The taskforce was established in March by the government of the Republic of Kenya in order to evaluate proposals on how to deploy blockchain technology in the public sector. The working group consists of local blockchain startups, experts, researchers, regulatory bodies, lawyers and other associated parties.

Speaking at an Information and Communication Technology Ministry (ICT) stakeholders meeting with the private sector, Ndemo reportedly asserted that the government should consider tokenization of the economy in order to deal with “increasing” rates of corruption and uncertainties. This move, according to Ndemo, would have the government print less hard currency. The chairman said:

“We must begin to tokenize the economy by giving incentives to young people to do things which they are paid through tokens that can be converted to fiat currency.”

In addition, Ndemo stated that the adoption of tokens could reduce unemployment levels, outlining the necessity of issuing a digital currency equivalent to a fiat currency. The ICT Principal Secretary Jerome Ochieng said that the government will develop relevant policies to process the recommendations proposed by the taskforce.

Notably, the Central Bank of Kenya (CBK) issued a circular to all banks in the country in April, warning them against dealing with cryptocurrencies or engaging in transactions with crypto-related entities. CBK Governor Patrick Njoroge cited crypto’s prevalence in illegal activities, its anonymous nature, and its lack of centralized control as the impetus for the ban.

In June, decentralized liquidity network Bancor launched a network of blockchain-based community currencies to fight poverty in Kenya. The project seeks to stimulate local and regional commerce and peer-to-peer activity by enabling Kenyan communities to create and manage their own digital tokens.

This post credited to cointelegraph  Image source: cointelegraph

 

The Financial Action Task Force (FATF) said it is getting closer to the establishment of a global set of anti-money laundering (AML) standards for cryptocurrencies, Financial Times reported September 19.

The FATF is an international organization established in 1989 at the initiative of the G7 in order to develop policies and standards to fight money laundering. The agency’s scope of activities further expanded to combat terrorism financing. The FATF currently comprises 35 member jurisdictions and 2 regional organizations.

The agency’s president Marshall Billingslea reportedly said that he expects the coordination of a series of standards that will close “gaps” in global AML standards at an FATF plenary in October.

At that time, the FATF will purportedly discuss which existing standards should be adapted to digital currencies, as well as revise the assessment methods of how countries implement those standards. Billingslea also outlined the importance of developing standards that can be applied in a uniform manner.

According to Billingslea, current AML standards and regimes for cryptocurrencies are “very much a patchwork quilt or spotty process,” which is “creating significant vulnerabilities for both national and international financial systems”. Billingslea, noted that despite the risks related to this kind of assets, digital currency as an asset class presents “a great opportunity.”

In June, Cointelegraph reported that the FATF was planning to start developing binding rules for crypto exchanges later that month. The new rules would be an upgrade to the non-binding resolutions which were approved by the FATF in June 2015, considering whether existing guidelines on AML measures and reporting suspicious trading activity are still appropriate, and if they can be applied to new exchanges.

Earlier this month, Belgian think-tank Bruegel also called for unified legislation on cryptocurrencies and more scrutiny on how they distributed to investors. Bruegel noted that the virtual nature of cryptocurrencies limits the development of regulations, stating that a piecemeal approach to crypto regulation leaves an opportunity for regulatory arbitrage.

 

This post credited to cointelegraph  Image source: Cointelegraph

German’s Finance Minister Olaf Scholz doubts that cryptocurrencies can currently replace traditional fiat currencies, Cointelegraph auf Deutsch reportstoday, September, 18.

“I would doubt today, whether it has a perspective as a currency model, ” saidScholz at a “citizens dialogue” at the German-Dutch Army Corps in Münster. Scholz compared cryptocurrencies to the tulip fever bubble in the Netherlands in the 17th century saying, “and the danger is great that there will be such a tulip inflation.”

Scholz said that the necessary computer processes for the mass implementation of cryptocurrencies are so expensive and energy-intensive that it could not work, but that he did not want to speak for the future “20 to 30 years.”

According to Scholz, cryptocurrencies should also be closely observed by regulators, as they could be used for terrorist financingmoney laundering or other criminal activities. He added that “…we do not believe that they already have an economically significant importance today.”

European legislators have met in several capacities in the past several weeks in order to discuss their concerns over cryptocurrencies and the potential remedies to problems associated with digital assets.

On September 4, members of the European Parliament met to discuss regulations for Initial Coin Offerings (ICOs), which while being a “very interesting and promising vehicle instruments” for raising capital, require more regulatory oversight in the view of many European legislators.

At a recent meeting of the Economic and Financial Affairs Council in Vienna, European Commission Vice President Valdis Dombrovskis claimed that crypto needs further regulation. While noting that crypto is “here to stay,” Dombrovsksis stressed that the European Union (E.U.) will focus on the development of crypto asset classification and regulatory mapping.

Prior to the aforementioned meeting, a report by Belgian think tank Bruegel urged European regulators to adopt uniform regulations on cryptocurrencies at the E.U.-level. The report notes that while regulations are left to national entities, there is an opportunity for “regulatory arbitrage” for crypto businesses.

 

This post credited to cointelegraph  Image source: cointelegraph 

The autonomous community of Aragon in northeastern Spain will be the first in the country to apply blockchain technology in its public administration, local news agency Europa Press reports Monday, September 17.

Aragon is one of Spain’s 17 autonomous communities, which were created with the goal of guaranteeing a qualified amount of autonomy for different nationalities and regions in the country.

Fernando Gimeno, the counsellor of Finance and Public administration in the Aragonese government, has signed a contract with Alastria — a blockchainecosystem of more than 274 entities, including companies and institutions which create blockchain-based tools in line with Spanish and E.U. legal frameworks. As a result of the partnership, Aragon will become the first Spanish autonomous community to provide blockchain-based services at the state level.

Gimeno called the contract “transformative”, stating that the world will “realize suddenly and strongly” the power of blockchain technology in the near future. He also stressed that blockchain is “the future of technology” and “fundamental” for public administration.

The Aragonese counsellor thinks blockchain will improve transparency and the efficiency of the administration, which in turn will attract business and investments. He further added that employees of the regional administration are already being trained to work with the technology in order to get acquainted with its “enormous potential.”

Neighboring Catalonia has also expressed interest in blockchain-based tools for its public administration, Cointelegraph reported in June 2018. The Autonomy’s Department of Digital Policies planned to develop a strategy for incorporating blockchain by the end of December 2018.

As blockchain-based technologies become integrated in public administration all over the world, the former ruling party in the Spanish government, Partido Popular, considered giving tax breaks to companies that use blockchain technology.

Later in June, Spanish left-wing political coalition Unidos Podemos suggested that the Spanish government establish a subcommittee responsible for studying the potential of blockchain technology and cryptocurrency regulation.

 

This post credited to cointelegraph  Image source: cointelegraph 

The U.S. Securities and Exchange Commission (SEC) said Tuesday that it has charged and reached agreements with two companies and their owners that operate in the cryptocurrency space.

The securities regulator alleged that Crypto Asset Management LP (CAM) and its principal, Timothy Enneking, had marketed itself under false pretenses, alleging that Enneking raised more than $3 million in late 2017 and claimed that the company was “the first regulated crypto asset fund in the United States.”

According to the SEC statement, Enneking and the company agreed to the SEC’s cease-and-desist order and will pay a penalty of $200,000, without admitting or denying the agency’s findings. Enneking didn’t immediately respond to a request for comment.

Although this isn’t the first time the SEC has issued cease-and-desist letters to companies operating in the crypto space, it is the first that found fault with registration statements made by a cryptocurrency investment company.

Separately, the SEC accused TokenLot LLC and its owners, Lenny Kugel, and Eli L. Lewitt, of acting as unregistered broker-dealers. The agency said that TokenLot – described as a kind of “ICO Superstore” – “received orders from more than 6,100 retail investors and handled more than 200 different digital tokens, which the SEC found included securities.”

As in the case of CAM, Kugel, Lewitt and TokenLot didn’t agree to or deny the SEC’s findings, but agreed to pay $471,000 in disgorgement plus $7,929 in interest.

Lewitt and Kugel will also pay $45,000 each in penalties and “agreed to industry and penny stock bars and an investment company prohibition with the right to reapply after three years.”

“The penalties in this case reflect the prompt cooperation and remedial actions by TokenLot, Kugel, and Lewitt,” Steven Peikin, co-director of the SEC’s Enforcement Division, said in a statement.

Notably, their deal with the SEC also states that they will find “an independent third party to destroy TokenLot’s remaining inventory of digital assets.” How this process will play out is unclear at this time.

Both the SEC orders referenced its 2017 DAO report, which paved the way for a series of SEC enforcement actions against alleged fraudsters in the ICO ecosystem. At the time, the agency said that securities law in the U.S. could apply to token sales.

Since then, senior officials at the SEC, including its chairman Jay Clayton, have made ICOs a significant priority for the agency.

The SEC orders can be found below:

In the Matter of TOKENLOT, LLC, LENNY KUGEL, AND ELI L. LEWITT, by CoinDeskon Scribd

In the Matter of CRYPTO ASSET MANAGEMENT, LP and TIMOTHY ENNEKING, by CoinDesk on Scribd

 

This post credited to coindesk SEC emblem image via Shutterstock

The United Arab Emirates (UAE) has approved a draft of regulations governing Initial Coin Offerings (ICO), local media outlet WAM reported Sunday, September 9 citing government sources.

The reported move comes in addition to lawmakers in the country adopting plans for a regulatory sandbox aimed at attracting greater fintech activity.

“The sandbox will act as an environment that attracts innovators to test innovative products, services, solutions and business models in a controlled space,” a report from the Securities and Commodities Authority (SCA) published September 4 reads, adding:

“This can be achieved by adopting an approach of relaxing and / or waving regulatory requirements for participants in the sandbox, while at the same time, ensuring that appropriate consumer protection safeguards are in place.”

The regulatory proposals regarding ICOs gained approval from the SCA in July, while WAM now reports the agreement will enter into law upon its imminent publication in the UAE’s Official Gazette, an official periodical containing all the country’s legislation.

“The SCA Board of Directors has approved the SCA plan to regulate the ICOs and recognise them as securities,” WAM stated, noting:

“The Board of Directors, having reviewed a study on the best international practices in this regard, has issued a directive that the procedures for trading digital token are to be regulated. The plan developed by the SCA includes a set of mechanisms as part of an integrated project to regulate digital securities and commodities.”

The UAE has pursued an in-depth policy of fintech integration in recent years, with a particular emphasis on blockchain at both municipal and state level.

 

This post credited to cointelegraph Image source: cointelegraph