Breaking: Google to Reverse Crypto Ad Ban for Exchanges Advertising in the US, Japan
Date: 25 September 2018
After banning all cryptocurrency-related ads from its platforms in March 2018, Google this week announced a partial lifting of this ban, to come into effect in October. Ads will now be allowed from regulated cryptocurrency exchanges in the US and Japan, provided they have been certified by Google for the country in which their ads will be shown.
This change in policy follows a similar decision by Facebook to allow ads from “pre-approved advertisers”. The approval seems to be related to applicants demonstrating that they have abided by some form of regulatory framework.
It’s not surprising that exchanges in Japan have been cleared by Google. It is a major center for crypto trading, and there has been support for cryptocurrency-related businesses from the Japanese authorities, provided they operate within a regulated framework. Japan became the first country to legalize cryptocurrencies last year. The Payment Services Act designates cryptocurrencies or virtual currencies as a form of payment. Exchanges are subject to strict registration and financial controls and are actively monitored by the Financial Services Commission. This was tightened even further following the hack of the Coincheck exchange early this year. A self-regulating body, the Japan Virtual Currency Exchange, has been set up to oversee virtual currency exchanges. There has also been work on a template for cryptocurrency regulation around exchanges and ICOs.
Japan has created a lot more clarity around the cryptocurrency industry, and its templates may become the example for other countries.
In the US there has also been a move towards more regulation of exchanges. In March 2018, the SEC announced that exchanges trading digital assets that meet the definition of securities must register with the SEC. Those exchanges wishing to operate as alternative trading systems (ATS’s) would have to register as broker-dealers and become members of a self-regulatory organization.
Coinbase, one of the biggest crypto exchange in the USA, has indicated that it wants to bring the benefits of blockchain to the regulated financial services industry. As part of this goal, it has recently acquired a broker-dealer license (B-D), an alternate trading system license (ATS) and a registered investment advisor (RIA) license. It has now applied to operate as a regulated broker-dealer. It will operate under the oversight of the SEC and FINRA (Financial Industry Regulatory Authority).
Poloniex, one of the top exchanges in the world, is said to earn revenues in the billions of dollars. Most of this has come from altcoins, generally associated with ICOs. Poloniex was recently taken over by Circle, and they have announced their intention to register with the SEC. Similarly Kraken, another US-based exchange is said to be contemplating the same steps.
It remains to be seen whether there will be a further lifting of bans by social media companies. It would seem to depend on the crypto industry itself deciding to apply some rules and regulations to the ways its members operate their businesses.
Coinbase in the news: New listing process and holder of new e-License from the UK.
Date: 25 September 2018
There were two big stories about Coinbase this week. The first, reported on their own Medium blog site, disclosed details of “Coinbase’s new asset listing process”. The second also reported in a Medium article, announced that “Coinbase Becomes Electronic Money Institution Under U.K.’s FCA Regulations”
Coinbase is a global digital asset exchange company (GDAX) that has until now taken a very cautious approach to the listing of new assets. It has allowed trades in Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin and fiat currencies. According to their website, Coinbase has served over 10 million customers and facilitated the exchange of more than $50 billion worth of digital currency. Trading volume for 27 September 2018 was over $191 million, and Coinbase was ranked 14th largest exchange in the world.
However, there are thousands of digital assets of all types, including coins, tokens, forks, stablecoins and collectibles. One of the top requests from Coinbase customers has been to add these assets to the platform. This is now going to happen. Coinbase has outlined the process to be followed, that will allow it to retain its standards about the assets that it lists and make sure that it is compliant with local laws. There will be no charge for these new listings at this point.
The second story related to Coinbase getting both the e-money license (Electronic Money Institution license) from the UK and membership of the EU’s Payment Services Directive (PSD). This is a huge step for a crypto exchange.
Coinbase is now allowed to issue electronic money and provide “services that allow payments to be made electronically, including through credit cards and money transfer operations.” The
PSD membership will allow for faster and safer transfers of fiat currencies into and out of Coinbase and local bank accounts. The time taken for wire transfers is expected to be reduced from several days to several hours.
The licenses will allow Coinbase to operate in the UK and the 23 states of the European Economic Area. This opens the market not just for Coinbase but for individuals who are looking for a safe way to get involved in the crypto world.
It will have to comply with rules about the safeguarding of customer funds. This includes keeping any fiat currencies in separate bank accounts. This will act as an additional security layer for customers, whose fiat funds will be safe even if Coinbase were to be hacked or go bankrupt.
As regulations increase, it is becoming clear that the crypto companies that want to survive will have to be compliant. Coinbase is making sure that it will be one of them.
Ripple in the news: Ripple trading places with Ethereum, Ripple with capacity for 50K TPS and Ripple part of the group to influence US lawmakers
Date: 26 September 2018
It’s been hard to avoid reading about Ripple this week.
The first topic has been about the fluctuating price of XRP. Last week a price surge led to Ripple overtaking Ethereum as the coin with a second-highest market cap after Bitcoin. The price dropped from $0.65 on Friday of last week to a low of about $0.45 on Tuesday. However, as it rose slightly on Wednesday it again overtook Ethereum for a short while.
There is speculation that this rise is associated with Ripple’s xRapid payment system, due to go live this month. The XRP token will be an integral part of cross-border funds transfers. Increased use of the token should lead to increased value.
At the same time, yet another bank — the US bank PNC — has announced that it will be using the Ripple platform to process international payments for its clients.
The second topic is related. Ripple says that it has improved its throughput capacity to a potential 50K per second (this compared to Ethereum at less than 20 TPS). If this is true, then Ripple is a serious contender even against a traditional service like Visa, and it would be lining itself up to be the coin of choice particularly in future IoT applications.
The third topic was about Ripple being part of a group of major players in the crypto and blockchain space who have joined together to present the case for the industry to US lawmakers. They will employ the lobbying group Klein/Johnson. Payment to the lobbyists will be in crypto, including XRT.
They will be looking to make sure that lawmakers start to understand the difference between coins and tokens that should be defined as securities and those that are commodities or special assets. This is to ensure that there is not just negative pressure from the SEC to crack down on ICOs and to regard all cryptocurrencies either as illegal or as securities.
The group is calling itself the Securing America’s Internet of Values Coalition. Their purpose is to ensure that lawmakers understand the potential of crypto and blockchain. This should lead to a form of government oversight that will encourage innovation and support competition in this new and volatile industry.