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Blockchain industry raises concerns over EC’s proposed crypto regulations

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Major players in the global cryptocurrency community have addressed the European Commission’s new legislative proposals on digital assets. The International Association for Trusted Blockchain Applications, or INATBA, has released an initial response to the Markets in Crypto-Assets (MiCA) regulations proposed by the EC. The association features major crypto companies like Ripple, ConsenSys, and Iota.

In its official response to the EC, the INATBA members expressed the industry’s concerns over the proposed MiCA regulations, calling the authority to bring their forces together in further development of the regulatory framework. While the INATBA generally sees the MiCA as a positive step that aims to establish regulatory clarity, some of its members outlined a number of significant concerns.

For example, they claim that in its present form, the MiCA could “overburden a young and innovative industry with costly and complex compliance and legal requirements that are disproportionate to the policy objectives it pursues.” The association expressed hope that the EC will provide supportive measures to ensure that the MiCA does not stifle innovation within the European Union and cause the EU-based firms to flee to non-EU countries.

As part of the response, the INATBA also underlined that the proposed legislation in its current form could negatively impact some emerging industry sectors like Decentralized Finance, or DeFi. “Certain analyses suggest that, under the proposed regulation, novel and early-stage developing markets such as Decentralised Finance would likely no longer be accessible to Europe and her citizens,” the INATBA’s statement reads.

Officially introduced on Sept. 24, MiCA regulations are part of the EC’s new digital finance package that is subject to consideration by the EC’s legislative counterparts. According to global digital asset policy and regulatory adviser XReg Consulting, MiCA will be directly applicable throughout the EEA without the need for national legislation once adopted.

In its summary to MiCA, XReg expressed confidence that the new legislation will have a profound impact not only on the European Economic Area, but on the entire world. Nathan Catania, a partner at XReg Consulting, told Cointelegraph that he expects the adoption of the new legislation to take a few years.

Established with the EC’s support in April 2020, the INATBA has more than 100 members including tech giant IBM, consulting giant Accenture, and Deutsche Telekom.



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ICO issuer charged with fraud by SEC for selling unregistered security

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The United States Securities and Exchange Commission, or SEC, has charged a cryptocurrency issuer for “making materially false and misleading statements” in connection with an unregistered security offering conducted between August 2017 and January 2018, offering further evidence that regulators were still targeting initial coin offerings from the last major market mania. 

Loci Inc., the platform behind LOCIcoin, and CEO John Wise were formally charged on Tuesday. The SEC claims that Loci and Wise misled investors about the company’s revenues, employee numbers and user base during the $7.6 million crowdsale. The regulator also alleges that Wise misused $38,163 in investor proceeds for personal expenses.

“Loci and its CEO misled investors regarding critical aspects of Loci’s business,” said Kristina Littman, the head of the SEC Enforcement Division’s cyber unit, adding:

“Investors in digital asset securities are entitled to truthful information and fulsome disclosures so they can make informed investment decisions.”

The order also requires that Loci and Wise pay a $7.6 million civil penalty for their transgressions.

Handing out penalties to cryptocurrency businesses is nothing new for U.S. authorities. Regulators from the SEC, Commodity Futures Trading Commission and Financial Crimes Enforcement Network have imposed fines of more than $2.5 billion on cryptocurrency-related businesses since 2014, underscoring the murky regulatory climate surrounding digital assets.

Elliptic Enterprises, a blockchain analytics firm headquartered in the United Kingdom, reported Tuesday that the $2.5 billion in penalties covered a broad range of infractions, including fraud, the selling of unregistered securities and a failure to uphold Anti-Money Laundering regulations.

The SEC accounted for the lion’s share of the penalties at $1.69 billion. The CFTC imposed penalties of $624 million and FinCEN slapped crypto businesses with $183 million in fines. The Office of Foreign Asset Control handed out the smallest fines among the regulators at $606,000.

Cryptocurrencies have been described by many as the wild west of finance. Tens of thousands of crypto-centric projects have launched in the wake of Bitcoin’s genesis block in early 2009. Many of these companies got their start in 2017 during the height of the initial coin offering boom.

Related: With US regulators handing out $2.5B in fines since 2014, crypto is not the ‘wild west’ of finance

ICOs allowed crypto startups to raise millions of dollars without having to meet the stringent regulations of more traditional security offerings. ICO funding reached the tens of billions in 2017 and 2018 combined, attracting unwanted attention from securities regulators. The SEC successfully charged the founders of several crypto companies, which effectively put an end to the mania — in the United States, at least.