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Two US Bills Focus on Cryptocurrency Market Manipulation and Improving Regulations

The proposals come in the wake of dissatisfaction within and beyond the industry with current regulatory practices.

Two new bills focusing on cryptocurrency market manipulation aim to “position the United States to be a leader in the cryptocurrency industry,” their sponsors claimed Dec. 6.

The bills, dubbed “The Virtual Currency Consumer Protection Act of 2018” and “The U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018” will go before the House of Representatives having been compiled in mid-November.

A bipartisan effort, their authors, congressmen Darren Soto and Ted Budd, said they wish to “provide data on how Congress can best mitigate these risks while propelling development that benefits our economy.”

“Virtual currencies and the underlying blockchain technology has a profound potential to be a driver of economic growth,” they said in a joint statement.

“That’s why we must ensure that the United States is at the forefront of protecting consumers and the financial well-being of virtual currency investors, while also promoting an environment of innovation to maximize the potential of these technological advances.”

The plans come as the U.S. sees continued growing pains in its journey to regulate cryptocurrency markets.

As Cointelegraph reported Friday, a new academic report has highlighted “overlapping” jurisdiction of agencies as contributing to the U.S.’ lack of appeal for industry businesses and consumers alike.

Cryptocurrency exchanges in particular have taken specific action to protect themselves from exposure by setting up offshore operations.

Soto and Budd correspondingly seek to broaden the basis for domestic regulation by looking beyond borders, their second bill advocating a “comparative study of the regulation of virtual currency in other countries” in order to “make recommendations for regulatory changes to promote competitiveness.”

Wall Street has already focused on market manipulation control meanwhile, Nasdaq in October claiming its financial instruments could help mitigate the practice.

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California Legislature Finalizes Blockchain Working Group Bill

California may soon be forming a working group to examine the potential benefits of blockchain to the state – and how best to update laws to make use of the technology.

California bill 2658, first introduced in February 2018, originally recognized “a record that is secured through blockchain technology is an electronic record,” as previously reported. However, the final version as of Monday now directs the Secretary of the Government Operations Agency to create a blockchain working group to study the technology instead.

It also adds that “for the purpose of this chapter, ‘blockchain’ means a mathematically secured, chronological, and decentralized ledger or database,” though this definition is temporary and will expire by January 2022.

The working group, whose chairperson will be designated no later than July 1, 2019, will include members from within the technology industry, as well as representatives from related fields. Stakeholders will be able to provide input to the group, which will then be responsible for recommending changes for the state legislature.

According to the bill, the group will specifically examine how blockchain can be used by the government and local businesses, what risks might come from using blockchain, how blockchain can benefit businesses and the government, how blockchain use can fit into California law and “the best practices for enabling blockchain technology to benefit the State of California, California-based businesses and California residents.”

The group has until July 1, 2020 to draft its report, which “shall include recommendations for modifications to the definition of blockchain … and recommendations for amendments to other code sections that may be impacted by the deployment of blockchain.”

Public records show that both the state Senate and the General Assembly have passed the bill after third readings as of Monday, meaning it should now go to Governor Jerry Brown, who has 30 days to allow the bill to become law or veto it.

Public records show that both the state senate and general assembly passed the bill with an overwhelming majority, likely protecting it against any potential veto.

California flag image via Jeffrey M. Frank / Shutterstock

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Malta Approves Three Blockchain, Crypto Bills in Second Parliamentary Reading

Malta approved three distributed ledger technology and crypto-related bills in their second reading in Parliament yesterday, June 26, according to legislative records from the plenary session.

The approved bills include the Innovative Technology Arrangements and Services Bill, the Virtual Financial Assets Bill, and the Malta Digital Innovation Authority Bill. The first two bills provide for the regulation of digital ledger technologies – of which blockchain is one type – and virtual financial assets in Malta under the supervision of the Malta Digital Innovation Authority.

The Malta Digital Innovation Authority Bill establishes the organization with the goal to “promote consistent principles for the development of visions, skills, and other qualities relating to technology innovation” as well as support regulations of the sector.

Silvio Schembri, the Junior Minister for Financial Services, Digital Economy and Innovation within the Office of the Prime Minister of Malta, tweeted about the passing of the bills yesterday, referencing Malta’s moniker as a “blockchain island:”

“Today Maltese Parliament unanimously approved 3 bills on DLT/blockchain, a 1st in the World. Honored to have driven these bills. Announced that Mr Stephen McCarthy will be the CEO of the new #Malta Digital Innovation Authority.  #BlockchainIsland -SS”

In addition to the passing of the three bills, local news outlet the Times of Malta confirmed Stephen McCarthy’s appointment as CEO of the Malta Digital Innovation Authority in an article published today, June 27. McCarthy had previously served as the CEO of Malta’s Housing Authority.

Several large cryptocurrency exchanges have recently moved their operations to Malta — OKEx, BitBay, Binance — as the country has actively developed crypto friendly legislation. Last week, the newly appointed chairperson of the Malta Bankers Association said that blockchain tech sounds like a “banker’s dream” and cryptocurrencies are “here to stay.”

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Wyoming Passes Bill To Relax Securities Law For Some Blockchain Tokens

The US state of Wyoming has passed a bill Feb. 19 allowing certain Blockchain tokens to bypass securities regulations if they meet three key requirements as of July , 2018.

House Bill HB0070 was sponsored by seven representatives and five senators of the Legislature of the State of Wyoming. The bill passed the Wyoming House of Representatives unanimously in its third reading with the approval of all 60 members.

The move comes as US regulators at the national level seek to crack down on illegitimate offerings from the cryptocurrency and Blockchain space, placing emphasis on the need to monitor the market for the sake of protecting investors.

According to the new bill, if tokens are offered in Wyoming — or simply to the state’s residents — via an Initial Coin Offering (ICO) or otherwise, the tokens will not need to be registered as securities in the state if they conform with the following three statutes:

“(i) The token has not been marketed by the developer or seller as an investment;

(ii) The token is exchangeable or provided for the purposes of receiving goods or services; and

(iii) The developer or seller of the token has not entered into a repurchase agreement of any kind or entered into any agreement, arrangement or scheme with the principal intent and effect of manipulating or attempting to manipulate the price of the token on a secondary market.”

HB0070 is one of two cryptocurrency-related projects sponsored by the twelve-member group currently making their way through the state legislative system.As Cointelegraph reported Monday Feb. 19, Wyoming Senate Bill 111 seeks to exempt crypto from state property tax obligations, in place since March, 2014.

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Nebraska Lawmaker Files 3 Blockchain Bills

A lawmaker in Nebraska has filed a trio of bills focused on blockchain and cryptocurrencies.

Public records show that on Jan. 3, state senator Carol Blood submitted three proposed laws to the Nebraska Legislature, one of which would amend the state’s money-laundering statutes to account for cryptocurrencies while the other two focus on blockchain applications more broadly.

One of the bills – echoing efforts in other U.S. states – would allow for the tech’s use for notarization and the establishment of a  document’s provenance. If passed, the measure would “authorize and define smart contracts…[and] authorize use of distributed ledger technology in the Electronic Notary Public Act and the Uniform Electronic Transactions Act.”

And following in the footsteps of Nevada, one of Blood’s proposed bills would “prohibit cities and villages and counties from taxing or otherwise regulating the use of distributed ledger technology.” A similar measure was signed into law last summer, which prevents local jurisdictions from taxing the use of smart contracts as well as requiring a license to use the tech in the first place.

Whether lawmakers in Nebraska will embrace the proposed laws remains to be seen. According to the Nebraska legislature’s official website, the bills in question have been referred to their respective committees for further deliberation, though no hearing dates have yet to be scheduled.

Nebraska legislature image via Shutterstock

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New Bill Paves Way For Adoption of Blockchain By US Government

The approval of the defense spending bill called the National Defense Authorization Act (NDAA) may lead to the mainstream adoption of Blockchain technology by government agencies in the US. This is because the bill has a provision called the Modernizing Government Technology Act (MGT) that will allow the agencies to redirect their cost savings into internal working capital funds that can be utilized to modernize their IT systems.

According to Information Technology Industry Council Senior Vice President of Public Sector, Trey Hodgkins, the US Congress wants the various agencies to have their own discretion on how to invest their savings.

“Blockchain was clearly one of the technological capabilities that Congress meant for agencies to look at, and what they were trying to do was create dollars with some flexibility to them so that agencies would have their own discretion on what they invest in.”

Brief details of the bill and the opinions of some industry players

Under the MGT provision, government agencies are authorized to spend their working capital funds for modernization initiatives falling in three categories, namely, migrating legacy systems to the cloud services, cybersecurity and other innovative and disruptive technologies and platforms.

Although it was not categorically stated in the bill, Blockchain technology is qualified as a potential direction for the allocation of funds for further advancement beyond the proof-of-concept stage at the agency level.

According to Hybrid Blockchain database provider ChromaWay’s Todd Miller, they are excited about the MGT Act due to its promotion of new technologies such as smart contracts and Blockchain.

“We are excited about the MGT Act because it provides incentives to federal agencies to move away from high-cost, low performing legacy systems toward new technologies, like Blockchain and smart contracts.”

The NDAA was already approved by both the House of Representatives and the Senate as of late November 2017. It is just awaiting the signature of US President Donald Trump to finally become law.