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- Veriscope Regulatory Recap - March 13th to March 19th
Veriscope Regulatory Recap - March 13th to March 19th
Welcome to another edition of the Veriscope Regulatory Recap.
Shyft Network
March 20, 2023
This week, we look at Illinois’ proposed crypto bill, a Federal Judge taking on the SEC over current regulatory uncertainty, the EU’s bill to regulate smart contracts, and Russia’s first CBDC regulation draft.
But no matter what regulatory measures authorities take to reign in the broader crypto market, they need to keep the end-users in mind. The industry stakeholders, too, have a role to play here, as they are expected to ensure minimal impact on user experience and privacy while complying with relevant crypto regulations.
Now, let’s dive straight into the recap.
Illinois Proposes a Bill to Regulate Crypto
Illinois' proposed crypto bill (House Bill 3479), also called the Digital Assets Regulation Act (DARA), seeks to regulate crypto business activity in Illinois.
The bill, which has received mostly negative reactions from the crypto industry, grants the state more power to investigate unapproved digital asset transactions and arrest those against the guidelines.
In the process of providing regulatory clarity to the fast-evolving cryptocurrency space, the bill is also "making it very difficult for companies to comply" by creating a very tight window for submitting an application and gaining approval.
Federal Judge Blames the SEC for "Highly Uncertain" Regulatory Environment
Presiding over the SEC vs. Binance US case over Voyager's acquisition, the bankruptcy Judge Michael E. Wiles laid into SEC for relying on "hyperbole or on 'straw man' arguments."
Speaking of the regulatory nature of crypto trading platforms and the security nature of crypto, the judge noted, "the Commission itself has not taken any position" on such subjects.
Judge Wiles also said that although the crypto exchanges have been operating in the space for years, they were left "without being subject to clear and well-defined regulatory requirements."
Not to mention, "regulators themselves cannot seem to agree" as to whether cryptocurrencies are commodities and subject to CFTC regulation or securities and subject to securities laws, "or neither, or even on what criteria should be applied in making the decision."
"I do not know how any party could possibly be expected to address the SEC's comments with the limited guidance that the SEC has provided," leaving everyone to only "guess as to what the arguments might have been," said the judge.
EU Passes Bill to Regulate Smart Contracts
The European Parliament passed the 2022 Data Act on March 14 with 500 votes in favor and 23 against it, which includes provisions on smart contracts. It mandates that smart contracts must have access controls, protect trade secrets, and have functions to terminate or reset.
The new rules will come into force in 2024, and companies will have to adhere to them to serve EU-based consumers.
The essential requirements regarding smart contracts for data sharing are covered under Article 30 of the Data Act. And while the provisions primarily target the Internet of Things (IoT), they could also affect DeFi and crypto if their reach and scope remain unclear.
Russia Approves First Draft for CBDC Regulation
The Russian Parliament has approved draft laws establishing a system to issue and regulate CBDC in a first reading on March 16. The Russian State Duma also approved the first reading of a bill that makes changes to the Russian Civil Code and defines the digital ruble as "non-cash money."
The two bills, which will go through a review process before being finalized in the second reading that'll take place in the coming months, mainly cover gaps in regulation stemming from the digitalization of a currency.
The bill's current version proposes authorizing the Russian central bank to process users' personal data without consent. As such, the Parliament has instructed the financial markets committee to ensure that personal data will be protected appropriately in the new digital ruble system for the second reading.
The legislation establishes a foundational framework for the digital ruble, including setting up a platform to issue the CBDC, developing wallets for storing it, and defining procedures to access the platform and participant rules.
Interesting Reads
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