Australian Government to end double taxation on digital currency
Treasurer Scott Morrison has introduced legislation into the Australian Parliament to remove the double taxation of digital currency.
Initial Coin Offerings (ICOs) under German law
By Hilger von Livonius and Philipp Riedl
The raising of funds for cryptocurrency projects (also called Initial Coin Offerings or ICOs) gain more and more market interest. Although there is no specific and coordinated regulatory framework applicable to ICOs, it is not something happening in a completely unregulated area.
Tax-free cryptocurrency transactions could come with reporting obligations
By Elizabeth C. Crouse, Mary Burke Baker, Robert M. Crea, Claire S. White and Rachel D. Trickett
As cryptocurrencies such as Bitcoin and Ethereum become more prevalent in investment circles and acceptable for commercial transactions, the U.S. Internal Revenue Service (IRS) has said little other than to label “virtual currencies” as property and state that transactions involving virtual currencies may be subject to taxation under generally applicable law. However, on September 7, the Congressional Blockchain Caucus introduced the Cryptocurrency Tax Fairness Act which would exempt certain cryptocurrency transactions and create a cryptocurrency-specific information reporting requirement.
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Islamic Finance News Europe Forum 2017
The Islamic Finance News Europe Forum 2017 took place in London on 11 September. The Forum gave several insights into the Islamic FinTech regulatory space.
Ian Johnson, the Chief Executive of the Dubai Financial Services Authority (DFSA) (the regulator of the Dubai International Finance Centre (DIFC)) spoke at the Forum about his organisation’s approach to regulating the FinTech space. He said that regulators are engaging strongly in the sector, often at the behest of their national governments who are leading the charge as a policy matter. The regulator’s job was to allow innovation whilst maintaining systemic and investor protection.
Australian Securities and Investments Commission announces the commencement date for its crowd-sourced funding regime
By Jim Bulling, Daniel Knight and Felix Charlesworth
The Australian Securities and Investments Commission (ASIC) has announced that will begin accepting applications under its new crowd sourced funding (CSF) regime from 29 September 2017 onwards. From this date, applications can be submitted via the existing ASIC ‘eLicensing’ portal.
In preparation for the commencement of the CSF regime, ASIC has released an information sheet outlining:
- the expected application process and timeframe; and
- its approach of assessing applicants.
During the period between 29 September 2017 and 27 October 2017, ASIC will assess applications lodged on similar dates in ‘batches.’ Successful applications from each batch will progress broadly at the same time. Incomplete or inadequate applications lodged during this period may be refused or placed in later application batches. Applications which are lodged from 27 October 2017 onwards will be considered individually as soon as possible.
Switzerland and Israel sign cooperation agreement
Swiss and Israeli financial regulators entered into a FinTech cooperation agreement on 4 September. The Swiss Financial Market Supervisory Authority (FINMA), the Israeli Capital Markets Insurance and Savings Authority (CMISA) and the Israel Securities Authority (“ISA”) intend to cooperate with the aim of encouraging and enabling innovation in their respective financial services industries and of supporting financial innovators in complying with the regulations in each other’s jurisdictions.
The agreement sets out existing activities in the FinTech regulatory space by each regulator. The new cooperation will include information sharing (including on regulatory issues), support to financial innovators from the other’s country (including help to understand the relevant regulatory environment), dialogue on new innovations and knowledge and expertise sharing.
Hong Kong Securities and Futures Commission statement on initial coin offerings
The Hong Kong Securities and Futures Commission (SFC) issued a statement about initial coin offerings (ICOs) on 5 September. The SFC noted an increase in the use of ICOs to raise funds in Hong Kong and elsewhere. The SFC said that, depending on the facts and circumstances of an ICO, digital tokens that are offered or sold may be “securities” as defined in the Hong Kong Securities and Futures Ordinance (SFO), and therefore subject to the securities laws of Hong Kong. ICOs typically involve the issuance of digital tokens, created and disseminated using distributed ledger or blockchain technology.
Securities over the Blockchain expected to get legal framework in France this fall
By Claude-Étienne Armingaud & Sidney Lichtenstein
The French Act no.2016-1691 dated 9 December 2016 on Transparency, Anti-Corruption and Modernization of Economic Life empowered the Government to amend the regulatory framework to facilitate the transmission of certain financial securities through blockchain technology.
In order to prepare such executive order, the Ministry of Finance initiated last Spring a public consultation, whose key trends were made public on 30 August 2017.
World Economic Forum publishes report on FinTech
By Giovanni Campi and Ignasi Guardans
On 22 August, the World Economic Forum (WEF) published the report “Beyond FinTech: A Pragmatic Assessment of Disruptive Potential in Financial Services”. The report, prepared in collaboration with Deloitte, maps out the impact of FinTech firms on different sectors and presents contrasting outlooks for the future of the industry.
One its key takeaways is that FinTech companies have changed how financial services are structured, but have so far failed to establish themselves as dominant players in the market. However, they have created the basis for potential disruption in the future. The success of financial institutions is thus increasingly more dependent on their ability to promptly adapt their business models and develop partnerships.
Hong Kong and South Korea on ICOs
By Rizwan Qayyum and Robert Crea
Hong Kong’s Securities and Futures Commission released a statement discussing whether existing regulations could be applicable to ICOs. This is a move likely precipitated by China’s ban on ICOs announced earlier this week.
The Executive Director of Intermediaries at the SFC, Julia Leung, warned that purchasers and those involved in an ICO need to be “that some ICO structures may be subject to Hong Kong securities laws.”
South Korean regulators have also taken a step towards tightening ICO regulation. South Korea’s digital currency task force group, comprised of the country’s central bank, and the Financial Services Commission (amongst other bodies) held a meeting on 3 September 2017, in which they discussed ICOs. It was noted that authorities will punish ICO fundraising platforms for violating the Capital Market Act by raising funds through stock issuance using digital currencies.