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Russia Plans To Launch 2 Crypto Exchanges & BRICS Stablecoin

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4 weeks ago

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Russia is now planning to launch two crypto exchanges, one in Moscow and the other in St. Petersburg. This move underscores the need to boost foreign economic activity (FEA), Moreover, it aims to build an RMB-linked BRICS stablecoin.

The crypto exchange initiative is designed to provide a new platform for digital transactions. However, experts have expressed concerns over the potential limitations and risks associated with the project, particularly in light of international sanctions.

Russia’s Plans On Developing The Crypto Sector

One of the crypto exchanges will likely leverage the infrastructure of the St. Petersburg Currency Exchange (SPCE) to facilitate foreign economic activity, according to a report by Kommersant. Whilst, the other platform is expected to be based in Moscow. However, it remains unclear whether it will be developed on the foundation of the existing Moscow Exchange or as a separate entity within an experimental legal framework.

The primary focus of these exchanges will be the creation and use of stablecoins. For context, stablecoins are a type of crypto that is typically pegged to a reserve of assets, such as a national currency or a basket of currencies. In this case, the Russian government is reportedly considering the development of stablecoins linked to the Chinese Renminbi (RMB) Yuan and the BRICS currency basket.

Hence, this move is aimed at boosting economic cooperation among the BRICS nations (Brazil, Russia, India, China, and South Africa). Currently, BRICS is eyeing dedollarization via crypto and blockchain. However, the development and deployment of a BRICS stablecoin via newly-launched crypto exchanges present a number of challenges.

Oleg Ogienko, CEO of BitRiver, pointed out the technological difficulties in integrating stablecoins into Russia’s blockchain infrastructure. He noted that “stablecoins, due to their legal nature, are more like cryptocurrency.” This could complicate their convertibility, liquidity, and security. Moreover, the complexity of these issues could hinder the seamless adoption of stablecoins in Russia.

Current Regulatory Framework & Challenges For Crypto Exchanges

In terms of regulatory frameworks, Russia currently operates under Federal Law No. 259 “On Digital Financial Assets.” This regulation provides the legal basis for the issuance and circulation of digital assets. However, this legislation does not specifically address the creation or regulation of cryptocurrency exchanges.

Yaroslav Schitzle from law firm Rustam Kurmaev and Partners emphasized the lack of a “clear and unified legal mechanism for the creation and operation of crypto exchanges” under existing Russian regulation. The only relevant regulation available is the Experimental Legal Regime (EPR). This legislation was recently enacted and might serve as the legal foundation for these new cryptocurrency exchanges.

The introduction of these crypto exchanges is expected to be rolled out in stages. Initially, access will be restricted to a select group of users. These include subsidiaries of major exporters and importers, often referred to as “blue chips” in the business world.

Mikhail Uspensky, a member of the expert council on the legislative regulation of cryptocurrencies in the State Duma, weighed in on the matter. He noted it is unlikely that small and medium-sized businesses or individual users will be granted unrestricted access in the early phases. Moreover, he emphasized that “the contours of the future experiment are entirely at the mercy of the regulator.”

Implications Of Global Sanctions

Despite the potential benefits, the project is fraught with significant risks, particularly concerning sanctions. The transparency of blockchain technology could lead to severe consequences if transaction data were to be leaked.

Uspensky warned that if it becomes known that a cryptocurrency was purchased on a Russian exchange, this information could be tracked and flagged as suspicious. This could lead to the blocking of transactions. He cautioned that such a scenario could “significantly ruin the lives” of the participants in these transactions.

Furthermore, it could also affect future holders of these digital assets who may have no direct connection to Russia. Additionally, experts like Nikita Vassev, founder of TerraCrypto, expressed skepticism about the appeal of these domestic platforms.

He argued that “only those who have no other choice will use such an exchange.” Vassev suggested that established, internationally recognized trading platforms will remain the preferred choice for most users unless they are left with no alternatives.

Meanwhile, Russia’s BRICS peer, India, is looking forward to kickstart crypto regulatory efforts. The Indian government is seeking public opinion for better framework. Now, the DEA release is awaited in September-October period, which will lay the basis for digital asset regulation in the country.

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Kritika Mehta

Kritika boasts over 2 years of experience in the financial news sector. Currently working as a crypto journalist at Coingape, she has consistently shown a knack for blockchain technology and cryptocurrencies. Kritika combines insightful analysis with a deep understanding of market trends. With a keen interest in technical analysis, she brings a nuanced perspective to her reporting, exploring the intersection of finance, technology, and emerging trends in the crypto space.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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Regulation

CFTC Appeals Decision Favoring Kalshi On Election Betting Contracts

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1 hour ago

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September 20, 2024

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The U.S. Commodity Futures Trading Commission (CFTC) is challenging a recent court decision that would allow prediction market platform Kalshi to offer contracts related to U.S. election outcomes. The ongoing legal battle has raised concerns about the integrity of election betting and the extent of the CFTC’s regulatory authority.

Court Hearing Pits CFTC Against Kalshi

At a hearing before the U.S. Court of Appeals for the District of Columbia Circuit, CFTC General Counsel Rob Schwartz and Kalshi’s counsel Yaakov Roth argued as to why the firm should be allowed to operate political prediction markets. The hearing was held after a district court decision that said the CFTC cannot stop it from offering contracts based on which party will control both the houses of the Congress.

Soon after the decision, the CFTC went for an application for a temporary stay which was granted by the appeals court.

The three judges, Patricia Millett, Cornelia Pillard and Florence Pan, challenged both the arguments and appeared rather skeptical of the reasoning provided. The judges questioned the CFTC about its view on the Commodity Exchange Act, as well as the consequences of permitting the opportunity to place a bet on the electoral outcome.

Concerns Over Market Manipulation and Election Integrity

The U.S. Commodity Futures Trading Commission’s concerns included threats to market integrity and manipulation of election-related prediction markets. Schwartz pointed out that the political prediction markets are more susceptible to false information and manipulation as compared to other event markets.

He stated that permitting these contracts could lead to misperceptions among the public and thus erode the already weak confidence in the U. S. elections, particularly during a time when more citizens doubt the validity of the electoral system.

Schwartz also noted that while traditional futures contracts are based on factual and accurate information, political markets could be skewed by fake polls, fake news, and other agenda-driven media. He noted that the CFTC cannot adequately monitor these underlying events and therefore it remains challenging to promote fairness and transparency in the markets.

Kalshi Defends Market Viability and Regulatory Compliance

Kalshi’s attorney, Yaakov Roth, pushed back against the concerns surrounding Kalshi’s compliance measures, noting that regulated prediction markets are more transparent and provide more oversight than less regulated foreign platforms. Roth argued that markets that are supported by a robust and comprehensive legal regime are less likely to be manipulated than the unregulated foreign markets that Kalshi seeks to compete with, while operating in a regulated environment.

According to Roth, the firm has also incorporated ‘Know Your Customer’ measures to ascertain that only approved market players transact and recommended that there should be a local regulated market to overcome the dependency on overseas markets with less transparency. He maintained that permitting these regulated prediction markets would offer better protection to the participants and minimize the chances of distortion by foreign elements.

Hence, in the upcoming 2024 U. S. elections, the appeals court is expected to make a ruling as soon as possible. The CFTC has been working on a regulation that is likely to prohibit the trading on political events as the commission says that such contracts are detrimental to the public interest. Legal experts have argued that the courts or the legislature may have to step in and offer guidance on the future of election-related prediction markets.

CFTC Chairperson Rostin Behnam has also expressed concerns over the likelihood of the financial regulator being involved in election contracts, saying that such actions may be outside the scope of the agency.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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Coinbase CLO Debunks SEC Crypto Asset Security Claims Before Gensler Hearing

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2 hours ago

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September 20, 2024

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Coinbase CLO Paul Grewal and Ripple CLO have challenged the SEC’s terminology of “crypto asset security,” a term increasingly used by the regulatory agency. His criticism comes at a time when the SEC is under pressure for coming up with this term yet there is no law in the United States that supports it.

The issue has gained much attention especially given that the SEC Chair, Gary Gensler and all the five SEC Commissioners are expected to appear before the House Financial Services Committee in a hearing.

Coinbase CLO Questions SEC’s Use of “Crypto Asset Security” 

Grewal posted on X to comment that the term “crypto asset security” is not uniform or well-established in the SEC enforcement measures. The Coinbase CLO also noted that the SEC has been inconsistent in its treatment of tokens as securities and as investment contracts in different legal contexts.

Such allegations come as Rep. Ritchie Torres, a New York Congressman, has made similar concerns earlier this month during a congressional hearing and challenged the SEC’sterminology.

The term ‘digital asset security’ or ‘crypto asset security’ is also not found in any law, regulation or Supreme Court judgement which adds to the criticism from the proponents of blockchain and lawmakers. Some of the legal scholars have also opined that the SEC made up the term without any statutory backing, including Daniel Gallagher, the Chief Legal Officer at Robinhood.

Ripple’s Legal Officer Joins the Criticism

Ripple CLO, Stuart Alderoty, also shared similar sentiments with the Coinbase CLO, saying that the SEC is taking advantage of the terminology used in the court. Alderoty noted that the SEC’s continued reference to “crypto asset security” in legal documents has begun to raise pushback.

For instance, the SEC recently apologized for using the term in the complaint against Binance, acknowledging that its use was misleading.

This critique comes at a time when Ripple is still in a legal tussle with the SEC over the status of XRP as a security. Alderoty argued that the SEC’s inconsistencies are eroding its capability to be convincing in the courts.

SEC Under Scrutiny Ahead of Congressional Testimony

Next week, all five SEC Commissioners, including Chair Gary Gensler, will testify before the House Financial Services Committee, which is the first time since 2019 when the whole commission will stand before Congress. This hearing comes in the backdrop of a growing sentiment among legislators and industry participants who have accused the SEC of having a hostile approach towards blockchain technology.

Some of the key concerns have been expressed by House Majority Whip Tom Emmer and Chairman Patrick McHenry regarding the SEC’s stance on regulating crypto airdrops that they consider crucial for decentralizing blockchain networks. Some of them directly accused the agency of brushing up the issues asserting that its regulation model inaptly fits the growing digital asset sector.

Apart from Coinbase CLO and Ripple CLO challenging the legal direction of the SEC, Gensler faces the probe over allegations of Illegal hiring at the company. This probe may complicate his upcoming hearings before the House Financial Services Committee where he is likely to face questions not only about the SEC’s stance to digital assets but also concerning the agency’s management.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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Texas Court Dismisses Consensys Suit Against SEC on Procedural Basis

Published

3 hours ago

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September 19, 2024

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The United States District Court for the Northern District of Texas dismissed Consensys Software Inc.‘s case against the Securities and Exchange Commission. This was after a long legal battle to determine the status of Ethereum and other similar software products.

Texas Court Ends Consensys Suit Against SEC

The U.S. District Court in Fort Worth has thrown out the allegations made by Consensys against the Securities and Exchange Commission in a recent legal move. The court, presided over by Judge Reed O’Connor, ruled on procedural grounds. The judge determined the claims concerning Ethereum classification and the regulatory approach to MetaMask were not ripe for judicial review. This decision effectively puts an end to the current litigation initiated by Consensys in April of this year.

The dismissal focused particularly on the lack of final agency action from the SEC, which the court noted was a requisite for a substantial legal challenge. This procedural dismissal indicates that despite the issues raised, the court decided not to proceed with evaluating the merits of the case.

Legal Battle Over Ethereum and MetaMask

Initially, Consensys challenged the SEC’s classification of Ethereum and its derivatives as securities. The complaint highlighted concerns over the SEC’s focus on MetaMask, a software service provided by Consensys that facilitates crypto transactions and staking. 

Despite an earlier notification in June about the SEC dropping its investigation into Ethereum, the broader implications of this regulatory scrutiny remained a contentious issue.

Subsequent to the initial lawsuit, the SEC initiated a separate enforcement action in June, accusing Consensys of operating its MetaMask swaps service without proper registration. 

In addition, according to Judge O’Connor, this case lacked the necessary finality from the Securities and Exchange Commission side to be considered ready for court adjudication.

Reactions and Future Regulatory Steps

The court’s decision to dismiss on procedural grounds does not conclude the legal issues surrounding the regulation of Ethereum and other blockchain technologies. 

More so, Consensys has expressed its intention to continue advocating for blockchain developers and to challenge the SEC’s actions in other jurisdictions, indicating that the struggle over crypto regulation in the U.S. is far from over. The case’s dismissal in Texas does not preclude the blockchain company from pursuing other legal avenues to address their grievances.

In addition, most recently, a US Bankruptcy judge Brendan Shannon approved Terraform Labs plan to liquidate its assets following an ongoing SEC lawsuit.

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Ronny Mugendi

Ronny Mugendi is a seasoned crypto journalist with four years of professional experience, having contributed significantly to various media outlets on cryptocurrency trends and technologies. His work includes notable contributions to Cryptopolitan and Coingape News Media, where he shares his insights on the latest developments in the cryptocurrency market. Outside of his journalism career, Ronny enjoys the thrill of bike riding, exploring new trails and landscapes.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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