Regulation
Russia Plans To Launch 2 Crypto Exchanges & BRICS Stablecoin
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.
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.
Regulation
Polymarket Faces French Ban After Massive Bets On US Election Results
Polymarket, a crypto-based prediction market, is likely to be prohibited by France’s gambling regulator, the ANJ, after a huge amount of bets were placed on the 2024 U.S. presidential election. Since the global audience engaged in prediction platforms, Polymarket experienced a record jump, with $450 million expected to be distributed to users following the victory of Donald Trump.
This increase of betting volume and large stakes has become a matter of concern for the French regulator because the platform offers unlicensed gambling services.
$450 Million in Payouts Expected After U.S. Election Bets
Prediction markets, which are expected to increase their payout to election bettors to around $450m following Donald Trump’s projected win, are attracting increasing attention.
Although conventional polls pointed to a closer contest, prediction markets such as Polymarket and Kalshi recorded a steep rise in Trump’s chances in the last few days, indicating a strong divergence with poll-based expectations.
Among the active users of Polymarket, a French trader called “Theo” made a $26 million bet on Trump’s win and won $49 million. This big bet made Polymarket popular, as the French authorities paid attention to the platform and its popularity among French residents, which led to concerns about the compliance of the platform with French gambling legislation.
France’s ANJ Considers Blocking Access to Polymarket
The ANJ has claimed that Polymarket is involved in gambling which is only allowed in France by licensed operators. According to local media, the regulator has the power to ban access to unlicensed gambling sites and is expected to restrict access to Polymarket soon.
An ANJ insider said: “Polymarket is just betting on something that is completely uncertain, which is exactly what gambling is.”
If put in place, the ban would prevent the usage of the application in France, despite the fact that users can still try to avoid the restriction by connecting to VPN. The ANJ could also try to influence media outlets and directories to stop advertising or linking to Polymarket and, thus, limit its audiences even more.
Regulatory Concerns Over Market Manipulation
The high level of activity on Polymarket has led to speculations that the platform may be used for market manipulation. Two blockchain analysis firms, Chaos Labs and Inca Digital, recently revealed that there was potential wash trading within Polymarket’s U.S. presidential betting market where the same assets are bought and sold to simply create a fake market. This type of trading is rather manipulative and can lead to the distortion of signals on the market and mislead other participants.
The US Commodity Futures Trading Commission also has concerns about prediction markets and put forward a rule in May aiming at stricter regulation of such markets due to the potential for manipulation.
Although no final decision has been reached, regulatory actions could impact Polymarket’s ability to operate freely in other markets, including the U.S.
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.
Regulation
FTX Co Founder Gary Wang Appeals For No Jail Time, Here’s Why
FTX co-founder Gary Wang has requested a federal judge not to send him to prison. He noted that he is testifying against the former business partner, Sam Bankman-Fried, someone he has known for a long time in a fraud case.
The lawyer for Wang submitted a sentencing memo in Manhattan federal court wherein he claimed that his client should not be incarcerated as he provided assistance to the prosecutors as well as his role in the scheme was comparatively less.
Wang, who pleaded guilty to fraud and conspiracy when FTX went bankrupt in 2022, is to receive his sentencing on the 20th of November.
FTX Co-Founder Gary Wang Appeals for No Jail Time
The defense counsel for FTX co-founder Gary Wang highlighted his client’s early cooperation with the federal prosecutors as one of the key reasons why the court should consider him for mercy. According to Graff, Wang was one of the first FTX executives to meet with the authorities and share information on the FTX and Alameda Research. Wang gave a testimony in the trial that led to the recent conviction of Bankman-Fried who was sentenced to 25 years in prison.
Speaking at the trial, Wang described how he was ordered to change the code of FTX in order to enable Alameda Research to use the assets of the company’s clients, which is one of the key points of Bankman-Fried’s fraud.
FTX co-founder’s lawyer noted that his involvement in the fraud was less than some of the other former executives, including Caroline Ellison, former CEO of Alameda Research, and Nishad Singh, FTX’s former head of engineering. Wang, his lawyer said, did not start or operate the scheme and was not personally involved in the provision of false information to the investors.
“Gary was not involved in the scheme at its inception, was never provided with details of the scheme, and, in contrast to Bankman-Fried, Ellison and Singh, never engaged in any affirmative action of deception,” Graff wrote.
Sentencing Comparisons to Other Executives
Wang’s attorney argued that a prison sentence would create an “unwarranted sentencing disparity” with Nishad Singh, who avoided jail time after pleading guilty and cooperating with the government. Singh, who faced potential decades-long sentences, was ultimately sentenced to time served and three years of supervised release.
Ellison, another major cooperator, received a two-year prison sentence. FTX co-founder Gary Wang contended that Wang’s level of involvement was even lower than Singh’s, supporting a non-custodial sentence for Wang as well.
Graff also noted Wang’s personal circumstances, stating that Wang is expecting the birth of his first child shortly after his sentencing date. Wang’s attorney suggested that allowing him to remain with his family would align with the court’s treatment of other cooperators in the case.
“Gary wants nothing more than to be a good husband and father and to continue his work to facilitate FTX victims’ recovery,” Graff wrote.
Separately, the U.S. government is working to reclaim approximately $13.25 million in political donations made by FTX executives, including Bankman-Fried and Singh. Judge Lewis Kaplan however granted the government additional time to negotiate the return of these funds, extending discussions with the PACs until January 15, 2025.
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.
Regulation
US SEC Files Motion for Judgment Against Kraken, Challenges Key Defenses
The U.S. Securities and Exchange Commission (SEC) has filed a motion seeking judgment in its case against cryptocurrency exchange Kraken, focusing on defenses such as “fair notice” and the “major questions doctrine.”
This move, led by SEC Chairman Gary Gensler’s team, aims to limit further discovery into the agency’s regulatory policies, particularly those affecting the crypto sector. The timing of the filing has drawn attention, as some in the industry view it as a strategic attempt to shield the SEC’s methods from closer examination.
US SEC Files Motion for Judgment Against Kraken
The SEC’s motion seeks to dismiss defenses put forward by Kraken that include the fair notice defense and the major questions doctrine. The fair notice defense argues that Kraken did not receive adequate regulatory guidance regarding its crypto-related activities.
Meanwhile, the major questions doctrine suggests that regulatory agencies, such as the SEC, should not make major policy decisions without clear direction from Congress.
Subsequently, the US SEC’s motion appears intended to prevent further discovery into its policies, which Kraken and other crypto advocates have criticized as inconsistent and unclear. A similar motion was filed in Ripple case, where the US SEC failed to secure a judgment. Michael O’Connor, an attorney representing Kraken expects a similar outcome in the Kraken case, though Kraken has indicated that it has additional defenses should this motion proceed.
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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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