Regulation
UK Legal Body Submits Crypto Asset Classification Bill
The Law Commission of England and Wales has proposed a groundbreaking classification for cryptocurrencies and other digital assets. The independent body, tasked with reviewing and recommending law reforms, has submitted a report to the UK government urging the creation of a new category of personal property specifically for crypto assets.
UK Regulatory Bodies’ Approach to Crypto Assets
The Law Commission of England and Wales has submitted a groundbreaking proposal to the government, urging the creation of a new category of personal property specifically for crypto assets. This recommendation comes as part of the Commission’s final report on digital assets, published on July 30.
In its report, the Law Commission highlighted the inadequacies of the current system, which categorizes personal property into only two types: things in possession (tangible property) and things in action (intangible property, such as debts or rights). The Commission argued that digital assets, including cryptocurrencies and non-fungible tokens (NFTs), often possess qualities of both categories, leading to complications in legal proceedings and dispute resolution.
To address this issue, the Commission has proposed the establishment of a “third category” of personal property. This new classification aims to ensure that property rights related to digital assets are clearly defined and enforceable. The Commission believes that this change will better accommodate and protect the unique features of digital assets.
Accompanying the proposal is a draft bill that calls for the separate categorization of crypto assets. This legislation is intended to create a robust legal framework that will support the growth of the digital assets sector in England and Wales. The draft bill allows courts to develop the specifics of this third category, providing flexibility for future amendments without disrupting legal proceedings for other forms of personal property.
The government is currently reviewing the Law Commission’s recommendation and the proposed legislation. This development comes at a time when other UK regulatory bodies are also taking steps to address the evolving digital asset landscape. The Bank of England and the Financial Conduct Authority recently issued a joint consultation on draft guidance for their Digital Securities Sandbox, which aims to facilitate testing of distributed ledger technology for trading and settlement of digital securities.
Also Read: Bank of Japan Rate Hike Leads to Bitcoin Volatility, All Eyes on US Fed Meeting
US Developments in Cryptocurrency Regulation
In the United States, there have been notable developments in cryptocurrency regulation and legislation. Senator Cynthia Lummis of Wyoming has introduced a bold Bitcoin bill that proposes using the cryptocurrency to address the national debt.
The bill, unveiled at The Bitcoin Conference, would require the Federal Reserve to hold Bitcoin as a strategic reserve asset. This unprecedented move reflects growing interest in cryptocurrency at the highest levels of government and could significantly impact US monetary policy if enacted.
Simultaneously, a federal judge has made a landmark ruling in the ongoing case between Ripple Labs Inc. and the SEC. The judge determined that Ripple’s XRP token is a security when sold to institutional investors, but not when sold to the general public. This nuanced decision has been widely interpreted as a victory for the crypto industry, potentially setting a precedent for how other cryptocurrencies are classified and regulated in the future.
Also Read: Binance Announces Listing Of These Trending Crypto Ahead Market Recovery
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
Texas Court Dismisses Consensys Suit Against SEC on Procedural Basis
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.
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
UN Calls for Global AI Governance As Meta & OpenAI Face Challenges
AI News: The United Nations has issued seven recommendations for reducing the risks of artificial intelligence (AI) based on input from a UN advisory body. The final report of the council’s advisory body focuses on the importance of developing a unified approach to the regulation of AI and will be considered at a UN meeting scheduled for later this month.
AI News: UN Calls for Global AI Governance
The council of 39 experts noted that large multinational corporations have been able to dominate the development of AI technologies given the increasing rate of growth, which is a major concern. The panel stressed that there is an ‘unavoidable’ need for the governance of artificial intelligence on a global scale, since the creation and use of artificial intelligence cannot be solely attributed to market mechanisms.
According to the UN report, to counter the lack of information between the AI labs and the rest of the world, it is suggested that a panel should be formed to disseminate accurate and independent information on artificial intelligence.
The recommendations include the creation of a global AI fund to address the capacity and collaboration differences especially in the developing countries that cannot afford to use AI. The report also provides recommendations on how to establish a global artificial intelligencedata framework for the purpose of increasing transparency and accountability, and the establishment of a policy dialogue that would be aimed at addressing all the matters concerning the governance of artificial intelligence.
While the report did not propose a new International organization for the regulation, it pointed out that if risks associated with the new technology were to escalate then there may be the need for a more powerful global body with the mandate to enforce the regulation of the technology. The United Nation’s approach is different from that of some countries, including the United States, which has recently approved of ‘a blueprint for action’ to manage AI in military use – something China has not endorsed.
Calls for Regulatory Harmonization in Europe
Concurrent with the AI news, leaders, including Yann LeCun, Meta’s Chief AI Scientist and many CEOs and academics from Europe, have demanded to know how the regulation will work in Europe. In an open letter, they stated that the EU has the potential to reap the economic benefits of AI if the rules do not hinder the freedom of research and ethical implementation of AI.
Meta’s upcoming multimodal artificial intelligence model, Llama, will not be released in the EU due to regulatory restrictions, which shows the conflict between innovation and regulation.
“Europe needs regulatory certainty on AI”
An open letter signed by Mark Zuckerberg, me, and a number of European CEOs and academics.The EU is well positioned to contribute to progress in AI and profit from its positive economic impact *if* regulations do not impair open…
— Yann LeCun (@ylecun) September 19, 2024
The open letter argues that excessively stringent rules can hinder the EU’s ability to advance in the field, and calls on the policymakers to implement the measures that will allow for the development of a robust artificial intelligence industry while addressing the risks. The letter emphasizes the need for coherent laws that can foster the advancement of AI while not hindering its growth like the warning on Apple iPhone OS as reported by CoinGape.
OpenAI Restructures Safety Oversight Amid Criticism
In addition, there are concerns about how OpenAI has positioned itself where the principles of safety and regulation of AI are concerned. As a result of the criticism from the US politicians and the former employees, the CEO of the company, Sam Altman, stepped down from the company’s Safety and Security Committee.
This committee was formed in the first place to monitor the safety of the artificial intelligence technology and has now been reshaped into an independent authority that can hold back on new model releases until safety risks are addressed.
The new oversight group comprises individuals like Nicole Seligman, former US Army General Paul Nakasone, and Quora CEO Adam D’Angelo, whose role is to ensure that the safety measures put in place by OpenAI are in line with the organization’s objectives. This United Nations AI news comes at the heels of allegations of internal strife, with former researchers claiming that OpenAI is more focused on profit-making than actual artificial intelligence governance.
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
SEC requests for more time to produce documents in Coinbase case
- SEC reportedly seeks an extension to February 2025 for it to provide case documents to Coinbase.
- Coinbase, Binance and Kraken all facing SEC lawsuits.
The US Securities and Exchange Commission has filed for an extension from the court, asking for more time as it looks to provide documents related to its case against crypto exchange Coinbase. Cointelegraph reported this on Sept. 19
SEC asks for extension
Court documents filed on Sept. 18 reveal that the SEC wants the court to extend the timeline for them to furnish Coinbase with key material by four months.
The regulator filed its request at the US District Court for the Southern District of New York, and if granted, will see it have until February 2025 for the deadline to share over 133,000 documents.
SEC’s court filing comes a month to the end of the initial timeline on Oct. 18, which is when the securities watchdog was to hand over documents as part of the case’s discovery proceedings phase. According to the regulator, an extension will allow it to produce the necessary documents.
SEC has sued several crypto companies
These latest developments in the SEC vs. Coinbase lawsuit adds to several others in recent months and weeks. It includes court filings and verdicts in the regulator’s cases against crypto exchanges Binance and Kraken, which are the other major industry players in a legal battle with the SEC.
Both the courts and US lawmakers have taken issue with the SEC’s use of the term “digital asset securities’. This is part of the main allegations against crypto exchanges, with the regulator alleging securities laws violations by these firms.
The term ‘digital asset security’ does not appear anywhere in any law enacted by Congress or in any rule promulgated by the SEC or in any decision rendered by the Supreme Court. It appears nowhere in the 2 million pages of the Federal Register. If it comes from neither statute… pic.twitter.com/ucSaCzEvOU
— Rep. Ritchie Torres (@RepRitchie) September 19, 2024
In 2020, the agency sued Ripple Labs over the XRP cryptocurrency – a case that dragged for three years before a notable ruling in July 2023 declared XRP not a security. The regulator also reached a $4 billion settlement with Terraform Labs.
A judge denied Kraken’s motion to dismiss the SEC’s lawsuit agaisnt the exchange in August this year.
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