The deadline for applications is 26 February 2021, and the applications could be made via Hawaii Technology Development Corporation’s website.
- Proposed rules would require financial institutes and MSBs, including virtual asset service providers (e.g., crypto exchanges), to: (i) file a report with FinCEN, within 15 days, on transactions (or a group of transactions) exceeding $10,000 in a 24-hour period; and (ii) keep records and verify the identity of customers at transactions above $3,000.
- These requirements will apply to transactions of convertible virtual currency (e.g., Bitcoin) involving unhosted wallets (i.e., wallets from which users can conduct transactions without the involvement of the wallet provider) and otherwise covered wallets.
- Practically speaking, this means that users of centralized cryptocurrency exchanges who want to move their holdings to their private wallets (unhosted wallets) would need to provide personal information for transactions greater than $3,000, and the exchanges would need to report either individual or groups of transactions that add up to more than $10,000 to the FinCEN.
- The comment period for the FinCEN proposed recordkeeping and reporting requirements has been extended several times and is expected to end on 27 March 2021.
- These charges reflect SEC’s position that Ripple’s XRP is a security. They came fresh off the SEC’s cases against Kik, Telegram, and Block.One (EOS), who were similarly alleged to sale unregistered securities through their token offerings.
- In assessing whether and why the XRP is a security, and how it differs from Bitcoin (which is not a security, according to the SEC), the SEC noted, inter alia, that there was an identifiable actor who held itself out as responsible for making marketing efforts with respect to XRP.
- Following the charges, various cryptocurrency exchanges (such as, inter alia, Coinbase, Bittrex, OKCoin, Crypto.com, Binance.US, eToro, etc.), have suspended or delisted the XRP token.
- A virtual pretrial has been set to February 22, 2021.
- For comparative purposes, Japan’s FSA, the country’s securities regulator, has reportedly confirmed that it does not consider XRP as a security.
Ripple has filed its response to the SEC’s allegations regarding XRP sales being an unregistered securities offering (29.1.2021).
- Ripple argues that XRP is not a security since it performs a number of functions that are distinct from the functions of securities, e.g. since it functions as medium of exchange – a virtual currency used today in international and domestic transactions.
- Ripple argues that SEC mischaracterized, misunderstood or ignored the economic reality of XRP, including: (1) that the XRP ledger is completely open-source, decentralized, and operates on a big scale outside of Ripple’s control; (2) that XRP is and long has been a digital asset with a fully functional ecosystem and utility as a bridge currency and other types of currency uses; and (3) that XRP’s price is not and has not been determined by Ripple’s activities – instead, the market has for many years priced XRP in correlation with other virtual currencies, most notably bitcoin and ether.
Ripple has also filed a Freedom of Information Act request for more information about how the SEC determined the status of ether as a non-security (5.2.2021).
SEC Commissioner Hester M. Peirce, despite supporting the SEC’s action in this case, has raised concerns that approach that suggests the tokens are securities could complicate the development of crypto networks