Michael Bacina and team of the Piper
Alderman Blockchain Group bring you the latest legal, regulatory
and project updates in Blockchain and Digital Law.
CoinJar launches first Australian crypto-linked card with
Mastercard
Mastercard has beat Visa to the punch to launch Australia’s
first crypto-linked card with crypto exchange CoinJar. In a recent press release,
through CoinJar’s sister site, Cryptonews, it was reported that
the CoinJar card is now available both physically and digitally
through both Google and Apple Pay integration.
Serendipitously, this announcement follows shortly after some recent questions of when
Australia would launch this kind of product.
We also understand that an alternative offering is hot on the
heels of this launch, as Visa has declared it should be
just a month (September) before Visa launches its own crypto-linked
card with Australian based start-up CryptoSpend.
Describing this new payment method as instant and secure,
CoinJar explains that the first “Australian-native”
crypto card functions exactly like any other Mastercard.
“The CoinJar Card allows you to spend your crypto like
cash, online and in-store“,its
website boasts.
The company further explains:
CoinJar Card allows you to use the
cryptocurrency in your CoinJar to make purchases, wherever
Mastercard is accepted. All you need to do is choose which crypto
you want to spend and it’ll be automatically converted to
Australian dollars when you make a transaction – no need to
preload.
With the CoinJar card supporting up to 30 different
cryptocurrencies and featuring a 1% conversion rate – the crypto exchange says will
be returned to customers through an internal rewards program, this
new product is certainly a great new offering for Australian crypto
innovators.
Visa and Mastercard already have live initiatives in the United
States which empower crypto-start-ups with the ability to offer
crypto-linked cards and payment mechanisms for crypto innovators to
have an easier way to spend their money. It is likely we will see
additional competition in this space soon.
It’s great to see Australia responding to increasing consumer demands
for the opportunity to spend their crypto via simple means.
Proposed ‘Crypto Bill’ aims to shake up US
regulatory landscape
The Digital Asset Market Structure and Investor
Protection Act (Bill), introduced by
Rep. Don Beyer, proposes sweeping reforms to digital assets in the
US, representing a big jump from an already progressive approach we
have seen to US digital asset
regulation.
A key feature of the new Bill is a strong position on
Stablecoins (digital assets pegged to a fiat currency such as the
AUD or USD). The Bill would give the US Treasury Department not
only oversight over the development of stablecoins but also a veto
power to coins that do not fall within their requirements, which
could see many stablecoins effectively banned.
Interestingly, there also appears to be an authorisation within
the Bill allowing the Federal Reserve to create a central bank digital currency
(CBDC). A CBDC has been under discussion for some time
in the US but the combination of legislation authorising the
creation of a US CBDC and a veto power over any other US CBDCs may
suggest that the US is seeking to entrench its place as the sole
issuer of a US CBDC.
Companies seeking to issue a stablecoin in the US, or companies
that already operate an existing stablecoin will have to apply to
the Treasury Department for approval of the use of stablecoins. The
Treasury will then have to consult with the Securities and Exchange
Commission (SEC), the Commodity Future Trading
Commission (CFTC), the Federal Reserve and/or
foreign entities before approving the proposal. This should be a
key consideration for entities developing, and those who are
already circulating, US denominated stablecoins.
The Bill is also making a big move towards regulatory clarity by
moving towards defining digital asset terminology and also
demarcating certain digital asset attributes under the purview of
either the SEC or the CFTC.
If passed, a “digital asset securities” definition
will be created to fall under the SEC’s control. Tokens that
entitle holders to equity, profits, dividend payments, interest or
voting rights, or tokens issued via an Initial Coin Offering
(ICO) will fall under this definition and thus the
SEC’s jurisdiction.
Under the Bill, tokens required to register with the SEC control
may file a ‘desecuritisation certificate’ certifying that a
digital asset does not contain the features of a security which
would have the effect of requiring the SEC to review the token and,
if no objection is raised, the tokens would be deemed not to be
securities. This is a rather elegant solution to the problem of
regulators declining to confirm where certain assets are not
securities.
The bill would require that cryptocurrencies outside of the
SEC’s jurisdiction fall under the CFTC jurisdiction along with
Bitcoin, Ether and their hardforks already considered as
commodities.
Finally the Bill seeks to address longstanding privacy concerns
surrounding Decentralised Finance (DeFi) by
compelling various US agencies to submit recommendations to
Congress regarding anonymity. The Financial Crimes Enforcement
Network (FinCEN) shall issue rules that govern:
anonymising services, money rules and anonymity-enhanced
convertible currency transactions.
While DeFi is not explicitly regulated by the bill, it imposes
obligations on the SEC, CTFC, Federal Reserve and the Treasury to
consider potential regulatory guidelines and provide
recommendations.
This Bill should be considered by any digital asset operators in
the US. The sweeping changes, and in some cases retrospective
changes, could very well change existing practice and the
regulation of projects already in place.
Independent Reserve secures first in-principle license approval
in Singapore
In early 2020 the strides
that Singaporean regulators were making in the digital asset space
caught the attention of one of Australia’s oldest and most
trusted digital asset exchanges, Independent
Reserve. This was the catalyst for
their expansion into Singapore which has now paid off with the
recent announcement that Independent Reserve has obtained the first
in-principle approval to operate as a
regulated Digital Payment Token (DPT) services provider in
Singapore.
The Monetary Authority of
Singapore (MAS) has received over 150
applications from service providers, of which two have been
rejected, 30 were withdrawn and now Independent Reserve is the
first to receive the coveted in principle approval. Adrian
Przelozny, CEO of Independent Reserve said:
To be one of the first cryptocurrency
exchanges to be notified by MAS of our in-principle licencing
approval is a reflection of the robustness of the policies,
procedures and risk management systems that we have put in place to
guide our day-to-day operations.
This follows in quick succession after Independent Reserve’s
announced their score for Singapore assessing the
city-state’s awareness, adoption, trust and confidence in
digital currency at a promising 63 out of a possible 100.
Independent Reserve explain:
A score of 100 indicates maximum
awareness, optimism, trust and adoption of cryptocurrency. A score
of 0 indicates a complete ignorance of cryptocurrency and
blockchain technology, and that no one has heard of Bitcoin.
In 2020 Australia scored a not-quite-passing 47 / 100 and this
latest result again shows Singapore’s leadership around
awareness and adoption in the digital asset space. Independent
Reserve say responsive regulation from MAS is lifting
Singapore’s score which aligns with our write ups on recent regulatory change and support
for regulated digital asset services including digital asset custody
services.
The Singapore approach highlights the value for companies
providing digital asset services to have a clear legal framework
and certainty from regulators. Australia is in a state of
regulatory flux/opportunity with Senate submissions and ASIC consultations underway
and significant funding entering
in the digital asset research space. It is not too late for
Australia to catch up, however, emphasis needs to be given to the
necessity for government and regulators to provide transparent and
accessible approvals and clear guidance of what can and cannot be
done by digital asset service providers. It seems to us that
custody is a great place to start.
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guide to the subject matter. Specialist advice should be sought
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