A commissioner at the US Securities and Exchange Commission (SEC) has said that the official regulation of cryptocurrencies could actually stunt the technology's development. Hester Peirce's comments come at a time when the SEC has been accused of acting contrarily and gives hope to those wanting governments to take a step back to prevent over-regulation

U.S. Securities and Exchange Commissioner Hester Peirce was speaking at the University of Missouri School of Law on Feb. 8 when she hinted that government regulation could actually cause the crypto industry difficulties. The lawyer, who has been nicknamed the "Crypto Mom" for her generally positive comments towards cryptocurrencies, said that it may be a better idea for regulators to step back and allow blockchain projects to mature, and that hastily drawn up regulations could harm the industry:

We might be able to draw clearer lines once we see more blockchain projects mature. Delay in drawing clear lines may actually allow more freedom for the technology to come into its own.

Peirce said that she would keep an eye on ensuring no laws harm crypto projects, citing stablecoin Basis, which is shutting down and returning its $133 million in capital to investors due to the difficulty of complying with securities regulations. "I am not going to comment on what I think about the merits of any particular project or how the securities laws apply to it, but my antennae will go up when apparently legitimate projects cannot proceed because our securities laws make them unworkable," she said.

Peirce further added that the SEC could at times be overly negative towards cryptocurrencies, and that this is something that needs to change: "We rightfully fault investors for jumping blindly at anything labeled crypto, but at times we seem to be equally impulsive in running away from anything labeled crypto. We owe it to investors to be careful, but we also owe it to them not to define their investment universe with our preferences."

Diverse Perspectives Needed

Peirce's comments come at a time when the SEC's views on cryptocurrencies haven't been wholly clear. Last year the SEC rightly took enforcement action against initial coin offerings and other crypto companies perpetrating fraud. But, as Peirce noted, this doesn't mean regulators and government agencies should be automatically skeptical about everything to emanate from the cryptocurrency sector.

As Angela Walch, a professor of law at St. Mary's University School of Law and a research fellow at the Centre for Blockchain Technologies at University College London previously said, it is important for regulators to have a "diverse perspective," as all too often they can be overly focused on protecting the financial system and indifferent to innovation and the benefits cryptocurrencies could bring.

The Indian government panel tasked with drafting crypto regulation is reportedly worried that cryptocurrencies could destabilize the rupee if they are accepted as payments. Its concern came to light despite evidence that cryptocurrencies do not currently pose a threat to financial stability.

Impact on the Rupee

The Indian government committee tasked with developing the regulatory framework for cryptocurrencies is reportedly "obsessed" with the impact they may have on the rupee if they are allowed to be used in payments, Quartz India reported. The committee is headed by Subhash Chandra Garg, Secretary of the Department of Economic Affairs.

"If bitcoin and other digital currencies are going to be allowed to be used for payments then whether it will end up destabilising the fiat currency is a major concern" for Garg's panel, the publication quoted an unnamed representative from the crypto ecosystem who recently met with the ministers as saying. "The overall impact on the financial ecosystem that it is likely to have is still unclear and it has been a challenge to convince them on this particular point."

If bitcoin and other digital currencies are going to be allowed to be used for payments then whether it will end up destabilizing the fiat currency is a major concern.

Garg's panel is finalizing its report containing the recommendations for the country's crypto regulation, according to the government's reply to a Right to Information filing.

However, the Ministry of Finance told Parliament that "It is difficult to state a specific timeline to come up with clear recommendations" and that Garg's panel is "pursuing the matter with due caution."

No Threat to Financial Stability

The Financial Stability Board (FSB) published a report in October last year on the financial stability implications of crypto assets. The FSB is an international body that monitors and makes recommendations about the global financial system to the G20, an international forum for governments and central bank governors. Its members are financial regulators and central bankers from 24 countries as well as global organizations such as the International Monetary Fund.

Cryptocurrencies need constant monitoring on overall financial stability considerations, given the rapid expansion in their usage.

The FSB report states that "Based on the available information, crypto assets do not pose a material risk to global financial stability at this time." Nonetheless, it notes that "vigilant monitoring is needed in light of the speed of market developments. Should the use of crypto-assets continue to evolve, it could have implications for financial stability in the future."

Citing the FSB's finding, the Reserve Bank of India (RBI) reiterated in its Trend and Progress of Banking in India 2017-18 report that cryptocurrencies are not a threat currently. "The market continues to evolve rapidly, however, and this initial assessment could change if crypto assets were to become more widely used or interconnected with the core of the regulated financial system," the central bank detailed. "Cryptocurrencies need constant monitoring on overall financial stability considerations, given the rapid expansion in their usage," the RBI concluded.

Cryptocurrency exchange Kraken has acquired Crypto Facilities, a British digital asset trading platform and index provider, in an undisclosed "nine-figure" deal. The acquisition means that Kraken will now be able to offer both spot and futures trading in bitcoin core, bitcoin cash, ripple, litecoin and ethereum while boosting revenue by attracting institutional customers.

Deal Turns Kraken Into a One-Stop Shop'

Kraken chief executive officer Jesse Powell has revealed  to U.S. magazine Fortune that the San Francisco-based company was on the verge of completing a $100 million funding round from its "larger customers."

Commenting on the Crypto Facilities deal, 10 months in the making, Powell said the acquisition reinforces Kraken's thrust on creating complementary services to its core spot exchange and over-the-counter trading. He stated that the exchange had since integrated the back-end operations of Crypto Facilities, allowing investors from both companies to trade on a single platform.

Users now have access to futures on six cryptocurrency pairs, "providing a highly efficient way to trade and hedge cryptocurrency in any market environment," he said in an email to news.Bitcoin.com. For U.S. customers, futures trading will, however, not be available. The U.K.'s Financial Conduct Authority has already approved the transaction, according to Kraken.

Of his company's largest acquisition yet, Powell said:

We are excited to introduce eligible clients to these industry leading futures and index products. Over the coming months, our teams will continue to enhance and expand these offerings. We've got great stuff in store for traders and institutional clients in 2019.

Founded in 2015, Crypto Facilities offers derivatives trading in cryptocurrencies like BTC, BCH, XRP and ETH to both individual and institutional investors. The London-based platform is the latest in a series of acquisitions by Kraken since 2016. The company, with four million global users, has previously acquired bitcoin exchanges Coinsetter, Cavirtex and Clevercoin. Kraken also bought Glidera, a wallet funding business, and Cryptowatch, a trading and portfolio tracking platform.

Timo Schlaefer, chief executive officer of Crypto Facilities, who will continue in his current role, said: "It has been our mission to build the most sophisticated, powerful and user friendly cryptocurrency trading platform. Teaming up with Kraken allows us to innovate the next generation of products and tremendously boosts the value we are able to provide to our clients."

Kraken Raises $100 Million in New Funding

Meanwhile, Kraken CEO Powell told Fortune that the exchange was close to completing a $100 million fundraising effort. To raise the money, Kraken sold some of its larger customers a stake in the company, he said. Kraken's earlier investors include Hummingbird Ventures, Blockchain Capital, and Digital Currency Group. Powell reportedly refused to name the new investors.

Much of the new investment originated from outside the United States, noted Powell, adding the raise did not need U.S. Securities and Exchange Commission approval because the company "only approached accredited investors and others covered by an exemption."

An Italian court has ruled that Francesco Firano, founder of defunct cryptocurrency exchange Bitgrail, was at fault for the disappearance of $170 million worth of the nano digital currency on his exchange last year. Firano, who called himself "The Bomber," is now "required to return as much of the assets to his customers as possible."

Court Seizes Firano's Personal Assets to Repay Victims

In its ruling, the Italian Bankruptcy Court, which enlisted the services of a court-appointed technical expert, concluded that both Bitgrail and Firano personally be declared bankrupt and forfeit their assets.

According to documents released by the Bitgrail victims advocacy group, the court's decision, delivered Jan. 21, authorizes the seizure of Firano's personal assets. So far, more than $1 million worth of assets have been seized, including a luxury vehicle, the group said. Digital assets worth several million dollars have also been confiscated from Bitgrail accounts and moved to accounts managed by trustees appointed by the court.

he documents show that Firano repeatedly mishandled security matters pertaining to the private keys of Bitgrail users, including his alleged transfer of client funds into wallets belonging to the exchange. Firano had failed to put in place suitable safeguards to prevent repeat, unauthorized withdrawals of nano from the exchange, the court said.

That's despite tens of millions of dollars worth of nano going 'missing' on several occasions due to duplicate withdrawals being fraudulently made from a single request due to a bug. The court berated Firano for not appropriately disclosing the suspicious transactions to his customers.

For example, the court found that the nano reported lost by Firano on Feb. 9, 2018 had actually been removed from the exchange months earlier, between July 2017 and December 2017. In total, about 10 million nano tokens left the exchange clandestinely during this period, with Firano's alleged full knowledge, but he did nothing about it.

The most damaging detail relates to how, just days before announcing the $170 million ( 17 million nano) theft, the Bitgrail founder moved 230 BTC (about $1.8 million at the time) into a personal account on another exchange called The Rock Trading, in a bid to swap it for euros. The documents show that Firano had also tried to withdraw money through a bitcoin ATM linked to that exchange.

The court appointed expert concluded:

Therefore it was the Bitgrail exchange that actually requested to the node multiple times to allow the funds to leave the wallet (funds that in fact, had already left the account after the first request) and not the Nano network that allowed multiple withdrawals. The shortfall reported by Firano in February was caused by a transfer request generated by Bitgrail multiple times upon receiving a single request from the user.

Victory for Investors as Firano Seeks Way Out

Meanwhile, Francesco Firano attempted to cheat his way out of the mess. After nano withdrawals were closed on the Bitgrail exchange in January 2018, Firano promised to repay investors 20 percent of their funds, but only "if they agreed to sign a waiver foregoing any legal action against him."

Later, he announced plans to reopen the exchange and release a new token called Bitgrail Shares, which would be used to reimburse the victims over time. Users called him out, wary that it was an elaborate exit scam, and opted to go to court. Firano argued in a losing case that his exchange was a mere provider of services and that the currencies deposited on the exchange were "regular" since he could not freely use the deposited coins.

A Bitgrail advocacy group has called the court ruling "both a huge win for crypto users and a cautionary tale for cryptocurrency exchange owners, who have been provided with a clear example of how not to run an exchange or handle a loss of funds."

A lawyer representing the Internet and Mobile Association of India in its writ petition against the RBI banking ban has shared new details of the progress to lift the ban with news.Bitcoin.com. The supreme court recognizes the urgency of hearing the RBI case without waiting for the Indian government to introduce crypto regulation.

The Urgency of Hearing RBI Ban Case

The Indian supreme court is hearing two crypto-related issues. The first concerns the crypto banking ban by the country's central bank, the Reserve Bank of India (RBI). The other concerns the Indian government's cryptocurrency regulation, lawyer Jaideep Reddy explained to news.Bitcoin.com on Monday.

He represents the Internet and Mobile Association of India (IAMAI), on behalf of Nishith Desai Associates, in its writ petition against the RBI circular in the country' supreme court. The IAMAI is an industry body whose members include a number of local crypto exchanges. In its circular dated April 6 last year, the central bank banned financial institutions under its control from providing services to crypto businesses.

In the latest supreme court hearing, "The matter was actually heard for a reasonable period of time," said Reddy, who represented the IAMAI in that hearing.

The petitioners' counsel told the court that "the constitutionality of the RBI circular is a separate issue from the government of India committee's decision" on crypto regulation, he recalled. "The court in the last hearing appreciated that the issues regarding the RBI circular on the one hand, and the larger government policy decision on the other, were separate." He continued:

After hearing IAMAI, it observed that the exchanges' businesses are nearly shut as a result of the RBI circular, and that, therefore, the issue of the validity of the circular needs to be heard and decided without waiting for the government committee's overall policy recommendation. The counsel for the RBI agreed to this approach.

"As of now, the petitioners have been pressing for the issues on the RBI circular to be heard," the lawyer reiterated, noting that "the court needs to decide whether the circular is legally and constitutionally valid or not."

RBI Ban Case Set for End of February

Without asking either party to submit additional documents, the supreme court set the next hearing to the end of February, due to "other pre-scheduled matters in the coming weeks," Reddy said, emphasizing:

While the judges orally observed that the matter should be placed on the top of the list and on a Tuesday, the official order only states that it will be listed in the last week of February. The exact date and order of listing will become known once the official list is released closer to the last week of February.

"We hope for a detailed hearing in which the court will hear all the arguments for and against the RBI circular and ultimately decide whether to uphold it or not," the advocate concluded.

Petitions to Be Heard

The media reported that several petitions had been filed against the RBI ban. Reddy shared with news.Bitcoin.com:

There are at least 5 petitions currently pending in the supreme court in connection with crypto-assets. Of these, 3 challenge the legal and constitutional validity of the RBI circular while 2 are public interest litigations on the broader issue of the need for crypto-asset regulation.

He emphasized that "IAMAI's petition only challenges the RBI circular." While noting that "The petitions are simultaneously listed so there is no concept of any petitioner leading the others," he also pointed out that "Generally, the seniority of the counsel influences who leads the arguments on a particular day."

Counter-Affidavits Filed by Government

The media also reported that the RBI had filed a counter-affidavit with the supreme court. Reddy confirmed to news.Bitcoin.com that "The RBI has filed a counter-affidavit responding to the IAMAI petition," adding that "It cites various concerns associated with crypto-assets." He elaborated:

We have responded in detail to the RBI's counter-affidavit by filing a rejoinder on behalf of IAMAI responding to each point. In our view, the mere fact that crypto assets have certain risks does not warrant a complete banking embargo.

The advocate further explained: "Crypto assets also have benefits and are essential to the success of blockchain technology. The constitution requires that restrictions on fundamental rights be reasonable and proportionate."

There is another counter-affidavit filed with the supreme court, Reddy conveyed. "The Union of India (i.e., the federal government) filed a counter-affidavit in some of the other petitions regarding the status of the government committee's deliberations on the legal issues surrounding virtual currency," he noted. "No date was given by which the ultimate report would come out. However, the counter-affidavit states that a draft report and draft law are soon expected to be placed for the consideration of the committee."

Switzerland's Falcon Private Bank has introduced a cryptocurrency wallet as well as support for direct transfers of BTC, BCH, ETH and LTC for private and institutional investors. The bank said investors can now directly transfer cryptocurrencies to and from its own "segregated Falcon wallets." They can also convert their digital coins into cash.

Fully Bankable Blockchain Assets'

In a press release published on Jan. 21, Falcon claimed that its latest offering "makes blockchain assets fully bankable." The Zurich-based bank also claimed to provide secure storage thanks to its "proprietary custody solution."

"Clients can place trading orders conveniently through e-banking or a dedicated relationship manager," said Falcon. "Digital assets are included in portfolio statements as well as in tax reporting documents."

The bank stated it had developed a process that ensures full compliance with Switzerland's anti-money laundering and know-your-customer laws and regulations. It claimed to have a multi-level protection that covers hardware, software, and transaction processes. "Our custody solution has been audited and reviewed by independent providers," Falcon detailed.

Martin Keller, chief executive officer of the Swiss private bank, commented:

Falcon has … demonstrated its expertize … in the digital assets space by merging traditional private banking services with innovative financial solutions.

 Progressive Switzerland Allows Crypto Firms to Flourish

Founded in 1965 as Ueberseebank, Falcon Private Bank is Switzerland's 26th largest foreign-controlled bank by total assets. The bank has more than $15 billion worth of client assets under management and has offices in Abu Dhabi, Dubai, London and Zurich.

It was licensed as a bitcoin asset management company by the Swiss Financial Market Supervisory Authority (FINMA) in July 2017. However, the bank has reportedly set its minimum bitcoin investment threshold at two million Swiss francs ($2 million), cutting off many Swiss citizens from investing through it.

Switzerland has taken a progressive stance toward cryptocurrencies by legalizing their use and formalizing crypto transactions in a range of different contexts. But some crypto projects still struggle to open bank accounts, and cryptocurrency-focused bankers and investors still complain about a relative lack of regulatory clarity, as it remains unclear whether cryptocurrencies can be considered legal tender in certain contexts.

Switzerland sees virtual money and blockchain technology as strategic innovations in global finance. It is therefore determined to maintain and expand the jobs it has to offer in the field. The country's tax regulator views cryptocurrencies as assets that should be subject to wealth taxes and declared on annual tax returns.

Buying bitcoin is not a revolutionary act. Nor should it be. And yet the way statists, apparatchiks and politicians bang on, you'd think the mere act of acquiring digital currency was akin to receiving the keys to a pandora's box in which lurks every illicit artifact known to man. One day, these dinosaurs will begrudgingly concede that buying bitcoin is no more seditious than buying a soda with a $20 bill. But until then, you'll want to preserve your privacy when acquiring cryptocurrency.

Buy Your Bitcoin, Keep Your Privacy

The reasons why you might want to keep bitcoin ownership to yourself don't require rehashing. Put simply, though, it's no one's damn business what you want to do with your money or how you wish to store your wealth. In the future, governmental scrutiny of bitcoin ownership will look as archaic and benighted as state intrusion into the religious or sexual preferences of its citizens. By the time that day comes, bitcoin may be worth a lot more than it is today. The steps you take to preserve your privacy in the present, therefore, may prove particularly precious in the future. Just think about 2011 bitcoiners who had no need to conceal their ownership at the time, only to find themselves sitting ducks once those bitcoins multiplied 3,000x by 2017.

Anonymously buying bitcoin in small amounts is relatively easy, though getting your hands on larger quantities without having to jump through hoops can be harder. Just as it's common practice to use fake personal details when signing into public wifi, the same can be done when buying bitcoin through ATMs and terminals such as the newly repurposed Coinstar machines. Doing so will require a burner phone or a secondary SIM card that isn't tied to your real world identity. Alternatively, search for "receive SMS online" to find links to services that will provide you with a one-time number.

Buying Bitcoin in Person

In addition to BATMs, which can be used to buy a few hundred bucks' worth of crypto at a time, P2P sites like Localbitcoins.com enable you to locate sellers in your area and meet them in person. Better still, if you have acquaintances who work in the cryptocurrency industry or mine crypto, you should be able to purchase bitcoin directly from them, since they'll be obliged to periodically liquidate some of their coins for fiat to cover living expenses. Newly mined coins are particularly precious (which is why they've been known to fetch a premium on OTC markets) because they have no history associated with them.

Purchasing bitcoin face-to-face (or face-to-ATM) brings its own risks, of course, particularly from a privacy perspective. If you would prefer it that no one knew of your business – not the miner you're buying crypto from, nor the surveillance cameras watching you feed banknotes into the BATM in the 7/11 – you'd be better served transacting online. While this removes the ability to transact in cash, there are privacy gains to be made elsewhere.

Anonymously Buying Bitcoin Online

Finding a bitcoin marketplace that won't KYC the hell out of you isn't easy, but there is one platform that stands out from all the boot-licking exchanges willing to do the government's bidding. Its name is Bisq, and what it lacks in liquidity and spot prices, it makes up for in privacy. The range of payment methods the P2P marketplace accepts is extensive: face-to-face is even an option, if you're fortunate enough to live within range of a seller. Generally speaking, you'll need to make payment using an e-wallet or bank transfer. While this entails certain compromises from a privacy perspective, it's easy to disguise the nature of the transaction using a generic banking reference such as "Car" or "Video editing."

Just as Localbitcoins.com will connect you with sellers willing to meet face-to-face, it will link you online in a manner similar to Bisq. Once again, if paying by bank transfer, you can put whatever you like on the pay-in reference, as most sellers do, as putting "bitcoin" on a bank reference is asking for account suspension. (This will change one day, but by the time it does, banks will no longer be relevant and will be begging bitcoiners for business.) It's easy to set up a Localbitcoins account using a private email account, such as Protonmail, and a fake social media account and burner number if you're particularly cautious. Hodl Hodl is another P2P market where verification is optional rather than enforced. The number of available offers is low, but Hodl Hodl has a wider range of cryptocurrencies including XMR and EOS.

Buy Privately Then Stay Private

Anonymity measures shouldn't end the moment you've bought bitcoin. It's an ongoing mindset that calls for using privacy-centric wallets such as Wasabi, avoiding sending funds to exchanges that enforce KYC, and also avoiding address reuse. But those are all topics we'll cover in one of our next "How To" guides. Like bitcoin itself, privacy is likely to become an increasingly precious commodity in the years to come. The steps you take now to preserve yours will pay future dividends.