Crypto in Venezuela and Company Crypto
Written 15th February, 2019
Venezuela, Regulation, and Sovereign Crypto
Venezuela has published a new framework on the regulation of cryptocurrencies. This 63-article framework includes defining key terms related to cryptocurrencies, establishes requirements for obtaining licenses for particular crypto activities (such as mining, crypto exchanges, etc.), and introduces fines for unlicensed activities. An interesting addition to this framework is the introduction to the first sovereign crypto asset, called the petro. A major addition to this framework is the amount of control given to the National Superintendency of Crypto Assets and Related Activities (la Superintendencia Nacional de Criptoactivos y Actividades Conexas) (Sunacrip), a national agency meant to inspect commercial crypto activities in Venezuela. Not only will Sunacrip have the capability to confiscate mining equipment from commercial operations, but they will be able to adjust the value of its Venezuelan sovereign cryptocurrencies (the petro).
There have been mixed reactions to this framework and the tightened control that the Venezuelan government is placing on cryptocurrency and crypto related activities. Many disagree with this framework, as centralizing crypto is contradictory to what it was created to be. Others are embracing the inclusion of sovereign cryptocurrency and strict regulation. Patrick Byrne, CEO of Overstock.com, for example stated that, when done right, “blockchain can make government superefficient and incapable of being bribed”. US lawyers have commented that regulating cryptocurrency are “tough waters to navigate”, which is likely why after all these years we’re still waiting for the IRS to issue more guidance on the taxation of crypto assets.
Company Crypto
The largest bank in the US, JP Morgan, announced yesterday that it’s working on launching its own digital currency called JPM Coin. It is being created with the intent to “instantly settle transactions between clients of its wholesale payments business” and for will only be available for businesses. They’re calling it a ‘digital coin’ as it’s not actually a cryptocurrency and not a stablecoin, but it uses a blockchain. Although reactions to this news is mixed, Ripple’s CEO, Brad Garlinghouse, tweeted that JPM Coin “misses the point” as a closed network digital currency today is outdated. It’s uncertain how the IRS would view a business’s use of this digital coin and how it might be treated differently from other cryptocurrencies and tokens.
