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Weekly review: Russian laws, Crypto-Sweep, market falls and two 51% attacks


This week has been marked by several major events in the sphere of cryptocurrency regulation, while the market itself has not shown the best performance.

The first laws with the direct mentioning of cryptocurrency have been implemented in Russia - the country where mining is one of the cheapest in the world due to energy prices. The legislation connected to this sphere has been visibly changing since autumn last year: for example, one of the abandoned proposals was to limit ICO participation for qualified investors only. In the final version of the law, the Bank of Russia can only limit the sum of acquired tokens for non-qualified investors, which is a major step forward. Tokens are viewed as cryptocurrencies issued by legal entities or individual business persons for investment attraction. The legal ICO in Russia should be operated by those who have a capital of 5 million rubles (81109.60 USD) or more. Banks and non-credit financial institutions are not allowed to open own ICOs.

Mining is considered an enterprise only when a person conducting it is surpassing the government-established energy consumption limit for three months. Cryptocurrencies are characterized as digital financial assets, lawmakers are aware there can be many independent issuers. One of the biggest downsides of the legislative trio - crypto-to-fiat conversion and vice versa. Exchanges are planned to be included in the white list composed by the Central Bank after consultations with the Council of Ministers.

Elina Sidorenko, head of the Russian parliamentary working group of cryptocurrency risk assessment, has criticized the laws: as she thinks, the problem is the imperative limitation of digital assets to cryptocurrencies and tokens while there are still so much potential future kinds of economic tools - digital bonds and the like. One should understand that current laws are not ideal and underdeveloped - they can lead to even more uncertainty than prior to their implementation, Sidorenko noted.

21-05-2018 21:00:00  |   Regulation

Meanwhile in the United States, the market is already in the legal sphere, and one of the primary concerns of the regulators is the continuous violation of the ‘token=securities’ principle. This has made the North American Securities Administrators Association (NASAA) to start a wide investigation of the whole market, reviewing entities working with the U.S. and Canadian market from 40 jurisdictions. This operation has already been dubbed “Crypto-Sweep” by Fortune and several other outlets.

Another investigation dedicated to price motion manipulation has been initiated by the United States Department of Justice together with the Commodity Futures Trading Commission. This research has already been supported by Mike Novogratz and Cameron Winklevoss who are undoubtedly interested in the purification of the sphere. Self-regulatory initiatives can actually help to do this too: messages about the scam list of the International Decentralized Association of Cryptocurrency and Blockchain (IDACB) have attracted the attention of the observers this week.

This week, the community is fully assessing the losses happened after the massive 51% attack on Bitcoin Gold which happened on May 18 - the control over the cryptocurrency blockchain has been intercepted by a hacker which has resulted in an unfair issue of new units. A very similar financial crime has been committed towards the environment of Verge - the attacker has received control over at least two mining algorithms of the same digital financial asset. In both cases, the price of XVG and BTG has visibly fallen since Monday.

The market itself has not been in the good shape this week: the assumption of Thomas Lee from Fundstrat has been largely incorrect. As he thought, the major blockchain summit called Consensus 2018 held in Manhattan would positively influence the price dynamics, but some observers insist it would be unwise to connect major events and price motion, as sometimes the latter is independent from the former. Bitcoin, the industry locomotive, has reduced to $7,376 on Thursday with a visible bearish trend. One can see this on Coinmarketcap:

As it usually happens, other coins have followed Bitcoin despite what their development teams claim about the complete independence from the rivals. One can carefully assume that Ethereum has more chances for the positive next week, as it shows the signs of correction since May 24.

Overall, this has not been the best week for the market, but nobody should exclude the sentiment reversal in the following months. The messages connecting the drop of prices to the US investigations may be incorrect, as the fall has started before the corresponding news.

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