Diamond Tokens To Become The Motivation for The US Legislative Activity

The Court of New York accepted that the current laws and rules regulating the market of securities were applicable to cryptocurrencies. Especially if it is about prosecuting scammers.

The judge Raymond DEARIE came to this decision during the trial of the “diamond” coins, which the Russian-born Maxim ZASLAVSKY was accused of.

This is a reminder that during the ICO the entrepreneur promised to the potential buyers of his cryptocurrency RECoin that digital coins would be secured by diamonds and real estate. However, during the months the project had existed Zaslavsky’s company did absolutely nothing. It did not purchase any real estate and did not present any precious gems to the society.

“The question is whether the claims of the prosecution that there are “the elements of a financial enterprise aiming at making a profit” in the organization are reasoned”, - the judge DEARIE wrote in his announcement. – If it is proved the jury can come to the conclusion that “the investors provide the capital and the share of profits; the promoters manage the enterprise and control the management. There are such elements in our case”. Therefore, Zaslavsky’s project can be called nothing but a joint-stock company and the tokens can be called securities.

By the way, the New York court made a decision not without reason. In 2014, the Internal Revenue Service (IRS) of the USA equated bitcoin to the property together with the stocks of high tech companies and other intangible property. The tax department decided that all the participants in crypto transactions had to pay taxes on the realized capital gain – from 15 to 35% per year – and keep records of the profit from the investment activity. Later, at the end of 2017, Donald Trump signed a decree, according to the norms of which all the transactions with cryptocurrencies are taxed as well as the security trading. The normative act entered into force on January 1 this year.

The court confirmed this interpretation.

America is the country of the common law. Therefore, legislative execution is in many cases more important than the President’s signature under the text. If the law is not in force, there is no law at all. For this reason, there are so many various mixed and out-of-force laws in the USA, and it never occurred to anyone to abrogate them.

This judgement has two sides.

The first one is that the crypto market has finally moved under the jurisdiction of the Securities and Exchange Commission (SEC), and the management of this regulator is more than leery of the virtual assets market. Such course of events is, in fact, the realization of a perimeter control. Where regulators are obliged to control how tokens are correlated to fiat money: converted, transferred, and invested.

Therefore, American cheated investors have all chances to get their $300 thousand invested in the project of the Russian businessman back.

The second one is that the supporters of cryptocurrencies will now have more opportunities to influence the regulators’ policy through the legislative levels of power. Coinbase, Protocol Labs, Digital Currency Group, Polychain Capital and other leaders of the industry announced the other day the creation of the Blockchain-Association, which will lobby the interests of the crypto at the highest level.

“The Blockchain-Association is an attempt to join the companies interested in the legal regulation to get their viewpoint to the legislators, - the main lawyer of Coinbase Mike LEMPRES said. – We do not want to operate on a political wicket but we are interested in the development of the legal and normative system, which would stand the test of time”.

At the same time, both the Congress of the USA and SEC admit that the volume of cryptocurrencies is increasing in the investors’ portfolio; and the legalization of the market, including the application of such financial instruments as ETF, becomes a real perspective.