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1/ On Friday, May 29th, at 16:00 UTC, the markets for ARDR, BCN, DCR, GAME, GAS, LSK, NXT, OMNI, and REP will be disabled for Poloniex customers in the US. All assets remain available for trading to customers outside the US. https://t.co/eNWeZTjT5X
— Poloniex Exchange (@Poloniex) May 16, 2019
Cryptocurrency exchange Poloniex has restricted access to nine different assets, including Decred, in the United States, citing regulatory issues.
Earlier this month, the US-based cryptocurrency exchange issued an update, indicating that the platform would restrict access to nine different assets to US customers, namely Decred, Ardor, Bytecoin, Game Credits, Neo Gas, Lisk, NXT, Omni, and Augur. Poloniex specifically cited regulatory concerns as the reason for this restriction, notably the status of the listed coins as potential securities and therefore subject to further regulation:
“We are committed to complying with regulatory requirements in every jurisdiction. Today’s action is a result of regulatory uncertainty in the US market. Specifically, it is not possible to be certain whether US regulators will consider these assets to be securities. We understand how frustrating this choice is for our customers, and for the crypto community more broadly. We believe in the power and potential of these assets, and will continue to focus time and energy on supporting positive policy and regulatory developments for crypto assets in the US and around the world.”
Poloniex is a cryptocurrency-only exchange based in the United States which uses the Tether (USDT) USD-pegged stablecoin to allow traders to move in and out of fiat values in place of allowing direct fiat deposits and withdrawals. It is currently ranked 71st among exchanges on CoinMarketCap and reported $40.283 million in volume over the last 24 hours.
My guess is both a combination of the premine and being a staking chain…but most likely the latter.
— Thomas Zarebczan 📚 (@TomZarebczan) May 17, 2019
Decred’s beginnings and present structure leading to a potential security classification
Notable among the assets restricted in the US by Poloniex is Decred, a governance-focused cryptocurrency with many similarities with Dash (which did not fall under the scope of the US restriction by the exchange). While technically a decentralized partially proof-of-work based cryptocurrency, Decred nonetheless had launch circumstances and present structure that may have caused Poloniex to believe that the coin could be classified as a security. First, at its launch, 1.68 million coins were premined, or created and distributed centrally before official decentralized proof-of-work mining began, representing 8% of the coin’s total eventual supply, with half of this granted to founding developers. Second, the disbursement of Decred’s 10% treasury is at the moment disbursed by a manager, with a proposal to decentralize treasury spending floated earlier this year to decentralize the treasury disbursements rather than to rely on a central party with control over the funds, though this proposal is estimated to take several months to implement.
Dash’s unique structure as the world’s first DAO has not yet seen clear regulatory classification
Dash may have avoided suspicion of regulatory classification as a security thus far because of its unique structure as a decentralized autonomous organization (DAO). Because of its structure, no one person or entity controls Dash, controls its funding, or can prevent others from participating. Additionally, the main development group, Dash Core Group, is now legally owned by the Dash network, further solidifying its decentralization. Because of this unique structure, Dash may not fit under current legal definitions of assets.