New Indian Governmental Committee Favors Legalizing Cryptocurrencies, Media Reports

A governmental committee in India has reportedly suggested that cryptocurrencies be legalized in the country, English-language local media TheNewIndianExpress (TNIE) reported on Dec. 26.

According to the article, an unnamed senior official who reportedly attended the panel’s meetings on cryptocurrencies stated:

“There is a general consensus that cryptocurrency cannot be dismissed as completely illegal. It needs to be legalized with strong riders.”

Previous Indian government panel meetings had reportedly suggested a complete ban on cryptocurrencies in the country earlier in December, stating that “any kind of dealing in such currencies should be treated as ‘illegal.’”

India’s government reportedly set up this most recent second inter-ministerial committee, which is led by Subhash Chandra Garg, the Department of Economic Affairs secretary, after the Reserve Bank of India’s (RBI) ban on banks dealing with crypto businesses and persons in April of this year.

While a previous committee had recommended a total crypto ban in March 2017, the new committee, TNIE writes, was set up to deal with the conflicting opinions on the RBI ban.

According to the TNIE, the committee has already had two meetings, and the next one is expected to take place in January.

This committee includes members of the Ministry of Electronics and Information Technology, RBI, Securities and Exchange Board of India and the revenue secretary.

The official also noted that the members of the committee “have also taken inputs from cryptocurrency exchanges and experts,” concluding by stating that they will work on the legal aspects with India’s law ministry.

As Cointelegraph reported at the beginning of the current month, G20 countries have called for the taxation of cryptocurrencies and regulation preventing their use for money laundering, according to a document stipulated during a Buenos Aires summit.

Some of the members of the second Indian governmental committee, such as the RBI executive director Ganesh Kumar and Ministry of Finance officials, participated in those G20 meetings. Because of this, according to the article, “they are expected to include insights they gained from the global deliberations in their report.”

In October, news broke that the developers of India’s first Bitcoin (BTC) “ATM” were arrested on criminal charges. According to local mainstream media, the two — who are also founders of India’s first crypto exchange Unocoin — were booked for criminal conspiracy, cheating and forgery.

A press statement from India’s Central Crime Branch noted that since the ATM had not been approved by the government, it should not have been called an ATM. Prashant Mali, a cyber lawyer, explained that if “kiosk” had been written instead of “ATM,” the installation would have fallen into a grey area of the law.

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From Kazakhstan to Uzbekistan: How Cryptocurrencies Are Regulated in Central Asia

As been reported on September 2, the president of Uzbekistan, Shavkat Mirziyoyev, ordered the establishment of a state blockchain development fund called the “Digital Trust.” Earlier in September, a decree legalizing crypto trading — also making it tax-free — and mining in the country came into force, making Uzbekistan a crypto-friendly state. But how is the rest of the Central Asia region is holding up?

The list below is based on thorough news research, but should in no way be considered complete. If you have more detailed information on banks and the crypto relationship in your country, we encourage you to share it in the comment section.

Kazakhstan

Regulation

Kazakhstan has clearly shown its interest in cryptocurrencies. According to a study published by the search engine Yandex in March, locals have been searching for crypto-related terms in frequency and the amount is several times higher this year as compared to 2017.

However, a definite regulatory framework has yet to be introduced in the country. There are signs that this situation might change in the near future, however: In May, Kazakhstan’s president, Nursultan Nazarbayev, called for global cooperation in terms of crypto regulation.

Nazarbayev stressed that “most countries are actively exploring the possibility of adapting cryptocurrency to the current configuration of financial systems,” adding:

“At the same time, we see completely separate actions of states in this issue. And these disparate actions will lead to inefficiency. It is necessary to start developing common rules.”

The president’s comment followed the National Bank of Kazakhstan’s (NBK) announcement that they are going to ban crypto trading and mining in the country. On March 30, CBK head Daniyar Akishev declared in an interview with RIA Novosti:

“In Kazakhstan, the National Bank is very conservative toward [cryptocurrencies], I welcome only relatively tight regulations. To elaborate, we want to prohibit buying and selling of cryptocurrencies with the national currency, we want to ban exchanges on this field, we want to ban any kind of mining.”

Akishev cited investor protection, Anti-Money Laundering (AML) and Know-Your-Customer (KYC) measures as primary reasons behind a potential blanket ban on cryptocurrencies. He added that NBK’s point of view is shared by “the majority of public authorities” in Kazakhstan and that his agency has already “prepared” amendments to the law.

Blockchain

Kazakhstan is actively trying to become the region’s main blockchain hub: In June, the country’s capital, Astana, held “the most important event for fintech in Central Asia” — a large blockchain conference supported by some public authorities and the Kazakh Association for Blockchain and cryptocurrencies (KABC).

KABC was registered in November 2017 by at least six organisations, some of which are led by people who previously worked at local regulating bodies. The coalition’s chairman has previously stated that their primary goal is to “define the rules for crypto and blockchain’s market jointly with the watchdog.”

Some of the country’s public authorities have already started researching crypto’s underlying technology. Thus, in April, the Ministry of Finance announced it was going to launch a blockchain-powered database, while a local cluster of innovation teamed up with IBM to study how the IT giant’s Hyperledger Fabric could be implemented for the local economy.  

Kyrgyzstan

Kyrgyzstan

Kyrgyzstan explicitly banned cryptocurrencies back in July 2014, when the National Bank of the Kyrgyz Republic issued a statement warning that the use of Bitcoin and other virtual currencies as a form of payment is illegal under the national law:

“Under the legislation of the Kyrgyz Republic, the sole legal tender on the territory of our country is the national currency of Kyrgyzstan som. The use of ‘virtual currency,’ Bitcoins, in particular, as a means of payment in the Kyrgyz Republic will be a violation of the law of our state.”

The central bank also warned the citizens about Bitcoin’s lack of regulation and high levels of volatility. Around the same time, a Bitcoin ATM machine was installed in Bishkek by Italian financial analyst Emanuele Costa, who argued that the ATM could greatly impact the way migrant workers in Kyrgyzstan send money back home. According to the World Bank, migrant remittances from 2013 totaled 31 percent of Kyrgyzstan’s GDP.

Despite the central bank’s harsh stance on crypto, virtual currencies are present in the country. As Valery Tutykhin, head of the International Finance Centre Development Agency, told local news agency 24.kg, investing in cryptocurrencies is possible in Kyrgyzstan:

“Our local investment market infrastructure can be used to legally invest into any crypto assets. Does someone want to buy cryptocurrencies? Let him do it through the local commodities exchange, and he will pay local taxes. Does someone want to raise capital for a startup through an Initial Coin Offering (ICO)? Let him do it through the local stock exchange. Its listing rules are not so complex.”

Blockchain 

Despite the regulatory uncertainty, the Kyrgyz Republic has proven to be blockchain-friendly. According to a March report dubbed “The Legal Status of Blockchain Technology in Kyrgyzstan” that was commissioned by the Kyrgyz Stock Exchange and the International Finance Centre Development Agency and prepared by Geneva-based law firm John Tiner & Partners, the law of Kyrgyzstan does not prohibit or hinder the development of blockchain-based projects, including cryptocurrency mining and trading. 

Specifically, the Kyrgyz Stock Exchange has been developing a blockchain-backed project to facilitate trade securities and make real-time settlements. Moreover, in April, the State Patent Office of Kyrgyzstan (KyrgyzPatent) announced that it will digitize patent records and create a blockchain-powered database with the help of the Russian National Intellectual Property Transactions Coordination Center (IPChain).

Tajikistan

Tajikistan

Regulation

Cryptocurrencies are neither legal nor banned in Tajikistan. However, in January the National Bank of Tajikistan (NBT) voiced its opinion regarding the issue for the first time, calling Bitcoin “a terrorism financing tool.”

“Being based on experience of financial institutions, the National Bank warns nationals of Tajikistan of risks related to use of Bitcoins,” NBT declared in a written reply to Radio Liberty’s Tajik Service.

Blockchain

While the government of Tajikistan seems to ignore the technology, there are some blockchain projects in the country. Specifically, in June 2017, Hong Kong-based blockchain startup Bitspark teamed up with the United Nations Development Programme (UNDP) to study the potential for blockchain remittances as a way to improve financial inclusion in Tajikistan.

According to Bitspark research, Tajikistan remains an underbanked country, as an estimated 85 percent to 90 percent of the population do not have formal banking accounts. Instead, they rely on alternative services for domestic and international payments, an area where blockchain has shown some progress.

Turkmenistan

Turkmenistan

Regulation

There’s no concrete information regarding virtual currencies’ legal status in Turkmenistan. According to responses posted on a thread on a Russian mining forum, where the opening poster asked whether it was possible to buy cryptocurrencies in Turkmenistan, even the over-the-counter (OTC) markets are barely present in the region. Reportedly, virtual currencies there can only be bought with U.S. dollars, but the government has been actively limiting access to foreign currency for local companies and citizens.

Uzbekistan

Uzbekistan

Regulation

Recently, Uzbekistan has introduced a number of positive regulation laws for the local crypto industry, namely recognizing trading and mining, as well as exempting local crypto traders from taxation.

The country’s president, Shavkat Mirziyoyev, has signed a law legalizing the activities of crypto exchanges, which came into force on Sept. 2. According to the decree, foreign nationals can only trade cryptocurrencies in Uzbekistan by means of creating a subsidiary in the country. The law also specifies a minimum capital requirement of roughly $710,000 to register a crypto exchange.

Moreover, crypto traders will not be subject to Uzbek stock market regulations and will be relieved of their obligation to pay taxes on trading revenues.

Under the new legislation, crypto exchanges must also comply with counterterrorism and AML laws. They are also bound to store information on crypto transactions, clients’ personal data and their correspondences for five years.

Blockchain

The local government has not ignored blockchain, either. In September, President Mirziyoyev also ordered the establishment of a state blockchain development fund titled the “Digital Trust,” according to a document published on the official government website.

The fund’s primary goal is to integrate blockchain into various government projects, including healthcare, education and cultural areas. The organization will also be responsible for international investment in the Uzbek digital economy. The Digital Trust will reportedly be funded by the National Agency of Project Management, in addition to international loans and grants.

Furthermore, in July, Mirziyoyev signed the order “On measures for digital economics development in the Republic of Uzbekistan.” The document makes provisions for blockchain to be integrated into local public administration.

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Almost All Top 100 Cryptocurrencies Solidly in Green, Dogecoin Skyrockets Over 40%

Saturday, September 1: crypto markets are multiplying recent gains today, with 97 out of the top 100 cryptocurrencies by market cap solidly in the green, as data from Coin360 shows.

Market visualization from Coin360

Bitcoin (BTC) continues to climb steadily over the $7,000 mark, seeing 2.52 percent gains over the past 24 hours, according to CoinMarketCap. Bitcoin is trading at about $7,216 at press time, up 7.2 percent over the past week. 

The largest cryptocurrency by market cap broke the $7,000 point for the second time this week amidst news from the U.S. Commodity Futures Trading Commission (CFTC) reporting a decline in bearish positions for non-commercial Bitcoin futures contracts.

Btc

Bitcoin 7-day price chart. Source: CoinMarketCap

Ethereum (ETH) is grazing the $300 price point, trading just under it at $299.66, up almost 6 percent over the 24 hour period. The largest altcoin has, like Bitcoin, also seen about 7 percent growth on the week, though it is still facing 28.7 percent losses on the month. 

Eth

Ethereum 7-day price chart. Source: CoinMarketCap

Total market capitalization of all cryptocurrencies has reached $238.4 billion point for the first time since August 8 and is continuing to grow, seeing a slight spike during the hours to press time.

Global

Total market capitalization 1-month chart. Source: CoinMarketCap

Of the top 25 cryptocurrencies, Dogecoin (DOGE) has seen the most notable growth, up a whopping 41 percent over the past 24 hours, according to CoinMarketCap. Altcoin Dogecoin has seen a significant upswing since August 30, up a stunning 135 percent in the past three days.

DOGE is currently ranked in 21st place on CoinMarketCap, trading at $0.0061 and with a market capitalization of $708 million.

To explain DOGE’s massive growth this week, commentators on Twitter point to an impending infrastructure development for the project dubbed Dogethereum, the demo for which is set to take place Sept. 5. The protocol refers to a smart contract that will act as a so-called bridge letting people move Dogecoins to and from the Ethereum blockchain.

In the top ten coins, Bitcoin Cash (BCH) and Litecoin (LTC) have seen the most growth, up 14.7 and 8 percent respectively.

The wave of green across crypto markets has increased as the reports surfaced that the Chicago Board Options Exchange (CBOE) is planning to launch Ethereum futures by the end of 2018.

Also this week, the central bank of India, the Reserve Bank of India (RBI), confirmed its plans to set up an inter-departmental group to evaluate the feasibility of issuing a rupee-backed central bank digital currency.

Earlier this week on August 29, Cointelegraph reported announced that Yahoo Finance was displaying buy and sell options for several major cryptocurrencies on its website. The company then confirmed to Cointelegraph that the new service will be only available on its iOS app and will let users trade cryptos including Bitcoin, Ethereum, Litecoin and Dogecoin on their preferred exchanges via an integrated third party service.

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Money or Assets? How World Governments Define Cryptocurrencies

Cryptocurrencies — what are they? Money? Commodities? Securities? Utility tokens? Or something else? Few national governments seem to be in any kind of agreement on this question, and for now, at least, their divisions have given such currencies as Bitcoin and Ethereum a floating, indeterminate status on the global stage.

As a result, cryptocurrencies lack a single, definite existence, with some nations treating them as money (e.g., Japan, Germany) and others treating them as an unregulated, speculative asset (e.g., Mexico, Denmark), making them the financial equivalent of Schrödinger’s cat. However, as this review of classifications of crypto throughout the world will show, cryptocurrencies are all these things and more, which is why they deserve to be classified by future legislation according their own, unique qualities.

United States: securities, commodities, property, money

As an indication of how difficult it may be for world governments to ever reach a global consensus on the status of cryptocurrencies, it’s worth pointing out that there’s currently little consensus within nations — let alone among them. This is nowhere more evident than in the United States, where five separate agencies have all had their own competing classifications of cryptocurrencies.

First up is the Securities and Exchange Commission (SEC), which — up until June — defined cryptocurrencies in general as securities, meaning assets in which someone invests in the expectation of receiving a return. In March, for example, it issued a public statement indicating that it would regulate anything being traded via an exchange platform as a security.

“A number of these platforms provide a mechanism for trading assets that meet the definition of a ‘security’ under the federal securities laws. If a platform offers trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.”

Bitcoin declined by 10 percent following this announcement, yet the statements of other American authorities and agencies differ with the SEC’s assertion that cryptocurrencies are securities. Because, also in March, a New York federal judge ruled that the Commodities and Futures Trading Commission (CFTC) can regulate BTC and other currencies as commodities, putting them on the same level as gold, oil and coffee.

If this wasn’t already confusing enough, the Internal Revenue Service (IRS) has defined cryptocurrencies as taxable property since March 2014, when it declared:

“For federal tax purposes, virtual currency is treated as property.”

Observers would be forgiven for supposing that three separate definitions were enough, yet two additional agencies treat cryptocurrencies as money. The U.S. Office of Foreign Assets Control (OFAC) is the bureau of the U.S. Treasury Department responsible for enforcing economic sanctions, which can include sanctions against certain cryptocurrencies (e.g., the Petro). In April, it announced that it would be treating “virtual currencies” in the same way as fiat currency, making any individual who handled a cryptocurrency covered by an economic sanction liable for prosecution.

Likewise, the Financial Crimes Enforcement Network (FinCEN) presides over the illegal use of money, including laundering and the financing of terrorism. It updated its regulations in March 2013 to cover all “persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies,” which required exchanges (classified as “money transmitters”) to implement Know Your Customer (KYC) and Anti-Money Laundering (AMC) measures. By expanding its regulations, it brought cryptocurrencies under the concept of money, in contrast to the other governmental agencies who classified it as either a commodity, security or property.

Of course, such classifications aren’t mutually exclusive, yet they introduce confusion and complexity for individuals and businesses that want to comprehend just where they stand legally with cryptocurrencies. Fortunately, there are growing signs that some of the above agencies are beginning to converge on shared definitions.

In June, the SEC finally clarified that it doesn’t regard either Bitcoin or Ethereum — as they are the two largest currencies by market cap — as securities and that it would focus instead on Initial Coin Offerings (ICOs). This move came a month after CFTC commissioner Rostin Behnam delivered a speech that emphasized the increasing collaboration between his commission and the SEC.

“I spoke about my position on the CFTC and the SEC efforts to harmonize rules. Given the large number of dually registered market participants and overlapping policy, there is a real opportunity for the CFTC and SEC to harmonize redundant rules and leave both market participants and regulators in a stronger position.”

Such steps are modest and preliminary, but given that the SEC no longer regards such currencies as Bitcoin and Ethereum as securities, they at least narrow down the field of what cryptocurrencies are in the United States. That said, they still aren’t legal tender, although that hasn’t stopped thousands of U.S.-based businesses from accepting Bitcoin and other currencies as a means of payment.

Canada, Mexico and South America: commodities, virtual assets, legal tender

Like the U.S., Canada doesn’t regard cryptocurrencies as legal tender. However, its approach to virtual currencies is slightly more unified, with the Canada Revenue Agency (CRA) currently defining them as commodities — a definition which would appear to apply in general throughout most government agencies. This is why purchases involving crypto are regulated by the CRA as if they were barter transactions, with the relevant taxation applying. That said, a parliamentary act passed in June 2014 also defined cryptocurrencies as ‘money service businesses’ for the purposes of updating anti-laundering laws, while the Canadian Securities Administrators (CSA) announced in August 2017 that “many” ICOs “involve sales of securities.”

In Mexico, the emphasis is also on cryptocurrencies as commodities. On March 1, the government passed the Law to Regulate Financial Technology Companies, which includes a section on “virtual assets,” — aka cryptocurrencies. Compared to the previous definitions of securities, commodities, property and money, this is an admittedly vague term, and the provisions of March’s law don’t currently narrow down its application (since the law is, in fact, awaiting secondary legislation). However, previous remarks by leading figures in Mexico indicate that the government would be inclined to translate it to ‘commodity,’ with Banco de Mexico governor Agustín Carstens stating in August 2017 that, because Bitcoin isn’t regulated by a central bank, it’s a commodity rather than a currency.

Travelling farther south, the picture is mixed. In Venezuela, the government (in)famously announced the oil-backed Petro in December, and in April, it decreed that the cryptocurrency must become legal tender for all financial transactions involving government ministries. However, while all other cryptocurrencies were immediately classed as financial assets and as securities as a result of the decree establishing the Petro, none have been declared legal tender. Even more confusingly, the Venezuelan parliament has opposed the Petro at every opportunity. In March, it even declared that the state-backed currency is in fact illegal, because it was created without congressional approval and without the involvement of the Central Bank of Venezuela.

While classifications of one kind or another generally apply in the above American nations, cryptocurrencies suffer from a partial non-existence in others. In Brazil, the Securities and Exchange Commission (CVM) declared in January that cryptocurrencies cannot legally be classed as financial assets, despite the fact that the Brazilian Revenue Office had previously stipulated in 2017 that they’re to be regarded as such for tax purposes. In Chile, cryptocurrencies are neither securities nor money, although the central bank has recently begun considering specific regulation.

And in Colombia, the Financial Superintendent has also declared that digital currencies don’t count as money or securities, while, for tax purposes, it can be considered a ‘high-risk investment.’ This makes it somewhat more accepting than Ecuador, where cryptocurrencies are not only not legal tender, but are also prohibited as a means of payment.

While South America often takes a restrictive stance toward cryptocurrencies, some nations within the continent are slightly more accepting. In Argentina, cryptocurrencies aren’t legal tender and they don’t have any regulation specifically applied to them. That said, they are treated as goods under the terms of the nation’s Civil Code, while a December update to tax regulation classifies them as income derived from shares and securities.

What such variations indicate is that, when it comes to the classification of cryptocurrencies, the economic and political situations of the nations concerned make a difference. The inherent abstractness of cryptocurrencies makes them adaptable in terms of their function, so their particular classification and usage all depends on the political and economic conditions prevailing in a particular nation, and what that nation wants to use them for. This is why, in countries where the national currency and economy are relatively weak — or where freedoms are restricted — cryptocurrencies tend to be denied legal status.

Europe: private money, units of account, contractual means of exchange, transferable value

This tendency becomes more apparent when the status of cryptocurrencies in Latin America is compared with their status in Europe. In Germany, the continent’s biggest economy, Bitcoin has been recognized as “private money” since April 2014. Prior to that, its finance ministry also recognized the cryptocurrency as a “unit of account” in August 2013, making it a financial instrument subject to taxation and requiring companies that trade it to register with the Federal Financial Supervision Authority. And this February, the government took a step further in recognizing cryptocurrencies as actual money, exempting crypto holders from the tax when they use their coins as a means of payment — as ruled by the European Court of Justice in 2015.

In the U.K., cryptocurrencies have generally been left undisturbed by regulation, and what’s interesting to note is that the government has recognized that comparing them to pre-existing currencies, commodities, securities or any other financial instrument would be inaccurate. In 2014, its HM Revenue & Customs department wrote:

“Cryptocurrencies have a unique identity and cannot therefore be directly compared to any other form of investment activity or payment mechanism.”

This would account for why the government has yet to propose or stipulate a definite status for crypto, even if the U.K. is part of the G20 group of countries that defined cryptocurrencies as assets rather than currencies in a March document, and even if crypto investment is subject to capital gains tax in Britain — making it an investment.

Across the English Channel, France has also held off applying any specific regulation to cryptocurrencies, although it has been making concerted efforts with Germany to propose laws that would be international in scope. Still, while it appears to be moving toward the creation of a favorable regulatory framework, the Banque de France has — since 2013 — held the position that cryptocurrencies are neither currencies nor a means of payment. On the other hand, the AMF (‘Financial Markets Regulator’) ran a public consultation in late 2017 that resulted in it defining two categories of cryptocurrencies: utility tokens and security tokens. Added to this, crypto traders — both private and commercial — are subject to taxation on their gains, with the government defining Bitcoin in 2016 as a “unit of account” for the purposes of collecting such tax.

Elsewhere in EU, the picture varies considerably, although there seems to be recurring agreement that cryptocurrencies aren’t money — except when authorities want to bring them within the scope of AML legislation. In Sweden, the central bank stated in March that “[Bitcoins] are not money.” This contradicted an October 2013 preliminary ruling from the Swedish Tax Board that stated Bitcoin isn’t subject to sales tax when traded, comes under the jurisdiction of Financial Supervisory Authority regulations and should be regarded as a currency.

In Denmark, the Financial Supervisory Authority delivered a statement in December 2013 that affirmed Bitcoin (and other coins) weren’t currencies, while in March 2014 the Danish central bank issued its own statement declaring much the same thing. As for what they are, the Danish Tax Council finally ruled in early 2018 that crypto-trading profits are taxable, implying that cryptocurrencies are regarded as (speculative) assets.

In the Netherlands, the central bank also denies the currency status of Bitcoin and other cryptocurrencies, having written in a January position paper:

“We do not consider cryptos as money.”

In contrast, a Dutch court ruled in March that Bitcoin can be considered a “transferable value,” making it equivalent to property. This bears some resemblance to a definition being worked on by the Italian Ministry of Economy and Finance in a draft decree, which describes cryptocurrencies as a “digital representation of value […] used as a tool of exchange for purchasing goods or services.” This classification doesn’t quite establish cryptocurrencies as currencies or as property, but it has parallels in a few other EU states. For example, in Latvia, the State Revenue Service and the Bank of Latvia have both asserted that cryptocurrencies represent a ‘contractual’ medium of payment —  a status that’s just short of money but close enough in functional terms.

Beyond the EU, Switzerland is perhaps the most significant European nation when it comes to crypto, not least because it has aggressively positioned itself as a desirable place for crypto traders and businesses. In 2014, its federal government published a report in which cryptocurrencies were defined as assets, rather than as currencies or a means of payment. But since then, the landlocked nation has introduced several “regulatory simplifications” in order to attract fintech companies, and it’s in this climate that new approaches to cryptocurrencies have emerged. In November 2017, the regional district of Zug began accepting Ethereum and Bitcoin as payment for administration costs and municipal services, effectively recognizing both as money. It was soon followed by the city of Chiasso (in Ticino), which announced in February that it would start accepting Bitcoin as payment for tax on amounts up to 250 Swiss francs.

Such examples from Europe offer two major takeaways. The first is that EU (and non-EU) nations — much like the U.S. and Canada — are holding back on specific crypto-focused regulation, thereby giving cryptocurrencies the space and time to solidify into definite, stable forms. As such, nations are reluctant to attribute any single ‘definition’ or ‘status’ to digital currencies. Correspondingly, the current application of numerous different categorizations is merely the result of attempts to apply any relevant pre-existing laws that, in lieu of specific legislation, might curb abuses of crypto. These categorizations are stop-gaps and shouldn’t generally be taken for what certain nations or governments ‘really think’ about crypto.

But secondly, even though many European states are gearing toward the announcement of bespoke cryptocurrency legislation, it would seem unlikely that many will advance so far as to actually recognize Bitcoin, Ethereum or any other major coin as legal tender. With the notable exceptions of Switzerland and Germany, the majority of European states deny that cryptocurrencies are money and given how jealously governments and central banks tend to guard their financial powers, it’s unlikely they’ll shift from this stance anytime soon.

China and East Asia

Jealousy is particularly acute in China. In December 2013, the Chinese government issued a notice proclaiming that Bitcoin is not a currency.

“In terms of nature, Bitcoin is a specific virtual commodity that does not have the legal status equivalent to currency and cannot and should not be used as currency in the market.”

Nonetheless, the same notice also acknowledged that “[Bitcoin] transactions act as a way of buying and selling goods on the internet,” and given that it made no attempt to prohibit or discourage such activity, it’s arguable that the announcement acted as a tacit recognition of cryptocurrencies as a means of payment (i.e., as money).

Unfortunately, the Chinese government’s position has hardened considerably since 2013. It banned ICOs in September 2017, while it also prohibited crypto exchanges that same month and later blocked foreign exchanges, citing “financial risks” as its motivation for both acts. In other words, it effectively denied that cryptocurrencies are legitimate securities, assets or commodities in China, just as it had denied their status as currency four years previously. And given that it has also been taking steps to make mining more difficult this year, the current political and regulatory climate in China is now denying cryptocurrency any kind of official status.

Things aren’t so gloomy for crypto elsewhere in Asia. In Japan, the government has gone through an opposite process to China’s, classing Bitcoin as “not currency” in 2014 and then correcting its position in March 2016, when the Payment Services Act finally recognized cryptocurrencies as money. However, as an indication of the uniqueness of crypto, the actual definition included in the act described cryptocurrency more specifically as a “property value” that can be used to buy goods and services, rather than as a currency.

Over in South Korea, cryptocurrencies are recognized as an “asset with measurable value,” a verdict furnished by the nation’s supreme court on May 30. It is consistent with the regulation and guidelines issued by South Korean authorities to date. These include a June update to AML laws that requires crypto exchanges to undertake Customer Due Diligence (CDD) and Enhanced CDD (EDD) measures, something which makes good on the government’s February promise to help foster the “normal” trading of cryptocurrencies as assets.

In Singapore, the government is also inclined to view cryptocurrencies as assets rather than money. In August 2017, the Monetary Authority of Singapore (MAS) warned ICOs and crypto exchanges that it has jurisdiction over those tokens falling under the definition of securities, a warning it repeated in September and also this May to eight exchanges that hadn’t yet registered with it. This is also largely the approach taken in Hong Kong, where the Securities and Futures Commission (SFC) clarified in February that it regards cryptocurrencies as securities, requiring ICOs and exchanges to apply for licensing. It has gone on to shut down certain ICOs as a result of existing securities laws, while it continued to remind the public that cryptocurrencies aren’t legal tender.

Unique identity

Again, what such stances underline is that most developed nations are cautiously open to cryptocurrencies as a new financial instrument, as a new means of generating income and raising capital and as the basis of a new technology — i.e., blockchain. However, it’s clear that few currently want to recognize Bitcoin or any other decentralized coin as money, especially if their governments happen to be more authoritarian. This reluctance is particularly evident in certain examples we’ve skipped over: In Russia, cryptocurrencies are “not a legal method of payment” but rather property, while the government in Turkey has previously stated that Bitcoin is “not considered as electronic money” under current law and isn’t compatible with Islam.

Because most governments are still unsure of how cryptocurrencies will develop in the future, and possibly because they don’t want to recognize the radical implications of decentralized money, they’ve shied away from establishing a distinct legal identity for cryptos. Instead, many have attempted to apply whatever relevant pre-existing laws they can, in the hope that this will curb those effects of cryptocurrencies that may be undesirable from the perspective of a national government. This is why, on an international level, cryptocurrencies have been swamped by a flood of miscellaneous categorizations, from private money to property and ‘transferable value.’

On the other hand, the variation in classifications is also a product of the versatility of cryptocurrencies. Because they generally aren’t issued and control by a central body, there are few restraints on how they can be used. Some holders may therefore use them as a means of payment, others may treat them as a speculative financial instrument or as property, while the future could bring yet even more functions. This adjustability to the needs of holders is one of crypto’s defining characteristics, which is why the U.K. government was probably right to say in 2014 that cryptocurrencies have a “unique identity.” And it’s also why, when the world’s governments finally get around to introducing specific legislation for cryptocurrencies, they’d be well advised not to attempt to subsume them entirely under existing legal categories.

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High Times Becomes the First IPO to Accept Cryptocurrencies

News

On Thursday, the well-known cannabis culture brand and publication High Times announced it’s holding an initial public offering (IPO) and that it will be the first regulated A+ stock offering to accept cryptocurrencies.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

High Times Takes Another Step Into the Future by Accepting Cryptocurrencies for its IPO

High Times Becomes the First IPO to Accept CryptocurrenciesThe firm High Times is a popular cannabis-focused monthly magazine that was founded in 1974. The publication founded by Tom Forcade reports on the marijuana counterculture and the legalization of cannabis. On August 2, 2018, the legacy company announced it is holding an IPO so individuals can invest in the firm by buying shares. In an unusual twist, the firm has also revealed it is the first A+ stock offering to accept bitcoin core (BTC), and ethereum (ETH).

According to High Times, the firm filed its Reg. A report which detailed “$29 million in a reduction of negative equity, significant decreases in operating losses, and a debt reduction — with the U.S. Securities & Exchange Commission.”  High Times CEO Adam Levin believes adding cryptocurrency acceptance will allow a bigger audience to participate in the IPO.

“High Times has been at the forefront of popular culture for more than four decades,” Levin explained during the announcement.

Now we’re taking another step into the future, not only as one of the first cannabis-related brands to go public on the Nasdaq but also as the first to allow bitcoin and ethereum as part of our public capital raise.

High Times Becomes the First IPO to Accept Cryptocurrencies
High Times has been reporting on cannabis culture since 1974. It will be the first US company to accept cryptocurrencies for its IPO.

No Initial Coin Offering But Including Crypto Investors

Investors can purchase shares at $11 a piece at the website Hightimesinvestor.com, and the company says with the firm’s strong online presence many will be interested in doing so. Furthermore, High Times has been trending a lot higher these days, as the US and other countries worldwide have been more lenient and even legalizing marijuana use. High Times says the publication is an “important beacon in the legalization activism game.” Levin details that they didn’t believe in utilizing the new crowdfunding process called initial coin offerings (ICO), but felt they needed to tend to these types of investors.

“Cryptocurrencies have created a new investor base across the world—we’re just giving them more stable opportunities for investment,” Levin notes.

Beginning with our Reg. A+ crowdfunding, we’ve been focused on giving everyone from retail investors to long-time fans more ways to own a piece of High Times. While we didn’t believe that the ICO process was the right move for our brand, it would’ve been foolish to leave this emerging investor base out as we continue to transform into a diversified media, events and merchandise giant.

Many cryptocurrency proponents believe the cannabis and digital currencies economies are up and coming industries that will grow exponentially in the future. Crypto supporters are pleased with High Times accepting BTC and ETH for IPO shares as the two budding sectors are once again growing together hand in hand.

What do you think about High Times accepting ETH and BTC for its initial public offering (IPO)? Let us know what you think in the comment section below.


Images via Shutterstock, and High Times. 


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Mastercard CEO Calls Anonymous Cryptocurrencies 'Junk,’ Again

Ajaypal Banga, the CEO of Mastercard, blasted cryptocurrencies during the “New India Lecture” at the Indian Consulate earlier this week, The Times of India reports Thursday, July 26. Banga described anonymous, non-state-issued cryptocurrencies as “junk,” because their prices can fluctuate “wildly” and thus they do not “deserve” to be considered a medium of exchange.

Speaking at a series of lectures hosted by the Indian Consulate in partnership with the U.S.-India Strategic Partnership Forum (USISPF), the India-born CEO and president of the multinational financial services giant Mastercard reportedly said the following:

“I think cryptocurrency is junk….The idea of an anonymized currency produced by people who have to mine it, the value of which can fluctuate wildly –– that to me is not the way that any medium of exchange deserves to be considered as a medium of exchange.”

This isn’t the first time that Ajaypal Banga refers to cryptocurrencies as “junk,” as he had already made the same evaluation in October of last year, lashing out at all digital currencies that are not “government mandated.”

Continuing on the topic of anonymity, Banga referred to the recent indictment by the U.S. Department of Justice (DoJ) of 12 Russian officials for allegedly using cryptocurrencies like Bitcoin (BTC) to fund “interference” in the country’s 2016 presidential elections. According to Mastercard’s CEO, the Russian intelligence officers chose Bitcoin because of the anonymity it offers:

“Why civil society would like to put a snake in its backyard and think that somehow the snake will only bite my neighbor, I don’t get it.”

According to The Times of India, Banga also appeared concerned by the statistic that 95 percent of all illegal transactions on the dark web marketplaces are conducted with the use of cryptocurrency.

While potentially as much as 44 percent of all Bitcoin transactions are associated with illegal activity, the “vast majority” of illicit purchases are still made with the more traditional tools, such as cash, according to a Cointelegraph report from March this year.

Despite Mastercard CEO’s negative stance on cryptocurrencies, the company appears interested in their underlying blockchain technology, having filed a number of patents in the past year that make use of the tech for payments.

In May of this year, Mastercard reported a drop in its quarterly growth due to a decline in the number of people who use its cards to purchase cryptocurrencies.

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Index ETF Tracking 10 Cryptocurrencies Filed With SEC

Index ETF Tracking 10 Cryptocurrencies Filed With SEC

Finance

Bitwise Asset Management has announced its plan to launch “the first publicly-offered cryptocurrency index exchange-traded fund (ETF).” A registration statement has been filed with the U.S. Securities and Exchange Commission. The fund will track the returns of the company’s Hold 10 Index which aims to capture 80% of the total market capitalization of the cryptocurrency market.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Bitwise to Launch Crypto Index ETF

Index ETF Tracking 10 Cryptocurrencies Filed With SECBitwise Asset Management announced Tuesday that it has filed a registration statement for “the first publicly-offered cryptocurrency index exchange-traded fund (ETF).”

The San Francisco-based company already manages “the world’s first privately-offered cryptocurrency index fund, the Bitwise Hold 10 Private Index Fund,” it described. The open-ended private placement fund was launched on November 22 last year and is only open to accredited investors, the company noted:

The new ETF will be called the Bitwise Hold 10 Cryptocurrency Index Fund. It aims to track the returns of Bitwise’s Hold 10 Index, a market-cap-weighted index of the 10 largest cryptocurrencies, rebalanced monthly.

The top five components of the Hold 10 Index as of the end of June is 55% BTC, 20% ETH, 9.4% XRP, 6.4% BCH, 2.6% LTC.

Index ETF Tracking 10 Cryptocurrencies Filed With SEC“The Hold 10 Index captures approximately 80% of the total market capitalization of the cryptocurrency market,” the crypto asset manager further elaborated. The index “uses a 5-year-diluted market cap and other eligibility criteria meant to address challenges of the crypto space such as continuously changing supply, liquidity, trade volume concentration, and custody limitations.”

Founded in 2017, Bitwise is backed by institutional and individual investors, including Khosla Ventures, General Catalyst, Blockchain Capital, Naval Ravikant, Alison Davis, David Sacks, Elad Gil, Adam Nash, Adam Ludwin, Suna Said, and Avichal Garg.

Index-Tracking Basket of Multiple Cryptocurrencies

Index ETF Tracking 10 Cryptocurrencies Filed With SECIn its Tuesday announcement, the company revealed that “A registration statement relating to the shares of the Bitwise Hold 10 Cryptocurrency Index Fund ETF has been filed with the Securities and Exchange Commission (SEC) but has not yet been declared effective.”

Bitwise’s Global Head of Research Matt Hougan commented:

Our research shows that an index-tracking basket of multiple cryptocurrencies behaves differently than a single coin. As such, we think both sorts of exposure need to be looked at by investors when considering the growing cryptocurrency space. Our view is that this new area has many similarities to the introduction 10 to 15 years ago of commodity ETFs.

He noted that “at that time, we saw the launch of single-commodity ETFs tracking gold, silver, crude oil, and other commodities, as well as ETFs tracking diversified commodity index baskets. We see a lot of similarities here.”

What do you think of Bitwise’s proposed crypto index ETF? Let us know in the comments section below.


Images courtesy of Shutterstock and Bitwise.


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G20 Asks FATF to Clarify AML Standards for Cryptocurrencies

Economy & Regulation

Financial ministers and central bankers from the G20 states met over the weekend in Argentina to discuss the challenges for the global economy. They reiterated their position that cryptocurrencies do not pose a risk to the financial stability. The officials also called on the Financial Action Task Force to clarify by October how its anti-money laundering standards apply to crypto-assets.   

Also read: Ukraine’s Financial Stability Council Supports Crypto Regulatory Concept

Reiterated: Cryptocurrencies Not a Risk to Stability

The representatives of the G20 member-states said in a communique released after the meetings on July 21-22 that growth remains robust and unemployment is at a decade low. However, they also noted the need to strengthen the dialog and adopt measures to mitigate the risks for economic development like “rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances, inequality and structurally weak growth.”

G20 Asks FATF to Clarify AML Standards for CryptocurrenciesThe statement does mention cryptocurrencies, or crypto-assets as they are called, but not among the risks that need to be addressed immediately. “While crypto-assets do not at this point pose a global financial stability risk, we remain vigilant,” the government officials stated. G20 members also issued a warning that sounds familiar – cryptos “raise issues with respect to consumer and investor protection, market integrity, tax evasion, money laundering and terrorist financing.”

Ministers and bankers didn’t miss the chance to point out, not for the first time, that crypto-assets, “lack the key attributes of sovereign money.” And, of course, they didn’t skip another favorite talking point of governments and regulators – “technological innovations, including those underlying crypto-assets, can deliver significant benefits to the financial system and the broader economy,” a confession that’s not really a concession.

G20 Wants AML Crypto Standard in October

The participants in the meeting reiterated their commitments from the G20 summit in March regarding the implementation of the standards on combating money laundering, terrorism financing and proliferation adopted by the Financial Action Task Force (FATF). They called on FATF to clarify in October this year how these AML standards apply to crypto-assets. The G20 also welcomed the updates provided by the Financial Stability Board (FSB) and the standard setting bodies, adding that it expected them to continue to monitor the potential risks of crypto-assets and assess multilateral responses.

FSB, an international organization that makes recommendations about the global financial system, announced last week a framework to monitor the financial stability implications of crypto-asset markets, as news.Bitcoin.com reported. It has been developed together with the Committee on Payments and Market Infrastructures (CPMI), another international body serving as a standard setter for payment, clearing, and settlement arrangements.

G20 Asks FATF to Clarify AML Standards for Cryptocurrencies

The previous meeting of the Group of Twenty, on March 19-20, ended with pretty much the same results, as far as cryptocurrencies are concerned. The forum did not adopt unified crypto-related regulations but urged FATF to apply their standards to crypto-assets. Right before the last summit, the Financial Stability Board dismissed calls from member-states for global crypto rules. FSB’s assessment at the time was identical – crypto-assets do not pose risks to the global financial stability.

The G20 is an international forum of government officials and central bank governors from Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, the Republic of South Africa, South Korea, Turkey, the United Kingdom, the United States, and the European Union – the economies that account for 85% of the gross world product and 80% of the world trade. Many of its members have already called for adopting global crypto regulations.

Do you expect the G20 to eventually propose common rules or guidelines for regulating the crypto space? Share your thoughts on the subject in the comments section below.   


Images courtesy of Shutterstock.


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