Tag: crypto regulation

The Holy Trinity: What Do the ‘Big Boys’ Think of Crypto?

For almost 10 years now, cryptocurrency has been one of the most discussed and controversial buzzwords in the financial sector. While some governments see great potential, even perhaps foreseeing an era of ‘blockchainization’, others are afraid of losing the ‘levers of influence’ on the traditional financial paradigms in their region and around the globe.  Having analysed and reviewed how the big players - including South Korea, the US and China - regulate crypto, we can conclude that all of these jurisdictions are adopting a broadly moderate or moderate-aggressive approach. Today we’ll take a closer look at each of these approaches, as well as the latest regulatory and legal developments in each country mentioned above. So, sit back and stock up on popcorn. The show has just begun! United States According to Cryptocompare, the US handles the second largest volume of Bitcoin transactions (roughly 26%). Another indicator of the US' power and relevance in the space is the number of crypto exchanges based in the country. However cryptocurrency is still not legal tender, as the Financial Crimes Enforcement Network’s guidance states. Right now, the US is losing the ‘crypto war’ due to the ambiguous nature of its legislation. While the United States House of Representatives has gone so far as to say that cryptocurrencies are the ‘future of money’, the same commitment has only been witnessed in some states and by a handful of regulators. For instance, the Securities and Exchange Commission (SEC) considers digital currency to be a security, while the Commodity Futures Trading Commission says crypto is a commodity. Such ambiguities serve to demonstrate, once again, that the US financial sector is overregulated and cumbersome. That’s why the majority of Americans aren't likely to benefit from the full integration of cryptocurrency into the financial system, with its superior simplicity and transparency, in short-term.  Nevertheless, the seeds of crypto development have been sown by the SEC and some local regulators. Last year, following the SEC’s move to regulate ICOs, the value of cryptocurrencies went up, as institutional investors gained more confidence in coin trading. The involvement of the SEC brought legitimacy to crypto trading, giving confidence to both existing and potential traders. Plus, several states have already passed supportive laws related to crypto. These are Arizona (recognition of smart contracts), Vermont (recognition of blockchain) and Delaware (pending initiative authorizing registration of shares of Delaware companies in blockchain-enabled form). South Korea  Lauded as one of the most technologically advanced countries in the world, South Korea has been pioneering within the ‘crypto revolution’. However, the country is currently perhaps most famous for its flirtation with the idea of banning cryptocurrencies and ICOs. To prove how influential the South Korean market is, we can cite the case of the ‘January collapse’.  On January 11 2018, South Korea - which had the world’s third-biggest crypto market at that time - announced plans to ban crypto trading altogether. Just a few minutes after the announcement, around $106 billion was wiped off the crypto market as Koreans withdrew from trading. The move by Korean authorities led to a massive worldwide sell-off throughout the month, sending the value of the top cryptocurrencies to a 2-month low. Despite despising crypto, the South Korean government is actually an ‘avid supporter’ of decentralized technologies. According to recent news, this summer the country pushed through accommodative legislations that would imply both tax reductions for new growth engine investment and the easing of requirements for new technology support, including blockchain technology investment support. China Here's an interesting observation: China is always associated with the color red. Its massive territory, painted in red on geographical maps, is the first thing to jump out at you. The same thing is true of ‘crypto maps’ too. China is famous for saying a hard ‘NO’ to crypto and ICOs.  However, China was actually titled the ‘King of Crypto’ in 2015-2016. The country used to be responsible for a vast majority of the global Bitcoin trade volume (95%) and for controlling about two-thirds of mining operations worldwide.  But then everything went downhill. It all started in the beginning of 2017 when the People’s Bank of China announced the investigation of the four major coin exchanges in the country. Following the announcement, mining faced serious crackdowns in the country, while the price of cryptocurrencies fell dramatically in value. Later in September, the Chinese government announced regulations that implied a ban of ICOs and crypto exchanges. New regulations affected every sphere of crypto, including P2P sales, over-the-counter markets, crypto-to-fiat exchanges, foreign crypto exchanges and ICO websites. Now the Chinese crypto community is expecting new legislation to hit the country. These expectations are possibly being driven by the newly elected governor of the People’s Bank of China, Yi Gang, who expressed a positive attitude towards blockchain and cryptocurrencies. Meanwhile, PBOC’s Institute of International Finance has released a report identifying cryptocurrencies as a top priority for 2018. This release served as a wake-up call for the community, and has breathed new life into the hope that China will come back into the crypto-friendly camp of nations.   Considering current levels of geopolitical uncertainty around the the world and the alarm expressed by some of the largest nations in relation to crypto, only one thing is clear just now: crypto is a priceless, unique, groundbreaking technology. It was once scarcely imaginable that the ‘empty-shell’ technology – as it has been called by naysayers - could create so much hype in the corridors of the world's most important institutions. Yet here we are.

Articles/October 25, 2018

Crypto Hotspots in Europe: 3 Countries to Consider

While some nations have already decided to strictly control or even ban cryptocurrencies, others are taking a far more supportive and balanced approach to this new asset class and the decentralized ledger behind it. Today we will talk again about the latter - the crypto-friendly countries which are embracing crypto in order to not let this financial innovation wither on the vine. Denmark Denmark, along with such countries as Malta, Belarus and Switzerland, is serving as a ‘crypto haven’ for blockchain enthusiasts and entrepreneurs. So, what does Denmark’s ‘hands-off’ approach imply? Firstly, its 0% tax on cryptocurrencies for individual cryptocurrency traders which makes it extremely attractive to potential crypto investors. However, this applies only to private cryptotraders. Crypto-related businesses do have to pay taxes. According to the Danish Financial Services Authority, crypto-based companies are taxed in the same way as any other business in the country. Estonia  Estonia has not always been considered a tech-friendly and developed country. In 2011, the Baltic nation of Estonia was the poorest country in the eurozone. The country had a few years previously joined the EU, and at such a time of change its people were struggling to spur economic development. But as of now, Estonia is considered as one of the fastest adopters in the world when it comes to digitalization and fintech innovations. That’s why it’s not surprising that blockchain technology hasn’t gone undetected by the Estonian government. This summer, the birthplace of Skype (in case you didn’t know, the Skype software was created by Estonians Ahti Heinla, Priit Kasesalu, and Jaan Tallinn), has granted a license to Ibinex, a company that specializes in white-label solutions for cryptocurrency exchanges. The new Estonian license will allow for providing a variety of exchange services and solutions for crypto traders, including fiat-to-crypto, crypto-to-fiat, and crypto-to-crypto transactions. Besides its friendly business environment and financial attractiveness, Estonia is also famous for its e-residency registration program.  This program makes business registration much less time-consuming, while ensuring startups are compliant with taxes, can take care of their banking needs and get incorporated in an effortless manner. Netherlands What makes the Netherlands one of the most remarkable countries in Europe? Of course, its free-thinking and liberal lifestyle. But actually, similar principles are also followed in businesses and financial sector. Young companies, along with giant corporations, are pervasively getting involved into decentralized technologies. For instance, Albert Heijn, Holland’s largest supermarket chain, has revealed it is using blockchain to make the production chain of its orange juice transparent. In addition, Europe’s largest trader of exchange-traded funds, Amsterdam-based speed trader Flow Traders NV has entered the crypto market. It recently became the first firm to buy and sell exchange-traded notes based on Bitcoin and Ethereum. Nowadays, the Dutch government is truly interested in the implementation of blockchain technology. Recently, it announced the National Blockchain Agenda, created collaboratively amongst government, business, and research institutions to be used as research guidelines for Dutch universities, applied sciences colleges, and other entities. Drawing the line  Today, cryptocurrency has the potential to be a ‘killer’ of traditional financial paradigms. This trend has led to the creation of a ‘bipolar crypto world’ composed of those countries which support crypto and those which are fully against it. With the passage of time we continue to see the latter camp get smaller and smaller, which is a hopeful sign for the future of crypto. Nevertheless, everything is riding on the regulations of a few influential countries. In simple terms, the giants show a path and the smaller ones follow. Our next article will be devoted to some of the market's ‘big boys’, including China, the US and the UK. Stay tuned for that!

Articles/October 4, 2018