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Crypto-Friendly Japan Mulling ICO Ban?

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Japan’s support of bitcoin and other cryptocurrencies is unlikely to extend to initial coin offerings, according to prominent local entrepreneur Koji Higashi.

ICO Ban a “Definite Possibility”

Higashi says a Japanese ban on ICOs is a “definite possibility,” according to Forbes.

“Japan’s not really ICO-friendly,” Higashi tells Forbes, arguing that regulators are “just more tentative.”

“They’re just trying to figure out if it’s going to be good or bad.”

Initial coin offerings (ICOs) have taken the world by storm, with more than $2.3 billion raised this year alone. The controversial crowdfunding model is being investigated by several nations trying to determine whether new coin offerings fall under the domain of securities laws. A surge in fraudulent ICO cases is also placing more pressure on regulators to protect investors.

Japan is considered one of the most market-friendly nations for cryptocurrency. Earlier this year, the government accepted bitcoin as legal tender. Since the Payments Services Act legalized cryptocurrency, regulators have approved 11 exchanges (full list).

Japan’s decision on ICOs will have important consequences on the broader market. As CCN notes, “a ban could potential limit the number of investors” and digital curency exchanges, thereby diminishing liquidity in the booming ICO market.

Ether Prices Fall

Ethereum, which has emerged as the platform of choice for ICO entrepreneurs, declined over the weekend. Prices have since fallen another 3% to $287.

The world’s second-largest cryptocurrency by market capitalization underwent a successful fork last week, but hasn’t yet stabilized, according to founder Vitalik Buterin.  The second leg of the Metropolis fork known as Constantinople is forthcoming, although no timetable for its implementation has been provided.

Like other cryptos, the ether token has skyrocketed this year. However, new highs have proven elusive as of late as the token continues to struggle with resistance levels north of the critical $300 level.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 499 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Regulation

G20’s Financial Watchdog Unveils Plan to Monitor Cryptocurrency Threat

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The Group of 20’s Financial Stability Board (FSB) has outlined a comprehensive plan to monitor the cryptocurrency market and rein in what it believes to be material risks to the global financial system.

G20 Unveils Crypto Framework

The G20’s financial regulator on Monday unveiled its strategy for determining whether cryptocurrencies such as bitcoin and Ethereum represent a risk to financial stability. In a ten-page report, the FSB lays out a framework that can assist G20 nations in identifying crypto-related risks using publicly-available data.

According to the report, metrics “that are most likely to highlight such risks” include market capitalization (size and growth rate), price levels and volatility. Basically, cryptocurrencies that exhibit unusually large growth rates and volatility may pose a risk to financial stability if their total value rivals that of more conventional markets.

FSB officials provide a further breakdown of what they call wealth effect metrics and institutional metrics. Initial coin offerings (ICOs) and capital flows into the blockchain arena are classified as wealth effect metrics. On the institutional side, the FSB recommends monitoring trading volumes, margin levels and interest among traditional lenders.

The FSB says the framework “should help to identify and mitigate risks to consumer and investor protection, market integrity, and potentially to financial stability.”

FSB Expands Oversight Efforts

In March, Hacked reported that the FSB was evaluating the cryptocurrency market but had not identified it as a major risk to financial stability.

To that effect, Bank of England (BOE) Governor and FSB head Mark Carney issued the following statement:

“The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time. This is in part because they are small relative to the financial system.

“Their small size, and the fact that they are not substitutes for currency and with very limited use for real economy and financial transactions, has meant the linkages to the rest of the financial system are limited.”

At the time the statement was issued, the total cryptocurrency market was valued at roughly $300 billion, not far from current levels. The market peaked above $830 billion earlier this year, prompting an investigation into crypto-assets.

While cryptocurrencies represent only a tiny fraction of the global financial system, their direct and indirect contribution to the economy is far greater. The crypto boom has generated an entire economy devoted to maintaining the size and growth rate of digital assets, as well as a bustling startup community whose funding has exceeded that of early stage venture capital.

For many, institutional interest represents the next frontier of digital currency adoption. Major banks and hedge funds are already experimenting with blockchain technology and the launch of bitcoin futures has given rise to a new breed of investor accessing digital assets.

The race for custodial services and efforts to launch the first bitcoin ETF also suggest that the market has potential to attract large sums of capital. These developments suggest that Carney may have to revise his previous statement about crypto assets having a limited use for the real economy.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 499 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Regulation

India’s Central Bank Spells Out Its Cryptocurrency Reservations As Panel Readies Regulatory Draft

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Indian Government Blocks GitHub, Vimeo, and Others for Hosting ISIS Content

The Reserve Bank of India (RBI), which cracked down on cryptocurrencies without much discussion, has offered an explanation a month later, as a government panel considers a draft of regulations, according to Quartz.

The concerns include the currencies’ insufficient intrinsic value, investor protection and anonymous transactions, the central bank explained to the Internet and Mobile Association of India (IAMAI), which includes bitcoin exchanges.

IAMAI members have suggested regulations to the RBI and dispute all of the central bank’s concerns.

Some bitcoin exchanges legally challenged the central bank after it instructed banks in April to close cryptocurrency accounts in the first week of July. In May, the country’s supreme court responded to that challenge by instructing the exchanges to address the RBI directly. The exchanges then submitted their suggestions.

This month, the court chose not to stay the April order, but instructed the RBI to respond to the exchanges’ suggestions.

An IAMAI member indicated the central bank, in its responses to the suggestions, said the RBI saw a need to protect banks and investors from frauds and noted there have been several scams.

The exchanges claim that an indiscriminate ban is not the right way o fight scams.

Praveen Kumar, CEO and chairman of Belfrics, an exchange based in Malaysia and active in India, said limiting cryptocurrency bank transactions and enabling more cash transactions leaves more people vulnerable to duplicity. Rather than a bank, the RBI should establish guidelines for exchanges to follow to prevent frauds.

In addition, frauds occur wherever money is involved, including with banks, noted a CEO for a cryptocurrency exchange in New Delhi who did not want to be identified for publication.

Regarding the central bank’s concern about anonymous transactions, the exchanges said they follow know-your-customer rules that can prevent money laundering. In addition, most transactions occur by means of bank account transfers that serve to monitor the transactions.

Regarding the concern about cryptocurrencies’ lack of intrinsic value, the CEO of another exchange who requested anonymity said this claim is not completely true.

To operate certain computer programs, a user can pay with Ether. And, as more institutions and individuals begin to use cryptocurrencies, there will be more use cases to improve intrinsic value.

One cryptocurrency exchange CEO complained that the central bank raised similar concerns earlier but has refused to consider the recommendations.

A finance ministry panel has been established to explore cryptocurrency regulations. An official who requested anonymity said the panel is not thinking of banning cryptocurrencies, but wants to regulate them so regulators can be able to trace transactions. The official said permitting cryptocurrencies to exist as commodities is being considered.

The official compared cryptocurrencies to traditional trading markets. In traditional stock markets, traders trade in different asset classes, which is not illegal.

Cryptocurrency trading is no different, the official said.

A mechanism that would ensure the funds are not used illegally is needed, the official said, and the most important thing is the ability to track its source.

The panel expects to publish a draft of regulations this month, the secretary of the economic affairs department and the head of the panel announced last month.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.9 stars on average, based on 8 rated postsLester Coleman is a veteran business journalist based in the United States. He has covered the payments industry for several years and is available for writing assignments.




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Bitcoin

Crypto Regulation: A Tectonic Shift Is Occurring

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What caused the crypto crash that began last December?  There are some observers silly enough to believe it was all the fault of the CBOE by starting the first Bitcoin futures contracts.  Others believe it was just the bursting of a bubble that was long overdue.

Most likely, the ban on crypto exchanges by the Chinese government and the fear of a total ban on ownership played a very big role in starting the selling wave.  That wave has continued practically to this day. But there is evidence that things are changing.

Since the moves by China, virtually every publication worth its weight in Satoshi has been fueling fears of suffocating governmental regulation.  We’re taking nothing away from these folks because regulation is a big factor for investors.

Barron’s: Regulate Out of Existence

After reading last weeks edition of Barron’s I concluded we have reached the worst in the mania over regulation.  Three of the world’s most “respected” economists, according to Barron’s, Joseph Stiglitz, Nouriel Roubini and Kenneth Rogoff, put the kibosh on crypto on the sole basis that it will be “regulated into oblivion”.  This is just the sort of editorial approach that Barron’s has long been known for.

Of course, there was the volatility versus storehouse of value argument and the declaration that nobody uses Bitcoin as a medium of exchange so it can never be worth anything. The shortcoming of so many economists is their insistence on being chained to history.  

It Is All About Money

After a period of largely negative regulatory developments during the past seven months, signs are emerging that things are changing as governments get more familiar with the benefits of nurturing blockchain technology and crypto. In the end, it is all about governments finally figuring ways to make money from crypto. Once that occurs, they realize, we are all in the same boat.

The Regulatory Paradox

This brings things to what some observers refer to the government regulation paradox. In other words, investors need government to deter price manipulation and other scams. But the unregulated autonomous nature is a big reason that investors bought into crypto in the first place.  So far the trick has been to find a middle ground.

If you take a long look at the issue there is a new trend emerging.  One by one governments are beginning to appreciate the importance of blockchain technology and the role of cryptocurrencies.  The initial adversarial role is being replaced with a more cooperative attitude. Crypto values aren’t going to increase exponentially overnight as a result. Nevertheless, having cooperative regulators is critical to mass acceptance.  Here are a few encouraging signs.

SEC declares Bitcoin and Ether Non Securities

It has been some time now that the US Securities and Exchange Commission ruled that neither Bitcoin or Ether were securities.  The idea is that, so long as there is no conveyance of ownership, everybody is safe. This includes most ICOs as well even though a formal ruling has yet to be given.  This clears up a giant cloud that investors have pretty much ignored.

Changing Government Attitudes in Switzerland

As the U.S. and other countries attempt to exert greater AML and KYC rules, projects are leaving in favor of places like Singapore, Malta and Gibraltar where a connection to the international banking system is available. Information coming from Switzerland predicts that by year end, Swiss banks will be open to dealing with crypto.  As the traditional home of banking secrecy, Switzerland is the ideal place for crypto to make inroads. For the Swiss economy, it is all about finance. Last year, ICO projects brought in almost $1.5 billion that Swiss bankers were losing out on. This could prove to be a landmark decision.

Upstaging China

On any given day, Asia can account for a big share of global crypto trading.  Seven months ago the Chinese government actions threatened the health of the market.  This is understandingly leading governments elsewhere to open their doors.

Improving Asian Trading

Asian regulators are standing by to take advantage of any serious restrictions in China. In Thailand, the securities industry association is working with regulators to establish a joint cryptocurrency exchange and is working with the Thai SEC to get an operating license.  And this month the SEC approved a new two-tier vetting procedure to create accredited ICOs.

All this was made possible because the Thai government wasted no time in declaring crypto as digital assets and skipped the endless debate.  Sometimes a government dictatorship has its advantages.

And finally, signs of improvement in Japanese regulations are being reported that could lead to creating a market for crypto ETFs.

Wrapping Up

It is entirely possible that government regulation could be one of the most boring topics in the history of mankind. But we can all agree that it has hurt every long term crypto investor. We can also agree that there has been a lot of “piling on” by the media this entire year. So I decided to take on a thankless task in the interest of providing some balance to opinions of professors Stiglitz, Roubini and Rogoff. Thanks for keeping me company.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 87 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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