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Higher Bitcoin Prices Could Boost Japanese GDP, Says Nomura

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The Japanese economy is poised for faster growth thanks to bitcoin, according to analysts at Nomura Holdings Inc.

Bitcoin-Inspired Growth

Bitcoin’s momentous rally in 2017 could boost Japan’s gross domestic product by 0.3% this year, the financial services giant said last week. Rising bitcoin values have created a so-called “wealth effect,” which could spur faster consumer spending in a nation that has for decades struggled with stagflation.

“Rises in asset values often result in a rise in consumer spending, too, known as the wealth effect,” Nomura analysts, led by Yoshiyuki Suimon, wrote Dec. 29, according to Bloomberg. “We estimate the wealth effect from unrealized gains on bitcoin trading by Japanese investors since the start of fiscal year 2017, and estimate a potential boost to consumer spending of 23.2-96.0 billion yen.”

The analysts believe the wealth effect will materialize in 2018 because the bulk of bitcoin’s gains came in the final quarter of 2017. Consumer spending is therefore expected to jump at the start of the new year.

Bitcoin approached $20,000 in December before a series of sharp corrections brought prices back down to the $13-$14,000 range. The coin still added more than 1,000% during the year and was partly responsible for the huge spike in other cryptocurrencies.

The Japanese economy is slowly emerging from years of moribund growth thanks to a cocktail of policies by the Abe administration. The “Abenomics” program has pumped trillions of yen into the economy in order to boost economic growth and inflation. As a result, Japan has put together seven consecutive quarters of growth, the longest stretch in over a decade. However, inflation remains well below the Bank of Japan’s official target of 2%.

Japanese Regulations

Unlike neighboring China, Japan has embraced bitcoin with open arms, with the government officially recognizing the cryptocurrency as a form of payment. Analysts estimate that hundreds of thousands of domestic merchants may have already begun accepting bitcoin payments.

In September, Japan’s Financial Services Agency officially recognized 11 domestic cryptocurrency exchanges, including bitFlyer. The registration process requires the companies to maintain strong computer and anti-money laundering (AML) systems.

Japan has quickly replaced China as one of the major centers for bitcoin trading, with the yen currency accounting for a greater share of transactions. By October, about 45% of bitcoin transactions were executed in yen.

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 614 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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Google to Lift Crypto Ad Ban in October

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Google has made a 180 degree turn from its blanket ban of cryptocurrency ads, at least for crypto exchanges. The internet giant will start allowing regulated crypto exchanges to purchase ads in the U.S. and Japan, according to a company announcement. It’s a step forward for the industry and an indication that the stigma attached to digital currencies is beginning to fade. The decision comes on the heels of social media giant Facebook similarly relaxing its crypto ad restrictions over the summer. Google’s revised policy goes into effect in October.

Google’s ad ban hasn’t been in place that long, as the announcement came in March and went into effect in June. At the time, banning crypto ads was the dot-com way of fighting back, and in addition to Google and Facebook, Twitter and Snapchat put their own respective bans in place. Google’s policy was designed to protect investors from putting their retirement savings in risky ICOs. Meanwhile, Google’s ad ban remains in effect for other components of the crypto industry, including ICOs and investment advice, for instance.

It’s unclear what triggered the change in direction, as the U.S. hasn’t come any closer to unveiling regulation for the burgeoning crypto industry. And Japan just suffered another crypto exchange hack after $60 million was stolen from Zaif.

Most likely, Google no longer wanted to remain on the sidelines of an industry that is expected to hit a stride. While trading volumes have surely come down in 2018 compared to year-end 2017 levels, crypto exchanges are still generating income hand over fist, with Binance reportedly targeting $1 billion in profits for the full year. CNBC reported that Google parent company Alphabet generates more than three-quarters of its sales from ads, with the segment topping $54 billion in 1H2018 alone.

As for Google’s new relaxed guidelines, the company states: “This policy will apply globally to all accounts that advertise these financial products,” even though the ads are only permitted in the U.S. and Japan markets.

Exchange Push

One regulated exchange that should meet the requirement for Google ads is Bakkt, the new exchange by NYSE parent company ICE. Bakkt is scheduled to make its debut in November and today made the following announcement –

Meanwhile, other exchanges are moving toward a regulated model, including the likes of ShapeShift. Though ShapeShift is based in Switzerland, it’s moving more toward a regulatory-friendly model with its new membership requirement. Before users could sign up without disclosing personal details, but Erik Voorhees told Cheddar that the model couldn’t be sustained in light of the company’s growth.

Once lawmakers craft policy for ICOs and make it clear what comprises a security token, perhaps social media and other tech platforms will begin easing those restrictions as well.

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 62 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Winklevoss Bitcoin Exchange Eyes UK Expansion: Report

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After being snubbed by U.S. regulators, Gemini exchange, which was founded by Cameron and Tyler Winklevoss, have set their sights across the pond. According to the Financial Times, the twins are eying an expansion into the U.K. market even as other blockchain startups have left Canary Wharf amid this year’s market struggles. According to sources cited in the FT, Gemini has already engaged a consultant about the potential expansion and is readying an application with UK regulators.

Their decision to pursue a UK expansion with the bitcoin price still a far cry from its peak is a sign of confidence in a market where institutional interest has seemingly reached a tipping point.

Founded more than four years ago by the Winklevoss twins, Gemini’s trading volume is currently hovering at $16 million. A UK expansion would pit it against U.S. rival Coinbase, both of which offer custody solutions and both of which target institutional investors. Coinbase recently unveiled a feature that gives British investors the ability to buy crypto with the GBP.

Meanwhile, U.S. regulators have been throwing shade at cryptocurrency exchanges, with the SEC having rejected the Gemini bitcoin ETF not once but twice as the regulator struggles to get a grip on the industry. In New York, where Gemini holds a BitLicense, the attorney general’s office released a scathing report of crypto exchanges, suggesting they’re not doing enough to combat “manipulation” and “conflicts of interest.”

Gemini has been proactive about blocking these activities, as evidenced by its partnership with Nasdaq to weed out possible abuse. It’s also had the regulatory wind at its back with the approval of its new stablecoin, the Gemini Dollar, which is pegged to the U.S. dollar.

The Winklevoss twins would be entering UK territory where the nascent crypto industry is viewed as a “Wild West,” with lawmakers spewing concerns of fraud and investor protection.

Canary Wharf

While it’s unclear where Gemini exchange would lease office space, Canary Wharf has attracted hundreds of blockchain startups since year-end 2017. Since that time, however, many have left amid the market downdraft, leaving players like crypto brokerage BCB Group standing.  BCB Group Founder Oliver von Landsberg-Sadie told the FT it’s not uncommon to “see a whole vacant area where there was once a flourishing team.”

Distributed workspace startup Primalbase, which is behind the PBT tokens and which Forbes described as a “tech ecosystem,” will make its UK debut on Oct. 4. The office space is designed for fintech firms.

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 62 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Japanese Cryptocurrency Exchange Zaif Suffers $59 Million Hack

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The Japanese cryptocurrency exchange Zaif was reportedly hacked for almost $59,000,000. This is not the first time the exchange has struggled with vulnerabilities or technical flaws in its system.

The most notable example of this history occurred back in February when a system glitch enabled customers to buy cryptocurrency for free. At the time, users of the exchange complained about the sites poor backend performance and a general lack of support throughout the whole ordeal.

Unlike this former glitch, this hack could prove to be a much larger issue for Zaif and could potentially lead to its shutdown. This is mainly due to the fact that Japanese regulators have significantly heightened their overall scrutiny of domestic exchanges since Coincheck was hacked for $530,000,000.

The Zaif hack occurred on Sept. 14 but was apparently not discovered until Sept. 17. The hackers managed to steal various amounts of Bitcoin, Bitcoin Cash, and Monacoin from the exchange’s hot wallet, which was collectively worth about 6.7 billion yen (or just under $60 million).

Zaif has stated however that the efforts to re-enable deposits and withdrawals by are already well underway. The exchange has also reported the hack to the Japanese Treasury Department (who are ostensibly already investigating the incident)

Zaif also claims to have already made damages declaration to the relevant authorities. An official statement put out by the exchange said, “Currently, we are checking and strengthening security and rebuilding the server in order to restart the system.”

Zaif has additionally notified Japan’s Financial Services Agency, as well as invited a third-party investigation firm known as the Kaichi Corporation to review possible causes of the hack and to trace the steps the hackers took to carry it out.

The most concrete step that they have taken so far is to announce that the managing team that oversaw the exchange during the hack. This is seen in the following official statement:

“All of our management team takes seriously that our valuable deposit assets have disappeared due to this hacking damage. As a result, even if the virtual currency equivalent to customer’s assets can be prepared by the above-mentioned funding etc., the concerns and inconveniences given to customers are tremendous.

As a result, our current management team has responded with full power to this matter, and we are fully committed to preserving the customer’s assets and fulfilling our obligation to hand over control to the management team of the Fiscal Group, which acquires a majority of control. We will retire our officers as a management responsibility.”

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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