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Information on Russia’s Regulation of Cryptocurrency Surfaces

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The Russian Federation has officially decided to regulate the circulation and mining of cryptocurrency, CCN reported Tuesday.

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Russia Outlines Scope of Crypto Regulation

A meeting of Russian officials that included President Vladimir Putin concluded that both the supply and mining of digital assets will come under the purview of central regulators. According to TASS news agency, finance minister Anton Siluanov stated that the government should “control the process of cryptocurrency emission and its circulation.”

According to reports, Russians will not be allowed to mine cryptocurrency, a process that will be maintained by a central authority. Holders of the digital asset will be allowed to exchange it for Russian rubles at any time.

Last week, Russian authorities said they would move to block cryptocurrency exchanges. It later emerged that the Kremlin decided to pursue a regulatory clampdown on the digital asset class rather than a blanket ban.

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Several nations have already chimed in on the cryptocurrency debate, each arriving at different conclusions. For example, cryptocurrency is a recognized payment method in Japan, but has been blocked outright (at least for now) in China. South Korea’s approach is somewhere in the middle: it has banned initial coin offerings (ICOs), but not cryptocurrency trading. The regukatory environment will further evolve as nations come to grips with the digital currency phenomenon.

Rise of the ‘CryptoRuble’

Earlier this week, Russian communications minister Nikolay Nikiforov said that a state-issued ‘CryptoRuble’ is set to be unveiled. Several news outlets, including CCN and Investopedia, reported the matter.

Nikiforov pointed to neighboring Kyrgyzstan as a chief motivator for moving swiftly on this matter. The Eurasian Economic Commission member is planning to launch its own gold-backed national cryptocurrency.

Despite all the regulatory concerns surrounding digital currency, Russia views it as a potential opportunity to diversify its economy away from oil.

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Vietnam Becomes the Latest to Ban Bitcoin, but in China, the Rules May Be Changing

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Vietnam became the latest nation state to launch an attack on cryptocurrency, as regulators sided with the alarmists without providing much of a rationale.

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Vietnam Issues Ban

The ban, which applies to all cryptocurrencies not deemed legal tender, was issued via formal statement by the State Bank of Vietnam. The punishment for accepting or offering payments in bitcoin can run more than $8,000 USD.

Vietnam’s central bank says only traditional forms of payment are accepted within its borders. This includes cash, checks, credit cards and other electronic payments.

The state-run bank has issued the following statement, according to Mirror:

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“Bitcoin virtual currency and other similar is not lawful means of payment in Vietnam; The issuance, supply, use of bitcoin and other similar virtual currency as a means of payment is prohibited in Vietnam.”

The announcement, whenever it was made, had very little impact on cryptocurrency trading. At press time, bitcoin (BTC/USD) was trading at $6,162 for a gain of $57.

The bulls blew the door wide open this weekend, sending bitcoin north of $6,300 for the first time ever.

Chinese Ban? Let’s Move to Hong Kong

Now that China’s Communist Party gathering has come and gone, sanity appears to be returning to public discourse. That is, according to a recent report from CNLedger, which our pals at CCN.com recently covered.  The trusted news sources have revealed that OKEX is expected to launch its peer-to-peer OTC bitcoin trading platform shortly.

As it turns out, OKEX and several other leading blockchain companies like BTCC and Huobi-Pro are located in Hong Kong. Theoretically, their presence in the Special Administrative Region allows them to circumnavigate the mainland’s recent ban on everything crypto-related.

It should be noted that OKEX is offering a bitcoin-to-crypto trading platform. Regardless of what Beijing thinks, it might not be a good idea to launch this platform on the mainland. That’s because the Chinese government recently blocked a major port for MetaTrader4, which is the engine of the online forex community.

Regulators have apparently shut down port ‘443’, which is used for secure web browser communications. The port also happens to be the one MT4 brokers use to connect to their trading server.

The port probably inhibits the government’s ability to spy on traders, or at least monitor their data flows (like that’s different?). There’s reason to believe this ban could extend to other trading platforms that utilize a similar standard.

Last month, China broadened its online censorship by blocking WhatsApp, the popular messaging platform acquired by Facebook for way too much. The ban was another blow to the social networking giant, as it too is banned on the mainland.

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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.

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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.”

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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.

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Ethereum Founder Says Central Banks are Incapable of Creating Own Cryptocurrency

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Central banks have expressed keen interest in creating their own cryptocurrencies, probably in realization that blockchain-powered assets are more than just a fad. It’s too bad they lack the paradigm to do so, says Ethereum founder Vitalik Buterin.

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Vitalik Doesn’t Think They Can Do It

A central bank-backed cryptocurrency would simply amount to “a server and a bunch of marketing buzzwords to make it look like a blockchain,” says Buterin, according to Jeff John Roberts’ latest Fortune report.

The 23-year-old Buterin said it would take years for central banks to mint their own coins, suggesting that existing blockchains needn’t be worried about competition from government.

Indeed, central bankers have spent the past few years mulling over the impact of cryptocurrencies on traditional payment methods. It’ll be another few years before they develop a system comparable to bitcoin or Ethereum, if at all.

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Russia could become the first case study in government-backed cryptocurrency. Reports from TASS suggest that central regulators are embarking on a ‘CryptoRuble’, or a digital currency system backed by fiat money.

Buterin is a native of Russia, but currently resides (at least partially) outside Toronto. That may explain his recent visit to the three-day Swell conference in the city. The event was hosted by Ripple, the world’s third-largest digital asset by market cap.

Can Governments Contain Cryptocurrency?

Buterin has raised awareness of the irony in proclaiming a centrally-controlled cryptocurrency. By definition, a cryptocurrency cannot be contained within a single jurisdiction, since mining can carried out by anyone, anywhere. This is perhaps what’s making central bankers so nervous. Although Russia’s CryptoRuble aims to centralize the mining of cryptocurrency, it’s unclear how such a system would be administered.

The inherent tension between central banks and cryptocurrencies will likely grow over time as more people use digital tokens as payment. With the exception of bitcoin, cryptocurrency has yet to take off as a payment method. Japan could very well be the first case study in how quickly bitcoin will be adopted to pay for goods and services. The world’s third-largest economy has already recognized cryptocurrency as a legal payment method, leading to speculation that hundreds of thousands of domestic merchants will start accepting payments within the first year.

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