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Russia Will Regulate Cryptocurrency After All

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Russia has decided to officially regulate cryptocurrency following high level talks between President Vladimir Putin, government officials and business leaders. The move came shortly after a central bank official confirmed that online bitcoin exchanges will be banned.

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Russia Opts for Regulation

Instead of a blanket ban on cryptocurrency trading, Russian officials have decided to control the mining and circulation of digital assets. Officials reached the decision following a meeting earlier this week between Putin, Finance Minister Anton Siluanov, central bank chief Elvira Nabiullina and the CEO of Qiwi payment system Sergey Solonin among others.

“We have agreed on the following: the state should regulate the process of issuing cryptocurrencies, the process of mining, the process of circulation,” said Finance Minister Anton Siluanov, as quoted by RT.

Russian authorities announced earlier this week they would join a global crackdown on cryptocurrency.  President Putin said bitcoin and other cryptocurrencies pose “serious risks” from the perspective of fraud and money laundering. He later clarified that Moscow intends to supervise the market rather than impose an all-out ban on digital currency use.

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We need, based on international experience, to build a regulatory environment that will systematize relations in this area, to protect, of course, the interests of citizens, business, and the state, to provide legal guarantees for working with innovative financial instruments,” he said.

According to the Proecutor General’s Office, cryptocurrencies are considered money surrogates, which makes their turnover a criminal offense. It is not yet clear how authorities will proceed with regulating the market.

Hopes of Renewed China Trade Boost Bitcoin

The value of bitcoin surged to new highs on Thursday amid hopes that China will lift trading restrictions on cryptocurrency. The world’s second-largest economy became the center of digital currency trading prior to last month’s blanket ban on the asset class.

News reports out of Xinhua suggest Beijing is looking to reinstate cryptocurrency trading under a new regulatory framework. Such a move would work in bitcoin’s favor, possibly leading to further price increases.

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Companies are Lining Up to Launch Bitcoin ETF, According to SEC

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Two companies have stepped forward with applications to the U.S. Securities and Exchange Commission (SEC) to launch a bitcoin exchange-traded fund (ETF), according to a recent report from CCN. The renewed push toward ETFs comes as more institutional investors look to enter the burgeoning cryptocurrency market.

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Bitcoin ETF

According to the SEC’s public filing system, regulators received new applications for the REX Bitcoin Strategy ETF and Rex Short Bitcoin Strategy ETF, as well as the VanEck Vectors Bitcoin Strategy ETF.

REX, which is based in Connecticut, filed its application on Dec. 8. The New York-based VanEck filed its application on Dec. 11 in a sign that more market players were looking to capitalize on a booming market.

VanEck had previously filed to create a bitcoin ETF before the SEC struck down a similar proposal. That being said, VanEck will reportedly provide the pricing data for an upcoming bitcoin futures contract to be made available via the Nasdaq exchange. Unlike the CBOE and CME futures contract, the Nasdaq version will pull pricing information from 50 sources provided by VanEck.

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A bitcoin ETF would make the digital currency widely available to millions of investors through common retirement accounts, such as IRAs and 401(k)s.

The highly coveted but elusive bitcoin ETF has been tried before by Tyler and Cameron Winklevoss, who failed to earn SEC approval earlier this year. Regulators disapproved the ETF on several grounds, including lack of regulation and a general inability to enter necessary surveillance-sharing agreements.

The SEC’s ruling on the Winklevoss ETF puts considerable doubt over whether the new products will ever get approved. Analysts say that ETFs could spark an even bigger rally for an asset class that has already added hundreds of billions of dollars to its value this year alone.

Bitcoin Trade Volumes

Bitcoin’s market cap surged past $290 billion on Monday as institutional money flowed into the asset class following the launch of the CBOE futures contract. Trade volumes over the past 24 hours reached $12.6 billion, according to CoinMarketCap.

Bitcoin-dollar transactions on Bitfinex accounted for 11.6% of the daily transaction. South Kore’as Bithumb accounted for nearly 11% of the daily turnover. Coinbase’s GDAX also saw 6.5% of the daily turnover, data showed.

At press time, BTC/USD was trading north of $17,100. Prices skyrocketed past $19,000 last week.

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.

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South Korea Loosens Grip on ICOs

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Initial coin offerings (ICOs) will not be banned in South Korea after all, according to a recent decision by the central government. Although the market will still be governed by strict regulations, institutional players will have the opportunity to invest in the burgeoning market.

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ICOs Will Not Be Banned

South Korean newspaper Chosun reported Friday that the government is looking to regulate the ICO market and will allow institutional investors to participate in the controversial crowdfunding model. Chosun revealed that several government agencies have formed a task force to sort out a regulatory framework for ICOs. They include the Ministry of Strategy and Finance, Financial Services Commission, Fair Trade Commission, Financial Supervisory Commission and Ministry of Justice.

The task forces are investing the possibility of taxing cryptocurrency investors, as well as implementing Know Your Customer (KYC) and Anti-Money Laundering (AML) policies for institutional investors. These protocols have already been adopted elsewhere and currently form the basis of the Simple Agreement for Future Tokens (SAFT) protocol.

A task force spokesperson told Chosun:

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“Currently, the task force is considering imposing stricter regulations for investor and consumer protection within the cryptocurrency market.” The spokesperson added “in regards to ICOs, the government will likely impose regulations to enable institutional investors to invest in ICOs.”

That being said, South Korea will still keep a tight lid on public access to ICOs, with the spokesperson clarifying that only institutional investors will be able to enter the market.

The spokesperson added: “It is not possible to allow any citizen of South Korea to invest in ICOs. However, the government may allow institutional investors that meet capital requirements established by the Financial Supervisory Commission.”

South Korea has adopted a fairly laissez faire approach to cryptocurrency, which has made the Asian nation a prime destination for traders. The South Korean yuan is the third most traded fiat currency involved with cryptos, behind only the Japanese yen and U.S. dollar. South Korean exchanges were at the center of the latest bitcoin rally that took prices north of $19,000.

Last month, South Korea’s Financial Supervisory Service (FSS) said it had no plans to monitor cryptocurrency exchanges. According to FSS head Choe Heung-sik, “supervision will come only after the legal recognition of digital tokens as a legitimate currency.”

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.

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South Korea to Remain Laissez Faire on Bitcoin, According to FSS

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South Korea’s financial watchdog has “no plans” to monitor cryptocurrency trading, according to a new report that circulated in local media. This will continue to be the case until South Korea recognizes cryptocurrency as a legitimate form of money.

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FSS Not Likely to Monitor Cryptos

Head of the Financial Supervisory Service (FSS) Choe Heung-sik has made it clear that the oversight body has no intent to monitor or regulate the crypto markets. Choe was quoted by the Korea Times stating: “Though we are monitoring the practice of cryptocurrency trading, we don’t have plans right now to directly supervise exchanges. Supervision will come only after the legal recognition of digital tokens as a legitimate currency.”

The watchdog’s position alleviates some concerns that Seoul was planning to clamp down on the digital currency market. South Korea has quickly emerged as a central hub for cryptocurrency trading, but even that hasn’t stopped policymakers from shutting down initial coin offerings (ICOs). Coin offerings are a highly popular but controversial crowdfunding campaign that have generated well north of $3 billion this year.

Despite being one of the world’s most liquid bitcoin markets, South Korea has a track record of charging a higher premium for the digital asset. According to CCN, the premium was as high as $500 earlier this month.

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The country is home to some of the world’s biggest cryptocurrency exchanges, such as Bithumb, which recently experienced an outage that cost investors billions of won. As CCN states, every single cryptocurrency that was listed by Bithumb has succeeded, including Zcash and Qtum.

Valued at $1 billion, Qtum is the world’s twelfth largest digital asset by market cap. Meanwhile, Zcash clocks in at no. 15 with $836 million. A total of twelve digital currencies are valued at $1 billion or more, according to CoinMarketCap. The total value of all 1,200 or so digital currencies in circulation is more than $250 billion.

Daily trading volumes on South Korean exchanges has reached 2 trillion yuan, which is equivalent to roughly $1.4 billion USD. Industry data shows that the yuan is the third most traded fiat currency following the Japanese yen and U.S. dollar.

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 money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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