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Taiwan Could Become the Next Major Hub for Cryptocurrency

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After years of hesitation, Taiwan is slowly shifting toward liberalizing its approach to cryptocurrency. Recent developments suggest the tiny Asian state is looking to nurture the nascent industry rather than impose restrictions like the ones seen in neighboring China.

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Taiwan’s Shifting Landscape

Numerous reports over the last six months have shown willingness on the part of Taiwanese regulators to approach cryptocurrency with open arms. One of the key turning points occurred in October when Financial Supervisory Commission (FSC) Chairman Wellington Woo told Parliament that crypto and blockchain are opportunities that shouldn’t be passed up.

This sentiment was echoed by Congressman Jason Hsu, who said Taiwan should work to realize the potential of cryptocurrency. He also disagreed vehemently with any view that Taiwan should clamp down on digital assets just because China and South Korea had negative views about certain aspects of the market.

“Just because China and South Korea are banning, doesn’t mean that Taiwan should follow suit – there is a huge opportunity for growth in the future. We should emulate Japan, where they treat cryptocurrency as a highly regulated, highly monitored industry like securities,” he said.

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Koo’s statement laid the foundation for the eventual passing of the Financial Technology Innovation Experimentation Act two months later. The Act aims to nurture domestic fin-tech startups by helping them avoid the same regulations that apply to incumbent firms. Crypto and blockchain startups fall within the fin-tech sphere.

The act takes inspiration from the United Kingdom’s sandbox concept, which allows firms that have passed an assessment to use the program to bypass certain regulations.

Officially “Neutral”

Taiwan’s official stance on cryptocurrency is “neutral,” according to Ralph Jennings of Forbes, who quoted a conversation he had with a publicist close to the government’s financial regulatory arm. Though not exactly clear, this statement seems to comply with existing provisions that make it illegal to solicit money through cryptocurrency.

That said, there are calls within Taiwan’s government to prepare for a possible meltdown within the crypto sector. The most publicized warning came from Shih Jun-ji, who serves as vice present of an executive branch of the federal government.

“My government should take early actions in response to the impact of digital currencies on finance,” Shih said, according to a Google translation of an official report that appeared on the Executive Yuan website in February.

At $10,000 per coin, bitcoin’s market cap equals one-third of the country’s foreign exchange reserves, the translation also said.

A Bright Future

Although Taiwan isn’t normally considered a major center for crypto investing, the country is home to a 25,000-strong blockchain community. There are a few active exchanges operating domestically, including MaiCoin, which predominantly serves the local community.

Despite being officially neutral on cryptocurrency, Taiwan is setting itself up for a very bright future in the sector. The sandbox model may have been inspired by the U.K., but its implementation in Taiwan is unprecedented. Adding to the excitement is the fact that the sandbox can run for up to three years. That’s three years in which startups can develop their product without the barriers of existing regulation.

The more we learn about Taiwan’s sandbox concept, the more promising it sounds. According to the Taipei Times, the FSC will decide whether a submission is sandbox-worthy within 60 days. Approved concepts would be given an 18-month window to launch trial runs of their product or service. This window can be extended for up to 36 months.

You may not hear much about the regulatory shifts underway in Taiwan, but this tiny jurisdiction is paving the way for an exciting future for all things fin-tech and blockchain.

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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4.5 stars on average, based on 335 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

Ripple Wants Governments to Guide Cryptocurrencies Out of Regulatory Purgatory

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Ripple has urged governments to revisit their approach to cryptocurrency, arguing that proactive measures are needed to guide the market.

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Urging Regulation

Commenting on British regulation, Ripple’s head of regulatory relations Ryan Zagone has called on officials to foster a safe and transparent cryptocurrency market through a number of initiatives. These “pillars,” as Zagone called them, include consumer protection, anti-money laundering and financial stability.

“We’re at that time now where we need more clarity and rules and we need more certainty. It’s a good time to start revisiting that ‘wait and see’ ­approach taken by regulators,” he said while comparing cryptocurrencies to the dot-com boom of the 1990s.

Zagone urged British lawmakers to adopt the Japanese model for cryptocurrency regulation, arguing that such an approach would balance the market between risk and innovation. This includes regulatory guidelines that would recognize digital currencies as a form of payment.

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Ripple is perhaps better suited to play by government rules given its strong penetration traditional finance. However, trading of its XRP token remains limited within institutional circles.

 

 

Regulation: Not as Bad as It Seems?

Though many in the blockchain community have dreaded government regulation, others have argued that new rules will help guide the nascent market to a better place. From a practical perspective, clear rules governing transactions, trading and initial coin offerings (ICOs) would likely reduce the rampant media bias against cryptocurrencies. A market without ‘FUD’ (fear, uncertainty and doubt) is less prone to sudden and dramatic shifts in consumer sentiment.

Several jurisdictions are positioning themselves to become major players in the cryptocurrency market by offering favorable regulation and an open environment for innovation. Chief among them are Switzerland, Singapore and Malta, three jurisdictions we covered as part of our ‘Where in the World to ICO’ series.

Nations such as Japan have already developed clear cryptocurrency guidelines, while places like South Korea have gone back and forth on how to regulate the digital asset class. Though frustrating, the ‘wait and see’ perspective highlighted by Zagone is the dominant approach to cryptocurrency regulation worldwide. It’s also the official stance of the G20, which only last month quelled expectations for imminent crypto regulations after deeming that the asset class poses no risk to financial stability. This is definitely a good thing, but does little to close the regulatory gap that Zagone and others have argued needs to be closed.

Elsewhere on the regulatory circuit, New York’s Attorney General on Tuesday announced the Virtual Markets Integrity Initiative, a so-called “fact-finding inquiry into the policies and practices” of cryptocurrency exchanges. A total of 13 cryptocurrency exchanges are part of the inquiry, including Binance, Bitfinex, Bitstamp USA, Bittrex, Coinbase’s GDAX, Gemini and Poloniex.

Keeping with New York, the Attorney’s Office for the Eastern District has accused a local resident of carrying out an elaborate cryptocurrency scheme meant to defraud investors. Blue Bit Banc, a binary options platform, allegedly manipulated data to rig the rules of binary options trades.

Fraudulent activities involving cryptocurrencies have caused businesses to self-regulate their exposure to the digital asset class. Case in point: Facebook, Google and Twitter have issued blanket bans on all forms of cryptocurrency advertising from banner ads to keyword targeting. The author has argued that the impact of the ban isn’t as bad as it appears given that less than 1% of the traffic generated on cryptocurrency exchanges comes from paid advertising.

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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4.5 stars on average, based on 335 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

Why Japan Could Represent the Future of Cryptocurrency

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Japan has quickly emerged as a powerful hub for cryptocurrency. Liberal policies, a budding investment community and full embrace of blockchain technology makes a strong case for the world’s third-largest economy becoming the center for everything crypto. Now, data on crypto trading as well as proposed guidelines for initial coin offerings (ICOs) have underscored Japan’s leadership pace.

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Crypto Trading Flourishes in Japan

While Japan has for some time been a major hub for cryptocurrency trading, a new report from the country’s top financial regulator has provided actual numbers on usage.

The Financial Services Agency (FSA) recently reported that at least 3.5 million people were trading crypto assets on one of the nation’s 17 domestic exchanges. The vast majority, some 84%, are between the ages of 20 and 40.

What’s more, trading volumes on domestic exchanges jumped from $22 million in March 2014 to a whopping $97 billion in March 2017. Over the same period, trading on margin surged from $2 million to $543 billion.

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Despite the growth, Japanese exchanges do not rank among the world’s largest when measured in terms of trade volume, a sign there may be more domestic users trading on one of the many international platforms.

As of Wednesday, Japan’s bitFlyer was ranked 19th in terms of daily transaction volume; Bitbank came in at 39th.

Research Group Proposes ICO Guidelines

A government-backed research group recently put forward several proposals for regulating the ICO market, including guidelines on consumer protection and anti-money laundering.

Tama University professor Takuya Hirai, who is also a member of Japan’s House of Representatives, spearheaded the proposals in collaboration with industry advisers representing ICO Business Research Group and bitFlyer, among others.

In a report published earlier this month, the group said: Appropriate rules must be set to enable ICO to obtain public trust and to expand as a sound and reliable financing method,” adding that their efforts are intended to propose “rules needed to establish ICO as a sustainable financing method based on discussions conducted by the research group.”

The research group intends to bring more transparency to the ICO market, which has been plagued by malicious actors and overhyped projects. According to various estimates, ICOs raised between $4 billion and $6 billion last year alone. The market is poised to break that record by the end of the second quarter, based on recent industry trends.

For all the negativity surrounding ICOs, several nations are developing more favorable guidelines for the industry. Among the top or emerging destinations for token issuers are Switzerland, Singapore and even Malta.

By bringing clarity to ICOs, Japan could become a top jurisdiction for token issuers when they decide to launch their project. Japan’s embrace of the fast-growing market already makes it a more attractive location when compared to other crypto hotbeds. China has banned ICOs entirely, South Korea is on the fence and the United States has been hyper-critical of projects that don’t self-classify as a security.

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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4.5 stars on average, based on 335 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

People’s Bank of China Plans Wider Crackdown on Cryptocurrency

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The People’s Bank of China (PBOC) is planning more draconian measures on domestic cryptocurrency operations, dashing hopes that the world’s second-largest economy would ease last year’s blanket ban on the asset class.

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PBOC’s 2018 Agenda

Plans for widespread crypto “reforms and supervision” were laid out in the central bank’s recently released agenda for 2018. The new measures are intended to target remaining cryptocurrency operations within China, including multi-level marketing activities.

Central bank Vice Governor Fan Yifei said “rectification of all types of virtual currencies will be carried out. ” At the same time, the central bank will prioritize and expand upon research towards its own state-backed cryptocurrency: the so-called digital renminbi.

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“First, we will intensify reforms and innovations to promote the central bank’s digital currency research and development; Second, the bank must strengthen supervision and rectify all types of virtual currencies,” he said.

In a recent report, the central bank’s Institute of International Finance identified cryptocurrencies as a major priority for 2018. The document suggests crypto assets may pose significant risks to the yuan, which has been at the center of China’s strategy to retain control over international trade. The currency has been devalued steadily in recent years, triggering huge spikes in volatility in international equity markets.

Since issuing its blanket ban on crypto assets, China has outlined new measures to clamp down on bitcoin mining operations, as well as domestic currency traders relying on foreign exchanges to flip their crypto assets.

PBOC’s Contradictory Views

China’s central bank waged war on cryptocurrencies last September when it banned their trading on domestic exchanges and said initial coin offerings would also be outlawed. However, its actions of late suggest it is more open to the idea of cryptocurrencies – just as long as they are controlled by the state.

This largely explains why PBOC officials are researching a state-backed cryptocurrency despite not recognizing bitcoin as a form of payment. By developing its own digital renminbi, China is looking to reap the benefits of crypto assets without undermining its current anti-money laundering processes.

Some members of the PBOC have expressed out-right support for a centrally controlled digital currency. One such person is Sun Guofeng, who heads the central bank’s financial research department. Sun recently stated that traditional money had negative consequences on the economy in general and interest rates in particular. He recommended that the Bank quickly move to develop a state-backed digital currency.

“While the central bank’s digital currency is conducive to the implementation of negative interest rate policies, the central bank should speed up the development of a central bank issued digital currency,” he said.

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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4.5 stars on average, based on 335 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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