Category Archives: 2018 Bitcoin News

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Australian Science Agency Praises “Smart Money” Blockchain Trial Success

Australia’s Commonwealth Scientific and Industrial Research Organisation (CSIRO) has completed a blockchain trial with one of Australia’s big four banks, the Commonwealth Bank of Australia.

The trial, announced last month, tested CSIRO’s blockchain-powered “smart money” with the help of carers and participants within Australia’s National Disability Insurance Scheme (NDIS). The NDIS was initiated by the Australian government for citizens with disabilities, including intellectual, physical, sensory and psycho-social. It creates a managed market for disability services in Australia.

The trial revealed that the technology could increase patients’ choices and their levels of control over their support. Also, it was seen to help eliminate the need for unnecessary paperwork and reduced the risk of both fraud and financial calculation errors resulting in misspending. Ten participants and carers took part in the trials.

CSIRO’s Data61 principal software and computational systems researcher, Dr Mark Staples, claimed that the trial was insightful in giving researchers a greater understanding of both the pitfalls and some of the benefits of integrating smart money payments into the NDIS system. He added:

“This automation and flexibility could reduce friction and enable greater innovation in many payment environments and unlock network-effect benefits… directly connecting citizens to public policy programs, empowering people to optimize their spending through things like smart savings plans and smart diets, and reducing costs for businesses, including through the potential for self-taxing transactions.”

Commonwealth Bank’s head of government and ADIs, Julie Hunter, saw wide applications for the new technology in all sectors including the non-profit environment.

Australia’s previous prime minister Malcolm Turnbull had asked the country’s Digital Transformation Agency (DTA) to research blockchain earlier this year. Principally, he asked for a focus on how the technology could be used to improve government services, including welfare payments. The Australian government granted the agency a budget of AUD 700,000 (USD 530,000) to carry out an investigation into DLT.

The move is one of many focused on how the government can best leverage blockchain’s advantages, including looking into how the technology can be used for making social security welfare payments to citizens. This latest CSIRO/Commonwealth Bank collaboration appears to be in line with the government’s current direction regarding implementing DLT into public services and other programs.

The new prime minister of Australia, Scott Morrison, plans to utilize blockchain technology to bring “much tougher competition” to the country’s big banks and dominant industries. He argued that the Australian banking system will be able to utilize DLT to help to transform areas of consumer data rights, open banking reforms, and new legislation.

 

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Crypto Skeptic India May Apply Tax Laws on Crypto in Possible Turning Point

Anonymous sources in India are suggesting that the crypto-sceptical nation may be at a turning point with the possibility of a goods and service tax (GST) on cryptocurrency trading.

Bloomberg reported that the government might be applying an 18% GST as there is a chance that the Indian government could classify cryptocurrencies as a supply of “intangible goods” and, therefore, making them subject to the tax levy with separate laws to be introduced that address the use of cryptocurrencies for illicit activities.

The proposal is reportedly being considered by Central Board of Indirect Taxes and Customs which, according to the anonymous source, will be presented before the GST council one it is finalized.

The source makes the case that the income tax department had realized critical nature of taxing digital currencies sooner than later. This is due to the digital asset markets growth which can build up significant liabilities, making recovery difficult in the future.

Early turbulence

The news is oddly contrasting with previous reports that have emerged from India, with April a particularly turbulent period. Earlier in the month, Bitcoin News reported that the Reserve Bank of India (RBI) was prohibiting all banks and financial entities from “facilitating transactions involving cryptocurrencies”, a move that sparked a petition that received 17,000 signatures, backed mostly by younger users who were employed in the blockchain industry.

Bitcoin bull Tim Draper chimed in during the April maelstrom, suggesting that the Indian government’s prohibitions against cryptocurrency would be “stifling innovation”. With that said, in May, Bitcoin News reported that despite the clampdowns, India has a wealth of crypto-savvy software developers that are more than capable of pushing innovation in the country. A study made by Indian HR company, Belong, brought to light the 5,000-strong developers who could drive the industry forward for India.

Efforts to create the taxation and regulatory frameworks were underway in late March when the largest tax filing platform began making inroads toward building appropriate regulations; the attempt to clarify cryptocurrency laws came shortly after exchanges and cryptocurrency traders came under significant pressures from the RBI and other banks.

Tackling cynicism

The decision to apply the taxation laws on cryptocurrencies hinges largely on the outcomes of the ongoing regulatory efforts being made by the department of economic affairs. Indian crypto exchanges believe a complete ban would be “futile” as the RBI not allowing for banks to transact with them would force buyers and sellers to other means of settling trades. This could contribute to illegal activities and, therefore, cause the ban to come down even harder on the industry.

Treating cryptocurrencies as goods and services may allow for the undeniably lucrative market to stay in force in India. Classifying them as currencies, however, would require changes in the law.

Should a positive consensus be reached through the appropriate classification, taxation and consequently, regulation standards, then India could soon follow in the footsteps of other countries embracing the technology.

 

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Binance CEO Firmly Believes in ICOs as Answer to Venture Capitalism

The CEO of cryptocurrency trading platform Binance has made a positive case for initial coin offerings (ICOs). In a recent blog post, Changpeng Zhao argues that the digital crowdfunding method adopted at large by blockchain startups are “not just good-to-have”, but necessary.

Out with the old

At the crux of the blog post is a debate between traditional venture capitalism (VC) and ICOs; Zhao highlights several differences while acknowledging the present issues with the ICO markets.

For entrepreneurs, Zhao argues that the process of acquiring funding through VCs is tedious, time-consuming and requires startups to relinquish some or all control of their project. He writes:

“Courting VC investors, doing powerpoints, business plans, pitch decks, executive summaries, due diligence, term sheets, investment agreements, offshore company structure setup, board of directors, make reports for them, getting a bridge loan because the VC lawyers insist on some totalitarian terms that essentially gives them absolute power and ownership of your company and hence delays the whole investment process…”

He then compares it to the speed, effectiveness and control an ICO delivers to any entrepreneur:

“Writing an awesome white paper about your passionate dream project and raise USD 20M in 10 days, from thousands of people around the world who speak your language, understand your vision, use your product as soon as it is launched, spend all day beta testing your product, or discuss with you about new neat (and sometimes useless) features that you haven’t thought about.”

ICOs are still in development

Zhao admits that ICOs are still in their early stages, which is true considering that countries around the world are feverishly debating the validity and legalities of ICOs, which contrary to popular belief, is a good thing.

Concerns over ICOs having a myriad of security, fraud and other illegal activities tied to them has caused knee-jerk responses from governments and regulators everywhere in the world. However, Zhao makes a strong point saying:

“You can’t make advancements without encountering problems. Properly dealing with issues is how progress is made. If we had given up e-commerce/internet because there was identity theft or credit card fraud, where would the world be today? Whoever deals with the issues best will be the winners, that’s where the competition is.”

ICOs beat VC projects

Zhao is of the belief that ICOs will succeed more often than VC projects and makes three distinct points as to why he thinks this is the case. His first is that again, ICOs are extremely time and cost effective. Less time spent raising funds means the actual project itself receives the much-required attention it needs.

Furthermore, the higher amounts of funding received from ICOs allow for startups to better overcome weak points in the project. Finally, ICOs create a user base during the funding period, turning investors into users, which is an extraordinarily strong start for any company upon launch.

He concludes by noting that VCs are now investing heavily in ICOs, a factor which he believes speaks for itself regarding just how valid and useful the digital fundraising method is.

 

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Thailand, Latest Addition to Asian Cryptocurrency Tax and Regulation Movement

Thailand is the latest country in the Asia region to start levying taxes on cryptocurrencies, despite receiving some opposition from the Thai Blockchain associations. The news arrives as other countries in the region and around the world ramp up legal and regulatory efforts.

Value-Added Tax and Capital Gains

In early April 2018, Thailand’s Ministry of Finance released plans to tax cryptocurrency trading and investments. After a cabinet meeting in late March, Thai Finance Minister Apisak Tantivorawong responded to a letter sent by digital asset associations calling for the Deputy Prime Minister and government to “rethink the enforcement of a royal decree to regulate digital asset transactions — particularly the withholding tax, as it could be an obstacle to startup fund-raising,“ reports the Nikkei Asian Review.

The proposed 15% capital gains tax is considered by digital asset operators in Thailand to be a stifling figure for the industry. It puts financial pressure on startups seeking to break into the blockchain and cryptocurrency industry, which could hinder overall innovation in the country.

There is also a 7 percent VAT charged on all cryptocurrency trades in the country, which for would-be blockchain entrepreneurs and companies seeking to have digital money as part of their business model is very off-putting.

Subject to Change

With that said, it’s somewhat important to note that the Thai legislation is still in its infantile stages. Since 2014, France had laws in place that classified cryptocurrency profits as either industrial and commercial profits or non-commercial profits, which made them subject to an eye-watering 45% capital gains tax at the top end for residents in the highest tax bracket.

As of late April 2018, the French Council of State reclassified cryptocurrencies as “movable property.” This makes them akin to transportable assets such as vehicles, precious metals or intellectual property and brings the tax rate down to a flat 19%, which may be high but is still a definite advancement for blockchain industries and investors in France.

Asian Advancements

Other countries in Asia are also beginning to relieve crypto-tax pressures with nations such as the Philippines announcing a special economic zone for ten blockchain and virtual currency companies.

In Abu Dhabi, the Global Market’s Financial Services Authority released proposals for a “fit-for-purpose” regulatory and taxation framework. In a statement, Richard Teng Chief Executive of the Financial Services Regulatory Authority (FRSA), regulator of the Abu Dhabi Global Market (ADGM) said:

“The FSRA is seeking to instill proper governance, oversight, and transparency over crypto asset activities,” Adding further, he said, “Our proposed regulatory regime is only possible with our deep understanding and knowledge of the solutions available to address the respective risks and represents the most comprehensive regime proposed by global regulators so far.”

South Korea, Japan, and China are also making similar headlines with regulatory and tax reforms that can only serve positively towards the future of cryptocurrencies and blockchain technology.

In Thailand, it is still early days and should the new tax laws prove too high for the country; there is a chance that the state will follow up on the original policies with further amendments, just like many other crypto-adopting societies in the world.

 

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UK Financial Conduct Authority to Deliver Crypto Regulation Analysis in 2019

The United Kingdom’s cryptocurrency regulation is slowly taking shape as its Financial Conduct Authority (FCA) has announced that they will be analyzing the risks and benefits of blockchain technology and cryptocurrencies.

Regulation in the UK

The FCA, Bank of England and the UK Treasury are working together on a discussion paper for cryptocurrencies which will be revealed in 2019. The coming UK crypto regulations are geared toward attracting businesses based in Continental Europe.

The FCA Business Plan 2018/19 states:

“Cryptocurrencies has been an area of increasing interest for markets and regulators globally. In the UK, the Treasury Committee has announced that it will be launching an enquiry, to which we intend to respond.”

The plan continues:

“Cryptocurrencies themselves (i.e. those designed primarily as a means of payment/exchange) are not currently within our regulatory perimeter. However, some models of use or packaging cryptocurrencies bring them within our perimeter, making the landscape complex.”

Regulation around the world

The FCA has previously warned consumers regarding the risks of initial coin offerings (ICOs). The popular crowdfunding method for blockchain startups has been part of a miasma of controversies causing ICO bans in countries like China, which is still having issues with ICO and cryptocurrency projects getting past the Peoples Bank of China’s (PBoC) strict rulings.

There are very few countries around the world that have outright bans on ICOs, and many of the governments within their respective countries are taking a look at the possibility of future regulations.

Most countries have banned ICOs due to fraudulent actors, scams, security risks and money laundering; however, several are attempting to create definitions and legal frameworks that can accommodate the technology and utilize the long list of benefits that come with it.

Protecting consumers and the technology

In February, the UK Treasury Committee launched an inquiry into cryptocurrencies and distributed ledger technology, stating that one of its goals is to provide protection to consumers and businesses without stifling innovation. MP Nicky Morgan, committee chairman, said:

“People are becoming increasingly aware of cryptocurrencies such as Bitcoin, but they may not be aware that they are currently unregulated in the UK, and that there is no protection for individual investors… We will also examine the potential benefits of cryptocurrencies and the technology underpinning them, how they can create innovative opportunities, and to what extent they could disrupt the economy and replace traditional means of payment.”

The FCA also released a statement in response to the UK’s growing number of cryptocurrency and blockchain firms describing that cryptocurrency derivatives could be classed as financial instruments, meaning that tokens issued through ICOs could require FCA authorization.

While the FCA doesn’t quite have a clear idea on how to manage or regulate cryptocurrencies and ICOs, it is evident that the regulator intends to embrace distributed ledger technology and, in doing so, enable blockchain-related businesses and innovations to thrive in the UK.

 

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South Korean Financial Watchdog to Investigate Banks Under New Crypto Rules

The South Korean Financial Services Commission (FSC) will inspect three of its banks to see if they are conforming to new anti-anonymity regulations.

In January, the financial watchdog announced that cryptocurrency investors in South Korea would have to use their real-name bank accounts in order to be able to deposit funds. The new regulation intended to remove multiple trading accounts on domestic cryptocurrency exchanges and to strengthen positive views of cryptocurrency trading by tackling money laundering.

Proactive efforts

In a statement, it announced: “We have already executed sufficient procedures for confirming the identity of a member when receiving a new member via a corporate account and it is against equity to allow only a few exchanges to issue new virtual accounts.”

FSC and the Financial Intelligence Unit will begin on-site inspections on three banks – NongHyup, KB Kookmin and KEB Hana Bank – from 19 to 25 April.

The inspection will focus on whether or not the three banks have managed to implement the new rules successfully. If so, it is hoped that this will contribute toward South Korea’s progressive approach to cryptocurrency and blockchain technologies.

Financial regulators and banks aren’t the only entities with blockchain developments in South Korea; they are part of an industry-wide paradigm shift that is experiencing frequent highs and lows. South Korean cryptocurrency exchanges are now to be taxed under existing policies, while Seoul is pushing to have its own cryptocurrency.

Furthermore, the Fuji News Network (FNN) also announced that the Korean government is setting up full-scale cryptocurrency regulations after local elections on 13 June, just ahead of a planned virtual currency international conference for G20 members on 14 June.

The scramble to regulate

More recently, the United Kingdom’s Financial Conduct Authority (FCA) also announced that it would be working with the Bank of England and the UK Treasury to begin discussions on how to regulate cryptocurrencies.

“People are becoming increasingly aware of cryptocurrencies, such as Bitcoin,” said Nicky Morgan, a Member of Parliament and chair of the Treasury Committee, “but they may not be aware that they are currently unregulated in the UK, and that there is no protection for individual investors.”

In China, similar efforts are also gaining momentum. In March, the Institute of International Finance, part of The Peoples Bank of China (PBOC), gave refreshing insights into the evolving attitudes in the country. In a contrasting report to China’s present stance on cryptocurrencies, exchanges and ICOs, it stated that cryptocurrencies could bear risks against the Chinese Yuan (CNY), but the Institute of International Finance is in favor of establishing a regulatory framework for cryptocurrency on a global scale.

South Korea is a huge proponent in the tide of major financial entities and governments pushing to recognize cryptocurrencies. Despite the current shaky market and past controversies, global approaches to the technology are undergoing profound political changes and 2018 is already proving to be an extraordinary year for positive blockchain advancements.

 

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