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Hungary Working on Crypto Regulatory Framework

Hungary is reported to working on a framework to regulate cryptocurrency trading through a joint workgroup set up for this purpose.

The county is currently far from being a crypto haven with steep taxation and a lack of recognition by the country’s ministry of finance and banking system. Despite this stance, the country, like a few others, dabbled with a state cryptocurrency in February due for its Swiss ICO back in March.

The blockchain-based cryptocurrency, the Korona, introduced by the Korona development team and led by Jean-Marc Stiegemeier, a former Wall Street financial adviser, seems to have disappeared from the media as a whole. It appears that this new state crypto didn’t quite make the 26 March deadline due the ICO raising insufficient funds.  The most recent position regarding crypto in Hungary is clarified by this recent ministry statement:

“Hungary is currently looking into regulating crypto instruments, and the central bank, the tax authority, the finance ministry and other authorities have set up a joint workgroup to evaluate legal, economic, law enforcement, money laundering and other aspects of cryptocurrencies with an eye to introducing more detailed regulation.”

Taxation of cryptocurrency in Hungary at 15% is in line with many other countries such as France, who recently revised its rates, with a reduced rate if trading is carried out as part of a business venture, in which case it drops to 9% as corporate income tax.

Hungary has rigid tax laws and because of this nationals latch on to various schemes to get around taxation requirements such as investment schemes which reportedly also carry tax burdens and legal risks. As regards cryptocurrency, there is no tax on gifts or loans so working these into cryptocurrency transactions is reportedly an option for investors.

INLOCK describes itself as a protocol enabling cryptocurrency holders to use their digital assets as collateral for a fiat loan in a safe and regulated environment. Company CEO Csaba Csabai, explains:

“According to current law in Hungary, as a consequence of selling or exchanging cryptocurrencies is considered a taxable event… However, using these digital assets as collateral for a loan to finance a temporary liquidity problem is not. The platform we are building is working towards this concept enabling cryptocurrency holders to access the purchasing power of their holdings without being punished by the extremely high tax rates.”

It remains to be seen if the new workgroup is able to smooth the way for investors and traders in the months to come.

 

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Ethereum Founder and Coinbase CEO See Positive Growth in Crypto

Joe Lubin, co-founder of Ethereum, has commented that the fall in recent cryptocurrency prices is no constraint to future positive market growth.

The comments were made in an interview with Bloomberg yesterday when the ConsenSys CEO indicated that the big picture was the relevant factor for investors, and not to focus on “pimples on a chart” as he put it, referring the peaks and troughs of Bitcoin prices.

He spoke of the “bubble” factor, suggesting that each of the six major events has always bought a surge of activity. He argues:

“…we build more fundamental infrastructure, we see a correction, and the potential gets even more impressive… I absolutely expect that there is a strong correlation between the rise in price and the growth of fundamental infrastructure in the ecosystem and the growth of development in the ecosystem. We are probably two orders of magnitude bigger as a developer community than we were eight or ten months ago.”

The current market trend should be expected, Lubin suggests. He argues that much of the current volatility has to be put down to investor speculation rather than flaws in the underlying technology, suggesting that cryptocurrencies were very much still on the right positive trajectory. Regarding his own case as a CEO, he said:

“So we can look at the price and make growth plans and projections, and we’re still on track, basically. So this is not unexpected.”

Lubin added that each value surge over the past years indicated that the current situation is just like the last “six big bubbles, each more epic than the previous one, and each bubble is astonishing when they’re happening”.

In other news, Coinbase CEO Brian Armstrong has revealed that the company signed up 50,000 new customers a day last year and on Tuesday reflected Lubin’s view that the general trend is positive, suggesting:

“This technology is going through a series of bubbles and corrections, and each time it does that, it’s at a new plateau… People’s expectations are all over the map, but real-world adoption has been going up.”

At time of press, Bitcoin is currently trading at USD 6,429, up 6.47% on 24-hr trading. Ethereum is trading at USD 285, up by 6.93% on 24-hr trade.

 

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South Korea Plans Special Crypto Zone Status for Jeju Island

The South Korean island of Jeju sees itself as a potential crypto haven and has requested that the government allows it special crypto zone status.

The island’s governor made the request at a meeting with Kim Dong-yeon, Korea’s finance minister and deputy prime minister for the economy, and other government officials in an attempt to place the island at the forefront of South Korea’s crypto economy.

Jeju Province, officially Jeju Self-Governing Province, is one of the nine provinces of South Korea. According to Wikipedia, the province is situated on and conterminous with the nation’s largest island of Jeju, formerly transliterated as Cheju, Cheju Do, etc., or known as Quelpart to Europeans.

Governor Won Hee-ryong proposes making the island a hub for the development of blockchain and cryptocurrency technology and has requested that the South Korean government form a panel of specialists to plan a strategy to boost its blockchain profile. At a meeting last week, the governor commented:

“For Korea to become a leader rather than a consumer of this new global industry, we need to quickly allow [the operation of] blockchain and cryptocurrency [firms].”

The request comes on the heels of a statement by central government on Monday that it plans to spend USD 4.4 million on eight tech sectors it regards as critical, citing self-driving cars and smart factories, with an emphasis on blockchain, big data, and artificial intelligence. This spending could increase to KRW 10 trillion over the next five years according to Kim Dong-yeon. If these reports are accurate, then the government would need to train 10,000 specialists to service these new projects.

The ministry said, “The measures will help facilitate the platform economy, which in turn will help speed up innovative growth.”

It appears that the request by Jeju may not be an accident coming so quickly after the government statement of extra funds targeting new technology. Governor Won’s desire to create “Jeju Free International City” is very much in keeping with the government’s drive towards regulating blockchain so that becomes fit for purpose, freeing up current restrictions.

Moves towards deregulating ICOs in South Korea is never far from the crypto news in the Asian techno hub, with announcements in June that Korea’s Financial Convergence Association had plans to build its own blockchain hub.

A startup fund is planned for the end of 2018 with Seoul talking the talk, promising that it plans to use “drastic measures to ease regulations that have been blocking new industries and technologies from moving forward”.

 

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India Investigates Replacing Smart Travel Cards with Crypto Tokens

The Indian government is currently in the midst of reviewing the viability of substituting smart travel cards for its own central-bank issued crypto tokens.

A senior official from the country’s finance ministry and a member of the committee undertaking applicability research for the crypto token said that the committee is currently researching the use of a custom blockchain-backed crypto token to replace smart cards in the public sector, such as the metro card.

Also in the private sector, they are looking to include the tokens in such areas as air mile loyalty programs where they cannot be converted back into fiat money, he said.

The Inter-Ministerial Committee (IMC) was first established early last year by the Ministry of Finance and constitutes members from India’s taxation authority and India’s Department of Economic Affairs (DoEA), as well as representatives from India’s central bank, the State Bank of India, and several other government departments.

The IMC has also been charged with producing a regulatory road map for the cryptocurrency space and is responsible for determining the usability of crypto tokens in the public sector, partly by studying international and governmental policies and legal framework regarding cryptocurrency.

The committee has been requested to find specific measures used by governments to curb money laundering activities via crypto.

India’s own crypto token

As reported by Bitcoin News on Monday, the Indian government is in the midst of implementing a crypto token specifically for financial transactions, stressing this as different to cryptocurrencies which are currently all banned in the country.

The tokens would differ specifically from cryptocurrencies as they would be a means of executing financial transactions exclusively in India.

The president of the Digital Lenders Association of India detailed that people would have to pay for these tokens with physical money should they be instituted, removing any impact on the country’s monetary policy.

 

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Venezuela Central Crypto Bank Next as IMF Predicts Million Percent Hyperinflation

It has been reported that there are new plans afoot for a Venezuelan central bank cryptocurrency along with a “superior court to the Supreme Court of Justice”.

According to Venezuela National Constituent Assembly member Hermann Escarra, the government is preparing to change the constitution to allow for the new crypto bank.

Venezuela’s crisis has steadily worsened as a result of lower oil prices, corruption, and a mismanaged socialist system, experiencing all but a total collapse of the economy, public services, security, and healthcare. In February, Venezuela launched its own Petro cryptocurrency backed by the country’s oil reserves.

Shopping bags made of the national currency the bolivar (VEF) are now being made in order to transport the notes, and a cup of coffee costs around VEF 2.2 million (around USD 0.50 at black market rates). For the same price, you can fill a small SUV with petrol almost 9,000 times.

The government continues to print money at an alarming rate with a current inflation rate of over 25,000%. The IMF predicts hyperinflation in Venezuela will reach a staggering one million per cent by the end of this year at the current rate, although this has been refuted as ludicrous by some economists. Economic meltdown and a recent assassination attempt on President Maduro just this weekend continue to paint a grim future for the South American oil-rich giant.

It is uncertain if a cryptocurrency-based central bank can do anything to help to at least alleviate some of the country’s extreme financial problems, particularly as the Petro has so far made little impact. It looks very much as though Venezuela has reached the “try anything” stage. Nonetheless, Escarra divulged the latest plan on Thursday:

“The National Constituent Assembly of Venezuela… is preparing a reform to the Constitution that would include a central bank for crypto-assets and a superior court to the Supreme Court of Justice… the draft changes to the Constitution will be presented in 35 days to the board of the Constituent Assembly.”

Maduro’s new “Bolivar Soberano” which is linked to the Petro is also ready for release on 20 August.

 

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Law Expert Advocates for Blockchain Use in Legal System

In an article for Lawyer Monthly, legal technology expert Paul Sachs advocated for the use of blockchain in the legal system and court proceedings, focusing on the UK in his discussion.

Sachs preceded his in-depth analysis of how blockchain could be utilized by stating a necessity for substance to be included in the growing discussion around the technology’s potential use cases; his analysis does just this.

Increased security

The most significant contribution of blockchain in law, as Sachs sees, it is the potential it has in transforming security and protecting evidence during a trial. He notes that the UK courts are currently going through a GBP 1 billion modernization effort partially focused on digitizing processes to increase work efficiency.

For courts to move away from paper, instituting new technology poses a risk, especially in that digital evidence can be altered. Sachs writes that particularly when there is a long time between the original submission and the court date, data must be provably fully compliant with security and business processes.

The solution: an immutable network of evidence that can be presented in a courtroom with no questions as to the authenticity of the data. These are the strongest features of blockchain by design.

Blockchain may be a public artifact, Sachs discusses, but legal evidence would not be revealed to the public, merely IDs and hash codes. He writes: ”In this way, it becomes an incorruptible digital ledger.” Each transaction of the evidence would be recorded on the blockchain, while the evidence itself would remain completely private.

This removes the opportunity for any wrongdoers to forge documents or edit photographs once the evidence has been uploaded to the blockchain. It also could be just the beginning of further innovation in the legal sector with security now guaranteed, as Sachs outlines.

Blockchain in the UK

Sachs’ vision for blockchain in the legal system may well be established given the UK Financial Conduct Authority’s (FCA) blockchain bullishness. It recently announced the establishment of a collaborative entity, the Global Financial Innovation Network (GFIN), to pursue innovations.

The network’s purpose is founded on the concept of establishing a global blockchain knowledge-sharing “sandbox”.

The Bank of England has also nearly finalized its Proof of Concept (PoC) project that is looking to establish a Real Time Gross Settlement (RTGS) service to meet new financial challenges emerging from the changing landscape.

 

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Bitcoin Is Better Than Gold

With the increasingly frequent comparisons of Bitcoin to gold, both as a store of value and a means of transferring value as a form of payment, traditional investors are now weighing in on the advantages of the world’s most popular cryptocurrency.

Is Bitcoin superior to gold for use as a currency?

The standard

Gold is perhaps the first decentralized currency, defined as a thing that has value but not under the centralized control of any governing body. It has been a sign of wealth and one of the most popular currencies for thousands of years. Physical gold holds its value since it can only be slowly mined over time, rather than printed rapidly like fiat.

Scarcity

Both assets are similar in that they are mined. However, Bitcoin has a limit on how much it can be mined – there will only be a maximum supply of 21 million Bitcoins. While gold has been determined to be finite, its total supply is unknown and only estimated. Should new, large deposits be suddenly discovered one day, its price would be significantly affected. Even a large unknown deposit on Earth can cause a big price crash.

Ease of transfer and security

Although physical gold is globally recognized as a currency, it is arduous to use for international commerce and finance. The metal is highly valued by the ounce, currently USD 1,200, but when dealing with large amounts of money, it can be very heavy. To send USD 1 billion to another country would require 52,000 pounds (approximately 0.25 tons) of gold. This would require a tremendous amount of effort and costs for customs, shipping and security. Additionally, it would take many days for gold to cross international borders, with multiple points of risk at en route.

Compare this to Bitcoin, where USD 1 billion can be digitally transferred anywhere in the world instantaneously, at a fee of only a few cents, with no additional costs. This digital transaction isn’t exposed to compliance with any jurisdiction’s regulations wither and cannot be intercepted nor hijacked once broadcast to the network.

Additionally, Bitcoin is cryptographically secure and has yet to be hacked despite years of attempts. Gold can be physically secured, but at great cost. Bitcoin’s cryptographic security can’t be compromised by even the most powerful supercomputer. Bitcoin transactions can be done instantly and leave no trace besides a note in the blockchain ledger that they occurred, while a gold transaction is very visible since it has to be moved physically, and a tremendous amount of traceable activity occurs when being moved.

Liquidity

Finally, gold has a huge paper market on COMEX, where its paper issuances can supposedly be redeemed for physical equivalents in a vault. However, COMEX’s vault contains less than 1% of the amount needed for all the paper gold issued. More is being printed too, saturating the market and keeping the price of the precious metal far lower than it should be. There is no equivalent situation for Bitcoin, since Bitcoins are highly liquid and there is no need for paper Bitcoin. The only reason paper gold exists is because its physical counterpart is difficult to transact.

Bitcoin can also be easily converted to local currency via peer-to-peer exchanges. Localbitcoins, for example, lists traders willing to buy or sell Bitcoin online at any one time in over 248 countries. It would be significantly more difficult to liquidate gold as it is likelier to find a buyer for Bitcoin than it is for the precious metal.

Ultimately, if fiat currency collapses it is clear that Bitcoin is in a much better position to become the top global currency, due to Bitcoin’s advantageous characteristics. This makes Bitcoin much more ideal for international commerce and finance than gold.

 

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Spanish Political Coalition Calls for Regulatory Body to Explore Crypto

Spanish coalition party Unidos Podemos is proposing a body to oversee the implementation of blockchain technology and crypto regulation in the country.

The coalition formed from left-wing parties Podemos, United Left, Equo and smaller parties has suggested the move in order to study the benefits of blockchain and implement its use in public administration in the country as well as explore its industrial potential.

Under the last administration, then Prime Minister Mariano Rajoy was suggesting possible tax breaks in order to create a more favorable environment for potential blockchain investment. Although Spain’s new prime minister Pedro Sánchez has promised to raise taxation on companies and increase public spending, so far, his views on new technologies such as blockchain and cryptocurrency still remain unclear.

Alberto Montero, the deputy of the political alliance, has presented the plan to Spain’s lower house as he sees blockchain significantly boosting security levels for social and economic transactions, suggesting that blockchain has “enormous potential”.

Regarding cryptocurrencies, the alliance is looking at examining current regulation for the use of digital currencies in Spain. Many of the major currencies are described by Podemos as being “located in a grey area of regulation”.

Podemos is not the only party looking at the adoption blockchain in government, as members of the current ruling party Partido Popular (People’s Party) had proposed a similar bill, although it now remains to be seen if this position is taken up by prime minister Sánchez as that proposal was made with Rajoy at the political helm before his departure in June of this year.

The current position is that Spanish Congress supports a draft regulatory framework for cryptocurrencies in theory. The Partido Popular’s original suggestion is that the state cooperates with the National Securities Market Commission (CNMV) and the Bank of Spain to coordinate its position on cryptocurrency in line with EU guidelines.

 

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10-Year Token Payment Delay Show Rare Developer Commitment

Beijing-based startup Nebulas has made the decision to postpone the initial coin offering (ICO) team’s token payments. They added an additional seven years to prove their determination for the company’s success, in a rare case of altruism for the lambasted industry.

The ICO team were initially planned to be paid through reserves of the startup’s native NAS token over three years following the offering before they agreed this could take place over the forthcoming decade instead.

Nebulas’s marketing director Becky Lu said that the decision was made so that the team could focus their efforts on the ”technical vision” of the company. She said that the decision was not easy as there were still many risks surrounding the blockchain industry and the future value of NAS, saying ”I think that shows our determination”.

Further to this commitment, a blog post from the company on Medium says it will publish the addresses of the undistributed NAS tokens. These make up 55% of the total number of tokens, with 45.5 million currently in circulation.

With the number of ICOs failing to provide the business that they have promised at a shamefully high level, Nebulas’s commitment stands out and sets a high standard for quality.

Its ICO raised USD 60 million in December last year through sales of NAS. The current NAS market cap stands at approximately USD 54.9 million.

The Nebulas project

The Nebulas white paper describes the project as a “value-based blockchain operating system and search engine” with an objective of finding solutions to three key blockchain issues. These include measuring the value of blockchain applications, creating a prosperous and long-term ecosystem, and continuing the development of an existing blockchain.

It harnesses a measurement system titled the Nebulas Rank, developed to find real values using “liquidity, speed, width, and depth of capital”.

 

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