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New Regulations in Mexico Restrict Banking Services for Crypto Investors

Mexico’s Central Bank, the Bank of Mexico, has updated regulations for financial entities that restrict the services they can provide to regular cryptocurrency investors.

Financial entities are first required to identify all the customers they have involved in cryptocurrency trading, and then sort out those operating on a regular or professional basis. Those that fall into this category must only be given demand deposit accounts and are required to provide additional identification data.

Banking service providers are told to refrain from opening new accounts to regular or professional traders, and any funds transferred to crypto beneficiaries are required to undergo additional validation checks. Each financial entity must provide accessible policies and procedures to prevent any illicit proceeds from being transferred to or from crypto-related accounts.

The regulations go as far as to prohibit banks from making resources available to crypto clients on the same banking business day that funds are deposited; should the Bank of Mexico issue any last minute notice that the bank should intensify the monitoring of the clients.

The central bank said that measures have been taken in order to prevent money laundering or illicit financial activities in Mexico. However, banks have raised concerns over how the new policies will be a detriment to market efficiency. Cryptocurrency exchanges have also expressed their views that the new know-your-customer (KYC) guidelines combined with the regulations will slow the speed of transactions and increase the cost for the process.

All authorized cryptocurrency exchanges must also comply with an additional set of guidelines issued by the Bank of Mexico, under the FinTech law that sets terms and conditions relating to the custody and control of digital currency assets.

Financial entities have until September 2019 when the regulations will be in effect, to comply with the new rules.

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Number of Australian Crypto ‘Hodlers’ Tripled Since January

Results from a recent study show that the number of Australian citizens with some form of crypto asset holdings has tripled since the beginning of 2018.

The survey was conducted by cryptocurrency trading brokerage HiveEx, which found the number of Australians ‘hodling’ crypto assets to have increased from 5% in January to 13.5% when it was reviewed in August. The survey further revealed that 50% of these individuals had these crypto holdings for investment purposes, whereas 34% said it was due to FOMO, and 26% replied that they were saving for retirement. Over a third of the respondents said that they planned to use cryptocurrency to pay their tax bill, and 80% claimed that they would be happy to use it in their day to day spendings if it were easy to do as in the case of local fiat.

The responses from Australian citizens who did not own any cryptocurrency were not as positive. While 65% of them said this was because they did not understand it or how to use it, one in five said they thought it was either a scam or a bubble.

Growing crypto infrastructure in Australia

One of the country’s youngest self-made millionaires and entrepreneur Fred Schebesta does not think the year’s relatively poor market performance has deterred investors. As a co-founder of HiveEx, he said that interest in cryptocurrency is actually far higher now than during the bull run in the latter part of 2017.

“At its core, you’ve got to remember, just because the price of bitcoin has gone down and people feel angry, that doesn’t reduce the interest,” Schebesta said speaking to a local news outlet. He continued on to compare Bitcoin to gold, speculating that it will continue to be a valued resource, standing the test of time.

Similar to the internet in 1996, Schebesta believes interest levels are ”100% growing.” To help provide for the growing sector, he plans to build what he calls a ”crypto bank of Australia” and offer custodianship, cold storage, escrow and exchange services.

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South Africa Looking for Crypto Tax Dodgers

South Africa Revenue Service (SARS) commissioner Mark Kingon has said that the government department is investigating alternative methods to find and identify cryptocurrency investors who may be avoiding taxes.

Tax must be paid on crypto gains

Speaking at the Institute of Internal Auditors SA conference in Sandton late last week, Kingon reaffirmed the requirement for investors to pay taxes on cryptocurrency profits. He noted, however, that the department is facing difficulties when it comes to clearly identify each individual making trades due to the anonymous nature of exchanging cryptocurrencies on blockchain-based platforms.

While Kingon said that SARS do have particular ways of finding and identifying traders, there are no clear-cut ways of dealing with problems such as citizens using foreign bank accounts, as transactions may technically be taking place in foreign jurisdictions.

It is crucial to be able to identify each individual linked with transactions or wallets because not everybody trading is making a profit, he said, adding that this is the only portion required to be deducted. Normal income tax rules have recently been applied to cryptocurrencies in South Africa, with taxpayers expected to declare profits and losses with their annual tax bills.

The onus to declare cryptocurrency-related taxable income is held on the citizen at the end of the tax year, with failure to relay this leaving them subject to interest and penalties.

Non-compliant traders would be able to lodge queries with the SARS for further investigation.

”Assets of an intangible nature”

Cryptocurrency is not accepted as legal tender in South Africa, rather they are regarded as “assets of an intangible nature”. This means that they do not constitute as cash but rather, are valued by SARS as the amount of money they were purchased for and have accrued. They fall under the SARS definition of gross income.



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Vietnamese Crypto Mining Farm Found Abandoned, Investors Missing $35M

The CEO of Vietnam-based cryptocurrency mining farm Sky Mining has reportedly absconded, leaving investors USD 35 million short.

Investors found an abandoned premises

The Sky Mining business structure offered people the chance to buy shares in the cryptocurrency mining hardware and collect a percentage of the profits. It advertised these profits at 300% in one year for a one-time payment between USD 100 and USD 5,000, as well as private use of a mining device for 15 to 18 months.

When the investors were told they may pick up their mining equipment from the business’s registered location, they instead found empty, closed premises. Upon further investigation, Sky Mining’s Phu Nhuan District office was also found abandoned.

CEO, Le Minh Tam, has been AWOL since Thursday; 5,000 investors are faced with losing an estimated total of USD 35 million.

No good news for investors

Local media outlet Thanh Nien published a letter reportedly from Tam who claimed his mining venture was no longer profitable and he was forced to sell the equipment to cover his losses, then run in fear for his life. In a new addition to the saga, Saturday he posted a Telegram chat video where he claimed he would return and restore the business to profitability.

Deputy chairman of Sky Mining Le Minh Hieu attempted to control the chaos by forming a board of 16 participants but was forced to disperse the group when he and his family became subject to death threats from angry investors. Hieu said that he too was a victim of Tam’s scam and has reported the threats to the police.

He said that he assumed Tam had retreated to the US with the investors’ money, noting that Tam most likely succeeded in his endeavor because he was responsible for directly managing the goings on of the mining equipment.

As of Monday, 20 investors have signed a joint complaint with the police department, with one investor taking her complaint to court after allegedly loosing approximately USD 269,000. Unfortunately, Vo Do Thang, Director of the Athena Network Security Training Center told VNexpress they had next to no chance of seeing their money returned.


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Crypto Investor Apologizes for Earning $8 Million

John Lore, a lawyer who has managed over 30 cryptocurrency hedge funds, has shared his experience with an investor who approached him for his services while apologizing for turning his USD 600,000 into USD 8 million.

Embarrassed by crypto riches

The investor in question reportedly apologized for how much money he had made, even seeming embarrassed with his newfound cryptocurrency riches.

Speaking to Business Insider, Lore said: “Some of them make me feel bad about my own net worth and what I’ve done with my life. I even had a fund manager apologize for making so much money and said he’d donate a lot to charity.”

Lore went on, “They’d put in approximately USD 600,000 and they, in January, were sitting at over USD 8 million. My son took one look at that and decided he’s going to be a cryptocurrency manager.”

New York firm Capital Fund Law Group was founded by Lore, with the business having a history of specializing in hedge fund and asset management. Demand for his specialist services has been growing, with Lore telling Business Insider he has seen a huge spike in inquiries.

Managing crypto hedge funds in 2018

Lore noted that his clients come from a far more diverse background than that of traditional hedge funds, some being just amateur traders who experienced huge investment returns.

“There’s a lot of demand but I think right now there’s a lot of need for education,” Lore told Business Insider. “Never has there been a more diverse group of potential managers come to us. These aren’t just all former buy-side analysts at investment banks, they’re coming from all different aspects.”

In 2017, Bitcoin rose 1,000% over USD, and with a recent report suggesting the average ICO investor sees 82% profit. Lore has attributed this to his recent increase of clients. Despite a rocky cryptocurrency marketplace this year, Lore noted that the funds he advises are still seeing strong returns.

“I would say right now most fund managers are not looking to necessarily grow a large fund, they’re looking to grow a track record,” he said. “In 2017, the market’s the track record – anyone who’s in is doing great. No one would form a cryptocurrency fund without absolutely fantastic performance returns.”


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The Genesis Block – 2013 Mid-Year Bitcoin Review

The Genesis Block – 2013 Mid-Year Bitcoin Review:

This report from The Genesis Block (@TheGenesisBlock) covers the major events from the first half of 2013 and what to look out for in the months ahead.  Excerpts:

“The one outlier in the global bitcoin trading story so far in 2013 has been CNY, with a meteoric rise from near obscurity at 1% in January to more than 6% of global volume at the end of June. This was largely attributable to a brief documentary about bitcoin aired on state-run CCTV.”

“Volatility has presented a number of exceptional arbitrage opportunities for traders. As macro events and news from different exchanges create unique trading dynamics, the price differential across exchanges can become quite significant.”

“As a smallmarket, bitcoin is still heavily influenced by individual micro events, but traders are clearly paying attention to major macro headlines as well.”

“We are also aware of three VC-backed exchanges currently in development.”

“The initial ASICMiner IPO was in August 2012 [raised] over $100,000 for initial ASIC production. As of this writing, shares are trading at 4.25 BTC each, providing initial shareholders a 4,250% return in 8 months and netting IPO investors millions of dollars in gains.”

“The US has unquestionably been the least accommodating with regards to virtual currency regulations. Throughout the rest of the globe, government responses have ranged from deferment to outright encouragement so far this year.”

“We expect more and larger retail players to enter the space, helping the value of the market continue to grow steadily.”

 – (PDF)  (Flash-based PDF Viewer)

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