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Golix Sues Zimbabwe Reserve Bank over “Illegal” Crypto Ban

Cryptocurrency exchange Golix has filed a lawsuit against the Reserve Bank of Zimbabwe, saying that the bank’s action in issuing a decree on 11 May 2018 banning all cryptocurrency activity was illegal.

Golix filed the lawsuit against the Reserve Bank in the High Court of Zimbabwe. Golix is one of three cryptocurrency exchanges that are active in Zimbabwe, the other two being Bitfinance and Styx24.

The lawsuit argues that the Reserve Bank of Zimbabwe has no jurisdiction to ban cryptocurrency, since that is equivalent to lawmaking which is something only the parliament can do. It argues, therefore, that the Reserve Bank of Zimbabwe is usurping parliament’s power with this action. The lawsuit also mentions that the Reserve Bank couldn’t even manage their own local currency, the ZWL, so they have no right in general to make decisions regarding any form of currency.

Zimbabwe is notorious for the hyperinflation which destroyed its currency, the Zimbabwean Dollar (ZWL), and the same Reserve Bank of Zimbabwe which is banning cryptocurrency was largely held responsible for the crisis.

Essentially, the bank was accused of printing money at will to pay all of its debts, including for funding a war in the Democratic Republic of the Congo. The inflation rates became so extreme that the Zimbabwe fiat currency lost all of its value almost overnight. In November 2008, inflation hit an unfathomable 79.6 billion % per month, and eventually, the ZWL was completely abandoned in 2015.

Foreign currency replaced the ZWL in Zimbabwe, with 90% of currency exchange activity in the country occurring via the USD. Even though USD is the most widely used currency in the country, it is very hard to obtain and usually has to be purchased on the black market illegally.

One new way to obtain USD was through a Bitcoin ATM that the Golix cryptocurrency exchange installed in the capital Harare in March of this year. It dispensed USD for Bitcoin, a rare way for Zimbabwean citizens to get USD outside the black market.

Although cryptocurrency is obviously a very positive development for Zimbabwean citizens who have had to live with hyperinflation, since it provides a store of value which the government cannot manipulate and facilitates obtaining stable and valuable fiat currencies like USD, the government of Zimbabwe is trying to ban it anyways via the action of the Reserve Bank.

The decree banning cryptocurrency states that all financial institutions and banks must halt all cryptocurrency-related activity within 60 days, and the order was thorough in banning any and all cryptocurrency activity even by individuals.


Unfortunately, some customers trying to sell Bitcoin and withdraw cash to their bank accounts are finding that it is no longer allowed, even though there is supposed to be a 60-day grace period from the issuance of the decree so that people can get their affairs in order.


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Singapore Central Bank to Revamp Regulations for Blockchain Industries

A recent consultation paper from the Monetary Authority of Singapore (MAS) makes proposals for existing regulations to be changed; this comes in light of emerging blockchain-related business practices on the city-state island.

The report comes shortly after the Singapore government and MAS made preparations to launch a pilot blockchain proof-of-concept project to conduct inter-bank payments utilizing blockchain technology.

Revamping old regulations

MAS, the central bank of Singapore has had regulations for recognized market operators (RMOs) in place since 2002, and it finds that’s the “single tier” regulatory framework fails to meet the demands of the “changing landscapes.”

“A multi-tier RMO regime with gradated requirements can better accommodate the emergence of new business models such as blockchain-based or peer-to-peer trading facilities, and lower the cost of entry for start-up operators,” writes MAS.

The proposition is to now expand the single tier into three separate tiers that cater to the needs of smaller-sized exchanges entering the market.

MAS has introduced the tiers within the RMO framework in the belief that it would allow for market operators to choose a regulatory tier that better matches “their risk profile and business model”.

Flexible regulations

Tier 1 addresses the requirements of “market operators that wish to target retail investors, but which are smaller in scope and have far less retail investor participation than traditional stock and derivatives exchanges”.  This tier is for operators that don’t pose systemic risks and will be allowed to serve retails investors should they meet additional retail investor protection requirements.

Tier 2 is aimed at market operators who already qualify under the present RMO regime but don’t pose system-wide risks and serve only non-retail investors.

Tier 3 applies to significantly smaller market operators in comparison to established exchanges; operators in this tier will be subject to more flexible capital requirements, technology risk management, and outsourcing.

The MSA explains, “This new tier is designed to facilitate new entrants that develop solutions for wholesale market participants or market operators that have reached the end of their sandbox tenure and are commercially viable, but whose businesses are not able to meet the requirements of the existing RMO regime.”

Earlier this year the MAS chief fintech officer Sopnendu Mohanty revealed his concerns regarding the speculative cryptocurrency investors. He is of the belief that it is negatively impacting on experimentation with blockchain technology.

In an interview with CNBC, Sopnendu said: “But the speculators and the people who are making money out of this speculation of the cryptocurrency (market) are perhaps negatively impacting the whole experimentation of cryptocurrency.”

Furthermore, the MAS is interestingly working on its own blockchain initiative called Project Ubin. which was announced in late 2016 and will contribute to Singapore’s overall advances toward understanding how to regulate cryptocurrencies and blockchain technologies.


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China Central TV Warns Off Bitcoin Investors

China Central TV has run a news story warning the Chinese public and investors about the related pitfalls of cryptocurrency, China Banking News reports.

The report, entitled ‘Blockchain Cryptocurrency Bubble Accumulates’ (区块链”代币泡沫堆积), is one of many following last years ban in China on ICOs. This report cites an investor named Yang Chao as an example of the misfortunes of crypto investing, reportedly losing tens of millions of Chinese yuan (CNY) this year on his Bitcoin investments, claiming:

“In actuality, this isn’t the first time that Yang Chao has speculated on coins… Prior to the banning of ICOs and cryptocurrency trading platforms, his losses already exceeded 2 million yuan.”

Yang Chao is reported to have suggested that the recent ICO ban has done nothing to dampen the enthusiasm of Chinese investors, and his personal reasons for continuing to invest is a result of cryptocurrencies large fluctuations, adding that investors like himself a relatively few in number.

Although Yang Chao’s continued diligence may be unusual in light of Bitcoin’s fluctuating price range this year, the report goes on to say that due to the “mad increase” in the price of Bitcoin, exceeding CNY 120,000 since its creation, “the allure of becoming rich overnight has attracted a large volume of investors”.

China banned both ICOs and cryptocurrency exchanges in September 2017, but trading by individuals has remained a murky area with many businessmen relocating to Hong Kong or Japan while still raising funds from mainland investors.

China Central TV ended its news feature with a final warning to would be investors, commenting: “The lack of openness, the lack of transparency, the instability of prices, as well as the expectation amongst investors that they will become rich overnight, has magnified risk on the virtual currency market.”

Cryptocurrencies have battled to find a place within China’s massive financial structure due to persistent government and state media pressure, but the same can’t be said for blockchain. Numerous projects are underway such as Shenzhen City government’s latest project investing CNY 500 million (USD 80 million) in blockchain startups.


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Spain Opens Legal Doors for Funds Investing in Crypto

Spain’s Comisión Nacional del Mercado de Valores (CNMV) or National Securities Market Commission, recently stated that investment funds could interact with Bitcoin.

The statement was within a Q&A document for fintech companies, with one of the questions asking if a fund registered by CNMV could directly invest in cryptocurrencies. The answer by the CNMV was:

“This type of funds would have a legal place in Law 22/2014, which regulates, in addition to venture capital entities, other collective investment entities of closed type and their management entities.”

Law 22/2014 funds for Spain fall into three categories: closed-end collective investment entities (EICC), closed-end investment funds (FICC), and closed-end investment companies (SICC).

All three funds must have their own conditions and requirements in order for a fund to be classified as such and, therefore, to be able to invest in cryptocurrency. And while the CMNV has made it legally possible for funds to delve into digital currencies, the possibility is only on paper. Separate issues regarding regulations and valuation of volatile assets like Bitcoin and Ethereum still exist. CMNV later states:

“The investment of FICC and SICC in cryptocurrencies raises a series of practical problems on how to comply with the regulations regarding the valuation of assets, the management of liquidity and the custody guarantee.”

The last condition eager funds should know is that this possibility may not be permanent. CMNV is only issuing this ruling until there is a European or international standard. So even if a fund satisfies all the right conditions, all of its hard work may be for naught at a moment’s notice.

Regardless, this is a massive step forward for cryptocurrencies being seen as legitimate assets in institutional trading.

Most regulated funds handling cryptocurrency do it indirectly, either through a price index, derivatives, or other market products. Few hold actual Bitcoin, Ethereum, or any other digital currency.

And while having regulated funds hold something reminiscent of a cryptocurrency, the positive implications for cryptocurrencies market and brand image are more pronounced when they’re holding the real thing.


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UK ‘Cryptoassets Task Force’ Begins on Positive Note

The UK government’s ‘Cryptoassets Task Force’ met for the first time on 21 May as part of the country’s plan to regulate the cryptocurrency and blockchain space, reported Crowdfund Insider.

One of the functions of the UK government’s task force will be to examine the risks of blockchain technology and mitigate these while examining the benefits of ledger technology in financial services. The Cryptoassets Task Force, consisting of the UK Treasury and the Financial Conduct Authority (FCA) has been set up for this purpose and is expected to report back in the summer with its findings in a roundtable scheduled for July, according to Bitcoin News.

The previously announced group involves the participation of the FCA, Bank of England (BoE), HM Treasury and other senior government officials. Some of the named participants include Katharine Braddick, director general of financial services at HM Treasury, Andrew Bailey, chief executive of the FCA, and Dave Ramsden, deputy governor of the BoE.

Bailey commented on the cryptocurrency status quo in the country saying that he was looking forward to working with both the BoE and the UK Treasury in order to develop policy.

Ramsden started on a positive note focussing on the what he saw as the potential benefits to the financial system on the UK economy:

“This task force will enable us to work closely with the Treasury and the FCA to explore how the opportunities posed by these technologies can be realized, while also tackling the risks arising from crypto assets.”

The task force’s analysis will not be limited to the central bank and regulatory bodies, but will welcome contributions from trade bodies, consumer groups and investors, in order to obtain a broad view of opinion from both government and public institutions.

The UK is known as a driving force in blockchain research and the spread of solutions is being utilized by numerous companies, as the country becomes one of the world’s most significant and dynamic fintech hubs. The government is keen to see further development of non-traditional innovation in the light of this recent progress.

BoE governor Mark Carney has moved over time from a position of claiming that cryptocurrency had “pretty much failed” as a form of money, to recent indications that he was not against innovation provided by cryptocurrencies, stating that regulation could potentially “serve the public better”.

British Conservative Member of Parliament (MP) Matt Hancock delivered a speech to the Law Society last month commenting that blockchain technology would have a “monumental impact” on people’s lives in the future.


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Crypto Tax Lifted as Poland Heeds Public Demand

Poland has reviewed its position on cryptocurrencies in the country, as part of a thorough analysis of the crypto space, announcing that it is to temporarily suspend tax collection for digital currencies, according to Cointelegraph.

In a similar move to the French government’s, who recently heavily reduced its taxation on sales of cryptocurrency, Poland’s ministry of finance has been forced to heed public demand for changes to cryptocurrency legislation.

The ministry had issued a statement prior the end of the Polish tax year, which ends at the end of April, informing consumers that cryptocurrency falls into two income tax brackets of 18% and 32%.

These announcements provoked immediate public response through a petition which gained over 5,000 signatures asking for tax exemption for crypto technology dealings. Although the government has responded positively to the petition, it has stated that “the obligation may arise to pay tax in an amount often exceeding the funds invested”.

The government announcement claimed, “Temporary abandonment of tax collection will allow for an in-depth analysis and preparation of system solutions regulating this economic space, including in the tax context.”

However, the Polish government continues to be wary of cryptocurrency and is continuing its information campaign to the public. The Financial Supervision Authority (KNF) has employed a company to conduct a social media campaign on its behalf which illustrates the dangers associated with cryptocurrencies, such as pyramid schemes and forex trading.

The anti-crypto stance was highlighted recently through a secretly-funded YouTube video about a man who lost all his money from crypto trading, as part of an ongoing collaboration between the Central Bank of Poland and the Polish government’s KNF.

Reports in January had revealed that a group of researchers at Lazarski University in Warsaw had created a digital currency called the dPLN, which could be linked to Poland’s fiat currency, the Polish zloty (PLN). The project was initiated by the Polish Blockchain Technology Accelerator (PATB), which operates under the patronage of the ministry of digitalization.

According to Prof Krzysztof Piech who was in charge of the project, he felt that “multiple countries will soon adopt the blockchain-based nationalized digital coins in 2018, and Poland’s dPLN can be paired with any currency of the world”.


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Thai Focus Group Hearing Clarifies ICO, Crypto Stance

The Security and Exchange Commission (SEC) of Thailand made several clarifications on cryptocurrency and blockchain when hosting a focus group meeting on cryptocurrency. Broadcast on 21 May on Facebook Live, the SEC discussed its present and future approaches to crypto-related enterprises and initial coin offerings (ICOs).

Clarity in conversation

As reported by local news outlet Siam Blockchain, the SEC clarified its role as being an overseer to ICO operations as well as cryptocurrency-related business such as exchanges, brokers and traders.

The focus group hearing also shed light on how ICOs should be allowed to raise funds, concluding that ICOs can only accept the national currency, Thai baht, and other digital currencies that are permitted by the SEC, those that “have enough liquidity and are not associated with money laundering”.

Furthermore, the SEC ICO Portal of Thailand will not be able to list international ICOs and nor will it involve itself with the ICOs of stable coins, which the national bank is to regulate. Projects that are operating an ICO must complete applications in 60 days and will be held to stringent Know-your-Customer (KYC) and Anti-Money Laundering (AML) standards.

The idea of an “approved ICO portal” came about in mid-May after the SEC held a public hearing for “drafted notifications and criteria” under an emergency decree on digital asset businesses which came into effect on 14 May.

SEC secretary-general Rapee Sucharitakul stated: “The legislation also aims to protect investors from risks of fraud and deception by dishonest persons, money laundering and exploitation of digital assets to facilitate illegal financial transactions, while ensuring regulatory clarity to facilitate legitimate uses of digital assets.”

Regardless of the feedback received from the blockchain community, the SEC set the legal conditions for digital tokens to only be offered by a company after a tight application process. While the new frameworks have the consumers best interests at heart, the community fears the move may be restrictive and cause Thailand to become an unattractive space for the industry.

Thai crypto classifications, taxation and regulation

Bitcoin News reported earlier in May that Thailand’s ministry of finance had proposed taxation and regulatory frameworks for cryptocurrencies; a 15% capital gains tax for digital asset operators and 7% VAT charge for all crypto-trades made in the country were considered to be too high for blockchain businesses and traders.

Later on in May, the SEC revealed that ICOs would not be allowed until fresh regulations were finalized in June; the decree required seller and operators to register assets to the SEC within 90 days with hefty fines and jail time for unauthorized transactions.

The recent moves display Thailand actively addressing the regulatory question that many countries are tackling; it is a remarkably positive step that in time could change and shift toward the desirable standards set by countries considered to be more “crypto-friendly”.


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Switzerland, Gibraltar, Malta Podium Finishers on Most Crypto-Friendly European List

Switzerland has come out on top in a BlockShow Europe study which ranks the most crypto-friendly European countries. Scored on their regulatory frameworks and blockchain related projects among other attributes, Gibraltar and Malta also ranked favorably.

Broad observations

In total, 48 European countries were examined for their existing regulations of initial coin offerings (ICOs) regulations, cryptocurrencies as a payment service and crypto taxation policies. Furthermore, the study took into consideration recent news stories and developments; this is due to ongoing advances in countries that do not yet regulate cryptocurrencies but have plans to do so.

With Gibraltar in second place and Malta third, Switzerland topped the charts ahead of the rest of the pack.

Home of the ‘Crypto Valley’

Switzerland is a crypto-friendly country thanks to leading cryptocurrency and blockchain projects such as the Ethereum Foundation and Shapeshift.

Backing this is the Crypto Valley Association, a government-supported and independent association that has pushed for favorable regulatory frameworks, which has attracted cryptocurrency-related projects from around the world. Blockchain startups and projects in Switzerland can benefit from low taxes, business-friendly regulations, and political stability.

Bitcoin News has recently reported a number of stories on Switzerland that contribute to the Swiss dominating the European charts. A national digital currency, aspirations to become a blockchain nation and heightened blockchain related business inquiries all display the incredible levels of blockchain innovation that can emerge from a crypto-positive country.

In second place, Gibraltar

Gibraltar has been showing great promise and is becoming another crypto-haven for blockchain projects. Innovative regulations and highly attractive business tax are critical factors as to why the British Overseas Territory ranked second in the study.

In late 2017, the Gibraltar Financial Services Commission (GFSC) made proposals for crypto-friendly regulations. Nicky Gomez, GFSC’s head of Risk and innovation told Reuters: “This is the first instance of a purpose-built legislative framework for businesses that use blockchain or distributed ledger technology.”

Additionally, Gibraltar reportedly had received “up to 200 applications” for ICOs ahead of the launch of its Gibraltar Blockchain Exchange (GBX); Bitcoin News has also previously reported that the GBX is moving boldly toward regulatory firsts.

Regarding taxation, Gibraltar is extraordinarily unrestrictive; there are no taxes on capital gains and entrepreneurs only have to pay income tax. It is little wonder that European and local blockchain startups are flocking to the country.

Third Place, Malta

The Mediterranean island of Malta is an interesting occupant of the third place position; proposals for new rules regarding cryptocurrency investment were made in late 2017 and in March of 2018, the Cabinet of Malta approved three bills that revolve around cryptocurrency and blockchain technologies. Furthermore, in April, Bitcoin News reported that the Prime Minister intended to have a “state-regulated cryptocurrency industry“.

It is also the new home to major exchange Binance, which will make Malta the territory with the most substantial cryptocurrency trading volume in the world. Binance announced the move to Malta in late March, likely in part due to Malta’s stance on taxation which allows international companies based on the island to pay as little as 5%.

To view the full list and more, follow this link.


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Regulations, Hacking Push Blockchain Provider To The Wall

Ethereum wallet and blockchain provider Parity has been forced to shut down its PICOPS platform from 24 May following new EU data protection rules and guidelines.

The EU General Data Protection Regulation (GDPR) replaces the Data Protection Directive 95/46/EC and was designed to harmonize data privacy laws across Europe, to protect and empower all EU citizens data privacy and to reshape the way organizations across the region approach data privacy,” states the EU’s GDPR portal.

However, according to MSN, the new law is causing certain problems, with LocalBitcoins disabling multiple accounts due to the new rulings. The GDPR laws are demanding, with a significant checklist of requirements, including those that relate to data processing principles and the limitation of storage. The significant challenges to blockchain mainly concern the immutability of transactions, replication, and encryption, including data processors and data controllers.

Swiss law firm PwC Legal recommends that platforms now scrutinize their blockchain-based solutions with regard to GDPR compliance to obtain a clear view of the legal risks they may encounter. It also explains why blockchain’s most significant feature; immutability, could be undermined by the new EU ruling:

“Transactions on a blockchain are immutable. It is not possible to delete information from a blockchain. This may contradict the GDPR’s right to erase / duty to delete personal data when a lawful ground for processing ceases to exist.”

Ethereum co-founder Vitalik Buterin commented on the news, calling it a sad development, particularly as PICOPS had facilitated many ICOs on the Ethereum ecosystem. Commenting on Twitter, he said, “A potentially very useful service in the Ethereum ecosystem discontinued due to GDPR issues.”

Jackson Palmer, the creator of Dogecoin, also criticized GDPR laws, despite saying that he thought it was “a step in the right direction from a data privacy perspective”.

“While I greatly respect the movement towards better data privacy and security laws, GDPR compliance is a large and unrealistic burden that small side-projects are simply under-equipped to manage (especially if being maintained by a single developer in their spare time),” commented Palmer.

Jutta Steiner, the CEO of Parity was critical of GDPR, arguing: “From a practitioner’s perspective, it sounds to me that it was drafted by trying to implement a certain perspective of how the world should be without taking into account how technology actually works.”

However, the company has commented that it will continue to work with regulators in order to ensure that the new rules don’t impact negatively on the industry. These are hard times for Parity, following its hacking last year, losing more than USD 300 millions worth of Ether.


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Tom Lee Explains Why His Post Consensus Bitcoin Prediction Went South

Fundstrat Global’s outspoken co-founder and cryptoanalyst Tom Lee, has explained to CNBC why he feels that his predictions of Bitcoin getting an injection from the last week’s New York Consensus Conference, didn’t actually come to fruition.

Although Tom Lee stands by his prediction of $25K by end of 2018 position, he suggests that the reasons the market, not only didn’t receive the suggested boost but in fact, lost value, was mainly due to the current lack of clarity in regulation and custodial announcements at the conference. Firstly, he explained why the bitcoin price should have gained from the Blockchain week of events in NYC:

“Given conferences like Consensus are chances for the community to gather in a centralized place and meet constituents new to the community (growth in attendance), it seems natural that the combination of ‘sanity check’ (all is OK and progress is happening) plus ‘new interest’ (incremental attendance) should strengthen the crypto-community’s conviction… And coupled with growth in incremental constituents, should have aided crypto-currency prices.”

Lee clearly wasn’t alone in expecting a bitcoin rally after the conference. Many were expecting a surge due to the popularity of the event and the number of attendees, particularly after months of uncertainty in the cryptocurrency market, and bitcoin’s recent signs of slow recovery. The total crypto market cap actually sank by $40 billion during the conference and bitcoin price declined by 3 percent.

Lee maintains that it wasn’t all negative, suggesting, “I think Consensus was a huge success. It is a great conference to bring a lot of people together from around the world. The quality of the people that were there was amazing.” He added:

“Bitcoin doesn’t have to go up every day to move from $8,000 to $25,000. The ten best days account for all the return of bitcoin in a year. If you didn’t own bitcoin for ten days each year, you lost 25 percent each year.”

The Fundstrat analyst suggested that crypto enthusiasts expect that regulation needs further careful clarification and discussion, and was disappointed at the lack of a current nuanced approach by regulators in this regard.

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