This year, regulators and institutions have become increasingly close to Bitcoin. The travel rule could include recipient data in non-custodial wallets.

The last year has been positive for cryptocurrencies as there are clearer regulatory schemes and more institutional adoption, but regulations could become stricter. Jacob Farber, general counsel at the R3 consortium and a partner at blockchain-focused law firm Ouroboros, put it that way.

According to Farber, the regulatory frameworks for cryptocurrencies and blockchains, in general, have been clearer. He claims that there are proposals concerning cryptocurrency regulatory frameworks in at least 12 jurisdictions around the world.

Given that advances in cryptocurrency regulations have occurred in 2020, the specialist highlights as positive this year. Besides, institutional investors have begun incorporating Bitcoin into their portfolios, central banks have advanced their plans for CBDCs, and traditional banks have ventured into cryptocurrency custody.

Farber argues that this scenario was highly unlikely in 2014 or 2015, especially the fact that a traditional bank offered cryptocurrency-based services.

“A greater number of individuals and institutions have entered the crypto space. Several countries, including China, are implementing digital currencies that central banks are going to manage. In July, the comptroller of the currency announced that traditional financial institutions like banks will be able to hold cryptocurrencies,” says Farber.

The environment looks favorable to cryptocurrencies, but Farber expresses his concern. Regulatory frameworks seem to be increasingly pushing towards the core of decentralized cryptocurrencies, according to the specialist.

Regulators have adapted their approach to the projects, depending on whether they are decentralized or not, in the United States and other jurisdictions. Farber says that the general trend has been to not regulate a project if it is decentralized, as has happened with Bitcoin and Ethereum.

“If an identifiable person or entity is behind a private blockchain project, that means that it is really centralized and clearly subject to regulation.” Farber says that the concern arises as the criterion of not regulating decentralized projects could be “under a bit of pressure.”

Farber cited the SEC’s 2017 decision on the DAO organization, which he viewed as security in contravention of the US Securities Act. “However, they determined that the DAO operators and promoters were involved in facilitating the sale of securities and that this agency had jurisdiction over that.”

The specialist also mentioned the update of the recommendations that the US Financial Crimes Enforcement Network (FinCEN) made on cryptocurrency regulations in May 2019. In it, the agency included decentralized applications as an object of regulation.

Something that has become clear in national jurisdictions around the world is the fact that cryptocurrency exchanges are subject to regulation, usually because they are the entrance and exit ramp, according to the Orouboros partner.

Additionally, Farber noted that regulators in different countries have adopted the so-called travel rule in the last year. “In its simplest form, this rule requires a money transmitter to report transactions that exceed a certain limit to the regulator.”

“In the United States, the interim comptroller of the currency has said that there will be more regulation on cryptocurrencies, which could further push the transactions currently excluded under the travel rule.”

Regulators could require information about the destination of a fund transfer from an account on a regulated exchange to a non-custodial wallet, even though it is from the same sender. In other words, they will demand the identification of the recipient of the funds. “Anyone who is using cryptocurrencies and connects with the traditional financial system will be subject to the KYC procedures.”

By Alexander Salazar

Public employees must disclose the number of digital assets that they own before June 2021. Cryptocurrency owners will face criminal penalties if they do not report their holdings.

Russia’s public officials must declare their holdings of Bitcoin and other cryptocurrencies by June 30^th, 2021. President Vladimir Putin recently ordered the measure under the decree and posted it on the nation’s official website.

The document stipulates that any official or person who aspires to a public position must disclose the amount of his or her digital assets, as well as that of his or her spouse, and children. The decree will enter into force on January 1^st, 2021.

Federal and regional government agencies, the Central Bank, government extra-budgetary funds, and state corporations should use the new decree as a guide for reporting their income, President Putin recommends.

The Legislative Assembly (or State Duma) approved a law on digital financial assets last July. The law introduces the concept of “cryptocurrencies”, but prohibits their use as a means of payment for goods and services throughout the country. The law will take effect next January.

The law defines digital assets as a set of electronic data contained in an information system, but not as a currency that is valid in Russia. It also does not consider them as a monetary unit of a foreign or international state, according to local media.

Russia Proposes Prison for Those Who Do Not Declare Their Bitcoin Holdings

In recent weeks, the Ministry of Finance proposed amendments to the Russian Penal Code. The agency proposed to force users to report to the tax authorities the numbert of cryptocurrencies that they receive, the transactions that they make with them, and the balances that they maintain in their digital asset wallets. The measure would be mandatory for all people who conduct transactions of more than RUB 600,000 (equivalent to USD 7,848) per year, according to local media RBC.

The Finance Ministry also proposed to imprison the owners of Bitcoin and other cryptocurrencies who do not inform the tax authorities about their transactions in digital assets. They would spend around three years in prison for not declaring their holdings at least twice every three years.

The Commission for Blockchain Technologies and Cryptoeconomics, which includes representatives from Russia’s digital asset industry, asked the Ministry of Finance to review the bills related to taxation on cryptocurrency holdings. They also asked for a reduction in fines and the elimination of criminal responsibility, adds the same local media.

Several exchanges operating in Russia, such as Binance, EXMO, CoinBene Russia, OKEx, and Bingbon, represent the Commission. Organizations of legal experts in the field of international regulation, as well as the Committee for Economic Policy, Industry, Innovative Development, and Entrepreneurship also constitute it.

Concerning the Central Bank of Russia, it is considering the issuance of a digital ruble, which would offer an additional form of money, on par with cash rubles. The financial institution published a report in which it argues that a digital currency would limit dependence on the US dollar and counteract the sanctions of the United States and the European Union against the Eurasian nation.

By Alexander Salazar

Bitcoin dominates operations in services such as Bitrefill, Xpay, and Cryptobuyer. Stablecoins have gained ground in services like Bitwage.

According to the trading volumes that service providers report, Bitcoin dominates cryptocurrency operations in Latin America. Representatives of some of those companies, which focus on the use of Bitcoin for everyday expenses, recently confirmed this.

That group of companies included Bitrefill, Xpay (Panda Group), Cryptobuyer, Bitwage, and Krypton Market. The dominance of Bitcoin is evident in all cases, with percentages varying between 70% and 85% of its operations.

The case of Bitrefill is prominent, not only because the percentage is above 80%. Part of its operations occurs in the second layer of Bitcoin, through the Lightning Network (LN).

The percentage of transactions on LN is just 3%. However, when adding these to those of Bitcoin on the main chain there is a total of 85% on the platform, which also accepts payments in Ether (ETH), Litecoin (LTC), and DASH.

Concerning Xpay, the payment gateway that Panda Group sponsors, the increase in operations with BTC has attracted attention. Typson Sánchez, CTO of Panda, explained that Bitcoin went from having 50% of operations last year to having 70% this year.

The situation has been the same in other cases. In the second place, behind Bitcoin, there is a struggle to dominate transactions. Users are divided among the abovementioned cryptocurrencies, as well as some stablecoins.

The latter is precisely the main alternative to BTC that Bitwage customers use to pay salaries with cryptocurrencies. In total, 15% of the operations on said platform are in stablecoins, according to Fabiano Dias, executive vice president of business development.

Bitcoin Adoption Accelerates with COVID-19 Pandemic

COVID-19 isolation measures advanced this year, at the same time that the adoption of cryptocurrencies increased. The representatives of these service providers confirmed this, based on the behavior of their customers.

While tourism fell, other industries compensated commercially for that drop, explained Mauro Peretti, executive of the Bitrefill gift card purchasing service. Video games in particular had significant growth, while electronic commerce remained. Also, the increase that occurred this year was very significant, compared to previous years, Peretti added.

The trading volumes of both Xpay and Bitwage decreased in March, which coincided with the beginning of the pandemic declaration. However, both companies recovered as 2020 progressed.

The isolation increased the demand for contactless payments and the increasing migration to the digital environment. For that reason, Jorge Farías, CEO of Cryptubuyer, believes that the pandemic helped accelerate the adoption of payments with cryptocurrencies in the region.

The executive said that the growth was exponential. He added that the process of [adoption of Bitcoin and other cryptocurrencies], which was going to take between 3 and 4 years, has been reduced to less than two years.

The rise of Cryptobuyer has been clear in recent months, particularly in Venezuela. Supermarket chains and franchises like Pizza Hut have recently started to accept Bitcoin and other cryptocurrencies using its points of sale.

By Alexander Salazar

The Mexican exchange platform has more than 1 million active users. Currently, it maintains operations in Mexico, Argentina, and Brazil.

In recent days, the Mexican exchange for Bitcoin and other cryptocurrencies, Bitso, announced that it had raised USD 62 million in a Series B investment round. Kaszek Ventures and QED Investors, who are participating for the first time in the Bitcoin ecosystem, provided the funds.

The capital that the exchange raised will allow its expansion in the Latin American market, they reported. At the moment, the startup is operating in Mexico, Argentina and Brazil. The total number of active users that Bitso manages in the region exceeds 1 million.

“This round will finance our global strategy to continue offering the Bitso platform in other Latin American countries, with a particular focus on Brazil. Our mission is to provide universal access to cryptocurrencies and make them useful in people’s lives,” said Daniel Vogel, CEO of Bitso.

The company’s board of directors will now include representatives from both investment funds. Coinbase and Pantera Capital, among other shareholders, took part in the financing round, which speaks highly of the Mexican startup.

Bitso Expands the Use of Bitcoin in Latin America

Bitso said that it has more than 95% of the share in the Mexican market and another significant percentage in the Argentine market, where multiple exchanges have already established themselves. However, there are no figures yet on its market penetration in Brazil. Concerning the latter case, the company specified that it will target its marketing strategy there.

It is not yet clear in which other countries of the region the Mexican exchange could start operations. In Latin America, there is a significant volume of transactions with Bitcoin in countries such as Venezuela, Colombia, and Chile. Since each case is particular, they receive attention in different ways: through local startups or international companies that offer support in the national fiat currencies of each country.

Bitso also mentioned the fact that the funds will serve to support its technical and engineering team. They seek to develop new products related to Bitcoin and other cryptocurrencies to meet the growing demand in the region.

In July 2019, Bitso became the first exchange in Latin America to receive a license to operate in Europe. At the time, the startup got permission to operate under Gibraltar’s regulatory framework.

It is not the first time that Bitso has announced the raising of funds from investors. In October 2019, the exchange received capital from Ripple to conduct the operations that currently exist in Argentina, and Brazil.

Regina Puca, Bitso’s public policy and regulation analyst, reported that the platform served to process 3.5% of all the remittances that entered Mexico last January.

By Alexander Salazar

The monthly trading volume on the top 15 exchanges increased by 114% on average in November. The November high was almost double the previous high of the year, which dates back to March.

In recent days, CryptoCompare published a report that describes the movements of the major exchanges in the ecosystem. At the same time that the price of Bitcoin maintained its bullish momentum and struggled to break its all-time high, these platforms reached all-time highs for trading volumes.

In November, the world’s top 15 Bitcoin exchanges moved more than USD 45 billion. That trading volume is nearly double the previous high this year, which occurred in mid-March, according to the report. This milestone coincided with the breaking of the USD 19,000 barrier for the price of Bitcoin, not seen since 2017.

The “top exchanges” that the analytics firm refers to are those that it classifies as the “top tier”. The 15 exchanges on this list include Binance, Coinbase, Kraken, Bitfinex, OKEx, and Huobi.

The increase in trading activity was not limited to a particular day. On average, the trading volumes of major exchanges in November increased by 114%, compared to the previous month. Among those markets, Bitfinex’s nearly 200% rise was the most prominent.

In contrast to the other exchanges for Bitcoin and other cryptocurrencies, the “top tier” increased their dominance of total trading volumes in November. During that month, this group came to represent 68% of the market volume, after having recorded 61% in October.

Major exchanges saw a clear increase, but global trading volume did not return to levels of earlier this year. For example, there were higher trading volumes between February and May. During that period, there was a majority share of less representative exchanges, in CryptoCompare’s opinion, according to a graph in their report.

Over USD 1 Billion Worth of Bitcoin Derivatives

In addition to trading volumes, the derivatives market reached a new all-time high in November. According to calculations by CryptoCompare, exchanges recorded a trading volume that exceeded USD 1.32 trillion last month.

That figure represents an increase of 108%, compared to October. The derivatives market accounted for 60% of the total trading volumes for Bitcoin and other cryptocurrencies, exceeding 53% from the previous month, the report highlights.

On November 26^th, derivatives volumes also reached an all-time high, with more than USD 93.3 billion.

The increase in the trading volumes of markets such as CME, Binance, BitMEX, and Deribit, among others, shows the growing institutional interest in Bitcoin. The entry of companies like MicroStrategy, and Square, in addition to the constant increases in Grayscale’s Bitcoin fund, are just a few examples.

Many analysts believe that this interest has been a determining factor for the increase in the price of Bitcoin, which remains above US 18,300, according to data from CoinMarketCap.

By Alexander Salazar

Anonymous sources have reported that Venezuela has already paid companies in its allied countries with Bitcoin. The Venezuelan Army has a Bitcoin mining farm in the city of Caracas.

To evade the trade sanctions that the United States has imposed on Venezuela, the Venezuelan government could be turning to Bitcoin to trade with its allied countries, among which are Turkey and Iran.

According to local media, anonymous sources from the Central Bank of Venezuela (BCV) have reported that the Venezuelan government has already paid companies from both countries, using Bitcoin as a means of commercial exchange.

No one knows yet what the abovementioned payments correspond to. However, it is public knowledge that the South American country imports food that comes from Turkey to incorporate it into its food subsidy system. Another more recent development has been the shortage of fuel, which has caused Iran to send gasoline to Venezuelan territory.

These same sources state that the Anti-Blockade Law, in force since mid-October, has served to strengthen the legal framework that makes these transactions with Bitcoin possible. Through this legal instrument, the Executive can create or use any financial mechanism, such as “crypto assets and instruments based on blockchain technology” to achieve its objectives.

When presenting the draft of this law, the president of Venezuela claimed that it would serve to “enhance the use of Petro and other Venezuelan and world cryptocurrencies in domestic and foreign trade. It would thus be possible to use all public, state, and private cryptocurrencies in the world.”

The authorities of the South American country have tried to find trading pairs to use Petro, but it has not yet been possible. According to the statements of the BCV sources, the government of Venezuela has found interest on the part of Iran and Turkey only with the use of Bitcoin.

Bitcoin Mining Farm in Fuerte Tiuna, Caracas

It is important to notice that in addition to the anonymity of the sources and the absence of official statements in this regard, it is logical that the Venezuelan government is resorting to payments with Bitcoin. That is true, especially if they have a mining farm for Bitcoin and other cryptocurrencies at their disposal in Fuerte Tiuna, a military complex located in Caracas, the capital of the South American country.

In that place, there is a “Center for the Production of Digital Assets” where cryptocurrency mining occurs to finance the government with assets that allow circumventing international sanctions.

The commander of the brigade in charge of that activity, General Lenin Herrera, said that they created that farm precisely to produce resources that no one can intervene when conducting international transactions.

The Venezuelan government has been exploring the possibility of adopting Bitcoin and other cryptocurrencies to access international trade for at least two years. Through this cryptocurrency adoption, Venezuela has bypassed the sanctions that weigh on its activities, particularly those from the United States Department of the Treasury.

By Alexander Salazar