Incidence of Coronavirus on Cryptocurrency Market on a Global Scale

Alexander Salazar
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Incidence of Coronavirus on Cryptocurrency Market on a Global Scale

Professionals are concerned that the coronavirus may disrupt the flow of business. Analysts believe that the virus could lead to a boom in the retail trade of cryptocurrencies.

Jason Wu, CEO and Founder of non-custodial crypto lender DeFiner, had to cancel dozens of meetings with its cryptocurrency customers in China after the onset of the coronavirus epidemic in January. The executive said that he had planned a tour to visit ten cities in the country, but nobody seemed to want to attend any meetings on cryptocurrencies or other subjects due to the virus.

Given its status as a cryptocurrency investment center, China has the largest number of exchanges in the Asia-Pacific region, which has 40% of the top 50 exchanges worldwide according to the research company Chainalysis. Professionals like Wu are worried about the possible disruption of business due to the coronavirus and the impact it can have on prices.

According to Wu, the cryptocurrency market could get hit a second time on the occasion of the Chinese New Year, since many Chinese cryptocurrency providers tend to charge in cryptocurrencies just before the festivities and reinvest in the market in the next year. As the outbreak of the virus occurred right at the end of the cycle, there is no certainty of how much money will return to the market after the festivities, or at which point.

Coronavirus Obscures Market Landscape

Cryptocurrency investors are a considerable force in the market, but it is statistically difficult to conclude a correlation between the outbreak of the coronavirus and the movements in the cryptocurrency market, said Lingxiao Yang, chief technology officer at Trade Terminal, a San Francisco-based investment fund.

Yang indicated some characteristics of China’s cryptocurrency market investors that could make coronavirus an influential factor on the market. Most investors in Asia are usually retail investors and, historically, they become more active around big festivities such as the Chinese New Year, said Yang.

It is also difficult to predict the market price since digital assets such as Bitcoin have a unique set of return controllers, said Kostya Etus, a wallet manager at the investment management company CLS Investments.

According to Etus, Bitcoin is not seen as a valuable security asset such as gold or cash and does not have much in common with risk assets such as stocks. Most assets are specifically from risk or risk-free environments, where price reactions can be predicted for certain events, but Bitcoin does not belong to this group of assets.

Fluid Situation in Financial Markets

Since the cryptocurrency market is highly speculative, the coronavirus could have a significant impact on the world market, according to Samuel Lee, a financial advisor at the Chicago-based company SVRN Asset Management.

Lee said that the outbreak of the coronavirus is more likely to have a limited effect since it has already been seen how Bitcoin rose at the same time that the possibility of a war between Iran and the United States presented itself. However, the advisor believes that the coronavirus may not have that high level of geopolitical influence.

The Standard & Poor 500 index closed positive even after the WHO convened an emergency meeting on how to attack the outbreak of the coronavirus. However, the reference of the Hang Seng index from Hong Kong and the A-share index from Shanghai has experienced significant declines recently.

By Alexander Salazar

Act to License Cryptocurrency Firms in Singapore Comes into Effect

Maria Rodríguez
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Act to License Cryptocurrency Firms in Singapore Comes into Effect

The Monetary Authority of Singapore will regulate the operations with cryptocurrencies in that country to “enhance the regulatory framework for payment services.”

The legislation that seeks to regulate the operation of cryptocurrency firms in Singapore came into effect this January 28th.

This new Payment Services Act has the objective to regulate cryptocurrency payments and trading enterprises following some aspects of the regulatory regime that currently governs traditional payments services and requires them to hold a license.

On the other hand, there are other special laws that crypto operations must comply with. Some of them are the Financial Advisers Act, Insurance Act, Securities, and Futures Act, and the Trust Companies Act.

Through this new rule, crypto services are under the oversight of the Monetary Authority of Singapore. Among other details, the regulator announced this January 28th that the new framework is expected to “enhance the regulatory framework for payment services in Singapore, strengthen consumer protection, and promote confidence in the use of the payments”, as a press release explains.

Loo Siew Yee, who is the regulator’s Assistant Managing Director, said: “The Payment Services Act provides a forward-looking and flexible regulatory framework for the payments industry. The activity-based and risk-focused regulatory structure allows rules to be applied proportionately and to be robust to changing business models. The PS Act will facilitate growth and innovation while mitigating risk and fostering confidence in our payments landscape”.

Requirements of the License

According to the press release, the new regulations require cryptocurrency-related firms to apply for operating licenses such as a money-changing license, a standard payment institution license, and a major payment institution license.

Japanese cryptocurrency exchange firm Liquid and its London-based competitor Luno plan to apply to this act, according to a Bloomberg report. About this aspect, Liquid CEO, Mike Kayamori said: “We welcome the Act with open arms”.

Different countries are regulating the cryptocurrency space, which, as a consequence, is becoming increasingly regulated. Many jurisdictions are setting licensing requirements for those who want to participate in cryptocurrency businesses.

One very known case is the stringent BitLicense, introduced in the state of New York, which the regulator amended for the first time in nearly five years in December 2019. BitLicense is a business license for using cryptocurrencies with a lengthy list of terms and conditions.

Another example is Malta, a country that introduced licensing requirements for cryptocurrency businesses in July 2018 and received queries from 21 cryptocurrency exchanges seeking authorization to operate in the country, which has opened its doors to blockchain technology and all cryptocurrencies.

Besides, Japanese cryptocurrency exchanges are required to register with the Financial Services Agency since the introduction of that country’s Payment Services Act in April 2017, introducing a regulatory regime for virtual currency (VC) businesses and making Japan the first developed country to do so.

Finally, the intention of some of those governments is to avoid money laundering and also be sure that crypto users pay their taxes and do not try to affect other users.

By María Rodríguez

New Law in the US Could Generate Great Influence on Cryptocurrencies

Maria Rodríguez
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New Law in the US Could Generate Great Influence on Cryptocurrencies

The new bill presented at the United States Congress could impact business with cryptocurrencies.

Recently, it was presented to the United States Congress a bill that would generate a major impact on cryptocurrencies if approved. According to information related to the legal initiative, it was known that the project is called “Virtual Currency Tax Fairness Act of 2020”, and will have the strength and power to solve certain irregularities in payments made with virtual currencies and other operations.

Some local news media detail that the objective of the law is to exempt some taxes that are generated on capital gains and made with cryptocurrencies. This is due to the constant use of the asset, especially when it has a character of daily use.

Over the years, cryptocurrencies are having a more influential role in the world’s economies, it is for this reason that more and more countries are focusing on creating legislation according to the new economic technology.

The United States Congress has become one of the main authorities in discussing if implementing the law or not, although there are discrepancies about the total legalization of the law since some members of congress have listed Bitcoin as a threat. Such is the case of Brand Sherman, a congressman who in 2019 commented that the dollar could be reduced by the use of Bitcoin and that users should be cautious about the decisions made in regulatory matters.

Besides, many congressmen take into account other factors to consider cryptocurrencies as a threat, exposing that the irregularity of the Bitcoin value or its use in crime determines the complexity to regulate the asset.

However, they find the constant variable that more and more people use cryptocurrencies in global commerce, putting the central problem on the table when regulating its use: How should cryptocurrencies be controlled?

The Fiscal Approach to the Use of Cryptocurrencies

The current law that governs the United States of America, indicates that using Bitcoin for the payment of some good or service represents a sale of holdings by the cryptocurrency. This means that this is a taxable event, which leads to a tax obligation, which must lead to the payment of taxes.

The previous bill would have determined that there would be a tax exemption in operations with amounts that are less than $600. This would enable a collection process only on large businesses with these assets. But this new version of the law takes a different turn.

The Virtual Currency Tax Fairness Act of 2020, states that taxes generated by capital gains will only have one exception when the earnings received are the result of transactions exceeding $200. This would mainly help the use of cryptocurrencies in small operations, especially when there are digital platforms that offer support for micro-payments or purchases of small goods or services.

Although complete legislation on the use of these assets in the United States has not yet been determined, everything indicates that their regulation goes by scales. This could certainly benefit the crypto industry if the approval of the US Congress is achieved.

By María Rodríguez

Cambodia Prepares a Blockchain-Based Digital Currency

Maria Rodríguez
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Cambodia Prepares a Blockchain-Based Digital Currency

A total of 11 of the country’s 43 commercial banks support the project that will simplify payments in a cheaper and faster way.

Two years after reports of a Cambodian cryptocurrency, the country is set to launch a Central Bank Digital Currency (CBDC) payment system. The name of said digital asset will be “Project Bakong”.

Chea Serey, the General Director of the National Bank of Cambodia (NBC) announced that the central bank was developing “the national payment gateway for Cambodia”. This digital asset will work as a blockchain-based, peer-to-peer platform with its specially designed cryptocurrency.

Although Serey did not give a definite date for the launch of the cryptoactive, the blockchain-powered money transfer platform will be in the market this year.

The CBDC already has the support of 11 out of the country’s 43 commercial banks. According to Serey, more financial institutions will join the platform and make use of the CBDC once the project is conducted. This could mean that the project is finding receptivity, although it is not on yet.

About the Development

Bakong was designed by the Japanese blockchain company Soramitsu. Makoto Takemiya, CEO of that company, commented that CBDC “is simply a tokenized version of the USD and Riel fiat money in NBC’s reserves”.

This project was first trialed by NBC in July 2019. Now, the CBDC will work on a closed system supported by its banking members. One of these members is the Phnom Penh Commercial Bank (PPCBank), according to what President Shin Chang Moo told local media.

One of the benefits that Bakong offers is that it is cheaper compared to conventional payments, even more than transfers and credit or debit cards. That is what Chang Moo considers. His bank is rolling out the system at all branches.

“We are in the final stages of the deployment (…) It has taken a little longer than expected because we were ensuring that the system is as useful and convenient for the users as possible. We will offer the service as soon as it launches”, Chang Moo commented to local media.

Avoiding Speculation

Moo added that there is “zero possibility of speculation” using the CBDC so this would be another reason to choose this technology.

About how the country will handle this asset, it was explained that Cambodia’s central bank will maintain centralized control of the proposed CBDC.

Users will be able to use the “quasi-form” CBDC for everyday payments from their mobile devices. The initiative is expected to support and help introduce QR-based transactions throughout the country.

Soramitsu is currently working on implementing similar systems for other countries around the world. Chea Serey added that NBC plans to integrate a cross-border payments facility into the Bakong platform to expand the development.

“Bakong will play a central role in bringing all players in the payment space in Cambodia under the same platform, making it easy for end-users to pay each other regardless of the institutions they bank with”, she explained.

Shortly, Bakong will “create financially inclusive ecosystems that all the stakeholders in the industry can benefit from”, Mood assured.

By María Rodríguez

Blockchain Technology Is Finally Implemented at Santander Bank

Alexander Salazar
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Blockchain Technology Is Finally Implemented at Santander Bank

Santander Bank, one of the most important financial institutions worldwide, has announced its addition to the blockchain trend. It plans to launch new products that will allow encrypting transactions and improving the security of new investment options and asset transfer tools.

The bank is conducting operational tests with new products, which will launch on the market soon if all goes well. The new commercial strategies seek to use the security of this new technology to attract new customers and to retain current customers with services and products that offer greater certainty and transparency in transactions.

The financial institution itself announced through a press release its project on blockchain technology, without revealing the real strategy and new products that it will launch. In this way, it maintains its well-known confidentiality policy, which allows it to prevent other banks from anticipating and improving its planned commercial offers.

Santander Bank and Blockchain Technology

Santander Bank already has its unit dedicated exclusively to improving its products and services through blockchain technology. The head of this area, María Concepción de Monteverde, recently participated at a meeting held in Barcelona, ​​making big announcements regarding the financial institution.

The bank conducted different tests last year, of which one of the most prominent was the simulation of the issuance of a 20-million-euro bond. During this activity, transactions between sellers and buyers were simulated to analyze the behavior of this new practice using blockchain technology.

This pilot test was commented in detail at the aforementioned meeting, where it could be seen that there is a growing interest from financial institutions in adding this new technology to their platforms to streamline transactions and ensure their security through the different existing technology platforms.

Santander Continues Blockchain Technology Exploration

Despite its announcement to continue the tests regarding blockchain technology this year, Santander has launched a series of calls to apply for Santander Scholarships for MIT Leading Digital Transformation. Students are allowed to access 2,500 scholarships offered by the bank to improve their knowledge of technological sciences, focusing on the technological transformation offered by MIT, where one of the main axes is blockchain technology.

While the tests regarding blockchain technology continue at this financial institution, as well as at others worldwide, it is important to note that clear laws regarding blockchain technology and its commercial use in the most important countries have not yet been regulated.

This year, new regulations regarding new blockchain technology and its use may be debated in the main parliaments worldwide, but it is important to establish clear parameters. In that way, banks will finally be able to launch new blockchain-based products and services, since they will be legally supported to avoid any type of inconvenience.

New blockchain-based payment platforms have succeeded in the current market, which has led small Fintech companies dedicated to offering this type of service to be worth millions of dollars shortly after being launched. This situation has aroused the interest among leading banks, such as Santander, which have established entire departments to research and develop blockchain-based financial products and services.

By Alexander Salazar

Free Trade Zone in Argentina Could Use Blockchain ​​Technology in Public Administration

Maria Rodríguez
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Free Trade Zone in Argentina Could Use Blockchain ​​Technology in Public Administration

Clarisa Bottini says that using blockchain technology in public administration is the present and that it would greatly help facilitate processes that imply high costs and a lot of preparation time.

Clarisa Bottini, who is Manager of the ZFBBCR entity (Zona Franca Bahía Blanca Colonel Rosales), in Argentina, told local media that they are evaluating the implementation of blockchain technology in public administration since, in her opinion; this technology could bring many advantages for a free trade zone.

In the article published recently by local media, the official stressed that through the different applications of this technology many transparency and interoperability processes of the trade that takes place in the area could be improved.

“In our Free Zone we promote the use of new technologies such as the Internet of Things, Artificial Intelligence (AI) and blockchain as new opportunities to improve the efficiency, transparency, and interoperability of the international trade ecosystem”, said Bottini.

Bottini explained his administration must implement solutions that help incorporate new technologies and that, in turn, bring benefits such as the decrease in operating costs and the time needed to boost sales and purchases of products in the international market.

“It is a challenge for our Free Zone to incorporate disruptive technologies such as blockchain, which ensures lower costs and times to facilitate and promote our foreign trade, and tools such as the Authorized Economic Operator (AEO) and the Single Window for Foreign Trade (VUCE) must be part of the tools offered by our ports and the free zone”, he concluded.

The official took advantage of the opportunity to clarify that this step is important for the public administration of an area like this since blockchain technology facilitates processes that can take days and energizes commercial activity. He also argues that blockchain solutions help solve central problems such as “the data security of millions of people and the inviolability of citizenship databases.”

Just as Bottini detailed, the advantages that the implementation of this tool would bring to the public administration, the entity manager ZFBBCR said that it would also contribute a certain amount of value to the use of this technology in telematic electoral processes. This concludes by observing that some countries are already developing tests for these processes. He mentioned countries like Mexico, Peru, Colombia, and Costa Rica.

With strong enthusiasm, the official explained that the use of blockchain technology in public records will allow a new type of relationship between the inhabitants and the authorities. He used the example of developing Smart Contracts for use in property titles, public payments, certificates, and legal documents, among other things.

Bottini concluded by explaining that the Public Administration enhanced with the Blockchain will allow a more transparent and decentralized management for citizens and businesses.

“Blockchain is not the future, it is the present. Blockchain goes far beyond its use for Bitcoin and can be a true revolution in Public Administration”, he said.

By María Rodríguez

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