Japan’s Government Is Evaluating the Creation of Its Cryptocurrency

Maria Rodríguez
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Japan’s Government Is Evaluating the Creation of Its Cryptocurrency

The highest financial institution in the Asian country issued a statement expressing that they will create a legal framework regarding the creation and issuance of their cryptocurrency.

After some research carried out by the Institute of Financial Investigations of the Central Bank of Japan, it was recently announced that they have developed a report that shows the deep interest of the government to create a legal framework according to the new times, which may regulate and control the emission of cryptocurrencies.

The government showed a deep interest in the complex issues that revolve around cryptocurrencies as well as its blockchain environment, which is why it was reported to be focused on the legal issues that must be resolved before the issuance of digital currency.

The publication of the report focusing on cryptocurrencies goes hand in hand with the interest of the Japanese government to reduce the use of cash and to adapt its financial system with innovative technologies, as well as accelerate the development of electronic banking in the country.

It is important to clarify that the report is contrary to the official opinion of the Central Bank, and that this time it will only work as a result of an investigation on these technological areas, which seeks to propose solutions to the problems in the electronic financial platform, related to the use of digital currencies and their regulation.

Currently, only the use of the official currency of Japan in cash mode is legally regulated and authorized, so this report clarifies that an update of its monetary legislation should be made.

Among the main problems that the report seeks to solve are the direct fight against money laundering, as well as the strengthening of its security and the verification of customer identities. These solutions can be used by the banks themselves for the improvement of electronic transactions and for the use of a possible digital currency issued by the country.

Japan Among the Countries Looking for Innovation in the Creation of Digital Coins

Japan has been making significant efforts to create a blockchain network which allows improving national and international financial transactions, to these efforts are added initiatives to create a digital currency that could be quickly accessible to customers in a new electronic banking system for the Asian country.

China has advanced in developing a blockchain system that can provide support for a cryptocurrency that can be used by various companies in the financial flow even with rural employees in some agricultural sectors.

In this regard, Changchun, who is the Director of the Digital Currency Research Institute of the Central Bank of China, said that it is absolutely necessary to continue with the research and development of this technology, due to the exponential increase in trade that has had the Asian country in the last decade.

These Asian countries are not the only ones that have involved blockchain technology in their financial system. Recently, Venezuela has sought to expand the “power” of its cryptocurrency and involve it much more in national banking, public processes, and in its natural commercial system.

By María Rodríguez

State Street: 38 % of Clients Will Invest in Crypto Next Year

Maria Rodríguez
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State Street: 38 % of Clients Will Invest in Crypto Next Year

Clients of the bank based in Boston are looking to invest in this new class of digital asset

Asset managers of the American financial services corporation State Street will put “more money into digital assets in 2020”, according to what the company recently announced.

Most of them are interested in digital currencies such as Bitcoin and other cryptoassets for adding it to their portfolios. However, none of the asset managers have pushed for the storage of crypto yet.

Almost 94% of State Street clients hold digital assets or similar products, such as Bitcoin futures. Also, about 38% of the users said they will have more bitcoins in 2020 and 45% said their allocation of bitcoin would stay the same. This is according to a study conducted by the bank through the quantitative analysis firm Oxford Economics.

In this sense, through a statement, Jay Biancamano, Managing Director of Digital Product Development and Innovation at State Street, considers that next year could be positive for the crypto market.

“We are talking to them less about ‘Can you custody this’ and we are more about how we can work together to make sure these changes are not disruptive to our business models”, Jay Biancamano explained during a bank-sponsored event held in New York.

Looking to Store Cryptoactives

He also commented that there will be a clearer idea of what the financial institution plans to do with these assets and their custody next year. Once, establishing that custody, State Street will be looking into fund administration, private placements, and the trading and issuance of this sector.

The bank is having changes. Now, Biancamano’s team focuses on working with clients and third parties around digital asset and tokenization proofs of concept.

“Being able to provide custody and servicing around digital assets is different than building our entire backend infrastructure and prioritizing our technology stack to support Hyperledger blockchain, the Managing Director said.

The team is working on the digital asset and not only in the infrastructure of the project. They go into the business without been worried about the number of DLT engineers to work with, despite having expertise on the staff needed.

“Honestly, institutions already have the ability to invest in these funds. VanEck is doing a private placement. WisdomTree announced the ability to invest on the Swiss exchange. I would like to see regulators become more comfortable with a bitcoin ETF, but I think the ability to invest in Bitcoin in a fund or directly is there”, Biancamano said.

The survey that revealed these results was based on a sample of 101 primarily US-based asset managers and owners. It showed that 62% of clients said tokenization will improve risks but 55% think it will enhance security, whilst 36% considers it will increase liquidity.

However, more than half of the firm’s clients (62%) say this technology will be integrated into their trading process in 2020. Only a half thinks the same about Artificial Intelligence (AI). The majority consider that Distributed Ledger Technology (DLT) will improve financing products.

By María Rodríguez

US Treasury Secretary is “Fine” with Libra As Long As It Shows Compliance with AML Regulations

Andres Chavez
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US Treasury Secretary is “Fine” with Libra As Long As It Shows Compliance with AML Regulations

The secretary of the United States Treasury Steven Mnuchin reportedly stated that he has no problems with Facebook launching the Libra stablecoin project, but that it needs to follow a set of financial rules in any case.

“I’m fine if Facebook wants to create a digital currency, but they need to be fully compliant” with financial secrecy and also with anti-money laundering regulations already in place. In no way can this be used for terrorist financing,” he observed as quoted by specialized publication Bloomberg.

The secretary offered his thoughts about the matter in Washington D.C., the country’s capital city, at a meeting of the House Financial Services Committee after being presented with a question by a legislator.

Will It Meet Its Announced Launch Date?

The Libra project, one in which Facebook is reportedly a partner as well as other prominent and worldwide recognized companies, was announced near the end of June. The social media giant said that it would be up and running sometime in the first half of next year.

However, the project has been met with a sizable opposition in several critical locations, including the United States and the European Union. It is not clear if it will be able to maintain its promise to launch before 2020’s Q3.

After the details of the Libra project and ecosystem were announced in the middle of the year, Mnuchin explained that he has met with Facebook officials at least a dozen times. One of the primary subjects of the conversation has been the regulatory concerns that seemingly half of the world has.

The fact that Facebook is viewed as a privacy-invasive service that has been involved in lawsuits and other legal issues over the years for its practices, legislators around the world are worried that the people’s digital currencies will not be safe.

The intention is for Libra to function as a stablecoin to provide payments within the Facebook platforms and ecosystems, which involves a series of services, apps, and other things. The project has a wallet named Calibra, and the Libra Association also announced that the coin will be pegged to a basket of national currencies.

Unlikely to Develop Digital Dollar

At the gathering, Mnuchin also stated that the United States, as a country, is not likely to come up with a cryptocurrency in the immediate future, per the Bloomberg’s report.

“[Federal Reserve Chair Jerome] Powell and I have discussed this – we both agree that shortly, in the next five years, we see no need for the Fed to issue a digital currency,” he explained to the people present in the venue.

At the hearing, legislators also asked about China’s intention to develop its digital yuan in the not-so-distant future. Also, the European Central Bank plans to do a similar thing if the conditions claim for it.

People asked about it because, in the past, Powell has indicated that the Fed was evaluating the option of developing a digital dollar.

By Andres Chavez

Thailand’s Immigration Police Arrest 24 Chinese People in Bitcoin Scam

Andres Chavez
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Thailand’s Immigration Police Arrest 24 Chinese People in Bitcoin Scam

Cryptocurrencies are a worldwide phenomenon that is slowly, but surely cementing its place as a store of value and as a payment method for an increasing number of goods, items, and services. It isn’t a far-fetched scenario that they can effectively replace fiat currencies in a handful of years.

They are fairly valuable, and that is why malicious people often use them as a means to entice investors and then rip them off, or target crypto asset in scams and hacking attacks. The increase in cryptocurrency trading there has been a natural surge in crypto-related criminal activity.

A Call Center

In the latest case, Thai police corps proceeded to arrest two dozens Chinese nationals for an alleged Bitcoin scam, according to a report from the Immigration Bureau of the Royal Thai Police. The crypto scam functioned through a call center in Rama III neighborhood of Bangkok, the capital city of Thailand.

Immigration officials and police officers not only arrested the 24 individuals but also took 61 laptops, 424 mobile phones and a considerable number of routers, per the announcement made this week.

Additionally, the Immigration Bureau also said that the operation’s leaders used the following modus operandi: they hired workers on a three-month deal and all expenses were paid plus a monthly wage of 5,000 yuan, the equivalent of $710. Upon arriving at the headquarters, the employees had to give their passports to the leader. Also, they overworked, as well, with shifts that started at 9:00 am and finished at 10 pm.

The criminals lured Chinese investors and made them buy Bitcoin, fudging rates to make money out of the whole operation.

Another Recent Case

According to local news hub Chiang Rai Times, it is not the first time that the Immigration Bureau makes a raid and takes down clandestine call centers run by Chinese nationals. In fact, shortly before the events took place, the police raided a stock speculation setup that was being administrated by Chinese teenagers.

In that case, it was reported that 54 minors were taken into custody for their role in the operation. They were taken at a Thai resort hotel for tricking investors in China into making investments in bogus stocks.

The Immigration Police, clearly very busy according to recent events, announced that those scammers wanted to make 5 million Thai baht (or approximately $165,000 according to the latest exchange rate) from investors. They gathered in “online chat rooms” were they tried to lure them.

However, the leader of that scheme is still free according to the local news, as the police is said to be hunting the organizer. This person, just like it happened in the first case mentioned above, has all the people’s passports in possession.

Thailand allows cryptocurrency trading, but there are specific regulations in place to standardize the activity. Issuing tokens and trading crypto in secondary markets is allowed but regulated under several decrees. The accepted pairs for crypto assets are the baht or other cryptocurrencies that have been given the green light by the Thai Securities and Exchange Commission.

By Andres Chavez

The Great Firewall of China Restricts Access to Etherscan.io

Andres Chavez
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The Great Firewall of China Restricts Access to Etherscan.io

The Chinese authorities’ censorship measures and practices are back in full scale, as the country’s famous “Great Firewall” proceeded to restrict access to one of the most widely used ethereum blockchain data sources at the start of the week.

The site in question is etherscan.io, which has been up and running for a long time as an ethereum block explorer. Netizens with IP addresses from mainland China were unable to access the site on Tuesday, according to multiple reports.

China’s Great Firewall refers to a series of practices and restrictions implemented by the government to control, censor, and regulate access to foreign internet sites and outlets. Some news pages from Western civilization, as well as social media networks, cannot be accessed in China. It has been said that the authorities don’t want their citizens to access those sites to protect national interests.

A Recent Development

The situation is fairly recent. Greatfire.org, a firm that gathers and monitors information about the sites currently restricted in mainland China, says that etherscan.io was accessible with no restrictions or “censorship detected” as recently as mid-August.

However, Greatfire.org’s scanning record states that etherscan.io has been 100 percent restricted since, at least, October 30th. The only way to access the site from China is using a Virtual Private Network, or VPN, and the use of these resources is also heavily restricted in the nation.

The reason why the etherscan.io block in China is newsworthy is that it is the first time that a blockchain explorer becomes an objective of an internet firewall. Other high-profile companies and Internet sites that are blocked are Google and all of its services, Facebook, Twitter, Reddit, and others.

“This is another instance of friction between the decentralized and immutable technology of blockchain and the tightly controlled, centralized government of China,” according to Matthew Graham, the CEO of Sino Global Capital, a famous blockchain investment company.

The executive of the mentioned firm also observed that “we should expect additional problems like these in the future as blockchain is integrated further into the Chinese economy and daily life.”

No Explanations Given

Of course, the Chinese government hasn’t yet offered an explanation about why the site has been blocked. However, in 2018 there were reports of crypto users encoded censored articles related to the #Metoo initiative and a farmaceutical scandal onto Ethereum transactions in a bid to overcome censorship.

Users shared the hash of those transactions on the WeChat platform while using etherscan.io, a situation that forced the instant messaging app to restrict them from viewing those etherscan.io URL’s from inside the app. The etherscan.io’s page stayed the same back then.

“Some have used this feature to post sensitive messages without the need to worry about the message being blocked or removed, or their identity being exposed. Anyone with a blockchain explorer like Etherscan can view these messages, so it is not surprising that this website has come in the crosshairs of internet censors,” per Graham.

By Andres Chavez

Kazakhstan Excludes Crypto Mining from Taxes

Andres Chavez
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Kazakhstan Excludes Crypto Mining from Taxes

Establishing a regulatory framework that goes in concordance with each country’s situation and reality remains one of the most important challenges for lawmakers and the crypto community in general. The latest nation state to provide an update on the matter is Kazakhstan.

The country’s legislators decided not to tax cryptocurrency mining until the resulting crypto assets from the activity have been exchanged for fiat currency, per a report from local business site Kursiv.

“Purely Technological Progress”

Quoting a legislative specialist who works in a blockchain association in the Asian country, the activity of crypto mining will not receive the same treatment as entrepreneurial performance. Instead, it will be viewed as “purely technological progress.”

The person in question is Madi Saken, who works as a legislative analyst at the National Association for the Development of the Blockchain and the Industry of Data Centers of the Republic of Kazakhstan (NABDC.) Saken was the one who broke the news at the “Blockchain Day” event in Kazakhstan.

The report also states that local legislators have already finished a draft law regarding the proper taxation of crypto assets. Right now, the bill is being reviewed by the presidential staff. After that, the document will be sent over to the Mazhilis, which is the lower house of the local Parliament. That is expected to happen this month.

It has been said that the law document that is currently proposed will officialize the legal status of mining cryptocurrencies, a worldwide spread activity that is now widespread in almost all every continent.

The official rules for crypto mining taxation will also be established in the proposed law. Saken explains that crypto and other digital assets won’t be able to be taxed since tax liabilities can apply just for the income made in what is called “real money,” which would be fiat currency.

Fiat Currency

As a result, the tax can only be exercised when the cryptocurrency or digital asset has been exchanged for fiat currency. Regarding that last point, Saken observed that “tax liabilities only emerge when there is an income in the form of real money, particularly when a cryptocurrency is exchanged for real money, which means it is sold on an exchange. Then, this income in the form of classic money will be subject to taxation.”

It is important to note; however, that the crypto mining will be considered entrepreneurial activity when a specific enterprise or firm provides services to use crypto mining hardware, according to Saken. Subsequently, mining farms will be subject to taxation by analogy with regular data centers.

It has become quite clear that Kazakhstan has fostered a positive environment for blockchain and cryptocurrencies to flourish. The country has a pro-crypto stance, recognizing its potential as well as that of the blockchain technology.

The Astana International Financial Center (AIFC) governor, which is the country’s primary financial hub, stated last year that innovating in the crypto and blockchain fields was a priority for the nation, but that all actors needed to regulate the activity.

By Andres Chavez

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