South Korea’s National Tax Service (NTS) has requested $30 billion won ($28 million) in taxes from major cryptocurrency exchange Bithumb in a move which has gained positive feedback from the community.
Bithumb ‘Will Not Object’ To Tax Bill
Local media reported on June 8 that Bithumb, which posted revenues of 427 billion won ($397 million) in 2017, will pay the bill following an audit from South Korea’s Internal Revenue Service (IRS).
As a result of the audit, which occurred in April, the IRS also confirmed that investigators had not found “any illegal activities such as tax evasion.”
An NTS official said:
The IRS has conducted a tax investigation against Bithumb for the 2014 to 2017 business years. […] We understand that Bithumb has decided to pay the related taxes without any objection to the imposed tax amount.
Cryptocurrency commentators received the news warmly on social media, noting that Bithumb getting the all-clear from regulators marked a positive step forward for South Korea’s exchange industry.
The National Tax Services announced that after @BithumbOfficial ‚s audit they will be charged ~$30mil in taxes. Even better news? The IRS found no illegal activities such as tax evasion to have taken place. The investigation was completed mid April.
— Korean Cryptocurrency & Blockchain News (@BlockchainROK) June 8, 2018
South Korea Stabilizes Crypto
Earlier this year, the government moved to clamp down on exchange operators, banning multiple accounts and forcing users to link their exchange account with their bank account. Foreign accounts were also halted, along with provisional warnings from authorities that exchanges would soon need to respond to tax obligations from the previous 2017-18 tax year.
The boon for Bithumb, meanwhile, comes as Seoul continues to consider reversing its previous ban on ICOs. A National Assembly committee dedicated to studying the ‘Fourth Industrial Revolution’ recommended during a meeting on May 29 that it plans to “establish a legal basis for cryptocurrency trading, including permission of ICOs.”
Also among its recommendations was making “improvements” to the “transparency” of the local cryptocurrency industry, along with “establishing a healthy trade order,” local news outlet Business Koreareported.
What do you think about Bithumb’s tax bill? Let us know in the comments section below.
China Minsheng Capital was the major force behind the funding round, Bitcoinist reported at the time, with Japan’s SBI Group, Korea Investment Partners and World Wide Invest also among the contributors.
Ex-Samsung Executive Leads eToro USA
For the US, which is notorious for its patchwork regulatory landscape regarding trading, the company will create offshoot eToro USA, led by ex-Samsung director of innovation strategy Guy Hirsch.
“We know that there is a strong demand in the U.S. for crypto and we are excited to be able to offer U.S. investors the opportunity to learn about and invest across multiple cryptocurrencies,” Hirsch commented.
It is not yet known how the company will navigate obstacles such as New York’s BitLicense scheme, which has seen multiple cryptocurrency operators deny service to its residents.
The wallet and exchange will see a gradual rollout “over the coming months,” the former “eventually” being available for both Android and iOS devices.
In addition to standard functions, the wallet will also contain as yet unspecified “other features.”
Will eToro’s expansion move boost cryptocurrency trading in the US? Share your thoughts below!
The financial services regulator for the southern African country of Zimbabwe – the Reserve Bank of Zimbabwe (RBZ) – has banned all financial services institutions in the country from all forms of cryptocurrency trading. The directive was shared in a circular on virtual currencies distributed to all institutions on Friday.
Cryptocurrency Trading Banned Through Banking Services
According to a news report, the circular which was signed by the RBZ registrar of banking institutions Norman Mataruka, the central bank has said that it is taking these measures to protect the public and safeguard the integrity, safety, and soundness of the country’s financial system.
All financial institutions in Zimbabwe which include commercial banks and mobile money service providers have been told to ensure to not use, trade, hold or transact in virtual currencies or provide banking services that would facilitate any individual or entity in dealing with or settling cryptocurrencies.
The ban outlined a swathe of services that include maintaining accounts, registering, trading, clearing, collateral arrangements, remittances, payment and settlement accounts, giving loans against tokens, accepting tokens as collateral, opening accounts of cryptocurrencies exchanges and moving money in accounts relating to cryptocurrency trading.
The RBZ has also directed banks to terminate any existing relationships with virtual currency exchanges in sixty days to liquidate existing account balances.
Zimbabwe does not recognize cryptocurrencies as legal tender and the country does not have a regulatory framework for virtual currencies or cryptocurrency trading. However, it has managed to effect a ban by directing financial institutions to keep their hands off all transaction and services related to cryptocurrencies.
Exercising Caution and Choking an Industry at the Same Time
The stance that has been taken by Zimbabwe’s central bank isn’t new. The cryptocurrencies space is still facing a lot of scrutiny and regulators in other markets have taken a cautious approach, pushed by concerns around money laundering, tax evasion, fraud and in cases like Zimbabwe, the externalization of foreign currency in response to the country’s foreign currency challenges.
Countries like India and China have explored this route before and in Africa, Kenya’s regulator has also taken a hard stance against cryptocurrencies. They are all meant to be measures against potential risks in a new space.
However, such moves also have a negative impact on legal service providers including entities that solve some problems that affect the economy.
In Zimbabwe, a number of businesses that have emerged in this space over the past few years that include the local cryptocurrency exchanges like Golix as well as outfits that have been using cryptocurrencies to facilitate remittances such as Bitmari will be affected by the directive.
Do you think that regulators that put restrictions on cryptocurrency activities because of the risk of crimes like money laundering are justified? Please let us know in the comments below.
Coinmarketcap (CMC) has released its first-ever mobile app. The cryptocurrency price and market capitalization website announced the release of the app on April 30. The launch of the app is part of CMC’s five-year anniversary celebration.
The Coinmarketcap App for iPhones
The new CMC mobile app is compatible with the iOS smartphone platform. It enables users to view crypto price, market cap and 24-hour price changes on the go. App users can select from a variety of filter options to see all tokens, the top 100 tokens or their watchlist tokens.
Watchlist tokens are specific cryptos that the users have selected. To include a cryptocurrency in the watchlist, users have to push the star-shaped icon on the token page. The app also uses tokens so people can record save and sync their watchlist between different devices.
The new app doesn’t appear to bring any novel feature. Many crypto traders already use different platforms to monitor price movements in the market.
Commenting on this observation, a spokesperson for CMC told TechCrunch that:
Are there other places where people can get the data and do we have copycats? Sure. However, we are the only site that you can guarantee is sourcing, gathering, and verifying the data itself, and we pride ourselves on being the first and best regarded within the industry.
Five Years in the Business
May 1, 2018, made it five years of CMC being in the business. The platform has grown tremendously to become the 175th most visited website in the world, according to Alexa rankings. Also, more than 60 million people have visited the site so far in 2018. The CMC Twitter account currently has 425,000 followers.
Today we’re celebrating our 5th birthday with new features, a new app, and a whole new look. Read more on our blog! https://t.co/pQYRDYeopg
When CMC began, it was reportedly tracking seven cryptos and a few exchange platforms that amounted to about $1.6 billion in market cap. Presently, the website monitors over 1,600 cryptocurrencies and 200 exchange platforms that amount to more than $400 billion in market capitalization. In January 2018, a decision by the site to delist South Korean cryptocurrency exchange platforms caused a wave of massive panic selloffs.
Rebranding the Coinmarketcap Platform
The website has also made some changes to its brand image with a new logo, color scheme, and font. The new Coinmarketcap logo contains the CMC initials and a wavy design that depicts the volatile nature of the crypto market. CMC has also made changes to the website API. The website still plans to release a new commercial API that includes historical data.
A statement by CMC commenting on these latest developments said that:
We pay close attention to the needs of our users and always encourage people to leave us feedback. We are hard at work to bring you more features that will give you more control over your experience while exploring our data.
Do you think the Coinmarketcap mobile app will be as popular as the website? Please share your views in the comment section below.
OKEx, one of the largest exchanges in the world, has announced plans to move to the European island, Malta. This announcement came quickly after a similar announcement made by Binance, one of OKEx’s main competitors.
In an attempt to gain an understanding of the political climate around cryptocurrencies in Malta, OKEx’s executives met with the Maltese government. While many EU countries are taking a standoff-ish, if not downright hostile, approach to cryptocurrency, Malta – which aims to become a ‘global pioneer’ for cryptocurrency – has proven to be extremely welcoming to crypto and blockchain businesses.
Currently, OKEx only offers crypto to crypto trading along with a futures market. OKEx is currently based in Hong Kong, which has probably made it difficult for the exchange to obtain the required licenses to allow for a fiat gateway to be opened in collaboration with banking systems. However, some suspect that with the move to Malta, that the exchange will open fiat to crypto trading, which will become an essential part of any successful exchange in the near future.
OKEx CEO Chris Lee stated:
We look forward to working with the Malta government as it is forward thinking and shares many of our same values: the most important of which are protection of traders and the general public, compliance with Anti Money Laundering and Know Your Customer standards, and recognition of the innovation and importance of continued development in the Blockchain ecosystem.
Malta – a Global Pioneer for All Things Crypto
Since the rise of the cryptocurrency industry, Malta has been continually open to accepting companies who are looking for a bit more wiggle room with regard to regulations. As a result of this, Malta has established itself as the crypto and blockchain ‘go to’ locale as more startups and exchanges flock to the country.
Earlier in 2018, Malta’s government announced their plans for a new segment of the government called theDigital Innovation Authority which aims to provide full legitimacy for blockchain and cryptocurrency companies alike.
It is unlikely that Malta will be averse to any legitimate cryptocurrency or blockchain company in the future as their policy plans indicate that they are willing to keep cryptocurrency rules minimal.
OKEx Chief Risk Officer and Head of Government Relations noted:
Malta’s Virtual Financial Asset Act is a solid foundation for the industry and the government to work together in fostering the nascent blockchain/digital asset industry. More specifically, Malta’s sound risk-based approach will help cultivate a responsible, compliant, and healthy ecosystem.
Do you think that the cryptocurrency and related technology industry will flourish in Malta? If not, where else? Let us know in the comments!
The Seoul-based cryptocurrency exchange Youbit has seen its insurance claim denied by a South Korean insurance company following a high-profile cyber attack in December.
Youbit was hacked twice in 2017. The first cyber attack on the little-known exchange took place in April and saw 4000 BTC covertly liberated from Youbit’s stores. The exchange never fully recovered before it was hacked again in December, losing an estimated 17 percent of its total assets.
Youbit is operated by Yapian Corp. According to The Wall Street Journal, the operators filed a claim with DB Insurance Co. – one of South Korea’s largest property-and-casualty insurance companies. Notes the report, the policy “had taken effect just weeks before,” and “covered up to $2.8 million in damages for an annual premium of about $244,400.”
On Thursday, DB Insurance confirmed its rejection of Yapian’s claim in February. The company was seeking the maximum $2.8 million. No reason for the denial was provided.
In December, Bitcoinistreported on Youbit’s announcement that it has filed for bankruptcy following the second hack. Read the announcement:
I am very sorry to inform you again with the sad news. After the accident in April, we made every effort to strengthen security, recruit personnel, and reduce hot wallet storage… In the meantime, due to the hacking of our company at 4:35 in the morning, funds have been lost from your wallet.
Youbit claimed it would go through a formal bankruptcy procedure to minimize customer fallout, but that balances would still auto-adjust to a fraction of their former worth, with the aim to refund once formal proceedings are over. Said the exchange:
Through various measures such as the sale of cyber comprehensive insurance (3 billion [won]) and the operating rights of the company, the loss to members is expected to be lower than 17%… I will make every effort to minimize this.
DB Insurance’s denial of Yapian’s claim will certainly not help matters.
What do you think about DB Insurance’s denial of Yapian’s claim for $2.8 million in damages? Do you think that cyber attacks against cryptocurrency exchanges will continue to increase? Let us know in the comments below!
The global unbanked have been frozen out of most economic ecosystems, but Paxful is changing this through the selling of gift cards on their cryptocurrency exchange.
The rich and elite have a lot of options when it comes to economic decisions. They can invest in gold, stocks, bonds, precious gems, artwork, real estate, automobiles, and cryptocurrency. The only snag they face is the wait to convert the value of one asset into another, but such a problem is a minor one indeed. By contrast, the unbanked are essentially locked out of most economic ecosystems due to having to physically hand over fiat for goods and services. Even getting involved in cryptocurrency is an issue for the unbanked, but Paxful is offering an unexpected gateway: gift cards.
Even Cryptocurrency Has Obstacles for the Unbanked
The number of individuals with a bank account has increased over the last few years, but the problems facing the unbanked and underbanked still exist. In the United States alone, there are 10 million households that are either underbanked or unbanked. Worldwide, the total number of the unbanked is two billion souls. As such, they do not have access to a financial institution in any manner.
As one can imagine, this puts severe limitations on an individual’s economic freedom. All transactions have to be made face-to-face and in cash. This situation puts the unbanked at the mercy of those who would economically exploit them as they have no other options. What good is it to know that an item costs 60% less online if you’re unable to purchase anything online?
Cryptocurrency is viewed as an outlet of economic freedom for people, but even this has some obstacles for the unbanked to face. Almost every cryptocurrency exchange requires the use of a financial account (checking account, debit card, credit card, etc.) as well as identifying documents in order to use it. The unbanked do not have access to these items, which means they would normally be locked out of engaging in the cryptocurrency sphere. Fortunately, Paxful is working hard to make a difference by offering the unbanked hundreds of options to engage in the virtual currency sphere without the need of a bank account.
Gift Cards Offer Economic Access
The humble gift card that a person can buy at any small shop or gas station offers access to the global economy via cryptocurrency. Paxful hosts the fourth busiest Bitcoin wallet by volume, but their status is often ignored due to the low amount of their transactions. People aren’t normally sending hundreds or thousands of dollars per transaction on Paxful, but the p2p network embraces this reality as their goal is to offer an economic lifeline to the developing world.
The number one gift card used by the unbanked on Paxful is iTunes. Last week, a total of $6,635,517 was converted into cryptocurrency via iTunes gift cards, with an average transaction amount of $97. The second most traded card on the Paxful platform is the Amazon gift card. This card featured an average amount of $84 per transaction, and the total volume for the last week was almost $2.5 million. Rounding out the top five payment methods on Paxful are the eBay gift card, the Walmart gift card, and the Best Buy gift card.
Why does Paxful allow so many different gift cards to be used on their cryptocurrency exchange? The answer is that it fulfills their goal of offering economic choices and freedom to people throughout the world, especially in regions that often lack stable financial structures. An unbanked person can easily venture into the crypto sphere and take full advantage of the global economic system just by wandering into a corner store, buying a popular gift card, and then exchanging it on the Paxful platform.
Keeping Opportunity Alive
Gift cards are the doorways to a new economic reality for millions and millions of people across the globe. This is why Paxful works hard to keep them available for conversion on the platform, despite any difficulties they may bring. A particular case is the iTunes gift card. This card chews up a lot of the support staff’s time due to some issues, but Paxful refuses to drop it. As Ray Youssef, the co-founder of Paxful, notes:
We are the only p2p crypto service that deals with iTunes gift cards, why? All the others stopped supporting them because of the absolutely massive headache and near impossibility of proving proper account balances on iTunes gift cards. We have chosen to keep iTunes gift card support because it is still how the unbanked of Africa get their bitcoins. We refuse to abandon these unbanked users as the whole idea of bitcoin and Paxful is to help them.
In the end, it’s often the little things in life that make a big difference. Such is the case with the humble gift card. Paxful allows the selling of such cards on their platform as a means of allowing those with no access to the global financial network a way in. Allowing the unbanked to retain their dignity while allowing them to explore financial opportunities is a tremendous gift.
What do you think about Paxful enabling the unbanked to use gift cards to access the cryptocurrency market? Let us know in the comments below.
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Goldman Sachs-backed startup Circle made waves earlier this week when it acquired cryptocurrency exchange Poloniex. A couple of experts share their thoughts on the implications for the soon-to-be first compliant US crypto exchange and its customers.
Most Crypto Exchanges ‘Over-Regulate Themselves’
As the dust settles on Circle’s acquisition of Poloniex, U.S. regulators are keeping a close eye on KYC/AML compliance of cryptocurrency exchanges.
Joseph Weinberg, OECD Think Tank Special Advisor and Chairman of Shyft, a blockchain protocol that will create a new standard for the KYC/AML mandates, shared his comments with Bitcoinist. He states:
Most crypto exchanges that are processing fiat to crypto transactions are very compliant and, in some cases, even more so than banks. It all really depends on jurisdictions and the compliance policies given by countries to crypto exchanges.
For crypto exchanges, the challenge lies in how little formal guidelines there are from regulators. As a result, most of the industry has been doing self-compliance in absence of clear procedures. To err on the safe side, crypto exchanges over-regulate themselves. For example, most exchanges ask for passport verification in order to confirm users’ identities, whereas most banks only require government-issued IDs, such as drivers licenses.
Interestingly, Circle acquired the crypto exchange over a year after announcing it was shifting focus from Bitcoin to blockchain-based services. At the time, the company informed its Bitcoin customers that they can can cash out or transfer their balances to Coinbase, if they wished to continue to use the cryptocurrency.
So why did Circle decide to jump back into the crypto game?
It appears that Poloniex was struggling to keep up with the unexpected surge in new users as prices skyrocketed in the second half of 2017. Additionally, being based in the United States, the company also had to keep up with rising compliance costs as it rolled out its new KYC policies late last year.
In the past, Poloniex had a lot of issues with onboarding new users and properly building out its KYC process, mainly due to the large amounts of time it takes to verify users. Given the level of KYC that exchanges force themselves to go through, scaling compliance is almost a separate product that the exchange has to build out.
According to him, this is where Circle comes in with their KYC/AML expertise. He says:
Through this acquisition, Circle will deploy more people to help handle compliance—more employees to build and process KYC due diligence faster. This is the same type of issue traditional banks have when it comes to scaling. Compliance costs keep multiplying, and yet, they aren’t always found to be effective.
The SEC Is Watching
Meanwhile, another takeaway has been put forth by Nathaniel Popper, author of Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money.
Just got this slide from a confidential Circle presentation. It does more to explain Circle’s acquisition of Poloniex than anything I have seen today. pic.twitter.com/gRXxDeXvxl
Popper noted on Twitter that the SEC informally suggested to Circle that no enforcement action will occur if the Boston-based startup “cleans up Poloniex and turns it into a regulated exchange.” He adds:
The SEC seems to be saying here that it’s okay if you broke the rules, as long as you get acquired by a legitimate player before we crack down on you.
The question now seems to be whether the SEC will apply this same thinking to other virtual currency exchanges if they are acquired by large players.
In addition to facilitating compliance, Circle also announced that it will add fiat bridges and expand operation to other markets. Namely, the company promised to explore “USD, EUR, and GBP connectivity that Circle already brings to its compliant Pay, Trade, and Invest products.”
This would imply that the exchange must also become compliant and answer to regulators from across the pond, who are currently scratching their heads on how to approach cryptocurrencies without stifling innovation in the process.
Therefore, regulators in the U.S. and abroad could be playing the carrot and stick strategy by providing an incentive for crypto exchanges to get acquired by the large players, such as Goldman Sachs, before a potential crackdown. Admittedly, this could also be a clever way for traditional finance to not only appear innovative through association but also assimilate would-be future competitors.
If true, the strategy may be futile and usher in the Streisand effect to boot. As technology advances, so do new methods of exchanging cryptocurrency. Therefore, assimilating centralized exchanges like Poloniex could force users to migrate en masse to decentralized exchanges and further bolster their development.
Why do you believe Circle acquired Poloniex? Share your comments below!
Images courtesy of Shutterstock, Twitter/@nathanielpopper.
After fighting the IRS in court, popular digital currency marketplace Coinbase has been ordered by the Northern District of California to turn over more than 10,000 users’ personal information and trade history — but it could have been much worse.
The Beatles once sang:
If you drive a car, I’ll tax the street, If you try to sit, I’ll tax your seat. If you get too cold, I’ll tax the heat, If you take a walk, I’ll tax your feet.
Now, you can add “If you sell on Coinbase, I’ll tax your trades.”
According to Coinbase support, the popular cryptocurrency marketplace notified roughly 13,000 users concerning a summons from the Internal Revenue Service — the United States’ tax collection agency and official administers of Congress’ Internal Revenue Code.
As described in the United States District Court’s decision, the IRS served up a summons to the exchange regarding records of almost every single Coinbase user over a period of several years. The exchange, however, failed to comply — leading to the IRS narrowing its request to significantly fewer individuals with larger accounts. The Northern District of California both granted and denied parts of the United States of America’s Petition to Enforce, resulting in Coinbase’s being ordered to turn over more than 10,000 users’ information, on suspicion that they failed to pay federal tax on their cryptocurrency profits.
The information provided to the IRS by the cryptocurrency exchange includes users’ “taxpayer ID, name, birth date, address, and historical transaction records for certain higher-transacting customers during the 2013-2015 period.”
Coinbase Is on Your Side
Though nobody enjoys dealing with the IRS, it’s worth noting that Coinbase sought to protect its users’ information from the federal government’s tax collectors. As explained by the exchange:
In December 2016, the Internal Revenue Service issued a summons demanding that Coinbase produce a wide range of records relating to approximately 500,000 Coinbase customers. Coinbase fought this summons in court in an effort to protect its customers, and the industry as a whole, from unwarranted intrusions from the government.
After a long process, the court issued an order that represents a partial, but still significant, victory for Coinbase and its customers: the order requires Coinbase to produce only certain limited categories of information from the accounts of approximately 13,000 customers.
Have you received a notification from Coinbase in regards to your information being turned over to the IRS? Do you appreciate the exchange’s initial non-compliance? Let us know in the comments below!
Images courtesy of Wikipedia Commons, Coinbase, and Bitcoinist archives.
Following false fears of a Bitcoin ban in India, the FUD storm continues as China looks to completely eradicate cryptocurrency trading—but can they succeed?
Chinese FUD Strikes Again
It’s been a rough month for Bitcoin and the cryptocurrency market. The price of the dominant cryptocurrency has dropped below $8,000, and many altcoins have suffered even more significant losses, following a seemingly endless flood of FUD (Fear, Uncertainty, and Doubt) from mainstream media outlets.
Now, it appears theFUD of the dayis that China, already notoriously unfriendly towards cryptocurrency, is ready to block all access to cryptocurrency trading websites and initial coin offerings (ICOs) by utilizing its notorious Great Firewall of China.
The troublesome story comes primarily fromFinancial News, a publication affiliated with the People’s Bank of China (PBOC), which is quoted as stating:
To prevent financial risks, China will step up measures to remove any onshore or offshore platforms related to virtual currency trading or ICOs.
Since then, advertisements for cryptocurrencies have reportedly stopped appearing on both Baidu and Weibo—China’s largest search engine and social media platform, respectively.
Scaling the Wall
Though China continues to be an enemy of cryptocurrency, it remains to be seen whether or not their increased measures have a greater effect than their already-instituted domestic ban.
According totheSouth China Morning Post, the PBOC-affiliated article admitted that recent attempts to eradicate digital currencies by shutting down domestic exchanges haven’t worked as well as planned, quoting:
ICOs and virtual currency trading did not completely withdraw from China following the official ban … after the closure of the domestic virtual currency exchanges, many people turned to overseas platforms to continue participating in virtual currency transactions. Overseas transactions and regulatory evasion have resumed.
The Financial News’ article also spins the planned ban as being for the protection of the country’s citizens, stating:
Risks are still there, fuelled by illegal issuance, and even fraud and pyramid selling.
China has already banned ICOs and domestic cryptocurrency exchanges, but many eager investors inside the country have found workarounds. According to Donald Zhao, a Bitcoin trader who moved to Tokyo following China’s domestic ban, China’s new regulations might succeed in making it even harder for individuals to circumvent the law:
It is common for people to use VPNs [virtual private networks] to trade cryptocurrencies, as many exchange platforms relocated to Japan or Singapore … I think the new move literally means it would be even harder to circumvent the ban in China … people promoting related business programmes may be arrested.
Still, where there’s a will, there’s a way, and people who really want to trade cryptocurrencies will likely figure out how to do so in secret.
Though stricter regulations in China aren’t going to help the market recover any faster, it’s worth mentioning that other countries are set to benefit. According to Cathay Capital’s Ace Yang:
It’s positive news for Japan and Singapore, because demand for participating in trading is not diminishing and traders have got to go somewhere.
What do you think about China’s claim to increase measures against cryptocurrency trading? Do you think it will have any long-term effects, or is it just another case of FUD? Let us know in the comments below!
Images courtesy of Shutterstock, Bitcoinist archives.