Čvn 10

AML: US Rules Would Force Declaration Of Crypto At Borders

· June 10, 2017 · 11:00 am

An update to US anti-money laundering (AML) legislation currently going through Congress would oblige travelers to declare digital currency at the border.


AML Rules Target $10k+ Crypto Holdings

S. 1241, a new bill sponsored by Senator Chuck Grassley, proposes adding the terms ‘digital currency’ and ‘prepaid access devices’ to existing list of financial items subject so such AML procedures.

It would also include reference to “any digital exchanger or tumbler of digital currency.”

Ostensibly designed to prevent trafficking of funds over $10,000 in value, the resulting powers given to border authorities could be nonetheless considerably more sweeping than at present.

United States Congress

While it is unclear how those arriving in the US would be screened for digital currency holdings, the Bill makes provision for a report to be commissioned ironing out the finer points.

The text states:

Not later than 18 months after the date of enactment of this Act, the Secretary of Homeland Security, in consultation with the Commissioner of U.S. Customs and Border Protection, shall submit to Congress a report—

(1) detailing a strategy to interdict and detect prepaid access devices, digital currencies, or other similar instruments, at border crossings and other ports of entry for the United States; and

(2) that includes an assessment of infrastructure needed to carry out the strategy detailed in paragraph […]

Coin Center ‘Reaching Out’ For Debate

The Bitcoin community is already reacting with caution to the legislation as it stands, with multiple questions being raised as to how lawmakers could enforce it in practice.

“We’re reaching out to the relevant offices,” Coin Center CEO Jerry Brito said in a Twitter response.

EU Focuses On Dark Web, ID Linking

The move is reminiscent of similar plans across the pond in the European Union regarding declaration of digital currency funds, this time at the point of spend.

While border controls are not currently on the table, legislators are keen to enforce similar AML controls on anyone holding any form of virtual funds.

Formally revealed in March, users could soon face obligatory linking of their personal identity to their wallet.

AML could force linking users' ID to their digital wallets

More recently, a joint “consortium” by the European Commission, INTERPOL and others will research ways in which illicit use of the dark web can be curbed. Participants promise that:

“The consortium will analyze legal and ethical requirements and define guidelines for storing and processing data, information, and knowledge involved in criminal investigations without compromising citizen privacy,” participants promise.

What do you think about the Bill being considered by Congress? Let us know in the comments below!


Images courtesy of Wikimedia, Shutterstock

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Dub 01

Japan’s New Bitcoin Law Could Do More Damage Than NY BitLicense

· April 1, 2017 · 9:00 am

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According to IndieSquare Co-founder Koji Higashi, new regulations in Japan, which will make Bitcoin an official form of payment (starting today April 1), may do more harm than good for the fledgling industry in the country.


Japan to Introduce Own ‘Bitlicense’

Following the disastrous demise of the infamous Japanese exchange, Mt. Gox and the arrest of its CEO Mark Karpelès, regulators in the country decided to introduce regulations for Bitcoin.

Bitcoinist_Mt. Gox

The regulatory framework has been in the works for over two years. The first bill was submitted to the Diet in Japan (the legislature consisting of the Lower and the Upper Houses) last March, and the Payment Services Act and the Act on Preventing of Transfer of Criminal Proceeds were amended in May 2016. Now, new drafts for detailed regulations and guidelines have been approved.

The new law, which is now in place starting today (April 1), is meant to protect consumers and to help them distinguish safe, i.e. approved exchanges, from fraudulent operations.

The law also recognizes approved cryptocurrencies as a legal method of payment in Japan, preventing users from investing in so-called scam coins, fake digital assets, and IOU tokens.

Although praised by western and Japanese media alike, the new regulatory framework may pose serious problems for the Japanese Bitcoin community, according to Koji Higashi, Co-Founder of IndieSquare and Community Director at the Counterparty Foundation.

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In a blog post, Higashi outlines the major issues with what he calls “Japan’s Bitlicense” due to the similarities found between the two, saying:

I’d actually argue that this law may turn out to be more damaging to the Japanese industry in the long run than what Bitlicense has been to NY.

Why It Could Be Worse Than NY’s

The Bitlicense introduced in New York has been widely perceived by the community as damaging for Bitcoin startups in the region due to the bureaucracy and high entry barriers for small startups. It resulted in several startups like ShapeShift and LocalBitcoins halting services for NY-based customers.

Now, Japan is doing the same, explains Higashi. “If you are not a fan of the excessive cost for legal and compliance fee for Bitcoin startups, however, the new law in Japan is certainly not exciting news for you,” he notes. 

bitlicense

Among others, the requirements involve the submission of a 3-year business plan, segregated fund management, KYC/AML requirements, segregated fund management, frequent reporting to authority, and external audits.

Some experts estimate that the costs involved with becoming a compliant exchange could be as high as $300,000-$500,000 USD. Moreover, additional fees and paperwork will also apply to companies beyond trading platforms and will affect P2P decentralized exchanges as well.

Higashi:

It’s hard to say whether the regulation in Japan is more costly than the Bitlicense but I can say it’s expensive enough to put serious financial pressure on startups and may force them to go out of business completely in some cases.

Another issue with the new regulatory framework is that it will require virtual currencies to be accepted into an official list of approved coins. Although this system may protect users from being scammed out of their savings, it may end up damaging the reputation of coins that don’t make it to the list, which will most likely be a conservative one at best.

Bitcoin in Japan

The new regulations may affect Bitcoin startups negatively but are also likely to push adoption forward and to create a sense of trust for new users in the virtual currency space. Japan is the fastest growing country in the Bitcoin market. For example, trading volume in Japan has recently surpassed that of China and the U.S.

bitcoinist_jpy_volume_09_feb

The country is experiencing growing interest in Bitcoin from users, investors, and merchants. Blockchain is also a technological focus point both for companies and the government. The Japanese community is also one of the biggest investors in crypto-related crowdfunding campaigns and Initial Coin Offerings, according to Higashi. 

[Note: This article was originally published on February 9, 2017. It has been updated as today (April 1) is the first day Japan’s new cryptocurrency law comes into effect.]

Will the new regulations drive companies away from Japan? Or will it usher a new age for cryptocurrency adoption in the country?


Images courtesy of CryptoCompare, Shutterstock, Counterparty.io

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Úno 13

VP Mike Pence’s New Chief Economist is a Bitcoin Supporter

· February 13, 2017 · 8:00 am

Bitcoin supporter Mark Calabria from the Cato Institute has been selected to serve as Chief Economist for Vice President Mike Pence.


Bitcoin-Supporter to Advise Mike Pence

The Vice President of the United States, Mike Pence, has selected a well-known libertarian and Bitcoin advocate, Mark Calabria, as his chief economist.

calabria

Having also previously worked for the Senate Banking Committee, Calabria is best known as the former director of financial regulation studies at the Cato Institute. He is also an outspoken advocate of free markets, housing reform and alternative currencies.

He expressed his support for Bitcoin on multiple occasions. In an interview, Calabria said:

While I’m an economist, not a tech guy, I’m very excited about Bitcoin, as I am about alternative currencies in general, and perhaps even more interested in the blockchain.

According to Jim Parrot, a senior adviser to Barack Obama’s National Economic Council, Calabria provides the Trump administration with “a voice around the table that will give them their philosophical true North.”

Moreover, Calabria even acknowledged in 2015 that “pretty much everyone at Cato, to varying degrees, is supportive of Bitcoin.” In fact, a few even own bitcoin, “as well as a few other alt-currencies.”

Bitcoin-Advocates Fill Administration

Mark Calabria is not the first Bitcoin advocate to join the ranks of the Trump administration. The president’s Bitcoin-friendly entourage is one of the main reasons why many Bitcoinists are optimistic about the Trump presidency.

Among these is Peter Thiel, co-founder of PayPal and initial financier of Facebook. Thiel has been part of Trump’s transitional team for over a year and has invested millions of dollars in Bitcoin businesses over the years.

Greater

Senator Mick Mulvaney, also known as ‘Bitcoin Congressman,’ has been chosen as Trump’s budget chief. Mulvaney has been actively promoting Bitcoin education in Washington for several years.

Most notable, however, is perhaps Balaji Srinivasan, an executive at venture capital firm Andreessen Horowitz and founder of the Bitcoin startup 21.co, who is contending to lead the Food and Drug Administration (FDA).

Bitcoin Gaining Ground in Washington D.C.

Furthermore, the U.S. Government is taking other steps to better understand Blockchain and its industry. This is the case with the new Congressional Blockchain Caucus, an initiative spearheaded by Rep. Jared Polis (D-Colo.) and David Schweikert (R-Ariz.).

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In 2015, Calabria expressed his concern with regards to Bitcoin regulations, saying:

I don’t think the Bitcoin community should be complacent about the current regulatory environment. The potential to get a lot worse is definitely there.

The Congressional Blockchain Caucus hopes to improve the approach to regulating cryptocurrencies through education about Bitcoin and blockchain technology. Hopefully, Calabria’s libertarian and laissez-faire approach can help lawmakers establish a sensible policy towards Bitcoin regulation in the near future.

Will the addition of Mark Calabria as Chief Economist help push Bitcoin adoption forward? Will it be good for the American Economy? Share your thoughts below!


Images courtesy of Shutterstock, Cato.org

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Úno 04

South Africa Latest to Consider Creating National Digital Currency

· February 4, 2017 · 8:00 am

One more nation, South Africa, is making the first step of migration to a fully digital economy, speaking about offering their own national digital currency based on blockchain technology.


South Africa Looks to Digital Currency

There are many advantages to nation-states, both stated and unspoken, to head in the direction of a national digital currency. The chief executive of the South African Reserve Bank (SARB) said that this would include more inclusion and economic reach, faster settlements and lower costs.

“If we go the route of issuing a digital currency, the objective would be to take advantage of emerging technologies so that we reap the benefits,” said Tim Masela, head of the National Payments System at the SARB in a statement.

We foresee that these benefits could be realized, which would be good for the transacting public. But of course, the risks have to be borne in mind as well and that’s what we want to balance.

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In Africa alone, digital currency use and national propagation seem to be a step ahead of the rest of the world’s governments. At the end of 2015, Tunisia announced that they had already successfully created a blockchain and a digital eDinar.

Senegal announced last year that they have struck a deal with a regional bank for their own national digital currency and this is expected to expand into neighbor nations as well. Nigeria has taken to Bitcoin’s digital currency in a big way over the last year.

“The proponents of the technology say ‘you don’t need to regulate it; it will self-regulate’. We don’t have an idea of how that will happen, we still need to reflect on this and need a good case [to show] that it can self-regulate. Otherwise, we believe that if it is not regulated and things go wrong, it could have a spillover effect on the financial systems,” he said.

Sweden is well along in removing cash from their society and going cashless is expected by the end of the decade. The Ukraine has declared their digital intentions recently. Australia, Canada, and even the United States have had discussions about their own versions of Bitcoin as well over the last couple of years. China is fast-tracking their own national Bitcoin system to prevent “capital flight,” when citizens move their money overseas due to a loss of value, domestically.

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One thing that we want to state very categorically is that, in working closely with the industry, we are very conscious about possible regulatory capture. We wouldn’t want to be seen as being captured, where the regulation would be dictated by participants in the market. We will guard our independence so that the regulation is for the good of the system and not necessarily informed by the incumbents’ positions.

Plenty of Downsides for Consumers

This eventuality of a world of national digital currencies is exciting but is ceded with potential unstated consumer downsides. Mass surveillance by banks and governments becomes a plug-and-play scenario. Economic capture is also assured, as one cannot divest themselves from the currency, as there is no way to actually withdraw funds from the system.

Cash is the last private form of payment, and that is being phased out in many nations, creating a future economic system where all transactions are monitored and all user’s finances are kept on a server, which can also be hacked.

According to the IMF, South Africa is the world’s 41st-largest economy, similar to Singapore and Columbia.

Will South Africa’s own national currency be a success? Share your thoughts below!


Images courtesy of Wikimedia, StudentBrands.co, Shutterstock

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