Bitcoin Struggles to Stay Above $10,000 On More Talk of Regulation: Week in Review Feb. 26February 27, 2018
In the past week, the price of bitcoin dipped back below the symbolic $10,000 mark, losing almost ten percent of its value week-on-week. Throughout most of 2018, the price of bitcoin – and the crypto markets as a whole – have been largely driven by statements from government officials in regards to future cryptocurrency regulations.
This week, Austrian Finance Minister Hartwig Loeger stated that the EU should adopt similar regulations for crypto assets as it does for gold and derivatives, which would include reporting all trades above €10,000 ($12,300) to the financial regulator and requiring all initial coin offerings to issue a “digital prospectus” similar as companies would for stock offerings.
The U.K. government also announced that it is looking at blockchain technology and cryptocurrencies to formulate future regulations in the country.
Talk of regulations has never been price-positive for cryptocurrencies. Hence, it will be difficult for bitcoin to move back towards its all-time high near $20,000 achieved in December 2017 until there is clarity as to how future regulations will shape up in key regions such as the U.S., U.K., South Korea, and the European Union.
This week’s contributions have been provided by Andrew O’ Malley, Ogwu Osaemezu Emmanuel, Pratik Makadiya, and Priyeshu Garg.
U.K Government Set to Create Favorable Regulations for Cryptocurrency
UK regulatory authorities have started looking into the impact of digital assets on the country’s economy, with the view to regulating the crypto ecosystem in a way that will be advantageous to all stakeholders.
According to Investment Week, the investigation will study the effect of virtual currencies and blockchain technology on financial institutions as well as other areas of the economy.
The inquiry will also carefully formulate guidelines that will protect businesses and consumers without “Stifling innovation.”
The exercise will also cross-examine the regulatory stance of the government and key authorities like the Financial Conduct Authority (FCA) and the Bank of England.
U.S. Government Arrest BitFunder Founder Jon Montroll
Jon Montroll, the owner of BitFunder, an obsolete Bitcoin-denominated stock exchange, was arrested by the United States government. A joint investigation from U.S. Securities and Exchange Commission (SEC) and Federal Bureau of Investigation (FBI), led to the arrest of Montroll, who also goes by the name “Ukyo.”
Federal prosecutors divulged charges against the defrauder and charged him for Perjury and Obstruction Of Justice on February 21, 2018. In a separate case, SEC filed a lawsuit against the company for operating an unlicensed securities exchange and swindling money from its customers.
Iran Government U-turns on Bitcoin, but Proposes National Cryptocurrency
In November 2017, reports indicated that the Iranian government was building infrastructure to embrace Bitcoin, which would aid in bypassing economic sanctions. However, the government has now debunked claims of giving bitcoin a legal status as reported on Iran Front Page, an independent news aggregation website.
To entirely deny claims of legalizing the pioneer digital currency, the Central Bank of the Islamic Republic of Iran, stated: “The wild fluctuations of the digital currencies along with competitive business activities underway via network marketing and pyramid scheme [tactics] have made the market of these currencies highly unreliable and risky.”
From this, it seems the Iranian government is on the reverse course from its initial plan to accept bitcoin. Additionally, Iran’s Central bank is exploring ways to “control and prevent digital currencies in Iran.”
Wyoming the Latest State to Introduce Crypto-related Bills
Wyoming is the latest state to introduce yet another bill related to these sectors, and they certainly won’t be the last.
Wyoming officials proposed a new tax bill to the state Senate on February 10, 2018, which proposed the introduction of an exemption on state property taxes for digital currencies. Alongside this proposition was a suggested date for when the tax benefit may be implemented.
The bill in question was numbered 111, and a group of senators introduced it. They were Chris Rothfuss, Tara Nethercott, and Ogden Driskill, as well as receiving support from three representatives – Jared Olsen, David Miller, and Tyler Lindholm. Apart from Senator Rothfuss, all of these people are Republicans.
South Korean Crypto Exchanges Earned $648 Million in 2017 that is Taxable
While the global markets for cryptocurrencies exploded in 2017, South Korea was one of the countries that saw a massive spike in trading volume as crypto-mania took over. There were often high premiums being paid by traders on South Korean exchanges as the high levels of demand were placing demands on the liquidity of even the major cryptos.
The surge of cryptocurrency trading, of course, proved to be lucrative for the South Korean exchanges who were earning their trading fees from these users. It has now been reported that there was about $648 million in taxable revenue made by these exchanges in 2017.
The profits gained by the exchanges showcases how lucrative this business can be, as well as being an excellent source of tax revenue for the South Korean government. There has been a crackdown as of late by the authorities in the region to ensure that the exchanges are meeting their tax obligations.
South Korean Financial Regulator and the Government Pledge to Support Cryptocurrency Transactions
On February 20, 2018, the chief of South Korea’s Financial Supervisory Services (FSS), Choe Heung-sik, noted that Korea’s cryptocurrency space now has the support of the government. Heung went on to say that authorities will have no issues with virtual currencies transactions that follow the latest guidelines created by the government and regulatory authorities.
In a meeting with major Korean cryptocurrency exchanges, Choe reiterated that the government “will support [cryptocurrency trading] if normal transactions are made.”
“Normal transactions” are those that meet the Know Your Customer (KYC) and Anti-Money Laundering (AML) standards. The official also hinted that the government would only continue to uplift the growth of the industry provided that it keeps within the boundaries laid out by regulators.
Since the preceding laws took effect, anonymous trading by cryptocurrency traders has been halted, and traders are required to use their real names associated with their digital currency exchange accounts, cryptocurrency wallets, and bank accounts.
For now, anonymous traders can continue trading virtual currency using their cryptocurrency holdings on virtual accounts. However, all cryptocurrency-to-fiat transactions (buying, selling, and withdrawals) must meet the new KYC standards.
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