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Harvard Economist: Bitcoin’s Future Value More Likely to Be $100 Than $100K

Ex-chief economist of the IMF and Harvard University Professor of Economics and Public Policy Kenneth Rogoff has characterized Bitcoin as “a lottery ticket.”

The former chief economist of the International Monetary Fund (IMF) has characterized Bitcoin (BTC) as “a lottery ticket,” in an article for major United Kingdom daily broadsheet The Guardian Dec. 10.

Writing in the midst of the recent crypto market price collapse, current Harvard University Professor of Economics and Public Policy Kenneth Rogoff suggested that the “overwhelming sentiment” among crypto advocates is that the total “market capitalisation of cryptocurrencies could explode over the next five years, rising to $5-10 [trillion].”

The historic volatility of the emerging asset class, he conceded, indeed indicates that Bitcoin’s decline from its all-time highs of $20,000 to under $3,500 earlier today is “no reason to panic.”

Nonetheless, the economist dismissed the “crypto evangelist” view of Bitcoin as digital gold, calling it “nutty,” stating its long-term value is “more likely to be $100 than $100,000.” Rogoff argued that unlike physical gold, Bitcoin’s use is limited to transactions – making it purportedly more vulnerable to a bubble-like collapse. Additionally, the cryptocurrency’s energy-intensive verification process is “vastly less efficient” than systems that rely on “a trusted central authority like a central bank.”

Even if Bitcoin should not necessarily be “worth zero,” Rogoff argued that national governments and “regulators are gradually waking up to the fact that they cannot countenance large expensive-to-trace transaction technologies that facilitate tax evasion and criminal activity.”

This, in his view, places Bitcoin in a double bind, with implications for its future value: “take away near-anonymity and no one will want to use it; keep it and advanced-economy governments will not tolerate it.”

While the economist noted that governments worldwide may in due time “regulate and appropriate” the innovations of the new asset class –– as shown by the interest of multiple central banks in digital currency issuance –– he argued that coorinatinated global regulation would eventually seek to “stamp out privately constructed systems,” with only certain geopolitical outliers as a possible exception:

“The right way to think about cryptocurrency coins is as lottery tickets that pay off in a dystopian future where they are used in rogue and failed states, or perhaps in countries where citizens have already lost all semblance of privacy. It is no coincidence that dysfunctional Venezuela is the first issuer of a state-backed cryptocurrency (the “petro”).”

Rogoff’s argument that “disgruntled” nation states –– Cuba, Iran, Libya, North Korea, Somalia, Syria, and Russia –– are turning to cryptocurrencies under the burden of sanctions has been raised by multiple analysts previously. A report earlier this fall indicated that the government of North Korea was “laundering” crypto into fiat to evade U.S. sanctions. Iran is going one step further, exploring the creation of its own national cryptocurrency, according to a report this summer.

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South Korean National Assembly Holds Regulation Debate With Local Crypto Exchanges

Major Korean crypto exchanges have arranged a crypto regulation debate in the National Assembly, discussing Anti-Money Laundering policies and customer protection.

South Korea’s representative body, the National Assembly, has held a crypto regulation debate arranged by major local cryptocurrency exchanges, IT media oulet ZdNet Korea reports Monday, Dec. 10.

According to local business outlet Financial Leaders, the topics of the debate were proposed by seven crypto exchanges — Bithumb, CobitCoin, Coinone, Upbit, Gopax, Coinplug and Hanbitco.

The debate was attended both by crypto entrepreneurs and politicians, such as Democratic Party member Kim Byung-wook and representatives for the Liberty Korea and Bareunmirae parties, both with a significant number of seats in the National Assembly. The country’s financial watchdog, the Financial Services Commission (FSC), also sent a representative to the discussion.

ZDNet reports that Lee Seok-wu, CEO of Dunamu — a subsidiary of Kakao that operates Upbit — led a discussion that was attended by FSC members and the president of Gopax, among others. The discussion reportedly focused on Anti-Money Laundering (AML), customer protection and Know Your Customer (KYC) practices..

The debate in the National Assembly was preceded by the FSC’s decision to allow banks to service crypto exchanges, as soon as they have adequate AML safeguards and apply KYC checks.

At the same time, South Korea has a strict policy against Initial Coin Offerings (ICOs), issuing strong warnings against them back in 2017. However, local blockchain startup, Presto, is reportedly going to file a constitutional appeal over this policy.

According to a recent report prepared by CryptoCompare, the crypto industry in South Korea is consistently growing. In November Korean crypto exchanges overtook Maltese competitors by average daily trade volume. As per report, major Korean players produced over $1.4 billion daily.

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Chinese Central Bank Governor Defines STOs as ‘Illegal Financial Activity in China’

The governor of the Chinese central bank has stated during a summit that STOs are an “illegal financial activity in China.”

The People’s Bank of China (PBoC), the country’s central bank, highlighted the illegality of Security Token Offerings (STOs) in the country, English-language local news outlet South China Morning Post (SCMP) reports Dec. 9.

A deputy governor of China’s central bank, Pan Gongsheng, reportedly told a summit in Beijing “that ‘illegal’ financing activities through STOs and ICOs [Initial Coin Offerings]  were still rampant in the mainland despite a nationwide clean-up of the cryptocurrency market last year.”

Gongsheng also said that if the government had not stepped in, the chaotic crypto market could have hurt the overall financial stability in China.

The central bank official pointed out that “the STO business that has surfaced recently is still essentially an illegal financial activity in China.” Gongsheng also reiterated the stance that cryptocurrencies are associated with crime:

“Virtual money has become an accomplice to all kinds of illegal and criminal activities.”

According to the article, Gongsheng noted that “most of the financing operations conducted through ICOs in China were suspected of being illegal fundraising, pyramid sales schemes and other financial fraud.”

The article also mentions that the chief of the Bureau of Financial Work, Huo Xuewen, warned against STOs about a week ago. He said:

“I want to warn those who are promoting STO fundraising in Beijing. Don’t do it in Beijing. You will be kicked out if you do it.”

On the other hand, blockchain adoption — the tech behind most cryptocurrencies — has been relatively embraced in China. As Cointelegraph recently reported, a Chinese Internet Court has started using blockchain to protect the intellectual property of online writers.

The legal basis of this development can be assumed to be the Chinese Supreme Court’s ruling from September, which established that blockchain can legally authenticate evidence.

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South Korean Startup Presto to File Constitutional Appeal Against Local ICO Ban

A South Korean blockchain startup has announced its intention to file a constitutional appeal against the country’s ICO ban.

A South Korean blockchain startup, Presto, will reportedly file a constitutional appeal over the county’s ban on Initial Coin Offerings (ICOs), South Korean economic media outlet Sedaily reports Dec. 6.

Presto claims on its website that it provides a “total solution to development teams from website building to token issuing.” The startup was reportedly trying to run a Decentralized Autonomous Organization-based Initial Coin Offering (DAICO) in South Korea for the first time.

As Cointelegraph explained in a dedicated guide, DAICOs aim to improve the ICO fundraising method by integrating some features of Decentralized Autonomous Organizations (DAOs).

This fundraising method enables users to use smart contracts to vote for a refund of the funds if they stop trusting the developers or lose faith in the project, Sedaily notes.

As Cointelegraph reported, South Korea banned all ICOs in September last year. Sedaily reports that Presto’s CEO and founder, Kang Kyung-Won declared that the startup has “been hitting a snag as the government and the National Assembly have done nothing over the last one year since the government’s blanket ban on ICOs.”

He then announced their intention to file a constitutional appeal:

“We will ask the court to rule on the ICO ban and the legislature’s nonfeasance.”

Sedaily explains that according to Presto, the ban infringes on “people’s freedom of occupation and property and equal rights and scientist’s basic rights.” Kyung-Won said that given the fast pace of technological development that came with the fourth industrial revolution, “such unconstitutional and pre-modern measures as the ICO ban should not exist any longer.”

South Korea’s stance to crypto regulation stands in clear contrast with other countries like Malta. As Cointelegraph reported in July, Malta has been acclaimed as “the blockchain island” after the local parliament approved three bills that gave the crypto industry unprecedented legal clarity.

The Maltese government is also reportedly working on an artificial intelligence (AI) strategy of which the ultimate objective is to “explore a citizenship test for robots in the process of drafting new regulation for AI.”

That being said, South Korea recently overtook the Maltese crypto exchanges daily trading volume in November according to a CryptoCompare report. In the document, analysts suggest that the reason behind this shift are “competitions, trans-fee mining and rebate programs.”

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Major UK Charity Fund Executive Believes Crypto Market Crash Is ‘Just a Bump in the Road’

A major U.K. charity fund executive declared during a crypto summit that the recent market crash is just a “bump in the road.”

A major United Kingdom charity fund executive said at the Bloomberg Crypto Summit in London this Friday that the recent crypto market crash is just a “bump in the road,” Bloomberg reports Dec. 7.

James Bevan, the chief investment manager at CCLA, told the audience during a panel that he doesn’t see the recent decrease in the value of cryptocurrencies “as an existential crisis”; rather, he noted that he believes this is just “a bump in the road.”

Bevan then also compared crypto to traditional finance, stating that “institutional investors have had plenty of bumps in the road in conventional currencies and transaction systems.”

CCLA is self-described as “one of the UK’s largest fund managers” and claims to have £7,842 million (just slightly short of $10 trillion) in assets under management on the last day of March this year.

Bloomberg’s article on the news outlet’s Crypto Summit also predicts that “the future of cryptocurrencies will entail greater regulation, more involvement by large institutions, lower volatility and greater integration with traditional assets.”

The first signs of large institutions starting to interact with the industry are already present, with the world’s second-largest stock exchange, Nasdaq, reportedly having confirmed the launch of Bitcoin (BTC) futures in the first half of next year.

Bloomberg also cites Marieke Flament, the global chief marketing officer at blockchain-powered payments firm Circle Internet Financial Ltd., as noting that it is “beneficial to get the wheels in motion for crypto regulations so the industry can learn from potential mistakes.”

This is not the first time a Circle executive took such a stance. In late October, the company’s CEO, Jeremy Allaire, called on global economies to collaborate on the development of crypto regulation, as Cointelegraph reported.

Namely, Allaire declared that “ultimately there needs to be normalization at the G20 level.” This request seems to have been recently answered this week, when G20 country leaders declared the start of work on an international cryptocurrency taxation system.

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US SEC Fines Delaware-Based Digital Asset Fund and Issues Cease and Desist Order

The SEC has fined a digital assets fund for breaching securities law and issued a cease and desist order.

The United States Securities and Exchange Commission (SEC) has issued a cease and desist order against CoinAlpha Advisors LLC in addition to ordering a $50,000 penalty, according to a filing published Dec. 7.

Delaware-registered CoinAlpha Advisors LLC was reportedly established in July 2017 to act as the managing member of and manager to fund CoinAlpha Falcon LP, which was formed in October 2017.

By May 2018, the fund had allegedly raised over $600,000 from 22 investors from at least five states, which purchased limited partnership interests in the fund in exchange for a proportional share of any profits derived from the fund’s investment in digital assets. The file further reads:

“In October 2018, after being contacted by the Commission staff concerning the issues herein, CoinAlpha unwound the Fund, pursuant to the authority granted in the Fund’s Limited Partnership Agreement.”

Although CoinAlpha Advisors filed a Notice of Exempt Offering of Securities with the SEC on Nov. 3, 2017, the company was not registered with the SEC. Therefore, CoinAlpha Advisors violated the securities law that “prohibits the sale of securities through interstate commerce or the mails unless a registration statement is in effect.”

Per the file, CoinAlpha Advisors immediately halted the offering once it was contacted by the SEC and undertook a review of marketing and promotional materials posted on social media. The company also reimbursed all fees it had already collected, and resigned all rights to future management and incentive fees.

Now, CoinAlpha Advisors reportedly has to pay a civil money penalty in the amount of $50,000 within ten days of entry of the order.

Yesterday, the SEC set a new deadline for Feb. 27, 2019 in order to further review the rule change proposals to list a Bitcoin exchange-traded fund (ETF) by investment firm VanEck and blockchain company SolidX on the Chicago Board Options Exchange (CBOE).

Both VanEck and SolidX firms filed with the SEC to list a Bitcoin-based ETF on June 6. Subsequently in August, the commission delayed its decision on listing the ETF until Sept. 30, requesting further comments regarding the decision. In October, the SEC set a deadline for submitting comments about proposed rule changes related to a number of applications for Bitcoin ETFs.

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Chilean Government Making Progress on Crypto Regulation, Says Finance Minister

The Chilean finance minister told local media that the government is making progress on clear crypto legislation.

Chile’s Minister of Finance Felipe Larrain claims that a group of state institutions “is making progress” in developing crypto regulation, local daily newspaper La Tercera reports Friday, Dec. 7.

According to Larrain, the Ministry of Finance is working with Chile’s central bank and Financial Stability Board to provide a balanced legal framework for the crypto industry. He noted that crypto regulations are but one aspect of a wider project to provide legal definitions for the fintech sector. Larrain noted that crypto regulation might take time:

“We are aware that it is important to move in this direction. But all countries in the world are facing similar problems [with crypto regulation], and there is no magic wand to solve them. We are exploring the best solutions to see how to regulate this brand new phenomenon.”

In March, following the closure of crypto-business accounts in major Chilean banks, Larrain promised to develop a legal framework to normalize the situation. Nine months on however, no such legislation has come forward, although the Chilean parliament has made some forays into regulating blockchain technology.

Larrain’s recent statement comes shortly after a Chilean Supreme Court decision, annulled a previous ruling by an anti-monopoly court to protect local crypto exchange Orionx and to reopen its banking accounts. In the decision, a judge claimed that cryptocurrencies “have no physical manifestation and no intrinsic value.”

Despite the alarming publications in local media, Chile’s crypto entrepreneurs told Cointelegraph that the new decision has nothing to do with prohibiting crypto exchanges. Both Orionx and Buda.com, which have been involved in a legal battle since March, assure that their banking accounts will not be affected, as the anti-monopoly court’s decision is still in force.

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Two US Bills Focus on Cryptocurrency Market Manipulation and Improving Regulations

The proposals come in the wake of dissatisfaction within and beyond the industry with current regulatory practices.

Two new bills focusing on cryptocurrency market manipulation aim to “position the United States to be a leader in the cryptocurrency industry,” their sponsors claimed Dec. 6.

The bills, dubbed “The Virtual Currency Consumer Protection Act of 2018” and “The U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018” will go before the House of Representatives having been compiled in mid-November.

A bipartisan effort, their authors, congressmen Darren Soto and Ted Budd, said they wish to “provide data on how Congress can best mitigate these risks while propelling development that benefits our economy.”

“Virtual currencies and the underlying blockchain technology has a profound potential to be a driver of economic growth,” they said in a joint statement.

“That’s why we must ensure that the United States is at the forefront of protecting consumers and the financial well-being of virtual currency investors, while also promoting an environment of innovation to maximize the potential of these technological advances.”

The plans come as the U.S. sees continued growing pains in its journey to regulate cryptocurrency markets.

As Cointelegraph reported Friday, a new academic report has highlighted “overlapping” jurisdiction of agencies as contributing to the U.S.’ lack of appeal for industry businesses and consumers alike.

Cryptocurrency exchanges in particular have taken specific action to protect themselves from exposure by setting up offshore operations.

Soto and Budd correspondingly seek to broaden the basis for domestic regulation by looking beyond borders, their second bill advocating a “comparative study of the regulation of virtual currency in other countries” in order to “make recommendations for regulatory changes to promote competitiveness.”

Wall Street has already focused on market manipulation control meanwhile, Nasdaq in October claiming its financial instruments could help mitigate the practice.

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Malaysia: Finance Regulator, Central Bank Say Cryptocurrency Regulation ‘Being Put in Place’

Authorities are in the process of developing cryptocurrency and ICO rules, which could become law in Q1 2019.

Malaysia’s finance regulator and central bank issued a joint press statement Dec. 6 in which they confirmed they were “putting in place” legislation on cryptocurrency and Initial Coin Offering (ICO) assets.

The statement from the Malaysia’s Securities Commission (SC) and Bank Negara Malaysia (BNM), which follows comments from senior government official that regulation of the sector could appear in Q1 2019, also reiterates the need comply with securities laws where appropriate.

“The SC will regulate issuances of digital assets via initial coin offerings (ICO) and the trading of digital assets at digital asset exchanges in Malaysia,” it confirmed.

“Regulations are currently being put in place to bring digital assets within the remit of securities laws to promote fair and orderly trading and ensure investor protection.”

Malaysia has slowly enacted a formalized stance on cryptocurrency activities this year. Last month, in addition to revealing the potential deadline, the country’s finance minister Lim Guan Eng also stated that anyone wishing to issue a new asset could only do so with BNM’s blessing.

“I advise all parties wishing to introduce Bitcoin (style) cryptocurrency to refer first to Bank Negara Malaysia as it is the authority that will issue the decision on financial mechanism,” he said.

Among those eyeing the developments is a local initiative dubbed “Hope Coin,” the creators of which may have to wait for the process to complete before launching.

The moves come hot on the heels of Thailand, which is around six months into the introductory phase of its own regulation.

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US Needs ‘More Nuanced’ Cryptocurrency Regulations: Academic Paper

The patchwork regulatory setups at federal level mean it is “easy to see” how the U.S. has a bad reputation among crypto operators and investors.

United Statescryptocurrency regulations are creating a problematic image for the country as an innovator and it needs a “more nuanced approach.”  Two university professors have made this claim in an article Friday, Dec. 7, referring to a paper originally published Nov. 16.

Discussing the current regulatory setup governing cryptocurrency, Carol Goforth of Oxford University and Arkansas School of Law’s Clayton N. Little blamed the “overlapping” authority of various regulators as hindering progress.

The U.S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), Internal Revenue Service (IRS) and more all attempt to govern cryptocurrency, the professors say, but each from a different perspective.

“Because different agencies in the U.S. have different regulatory powers and responsibilities, each agency has tended to classify the very same assets differently in order to assert jurisdiction,” the paper reads.

As Cointelegraph has often reported, representatives of the SEC and CFTC in particular continue to be vocal about the need to comply with existing laws when issuing, dealing in or trading cryptocurrencies.

In October, CFTC chairman Christopher Giancarlo acknowledged the complexity of the situation regarding his agency and the SEC.

“…Different orientation, different histories, so we do come at these things from different perspectives,” he told CNBC’s ‘Fast Money’ segment at a conference.

For Goforth and Clayton, however, the situation does more harm than good. In a summary of their work for the Oxford Faculty of Law Dec. 7, Goforth wrote:

“Although various authorities in the US have repeatedly claimed that they do not wish to over-regulate cryptoassets or to stifle innovation in the space, overlapping regulations produced by a multitude of distinct agencies with different missions and priorities have produced a confusing mix of classifications and requirements.”

It was “easy,” she said, to “see why the US is not regarded as being receptive to crypto.”

This year, cryptocurrency exchanges including Coinbase and Bittrex began a trend of setting up operations in a more permissive jurisdiction beyond the control of the SEC and CFTC in order to offer international clients additional coins not available to their U.S. counterparts.