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Barrels of Oil May Be Paid for Using Crypto One Day, Head of Russian Energy Giant Says

Igor Sechin, the head of Rosneft, believes that barrels of oil could one day be paid for using cryptocurrencies.

The head of Russian oil company Rosneft has not ruled out the possibility of paying for oil using cryptocurrencies in the future, according to a report by Snob.ru on June 6.

Igor Sechin said the industry’s acceptance and awareness of digital assets is beginning to rise as Silicon Valley tech giants including Google, Amazon and Apple begin to explore the oil and gas sector.

While he suggested that the stablecoin Facebook is currently developing could one day be used to purchase oil by the barrel, Sechin warned there are some hurdles that cryptocurrencies need to overcome if they are to pique the interest of energy giants. He was quoted as saying:

“Greater flexibility often means greater volatility, and digitalization creates risks for maintaining commercial secrets and leads to the need to create new regulatory mechanisms, additional reservations. Today, technology companies do not have quality answers to these fundamental questions.”

Sechin was speaking at the St. Petersburg International Economic Forum.

Oil and cryptocurrencies have been linked before, with Venezuela’s Nicolas Maduro issuing a coin known as the Petro, which was supposedly tied to the nation’s reserves of commodities including gold, diamonds and oil.

Last November, major oil companies joined large banks to launch a blockchain-driven platform for commodity trading, but this was more focused on helping industry players transition from paperwork to smart contracts.

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Indian Government Not Considering Total Cryptocurrency Prohibition

India is once again in the cryptocurrency news as recent reports indicate the government has no intention of banning virtual currencies. It has always been difficult to get a definitive stance from the government concerning the emerging market. The latest news coming out of the country doesn’t make the situation any clearer.

Cryptocurrencies are Commodities

The government in India via the ministry of finance set up a committee to examine the country’s cryptocurrency market. According to an anonymous source with inside knowledge of the committee’s deliberations, there is no plan to ban cryptos in India just yet. The source also went on to say:

I don’t think anyone is thinking of banning cryptocurrencies altogether. The issue here is about regulating the trade, and we need to know where the money is coming from. Allowing it as a commodity may let us better regulate trade, and so that is being looked at

If India decides to classify cryptos as commodities, then they would be emulating countries like the United States. Apart from the significant tax implications, such a characterization would firmly identify cryptos as an emerging asset class in the country. Commenting on the possibility, Coindelta co-founder, Shubham Yadav said:

Though cryptocurrencies belong to a new class of financial assets, we can still welcome them as commodities and not currencies because of their [highly] volatile prices. Many countries have been already going in this direction, including the U.S.

Former Reserve Bank of India (RBI) deputy governor, R Gandhi, also believes that classifying cryptos as commodities vastly favorable the status quo.

If these are used to settle transactions, then it acquires the nature of currency. So that is one thing that one needs to be wary of. But if people want to invest in a commodity then that is different, because then we can assume that they are aware of the risks involved.

Cryptocurrency Regulations Will Legitimize the Market

While the committee is less keen on banning cryptos, reports indicate that they are weighing suitable options for effectively regulating the market. One of its mandates is to prevent the use of digital currencies in perpetrating financial crimes and supporting terrorist operations. Commenting on the matter, a top government official said:

Trade is not a criminal offense. Most of us trade in various asset classes in the stock market. So how is cryptocurrency trading any different? What has to be in place is a mechanism to be sure that the money used is not illegal money, and to track its source is the most important thing.

By looking to legitimize the market with strict regulations, the government seems at odds with the RBI. Earlier in the year, the RBI mandated Indian banks to cease all services to cryptocurrency exchange platforms in the country. The ban which came into effect on July six prohibits banks from facilitating cryptocurrency transactions in India.

Since the announcement of the ban, there has been a lot of dissent from crypto proponents in the country. However, the nation’s courts have so far dismissed all challenges to the ban which is already having some degree of impact in the Indian crypto scene.

Should the Indian government classify cryptocurrencies as commodities? What impact do you think positive regulations from India would have on the cryptocurrency market? Let us know your thoughts in the comment section below.

Image courtesy of Ethereum World News archives.

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Cryptocurrencies Legalized as Futures Trading Commodities by Indonesian Regulator

Bappebti, the Indonesian Trade Ministry’s Futures Exchange Supervisory Boards has legalized cryptocurrencies as commodities in the country. Local media sources announced the landmark decision on June 3, 2018. Bappebti’s directive comes even as the country’s central bank does not recognize cryptos as means of payments.

Cryptocurrencies are Now Commodities in Indonesia

According to The Jakarta Post, Bappebti’s decision means that people can trade cryptocurrencies on the country’s futures market. Speaking to local media sources about the decision, Dharma Yoga, the head of Bappebti market supervision and development bureau, said that:

The Bappebti head has signed a decree to make cryptocurrency a commodity that could be traded at the bourse.

According to Yoga, the Bappebti board carried out an extensive four-month review before deciding to classify cryptocurrencies as commodities. Yoga also said that:

The government will soon issue a supporting regulation that will rule on several issues including currency exchange companies, taxation, and prevention of money laundering and terrorist financing.

Creating the Proper Regulatory Framework

Concerning the regulatory steps to take in the aftermath of the decision, Yoga said all necessary stakeholders need to work together. According to him, financial regulators like the Taxation Directorate General, the Financial Services Authority (OJK), and the Financial Transaction Reports and Analysis Center (PPATK) need to collaborate to create the proper regulatory framework for cryptocurrency commodity trading. Also, Yoga called on the central bank and the police counterterrorism squad to be part of the process.

According to Yoga:

The government will soon issue a supporting regulation that will rule on several issues including currency exchange companies, taxation, and prevention of money laundering and terrorism financing.

The quest to create the perfect regulatory environment for crypto commodities trading will not be complete without the active participation of the country’s digital currency community. Thus, Yoga said Bappebti is reaching out to Indodax, and several other stakeholders to submit proposals for trading procedures and product specifications. Some of the required information includes the type of cryptos and the tick size of trading instruments. Other pertinent information includes the mechanism for dispute settlement as well as the prescribed trading hours.

Central Bank Still Against Cryptocurrencies

All eyes are on the Indonesian central bank to see how it adjusts its stance on digital currencies. The apex bank earlier classified cryptos as not being a legal exchange medium. Thus, there is a prohibition on crypto payments in the country. According to the bank, cryptos are a veritable means for money laundering and terrorist funding.

There have been calls for the bank to look into creating a national crypto for the country. The country’s former finance minister, Chatib Basri, called on the bank to reconsider its stance on digital currencies.

Will this latest development force the country’s central bank to rethink its prohibition on cryptocurrency payments? Do you think this decision will turn Indonesia into a cryptocurrency trading hub in the Asian theater? Keep the conversation going in the comment section below.

Images courtesy of Pxhere and Pixabay.

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Indonesian Regulator Gives Green Light for Crypto Futures Trading

Indonesia’s Futures Exchange Supervisory Board (Bappebti), a commodities market regulator under the country’s Ministry of Trade, has reportedly ruled that cryptocurrencies are commodities that can be traded on the country’s futures exchange.

According to a Jarkata Post report on Monday, the agency’s market supervision chief, Dharma Yoga, has confirmed the decision and said the ruling came after a four-month study period that examined the issue.

According to Yoga, the agency has now signed a decree to formalize the decision, potentially clearing the way for the launch of a bitcoin futures product in Indonesia.

Meanwhile, other regulations around cryptocurrency exchanges and related taxation in the country will also be revealed by the country’s central bank and its taxation agency, Yoga said.

The central bank, Bank Indonesia, suggested late last year that it would prohibit bitcoin payments in the country, and subsequently stated it does not recognize the cryptocurrency as a legal payment method. However, it did not mention cryptocurrency exchanges at the time.

Yoga further indicated that, in order to prepare a comprehensive regulatory framework, the agency is now requesting domestic cryptocurrency exchanges to submit regulatory proposals.

Indonesian rupiah via Shutterstock

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Cryptos Are Commodities, Rules US Judge In CFTC Case

A U.S. district judge has backed the U.S. Commodity Futures Trading Commission in defining cryptocurrencies as commodities.

According to a Memorandum & Order for a court case that the CFTC had brought against cryptocurrency business operator Patrick Kerry McDonnell, Judge Jack Weinstein from a district court in New York ruled that “virtual currencies can be regulated by CFTC as a commodity.”

“Virtual currencies are ‘goods’ exchanged in a market for a uniform quality and value. … They fall well within the common definition of ‘commodity’,” the judge wrote in the order on Tuesday.

At issue in the case was whether the CFTC had the authority to regulate cryptocurrency as a commodity in the absence of federal level rules, and whether the law permitted the CFTC to “exercise its jurisdiction over fraud that does not directly involve the sale of futures or derivative contracts,” according to the document.

In both instances, Weinstein answered in the affirmative, meaning the case can be brought against the defendant.

The judge further granted a preliminary injunction barring the defendant from further engagement in cryptocurrency investment as the case continues.

As previously reported by CoinDesk, the CFTC defined cryptocurrencies as commodities as far back as 2015, a decision that has led the agency to recently target cryptocurrency businesses that it considers are hoaxing investors.

In one of several cases filed in January this year, the CFTC sued McDonnell and his company CabbageTech for allegedly absconding with customers’ digital assets.

The agency said at the time that McDonnell branded himself as a cryptocurrency investment expert with trading advice that could result in highly attractive returns on investment. Yet soon after customers sent in money and cryptocurrencies, the defendant allegedly misappropriated the funds, according to the case.

CFTC image via CoinDesk archive

See the full Memorandum & Order below:

Memorandum & Order by CoinDesk on Scribd

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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US Commodities Regulator Proposes Definition for Cryptocurrency 'Delivery'

The U.S. Commodity Futures Trading Commission (CFTC) has published a proposed interpretation of how it will deem that a cryptocurrency has been “delivered” from a buyer to a seller.

The agency – which more than two years ago announced that it would regulate bitcoin as a kind of commodity – gave two examples today of how a cryptocurrency would be considered “delivered” in the context of its rules.

As late as October, the agency said that it was still weighing the issue in light of the prevailing lack of clarity since 2015, and the process was perhaps triggered in part after a $75,000 fine was issued to digital currency exchange Bitfinex and the subsequent petition from U.S. law firm Steptoe & Johnson LLP calling for a more concrete definition.

Now, the CFTC is taking the first steps toward publicly clarifying how it would define a “delivery,” which the agency said back in October was a complex issue given the wholly digital nature of cryptocurrencies.

According to the CFTC, the two factors which determine that a delivery has taken place are:

“(1) a customer having the ability to: (i) take possession and control of the entire quantity of the commodity, whether it was purchased on margin, or using leverage, or any other financing arrangement, and (ii) use it freely in commerce (both within and away from any particular platform) no later than 28 days from the date of the transaction; and

(2) the offeror and counterparty seller (including any of their respective affiliates or other persons acting in concert with the offeror or counterparty seller on a similar basis) not retaining any interest in or control over any of the commodity purchased on margin, leverage, or other financing arrangement at the expiration of 28 days from the date of the transaction.”

Per the CFTC, the proposed interpretation isn’t final and is subject to a 90-day public comment period (which begins when the interpretation is formally published in the Federal Register.

 Bitcoin and dollar image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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CME Explores Logging Trade Transactions on Blockchain System

New patent filings from Chicago Mercantile Exchange (CME) highlight how the firm might use blockchain to store and execute financial transactions.

According to two applications released by the U.S. Patent and Trademark Office (USPTO) on Thursday, the commodity derivative exchange may be looking into developing a transaction platform able to execute transfers automatically at times defined by the parties involved.

The two applications, which primarily differ in the specific language used to describe the potential invention, outline how the platform would be housed on a system of computer processors, utilizing a distributed ledger as the basis for recording transactions.

CME could use this blockchain to catalog every update, using unique cryptographic keys to identify individual transactions and modifications, thus marking every action committed by different parties involved with the data.

The system would be able to let party A know as soon as party B requests a change or modification to a transaction, allowing party B to choose whether or not to validate the change. If both parties validate the change, the ledger would update to reflect the confirmation, but if a party declines the change, the ledger would instead generate a rejection message.

While CME’s concept is primarily focused on financial transactions, the system could be applied in other fields, the applications say – including with different regulatory or licensing agencies which issue certifications and licenses, such as passports, visas, and driver’s licenses.

The ledger could also potentially be used to verify those credentials by allowing a third-party to check with the issuing entity.

Disclosure: CME Group is an investor in Digital Currency Group, CoinDesk’s parent company.

Trading board image via Joseph Sohm/Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.