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Bitcoin Simply Existing Positively Impacts Monetary Policy: Research

The existence of private decentralized cryptocurrencies like Bitcoin has a healthy impact on governments’ fiscal and regulatory policy, a new analysis contends.

The existence of private decentralized cryptocurrencies like Bitcoin (BTC) has a healthy impact on governments’ fiscal and regulatory policy, a new analysis contends.

TThe argument was put forth in a paper published on Aug. 16 by Max Raskin (NYU School of Law), Fahad Saleh (McGill University) and David Yermack (NYU Stern), entitled “How Do Private Digital Currencies Affect Government Policy?

3 positive impacts of cryptos simply existing

The analysis notes that as regards the global financial system, the question of cryptocurrencies’ influence is not confined to whether or not the majority of the population opts to use them. 

Rather, the authors argue that cryptocurrencies’ very existence has a counterfactual impact in that they function as a check on both fiscal and regulatory policy. 

While cryptocurrencies may not have replaced the dollar, they have three important positive areas of impact on the existing monetary system, the authors note.

First, citizens secure welfare gains from the existence of cryptocurrencies because they offer diversification; moreover, private digital currencies serve as competition for local investment and thus restrain monetary policy, thereby generating lower inflation.

Second, the authors argue that cryptocurrencies encourage local investment and serve as a complement — not as a substitute — for that investment. In offering an alternative to local fiat, they discipline monetary policy — again reducing inflation — leading to higher returns from investment and thus more investment overall.

Third, the government itself gains from permitting the use of cryptocurrencies within the local economy, given that it extracts revenue through taxation and thus benefits from the higher levels of local investment.

Currency crises

Examining two major national fiat currency crises that have erupted since the financial crisis — the Turkish lira and the Argentine peso — the authors further argue that:

“A private digital currency has significant implications for a corrupt emerging market. We define a corrupt emerging market as an economy with high volatility and a government that sets policy based on selfish interests rather than considering the welfare of citizens.” 

As Cointelegraph has previously reported, 20% of the Turkish population was reported to hold cryptocurrencies as of summer 2019.

Last week — as the peso plunged 30% — Bitcoin (BTC) as trading in Argentina at a 4% premium

Not only do cryptocurrencies influence the incumbent system, but macroeconomic factors feedback into the crypto sector: recently, the head of global fundamental credit strategy at Deutsche Bank noted that central banks’ dovish policies are positively impacting alternative currencies such as Bitcoin — a view that has been echoed by many.

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Santander Joins Bank Blockade Against Coinbase in the UK: Report

Major Spanish bank Santander is reportedly ceasing to enable United Kingdom customers to deposit their fiat funds to major cryptocurrency exchange Coinbase.

Major Spanish bank Santander is reportedly ceasing to enable United Kingdom customers to deposit their fiat funds to major cryptocurrency exchange Coinbase. 

An unverified source posting to Reddit on Aug. 14 claims to have been informed of the development over the phone by a  Santander representative.

“Isolated to Coinbase,” not crypto in general

The source alleges that having been informed over the phone, they put in a complaint with the bank’s complaints unit, which then reportedly confirmed that the client should move to an alternative bank if I wish to make the payment. 

The complaints unit reportedly revealed that the restriction was likely due to the bank’s attempts to tackle an apparent increase in Coinbase-related fraud.

The post has sparked over 100 comments to press time, with at least three fellow Redditors noting they have not experienced restrictions using Santander with their Coinbase accounts. At least one of these respondents self-identified as a United States resident, while the others did not reveal their jurisdictions.

A further commentator noted that Santander has allegedly blocked withdrawals from BitStamp in Portugal and Spain. 

In a follow-up comment, the original poster noted that the measures could be temporary until Coinbase improves their fraud prevention, noting that Santander had indicated that “this was isolated to Coinbase and not cryptocurrency in general.”

Barclays allegedly severs ties with Coinbase

The apparent actions of Santander in the U.K. follow fresh reports that British banking giant Barclays has cut its own ties with Coinbase; the bank had notably been providing Coinbase users with access to the U.K.’s Faster Payments Scheme and smooth GBP exchange as of March of last year.

News of the severed ties remains officially unconfirmed, as does the claim that Coinbase will continue its access to U.K. banking through Clearbank, a younger and less established institution.

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Iran Crypto Devs Launch Platform for Flood Victims in Light of US Sanctions

Crypto developers in Iran have created a charity platform for crypto donations in an effort to bypass United States sanctions.

Volunteer cryptocurrency developers in Iran have created a blockchain platform called IranRescueBit, which allows people to make charitable cryptocurrency donations to aid regions in the country in recovering from destructive flooding.

Al Jazeera shared the news in a report on Aug. 14. According to the report, the platform supports donations in Bitcoin (BTC), Ether (ETH) and Litecoin (LTC). The government is reportedly not involved in the project.

IranRescueBit reportedly allows donors to dodge American sanctions that have insofar prohibited international donations to the Iranian Red Crescent Society, which is a non-governmental humanitarian society within Iran.

According to the report, the advantage of cryptocurrencies in this case is that no centralized authority is needed to verify the transactions due to the decentralized nature of crypto confirmations.

IranRescuebit executive director Hamed Salehi told Al Jazeera that the platform’s campaign is hoping to facilitate one month of crypto donations before using local exchanges to convert the cryptocurrencies into Iranian rials. 

Once the conversion is complete, Salehi said the proceeds would be sent to a local bank account of the Iranian Red Crescent Society. Salehi commented:

“We hope that IranRescueBit can turn into a platform that could be employed either by the community or by the IRCS should the need ever arise again in the future.”

Record rainfalls in April gave way to destructive flooding that resulted in 70 deaths in 13 provinces with the highest casualties in Fars, Lorestan, Golestan and Hamedan, according to CNN.

Blockchain platforms for charity

As previously reported by Cointelegraph, the South Korean holding company SK C&C recently unveiled a scheme for a blockchain-based donations platform. As per the report, the platform will allow users to make donations and in return receive incentives tokens, which can apparently be used to buy merchant items.

However, regulations and technological challenges pose barriers to an official launch. SK C&C head Lee Sun-min explained:

“Since SK is a company, we cannot pursue profits in won stablecoins. Regulatory issues are not solved, too […] It’s hard to build a platform ecosystem […] Not just a single company can do it. We are currently looking for a company to build a platform ecosystem.”

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Binance Jersey Partners with Crypto Platform Caspian for Faster Trades

Binance’s fiat-to-crypto service for European currencies has partnered with a fast-execution crypto platform.

Binance’s fiat-to-crypto conversion branch for euros and British pounds, Binance Jersey, has entered into a partnership with the crypto investment service Caspian, which provides trading, portfolio and risk management on its platform.

Caspian shared news of the partnership with Cointelegraph on Aug. 14. The partnership will purportedly result in improved security for crypto investors, as well as a lower barrier to entry for the crypto market. The managing director of Caspian Chris Jenkins elaborated:

“I am delighted for us to partner with Binance Jersey, a  substantial step forward in helping move the wide adoption of cryptocurrency trading forward for the institutional market in Europe […] As increasing numbers of institutions engage in this emerging sector, there is an increasing need for a reliable fiat-to-crypto exchange.”

Binance Jersey CEO Jon Day also remarked that he believes Caspian’s technical system for order and execution will speed up trading on their end:

“Our clients can now benefit from faster order execution and additional features including a larger suite of customizable market data and parent-and-child order slicing, to name but a few.”

Binance Jersey

As previously reported by Cointelegraph, Binance created Binance Jersey at the beginning of 2019. At the outset, Binance Jersey planned to launch fiat-to-crypto support for euros and pounds with major cryptos Bitcoin (BTC) and Ether (ETH).

Later in June, Binance Jersey announced that it had issued a proprietary stablecoin backed by the pound. According to Binance chief financial officer Wei Zhou, there has been an increasing awareness of the utility that stablecoins offer, as well as growing use cases for this type of token. These reportedly motivated Binance Jersey to add the stablecoin, as well as to pursue more fiat-pegged stablecoins.

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Bitex Partners With Bantotal For More Cross-Border Payments in Latin America

BTC exchange Bitex has partnered with Uruguay-based financial software company Bantotal to expand its cross-border payments offerings in Latin America.

Bitcoin (BTC) exchange Bitex has partnered with Uruguay-based financial software company Bantotal in order to expand it cross-border payments system on the Bitcoin blockchain to Latin America.

CoinDesk announced the companies’ new partnership in a report on Aug. 13. According to the report, the upshot of this partnership is that Bantotal’s clients will have access to Bitex’s exchange services via a marketplace that hosts traditional financial services in its BDevelopers program.

Per the report, Bitex will act as a middleman service for cross-border payments. The exchange’s role is to convert from fiat currency to BTC, and then back to fiat again in order to facilitate these cross-border transactions.

Manuel Beaudroit, the chief marketer at Bitex, explained:

“If I want to do a payment from Argentina to Chile, I don’t need to buy dollars with the Argentinian pesos then transfer the dollars to the U.S. then move the dollars to Chile and exchange them into Chilean pesos […] I can just send a payment from Argentina to Chile directly.”

Bitcoin Argentina VP Leo Elduayen reportedly thinks that this partnership will majorly boost Bitex participation from within Latin America. According to the report, Bantotal provides services to over 60 financial institutions ranging across 14 countries, and a spokesperson estimated that 20 million people use the company’s money management services.

Bitex in Argentina

As previously reported by Cointelegraph, Bitex similarly partnered with an Argentina-based bank — Argentinian Banco Masventas (BMV) — back in May. As stated in the report, Bitex partnered with BMV in order to allow its clients to conduct cross-border payments.

José Humberto Dakak, a principal shareholder at BMV, apparently commented that the bank hopes to improve its digital and smartphone-based services with the partnership. He further remarked:

“One of the initiatives is to use Bitex as a strategic partner to provide our overseas customers with payment and collection services at the Bitex Exchange.”

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South Korean Holding Company Uses Ripple Fork to Develop Donations Platform

South Korean holding company SK C&C has developed a platform for charitable donations, using a fork off of Ripple’s blockchain.

South Korean holding company SK C&C has unveiled plans for a donation platform that is based on a Ripple blockchain fork. Moreover, the platform will support a stablecoin linked at a 1:1 ratio to the won, as well as a utility token.

South Korean news daily Chosun reported about the company’s initiative on Aug. 9. According to the report, the donation platform is still strictly in the planning phase. SK C&C head Lee Sun-min explained that issues with regulation and infrastructure development present barriers to launching their proposed platform:

“Since SK is a company, we cannot pursue profits in won stablecoins. Regulatory issues are not solved, too […] It’s hard to build a platform ecosystem […] Not just a single company can do it. We are currently looking for a company to build a platform ecosystem.”

As far as the details of the donation system are concerned, the platform —  dubbed “ChainZ” — will rely on the won-backed stablecoin Social Value Coin (SVC) for making donations, and employ the utility token Social Value Power (SVP) to reward benefactors.

As per the report, people who donate SVCs to some cause will receive a thousandth of their total in SVPs. As an example, the report says that donating 50,000 SVCs will result in receiving 50 SVPs. SVPs can purportedly be used to buy merchant items.

SK C&C is the holding company of SK Group with services in multiple aspects of industry including IT, logistics, finance and communications and media. The firm has an annual revenue of $53.8 billion according to Owler.

Blockchain for social good

As previously reported by Cointelegraph, the Binance Charity Foundation announced that they had plans to release a token to support women’s health in July. As per the announcement, 46 organizations including Ripple partnered to promote the “Pink Care Token” (PCAT) for supporting women’s health in developing countries. PCAT is issued on Binance Chain as a redemption-only token, which will go towards a year’s supply of sanitary supplies. The first shipment of supplies is scheduled for mid-July and will be sent to an area in Uganda.

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Bitcoin Safe Haven Sucking in Money From China, Says Blockchain Executive

Investors looking for an escape from yuan devaluation are flocking to Bitcoin as well as traditional fallbacks, says Chris Reinertsen.

Bitcoin (BTC) really does function as a safe haven asset in 2019, another source has told mainstream media as the United StatesChina trade war rages.

Bitcoin increasingly important amid economic uncertainty

Speaking to Forbes in an interview on Aug. 8, Chris Reinertsen, chief marketing officer of blockchain consultancy Rhythm Technologies, said investors were pouring into Bitcoin in addition to traditional safe haven assets.

“There is a flight of capital to safe-haven assets across the board, which now includes Bitcoin,” he told the publication.

He added: 

“Throughout the last few years, we have been seeing the trend of Bitcoin increasingly becoming fundamentally correlated to more macro moves as increased economic uncertainty in the world increases.”

Bitcoin as a hedge against inflation

As Cointelegraph reported, Reinertsen is far from alone in his hypothesis. The latest dispute involving China, which saw the U.S. government brand Beijing a currency manipulator, appeared to fuel a fresh upturn in the Bitcoin price this week. 

Thereafter, investors were happy to go on record about the cryptocurrency’s appeal as a hedge against volatility in fiat markets. 

“It’s been an amazing run, it’s fantastic technology; some people are using it as a way to hedge against inflation,” the CEO of consultancy firm Agecroft Partners, Don Steinbrugge, told CNBC on Tuesday.

Reinertsen likewise pointed to China’s deliberate devaluation of the yuan to an 11-year low against the dollar as a factor driving money into Bitcoin.

His view on China more broadly was shared by Circle CEO, Jeremy Allaire, who similarly mentioned macroeconomic motivation while explaining Bitcoin’s sudden bull market this week. 

“I think the broader theme of, you know, Bitcoin specifically, crypto more broadly participating in these global macro forces is becoming more and more clear,” he said.

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Buying Crypto With The Apple Card Violates Its Customer Agreement

Apple has included a stipulation in its Apple Card agreement that says crypto purchases count as cash advances or similar, which are forbidden.

According to the Apple Card Customer agreement, users will not be permitted to buy cryptocurrencies using the company’s upcoming credit card service.

Goldman Sachs published the agreement on July 2, according to a report by Reuters on the same day. As per the report, American tech giant Apple is releasing the Apple Card in partnership with investment banking company Goldman Sachs as part of a broader business plan to bring in more revenue through service offerings. 

According to the card’s customer agreement, cryptocurrency purchases fall under the heading of cash advances or cash-like transactions:

“‘Cash Advance and Cash Equivalents’ means any cash advance and other cash-like transaction, including purchases of cash equivalents such as travelers checks, foreign currency, or cryptocurrency; money orders; peer to peer transfers, wire transfers or similar cash-like transactions; lottery tickets, casino gaming chips (whether physical or digital), or race track wagers or similar betting transactions.”

The user agreement then goes on to say that cash advances — and cash equivalents — are one among a number of banned activities for Apple Card use, meaning that buying crypto with their card is forbidden.

According to Apple’s website, the Apple Card is a planned type of credit card service, slated to launch this summer. Apple Card will be offered  both through iPhones via the digital Wallet app, as well as through a Goldman Sachs-issued consumer credit card made out of titanium.

Does buying crypto qualify as a ‘cash advance’?

As reported earlier today by Cointelegraph, the banking giant Chase is currently facing a class action suit that hinges on whether cryptocurrency purchases qualify as a type of cash advance, or cash-like transaction, as described in its credit card contract. Most recently, the judge overseeing the case has said that they believe the defendants’ interpretation, which states that cryptocurrency purchases do not fall into this category, is sufficiently plausible for continuing with the lawsuit. As such, a number of Chase’s motions to dismiss have been denied, as they are closely related to this issue.

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Brazilian Cryptocurrency Brokerage Wins Lawsuit Over Closed Bank Account

A Brazilian cryptocurrency brokerage has won a lawsuit against a bank that closed its account due to purported concerns about fraud.

Brazil-based cryptocurrency brokerage M Intermediação e Prestação de Serviço Ltda. has won a lawsuit against Banco Bradesco, which was initiated after the bank closed M Intermediação’s account.

Cointelegraph Brazil reported the legal victory in a report on August 1. According to the report, M Intermediação uses the Bitcoin network as well as traditional bank accounts to let their users make deposits and withdrawals in both Bitcoin (BTC) and Brazilian reals.

The Banco Bradesco decided to block the brokerage’s account in 2018, claiming that their security system detected unusual activity. The bank subsequently blocked the account in order to prevent alleged fraud.

The presiding judge reportedly did not find any evidence that would substantiate Bradesco’s claims, and so ruled that Bradesco must keep M Intermediação account open.

Crypto vs banks: South American lawsuits in 2018

As previously reported by Cointelegraph, the bank Santander similarly lost a lawsuit— and subsequent appeal — brought by a Brazilian crypto company who complained that its bank account had been closed without cause.

The crypto company in question was the cryptocurrency exchange Mercado Bitcoin, who also filed its suit in 2018. Santander argued that it froze the exchange’s account due to concerns about the origins of the funds the exchange was depositing.

Elsewhere in South America, three Chilean crypto exchanges filed complaints with an appeals court over their accounts being frozen in 2018. The banks Itau Corpbanca and Scotiabank in particular had locked the accounts for the exchanges BUDA and CryptoMKT, while the public bank Banco del Estado de Chile had frozen Orionx’s account alongside BUDA’s and CryptoMKT’s.

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Arizona to Test Marijuana-Oriented Stablecoin in State Fintech Sandbox

An Arizona startup is testing its stablecoin payments platform for the medical marijuana industry through the state’s fintech sandbox.

The state of Arizona has accepted a blockchain-based, cannabis industry-oriented payments solution into its fintech sandbox.

According to a recent press release from the Office of the Attorney General, the company — called Alta — is a cash management solution for licensed medical marijuana providers and vendors. The Arizona-based financial services startup intends to offer a stablecoin that is pegged 1:1 with the United States dollar. 

During its sandbox testing phase, Alta will trial its member onboarding and remittances platform. The end goal of the platform is to let users pay for goods and services using the stablecoin instead of fiat money.

Banking problems for the cannabis industry

Cannabis, while legal in some states in the U.S., is still considered a controlled and illegal substance by the federal government. As such, banks are hesitant to deal with cannabis-related business as it would be grounds for the government to revoke their federal deposit insurance, which is a crucial financial safety net for banks.

Sarah Wessel, the co-founder and COO of Alta, said that this blockchain-based service can provide a crucial financial service and make local communities more safe:

“The cash economy for legal cannabis in Arizona exceeds $350 million annually […] These are legitimate companies, innovators and entrepreneurs that are forced to operate in cash. We offer them peace of mind. Our digital payment technology lifts the burdens of having to operate solely through cash and makes our communities safer.” 

Other crypto business and state governments have tried to bridge the gap between the cannabis and financial services industries. In 2017, the Dash network began paying the firm Alt Thirty Six to integrate Dash as a payment option in the cannabis industry’s point-of-sale systems.

From the legislative side, lawmakers in the state of California proposed a bill in February that would accept crypto for tax payments from cannabis-related businesses. The bill, which has not moved out of committee since March, aimed to relieve tax offices from the large piles of money brought in by cash-heavy cannabis businesses.

Arizona Fintech Sandbox

Arizona became the first state to introduce a regulatory sandbox in March 2018. Republican Congressman Jeff Weninger reportedly sponsored the legislation behind the sandbox. Weninger commented on the potential broader use cases in today’s press release, saying:

“It’s exciting to have Alta as the newest participant in Arizona’s FinTech Sandbox. There’s huge potential for stablecoin technology in cash-intensive businesses around the world, and Arizona is fortunate to play a critical role in the development and growth of this emerging industry.”