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Analyst: Bitcoin Ban Extremely Unlikely Post-U.S. Treasury’s Comment

U.S. Treasury Secretary: Bitcoin, Crypto Are “National Security Issues”

On Monday, the U.S. Treasury Secretary made it clear that he is aware of Bitcoin, cryptocurrencies, and Libra, especially in regards to what issues they pose to society and traditional finance.

Echoing Donald Trump’s stances to a T, Steven Mnuchin noted that “cryptocurrencies such as Bitcoin” have been “exploited” to facilitate illicit activity worth billions. Mnuchin claims that said criminal activities that are known to involve Bitcoin and other decentralized digital assets include “tax evasion, extortion, ransomware, [the sale of] illicit drugs, and human trafficking”. With this in mind, the Treasury Secretary dubbed cryptocurrencies a “national security issue”, keeping his statement blunt.

He adds that companies dealing with this asset class should comply by the rules that many “traditional financial institutions” abide by, namely those involving anti-money laundering, countering the financing of terrorism, and money transmitting and servicing. Mnuchin explained:

“The United States Treasury has been very clear to Facebook, to Bitcoin users, and to other providers of digital financial services that they must implement the same [rules] as traditional financial institutions. The rules governing money-service providers apply to physical and electronic transactions alike.”

While these comments seem bearish, there may be a silver lining. As crypto-friendly economist Alex Kruger notes, the odds of there being a U.S. “Bitcoin ban dropped from extremely low to almost zero” following this press conference. Kruger dubbed Mnuchin’s comments a “nothing burger”, presumably because what was said could be classified as givens.

Mnuchin’s tacit assurance that this industry should be heavily regulated, not banned, comes after talk of an all-encompassing ban on Bitcoin and altcoins arose in response to Trump’s tweets on cryptocurrency.

Trump’s Thoughts on Crypto

Per previous reports from Ethereum World News, the American president tried to dismantle the value proposition of not only decentralized cryptocurrencies — such as and namely Bitcoin — but Facebook’s Libra too.

Trump quipped that he doesn’t believe that digital assets are money, adding that they are also known to be very volatile and “based on thin air”.  The President went on to argue that cryptocurrencies can and do “facilitate unlawful behavior”, citing its use in the drug trade and “other illegal activity”.

He even took some time to poke the Libra crowd, claiming that the association should abide by “all Banking Regulations”, and that the U.S. Dollar should be the world’s strongest currency.

Might Just be Bearish for Bitcoin

Sure, maybe there isn’t a ban on the horizon. But, should cryptocurrency investors be worried after these comments. According to Kruger, it’s entirely possible. He writes that Libra’s chances of actually coming to fruition seem “toast”, and institutions may be disincentivized to foray into the cryptocurrency space more than they already have.

Photo by Mikhail Pavstyuk on Unsplash

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Crypto Researcher: Trump Could Ban Bitcoin, But it’s Unlikely

Donald Trump Name Drops Bitcoin

In a three-part thread, Donald Trump lambasted cryptocurrencies, even setting his sights on Bitcoin. The American leader tried to dismantle the value proposition of not only decentralized cryptocurrencies — such as and namely Bitcoin — but Facebook’s Libra too.

Trump quipped that he doesn’t believe that digital assets are money, adding that they are also known to be very volatile and “based on thin air”.  The President went on to argue that cryptocurrencies can and do “facilitate unlawful behavior”, citing its use in the drug trade and “other illegal activity”.

He even took some time to poke the Libra crowd, claiming that the association should abide by “all Banking Regulations”, and that the U.S. Dollar should be the world’s strongest currency.

A BTC Ban Possible?

This sudden tweetstorm left many wondering, is Trump looking to ban Bitcoin? And more importantly, would it even be possible for the American leader to take such drastic action?

According to one prominent crypto researcher, no and yes. In a recent Twitter thread, Alex Kruger, an economist and known industry analyst, laid out his thoughts on the potential for a ban of Bitcoin and maybe other cryptocurrencies in the United States.

Via the 16-part thread, Kruger explained that technically, the U.S. president cannot ban code, which Bitcoin is. What Trump can do, however, is to ensure that the government targets fiat onramps into this ecosystem. For instance, U.S. financial regulators could determine cryptocurrencies, even Bitcoin, too risky to be sold to retail investors; and the President could even issue an executive order disallowing those from dealing with BTC, but he would need to find a valid reason in the Constitution or legislature.

Kruger sees three main reasons why the government would want to crack down on the cryptocurrency. 1) cryptocurrency represents a clear threat to the banking system, as made evident by the anti-Libra stance by governments the world over; 2) digital assets hurt Washington’s ability to impose economic sanctions; 3) as Trump stated, Bitcoin and its ilk can be used to facilitate illicit activity, like laundering proceeds of contraband sales and evading taxes.

Despite these reasons to ban cryptocurrency, Kruger notes that such a step would be unlikely. Even if a ban manages to occur, the economist notes that the ban would be overturned.

This aside, Jeremy Allaire, the chief executive of the Goldman Sachs-backed Circle, suggested that Trump’s tweets — yes, tweets — are potentially the “largest bull signal” for Bitcoin of all time. As he explains, no longer is Bitcoin an asset for the fringe. Now, it exists in the mainstream, as more likely than not, this single Twitter thread, exposed to upwards of 68 million Twitter users, will trigger global political and economic discussion on the matter. And by simple virtue of curiosity and the so-called “Lindy Effect”, this space could grow rapidly.

Photo by Helloquence on Unsplash

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Illegal Bitcoin Mining? China Seizes Thousands of ASICs

China Arrests 22 in Illegal Bitcoin Scheme

Bitcoin mining is still a thing in China. And according to a recent report from XinhuaNet, a Chinese press agency, so is illegal cryptocurrency mining. Due to the nation’s easy access to crypto ASIC mining machines (which are made in the nation), cheap electricity, and ways to siphon power from certain grids, some Chinese have started illegal mining operations.

In a recent case outlined by Xinhua, around 22 individuals installed over 4,000 ASIC machines that were used to mine Bitcoin and compatible cryptocurrencies at facilities that used illegal power. The farm, located in a Chinese province called Jiangsu, is reported by a local power firm to have stolen power of upwards of $2.9 million.

This comes shortly after a few other cases of illegal Bitcoin mining in China. In one case, an individual stole thousands of dollars worth of electricity from a local train network to power ASICs.

It is unclear if the 22 have been or will be charged, and how they will be punished if they do get sentenced.

Crypto On the Rise

China’s obviously aversion towards local illegal Bitcoin miners comes as the nation has seen a resurgence in cryptocurrency, both at a government and retail investor level.

Per a tweet from cnLedger, a number of “online data service providers” suggest that a crypto asset-related app is trending on China’s iOS App Store. Exchange giant Huobi’s mobile application is now, according to the sources, the seventh largest keyword in the aforementioned marketplace. Considering that Apple sells some 40 million handhelds in China each year, this is quite the statistic.

Simultaneously, WeChat keyword analytics have accentuated a massive uptick in the volume of “Bitcoin”. In fact, the past ninety days have seen keyword volume for the Chinese term for “Bitcoin” skyrocket by five times.

And, Sina Finance, a major financial news and data provider owned by a major technology firm, added Bitcoin and cryptocurrency price feed data to its application.

According to local reports, this data is only available via Sina’s application, not through the website. It has also been reported that this new section on the Sina Finance application includes cryptocurrency- and blockchain-related news, but it isn’t too clear from what sources Sina is grabbing news events from.

This surge in mom & pop interest has unfortunately led to some odd debacles. Per previous reports from Ethereum World News, a project piggybacking off Tron’s success is reported to have stolen over $30 million from local investors. Known as “Wave Field Super Community”, the firm claimed to be a Super Representative, meaning a leading node, of the Tron blockchain. Wave Field is Tron’s Chinese name translated to English.

Photo by Alessio Lin on Unsplash

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Trump Bitcoin Takedown To Provide Unintended Price Support For Crypto

donald trump bitcoin

Is there a Trump rally incoming for bitcoin?

That’s what’s on the minds of many after US president Donald Trump tweeted on Thursday that he was “not a fan of bitcoin and other cryptocurrencies”.

Although Trump is loved by many he is arguably hated in at least equal measure at home and possibly hundreds of millions more around the globe.

So could the Trump take down of bitcoin push those inclined
to look favourably on anything that Trump doesn’t like, bring a net boost to
the price of bitcoin?

His strident comments may have surprised some but that probably depends on your politics, or at any rate what you think Trump’s politics are.

Trump is fairly certain that cryptocurrencies “are not money”,
noting that they are “highly volatile and based on thin air”.

That’s wrong in so many ways but we needn’t bother to provide more well-worn rebuttals for EWN readers.

however, it is worthy or recalling that his tweets come hard on the heels of Fed chairman Jerome Powell accepting that bitcoin has a use case as a store of value similar to gold.

Unlike Trump, Powell also has the foresight and historical perspective to appreciate that nothing lasts forever when he was considering the current role of the US dollar as the world’s reserve currency of choice.

It is against this background perhaps – and the question of how to deal with Facebook’s Libra – that Trump’s attitude should be measured.

Where the Fed chairman goes, Trump is often tempted to go in
the opposite direction.

Libra – get a bank licence says Trump

And Donald and Mark (Zuckerberg) aren’t exactly buddies either. Trump made that clear in his demand that Facebook go get a banking licence before it launches Libra.

“If Facebook and other companies want to become a bank, they
must seek a new Banking Charter and become subject to all Banking Regulations,
just like other Banks, both National and International,” said the US president.

Powell, in coordination with other central bankers, is determined that Libra does not see the light of day until regulations that adequately address the perceived risks it conjures up are firmly in place.

Trump – a nationalist who doesn’t like “global money” unless it’s the US dollar

Perhaps it is not surprising that Trump’s economic nationalism has outweighed the hopes of those libertarians who lean right.

Although Trump’s thoughts to date on the US dollar have been contradictory as to whether he wants a strong or weak dollar, he does want the US’s preeminent position in the global  financial system to be maintained.

With that objective in mind, the dollar has to be protected from all comers, and that includes bitcoin, Libra and any other potential challengers it would seem.

Although Obama made references of a negative kind about crypto with his “Swiss bank account in your pocket” remark, which was interpreted as a reference to bitcoin, this is the first time a US president has explicitly discussed bitcoin. That matters.

Crypto market takes Trump in its stride – will his remarks support bitcoin price?

The market did not immediately react in an adverse fashion to Trump’s observations, and the price of bitcoin has actually appreciated since then.

In other times, such a high-powered individual throwing sand
in the face of crypto would have triggered a price plunge. Indeed, Powell’s
recent remarks were cited by some as the reason for the recent pullback from
$13,000 by bitcoin.

In fact, far from being a negative for bitcoin, Trump’s tweets may help to support the price.

Bitcoin was priced at around $11,500 when Trump made his tweet on Thursday night and is $200 higher at the time of writing, trading at $11,725 on Coinbase.

That’s not a significant move by bitcoin standards, but it does show resilience in the face of political pressures.

BTCUSD 12-hour chart 12 July
BTCUSD 12-hour candles on Coinbase, 12 July (Chart courtesy TradingView)

Trump tweet a great advert for bitcoin

More than that though, Trump’s tweet has led to headlines
around the world as the mainstream media picks up on the latest pronouncements
from the Oval office.

If nothing else it further raises the profile of bitcoin and
crypto.

But more than that, it will get people asking “what are they worried about?”.

If the dollar is so “dependable” and “reliable”, as Trump would
have it, what’s there to worry about? If crypto is so useless, why worry about
Libra?

Unwittingly, Trump has just provided bitcoin with the sort of advert money (crypto or fiat) can’t buy.

If The Donald wants to get up to speed with the real deal on crypto, Tron’s Justin Sun has reached out with an invite to join him for lunch with Warren Buffett:

And if the president doesn’t have time for that, perhaps he should dwell on the fact that since his presidency began the dollar index is down -4% and bitcoin has returned 1,186%.


Image: Courtesy Fickr, Gage Skidmore

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India: Notable Crypto Exchange Shutters Ops Amid Bitcoin Ban Rumors

Indian Crypto Exchange Bites The Dust

Despite seemingly massive support for Bitcoin, crypto assets, and blockchain in India, one of the nation’s largest exchanges recently shuttered its operations. According to a blog post published Thursday, penned by a co-founder of Koinex, Rahul Raj, the platform will be closing operations immediately.

Raj, explaining that rationale behind this dramatic decision, cites “months of [regulatory] uncertainty and disruption”. This is in reference to India’s odd stance on digital assets, which has forced regulated financial institutions, including banks, to stop interacting with crypto exchanges, startups, and individuals in this ecosystem. Without a proper banking partner, it is no surprise that Koinex has been struggling, as, after all, fiat-to-crypto (and vice-versa) trades are a key part of any exchange. Raj expands:

The last 14 months have been tough to operate a digital assets trading business in India, on account of the closure of bank accounts holding user deposits… We have consistently been facing denials in payment services from payment gateways, bank account closures and blocking of transactions for trading of digital assets. 

This is far from the worst though. Earlier this month, the Bitcoin and crypto asset community woke up to a harrowing tidbit of news from Bloomberg Quint. An article, which cited a “draft bill”, revealed that regulators in India, from multiple financial and judiciary agencies, revealed that those who involve themselves in the “sale, purchase and issuance of all types” of crypto assets, including Bitcoin, could lead to a ten-year jail sentence and/or fine.

At the same time, the Reserve Bank of India and its partners have purportedly also proposed the creation of a “Digital Rupee” to fill in the void left by a ban on Bitcoin. This exact strategy has purportedly been “recommended by a panel headed by Economic Affairs Secretary Subhash Chandra Garg”, and has been backed by an array of other respected governmental agencies.

This article purportedly killed Koinex’s volume, with the platform’s co-founder claiming that this draft bill created a mass amount of “FUD” which resulted in a “sharp decline in trading volumes” and an anti-crypto stance from citizens of the nation. Per data from The Block, the volume on Koinex has, in fact, plummeted. Since hitting $9.7 million of aggregate volume in September 2018, this figure has been halved to $4.3 million. Ouch.

The weird thing is that as reported by Ethereum World News previously, the Reserve Bank of India has denied any involvement in any new crypto ban. In a statement issued June 4th (prior to this news), the central bank claimed that it is not aware of any new plan for a ban. They explain that they were not forwarded any draft bill, if it exists at all, from any fellow financial regulator in India, nor was in communication with any other agencies on the subject matter.

This doesn’t imply that the draft bill doesn’t exist though, yet the RBI should be involved if it truly is in the works.

Regardless, many note that if the ban was put in place — if it does exist after all — it may actually be a net benefit for the cryptocurrency space. This is in reference to the Streisand effect and the theory that consumers like to oppose government control in some settings.

Photo by Mitchell Ng Liang an on Unsplash

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Libra Latest: Bank of England’s Carney Hints At Crypto On Central Bank Balance Sheets in BBC Interview

Talking to BBC radio about a new Bank of England report The Future of Finance, governor Mark Carney was fairly balanced about Facebook’s Libra but said: “You can’t let a system develop that you have to use because it becomes so integral to everyday life.”

Carney, in response to the interviewer suggesting the report
was written to address problems, Carney began defensively.

“There’s much more positive here about the future of
finance. Start on the positive side…” he began.

“There are issues – the least well-off pay the most for
their services,” echoing the words of Facebook chief executive Mark Zuckerberg.

“Credit… transferring… borrowing – the less well-off pay the
most.”

“Half of businesses don’t have access to borrowing.”

Crypto on central bank balance sheets?

Then he moved on to the fintechs, of Facebook which is the newest, and how they can be part of the solution.

“There are new financial solutions possible that can address
them.”

“You won’t notice what we do because it is to do with the
plumbing… but you will notice some things. We can change bank payments so they
are instant.”

“We can level that playing field… New fintech’s can have access to our balance sheet.”

Libra Investment Token will pay interest and could be the sort of security that central banks might consider holding, or may have too.

Facebook’s Libra “has got to be safe” says Mark Carney

So where does Facebook’s Libra fit in, is it a good idea or
a danger?

How would it work, the interviewer asked it worried tones?

“It has to be safe or it’s not going to happen.”

“We, the Fed and all the major central banks and supervisors would have direct regulatory oversight.”

“Also, regulators like the FCA here in the UK would have oversight. We want to make sure data and privacy rights are protected.”

“Now, we have strong privacy rules as part of Europe.”

If Libra develops, won’t be “place for terrorists and criminals”

“People need to have the ability to be private but still access this system if it does develop.”

He continued: “It has to be the choice of the individual a
true choice. You can’t let a system develop that you have to use it because it
becomes so integral to everyday life.”

In his final comments on crypto-related matters he said: “We are not going to allow a network that comes into place for criminals and terrorists.”

Calls in UK for Carney to reveal details on secret Zuckerberg meeting

Regulators, politicians and central banks have been pushing back against Libra over the past few days.

There are also calls in the UK for Carney to reveal what he and Mark Zuckerberg spoke about in their secret meeting.

Whatever happens with Libra, it has boosted the bitcoin price as it closes in on $10,000.


What do you think about the possibility of stablecoin cryptos like Libra, and even proper public distributed crypto such as bitcoin, being held on central bank balance sheets? Leave a comment below

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Facebook Libra Regulatory Pushback Building in India, US and Europe

That didn’t take long – from India, to the US and Europe, regulators are pushing back against Facebook’s Libra cryptocurrency plans.

Within a heartbeat of the Libra cryptocurrency announcement,
the world’s regulators began signalling: hey not so fast Zuck.

It’s one thing to tell the world about a global money launch,
but quite another to get it out of the door.

Facebook’s problems are not so much in its particular brand
of blockchain (or not blockchain) so much as the considerable roadblock
presented in the form of the global financial regulators and central banks.

But you also get the feeling that the financial authorities
are behind the curve on crypto and we are at a wake-up call moment.

Financial Action Task
Force coming after Facebook’s Libra and all crypto

After much chatter about how to regulate crypto on Friday
(21 June) the G7’s Financial Action Task Force (FATF) will present its full
recommendations for regulating “virtual asset service providers” (VASPs).

 The rules have all
been finalised with the exception of the part about requiring Vasps to record
the identity of senders and receivers of cryptoasset, which it was consulting
on.

Presumably the bank-wire type rules will be included in the published
recommendations on Friday, despite the objections of those lobbying on behalf
of the crypto industry.

That being so, the new rules could be a particularly onerous
and expensive to comply with for crypto firms, especially regarding
transactions involving so-called privacy coins such as Monero (XMR), Dash
(DASH), Verge (VXG) and Zcash (ZEC) but also with “ordinary” pseudonymous coins
such as bitcoin.  

It all comes to a head on 28 June at the G20 meeting in
Osaka, Japan, when the financial regulators will have their own gathering
running alongside that of the political leaders.

 There could be some market-impacting
news coming out of those deliberations.

But let’s get to the responses from the financial powers
that be to Facebook’s Libra.

US Senate Banking Committee
and House Financial Services Committee to both hold Libra hearings

In the US Facebook’s are turned out to be a red rag to a
bull.

First out of the blocks was the chair of the House Financial
Services Committee, Rep. Maxine Waters who said her body would conduct hearings
on the social media giant’s plans. She called on Facebook to immediately cease
any further work on the project.

“With the announcement that it plans to create a
cryptocurrency, Facebook is continuing its unchecked expansion and extending
its reach into the lives of its users. The cryptocurrency market currently
lacks a clear regulatory framework to provide strong protections for investors,
consumers, and the economy,” Waters said in a written statement.

Activity on the US Capitol didn’t stop there.

The Senate Banking Committee has let it be known that it
will begin a hearing on Libra starting on 16 July.

According to Reuters, the committee had asked Facebook for
details about the project in May.

Jerome Powell high
expectation on “safety and soundness” for Facebook’s Libra

And yesterday the chair the of US Federal Reserve Jerome
Powell was asked about Libra in his press conference following the sharing of
thoughts on interest rates and other matters that came out of the two-day policy
meeting.

Asked if cryptocurrencies might impact monetary policy, Powell
said “we are a long way from that”. He noted that Facebook had done “quite
broad rounds around the world with regulators, supervisors and lots of people
to discuss their plans and that certainly includes us.”

He see the benefits of the that could have “large
application” but has high expectations from a safety and soundness and
regulatory standpoint”. In his remarks he was saying he was echoing what Bank
of England governor Mark Carney had already said, which we will come to shortly.

Staying with the US, hostility to crypto in Congress was in
evidence last month when Rep. Brad Sherman said bitcoin and other crypto should
be banned.

His reasoning is that crypto could undermine the dollar and
therefore the economic power of the US: “An awful lot of our international
power stems from the fact that the dollar is the standard unit of international
finance and transactions… it is the announced purpose of the supporters of
cryptocurrencies to take that power away from us.”

Bank of England’s
Carney demands “highest standards” for Libra

Over at the Bank of England, governor Carney, told the FT that regulators will need to be all over Libra like a rash.

Although he is “an open minded” about the project and sees
the benefit of its promised “free and instant” payments. He said the
authorities will need to look at it “very closely”.

Precisely because it would be likely to be on an exponential
adoption is Carney’s implied thinking, it will need to be “subject to the
highest standards of regulation”.

In a shot across Mark Zuckerberg’s bow, he said a launch
would not be greeted with an “open door” by regulators.

Carney said the Bank of England will be working with the G7
group of leading industrial nations, the Bank of International Settlements,
sometimes referred to as the bank of the central banks and the Financial
Stability Board, which Carney chaired shared until last year .

French finance
minister lashes out against Libra

Staying in Europe, French finance minister Bruno Le Maire is calling for central banks to look into Facebook’s plans, warning that it could become a “sovereign currency” and that this “must not happen”, he said in an interview aired by Europe1 radio. Read more on this in the EWN reports here.

German European
Parliament members warns on Facebook “shadow bank”

German European Parliament member Markus Ferber said
Facebook’s Libra “set off alarm bels for regulators” and he worried that
Facebook could in effect become a “shadow bank”.

Staying in continental Europe, Europe’s privacy chief,
Giovanni Buttarelli the European Data Protection Supervisor told Business
Insider that “any further concentration of personal data poses additional risks
to the rights and freedoms of individuals — so the proposed launch of a digital
coin (cryptocurrency) by Facebook will require careful scrutiny from several
enforcement bodies, including data protection authorities”.

The European Union has the toughest privacy rules among the
major economic blocs, enshrined in the General Data Protection Regulation
(GDPR).

India says no to Facebook Libra

Elsewhere things are looking too good either.

India, which Bloomberg reported last year was a key target for
Facebook’s crypto ambitions with its high number of unbanked individuals, is
not playing ball.

The usually well-informed Indian business news outlet  The Economic Times, reported: Libra, the cryptocurrency to be unveiled by Facebook next year, will not be available in India, according to a person directly in the know, as current regulations do not permit use of the banking network for blockchain currency transactions.  

Mark Zuckerberg explicitly mentioned the 1.2 billion unbanked
people around the globe as the core initial target audience.

The unnamed person in the report is quoting saying: “Facebook
has not filed any application with RBI (Reserve Bank of India) for its
cryptocurrency in India.”

However there has been no response from the Indian central bank
and a Facebook spokesperson told ET “We expect Calibra to work on WhatApp and
be available globally’”

Facebook is going to need to go on a hiring spree for lobbyists for each of the jurisdictions it is looking to bring the service to.


Do you think Facebook’s Libra will get off the ground or be killed at birth by regulators? Leave a comment

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How Facebook Globalcoin Will Make Private Money Work After Hiring Bank Lobbying Supremo

Facebook Globalcoin

With the Facebook Libra / Globalcoin set to launch as soon as Tuesday 18 June and news that the social media giant has just hired a Standard Chartered bank lobbying supremo, interest is reaching fever pitch.

Some have questioned why Facebook is launching a crypto
product at all, while others says it will probably not be a “real” crypto.

But both of those viewpoints miss the real import of what Mark
Zuckerberg is up to.

From Cincinnati Time Store to Bitcoin to Facebook Libra Coin

Before the invention of bitcoin – and its necessary
precursor the internet – the possibility of sustaining a private money form was
limited, and not just by states that jealously guard their monopoly over the
money supply.

A brief glance at the various utopian schemes proffered in
the US in the early nineteenth century, before industrial capitalism had a sure
footing, provides legion examples of the difficulties.

Chief among them was the Cincinnati Time Store venture EWN covered a few months back, that lasted three years and was a success in the localities in which it operated.

Let’s not delve further into the radical anarcho Ricardian
roots of the ideas of Josiah Warren (the time in question was labour time), but
instead home in on its inability to roll out its local success at national
scale.

Its national scale was a part of the secret of the success
of the US as the economic powerhouse it is today – the lack of regulatory
frictions, notwithstanding state laws, provided an accessible home market. But
things were not so straightforward for money.

Many banks competed with issuing their own paper bills (of
exchange) but none held national sway.

Warren’s scheme could not escape the same parochialism borne
of technological limitation. In Warren’s day there was no way to effect a
one-to-many relationship in the fashion of the 21st century
internet.

There were many competing forms of money in the US at the
time, which was partly because of the vast distances that made interconnectedness
before the telegraph and the railway impossible at any faster rate than the
horse.

Facebook Libra coin’s universality

In addition to well-attested properties that money must have
to fulfil its necessary function as a standard of measure, means of exchange
and store of value, there is one that tends to be overlooked or at any rate
subsumed in the others.

Alongside acceptance (trust), portability and divisibility, is
an underlying assumption that the functionality money delivers will be applicable
to the entire universe of all exchange values.

The Cincinnati Time Stores needed a national network that
was available to all – or a large majority – of consumers and producers for it
to establish a hegemonic presence. That was technically not possible; no matter
how much loved the stores may have been in Cincinnati, their impact was
limited.

There was no point in a merchant or service provider marking
up prices in labour-time expended in the production of a good or fulfilment of
a service if there was no market in which such a standard was used. Similarly,
there was no incentive to accept the stores’ notes.

A Facebook global coin makes 21st century private money easy

Enter Facebook’s Libra coin, although the name that was
previously doing the rounds – Globalcoin – illustrates our universality imperative
much better.

Facebook, as the world’s most pervasive social network, is,
privacy doubts aside, the most perfectly suited issuer of private money in the
21st century.

Unlike the Cincinnati Time Store Facebook has the ability to
launch its money simultaneously everywhere if it so wishes. Even if it chooses
a staggered rollout, this potential of universality would still work its magic,
forcing others to respond to its gravitational force.

That’s why it has been so easy for Facebook to do deals (to be
precise, bring in as members of the “independent” foundation governing the
Libra coin) with supposed payment rivals such as PayPal, Visa and Mastercard.
It’s why it has been able to bring service providers such as Uber on board to
accept its private money.

It’s why, after its discussions with the US Treasury and the
governor of the Bank of England, it is presumably fairly confident that it will
be able to comply with regulations, such as they are.

FATF finalises recommendation on global crypto on 21 June –  is Facebook Globalcoin launch timed wrong?

However, we should add a caveat, or at least further
explanation, on the regulation issue.

The Facebook Libracoin/Globalcoin whitepaper is set for release three days before the Financial Action Task Force (FATF) finalises its recommendations for what it calls virtual asset service providers (VASPs) on 21 June.

Facebook is well aware of the impending global crypto
regulations rollout and knows that each jurisdiction will interpret the rules
differently. But its strategy is unlikely to be to play one country’s
regulators off against another, in a sort of whack-a-mole play.

Alternatively, Facebook may seek to argue for laxer
regulations for the unbanked and those not seeking to interact directly with
the fiat financial system – users may be granted a certain amount of currency
or could earn it through various activities such as watching video adverts.

The FATF recommendations as they relate to crypto have been finalised with one exception and this is it: the all-important paragraph 7b, with the salient part highlighted below:

7 (b) R.16 – Countries
should ensure that originating VASPs obtain and hold required and accurate
originator information and required beneficiary information on virtual asset
transfers, submit the above information to beneficiary VASPs and counterparts
(if any), and make it available on request to appropriate authorities.
It
is not necessary for this information to be attached directly to virtual asset
transfers. Countries should ensure that
beneficiary VASPs obtain and hold required originator information and required
and accurate beneficiary information on virtual asset transfers, and make it
available on request to appropriate authorities.
Other requirements of R.16
(including monitoring of the availability of information, and taking freezing
action and prohibiting transactions with designated persons and entities) apply
on the same basis as set out in R.16

It is likely that Facebook is pre-empting this by building
in the necessary “bank wire level” reporting compliance.

To do that it will have to introduce KYC/AML onboarding for
existing Facebook/WhatsApp/Instagram/Messenger customers to gain access to the
Libra Coin.

But to get traction with such an approach means we come back
to the problem of trust, but given that people provide their details to
merchants of all types on the internet and Facebook’s reported partnerships
with existing players, at least partly with an eye to ameliorating such
concerns, this is not necessarily the insurmountable barrier it might appear at
first sight to the social network’s payment and marketplace ambitions.

Facebook’s Project Libra know what regs are coming, or are pre-empting

Alternatively, Facebook, if it hasn’t factored in the
unknown regarding which direction the FATF will move in on paragraph 7b next
Friday, then it would be wise to wait until that is clear.

That’s unlikely to happen at this late stage which does
suggest Facebook knows what’s coming down the line.

And the news today, reported by the Financial Times, that Facebook has hired Standard Chartered’s head of corporate and public affairs, Ed Bowles, to be its director of public policy, suggests it is preparing in advance for the regulatory tussles to come.

Facebook, some existing regulated firms and cryptocurrency industry main beneficiaries

Actually, Facebook would probably be a beneficiary of new
expensive regulatory hurdles to entry, as would existing regulated VASPs and
non-crypto financial services companies.

But these are really side issues. Facebook’s global reach
means its coin will have the universality and the convenience that comes with it.
That will likely trump trust fears for many consumers, if not for government regulators
concerned about privacy and monopoly practices.

The banks and regulators are behind the curve and Facebook
and those crypto firms that can navigate the new regulations will be the winners.

Bitcoin – the one coin to rule them all

So too will bitcoin (if not XRP) and other decentralised (mined) digital currencies that can operate independently of states, even if on and off ramps become policed more vigorously – market activity will simply be transferred to over-the-counter trading.

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Buy Bitcoin: Hong Kong Protests Spark Fervor Regarding Freedom, Democracy

Bitcoin (BTC), a digital currency not bound by the traditional rules of fiat, may seem nebulous and useless, but geopolitical and macroeconomic events are quickly proving its viability. Over the past week, Hong Kong has seen a growing amount of political unrest as a result of proposed legislation from the local government, which would allow local authorities to ship purported criminals from the “Special Administrative Region” of China to the mainland.

The Hong Kong Protests

On Sunday, an estimated one million individuals from Hong Kong — a supposed one in seven residents of the island city — took to the streets in protest. They called for Carrie Lam, the “chief executive” of Hong Kong, to step down, and for other regulators to retract the aforementioned bill. The hundreds of thousands in the streets, and the millions watching from their apartments and across the globe believe that this bill can allow for Hong Kong to extradite naysayers of Beijing and pro-democracy pundits to the mainland for a different fate than if they were to remain in the city.

The image below, which comes from The New York Times, accentuates the size of the crowd and how big of an issue this truly is.

However, after this protest, one of the largest in Hong Kong’s history, Lam didn’t back down, and instead doubled-down.

Then, Wednesday (yesterday) swung about, and another set of protests took place. This time, the crowd formed organically, and didn’t even sign the proper papers to hold the protest. The crowd, which is claimed to have amassed to tens of thousands, maybe even 100,000 at its peak, surrounded a building in Hong Kong where lawmakers were set to discuss the extradition bill.

Unlike the previous rally, the activists, most of which were in the teens or mid-twenties, were looking to physically stop something from occurring. As a result, the police cracked down, enlisting the help of rubber bullets, tear gas, pepper spray, and other tactics meant to deter rioters, not protesters. Authorities also tried to ID as many as possible, specifically in a bid to try and stem the movement. This, for those with knowledge of Hong Kong’s spotty history, is very reminiscent of 2014’s Umbrella Movement, during which students looked to stop Beijing from censoring certain candidates from participating in the city’s elections.

But even in spite of this latest move, Lam isn’t backing down, and even recently likened the protesters, deemed rioters by the police force, as spoiled children.

Why Bitcoin Matters Here

Bitcoin may not seem relevant here, but it is. As Travis Kling, an anti-establishment proponent that runs crypto fund Ikigai, recently wrote on Twitter:

Hundreds of thousands of people protested in Hong Kong against a bill allowing extradition to mainland China. Access to The Washington Post and The Guardian were just blocked in China. Access to Wikipedia was blocked a few weeks ago. Crypto is intimately wrapped up in all this.

Kling is poking at the fact that cryptocurrencies and related technologies allow for censorship and other questionable anti-democratic tactics to be stamped out. Here’s a perfect case in point, during the protest, those attending opted to use cash for the metro instead of so-called “Octopus Cards”, which are ID-tied cards used for transit and purchases in certain stores (7-11, Mcdonald’s, etc.). They did this to avoid financial surveillance. Bitcoin, if used correctly and implemented correctly, could have been a perfect alternative here.

Photo by John-Paul Henry on Unsplash

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China: Hodling Bitcoin (BTC) and P2P OTC Trading is Legal

China Prompts Bitcoin Boost

Good news for the Chinese crypto community. Xiao Wei, a Council Member at the Law Research Association of the Bank of China, shared with the local media that, despite the ban, Chinese citizens can safely hold Bitcoins (BTC) without this being considered a crime or an illegal activity.

According to the expert, the Chinese legal system expressly prohibits ICOs, but has a different view regarding the possession of cryptocurrencies and the rights associated with them:

“In 2013, China gave a clear definition of the legal nature of Bitcoin itself: a specific virtual commodity, that is, its status as a “property”. The General Principles of Civil Law, implemented on October 1, 2017, reconfirmed that virtual property is protected by Chinese Law.

Xiao Wei analyzed that based on this, owning Bitcoin is legal in China.”

Likewise, being crypto a legal property, OTC trading is also not considered a crime. The expert explains that according to the laws, this would be an act of “disposition of power” in which one person transfers to another an asset along with the rights associated with it. “How to dispose of it is the private right of the owner, and others have no right to interfere,” he explained

China: The Bitcoin Ban Doesn’t Attack Trading Per Se, But its a Powerful Resource Against Scammers

Xiao’s statements provide some clarity to the ecosystem. The
Chinese government has a restrictive policy that seeks to reduce the activities
associated with cryptocurrencies, especially because of the negative perception
that exists around the ecosystem.

Flag of China
China Flag

According to BJNews, there are currently 461 court judgments
related to “Bitcoin” and this trend increases over time. In the last
5 years, the evolution was from 9 pieces to 26, then to 54, then 120 and then
216.

However, there is still no need to be overexcited. The
government maintains its ban and there is a very thin line between what is
legal and what is illegal.

According to sources, Xiao Wei has maintained constant communication with other lawyers and there is a general agreement that according to the Country’s Criminal Law, non-p2p trading may fall under the Article 225, numeral 3 of the Criminal Law, “Other illegal business operations that seriously disrupt market order”.

However, although it may be considered legal, there is also
no law that expressly says so. This has generated many conflicting opinions
among legal experts.

One example is Wang Deyi who explains that from his point of view “Bitcoin transactions in China are in violation of national regulatory policies, and bitcoin-based over-the-counter transactions are difficult to obtain legal recognition.”

So far almost all arrests and prosecutions associated with
cryptocurrencies in China have been the result of fraud against third parties.

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