Black Dog Venture Partners CEO Scott Kelly Claims Bitcoin’s Liquidity Will Cause a Crash

Bitcoin price predictions are either overly positive or negative. It seems level-headedness is difficult to come by in this regard. Scott Kelly, CEO of Black Dog Venture Partners, claims a Bitcoin crash is imminent. Not because it is overvalued or anything, but how the “massive trading” is problematic. It is the first time someone considers high liquidity a problem for any financial asset. A strange situation, that much is certain.

There is no shortage of platforms trading Bitcoin and other cryptocurrencies these days. Given the recent Bitcoin price surge, it is only normal we see more people trading the world’s leading cryptocurrency. This has allowed the price to appreciate over time and successfully retain its value at the same time. Not everyone thinks the massive trading of BTC is a good thing, though. Scott Kelly sees it as the aspect that will cause an imminent Bitcoin price crash.


This train of thought is rather interesting to follow. More specifically, without liquidity, the Bitcoin price would have collapsed a while ago. An increase in trading can only be a good thing, for all intents and purposes. It is true the Bitcoin price is mainly dominated by speculation right now, though. That doesn’t automatically mean we will see a collapse either. Scott Kelly is issuing a very odd statement in this regard. Drawing parallels to traditional trading won’t work out in this regard either. More specifically, none of the previous bubbles compares to Bitcoin in the slightest.

In virtually every case, those markets collapsed after “regular people” got on board. With Bitcoin, markets have been open to everyone and anyone from day one. There is no reason to make this comparison whatsoever. It seems as if Scott Kelly wants accredited investors to have access to Bitcoin. The rest of the world shouldn’t meddle in things they “can’t comprehend”. We have seen Russian government officials echo similar statements not too long ago. Bitcoin is and will always be a free market, though.

Scott Kelly is trying to discredit Bitcoin like so many higher-ups in the financial sector. All of these remarks have fallen on deaf ears. The more types like Scott Kelly oppose Bitcoin, the more traction it will gain. This disruptive force will not be held down by any means. Speculation will always be a big part of any cryptocurrency. However, one shouldn’t forget Bitcoin also has real-life use cases. The currency will see a correction sooner or later, but a collapse seems highly unlikely.
SOURCE: http://www.newsbtc.com/2017/11/06/black-dog-venture-partners-ceo-scott-kelly-claims-bitcoins-liquidity-will-cause-crash/

Bitcoin is unstoppable these days, passing one “technical” test after another, crossing the $5000-mark, the $6000-mark, and the $7000-mark in a matter of weeks. The “people’s currency” has gained 27.33% in seven days, as market volume increased.

What’s behind the digital currency’s breathtaking run?

Certainly, it isn’t the lifting of regulations which halted trade of digital currency in China, as some expected (back in September, China banned Initial Coin Offerings (ICOs) and shut Bitcoin exchanges, sending the digital currency’s price tumbling from $5000 to close to $3000).

Instead, there have been a number of positive developments that helped build investor confidence and hype in the “people’s” currency. One of them was the stepping up of government regulations in US and Japan to protect the cryptocurrency markets from possible manipulation, while limiting the supply of new coin offerings.

*As of Saturday, November 4, 2017, at 10.30 am

Another development was the change in Wall Street’s attitudes towards Bitcoin, with hedge funds cozying up to the digital currency; and CME introducing Bitcoin futures.

Then there was the renewed investor interest in technology in Wall Street, following a string of strong earnings reports from Amazon, Google, Facebook, and Apple, sending NASDAQ to new highs, and re-igniting hype for technology investments.

Source: Finance.yahoo.com 11/4/17

Meanwhile money, the fuel behind the multiple asset rallies, continues to be cheap, as interest rates continue to be cheap. This means that investors do not have to sell one asset to buy another, as was the case back in the old days of “normal” interest rates.

Apparently, Bitcoin can survive and thrive without China, provided there are developments that keep the confidence and hype for the digital currency alive, and and provided that money remains cheap.
SOURCE: https://www.forbes.com/sites/panosmourdoukoutas/2017/11/04/bitcoin-prices-still-firmly-above-7000-without-china/#7d8ff9e46f02

Bitcoin May Rise To $20,000, But Will Eventually Collapse: Russian Parliamentarians
Members of the Russian Duma predict further growth of Bitcoin, but concurrently call it a bubble that is sure to collapse.

Bitcoin has potential for enormous growth, but this growth is unstable, owing to which there are significant risks of a crash, according to deputies of the Russian Duma.

Bitcoin scaled new heights this week, and surged past a record-breaking $7000. The spike marks an increase of more than sevenfold since the start of the year, when Bitcoin’s price was around $1000. While the price surge has validated supporters of cryptocurrency, the significant increase has also given rise to concerns about Bitcoin’s volatility.

During an interview with RT, Chairman of the State Duma Financial Market Committee, Anatoly Aksakov, said the market for the digital currency was definitely bullish at present, with plenty of potential for further growth.
Aksakov claimed the price would continue to rise owing to “active discussions” about Bitcoin in the media, which tout the cryptocurrency’s record-breaking price surges and high profitability. It is owing to this hype, according to Aksakov, that “hotheads” looking for investment opportunities, “jump into the deep end”; this state of affairs will continue, he said, until some “critical situation” brings Bitcoin crashing down.

During an interview to Regnum, Sergey Zhigarev, head of the State Duma Committee on Economic Policy, Industry, Innovative Development and Entrepreneurship, voiced similar sentiments. Zhigarev described Bitcoin as a bubble, saying that while there was no question about Bitcoin’s potential for future growth, the grounds and stability of this growth were both in question, making it a risky investment.

Futures exchange CME Group recently announced a plan to launch Bitcoin futures at the end of 2017, a move which could lend a great deal of legitimacy to the controversial digital currency.

However, the effect of this announcement on governments and banks remains to be seen, as both groups have displayed suspicion and unwillingness to take Bitcoin seriously. Russia is one among many countries trying to bring cryptocurrencies under government control – last month, President Vladimir Putin issued orders for the regulation of cryptocurrencies and ICOs, shortly after he called digital currencies risky. In addition, Russia has also announced plans to launch its own virtual currency – the ‘CryptoRuble’.
SOURCE: https://cryptovest.com/news/bitcoin-may-rise-to-20000-but-will-eventually-collapse-russian-parliamentarians/

Chinese Analyst: ”Bitcoin Nuclear Bomb In New Currency War Between China and USA”

Xiao Lei, a Chinese financial analyst, has published an article that seeks to argue that the spheres of bitcoin and cryptocurrency are increasingly becoming a battleground in “a new currency” war between China and the United States. Despite some bitcoin users describing Lei’s views as conspiratorial, the article has garnered significant attention after becoming recommended by Baidu Baijia – an online media channel owned by major Chinese company Baidu.

Mr. Lei is Concerned About the Future for Chinese Bitcoin Traders

Chinese Analyst: ”Bitcoin Nuclear Bomb In New Currency War Between China and USA”In an article recommended by Baidu Baijia, Xiao Lei states “as an ordinary investor, I am concerned about whether bitcoin investment can make money. But if I stand in the perspective of a country, I am concerned whether this thing can be used by me or not and whether there are some factors that are unfavorable to me in the future.”

Mr. Lei argues that the contemporary era comprises an epoch in which “the strategic significance of [traditional commodities such as] oil and grain… may not be so important [now, as] the game between countries has entered [the] virtual” domain. Xiao Lei posits that control over seigniorage (profit made by a government by issuing currency, especially the difference between the face value of coins and their production costs) has become the principal means through which economic power is assured in the contemporary context.

Mr. Lei Argues That “The Battle of Seigniorage” Has Manifested At “The Level of Virtual Currency”

Chinese Analyst Describes Bitcoin as Potential "Nuclear Bomb' In "New Currency War" Between China and USAThe analyst states that bitcoin “is not welcome by the legal currency market, unless there is sufficient means and ability to control… If any country can manage bitcoin freely, bitcoin will become the nuclear weapon of a new currency war. This has been discovered by Japan and the United States.”

Mr. Lei states that “the bitcoin core development team” has sought to “curb China’s growing influence in the bitcoin market”, arguing that such has resulted in a power struggle between western-based bitcoin developers and Chinese-based miners for influence over the network.

Xiao Lei asserts that “since 2013, Bitcoin has seen tremendous growth in China with 95% of the trading volume and more than 50% of the computing power.” Mr. Lei argues that the growing Chinese presence in the bitcoin ecosystem has correlated with a reduction in the influence bitcoin’s core developers — of which he emphasizes “there are very few Chinese.” Mr. Lei even goes as far as stating that “cultural and strategic intentions determine that there is a natural and irreconcilable contradiction between the core developer and the Chinese government.” Mr. Lei alleges that “in order to counterbalance the rise of the Chinese market…Bitcoin is… constantly using technological improvements to weaken China’s influence.”

“If the Current Trending Continues, One Day You Will Find That Holders of Bitcoin and Those Who Do Not Own Bitcoin May Be Two Totally Different Classes”

Chinese Analyst Describes Bitcoin as Potential "Nuclear Bomb' In "New Currency War" Between China and USAMr. Lei states that “on the night… [that] the two major exchanges in China… stopped trading, the Chicago Mercantile Exchange [(CME)], the world’s largest futures exchange, announced” its intention to launch bitcoin futures during Q4.

Mr. Lei points out the majority of Chinese bitcoin trading now occurs on over the counter (OTC) markets. Mr. Lei asserts that “if CME successfully launches bitcoin futures in the fourth quarter, …over-the-counter transactions in China or exchanges in Japan and South Korea may not have much pricing power… Once CME’s bitcoin futures market goes public, it will become the world bitcoin [market] maker.”

It should be noted that members of the cryptocurrency community have dismissed Mr. Lei’s assessments as conspiratorial and lacking in evidence – with many pointing to Mr. Lei’s frequent insinuation pertaining to the Central Intelligence Agency (CIA), including implying that the CIA may in some way have colluded with bitcoin’s creator, Satoshi Nakamoto, as unsubstantiated claims that serve to undermine Mr. Lei’s credibility.
SOURCE: https://news.bitcoin.com/chinese-analyst-describes-bitcoin-potential-nuclear-bomb-new-currency-war-china-usa/

Some of China's top bitcoin exchanges are now shifting to the over-the-counter (OTC) market in the wake of a crackdown by regulators in the country.

In announcements made on Oct. 31, both OKEx and Huobi Pro said they will introduce peer-to-peer trading platforms that support fiat currency transactions, including the Chinese yuan, as an alternative for the country's domestic cryptocurrency investors.

Based in Hong Kong, the two exchanges had previously provided solely crypto-to-crypto trading since being founded by their respective parent exchanges, Beijing-headquartered OKCoin and Huobi. They will now pivot toward a combination of the existing structure and the direct, peer-to-peer model.

According to OKEx, the yuan is currently the only fiat currency that is available on its P2P platform, noting that it has seen increasing demand from Chinese investors since the exchange crackdown.

Lennix Lai, financial market director at OKEx, said the platform has received around 8,000 user applications for account registration since the new service's launch on November 1.

Lin Li, CEO of Huobi, said in his latest announcement that, besides the P2P platform on Huobi Pro, the company is also eyeing an expansion to overseas markets. The firm is currently in the process of setting up an exchange platform in South Korea in order to compete with local marketplaces like Bithumb.

The news follows months of growing scrutiny by Chinese regulators that led to all major bitcoin exchanges in the country, including OKCoin, Huobi, BTC China, and ViaBTC, to suspend order book trading of digital assets against the yuan.
SOURCE: https://www.coindesk.com/chinas-bitcoin-exchanges-shift-p2p-model-domestic-crackdown/

Bitcoin has faced turmoil in the past but nothing like this. In two weeks, a massive fight taking place among bitcoin insiders could produce a ruinous schism—undermining the integrity of digital currency and threatening its sky-high value.

The fight is over a so-called fork in bitcoin’s software, known as SegWit2x, that will create two competing versions of the currency and lead to disagreement over the “real” bitcoin. There’s even a battle over who gets to use the popular BTC ticker symbol.

The fork will also mean a payout to existing bitcoin holders, though any windfall could be overshadowed by larger turmoil. To understand what’s at stake, here’s a plain English Q&A to explain the controversy.

Why is bitcoin going to split?
There is a disagreement between key stakeholders over how to update the core software that runs bitcoin. You can learn more about the technical details below, but the crux of the fight is over whether to double the size of bitcoin blocks.

The blocks, which are added every 10 minutes, serve as a record of all bitcoin transactions to create a permanent blockchain ledger. The current controversy means there is likely to be two bitcoin blockchains—one that uses smaller 1MB blocks and one that uses bigger 2MB blocks—and temporary uncertainty over which is the “real” bitcoin.

While bitcoin has experienced these sort of forks in the past (most notably with the creation this summer of rival currency “Bitcoin Cash,”) the market has never regarded such splits as a replacement for the original bitcoin. This time could be different.

When will the fork happen?

It is supposed to take place soon. This website offers a more precise moment —specifically Nov. 16 at 5:42 am—based on the number of blocks being added to the bitcoin blockchain. The fork is supposed to go into effect for block number 494784. (Once again, technical details on blocks and forks are further below).

Who is supporting the split?

The main advocates for the bigger blocks, aka B2X, are consortiums of bitcoin miners who use specialized computer rigs to compile transactions on the blockchain—and earn bitcoins (currently valued at around $7,400) while doing so. They argue the bigger blocks are needed to accommodate the rapid growth of the bitcoin network, and to reduce the rising transaction fees that have come with this growth.

The mining consortiums are being backed by many of the companies that provide the financial eco-system that supports bitcoin. These include certain exchanges, wallet providers, market makers, and storage vaults. The positions of these companies, however, is inclined to shift based on the market and popular sentiment.

Who is opposing it?

Opposition is led by a group of developers who maintain the core software that has so far defined bitcoin. Many of them consider the proposed fork as a corporate takeover of bitcoin, and say there are other solutions to accommodate bigger blocks. Here is how Samson Mow, a longtime developer, describes the big block advocates:

“[Big block] ringleaders are still pushing for a hard-fork now purely due to ego and escalation of commitment at this point. If you look at the history of contentious forks, starting from Bitcoin XT in 2015, it’s the same group of people. Either they are technically incapable of conceive of scaling methods other than block sizes increases, or they are trying to set Bitcoin on a path of centralization by making it more difficult for people to run nodes.”

The developers are supported by certain companies and mining groups, and by many amateur bitcoin enthusiasts who get together at meet-ups worldwide.

What version of bitcoin will prevail?

No one is really sure. If most miners get behind the proposed split—and stay behind it—that will likely make the big block version the de facto official version of bitcoin.

But if the market continues to place more value on the original bitcoin, miners could get cold feet and go back to the small version if it is more profitable. Indeed, for now, certain futures markets are predicting the price of the original bitcoin will be significantly higher post-split than the big block version (it’s unclear how reliable these are).

It’s also likely that big exchanges like Coinbase will serve as king-makers after the fork, in part by deciding which version of the currency gets to be “BTC”— the ticker symbol everyone currently uses to define bitcoin. For now, most exchanges are not openly supporting one bitcoin version or the other. (You can read a rundown on where the 20 biggest ones stand here). Here is what Greg Dwyer of the exchange BitMEX has to say:

“There is a lot of passion from both sides in the community as to why we should have a fork and as to why we should not, especially now with Bitcoin Cash (and its ability to mine larger blocks), a number of Bitcoiners do not see the need for 2X anymore. With bitcoin at [its current valuation of $7,400], there is a lot of money at stake to ensure the coin you support succeeds.”

How long will it take to clear up?

That’s also unclear, though it’s probably best for bitcoin if a winner emerges sooner than later. A prolonged battle could spread confusion among investors and trigger a crisis of confidence in the booming crypto-currency market.

Meanwhile, some fear the big block version of bitcoin will fail to contain adequate technical measures (known as replay protection) to ensure transactions on both chains don’t become muddled. This would likewise spread uncertainty.

Finally, there is speculation that, even if the big block version of the chain proves less profitable, some big miners will keep mining it anyway in order to impair the small version. If that sounds like civil war, you’re right, and the fallout could be ugly.

What about those payments for current bitcoin holders?

If the big block version of bitcoin goes forward, it will contain an exact replica of the existing bitcoin blockchain—including a record of who owns all of the existing bitcoins. This also means every existing bitcoin holder will also hold those bitcoins on the new chain.

Coinbase and other big exchanges have already confirmed they will accommodate both versions of the chain, meaning a client who holds five bitcoins will also soon hold five B2X (or whatever they call the new version). This is potentially good news for bitcoin holders because, hey, free money! They will wake up with digital assets they didn’t own the day before.

Those waiting on a windfall should, however, take note of two caveats. First, there is uncertainty about how much liquidity there will be for both versions of bitcoin after the fork (note that Bitcoin Cash, which arrived after a fork in August, is fairly illiquid). Second, the arrival of B2X bitcoin could trigger a crisis of confidence in the digital currency market—and cause the combined value of both currencies to fall below today’s bitcoin price.

So what are the technical details behind the B2X update?

Before explaining B2X, it’s helpful to realize bitcoin works a bit like the operating systems in your iPhone or Android phone: Every so often the developers push a code update containing features or security updates for everyone to install.

Typically, bitcoin miners and others install the updates without fanfare and carry on. If they don’t, it’s not a big deal since the updates are backward compatible—meaning new and old versions of bitcoin software can recognize each other, including the all-important blockchain transactions.

The B2X update, which aims to increase the size of a bitcoin block from one megabyte to two, is different. It involves a “hard fork” that will create incompatible versions of the existing blockchain. To use the phone analogy again, imagine an iOS update that resulted in an iPhone user only being able to message other iPhones that had also added the update.

Finally, note that the technical measure itself—doubling the block size—is rejected by core bitcoin developers as necessary to accommodate the transaction growth on the network. These developers point out a recent technical solution (known as “SegWit”) that fits more transactions on a block is already in place, and that other easy-to-implement congestion solutions will arrive soon.

Where can I learn more about the B2X fork?

This Q&A is only a high-level overview of the coming split. If you want more, Bitcoin Magazine is an authoritative source and has a helpful guide to B2X and other forks. Meanwhile, a recent Forbes feature by bitcoin maven Laura Shin offers a detailed look at the people and factions driving the current crisis. If you’re curious about how exactly forks work (including soft versus hard forks), this is a useful piece.

Finally, Twitter is your best source for up-to-date information about the fork. Some useful people to follow include bitcoin veterans like Ryan Selkis (aka Two-Bit Idiot), developer Jameson Lopp, economist Tuur Demeester, and small block advocate Samson Mow. It’s also worth watching the tweets of Coinbase CEO Brian Armstrong since his company is likely to affect the final outcome.
SOURCE: http://fortune.com/2017/11/03/bitcoin-segwit2x/

The only major Wall Street strategist with an official price forecast for bitcoin turned "cautious" as the digital currency soared above $7,000 to record highs.

We are "cautious short-term on bitcoin," Fundstrat co-founder Tom Lee said in a Thursday report. He said bitcoin has gained far more than fundamentals warrant right now.

Fundstrat's model for bitcoin factors in the number of unique bitcoin addresses — a string of letters and numbers used to identify accounts — and the estimated number of transactions per user. In August, the model indicated that bitcoin would rise to $6,000 by the middle of 2018.

Bitcoin shot past that figure to an all-time high of $7,454.04 on Friday, according to CoinDesk. A surge of investor interest in the digital currency has sent it soaring more than seven times in price this year.

Bitcoin 12-month performance


DataTrek Research co-founder Nick Colas, a market strategist who began writing about bitcoin several years ago, also pointed out in a Friday note that digital currencies are still not an asset class by traditional criteria of size and fundamentals.

"Crypto currencies do not yet have as robust a regulatory framework around them as stocks, bond, currencies or other traditional asset classes," Colas said. "Some prominent financial markets professionals even think that governments may eventually ban them. No one talks that way about stocks and bonds."

Several major investors and banking executives have said in the past several months that bitcoin is a bubble that may soon burst. Elliott Prechter of The Elliott Wave Theorist newsletter predicted nearly seven years ago that bitcoin would surge from 6 cents. But Prechter said in July that the mania around bitcoin now dwarfs the tulip bulb mania from nearly 400 years ago.

With bitcoin just above $7,000 on Thursday, Lee said in his report that the currency is overwhelmingly in "weak hands," or held by investors who are chasing price gains and who would quickly sell on any negative turn in sentiment.

Lee maintained a 2022 target of $25,000 for bitcoin. His team's technical analysis indicates if bitcoin falls below $6,450, the lowest it will fall is $5,000, the September high. Before starting Fundstrat in 2014, Lee was chief equity strategist at JPMorgan.

The world's largest futures exchange, CME, said Tuesday that in response to client interest it plans to launch bitcoin futures by the end of the year. Amazon.com this week also registered three website domains that include references to cryptocurrencies, although the move may be more to protect the company's brand name. The e-commerce giant has said it has no plans accept cryptocurrency.

In contrast to Lee's cautious turn, stock analyst Ronnie Moas of Standpoint Research said Friday that following the latest headlines, he is raising his 2018 price target on bitcoin from $7,500 to $11,000. Moas began covering bitcoin this summer around the same time as Fundstrat and has a $50,000 target for 2027, a nearly sevenfold gain from Friday's prices.

Bitcoin has come a long way from being followed by a small group of enthusiasts to the focus of a new product from a major exchange. More than 120 so-called cryptofunds have launched to invest in bitcoin and other projects related to cryptocurrencies, according to financial research firm Autonomous Next.

Not meeting the traditional criteria of an asset class is "no reason to avoid" digital currencies, Colas said. "By the time they meet the high hurdles of 'Asset class' status, much of the high-powered return potential will be in the past."
SOURCE: https://www.cnbc.com/2017/11/03/first-wall-street-strategist-to-embrace-bitcoin-and-call-for-rally-is-now-cautious.html

One of the most active markets for trading cryptocurrencies says it plans to list only a fraction of the hundreds of new digital coins that have been invented this year.

The cautious approach to new digital assets by GDAX, a marketplace whose backers include the New York Stock Exchange, underlines the risks around many of the cryptocurrencies born in 2017’s frothy market for initial coin offerings, or ICOs.

The highly unregulated, experimental fundraising mechanism has so far in 2017 produced more than 200 coins and generated some $3bn for early stage companies globally, according to tracking website CoinSchedule.

But it has also drawn warnings from financial watchdogs concerned about retail investors losing money on the young projects, many of which could turn out to be failures or outright frauds.

Short for Global Digital Asset Exchange, GDAX currently has the world’s fourth highest bitcoin trading volumes and is regulated by the New York Department of Financial Services. It belongs to San Francisco-based Coinbase, a digital wallet company valued at $1.6bn this summer, whose investors include Andreessen Horowitz and Union Square Ventures.

Designed for institutional traders, GDAX currently supports bitcoin, litecoin and ethereum, established cryptocurrencies which have been circulating for nine, six and two years respectively.

But as a wave of new coins has hit the market, GDAX says it is under pressure to expand its listings.

“The number one feedback I’d say we get from customers is, ‘add more things, I want to trade more assets’,” Adam White, head of GDAX, told the Financial Times. “We see those customers going to other venues, and we don’t want that to happen.”

However, Mr White played down the amount of new coins GDAX will list, saying only it expects to add “more than three” next year. “It’s not going to be hundreds,” he added, clarifying: “We plan to support dozens of new assets in the coming years.”

The exchange on Thursday launched a framework for evaluating digital assets for admission to its platform, which it hopes will help guide the nascent industry’s development.

GDAX’s framework considers factors including whether the team developing the coin has a “track record of demonstrable success or experience”, if there are examples of “real-world implementation” for the coin, and whether it advances GDAX’s company goals of creating an “open financial system”.

Courtney Chin, business operations associate for Coinbase, said there was an “internal risk-reward” calculation that GDAX had to make, and that it was generally opting to see coins mature before listing them.

Although notable finance figures such as JPMorgan Chase’s Jamie Dimon and famed investor Warren Buffett have derided cryptocurrencies, the prospect that mainstream financial services could embrace them was bolstered this week as CME Group, the world’s largest exchange operator by market value, said it was preparing to launch bitcoin futures.
SOURCE: https://www.ft.com/content/32881cb2-bf23-11e7-b8a3-38a6e068f464

Not long ago, the New Zealand Financial Markets Authority, also known as the FMA, has published a commentary about initial coin offerings (ICOs) and digital currency services.

In its statements, the financial regulator declared that the economic substance alongside with a few characteristics can determine whether an ICO is a financial product or not. The report goes ahead and explains how ICOs can actually fall under the scope of managed investment products, debt securities, derivatives, equity securities and more, therefore companies holding these crowdfunding campaigns may have to fulfill certain regulatory requirements.

The agency went ahead and clarified that: “All tokens or cryptocurrencies are securities under the FMC Act [Financial Markets Conduct Act 2013] – even those that are not financial products. A security is any arrangement or facility that has, or is intended to have, the effect of a person making an investment or managing a financial risk.”

Not only this, but the regulator also mentioned that all businesses offering financial services related to digital currencies, such as wallets, brokers, and exchanges need to comply with the Financial Service Providers Act of 2008. In case a digital currency is not defined as a financial product, then businesses will need to comply with trade regulations, as per the Fair Trading Act.

The FMA also commented that at this time, most of the online exchanges operating in the region have no licenses and aren’t regulated, therefore if something goes wrong, investors will not be able to legally recover their investment capital.

However, these statements lead us to believe that New Zealand is not actually planning to work on any legislative framework for digital currencies and the related services anytime soon. Rather, some believe that the FMA wishes to inform the public that they take no responsibility whatsoever in case things go wrong.
SOURCE: https://themerkle.com/new-zealands-financial-regulator-states-all-cryptocurrencies-are-securities/

Bitcoin has been attracting lots of attention in Japan. But the number of people who use the crypto-currency, and businesses that accept it, are still limited. Some companies are looking to change that.

Online gourmet guide Gurunavi is rolling out a payment system for 10 restaurants in Tokyo this week. The company is going to watch how customers and businesses respond to the service. And it's got plans to expand the system nationwide next spring.

"Foreign tourists are accustomed to using the digital currency. We think more of them try to use bitcoin in Japan. We'd like them to be able to do this when they dine out," says a company official.

Another online-information provider, Recruit Lifestyle, began offering bitcoin-payment systems in July. Its clients include a leading eyewear chain. Company officials say a growing number of independent restaurants is also signing up.

Japan introduced regulations to protect crypto-currency users in April. The use of Bitcoin has since started to spread.

Three major Japanese banks are considering a foray into the expanding field of crypto-currencies by working together to develop their own.

Sources close to the matter say Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho will set up a joint council by the end of the year to discuss ways they can cooperate. They're planning to call on regional banks and other financial institutions to join the project. The 3 banks envision a digital currency equivalent in value to the Japanese yen that will make life more convenient for customers.

They plan to look at ways to combine bank accounts for cash and digital currency so account holders can use the crypto-currency like cash. The financial groups have been working on their own digital currencies, so it remains to be seen if they can agree on a unified standard. Global competition to develop digital currencies is intensifying as major IT firms enter the market.
SOURCE: https://www3.nhk.or.jp/nhkworld/en/news/editors/2/bitcoinexpandinginjapan/

As Chinese bitcoin exchange Huobi suspends local CNY trading today, the ‘big three’ trading platform is looking at pastures beyond China.

In an announcement, Huobi founder Leon Li laid out the company’s future vision as the exchange implements “full cessation of all digital assets” trading against the yuan today.

Li wrote:Li went on to underline that digital currencies has already “led to a great stir” that will “bring profound changes to the global financial system.” The founder of one of China’s biggest bitcoin exchanges also gave some insight into the authoritarian controls exerted by Chinese regulators to effectively shutter the cryptocurrency industry.

In recent years, China’s economy is developing slowly. However, capital resources that are intended for the development of enterprises have been attracted to morbid speculations in some markets,” Li explained. “Since the second half of 2015, the financial industry has a cycle of strong regulation where the capital should support the economic development.”

Li added: Coinciding with Huobi’s cessation of its Chinese exchange is the launch of Huobi.pro, its international trading platform with support for Tether (USDT) with trading enabled for ten cryptocurrencies. The exchange is headquartered in Singapore with a subsidiary in Hong Kong. Meanwhile, Huobi China will transform from a cryptocurrency trading platform to a blockchain consulting and research platform.

China’s central bank, the People’s Bank of China, first announced a sweeping ban on all initial coin offerings (ICOs) and cryptocurrency trading on 4th September. In this post, Li revealed official notices received from the PBoC on 15th September, forcing the exchange to suspend user registrations and RMB deposits on the same day.

Huobi’s shuttering of trading in China comes a month after fellow ‘big three’ exchange BTCC, the world’s oldest bitcoin exchange, shut its doors following the regulator’s squeeze.
SOURCE: https://www.cryptocoinsnews.com/chinas-bitcoin-curtain-call-watershed-moment-says-huobi-founder/

Central bank-issued digital currency is the future, not cryptocurrency, economist says

Digital currencies issued by central banks will make transactions more efficient while cryptocurrencies serve as a vehicle for illicit activity, economist Barry Eichengreen told CNBC Monday.

Asked whether he thought cryptocurrencies like bitcoin and ether would play a major role in the economy, he said: "Not really."

"I think there is a role for central bank-issued digital currencies which are a very different thing than crypto, anonymous currencies," he said.

"The first alternative central bank digital currencies will make transactions more efficient. The second one is a vehicle for money laundering, tax evasion and the like."

Cryptocurrencies have come under fire from a number of economists, regulators and banking executives in recent weeks.

Harvard economist Kenneth Rogoff made a prediction that the price of bitcoin would "collapse" under continued pressure from governments.

Last month, China's regulators moved to ban initial coin offerings (ICOs) that allow start-ups to raise funds by flogging off new cryptocurrencies. The price of the virtual asset dipped significantly following the ban.

JPMorgan CEO Jamie Dimon has called bitcoin a "fraud" that will eventually "blow up." Earlier this month, the investment banker said he would refrain from commenting on bitcoin, only to scrutinize it again the next day.
SOURCE: https://www.cnbc.com/2017/10/30/barry-eichengreen-central-bank-digital-currency-not-cryptocurrency.html

The State Bank of Vietman has issued “Information related to the use of virtual currency” that bans use of the cryptocurrency for payments.

It won't say why, and doesn't explicitly ban mining or blockchain.

The Bank lists conventional payment mechanisms like cheques, payment orders and credit cards as permitted, but then adds (after translation) that “Bitcoin virtual currency and other similar is not lawful means of payment in Vietnam; The issuance, supply, use of bitcoin and other similar virtual currency as a means of payment is prohibited in Vietnam.”

Fines of around US$9,000 apply to those who accept or offer payments in virtual currencies.

Why the Bank decided to make the statement is unclear, but it's not hard to guess why: Vietnam's government is a little like China's in that it permits private enterprise but remains a single-party communist state. Virtual currencies' represent a threat to command economies that such regimes find hard to tolerate, as China's shuttering of Bitcoin exchanges and Russia's attempts to do likewise demonstrate.

The ban does not, however, mention mining or exchange of virtual currencies, leaving open the possibility that Vietnam will permit cryptocurrency-or-blockchain-related activity. So long as they're not used to buy and sell stuff.

Vietnam's trying to reform its economy, is already winning manufacturing work from China and attracting considerable foreign investment. It's not hard to imagine blockchain making a splash there, even if Bitcoin is banished from commerce.
SOURCE: https://www.theregister.co.uk/2017/10/30/vietnam_bans_bitcoin_as_payment_for_anything/

The South Korean central bank have announced that they will classify digital currencies as commodities rather than currencies. Whilst regulation is yet to be confirmed, the decision will certainly have an effect within the third largest global crypto trader's borders.

The central bank of South Korea announced on Monday that they would not consider Bitcoin a currency but rather as a commodity. According to Yonhap News, Lee Ju-yeol, the bank’s governor, refuted the notion that cryptocurrency should be considered legal tender. At a legislative session in Seoul, he said:

    Regulation (of virtual currencies) is appropriate because it is regarded as a commodity. It [cannot be] regulated at the level of a currency.

The declaration on Monday comes as the first news from the nation of South Korea regarding digital currency since the ban on initial coin offerings which came into place following China’s similar ruling this September.

Speaking in South Korea’s capital, Lee Ju-yeol claimed that the space needed further regulation on the grounds that cryptocurrency was a commodity, rather than a legal currency. He continued, however, to admit that:

   It is not a situation for the Bank of Korea to take such an action at the present.

During Monday’s National Assembly audit of the Bank of Korea, both the governor of the institution and a Democratic Party politician, Song Young, stated that the bank’s research into virtual currency could use improvement.

This is despite a digital currency task force being created earlier this year to research potential regulation and licensing issues surrounding Bitcoin and Bitcoin exchanges. It was later reported that the group failed to reach consensus about how cryptos should be treated legally. On Monday, however, Lee pledged to follow the example of such nations as Sweden in their attitude and exploration of topics surrounding cryptocurrency.

The central bank announcement comes just weeks after a meeting with the IMF in which the Asian economic power agreed to step up their supervision of cryptocurrency-related matters within their borders. However, for now, it seems that the planet’s third largest trader of cryptocurrency will remain free of regulation, although according to Monday’s announcement, the days in which traders can enjoy this liberty are certainly numbered.
SOURCE: http://www.newsbtc.com/2017/10/27/south-korea-central-bank-bitcoin-commodity-not-currency/

SBI Group, a financial services company based in Tokyo, is increasing its commitment to cryptocurrency and blockchain space with several bold initiatives unveiled this week.

SBI Holdings, the entity that holds most of the group’s businesses and companies, has signed a deal with London-based bitcoin debit card company Wirex to launch a joint venture. SBI Holdings previously invested US$3 million into Wirex’s subsidiary in Japan via its Fintech Fund.

The new company, called SBI Wirex Asia, seeks to deliver a Japanese cryptocurrency payment card and further plans to develop other co-businesses in the field of cryptocurrencies, blockchain and payments.

Wirex serves some 900,000 customers in 130 countries, enabling them to spend their cryptocurrencies on the Visa network around the world.

The deal with SBI Holdings will allow Wirex to strengthen its position in Japan and Asia with products and services specifically designed for these markets, said Pavel Matveev, founder and CEO of Wirex.

“Japanese customers are our most enthusiastic supporters and use our Visa cryptocurrency debit card more regularly than anywhere else in the world. They deserve a Yen-denominated card soon and we will deliver it to them,” Matveev said.

In addition to its deal with Wirex, SBI has also unveiled plans to establish “a new financial ecosystem based on cryptocurrency.”

In its latest financial report, the firm detailed its plan. SBI’s cryptocurrency efforts involve entering into the cryptocurrency mining business, “an activity unevenly distributed in China,” establishing means of utilizing cryptocurrencies, providing institutional investors with cryptocurrency investment opportunities, and establishing a dominant cryptocurrency exchange platform.

SBI Virtual Currencies, a company the group established to operate a cryptocurrency exchange platform, was granted a Virtual Currency Exchange license by the Financial Services Agency in September. The exchange is expected to support the trading of BTC, XRP, JPY and USD.

Another of SBI’s ventures is called SBI Crypto and was established in August to focus on cryptocurrency mining. The company is currently in preparations for Bitcoin Cash mining overseas.

SBI Group said it will “acquire cryptocurrency share through mining in order to stabilize the market.”

The firm also plans to launch a remittance solution utilizing blockchain technology for financial institutions in South Korea. This would be done through a partnership with DAYLI Intelligence, a fintech company from South Korea.

A separate partnership with Siam Commercial Bank would allow for the launch of the first remittance service between Japan and Thailand that utilizes Ripple. The solution would enable users to send money from Japan to Thailand in less than five seconds compared to the current one to two business days.
SOURCE: https://coinjournal.net/japan-financial-group-sbi-strengthens-commitment-cryptocurrencies/

The head of South Korea’s central bank stated at a parliamentary audit that Bitcoin will not be regulated as a  currency, but as a commodity.

During the National Assembly audit of the Bank of Korea (BOK), governor Lee Joo-yeol said: “it is difficult to look at [virtual currencies] as money by [definition] of Bank of International Settlements (BIS),” according to Yonhap News.

Lee also expressed the central bank’s current official stance on the regulation of cryptos:

“Regulation (of virtual currencies) is appropriate because it is regarded as a commodity. It [cannot be] regulated at the level of a currency.”

Despite this, Lee revealed that the central bank is not launching regulation soon: “It is not a situation for the Bank of Korea to take action at present.”

Last year, South Korea launched a digital currency task force to research regulatory and licensing parameters for bitcoin and bitcoin exchanges. CCN reported earlier in June that the participants ‘failed to agree on whether virtual currencies should be included in systems right now and how the systems will work if they are included.”

The Financial Supervisory Service (FSS), the country’s financial regulator, banned initial coin offerings (ICOs) guided by the task force, leading to fears of a crackdown on the local cryptocurrency trading market, similar to what took place in China.
SOURCE: https://ibsintelligence.com/bitcoin-regulated-commodity-south-korea/

Japan’s Quoine - Too Much Interest to Handle from ‘Desperate’ Chinese Exchanges

China’s Bitcoin-to-fiat exchange and ICO ban is producing a record number of “desperate” refugees, Quoine’s CEO Mike Kayamori has said.

In comments to Bloomberg, the Japanese exchange head said the fallout from the Chinese rules means the country’s exchange operators are fervently looking for alternatives, including in Japan.

“We’re talking to almost all of those guys. They’re all desperate now,” he told the publication.

Japan offers a ‘friendlier’ licensed environment for crypto exchange businesses, while China’s household names such as OKCoin and Binance are eyeing up Hong Kong, Singapore and South Korea.

Kayamori said that such is the scale of demand, Quoine alone is unable to service Chinese requirements.

“There’s a lot of Chinese retail people reaching out to us, but we can’t handle it. So if a Chinese partner can handle all of those and they connect to us, that will be much easier,” he added.

As China’s flagship exchange BTCChina shuts its doors in the coming days, the Bitcoin sphere is buzzing with speculation as to if and when the situation will change once again.

In the meantime, international scaling is something OKCoin is considering in light of current demand.

“China used to account for a significant share of the cryptocurrency market, so we think the demand is there," Lennix Lai, financial market director for its subsidiary OKEx said.

“As formerly one of the biggest operators in China, we think we have a good chance of competing globally.”
SOURCE: https://cointelegraph.com/news/japans-quoine-too-much-interest-to-handle-from-desperate-chinese-exchanges

Japanese internet giant GMO has announced a plan to sell its “next-generation mining boards,” equipped with 7nm ASIC chips through an initial coin offering (ICO) next year.

Japanese conglomerate GMO Internet announced on Wednesday that its bitcoin mining business will launch an initial coin offering (ICO) next year. The purpose of the token sale is “to sell next-generation mining boards,” the company wrote, stating that: Japan currently has no specific law for regulating ICOs. However, some existing laws may apply to token sales. For example, some of them may be classified as sales of securities and subject to the current securities laws.

Japan's GMO Plans to Sell 7nm Bitcoin Mining Boards Using Token Sale“We will consider properly the laws and regulations that are applicable to us under the current legislation including Payment Services Act and the Financial Instrument and Exchange Act,” GMO stated in its announcement. “And [we] will be conscious of the protection of token purchasers and stakeholders’ profits when designing the token sale.”

At the end of September, GMO’s bitcoin exchange subsidiary, GMO Coin, became one of the first eleven bitcoin exchanges to be granted registration by the Financial Services Agency (FSA).


GMO is currently developing the 7nm ASIC chip in collaboration with a partner that has semiconductor design technology. The project was first unveiled in September. According to Masatoshi Kumagai, GMO Group president, the company plans to invest 10 billion yen in the next few years on its mining operation as well as the research and development for 7nm, 5nm, and 3.5nm mining chips.

Japan's GMO Plans to Sell 7nm Bitcoin Mining Boards Using Token SaleIn addition to operating a mining center in Northern Europe, the company will also launch a cloud mining business as well as sell its mining boards equipped with the 7nm mining chips. “Each card will be able to mine at a projected 8 terahashes per second or more with a power consumption of only 300 watts,” Kumagai detailed.

“It will be possible to reduce power consumption compared to the existing mining machines with the same performance, and achieve a computational performance of 10TH/s per chip,” GMO detailed on Wednesday, adding that:
“After the launch of the bitcoin mining business, we will also sell our own next-generation mining boards,” GMO’s announcement reiterated.
Source: https://news.bitcoin.com/japans-gmo-7nm-bitcoin-mining-boards-token-sale/

‘Bubblish’ Bitcoin ‘Just an Application’ of Blockchain, Says China Renaissance CEO

The head of a major Chinese investment bank has claimed bitcoin isn’t as significant as its underlying blockchain technology.

Fan Bao, chief executive of investment bank China Renaissance, believes bitcoin is “getting a little bit bubblish” following its recent all-time highs above $6,200, up from $1,000 at the turn of the year.

“Obviously, right now it’s [bitcoin price] getting a little bit hot, like the weather outside,” Bao said an interview with CNBC recorded in Saudi Arabia. “[It’s] getting a little bit bubblish.”

Instead, the investment banker is more bullish about blockchain, the underlying technology powering cryptocurrencides like bitcoin.

Referencing blockchain technology separately from bitcoin, Bao went on to state: Bao’s comments come at a time when bitcoin is firmly in the mainstream with everyone from heads of states like Putin to Wall Street banks’ chiefs offering an opinion on decentralized cryptocurrencies that function independently from state controls. Bitcoin hit an all-time high of $6,200 a week ago.

Meanwhile, multiple governments around the world are either researching or already developing blockchain-based applications for multiple industries including trade finance, logistics,  land registry, pensions and more.

Source: https://www.cryptocoinsnews.com/bubblish-bitcoin-just-an-application-of-blockchain-says-china-renaissance-ceo/

Bitcoin 'doesn't solve a main need in society right now,' says Royal Bank of Canada CEO

From JPMorgan's Jamie Dimon, to the IMF's Christine Lagarde, bitcoin has become a major talking point for the finance world's established voices.

Now Royal Bank of Canada CEO, David McKay, is joining in calls to question the utility and legitimacy of bitcoin.

"The purpose it [bitcoin] seems to serve today is really to help move money in a hidden way and facilitate, potentially facilitate, criminal activity of moving money in an undetected way," McKay told CNBC in an episode of Life Hacks Live.

"I think some people will call it a fraud. I don't think it's fraudulent … But it doesn't solve a main need in society right now."

McKay doubts bitcoin's legitimacy in the face of the pound, euro or dollar.

"A currency is a promissory note on a future good and service and economy. I hold a dollar, or a pound, or a euro because I want to exchange it for physical good or a service sometime in the future and I'm confident in holding that note because of the political system backing it, because of the strength of the economy, because of a central bank with reserves."

"So when you look at those characteristics and the real need for a currency, how do you apply that to a cryptocurrency? Most of those criteria don't fit; it's not backed by a government, it's not backed by rule of law, it's not backed by economy, there's no reserve against it, you actually have to mine it in a distributed chain environment," said McKay.

Though bitcoin may "serve a need in the future" in reducing the friction in moving money, it's potentially illicit activity means it's in need of regulation, said McKay.

It's the technology underpinning bitcoin rather than the cryptocurrency itself that excites the CEO.

"Most people in the world aren't talking about bitcoin. They're talking about blockchain, the distributed ledger private or public that underpins the bitcoin application of it," said McKay.

"It has a chance to transform everything from our capital markets, and our trading businesses, our security settlement businesses, right into our retail franchise. And so that technology, that ability to work in code and build solutions, are two new technologies and areas that we need."

On the evolution of the banking sector, McKay sees a huge change already.

"When I grew up in banking we were like an enclosed industry. We built everything ourselves, we managed everything ourselves, we interacted one on one with the client."

"Today, banking is about partnerships with fintech, with technology companies, bringing in new ideas, building innovative solutions quickly, breaking them down and rebuilding them. It's a completely different industry," said McKay.
Source: https://www.cnbc.com/2017/10/23/bitcoin-does-not-solve-a-main-need-in-society-royal-bank-of-canada-ceo.html