Taiwan Follows Japan’s Bitcoin-Friendly Move, Avoids Outright Ban

In a positive move for the cryptocurrency market, Taiwan has announced that it won’t be banning digital currencies like bitcoin.

News of what Taiwan intends to do avoids the harsher steps taken by China and, more recently, South Korea. Instead, Taiwan is copying the move by Japan by embracing the digital currency market.

The news was announced by Taiwan’s Financial Supervisory Commission chairman Wellington Koo. During a joint session of parliament and cabinet, Woo stated that Taiwan would not regulate against the industry. Instead, he pledged to leave the door open for development.

Kuomintang Party (KMT) congressman Jason Hsu questioned Woo on the country’s position. However, Woo agrees with Hsu and believes that the technology presents a huge economic opportunity for Taiwan. The political party has long held a pro-fintech stance.

Hsu said:

“Just because China and South Korea are banning, doesn’t mean that Taiwan should follow suit – there is a huge opportunity for growth in the future. We should emulate Japan, where they treat cryptocurrency as a highly regulated, highly monitored industry like securities.”

According to Hsu, this paves the way for the passing of the ‘Financial Technology Innovation Experimentation Act.’

If passed, it would establish a regulatory fintech sandbox for research into digital currencies and the blockchain.

A Long Way to Catch Up

Unlike Japan, Taiwan’s venture into the cryptocurrency market is relatively new. Despite this, though, it has a highly active crypto scene. This can be seen by the fact that MaiCoin, Taiwan’s only digital asset exchange platform, has around 25,000 users.

Yet, the country is eagerly working at building the market.

So much so, that AMIS, a Taipei-based blockchain consultancy, is attempting to get financial institutions to join a private blockchain consortium proposition. AMIS is a sister company of MaiCoin. At present, only Taipei Fubon Bank and Taishin International Bank have joined while Taiwan’s Industrial Technology Research Institute is an investor; however, it’s still early days.

Hsu knows that Taiwan has a long way to go before it can catch up with the likes of Japan.

Japan has been in the market since the early days with its first digital currency exchange originating in 2010. Not only that, but the yen is a free-floating currency, whereas the Taiwan dollar is tied to the U.S. currency.

Taiwan realises that that isn’t going to stop them embracing the industry. Compared to countries that are shutting down cryptocurrencies, like bitcoin, Taiwan is remaining competitive in a growing sector.

China Bans ICOs and Closes Domestic Bitcoin Trading

At the beginning of September, Chinese authorities announced they would be banning initial coin offerings (ICOs).

In a joint statement from seven of China’s regulators, it read:

“[ICOs are] a kind of non-approved illegal open fund raising behavior, suspected of illegal sale tokens, illegal securities issuance and illegal fund-raising, financial fraud, pyramid schemes and other criminal activities.”

This was shortly followed by the decision to halt domestic digital currency exchange trading. As a result, several prominent bitcoin exchanges – ViaBTC, BTCC, OKCoin, Huobi and Yunbi – announced they would be halting mainland services. ViaBTC and BTCC has since ceased operating. However, the remaining three aren’t expected to stop functioning until the end of October.

Naturally, news of this caused market prices to drop. On the 15th September, bitcoin was trading at $2,947. This was a significant fall considering it had achieved an historic high on the 2nd of September when it scaled $5,000. Since then, however, the market has steadily recovered.

At the time of publishing, on the 6th October, bitcoin’s price is trading at $4,364, a 1.13 percent rise in 24 hours. Over seven days its value has risen by 4.76 percent. It market cap is worth $72.4 billion.

Whether Chinese authorities lift the ban on domestic trading is not known. However, it signals the country’s determination to control money that is flowing in and out of the country.

South Korea Follows China

The announcement by South Korea to ban ICOs may not have been considered that surprising. Prior to stating its position, on the 4th September, South Korea’s digital currency task force had discussed increasing regulatory oversight on the trading of cryptocurrencies.

Kim Yong-beom, the secretary-general of the Financial Services Commission (FSC), said:

“At this point, digital currencies cannot be considered money and currency not financial products.”

The report added that authorities will ‘punish’ ICO fundraising platforms.

On the 29th September, the actual banning of ICOs in South Korea was made official. At a meeting the country’s financial regulator discussed digital currencies. One of the topics pertained to initial coin offerings.

Kim Yong-bum, the vice chairman of the FSC gave a speech and said that all ICOs were prohibited in all forms, including securities.

He said:

“ICOs are being increased worldwide by issuing digital tokens and investing in virtual currencies.”

Adding:

“There is concern about the adverse effects such as the increase in the risk of fraudulent receipt.”

According to the financial regulator, ICOs are a ‘violation of the capital market law.’ Consequently, it said that an ‘intensive crackdown’ will take place. Additionally, ‘penalties’ will increase for ‘illegal acts.’

Other countries that have issued guidelines on ICOs include the U.S. and Singapore. In July, the U.S. Securities and Exchanges Commission (SEC) applied securities laws to the issuance of ICO tokens. Whereas, the Monetary Authority of Singapore (MAS) clarified its position on ICOs in August.

Criminal Use with ICOs

For many authorities there is the risk that ICOs are being employed for illegal activities.

The Swiss regulator is concerned about this. So much so, that it believes that some are being used for ‘terrorist financing.’

In a report, the Swiss Financial Market Supervisory Authority (FINMA) said that it was investigating a number of ICOs. This was to determine whether they had breached ‘regulatory provisions.’

One of its concerns relates to ‘provisions on combating money laundering and terrorist financing’ and other areas.

Whereas, the chief executive of the Hong Kong Monetary Authority (HKMA) believes that digital currencies are linked to money laundering. This is an opinion shared by Larry Fink, chairman and CEO of BlackRock, the world’s largest investment management corporation.

Recently, he said:

“When I think about most of the cryptocurrencies, it just identifies how much money laundering is being done in the world.”

Featured image from Shutterstock.

Novogratz: Cryptocurrency Market Will be ‘Largest Bubble of Our Lifetimes’

A former hedge fund manager at Fortress Investment Group is, reportedly, looking to create a $500 million hedge fund focusing on cryptocurrency and blockchain.

Mike Novogratz, the former manager at Fortress Investment Group, is investing $150 million of his own money. An additional $350 million is expected to be raised by January, 2018, through outside avenues, reports Bloomberg News.

If true, the Galaxy Digital Assets Fund would represent the biggest of its kind. Not only that, but it would illustrate Novogratz’s aggressive move into the sector, to date.

Despite the fact that he didn’t specify whether he’s raising a fund, he did explain why he’s taking part in what he called ‘the largest bubble of our lifetimes.’

He says:

“This is going to be the largest bubble of our lifetimes. Prices are going to get way ahead of where they should be. You can make a whole lot of money on the way up, and we plan on it.”

Investing in Bitcoin

Novogratz made headlines in April when he revealed he had put 10 percent of his net worth into bitcoin and ethereum.

At the time he declined to reveal how much his net worth was. However, he claimed that it was ‘the best investment of my life.’ In April, bitcoin was trading over $1,200. Fast-forward to September and bitcoin’s price topped the $5,000 mark on the 2nd.

Yet, shortly thereafter, it’s price plunged 30 percent as China’s ban on initial coin offerings (ICOs) and a crackdown on domestic digital currency exchanges impacted the market’s price.

Novogratz explains that he sold at the right time.

“I sold at $5,000 or $4,980. Then three weeks later I’m trying to buy it in the low $3,000s. If you’re good at that and you’re a trading junkie, it’s a lot of fun.”

It is because of the market’s fluctuating prices that Novogratz compares it to the Wild West. He believes that the cryptocurrency market needs more regulation and that some ICOs are simply fraudulent ‘get-rich-quick-schemes.’

Concerns Still Remain

While Novogratz appears keen to explore the cryptocurrency market further, most large establishments are steering clear. For many, concerns about its unregulated nature and its volatility remain.

Jamie Dimon, CEO of JPMorgan Chase, recently added his voice to those against bitcoin when he called it ‘a fraud.’

At a news conference, the banker claimed that the digital currency ‘won’t end well’ and that it will eventually blow up.

He said:

“It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed. Currencies have legal support. It will blow up.”

He also mentioned that he would ‘fire in a second’ any employee found trading in bitcoin. Interestingly, questions have been raised about the fact that JPMorgan handles bitcoin-related client trades.

Another figure that has been against bitcoin is Howard Marks, founder of Oaktree Capital Management. At the end of July, Marks claimed that digital currencies ‘aren’t real‘ in a 22-page memo to clients. At the time, he said people were investing in the market for fear of missing out. Additionally, he claimed that digital currencies are ‘nothing but an unfounded fad or perhaps even a pyramid scheme.’

Interestingly, he has since changed his view on the market. As a result, in a new 11-page memo to clients he admits that bitcoin could become a legitimate currency. Yet, even though he considers himself ‘less of a dinosaur’ regarding his understanding of the currency, he’s still not investing in it.

He wrote:

“I still don’t feel like putting my money into it, because I consider it a speculative bubble.”

Seeing Opportunity Where Others Smell Fear

For Novogratz, though, the cryptocurrency market presents the perfect opportunity. And it’s one that he wants to be a part of.

He explains:

“In a lot of ways, this is a market like any other market. You see the psychology of fear and greed in the charts the same way you’d see it in charts of the Indonesian rupiah or dollar-yen or Treasuries. They’re exaggerated because of less liquidity and because you can’t get short.”

Interestingly, Rainer Michael Preiss, executive director at Singapore-based Taurus Wealth Advisors, said that CEOs of major U.S. banks are ‘probably afraid‘ of bitcoin and the blockchain.

In a report, he said:

“Of course, if you run a very large U.S. bank, most probably you are afraid of blockchain and bitcoin.”

This is understandable considering the amount of wealth they control. However, Preiss believes that cryptocurrencies are becoming a viable alternative to people because of a bank’s lack of transparency.

He added:

“The concerns are about the fractional reserve banking system, and the balance sheet of the Federal Reserve at $4.5 trillion, where the Fed officially refuses an audit. On the other hand, on the bitcoin blockchain, you have an audit everyday because it’s open-sourced.”

Investing in Ethereum

It wasn’t until Novogratz left his job at Fortress that he made a name for himself in the crypto market. In 2015, after seeing a friend’s startup and the success of it, he decided he wanted to become more involved in the space.

Instead of investing in bitcoin, though, he put his money into ethereum. At less than a dollar per ether, Novogratz invested $500,000 and left for a holiday to India. When he returned ether’s value has risen fivehold.

During 2016 and 2017, ether and bitcoin soared in value: ether touched $400 and bitcoin scaled $2,500. As a result, Novogratz was able to make around $250 million through the coins he sold. From then he became hooked. He believes that bubbles help to ‘fundamentally change’ the way people live.

“Remember, bubbles happen around things that fundamentally change the way we live. The railroad bubble. Railroads really fundamentally changed the way we lived. The internet bubble changed the way we live. When I look forward five, 10 years, the possibilities really get your animal spirits going.”

He now estimates that he has around 20 percent of his net worth invested in digital assets.

Despite his self-imposed exile from Wall Street after his losses at Fortress, Novogratz is keen to enjoy this venture in the cryptocurrency space. As he says, you ‘learn from your mistakes.’

Featured image from Shutterstock.

Japan’s FSA Regulator to Monitor Bitcoin Exchanges from October

Japan’s Financial Services Agency (FSA) is to begin monitoring Japanese bitcoin exchanges from October.

According to the Japan Times, the move is to ensure that digital currency exchanges have the correct internal systems, such as protecting customer assets, in place. If not, on-site inspections will be carried out.

In April, a revised payment services law went into affect. This set out operational standards for digital currency exchanges in addition to recognising bitcoin as a legal form of payment. As a result, there has been strong trading from Japan, which helped push bitcoin’s price up to $5,000 at the beginning of September.

According to an FSA executive, the move is to ensure the development of the market and to regulate bitcoin exchanges.

“We pursue both market fostering and regulation enforcement. We aim for sound market development.”

By the end of September, all cryptocurrency exchanges operating in Japan are required to register with authorities. The revised law includes anti-money laundering (AML) and know-your-customer (KYC) regulations.

To monitor the more than 20 bitcoin exchanges in Japan, the FSA has established a team of 30 members with the relevant expertise. The team will determine whether the exchanges have the appropriate risk management measures in place, including how to respond to cyberattacks.

Japan is no stranger to incidents involving the lose of customer assets in the digital market. The now-defunct bitcoin exchange Mt Gox is well known for its notorious past. In 2014, the exchange collapsed, which saw the loss of millions of dollars in customers’ funds. The exchange’s failure is considered a vital component in pushing Japanese authorities to regulating the market.

China Cracks Down on Domestic Bitcoin Exchanges

This move comes at a time when Chinese authorities have outlawed initial coin offerings (ICOs).

According to authorities, ICOs are an illegal form of fund-raising that is open to:

“…financial fraud, pyramid schemes and other criminal activities.”

After this announcement came the call to stop prominent domestic digital currency exchanges from operating in the country. Naturally, news of this saw market prices plummet. So much so, that on the 15th September, bitcoin’s price was trading at $2,947. As a result, its market cap was pushed down to $48.8 billion.

Following China’s move to halt bitcoin exchanges, several have already revealed when they will be closing. Chinese exchange BTCC is expected to stop functioning at the end of September. However, ViaBTC, will cease operations today, as of the 25th September. OKCoin and Huobi will halt their operations at the end of October. They have been given extensions due to the large number of users on their platforms and because neither listed ICO trading pairs.

Reportedly, ViaBTC will relaunch its platform overseas; however, it’s not know when the relaunch will take place.

Last week, at a global blockchain event held in Hong Kong, Haipo Yang, CEO of ViaBTC, said:

“A third of our customers come from outside China, and I believe these overseas users will continue to use the ViaBTC platform, so we can still provide value.”

Bitcoin’s Price Recovers Slightly

Since achieving the $5,000 mark at the beginning of September, bitcoin’s price has been on a roller coaster ride. This has been greatly brought about by China’s move to crackdown on the market.

However, today, the digital currency is showing some signs of improvement. At the time of publishing, bitcoin’s price is trading at $3,897, a 4.81 percent rise in 24 hours. In seven days, though, its value has dropped by 1.23 percent. Its market cap is currently worth $64.6 billion. Yet, it still has a way to go before it can attain its $75 billion market cap it achieved at the beginning of September.

At present, the combined market value is worth $135.4 billion. This, too, is a significant drop from its near $180 billion market value from the start of the month.

Only time will tell whether bitcoin’s price can once again reach new heights. Despite this slight setback in price many people remain confident that it will rise again, even further than what has already been seen.

To the Moon for Bitcoin?

Tom Lee, a Wall Street strategist and co-founder at Fundstrat, an independent research boutique, providing market strategy and sector research, believes bitcoin will rise to $25,000 in five years. Additionally, he states that it will remain the best asset to invest in to the end of 2017.

In a report, Lee said:

“I unequivocally believe bitcoin is your best investment to the end of the year.”

These are similar comments he made in August when he said:

“It has a lot of characteristics that are very similar to gold that I think will make it ultimately attractive as an alternate currency. It’s a good store of value.”

According to Lee, there’s no point in projecting bitcoin’s price two months from now. Instead, looking at its long-term future is the way forward.

Veteran trader masterluc has predicted a bullish price of $15,000 for bitcoin by the end of 2017. According to the trader, bitcoin will continue its bull run into 2019. At which point, the trader believes it will be worth between $40,000 and $110,000.

Bitcoin is ‘a Fraud’

Despite the confidence in the currency, not everyone thinks the same.

According to Jamie Dimon, JPMorgan Chase CEO, he thinks the cryptocurrency is ‘a fraud‘ and that it ‘won’t end well.’

At a conference in New York, the banker said:

“It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed. Currencies have legal support. It will blow up.”

Additionally, he stated that he would ‘fire in a second’ any employee found trading in the digital currency.

More recently, he took another shot at bitcoin claiming that it is a ‘novelty‘ and that it’s ‘worth nothing.’

In an interview, Dimon stated:

“Right now these crypto things are kind of a novelty. People think they’re kind of neat. But the bigger they get, the more governments are going to close them down.”

He added that ‘creating money out of thin air without government backing is very different from money with government backing.’

As such, this sort of creation, to him, is ‘worth nothing.’

One report suggests, though, that the CEOs of major U.S. banks are ‘probably afraid‘ of bitcoin and the blockchain.

Rainer Michael Preiss, executive director at Singapore-based Taurus Wealth Advisors, thinks this is because cryptocurrencies are becoming a viable investment alternative for people.

Featured image from Shutterstock.

ViaBTC to Launch Bitcoin Exchange Overseas in Light of Beijing Ban

Chinese bitcoin exchange ViaBTC has announced that it will be launching an overseas platform after Chinese authorities cracked down on digital currency exchanges in the country.

On September 25, ViaBTC is expected to suspend its domestic services to customers. As a result, it has urged current investors to withdraw their assets before closing.

At a global blockchain event held in Hong Kong, Haipo Yang, CEO of ViaBTC, said:

“A third of our customers come from outside China, and I believe these overseas users will continue to use the ViaBTC platform, so we can still provide value.”

However, while this will no doubt help boost bitcoin trading, Haipo said no time frame had been established to relaunch the platform abroad.

Other mainland digital currency exchanges due to cease operations include BTCC, OKCoin and Huobi. BTCC is also expected to stop its domestic services at the end of September. However, it has been reported that OKCoin and Huobi have until the end of October. This is due to their large customer user base and because neither listed ICO trading pairs.

China Takes Steps to Ban ICOs and Domestic Exchanges

The start of September saw a new record high for bitcoin when it reached the $5,000 mark on the 2nd September. Yet, this new high was short-lived. Shortly after, on the 4th September, Chinese authorities outlawed initial coin offerings (ICOs). According to regulators they are an illegal form of fund-raising, which is linked to financial fraud and pyramid schemes.

Following the ICO announcement, rumours began circulating that domestic digital currency exchanges would be targeted too. These rumours eventually became fact, which saw China ordering the closure of several prominent exchanges.

Consequently, market prices plummeted. At the time of publishing, on the 22nd September, bitcoin is trading at $3,626, a 6.54 percent drop in 24 hours. Over seven days, though, it has risen by 12.19 percent.

So far, the lowest trading price for bitcoin was on the 15th September. Then it was valued at $2,947, pushing its market cap down to $48.8 billion, according to CoinMarketCap.

Since then bitcoin’s price has risen and fallen, even climbing back up to $4,000 at one point. Yet, it is due to the fact that there is a large amount of investor speculation, it’s decentralised and volatile that authorities are looking at it closely.

The National Internet Finance Association (NIFA), a self-regulatory body established by the People’s Bank of China (PBoC) called cryptocurrencies ‘a tool for money laundering, drug trafficking, smuggling, illegal fund-raising and other criminal activities.’

Could Mining be Impacted Too?

ViaBTC also operates a bitcoin mining pool. However, speculation remains as to whether China’s ban will extend to mining operations as well.

Chinese exchanges make up around 10-15 percent of trading volume. Yet, they account for around 65 percent of total bitcoin hashrate. However, it’s possible to use virtual private networks (VPNs) to get around China’s block.

Recently, Yang took to social media to say:

It remains, therefore, to be seen what China’s next move will be.

Yang said:

“We have yet to receive notice that we need to halt mining, so [mining] is operating as usual.”

Yang is of the opinion that digital currencies can’t be banned from the country.

He added:

“The bitcoin network is fully distributed, even if there is the [great firewall], users can easily bypass this using methods like [virtual private networks]”

“Synchronising bitcoin information is easy, as long as one [computer] in China is synchronised on the bitcoin network, every other [bitcoin] computer will also obtain the full information on the network.”

Regulatory Oversight Needed

According to a former U.S. market regulator, the volatility of bitcoin’s prices are concerning. So much so, that he believes the only solution is through regulation.

Bart Chilton, the former commissioner for the Commodity Futures Trading Commission (CFTC), made his comments in a recent opinion article on CNBC.

In it he discusses China’s closure on digital currency exchanges and Jamie Dimon’s remarks on bitcoin. The CEO of JPMorgan called bitcoin ‘a fraud‘ while claiming that the currency ‘won’t end well.’

Chilton believes that China’s actions should be a wake up call for bitcoin enthusiasts.

He wrote:

“Rather than waiting for governments to take actions that thwart the development of digital currencies, they should lead efforts to put in place appropriate regulatory oversight for these new and innovative financial technologies.”

He added:

“Visionary leadership is needed. Without it, there’s a mounting risk that more and more governments will simply ban—or over-regulate—bitcoin and other digital currencies.”

Dimon Knocks Bitcoin Again

Dimon was obviously not happy at the shot he took at bitcoin the first time round. As a result, he has done it again.

Not only is the currency ‘a fraud,’ but he claims that cryptocurrencies are a ‘novelty‘ and are ‘worth nothing.’

During an interview with CNBC-TV18 in New Delhi, India, he said:

“Right now these crypto things are kind of a novelty. People think they’re kind of neat. But the bigger they get, the more governments are going to close them down.”

He added:

“It’s creating something out of nothing that to me is worth nothing. It will end badly.”

His comments have drawn criticism from the bitcoin community.

Scott Nelson, CEO and chairman of blockchain firm Sweetbridge, said last week, in light of Dimon’s fraud remarks, that:

“Comments like Jamie’s show a failure to grasp the significance of the blockchain and the power of brand in a fundamental sea of change.”

Meanwhile, London-based Blockswater, an algorithmic liquidity provider, has filed a complaint against Dimon for ‘spreading false and misleading information‘ about bitcoin.

According to a report, Dimon violated Article 12 of the European Union’s Market Abuse Regulation (MAR) when he called bitcoin a fraud.

Florian Schweitzer, managing partner at Blockswater, said:

“Jamie Dimon’s public assertions did not only affect the reputation of bitcoin, they harmed the interests of some of his own clients and many young businesses that are working hard to create a better financial system.”

The complaint was filed with the Swedish Financial Supervisory Authority and Schweitzer has asked the Swedish regulator to investigate. He notes in his complaint that market abuse in Sweden is punishable by up to two years in jail.

Featured image from Shutterstock.

Dimon Faces Market Abuse Report After Bitcoin Fraud Comments

A market abuse report has been filed against JPMorgan’s CEO after ‘spreading false and misleading information’ about bitcoin.

The report in question was filed by London-based Blockswater, an algorithmic liquidity provider. It was filed with the Swedish Financial Supervisory Authority against JPMorgan and its CEO Jamie Dimon.

According to Blockswater, Dimon violated Article 12 of the European Union’s Market Abuse Regulation (MAR) when he called bitcoin ‘a fraud.’

On the 12th September, Dimon took a shot at the digital currency stating that it ‘won’t end well’ and that it will eventually blow up.

He also said that he would ‘fire in a second’ any employee found trading in the digital currency for two reasons:

“It’s against our rules and they are stupid. And both are dangerous.”

After Dimon’s comments one observer noted that the cryptocurrency dropped in value.

According to the complaint, Dimon’s comment impacted bitcoin’s price negatively as the ‘cryptocurrency’s price and reputation’ dropped.

Florian Schweitzer, managing partner at Blockswater, said:

“Jamie Dimon’s public assertions did not only affect the reputation of bitcoin, they harmed the interests of some of his own clients and many young businesses that are working hard to create a better financial system.”

It was added that Dimon ‘knew, or ought to have known, that the information he disseminated was false and misleading.’

Since Dimon’s comments questions have been raised as to why the bank handles bitcoin-related client trades. According to a report, most Wall Street banks use the Bitcoin XBT platform to act as agents for buyers and sellers. JPMorgan does so too.

Yet, a spokesperson for the bank said it doesn’t trade with its own capital.

Brian Marchiony, JPMorgan Chase spokesperson, said:

“They are not JPMorgan orders. These are clients purchasing third-party products directly.”

Blockswater also claim that the bank traded bitcoin derivatives on Stockholm-based exchange Nasdaq Nordic for clients before and after Dimon’s comments. Schweitzer is of the opinion that it ‘smells like market manipulation.’

As a result, Schweitzer has asked the Swedish regulator to investigate. He notes in his complaint that market abuse in Sweden is punishable by up to two years in jail.

Bank CEOs Are ‘Afraid’ of Digital Currencies

Interestingly, one wealth advisor believes that CEOs of major U.S. banks are ‘probably afraid‘ of bitcoin and the blockchain.

Recently, Rainer Michael Preiss, executive director at Singapore-based Taurus Wealth Advisors, said:

“Of course, if you run a very large U.S. bank, most probably you are afraid of blockchain and bitcoin.”

His comments are in light of Dimon’s remarks about bitcoin. Preiss believes that due to a bank’s lack of transparency, cryptocurrencies are becoming a viable investment alternative for people.

He added:

“The concerns are about the fractional reserve banking system, and the balance sheet of the Federal Reserve at $4.5 trillion, where the Fed officially refuses an audit. On the other hand, on the bitcoin blockchain, you have an audit everyday because it’s open-sourced.”

Additionally, he believes that bitcoin remains ‘a good store of value.’ This is down to the fact that its price has risen from $7 to $5,000 since January, 2014. Bitcoin reached the $5,000 mark on the 2nd September when CoinDesk’s Bitcoin Price Index (BPI) recorded it at $5,010. Chinese bitcoin exchange OKCoin recorded the currency’s price at $5,149. At the time the combined market cap was worth nearly $180 billion. At the time of publishing, on the 21st September, it’s valued at $124.8 billion.

Bitcoin’s Price Tumbles to $3,600

Since the announcement from China that it is outlawing initial coin offerings (ICOs) and cracking down on domestic digital currency exchanges, bitcoin has seen its price drop.

This is due to the fact that several prominent exchanges will cease their operations. At the end of September Chinese digital currency exchanges BTCC and ViaBTC will suspend their functions. Meanwhile, OKCoin and Huobi are expected to stop operating at the end of October. It’s believed this is because of the large number of users on the platforms and because neither had listed trading pairs for ICO tokens.

So far since this announcement the number one digital currency has dropped below the $3,000 mark. On the 15th September it was recorded at $2,947, pushing its market cap down to $48.8 billion. Since then, however, it has improved. So much so, that on the 19th September it was trading at $4,090, pushing its market cap back up to $67.7 billion.

Yet, uncertainty still reigns within the market. As a result, the price of the currency has since dropped. At the time of publishing, it is trading at $3,647, which is an 8.22 percent drop in 24 hours. Subsequently, its market value is now worth $60.4 billion. Favourably, though, over a seven day period, its value has risen by 8.88 percent.

Cryptocurrencies Are ‘Garbage’

This is according to gold investor John Hathaway. He is the latest individual to speak out against the market in a new report.

Speaking with Kitco.com, a precious metal news and data site, the asset manager said simply that the cryptocurrency craze was simply ‘garbage.’

Hathaway said:

“It’s an absolute bubble – there’s no question in my mind that it’s in a bubble.”

Manager of the $1.2 billion Tocqueville gold fund, he added:

“Sure you can make money in bubbles any time but you have to get out. Let’s not forget that the total market value of these cryptocurrencies is $180 billion or so, maybe a little less now – that’s tiny compared to gold.”

Some have speculated that interest in bitcoin is taking away interest from gold. Mohamed El-Erian, Allianz’ chief economic adviser, is one such figure to voice these concerns. However, Hathaway doesn’t believe that’s the case.

“The idea that cryptocurrencies have somehow diverted interest in gold is baloney, it’s just not true.”

What Now?

It remains to be seen whether Dimon does face any repercussions from his bitcoin fraud remark. However, he will be hard pressed to find people who don’t think his comments impacted the currency’s price and reputation.

For now, we just have to wait and see. There are, however, a number of factors affecting bitcoin’s price, which it’s currently struggling to recover from.

Featured image from Shutterstock.

UK Watchdog Warns Bitcoin Investors Could Lose Their ‘Entire Stake’

The U.K.’s financial regulator has issued a warning to bitcoin traders over the frenzy created by initial coin offerings (ICO), some of which are being promoted by celebrities such as Paris Hilton and boxing champion Floyd Mayweather.

The Financial Conduct Authority (FCA) has said that traders investing in ICOs should be prepared to lose all of their money. Furthermore, they should be aware that some may end up being scams.

It said:

“ICOs vary widely in design. The digital token issued may represent a share in a firm, a prepayment voucher for future services or in some cases offer no discernible value at all. Often ICO projects are in a very early stage of development. ICOs are very high-risk, speculative investments.”

It added:

“You should be conscious of the risks involved and fully research the specific project if you are thinking about buying digital tokens. You should only invest in an ICO project if you are an experienced investor, confident in the quality of the ICO project itself and prepared to lose your entire stake.”

Following this was a list of the risks associated with ICOs. These included:

  • Unregulated space
  • No investor protection
  • Price volatility
  • Potential for fraud
  • Inadequate documentation
  • Early stage projects

It added that some ICOs may not use the money raised ‘in the way set out when the project was marketed.’

China Bans ICOs

The FCA’s comments come at a time when China recently outlawed ICOs in the Chinese nation. China has also said that it plans on banning the trading of digital currencies on domestic exchanges. At the beginning of September, the ban was backed by seven of China’s regulators. It is hoped this will stamp out fraudulent fundraisers.

According to a report, Beijing and Shanghai have seen an increase in ICO trading. So far, this year has seen the launch of 65 ICOs. This has raised around $400 million from 105,000 investors.

When someone invests in an ICO their money goes up when the coin’s value increases. To date, bitcoin has more than quadrupled during 2017. At the beginning of the year bitcoin was valued at $1,000. Yet, at the start of September it had risen to $5,000. As of the 13th September, bitcoin is trading at $3,902. It’s believed that China’s plans for digital currency exchanges is impacting the price of bitcoin.

Ethereum has also seen its value rise. At the beginning of the year it was trading around $8. Now, though, it’s valued at $260. As a result, traders are willing to speculate and put their money into ICOs. Of course, because of the market’s rise in value many ICOs are taking advantage and are simply scams to steal money.

China’s regulators believe that the issuance of token sales is illegal. As a result, they are keen to crackdown on fundraising activities in the country.

Following the ban, a statement from the regulators said:

“In essence, it is a kind of non-approved illegal open fund raising behavior, suspected of illegal sale tokens, illegal securities issuance and illegal fund-raising, financial fraud, pyramid schemes and other criminal activities.”

BitKan Freezes Trading Services

Since the ban, one Chinese over-the-counter (OTC) trading service for digital currencies has frozen its activities.

BitKan said in a post that it would be suspending trading on the 14th September at 12:00 a.m., Beijing time. This is due to increased pressure from authorities. However, it didn’t mention when it would resume services, if at all. The move from BitKan is interesting as OTC traders may be excluded from the ban. The ban, at the moment, only impacts exchange-based trading.

Celebrities Promote ICOs

The increase in ICO trading is partly down to celebrities promoting them. This, in turn, is causing a frenzy as new investors jump on board.

At the end of July, boxing champion Floyd Mayweather took to Instagram to promote an ICO. In the photo Mayweather predicted that he would make a lot of money in the ICO for Stox, a prediction market project, which launched at the beginning of August. In its token sale, Stox went on to raise $30 million.

At the end of August, Mayweather then promoted his second ICO on Twitter. This time it was for the token sale of the Hubii Network, which is developing a blockchain-based content marketplace. He also mentioned the hash tag #CryptoMediaGroup, but didn’t elaborate.

Celebrity heiress and reality TV star Paris Hilton is the latest celebrity to jump on the ICO band wagon. On the 4th September, it was reported that Hilton had announced her participation in a token sale.

Taking to Twitter, she said:

“Looking forward to participating in the new @LydianCoinLtd Token! #ThisIsNotAnAd #CryptoCurrency #BitCoin #ETH #BlockChain.”

Many, however, remain dubious as to nature of the ICO. One person tweeted:

Called Lydian, the project claims that it is ‘developing blockchain driven technologies to reduce ad fraud and to maximize the effectiveness of ad marketing expenditures.’

A PR for it said:

“It aims to address the trust and transparency issues affecting digital marketing platforms using blockchain distributed ledgers and industry exclusive data sets to democratize trust at scale.”

China’s Ban Shouldn’t Stop Firms Researching the Blockchain

This is according to the director general of the Chinese central bank’s research institute.

In a report, Sun Guofeng, from the People’s Bank of China (PBoC), said that the ICO ban was ‘necessary and timely.’

However, he added:

“This should not prevent relevant financial technology companies, industry bodies and other technology firms from continuing their research into blockchain technology.”

He added that the blockchain is a ‘good technology’ and that an ICO is not the only way to research it.

For many, this move from China will be considered further interference from authorities keen to curb the market. For others, however, it’s a step in the right direction.

Sasha Ivanov, CEO of blockchain company Waves, said:

“There’s no secret that a lot of the initial coin offerings, with ads on Facebook promising huge discounts and returns, are nothing but a scam.”

“The Chinese government could cope with those companies working in a shadow zone of the law, but they have finally lost patience, as more and more companies tried to raise millions for nothing.”

David Moskowitz, co-founder and CEO of blockchain-powered social network Indorse, said that it would help to protect consumers from fake ICOs.

“We hope the authorities will recognize the potential of the sector for economic growth and technological development, and enact rules which will allow for the safe and secure future of the industry.”

Featured image from Shutterstock.

Howard Marks Has a Change of Heart Over Bitcoin, Sees it As a Currency

Billionaire bitcoin critic Howard Marks has reviewed his opinion on bitcoin, admitting it could be a legitimate currency.

At the end of July, the founder of Oaktree Capital Management wrote a 22-page memo to clients stating that digital currencies aren’t real. His position on them couldn’t be questioned. This was because he firmly stated they they weren’t real three times.

At the time he wrote:

“I’d guess these things have arisen from the intersection of (a) doubts about financial security — including the value of national currencies — that grew out of the financial crisis and (b) the comfort felt by millennials regarding all things virtual. But they’re not real.”

Furthermore, he believed people were investing in the crypto market for fear of missing out. He also claimed that digital currencies are ‘nothing but an unfounded fad or perhaps even a pyramid scheme.’ In a bid to deter people from investing in bitcoin he compared it to the tulip bubble.

However, after warning clients away from the market, it appears he’s changed his mind.

Bitcoin as a Form of Currency

In a new 11-page memo to clients Marks started by saying that his previous memo had generated the most response in the 28 years he’s been writing memos. As a result, he felt it was right to respond and reflect given the time that had passed.

He wrote:

“What bitcoin partisans have told me subsequently is that bitcoin should be thought of as a currency – a medium of exchange – not an investment asset.”

He then delves into further discussion, presenting the case for it as a currency. One of the points he mentions is that:

“For a long time currencies were backed by (and exchangeable for) gold or silver, but that’s no longer the case. The truth is, there’s nothing behind currencies these days other than their issuing government’s ‘full faith and credit.’ But what do they promise? New currencies are sometimes created out of thin air (like the euro, which wasn’t legal tender sixteen years ago), and sometimes they’re devalued.”

Marks ultimately agrees that the digital currency can be accepted for payments and as a store of value.

Reservations Still Remain

Yet, despite his new outlook on bitcoin Marks isn’t fully convinced. Even though he considers himself ‘less of a dinosaur’ regarding the currency he’s still not investing in it.

He wrote:

“I still don’t feel like putting my money into it, because I consider it a speculative bubble.”

However, he’s willing to be proven wrong about the currency. Interestingly, he sees bitcoin as being better than the dollar. This is due to the cap on the number of bitcoins issued. At present, 16.5 million coins out of the 21 million limit have been released. The cap is not expected to be reached until 2140. The dollar, though, or any other fiat currency can be issued at any time. As Marks writes this reduces ‘its purchasing power through inflation.’

He adds:

“Merely by limiting the growth of supply, bitcoin would become more valuable as other currencies devalue.”

Given the growth of bitcoin in the past nine months it remains to be seen whether Marks will eventually invest in it.

Volatility Remains

The value of bitcoin has soared to uncharted heights throughout 2017. As a result, it recently scaled the $5,000 mark. Such a milestone was monumental to the currency and those backing it. However, as of the 11th September it is trading at $4,186, according to CoinMarketCap. In a 24-hour period its value has risen by 2.09 percent, but in seven days it has fallen by 1.95 percent.

This price drop is believed to be because of China. The country recently announced the banning of initial coin offerings (ICOs) to prevent financial fraud and illegal fund-raising. As a result, the news has seen bitcoin’s value drop by nearly $1,000. On the 10th September, uncertainty over a Chinese report that the country may shut down exchanges saw bitcoin fall to $3,950. As can be seen it has slightly recovered in price.

According to the Wall Street Journal, the ban is expected to be limited to exchange-based trading and not over-the-counter transactions. The report states that China’s central bank – the People’s Bank of China (PBoC) – has drafted a draft, which will prevent Chinese platforms from providing virtual currency trading services.

It is because of situations such as this that volatility in the market remains. With people unsure of what China’s next step will be, many are selling off their coins now.

According to Yale economics professor and Nobel Prize winner Robert Shiller, the digital currency resembles that of a bubble. Known for his work on bubbles in economics, Shiller claims that bubbles are brought about by stories and not metrics.

He said:

“It’s the quality of the story that’s attracting all this interest, and it’s not necessarily sustainable.”

He added:

“The story has inspired young people and active people, and that’s what’s driving the market. It’s not fundamentals. It’s not like this is a fundamentally important thing, this bitcoin.”

Cryptocurrencies Will Remain

Of course, despite government curbs to control the digital currency market, they will remain.

This is the thinking of Mark Mobius, executive chairman of Templeton Emerging Markets. He said that the crypto market is gaining prominence because they provide a fast way to transact with.

Yet, he believes that China is ‘ahead of the game’ in stopping ICOs as there is the danger of them being used by terrorists. However, while there are attempts from governments to curb the market it’s unlikely that they will disappear anytime soon.

As another report puts it:

“A ban on crypto exchanges won’t mean the end of trading in digital currencies.”

The market is going through an interesting phase for many market watchers. As such, it remains to be seen what will happen in the weeks and months that follow. The jury is still out regarding China’s decision and while bitcoin has risen in price from the 10th, it’s still feeling an impact.

For the time being, however, Marks has given a small nod of approval toward the currency and that can only be seen as a good thing.

Featured image from Shutterstock.

Is the PBoC’s Regulation Crackdown Cooling Bitcoin Fever in China?

A surge of interest in bitcoin has seen its price reach new heights, yet the excitement of the digital currency market in China has been watered down due to the nations government who wants to control bitcoin.

According to a salesperson at Huobi, one of the ‘Big Three’ digital currency exchanges in China, the platform is receiving fewer phone calls for inquiries.

“This is because withdrawals are controlled by regulations.”

Sending money out of the country through bitcoin was easy for people to undertake. However, such a procedure for the People’s Bank of China (PBoC) was frustrating as its keen to keep the yuan from weakening.

As a result, in January 2017, the PBoC undertook on-sight inspections at China’s biggest digital currency exchanges known as the ‘Big Three’ in Shanghai and Beijing: OKCoin, BTCC and Huobi.

At the time, the Shanghai branch of the PBoC, said in a public statement that:

“The People’s Bank of China Shanghai HQ, the Shanghai Municipal Finance Office and other units formed a joint inspection team to carry out site inspections on Bitcoin China, focusing on checking whether it was operating beyond its business scope, whether it was engaging in unlicensed forex, payment, financing and other related businesses; whether it engaged in market manipulation; implementing anti-money laundering, financial security risks and so on.”

A separate notice was issued by the Beijing branch of the PBoC, which issued a similar statement.

BTCC revealed on social platform Weibo that it had met up with the PBoC and that it was ‘cooperating with regulatory departments.’

Bitcoin

In order to comply with the anti-money laundering (AML) and other requirements, all three exchanges announced that they would be suspending their withdrawal services and would only resume once they had received regulatory approval.

It was initially believed that the withdrawal freeze would only last one month; however, it continued through to March and only ended at the beginning on June, signalling the end of China’s freeze. News of digital currency exchanges resuming their services helped to bump the price of bitcoin back up to around $2,400.

However, while bitcoin trading volumes are gradually improving in China since the withdrawal restrictions, the PBoC still has a keen interest in digital currencies. So much so, that it’s expected to release a new set of regulations regarding them in due course. As a result, the Chinese bitcoin market remains on edge with no idea as to how these new rules will impact the currency.

Trading Turns to Japan

Unlike China, though, Japan has changed its stance of digital currencies such as bitcoin and now regards it as a legal form of payment for goods and services.

On 1 April, the Japanese government passed a law that had been drafted in December 2016, bringing bitcoin exchanges under AML and know-your-customer (KYC) rules, while listing bitcoin as a payment method.

The debate circulating the regulation of digital currencies such as bitcoin come in the wake of the collapse of Mt. Gox, the now-defunct digital currency exchange. In 2014, the digital market was left shattered after it was alleged that the Tokyo-based platform had lost $350 million or 744,4000 bitcoins. Mark Karpeles, CEO of Mt. Gox, was later arrested on allegations that he had manipulated volume on the-then leading bitcoin exchange prior to its demise. He is currently under investigation as to his involvement in the platform’s collapse and the remaining missing money.

Now that the law has been put into effect, it means that capital requirements are in place for the digital currency exchanges to protect users from any further mishaps. Not only that, but the exchanges are also required to undertake employee training programs and to submit yearly audits.

Such a turnaround of events has seen trading volumes in Japan rise. In May, trading of bitcoin in Japanese yen rose by 31 percent.

Furthermore, this acceptance of bitcoin has meant that retailers are working toward accepting it as a form of payment for customers.

Appearing to lead the way is Japanese low-cost airline Peach Aviation Ltd., who have announced that they will be accepting bitcoin as a form of payment by the end of the year to customers who want to purchase flight tickets. Japan’s leading online travel agent Evolable Asia has also teamed up with BITPoint Japan, the company behind Peach Aviation Ltd., to get 1,400 hotels and inns around the country to start accepting bitcoin by the summer of 2017.

Such a move is likely to produce a chain reaction, which is already being reported. So much so, that by the end of the year, it’s believed that there will be around 300,000 Japanese retailers accepting bitcoin for goods and services.

For a country that hasn’t had the best experience with bitcoin in the past, this news highlights how far the currency has come and the belief that countless individuals appear to have in it.

Many, however, continue to question bitcoin’s usage to pay for things considering it remains such a volatile asset and the transaction fees involved to transfer bitcoins. Despite this, though, the digital currency market remains popular with bitcoin leading the way. As such people appear embracive of the currency, which can be seen in Japan.

China to Follow?

It remains to be seen whether China will change its position on digital currencies and provide favourable regulations that will boost bitcoins price and restart the surge of interest within the country.

At the moment, the market is on tenterhooks as it remains unclear as to what direction the PBoC will take.

Yet, if China’s position on bitcoin regulations proves favourable, could it help to push the market cap of all digital currencies to one trillion dollars?

Bruce Fenton, a blockchain economic advisor, recently made this announcement on social media. According to him, in three years the market cap value of the entire crypto market will be valued at one trillion dollars.

Bitcoin

According to Coin Market Cap, it’s currently worth over $112 billion and is likely to continue rising as more interest and investment gets pushed into the market. It remains to be seen whether the one trillion mark is reached within three years or sooner than that.

Featured image from Flickr via worldwide finance.