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.