Crypto Market Recap 12/19/17

As Bitcoin Prices Skyrocket, Governments Scramble To Keep Up And Collect Tax

Adoption

• Ebay Considers Crypto Adoption: According to a recent interview with Yahoo Finance, senior vice president of eBay Americas Scott Cutler has indicated the company is considering accepting Bitcoin as payment. One issue potentially holding up the migration of Bitcoin onto their platform is the high and unstable transaction prices. On the other hand, Overstock.com’s stock price has soared over 130% in the last year on the back of crpyto related adoption. Cutler noted, “we’re not quite there yet” making it unclear as to when a decision would be made. Craigslist recently announced the ability for sellers to accept BTC, a trend expected to continue while Bitcoin hits headlines the world over.
• Bloomberg Adds XRP, ETH, And LTC: Financial giant Bloomberg has added Ethereum, Ripple, and Litecoin to its data terminal service, used by bankers and traders worldwide for up to the minute pricing data. The major altcoins join Bitcoin which has been on the platform since June of 2014. Provided by Luxembourg based Bitstamp, the addition of pricing data signifies a major shift in adoption as even those entrenched in the traditional finance world begin exploring the investment opportunities of cryptocurrency. A company with Bloomberg’s reputation acknowledging the importance of alt coins could foretell a major tipping point of adoption as cryptocurrency continues its march into the limelight.
• Bitcoin Hits 20K For Christmas: Bitcoin has eclipsed yet another key mental barrier by officially cracking the $20,000 price mark. The massive influx of new investment has seen the price of BTC rise by nearly 2,000% this year, gaining almost $14,000 in the last week alone. Bitcoin’s seemingly unstoppable ascension into headlines combined with mainstream financial adoption like the CBOE and CME futures contracts has created an almost unrelenting push for investors to hold Bitcoin. While many continue to assert that BTC is experiencing an unsustainable bubble, if nothing else these gains may signify cryptocurrency as a recognized alternative to traditional investments for a growing number of people.
• Venezuela Continues BTC Love Affair: Bitcoin is increasingly becoming rooted into the Venezuelan economy as hyperinflation conspires to make the Bolivar near worthless. Many citizens report having fully migrated over to the digital currency for all of their transactional needs, with local services like LocalBitcoin and Colobit facilitating easy peer-to-peer payments. While earlier in the year saw reports of government crackdowns on Bitcoin miners, it seems even President Nicolas Maduro is considering embracing crypto with a claim to be investigating a government backed currency called the Petro, though critics are highly dubious of any such effort.
• Coinbase CEO Toys With Alt Coin Listings And IPO: Coinbase president Asiff Hirji has shared some interesting insight into the explosive growth of his company during a recent CNBC interview. The CEO boasts trading volume is up 30X over this time last year with tens of thousands of new accounts being created daily, remarking “…As the asset class has matured, I think there are a lot of people who are adding it just like any other asset class to their portfolio.” As per the burning question of when new currencies might be added to the popular platform, Mr. Hirji said, “…suffice to say that we have a framework out there and we have a lot of people campaigning for new assets.” The CEO also hinted at the possibility of Coinbase IPO.
• Crypto Market Cap Crosses Half A Trillion: The total cryptocurrency market cap has eclipsed $600B, up roughly $133.3B in the last week and $387B in the last month to an all time high of over 640B before falling to $624.B at the time of writing. At this time last year, the total market cap was roughly $14.6B, around $609B less. For comparison, Apple’s market cap has climbed from roughly $618B to $895B in the same one year period. Introduction of new investment vehicles like the the CME and CBOE future contracts has spurred an incredible flurry of investment activity, resulting in a torrent of unprecedented capital infusion into an extremely new ecosystem. Many critics continue to assert that crypto is experiencing an untenable bubble, while others argue the market is following more an “S” curve that may see a flattening of growth without any bubble.
• Sirin Labs ICO Raises $110 MLN In Under 24 Hrs: Sirin labs, maker of the $16,000 privacy focused Solarin smartphone has raised $110MM in the first 24 hrs of its ICO. Though ICOs seem to be cooling in popularity as investor maturity catches on to the often highly suspect claims of many of these upstarts, Sirin has a leg up by having already introduced a product to the market. The company is developing a blockchain powered smartphone called Finney, which they plan to market for for less money than their original phone.
• Israeli Prime Minister Sees Banks Vs. Crypto Clash: Israeli Prime Minister Benjamin Netanyahu has said he feels banks may eventually become obsolete in the face of Bitcoin. In a video on the subject, he claimed “Is the fate of banks that they will eventually disappear? Yes. The answer is yes. Does it need to happen tomorrow? And do we need to do it through Bitcoin? That’s a question mark.” Mr. Netanyahu went on to say that the inherent truth of the disruptive power of Bitcoin is behind the massive price increases, though he goes on to say that “There’s nothing like this, that will continue rising at this rate, it can’t happen.”
• Russian Devs Introduce Blockchain Based Corporate Voting: Russian firms Dataart and The National Settlement Depository have created an online system for corporate E-voting built atop blockchain technology. The system will allow shareholders of publicly traded companies to vote on issues while maintaining transparency. In this way, users can see that their vote was counted without knowing what others have voted for, with safe and immutable storage. Voting is a use of increasing interest for blockchain technology, and could one day quell the possibility of voter tampering.
• Bitcoin Debt Bubble Possibly Forming: The current Bitcoin frenzy is driving some people to desperate measures in order to invest, resulting in growing “bitcoin debt” as people reportedly take out mortgages and credit card debt in order to fund their Bitcoin habit. According to Joseph Borg, president of the North American Securities Administrators Association, “We’ve seen mortgages being taken out to buy Bitcoin. … People do credit cards, equity lines. This is not something that a guy who’s making $100,000 a year, who’s got a mortgage and two kids in college ought to be invested in.” In light of all the recent gains, investors should still remain cautious and pragmatic. Anything with such a stratospheric rise is still inherently extremely volatile.
• Japanese Auto Groups Embracing BTC: Idom Inc of Japan, with the largest market share for domestic used car sales in the country, has announced that its specialty imported used car chain Liberala will start accepting Bitcoin. To facilitate the effort, a collaboration was formed with Japan’s largest Bitcoin exchange Bitflyer. The group plans to add another division which would see over 550 more dealerships accepting BTC. Japan continues to be an aggressive adopter of cryptocurrencies, with announcements like these expected to grow as the nation furthers it’s embrace of digital money.

Regulation

• U.S. Financial Regulator Not Afraid of Crypto Rise: The Financial Stability Oversight Council (FSOC) has claimed they do not feel cryptocurrencies pose a threat to existing financial systems. A new report says very few people are using digital currencies transactionally, with the agency instead focusing on the underlying power of blockchain technology, remarking, “Virtual currencies are only used by a very small number of consumers. We give a bit more credit to the potentially much broader applications of the so-called distributed ledger technology underpinning the innovations. It is noteworthy that this digital wave also presents a regulatory challenge, because the storage of data is decentralized, rather than being in one spot that governments can watch.” The report stands in contrast to many who feel cryptocurrency could one day undermine the traditional banking system.
• European Parliament Eyes Future of Cryptocurrency: European Parliament member Sorin Moisa has stated cryptocurrency isn’t going anywhere during a conference in Brussels. He pushed the need for regulation, boasting, “The policy response should be aimed at eliminating the impostors and revision of the Anti-Money Laundering Directive which will help to kick-start this process. Regulating ICOs is also an area worth considering since they should respect EU security-related frameworks. With regard to monetary policy, it is difficult to understand what adjustments, if any, is required to be made to respond to these developments.” Other members made statements concurring with Mr. Moisa’s, with Peter Zilgalvis, head the Startups and Innovation Unit at the European Commission announcing the launch of a blockchain observatory that will explore different use cases for cryptocurrency and conclude what, if any, intervention is necessary.
• Estonia Still Pondering National Token: Kaspar Korjus, managing director of Estonia’s e-residency program has published a blog post today outlining what he feels are the myriad benefits of an Estonian backed currency dubbed “estcoin.” Mr. Korjus feels that the coin would help engender the E-community by further incentivizing people to apply for digital residencies (a program that allows anyone to open bank accounts and businesses in Estonia after applying to become an E-citizen). He further states that the coin would help the government provide secure identities, concluding with the notion that the coins could even be pegged to the price of the Euro. Any idea of being conflated with the Euro was previously lambasted by European Central Bank President Mario Draghi when in September he stated that, “No member state can introduce its own currency; the currency of the eurozone is the euro.” This recent update shows that the concept for an Estonian currency may be alive and well in the country, even if the ire of the EU remains at the very least a limiting factor.
• South African Revenue Service Investigates Crypto Tax: The South African Revenue service (SARS) is looking to technology firms in order to track Bitcoin transactions for taxation purposes. The U.S.’s IRS famously reported that only 802 Coinbase users had declared their Bitcoin earnings last year, highlighting a growing problem for governments. The issue is compounded by a lack of clarity as per how citizens should go about reporting earnings. For their part, the SARS admits this is a difficult issue, as it might be hard to force institutions to break their customers privacy, something very well protected by blockchain technologies.
• Venezuela To Formally Regulate Mining: The government of Venezuela has announced the opening of a Bitcoin mining registry starting on December 22nd. Miners in the country will be required to sign up as part of a greater proposed regulatory framework for the activity. While not technically illegal, Bitcoin mining has been a contentious issue in the country with police breaking up mining operations, charging for electricity theft and fraud. For his part, the newly appointed Superintendent of Venezuelan Cryptocurrency Carlos Vargas boasts (of the miners), “We want to know who they are, we want to know where they are, we want to know what equipment they are using.”
• Fed Chair Waxes Philosophical On Crypto: Outgoing US FED chair Janet Yellen commented that cryptocurrency was still a “highly speculative asset” during a conference in Washington. She went on to speak about the Fed’s stance on crypto, reiterating that the agency does not have the power to regulate cryptocurrencies. She clarified, “The Fed doesn’t really play any regulatory role with respect to Bitcoin, other than assuring that banking organizations that we do supervise are attentive, that they are appropriately managing any interactions they have with participants in that market, and appropriately monitoring anti-money laundering, bank secrecy act responsibilities that they have.” On the topic of government backed crpytocurrencies, Yellen noted that at the moment the Fed has no serious intention to issue a digital dollar.
• Indian Tax Man Shows Up For Its Share of The Crypto Craze: India’s income tax department has started conducting surveys across the nation as investigators visited nine exchanges. The surveys were performed under a section of the country’s income tax laws. Indian lawmakers have been increasingly active in regards to cryptocurrency as of late, with the reserve bank issuing a warning earlier in the month with the regular calls to caution. While the greater intent behind the raids remains obfuscated for the moment, it would seem the Indian government is becoming increasingly concerned regarding the matter of taxation as Bitcoin hits all time highs.
• South Korea Gears Up For Mass Regulation: The ever tightening regulations in South Korea continue with recent announcements stating the illegality of foreign participation in the country’s exchanges while also formally barring underaged users from participating in trading. The news comes along with upcoming regulations in the nation focused on taxation and investor protection, with the potential to regulate how much volume is spread across each exchange in addition to the typical anti-money laundering and know your customer regulations. For its part, South Korea’s largest exchange Bithumb said they welcome the new rules, boasting that the regulations will further bolster the market. A spokesperson for the government’s cryptocurrency task force remarked, “The South Korean government has no other choice but to follow the regulatory frameworks and trends established by other leading governments. While there certainly exists a negative reputation attached to cryptocurrencies, the government’s stance is to allow what has to be allowed, for the benefit of the South Korean market.” Reports of ponzi schemes and thousands of students trading cryptocurrencies has pushed the once hands off nation to move towards a more formal regulatory environment.
• EU Plans Formal Crypto Tax: In light of cryptocurrency’s explosive popularity, the EU’s economic and financial affairs council is partnering with the Organisation for Economic Co-operation and Development among others to formulate proposals for handling the newfound crypto economy. The groups are touting the urgency of updating the global network of double tax conventions, in a sense calling for a universal tax policy. They claim with the way things are now and the borderless nature of cryptocurrency, double taxation becomes a major problem with digital money’s incredibly easy transference. The consortium feels that tax should be paid based on where value is generated and where profit is realized. This in turn would require the EU to adopt a system of tax neutrality, with the group stressing the need for tax proposals by early 2018.
• Centra ICO Will Face Lawsuit: Centra, an ICO made famous by the endorsement of boxing champion Floyd Mayweather, is facing a class action lawsuit regarding accusations of securities law violation by misrepresenting the token as a utility. The lawsuit asserts that between July 30th and October 5th of 2017, Centra violated the securities act by selling over $30MM worth of unregistered securities. Centra claims to be making a debit card that would allow instant transactions in multiple currencies. The suit alleges that by calling ICO participants investors and further boasting of the appreciative potential for the token, Centra was clearly selling a security. The Centra suit comes at time when the SEC has recently been cracking down on questionable ICOs with its cyber crime unit, though it should be noted the Centra suit was started by an individual complainant.
• Kuwait Will Not Recognize BTC: Kuwait’s Ministry of Finance has reported that it will not recognize Bitcoin as a formal currency, further clarifying that it will not allow financial institutions, banks, and affiliated companies to trade Bitcoin. Proceeds of Bitcoin wired from outside the country are also illegal under the new ruling. They did note that outside of that specific preview, the agency cannot formally regulate Bitcoin trading. The bank went on to state that these regulations do not cover “virtual currency” which they define as ”any type of digital unit used as a medium of exchange, unit account, or a form of stored value.”
• Danish Central Bank Chief Issues Bitcoin Warning: The head of the Danish Central Bank Lars Rohde has issued a cryptocurrency waring, urging investors to stay away from Bitcoin. He impishly noted, “If you do not like casinos, you’ve got a good alternative”, continuing “I see bitcoin like tulip mania, like a bubble out of control.” The banking head went to say that Bitcoin is completely unregulated and offers no consumer protection. He also went on to clarify that following a Dec 15th report, it seemed that a central bank issued digital currency would be of dubious value.
• France Urges Bitcoin Regulation: France’s Finance Minister Bruno Le Maire is pushing for discussion regarding Bitcoin Regulation at 2018’s G-20 summit. In a interview, he stated that he’s asked Argentina (set to take control of G20 presidency) to have Bitcoin on the agenda. La Maire went on to say, “…there is evidently a risk of speculation. We need to consider and examine this and see how…with all the other G20 members we can regulate bitcoin.” France is forging ahead with its own regulations, having granted approval to trade unregistered securities on blockchains and created an ICO framework dubbed projet UNICORN earlier this year.
• UK Watchdog Will Dive Deeper Into ICOs: The UK’s Financial Conduct Authority (FCA) has said that it will be analysing ICOs with an eye on “further regulatory action.” In a statement, the agency remarked the findings “…will help to determine whether or not there is need for further regulatory action in this area beyond the consumer warning issued in September.” The September warning cautioned investors to consider the various risks associated with ICOs, regarding them as “high risk” and “speculative” investments.