weighing-scale

Indian Government Considering Crypto Tokens for Transactions

Following the recent ban on cryptocurrencies by Reserve Bank of India, it was assumed that the country would take a more partial stance as it reflects further on the issue of cryptocurrencies altogether. Well, as it turns out, the country has set up an inter-governmental committee called the “Inter-Ministerial Committee” (IMC) which has been tasked with drafting regulations and a roadmap for the concept of tokenization in both the public and the private sector.

“The committee is examining if crypto tokens can be used to replace smart cards such as metro cards in the public sector to start with. Similarly, in the private sector, it can be used in loyalty programs such as air miles where its use is limited to buying the next ticket and can’t be converted into money.”

Yes, that’s right. The India government may soon allow its citizens to pay for airline tickets and metro cards with crypto tokens regardless of the fact that the ban on decentralized digital currencies in the country is still ongoing.

Slight Delay

The government had previously planned to submit the proposal for the crypto regulations last month but according to a senior official close to the matter, the regulatory framework had experienced some minor setbacks and are therefore likely to be pushed forward to the end of the year. The official further revealed that the reason for the delay was because the “finance ministry panel is still evaluating how to treat blockchain and cryptocurrencies separately.”

“Blockchain is an interesting thing. We definitely want to milk it effectively for financial transactions. So all officials are really trying hard to understand how to separately use blockchain, without cryptocurrency… And understanding a new software takes time,” the official clarified.

Government Issued Crypto Tokens

News about this new development was made public on August 10 through a DNA India report that stated that the Indian government has been “considering launching crypto tokens for financial transactions in the country, even as the existing ban on cryptocurrencies is likely to continue.”

Even though the aforementioned tokens will be based on blockchain technology, they will not form a currency of their own – instead, they will be a mere representation of real money and not its replacement. Heading the committee is DEA Secretary Subhash Chandra Garg who has categorically denied that the government has allowed the use of cryptocurrency in a manner including payment systems – crypto is very poular in India and this was bound to come up.

“The committee is studying the possibility of using cryptocurrencies or the crypto technology (distributed ledger technology) for financial transactions and also what kind of regulations are needed for that. [While] the currency is totally banned, the committee is discussing its other usage and how it can be mainstreamed in India,” he said.

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Goldman Sachs Reportedly Considering Crypto Custody Service

Having launched bitcoin futures trading in May, New York-based multinational investment bank, Goldman Sachs, is reportedly pondering taking the next step in the cryptocurrency market that will involve the launch of a crypto custody service. If the report, which was filed by Bloomberg, is true the move would make the investment bank the first large and credible institutional player to offer custody for cryptocurrency funds – this is exactly what the crypto market in the United States and the rest of the world have been waiting for.

If attainable, such an asset securing guarantee are at the very “least elusive in such an unregulated and fledgling market.” However, if realized, Goldman Sachs’ cryptocurrency custody services will certainly be a game-changer. In fact, it safe to say that just the talk of the offering itself is enough indication that there is growing demand for such services, and if they materialize they may even encourage more investors to participate.

Furthermore, supposing the offering gets the go-ahead, it will buff up the credibility of the cryptocurrency market, by acting as a vote of confidence of sorts for crypto. This would eventually pave way for the legitimization for the legitimization of the cryptocurrency index and hedge funds in as far as the institutional players are concerned.

According to Bloomberg’s anonymous source(s), deliberations on the matter are on-going but no timeline has been set for when the Wall Street giant will roll out the custody services. Goldman Sachs released a statement recently neither confirming nor denying the existence of such a move.

“In response to client interest in various digital products we are exploring how best to serve them in this space,” a spokesman for Goldman Sachs said. “At this point, we have not reached a conclusion on the scope of our digital asset offering.”

Goldman Sachs has been taking its time with its crypto-related projects – despite announcing a crypto trading desk in May, it is yet to set-up a full-fledged desk for the same. Still, sources close to the company have confirmed that the services are being worked on in the background and will be availed to customers once they are ready.

Still Wary About Bitcoin

Despite Goldman Sachs plans to launch various crypto-related projects, the firm is not going to begin making any bullish bitcoin price calls anytime soon.

“Our view that cryptocurrencies would not retain value in their current incarnation remains intact and, in fact, has been borne out much sooner than we expected,” a recent Goldman Sachs report stated. “We expect further declines in the future given our view that these cryptocurrencies do not fulfill any of the three traditional roles of a currency: they are neither a medium of exchange, nor a unit of measurement, nor a store of value.”

AMLC

The AMLC Sets Its Sight on Casinos and Digital Currencies

Philippine’s Anti-Money Laundering Council (AMLC) has recently made a decision to bring digital currencies and casinos into their spotlight this year as it tightens its vigilant watch on dirty money. As clarified by Mel Georgie B. Racela, the AMLC Secretariat Executive Director, the council has now included the conversion of cash into poker chips and digital or virtual currencies in its coverage. This move is primarily aimed at plugging certain gaps that have been plaguing the anti-money laundering laws.

To begin with, the casino operators were given a six-month period – starting from this month – in which they are supposed to register with the AMLC. The compliance of the casino operators is expected to reduce the opportunities that criminals have to launder illegally obtained funds at the casino’s gaming tables. Prior to these new regulations, the Republic Act No. 10927 which was enacted last year required all the gambling operators to report their daily transactions worth at least P5 million to the AMLC.

However, it was until last week that the council published the Republic Act No. 10927’s implementation rules – casino operators now have until mid-December to sign up on AMLC’s online portal and begin submitting the required transaction reports.

The agencies National Risk Assessment 2015-2016 cited a considerably high risk of money laundering among casinos as well as many other financial service business. This was further elevated by the fact that it happened to coincide with the Bangladesh Heist in which $81 million in stolen funds vanished without a trace at casino gaming tables.

High Hopes

According to Mr. Racela, the threat level is going to reduce significantly as the agency’s new regulations take effect. Added to the fact that the casinos are now subject to a know-your-customer policy which will require them to report any suspicious transactions to the AMLC, it is quite obvious that everything is certainly bound to get better.

“If we make a reassessment of our national risk insofar as casinos are concerned, we believe that we will be able to reduce this from high risk to moderate,” Mr. Racela said on Monday, June 18 during the inaugural symposium of the Association of Certified Anti-Money Laundering Specialists Manila chapter.

The AMLC is looking to have the money laundering risks attached to casinos minimized in the next round of evaluations that is due in a couple of years (probably 2020) – the agency is confident that the new rules will eventually pay off.

As for digital currencies, while it is evaluating the best possible way of effectively going about it, the agency has confirmed that it has given its members the go-ahead to “study the suspicious transaction reports submitted by virtual currency exchanges.” Mr. Racela, however, noted that it is still too early to say whether or not the digital currency space will turn into an arena for money launders.

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Cryptos Struggle to Regain Momentum after Bitcoin Hack

On Sunday, June 10, renowned South Korean-based cryptocurrency exchange, CoinRail, announced that they had been victims of a hacking attempt. According to the cryptocurrency exchange’s official website “70% of the coin rail total coin / token reserves are safely stored” and, “Two-thirds of the coins confirmed to have been leaked are covered by freezing / recalling through consultation with each coach and related exchanges. The remaining one-third of coins are being investigated with investigators, relevant exchanges, and coin developers.”

Following the cyber-attack and its subsequent announcement, the cryptocurrency market suffered a loss of a whopping $42 billion of its market value. The tweet that announced the hack also triggered a $500 drop in the crypto space in a little over an hour – bitcoin, for one, suffered a 10 percent drop to a two-month low. Many other digital currencies including Ethereum were dragged down as well.

The hack has further triggered a lot of debate regarding the safety of crypto as a whole. Global policymakers, for instance, have warned investors to be cautious in trading cryptocurrencies citing the lack of regulatory oversight.

“CoinRail is not a member of the group that promotes self-regulation to enhance security. It is a minor player in the market and I can see how such small exchanges with lower standards on security level can be exposed to more risks,” Kim Jin-Hwa, a representative at Korea Blockchain Industry Association pointed out recently.

Unexpected Impact?

Ideally, since the hack was on a relatively small crypto exchange, there is no reason for cryptocurrency holders, investors and even speculators to panic over such an occurrence. Unfortunately, this is not the case. Added to the fact that CoinRail is just one of the growing list of crypto-related companies that have been hacked in the past few years, the fact that many people are switching to crypto represents a much bigger concern.

The hack might not be the absolute cause of the plummeting price of digital currencies but it remains to be a key concern that should be addressed soon if the crypto future that we are hoping for will come to be.

Already, 14 major cryptocurrencies in South Korea have adopted necessary measures that are aimed at protecting crypto users – these include restrictions that allow the users to have no more than a single account. As for CoinRail, cryptocurrency trading has been suspended for now as the exchange collaborates with the local authorities as they investigate the hacking. Hopefully, once the CoinRail issuer is resolved, we will see a reversal in the downward trend in the prices of crypto – that is, if it indeed had something to do with the price drops.

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Regulators in the US and Canada Crack Down on Crypto Schemes

As the battle between the cryptocurrency regulation and the ultimate quest for liberation rages on, forty regulators in the United States and Canada have teamed up in an effort to regulated cryptocurrency investment schemes. The collaboration between two countries’ regulators has resulted in the largest crackdown in cryptocurrency scams of this scale in history. So far, there are 70 ongoing investigations with 35 more that have either been completed or are still pending.

CNBC reports that the collaborative effort, that is, the North American Securities Administrators Association (NASAA), has officials from 40 or more different state regulators working together to provide the much-needed coordinated responses to any cryptocurrency-based investment schemes such as Initial Coin Offerings (ICO’s).

The North American Securities Administrators Association (NASAA), as it turns out, is the oldest international organization whose primary goal is investor protection. It also boasts of a vast number of members that include securities administrators from states, provinces, as well as the territories in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico. The organization’s efforts have turned out to be very helpful in ensuring that the crypto industry flourishes safely – its approach involves policing investment opportunities in the United States and Canada such as in ICOs to ensure that they are legitimate and are being carried safely and within the legal boundaries.

“The crackdown comes amid growing attention in the U.S. to cryptocurrency scams, including by the Securities and Exchange Commission and the Commodity Futures Trading Commission. The SEC has brought several fraud cases against operators of initial coin offerings and last week launched a website to help investors recognize scams. William Francis Galvin, the state’s secretary of the commonwealth, said NASAA’s task force found roughly 30,000 crypto-related domain name registrations, many of which appeared in late 2017 as the price of bitcoin neared $20,000,” an excerpt from the CNBC report reads.

Praise from High Places

The NASAA crackdown operation that has since been dubbed “Operation Crypto Sweep” has been lauded by a number of industry bigwigs including Jay Clayton, the chairman of the United States Securities and Exchange Commission. In a statement that was released on Monday, May 22, Clayton said that the state and provincial regulators play a vital role in the protection of Main Street investors.

“The enforcement actions being announced by NASAA should be a strong warning to would-be fraudsters in this space that many sets of eyes are watching, and that regulators are coordinating on an international level to take strong actions to deter and stop fraud,” Clayton added.

In addition to this, Clayton pointed out the fact that NASAA’s efforts would drive out bad actors and scammers early on thus ensuring that governments adopt stances that are not going to choke off the crypto industry.

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Bitcoin Receives Praise from IMF Chief Christine Lagarde

Bitcoin recently received an unexpected boost thanks to praises from International Monetary Fund (IMF) chief Christine Lagarde that detailed the global benefits of the decentralized digital currency. In a blog post that was published on Monday, April 16 the IMF boss pointed out that digital currencies such as bitcoin have the potential of offering fast and cheap transactions while blockchain, the underlying technology, can be used to make financial transactions more secure.

About a month ago, Lagarde published a blog post that was intended to caution people against the potential risks of cryptocurrencies. While she still has a few of the previous sentiments regarding precautionary measures to ensure a sustainable crypto framework, her most recent blog post leans more towards the potential benefits of crypto assets.

Lagarde still believes that there is a dire need for a crackdown on illicit activity involving crypto, something that she initially spoke of during the World Economic Forum 2018 back in January. Even so, she reiterates the essence of an “even-handed approach” from now on.

“Understanding the risks that crypto-assets may pose to financial stability is vital if we are to distinguish between real threats and needless fears. That is why we need an even-handed regulatory agenda, one that protects against risks without discouraging innovation,” Ms. Lagarde said. “A clear-eyed approach can help us harness the gains and avoid the pitfalls of the new crypto-assets landscape.”

“An important initial step will be to reach a consensus within the global regulatory community on the role crypto-assets should play. Because crypto-assets know no boundaries, international cooperation will be essential,” she added.

New York Opens Probe into Exchanges

Barely a day after Christine Lagarde made her support for bitcoin public, the office of the New York Attorney General sent out letters to 13 cryptocurrency exchanges. The letters require that the exchanges provide information that would help to improve transparency in the digital currency industry.

“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money. Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms,” NY Attorney General, Eric Schneiderman wrote. “Our Virtual Markets Integrity Initiative sets out to change that, promoting the accountability and transparency in the virtual currency marketplace that investors and consumers deserve.”

The letters included a questionnaire that requested information about the basic operation and fees, trading policies and procedures as well as the anti-money laundering and anti-hacking control measures they have put in place. While this probe is meant to protect the interests of New York-based cryptocurrency traders, it might have significant implications for the exchanges’ international customers.