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Cryptos under pressure in China

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Markets are dropping during Asian trading today as fears increase of further shutdowns across the region. Authorities in China seem hell-bent on preventing their citizens trading in digital currencies, which may have flashed a wave of anxiety selling across the board.

According to reports, the Chinese government plans to target methods for trading digital currency by imposing a shutdown, including over-the-counter trading, offshore sites used for centralized trading, and peer-to-peer trading of large transactions.

                                                       
The report on the state-run Securities Times cites sources at the Leading Group of Internet Financial Risks Remediation, China’s top internet finance controller. There are no specifics on the crackdown, but it is widely being said that the internet police would block access to local and international platforms that provide digital currency trading. China is one of the most heavily censored countries in the world, and its ‘Great Firewall’ already filters all web traffic that the dictatorial communist party does not want its citizens to see.
People who trade in large amount of crypto currencies are the target of this crackdown.

Alternate Methods
Users of crypto currency have started to use messaging app Telegram in groups to trade and to avoid the ever present web of censorship and restriction in China. Vice director of the Chinese central bank, Pan Gongsheng, told Reuters that China will continue to apply pressure on domestic crypto trades for the sake of financial stability. He went on to state:

“Pseudo-financial innovations that have no relationship with the real economy should not be supported.”

 

Last year in September the cryptos faced a crackdown, the markets went into free fall, but it survived and recovered soon. A recent crackdown on Bitcoin mining created an evacuation as China-based companies and mining associations moved their operations to friendlier countries. A number of China’s major crypto exchanges, such as Huobi and OKCoin, shifted operations overseas to Hong Kong where more freedom is granted. Because of the widely acceptance of crypto currencies in Japan Huobi is also planning to set up two crypto exchanges in Japan.

 

Do you think traders in China find a way around the constant restrictions? Share your views in the comments below.

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Australian Taxation Office warned against crypto retirement funds

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Regulatory authorities around the world have tighten the grip on crypto projects. Taxation authorities like Internal Revenue Service (IRS) and Australian Taxation Office (ATO) are the latest to join the list with strong initiatives.

Australian Taxation Office recently sent warning letters to the investors who have invested a large part of their retirement savings in crypto related funds. ATO sent these letters in order to warn investors against high risk investments like crypto. One of the key responsibilities of regulatory authorities and taxation authorities is to keep investors away from high risk investment schemes.

A spokesman from ATO told local media that “We have already seen instances in 2018 where investors lost significant amount of their retirement fund in crypto investments, so it’s our duty to make them aware about the kind of risk crypto market posses”. The spokesman further explained that they are also against the huge exposure in any single asset class. “We are not saying that we are all and all against the crypto market or crypto assets, but we are more concerned about the kind of exposure these crypto retirement funds have in single crypto asset like Bitcoin”

“If an investor is putting more than 90% of his retirement savings in crypto then obviously it is at high risk and that’s what we discourage, we have no issues in diversified portfolios but if crypto retirement funds are having 100% exposure in crypto assets then we have to warn investors about the potential losses.

Self-Managed-Super Funds (SMSFs)

SMSFs are type of retirement accounts privately managed by individuals rather than the institutions or regulated financial companies. Australian Securities and Investments Commission also supports ATO’s decision, in a recent statement ASIC said

“Be wary of services offering to establish an SMSF for you in order to gain exposure to cryptocurrencies. Not only does operating an SMSF involve significant time, skills and responsibility, you may also be putting your retirement savings at risk”

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Morning Crypto Roundup: Coinbase, Bakkt, Binance in news

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“Coinbase seeing $200-400 million in new crypto deposits every week”: Armstrong 

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CEO of Coinbase, Brian Armstrong says that “Adoption of crypto by Institutions is no more an uncertainty. The question was valid about 12 months ago, but now everything has changed as we’re seeing $200-400 million a week in new crypto deposits from institutional clients”

In a recent tweet, Armstrong further says that trust and safety means a lot to crypto investors and Coinbase is on a mission to provide safe infrastructure to institutional clients in order to increase adoption.

Coinbase has completed acquisition of Xapo which helped them in institutional business. In a recent blogpost, Coinbase further mentioned that in just one year of launch, Coinbase custody has reached a staggering number of $7 billion of assets under custody, stored on behalf of 120 clients from 14 different countries.

The highlight of today’s tweet from Brian Armstrong was the numbers from Institutional investors. Safety have always been a big issue for investors and that’s why there were lot of discussions regarding adoption of crypto at Institutional level, but with $200 – 400 million coming into Coinbase every week, we can easily say that crypto adoption at institutional level is no more a question, it’s a reality.

The way forward 

We already discussed about the importance of safety of funds in crypto market, but in order to increase adoption, crypto market must create new traders. Traders love leverage, borrowing and lending which allows them to trade the market even with limited resources. Retail forex market is a prime example of such facilities. Coinbase did mentioned in the blogpost that they are excited to explore new ways to monetize and leverage crypto assets like borrowing and lending.

Bitcoin ETF

Decision about the Bitcoin ETF by securities and exchange commission is pending in October. Exchange traded fund approval from SEC can open new doors for crypto adoption at an institutional level.

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