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India following China’s approach towards crypto regulation

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As India’s crypto craze is on the rise, banks have turned into a hindrance. Perhaps taking signal from the uneasiness shared by the Reserve Bank of India (RBI) and the Narendra Modi government, a portion of the loan specialists are not any more alright with virtual monetary standards. This has prompted issues with stores and withdrawals.

This is decisively the tussle that is playing out at Koinex, a digital money trade, between its installment specialist organization and its bank where withdrawals have been deferred for more than two weeks.

On Jan .07  Koinex said in a blog post.

“…regulators world-over, have struggled to understand the underlying blockchain technology and develop an appropriate response to it; and India is no exception. These misgivings have resultantly affected the financial services community, who find it difficult to make up their mind about supporting cryptocurrencies, eventually causing organisations like Koinex and its users to bear the brunt,”.

To discourage financial specialists from wagering on these digital forms of money, the government has more than once said that bitcoin and its kind are not legitimate in India. The finance ministry even called them a ponzi plot. Not simply in India, governments somewhere else too have been fixing the noose around virtual monetary forms, scripting its destruction. On Jan. 09, bitcoin drooped below $15,000 apiece as controllers in South Korea, China, and US got serious about illicit digital money (cryptocurrency) offerings and initial coin offerings.

Requesting obscurity CEO of a bitcoin exchange said;

“The government hasn’t banned virtual currencies, but has expressed its reservation about them. Our understanding, based on various meetings with our banking partners, is that this (situation) is a result of those reservations. Instead of arm-twisting, it would be better if they could come up with steps to regulate the industry,”

a legal advisor said who works with a couple of these trades.

“The government is following the same method used by China, where they haven’t explicitly banned bitcoin, but made the regulatory environment around it so difficult by cracking down on other things that it is no longer a conducive environment for cryptocurrencies,”.

Earlier, China accounted for 90% of bitcoin’s global trading volume; that has now slipped to 7%. Clearly, killing them softly has worked.

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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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