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Venezuela will start using Petro commercially from October

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Petro is a controversial crypto currency developed by Government of Venezuela. It was launched in February 2018

Government of Venezuela announced that they will start commercial use of national crypto currency from October 2018. Venezuela is the first country in the world to introduce national crypto currency citing economic crisis and devaluation of Bolivar (Venezuela’s national fiat currency)

Country is facing massive economic issues like hyper inflation, devaluation, economic restrictions, limited financing sources. In these circumstances Venezuela introduced new economic policy indicating commercial use of Petro. They launched Petro is February 2018 but it wasn’t listed on any of the International Crypto exchanges, no one was trading petro and no one was using it either, in fact former finance minister of Venezuela called this project an imagination with no realistic use. Citing this criticism from opposition, President Nicolas Maduro announced that the country will start the commercial use of national crypto currency from October.

He appeared on the national TV and said,

“Petro comes into play as a currency for exchange, purchase and convertible currencies for the world.” Which took lot of people by surprise as many of them were thinking that this idea is not realistic and will not work at all.

Criticism 

When Venezuela launched the crypto currency, they mentioned that Petro will be backed by Oil, but according to a recent report by Reuters , Petro is not backed by oil at all and of no use as of now because neither it’s being traded at any of the exchanges nor anyone using it, so it’s a total waste as of now. It was reportedly backed by State owned Oil company PDVSA, which in fact is in $45 billion debt already, so that’s making the matter worst for potential investors as they can’t invest in a currency which is backed by a company already in massive Debt.

The way forward 

Despite of all the criticism that Venezuela’s president is facing regarding Petro, he still tied up this crypto currency with his national economic reform plan, according to that plan, petro will be used for all the commercial usage just like Bolivar, from Banking to investing, salaries to social usage. He is also expecting Petro to be used as leading source of financing from International community as they are facing sanctions from US as far as financing in US dollar is concern.

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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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