Cryptocurrency This Week: Bitcoin, A Pandora’s Box For India, Belarus To Legalise  

Once in a blue moon or just a ‘bubble’? Bitcoin is on a roll. This week, Bitcoin, Ethereum and Bitcoin Cash saw an unprecedented growth, with Bitcoin leading the charge at a market price of $11K. The cryptocurrency market that was at $250 Bn crossed $300 Bn this week, which is worth more than IBM, McDonald’s or Disney. Inspired by the boom, Michael Arrington, the founder and former editor of TechCrunch has launched a $100 Mn cryptocurrency fund called Arrington XRP Capital to trade Ripple. While Bitcoin enthusiasts think that Bitcoin is the real money that authorities really don’t understand, authorities in India, France, Russia and China consider Bitcoin to be a Pandora’s box; one never knows what disastrous impact it could have if regulated. Interestingly, while Arun Jaitley, Finance Minister of the world’s largest democracy India, refuses to recognise Bitcoin’s legitimacy, countries like Iran and North Korea have welcomed cryptocurrency wholeheartedly.

Of course, there are adverse effects. Bitcoin mining, for instance, has got costlier. According to PowerCompare.co.uk, the electricity used to mine Bitcoins this year is bigger than the annual usage of 159 countries. Cryptocurrency-crimes too, have seen an unprecedented rise. In Japan alone, cryptocurrency exchanges have reported more than 170 money-laundering cases for the past six months. To avoid the increasing mining cost, a Tesla car owner has managed to fit a legitimate mining rig inside the trunk of his shiny Model S, and according to the inventor, the electricity needed to mine Bitcoins comes from Tesla’s free superchargers. The image has gone viral, but so was company’s cofounder and CEO Elon Musk. Recently, a report had come out stating Elon Musk as the real Satoshi Nakamoto. However, soon the news burst as Elon Musk himself denied the report.

Let’s take a look at the recent developments from the world of Cryptocurrency!

India Does Not Recognise Cryptocurrency As Legal

India has not legitimised Bitcoin or any other cryptocurrency, reaffirmed Finance Minister Arun Jaitley while responding to a query over cryptocurrency. The Government of India stands by the RBI’s statement on cryptocurrency dated December 24, 2013.

While addressing the press on GDP growth figures in the second quarter, Jaitley appeared to be quite informed about Bitcoins and other cryptocurrencies. When asked why the government is not clarifying its stance on cryptocurrencies, given that Bitcoin has reached a new height of $11,304, Jaitley said, “You are 24-hour late, the price has since fallen significantly. As far as the Indian government’s stance is concerned, we have not given any legitimacy to cryptocurrency. Yes, we have received the report, and it is under examination.”

Despite the government’s refusal to recognise cryptocurrency usage as a legal affair, the number of traders and investors have seen a huge surge for the last few months. Unocoin, which gathered 100K subscribers in three years, registered 200K subscribers in the last one month, reported Quartz.

Bank Of France: Bitcoin Is Not Even A Cryptocurrency

“Bitcoin is a speculative asset and people who invest in it do so at their own risk,” warned Francois Villeroy de Galhau, Governor of the Bank of France in a statement made earlier.  

Speaking at a conference in China, Villeroy stated, “We need to be clear: Bitcoin is in no way a currency, or even a cryptocurrency. It is a speculative asset. Its value and extreme volatility have no economic basis, and they are nobody’s responsibility. The Bank of France reminds those investing in bitcoin that they do so entirely at their own risk.”

Like RBI, the French Central Bank has been working on integrating blockchain technology at several levels. The bank has also launched an innovation lab in collaboration with blockchain-based startups to develop blockchain solutions.

Bank Of England: Bitcoin Is Too Small

Bitcoin is too small to pose any threat to global economy, says Bank of England Deputy Governor, Sir Jon Cunliffe.

Speaking at BBC Radio 5 Live, Cunliffe warned that investors must be aware of the risks from the rapid rise in the price of digital currency Bitcoin. He said, “I would just say investors kind of need to do their homework.” However, Cunliffe claimed that Bitcoin doesn’t stand to pose any threat to the global economy and financial institutions despite having an impressive run in the market.

“This is not at a size where it’s a macroeconomic risk to the global economy, but when prices are moving like that, my view would be investors need to do their homework. This is not a currency in the accepted sense. There’s no central bank that stands behind it. For me, it’s much more like a commodity,” added Cunliffe.

Iran Welcomes Bitcoin (With Regulations)

Iran’s High Council of Cyberspace, one of the decisive authorities in issues pertaining to cryptocurrencies in the country, has welcomed Bitcoin and other cryptocurrencies,  provided the regulations are in place, reported the Iranian economic daily Financial Tribune.  

Speaking to a News Agency, Abolhassan Firouzabadi, HCC Secretary opined, “We [at the HCC] welcome Bitcoin, but we must have regulations for Bitcoin and any other digital currency. Studies are necessary for considering a new currency.”

Inc42 had earlier reported that Central Bank of Iran is currently studying all the aspects of Bitcoins, and will review the bank’s policies in this area.

Belarus To legalise Cryptocurrency

Sandwiched between Russia and Poland in Eastern Europe, Belarus is expected to legalise Bitcoin and other cryptocurrencies. A draft decree which would legalise cryptocurrencies, presented during the Belarusian High-Tech Park, currently awaits the sign of the President of Belarus, reported a Bitcoin daily. Once the bill is enacted, cryptocurrencies, as well as ICOs, will become legal tenders in the country and Belarusians will be able to exchange/trade rubles for cryptocurrencies.

Speaking at the Sputnik press centre, Priorbank’s Head of Digital Banking Sergey Lazyuk said, “It is expected that Belarus will have a system for the exchange of real money for cryptocurrency, in fact, such exchange points will be legalised.”

Local media Tut by Media reported, “The decree will introduce into the legal field not only cryptocurrencies but also the activities of the so-called miners. It will be possible to legally create major cryptocurrency mining centres in Belarus. However, that will escalate the electricity demand in the country.”

Nasdaq To Offer Bitcoin Futures

Bitcoin is the gold rush. Following in the footsteps of CME Group (Chicago Mercantile Exchange), which has already announced plans to offer Bitcoin futures, Now Nasdaq, the second largest stock exchange in the world is set to offer Bitcoin futures in the first half of 2018, reported WSJ.  

CME Group has also finalised the timeline of the launch and the world’s largest futures exchange has announced that Bitcoin futures contracts will be launched on December 18, 2018. The exchange has already completed self-certification with the Commodity Futures Trading Commission.

Besides Nasdaq, Cantor Exchange, Toronto has also announced its plans to offer Bitcoin futures and has completed the self-certification process.

The US CFTC Chairman J. Christopher Giancarlo stated, “Bitcoin is a virtual currency. It is a commodity unlike any the Commission has dealt with in the past. As a result, we have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets. In working with the Commission, CME, CFE and Cantor have set an appropriate standard for oversight over these bitcoin contracts given the CFTC’s limited statutory ability to oversee the cash market for bitcoin.”

Giancarlo further added, “Market participants should take note that the relatively nascent underlying cash markets and exchanges for bitcoin remain largely unregulated markets over which the CFTC has limited statutory authority. There are concerns about the price volatility and trading practices of participants in these markets. We expect that the futures exchanges, through information sharing agreements, will be monitoring the trading activity on the relevant cash platforms for potential impacts on the futures contracts’ price discovery process, including potential market manipulation and market dislocations due to flash rallies and crashes and trading outages. Nevertheless, investors should be aware of the potentially high level of volatility and risk in trading these contracts.”

Bitcoin Cash To Increase Its Block Size

In August this year, Bitcoin Cash was hard-forked from the Bitcoin blockchain citing 1 Mb block size of Bitcoin blockchain as insufficient. The block size in Bitcoin Cash was increased to 8 Mb. Now according to a cryptocurrency web daily Coindesk, a new roadmap has been released by the Bitcoin offshoot’s main developer team Bitcoin ABC, which proposes two hard forks  in May and November of 2018. The announcement reads, “We want to make it more reliable, more scalable, with low fees and ready for rapid growth. It should ‘just work’, without complications or hassles. It should be ready for global adoption by mainstream users, and provide a solid foundation that businesses can rely on.”

The Bitcoin Crime

Japan’s cryptocurrency exchanges have reported 170 cases of money-laundering since the new cryptocurrency regulations came in place, said Japan’s National Police Agency (NPA).  

Japan had enacted new cryptocurrency regulations in April this year. In Japan, there are 11 cryptocurrency exchange operators that are registered based on the law on payment services. The number of users is expected to rise if these cryptocurrencies attract more attention. Police said on Thursday that 170 cases of suspected money laundering linked to cryptocurrencies were reported by currency exchange operators in Japan in the six months till October 1. The first such report by the National Police Agency was conducted after the law on prevention of transfer of criminal proceeds was revised in April, requiring cryptocurrency exchange operators to report transactions suspected to be involved in money laundering, stated Japan Times.

In other news, South Korean Shinhan Bank has finally announced its plans to launch cryptocurrency custody services. This will help investors/traders buying cryptocurrencies to lock down their digital assets. After working for more than six months, the bank is now ready to provide deposit services for cryptocurrencies. Significance of cryptocurrency custody services can be understood by the fact that out of 17 Mn Bitcoins mined so far, 3.7 Mn i.e 23% of the total Bitcoins that are in circulation may be lost forever, according to a blockchain analysis firm Chainalysis.

Meanwhile one of the most watched tv series The Big Bang Theory’s The Bitcoin Entanglement episode released on November 30. However, catering to the wide audience across the globe, the Bitcoin episode could neither satisfy the Bitcoin-naives who had no clue about the concept of distributed ledger in cryptocurrency nor the Bitcoin-nerds who knew the lines were directly taken from the Reddit’s Bitcoin forum. The creativity fever weaving around Bitcoin is getting high, post Mr. Robot’s success, people are making Bitcoin Raps/music and documentaries, unlike India where Bitcoin enthusiasts are yet to step up from cryptocurrency trading.