Russian Central Bank Cracks Down on Cryptocurrency

The Russian government is currently keeping all cryptocurrency owners in the country on their toes as it decided to crackdown on cryptocurrency websites.

The Russian government is currently keeping all cryptocurrency owners in the country on their toes as it decided to crackdown on cryptocurrency websites.

Taas.com reports Russia’s Central Bank’s First Deputy Chairman Sergey Shvetsov, as saying that the bank welcomes imposing any restrictions on operations of external websites. Though the government has said that its decision to ban external websites dealing on cryptocurrencies is premised on the fact that cryptocoins pose a risk to its citizens and businesses, this reason is highly doubtful.

In the past months, the government and its financial regulatory agencies have been considering descending the sledge hammer on the heads of cryptocurrency traders and exchanges. The reasons advanced for their actions, though may hold some water, may not really be why such harsh actions are being taken.

Cryptocurrencies, especially bitcoin have been seen as serious threats to fiat currencies and the gains derived from printing them. Since blockchain was brought into the financial market scene, it has been considered a serious technology capable of upsetting the ways things are done in the system.
Bitcoin, for instance, has been widely accepted as the digital currency of choice for financial transactions online and for payment for goods and services. And since it is decentralized, Bitcoin, Ethereum and some other carefully selected cryptocoins have made things relatively easier, reducing the confirmation time for financial transactions, and putting you fully in charge of your own portfolio with no external interference from banks and other financial regulatory agencies. This indeed has become a source of worries for several governments across the globe.

First Deputy Chairman Sergey Shvetsov has openly declared that the Bank saw “all cryptocurrency derivatives to be a negative development on the Russian market and do not consider it possible to support it.”

The ban on external websites comes on the heels of the recent complaints by the Russian President Vladimir Putin, who had earlier demanded for the banning of cryptocurrencies, bitcoin in particular, asserting that they could be used for money laundering, evading taxes, and terrorism financing. The president went on to say that bitcoin itself is a pyramid scheme.

Sputnik reported last month that the head of the Central Bank of Russia, Elvira Nabiullina, has said “we are categorically opposed to introducing cryptocurrencies in regulation as a monetary asset.”

While addressing reporters, the Deputy Finance Minister has stated vehemently that the country would not make Bitcoin payments legal.


Central Australian Bank Might Soon Launch Cryptocurrency

FinTech companies in Australia have been demanding that the central Australian bank issue the Digital Australian Dollar.

Several Australia-based FinTech startups have submitted proposals to the Australian central bank and Federal Treasury to create a state-sponsored Australian cryptocurrency, the Digital Australian Dollar.

According to the Australian Financial Review, three prominent FinTech startups, including FlashFX, AgriDigital, and Othera, have approached the bank via the industry advocacy group FinTech Australia, as well as the governmental FinTech Advisory Group. These startups have urged the bank to give due consideration to creating the Digital Australian Dollar (DAD). According to reports, the DAD will be linked to the current fiat Australian currency, and reportedly is set to confirm the country’s growing blockchain enthusiasm, according to FinTech Australia chief executive, Danielle Szetho.

According to Szetho, key stakeholders such as the RBA will ensure a relationship based on trust when Australian users are introduced to cryptocurrencies. While, being linked to fiat currency, the DAD will not be able to undermine the current stability of the current Australian currency.
So far Szetho proved a critical advocate for the cryptocurrency, while also being critical of the Australian government’s delay in delivering on their promise to end double taxation in the case of cryptocurrency transactions. The double taxation was finally ended this year.
FlashF, based in Sydney, was one of the pioneering startups which provided financial services to facilitate blockchain related activities. While all three startups have their own tokens, they argued that the DAD would be more powerful than any other digitized version of the Australian dollar, as well as create trust amongst Australian citizens.

According to FlashFX chief enabling officers, Nicolas Steiger, a DAD endorsed by the government would encourage increased trust and certainty amongst users. In addition, implementing the DAD would lead to immense growth in the marketplace. Lastly, it would discourage unofficial parties to release unendorsed digital Australian dollars.

Another advocate for state-backed cryptocurrency is the blockchain startup, AgriDigital, who facilitates transactions between farmers and buyers.
While AgriDigital uses blockchain to record, store, and facilitate transactions, payments are still in the fiat currency. This is mainly due to the volatility of cryptocurrency.

According to AgriDigital co-founder, Emma Weston, a state-sponsored DAD would make payments easier and more convenient.
The last startup, Othera, manages digital loan contracts that are based on blockchain technology. According to Othera’s chief executive, the company is currently pressed to work with existing legacy payment systems in the financial industry in order to process payments from loan borrowers before they can forward payments to the token holders of the contract.

John Pellew, CEO of Othera stated that the current system is a slow and painful process which does not sufficiently utilize the full scope of what blockchain technology has to offer. A DAD would enable all companies to unlock a significantly quicker and more convenient payment technology.
According to reports, the Australian central bank is currently engaged in reviewing the proposals and launching an investigation before they will reveal their decision.


Estonia Becomes Cryptocurrency Leader in the Baltic Region

With its cryptocurrency-friendly attitude and innovative tech industry, Estonia has established itself as the Bitcoin leader in the Baltic area.

The Baltic region has always been a promising area wherein which cryptocurrency can flourish. The Baltic, which consists of Lithuania, Latvia, and Estonia, is significantly poorer than its Western European counterparts. However, the Baltic has experienced an economic boom in the last decade, partly thanks to Bitcoin and other cryptocurrencies.

This is especially true in Estonia. Estonia, the birthplace of Skype, has always shown innovation in the IT industries. The tech-friendly attitude as well as the economic situation, has made Estonia the prime location to become a prominent Bitcoin exchange market.

Other considerations also factor into Estonia’s cryptocurrency success. Firstly, it is extremely easy to open up a business in the country. In addition, gaining access to the government is equally easy. Expenses for opening an LLC equates to less than $10 000. Due to the convenience of the process, several firms carry the OÜ extension, which is the Estonian equivalent for LTD. The convenient Estonian registration process might also become more widely used in blockchain projects, such as the .io domains are already employing.

Many experts believe that Estonia and their Baltic neighbours could soon become leaders in the cryptocurrency industry. Currently, Russian authorities are employing a largely draconian regime when it comes to cryptocurrency regulation. Considering Estonia’s, proximity to the Russia, businesses, and traders will soon look towards the Estonian market to replace the gap left by the Russian market.
To make its position stronger, the Baltic area has a high concentration of Bitcoin full nodes. The nodes are a confirmation of the region cryptocurrency knowledge.

Currently, Lithuania boasts with the most nodes at 66 nodes. This number competes with several other crypto-friendly countries such as the Ukraine, which has 80 nodes, Poland with 66 nodes, and the Czech Republic which has 65 nodes.
While these statistics can not yet compare with cryptocurrency leaders such as Japan, or the US, the numbers are indicative of the countries’ strong position in cryptocurrency. While Latvia only has 16 nodes, and Estonia 10, these countries have confirmed their cryptocurrency leadership in other ways.

In addition to Bitcoin nodes, Lithuania also holds Monero nodes and three Litecoin nodes. While Estonia and Latvia both hold four Litecoin nodes respectively. This puts the area ahead of other tech-innovative countries such as Switzerland.

While comparing nodes alone cannot give us a comprehensive look at a country’s Bitcoin future, it is a good indicator of possible success and dominance.

The area has also been experimenting with issuing their own cryptocurrency coins. Earlier this year, Estonia announced the creation of estcoin, a token based on an Ethereum principle. However, this coin received a lot of criticism, including that of Mario Draghi, the president of the European Central Bank, who was quick to remind Estonia that the official currency will remain the Euro.

Despite the criticism, Estonia continued to operate the e-residence program. Several experts believe that blockchain tokens can co-exist with fiat currency in the future if the currencies do not merge or cross into each other’s territory.

Given the openness of Estonia’s e-residency as well as the convenience of starting a business, Estonia has become the most sought-after options for start-ups. Currently, Estonia has less than 2 million residents, which means that they might choose to extend their e-residency to build a worldwide population of over 10 million people.

The e-residency could place Estonia as one of the main blockchain capitals of the world.
Estonia and the other Baltic states have managed to turn their biggest disadvantage into an attractive option for investors. The underdeveloped investment and finance sector, which previously was a burden, has now become a promising option for the cryptocurrency start-up option.


Bitcoin Gold Releases Statement to Address Criticism

As the upcoming Bitcoin fork edges closer, the Bitcoin Gold project has received a lot of criticism from the crypto community.

The cryptocurrency community has been ardently discussing the upcoming fork, and Bitcoin Gold (BTG) in particular as the fork deadline is scheduled for 25 October. Several users and developers have conducted comprehensive investigations as to Bitcoin Gold’s code and found it lacking in more ways than one.

The flaws pointed out by the community as well as the lack of available information on BTG has led to a fair share of skepticism surrounding the fork. Several users on BTG’s Slack channel have also voiced concern over BTG both in the form of asking the developing team questions, to denouncing BTG as “shady.” Many users have also expressed their astonishment at the severe lack of infrastructure and exchange listing with the fork deadline looming.

One particular user used a reverse Whois background search on the BTG website to found the domain owner. The user’s research revealed that the BTG website owner also owns several other cryptocurrency domains. The same user also discovered that BTG’s algorithm is unfinished and has no added replay attack protection. As for the code itself, it did not show any concrete signs of developing, despite the fork deadline being just one week away. In addition, the code displayed an implemented pre-mine which means that the developers will have a lot of BTG if the project does end up successfully forking.

However, two weeks ago, the developing team responded to accusations and criticisms via an official statement.
According to the BTG accusers and critics simply did not understand the decentralized nature of the bitcoin network, and went on to address several other concerns.

In regard to the lack of replay protection, the BTG team stated that the replay protection code is relatively simple compared to the PoW change. However, the team did not confirm that replay protection will be added before the launch. They also cited the problem of lack of volunteers. So far, the BTG has only had one developer volunteer for the project.

The BTG team addressed the unfinished Equihash implementation by stating the true consensus change is still incomplete. They also noted the change in difficulty which led to the adjustment algorithm to not yet be merged with the code. As to the pre-mine, the team stated that the code came from a fundraising idea earlier this year.

While the BTG team stated that the idea did not fully reflect the vision and spirit of the entire team, they also did not rule out the idea of removing the code either. The team stated that they might keep the code as means of basic funding for the project which is made up of volunteers. However, the team stated that they will make a detailed financial plan available to the public for the sake of transparency.

In addition to the criticism, BTG has also experienced other issue in the form of illegitimate websites claiming to provide users early access to buy BTG. The website “claimBTCGPU” claims that users are able to enter their BTC into the system to pre-claim their BTG, but that users will not be able to spend the BTG yet.

The website also gives detailed instructions, including pictures which illustrate the process. The website claims to be a BTG wallet which gives BTG transactions a priority.

Several members of the crypto community have already denounced this website to be a scam via several social media channels.


Abu Dhabi Regulates ICOs For Cryptocurrency Funding

Regulators in Abu Dhabi have started regulating Initial Coin Offerings (ICOs) in the country and have cautioned that they are fraught with “many risks.” ICO is a popular way for cryptocurrency start-ups to raise money.

ICOs as a way of raising money for start-ups involves issuing new crypto coin and users buy them using Ethereum or Bitcoin. Just like crowdfunding, it is a way of raising money but involves cryptocurrency. Data website Coinschedule.com estimates that start-ups have raised up to $2.4 billion from ICOs this year.

The Abu Dhabi Financial Services Regulatory Authority (FSRA) on Monday, issued guidelines on ICOs and virtual currencies for the first time.
It noted that if an ICO possessed the characteristics of a security, like issuing a person ownership of shares in a company, then FSRA will place it under regulation, just like a company issuing new stock.

Head of fintech strategy at the FSRA Christopher Kiew-Smith, told CNBC in a telephone interview that there is a high level of diversity in the IOC market when it comes to quality, with some ICOs constituting high risk. He further stated that there are no disclosures or financial statements and they are extremely high risk for people who are seeking returns.

He noted that “But we are aware of and are working with some firms that want to use ICO tech to fund in a transparent fashion. We have asked firms to bring them within the regulatory framework.”

The guideline provides that any company which wishes to execute an ICO must approach the FSRA to ascertain whether it falls under the body’s regulation. Just like a firm for an Initial Public Offering (IPO) on the stock market, under this regulation, companies are also required to publish a prospectus. The FRSA must approve any market intermediary or secondary market operators that are dealing with ICOs.

However, there are some ICOs which will remain unregulated. Any token which when offered as part of an ICO does amount to “offer of securities” would not be regulated. When that is the case, investors are advised to tread with “extreme caution.”

The FSRA’s guidelines state that “The risk of fraud and loss of capital is therefore significantly higher. This is particularly likely to be the case where a token issuer promises extremely high investment returns that are disproportionately high relative to those generally available in the market.”

Cryptocurrencies are not money but commodities

The Abu Dhabi financial regulators also noted that virtual currencies are not money but “commodities” which are in the same category as precious metals or fuels. They, therefore, stay unregulated.

There have been contradictory regulations from one country to the other over the past months regarding the use of cryptocurrencies and accepting them for transactions. For instance, Dubai recently planned to build its economy around blockchain and has allowed it major companies to start testing out how they can adopt blockchain in doing business.

Japan has also gone ahead to make bitcoin legal tender. Japan’s GMO recently invested $90 million in cryptocurrency mining. Besides, Japanese e-commerce giant DMM is equally considering investing money in the crypto market. The country is obviously creating an enabling environment for cryptocurrency business to thrive.

Unfortunately, the same cannot be said of China, which has already placed a ban on ICOs because they felt it wasn’t safe for their citizens. This development has seen an exodus of start-ups going to launch their ICOs in Japan which has a friendlier environment.

The executive director of capital markets at the FSRA Wai Lum Qwok told CNBC by phone that “For us, we do see a lot of challenges in regulating something which was designed not to be regulated. We recently established a fintech reach with the Japanese FSA, and through such cooperation, we hope to see how they regulate these and if there are risks they see. We are open to carving virtual currencies into the regulated space.”

FSRA is of the opinion that ICOs could be a way for companies to transparently raise money and in less expensive manner if appropriately regulated. They went ahead to say that were trying to remove disproportionate barriers to innovations that are sensible.

Looking at the way some ICOs have been launched recently, there’s need to have some regulations to create a sane environment and minimize the way some investors are being ripped off.