The New York Attorney General office launched a fact-finding inquiry to discover how the cryptocurrency exchanges work and what they’re doing to fight bots, money laundering, and market manipulation. Erik Voorhees, CEO of ShapeShift, and Jesse Powell, CEO of Kraken, denounce the “questionnaire” as hostile to cryptocurrencies and business, in general.Kraken CEO Slams New York Attorney General for ‘Hostile’ InquiryEric T. Schneiderman, the New York Attorney General, sent questionnaires to 13 cryptocurrency exchanges in order to better understand how they operate and protect their customers’ investments.The office sent questionnaires to Coinbase, Gemini Trust Company, Payward (Kraken), Bittrex, bitFlyer USA, iFinex, Circle Internet Financial Limited (Poloniex), Binance Limited, Elite Way Developments (Tidex.com), Bitstamp USA, Gate Technology (Gate.io), itBit Trust, and Huobi Global (Huobi.Pro).The cryptocurrency industry is somewhat baffled at the initiative from the New York Attorney General as its approach seems hostile to the ecosystem. “The AG’s tone-deaf response shows just how bad the disconnect really is”, said Kraken CEO Jesse Powell on Twitter. “Not only are they apparently experts in what legitimate businesses desire, they are also experts in what’s important to consumers. I have a wild idea: how about we let the market decide?”Jesse Powell published Kraken’s the full reply to the New York Attorney General, slamming the state government’s hostile approach and its attempt at inquiring companies based outside New York.“Kraken’s BitLicense-prompted exit from New York in 2015 pays another dividend today. When I saw this 34-point demand, with a deadline 2 weeks out, I immediately thought “The audacity of these guys – the entitlement, the disrespect for our business, our time! The resource diversion for this production is massive. This is going to completely blow up our roadmap!” Then I realized that we made the wise decision to get the hell out of New York three years ago and that we can dodge this bullet.”The statement added that Kraken is happy to help government understand their business, but instead of an inquiry, a conversation at lunch would be more productive and respectful.“We did all this once already, and then you gave us the BitLicense. Why don’t you try extracting this information from those businesses actually operating in your state? Kraken left New York because New York is hostile to crypto, and this “questionnaire” we received today proves that New York is not only hostile to crypto, it is hostile to business”, Kraken’s statement said.Jesse Powell’s response to the New York Attorney General’s office found massive support from the cryptocurrency community, including heavyweight executives within the industry such as Erik Voorhees, Chief Executive Officer of ShapeShift.Jesse – thank you for taking the ethical stance and speaking up for what’s right. Crypto has brought more transparency to finance and protection to consumers than the last 100 years of bureaucratic nonsense that has spilled from the sewers of New York. https://t.co/CsGaEO8R4F— Erik Voorhees (@ErikVoorhees) April 19, 2018Cryptocurrency exchange operating outside the New York state are not required by law to answer the inquiry. The approach from NY’s Attorney General may drive away more companies within the crypto space.
Companies venturing into Bitcoin trading are taking a big risk. This largely unregulated market remains subject to a lot of volatility.For Square, their decision to offer Bitcoin trading has paid off in spades. Nomura Instinet analysts claim Square will bee see a “healthy” boost to Q1 earnings thanks to this new feature.
Huobi, one of the largest cryptocurrency exchanges in China, is set to expand its business outside of Asia. The company, who is headquartered in Singapore and has recently opened a subsidiary in South Korea, has announced a plan to set up an office in London.Huobi Exchange Plans to Open in LondonHuobi, a cryptocurrency exchange originally from Beijing and now headquartered in Singapore amid the Chinese ban on the industry, is setting up a plan to expand its operations in Europe. Chern Chung, Senior Business Development Manager for Europe at Huobi, said the company “wants to have a presence” in the city because “our statistics show that London is the most active trading scene across all of Europe”, according to reports.From London, Huobi will be able to build and launch products and services for the European customer base. Additionally, the exchange wants to build strategic relationships with the global banks headquartered in the city, the world’s top financial center, despite the ongoing uncertainty Brexit is still having on the ecosystem in London.By moving to London, the exchange operator will be exposing its business to a very respectable jurisdiction when it comes to regulatory oversight. The United Kingdom has one the most up-to-date global regulations on cryptocurrency and is not as lax as some other territories, such as Gibraltar or Malta.Peng Hu, Vice President of the Huobi Group, is determined to open the office in London despite the advantages offered by other jurisdictions.“Not Malta, not Switzerland. Absolutely London, more precisely Britain, is the entry point for the European market for us”.The move “shows Huobi’s commitment and determination to go mainstream”, and that “we are not afraid of regulation nor are we escaping regulation”, Chung added.Huobi was forced to leave the Beijing office in Q4 2017 amid the Chinese ban on cryptocurrency trading. The company moved to Singapore and has been quickly designing its global expansion plans, including offices in South Korea, the United States, and Japan.Founded in 2013, Huobi has grown to become one of the largest cryptocurrency exchanges in the world. The cryptocurrency exchange deals about $1.1 billion of daily trading volume, approximately half of direct competitor Binance.Following the opening of the London office, Huobi is expected to launch operations in San Francisco. The South Korean subsidiary was announced on March 30, and opened with 100 cryptocurrencies listed. Huobi Korea is also prepared for a potential hacking scenario as the exchange has created an investor protection fund. Image from Shutterstock
South Korean cryptocurrency exchanges aim to self-regulate this industry. That decision has been known for a while now, yet the official rules were unveiled last night. This approach will help provide a more legitimate image for the different cryptocurrencies gaining traction in the region. Additionally, it will also foster a vibrantblockchain ecosystem.
‘Tax Day’ in the U.S. is today, April 17, and a number of analysts are bullish on Bitcoin as the much-anticipated tax deadline should trigger the next upward momentum.‘Tax Day’ to Spark New Bullish Momentum For BitcoinThe cryptocurrency market has been hungover ever since Bitcoin entered the futures trading market in December 2017. The downward path in 2018 removed the majority of its market cap, from about $826 billion to $330 billion today. Bitcoin had a similar fate as its market cap plunged from $324 billion to $138 billion, and its price shed $12,000, from $20,000 to about $8,000. Today, however, is ‘Tax Day’ in the United States.The IRS says cryptocurrencies constitute property, which is subject to capital gains tax. Institutional investors argue that ‘Tax Day’ is the trigger of the new bullish run.“Tax-selling has been a significant factor in downward crypto prices over the past few weeks. I would expect this downward pressure to abate after tax day,”Blockchain Capital co-founder Spencer Bogart told CNBC.The 1,300 percent upward move seen in the Bitcoin price chart should result in $25 billion in taxes for digital currency holdings in the United States, according to Tom Lee, Head of Research at Fundstrat Global Advisors. Lee says that U.S. households captured 30% of the $590 billion capital gains from cryptocurrencies in 2017. The tax rate of 27% on a $92 billion taxable gain means that U.S. holders owe $25 billion.On April 15, Tom Lee said that Bitcoin may be bottoming;CRYPTO: Where was #BTC 1M prior to ~$20,000 top? $5,900. In other words, BTC this year rollbacked prices similar to what happened in 2014/15. Could be same bottom as the 2014/15 bottom. Also, selling related to capital gains taxes in US should be lifting as tax day is 4/17. pic.twitter.com/AyOgKPoR2x— Thomas Lee (@fundstrat) April 15, 2018Lee expects Bitcoin to reach $20,000 again by mid-year and $25,000 by the end of 2018. By early 2020, the cryptocurrency is predicted to be worth $91,000.An investor letter published by Dan Morehead, Founder and CEO of Pantera Capital, said that bitcoin is “highly likely to have exceeded $20,000 within a year.”Tim Draper, an early backer of Tesla, Skype, and SpaceX, announced that he predicts that Bitcoin price will reach $250,000 by 2022. Draper said he expects that, in five years, whoever tries to pay in fiat currency will be laughed at.Horizon Kinetics’ Murray Stahl argued that Bitcoin could be worth the value of all the currency in the world because fiat money can be “debased”. According to Barron’s estimate, this would mean a figure of $361,000 per Bitcoin. Image from Shutterstock
The cryptocurrency ecosystem has found an unexpected backer in the International Monetary Fund. The organization is asking the world’s central banks to be open-minded about digital money as they should “distinguish between real threats and needless fears”.IMF Wants to Help Develop Cryptocurrency RegulationChristine Lagarde, Managing Director of the International Monetary Fund, took many in the financial system by surprise with a recent blog post where she seems to be on the side of cryptocurrencies when it comes to the recent overreaction by some central banks, including India and Pakistan. The IMF wants to offer its 189 members advice and serve as a forum for discussion and collaboration in the development of a consistent regulatory approach;“Policymakers should keep an open mind and work toward an even-handed regulatory framework that minimizes risks while allowing the creative process to bear fruit”With over 1,500 different digital coins and tokens in circulation, financial regulators feel pressured to allow the blockchain technology to develop while being threatened by cryptocurrency trading without the oversight of a central monetary authority. The IMF’s annual spring meeting in Washington is this week included the hot topic for this year – the cryptocurrency market.According to Coinmarketcap, the total market cap among the 1568 cryptocurrencies spread in 10327 markets is over $300 billion, which is about 4.8 percent of the world’s foreign exchange reserves.Last week, IMF’s Lagarde told Hong Kong’s South China Morning Post that the industry is something which is developing fast, is highly volatile, with benefits and downsides.“Firstly, the illicit use of digital currency plus abuse of consumers’ financial illiteracy must be guarded against. Secondly, innovations from the use of digital mechanisms need to be explored and encouraged. So it’s a combination of having a framework that protects, and not stifling innovation, that can lead to cost efficiency.”A preliminary assessment made by the IMF concluded that while assets tied to cryptocurrencies don’t pose an immediate danger to the global financial system because their footprint is still small, they have the potential to magnify the risks and increase the transmission of economic shocks. On the other hand, they can “enable fast and inexpensive financial transactions” and the distributed ledger technology could improve efficiencies.“We need to remain alert and vigilant. We must act quickly to close the knowledge gaps that inhibit the effective monitoring of crypto-assets. There should be systemic risk assessment and timely policy responses, as well as measures to protect consumers, investors, and market integrity”, Lagarde added.This week, the IMF Innovation Lab is holding sessions on distributed ledger technology, successful applications of the blockchain, and the risks and opportunities of cryptocurrencies. Image from Shutterstock