Countries where cryptocurrency, coins, tokens and ICOs are banned

There has been a lot of activity lately in the world with governments banning cryptocurrency and ICOs but this should come as no surprise as there has been strongly worded messaging about this for some time.

China bans ICOs and shuts down Exchanges
This had a massive impact on the valuations of coins such as Bitcoin, Litecoin, Etherum, Dash etc.. but things have since recovered since the 2017/09/04 law passed in China but serves as a warning and example of what government intervention can and cannot do.

http://en.people.cn/n3/2017/0904/c90000-9264331.html

Chinese authorities on Monday ordered a ban on Initial Coin Offerings (ICOs), a nascent form of fundraising in which technology start-ups issue their own digital coins, or “tokens”, to investors to access funds as the rapidly expanding market spawned concerns over financial risks.

Starting Monday, ICO activities should be halted, and ICO platforms should not engage in exchange services between fiat currencies, virtual coins and tokens, said a statement from the People’s Bank of China.

South Korea Bans ICOs

The good news is that while ICOs are banned it does not appear that trading in the currencies themselves is banned.
http://www.nasdaq.com/article/south-koreas-ico-ban-a-reaction-to-serious-concerns-over-cryptocurrency-investment-practices-cm854236

In fact it appears South Korea plans to allow trading but wants more regulation and safeguards:

South Korea Makes it Legal to Transfer Cryptocurrencies Internationally

Singapore

Although not by law, many companies in Singapore dealing in cryptocurrency have had their accounts closed:

https://www.out-law.com/en/articles/2017/september/singapore-banks-closing-accounts-of-cryptocurrency-firms/

Countries subject to strict or promising strict regulations

Nearly every country has taken a similar line where they are making a legal framework and claiming that ICOs are subject to the same laws and rules as IPOs. However this doesn’t appear to have been translated into law. It also doesn’t address the question of how holders on the coins will be impacted but one would guess that in the future they may be subject to capital gains tax and treated like traditional stock investments.

This list of countries includes:
EU, Hong Kong, Canada, Singapore and many other countries around the world.

Hong Kong Regulators Warn ICO Tokens May be Securities Under the Law

SEC: ICO Tokens Like Those of The DAO are Securities Subject to Regulations

Canadian Regulators Say Cryptocurrency ICO/ITO May be Subject to Securities Law

Is the regulation valid, practical and legal?

This is a hard call for me to understand in the sense that these cryptocurrencies are just that, digital currency and currently people are not taxed or penalized for simply exchanging, buying and/or holding different currencies.

It may also be interesting to see what the large exchanges, businesses and users do in response such as unprecedented regulation and laws. It may be that some of the regulations and laws imposed around the world may be found invalid or unenforceable in the end.

What are your thoughts and as always please let me know if I’ve missed any new developments around the laws of cryptocurrency.

2017 and Beyond The Future of Cryptocurrency and Government Financial Regulations

Governments, banks and other large entities have all been murmuring, talking and hinting what the future of cryptocurrency could be or specifically the block chain. They all agree “blockchain” is good, there is no one against it but there has been a lot of confusion about the internet thinking this is equates to government and corporate backing of decentralized cryptocurrencies. I believe this couldn’t be the truth, in fact there have been lots of issues for companies exchanging cyrptocurrency for cold hard cash being unable to wire etc.

The excuse you hear from the big players are concern over fraud, money laundering, etc.. all of which happens in the current fiat monetary system. The true issue behind all the fuss is simply that these decentralized cryptocurrencies allow unhindered free trade around the world regardless of which country you are citizen of and where you are, no one can sanction you or freeze your assets in cryptocurrency. Further, it is of course a huge threat to the current financial system and governments around the world who depend on third party “reserve” banks to print their money. It’s bad news for their monopoly on finance and business transactions worldwide.

Bitcoin Exchanges in China are being shutdown: https://www.usatoday.com/story/money/2017/09/14/china-orders-bitcoin-exchanges-shut-down-report-says/665209001/
Russia says Bitcoin is illegal: https://www.reuters.com/article/us-russia-bitcoin/russian-authorities-say-bitcoin-illegal-idUSBREA1806620140209
Bitfinex sued Wells Fargo for blocking their wires: https://bravenewcoin.com/news/wells-fargo-sued-for-suspending-bitfinex-wire-transfers/
US SEC says they want to regulate coins: https://themerkle.com/sec-may-be-looking-for-ways-to-regulate-the-cryptocurrency-ico-market/
JP Morgan’s CEO Jamie Dimon calls Bitcoin a fraud: https://www.bloomberg.com/news/articles/2017-09-12/jpmorgan-s-ceo-says-he-d-fire-traders-who-bet-on-fraud-bitcoin

The part in China is most significant because the action in China has coincided with drops in value of the major currencies, as well as Chinese users doing a lot of mining and trading in crytocurrency.

When we take some examples above, this is the general consensus among bankers and government worldwide. They all like blockchain and want to make their own currencies that they control and centralize, but they are certainly against the decentralized ones and as new banking, taxation and other government intervention roles out surrounding cryptocurrency it will be very interesting to see where things head.

I personally think the decentralized currency will always exist and it can and will coincide with other mainstream offerings from banks and governments. There will be a place for both just as cash from other countries is traded for other items whether gold, silver or even electronics and oil. Trade will continue but through a different method of settlement and transfer.

One thing is for sure until we see how things break in terms of government regulations and how their own cryptocurrency’s play out, the value of the original decentralized currencies like Bitcoin, Litecoin, Etherum et al will have wild fluctuations as people react to news that threatens these currencies the same way people would read the news about Greece’s debt and haircut on the bonds they sold. In fact many watch the crypto market including the ICO (Initial Coin Offerings) and note they do seem to function as any other traditional market would in terms of news and advancements.

I believe we are seeing a financial revolution, all currency will soon be crypto and physical cash before we know it may all be stop being used.
The only question is how fast does it all happen and how does the difference between centralized banks and decentralized crypto users play out?

Decentralized Search Engines to Rival Google Based on Blockchain from Bitclave

I haven’t covered it in my blog here but many know the blockchain technology made popular by Bitcoin has other possibilities such as sharing data, files etc and one of the latest manifestations is the “Bitclave” project. The website doesn’t detail some of these things but here is what I gather and I apologize if it’s not 100%, but here is what I break it down as:

#1) Bitclave is a decentralized search engine based on blockchain technology.
#2) Bitclave has CAT which is it’s own cryptocurrency based off the same blockchain meant to be used as currency.
#3) Bitclave is unique in that unlike the current big search engines, they will not be freely selling your information to benefit unknown third parties.
#4) Bitclave is not only a decentralized search engine and currency but it also rewards you for engaging in particular offers if you want to buy a car or house, for engaging with particular companies and offers (even if you don’t buy) you are rewarded with some CAT currency.
#5) Your information is under your control and completely private so you can choose when and how to sell it for big money potentially to third parties.

I’m going to go into some of the pros and cons that I see.
Pros.
First and foremost this is an exciting project on its own due to the decentralized aspect of the search engine. It takes it one step further by giving the user control over their private search/marketing data and even lets them directly and profit in ways that are under their control.

It will also revolutionize business potentially if things are done this way under a mutual benefit between business and user. In fact if executed properly it could end or significantly change the internet business and search model as it exists now with the big engines and social sites.

Cons

However, the Bitclave team would still largely retain certain controls just as developers of any blockchain do which makes some aspects only as trustworthy as the team is capable and trustworthy for.

It is theoretically possible that the business model above could turn biased in a somewhat similar way that the mega search engines have done things, where the rules are constantly changing for the benefit of a few. However, this is not a likely thing in the near future since Bitclave needs to prove itself and gain trust to both users and business.

Another big concern, which is still a concern for the mega engines is how would spam, hateful, defamatory and other harmful material be handled? It is great to be free and decentralized but there needs to be some legal or other mechanism to prevent abuse of such a powerful search engine. It’s definitely worth checking out to see how things play out.

Conclusion
I am very excited about this project, it is more commercialized than I expected and could not be considered entirely open source or community based but I’m OK with it as long as it is executed as envisioned it will have a massive and positive impact on the internet which benefits the majority.

Good luck to the Bitclave team they could be making serious history in both blockchain, search and online commerce!

Bitcoin’s Hard Fork of BCH Bitcoin Cash a milestone for cryptocurrency

The hard fork occurred on August 1st, 2017 with some nodes of the Bitcoin network implementing the “Segwit update”.  Although a lot of potential chaos could have happened, many in the industry called it correct that the most probable scenario is that the split would occur with the creation of BCH and Bitcoin users would not lose any coins and would be rewarded with an equal amount of BCH.  However, most exchanges and users were advised to backup their wallets and not do any transactions in the meantime.

Beyond this a lot of questions and issues need to be sorted out in the cryptocurrency world for things to stabilize and be universally accepted by businesses and individuals.  The key issues in my mind are “volatility”, “stability”, “security” and “regulation”. Really a serious issue with either of my three cores issues puts people and businesses at big risk although new updates and coins keep coming out with some promising the solution to these various issues.

Volatility

This is in reference to the extremely unpredictable nature of many currencies and Bitcoin is a core example with rapid swings.  Now people have often been warned that “don’t store your coins for the long-term” and this comes from the Bitcoin team itself as no one can be certain of the future of any coin at this moment.

Some have lamented that cash is the same, this is true but with the caveat that cash is backed by a government and central bank (all of who which do not really like cryptocurrency unless it is managed or under their control-more on regulations later).  Cash of course has had its issues whether run on banks, robberies, theft, fraud and other misuses of currency however cash is what most of us know and there is some safety and security in the “right cash” and at least often some predictability.

Take for example a record high of Bitcoin at the time in 2013 of approximately $1300 USD but sometime in 2015 trading was just at $267 USD.  The point here is that at this time cryptocurrency can be very volatile and unpredictable.  It can create chaos in everyday life for both business and individuals.  A risk that many businesses echo is the above scenario what if you accept payment based on USD in a cryptocurrency and the value plummets by 80% or some other high number suddenly?  It creates huge issues to say the least and time should address them but until there are more coins that have some consistency in their valuation without rapid descents there will be some reluctance.

Stability

There have been many instances on both the networks and exchanges for Bitcoin and Etherum where there are a ton of unconfirmed transactions.   I still have trouble understanding this but there are various numbers of “confirmations” before once can be comfortable they really have the currency that has been sent.  What if the network stops working or slows down creating massive fraud or inability to process transactions?

Fortunately there are new coins coming out which are instant that solve this issue but still there are many in the wild, common and highly valued that do not have these features.

There is also of course the concern that massive DDOS attacks could take out the network of a cryptocurrency or effectively shutting it down.

Security

The biggest threat is that there is the assumption that blockchain is secure and irreversible and it is impossible to play around in ways you shouldn’t.  However, this also relies on someone not finding a weakness or exploit against the blockchain, and what is more probable going forward is that an organization with massive computing power ultimately finds this and exploits this in various ways.

There are also other considerations such as people losing their coins to viruses or hackers, this has even happened to exchanges such as Coinbase executives.  One thing for sure is that it is not wise to leave your coins in an exchange if not for the risk that in the recent Bitcoin Fork the exchange refuses to give you the split/new currency.

Regulation

This is the biggest uncharted territory but governments and large financial institutions have made their position clear and my interpretation is that “we love blockchain” but “we hate that it is not under our control yet”.  This will have significant repercussions worldwide on how individuals and businesses deal with cryptocurrency.  Significant regulation and the introduction of state-run/central cryptocurrencies could potentially wipe out or make worthless some coins overnight. On another note it appears to be increasingly difficult to buy or sell out of the cryptocurrency markets with banks making it increasingly difficult for the coin exchanges to operate.

Conclusion

Bitcoin and other cryptocurrencies have made it far beyond the naysayers and through many difficult and unpredictable times.  Ultimately I believe cryptocurrency will continue to evolve and improve but as with any tool there are always going to be some pitfalls and bottlenecks.