Chairman of the Commodity Futures Trading Commission [CFTC] – J. Christopher Giancarlo, declared his bullish point of view on cryptocurrencies during one of the most important meetings when it comes to the digital currencies – SEC and CFTC declaring out important announcements related to crypto-regulation.
The community and enthusiasts that follow the coins were waiting for the meeting to take place for a long time – and did not let down. The event turned out better than just having typical politician discourse on how to keep the market under control, as the chairman added:
“We must crack down hard on those who abuse our young enthusiasm for bitcoin and blockchain technology,” he said to the congress. “We owe it to this new generation, to respect their interest in this new technology with a thoughtful regulatory approach,”
The final part of the phrase did come as a conclusion to Mr Giancarlo after being inspired as he explained during a conversation with his own kids how they were very curios and interested in cryptocurrencies. That is more than understandable as we experienced coins like Bitcoin reaching all-time highs of $20.000 against the US Dollar per token and then in just a month dipping to $6,100.
Mr Giancarlo has also been saying that Bitcoin has intrinsic value. For him, the value is related to the cost of mining this cryptocurrency. He has also commented about possible regulations. As many other countries are doing, the cryptocurrency market should be allowed to grow while regulating illegal activities around it.
As explained in a previous EWN writing, the prices have been riding a recovery train very confident with the pair BTC/USD changing hands just below the major $8,000 level. That means that the market reacted instantly to comments that seem positive to the whole cryptocurrency community.
Tuesday, Feb 6. A very much welcomed market development has been taking place following Monday’s speedy dip.
An effecting factor could be the Commodity Futures Trading Commission [CFTC] and the Securities and Exchange Commission [SEC] hearings which were an event today Feb 6. The plans [by the regulators] are to take the crypto-conversation to table including: cryptocurrencies, ETFs and ICO [Initial Coin Offerings].
Despite the up-tick, Bitcoin is still trading below the $8,000 level against the US Dollar [keeping in mind that it was trading $6,150 – this is over $1k gain in a day], while Ethereum [the second in place by market capitalization] is on 10 percent gain the last 24-hours changing hands at approx. $771.11.
The global-scale market capitalization recovered from the lows of $280 bln to $360 bln per time of writing. According to CoinMarketCap, NEO token price against the US Dollar is averaging the best performance in the last day stabilizing at around 20 percent increase. Keeping an above $100 trading ground could open doors for further gain for the pair NEO/USD.
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Identity verification improvements
We saw record sign ups and activity in December. As a result of this growth, our identity verification systems were overwhelmed and many customers experienced significant delays in verifying their photo ID. This resulted in a poor experience for our customers. We’re sorry and determined to not have this happen again.
Over the last 8 weeks, our team has invested time upgrading our verification systems and integrating an additional ID verification vendor. We are now verifying nearly 90% of all customers who submit a photo ID. We are continuing to invest in improvements to our verification systems and later this week, we’ll be publishing a more detailed post specifically highlighting issues and improvements to identity verification.
Credit card purchases
Last week, some customers using credit cards started to see an additional “cash advance” charge on their card statement. This was the result of the MCC code for digital currency purchases being changed by a number of the major credit card networks. Banks and credit card issuers may now add cash advance fees to purchases of digital currency. Customers will notice this listed as a separate line item on their credit card statement.
These additional fees are not from Coinbase. Because these fees are charged directly by the bank or credit card issuer, unfortunately we don’t have a way of knowing when they might be charged or how much they might be. If you were charged additional fees, we recommend contacting your bank as you may be able to have these waived or receive information about switching to a card with lower fees.
For customers purchasing digital currency with a credit card, we added a warning about potential cash advance fees. However, we did a poor job messaging this to customers more broadly. We’ve since emailed customers with a linked credit card notifying them of this change.Going forward, we will notify customers of changes related to payment methods via our blog, email and Twitter.
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This is what happened during the SEC and CFTC meeting.
The Commodity Futures Trading Commision (CFTC) and US Securities and Exchange Commision (SEC) met the morning of February 6 2018 to discuss their roles in Blockchain, virtual currencies, and ICOs. Set in Washington D.C. at the Dirksen Senate Building, the Committee on Banking, Housing, and Urban Affairs met in open session for about 2 hours. Before the hearing began, testimonies were released on behalf of both witnesses.
(these testimonies were released on February 5 2018)
J. Christopher Giancarlo, chairman and witness of the CFTC, expressed optimism in his testimony towards Blockchain/DLT, dedicating a page and a half (VI. Potential Benefits) to the numerous ways financial institutions, charities, social services, agriculture, and logistics can all benefit from it. Giancarlo seemed very bullish on allowing more freedoms for DLT, even comparing it to the internet:
“This simple approach is well-recognized as the enlightened regulatory underpinning of the Internet that brought about such profound changes to human society. During the almost 20 years of “do no harm” regulation, a massive amount of investment was made in the Internet’s infrastructure. It yielded a rapid expansion in access that supported swift deployment and mass adoption of Internet-based technologies. Internet-based innovations have revolutionized nearly every aspect of American life, from telecommunications to commerce, transportation and research and development. [“Do] no harm” was unquestionably the right approach to development of the Internet. Similarly, I believe that “do no harm” is the right overarching approach for distributed ledger technology. “
Despite his optimism, the chairman still stated that digital currencies will “likely require more attentive regulatory oversight” in regards to “fraud and manipulation.” But in his conclusion, he addressed that the SEC and CFTC should do their best to leave room for growth:
“As we saw with the development of the Internet, we cannot put the technology genie back in the bottle. Virtual currencies mark a paradigm shift in how we think about payments, traditional financial processes, and engaging in economic activity. Ignoring these developments will not make them go away, nor is it a responsible regulatory response.”
Jay Clayton, the chairman of the SEC, was a little less excited about virtual currencies – but he also wasn’t denying their role in a modern financial ecosystem.
“To be clear, I am very optimistic that developments in financial technology will help facilitate capital formation, providing promising investment opportunities for institutional and Main Street investors alike. From a financial regulatory perspective, these developments may enable us to better monitor transactions, holdings and obligations (including credit exposures) and other activities and characteristics of our markets, thereby facilitating our regulatory mission, including, importantly, investor protection.”
But he also admitted that there still lay many traps:
“At the same time, regardless of the promise of this technology, those who invest their hard-earned money in opportunities that fall within the scope of the federal securities laws deserve the full protections afforded under those laws. This ever-present need comes into focus when enthusiasm for obtaining a profitable piece of a new technology “before it’s too late” is strong and broad. Fraudsters and other bad actors prey on this enthusiasm.”
SEC Chairman Clayton and CFTC Chairman Giancarlo, image source: c-span
While Giancarlo mentions the word “ICO” once in his testimony, Clayton mentions it 132 times.
A recent study has found that 10% of all ICO proceeds have been lost to hacks and fraud, and Clayton’s fear is that many uneducated investors are losing lots of money. He even went on to promote Facebook’s recent ICO advertising ban:
“I do want to recognize that recently social media platforms have restricted the ability of users to promote ICOs and cryptocurrencies on their platforms. I appreciate the responsible step.”
Clayton goes on to praise the innovations of DLT (Distributed Ledger Technology), better known as “Blockchain”, but hopeful to create some boundaries for ICOs.
“Simply said, we should embrace the pursuit of technological advancement, as well as new and innovative techniques for capital raising, but not at the expense of the principles undermining our well-founded and proven approach to protecting investors and markets.”
The General Stance
Clayton has mentioned that he and Giancarlo have “built a strong relationship.” They are willing to work together to come up with a robust regulatory framework. In the simplest of terms, there seems to be a gradient that starts at ICOs, to virtual currencies, and then to DLT. DLT needs the least regulation, and in fact both the SEC and CTFC seem to encourage anyone willing to expand on it. ICOs are on the other side, requiring the most regulation, and virtual currencies are in the middle, needing protection against fraud and market manipulation.
Today’s hearing was refreshing in the sense that both Chairman Giancarlo and Chairman Clayton remained excited about the potential of decentralized technology and cryptocurrencies throughout the hearing.
Clayton broke it down into 3 categories: DLT (distributed ledger technology), cryptocurrencies, and ICOs. As stated in the pre-testimonies, the CTFC was interested in allowing growth for DLT and cryptocurrencies, while keeping a watchful eye on fraudsters in ICOs.
Giancarlo was very bullish in his sentiments towards cryptocurrency. In his opening statement he said that “we owe it to this generation to respect this generation’s interest in cryptocurrencies, and punish those who persecute.” He talked about how interested his children were in the Bitcoin world and it was exciting to see them so interested in finance.
He also mentioned Lab CFC: the CFTC’s organization to educate Main Street on cryptocurrencies. Giancarlo stressed that education was the most important route to take when overseeing cryptocurrencies; the CFTC has never conducted as much educational outreach as they have in this area.
Senator Crapo mentioned that neither agencies have complete jurisdiction over cryptocurrencies and ICOs. Giancarlo and Clayton both agreed that they “may need additional authorities to regulate,” but before they can agree to that they must learn more about the crypto space. Clayton also briefly touched on the issue that the SEC does not have enough money to hire more people.
When Senator Cotton asked Giancarlo about the value of Bitcoin, Giancarlo replied with “If there was no Bitcoin, there would be no DLT.” Both Clayton and Giancarlo know that cryptocurrencies are important for the development of DLT, and want to see the technology grow without getting anyone hurt in the process. Giancarlo also said that Bitcoin’s floor could not be zero. This is because Bitcoin’s value is “tied to mining.”
There wasn’t much talk at all about tax regulation. Clayton and Giancarlo also admitted that they have no jurisdiction over nation states, such as Venezuela, using cryptocurrencies to avoid sanctions.
Clayton did mention that while ETFs in Bitcoin are currently not ready, but that “there will be room in the future.”
Lastly, Senator Warren asked Clayton how they can make ICOs safer. Clayton responded that many ICOs are, in fact, violating existing laws and that ICOs “should pay more attention” because the SEC is going to be investigating these violations further.
The best solution, according to both Giancarlo and Clayton, would be to:
Educate the masses about Bitcoin and cryptocurrencies
Use the jurisdiction that they have over the futures markets of Bitcoin to collect data and keep track of the markets so that nobody gets too hurt
Use taskforce to go after “fraudsters” who are scamming Main Street investors in ICO pyramid schemes, and worthless cryptocurrencies.
In summary, cryptocurrencies will allow growth for the United States the same way that the internet did. The United States should be a leader in this aspect, and make sure that nobody gets hurt in the process. Crypto HODL’ers alike all agree that the news was very bullish.
On a side note, Giancarlo thinks “HODL” is an acronym for “Hold On for Dear Life.”
Did Giancarlo just say HODL to a group of senators
Bitcoin (BTC) is still trading around the $7000 mark, about $7,171.42 by press time and up 1.28 percent over a 24-hour period. This is almost $1000 up from a low today that had brought BTC to almost $6,000.
Ethereum (ETH) and Ripple (XRP) have gone up 4.59 and 1.65 percent over a 24-hour period respectively, trading at around $732.13 and $0.70.
Total crypto market cap is about $339 bln, up from an early morning low of around $276 bln.
AltcoinsNEO and NEM were markedly up compared to the rest of the top ten coins listed on CoinMarketCap, up almost 12 percent each over a 24-hour period and trading at $91.40 and $0.51 by press time.
A man out of nowhere jokes, “Look at this Bitcoin Titanic.”
A few in the queue, who could make out the meaning of the pun, laughs uncontrollably while admiring a colossal cruise before them for its unmatched beauty with their iPhones out.
The check-in queue moves slowly as usual, but the conversation about the Bitcoin’s meteoric rise keep everybody occupied. The people are meeting for the very first time, but they have read about each other. Business cards are out and being exchanged for other business cards. The crypto-community, it seems, has finally come out of their digitized pseudonymous avatars to finally interact in the real world.
It is January 15, 2018, the day when blockchain investors, developers, enthusiasts, and media professionals are about to board Royal Caribbean’s Mariner of the Seas. The 1,020-foot-long ship will be a host to the CoinsBank Blockchain Cruise Asia conference for the next four days, during which it will travel from Singapore to Thailand via Malaysia.
Day 1: The Blockchain Journey Begins on Water
The attendees are handed over the entire conference program, which mentions a long list of crypto-celebrities as speakers. They include Jose Gomez, a former assistant to the late Venezuelan President Hugo Chavez; Jorg Molt, one of the few early Bitcoin adopters who claim to hold billion dollars worth of digital currency assets; and Kaspar Korjus, the chief of Estonia’s famous e-residency program.
But the biggest takeaway is John McAfee, the celebrated cybersecurity expert and a cryptocurrency evangelist, who will be joining the rest of the Blockchain Cruise attendees in Thailand. During the conversations at the dinner table that night, people are enthusiastic about listening to McAfee’s views on emerging cryptocurrencies and their impact on businesses and on Bitcoin.
Day 2: The Day of Blockchain Governance and Penang
Savoy Theater, Deck 3: It is January 16, 2018, 0900 hours. Susan Poole, celebrated blockchain columnist and the honorable host to Blockchain Cruise Asia, starts with an enthralling opening keynote. The topic, in the meantime, remains to be blockchain and its imminent integration into government schemes.
The speakers, which include Ann Charleus, the founder of SheroRising.org; Travis Right, the co-founder of CCP Digital; Taavi Roivas, Member of Parliament, Estonia; Kaspar Korjus, managing director of Estonia’s e-Residency program; Dr. Jose Gomez, Vice-Chairman at TecnoConsult; speak on various topics ranging from entrepreneurship and e-governance to e-residency and cryptocurrency security.
But perhaps the biggest draw is government panel discussion, which lists important bureaucratic figures from all around the world. They include Taavi Roivas (Estonia), Kaspar Karjus (Estonia), Pratin Vallabhaneni (US), Tim Bird (UK), Antonio Morales (Venezuela), Jose Gomez (Venezuela) and Artem Subotin (Belarus), and Sergey Drobyshevsky (Belarus).
Watch them speak in our exclusive two-part coverage:
The conference for the day concludes. It is time to enter Malaysia and have some tourist time.
Day 3: Bitcoin Drops Huge and THAI Blockchain Conference
The Mariner of the Seas is docked a little far from Phuket, Thailand. The Blockchain Cruise Asia attendees are required to gather for an event on Paradise Beach. Everybody looks excited about stepping out from the cruise for a while. Most of them are already talking about taking a swim into the sea on a sunny day; while many of them are just hoping to meet John McAfee in person.
It is the same day when Bitcoin price has dropped towards $10,000. Attendees, however, are least nervous about such fluctuations. They look sure about their positions. Some quite discussions take place but get overcome by the excitement of an event that is lying ahead.
The crowd reaches Paradise Beach. This event is no less than a beach party. The stage is set. Songs about Bitcoin are echoing through the place. Some attendees are already inside waters. Others are enjoying sips of iced juice in a beach-bar while discussing their future cryptocurrency positions after the latest BTC drop.
The beach begins to be less of an attraction when the clock hits 1315 hours. The shacks before the stage start getting occupied. John McAfee is visible behind the stage, perhaps rehearsing his speech. His name gets announced.
Watch John McAfee’s speech from CoinsBank THAI Blockchain Conference here:
The momentum is kept alive by the following speakers. Ronnie Moas, founder, and director of research at Standpoint Research, Inc speaks passionately about Cryptocurrency Diversifications and Income Inequality. His initiative of raising funds for the poor gets lauded from everybody in the audience – and even from the backstage.
SilkRoad Equity’s Andrew J Filipowski and Forbes’ Salley Eaves also gives important keynotes on Cataclysmic Disruptors and Blockchain’s potential in business and social good, respectively.
A beautiful sunset before the main stage indicates the end of the conference for the day. Everybody gathers near the pickup spot and transports back again to the Mariner of the Seas.
Day 4: A Full-Day Discussion on Token Sale and Blockchain
January 18th, 2018 is the busiest day on the Mariner of the Seas. It is going to be a whole-day event and journey back to Singapore. The conference is taking place in two different theaters (not far away from each other). In Savoy Theater on Deck 3, Jorg Molt is speaking about Bitcoin vs FinTech’s growth in the next 5 years. While in Conference Center on Deck 2, a whole new discussion about Token Sales and Investments are going on.
The day goes on with discussions and speeches taking place concurrently. It’s all up to the attendees that which one they want to pick. If one has to compare the two auditoriums, the Conference Center on Deck 2 is literally catching more eyeballs than the Blockchain section on Savoy Theater. The shift signifies ICOs as the trendiest thing in the cryptoverse.
In the meantime, let’s not forget to mention some speakers on their brilliant insights. Tameez Abramjee, the CEO of Global Crypto Exchange, lays out a nutshell opinion about cryptocurrencies in Africa. Tone Vays, Blockchain Consultant and Researcher, and Jack Tatar, co-author of Cryptoassets, in their respective speeches, deliver powerful insights on crypto investment.
NewsBTC’s very own contributor and a long-term HODLER Jayanand Sagar also participate in a panel discussion on Media’s role in cryptocurrency sector.
The event has concluded. As the cruise heads back to Singapore, the crypto-community is heading back to their party mood. Coinsbank has arranged a private lounge for them where they can interact further, and establish more business contacts before the journey ends. Some drink, some dance, while some just stay blockchain-zoned.
There is a lot to take away from this entire experience, something that cannot fit this article. It should be best enjoyed and relived in the next installment. Reports are that Coinsbank will soon organize another event. So to the 700 attendees, and to those who could not make it this time, there will be another announcement from Coinsbank soon.
In the end, I think to myself, ‘That was no Bitcoin Titanic. Titanic drowned.’
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Though some employees might like to get paid in cryptocurrencies, chances are it’s not a good idea.
With the help from recent news headlines chronicling the substantial increase of some cryptocurrencies, more members of the public are discovering what people who’ve dealt with digital currencies like Bitcoin already knew. Although volatility is constant, it is possible to become wealthy with Bitcoin and similar non-physical forms of money.
So you might be wondering, why isn’t it possible for your workplace to pay your wages in cryptocurrency? Some employers actually do – we’ll cover those later. But first, let’s discuss four barriers that make widespread adoption of that payment method difficult.
1. Some laws specify cash or check payments only
One of the main federal regulations that cover employee wages in the US is the Fair Labor Standards Act (FLSA). It stipulates that employers must meet at least some of their minimum-wage requirements by paying workers with cash or checks – as of now, Bitcoin payments don’t apply and the same is true for overtime compensation.
However, outside those federal requirements for minimum wage and overtime, employers and workers can agree on other forms of payment if desired. Employers could theoretically pay employees partially with cash or checks, then give them supplementary amounts made up of cryptocurrencies.
The system isn’t so straightforward in certain states, though. For example, Delaware and Texas are two of several states where wages can only be comprised of US currency.
2. Cryptocurrencies may be deemed securities
The Securities and Exchange Commission (SEC) issued a statement about cryptocurrencies to remind people that investments associated with them can quickly cross into other geographical boundaries without owners’ knowledge, which increases the possible risk.
Also, the SEC may ultimately decide some cryptocurrencies are designated as securities. In that case, employers would have to comply with additional laws for securities in addition to the wage-related rules mentioned above.
3. Employers could feel wary
The rapid fluctuations in value associated with Bitcoins and other cryptocurrencies may make employers balk at the idea of paying their workers through these non-traditional means. Similarly, they might feel that not enough merchants accept cryptocurrencies as payment yet, even as the number grows.
However, a BitPay debit card allows people to convert amounts from their cryptocurrency wallets into dollars in minutes. People can then use the more widely accepted currency anywhere that accepts Visa. This capability takes care of the potential issue of someone having cryptocurrency but not being able to spend it.
The card also offers a safeguard if cryptocurrency holders learn about market conditions that signal a likely, sudden drop in value. In such a scenario, people could quickly make conversions using the card to avoid holding onto large amounts of cryptocurrency that could lose substantial worth in a few days or less.
4. The tax implications vary by country
If an employer regularly hires remote workers who are legal residents in one country and pay taxes in other, the different ways countries view cryptocurrencies for tax purposes could also be a barrier to adoption.
In Canada, for instance, the country views cryptocurrency earnings as barter transactions. Companies based in the US have to convert cryptocurrency values to dollar amounts for the IRS on the dates payments occur. Similarly, employees must report all earnings in dollars, even when earned as Bitcoins or another currency.
Depending on the respective countries, reporting cryptocurrency earnings for tax purposes could be a straightforward process. However, companies with large percentages of international workers may decide that figuring out the logistics requires too much time-consuming research. If that happens, workers who strongly desire cryptocurrency payments could offer to find out the details and report back to their employers.
Some companies do pay employees with cryptocurrency
Despite the challenges we’ve presented, pioneer companies do exist that pay their employees in cryptocurrencies. Notably, none of the businesses are within the US, so some of the issues you learned about above may not apply to them. Geographical differences aside, if a growing number of companies around the world conclude that cryptocurrency payments for employees make sense, it could encourage other entities to follow suit.
Starting in February, GMO Internet, a Japanese company, will give portions of employee salaries in Bitcoin. Employees will be able to receive the equivalent of $890 per month in Bitcoins. A representative of the company said the move to offer Bitcoins as salary was intended to make the company at large more literate about how cryptocurrencies work.
Another business to consider is Buffer, a company associated with social-media tools that save time and grow traffic. It pays one of its developers, who reside in South Africa, a portion of his salary in Bitcoins. In this case, the employee is a big believer in the potential of Bitcoins. As such, he wanted to receive five percent of his wages in the currency.
The man approached a payment associate that works with Buffer and began a dialogue, later completing research to find a company that specializes in payroll services related to cryptocurrencies. He’s a good example of an employee who was proactive and got positive results even though the company was not offering widespread cryptocurrency payments.
If a business is already in the cryptocurrency market, they might even ask employees during the hiring process whether they’ll accept non-physical payments. That situation happened at Bitedge, a sports betting establishment based in Australia. The company’s web developers receive 100 percent of their income in Bitcoins.
The future is bright
If you’re eager to explore the possibility of getting paid in cryptocurrency, it’s crucial to be aware of the volatility associated with cryptocurrency values, as well as the possibility that employers may not be up to speed about digital forms of payment. They might require you to research the specifics and provide guidance.
As cryptocurrencies become more prominent, finding ways to overcome these and other challenges get easier. You can strengthen your stance as an early, in-the-know adopter and get involved in what could eventually revolutionize the way employers give compensation.
The head of the Bank for International Settlements thinks BTC is a “Ponzi scheme” and calls on central banks to prevent crypto from joining mainstream finance.
Augustín Carstens, the general manager of the Bank for International Settlements (BIS), called Bitcoin a “combination of a bubble, a Ponzi scheme and an environmental disaster” and asked central banks to more closely regulate cryptocurrencies during a speech at Goethe University on Feb. 6.
BIS is known as the “bank for central banks,” for it only provides banking services to central banks and other international organizations.
In Carsten’s opinion, the global interest in cryptocurrencies is just a “speculative mania” and thus strict regulation by central banks is needed:
“If authorities do not act pre-emptively, cryptocurrencies could become more interconnected with the main financial system and become a threat to financial stability.”
Carsten considers it “alarming” that some banks are releasing Bitcoin ATMs, for he considers Bitcoin’s potential use for illegal transactions too high to allow the currency to be associated with mainstream financial institutions:
“If the only ‘business case’ is use for illicit or illegal transactions, central banks cannot allow such tokens to rely on much of the same institutional infrastructure that serves the overall financial system and freeload on the trust that it provides.”