Chinese Crack Down Closes Cryptocurrency Traders And Exchanges

Graham Trafford
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Chinese Crack Down Closes Cryptocurrency Traders And Exchanges

The Chinese authorities have drawn a bamboo curtain over cryptocurrency exchanges and traders in the country.

The central bank – the People’s Bank of China – has declared victory in a fight to stop initial coin offerings (ICOs) and digital currency trading.

Beijing’s long-term goal is to replace the free digital currency market with a state-owned cryptocurrency and blockchain controlled by the central bank.

Because of the policy to ban cryptocurrency, any state offering of digital currency has no local opposition.

“The development of digital economy needs central bank-issued electronic currency more than ever. It’s crucial to speed up the research and issuance,”said a spokesman for the central bank last year.

Blanket ban on digital currencies

The bank says the blanket ban on all cryptocurrency activity was a bid to stamp out rogue traders and fraudsters charging investors exorbitant fees and rates of interest while deceiving them to invest in ICOs that were just fronts for stealing their money.

Prior to September 2017, China was the world’s major cryptocurrency centre, with around three-quarters of all transactions taking place in or passing through the country.

Then the government decided to boot out the crooks with a blanket ban on all cryptocurrency activity.

Six months later, the central bank says the operation is complete and all traders and exchanges in the country have closed.

“There is only one thing that we should do now, and that is stand by and watch as bitcoin’s corpse floats past us,” said central bank vice president, Gongsheng Pan.

India blocks taking money from e-wallets

Meanwhile, a similar policy move has taken place in India, where the Reserve Bank of India has banned the nation’s banks for, transferring money between cryptocurrency wallets and their bank accounts.

The move effectively stops investors from accessing their money in India as rupees and curbs any digital currency start-up from raising money through an ICO.

Indian authorities have already banned ICO social media advertising in another move to shut down the market and close digital currency exchanges.

Other countries are heading down the same route – with Australia launching exchange regulations and South Korea trialling a national cryptocurrency.

The choke-hold is also easing in Russia and Thailand, where ripple is talking with the governments about developing state cryptocurrencies.

Ripple Snatches A Bigger Slice Of The Cryptocurrency Market

James Atkins
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Ripple Snatches A Bigger Slice Of The Cryptocurrency Market

Ripple is making up ground on other leading digital currencies with an increased market share, according to a new trading report.

Ripple has grown to take a 7.57% share of the digital currency space – up from 3.56% at the end of 2017.

The progress was revealed in a market report for the first quarter of 2018.

Developers Opencoin say the growth is attributed to listing on 18 more exchanges during the trading period – taking availability up to 60 exchanges worldwide.

The data reveals XRP worth $160 billion was traded in the first three months of the year. XRP is the digital currency associated with ripple, which is an open payment network that operates with the currency. Together, the cryptocurrency is called XRP Ripple or ripple for short.

Price wobble

The report adds that 3 billion XRP tokens were freed from a cryptographically sealed escrow. Of that, 2.7 billion went to new escrow accounts, while the remainder was reinvested in the network.

The total capitalisation of XRP Ripple’s digital assets comes to $263 billion – a 56% drop from $603 billion at the start of the year.

XRP started the year with a price of $1.91 but slipped 73% to $0.51 cents at the end of the quarter.

The report points out that the cryptocurrency market went south during the quarter, with ripple following the trend.

Developers also cited a move by conmarketcap.com, a listing web site, to drop South Korean exchanges impacted XRP Ripple badly as the digital currency has a large slice of the market in that country.

What is XRP Ripple?

During the quarter, ripple announced tie-ups with Western Union, Moneygram, Cambridge Global Payments, MercuryFX and IDT.

The current price has seen ripple recover to $0.80 cents with a market cap of $30.66 billion.

Ripple owner Opencoin is developing the system as an open source money transfer network outside the ‘walled garden’ of formal financial institutions that restrict access with fees, processing delays and currency charges.

The network is designed to transfer any currency – including bitcoin, US dollars, pounds or Japanese yen.

Like bitcoin, ripple has a cap on the number of tokens that can be mined.

Financial Firms Moving To Trade Cryptocurrency

James Atkins
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Financial Firms Moving To Trade Cryptocurrency

Cryptocurrencies are starting to cause a stir among traditional financial firms, according to a new study.

One in five financial firms are readying to trade in digital currencies within 12 months, says the poll by Reuters.

Researchers spoke to 400 financial businesses, and 70% said they were ready to go into the market within six months, while 22% will wait up to a year.

The trigger was the meteoric rise in the value of Bitcoin and other cryptocurrencies towards the end of last year.

Their interest was finally grabbed by the launch of Bitcoin futures in the United States, even though trading is low and digital currencies are a niche project.

Niche segment

Neill Penney, co-head of trading at Thomson Reuters, said: “Cryptocurrency is still a relatively small part of the trading market, but this survey makes clear this niche segment is starting to enter the mainstream of the financial services industry. This is a major change from a year ago.”

Cryptocurrencies are on the rise again after the market stalled for the first three months of the year.

Experts believe a bull run is about to start on digital currencies.

Bill Barhydt, the CEO of American Express-backed cryptocurrency start-up Abra, said: “I talk to hedge funds, high net worth individuals, even commodity speculators. They look at the volatility in the crypto markets and they see it as a huge opportunity. Once that happens, all hell will break loose.”

While FTSE Global Markets reports that although cryptocurrency trading is in its infancy, circumstances are starting to change in favour of a break-out.

Investment mandates

“Many market watchers are torn between an attraction to market innovation and concerns about the robustness of many of the exploding numbers of players in the space,” said a spokesman.

“Additionally, there are also compliance issues to face, with many hedge funds and traditional funds forced to watch the rise in cryptocurrency prices with their hands tied by investment mandates and security issues.  The world is changing, and major cryptocurrency players are working to develop credentials acceptable to regulators and the wider market.”

Separate research suggests the number of hedge funds trading digital currencies has reached a new peak of 226 in the four months ending February 15, 2018. Only 37 were trading at the start of 2017.

Despite a growing number of funds, assets under management total no more than $5 billion, says consultancy Autonomous NEXT.

G20 Fails To Come Up With Cryptocurrency Solution…Again

James Atkins
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G20 Fails To Come Up With Cryptocurrency Solution…Again

The latest meeting of central bankers and finance ministers from the world’s 20 leading economies has passed with little discussion of cryptocurrencies.

The G20 meeting was heralded as a digital currency talking shop for regulators – but any discussions seem to have taken place behind close doors, according to official reports of the summit.

After a meeting in Buenos Aires, Argentina, earlier in the year, the G20 signalled cryptocurrency regulation was a hot topic on the agenda, but since then governments have failed to agree on how to approach controlling an online cross-border marketplace.

Observers are disappointed with their progress so far – with some more vocal than others.

Nigel Green, founder and CEO of deVere Group, an international financial services company advising tens of thousands of expats, has just released an exchange app – deVere Crypto.

International agreement needed

He argues the G20 must work towards an agreement to adopt common regulations for cryptocurrencies such as Bitcoin.

“G20 representatives must use this summit to work towards an agreement to adopt common regulations for cryptocurrencies. By doing so, they will position their respective countries on the right side of history,” he said.

“I would urge officials to study the proactive fintech approach taken by Japan, which was among the first adopters of a regulatory framework to oversee trading on registered exchanges.

“What is needed is a global consensus on robust guidelines for this burgeoning industry.

Protection for investors

“Cryptocurrencies are here to stay, with an ever-growing number of people, firms and institutions investing in the likes of Bitcoin, Ethereum, Ripple, Litecoin and Dash.  This demand is only likely to gain momentum as knowledge and awareness increases, and as scalability matters are being tackled to bolster the transaction processing capacity.

“Also, precisely because financial regulatory bodies around the world are increasingly looking to regulate cryptocurrencies, which will give investors even more protection and confidence in the market.

“Stringent rules will also be the most effective way to combat cryptocurrency criminality.  In addition, there will be less potential risk for the disruption of global financial stability, and the more potential opportunities there will be for higher economic growth and activity in those countries which introduce regulation.”

Bitcoin Ranks As A Top Topic Online

James Atkins
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Bitcoin Ranks As A Top Topic Online

Bitcoin has broken into the top 10 of most viewed pages on Wikipedia – a ground-breaking achievement that shows cryptocurrencies have arrived in general parlance.

Although bitcoin lags the Queen of England and US President Donald Trump in popularity, the cryptocurrency rates ahead of Wonder Woman Gal Gadot, SpaceX and Tesla CEO Elon Musk and Facebook.

The bitcoin page had 15.02 million views – behind the page listing deaths in 2017 which grossed 37.38 million views.

The bitcoin revelation came as part of Wikipedia’s annual top 50 pages reportfor 2017 in which writer’s described the year as ‘tumultuous and intriguing’.

Bubblier than tulips

This is what Wikipedia has to say about bitcoin: “For our dear readers who can’t make heads or tails of this novelty: bitcoin is as good as gold, shinier than lead, bubblier than tulips, held deep in the mines, and driving people nuts.

“Gold has enriched adventurers and bitcoin has held fools to ransom. You may dive in a pool of gold but lose it all at war. Strangely, while you can still buy gold today and forget about it until your great-grandchildren cash it out, the much-hyped “future of money” has turned into the most speculative intangible asset of all time, while proving totally unsuitable as a means of payment.

“Still, over 2017 at least, bitcoin would have been a better investment than Tesla stock.”

What rivalled interest in Bitcoin?

Tesla stock started 2017 priced at $229 and ended at $316 on December 31 – a rise of $87 or 38%., while over the same period, bitcoin increased from $900 to $19,065.

No other cryptocurrency appears in the Wikipedia top 50 pages.

The top 10 were:

  1. Deaths in 2017 – 37.38 million views
  2. Donald Trump – 29.64 million views
  3. Queen Elizabeth II – 19.29 million views
  4. Game of Thrones (Season 7) – 18.79 million views
  5. Meghan Markle – 16.94 million views
  6. Game of Thrones – 16.83 million views
  7. Bollywood films 2017 – 16.39 million views
  8. United States – 15.76 million views
  9. Bitcoin – 15.02 million views
  10. 13 Reasons Why (TV Series) – 14.93 million views

Cryptocurrency ICOs Are Not All Frauds, Says SEC

James Atkins
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Cryptocurrency ICOs Are Not All Frauds, Says SEC

It’s official – not all initial coin offerings (ICOs) are fraud – according to US Securities & Exchange Commission chief Jay Clayton.

Clayton, one of the most influential investment commentators in the world, made his remarks in a speech at Princeton University.

He explained that the SEC crackdown on ICOs was aimed at protecting consumers and rooting out rogue traders.

“Driving out bad actors early on will ensure that the government won’t eventually adopt a hard-line stance that it will effectively choke off a budding industry,” he said.

Battle against fraud

“Is the approach taken in Washington by the SEC adversely affecting distributed ledger technology in other areas? My hope is that it’s helping because this technology is being used for fraud. And to the extent that it’s being used for fraud, history shows that government comes down harshly on that technology later.

“If we don’t stop the fraudsters, there is a serious risk that the regulatory pendulum – the regulatory actions – will be so severe that they will restrict the capacity of this new security.”

The problems with cryptocurrency and fraud is the opportunity for crime is designed into the system.

Cryptocurrency is unregulated by governments and central banks, which means there is no unified policing of the sector, which leaves cracks for crooks to exploit.

Add to this eager investors willing to part with their money for expected sky-high profits, and the crooks have a ready supply of victims to prey on.

Tighter rules for traders

Several governments are tightening up their local rules to control the millions of pounds held by cryptocurrency traders.

In the UK, investment watchdog the Financial Conduct Authority is ready to declare trading in cryptocurrency derivatives a regulated activity.

The regulator said: “We are aware of a growing number of UK firms offering so-called cryptocurrencies and cryptocurrency-related assets.

“It is likely that dealing in, arranging transactions in, advising on or providing other services that amount to regulated activities in relation to derivatives that reference either cryptocurrencies or tokens issued through an initial coin offering (ICO), will require authorisation by the FCA.”

In Japan, regulators have banned two exchanges for failing to carry out adequate know-your-customer anti-money laundering checks.

Cryptomining Extensions Axed By Google

Graham Trafford
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Cryptomining Extensions Axed By Google

Google has blocked Chrome browser extensions that include cryptocurrency mining scripts.

The internet giant had already announced extensions in the Chrome Web Store would be deleted in June.

But the ban on new scripts came as a shock to cryptocurrency miners.

Google had allowed the scripts if the sole purpose of the extension was cryptocurrency mining and users were properly told about the intention.

However, Google explained that the number of malicious extensions hiding cryptocurrency mining scripts had increased in recent months.

“We chose to defer banning extensions with cryptomining scripts until it became clear that most mining extensions submitted for review failed to comply with our single purpose policy or were malicious,” said Google’s extensions platform product manager James Wagner.

“The extensions platform provides powerful capabilities that have enabled our developer community to build a vibrant catalogue of extensions that help users get the most out of Chrome. Unfortunately, these same capabilities have attracted malicious software developers who attempt to abuse the platform at the expense of users.”

In common with other big data organisations, such as Facebook, Google has also announced a blanket ban on cryptocurrency advertising for wallets and exchanges.

Aussie exchanges regulated

Financial regulators in Australia have told cryptocurrency exchanges in the country that they must apply mandatory anti-money laundering rules.

The rules insist that the exchanges must verify the identities of their customers.

In other countries, customer identification has been the first step towards taxing the gains of cryptocurrency traders.

The new rules start immediately, and exchanges must sign up to the Australian Transactions and Reporting Analysis Centre (AUSTRAC) digital currency exchange register by May 14.

Failure to abide by the rules could lead to fines and exchange closures.

Antigua sets up crypto exchange

The government of the Caribbean islands of Antigua and Barbuda is planning to launch a state-backed cryptocurrency exchange.

Ministers hope the exchange will generate much-needed income for the tiny country.

Melford Nicholas, the country’s information technology minister, said the exchange will act as a facilitator to bring together cryptocurrency buyers and sellers for a fee.

“We’re thinking that we can leverage both those relationships. By establishing an exchange here it will bring Antigua into the game as it were should there be any potential economic spinoffs we should be in the front seat,” he said.

The government hopes to take advantage of cryptocurrency, online gaming and development of blockchain technologies.

Police Arrest £1 Billion Cash Machine Hack Mastermind

James Atkins
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Police Arrest £1 Billion Cash Machine Hack Mastermind

The mastermind behind a gang of crooks who robbed cash machines of more than £1 billion has been arrested in Spain.

Named only as Denis K, the criminal boss orchestrated hacks on bank cash machines that made them dispense money at a set time to waiting thieves.

The gang had targeted more than 100 banks and financial institutions since 2013, netting as much as £10 million at a time.

The crooks developed sophisticated software that could secretly take over the cash machines.

The malware code was sent by email to unsuspecting bank workers and secretly loaded on to their networks when they clicked to open the message.

Luxury lifestyle

Denis K and three associates then took remote control of the networks to access databases and bypass security systems, so they could operate the cash machines.

After switching the stolen money in to cryptocurrencies, the gang lived a luxury lifestyle, buying large homes, expensive cars and other big-ticket items.

Much was converted into the digital currency bitcoin. Denis K reportedly had access to 15,000 bitcoins worth £85 million at the time of his arrest. The current exchange rate values a bitcoin at $5,650.

Many of the cash machine hacks were in Russia, where Denis K, a Ukrainian, worked with the Russian mafia for two years. Since 2015, he had switched allegiance to criminal gangs in the Eastern European country of Moldova.

Russian cyberattacks

The Russian Interior Ministry said the cyberattacks impacted all the country’s financial systems. Besides the hacks, once inside a bank’s computer system, the gang hijacked accounts so they could move money around for withdrawal by ‘mules’.

Police from Spain, Belorussia, Taiwan and Romania took part in the covert operation with Europol and the FBI.

Spanish police are celebrating the capture of the gang after the multinational law enforcement operation. Denis K was arrested in the resort of Alicante.

“The head has been cut off,” said Carlos Yuste, the Spanish police chief heading the investigation. “I’m sure there are other operations like this, but not many.

“The gang members didn’t know each other and made contact through Internet chat rooms and it’s unlikely they can continue after the mastermind was captured.”

Do I Pay Tax On My Cryptocurrency Profits?

James Atkins
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Do I Pay Tax On My Cryptocurrency Profits?

If you pay tax on your cryptocurrency trading profits or not depends on where you are tax resident.

Thousands of investors have made and lost fortunes over the past year as the value of digital currencies soared, then plunged away.

The lucky ones who cashed out at the height of the boom would have made big profits.

In most countries, digital currencies are regarded as investments rather than legal tender for spending as money. Local rules will apply to tax on profits.

Here the rules for British tax residents are outlined –

Do I have to declare digital currency gains?

If you pay tax in the UK, reporting your digital currency gains depends on how you made the money.

You are one of two alternatives:

  • A trader who makes money from charging clients a fee for placing digital currency transactions on the market. Traders also deal their own digital currency.

The hallmark of a trader is someone who buys with the intention of selling quickly at a profit.

Traders run an exchange or broker deals and pay income tax on their profits.

  • An investor who buys digital currency and intends to hold onto them until the price rises. Investors tend to look at medium to long term holdings of five to 10 years or more.

Investors pay capital gains tax on their profits

Isn’t currency exchange exempt from tax?

Yes, but the UK government does not recognise any digital currency as legal tender, so the exemption does not apply.

When is my tax due?

The tax year ends on April 5, 2018. Any earnings from trading or profits from investing digital currency for the year must be declared on a tax return due for filing for individuals by January 31, 2019. Any tax must be paid by then as well.

What if I have spent the money?

Unlucky. You must still pay the tax, although HM Revenue & Customs might come to an arrangement if you can show a hardship.

Will the tax man know if I don’t tell?

Yes. Any digital currency trade in the UK will be recorded by a trader or exchange and they hand a list of customers to HMRC every year. You may not be caught for a while, but the likelihood is the tax man will come looking for you.

Google To Block Cryptocurrency Ads

Anna Webb
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Google To Block Cryptocurrency Ads

Software giant Google is banning cryptocurrency advertising from June in a crackdown on scammers and unregulated financial products.

Google joins Facebook in a bid to tackle scammers – Facebook already has a similar ban in place.

In a surprise announcement, Google will clear the search engine of all advertising for cryptocurrencies, initial coin offerings (ICO), wallets and exchanges.

Google’s director of sustainable ads, Scott Spencer, said in a blogpost: “We updated several policies to address ads in unregulated or speculative financial products like binary options, cryptocurrency, foreign exchange markets and contracts for difference (CFDs).”

Children targeted

Skins betting will also come under scrutiny as Google tries to stop games and social media pedalled as a cloak for online gambling that targets children and young adults.

The fight to control advertising eats tremendous resources, says Google.

“In 2017, we took down more than 3.2 billion ads that violated our advertising policies. That’s more than 100 bad ads per second!” said Spencer.

“This means we’re able to block most bad ad experiences, like malvertising and phishing scams, before the scams impact people.

“We blocked 79 million ads in our network for attempting to send people to malware-laden sites and removed 400,000 of these unsafe sites last year and we removed 66 million trick-to-click ads as well as 48 million ads that were attempting to get users to install unwanted software.”

Bounty for hacker information

Cryptocurrency exchange Binance, based in Hong Kong, has posted a $250,000 bounty for anyone who can supply information that leads to the arrest of hackers involved in a bid to crack the company’s security in recent weeks.

The hackers failed to breach Binance’s security and no digital currency was stolen.

The exchange has a war chest of $10 million set aside to pay rewards for information about hackers and is calling on other exchanges to join the campaign.

“To ensure a safe crypto community, we can’t simply play defence,” said a statement.

“We need to actively prevent any instances of hacking before they occur, as well as follow through after-the-fact. Even though the hacking attempt against Binance on March 7th was not successful, it was clear it was a large-scale, organized effort. This needs to be addressed.”

Bitcoin Rate Plummets After Surging To A New High

Graham Trafford
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Bitcoin Rate Plummets After Surging To A New High

The value of virtual currency Bitcoin is bouncing around trying to find a new level after hitting a new high.

Over the past two weeks, the currency exchange rate climbed a massive 40% to hit a new peak of $1,140.

Then, the value fell away spectacularly by a fifth in just one day and slumped to as low as $881.

Bitcoin has steadied over the past day or two and is now trading at $886.

Market analysts have pointed out that Bitcoin and the Chinese yuan seem to have a linked rate – as one rises the other falls and the reverse.

Link with the Chinese yuan

In recent days, the yuan has put on value as the Chinese government has taken measures to stabilise the rate.

Many Bitcoin investors choose to dip out of world currencies such as the US dollar, pound and yuan in favour of the virtual money which is outside the control of a central bank and any regulator.

Bitcoin and other virtual systems are the only true international currencies, because they trade without borders and have a global rate rather than one set against a basket of other major currencies.

This allows investors to avoid capital controls and to hedge against devaluation.

The link between the yuan and Bitcoin is sparking interest.

China is a Bitcoin hub

Many see the interaction as a result of Chinese investors switching in and out of the yuan into the online currency.

Bitcoin trading figures seem to show that more than 90% of the virtual currency’s transactions take place in China.

Critics suggest Chinese Bitcoin exchanges overstate their positions to manipulate the virtual currency rate and to encourage speculation.

“Given that the yuan’s weakness over recent months seemed to correlate with bitcoin’s strength more than any other currency, it’s no surprise that bitcoin traders have reacted the way they have due to the yuan’s sudden strength,” said Paul Gordon, co-founder of Quantave, a firm easing access to virtual currencies for investors.

The general opinion is the Bitcoin rate fell due to speculators taking their profits on the trade and that the exchange rate will settle back in time.

Police And Regulators Line Up To Tackle Onecoin

Anna Webb
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Police And Regulators Line Up To Tackle Onecoin

Financial watchdogs and police are warning investors to stay away from a virtual currency scam sweeping Europe.

The UK Financial Conduct Authority (FCA) and The City of London Police allege the online currency OneCoin is a scam.

OneCoin follows the model of other virtual currencies, such as the much wider known Bitcoin.

However, promoters claim the amount of OneCoin available is infinite and the value is unaffected by inflation or regulation.

Users have to mine the currency by solving complicated mathematical questions, but unlike Bitcoin, which has a transparent security process that allows miners to deposit and value their coins, OneCoin has no independent valuation procedure.

A statement from the FCA says police have an ongoing investigation into OneCoin.

Mystery over OneCoin transparency

Meanwhile Belgian regulators have announced that OneCoin promoters have misrepresented their relationship with the country’s Financial Services and Markets Authority.

“The FSMA wishes to warn the public that OneCoin has not received any form of recognition whatsoever from the FSMA,” said a spokesman for the regulator.

“The same is true of the persons who are promoting OneCoin: they do not hold an authorization or any other form of recognition from the FSMA.”

In Sweden, Bitcoin promoters pulled no punches with their opinions.

“OneCoin is not like the crypto currencies compared with, such as Bitcoin. Without an inspectable block chain, open break and independent venues so it is impossible to independently ensure that OneCoin not a scam or a pyramid scheme,” said Swedish Bitcoin Foundation chairman Mars Henricson.

Call for scam victims

Other industry experts accuse OneCoin of being nothing more than a pyramid selling scheme.

“OneCoin is a simple recruitment-driven pyramid scheme, backed with a residual binary compensation structure,” said online analysts MLM.

“Masquerading as a crypto-currency, OneCoin’s OneTokens are nothing more than Ponzi points. The more people join the OneCoin concept, the higher the popularity and value of the currency.

“The more popular OneCoin is, the higher the value of the cryptocurrency.”

It seems evidence is stacking up against the legality of OneCoin and if the virtual currency is really an elaborate Ponzi scam waiting to unfold on investors.

Meanwhile, City police are asking OneCoin investors to come forwardif they believe they are victims of fraud.

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