Professor Wang Yang, vice president for institutional advancement and chair professor at the Department of Mathematics at the Hong Kong University of Science and Technology (HKUST), criticized China’s cryptocurrency mining ban during a panel discussion in Hong Kong last week. He called the decision “very unwise” because it shifted businesses to the U.S., boosting American […]
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Report: 30% of UK Watchdog’s Financial Crime Experts Focused on Crypto Businesses in 2022-23
According to a report, the Financial Conduct Authority, a watchdog for the financial services industry in the U.K., had 30% of its financial crime specialists focused on crypto-asset businesses. Assessments conducted by supervisors in the U.K. found that not only crypto-asset businesses, but nearly all participants in the country’s financial services sector, are susceptible to […]
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UK Regulator: Crypto Asset Businesses Expected to Comply with the Travel Rule Starting in September
According to the United Kingdom’s Financial Conduct Authority, crypto asset firms operating in the country will be required to comply with the Financial Action Task Force’s travel rule starting on Sept. 1, 2023. Crypto asset businesses will be required to take “all reasonable steps” to ensure compliance with the travel rule. When the rule becomes effective, compliance with the rule is still expected even when a crypto asset business uses a third-party supplier.
Delays in Implementing Travel Rule
The United Kingdom’s financial services industry regulator, the Financial Conduct Authority (FCA), has said crypto firms based in the country will soon be required to adhere to the so-called travel rule. According to the regulator, crypto firms are expected to start complying with this rule from Sept 1, 2023.
In a statement released on Aug. 17, the FCA suggested that its decision to enforce the requirement aligns with the Financial Action Task Force (FATF)’s call for the swift implementation of the travel rule. Despite the FATF’s call, many countries have failed to implement the travel rule due to delays “in adoption and different timelines for enforcement of the Travel Rule across jurisdictions.”
Explaining why the UK is proceeding to implement the rule compelling crypto firms to collect, verify, and share information, the FCA said:
We have worked closely with industry to provide guidance on how to comply and what we reasonably expect of firms ahead of other countries following the UK’s position.
As a result of this step taken by the U.K., crypto asset businesses based in the country will be required to take “all reasonable steps” to comply with the rule. Compliance with the rule is still expected even when a crypto asset business uses a third-party supplier.
Crypto Firms Expected to Collect and Verify Information
In instances where funds are being sent to a jurisdiction without the travel rule, the FCA said crypto firms must still collect and verify the information before a transfer is made. If the funds are being transferred from a jurisdiction without the travel rule, the necessary risk-based assessments must be undertaken before deciding to avail these to the beneficiary or not, the regulator said.
Meanwhile, the FCA said it has been working on a guidance to help firms comply with the travel rule. The financial services industry watchdog added that crypto asset businesses can also share their thoughts about the guidance on or before Aug. 25, 2023.
What are your thoughts on this story? Let us know what you think in the comments section below.
Russian Businesses Ask Putin to Help Legalize Crypto
A body representing the interests of Russian businesses has called on president Putin to help with crypto legalization. Their proposals, including on the use of cryptocurrencies in foreign trade settlements, have been included in a report to Russia’s head of state.
Companies Urge President Putin to Support Legalization of Crypto Payments
Russian businesses are seeking help from the Kremlin in efforts to legalize decentralized cryptocurrencies like bitcoin. Their request has been included in the annual report of Russia’s Business Ombudsman, Boris Titov, to president Vladimir Putin.
The recommendations were laid out in a paper titled “Key Business Problems under Sanctions and Structural Transformation in 2023” produced by the Institute of the Commissioner for the Protection of Rights of Entrepreneurs under the President of the Russian Federation.
Among other suggestions, the authors urge for allowing the use of cryptocurrencies in international settlements. More specifically, they propose to legalize cross-border crypto payments with a dedicated bill so that cryptocurrencies can be used in dealings with partners abroad. To achieve that, the status of such transactions needs to be determined in Russian law, they insist.
Another of their initiatives concerns the operators of trading platforms for digital assets, RBC Crypto reported. It envisages the establishment of a system for mutual settlements or clearing as well as the issuance of special digital currencies for these purposes.
Pressed by financial restrictions and other penalties imposed by the West over the invasion of Ukraine, Russian government authorities and businesses have been exploring ways to circumvent sanctions. The idea to legalize the use of cryptocurrencies for payments outside Russia has been gaining support.
Several crypto-related bills are currently under review in the State Duma, the lower house of Russian parliament, but officials in Moscow recently admitted that Russian companies are already employing crypto in foreign trade despite the absence of regulation.
This is not the first time Russian companies lobby for crypto legalization. In late 2022, IT firms from the association of Russian software developers, Russoft, asked to be allowed to make and accept payments in cryptocurrency when working for foreign clients.
Do you think the Russian government will legalize international crypto payments in the near future? Tell us in the comments section below.
Coinbase Shares Wells Response, Challenges SEC’s Change in Attitude Towards Its Core Businesses
On April 27, Coinbase, the crypto exchange based in San Francisco, made public the disclosure of its response to the Wells notice it had received from the U.S. Securities and Exchange Commission (SEC) back in March. The company maintained that the regulatory body’s enforcement actions were in direct contrast to the agency’s previous approval of the firm’s public listing via its S-1 filing. Coinbase asserted in its response to the SEC that it is the “innocent investors who stand to lose the most from the commission’s abrupt about-face.”
Coinbase Responds to U.S. Securities Watchdog’s Wells Notice
Coinbase’s CEO, Brian Armstrong, presented his company’s response to the U.S. securities regulator on Thursday, divulging their Wells response. In direct opposition to the SEC’s enforcement actions, Coinbase maintains a firm disagreement, while the correspondence made it clear that the regulator should have been aware of this stance when Coinbase went public.
The animosity between the two entities was further highlighted in Coinbase’s response, where the exchange explained that the SEC had neglected to provide clear guidelines for the regulator’s recent enforcement actions.
“If the commission had believed in April 2021 that Coinbase’s core businesses violated securities law, it would have been required by its own mandate to prevent the S-1 from becoming effective to protect the investing public,” the response says. “Instead, it allowed the offering to proceed, and millions of members of the public invested their savings in Coinbase. Investors could only infer by this approval that the Commission did not think Coinbase’s core business was unlawful.”
Coinbase CEO: ‘We’re Confident in the Facts and on the Law’
On Thursday, Armstrong reaffirmed Coinbase’s commitment to creating innovative products that promote economic freedom. “We are committed to building in the U.S. and around the world,” declared the Coinbase CEO. “We will defend ourselves and stand up for the rule of law.”
Coinbase’s Wells response conveyed its bewilderment at the regulatory body’s abrupt change in attitude, particularly given the exchange’s extensive interaction with the SEC during its public listing process. “The staff’s laundry list of proposed charges all rest on three primary legal theories, each of which is flawed and untested,” asserted the missive.
Coinbase’s Wells response comes on the heels of the company’s announcement that it had initiated legal proceedings in federal court, demanding that the SEC respond to their petition filed in July of 2022. Similarly, the Wells response pledged to continue cooperating with the SEC in the hopes of amicably resolving the matter.
What are your thoughts on Coinbase’s response to the SEC’s Wells notice and its stance on the regulatory body’s enforcement actions? Let us know in the comments section below.
Tax Benefits for Bitcoin Businesses in Belarus Extended Until 2025
Tax exemptions for companies and individuals legally working with cryptocurrencies in Belarus will remain in place until Jan. 1, 2025. A new presidential decree extends the tax cuts introduced in 2018 when the executive power in Minsk legalized crypto activities such as mining and trading.
Belarus to Maintain Its Crypto-Friendly Tax Regime for Another 2 Years
President of Belarus Alexander Lukashenko has approved the extension of the tax preferences provided to crypto companies registered in the country and people involved in the industry. On Tuesday, the Belarusian leader signed Decree No. 80 “On Certain Issues of Taxation.”
The document prolongs the tax breaks that were introduced with Lukashenko’s Decree No. 8 “On the Development of the Digital Economy” of Dec. 21, 2017. The latter legalized a number of crypto-related activities in the country when it went into force on March 28, 2018.
The regulations, including the tax benefits, apply only to residents of the Belarus High-Tech Park (HTP). Its special legal regime permits the issuance and circulation of cryptocurrencies and tokens and the Belarusian authorities now seek to ensure its development.
Under Lukashenko’s latest decree, the turnover and profit of such entities will not be subject to value-added tax (VAT) and profit tax until Jan. 1, 2025. Individuals will be also relieved from income tax during the same period, for income received from mining, acquisition, exchange, or sale of crypto assets for fiat currencies.
The president has also ordered the Administration of the HTP to produce a concept for the further development of the crypto sphere in Belarus by July 2024, working with interested parties. The decree enters into force with its publication but covers the first months of the year, too, as the tax exemptions expired on Jan. 1, 2023.
While supporting regulated crypto businesses, the Belarusian government has been going after unauthorized undertakings. In August 2022, law enforcement officials in Minsk issued an international arrest warrant for the owner of the country’s largest unlicensed crypto exchanger, Bitok.me. And in January of this year, a Belarusian citizen was fined million for illegal crypto trading.
Do you think Belarus will extend the tax exemptions again in 2025? Share your expectations in the comments section below.
Law Firm’s White Paper Claims US Bank Regulators Are Waging a ‘Clandestine Financial War’ Against Crypto Businesses
According to a recent white paper published by four members of the law firm Cooper & Kirk, PLLC, U.S. bank regulators are attempting to “drive crypto businesses out of the financial system.” The paper, titled “Operation Chokepoint 2.0,” claims that after laying the groundwork by labeling lawful businesses as “reputationally risky,” federal bank regulators, with the help of state officials, “turned to the task of purging their accounts from each of the banks subject to their supervision.”
Constitutional Issues Raised by Operation Chokepoint 2.0: Depriving Businesses of Due Process and Key Structural Constitutional Protections
Five days ago, Bitcoin.com News published an article that examines recent discussions in the crypto community regarding “Operation Chokepoint” and why crypto proponents believe the U.S. government aims to eliminate access to cryptocurrencies. On Monday, the Washington D.C. law firm Cooper & Kirk published a white paper on the subject, noting that U.S. bank regulators are ostensibly waging a “clandestine financial war” against the crypto industry.
The paper’s authors, David Thompson, John Ohlendorf, Harold Reeves, and Joseph Masterman, begin by explaining “Operation Chokepoint 1.0” before delving into “Operation Chokepoint 2.0.” The first iteration of the alleged operation began by labeling legal and law-abiding crypto entities as “reputationally risky.”
The second stage of the operation attempts to choke the crypto industry by restricting access to on and off-ramps. According to the Cooper & Kirk paper, “in the back rooms of banks around the country, bank examiners explained that those financial institutions that continued to serve customers that the federal regulators had labeled ‘reputationally risky’ would suffer the consequences.”
The law firm explains that one of the first acts committed was when the Biden administration’s Office of the Comptroller of the Currency (OCC) rescinded a rule designed to “ensure fair access to banking services for several industries—including debt collection—previously cut off during the controversial Obama-era program Operation Chokepoint.”
The Cooper & Kirk authors further detail that the Federal Deposit Insurance Corporation (FDIC) got involved on April 7, 2022. At that time, the FDIC issued a letter to all institutions under its supervision, asking for information concerning their interest in serving the crypto industry and banks that are already engaged with businesses of this nature. Cooper & Kirk’s white paper asserts that Operation Chokepoint 2.0 is unlawful and unconstitutional.
“Operation Choke Point 2.0 deprives businesses of their constitutional rights to due process in violation of the Fifth Amendment,” the paper’s authors explain. “Operation Choke Point 2.0 violates both the non-delegation doctrine and the anti-commandeering doctrine, depriving Americans of key structural constitutional protections against the arbitrary exercise of governmental power.”
The white paper follows the failures of three major U.S. banks that had connections with the crypto industry, as well as commentary from Signature Bank board member and former politician Barney Frank, who suggested that Signature’s seizure was meant to be an “anti-crypto” message.
What do you think about the allegations made in the Cooper & Kirk white paper? Do you believe that Operation Chokepoint 2.0 is unconstitutional, and if so, what actions should be taken to protect the rights of crypto businesses? Share your thoughts in the comments section below.
Aurora Labs Launches Turnkey Blockchain Solution for Businesses Transitioning to Web3
PRESS RELEASE. Aurora Cloud is the all-in-one cloud infrastructure solution bridging Web2 and Web3.
03/02/2023 Denver – Web3 infrastructure startup Aurora Labs announced the launch of Aurora Cloud, a platform and suite of products that allows today’s Web2 businesses to capture the value of Web3.
Aurora Cloud — Platforms like Amazon AWS and Microsoft Azure unleashed the potential of Web2 by democratizing the building blocks of the internet. In a similar way, Aurora Cloud — including Borealis Business, Aurora Pass and Aurora Silos — eliminates the technical and user experience barriers that keep Web2 businesses from capturing the full value of Web3.
The foundation of Aurora Cloud is Aurora, the innovative blockchain that provides full Ethereum compatibility, while leveraging the speed, low-cost and infinite-scalability of the third-generation layer-1 protocol, NEAR.
Borealis Business — The first pillar of Aurora Cloud is a transaction processing and accounting engine known as Borealis Business that allows Web2 companies to add blockchain capability to their applications in a way that completely removes costs and other technical complexities from the end-user experience. The product also includes all the data tools necessary to support business operational monitoring, understanding and optimization.
Aurora Pass — Many of today’s Web2 companies are mobile-first or mobile-only. For these customers, the second pillar of Aurora Cloud is the Aurora Pass digital wallet, facilitating the adoption of blockchain technology in mobile applications with minimal development work, and allowing users to authorize transactions using the same biometric facilities like Touch ID and Face ID they’ve come to know and love.
Aurora Silos — While the permissionless nature of public blockchains ushers in a new age of ubiquitous accessibility, many of tomorrow’s most valuable blockchain use cases will require app-specific and business-specific blockchains. To address this need, the final pillar of Aurora Cloud is Aurora Silos, which are customer-specific, dedicated blockchains, running on the Borealis Business infrastructure, and providing an unparalled feature set.
Aurora Silos go beyond Ethereum compatibility, allowing customers to design and implement their own custom tokens, tokenomics and even transaction fee mechanics, to support any imaginable blockchain business model. As a dedicated blockchain, Aurora Silo customers can implement multiple-levels of access control, perfect for KYC/AML-restricted “permissioned” DeFi environments, members-only access to games, or any context requiring the management of network access and activity — and without closing the door to interoperability and cross-network composability with public protocols like Ethereum, Aurora or NEAR.
White-glove service and support — For customers that need integration assistance, or even conceptual ideation around how to best adopt blockchain technologies in their businesses, Aurora Labs’ crypto-native business development and engineering teams are ready to serve as a partner every step of the way.
“It’s thrilling to be part of a technical revolution, and to be building the infrastructure that businesses need to onboard millions to Web3.”
Alex Shevchenko, CEO and co-founder of Aurora Labs
The platform is currently in beta, and available for early business integrations.
About Aurora & Aurora Labs
Aurora is a platform for Web3 developers to build pioneering and scalable distributed applications. Powered by its high-performance Ethereum Virtual Machine (the Aurora Engine) and fully trustless bridge (the Rainbow Bridge), Aurora combines the builder-friendly development experience of Ethereum with the modern blockchain performance of the NEAR Protocol to offer an environment for creating highly scalable, carbon-neutral, future-safe, and low-cost Web3 services. To learn more, visit www.aurora.dev.
Aurora Labs is a Web3 infrastructure startup. To learn more, visit www.auroralabs.dev.
For any information about this release, please contact:
This is a press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.
The Rise of High-risk Businesses – How Fintech and Cryptocurrency Have Come To the Rescue
The internet has radically changed commerce and opportunities for entrepreneurs and small and medium enterprises (SMEs) globally. The ability for smaller merchants and businesses to operate internationally has been a game-changer. However, numerous payment problems have arisen resulting from the rapidity of the change, and financial services are struggling to keep up.
Legacy infrastructure is holding back business
It is frustrating for many SMEs that they can now operate across borders, but legacy banking infrastructure often labels smaller businesses as ‘high-risk’. This can make transactions difficult, risky, slow, and expensive.
For example, a business receiving an international payment will probably use SWIFT and won’t receive the money for between one and five days, on average. There is no transparency in the process, there will be fees attached and, probably, an unfavorable exchange rate.
Then there are the risks for the merchant that arise from credit card fraud. The recent 2021 Chargeback Field report found that between 2018 and 2021, there was a 21 percent increase in criminal fraud.
There are solutions available for P2P transactions and larger companies, but SMEs have been largely excluded. As smaller businesses often operate on very tight margins, this is holding back a lot of enterprises. Fortunately, solutions have been appearing thanks to nimbler fintech companies, innovative new platforms, and the adoption of cryptocurrencies.
High-risk SMEs and cross-border transactions are on the rise
Companies are generally labelled ‘high risk’ for a couple of reasons. First, the type of industry is one of the broader and often more arbitrary ones. These can include online pharmacies, VoIP providers, and even subscription services to things like magazines.
Some industries deemed high risk are vast. The online gaming industry, for example, was worth US.65 billion in 2019 and is expected to be worth US2.05 billion in 2025. Cryptocurrencies and related businesses are similarly deemed risky, yet Bitcoin alone is valued at .03 trillion (as of 26th November 2021).
Secondly, SMEs are frequently labeled high risk as they tend to have low sales and transaction volumes. Also, smaller companies operating outside of wealthier countries or blocks – such as the US, Canada, Japan, Australia, and the EU – are grouped into this ‘risky’ category. However, this is incredibly limiting, especially given that SMEs account for 90% of all businesses worldwide.
The internet is still expanding, and smaller merchants are suddenly able to reach global markets. Unfortunately, the legacy banking infrastructure has fallen behind in how it labels risk and penalizes SMEs making cross-border transactions. However, fintech is finding solutions, and the banks are being forced to play catchup.
Cryptocurrencies solve the main problems with traditional banking systems
Ironically, given its frequent labelling as ‘high risk’, it seems that cryptocurrency might be a solution. Fintech companies like XanPool, and its platform XanPay, have developed infrastructures that bypass legacy banking networks.
XanPool’s founder and CEO, Jeffery Liu, explains how his company’s cross-border payment solution came about. “As an entrepreneur, I am also on the lookout for problems people are having, and I then set out to try and provide a solution,” he says.
“XanPool was founded in 2019 because there was a problem onboarding and offboarding from fiat currencies to crypto. The issue was that to buy and sell crypto with local currency, you had to go through the legacy banking infrastructure with all its fees, delays, and risks. Given that Bitcoin was invented to bypass traditional systems, the situation was crazy. So, we designed a way around that.”
XanPool is essentially a market-making software that lets buyers and sellers – liquidity providers – trade crypto using various digital wallets or bank accounts. “We have cryptocurrency and a network of local currency liquidity providers that allows users to bypass traditional banking systems. This means they can also avoid the extra fees and exchange rate problems and, as transactions are instant, there aren’t days of delays and risks of chargebacks and fraud,” Liu says.
Once XanPool was up and running, Liu saw another problem that could be fixed. By leveraging XanPool’s existing cryptocurrency and liquidity pool, cross-border payments could also bypass traditional international banking infrastructure.
SMEs had been left behind, but that is changing
“We knew SMEs had been largely ignored by the banking system, with regards to making international payments. This was especially true in countries and industry sectors that established finance deemed risky. This includes most online businesses and nearly all of the Asia Pacific region countries,” Liu says.
Given that there are an estimated 213 million SMEs globally and almost 132 million of them are in the Asia Pacific region, there are a lot of enterprises being deemed ‘high risk’ and excluded from easy cross-border transactions.
“To solve this problem, we created XanPay,” Liu explains. “It’s a payment platform that every high-risk business from SMEs to eSports can use. As it works with local existing payment platforms, it is straightforward to implement and use. Furthermore, because it is built on XanPool’s infrastructure, these enterprises benefit from instant international payments with no risk of chargebacks or credit fraud. Having transactions that are 40 per cent cheaper and are instant decreases the risk that got them penalized in the first place.”
The advantage of fintech solutions like XanPay is that they were able to start with a fresh slate. Banks are struggling to adapt their systems and make them more efficient, but newer companies can start from scratch and incorporate advances like eWallets and cryptocurrency.
As more SMEs in developing countries move online, the number of businesses labeled ‘risky’ will continue to rise. Even a few years ago, this was a significant issue. Now, thankfully, there are several fintech solutions – and if the banks don’t catch up, they will be left behind.
Investing In Bitcoin Mining Businesses Is Also A Sign Of Institutional Acceptance
Last quarter, the New Jersey Pension Fund invested heavily in two Bitcoin mining giants. A small step for institutional investors, the move might represent something much bigger. There’s a hunger for Bitcoin exposure at the highest levels, but just owning the asset might be too risky or inconvenient for some of those big players. And, until the US government approves the long-awaited Bitcoin ETF, miners provide a much safer target.
Related Reading | Marathon Digital Holdings Reported A 17% Spike In Bitcoin Mining
According to Coindesk:
The state-managed pension ended June with .66 million in Riot Blockchain (NASDAQ: RIOT) and .39 million in Marathon Digital Holdings (NASDAQ: MARA), according to disclosure documents.
New Jersey’s Common Pension Fund D has billion in total assets for state employees.
The New Jersey Pension Fund’s intent is clear, and they put their money where their mouth is. However, is there a reason that explains why they don’t want to hold the asset? A legal reason, perhaps? The polemic Michael Saylor explains their rationale in this tweet:
Many institutional investors find publicly traded Bitcoin miners to be attractive investments because they want BTC exposure but prefer to hold securities rather than property due to tax, accounting, & business considerations.
So, there are several reasons besides Bitcoin’s volatility. Nevertheless, there’s a hunger.
RIOT price chart on Nasdaq | Source: RIOT on TradingView.com
Is Bitcoin Feasible As An Institutional Investment?
Bitcoin is maturing and spreading. The title phrase is the same NewsBTC used three years ago in an article that came to the conclusion that the asset wasn’t ready. We said:
In its current state, the market is highly speculative, with a majority of investors looking to make a quick buck. Institutional investors have seen that, and have mostly shied away from opening their wallets for the industry. These investors are looking for long-term returns, securing the trust of consumers over time rather than making a quick buck.
The tables turned. The situation changed. At the present, we are in an era in which some of the more innovative institutions already invested and drove the price to insane all-time highs… only to take their earnings and let it drop again. In any case, Bitcoin is proving its worth as institutional investment. About this situation, NewsBTC said:
These high wealth players with decades of market experience and all kinds of tactics on their side were paramount to driving prices up to ,000 per coin. Unfortunately, the data above suggests they were also instrumental to the selloff that left retail traders with a bloody aftermath.
Related Reading | Brazil approves Bitcoin ETF – SkyBridge files for its own
What About a Bitcoin ETF? Is That In The Cards?
The only factor left unexplored is the possibility of a Bitcoin ETF in the US. As you should know, every financial institution and their mothers applied, and some of them have already been rejected. NewsBTC quoted Hester Pierce, Securities and Exchange Commission (SEC) Commissioner, who said about the situation:
(Institutions) want access to crypto through a regulated market. It makes sense for us to consider how to do that (…). We’ve dug ourselves into a little bit of a hole. A lot of people are looking for a way to access the asset class. We waited a long time to approve this kind of product.
Sadly for us, we’re still waiting.
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