BI Reminds Again that Virtual Currencies, Bitcoins are Banned

CO, Jakarta – Bank Indonesia (BI) once again released a public announcement regarding virtual currencies such as Bitcoin that are not considered to be a legitimate payment tool in Indonesia. In accordance with Law, No 7/2011 on currencies state that legitimate currencies are the ones that are issued …

TEMPO.CO, Jakarta – Bank Indonesia (BI) once again released a public announcement regarding virtual currencies such as Bitcoin that are not considered to be a legitimate payment tool in Indonesia.

In accordance with Law, No 7/2011 on currencies state that legitimate currencies are the ones that are issued by the country and that every transaction must use Rupiah as its currency.

“This makes it clear that virtual currencies are not included in the rupiah currency definition. That is why Bank Indonesia banned its use in Indonesia,” said Bambang Pramasudi, Head of Bank Indonesia’s branch office in Maluku Province on Tuesday, February 20.

Bambang reasoned that virtual currencies are saturated by risks, speculations, and fluctuates easily because of the lack of any official administrator that is responsible for controlling the value of the currency.

He also argued that virtual currencies are prone to be used for money laundering and source funds for terrorist activities.

Bambang once again reminds that Bank Indonesia has banned the use of virtual currencies such as Bitcoin by Indonesian payment system providers and financial technology organizers.

ANTARA

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Time for HK to take a serious look at crypto issues

The order also requires financial institutions across the mainland to adopt necessary and effective measures to prevent their existing payment channels from being used for virtual currency trading, in a determined attempt to crack down on cryptocurrency users and investors in China. Likewise, the South …

Coincheck, a cryptocurrency exchange based in Japan, announced last month that it suffered a loss of US$500 million in customer assets as a result of a massive hacker attack.

The incident has once again renewed international concern about the current state and potential risks related to cryptocurrencies.

At present, countries around the world differ in many ways when it comes to the policies and regulatory approaches toward cryptocurrencies.

Take Japan as an example. In recent years the country’s financial regulatory authorities have remained relatively receptive to the trading of cryptocurrencies.

Last year the Japanese government even officially recognized bitcoin as a legitimate means of transaction and exchange, and allowed a total of 11 cryptocurrency exchange platforms to register and operate in the country.

According to statistics, currently nearly one-third of the world’s total bitcoin transactions are cleared in the Japanese yen.

Apart from Japan, Israel has also been relatively positive about virtual currencies.

Shmuel Hauser, former chairman of the Israel Securities Authority (ISA), once said that the Israeli government must clearly differentiate among the blockchain, bitcoin and initial coin offerings (ICOs).

He urged Tel Aviv to establish a proper regulatory framework over cryptocurrency trading in order to set the country on a steady course towards becoming the world’s ICO hub.

On the other hand, some countries and regions, such as Russia, Dubai and Sweden, have adopted a different approach.

Instead of setting up legal frameworks to regulate the transaction and trading of digital currencies, these countries have taken one major step further by issuing their own official cryptocurrencies in order to make it easier for their regulatory authorities to trace inbound and outbound capital flows.

More importantly, by issuing their own virtual currencies, these countries can eliminate black market trading and reduce their tax losses.

However, while some countries have remained receptive to cryptocurrencies and even recognized them as legal currencies, there are also some others, such as China and South Korea, which have remained highly skeptical about the virtual units.

As far as China is concerned, it has been taking a tough stance on cryptocurrencies.

For instance, after banning all ICOs of virtual currencies and shutting down all transaction platforms in the mainland last year, the People’s Bank of China recently issued an order which bars banks and their subsidiaries from providing any form of transaction services for cryptocurrency trading.

The order also requires financial institutions across the mainland to adopt necessary and effective measures to prevent their existing payment channels from being used for virtual currency trading, in a determined attempt to crack down on cryptocurrency users and investors in China.

Likewise, the South Korean government also banned all forms of cryptocurrency ICOs, and required that all virtual currency trading activities must be carried out only in an identifiable manner.

In the meantime, the Seoul administration is also working aggressively to push a bill through the Korean parliament under which all cryptocurrency exchange institutions and their trading activities could be banned within the country.

In comparison, the US, Britain and Singapore have been steering a middle course over the trading of digital currencies.

Simply put, these countries are largely sitting on the sidelines over the trading of virtual currencies, and have no plan yet to ban them altogether.

However, regulatory authorities in these countries are keeping a close eye on any cryptocurrency trading activity that might violate existing financial regulations, and are working painstakingly to warn their citizens against the potential risks of crypto investments.

The biggest challenge posed by the rise of cryptocurrencies is that these digital currencies aren’t tied to any country and can transcend borders easily. As a result, it would be very difficult for any individual sovereign state to oversee and regulate cryptocurrency trading effectively.

That said, I believe in the long run, the establishment of a multilateral regulatory framework would be necessary in regulating the trading of virtual currencies. The European Central Bank has already called upon countries that will be attending the G20 summit next month to pay more attention to the cryptocurrency issue.

As to Hong Kong, the Financial Services and the Treasury Bureau and the Investor Education Center have made a joint effort in educating the public about the risks of cryptocurrency investments.

Nevertheless, I believe public education campaign alone is not enough. The government should also study how to establish a regulatory mechanism for the trading of virtual currencies so as to protect the interests of our citizens and investors.

This article appeared in the Hong Kong Economic Journal on Feb 13

Translation by Alan Lee with additional reporting

[Chinese version 中文版]

– Contact us at [email protected]

RC

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PayPal CFO: Bitcoin’s Success is Very Likely

Earlier this year, PayPal CEO Dan Schulman called Bitcoin “an interesting experiment” in a Facebook Live event, while also noting that “it could change the world.” At the same time, Xapo CEO Wences Casares even went so far as to predict a future in which one single Bitcoin could be worth $1 million.
· February 21, 2018 · 8:00 pm

There’s a lot of doubt surrounding Bitcoin’s potential as a viable, real-world currency – but PayPal’s chief financial officer sees only positive things in the dominant cryptocurrency’s future.


A ‘Very High Likelihood’ of Success

According to John Rainey, PayPal’s chief financial officer, Bitcoin, and other cryptocurrencies will one day become a popular method of payment – just not yet. Rainey toldThe Wall Street Journal:

Given the volatility of bitcoin right now, it’s not a reliable currency for transactions because if you’re a merchant and you have a 10% profit margin, and you accept bitcoin, and the very next day bitcoin drops 15%, you are now underwater on that transaction.

Nevertheless, Rainey recognizes Bitcoin as a legitimate currency, even if it’s not quite ready for mainstream adoption yet. Says Rainey:

At some point there is very high likelihood. The technology, there is real merit to it. I do think, though, it will be years down the road before we see the kind of ubiquity and acceptance that make it a form of currency that is used every day.

PayPal and Cryptocurrency

This is not the first time PayPal has shown support for Bitcoin and cryptocurrency. PayPal was one of the first companies to accept cryptocurrency as a currency on its platform, allowing merchants the option to be paid in Bitcoin as early as 2014/2015.

Earlier this year, PayPal CEO Dan Schulman called Bitcoin “an interesting experiment” in a Facebook Live event, while also noting that “it could change the world.” At the same time, Xapo CEO Wences Casares even went so far as to predict a future in which one single Bitcoin could be worth $1 million.

Differing Opinions

Of course, not everyone agrees with Rainey’s and Schulman’s optimistic long-term assessment of Bitcoin’s future as a currency. Earlier this week, Bank of England Governor Mark Carney claimed Bitcoin has already failed on virtually every front, stating:

It has pretty much failed thus far on … the traditional aspects of money. It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange.

Differing Opinions

Venture capitalist and Tezos investor Tim Draper, however, recently claimed Bitcoin is “the future” of currency while claiming a large portion of the world’s currency will someday be comprised of cryptocurrencies.

What do you think about Bitcoin’s potential as a mainstream currency? Do you think digital currencies are the way of the future? Let us know in the comments below!


Images courtesy of Reuters, Fortune

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British lawmakers are launching an inquiry into cryptocurrencies

British lawmakers on Thursday said they are launching an inquiry into digital currencies, as well as the underlying distributed ledger technology. The probe will focus on the opportunities and risks posed to consumers, businesses and the government by the rising popularity of cryptocurrencies.

Britain’s cross-party Treasury Select Committee of lawmakers on Thursday said it is launching an inquiry into digital currencies, as well as the underlying distributed ledger technology.

The probe will focus on the opportunities and risks posed to consumers, businesses and the government by the rising popularity of cryptocurrencies, the committee said in a statement.

A global investment craze over bitcoin and other cryptocurrencies in the last year has seen wild gyrations in their valuations, making fortunes for some investors, while others have lost heavily.

Bitcoin, the best known virtual currency, lost over half its value earlier this year after surging more than 1,300 percent.

“People are becoming increasingly aware of cryptocurrencies such as bitcoin, but they may not be aware that they are currently unregulated in the UK, and that there is no protection for individual investors,” Nicky Morgan, chair of the Treasury Committee, said.

The British committee of politicians will take written and verbal evidence from a range of experts on the digital currencies, which will then inform a report it submits to the government containing recommendations on what to do.

The inquiry will consider whether the government is striking the right balance between protecting customers and businesses without stifling innovation.

Governments and regulators worldwide have in recent months shown themselves divided on what to do about cryptocurrencies, which have already spawned investment scams promising returns of over 1,000 percent and hacks on the exchanges that store the virtual funds.

The finance ministers and central bank governors of France and Germany earlier this month called for the policy and monetary implications of cryptocurrencies to be placed on the agenda of the upcoming G20 meeting of the largest advanced and developing economies.

The Governor of the Bank of England Mark Carney meanwhile on Monday said that bitcoin has “pretty much failed” as a currency measured by standard benchmarks, and is neither a store of value nor a useful way to buy things.

But the BoE is one of a number of central banks and governments around the world that are looking into the underlying blockchain technology as a potential way of issuing digital-only currency, for making settlement more efficient, or for distributing and tracking money in the public sector.

Saudi Arabia’s central bank last week signed a deal with U.S. based digital currency firm Ripple to help banks in the kingdom settle payments using the technology.

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What do people think of Bitcoin?

Since Bitcoins‘ meteoric rise to above $10,000/BTC last year, plenty of opinions about the cryptocurrencies, and others like it, permeated into mainstream economic discussion. These opinions range from cautious enthusiasm, to abject opposition. With the increased interest in regulating private …

Since Bitcoins’ meteoric rise to above $10,000/BTC last year, plenty of opinions about the cryptocurrencies, and others like it, permeated into mainstream economic discussion. These opinions range from cautious enthusiasm, to abject opposition. With the increased interest in regulating private currencies, these opinions and the people who hold them are bound to make an impact on these markets.

For the most part, West Virginia’s policymakers are in clear opposition. Even in 2014, before the rise in price, Sen. Joe Manchin wrote a letter to federal regulators, such as Federal Reserve Chairman Janet Yellen, calling for the total ban of bitcoin, according to a press release from the senator. Last year, the state legislature, at Manchin’s urging, passed stricter money-laundering legislation specifically mentioning cryptocurrency.

The sentiment channeled by Manchin is largely paternalistic, geared at protecting people from the instability of the currency or the illicit activities often associated with it.

In his letter, Manchin stated, “This virtual currency is currently unregulated and has allowed users to participate in illicit activity, while also being highly unstable and disruptive to our economy.”

The argument that cryptocurrency is destructive to the economy is fairly weak. Cryptocurrencies simply don’t have the scale to make much impact across the economy, even now. What Manchin likely means is that some people may speculate on bitcoin and suffer from losses. Of course, anyone who did speculate on bitcoin in 2014 is probably doing very well right now.

Although Manchin’s letter was largely considered for show, West Virginia’s electorate loves paternalistic government — as any speech from Gov. Jim Justice will show — there are economists with similar beliefs. Most notably Nobel Prize winning economist Joseph Stiglitz, who called for banning bitcoin.

“It’s a bubble that’s going to give a lot of people a lot of exciting times as it rides up and then goes down,” Stiglitz said on Bloomberg.

The other perspective on cryptocurrency, which is arguably the broader school, sees it as a promising experiment that should be allowed to continue. These economists wouldn’t tell you cryptocurrency is a great investment, but they’re not convinced they must ban you from taking the risk.

Mario Draghi, president of the European Central Bank (ECB), stated it is not the job of the ECB to regulate bitcoin, according to Reuters. Other economists cited the promise of the blockchain technology, which is the bedrock of how cryptocurrency works, to make finance more secure.

There has even been some talk of central banks or international institutions establishing their own forms of cryptocurrency. According to CNBC, Christine Lagarde, managing director of the International Monetary Fund (IMF) has not ruled out the possibility of using crypto-technology — noting the Special Drawing Right, a financial asset created by the IMF that could potential incorporate the technology.

Many activists will even point back to statements made by Nobel Prize winning economist Milton Friedman (who revolutionized monetary economics), discussing how the internet could change currency in a very similar way that cryptocurrency does, well before bitcoin launched.

The cautious optimists seem likely to take the day in this case. Not only is it just not possible to shutdown cryptocurrencies, but people will not take well to being told they are being protected from a risky investment when it is their own money to risk.

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