Survey: U.K. Crypto Companies Must Bank Abroad

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Nearly three-quarters of U.K.-based crypto businesses have been forced to bank abroad due to the difficulty in opening a bank account locally, according to a survey conducted by CryptoUK, a self-regulatory trade body representing the domestic crypto asset industry.

The organization, which carried out a survey of more than 40 leading companies in the crypto assets sector in May and June 2019, found that banks are frequently refusing to open accounts for crypto businesses, pushing these companies to look for more lenient jurisdictions.

Forced to Bank Overseas

Fifty-five percent of surveyed crypto companies active in the U.K. applied for bank accounts domestically but were rejected. In half of the cases, no reason or justification was given to them.

Seventy-three percent said that they had opened a bank account in another country, citing more than 15 different jurisdictions including the U.S., Switzerland and several EU member states, a spokesperson for CryptoUK told Bitcoin Magazine.

Most of these countries have regulatory regimes for crypto companies and their governments have made proactive efforts to welcome businesses in the sector.

“Many in the crypto sector, including CryptoUK’s members, want to call the U.K. home, invest in innovation and grow their operations here,” Iqbal V. Gandham, chair of CryptoUK, said in a public statement. “But as our survey shows the often-impossible task of opening a bank account is forcing more companies to turn to other jurisdictions, which are often riskier and offer less certainty to companies.”

Though the U.K. government has been looking to maintain the country’s position as a top fintech hub post-Brexit, the U.K. risks facing a drain in innovation and tech talent if banks continue to refuse to do business with crypto companies, CryptoUK said.

The survey found that 69 percent of respondents had either moved or are considering moving out of the U.K. due to difficulties in opening an account, with 75 percent stating that access to banking services is essential for them to grow operations in the U.K.

“Banking services are crucial to enable crypto companies to thrive in the U.K., which was made clear in the responses to CryptoUK’s survey,” the spokesperson said. “Access to banking services in the U.K. would provide greater reassurance for businesses and consumers, allowing the industry to thrive in a secure environment.”

A Call for Favorable Regulation

According to CryptoUK, the difficulties crypto businesses face with the banking industry is largely due to the lack of clarity around crypto assets regulation, leading banks to have a very restrictive approach when it comes to dealing with businesses in the sector.

CryptoUK calls on the government and regulators to look to jurisdictions such as France, which has recently introduced legislation supporting crypto companies in accessing banking services if they opt into being regulated. But most importantly, it urges the public sector to work with the industry “to ensure that innovation in the sector is not hampered.”

“The government has repeatedly declared its desire to make the U.K. the global hub of fintech, and the crypto industry plays a critical role in the sector. The crypto asset industry is currently worth over £300 billion,” the spokesperson said. “The U.K. has the opportunity to become a world leader within the crypto economy, but if we want the brightest minds and the best firms to call the U.K. home, the government must support our emerging sector through appropriate, proportionate and well-designed regulation.

CryptoUK was formed in early 2018 by a group of seven crypto companies, including trading platform eToro and exchange Coinbase. The organization aims to “promote higher standards of conduct” and engages with politicians and regulators “to develop knowledge of the industry” and “help produce an appropriate operating framework for the U.K.’s crypto asset market,” according to press material.

The post Survey: U.K. Crypto Companies Must Bank Abroad appeared first on Bitcoin Magazine.

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Indian Gov’t Panel Recommends a Blanket Ban on Cryptocurrencies

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A blanket ban on cryptocurrencies has been reportedly recommended by an Indian government panel.

An Indian government panel recommended a ban on cryptocurrencies, Reuters reports on July 22.

Is India finally about to ban cryptocurrencies?

The panel recommended to the government today to ban cryptocurrencies and impose sanctions for any dealings involving crypto assets. Reuters adds that, according to a government statement, the report and draft legislation released by the panel behind the recommendation will be examined by regulators and the government before taking a final decision.

A local ban is not surprising

Earlier this month, India’s Minister of State for Finance Anurag Thakur has pointed out that there is no law in India expressly prohibiting the use of cryptocurrencies. Still, draft legislation that would allegedly impose a ban on the use of cryptocurrencies in India has been published by local blockchain legal experts on social media over a week ago.

The given 18-page draft proposes a definition of cryptocurrencies as “any information or code or number or token not being part of any Official Digital Currency, generated through cryptographic means or otherwise, providing a digital representation of value.” 

While all assets fitting this definition would be prohibited, the regulation also suggests that a digital rupee, issued by India’s central bank, would be recognized as legal tender.

As Cointelegraph recently reported, Bitcoin (BTC) proponent and Tezos investor Tim Draper hit out at the Indian government on July 16 calling the government “pathetic and corrupt” for the proposed ban on cryptocurrency.

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Bitcoin News Summary – July 1, 2019

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The post Bitcoin News Summary – July 1, 2019 appeared first on 99 Bitcoins.

Here’s what happened this week in Bitcoin in 99 seconds.  A video surfaced this week of an Iranian Bitcoin mining operation running inside a mosque, buildings which receive free electricity in the country. It was reported that $260k worth of Bitcoin has been mined inside 100 different Iranian mosques. Meanwhile, the government is shutting […]

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Deutsche Bank Collapse Could Crash Global Financial Markets

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German financial services giant Deutsche Bank AG is one of the largest and most important economic institutions in the world. Mainly due to self-imposed scandals, the bank is now having to taking drastic measures to stay afloat. Investors everywhere should note that if such a critical piece of the too-big-to-fail banking system falters, it could trigger another global financial crisis.

Also Read: Global Crypto War Is Heating up – Iran Next in Line With Its Own Gold-Backed Coin

Deutsche Bank Struggles to Survive

Deutsche Bank AG, the largest banking services group in Germany with well over a trillion dollars worth of assets, has been a major source of concern for international investors, economists and policy makers for more than a couple of years now. In fact, the International Monetary Fund called the bank in 2016 “the most important net contributor to systemic risks” to the global financial system. That same year, various financial publications around the world also started warning that Deutsche might be the “next Lehman Brothers,” referring to the investment bank whose collapse is considered to be a major part of starting the 2008 global financial crisis.

Now the German bank appears to be struggling again, with some commentators fearing it will not be able to survive. Just this month it was announced that Deutsche will undergo a major reorganization in order to stop the bleeding. As was widely reported, the restructuring process of the company will include downsizing about a fifth of its employees around the world, approximately 18,000-20,000 people. Additionally it was revealed that Deutsche will cut its investment in information technology by over a billion dollars per year, a move that will hinder it from catching up with competitors or being able to face new challengers in the fintech domain. Moreover, there are also reports in the market that some institutional investment funds are pulling out their assets from the bank, which might signal a lack of trust in the success of the reorganization efforts.

Costly Scandals and Billions in Fines

Before we ponder how the situation might unfold, let’s review how Deutsche Bank got to its current state. Over the last few years it has been involved in a number of scandals such as facilitating money laundering which cost the bank a fortune in legal expenses, reputational damage and massive fines. Its stock is now trading at a 30-year low, having lost over 70% in value since 2007. The bank also suffered frequent changes at the top because of this, replacing CEOs and other top executives at an alarming rate for a company of its kind in its industry. In November 2018, its headquarters were even raided by law enforcement officers and representatives of the German tax authority.

Deutsche Bank Collapse Could Crash Global Financial Markets

The myriad of legal troubles it’s faced have cost Deutsche Bank an incredible amount of money in the last few years. For example, in April 2015 it had to agree to pay a combined $2.5 billion in fines to American and British authorities for its involvement in the Libor scandal, where several banks were accused of colluding to fix interest rates widely used around the world. And in January 2017, Deutsche reached a $7.2 billion settlement with the U.S. Justice Department over its sale and pooling of toxic mortgage securities. In total, Deutsche Bank has paid more than $13 billion for litigation since 2012.

What Happens When Too-Big-to-Fail Fails?

So what will happen if Deutsche Bank does not succeed with its reorganization efforts and can no longer survive on its own? If it was operating in an economy governed by real free market principles, the bank would just go out of business the same way other companies do all the time. However, it is more than possible that politicians and bureaucrats will feel a need to intervene to prevent that from happening.

Bodies such as the German government and the European Central Bank (ECB) can say that the failure of the largest commercial banking institution in the economic heart of Europe would have disastrous ramifications for the continent and the world as a lack of investor trust will send an economic shockwave from Germany outward. For this reason they may claim to have no choice but to rescue Deutsche Bank with other people’s money. This can be done by several ways, including forcing other banks to buy out Deutsche (there were attempts to merge it with Commerzbank AG in the past), printing more fiat money and giving it away to Deutsche or even outright nationalizing the bank.

Deutsche Bank Collapse Could Crash Global Financial Markets

Whatever the case may be, it will have lasting implications on the global economy. Besides the knock-on effect on other financial institutions, a collapse of Deutsche Bank, as well as a rescue of it with European citizens’ money, could create serious political fallback. As we have seen with the last global crisis financial, disillusioned voters might feel that those in power are sacrificing their savings in order to help rich bankers from too-big-to-fail institutions, fueling a drift to populism in extreme right and left parties, further destabilizing the established order.

A new financial crisis triggered by a collapse of Deutsche Bank can also drive more people to discover cryptocurrency as an alternative to fiat, as the faults of the old system become obvious to understand. A costly and unfair rescue of the failing system will also have such an effect, evoking the Times headline “Chancellor on brink of second bailout for banks” from January 3, 2009, enshrined by Satoshi Nakamoto in the Bitcoin genesis block for a reason.

What do you think about the current state of Deutsche Bank and the likelihood of its possible collapse to crash the global financial markets again? Share your thoughts in the comments section below.

Images courtesy of Shutterstock.

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The post Deutsche Bank Collapse Could Crash Global Financial Markets appeared first on Bitcoin News.

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Crypto Bullishness Spreads on Capitol Hill

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Cryptocurrency Bullishness Spreads on Capitol Hill

U.S. Congress has shown that it is starting to care about cryptocurrency as a number of lawmakers spoke up in favor of it this week. “The world Satoshi Nakamoto had envisioned is an unstoppable force” and “there’s no capacity to kill bitcoin” are some of the comments made by lawmakers. Meanwhile, the Fed chair said bitcoin is a store of value like gold and admitted that an era of many different currencies could return with the wider adoption of cryptocurrency.

Also read: G20 Leaders Issue Declaration on Crypto Assets – A Look at Their Commitments

Unstoppable Force, No Capacity to Kill Bitcoin

During congressional hearings on Facebook’s Libra this week, a number of U.S. lawmakers spoke in favor of cryptocurrency. Among them was Rep. Patrick McHenry, the Republican Leader of the House Financial Services Committee.

At the Committee on Financial Services hearing on July 17, McHenry said: “The reality is, whether Facebook is involved or not, change is here … Digital currencies exist, blockchain technology is real, and Facebook’s entry in this new world is just confirmation albeit its scale.” He elaborated:

The world that Satoshi Nakamoto, author of the Bitcoin whitepaper, envisioned and others are building is an unstoppable force.

The lawmaker added: “We should not attempt to deter this innovation, and governments cannot stop this innovation and those that have tried have already failed.”

Cryptocurrency Bullishness Spreads on Capitol Hill
Rep. Patrick McHenry

While speaking at length about innovation, McHenry stated: “Some politicians want us to live in a permission-based society where you need to come to government and ask for its blessing before you can begin to even think about innovating. Those are the politicians that would rather kill it before it grows, but there are others.” He proceeded to urge his colleagues on both sides of the aisle to unite in support of innovation, declaring that his party is ready to work with innovators to implement technology in the U.S. “before we lose out to other countries around the world.”

McHenry additionally emphasized: “Due to the nature of the technology of Bitcoin, governments cannot kill it, nor should they. You can’t kill digital currencies broadly. They will be enduring. They will be strong. That is the new framework of the next generation of the internet — that is clear.”

Cryptocurrency Bullishness Spreads on Capitol Hill

On the same day, McHenry appeared as a guest on CNBC’s Squawk Box to discuss the hearing. When asked whether, in the long term, he believes that regulators and politicians will allow the emergence of new types of currencies, the representative replied:

I think there’s no capacity to kill bitcoin. Even the Chinese with their firewall and their extreme intervention in their society could not kill bitcoin.

Bitcoin Is Store of Value Like Gold

Federal Reserve Chairman Jerome Powell also made some bullish statements about cryptocurrency when he testified before the Senate Committee on Banking, Housing and Urban Affairs on July 11 regarding monetary policy and the U.S. economy.

Powell was questioned about the impact of a cryptocurrency system on the U.S. reserve currency. “If a cryptocurrency system were to become prevalent throughout the globe, would that diminish or remove the need for a reserve currency in the traditional sense?” asked Senator Mike Crapo, Chairman of the Banking Committee.

Crypto Bullishness Spreads on Capitol Hill
Federal Reserve Chairman Jerome Powell

“I think things like that are possible,” the Fed chair admitted but noted that “We haven’t seen widespread adoption.” Nonetheless, he opined:

That’s not to say we won’t see it and if we do see it, yes you could see a return to an era in the United States where we had many different currencies … in the so-called, I guess, national banking era.

After using bitcoin as an example, saying that almost no one uses it for payments, the Fed chair explained that “They use it more as an alternative to gold, really. It’s a store of value. It’s a speculative store of value like gold.”

President Donald Trump also made his first-ever tweet about bitcoin on July 11. Even though he wrote that he is “not a fan of bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” many in the crypto community view the first direct tweet about bitcoin by a U.S. president as a bullish sign.

Cryptocurrency Bullishness Spreads on Capitol Hill
President Donald Trump

Congress Has Started to Care

Rep. Tom Emmer also spoke at the congressional hearing on July 17. He revealed in a tweet afterward that the hearing was not only about Libra but “an opportunity to amplify a discussion on cryptocurrencies.” He suggested that “Lack of understanding by Congress and regulators will stifle blockchain technology, which stands to be a force of change for good.” During the hearing, he remarked:

I’m sure you’re aware bitcoin is now 10 years old and now suddenly, magically Congress is responding. In other words, after more than a decade, Congress has apparently started to care.

“Unfortunately some people want to unnecessarily restrict it or even ban it. They fear change,” the representative described. “Nothing has been more clear on this committee than the blind aversion to change that some of our members have constantly espoused, even when it wasn’t required or even the subject of the hearing.”

Crypto Bullishness Spreads on Capitol Hill
Rep. Tom Emmer

Emmer continued:

My colleagues are incredibly fearful of money laundering and criminal activity and cryptocurrencies, but the dollar and all fiat-backed currencies have been proven to be the largest means of illicit behavior and money laundering.

Nonetheless, “this does not mean we need to suppress individual freedom,” he stressed. “Individuals insistent on the exclusion of middlemen and the freedom of the individual will continue to create open networks separate from central control.” Libra, however, relies on middlemen instead of minimizing them, he explained, but believes that Facebook’s coin “presents an incredible opportunity for everyone on this committee to learn more about actual cryptocurrencies.”

‘We Will Allow for Proper Use’

Earlier this week, on July 15, Treasury Secretary Steven Mnuchin held a press conference at the White House where he talked about regulatory issues surrounding Libra and other cryptocurrencies.

Despite stating that “Many players have attempted to use cryptocurrencies to fund their malign behavior,” calling it “a national security issue,” he emphasized that “the U.S. welcomes responsible innovation, including new technologies that may improve the efficiency of the financial system and expand access to financial services.” Regarding Libra and other cryptocurrencies, the treasury secretary confirmed that “our overriding goal is to maintain the integrity of our financial system and protect it from abuse.”

Vaneck director Gabor Gurbacs commented on Mnuchin’s speech:

I thought Treasury Secretary Mnuchin had a fair and balanced view on bitcoin and digital assets. Secretary Mnuchin told the general public to play by the rules, don’t do anything illegal and there are paths forwards.

Crypto Bullishness Spreads on Capitol Hill
Treasury Secretary Steven Mnuchin

In a July 18 interview on Squawk Box, Mnuchin expressed concerns about cryptocurrency, echoing President Trump’s stance when he tweeted that “Unregulated cryptoassets can facilitate unlawful behavior, including drug trade and other illegal activity.”

Responding to Squawk Box co-host Joe Kernen suggesting that “Cash is laundered all the time and it’s all we’ve ever used for nefarious activities and we’ve certainly had plenty of them,” Mnuchin contradicted:

I don’t think that’s accurate at all that cash is laundered all the time. We have the strongest AML system in the world.

Kernen argued that “There’s been a lot of nefarious activities historically, and it’s never involved bitcoin, so obviously it’s been successfully done with cash,” but Mnuchin insisted: “I don’t think it’s successfully been done with cash, I’ll push back on that and we’re going to make sure that bitcoin doesn’t become the equivalent of Swiss-numbered bank accounts which were obviously a real risk to the financial system.”

Cryptocurrency Bullishness Spreads on Capitol Hill

The treasury secretary also recently called on all countries to apply the crypto standards set by the Financial Action Task Force (FATF). By adopting these guidelines, “the FATF will make sure that virtual asset service providers do not operate in the dark shadows,” Mnuchin noted. “We will allow for proper use [of cryptocurrency], but we will not tolerate the continued use for illicit activities.”

What do you think of these lawmakers’ opinions on cryptocurrency? Let us know in the comments section below.

Images courtesy of Shutterstock, C-span, and CNBC.

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BTC Outflow on BitMEX Exceeded Inflow by $73M: TokenAnalyst

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Bitcoin outflows on BitMEX exceeded inflows by $73 million after the exchange was reported to be investigated by the CFTC.

Bitcoin (BTC) outflows on major crypto exchange BitMEX have notably exceeded the inflows after the firm was reported to be a subject in a regulatory investigation.

Bitcoin outflows on BitMEX exceeded inflows by $73 million

Over the past 24 hours, BitMEX saw an outflow of $83 million worth of Bitcoin, while only $12 million came in, London-based blockchain data provider TokenAnalyst reported in a tweet on July 19.

24-hour on-chain Bitcoin flows on major exchanges. Courtesy of: TokenAnalyst Twitter

24-hour on-chain Bitcoin flows on major exchanges. Courtesy of: TokenAnalyst Twitter

While such a discrepancy appears to be abnormal in comparison with other exchanges, such as Binance, which saw a $54 million outflow alongside an inflow of $58 million, BitMEX exchange has experienced outflow dominance several times before, according to TokenAnalyst.

Historic inflow and outflow on BitMEX. Courtesy of: TokenAnalyst

Historic inflow and outflow on BitMEX. Courtesy of: TokenAnalyst

Bitcoin outflow dominance on BitMEX is normal due to the amount of Bitcoin held on the platform

The spike of Bitcoin outflows came amid recent reports that United States regulator the Commodity Futures Trading Commission (CFTC) launched an investigation of the company. The authority is allegedly probing BitMEX as the United States is one of the countries excluded from using the exchange, which is registered in the Seychelles.

While some commentators online considered the recent spike of outflows on BitMEX a sign of panicked leaving, industry Twitter personality WhalePanda said that it is a normal reaction, taking into account the amount of Bitcoin held by BitMEX. He wrote: “It’s more of a reminder for people who don’t actively trade their entire stash to withdraw (some of) it.”

BitMEX is the world’s second largest crypto exchange according to reported daily trading volume to date, with its Bitcoin trading amount accounting for $3,2 billion at press time, according to data from CoinMarketCap.

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