Argentina’s central bank extends capital controls to ban the purchase of Bitcoin and cryptocurrency using credit cards.
After recently imposing limits on U.S. dollar purchases, the Central Bank of Argentina (BCA) announced Oct. 31, that citizens are prohibited from using credit cards to buy Bitcoin (BTC) or other cryptocurrencies. The news was initially reported by Cointelegraph Brazil on Nov. 1.
All in the name of preserving forex reserves
The measures were published in a communication covering several industries in which credit card use was limited or prohibited. The section referring to cryptocurrency reads:
“Acquisition of Bitcoin and cryptocurrencies: It is prohibited to purchase BTC with this payment method. The only remaining alternative for this investment is to do so with funds transferred from a bank account.”
It is unclear whether the rules apply only to credit cards or if this includes debit and prepaid cards.
The BCA says that these measures are critical to preserving the country’s foreign exchange reserves.
Bitcoin just part of a wide-ranging crackdown
According to experts, the central bank intends to block the entry of dollars into the country, seeking to have stronger exchange control.
This follows a move by the BCA earlier this week, which limited the amount of U.S. Dollars Argentinian citizens could buy each month. The maximum amount was reduced from $10,000 to just $200.
At the time this caused a spike in Bitcoin trading, which these latest measures would seem to partially address.
Canada’s volatile history of mainstream adoption and fraud is directly impacting the future of cryptocurrency in the country.
Recently, Canada’s central bank has been leading working groups with global partners exploring a blockchain future. Their crypto presence has soared with Ernst & Young’s announcement that it is using Toronto to test its public government expenditure blockchain. But what is the cryptocurrency landscape currently like in Canada?
The history of crypto in Canada may seem as volatile as a token with a small market cap, yet mainstream use and adoption have been on a consistent incline since 2013, when Canadians started pushing mainstream adoption. Now, the Canadian government is leading working groups. What else has the country been up to in the blockchain space?
The first thing that comes to everyone’s mind when it comes to the Great White North is that the founder of Ethereum, Vitalik Buterin, grew up in Canada — but Etherum isn’t all the country has provided to the crypto space. Here are some more notable stories from Canada’s blockchain history.
The world’s first Bitcoin ATMs
Canada contributed to Bitcoin’s (BTC) mainstream use early on by opening the world’s first Bitcoin ATM at a coffee shop in Vancouver in 2013. The ATMs were released by Bitcoiniacs and Robocoin. Bitcoin was trading at around $200 at the time and, during the first day, the kiosk performed 81 Bitcoin transactions equaling around 81 BTC.
The ATM is considered a strong driver for attracting new people to cryptocurrency, with around a third of its users new to Bitcoin. In an interview with Cointelegraph back in 2013, Robocoin CEO Jordan Kelley marveled at how easy it was for people to get started with Bitcoin. According to industry monitor CoinATMRadar, there are at least 715 cryptocurrency ATMs in Canada, with 85 in Vancouver and 227 in Toronto.
It is easy to agree that the initial coin offerings (ICOs) craze produced more losers than winners, as many took advantage of the hyped-up funding method to conduct scams. In response, state and provincial securities regulators in the United States and Canada launched probes into potentially fraudulent crypto investment programs as part of the North American Securities Administrators Association’s Operation Cryptosweep in 2018. The initiative is reportedly the largest coordinated investigation held by state and provincial officials targeting suspicious crypto investment products, and has resulted in over 200 investigations of ICOs and crypto-related investment products.
Operation Cryptosweep has issued at least 77 actions against crypto programs, including the infamous BitConnect, which has gone down in history as one of the largest cryptocurrency scams.
Vancouver mayor suggests a ban on Bitcoin ATMs
The mayor of Vancouver, Kennedy Stewart, suggested a complete ban on Bitcoin ATMs in the summer of 2019 due to Anti-Money Laundering (AML) issues associated with the ATMs. The associated police report claims that criminals could purchase a Bitcoin ATM for their own needs for a few thousand dollars, and then deposit their cash into that ATM “as many times as required” to profit from or eliminate the transaction fees.
While many Canadian governing bodies have already taken steps against cryptocurrency, British Columbia’s review into the alleged money laundering activities is ongoing. Canada saw the amount of money laundering claims triple last year to 2,466 claims.
When speaking to Cointelegraph, Andrey Peshkov, the CEO of money transfer app USDX Wallet, dismissed the concerns surrounding money laundering using cryptocurrency in Canada, remarking:
“I do not think that cryptocurrency holders try to laundering money in Canada because they are obligated to pay taxes. Many countries do not require holders to pay taxes from their crypto income making them more attractive to bad actors.”
Flexa and Coinsquare integrate physical retail payments for Canada
However, not all news surrounding Canada recently has been negative.The Winklevoss-backed cryptocurrency payments service Flexa, which allows merchants such as TopGolf to accept cryptocurrency, has seen strong acceptance around the country.
Current estimates show that over 7,500 businesses have signed up on the platform to offer crypto payments to their customers, indicating that business owners in Canada see a need to provide payment solutions in crypto.
Canada audits QuadrigaCX exchange
A review of Canada in cryptocurrency would not be complete without talking about QuadrigaCX, a defunct Canada-based exchange. The company began grabbing headlines ever since its CEO Gerald Cotten was declared dead in India without ever having revealed the keys to access the company’s cryptocurrency reserves. When these reserves were discovered inaccessible, the business became insolvent, declaring bankruptcy.
The Canadian company’s bankruptcy trustee was Ernst & Young, a Big Four accounting agency. A bankruptcy trustee oversees the exchange’s insolvency proceedings focusing on auditing from a tax and creditor perspective.
Recently, the widow of QuadrigaCX Founder Gerald Cotten, Jennifer Robertson, paid $9 million in assets to the users of QuadrigaCX through EY. Robertson wrote in a personal statement, “The vast majority of my assets and all of the Estate’s assets are being returned to QCX to benefit the affected users.”
While the widow may not have been aware of her husband’s alleged malfeasance, what happened suggests that Canada is determined to rid cryptocurrency of fraud to protect both investors and holders. According to EY, Robertson’s late husband created fake accounts under several pseudonyms and used them to trade users’ money on the QuadrigaCX platform to show artificial income. The auditor also said that much of the funds were eventually transferred to personal accounts that he controlled.
High-paying employment in Blockchain Consensus report
The Blockchain Consensus report was released on Oct. 4, 2019 by the Chamber of Digital Commerce Canada, exploring the blockchain ecosystem in Canada. The report takes a closer look at Canada’s blockchain ecosystem, breaking down insight by region and company size. The report also states that government commitment is desperately needed to move this highly innovative technology sector forward by providing legal clarity.
Further, the report includes statistics that highlight the average annual blockchain salary in Canada sitting at more than $98,000 Canadian dollars, making blockchain careers among the highest-paying in the country. The CEO of Shortex, Vladimir Prosvirkin, remarked on this report to Cointelegraph:
“Canada is one of the leading countries adopting blockchain technology on a corporate level. Every second company is invested in blockchain somehow last year. Due to the country’s low energy cost, high internet speeds, and favorable regulations, blockchain and cryptocurrency industries have always prospered here.”
Piloting government spending tracking in Toronto
In an effort to increase transparency, EY started tracking how public funds are spent in the capital city of Toronto. As reported by Cointelegraph on Oct. 16, the system can track the government’s public funds as they move through different state agencies, providing transparency to the public.
According to EY, data provided by the platform can potentially be used to better inform future decision making on policies. Upon the pilot program’s launch, EY issued a statement, “Blockchain technology can positively impact processes from tax collection to open data to public spending.” A Bitcoin-conscious and highly functioning city like Toronto may benefit from greater transparency in government spending and provide an important use case.
G-7 working group on stablecoins
On Oct. 13, 2019, the Bank of Canada released results from the G-7 working group on stablecoins that was tasked with “investigating the impact of global stablecoins” as a whole. While much has been written about the strong language in the report, such as “Stablecoins pose a threat to financial security,” it also outlines ways in which governments and digital securities can work together. Participants included the Bank of England, the Bank of Canada, the Bank of France, the European Central Bank, the Bank of Italy, the Bank of Japan and the United States Department of Treasury.
On the eve of the G-7 working group, Anthony Pompliano, co-founder and partner at Morgan Creek Digital, noted that it has taken only a decade from Bitcoin’s creation for the “decentralized digital currency to go from basically the fringes of the internet to now being discussed at the G-7 and other regulatory offices.”
Challenges lie ahead for stablecoins
The report goes on to outline the challenges that stablecoins need to overcome in order for them to remain in compliance. Focusing on private stablecoins, the report highlights that stablecoins, regardless of size, pose some major risks such as regulatory, security, and those relating to financial reporting and misconduct.
Further, the paper addresses challenges and risks that globally adopted stablecoins like Tether (USDT) pose to monetary policy, financial stability, the international monetary system and fair competition. Jude Regev, the founder of Element Zero, an open-source network that provides branded stablecoins and a fee-free on-chain SmartSwap, noted to Cointelegraph:
“Private stablecoins will need to be more similar to a shield that protects purchasing power and provides security against hacking. When Central Bank’s like Canada issue their own digital currencies and other countries do the same, being able to create stable interoperability between each countries’ fiat onboarding will add the most value to the ecosystem.”
Based on international conversations and the working session led by Canada in conjunction with other countries, it is clear the country sees both value and risk in stablecoins. The working document shows a future where digital currency will utilize banks only as a means for fiat onboarding. The document seems to address two known stablecoin protocols, an algorithmic stablecoin like DAI and asset-backed stablecoins like Tether.
Toward the future
Canada’s blockchain history is marked by triumph and struggle. The Crypto Canucks are constant drivers and mass adoption is incoming through all the perceived barriers. From the first Bitcoin ATM to considering banning Bitcoin ATMs to leading the international community toward adoption, the Great White North has been at the forefront for both cryptocurrencies’ benefits and risks.
While adoption continues to increase, inappropriate regulation could potentially hinder some projects in the country. Guidelines may end up forcing private stablecoins to comply with securities laws in big countries or to even become banks, significantly raising the barrier to entry. Alternatively, countries may turn to outlawing private stablecoins altogether for fear of harm coming to their existing banking systems.
China has been on a roll with a series of crypto-related announcements. President Xi Jinping’s speech to accelerate the development of blockchain technology in China was followed by the passing of a cryptography bill. Meanwhile, China’s Center for Information and Industry Development has continued to evaluate and rank crypto projects, and the central bank is preparing to launch its own digital currency.
As China embraces blockchain technology and prepares to launch its own digital currency, the country’s Center for Information and Industry Development (CCID) has continued to publish crypto project rankings. The CCID is a scientific research institute directly under China’s Ministry of Industry in Information Technology. The first ranking, published in May last year, took the crypto industry by surprise.
The latest set of rankings consists of 35 crypto projects, ranked based on the CCID’s Global Public Blockchain Technology Assessment Index. There are three sub-indices: basic technology, applicability, creativity. Collectively, they make up the overall ranking.
Occupying the number one spot overall is EOS, which has been at the top of the overall rankings since the center started evaluating it back in June last year. The second position has changed from the previous ranking, with TRON replacing Ethereum. NULS remains in the fourth position, while Bitcoin remains in the 11th spot. Bitcoin Cash now ranks 30th, down a few positions from the 26th spot previously.
The institute explained that the average value of the basic technology sub-index is mostly unchanged from the previous period. The average value of the creativity index has marginally increased, while the average value of the applicability index has increased substantially. Two projects, Gxchain and XEM, have been removed for further observation because “a dynamic adjustment mechanism was introduced to adjust the public chain whose code update rate is too low,” the CCID explained.
The indices are compiled by the CCID (Qingdao) blockchain research institute, an entity established by the CCID. The rankings and evaluation work are carried out every two months in collaboration with multiple parties such as the CCID think tank and the China Software Evaluation Center. “The result of this assessment will allow the CCID group to provide better technical consulting services for government agencies, business enterprises, research institutes, and technology developers,” the institute previously explained. The CCID provides professional services to the government including research, consulting, evaluation, certification, and research and development, its website describes.
China’s CBDC and Cryptography Law
While the CCID has been evaluating crypto projects for over a year, China’s central bank has been researching the possibility of issuing its own central bank digital currency (CBDC) for much longer. The People’s Bank of China (PBOC) set up a research team in 2014 to explore launching its own digital currency, reportedly to reduce the costs of circulating traditional paper money and boost policymakers’ control of money supply.
The project was recently accelerated following the announcement by social media giant Facebook regarding the Libra digital currency project. Having hinted to the media that its CBDC was “almost ready,” the PBOC later stated that more research was needed. Governor Yi Gang clarified earlier this month that there was no timeframe for the launch and more time is needed for further research, testing, trials, assessments, and risk prevention. Nonetheless, some people are more optimistic about the time frame. Huang Qifan, Vice Chairman of China Center for International Economic Exchanges, talked about the country’s digital currency electronic payment (DCEP) system in his keynote speech at the Bund Summit, a financial conference in Shanghai, on Monday. He remarked:
The PBOC has been studying DCEP for five or six years, and is likely to be the first central bank in the world to launch a digital currency
While Chinese authorities have indicated that its digital currency would be similar to Libra, some experts have reservations about the DCEP system. Zhang Anyuan, chief economist from China Securities, was quoted by The South China Morning Post as saying: “DCEP anchoring purely on [the yuan] won’t be able to compete with Libra, despite it may draw the participation of internet giants like Alibaba and Tencent.” He elaborated that, based on the details revealed so far, “its internationalization will not succeed without a monetary theory breakthrough or a money creation innovation,” the publication conveyed.
Further, China’s official state-run press agency Xinhua News Agency reported late on Saturday that a cryptography law has been passed and will take effect on Jan. 1, 2020. This law is aimed at “facilitating the development of the cryptography business and ensuring the security of cyberspace and information,” the publication explained, citing parliament.
Xi Jinping Elevates Blockchain in China
Chinese President Xi Jinping, while still silencing protesters in Hong Kong, managed to gain immense popularity within the crypto community last week when he said that China should expedite the development of blockchain technology as the core for innovation.
He emphasized that the integrated application of blockchain technology plays an important role in new technological innovation and industrial transformation, Xinhua reported and quoted Xi as saying:
We must take blockchain as an important breakthrough for independent innovation of core technologies, clarify the main directions, increase investment, focus on a number of key technologies, and accelerate the development of blockchain and industrial innovation.
“Chinese president seldom elaborates on a particular tech,” commented Twitter handle Cnledger. “Previously, only [the] internet and artificial intelligence were specifically elaborated on and collectively studied in the Central Political Bureau. This means blockchain is at least raised to the same level as A.I. in China.” Following Xi’s statements, blockchain-related stocks spiked. Xunlei, a company selling cloud downloading services claiming to be heavily invested in blockchain, for example, doubled its market cap overnight.
What do you think of the CCID’s rankings, President Xi’s speech, and the PBOC preparing to launch a central bank digital currency? Let us know in the comments section below.
Images courtesy of Shutterstock and the CCID.
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The central banking system controls monetary policy within a given jurisdiction, including the creation of money itself. The system is a lie and a denial of reality. The lie is political in motivation and content, and the denial of reality is rooted in culture and philosophy.
The political lie: Central banks are said to facilitate commerce and to benefit customers by connecting them globally. They purport to guarantee money and the safety of transactions. In fact, central banks are a chokepoint for commerce, which benefits the elite at the expense of ordinary people. Their mandated fiat constitutes the largest, longest, and farthest-reaching financial scam ever perpetuated. The fiat-money scam is committed by the political class upon productive people. The central banks’ transactions are the opposite of what is claimed; they betray customers in order to enrich the state with access to the wealth and personal information of average people.
The philosophical lie: To sustain a massive falsehood over time, facts must be constantly denied. Otherwise, people will hold the scam up to reality and check it against evidence. The falsehood needs to blur the truth, or destroy it, so that facts become discredited. If the lie is successful over time, people come to believe that the way things are right now—what they are told is “true”—is the way things have always been and must always be. Nothing but the lie is practical or possible.
How Things Used to Be
It wasn’t always this way, and history is the greatest reality check of all. The depravity of paper money was once common political knowledge, for example. Consider America’s Founding Fathers.
“Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.” George Washington, the first U.S. President.
“Paper money is unjust; to creditors, if a legal tender; to debtors, if not legal tender, by increasing the difficulty of getting specie. It is unconstitutional, for it affects the rights of property as much as taking away equal value in land. It is pernicious, destroying confidence between individuals; discouraging commerce…” James Madison, “Father of the Constitution.”
“To emit an unfunded paper as the sign of value ought not to continue a formal part of the Constitution, nor ever hereafter to be employed; being, in its nature, pregnant with abuses, and liable to be made the engine of imposition and fraud; holding out temptations equally pernicious to the integrity of government and to the morals of the people.” Alexander Hamilton, first Treasury Secretary.
In a May 1788 letter, Thomas Jefferson—author of the Declaration of Independence—used an interesting word to describe paper money: “ghost.”
“There is no saying where this fire [bankruptcies in London] will end. Perhaps in the general conflagration of all their paper. If not now, it must ere long. With only 20 millions of coin, and three or four hundred million of circulating paper, public and private, nothing is necessary but a general panic, produced either by failures, invasion or any other cause, and the whole visionary fabric vanishes into air and shews that paper is poverty, that it is only the ghost of money, and not money itself.” In 1817, Jefferson added that paper money’s “abuses also are inevitable and, by breaking up the measure of value, make a lottery of all private property.”
The Ghost of Money
As accurate as the other Founding Fathers were, Jefferson pointed to a more fundamental issue. Paper currency was “the ghost of money”; coins were the reality. They were opposites of each other, like lies and truth, with one being a phantom and the other being the substance of life. Paper money is not merely an expression of and a pathway to corruption, it is also an existential parallel to free-market money. (“Existential” here means that fiat affirms the existence of money by being a “ghost” of it, even while contradicting money’s substance.)
The challenge for central banks is to make the phantom seem real and the reality seem fraudulent. One way to do so is to question the validity of objective reality itself. After all, if there is no objective reality—if reality is dictated by authorities, the narrative, the majority, or other subjective forces—then there is nothing factual against which to assess anything. When nothing is objectively false or true, a lie is as valid as the truth.
We live in a culture of relativism, which supports the denial of reality—a denial that sustains the pervasive lie of central banking. Ethical relativism argues that there is no absolute truth; no objective standard or empirical evidence underlies ethics and personal judgment. Ethical relativism can be divided into different categories:
Descriptive ethical relativism studies people’s beliefs about morality, often focusing upon the beliefs of collectives such as tribes or specific societies. It is sometimes called “comparative” because it contrasts different approaches.
Meta-ethical relativism claims that moral judgments are not true or false in any provable or objective sense; they are relative to a perspective or circumstances—that is, they are subjective. This idea underlies all relativism.
Normative moral relativism, a subset of normative ethics, asks how people should act. Relativism answers that no moral standards bind all men at all times because right and wrong are not universal. Killing an innocent man is not always wrong, for example.
(The opposite of Ethical Relativism is Absolutism—the doctrine that actions are intrinsically right or wrong. Killing an innocent person is inherently wrong, even if it is done for the greater good or some other perceived benefit.)
A venue in which many people encounter ethical relativism in a pure form is in introductory college courses in philosophy. The professor poses a hypothetical in order to make students re-examine their ethical codes. The scenario usually runs, “The entire nation of France will drop dead tomorrow morning unless you kill your neighbor who is an innocent man. What do you do?” Or:“You can eliminate cancer by pressing a button that will also kill one healthy person who is an innocent man. Do you push the button?”
Such questions are illusions of a moral dilemma; they are ghosts. They are supposed to pit the moral horror of participating in mass murder against the moral horror of killing an innocent person in order to make a student conclude that there is no correct choice. Morality is relative, not absolute. But the questions are ghosts because they cannot be honestly answered. They postulate a parallel world in which the rules of reality, like cause and effect, have been so dramatically changed that pushing a button cures cancer. This world operates on magic, not objective reality.
The Truthful Response to a False Dichotomy
Actually, there is one honest answer: “Because my ethics and actions are based on the facts and physical rules of the world around me, I don’t know what I would do if those facts and rules no longer existed. If I were in a totally different reality, I’m sure my ethics and actions would be different, but I don’t know how.” This answer is the opposite of what the faux dilemmas are intended to elicit, of course, because it asserts reality rather than blurring it.
And, yet, this sort of question is commonly viewed as a “tough” moral issue. After all, how can the life of one person outweigh that of millions? This query is another intellectual sleight of hand. Morality is being reduced to a numbers game, a cost-benefit analysis, rather than a matter of principle. The subject is now utilitarianism, not ethics, as the professor claims. This is the destruction of objective morality. Into the resulting vacuum, utilitarianism rushes, usually in the company of expert opinion and authoritative pronouncements.
Right and Wrong Are Not All Relative
What is right or wrong is one of the most fundamental decisions a person can make. If the person is persuaded to abdicate his ethical judgment to an authority or a gray zone—if there is no objective morality or reality—then all decisions and judgments are based on relativism.
The implications of this for central banking are twofold: a moral and a metaphysical relativism that benefits lies.
Central banking is immoral. Fiat money and its inevitable inflation are theft; the banking monopoly robs people of opportunity and prosperity; the punishment of financial dissenters, such as black marketeers, negates freedom by denying individuals the use of their own property. This is a problem for central banking because it is an oppressive double standard, and people rebel against blatant injustice. The problem of backlash against a double standard can be eliminated, however, by removing morality itself from the picture. Without objective morality, there is no objective justice. Everything is a matter of authority, expert opinion, circumstance, and utility.
Central banking is a metaphysical lie that requires the discrediting of fact. Lies are used to establish the superiority of state-controlled finances over a privately-controlled system and so gin up people’s compliance. The propaganda is basically three-pronged.
1) Private alternatives are depicted as either criminal or fraught with danger – or both. The criminal accusations against cryptocurrency, for example, include human trafficking, tax evasion, drug dealing, and money laundering; the accusations are incredibly exaggerated and equally valid against fiat currency. The dangers include fraud, ransom attacks (blackmail), and the free market. Fraud and blackmail are not unique to crypto, of course, and the free-market cure for both is the exercise of due diligence and protective technology.
The demonization of the free market is a different matter; it is political and philosophical. Self-interest and voluntary exchange are vilified for the sole reason that they are antithetical to the state. The free market is the state’s main competition because it actually provides what the state promises but cannot deliver: freedom, prosperity, peace, and a civil society. Competition is not permitted, especially when it is effective.
2) The state argues that its financial institutions are public goods while private alternatives are ruthless, chaotic, and incompetent systems that offer no recourse to exploited individuals. The smear campaign is backed up by a horde of authorities who are a mixture of the scholarly, the bureaucratic, and the heavily armed. Above all, people must be discouraged from comparing the current financial system with alternatives from the past or possibilities in the future that would call the lie into question. As in the philosophy class, the rules of reality must be altered; in this case, the rules of the marketplace must be discredited.
3) Some people always see through the propaganda. These people are targeted and punished for acting on their disagreement in order to discourage others from doing so. This is the point at which propaganda becomes a gun.
The central banks know truth from lies; they know what they are doing. “Dutch National Bank Says Gold Can Re-Start Economy in Case of Total Collapse.” The De Nederlandsche Bank (DNB) or Dutch Central Bank recently acknowledged that its system of lies was faltering. DNB stated, “if the [central banking] system collapses, the gold stock can serve as a basis to build it up again.Gold bolsters confidence in the stability of the central bank’s balance sheet and creates a sense of security.”
The statement is a rare admission of reality. Central banking’s structure has become so transparently unstable and fraudulent that people have lost their confidence and sense of security in it. Central banks now pin their hopes on a store of value that is supported by five centuries of history and private choice – gold. Many hedge even this relatively safe bet by forging or incorporating digital currencies, often backed by gold or other hard commodities. Central bankers realize that the smoke they have been blowing into mirrors needs to be rescued by a form of wealth that people trust.
As central banking crumbles, so does the lie. The truth can’t come soon enough.
Do you agree that central banking’s days are numbered? Let us know in the comments section below.
Op-ed disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. 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 information in this Op-ed article.
Images courtesy of Shutterstock.
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Since the beginning of widespread protests in Lebanon last week, banks and lending institutions have remained closed, fueling fears of an impending nationwide cash crisis. Attempts to assuage the concerns of suffering individuals without money or options are not proving effective, as officials scramble to address the situation against a backdrop of alleged political embezzlement and mounting public frustration.
As banks don’t actually store customer deposits, Lebanese lenders and business officials are afraid that a sudden re-opening after being closed to the public for over a week could have disastrous consequences. “The cash of the banks are in reserve at the Central Bank or are in Treasury bills,” the president of the Worldwide Association of Lebanese Businesspeople told U.S. media. “The cash of the banks are not in the bank deposits, so no, they don’t have enough cash for everyone that would come and ask for any cash of transfer.”
An official statement from the Association of Banks in Lebanon (ABL) confirmed fears that banks will remain closed, stating: “In light of the continuing volatile security situation and the closure of most roads, and for the safety of customers and sector’s employees and its properties, banks will remain closed on Friday, October 25, 2019.” The chairman of the association, Salim Sfeir, maintained that banks would reopen when protests calm down, stating:
Once normalcy is restored, we are very confident that we can resume servicing our customers in full capacity.
Failed Attempts to Calm Protestors
The attempt at reassurance is of little comfort to many Lebanese, who want their banks to open, but are more deeply concerned with the systemic corruption of Lebanon’s politics as a whole. Attempted taxation of voice over internet protocol (VOIP) services such as utilized by the popular Whatsapp messenger, and other tax hikes and austerity measures are all part of the corrupt economic cocktail which triggered the start of mass protests last week. The Banque du Liban, Lebanon’s central bank, is also under fire for allegedly allowing corrupt politicians to embezzle money out of the country.
Demonstrators most recently gathered to protest in front of the main branch of the Lebanese central bank in Beirut, regarding its alleged role in assisted embezzlement, with some Lebanese Twitter users commenting that there is a media blackout and attempt to suppress coverage of the event. A video is captioned in Arabic:
The ruling of the bank shall fall. In front of the Banque du Liban.
The only activity currently allowed by the nation’s other banks and lenders is the payment of customer and employee wages at the end of the month via ATM, a statement from a state news agency confirms.
Similar Events Elsewhere
Recent centrally imposed withdrawal limits in India are presenting similar problems, and in very dire fashion, with reports and allegations even of death resultant from inability of customers to withdraw funds from local banks. As in Lebanon, officials are trying to keep people calm, but to little avail. With bank employee strikes, depositors gathering en masse outside of bank branches, and the Indian Supreme Court refusing to entertain petitions further fueling the fire, the situation is precarious.
Many cryptocurrency advocates see these events as perfectly illustrative of why crypto adoption is necessary. When an individual’s own money is inaccessible and even non-existent once given into the hands of centrally regulated lenders, situations such as those being witnessed in Lebanon and India are bound to happen.
What are your thoughts on the bank closures in Lebanon? Let us know in the comments section below.
All eyes are on the German economy which was once perceived as stable and strong. However, the financial state of affairs has been tumultuous and Berlin’s state cabinet recently agreed to a five-year rent freeze to help curb the rising housing costs in the country. Moreover, Bundesbank just published a monthly report that explains how Germany’s economic output is in a deep slump and the country’s monetary system has been beaten by Brexit fears and trade wars.
Many European nations have been focused on the Federal Republic of Germany and its economy. Economists and bankers from the region have been warning that the outlook is looking dreary for the rest of the year and into 2020. According to Germany’s central bank, the German economy has already fallen into the start of a recession. Bundesbank’s monthly report said the “German economic output could have decreased slightly in the third quarter of 2019,” and emphasized that it deflated by 0.1%. The eroding nature of the decline was “mainly due to the fact that the export-oriented industry continued to weaken,” Bundesbank said. The news follows all the warning signs that the next big financial crisis begins in Germany after the greater European Union saw a massive reduction in production. Bundesbank’s recently published report highlights that auto industry revenue in Germany dropped 1.5% between Q2 and Q3.
Now the leftist coalition within Berlin’s government has decided to agree to a five-year rent freeze. Reports claim that the three parties in Germany, the Greens, Social Democrats, and Die Linke, all believe a rent freeze is needed to battle housing costs that have spiked considerably in recent months. So much so that renters have called the rent inflation “rent madness” as rates have risen by 2.8% annually for close to two decades. The rent freeze plan was designed and promoted by the coalition of politicians including Katrin Lompscher of Die Linke. A rent freeze basically entails creating a price ceiling throughout the region and no increases in rent are allowed until the expiry date. Rent price controls are an extremely controversial practice and historically Keynesian economists have pushed the idea for decades. Germany has a long history of rent controls and started a system of “second-generation rent controls” in 1989 and again in 2015. The legislation known as the “Mietpreisbremse” or “rent brake” was supposed to stop rising rents.
A Rebirth of Communist Ideals
A few weeks ago, Leonid Bershidsky said the new rent control plan floating around the coalition of German bureaucrats was a case of “communist amnesia.” Bershidsky asserts that Germany’s capital city regulations “would greatly empower bureaucrats and boost a black market in housing.” Germany’s new rent freeze will ban increases for a five-year period except on housing that is already receiving subsidization and new construction homes. In order to make sure landlords are following procedure, tenants must have the city sign any new rent contracts. Berlin landlords are not too pleased with the socialist government stepping in on rent control and German economists believe landlords will skip much-needed renovation plans. For instance, because landlords won’t be able to raise the rent, most will likely choose to skip improving the property until the rent freeze ends. Moreover, by the end of the expiry date, people think that the rental prices will spike considerably by reflecting actual supply and demand.
Germany’s economy has been an integral part of the EU as a whole and the Eurozone. Watching the German economy can provide a telltale sign that something is wrong and signals from European central banks support this. In the U.S., the doom and gloom economic forecast is the same, where Trump’s trade war has been affecting markets and the Federal Reserve has been participating in overnight repos and slashing interest rates. Extreme economic concepts are now on the table as global financiers are discussing helicopter money, rent control, and basic income. A few analysts believe the warning signals this year have bolstered safe haven assets like precious metals and cryptocurrencies. The start of a slowing German economy a decade after the 2008 crash is a sure sign to some that a financial crisis is looming. Some even believe the days of rotten bureaucrats, filthy fiat, and ‘too big too fail’ central planners are numbered and a new era of financial freedom is upon us.
What do you think about Berlin’s government agreeing on a five-year rent freeze? Do you think cryptocurrency can help? Let us know what you think about this subject in the comments section below.
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The deputy governor of Banque De France said that central banks really only have three available options to address cryptocurrencies: ignore, ban or adopt.
Denis Beau, the deputy governor of France’s central bank, Banque De France, recently delivered comments regarding central banks’ approaches to cryptocurrencies.
Establish appropriate cryptocurrency regulations
On Oct. 16, Beau spoke at the Official Monetary and Financial Institutions Forum conference in London, where he discussed the role of cryptocurrency assets in today’s global financial payment system.
Beau stated that the traditional bank-based ecosystem could face significant changes due to the many technological developments, such as blockchain and distributed ledger technologies, further explaining:
“With the emergence of so called crypto-assets […] and so called stablecoins, we may also see new settlement assets develop which may compete against and possibly, according to their promoters, replace commercial and central bank money as settlement assets at the center of our payment systems.”
Beau continues by saying that stablecoins of potentially large size and reach might present unforeseen challenges of “system-wide importance, to competition policy, financial and monetary stability.”
Beau adds that central banks really only have three available options to address cryptocurrencies. The first would be to completely ignore crypto-assets, which would not mitigate any of the potential risks. The second option would be to ban all cryptocurrencies and the third available option, which is the most preferred one in Europe and France according to Beau, is to establish and standardize crypto regulations across the board.
The challenge of standardization
Indeed, the lack of standardization of regulations and procedures in the cryptocurrency and blockchain spaces has been identified as a problem both by regulators and industry players. Big Four professional services firm Deloitte noted the lack of standardization as a major obstacle to blockchain adoption in a report last year. ‘
Monero (XMR) core developer Riccardo Spagni has previously suggested that uneven international regulatory standards will result in a cryptocurrency-related brain drain, as the talent involved in the industry moves to the most beneficial jurisdictions.
Lawmakers in some countries have attempted to get ahead of such an exodus of talent and investment by making friendly regulatory environments within their home jurisdictions. Earlier this year, United States Representative Warren Davidson reintroduced the Token Taxonomy Act — a bill that would exclude cryptocurrencies from classification under U.S. securities laws.
Washington risks devaluing the dollar’s status in the future if it fails to respond to innovation, says the former regulator.
The ex-head of the United States’ commodities regulator thinks the government must digitize the dollar and take power away from central banks.
Giancarlo wants independently maintained dollar
In an opinion piece for the Wall Street Journal on Oct. 15, J. Christopher Giancarlo, former chair of the Commodity Futures Trading Commission or CFTC, argued the dollar could lose status in the future.
This would be specifically due to other countries rolling out digital currencies. The answer, he argued, is to create a new form of dollar.
“We propose a digital dollar—a government-sanctioned blockchain protocol, created and maintained by an independent nongovernmental group but administered by banks and other trusted payment organizations,” he explained.
“Cash brought into the system would be exchanged for digital U.S. dollars on a blockchain, with the cash lodged in special escrow accounts maintained by the Federal Reserve.”
Unlike many banking sources that have discussed digital currency, the digital dollar concept hints directly at decentralizing power over money.
While stopping short of claiming central banks should lose their ability to control national currencies, Giancarlo nonetheless argues that by shunning digital currency, the U.S. is set to weaken the dollar’s appeal. He warned:
“Significant actors, including central banks and social media platforms, may launch new currencies in the next few years. As their networks grow, they could eventually erode the dollar’s status as the most popular currency for international exchange.”
Giancarlo compared the potential dollar decline to the pound sterling’s loss of power after World War II.
The theory chimes with Bitcoin (BTC) proponents, with Saifedean Ammous’ book “The Bitcoin Standard” also noting global reserve currencies come and go at regular intervals.
For Ammous, however, the reason for this is tied to poor government handling of currency, including overt meddling in its issuance and value. Leaving the gold standard, he claims, all but guaranteed the fate of modern fiat currencies, including the dollar.
As Cointelegraph reported meanwhile, Giancarlo previously said he expects 2019 to become the starting point for a concerted international response to cryptocurrencies from regulators.
The People’s Bank of China is almost ready to launch its government-backed digital currency, official sources say.
The People’s Bank of China (PBoC) is almost ready to launch its government-backed digital currency, official sources say.
An Aug. 20 report from the CPC-owned English-language news portal China Daily further revealed that the central bank digital currency (CBDC) may have been influenced by the unveiling of Facebook’s planned cryptocurrency, Libra.
‘Inspiration from Libra’
After five years of research and system development work since 2018, the PBoC is almost ready to launch its CBDC, the deputy director of the bank’s payments unit Mu Changchun revealed at a forum last week.
Trials for the currency have been ongoing and the institution is reported to be testing multiple approaches for the project. If things proceed smoothly, the PBoC expects it could launch the currency sooner than Libra.
The latter’s recent announcement is notably reported to have influenced the PBoC’s original design for its planned CBDC.
Yang Dong — director of the Research Center of Finance Technology and Cyber Security at Renmin University of China — told China Daily that the announcement of Libra had sparked debate among Chinese regulators and motivated the project’s designers to involve more non-governmental institutions in the currency’s development and issuance process. He stated:
“Further testing is needed before officially launching the Chinese CBDC, gaining inspiration from the Libra.”
While not revealing specific names, Yang indicated that the next round of CBDC trials will involve both the central bank and private- and state-owned firms and will focus on non-governmental and cross-border applications.
CBDC expected to have many positive impacts
China UnionPay chairman and former PBOC official Shao Fujun told China Daily that the CBDC “will have lots of positive impacts, including tracking the money flow in economic activities and supporting making monetary policy.”
It nonetheless faces challenges such as global coordination as regards monetary and exchange rate policy, he noted.
China’s digital legal tender will be controlled by the PBoC and 100% backed by the reserves commercial institutions pay to the institution, an unnamed central bank official indicated. Citizens will be able to exchange the currency in commercial institutions.
At the forum, Mu further highlighted that currently, several different designated institutions are taking different technical routes for developing the CBDC and electronic payment infrastructure.
He added that the CBDC’s organizational structure is to some extent similar to that of Libra’s.
As reported just yesterday, top crypto exchange Binance is launching an open blockchain project — focused on developing localized stablecoins worldwide — that also appears to compete directly with Libra.
There are many reasons why the Philippines is becoming increasingly crypto-friendly. Not only has its central bank registered more crypto exchanges recently, but the Securities and Exchange Commission has also been actively finalizing crypto guidelines. The country has an active crypto community, and one of its largest banks has engaged in multiple crypto projects.
The number of approved crypto exchanges has been increasing in the Philippines. The country’s central bank, the Bangko Sentral ng Pilipinas (BSP), has registered 13 of them so far: Betur Inc. dba Coins.ph, Rebittance Inc., Bloomsolutions Inc., Virtual Currency Philippines Inc., Etranss Remittance International Corp., Fyntegrate Inc., Zybi Tech Inc., Bexpress Inc., Coinville Phils Inc., Aba Global Philippines Inc., Bitan Moneytech Co. Ltd., Telcoin Corp., and Atomtrans Tech Corp. The latter two were added to the BSP’s list of approved exchanges last month.
The central bank adopted a formal regulatory approach to cryptocurrency through the issuance of Circular No. 944 back in 2017. It requires businesses engaged in the exchange of cryptocurrencies for fiat money in the Philippines to register with the central bank as remittance and transfer companies.
Among the registered companies is Rebittance Inc., a wholly owned subsidiary of Satoshi Citadel Industries (SCI), a fintech company building a blockchain ecosystem in the Philippines. Co-founder Miguel Cuneta told news.Bitcoin.com that, besides the 13 registrants, many others are in “in the process of applying.”
In addition, the Philippines has a special economic zone where many overseas crypto exchanges have been licensed to operate. The Cagayan Economic Zone Authority (CEZA) revealed in June that it had licensed 37 crypto exchange operators. In collaboration with property developer Northern Star Gaming and Resorts, the authority has been building “Crypto Valley of Asia” for companies operating in the Cagayan Special Economic Zone and Freeport. However, CEZA’s licenses do not entitle licensees to “sell securities to Filipinos or to exchange tokens into fiat currency,” the authority clarified, noting that a BSP license is needed for such purpose.
Growing More Crypto-Friendly
Cuneta further shared with news.Bitcoin.com that he believes “The Philippines has always been one of the most crypto-friendly countries in the world,” highlighting several factors.
Firstly, he emphasized that the Philippines is “one of the first in the whole world” where the central bank registers companies wanting to provide services using cryptocurrency. The BSP started registering them in 2017, the same year Japan’s top financial regulator, the Financial Services Agency (FSA), began registering Japanese crypto exchanges. The FSA has registered 19 operators to legally operate crypto exchanges in Japan so far. Moreover, Cuneta elaborated:
We also now have new draft guidelines from our own SEC on ICO fundraising and order-book exchange regulations, paving the way for a more mature ecosystem with our own crypto marketplace for local price discovery.
The SCI co-founder additionally remarked that his country has “an active community and active meetup groups established since 2014.” He also acknowledged that CEZA “allows overseas crypto companies to register and cater to offshore customers.” After conveying various reasons for the crypto savvy image of the country, he concluded that “Definitely, the Philippines is becoming more and more crypto-friendly.”
Luis Buenaventura, founder and chief strategy officer at Bloomsolutions Inc., shares a similar sentiment. Describing his country as “one of the most crypto-friendly countries in the world,” he told news.Bitcoin.com: “Not only do we have an actual regulatory framework for crypto exchanges, but we’re also a predominantly English-speaking population that can use all the same tools and apps as North American or European audiences with minimal localization. Thus we tend to be a launchpad for U.S. startups looking to expand in the region.”
As an example, he mentioned popular mobile bitcoin wallet and investing app Abra. The startup has been offering its crypto-to-fiat conversion network in the Philippines since 2016, trialing it in the country first, before expanding to others. Many Filipinos are also trading bitcoin cash on Bitcoin.com’s peer-to-peer marketplace.
Crypto Adoption Advancing
Buenaventura estimates that there are approximately two million people in the Philippines who have had some exposure to crypto; some were “caught up in the buying frenzy of late 2017.” He further shared with news.Bitcoin.com:
We have a fairly sizable expat population, mostly Koreans, Chinese, and Japanese so there’s a lot of cross-pollination when it comes to financial technologies and payment systems.
Cuneta also believes that crypto adoption is growing in the Philippines, “at least in terms of the number of on-ramps and off-ramps we have for bitcoin and other cryptocurrencies in the country,” he explained to news.Bitcoin.com. “You can send money, pay bills, buy phone credits, and exchange crypto to fiat using several central-bank licensed exchanges and service providers.”
While asserting that “Bitcoin-as-retail-payment has never caught on here,” Buenaventura opined:
Less than 2% of payments in the Philippines happens digitally so the importance of creating cash-to-crypto bridges can’t be overstated.
Stressing the growing number of places where “people can actively exchange physical cash for crypto,” he disclosed that his company “powers about a dozen physical locations, and they’re all licensed FX outlets, and we’re aiming to be in 50 by the end of the year.”
Unionbank’s Crypto Initiatives
The Union Bank of the Philippines (Unionbank), one of the largest banks in the country, has engaged in a couple of crypto projects. Following the installation of a bitcoin ATM at its branch in Makati called The Ark, the bank has reportedly launched a stablecoin.
The Philippine Star reported on July 26 that Unionbank had issued “a stablecoin dubbed PHX and became the first bank in the country to conduct transactions using the blockchain technology.” This stablecoin is not to be confused with the Red Pulse Phoenix coin which uses the same symbol. Unionbank backs the value of its coin, which is guaranteed to be at parity with the Philippine peso at all times, the publication conveyed.
A senior vice president and head of the fintech business group at Unionbank, Arvie de Vera, revealed that live PHX transactions were implemented on the bank’s i2i platform. Project i2i, which stands for island-to-island, institution-to-institution, and individual-to-individual, is the bank’s clearing system that connects rural banks through blockchain technology. Three banks participated: Summit Rural Bank in Luzon, Progressive Bank in Visayas and Cantilan Bank in Mindanao. Each performed buy, transfer, redemption transactions and domestic remittances using the stablecoin. Initially available only to i2i participants, the coin can be purchased and redeemed by debiting from and crediting directly to their Unionbank accounts. According to de Vera:
PHX is a stable store of value, medium of exchange and is a programmable token with self-executing logic. It enables transparent and automatic execution of payments.
SEC’s Digital Asset Exchange Rules
The Securities and Exchange Commission (SEC) of the Philippines has published a document entitled Rules on Digital Asset Exchange, which primarily governs the registration and operations of digital asset exchanges accessible in or from the Philippines.
The document has 10 main sections covering areas such as registration requirements, anti-money laundering measures, as well as the powers and responsibilities of digital asset exchanges, including capitalization maintenance requirements. “The digital asset exchange shall maintain the unimpaired paid-up capital of one hundred million pesos (Php 100,000,000.00 [~$1,912,450]) at all times … in a form, and amount as the Commission determines is sufficient to ensure the financial integrity of the digital asset exchange and its operations,” the SEC document reads.
Stakeholders, exchanges, broker-dealers, investment houses, the investing public, and other interested parties had until Aug. 14 to submit their input regarding the proposed rules.
What do you think of the Philippines’ crypto ecosystem? Let us know in the comments section below.
Images courtesy of Shutterstock.
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