At the World Digital Mining Summit in Frankfurt, Germany, Bitcoin.com’s CEO Stefan Rust sat down with Jihan Wu, cofounder of Bitmain Technologies and Matrixport. The two discussed how cryptocurrencies being used for payments is spreading and how Bitmain is doing after the bear market last year.
A Virtual Economy at Work Approaching Critical Mass
The World Digital Mining Summit (WDMS) is a two-day mining conference that hosts an assembly of industry leaders, mining rig manufacturers, cryptocurrency pool operators, and other individuals passionate about crypto. During the event, Bitcoin.com’s CEO, Stefan Rust, had the privilege of sitting down with Bitmain cofounder Jihan Wu and discussed a wide variety of subjects. At first, Wu explained how he got into Bitcoin and that while working for an investment firm, he happened to read something about Bitcoin and found it “really interesting at that time.” After looking into it for two days straight he decided that bitcoin was a good idea. Wu was actually the first person to translate Satoshi’s Bitcoin white paper into Chinese for residents living in the region.
“I was the first one to translate the [white paper]. At that time in the Chinese media said Bitcoin was either a scam or it does not work,” Wu explained to Rust. “I happened to understand economics and some high-level principles of computer science so I knew [Bitcoin] works in both economic ways and in computer science ways. So I translated the white paper and tried to get more positive feedback from Chinese social media.”
While recalling his old QT wallet, Wu emphasized that it’s been an amazing journey. “I still remember back then no one knew about bitcoin and right now there are 20 million or 40 million users around the world and almost everyone now more or less have heard about bitcoin — I believe there are actual users getting involved in the cryptocurrency economy and those [individuals] are really starting to use cryptocurrencies for payments. A way to store their cash account — I believe this kind of user base will increase more and more.” Wu continued:
This is a virtual economy at work and it’s quite difficult in the beginning but I think we are almost near critical mass.
The Bitmain cofounder remarked that he believes the 40 million crypto users globally had initially stemmed from investor types, but nowadays he sees more ordinary people joining the economy and “especially young people.” “[Individuals] are really pushing cryptocurrency into the local payment network and people start to use it,” Wu said. Rust also brought up spending bitcoin cash (BCH) in Slovenia where there are hundreds of merchants that accept digital assets for products and services. “Lots of people still today believe [Bitcoin] is undoable or it’s out of their imagination how cryptocurrency can be really adopted by real life use cases,” Wu replied. “I think it’s a miracle, I think it’s amazing and lots of miracles are happening nowadays.”
Bitmain Continues to Produce Next Generation Mining Rigs and Chips
After discussing cryptocurrency adoption, Wu also explained how Bitmain was doing this year. “After the bottom of the bearish trend last year we’ve seen a very fast recovery in the money industry and we can see the hashrate growing very fast. Bitmain’s sales volume increased a lot and we released a new generation of mining rigs and mining chips.” Wu detailed that the company also released new artificial intelligence (AI) chips. He further explained that Bitmain’s mining pools mined different cryptocurrencies and remain top-ranking mining pools. Wu stressed:
It’s a good year for Bitmain.
Additionally, Rust and Wu talked about regulations in China and how roughly 60% of the world’s hashpower is located in the country. The two executives discussed the possibility of China banning bitcoin mining and how the Chinese government is dealing with oversight. The Bitmain cofounder and Bitcoin.com CEO conversed about a slew of other subjects like the ecological impact of bitcoin mining, the reward halving, and a lot more insights from someone who’s seen the cryptocurrency mining industry grow immensely, first hand. If you want to check out our exclusive interview with Bitmain’s Jihan Wu, check out the video below.
What do you think about Jihan Wu’s perspective of the mining industry and cryptocurrency ecosystem? Let us know what you think about the interview in the comments section below.
Bitcoin Cash Register has surpassed 10,000 installs on the Google Play Store, live streaming platform Twitch reinstates cryptocurrency payments and BCH is coming to the Brave web browser. Watch these and other developments discussed in this week’s video update on Bitcoin.com’s Youtube channel.
Twitch is a video streaming platform owned by Amazon with more than 15 million unique daily visitors who mainly use it for watching live gaming and esports. Earlier this year, the website stopped accepting cryptocurrency payments by removing support for Bitpay. However, recently Twitch users have reported that the option to pay with bitcoin cash (BCH) and bitcoin core (BTC) is available once again.
Speaking about Bitpay, the leading cryptocurrency payment processor has launched a new directory for anyone who is looking for recommended places to spend their BCH or BTC. The directory features a variety of retailers, arranged by categories such as electronics and fashion. The entertainment and gaming section still doesn’t mention that Twitch is back, but does cover other online play options such as Chess.com.
In addition to enabling businesses to accept crypto payments, Bitpay also empowers charities to accept donations in digital assets. Recently the Tony Hawk Foundation announced it is now accepting cryptocurrencies from supporters through Bitpay.
The HTC Exodus 1 phone will also feature Brave as the default browser in its upcoming release. Bitcoin.com CEO Roger Ver commented: “I think I may have to switch my phone to an HTC phone once all of this is out.”
Bitcoin Cash Register is a simple point-of-sale (PoS) app from Bitcoin.com that allows any business to accept BCH payments at any retail location. Merchants can choose from over 150 fiat currencies, and cash out customers wanting to pay in BCH in a non-custodial manner, without any registration. The app is available both for iOS and Android devices and has surpassed 10,000 installs on the Google Play Store.
The weekly video update also covered a couple of upcoming community events. The newest Bitcoin Cash Conference is coming to North Queensland, Australia, on Sept. 4 – 5. And Anarchovegas is coming up this July 20 – 21 in Las Vegas, Nevada, promoting individualism and freedom, with a special benefit to support Ross Ulbricht.
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Images courtesy of Shutterstock.
Verify and track bitcoin cash transactions on our BCH Block Explorer, the best of its kind anywhere in the world. Also, keep up with your holdings, BCH and other coins, on our market charts at Bitcoin.com Markets, another original and free service from Bitcoin.com.
As the G20 leaders’ summit came to a close, the nearby V20 summit concluded with a set of promises for the crypto industry in response to the global crypto standards set by the Financial Action Task Force. A group of national crypto associations aims to engage with government agencies and global policymakers to ensure the industry’s best interests are understood and valued at an international level.
The two-day Virtual Asset Service Providers Summit or V20 in Osaka, Japan, wrapped up Saturday. Policymakers and representatives of major companies in the crypto industry gathered “to develop a clear roadmap toward full compliance with a new set of recommendations from the Financial Action Task Force (FATF) for the global regulation of crypto asset transactions,” the V20 declared. At the same time and in the same city, the G20 leaders’ summit also wrapped up Saturday.
At the conclusion of the summit, the V20 announced that a group of national trade associations representing virtual asset service providers (VASPs) signed a Memorandum of Understanding (MOU) “to establish an association to provide a global unified voice for the virtual asset industry.” Ronald M. Tucker, convenor of the V20 and founder of the Australian Digital Commerce Association (ADCA), commented:
We’ve brought everyone on the journey to create a new body that will assist in establishing a means to engage with government agencies and the FATF to ensure our best interests are understood and valued at an international level.
Tucker explained that the agreement signals a commitment to develop a “cooperative regime to underpin dialogue with government and regulators to promote VASP.” In addition to supporting “industry-wide information exchange and best practice” and an increased “awareness of the industry and its economic value,” it promotes and facilitates “compliance with global industry standards.”
The signatories include the ADCA, Singapore Cryptocurrency and Blockchain Industry Association (ACCESS), Japan Blockchain Association (JBA), Korean Blockchain Association (KBCA), Hong Kong Blockchain Association (HKBA) and Taiwan Parliamentary Coalition for Blockchain & Industry Self-Regulatory Organization. A former FATF president, Roger Wilkins AO, witnessed the signing ceremony.
Representatives from a number of major cryptocurrency exchanges, media outlets, law firms, and other crypto service providers participated in the event. They include Bitfinex, Circle, Coinbase, Huobi, Kraken, Okcoin, Coins.ph, B2c2, Bitcoin.com, Bitcoin Australia, Crypto Garage, Deloitte, Diginex, Norton Rose Fulbright, Sentinel Protocol, Anderson Mori & Tomotsune, and Pwc. Several regulated crypto exchange operators in Japan also participated such as Bitflyer, Bitpoint, Coincheck, Huobi, Rakuten Wallet, and SBI Group.
Implementing Controversial FATF Guidelines
The FATF released its new guidance for the risk-based approach for crypto assets and related service providers on June 21. However, some industry participants, particularly service providers such as crypto exchanges, have raised concerns regarding the implementation of some recommendations.
“What we are hearing from industry is that the new rules may have the opposite effect to which they were intended, effectively forcing crypto transactions off the controlled platforms,” said the former FATF president. Industry participants believe that applying these requirements “could result in potential unintended consequences, including encouraging P2P transfers via non-custodial wallets, which are significantly harder for law enforcement to track or control,” the V20 explained.
Daniel Kelman, Bitcoin.com’s resident legal advisor, spoke at the V20. He shared with news.Bitcoin.com that, in essence, the FATF wants VASPs to be regulated and “only licensed and regulated exchanges could participate in a SWIFT-like network for payments between VASPs.” He remarked, “Of course this makes no sense, since this is not how crypto works. No one uses an exchange to send money, they’ll withdraw to their own wallet and send it anywhere,” stressing the need to address this issue first and foremost. Kelman added:
One quote from a regulator stands out: ‘combating money laundering will always trump innovation and financial inclusion.’ I couldn’t disagree more.
“Most importantly, it was clear FATF did not know much about our industry and were just forcing bank rules cookie-cutter style onto crypto. Case in point was my discussion about using the public ledger to assess risk as opposed to the ‘Travel Rule,’ which is basically impossible for crypto exchanges to implement. I raised the prospect of blockchain analysis to achieve the same result and they were dumbfounded, had never even considered this,” he recalled. “The conference was not really about debating these rules. They were essentially forced on us and they wanted to use this event to try to claim ‘consensus’ that they were fair and valid.”
The FATF Standards Summarized
Following the publication of the FATF guidance, blockchain forensics firm Chainalysis gave its feedback on the recommendations. The firm previously made it clear that there are challenges to implementing the FATF standards, as news.Bitcoin.com reported. The full FATF report can be found in this article.
One of the most controversial proposals is Recommendation 16 which mirrors the Travel Rule in the U.S., the firm explained, adding that it requires VASPs to send originator and beneficiary information to other VASPs or financial institutions involved for transactions over 1,000 EUR/USD. The firm emphasized:
There is a substantial technical obstacle to implement the ‘secure’ and ‘immediate’ transfer of information to other obliged entities.
The FATF requires countries to regulate and monitor crypto activities and register or license crypto service providers. Financial Intelligence Units need to modernize systems and have a regime to freeze and seize accounts when necessary. In addition, financial institutions, including retail and corporate banks, must not de-risk VASPs or customers with crypto activities, but should instead apply the FATF’s risk-based approach and find ways to mitigate risks associated with these activities.
The guidance requires VASPs to have enhanced “due diligence” procedures in place, and include that information in their reporting. Regulators must be able to receive and investigate Suspicious Activity Reports generated from financial institutions and crypto service providers from their compliance efforts.
Moreover, AML compliance needs to be consistent with local privacy laws. “FATF calls upon countries to coordinate and ensure that recommendations are compatible with national data protection and privacy rules,” Chainalysis remarked. Anonymity-enhancing cryptocurrencies were highlighted for higher AML risk, the firm described, elaborating:
Guidance leaves room for truly decentralized exchanges and applications with no natural person connected to them to be excluded.
The importance of international information sharing to mitigate the risk of money laundering is also highlighted in the guidance.
FATF Recommendations Are Not Laws
FATF Secretariat Tom Neylan provided the V20 with an update on the new guidance for VASPs. Emphasizing the importance of regulation, he said that at the current stage they are still looking for an appropriate regulatory framework relating to cryptocurrency which would include not only centralized exchanges but also decentralized exchanges and P2P transactions, Coinpost reported. The publication quoted him as saying, “The regulation on the virtual currency industry is not a ‘monster’ that causes panic,” noting that “If implemented, the virtual currency market will become more open.”
However, lawyer Jake Chervinsky pointed out soon after the FATF released its guidance that the money-laundering watchdog simply “makes recommendations, not laws,” emphasizing that the organization “doesn’t have any regulatory authority of its own.” He detailed:
Member countries can adopt all, some, or none of FATF’s recommendations. There are basically no repercussions for not adopting (or for violating) FATF recommendations.
Speaking at the V20 conference, Takato Fukui, Director General of the Japan Virtual Currency Exchange Association (JVCEA), shared with attendees the best practices for establishing a self-regulatory organization (SRO) for the crypto industry. His association received approval from Japan’s top financial regulator, the Financial Services Agency (FSA), to operate as an SRO in October last year.
The FATF was clear in its new guidance that “only competent authorities can act as VASP supervisory or monitoring bodies, and not self-regulatory bodies.” The FSA explained to news.Bitcoin.com that it is working closely with the JVCEA on self-regulation. “We expect that through self-regulation, clearer and more detailed rules will be provided as to provisions that are not specified under the existing laws/regulations, as well as self-discipline in areas that are not covered by the laws and regulations,” the FSA shared.
Operators of crypto exchanges are expected to follow similar rules to those set by the SRO regardless of whether they are members of the organization. The FSA also clarified that registration of non-SRO members that have not established internal rules equivalent to the SRO’s rules can be refused or canceled.
How Japan Regulates Crypto
Japan has often been referred to as the leader when it comes to crypto regulation, having legalized cryptocurrencies as a means of payment back in April 2017 and requiring crypto exchanges to register with the FSA. The country currently has 19 registered crypto exchanges.
At the summit, Bitflyer CEO and Chairman of the JBA Yuzo Kano was on stage describing his country’s regulatory landscape, Coinpost reported. He explained that, in Japan, the FSA is in charge of multiple areas so it can respond to any issues flexibly and quickly. With the country’s Revised Fund Settlement Act, passed in 2016, the agency succeeded in providing the legal definition for cryptocurrency ahead of most other countries worldwide, Kano detailed. He noted that the industry has been through various twists and turns as it grows such as the Mt. Gox debacle and a couple of major hacks last year. Coincheck, one of the country’s largest crypto exchanges, was hacked in January last year and Zaif, a regulated exchange, was hacked in September.
Kano also noted that the term “virtual currencies” will be changed to “crypto assets” from April 2020 since the revised Act on Fund Settlement and the Financial Instruments and Exchange Act were passed the Plenary Session last month. He added that the crypto industry continues to develop year-after-year.
Some Embrace FATF Standards
Huobi Global, which was represented at the V20, openly embraces the FATF standards. “The crypto industry should embrace industry standards & compliance,” the company announced Friday. “FATF’s guidelines are a chance to develop progressive industry standards, create innovative tech that weeds out abuse while preserving access for legitimate actors, and more.”
Elaine Sun Ye Lin, Huobi’s Head of Compliance, commented: “We see this as the starting point in an ongoing conversation between the cryptocurrency industry and G20 regulators … we believe direct dialog with FATF will help clarify the unique nature of the crypto industry and allow us to find industry-wide solutions to the problems we face.” Huobi Global CEO Livio Weng elaborated:
While it’s true these changes do present a challenge to the industry in terms of immediate implementation, they present real opportunities as well.
He believes that “This is a chance for us to develop industry standards to promote growth and protect user rights, develop technology to identify and weed out the bad while preserving the access for legitimate users, and to develop our ability to respond as a community to the issues that the cryptocurrency and blockchain industries face.”
What do you think of the V20 efforts? Let us know in the comments section below.
Images courtesy of Shutterstock, the FATF, Philippe Le Saux, and the V20.
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