The Race is On: China Passes the Very First “Crypto Law,” Will Go into Effect in January, Next Year

  • China is all-in in blockchain technology. President Xi Jinping stressed that China should “seize the opportunity” and take the leading position in the field of blockchain technology.
  • This news has the leading cryptocurrency surging 42%, the third largest Bitcoin spike ever in its history.

Now, the Standing Committee of the 13th National People’s Congress in China has passed a new law on Oct. 26 to regulate cryptography. The law will be implemented from January 2020, reported local news channel CCTV.

The central cryptographic agency will have a unified leadership over the national cryptographic work and will formulate major guidelines and policies for national cryptography.

The law is aimed at standardizing the application and management of passwords, promoting the development of the password business, ensuring network and information security, and improving the scientific, standardized and legalized level of password management.

The Article 9 of the law, as shared by a think tank platform, Safe Internal Reference, the state encourages the research and exchange of cryptographic science and technology, protects cryptographic intellectual property rights, and promotes the progress and innovation of cryptography and public/private key technology.

China Pushing Out Political & Legal Foundation For the Upcoming Digital RMB

Though it nowhere explicitly mentions cryptocurrency, it is focused on the application of cryptography, a component that underpins cryptos like Bitcoin.

“The key takeaway is – the developing of new cryptography, hashing algo, even the usage of the tech, will be in the official legal realm. This means you need to follow the CCP standard for all “encrypted” behaviors, which can be VERY broad, from mining to block propagation,”

shared Dovey Wan, founding partner of Primitive Crypto.

In a nutshell, Wan notes this is about,

“pushing out the political and legal foundation for the upcoming digital RMB, which will roll out by the end of this year or early next year.”

China’s move came just a few days after Facebook CEO Mark Zuckerberg during his testimony before the Congress regarding this crypto project Libra warned,

“China is moving quickly to launch a similar idea in the coming months. We can’t sit here and assume that because America is today the leader that it will always get to be the leader if we don’t innovate.”

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Author: AnTy

Facebook’s Marcus: Striking Libra as a Threat to the US is a Win For China’s Digital Currency

As we already know, after five years of research, the People’s Bank of China is very close to releasing its digital currency.

While China has been focused on creating a central bank digital currency, the US has no plans for the same in the near future, though they are looking at it.

In the meantime, the US-based Facebook is working on its cryptocurrency project Libra which is being scrutinized from regulators worldwide. US lawmakers got even a step further and threatened the companies and CEOs by sending a letter to the Libra Association members to quit the project.

As such seven members including PayPal, Mastercard, Visa, and Stripe have left the Association.

As such the social media giant is warning the US regulators that derailing Libra’s plan would be a huge win for China.

“The future in five years, if we don’t have a good answer, is basically China re-wiring” a large part of the world “with a digital renminbi running on their controlled blockchain,” said David Marcus, who is leading the Libra.

A Real Threat to the US

While US officials are trying to figure out how to regulate Facebook’s digital currency, Marcus said Beijing is plowing ahead with its digital payments system with global reach.

China’s progress, Marcus told Bloomberg, could present a real threat to US influence.

He further warned about “having a whole part of the world completely blocked from U.S. sanctions and protected from U.S. sanctions and having a new digital reserve currency” with no alternative.

Facebook has highlighted threats posed by China previously as well. In April 2018, when CEO Mark Zuckerberg testified before Congress, he pointed out that China would be strengthened by the breakup of US tech companies.

Marcus also gave speeches defending Libra to the global leaders at the G7 meeting with the World Bank and IMF while meeting the staff of Democratic and Republican members of the House committee.

Last week, Marcus had said, “Look, change of this magnitude was going to be hard all along.”

On the criticism that the company should have done more to get regulators onboard before going with the plan, Marcus told a small group of reporters, “Even if we spent 10 years outreaching, you’d still hear the same thing.”

On Wednesday, Zuckerberg is expected to testify about Libra at a hearing held by the House Financial Services Committee.

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Author: AnTy

China Invests Billions After Economy Slows Down, Can Bitcoin and The Crypto Industry Benefit?

After months of trading tensions with the United States, China has perceived that it’s economy is no longer growing as much as it once was before. Now, in a swift move, the People’s Bank of China has decided to inject around $28 billion USD into the economy to boost it. The money was pumped into the economy via loans made to commercial banks.

Now, several experts are trying to determine whether this new boost of money in the country can affect the crypto market, too. On prior occasions, investors of the country chose to invest in Bitcoin, even though there is officially no BTC market in the country.

Yuwa Hedrick-Wong, an economics commentator on Forbes Asia, confirmed that China seems to be trying to decouple itself economically from the United States. While this might be good for China in the long-term, it is bad for the economy in the short-term, which means that profit will go down everywhere.

Bitcoin can certainly be a way out, as it is a decentralized currency that can, up to a point, be used as a borderless currency. While it lacks the structure and the adoption to be even more important, Bitcoin is certainly present and relevant in China. Tether is also being used in the country in large quantities.

All of these aspects point out to the possibility that wealthy Chinese investors might decide to spend their economic boost in crypto’s, which would definitely make the market more vibrant and push prices forward. Now, we have to wait and see if these theories will really happen or if the Chinese investors will lose on this chance.

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Author: Gabriel Machado

People’s Bank of China to Onboard Six Technology Wizards in Helping Launch Its Digital Currency

The Chinese central bank, known as the People’s Bank of China, has recently put up a recruitment notice on its official site. According to the job post, the state bank is looking for six tech experts who have a lot of experience with blockchain technology.

Most of the people hired are set to work on the Digital Currency Research Institute. Candidates who apply should know that they are expected to be experts in cryptography, computing, microelectronics and/or econometrics.

The new employees would be responsible for developing software that would be used in the country’s new digital currency. They should also be able to do technical research and develop trading terminals, as well as study methods of payments and clearing.

Another important point is that the bank revealed that people with experience in systematic framework design, big data platforms, blockchain development and crypto research will be preferred.

The Mysterious Chinese Digital Currency

China is not very open with information, so the state-backed digital currency of the country is pretty mysterious so far. The People’s Bank of China is supposed to be working on it since 2014 and it said that it is ready to be launched this year, but the lack of official information makes it hard to know.

What is certain is that this project could certainly change the world and help China to improve its financial system, something important for a country that intends to become the largest economy of the world in the future.

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Author: James Fox

China’s Central Bank Affirms That National Digital Currency Has No Timeframe For Launch

China has confirmed its plans to launch its own central bank-based digital currency but does not have a timeframe right now. This is what the local media outlet Global Times revealed after the local central bank, the People’s Bank of China, commented on the situation of the project.

The governor Yi Gang was quoted by the media outlet affirming that the bank still needs to evaluate some of the risks and to make more tests before the asset will be available for the population. According to him, the development of the national currency has moved quite a lot until now, but the country doesn’t have any timeframe for the launch at the moment.

Another deputy director of the bank, Mu Changchun, affirmed last month that the token was ready for launch, so the information is contradictory, to say the least. When we consider that the bank even denied the claims that the project existed some time ago, it is hard to say with some certainty how the project is faring.

Who Will Launch Its Crypto First? Facebook or China?

There is a lot of speculation going around right now on whether Facebook or China will release their token first. Libra has its launch scheduled for the end of 2020, but it is facing a lot of regulatory issues. China, on the other hand, would not face regulatory issues, but we are unsure about how complete the asset actually is.

Whoever takes the lead will have an important headstart in dictating how the world of centralized digital assets will work, despite the fact that Facebook and China will act on very distinct places.

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Author: Daniel W

China’s Crypto Stance to Soften as Bank of China Outlines Bitcoin Qualities

Chinas-Crypto-Stance-to-Soften-as-Bank-of-China-Outlines-Bitcoin-Qualities

Bank of China recently posted an infographic entailing cryptocurrencies on its official website reveals news outlet Decrypt. As per the claims made, it seems to be an attempt to educate residents on the overall functioning of cryptocurrencies, followed by its real use cases and the value it could potentially conquer.

This is definitely caught off guard considering the fact that the country has dismissed the likes of cryptocurrencies ever since countries began to scrutinize it. It is important to stress that both the People’s Bank of China (PBoC) and Bank of China are two different entities, where the former constitutes regulatory frameworks and the latter exists in different branches.

Even the CEO of Tron, Justin Sun makes an appearance on this infographic, who supposedly was quoted saying (closest translation):

“The biggest problem is too much money!”

As for how the informative visualization was put together, Crypto Potato highlighted that it starts with Bitcoin’s history and Satoshi Nakamoto, followed by the notion of a decentralized peer-to-peer system, Bitcoin mining and issues such as Mt. Gox and an investor’s attempted suicide was reported.

Moreover, accomplishments have also been shared in this part, such as the first ever time pizzas were purchased with BTC, as well as Facebook’s most recent endeavor, Libra.

The second part explores more of what’s been happening for some time now, which includes the volatility in prices, stressing that investing in the giant is equivalent to a roller coaster ride.

As for the final part, it is more relatable to present time trading and successes including crypto ATMs, crypto-related payment options and ways cross-border payments can be achieved.

Is this a sign that China may reconsider its outlook on cryptocurrencies? Will countries like India follow suit?

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Author: Nirmala Velupillai

Chinese Alcohol Wholesaler And Marketer Oranco To Use Blockchain To Fight Counterfeit Products

Chinese-Alcohol-Wholesaler-And-Marketer-Oranco-To-Use-Blockchain-To-Fight-Counterfeit-Products

Oranco one of the most prominent premium alcohol marketer and wholesaler in China just announced that they are going to use a product based on blockchain technology to fight fake products.

Counterfeit goods are a nearly $500 billion industry that, by nature, is difficult to quantify. It’s likely that this number is much higher. Chinese merchants are particularly egregious in this regard, developing cheap knockoffs of popular brands and selling them to unsuspecting customers who are hungry for a good deal.

The press release of the product states:

“On August 20, 2018, the Company, through its wholly-owned subsidiary Fengyuang Huaxin Liquor Development Co., Ltd., entered into an agreement (the “Agreement”) with Guangzhou Silicon Technology Co., Ltd. (“GSTC”), a company specializing in blockchain technical solution development and technical support, to develop the Technology for the identification and anti-counterfeiting of the Company’s premium alcoholic beverages.”

Now, in accordance with the agreement, the participating companies have agreed on developing a blockchain-based tech for

“the identification and anti-counterfeiting of the Company’s premium alcoholic beverages.”

Blockchain offers an undeniable advantage for trust and customer/brand relations. By allowing identification information to be recorded and, above all, verified, it can allow real traceability of the marketed products and the way they have been produced.

President of Oranco, Mr. Peng Yang commented:

“This technology will assure the authenticity and further build the value of our premium products. We look forward to further exploring and exploiting blockchain technologies following this exciting step.”

Using blockchain to see if a product is fake or real is nothing new and has already been used for several years for the certification of diamonds and precious stones by Everledger, a company that has created a universal registry. Each stone or diamond is notarized in the blockchain with many traceability elements such as the owner’s name, the serial number which is also laser engraved on the stone, and all related data: size, color, purity, and so on.

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Author: Sritanshu Sinha

China May Adopt a “Hong Kong Style” Cryptocurrency, Instead of Libra, Per Ex-Central Bank Governor

China May Adopt a “Hong Kong Style” Cryptocurrency, Instead of Libra, Per Ex-Central Bank Governor
  • Libra’s whitepaper was recently released in June 2019.
  • In response, the People’s Bank of China may end up releasing their own bank-backed digital currency.

After the release of the whitepaper for Facebook’s Libra cryptocurrency, governments around the world have brought up concerns. Some have already stated that they will not allow Libra to be used within their economy, while others simply want clarity on the regulations already in place.

In a statement from the former governor of the People’s Bank of China (PBoC), it appears that commercial entities may be taking the role of issuing digital currencies. Zhou Xiaochuan stepped down as the head of PBoC after 15 years in 2018.

In the South China Morning Post, Xiaochuan commented that it is possible for China to use the Hong Kong monetary system to learn about digital currency issues, ultimately paving the way to issue their own. He revealed that the government is still working to respond to the newly proposed Libra cryptocurrency, leading them to considering their own digital currency instead. Continuing to be the key backer behind the digital currency initiative, Xiaochuan stated that there is a lot for policymakers to take from the Facebook and Hong Kong models for digital assets.

At a symposium organized by the State Administration of Foreign Exchange in Beijing, a transcribed version of Xiaochuan’s speech stated, “Notes can be issued by the central bank or commercial entities.” However, he did not explain what kind of “commercial entities” could be best for China.

There are already three banks in Hong Kong – Bank of China, HSBC, and Standard Chartered – that have already issued their own banknotes in their own names, holding the USD in reserves as backing. With this model, the Hong Kong Monetary Authority has been able to maintain a 7.8:1 ratio between the Hong Kong dollar and the US dollar. If China chooses to adopt the same model, they would end up avoiding major fluctuations that cryptocurrency faced in the early days.

Senior analyst Chen Dafei of Orient Securities commented that he noticed the reference that Xiaochuan made to the commercial entities, noting that he took it to mean that tech firms could ultimately be able to participate in digital currency issuance. However, the process by which this would be implemented was not clear.

Tech firms Alibaba and Tencent already have a solid payment network in China, using Alipay and WeChat Pay. It is worth noting that Alibaba owns the South China Morning Post, which has been referenced in this article.

While Dafei believes that the new path could involve tech firms, chief scientist Wei-Tek Tsai of Tiande Technologies was not in agreement. Instead, he argued that the only entities capable of issuing digital currencies are commercial banks and central banks. During the speech, Xiaochuan stated, “One problem [in the early development] was that people had been too eager to make quick money to turn cryptocurrencies into items for speculation instead of a means of trade.”

As Xiaochuan sees it, there is still plenty to learn from the whitepaper released regarding Libra last month, considering that the new asset will be linked to a collection of major currencies. Furthermore, the cryptocurrency is going to be based on a Swiss nonprofit consortium. So far, this consortium is a collaborative network of over two dozen companies, including Visa, Mastercard, PayPal, eBay, and Uber.

When digital currencies first entered the market, the PBoC had not criminalized the use of cryptocurrencies at all, even Bitcoin. However, when speculation and major price changes started happening, China chose to completely ban both trading and initial coin offerings. Recently, the central bank of China has been a little more progressive, studying the creation of their own “sovereign” digital currency, and they have even developed a dedicated institute for this effort. Unfortunately, progress has been slow paced.

With the idea of Libra entering the market as a globally used cryptocurrency, controversy started as China considered the best way to respond.

So far, the comments made by Xiaochuan have been the most comprehensive statements on what could happen next. Xiaochuan believes that Libra is paving the way for a “strong international currency,” which would shake up the economic system. Cross-border payments would be challenged, and the sovereign currencies without a stable value would be on treacherous ground. Xiaochuan stated,

“Libra has introduced a concept that will impact the traditional cross-border business and payment system.” Even with remote risks, Xiaochuan believes that the best move for Beijing will be to “make good preparations and make the Chinese yuan a stronger currency.”

Instead of seeing Libra’s progress as a challenge, Xiaochuan sees it as an opportunity for developing countries to strengthen their own payment structures.

Presently, the central bank’s research chief, Wang Xin, has already announced the approval of a collaboration between market institutions for the purpose of researching and creating a central bank digital currency. Still, a big concern in Beijing is that the launch of such a digital currency could further embed the US dollar hegemony. Xin stated,

“If the digital currency is closely associated with the US dollar, it could create a scenario under which sovereign currencies would coexist with US dollar-centric digital currencies.”

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Author: Krystle M

Bitcoin Traders in Japan to See More Government Interference For $93 Million in Undisclosed Revenue

Japanese-Crypto-Traders-to-See-More-Government-Interference-For-93-Million-Undisclosed-Revenue

There are more than a few countries in the world where cryptocurrency is largely frowned at. China, for example, isn’t the most receptive to crypto as the government not only openly condemns it but also tries to pass laws that ensure that the growth of the cryptocurrency sector is as stifled as possible. Even though there is no legislation against crypto in the United States, the country’s SEC is also a bit on the fence about the sector.

Japan, however, is one of the most liberal countries with regards to crypto. In April 2017, the country officially recognized Bitcoin and cryptocurrency in general as legal, to be governed under the Payment Services Act. In December of the same year, the National Tax Agency (NTA) also formally classified profits made from crypto as “miscellaneous income” and ruled that such income be taxed between 15%-55%. This is probably the reason Japanese traders have decided to hide their cryptocurrency gains.

Japanese Traders Don’t Report Crypto Profits

According to some reports, at least 30 different cryptocurrency businesses and about 50 persons have either underreported their proceeds or have not been reporting them at all, for a few years now. Japanese law clearly states that all individuals and businesses who earn above 200,000 yen – $1850 – annually are expected to report such earnings. However, more than a few people have not been reporting this, supposedly due to the 55% tax attached. According to authorities, the undisclosed funds add up to about 10 billion yen ($93 million).

Crypto Will Face More Scrutiny

The tax evasion discovery didn’t just start and since last year, the Japanese government has been creating a new system that will allow the NTA to officially collect information from the country’s crypto exchanges on suspected evaders. The information will include their names, addresses, individual identification numbers and some other personal information.

At the moment, all intermediaries that the NTA requires information from are not exactly mandated to do so compulsorily. If an exchange feels they have enough reason to refuse to share the information, they have a right to do so. To ensure that privacy is upheld even when the new law is finally implemented, these exchanges will still be allowed to challenge a request made by the NTA through a proper appeal. The NTA will also only ask for data for suspected tax evaders who have earned at least 10 million yen – ($88,700).

The NTA declared as the conclusion from a survey that more than 300 persons disclosed they made about a 100 million yen from various cryptocurrency businesses and deals IN 2017. This was probably a direct effect of the 2017 surge when Bitcoin hit its all-time high of almost $20,000.

Furthermore, the government is also looking to pay more attention to Initial Coin Offerings (ICO). The country’s financial authority, the Financial Services Agency (FSA), is looking to create and enforce new and sterner regulations governing these ICOs to protect investors and stakeholders from fraud. When this is properly implemented, all institutions that wish to have an ICO will be mandated to first register with the FSA. This decision was made because of a few widely known duplicitous ICOs in other parts of the world that have defrauded innocent investors.

Crypto Taxes Should Probably Be Reduced

A few months ago, the FSA was asked by the Japan Association of New Economy (JANE) to cut down the existing tax percentage for crypto businesses. JANE asked that tax on crypto be reduced to 20%, which is the official rate for stocks. In addition to this, the agency was also asked to completely leave crypto-to-crypto transactions untaxed.

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Author: Tolu