Russia has No Plans to Ban Crypto Unlike China, says Deputy Finance Minister

Russia Has No Plans to Ban Cryptocurrencies Unlike China, says Deputy Finance Minister

A Siberian region, which relies heavily on hydroelectric power and is known for its cheap electricity, also saw its energy consumption surging 159% due to an “avalanche” of crypto-mining.

After the US Federal Reserve Chairman Jerome Powell and US Securities and Exchange Commission (SEC) Gary Gensler clarified in no uncertain terms that they have no plan to ban Bitcoin and cryptocurrencies, Russia’s Deputy Finance Minister Alexei Moiseev conveyed the same thoughts.

Moiseev told reporters this week that Russia does not plan to follow the same path as China and introduce a ban on the purchase of crypto by citizens on foreign exchanges, according to a local publication.

“Russian citizens can have a wallet open outside the Russian Federation, but if they operate within the Russian Federation then they will be subject to bans, I think, for the entire foreseeable future, due to our financial sovereignty,” said Moiseev during a “Digitalization of Financial Markets” lecture at MGIMO.

Last month, China strengthened its crackdown on crypto mining and trading; as a result, a flood of Bitcoin miners are now also moving to Russia besides Kazakhstan and the U.S.

A Siberian region, Irkutsk, which relies heavily on hydroelectric power and is known for its cheap electricity, saw retail energy consumption surging 159% this year, from 2020 levels due to an “avalanche” of underground crypto-mining, Governor Igor Kobzev said in a letter to Russian Deputy Prime Minister Alexander Novak.

“The situation is an unpredictable event for the region and is leading to significant loads on the power grid with the risk of accidents and emergencies,” reads the letter, in which Kobzev said the problem has been exacerbated by China’s ban on mining and called for higher electricity rates for miners.

Close Attention on Crypto

While no plans to ban crypto, the digital currency will not be allowed to be used as a means of payment within the country, as this could result in the loss of the government’s control over the money supply, said Deputy Finance Minister.

Moiseev further said that there is a need to define digital currency and blockchain in the country’s Civil Code and in specialized laws.

“The blockchain will obviously occupy its own niche and will be used where equal rights are needed.”

Last week, Anatoly Aksakov, the head of the State Duma Committee on the Financial Market had said that they are keeping “close attention” on the topic of digital assets and thinking about implementing legislative restrictions on the investment of unqualified investors in cryptocurrencies.

These measures, according to him, are necessary to protect private investors as billions of dollars are currently spent on the purchase of digital currency. But while there is a great risk, there is also great profitability, he noted.

“Here, of course, we need to prescribe in the legislation the norms that will protect an unqualified investor in ill-considered investments in digital currencies.”

In July this year, the Central Bank of the Russian Federation issued an information letter recommending Russian exchanges not to admit instruments linked to crypto and advised professional participants in the securities market to refrain from offering their unqualified clients access to crypto and the management company to include them in mutual funds.

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Author: AnTy

DOJ Establishes National Cryptocurrency Enforcement Team

US Deputy Attorney General Lisa Monaco announced new enforcement initiatives targeting crypto contractors who fail to report cyber breaches ‘because cryptocurrency is used in a wide variety of criminal activity.”

The creation of a National Cryptocurrency Enforcement Team (NCET) was unveiled on Wednesday during a virtual speech at the Aspen Cyber Summit, whose goal is to tackle complex investigations and prosecutions of criminal misuses of crypto assets, particularly crimes committed by exchanges, mixing and tumbling services, and money laundering infrastructure actors.

The team will also assist in recovering assets lost to extortion and fraud, including payment to ransomware.

“Cryptocurrency exchanges want to be the banks of the future, well we need to make sure that folks can have confidence when they’re using these systems and we need to be poised to root out abuse.”

“The point is to protect consumers.”

To head the team, the agency is looking for someone with experience in technology underpinning cryptocurrencies and blockchain, it said.

With this, the DOJ aims to “strengthen” the Department’s ability to disable financial markets that allow cybercriminals to “flourish.”

The NCET will investigate and prosecute crypto cases; support the coordination and sharing of information and evidence among law enforcement offices, and collaborate and build relationships with private sector actors with expertise in crypto matters to further the criminal enforcement mission.

“For too long, companies have chosen silence under the mistaken belief that its less risky to hide a breach than to bring it forward and report it. That changes today.”

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Author: AnTy

While “Not an Issue Yet,” BoE Deputy Gov Sees Growing Appetite for Crypto Among Both Retail and Institutions

While “Not an Issue Yet,” BoE Deputy Governor Sees Growing “Appetite” for Crypto Among Both Retail and Institutions

While not wanting to stop firms from doing things that make commercial sense, Sam Woods calls for a “very conservative view” on capital measures.

The Bank of England Deputy Governor doesn’t want the banks to have big exposure to crypto-assets not backed by sufficient capital, and for that, if they would have to front-run global rules, he would.

Sam Woods said on Thursday that Britain’s banks at the point “don’t have material exposures to crypto” but added that there is certainly “an investor appetite and not just retail, also institutional investor appetite to have a little bit of this stuff.”

He further noted that some of the banks have announced their plans to provide ancillary services “that may be OK but as that develops and if it develops into something big, we are going to need to make sure the capital treatment is pretty robust,” Woods told Reuters.

The Basel Committee on Banking Supervision (BIS), which is a global banking supervisory authority, has already laid down capital requirements for banks that hold crypto assets. The committee has proposed punitive charges for not meeting them that lenders said would make their involvement in the cryptocurrency sector prohibitive.

According to Woods, Basel’s proposals were “quite sensible,” and that the regulatory community was starting to get a better grip on the cryptocurrency sector.

Still, it can take years to adopt norms that would need to be implemented by members like the European Union, the US, and Britain.

“We would not want to stop firms doing things that make commercial sense, but we would take a very conservative view on capital treatment, and if necessary, we would therefore front run, maybe not exactly in the same way, but we would put some capital measures in place,” Woods said. “It’s not an issue yet.”

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Author: AnTy

US Treasury Dept And Federal Reserve Are ‘Studying’ Possible Launch Of A Digital Dollar

Speaking during the online Atlantic Council webinar, the U.S Deputy Treasury Secretary, Justin Muzinich, said his department, alongside the Federal Reserve, is looking at launching a central bank digital currency (CBDC) tied to the dollar in the future.

This announcement follows a trail of the Federal Reserve’s previous efforts to launch digital dollar wallets liable to the central bank. Federal Reserve Bank of Cleveland President Loretta Mester, revealed last month that legislation is being set up so each American would own a digital dollar account with the Feds.

Notwithstanding, the Boston Federal Reserve announced in August that they are testing over 30 blockchain projects to prepare a digital dollar. However, the research and development process for a CBDC is set to take years to complete – having begun in 2015 – the Boston Fed said.

Muzinich stated the learning curve in launching a digital dollar on a distributed ledger would produce “efficiency benefits and cost benefits.” He further targeted the slow U.S. efforts in introducing its own dollar:

“And I also think, more broadly, it’s important for the government to embrace innovation and not be scared by it.”

However, there are still a few factors to consider in launching a CBDC, including regulation of the CBDC to prevent money laundering activities while maintaining users’ digital privacy.

On regulation of a digital dollar, Muzinich states governments worldwide – especially Europe – should work to regulate cryptocurrencies globally. This arises from the different functions of cryptocurrencies, away from payments.

Questions of money laundering have taken center-stage in the adoption of cryptocurrencies. Still, other issues such as financial stability and monetary base of the cryptocurrency should also be put in check. To keep the consumers and users of the digital dollar safe and secure, Muzinich stated the existing laws governing fiat currencies should be extended to crypto.

“Treasury has made it clear that the obligation to comply with U.S. laws is the same, regardless of whether a transaction is denominated in traditional fiat currency or digital currency.”

“Existing laws apply to digital assets in no uncertain terms.”

He explains that even if cryptocurrencies comply with the KYC/AML/CFT rules, there’s still a danger of foreign parties disrupting the monetary base creating financial instability. This could arise if a stablecoin issuer shifts its reserve ratio from fully backed to partially backed, or changing the composition of assets in reserve.

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Author: Lujan Odera

South Korea’s Financial Authorities to Include Cryptocurrencies in New Taxation Framework

  • South Korea’s Deputy Prime minister, who also doubles as Minister in charge of the Finance docket, has revealed their intention of placing cryptocurrencies under the list of taxable items.
  • This was revealed after the jurisdiction’s legislature passed amendments to facilitate crypto trading legally.

A local publication reported that South Korea’s Ministry of Strategy and Finance aims to introduce taxes for digital assets, with the rate expected to reach 20 percent. The announcement was made during the Financial Parliamentary committee meeting chaired by Minister Hong Nam-Ki on 17th July.

According to Hong Nam-Ki, the tax system aims to adapt to current market trends, including virtual assets. The government will work on a policy that will list the items liable to be taxed and what kind of taxation these items would incur. The taxation policy will be discussed through the next quarter, with the final report expected to be submitted to the legislature in September this year.

Legality and Regulation of Crypto Activities in South Korea

Earlier in March, the South Korean legislature passed two amendments that facilitated the legal entry of crypto traders in the jurisdiction after almost two years of deliberations. This would, however, be compliant with South Korea’s legal requirements, with a voracious appetite for crypto assets being recorded in the jurisdiction.

This put the crypto activities in the scope of taxable items as the Finance Minister, who also doubles as Deputy Prime Minister highlighted that they were looking to impose taxes where there is income. They intend to zero in on the crypto mining activities and Initial Coin offerings (ICOs).

In January, the Finance Ministry brought forth a proposition to impose a 20% tax on crypto revenues. This sparked speculation that the Finance Ministry was looking to re-categorize revenues generated from crypto as other income to fit specific taxation brackets the same as lottery winnings. This would be beneficial for crypto traders, as the alternative of classifying crypto-assets as capital gains would attract steeper tax rates of over 42%.

He also mentioned that they had engaged in global discussions over a new digital tax framework. He added that such laws are beneficial for S.Korea’s economy as it would increase revenue through taxing foreign crypto firms used by local residents, adding that local crypto firms would also be susceptible to taxation from foreign jurisdictions. This was after they were involved in a tussle with Bithumb after the latter challenged the $69 million tax imposed by National Tax Service (NTS).

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Author: Lujan Odera

CBDC’s Provide Greater Monetary Control But Face Risk of Becoming too Dominant: BoE Deputy Gov

The Bank of England’s Deputy Governor of Financial Stability discussed Central Bank Digital Currencies (CBDC), stablecoins and cryptocurrencies. Delivering the speech was Sir Jon Cunliffe at the London School of Economics.

According to a report by Crowdfund Insider, the topic discussed was: ‘It’s Time to Talk About Money,’ with the Deputy Governor beginning by announcing that a “new wave of technological development” which uses distributed ledger technologies is underway.

The Bank of England will need to consider how to move forward in their management of innovations like stablecoins, said the Deputy Governor.

Too Much of the Traditional: Current Regulations Favour the Old

While questions raised included just how the bank should address fiat-backed cryptos, how to regulate them, and the boundaries of the public-private sector, what remains important is that they’re not exclusively UK-based problems. Cunliffe said there is “considerable opportunity to improve the domestic retail payment systems.”

“Innovation and competition can lead to better, cheaper, payments services in the economy. But, the payment systems on which we depend have to be reliable and robust, prudentially and operationally. Regulation, therefore needs to keep pace with the changes in the payments landscape and the proliferation of new actors. The same risks have to be subject to the same regulation.”

The UK regulatory body focuses on the “banks and core payment systems that have traditionally performed the most functions.”

But innovation and competition introduce more actors to this chain of action and “the current regulatory framework does not capture the full ‘end to end’ risks.“

Stablecoins for underbanked but pose considerable risks

Stablecoins, according to him, may help in the reducing friction and expenses within current payment methods, while also providing improved services for the underbanked. Cunliffe said that

“These proposals have, to be fair, shone a light on some of the failures and costs of the current domestic systems … which is particularly true for cross border payments.”

Retail cross-border payment systems are still relatively undependable, slow, and overly expensive. This leaves many potential customers with no way to use them.

Cunliffe highlighted Facebook’s Libra proposal as one such high profile solution which claims such benefits. At the same time, however, because of the enormity of Facebook’s reach, it may become extremely important.

“We are considering these risks internationally within the Financial Stability Board, which will report this year on developing regulatory recommendations with respect to stablecoins.”

Stablecoins also raise broader regulatory questions such as data protection, competition, anti-money laundering, and the funding of potential counter-terrorist groups, the official stated,

“Stablecoin proposals raise broader regulatory issues, e.g. for competition, data protection, anti-money laundering and counter terrorist financing.”

CBDC – “Risk-free form of money”?

CBDCs, meanwhile, could provide a “risk-free form of money,” according to the Cunliffe. Offering greater financial authority from the Bank and further assisting that the payments system remains competitive for individuals and businesses. While this is positive, the risks are also profound.

“For all the opportunities, there are also some significant potential implications (…) such as the implications for the supply of credit to the economy if the role of banks changes, liquidity dynamics both in normal times and in stress, and the risk that a CBDC is too successful and becomes dominant and a single point of failure in itself.”

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Author: AnTy

BoJ Deputy Governor: No Need To Launch CBDC Prematurely, Understand Risks And Benefits

According to Bank of Japan’s (BoJ) Deputy Governor Masayoshi Amamiya, central banks should have a better understanding of what digital currencies can bring.

He also said central bank digital currencies (CBDC) can facilitate the way in which private money is flowing and settlements are being streamlined, all while encouraging innovation in the private financial and banking sectors.

“When countries consider issuing central bank digital currencies, they must conduct a comprehensive study on how it affects their settlement and financial systems.”

More Advanced Economies Don’t Have a CBDC Urgency

Amamiya also commented that Japan, since it is not an emerging economy, doesn’t feel the need to quickly jump into launching a CBDC. Emerging economies have more a more dire need to get a digital currency backed by the central bank to its citizens to control money laundering.

He did explain that, at the moment, the BoJ is going to have a research team for CBDCs. This team will collaborate with researchers from other countries. He made back in January the allusion that the bank is already working on research with central banks from the UK, the EU, Switzerland, Canada, and Sweden.

Ruling Party in Japan Enthusiastic About Digital Currencies

BoJ Deputy Governor Amamiya isn’t the only Japanese official to take a proactive stance when it comes to his country issuing a digital currency. Other officials, including the Liberal Democratic Party’S (LDP) head of banking and finance systems research commission, Kozo Yamamoto, said Japan should have the digital yen in the next 2 or 3 years. Here are his exact words on the matter:

“The sooner the better. We’ll draft proposals to be included in government’s policy guidelines, and hopefully make it happen in two-to-three years.”

Many other members of the LDP have expressed their openness to the BoJ issuing a digital currency, especially, when China announced it was going to launch a digital yuan this year.

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Author: Oana Ularu

Japan ‘Must Be Prepared’ To Launch A CBDC If Public Demand Increases: BoJ Official

According to a Bank of Japan’s (BoJ) deputy governor, the country needs to keep on doing research on what issuing a central bank digital currency (CBDC) would mean, even if a launch is not yet in the cards.

As reported by Reuters on January 30, Masayoshi Amamiya said at a seminar held in Tokyo that if the payments technology continues to advance so fast, the demand for a CBDC may increase, so the bank needs to know everything about the groundwork of owning a digital currency. Here are Amamiya’s exact words:

“The speed of technical innovation is very fast. Depending on how things unfold in the world of settlement systems, public demand for CBDCs could soar in Japan.”

BoJ Is Not Yet Planning to Issue a CBDC

The governor continued his speech by saying BoJ doesn’t have any plans to issue a CBDC just yet, as potential problems still need to be researched, the monetary ramifications and security for the digital yen being mentioned among such problems. Even so, BoJ must be prepared, he added. Amamiya’s comments arrived a few days after members of the ruling Liberal Democratic Party in Japan said they would make the proposition for the BoJ to issue a digital currency.

70 Japanese Lawmakers in Liberal Democratic Party Say the Digital Yen Is a Must

There are about 70 lawmakers in the Liberal Democratic Party who think that issuing a digital yen is a must, especially when it comes to competing with Facebook’s Libra and China’s own CBDC, which are both scheduled to launch this year.

In the past, Amamiya has addressed the idea that central banks, by issuing their own digital currencies, would bring more effectiveness to the negative interest rate policies. He said in July that if the digital yen is issued by BoJ and the interest rate set is to be negative, businesses and individuals would be charged if they’d hold the CBDC, which would lead to them to drop the digital currency and to hold cash instead, moment in which banks would have to make an effort to get rid of cash.

As for the time being, Amamiya thinks that BoJ issuing a CBDC would not influence the bank’s control over asset prices, bank lending, and interest rates, yet the monetary policy may turn out to be very complex as a result of “the transmission mechanism” changing.

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Author: Oana Ularu

BoE Deputy Governor: Central Bank Digital Currencies Are “Worth Looking At”

According to Bank of England deputy governor Dave Ramsden, developing a synthetic central bank digital currency is “worth looking at.”

Ramsden who oversees payments and fintech said currently, the UK central bank is “very focused” on what needs to be done to provide infrastructure to encourage private innovation.

Now, creating a digital currency with other central banks is “worth looking at because there is a big issue with the cost and efficiency of payments” across borders.

This idea was also raised by BoE governor Mark Carney, who back in August during a speech in Jackson Hole, Wyoming talked about replacing the dollar as a reserve currency with a stablecoin like Facebook’s Libra.

On Tuesday in London, the BOE chief said currency offerings to business and consumers are “not good enough in this day and age.”

“We should always be challenging ourselves on whether we do more, because the consumer demand, both in advanced economies and in developing economies, is for greater efficiency,” Ramsden told Bloomberg. “There’s a big prize here.”

This week, European Central bank member Benoit Coeure said the regulators have to be prepared for revolution in digital currency space and central banks must adapt. Earlier this month he said Libra was a “wake-up call” for central banks while Germany’s Finance Minister, Olaf Scholz, said:

“We encourage European central banks to accelerate work on issues around possible public digital currency solutions.”

Meanwhile, some of the G20 central banks are experimenting with central bank digital currency (CBDCs). China is one of the prime examples that are “almost ready” with its sovereign digital currency.

The US is not considering issuing a CBDC right now but “following very carefully.” Japan and South Korea are other countries without a plan to issue a central bank digital currency. Russia has repeatedly indicated its plans to issue a CBDC, but not in the immediate future. India, on the other hand, is working on a draft bill for the same.

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Author: AnTy

Banque De France Governor: Crypto Assets Need a ‘Same’ Global Regulatory Framework

Denis Beau, the deputy governor of the French central bank, also known as Banque de France, has called out for a more global approach to regulation for crypto assets. According to him, there is a need for more consistency in deciding how to regulate the crypto world.

Because of this, the only way to properly ensure that the standardization is happening is to really reunite and set up the guidelines.

His comments come at a time in which Facebook’s Libra project has raised several doubts in the world about how to deal with a project such as this one. Beau cited Facebook’s currency and also talked about central bank digital currencies (CBDCs), which haven’t been launched yet, but will certainly be soon.

Beau affirmed that he hoped that more banks would experiment with their own digital assets, as he was very bullish on the technology, especially in the long term. According to him, the financial system is still relying on several slow and cumbersome mechanisms to transfer money, so the blockchain would certainly be very important when it comes to upgrading this.

The banker affirmed that the tokens that were released so far, including Bitcoin, were simply unable to fill up the position of becoming a faster way to send money. Most cryptos, in his opinion, are extremely volatile, so they are not very attractive to everyday use or to become a real way to store value.

He also believes that these assets, if left to be the solution, can also bring many risks to financial stability, such as fragmentation and increased risks of fraud. Because of this, bankers should consider creating their own solutions.

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Author: Silvia A