Former RBI Regulatory Chief Advocates for Crypto Regulations in India

India’s relationship with cryptocurrencies has continued to be murky at best. The situation is made markedly worse by regulators, who have made a habit of being coy on the subject.

However, one former policymaker has called on the Reserve Bank of India to adopt crypto and go deeper into the digital currency age.

Building the Right Environment for Assets to Thrive

Earlier this week, Rama Subramaniam Gandhi, a former governor at the Reserve Bank, spoke at the inaugural Hodl 2021 virtual conference. Gandhi had tried to push the agency into adopting cryptocurrencies and creating an enabling environment for the assets to thrive in India to no avail.

The inaugural Hodl event, which was organized by the Blockchain and Crypto Assets Council of the Internet and Mobile Association of India, included several notable people across India’s crypto industry. They had reps from companies like top exchanges WazirX and CoinDCX, trading service ZebPay, and blockchain developer Polygon. While many of them gave opinions about the potential for blockchain and crypto to improve lives across India, Gandhi’s speech focused more on the regulatory angle.

Gandhi had led the Reserve Bank from 2014 to 2017. As the former policymaker pointed out, cryptocurrencies should be treated in the country as a commodity or an asset – and appropriately taxed. He added that a stable regulatory framework would make it easier for Indians to invest in and hold cryptocurrencies.

“Cryptocurrencies should be paid for through normal payment channels. If they are not, it should be deemed mined, and capital gains tax must be levied. That is like voluntary disclosure.”

Murky Crypto Stance Won’t Affect CBDC Development

India’s stance on crypto has continued to be highly controversial. The Reserve Bank banned commercial banks from transacting with crypto companies in 2018, but the decision was overturned last year following a landmark ruling from the Supreme Court.

But, regulators still weren’t done. Legislation tagged the “ Cryptocurrency and Regulation of Official Digital Currency Bill 2021” was introduced earlier this year to ban crypto, although it hasn’t been signed into law. The Economic Times reported in May that the government might consider overturning the ban to regulate digital asset trading instead. But, not much action has been made in either direction.

Despite the murky stance on crypto, India’s government remains resolute in its mission to build a central bank digital currency (CBDC). Speaking to CNBC recently, Reserve Bank governor Shaktikanta Das explained that CBDC trials could commence before the end of the year.

Das pointed out that the Reserve Bank is very careful in handling a possible digital rupee, even as several other countries worldwide progress with currency digitisation. He explained that the regulatory watchdog is more concerned with examining the CBDC’s impact on the financial sector, especially with affected monetary policy.

On the technical front, the Reserve Bank is also looking into the merits of using blockchain for the proposed CBDC. With all of this, Das expressed confidence in the Reserve Bak’s ability to get a framework ready to start tests by December.

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Author: Jimmy Aki

Crypto Custodian, Prime Trust Ends One Year Relationship with Crypto Lender, Celsius

Crypto Custodian, Prime Trust Ends One Year Relationship with Crypto Lender, Celsius

  • Crypto custodian Prime Trust is set to stop providing services to crypto-earning app Celsius in the coming month.
  • A source familiar with the matter stated the hypothecation of users’ assets as the core issue.
  • Celsius also halted its services to UK residents recently.

Prime Trust, a crypto custodian, is ending its one-year relationship with the crypto lending firm Celsius in the coming 30 days. Prime Trust, however, withheld the actual reason to stop offering custodial services to Celsius in a statement released on Thursday.

According to one spokesperson, Prime Trust noticed suspicious red flags in Celsius way of doing business and will start cutting off Celsius users from its platform. Once the 30 day notice period elapses, the custodial will lock off all APIs from Celsius, denying users access to its custodial platform.

The termination letter sent out by Prime Trust claims a “variety of business factors” caused the split – ending the successful one-year relationship between the two firms. The statement further reads,

“We won’t comment beyond that other than to wish Celsius well in its endeavors.”

Sources familiar with the matter claim that Prime Trust ended the Celsius partnership due to the latter “endlessly hypothecating users’ assets,” which deems dangerous to its business structure. Hypothecation means lenders, bankers, and brokers using users’ assets posted as collateral for their own gain. Prime Trust sees this trend as a dangerous one for its business hence the cut-off.

This is not the first time Celsius is hanging on its public image. In April, the crypto lender suffered a data breach that exposed its users’ data through a third-party mailing list.

Responding to the claims, a spokesperson from Celsius vehemently denied any hypothecation by the lender. The spokesperson explained that they are leaving the partnership with Prime Trust because the services offered to New York clients are not up to standard with Celsius. The statement reads,

“Since Celsius started offering its services to NY residents, it has never re-hypothecated their crypto assets.”

“Unfortunately, the level of service provided to our NY users through our partnership with Prime Trust was not at the level Celsius users are accustomed to, and therefore we are planning to proceed with an alternative solution for our New York state users.”

Celsius is moving out of the U.K.

Celsius recently announced it would leave the United Kingdom and withdraw its temporary registration application with the Financial Conduct Authority (FCA). The crypto lender stated uncertainty in crypto regulations as the main reason for the exodus.

Celsius will focus its efforts in other countries – especially the U.S. – by “securing licenses and registrations in the country and other jurisdictions that will ensure the long-term viability of Celsius and its community,” its statement read.

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Author: Lujan Odera

University of Waterloo Prof: Ripple’s XRP is More Environment-Friendly Than PoW Based Bitcoin

The recent coronavirus pandemic has brought back attention towards maintaining a cordial relationship with our environment. In the wake of the COVID-19 outbreak, the whole world has come to a standstill as roads become empty and factories shut down.

While the pandemic for sure has created a sense of uncertainty, it has also given a pause to mother nature from constant carbon emission and pollution which in turn has resulted in clearer skies and improved conditions for our ozone layer.

While the world will not be the same once we get past these troubled times, its time for some introspection and how we take our environment for granted.

Blockchain and Cryptocurrencies are going to play a pivotal role in the financial future, and thus sustainability should be a top priority for the decentralized space as well. Ripple, one of the key players in the decentralized space, is at the forefront of this initiative where its University Blockchain Research Initiative (UBRI), in association with the University of Waterloo is looking into ways that cryptocurrency can be made more sustainable.

Professor Hasan and Research Associate Crystal Roma along with their team recently published a research paper on the cost of running an XRP Validator node.

The research found that running one for a year would cost around $63, which was a great contrast to the fact that mining a single Bitcoin cost anywhere between $531 to $26,170. Professor Hasan noted that:

“Energy consumption is a big issue for blockchain, and it’s important that we identify better alternatives that can replace Proof-of-work algorithms.”

Bitcoin and the Environmental Woes Associated With PoW Based Mining

Bitcoin is certainly the king of cryptocurrencies, be it in terms of monetary value, its market cap or market dominance.

However, being such a prominent name also bring a lot of criticism along with it and while there have been many controversies associated with the king coin including its scalability and price volatility issue, the most prominent one is the label of being not so environment-friendly primarily because of its mining consensus Proof-of-Work.

The debate around high electricity consumption for mining Bitcoin, and its respective carbon footprint, arose during the last quarter of 2018. It’s estimated that the amount of electricity consumed in the bitcoin mining process is equivalent to the energy footprint equivalent to the size of a country like Austria.

Experts have since debunked the allegations of having a massive carbon footprint, claiming a majority of the power utilized to mine Bitcoins come from clean source energy, however, there is no denying the fact that Bitcoin mining does consume a significantly high portion of electricity without any direct output of that consumption.

While in many cold countries, miners have modified their mining rigs to use it as a modified thermostat, yet the concerns loom large.

Proof-of-Work mining consensus is considered the most secure consensus at present as it requires multiple miners to input their hashpower to mine the next block, making it difficult for hackers to gain control over the network.

On the other hand, Proof-of-Stake the second-most popular mining consensus select a miner on the network based on their on-chain activity and thus instead of hundreds of miners putting in their hashpower, which in turn leads to a lot of wastage of electrical energy, only the selected one mines the block.

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Author: Rebecca Asseh

Chinese Interest in Bitcoin has been on the Rise in 2019

China’s relationship with Bitcoin is something that has been a source of much speculation in the cryptocurrency space.

From banning the trade of Bitcoin in 2017 to legalizing owning the digital currency, the stance keeps on changing. What’s not changing is the rising interest in Bitcoin.

In 2019, Chinese interest in BTC, as measured by Baidu searches, has been on the rise, notes economist and trader Alex Kruger.

A spike in Bitcoin searches occurred simultaneously with the searches for trade war and Trump.

This year we saw Bitcoin moving in response to the development in the US-China trade talks. Earlier this month, Bitcoin jumped after Trump Tweeted and Chiense Yuan broke its important physiological level of 7 against US Dollar.

“Continuation of the trade war means BTC up. The longer the war runs, the higher bitcoin will go,”

said Clem Chambers, CEO of private investors website ADVFN.com.

This has him predicting Bitcoin to soar above

“ £20,000 by Christmas or sooner.”

Most recently

Bobby Lee — co-founder and former CEO of China’s first crypto exchange BTCC — says the Chinese have always thought of Bitcoin as an investment rather than a payment system.

Bitcoin searches may seem to often move in line with USDCNY searches (贸易战, red) … however, that’s likely due to the weekend effect (interest for both decreases during weekends, even BTC). The Aug/5 USDCNY breakout may be an exception, as everyone started talking about it.

This chart shows bitcoin searches’ peaks of 2019.

It’s safe to assume interest is usually driven by price, rather than vice versa, although there should be a feedback loop in play.

For a better analysis, one needs the time series, ideally with intraday periodicity, to run stats.

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Author: AnTy

Economist: Calling Bitcoin a Macro Asset is “Mass Delusion”

  • Bitcoin reaches a record inverse relationship with China’s currency
  • But it is not yet a macro asset

In 2019, there were several instances that showed Bitcoin is becoming a hedge against the global issues.

The trade war between the US and China turned fruitful for the leading cryptocurrency and then when Chinese Yuan dropped below the important psychological level of 7 against the US dollar, we saw BTC surging yet again.

Record Bitcoin-Yuan Divergence

In the past few months, bitcoin’s correlation with gold, a traditional safe-haven asset, increased from 0.496, over the past year, doubling to 0.837.

The geopolitical and macroeconomic situation is possibly playing a part in this data like the escalating tension between the world’s two biggest economies, against which investor Tim Draper said Bitcoin can offer a

“remarkable hedge.”

Now, another data supports this argument.

Bitcoin has reached a record inverse relationship with China’s currency, in the past week, as per Bloomberg analysis of their 30-day correlation. This suggests the leading cryptocurrency may have “become a refuge for people hedging the yuan’s depreciation.”

The corroborating evidence to this is people in Asia paying more for Bitcoin than elsewhere.

“You can see it in the premium price paid sometimes for Bitcoin in exchanges like Huobi that primarily cater to Chinese,”

said Dr. Garrick Hileman, a researcher at the London School of Economics and Blockchain.com’s research director.

This inverse correlation became evident in April and May when “tensions ratcheted up with the deterioration on U.S.-China trade relations,” he added.

Bitcoin is Not a Macro Asset, Yet!

But economist and trader, Alex Kruger beg to differ.

“Bitcoin is not yet a macro asset,”

he emphasized.

The commentaries of Bitcoin being driven by gold, yuan, stocks, the US dollar or any other asset, to him “feels like mass delusion” which is not different from

“‘this is a new paradigm, not a bubble’ narrative of late 2017.”

Macro assets like stocks indices, rates, FX, copper, crude oil, precious metals, and sovereign bonds are mostly driven by geopolitical and macroeconomic factors.

Unlike non-macro assets like natural gas, grains, single stocks, and bitcoin, they react in real-time consistently to any major news, said Kruger.

Moreover, macro assets move with large market moves and that too in a predictable manner. They also have a relatively constant correlation with risk-assets.

Due to the fact, everything moves together and at the same time, Kruger said a speculator that has multiple positions in a number of these assets has to monitor correlations and portfolio risk.

This, however, is not the case with Bitcoin, which he said is a “wonderful feature.”

Meaning Bitcoin is not a macro asset yet but “it should become one as the market matures” because the flagship cryptocurrency has already been seen as a digital gold and hedge against the tail risk of fiat systems collapsing.

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Author: AnTy

China’s Love with Tether (USDT) Signals a Bullish Trend in the Cryptocurrency Market

Chinese cryptocurrency traders are building a strong trading relationship with Tether (USDT) as the stable coin remains the best traded asset in the crypto world. According to Coinmarketcap charts, the token holds 33.63% of all trading volume across the cryptocurrency exchanges. Most of this volume seems to be originating from the Asian traders as the ban of on ramp fiat channels persists.

Bullish signs? Chart showing USDT robust market cap growth (Source: Coinmarketcap)

China’s love for Tether USDT trades

Tether (USDT) has recorded its highest market capitalization figure ever during the month of August hitting the $4 billion dollar mark. USDT remains a popular option for investors in China to hold their digital asset value and buy other cryptocurrencies, as the Chinese investors sense a potential bull run in the market.

In an interview, one of the Chinese investors spoke on the effect of USDT in the cryptocurrency industry in the country.

Choosing to speak anonymously, she said,

“Tether has truly good liquidity in China. One of the primary use-cases is a fiat on- and off-ramp for crypto trading. I did also see some people using tether for legit business use-cases like cross-border trading.”

A bullish case for Tether

The increasing love for Tether in China is a result of the investors’ bullish sentiments, rather than the technological developments, regulations or infrastructure.

A trader spoke to Coindesk in an exclusive report,

“Tether is the easiest way to hold a relatively stable volume of value at an exchange that doesn’t accept dollars. It’s much more about that [USDT] network effect than any technology, infrastructure or other advantage.”

With Tether set to release a Chinese Yuan stable coin, CHNT, in the “near future”, China may be setting a trend for a bullish trend in the closing months of 2019.

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Author: Lujan Odera