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Facebook’s Libra Confession, US Urged to Lead Way on Crypto

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Facebook warns investors that the Libra stablecoin may never launch

The Libra storyline is fast becoming a never-ending soap opera — and we might be reaching the season finale. Facebook used its latest quarterly report to warn investors that its controversial cryptocurrency may never launch at all. The admission at least shows that the social network is taking the concerns of regulators and policymakers to heart. Although the company still expects Libra to be released in 2020 (for now), it looks like Facebook is laying the groundwork for a U-turn, if need be. Who knows what next week’s installment will have in store…

Some senators call on U.S. to lead in blockchain and crypto, others doubt

When David Marcus, head of Facebook’s Calibra wallet, appeared in front of Congress last month, he had one warning for U.S. lawmakers: Lead the way on digital currencies, or another nation will. With those words ringing in their ears, some politicians seem to have taken notice. At a hearing of the U.S. Committee on Banking, Housing and Urban Affairs, Sen. Michael Crapo of Idaho broke rank with some of his colleagues. He said he wanted the U.S. to be at the forefront of cryptocurrencies and blockchain, adding the technology “both has incredible potential and incredible risk.” A fellow senator concurred — fearful China might end up getting an upper hand in this fast-moving industry.

One in five European crypto holders are women, new report reveals

The crypto market is often dismissed as a youth-skewed, male-dominated space — but a new report reveals perceptions about the scale of the gender imbalance may be misguided. Previous research has indicated that more than 90% of European crypto investors are male, but this latest study suggests 22% of holders are female. What’s more, they are likelier to be in the top 10% of earners than their male counterparts. Other nuggets of information reveal that Switzerland has the highest rate of crypto ownership in Europe — and even though the United Kingdom languishes in 11th place when it comes to its share of European crypto holders, London has the highest concentration of enthusiasts anywhere on the continent.

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Australian draft bill excludes digital currency from new cash payment limit

Is Down Under down with cryptocurrencies? Potentially, based on a new explanatory memorandum issued by Australia’s government. Although the country plans to ban cash payments for goods and services worth more than 10,000 AUD ($6,900), politicians hope to exclude cryptocurrencies from this rule. Lawmakers say they want to avoid stifling innovation in the burgeoning sector — adding that its research suggests “there is little current evidence” that crypto is being used to facilitate black market activities.

 U.K. financial regulator, the FCA, won’t regulate Bitcoin and Ether

As one country tries to provide clarity on cryptocurrencies, another is making matters murkier. The Financial Conduct Authority, Britain’s regulator, announced this week that it will not oversee Bitcoin and Ether because they are outside of its remit. To further add to the sense of confusion, the FCA says it can monitor security tokens and utility tokens — potentially resulting in a fractured landscape for regulation.

Winners and Losers

At the end of the week, Bitcoin is looking up at around $10,701, Ether at $219 and XRP at $0.32. Total market cap is around $287 billion.

The top three altcoin gainers of the week are TRONCLASSIC, Ubricoin and Formosa Financial. The top three altcoin losers of the week are Infinitus Token, EscrowCoin and BQT.

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For more info on crypto prices, make sure to read Cointelegraph’s market analysis. 

Most Memorable Quotations

“We love you, Bitcoin.”

Jack Dorsey, founder of Twitter and Square

“We are very, very pro-Bitcoin. There is more than enough work for us to do there. That said, we are open to emerging use cases and technologies that complement Bitcoin.”

Steve Lee, Square Crypto project manager

“I want the U.S. to stay at the forefront of this technology, which both has incredible potential and incredible risk.”

Michael Crapo, U.S. Senator

“There is a lot driving the ever volatile pricing of Bitcoin, but I think its value as a leading indicator into behind the scenes geopolitical tensions shouldn’t be ignored.”

Peter Tchir, ex-executive director at Deutsche Bank

“The increase in proliferation of digital asset projects outside the U.S., the movement of companies to leave the U.S. and projects to get started outside the U.S. is definitely getting people’s attention.”

Jeremy Allaire, Circle CEO

“NEW ALL-TIME HIGH! On July 13th, Bitcoin Suisse conducted the highest bitcoin trade ever recorded on the summit of Breithorn, Switzerland, 4164m above sea level.”

Bitcoin Suisse, crypto services provider

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“There is little current evidence that digital currency is presently being used in Australia to facilitate black economy activities. Given this, the Government has decided at the present time to effectively carve digital currency out from the cash payment limit.” 

Australian Government

“The recent proposal of the inter-ministerial committee of the [Indian] government to ban all cryptocurrencies barring those that are backed by the government, is not the most constructive measure.”

Nasscom, major Indian trade organization

“For years, Richard Castro used the dark web to distribute prolific quantities of powerful opioids. […] Castro thought he could hide behind the anonymity of the internet.  […] Thanks to our law enforcement partners, ‘Chems_usa’ is now in U.S. prison.” 

Geoffrey S. Berman, Manhattan U.S. attorney

Prediction of the Week

CNBC host goes full Bitcoin maximalist with $55K forecast after halving

Joe Kernen used to be a Bitcoin bear. Not anymore, it seems. The Squawk Box host stunned his guest by predicting the dominant cryptocurrency could hit $55,000 by May 2020 — a price surge of 500% in less than a year’s time. Indicating that he’s undergone a full conversion to BTC maximalism, Kernen predicted that the upcoming halving of mining rewards will increase scarcity and result in greater demand. Kernen recently became an unlikely hero of crypto enthusiasts after he said Libra didn’t excite him at all. Appearing alongside Anthony Pompliano this week, he also warned the “first country to buy Bitcoin will force others to play catch up.”

FUD of the Week

IRS Brazil requires reporting all Bitcoin transactions starting now

Thursday saw Brazil introduce new measures that mean citizens must share information about their crypto transactions with the state’s Internal Revenue Service. The new measure applies to individuals, companies and brokerages — irrespective of whether the activity involves buying and selling coins, making deposits and withdrawals, or donating to a good cause. In a move that’s going to result in an immense amount of paperwork for Brazilian hodlers, updates will need to be shared with the taxman every single month — with eye-watering punishments if they fail to comply. In addition to penalties of between $25 and $130, up to 3% of the value of nonreported transactions can be charged as a fine.

 ‘Chems_USA’ pleads guilty to Bitcoin-enabled dark web opioid conspiracy

A man from Florida has pleaded guilty to having a role in a multimillion-dollar drug dealing conspiracy that was enabled by Bitcoin. Richard Castro admitted money laundering and distributing three controlled opioid substances over the dark web. He operated under several usernames — including “Chems_usa,” “Chemical_usa” and “Jagger109” — and will forfeit assets worth more than $4.1 million as a part of the ruling. Prosecutors in the U.S. have called Castro naïve for thinking “he could hide behind the anonymity of the internet,” and he’ll be sentenced in October.

 

Singapore’s regulator warns of new scam Bitcoin investment scheme

Forged statements by a former Singaporean prime minister are being used to dupe unsuspecting consumers into a Bitcoin scam online, regulators have claimed. The Monetary Authority of Singapore says articles are circulating that claim ex-leader Goh Chok Tong has a method to help citizens become rich in seven days — but warns the statements were “either false or were taken out of context and used in a misleading way.” Victims were urged to deposit $250 into a trading platform that claims to execute automated traders on a user’s behalf.

Best Cointelegraph Features

Sex and crypto: A Cointelegraph documentary

Crypto’s censorship-resistant, pseudo-anonymous nature has led it to becoming a popular payment method in the adult entertainment industry. In this documentary, Cointelegraph looks at how crypto startups are revolutionizing the way pornographic content is purchased — and asks whether it could disrupt the industry.

Is Bitcoin a store of value? Experts on BTC as digital gold

Bitcoin has now been around for 10 years, but the debate about whether the cryptocurrency can be considered “digital gold” rages on. We’ve asked a range of crypto and blockchain experts for their take.

Could Facebook Libra become the largest DApps network to date?

Back in 2014, a group of foundational experts led by David Johnston presented the Decentralized Applications (DApps) framework. This in-depth article examines whether Libra’s ecosystem could end up becoming the largest DApps network to date (if it launches), and whether Facebook should be regarded as a villain.

Crypto market trading — inside look from those earning a living off it

As Bitcoin enjoyed exponential growth, especially toward the end of 2017, the crypto trading sector has flourished too. This Cointelegraph article profiles some of the analysts who are making a killing trading BTC by using a vast array of investment techniques.





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Crypto Custodian BitGo Expands Japanese Presence, Builds Team

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Digital asset trust and security company BitGo is reportedly expanding into the Japanese market, The Block reported on Aug. 9.

A source familiar with the matter told The Block that BitGo is expanding its presence in Japan. According to the report, BitGo is planning to grow its Japan-based team, including hiring a sales director for the company’s sales team in Tokyo.

Per a dedicated job post published by BitGo last week, the sales director will specifically be responsible for the company’s “digital wallet and offline vault solutions across your agreed territory.”

In May, BitGo appointed a veteran Wall Street trader Nick Carmi as its head of financial services. The hire was ostensibly spurred by an intent to forge a stronger connection between technologically innovative digital assets and the traditional financial sphere.

In late July, BitGo and decentralized identity startup Civic announced plans to launch a new wallet using BitGo’s multisig technology in Q4 2019.

Using BitGo’s multisig security technology, the wallet will require users to undergo identity authentication using a blockchain system for secure verification. The underlying data is not shared between multiple parties and aims to grant users more control over their personal information.

As reported in June, about 30 Japan-based crypto-related businesses and 50 individuals had not declared their revenues from cryptocurrency trading as of March, allegedly due to a high tax on this type of income.





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Weapon in US Trade War or Attempt to Manipulate Bitcoin?

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After a short stay in the red zone, Bitcoin (BTC) has recovered toward $12,000, with traders turning bullish as ever. Experts call the United States-China trade war a key reason for the main cryptocurrency’s price fluctuations. Fuel to the fire has been added by the recent announcement by the People’s Bank of China (PBoC) of plans to get ahead of the U.S. and Facebook’s Libra by issuing a national cryptocurrency.

Chinese government is set to digitize yuan, challenge U.S. and Libra

As Cointelegraph reported, the PBoC plans to focus on developing its own legal digital currency. On Aug. 2, during a video conference devoted to discussing financial tasks for the second half of 2019, heads of financial and economic institutes in China touched upon the topic of cryptocurrencies. The country’s central bank announced its intention to accelerate the development of its own digital currency and also confirmed its plans to allocate more resources to the implementation of this task.

It is notable that the decision of the Chinese bank to intensify the creation of a national cryptocurrency was preceded by the hotly debated development of the Libra coin. Initiated by Facebook in 2019, the project is now actively being lobbied for in the U.S. government, but without any results so far. 

Related: US Congress on Libra Overview: Trust, Privacy and Genocide Accusations

In July, Wang Xin, director of the PBoC Research Bureau, said that, with the development of the Libra cryptocurrency project, the People’s Bank of China should accelerate the growth of its own digital currency, which it has been working on over the past few years. Wang believes that the risks Libra bears for the traditional financial system will force regulators to devote many more resources and forces to develop its digital currency. Wang asked:

“If [Libra] is widely used for payments — cross-border payments in particular — would it be able to function like money and accordingly have a large influence on monetary policy, financial stability, and the international monetary system?”

In particular, China is concerned about which currencies Libra will be tied to and what role the U.S. dollar will play in this project. Wang said:

“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. But there would be in essence one boss, that is the US dollar and the United States. If so, it would bring a series of economic, financial and even international political consequences.”

Former PBoC Chairman Zhou Xiaochuan also believes that the concept of a global digital currency introduced by Facebook that can be exchanged into fiat money threatens existing cross-border payment systems and could weaken the position of national currencies, which he spoke about at a conference in Beijing, as reported by the South China Morning Post.

According to Zhou, Chinese authorities need to strengthen the national currency and consider the Hong Kong model to create a digital renminbi, which involves issuing money through commercial enterprises under the supervision of the central bank. Some analysts have already expressed the belief that technology giants Alibaba and Tencent may be assigned such a task. Large corporations in the country appear to be supportive of the ideas coming from government ​​members, as Huawei CEO Ren Zhengfei commented:

“China can just issue our own version of Libra. Why should we wait for others to do it? The power of a country is always stronger than that of an Internet company.”

Stablecoin to support the local economy

A future national cryptocurrency may be issued in the form of a stablecoin tied to the yuan (also called the renminbi). Researchers at the PBoC published a review of recent initiatives in this area back in October last year. Most of the coins discussed in the material are pegged to the U.S. dollar, such as Gemini Dollar (GUSD) and Paxos Standard (PAX). The researchers are convinced that the development of cryptocurrencies tied to USD strengthens the role of the dollar in the global monetary system, while also having a negative impact on other fiat currencies. According to the researchers:

“If the stablecoins tied to the U.S. dollar end up being widely recognized by the market and prove their applicability in the real economy, we will have to redouble our research efforts in this direction, as well as in studying the relevant experience. This is necessary to support local institutions and issue stablecoins tied to the renminbi.” 

At the same time, the authors note that stablecoins still have a long way to go before the financial system begins to feel any significant influence from new assets. Star Xu, the founder of cryptocurrency exchange OKCoin, expressed a similar point of view in his post on Weibo, writing: “The dollar-pegged #stablecoin regulated by the US government will strengthen the penetration of the US dollar 100 fold.”

Bitcoin is growing due to the yuan’s rate falling

Analysts have drawn parallels between the declining rate of the yuan and Bitcoin’s growth. The price of the preeminent digital currency rose sharply the very moment when the Chinese currency fell by 7% to an 11-year low. On Aug. 5, Bitcoin’s price surged to $11,786, with the daily increase amounting to an 11% gain.

Evolution of PBoC's relations with cryptocurrencies

U.S. President Donald Trump alleged on Twitter that the Chinese government is manipulating the price of the renminbi:

“China dropped the price of their currency to an almost a historic low. It’s called ‘currency manipulation.’ Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!”

As financial analysts suggest, the renminbi declined due to investors’ concerns about a new round of escalation in the trade war between China and the U.S. This happened a few days after Trump introduced additional tariffs on goods imported from China. Now that U.S. products could become more expensive for Chinese consumers, a lower exchange rate might adversely affect U.S. exporters. The prices of U.S. stock futures have already declined, while the cryptocurrency market has demonstrated the opposite tendency.

Some analysts have postulated that the reason for this dynamic could be because Chinese investors use Bitcoin as a means of saving money. Simon Peters, an analyst at trading platform eToro, suggested that Chinese investors could want to diversify as the yuan fell. According to Peters:

“Given that Chinese investors make up a large proportion of crypto investors, there’s a strong possibility some are backing bitcoin’s chances against the yuan.”

However, Peter Schiff, an economist and CEO of brokerage company Euro Pacific Capital, rejected this explanation, claiming it was more about speculation rather than about real need:

“CNBC is trying its best to dupe its audience into buying Bitcoin. Despite gold being a much larger market, CNBC devotes far more airtime to Bitcoin. The Chinese aren’t buying Bitcoin as a safe haven. Speculators are buying, betting that the Chinese will buy it as a safe haven!”

The internet says…

An ambiguous statement made by the PBoC regarding the creation of a national cryptocurrency has sparked intense discussion around the world. Several points of view, primarily negative, have appeared on the internet in response. Some users suggested that both the U.S. and China need cryptocurrency to strengthen control over their citizens. Crypto enthusiast Richard Heart opined:

“Nations want more control over their cirizens. Nothing new…or good.”

And some even suggested that the confrontation between China and the U.S. in the cryptocurrency field could lead to a world war.

Place your bets

How soon Chinese residents will be able to see — and most importantly use — the local digital cryptocurrency is still unknown, as it may take years to implement such an idea. The full process may require the development of a regulatory framework, instruments of taxation and regulation, as well as creating special entities and hiring specialists who will work with cryptocurrency.

Previously, attempts to create a national cryptocurrency have already been undertaken by countries such as Iran, Turkey, Saudi Arabia, Russia, Estonia and Venezuela. The South American country allegedly raised $1 billion during the presale of the supposedly oil-backed cryptocurrency Petro, and Venezuelan banks began to display the citizens’ account balance in the new currency. This year, Venezuela intends to make Petro OPEC’s main digital currency, according to Oil Minister Manuel Quevedo.

Related: Venezuelan Petro Against US Sanctions: History and Use of the Crypto

In regard to China, such an initiative has been discussed since January of 2016, when representatives of the PBoC announced the plans outlining their desire to create the country’s own digital currency as soon as possible. At the same time, the Chinese central bank also clearly articulated the advantages of cryptocurrencies over traditional money:

“Digital currencies are much cheaper in circulation than traditional fiat money, promote trade, increase transaction transparency and reduce the risks of money laundering and tax evasion. The use of digital currency will help build a new financial infrastructure, strengthen the payment system in China, increase the efficiency of mutual settlements and accelerate the modernization of the economy.”

Notably, the PBoC has been following the development of the digital currency market for a long time, with an appropriate research group created back in 2014. And since 2015, the Chinese government has been actively studying the regulatory experience of other countries in order to prepare an appropriate regulatory framework.

Correlation between yuan’s fall and Bitcoin’s surge

It is noteworthy that in a report published on the PBoC’s official website, the word “Bitcoin” is not mentioned even once, although China is one of the top players in the crypto industry. The principles and technologies on the basis of which it is planned to create a state digital currency are also not explained. 

At the same time, blockchain technology is mentioned only once as one of the iconic phenomena in the information technology development. However, the general context of the statements suggests that the future digital currency will have much in common with Bitcoin — at least, from a technical point of view. 

Wang noted that the PBoC was one of the first central banks to start exploring the possibility of creating its own digital currency, but research experience alone is not enough. Wang said, “We had an early start […] but lots of work is needed to consolidate our lead.” He also confirmed that the central bank has already received approval from Chinese authorities to create its own digital currency, though it is not yet known at which stage its development is currently at. Huang Yiping, a Beijing University professor and the chairman of the research initiative, said that China is ahead of the U.S. in promoting digital finance. He continued:

“It remains unclear if Libra will succeed […] but the concept won’t disappear. But it has sent a warning to China that its lead [in digital finance] is not a sure thing.”

However, in an interview with Cointelegraph, one of the senior PBoC representatives — who wished to remain anonymous — said that the implementation of such a fundamental project may not do without risks, continuing:

“Digital currency is a sphere very important to look at in the future. The turbulence caused by the Chinese-American trade war and the negative implications of it will last for a long time. Under these circumstances, we will have to monitor the development of digital assets since it brings both risks and opportunities. I believe that China will create its digital currency one day.”





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Disgruntled Bitcoin Investor Brings $22.5M Class Action Suit to Israeli Bank

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An unnamed investor has filed a lawsuit against the Israeli Bank Hapoalim in the amount of approximately $22.5 million, on account of the bank allegedly refusing to accept deposits of profits earned via Bitcoin (BTC). 

Industry media outlet BlockTV discussed the lawsuit in a report on Aug. 9. According to the report, the complaint is being filed as a class action suit, and the investor ultimately plans to sue other Israeli banks on the same grounds. 

According to the report, Israeli banks are largely anti-crypto because they wish to avoid being scrutinized in connection with crypto-related firms and individuals. However, the disgruntled investor’s lawyer, Lior Lahav, has said that this is not sufficient grounds for banks to refuse services to cryptocurrency investors. Lahav stated:

“The banks have an obligation under the law to accept money from the clients […] They can check on their clients, do their due diligence, and find out where the money is coming from. The problem with the banks is that they are doing nothing. They are not asking their clients: ‘Provide me documentation of the origin of the money.’”

Lahav further illustrated the scale of the issue, arguing that there are tens of thousands of Israeli investors who are similarly being punished for no apparent wrongdoing:

“There are more than 70,000 bitcoin investors in Israel who are facing the same problem from their banks […] 99 percent of them are ordinary people that invested in a thing that’s completely legal.”

Ross Gross

Lahav pointedly noted that his client is not Ross Gross. Gross is a Bitcoin investor who claimed that the bank Hapoalim refused to accept his deposit, purportedly because it came from crypto trading profits.

As previously reported by Cointelegraph, Gross began investing in Bitcoin back in 2011, and has reported his earnings to the Israeli tax authority. However, as of 2017, Bank Hapoalim stopped accepting his deposits of funds earned from Bitcoin trading. 

As a result, Gross has not been able to pay his capital gains taxes and the tax authority has put a lien on his bank account, home and scooters. Gross said, “the tax authority is aware of the problem, but they say the ball isn’t in their court.”





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