Pakistan Government to Put the Searchlight on Bitcoin Traders Says Local Media

Powerful Pakistan government and media officials appear to be contradicting the domestic population’s embrace of bitcoin.   

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Pakistan Government on the Defensive, Maybe

Karachi, Pakistan’s Dawn, a widely circulated and read periodical and website in English, is rather cosmopolitan. Covering bitcoin, however, its website curation seems to have a decidedly negative slant.

Pakistan Herald Publications Limited is Dawn‘s owner, and its CEO is Hameed Haroon, noted regional journalist and member of a highly influential family in the country.

In one dispatch from Mr. Haroon’s flagship, reprinted all over the world, the headline announced, “FBR goes after bitcoin traders.”

Pakistan Government to Put the Searchlight on Bitcoin Traders Says Local Media
Faisal Khan’s only evidence Pakistan’s government is paying any attention to bitcoin.

FBR is Pakistan’s Federal Bureau of Revenue, its principal collector of tax.

“The top intelligence department,” the piece insisted, “is investigating cases where investors trade digital currencies probably to evade taxes or launder money.”

The sentence-inserted link refers to the site’s own coverage of bitcoin reaching 1000 USD early this year. Not a single reference to FBR nor an investigation.

“A senior tax official said people evade tax and launder money using cryptocurrencies,” the article asserts without a single quote or reference. “They buy bitcoin to launder their tax-evaded money […], adding that they park their black money out of Pakistan in many cases.”

Paraphrases are allowed, of course, but this drove news.Bitcoin.com to search relevant Pakistani government pronouncements on bitcoin specifically, cryptocurrencies generally.

Nothing.

The Dawn piece goes on in this manner, listing a veritable alphabet soup of agencies and investigators and laws employed to hunt bitcoin traders without citing a documented source.

Pakistan Government's and Street's Tensions with Bitcoin
Screen Shot of SBP by Faisal Khan, showing no reference to the bank’s position on bitcoin.

What Blogs and Independent Sites Know

Faisal Khan, financial technology scout for venture capitalists and payments consultant, based in Turkey, blogged his similar bafflement.

After he too read the Dawn piece, he “wanted to explore the basis under which these raids are being conducted and wanted to comment on this further.”

He searched and searched.

Mr. Khan writes, “I’ve searched […], trying to find any circular &/or notification, gazette, SRO, press release, etc. related to Bitcoin &/or Cryptocurrency – but I could not find it.”

His knowledge of Pakistan’s legal history is impressive, and he cites all the documents he examined.Pakistan Government's and Street's Tensions with Bitcoin

“For bitcoin to be considered for money-laundering,” Mr. Khan notes, “it has to be defined into an asset class whereby [bitcoin] has been declared [money] or some form of an asset as per ‘some’ legal definition in some law in Pakistan.”

He concludes, “Right now, the Government of Pakistan in no way recognizes [bitcoin] as legal tender or legal ‘anything.’ It has no legal standing under any law in Pakistan.”

Since the series of articles in Dawn, bitcoin seems to be capturing the attention of Pakistani rupee holders anyway.

Localbitcoins exchange activity in the region as of this writing has risen exponentially, matching a global pattern.

Citing Japan’s approach, long-time Pakistani commodity trader Shahan Rehman urged acceptance “by a country compels people to jump on the bandwagon, increasing its price massively.”

As of now, official government pronouncements are not available to the public.

Are Pakistan’s laws on bitcoin just not available digitally? Is the government on purpose holding back? Tell us in the comments below.

Japanese Companies Embracing Bitcoin See Stocks Soar with Rising Bitcoin Price

Japanese companies continue to benefit from embracing Bitcoin, following its approval by the government as a form of payment. Small businesses listed on stock exchanges that offer bitcoin-related services are seeing their share prices rise as the price of bitcoin spikes.

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Bitcoin’s Gains Spilling into Traditional Stock Markets

Japanese Companies Embracing Bitcoin See Stocks Soar with Rising Bitcoin Price
Prime Minister Shinzo Abe

On April 1, Prime Minister Shinzo Abe’s government legalized bitcoin as a form of payment. The law, which enforces strict rules on bitcoin exchanges, gives the digital currency more credibility. Many companies subsequently began integrating bitcoin into their business models, with some forming partnerships with small bitcoin startups.

As bitcoin becomes more widely accepted in Japan, its price rises sharply. The cryptocurrency has risen approximately 180 percent at press time since the beginning of the year, according to data from Japan’s largest bitcoin exchange by volume, Bitflyer.

Meanwhile, small exchange-listed companies that have started incorporating bitcoin into their businesses are seeing a similar pattern in their share prices. A well-known Japanese day trader, Naoki Murakami, said that “All of these gains coincide with bitcoin’s rally,” Bloomberg reported on Monday. He explained:

That has made the stocks of these small-cap companies an attractive way for speculators to invest in cryptocurrency markets without buying them directly. […] Not everyone is sure they can trust bitcoin exchanges. And some don’t have accounts there. That’s why they’re using the stock market to speculate.

“From about a month ago when all these virtual currencies started spiking like crazy, we began seeing the so-called ‘stocks of the virtual currency bubble,”’ he noted.

In addition, he explained that Japanese stock markets have relatively loose listing requirements, therefore many small companies are able to go public with “no income and a market value of as little as $10 million.” That is why the Tokyo Stock Exchange is home to hundreds of small companies, he explained, adding that:

It’s probably not a coincidence that Japan’s stock market is being seen as a proxy for bitcoin investments.

Here are Some Winners

Among companies that are seeing their stocks rally after they announced businesses relating to digital currencies are Remixpoint Inc, Infoteria Corporation, and Fisco Ltd, according to Bloomberg.

Japanese Companies Embracing Bitcoin See Stocks Soar with Rising Bitcoin PriceRemixpoint Inc. is the largest of the three companies, having a market value of about 31.3 billion yen ($283 million). The company opened a bitcoin exchange, Bitpoint, at the end of May before announcing its plans to install over 100,000 ATMs nationwide. Its stock has more than doubled in value since the partnership with Peach Aviation to bring bitcoin payments to the airline, Bloomberg noted. “Remixpoint is trading at 514 times earnings, the highest among all Japanese technology companies worth more than 30 billion yen.”

Japanese Companies Embracing Bitcoin See Stocks Soar with Rising Bitcoin PriceInfoteria Corporation partnered with bitcoin exchange platform developer Tech Bureau and is testing ways to use blockchain technology for proxy voting. The company saw its shares up more than 50 percent in the past month. Similarly, financial information services provider Fisco Ltd. began operating a bitcoin exchange last year and is up about 25 percent since early May, the news outlet detailed.

When the price of bitcoin fell, these companies’ share prices also experienced a similar downturn. However, overall, their gains have significantly outweighed their losses.

Do you think these companies will continue to benefit from bitcoin’s price rise? Let us know in the comments section below.

Nevada Senate Bill 398 Becomes Law, Prohibiting Tax on Blockchain Technology

Judging by recent legislation, which is mostly hostile towards blockchain technology, Senate Bill 398 in Nevada seems like an unprecedented step in a positive direction. SB398 prohibits taxation and regulations regarding the use and implementation of blockchain technology, and it was approved by Nevada governor Brian Sandoval. 

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The bill is meant to create an environment that is hospitable Nevada Senate Bill 398 Becomes Law, Prohibiting Tax on Blockchain Technologyrather than hostile to new technology startups, and it is the first one to recognize smart contracts as legitimate and binding.

The bill was filed by Ben Kieckhefer on March 20. It appears he did not want the State to follow in the footsteps of places like New York who have generated regulations that harm bitcoin and other blockchain-based companies. The politicians in Nevada overall want the blockchain and technology industry to grow and benefit their State.

A Minutes of the Senate Committee On Judiciary record document read, “The bill will help ensure the State keeps pace with technological advancements and provide a legal framework for people using a blockchain to not do so in a legal gray area.”

The bill includes the following legal requirements for county commissioners to follow:

A board of county commissioners shall not: 13 (a) Impose any tax or fee on the use of a blockchain by any 14 person or entity; 15 (b) Require any person or entity to obtain from the board of 16 county commissioners any certificate, license or permit to use a 17 blockchain; or 18 (c) Impose any other requirement relating to the use of a 19 blockchain by any person or entity.

Towards Blockchain Recognition and Acceptance…or not?

These type of bills that seem to be pro-blockchain may be a meaningful positive step toward creating more acceptance for cryptocurrencies. Seeing these kinds of bills are a nice change in tempo, because other bills have demonized crypto for contributing to money laundering schemes and other forms of crime.

For instance, in Florida, an appropriations committee recently Nevada Senate Bill 398 Becomes Law, Prohibiting Tax on Blockchain Technologypassed an anti-money laundering bill to target people who leverage bitcoin to hide finances. Also, Federal senate bill 1241 defines digital currencies as “monetary instruments,” and its intent is to target bitcoin exchanges to intercept criminal activity and undermine cryptocurrency freedom and neutrality.

Nonetheless, pieces of legislation that are bad and good for blockchain technology will continue to crop up in lockstep as politicians decide what is best for their constituency. In the end, crypto-enthusiasts can only hope for the disruptive technology to be shown in a positive light rather than be paraded alongside images of a dark criminal underworld, rife with its hackers and fraudsters and shysters and monsters.

Do you expect to see more anti-blockchain or more positive blockchain legislation in the future? Let us know in the comments below. 


India’s Government Divided Over Bitcoin Legalization

As the period for public comments regarding the regulatory framework for bitcoin comes to an end, a debate heats up among members of the Indian Parliament about the legalization of digital currencies. Meanwhile, bitcoin trading volumes remain strong in the country.

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Parliament Members Divided Over Bitcoin

India's Government Divided Over Bitcoin LegalizationAt a Parliamentary Standing Committee of Finance meeting last week, a heated discussion erupted among members of the Indian Parliament about bitcoin.

A number of Parliament members, including BJP member Kirit Somaiya, “cautioned the finance ministry officials present at the meeting against any move to legalise bitcoin,” according to The Economics Times, India’s leading business newspaper.

A source told the publication:

Members feared that it [bitcoin] could become a parallel instrument for cycling black money and dodgy transactions and also be a source of terror financing.

India's Government Divided Over Bitcoin Legalization
Kirit Somaiya

They wanted the government to look into the vulnerability of bitcoin. Somaiya who has repeatedly spoken against the digital currency, calling it “illegal” on numerous occasions, raised a series of questions.

He asked the officials why the government was being ambivalent about this instrument, citing that they have not clarified whether it was a legally permissible instrument or not.

He also demanded to know whether officials are properly briefing the prime minister about the risks of bitcoin.

Bitcoin Could Soon Be Regulated in India

Currently, the same government has been considering legalizing the digital currency. Last week, the Finance Ministry started soliciting comments from the public on how to best regulate bitcoin. The deadline for submissions is May 31, and 3,357 comments have been submitted at press time. The majority of them are in support of regulating bitcoin.

India's Government Divided Over Bitcoin Legalization“Regulating bitcoins will address many such concerns and queries, including market acceptance, customer trust, investment security, money laundering, hawala, etc,” Hesham Rehman, co-founder and CEO of Bitxoxo Bitcoins Online, was quoted by The Times Group as saying. “For instance, regulations like strong eKYC and penalizing bitcoin trading in cash will help proper transaction records which will negate all the chances of any sort of illegal activity.”

Karthik Iyer, India’s Ambassador of the blockchain think tank P2P Foundations, also offered his viewpoint on the situation:

The government should think about treating cryptocurrencies as a commodity if not a full-fledged currency with exchange value. There is a lot of arbitrage in the markets and it can generate a great deal of wealth for India’s crypto traders.

India’s Bitcoin Volume

India's Government Divided Over Bitcoin LegalizationMeanwhile, bitcoin trading volumes in India have exploded. Last week, the price of a bitcoin skyrocketed globally. During that spike, it traded at nearly a $1,000 premium in India as supplies to the country have been limited.

This month, leading Indian bitcoin broker Zebpay announced that it had reached a milestone of over 500,000 app downloads and is adding more than 2,500 users daily. Struggling to keep up with the surge in new users and volume, Zebpay announced, “we have put a temporary buy limit of Rs 50,000 per day due to the shortage of bitcoin stock.”

India's Government Divided Over Bitcoin LegalizationNew user growth was also the cause of the downtime experienced at leading Indian bitcoin exchange by volume, Coinsecure. “We have been experiencing exponential growth of users on our website, causing slowness and stress on our systems,” according to a statement from CEO Mohit Kalra to Coinsecure’s customers.

Meanwhile, on the peer to peer Localbitcoins exchange, trading volumes in Indian rupee hit record highs as well, with nearly double the previous week’s volume of rupees traded for bitcoin.

India's Government Divided Over Bitcoin Legalization

Do you think that the Indian government will listen to their people and regulate bitcoin? Let us know in the comments section below.

Japan’s Bitpoint to Add Bitcoin Payments to 100,000+ Stores

Bitpoint has recently partnered with Peach Aviation to provide bitcoin payment tech to the company, and now plans to do the same at “hundreds of thousands of Japanese retail outlets.”

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From Peach Aviation to 100,000+ Stores

Japan's Bitpoint to Add Bitcoin Payments to 100,000+ StoresPeach Aviation Ltd announced last week that it will be the first Japanese airline to accept bitcoin for tickets. Peach is Japan’s first Low-Cost Carrier (LCC) and is majority owned by the country’s largest airline, All Nippon Airways Co. Ltd (ANA).

To accept bitcoin, the low-cost airline has partnered with Bitpoint Japan Co, a bitcoin exchange and payments startup founded on March 3, 2016. In addition to allowing Peach to accept bitcoin for flight tickets, the companies are working together to add bitcoin Japan's Bitpoint to Add Bitcoin Payments to 100,000+ Storespayment options to souvenir shops, restaurants, and hotels at travel destinations. Furthermore, “we will jointly install bitcoin ATMs where customers can withdraw cash from bitcoin,” their partnership agreement reveals.

On Monday, Bloomberg reported that Bitpoint is “planning to give hundreds of thousands of Japanese retail outlets the ability to accept the digital currency.” The company’s president, Genki Oda, said, “We’re holding discussions with a retail-related company,” adding that:

We’re also talking to a big convenience store operator about using it [bitcoin] … By going through a company providing payment terminal services to shops, we have the possibility of increasing its use at one stroke. It’s easier than talking to lots of individual retailers.

Japan's Bitpoint to Add Bitcoin Payments to 100,000+ StoresBitpoint currently has ties with several retailers and plans to expand that number, Oda told the publication. The aim is to promote the use of bitcoin in retail stores instead of as a speculative investment, he detailed.

Oda also runs Bitpoint’s parent company, Remixpoint Inc., a publicly-traded conglomerate with a market value of about 21 billion yen ($189 million).

400,000+ Stores Could Accept Bitcoin

Japan's Bitpoint to Add Bitcoin Payments to 100,000+ StoresSince April 1, when the Japanese government started recognizing bitcoin as a legal method of payment, a slew of Japanese companies have started considering accepting bitcoin. The first major retailer to do so following the government’s move was Bic Camera, one of the country’s biggest electronics retailers. The company partnered with Japan’s largest bitcoin exchange by volume, Bitflyer, to accept bitcoin.

Also in April, another bitcoin exchange, Coincheck, announced that it had been working with Recruit Lifestyle to bring bitcoin payments to over 260,000 stores by this summer. Claiming to hold 99% of the bitcoin payment market share, Coincheck said that about 5,000 stores already accept the digital currency using its payments system.

Japan's Bitpoint to Add Bitcoin Payments to 100,000+ StoresThen last week, Bitflyer CFO, Midori Kanemitsu, independently told Nikkei that the number of stores accepting bitcoin “is expected to rise to 300,000 or so in 2017.”

If Kanemitsu’s estimation is added to Monday’s announcement by Bitpoint, then the total number of stores that could start accepting bitcoin soon could rise to 400,000+.

Do you think Bitpoint will successfully add bitcoin payments to 100,000+ stores? Also, how many stores do you think will accept bitcoin in Japan this year? Let us know in the comments section below.

Russian Bankers Push to Legalize Cryptocurrency

Russian bankers released a statement May 26, saying that cryptocurrency should be legalized for circulation. This message comes from German Gref, who is head of the Russian Sberbank. Gref said there needs to be an honest and intelligible conversation about cryptocurrencies, because attempts to ban it have only caused problems in the past. 

 

A Russian news article Russian Bankers Push to Legalize Cryptocurrencymentioned Greff’s commentary: “Gref stressed that they now engage in a constructive dialogue about cryptocurrency, the Central Bank are trying to understand – what is it and what to do next. ‘Attempts to introduce bans will only lead to the loss of existing competitors,’ said the head of the financial institution.”

Cryptocurrency May Become “Digital Product” in Russia

In another article by the same Russian news outlet, the Russian government’s Deputy Chairman Regulator of the Central Bank, Olga Skorobogatova, said government is preparing amendments regarding cryptocurrencies and the tax code. Skorobogatova went on to admit that government cannot control how many cryptocurrencies can be created. The Russian news page said,

Skorobogatov noted that virtual assets continue to be emitted, no gold reserves, they are not provided, there is no control over their number.

The Russian news outlet went on to say that government or the “financial market” does not necessarily see cryptocurrency as a threat, because government considers it a “digital product.” This is likely why government is seeking to create amendments for it in their tax code.

The article said, “Therefore, financial market electronic money does not consider it a threat. But, if you do not begin to deal with this issue, you can skip a significant risk increase.”

Russian Officials Want to Understand and Accept Cryptocurrency

Between bankers and government Russian Bankers Push to Legalize Cryptocurrencyofficials changing their perspective, it appears there could be a movement toward more political acceptance of cryptocurrency in Russia. This information comes as bitcoin’s popularity has surged over recent weeks and Japan has classified bitcoin as a payment method along others.

It looks like some governments and bankers are trying to understand cryptocurrency rather than react against it.

Do you think that Russia will accept and legalize cryptocurrencies? Let us know in the comments section below.

Proposal to Classify Bitcoins as Digital Goods Russia’s Central Bank Started Drafting

The Central Bank of Russia has proposed classifying cryptocurrencies including bitcoin as digital goods for tax purposes, according to local publications. The draft proposal is due in one month.

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Classifying Bitcoins as Digital Goods

The Deputy Governor of the Central Bank of Russia, Olga Skorobogatova, revealed on Thursday that the bank has proposed to classify cryptocurrencies, including bitcoin, as digital goods for tax purposes. Sputnik International reported her saying:

Two months ago we held a meeting with ministries and organizations… on how to classify non-state cryptocurrencies, which are de facto used in Russia. We propose to treat them as digital goods, use the digital goods legislation, with certain amendments on taxes, control and record-keeping.

According to Skorobogatova, the proposal was supported by all ministries, and the central bank is planning to deliver the first draft of the regulations in a month. This proposal follows her promise in February for the central bank to decide whether digital currencies are considered assets, cash or securities by mid-2017.

The Central Bank’s Need to Control Bitcoin

Russia's Central Bank Drafting Proposal to Classify Bitcoins as Digital Goods
Olga Skorobogatova

According to RBC, a leading Russian media group headquartered in Moscow, the central bank claims that they need to start controlling cryptocurrencies in Russia or they can quickly become a threat.

Since digital currencies are not backed by gold reserves and are not state controlled, the deputy governor said that they can lead to instability in the financial markets sooner or later.

She then noted that cryptocurrency trading volumes in Russia have increased since last year, and said (loosely translated):

If people are engaged in this, they have to pay money for it. And we must understand how to control these activities.

Russia’s Struggle to Control Cryptocurrencies

The official government stance on cryptocurrencies has been under constant debate for years. Starting with a very strict stance favoring criminalization, Russian lawmakers have become more lenient over time as the benefits of blockchain technology became apparent in the country.

Russia's Central Bank Drafting Proposal to Classify Bitcoins as Digital Goods
Alexey Moiseev

In December 2016, Vadim Kaluhov, the Director of Financial Technology, Projects and Process Management at the Bank of Russia, warned the government against using excessive measures. He conveyed that if the regulations are too strict, then cryptocurrency transactions will move outside of Russia. “By pushing the process of exchange out of the country, we actually lower the level of security and stability,” he detailed.

In January, Deputy Finance Minister Alexey Moiseev told reporters that the central bank and the Federal Financial Monitoring Service had been watching bitcoin. They did not find it to be a threat. In April, he announced that the country was considering recognizing the digital currency in 2018 to fight money laundering.

This month, the largest online retailer in Russia, Ulmart, announced that it will start accepting bitcoin payments in September.

Meanwhile, trading volume has grown steadily. Localbitcoins, the most popular trading platform in Russia, shows that the country has the second largest trading volume, behind only China. Russia has seen over 400 million rubles worth of trading, or over $7 million USD in weekly volumes for three weeks in a row.

Russia's Central Bank Drafting Proposal to Classify Bitcoins as Digital Goods

What do you think of Russia classifying bitcoin as digital goods? Let us know in the comments section below.