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.   

islamabad-1068x668

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.

shutterstock_601525469-640x426

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.

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.

Russia-Considers-Recognizing-Bitcoin-in-2018-to-Fight-Money-Laundering-640x426

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.