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Bitcoin Regulation In UAE: Abu Dhabi Regulator Considers A Possible Framework

The United Arab Emirates have been in the focus regarding cryptocurrencies lately, especially after some talks about potential regulations for the industry. This move could see many exchanges, intermediaries and crypto companies to move into the big financial zone of Abu Dhabi, the capital of UAE.

Another announcement has been making news lately – this time by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market. According to him, the country is reviewing the development of a regulatory framework containing many industry firms and relevant authorities.

This regulatory move, if established, could potentially make the UAE a shore for many cryptocurrency exchanges and firms. According to the Abu Dhabi regulator:

“We are reviewing and considering the development of a robust, risk-appropriate regulatory framework to regulate and supervise activities of virtual currency exchanges and intermediaries. In considering such a framework, the FSRA intends to consult and work closely with industry participants and relevant professional bodies.”

Obviously, this development will come within months of guidelines and regulations issued by the Abu Dhabi government regarding cryptocurrencies and ICOs. There is no doubt that some of these regulations will be strict – however, the financial markets already separated ICOs (as securities) from cryptocurrencies (as commodities) in the market.

What’s also interesting is that at the time, central banks of the UAE and Saudi Arabia have joined forces, working on the development of a cryptocurrency that could see cross-border transactions all thanks to a cryptographic token.

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Bank Of England Is ‘Open To The Idea’ Of A Central Bank Digital Currency

After the talk from the governor of Bank of Spain, it seems like Bank of England is following when it comes to potential plans involving cryptocurrencies. However, the stance of this bank is quite optimistic and in line with digital currencies.

According to the Governor of the Bank of England Mark Carney, there is a possibility of a central bank digital currency (CBDC) in the future. His talk at the Riksbank Anniversary conference (a Swedish bank) proved the open-mindedness of implementing a CBDC in the future.

However, Carney also stressed that any such adoption would not happen soon. The UK central bank governor said that cryptocurrencies currently do not constitute money and have pretty much failed thus far on. As he said in February 2018:

“It [cryptocurrency] has pretty much failed thus far on… the traditional aspects of money. It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange.”

What’s most interesting is the fact that earlier this month, the Bank of England issued a working paper which laid out various scenarios of possible financial risks and instability issues of using a CBDC. The report also found that the scenarios described put no reason to believe that adopting a CBDC would negatively impact the private credit of total liquidity provision to the economy.

The 350th anniversary of Riksbank on May 25th was the event where Carney stressed that the “past, present and future” of central banks have and do depend on maintaining the public trust in the financial system. Ever since Brexit, the Bank of England overhauled its financial system which made it more resilient to shocks such as the ones following the events like Brexit.


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Cryptocurrencies ‘Pose More Risks Than Benefits’ According To Bank Of Spain

The head governor of Spain’s central bank is a strong believer in blockchain technology. However, when asked about cryptocurrencies, he is far more uneasy on this topic. The governor of Banco de Espana, Luis Maria Linde, recently discussed cryptocurrencies in a speech organizing by the auditing giant Deloitte.

In the speech, Linde said that cryptocurrencies “present more risks than benefits”. In that way, he believes that the blockchain technology may be the only one to improve efficiency and reduce costs.

According to Linde:

“[Cryptocurrencies] have low acceptance as a means of payment, suffer extreme volatility, present multiple operational vulnerabilities and have been related to fraudulent or illicit activities in many cases.”

He also referred to crypto tokens as “the spurious novelties that do not provide significant improvements and should be tackled as soon as possible” during his speech.

The blockchain technology, on the other hand, offers many “interesting possibilities” and has a massive potential for reducing costs. However, this technology is “still not quite mature” according to him.

The governor of Banco de Espana also argued that potential digitization in the financial sector can signify “great opportunities” and increase the efficiency of financial services while meeting users’ demand. All if the technologies are “well-used and managed” according to him.

He also warned that “the move to a more digital economy is accompanied by greater cyber threats and it is necessary to develop new measures and protect the processes, assets and the customer data.”

Cryptocurrencies are illegal in Spain – and some government officials even link the technology to organized crime. From all this, it appears that they will remain like this in the coming months.

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India May Bring A 18% Tax On Cryptocurrency Trading Starting In July 2018

India, which is the world second largest country by population, is reportedly planning to give a glimmer of hope to cryptocurrencies and people investing in them. After months of thinking and rationalizing, it seems like India’s government is ready to levy an 18% tax on cryptocurrency trading.

As reported on Bloomberg, the country is planning to put this tax to action soon – putting it under the Goods and Services Tax (GST) on cryptocurrency trading. Currently, the proposal is being considered by the Central Board of Indirect Taxes and Customs and will likely be presented before the GST council after it is carefully reviewed.

If this is made official, Bitcoin could be classified under “intangible goods” and would be on par with other software systems. The authority even added that there may be separate laws introduced in order to deal with the usage of cryptocurrencies for criminal activities.

In April 2018, the Reserve Bank of India killed the cryptocurrency industry, after asking all banks to withdraw their relationships with all cryptocurrency exchanges. However, this may change soon as the Income Tax department realized the importance of taxing virtual currencies.

The proposal’s main points include:

  • Purchase or sale of cryptocurrencies to be considered as a supply of goods, and those facilitating transactions like supply, transfer, storage, accounting, among others, will be treated as services.
  • Value of a cryptocurrency may be determined based on the transaction value in rupees or the equivalent of any freely convertible foreign currency.
  • If buyers and sellers are in India, the transaction would be treated as a supply of software and the buyer’s location will be the place of supply.
  • For transfer and sale, the location of the registered person will be the place of supply. However, for sale to non-registered persons, the location of the supplier would be considered as the place of supply.
  • Transactions beyond the Indian territory will be liable for integrated GST and would be considered an import or export of goods. IGST will be levied on cross-border supplies.

The proposal seeks the tax to be made official from July 1st, 2018.

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Cryptocurrencies Are ‘Innovative’ But ‘Pose Challenges’, Federal Reserve Governor Says

As of recently, the Federal Reserve has been mentioning cryptocurrencies and their potential impact on the economy. The Fed Governor Lael Brainard is one of the latest to comment on the situation in which digital currencies currently are.

According to Brainard, the cryptocurrencies must offer more details and all the things they need in order to solve the challenges on the market. Brainard spoke at a Fed conference in San Francisco. As Reuters reports, she stated:

“Cryptocurrencies are strikingly innovative but also pose challenges associated with speculative dynamics, investor and consumer protections, and money-laundering risks.”

Earlier this week, the St. Louis Federal Reserve Bank President showed up at the Consensus 2018 conference in New York and once again proved that authorities are more than eager to involve in the current happenings.

However, the Fed currently thinks that the risks outweigh the rewards. According to Brainard, the blockchain that is being used to streamline payments is very innovative – but digital currencies are “problematic” due to the lack of centralized control and the vulnerable position that consumers and investors can be placed in as a result.

What’s interesting is that Brainard placed a nail in the coffin for the possibility of a Fedcoin which would be a cryptocurrency that will ‘keep the pulse on the market’. As she said:

“There is no compelling demonstrated need for a Fed-issued digital currency,”

The Fedcoin would usher in “legal activities into a digital coin” however isn’t evident in the current Fed regime.

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