South Korea Tells Two Dozen Countries and the IMF to Regulate Cryptocurrency Trading

We have witnessed dozens of global attempts to regulate cryptocurrencies in recent years. None of these efforts have been positive whatsoever. South Korea now urges other countries, as well as the IMF, to curb cryptocurrency trading. An interesting stance, although it may turn out rather positive for the future of Bitcoin and altcoins. Whether any of the addressed parties will take action, is something else entirely.

In a way, curbing cryptocurrency trading is all governments can do right now. Rather than take China’s lead, following South Korea may not be a bad idea. More specifically, the local financial regulator wants to prevent money laundering, terrorist funding, et cetera. Cross-border cyber transactions involving cryptocurrency have become rather problematic in South Korea over the past few months. It is unclear if any other region of the world has to deal with similar issues right now.

Regulating Cryptocurrency Trading Won’t be Easy

An international coordination to regulate cryptocurrency trading will not be easy to achieve. Very few countries are actively concerned about this new form of money. The laissez-faire attitude reigns supreme in this regard. If countries were to work together, however,  interesting things could happen. It will be either beneficial or destructive for the cryptocurrency ecosystem. In this day and age, there is no middle path when it comes to governments, regulation, and cryptocurrency.

With South Korea attempting to initiate discussions, a big first step has been taken. Addressing the way people can buy and exchange cryptocurrency seems to be the top priority. No country can afford to ignore this new form of money any longer. Preventing speculative transactions is another important aspect to keep in mind. Right now, all cryptocurrencies are mainly valued based on hype and speculation. It creates very volatile markets where money can be earned and lost very quickly.

Although it is commendable to tap the IMF in this regard, that institution most likely won’t intervene. More specifically, the IMF maintains a level-headed approach to cryptocurrency trading. They have announced not to take any drastic actions for the foreseeable future. At the same time, the organization doesn’t dismiss Bitcoin and other currencies either. Whether or not other regulators will respond to South Korea’s action, remains to be determined. For the time being, it seems very little will change.

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Interesting things are happening in the world of traditional finance these days. China, while often seen as a prosperous economy, has received a stern warning from the IMF. The country needs to address their corporate debt levels before things spiral out of control. This will put a lot of pressure on entrepreneurs and corporations, which may cause citizens to flock to Bitcoin in the long run.

China is one of the many countries in the world today dealing with a growing pile of corporate debt. This is not entirely surprising, as the country has gone through some very difficult times as of late. Furthermore, the government and PBOC continue to devalue the Yuan to create economic wealth by pumping more funds into the local economy.

The Chinese Economy Is Hurting Due To Corporate Debt

Unfortunately, none of these measures is sufficient to please the IMF. Not too long ago, the International Monetary Fund was considering to add the Yuan to its basket of reserve currencies. In doing so, the IMF would elevate the status of the Yuan to one of the very few global currencies in the world.

Ever since the financial trouble started brewing in China, however, those plans have been put on ice for the foreseeable future. Right now, there is a bigger chance the IMF may turn its back on China unless they can get their corporate debt problem fixed sooner rather than later.

Doing so is not easy, though, as businesses in China continue to struggle. Exports remain low, and there is no direct improvement on the horizon. With so much volatility in fiat currency and stock markets, traditional debt-relief solutions are not a valuable option either. Precious metals provide a way out of this mess, but it will not create a way to pay off debts in the next few months.

As long as this uneasy situation continues, the local economy will suffer. With a devaluing national currency, strict capital controls, and corporations drowning in debt, consumers and entrepreneurs will look elsewhere. Bitcoin presents a way out, as it is not controlled by banks or governments. Moreover, Bitcoin is a global currency that has no ties to the IMF, yet presents an attractive investment vehicle for the long term.

Source: CNN Money

Header image courtesy of Shutterstock

Given the recent financial crisis, the question becomes whether or not there are any signs of recovery, or if things are worse for the wear. Depending on which country one resides in, there might be a slight improvement although a large part of the world is still working towards stabilization. If a new financial crisis were to take place tomorrow, things could get kind of interesting for Bitcoin to say the least.

Also read: BTCC’s Humorous Documentary on Bitcoin Mining in China

A New Financial Crisis Is Not Unlikely

Despite what financial experts may want the general public to believe, there is hardly any improvement in the world economy ever since the financial crisis hit in 2007. The trust relationship between banks and customers is hanging on by a thin thread, and the growing demand for new financial tools is only putting more stress on financial institutions.

At the same time, fiat currencies and the stock market remain rather volatile, while oil prices are not doing that much better in recent months. Everything that is linked to traditional finance is in a slum, and there are no visible signs for long-term improvements. In fact, things are looking rather bleak for 2016, and we are only in April so far.

Back in January of 2016, a warning was issued how the world should brace for the impact of a new financial crisis. With the looming Brexit, the Eurozone is under a lot of duress, and the worst case scenario could see the entire Eurozone collapse. Although media headlines are stating how some countries are starting to show signs of recovery, the current equilibrium is very brittle, and it would not take much to send the economy back into recession.

Moreover, a document was leaked by Wikileaks about a day ago, which showcases the current plans by the IMF. Among the topics discussed during this transcript of an internal IMF meeting are how Greece is facing another disaster, and how the organization is considering a Troika exit as well. Neither of these solutions is favorable for an economic recovery, yet they could individually lead to a new financial crisis.

An Interesting Situation For Bitcoin

As horrible as the thought of a new financial crisis is, there have been plenty of warnings about how things needed to change in 2007-08. Unfortunately, governments and central banks decided not to listen to these warnings, although some minor reforms have taken place in a few countries. But on a bigger scale, the economic situation has remained at status quo, rather than alleviating the stress of the financial crisis.

Then again, a secondary financial crisis would push even more consumers and enterprises in the direction of alternative financial services and solutions. Bitcoin is an obvious contender in this regard, as it is the only viable global form of transferring value that is not dragged down by the banking ecosystem. Despite some of the flaws in Bitcoin that need to be addressed – such as the scalability issue – Bitcoin is a far more preferable financial solution than other services.

Granted, there is still a mental entry barrier to overcome when switching from fiat currency and bank accounts to Bitcoin. That being said, the advantages outweigh the downsides, as users are in full financial control without relying on middlemen. Doing some research on the topic is necessary for everyday consumers, but it will be an eye-opener, to say the least.

Source: Wikileaks

Header image courtesy of Shutterstock

We are back into the Cold War times. While most of us would love to assume that the Cold War ended with the collapse of Soviet Union over two decades ago, the current scenario says otherwise. The growing conflict between Russia and the United States along with its allies is not a secret anymore.

The United States and the Russian Federation are superpowers commanding the two most formidable armies in the world. Both countries are now fighting it out amongst themselves in public; most of these conflicts are currently confined to political, diplomatic and espionage channels. As the situation continues to worsen, basic common sense and the restraint of a handful of powerful people has so far prevented the situation from escalating into a mighty showdown. While the risks are still high, politicians and bureaucrats are trying to push each other’s limits.

The recent attempt is the International Monetary Fund’s latest policy change. The United Nations and its divisions have become the pawns for those countries with veto power, who are more interested in serving their own agendas. Even the IMF has joined the likes of the UN by being partial towards the United States and its allies.

However, with the right technology and processes, the UN and IMF can overcome this popular perception and undo the damage done to their reputations. The technology behind cryptocurrencies is ideal for this purpose; innovations in blockchain technology have led to the development of a range of solutions that can make e-governance and smart contracts possible. Even digital currency by itself can change the world for better.

Recently, the IMF announced changes to its lending policy, making nations that default on debt eligible for more loans without having to repay them first. The new guidelines have evoked a strong response from Russia, to which Ukraine owes $3 billion in debt which has to be repaid by the 20th of this month. To make matters worse, Ukraine has announced that it will not be repaying Russia anytime soon, and Russia sees the IMF’s move as colluding with Western Bloc nations to alienate Russia and ensure Ukraine continues to have access to funds.

On the other hand, it can be argued that the IMF’s policy is not just applicable to Ukraine, in particular, but also other countries like Greece, which are also facing economic crises at the moment. It might be of more help than harm; however, news reports state that Western Bloc economies are pressuring Russia to restructure Ukraine’s debt.

Now, imagine a situation where countries use Bitcoin or Bitcoin-like digital currencies as official tender, and all bonds are executed on smart contracts. In such cases, enforcement of debt repayment or even trade deals will become much easier. The smart contracts will automatically transfer the money owed creditors from the nation’s treasury, ensuring every nation does its part to ensure a strong economy.

In the absence of such a system—combined with Ukraine’s reluctance to repay the debt—Moscow is contemplating legal action against its neighboring country. One can expect to see the outcome by the end of this year, as soon as the grace period for repayment expires on 30th.

IMF Allows Lending to Countries with Arrears; Russia Prepares to Go to Court over Ukraine Debt

Yes, you read that right! The daily volume in the Bitcoin-yuan pair on the leading Chinese Bitcoin exchange BTCC has soared to more than double what the volume was in the past 6 months. During this period, the price of the pair first reached a stratospheric valuation of 3,340 and then immediately tanked to 1,810.

The volume in the subsequent recovery has been strong, as well. The level has quickly recovered to 2,609, and the bulls look formidable.

Bitcoin yuan

Image

Take a look at the daily BTC-CNY price chart above.

For the period spanning mid-May to early November, neither the rallies nor the declines had this level of active participation.

Factors behind the rising volume

  1. Monetary policy easing – The People’s Bank of China (PBOC), China’s central bank, has been aggressively resorting to monetary easing in order to spur the investment cycle. China’s sticky economic slowdown had forced the hand of China’s monetary policy makers to devalue their currency, yuan, in order to make their exports attractive.

Successive rounds of monetary easing have made loans cheaper, which is pushing the financial market participants to trade more, leading to rising volumes on China’s prominent Bitcoin exchange.

  1. IMF adds Chinese yuan as the reserve currency – With the International Monetary Fund (IMF) including the Chinese yuan in its Special Drawing Rights (SDR), central banks will be able to buy more of the currency.

The inclusion also means that foreign participants will now be able to invest more in China; according to Standard Chartered Bank, at least $1tn of foreign funds are expected to hit the Chinese markets following the move.

To stay competitive, the Chinese central bank may extend its stimulus program even further, which may reflect in increasing volume on Bitcoin exchanges.

Conclusion

Although Bitcoin-yuan may be a strong bullish bet, it runs the dangerous risk of being quickly overbought. Traders should take note of this before they go on a buying spree due to easy and cheap liquidity.

Online Bitcoin transactions have  surged since the Greek government imposed capital controls and withdrawal limits. In the midst of the Euro crisis, people across the world are finding Bitcoin to be a safe and attractive bet in comparison to fiat currency.

Gone are the glory days of Greece – the land of Iliad and Odyssey. Once a great empire from 500 BC to 200 BC, the present day Greece lies in tatters due to deteriorating economy and rising debt. The country which went broke due to the economic crisis is now unable to repay the debt it owes to the International Monetary Fund, European Central Bank and Eurozone.

Upon becoming a member of the European Union, Greece adopted the euro as its currency and the country has been in trouble ever since. According to the mainstream media the European Union was the biggest failure, thanks to mismanagement and time spent by the leaders of EU nations traveling back and forth to Brussels instead of concentrating on the governance and development of their countries. One look at the present day EU shows a crisis – Spain and Italy in red and Greece in crimson.

READ MORE: Capital Controls in Greece Trigger Flight to Bitcoins

Greece has been struggling for almost a decade now. The bailout packages provided by troika didn’t really help the country much. Both Greece for its failure to reform its economy and Troika’s conditions for the bailout package are equally responsible for the country’s present condition.

In order to prevent total collapse of the country’s economy, Greece recently introduced capital controls and imposed limits on the maximum cash withdrawal from banks. Greeks can currently withdraw only 60 euros per day from their bank accounts. The state of affairs in the Mediterranean nation has started to take its toll on normal transactions, both online and offline. Banks have always been the backbone of the economy, the limits imposed on transactions has crippled online transactions and payment services alike.

PayPal’s services in Greece now stands severely disrupted due to the inability of Greek customers to transfer funds into PayPal wallets linked to their bank accounts. Currently PayPal’s Greek customers can only receive payments in the region. Even cross border money transfer facilities have been temporarily discontinued by PayPal in Greece.  Other online payment services, including card payments and wire transfers are also affected by transaction limits.

Issues related to increased dependency on conventional banking services has become clearly visible during this time of crisis, which has strengthened the principles associated with Bitcoin. There is speculation that Greece may adopt Bitcoin as an alternative currency in the coming days, but the Greek government’s negotiations with Troika says otherwise. Greece is still inclined to be part of the EU and it is holding a referendum with this regard.

Greece may continue to use euro as its official currency, provided both the parties come to an understanding in the coming days. Otherwise, it may switch to drachma, the national legal tender of Greece before it joined EU. However, once the capital controls are eased, Bitcoin may become part of an alternative economy in the region as Greeks will be willing to reduce their dependency on the country’s financial institutions.

READ MORE: Is Bitcoin Bad for Greece?