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Hungary’s central bank governor Matolcsy wants to ban crypto trading and mining in the EU

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The Governor of the Hungarian National Bank, György Matolcsy, has advocated a European Union-wide ban on all cryptocurrency trading and mining operations.

Governor Matolcsy referenced China’s recent crypto prohibition in a blog post titled “Time has come to ban crypto trading and mining in the EU,” published by the Hungarian central bank, a.k.a. Magyar Nemzeti Bank (MNB).

He also mentioned the Russian central bank’s plan, which calls for a complete ban on cryptocurrency trade and mining within Russia. But recently, Russia switched from its decision to impose the ban. He said, “I perfectly agree with the proposal and also support the senior EU financial regulator’s point that the EU should ban the mining method used to produce most new bitcoin.”

Matolcsy showers his opinion about crypto

Matolcsy mentioned the most argued opinion that “It is clear-cut that cryptocurrencies could service illegal activities and tend to build up financial pyramids. Russia’s central bank is right saying that “the breakneck growth and market value of cryptocurrencies are defined primarily by speculative demand for future growth, which creates bubbles.”

Matolcsy urged that the EU should act together in order to preempt the building up of new financial pyramids and financial bubbles. He also added that EU citizens and companies would be allowed to own cryptocurrencies abroad, and regulators would track their holdings.

Satoshi standing tall in Budapest

On September 17, 2021, an enormous bronze monument honoring the unknown founder of the Bitcoin digital currency was revealed in Budapest, Hungary’s capital. Its makers claim it is the first of its kind in the world.

The figure rests on a stone pedestal etched with the name Satoshi Nakamoto, the alias of the enigmatic Bitcoin innovator whose actual identity is unknown. It was erected in a business park near the Danube River in Budapest.

Andras Gyorfi, a Bitcoin journalist and the project’s originator, described Satoshi as “the founding father of the whole cryptocurrency sector.” “He’s the god of our market since he invented Bitcoin and blockchain technology.”

The bust’s featureless face is extensively polished to make it reflective like a mirror in which onlookers may see themselves, and it’s wrapped in a golden hoodie branded with the Bitcoin emblem.

TSB Bank to ban crypto purchases citing cyber-crime concerns

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TSB Bank, which happens to be a retail and commercial bank in the UK is all set to is impose a ban on more than five million of its British banking customers sending money to two prominent cryptocurrency exchanges amid concerns associated with cyber-crime.

According to reports, the institution is gearing up to bar its customers from sending money to trading platforms such as Binance and Kraken on concern that fraudsters are being allowed to create e-wallets and steal user’s money because of poor security checks.

The bank views that Binance, which happens to be one of the world’s biggest cryptocurrency exchanges, as a hotbed for scammers. This is not the first time when TSB has drawn out associations between cryptocurrency and fraudulent activities. The British institution’s Head of Fraud Ashley Hart has also been vocal about crimes in the crypto sector in both newspapers as well as radio. Hart also stressed the “dramatic spike in fraud” and remarked that the existing cryptocurrency exchanges are “rife with fraudsters,” that siphoning off with massive sums as “they capitalize on the surging interest in this type of investment.”

The exec of TSB Bank was also quoted saying,

“Anyone approached to invest in crypto should be extremely wary as these approaches are overwhelmingly scams.”

TSB Bank isn’t the only British financial institution barring cryptocurrency dealings

Apart from TSB Bank, Barclays is another major bank in the United Kingdom that decided to prevent their customers from transferring money to digital currency exchanges such as Binance and SwissBor. Fintechs such as Monzo and Starling also followed the suit. While the representatives of the institutions stated that the move stemmed from bad actors in the space, they were keen on resuming services.

As per the latest stats, UK users had reportedly lost more than $82 million during the past year, most of which originated from investment scams via social media. In addition to that, almost half of 50% of such scams were linked to cryptocurrencies such as Bitcoin and Ethereum.

India’s Central Bank Clarifies Circular on Cryptocurrency Ban to be Invalid

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The cryptocurrency ecosystem in India has always been a contentious one. The lack of clarity has failed to address important aspects of the users in the region. In a brief respite, however, the country’s central bank and regulatory body Reserve Bank of India [RBI] clarified on Monday that its 2018 order directing financial institutions to halt dealing in digital currencies was revoked by the Supreme Court in March 2020.

Hence, the circular in question cannot be quoted by banks to refuse services to users dealing in cryptocurrencies. The clarification came in the wake of reports that certain banks such as HDFC Bank Ltd and State Bank of India [SBI] had warned customers via emails against engaging in virtual currencies such as Bitcoin.

Shrimohan Yadav, who happens to be the Chief General Manager of RBI stated,

“It has come to our attention through media reports that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular dated April 06, 2018. Such references to the above circular by banks/ regulated entities are not in order as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020.”

Our RBI has finally sent out this notice to banks after 15 months since the Supreme Court verdict. Never late than never and we have this as a reason to celebrate! #IndiaWantsBitcoin

A brief history into India’s relationship with crypto

It all started late 2017 after two PILs were filed in the Supreme Court of India, one that sought to ban outrightly purchasing and selling cryptocurrencies in the country, while the other urged for proper regulation. Soon after which the government had set up a committee to investigate the industry and recommend actions.

A few months later, in April 2018, RBI issued a circular restricting commercial and co-operative banks, payments banks, small finance banks, NBFCs, and payment system providers from engaging in cryptocurrencies as well offering services to all platforms which deal with them. This crippled the crypto ecosystem overnight as many trading volumes across exchanges in the country fell sharply and many lost their jobs.

In May 2018, several Indian crypto exchanges and platforms filed a writ petition in the apex court of the country.

The following year, the government-established committee presented its report, prescribing a ban on “private cryptocurrencies” in India. Despite this, the Supreme Court revoked the RBI’s circular terming it as unconstitutional.

However, in January 2021, it seems like the cryptocurrency industry in India is back to square one as the government planned to introduce a bill to not just create a digitized version of the national currency but also to ban digital currency dealings.

India Cryptocurrency Scene in Turmoil; Govt Plans on Banning Crypto Trading

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Just when India saw investors rushing back into the cryptocurrency trading scene, the country saw yet another setback with respect to regulations. In the latest development, the Indian government is reportedly planning to introduce a new law banning Indian cryptocurrency trading.

According to Bloomberg’s sources familiar with the matter, the bill in question is expected to be discussed soon by the federal cabinet before it is sent to the Parliament.

Blockchain, not Bitcoin

This is an often-heard stance across the digital asset space and the Indian government holds a similar sentiment. There is no doubt that the country’s government is a huge proponent of blockchain technology with several pilots and projects launched in favor of fledgling technology. More than half of Indian states have already initiated government-sponsored blockchain-based projects.

India still has a long way to go before it can call itself a hub of blockchain as despite these attempts to lure potential blockchain investments since the innovators in the country have a limited window of experimenting just with private blockchain as opposed to a more flexible global scenario.

At the same time, planning on an outright ban of cryptocurrencies in the country is a major blow to the crypto ecosystem in the country. This news comes after reports of the country’s finance ministry seeking inter-ministerial consultations on a potential ban surfaced earlier in June this year.

Blast from the past

The Reserve Bank of India had previously banned commercial banks from servicing to cryptocurrency traders and exchanges in 2018. This was responded with a lawsuit in the Supreme Court by cryptocurrency exchanges challenging the RBI ban in September 2019. The ban was overturned in the March of the following year bringing a respite for both investors as well as the crypto platforms.

Firms that had previously fled the country amid a lack of regulatory clarity to more crypto-friendly countries were looking to expand their footprint following the development. Soon after, the trading volumes on cryptocurrency exchanges servicing Indian clients also increased substantially.

Implication

While the ban materializes, it would not just be a huge traders/investors and existing cryptocurrency platforms, but it would also pose as a major hindrance to big companies seeking for the foray Indian market, and the country could potentially lose out on a lot of employment opportunities as other Asian countries have taken the route of regulating the space instead of outlawing them.

Existing cryptocurrency exchanges, on the other hand, is likely to register their companies abroad to skirt adverse legislation in India and not to forget the crypto assets worth thousands of millions owned by the people in the country that would have to be disposed off if the bill becomes a reality.

Indian Crypto Industry Worried of Alleged New Crypto Ban by Authorities

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Five months ago, the Indian crypto industry was filled with hope and excitement as the Supreme Court lifted a ban on cryptocurrencies. Nevertheless, the excitement and hope were once again overshadowed by uncertainty, after an anonymous government official allegedly reported that the government is drafting a new law to ban digital currencies.

According to the alleged government official, two ministries and the Reserve Bank of India ( RBI) are proactively structuring the legal framework to outlaw cryptocurrencies for good in India. A report by the Indian news outlet, Moneycontrol, on August 4,  claimed some Indian authorities want to ban cryptocurrency trading in the country. The report suggests that the Ministry of Electronics and Information Technology, the Ministry of Law and Justice, and the Reserve Bank of India (RBI) are deliberating on the structure of the law to ban digital assets.

New crypto ban scare in India

The news outlet quotes the anonymous official, saying, “Once Parliament resumes for the session, we are hoping to get [the law] ratified.” Indian lawmakers are expected to assemble again in late August or at the beginning of September. As per the official, the government wants to outlaw cryptocurrencies through a statutory structure, as opposed to other means such as RBI’s blanket ban. He adds, “It will clearly define the illegality of the trade.”Back in 2018, the Reserve Bank of India prohibited banks from offering their services to businesses involved with cryptocurrencies. However, the crypto ban was lifted by the Supreme Court back in March. Notably, the recent revocation of the blanket ban led to the rise of many new cryptocurrency exchange platforms in the subcontinent. Indian authorities are now threatening to introduce a law banning cryptocurrencies rather than RBI’s crypto ban.

Crypto is vital to Indians during coronavirus pandemic

Cryptocurrency exchanges across India have reported substantial growth in the last few months, as investors shift away from traditional assets. Notably, many parts of India are under strict movement restrictions since the government imposed a lock-down in March.

Indian-based crypto exchange platform, WazirX, saw a massive 80 percent growth in both March and April. Furthermore, CoinDCX, which is also based in India, saw ten times more new registrations the week after the crypto ban was lifted, than the average registrations before the repeal.

Russian Federation Drops Plot to Outlaw Bitcoin Transactions

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The Digital Financial Assets Bill (DFA), which is scheduled to be read for the second time in the Russian Parliament today, has withdrawn mentions to the administrative and unlawful obligation for bitcoin transactions. The third and ultimate reading will institute the draft as a law. According to the head of parliament’s financial markets committee, Anatoly Aksakov, while speaking to a domestic news outlet, Ria Novosti: “There will be no liability in this bill.” 

Administrative and criminal liabilities withdrawn from DFA bill

Speaking to the media agency, Aksakov noted that the decriminalization of bitcoin investment had been set aside until further notice. He also said: “They have removed everything; there is only a link that the regulation of digital currency will be determined by another law.” The previous edition of the DFA bill intended to introduce financial penalties of up to $7,000 or face seven years in prison.

In addition, the bill suggested penalizing firms that issue or deal with cryptocurrencies without the authorization of the Russian central bank. The proposed financial penalties amounted to approximately $28,000 for violations of the Bitcoin Transactions Act if it is used as a means of payment for goods and services. Initially, the original bill proposed that firms would have to pay up to one million rubles ($13,900), while individuals would be fined at least 200,000 rubles ($2,800) for transactions in virtual assets to pay for goods and services.

Lawmakers planning “special law” to outlaw bitcoin transactions

Moving forward, Aksakov noted that the current draft bill, in its amended structure, now only concerns the challenges surrounding the definition of digital financial assets; and spells the standards for dealing with blockchain tech, among other issues. Besides, Aksakov, who is in charge of sponsoring the bill, anticipates the proposed law to be enacted on January 1, next year after adopting the second and third readings during the State Duma spring section that ends on July 23.

Legislators in Russia are also working on another “special law” on cryptocurrency policing, which may introduce strict penalties for dealing with bitcoin transactions. According to Aksakov, the law could be adopted during the autumn session, which ends in December. Digital currencies in the Russian Federation remain vague. The legality of ICOs, Smart Contracts and Crypto Mining lacks a clear definition despite the high number of proposals submitted to the legislature for this intention.

Venezuela Outlaws Crypto Mining Activities in the Country

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Venezuela has recently banned the trade in crypto mining in the country. The ban is mainly aimed at citizens who reside in all government-owned houses and in all their surrounding vicinity. In a maiden announcement on Friday, Minister of Habitat and Housing, Iidemaro Villarroel, said that the continued use of crypto mining could have an impact on the distribution of electricity in the country.

Besides, the Minister said Crypto ‘s ban on mining was part of the Great Home Project. In his speech, the Minister revealed that crypto mining and other instruments involved in its operations consumed a lot of power. This, in turn, violated the government’s already formulated electricity distribution policy. He added,” In this coordinated work, we have detected the harmful effects of these elements of high electrical demand in the public houses of the Grand Mision Vivienda project.”

Venezuela’s Great home project plans

The Great Home Projects (Gran Misión Vivienda) involve the government’s plans to provide grant housing to local Venezuelan citizens with low incomes. The government is targeting the poor and providing them with adequate housing despite the harsh economic environment that the county is currently facing. And the government has also managed to deliver around 3 million homes to the citizens in their efforts towards the project.

Around 151 houses were also distributed to different families in the nation’s capital of Caracas; back last year. It is precisely these government-owned houses and their surroundings that have notified the ban. They insist that all crypto mining trades in these households are considered illegal and a crime punishable by law.

Crypto mining effects on the country’s electricity supply system

The Venezuela government has attributed the Crypto mining trade to directly affecting the power grid. They insist the mining process tends to consume a lot of power, thus affecting the distribution of electricity throughout the country. Back in 2019, there were reports of the national electrical shutdown after the Guri hydroelectric dam failed; further proving a significant problem that needs to be addressed.

Indian Banks Hesitating to Embrace Crypto Industry Albeit RBI Consent

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The Reserve Bank of India (RBI) reversal of the outright crypto-currency ban in March was a gift to the flourishing Indian crypto-industry. The country’s emergence of new exchange platforms has been the incentive to the industry ‘s steady and healthy growth.

While India is one of the most affected nations by the coronavirus pandemic, this significant growth is noticeable. Indeed, the epidemic has led to a downward economic disaster across the nation. In such crisis-ridden times, blockchain and digital currencies have proved the desperately needed remedy for both investors and fintech ground-breakers alike.

Crypto regulatory wariness

Nevertheless, lifting the blanket ban seems was not the ultimate solution to the regulatory uncertainty that most had hoped to be. There have been alleged incidents where Indian banks have denied financial services to crypto-related firms. The good thing is that the industry has a more explicit regulatory structure than there was in 2017; the extent of cynicism and turmoil was sky-high.

Notably, a rumour emerged within the Indian Ministry of Finance for interdepartmental consultation on a law proposing all crypto operations to be abashed. The draft law proposal involved a heavy financial penalty for guilty individuals and a prolonged prison sentence. Recently, the rumour was refuted.

According to a business consultancy firm, AKM Global, if the proposal for a blanket ban passes into law in its current fashion, it would “completely decimate the crypto-industry in India.” Rumor has aroused the already fading fears in the crypto-currency industry in India. Regardless of the recent rumors, Nischal Shetty, CEO of WazirX, still maintains confidence with the government.

An email sent to Cointelegraph’s crypto media outlet quoted:

“On the day the news about the ‘note’ broke out, it created some panic among the community. But that’s all. We are not seeing any difference in the trading behaviour on WazirX since then. There have been speculations about crypto ban in the past as well. With more than 5 million crypto users in India, I’m confident that our Prime Minister won’t let us down.”

Indian Banks reluctance to embrace crypto industry

In addition to RBI, certain private commercial banks in India have refused to process cryptocurrency transactions. However, a large percentage of speculations suggest the reason why the cryptocurrency sector lacks knowledge; as noted within various government bodies.

Siddharth Sogani, the founder of Crebaco research firm, believes that there may be further conflicting interests at play. According to him, “Banks will always be globally opposed to this industry because if crypto comes into action; P2P transactions will eliminate the need for third-party bankers.”

Regardless, in response to a request for information from the co-founder of the crypto exchange Unocoin, Harish BV, the RBI did not, in fact, indicate any limitations on banks offering crypto-related companies and individual traders to account. This was the major RBI statement that presumably banks were waiting for, but the actual quantifiable effects remain.

Indian Crypto Firms Optimistic Despite Crypto Blanket Ban Rumors

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Indian crypto firms remain optimistic for the bright future, despite rumors of an imminent ban on cryptocurrencies from India. Last week, the Indian Ministry of Finance submitted a proposal to permanently ban digital currencies from the country.

The Indian cryptocurrency industry has begun to experience growth since the Reserve Bank of India ( RBI) has been forced to lift the banking ban by the apex court, giving the government embattled industry a new lifeline. Even so, after three months of a smooth ride, the industry is once again facing the threat of permanent dismantlement.

Indian crypto firms under siege

If the new bill awaiting approval by ministers passes into law, it will end the booming cryptocurrency industry. Notably, the new law will affect crypto-related firms and individuals who own and trade digital currencies. 

Regardless, some Indian crypto firms are still optimistic and claim there is no need to panic. The first cryptocurrency firm that comes to mind when talking about the Indian crypto sector is WazirX. WazirX has been making headlines in the media for record-breaking trading volumes, and the recent high-profile acquisition by exchange giants Binance.

Optimism galore

According to the CEO and founder of WazirX, Nischal Shetty, the news of a blanket ban are merely rumors. He says:

“While we do not question the credibility of the source, we do know from our own links within the government that India’s crypto sector, in fact, is viewed in a positive light. There is no ban being considered, as far as we know.”

Moreover, the founder and CEO of CoinDCX, Sumit Gupta, commented on the rumors. The crypto firm recently managed to raise $2.5 million in extra funds to venture into several crypto-related investments in India.

Furthermore, Gupta launched CoinDCX’s online crypto and blockchain learning platform to drive adoption. He noted that India is yet to enjoy the best days, and he sees his new initiative introducing digital currencies to at least 50 million people in India. He stated:

“The launch of DCX Learn is a big step toward understanding and embracing crypto. It comes at a time when Indian crypto companies are thriving. So, instead of focussing on rumors, we must do all we can to fast-track financial inclusion in India.”

Russia’s Proposed Crypto Ban Opposed by Ministry of Justice

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Russia’s proposed ban on crypto, which seeks to restrict all crypto-related activities within the Russian Federation, has suffered yet another setback following a negative review by the government’s vital arm.

Russia’s Ministry of Justice challenged the newly proposed bill seeking to ban cryptos on 16 June, exactly seven days after Russia’s Ministry of Economic Development also issued a scathing criticism of the bill. The new bill was proposed by the legislators back in March, but it is believed to be the original idea of the nation’s central bank.

Russia’s proposed crypto ban criticized by both the public and government bodies

The Russian central bank is known to be anti-cryptocurrencies and does not support the use of digital currencies. After being revealed, the new proposal seeking to prohibit individuals from using the country’s necessary facilities to run any crypto-operations was met with some cruel reviews from the Russian cryptocurrency community. 

Notably, the proposal seeks to bar Russians from utilizing the country’s infrastructure to conduct, run, or operate any crypto-related activities. However, individual people will be allowed to inherit digital assets or receive them due to the counterparty’s bankruptcy procedure. Additionally, cryptocurrencies can be seized like any other property by a court order.

More clarity required

According to Russia’s Ministry of Justice, the bill does not clarify the justice system on what to do with confiscated digital assets. Under normal circumstances, marshals sell the confiscated assets through auctions, but with crypto transactions being prohibited in the country, this will be impossible. 

Instead of the standard procedure, the Russian Ministry of Finance proposes that a government agency be assigned to assist Russians in selling their cryptocurrency holdings overseas. Meanwhile, Anatoly Aksakov, the sponsor of the draft bill while speaking to Tass news agency, stated that the draft bill on digital securities is already finalized. It is only awaiting to go through the final reading.