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China Could Use Bitcoin As A Financial Weapon Against US Dollar

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China has time and again revealed its inclination towards digital assets. However, the United States of America has been extremely stringent with regard to the crypto market. Just when the crypto-verse is growing in terms of popularity as well as price, several individuals across the globe have started to view the crypto industry as a promising investment portal. However, the strict laws imposed by the American government has made it difficult for the citizens of the country to invest in the asset.

Anthony Pompliano, appearing in a recent interview with CNBC’s Squawk Box, pointed out how the US could lag behind in the financial race if it did not embrace Bitcoin [BTC]. Speaking at the Nixon Seminar, prominent investor Peter Thiel suggested how Bitcoin could be thought of as a “Chinese financial Weapon against the US”. While Thiel speculated that this could undoubtedly threaten the US Dollar, Pomp went on to agree to the same.

China Getting Ahead In The Financial Race?

With the fast-paced development of the digital yuan, China had already established its dominance. While the US is still lagging behind in the development of the CBDC, embracing crypto could possibly help the country stay ahead in the game, the community speculates.

Elaborating on Thiel’s recent statement, Pomp stated,

“Everyone in the world has an opportunity to use this, just like the internet. And so, just because other countries, maybe adversarial or not to the United States, are going to use it, it doesn’t mean [Thiel] is taking an anti-Bitcoin stance. Actually, it’s quite the contrary.”

Further dismembering Thiel’s comment, the Morgan Creek Digital co-founder suggested that the US could fall back in the “global competition” which would further push other countries like China to use this to “destabilize or financially attack the United States.”Additionally, he added that America was required to “be the leader” and embrace crypto in order to retain its place on the top.

He added,

“What we need is for the United States to be the leader here. We need to embrace this, so we need to make sure that we use this technology to continue to be a leader on the global stage.”

Hackers Demand Monero Through Trump’s Campaign Website

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This year, many people across the globe have been denounced by the abject pandemic. The crypto industry was also subject to immense treachery. A lot of dirt was thrown at the industry, as some fraudsters were looking bag some easy money. With the value of crypto assets hitting new heights, hackers sought Bitcoin and other cryptocurrencies as a ransom. After India’s Prime Minister Narendra Modi, America’s Donald Trump is the latest to fall prey to a cryptocurrency hack.

Hackers Seek Monero

Earlier today, US President Donald Trump’s campaign website was under attack. For a period of 30 minutes, the hacker took over the website and reportedly demanded the privacy coin Monero [XMR]. A notice was issued on the site by the attackers highlighting that the globe was tired of fake news that was advertised by President Trump. The hacker further revealed that he/she had intended to deliver the truth to the world. Twitter user, Gabriel Lorenzo Greschler was one of the first to discover the attack as he tweeted,

In the notice issued on the site, the hacker alleged to have acquired passage to the “most internal and secret conversations strictly classified information” this was further accompanied by claims of gaining full access to Trump as well as his relatives.

COVID-19 was undoubtedly the highlight of this year. A microscopic virus that disrupted the ways of the entire mankind paved the way to several conjectures. While some put forward the theory of China spreading the virus to weaken the world, a few others alleged that Bill Gates was in a deal with “big pharma” to suck out profit through the death and suffering of people. However, none of these have substantial proof and the hacker was the latest one to add to the list of the already existing speculations. The notice of Trump’s website read,

“most internal and secret conversations strictly classified information is exposed proving that the trump-gov is involved in the origin of the corona virus.”

This wasn’t it, the hacker further accused Trump of manipulating the 2020 elections by joining forces with foreign actors. Leaving people high dry, the hacker suggested that he/she would reveal the truth based on the number of votes. The votes were measured through the number of Monero in the “yes” address and the “no” address.

The hackers further said,

“after the deadline we will compare the funds and execute the will of the world. In both cases we will inform you.”

The notice was removed promptly and Trump’s campaign team revealed that no information from the website was compromised.

Brad Garlinghouse Seeks ‘Level Playing Field” As Regulators Allegedly Favor Chinese Tech Over US

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Cryptocurrencies have had a tough time establishing itself in the globe. From being sidelined to being touted as a darknet currency, cryptocurrencies are finally seen as a major asset in the financial sector. However, the regulations for a number of digital assets remain uncertain as regulators continue to probe these currencies. Ripple has been quite vocal about how unclear and hazy the regulations have an impact on the crypto-verse.

US Regulators Favoring Chinese Technologies?

Just last week the former CEO of Ripple, Chris Larsen along with Brad Garlinghouse, the current CEO of Ripple revealed that the company was inclined towards shifting their office to a different country that had better clarity on regulations pertaining to crypto. Prolonging the same, Ripple’s Garlinghouse shared an array of tweets. While the previous statements made by the CEO were misunderstood by many, Garlinghouse clarified that Ripple was not looking to “evade US regulation.”

Pointing out that Ripple has complied with “critical laws” including BSA/AML controls, Garlinghouse suggested that Ripple was a proud company of the United States. Elaborating on the most recent issue regarding the status of crypto in the country, Garlinghouse tweeted,

“However, last week’s DOJ report lists 8 separate US reg bodies each with a different view: crypto is property, crypto is a commodity, crypto is a virtual currency, crypto is a security, etc. Regulation shouldn’t be a guessing game.”

Furthermore, Garlinghouse went on to reveal that certain regulators of the United States were actively favoring Chinese technologies over companies based in the States. He added,

“Legislation like the #DCEA can bring US companies to equal footing.”

Regulations or lack of regulations has come in the way of innovation and has been posing as a huge barrier to innovation. Following the same, Larsen had suggested that Ripple would consider moving to Switzerland, Singapore, UK, or Japan.

Garlinghouse further tweeted,

The Ripple CEO’s comment section was flooded with opinions regarding the matter. While some suggested that regulatory clarity was not limited to only Ripple and XRP, a few others highlighted how the United States has always portrayed a laid back attitude with regard to new banking products.

Ripple’s Former And Current CEO Reveal Plans To Exit US Over Regulatory Climate

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Decentralization is what the crypto industry hoards. Nevertheless, the crypto-verse continues to fall under the purview of many regulators across the world. Although cryptocurrencies have a ton to offer when it comes to digitization, the risks pertaining to them also follow. As a result, some regulators have had a difficult time scrutinizing these assets. However, the lack of regulatory clarity appears to be a big problem for Ripple.

Is US A No-Go For Ripple?

Appearing in a recent interview, the former CEO of Ripple, Chris Larsen hinted that the blockchain-based payment protocol was considering exiting the United States following the severe regulatory implications put forth by the country’s regulators. Currently based in California, Ripple has been seeking better clarity on the regulatory climate of Ripple in the country.

Pointing out how the US limits crypto platforms from operating globally, Larsen highlighted that Ripple was looking to relocate its headquarters from San Francisco. He said,

“We don’t know how it’s going to exactly play out, You know, those countries are trying to sort of become fintech centers of the world. You have clarity in places like Switzerland, the U.K., Singapore, Japan.”

He also added that the above-mentioned countries would have the upper hand as they would harbor capital markets, regulators as well as innovators in the same city, unlike the United States. In the United States, New York is where investors can be found, Washington has lawmakers, and Silicon Valley has tech entrepreneurs, and none of them can understand each other, he added.

Seconding Chris Larsen’s take on the hostile regulations of the United States, Ripple’s current CEO, Brad Garlinghouse tweeted,

“Strongest internet companies built in the US, in part b/c of regulatory clarity. We have that opp with blockchain + digital assets. Responsible players like Ripple aren’t looking to avoid rules, we just want to operate in a jurisdiction where the rules are clear. #DCEA of 2020.”

This wasn’t the first time, Garlinghouse had called out the regulators of the United States. Towards the end of May, Ripple’s CEO shared a tweet urging the regulators to embrace crypto instead of hindering its growth.

Ripple is not the only crypto platform that has been prey to the uncertain regulatory climate. If the United States prolongs its hostility towards crypto, the country could lose its edge in digitalization.

US Treasury Sanctions Two Russians Involved in Crypto Phishing Attacks

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The United States Department of Treasury announced sanctions against two Russian nationals for their involvement in phishing campaigns in the year 2017 and 2018. According to the official press release, the accused reportedly targeted customers of two US-based and one foreign-based cryptocurrency exchanges.

The two individuals sanctioned namely, Danil Potekhin and Dmitrii Karasavidi are being designated pursuant to the Executive Order targetting malicious cyber activities. This also included those related to the significant misappropriation of funds or personal identifiers for private financial gain read the press release.

Several American citizens as well as businesses were also among the victims of the fraudulent actors that resulted in a loss of nearly $16.8 million, combined.

Secretary of the Treasury, Steven T. Mnuchin

“The individuals who administered this scheme defrauded American citizens, businesses, and others by deceiving them and stealing virtual currency from their accounts. The Treasury Department will continue to use our authorities to target cyber-criminals and remains committed to the safe and secure use of emerging technologies in the financial sector.”

Potekhin had created a number of fraudulent web domains that closely resembled the genuine ones of cryptocurrency exchanges to lure in and dupe unsuspecting users thinking they are on a legitimate platform. Following this, Potekhin and his co-conspirators stole the users’ login credentials thereby gaining access to their accounts.

They press release also stated that the attackers used various mechanisms to exfiltrate the stolen funds and subsequently cashing out for a higher price this pulling a quick profit.

Ultimately, the stolen funds were traced to Karasavidi’s account, following which millions of dollars in cryptocurrency and U.S. dollars were seized in a forfeiture action by the United States Secret Service. The sanctions were imposed in a coordinated action with the U.S. Department of Justice and the U.S. Department of Homeland Security, the U.S. Department of the Treasury’s Office of Foreign Assets Control [OFAC]

Cryptocurrency and Blockchain Companies Can Breathe Huge Sigh of Relief After Latest Regulations Proposal by CSBS

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Regulations and the rulebook instituted by traditional organizations have always acted as obstacles for the nascent cryptocurrency industry which brings with it new functionalities and features. After years of debating over which set of regulations is best for the world of virtual assets, US state governments finally seem to have arrived at a middle ground.

On September 15, the Conference of State Bank Supervisors [CSBS] revealed a new regulatory regime for money service businesses that is set to enable a more seamless cryptocurrency industry. The latest proposal will include a single exam that will be conducted by state regulators which will determine the handing out of trading licenses.

The latest unveil is set to benefit not just the smaller cryptocurrency companies but also financial mainstays like Western Union and PayPal. According to the CSBS, the leaner regulation scheme will make it easier for institutions to operate across multiple states. It has become important for the state governments to favor the aforementioned organizations because of the sheer amount fo economic traffic that they bring-just last year, the 78 large payment firms that come under the new regulations moved almost $1 trillion in terms of transactions.

The latest set of rules comes after years of complaints and recommendations from crypto companies and their supporters. Under the new regime, rules will be proposed by a selected set of regulators from a few states who will act as the overwatch for the entire country. This sentiment was also reiterated by CSBS president and chief executive John Ryan who fully backed the new idea. According to him, states will be able to share information from the initial exams with each state reserving the right to launch their own investigations if they seek to do so.

Mr. Ryan further added that the states weren’t giving up authority but were rather realizing the “efficiencies of sharing information”. Kevin Hagler, a member of the CSBS board added:

“One company, one exam is a significant and important shift in how state regulators will ensure compliance with consumer protection and safety and soundness standards for the largest payments companies. By working together and relying on the excellent work of fellow state regulators, we will be able to do even more.”

The decision has certainly been met with a lot of appreciation from the world of fintech, which has been burdened with red tape ever since its inception. If all things go according to plan, then it may only be a matter of weeks before cryptocurrency organizations can function at full tilt in the US legally.

China Initiates Digital RMB Testing to Educate Citizens

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While the United States has often been at the forefront of technological advances, this has not been the case with regard to the digitalization of its national currency. For the most part, policymakers have failed to see the industry in a promising light that has led to the Western Superpower lagging behind its Eastern counterpart.

As the US and China continued to lock horns, in the digital race, it was the latter that appeared to be way ahead. Its trump card? Digital RMB.

The first mover in the space

China has already begun testing the digital Renminbi [RMB] as well as educating citizens about using it. In addition to running trials of the central bank-issued digital currency, it was also reportedly working towards normalizing it across media.

The country has been working on digital RMB for the last six years. It was the growing popularity of Bitcoin that triggered the development. Expanding the “Blockchain and not Bitcoin” narrative, China is all set to increase convenience, security, and anti-counterfeiting level of retail payment, thus accelerating the development of its digital economy.

However, empowering its country’s economy isn’t the only factor that has bolstered the release of its digital currency. One of the many thoughts that Chinese policymakers have in mind is to increase the influence of RMB.

On the other hand, the US is nowhere near with a Digital Dollar. Even the discussions around it were spurred the call to action because of the coronavirus pandemic and Facebook’s Libra.

President of Chamber of Digital Commerce, Perianne Boring, had earlier stated that if the US does not adopt the ” best technology underpinning the country’s financial system and another country leap-frogs their infrastructure, this could jeopardize US’s standing on the world stage.”

Seeking global dominance

With its CBDC, China is set to become the first country in the world to offer a digital sovereign currency. There are candidates already lined up to roll out the CBDC on a large scale, for example, Didi Chuxing the country’s largest ride-hailing platform, food delivery giant Meituan Dianping to name a few.

On the surface, it looks like China is heading for CBDC utilization for domestic purposes. However, it is no secret that China is not quite satisfied with the US Dollar’s dominance and reach in the global financial system.

Let ‘s look at China’s brief timeline overtaking the US over the last decade. It claimed to have “overtaken” the US as the world’s largest trader of goods in 2014. As stated in the book Renminbi Internationalization, China has reportedly implemented a pilot scheme to expand the use of its national currency for trade settlement with the Southeast Asian nation, which later materialized.

However, the main milestone for RMB was when the IMF added the currency to the Special Drawing Right [SDR] basket, an international reserve in 2016.

World Money and Power Politics

One of the most crucial ways in which China seeks to spread the money and rise up as a strong contender to the US Dollar is through the Belt and Road initiative. According to a paper released by Kiel Institute for the World Economy last year, China reportedly holds more than $5 trillion of debt owed by other developing or low-income nations. This is again just an estimation, nearly half of China’s loans go unreported.

While this may bring in repayment failure concerns by the countries in debt, it is one way for China to “internationalize” RMB.

Speculating on the rise of China’s CBDC along the same line, Lucy Gazamarian, Co-chair of the blockchain committee of the FinTech Association of Hong Kong recently stated,

“If [China] wants its currency to flow more freely outside of its own borders, it has the technological capability to do that. There’s so much trade happening in the Belt and Road [Initiative], 60-plus cities, and there is not a universal currency.”

Gazamarian stated that the USD still needs to be translated and most huge transaction need to flow through the USD and further added,

“So there is a case for the CBDC to become a universal payment instrument in emerging countries as part of the Belt and Road, then [maybe] it could rise up as the world’s reserve currency for emerging countries.”

FXCoin Analyst Believes Weak Yuan Could Strengthen Bitcoin

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Economic sanctions against Chinese traders are likely to weaken the value of the Chinese Yuan. As a result, Bitcoin’s (BTC) value is likely to strengthen. This is according to Yasuo Matsuda, a senior strategist at FXCoin. 

COVID-19 Caused a Domestic Recession

Speaking to Cointelegraph Matsuda noted that the Yuan’s depreciation would easily lead more Chinese traders to Bitcoin. Resulting in a powerful bitcoin in 2020. The strategist at the Japanese crypto firm noted how likely it was that bitcoin would gain popularity among Chinese traders. For example, citing economic sanctions against Chinese nationals as the main variable towards the weakening of the Yuan. In particular, economic sanctions are the result of the government ‘s security laws, which are part of curbing the spread of COVID-19.

Bitcoin will, therefore, serve as an escape route for Chinese citizens frustrated by a domestic recession in their economies. Meanwhile, Matsuda explained how the Covid-19 pandemic caused the economy to fall into recession. Create an urge among traders to transfer their liquid assets abroad. In fact, Bitcoin could gain even more popularity if the current legislation imposes economic sanctions on the US.

Chinese Yuan Dropped During 2019 Trade Wars

The Intense 2019 US-China trade wars caused a stir across the Asian economy, resulting in a sharp decline in the Chinese Yuan. The currency bottomed towards it low between May and September last year.  The Chinese Yuan is now almost approaching its 2018 values. However, this January, after facing a slight rebound from its falling curve.

However, what incentivizes traders to shift their assets overseas once a recession occurs is because the value is dropping in terms of dollars. Capital Flight Regulations in Beijing have taken strict paths, and therefore Bitcoin seems to be the only way forward. This is why most of the Fintech analysts have referred to Bitcoin as a flight-to-security asset.

According to the Independent.uk, in 2020 Bitcoin became the top-performing asset. Overcoming other assets like Gold and Oil.

Crypto Businesses Licensing Bill in Progress in US State of Louisiana

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 American state of Louisiana legislators passed a crypto businesses licensing bill that is only awaiting to be signed into law, as per public records. The new bill will provide a structure to properly regulate entities working in the digital currency industry.

The legislation backed by a state representative, Mark Wright, was filed earlier this year. The bill looks to create a procedure for firms tied to digital currencies to seek and secure operating licenses in the state of Louisiana.

Louisiana warming up as crypto  businesses licencing bill awaits approval

The new laws would see the creation of definitional language for cryptocurrency exchanges and the words and phrases associated with digital assets. Louisiana is following in the footsteps of New York, to release its own BitLicense to regulate the expanding cryptocurrency industry in the United States.

The House of Representatives in the state advanced the bill on May 20 with 92 members agreeing to the legislation. There are several requirements that all crypto businesses should fulfill with Louisiana’s Office of Financial Institutions (OFI) before beginning to operate in the state; such as recording of fingerprints, do a “experience, character, and fitness” test, pay an initial non-refundable fee of $2,000 and an annual renewal fee of $1,000.

It’s not over yet

Despite the eagerly anticipated law receiving green-light from the lower chamber, there is still a long way to go to obtain approval from others such as the State Senate, Consumer Protection, and the Committee of Commerce. Additionally, the bill is quite costly. Its enactment will cost over $150,000 and its total cost will probably break past $1 million in the next five years.

Cryptocurrency licensing in the United States varies in different states. Back in 2019, although it was launched countrywide, Binance US was still not available in 13 states including Louisiana. Nevertheless, the booming cryptocurrency industry has forced many of them to regulate digital currencies.

United States IRS Decides to Look into Dealing with Cryptocurrency Taxes

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The cryptocurrency industry has been the subject of several regulatory concerns in the last few years. Most of these concerns have often been aimed at two major sectors of the industry: security and the vulnerability to massive fraud.

When the cryptocurrency industry grew, so did the size and scope of the scams. The United States Internal Revenue Service [IRS] was the latest agency to move into the virtual asset world with a plan to combat cryptocurrency tax evasion.

Just last week, the IRS released a paper that requested independent experts to help crackdown on cryptocurrency tax evasion. The [SoW] report produced by the IRS set out their criteria, which focused mainly on tax returns on cryptocurrency gains/losses. Sources close to the IRS have reported that it would cover the taxation of small-time players

An excerpt from the SoW added:

“Taxpayer transactions can be relatively simple, or in some instances, they can have hundreds of thousands of digital asset transactions in a year.”

Reports have indicated that the IRS has been tracking the cryptocurrency space for some time. One of the first steps to be taken by the IRS would include trading of cryptocurrencies and related procedures. The IRS recognized that billions of dollars worth of transactions occur on these exchanges, while fraud occurs simultaneously.

At present, traders still have the option to obtain a crypto tax software and calculate the exact rate to be reported. The IRS had to reveal this information because reports circulated that the Agency needed requesting crypto firms to disclose user data.

The latest move from the IRS was met with some trepidation by officials in the cryptocurrency space. David Kremmer, Chief Executive Officer of CryptoTrader. Tax claimed that a lot of people in the industry would not be pleased with the decision, but those legitimate traders would have nothing to worry about.