British flag 

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One of the world’s largest cryptocurrency exchanges Coinbase is handing over its customer data to Her Majesty’s Revenue and Customs (HMRC) for all who received more than £5,000 (€5,510) worth of cryptocurrency payments during the last tax calendar. Now Coinbase had sent a notice to its UK-based users via Twitter that their information will be shared with the tax department in the United Kingdom on October 2 last week. 

Initially, the exchange was liable to send all previous transactions starting from 2017 but now it is only giving the data from the last tax calendar only, in a sign of compromise. The €5,510 cut-off amount was also deliberated and eventually agreed upon with the government demanding an even lower scrutiny amount while the exchange itself was looking for a smaller one. The demand is similar from tax authorities of governments around the world with many of them looking to get even greater access into user information of crypto users. New Zealand’s government for instance has gone one step even further than the UK and demanded even more specific information from local crypto exchanges. 

The Centralized Exchanges

Centralized exchanges like Coinbase, Binance, Bitstamp, Bitfinex, Huobi and others do make things easy for users around the world. They allow instant purchases with our bank cards, instant trading capability, etc. However, despite their increasing utility, we are also seeing how they can be used by government agencies to track citizens even though many of them look to cryptocurrencies as a means to avoid government censorship. According to a spokesperson from the Coinbase UK said:

“These requests are commonplace for financial services companies. Through a series of constructive conversations, we agreed upon a more limited and focused disclosure…”

While the exchange itself may be sincere in doing so, the truth is that these centralized exchanges have their hands tied in a constant barrage of governmental regulation which often forces them to reveal sensitive customer data to the authorities. They need to comply with these demands or else they are banned from operating in these respective countries. It is a classical centralized trap for centralized ventures. The government can easily shut them down according to will. Some cryptocurrency promoters believe that this centralized model of exchange is the single biggest threat faced by the crypto community because even if there is no government regulation, these organizations have direct control over other peoples’ funds worth hundreds of billions of dollars which is antithesis to the crypto industry that despises this over centralization. This setup allows many exchanges to misreport their data. 

Decentralized Exchanges

Decentralized exchanges that are autonomously operated and don’t have a central authority in complete control over the proceedings are probably the holy grail of the cryptocurrency sector. They envisage an exchange platform that is not controlled by a centralized model and thus it is not answerable to government regulation and censorship. However, despite fast-track development on this front, many of the concepts coming from the crypto sector couldn’t fulfill their promise of a fully functioning decentralized exchange for some time. Either there was some hidden centralized feature or the functionality just wasn’t there. However, now it seems like the next crop of these exchanges will fulfill many of the user requirements and challenge the centralized exchanges as a means of exchange in the crypto world. Exchanges like Uniswap and others may solve the issue of over centralization in the sector but they also have a long way to go if they wish to become the industry standard. The centralized exchanges will therefore need to adapt quickly or risk becoming obsolete in the end. 

bitcoin and fiat currency 

Bitcoin price has been slowly but steadily rising for the past months. As more and more signals that suggest an incoming bull run keep appearing, optimistic prognoses regarding the long-time future of the most valuable cryptocurrency are also getting increasingly popular. Recently, the entrepreneur and author Jeff Booth decided to share his outlook on bitcoin’s future with the crypto community.

Booth, author of the popular book “The Price of Tomorrow: Why Deflation is the Key to an Abundant Future” and the founder of Canada-based tech company Builddirect, has discussed the current state of the global economy in an interview with Cambridge House International. The focus of the interview published last week was bitcoin, and specifically, how the economic situation will affect BTC price and the digital currency’s ultimate future.

The world economy 

Booth believes that the world’s economy will not be able to successfully deal with the effects of the coronavirus pandemic. Although Booth’s book has been published before the start of the pandemic, he claims that COVID-19 has only accelerated the mechanisms that were already in place long before. Central banks were printing fiat currency ever since the gold standard was abolished, but the pandemic-related stimulus packages greatly increased the rate at which the governments print money. For Booth, it’s a sign of an imminent, worldwide economic depression, and a severe crisis of the entire economic system built around fiat currency and central banking.

Devaluation of Fiat-money 

Booth predicts that the unrestrained money printing will lead to a massive devaluation of the dollar and other fiat currencies: “once the Fed loses its credibility then all bets are off in inflation”, he says. However this grim outlook on the world’s economic situation is precisely what makes Booth so bullish on Bitcoin - he believes that as inflation gains momentum, people will turn to deflationary assets like BTC and gold.

Optimism about Bitcoin 

Although Booth has revealed that he owns both bitcoin and gold, and he encourages everyone to diversify their portfolio, he also states that he is “much more bullish on bitcoin”. Booth claims that BTC “could be the new gold”, and he even goes as far as saying that “everyone’s portfolio must include bitcoin”.

Booth believes that bitcoin’s major advantage over gold is its portability. As national fiat currencies start to rapidly lose value, people will flee to BTC - the asset that not only is immune to inflation, but unlike gold, it’s also very easy to store and transfer. According to Booth, when the fiat system collapses, bitcoin may even go from a safe haven asset to the world’s reserve currency - the dominant form of money to which all national currencies are pegged.

US federal agency sues BitMEX 

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Top futures trading regulator in the United States Commodities and Futures Trading Commission (CFTC) has filed a civil action lawsuit against cryptocurrency futures and derivatives exchange BitMEX in a district-level court in New York state. The federal regulator accuses BitMEX of operating without a license in many US states and violation of several other important regulations including non-implementation of Anti Money Laundering (AML) procedures. BitMEX owners and co-founders Arthur Heyes, Ben Dolo and Samuel Reed are named as the accused in the case. 

What is BitMEX?

BitMEX is the world’s largest cryptocurrency futures and derivatives exchange. It sees hundreds of millions of dollars worth of futures and other derivatives trading on a daily basis and has been the leader of the industry for a long while now.

The Role of US Federal Agencies

The US regulators have had long-term concern over the growth of the “Bitcoin industry” and have since indulged in several direct and indirect maneuvers to help curtail it. They are irked by the decentralized P2P nature of the sector and the fact that users can effectively hide their assets by going off the fiat grid, so to say. However, due to some pro-crypto legislation at state and federal level, court decisions and advocation from pressure groups, they cannot go after these platforms directly in many cases. So, an exchange like BitMEX appears to be an easier target for the CFTC in particular because while cryptocurrency trading is semi-covered by law in the US, the cryptocurrency derivatives trading has been outlawed. Futures, swaps and other derivatives are not protected currently in the USA and CFTC is using this case to set a precedent for their regulation. The whole derivatives trading drama has been going on for two years and still no Exchange Traded Fund (ETF) has been allowed by either the CFTC or the Securities and Exchange Commission (SEC). 

The Accusations Against BitMEX

In the civil action lawsuit, the CFTC has levelled some serious allegations against BitMEX’s top executives, some of which are quite legitimate. For example, in addition to operating without any kind of registration, BitMEX is offering unnatural leverages in its derivatives trading options on commodities, futures, instant swaps and options which can rise to as much as 100x at times. This kind of leverage is quite dangerous and can promote reckless speculation in the markets and it is often witnessed in the community. The exchange in practicality offers up to trillions of dollars in leverages without having to follow any compliance features required for regular derivatives exchanges.

The Chairman of the CFTC, Heath P. Tarbert, said: 

...., New and innovative financial products can flourish only if there is market integrity. We can’t allow bad actors that break the law to gain an advantage over exchanges that are doing the right thing by complying with our rules”.

Other allegations against BitMEX include non-compliance with AML regulations and violation of Bank Secrecy Act, a Federal violation punishable by jail time. 

Verdict

The US CFTC’s case against BitMEX is probably a precedent-setting move against any future court battles against cryptocurrencies and their derivatives. Some of BitMEX’s actions are indeed reckless or promote reckless speculative behaviour. Now it remains to be seen whether the court will outright ban the exchange or let it go with a few penalties and such or even announce that the federal regulator doesn’t have any authority over them. Given the anti-crypto stance of the New York district overall, BitMEX might be looking at some penalties especially considering some of their leveraged services are unnaturally speculative.

 

President Maduro of Venezuela

A few weeks ago, the president of Venezuela, Nicolás Maduro ruled the beginning of the use of cryptocurrencies with regard to national and world trade, now, you will wonder where that interest comes from?

Certainly, Venezuela has been closed in terms of the use of cryptocurrencies, reaching a point where they even created a national "cryptocurrency" that is maintained thanks to the country's natural resources; however, they have surprised with this news.

This is due to a kind of counterattack to neutralize the devastating economic sanctions of the United States.

All this was officially announced in Parliament on September 29, it is well known that in Venezuela the use of cryptocurrencies used to be an open secret, because it was not legal to use or mine them.

Even so, Venezuela had and has high transaction rates, especially because it is an option for sending remittances.

For his part, President Nicolas Maduro said verbatim "this measure will give new strength to the use of Petro and other cryptocurrencies, national and global, in national and foreign trade ..."

When it comes to the Petro. talks about the cryptocurrency named above, which does not really enter the cryptocurrency categorization and has not had the success that was expected by the government. Also, the method of use is quite cumbersome and it is not a frequently used payment method.

For his part, Maduro was delivering an anti-sanctions law aimed at stimulating economic and social development, which was also affected by the United States sanctions.

These types of economic sanctions tend to strangle Venezuela's trade relations with nations that use the dollar as their official currency, because other countries decide to avoid as much as possible any rapprochement with the South American country.

For this reason and its consequences, the country decides dictatorially, to set its sights on the Petro. It should be noted that the sanctions applied to countries like Venezuela do not usually bear the fruits that are believed since ending a dictatorship of this magnitude goes beyond constant economic blockades.

Venezuela, being the sixth largest oil producer in the world, hopes that through cryptocurrencies the restriction of petrodollars can be compensated, which is included in the consequences of economic sanctions.

Outrage by the cabinet

The entire cabinet of this left dictatorship has been scandalized by these sanctions (and to be honest, by all the previous ones and by whatever the president of the United States says or does).

He also said “Donald Trump and his sanctions prevent Venezuela from carrying out transactions in any of the world's banks. There are other ways to pay, and that's what we are using, because our payment system works perfectly in China and Russia "because China AND Russia are its main allies, there is no problem with the use of their payment systems, but in Definitive are not the best example to demonstrate the functionality of the system.

Now, according to the report made by Bloomberg, the central bank of Venezuela is taking into account the statements and studying if they can have crypto reserves and how this would help or affect the country and its economy, which is already in decline.

They also have bitcoin (BTC) and Ethereum (ETH) as their immediate targets.

In fact, they are assets that have already been requested by the state-owned Petróleos de Venezuela SA.

This oil company plans to send BTC and ETH to the central bank and once that is done, have it pay the company's suppliers with the coins.

To conclude

It is not a secret that the deepening of the economic crisis in Venezuela has led the country to massive adoption of cryptocurrency, this is proven in the more than $ 8 million in bitcoins that are traded every week according to Coindance data.

However, it should be noted that decisions like these are not taken lightly and are not necessarily going to help the common Venezuelan citizen, since this probably comes with laws that charge high fees and criminal penalties for not using cryptocurrencies in the way in which they prefer. In fact, it could even become another bump for Venezuelan society and its daily quests to survive.

Finally, it is important to note that the government recently signed a new tax agreement with which it will be able to collect taxes and fees on the petro, as we said before, most of its decisions have more pros than cons.

Theter 

In the early days of cryptocurrency, tether was introduced as a way to trade against the US dollar while still owning cryptocurrency. At the time of its introduction, it was virtually the only option that you had for stablecoins. However, as the market for stablecoins has grown, tether is beginning to fade in a crowded landscape. The volume of stablecoins has now surpassed $20B, and Tether’s share of the market has dipped below 80% for the first time in the history of its existence.

One of the fastest-rising stablecoins is USDC, which now owns 13% of the market. This is significant progress, considering the dominance that USDT once had over the stablecoin market.

Market growth for stablecoins

An encouraging aspect of the stablecoin market is that more and more investors are flocking to stablecoins to take advantage of the great returns that are being enjoyed in the DeFi corner of cryptocurrency. With stablecoins, investors can partake in investment vehicles that are otherwise not accessible with cryptocurrency. This means that even though USDT is on the downtrend, the demand for stablecoins as a whole is increasing.

Trouble looms for USDT

Still, the current climate is not very encouraging for the long-term prospects of USDT as a stablecoin for the future. USDT has been downgraded by Weiss Crypto Ratings in recent months, citing the fact that USDT does not have robust auditing procedures, which is something that USDC has more than covered. This has led to higher appeal in USDC.

Though tether remains the most well-known stablecoin on the market, USDC is more popular with DeFi investors and those that are entering the cryptocurrency scene for the first time. This leaves a gaping door for USDC to overtake tether with rapid growth and the capabilities that investors are looking for in a stablecoin.

For the time being, tether is safe as ever. However, as the space continues to expand, tether will once again have to make the case for why they are superior to other stablecoins. At the present, they are losing that battle gradually.

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