Hardware at the DeeCrypto retail store selling cryptocurrency mining equipment by such brands as ... [+] Bitmain, GPU, KeepKey, Embedded Downloads and Ledger now at risk as new law will make it harder for miners, others. (Photo by Artyom GeodakyanTASS via Getty Images)

Russias State Duma hates bitcoin, ether, ripple, you name it. If it is not the ruble, or a currency issued by a state, Russias government is not into it.

The government posted an updated version of their new draft lawOn Digital Financial Assetson Monday for public comment, along with it additional documents that significantly change the way cryptocurrency is regulated in Russia. Breaking the rules comes with legal penalties now. But the good news is, Russians dont have to give up their fixation on cryptocurrencies.

The law, which is not a major shift in tune from The Kremlin or the Central Bank in regards to official positions on privately issued crypto currencies, does however prohibit the circulation of all cryptocurrencies, as well as their mining and advertising.

ryptocurrencies go completely into the gray zone in Russia, says Artem Kalikhov, chief product officer of Waves Enterprise. People who own one or two bitcoins are not at risk. But all cryptocurrency exchanges and wallets hosted on Russian sites with a .ru at the end are now at risk.

The new law doesnt mean Russians cannot own digital financial assets legally. The Russian Central Bank has not yet introduced the rules for inclusion in cryptos as a security. The Russia crypto market is waiting for that still.

Russian officials have been arguing about crypto regulation since January 2018.

Anatoly Aksakov, chairman of the Russian State Duma's Financial Market Committee. You can own ... [+] cryptocurrencies like Bitcoin, but you should declare it. Cryptocurrency exchanges? Not welcome. (Photo by Vladimir GerdoTASS via Getty Images)

Anatoly Aksakov, a member of the Russian State Duma, says that the countrys new crypto law wont go into affect until the summer.

Aksakov said on Thursday of last week that people can buy and hold cryptocurrencies, but should declare it on their taxes. By declaring it, they will be given legal protections, since the cryptocurrency will be considered as a property. If they dont declare it, they will not have any legal protections. Either way, there will be no legal penalties for owning cryptocurrencies, according to a report by RBC Russia.

For us, at KickEX, this is bad news, says Anti Danilevski, CEO of the new KickEX, a crypto currency exchange run by the creators of KickICO back in the intial coin offering heyday a whole three years ago now.

We were initially regulated in the European Union, not in Russia, because we anticipated this, he says. Its a pity that cool technology startups are forced to leave the country and cannot operate in their homeland. We will transfer our team to the EU now, he says. Its painful for me to see that in the field of cryptocurrencies and digitalization, my country is moving backward while the whole world is moving forward.

Aksakov said there will be no digital currency platforms operating on the territory of Russia meaning no exchanges.

For now, the Russian crypto community is still chewing on the letter of the law, opening it up to interpretation.

The new digital law in Russia is designed to make it harder for tax evasion through ... [+] cryptocurrencies. Photographer: Chris Ratcliffe/Bloomberg

Digital money is not necessarily the same as digital assets, and the law seems to be concerned with tokens. They will get regulated, and most likely they will be adopted as private securities one day. If so, it will one day be possible to conduct regulated security token offerings in Russia, they believe.

In that case, maybe the hammer has not busted through the crypto piggy bank.

As far as I can see, this is a fight against cryptocurrencies, not with tokens or blockchain, Danilevski says.

To newcomers in the crypto space, its worth noting that there are distinguished differences between cryptocurrencies like Bitcoin, and other digital assets issued by a tech company issuing its own coin. While they all depend on blockchain technology; blockchain technology does not require cryptocurrency.

Waves was building a blockchain trading platform for the Moscow Exchange as a beta test to see how it would work to trade crypto currencies.

That market in Russia is developing steadily now, says Kalikhov. The attitude of Russian regulators is that cryptocurrencies are not allowed; and financial assets based on blockchain technology are going to be subject to regulation, but blockchain technology itself is still a go.

More:
Russia Sort Of Dropped The Hammer On Bitcoin, Crypto - Forbes

Updated: June 1, 2020 9:27:23 pm

Written by Radhika Pandey and D Priyadarshini

By striking down the Reserve Bank of India circular of April 6, 2018, the Supreme Court has given a fillip to crypto exchanges in the country. The circular had stopped traders and exchanges from accessing the banking system. Unable to conduct trades, several exchanges had shut down or moved overseas. Now, some have returned, others are seeing increased users and one has recently secured a multi-million dollar investment.

But the judgment has also rekindled the question of regulating crypto exchanges. There exists no clear legal and regulatory framework governing them. Recent reports suggest that the government may be mulling over a regulatory framework for cryptocurrencies. The RBI has also recently clarified that banks are not prohibited from providing services to traders and exchanges. Given the above, this article examines the broad contours of the possible approaches that can be taken to regulate crypto exchanges as they perform important functions but also carry significant risks.

Similar to stock exchanges, crypto exchanges provide an online platform or marketplace, albeit for cryptocurrencies. By also enabling trade or exchange of cryptocurrencies for fiat money, they connect the crypto and traditional financial systems. Regulators also look to exchanges for information on users and transactions, although this may depend on their organisational structure and functions. For example, centralised exchanges offer a single point of regulation. They have an entity in charge of the platforms governance and act as an intermediary throughout the trading process, namely, storing clients funds, monitoring trades and ensuring fulfilment of orders. But decentralised exchanges enable trades or exchanges on a peer-to-peer basis through an automatic process involving smart contracts. They make regulation challenging due to the anonymity of users and lack of central presence.

Crypto exchanges have also assumed importance due to their role in initial exchange offerings (IEO). Unlike initial coin offerings where the issue of coins or tokens is made directly to investors, with the latter responsible to assess the projects credibility, crypto exchanges intermediate and vet an IEO through due diligence of projects and KYC scrutiny of issuers. Crypto exchanges have therefore emerged as a key market infrastructure within the crypto-ecosystem.

But there are several concerns due to which regulation and supervision is required. In its heyday, MT Gox crypto exchange accounted for nearly 70 per cent of all Bitcoin transactions. Its hacking led to losses estimated in billions of dollars today. It went bankrupt. Investors claims are yet to be settled. More recently, the sudden death of the CEO of Canadas largest exchange in India left millions of investors money inaccessible in offline wallets. He alone knew the passwords. Such instances highlight some of the key risks associated with crypto exchanges the safety and security of cryptocurrencies and lack of investor/consumer protection in the form of recourse, and quick and orderly access to their own funds/assets.

Moreover, unlike traditional securities markets, crypto exchanges perform additional functions like custody of assets or funds, clearing and settlement. They are also known to co-mingle client and proprietary funds or assets sometimes. Such practices, without adequate internal checks and controls, lead to conflicts of interest, micro-prudential and consumer protection risks.

Of particular concern is the un-intermediated access given to retail investors of complex products without adequate disclosures or advice regarding their suitability. The borderless nature of cryptocurrencies and service providers (like wallets and payment processing) weaken the ability to enforce investors rights and recover their assets. Crypto exchanges are also known to enable circumvention of capital controls and commission of financial crime including money laundering and terrorism financing.

International experience illustrates some broad principles for regulating crypto exchanges. Typically, in jurisdictions that categorise cryptocurrencies as securities or other financial instruments, licensed crypto exchanges have emerged as a point of regulation, including for the implementation of anti-money laundering (AML) and terrorism financing (CFT) laws. Recognition then entails the application of existing securities laws as in the case of the US, UK, Japan or Hong Kong, or laws specifically designed for cryptocurrencies like Malta. International standard setting bodies like FATF and IOSCO too have provided guidance from time to time. Pertinently, IOSCOs recent report on cryptocurrency trading platforms recognises that risks currently associated with trading on such platforms and traditional risks in securities trading are similar. The report also notes that securities laws objectives like consumer protection and market integrity continue to apply even if underlying technology and business models of crypto exchanges pose unique challenges.

Accordingly, a legal and regulatory framework must first define cryptocurrencies as securities or other financial instruments under the relevant national laws and identify the regulatory authority in charge. Regulation must then define the entry points who can carry out crypto exchange and intermediary functions, who can trade and what can be traded. Operation of crypto exchanges or intermediaries like brokers or custodians can be subject to receiving regulatory licenses. Licenses may be issued based on compliance with eligibility requirements and a detailed scrutiny of operational policies and procedures on internal governance, risk management and financial resources. Trading can be restricted to approved cryptocurrencies as in the case of Japan. Exchanges can be required to screen undesirable cryptocurrencies that dont permit tracing or are vulnerable to cyberattacks. Regulations can also require the performance of stringent KYC checks and independent verification by exchanges before onboarding investors. Access to retail or unsophisticated investors can be prohibited (like Hong Kong) or intermediated through professional advisors.

Thereafter, regulation must provide for ongoing supervision on matters concerning safety and security of assets and funds, transparency of operations including trading and price discovery, comprehensive and timely disclosures on the cryptocurrencies traded including risks and suitability for retail investors, and compliance with AML/CFT requirements. Record keeping, inspections, independent audits, investor grievance redressal and dispute resolution may also be considered to address concerns around transparency, information availability and consumer protection. Ongoing regulation and supervision seek to reduce the possibility of exchanges failing. But when they do, regulation must enable investor protection through quick and orderly access to their funds or assets.

Cryptocurrencies are borderless and often transcend regulatory classifications (as security, commodity or payment mechanism for example). Establishing robust information sharing and coordination mechanisms between regulators and enforcement agencies within the country, and with relevant foreign agencies would therefore be crucial too.

The writers are fellows at the National Institute of Public Finance and Policy

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Regulating cryptocurrency exchanges - The Indian Express

Stemming from the confined venue of speculation and economic theory, there is much to address regarding the probability of whether Bitcoin will ever reach $100,000.

To bring light upon the query in motion, well analyze long-standing economic theories versus economists doubts while taking under due consideration deeply-rooted market variables, projections, and global acceptance that are all bound to distill a change in the value of Bitcoin in one way or another.

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With these truths in mind, lets begin.

Cryptocurrency enthusiasts have long poised the likelihood of Bitcoin reaching $100,000.

Evidence of this can be noted from high-profile individuals such as Anthony Pompliano, Co-Founder and Partner of Morgan Creek Digital.

I still think Bitcoin will hit $100,000 by end of December 2021. Fixed supply. Increasing demand. Time will tell.

Charles Hoskinson, Ethereum Co-Founder, had tweeted in late 2019:

Then, of course, we have the more recent actionable insights rendered through The Great Monetary Inflation proclaimed by macro investor Paul Tudor Jones, who acquired Bitcoin as a hedge against inflation earlier this month.

Despite acquisitions and proclamations attesting to Bitcoins impending worth, one should also assess whether these claims are rather a publicity stunt to increase Bitcoin participation or rather a deep-rooted belief originating from a coupling between past experiences and a desperate desire of riches to prolong extravagant lifestyles.

Regardless, these speculations should be taken with a grain of salt and weighed accordingly.

While crypto enthusiasts rely upon speculation in the crypto news, investors and Bitcoin participants tend to primarily formulate their assumptions upon tangible evidence that is derived from projection models and macroeconomic theories.

Projection models such as the Bitcoin S2F Model and M2 capitalization theory project astronomical valuations for Bitcoin but as time has shown us one of these models has already been debunked.

Over the past few years, and more prominent now as a method used to combat the financial ramifications of the Coronavirus pandemic, quantitative easing has been performed by countries central banks.

Take for instance the U.S. Federal Reserve, which has been printing U.S. dollars at an exponential rate since 1970.

Perhaps the most noticeable effects of the exponential printing of U.S. dollars would be inflation, where the price of goods and services has been rising in unison to meet the money supply.

Generally, a healthy economy would be characterized through depreciation in prices due to entities finding more efficient and affordable alternatives for similar goods and services but that is not the case.

To highlight the core point of this theory, should the Federal Reserve continue to print U.S. dollars at an exponential scale then, as a result, the U.S. dollar price of Bitcoin will also continue to rise at an exponential rate until it has reached a value of $100,000 per Bitcoin.

Also known as the Bitcoin S2F model, the Bitcoin Stock-to-Flow Cross Asset Model ratio created by @100trillionUSD seeks to measure the effect of scarcity on BTC price through measuring current Bitcoin circulation and production rate.

As @100trillionUSD suggested in 2019 through Modeling Bitcoin Value with Scarcity, The predicted market value for bitcoin after May 2020 halving is $1trn, which translates in a bitcoin price of $55,000. That is quite spectacular. I guess time will tell and we will probably know one or two years after the halving, in 2020 or 2021. A great out of sample test of this hypothesis and model.

While it doesnt take a mathematician to deduce how significantly short this economic model failed, up to 8 additional flaws have been reported regarding the Bitcoin scarcity valuation model.

As a result, we can no more put stock in economic theory than we can through unwarranted speculations.

The most level-headed forerunners for predicting future Bitcoin prices may be contributed to economists who have yet to be proven incorrect regarding their cynical-based projections.

Such examples include the projection laid upon us by Kenneth Rogoff, an economist and Harvard University professor, who went on to express the following during a CNBC interview:

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I think bitcoin will be worth a tiny fraction of what it is now if were headed out 10 years from now I would see $100 as being a lot more likely than $100,000 ten years from now.

Basically, if you take away the possibility of money laundering and tax evasion, its actual uses as a transaction vehicle are very small,

It should be noted that Rogoff isnt the only economist who feels that Bitcoin wont amount too much value in the future.

Joe Davis, a lead economist for Vanguard, a high-profile investment firm, stated, Im enthusiastic about the blockchain technology that makes bitcoin possible As for bitcoin the currency? I see a decent probability that its price goes to zero,

The bitcoin its value is based off of scarcity and an artificial scarcity thats out there, Its really tough to imagine where the long-term return comes from other than speculation. Joe Davis

If speculations regarding Bitcoins future applications are truly the driving force behind the volatility then the valuation of BTC as a whole is crippled as a result of diminished cash flow.

While speculation and debunked theories are two sides of the same coin, black swan events are an entirely different entity that has been known to characterize an era of hardship and uncertainty.

Unforeseen black swan events, such as the recent Coronavirus Stock Market Crash, have gone to illustrate that no economy is impervious to flaws while also dismantling the long-standing ideology that Bitcoin is a safe haven asset.

Given the ramifications that can materialize from the wake of black swan events, no Bitcoin valuation can be complete without the possible occurrence of these devastating events.

To expand, modern times must be taken into account.

Such as, those of us reading this have already survived one black swan event but given how countries are starting to open their borders and governing states are once again re-opening their economies, the likelihood of another black swan event occurring as the byproduct of a second outbreak of Coronavirus only increases with each easing of confinement limitations folded back.

Therefore, it would be optimistic to the point of foolishness not to weigh these truths in your mind when speculating the possibility of BTC reaching $100,000.

One variable piece of the puzzle that can significantly influence Bitcoins likelihood of $100,000 per coin would be the mainstream adoption of Bitcoin.

Should a significant surge in Bitcoin participation become present, then the generalized economic theory of supply and demand can be implemented as an increase in participation will likely be contributed to an increase in demand.

Through an increase in demand comes an appreciation of value, which given how Bitcoin supply is limited, should further strengthen the ideology that an increase in Bitcoin demand will increase the price of Bitcoin.

Lets ditch the economic theories and speculations to conduct some simple arithmetic.

The maximum sum of Bitcoins that will exist is 21 million.

Should the value of Bitcoin reach $100,000 per coin then the total potential market capitalization of Bitcoin, once all mined, would be equivalent to $21 million x $100,000 = $2,100,000,000,000 or $2.1 trillion.

According to CNBC in late 2019, the value of the global equities market surpassed $85 trillion, or $85,000,000,000,000.

It should be noted that the global value of the equities for 2019 started under $70 trillion, meaning it saw an increase of no less than $15 trillion throughout the year 2019.

To put that into perspective, should Bitcoin reach a value of $100,000 per coin (even if all were mined) that would mean that the market capitalization of Bitcoin would be more than 40xs less than what the value of the global equities market was at the end of 2019.

($85,000,000,000,000 global equities value / $2,100,000,000,000 = 40.4761904762)

Putting stock in speculations asserted by cryptocurrency advocates will get you no further than faulty economic theories that can in no way, shape, or form take under due consideration all the innumerable variables that nest their way into the ever-changing Bitcoin valuation equation.

Through M2 capitalization theory and the renowned principles of supply and demand, we are rendered rather convincing insights into the possibility that Bitcoin could reach $100,000 which is further strengthened when you compare the capped off Bitcoin market capitalization of $2.1 trillion to that of the $85 trillion for global equities in 2019.

While, at first, it may have seemed like a highly unrealistic projection of Bitcoin reaching $100,000, but when you stop to put it in perspective with the total value of global equities then it may appear, to some, as only a matter of time.

Regardless, and to conclude, it is impossible to accurately predict the value of Bitcoin in 10, 20, or even 40 years from now but if history has taught us one thing it would be that anything is possible.

Original post:
Bitcoins $100K Probability Speculation or Economic Theory Backed? - Finance Magnates