Bitcoin Businesses in India Petition to Make Bitcoin Legal, Can India Become the Next China?

Posted on April 4, 2017 | by [email protected]

India is a country with a good amount of smartphone and technology penetration. Traditionally, India has been the back office for most of the multinational companies owing to its time zone advantage, cheap and skilled labor and diligent technical skills. With the recent outburst of cheap and affordable smartphones in India, there has been a good amount of smartphone penetration leading most of the upcoming Indian e-commerce startups to go completely app-based rather than investing much on the traditional website. India is potentially one of the countries where with a good amount of adoption, Bitcoin volumes can inflate exponentially. However, the Reserve Bank of India has had a neutral standpoint towards the digital currencies. RBI has stated that they are not regulating Bitcoin or other cryptocurrencies yet and would like to observe and understand the technology better before adoption. However, Bitcoin businesses in India have filed a petition to make Bitcoin legal. Let’s dive into the details of the petition and the impending effects.

Bitcoin booms in India

While Bitcoin transactions in India initially were considerably low, Bitcoin mining activity has been very high since 2012. GB Miners group have 9% hashing power of the Bitcoin network, paralleling their western counterparst, making them the largest Bitcoin mining group in the country. With the Indian Government’s demonetization move, the country was forced to go cashless and this saw a rise in Bitcoin transactions and Bitcoin prices. The demonetization ended at the start of 2017, but the effects are still persistent with lower cash withdrawals being observed at banks and ATMs. This has built the required momentum for Bitcoin adoption in India.

The petition

The petition comes at a time when Bitcoin is making regional headlines due to statements from policymakers and politicians who have raised concerns about the lack of regulation surrounding the bitcoin industry. As the government is sticking to the hands off approach, big players in the Indian bitcoin industry who welcome regulation have banded together to launch a self-regulatory body to ensure adherence to KYC and AML norms called The Digital Asset and Blockchain Foundation of India (DABFI). DABFI has launched a petition calling for the explicit legality of bitcoin and other cryptocurrencies in the country. Their main motive is to develop an amicable environment for the development of Bitcoin and other cryptocurrencies.

What can India do to Bitcoin?

India is the second most populated country in the world relying heavily on micropayments. This is especially true for the small scale and medium industries that play a vital role in the country’s economy. With sustained adoption, Indian Bitcoin adoption can be a game changer for the cryptocurrency. Unlike China where the Bitcoin is only now a speculative vehicle, India can do justice to the true stature of Bitcoin and nurture the currencies through large scale adoption and eventually using its massively brilliant technical force for Bitcoin engineering. The verdict for Bitcoin’s legality in India might be set sometime in April. How the Indian government’s judgment would impact Bitcoin is to be seen.

BTC-China launches Multi-currency wallet, looks to increase adoption by Social Media Integration

Posted on March 22, 2017 | by [email protected]

February saw an iconic change in the functioning of Bitcoin markets after the Chinese Exchanges stopped withdrawals from their exchanges citing regulatory reasons. Bitcoin has been historically powered by any adverse movements in the Chinese Markets and has been majorly been a hedging ground and speculation vehicle. With the Chinese Government imposing strict restrictions on ‘Capital Flight’, Bitcoin has come under major scrutiny that prompted a closed door meeting of PBOC with top Chinese Bitcoin Exchanges. The Chinese government is skeptical that people are banking on Bitcoin to get the money out of the country and hence have enforced exchanges to stop withdrawals till the exchanges have a regulatory set up in place.

The PBOC intervention:

While the exchanges are taking sufficient time to set up the required monitoring system, they have extended the suspension of withdrawals. The dwindling Bitcoin volumes from China were an indication of how automated traders were flushed out from Bitcoin Markets and pseudo Chinese volumes were avoided. This has allowed Bitcoin’s perceived value to move closer to its real value and gave the market participants a good glimpse of the adoption status of the cryptocurrency and its true market presence. BTC China, famously known as BTCC has been optimistic about the cryptocurrency despite all the hurdles.

The wallet features and social media adoption:

BTC China’s CEO, Bobby Lee recently tweeted his prediction placing Bitcoin’s price in the range of $5,000-$10,000 by the end of 2020. To pace up the adoption and promote the cryptocurrency, the exchange has come out with interesting features for Bitcoin users. The exchange which already mints physical Bitcoins for usage, has now entered the mobile payments market. The platform- Mobi is a multi-currency mobile wallet that enables bitcoin storage and conversion. One can convert to over 100 currencies including gold and silver. The wallet has no registration process and enables users to register with the phone number associated with their mobile device.

The app enables customers to transfer every currency the platform supports to Twitter and through SMS text as well. With cryptocurrencies’ adoption relying heavily on social media publicity, this was a premeditated attempt to use it to integrate the platforms for better and comfortable usage.

“With Mobi, we are taking Bitcoin mainstream”, stated the Bitcoin start-up.

Did Bitcoin finally slay the dragon?

Posted on February 21, 2017 | by [email protected]

Just a couple of months ago, China was a major fundamental driving factor for cryptocurrencies. Bitcoin price fluctuation is a flagship example of how one of the world’s biggest economies can manipulate the markets at will. Whether what has transpired was helpful or hindering for Bitcoin growth is debatable, it surely did have staggering effects on the cryptocurrency’s interesting journey. With PBOC’s intervention in the activities of major Chinese exchanges for the past three months, Bitcoin prices have been experiencing heavy volatility. But after Bitcoin markets took repeated blows, finally when the Chinese Bitcoin exchanges announced ban on withdrawals for a month, the price drop impact was relatively lower than expected. But it is evident that the prices sustained because the volumes were manifested elsewhere. Let’s dive deep into how adoption has beaten Chinese supremacy in Bitcoin markets:

The Chinese grip:

For a long time, China has had good control over Bitcoin with over 96% of Bitcoin volumes coming from China. With PBOC’s policies of devaluation of Yuan to increase the return on the imports, investors looked up to Bitcoin as a hedging instrument. Also, automated trading dominates the Chinese volumes owing to the zero transaction fees. With PBOC’s restriction and tightening grip over the activities of the exchange, things looked ominous for Bitcoin’s bullishness. But before China could do further damage, things stabilized and the prices regained traction.

The adoption and the towering expectations:

With exchanges shutting down withdrawals, there was a significant drop in volumes. This was immediately covered by the new found heavy adoption in Japan at merchant and institutional level. Bitcoin legislation in Japan turned favorable with the abolishment of 8% sales tax that attracted Chinese automated traders immediately after the exchanges levied transaction fee. With realistic policies and good regulations, Japan, South Korea, Singapore and the Philippines are handling increasing volumes easily and effectively. The start of 2017 marked a tectonic shift in the Bitcoin ecosystem. China’s authority over Bitcoin slipped away with increasing and probing regulations. This manifested in other Bitcoin markets which reflects the currency’s growth.

The prices are mooning owing to the speculations over Winklevoss ETF. If the ETF is approved we can surely see the currency sky rocketing by mid 2017.

Bitcoin Bull Run staggered as Major Chinese Exchanges halt withdrawals temporarily

Posted on February 9, 2017 | by [email protected]

For the past couple of months, whenever Bitcoin price gets momentum and is approaching the all-time high, China has played a spoil sport in ruining the price rise. This happened once at the start of 2017 when the probing of Chinese authorities into the operational model of the exchanges tanked the prices all the way back to $750 from near all-time high. The story of Bitcoin on 9^th February is no different, the cryptocurrency was in a study Bull Run and the currency’s proponents were expecting a high breach sometime this week. While everything looked compact, the new announcement of the leading Chinese exchanges Huobi and OkCoin came up with an announcement that made the markets instantly bearish on the short term scale. Let’s dive deep into the details of what exactly happened:

The announcement:

Two of China’s top three Bitcoin exchanges Huobi and OkCoin announced that they will suspend Bitcoin and Litecoin withdrawals for a month effective immediately. During this one month period both the exchanges would set up automated monitoring systems and checks in place to prevent money laundering. While these restrictions are in place, Reminibi withdrawals wouldn’t be affected and no limit is set upon them. Both the exchanges indicated that the upgrade would be to combat “money laundering, exchange, pyramid schemes and other illegal activities”. No update was provided by BTC China on this front.

The reason behind the scrutiny:

China has been facing the problem of ‘Capital Flight’ for some time now. Implementation of ‘Capital Controls’ over various assets hasn’t been fruitful. During the course of 2016, Chinese Government has realized that while Yuan was being devalued, Bitcoin experienced unusual surge in prices. This was because investors were shifting their funds from traditional Chinese assets to Bitcoin. Chinese officials and PBOC have come to a conclusion that Bitcoin is being used for ‘Capital Flight’ and are keen to impose capital controls over the digital currency in 2017.

Effect on Bitcoin Price:

While the currency temporarily is experiencing a short term bearish trend, things would look better after a month’s period when the exchanges become fully functional. The impact of the move shouldn’t last long as Japan has already begun eating into China’s volumes owing to their growing adoption. When the Chinese exchanges imposed transaction fee and put a check on leverage available, the automated traders have sought Japanese exchanges as their new haven. After a little setback, technically Bitcoin market should be able to recover in quick time.

Chinese Bitcoin Exchanges Impose 0.25% Fees To Appease Regulators

Posted on February 8, 2017 | by [email protected]

Bitcoin investors might want to pay more attention to developments in China going forward because the Bitcoin industry tends to catch a cold every time Chine sneezes. China is one of Bitcoin’s biggest markets and the cryptocurrency has an impressive adoption and market penetration in the country. In fact, analysts have submitted that Chinese Bitcoin exchanges recorded about 42% of Bitcoin transactions globally in 2016.

In the last couple of weeks however, Bitcoin has been facing increased pressure stemming from the Chinese government’s efforts to put a muzzle on the use of Bitcoin in the country. The People’s Bank of China (PBOC) has said that it considers Bitcoin as a commodity (probably on par with gold) and not a currency. The PBOC also hinted that it would step up its regulatory oversight on the use of Bitcoin in the country. The development in China caused Bitcoin to lose its footing from around $1100 to its current $923 trading price.

China’s Bitcoin exchanges impose trading fees to appease regulators

Breaking news on Monday (January 23) shows that Bitcoin exchanges in China are trying to appease regulators by charging a 0.2% fee per Bitcoin transaction starting on Tuesday (January 24). The three biggest Bitcoin exchanges in China, BTCC, Houbi, and OKCcoin have all released statements on their intent to start charging 0.25% per transactions. All the three exchanges in separate statements noted that the reason for the charges is to “to further curb market manipulation and extreme volatility.”

At the start 2017, the People’s Bank of China has called for stricter regulation on the use of Bitcoin in China. The PBOC said it would start investigating Bitcoin transactions in order know the extent to which the cryptocurrency is being used to aid illegal transactions such as money laundering. Of a truth, many people in China are using Bitcoin to evade the country’s draconian laws aimed to stopping capital outflow from the country.

However, the increased adoption of Bitcoin for transactions and payments at lieu of the Chinese Yuan has reduced the demand for the Yuan and the Yuan is under pressure in the forex markets. For instance, in 2016, the Yuan CNY=CFXS declined 6.6% against the USD to mark its weakest full year performance since 1994. Hence, it doesn’t take much analysis to deduce that the PBOC is mounting pressure on Bitcoin in order to reduce interest in the cryptocurrency.

How far will China’s exchanges go to please regulators

Chinese authorities are worried (and with good reason) that people are using Bitcoin to move their wealth out of China. Hence, they have a strong enough motive to frustrate Bitcoin users in the country. Bitcoin exchanges are businesses and they must remain in the good books of the government to succeed especially in places like China where the government lords it over all.

In addition to the transaction charges, the three biggest Bitcoin exchanges in China have also stopped leverage trades that allow people to do something akin to margin trading with Bitcoin. The ending of leveraged trades will also reduce the speculator element in Bitcoin transactions.

The fact that the exchanges all decided to start charging 0.25 transaction fee (on the same day) suggests that the move was a coordinated action even though the exchanges have avoided hinting that they made the decision under duress. Hence, we can submit that the exchanges won’t mind caving in to some of the demands of regulators inasmuch as the demand would help them stay in business even if it causes a ‘little’ inconvenience for their clients.

Bitcoin is Too Big for China to Kill

Posted on January 19, 2017 | by [email protected]

Bitcoin investors have had it rough in the last couple of weeks after the cryptocurrency crashed from its near all-time highs. The main reason behind the decline in the price of Bitcoin was rising apprehension that China might move to halt the demand for Bitcoin it its economy. China is one of the markets where Bitcoin enjoys a broad-based early adoption, but the government’s recent effort to tackle money laundering and capital outflows makes the outlook for Bitcoin gloomy in the country.

Interestingly, many investors didn’t wait to examine the fundamental reasons supporting the rally in Bitcoin and they rushed for the exits at the first sign of trouble from China. However, China might be one of Bitcoin’s biggest markets but it is not Bitcoin’s only market. This article explores some of the reasons Bitcoin’s global broad-based demand won’t be eroded just because China wants to regulate the cryptocurrency.

Bitcoin’s adoption and growth is not dependent on China

China is a big market for Bitcoin and it has dominance in the volume of Bitcoin mining activities within its borders. However, many investors are erroneously mistaking the volume of Bitcoin trade in China for its leadership in Bitcoin’s global total addressable market share. However, the fact remains that at the core of Bitcoin’s decentralized philosophy is an intentional move to ensure that no single country is able to control the value of Bitcoin.

Hence, China might have a large number of Bitcoin users but it can’t dictate the terms of use for “Bitcoineers” globally. Matej Michalko, CEO of Decent observes that “Bitcoin is a global currency, not dependent on the single economy, no matter how powerful it is. China’s willingness to put effort on Bitcoin trading should encourage other countries to adapt their legislature in favor of a more flexible approach to cryptocurrencies.”

India and Venezuela are some of the populous economies with a growing demand for the use of Bitcoin. Hence, even if China decides to close down all the Bitcoin exchanges in the country, the move could have short-term effects in reducing the value of Bitcoin but the move won’t be enough to shut down the value proposition that Bitcoin already has globally.

China’s current efforts might push for a wider adoption of Bitcoin

In the first few days of 2017, Bitcoin was trading around $1,134 before China made some moves that triggered a decline last week – Bitcoin now trades around $829. Critics of Bitcoin might want to gloat over the marked decline in the value of the cryptocurrency. However, the fact remains that the decline might turn out to be a blessing in disguise in fuelling the increase adoption of Bitcoin in the global markets.

To start with, investors often love to “buy low” and “sell high”; hence, the $1,034 trading price of Bitcoin at the start of the year priced out many potential investors from the market. However, Bitcoin seems to have found support around the $800 mark in the last couple of days; hence, it shouldn’t fall lower unless there’s another cataclysmal event in the news. In essence, many more investors would be willing to buy Bitcoin now that its price is manageable around $800 in anticipation of booking gains in the next rally in the cryptocurrency.

Global markets tank, Bitcoin’s uncertainty lets Gold regain its stature as ‘Safe Haven’

Posted on January 12, 2017 | by [email protected]

The global markets slumped on January 12, 2017 after a news conference by President-elect Donald Trump. Assets declined across the globe with European, Asian shares and S&P 500 futures all falling, while the dollar slumped against most currencies. The conference disappointed the institutional investors with reveals to very little details as to economic and trade plans. This element of uncertainty resulted in a major slump in US dollar trading after recovering from a three week low. Surprisingly even after so much market commotion, the Bitcoin price remained unaffected despite so much market activity. Let’s look into why Gold reigned while Bitcoin was left behind during the latest market collapse:

Bitcoin stagnant as uncertainty looms:

The year had a lot of surprises that came as backlash for Bitcoin’s Bull Run which neared the all-time high start of this year. Firstly when the prices approached all time high, panic associated to Chinese policies led to the first stage of the collapse. After briefly trading at $900 range for quite some time the next collapse occurred a couple of days later. This was majorly due to the news that Peoples Bank of China has acted on Bitcoin regulation in 2017. They have contacted exchanges to monitor the process in order to avoid currency getting out of the country.

Following the second crash, Bitcoin has formed some kind of support around $750 and has been trading in the area ever since. It remained unaffected during the Yuan’s fall and the global market’s pandemonium since the investors are looking at it cautiously now. After trading sufficient volume and building a strong support, it might finally take off and adhere to the conventionally observed fundamentals.

Gold returns as the only ‘Safe Haven’:

Gold spiked up to over $1,200 after Wednesday’s shift in market dynamics. The price jump for a mere market scare can be attributed to Bitcoins unavailability during this time. The fact that Bitcoin rallied upto the high but wasn’t able to breach it significantly has left an element of doubt in the minds of institutional investors. Hence the general inflow of funds has been redirected to Gold, retaining its status as reliable asset. Whether Bitcoin would be able to displace Gold again as a security asset or Gold will continue to dominate this sector, only time will tell.

Bitcoin crashes as China acts up on regulations

Posted on January 11, 2017 | by [email protected]

What has been in the air surrounding Bitcoin and China from the start of the New Year has indeed been confirmed on 11^th of January. Rumors about China moving forward with regulation and capital controls on Bitcoin are proven to be true. While the volume from Chinese exchanges remained fairly constant or increased, the price of Bitcoin took a hit. These regulations will need a good 2-3 years for formulation and taking complete effect. But the news came as a shock to the market and has seen the market reacting very adversely. The price has dropped to around $750 with little support. Let’s diagnose the crash and what we can expect further from here:

When did this start?

Chinese economy is a credit fueled economy and they have observed that the currency generated has been steadily finding its way out of the country. With patterns where Bitcoin prices increase with Yuan devaluation, they have figured out that Bitcoin was the medium. To confirm the same the authorities have closely monitored the digital currency with thoughts of regulating it. China as such has strong capital controls and conversion of local currency into foreign currency is well regulated. However Bitcoin having a peer to peer nature doesn’t get accounted in these regulations. Hence Chinese authorities have decided to employ strict capital controls over Bitcoin. These measures require identification and completion of detailed forms to convert yuan into Bitcoin or invest in Bitcoin.

How is PBOC regulating?

China’s financial regulators are reportedly seeking opinions on how to regulate the trading of bitcoin and have contacted the exchanges on the same. One of the proposed methods may include setting up a depository platform. Chinese exchange BTCC – one of three leading bitcoin trading platforms spoke to by the People’s Bank of China last Friday. They have explicitly stated that they adhere to “strict AML/KYC policies and it’s not possible to evade the capital controls through their channel”. With Peoples Bank of China probing deeply into matters, we can expect strict regulations to be implemented very soon.

Diagnosis and predictions:

Bitcoin has been trading at peak prices after a sustained bull run last year. During this time, many investors moved their funds into the digital currency for long term holding. With the fears triggering a complete crash, most of the investors decided to exit the market furthering the price drop. With the price now lingering around $760, we can see one of the following two things happening.

Bullish side:

If the price consolidates and moves up with momentum and breaks the all the time high, then Bitcoin can head straight to $2000 levels within the next couple of months.

Bearish side:

On the Bearish side, $560-$600 range is a heavy support zone that held the prices on multiple occasions. Once market breaches these levels, a strong crash taking Bitcoin to $250 can be expected.

How the market would choose to react now and what side Bitcoin decides to rally again, only time will tell.

Defying fundamentals: Yuan drops but Bitcoin remains stable, Ethereum to benefit?

Posted on January 10, 2017 | by [email protected]

Start of the year and the behavior of Bitcoin has been surprising people around the Globe. A sudden halt to the trend, as the price reached the peak and now most unexpectedly the price is unaffected when Yuan is dropping. ‘Bitcoin Trading-101’ would any day tell you to keep an eye on China and Yuan for hints about price movements. This held well until the start of New Year but suddenly has become a futile pro tip. Institutional Investors and Intraday traders are all baffled by this anamoly. Let’s dive deep into understanding how exactly Bitcoin dynamics have changed w.r.t China:

China’s rumored desperate attempt and failure:

While the Bitcoin price was soaring, US dollar was at a three week low strengthening Yuan. China has plans to devalue Yuan further to 7.15% from 6.8125% this year to maintain good returns on exports. But with Yuan strengthening organically, rumors were floating in the market that China might order their state-owned companies to sell their foreign reserves. However while these might be just rumors effecting the market, Yuan devalued further and this time Bitcoin prices have remained stable.

Strong Capital controls taking the steering?

The Chinese authorities have closely monitored Bitcoin in 2016 to control and curb corruption that is hampering their economy. After gathering sufficient information, they have concluded that investors are using Bitcoin to send the money out of the country. China as such has strong capital controls and conversion of local currency into foreign currency is well regulated. However Bitcoin having a peer to peer nature and doesn’t get accounted in these regulations. Hence Chinese authorities have employed strict capital controls over Bitcoin. These measures require identification and completion of detailed forms to convert yuan into Bitcoin. With Yuan’s fall not boosting Bitcoin price, one might suspect that these controls are in place and functional.

Who will benefit from this?

If China slowly fades out from Bitcoin scenario as major driver of price and volumes, next in line would be India. With a large population that recently underwent demonetization and has been adopting Bitcoin and digital payments, India can be the next big player in Bitcoin. The budding digital currencies and blockchain startup scenario in India is surely promising in this prospect.

While Bitcoin price has remained stable in between $900-$910, Ethereum is experiencing an unusual price surge with Yuan devaluation. If it’s the case where the Chinese are now moving funds to Ethereum then it’s only a matter of time before the Chinese government realizes it. This would put all cryptocurrencies in a position to endure complete regulation in China.

Investors Rush for the Exits as China Moves to Halt the Rally in Bitcoin

Posted on January 10, 2017 | by [email protected]

Bitcoin recorded a surprising crash on Thursday January 5 to halt the expectations that the cryptocurrency will continue its rally to surpass its previous all-time high. Bitcoin had already crossed the $1,100 threshold and it was nearing the $1,200 threshold before it lost its footing. Bitcoin almost dropped to $800 on January 7 and it currently trades around $908 as at 9:27AM EST today.

Many people have tried to find out the reasons for the short-lived rally in Bitcoin prices. Interestingly, the prevailing opinion in the market submits that the People’s Bank of China is behind the unexpected crash in the price of Bitcoin. This piece seeks to examine how China unwittingly orchestrated the crash in Bitcoin prices.

Here’s how China ended Bitcoin’s rally

Bitcoin is already taking up position as a cryptocurrency that could displace troubled fiat currencies and end government interventionist monetary policies. Last week, we wrote on how Bitcoin is already building momentum to displace the Bolivar in Venezuela. Well, the People’s Bank of China made a preemptive strike to ensure that thoughts to use Bitcoin in place of the Chinese Yuan don’t begin to take root in China.

The PBC issued two notices from its Beijing and Shanghai branches emphasizing its position on Bitcoin’s place in the economy. The PBC noted that it considers Bitcoin as a commodity and not a currency and that investors should only trade Bitcoin with the understanding that it carries investment risks. The PBC also requested meetings with Bitcoin exchanges to encourage “self-examination” in ensuring that exchanges stay within the ambits of regulations and that they are managing risks properly.

The more troubling development that caused the price of Bitcoin to tank is the revelation that China’s foreign exchange regulator SAFE was investigating the use of Bitcoin in avoiding capital controls on China. Beijing has placed strict capital controls on the inflow of funds in and out of China but speculators believe that China’s wealthiest are using Bitcoin to bypass those capital controls.

In fact, a decent part of the rally in Bitcoin was fueled by the rumors of an increase in Bitcoin adoption amidst China’s wealthiest. In essence, moves to investigate the use of Bitcoin to evade capital controls could be a precursor to a clampdown on the use of Bitcoin in China. A clampdown on Bitcoin use in China could result in losses for investors; hence, many people have started unloading their Bitcoin holdings.

OKCoins thinks the Bitcoin should be regulated in China

Leading Bitcoin exchanges in China are supporting the government’s plan to push more regulations through the Bitcoin industry in the country. OKCoin is the second-largest Bitcoin exchange for CNY Bitcoin-trading in China – BTCC leads OKCoin in 7–day-volumes. OKCoin revealed that it had had dialogue with the PBC on its plan introduce a third-party platform. The firm however notes that the PBC is yet to make a decision on creating such a platform.

Nonetheless, OKCoin CEO, Star Xu observes that regulating the Bitcoin industry could benefit all stakeholders and that the panic selloff in Bitcoin is unwarranted. In his words,

“The industry can benefit from balanced, risk-based regulation and oversight and we look forward to further constructive discussions with the regulators and industry participants.”