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The Texas Securities Commissioner signed a decree committing Bitconnect to stop operations, as the company is accused of fraud. Bitconnect is a foreign company that claims a share of $ 4.1 billion in the market of cryptocurrency.The regulator’s decision was to cease the numerous investment programs managed by Bitconnect.
The regulator believes that Bitconnect breaks the rules without disclosing information about its physical location, assets, and liabilities. Moreover, it misleads users, claiming that its Bitconnect Lending Program is a safe way to make money without significant risk. However, the company is well aware of the risks associated with cryptocurrencies.
What Laws the Company Violated
The final part of the decree stresses that investments in the Bitconnect Staking Program and Bitconnect Lending Program are securities. Therefore, the company violates the Texas Securities Act. Because Bitconnect does not register their tokens at the Securities Commission.
In November 2017 there was a discussion of Bitconnect in the crypto community where Vitalik Buterin accused the company of the Ponzi scheme. Bitconnect is based in England, and this decree does not directly affect the business. Nevertheless, the regulator has the right to prohibit Bitconnect from interacting with the inhabitants of Texas. This will create certain problems for it since it will not be so easy to separate the inhabitants of Texas from other users of the site.
According to Coinmarketcap data, at the moment, Bitconnect’s cryptocurrency is on the 21st place in the rating of digital currencies. Its capitalization is equal to $ 2.54 billion.
Now it became known that the Chinese authorities intend to settle the issue of using electricity by miners. Probably, it is about the industrial mining. It was made to gradually reduce the scale of the market.
In China Concentrates Lion’s Share of the Computing Power of the Bitcoin Network.
It is reported that the similar initiative comes from the People’s Bank of China. At the end of last year, the central bank of China in one of the meetings discussed this issue with members of the Beijing Group Leader on reducing financial risks on the Internet. The People’s Bank of China cannot directly regulate the use of electricity by cryptocurrency lenders. Nevertheless, it can apply with the appropriate assignment to local authorities in the regions.
Note that the Chinese miners began to express concerns about possible restrictions. It happened immediately after the ban on ICO in the country and the subsequent closing of exchanges. We still remember how the market of the whole country reacted and what happened with the bitcoin rate after this decision. Now we can imagine what will happen if the Chinese authorities eventually introduce restrictions on the amount of energy spent on the production of cryptocurrency.
TRON broke into the cryptocurrency world simultaneously with the ICO, held in August 2017. It began to trade at the end of September 2017. Now TRON is starting to influence the market – over the past few days it rose from $ 0.033 to $ 0.12.
Justin Sun is the general director of TRON. This is what he achieved by the age of 27:
graduated from the University of Pennsylvania;
is ranked among the top 30 Forbes businessmen under 30 in China;
is ranked among the top 30 Forbes businessmen under 30 in Asia;
founded Peiwo APP (Chinese Snapchat);
is now visiting the University of Hupan;
was a head of Ripple in China.
Lucien Chen, a major expert on Tencent and Alibaba databases, is also in the TRON team. Recently, Chen announced that Alibaba’s technical specialists would start working with TRON. Why do you think Alibaba allowed to entice talented employees into the project? It can hint at future integration with the Alibaba platform.
One of the early investors of TRON was Feng Li, who has a slightly controversial resume in the cryptocurrency industry. He provided seed money for Coinbase, which, with an influx of new users, receives a high income. Lee also serves on the board of directors of Ripple, whose market capitalization is about $132 billion.
The TRON project consists of several phases – Exodus in 2017 and Eternity in 2023. It looks like the project has serious growth factors for the next few years. Moreover, the fact that at the moment TRON is a single token below $ 1.00 in the top 20 makes it an attractive target for many investors.
Vitalik Buterin, the creator of Ethereum, announced the launch of two financing programs aimed at solving the problem of network scaling. This issue is becoming more and more urgent taking into consideration the number of transactions reaching 1 million a day.
The essence of the programs
According to Buterin, network scaling is the most important technical challenge. The developers have to cope with this task before the active implementation of blocking applications. The focus of the programs will be twofold: data fragmentation and two-layer protocols. Financing for them will be from $50 thousand to $1 million. These expenses will mainly cover the costs of developing solutions. Also, there are links to additional materials on these areas and technological examples in the message. Details, including terms, conditions and payment schemes will be discussed with the participants of the program.
Buterin emphasizes that the size of grants for these programs is much higher than that for previous projects. Therefore, they expect a more significant result. He explained that they invite independent teams of developers, companies, universities and academic groups to participate. They understand that different groups of applicants may require different approaches and processes. That is why they are willing to be flexible to meet the individual requirements of the teams.
At the beginning of November, Vitalik Buterin unveiled a long-term plan for 3-4 years on the technical development of the Ethereum network. The idea of data fragmentation is the leading one in this project.
Mohamed El-Erian is sure that a “moment of truth“ will come for bitcoin shortly. He is a chief economist of the most significant European asset management company Allianz.
The financier associates this with the correction that the first cryptocurrency tested recently after the launch of BTC futures.
According to El-Erian, now the crypto-currency market is at the “historical crossroads.” 2017 was a breakthrough for the industry, and the price of bitcoin increased from $ 1,000 to almost $ 20,000. After this event, a noticeable correction began. This situation is familiar for bitcoin (the average coin drops by 30% every two months). El-Erian noted that this was the most significant correction after the launch of BTC futures on US stock exchanges CBOE and CME Group.
What to Expect in The Future?
He said that this sharp correction can become a catalyst and will further stimulate the interest of institutional traders in the new market. At the same time, it can also become a stepping stone to blowing this historic and outstanding bubble.
In September, the former executive director of PIMCO called a “reasonable” price of $1,300-2,000 per one bitcoin (about a third of the real market at that time). He argues that the cryptocurrency hinges on a dedicated but limited investor base. The financier also noted that bitcoin attracted far less government attention and intervention than expected.
Financial analysts also said that the regulatory steps of the Chinese government would be a “fatal blow” for bitcoin. As practice showed, cryptocurrencies continued to grow in price and after all prohibitions in the Middle Kingdom.
El-Erian believes that a “healthy” correction will eliminate “irrational exuberance.” It will also provide institutional investors with an attractive “entry point” to the crypto-currency market.
The South Korean online portal Saramin interviewed 941 employees and found out that 31.3% of them invested in cryptocurrencies. The average investment amount was 5.66 million won ($5,300).
According to the survey, 44.1% of employees invested less than 1 million won, 18.3% – 1-2 million won, 9.8% – 2-4 million won, 7.8% – 4-6 million won, 12.9% – more than 10 million won. 54.2% of respondents said they invested in cryptocurrency because they think this is the fastest way to earn. And 47.8% said it was a secure investment because the amount was insignificant.
Someone Wins, and Someone Loses
About 80.3% of the respondents reported that they had made a profit from their cryptocurrency investments; 13.2% had not suffered losses, and 6.4% lost their money. Among those who managed to earn on the investment, 21.1% received more than 10% of profits, and 19.4% more than 100%.
South Korea accounts for about 20% of the world trade in bitcoin. This is one of the most active regions in the cryptocurrencies trading. Experts believe that more than two million South Koreans own bitcoins and other cryptocurrencies.
The government of South Korea is taking urgent measures to regulate the country’s cryptocurrency market. The collapse of the cryptocurrency market may lead to negative consequences. That’s why the country’s authorities have established supervision over crypto-exchanges. They also banned the trade in cryptocurrency for foreigners and minors and limited the operations of banks in this area.
Developers of hardware wallets Ledger warned users about fraudulent schemes associated with hard fork Bitcoin Diamond (BCD). It is about sites that offer Bitcoin holders to get BCD coins.
The Peculiarities of the Hard Fork
Bitcoin Diamond is one of the many forks of Bitcoin, the developers of which announced their intention to issue a new cryptocurrency in November. Details of the project were unknown; there were vague promises of faster network transactions and other additional benefits, the implementation of which is still not visible. Futures on BCD are now traded on 20 exchanges. The BCD team promised to increase the block size to 8MB. This would improve the transactional ability. However, BCD was also seeking to decrease the expenses related with transactions. BCD planned to encrypt the balance and the amount, which could provide confidentiality.
Frauds lure Bitcoin holders who technically have the right to receive equivalent balances in BCD, to a multitude of sites. It is allegedly possible to obtain BCD through these websites by providing confidential information.
There are also suspicions about the actual developers of hard fork and their true goals. So, in one of the posts on the Medium blogger bitcoinblooddiamond calls the BCD “a scam of incredible proportions”. He pointed to the questionable activity in social networks, the lack of technical details and possible cooperation with the stock exchange cryptocurrency. He emphasized that Bitcoin Diamond is not like the previous forks (Bitcoin Cash and Bitcoin Gold). It does not have any blocking code. This is a scam designed specifically to steal the Bitcoins. The blogger urges to sell assets in Bitcoin Diamond immediately.
President of the United States Donald Trump signed a new bill that could implement taxation on cryptocurrency. This means transactions on the exchange of cryptocurrency will be under the tax. This has become a significant change in the country’s tax legislation over the past 30 years.
Legislation and Regulation of Cryptocurrency
In accordance with Article 1031 of the US Tax Code, cryptocurrency transactions were considered an “exchange of similar assets” before, which allowed investors to use a “loophole” and avoid paying taxes. However, from January 1, 2018, all transactions involving digital money, including the exchange of one cryptocurrency for another, will be subject to compulsory tax.
This was the result of amendments to an article that classifies certain assets as “similar type”. Traders used the so-called “exchange 1031” rules, which allowed for the exchange of property without paying taxes. From March 2014, the US Internal Revenue Service regarded Bitcoin and Altcoins as a property. Nevertheless, it was not clear whether the exchange of one cryptocurrency for another falls under the article about “similar assets”. Until this time, digital money remained in the grey zone.
Since January 1, 2018, Article 1031 will cover only real estate. Moreover, the definition of “property” has narrowed to “material ownership”, under which neither Bitcoin nor other cryptocurrencies already fall. Thus, next year one of the most significant “loopholes” in the US tax law will be closed. Moreover, all cryptocurrency transactions on the territory of the country will be under tax right at the moment of the commission.
Last week the bitcoin rate, after a rapid growth, fell dramatically by a third, forcing many people to be pretty nervous. Someone has accepted it, and someone is panicking to this day. At the time of writing, the cryptocurrency has recovered slightly and now costs about $ 15,000 (CoinBlip data). In the meantime, Morgan Stanley analysts decided to add fuel to the fire. After completing their market research, a group of experts from Morgan Stanley, led by James Faucette, said that the real value of the cryptocurrency could be $0.
James makes arguments
Faucette lists the main reasons why it is impossible to determine the real price of a cryptocurrency. Among them is the absence of interest rates tied to the bitcoin rate, the lack of any real goods that support the value of the cryptocurrency, as well as the problems associated with network scalability and transaction commissions.
Faucette also draws an analogy with the volume of trading on the foreign exchange market (average daily rate) – $5.4 trillion vs. $3 billion from bitcoin. He compares Bitcoin with Visa regarding the number of purchases made per day – less than $300 vs. $17 billion.
In conclusion, the analyst provides a graph showing the adoption of the cryptocurrency by the Internet market. Apparently, in the last two years, the positions have only worsened – two of the five largest sellers refused to support Bitcoin. It remains to add that Morgan Stanley has never indeed spared Bitcoin. Earlier, Morgan Stanley CEO James Gorman called bitcoin a speculative tool that does not deserve any attention.
Today a financial upheaval takes place. The necessity of broader responsibility and clarity in the financial industry is the reason for its emergence. The disintegration of offices that banks offer and absence of investing played a role too. As for Bitcoin, it has changed from a tentative idea into the establishment of a trading. Furthermore, it earned over the $300 billion.
So long as the currency is becoming more and more well-known, Bitcoin is ready for the more sudden increase. Nevertheless, Bitcoin is still an exceedingly unstable currency. This drawback has discouraged some potential depositors from participating in the trading. It also precluded them from including the currency into their investments.
Is it possible to decrease the instability of investments?
Depositors desire to possess a device that would assist them to decrease the instability of their investments. Besides, they would like to reduce risks, which can emerge.
The Active Bitcoin Certificate decreases trading instability. This exchange certificate gives depositors an opportunity to transfer their stocks between Bitcoin and U. S. dollar. A special machine-learning algorithm analyzes technical schemes, executed instability steps, buy/sell coerce and social media thoughts.
This algorithm calculates the nearest direction of future earnings for depositors on the present-day. Swissquote is an online Swiss bank. It assigns between 60% and 100% of the investments to bitcoin. The rest of the currency they invest in US dollars. This strategy will give depositors an opportunity to neutralize the essential risk of Bitcoin investment instability.