Governments could benefit from cryptocurrencies

Governments could benefit from cryptocurrencies

The world is constantly changing. People are always thinking of innovative new ways to streamline processes and to make things run more efficiently. In some cases, it’s a welcome change as the benefits are clearly evident.

However, in other cases, these changes can be viewed as threatening and are met with resistance and skepticism. Case in point is the cryptocurrency industry.

Virtual currencies have an aim of giving monetary power back to the people and in a sense, is revolutionizing the global financial market. This is the same market that is controlled by governments and central banks. Because of this, its easy to see why these entities would be against the disruptive nature of cryptocurrencies.

However, digital currencies are here to say, and are part of an increasingly lucrative industry. In fact, the combined market cap for cryptos recently reached the $800 billion mark. In addition, it is becoming a viable option for citizens in countries where the economy is in the red, or where authoritarian leaders are in charge.

Actually, it seems to be governments that fall into the latter category who seem to be resisting the most as giving citizens autonomy over their own money seems to be a frightening thought indeed. The thing is, these government don’t see that by embracing crypto, they could fill their coffers too, potentially through tax initiatives.

China was one of the first countries to act on their perceived threat of cryptocurrencies. The country banned ICOs and went on to shut down exchanges. Because of this, the country also managed to lose billions of yuans’ worth in tax, which would have helped grow their GDP. However, this hasn’t stopped the crypto industry from operating in China, albeit underground.

Governments that are more secure seem to have a different view in that they realize the importance of virtual currencies in our world today. Japan has accepted Bitcoin as legal tender, and is also regulating the trade in the country. In this way, they can benefit from crypto as well. In fact, if estimates are to be believed, Bitcoin accounted for 0.3% of GDP growth in Japan.

The consequence of fighting against the inevitable is that you lose. When the rest of the world runs smoothly and is flourishing under the growth of crypto adoption, countries like China may be left standing at the bank withdrawing the last of the dwindling supply of fiat currencies, because traditional money will become a rare breed in the future.

Russian officials do not have to declare their crypto

Russian officials do not have to declare their crypto

Russia continues its ever-evolving relationship with cryptocurrencies with its latest move. The country has previously been very vocal about their plans to control and regulate the digital currency industry.

Russian President Vladmir Putin has declared July this year as the deadline for a definitive framework for the industry, and his government has even submitted a draft law detailing processes for issuing, taxing, buying and trading virtual currencies.

The country’s Ministry of Labor has released their income, expenses and property declaration guidelines for government employees, and its got an interesting little side note. The framework states that state workers do not have to declare any “virtual currencies” they may have attained.

Government employees already do not have to declare “goods and services in their natural forms”, and now cryptocurrencies form part of that.

A reason for this, according to the ministry’s representative is due to the lack of clear legislation:

“At present, approaches to the definition and regulation of cryptocurrencies in the Russian Federation at the legislative level are not defined.”

According to Russian news portal, Izvestia, some experts believe that this new addendum will increase the level of corruption in the country’s government, a problem that is continuing to grow. Over the last 10 years, state corruption has increased by 30%.

In 2009, it became mandatory for government employees to declare their income. In addition, state workers also have to publicize any gifts of traditional fiat money that they have received from friends of family.

Vladislav Tsepkov, who is part of the Business Against Corruption Center, does not feel as though crypto corruption will be an issue though. The government-created organization aims to protect the rights of entrepreneurs. Tsepkov had this to say:

“But cryptocurrency is not a means of payment, it cannot be spent. If they [government workers] sell it and get real income, then it will need to be declared, so the risks are minimal.”

Even though clear and concrete crypto regulations still need to be approved and adopted, Russia has made no secret of the fact that they are against crypto usage. Authorities have even cautioned investors that they are “high risk”.

They may not be on board with Bitcoin, but Russia definitely sees the potential of Blockchain Technology. The country recently announced that they hope to develop and issue a state-controlled virtual currency known as the CryptoRuble. Some government officials believe that this state-run crypto could be used to circumvent financial sanctions placed on the country.

The 'Dean of Blockchain Lawyers' Just Got a New Job

One of the first and most influential lawyers to represent blockchain and cryptocurrency businesses is joining one of the industry's oldest startups in an executive role.

Announced today, Marco Santori is leaving Cooley LLP, where he's been a partner since November 2016, to become the president and chief legal officer of Blockchain, a longtime client and one of the industry's best-known wallet startups.

The move is a return to roots for Santori, who started out advising early bitcoin startups on legal and policy matters but over the years shifted to working on enterprise blockchains and, most recently, initial coin offerings.

But he said his heart was always in bitcoin's potential to empower individuals.

"I didn't get into this to do ICOs," Santori told CoinDesk. "It's a fascinating area of the law, but that's not the train that I'm on."

Likewise, he said:

"I'm not trying to rebuild Wall Street on top of a blockchain. I'm trying to give ordinary people a better option for finance, a better option for storing their funds and using their funds."

Blockchain is the best place for him to fulfill that vision, Santori said. The company, which has offices in New York and London, allows users to store and send bitcoin through their web browsers without downloading any software.

It's raised a total of $70 million to date. According to co-founder and CEO Peter Smith, the company has more than 20 million users.

Strategic role

Smith said Santori will play a strategic role, helping Blockchain meet the demand that exploded last year by scaling up not only the legal and regulatory functions but also corporate development, including acquisitions and partnerships.

"In our space, it's so special: go-to-market strategies and acquisition strategies are all reliant on the regulatory and legal side," Smith told CoinDesk. "Having someone come out of that vertical who understands how to run deals is very key."

Santori is uniquely suited for such a role, having been on "at least one side of every major transaction in the digital currency space over the last four years," Smith said.

The chief legal officer position is newly created. The president's title previously belonged to Blockchain co-founder Nic Cary, who will maintain an active role as vice chairman, focusing on public affairs and external relations as Santori takes over the policy and expansion duties, a company spokeswoman said.

Cary said in a press release that he will be "dedicating more of my time [to] building our brand in key regions like India, hiring the brightest talent, and educating more people on the benefits of digital assets."

A long, strange trip

In many ways, Santori's career has mirrored the blockchain industry's evolution.

He first made a name for himself as a bitcoin-savvy lawyer while working at Nesenoff & Miltenberg LLP. In 2013, he became the chairman of regulatory affairs committee at the Bitcoin Foundation and the following year represented the trade group during the New York State Department of Financial Services' BitLicense hearings, watched across the globe.

In late 2014, he joined the white-shoe firm of Pillsbury Winthrop Shaw Pittman LLP, and simultaneously was retained as global policy counsel for Blockchain. Santori made partner at Pillsbury two years later.

This period coincided with a long bear market for bitcoin. The industry's focus turned to seeking ways corporations and governments could take advantage of the underlying technology without having to touch the currency.

During that era, Santori was a key figure in shaping the state of Delaware's blockchain strategy. He helped to craft legislation that allowed firms incorporated in the First State to record their shares on a distributed ledger.

At Cooley, where Santori's been a partner since November 2016, his work has centered around ICOs, which took off like a rocket last year, despite the legal uncertainties surrounding these token sales.

ICO controversies

Santori tried to bring some clarity to the market last year with the SAFT, or Simple Agreement for Future Tokens.

In this structure, a blockchain project raises money exclusively from accredited investors, thereby avoiding securities registration requirements; once a network or product is built, the tokens needed to use it are distributed to the investors, who can resell them to the public.

The SAFT idea has been controversial, with some legal scholars fearing it may have the opposite effect from its intent and increase the legal risk for token issues.

Meanwhile, the U.S. Securities and Exchange Commission and other regulators around the globe have begun cracking down on ICOs. And last month, without naming any names, SEC chairman Jay Clayton voiced disapproval of lawyers who have been advising ICOs that resemble securities offerings but don't comply with the securities laws.

Santori said his move to Blockchain was in the works long before Clayton made those remarks. As for the remarks themselves, he gave a very lawyerly response.

"The SEC and the bar are in a learning process about how these things ought to be treated, about where the value is, where the risk is," Santori said, adding:

"Regulators all around the world are responding primarily to headlines. There's been a failure on the part of the industry and the bar to explain the value to regulators. We all have a lot of work to do together."

Santori said his departure from Cooley is bittersweet, since he hasn't finished building the firm's fintech practice, but there aren't enough hours in the day to do that and perform his new duties at Blockchain.

"I wish I could do both," he said.

Image via Marco Santori

Nick Szabo Developed a Method of Sending Bitcoin Transactions Over Radio

At the Scaling Bitcoin Conference held at Stanford University, Bitcoin pioneer Nick Szabo and former Stanford engineer Elaine Ou introduced a working method of securely sending Bitcoin transactions over radio signals.

Earlier this week, Jameson Lopp, the lead engineer at BitGo and prominent Bitcoin developer, revealed that the presentation of Szabo entailed their successful tests of sending Bitcoin transactions using weak signal HF radio, by operating a Bitcoin SPV client.

Similar to the Bitcoin satellite transaction broadcasting technology developed by Blockstream, the settlement of Bitcoin transactions through HF radio signals can be more inefficient in comparison to processing Bitcoin transactions normally, over the internet. However, one advantage of using radio signals and Bitcoin satellites to settle transactions is its ability to reduce censorship and circumvent internet restrictions to send and receive Bitcoin.

In August, Blockstream, a blockchain and Bitcoin development firm, introduced the Bitcoin satellite technology with a shared vision of eliminating censorship and internet resistance in using Bitcoin as a store of value and a digital currency.

Adam Back, the CEO of Blockstream, stated:

“ Bitcoin is a powerful and transformative internet native digital money that has blazed a trail of disruption, with its full potential yet to unfold. Because it's permission less, Bitcoin enables anyone to freely create new financial applications and other innovations that use the Blockchain that haven't been possible before. With more users accessing the Bitcoin Blockchain with the free broadcast from Blockstream Satellite, we expect the global reach to drive more adoption and use cases for Bitcoin, while strengthening the overall robustness of the network.”

Over the past 12 months, an increasing number of governments, authorities, and countries have started to fully regulate Bitcoin as a legitimate currency. Countries like Japan went as far as to declare Bitcoin as a legal currency, encouraging the usage of Bitcoin for payments.

But, inevitably, in the mid-term prior to the global mainstream adoption of Bitcoin, a few countries could attempt to restrict the usage of Bitcoin by imposing restrictions on internet service providers to limit Bitcoin transactions. In such cases, the presence of Szabo’s Bitcoin radio transaction settlement technology and Blockstream’s Bitcoin satellite system would enable users to freely send and receive Bitcoin, circumventing government restrictions with ease.

Japanese Bitcoin Mining Just Became More Attractive

About five or six years ago, it was possible to profitably mine Bitcoin using nothing more than a desktop PC. Fast forward to today, and profitability requires huge amounts of hash power and, in turn, a considerable amount of electricity. Of course, unless this electricity is cheap, profitability is difficult to achieve. This has led to markets searching for the most efficient (from a price perspective) regions globally to set up their mining operations.

Historically, China has been a popular choice as have some areas of Eastern Europe

Now, however, the latest region to enter the fray is Japan.

Specifically, a region in northern Japan where the climate is ideally suited to this sorof mining activity.

The region in question is called Kazuno City and it has a population of approximately 32,000. It is located on a mountainous northern prefecture on Japan’s primary island called the Akita Prefecture.

Here's what Japan Today said about the climate:

“The average yearly temperature of Kazuno City is low, probably contributing to improving the heat exhausting/cooling effects to deal with the heat generated by computers for mining… The city has an abundance of renewable energy including geothermal, hydroelectric and wind powers, and its self-sufficiency rate of electricity exceeds 300%.”

According to reports, one company is already making plans to set up an operation in the regionand expectations are that many more will follow, lured in by the potential profits rooted in cheap electricity and a cryptocurrency friendly government environment.

The company in question is called Miner Garage. According to, again, Japan Today:

“At the mining center, 600 computers will be installed at first, and they are expected to realize a mining business worth about 300 million yen per year by dealing with about 10 kinds of virtual currencies such as Bitcoin.”

This is just one of many positive developments out of Japan surrounding the cryptocurrency space and it further reinforces the country's efforts to establish a leadership position in this sector.

Goldman Sachs thinks Bitcoin could soon be worth nearly $8,000

Bitcoin’s star seems destined to continue to rise. It has grown more than 500%in this year alone, with no sign  that trend will be abating anytime soon. It also seems to be gaining traction outside of the crypto industry, with investors hoping to catch a ride on the Bitcoin express.

Hoping to facilitate this, CME, the world’s largest exchange, recently announced their plans to launch a Bitcoin futures contract later this year. This will allow for more people to invest in the currency as they will not require an actual Bitcoin to profit from it.

Following this announcement, Bitcoin reached a record high of $7,601.53 over this weekend. After dipping below $7,000 on Sunday, it was trading $7,092 by Monday.

Goldman Sachs predicts that it will continue its upward trend to be within touching distance of the $8,000 mark

“The market has shown evidence of an impulsive rally since breaking above $6,044,” Sheba Jafari, vice president on the bank's FICC Market Strats team, said on Sunday.

“Next in focus, $7,941. It might consolidate there before continuing higher,” she added.

In August this year, Jafari stated that the currency was riding the fifth and final wave, based on the Elliot Wave theory, of an “impulsive” rally with estimates that it would reach a high of $4,827 before dropping to less than half of that at $2,221.

The currency did indeed increase after that to reach $5,013 in the beginning of September. However, as China began its aggressive crackdown on digital currencies that month, Bitcoin dropped to $2,951. Jafari has now said that if Bitcoin does in fact reach a price of $7,941, it would mark the third of “five-waves up” for the currency.

In addition to being supported by CME, Japanese investors have also shown an increase in the demand of Bitcoin. Trade in the currency in Japanese yen accounts for approximately 60% of the trading volume.

The introduction of these Bitcoin futures contracts will greatly increase the currency’s investment potential. Becauseit will be based on speculation rather than purchasing the actual currency, this will eliminate counterparty risk as well as reducing the risk associated with the volatile and unpredictable crypto market. In addition, these futures might pave the way for Bitcoin ETFs sooner rather than later.

So even though Bitcoin has dropped $600 from its record high, there is still belief from one of the biggest financial institutions that there are definitely more highs for Bitcoin to chase, and ultimately reach.

How Anti-Bitcoin Saudi Prince Could Have Prevented Billions of Dollars Being Frozen

How Anti-Bitcoin Saudi Prince Could Have Prevented Billions of Dollars Being Frozen

On the RT’s Keiser Report, highly regarded financial analyst Max Keiser revealed that billionaire Prince Alwaleed Bin Talal, who harshly criticized Bitcoin in the past, could ironically have prevent the loss of his fortune with bitcore.in.

Prior to his arrest on various charges including corruption and money laundering, Talal criticized Bitcoin, stating that a bubble is forming and that it is a new “Enron in the making.”

On the Keiser Report, Max Keiser explained that after a strange series of events, Bitcoin could have protected the assets and wealth of Talal from the Saudi police and the government, given its decentralized structure and immutable nature.

“He [Talal] said bitcoin was no good because there is no central government and no central bank. And then a week later, the central bank and the central government rips out all of his net worth. If he had them in Bitcoin, he wouldn’t have that problem. He is like a poster child for why you should buy bitcoin. Anyone who is thinking about should I buy bitcoin, look at [Talal] sleeping on a mattress of a rich hotel under house arrest. Furthermore, he is overrated as a money manager,” said Keiser.


Since the beginning of 2016, the price of Bitcoin has been on the rise for the particular reason Keiser mentioned on the Keiser Report. Investors and traders have started to seek for assets and safe haven assets that are transportable, liquid, and most importantly, unseizable. Any asset, currency, or store of value that is physical can be confiscated and seized by the government, as seen in the recent case of Talal.

One of the Bitcoin’s major advantages over fiat currencies and traditional safe haven assets like gold is that it eliminates power from authorities, because governments are limited to what they regulate within the global Bitcoin and Cryptocurrency markets.

For instance, the Chinese government recently imposed a ban on Cryptocurrency trading. But, reports suggest that the demand for Bitcoin and other Cryptocurrencies have consistently increased even with the trading ban in place, as traders migrated to over-the-counter (OTC) and peer-to-peer (P2P0 in regions like Japan and Hong Kong to invest in Bitcoin.

OKCoin and Huobi, two of the largest Bitcoin exchanges in China that recently halted their services within China, reallocated their headquarters to Hong Kong and are currently considering launching over-the-counter trading platforms for both Hong Kong and Chinese traders.

In the case of Talal, the Saudi police and the government would have not been able to seize his assets if his wealth was stored in Bitcoin, and would have not been able to estimate his net worth to begin with. Such privacy is important and necessary to any investor, trader, business, and individual.