Wayi International Digital Entertainment will begin accepting Bitcoins in 2014 to profit from the regulations surrounding Bitcoin in China, under the assumption that the inability for Bitcoin holders to profit from the growth of the currency will lead them to spend it instead. They then plan on becoming Taiwans primary Bitcoin exchange. Although Chinas regulations and statements against the value of cryptocurrencies caused the price of Bitcoin to drop significantly, these actions could help to stabilize the currency, making it more attractive to long term investors by discouraging short term speculation and incentivising bitcoin holders to buy and sell goods using the currency.
Bitcoin mining company Milly Bitcoin asked for a ruling from FINCEN regarding whether or not companies which mine bitcoin will be legally classified as money transmission services. FINCEN responded “Activities that, in and of themselves, do not constitute accepting and transmitting currency, funds or the value of funds, are activities that do not fit within the definition of money transmission services and therefore are not subject to FinCEN’s registration, reporting, and recordkeeping regulations for MSBs” They went on to confirm that “To the extent that a user mines Bitcoin and uses the Bitcoin solely for the user’s own purposes and not for the benefit of another, the user is not an MSB under FinCEN’s regulations, because these activities involve neither “acceptance” nor “transmission” of the convertible virtual currency and are not the transmission of funds within the meaning of the Rule.”
This is good news for Bitcoin miners, and is a sign that FINCEN is adopting a moderate regulatory position on Bitcoin transactions which targets illegal uses of Bitcoin such as money laundering, but which does not consider the creation of the currency itself to be a crime. The creation of cryptocurrencies is technically illegal and could be prosecuted under title 18 U.S.C. 336, Sec. 336. which states “Whoever makes, issues, circulates, or pays out any note, check, memorandum, token, or other obligation for a less sum than $1, intended to circulate as money or to be received or used in lieu of lawful money of the United States, shall be fined under this title or imprisoned not more than six months, or both.” However, this statute hasn’t been enforced in a published court opinion since 1899, a good sign for the budding currency.
Although the Reserve Bank of India recently issued a warning against transacting using Bitcoin, yesterday they stated that they won’t be regulating Bitcoin transactions. KC Chakrabarty, Deputy Governer of RBI said “Regulation comes only when people are doing certain business and we come to understand that something wrong is happening. First of all we don’t understand this subject.” He continued that “at present what we are saying is neither we regulate them nor we support them” This is a surprising statement considering that it comes just days after Enforcement Directorate officials raided the offices of two Bitcoin exchanges in Ahmadabad, rBitco.in and buysellbitco.in. The owners of the two exchanges are being charged with violating the Foriegn Exchange Management Act, and officials are analyzing their transaction data for illicit activity. For now, India’s regulatory stance towards bitcoin transaction remains inconsistent and unclear.
The volatility of Bitcoin has lead some investors to shy away from directly acquiring the currency, but it’s promise as a rapid and secure means to transfer value around the world provides a unique opportunity to obtain an early stake in what may be the foundation for the future of global commerce. Some economists including John Greenwood, Chief Economist of Invesco, advise investors to gain exposure to Bitcoin by investing in the infrastructure surrounding the currency rather then by acquiring bitcoins directly.
Greenwood cites Li Ka-shing, Asias wealthiest person (net worth 28.8 billion,) who has invested in Bitpay, a service which makes it easier for merchants to accept bitcoins as payment, comparing the current bitcoin boom to the california gold rush: “Just like investors in days gone by made more money out of selling shovels and picks to gold-diggers than anyone ever made out of the gold mine, [Ka-shing] is investing in the peripheral activity that bitcoin has generated.” Ka-shings investment seems to be paying off, as the number of merchants accepting bitcoin through Bitpay has more then tripled in the last few months. The graph above shows the number of monthly transactions processed by Bitpay over the last year.
Reserve Bank of India stated that cryptocurrency is risky to transact in because “there is no established framework for recourse to customer problems/disputes/chargeback, etc,” continuing that “The absence of information of counterparties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism”. At the same time, businesses in India are begining to accept cryptocurrencies such as Bitcoin because of the percieved benefits offered by a currency secured by math and physics rather then by human promises. Tarun Thandi, owner of Kolonial, the first restaurant in India to accept payment in Bitcoin said, “Right now, people are a bit sceptical about bitcoins, but it’s going to become big. I am testing the waters”
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The Monetary Authority of Singapore has decided that it will not regulate or otherwise interfere with Bitcoin transactions, stating “Whether or not businesses accept Bitcoins in exchange for their goods and services is a commercial decision in which MAS does not intervene”. This is consistent with their long standing policy of leaving transactions in digital currencies unregulated. They’ve also cautioned that Bitcoin could be risky to use because of the lack of an authority from whom recourse can be sought in the event of a crash in the value of the currency.
Patrick Byrne, CEO of Overstock.com has announced that Overstock.com will begin accepting Bitcoin during Q2 2014. They are the first ecommerce company of this scale in the US to begin accepting Bitcoin, and adds legitimacy to the value of the currency. “Bitcoin is good money” Byrne stated. “It will put [Overstock] at a competitive edge if, and only if, the general population starts thinking and using bitcoin,” he said. “We’re willing to take the first step and see.” Overstock.com is an online discount retailer that sells a broad range of products including furniture, rugs, bedding, electronics, clothing, jewelry, and cars. Read more here: http://newsbtc.com/2013/12/19/overstock-com-begin-accepting-bitcoin-2nd-half-2014/