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Bitcoin slides 18 percent on crackdown fears; crypto rivals also plunge

by UNTV News   |   Posted on Tuesday, January 16th, 2018

FILE PHOTO: A small toy figure is seen on representations of the Bitcoin virtual currency in this illustration picture, December 26, 2017. REUTERS/Dado Ruvic/Illustration

LONDON (Reuters) – Bitcoin tumbled 18 percent on Tuesday to a four-week trough close to $11,000, after reports that a ban on trading of cryptocurrencies in South Korea was still an option drove fears grew of a wider regulatory crackdown.

Bitcoin’s slide triggered a massive selloff across the broader cryptocurrency market, with biggest rival Ethereum down 23 percent on the day, according to trade website Coinmarketcap, and the next-biggest, Ripple, plunging 33 percent.

South Korean news website Yonhap reported that Finance Minister Kim Dong-yeon had told a local radio station that the government would be coming up with a set of measures to clamp down on the “irrational” cryptocurrency investment craze.

South Korea had said on Monday that its plans to ban virtual coin exchanges had not yet been finalised, as government agencies were still in talks to decide how to regulate the market.

Bitcoin slid on the latest news, trading as low as $11,191.59 on the Luxembourg-based Bitstamp exchange, down 18 percent on the day, for a short period putting the digital currency on track for its biggest one-day fall in three years.

“It’s mainly been regulatory issues which are haunting the cryptocurrency, with news around South Korea’s further crackdown on trading the driver today,” said Think Markets chief strategist Naeem Aslam, who holds what he described as “substantial” amounts of bitcoin, Ethereum and Ripple.

“But we maintain our stance. We do not think that the complete banning of cryptocurrencies is possible,” he said.

Cryptocurrencies enjoyed a bumper year in 2017 as mainstream investors entered the market and as an explosion in so-called initial coin offerings (ICOs) – digital token-based fundraising rounds – drove demand for bitcoin and Ethereum, the second-biggest digital unit.

The latest tumble leaves bitcoin down more than 40 percent from the record high around $20,000 it hit in mid-December, wiping about $130 billion off its “market cap” – the unit price multiplied by the total number of bitcoins that have been released into the market.

The news from South Korea came as it emerged a senior Chinese central banker had said authorities should ban centralised trading of virtual currencies as well as individuals and businesses that provide related services, according to an internal memo from a government meeting seen by Reuters.

Bloomberg reported on Monday that Chinese authorities plan to block domestic access to Chinese and offshore cryptocurrency platforms that allow centralised trading.

“(It) seems like it’s uncertainty spooking the markets,…with regulations unclear,” said Charles Hayter, founder of data analysis website Cryptocompare. “(Traders) are taking profits on the increased risk scenarios going forward.”

A director at Germany’s central bank said on Monday that any attempt to regulate cryptocurrencies must be on a global scale as national or regional rules would be hard to enforce on a virtual, borderless community.

By 1000 GMT bitcoin was trading down 16 percent on the day at around $11,500 on Bitstamp.

Reporting by Jemima Kelly; Editing by Tommy Wilkes and Hugh Lawson

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Cryptocurrency traders to launch lawsuit against Coincheck on Thursday – lawyer

by UNTV News   |   Posted on Wednesday, February 14th, 2018

Cryptocurrency exchange Coincheck’s signboard is pictured in front of a building where their office is located in Tokyo, Japan February 2, 2018. REUTERS/Kim Kyung-Hoon

TOKYO (Reuters) – A group of cryptocurrency traders will file a lawsuit against Coincheck Inc on Thursday over last month’s theft of $530 million (£382 million) in digital money from the Tokyo-based exchange, a lawyer representing the claimants said.

The ten traders will file the claim at the Tokyo District Court over Coincheck’s freezing of cryptocurrency withdrawals, Hiromu Mochizuki, a lawyer representing the plaintiffs, told Reuters.

The traders will request that Coincheck allows them to withdraw cryptocurrencies to “wallets” – folders used for storing digital money – outside the exchange, Mochizuki said. The group may launch a second lawsuit at the end of the month to claim for damages over the heist, he added.

Coincheck representatives did not immediately respond to phone and emailed requests for comment.

The Coincheck incident highlighted the risks in trading an asset that policymakers are struggling to regulate, and has renewed the focus on Japan’s framework for overseeing these exchanges.

The Tokyo-based exchange, which froze all withdrawals of yen and digital currencies following the theft, resumed yen-withdrawals from Tuesday, according to posts on Twitter.

Coincheck said on Friday it would allow customers to withdraw yen after confirming the integrity of its system security. It added it would keep restrictions on cryptocurrency withdrawals until it could guarantee the secure resumption of its operations.

Coincheck is set to file on Tuesday a report with regulators on the heist, the safety of its systems, and measures it will take to prevent a repeat.

Reporting by Thomas WilsonEditing by Shri Navaratnam

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Japan’s Coincheck reports to regulators over $530 million cryptocurrency heist

by UNTV News   |   Posted on Tuesday, February 13th, 2018

FILE PHOTO: Journalists are seen next to Cryptocurrency exchange Coincheck’s signboard while Japan’s financial regulator conducts a spot inspection on Coincheck, in Tokyo, Japan February 2, 2018. REUTERS/Kim Kyung-Hoon/File Photo

TOKYO (Reuters) – Japanese cryptocurrency exchange Coincheck Inc, under pressure to better safeguard investors after the daring theft of $530 million (£382 million) of digital money last month, said it had on Tuesday filed a report with regulators on the hacking.

The Financial Services Agency ordered Coincheck to raise its standards after the late-January hack, directing it to submit a report on the security of its systems and measures it would take to prevent a repeat.

The report included Coincheck’s investigation into the heist and details of steps to bolster its risk management system, the exchange said in a statement.

The submission of the report came as Coincheck lifted curbs on yen withdrawals.

The exchange, which froze all withdrawals of yen and cryptocurrencies following the heist, said last week it had confirmed the integrity of its system security and would from Tuesday allow customers to withdraw yen. A source told Reuters on Friday that Coincheck had received withdrawal requests from customers totalling about 30 billion yen (£202 million).

The exchange will hold a press conference at 8 p.m. local time (1100 GMT), the person familiar with the matter said. Coincheck did not immediately respond to an emailed request for comment.

The heist has exposed flaws in Japan’s system of regulating cryptocurrency trading, and raised questions over the country’s dash to oversee the industry – a move that was in sharp contrast to clampdowns by policymakers in countries such as South Korea, China and India.

LAWSUIT

Despite allowing customers to resume withdrawing yen from its systems, Coincheck said last week it would keep in place curbs on cryptocurrency withdrawals until it could guarantee the secure resumption of its operations.

“We are continuing to confirm and improve the security of our systems in order to resume transfers of other cryptocurrencies,” Coincheck said.

A lawyer representing a group of ten cryptocurrency traders told Reuters that they will launch a lawsuit against Coincheck on Thursday over the curbs on taking out cryptocurrencies.

The group will file a claim at the Tokyo District Court for Coincheck to allow withdrawals to private “wallets” – digital folders for storing money – outside the hacked exchange, the lawyer, Hiromu Mochizuki, said.

Separately, Bank of Japan Governor Haruhiko Kuroda said on Tuesday cryptocurrencies likely won’t threaten legal tenders like the yen any time soon as they are mostly used for speculative trading, rather than as payments and settlement means.

Kuroda also said the BOJ was closely watching developments in cryptocurrency trading to ensure they do not erode public trust over the safety of existing settlement systems overseen by the central bank.

“Cryptocurrencies aren’t legal tenders and don’t have assets to back up their value,” the BOJ chief said.

Reporting by Takahiko Wada and Thomas Wilson; Additional reporting by Leika Kihara Editing by Shri Navaratnam

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Gibraltar moves ahead with world’s first initial coin offering rules

by UNTV News   |   Posted on Monday, February 12th, 2018

FILE PHOTO: Cryptocurrencies are seen on a website that tracks the value of initial coin offerings (ICO) in this illustration photo taken September 5, 2017. REUTERS/Thomas White/Illustration/File Photo

LONDON (Reuters) – Gibraltar will introduce the world’s first regulations for initial coin offerings with dedicated rules for the cryptocurrency sector whose fast growth has triggered concern among central bankers.

They are worried about financial stability and protecting consumers but regulators have so far adopted a patchwork approach to ICOs, ranging from bans in China to applying existing securities rules in the United States.

This has created legal uncertainty for transactions that sometimes straddle many countries.

An ICO involves a company raising funds by offering investors tokens in return for their cash or cryptocurrency such as bitcoin, as opposed to obtaining shares in the company from a traditional offering.

Over $3.7 billion was raised through ICOs last year, up from less than 82 million euros in 2016, a leap that has rung alarm bells among central bankers as some firms rush to issue tokens before new rules are introduced.

Gibraltar’s government and Gibraltar Financial Services Commission (GFSC) said lawmakers will discuss a draft law in coming weeks to regulate the promotion, sale and distribution of tokens connected with the British overseas territory.

The GFSC said it would represent the first set of bespoke rules for tokens in the world.

“One of the key aspects of the token regulations is that we will be introducing the concept of regulating authorized sponsors who will be responsible for assuring compliance with disclosure and financial crime rules,” said Sian Jones, a senior adviser to the GFSC.

The regulation will establish disclosure rules that require adequate, accurate and balanced information to anyone buying tokens, the government and Financial Services Commission said in a joint statement.

Central bankers have lined up in recent weeks to call for cryptocurrencies and ICOs to be regulated, saying that while innovation in finance can bring benefits, consumers must be protected.

“Tokens could post substantial risks for investors and can be vulnerable to financial crime without appropriate measures,” the finance ministers and central bank governors of France and Germany said in a letter on Friday.

“In the longer run, potential risks in the field of financial stability may emerge as well,” said the letter calling on the Group of 20 economies (G20) to discuss cryptocurrencies at their next meeting.

Gibraltar’s move is being closely watched by regulators from across the world, including Britain and Singapore, who may come forward with their own rules.

Jay Clayton, head of the U.S. Securities and Exchange Commission, said on Tuesday that tokens are securities and subject to the same investor protection rules as share offerings.

French markets watchdog AMF published a discussion paper last October on ICOs, but it has not yet said if it will push ahead with rules.

Gibraltar is looking to boost its thriving financial services industry beyond gaming after Britain, along with Gibraltar, leave the European Union in 2019.

It blazed a trail in January by introducing the world’s first bespoke license for “fintech” firms using the blockchain distributed ledger technology that underpins ICOs.

“We remain fully committed to ensuring that we protect consumers and the reputation of our jurisdiction,” said Albert Isola, Gibraltar’s commerce minister.

Gibraltar is also reviewing its rules for investment funds that involve cryptocurrencies and tokens.

($1 = 0.8159 euros)

Editing by Anna Willard

 

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