NYDFS vs Bittrex
New York has become the first state in the US to lay down regulations and rules for the trade of virtual currency including Bitcoin. Outlined by Benjamin M. Lawsky, Superintendent of Financial Services, the new regulations will affect traders which accept, sell or buy virtual currency. The Mt. Gox bitcoin debacle: Bankruptcy filed, customer bitcoin lost.
Read More. The rules have been formed after a two-year long investigation into cryptocurrency. The "BitLicense" regulations. PDF contain consumer protection, anti-money laundering compliance and cybersecurity rules tailored for companies using virtual currency, including Bitcoin. At the BITS Emerging Payments Forum in Washington, DC on Wednesday, Lawsky said digital currency highlights the dynamic nature of financial markets and technology, and the pace of change is only doing to accelerate in the years to come.
As a result, "regulators need to be ready to meet that challenge. That is the bread and butter job of a financial regulator," Lawsky said. Lawsky noted that attempts to ban Bitcoin would likely fail, as banning computer code is nigh-on impossible. Instead, the financial regulator said the key is balancing the protection of consumers, the reduction of fraud and still permitting innovation breathing space.
If companies use virtual currency and are holding on to customer funds, they need to apply for a license. However, app developers who are developing software do not need to -- as the department will not need to act as a financial intermediary. Lawsky commented:. In addition, companies will need the approval of the financial regulator if they make substantial changes to their business models or products, as well as the inclusion of new controlling investors.
However, they will not need permission before seeking funding through investment rounds or small software updates. We're not Apple," Lawsky told attendees. The regulations have been drawn up in response to virtual currency being used for illegal activity -- such as for the trade and purchase of drugs and weapons on the now-defunct underground marketplace Silk Road , as well as cyberattacks which have taken place on cryptocurrency exchanges and resulting in the loss of customer funds.
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Australian government looks to trial IoT sensors to keep energy use in check. It will also develop a data hub to store all of the collected information in real time. Do the holidays have you anxious and depressed? Be digitally mindful.
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The weird future of brain-computer interfaces: Replacing passwords with thoughts and mind-reading bosses who can tell when you are bored. Brain computer interfaces BCIs are starting to make their way into the consumer sphere, from brain-training systems to 'passthoughts'.
Singapore digital banking era will put focus on SMBs, consumer trust. Introduction of digital banks will 'shake up' Singapore's banking industry, which is expected to have up to five new digital market entrants, says a Forrester analyst, who underscores Read this. My Profile Log Out. Join Discussion. Add Your Comment.
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You may unsubscribe from these newsletters at any time. Over , robo-debts have been paid without a review It isn't known if the customers who paid a debt were even made aware that they could question the validity of the debt that was issued to them.
Australian government looks to trial IoT sensors to keep energy use in check It will also develop a data hub to store all of the collected information in real time.
Be digitally mindful You have racing thoughts and don't want to get out of bed. IBM Research says new battery design lacks heavy metals, can perform better than lithium-ion The IBM Research battery is built with materials extracted from seawater and would minimize the need to mine. The weird future of brain-computer interfaces: Replacing passwords with thoughts and mind-reading bosses who can tell when you are bored Brain computer interfaces BCIs are starting to make their way into the consumer sphere, from brain-training systems to 'passthoughts'.
Singapore digital banking era will put focus on SMBs, consumer trust Introduction of digital banks will 'shake up' Singapore's banking industry, which is expected to have up to five new digital market entrants, says a Forrester analyst, who underscores
Its BitLicense requirement has made operating a crypto business very expensive and difficult. In an effort to turn things around, state regulators are now aiming to attract Bitcoin and altcoin miners. On paper, there is no reason for cryptocurrency miners to ever consider setting up shop in New York. Few people are aware that the region could soon provide access to very cheap electricity. A new electricity rate structure has been proposed by New York regulators. Miners who are contemplating setting up shop in this part of the United States would be able to negotiate a more favorable price.
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One Approval, One Rejection
A delegation of American executives flew to Beijing in April for a secret meeting just blocks from Tiananmen Square. They had come to court the new kingmakers in one of the strangest experiments in money the world has seen: the virtual currency known as Bitcoin. It has attracted major investments from Silicon Valley and wit significant following on Wall Street.
Yet Bitcoin, which is both a new kind of digital money and an unusual financial network, is having something of an identity crisis. Like so many technologies before it, the virtual currency is coming up against the inevitable push and pull between commercial growth and the purity of its original ambitions.
In its early conception, Bitcoin was to exist beyond the control of any single government or country. It would be based everywhere and. Yet despite the talk of a borderless currency, a handful of Chinese companies have effectively assumed majority control of the Bitcoin network.
Bitccoin have done so through canny investments and vast farms of computer servers dispersed around the country. The American delegation flew to Beijing bitcojn that was where much of the Bitcoin power was concentrated. At the time of the meeting, held at the Grand Hyatt hotel, over 70 percent of the transactions on the Bitcoin network were going through just four Chinese companies, known as Bitcoin mining pools — and most flowed through just two of those yor.
That gives them what amounts to veto power over any changes to the Bitcoin software and technology. China has become a market for Bitcoin unlike anything in the West, fueling huge investments in server farms as well as enormous speculative trading on Chinese Bitcoin exchanges.
Chinese exchanges have accounted for vitcoin percent of all Bitcoin transactions this year, according to an analysis performed for The New York Times by Chainalysis.
Just last week, the Chinese internet giant Baidu joined with three Chinese banks to invest in the American Bitcoin company Circle. Nw power of Chinese companies has already come to play a major role in bitocin civil war that has divided Bitcoin followers over the last year and led to the departure of one of the top developers of the virtual currency.
The dispute has hinged on technical matters as well as on bigger questions of what Bitcoin should look like in 10 or 20 years. The American companies whose executives ndw to the Grand Hyatt — including venture-capital-funded start-ups like Coinbase and Bihcoin — are fighting to make Bitcoin bigger.
They hope to expand the capacity of the Bitcoin network so that it can process more transactions and compete with the PayPals and Visas of the world. As Bitcoin has grown more popular, those limits have caused severe congestion and led to lengthy transaction delays.
The American delegation in Ned had a software proposal, known as Bitcoin Classicthat ned change all. The Chinese companies, though, had the ultimate decision-making power over any changes in the software, and they did not agree with the American delegation.
The Chinese had thrown in their lot with another group of longtime programmers who wanted to keep Bitcoin smaller, in part to keep it more secure. The Americans hoped to persuade the Chinese to switch sides. In a hotel conference room, the American team of about a half-dozen people cycled aith its PowerPoint slides, in English and Chinese, arguing for expansion of the network, most notably pointing to the long delays that have been plaguing the system as a result of the congestion.
The Chinese representatives listened and conferred among themselves. Bitcoim group took a break for trzding lunch of lamb and dumplings at a nearby mall. Some Bitcoin advocates have complained that the Chinese companies have been motivated only by short-term profit, rather than the long-term success and ideals of the project. Bobby Lee, chief executive of the Bitcoin company BTCC, which is based in Shanghai, bristled ctiizens that — and at the notion that the Chinese companies represent any sort of united.
He attended the April meeting and pointed out that the Chinese citlzens had disagreed among themselves on how urgent it was to make changes to the Bitcoin software. He said the American companies failed to understand the power dynamics in the room that day. Lee said in an ykrk last week. The Chinese people have long memories. The mysterious creator of BitcoinYoek Nakamoto, released the software in early It was designed to provide both a digital trdaing and a new way to move and hold money, much as email had made it possible to send messages without using a postal service.
From the beginning, the system was designed to be decentralized — operated by all the people who joined their computers to the Bitcoin network and helped process the transactions, much as Wikipedia entries are written and maintained by volunteers around the world. The bitcoinn of a group-run network was that there would be no single point of failure and no company yrading could shut things down if the police intervened. This was censorship-free money, Bitcoin followers liked to say.
Decision-making power for the network resided with the people who joined it, in proportion to the computing power they provided. The allure of new riches provided the incentive to join: Every 10 minutes, new Bitcoins would be released and given to one of the computers helping maintain the. In the lingo of Bitcoin, these computers were said to be mining for currency. They also served as accountants for the network.
For the first few years, aside from its use as a payment method on the Silk Roadan online drug market that has since been shut down, Bitcoin failed to gain much traction. Lee said the Chinese took quickly to Bitcoin for trafing reasons. For one thing, cifizens Chinese government had strictly limited other potential investment avenues, giving citizens a hunger for new assets. Also, Mr. Lee said, the Chinese loved the volatile price of Bitcoin, which gave the fledgling currency network the feeling of online gambling, a very popular activity in China.
There has been widespread speculation that Chinese people have used Bitcoin to get money out of the country and evade capital controls, but Mr. Lee and other experts said the evidence suggests this is not ctiizens significant phenomenon. The frenzy, though, awakened interest in another aspect of the currency: Bitcoin mining. Peter Ng, a former investment manager, neww one of the many people in China who moved from trading Bitcoins to amassing computing power to mine.
First, he mined for. More recently he has created data centers across China where other people can pay to set up their own mining computers. He now has 28 such centers, all of them filled with endless racks of servers, tangled nwe and fans cooling the machines.
Ng, 36, said he had become an expert in finding cheap energy, often in places where a coal plant or hydroelectric dam was built to support some industrial project yofk never happened. The Bitcoin mining machines in his facilities use about 38 megawatts of electricity, he said, enough to power a small city. The people who put their machines in Mr. This month it attracted about 13 percent of the total computational power on the Bitcoin network. If members of a pool disagree, they can switch to another pool.
But most miners choose a pool based on its payout bitcoij, not its Bitcoin politics. Lee invited to the meeting with the American delegation in Beijing. The head of operations at F2Pool, Wang Chun, was also. That company, Bitmainbegan to build computers in using chips specially designed to do mining computations. Bitmain, which has employees, manufactures and sells Bitcoin mining computers.
It also operates a pool that other miners can join, called Antpool, and keeps a significant number of mining machines for itself, which it maintains in Iceland and the United States, as well as in China. Wu and the other mining pool operators in China have often seemed somewhat surprised, and even unhappy, that their investments have given them decision-making power within the Bitcoin network.
Why are you asking us about software? Ng said he often hears from miners. This attitude initially led most Chinese miners to align themselves with old-line Bitcoin coders, known as the core programmers, who have resisted changing the software. The miners wanted to take no risks with the money they were minting. But lately, Mr. Wu has grown increasingly vocal in his belief that the network is going to have to expand, and soon, if it wants to keep its followers.
He said in an email last week that if the core programmers did not increase the number of transactions going through the network by July, he would begin looking for alternatives to expand the network.
Wu dismissed that concern. He also said dith as more Americans buy his Bitmain machines and take advantage of cheap power in places like Washington State, mining will naturally become more decentralized. Already, he said, 30 to 40 percent cotizens new Bitmain machines are being shipped out of China. DealBook Business and Policy.
Network Bottleneck The American companies whose executives ylrk to the Grand Hyatt — including venture-capital-funded start-ups like Coinbase and Circle — are fighting to make Bitcoin bigger.
Ultimately, Mr. For now, though, China remains dominant.
WHY US CITIZENS NEED TO WITHDRAW FROM BITTREX
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