Crypto Assets Pose No Risks to Financial Stability, International Bankers Claim

The Financial Stability Board has presented its final report on cryptocurrencies, stating they pose no threats for global markets, at least for now.

International central banks and financial officials think that cryptocurrencies pose no significant risks to global economic stability, according to a report published by the Financial Stability Board (FSB) Wednesday, Oct.10.

The FSB — an international agency consisting of 68 local institutions such as central banks, watchdogs, and ministries of finance that prepares recommendations for global financial systems  — published a document called “Crypto-asset markets: Potential channels for future financial stability implications” with their findings.

As per the report, the bankers see no significant dangers in cryptocurrencies, as their total market capitalization was at $830 billion at its peak and has since dropped to $210 billion, which barely reaches 2 percent of the global value of gold. Still, the FSB urges regulators to watch the digital coins market closely amid its quick growth.

As well, the FSB includes a warning about possible price manipulations related to crypto, noting:

“Illiquidity, concentrated ownership, fragmented market structure, and other issues also make crypto assets potentially susceptible to price manipulation.”

In addition, the international agency stressed that the crypto industry raises some policy questions, such as consumer and investor protection.

The paper follows a previous FSB report from July that was presented to the G20 finance ministers and central bank governors. The organization had stated that cryptocurrencies would need in-depth monitoring due to the rapid development of the market, although they didn’t pose any threat at the moment.

In May, the International Monetary Fund (IMF) also stated it saw no risks from cryptocurrencies in regards to global markets financial stability. However, the IMF pointed out that they could pose some threats if they become more widespread without the relevant regulation.

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Singapore: Regulator Plans to Smooth Over Banking Ties With Crypto Businesses

Ravi Menon has said he “would not blame” banks for not serving crypto clients, but an “understanding” could be reached.

The head of Singapore’s financial regulator and de facto central bank said he wants to “bring together” banks and crypto businesses after complaints about banking support, Bloomberg reports Wednesday, Oct. 10.

Speaking in an interview, Monetary Authority of Singapore (MAS) managing director Ravi Menon appeared to consider the creation of a balanced regulatory environment for incoming crypto entities.

“What we are trying to do is to bring the banks and cryptocurrency fintech startups together to see if there is some understanding they can reach,” he told the publication, adding:

“The nature of this business is a bit different, so banks may need to employ other ways in which they can establish bona fide. I hope we can bring minds together on this so that we can get over this hurdle.”

Singapore has made a name for itself in recent years as a broadly welcoming jurisdiction regarding disruptive fintech, with Menon publicly showing support for the promise of both cryptocurrency and blockchain technology.

At the same time, he remains prudent about the emerging sector, noting to Bloomberg that from a bank’s perspective, he still “would not blame” executives for continuing to refuse to service crypto clients.

“Some of these activities are indeed quite opaque,” he added.

Last year, reports emerged of extant cryptocurrency entities in Singapore suddenly having their bank accounts closed by local lenders.

Nevertheless, Singapore’s position continues to differ markedly from official stance in countries such as India, where a blanket ban on banks dealing with crypto businesses continues.

After a raft of complaints, the country’s supreme court is now soon due to deliver a verdict on the ban’s legal legitimacy.

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Unconfirmed: IBM, Azeri Central Bank Cooperate on Blockchain Development, Local Media Report

IBM and Azerbaijan’s central bank will reportedly cooperate on implementing blockchain as part of a five-year program for the digital transformation of the economy.

IBM and the Central Bank of Azerbaijan (CBA) will reportedly collaborate on implementing blockchain technology in the country’s economy, Central Asian-focused Trend News Agency reports October 9.

Trend News Agency is an established news service provider spanning the Caucasus, Caspian region and Central Asia, with dedicated news platforms in Azerbaijani, Russian, Turkish and Persian, alongside an English-language platform

The agency states that the director of the Information Technology Department at the CBA, Farid Osmanov, revealed news of the five-year program for the digital transformation of the economy at the Azerbaijan-Germany Business Forum on Energy and ICT in Baku earlier today.

Osmanov reportedly said the central bank will be cooperating with IBM specifically on blockchain, adding that the transformation program would be “fairly large,” and fork in two directions:

“The first direction corresponds to plans for digital transformation. This initiative will be implemented within a five-year plan, which aims to meet the requirements and needs of the country’s economy and banking sector.”

The second direction for the partnership is the development of a digital identification system, Trend News Agency reports. Osmanov reportedly said the initiative involved the cooperation of “around” 10 commercial banks and 15 government agencies.

IBM has not responded to Cointelegraph’s request for comment as of press time, and Trend notes that the “story is still developing.”

IBM has previously cooperated on an institutional blockchain development initiative of a similar large scale. This July, the tech giant signed a five-year AU$1 billion ($740 million) deal with the Australian government to use blockchain and other new technologies to improve data security and automation across federal departments, including defense and home affairs.

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‘Huge Cash Flows’: Lithuania Voices Concern Over ICO, Crypto Trading

Lithuanian regulators are focusing on ICOs and cryptocurrency trading in new investigations and potential policy reforms.

Lithuanian authorities held a seminar examining the “threats and potential benefits” of Initial Coin Offerings (ICO) to the country’s economy, a press release reported Wednesday, October 3, amid an ongoing investigation into cryptocurrency trading habits.

The Financial Crime Investigation Service (FCIS) organized the meeting, which included representatives from government ministries, the central bank, and the General Prosecutor. According to the press release, the gathering revealed that Lithuanian processes “huge” turnover from crypto to fiat.

Antonio Mikulsk, head of the FCIS, said:

“Virtual currency has huge cash flows, but (there are) worries about converting them into dollars and euros as quickly as possible, (and) leaving virtual currencies as quickly as possible.”

Lithuania had pledged to create a formalized regulatory environment for cryptocurrency and related products, noting the benefits that come from adopting a hands-on approach to the industry.

Now, authorities are noting that a high ICO turnover volume — €500 million (about $576 million) over the past eighteen months — calls for tougher anti-fraud mechanisms.

“According to ICO figures, Lithuania is one of the world leaders and shows the highest, 305 percent, growth from all over the world,” FCIS deputy director Mindaugas Petrauskas added, quoting data from local consultancy firm Versli Lietuva.

The FCIS is simultaneously examining banks’ role in processing high-volume crypto-to-fiat transactions resulting from exchanges, noting that any single transaction over €80,000 (about $92,200) must be investigated, Lithuanian news outlet Delfi reported October 5.

Various regional banks are involved in the investigation, including SEB Bank, Swedbank, and Danske Bank. The sum total of crypto exchange transactions from 2017 to 2018 stood at €661 million (around $762 million) at the time the data became public, Delfi notes.

“Such a sum already causes a certain suspicion,” Petrauskas said about the €80,000 threshold, which involves around 500 individuals and 100 business entities.

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Singapore: Central Bank Refutes Fake Articles Claiming its Chairman Invested $1 Bln in BTC

The Monetary Authority of Singapore has distanced itself from fake news about a $1 billion Bitcoin investment from its chairman.

Singapore’s de facto central bank issued two warnings over two fake news websites Tuesday, September 18, after articles were published with “fabricated comments” about crypto from Chairman and Deputy Prime Minister Tharman Shanmugaratnam.

The sites, Gulf Weed Crab and Positive Bath Hour, which feature hoax news stories on seemingly random topics, had claimed Shanmugaratnam was behind both a state-sponsored $1 billion investment in Bitcoin (BTC) and a “Hi-Tech Digital Project” for Singaporeans.

The websites have since appeared to withdraw the articles. Gulf Weed Crab’s headline, according to a screenshot reproduced in local media outlet Straits Times, read: “Tharman Shanmugaratnam Invests $1 Billion for All Singapore Residents,” with the other site’s article contained false information about a “hi-tech” digital investment.

Commenting on the episode, the Monetary Authority of Singapore (MAS) sought to distance itself from quotations erroneously attributed to Shanmugaratnam, reiterating the Gulf Weed Crab article’s content was fake.

“The website’s article on Bitcoins is highly deceptive and misleading,” it responded, stating:

“The statements attributed to DPM Tharman are completely false, apart from his observation that trading volumes in cryptocurrency are low in Singapore.”

Both of the offending articles had also asked for payment information from readers in order to send funds, and to sign up for a “Bitcoin account.” MAS’s second warning noted that “cases of fraudulent investments and other forms of unlawful activities should be referred to the Police [sic].”

Singapore continues to adopt a permissive yet prudent stance on cryptocurrency, with MAS and senior politicians noting they were monitoring the space and would apply stricter regulation if necessary for consumer protection.

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European Central Bank: ‘No Plans’ for Digital Currency, Cash Demand Growing

The European Central Bank is not planning on issuing its own digital currency under current conditions, President Mario Draghi has confirmed.

The European Central Bank (ECB) has “no plans” to issue its own digital currency, President Mario Draghi told the European Parliament Wednesday, September 12.

Addressing a query by MEP Jonás Fernández, Draghi said “substantial development” was still needed in the underlying technology behind cryptocurrencies before the Central Bank would consider using them.

“The ECB and the Eurosystem currently have no plans to issue a central bank digital currency,” he summarized:

“Nonetheless, we are carefully analysing the potential consequences of issuing such a currency as a complement to cash.”

Explaining why no plans were afoot at the ECB, Draghi drew attention to those same factors.

“…The technologies which could potentially be used to issue a central bank digital currency […] have not yet been thoroughly tested and require substantial further development before they could be used in a central bank context,” he told Fernández, adding:

“With regard to the central bank administering individual accounts for households and companies, this would imply that the central bank would enter into competition for retail deposits with the banking sector and lead to potentially substantial operational costs and risks.”

He added there was at present “no concrete need” to issue an additional currency within the eurozone, saying demand for cash banknotes “continues to grow” in the EU28.

Draghi continues the wary stance the 28-member bloc has traditionally held on bank-issued cryptocurrency, in contrast to moves by countries such as Russia and China.

Earlier this year, a joint report from the ECB and Bank for International Settlements (BIS) highlighted “side effects” of a potential launch of such a currency, also considering the need for more research beforehand.

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President of Chile’s Central Bank Considers Cryptocurrency Regulation, Says It Is Useful for ‘Monitoring Risks’

The president of Chile’s Central Bank believes that cryptocurrency regulation could allow better monitory of risks in the market.

Mario Marcel, the president of Chile’s Central Bank, is considering regulating cryptocurrencies in the country in order to monitor risks, local news outlet El Economista reported Tuesday, May 15.

Cryptocurrencies in Chile are not currently considered as money or securities, but there are no laws in place that prevent citizens from exchanging crypto for goods and services.

During a forum of the Finance Commission of Deputies, Marcel said that “incorporating regulation will allow having a registry of participants in these activities and thus have information to monitor the associated risks”:

“These activities could be developed under more robust standards and mechanisms, especially in terms of market transparency, consumer protection, and prevention of money laundering and terrorist financing.”

At the end of March, Chilean crypto exchange Buda and Crypto MKT asked the Chilean Association of Banks (ABIF) to provide a clear position on crypto and crypto trading after some of their accounts were closed by various Chilean banks.

In mid-April, three Chilean crypto exchanges – Buda, Orionx, and Crypto MKT – went to an appeals court to protest this closure, which was seen by some as the banks using their power to curtail the cryptocurrency industry. At the end of April, Chile’s anti-monopoly court ruled that Buda’s accounts must be reopened at state bank Banco del Estado de Chile and Itau Corpbanca.

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