Russia Developing System to Identify Crypto Miners but Considers Tax Break
A Russian ministry is preparing a bill for the regulation of cryptocurrency mining which reportedly includes a “special system” to detect crypto miners. In addition, there may be a 2-year tax break for miners as well as energy quotas and special tariffs.
Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies
System to Detect Miners
The Russian Ministry of Communications and Mass Media is reportedly developing a system to identify cryptocurrency miners in Russia so that they can be taxed, Vedomosti reported last week. The publication elaborated:
There will be a special system for detecting miners – according to the structure of current consumption and Internet traffic, to correlate the capacity of the mining equipment with the amount of cryptocurrency that the miner declares on the crypto exchange.
This is not the first time Russia has explored ways to identify miners. In October, the chairman of the State Duma Committee on Financial Markets, Anatoly Aksakov, noted the possibility of using electricity consumption to track crypto miners.
The Feasibility of This Tracking Method
Experts told the news outlet that “The main question is how the authorities will detect the consumers’ accounts that earn cryptocurrencies, and not those who watch TV or heat apartments,” adding that:
It is extremely difficult to track whether a consumer in his apartment is crypto [mining] or downloading a series of films.
“Detection of miners by the profile of their power consumption and Internet traffic will be very difficult to realize,” explained Andrei Koptelov, director of the Center for Economic Research at the Synergy University. “It is virtually impossible to distinguish between what consumes electricity, a mining farm or household heater, and the means of private virtual networks allow you to encrypt traffic.”
Tax Holidays, Energy Quotas, and Special Tariffs
While emphasizing that crypto mining will be taxed, RBC reported that the Ministry of Communication is considering special benefits for miners:
For starters, the miners will be given two years of tax holidays with compulsory accounting. Then they will be obliged to pay profit [income] tax, but they will not pay VAT.
In addition, the Ministry of Communications also plans to give miners “energy quotas and a special tariff,” the news outlet detailed.
A representative of the Ministry of Energy attended the meeting held by the Ministry of Communications to discuss Russia’s mining regulation last week. “So far no one has been able to explain why” there should be special tariffs for miners, the Energy ministry stated. “In the Russian Federation, currently the existing tariffs are among the lowest in the world, which already makes computing facilities in Russia quite attractive,” the ministry’s press service asserted.
Do you think Russia will be able to identify crypto miners? Should miners be given tax holidays, energy quotas, and special tariffs? Let us know in the comments section below.
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Singapore Mall Sells Cryptocurrency Mining Hardware
Cryptocurrency miners in Singapore can now buy their rigs pre-assembled right at the mall as more retail computer hardware shops enter this booming market. This is another strong sign of how retailers are diversifying away from their traditional costumers such as PC gamers, all due to the allure of cryptocurrency earnings.
Also Read: Dr. Doom (Professor Nouriel Roubini) Calls Stablecoin Tether a Scam
Singapore Mining Mall
At least five computer stores are now selling cryptocurrency mining rigs in Singapore’s Sim Lim Square, according to a report from the region. The six-story complex is mainly known for attracting tourists from around Asia with its cheap electronics, shopping bargains, and many computer spare parts and service shops. However, Singaporeans these days want more cryptocurrency hardware than another knockoff mobile phone or gaming laptop, and local businesses are adopting to meet this demand.
One shop owner, Wilson Josup sells about ten rigs on a weekly basis, up from just one or two when he first started selling them about six months ago. He said that based on customer testimonials, letting a S$4,000 rig operate non-stop can earn around S$400 a month. And clients range from those in their 20s to retirees, he told the South China Morning Post. “Most of my customers would ask me to help transfer the rigs from their homes to a data center because they don’t like the heat and noise,” noted Josup, adding that his profit margin on each rig was around 10%.
Another store owner, Trecia Tay, has yet not sold any mining rigs but explains she now receives about ten inquiries about them every week, five times the amount of questions from just three months ago.
Background
Beyond just Singapore, this story exemplifies how cryptocurrency miners are overcrowding the retail computer market all over the world. In a related matter, GPU manufacturer Nvidia recently requested retailers take measures to try and ensure its products get into the hands of gamers, not miners.
When do you expect it will be possible to get a cryptocurrency mining rig right off the shelf in your local mall? Tell us what you think in the comments section below.
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University College London Fights CV Fraud via Bitcoin Verification
Imagine getting treated by a doctor with a fake diploma, or losing a job to another candidate who faked his resume. Unfortunately, such cases are all too prevalent these days in various parts of the world where proper documentation verification is too cumbersome or too costly. However, bitcoin might provide the answer to making sure this reality is preventable in the future.
Also Read: Dr. Doom (Professor Nouriel Roubini) Calls Stablecoin Tether a Scam
Bitcoin CV Verification
All graduates of this course in 2016 and 2017 could register their degree details on a platform developed by London-based startup Gradbase. The school checked the validity of this data and then the system issued a transaction validating the authenticity of these degrees via bitcoin. The participating graduates received a QR code they can place on their CV documents, business cards or professional profiles which anyone can scan to verify their credentials.
The company’s co-founder, Cédric Colle, commented: “Academic fraud is a global issue which needs a global solution. The ambition of Gradbase is to become the first platform for easily and trustworthily verifying any qualification around the world.”
University College London’s Centre for Blockchain Technologies
Its Centre for Blockchain Technologies (CBT) serves as an academic interdisciplinary research hub for bitcoin and related innovations, as well as a think tank connecting developers and regulators. It provides consultancy services to industry members, knowledge-transfer activities and in-house solutions.
“We are very excited to have collaborated with Gradbase on a pilot which is a UK first. The UCL CBT is playing a leading role in enabling the use of Blockchain technology in the education sector, and we believe that, in the future, such technology will become mainstream,” said Paolo Tasca, Executive Director of UCL CBT.
Would you want to have verification of your ID, CV or academic qualifications stored on the bitcoin blockchain? Tell us what you think in the comments section below.
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Russia’s Longest-Serving Finance Minister Backs Crypto “Self-Regulation”
Former Russian Finance Minister Alexei Kudrin favors “self-regulation” in the cryptocurrency sector. He believes it will be more effective, at this early stage, than any imposed regulations. Others have expressed similar views about the currently proposed regime. Kudrin shared his opinion on social media, commenting on the latest developments in the crypto debate. The longtime member of Putin’s administration now heads a think tank working on the strategic development of Russia.
Also Read: Calls for “Legal Bitcoin” in Ukraine, as Natsbank Mulls E-Fiat
Inevitable Crypto Future Beyond the Fault Lines
Cryptocurrency circulation will inevitably increase in Russia, but before standards are created and technologies improved, risks are very high for investors, and especially for ordinary citizens, Kudrin warned. “In this respect, self-regulation is more effective than
The debate about cryptocurrency regulation in Russia is going on amidst a pre-election atmosphere. Several fault lines have appeared between the Central Bank of Russia and the Ministry of Finance working together on the new legislation. At times their cooperation looks more like an argument over several aspects of the law. Kudrin’s comment came with the announcement that “Minfin” and “Centrobank” have reached agreement to legalize initial coin offerings but remain diametrically opposed on the legal status that should be attributed to cryptocurrencies like bitcoin.
The Finance Ministry has just published the draft law “On digital financial assets” prepared together with CBR representatives. The bill defines terms like smart contracts and tokens, sets rules for conducting ICOs, and establishes the legal regime for cryptocurrency mining. Exchanging cryptos for rubles, foreign fiat, or other property is the “Apple of Discord”, however. The ministry argues that legalizing widespread crypto transactions would limit law violations, improve transparency for taxation and increase budget receipts. Reluctant to accept this reasoning, Russia’s main monetary authority remains opposed to such legalization of bitcoin and other cryptocurrencies. “They are not backed by anything or guaranteed by any government”, CBR insists.
This is not the first time the two financial authorities have made their crypto disagreements public. They couldn’t get along on the introducing of crypto trade or the idea of a national cryptocurrency. The Ministry of Finance has been pushing for trading cryptocurrencies and their derivatives on Russian exchanges, but the Central Bank does not fully support its initiative. And, when CBR saw potential in the so-called cryptoruble, now delayed, its enthusiasm was not shared by the MF, which called the idea “inappropriate”. Meanwhile, the leading candidate for the Kremlin has been cautiously avoiding “yes” and “no” answers, when questioned by media about the crypto future of Russia. The ambiguity is likely to persist until the presidential election in March.
Voices of Reason From the Sidelines
Both praised and criticized, Alexei Kudrin has been widely credited for steering Russia through the last global financial crisis. Analysts say he pulled that off largely thanks to the Stabilization Fund, believed to be his creation. Considered one of the masterminds of Kremlin’s economic policies under both Putin and Medvedev, Kudrin has been hailed as a “free market champion” and a “fiscal manager of the highest order” by foreign observers.
In Russia he has been praised for paying off a large portion of its debt, while pensions and salaries were going up. Critics say, however, that his liberal visions for the future may hurt Russia’s economy and bring down the standard of living. Nevertheless, Kudrin has been acknowledged for balancing the views of government officials with security background.
In his critique, Kudrin has been joined by another prominent public figure in Russia. The Business Ombudsman Boris Titov also commented on the draft law prepared by the MF and the CBR. They are proposing “much harsher regulation than Japan, Switzerland, Belarus, and Armenia, i.e. the countries that have adopted some legislation so far”, Titov said. “Better not adopt anything”, he added.
Titov is convinced that with the offered legislation Russia will “lose its attractiveness” in the eyes of the crypto community. He also warned that such strict conditions for crypto mining and digital assets circulation will complicate the implementation of the blockchain technology in the country. “It gives people, entrepreneurs and the tech society an opportunity to control government officials – of course they don’t like this”, said Boris Titov, a bitcoin advocate who is also running for the presidency of the Russian Federation.
Do you think that views like those of Kudrin and Titov can influence Russia’s final decision about cryptocurrency regulation? Tell us in the comments section below.
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Growing Number of South Korean Crypto Exchanges Participate in Self-Regulation
The number of cryptocurrency exchanges participating in self-regulation has nearly doubled in South Korea. The crypto self-regulation efforts are led by the Korean Blockchain Association which has recently launched with 66 members. The association also plans to develop standard price indices for the main cryptocurrencies.
Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies
25 Crypto Exchanges to Self-Regulate
The Korean Blockchain Association has been leading the cryptocurrency self-regulation efforts in South Korea. The group formally launched on January 26 with 66 members, local media reported. Among its members are 25 crypto exchanges including all of the country’s major platforms such as Upbit, Bithumb, Korbit, Coinone, and Coinplug.
An inaugural ceremony for the launch was held at the Yeouido National Assembly Hall in Seoul. It was attended by 58 out of 66 member companies along with Min Byung-Doo, a member of the Democratic Party, and Kim Sung-tae, a member of the Free Korean Party, Inews24 reported.
Former South Korean Minister of Information and Communication, Chin Dae-jae, became the first chairman of the association. Top Star News quoted him saying, “The public interest in cryptocurrencies represented by bitcoin has soared, and the excessive speculative funding has flowed into exchanges. It’s our reality now.” He emphasized, “The association wants to be an effective communication channel between the government and the industry.”
During the first half of the year, the association “plans to create an information system that allows the public to easily understand virtual currency,” Chosun detailed, adding that:
The association also plans to develop a standard index of key virtual currency prices and transaction data…The intention is to provide credible information as standard transaction data.
Self-Regulation for Korean Exchanges
The association has established a self-regulatory committee to work with cryptocurrency exchanges. Chin was then quoted by Chosun:
I will launch a self-regulation review in the first half of the year.
He further noted, “We will study the Japanese regulatory framework and make sure that the entire ecosystem is stable.” In addition, he elaborated, “I will also take the initiative to create an environment where investors can learn how to use virtual currency,” Maekyung reported.
According to the Hankyoreh, the association’s self-regulatory measures will “include minimum operating requirements such as the capital base of virtual currency exchanges, employee ethics regulations, and consumer protection.”
What do you think of Korean crypto exchanges declaring self-regulation? Let us know in the comments section below.
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Report Finds Correlation Between USDT Issuances and BTC Price Moves
The Tether Report, a pseudonymously authored analysis examining the speculative assertion that bitcoin price volatility is highly correlated to the issuance of new USDT, has claimed that approximately 48.8% of bullish price movements have occurred within the two-hours immediately following ninety-one individual Tether grants.
Also Read: Vouching Bitfinex and Tether’s Bank Accounts Hold Nearly $3 Billion USD
Pseudonymous Author Scrutinizes Tether’s Operations
The report states that “Tether in its current incarnation is a 2014 rebranding of Realcoin [that] ostensibly function[s] by taking USD deposits from customers and exchanging them for an equal amount of USDT.” The author describes “the ability to price digital assets in USD without having USD-denominated bank accounts” as a major function enticing exchanges to adopt the cryptocurrency, stating that “the extreme difficulty many exchanges have faced in maintaining banking relationships” makes USDT “quite attractive.”
Tether Subject to Speculation Regarding Suspicious Activities During 2017
In early September 2017, Tether sought to reject suspicions that the company may be undercapitalized, “promis[ing] a historical audit that is still incomplete” to this day. Instead, the company “produced an internal document” later that month, which “purport[ed] to show USD balances back the then modest amount of [approximately] 440 [million] USDT. The internal memorandum did not divulge the “service agreements and institutional names attached to these funds,” comprising a “reduction of transparency since their April report,” which “establish[ed] the names of their earlier banking partners.
In November, Tether revealed that it had suffered a hack which was quickly “mitigated via an amendment to the Tether network code.” The next month, the company then announced that “the existing platform would be phased out and no further deposits [to] the current wallets should be attempted.”
Despite the many hurdles recently faced by Tether, the number of USDT in issuance has “increased ten-fold in only 5 months” following the release of September’s memo.
Report Finds USDT Issuances and Bitcoin Price Volatility to be Highly Correlated
The report seeks to test this assertion using empirical data, providing analysis of the relative price volatility experienced by bitcoin leading up to and immediately following the issuance of new Tether. The article concludes that “48.7% of bitcoin’s price growth between 3/29/17 and 1/4/18” took place during the “two-hour blocks” immediately following the ninety-one individual grants of new USDT – the collective time of which “total[s] less than 3% of the trading hours during that time period.” Transversely, the report concludes that “the average price behavior on a 2-hour timescale the compounded growth is just 6.5%,” leading the researchers in estimating that “a rough estimate of [approximately] 40% price growth attributed to Tether is defensible.
Damning Conclusions
Of Tether, the data is said to indicate that USDT “may be created when bitcoin is falling,” concluding that “Tether could account for nearly half of bitcoin’s price rise, not even allowing for follow-on effects and the psychological effects of rallying the market repeatedly.” The research emphasizes that “The statistics presented herein do to not establish wrongdoing but merely give rise to the opinion that the observed behavior appears questionable and should be further examined.”
Ultimately, the report advocates that Tether should “Conduct an audit by a reputable auditor,” adding that given the scale of the company’s operations that a “Big Four” accounting firm should be employed. The report suggesting that “The audit [should] not solely include a snapshot of accounts on a single date. It should also confirm that each Tether is backed by a dollar now and was for all points in Tether’s history. More than confirming that accounts of the proper amount do and have existed, the nature of those accounts and the service agreement between the banks and Tether should be divulged to show that these accounts exist solely for the benefit of Tether holders.”
What is your response to The Tether Report’s analysis and assertions? Share your thoughts in the comments section below!
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