Bitcoin

Bitcoin Tracker: Smooth(ish) Sailing?

The price of the popular digital currency spent the week climbing back up after fears that China could crack down on its domestic exchanges caused its value to slump. However, recently the People’s Bank of China pointed to irregularities in the operations of bitcoin exchanges BTCC, Huobi and OKCoin as the cause of the recent rollercoaster ride in bitcoin’s price, said Reuters.

The recent spot checks (that may or may not have been the source of bitcoin’s recent fluctuations) concluded that that the bitcoin exchanges were margin trading — which Huboi and OKCoin have both recently halted.

The developments are still ongoing, so PYMNTS’ Bitcoin Tracker will keep watch for new details in the coming weeks. If there’s one thing we can say for sure about bitcoin, it’s that it always keeps investors, analysts and users on their toes.

The past few days have seen bitcoin rising at a similar rate seen in late December and into early 2017. At the time of writing, bitcoin was valued at $894.34, up 1.14 percent from the day’s open of $884.25.

Bitcoin’s current estimated market cap is over $14.5 billion, with over 16 million total bitcoin in circulation, according to data from Coin Desk. A quick look around suggests most investors and bitcoin analysts are still bullish on the digital currency’s long-term prospects despite its continued propensity toward volatility.

Last week, Bitcoin Tracker covered a bit about Nigeria’s rising interest in digital currency as the nation’s issues of inflation and recession continue. We weren’t the only ones to notice. On Jan. 12, the Central Bank of Nigeria (CBN) released a circular to banks and other financial institutions warning against the use of “virtual currencies.”

The CBN cited the volatility, anonymity and lack of regulation as reasons why digital currencies are “susceptible to abuse by criminals, especially in money laundering and financing of terrorism.” These accusations have been levied by digital currency detractors in the past (not without at least some good reason, of course). The CBN advises banks to not transact, hold, trade or use digital currency.

The CBN also advises banks and financial institutions to monitor users who engage with virtual currencies and to close the accounts of digital currency users if at the bank’s discretion they are “not satisfied with the [AML/CFT] controls put in place by the virtual currency exchangers/customers.” Further, the central bank asks that financial institutions report any suspicious transactions by customers to the Nigerian Financial Intelligence Unit.

Stateside, the battle between Coinbase and the IRS is heating up.

Until recently, Coinbase had yet to make a legal move on its own behalf. But last week, Coinbase filed court papers to support the ongoing challenge, saying the agency’s request is too broad. If Coinbase is allowed to intervene, the bitcoin exchange will supplement Berns’ original case with additional arguments.

The IRS seeks access to Coinbase’s user records as part of an investigation into alleged tax violations connected to digital currency. Coinbase user and attorney Jeffrey K. Berns filed a motion in federal court to block the IRS from accessing Coinbase users’ personal, transactional and security data.

Coinbase CEO Brian Armstrong wrote in a blog post, “If the IRS were to approach Citibank, Fidelity or PayPal and ask them to turn over all customer records, they would rightfully push back. And I feel we have the same obligation to do so.… Other digital currency exchanges operating abroad (while still serving U.S. customers) are unlikely to demonstrate a similar commitment to working with the IRS, yet we were the only company (as far as I know) to receive a subpoena for all customer records.”

Armstrong proposed that Coinbase could work with the IRS by adopting third-party tax reporting mechanisms, like the one currently used by brokerage firms — the 1099-B form. If this were to play out, Coinbase would become the first digital currency exchange to adopt such a structure.

Among other potential digital currency firsts (at least for Europe), Sweden’s central bank is reportedly considering creating and releasing its own digital currency.

The idea to create an e-krona has been in the works since at least November of last year as a way to address the major drop in cash use in the country of some 9.5 million the past decade. The idea has been gaining traction since, at least among bank officials. Swedish consumers, it turns out, are still skeptical.

The amount of circulating cash in Sweden has fallen by some 40 percent since 2009, said eMarketer, due in large part to the rise of online shopping and alternative payment methods. But even with digital payments on the rise, a survey by IT software and service company Tieto showed that half of Sweden’s internet users weren’t in favor of the central bank issuing digital currency. Only 9 percent were in the pro camp.

The culprit? The unsavory reputation of digital currencies combined with more general security concerns. Sweden’s central bank could come to a decision on the e-krona in the next two years.

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