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US Cash Crisis: Withdrawal Limits Spark Bank Run Fear

18/03/2020 by Idelto Editor

The entire world has been focused on the economy as the coronavirus outbreak has devastated global markets. While stocks, commodities, and barrels of oil plunge in value, there’s been considerable demand for cold hard cash in certain countries. According to reports, Wall Street’s elite has been trying to withdraw $30-50K per person as they flee the Hamptons. Moreover, various individuals across the U.S. are claiming financial institutions like Chase and Bank of America are restricting cash withdrawal amounts.

Also read: Edward Snowden ‘Felt Like Buying Bitcoin’ While Traders Hunt for the Market Bottom

US Banks Impose Withdrawal Restrictions as Customers Empty Accounts Demanding Hard Cash

Cash is something everyone looks for during times of economic hardship and right now banks are struggling to provide liquidity. During Wednesday morning’s trading sessions, global stock markets and futures continue to lose ground. The price of oil has plummeted even further from last week and is at its lowest value per barrel in 17 years. The price of crude oil is hovering around $43 per barrel and Goldman Sachs predicts the price will drop to $20 per barrel soon. Oil prices have already begun to hurt people within the gas industry as 3,500 Halliburton employees from the North Belt facility in Houston have been laid off due to the price decline. While facing massive layoffs in industries like airlines, tourism, and construction, people are in search of hard cash to help hold them over through the economic storm.

Chase is insolvent. Bank run. Proceeded to lie to me to go around outside the drive thru without my mask and she would give me the 5k promised earlier ($2k rationed per customer). I did so and they refused to give me it. Manager demanded I delete the video. $JPM $XLF pic.twitter.com/DOF6Gq6h6I

— DONT TEST DONT TELL (@enchiridion47) March 17, 2020

News.Bitcoin.com reported on how in the Hamptons, New York’s elite have been going to banks and asking to withdraw large sums of cash. According to reports, banks like Chase, JPMorgan and Bank of America (BoA) have been limiting withdrawals. This is because the rich from New York have been asking for $30-50K withdrawals so banks have created a limit between $3-10K in some areas. During the market massacre on March 12, Manhattan Bank temporarily ran low on $100 bills after a large rush for cash. A BoA spokesperson told the public that there were only issues with large denominations and individuals are able to withdraw $20-50 notes. “We don’t keep large amounts of cash in big bills in the branches because it’s dangerous for our employees and there is low demand,” BoA stated.

Bank of America is limiting cash withdrawals to $3,000. Expect that number to drop over the next few days.

— Tatiana Koffman ⚡️ (@tatianakoffman) March 16, 2020

There are people complaining on social media about the withdrawal limits from certain banks in the U.S over the last few days. “Go to the bank today and ask to withdraw your entire balance,” one individual tweeted on March 17. “They are refusing to give out more than $5,000 — Even if your account has $20k. Even if your normal withdrawal limit is $10,000 daily.” On March 14, a person from New York tweeted: “Food chain is broken. Went to Stop & Shop [and] shelves are empty. Meats gone. No more eggs — [and] the bank would only permit a $2,500 limit per day withdrawal.” Another Twitter post shows a man visiting Chase bank and recording a video of a manager refusing to give him $5K. Moreover, the branch manager from Chase asked the person to delete the video. The man said:

Chase is insolvent — Bank run. [The bank] proceeded to lie to me to go around outside the drive-thru without my mask and she would give me the $5K promised earlier ($2K rationed per customer). I did so and they refused to give me it — Manager demanded I delete the video.

Starting from today I’ll start to withdraw cash amounts until I reach a buffer of 6 months for living expenses.

Keep in mind that governments:

– will discourage cash withdrawals
– can ban the usage of cash payments

All because they’re shit scared of an impending #bankrun

— Mr. Backwards ® (@Coin_Shark) March 14, 2020

European Banks Shutter, German Banks Impose Withdrawal Restrictions, and Bank Runs from the Past

The U.S. is not the only country that is having cash problems as European banks have shuttered hundreds of branches since the Covid-19 spread. For example, the financial institution HVB closed 101 branches across the EU. Reports detail that a few German banks are imposing withdrawal limits and customers can only withdraw 1,000 euros per visit. Ever since last Thursday’s stock market crash, people are reminded of the economic disasters in the past like 2008’s Financial Crisis, ‘Black Wednesday’ in 1992, and ‘Black Monday’ in 1987.

However, those crashes didn’t cause massive bank runs; the last time that happened was during the Wall Street crash in 1929. During the Great Depression throughout the early 1900s, the 20s and 30s, there was a massive run on savings and loan operations and financial institutions across the U.S. The economic crisis sparked by the coronavirus is causing these fears again.

“Bank runs are starting in Colorado,” another man from the U.S. tweeted on March 17. “Smaller towns and small cities are not allowing walk-ins [or] anyone, along with limits on cash withdrawals.”

How To Prevent A Bank Run During A Manufactured Crisis pic.twitter.com/K1ZMWRUK3l

— Spiro (@o_rips) March 12, 2020

Bitmex Research: ‘Bitcoin Price May Shine in the Volatile Inflationary Aftermath’

In this crazy environment of financial calamity, people are uncertain where cryptocurrencies like BTC will stand. A blog post published on March 17 by Bitmex Research predicts high inflation from all of these events. Just like many crypto supporters, Bitmex researchers think that BTC will shine during the inflationary aftermath. “In such an economic environment, with high inflationary expectations, gold looks set to shine,” Bitmex wrote. “But what about Bitcoin? Bitcoin has crashed by almost 53% (peak to trough) in the 2020 Coronavirus crash, as investors raced to the U.S. Dollar. In many ways this was inevitable. Where the Bitcoin price may shine is in the volatile inflationary aftermath of the response to the crash.”

At press time, BTC is hovering just above the $5K region but the asset’s value seems to be dragging downwards and flirting with sub-$5K. Even with prices so low, people believe the possibility of bank runs and significant cash liquidity issues will drive more people toward cryptocurrencies. “If you think bitcoin isn’t a safe haven asset, just wait until the bank runs begin,” BTC supporter ‘Bitcoin Bacon’ tweeted on Tuesday. The day prior another individual shared a picture of his stacks of $100 bills on Twitter and said: “Advice…[I] just cleaned out one of my accounts to get liquid…bank runs will be here by next week.”

What do you think about the economic carnage causing cash shortages and banks adding withdrawal limits? Do you think that cryptocurrencies like bitcoin will benefit from this financial calamity? Let us know what you think about this subject in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Price articles and market updates are intended for informational purposes only and should not be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Cryptocurrency and global market prices referenced in this article were recorded on March 18, 2020.

Image credits: Shutterstock, Twitter, and Markets.Bitcoin.com.

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Bitcoin Is Financial Instrument, Clarifies Germany, Crypto Custodians Qualify as Financial Institutions

03/03/2020 by Idelto Editor

The Federal Financial Supervisory Authority of Germany, Bafin, has issued guidance to clarify the status of cryptocurrencies and the regulations that apply to related business activities. The recommendations are based on the country’s current legislation, taking into account the latest changes.

Also read: Turkey to Inspect Cryptocurrency Exchanges as Part of Government Offensive Against Online Gambling

The Keepers of Your Crypto Are Financial Institutions in Germany

The guidance document concentrates on the requirements for the providers of crypto custody services operating in the Federal Republic. Starting from 2020, German banks and other regulated financial institutions are allowed to manage cryptocurrencies such as bitcoin on behalf of their clients, after Berlin adopted amendments transposing Europe’s anti-money laundering rules into national law. German fintechs also rushed to offer similar services.

Regulators begin with defining what a crypto custody business is – the safekeeping and managing of crypto assets or private cryptographic keys that serve to hold and store crypto assets that can be transferred to others, which is a financial service. The definition stems from the German Banking Act, while providing this type of service was made possible by the law implementing EU’s Fourth Anti-Money Laundering Directive. The changes came into force on Dec. 12, 2019.

Germany now considers service providers who offer the exchange of virtual currencies for legal tender and vice versa, or for other digital assets, to be financial service institutions. Cryptocurrencies, depending on their design, are generally regarded as financial instruments. The exchange of cryptos falls into the category of regulated banking and other financial services transactions. The broad definition has been given in order to account for all crypto assets relevant to the financial market, including digital coins that are not considered units of account.

Coins and Tokens Are Digital Representations of Value

The guidance further describes cryptocurrencies as a digital representation of value that has not been issued or guaranteed by a central bank or public body and does not have the legal status of a currency or money. At the same time, a crypto can represent an agreement for, or an actual exercise of, a payment or investment. It can be accepted as a medium of exchange by natural or legal persons and be transmitted, stored and traded electronically. Coins and tokens can also bear rights similar to those of traditional securities.

German regulators have made it clear that any organization which wants to conduct banking business in the country or provide financial services commercially needs permission from Bafin. This applies to domestically operated companies, or in other words entities that are based in the Bundesrepublik even if they serve non-residents only, and companies that have established a local office from which they maintain their business activities.

Firms operating in the crypto sector must apply for a Bafin license by the end of November, 2020. So far, over 40 financial institutions have declared intent to offer services related to cryptocurrencies under the country’s updated legislation, as news.Bitcoin.com reported in February. Entities that already work with crypto assets have until March 31 to at least express intent to apply for a license. This is not part of the actual application procedure, but an important step towards acquiring the necessary license.

Do you think Germany’s efforts to regulate the crypto space will create favorable conditions for the development of the industry? Share your opinions on the subject in the comments section below.

Images courtesy of Shutterstock.

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Copy Trading Platform ZuluTrade Powers SetBroker.com

28/02/2020 by Idelto Editor

SetBroker, an innovative Bitcoin-based copy-trading platform, announced today their successful launch. Their platform is powered by ZuluTrade’s technology and Traders ecosystem.

Setbroker.com’s unique sales incentive is that it will exclusively use Bitcoin for funding Investors’ trading accounts. The project is expected to transform the cryptocurrency trading market using blockchain and Bitcoin technology combined with a solid system of trading strategies.

ZuluTrade, founded in 2007, bridged the trading gap by building an online and mobile Platform that connects Traders who have built good strategies with investors (followers) who can copy those trades in real-time, into their own investment accounts. ZuluTrade provides the largest, truly open-trading ecosystem, operating globally and regulated in the EU, Japan and now in the USA. The innovative Platform offers ZuluTrade’s proprietary technology via B2B collaborations with entrepreneurs who want to become involved with the industry. SetBroker.com is the latest outcome of such an alliance.

Roula Pelehrinis, ZuluTrade’s Head of Institutional Sales, commented: “We have always been interested in B2B partnerships and when SetBroker approached us with this savvy idea, we took the opportunity to welcomed it into our ever-expanding Partnership Groups and to strategically expand our broker-scope into the Cryptocurrencies sector for our Investors.”

James Townsend, SetBroker Managing Director commented: “Today’s investors are savvy. They are looking for new ways to build upon their investment strategies. At the end of the day, they want the best performance for the funds that they are spending their hard earned dollars on. SetBroker, powered by ZuluTrade will allow first time traders to familiarize themselves with the financial markets and gain confidence to trade.”

Setbroker.com is now available under the brand “Setbroker”. As in all leveraged financial products, No “safe” trading system has ever been devised, and no one can guarantee profits or freedom from loss. Past performance is not indicative of future results.

Contact Email Address
[email protected]

Supporting Link
https://setbroker.com

This is a press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.

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Shopify Joins Libra While Quitter Vodafone Advertises Bitcoin on Facebook

24/02/2020 by Idelto Editor

Facebook’s coin project, Libra, continues to draw attention despite setbacks, including a shrinking pool of backers and a growing number of worried regulators. But now with JP Morgan seeing potential for the social network’s cryptocurrency and e-commerce giant Shopify joining the Libra Association, its chances might have improved. Although, assuring governments that Libra won’t undermine their monetary authority and convincing users of its utility remain key challenges.

Also read: Fed Chair Powell Reveals US Response to China’s Digital Yuan, Libra, Public Payments Ledger

Vodafone Posts Facebook Ad With Bitcoin in Germany

Libra’s long list of supporters has shortened in the past few months with major players such as Visa, Mastercard, Ebay, and Paypal leaving the Libra Association after it became clear that the project is facing major regulatory hurdles. Online payment processor Stripe, travel website Booking Holdings and the South American online sales platform Mercado Pago are also among the quitters.

Vodafone pulled out of the project last month becoming the eighth company to do so. The telecom giant, which operates in two dozen countries and serves clients in many more, recently spurred social network discussions and speculation in crypto media with a move that some took as an indication of its future plans. On Friday, Vodafone posted a Facebook ad in German that shows a bitcoin and the following message:

Will there be bitcoins instead of pocket money soon? What should grandma give you if everyone will pay with their smartphone in the future?

Vodafone left Libra to focus on M-Pesa, its own digital payments platform. Launched in 2007 by its Kenyan associate Safaricom, M-Pesa has established itself as the leading mobile money service in Africa. It now has 37 million active users in seven countries in the region, who carried out over 11 billion transactions in 2019. But it does not support Bitcoin, not yet.

Swimming Against the Current, Shopify Bets on Libra

Not everyone is leaving Libra, though. In fact, the majority of founding members are still on board. The updated list published recently by the Telegraph features the names of companies from various sectors including Facebook’s subsidiary Calibra, crypto firms Coinbase, Anchorage, Bison Trails, Xapo Holdings, and also Uber, Lyft, Spotify, Farfetch, Payu, Iliad, Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures, Creative Destruction Lab, Kiva, and even NGOs like Mercy Corps and Women’s World Banking.

Shopify, the Canadian e-commerce platform, became the latest enthusiast to join the club. The company, which offers services and solutions for over a million small merchants and online retailers, announced its decision to become a member on Feb. 21, pledging to invest $10 million in the project. “We spend a lot of our time thinking about how to make commerce better in parts of the world where money and banking could be far better,” Shopify stated in a blog post, adding: “As a member of the Libra Association, we will work collectively to build a payment network that makes money easier to access and supports merchants and consumers everywhere.”

Having announced it last June, it remains unclear whether Facebook will be able to launch Libra in the first half of 2020, as initially planned, or even by the end of this year. Both Facebook founder Mark Zuckerberg and the head of Calibra David Marcus have already answered questions in the United States Congress about the social media giant’s plans for the project, in an effort to alleviate concerns expressed by policy makers who fear Libra could undermine the U.S. dollar and challenge its supremacy as a global currency.

Antitrust regulators in Europe have been investigating the project as well. A new memo issued by the Vice-President of the European Commission (EC) Valdis Dombrovskis reveals Brussels is unhappy that the available information on Libra “lacks detail” and even after additional questions were sent to the association, it “remains insufficient for determining the precise nature of Libra” and its relation with existing EU law. “Libra is still a project, and thereby a moving target,” Dombrovskis notes and reminds about the Dec. 5 joint statement of the Commission and the Council of the European Union recognizing the risks raised by stablecoins and the need for regulation and oversight. The EC is currently gathering feedback from citizens and organizations to establish a regulatory framework, one of the goals of which is to “harness the potential opportunities that crypto-assets may offer.”

JP Morgan Recognizes Maturing Crypto Market but Sees Focus Shifting Towards Stablecoins

In its annual report on blockchain and cryptocurrency developments, JP Morgan Chase acknowledges that the crypto market continues to mature but notes that the characteristic volatility of cryptocurrencies remains an impediment to broader adoption. One that has also “led focus towards stablecoins.” The multinational investment bank, which issued its own digital coin representing fiat currency to facilitate payments between clients, believes that stablecoins have the potential to grow substantially in global transactions, despite certain challenges with operating such payment systems. The authors of the study point out:

While the world is ready for private money in our view, rapid adoption and scale are hindered by the underlying technology and the need for substantial regulatory oversight.

JPMC also notes that financial inclusion is one of the motivations behind Libra and that if the unbanked consumers were to drive the growth of the cryptocurrency, the project would be more about peer-to-peer payments and could support a significant share of global transactions. Currently, the global economic activity is far more concentrated among countries with higher levels of inclusion, according to data from the World Bank quoted in the report. For a stablecoin like Libra to succeed, the bank elaborates, it would require a few changes to its design such as “some short-term liquidity facilities, a source of positive-yielding reserve assets, and less distributed, semi-private networks.”

What are your expectations about the future of Facebook’s Libra project? Share your opinion in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Images courtesy of Shutterstock.

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Brussels Asks Europeans How to Regulate Bitcoin, Public Consultation Continues Into March

11/02/2020 by Idelto Editor

The European Commission is gathering feedback from EU citizens, businesses, regulators and other interested parties to establish a regulatory framework for crypto assets and markets on a European level. The public consultation which started in December will continue until March 19, 2020, with the finalized proposal expected in the third quarter.

Also read: Swiss Financial Watchdog Proposes $1,000 Client Identification Threshold for Crypto Transactions

EU Legislative Process for Crypto Assets in Progress

The legislative process in the European Union can be long and complicated – initiatives, roadmaps, assessments, and discussions must take into account various and diverse interests. The common market needs a common regulatory framework with investors, companies, customers and regulators speaking the same language, which takes time as stakeholders have already learned.

The European Commission has the right of legislative initiative in the EU. The process of planning and preparing a new law or policy involves putting out a roadmap that describes the problem, sets out objectives, outlines policy options, and defines the scope of the proposed legal framework. A more detailed inception impact assessment replaces the roadmap when the potential impact of the legislation is significant. Citizens, businesses, civil society and public authorities are invited to express opinions about the proposal before it’s finalized.

The lack of regulatory clarity and legal certainty in the crypto space is what prompted the European Commission’s Directorate-General for Financial Stability, Financial Services and Capital Markets Union (Fisma) to launch an initiative for the adoption of a European regulatory framework for crypto assets and related financial services. Initiating and implementing the EU policy in the area of banking and finance is the DG’s main responsibility.

European Commission Issues Inception Impact Assessment of Crypto Regulation

Fisma published an inception impact assessment in December to inform citizens and interested parties about the Commission’s plans that will result in a legislative proposal. The directorate is seeking their feedback on the initiative as well as their views on its understanding of the problem. The assessment will also serve as an opportunity to identify crypto assets and related services that are not covered by EU’s Fifth Anti-Money Laundering Directive to provide the basis for future amendments to AMLD5 taking into account the latest recommendations of the Financial Action Task Force (FATF).

The move comes after the Commission adopted a Fintech Action Plan in March 2018 mandating the European Securities and Market Authorities (ESMA) and the European Banking Authority (EBA) to assess the suitability of the current EU legislation to crypto assets and initial coin offerings (ICOs). On their advice received in January 2019, the EC is now working in two directions: assessing the applicability of the existing framework for those digital coins that qualify as financial instruments and establishing if a new regulatory approach is needed for the rest. A letter by EC President Ursula von der Leyen to Fisma Commissioner and Vice-President Valdis Dombrovskis describes the task in a sentence:

Ensure a common approach with Member States on cryptocurrencies to ensure we understand how to make the most of the opportunities they create and address the new risks they pose.

There is no definition of crypto assets in the EU at the moment, the directorate notes. It’s unclear how existing regulations apply and the absence of dedicated rules leaves consumers and investors exposed to risks. Stablecoins could pose additional challenges, in terms of monetary policy and sovereignty, due to their capacity to be an alternative to fiat currency. The lack of legal certainty, according to Fisma, is a major hurdle to the development of a sustainable crypto asset ecosystem. Furthermore, national regulatory regimes implemented by some member states can make the cross-border provision of crypto-related services difficult, the directorate remarks.

Regulatory Proposal Expected in Third Quarter

The European Commission has so far received feedback from several organizations. The Spanish Bolsas y Mercados Españoles (BME), which integrates companies operating securities markets and developing blockchain solutions for them, welcomes the Fisma initiative. It has expressed its views regarding several aspects such as the definition of crypto assets and the financial market infrastructure supporting innovation. The Belgium-based European Savings and Retail Banking Group (ESBG) insists on implementing a licensing regime for crypto service providers and a set of rules to protect ordinary consumers and investors.

Two Italian entities have also shared their opinions. According to Links Foundation, the deflationary nature of crypto assets may help the European society to migrate from a debt-based economy while Digital Ledger Technologies (DLTs) can raise trust in the financial sector and introduce “shorter value chains with fairer remuneration logic.” The research institution calls for reducing the difficulty for startups dealing with crypto assets to open traditional bank accounts, promoting access to crypto assets without requiring accredited investor status, and facilitating the payment of wages in cryptocurrencies. A small consultancy firm operating in the sector, Coinlex, stresses the need for a European crypto directive to avoid fragmentary national regulations.

The public consultation on the initiative was launched on Dec. 19, 2019 and will continue until March 19, 2020. The European Commission expects more feedback and alternative views on all aspects of the initiative from citizens, blockchain experts, market participants such as crypto exchanges and wallet providers, representatives of the traditional financial sector and fintech startups, member states and competent national authorities. They can contribute to the consultation by filling in an online questionnaire after registering with the EU’s Transparency Register. The finalized regulatory proposal is expected in the third quarter of 2020.

Do you think that opinions expressed by members of the crypto community and industry will be taken into account by the European Commission? Share your expectations in the comments section below.

Images courtesy of Shutterstock.

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