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2020 Cryptocurrency Regulation in the Philippines Recap

A key highlight for 2020 is the vigilance of the Securities and Exchange Commission (SEC) in issuing advisories and cease and desist order, and in taking other enforcement actions against cryptocurrency-related investment scams, Forsage being the largest and most high-profile among them.

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Compared to 2018 and 2019, 2020 is a relatively slow year in terms of Philippine regulatory developments on cryptocurrencies and blockchain. This is understandable considering that the COVID-19 pandemic has compelled financial regulators to focus their attention on macroprudential measures that will allow continuous financial activities and flow of credit to the economy.

A key highlight for 2020 is the vigilance of the Securities and Exchange Commission (SEC) in issuing advisories and cease and desist order, and in taking other enforcement actions against cryptocurrency-related investment scams, Forsage being the largest and most high-profile among them.

Table of Contents.

Securities and Exchange Commission

The SEC’s draft Rules for Digital Asset Exchange and draft Rules for Initial Coin Offering are still pending. There are no official updates on the progress of the consultation phase that started in 2018. The bullish market which is projected to continue in 2021 and the vibrancy and exuberance associated with it might offer the impetus that will urge the SEC to finalize these proposed rules.

In 2020,  the SEC demonstrated its vigilance in issuing numerous public advisories in relation to cryptocurrency-related investment scams. For instance, the SEC issued an advisory in April 2020 and warned the public against Blockxperts, Inc.’s Cryptopeso scheme and “PHPc Staking Program”. The scheme required the investment of at least PHP2,000.00 from its members plus the activation fee in the amount of PHP500.00. The amount invested will be converted into Cryptopeso (PHPc), which will be staked and locked in for three, six, 12, or 24 months, at the option of the investor.

Subsequent to the public advisory against Cryptopeso, the SEC issued another advisory in July 2020 against Forsage for enabling unregistered securities to be offered in the Philippines. In September 2020, the SEC also issued a cease and desist order (CDO) against the individuals associated with Forsage. According to the SEC, Forsage’s smart contract-enabled “Crypto Earning Program” partakes of the nature of securities where investors do not need to actively exert effort other than to passively invest or place money in its scheme to earn profit. The SEC also characterized Forsage as a “Ponzi Scheme where monies from new investors are used in paying ‘fake profits’ to prior investors and is designed mainly to favor its top recruiters and prior risk takers.” The fact that Forsage claims to be a decentralized platform that runs through the use of smart contracts did not matter in the SEC’s “investment contract” analysis.

The SEC also issued public advisories against other investment scams such as BitThroughCash / Bit2Cash (January), Munics (March), Bitrade (March), Bitcoin Revolution—notorious for employing fake celebrity endorsements (March and again in June), Cryptec and Point Place (April), The Billion Coin or TBC and Kris Kringle (April), My Profit Robot (April), Nexus P Capital (April), Crypto Invest With Us or CIWU (May), Ethmarket LLC PH (June), Daily Passive BTC Ltd (June), Btxtraders.com (July), Million Money (July), Bitfinanceinvestment.Ltd (August), Mining City (September), Bitcoin Digital (October) Coinmax.ph (November), Sharelink Ads and Cryptotrading or SACT (November), and CubeBit 2.0 (December).

Bangko Sentral ng Pilipinas

As of December 2020, there are now 17 “Virtual Currency Exchanges” registered with Bangko Sentral ng Pilipinas (BSP). The BSP approved seven new VCEs in 2020, while three operators were delisted for undisclosed reasons.

Also since this year, the BSP started adopting the updated nomenclatures (e.g., VA and VASP) employed by the Financial Action Task Force (FATF) in referencing cryptocurrency activities and actors. The BSP is constantly evolving its regulatory framework for new types of cryptocurrency-based financial intermediaries, consistent with the guidance prescribed by the FATF for Virtual Assets (VA)and Virtual Asset Service Providers (VASP). Indeed in the draft regulation circulated for comments by the BSP earlier this year, the proposed guidelines that will update BSP Circular 944 was entitled “Guidelines for Virtual Assets and Virtual Asset Service Providers.”

Most of the rules introduced by the proposed VASP Guidelines incorporate established best practices. In fact, we can say from experience that the BSP already expects BSP-registered VCEs to observe these best practices which are being checked during onsite audit. Thus, for those with mobile applications, the security controls should also be able to safeguard the integrity, authenticity and confidentiality of data residing or processed in the mobile platform. Their security framework should also cover the protection of the virtual asset wallets against cyberthreats and other technology risks. 

Also according to the proposed rules, BSP-registered VASPs should also put in place necessary security measures and controls in its platform to ensure confidentiality, integrity and availability of data uploaded, stored, processed and transmitted into and out of the system and protect its information technology infrastructure from malware, cyber-attacks and other evolving and emerging threats. Lastly, VASPs should also adopt sound outsourcing mechanisms to manage risks arising from outsourcing, specifically those concerning confidentiality, data privacy, data management, contract management, cybersecurity, performance monitoring and business continuity, among others. In all instances where technology is outsourced, say to a cloud service provider, the VASP remains to be ultimately responsible for the performance of the financial service in the same manner and to the same extent as if the VASP was directly performing said activity.

In the proposed VASP Guidelines, the BSP expressly incorporated the “Travel Rule” pursuant to FATF’s Guidance for Virtual Assets and Virtual Asset Service Providers. The jargon reflects the essence of the rule, that is, identifying information must “travel” along with the fund transfer. According to said rule, a VASP that facilitates a virtual asset transfer amounting to PHP50,000.00 or more, or its equivalent, must obtain and hold required originator information and required beneficiary information, which have been verified for accuracy, and submit said information to beneficiary institutions. It must be noted however that the Travel Rule has always applied to all banks and non-bank financial institutions—which includes VCEs which are categorized as money service business (see for example BSP Circular No. 1022 [2019]). Nevertheless, the BSP makes it explicit that this Travel Rule also applies to VASPs to align with the FATF Guidelines.

In a speech by BSP Governor Benjamin Diokno in September 2020, he mentioned that the proposed Guidelines for VASP “is in its final phase.” It can be expected that the new rules will be finally approved within the first and second quarters of 2021.

Proposed Legislations

2020 saw bills proposed in Congress seeking to regulate the use of blockchain technology and to mandate the BSP to issue a central bank digital currency (CBDC).

Just last year, we predicted that another proposal will be put forward for the creation of a blockchain-based digital peso. As we wrote in our 2019 recap of regulatory developments in the Philippines: “(c)onsidering the rising popularity of the subject of Central Bank-issued Digital Currency (CBDC) among central bankers and monetary policy experts, it will be exciting to see another lawmaker resurrect the idea of a “logchain”-based “E-Peso” which was first proposed in Congress as early as 2014.” True enough, in May 2020, Rep. Cua proposed for the creation of the Bangko Sentral Digital Peso (BSDP) that will be powered by a “logchain” through House Bill No. 6646). In essence, Rep. Cua revived the bill filed by Rep. Kimi Cojuangco in 2014, which proposed for the issuance of “E-Peso” (House Bill No. 4914).

Last October, Rep. Joey Salceda filed House Bill No. 7864 proposing for the enactment of the “Blockchain Technology Development Act.” The proposed bill establishes legal definitions for concepts such as blockchain, distributed ledger, cryptographic hash, and smart contract. Further, the bill seeks to confirm the legal enforceability to smart contracts and their admissibility as electronic evidence. Furthermore, the bill seeks to regulate the legal consequences of certain use cases for blockchain technology (e.g. financial services, digital identity, and human development). Finally, the bill intends to promote blockchain and fintech-related economic development in the private sector—designating the National Economic Development Authority to spearhead the effort.

Meanwhile in the Senate, the proposed bill for the Digital Assets Act filed by Sen. Imee Marcos remains pending and there are no official reports on the status of this Senate bill

Prospects

Looking forward, we foresee that a bill will be filed in Congress in 2021 that will propose the amendment of the Anti-Money Laundering Act (R.A. 9160) to include Virtual Asset Service Providers (VASP) among Covered Persons—requiring all VASPs as a statutory policy to observe know-your-client, record keeping, covered transactions and suspicious transactions reporting as well as appointment of AML compliance officer. We see this as a “low-hanging fruit” that the Congress  can pass without much debate or controversy, considering that this will only implement the FATF’s 2018 and 2019 recommendations on virtual assets and VASP.

This article is published on BitPinas: 2020 Regulatory Developments on Cryptocurrency and Blockchain in the Philippines

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Source: https://bitpinas.com/news/2020-cryptocurrency-regulation-in-the-philippines-recap/

Blockchain

Increasing Stability of the Utopia P2P Network

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The number of full nodes in the Utopia P2P ecosystem has passed the 30,000 mark.
This means that more than 30,000 nodes are working for the security and resilience of the network.

Stability

The number of full nodes within the Utopia decentralized ecosystem has reached 30,000 and is moving forward. This number is an indicator of the stability of internal processes and a guarantor of reliability.

Nodes in the blockchain have one of the most important roles – they are responsible for checking the legitimacy of blocks, approving transactions, and ensuring the smooth operation of the network. To a large extent, this responsibility falls squarely on the full nodes. In other words, the more nodes involved in supporting the network, the harder it is to trick, hack or crash the system. As a consequence, better connection quality, safer operations, cleaner and more honest mining.

When you install and run Utopia ecosystem mining bot, you automatically increase the number of nodes, thereby contributing to the stability of the network. Everyone involved in this process receives Crypton Cryptocurrency (CRP).

Benefits

Crypton is the unique currency of the Utopia peer-to-peer network. Coin mining does not burden your PC and is eco-friendly as it is done through an ecosystem. All you need to mine is a computer and a bot installed.

By launching the app, you start receiving collective rewards every 15 minutes – that’s how long it takes to form a new block. Users also receive a Proof of Stake reward to their minimum monthly balance. CRP is already listed on a number of exchanges and is available for sale.

– Anyone can mine, send and receive Cryptons. Cryptocurrency mining is available to all Utopia ecosystem users. CRPs are provided for being on the network and. Mining participants are rewarded for supporting the ecosystem – forwarding packets and providing RAM for caching purposes,” according to 1984 Group, the developer of the Utopia P2P network.

At the time of writing, 4,672,181.975674 CRPs have already been mined by Utopia network users, with the total number of transactions steadily approaching 300,000.

Security

The creators of Utopia Network have built an independent ecosystem, which doesn’t ask for your personal information even when you register and doesn’t track your activities or geolocation.

The server is basically not involved in data transfer and storage. The Curve25519, XSalsa20, and Poly1305 algorithms are used to encrypt, sign, and authenticate packets, objects, and peer-to-peer connections.

This way, you don’t have to worry about the security of your personal data and are free to use the Utopia ecosystem. In addition to in-network mining there are anonymous messenger, browser, email, and e-wallet. All functionality is focused on user anonymity and is available to all registered in the Utopia P2P decentralized network.

As far as we know, in the near future the developers will release an encrypted anonymous Utopia ecosystem app on IOs and Android.

Download Utopia: https://u.is/en/download.html
Website: https://u.is/
Crypton Exchange: https://crp.is/


Click here for Free Trial.
Source: https://www.livebitcoinnews.com/increasing-stability-of-the-utopia-p2p-network/>

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Investors must brace themselves as Bitcoin Cash goes downhill in the coming weeks

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Though off to a strong start in September, Bitcoin Cash seemed to have taken its foot off the pedal. Caught between two corrective phases on 7 and 20 September, the price steadily declined after forming a local peak above $800.

Moreover, BCH’s latest drawdown towards 38.2% Fibonacci level identified vulnerabilities in the market which could extend all the way back to July lows. With sentiment also expected to be sour due to a recent death cross, BCH bulls certainly faced a tall mountain to climb. At the time of writing, BCH traded at $549.2, down by 4.8% over the last 24 hours.

BCH Daily Chart

Source: BCH/USD, TradingView

A near 16% decline from the 50% Fibonacci level pushed BCH to the all important 38.2% Fibonacci level. Back in late-June, BCH suffered a 31% sell-off after it pierced below the aforementioned level on the back of a descending triangle. Hence, to dissuade short-sellers from the market, BCH would need to keep its neck above the $540-mark.

However, certain factors in the market could not be overlooked. For instance, each of BCH’s indicators slipped below their equilibrium points for the first time in nearly 2-months, while a negative crossover between the 20-SMA (red) and 200-SMA (green) created some more uncertainties.

Reasoning 

Even though corrective phases have been overserved previously in the market, BCH’s RSI held above it mid-line. This was not the case anymore after the RSI shifted below 45 and into bearish territory. In fact, the RSI was yet to touch the oversold territory, which meant that BCH could see some more losses rather than an immediate reversal. Such was the case with the MACD and Awesome Oscillator as well, which slipped below their equilibrium levels. If sentiment continues to be weak, the 23.6% Fibonacci level and $400 would come back into play.

Conclusion 

Bitcoin Cash’s long term narrative took quite a hit after prices declined below the 50% Fibonacci mark. In fact, this also negated a bullish setup which was highlighted in an earlier article. BCH’s indicators also fell into bearish zones  after this retracement. Considering these factors, BCH was open to a further sell-off towards the $400-mark in the coming weeks.

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Source: https://ambcrypto.com/investors-must-brace-themselves-as-bitcoin-cash-goes-downhill-in-the-coming-weeks

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Indian government cautious about crypto-adoption, CBDC is a possibility

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Indian traders and exchanges might be bullish about the crypto market, but the Indian  government doesn’t seem keen on rushing into the scene. At least, not until studying its homegrown fintech industry and the anti-Bitcoin protests in El Salvador.

Tracking global news

Indian finance minister Nirmala Sitharaman in a recent interview with Hindustan Times explained why the country seemed to be falling behind when it came to crypto adoption.

Though she admitted, El Salvador wasn’t “the best example,” Sitharaman said,

“You’d think common people don’t care about digital currency; but the public took to the streets against the move. It’s not a question of literacy or understanding – it’s also a question of to what extent this is a transparent currency; is it going to be a currency available for everyone?”

Sitharaman referred to CBDCs as a “legitimate” cryptocurrency and admitted there could be a “possibility,” in hat regard. She noted that India held the “strength of the technology” and acknowledged the need to formulate a Cabinet note. However, Sitharaman wondered if India was ready to follow El Salvador’s way.

Facts on the ground

Though accessibility is a pressing concern, more Indians have discovered crypto than perhaps expected.

Nischal Shetty, CEO of the Indian crypto exchange WazirX – a subsidiary of Binance Holdings – has stated that WazirX sign-ups from India’s tier-two and tier-three cities overtook those from tier-one cities this year. Even so, sign-ups from tier-one cities themselves saw a 2,375% rise. Furthermore, WazirX added one million users in April 2021 alone.

Adding to this, the cost of electricity and Internet data in India are relatively cheaper, which could boost both crypto trading and mining in the future. However, at the last count, there was only one Bitcoin ATM in the whole country.

As per data by Useful Tulips, which combined data from Paxful and LocalBitcoins, India saw transfers worth around $4,502,369 in the last two weeks.

Could anti-Bitcoin protests happen in India?

There is evidence to support both sides. India has a strong history of mass protests, with the farmers’ protests against the government’s agricultural laws being one such example. The 2016 demonetization of part of the country’s paper currency still haunts many, and Internet penetration is yet to cross 50%.

However, India also has the largest diaspora in the world, with approximately 18 million people living outside the country. Crypto innovation could lead to hundreds of millions of dollars being saved on remittance charges as money is sent across borders.

But for the time being, it seems India’s urban residents are more bullish about crypto than its government.

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Source: https://ambcrypto.com/indian-government-cautious-about-crypto-adoption-cbdc-is-a-possibility

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