Weekly Recap 24.08.2019. – 30.08.2019.

The BitMEX Insurance Fund Holds More Than $300 Million 

The BitMEX Insurance Fund has increased to holding over 31,300 bitcoins (approximately $314 million). The fund has experienced a 50.7% increase from its holdings since the beginning of 2019.

The BitMEX Insurance Fund is used to alleviate unfilled liquidation orders on the platform. In other words BitMEX’s platform and products are structured in a way that exchange does not require payments from its traders who have negative account balances when they are liquidated in a levered trade. Instead, the exchange uses its Insurance Fund to ensure the winning party of a trade receives their expected profits even if the losing party’s losses do not cover the winning party’s gains. (Neutral)

Binance Announced That It Will Offer Lifetime VIP Membership to KYC Leak Victims

Major cryptocurrency exchange Binance announced that it will offer a lifetime VIP membership to all its users affected by the recent Know Your Customer (KYC) images leak on the platform.

According to the official blog, currently Binance is “actively contacting all potential victims with […] guidance on privacy protection and restitution,” and highly recommends “affected users to apply for new identification documents in their respective region.” The post also states:

“We are compensating affected users with a lifetime Binance VIP membership, including preferential trading fees, support, and more services.”

According to the report, Binance said that its investigation of a KYC data leak that occurred in the beginning of August is still ongoing. The exchange’s security and investigations team is purportedly trying to identify the source of KYC images similar to those leaked by an unidentified hacker.

The thing is, Binance announced the leak on Aug. 7, stating that an unidentified individual threatened the platform and demanded 300 bitcoins (BTC) in exchange for withholding over 10,000 photographs of purported Binance KYC data. (Neutral)

Swiss Regulator Issues Banking License to Two Blockchain Firms

Switzerland’s Financial Market Supervisory Authority (FINMA) has issued banking and securities dealers’ licenses to two new blockchain firms – SEBA Crypto and Sygnum.

This is the first time that such licenses are issued to “pure-play blockchain service providers. The licenses will allow companies to provide services to institutional and professional customers.

“Sygnum’s plans for corporates include the ability to raise new capital by producing asset tokens based on existing financial assets, thereby lowering capital raising costs and improving liquidity for issuers and investors,” the firm has said.

SEBA Crypto said that the license is a “milestone for the entire digital asset market ecosystem,” and that the bank is expected to officially go-live in early October 2019.

“Institutions supervised by FINMA are only permitted to send cryptocurrencies or other tokens to external wallets belonging to their own customers whose identity has already been verified and are only allowed to receive cryptocurrencies or tokens from such customers,” the regulator said, adding:

“FINMA-supervised institutions are thus not permitted to receive tokens from customers of other institutions or to send tokens to such customers.” (Positive)

The Central Bank of Brazil Adopts IMF Guidelines For Crypto Classification

The Central Bank of Brazil has moved to classify bought or sold cryptocurrency assets per International Monetary Fund (IMF) guidelines.

Brazil’s central bank announced its decision on Aug. 26. With the new classification under IMF standards, traded cryptocurrencies will be classified as non-financial products and as such, will be accounted as goods on the central bank’s balance sheet.

A central bank balance sheet, just like a regular bank’s balance sheet, summarizes its financial position, and is made up of assets, equity and liabilities.

Since purchasing and selling cryptocurrency involves the execution of foreign exchange contracts, the central bank considers selling and buying crypto assets in their export and import statistics. Moreover, because Brazil is a net importer of crypto assets, this apparently has contributed to lowering the trade surplus on its balance sheet.

According to  the report, the classification of cryptocurrencies as a good is significant. Recognition of cryptocurrencies as property would purportedly make them eligible to be used as a payment mechanism.

The central bank notes that these classifications were recommended by The Balance of Payments Statistics Committee — an advisory committee to the IMF Statistics Department that focuses on external sector statistics methodology. (Neutral)

Alibaba and Tencent Among the First to Receive China’s Cryptocurrency

After five years of research, China’s central bank gets ready to launch its own cryptocurrency and Forbes is reporting that seven institutions will be among the first to receive and interact with it. Included in the initial batch are Alibaba, Tencent, and Union Pay, an association of Chinese banks, the Industrial and Commercial Bank of China and Bank of China.

According to Forbes’, the institutions will be responsible for “dispersing the cryptocurrency to 1.3 billion Chinese citizens and others doing business in the renminbi.” Furthermore, Forbes’ sources indicate that China’s central bank “hopes the currency will eventually be made available to spenders in the United States.” (Neutral)

Bakkt Clients Can Start Warehouse Deposits on Sept. 6

Bakkt clients will be able to start depositing their funds in the Bakkt Warehouse for physically delivered Bitcoin (BTC) futures starting Sept. 6.

On Aug. 28, the much-anticipated crypto trading platform Bakkt announced on Twitter that its qualified custodian, Bakkt Warehouse, will begin offering storage of customer’s Bitcoin in early September.

Storage will start weeks before the scheduled launch of its platform for daily and monthly crypto futures in the United States on Sept. 23. The platform will enable physical delivery of Bitcoin with end-to-end regulated markets and custody.

The Bakkt Warehouse, a part of Bakkt Trust Company, was developed using the same cyber and physical security protections as New York Stock Exchange, which is also operated by Bakkt’s parent company Intercontinental Exchange.

Bakkt’s physically delivered futures have been the subject of much anticipation from the crypto community as the company faced multiple delays in launching the platform due to compliance issues. (Positive)

Portugal Tax Authority: Cryptocurrency Trading and Payments In Crypto Are Tax-Free In The Country

According to a report published on Aug. 26 by Portuguese business newspaper Jornal de Negócios, the Portuguese Tax and Customs Authority have confirmed that crypto transactions or payments are exempt from Value Added Tax (VAT).

The agency reportedly provided the clarification to a local crypto mining company, publishing an official ruling document. In the document, the authority states that the exchange of crypto for fiat money is free of VAT, adding that crypto users do not have to pay any income tax.

In the official statement, the Portuguese tax authority cited a 2015 ruling by the European Court of Justice regarding the case involving major Swedish Bitcoin (BTC) portal Bitcoin.se and its moderator David Hedqvist.

As reported at the time, the court ordered that Bitcoin is a means of payment and that the exchange should therefore be exempted VAT obligations. However, the Swedish Tax Agency subsequently argued against the ruling, claiming that the court did not fully understand the matter.

The confirmation follows a previous tax ruling by the Portuguese tax authority that cryptocurrencies are not taxed in the country. A document published by the agency in 2016 states that income from the sale of crypto in Portugal is not subject to income tax. (Positive)

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