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Turkey will release the state cryptocurrency; Goldman Sachs bank develops blockchain direction. SEC and FINRA provided explanations on cryptocurrency brokers.
The Turkish authorities paid great attention to blockchain technology in their 11th Development Plan. Moreover, these plans highlight that the Central Bank of the country will issue the state cryptocurrency, and this will happen before 2023. It is not yet clear whether it will be possible to use it in everyday settlements between buyers and sellers. However, it is already known that digital coins will be applied at customs and in transport, as well as when providing public services.
In the past two years, Turkey is experiencing an economic crisis, which led to a decline in lira exchange rate and heightened interest in Bitcoin. Therefore, looking over the published plan, it is possible to conclude that the authorities want to respond to the public interest in digital financial assets through the state cryptocurrency emission.
In many countries, residents are responding to the economic crisis by actively buying bitcoins. This happened in Argentina, where inflation was 47% for 2018. In Venezuela, prices rose by 1,700,000% over the past year, which also prompted citizens to keep their funds in cryptocurrency.
However, Venezuela’s example can somewhat dissipate the enthusiasm for the emergence of the Turkish Central Bank cryptocurrency. The Latin American country launched Petro, its own digital coin, back in 2017, but this had a slight effect on the country's economy. Trading partners refused to accept new asset for settlements, which practically led to its use exclusively for domestic trade.
The Chinese authorities went some other way. The national cryptocurrency has not yet appeared here, however, the authorities are already testing new technology. Blockchain platform, which has been launched for settlements between credit organizations, processed transactions for $ 4.36 billion for 8 months. This is an insignificant share of country's trade, but the experiment allows working out the technology of the Central Bank cryptocurrency launching in real conditions.
The Block reports that the Goldman Sachs investment bank has a vacancy of Digital Assets Project Manager. This credit institution was always wary of blockchain, but this time it decided to move forward. According to unofficial data, there are already working on the creation of bank cryptocurrency or settlement system in a similar way as JPMCoin.
JPMorgan bank has released its own token in order to use it in three ways. The first two aimed to facilitate exchange operations in an international trade and use it on the securities market do not cause questions. However, using it as a substitute for dollar can lead to problems.
Since this corporation’s daily turnover exceeds $ 6 trillion, the scale of the innovation becomes clear. In fact, the US currency is being squeezed out of circulation, which is unlikely to be supported by the country's authorities. If users can buy bank cryptocurrency by JPMorgan, Goldman Sachs and other giants, then dollar will be forced out of the traditional field.
This situation gives explanations on the true reason for SEC's rejection of cryptocurrency assets. If the regulator starts to encourage the emergence of alternative financial instruments, it will actually undermine the country's economy. Its national debt exceeds $ 21 trillion even as we speak, and this figure continues to increase.
Cryptocurrency boom begins in the global financial system. It seems that Libra project effected its start. China issued a statement that it is it who is forcing the People’s Bank of China (PBoC) to strengthen efforts on launching a national digital coin. Lending institutions also do not want to stay away from the process. Even the conservative Goldman Sachs is forced to take action. At the end of June, David Solomon, its General Director, gave a hint that there is a possibility of launching bank cryptocurrency, and that active research is being conducted at the bank on the possibilities of digital financial assets.
The American cryptocurrency companies hit stiff headwinds in obtaining licenses from SEC and FINRA for broker-dealer activities. In their decisions, agencies are guided by the Securities Investor Protection Act of 1970. The problem is that cryptocurrency as a security does not meet many conditions of obsolete rules.
Moreover, agencies claim that the main problem is the digital assets storage conditions. Regulators declare that a cold storage password can be not only in broker’s possession, but also in the third parties’. Moreover, this leads to legal uncertainty and increased risk.
According to some experts, the American regulators have actually passed moratorium on licensing cryptocurrency brokers. Many large platforms cannot get the appropriate permission to work in the United States. Gemini, which is still actively working with cryptocurrency-based derivatives, is among them.
Meanwhile, cryptocurrency exchanges bypass the ban obtaining permission to work in individual states. However, this leads to certain difficulties and additional costs. At the same time, their competitors from other countries are actively developing.
Thus, Binance, the largest worldwide cryptocurrency exchange, has moved to 2.0 platform and announced margin trading start. Such a lag creates disadvantages for the American trading platforms. The US authorities are trying to solve the issue by means of prohibitions; however such a policy far from always leads to success. As a result, Binance stopped providing services to US customers a month ago. Nevertheless, nothing forbids them to open an anonymous wallet. Although the maximum withdrawal is 2 BTC only, this is quite enough for a regular trader.