Issue 3: Government and Institution Made Obstacles For Crypto Users
Why Is Privateum Necessary? Governments And Institutions Are Constantly Creating Obstacles For Crypto Users. What Are The Ongoing Invasions Of Privacy And Why Is Total Control Inevitable?
Anti-Privacy Regulations Pose Risks for Crypto Investors, Bank of America Says in its February 2021 report. Cryptocurrencies “challenge the ability of governments to levy taxes and to control capital flows more broadly,” the report says and warns of the risks and potential market disruption from anti-privacy government measures. Uncertainty over how the governments will act to limit these use cases presents a key risk for cryptocurrency investors: “Encrypted private wallets with digital assets that can be transferred across borders would seem to undermine the monetary sovereignty of every nation-state,” the report says.
The report is quite notable, as state actors attempt to erect a cordon around criminal activity that relies upon cryptocurrencies, some governments have actively sought to undermine the adoption of cryptocurrencies that are most respectful of an individual’s privacy.
Moreover, FATF recommends governments investigative structures to secretly inject own nodes to such private networks and monitor online activities, as in EU with centralized database of all the crypto users.
In some cases it is possible for governments to limit crypto investors’ activities through several administrative sanctions, including but not limited by delisting of appropriate applications both from Apple Store and Google Play Market, limiting online access to and blocking of appropriate web-sites and servers with the reason of their supporting money-laundering and other unlicensed activities, arresting the key team-members of services and technological initiatives offering solely technical “solutions” of private networking, trading and crypto processing on the basis of their evidently supporting tax-avoidance practices.
The U.S. maintains a generally positive outlook on the use of Bitcoin and other cryptocurrencies, though few formal rules have actually been introduced. Most of the regulatory discussion surrounding blockchain has been at the agency level, including the Department of Treasury, Securities and Exchange Commission (SEC), Federal Trade Commission (FTC), Internal Revenue Service (IRS) and Financial Crimes Enforcement Network (FinCEN) — all of which hold differ in their definitions of “cryptocurrency,” as well as their stances on how regulation should be applied. It creates certain collisions and obstructively destructive practices for private crypto holders, limiting accessibility to and freedom of crypto trading. The case is getting even more complicated, depending on the appropriate state local legislation.
The overall approach of the European Union (EU) towards blockchain technology has been positive and welcoming — but only recently did it put forth official legislation to regulate it. On January 10, 2020, the EU signed its 5th Anti-Money Laundering Directive (5AMLD) into law, marking the first time that cryptocurrencies and crypto services providers will fall under regulatory scrutiny. It proposes that the EU’s member states create central databases comprised of crypto users’ identities and custodian wallet addresses for Financial Intelligence Units (FIUs) to access. Treatment of cryptocurrencies differs from country to country, ranging from a VAT-taxable asset to digital money.
In the UK, where then Brexit transition period looms for the remainder of 2020, the UK Financial Conduct Authority (FCA) has become the anti-money laundering (AML) and counter-terrorist financing (CTF) supervisor of the country’s crypto-asset activities, stating that crypto exchanges, ATMs, peer-to-peer platforms, custodian wallet providers, and token issuers all must comply with its rules.
United Arab Emirates put absolute ban: Under article D.7.3 of the Regulatory Framework for Stored Values and an Electronic Payment System, issued by the Central Bank of the United Arab Emirates in January 2017, all transactions in “virtual currencies” (encompassing cryptocurrencies in Arabic) are prohibited.
Financial institutions are warned from using bitcoin, as the Saudi Arabian Monetary Authority (SAMA) has warned from using bitcoin as it is high risk and its dealers will not be guaranteed any protection or rights.
Bitcoin is not regulated as it is not considered to be electronic money according to the Turkish law.
In early 2018 India’s central bank, the Reserve Bank of India (RBI) announced a ban on the sale or purchase of cryptocurrency for entities regulated by RBI. In March 2020, the Supreme Court of India passed the verdict, revoking the RBI ban on cryptocurrency trade. However, in 2021, the government is exploring the creation of a state-backed digital currency issued by the Reserve Bank of India, while officially banning private ones like bitcoin.
In China financial institutions are not allowed to facilitate bitcoin transactions. Regulation prohibits financial firms holding or trading cryptocurrencies. Cryptocurrency exchanges or trading platforms were effectively banned by regulation in September 2017 with 173 platforms closed down by July 2018. Many bitcoin mining operations in China had stopped operating by January 2018.
Japanese law on cryptocurrency transactions must comply with the anti-money laundering law; and measures to protect users investors. The Payment Services Act defines “cryptocurrency” as a property value. The Act also states that cryptocurrency is limited to property values that are stored electronically on electronic devices, not a legal tender.
This is further prevalent daily, as can be specifically seen in South Korea, where the Korean Financial Authority launched investigations on investments made by employees in related departments, and proceeded to seize $25,000,000 worth of crypto assets.
How to avoid those sort of risks and personal troubles with domestic tax authorities and consequent criminal investigations and charges?
How can a simple crypto user operate with crypto markets for own lawful profit in such a highly obstructive legal environment?
The Privateum Solution
The Privateum Initiative focuses on achieving privacy in assets management and crypto processing with rightful practical on-site implementation internationally. Privateum is a technological and legal solution based community platform to avoid privacy invasion from official regulations. Our community gets protected from both legal and governmental intrusions.
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