This week’s summary of various cryptocurrency news and developments:
Coinbase CEO claims battle with the IRS could cost the startup $1 million
Last week, DeepDotWeb reported a new court filing showed Coinbase was ready to fight the IRS in order to stop it from getting to its user records. Coinbase has already claimed this was an “extraordinarily broad ‘John Doe’ summons”, so it’s now specifically attempting to hold off a decision on a motion filed on one of its customers, Jeffrey Berns.
This week, Brian Armstrong, Coinbase’s CEO, wrote about the subpoena the IRS sent the company. In his piece, Armstrong said the startup could face as much as $1 million in legal expenses even though the company has the same goal as the IRS: “I believe Coinbase and the IRS fundamentally want the same thing: for all US users of virtual currency to pay their taxes. And I believe our prior actions demonstrate that we are committed to making this happen. I also feel that the IRS sending us a John Doe summons on all customer accounts is not the best way for us to mutually accomplish this objective.”
China’s central bank found irregularities in the country’s major exchanges
According to China-based news source Jiefang Daily, the People’s Bank of China (PBOC) has recently released the results of one of it inspections on bitcoin exchanges. The report concludes the country’s major exchanges, BTCC, Huobi and OKCoin were causing abnormal fluctuations in the price of bitcoin, as they were carrying out margin trading activities. Details on the case are scarce, and so far, no punishment has been issued.
Through their online Weibo account, BTCC has already issued a formal response: “BTCC will continue to actively cooperate with the central bank and its associated departments and carry out rectifications. BTCC is currently operating normally.”
Nigeria’s central bank advised financial institutions against virtual currencies
The Central Bank of Nigeria’s Financial Policy and Regulation Department released a document in which it warns banks and other financial institutions to not “use, hold and/or transact in any way” virtual currencies. Bitcoin, Onecoin, Monero and Dogecoin are used as examples in the document, that adds that financial institutions that do adopt virtual currencies do so at their own risk. Moreover, banks should control any customers that do use digital currencies and operate digital currency exchanges, as they should make sure those exchanges are adhering to AML/KYC rules. If not, the Central Bank of Nigeria said these customers’ accounts should be closed.
Washington lawmakers attempt to keep bitcoin away from the legal marijuana business
SB 5264-2017-18 is a bill that seeks to amend some of Washington’s rules regarding the sale and distribution of legal marijuana. Its goal is to ban the acceptance of virtual currencies in the legal pot business, even for the purchase of business supplies: “A marijuana producer, marijuana processor, or retail outlet must not pay with or accept virtual currency for the purchase or sale of marijuana or any marijuana product.” This is a type business that could greatly benefit from the use of bitcoin.
Various cryptocurrency news websites are noting, however, that the definition of “virtual currency” within the bill can be confusing. It reads: “Virtual currency” means a digital representation of value used as a medium of exchange, a unit of account, or a store of value, but does not have legal tender status as recognized by the United States government. “Virtual currency” does not include the software or protocols governing the transfer of the digital representation of value or other uses of virtual distributed ledger systems to verify ownership or authenticity in a digital capacity when the virtual currency is not used as a medium of exchange.”
Coinbase received a New York BitLicense
The New York State Department of Financial Services (NYDFS) awarded cryptocurrency exchange Coinbase a BitLicense that solidifies the exchange’s operating status. The BitLicense, introduced back in June 2015, is a sign of how committed New York is to fostering and encouraging the growth of the FinTech industry: the first companies to receive the license were Circle and Ripple. Coindesk added the NYDFS said in a statement the license was granted “after a “comprehensive” review of Coinbase’s anti-money laundering, capitalization, consumer protection and cybersecurity policies.”
Bitcoin at $922 after Donald Trump’s inauguration
After Donald Trump was elected the 45th President of the United States of America on November 8, 2016, bitcoin’s value surged more than 3%, likely because the cryptocurrency is often used to hedge against instability. After his inauguration, the value didn’t seem to be that affected, even though it did reach $922 at the time of press, according to BitStamp.
The scalability debate is heating up
Bitcoin’s scalability debate seems to be hating up. Bitcoin.com recently reported the network alternative Bitcoin Unlimited, also known as BUIP 001 has been gaining terrain, closing in on its “opponent” SegWit. Yesterday, CryptoCoinsNews reported Gang Wu, the CEO of HaoBTC, a mining business that controls over 6% of bitcoin’s network, attacked developers, claiming they tore up the Hong Kong agreement to force SegWit. Moreover, Bitmain’s co-founder and currently biggest bitcoin miner (with roughly 20% of the hashrate) Jihan Wi, stated: “If only the PBOC inspection could end up with a certain dumb *** exchange that endorses segwit getting closed down.”, likely referring to BTCC.
Roger Ver, Bitcoin.com’s CEO, recently republished a piece from August 2015, in which he attacks censorship within the bitcoin community, and defends that bigger blocks will mean more decentralization.