India Left With Zero Money and No Gold

Isokivi || Creative Commons

Recent developments in India continued to steal headlines in the past couple of weeks. A surprising upshot was reported in both China and Vietnam while Spain and cannabis in the U.S. also generated significant interest.

The Indian government has banned the import of gold to the country after its latter decision to “cleanse” India of its cash while also levying heavy taxes on all gold investments. The majority of these decisions only seem to benefit the cause of Bitcoin. The cryptocurrency has been accordingly thankful. Only last week, its trade has rocketed by more than 100% in less than a half-month via the service of CoinDance.

A similar trajectory has been taken up by the Chinese government which decided to significantly regulate the import of gold to its territory from early December onwards. The aim is to keep the national currency within the country´s boundaries. The overall impact on trade, however, could be tangibly higher than the one evidenced in India, as China accommodates a large number of Bitcoin “miners”.

Extending our stay in Asia, Vietnam (similarly to South Korea or Japan) announced its plan to regulate cryptocurrencies – in a positive sense. Vietnamese officials seem to have acknowledged the fact that regulating an influx of investments with high potential would most likely not be the smartest course of action. They intend to pass a legislation focusing on the challenges of money laundering, terrorism and tax evasion. It is quite a paradoxical situation indeed, as the government of a relatively poor, developing country – which, by the way, holds more that 2.2 million electronic wallets – endorses virtual currencies, while the government in Slovakia had not even taken notice.

Darkness is falling on Spain, too, due to the governmental plans to set limits on the amount of cash one can carry to a maximum of EUR 1000. The idea is to increase control over cash flow between citizens that could eventually prevent tax evasion. A similar cap has already been introduced in Portugal and Greece, with a cash maximum of EUR 1500. In Slovakia, limits of this sort burden mostly businesses as they are only allowed to make transactions up to a value of EUR 5000. The whole fuss around cash limitations will only boost the appeal of payment alternatives. One of those already established ones is Bitcoin. Without doubt, it can still be subject to criticism and scrutiny, but only to a certain extent. Users have the option to engage with platforms such as LocalBitcoin or Bitsquare offering the opportunity to exchange national currencies for Bitcoin directly at the user´s address as opposed to the indirect route of currency exchanges.

Russia has always been one of the headlines of these articles and this time will be no different. The country´s tax officials have suddenly decided to categorize the purchase/sale of Bitcoins as monetary transactions, resulting in Bitcoin being equal to securities. Controllers say they only want to regulate Bitcoin in order to counter money laundering and to gain support within the rules of the fight against terrorism. The government´s response is clouded with uncertainty as state bodies in Russia have long exhibited utter confusion and indecision when dealing with cryptocurrencies. Officials at the Ministry of Finance had even boasted about convicting and jailing businessmen for up to 4 years. On the contrary, the Russian Central Bank has been quite sympathetic to cryptocurrencies, engaging in its own research of virtual currencies and their potential applications.

As today´s dessert, we will be serving the “weed” business in the United States, which is experiencing a recent boom in several of the country´s states. Not surprisingly, individual state legislation often differs to various extents in aspects of the allowance to carry, grow or even sell cannabis. Purchasing cannabis for medical purposes represents yet another problem. Inconsistent and dissonant legislation forces consumers to pay in cash or helplessly rely on the hope that shops accepting card payments will not be “busted”. CanPay, a tech company, had developed an app enabling its users to send money directly to businesses without engaging the banking system. CanPay has also expressed a willingness to utilize Blockchain in the future. This could prove to be an even more effective tool to facilitate these kinds of transactions as all of them would be immutably stored.

Translated by Edward Szekeres

Martin Lindak