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The Reserve Bank of India (RBI), the country’s central bank, has clarified that banks can’t caution their customers against dealing in crypto, citing an old 2018 circular, which was overturned by the Supreme Court of India last year.

“It has come to our attention through media reports that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular … dated April 06, 2018,” said the RBI in an official statement Monday. “Such references to the above circular by banks/ regulated entities are not in order as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020.”

In 2018, the RBI had passed a rule that restricted banks and other financial institutions from dealing with crypto clients, but the Supreme Court overturned that rule last year. Still, banks and financial institutions, including HDFC Bank and SBI Cards & Payment Services, as recently as last week, were reportedly citing the old circular, warning customers of restrictions.

It is not clear why banks were still citing the old circular. But they made a “big blunder,” and the RBI had to clarify eventually, Sharan Nair, the chief business officer at Indian crypto exchange CoinSwitch Kuber, told The Block.

“Banks can no longer caution customers against dealing in cryptocurrencies citing the 2018 RBI circular,” said Nair.

Nischal Shetty, CEO of Binance-owned crypto exchange WazirX, told The Block that it is an “excellent move” by the RBI.

“This brings in a lot of clarity for banks, which have been on the fence whether they should service the crypto industry or not,” said Shetty.

As well as crypto users, crypto exchanges have also been facing banking issues in recent weeks. But does the RBI’s statement mean they will no longer face those difficulties?

That will be clear in a week’s time, Nair told The Block, after banks have been contacted and responses received.

If banks no longer deny services to crypto exchanges, then it would be a “good news,” said Nair. If they continue to decline, “then we’ll have to be worried about that.”

Enforcing customer due diligence

In its Monday statement, the RBI also said that banks will have to carry out customer due diligence processes in line with regulations, including know your customer (KYC), anti-money laundering (AML), combating of financing of terrorism (CFT), and the Foreign Exchange Management Act (FEMA) for overseas remittances.

“Banks do due diligence on any business they work with,” Shetty told The Block. “Since we follow all the KYC and AML guidelines, this should work well for us.”

Looking at the bigger picture, while the RBI clarity provides some relief, India’s crypto fate depends on the country’s government. One that is likely to discuss a bill in the upcoming session of parliament.

The bill’s contents are not known yet, but it seeks to “prohibit all private cryptocurrencies in India” and create a framework for developing a central bank digital currency.

There has been much chaos and confusion when it comes to India’s crypto situation. On the one hand, the country’s finance minister Nirmala Sitharaman has said that the government will be taking a “very calibrated position” on crypto. On the other hand, the RBI Governor Shaktikanta Das has said that the central bank has “major concerns” about crypto from the financial stability angle.

But Indian crypto exchange operators remain optimistic, as The Block has reported previously. They expect India will regulate crypto as an asset class, rather than as currencies, since they are not legal tender in the country.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Ray Dalio, a billionaire investor and the founder of the world’s largest hedge fund Bridgewater Associates, has said that the digital yuan will be more competitive than the digital dollar.

In an interview with CNBC on Monday, Dalio said he thinks the U.S. will issue a digital dollar one day and it may be a “viable” currency. But it won’t be the most competitive one, with its value possibly hit by growing U.S. debt levels, he added.

The digital yuan, on the other hand, will be more competitive in terms of pricing and return, said Dalio. It will be “a very viable alternative” to many investors if it is accepted internationally and comes with attractive interest rates, he said.

“I think we’re going to enter a world in which people will be thinking which currency, and the ones that have the best fundamentals will be the ones that will be most competitive and that’ll be threatening to countries,” said Dalio.

Yuan: A top reserve currency

Dalio also expects China’s yuan to become a top reserve currency sooner than expected.

China is currently the world’s largest trading nation, meaning it is the number one country in exports and imports. Dalio expects more trade and more financial transactions to be denominated in yuan.

“I think you’re going to see the renminbi become a more significant, a strong currency, stable currency, more attractive-returning currency, and also a more widely used currency … in the years ahead,” said Dalio.

Currently, the dollar is the world’s largest reserve currency with a share of nearly 60%, according to data from the International Monetary Fund (IMF). China’s yuan currently has a share of about 2%, behind the euro, Japanese yen, and British pound, per the IMF data. But Dalio expects the yuan share to increase to around 10% to 15% in five to 10 years’ time.

“I think incrementally it will happen faster probably than most people expect,” he said. “A lot has to do not just with what China does. It has to do with what the dollar does.”

China is nearing the launch of its digital yuan after over six years of research and development, as The Block has previously reported. The U.S., on the other hand, has only recently started exploring the idea of creating a digital version of its currency. The Federal Reserve plans to publish a discussion paper this summer on the potential issuance of a digital dollar.

In the interview, Dalio also said that the digital yuan would compete with bitcoin, an “alternative currency.” But the digital yuan will not completely take over the crypto market, he said. “Nothing ever completely takes over anything.”

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Japan’s financial watchdog issued a warning on Friday to crypto derivatives exchange Bybit for operating without registration, a first such warning from the regulator in over three years.

The Japan Financial Services Agency (FSA) said that Japanese residents are using the Singapore-headquartered exchange, even though it lacks permission. Crypto derivatives exchange Deribit, on the other hand, for instance, blocks Japanese IP addresses.

The FSA hasn’t issued a warning like this to a crypto exchange in over three years. In March 2018, the regulator warned Binance over unregistered operations. Last year, Binance said that it would implement a “gradual restriction of trading functions” for Japanese residents “at a later date.” But the exchange still appears to be operating in the country.

As for Bybit, it is the second such warning for the exchange in recent months. Earlier this year, the U.K.’s Financial Conduct Authority (FCA) issued a warning against Bybit, and the exchange had to cease its operations in the country.

Bybit is currently the fourth-largest bitcoin futures exchange in terms of both trading volumes and open interest — the value of outstanding derivative contracts that are yet to be settled — according to The Block’s Data Dashboard.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto exchanges have seen more than $2 trillion in volume this month, according to The Block’s Data Dashboard, the most-ever in history.

May represents the fourth month in a row in which crypto exchanges have seen more than $1 trillion in volume, according to The Block’s legitimate volume index. The index takes data from the largest exchanges with trustworthy reporting of volumes.

Binance continues to be at the number one spot in crypto-to-crypto exchanges. The exchange has seen nearly $1.5 trillion worth of trading volumes in May.

Coinbase, on the other hand, remains the top fiat-to-crypto exchange. It has seen more than $198 billion worth of trading volume in May, according to The Block’s Data Dashboard.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Bitcoin’s mining difficulty saw a notable decrease around Sunday midnight UTC time as the network’s hash rate has dropped significantly even before China’s bitcoin mining crackdown comment.

On-chain data shows the network’s mining difficulty adjusted to 21.05 Trillion at block height 685,440, which is a 16% drop compared to its recent all-time-high recorded on May 13.

In fact, Bitcoin’s average block production interval already increased to 11.8 minutes between May 13, the last mining difficulty adjustment date, and May 21, when China’s State Council iterated in a recent meeting that there needs to be a crackdown on bitcoin mining and trading activities in China.

That interval was 18% faster than the Bitcoin network’s intended 10-minute-per-block production time, which also means the average hash rate between May 13 and 21 already dropped to around 147 exhashes per second (EH/s).

Following the China State Council’s comment Friday last week, the seven-day moving average hash rate has remained relatively steady around the 150 EH/s level.  

As reported previously, the computing power connected to Bitcoin has declined since May 13 due to a few factors.

While some miners had started the migration process from Northern Chinese provinces to the hydro-electricity hub in Sichuan, the power plants in Sichuan have been limiting the supply to energy-intense industries including mining farms due to the delay of the rain this year. As a result, there has been a surging electricity demand from the general public, which had to be prioritized. 

It remains to be seen whether and how the Sichuan government will react to the State Council’s high-level policy signal in terms of cracking down on bitcoin mining activities. 

Different from its counterparts in Inner Mongolia, where the energy is mostly based on fossil fuel, the Sichuan government is hosting a seminar next week to understand what the impact of a simple ban would have on the local hydropower economy. 

Meanwhile, some Chinese bitcoin miners are looking for energy capacities overseas to migrate their equipment out of China to hedge against regulatory uncertainties ahead.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

While the Securities and Exchange Commission (SEC) deliberates the potential approval of VanEck’s bitcoin and ether exchange-traded funds (ETFs), the company is moving forward with two exchange-traded products (ETPs) abroad. 

On June 1, VanEck will list its Vectors Bitcoin exchange-traded note (ETN) and Vectors Ethereum ETN on the Dutch and French portions of Euronext, the company said in a release. 

“Bitcoin and Ethereum have firmly established themselves on the market as the two largest cryptocurrencies,” said Martijn Rozemuller, CEO at VanEck Europe, in a press statement. “Due to their low correlations to other asset classes, they provide an interesting opportunity to diversify one’s investment portfolio.”

The product expansion comes months after the launch of an exchange-traded note (ETN) on Germany’s Deutsche Boerse Xetra back in November.

The company has been attempting to become the first U.S. firm to go live with an SEC-approved bitcoin ETF since 2019. In April, the SEC punted a decision on its current bitcoin ETF effort until later this year.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• On May 19, Rajarshi Maitra announced that he was quitting his job to work on bitcoin full time.
• In this interview, he explains what drew him in and what it felt like to have his first bit of code merged into bitcoin’s codebase.

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subscribers of The Block Daily.
You can continue reading
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Quick Take

• An inside look at Coinbase’s prime brokerage business
• Multi-strat hedge funds are coming, according to the firm’s Greg Tusar

This feature story is available to
subscribers of The Block Daily.
You can continue reading
this Daily feature on The Block.

Andreessen Horowitz’s third crypto fund could garner $2 billion if all goes according to plan, sources told venture capital writer Eric Newcomer for his newsletter. 

Last month, a report from the Financial Times indicated that the a16z-led crypto fund would draw anywhere from $800 million to $1 billion, as The Block previously noted. 

A16z has already poured a substantial amount of its capital into crypto startups, with a recent focus on network scaling and non-fungible tokens (NFT) marketplaces. 

The most recent investments were $8 million toward the NFT platform startup RTFKT on May 5, with $23 million put toward the more prominent OpenSea NFT marketplace on March 18. A16z has invested in other digital collectible projects like Dapper Labs and CryptoKitties in the past. 

In addition to NFT marketplaces, a16z’s crypto portfolio includes investments in crypto infrastructure like Bitcoin and Ethereum, DeFi projects such as Uniswap and exchanges like Coinbase.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The Securities and Exchange Commission (SEC) has filed a civil lawsuit against five people accused of promoting BitConnect, a now-defunct crypto Ponzi scheme. 

The regulator contends the platform’s “lending program” constituted a $2 billion unregistered securities offering since the firm wasn’t a registered broker-dealer. Bitconnect first debuted in 2016 and shuttered its primary lending platform in early 2018 amid allegations of fraud and warnings from regulators. The FBI publicly sought out potential BitConnect victims in 2019.

Now, the SEC is holding Trevon Brown, Craig Grant, Ryan Maasen and Michael Noble to account for their alleged advertisement of the merits of the platform’s lending program. They created YouTube videos touting their success using the platform to solicit investor funds, per the SEC’s complaint, and received commissions for their efforts. 

Joshua Jeppesen is also a defendant in the case for his alleged role as a liaison between BitConnect and its promoters. Jeppesen represented BitConnect at events. 

“The SEC’s complaint charges the promoter defendants with violating the registration provisions of the federal securities laws, and Jeppesen with aiding and abetting BitConnect’s unregistered offer and sale of securities,” said the regulator in a statement. 

The lawsuit was filed in the United States District Court for the Southern District of New York. The agency is seeking injunctive relief, disgorgement plus interest and civil penalties.

“We allege that these defendants unlawfully sold unregistered digital asset securities by actively promoting the BitConnect lending program to retail investors,” Lara Shalov Mehraban, Associate Regional Director of the SEC’s New York Regional Office, said in a statement. “We will seek to hold accountable those who illegally profit by capitalizing on the public’s interest in digital assets.”

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.