Hk bitcoin atmwhat is arbitrage in bitcoin buying and selling


Wall Street Investment Banks Quant: Princeton Quant FinTech Presentations: Princeton Quant FinTech Presentations. Download the PDF research report titled: Global Financial Regulation Interview: Future of Finance Project www.

Earlier, similar probabilistic, statistical, and numerical methods related concerns were in the global popular press in the context of the global financial crisis. Future questions focused on the underlying assumptions and logic may focus on related implications for compliance, controls, valuation, risk management, etc. Likewise, recent developments about mathematical entropy measures shedding new light on apparently greater vulnerability of prior encryption mechanisms may offer additional insights for compliance and control experts.

For instance, given related mathematical, statistical and numerical frameworks, analysis may also focus on potential implications for hk bitcoin atmwhat is arbitrage in bitcoin buying and selling, valuation and risk models.

The important point is that many such fundamental assumptions and logic underlying widely used probabilistic, statistical, and numerical methods may not as readily meet the eye. The news rocked the bitcoin world, and it could even bring down the much-hyped digital currency. Internal Revenue Service said on Tuesday that bitcoins and other virtual currencies are to be treated, for tax purposes, as property and not as currency The IRS supplied that in its statement, which dealt a blow to bitcoin "miners," who unlock new bitcoins online.

The IRS said miners must include the fair market value of the virtual currency as gross income on the date of receipt The IRS also said that virtual currency is not to be treated as legal-tender currency to determine if a transaction causes a foreign currency gain or loss under U. If a taxpayer holds virtual currency as capital - like stocks or bonds or other investment property - hk bitcoin atmwhat is arbitrage in bitcoin buying and selling or losses are realized as capital gains or lossesthe agency said.

How do you see bitcoin's future? Crypto-currency BTC seems to get most media coverage given its role in global monetary transactions, electronic payments and related governmental and regulatory concerns. Some such innovations of the cryptographic protocol enable creation and regulation of issue of the crypto-currency BTC, preventing its counterfeiting and double-spending, and securing its global transmission at minimal transaction cost and processing time. World governments and global financial institutions such as big banks are interested in the technical protocol and related cryptographic frameworks and technologies.

Given their interest in developing and controlling such crypto-currencies, global governments and financial institutions represent potential competitive threats to BTC and other crypto-currencies. Being pegged to the Canadian dollar is expected to avert the kind of risky speculative spikes and drops typically associated with BTC and related volatility concerns of regulators such as in China.

The technical protocol not only underlies BTC but other competing crypto-currencies with some notable differences. Its features such as P2P network based decentralization without need of a third-party intermediary underlie future digital innovations enabled by public key cryptography such as next-generation electronic contracting as well as next-generation social networks.

My research report on Bitcoin Protocol with focus on BTC mining, transactions, and payments explaining the above contrast between the protocol and the currency is accessible at http: The underlying technical cryptographic protocol is what seems to hold most appeal in terms of such future innovations to national and state governments, regulators, financial institutions, and private enterprises including those enabling the current crypto-currencies as well as other players.

Bypassing traditional financial intermediaries such as banks, BTC transactions via decentralized Hk bitcoin atmwhat is arbitrage in bitcoin buying and selling network enable movement of large amounts of currencies cheaply, almost instantly, and potentially anonymously. As noted in the above Bitcoin Protocol research report, China earlier allowed popular participation in bitcoin market while emphasizing just like most other countries that it does not recognize BTC.

Like most other governments, China seems concerned about its control of monetary policy, cross-border currency and capital flows, and currency exchange rates. In addition to prior concerns noted above, such policy concerns mirroring concerns expressed by other nations, motivated China to subsequently ban financial institutions and payment companies from handling virtual currencies.

BTC China and other exchanges are trying to work around the ban while trying to reduce highly speculative price volatility of the BTC. Recently, to reduce speculative trading, it reintroduced the trading fees. Just last week, BTC China reported that trading volumes are being gradually restored by use of vouchers that bypass third-party hk bitcoin atmwhat is arbitrage in bitcoin buying and selling providers and referral incentives.

The Chinese government has turned against bitcoin in the regulatory environment. How does that affect the bitcoin market? Europe was the first to recognize the potential risk of losing control of monetary policy with current trend of cautiously watching developments while watching over the interests of consumers. However, caution on part of China and other nations is one of many other factors noted below that affect the BTC market besides inherent risks and vulnerabilities in the bitcoin protocol and the global arms race of monopolistic and oligopolistic mining pools and botnets that can subvert control of the P2P BTC networks.

Volatility related to spikes in BTC price also results from announcements such as the one by the largest social-network gaming sites announcing acceptance of BTC. Ironically, some such prominent social-network gaming sites are already targets of ongoing surveillance and investigations by various national government agencies searching for terrorist and criminal networks.

Several risks, threats, and vulnerabilities are inherent in the design of the bitcoin protocol which is susceptible to cryptographic vulnerabilities and threats as hk bitcoin atmwhat is arbitrage in bitcoin buying and selling in my Bitcoin Protocol research report.

In the beginning of the second week of January,a mining pool GHash. The latest developments have led a Bloomberg report to conclude that bitcoin is now less a currency than a kind of risky bond for which the issuers bear no responsibility, hence investors should be aware that the situation is ripe for abuse. Related risks obviously motivated recent policy decisions of various governments and regulators such as in China and Hong Kong.

Quite likely, installation of a bitcoin-ready ATM in Hong Kong will have no significant effect based upon current state of global regulatory announcements about BTC.

Firsteven though such trend has existed only over a short term, one may try to generalize based on what effect BTC-ATMs had in other cities in other countries such as Canada that have been in BTC regulation related headlines. Seconddespite differences across national monetary, capital, and currency control policies, overall similar and shared policy concerns guiding recent BTC regulations and enforcements may help to deduce such effects in predicting the future of BTC.

Thirdspecific analysis and observations reported by regulators of China, Hong Kong, Taiwan and other countries such as Canada and USA have noted no significant effect of BTCs on their respective financial systems. The last point is self-evident given current 12 million BTCs in circulation with total circulation capped at 21 million by The first two points are further explained below with specific evidence hk bitcoin atmwhat is arbitrage in bitcoin buying and selling on public record.

Hence, regardless of installation of BTC-ATMs, the future of BTCs will depend upon the individual national and state regulatory policy and related enforcement as further explained below. Some popular media reports seem to perhaps imprecisely quote the comments from the letter of US Fed chief that he attributed to others in his letter filed in the context of the US Senate hearings of November, Despite some contrasts across national policies described in popular media reports, the primary concerns of governments and regulators across nations including China and Hong Kong actually seem quite consistent.

Hence, despite any superficial differences that sometimes seem to be exaggerated in some media reports, most major nations seem to share consistent and common regulatory concerns about BTCs. Accordingly, if the current trend continues, the future of national regulatory policies and enforcements may probably have similar impact on the future of BTC.

Similar sentiment is shared by financial regulators and institutions, whether in Hong Kong, China, or Taiwan, or for that matter in most other countries. Bitcoin is not regulated by the HKMA.

Bitcoin is not a currency, but a virtual commodity. Financial institutions and the public shouldn't use it as medium of payment. Given Bitcoin's non-currency status, no bank deposits should be made with it, and banks are not allowed to receive or provide Bitcoins.

The country's central bank had expressed concerns about Bitcoin's lack of legal status, high risks of money laundering, and potential association with illegal activities. Similarly, reports painting an apparent contrast between Hong Kong and Taiwan with the former getting its first ATM must be very carefully interpreted.

Such concerns are more or less similar to those expressed by most national regulators in USA, Asia, Europe, or elsewhere. How can accountants make provisions for bitcoin-denominated transactions in financial reports etc. A government central bank issued currency is legal tender in the sense that it is acceptable and legally used for settlement of debts and payment of taxes. In contrast, creditors are not required by law to settle debts in lieu of BTC payments.

Nor do governments accept BTCs for tax payments. BTC and other non-government virtual currencies are deemed highly speculative and risky for consumers as their value is not backed by any physical commodity such as gold, issuers such as central banks, or the real economy. Taiwan represents such an illustrative case. Particularly, being aware about the specific evolving regulatory guidelines will enable accountants and auditors in Hong Kong and elsewhere to make provisions for compliance about BTC-related disclosure and reporting.

That Notice expressly required all financial institutions and payment institutions not to embark on any BTC-related services such as provision payment, clearing and settlement for transactions.

The outgoing CFTC chairman noted: In other words, the legal classification of BTC meant that commercial profits resulting from using BTCs in trade may be taxable. The Bundesbank is warning emphatically about these risks. As noted, most governments are classifying legal status of BTC to control money laundering and investment frauds, and, impose and collect sales and capital gains taxes from BTC related activities.

In the first week of December,Central Bank of Taiwan issued a directive for BTC trading Hk bitcoin atmwhat is arbitrage in bitcoin buying and selling sites to register in compliance with Telecommunications Act and the Regulation on Internet Information Service hk bitcoin atmwhat is arbitrage in bitcoin buying and selling relevant organizations to follow the requirements of the Anti-Money Laundering Act in compliance with the legally required anti-money laundering procedures such as KYC and suspicious transaction reporting.

In the second week of January,Hong Kong Monetary Authority HKMA warned regulated banks to monitor potential and existing customers dealing in or operating schemes related to virtual currencies such as BTC particularly given money-laundering risks associated with the relative anonymity afforded by BTC transactions.

Since then Internal Revenue Service IRS had also begun investigations into the potential use of digital currencies for tax evasion, a criminal activity representing a predicate offence for money laundering in several regions including Hong Kong.

BTC is not legal tender given it is not issued by any national government or central bank. AML statutes however also apply to financial institutions that are in the money services business. Likewise, definition of securities that include investment contracts involving taking money from customers to generate profits qualifies as a security under the SEC regulations and is thus covered by related AML regulations.

Laws about capital assets generating capital gains can also be extended to miners and investors of BTCs. Based upon the above observations, two key conclusions can be drawn at the moment that seem relevant hk bitcoin atmwhat is arbitrage in bitcoin buying and selling disclosure and reporting by accountants and auditors in China, Hong Kong, Taiwan, Canada, USA and elsewhere.

Second, most legal entities seem to be following similar regulatory strategies based on existing regional, national, state, and agency frameworks while in process evolving frameworks to address shared concerns such as those related to money laundering and terrorist financing, investment frauds, sales taxes, and capital gains taxes.

Generally, how can accountants best acquaint themselves with the bitcoin environment? As apparent, the recent developments in the bitcoin environment represent a microcosm of the evolving state of global financial and accounting regulation with increasingly information-intensive virtual global financial currencies, financial instruments, and financial exchanges.

Subsequently, I have had the privilege of being invited by the United Nations Headquarters to advise their global constituencies on the national asset measurements related to digital and virtual knowledge assets. From similar experiences, there are two apparent lessons learned that may be relevant for accountants to acquaint themselves with the increasingly virtual global environments of financial currencies and instruments including BTC and other crypto-currencies.

Given evolving state of global information and technology developments currently morphing national and global financial systems to increasingly virtual forms, accountants, auditors, and regulators will need to develop related foresights. For instance, if today we need to understand crypto-currencies such as BTC, tomorrow may be about quantum money given that money and related global transaction and payment systems and mechanisms will continue to evolve.

While some may speculate quantitative computing applications becoming mainstream in next three to ten years, history, as in the case of RSA, however shows that in some cases speculated future may arrive much, much sooner than speculated by even the smartest scientists at the most prestigious institutions. The second lesson learned relates to what all of us who are professionally trained as accountants and auditors are taught: All of us know that professional skepticism of the accountant and auditor is most critical to ensuring an attitude based upon a questioning mind and a critical assessment of evidence.

In formal quantitative research methods, the process is sometimes called triangulation of observations using diverse research methods and measures. Additionally, it may involve analyzing the fundamental assumptions and logic underling any crypto-system, financial instrument, or a narrative legal or policy argument or directive, for example.

It is likely that model risks encountered in global financial systems and risk management systems such as those assessed using VaR Value at Risk and other quantitative finance frameworks could have been better served by a similar attitude. Similarly, in a different context such as in the case of cybersecurity controls and compliance, having analyzed the security of an encryption system, it may be equally important to ensure the robustness of the underlying random number generator and other algorithms.

Going forward, one may observe that similar random number generators are also extensively used as predictive stochastic determinants of future prices of financial instruments as in Monte Carlo models. Recently, such probabilistic, statistical, and numerical methods related concerns are in globally popular hk bitcoin atmwhat is arbitrage in bitcoin buying and selling related to cybersecurity controls and compliance.

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