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Bitcoin Trading at a Premium on Bitfinex and Poloniex

Bitcoin trading at a premium on bitfinex and poloniex

While bitcoin tends to have slight price premiums and discounts in different currency markets like the CNY or INR, some exchanges are now trading bitcoin with a considerable premium. Bitcoinist explains why.

Bitfinex and Poloniex Price Premium

A quick look at the Bitcoin prices from all exchanges in the field and one will notice a small anomaly. Both Bitfinex and Poloniex are trading bitcoin with a +$50 premium on the USDT market. While most exchanges currently have an exchange rate of 1 BTC/ 1,200 USD, both Poloniex and Bitfinex are trading at roughly 1 BTC/ 1,260 USD.

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This premium is due to the difficulty experienced in withdrawing fiat currency from these exchanges, in this case, the U.S.Dollar. While Bitfinex seems to be experiencing problems on the fiat side due to recent complications with partner banks, there also seem to be some problems with liquidating the USDT cryptocurrency token that replaces the USD currency on the Poloniex exchange.

It turns out, however, that both exchanges are being affected by the same problem: Wells Fargo.

Bitfinex trading btc at a premium

Bitfinex

Last week, Bitfinex published a blog post regarding delays in processing USD withdrawals. Although Bitfinex doesn’t state what the exact problem is, the situation is believed to be connected with the problems experienced with the Wells Fargo bank which stopped processing transfers from the Taiwanese banks used by Bitfinex. Since then, Bitfinex has decided to file a lawsuit against the bank and is seeking a preliminary injunction as well as damages of more than $75,000. The announcement reads:

Bitfinex is currently experiencing delays in the processing of outbound USD wires to customers. The normal channels that we have been operating through in the past are currently unavailable. Alternative channels are being opened to solve these transmission delays; however, the complexity and scale involved mean that it is taking some time to return to normal withdrawal velocities. Consequently, customers requesting USD wires should expect delays as we work to normalize the withdrawal process. USD deposits remain unaffected.

However, since then, the situation has escalated and despite the reference made by Bitfinex to the USD deposits remaining unaffected, a new announcement was posted yesterday, stating that USD deposits are being blocked. The new statement enforces the notion that the problems are indeed due to the complications with Well Fargo and Bitfinex’s Taiwanese banks. The announcement reads:

Beginning April 18, 2017, all incoming wires to Bitfinex will be blocked and refused by our Taiwan banks. This applies to all fiat currencies at the present time. Accordingly, we ask customers to avoid sending incoming wires to us until further notice, effective immediately.

As users struggle to withdraw USD, those that are not willing to wait for the operations to return to normal may be pushing the price upward as they buy bitcoin in an attempt to move funds out of the exchange and liquidate them elsewhere at a loss. Other may be taking advantage of the situation and selling for a higher price, hoping that withdrawals will eventually resume, pushing the price back to the average exchange rate.

Poloniex - tether - usdt

Poloniex

The problems on Poloniex’s side seem to derive from the USDT (Tether) cryptocurrency token. Poloniex does not allow fiat withdrawals or deposits and works instead with USDT,  a crypto asset issued on the bitcoin blockchain through the Omni Layer.

This may cause some liquidity problems for users that are not aware how to exchange USDT for USD. The main USDT/USD market is, in fact, Bitfinex, which is currently experiencing the aforementioned issues with deposits and withdrawals. Other markets like Kraken seem to be trading USDT/USD at a discount, currently going for $0.941, meaning that users that sell bitcoin for USDT and then withdraw it through Kraken are doing so at a loss. Other USDT/BTC markets like Bittrex are also seeing a premium for BTC.

Users could still exchange the cryptocurrency for USD on the official Tether website but there’s a problem: Tether was also working with Wells Fargo to process customer in and outgoing transaction but the bank decided to freeze operations, affecting both Tether and Bitfinex.

So, we can see that both Poloniex and Bitfinex are being affected by the same problem which is being caused by Wells Fargo. It is unclear when the situation will be resolved but it’s worth noting that Tether has no legal obligation to resume withdrawals, although they most likely will. The website’s legal warning reads:

There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money. There is no guarantee against losses when you buy, trade, sell, or redeem Tethers.

Have you been affected by the withdrawal issues on Bitfinex or Poloniex? Let us know in the comments below.

Images courtesy of Bitfinex, Poloniex, AdobeStock

The post Bitcoin Trading at a Premium on Bitfinex and Poloniex appeared first on Bitcoinist.com.

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Russia Set to Legalize Bitcoin by 2018, Track Every Transaction

The Finance Minister of Russia has revealed state interest in tracking every cryptocurrency transaction ‘just like with bank operations.’ Furthermore, a bitcoin regulation bill is expected later this year, which could go into effect as early as 2018.

‘The State Needs to Know’

Russian authorities are looking into the possibility of legalizing operations with bitcoin and other cryptocurrencies within the framework of curbing illegal money transfers, Russia’s Finance Minister, Alexey Moiseev told Bloomberg.

He continued:

The state needs to know who the participants are in a financial operation. If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations.

Back in February, Russia’s Central Bank deputy chairwoman, Olga Skorobogatova, revealed that the Bank and MinFin is expected to release a cryptocurrency regulation draft later this year, in which it will define whether bitcoin is an asset, cash or security.

She also noted that there is no pressing need to impose any restrictions since operations with cryptocurrencies, including bitcoin, are still insignificant in volume.

bitcoin is a private currency, and it’s become clear that all is not as simple and straightforward as in books and magazines. The position of regulators and agencies is thus that we would not like to issue a concrete ban on it, but rather understand how to approach it, and from this develop a base for regulation.

Kaliningrad May Be bitcoin Testbed

Back in February, Bitcoinist reported that the Russian enclave of Kaliningrad has expressed willingness to become the first region where cryptocurrency regulation could be tested.

Kaliningrad’s business ombudsman Boris Titov explained that regardless of what is decided about crypto at the state level, the area could become a testbed where bitcoin and its ilk are regulated while confirming that cryptocurrencies are currently “not prohibited in the Russian Federation.”

He also added that Kaliningrad could host Russia’s first cryptocurrency exchange.

It’s very important that cryptocurrency circulation not be regulated by any form of sanctions. This concept may sound utopian, but new times call for new solutions, and Kaliningrad Oblast can build on that.

In the Russian mainland, the city of St. Petersburg has recently become a testbed of its own for cryptocurrency teller machines or BTMs. The city currently hosts three machines, which have thus far remained untouched by authorities. If successful, more bitcoin ATMs and cryptocurrency businesses could follow suit.

Privacy Out the Window?

While the legalization of cryptocurrencies in Russia may seem like a one-eighty degree turn from previous legislative proposals of an outright ban, the status quo is probably better for individuals who value privacy. 

Just like in China, which has recently clamped down on its exchanges, who must now identify all users in accordance with Anti-Money Laundering (AML) laws, Russia seems to be headed in the same direction. 

It also appears that Russia’s Central Bank and the Ministry of Finance have realized that bitcoin’s public ledger can be used to track every (pseudonymous) transaction on its blockchain.

Bitcoinist_Apple Differential Privacy

Thus, it’s probably safe to assume that the expected bill will focus on the implementation of Know-Your-Customer (KYC) and AML policies in an effort to link users’ real identities to their bitcoin addresses. This identification process will likely occur at the on-ramp, i.e. when buying/converting into bitcoin, for example.

Therefore, it’s probable that cryptocurrency businesses such as bitcoin exchanges, bitcoin ATMs, online conversion services (e.g. Shapeshift) etc. will have to either comply or face penalties.

On the flip-side, regulatory clarity could open the door to more crypto-related startups in Russia. Meanwhile, ‘legal bitcoin’ in the country could also boost demand for more privacy-focused cryptocurrencies like Monero and ZCash as well as the development of bitcoin anonymizing tools such as Mimble Wimble.

Will Russia legalize crypto in 2018? Will it have a positive effect on bitcoin? Let us know below!

 Images courtesy of CNBC, Shutterstock

The post Russia Set to Legalize Bitcoin by 2018, Track Every Transaction appeared first on Bitcoinist.com.

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