Cryptocurrency arbitrage network security
If you are carrying on a business that involves transacting with cryptocurrency the trading stock rules apply, rather than the CGT rules. If you hold cryptocurrency for sale or exchange in the ordinary course of your business the trading stock rules apply, and not the CGT rules. Proceeds from the sale of cryptocurrency held as trading stock in a business are ordinary income, and the cost of acquiring cryptocurrency held as trading stock is deductible. Not all people acquiring and disposing of cryptocurrency will be carrying on businesses. To be carrying on business, you will usually:. There is also usually repetition and regularity to your business activities, although one-off transactions can amount to a business in some cases.
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Alert (AA21-048A)
The Working Group expresses its gratitude to the Governor, Reserve Bank of India, Shri Shaktikanta Das for entrusting the responsibility on the Group to comprehensively study all aspects of digital lending activities to enable an appropriate policy approach. The diverse interactions and different perspectives helped the Group in getting a holistic view of the nascent digital lending ecosystem. The Group would like to place on record its appreciation for all their valuable inputs, which have immensely helped in shaping this Report.
The Group would also like to express gratitude to the Legal Department Ms. Application Programming Interface: A set of rules and specifications followed by software programs to communicate with each other, forming an interface between different software programs that facilitates their interaction. Artificial Intelligence: Information technology IT systems that perform functions requiring human capabilities. AI can ask questions, discover and test hypotheses, and make decisions automatically based on advanced analytics operating on extensive data sets.
Annual Percentage Rate: The annual rate that is charged for borrowing a loan and includes processing fees, penalties and all other charges that are applicable to the loan throughout its life. Balance Sheet Lending: Financial service involving extension of monetary loans, where the lender retains the loan and associated credit risk of the loan on its own balance sheet.
Buy Now Pay Later: A point of sale financial product where a borrower is allowed to purchase products on deferred payment basis and pays in a predetermined number of installments. Caveat Emptor: The principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made. Consumer Protection Risk: Derived from the definition of misconduct risk, consumer protection risk is the risk that the behaviour of a financial services entity, throughout the product life cycle, will cause undesired effects and impacts on customers.
Cooling-off Period: A period of time from the date of purchase of good or service from a distance e. Cyber Security: Protecting information, equipment, devices, computer, computer resource, communication device and information stored therein from unauthorized access, use, disclosure, disruption, modification, or destruction.
Digital Lending: A remote and automated lending process, majorly by use of seamless digital technologies in customer acquisition, credit assessment, loan approval, disbursement, recovery, and associated customer service. Digital Lending Apps: Mobile and web-based applications with user interface that facilitate borrowing by a financial consumer from a digital lender.
Embedded Credit: The lending services generated from the embedding of credit products into non-financial digital platforms. FinTech Financial Technology : A broad category of software applications and different digital technologies deployed by the intermediaries that provide automated and improved financial services competing with traditional financial services.
First Loss Default Guarantee: An arrangement whereby a third party compensates lenders if the borrower defaults. Key Fact Statement: A comprehension tool in the pre-contract stage of credit process consisting of a standardized form listing all the fees, charges and other key credit information that a financial consumer needs to make informed decision which promotes transparency and healthy competition. Glass Box Model: In a Glass Box model of AI, all input parameters and the algorithm used by the model to come to its conclusion are known imparting it better interpretability.
A balance sheet lender must have continuing ability to handle the above functions and the lender, not the LSP, must be able to demonstrate that it exercises day-to-day responsibility for the same, when LSPs are engaged. Loan Flipping: The process of raising cash periodically through successive cash-out refinancings. Machine Learning: A method of designing problem-solving rules that improve automatically through experience. ML algorithms give computers the ability to learn without specifying all the knowledge a computer would need to perform the desired task.
The technology also allows computers to study and build algorithms that they can learn from and make predictions based on data and experience. ML is a subcategory of AI. Payment Gateway: Payment Gateways are entities that provide technology infrastructure to route and facilitate processing of an online payment transaction without any involvement in handling of funds.
Payment Rails: Established networks or back-end systems involved in processing of cashless payments. Personal Identifiable Information: Information that when used alone or with other relevant data can identify an individual. Responsibilization: Subjecting financial service providers to a broad duty to treat consumers fairly but not specifying in detail how it is to be done.
Short Term Consumer Credit: The practice of lending to consumers, amounts of money that are small relative to other forms of credit in the market for short period, say, from a few days up to12 months, at an annual percentage rate considered high compared with other credit products available to consumers.
Step-in Risk: In the context of the report, Step-in Risk refers to the risk that a balance sheet lender assumes by providing support to the LSP beyond the contractual obligations, both from reputational and substitutability point of view. Synthetic Identity: A synthetic identity is a combination of information that is real and fake information fabricated credentials where the implied identity is not associated with a real person.
TechFin: As opposed to FinTech where traditional financial services are delivered by use of technology, TechFin is where an entity that has been delivering technology solutions launches new way to deliver financial services. In other words, FinTech takes the original financial system and improves its technology, TechFin is to rebuild the system with technology. Travel Rule: Information required to be collected, retained and be included in every fund transfer transaction initiated by one financial institution on behalf of a customer that should travel be passed along to each successive financial institution in the funds transfer chain.
Vulnerable Consumers: Those consumers who are at a disadvantage in exchange relationships where that disadvantage is attributable to characteristics that are largely not controllable by them at the time of the transaction.
Andreasen and Manning, Technological innovations have led to marked improvements in efficiency, productivity, quality, inclusion and competitiveness in extension of financial services, especially in the area of digital lending.
However, there have been unintended consequences on account of greater reliance on third-party lending service providers mis-selling to the unsuspecting customers, concerns over breach of data privacy, unethical business conduct and illegitimate operations. While the current share of digital lending in overall credit pie of the financial sector is not significant for it to affect financial stability, the growth momentum has compelling stability implications.
It is believed that ease of accessing digital financial services, technological innovations and cost-efficient business models will eventually lead to meteoric rise in the share of digital lending in the overall credit. The larger issue here is protecting the customers from widespread unethical practices and ensuring orderly growth. As has been seen during the pandemic-led growth of digital lending, unbridled extension of financial services to retail individuals is susceptible to a host of conduct and governance issues.
Mushrooming growth of technology companies extending and aiding financial services has made the regulatory role more challenging. In view of the ease of scalability, anonymity and velocity provided by technology, it has become imperative to address the existing and potential risks in the digital lending ecosystem without stifling innovation.
Further, on a larger canvas and on a medium to long term horizon, digital innovations along with possible entry of BigTech companies may alter the institutional role played by existing financial service providers and regulated entities. Such developments spurred by mere commercial considerations would pose regulatory challenges in ensuring monetary and financial stability and in protecting interests of the customers.
The recommendations seek to protect the integrity of the system against entities that are not regulated and not authorized to carry out lending business.
The onus of subjecting third-party lending service providers to a standard protocol of business conduct would lie with the regulated entities to whom they are attached. Further, an institutional mechanism is envisaged to ensure the basic level of customer suitability, appropriateness and protection of data privacy.
The report further seeks to ensure that there is orderly growth in the digital lending ecosystem without it being unduly disruptive towards the existing players in the ecosystem. Technology Neutrality: Neutrality towards technological differentials or business models while encouraging competition to maximize the benefits to the financial system.
Principle Backed Regulation: Instead of a rule-based regime, a principle-backed approach to provide sufficient scope for innovation and adaptability in a dynamic environment. Addressing Regulatory Arbitrage: Addressing the arbitrage between different sets of entities in the digital lending ecosystem to ensure level playing field and market integrity.
To achieve these principles in a holistic manner, the WG has recommended a three-pronged measure on a near to medium term.
Some of the key recommendations of the Working Group are enumerated below:. A nodal agency should be set up which will primarily verify the technological credentials of DLAs of the balance sheet lenders and LSPs operating in the digital lending ecosystem.
It will also maintain a public register of the verified apps on its website. Balance sheet lending through DLAs should be restricted to entities regulated and authorized by RBI or entities registered under any other law for specifically undertaking lending business.
A suitable notification in this regard should be issued by the appropriate authority. All loan servicing, repayments, etc. Compliance with the prescribed baseline technology standards should be a pre-condition to offer digital lending by the REs and by LSPs providing support to REs.
REs should document the rationale for the algorithmic features aiding lending decisions that should ensure necessary transparency. Algorithm used for underwriting should be auditable and lenders shall ensure that outputs from such algorithms are knitted in ethical AI design.
A look-up period of certain days should be provided for all digital loans with the option of exit by paying proportionate APR without any penalty. Use of unsolicited commercial communications for digital loans should be governed by a Code of Conduct. Besides recommending concrete action points, the WG has also made several suggestions. The suggestions would require wider consultation with stakeholders and further examination by the regulators and government agencies.
A gist of recommendations and suggestions along with the implementation agency is provided at the end of the report. All entities operating in the digital lending ecosystem do not come under the regulatory purview of the Reserve Bank. In its evolution, riding on other digital cousins such as digital payment and social media, certain actors could use it for their own ends, with unintended consequences for the nascent ecosystem.
Against this backdrop, the Reserve Bank had constituted a Working Group WG on digital lending on January 13, to study all aspects of digital lending activities in the regulated financial sector as well as by unregulated players so that an appropriate regulatory approach can be put in place. The terms of reference and names of the members of the WG are as under:. Evaluate digital lending activities and assess the penetration and standards of outsourced digital lending activities in RBI regulated entities;.
Identify risks posed by unregulated digital lending to financial stability, regulated entities and consumers;. Recommend measures, if any, for expansion of specific regulatory or statutory perimeter and suggest the role of various regulatory and government agencies;. Recommend measures for robust data governance, data privacy and data security standards for deployment of digital lending services. Shri P. The Group conducted four meetings between January 19, and April 01, which were attended by all members and the secretarial team.
In recent periods, a spate of digital micro-lending by various fringe entities and their dubious business conduct were flagged to RBI, Law Enforcement Agencies LEAs , and reported in public domain.
Such incidents were grappled by various LEAs at State level, albeit in non-uniform manner, after certain clarifications on identity of regulated entities were rendered by RBI, followed up by awareness drives. This undesirable experience was the imminent prompt for constitution of the Working Group to recommend a framework to address such issues holistically.
The WG received inputs from thirty-six such stakeholders and their feedback covered various aspects - legal, regulatory, technological, code of conduct, fair practices, grievance redressal, etc. A brief synopsis of such inputs is presented at Annex A. A total of ten formal interfaces were also held with important stakeholders in the digital lending arena to elicit their views on the subject.
Details of interfaces and list of entities that provided their inputs to the WG are provided at Annex B. The extracts of the survey data are appended at Annex C.
Technology neutrality theory would imply that what is not legal offline, cannot be legal online. Many of the trouble spots around the fringe digital lending were considered identical to the known types of undesirable lending practices in the conventional lending landscape, albeit in a digital edition. This should also be seen to have forward compatibility in the context of approach to regulations of broader digital financial services as and when it evolves.
Harmonizing market conduct rules and oversight for all comparable credit offerings for all providers and channels would also fall under this tenet. As the report covers three distinctive regulatory dimensions of digital lending, it blends all the grades of regulations. For a smooth integration, a principle-backed approach has been preferred to a rule-based regime as it affords flexibility in terms of its actual application to innovations, rather than a stifling over-prescriptive regime.
While a commensurate construct for the equilibrium trinity of innovation, regulation and stability for digital lending has been attempted in the report, maintaining flexibility, adaptability and continuous learning in a rapidly evolving and dynamic environment is what should be attempted in its implementation. However, for the present context in India, the regulatory approach should include, among others, moving beyond mere disclosure and fair practice framework to more regulatory guardrails, particularly in respect of recurring issues.
A level playing field is key to ensure not only fair competition but also consumer protection. The same regulatory conditions and supervision should apply to all actors who seek to innovate and compete on FinTech: incumbent banks, FinTech start-ups and BigTech firms.
Cryptocurrencies: market analysis and perspectives
February 28 It seems there has been nothing but bad news for cryptocurrency exchanges recently. Amid the price collapse, a number of high-profile incidents have cast further doubt on the stability of the market. Conspiracy theories have naturally followed. In Mt. Gox, one of the first bitcoin exchanges, shut down its operations and filed for bankruptcy.
Trading Forex With Bitcoin: How Does It Work?
Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy. With reference to recent articles discussing Standard Bank terminating accounts of several clients offering automated cryptocurrency arbitrage services, we highlight a few kew points on the matter in this post. The Exchange Control Regulations prohibit transactions where capital or the right to capital is, without permission from National Treasury, directly or indirectly exported from South Africa. This includes transactions where an individual purchases crypto assets in South Africa and uses them to externalise 'any right to capital'. Contravening these regulations is a criminal offence. This is because of the nature of the assets and because the transaction is currently not reportable on the FinSurv Reporting System.
Justice News
Bitcoin BTC has evolved in recent years into a speculative investment for individuals seeking alpha from alternative assets and a possible hedge against global uncertainties and weakness in fiat currencies. Bitcoin is a digital floating exchange that is pegged to the U. However, unlike gold, there is no underlying physical asset on which one can base the price. The debate over whether bitcoin should be considered a legal tender accelerated in the wake of the high-profile attack of Japanese exchange Mt.
What is Crypto Arbitrage – Exploring Cryptocurrency Arbitrage
The dominant NFT marketplace remains stubbornly hands-off in its approach to controversy. Although the stock market has historically been one of the world's greatest wealth creators, many well-known cryptocurrencies have run circles around the broad-market indexes in recent years. It's not hard to understand why investors are so excited about the two largest cryptocurrencies by market cap. Avalanche processed 1. While the network was vibrant where could price go?
Investing Basics: Understanding Arbitrage
The year-old cryptocurrency billionaire has jetted in from Hong Kong in part to co-host this private party but nonetheless tries to slink to the corner of the room unnoticed. What do you think about the latest crypto crash? FTX pockets 0. Save for Mark Zuckerberg, no one in history has ever gotten so rich so young. The irony? Bankman-Fried is no crypto evangelist. Steve Jobs obsessed over his sleek and simple products. But to get there, Bankman-Fried, who moved to Hong Kong in and to the Bahamas in September, will have to survive increasing government attention and outflank an army of competitors vying for the business of more than million traders worldwide—all while braving the boom-and-bust crypto cycles that can spawn great fortunes at historic speeds yet level them just as quickly.
The vast range of DeFi platforms that have emerged over the last few years has made this market suffer from the problems inherent to their centralized alternatives, i. At the same time, all these discrepancies serve as fertile ground to traders as they provide numerous opportunities for arbitrage trading. In this article, we are going to explore the basic principles of cryptocurrency arbitrage on DeFi, how one can make money with its help and what associated risks there exist. Crypto arbitrage is a trading strategy based on differences in asset prices across different platforms.
Official websites use. Share sensitive information only on official, secure websites. Attorney General William P. For example, the cyber criminals behind ransomware attacks often use cryptocurrency to try to hide their true identities when acquiring malware and infrastructure, and receiving ransom payments.
The papers in this special issue focus on the emerging phenomenon of cryptocurrencies. Cryptocurrencies are digital financial assets, for which ownership and transfers of ownership are guaranteed by a cryptographic decentralized technology. Using the lenses of both neoclassical and behavioral theories, this introductory article discusses the main trends in the academic research related to cryptocurrencies and highlights the contributions of the selected works to the literature. A particular emphasis is on socio-economic, misconduct and sustainability issues. We posit that cryptocurrencies may perform some useful functions and add economic value, but there are reasons to favor the regulation of the market. While this would go against the original libertarian rationale behind cryptocurrencies, it appears a necessary step to improve social welfare. Cryptocurrencies continue to draw a lot of attention from investors, entrepreneurs, regulators and the general public.
You might be using an unsupported or outdated browser. To get the best possible experience please use the latest version of Chrome, Firefox, Safari, or Microsoft Edge to view this website. Arbitrage means taking advantage of price differences across markets to make a buck.
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