We have covered Bitcoin since before its run up, and all the way down. The month of March turned out to be quite a depressing month as cryptocurrencies collectively fell to its lowest since a long time, and seem to still be on a downtrend. Google, Facebook, Twitter and now, even Mailchimp has announced publicly that they would be banning advertisements for ICO – though at a closer look it seems that “buying Bitcoins” ads are not blocked at the moment.

Crypto – ban or embrace?

Many governments around the world that have so far decided to stay at the sidelines, have begun to make moves by issuing stern regulations – not only on taxing capital gains for holders of cryptocurrencies, but some even go as far as banning it. In the US, IRS have repeatedly issued reminder to tax payers to declare their income from crypto – but to no avail. At least for now, only a handful of people have declared their income from cryptocurrencies.

The IRS have been eyeing the taxation of cryptocurrency owners for a very long time

Such policies are certainly not unexpected but as least for now, regulations lack enforcing. It is understandably quite difficult due to the lack of proper means to track cryptocurrency movements. On the other hand, there are quite a few governments who have openly embraced Bitcoin by passing accommodative policies with view that they will find some other way to tax the Bitcoin economy eventually.

Banks losing their advantage, mobile payments increasingly saturated

As of a couple of years ago, it seemed that people increasingly do not need to rely on their “friendly neighbourhood bank” any more. Why the need to subject oneself to cumbersome, slow service, when one can instead turn to digital wallets such as WeChat Pay, and AliPay. It is only a matter of time when the need of a bank account is questioned. As a result banks are increasingly desperate as their stare down at their ever dwindling market share (and fees).

Siam Commercial Bank (SCB) in Thailand is planning a $1 billion technology investment program in a bid to shed its brick-and-mortar outlets.

Realizing this, banks in many countries, have started to phase out the traditional model where they open as many branches as possible – and have now moved banking services into mobile phone applications, and have also struck partnerships with local convenience stores to accept deposit and withdrawal from their banking customers.
While many banks may have launched their own mobile wallet (alongside other ride-hailing companies and coupon companies) we wonder if mobile payments itself has become a bubble or just something “trendy” to do. You got to admit it, wallets and mobile payments have become a trendy thing to do, to justify insane valuation in many of these “unicorn” startups.

Bitcoin, the boat that sailed

Bitcoins and cryptocurrencies have collectively (in the past few years) increased their foothold in the market by many folds. While arguments against Bitcoin adoption due to relative price instability are true, it offers what banks and even mobile payment apps cannot offer – privacy and instantaneous transfers with negligible fees.
Realizing this, Wall Street banks such as Goldman Sachs (through their company Circle), recently acquired one of the top crypto-exchanges, Poloniex for a rumoured US$400 million. If anything spells desperation – this is it. While many pundits may toot their horn and prophecy on Bitcoin’s demise – we contend it simply has too much to offer.

Back to the fundamentals

You see, the market has plunged low enough for speculators to think carefully before they invest in cryptocurrencies. Now, everyone is focused on the size of the network, use-cases and viability of the technology. It is no accident that since ICO ads were banned, the craze also died down, alongside with Ethereum’s price. The punch bowl has been taken away, so now it is back to the fundamentals.

Ethereum Prices: currently trading below US$400, when it used to trade as high as US$1400

In addition, we also contend that regulation-friendly cryptocurrencies will begin to see increasing market appetite in months to come. Nothing spells confidence more when your token is regulation-friendly, and will not be banned by the government. There truth is, no investor would want for their investment to go to zero. With governments increasingly intervening, it is better to be prepared than not.

Conclusion

We predict that many (if not most) of the current cryptocurrencies available in the market will die out, ushering in a potentially higher price for bitcoin in the near future. At the same time, regulation-friendly cryptocurrencies with potentially numerous use-cases, will begin to see higher take up rate (and prices). If the banks (or companies) are smart, they will ride this new wave. The boat is slowly sailing away, and never coming back. They should act fast.

If you enjoyed reading the Crypto Review series, you also want to check out Part 1, Part 2, and Part 3.

Thanks for reading The Low Down, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at hello@mworks.asia and let us know how we can help.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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He has worn many hats in the past - selling advertising space, banking services, and even trading stocks. In 2013, longing for a change of scenery, he joined Rocket Internet’s (now Alibaba’s) Lazada as a online marketer in Bangkok, where he experienced first hand life in a startup. He never looked back since - landing lead roles at Rocket’s EasyTaxi (Singapore), Rocket’s MEIG (Dubai), and Bamilo (Tehran). After that, he launched (and ran) the Thai venture for one of Singapore’s biggest cross-border ecommerce. Last year, Chong put his expertise to work, helping an SGX-listed company relocate to and run operations in Thailand. Nowadays, he’s just chilling by the countryside.