There’s a new Financial Action Task Force (FATF) on the block and its chief goal is to deal with the issue of privacy and cryptocurrencies. It is no exaggeration to say that the privacy issue is obsessing regulators worldwide and the reason is this; they are totally focused on what they see as crypto’s potential as a money-laundering mechanism.

Therefore they set up the FATF, which in June announced its recommendations on regulating cryptocurrencies for its 37 member countries. Naturally, its rule is controversial if you’re a crypto believer, because it says that “virtual asset service providers” (VASPs), including crypto exchanges, must pass information about their customers to one another when transferring funds between firms. It’s called “the travel rule.”

The 37 countries in the FATF have banded together to set international anti-money laundering standards. Jonathan Chester at Forbes says,

“It is essentially the United Nations for fighting financial crimes.”

This rule requires: “all financial institutions to identify both the sending party and the receiving party within a payment transaction equal to or greater than $3,000.”

You probably know that this ‘identification’ already takes place in relation to traditional bank transfers. But, as Chester remarks,

“accomplishing this directly within the Bitcoin is close to impossible.”

He explains why:

“There is a technique to embed text data by converting the data into a wallet address and sending that address a small amount of funds. However, this would be giving away private consumer data publicly with no way to remove it, forever.”

The travel rule raises other issues for crypto transactions. For example, would bitcoin custodians or exchanges be able to send funds directly to users’ wallets in amounts above $3000? And if they could, how would they be able to confirm the users’ identities. Might there some requirement that exchanges could only send sums greater than $3,000 to users with whitelisted addresses? And then again, what would an exchange have to do if it receives funds greater than $3,000?

Chester interviewed Neal Reiter, Director of Product Management of Identity Mind, a leader in international KYC and transaction monitoring industry. Reiter had this to say about the travel rule:

“if an individual wants to transfer bitcoin from their exchange account to an address outside of their platform, the exchange must also send seven different pieces of information: the sender’s name, the sender’s account number, the sender’s address, the sender’s financial institution’s name, the amount, the date, and the beneficiary’s financial institution’s name.”

His conclusion is that these terms would make it almost impossible for crypto to comply.

It is worth noting that this rule originates in the US and will first be applied in the USA. Chester wonders if other countries will follow. Juan Llanos, an expert in compliance believes they will, because

“most FATF member countries march in lockstep to the beat of the largest countries in the world, all of which agree that anonymity is anathema.”

He also made this warning:

“Law enforcement and national security public policy have prevailed over civil liberty. In other words, good-bye privacy; hello full transparency and surveillance.”

It may be the end of privacy, but it is most unlikely it will bring about the end of bitcoin — that is something to be thankful for.

Kyle Torpey writing at Forbes believes the answer to the question could well be a resounding YES! In his article he makes the case for a surge in bitcoin’s value over the next two years and discusses Anthony Pompliano’s bitcoin at $100,000 prediction.

It is true that bitcoin has had a much healthier 2019 compared with its rather miserable 2018. Indeed, it has roughly tripled its price this year. However, as Torpey says, Pompliano thinks, “the party is just getting started.”

Pompliano, who is the Morgan Creek Digital co-founder, was interviewed by Julia Chatterly on CNN when he made his prediction. She asked him how he had arrived at such a figure.

US monetary policy could boost bitcoin

He pointed to current US monetary policy and bitcoin’s upcoming halving event. He said: “Whenever we get to a recessive period or kind of slowing growth, central banks have kind of two tools: They can cut interest rates, which they did yesterday, and they can print money (quantitative easing). And so, when they do both of those things, it usually takes anywhere between 6 to 18 months to feel the effect of those tools, and what it’s going to do is it’s going to coincide with the Bitcoin halving,”

A halving event in Bitcoin is when the amount of Bitcoin that are generated by miners every ten minutes is cut in half, and the scheduled issuance of new Bitcoin is halved roughly every four years. For example, next year the number of new Bitcoin created in each new block will drop from 12.5 to 6.25.

Bitcoin is better than gold

Pompliano also believes that bitcoin has considerable advantages over gold, a topic that has been widely discussed over the last several weeks in particular. He explained it like this: “The difference is, between Bitcoin and gold, with Bitcoin, we know exactly how many is getting created, so 1,800 Bitcoin are going to be created today. The second thing is we know the total supply available, which is 21 million. So, it’s not: Hey I wonder how much is in the ground. We know exactly how much it is, and we can actually go and audit or verify the software code of the system.”

This is not the first time that Pompliano has predicted bitcoin at $100,000; he made the same claim in 2017. However, this time he is not alone in his view. Pantera CEO Dan Morehead has said there’s a “good shot” the Bitcoin price will hit $42,000 by the end of 2019 and as Torpey says, Morehead’s data supporting his prediction “is even more bullish” than Pompliano’s.

Bitcoin owners will no doubt hope that Pompliano turns out to be right; they only have to wait two years to find out.

There is an air of gloom and doom in the cryptocurrency markets this week. Across the board, bitcoin and the leading altcoins are all showing a drop in price. The question for crypto owners is: what should I do now?

Reza Jafery posting on Medium talks about the need to make sane decisions when the market is in this state, saying, ” Trading or investing in cryptocurrency is a psychological war against yourself.” Indeed, investing in markets does require mental strength and self-control.

Jafery also comments that if the traditional markets require traders and investors to stay strong, then the crypto market requires “the mental fortitude of a Jedi.” This is because it is the most volatile market in existence and it is as he says, “almost completely sentiment driven.”

As a result the market’s movements don’t always make sense. It also has more retail investors than any other market. These investors aren’t professionals and they tend to be driven more by feeling of excitement about the market. For example, when there is a surge in Google searches for ‘bitcoin’, the price is typically on the rise, as the search volume actually starts to pick up just before the price goes up. Therefore the price is being driven by emotion. And as Jafery says, “To come out on top in a market driven by emotion, you have to remove emotion from your trading.” When the price falls, it is hard to stay calm, but that is exactly what you should do, because you can be confident that it will go back up again.

Another mistake that investors tend to make is trying to “catch the bottom.” This means you’re attempting to enter into a trade at a bottom of a downtrend. It’s almost impossible to execute this successfully. As Jafery suggests, “if you’re planning on entering a trade, it’s better to just get in near the bottom rather than wait.” This advice is particularly important for retail investors.

Another sensible bit of advice is this: don’t sell coins that are falling for ones that are going up. If you’ve done this, you’re certainly not alone. What tends to happen is that the minute you sell those coins that don’t seem to be performing, and probably at a loss, hoping to make a killing with some coin that is surging in price, you can bet that the coins you’ve just sold will skyrocket.

Finally, don’t keep looking at the price charts. They won’t miraculously start shooting upwards because you’re watching them. Jafery recalls what happened to him when he sat “charting” for hours on end: “When I wasn’t being productive, I was needlessly monitoring my holdings like a hawk. It made me more emotional, and it made me overtrade. Two things I now know to avoid at all cost.”

Stay calm folks and make sane decisions with your crypto holdings this week!