Press Blockchain and CryptoCurrency
The top 20 cryptocurrencies are reporting mixed movements, as Bitcoin hovers under the $4,000 mark.
Market visualization from Coin360
At press time, Bitcoin is down 0.26 percent on the day, trading at around $3,976 after a brief mid-day high of $4,005, according to CoinMarketCap data. Looking at its weekly chart, the current price is over 8 percent lower than $3,643, the price at which Bitcoin started the week.
Bitcoin 7-day price chart. Source: CoinMarketCap
Ethereum is up by little over a tenth of a percent over the last 24 hours. At press time, ETH is trading around $148, after having started the day at the same price and reporting a mid-day low of about one dollar lower. On its weekly chart, Ethereum has seen its value increase nearly 17 percent from $123, the price at which the coin started the week.
Ethereum 7-day price chart. Source: CoinMarketCap
Ripple has lost 0.33 percent in the 24 hours to press time and is currently trading at around $0.32. On its weekly chart, the coin gained nearly 6 percent from $0.302, the price at which XRP started the week.
Ripple 7-day price chart. Source: CoinMarketCap
The Russian State Duma plans to review and adopt new cryptocurrency regulation in March.
The Russian State Duma (the lower house of the Federal Assembly of Russia) plans to review and adopt new cryptocurrency regulation in March. The former Energy Minister Igor Yusufov is also proposing an oil-backed crypto, Russian financial outlet Rambler reported on Feb. 21.
Furthermore, Rambler reports that the head of the Energia investment-oriented corporation, former Energy Minister Igor Yusufov, also has tangible prospects for proposing an oil-backed cryptocurrency. The construction of the project’s roadmap is reportedly almost at the final stage.
In an interview with Rambler, Yusufov reportedly said that the introduction of a crypto settlement system on the energy market could allow for the avoidance of costs associated with the use of not-backed-up currencies and the fluctuations of their exchange rates. He also cites savings on currency exchange commissions and trade restrictions as other examples of advantages that the proposed system could bring.
The article also that underlines counties member of the informal Organization of the Petroleum Exporting Countries + (OPEC+), including Russia, would benefit the most from such a system. The reason provided is that the cryptocurrency platform would permit them to circumnavigate financial and trade restrictions.
Moreover, Yusufov is also quoted as explaining that the blockchain would also be used to track and verify every barrel of oil alongside the entire chain, without any additional costs. The former head of the Federal Securities Commission of Russia, Igor Kostikov, reportedly commented on the idea, suggesting that not only oil and gas could be connected to it, but any exchangeable resource. He concluded:
“Perhaps the oil-backed cryptocurrency will be the pioneering project that will create a reliable structure for the cryptographic market as a whole.”
The idea of a state-issued oil-backed cryptocurrency closely resembles the Petro, an oil-backed crypto first announced by Nicola Maduro, the president of Venezuela, in 2017 and launched in February last year. However, the oil-backed coin has thus far failed to materialize.
As Cointelegraph reported at the end of January, the chairman of the upper house of the Russian parliament has urged MPs to expedite their work on digital economy bills that include a draft on crypto regulation.
Financial derivatives company Fidelity Investments has received and passed on the Lightning Torch.
Financial derivatives giant Fidelity Investments received and passed on the Lightning Torch, as revealed by tweet by the company sent on Feb. 22.
Just like the Olympic torch, the Lightning Torch is being passed between members of the Lightning Network community. The trend first reportedly started when Twitter user and Bitcoin (BTC) enthusiast Hodlonaut sent 10,000 satoshis (the smallest, indivisible fractions of a Bitcoin) to another Lightning user, and the user added another 10,000 satoshis and passed it on.
Fidelity passed the torch to the Harvard School Blockchain & Crypto Club in the wake of its upcoming dedicated conference. Previously, the torch famously has been held by the 88-year-old grandma of a crypto enthusiast as well as by Twitter CEO Jack Dorsey, who held it at the beginning of the current month.
As Cointelegraph recently reported, Dorsey, who is also the founder and CEO of United States-based Bitcoin-supporting payments service Square, said that rolling out the Lightning Network on Square’s Cash App is a question of “when, not if.”
The Lightning Network is a payment protocol that works as a second layer on top of a blockchain. A large number of those in the cryptocurrency community have suggested the Lightning Network as a fix to Bitcoin’s scaling problem.
Fidelity Investments manages over $7.2 trillion in client assets. In October last year, the investment giant announced the launch of a new company, Fidelity Digital Asset Services, targeting institutional crypto assets investors.
Vlad Zamfir, an Ethereum Foundation researcher, will join CasperLabs to develop their PoS consensus algorithm.
Blockchain protocol research and development company CasperLabs has appointed Ethereum Foundation researcher Vlad Zamfir as lead consensus protocol architect, a Medium post by the company reveals on Feb. 22.
CasperLabs is a company trying to develop the so-called correct-by-construction Casper proof-of-stake (PoS) Ethereum (ETH) consensus algorithm. In a PoS cryptocurrency, block creators are chosen by random selection with the consideration of the user’s wealth in the network and, sometimes, the age of his assets that is often referred to as the “coin age.”
Vlad Zamfir infamously stated in March 2017 that Ethereum is not safe, scalable and is an immature technology, while urging the community to not rely on it for critical applications when it’s avoidable.
As Cointelegraph reported in December last year, Ethereum co-founder Vitalik Buterin declared that future blockchains with sharding based on PoS will be “thousands of times more efficient.” The higher efficiency, according to Buterin, will make many new decentralized applications (DApps) practical, since the fees would only be a fraction of their current prices.
In the CasperLabs Medium post, Zamfir stated that he believes PoS consensus protocols that are more secure than the blockchains in existence are possible, adding:
“However, I am not sure if the Bitcoin and Ethereum blockchain communities are going to be able to upgrade their protocols.”
In May 2018, a Cointelegraph analysis explained that Casper is expected to help solve excessive energy consumption and “issues with equal access to mining hardware, mining pool centralization, and an emerging market of ASICs.” Alongside sharding, PoS is intended to be Ethereum’s on-chain scaling solution.
Canadian banks showed hesitation concerning the management of insolvent cryptocurrency exchange QuadrigaCX’s assets.
QuadrigaCX has faced financial difficulty following the sudden death of its founder Gerry Cotten, who was the allegedly only one with access to the exchange’s cold wallets.
As Cointelegraph reported earlier this week, QuadrigaCX has sent its remaining crypto assets from its hot wallets to Big Four auditing firm Ernst & Young, the court-appointed monitor overseeing the case. During Friday’s court hearing, lawyers for the Bank of Montreal and the auditing firm reportedly said that the banks are uncomfortable managing the funds, citing the uncertainty of their origin.
Elizabeth Pillon, a lawyer representing Ernst and Young, is quoted by CBC saying that she doesn't blame the banks for their hesitation since there are allegedly money laundering issues. Pillon also reportedly noted:
“The monitor has serious concerns about finding another institution to hold these funds.”
According to the article, at the end of Friday’s hearing, Justice Michael Wood of the Nova Scotia Supreme Court issued an order that will eventually see the QuadrigaCX money deposited in a Royal Bank account.
Ernst and Young will then use these funds to pay for the ongoing court proceedings, and “the money could also be used to partially compensate 115,000 users of the QuadrigaCX exchange who are owed $260 million” in crypto and cash, CBC notes.
The unwillingness to hold QuadrigaCX’s funds also manifested during the time of its operations, when the exchange was unable to get a bank account because of banks’ reluctance and instead turned to third-party payment processors.
As Cointelegraph reported in November last year, when the Canadian Imperial Bank of Commerce froze the accounts of the payment processor, the court ruled in favor of the bank, citing concerns over identifying the identities of the funds’ owners.
Parity’s release manager Afri Schoeden admitted to quitting Ethereum projects following controversial tweets about the network’s Serenity upgrade.
Afri Schoeden, release manager at blockchain infrastructure firm Parity Technologies, has quit all Ethereum projects after a controversial tweet that sparked outrage on social media. Schoeden spoke to blockchain media BreakerMag on Thursday, Feb. 21.
In his tweet, Schoeden reportedly criticized Serenity, also known as “Ethereum 2.0” — a final upgrade for the Ethereum network that brings its mainnet over to a proof-of-stake (PoS) consensus algorithm. The tweet, which has since been deleted, reportedly read:
“Polkadot delivers what Serenity ought to be...”
Polkadot is Parity’s upcoming protocol aimed at linking different blockchains. Schoedon told BreakerMag that he will “no longer work on Ethereum or Ethereum-related projects,” but will remain with Parity. He explained the meaning of the recent tweet:
“Polkadot is not a direct competitor to Ethereum and chains like Ethereum were always an integral part of the Polkadot vision. The focus of my tweet wasn’t Polkadot or competition, but Serenity, which is, in my eyes, rolled out too slowly, and I fear that it [won’t] matter anymore once we get there. People didn’t get that, and only I am to blame for not getting the message straight.”
Moreover, Schoeden believes that the Ethereum community needs to find some shared values and goals:
“I also fear that Preethi [Kasireddy] was right last year when she said that we might need to talk about the values (again) to find out what the community really stands for.”
Following the controversial tweet, users immediately accused the developer of “betrayal,” along with “sabotaging” Ethereum from within and having a conflict of interest. Schoeden subsequently clarified that the discussions forced him to quit Ethereum:
"I did not quit social media, I quit Ethereum. I did not go dark, I just left the community. I am no longer coordinating hard forks, building testnets, or contributing otherwise. I did not work on Polkadot, I never did, I worked on Ethereum. I did not hate Ethereum, I loved it."
The pre-release of Ethereum 2.0 kicked off in early February. The Constantinople hard fork, an upgrade to the Ethereum, network — which encloses separate Ethereum Improvement Proposals (EIPs) in order to soften the transition from the current proof-of-work (PoW) to PoS — is scheduled for Feb. 27.
Constantinople faced its first delay in October 2018 due to a consensus issue that was detected on the Ropsten testnet. In January, smart contract audit firm ChainSecurit found a vulnerability in the Constantinople hard fork. The critical issue, which could have allowed for reentrancy attacks via the use of certain commands in Ethereum smart contracts, caused another dealy.
Blockchain entrepreneur Andreas Kristof even insinuated that Schoeden was directly responsible for Serenity’s delay.
Researchers from Stanford University have developed a privacy mechanism called Zether, which is compatible with Ethereum and other smart contract platforms.
Researchers from the Stanford University and Visa Research have developed a privacy mechanism for Ethereum (ETH) smart contracts. A paper describing the mechanism was published on Stanford University’s Applied Cryptography Group website on Feb. 20.
According to the paper, the researchers created “a fully-decentralized, confidential payment mechanism” called “Zether” that is consistent with both Ethereum and other smart contract platforms. The developers reportedly developed a new smart contract — that can be executed either individually or by other smart contracts — that maintains the account balances encrypted and enables the deposit, transfer and withdrawal of funds through cryptographic proofs.
The authors claim in the report that transactions on Zether are confidential, wherein one transaction costs approximately 0.014 ETH or around $1.51 at press time. Enhanced confidentiality is reportedly enabled by the option to lock funds in an account to a smart contract. The type of anonymity guaranteed by Zether is more similar to Monero (XMR), the report says, explaining:
“We describe an extension to Zether that can also hide the sender and receiver involved in a transaction among a group of users chosen by the sender. Though the overhead associated with anonymity scales linearly with the size of the group, no trusted set-up is needed and no changes to the underlying smart contract platform are required.”
“The Zether contract will never transfer funds without first checking an appropriate burn or transfer proof, even if the request comes from another smart contract whose rules do not permit illegal transfers. This design decision ensures that the security of Zether only depends on itself and not on any outside smart contract. Even a maliciously written or insecure smart contract cannot cause Zether to misbehave,” the report specifies.
Privacy coins, which provide users with more anonymity, are regarded with mixed feelings both from the community and governments. Last month, Litecoin (LTC) creator Charlie Lee declared that he would focus on making the major cryptocurrency more fungible and private. Lee explained that confidential transactions could be added to Litecoin through a soft fork and would be implemented “sometime in 2019.”
In April 2018, Japanese regulators from the Financial Services Authority (FSA) suggested preventing cryptocurrency exchanges from trading anonymity-oriented altcoins Dash (DASH) and Monero. “It should be seriously discussed as to whether any registered cryptocurrency exchange should be allowed to use such currencies,” an unnamed member of the FSA group said.
Institutional investors are getting more involved in the crypto space as fundamentals are improving.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Market data is provided by the HitBTC exchange.
The fundamentals of the crypto space have been improving over the past year. These developments are not going unnoticed by the institutional players. Though they have not committed huge sums of money, they have started testing the waters.
Crypto hedge fund Pantera Capital, which in its two previous crypto funds had managed to raise only $13 million and $25 million, has secured $130 million in funding out of the targeted $175 million. Similarly, the University of Michigan’s endowment plans to increase its investment in a crypto-focused fund managed by American venture capital firm Andreessen Horowitz.
Large traditional exchanges across the world have acknowledged the growing interest of institutional players in the crypto space and are coming up with new services. While Bakkt is the most awaited launch in the United States, exchanges in Europe are also preparing to take the plunge. Eurex, a Germany-based derivatives exchange operated by Deutsche Boerse, is planning to launch futures contracts for the top three cryptocurrencies.
With the groundwork being laid out for the institutional investors, is it a good time to buy for the long term or is this just a dead cat bounce?
Bitcoin (BTC) has been trading close to the psychological resistance of $4,000 for the past three days. Though the bulls have not been able to push prices higher, the cryptocurrency has not given up ground either, which is positive.
The 20-day EMA has started to slope up and the RSI is in the overbought zone, which shows that the bulls have the upper hand in the short term. However, the 50-day SMA still remains flat, which shows that the medium-term trend is yet to change.
The BTC/USD pair will face resistance close to $4,255, but if the bulls succeed in breaking out of this level, it will complete a double bottom pattern that has a target objective of $5,273.91. Hence, we might add to our existing long positions if the price sustains above $4,255. For now, the stops can be kept just below $3,236.09.
Contrary to our expectations, if the digital currency fails to rise above $4,255, it will remain range-bound between $3,236.09 and $4,255 for a few more days. Our bullish view will be invalidated if the pair plunges to a new yearly low.
Ethereum (ETH) has been consolidating for the past three days, without giving up much ground. This shows that the buyers are in no urgency to book profits and are buying on every small dip. This increases the probability of a move to $167.32 and higher. Therefore, traders can protect half of their long position with a tight stop. If the virtual currency pierces through $167.32, it can move up to $182.99. Hence, we shall give some wiggle room to the remaining half position and keep the stop at $125.
If the ETH/USD pair fails to scale the overhead resistance, a drop to $134.50 is probable. The 20-day EMA is also close to this level, hence, we expect it to act as a strong support. Nevertheless, if the bulls fail to hold the support, the slide can extend to the 50-day SMA and below it to $118.
Ripple (XRP) traded near the overhead resistance of $0.33108 for the past two days but could not close (UTC time frame) above it.
On the downside, the XRP/USD pair is finding support at the moving averages. If the pair bounces from the current levels and breaks out of $0.33108, it is likely to rally to $0.40. Therefore, we retain the buy suggested in our previous analysis.
On the other hand, if the bulls fail to breakout and sustain above $0.33108, the digital currency will continue to trade inside the range of $0.27795 and $0.33108. The trend will turn negative if the price plunges below the support zone of $0.27795 and $0.24508.
Though EOS broke out of $3.8723, it is facing selling close to $4.00. It formed an inside day candlestick pattern on Feb. 21. If the bulls succeed in scaling above $4.10, the recovery can reach $4.4930, which is likely to act as a strong resistance.
The 20-day EMA is trending up and the RSI is in the overbought territory, which shows that the bulls have the advantage in the short term. Traders can keep a tight stop on half of their long positions and keep a stop of $2.90 on the remaining half.
Contrary to our expectation, if the bears breakdown and sustain below $3.8723, the EOS/USD pair can decline to $3.2081. The 20-day EMA is also located at this level, which should act as a strong support. However, if this level also breaks down, the pair can drop to the 50-day SMA and below it to the critical support at $2.1733.
Litecoin (LTC) turned down from just above $52 on Feb. 20 but found buying at the strong support of $47.2460. If it breaks out of $52.50, the recovery can extend to $56.910 and above it to $60. Therefore, traders can keep the stop loss on half position at $40 and the other half can be trailed closely to lock in the paper profits, if not done already.
Though the moving averages are trending up, the RSI is showing signs of forming a negative divergence. A break below $47.2460 will find support at the 20-day EMA, below which the slide can extend to the 50-day SMA. The balance will shift in favor of bears if the LTC/USD pair breaks down of $40.
Bitcoin Cash (BCH) has been trading close to $141 for the past three days. Attempts to push the price away from this level in either direction have failed.
A breakout of $150.52 will signal that the bulls are back in command. The levels to watch on the upside are $163 and above it $175. Hence, traders should hold their long positions with the stop loss at $116.
Our bullish view will be invalidated if the BCH/USD pair turns down from the current levels and plummets below both the moving averages and $121.
Stellar (XLM) has not been able to cross the 50-day SMA over the past three days. However, it has not given up much ground either, which shows strength. It is finding buying support close to the 20-day EMA, which has flattened out. The RSI is also close to the midpoint. These point to an equilibrium between the buyers and the sellers.
A breakdown of the 20-day EMA can plunge the XLM/USD pair back towards the lows. On the other hand, a breakout of the 50-day SMA can carry it to $0.13427050. As the digital currency has been a huge underperformer, we shall wait for a trend reversal pattern to form before recommending a trade in it.
Tron (TRX) has been trading close to the $0.025 level for the past three days. The bulls are struggling to break out of the downtrend line. Presently, the flat moving averages and the RSI close to 50 shows a balance between the bulls and the bears.
If the TRX/USD pair does not scale the downtrend line within the next couple of days, the bears are likely to push it back towards the support of $0.02306493. A break of this support can result in a fall to $0.02113440 and below it to $0.01830000. Therefore, traders can keep the stop loss on their long positions at $0.0230.
Conversely, if the cryptocurrency rises above the downtrend line, it will again attempt to break out of $0.02815521. A breakout of this critical resistance will start a new uptrend that can push the price to $0.03575668 and above it to $0.0380.
As expected, Binance Coin (BNB) turned down from close to $12 on Feb. 20. However, the bulls bought the dip to $10. This shows that the digital currency might consolidate between $10 and $12 for a few days.
As both the moving averages are sloping up and the RSI is close to the overbought zone, the probability of a breakout of the range after a few days is high. A breakout of $12 can carry it to $15 and above it to $18.
Contrary to our assumption, if the bears sink the BNB/USD pair below the range and the 20-day EMA, the drop can stretch to the 50-day SMA. A breakdown of the 50-day SMA will turn the tables in favor of the bears. We shall wait for a buy setup to form before proposing a trade in it.
The bulls failed to push Cardano (ADA) above the resistance of the range for the past three days. This means the range bound action between $0.036815 and $0.051468 will continue for a few more days. The flat moving averages and the RSI marginally in the positive zone point toward a consolidation.
If the pair stays inside the range, we might attempt to buy at the support of the range if we find a strong bounce, but if the bears sink the price below the range, a retest of the low is probable.
A breakout of the range will start a new uptrend that has a minimum target objective of $0.066121. If this level is crossed, the ADA/USD pair can reach $0.080. Therefore, we retain the buy suggested in our previous analysis.
Ohio state treasurer Robert Sprague revealed that the authority has collected two tax receipts via cryptocurrency to date.
Two businesses in the United States state of Ohio have paid taxes with cryptocurrencies, state Treasurer Robert Sprague said in a forum on Feb. 19. Ohio became the first state to allow businesses to pay taxes with cryptocurrencies like Bitcoin (BTC) in November 2018.
During a forum covering policy issues facing the state, Sprague said that the treasury has only collected two receipts for tax payments using cryptocurrencies. He did not specify the specific amount of tax payments received through cryptocurrency.
With that, Sprague emphasized that the Ohio state treasury does not manage cryptocurrency themselves, clarifying that they do not accept any other currency than the U.S. dollar. The treasurer elaborated that crypto tax payments are conducted through a cryptocurrency platform which simply facilitates the exchange from crypto to fiat:
“We will never accept won or renminbi or francs or cryptocurrency, or any other currency. You have to relieve your debts to the state of Ohio with U.S. dollars. That’s what we’re currently accepting. This platform just allows for that exchange, basically before that debt is settled to the state of Ohio.”
Sprague said that the treasury is reviewing how the program might be expanded or curtailed, and is investigating the potential counterparty risks with the vendor.
Ohio has been actively trying to attract blockchain- and cryptocurrency-related businesses to the state. When the state passed the law allowing business to pay taxes in crypto, then state Treasurer Josh Mandel said that the legislation “plants a flag” in Ohio in terms of national cryptocurrency adoption.
On Feb. 21, the County Auditors’ Association of Ohio announced the formation of a working group to explore the benefits of blockchain in terms of real estate transactions and transfer of land titles across multiple counties
In early December, Cointelegraph reported that Ohio-based funds plan on investing more than $300 million in blockchain startups through 2021, namely to startups developing blockchain applications for local business, government, welfare projects, and others.
University of California academics have proposed a system for running clinical trials using blockchain technology.
Academics from the University of California, San Francisco, have proposed a method of sharing medical data using a blockchain-based system. An article outlining their research published by international research journal Nature on Feb. 22.
The researchers reportedly developed a blockchain-powered system that aims to improve the traceability and immutability of collected clinical data, and make it more trustworthy. In addition, the system aims to advance methods for reporting adverse events during research and improve medical record management.
During the trial, the developers reportedly launched a web-based portal accessible to all participants with a real clinical trial dataset, which facilitated the interaction between patients and clinical investigators. The authors further tested malicious attacks to data integrity with real world medical records.
After a transaction was performed, all associated data was reportedly recorded onto a new block and then joined together and hashed using the SHA256 algorithm. “Data storage of the blockchain will be accomplished by duplicating and distributing the chain to physically separate machines and data warehouses to be managed by the regulator,” the report further explains.
The blockchain. Source: Nature Communications
If a user needs to modify already presented information or correct a mistake, the system allows them to make an update by submitting a new transaction with the corrected data without overwriting old data.
Blockchain technology has already been implemented by various healthcare-related organizations. Earlier this month, the Canadian unit of American tech giant IBM partnered with pharmaceutical company Boehringer Ingelheim to test blockchain in clinical recordkeeping. The parties aim to discover whether the integration of blockchain with clinical recordkeeping provides the proper level of data integrity, transparency, and patient safety, in addition to reducing costs and automating processes.
Also this month, blockchain tech company Bitfury partnered with radiology blockchain marketplace Medical Diagnostic Web and blockchain-powered life data marketplace Longenesis to create a blockchain-based platform for maintaining, sharing and securing medical imaging and diagnostics information such as X-rays and CT scans.
Bitcoin broke the $4,000 threshold for the fourth time in 2019, while all top 20 cryptos are seeing green.
Feb. 22 — following some red signals yesterday, crypto markets have continued to rise, with all top 20 coins up today, according to CoinMarketCap.
Market visualization from Coin360
Bitcoin (BTC), the biggest cryptocurrency accounting for around 52 percent of crypto market, has again briefly broke $4,000 point for the fourth time this month, according to CoinMarketCap. At press time, Bitcoin is up around 1 percent, and is trading at $3,987. The oldest cryptocurrency is up almost 10 percent over the past 7 days.
Bitcoin 7-day price chart. Source: CoinMarketCap
The top altcoin Ethereum (ETH) is up 2.47 percent, and is trading at $148.75 after dropping to as low as $145 earlier on the day. The coin is strongly holding it weekly momentum, up more than 21 percent at press time.
Ethereum 7-day price chart. Source: CoinMarketCap
Ripple (XRP), the third top cryptocurrency by market cap, is slightly up 0.28 percent, and is trading at $0.321, with its gains over the week amounting to 6.87 percent.
Ripple 7-day price chart. Source: CoinMarketCap
Both total market capitalization and daily trading volume of crypto markets remain stable over the day. At press time, the market cap is $134.9 billion, while daily trade volume amounts to $24.32 billion.
EOS (EOS), the fourth top cryptocurrency by market cap, has continued its ongoing growth, and is seeing the biggest growth among top 20 coins today, up around 3.5 percent at press time. The cryptocurrency is also seeing the most growth among top 20 over the past 7 days, up almost 40 percent, according to CoinMarketCap.
Total market capitalization 7-day chart. Source: CoinMarketCap
Earlier today, Reddit co-founder Alexis Ohanian said that crypto hype is gone, leaving space for true crypto believers who have stayed to build real crypto infrastructure without speculators on the market.
Also today, the third top crypto exchange OKEx listed Ripple (XRP) and Bitcoin Cash (BCH) on its customer-to-customer (C2C) trading platform, enabling users to buy or sell the cryptos with five supported fiat currencies, including the British pound, Chinese renminbi, Vietnamese dong, Russian rubles, and Thai baht.
Along with growing crypto markets, stocks rose on Friday as another round of United States–China trade talks wrapped up, according to CNBC. The Dow Jones Industrial Average (DJIA) jumped 100 points as Intel outperformed, while both the S&P 500 and NASDAQ Composite have risen around 0.3 percent.
Oil prices have risen to their highest levels in 2019 today based on OPEC's ongoing supply cuts and anticipation that Washington and Beijing may soon end their trade dispute. Brent crude futures hit $67.56, while U.S. West Texas Intermediate crude set a fresh 2019 high at $57.81, according to CNBC.
Thailand’s National Legislative Assembly allows for the issuance of tokenized securities on blockchain with new amendments.
The government will amend the Securities and Exchange Act, according to the article. As soon as the changes come into effect later in 2019, tokenized securities such as stocks and bonds can be officially issued on blockchain.
The Thai Securities and Exchange Commission (Thai SEC) will issue additional rules so that crypto platforms can seek a securities depository license. According to Thai SEC deputy secretary Tipsuda Thavaramara, the regulator will also allow businesses that operate as depositories of securities and digital tokens to apply for such licenses.
Previously, the aforementioned act defined Thailand Securities Depository Co Ltd, a subsidiary of the Stock Exchange of Thailand (SET), as the only company permitted to operate as a securities depository for the SET's securities trading operations.
The Thai SEC will also decide whether a security token offering is regulated under the current securities act or the royal decree on digital assets. The decision will depend on the rights and obligations associated with a particular token, the publication notes.
Earlier this year, the Thai Ministry of Finance issued digital asset business licenses to four crypto-related firms under the recommendation of the Thai SEC Board. Two other applicants failed to comply with Thai SEC rules and were rejected.
As Cointelegraph previously reported, the National Electronics and Computer Technology Center of Thailand is exploring the use of blockchain in e-voting. The solution could be deployed in the short term in a closed environment; for example, Thai nationals living abroad could go to an embassy or consulate to vote and verify their identities on blockchain.
Reddit co-founder Alexis Ohanian claimed that the crypto hype is gone, leaving space for true crypto believers.
Alexis Ohanian, co-founder of Reddit and known crypto bull, claimed that the crypto hype is gone, leaving space for true crypto believers. Ohanian spoke on the subject in an interview with Yahoo Finance released on Feb. 22.
When asked if he is still a big believer in crypto, Ohanian acknowledged that the current state of the market is undoubtedly still considered to be a crypto winter, which means crypto prices are depressed.
However, citing Coinbase CEO Brian Armstrong, Ohanian emphasized that the bear market has contributed to the elimination of speculators, while true crypto believers have stayed to build real crypto infrastructure.
Ohanian elaborated that in his opinion, the extinction of the hype around the crypto and blockchain space is actually a good thing for industry development. He said:
“Now, it's still to be seen. But what's a strong signal to me is still some of the smartest people I know in tech are working on solving these problems. They're building companies that are built on blockchain. The hype is gone. The fervor is gone. But I think that's a good thing.”
Ohanian was also asked about the announcement from banking giant JPMorgan Chase concerning the launch of its own cryptocurrency JPM Coin, a blockchain-powered asset that is expected to increase settlement efficiency within the bank’s operations.
Answering the question, Ohanian stressed that the recent move by JPMorgan is just another indication that there is real innovation happening since the wild speculation is gone. Considering the upcoming release of the coin to be a good thing, Ohanian still noted that JPMorgan CEO Jamie Dimon had previously called major cryptocurrency Bitcoin (BTC) a scam.
Recently, Dimon has since clarified his stance towards Bitcoin, claiming that he had not intended to become the spokesperson against the biggest cryptocurrency.
Born in 1983, Alexis Ohanian became a 23-year-old multi-millionaire in 2006 after selling Reddit along with the second co-founder Steve Huffman back in 2016. The internet entrepreneur and investor is also a co-founder of early-stage venture capital firm Initialized Capital.
In July 2018, Ohanian maintained his prediction that Bitcoin and top altcoin Ethereum (ETH) will hit $20,000 and $1,500 respectively in 2018. However, since July 2018, the highest price points of the two cryptos have been maximum thresholds of around $7,200 and $400 respectively, according to CoinMarketCap.
A postdoctoral researcher from the University of Luxembourg believes central banks are very interested in launching CBDCs.
The idea of issuing a central bank digital currency (CBDC) is too attractive to ignore, a postdoctoral researcher from the University of Luxembourg wrote in a study. The research was shared by the Oxford Business Law Blog on Friday, Feb. 22.
Hossein Nabilou, a postdoctoral researcher at the Faculty of Law, Economics, and Finance of the University of Luxembourg, presented his findings in a study entitled “Central Bank Digital Currencies: Preliminary Legal Observations.” The report focused on potential challenges that launching a CBDC might cause for the European Central Bank (ECB).
According to Nabilou, cryptocurrencies have significantly impacted the banking sector. He writes how their functionality, similar to money issued by a central bank, first drew banks’ attention. Banks were also preoccupied with the idea that cryptocurrencies could ruin their monopoly on controlling the circulation of money and influence the stability of existing financial systems, Nabilou believes.
Thus, CBDCs can be treated as a policy response to the growing popularity of cryptocurrencies, he continues. Despite the prevailing scepticism towards crypto and several failed attempts to launch a state-backed coin, such as the Venezuelan Petro, central banks are actively studying the technology behind digital currencies. Some of them even have the possibility of launching a CBDC in their agenda, the researcher writes.
However, if the ECB launches a digital currency, it might lead to banking disintermediation, Nabilou continues. Customers will get direct access to the central bank’s balance sheets, and consequently there will be no reason for them to hold balances within a commercial bank, which might lead to overall banking sector instability.
Moreover, such a move would centralize the credit allocation and undermine the principle of an open market economy with free competition, violating the constitutional constraints set by the EU. For those reasons, the ECB is unlikely to issue a CBDC unless the appropriate regulations are introduced, Nabilou concludes.
Venezuela was one of the first countries to launch a state-backed coin in 2018. Despite the efforts taken by the government, the Petro has seemingly failed to help bail out the country’s economy. Several banks in Iran have also supported a gold-backed digital currency dubbed PayMon, while Egypt is still considering a possibility of launching a CBDC.
Some central bank officials have publicly shared Nabilou’s view on CBDCs. For instance, South Korea’s central bank has recently issued a warning over CBDCs, stating that they would result in mass withdrawals of funds from private institutions, squeezing liquidity and pushing up interest rates.
The OKEx C2C platform has listed Ripple and Bitcoin Cash while delisting NEO, QTUM and Exchange Union (XUC).
Malta-based major cryptocurrency exchange OKEx has listed Ripple (XRP) and Bitcoin Cash (BCH) on its customer-to-customer (C2C) trading platform, according to a press release shared with Cointelegraph on Feb. 22.
OKEx, the top third crypto trading market by daily trading volumes at press time, now allows users to buy or sell XRP and BCH with five supported fiat currencies: the British pound (GBP), Chinese renminbi (CNY), Vietnamese dong (VND), Russian ruble (RUB) and Thai baht (THB) on the OKEx C2C trading platform.
The Thai baht was added to the OKEx C2C platform in mid-February.
During the newest upgrade, all services on the OKEx C2C platform will remain as normal, the announcement states. The platform allows users to place orders with self-selected exchange rates and payment method, purchasing or selling crypto from other users using fiat with zero transaction fees.
The new listings are added to already supported biggest cryptocurrency Bitcoin (BTC), major stablecoin Tether (USDT), top altcoin Ethereum (ETH) and Litecoin (LTC), the fifth top cryptocurrency by market cap at press time.
At the same time, OKEx has announced the delisting of three cryptocurrencies: on Feb. 25, OKEx will stop supporting 17th ranked cryptocurrency NEO (NEO), as well as QTUM (QTUM) and Exchange Union (XUC).
Recently, OKEx has listed four new crypto derivative pairs to its platform, enabling users to trade Bitcoin SV (BSV), QTUM, DASH (DASH) and NEO against Bitcoin or Tether on margin with a 3x leverage option.
The newly listed XRP coin is the third-top cryptocurrency by market cap at press time, having lost its top coin position in January. Recently, CEO and representative director of Japanese financial services giant SBI Holdings outlined Ripple as one of the reasons to remain optimistic about the future of the crypto industry.
Bitcoin Cash, a cryptocurrency created as a result of a Bitcoin hard fork in August 2017, is now ranked the sixth-top crypto by market cap. Recently, major United States-based cryptocurrency exchange and wallet service provider Coinbase has listed BCH on its Coinbase Wallet.
Andorra will implement blockchain tech in storage of its higher education degrees, with plans to expand to lower degrees.
The Principality of Andorra, a sovereign landlocked state on the Iberian Peninsula, will digitize national higher education by implementing blockchain technology for storing all academic degrees.
The initiative is aimed at creating a more secure registry processes, EuropaPress reports. Academic degrees recorded via blockchain tech can not be eliminated or modified, and the tech will also allow for the reduction of “administrative expenses derived from the current analogue process,” the article notes.
The access to the blockchain is to be provided by Andorra Telecom, the national telecom company, which is responsible for the distribution of digital terrestrial and radio broadcast services in the Principality of Andorra.
Europa Press also states that blockchain tech would allow for easier access to higher education:
“It opens the possibility that in the future the Hague Apostille in the recognition of titles at an international level will not be necessary.”
The Hague Apostille is a certificate through which a document issued in one of the signatory countries can be certified for legal purposes in all the other signatory states.
As Cointelegraph reported yesterday, the Maltese government signed a two-year contract with a software company to store all educational certificates, including secondary school certificates issued by the state, church and independent schools, with blockchain technology.
Earlier this month, the Russian Federal Service for Supervision in the Sphere of Education and Science announced plans to implement blockchain technology in the country’s main graduation examination starting this year, as Cointelegraph wrote on Feb. 5.
Brian Armstrong has cited the company’s lengthy history as proof its intentions were not fraudulent.
In a series of tweets, Brian Armstrong suggested the exchange, which is currently undergoing restructuring procedures and owes creditors around $190 million, did not attempt fraud.
“(QuadrigaCX) was one of the oldest exchanges in existence (founded in 2013). If they planned an exit scam, it likely would have been timed better,” he summarized.
Users of the now-defunct Quadriga are currently battling through the courts to secure missing funds. The exact circumstances under which their deposits disappeared remain uncertain; the exchange’s CEO, Gerald Cotten, unexpectedly died in December.
Since then, multiple claims have raised the prospect that funds were mismanaged and that the official information from Quadriga’s representatives may not match the facts resulting from blockchain analysis.
Coinbase had conducted investigations of its own, Armstrong said, likewise suggesting the last months of operations posed questions about its management.
“Sequence of events suggests this was a mismanagement with later attempt to cover for it,” he wrote, adding:
“This implies that at least few people inside Qadriga (sic) knew that they were running fractional. If so, then it's possible that untimely death of their CEO was used as an outlet to let the company sink.”
Big Four auditor Ernst & Young is currently in charge of consolidating Quadriga’s wallets and accounts. On Thursday, the exchange transferred its remaining accessible wallet balances to the company’s possession.
Crypto hedge fund Pantera Capital has already sealed $130 million out of a $175 million target for its third crypto venture fund.
Crypto hedge fund Pantera Capital has already sealed $130 million out of a $175 million target for its third crypto venture fund. The development was shared with Cointelegraph in private correspondence with Pantera president Bill Healy on Feb. 22.
For Pantera’s debut fund in 2013, the firm had raised $13 million, rising to $25 million for its second. As reported in August 2018, Pantera raised the game for its third offering, saying at the time that the $175 million target was “a function of how fast the space is moving, the talent coming in, the opportunities, and the sizing of rounds.” Healy today told Cointelegraph that:
“Blockchain venture equity continues to be very strong, both in terms of returns and deal flow. Pantera’s first two venture funds, which were launched in 2013 and 2015, are currently valued at 7.2x and 2.8x, respectively. [For the third,] we’ve raised $130mm of the $175mm fund in the previous closing. Venture Fund III will have its final close on March 28th.”
Pantera executives have previously disclosed that $100 million from 140 investors had already raised by mid-August 2018, according to a CNBC report at the time. The fund reportedly has a decade-long investment period, and offers investors equity in a blockchain company in return for their capital.
Healy revealed the fund’s activities to date, outlining that:
“Our third blockchain venture fund has invested $30 million into nine portfolio companies. Pantera was joined by BCG and Microsoft as a founding investor in Bakkt, the newly formed subsidiary of the parent of the New York Stock Exchange (Intercontinental Exchange - NYSE: ICE). Pantera led the funding rounds in five deals, including Blockfolio and, most recently, Staked. Our investments in StarkWare and Synthetic Minds have also been announced.”
As reported in August, Pantera has also been developing nontraditional venture funds for crypto investors, such as an investment strategy with input from machine learning and a hedge fund that focuses on initial coin offerings (ICO).
In December, the hedge fund published a newsletter warning that a quarter of its ICO projects could be found to be in violation of United States’ securities laws, and would potentially be compelled to repay investors.
Pantera’s most recently led funding round, as Healy noted, was in crypto staking startup, Staked — a venture that manages clients’ deposited and staked cryptocurrencies, which generate block rewards.
Whereas ICO investments may face the adverse impact of the cryptocurrency market slump and regulatory crackdowns, some have proposed that that proof-of-stake token investments can provide a profitable investment strategy regardless of market conditions.
An official at South Korea’s sole securities exchange operator says the bourse is closely eyeing developments in regard to crypto ETFs.
An official at South Korea’s sole securities exchange operator, the Korea Exchange (KRX), says the bourse is closely eyeing developments from United States regulators in regard to Bitcoin (BTC) exchange-traded funds (ETFs). The official, reportedly speaking on condition of anonymity, was cited by local English-language daily The Korea Herald on Feb. 20.
ETFs are securities that track a basket of assets proportionately represented in the fund’s shares. They are seen by some as a potential development that would herald the widespread adoption of crypto as a regulated and passive investment instrument.
The U.S. Securities and Exchange Commission (SEC) has to date either rejected or postponed its decision on a wide range of proposed crypto-related ETFs. With the SEC’s review period of one proposal now set to come to a close by April, the KRX official reportedly remarked:
“The US has been the front-runner on the cryptocurrency market and related derivatives, and there are strong voices supporting the launch of Bitcoin ETFs within the market — which is why we are observing the progress and response of the US [SEC]’s decision on Bitcoin ETFs.”
The official added that KRX is extensively discussing the provision of a solid Bitcoin index, which would be “required for the launch of such ETFs [...] when [...] commercialized and integrated into the market [...] because it would eventually concern investor protection issues.”
As The Korea Herald further reports, South Korea’s burgeoning blockchain space has reportedly already seen the launch of blockchain ETFs by local investment banks and asset management firms — products whose listing is eased by the relatively lower level of scrutiny they receive from the country’s watchdog, the Financial Supervisory Service.
Lee Kyung-ho, a professor at Korea University’s Graduate School of Information Security, reportedly argued that the health of the local blockchain sector would eventually pave the way to cryptocurrency ETF integration, remarking that:
“With the government expanding its investment in research and development of blockchain technology, the projects are expected to minimize or eliminate the risk of integrating ETF transactions in the cryptocurrency market.”
Lee further pointed to the fact that prospective Bitcoin ETF trading relies on robust Know Your Customer and Anti-Money Laundering compliance, which the Korean has already increasingly been requiring of domestic crypto exchanges.
In a recent interview with Cointelegraph, prominent CNBC commentator, crypto analyst and investor Brian Kelly said he believes there is no shot for a Bitcoin ETF this year — but a very good chance in 2020.
Four businesses suspected of selling unregistered securities in Texas have signed a cease and desist order.
The result of a nine-month process, Mintage Mining, BC Holdings and Investments, Social Membership Network Holding, Nui Social and manager Darren Olayan agreed to refrain from offering cryptocurrency tokens to investors.
As respondents listed in the order, the entities will also pay an administrative fine of $25,000.
In July last year, the Texas State Securities Board (SSB) identified token offerings by the companies as falling under the definition of securities according to local legislation.
The latest order confirms the findings, and requires no further activity to take place until suitable licensing and documentation are collected. The order was signed by all the named respondents.
The move constitutes the most recent victory for the SSB in its ongoing clampdown on unregistered securities sales by the emerging cryptocurrency sector. As Cointelegraph reported, bad actors in the space are subject to intense scrutiny, mirroring a nationwide operation by the United States Securities and Exchange Commission (SEC).
Earlier this month, the SSB revealed it had issued a total of 16 orders to industry players in 2018 that it suspected of being scams.
“The orders cited a total of 60 individuals and entities,” the regulator said in its yearly roundup, stating:
“None of the individuals or firms were registered to sell securities in Texas.”
The University of Michigan’s $12 billion endowment plans to bolster its investment in the cryptonetwork technology fund.
The University of Michigan’s $12 billion endowment plans to bolster its investment in a “cryptonetwork technology fund” (CNK Fund I) managed by American venture capital firm Andreessen Horowitz. The development was revealed in the agenda for the university’s Board of Regents meeting on Feb. 21.
According to the document, the endowment had already committed $3 million to CNK Fund I in June 2018 and has now included it as an approved partnership for a follow-on investment, amount unspecified. The agenda states that the fund — created by the Menlo Park, CA-headquartered Andreessen Horowitz — “invest[s] in cryptonetwork technology companies across the spectrum of seed, venture, and growth stage opportunities.”
The document outlines the rationale behind backing the Andreessen Horowitz dedicated crypto fund, noting that crypto “has become an important area of innovation and entrepreneurship that warrants focused attention” and that it is regarded as “a distinct type of technology by entrepreneurs, funding sources, and developers.”
The agenda continues:
“As opportunities related to cryptonetworks transition from being undefined to becoming more visible and sharply defined, the·need for a separate thematic fund may recede. In addition, the regulatory landscape for crypto-based investments is potentially more cumbersome than is the case with the sort of traditional IT investing that otherwise characterizes AH's activities.”
As previously reported, several high-profile prestigious university endowments have started to back crypto-focused funds.
In October 2018, Ivy League school Yale — which has the second-largest endowment in the United States — was revealed to be one of the investors that helped to raise $400 million for a major new crypto-focused fund created by veterans from Coinbase and stalwart crypto fund Pantera Capital.
That same month, it was reported that fellow Ivy League titan Harvard — whose ~$39.2 billion endowment for the 2018 fiscal year was the largest of any university endowment globally — had invested capital into “at least one cryptocurrency fund.” The report made the same claim for four further prestigious U.S. schools — Stanford University, Dartmouth College, the Massachusetts Institute of Technology (MIT) and the University of North Carolina.
In December 2018, Spencer Bogart — partner at venture capital firm Blockchain Capital — noted that the entrance of major university endowments into the crypto space demonstrates the increased institutionalization of the asset class.
This month, major pension and endowment consultancy firm Cambridge Associates published a research note arguing that crypto represents a worthwhile investment for institutions “with an eye toward the long term.”
The FBI is attempting to investigate the movements behind the failed alleged ponzi scheme, which at one point was worth $2.5 billion.
The United States Federal Bureau of Investigation (FBI) is seeking to contact investors in alleged ponzi scheme Bitconnect (BCC) that collapsed in January last year, a news statement confirmed on Feb. 20.
As part of ongoing investigations into the activities of the well-known but shadowy scheme, the Cleveland branch of the U.S. law enforcement agency appealed to ex-investors to give information about their interaction with Bitconnect.
A dedicated questionnaire is already available online, Special Agent Vicki D. Anderson explaining that responses would assist investigators in identifying those affected by monetary loss.
“The FBI is seeking potential victims who invested in the cryptocurrency Bitconnect coin (BCC), which was first released through an initial coin offering orchestrated by Bitconnect in November 2016,” she explained in the statement, adding:
“Your responses are voluntary and would be useful in the federal assessment of this matter and to identify you as a BCC investor and/or potential victim.”
The questionnaire requires the respondent to provide information such as how they first heard of Bitconnect, how much they invested and their access username.
As Cointelegraph reported, Bitconnect gained an almost mythical status among the plethora of initial coin offerings (ICO) which operated until the market crashed last year. Organizers’ lavish publicity events included bizarre entertainment for attendees, most notable of which were appearances by spokesperson Carlos Matos that subsequently went viral.
Coinbase CEO and co-founder Brian Armstrong has outlined what he believes to be four common misconceptions about crypto custody solutions.
Brian Armstrong, co-founder and CEO of United States crypto exchange and wallet Coinbase, has outlined what he believes to be four common misconceptions about crypto custody solutions. His article was published on Fortune’s crypto-focused segment The Ledger on Feb. 22.
Cold storage refers to a method of keeping crypto holdings and users’ private keys offline in order to safeguard against theft via a remote attack. Hot storage, conversely, refers to storage on a device that has an active connection to the internet.
Armstrong’s first argument tackles the perception that hot storage is always necessary to provide the flexibility and speed required to execute trades. He notes that certain platforms allow users to trade over-the-counter (OTC) using delayed settlement, meaning funds remain in offline storage until after the trade has been executed.
As reported, a recent joint venture between blockchain security firm BitGo and Bitcoin (BTC) OTC trading platform Genesis Global Trading similarly allows clients to trade crypto without the need for withdrawals from cold storage.
Armstrong’s second point centers on proof-of-stake (PoS)-based cryptocurrencies, noting that participating in a PoS network and earning returns on staked coins doesn’t necessarily imply the latter need to be stored in a hot wallet.
The CEO gives the example of crypto project Tezos, which allows token holders to delegate their staked funds to a so-dubbed “baker,” who keeps a small portion of funds hot to generate staking rewards — yet customers’ funds remain securely offline.
Third, Armstrong disentangles the relationship between single-key holders and whether storage is hot or cold, noting that designing a crypto custody solution to require multiple keys is a sound measure regardless of whether stored funds are on or offline.
Lastly, the CEO mentions hardware security modules, arguing that they can come close to the security of cold storage — and can undoubtedly be beneficial for custodial architecture — but nonetheless cannot match it. Armstrong closes his article with a note about hot storage, writing:
“With hot storage there are a lot of details that you need to get right to keep the funds safe. Is it possible to get all those details right? Yes, and I’m comfortable using hot storage for reasonable amounts. [...] Do I want to bet my entire business on all those details being right indefinitely? Probably not.”
According to an apparent purchase agreement for Telegraph’s Gram tokens, the network must launch prior to October 31, 2019 in order for token purchase agreements to be valid.
Purchase agreements for messenger service Telegram’s Gram tokens will be terminated if the Telegram Open Network (TON) does not launch by October 31, 2019. An apparent purchase agreement with the said terms was obtained by Cointelegraph on Feb. 21 though the Telegram channel Tgram, devoted to news about the TON network.
The agreement details the legal niceties of Gram token purchases, outlining regulations for different jurisdictions in regard to the distribution of the tokens. Notably, it states that, should network not be released by October 31, 2019, the contract will be considered null and void.
While the document provides the name of the founder of the encrypted messenger Telegram, Pavel Durov, it is not yet been signed or dated. The document also lists the address for Harneys, a lawyer's office in the British Virgin Islands, where Telegram is also registered.
According to the document, the company intends to create and release a new digital currency called “Grams” following the development and launch of a new blockchain platform, the TON Network.
Sources familiar with the matter recently told Cointelegraph that TON could launch as early as March 2019. Cointelegraph’s source emphasized that Durov was reluctant to confirm a specific date for TON's release and that the March estimate remains subject to change.
According Russian media outlet The Bell, investors have been told that TON is 90 percent ready, but that delays are possible because of the “innovative nature of the development.”
As Cointelegraph previously reported, Pavel and Nikolai Durov filed a “Notice of Exempt Offering of Securities” with the U.S. Securities and Exchange Commission (SEC) on Feb. 13, 2018, reporting $850 million raised from 81 investors in the first round of their initial coin offering (ICO) for “the development of the TON Blockchain, the development and maintenance of Telegram Messenger.”
Later in March 2018, the Durov brothers revealed that they raised $850 million in the second round of their ICO from 94 investors. In October 2018, it was reported that Telegram would release a test version of theTON platform “this autumn.”
Crypto wallet MyEtherWallet in collaboration with crypto finance firm Bity have launched a platform for the conversion of crypto to fiat without going through KYC requirements.
Cryptocurrency wallet MyEtherWallet (MEW) in collaboration with crypto finance firm Bity are releasing a platform to convert cryptocurrency to fiat without Know Your Customer (KYC) requirements. MEW announced the news in a blog post published on Feb. 20.
Per the announcement, users of the MEW V5 wallet are now able to exchange up to 5,000 Swiss Francs ($4,995) worth Bitcoin (BTC) and Ethereum (ETH) to euros and Swiss francs without going through KYC requirements inside the wallet. Users can purportedly make the exchange from any part of the world.
KYC procedure enable organizations to verify the identity of their customers before or during dealing with them. Businesses can assess whether their clients are involved in illegal activities like money laundering or corruption.
To use so called “Exit-to-Fiat” option, customers have to choose the target digital and fiat currencies in the wallet dashboard. Users will further be asked to provide some personal data, including their phone number, banking details, official name of their bank account, and the billing address needed for compliance purposes.
Enhanced privacy and anonymity of cryptocurrencies have always been linked by the governments and regulators to illicit activities and the possibility of money laundering. Last month, the Cyberspace Administration of China (CAC) introduced new regulations for blockchain firms that are operating in the country.
The CAC guidelines require blockchain startups to allow authorities access to stored data, and to introduce registry procedures that would require ID card or mobile numbers from its users. Moreover, they will be obliged to oversee content and censor information that is prohibited under current Chinese law.
In April 2018, Amazon Technologies, Inc. received a patent for a streaming data marketplace that would permit the combining of multiple data sources, thereby enabling the real-time tracking of cryptocurrency transactions and the users involved. This would essentially lead to the de-anonymization of transactions involving Bitcoin, Ethereum or any other non-privacy cryptocurrency.
Deutsche Boerse-operated derivatives exchange Eurex is reportedly planning to launch digital currency futures.
Eurex, a Germany-based derivatives exchange operated by Deutsche Boerse, is reportedly planning to launch futures contracts tied to digital assets, financial technologies-focused news outlet The Block reported on Feb. 21.
People familiar with the matter reportedly told the Block that Eurex is planning to launch futures contracts tied to such digital currencies as Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP), having already had meetings with market-making companies to discuss the products.
Deutsche Boerse has reportedly been considering the introduction of digital currency futures since December, 2017. A spokesperson for the exchange then said that “we are thinking about futures, with which private investors and institutional investors can protect existing investments in Bitcoin or set for falling prices of the cyber currency.”
In September 2018, Deutsche Boerse established a “DLT, Crypto Assets and New Market Structures” unit, that would explore the disruptive potential the technology could have for financial market infrastructure, as well as the new products the exchange could develop to enhance its existing offerings.
Founded in 1998, Eurex is an international derivatives exchange operated by one of the world’s leading stock exchanges, Deutsche Boerse. Eurex Clearing reportedly manages a collateral pool of 49 billion euro ($55.5 billion) and clears trades valued at 12.46 trillion euro each month.
Last month, Deutsche Boerse announced that it was “making significant progress” on its blockchain-based securities lending platform, the launch of which is scheduled for the the first half of 2019. Per the press release from Deutsche Boerse, six banks to date had confirmed their plans to join the securities lending platform, and have initiated “their connectivity processes.”
Three German banking and tech giants have completed a 100,000 euro money market security transaction based on the blockchain platform Corda.
German banking and financial services company Commerzbank and technology companies Continental and Siemens have jointly conducted a money market security transaction pilot using blockchain technology. Cointelegraph auf Deutsch reported on the development on Feb. 21.
Money market securities are short-terms assets that serve for financing companies and usually have a maturity of one year or less. Usually, the processing of a payment takes two days due to a clearing process.
The aforementioned parties “for the first time” conducted a blockchain-based money market security transaction worth 100,000 euro ($113,340) within a pilot project in January, where Continental acted as the issuer of the security, Commerzbank provided R3’s Corda-based blockchain platform, while Siemens subscribed to the money market security as an investor.
The blockchain-powered platform reportedly allowed the companies to improved flexibility, efficiency and transparency in the deal. Speaking about other benefits of the transaction, Peter Rathgeb, Corporate Treasurer at Siemens, said in a Feb. 21 press release:
“The significantly shorter throughput times and faster time-to-market show clear advantages of this technology [blockchain]. Key challenges include security and performance issues, as well as legal issues such as the need to create a consistent European standard and understanding of the law on blockchain-based transactions.”
In late 2018, Commerzbank in collaboration with French corporate and investment bank Natixis, and Dutch financial services firm Rabobank completed a live 100,000 euro ($113,340) commercial paper transaction on the Corda platform. Commerzbank developed the pilot framework, software and distributed ledger (DLT) network for the trade, and instructions on regulatory implications.
Previously, Siemens joined a scalable blockchain platform, the Energy Web Foundation (EWF), to promote the use of decentralized technologies in the energy sector. Siemens officials reportedly argued that blockchain technology will help increase interoperability in the area, linking consumers with energy producers and network operators.
The financial capital of the world can afford to be picky — but does it stifle fintech innovation?
Recently the New York Department of Financial Services (NYDFS) granted statewide virtual currency licenses to two applicants: stock trading service Robinhood and cryptocurrency ATM operator LibertyX. The state’s regulatory regime, commonly known as BitLicense, imposes a set of strict disclosure and consumer-protection requirements on any business that offers cryptocurrency-related services to New York residents. Since the framework was introduced in 2015, only a handful of companies had their applications approved by the NYDFS: The elite club of BitLicense holders now counts just 16 entities, the two newcomers included.
The state has also demonstrated that it keeps close tabs on those who might be in violation of the compliance procedures: In September last year, the New York state attorney general's office published a report that raised concerns over price manipulations that were possibly taking place on cryptocurrency exchanges, and referred three of them to the state’s financial regulator.
While many American states strive to appeal to crypto businesses by implementing lenient policies and easing red-tape pressures on industry startups, New York has championed a regulatory approach more rigorous than that of most nation-states. Many influential figures in crypto community are cross with what they perceive as a vast governmental overreach, yet there seems to be no shortage of firms still ready to take on the pains of obtaining the license. But in the big picture, is this type of regulatory climate that exists in the world’s financial capital beneficial for the crypto industry, mainstream adoption and the Empire State itself?
Reasons to comply
For any company somehow related to finance, the benefits of doing business in New York and with New York residents are obvious. The number of powerful financial institutions per square foot is staggering, the Wall Street money is just a glance away, and a consumer market of almost 20 million people is no small deal, either. This is especially true if you are a prominent player in the nascent fintech industry longing for mainstream adoption.
New York legislators in Albany are well aware of their jurisdiction’s unique position as a major financial hub, and have been long acting accordingly. Martin Weiss, founder of Weiss Research and Weiss Cryptocurrency Ratings, explained that the tendency for strict state-level regulation has a long history:
“Traditionally, Albany has been tougher than many other states in regulating — insurance, for example. They are the toughest state in regulating financial markets, too. They see themselves responsible for keeping the financial center.”
In the case of crypto, Weiss argued, New York’s centrality to the world’s financial system is a powerful enough factor to overcome the logic of crypto regulation applicable to almost any other territory:
“Cryptocurrencies are, in essence, borderless. Regulation, in order to catch up, would also have to be borderless, crossing not only state boundaries but also national boundaries. New York is in a unique situation because it regulates a major financial center, the largest in the world. So as long as all those corporations want to remain domiciled in New York, legislators in Albany do have a jurisdictional reach that sticks. In most places in the world, if you try to regulate cryptocurrencies, they’ll just move to another jurisdiction. That is bound to happen with most of cryptocurrency institutions. But that’s not the case with New York.”
Vigilant New York state authorities became concerned with Bitcoin regulation fairly early: Ben Lawsky, the state’s Superintendent of Financial Services, first sketched the contours of what would become BitLicense in July 2014. Regulations came into full effect almost a year after, forcing both existing and incoming players to either comply or quit.
Hardly surprisingly, not everyone took the news well. During the summer of 2015, big names such as BitFinex and ShapeShift pulled out of the New York market; crypto exchange Kraken announced cessation of services to New York residents in a blog post that called BitLicense “a creature so foul, so cruel that not even Kraken possesses the courage or strength to face its nasty, big, pointy teeth.” Erik Voorhees and Jesse Powell, the bosses of ShapeShift and Kraken, respectively, remained BitLicense’s staunch critics, calling for the regulation’s repeal ever since.
Aside from decrying the redundancy of regulation, opponents often point out how the pace at which licenses get approved is dismally slow — it is not uncommon for a company to wait for three years to be approved, as it happened with Genesis Global Trading. This part of the process alone can put smaller companies at a disadvantage. As Kevin Hobbs, CEO of the blockchain consultancy Vanbex Group, told Cointelegraph:
“We believe that these strict regulations hinders cryptocurrency innovation in the Empire State. BitLicense is particularly restrictive for small companies to bear. Since only the largest companies possessing ample resources able to comply with the strict regulations. The BitLicense became effective in New York on June 24, 2015 but in the three years since then, only five crypto-related companies have been approved for a BitLicense in the state. Indeed, these one-size-fits-all regulations ultimately stifles innovation.”
Pushback from the more regulation-averse flank of crypto community has also received some political support: Larry Sharpe, a Libertarian Party candidate in the 2018 New York gubernatorial election, argued that the BitLicense regime serves to entrench the incumbent’s dominance in the market, and proposed to eliminate the licensing process. His bid in the November 2018 election, however, was unsuccessful.
Maybe it’s not that bad?
Those who are on board with the New York authorities’ rigorous policies toward cryptocurrency usually speak in the language of benefits to institutional and mainstream adoption. The idea is that the robust, large-scale crypto enterprises that prove capable of complying with the licensing requirements could draw the whole ecosystem closer to the core of the incumbent financial system that New York embodies. Robinhood, the recent addition to the pool of BitLicense holders, could definitely play this role. As Sky Guo, CEO of smart contract platform Cypherium, put it:
“A great part of Robinhood’s value to our space will be as a leader in quasi-institutional compliance. New York is the center of traditional finance, and the state's licensing process — for good reason — prioritizes the integrity of its complex systems. For these reasons, Robinhood will be a great bridge between the two communities. Because Robinhood aims to open public access to traditional finance mechanisms, the company has a natural affinity for crypto projects and the DLT space in general.”
In addition to institutional-level shifts, Robinhood is poised to help the cause by adding a share of its regular stock users to the ranks of crypto community, notes Eric Ervin, CEO of Blockforce Capital:
“Long-time cryptocurrency believers may not be migrating over to the Robinhood crypto platform anytime soon due to its lack of certain features that are available on other crypto trading platforms. However, the increased trust instilled by the issuance of the BitLicense may be enough to convince current Robinhood users who are on the fence to give the service a try. Robinhood’s significant user base in the state of New York will open the door to new crypto investors.”
Finally, there are signs that the Empire State’s regulatory framework is evolving into something more flexible and dynamic. More companies have seen their applications for a crypto license approved in the last year than in the previous three. A seemingly lighter version of the approval process is now applied to companies seeking permission to offer crypto custody. According to reports from inside the state legislature, a task force is being assembled to focus entirely on digital currency.
Guy Hirsch, Managing Director of trading platform eToro US, told Cointelegraph:
“We think that New York regulators are making a genuine effort to make the state competitive for the blockchain era. BitLicenses have been approved on a more regular basis recently. NYDFS have issued several novel approvals for crypto custody. They also have put together a very clear Q&A on their website that provides a coherent framework for companies to buy, sell, hold, and transmit cryptoassets in a compliant manner.
“A lot of us think that the financial services industry will run on a blockchain. If this assumption turns out to be true then New York, being the financial capital of the world, has a vested interest in making sure it remains as such in decades to come.”
New York has gravitated toward a tight regulatory model that, at least according to the majority of state representatives, fits its status of the global financial center the best. In the years to follow, this model will enter a competition with alternative conceptions of how to do it. Martin Weiss hopes that this competition will ultimately yield a uniform, globally enforced regulation:
“What you’ll find is various jurisdictions experimenting with regulation: Malta, UK, Russia, Belarus — some taking a much more liberal attitude, some taking stricter attitudes — and over time, the model that works the best will become the predominant model globally. We’ll hopefully see a global regulatory regime enforced by supranational organizations like the IMF [International Monetary Fund] or the BIS [Bank for International Settlements] or something like that. New York is establishing a tough model.”
Brazil-based Banco BTG Pactual SA has revealed its plans to release а security token, which could be purchased with Gemini Dollars or Ethereum.
The token dubbed “ReitBZ” — which will be backed by distressed real estate assets in Brazil — will reportedly enable the bank to provide its real estate business to international investors at lower costs than with traditional means. ReitBZ will be perpetual, with the initial offering period of around 90 days, while proceeds will be reinvested in the distressed portfolio.
Andre Portilho, BTG’s partner responsible for the project, reportedly said that the bank began exploring the technology behind cryptocurrency several years ago, and said that “we thought Bitcoin (BTC) and other currencies were turning too volatile, but we saw an opportunity with this token to try something new — but also with our skin in the game.” The bank reportedly expects to raise $15 million through an initial coin offering (ICO).
Investors will purportedly be able to buy ReitBZ via a special platform by using the Gemini Dollar (GUSD) stablecoin or Ethereum (ETH). The bank reportedly specified that investors will “receive periodical dividends from the recovery of the distressed assets, which will be handled by a BTG-owned company called Enforce.” The investments will not be hedged.
In September 2018, the largest brokerage in Brazil, Grupo XP, announced its plans to enter the crypto space by launching an exchange for Bitcoin and Ethereum called XDEX. Grupo XP CEO Guilherme Benchimol reportedly said that the company was pushed into the crypto business by the popularity of cryptocurrencies among investors. Three million Brazilians “have exposure” to Bitcoin, compared to only 600,000 that invest in the stock market.
Earlier today, Japan’s banking giant Mizuho Financial Group revealed that it will launch its own stablecoin for payments and remittance services on March 1. The coin will reportedly be managed by a dedicated mobile app, dubbed J-Coin Pay, using QR codes at checkout to complete retail payments, as well as fixed at a price of 1 yen (~$0.01) per unit.
A closer look at STOs and how the process compares to the more familiar ICO and IPO.
What is an STO?
STO stands for security token offering.
Similar to an initial coin offering (ICO), an investor is issued with a crypto coin or token representing their investment. But unlike an ICO, a security token represents an investment contract into an underlying investment asset, such as stocks, bonds, funds and real estate investment trusts (REIT).
A security can be defined as a “fungible, negotiable financial instrument that holds some type of monetary value,” i.e., an investment product that is backed by a real-world asset such as a company or property.
A security token, therefore, represents the ownership information of the investment product, recorded on a blockchain. When you invest in traditional stocks, for example, ownership information is written on a document and issued as a digital certificate (e.g. a PDF). For STOs, it’s the same process, but recorded on a blockchain and issued as a token.
STOs can also be seen as a hybrid approach between cryptocurrency ICOs and the more traditional initial public offering (IPO) because of its overlap with both of these methods of investment fundraising.
How is an STO different from an ICO?
It is the same process, but the token characteristics are different.
STOs are asset-backed and comply with regulatory governance. Most ICOs, on the other hand, position their coins as a utility token that give users access to the native platform or decentralized applications (DApps). The purpose of the coin, they argue, is for usage and not for investment. As a result, ICO platforms circumvent certain legal frameworks and do not have to register or comply with the strict governance of regulatory bodies.
The barrier to entry for companies to launch an ICO is, therefore, much lower, as they do not have to do all the upfront compliance work. They are also able to sell their coins (i.e., raise funds) to the wider public.
It is much more difficult to launch an STO, as the intention is to offer an investment contract under securities law. Therefore, these platforms will have to do the upfront work of making sure they comply with the relevant regulations. They would typically also only be able to raise funds from accredited investors who have themselves passed certain requirements.
How is an STO different from an IPO?
Again, it’s the same process, but STOs issue tokens on a blockchain while IPOs issue share certificates on traditional markets.
Although both are regulated offerings, IPOs are only used in private companies that want to go public. Through the IPO process, they raise funds by issuing shares to accredited investors.
With STOs, tokens that represent a share of an underlying asset are issued on the blockchain to accredited investors. These can be shares of a company but, because of tokenization, can really be of any asset that is expected to turn a profit, including a share in the ownership of a property, fine art, investment funds, etc.
STOs are also more cost-effective than IPOs. With IPOs, the companies would typically pay high brokerage and investment banking fees to get access to a deeper investor base. STOs would still need to pay lawyers and advisors, but they offer more direct access to the investment market and, therefore, typically won’t have to pay large fees to investment banks or brokerages. The post-offering administration for STOs is also less cumbersome and cheaper than with traditional IPOs.
How are STOs defined and regulated around the world?
This will very much depend on the individual jurisdictions.
The Securities and Exchange Commission (SEC) in the United States is perhaps the most vocal on the issue of how a security token is defined, and whether or not certain utility tokens are, in fact, security tokens that should be regulated.
In their Decentralized Autonomous Organization (DOA) report in July 2017, the SEC concluded that the DAO ICO was, in fact, a security offering under the qualification of an investment contract.
According to the SEC, ICOs will be classified as a security if they fall under the definition of an investment contract, which was established by the Supreme Court and derived from a landmark case between the SEC and The Howey Company.
Now known as the Howey Test, it states that:
“An investment contract is (1) an investment of money (2) in a common enterprise (3) with a reasonable expectation of profits (4) to be derived from the entrepreneurial or managerial efforts of others.”
The DAO report also concluded that “the investment of ‘money’ need not take the form of cash.” and in a Senate hearing on Feb. 6, 2018, SEC Chairman Jay Clayton also said:
“I believe every ICO I’ve seen is a security.”
However, a bill that seeks to exempt digital tokens from securities law and taxes will be reintroduced to the U.S. Congress “soon,” according to a Feb. 14 tweet from U.S. Congressman Warren Davidson.
#TokenTaxonomyAct Thanks to all who have shared input. @RepDarrenSoto & I are excited about the revisions and look forward to reintroducing this bipartisan bill soon. We continue to inform our colleagues about the urgent need for light-touch regulatory certainty. #blockchain— Warren Davidson (@WarrenDavidson) February 14, 2019
In it, the FCA distinguishes between three types of tokens:
- Exchange tokens — “These are not issued or backed by any central authority and are intended and designed to be used as a means of exchange.“ They fall outside the regulator’s governing perimeter.
- Utility tokens — “These tokens grant holders access to a current or prospective product or service but do not grant holders rights that are the same as those granted by Specified Investments.” They may be within perimeter if they meet the definition of “e-money.”
- Security tokens — “These are tokens with specific characteristics that mean they meet the definition of a Specified Investment like a share or a debt instrument.” They are fully under the scope of the FCA’s regulations, if they meet the definition of a “Specified Investment.”
Switzerland’s Financial Market Supervisory Authority (FINMA) released its ICO guidelines on Feb. 16, 2018, stating each case must be decided on its individual merits but, similar to the FCA, also categorized tokens into three groups:
- Payment tokens — “Tokens may in some cases only develop the necessary functionality and become accepted as a means of payment over a period of time.” FINMA will not treat such tokens as securities but will require compliance with Anti-Money Laundering (AML) regulations.
- Utility tokens — “Intended to provide digital access to an application or service.” These tokens do not qualify as securities if their sole purpose is only to confer digital access rights to an application or service, and if the utility token can already be used in this way at the point of issue.
- Asset tokens — “Represent assets such as participations in real physical underlyings, companies, or earnings streams, or an entitlement to dividends or interest payments.” FINMA regards asset tokens as securities, which means that there are securities law requirements for trading in such tokens.
Are all governments open to the idea of STOs?
In short, no.
Many countries have banned STO’s (and cryptocurrency trading in general), including China, South Korea, Vietnam, Algeria, Morocco, Namibia, Zimbabwe, Bolivia, India, Lebanon, Nepal, Bangladesh and Pakistan.
While in other countries — like Thailand, for example — STO regulations are not as clear-cut, as governments are still undecided as to how it should be regulated. Thailand’s Securities and Exchange Commission (Thai SEC) concluded that Thai-related STOs launched in an international market break the law.
But in an article by the Bangkok Post, deputy secretary of the Thai SEC, Tipsuda Thavaramara, indicated that the commission still has to decide how STOs will be regulated and that, at the moment, it will be looked at on a case-by-case basis.
"At the moment, we have not decided whether STOs fall under the SEC Act or the Digital Asset Act, but it depends on the STOs conditions and the details in its white paper."
What are the advantages of an STO?
We can look at it from both an ICO perspective as well as an IPO perspective.
Compared to an ICO, STOs are seen as lower risk because the securities laws that security tokens have to comply with often enforce transparency and accountability. A security token will also be backed by a real-world asset, which makes it a lot easier to assess whether or not the token is priced fairly in relation to the underlying asset. With pure utility tokens, it can be difficult to assess the true value of a token and whether or not it is priced fairly.
Compared to traditional IPOs, an STO is cheaper because of the removal of middlemen, such as banks and brokerages. Smart contracts reduce the reliance on lawyers, while the blockchain reduces the need for paperwork. This makes the whole process not only cheaper, but also faster.
Fractional ownership and the ability to trade 24/7 bring additional liquidity to the market, especially with traditionally illiquid assets, such as scarce paintings, property and collectibles.
In an email to business and financial news network CNBC, Dan Doney, co-founder and chief executive of fintech firm Securrency, said:
"The ability to trade around the clock, with a range of currencies, offers investors both convenience and liquidity."
These same characteristics open up the market to smaller investors who wouldn’t normally have access to the more avant-garde types of assets.
Finally, it’s good for blockchain adoption in the long-run. STOs are legally compliant, which means they are perceived to be less of a risk and will encourage institutional investors to come on board.
The more institutional investors start to invest, the less volatile the market is likely to become and the further blockchain adoption will grow.
What are the main challenges with STOs?
Increased regulation is the biggest challenge STO platforms face.
This places a bigger administrative burden on them, as processes will have to be set up for custodianship, tracking ownership, exchange approvals, Know Your Customer (KYC), AML, etc. to make sure they comply with the relevant securities laws. And although the process is seen as cheaper than a traditional IPO, the additional upfront work does make it more costly and raise the barrier of entry compared to utility ICOs.
Furthermore, by removing some of the middlemen like banks, brokerages and lawyers, the responsibility of performing these functions now falls on the shoulders of the company, which further increases the administrative burden.
The regulations in certain jurisdictions might also limit who can invest in the STO, which reduces the overall investor pool.