Prediction Market Platform Augur Sets Launch Date
Augur, one of the very first startups to launch an Initial Coin Offering has officially announced that their platform will go live on July 9. With the exception of exchanges, the soon deployment of the predictions market platform marks one of the first blockchain operations to go live.
US Cryptocurrency Exchanges Heed to SEC Directions
Kraken said that the exchange will likely register with the US Securities and Exchange Commission (SEC) as a broker dealer, and then later as an Alternative Trading System. And Coinbase indicated it would follow the same path in April. Poloniex and Bittrex are also reportedly working with the SEC.
Civic Verification Process Harkening Back to Centralized Solutions?
At the Consensus event that took place in New York last week, Civic introduced their prototype of a beer vending machine that is supposed to anonymously verify age and then disperse the beverage. And while a good use case in theory, Civic’s solution is still being routed back to the company itself for identity verification who stores the data, albeit, temporarily.
Cryptocurrency Exchanges Vie for Preferred Stablecoin Adoption
Bitmain led a $110Mn investment round in Goldman Sachs backed Circle. The two companies will work together to create a new transparent stablecoin that would rival both Tether and TrueUSD. The stablecoin will be governed by a newly created foundation CENTRE, which is currently consisted of Bitmain and Circle but new members are expected to join before launch.
Smart Contract Audit Industry Comes of Age
The number of smart contracts is expected to reach 10 million in 2018. The smart contracts are accessible globally and store large amounts of value, which makes them an attractive target for hackers as was seen with The DAO and Parity wallet vulnerabilities. Once smart contracts are deployed, the code cannot be changed or patched easily, which has led to an immense need of audit. Diar speaks to Eduard Kotysh, CEO of Solidified, which is a comprehensive smart contract audit platform that has worked with Gnosis, Polymath, Bankera, Melonport amongst others.
Neufund Looks to Ease Security Filing Pains on Equity Raise Platform
As fear of regulator backlash around Initial Coin Offerings ramped up this year - which has seen the new funding paradigm begin to drop in popularity, Berlin-based Neufund have wrapped their heads together with the German Federal Financial Supervisory Authority (BaFin) in an effort to tokenize equity offerings on the blockchain. The platform, slated to launch in the coming months, is attempting to bridge the on-chain and off-chain parallels of company structures.
Robinhood Ambitious on Crypto Trading Amid Mega Raise
Robinhood, a fintech startup that developed a commission-free trading platform, announced that it had raised $363Mn in a funding round led by DST Global. The company now boasts with more than 4Mn users, $150bn in transaction volume and is valued at $5.6Bn.
Facebook Jumps onto Blockchain Bandwagon
Facebook is known for having tendencies to invest in emerging services and technologies. In the past four years, the social media giant has acquired Instagram for $1Bn, WhatsApp for $19Bn and Oculus for $2Bn. David Marcus, a former Head of Messenger at Facebook and a former CEO of PayPal, who also joined Coinbase’s Board of Directors in December, announced that he will be setting up and heading a small group to explore how to best leverage blockchain across Facebook.
Circulating Supply Increase Prop Up Select Crypto Rankings
A little over 17Mn Bitcoins are now circulating - 80% of the total projected supply. And while the major has now entered a relatively flat line supply curve year-on-year, some cryptocurrencies are releasing tokens in the bucket load, propping up their market capitalization and helping them move up the rankings within the Top 100 coins.
Radix, Hedera Hashgraph Eye Main Chain Scaling Solutions
Radix and Hedera Hashgraph, both of whom are building blockchain networks in an effort to address the scaling woes the industry has so far seen, spoke to Diar on the progress of their platforms. Radix demonstrated in a live test that it can sustain more than 20,000 transactions per second. And Digital Currency Group backed Hedera Hashgraph have also partially tested theirs. Both networks have taken different technology and governance approaches are slated to go live in 4Q18.
LocalBitcoins Volume Plummets as Patrons Shift to Exchanges
LocalBitcoins, one of the very first platforms that made Bitcoin trading more feasible during the cryptocurrency's hay day, has seen its trading volume plummet as US-based exchanges Coinbase, Kraken and Gemini soar. But its not all bad news for the website - liquidity is USD value has stayed steady, and also increased too.
Basket Fund Options Increase as Tokens Gain Momentum
With over 200 Cryptocurrency focused Hedge Funds having started this since last year, it was only a matter of time before Index Funds became a standard offering in the decentralized space. While the investment vehicle that adds different coins to a basket of funds has been relatively limited to accredited investors, such as Grayscale's Digital Large Cap, the Coinbase Index Fund, and Bitwise Hold 10, a new option has come into the scene dubbed Ethereum10.
Self-Sovereign Identity Adoption Hopes on Blockchain Interoperability
While the Internet may be missing an identity layer, Self-Sovereign Identity empowered by the blockchain aims to address just that. Diar speaks to Danny Zuckerman, who heads up strategy & operations at uPort, and Drummond Reed, Founding Trustee of the Sovrin Foundation, who both agree that interoperability of the SSI ecosystem will vastly improve security and reduce redundancies of the centralized systems, aiming to provide the public with ownership of their own information.
Banks Look to R3 For Self-Sovereign Identity Customer Solutions
Banks want to play a role in self-sovereign identity. Blockchain consortium R3’s Abbas Ali tells Diar that self-sovereign identity can allow banks to remove the risk of holding information on behalf of customers. Instead of running on a public network, banks are more inclined to build in a private implementation of the network. And it seems that banks are also keen in getting involved in running data storage services specifically for identity information.
IMF Assesses Crypto Asset Place in Regulated Financial System
The International Monetary Fund continues to weigh-in on Cryptocurrencies, which it has dubbed closer as Crypto Assets. The latest input comes from the organizations Global Financial Stability Report following Managing Director Christine Lagarde’s articles earlier this month. Ultimately, however, any sort of regulatory direction remains ambiguous at best with the IMF possibly gunning to be the orchestrator and oversight body of the new-born industry.
Goldman Sachs Backed Exchange Circle Adds ZCash
Circle, which a few months ago also purchased US-based exchange Poloniex announced that they have added ZCash alongside their other five current offerings on the platform - Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic and Litecoin. The announcement also made note that the exchange would be adding more cryptocurrencies over the coming three weeks.
Blatant Exit Scams on Rise, Sums Small in ICO Raise Comparison
The ICO has become synonymous with exit scams, which have become more frequent in 2018. The due diligence in ICOs is shifted from institutions to individuals who have less resources, less knowledge and are easier influenced by marketing techniques and get-rich-quick schemes. Online platforms that review ICOs have also been ineffective. And while the SEC was able to step in and stop three blatant fraudulent ICOs, not all investors were so lucky.
Coinbase Steadfast in Head Hunting Onslaught
Aurora Harshner, Director of Recruiting at Coinbase has been busy. The popular exchange has hired four Vice Presidents and two Chief Officers to its business this year alone. The company is actively seeking to fill over 90 more positions – mostly engineers. And if it can't hire them, it's most certainly willing to buy them out.
New York Attorney General Looks to Score Brownie Points
Because the US Senate, SEC, CFTC, FinCEN, US Treasury, IRS, Bureau of Fiscal Services, among other government agencies weren't poking around enough into Cryptocurrency operations, the New York State Office of the Attorney General (OAG) has now felt the need to weigh-in also.
IMF Christine Lagarde Chimes in on Crypto-Asset Positives
International Monetary Fund (IMF) Managing Director Christine Lagarde has taken an attempt at addressing regulator fears regarding cryptoassets, a term that seems to have caught on since last month's speech by Bank of England (BoE) governor Mark Carney (Diar, 5 March).
Hyperledger, R3 Remain Sober on GDPR Implications
While users of public Blockchains will have to beware of their own footing regarding their personal information, upcoming EU General Data Protection Regulation (GDPR) has complicated matters slightly for enterprise blockchains in order to be compliant. Speaking to Diar, Hyperledger Executive Director Brian Behlendorf remains calm about the EU framework as agreements between validating participants to amend the ledger in extreme circumstances could potentially address any grey areas, should concerns arise.
EU Looks to Counter Balance Silicon Valley with Blockchain Funding
22 European Union (EU) member states gathered in Brussels last week signing a partnership agreement that would see €300Mn being invested into decentralized projects after having already invested €80Mn under the banner of what the block has dubbed as the “Digital Single Market.” The funding, aimed at addressing key areas of interest, have seemingly also been a bane to European regulator’s past.
Samsung Confirms ASIC Chip Production for Mining Hardware
Samsung has confirmed in January that it has started to manufacture ASIC chips used for mining. Supposedly, it has been confirmed that Samsung is producing the ASIC chips for Halong Mining’s hardware. Halong Mining is a new entrant on the ASIC hardware market, which has been dominated by Bitmain. Canaan is also a relatively new player on the market.
Stock Exchanges Start Eying Cryptocurrency Operations
Sowa Labs, a fintech subsidiary of Börse Stuttgart, announced that it will launch a cryptocurrency trading app dubbed Bison. The trading app will support bitcoin, ether, litecoin, and ripple and is planned to be released in September 2018. Sowa Labs initially specialized in predictive real-time data analytics of financial markets but since being acquired by Börse Stuttgart in December 2017 has since focused on development of the cryptocurrency trading app.
Bitcoin Births Blockchain Analysis Firms, "Know-Your-Transactions"
Chainalysis, a New York-based blockchain analysis company, announced that it had raised a further $16Mn, as well as revealed their competitor knock-out real time analytics tool they've dubbed as Know-Your-Transactions (KYT). Chainalysis is the first company that focused solely on Bitcoin compliance for regulatory obligations such as anti-money laundering (AML).
US Securities & Exchange Commission Looking at Bitcoin ETFs, Again
According to a report published by the Securities and Exchange Commission (SEC), the agency is considering a rule change, which would enable the listing of two Bitcoin exchange traded funds (ETFs) on NYSE Arca.
India Goes on Final Cryptocurrency Offensive
The Reserve Bank of India (RBI) issued an order on Friday saying that regulated financial institutions will have three months to sever ties with any entities that are dealing with cryptocurrency. Even though RBI recognized that technological innovations including blockchain can potentially improve the efficiency of the financial system, it said that cryptocurrencies raise concerns of consumer protection and money laundering amongst others.
Coinbase Looks to Alumni for Investment Opportunities
Last week, Coinbase President Asiff Hirji announced on CNBC that the exchange has now launched their own investment arm, Coinbase Ventures Fund. The fund aims to focus on early stage companies, not cryptocurrencies, that are aligned with the company's own vision of building an open financial system.
Øx dApps Coin Together Decentralized Financial System
Last week Coinbase made a long-awaited announcement that they will soon be supporting ERC20 tokens on their platform. While they made no statement on what digital assets they would be adding in the upcoming months, 0x, the decentralized exchange protocol’s coin surged on the back of former Coinbase employees assisting on the project. But in the grander scheme of things, is there more than meets the eye?
Institutions Await Consortias to Deliver on Blockchain Promises
Hyperledger, Enterprise Ethereum Alliance, R3 and we.trade are the largest consortia that focus on developing blockchain solutions. The blockchain consortia are consisted of enterprises that are looking to develop large blockchain solutions where the data is private or only shared amongst the participating members.
Bank of Montreal Bans Debit Cards For Cryptocurrency Purchases
In a memo Bank of Montreal (BMO) said that it decided to block cryptocurrency merchant transactions in order to protect its customers from the volatile nature of cryptocurrencies as well as security risks. The move is a little perplexing on the banks stance since BMO will restrict its customers from spending their own capital on checking or savings accounts
US Department of Justice Continues Crack Down
While the US Securities and Exchange Commission, the US Commodities and Trade Commission, FinCEN, and every regulator aims to define digital assets, the Justice Department just continues business as usual.
While many parts are up for interpretation from Coinbase's Digital Asset Framework that lists the prerequisites a cryptocurrency requires to qualify for listing on the popular exchange, one measure can help hone down possibilities. Whether or not a cryptocurrency has a fiat trading pair on the market filters down possibilities remarkably. Can listings by cross-town exchange Kraken provide further insight?
Airdrops Worth Billions, But Adoption Success Rate Limited
Successful projects have airdropped what is now worth more than $4Bn of free tokens. But there is a very low success rate associated with airdrops - with no functioning use case, the tokens become essentially worthless. However, airdrops can evolve as an alternative fundraising method that are cunningly attempting to circumvent securities laws – but not all is what meets the eye.
Tether Hampering Bitcoin, Cryptocurrency Decoupling?
Critics have been calling out the US pegged stablecoin Tether as being a systematic risk to the cryptocurrency markets due to the company's seemingly inability to release audited reports proving dollar for dollar reserves. Tether, which accounts for 1/4 of trade volume with Bitcoin alone, has been used by exchanges that haven't been able to find banking. Diar data crunching shows cryptocurrencies are less likely to be affected by Bitcoin's price fluctuations, should Tether be a small part of traded volume, along with fiat trading.
Coinbase Inching Closer Towards Ambitious Goals
Coinbase has been racking up a few wins in recent weeks. They launched their first institutional investor product, the Coinbase Index Fund, and announced approval by British regulators for an e-Money license that gives it reach in the UK and, for now pending Brexit negotiations, in Europe also. And Toshi, the company's Ethereum web-broswer was updated last week too, marking their entrance into what CEO Brian Armstrong has dubbed as Phase-4 of the exchange's plan.
Cryptocurrency Exchange Listing Success Markedly Vary
Binance CEO Changpeng Zhao tells Diar that vigorous review of teams and ICO projects are part of the exchange's modus operandi which has seen the young operation list tokens that have retained their gains, even in today's bear market. We crunch some numbers for tokens that have been trading since 2017 to date to see just how well crypto exchange listings have faired.
Looming Regulatory, Banking Hurdles Face Crypto Exchanges
As the focus on cryptocurrency regulation pick up pace worldwide, exchanges could be the next target of the watchdogs. While the largest exchanges have already implemented necessary Know-Your-Client (KYC) and Anti-Money Laundering (AML) procedures, many still remain unregulated. Four of the largest exchanges by trading volume do not support any fiat currencies natively.
Wyoming Passes Utility Tokens Law as New Asset Class
While the institutions of old flock to Delaware, Wyoming is aiming to be the home of the next generation of companies by passing into law 5 bills that define cryptocurrencies and Blockchain initiatives.Wyoming House Bill 70, dubbed as the “Utility Token Bill” was signed into legislation last week marking a new legal option for developers wishing to raise funds through an Initial Coin Offering.
Central Bank Digital Currency to Impede on Bank Profitability
The Bank for International Settlement (BIS), the financial organization owned by 60 central banks published a report outlining the pros and cons of a possible Central Bank Digital Currency (CBDC) last week. With various options on the design and features of a possible CBDC, the BIS echoed its concerns that commercial banks will find difficulty sustaining deposits and maintaining income streams from payments.
Wall Street Creeps into Crypto, Backs DLT-Focused Outfits
The recent purchase of Poloniex by Goldman Sachs-backed mobile Bank Circle caused many to rejoice into a solid entrance by Wall Street into the Cryptocurrency space. But financial outfits have been entering the cryptocurrency and blockchain development space for some time now, from Mastercard and Visa to the New York Stock Exchange and NASDAQ since early 2015.
Coinbase, Grayscale Introduce New Institutional Investor Products
Major retail cryptocurrency exchange Coinbase announced that they have now introduced an index fund and asset management arm to their business. The fund compromises of what is currently tradable on Coinbase – Bitcoin, Ethereum, Litecoin and Bitcoin Cash. And Grayscale also introduced single asset trusts for the latter three cryptocurrencies last week, as well as a Ripple Investment Trust.
FinCEN Reassures, Agency Will Hold Token Issuers Accountable
In a letter from the Financial Crimes Enforcement Network (FinCEN) addressed to Senator Ron Wyden, a ranking member on the US Senate’s Committee of Finance, the agency responded to the concerns regarding cryptocurrency activity. FinCEN, an arm of the US Department of Treasury that looks to combat domestic, as well as international illicit financial activity.
SEC Calls on Token Exchanges to Register with Watchdog
The US Securities and Exchange Commission (SEC) continues to send out it's warnings, the latest of which targets cryptocurrency exchanges who are trading tokens that where issued from an Initial Coin Offering (ICO).
Murky Progress for Projects Following Mega ICOs
The boom of Initial Coin Offerings (ICOs) made it possible to raise capital globally without an intermediary, regulatory responsibility or even basic investor relation tenants. Setting up an ICO was considerably cheaper and easier than traditional fundraising methods because of lack of regulation. And as most ICOs purposely tried to avoid being labeled as a security, compliance and due diligence requirements were nonexistent.
Bank of England Looks to Integrate Digital Assets into Financial System
In a speech delivered last week at Bloomberg’s European Headquarters on 2 March, Bank of England (BoE) governor Mark Carney highlighted several points on how cryptocurrencies might pose a threat to current markets, and in which way the British nation will wish to address regulation and classification of digital assets at the upcoming G20 Summit.
UK Mobile Payments Witness Exponential Growth
While still a far cry from China who processed close to $7.5Tn in 2017 through mobile payments thanks to AliPay and WeChat, UK mobile payments grew by over a whopping 300% according to WorldPay - nearing a total of £1Bn. The new trend, showing exponential growth, shows promise according to WorldPay, in higher ticket purchases showing a greater trust and ease in using mobile service providers.
German Securities Regulator Weighs-In on Cryptocurrencies
The Federal Financial Supervisory Authority of Germany (BaFin) last week published a circular clarifying it's position on Initial Coin Offerings (ICO). The German regulator has seemingly classified all ICOs as securities.
Cautioned ICO Investors Look to SEC with Class Action Lawsuits
Crypto-related litigation has seen a surge ever since the chairman of the Securities and Exchange Commission (SEC) announced that most of the ICOs that he has seen qualify as securities. Unsurprisingly, the lawsuits are against the ICOs that have been underperforming financially and they are retrospectively accused of issuing unregistered securities. Only two law firms have been involved in almost all litigation.
Gibraltar Token Regulations Slated for 2Q18 Parliament Consideration
The Government of Gibraltar and the Gibraltar Financial Services Commission (GFSC) announced earlier this month that the regulator is working on new legislation to regulate tokenised digital assets that will also address the trading markets and cryptocurrency investment advisors. Should the regulators framework be approved by parliament, this would make it the first encompassing law in the world that governs tokens.
Torrent of Failed ICO Projects in 2017, But Lost Funds Still Minuscule
A study by Bitcoin.com found that a whopping 46% of ICOs launched in 2017 failed. The number shoots up to an eye-balling 59% if one is to include projects that will also most likely fail in the near future. And while the total amount lost is to the tune of $233Mn, the sum only represents 4% of the total funds raised in 2017. Maybe investors are more savvy than meets the eye after all?
Venezuelan Cryptocurrency, Petro, Launches In Peculiar Fashion
Less than 3 months ago, Venezuelan President Nicolas Maduro made a televised announcement that his economically embattled nation will launch its own cryptocurrency, the Petro, backed by its oil & gas, gold and diamond reserves – an approach at possibly circumventing US sanctions through a globally traded digital currency (Diar, 4 December 2017).
CFTC, SEC Draw Guns Against Questionable Cryptocurrency Activities
After being for the better part of 2017 observant on cryptocurrency activities, the U.S. Commodity Futures Trading Commission (CFTC) is starting to take a proactive approach in 2018 in order to protect US investors. The agency has been warning cryptocurrency investors about fraud and manipulation and advises them to do independent research. And the SEC hasn't stayed quiet either this week gunning down a few targets of their own.
IRS Still Mum on Preferred Cost Basis Method For Tax Calculations
The IRS hasn’t released guidance since 2014 and it’s leaving cryptocurrency attorneys and investors blindfolded. The IRS, which treats virtual currencies as property for tax purposes, means every exchange of cryptocurrencies is treated as a taxable event even when fiat is not directly involved. Following the price boom in 2017, the IRS has yet to clarify which accounting method to use when calculating capital gains and has yet to establish how to determine the cost basis of hard forks and air drops.
Ripple Bags Major Financial Institutions in More Testing
In a highly anticipated move by the Ripple community, Hikmet Ersek, the CEO of Western Union, announced that the cross-border payments focused company is officially experimenting with xRapid, which uses Ripple’s native cryptocurrency XRP.
JP Morgan Takes Crack at Studying Digital Currencies and Assets
Major investment bank JP Morgan published a report titled "Decrypting Cryptocurrencies: Technology, Applications and Challenges" made available to its clients last week. JP Morgan took the position, much like many central banks (see story below) that no cryptocurrency at this point in time is stable enough to be considered a currency. The firm doesn't believe that any Central Bank, while showing interest, will issue digital currency in the near future.
Barry Silbert, CEO of Digital Currency Group (DCG) announced last week at the Yahoo Finance All Markets Summit that its asset management business arm, Grayscale, has launched its 4th cryptocurrency investment product, the Digital Large Cap Fund, compromised of a basket of 5 cryptocurrencies – Bitcoin, Ethereum, Ripple, Bitcoin Cash and Litecoin.
Italian based exchange, BitGrail, announced last week the theft of 17Mn Nano coins. The estimated value at the time of theft is between an eye-tearing $175-200Mn, making it the third largest hack in crypto history. But concerns are being voiced by the Nano team that not all is as it seems calling possible foul play by the exchange operators.
Hacks on centralized exchanges have had limited effect on Bitcoin’s short term and long-term price Diar number crunching shows. With the possibility of stolen coins being blacklisted and blocked from being deposited by exchanges who wish to remain compliant with Anti-Money Laundering and Know-Your-Client (KYC) regulations, fiat off-boarding mass sums, while not impossible, becomes tricky.
The US Securities and Exchange Commission (SEC) and US Commodity Futures Trading Commission (CFTC) Chairs, Jay Clayton and Christopher Giancarlo, testified infront of the US Senate last Tuesday in a session that looked to address concerns about virtual currencies. The SEC and CFTC shared the view that they currently lack sufficient legislative powers and broader coordination with other regulators.
ECB: US Futures Could Lead EU Banks Holding Bitcoin Positions
Bitcoin continues to creep up in every possible financial event. Last week, the discussion of Bitcoin and cryptocurrencies was raised by several speakers at the European Parliament in Strasbourg. And it didn't fall off the radar by European Central Bank (ECB) President Mario Draghi who said "recent developments, such as the listing of Bitcoin futures contracts by US exchanges, could lead European banks too to hold positions in Bitcoin
Tether, Traders Unfazed by US Regulators Subpoena
Cryptocurrency community concerns were answered by the the US Commodities and Trade Commission who on 6 December 2017 subpoenaed Tether and Bitfinex. With scant details besides this very fact having emerged as of date, the news did very little to hamper the trading of USDT. And with markets taking a bearish turn, the stablecoin might continue to be used by traders who aim to profit from fluctuations.
SEC Continues Course Against Questionable ICOs
The SEC halted AriseBank for misleading investors in a fraudulent ICO. The Commission made clear that using terms like cryptocurrency and ICO will not escape the regulatory oversight or its efforts to protect investors.
Decentralized Exchanges Remain on Far Outskirts of Trading Volumes
While centralized cryptocurrency exchanges are prone to thefts, they provide a faster, more user-friendly experience. They are also fiat on and off ramps. A key element that decentralized exchanges cannot provide due to Anti-Money Laundering (AML) and Know-Your-Client (KYC) regulations. And while decentralized exchanges provide more control and security they continue to lack liquidity.
Cryptocurrency Exchange Thefts Near $1Bn Following Coincheck Heist
The largest heist in history took place last week with the robbers stealing close to $500Mn worth of NEM coins from Japanese exchange Coincheck. The sum brings the total cryptocurrency exchange thefts alone close to an astounding $1Bn. In fact, over 93% of stolen cryptocurrencies have occurred on centralised exchanges highlighting the problem and risks involved even further.
Davos WEF: Cryptocurrencies Receive Luke-Warm Welcome
A flurry of commentary regarding bitcoin and cryptocurrencies came out of Davos where world leaders met at the annual World Economic Forum. And while cryptocurrencies, headed by Bitcoin, have fallen on everyone’s radar, it seems evident that those steering potential regulation remain weary of the pseudonymous traits and possible illicit activity with cryptocurrencies.
US Dollar Pegged Cryptocurrency, Tether, Raises Concerns
Major cryptocurrency exchanges who have found banking and regulation to be possibly problematic are accepting Tether, a 1 for 1 US dollar pegged cryptocurrency that claims to be backed by the corresponding reserves. But the lack of a professional audit and massive new issuance of Tether have left the community concerned of a possible systemic risk to the cryptocurrency industry.
Banking Group Nordea Turns Regulator
Last week the largest Scandinavian banking group, Nordea, announced a sweeping ban for all its 31,000 employees from trading cryptocurrencies starting from 28 February. What is possibly the first such ban of its kind has turned the regions financial conglomerate into a regulator as neither the European Central Bank (ECB), nor the nations Central Banks have given such guidelines or directives.
In a move to showcase the scaling solution for Bitcoin, Blockstream, the influential outfit that houses many of the core Bitcoin developers, pushed forward with an online store testing payments on the highly awaited Lightning Network. Many are heralding the move as a step forward in bug testing the scaling protocol in real-time but the stride doesn't come without caution.
With current volatility spikes and scalability issues, merchants are avoiding Bitcoin payments directly and using an intermediary to process the transaction to avoid the currency exchange risk. Most of them never even hold Bitcoin or other cryptocurrencies but rather receive the fiat amount in their bank accounts.
A recent report that was co-authored by Bitcoin analytics firm, Elliptic, and the Center on Sanctions and Illicit Finance, a program funded by Washington based Think Tank, the Foundation for Defense of Democracies, found that only a small portion of the cryptocurrency, under 1%, entered conversion to fiat services.
South Korea caused large cryptocurrency sell-offs after the justice minister said that the ministry is “basically” preparing a bill that would ban trading on cryptocurrency exchanges. The statement caused an outrage of public who joined their forces in a petition that has since been signed more than 220,000 times.
Major Blockchain Investors Back Select Few Cryptocurrencies
The number of new cryptocurrencies being added into the market keeps growing in unabating fashion – over 1400 are being traded as of date. But major investors Digital Currency Group (DCG), Blockchain Capital and Pantera Capital have only backed a select few cryptocurrencies, and many times, have invested in the very same prospects. But the “Big3” have another trick up their sleeves with the investors backing major exchanges and wallet services.
Ripple, Moneygram Announce xRapid Pilot Testing XRP
Blockchain payments focused company Ripple Labs announced last week that the international money transfer firm Moneygram will be pilot testing xRapid that uses XRP to facilitate quick and low cost cross-border transfers. The news resulted an a quick stock price surge for Moneygram, as well as XRP. Seemingly, the possible adoption of the technology is positive for both companies, however, the benefits ultimately might be quite small.
Kodak Snaps Moment With Blockchain, Announces ICO
Kodak announced the launch of a rights management platform for photographers that will run on a blockchain along with an underlying cryptocurrency KODAKCoin. Kodak is the latest publicly traded company to jump on the blockchain craze which has riddled the stock markets with soaring prices by simply announcing its entrance into the new technological space.
Private Cryptocurrencies Challenge Bitcoin Fungibility
Bitcoin and most cryptocurrencies are pseudo-anonymous – all transactions are publicly available online including the addresses and amount being sent. As a result, the coins can sometimes be traced through blockchain analysis. The movements of the privacy cryptocurrencies are near impossible to track, giving governments another technical obstacle to overcome.
Bank of England Digital Currency To Upend Payments Market?
While the Bank of England (BoE) has been quite transparent about its interest in digital currencies since 2015, word finally broke out via British newspaper The Telegraph at year-end that the BoE plans to issue a "Bitcoin-Style" digital currency. The BoE press office quickly confirmed to Diar that it is unlikely that a digital currency will happen anytime soon. What is interesting, however, is the potential that anyone, not just financial institutions, could hold the digital currency directly with the central bank.
Ripple Labs Book Value Reaches Record on xRapid Adoption Hopes
Ripple Labs’ native cryptocurrency, XRP, has recently overtaken Ethereum as the second highest in terms of market capitalization. In just the past month, its price surged by more than 1400% and the market cap shortly reached $148Bn. Even in the erratic cryptocurrency market, XRP’s rise was contentious. The most probable explanation for its rise is that the investors are confident that Ripple’s XRP will eventually be used as an underlying asset within the banking system.
Visa Ends Relationship With Sole EU Issuer of Cryptocurrency Cards
Visa ended a relationship with WaveCrest, an issuing company that was responsible for providing the vast majority of cryptocurrency backed debit cards. Most of the cryptocurrency cards effectively stopped functioning without any notice. Last November, Diar reported that WaveCrest was monopolizing the space in Europe increasing the likelihood of a potential choke hold on the cryptocurrency debit cards.
Bitcoin Volatility Trends Upwards For First Time Since 2013
Mass adoption driven by speculation and not the underlying technology led to an unsustainable increase in transactions, which in turn crippled the network by driving up the fees and confirmation times. Ultimately, Bitcoin is only usable as a volatile store of value and as an instrument for safely sending larger transactions without government’s ability to seize it.
Whilst centralised Bitcoin hacks have become less of an early technology hazard than in recent years, the money supply has been riddled with thefts and heists. Diar analysis shows that a whopping 10% of bitcoins circulating have been the victim of theft. But with a public ledger and companies that track movement of wallets with stolen goods, it may prove too difficult to withdraw into fiat as exchanges adhere to Know-Your-Client (KYC) and Anti-Money Laundering (AML) requirements. What this could mean however, is an additional sum of lost coins.
Digital Currency Group Invests Alongside Big Money
Since its start in late 2015, Digital Currency Group (DCG) has been investing in what have turned out to be some of the most active and influential Blockchain and Bitcoin companies. From popular exchanges and wallets, to press, DCG has expanded its presence and is only a few degrees of separation from the most prominent players on Wall Street and Silicon Valley.
Bitfinex, Coinbase Double Bitcoin Trading Volume, Kraken in Decline
Cryptocurrency exchange platforms Bitfinex and popular Coinbase continue to increase their market share of bitcoin trading volume in the latest quarter of 2017 as people continue to pour in from apparent fear-of-missing-out.
Bitcoin Cash Finds Target Audience With BitPay, Blockchain Wallet
BitPay, the largest bitcoin payment processor, announced on Friday that it will begin to support payments on the other blockchains starting with Bitcoin Cash this year. The news came out one day after Blockchain.info, a Bitcoin wallet with more than 20Mn users, has announced on Thursday that it now fully supports Bitcoin Cash as a result of a growing demand. BitPay started in 2011 with a mission to make payments faster, safer, and more efficient through Bitcoin.
CME Bitcoin Futures Launch, Clearing Firms Sit on Sidelines
In the most anticipated financial product of 2017, the CME Bitcoin Future launched this week as the biggest institutional backing of the cryptocurrency yet, one week after cross-town rivals CBOE launched their Bitcoin futures (Diar, 11 December).
IOTA Takes Aim at Solving Blockchain Scaling Conundrum
Cryptocurrencies that are based on blockchain are struggling to scale without an increase of fees and slowing down confirmation times. The transactions on Ethereum were slowed down by Cryptokitties this week, a website that lets user collect and breed digital cats. And Bitcoin notoriously struggles to settle on a solution with consensus that would scale the network and make microtransactions feasible.
Major Exchanges Face Parallel Outage-Trend During Price Surges
As the Bitcoin frenzy and fear-of-missing-out continues to show no end, major crypto exchanges have been riddled with problems handling the massive amounts of traffic from people looking to access various trading platforms. The problem isn’t isolated to a single exchange in particular – but in fact – incident logs show that during peak prices and volume surges, major exchanges across the world stop operating almost in-concert.
US Securities and Exchange Commission File Charges Against PlexCoin
In late September, the SEC announced that they are launching a Cyber Unit that will target cyber-related misconduct. The Cyber Unit is responsible for coordinating information sharing, risk monitoring, and incident response efforts throughout the agency. Amongst others, the focus will be on market manipulation, violations involving Distributed Ledger Technology (DLT) and Initial Coin Offerings (ICOs), misconduct on the dark web and cyber-related threats to trading platforms.
CBOE Bitcoin Futures Launched, Circuit Breakers Triggered
One of the most anticipated products in the Bitcoin community came of age on Sunday with Chicago based exchange CBOE launched the first Bitcoin Future. Within a short five minutes of trading, Bitcoin Futures spiked 10%.
Parity Proposes Difficult Suggestions To Salvage Stuck Ether
A month after more that 500 users where affected by a bug in the popular multi-signature wallet Parity, the company behind the software have made suggestions on how to rescue some 500,000 Ether.
Bitcoin Linked Investment Products Coming of Age
With the lack of clear regulations on trading and taxation of potential Bitcoin gains, institutional investors have sought alternative products linked to Bitcoin’s impressive value rise and daily fluxes. Multiple financial products are now available and many more have been announced giving big money an easier entrance point to the cryptocurrency.
Blockchain Identity Platforms Target Old Institutions
Blockchain have been promising a plethora of solutions against downtime and security. Startup Bloom is targeting the market share of credit scoring agencies, while others such as uPort and Civic aim to provide a secure identity platform that has even seen some governments use already.
Venezuela Aims to Launch National Cryptocurrency
OPEC founding member Venezuela announced its intention to launch a cryptocurrency backed by their oil & gas, gold and diamond reserves. Venezuelan President Nicolas Maduro made a televised announcement where he dubbed the planned currency as "Petro.”
Institutional Bitcoin Storage Solutions Rake in Big Money
While the blockchain is near impenetrable, Bitcoin has been notoriously known for hacks that have been the result of shoddy security measures and the downfall of centralized hold places such as exchange Mt.Gox which lost an estimated 650-850,ooo Bitcoins. Coinbase and other Bitcoin companies have found an opportunity to charge massive fees to safe keep clients Bitcoins.
The number of crypto hedge funds have seen an enormous growth in 2017. 100 new hedge funds have opened this year alone – around 80% of all crypto hedge funds in existence. Nasdaq analytics firm eVestment estimates that traditional hedge funds in 2017 have been able to generate an average Year-To-Date return of approximately 7.2% which pales in comparison to the massive returns crypto has been able to give its clients.
Vol1. No.5 - 27 November 2017
Revolut to Use GDAX, Bitstamp as Underlying Exchanges
Fintech start-up Revolut is launching a limited closed public beta program for trading cryptocurrencies this week on their popular mobile banking wallet. Lewis Tuff, Lead Platform Engineer tells Diar that Revolut is only a few short weeks away from offering all its user base three of the major cryptocurrencies.
Vol1. No.5 - 27 November 2017
European Payment Council Rolls Out Instant Cross-Border Payments
The European Payments Council (EPC) has announced that the awaited SEPA Credit Transfer Instant (SCT Inst) which will allow fast cross-border payments within the Single Euro Payment Area (SEPA) members has gone live.
EU Bank Failure Burden Remains on National Guarantee Schemes
With the European Deposit Insurance Scheme (EDIS) proposal all but scrapped, the European Central Bank (ECB) released an opinion proposal on the restructuring of framework for bank crisis management should it find itself in a precarious position. The proposal seeks to allow ailing banks to set withdrawal limits to avoid any possible bank-runs and maintains that the national guarantee schemes that are financed by levies on local bank should carry the burden of failure.
Crypto Lenders Eye P2P, Small Loans Market Share
The global financial crisis led to a massive distrust in financial institutions, and increasingly, people requiring credit veered towards the online Peer-to-Peer (P2P) lending industry. The opportunity hasn’t been lost on new players entering the market, that is estimated could reach $290Bn in just a few years, utilizing the Blockchain and Cryptocurrencies. Diar speaks to their CEOs.
Central Banks Undecided on Digital Currency Design
Research on a Central Bank Digital Currency (CBDC) have all been asking similar questions – will the public hold accounts with the Central Bank instead of commercial banks? Will the currency earn interest like bank reserves? What are the macroeconomic objectives? Sweden’s Central Bank, the Riksbank, finds itself in a position wishing to address these very questions sooner rather than later, as the Scandinavian country’s payment system now effectively depends on a handful of commercial entities.
Central Banks DLT Studies Positive, Exploration Continues
Central Banks have been testing various DLT solutions on the market, however, the verdict is still out on whether or not the technology can handle the mass amounts of transactions and complexities the industry faces. For the most part, cost, privacy and liquidity are the primary problems that the Central Banks wish to address.
Alipay Continues Expanding Its Tentacles
Ant Financial Services Group wallet Alipay boasts some 520Mn active users and continues expanding its network with both consumers, and merchants at home. And 2017 has seen new partnerships develop internationally with the payment service provider giant in an effort to allow Chinese tourists to use their wallet whilst travelling abroad.
Bitcoin Selling at Premium as Turkish Lira Continues Decline
The Turkish Lira continues its decent against the greenback and Euro. As a possible support for its embattled currency, the Central Bank of Turkey (CBRT) has added a near $5Bn worth of gold to its stash. Meanwhile, Bitcoin is trading at a premium on Turkish Exchanges.
Cash-Settled Bitcoin Futures Ushers in Institutional Tools
Following lasts weeks announcement that it will start Bitcoin Futures Contracts by year-end (Diar, 6 November), the Chicago Mercantile Exchange (CME) followed-up this week with the release of their contract specifications that have the earmarks of other CME cash-settled products, including circuit-breaker rules in order to rein in any major day-to-day swings.
Bankers, Regulators Continue Sounding Alarm Bells
A flurry of opinions and views on Bitcoin and Initial Coin Offerings (ICOs) from big money and regulators from various government bodies have been circulating in the past several months. While most comments are bearish, with the advent of Bitcoin Futures, institutions, while hesitant, might find opportunity in the new asset class.
Bitcoin Segwit2X Suspended Amid Weak Support
The SegWit2X hard fork which was aimed at addressing the blocksize, has been cancelled in an email written by BitGo CEO Mike Belshe. As one of the main proponents of the SegWit2x project, Belshe expressed that the project has not built sufficient consensus and if the planned hard fork were to go through, it could divide the community even further and hinder Bitcoin’s growth.
$150Mn Stuck In The Aether From Parity Bug
A security vulnerability, which has unofficially rendered as much as $150 million in ether inaccessible was discovered on November 6 in Ethereum’s client Parity. Parity, a multi-signature wallet, is Ethereum’s second most popular client developed by Parity Technologies, a London-based startup.
Bitcoin Cash Supporters Get Vocal With Vested Interest
Shortly after the news of holding off on the planned Segwit2X hard fork, the supporters of block size increase have rallied together and voiced their support for Bitcoin Cash. The result was massive price swings with Bitcoin Cash reaching its all time high.
With the rapid increase in price for Bitcoin, holders are reluctant to spend, which pushes down demand from consumers on merchants to accept the currency. Cryptocurrency debit cards provide a way to seemingly eliminate fiat currencies in adopter’s daily lives. But there is a clear chokepoint for cryptocurrency spending as only two significant Money Services Businesses issue Visa Cards – WaveCrest in Europe, and Metropolitan Commercial Bank in the US.
Bitcoin Financial Instruments Continue Gaining Traction
In the biggest institutional endorsement of Bitcoin yet, the Chicago Mercantile Exchange (CME), following CBOE, announced the Q4 2017 start of a cash-settled future contracts for the cryptocurrency. LedgerX has been trading Bitcoin Swaps & Option. And in Europe, Saxo Bank, following XBT Provider, has been trading Exchange Traded Notes (ETN) which now exceeds a whopping $100Mn in Assets Under Management. Talks of Exchange Traded Funds (ETF) have already started.
StartEngine, tZero Steer Towards SEC Regulated ICO Market
With over $3.5Bn in capital raised so far by Initial Coin Offerings (ICO) in 2017 and a record raise in October to the tune of $829Mn (See Chart), cryptocurrencies continue to garner the attention of the US Securities and Exchange Commission (SEC). StartEngine and tZero aim to address two possible upcoming eventualities – SEC Regulated ICOs and the trading platform for these very securities.
Russia is planning to issue a government-backed digital currency, the CryptoRuble. It will not be mined but rather issued by the Central Bank. While details are scant, its value will be pegged to Rubles, which will aim to be a stable digital medium of exchange. CryptoRubles will not be private or resistant to inflation but they can present an opportunity for the government to tax the underground economy by slowly phasing out cash.
Lenders Bank Roll Enterprise Blockchain, But Adoption Limited
The potential of enterprise Blockchain to reduce costs and streamline the banking industry has spurred banks to invest heavily in research. Use cases span broadly from cross-border payments, clearing and settlement, KYC procedures, trade finance, loan syndication to the implementation of smart contracts. And while there has been a lot of motion, Blockchain has seen limited large scale adoption.
Apple Pay Continues Expansion, Enters Middle East
Apple has fulfilled on its third-quarter earnings call promise to deploy Apple Pay in three more European countries, Finland, Denmark and Sweden. The mobile wallet from the tech giant also entered the United Arab Emirates, 6 months after Samsung Pay entered the market in April 2017.
Lightning Network A Boon To Bitcoin Fungibility
With the recent arrest and soon extradition of Alexander Vinnik to the U.S. on money laundering charges, exchanges will be incentivized to use a centralized service to check the bitcoins’ history to avoid involvement with authorities. This questions a core component of Bitcoin, and if the currency can be made truly fungible.
Mastercard Launches B2B Blockchain Pilot
Mastercard, who joined the Enterprise Ethereum Alliance (EEA) in late July 2017, has launched their Business-to-Business (B2B) Blockchain Application to facilitate cross-border payments throughout its 22,000 bank and financial institutions.