Tuesday, January 29, 2019

Italian Court Orders Bitgrail Founder to Refund $170M of ‘Missing’ Cryptocurrency


An Italian court has ruled that Francesco Firano, founder of defunct cryptocurrency exchange Bitgrail, was at fault for the disappearance of $170 million worth of the nano digital currency on his exchange last year. Firano, who called himself "The Bomber," is now "required to return as much of the assets to his customers as possible."

Court Seizes Firano's Personal Assets to Repay Victims
In its ruling, the Italian Bankruptcy Court, which enlisted the services of a court-appointed technical expert, concluded that both Bitgrail and Firano personally be declared bankrupt and forfeit their assets.

According to documents released by the Bitgrail victims advocacy group, the court's decision, delivered Jan. 21, authorizes the seizure of Firano's personal assets. So far, more than $1 million worth of assets have been seized, including a luxury vehicle, the group said. Digital assets worth several million dollars have also been confiscated from Bitgrail accounts and moved to accounts managed by trustees appointed by the court.

he documents show that Firano repeatedly mishandled security matters pertaining to the private keys of Bitgrail users, including his alleged transfer of client funds into wallets belonging to the exchange. Firano had failed to put in place suitable safeguards to prevent repeat, unauthorized withdrawals of nano from the exchange, the court said.

That's despite tens of millions of dollars worth of nano going 'missing' on several occasions due to duplicate withdrawals being fraudulently made from a single request due to a bug. The court berated Firano for not appropriately disclosing the suspicious transactions to his customers.

For example, the court found that the nano reported lost by Firano on Feb. 9, 2018 had actually been removed from the exchange months earlier, between July 2017 and December 2017. In total, about 10 million nano tokens left the exchange clandestinely during this period, with Firano's alleged full knowledge, but he did nothing about it.

The most damaging detail relates to how, just days before announcing the $170 million ( 17 million nano) theft, the Bitgrail founder moved 230 BTC (about $1.8 million at the time) into a personal account on another exchange called The Rock Trading, in a bid to swap it for euros. The documents show that Firano had also tried to withdraw money through a bitcoin ATM linked to that exchange.

The court appointed expert concluded:
Therefore it was the Bitgrail exchange that actually requested to the node multiple times to allow the funds to leave the wallet (funds that in fact, had already left the account after the first request) and not the Nano network that allowed multiple withdrawals. The shortfall reported by Firano in February was caused by a transfer request generated by Bitgrail multiple times upon receiving a single request from the user.

Victory for Investors as Firano Seeks Way Out
Meanwhile, Francesco Firano attempted to cheat his way out of the mess. After nano withdrawals were closed on the Bitgrail exchange in January 2018, Firano promised to repay investors 20 percent of their funds, but only "if they agreed to sign a waiver foregoing any legal action against him."

Later, he announced plans to reopen the exchange and release a new token called Bitgrail Shares, which would be used to reimburse the victims over time. Users called him out, wary that it was an elaborate exit scam, and opted to go to court. Firano argued in a losing case that his exchange was a mere provider of services and that the currencies deposited on the exchange were "regular" since he could not freely use the deposited coins.

A Bitgrail advocacy group has called the court ruling "both a huge win for crypto users and a cautionary tale for cryptocurrency exchange owners, who have been provided with a clear example of how not to run an exchange or handle a loss of funds."

Cryptocurrency Is Providing a Lucrative New Revenue Stream for Governments


Cryptocurrency's resistance to government control is countered by the fact that a number of governments, including Chile, Romania, Spain and South Africa, are looking to cash in by taxing crypto assets. These countries are crafting laws that bind citizens to annually disclose cryptocurrency investments that, in some cases, are held at home and abroad, and to pay anything from 10-35 percent income tax on crypto gains.

Cryptocurrency Taxation: Coming-of-Age Responsibility or Loss of Freedom?
Crypto taxation is happening despite governments' largely lukewarm treatment of virtual currency as a bona fide financial instrument that is useful for everyday transactions. Some governments have previously issued skeptical statements in a bid to dissuade cryptocurrency usage on their turf, though others have committed to research, proactive policies and legislation to make digital coins an integral part of their economic strategy.

Governmental efforts to stake a claim in cryptocurrency wealth suggest that digital currencies are at a point where the establishment acknowledges their legitimacy and value to the state. However, the warm embrace of government tax agencies doesn't sit well with crypto visionaries for whom privacy and detachment from the state are foundational values.

Chile's new legislation, allowing it to tax cryptocurrencies starting in April, has been interpreted by observers as a major step towards legitimizing the trade and use of virtual currencies in the South American country, following previous uncertainty. Before the latest move to increase the tax base by targeting crypto assets, the Chilean judiciary had refused to protect cryptocurrency investments, noting that they are not legal tender, while taking issue with the fundamental qualities of virtual currencies.

In 2018, the country's Supreme Court upheld a bank's closure of a cryptocurrency exchange's accounts. It said the bank had acted in compliance with laws on money laundering and terrorist financing, a threat allegedly posed by censorship-resistant, decentralized cryptocurrencies. However, with the latest development, it may be necessary for the judiciary to protect cryptocurrency exchanges and individual investors from interference, even if their motive is merely to maintain the largest possible terrain for the taxman.

Crypto Users Faced With Autonomy Conundrum
Cryptocurrency users are faced with a conundrum whereby absolute autonomy from state interference denies them the protection of governments when banks and other institutions overstep the mark. However, recognition comes with a price in the form of relinquishing a degree of privacy and control to governments.

Governments have previously excluded cryptocurrencies from their definition of what constitutes money, but this interpretation also seems to be evolving. Whereas Chile exempted cryptocurrencies from Value Added Tax laws in 2018 on the premise that they are "intangible assets," investors will now be required to pay tax on earnings generated from crypto-related investments, according to the country's Internal Revenue Service.

The opacity of cryptocurrency is a source of worry for governments as it can potentially be used for tax evasion and money laundering. Then again, so can fiat currency. Spain has identified 15,000 cryptocurrency investors it will monitor to prevent illicit financial dealings and to tax for cryptocurrency transactions, as well as staking its claim in crypto assets.

"The use by organized crime of the deep internet for trafficking and trade in illicit goods, as well as the use of bitcoin-type cryptocurrencies as means of payment, is one of the most demanding challenges today. In order to face this threat, the use by the tax agency's research units of new information gathering and analysis technologies in all types of networks will be enhanced," Spanish publication El Pais reported.

Spain's anti-fraud law, drafted in October, will require crypto investors to declare all of the assets they hold at home and abroad. Profits from cryptocurrency transactions are currently taxable under legislation covering matters related to individual income taxes, with rates of between 19 and 23 percent depending on profit.

The latest taxman to join the club is Romania, which amended its tax laws this month, allowing it to start taxing gains from bitcoin investments at a rate of 10 percent. The improved fiscal code legislation categorizes earnings generated from buying and selling cryptocurrencies as "income from other sources" and therefore subject to income tax, local media reports.

The evolution in governments' perceptions of cryptocurrency and subsequent demands of its owners seem inevitable. It is up to the cryptocurrency community to also evolve in ways that allow it to manage the mixed blessings of state encroachment. While concerns about criminality are warranted, sweeping government encroachment into the space will result in loss of freedoms such as insulation from censorship.

Tuesday, January 22, 2019

Falcon Private Bank Launches Crypto Wallet With Support for Direct BTC and BCH Transfers


Switzerland's Falcon Private Bank has introduced a cryptocurrency wallet as well as support for direct transfers of BTC, BCH, ETH and LTC for private and institutional investors. The bank said investors can now directly transfer cryptocurrencies to and from its own "segregated Falcon wallets." They can also convert their digital coins into cash.

Fully Bankable Blockchain Assets'
In a press release published on Jan. 21, Falcon claimed that its latest offering "makes blockchain assets fully bankable." The Zurich-based bank also claimed to provide secure storage thanks to its "proprietary custody solution."

"Clients can place trading orders conveniently through e-banking or a dedicated relationship manager," said Falcon. "Digital assets are included in portfolio statements as well as in tax reporting documents."

The bank stated it had developed a process that ensures full compliance with Switzerland's anti-money laundering and know-your-customer laws and regulations. It claimed to have a multi-level protection that covers hardware, software, and transaction processes. "Our custody solution has been audited and reviewed by independent providers," Falcon detailed.

Martin Keller, chief executive officer of the Swiss private bank, commented:
Falcon has … demonstrated its expertize … in the digital assets space by merging traditional private banking services with innovative financial solutions.

 Progressive Switzerland Allows Crypto Firms to Flourish
Founded in 1965 as Ueberseebank, Falcon Private Bank is Switzerland's 26th largest foreign-controlled bank by total assets. The bank has more than $15 billion worth of client assets under management and has offices in Abu Dhabi, Dubai, London and Zurich.

It was licensed as a bitcoin asset management company by the Swiss Financial Market Supervisory Authority (FINMA) in July 2017. However, the bank has reportedly set its minimum bitcoin investment threshold at two million Swiss francs ($2 million), cutting off many Swiss citizens from investing through it.

Switzerland has taken a progressive stance toward cryptocurrencies by legalizing their use and formalizing crypto transactions in a range of different contexts. But some crypto projects still struggle to open bank accounts, and cryptocurrency-focused bankers and investors still complain about a relative lack of regulatory clarity, as it remains unclear whether cryptocurrencies can be considered legal tender in certain contexts.

Switzerland sees virtual money and blockchain technology as strategic innovations in global finance. It is therefore determined to maintain and expand the jobs it has to offer in the field. The country's tax regulator views cryptocurrencies as assets that should be subject to wealth taxes and declared on annual tax returns.

Airdrop Causes Exchange to Accidentally Send BTC to Customers EXCHANGES 2 hours ago | Kevin Helms | 3671


A South Korean crypto exchange mistakenly sent its customers BTC and other cryptocurrencies due to an error during an airdrop. Some users immediately sold the coins, causing the prices of a number of cryptocurrencies on the exchange to sharply fall. The exchange said, however, that the majority of customers have agreed to return the assets.

South Korean cryptocurrency exchange Coinzest reportedly sent its customers BTC and other cryptocurrencies while trying to airdrop WGT tokens. The exchange posted a notice on its website that at approximately 18:30 p.m. Korean time on Jan. 18:

The WGT token airdrop process caused a computer error that incorrectly reflected the deposit details of some customers' assets … we took measures to immediately check the server to prevent any additional damage as a result of the sales and purchases of some misappropriated assets by some customers.

The exchange's computer program "allocated a particular cryptocurrency to the event," Sedaily explained on Monday, noting that "Coinzest originally tried to airdrop 30,000 WGT coins, but accidentally entered data to airdrop other coins."

An official of the exchange said that about 400 members were supposed to receive WGT tokens, Hankyung publication reported, adding that other cryptocurrencies such as BTC and ETH were sent to members' wallets. The news outlet elaborated that "about 10 members tried to sell about KRW 600 million worth [~$530,000] of cryptocurrencies or to withdraw money in Korean won even though they recognized the mistake of depositing money and computer errors. [Therefore] there has been a problem of rapid price decline."

The price of BTC and a number of other cryptocurrencies on Coinzest subsequently plummeted at about 7 p.m. Korean time on Jan. 18, with BTC's price falling to 999,000 won (~$883) from over 4 million won.

Asking Customers to Return Assets
After detecting the problem, Coinzest immediately halted trading and performed a server checkup, according to a notice on its website. It then resumed trading the next day. "The asset and transaction information was restored to 18:33:18 on the 18th, the last time a normal transaction occurred before the computer error occurred," the exchange clarified. Hankyung detailed:

Coinzest immediately contacted the customers and asked them to return their assets. The majority of the members promised to return [them].

Coinzest CEO Jeon Jong-hee was quoted by the publication as saying, "I am extremely sorry that I have caused an unexpected computational error to customers … I am very sorry for my customers." He added that his exchange's emergency response system will be strengthened to prevent the problem from recurring.

Tuesday, January 15, 2019

Malaysia Starts Regulating Cryptocurrencies Today


Malaysia's finance minister has announced that the order to regulate cryptocurrencies and initial coin offerings as securities has come into force. Crypto service providers and exchanges are required to obtain authorization from the country's Securities Commission, which will work with the central bank to ensure compliance.

Regulating as Securities
Malaysian Finance Minister Lim Guan Eng said on Monday that his country "will regulate initial coin offerings (ICOs) and the trade of cryptocurrencies," Reuters reported, adding:

An order to recognize digital currencies and digital tokens as securities will come into force on Jan. 15, under the regulation of the Securities Commission Malaysia [SC].

The order is known as "the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019." Cryptocurrencies, ICOs and their related activities must comply with relevant securities laws and be approved by the commission, the minister explained.

Following Lim's statement, the Securities Commission Malaysia confirmed that it "will put in place guidelines to regulate offering and trading of digital assets." The regulator noted that "the offering of digital assets, as well as its associated activities, will require authorisation from the SC and compliance with relevant securities laws and regulations," elaborating:

The guidelines will among others, establish criteria for determining fit and properness of issuers and exchange operators, disclosure standards and best practices in price discovery, trading rules and client asset protection. Those dealing in digital assets will be required to put in place anti-money laundering and counter-terrorism financing (AML / CFT) rules, cyber security and business continuity measures.

Furthermore, the commission stated that it "will enter into coordination arrangements" with the Bank Negara Malaysia, the country's central bank, in order "to ensure compliance with laws and regulations under the purview of both regulators." In addition, the regulator revealed that "The relevant regulatory framework is expected to be launched by end-Q1 2019."

Lim was quoted by The Star as saying, "Any person offering an ICO or operating a digital asset exchange without SC's approval may be punished, on conviction, with imprisonment not exceeding 10 years and fine not exceeding RM10mil [~$2.44 million]."

Ministry of Finance Sees Potential
The finance ministry "views digital assets, as well as … underlying blockchain technologies, as having the potential to bring about innovation in both old and new industries," Lim further described, elaborating:

In particular, we believe digital assets have a role to play as an alternative fundraising avenue for entrepreneurs and new businesses, and an alternate asset class for investors.

Meanwhile, Bank Negara Malaysia has repeatedly said that cryptocurrencies are not legal tender in its country. The central bank has advised the public to carefully evaluate the risks associated in dealing with them.

Bank Negara Malaysia has published a list of companies that have declared themselves as cryptocurrency exchanges or service providers, but emphasized that it has neither licensed nor authorized these businesses. Among companies on the list are Belfrics Malaysia, Bit Malay, Bitpoint Malaysia, Bit Trade Enterprise, Bong Technology, Bxm, Luno Malaysia, Openbit, Udax International, Upbit Malaysia, and Xbit Asia.

The Daily: Bittrex Opens OTC Desk, Bakkt Acquires Futures Team


In today's edition of The Daily, we cover a number of stories that show how the cryptocurrency ecosystem is evolving to become more inviting to institutional investors. Bittrex exchange opens an OTC trading desk, Bakkt "acquihires" a futures compliance team, and Swiss investment bank Vontobel launches a custody solution.

U.S.-based digital asset exchange Bittrex has announced that it has opened an over-the-counter (OTC) desk, which includes trading on nearly all 200 tokens available on the platform. It will offer approved customers with reduced price risk, rapid trade execution and guaranteed pricing for large trades, which are typically $250,000 or greater. The new OTC desk will also accept both cryptocurrency and USD wire transfers for deposits.

"We're excited to offer this new, game-changing trading option for our customers," said Bittrex CEO Bill Shihara. "With one of the most extensive selections of digital assets of any OTC desk available, this offering will be another way for Bittrex to further advance adoption of blockchain technology worldwide, while also providing our customers with price certainty and a fast and easy way to trade large blocks of digital assets."

Bakkt Acquires Futures Team

Bakkt, the digital asset subsidiary of  Intercontinental Exchange (NYSE: ICE) which recently raised $182.5 million, has completed its first acquisition. The company announced it entered into an agreement to acquire certain valuable assets of Rosenthal Collins Group (RCG), an independent futures commission merchant.

The goal of the deal is to purchase capabilities needed for developing the bitcoin futures platform. The transaction is expect to close in February and will include the members of the RCG team joining Bakkt. It is said to enhance the company's risk management and treasury operations with both systems and expertise, as well as to contribute to its regulatory, AML/KYC and customer service operations.

"This acquisition underlines the fact we're not standing still as we await regulatory approval by the CFTC for the launch of regulated trading in our crypto markets," stated Bakkt CEO Kelly Loeffle. "Our mission requires significant investment in technology to establish an innovative platform, as well as financial market expertise to deliver the most trusted fintech ecosystem for digital assets."

Vontobel Launches Crypto Vault

Investment bank Vontobel, the third-largest provider of B2B custody and execution services in Switzerland, has launched a 'Digital Asset Vault'. The service allows Vontobel's clients, which include over 100 banks and wealth managers, to issue instructions for the purchase, custody and transfer of digital assets integrated within their familiar banking infrastructure and regulated environment. Financial intermediaries could also use the service to offer their own clients a solution for digital assets.

"Digital Asset Vault represents the logical next step in the development of our range of services for digital assets. With our innovative strength and experience, we have thus closed the gap between existing and digital assets. By incorporating digital assets into our own banking infrastructure, we have also become the first provider to already meet the high standards required by financial intermediaries and their regulators," stated Roger Studer, head of Vontobel Investment Banking.

Wednesday, January 9, 2019

Waves Platform; Web3 Apps and Products: Trustless, Synergistic and Monetizable


We live in the era of tectonic shifts in society and technology. The shape of the future world is still quite vague, and changing all the time. Futuristic concepts that have been proposed not so long ago stop making sense or need to be adjusted. One thing is obvious — development of the Internet will be crucial for the development of the world we live in, and what happens to the Internet will essentially happen to the world.

The concept of Web3.0 that emerged almost twenty years ago acquires a more tangible shape only now. Because of the emergence of the blockchain technology we are starting seeing some products that can be called Web3 prototypes. It's still too early to lay out the standards for the future Web, we might need some more products to actually understand what those standards should be. On the other hand, we could define Web3 products essentials, since now we have all the major ingredients for building applications that are essentially different from the applications we are accustomed to now.

Web1, the original Internet, was just a collection of interlinked documents with very little interactivity. Web2, the Web we use now, is interactive but centralized, it essentially mimics the structure of human society with ineffective vertical structures, controlling but at the same time vulnerable. Current Internet infrastructure quite often brings out the worst in society: due to the increased number of social connections we get fragmentation and segmentation on steroids — despite its global nature the Internet paradoxically leads to less, not more, connectivity in many cases.

Web3 was proposed as Semantic Web, a Web of Meaning. It might sound different from the Web3 we have in mind now, but if we look more closely we'll see that it's not really the case. "Semantic" in this setting means understandable by computers and running according to protocols, decentralization is essential in the true semantic approach. Protocol becomes the king of Web3, there's no need for trust any more, once established Protocol runs indefinitely and cannot be manipulated.

Web3 needs decentralization in its core; decentralization is not the whole of it but it is the foundation for other technologies. This is the glue that connects disparate technologies in a synergistic consortium. Web3 is holistic, it does not pit one technology against another, it brings them together on a layer which minimizes the need for trust.

Web3 is going to be deeply intertwined with the society structure, in Web2 you have some stale concepts brought over to the Internet, now the process becomes reversed — Web3 leads the way, showing more effective approach to human interaction.

So what are the essential features of Web3 Products and applications?

Web3 products minimize the need for trusted third parties and let you control your data.
All the data created by the user is controlled by the user; she explicitly allows access to her data including all the data she produces. Private keys are stored on the user side, there is no need for centralized user authentication. Data storage is as decentralized as possible; only encrypted data can be stored in a centralized way. Access to sensitive user data is fully controlled by the user.

Web3 products are synergistic. Combination of different technologies is essential, combined they produce new added value.
Combinations of IoT, Big Data, AI and distributed ledgers are very natural, they create trustless data processing environment that cannot be manipulated.

Monetization of Web3 products is transparent. There's no hidden monetization through collected user data. You get what you paid for, and you know how the money is made.
New technology begets new economy. Through tokenization we achieve transparency in Web3 business models. Decentralized does not mean non-monetizable, it means monetizable in a new and transparent way.

So what Web3 products are we going to see soon? Browsers with an integrated blockchain layer and private keys stored on the user side; uncensored or community-censored social networks where access to the network cannot be denied and user data deleted uncontrollably; messengers that run on blockchain private/public key pairs and, even if not completely decentralized, allow for multiple public servers; enterprise systems running on a decentralized layer and processing huge amounts of data in real time.

Web3 concept is inclusive, it it not a concrete product, it is rather a philosophy that can be implemented for any application type. In 2019 first true Web3 products will be launched.

Venezuela Decrees Crypto Operators Must Pay Taxes in Cryptocurrencies


The Venezuelan government has published a decree requiring taxpayers with crypto operations in the country to pay their taxes in cryptocurrencies. Similarly, operators of foreign currencies must pay their taxes in those currencies. The decree states that the change is necessary for the "strengthening of the current fiscal regime."

Paying Taxes in Cryptocurrencies
The Venezuelan government published the official gazette No. 6,420 dated Dec. 28 on Monday, local media reported. It contains Decree No. 3,719 which outlines new tax payment rules for cryptocurrency operators. Dinero publication explained:

The government of President Nicolás Maduro published a decree that will require taxpayers who carry out operations in foreign currencies or cryptocurrencies to pay their taxes in that same currency and not in bolivars.

The decree states that "the Venezuelan people are currently facing a fierce war waged by internal and external factors that pursue the deterioration of the economy, which is why it is necessary to adopt sufficient measures to ensure the strengthening of the current fiscal regime." The Ministry of Popular Power of Economy and Finance is in charge of the execution of the decree which is effective as of the time of the publication in the national gazette.

Article one of the decree states that taxpayers in Venezuela "who carry out operations" in foreign currencies or cryptocurrencies as authorized by the law "must determine and pay [their tax] obligations in a foreign currency or cryptocurrency."

Two exemptions are listed in the decree: "transactions of securities traded on a stock exchange" and "the export of goods and services, carried out by public bodies or entities."

Furthermore, the decree describes that payments such as tax refunds for cases established in the decree will be made in the "national currency."

Using Petro for Tax Calculations
Maracaibo Municipality in Venezuela's Zulia State recently announced that it will use the national "cryptocurrency," the petro, as the basis for business tax calculations, Runrunes reported. The announcement created some confusion among residents, who thought that they would have to pay their taxes in petros.

On Tuesday, the intendant of Servicio Desconcentrado de Administración Tributaria (Sedemat), Jean Carlos Martínez, clarified to Noticia al Dia publication that "taxpayers will not be charged taxes in petros." He elaborated:

We are using the value of the petro as a reference unit to be able to determine the minimum tax, since the ordinance of the current economic unit is still stipulated in percentages of gross income.

He added that the petro has two values: one as a cryptocurrency and the other is "as a unit of account that translates into 9,000 sovereign bolivars, which will be used in passport procedures or current salaries."

The new decree establishes "that the payment of taxes will be made depending on the economic activity of each company or microenterprise," the news outlet noted. Martinez was then quoted as saying, "If someone had transactions in petro, bitcoin or other currency, [they] should declare [their income] according to the currency that [they] manage."

Wednesday, January 2, 2019

Institutional Investors Are Changing the Cryptocurrency Market


Last year, reports emerged that George Soros and the Rockefeller family were beginning to take positions in the emergent crypto asset class, according to Bloomberg. The family's $26 billion Soros Fund Management was supposedly considering trading digital assets. The Rockefeller family's VC arm, Venrock, decided to take a different approach by partnering with Coinfund to assist entrepreneurs in launching blockchain businesses. 

Mike Novogratz, the chief executive officer of Galaxy Investment Partners, said he sees Q1 and Q2 2019 as a period when more institutions will start to come into crypto. He also expects the crypto markets to turn bullish again in 2019. 

Previously, investors were hesitant to enter the crypto markets due to high volatility and lack of regulation, but this is changing, with large players starting to take positions. How Institutional Investors Are Changing the Cryptocurrency Market
Stefan Neagu, co-founder of digital identity management system Persona, said: "BTC attracted large players, as the institutional investors saw BTC as an investment instrument. This helped the crypto market because it was not a playground anymore, but rather the sandbox of a limited group of people with money from a real economy being shifted to the crypto market."      

In 2018, over-the-counter (OTC) market makers have thrived, with many institutional traders shifting to OTC. Etoro announced that it had opened an OTC platform for institutional buyers and Coinbase and Hodl Hodl launched OTC desks in November. 

According to cryptocurrency research group Diar, institutional cryptocurrency trading on traditional exchanges has been diminishing in volume due to BTC being welcomed into major outfit portfolios this year. There has instead been a shift to OTC trading. 

During OTC market hours, there has been an increase in BTC trading volume by 20 percent, while Grayscale's Bitcoin Investment Trust (GBTC) volumes were down 35 percent in 2017 vs. 2018 for the same period. It seems institutional traders might be shifting towards higher liquidity OTC physical BTC markets. 

Russians See Growing Number of Options to Buy Cryptocurrencies


Interest towards cryptocurrencies in Russia remained relatively stable throughout 2018, despite the significant drop in their prices. Ruble-denominated trade on Localbitcoins, for example, has shown a generally positive trend since last spring. In the past year, Russians also saw a growing number of other options to purchase digital coins.

Russians Not Losing Interest in Cryptocurrencies
The last 12 months will be remembered in the crypto space as a period of bearish sentiment and shrinking capitalization. In 2018, leading coins such as BTC saw an 80 percent drop in their valuation compared to the all-time highs reached in the last weeks of 2017. However, according to Olga Prokhorova from the International Financial Center investment consultancy, the falling prices have not significantly decreased interest in cryptocurrencies, and Russia is no exception.

In an interview with the Federal Press news outlet, Prokhorova quoted data from a recently published study by the University of Cambridge which revealed the number of identity-verified users in the ecosystem has increased to over 35 million. The study also noted the increased transaction volumes on P2P exchanges such as Localbitcoins from countries that have experienced monetary crisis. Russia, which has been through financial turmoil in the past, was included in this group of nations lead by Venezuela which is currently in economic trouble.

With the exception of a couple weeks during this past fall, weekly Localbitcoins volumes in Russian rubles have followed an upward trend since the spring of 2018, according to Coin Dance – from the year's low of around 740 million rubles in mid-March (~$10.6 million) to well over 1.2 billion rubles (almost $18 million) in the last full week of December.

Popular Ways to Buy Digital Coins in Russia
Peer-to-peer exchanges are not the only option for Russians looking to acquire cryptocurrencies. There are a number of other platforms and the Russian online publication 1rre has recently summarized the tried-and-tested alternatives, starting with exchanges that are popular in the country such as Exmo, Bitfinex and Bitstamp. Another leading global trading platform, Huobi, recently opened an office in Russia and launched a Russian-language website. Livecoin, Yobit, Hitbtc, C-cex, and Spectrocoin can also be added to the list, according to previous publications. Crypto exchanges are arguably the safest way to buy digital coins, but users need to pass KYC procedures and pay fees.

Another option is to use an online payments processor such as Webmoney, which recently offered its customers the possibility to purchase and exchange cryptocurrencies with fiat money. Verified subscribers can also cash out directly to their bank cards. The major disadvantage in this case is the exchange rate, the news outlet remarks.

A number of online exchangers operating in the country have become a popular choice for many Russian crypto traders. Using their services, however, is still risky and requires some research in advance. A platform called Best Change helps Russians to do that. The website provides information about different options to trade cryptocurrencies with fiat money and claims all listed exchangers are verified.

Cryptocurrency teller machines have been installed in over 20 Russian cities, from the capital Moscow, with at least eight ATMs, to Yakutsk in Siberia. While most of them offer only purchases of popular digital coins such as BCH, BTC, ETH and LTC, some of these devices support sales as well. A new Russian BATM tracker, Cryptocoinmap.ru, was launched recently, as news.Bitcoin.com reported in December. Information about their fees and transaction limits can be found on Coinatmradar.com.

Russians can also buy and sell cryptocurrencies using Telegram bots. One of them, @btc_change_bot, provides Russian language support. It connects buyers and sellers of electronic cash for a commission of 1 percent on the traded amount.