Friday, April 3, 2020

Manufacturers Mark Down Bitcoin Miners as Price Drop, Halving Change Calculus


Last month's crash in cryptocurrency prices has prompted manufacturers to sell inventories at a discount, in some cases as steep as 20 percent, over the past few weeks. Both the newest models and slightly older machines have been marked down.

Complicating the matter is the imminent bitcoin halving in May that will reduce the network's mining reward by half, causing most miners to be less profitable if bitcoin's price doesn't increase significantly by then.

For instance, DJ Miner, an overseas distributor for Shenzhen, China-based MicroBT, was advertising about $2,500 per unit of the manufacturer's flagship WhatsMiner M30S early last month. After bitcoin's March 12 crash – the worst sell-off in seven years – the price is now cut by 20 percent to $2,000 per unit.

The WhatsMiner M20S, a less advanced but popular model that boosted MicroBT's market share against major rival Bitmain in 2019, is also seeing a 20 percent price cut from $1,679 to now $1,340, DJ Miner's website shows. Pangolinminers, another distributor for MicroBT shows similar pricing rollbacks on its website.

Similarly, while Bitmain is advertising $1,567 for its AntMiner S17+ with a computing power of 67 terahashes per second, various resellers are posting quotes on WeChat seen by CoinDesk at around $1,300 per unit.

The Beijing-based mining giant has previously announced the pricing for its latest flagship AntMiner S19 Pro at about $2,900 per unit but the shipment won't take place until May and so far is only available for investors inside China.

See also: How Bitcoin's Price Slump Is Changing the Geography of Mining

Efficient market
It is important to note that most specialized bitcoin computers, known as ASICs, had already been dropping in price since the fourth quarter of last year, as the manufacturers adjusted their strategies in line with bitcoin's price swing.

These machines are priced assuming it would take the buyer on average 15 months to make back their equipment investment. Holding the payback period relatively constant, manufacturers would adjust the prices of their equipment according to bitcoin's market price and the level of competition on the network – the two factors that determine how much revenue a miner can generate in a day.

Miner pricing data compiled by research startup TokenInsight shows that, for example, the Whatsminer M20S and the AntMiner S17 Pro were priced at around $2,400 and $3,000, respectively, in mid-October 2019. The price for both had dropped to around $1,500 as of March 10.

"ASIC miners have experienced a relatively large market devaluation since Q4 2019. However, the miner market has found some level of price floor during Q1 2020 despite the recent crypto market downturn," said TokenInsight analyst Johnson Xu. "Some experienced miners are currently looking to purchase some secondhand ASICs at a significant discount … based on their carefully structured model."

Blockware Solutions, a reseller of bitcoin ASIC miners in North America that also operates mining facilities, said in a recent research report that the market crash in March, together with the coming halving, has led to a significant decrease of bitcoin's mining computing power – which in the long run, could be an encouraging sign for the market's efficiency.

"If Bitcoin remains at lower price levels for 2-4 months, post-halving, many miners operating at a loss will be forced to shut off," Blockware said. "After all the miners that are operating at a loss shut off, the miners that survive experience significant margin relief. We will witness a network in short-term chaos, but difficulty adjustments will reinstate stability once the inefficient miners shut off."

Russian rapper busted by the FBI for digital currency money laundering


If you want to conduct illegal activity, it's best not to leave a trail of any sort that can prove your involvement. A Russian rapper residing in California has learned this lesson the hard way after being arrested by the FBI. The federal law enforcement agency picked up Maksim Boiko and accused him of laundering money through digital currency exchanges and transactions, allegedly while doing little to hide his identity.

Court documents released (in pdf) on March 30 indicate that Boiko conducted his extra-curricular activities using platforms such as the now-defunct BTC-e digital currency exchange, a portal that was also shut down for money laundering. The documents also show that Boiko allegedly has ties to QQAAZZ, an organized crime syndicate that operates in several countries around the world.

The rapper's downfall began when he showed up at Miami International Airport this past January. At that time, he had $20,000 in cash, which is twice the amount allowed to be carried across borders without a written declaration of the source of the funds. It isn't clear if Boiko presented a declaration or not, but he was questioned about the money and explained that it came from digital currency investments and rental properties.

The explanation was not received with a great deal of credibility, and an investigation began. Subsequently, Boko was picked up by authorities in Miami toward the end of last month. He is charged with "knowingly and intentionally conspire and agree with other persons known and unknown, to commit money laundering in violation of Title 18, United States Code, Section 1956(h)."

In building its case against Boiko, the FBI was able to come across several interesting finds. It was able to determine that he had registered an email account,, using his own name and created a username of gangass. That username was also picked up on several underground communications channels used predominantly for criminal activities.

In addition, Boiko had been a little too willing to brag about the amount of money he had in his possession on several occasions, posting pictures of himself holding huge stacks of bills, and even one that appeared to show him getting ready to launder funds through a Chinese bank account. He didn't appear in the picture, but a placard with "Maksim" and a screenshot of a "plinofficial" account on Instagram are clearly seen.

Boiko apparently had greater success as a criminal than he did as a rapper, but everything he did made it easy for law enforcement to conduct its investigation. As a rapper, he uses the moniker Plinofficial.

Friday, March 27, 2020

After Coronavirus ‘War,’ Bretton Woods-Style Shakeup Could Dethrone the Dollar


For governments, fighting the coronavirus pandemic is like fighting a war.
The leaders of Italy, Spain and Germany have used the analogy – along with the CEOs of Bank of America and the U.S. telecommunications giant AT&T – to describe the mass-scale efforts needed to combat the disease: mobilizations of the health care industry, a retooling by factories to produce masks and makeshift morgues to accommodate a fast-rising death count.

During a televised press conference this week, U.S. President Donald Trump characterized himself as a "wartime president."

Now, it's becoming clearer that the economic toll of the virus, as in a war, is likely to be dire. In the U.S. alone, a record 3.3 million jobless claims were filed last week. Deutsche Bank predicts the country's job losses might exceed 15 million, with Europe approaching a similar level. Countries are prepping aid and stimulus packages into the trillions of dollars, stretching already heavily indebted government balance sheets. Central banks led by the U.S. Federal Reserve have pledged nearly unlimited support to financial markets. Investors have flown to safety in U.S. dollars, and in doing so driven down emerging-market currencies, inflicting additional economic damage on some of the world's poorest countries.

So with officials starting to envision what it might take to rebuild damaged economies and restore society to a semblance of normal, speculation is mounting that seismic shifts might be in the offing for the global monetary system — a phenomenon that historically has occurred in the wake of world wars.

Think Bretton Woods, the historic gathering in 1944 at a mountaintop resort in New Hampshire, which set the template for the current system and entrenched the dollar's near-century-long reign as the world's dominant currency.

"I wouldn't rule out anything at this point," says Markus Brunnermeier, a Princeton University economics professor who has advised the International Monetary Fund, Federal Reserve Bank of New York and European Systemic Risk Board.

Questioning dollar dominance
Even before the coronavirus hit, questions were percolating among some economists and monetary officials over whether the dollar-based system could last through the 2020s.

One concern is that monetary policy in the U.S. – actions by the Fed to maximize domestic employment and keep prices stable – reverberates through countries all over the globe, often saddling them with higher inflation whenever their currencies weaken versus the dollar; while exporters of raw materials or manufactured goods might become more competitive, consumers feel the pinch from higher prices for imported goods. Another factor is that so many commodities such as oil, copper and gold are priced in dollars, leaving producers including Russia, Brazil and South Africa at the mercy of foreign-exchange markets.  

Bank of England President Mark Carney floated the idea of a "synthetic hegemonic currency," possibly based on new digital-asset technologies, to reduce the dollar's "domineering influence" on global trade. China, the world's second-largest economy, has been pressing forward with a digital version of its yuan that might be used more widely in global trade. Facebook, the social network, proposed last year to create its own payment token, libra. Bitcoin, launched in the throes of the 2008-09 financial meltdown, offers another alternative.

"Eventually we're going to get past this crisis," said Tim Shaler, a former portfolio manager at the bond fund Pimco who now serves as chief economist for iTrust Capital, which allows clients to buy cryptocurrencies and physical gold through their retirement accounts.  "If there's a possibility to create some digital currency not tied to any domestic economy, there might be an opportunity for somebody to figure that out."

The Fed helicopters in with trillions
It's little surprise the Federal Reserve is intervening so deeply in U.S. markets during a time of crisis. That "quantitative easing" (QE) playbook was put in place by former Fed Chair Ben Bernanke, who garnered the moniker "Helicopter Ben" thanks to his advocacy for plying the financial system with large quantities of much money when needed. In a matter of months in 2008, from August to December, the Fed's balance sheet doubled in size to more than $2 trillion. It doubled again during the next few years to over $4 trillion.

On Monday, the U.S. central bank, now led by Chair Jerome Powell, made an unprecedented pledge to buy bonds in unlimited amounts to support markets, while reviving 2008-era QE emergency-lending programs to ply banks, Wall Street dealers and even corporations with fresh liquidity. The new efforts could quickly balloon the Fed's balance sheet to north of $8 trillion, says Stephen Cecchetti, who headed the monetary and economic department at the Bank for International Settlements in Basel, Switzerland, in the early 2010s.


On Wednesday, lawmakers in Washington were negotiating a $2 trillion aid package, but the investment-research firm Evercore ISI predicted this week in a report that another $3 trillion might be needed. Some of the Treasury bonds issued to finance surging U.S. government budget deficits might get sopped up by the Fed.  

"The central bank has to be a part of the war machine," said Cecchetti, now a professor of international economics at Brandeis University.

The dollar's inflationary threat
Despite the flood of new dollars, the U.S. currency has surged in recent weeks to its strongest levels in three years. Inflation is muted, and the economy's weakness means prices in the U.S. won't be pressured upward anytime soon.

But the Fed's trillions could eventually lead to higher inflation. There also might be a renewed outcry that such money injections merely bail out bankers and rich people, with few of the benefits going to the middle or lower classes – similar to the arguments of the Occupy Wall Street movement that followed the 2008 crisis.

Outside the U.S., central banks might emerge from the coronavirus shock with a stronger appetite for independence from American influence over the global monetary system.

"It's going to be interesting to see how it plays out when we have at least two major financial players that are going to emerge from this," said Omer Ozden, CEO of RockTree Capital, a merchant bank with expertise in blockchain technology. "China will have its own thoughts and may take a different direction from, let's say, a Bretton Woods-style global organization."

Trustless world, trustless systems
It's highly unlikely the global monetary system would see a negotiated accord along the lines of the Bretton Woods accord, which was joined by 44 countries, said Edwin Truman, a senior fellow at the Peterson Institute for International Economics who oversaw the Federal Reserve's division of international finance from the late 1970s through the late 1990s.

Trump's brash, freewheeling style and protectionist impulses in recent years have alienated former allies in Europe, and his border wall campaign has ratcheted up tensions with Mexico. He demonized China in last year's trade war and recently referred to the coronavirus as the "China virus."

"One of the big challenges of today, in contrast to 2008-2009, is that the state of national cooperation is pretty low," Truman said. "In order to do, collectively, a big change in the system, people would have to agree, and everyone seems to be fending for themselves."

For George McDonaugh, CEO and co-founder of Isle of Man-based KR1, a publicly traded cryptocurrency investment company, it's the head-scratcher of "helicopter money" that might ultimately raise fundamental criticisms of the current monetary system. Deep interest rate cuts and central bank money injections in ever-growing quantities appear to have become the default solution whenever a market crisis hits every seven to 11 years.  

The Fed's trillion-dollar money injections during the 2008 financial crisis did little to weaken the dollar's dominance in the years since, but this time might be different.

"If someone on TV says we can have infinite money, someone on the other side of that TV screen says, 'Why have I been working my ass off for the past 40 years?'" McDonough said.

Telegram token investors ‘ready to accept refund’ amid SEC court battle


A number of investors in the token issued by messaging app Telegram are reported to be ready to accept their money back, which would see the firm settle at a fraction of the funds paid into the token.

According to a TASS report, as many as 10 separate investors in Telegram's blockchain project are now poised to accept the offer, which would see 72% of money invested in the token returned.

Head of Russian digital currency investment firm Hash CIB, Yakov Barinsky, said the refund offer was looking more attractive to investors in light of the global coronavirus crisis: "What I see now among various investors is that many, at least 10 investors with whom I spoke, are inclined to take away 72% of the invested funds. Considering what is happening in the financial markets, this offer now looks much better than in October."

Back in October, investors were offered 77% of invested funds back as refunds for the project, which has been beset with difficulties—not least ongoing investigation by the U.S. Securities and Exchange Commission (SEC), over what the regulator argues was an illegal sale of securities.

At the time, investors rejected the offer and agreed to extend the deadline for issuing the tokens to April 2020. Now, Telegram has said investors can receive 72% of their funds back, with the remaining 5% already spent on the development process in the intervening months.

It follows on from a ruling earlier this week, in which a federal court in New York ruled against Telegram, finding that issuing the Gram tokens would constitute a violation of securities laws.

Barinsky said Telegram could now choose to register a transaction, and to recognize the court's interpretation of its Gram tokens as a security.

"To conduct an IPO, but in this case, the launch of the project will be postponed for another period, companies usually prepare for this for at least a year. For this scenario, it will also be necessary to conduct another consultation with investors and again ask for a delay in launching the project," Barinsky said. 

Saturday, March 21, 2020

Toyota launches blockchain lab for verification, supply chain and more


Japanese automotive manufacturing giant Toyota has launched a blockchain lab that will focus on integrating the technology into most of its operations. Known as the Toyota Blockchain Lab, the project has been in the works since April last year. It will integrate blockchain into its verification processes, global supply chain, financial systems and more.

The global automotive industry has evolved rapidly, forcing carmakers to focus on providing more value to their customers. Toyota intends on keeping ahead of its rivals, and with the integration of blockchain, it will allow its customers to "connect more openly under safety and security," the company said in a press release.

#Toyota's latest #blockchaintechnology improves information reliability and accelerates the sharing of data among multiple parties in a more open environment that is safe and secure.

The Blockchain Lab is a collaboration between the Toyota Motor Corporation and Toyota Financial Services Corporation. It has been undertaking demonstration trials since its formation 11 months ago. It stated, "In the following initiatives focused on customers and vehicles, demonstration trials under specific conditions were completed in November last year, confirming the usefulness of blockchain technology in each use application."

One of the key application areas for blockchain technology will be in identity verification. Toyota currently requires its clients to verify their identity separately for every service they intend to use. This reduces the chances of fraud and data breaches, but at the same time, it's quite time consuming. With blockchain, the client will only need to verify his identity once, after which he can share the data in a permissioned blockchain system.

Toyota also plans on applying blockchain in its supply chain management to improve efficiency and traceability. It will record and share information regarding manufacturing, shipping and more on a blockchain-powered network. The company, which is the second-largest automotive manufacturer after Volkswagen, will also record information about its repair parts. This will enable the end user to verify genuine Toyota products.

Toyota intends to record information about its vehicles on the blockchain platform as well. Data to be recorded includes any repairs over a car's lifetime, its mileage and ownership. This data will make it much easier to accurately value a Toyota vehicle.

Going forward, the company will partner with other industry stakeholders in its project, it revealed, stating, "In addition, with regard to various blockchain platforms around the world, in collaboration with partner companies, we will formulate non-functional evaluation items to accelerate the social implementation of the technology, and accumulate technical knowledge to select a suitable platform for each application."

Toyota has also revealed that it will integrate blockchain technology in its utopian conceptual city. Known as Woven City, it will be powered by hydrogen and will rely on smart technology. It will be built on a 175-acre land in Japan, on the base of Mount Fuji, with the construction beginning early next year. Artificial intelligence will be central to the city's operations, Toyota revealed.

Indian Parliament probing suspect ‘Bitcoin businesses’


An investigation into dubious digital currency businesses in India is underway, amid concerns about rampant fraud in connection with digital currencies in the country.

The investigation was revealed in a filing submitted before India's lower house, the Lok Sabha, following a formal question to the Minister of State for Finance and Corporate Affairs Anurag Thakur.

Center-left politician Mohammed Faizal asked the Minister whether he was aware of the "cheating and fraudulent practices by bitcoin companies", and whether these firms "are repeatedly violating rules laid out by the Corporate Affairs Ministry by not filing annual balance sheets".

In his answer, Minister Thakur said the companies concerned "are not defined under the Companies Act". The Minister said only two firms dealing with BTC were registered with the Companies Registrar, and one of the companies, Zeb IT, had previously been subject to prosecutions under the Companies Act. The firm is currently in liquidation.

The other firm, Unocoin Technologies, was reported to be up to date in its filings, with the Minister saying he had yet to receive any complaints against the company.

The developments come at a time of rapid change in the Indian digital currency sector, following the decision of the Supreme Court to overturn the Reserve Bank of India's earlier ruling effectively banning digital currency in the country.

The following day, Unocoin resumed fiat deposits, with several other exchanges including OKEx, Coindcx and Wazirx taking similar steps to resume business—despite none being registered by the authorities, according to the Minister's answer.

International exchanges Kraken and KuCoin have since confirmed their intentions to expand into the Indian market, with both companies expected to be eyeing a share of the newly liberated Indian sector.

The Reserve Bank of India has said it intends to appeal against the Supreme Court ruling, casting doubt on whether the position is settled long-term. For the time being, digital currency exchanges and other related companies can take advantage of the ruling to rebuild the sector so badly affected by the RBI decision.

Saturday, March 14, 2020

Bank of England chief warns of CBDC ‘challenges’ on fiat money


The outgoing governor of the Bank of England has warned of the risks of central bank digital currencies (CBDCs), highlighting the potential impact of CBDCs on fiat currency and the wider financial system.

Mark Carney, who is due to leave his post on Friday, addressed the risks posed by central bank digital currencies, highlighting the "significant challenges" that could be posed to financial stability.

First reported by Reuters, the comments come at a time when the bank is reported to be considering the feasibility of issuing its own digital currency on the blockchain:

While CBDC poses a number of opportunities, it could raise significant challenges for maintaining monetary and financial stability…and would need to be very carefully designed if it were to be introduced.

Carney said there were likely implications for commercial banks, should significant balances move towards CBDCs: "If significant deposit balances are moved from commercial banks into CBDC, it could have implications for the balance sheets of commercial banks and…the amount of credit provided by banks to the wider economy."

The comments come in the final days of Carney's tenure at the bank, as he prepares to take up post as the U.K. government's Finance Adviser for COP26. He is set to be replaced by Andrew Bailey, the current head of the U.K. financial regulator, the Financial Conduct Authority (FCA).

In the report, the bank also addressed the decline of cash, with consumers and businesses alike increasingly opting for digital payment alternatives.

The Bank of England is scheduled to meet, alongside representatives from five other financial regulators, to discuss models for issuing a digital currency. On its preferred approach, the bank said that any digital currency would be denominated in Sterling, and would not be allowed to entirely replace cash notes.

It comes as other central banks are already testing their own digital currencies. In Sweden, for example, the central bank is running tests on issuing a digital currency dubbed the 'e-Krona', while other central banks are known to be running their own feasibility assessments on the technology.

FCA issues warning to avoid coronavirus-linked digital asset scams


Just like there always have been, scams are found in the digital currency space. There will always be those who are too inept to make a decent living and want to take advantage of situations in order to line their own pockets. As the coronavirus has gripped the world, there's no doubt that it is being used as a tool for initiating fraudulent activity, and the U.K.'s Financial Conduct Authority (FCA) has issued a warning to remind individuals to use caution when approached about making investments related to COVID-19.

In a message posted by the FCA on its website this past Wednesday, the financial watchdog explains, "Watch out for scams related to coronavirus (COVID-19). These scams take many forms and could be about insurance policies, pensions transfers or high-return investment opportunities, including investments in cryptoassets."

As is often the case, the potential scams will offer investment opportunities that are too good to be true, which should be the first sign for individuals to stay away. The FCA adds, as it has warned in the past, "If you decide to invest in something offering a high return or in a cryptoasset, you should be prepared to lose all your money."

The scams could come in many styles – requests for donations to the World Health Organization or the Centers for Disease Control and Prevention, or as a means to prepare for a rebound once the markets begin to recover. Common sense dictates that any investor perform his or her due diligence before making any type of investment, and understand the source of the request before turning over any funds.

Fortunately, digital asset enthusiasts have grown accustomed to potential scams and don't fall for the tricks as easily as may have once been seen. According to the National Fraud Intelligence Bureau in the U.K., those COVID-19 scams that have already been seen haven't had a lot of success. However, conventional investment scams in the U.K. tied to the virus have reportedly been able to collect more than £800,000 (a little more than $1 million).

The FCA recommends that individuals stay away from offers that appear out of the blue and to ignore investment opportunities that pop up on social media. It also suggests calling back those individuals who make contact looking for investments and to never provide any personal detail under any circumstances. In addition, before making any type of investment, consumers should check the FCA's register and its official Warning List to see if the entity is legitimate. If the company isn't listed in the register, don't hand over any money. The extra five minutes taken to do the research can help individuals avoid massive financial losses and headaches.

Saturday, March 7, 2020

Pair linked to crypto Ponzi scheme in US pleads not guilty


Two co-founders of an alleged crypto Ponzi scheme have pleaded not guilty to a range of charges, following a criminal indictment on money laundering and conspiracy to commit wire fraud.

John Caruso and Zachary Salter of Zima Digital Assets have been accused of running a crypto scam responsible for defrauding some $9 million from its customers, in a structure defined as a "classic Ponzi scheme."

The first $1.9 million of deposits into the scheme were returned to early investors, validating the scheme and its claims for significant investment returns. These payments were allegedly used to encourage more investment in the scheme.

The following $7 million invested was purported to have been spent frivolously by the founders, including on luxury vacations, private jets and casino trips. The founders themselves claimed no taxable income during the period, despite showcasing their monied lifestyle on their social media profiles.

Some 90 investors were conned by the scheme, including former athletes and some elderly victims. The pair were arrested by law enforcement authorities on January 30, with an initial plea hearing for Salter taking place earlier today.

Caruso entered his not guilty plea on February 26, having previously been released from prison in 2017.

The case will now move to trial in front of a jury, scheduled to begin on July 4. If either party is convicted on the charges, they will be required to return all assets acquired through the scheme or from the proceeds of their crimes.

Among the charges on the indictment are allegations of false statements in investor contracts, alongside misrepresentations through direct messages to investor clients.

At a hearing in February, the prosecution said, "There is no evidence any of the investment funds that have been provided to Caruso and Salter have gone to any cryptocurrency/digital asset investment, or to any investment of any kind, as fraudulently misrepresented by both Caruso and Salter."

On the date of the hearing, Zima Digital Assets was still receiving new funds from investors, which the co-accused were personally misappropriating to fund their own lavish lifestyles.

Altered Carbon reduces cryptocurrency to black market payment option


The world of Bitcoin involves a lot of speculation of what the future will be like. Through the power of unlimited on chain scaling, Bitcoin SV (BSV) offers a world where much of the data and transactions of the world can be immutably recorded on chain, and micro transactions create entirely new business plans for intrepid individuals to pursue. But in fictional future of Netflix's Altered Carbon, cryptocurrencies appear to have found their place as nothing but black market currencies.

If you're unfamiliar with Altered Carbon, the show depicts our galaxy several centuries in the future, where a breathrough in science has allowed the rich and powerful to avoid permanent death by passing their consciousness into new bodies indefinitely. The central conflict of the show is between those with power and infinite life, nicknamed the Meths, and the various groups principally opposed to this technology due to the imbalance it creates between rich and poor. The main character of the show, Takeshi Kovacs, falls in the second camp.

The currency of the future is typically referred to as credits. The financial system supporting it is never discussed at length, and as the main characters typically have more than enough credits to do whatever they need to, the topic is never explored at very much length. But in season 2, episode 5, the set designers of the show decided to have a little fun inserting some cryptocurrencies into the mix.

In a scene where the characters are shopping for contraband technology and weapons, price tags for the items clearly have labels for several cryptocurrencies.
The Bitcoin logo in particular caused some conversation on twitter. Depending on how you tilt your head, it could either be a BTC or BSV logo.

The prices drawn up for the stickers were probably done without much thought, but the fictional prices of these contraband items is fun to think about. Gloves in the shot are worth 0.867 (either BTC or BSV) and 3,089 Litecoin. That would mean a current day price of between $210.57 and $193,309.62. Considering they are high tech, contraband gloves, it's probably toward the higher end.

While this is all a bit of good fun based on the background of a fictional universe, BSV supporters will want to hope that the real Bitcoin becomes the credits of the universe, rather than the black market payment option.

This is the second time in just a few weeks that Bitcoin gets referenced by a significant piece of pop culture. The Simpsons also recently gave a cryptocurrency explainer, with an on screen gag noting they knew the real identity of Satoshi, but "we're not telling."

Saturday, February 29, 2020

Seoul to debut blockchain petition system in March


Seoul is set to launch its blockchain-powered petition system on March 1. The system will enable the residents of the city to air their views and share them with the local government. It will replace the existing system which has been marred by claims of fake identities and vote manipulation.

Known as Democracy Seoul, the new system will give the residents of South Korea's capital the opportunity to turn the government's attention to issues that affect them. A resident will be able to propose any issue on the platform and if it gets at least 1,000 votes from other residents, the city's Mayor Park Won-soon will have to address it. This system will be similar to an existing national system that allows South Koreans to air their issues with the government. Once an issue receives 200,000 votes, the national government has to address it.

The national petition system, as with any other online voting system globally, has been marred by accusations of vote manipulation and fake identities. As Decrypt reports, experts have unearthed that it's quite easy to deceive the system, even with little technical expertise. All one needs to cast a vote multiple times is to use a different username and internet service provider.

The use of blockchain will eliminate the authenticity challenge, with the technology being used to verify the identity of every person who votes, preventing duplicate voting. Blockchain will also give the system more transparency, giving the residents more trust in the system.

The blockchain system comes just a fortnight after the Seoul Mayor lowered the threshold number of votes required for the government to respond from 5,000 to 1,000. This will make it possible for the government to respond to more issues. According to a report by the Maeil Business Newspaper, Democracy Seoul has registered over 5,900 civic proposals since it launched in October 2017. 59 of these proposals have gone on to become official city policies.

As Seoul launches its blockchain petition system, South Korea is working on its national blockchain voting system. Announced in November 2018, the system provides real-time visibility of the voting process, making the system more credible. The system incorporates other emerging technologies including the Internet of Things, artificial intelligence and big data.

Iranian leader urges the country to use crypto to evade sanctions


An Iranian commander has called on the country to seek more unique ways to bypass the several sanctions imposed against it. The general cited cryptocurrencies as one ideal solution at a time when the sanctions have crippled the economy and are forcing the country into a recession.

Saeed Muhammad, a commander of the Islamic Revolutionary Guard Corps, was addressing a crowd recently, reported local crypto outlet The general criticized the stand taken by the American government, saying that it has been trying to impede the livelihoods of the Iranians and block its development.

For a solution, he suggested, "We are demanding the creation of a more sophisticated mechanism to bypass sanctions. To circumvent sanctions, we must develop solutions such as the exchange of products and the use of cryptocurrencies with our partnerships in other countries."

Iran has long been looking at using cryptos to evade the sanctions by the U.S government. For decades now, the country has been at loggerheads with the U.S especially regarding its nuclear programs. However, things took a turn for the worse after Donald Trump became president, imposing tougher sanctions as he seeks to force the Middle Eastern country to renegotiate its nuclear deal with the U.S.

Iran's president Hassan Rouhani called on all Muslim nations to unite and build a crypto that would rival the U.S dollar. In an event in December last year held in Malaysia, the president described the U.S as a bully and urged his fellow Muslim leaders to unite against it. By creating and using their own crypto, Muslim nations could be able to finally stand up against the U.S, he stated. Other Muslim leaders supported his call, including the presidents of Malaysia and Turkey.

The Iranian government has also sought to support existing cryptos by enabling crypto mining in the country. Iran has very affordable electricity which has attracted miners in their numbers. To bring the industry under control, the government legalized crypto mining last year. A month ago, it also issued licenses to over 1,000 miners.

Saturday, February 22, 2020

Binance not licensed to operate in Malta, regulators say


Controversial cryptocurrency exchange Binance has found itself scrambling to perform damage control and repair after regulators in Malta called it out over false claims. In a statement published by the Malta Financial Services Authority (MFSA) on Friday, the regulator made it quite clear that Binance has never received authorization to operate in the country. As a result, Binance has been trying to dance around the subject with some creative responses.

The MFSA's message reads, "Following a report in a section of the media referring to Binance as a 'Malta-based cryptocurrency' company, the Malta Financial Services Authority (MFSA) reiterates that Binance is not authorised by the MFSA to operate in the crypto currency sphere and is therefore not subject to regulatory oversight by the MFSA. The Authority is however assessing if Binance has any activities in Malta which may not fall within the realm of regulatory oversight. Admission of virtual financial assets to trading and/or for offering virtual financial assets to the public in and from Malta requires an MFSA licence in terms of the Virtual Financial Assets Act (CAP 590) of 2018."

It isn't clear where the assertion that Binance is a Malta-based company originated, but the exchange, led by controversial figure Changpeng "CZ" Zhao, is attempting to create its own rules regarding what defines business operations. Those attempts are falling flat.

For example, the company's chief growth officer, Ted Lin, told Decrypt just a few days ago, "We have offices in Malta for customer services, and some compliance people there, but it's not the headquarters per say [sic]. It's the spiritual headquarters. It's a name that people think about when they think about Binance."

Lin's comments to Decrypt were part of a larger story regarding the fate of the company in another region. Binance is, according to the countries' registry offices, registered in both the Cayman Islands and the Seychelles. However, the European Union (EU) is now ready to put the Cayman Islands on a blacklist of tax havens, which could make it difficult for any company registered there to do business with entities or individuals in the EU.

When it got started, Binance launched in China. However, as the country began to crack down on crypto, it decided to move to Japan. Not long after getting set up in its new headquarters, Binance suffered an attack on the exchange, leading Japan's Financial Services Authority (FSA) to require Binance to apply for a license. That apparently wasn't within the scope of the exchange's business model, and it left to find a new home, reportedly landing it in Malta.

The CEO of Malta-based Chiliz, Alexandre Dreyfus, weighed in on whether or not Binance is in Malta. He told Decrypt, "Insinuating that Binance doesn't have offices and people in Malta is offending for the employees here. As you can see on their website, they are still recruiting significantly in compliance, security, customer care."

Friday, February 14, 2020

$10K Bitcoin Prompts Influencers to Call a Bull Market


Cryptocurrencies have gained significant value over the last few weeks and it's causing exuberance among digital currency proponents. Now a number of traders and influencers believe bitcoin and other coins are in bullish territory. Despite the surge to $13K last July and the deep pullback that followed, BTC investors and influencers have no issue believing that crypto is on the threshold of another bull market.

'Calling the Bull' Is a Bold Move, But a Number of People Are Doing So After BTC Surpasses $10K
Bitcoin traders, analysts, and thought leaders on social media and forums seem to think that the crypto market is facing another bull run. Statements about a "bull market" and a possible "altcoin season" are littered all over Twitter and news articles about the cryptoconomy's swift rise. You can find a number of crypto influencers explaining that the bitcoin bull market is overdue for a variety of reasons.

Some people claim the reward halving is pushing BTC's price up, they say miner capitulation is over, the BTC hashrate has touched an ATH, and most of the non-ideological investors capitulated. Moreover, lots of crypto investors are stressing that "this time is different" even though they know calling a bear or bull market requires judgment and is considered a bold call. But this hasn't stopped a number of crypto's influential figures from doing so.

"Early signs of a bull market," explained @American_hodl on Wednesday. "I am finding myself explaining bitcoin to skeptics and new entrants again. This did not happen during the bear. During the bear, it was just us here."

However, other people disagree with American_hodl and the others who assume the market has turned bullish. Some individuals have certain price points that need to be obtained until they call the bull. "We aren't in a bull market until we close above $10.7k," emphasized @llamamarket. "So I'm patient but it looks more likely I was wrong about $5k at least at this very moment. I'll keep everyone posted if/when I buy." The specific price point at which a bull market occurs has been a trend lately and the crypto influencer Luke Martin touched upon the subject on February 6, tweeting:

Fun observation about BTC in a bull-market is the post each day stating: 'Bitcoin isn't bullish until we cross $10k' which quickly turns into 'Not bullish until we cross $11.6k' which quickly turns into 'Not bullish until we cross $14k,' which turns into 'Not bullish until…'

Bullish Pomp Tweets 'Altcoin Season' Phases, and Never Shorting the Bull
Anthony "Pomp" Pompliano, the well known cofounder of Morgan Creek Digital Assets has been talking about the bull run lately too. On Twitter, Pomp felt the need to give an "important message as we enter the next bitcoin bull market." Pomp explained: "BTC is very volatile, you can lose all of your money, only invest what is ok to lose, Twitter is not investment advice, don't buy BTC with credit cards, keep low time preference, [and] do your own research." When BTC crossed the $10K zone, Pomp let his 309,000 Twitter followers know that he still thinks "bitcoin will hit $100,000 by end of December 2021." In between all the social media and forum discussions about the bull market, a number of individuals say that "altcoin season or altseason" typically happens before the BTC bull market or comes in phases.

Managing partner at Blocktown Capital, Joseph Todaro, discussed the altseason topic and the next bull market on Wednesday. "This is the first altseason of the next bull market," Todaro tweeted. "You only get 3 real altseasons: The early alt pump when bitcoin is still less than ATH (weak), the mid alt pump after bitcoin passes ATH ~$20k (strong), [and] the late alt pump as bitcoin marks cycle top (strong). Bitcoin just hit $10,000." Todaro also quipped and said:
"You know we are in a bull market when Peter Schiff refuses to tweet about bitcoin."

Despite knowing about the prior BTC price dump after July's $13K high, bitcoiners everywhere are still calling the bull after the $10K position was reached. "Bitcoin is currently in an intense bull market and investors are getting excited," another individual tweeted on Wednesday.

"Never short bitcoin in a bull market," explained the BTC thought leader Whale Panda on Tuesday. "Never short bitcoin, period," the popular Twitter account @Arminvanbitcoin replied to Whale Panda's statement. Crypto Twitter influencer Paul McNeal from tweeted to his 20,000 followers about the bull market situation as well: "Market Cap goes up – Bitcoin dominance goes down — Welcome to the bull market of 2020."

IOTA forced to suspend network after wallet hack


The group leading the development of the IOTA blockchain, the IOTA Foundation, has run into a troubling situation.  The non-profit was forced to halt its network this past Wednesday after discovering that the IOTA Trinity wallet had been attacked by hackers, resulting in the theft of tokens it held.  The issue is still being unraveled, but there are reports that anywhere from $300,000 to $1.6 million in IOTA tokens may have been lifted from the wallet.

When reports started flowing in on Wednesday that the wallet could have been hacked, the group took action and shut down the Coordinator node to look into the issue further.  It is reportedly looking into a security flaw found in an earlier version of the wallet, and explains, "First (but not all) exchanges have responded, reporting that no monitored funds have been transferred or liquidated.  Most evidence is pointing towards seed theft, cause still unknown and under investigation.  Victims (around 10 that identified with the IOTA Foundation so far) all seem to have recently used Trinity."

As indicated, there have been ten victims identified.  Trinity is available for mobile devices, as well as Windows and MacOS, and some reports indicate that the problem may be limited to the desktop application.  However, this has not yet been confirmed.

This isn't the first time that IOTA has run into security issues, but the possible theft of as much as $1.6 million could make it one of the most disastrous.  In the past, the wallet implementations have been known to be buggy and unstable, and tokens have been lost or sent to the wrong addresses.  The development team also previously rolled out a controversial hash function that was met with a lot of criticism, which developers refuted.  However, they later changed the code anyway to respond to those complaints.

By far, the most disastrous hit to the alternative blockchain's reputation came when a hacker out of the UK stole $11 million in IOTA tokens.  However, his run was short-lived, as law enforcement was able to track him down and arrest him, and IOTA was able to recover the majority of the stolen funds.

After this latest attack, the foundation is already working with law enforcement to determine how much damage was done.  The group explains in an announcement, "We've shifted the complete focus of all relevant resources of the IOTA Foundation to this investigation last night and we have been working in teams to investigate [the] impact and cause together with the identified victims."  It added, "We have been working on the investigation of attacked seeds and analyzed the attack pattern, using a set of newly developed tools, as well as finishing a complete manual verification (to validate tooling reliability)."

Saturday, February 8, 2020

Blockchain could help China respond better to Coronavirus, expert says


As China battles to contain the deadly Coronavirus outbreak, one expert believes that blockchain could greatly boost the country's efforts. The virus has infected over 28,000 people in just three weeks, with 563 losing their lives so far. According to an academic at the University of Hong Kong, it's time China turned to blockchain in its response efforts.

In his post on the Oxford University Faculty of Law blog, Syren Johnstone believes that the time to build borderless solutions based on decentralized technologies has come. Johnstone, who is the Executive Director of the Master in Laws Programme at the University of Hong Kong, pointed out that blockchain and artificial intelligence can be used to better manage crisis situations.

He stated, "A private blockchain network would enable the recording and tracking of anything that is donated, from donation dollars to N95 masks. It also creates clear points at which it is possible to hold a person or organization to account, from the loading of donations for delivery through to its final end-use."

This blockchain network can also have public visibility, providing end-to-end transparency to all stakeholders. This would allow the donors to trace their donations, ensuring that they are going to the intended use, which would in turn push them to become even more involved.

The network would also allow the charity foundations to make informed decisions on how to spend the donations, based on sufficient data regarding the infection. Artificial intelligence could also be integrated in this step to feed data to the network on the infections, guiding the decision-making process.

He stated, "In a blockchain-based donations context, such outcomes would not only be driven by models developed by epidemiologists but also by the current and forecast supply and utilization of limited resources. AI can also provide visibility to the decision-making process, which is critical to restore public trust in the system and the ongoing flow of much needed donations."

Currently, the Chinese government has directed all donations towards the Coronavirus outbreak to be channeled to five charity organizations. This centralization makes the response towards the epidemic slow and unnecessarily complicated, with historical data proving this centralization approach is counterproductive.

Blockchain is already in use in some of China's largest companies including Alibaba and Tencent, so why not charities? Moreover, President Xi Jinping has called for blockchain adoption in China, proving the technology is here to stay. The Coronavirus crisis, unfortunate as it is, provides the tech industry the opportunity to develop decentralized solutions which could lay the foundation for the charity sector, he argued.

Saturday, February 1, 2020

Police arrest 10 in $6.6M Israeli crypto scam


European authorities have arrested 10 suspects accused of defrauding over $6 million from tens of investors. The suspects conducted a crypto pyramid scheme targeting investors in several European countries, including France, Belgium and the U.K. The arrests are the culmination of an extensive investigation that began in 2018.

The investigation was led by Europol and Eurojust, EU agencies that focus on law enforcement and criminal justice cooperation respectively. In a press release, Eurojust indicated that the scheme had defrauded 85 investors, mainly from France and Belgium, although it was based in Israel.

The scheme targeted its victims by phone, promising them incredible returns of up to 35% for a small investment. In a classic pyramid scheme technique, the fraudsters paid off the initial investors using money raised from late-stage investors. The initial payments led many of the investors to stake more money and recommend the scheme to others.

However, after some time, the payments stopped, as they always do. The criminals began to channel all payments into bank accounts belonging to several fake companies in Asian countries and Turkey.

Investigations into the crime ring started in 2018, with Eurojust issuing investigation orders to authorities in the U.K., Bulgaria, Spain, Hungary, Portugal and the Czech Republic to assist with the investigations. In January last year, the authorities made the first arrests, bringing in four suspects arrested in France. Europol also partnered with authorities in Luxembourg to seize $1.1 million.

This is the latest case of crypto fraudsters being brought to book. In January alone, tens of crypto fraudsters have faced the law in connection to millions of dollars lost through crypto scams. The DoJ, for instance, recently charged two alleged fraudsters for using fake identities to raise over $30 million in an ICO. The two were behind CG Blockchain, a company that claimed to develop blockchain auditing tools.

The SEC, on the other hand, charged ICOBox with the issuing of an unregistered ICO in which it raised $14 million. Just days prior, it had charged a San Diego, California man for defrauding $3.5 million from investors in a cloud mining scam.

The law enforcement actions are a positive sign for the crypto industry as it indicates the authorities are cracking down on the rampant crypto scams. Once the industry sheds the scammers, it will appeal to more people and likely attract government support.

Saturday, January 25, 2020

Texas securities adds crypto to list of top threats to investors


The Texas State Securities Board (TSSB) recently published the tenth-anniversary edition of its investor guide, which contained a list of risky investments—cryptocurrency included—that people should be wary of.

In its "Texas Investor Guide: Strategies for Investing Wisely and Avoiding Financial Fraud," the state regulator said cryptocurrencies require scrutiny and should be traded with care. Aside from crypto, the list also includes unregistered individuals, oil and gas offerings, and promissory notes.

According to the TSSB, digital assets are extremely volatile and that it's almost impossible for a layman to understand how it works. Promoters of crypto tokens are also just trying to take advantage of people looking for a way to get rich quickly, the board says, noting that even seniors and retirees who prioritize security over speculation have ended up investing in ICOs.

Word of advice from the regulatory body

The TSSB has some pieces of advice for investors on how to deal with cryptocurrencies. The state board warned investors to refrain from buying cryptocurrencies without knowing the trustworthiness of the token-issuing firms.

"Any investor who does decide to enter the crypto space should only deal with registered firms," TSSB advised. Further emphasizing that very little that can be done for investors that lose their funds through ICO or other crypto-related investments.

Additionally, the regulatory explained that investing in such cryptocurrency offerings leads to investors transferring funds to anonymous third parties.

This week in tech: India, Turkey, UK make moves as China’s investment drops


The world's first central backed digital currency is yet to see the light of day, but progress is being made. This week, the Bank of England announced that it plans to explore possible use cases for a digital currency. The BoE has joined hands with the Bank of International Settlements and five other central banks in the project, among them the Bank of Japan and the European Central Bank. The move could be among the most significant steps in the push for the use of CBDCs across Europe and beyond.

The move by the BoE is one of many in the past year, as the world seeks to adopt blockchain-based digital currencies. According to the World Economic Forum, central banks are waking up to digital currencies. During the Davos 2020 conference this week, the WEF launched the CBDC Policy-Maker Toolkit that's aimed at helping central banks find the best way to integrate digital currencies into their monetary systems. The organization gathered insight from central bank researchers, international organizations, global policy‑makers and experts from over 40 institutions.

Still on CBDCs, the MIT blockchain research group believes that most of them will use technology currently being applied by existing digital currencies. The Digital Currency Initiative published a report this week stating that most CBDCs will copy features such as "the usefulness of programmability in money and the importance of preserving user privacy."

In India, the government is struggling to find some middle ground on crypto and blockchain. While the Reserve Bank has had its issues with crypto, the country's securities regulator believes blockchain will play a key role. Ajay Tiagi, the chairman of the Security and Exchange Board of India is urging the exploration of blockchain applications in the securities market, such as in clearing, settlement and record-keeping.

Still in India, the country's Telecoms and IT Minister has called for blockchain solutions for improving quality of government schools. Ravi Prasad called on the National Informatics Center to develop solutions for public schools, saying he is very keen on leveraging blockchain technology in primary education. He was speaking during the inauguration of a blockchain center of excellence in Bengaluru.

In Turkey, the city of Konya is working on integrating blockchain, including developing its own digital currency. The city has blockchain experts already looking into how the technology can be integrated in social programs. The proposed digital currency, City Coin, will be used in the social programs as well as other state payment systems.

The world's largest brewing company is also using blockchain, leveraging the technology to help African farmers prove their income. Anheuser-Busch InBev, the maker of the popular Budweiser, has developed a blockchain-powered system that keeps track of all the farmers supplying it. This system replaces the tedious paper trails previously used. The farmers can use it to prove their income to banks and other financial institutions, a crucial factor in acquiring credit facilities.

Argo Blockchain had the best year yet in 2019, a report this week revealed. The report claimed that the crypto mining company saw a tenfold increase in its revenue last year. Argo, which is listed on the London Stock Exchange generated $11 million, up from $987,000 in 2018.

While blockchain technology is rising to the top, China has scaled down its investment in the technology. A report by state-run Xinhua revealed that the country saw 245 financing deals in blockchain in 2019. These deals accounted for $3.6 billion, a 40.8% drop from the previous year. Beijing, Shenzhen and Hangzhou had the most deals, the report stated.

Saturday, January 18, 2020

FATF Holds Global Forum to Discuss Crypto Supervision


The Financial Action Task Force (FATF) and over 50 delegations involved in crypto supervision recently gathered to discuss how to regulate crypto assets and related service providers. While examining three key areas, they stressed the importance of international cooperation, citing that cryptocurrencies are global products.

FATF-Led Discussion on Crypto Supervision
The Financial Action Task Force held a "supervisors' forum" in France last week to discuss crypto asset supervision. The aim of the forum was "to promote more effective supervision by national authorities" in the area of crypto assets and related service providers. The FATF is an intergovernmental organization with a focus on developing policies to combat money laundering and terrorism financing. Supervisors are designated authorities or non-public bodies with compliance responsibilities of each country.

According to the FATF, this event was the first opportunity for regulators to discuss how to implement new measures for crypto assets and related service providers since it finalized them in June 2019. Attendees included 135 representatives from over 50 delegations involved in virtual asset supervision, the FATF detailed, elaborating:

Supervisors play an important role in ensuring that regulated entities, such as banks and financial institutions, implement the FATF's standards to detect and prevent money laundering and terrorist financing.

3 Key Areas Discussed
The event's participants shared their knowledge and experience in supervising and regulating virtual assets and virtual asset service providers (VASPs). They discussed three main topics, starting with the lessons learned so far from countries that have already established a regulatory framework for cryptocurrencies and VASPs.

The second topic concerns common issues when drafting VASP laws and regulations. Representatives shared their approach to developing an AML/CFT regime for VASPs in their jurisdictions and outlined how they were implementing the FATF's recommendations. The third topic discussed was about the tools, skills, procedures, and technology needed to effectively supervise VASPs. The FATF remarked:

The importance of international cooperation was also highlighted, as virtual assets are inherently global products.

The supervisors and regulators identified a number of areas that need further action which they plan to discuss at the next FATF Plenary and other supervisors' meetings to be held in May.

Implementing the FATF Standards
The supervisors' forum is an initiative of the Chinese Presidency of the FATF to promote more effective supervision by national authorities. Two have been held so far, the first of which was held in November 2019 in Sanya, China. It focused on the effectiveness of supervision without discussing crypto assets.

The FATF's explanation from its crypto guidance.
The FATF issued guidance for crypto assets and VASPs in June 2019, with the support of the G20 countries. The money-laundering watchdog subsequently revised its assessment methodology. It sets out how the FATF will determine whether countries have successfully implemented its recommendations and are regulating the crypto sector. The FATF's rules apply both when cryptocurrencies are exchanged for fiat currencies and for other digital assets.

The challenge now is for countries and affected entities to effectively implement its recommendations, the FATF affirmed. By bringing together practitioners from around the world, the organization explained that it "is beginning to develop a global knowledge base on 'what works' in supervising virtual assets," adding:

This will help ensure a consistent global approach to supervision and will help the VASP sector adjust to the new regulatory environment.

A FATF meeting.
While acknowledging that implementing its requirements will be challenging for the crypto sector, the FATF believes that "it will ultimately increase trust in blockchain technology as the backbone behind a robust and viable means to transfer value." Noting that adopting its rules will "ensure transparency of virtual asset transactions and keep funds with links to crime and terrorism out of the cryptosphere," the money laundering watchdog declared:
Countries need to implement the FATF's measures, and soon … The FATF will evaluate next steps in June 2020.

EXcoin’s Mru Patel wants to bring blockchain together for social good


Blockchain technology has been focused on improving efficiency, reducing costs and improving speed—all of which translate to increased profitability for its users. However, in recent times, we've seen a rise in the use of blockchain for social good. The Global Blockchain Organization is one initiative, aiming to utilize the blockchain to create a better future. One of the founders, Mru Patel was at the Malta AI and Blockchain Summit where he spoke to CoinGeek's Stephanie Tower about GBO, the need for regulations and more.

The GBO will bring together various stakeholders, from regulators to banks and startups, and "create a standard regulated thing on basic values," he explained. These members will "shape the future of the blockchain through process, regulation and universal compliance towards blockchain for humanity."

The organization was launched in December 2019 in Oslo, Norway. It intends to work towards the adoption and utilization of blockchain in government, healthcare, energy, finance and infrastructure.

Patel stated, "The immediate impact we hope for is all about humanity—how to improve the lives people. At the end of the day we're giving to charities, we're building communities, we're going to raise a lot of funds."

Patel is also the President of EXcoin, a derivatives exchange for digital options trading. The platform allows its users to deposit and withdraw in crypto and offers trading in futures, options and CFDs. He has also been extensively involved in regulatory processes, especially concerning cryptocurrencies and blockchain technology.

He believes that governments across the globe must try to understand blockchain a bit better, so as to make informed decisions on how to regulate it. Most of them only know blockchain as a technology that underpins Bitcoin. Others relate it to the many crypto-related scams that have occurred in recent times. However, it's much more than this and could ultimately transform how governments operate.

On the perceived tug of war between blockchain and regulators, he explained, "Majority of the governments are focusing mainly on the fintech space to track money laundering and related activities, also on taxation. In my view, majority of them are dragging their feet. I have a view that what they are actually doing is protecting their jobs, pensions and the cartels they are involved with."

Sunday, January 12, 2020

New York wants crypto companies to pay their own way


New York has a love/hate with cryptocurrency. It's the only state that requires companies in the industry to obtain a separate license, the BitLicense, to operate, while recognizing that digital currency is legitimate. There is even talk of the state issuing its own quasi-crypto, minus the decentralization, and Gov. Andrew Cuomo now believes that companies should take a more vested interest in their activity if they want to operate within the state's borders. Cuomo has proposed changes to New York's Financial Services Law (FSL) that would require those entities to cover all expenses related to regulation and licensing.

In Cuomo's State of the State (in pdf) plan, he explains that there are gaps in the oversight of companies licensed under the Bank Law and Insurance Law, and those covered by the FSL. Entities covered by either of the first two are obligated to provide payments to the New York Department of Financial Services (NYDFS) to cover their regulatory costs, but this isn't the case for those covered by the FSL. The governor wants to amend the FSL in order to close these gaps.

While the plan doesn't specifically mention cryptocurrency businesses, they're regulated by the NYDFS and the FSL. This can only mean that they would be subject to the same regulations as any other entity under the FSL's guidance.

No mention is made about how much any costs would be, or when the plan might be put into action. Nor does it indicate if businesses already licensed would have to pay any retroactive fees, or if they would automatically be grandfathered into the policy. The governor's office is now accepting public comments on the proposals, with any input expected on or before January 27.

Several lawmakers in New York, along with a law professor from Cornell, have introduced a plan that would see a statewide digital currency become active. Dubbed "public Venmo," the project would introduce an electronic banking platform and a digital currency that would be available for use across the state.

According to Vice, Public Venmo is the brainchild of Senator Julia Salazar, Assemblyman Ron Kim and Cornell law professor Robert Hockett. Kim explains, "I believe that our proposal, the Inclusive Value Ledger, has the potential to be truly revolutionary," Kim said in a public statement. "The creation of a free public savings and payment platform that all New Yorkers can use, not only to pay for goods and services but also to transfer money directly to each other through, could fundamentally reshape New York into a fairer, healthier, wealthier, and more inclusive place for all."

As opposed to other digital currencies, Venmo wouldn't be completely decentralized. It would be issued, monitored and regulated by a central government-led entity that maintains a government-controlled master wallet.

Saturday, January 4, 2020

Weekly crypto news roundup


2019 is securely in the history books, and 2020 is ready to bring a lot of positive change for the cryptocurrency and blockchain spaces. Regulation, perceptions and laws continue to migrate toward wider acceptance, even if the transition seems slow, and this year is going to be a pivotal shift for how crypto is received. Going from 2019 to 2020 means out with the old, in with the new, and this week, the transformation week between the two years, is helping to make that happen.

Despite crypto having been received well in Australia, an executive with the Reserve Bank of Australia sees BTC as a non-practical alternative to fiat. Anthony Richards admits that he has dabbled in BTC, but he doesn't believe it can take the place of regular currency. He's correct, as crypto was never meant to replace fiat, and alternatives such as BTC and ETH are not carrying the digital currency torch the way it had been intended.

Google recently banned MetaMask, an ETH wallet and decentralized web browser from the Play Store and Apple appears to be ready to follow suit. It updated its App Store policy and might force apps that offer decentralized app (DApp) browsing capabilities to pull their products. This includes the Coinbase DApp browser, which contains a MetaMask component, and the possibility isn't sitting well with anyone. The reason Google and Apple are giving for the removal of MetaMask is because it includes a crypto mining function; however, MetaMask has already denied that assertion. For Coinbase users, the only alternative would be to use the desktop version of the Coinbase Wallet.

South Korean crypto exchange Bithumb is having to dig deep into its pockets to cover a massive tax bill. The country's National Tax Service is looking for just under $69 million from the company in the form of foreign customers' withholding taxes on gains made from crypto investments. The tax bill comes as Vidente, the exchange's largest shareholder, acquired just over 34% of the exchange's parent company. Bithumb and Vidente are prepared to pay the bill to stay on the government's good side, but will contest the legitimacy of the claim, as well.

Bitcoin SV (BSV) continues to gain strength on a number of levels. Most notably, it has recently become attractive to more crypto miners, with several new pools joining the mix recently. One of the reasons for the switch is because trends are showing that mining BSV is more profitable than mining BTC. This became more pronounced after the Quasar upgrade last year, and will grow even more with the Genesis upgrade next month.

If letting an employee go for any reason results in bad blood, it's a good idea to upgrade protocols and security measures to ensure the former employee can't look for retribution. One startup out of France learned this lesson the hard way after a former employee, disgruntled at being let go for reasons that aren't entirely clear, broke into the company's network and stole 182 BTC—around $1.3 million. Knowing how the system worked, he was able to sidestep security measures that would have sounded the alarm, but someone still noticed the sudden massive loss in holdings and contacted the authorities. The theft was traced to the former employee, who will now have to answer for his actions in front of a judge.