Tuesday, June 25, 2019

48 Crypto Exchanges Approved in the Philippines

 


The number of approved cryptocurrency exchanges has been growing in the Philippines. In addition to 11 operators registered by the central bank, the Bangko Sentral ng Pilipinas, there are 37 other crypto exchange operators licensed by the government-owned Cagayan Economic Zone Authority.

11 Crypto Exchanges Registered With Central Bank
The Bangko Sentral ng Pilipinas (BSP) has registered 11 cryptocurrency exchanges, allowing them to operate in the country, according to the most recent list of Remittance and Transfer Companies with Money Changing or Foreign Exchange Dealing and Virtual Currency (VC) Exchange Service.

The licensees are Betur Inc. dba Coins.ph, Rebittance Inc., Bloomsolutions Inc., Virtual Currency Philippines Inc., Etranss Remittance International Corp., Fyntegrate Inc., Zybi Tech Inc., Bexpress Inc., Coinville Phils Inc., Aba Global Philippines Inc., and Bitan Moneytech Co. Ltd.

The central bank adopted a formal regulatory approach to cryptocurrency through the issuance of Circular No. 944 dated Feb. 7, 2017. It requires businesses engaged in the exchange of cryptocurrencies for fiat money in the Philippines to register with the central bank as remittance and transfer companies. The bank elaborated:

BSP-registered VC exchanges are now required to put in place adequate safeguards to address the risks associated with VCs such as basic controls on anti-money laundering and terrorist financing, technology risk management and consumer protection.

As for cryptocurrency ATMs, the central bank revealed on June 13 that it had not authorized any individual or entity to install them in any location in the Philippines or manage online platforms for them and other crypto transactions. The notice reiterates that crypto ATM operators must register with the central bank as VC exchanges under the aforementioned circular. In addition, the BSP noted that a separate approval may be required from the Securities and Exchange Commission for the issuance of initial coin offerings and operation of crypto trading platforms.

37 Others Licensed by CEZA
Besides the companies registered by the BSP, many others have been licensed by the Cagayan Economic Zone Authority (CEZA) to operate crypto exchanges. CEZA is a government-owned and controlled corporation tasked to manage and supervise the development of the Cagayan Special Economic Zone and Freeport, the 54,119-hectare area located at the northeastern tip of the country.

"As a freeport, it operates as a separate customs territory similar to Hong Kong, Singapore, Labuan in Malaysia and Hamburg in Germany," CEZA described, adding that it has been offering foreign companies incentives and advantages to registering their businesses there. "These developments are all deemed toward attracting legitimate and productive local and foreign investments and, thus, creating employment opportunities in and around the freeport," its website details. CEZA Administrator and CEO Raul L. Lambino explained:

We are making CEZA a sandbox for the development of these disruptive technologies, serving as a laboratory for interested parties to experiment on these new dimensions of business enterprise.

On June 17, CEZA revealed that 37 companies are currently licensed under its "Financial Technology Solutions and Offshore Virtual Currency Exchange (OVCE) Business Rules and Regulations of 2018." There are two types of licenses. Twenty-four companies have been granted the OVCE Principal license and 13 companies the OVCE Regular license. The former allows licensees to conduct offshore fintech business and crypto exchange activities; the latter allows licensees to conduct only offshore crypto exchange activities.

List of OVCE licensees provided by CEZA on June 17.
The 24 Principal licensees are Golden Millenial Quickpay, Ultra Precise Investment, Liannet Technology, Rare Earth Asia Technologies, Formosa Financial Holdings, Tanzer Holdings, Asia Premier International, Orient Express Global, White Ranch, Dragon Empire Developments, Galaxy Plus Developments, Tiger Wheel, Ipe Global, Cr8tiv Solutions Management, Sino-Phil Economic Zone Agency Development and Management, Digifin Technologies, Hong Kong Yuen Shing Hong, First Bullion Holdings, Okcoin Philippines Technology, 6x Tech, Increz Korea, Harseq, Fafa Internet Blockchain (China), and Wangwang Quickpay Foundation.

The 13 Regular licensees are Cezex Trading, Unicorn Venture Investment, Eplata Pacific, A&C Fintech, Zipmex, Bird Mouse, Ecoflow, Adax Tech, Monetium, Bitpoint Apec Investment, Hxl (HK) Technology, Noah Ark Technologies, and Wtia.

Some companies have falsely claimed to have been licensed such as Freedom Traders Club, Ploutos Innovation, Ploutos Coin, Hedger Technology, Hedger Mining, Idragon Science Development, Teo Consulting Group, ECP, and Grace Exchange, CEZA warned. The authority additionally clarified:

No Filipino company, Filipino, or Philippine resident is allowed to apply for a CEZA OVCE license, and if so licensed, such licensee is not allowed to sell securities to Filipinos or to exchange tokens into fiat currency, unless they are registered with the SEC or the Bangko Sentral ng Pilipinas (BSP), respectively.

Philippines Building Crypto Valley of Asia
In collaboration with property developer Northern Star Gaming and Resorts, CEZA is building Crypto Valley of Asia for companies operating in the Cagayan Special Economic Zone and Freeport.

The first phase of the project consists of a 25-shop housing development inside the cyberpark with services and amenities such as co-working and living spaces, business incubation and acceleration hubs as well as back offices of crypto exchanges and service providers, CEZA outlined, adding:

Soon to also rise in crypto valley are a world-class internet data center, crypto-mining firms, self-contained power production facilities, and a state-of-the-art cyber security and risk assessment facility.

BSP's Regulatory Approach to Cryptocurrency
"The BSP recognizes that VC systems can revolutionize financial services delivery, particularly for payments and remittances," Governor Nestor A. Espenilla Jr. acknowledged at the annual convention of the Association of Philippine Correspondent Bank Officers in June last year.

BSP Governor Nestor A. Espenilla Jr.
Explaining the central bank's views and regulatory approach to cryptocurrency, the governor stated that "Cryptocurrencies are a medium of exchange. The Bangko Sentral ng Pilipinas recognizes this," noting:

We have adopted a regulatory approach to privately-issued cryptocurrency that is balanced, open and flexible… This is to allow the market to promote financial innovation and for the industry to take advantage of all its benefits and efficiencies – with prudence.

He further remarked, "Cryptocurrencies, like fiat currencies, are neither good nor bad. They are neutral … The BSP allows the market to develop but it has also issued responsive regulations to uphold consumer protection and to maintain financial stability."

Monday, June 10, 2019

Crypto Debit Cards You Can Use Now Plus a Few to Expect Soon

 


Debit cards tied to cryptocurrency wallets provide an opportunity to spend your digital coins almost anywhere fiat money is accepted. It's a working solution, at least until wider adoption comes around. That's why they've become so popular in the crypto community. Challenges of different sorts have negatively affected some of the earlier offerings, but it's good to see products that have survived and new ones that are gaining traction or are about to enter the market.

A Global Crypto Debit Card
During the past year, crypto winter forced businesses to downsize and adjust to unfavorable market and regulatory conditions. Many are still trying to adapt and some are already seeking opportunities elsewhere. For example, the company that issued Shift, arguably the first bitcoin debit card in the U.S. which allowed holders to spend from their Coinbase wallet, is not offering it anymore. It's now operating under a new brand name, Apto Payments. And in Europe, many card providers suffered a hard blow when Visa terminated Wavecrest's membership – some have recovered, others are yet to return.

Not everything is so bleak, however. Paycent is a crypto debit card that's been available worldwide since relatively recently but according to its website, over 53,000 cards have already been delivered globally. They enable users of the Paycent wallet to spend their digital assets in brick and mortar stores as well as with online merchants through conversion to fiat. You can also withdraw funds in local currency from ATMs in just about any country. The card can be ordered from the platform's wallet which supports a number of coins including bitcoin core, ethereum, litecoin, dash, and the Binance token.

Paycent's operator, Singapore-based company Texcent Asia, issues three types of cards – Mastercard, Union Pay International and China Union Pay. The Ruby card (CUP) has spending and withdrawal limits of $2,500, while the Sapphire card (UPI) and the Solitaire card (MC) are limited to $5,600 for transactions and $1,650 for withdrawals. They come as both physical and virtual cards and are delivered for $49. You can find out more about the applicable fees and limits on the Paycent card site.

At the moment, Paycent is offering one of the few, if not the only, crypto debit cards with global coverage. Nevertheless, there's a number of other options that we've previously reviewed and here are those that are still available in mid-2019. Wirex is a popular choice in Europe. Its Visa card supports conversion from several major cryptocurrencies and provides a 0.5% BTC cashback on in-store purchases. The card issued by Bitpay remains a working option for U.S. residents who can use it to shop with Visa merchants anywhere in the world. They can spend bitcoin cash (BCH) and bitcoin core (BTC) from their Bitpay wallet and the cryptos are converted to dollars.

Cryptopay is a platform that offers a prepaid card which can be loaded from its wallet supporting four cryptocurrencies – bitcoin core, ethereum, litecoin, and ripple. The card is currently available for clients in the U.K., Europe and Russia, with negotiations underway with a new issuer in Singapore. It comes in plastic and virtual form and allows holders to spend their coins both online and offline as well as withdraw fiat cash worldwide.

Cards Supporting Bitcoin Cash
A growing number of card issuers now support bitcoin cash in their products, with the above-mentioned Bitpay being the most notable example. Other platforms added the cryptocurrency more recently. Crypto.com's MCO Visa card has allowed you to spend BCH since the end of May, when the Hong Kong-based payment processor announced it had introduced the coin to its wallet and card app. The company started shipping its debit cards to customers in Singapore last October and promised to take them to the U.S. through a partnership between its Florida-registered affiliate Foris Inc. and the Metropolitan Commercial Bank in New York. Its wallet is currently available in 36 states but there's been no update on the plans for the card itself.

Crypto enthusiasts who have a Uquid account can order one of their virtual and plastic cards. The platform promises unlimited online spending and ATM withdrawals as well as fee-free POS purchases. You can top up your balance with a staggering number of coins and tokens, a total of 89 so far, including bitcoin cash. Your digital assets can be converted to British pounds, euros and U.S. dollars. The card is not offered in the United States, however, and you'll be able to determine if your country is eligible only after logging in to your account. Creating one is free of charge but ordering the physical card will cost you up to $17, depending on the fiat currency you've chosen.

Bitnovo buys and sells more than 20 major cryptocurrencies. The trading platform has a mobile app and issues debit cards with which you can pay in stores and online with coins converted to euros. To use it you don't need to have an associated bank account and you can top up with crypto. Bitnovo added BCH to its options in September last year. It also supports bitcoin core, dash, litecoin, ripple, zcash and stellar. Bitcard allows you to withdraw fiat from ATMs for €1 per transaction and there's a monthly fee of €1.20. The card is currently available only for EU residents. Ordering a Basic Level card does not require any registration but you can only load up to €250 on it. The Level Plus (up to €2,500 per year) and the Premium Level cards (maximum €15,000) do come with the obligation to share personal data.

An offering known from before the Wavecrest saga is now returning to the market. Belize-based company Advcash is preparing to launch its virtual and plastic cards in the European Union, Russia and other countries. The fiat currency of the ADV Cards will be either euro or U.S. dollar but holders will be able to withdraw any currency at teller machines around the globe. You'll be able to fund your card with the ADV wallet which supports BCH along with other leading cryptocurrencies such as BTC, ETH, LTC, HRP, and ZEC. Advcash promises free shipping for their cards and no maintenance fees but you need to pay 14.99 in euros or dollars for the card. Detailed information about other fees and limits can be found on the issuer's website.

A new player in the niche is the Spanish fintech startup 2gether, which is targeting its products and services at the crypto community in Europe. The platform released its prepaid Visa card in April and its holders can use it in any of the 19 members of the Eurozone with plans to expand availability to the rest of the EU. It allows you to spend your digital coins anywhere Visa is accepted through instant conversion to EUR, which is the common fiat currency of the Eurozone countries. Bitcoin cash (BCH) is one of seven supported cryptocurrencies along with ETH, BTC, XPR, EOS, XLM, and LTC. 2gether lets you hold and manage euro and crypto balances in the same app as well as to buy and sell digital coins.

Yahoo Japan-Backed Exchange Launches Crypto-Yen Markets and Margin Trading

 


Back in April 2018, it was revealed that Yahoo Japan was planning to launch a cryptocurrency exchange licensed by Japan's Financial Services Agency (FSA). Now, a year later, Yahoo Japan's trading platform Taotao is open offering BTC and ETH trading while also providing users with margin trading available in litecoin (LTC), ripple (XRP) and bitcoin cash (BCH).

Yahoo Japan's Taotao Exchange Has Launched
Yahoo Japan Corporation has officially entered the cryptocurrency trading industry with its newly launched exchange Taotao. Yahoo Japan is an internet company tethered to the American multimedia corporation Yahoo. The web portal operated by Yahoo Japan is the most visited website in the country, offering services like email, Roku, Gyao, Geocities, auctions, shopping, and travel. The company's exchange was initially called Bitarg up until Yahoo Japan acquired the trading platform last February and renamed it Taotao. The trading platform is fully licensed with the FSA as a Japanese virtual currency exchange business association type 1 member.

The Yahoo Japan-backed cryptocurrency exchange offers both BTC and ETH trading against JPY. The trading platform also provides margin trading with LTC, BCH, and XRP.
Taotao President, Shinichiro Arakawa, announced the launch of the platform on May 30, 2019, with an initial commemoration campaign that gives traders zero fees for 30 days. Additionally, for BTC, ETH, BCH, XRP, and LTC margin trading, the open position management fees from leverage transactions are waived for the first month. Taotao launched the web portal with its slogan "New money, new world," and the company believes Taotao makes it easier for cryptocurrency users to trade in a safe manner. The Taotao trading platform can be used in a browser but the exchange also offers a mobile trading experience with its Android and iOS applications. Users can trade with BTC and ETH in a traditional spot market fashion with their smartphone while also playing with leverage on LTC, XRP, and BCH.

Taotao users can trade and execute leverage using either an Android or iOS mobile device. The iOS version of Taotao is pictured above. Users can also register with a Yahoo Japan ID as well.
The Yahoo Japan-backed Taotao claims to offer top-notch trading in a completely isolated environment from the external networks. Funds are kept in cold storage and Taotao also offers multi-signature technology which requires the approval from multiple individuals at the time of withdrawal. In order to prevent unauthorized logins, Taotao requires two-factor authentication (2FA) for accounts. One interesting thing to note about registering for Taotao is users can sign up with a Yahoo Japan ID to make the process much quicker. Still, in order to be fully verified, users are required to provide a photo ID in order to obtain approval. After the Coincheck breach in January 2018, Japanese exchanges have to abide by strict rules in order to acquire a license to operate a virtual currency trading platform. Yahoo Japan's Taotao platform is among 19 FSA approved cryptocurrency exchanges within the country.

A Taotao advertisement which at the time reimbursed accounts with 11,000 yen worth of credit.
Crypto Exchange Competition in Japan Is Growing
Yahoo Japan's entry into the cryptocurrency trading environment will surely help give digital assets further mainstream attention. There have already been advertisements on Yahoo Japan's web portal when the company announced the pre-registration account openings for March 25 and gave up to 11,000 yen in reimbursements for advance registrations.

The Japanese cryptocurrency platform Bitflyer is one of the longest-running exchanges in the country and typically captures the most BTC trade volume in Japan. In 2017 Bitflyer commanded the most crypto volume in the world for a short period of time.
Taotao will compete with a slew of trading platforms and the Japanese forerunner Bitflyer, one of the world's leading digital asset exchanges by volume. For instance, on Monday, June 10.

The Yahoo Japan-backed exchange Taotao will face other competitors such as Rakuten, Fisco, and Decurret.
One of those examples is the Fisco Cryptocurrency Exchange, which initiated services in Japan during the last week of April. Fisco Digital Asset Group (FDAG) previously worked with Tech Bureau Inc., the firm which operated the hacked exchange Zaif, and FDAG decided to relaunch services seven months later. Then there's the recent opening of Huobi Japan last January, which introduced LTC, BCH, MONA, BTC, ETH, and XRP trading to Japanese traders. Huobi Group managed a merger with Bittrade and rebranded into Huobi Japan after acquiring a license to operate under the FSA's stricter guidelines. Taotao will also be challenged by the new platform Decurret and the revamped Rakuten service in Japan.

Monday, June 3, 2019

US, Japan and South Korea lead the world in crypto interest: Report

 


The U.S., Japan and South Korea lead the world in crypto interest. This is according to the latest study into cryptocurrency trends worldwide. The study, conducted by crypto outlet The Block, showed that five countries account for half the traffic for the 48 most popular digital currency exchanges.

The U.S. was the undisputed leader of the pack, the poll found. The country accounted for 24.5% of the total traffic to the exchanges over the six months that the poll was conducted. The country has always been a world leader in the adoption of new technology, and cryptocurrencies have proven to be no different.

In second place was economic giant Japan. The country, which was the first major economy to recognize cryptocurrency as a legal method of payment, had a 10% share of the traffic. South Korea at 6.5%, Indonesia at 4.5% and India at 4.2% rounded up the top five. China, Germany, the United Kingdom, Russia and Brazil were the other countries in the top ten.

However, the rankings changed significantly when the researchers took the population of a country into consideration. With a population of 327 million, the U.S. was no longer at the top. Instead, Singapore came out top. The Asian country is recognized as one of the top global financial hubs and it has lived up to its name according to the study. In second place once again was Japan, with Switzerland ranking third.

The study also ranked crypto interest by regions and as expected, North America came out top. With Canada and the U.S. quickly taking to digital currencies, the regions is way ahead of its peers. Europe was second, with Oceania, Asia, South America and Africa rounding up the list respectively.

While the study provided an insight into the interest levels in cryptos, its data wasn't a perfect representation of the crypto market. For one, in some countries, the cryptocurrency exchange industry hasn't quite matured. Moreover, the established crypto exchanges have shunned some regions and thus crypto enthusiasts turn to peer-to-peer trading platforms such as LocalBitcoins. For instance, Coinbase still doesn't provide its services to African countries despite expanding to 60+ countries globally.

The data was also skewed by the fact that some countries have either outlawed cryptos completely or have discouraged their citizens from trading. China is a prime example, with the country becoming hostile to cryptos in the past few years. Citizens in such countries turn to VPNs to avoid the censorship, skewing the data against them and for some other countries.

SEC Commissioner Hester Peirce Encourages Less Caution Toward ETF Innovation

 


Hester Peirce, commissioner at the United States securities regulator, has urged for a less cautious approach towards innovation in the exchange-traded funds (ETFs) space on the regulator's part. The Financial Times reported on her remarks on June 2.

Per the report, the Security and Exchange Commission's (SEC) Peirce called on her co-commissioners to allow for innovation in the ETF space by lessening their caution.

She reportedly commented on the SEC's approach towards this category of highly regulated financial derivatives, noting that the SEC is "still smothering ETFs with personalised attention as if they were infants."

Peirce also noted that she believes the regulator was wrong in its decision to reject the bitcoin (BTC)-based ETF application introduced by the Winklevoss twins, who are also founders of the Gemini cryptocurrency exchange. According to Peirce, an ETF would encourage institutional investors to participate in the cryptocurrency market.

The CEO of world's third-largest asset manager, State Street Global Advisers, Cyrus Taraporevala commented to the Financial Times:

"If something does go awry with them, then the whole industry gets painted with the same brush. [...] We do not do inverse ETFs or leveraged ETFs. That will be the case as long as I am in my role."

In 2010, the SEC reportedly banned leveraged and inverse ETFs, presumably because they can produce particularly large losses, the Financial Times notes. Still, Peirce noted that other types of mutual funds also use derivatives to amplify their exposure, and it was clear that unsophisticated retail investors are not the target for leveraged ETFs. She reportedly commented:

"The unwillingness to allow more competitors to offer geared ETFs seems to be another example of denying or curtailing access to a product that would be useful to some investors."

The Financial Times further notes that the U.S. regulator in question is also expected to introduce new ETF regulation, which is expected to speed up innovation in the space.

As Cointelegraph reported at the end of May, the Japanese Financial Services Agency has also showed a cautious approach towards cryptocurrency-based ETFs, according to comments from the finance committee of the upper house of the National Diet.

A recently released Cointelegraph analysis writes that part of the crypto community believes bitcoin's volatility could render the odds of an ETF based on the coin being approved significantly lower.

Wednesday, May 29, 2019

China Releases New Crypto Rankings

 


China's Center for Information and Industry Development has released its latest rankings of 35 crypto projects that were evaluated over the past two months. While several top positions remain unchanged, Bitcoin has climbed up the overall ranking.

New Rankings From China
The Center for Information and Industry Development (CCID), under China's Ministry of Industry and Information Technology, released the 12th update of its crypto project rankings Thursday. The number of projects evaluated was unchanged from the previous rankings published in March. The center also announced that starting this month the rankings will be adjusted every two months instead of monthly.

In addition to the overall ranking, the CCID published three others based on basic technology, applicability, and creativity sub-categories. EOS tops the list overall, followed by Tron, and Ethereum. The center started ranking Tron in February, debuting at number two overall and has remained at that position ever since. BTC now ranks 12th, up three places from the 15th place in the previous ranking. BCH has also improved, currently occupying the 29th spot overall, up from the 31st place previously.

"The results show that the world's three major Dapp platforms — EOS, Tron, and Ethereum — remain ranked in the top three, [and] the scores are 148.5, 144.1 and 136.6," the CCID wrote.

The center describes itself as "a first-class scientific research institution directly under the administration of the Ministry of Industry and Information Technology of China." The first crypto ranking was released in May last year. The assessment is carried out by the CCID (Qingdao) blockchain research institute, an entity established by the CCID, in collaboration with multiple organizations such as the CCID think tank and the China Software Evaluation Center. "The result of this assessment will allow the CCID group to provide better technical consulting services for government agencies, business enterprises, research institutes, and technology developers," the center previously explained.



Sub-Rankings
The overall ranking is based on the total index scores of 35 crypto projects. The total index of each crypto project is the weighted average of its three sub-indices: the basic technology index, the applicability index, and the creativity index. The basic technology sub-index accounts for 64% of the total index, while the applicability sub-index accounts for 20% and the creativity index 16%.

"The basic technology sub-index mainly assesses the level of technical realization of the public chain," the center described, adding that the key areas evaluated under this category "include the function, performance, safety and decentralization of the public chain." The top five crypto projects in this category are EOS, Tron, Steem, Bitshares, and Gxchain.

The creativity sub-index "focuses on continuous innovation in the public chain, including developer size, code updates, and code impact," the center detailed. In this category, the top five crypto projects are Bitcoin, Ethereum, Lisk, EOS and Tron.

The applicability sub-index "mainly evaluates the comprehensive level of public chain support for practical applications," the center continued. "The assessment includes four aspects: node deployment, wallet application, development support and application implementation." For this category, the top five crypto projects are Ethereum, Neo, Nebulas, Tron, and Ontology, which are unchanged from the previous ranking for this sub-category. "However, the data shows that the applicability indices of only 11 of the 35 public chains have increased, and the overall index has declined compared to the previous period," the CCID noted.

G20 Countries Start Implementing Unified Crypto Standards

 



As the G20 summit approaches, member countries have been discussing how to implement the standards set by intergovernmental organizations such as the Financial Action Task Force. While there may be some challenges in complying with the standards, the European Central Bank says the risks crypto assets pose to the euro area's financial stability are manageable.


The G20 countries have reaffirmed their support for the Financial Action Task Force (FATF) as the global standard-setting body in areas such as anti-money laundering. They have also agreed to follow the FATF recommendations including those concerning crypto assets.

The FATF held its annual Private Sector Consultative Forum in Austria earlier this month with its members and over 300 representatives from the private sector participating. Members of the FATF are 36 countries and two international organizations including the European Commission. The FATF explained:

The discussions focused on the mapping of virtual asset services and business models … and on the implementation of specific FATF recommendations.

A FATF meeting
In its April report to the G20, the FATF outlined its work on crypto asset standards and promised to update its guidance "to continue assisting jurisdictions and the private sector, in implementing a risk-based approach to regulating virtual asset service providers, including their supervision and monitoring," the report describes. "This will help countries in exercising oversight of this sector." While emphasizing various risks such as money laundering, the FATF also recognized:

Technological innovations, including those underlying virtual assets … may deliver significant benefits to the financial system and the broader economy.

Russia Has Issues to Resolve
Among countries that have announced their plans to implement the standards set by the FATF is Russia. The country has yet to finalize the regulatory framework for cryptocurrency, which President Vladimir Putin originally said must be done by July last year. Since no crypto regulation had been introduced, the Russian president signed another order for his country's crypto regulation to be implemented by July this year.

However, another delay may also be in the cards as the Chairman of the State Duma Committee on Financial Market, Anatoly Aksakov, has revealed that "The adoption of the law on digital financial assets is 'stuck' because of the requirements of the FATF," Tass reported on May 21. Speaking at the Russian Stock Market 2019 conference, he explained that the requirements will either be implemented in the law on digital financial assets or in a separate bill, elaborating:

The law on digital financial assets has been suspended … There were FATF decisions that require us to resolve issues related to bitcoins and so on.

The news outlet also reported first deputy chairman of the Bank of Russia, Olga Skorobogatova, indicating that the law on digital financial assets could be adopted in the Spring session. "The law on digital financial assets, on crowdfunding, etc., all these bills are in a fairly high degree of readiness," she told the State Duma. "Colleagues from the State Duma committees are very helpful, we expect that these laws can be passed during the Spring session." She further stressed that these laws "are extremely important for the country and will provide an opportunity to implement new projects."

Japan Collaborating With Other G20 Countries
The host of the June G20 summit, Japan has been actively working on implementing global standards on crypto assets. Last week, the country's House of Representatives passed a crypto bill with a number of required resolutions. According to Impress publication, one of them reads:

We have fully grasped the regulatory trends of G20 countries, and cooperated with each country to achieve international harmony.

In April, local media reported that the Japanese government is preparing to offer a handbook to the G20 countries to help them with their own crypto regulations. This matter will be discussed at the June summit along with a wide range of regulatory measures relating to crypto assets.

In December last year, Japan's top financial regulator, the Financial Services Agency (FSA), released a report stating:

To manage and mitigate the risks emerging from virtual assets, countries should ensure that virtual asset service providers are regulated for AML/CFT purposes.

They should also be "licensed or registered and subject to effective systems for monitoring and ensuring compliance with the relevant measures called for in the FATF recommendations," the report details.

South Korea Wants Regulatory Consistency
South Korea has announced several times that it will comply with the unified crypto regulatory standards. At the FSB plenary meeting in April, the progress report to be delivered to the upcoming G20 meetings in Japan, vulnerabilities in the global financial system, and global standards of crypto regulation were discussed. "Transnational cooperation is necessary to regulate virtual currencies," Choi Jong-ku, Chairman of the Financial Services Commission, was quoted as saying. He emphasized the importance for each country to consistently implement international standards prepared by the FATF "to minimize regulatory inconsistencies."

FSC Chairman Choi Jong-ku
Possible Challenges Ahead
Blockchain analysis firm Chainalysis provided feedback to the FATF on its guidance for crypto assets in April. "FATF's guidance, as it is currently drafted, would have profound implications for the cryptocurrency industry," the firm wrote.

"There are clear technical obstacles that prevent cryptocurrency businesses from being able to comply with these standards," Chainalysis detailed. Citing that "Cryptocurrencies were originally designed as a peer-to-peer financial system that has no central authority and no intermediaries," the firm asserted that in most cases crypto exchanges "are unable to tell if a beneficiary is using another exchange or a personal wallet," adding:

Requiring a transmission of information identifying the parties is not technically feasible.

The firm proceeded to discuss "technical opportunities," suggesting that in order to meet the FATF's goals, "Cryptocurrency exchanges can use the transparency of the shared ledger to form an effective risk-based approach." They explained that it should be the job of exchanges to collect and store know your customer (KYC) information of each transaction's originator, and clarified that "While the transactions themselves are public, exchanges should also link their customers with their specific transactions as this information is not available on the public ledger."


Another point highlighted by the firm, which they referred to as "unintended consequences," is that "There is no infrastructure to transmit information between cryptocurrency businesses today, and no one has the ability to change how cryptocurrency blockchains work." The firm elaborated:

Forcing onerous investment and friction onto regulated businesses, who are critical allies to law enforcement, could reduce their prevalence, drive activity to decentralized and peer-to-peer exchanges, and lead to de-risking by financial institutions.

Chainalysis noted that "Such measures would decrease the transparency that is currently available to law enforcement."

Manageable Financial Stability Risks
The European Central Bank (ECB) monitors crypto assets and analyzes potential implications for monetary policy and the risks they may pose on market infrastructures, payments, and the stability of the financial system. Its report published earlier this month entitled "Crypto-Assets: Implications for financial stability, monetary policy, and payments and market infrastructures" summarizes the outcome of the analysis of its Crypto Assets Task Force. The report reads:

At present, crypto-assets' implications for and/or risks to the financial stability of the euro area, monetary policy, and payments and market infrastructures are limited or manageable.

Noting that crypto assets cannot be used to conduct money settlements in important financial market infrastructures in the EU, the bank states that "they do not qualify as securities … [and] central securities depositories (CSDs) cannot undertake settlement of crypto-assets."

Even if crypto-based products were to be cleared by central counterparties, they would need to be authorized and to satisfy existing regulatory requirements, the bank clarified, adding that "Even at their peak in early 2018 the outstanding value of crypto-assets was too small to give rise to concerns for the EU financial system and the economy." Stressing that "Crypto-assets market developments are dynamic and links to the financial sector and the economy may increase in the future," the bank claims:

It is therefore important that the ECB continue to monitor the crypto-assets phenomenon, raise awareness and develop preparedness for any adverse scenarios, in cooperation with other relevant authorities.

The ECB concluded that "Financial institutions investing directly or indirectly in crypto assets should have in place relevant governance arrangements, also in line with the licensing criteria, and commensurate to the materiality of investments in crypto-assets and/or crypto-assets-related activities." The bank added that many factors ranging from market developments to "unintended 'legitimising' effects" of crypto regulation could result in greater exposures to crypto assets.

Wednesday, May 22, 2019

Dutchman arrested for alleged crypto mining fraud of $2.2 million

 


Dutch authorities arrested a 33-year-old businessperson for allegedly defrauding investors through a crypto mining fraud.

According to local reports, Dutch tax authority's investigative department, FIOD, made the arrest. The suspect was a director of two private limited companies, which he allegedly used for money laundering, fraud and forgery activities.

The man started his company back in 2017. Through the company, the suspect received money from investors who thought they were buying computers for buying bitcoins. The suspect collected about €2 million ($2.2 million) from the investors. Investors were promised returns of 0.3 Bitcoin Core (BTC) per month (about $2,389 at current prices). Investors became worried when they failed to get the returns or their mining computers.

Upon investigations, authorities discovered that the BTC mining machines were probably never even purchased. Initially, police had searched his house in November 2018 and discovered luxury goods such as bags, dirt bike, and shoes, and understand that he also used the money on motorbikes and gambling.

Notably, one of the suspect's BTC mining companies, Koniz Trading, was declared bankrupt last year after customers' accused him of fraud, according to reports by the NL Times.

The FIOD added that fighting money laundering is the priority for the government as it is one of the "serious" crimes in the country.

Earlier this year, De Nederlandsche Bank (DNB), the nation's central bank, and the Netherlands Authority for the Financial Markets published a report that suggested that fiat-to-crypto exchanges and custody solution providers must be licensed as cryptocurrencies carry "high financial crime risks." In their report, these authorities explained:

"These risks must be addressed effectively, which can be achieved as a result of the international coordination of countermeasures that AMLD5 [the Fifth European Anti-Money Laundering Directive] provides."

Other countries, notably Malta, have already started to warn its investors on crypto fraud. Late last month, authorities in that country came out to issue guidelines that will help investors identify fraudulent crypto projects. This was done through a report released by the Malta Financial Services Authority (MFSA).

Among the issues addressed in the report, is the need for investors to protect themselves from engaging in suspicious projects, especially those that promise huge returns.

How to Buy Pizza With Bitcoin Cash

 


Every year on May 22, the cryptocurrency community marks this day in 2010 when Laszlo Hanyecz purchased two pizzas for 10,000 bitcoins. To help you celebrate Pizza Day, here are a variety of options to buy to pizza with bitcoin cash (BCH) in different countries around the world.

How to Buy Pizza With BCH on Bitcoin Pizza Day 2019
One of the simplest ways to pay for pizza with bitcoin cash (BCH) in the U.S. is to get a gift card for you favorite joint on the Bitcoin.com Store. Here you can order cards for use in major national chains such as Domino's and Papa John's as well as smaller regional options.

To find a place selling pizza for BCH in Europe you can check out your country's local branch of Takeaway.com. The Amsterdam-headquartered company operates over a dozen international food delivery websites and apps and a number of them accept BCH such as Germany's Lieferando.de, Poland's Pyszne.pl, and the Netherlands' Thuisbezorgd.nl.

If you are living or visiting Seoul, South Korea, you should check out Shuttle Delivery, which enables users to spend BCH in more than 200 restaurants in the area. This South Korean food delivery platform offers an app in Korean and English and supports Android and iOS devices.

To find a nearby pizza-serving BCH-friendly establishment wherever you are in the world, use the Marco Coino app.

Thursday, May 16, 2019

SEC Commissioner Says Time Is Right for Bitcoin ETFs — 3 Funds Pending

 


The U.S. Securities and Exchange Commission (SEC) is currently reviewing three bitcoin exchange-traded funds (ETFs), one of which was filed last week to track the prices of two cryptocurrencies. An SEC commissioner said at the Consensus conference on Monday that the time is right for a bitcoin ETF, as the commission is due to make a decision on one of them next week.

At the Consensus 2019 conference in New York on Monday, SEC Commissioner Hester Peirce, also known as "crypto mom," discussed the regulatory environment for bitcoin ETFs. Expressing her dissatisfaction with the current law, she asserted that the SEC should do more to provide a regulatory framework for cryptocurrency including rules around safe harbor. Decrypt quoted her as saying:

I thought the time was right a year ago — even longer than that … My first chance to comment on it was a year ago … Certainly the time is right, but there are still questions floating around the SEC that need to be answered as much as possible by you all.

Peirce then encouraged the audience to write to the SEC to help them understand the market. One issue she noted was market manipulation, which "is a concern that people keep raising at the SEC," she shared. "Other issues like custody issues [also] come up a lot."

Her comments at Consensus echo her speech at the Securities Enforcement Forum which took place on May 9. "The problem is that the securities laws do not cease to operate as a new industry develops," she explained. "Consequently, individuals and companies in the industry must comply with our securities laws or risk becoming the subject of an enforcement action. It is therefore our duty as a regulator to provide the public with clear guidance as to how people can comply with our law. We have not yet fulfilled this duty." The commissioner additionally described:

It is not the SEC's overzealous action that has stifled the crypto industry, but its unwillingness to take meaningful action at all.

Peirce also expressed concern that the U.S. is falling behind other forward-thinking countries. "Our country has always been a country where innovation can really thrive," she opined Monday. "I worry that a lot of the activities are now happening offshore. I want the US to be the market for innovation."

The SEC staff recently issued a 14-page document detailing a framework to assist issuers with conducting a Howey analysis to evaluate whether token offerings are securities. It details features of an offering and actions by an issuer that could signal that the offering is likely a securities offering. Peirce expressed her worry, however, that this framework "could raise more questions and concerns than it answers."

The commissioner previously said she believes the SEC has no jurisdiction to look at the underlying asset when considering whether to approve a proposed rule change for an ETF. She has also emphasized that excessive regulation could hurt innovation such as cryptocurrency.

The SEC's Senior Advisor for Digital Assets and Innovation, Valerie Szczepanik, explained that the agency is moving slowly on cryptocurrency regulations and cryptocurrency-based products because it needs to be cautious. Szczepanik coordinates efforts across all SEC divisions and offices regarding the application of U.S. securities laws to emerging digital asset technologies and innovations, including cryptocurrencies and initial coin offerings.

In his speech at the SEC Sparks conference on April 8, Chairman Jay Clayton said one of the areas the commission has focused its attention on due to heightened risks is "digital assets, including cryptocurrencies, coins, and tokens." At the Consensus Invest conference in November last year, he revealed the key upgrades he needed to see before the SEC could consider approving its first bitcoin ETF such as better market surveillance and safe custody of crypto assets.

SEC Chairman Jay Clayton
Bitwise Bitcoin ETF: August 14
One of the proposals being reviewed by the SEC is for the listing and trading of shares issued by Bitwise Bitcoin ETF Trust filed by NYSE Arca Inc. on Jan. 28. This proposed rule change was published in the Federal Register on Feb. 15. On March 29, the SEC designated May 16 as the day to make its decision on this proposal. However, on May 7, the exchanged filed Amendment No. 1 to the proposed rule change, replacing the original one in its entirety. According to the amended registration statement filed with the SEC:

The trust will hold bitcoin … [and] will store its bitcoin in custody at a regulated third-party custodian, and will not use derivatives that may subject the trust to counterparty and credit risks.

Furthermore, the company explained that "the trust will not directly purchase or sell bitcoin. Instead, authorized participants will deliver bitcoin to the trust in exchange for shares of the trust, and the trust will deliver bitcoin to authorized participants when those authorized participants redeem shares of the trust."

The filing also details that "in seeking to ensure that the price of the trust's shares is reflective of the actual bitcoin market, the trust will value its shares daily based on prices drawn from ten bitcoin exchanges … [which] represent substantially all of the economically significant spot trading volume on bitcoin exchanges around the world."

On March 22, Bitwise tweeted clarifying that "The exact methodology largely mirrors the settlement pricing methodology of CME futures, which we believe has the correct construction." The company added that the exchanges are Binance, Bifinex, Bitflyer, Bitstamp, Bittrex, Coinbase Pro, Gemini, Itbit, Kraken, and Poloniex, noting that five of them "have implemented sophisticated market surveillance tools to prevent market manipulation and bad behavior."

Since the company filed an amendment, the commission began soliciting public comments on the new proposal on May 14. So far, 25 comments have been received on this proposal. Securities lawyer Jake Chervinsky remarked:

The new deadline is August 14. The SEC can delay one more time to a final deadline of October 13.

Vaneck Solidx Bitcoin ETF: May 21
The next proposal for a bitcoin ETF under review by the SEC is the high-profile Vaneck Solidx bitcoin ETF. Cboe BZX Exchange Inc. originally filed the proposed rule change to list and trade shares issued by the Vaneck Solidx Bitcoin Trust in June last year. However, it withdrew the proposal on Jan. 22 due to the U.S. government shutdown which affected the SEC.

The exchange refiled the proposed rule change for the same ETF on Jan. 30 which was published in the Federal Register on Feb. 20. On March 29, the commission extended the time period to review this ETF to May 21. At press time, 24 comments have been received for this new proposed rule change, far fewer than the 1,600 plus comments received for the previous filing that was withdrawn. The registration statement explains:

The investment objective of the trust is for the shares to reflect the performance of the price of bitcoin, less the expenses of the trust's operations.

This trust intends to achieve its objective by investing all of its assets substantially "in bitcoin traded primarily in the over-the-counter markets, and may also invest in bitcoin traded on domestic and international bitcoin exchanges," the filing states. "The trust will be responsible for custody of the trust's bitcoin."

Solidx Management Llc is the sponsor of the trust, with Delaware Trust Company as the trustee and the Bank of New York Mellon as the administrator and transfer agent. The bank will also serve as the custodian with respect to cash of the trust since it will occasionally hold cash for short periods in connection with the purchase and sale of bitcoin, and to pay trust expenses. Van Eck Securities Corporation will provide assistance in the marketing of the shares.

Crescent Crypto Index Fund: Just Filed
The third bitcoin ETF-related filing which the SEC is reviewing at press time is by the United States Commodity Index Funds Trust. The company filed a registration statement with the SEC on Thursday for Crescent Crypto Index Fund, sponsored by the United States Commodity Funds (USCF). It will be traded on the NYSE Arca stock exchange under the symbol XBET. According to the document:

The investment objective of XBET is for the daily changes in percentage terms of its per share net asset value to reflect the daily changes in percentage terms of the Crescent Crypto Core II Index (the 'CCINDX'), less XBET's expenses.

The new index seeks "to track the performance of a market capitalization weighted portfolio of bitcoin and ether," the company describes, noting that it "has limited history and is currently under development and subject to further input from the Crescent Crypto Index Committee." This index "is based on various inputs which may include price data from various third-party exchanges and markets."

The trust and fund are managed and controlled by USCF, a limited liability company that is registered as a commodity pool operator with the Commodity Futures Trading Commission and is a member of the National Futures Association. USCF will employ Crescent Crypto Manager Llc, a wholly owned subsidiary of Crescent, as co-portfolio manager to XBET.

SEC Decision Timeline
Whenever a proposed rule change is filed with the SEC, it will be published in the Federal Register which serves as the key start date for the SEC's ETF approval timeline.

The proposal for the Vaneck Solidx ETF was filed on Jan. 30 and published in the Federal Register on Feb. 20. The Bitwise ETF proposal was filed on Jan. 28 and published in the Federal Register on Feb. 15. The rule change for the Crescent ETF has yet to be published in the Federal Register.

After the proposed rule change has been published in the Federal Register, Section 19(b)(2) of the Securities Exchange Act provides that "within 45 days of the publication of notice of the filing of a proposed rule change, or within such longer period up to 90 days … the commission shall either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved."

According to the Securities Exchange Act of 1934, the SEC can extend the time to make a decision on an ETF up to 240 days after the date of its publication in the Register. If the SEC has not made a decision after 240 days for any reasons, the ETF would be automatically approved.

However, Chervinsky explained that it is extremely unlikely the SEC will let such a decision go to automatic approval, noting that the SEC would likely have measures in place to avoid missing such important deadlines. Further, if a bitcoin ETF is automatically approved, it can easily be undone after the emergency that prevents the agency from making a proper decision is over. The lawyer elaborated:

The SEC doesn't have the power to extend the 240-day deadline. The statute absolutely prohibits any further delays.

As for the three proposals in consideration, the SEC is due to make a decision to either approve, deny, or delay its decision on the Vaneck Solidx bitcoin ETF proposal on May 21, having just delayed its decision on the proposal for the Bitwise bitcoin ETF. Chervinsky estimates that if the commission decides to further delay its decision on the Vaneck Solidx ETF, then the new decision date will be Aug. 19. The final dates after 240 days will be Oct. 13 for the Bitwise proposal and Oct. 18 for the Vaneck Solidx proposal. He also emphasized that the agency could ask the sponsors to withdraw and refile, which will start the clock all over again.

Billon secures EU funding for blockchain document management system

 


While there are many countries around the world that are cracking down on cryptocurrency markets or wary about how to embrace and regulate them, there are other companies that are receiving support from the government due to the shifting attitudes on the potential of blockchain technology. Recently, Billon Group was awarded over $2.1 million by the European Union (EU) to develop a blockchain-based document management system.

The money comes specifically from the European Commission's SME instrument program, which is part of a larger overall Horizon 2020 program. Horizon 2020 describes itself as the "biggest EU Research and Innovation program" ever. A total of 64 organizations were awarded in this particular phase of the program, including other blockchain-related companies such as Settlemint, a blockchain software company, and KYC (Know-Your-Customer) service AUTHENTEQ.

Billon will not only be digitizing paper documents, but encrypting them, as well. The idea is to increase transparency in efficiency with respect to document storage and management by placing these documents on a distributed ledger. This can reduce cost for a variety of organizations and corporations by as much as 50%, according to the Billon Group. The solution will also be compliant with the General Data Protection Regulation (GDPR), as well as other EU regulations. The GDPR is a regulation adopted in 2016 that relates to overall data regulation and personal privacy that applies to all EU member states.

The company has already been adopted by the Polish Credit Office (BIK), which increases efficiency with respect to the Polish banking sector. The CEO of Billon Group, Wojtek Kostrzewa, pointed out how the company is working on disrupting the document management sector. He states: "Today's document management industry has struggled with fulfilling regulatory and customer requirements related to protecting document identity content, and to provide customers with control over data they choose to share or delete. With the funding from Horizon 2020, Billon will fulfill MIFiD2 and GDPR requirements with innovation that puts a customer in control of their own data and documents."

Wednesday, May 8, 2019

Bitcoin in “large scale security breach”

 

Binance suffered a large scale security breach late today, according to a statement. Hackers managed to obtain API keys, two-factor-authentication codes and other information. In addition, 7,000 Bitcoin ($40 million) were withdrawn in a single transaction.

The hackers used multiple techniques, including phishing attacks and computer viruses to get at Binance and its hot wallets, where it keeps funds to manage the day-to-day operation of the exchange. The hackers were unable to access the Binance cold storage—the off-line wallets where the majority of funds are kept. Likewise, individual user wallets were not directly affected.

CZ Binance✔
@cz_binance
 Have to perform some unscheduled server maintenance that will impact deposits and withdrawals for a couple hours.  No need to FUD.  Funds are #safu.

Though trading will continue, the $40 million hack means Binance will halt withdrawals and deposits for a week, while performing a security audit.

According to the statement: "The hackers had the patience to wait, and execute well-orchestrated actions through multiple seemingly independent accounts at the most opportune time."

The company reported it that maintains an emergency fund for these eventualities, called Safu, which will be used to cover the stolen Bitcoin.

As has become usual in exchange hacks, the breach in was announced via an "unscheduled server maintenance" tweet.  That alarmed a number of Twitter users, who messaged CEO Changpeng Zhao, wondering if the exchange had been hacked.

Since the hack was revealed, the price of Binance Coin (BNB) fell eight percent to $19.88 but has since recovered to $21.

Responding to the security breach, CEO at blockchain analytics firm CipherTrace, Dave Jevans, said, "Binance responded quickly to the hack and was very transparent about the ordeal. It is a shining example in the industry of rapid response, full transparency and a solid financial model for reimbursing customers from hacks."

Jevans pointed out it was the second exchange hack using two-factor authentication this week, recommending a more stringent three-factor authentication. However this will be down to exchanges to implement.

Binance said it will undertake a security review to determine what went wrong and what can be fixed. While deposits and withdrawals will remain closed, trading will continue.