Tag: BTC

Crypto Regulation: What Was and What Could Be

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2018 was without a big year for cryptocurrencies as a whole particularly because it saw through a number of developments that kicked off in late 2017. There has been an equal measure of ups and downs in the crypto space which, in one way or the other, have been key to the growth of the industry. Keeping all that in mind, one of the key considerations that many people had in the last year and are looking to improve upon is regulation. With more and more institutional investors streaming into the blockchain and crypto space, there has been an outcry for increased regulation which is expected to be a key driver of the crypto bear market of the past year.

Most of these investors also blamed the initial coin offering (ICO) market’s cool-down on potential threats. To put this into perspective, in October 2018, initial coin offering issuers collected close to $770 million, which is a 50 percent drop of what they raised in December 2017. Apparently, this slowdown was a result of continued pronouncements by SEC Chairman Jay Clayton that said ICOs are securities which imply that those that do not register with the SEC would face dire legal consequences.

What This year Holds

One thing that we can all agree on is that 2019 will certainly be the year that crypto regulation climbs to greater heights. In essence, this means that it is likely that various crypto regulations will become a defining move for such organizations as the Securities and Exchange Commission (SEC) as well as other financial bodies in all parts of the globe. While some crypto-related businesses may be reluctant to follow the SEC’s rules, existing regulations are already taking a massive toll on a number of crypto businesses and this is likely to increase further as the year progresses.

Regulation, as always, is always going to be double-sided phenomena. On one hand, existing and future regulations may inhibit innovation – some companies may close their doors and others may avoid starting up altogether. The main takeaway here is that we might go through a transition period where companies and businesses that are not able to play by the rules will be forced to step aside.

On the other hand, proving that cryptocurrencies do indeed have some legitimacy might actually be easier with more regulation in place. Already, the entry of institutional investors is starting to becoming a big deal for people who were skeptical of crypto. It is well known that the borderless and anonymous nature of cryptocurrencies makes them nearly impossible to control but with more regulation, reasonable solutions are certainly bound to be found.

Major U.S. Science Museum Now Accepting Payments in Bitcoin

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Bitcoin has made yet another step in the right direction towards mass adoption thanks to a museum located in Cleveland, Ohio that will be taking payments in crypto as from November 13. Great Lakes Science Center, the museum in question plans to use BitPay to process the BTC payments that it will be receiving from the visitors who will want to pay in BTC.

According to the Kirsten Ellenbogen, the museums chief executive, by accepting payments in BTC this early on, the institution hopes to facilitate the growth of the blockchain ecosystem. Moreover, there is much more optimism with regards to blockchain technology thanks to a number of promising developments. For instance, a Swiss luxury watchmaker known as Hublot successfully integrated the bitcoin and the blockchain to sell 210 pieces of its limited edition BTC-themed sports watch – the company made a whopping $5.25 million in revenue from the sales that were conducted solely through BTC with each piece fetching no less than $25,000.

The adoption of the digital currency as a means of payment comes ahead of the museum and education center’s inaugural Blockland Solutions Conference which is a four-day event scheduled for December 2018. One of the core agenda of the conference will be to explore and educate the attendees about the future of blockchain technology.

“There is a lot of excitement around the conference. Accepting bitcoin is just a small part of the momentum to grow a blockchain ecosystem in Cleveland,” Ellenbogen said.

Tried and Tested

Fortunately, the Great Lakes Science Center will not be venturing into unknown grounds since two other casinos in the United States – Museum of the Coastal Bend in Texas and St. Petersburg Museum of History in Florida – have succeeded in integrating bitcoin as a payment system. When it kicked off the initiative in 2013, the Museum of the Coastal Bend’s officials were quite skeptical about anyone visiting and using BTC but they went ahead with it because there really wasn’t as much risk.

Five years down the line and bitcoin has become quite a big deal and is worth upwards of $110 billion. The digital currency is also considered to be a proper asset by mainstream institutions such as Nasdaq, Fidelity, ICE and even the New York Stock Exchange. The Great Lakes Science Center hopes to also tap into the ecosystem with its own set of unique offerings that will include the ability to purchase admission tickets to visit NASA’s Glenn Visitor Center.

All this will be possible through an app that the museum launched a year ago. The app utilizes augmented reality and virtual reality to allow visitors to experiment with various elements of space phenomena such as flames and space-craft designs when they visit the Glenn Visitor Center.

Such developments are clear proof that the integration of trusted or major digital currencies like bitcoin is the new trend in the global market.

Revolutionary BTC Sidechain, The Liquid Network, Goes Live

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For a while now there has been a lot of buzz regarding such developments as the Lightning Network, which scales up the bitcoin network so that it can keep up with digital currencies like Ripple and Tron. The Lightning Network, for instance, has shown a lot of promise and is expected to take off on a large scale pretty soon. In the meantime, Blockstream, a company that majors in blockchain development projects, is hell-bent on completely revolutionizing how the world’s oldest and most popular digital currency works.

On October 10, the company officially announced the launch of the Liquid Network, a project they are touting as an inter-exchange settlement network that connects digital currency exchanges, financial institutions, market makers and brokers from all around the globe. This comes in a little less than a year after Blockstream introduced the concept of the Lightning Network during the Blockchain Association of Canada’s Government Forum that was held in Ottawa.

What It Does and How It Does It

Well, unlike the famous Lightning Network which has also been all the buzz lately, the Liquid Network is a secondary layer that was built as a sidechain of bitcoin – the sidechain essentially qualifies to be referred to as an extension of the bitcoin blockchain. However, it is not exclusive to the bitcoin blockchain. This sidechain allows its users to swap coins from the main blockchain to its sidechain in a 1-to-1 parity, something that is usually aimed at tapping in certain features that the main network may be lacking.

In the case of the Liquid Network, the feature that is tapped in is incredibly fast transactions with the main focus being on enhancing the exchange of large sums between the crypto exchanges, market makers and the financers. As it turns out, the members of the Liquid Network will be the ones providing the liquidity because they will be the people responsible for keeping a balance of L-BTC which they would then allow their users to trade.

“The members of Liquid secure the network by running functionary servers that run the Liquid blockchain as well as maintaining the two-way peg to the Bitcoin blockchain,” Blockstream’s CSO Samson Mow said in a recent interview. “When someone wants to move BTC to the Liquid sidechain, they send it to a unique peg-in address. When someone is ready to move their money back to the Bitcoin blockchain, they can make a peg-out transaction that will tell the [Liquid members] to send Bitcoin to the desired address.”

What Next?

At launch, the Liquid Network project had a total of 23 partners who are now the so-called Liquid members. Blockstream hopes to expand Liquid’s membership moving forward and at the same time build out its services to include such things as Issued Assets (IA) which would include tokenized commodities, tokens, and even Ethereum.

In the meantime, the company will be focusing on extending the features of the Lightning Network to specifically ease its introduction and adoption in the global cryptocurrency community.

Crypto Exchanges “Crying for Regulation”, New Study Reveals

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It is nearly impossible to find an industry where a majority of the participants are wishing for the government to intervene, especially if it thrives off not being subject to influence by said governments. Well, according to a summary delivered by Mistertango, a crypto payment app, 88 percent of cryptocurrency exchanges want some kind of industry regulation introduced before something “potentially disastrous” occurs.

Yes, that is right. Contrary to popular belief, many of the major stakeholders of the crypto industry including a number of renowned exchanges believe that more regulation is necessary to ensure that the industry is safeguarded from volatility and manipulation.

Mistertango’s study involved 24 digital currency exchanges across Asia, South America, Europe, and Oceania, with 88 percent of the respondents expressing their desire for the introduction of more regulatory safeguards. They believe that the existing regulatory standards are not sufficient enough to safeguard against the illegitimate use of digital assets.

Fear of Being Squeezed Out of Operation

As reported by Mistertango, about a third of the cryptocurrency exchanges think that a major market crash is the biggest potential threat to the industry. While they did not elaborate on this, their responses to other questions asked during the survey pointed to their growing fear of being hounded out of the industry by regulated financial institutions.

To put this into perspective, 40 percent of the exchanges believe that reducing the barriers to crypto funding by banks and other regulated financial institutions will help in increasing general acceptance and subsequently, widespread adoption of cryptocurrencies. Majority of the exchanges believe that crypto trades should be subjected to Know Your Customer (KYC) and Anti-Money Laundering (AML) guidelines just as traditional financial institutions are.

“The industry is crying out for regulation and the response from partners has shown this,” said Gabrielius Bilkštys, business manager at Mistertango. “Uncertainty is the biggest fear, and regulation is critical to provide the stability we need. Unfortunately, there is no regulatory consensus – worldwide or otherwise. For cryptocurrencies to move towards the scale and ubiquity possessed by fiat currency, it needs cohesive, considered, and comprehensive regulation. Thus, regulation will be a catalyst, not an inhibitor to the crypto market’s development.”

Calls for Regulatory Reform

Even though calls for regulation of cryptocurrency exchanges are quite common, it is just now that news of stakeholders within the industry supporting such initiatives is arriving. In fact, many of them are beginning to take action. For instance, a number of Japanese crypto exchanges formed a self-regulatory body earlier this year in a bid to rebuild trust in the wake of the $350 million heist that involved Tokyo-based trading platform, Coincheck. Similarly, in South Korea, crypto exchanges have welcomed proposals for regulation of crypto trading by regulated financial institutions.

“It has been widely supposed that crypto companies want to avoid a regulated environment, but this is far from the truth,” Oleksandr Lutskevych, CEO of CEX.IO pointed out. “The industry is all too aware that regulation will lead to the maturity of the market and ensure businesses remain free from suspicion of involvement with illegitimate uses of cryptocurrency.”

Nasdaq Holds Closed-Door Meeting with Crypto and Fiat Firms

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Despite their obvious growth in popularity and real-world applications, cryptocurrencies have been lingering in the regulatory grey zone mostly because international regulatory bodies hold mixed opinions on the development of the rapidly growing industry as well the asset class. It would seem that the reputation of the entire cryptocurrency industry has been hopelessly tainted by issues pertaining to fraud and shady transactions, but everything is about to change for the better.

With a number of emerging regulation and institutional solutions, Wall Street is beginning to slowly warm up to the idea of cryptocurrencies as a legitimate digital asset class. One of the organizations championing the legitimization of crypto is Nasdaq who on July 27, 2018, held a closed-door meeting in Chicago with the heads of various cryptocurrency-based companies and other financial institutions to discuss the future of the sector.

Bloomberg reports that the agenda of the meeting was the examination of ways of enhancing the overall outlook of the crypto-business and exhibiting its potential to the rest of the world. They also, reportedly, discussed some of the actions that crypto-based companies must do in order to improve the reputation of bitcoin and other digital currencies

Nasdaq Is Optimistic About a Digital Economy

Nasdaq has already adopted an industry-forward stance as far as crypto is concerned – its CEO, Adena Friedman is already at the helm of a number initiatives designed to help cryptocurrency exchanges advance their security systems. Security will naturally be a key determinant of whether crypto is finally ready to take the next step forward towards legitimization.

The company also partnered with Winklevoss twins-owned Gemini, a digital asset exchange to monitor Ether and bitcoin trading using Nasdaq’s SMARTS Market Surveillance systems. This was followed by an announcement that was made earlier this week disclosing that Nasdaq is going to be supplying five digital currency exchanges with market surveillance technologies.

Adena Friedman, who is at the helm of all these developments, has expressed a lot of optimism towards the development of a digital economy. In a May 7 CNN podcast, she noted that:

“How it evolves and which of the cryptocurrencies may or may not be the one that ultimately gets embraced, I think that really the jury is still out on that. But I do think the idea of a more globalized payment mechanism that is more efficient than what we have today allows for money to transfer across countries and certainly supports the Internet economy.”

She believes that cryptocurrencies are, without a doubt, the next logical step in the space of currency adding that the underlying blockchain technology will enable among other things more efficient value transfer. In addition to this, she has even said that Nasdaq would be willing to consider operating a cryptocurrency exchange once regulations settle and the crypto sector matures.

Bitcoin Crosses $8,000 Mark, Up 20 Percent in One Week

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Bitcoin’s price yesterday crossed the $8,000 mark for the very first time in over a month. This has already begun to spark speculations that this could be the return of the bull run that last year propelled bitcoin to its all-time high of almost $20,000. But, is it?

This recent rise in bitcoin’s price comes just after a week that saw it increase in value by about 20 percent following news that established financial institutions were eyeing the possibilities of venturing into bitcoin and cryptocurrency as a well as a ton of positive regulatory new from all around the world.

On the same note, bitcoins surge in value has been affecting many other aspects of the crypto industry including the so-called bitcoin dominance which rose to 47 percent this week, which is the highest it has ever been since December 2017 – bitcoin dominance is a measure of how much the total digital currency market is controlled by bitcoin.

What Is the Cause?

Many experts and crypto enthusiasts believe that bullishness around bitcoin can be attributed to the expected approval of a bitcoin exchange trade fund (ETF) that is currently being mulled over by the United States Securities Exchange Commission (SEC). The ETF was filed by New York-based VanEck and a blockchain platform known as SolidX through the Chicago Board of Exchange (CBOE).

If this bitcoin ETF is approved, people will be able to buy bitcoin without having to deal with existing clunky exchanges that usually struggle with cumbersome regulation and lack of trust from the public. According to a report filed but the ICO Journal a week ago, given the rise in bitcoin’s price, it appears that the bitcoin ETF is likely to get approved.

“I would call [the likelihood of approval] 90% at this point. The crypto markets have moderated and regulators have watched the lack of drama surrounding bitcoin futures across several global exchanges,” one of the ICO Journal’s unnamed sources reportedly commented. “The price moderation and adoption of a peer product is what the conversations have centered around. In January we were justifiably concerned about a bubble and the harm a quickly approved product could attract speculators and create losses that led to significant lawsuits. Now, those factors seem to be mitigated significantly.”

Global Regulatory Developments

Investors have also been quite keen on global regulatory news and this might also have something to do with the surge in bitcoin’s value. For instance, South Korea last week set up a government department that is tasked with creating policy initiatives around cryptocurrencies and financial technology.

“Regulation is moving in apace with positive murmurings from governments as they understand the opportunities and risks, and how to tailor their approaches — South Korea being the latest to give another tacit nod,” Charles Hayter, chief executive of digital coin comparison site CryptoCompare, said in an email on addressed to CNBC.

John McAfee Fires Shots at the RBI over Cryptocurrency Ban

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Renowned cybersecurity pioneer John McAfee has recently called for a boycott of the Reserve Bank of India (RBI) and the financial institutions dealing with it over a recent decision by the central bank that forces banks to cease and desist from dealing with cryptocurrency traders.

The move by the RBI has created a lot of chaos and panic especially because of India’s technology ecosystem that has been riding the cryptocurrency wave for quite some time now. Most of the reactions have cited concerns pertaining to how the country’s rapid movement towards development will be hindered from here on out.

It is important to note that the ban is not an all-inclusive decree that Indian cryptocurrency investors will be in violation of the law for dealing in crypto. In fact, there are many other options that digital currency traders can users and they include crypto-to-crypto, peer-to-peer, offshore exchanges as well as international bank accounts. As such, while the decree that financial institutions should stop offering services to crypto investors is indeed a setback, it does not mean that it will be the end of all cryptocurrency trading in India.

The Indian media is culpable for the panic, fear, uncertainty, and doubt that is now rife in the country – as expected, they erroneously reported that the RBI had imposed a country-wide ban on cryptocurrency trading among investors.

McAfee Is Not Amused

On July 6, John McAfee posted an intriguing tweet that fired off at the Reserve Bank of India and urged all financial institutions to dissociate themselves with the central bank. He further warned that he would call for a boycott against the financial institutions that steal deal with the RBI.

“The Reserve Bank of India (RBI) initiated this atrocity out of fear and won through the existing centralized power structure. I’m calling for a boycott of any financial institution that does business with RBI. We must stand together and act,” read McAfee’s tweet.

In his tweet which comes in the wake of the recent verdict by the Indian Supreme Court to uphold the RBI crypto ban, McAfee spoke out against these developments. Knowing McAfee, he will remain at the forefront of these protests, at least until the ban is either lifted or a reasonable consensus is reached.

From the looks of things, there are many ways this could play out but it will all depend on how both sides of the divide will play their cards. Recent reports revealed that prior to the ban, the RBI did not carefully and explicitly review the pro and cons of cryptocurrencies in the country. Already, the central bank’s officials have begun reviewing a draft that focuses on cryptocurrencies and associated regulations that would be required to ensure its survival. The said draft was prepared by the Secretary of the Department of Economic Affairs, Subhash Chandra Garg. Maybe there is still hope for crypto in India after all.

Facebook Reverses Ban on Crypto Ads for Approved Vendors

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Barely six months after a somewhat successful attempt at banning the proliferation of deceptive cryptocurrency advertising on the popular social media platform, Facebook has decided to lift some of these restrictions. The ban on cryptocurrency adverts by Facebook come officially on January 30 as part of a customer protection initiative that was meant specifically to keep naïve users of the platform from falling victim to crypto-related scams that have been rife in the online space.

 “We’ve created a new policy that prohibits ads that promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings, and cryptocurrency,” Facebook’s Product Management Director, Rob Leathern said at the time.

In the wake of Facebook’s crypto ad ban, other leading tech companies and advertisers such as Twitter, Google and Snapchat also joined in and implemented their own bans on cryptocurrency ads while citing the same reasons that Facebook did.

Did It Work?

Unfortunately, the ban did not turn out to be as effective as Facebook had hoped – crafty cryptocurrency advertisers were still able to sneak their promotions onto the social media platform by modifying or changing the spellings of common crypto-related keywords. However, it is worth mentioning that the ban did indeed see to a significant reduction in the number of crypto ads.

Unfortunately, again, while the ban helped in barring con artists from advertising, it also barred legitimate cryptocurrency business like Gemini and Coinbase from advertising their products. This is perhaps the main reason why Facebook has moved to loosen their restriction on cryptocurrency adverts albeit with a few conditions.

The Terms

In an official blog post on Tuesday, June 19, Facebook’s Rob Leather once again made the announcement that the social media platform has loosened the restriction they laid out earlier this year in January but they have also included measures to ensure the allowed ads are from legitimate crypto businesses.

“In the last few months, we’ve looked at the best way to refine this policy — to allow some ads while also working to ensure that they’re safe. So starting June 26, we’ll be updating our policy to allow ads that promote cryptocurrency and related content from pre-approved advertisers. But we’ll continue to prohibit ads that promote binary options and initial coin offerings,” the blog post reads.

Even though Facebook argues that it has loosened the ban to allow legitimate cryptocurrency business to keep advertising their services, there has been speculation stemming from rumors that the social media behemoth has been developing its own blockchain and could eventually launch its own digital currency.

In a way, this was confirmed by an announcement from Mark Zuckerberg which followed shortly after and stated that the company was looking into digital assets and the decentralized technologies behind them as a potential fix for some of Facebook’s problems.

Chinese Bitcoin Miner Manufacturer Seeking to Go Public

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Bitcoin recently slumped below $6,000 reaching its lowest value in a little over eight months. This has sparked a number of reactions as investors and other members of the digital coin’s community debate over allegations of price manipulation.

Bitcoin’s woes do not stop there though. The Chinese government also recently issued a blanket ban on cryptocurrency trading followed by a restriction on bitcoin miners. Is this enough to stop bitcoin’s rise?

Well, amid all the talk of bitcoin’s price drops, the blanket ban, and theories of its ultimate downfall, Ebang Communication, one of China’s largest bitcoin mining chip makers, has opted to ignore all the buzz as it seeks to go public on the Hong Kong Stock Exchange (HKEX). According to a Reuters report, EBang Communications filed an application for an initial public offering (IPO) with the HKEX on June 25. However, the application is still a draft and thus the valuation of the Zheijang-based company is still definitively clear.

Even so, the application itself confirms a May report that claimed the company was working with advisors on Hong Kong float and aimed at raising as much as $1 billion to fund its growth. The filing also includes a financial statement that state that Ebang Communications earned 925 million yuan ($45 million) in revenue last year – 2017 was indeed a great year for the company as the revenue was nearly eighteen times as much as what they got in 2016.

In addition to the revenue statistics, the filing further suggested that the proportion of the bitcoin miner manufacturer’s revenue was generated solely from the sale of the bitcoin miners has also gone up significantly year-on-year. To put this into perspective, the revenue generated from the sale of bitcoin miners rose from 31 percent in 2015 to 42 percent in 2016 and then to a staggering 94.6 percent in 2017.

Founded in 2010, Ebang Communications kicked off its operations as a manufacturer of hardware products for the telecommunication industry. The company opted to enter the cryptocurrency mining in 2016 when they launched the Ebit miners, a product that was intended to compete directly with two other Chinese bitcoin mining market leaders, Cannan Creative and Bitmain.

The company’s IPO application also came with some exciting news for bitcoin miners. As it turns out, Ebang is on the verge of releasing its next generation of bitcoin miners that will be equipped with the latest 7nm semiconductor chips. These next-generation 7nm chip have been in development since 2017 and were just recently launched by GMO, a Japanese tech conglomerate.

Reserve Bank of India Reveals Its Crypto-Ban Was Uninformed

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The Reserve Banks of India (RBI), India’s central bank, has been warning the citizens of India against the dangers of investing in crypto since 2013. The central bank followed through with two more major warnings in 2017 before it finally came down hard on the cryptocurrency industry earlier this year.

An April 5 this year, the RBI issued a somewhat controversial decree that required all regulated financial institutions to quit providing services to business dealing in cryptocurrencies – this was accompanied by a three-month compliance deadline. According to the bank, the move was primarily motivated by the need to protect consumers and prevent money laundering. At the same time, the RBI also announced that it would be forming a workgroup that would be tasked with the study of the feasibility of issuing a state-backed cryptocurrency.

As expected, not everyone agreed with the RBI and its decision especially because of the concern that the bank did not conduct proper research prior to issuing the decree. This concern was confirmed this week when the RBI revealed that had made no serious efforts to effectively and explicitly study and understand various aspects of cryptocurrencies before issuing the ban. Furthermore, the bank did not form an internal committee to investigate the purported risks that it associated with cryptocurrencies.

“The RBI specifically mentions that it conducted no research or consultation before the implementation of restriction in April. The RBI also responded that no committee was ever formed for analyzing the concept of blockchain before the decision,” said Sethi, a lawyer and founder of blockchainlawyer.in.

The most affected parties, in this case, were the Indian cryptocurrency exchanges and individual traders, most of whom believe that even though they are opposed to it, they actually did expect something like that to come up. It is becoming more common for governments to make spontaneous decisions on crypto without studying it first. For instance, Japan and Russia have tried to ban crypto but have been forced to soften their stances on the issue owing to the backlash, and India is certainly headed in the same direction.

What Next?

Multiple lawsuits were filed against the RBI and some of them are already taking root into how the future of crypto in the country will play out.

“This RBI response has cemented our case ahead of the hearing in SC. The grounds on which our writ petition has been filed is that the RBI has not done enough research to ban a business completely,” Rashmi Deshpande, one of the lawyers fighting out the case in India’s Supreme Court told local news outlet.

According to June 13 report by the Economic Times, the RBI has already softened its position and therefore going to lift sanctions and the ban on crypto thus allowing trading once again. Some other reports have conflicting information but one thing that is clear is that there is a lot of effort being made toward making sure the decision is reversed.

“The foremost reason we are fighting is because we know that banning is next to impossible and it will make things worse for everyone – for the Reserve Bank, for the government, for the tax department, and for the user. In addition, it will push India back in reference to blockchain adoption across the world. We always have an option to relocate to other countries to carry our business, but that’s not the solution. If we cannot convince our own government, we cannot expect other governments to support us,” says Kunal Barchha, one of the founders of Coinrecoil.