Category Archives: Cryptocurrency

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What Lies Ahead for Blockchain and Cryptocurrencies, Post-Brexit?

A Britain-based CEO has suggested that post-Brexit, cryptocurrencies will benefit the UK as they have key advantages over fiat currencies.

Danial Daychopan of Crypto company Plutus, suggests that due to the pound and euro’s interdependence and the fact that they are both based on other currencies,  allows decentralized cryptocurrencies to offer a “variable and stable alternative” for both consumers and businesses in the post-Brexit UK.

The current lack of direction in Brexit negotiations has led some people to believe that a period of instability is a possibility as both Europe and the UK race towards next year’s deadline. Daychopan sees instability and lack of trust in governments and the global financial system as key to the success of digital currencies. He claims:

“…in economies that aren’t stable, we’re already seeing digital economies developing and thriving. We’re approaching a period of instability and people need to understand that cryptocurrencies are going to be a force for good, not just tokens to be speculated upon.”

In terms of where cryptocurrencies sit once Britain’s departure from the EU becomes a reality, it is still unclear how Brexit will affect the future of blockchain and cryptocurrencies in both zones. The EU including the UK, with the exception of only 6 states, has signed up to the EU Blockchain Partnership which will promote the future exchange of expertise in order to launch EU wide blockchain-based applications across the single digital market.

The EU has called for cryptocurrency regulation at both European and G20 level and would clearly like to regulate the industry from Brussels, a further possible complication for the UK. As current members of the “EU Blockchain Observatory Forum” the UK has already benefited from membership with the EU’s fintech market, now valued at $6 billion.

Kay Swinburne, Member of the European Parliament (MEP), argues that bodies such as the EU Blockchain Observatory Forum are not essential to the UK advancing its fintech impact after Brexit. The UK, with its new crypto haven Gibraltar, having advanced significantly down the cryptocurrency and blockchain route, may be well placed to withstand significant damage to its fintech markets on withdrawal.

As the UK prepares to leave the EU it is also reportedly planning to create its own crypto regulations before 2019. The EU has already passed its own blockchain resolution for a post-Brexit Europe in order to remain a global fintech hub.

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Cryptocurrency Market Decline Caused by Strengthening Dollar

A senior market analyst at eToro, Mati Greenspan, recently produced a commentary on cryptocurrency market. He argued that the recent market decline is a product of the strengthening US dollar.
 
As the dollar continued to perform well in recent weeks, fuelled by policies tightening the economy with the intention of preventing high inflation, the economies of emerging markets struggled to maintain the strength of their own currencies. Greenspan believes this has affected cryptocurrencies in the same way.
 
In the commentary that was shared with CCN, Greenspan compared the movements in the crypto market with those of local fiat currencies in emerging markets, noting that they mirror one another. While investors in these markets are choosing to invest in cryptocurrencies when their local currency is on the decline, Greenspan said that the US dollar is still the most popular reserve currency of choice.
 
His analysis suggests that many smaller economies rely on a stable exchange rate with the dollar, something threatened by its current appreciation. Additionally, because of its movements, there is less incentive for investors to move their capital into the digital currency market.
 
The value of cryptocurrencies is often regarded as unassociated with the movements of traditional commodities such as gold and oil. But in this case, they have been fluctuating in the same ways, in reaction to the surging dollar. It is common for these commodities to lose value in the face of the increasing dollar value. The digital currency market has followed suit this time.
 
As the past several days have seen the movement of the dollar slow down, currencies such as the lira, rand, and peso have begun to recover. As Greenspan’s analysis would suggest, so has the cryptocurrency market. Market capitalization hit USD 216 billion Friday from a Monday total of USD 190 billion.
 
An alternative analysis of the decline from Arthur Hayes, CEO of cryptocurrency derivatives exchange BitMEX, suggested that ICO-funded startups were cashing out capital before losing any more in another market dip.
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Landmark Hearing: US Hacker Ordered by Court to Pay Bail in Bitcoin

A US court has ordered an alleged hacker to pay for his bail using cryptocurrency.

Magistrate Judge Corley has ordered the defendant, Martin Marsich — a 25-year-old Serb/Italian national charged for a hacking offense to pay an equivalent of $750,000 in cryptocurrency for bail.

Marsich is accused of hacking US video games company Electronic Arts (EA), and obtaining in-game currency to buy and sell in-game items. He is also said to have sold access to online games though black-market websites. Marsich is accused of hacking into 25,000 user accounts.

Residing Judge Corley has been in the news before regarding cryptocurrency. Last November she ruled in favor of the IRS, against cryptocurrency giant exchange Coinbase. Judge Corley ordered the cryptocurrency platform to submit information about clients’ transactions to the government agency.

District Attorney of St Mateo County, Steve Wagstaffe was quoted saying, “[he has] never heard of anyone bailing out of jail with cryptocurrency in any courtroom.” While acknowledging that cryptocurrency was acceptable in the federal court, he claimed that a similar bail “would fly in a San Mateo County Superior Court”

Assistant District Attorney Abraham Simmons explained that “judges can order many kinds of bail, including real estate owned by another person.”

Further, he was quoted saying, “The judge could order just about anything…It really is quite broad…What the objective is, is to get the defendant to comply with an order to appear later.”

With regards to the fluctuating value of cryptocurrencies, particularly in the current volatile market ,and how this would affect a “crypto-paid” bail, Simmons commented, “I would imagine that either side would alert the court of an extreme change in the value of the asset, but it doesn’t mean that the court would care one way or the other.”

The initial complaint charges Marsich with:

“…intentionally accessing a protected computer without authorization to obtain information for the purposes of commercial advantage and private financial gain…and accessing a protected computer to defraud and obtain anything of value.”

Marsich was arrested while boarding a flight to Serbia on August 8th by San Francisco Police. If convicted, the defendant could face a maximum of  5 years imprisonment, a fine of $250,000 plus restitution.

Although bail bonds paid using cryptocurrency may be regarded as beyond the norm, paying taxes in this may well become acceptable in the US after the Rules Committee of the Arizona House of Representatives passed a bill this year that allows residents of the state to use cryptocurrencies in making tax payments.

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Second Crypto Funded School to Be Built in Rwanda

An NGO and a cryptocurrency platform are planning to construct a school in Rwanda using cryptocurrency funding.

The non-profit organization, Zam Zam Water, in a cooperative project with Peer-to-Peer finance platform provider Paxful is aiming to raise $100,000 for an education center. The project will be implemented in Rwanda’s Bugesera District, complete with full-time teaching staff.

The school building project in Rwanda is not the first of its kind in the region. It follows a similar project which saw the opening of a school for children aged three to six. The new school will be built to complement the first school by catering for children aged six to 15.

The raising of estimated building costs of up $100,000 has been started for the new project with a donation of $20,000 from Paxful. The remaining funds will be raised through online crowdfunding. Cryptocurrency donations via Bitcoin, Bitcoin Cash, Ethereum, Litecoin and Dash will be matched by the crypto platform’s BuiltWithBitcoin initiative until the necessary funds have been raised. Ray Youseff, CEO at Paxful commented:

“The BuiltWithBitcoin initiative is a testament to the growing power of cryptocurrency…We firmly believe in its capacity to improve lives and make the world a better place.”

The second of the two schools will be larger, almost double the size of the first with six classrooms and six full-time teachers. The school will have its own cafeteria, potable well, and sustainable solar panel power system

Yusuf A. Nessary, Founder and President at Zam Zam Water sees education as fundamental in moving countries like Rwanda forward, suggesting:

“Education is a crucial tool for helping those in developing nations increase their standard of living, so we are very pleased to partner with Paxful to serve these bright young students”, adding, “This is only a small glimpse into what we can and will continue to do with the power of cryptocurrency.”

Cryptocurrency is increasingly being used to fund humanitarian projects in developing countries around the world, particularly on the African continent. Global micro-leasing marketplace Powerhive announced a partnership this year to offer decentralized solar power to poorer nations.

AfricaPowerhive will be the beneficiary of funds generated from the sale of Sun Exchange’s SUNEX rewards tokens through public sale. The money will then be spent on developing solar-powered mini-grid projects in Sub-Saharan Africa. The project will allow for the solar panels used to be sold later to Sun Exchange members who will, in turn, own the cells used in the projects and subsequently profit from a sustained period of “solar-powered money”

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Hong Kong Unis Scoop Grant of $20 Million for Blockchain Research

Hong Kong universities are set to receive a USD 20 million grant through government funding for research and development projects in blockchain and fintech.

In an effort to drive blockchain into administrative and financial sectors, Hong Kong is asking its universities to delve deep and come up with answers. The major beneficiaries of this round of specific funding are Hong Kong University of Science and Technology (HKUST), along with the Chinese University of Hong Kong (CUHK), and the City University of Hong Kong (CityU).

Through the project, along with research and development tasks, the universities are also required to report on Hong Kong’s current progress in becoming a fintech regional hub. Professor Tan Jiayin, known for his previous research work entitled ‘Strengthening Hong Kong’s Strategic Position as a Regional and International Business Center’, is to head up the multi-university research project.

Hong Kong’s blockchain push is an attempt to catch up with some of the more fintech proactive countries in the region such as Singapore and Japan. Updating aspects of the financial sector have recently become a focus for private companies and government bodies, who are beginning to regard blockchain technology as a way of modernizing record keeping and speeding up payments, in what is often described as an overly paper-driven industry, particularly given the technologies available today.

Work such as professor Jiayin’s which has already explored blockchain technology, network security, and artificial intelligence learning, as it relates to the current economic climate, will be a boost to the shared university partnership. Jiayin has asked Hong Kong’s banking community to participate in the research as part of the grant relates to the creation of digital currencies, although these have been looked on unfavourably by HK banks in the past, discounting the idea of a CBDC. In an announcement on 30 May, the Hong Kong Monetary Authority (HKMA) decided against the idea.

However, the HKMA announced the launch of a blockchain trade finance solution in partnership with 21 regional banks last month. Also, seven banks including Hong Kong’s banking regulator are to launch a trade finance platform this September using blockchain, including HSBC and Standard Chartered. Notably, HSBC’s Monex digital currency concept in 1998 was reportedly the professor’s brainchild.

The push towards integrating blockchain into Hong Kong’s administrative and financial sectors is not the first after a government plan was released in 2017 to produce a blockchain-based trade financing system to increase settlement efficiency and reduce fraud. This after a heightened level of concern around the cryptocurrency space due to high levels of fraud.

Research recently revealed that the percentage of financial crime involving cryptocurrencies was in fact comparatively low, when compared to other methods of, largely organized, crime in the city.

 

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Unresolved Crypto Legal Cases Mount in China Due to Unclear Regulations

Courts in China are struggling to clear cases relating to cryptocurrency due to a lack of clear regulation despite the current ban.

Reportedly, many of the cases which relate to crypto, which now stand at 270 at the last count, have arisen due to Bitcoin’s falling price. Coupled with contrasting interpretations of the law at the local level, this has caused a backlog in the courts.

Cryptocurrencies are officially banned in China since mainland residents were restricted from trading in cryptocurrencies on exchanges late last year and ICOs were outlawed. Nonetheless, crypto related disputes are increasing in both frequency and volume. However, it appears this state law is applied at the local level often without an official government mandate.

The current problem has arisen because courts often can’t ascertain exactly how illegal many of the activities that come before them are, due to a lack of regulatory clarity. Reports indicate that many local areas had no official statement from the State regarding the ban and how to implement it.

In the first week of August, out of the 274 pending crypto cases, 126 related to criminal activity relating to property and economic crime and another 107 related to breach of contract, with two administrative issues.

Such cases as this one relating to crypto exchange Coinice are quite typical. The exchange sent a client BTC 5 in error during a system upgrade. The client quickly sold this, refusing to return the funds when the error had been spotted. His argument was that as Bitcoin trading was an illegal activity in China, the exchange had in fact committed the illegal offense.

The result, having been ruled as a civil case by a Beijing court, maintained that the client had initially agreed to Coinice’s service conditions and thereby was instructed to return the funds. The client appealed, taking the case to an appeals court, the Second Intermediate People’s Court of Beijing, which upheld the lower court decision. It maintained that the illegality of the exchange’s operations didn’t affect the requirement of the defendant to return the funds.

Many Chinese companies have moved their operations to Hong Kong, Singapore, South Korea, Japan, the United States and the EU in order to escape the ban and continue trading.

 

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Reality Shares Launch $100 Million Crypto Hedge Fund

Reality Shares is launching a USD 100 million crypto hedge fund, joining a long list of new crypto hedge funds, a sure sign that institutional investment into the crypto space is increasing.

Reality Shares has already set aside USD 25 million to start the fund up and shouldn’t have a problem expanding to the projected USD 100 million. The firm is responsible for launching the first blockchain exchange traded fund (ETF) in the world, listed on Nasdaq China as BCNA, which has been extremely successful, generating USD 100 million of cash in only a couple of months.

There are already 466 crypto hedge funds in existence, most of which were launched during 2017 and 2018. Some of these hedge funds have made headlines on Bitcoin News, such as Galaxy Digital, Benson Oak, Andreessen Horowitz, Lightspeed Ventures, Autonomous Partners and Grayscale Investments. Essentially, lots of big names and big investors recognize the potential of Bitcoin and crypto, and are building their investment infrastructure.

This new crypto hedge fund from Reality Shares will be in the top 100 crypto hedge funds, when using total investment to rank. Even though USD 100 million isn’t enough to significantly impact global crypto prices, the aggregate of institutional investment so far is definitely pushing crypto prices higher and setting the stage for much bigger investments in the future. Once the crypto markets start rallying again, institutional investors will pour money into crypto hedge funds, accelerating the rally. The most important thing is that the infrastructure is being solidified and will be ready by the time this happens.

Reality Shares will use a mix of arbitrage, venture, and directional strategies. To break this down, this means it is planning on making profits from price differences on exchanges across the globe, investing money into crypto startups, and also will be making long or short bets on crypto prices.

 

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Cboe President Still Hopeful for First ETF Approval

The race to receive the coveted spot as the first Securities and Exchange Commission (SEC) approved Bitcoin exchange-traded fund (ETF) continues and Cboe Global Markets Inc believes it still has a chance to make it.

Speaking to Bloomberg, Cboe’s exchange operator’s president and chief operating officer Chris Concannon said that it was a matter of working through the issues that concern the SEC before an ETF can be approved. He believes Cboe can achieve this but recognizes the growth of a strong Bitcoin futures market may mean that a futures-based ETF may come first, rather than an exchange for the cryptocurrencies themselves.

What Concannon sees potentially problematic here, however, is that a futures-based ETF has never been done before, and it could be a struggle to find enough liquidity. Futures trading volumes have remained low compared with commodities contracts such as gold, although an ETF would certainly prompt a significant increase in trades. The SEC is hesitant to approve such an ETF until futures trading can provide sufficient liquidity, however.

Concannon said that he had learned there have been more articles than volume, describing the amount of media attention the market gets compared to its size as ”shocking”. He noted that the entire cryptocurrency market was only a fifth that of multinational technology company Apple.

Cboe was the first company to usher Bitcoin into mainstream finance during its bullish run in December last year, offering futures contracts for the cryptocurrency. Many interpreted this as a signal Wall Street was turning in favor of Bitcoin, with an ETF finally becoming foreseeable.

The SEC cited the potential for market manipulation in the nearly entirely unregulated market as the primary reason to deny approval, as was the case in the Winklevoss brothers rejection. The SEC said that they would require a surveillance sharing agreement with a large Bitcoin exchange to ensure no manipulation is taking place, of which the Winklevoss Bitcoin Trust could not provide at the time.

 

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Fast Money’s Brian Kelly Bullish as Ever On Bitcoin’s “Wild Ride”

Brian Kelly is back with his latest views on Bitcoin’s current fortunes and he is upbeat and bullish on where the market is heading.

His last words on the subject over a week back were made in the wake of investors holding their breath for the SEC’s ETF announcements which saw another dip for Bitcoin and other cryptocurrencies. He suggested then that the ETF waiting list at the SEC was driving market uncertainty. He rejected the notion that ETF would be approved by the SEC this year, suggesting that he wasn’t actually optimistic on them being approved in 2018, a view that has now become widely held.

In his latest appearance, he suggested that the “wild ride” Bitcoin is currently on needs to be seen in the context of a before and after scenario regarding CBoE-based Bitcoin futures. He said that Bitcoin frequently doesn’t respond well pre-expiry date, but then experiences a 10% jump following futures expiry.

He cited the expiry of April futures as a case in point which saw a Bitcoin leap of 20% of just six days. Asked if other cryptocurrencies would follow Bitcoin on its current “wild ride” of highs and lows, he revealed his thoughts that altcoins tend to follow its lead:

“They (altcoins) are still quite correlated (with Bitcoin). Over the last 60 days or so, Bitcoin has really been the leader — a lot of that had to do with the speculation about an ETF. But what you did see today is stuff like Ethereum almost 10% off yesterday’s lows, stuff like Stellar Lumens — still holding up quite well. So yes, if you get a 10 or 15 per cent run on Bitcoin on a short squeeze, it should bring everything else back up.”

There are some optimists on the other side of the Atlantic who see Bitcoin’s falling price in 2018 as a reflection of the market regulating itself. Phillip Nunn, CEO of investment firm Wealth Chain Capital, suggests than Bitcoin and larger coins will be the survivors after a market realignment: He said:

“The Bitcoin boom seems to be over for now, it’s currently trading at USD 6,472 (time of press) and I personally welcome it. The market is telling us something loud and clear, we do not need 1,000 different altcoins and the crash will most certainly get rid of these. A consolidation of quality projects within crypto will bring about the start of true Bitcoin dominance. I firmly believe the market will sustain itself, now is the time for investment, while prices fall.”

Ted Rogers, the chairman of vault operator Xapo, agrees, also suggesting that the current market offers an excellent opportunity to purchase the flagship digital currency.

 

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