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Brexit, Binance and Bitcoin: A New Era for Crypto in the UK?

Brexit, Binance and Bitcoin: A New Era for Crypto in the UK?

With the clock ticking on Britain’s much-debated exit from membership of the EU and all that means if a decision is finally agreed by September, where will this leave the UK in European Crypto Space? In a position of strength, or cut-off from its legislative support on the other side of the channel?

Well, no man is an island according to English metaphysical poet John Donne, but at this moment in time, it appears that the UK is digging its own hole in the sand as each week passes towards the latest agreed date of departure, when Great Britain and Northern Ireland hopefully get its rules back from the longtime European partners; the leaver’s much heralded and acclaimed  “taking back control.”

Does this even matter when it comes to cryptocurrency trading? In the UK the banks are aware of it, the Bank of England is monitoring it, and the man on the street pretty much knows about it. Bitcoin continues to be classified as private money, with VAT applied and also subject to capital gains tax, where profits and losses are involved.

However-and Britain has illustrated with great clarity to a dumbfounded Europe with its Brexit machinations-it is often slow to make decisions and enforce regulations; in fact, the UK now risks falling behind its European partners regarding cryptocurrency regulations unless it acts with more clarity and decisiveness, and guess who has taken up the leading role in this regard? The French…that must hurt.

Yes, the UK’s Financial Services Authority (FSA) did release a recent update of its progress which is currently in the hands of the specially selected Cryptoassets Taskforce.  However, a series of final guidelines or policy guidelines are still awaited from the FSA after the release of this consultation paper as far as regulatory dynamics go. With France now happy to lead Europe on a regulatory charge, Britain could be left counting its fingers after Brexit.

There are those in the UK however who like what they see in terms of crypto’s future after Brexit. Mike Romanov chief executive of Digital Securities Exchange (DSX) feels it can continue its dominance in the financial markets and crypto could come under the UK rather than EU legislative control. Others see an opportunity too, with a dent left in the Euro cryptocurrency market as Britain goes into its own crypto shell, out of reach from the EU’s legislative grasp, opening the door for new smaller players outside of the EU to leap in and plug some holes.

This is the Bitcoin bull’s stance, Britain hopes for friendlier digital currency regulations than it has at present. Another consideration is what might happen to the price of BTC with the impact of a final departure or possible vote to remain (the usual suspects) this year. There is a general feeling that it is simply the Brexit debate which is pinning the economy down and any kind of departure from this pain will be a release for both traditional and digital financial markets. According to the Bank of England, the economy has been shedding about £800M every week since they made the verdict in 2016.

There is one man who is just happy at what he sees, and if it continues, well then long may it do so. Enter Binance CEO Changpeng Zhao who, having now set up in Jersey is in the right place at the right time; well located for Europeans and Brits alike, whatever the outcome. With the existing offshore legal and regulatory framework for cryptocurrency, it is made to measure, given that there is now more than just a hint that Brits could turn to cryptocurrency come the predicted economic fallout given a no deal Brexit this year, and for this event, Zhao sees himself in the front line.

When it comes to crypto, the front line is always the place to be.

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All Assets Will Be Traded on Decentralized Exchanges

In an interview with Bloomberg, executive chairman of Blockchain Research Institute Donald Tapscott shared his opinion about the future of cryptocurrency, decentralized exchanges and the fate of traditional assets.

Tapscott has suggested that in the near future, the intrinsic qualities of decentralized exchanges will make them compatible with traditional assets, he said:

“All assets, not just currencies, but traditional securities will be traded on decentralized exchanges.”

His reason for the assertion comes from the fact these exchanges offer the requisite transparency for tracking bad players in the financial market, and as a matter of fact, this core characteristic will enable decentralized exchanges to dominate over the centralized exchanges in the future.

Tapscott seems to think decentralized exchanges in China are feasible despite the lack of government oversight as an intrinsic quality of these exchanges. However, since China banned cryptocurrency trading, and according to him, “the government of [China] is quite serious about hurting crypto,” his understanding of the situation is that of a “weird dichotomy” as the nation sees blockchain playing an important role in the future economy, nonetheless has made an enemy of the underlying digital asset class.

However, the banning of exchanges and the current action against mining operations can only hurt any foreseeable future with blockchain. Tapscott finds it unnecessary and while Bitcoin seems to be championing the crypto space at the moment, he argues that:

“In 20 years we are not going to be using Bitcoin in China. The Chinese people will use the RMB, only the RMB will become a cryptocurrency, the Central Bank of China will turn it into a digital currency.”

On the subject of security, Tapscott argues that few things can be solved by technology alone, and while crypto space may be prone to bad actors, sometimes the problem isn’t with the technology but rather bad governance which is structured in a centralized manner. He opines:

“Blockchain is much harder to hack than the traditional systems, our banks, our governments and [financial] institutions.”

 

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Coinbase Adds Latin America and Southeast Asia to Its Expanding Client Base

Coinbase Adds Latin America and Southeast Asia to Its Expanding Client Base

US cryptocurrency exchange giant Coinbase is to add 11 new markets in Latin America and Southeast Asia as part of its current global expansion programme.

This is hot on the trail of its expansion in the UK market seeing revenue growth of 20% to USD 173 million, and the recent announcement of its new Coinbase card. In 2018, the exchange recorded USD 520 million in revenue according to Reuter’s latest figures.

The Visa card, linked with the Coinbase Card app for iOS and Android, is only available to UK account holders, although there are plans to add support for other European countries in the future. The card will allow worldwide purchases where crypto payments are available online or in store.

Latin America has been in Coinbase’s sights for some time, so the access to trading services in Argentina, Mexico, Peru, Colombia, and Chile won’t come as a huge surprise to those in the region, given the company’s desire to spread its services to all corners of the globe.

Southeast Asia has a booming cryptocurrency market with Japan and South Korea leading the way, so a move towards capturing a piece of the market in the region is a sound move with India, Hong Kong, South Korea, Indonesia, the Philippines, and New Zealand customers now having access to Coinbase services.

With 53 countries now using Coinbase services including the recently added Andorra, Gibraltar, Guernsey, Isle of Man, Lithuania, and Iceland, the San Francisco-based company has thrown down the gauntlet to other major exchanges in its bid to become the globally dominant cryptocurrency exchange.

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Study Says Lone “Committed Actor” Responsible for April Bitcoin Surge

Study Says Lone

Fresh research by crypto analytics firm CoinMetrics has added to speculation that the sudden hike in Bitcoin price in early April, that prompted the current revival of the cryptocurrency market, is all down to the actions of a single trader.

According to the company, among the many theories surrounding the event, one of the most plausible ones was that of a single entity that placed an order for about USD 100 million worth of Bitcoin across several exchanges. It said that “a single committed actor”.

It then proceeded to provide evidence to back up its theory by posting a series of Tweets on its official Twitter account, beginning with the assertion that there was no news of significant impact during the one hour of the event, a time that was also normally very low in trading volume.

On April 2, 2019, Bitcoin’s price increased from roughly $4,200 to $5,000 in a span of one hour. There was no impactful news released during this time.

— CoinMetrics.io (@coinmetrics) April 17, 2019

It observed that most of the volume happened on HitBTC exchange on the BTC/USDT market. It also, however, does not rule out HitBTC’s action could have been due to wash trading. The large trading amounts were then observed on Coinbase, followed by Bitfinex. All three are among the world’s most active exchanges for Bitcoin.

It provides several charts to support their claim:

The large price movement on April 2, 2019 occurred during the window of lowest global liquidity. It began at 04:30 UTC and lasted until 05:30 UTC. This time may have been deliberately chosen so that a committed actor could maximize price impact when trading. pic.twitter.com/vktxpGBwlQ

— CoinMetrics.io (@coinmetrics) April 17, 2019

A video showing the full history across all exchanges also shows a remarkably similar pattern happening on all three platforms:

Here’s a fuller history of those three exchanges pic.twitter.com/j3KJxtr60h

— CoinMetrics.io (@coinmetrics) April 17, 2019

CoinMetrics concluded that a bull run could very well be on the cards, but that it was too early to say if a rally was already underway.

 

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Ex-Top 3 South Korea Exchange Closes Shop

Ex-Top 3 South Korea Exchange Closes Shop

Coinnest has announced that it has ceased operations in South Korea. Formerly the third largest cryptocurrency in the nation, it cited lowered demand for trading against a background of regulations and business interests, as the reason for this closure.

A notice was posted this week on its website informing its users that it was no longer in operation, asking all users to withdraw any funds stored on their platform before 1 May 2019. To assist with this procedure, the management have lowered withdrawal fees as well as the minimum threshold permissible.

A staff member from Coinnest told CoinDesk Korea:

“It is a natural result of a decrease in trading volume. Both regulatory issues and business decisions have served as a background for this decision.”

However, users will remember a rocky road leading to this untimely end for Coinnest, when an employee was arrested in 2018 on suspicion of fraud. The executive was later convicted and fined KRW 3 billion (USD 2.5 million), along with a jail sentence.

More recently in January, Coinnest bumbled an airdrop, sending customers almost USD 5 million in Bitcoin and other cryptocurrencies, instead of We Game Tokens (WGT) as it had intended.

South Korean exchanges are also a purported target of North Korea-backed hackers, and hacks of exchanges in the country have made news headlines over the past two years.

 

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Binance to Launch Fiat-to-Crypto Exchange Platform

Binance to Launch Fiat-to-Crypto Exchange Platform

The Chief Financial Officer of Binance has announced that the cryptocurrency exchange giant is going to launch its new fiat-to-crypto exchange platform next week in Singapore. This will allow people in Singapore to buy or sell cryptocurrencies using Singaporean dollars. However, the platform is currently going to support buying and selling of Bitcoin only with a hint of possible addition of other cryptocurrencies in the near future.

Binance CEO Changpeng “CZ” Zhau  told CoinDesk,

“Next week we are going to launch the Singapore simple buy/sell on-ramp. It will actually be a new product we are launching, as a very easy buy/sell platform so users in Singapore can buy and sell bitcoin with Singapore dollars… It will just be bitcoin, but we hope to add more [cryptocurrencies]. For a lot of these regulated jurisdictions, it’s easy to start with things that people know and understand and you can gradually build on that.”

Binance started its project of building this fiat-to-crypto platform in January when it collaborated with Simplex to allow traders to buy a wide range of cryptocurrencies using Visa and MasterCards. It also added Binance Lite in March which allowed the newsagents to buy cryptocurrencies from more than 1,300 locations across Australia. As mentioned in an article earlier, Binance was to launch DEX with Binance chain as its backbone.

The Binance CFO also hinted that they were planning to expand in the United States of America as well but did not furnish any further details regarding the same. It has extended to Uganda to provide financial support to the less fortunate. Their rapid expansion is also evident by the fact that they have moved into the United Kingdom via Malta.

 

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Big Corporates Investing in Blockchain with Wait ‘N See Approach

Big Corporates Investing in Blockchain with Wait 'N See Approach

PitchBook data recently compiled for Reuters shows that both corporate funding and venture capital investments are still behind blockchain tech, although trust in cryptocurrency has still yet to become a feature of large company investment.

Corporate investment in Bitcoin is seen very much like the Holy Grail of the cryptocurrency industry, and to date, the big money is aimed at blockchain technology, although the application for the tech is not as widespread as some advocates would suggest.

However, the future is looking bright with this new data illustrating just how much corporates have softened towards the crypto market, despite avoiding the actual cryptocurrencies themselves. Funds heading in the direction of crypto and blockchain startups are now to the tune of USD 850 million this year to April, and some of this interest has come from high tech companies.

The Catch 22 continues for Bitcoin though, as large companies wait to see if Bitcoin can break through to gain wider adoption despite its fall in value. For many, the perception is that it is only corporate acceptance that can give the market impetus to drive crypto forward to new levels moving forward.

Despite the usual hype, blockchain still needs to find some more sectors in which to operate so that it can be accepted as a viable solution in industry, according to Richard Hay, UK head of fintech at law firm Linklaters, who calls for far more blockchain innovation:

“There are two dynamics at play… We can get something up and running and achieve cost savings, and also look longer term at ways of deploying the technology in more transformative ways.”

Pitchbook data to April also shows that some cooperate investment has been directed at crypto mining gear and exchanges, including the four biggest VC-backed firms by valuation, but Anton Ruddenklau, global co-head of fintech at KPMG feels that although companies are “really enamored” with tokenization, “they are investing as a technological hedge as much as anything”.

One potential crypto industry driver, Bakkt, has already run into problems before its launch. The highly-anticipated cryptocurrency platform has run into trouble with the US Commodity Futures Trading Commission (CFTC) over its custody plans for clients’ Bitcoin, after raising USD 180 million last year from investors including M12, Microsoft’s venture capital arm.

 

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Kraken Joins Other Exchanges in Delisting Bitcoin SV for “Toxic” Behavior

Kraken Joins Other Exchanges in Delisting Bitcoin SV for

Major US cryptocurrency exchange Kraken has decided to delist Bitcoin SV (BSV) after polling its clients on Twitter over the past few days.

In a largely expected move given the response by other major exchanges, Kraken stated that BSV’s behavior was not in keeping with what it regards as ethical. The California based exchange’s official press release stated that BSV had “…engaged in behavior completely antithetical to everything we at Kraken and the wider crypto community stands for

The alternative crypto’s popularity nosedived after pseudonymous cartoon space-cat “hodlonaut” was threatened with legal action for disputing the legitimacy Craig Wright’s claims to be the founder of Bitcoin.

Since Bitcoin SV forked from Bitcoin Cash in November of last year it has been on a downward spiral. Only major exchange OKEx is continuing to run against popular opinion with rumors that it may be forming a BitcoinSV-centric cryptocurrency exchange called Float SV, with a launch planned for later this month, although it remains to be seen if the tide against BSV is too much and it too caves in and delists, abandoning its offshoot exchange idea in the process.

The poll gathered over 70,000 votes, with 71% of respondents voting to delist the currency. Kraken didn’t hold back on their condemnation of the alternative crypto’s moves to attack those refuting Wright’s claim. Kraken added:

“It started with fraudulent claims, escalating to threats and legal action, with the BSV team suing a number of people speaking out against them. The threats made last week to individual members of the community were the last straw.”

 

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Japan Regulator Urges Improved Security for Offline Crypto Custody

Japan Regulator Urges Improved Security for Offline Crypto Custody (1)

Cryptocurrency exchanges in Japan will be required to fortify their cold wallet storages, according to a Reuters report.

Citing a source with direct knowledge of the matter told, the report states that Japan’s financial regulator, the Financial Services Agency (FSA), is uneased by the current security levels of some exchanges as it perceives risks of internal thefts that threaten cold wallets.

To this end, the undisclosed source told the outlet that a preferred measure would be to have more than one person be in charge of the cold wallet and be placed on rotational shifts.

As Japan embraces the fintech industry to further economic growth, the watchdog will, therefore, urge cryptocurrency exchanges with security lapses to ensure they adopt the best offline security practices, given that the previous year had seen as much as USD 530 million stolen from a single exchange in Tokyo alone.

In the fall of 2017, Japan began issuing a license to cryptocurrency exchanges under its new regulation, with the second exchange announced in March to debut its services in April. With its steady oversight over the industry, Japan continues to drive interest that balances innovation and investor protection.

Cryptocurrency custody remains a crucial subject in the industry; notably one of the major concerns shared by many regulators as well as investors, which in effect has created a competitive market for custody-related solution platforms. As for crypto exchanges, the situation is direr.

Case in point, Bakkt recently experienced hiccups with its launch as the US Commodity Futures Trading Commission (CFTC) stated that Bakkt’s custody protocol would need to take further steps in protecting the cryptocurrency in order to be compliant the commission’s rules.

On the subject of cold wallets, it appears security breach may not be the only threat to funds stored offline. A recent case of trapped customer funds worth over USD 190 million in a cold wallet of major Canadian cryptocurrency exchange QuadrigaCX after the death of the CEO Gerald Cotton – who was solely in charge of the cold wallet – leaves a bitter experience.

 

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Reuters: Coinbase 2018 Revenue Over Half Billion Dollars

Reuters_ Coinbase 2018 Revenue Over Half Billion Dollars

A Reuters report has estimated that US-based cryptocurrency exchange Coinbase raked in a staggering USD 520 million in revenue in last year alone. The figure was based of UK revenue which grew by about 20% to USD 173 million, according to its most recent filing with the British corporate registry.

Despite the warnings from various regulators about digital assets, against a badly-performing market throughout 2018, Coinbase UK CEO Zeeshan Feroz told Reuters that the latest branch of Coinbase brought in a third of the company’s revenue, with a net profit of USD 7.4 million in 2018.

The pace of investment into financial technology (fintech), including in blockchain and distributed ledger tech, has continued in an upwards trend, despite misgivings from some segments of the traditional finance and banking industry.

PitchBook, researching for Reuters, believes that some USD 850 million has already been poured into the industry with less than four months gone for 2019, while venture capital (VC) participation in 2018 grew five-fold to a record USD 2.4 billion.

For instance, the London Stock Exchange Group led a USD 20 million funding round for capital markets blockchain startup Nivaura just recently, while London has been touted as likely to overtake competitors as a unicorn-producing capital.

Signs of slowdown are there, though, with 2019 recording average of USD 6.5 million per deal, down from USD 8 million witnessed in 2018.

 

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