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US Crypto Regulations Between a Rock and a Hard Place

US Crypto Regulations Between a Rock and a Hard Place

In the midst of the delay for the approval of Bitcoin exchange-traded fund (ETF) applications after several rejections, and current uncertainty regarding regulatory framework, US Securities and Exchange Commission (SEC) Commissioner Hester Peirce provided insights into the matter as an opportunity for better industry development.

Last week, Heister made comments on the issues of state regulation at the University of Missouri School of Law where she opined that “entrepreneurship and innovation do not have the happiest relationship with innovation”, which may be the core reason why crypto ventures have suffered in the hands of most regulatory systems.

The SEC’s clamp down on non-compliant ICOs (issuing securities disguised as utility tokens), its rejection of Bitcoin ETF applications, and somewhat deliberate delay in providing a regulatory framework as regards the industry may have a more logical than malicious intent behind it. Innovations, while they make life easier most of the time, always come outside the norms, especially those of the regulatory system and often times drives regulators to accept changes despite skepticism.

“Regulators, for their part, tend to be skeptical of change because its consequences are difficult to foresee and figuring out how it fits into existing regulatory frameworks is difficult,” she said, implying that it’s not an easy task for the SEC to reject what seemingly looks like a financial innovation in an attempt to weigh and understand the situation correctly.

The last financial crisis has made it easier for trust issues to thrive, especially on the part of the regulator, given that some ascribe the crisis to be due to “financial innovations”. Peirce pointed out that “…every innovation — even one that almost everyone agrees is good — carries with it some risk”, something currently agreeable with the cryptocurrency system.

Accordingly, since innovations can be unpredictable, so caution must be applied when drafting regulatory frameworks, especially for a new industry such as blockchain and its underlying assets. Peirce continues by saying that “as regulators, therefore, we must allow innovation to proceed, even as we put in reasonable safeguards and watch for unanticipated consequences”, and still, it has to come with no comprise to the securities laws in place. It behooves one to imagine where the true line of trade-offs will be drawn, seeing that the core structure of the crypto industry lies in decentralization, which by implication makes it harder for any regulator.

Still, the regulatory polarity has created distinct shades of gray areas around the world. With the Chinese government adamant with its crypto ban, the Indian government chose a rather bizarre stance — first with a ban on banking services to crypto related ventures, and then planned to develop a state-backed cryptocurrency, which it shelved later on. Meanwhile, other jurisdictions have launched out to attract the “rejected”, by providing a safe haven to crypto ventures, and a few nations are developing their own state-backed crypto to augment their economies.

In the UK, the principal regulator has extended an invitation to the public through its consultation paper to better assess a possible way forward for industry regulations. It said in late January: “We are consulting on Guidance for crypto assets to provide regulatory clarity for market participants.” Meanwhile, in the Middle East, the United Arab Emirates (UAE) has also hinted on possible ICO regulations to be introduced later this year.

So far, the crypto industry has had checkered developments and have more recently been in a stalemate (regardless of minor spikes in market dynamics), and many have been waiting eagerly for the next bull-run trigger. It’s basically what most crypto enthusiasts talk about these days, consequently, dialing down tech innovation, development and mass adoption of crypto products — at least, for the innovations that they stand for — and are relying on adjuncts gunning for more institutional involvement that would supposedly propel the market further.

While the US SEC does recognize the potential this innovative technology may provide, as Peirce says. “the United States has benefited greatly from the relative importance of non-bank financing”, supposedly placing them on par with the capital market. This further buttresses the point made by SEC boss Jay Clayton who viewed crypto as a “promise for adding efficiency to our [capital] marketplace”.

However, the regulatory watchdog maintains a stance of balance that involved protecting the interests of investors as market volatility, manipulation, hacks, frauds, exchange illiquidity, and a host of other unforeseen consequences from the unstandardized cryptosystem remain legitimate concerns.

Perhaps, when the SEC, as well as other financial regulators, have finally regulated the industry, these problems will be adequately tackled. Meanwhile, the regulator itself is waiting for the maturity of the industry marked by improved oversight on market surveillance, definitive asset classification, and airtight custody solutions, before embracing the industry wholeheartedly. But it still remains to be known at what cost?

The good news so far is that earlier this year, a bill was introduced in the House to help with asset classification, that partly takes care of one problem. Nasdaq introduced its SMARTS Market Surveillance solution which may have provided precedence in the direction of play towards controlling market manipulation. On the subject of custody solutions, crypto ventures are urged to ensure best cybersecurity practices. Fidelity, Coinbase, Gemini, BitGo, Ledger, ItBi and even Goldman Sachs are among many reportedly racing toward that end.

Peirce’s overall sentiment in a manner of speaking, perhaps one shared on both sides of the tussle is that the delay in drawing clear lines may actually allow more freedom for the technology to come into its own.

 

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IOTA Recovers Nearly All of $11 Million of Stolen Crypto

IOTA Recovers Nearly All USD 11 Million of Crypto Lost in Hack

Following the USD 11.4 million hack of technology group IOTA, a top official has confirmed to Reuters that nearly all of the funds have been recovered.

The hackers stole cryptocurrency funds from investor’s wallets on the IOTA platform by creating a malicious seed-generator running over the websites own page. When clients used the generator to create their 81-digit seed password, the hackers were able to capture and save the digits.

A 36-year-old man from Oxford, England was arrested last week on the grounds of stealing the funds from over 85 victims. It was initially thought to have been committed by an organized criminal group but officials now believe this man was the sole perpetrator. Authorities are withholding the funds to use as evidence in court.

Since the attack, IOTA has partnered with Ledger Hardware Wallet to enable users to protect their private keys for their IOTA tokens.

While of course any hacks or criminal activities that result in the unlawful loss of funds are unacceptable, it is a promising step that authorities are becoming increasing equipped to trace funds and find the criminals behind the offenses.

 

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Ledger Nano S Review: Good Value for Money?

Nano Ledger S Review BitcoinNews

Overview of the Ledger Nano S

The Ledger Nano S is a hardware wallet, meaning that it stores the private keys to your cryptocurrency wallets, securing your funds and giving you the ability to safely conduct transactions. Ledger has been around since 2014 and apart from being regarded as a very secure wallet provider, the Ledger Nano S is currently the only hardware wallet that supports Ripple (XRP) and a total of 1,180 other cryptocurrencies. Their wide range of supported crypto assets makes it a very useful storage option for those who invest in a wide range of altcoins and need a way to securely store them as well as for those who just need somewhere safe to put their crypto-assets.

We will explore all of this in more detail: Ledger’s reputation and history, the wallet’s design, security features, setup and initialization in the following Ledger Nano S review.

More about Ledger the company

Ledger is a French company that began life in 2014 and has grown into a leader in secure cryptocurrency storage solutions and blockchain applications. Since the original founders of the company came together to form Ledger, the company has expanded to over 130 employees with offices in Paris, Vierzon and San Francisco. In that time, Ledger has built up a strong customer base with clients in 165 countries and over 1,441,000 Ledger Nano S wallets already sold. Investments in the company are also healthy, having raised USD 85 million to date.

Design

So what can you expect after receiving your Ledger Nano S?

The box should contain:

  • The Ledger Nano S device
  • 3 documents: Getting started card, Did you notice card and 3 copies of the Recovery sheet
  • A lanyard and keychain
  • A USB cable

Note that Ledger doesn’t use a tamper-proof seal or sticker as they can be counterfeited to fool people. If there is anything missing from the box or the seed card has anything written on it, then it shouldn’t be used and Ledger should be contacted immediately. As a common rule when buying any hardware wallet, the device should only be purchased directly from the company and not from Ebay to ensure it hasn’t been pre-owned or tampered with.

Ledger Nano S box contents
What should be delivered with a Ledger Nano S

So back to the design of your new Ledger Nano S. It resembles a USB stick in size and shape and can be easily held in your hand or put in your pocket. Alternatively, you can use the lanyard or key ring it comes with to carry it around with you. The inbuilt display, although smaller than some other wallets such as Keep Key, is large enough and an important security feature as it allows you to use the device securely even if you are unsure that the computer you’re using it with is free from malware. The rotatable metal sleeve protects the screen isn’t strictly necessary but doesn’t do any harm and makes the wallet as a whole a bit more durable. In short, the device is practical and makes a good first impression.

Now that it has been unpacked and inspected, it is ready to be set up.

Setup and initialization

The setup and initialization process of the Ledger Nano S is quite intuitive and similar to most other hardware wallets. To start, plug your wallet into your computer and turn it on; after that, you will be asked to create a PIN code using the 2 buttons on the device.

Important to note is that when you first plug the wallet into your computer, the screen should display “Welcome” and “Press both buttons to begin”. If this isn’t the case, then there’s a chance it has been tampered with and Ledger should be contacted. Also, the PIN and seed code will not have been preset. If they have, then the device is likely not safe and Ledger should be contacted.

ledger nano s welcome screen

Once you have confirmed the PIN, you’ll be asked to write down your 24-word seed on the card provided. The seed will be displayed on the screen of your Ledger Nano S so that it never comes in contact with your computer or the internet.

The ability to use the device to create and display important, private information is part of what makes hardware wallets such a secure, simple option for storing cryptocurrencies. It is, however, important to write the seed code down in the correct order and store it somewhere safe from the elements and prying eyes.

Now all that is left to do is to install Ledger Live which is the software that allows you to download apps and manage your different wallets on the device. This includes conducting transactions with the hardware wallet. Ledger Live is not the only option. Those with existing software wallets, including those from Mycelium, Electrum and some others, can use the Ledger Nano S to secure them. In total, the setup takes around 5 minutes and is not difficult, following similar steps to most other hardware wallets on the market.

Supported coins

One of the most crucial things to consider when buying a hardware wallet, apart from its security features, is supported altcoins. In this regard, Ledger is well-known for being particularly willing to add support for new cryptocurrencies, often well before other devices on the market. Currently, the Ledger Nano S supports over 1,100 cryptocurrencies although many, such as ECR-20 tokens, aren’t supported by Ledger Live directly so to send or receive them you will have to download other software such as MyEtherWallet or MyCryptoWallet.

The Ledger Nano S, of course, supports many of the most popular cryptocurrencies traded, including:

  • Bitcoin (BTC)
  • Bitcoin Cash (BCH)
  • Bitcoin Gold (BTG)
  • Ethereum (ETH)
  • Ethereum Classic (ETC)
  • Ripple (XRP)
  • Litecoin (LTC)
  • Dogecoin (DOGE)
  • Zcash (ZEX)
  • Dash (DASH)

One of the issues with the Ledger Nano S is that although it can be used to store many different types of cryptocurrencies, the device has limited memory and only about 4 or 5 cryptocurrency apps can be stored at the same time on the device. This has drawn criticism from some users, however, although it is a hassle, it is not difficult to uninstall apps from the device via Ledger Live to make space for new ones. When uninstalling apps on the device, the personal keys are not lost and to gain access to the wallet, you just have to reinstall the app for that cryptocurrency on the device again as the private keys remain securely stored on the device.

As a side note, Ledger allows users with an Android OTG capable device to check their balance on the go with their Ledger Live app for mobile devices. Running in what Ledger calls consultation mode, with an OTG cable, you can currently only check your Ledger Nano S’s balance on the app and not conduct transactions. The OTG cable can be purchased from Ledger directly with the hardware wallet.

Security features

The Ledger Nano S is considered to be at least as secure as other popular hardware wallets on the market such as Trezor or Keep Key. Its inbuilt screen means that all actions have to be manually confirmed on the device. On top of this, when generating a private key and seed for the wallet, they are generated on the device in real time. This means that they are not accessible from the internet or the connected computer which is a large part of why the Ledger Nano S, and hardware wallets in general, are far superior in terms of security and privacy to software or cloud wallets.

For more advanced users and those with large sums of cryptocurrency that want to add an extra layer of security to their Ledger Nano S, there is the option to add a passphrase. This is an extra word added to the 24-word seed code and a second associated PIN that allows for hidden wallets. The passphrase is never written down and chosen on the device by the user so is therefore known only to the owner of the device. If a wallet is placed “behind” the passphrase, when trying to recover the device with the 24-word seed, only those not “behind” the pass code will be recovered.