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UK Regulator Considering Ban on Sale of Crypto Derivatives

Posted on October 31, 2018October 30, 2018 by Martin S.

On October 29, the United Kingdom’s Cryptoassets Taskforce released a report that detailed its proposal for changes to some of the crypto regulation and raised a number of concerns over the way digital currencies and associated assets are used and traded. The taskforce which was launched earlier this year in March comprises the Financial Conduct Authority (FCA) and the Bank of England (BOE) was tasked with regulating and supporting cryptocurrency-related technologies.

Due to the lack of a widely accepted definition of crypto assets as well the variations in the value and rights that they bestow their holders with, the task force developed a framework that classifies crypto assets into three categories – that is, crypto assets for investment, for use as a means of exchange and for supporting capital raising and the development of decentralized networks through ICOs.

The report explained that, due to their extremely high volatility, failure in use as a unit of account and poor acceptance, crypto assets that are meant to be used as a means of exchange cannot be considered to money or currency. On the other hand, if the crypto assets are used as an investment they would reportedly have the potential to widen access to new investment ventures. However, the report went on to acknowledge that at the current market state, these cryptocurrency assets also have the potential to expose users to varying degrees of risks including illicit or criminal activities.

As for the so-called Initial Coin Offerings (ICOs) the report stated they are very promising ventures especially because most of them present several opportunities that would be great for supporting innovation and competition, addressing certain financing gaps, improving efficiency as well as the creation of a new investor and customer base.

The FCA To Act

With all these in mind, the Financial Conduct Authority (FCA) is reportedly mulling over a potential ban on the sale of crypto derivatives specifically because it believes that digital currencies hold no intrinsic value.

“Given concerns identified around consumer protection and market integrity in these markets, the FCA will consult on a prohibition of the sale to retail consumers of all derivatives referencing exchange tokens such as Bitcoin (BTC), including CFDs, futures, options and transferable securities. The proposed prohibition would not cover derivatives referencing crypto assets that qualify as securities, however CFDs on securities would remain subject to [the European Security and Market Authority’s] temporary restrictions and any future FCA proposals to implement permanent measures in relation to CFDs,” a statement by the FCA reads.

The regulator is also reportedly expecting to launch a wide consultation into whether or not the ban will be a good idea within the first quarter of 2019. Hopefully, the United Kingdom will not go the “Indian route” by completely banning crypt, a move that would be quite devastating considering how deep-rooted digital assets are in the region.

Blockstream’s Liquid Network Launches for the BTC Blockchain

Posted on October 17, 2018October 17, 2018 by Martin S.

One of the major setbacks for the mainstream adoption of cryptocurrencies has been the difficulty and slow nature of crypto settlements, especially where large volumes of these digital assets are involved. There have of course been attempts at fixing this problem with the so-called sidechains that promise faster transactions but the pace of the developments has not been as reassuring as many people had hoped for. The Lightning Network, for instance, has managed to gain quite a lot of traction in the past several months but its use of nodes with limited capacities has been quite detrimental to its growth, to say the least.

Now, Blockstream, a San Francisco-based blockchain technology company may have finally found a solution to the problem. Referred to as the Liquid Network, the company’s new bitcoin sidechain is set to revolutionize the crypto space by allowing for faster and more secure digital currency and asset settlements with an emphasis on the larger volume settlements. The sidechain which will be connecting institutions, crypto exchanges, and even brokers partnered with 20 exchanges at launch, a move that is certainly bound to improve its standing in the crypto space and speed up its adoption at the same time.

“Liquidity across exchanges is definitively not there yet. With the advent of Liquid — with faster settlement times — we should be able to improve it by making it faster and easier to transfer,” Samson Mow, Blockstream’s Chief Strategy officer said.

How It Works

According to Samson Mow, the members of the Liquid Network and the exchanges will be the main providers of liquidity since they will be the ones responsible for keeping a balance of L-BTC that they would, in turn, allow their users to swap. The Liquid Network’s design is a bit of a twist of the original concept of the sidechain which was initially pitched as a means for trustless swaps – Blockstream’s spin requires the intermediaries to execute the swaps themselves.

“When someone wants to move BTC to the Liquid sidechain,” Mow went on to explain. “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.”

Contrary to what many people would assume, the Liquid Network is not a replacement of the Lightning Network. In fact, in the blog post that announced the launch of the project, Blockstream clarified that the Liquid Network is capable of adding the Lightning Network as a second layer which makes the two technologies complimentary as both of them are vital to the crypto ecosystem.

Petition Champions XRP As Official Crypto in 2020 Olympics

Posted on October 10, 2018October 10, 2018 by Laura P.

An online petition pertaining to the mainstream adoption of Ripple’s XRP that was created months ago has recently gained a lot of steam. Dubbed change.org, the petition that was reportedly created by Ken Takahashi, a Japanese citizen, is aimed at the Olympic Games Committee and it proposes that Ripple’s XRP token should be adopted as an official cryptocurrency in the upcoming 2020 Tokyo Olympics.

Initially, the petition aimed at getting a total of 7,5000 signatures before it was submitted to the International Olympic Committee (IOC), but the number has since been surpassed with the total count currently standing at around 15,000 signatures.

According to the creator of the petition, Ken Takahashi, XRP is capable of solving a number of logistical problems that have often accompanied large international sports events such as the Olympics especially when it comes to foreign exchange. So, instead of putting enormous pressure on the Japanese Yen in 2020, the petition proposed that a system that uses XRP be created and implemented.

“As tourists stream into the country, demand for the local currency skyrockets, causing long lines at currency exchanges, as seen at past events like Beijing 2008 and Rio de Janeiro 2016. Confusing exchange rates and language barriers further complicate the problem. We believe that the fast transaction times and security of Ripple Lab’s XRP cryptocurrency would be a great contribution towards solving this problem,” reads a section of the online petition.

The arguments presented in the petition could not be more sensible – it seems natural that the borderless nature of crypto would be used at an international event that is attended by people from all corners of the globe. In fact, if such a thing happens, it would be a huge step forward towards mainstream adoption of digital currencies.

How Likely Is It?

Despite the fact that Japan witnessed the biggest crypto heist in the world earlier this year, it has remained quite open to crypto adoption – this shows how deep-rooted cryptocurrencies are in the country. As such, the 2020 Tokyo Olympics present a golden opportunity to test the potential of crypto to help in saving time and money for the global influx of Olympic fans and tourists.

Unfortunately, while the case can be made for the benefits that a crypto-powered gaming event has been made, the problem in this particular case lies with XRP itself. Ripple has not focused much on mainstream adoption with XRP even though the platform has been gaining a lot of popularity due to its application for cross-border transactions between organizations.

Frankly speaking, XRP might be the third-ranked digital currency on the planet but its application in the Olympics might be too premature especially because it is still in its early stages and is yet to gain enough traction in the mainstream commercial arena. However, in retrospective, the period between now and the 2020 Olympics is a fairly long time more so when speaking of the crypto industry – who knows what changes may be introduced?

Institutional Investors Making Huge OTC Crypto Purchases

Posted on October 3, 2018October 3, 2018 by Martin S.

While most of the world expected the bitcoin ETF to be the tipping point that would allow institutional money to come into the cryptocurrency market, it seems like the institutional investors have once again had their way despite the uncertainty that looms over the BTC ETF. In fact, according to recent OTC Trade Data, these institutional investors now dominate bitcoin markets with high volume trades. Yes, that is right – institutional investors are becoming more and more involved in the $220 billion cryptocurrency market than many people may realize and this is perhaps because they have been using back-doors for the purchases.

Many people believe that the next bitcoin bull run will be entirely driven by institutional investment which will be encouraged by the acceptance of a bitcoin ETF such as the those that are currently in the works at the United States Securities Exchange Commission.

The Current Situation

While some crypto market data analysts and providers estimate that the daily trading volumes of bitcoin are at around $4 billion, ShapeShift’s Coincap.io has revealed that the actual trading volume of bitcoin falls at around $2.7 billion. Coincap.io further revealed that, for most of the large-scale investment companies, institutions, and retail traders, the global crypto market has not reached enough liquidity to process the multi-billion-dollar trading orders. In other words, major digital asset trading platforms could liquidate large orders but it may have a large impact on the short-term price movement of cryptocurrencies.

Over the Counter (OTC) Trading

A number of high-net-worth individuals have been buying into cryptocurrencies and considering the amounts that they have been spending, it is safe to assume that these “individuals” are institutions or are at least part of them. As mentioned above, a peek into recent OTC trading data reveals a huge interest in bitcoin from these supposed institutional investors.

“Bloomberg reports that in April, daily OTC trades varied anywhere between $250 million and $30 billion, while exchanges only handled about $15 billion daily in that time by contrast. Corroborating this, Circle Financial CEO Jeremy Allaire confirmed that his company is seeing a triple-digit increase in OTC volumes. By contrast, according to data from CryptoCompare, exchange trade volumes are down 80 percent from their peaks at the same time as the increasing popularity of OTC,” reads Cryptoglobe’s comment on the issue.

This over-the-counter crypto market has facilitated between $250 million an $30 billion in digital currency trades per day in April, according to researchers. But, why is this happening?

Well, as it turns out, large digital currency traders like private sales simply because exchanges can move coin prices. Private sales are more appealing since the trading parties can fix the price in advance instead of having to worry about the fluctuations that are rife in the crypto market. Also, exchanges sometimes limit the number of coins that can be traded and this is certainly not ideal for large traders.

Google Ends Cryptocurrency Advertisement Ban

Posted on September 26, 2018September 25, 2018 by Laura P.

Barely five months after it rolled an advertisement policy that banned cryptocurrency advertisements, Google has decided to lift ban with plans to allow regulated cryptocurrency exchanges to buy ads in the United States and Japan. This new policy is scheduled to be rolled in October 2018 and will require the advertisers to apply for certifications within the specific countries within which their ads will be circulated.

The rapid growth in the popularity of cryptocurrencies has been great for the industry but it has also attracted additional scrutiny. For instance, in the United States, the Securities and Exchange Commission recently created a Cyber Unit tasked with handling online financial crimes to begin investigating companies that had stakes in the crypto or blockchain industry. The Cyber Unit also issued several subpoenas and charged a number of firms for alleged cryptocurrency fraud. Similar and even worse crackdowns have also been seen in other countries including China and India.

Widespread Rollout

Even though the digital currency boom has been a great source of wealth and excitement, it has been accompanied with quite a number of negative aspects that include spawned fraud as well as high-profile scams, both of which resulted from the lack of well-defined regulatory frameworks. It is for this particular reason that for a better part of the first of the year that many of the world’s leading tech giants – Google, Twitter, Facebook and Snapchat among others – moved to crack down on crypto-related advertising in a bid to stop some of the criminal activities associated with crypto. Unfortunately, the restrictions also affected legitimate crypto-related business and this is perhaps why some of the companies, namely Facebook and Google, have taken a step back.

“We don’t have a crystal ball to know where the future is going to go with cryptocurrencies, but we’ve seen enough consumer harm or potential for consumer harm that it’s an area that we want to approach with extreme caution,” Google’s Scott Spencer cited in June during the company’s original crypto ad ban.

The Updated Policy

While the tech giant’s updated ad policy will apply ton advertisers all over the world, the advertisements will only be allowed to run in Japan and the United States – hopefully, this will also change soon. Furthermore, as mentioned earlier the advertisers will be required to apply for certifications from each of the countries that they wish to advertise in (which are now only Japan and the U.S.) to have their ads served in those countries.

“The Google Ads policy on Financial products and services will be updated in October 2018 to allow regulated cryptocurrency exchanges to advertise in the United States and Japan. Advertisers will need to be certified with Google for the specific country in which their ads will serve. Advertisers will be able to apply for certification once the policy launches in October. This policy will apply globally to all accounts that advertise these financial products. For more details, see About restricted financial products certification. The Financial products and services page will be updated once the policy goes into effect,” Google wrote.

NY AG Says Crypto Exchanges Are at Risk of Manipulation

Posted on September 19, 2018September 19, 2018 by Martin S.

The New York Attorney General’ office on September 18 published a report that says that cryptocurrency exchanges are vulnerable to conflicts of interests, manipulation as well as many other consumer risks. The 32-page “Virtual Markets Integrity Report” highlights concerns that exchanges are not doing much to protect investors.

Launched in April, the “Virtual Markets Integrity Initiative” kicked off when Eric T. Schneiderman, the then-New York Attorney General, sent letters to thirteen cryptocurrency exchanges requesting information on their operations, internal controls as well as other key issues.

“The New York State Office of the Attorney General (the “OAG”) launched the Virtual Markets Integrity Initiative to protect and inform New York residents who trade in virtual or “crypto” currency. As a medium of exchange, an investment product, a technology, and an emerging economic sector, virtual currency is complex and evolving rapidly. The OAG’s Initiative, however, proceeds from a fundamental principle: consumers and investors deserve to understand how their financial service providers operate, protect customer funds, and ensure the integrity of transactions,” reads the statements from the Attorney General’s office.
“The industry has yet to implement serious market surveillance capacities, akin to those of traditional trading venues, to detect and punish suspicious trading activity.”

The Key Findings

The study found that the absence of accepted methods of auditing virtual assets has resulted in the lack of a consistent and transparent approach to the independent auditing of digital currencies trade on the exchanges. This, therefore, puts the customers’ funds in the various exchanges at risk of theft or cyber-attacks.

“New Yorkers deserve basic transparency and accountability when they invest – whether on the New York Stock Exchange or on a cryptocurrency platform,” Barbara Underwood, New York’s current Attorney General said in a statement. “Many virtual currency platforms lack the necessary policies and procedures to ensure the fairness, integrity, and security of their exchanges.”

One of the more bizarre revelations was that only four cryptocurrency exchanges have mechanisms for market manipulation detection and prevention in place. The four exchanges – HBUS, Coinbase, Gemini and Bittrex – are therefore the safest options for crypto investors.

On the flip side, the report went on to refer three major New York crypto exchanges – Gate.io, Binance, and Kraken – to authorities over charges of violation of state law for allowing trading on the part of New Yorkers.

The report has attracted an equal measure of support and criticism from the crypto exchanges and other stakeholders of the industry. Still, it is going to be a while before we finally see the ramifications of these findings.

Ethereum Drops Below $200, Further ICO Selloff Expected

Posted on September 12, 2018September 12, 2018 by Laura P.

Over the past few months, Ethereum investors have had to cope with bears from everywhere thanks to the pessimistic news and sporadic or wavering statements that have grown rather rampant within the period of its existence. While a lot of work has been put into the Ethereum project, the digital currency otherwise known as ETH has managed to plunge so deeply to a new all-time low of about $183 – this is the first time that the cryptocurrency market is seeing a bloodbath that has caused a plummet of close $198 billion.

There was a boom in the number of Initial Coin Offerings in towards the end of the 2017 and early this year, something that drew the attention of a number of different market players including mainstream media. Ethereum happened to be one of the biggest beneficiaries of this rapid increase in the number of Initial Coin Offerings. In fact, the digital currency remains to be the second biggest cryptocurrency market and its smart contract has spawned several projects including Tron and EOS.

Unfortunately, this year has not been Ethereum’s best year having gone through a constant drop this year. This drop in Ethereum’s value has been one of the most shocking outcomes in the cryptocurrency industry and the ICOs are reportedly to blame for the digital currency’s downward price trend.

“The blockchain space is getting to the point where there’s a ceiling in sight. If you talk to the average educated person at this point, they probably have heard of blockchain at least once. There isn’t an opportunity for yet another 1,000-times growth in anything in the space anymore,” Vitalik Buterin, the co-founder of Ethereum commented on ETH’s decline.

This is certainly not good news for speculators and crypto enthusiasts who purchased digital currencies at high prices at the beginning of the year with the hopes of stopping glosses from the year-long slump. As such, it is very important for stakeholders to have practical anticipations for possible gains especially considering last December’s astounding flare-up in crypto prices that was described as a “retail bubble” by many investors.

Why Fingers Are Pointing to the ICOs

Ethereum-based ICOs have spent 157,700 ETH over the past 8 days – this is equivalent to $29.9 million at the digital currency’s present value and is the highest amount spent since March. Due to this, there has been speculation that the cryptocurrency startups have been offloading Ethereum for fiat currency on major exchanges.

Alex Kruger, a cryptocurrency analyst, says that about 4 percent of the Ethereum held in visible ICO wallets was transferred out last month. Kevin Rooke, another cryptocurrency analyst, also pointed out that the Ethereum reserves held by ICOs fell to $600 million in the last week. This ICO cash-out is one of the causes of ether’s 40 percent price drop over the past month.

The Lightning Network Hits 100 BTC and 12K Channels

Posted on September 5, 2018September 5, 2018 by Martin S.

Even though the price of bitcoin has been facing a bear market lately and the innovative Lightning Network is still facing some issues, the latter is growing bigger by the day. Bitcoin’s Lightning Network became bigger than ever before this month when its capacity finally crossed the 100 BTC mark (about $73,000). This can partly be attributed to the fact that bitcoin has managed to grow its popularity immensely – this has, in turn, lead to the hastening of the development progress of the off-chain payment protocol in the past few months.

The proposed second-layer scaling solution which was as low as 3 BTC at the beginning of the year has shown a great deal of promise not just for bitcoin enthusiasts but for the cryptocurrency community as a whole. While getting to the 100 BTC mark took a relatively short time (a little over half a year), getting to that point was certainly not an easy task. The Lightning Network first hit 50 BTC capacity back in July this year which seemingly pointed to the fact that the network is finally scaling the way it was intended.

More Nodes and Channels

Also, the total network capacity of 101.7 BTC is contributed to by 3,350 nodes and more than 12,000 channels. The number of nodes has increased by 11 percent in the past 30 days with the capacity and number of channels going up 4 and 7 percent respectively. Reports from the past month reveal that recent experimentation on the network account has influenced certain accounts to markedly increase their individual capacity to process payments.

As mentioned earlier, July was a pivotal escalation point for the network – overall capacity shot up 85 percent when compared to the month of June. There is still a lot more that has to be done in terms of the node count before the Lightning Network is at full speed but from the looks of it, everything is certainly headed in the right direction.

Dealing with Scaling Problems

All of the mentioned improvements are indications that many developers and crypto enthusiasts are committed to ensuring that the Lightning Network is a success – some of them include SatoshiLabs and Bitrefill who have been working diligently to improve the network. Unfortunately, we may have to cope with a few discrepancies which will hopefully be addressed as development progresses.

One of the most prominent of these issues is the user-friendliness of the network, or rather its non-user-friendly nature. To put this into perspective, many of the transactions on the network still fail and this affects the overall usability and outlook of the network. Hopefully, this should be fixed sooner than later if mainstream adoption is the ultimate goal. Till then, so far so good.

Google Play Store’s Crypto-Mining Ban Not Going So Well

Posted on August 29, 2018 by Laura P.

A little over a month ago, Google banned cryptocurrency mining apps from its Play Store – this was made official when on July 27 the company pushed an update reading “we don’t allow apps that mine cryptocurrency on devices” to its developer policy. All of the existing apps that were in violation of the updated policy were given a 30-day grace period within which they were to revise their products to ensure that they comply with the new terms or face removal from the Play Store.

It has been 30 days since the ban was issued but despite the fact that the deferral period has expired, some apps that enable on-device crypto mining can still be found on the Play Store. Google is not entirely at fault in this case since it has been purging some of the offending apps. However, as it turns out, there is still a lot more work to be done. The company’s inspiration can be partly attributed to a number of security concerns that have led to probes and investigations into ICOs and crypto firms.

Earlier this month, the Google Play Store reportedly hosted an Ethereum (ETH) scam application. Discovered by Lukas Stefanko, a Slovakian malware researcher, the fraudulent “Ethereum” app was being offered for purchase at a price of around $388. According to Stefanko, the scam app was intended to dupe uninformed buyers into purchasing it when they mistook it for the original Ethereum cryptocurrency.

Some of the apps that are reportedly in violation of Google’s new developer policy but are still being hosted in the Play Store include Crypto Miner PRO, Pocket Miner, NeoNeonMiner and Pickaxe Miner. MinerGate, one of the mining apps that was axed from the store boasted of more than a million Android installs. The developers behind the app are however not amused because according to them they had made changes to the app in order to comply with Google’s updated developer policy.

“Mining on your phone directly was among the core features of the MinerGate app before the last changes in Google Play Development policies.” MinerGate wrote in an email addressed to Hard Fork. “With the last update, we are removing this functionality to meet the updated requirements.”

App Developers Going Rouge

Google begin its crackdown on crypto mining software when it announced that it be removing mining extensions from its Chrome Web Store following a revelation that a huge number of them were supposedly not in compliance with the company’s policies. The focus has since shifted to the Play Store and the affected parties are being to get crafty.

Many developers are already trying to find ways to bypass Google’s ban and distribute apps and Chrome extensions with on-device mining capabilities. Still, it will be up to users to decide on the best cause of action with regards to accessing apps with similar functionalities – downloading and installing apps from third parties is very risky. Be warned.

eToro Signs Bitcoin-funded Sponsorship Deals with EPL Clubs

Posted on August 22, 2018August 21, 2018 by Martin S.

Bitcoin is making yet another entry into the mainstream world through sports. Soon, teams and clubs may be able to buy football players using bitcoin thanks to recent sponsorship deals between seven English Premier League clubs and renowned online trading platform, eToro.

The Premier League Clubs – Tottenham Hotspur, Leicester City, Southampton, Cardiff City, Brighton, Newcastle United and Crystal Palace – are set to begin participating in cryptocurrency trials on Monday and this will be facilitated by eToro. The goal of the trials is to have bitcoin being used in place of the pound sterling for player transfers in the Premier League. The online trading platform also paid the clubs (in bitcoin) to have them participate in the trials.

The sponsorship deal will also see eToro appear on in-game advertising boards at the homes of all the seven clubs as well as within their advertising spaces.

“As a global multi-asset platform where you can purchase the world’s biggest crypto assets alongside more traditional investments, we are excited to be partnering with so many Premier League clubs and make history by being the first company ever to pay for a Premier League partnership in bitcoin,” Iqbal V. Gandham, UK Managing Director at eToro.

In most of the sponsorship and partnership deals with sports clubs, the extent of digital currency involvement is often limited to payment. However, eToro believes that the blockchain will have a pretty significant impact on the future of various sports operations very soon.

“The blockchain technology that underpins cryptocurrencies like bitcoin brings transparency, which we believe can improve the experience for everyone who loves the ‘beautiful game’, from fans being targeted by ticket touts, or a club negotiating a transfer, we believe that blockchain will revolutionize the world of football,” Gandham explained.

The move certainly marks another huge milestone for blockchain and digital currency integration in mainstream football. As is stands there have been a couple of experiments that bear similarities to this one such as the one in Turkey where, in January, Harunustaspor hired a professional player for Bitcoin. The clubs involved in the eToro sponsorship deal are also quite excited about the new venture and the path it could take from here on out.

“We are pleased to welcome eToro to the club as an Official Partner, it is exciting to be working with such an innovative industry leader. Much like Leicester City, eToro is an ambitious brand with a significant global reach and we look forward to working together throughout the season,” Jonathan Gregory, the commercial director for Leicester City said.

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