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Hong Kong Protests Are Now Deeply Connected To Crypto Adoption And Use

The protests in Hong Kong, which have been taking place since late March, now represent the most significant domestic disturbance in China in thirty years. Fearing government reprisals, protesters are employing a wide variety of methods to evade the sophisticated surveillance techniques the authorities are believed to be using. These include wearing masks to block facial recognition systems, purchasing mass-transit tickets anonymously, and using encrypted social media apps to communicate. Cryptocurrency is now playing a key role as well, as protesters are using it to avoid government detection when making purchases. This use is having an impact on the overall crypto ecosystem, and it very well may impact China’s future policies toward blockchain assets. 

There is no question that Bitcoin has become the defacto currency of the Hong Kong protestors. It presently carries a substantial premium in the city that ranges from USD $80-$160. The official digital payment system, known as Octopus, is widely mistrusted as it enables purchase history to be recorded and thus tracked. Tracking Bitcoin and other cryptocurrency is, of course, extremely difficult.

Unlike mainland China, which has banned exchanges and discourages crypto use, blockchain assets have been thriving in Hong Kong for some time. The city has dozens of Bitcoin ATMs, is home to several exchanges, and crypto is accepted at many shops, restaurants, and retail businesses. This scenario is possible because Hong Kong has a different political and economic structure than the rest of the country. In fact, the current protests are rooted in fears that the Chinese government is attempting to undermine the port city’s unique, quasi-sovereign status. 

There is presently no way to know when the demonstrations will end, and a violent crackdown from the Chinese military may yet happen. Nevertheless, this ordeal must come to an end at some point. When it does, there is little doubt that the Chinese government will take a very close look at how blockchain assets, and the technology behind them, played a role in protest activity. It is quite possible that the government’s anti-crypto sentiment will strengthen as a result. The same can be said of other governments that face potential domestic uprisings. 

The events in Hong Kong have not had a positive impact on the cryptocurrency market, as Bitcoin and altcoins have been sliding in value for almost three months. However, given that recently there have been numerous forces acting on the crypto space, it is difficult to gauge the role of one event. The protests have definitely given publicity to the role that decentralized, distributed ledgers can play in protecting anonymity and securing wealth during times of strife.

Hopefully the Hong Kong protests will come to a peaceful and productive conclusion. Regardless of what happens, dissidents have learned that Bitcoin and other cryptocurrencies can be used to their advantage. Moving forward the use of cryptocurrency by individuals involved in anti-authoritarian and protest activity across the globe is certain to become commonplace.

 

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Source: Crypto News

Spanish Police Hits Hard on Bitcoin ATMs After Being Used to Fund Drug Traffickers

In the mid of July 2019, Bloomberg published a stunning report which indicated that Spanish LEAs are quite concerned regarding the fraudulent use of Bitcoin ATMs. To be very specific, the local forces pointed out an array of glitches in Europe’s AML provisions, which ultimately facilitate the people from the underworld to carry out their unlawful activities without being tracked.

The report further indicated that the police busted a drug-trafficking gang that used BTC ATMs in order to send roughly $10 million to a variety of wallets multiple countries, hence proving this very technology as a potentially safe haven for illicit acts.

Furthermore, it was also said that the gang bought two ATMs from an online trading platform and planted them in (location undisclosed) office in the country’s capital. Of course, the office used an alias and tried to conceal its real motives from the general public by labeling it as remittance transfer and trading hub.

Just to set the perspective for less tech-savvy readers, please note that traffickers used to fill the ATMs by sending the money from regular bank accounts to trading platforms and then forwarding them to top up the machines. Once the tokens were received, they would send it to different wallets anonymously.

In order to curb their operations, police also went a step ahead and exposed 2 such ATMs, while flagging 20 wallet addresses and exposing a couple of cold wallets as well. However, since cryptocurrencies are decentralized and anonymous, investigators are taking some time to prove their ownership and then establish a sound relationship between the funds and the activities sponsored while using them.

As a result of this incident, Spanish Anti Money Laundering regulations have started taking a new shape and the stakeholders are motivated to make them robust. In one of the attempts, the Supreme Court took a strong stance and declared that the BTC is not money – this decision came in response to a fraud case where the victim demanded his money to be reimbursed.

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Source: Crypto News

IBM Continues To Develop Blockchain Projects, Yet Major Challenges Remain For The Tech Giant

It is no secret that for the past several years most major technology companies have been researching blockchain systems, with many looking for a pathway to enter and profit from the space. IBM has clearly been at the forefront of this movement, with a myriad of blockchain projects under development, and partnerships with institutions seeking to benefit from what distributed ledgers can offer. Nevertheless, blockchain’s unique architecture may make it difficult for Big Blue to design a profitable business model. Also, competition from small, yet very promising platforms is likely also a challenge for the tech giant.

There is no question that IBM intends for blockchain to become a major part of its future services. It is currently seeking to hire hundreds of blockchain experts, mostly in programing, for work at many locations around the world. It also boasts over five hundred of what it calls “client engagements.” with various institutions.

Logistics and supply chain security appears to be a major market segment IBM is pursuing. For example, It is a key player in TradeLense, a distributed ledger platform under development for use in global shipping. The company is also working with farmers and food processors as well as retail companies to create blockchain applications for their products.

There are a number of other areas where IBM is developing blockchain-based business solutions. These include insurance, health care, and government services. Perhaps the most promising is in finance, where IBM is working on smart contract solutions for corporate investing, and intends to use its recently launched Blockchain World Wire to facilitate cross-border fiat transfers. Most recently, the company has even filed a patent for a blockchain-based web browser. 

The fact that IBM would venture boldly into the blockchain space is hardly surprising, as it has a long history of reinventing itself and embracing cutting-edge technology. What is interesting in this case is that, with the exception of Stellar-based Blockchain World Wire, IBM is basing almost all of its services on Hyperledger, a permissioned platform. In fact, the company is a key Hyperledger developer and promoter. The decision for this choice is obvious, as it enables the company to retain a centralized authority and governance structure. Simply put, Big Blue can control the validator nodes, and thus the network itself. 

Permissionless, decentralized platforms such as Ethereum or Cardano offer a level of security  that Hyperledger never will, and of course they are free to use. In fact, many experts assert that permissioned networks should not even be considered true blockchains because of their closed architecture. This reality, which is rooted in the very design of blockchain itself, could render much of IBM’s blockchain services inferior and, by some measures, lacking authenticity as truly immutable decentralized ledgers. 

Thus, for IBM to achieve its goal of becoming a major player in the blockchain space it will have to develop the means to profit from a technology that, by its very design, resists centralized control and management. This task will not be easy. Nevertheless, if it can convince enough customers that Hyperledger is a suitable alternative to permissionless platforms, perhaps it can succeed.

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Source: Crypto News

Iran Officially Legalizes Crypto Mining

The Iranian government recently approved digital coin mining. The announcement which was made on July 2019 by the country’s Economic Commission, has prompted authorities to find ways to control crypto mining within its current legal structures. Thanks to the country’s reduced electricity costs, mining has been thriving even before it was officially legalized.

Mining Electricity Costs

A Study conducted by Crescent Electric Supply Company found the cost of mining 1 Bitcoin to be as low as $3,217.  However, energy spokesperson Mostafa Rajabi reported a 7% power consumption surge the previous month as a result of the numerous mining farms around the Islamic republic.

Homayun Haeri, the deputy in charge of electricity & energy in the Ministry of Energy mentioned that government ministers would discuss an initiative to enforce an electricity charge for these farms. Haeri recently opposed government subsidies saying that mining companies should pay their electricity bills in real prices. This is considering Iranian authorities use nearly $1 billion per year on power subsidies.

According to Abdolnaser Hemmati, the Governor of the Central Bank of Iran (CBI), the accepted mining mechanism will face further scrutiny at a cabinet meeting. Hemmati further argued that the country’s currency miners should build the local economy instead of releasing mined Bitcoins overseas. What’s more, he maintained that mining should be hinged on electricity export prices. At the moment, electricity exports stand between $0.7 and $0.10 per kW⋅h. Bitcoin miners, however, only pay $0.05 per watt which is the charge for agricultural and industrial enterprises.

At a past sitting, Iran’s economic commission chairperson Elias Hazrati stated that cryptocurrency should be acknowledged as an official sector so that the country can enjoy tax and customs proceeds. The commission has already developed a tariff plan that matches crypto mining with electricity export costs. Though Energy docket Deputy Homayun Haeri, didn’t reveal the exact figures, he mentioned that export prices depend on several factors, for example, Persian Gulf fuel costs.

Mining Farms Closed

In June 2019, the Iranian authorities had shut down mining companies over a spike in electricity consumption.  For a while, the government had not declared its official position on currency mining. Not long ago, Energy ministry representative Mostafa Rajabi attributed the power instability facing consumers to crypto mining.

This statement followed the closing down of two mining farms in Yazd. Situated in deserted factories, the farms had close to 1000 mining machines. Rajabi recognized that the energy for mining a single Bitcoin could power 24 households for one year.

Some mining entities operated inside schools and mosques where electricity was free. Not only that, Kamil Brejcha, a Cryptocurrency Miner confessed to installing mining rigs beside his greenhouses to utilize the cheap electricity he got for running an agricultural station.

Foreign Investors

In response to high electricity costs and stringent policies in China, many Chinese crypto miners are moving to Iran as well as other destinations like Canada, USA, Thailand, Iceland, Cambodia, Southeast Asia, and Vietnam.

Nima Dehqan, an analyst at blockchain startup Areatak said that his firm was in consultation with foreign investors over mining in Iran. According to Dehqan, these investors hailed from countries like Ukraine, France, Spain, and Armenia.

He went ahead to mention his company’s agreement with a Spanish stakeholder to establish mining farms in the country. The project would take place in three phases namely, testing, building infrastructure, and gathering additional foreign investors.

The deteriorating economy in conjunction with the unstable Iranian currency has prompted citizens to adopt digital coins. As such, crypto-mining not only keeps money within the country but also creates currency as sanctions continue to rock the country.

Crypto Usage

Although Iran has given the go-ahead for crypto mining, it is not clear whether authorities will change their previous stand on cryptocurrencies as a means of local payments. Just recently, the central bank of Iran released a draft framework exploring crypto legality and welcomed reactions from the public.

While some are happy with the draft, the majority of the local crypto community do not approve of the specifics. This is because they feel the framework threatens the freedom of individuals and businesses in the digital market when executed in its present form. One of the activities the draft seeks to ban is the use of digital currencies for local payments.

Likewise, it authorizes crypto exchanges to get permits, therefore, creating an avenue for the government to charge rent. Another reason why local communities are against the proposal is the excessive use of the word “forbidden” which presents the danger of criminal prosecution. In a bid to rectify these clauses, community members compiled their suggestions into a document and sent it to the CBI.

From about three dozen participants, the 13-page draft document was found to have a total of 51 problems. So far, only two Iranian citizens have been put on OFAC`s sanction list. In 2018, Ali Khorashadizadeh together with Mohammad Ghorbaniyan faced OFAC’s sanctions for allegations of promoting the SamSam ransomware payments.

The two were accused of standing for two cyber-criminals that had hit more than 200 entities in a hacking scheme that lasted nearly three years. Though Ghorbaniyan owns up to enabling the payments, he denies knowing the source of these funds.

The Iranian government therefore needs to scrutinize the suggestions from the community members in a bid to enforce fair laws for mining entities and stakeholders in the wake of the country`s crypto mining approval.

 

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Source: Crypto News

Updated Rules by the Financial Industry Regulatory Authority (FINRA)

The United States Financial Industry Regulatory Authority (FINRA) has extended the deadline for companies to report their cryptocurrency ventures. The regulatory notice comes at a time when all eyes are set on Libra, Facebook’s crypto initiative.

The initial deadline was July 31,2019 but has since been moved to a similar date next year. Despite the growing interest in the digital market, not much success has been witnessed in protecting retail investors from fraud. And so, FINRA is committed to monitoring member participation and ensuring firms follow all the applicable state and federal laws.

Previous Notice

In July 2018, FINRA prompted companies to notify the regulator of their activities in the digital market. FINRA also requested for information on future changes the businesses or their related affiliates and persons would make involving cryptocurrencies and other digital tokens. In the report, FINRA asked firms to write to their regulatory coordinator when notifying them of such activities.

Similarly, any material change in an organization’s operations called for the submission of a continuing membership application (CMA) and approval. Unless a change arose, FINRA saw no need for further communication.

According to the updated regulatory notice, below are the activities that firms are expected to disclose;

  • Acquisitions, sales, and transaction executions in digital assets
  • Acquisitions, sales, and transaction executions in pooled funds involving digital assets
  • Acquisitions, sales, and transaction executions in derivatives involving digital assets
  • Possession of digital assets
  • Using distributed ledger transactions (DLT) or any other blockchain technology to register cryptocurrencies and related digital tokens
  • Involvement in secondary and initial offerings of crypto assets
  • Crypto mining
  • Show interest in cryptocurrencies and related digital coins and tokens
  • Acceptance of crypto coins from users
  • Development, provision, and management of consulting services for pooled funds connected to digital assets
  • Clearance and settlement solutions for cryptocurrencies and related digital coins and tokens
  • Propose, request, or take orders in cryptocurrencies or related digital coins and tokens
  • Development and management of platforms dealing with secondary trading of crypto assets

SEC and FINRA Collective Report

FINRA in collaboration with the Securities and Exchange Commission (SEC)  recently issued guidance on broker-dealer control of digital securities. This was in response to the market requests for an explanation on whether such assets fall under federal laws. For them to feature in the securities marketplace, organizations must observe the laws governing securities with particular emphasis on the customer protection rule.

This regulation enhances asset improvement if broker-dealer becomes unsuccessful. According to SEC, this regulation has an almost fifty-year history of recovery for users. Even so, past cyber attacks have tainted the image of this record, therefore, stressing the need to ascertain broker-dealers safeguarding of consumer assets.

What’s more, the statement might present opportunities for traditional entrepreneurs to acquire digital securities. SEC discovered that unregistered firms intending to incorporate digital asset securities into their businesses would first have to list themselves as broker-dealers. However, the approval process calls for patience considering some of the applications have been pending for more than one year. While some claim the SEC delayed accepting entries for companies dealing with digital assets, others believe crypto-related securities contain advanced affairs that regulators must first evaluate.

Financial consultant Matt Comstock said that digital securities would be considered uncertificated as is the case in particular states where a stock’s ownership is supported by electronic records instead of physical certificates. Moreover, the SEC regulation will allow broker-dealers to determine possession through transfer agents. These are official SEC entities responsible for keeping data on the securities` record holders. Although it may take a while before the method is approved, you could also put securities inside wallets managed by broker-dealers using private keys.

FINRA and SEC went ahead to explore the possibility of digital assets falling short of the Securities Investor Protection Act (SIPA) of 1970 conditions for digital securities. According to SEC`s Rule 15c3-3, all broker-dealers ought to hold users` fully paid and surplus margin securities. Alternatively, they could preserve them without lien at a safer controlled location. Oftentimes, securities held in line with SIPA provisions have safeguards for canceling mistaken transactions. Involvement of third parties when dealing with digital assets increases the risk of loss and theft.

Final Thoughts

Some of FINRA’s functions include providing full disclosure of purchased goods to users, ensuring securities products are evaluated, certified and licensed as well as seeing to it that brochures, sites, and ads do not mislead customers. In a bid to fight money laundering, FINRA also ensures firms comply with the U.S. Bank Secrecy Act as well as other applicable anti money laundering (AML) regulations.

 

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Source: Crypto News

Hacker Releases Stolen Binance Customer Data After Attempt To Extort The Exchange

Binance has been hit with its second security breach this year as a hacker has begun releasing customers’ personal information related to the exchange’s know-your-customer (KYC) processes. The hacker began releasing the information after Binance refused his extortion demand of 300 Bitcoins. Although Binance is downplaying the significance of this incident, it is cooperating with authorities and has offered a 25 Bitcoin reward for information leading to the hacker’s identity. 

Personal data alleging to belong to Binance customers began showing up on a Telegram channel on August 7th. This data included photos of individuals holding identification documents and hand-written pieces of paper. Exchanges often require such pictures for account verification. Binance has claimed that the pictures were likely stolen from a third party processor, but has not denied they were of its account holders. The exchange also stated that these pictures had been available for several months on the dark web.

Coindesk claims that it has been in contact with the hacker, who uses the pseudonym “Bnatov Platon,” and claims to hold as many as 60,000 pieces of personal information on Binance users. According to Coindesk, Platon also claims that he has information on the hackers behind the 7,000 Bitcoin theft the exchange suffered earlier this year, and that he initially offered this information to Binance administrators, but that negotiations broke down. He also asserts that the Bitcoin theft was an inside job.

For its part, Binance has stated that this situation is nothing more than an extortion scheme, and that the customer information has been released purely because it has refused to pay up. Binance has stated:

We would like to inform you that an unidentified individual has threatened and harassed us, demanding 300 BTC in exchange for withholding 10,000 photos that bear similarity to Binance KYC data. We are still investigating this case for legitimacy and relevancy.

Binance has also stated that the hacker claims to have KYC information from other exchanges. The person, or persons, behind this hack as well as their true motives may never be known. Nevertheless, even if they are caught there is no doubt that Binance has once again suffered a serious blow to its reputation as a secure and trustworthy exchange. Notably, this failure does more than shake public confidence. Binance is presently striving to work with governments to become a legitimate, regulated, financial institution. This incident may give regulators pause before granting such licensure.

More information on this hack will likely emerge in the coming days and weeks. Also, it is possible that more user data may be released. CryptoNews will give updates as more news becomes available.

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Source: Crypto News

Fiat-To-Crypto Onramps Are Growing As Governments Tighten Regulations

Although impressive development has taken place across the blockchain space during the past few years, the ability to purchase crypto with fiat remains challenging. Despite growing interest from the public, purchase options are limited, as the process tends to be long, inconvenient, and expensive. More fiat onramps are opening, but regulatory hurdles continue to be a major obstacle to their progress. 

Although every nation has unique finance and banking rules, almost all require businesses that deal with handling and moving money to follow know-your-customer and anti-money laundering regulations. In the United States, for example, financial institutions must acquire a money transmission license from both the federal government and from any state where they operate. Acquiring such licenses is, not surprisingly, both tedious and expensive as is maintaining compliance with the myriad of regulations that come with them.  

This difficult process is made even more challenging for cryptocurrency exchanges, as most nations have yet to fully define the legal and regulatory status of blockchain assets. This lack of clarity results in exchanges facing significant scrutiny from lawmakers because of the controversial and often misunderstood nature of the crypto space. There are also a number of states that have attempted to block fiat-based exchanges altogether, such as India, which presently prohibits banks from involvement in crypto activity.

Despite current obstacles, the tremendous profit potential means that the number of fiat-to-crypto exchanges is all but certain to grow in the coming months and years. Coinbase, for example, is believed to have made USD $78 million in the first quarter of this year, and over $500 million in 2018. Not surprisingly, other established exchanges, such as Poloniex, Bittrex, and Binance have now moved into the fiat market and many new ones, such as Voyager, are entering it as well. 

The overall growth in the blockchain space is putting pressure on regulatory bodies to make purchasing crypto easier, the results of which are mixed. A few U.S. states, such as Pennsylvania, have loosened licensing requirements for fiat exchanges. Some nations, such as Switzerland and Malta, are also taking steps to become more crypto-friendly. Nevertheless, most governments remain wary of embracing the radical level of change that will come with the crypto revolution, and thus are reluctant to make any moves in that direction. 

For their part, existing financial institutions are increasingly interested in offering crypto services, which will soon place them in direct competition with existing exchanges. Crypto custodial services, such as Bakkt, as well as exchange traded funds (ETFs) and other investment vehicles are expected to soon be commonplace. There is thus no question that the authorities that govern the global financial system will soon be forced to take the blockchain revolution more seriously, and begin making the legal reforms necessary to legitimize crypto assets. 

For crypto advocates, the good news is that the number of fiat onramps is growing, yet much more growth is needed. Also, lawmakers and regulators are gradually accepting the fact that this new asset class cannot be regulated in the traditional sense. Nevertheless, challenges and obstacles for those wishing to purchase cryptocurrencies are likely to be commonplace for the near future.

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Source: Crypto News

Proposed Ban on Financial Instruments Associated with Digital Currencies by the FCA

The Financial Conduct Authority (FCA) plans to ban financial instruments associated with digital currencies like Bitcoin. According to a published policy document referenced, “Restricting contract for difference products sold to retail clients”, the financial regulatory body that is based in the United Kingdom announced the proposed ban in July 2019.

Though it cannot prevent the direct purchase of digital coins, the FCA can outlaw the sale of products on the basis of their respective prices that are controlled by UK companies. So to say, FCA intends to terminate the sale of derivatives together with exchange-traded notes (ETNs) referencing particular Cryptoassets types.

Reasons behind the Ban

The regulatory body proposes the anticipated ban due to underlying reasons. According to the market watchdog, such products could bring losses to retail customers who are neither aware of their dangers nor benefits. This includes enabling restriction of contracts for difference products sold to retail clients. This is due to;

  • Excess volatility in Cryptoassets values
  • Underlying assets lack criteria for valuation
  • Increased financial offenses and market misappropriation in the Cryptoassets sector
  • Insufficient knowledge of Cryptoassets by customers as well as disinterest in the investment commodities referencing them.

Crypto derivatives also have high fees. Although these charges can be excused due to hedging and market risks, they ultimately reduce a consumer’s total earnings. The FCA approximates a £75m to £234.3m annual drop in customer losses.

Cryptoassets Taskforce Report Follow-up

This initiative follows the FCA`s public commitment from the recent Cryptoassets Taskforce Report that was created in July 2018 and revised months later in October. It was the brainchild of a group which consisted of the FCA, BoE and HM Treasury. The document urges relevant authorities to take steps that will:

  • Protect consumers
  • Allow compliant innovators to thrive
  • Preserve the UK’s reputation as a secure and transparent area for business in the financial sector
  • Ensure regulatory standards are upheld
  • Prevent future threats to financial stability

In November 2018, relevant stakeholders convened at a meeting in London to discuss the findings of the task force. Speaking at the event, the strategy and competition boss from FCA, Christopher Woolard mentioned the significant strides Cryptoassets had made in the past decade.

From a Bitcoin whitepaper back in 2008, the digital market had risen to more than 2000 Cryptoassets. Though some Cryptoassets birthed financial innovations, the task force found risks that could compromise market integrity; harm consumers and increase financial crimes.

Types of Cryptoassets discussed

From the group’s findings, Woolard noted three Cryptoasset types, namely:

1. Exchange Tokens

They include Cryptoassets like Litecoin and Bitcoin. Though people call them cryptocurrencies, the words “exchange tokens” are most preferred because the assets do not operate as money. However, exchange tokens can serve as investments or modes of exchange. What’s more, they make use of distributed ledger technology (DLT) and are not supported by any central bank.

2. Utility Tokens

These assets are redeemable to obtain a particular product or service on a DLT platform. Generally, utility tokens are not within FCA`s limits.

3. Security Tokens

They offer privileges like repayment of a particular amount, ownership, and shares in future gains. They could also be transferable guarantees or financial tools as per the Markets in Financial Instruments Directive.

Woolard went on to mention the uses of the three Cryptoassets that the task force envisioned were the most common. Apart from being a mode of exchange, Cryptoassets serve as investments and enhance the raising of capital.

Previous Ban on Binary Options

The proposed ban is much the same as the previous binary ban by ESMA effected on April 2, 2019. Binary options give users a time frame to predict whether a particular index, share, or currency will register a rise or drop in price. At the time, Mr. Woolard expressed his distaste for binary options by labeling them “gambling products dressed up as financial instruments” which were also referred to as the “biggest investment con in Britain”  for giving high earnings on the least likely events and low earnings on higher probability events. This together with short trade durations could cause addiction among consumers.

What’s more, firms lured investors with flamboyant marketing campaigns promising unbelievable rates. At first, binary options were regarded as a form of gambling. However, the FCA began regulating them in 2018 only to enforce a total ban the following year. FCA said the step would protect customers from losing around £17million annually. But FCA is not the only authority that has stopped the trade of these tokens. European control authority ESMA effected a temporary ban in 2018 which it has kept renewing until now.

Proposed FCA Consultation Paper

FCA has detailed a consultation paper (CP) on the likely ban. The rules in the CP will take the place of the final regulation guiding contracts for difference (CFDs). In a recent statement, FCA regarded CFDs as “complex, leveraged derivatives”. With CFDs, users speculate prices without possessing the underlying securities. As a result, the authority will step in to monitor rogue firms selling CFDs to cushion consumers from extreme risk. The intervention is expected to save buyers around £267 million to £451 million annually.

FCA now requires firms dealing in CFDs to:

  • Ensure losses don’t exceed the total amount in a customer’s trading account
  • Terminate a client’s position when their money drops to 50% of the minimum necessary to retain an open spot in a CFD account
  • Reveal the true percentage of customer retail accounts making losses in the firm
  • Stop enticing prospects to trade with cash or other persuasions
  • Control leverage within 30:1 and 2:1 as per the volatility of central assets

The biggest question though is whether consumers can value Derivatives. According to an analysis in the Consultation Paper, the FCA gives an example of how two analysts had a 400x difference when they valued bitcoins. According to Woolard, “Most consumers cannot reliably value derivatives based on unregulated Cryptoassets.” He continued to add, “It is therefore clear to us that these derivatives and exchange-traded notes are unsuitable investments for retail consumers.”

Conclusively, even though the definition of a derivative is still unclear, the FCA has tasked itself to conduct studies to investigate the speculative attributes of cryptocurrencies. It found that Google searches and tweets from social influencers are huge determinants of price. Other institutions have also joined in. DAI, a cryptocurrency collateralized by Ether plans on introducing other kinds of collateral in the near future. This seeks to enhance enough knowledge for consumers to understand financial risks.

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Source: Crypto News

Blockchain’s Use in Fighting Counterfeiting is Growing Rapidly

Blockchain technology is on track to disrupt many institutional and business sectors, and its move into the mainstream will likely take place in steps. Among the first is logistics, with the fight against counterfeit goods being a top priority. This type of application is relatively easy for distributed ledger platforms to perform, and could result in tremendous savings for global manufacturers. This use case is well-known, and now a number of projects have moved beyond proof-of-concept and have fully deployed, with positive results.

Quality assurance company DNV GL has been moving quickly into the blockchain space. It has forged a partnership with the Vechain Foundation, and is promoting its platform as an anti-counterfeit protocol across a wide range of product lines. DNV GL has facilitated the adoption of Vechain with several European wineries as well as with Australian beef producer L28. Many more businesses are expected to follow suit. The most significant Vechain partnership to-date is with Walmart, which has begun using it to track food products in China.

The potential to fight counterfeit pharmaceuticals is one of the most promising aspects of distributed ledger technology, and projects to do so are now being deployed. For example, the Ugandan government has partnered with MediConnect, a blockchain startup, to create a national electronic infrastructure based on the Stratis platform to track drug authenticity and distribution. UK Meds and Tower Health & Pharmacy, both online pharmacies operating in the United Kingdom, have also teamed with MediConnect. 

Industrial sectors ranging from electronics to apparel are also now implementing anti-counterfeit systems based on blockchain networks. So prevalent is adoption that it is reasonable to assume that within 10 years most of the world’s manufactured goods will be connected in some way via the technology, possibly much sooner. Thus, blockchain has clearly taken a clear step forward in the march toward adoption, as examples now exist of real-world use.

It is worth noting that present users of this new technology have reported very high satisfaction. The systems in place, although new and presently small scale, are working well. For example, French Winery P. Ferraud & Fils has praised its adoption of Vechain, at one point tweeting that it was “proud to be part of the blockchain revolution.” In fact, there have been no published reports of any distributed ledger anti-counterfeit system failing to achieve its goals.

Crypto advocates have long argued that business and industry would likely adopt blockchain platforms before the general public begins to use cryptocurrency. Using blockchain to fight fraudulent goods reinforces the fact that cryptocurrencies can hold value in and of themselves if they make a value added contribution to specific institutions. In other words, these new global assets are far more complex, and useful, than critics would like to public to believe. 

Other platforms with anti-counterfeit use cases under development include Ethereum, Waltonchain, and Iota. Thus, competition for which can offer the best solution is likely to increase. Nevertheless, now that this technology has been successfully deployed, it is all but certain to become a permanent component of global manufacturing and logistics.

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Source: Crypto News

Bitcoin’s Dominance Challenged As Price Recovery Stalls

The Bitcoin price recovery that began in April has flatlined, with the price remaining around USD $10,000 for most of this month. Although Bitcoin remains firmly in the top position in terms of market value, its status as the flagship cryptocurrency continues to face challenges. The current state of affairs within the blockchain space reflects significant growth and development, making it very difficult to determine the true value of any significant platform. In this context, Bitcoin is facing ever more competition from well-designed altcoins.

Bitcoin maximalists have had reason to celebrate during the recovery period. In addition to more than doubling in fiat value, Bitcoin has seen its market dominance increased from fifty percent at the start of April to around sixty-five percent in mid-July. This figure is particularly important, as it is the single most significant metric in determining whether or not Bitcoin is successfully fending off rival platforms for overall investment and adoption. Ethereum, the second most valuable platform, sits at under nine percent and is thus nowhere close to entering first place any time soon.

Nevertheless, this figure can be deceptive as the collective value of the platform does not reflect other important variables such as liquidity, trade volume, and price movement. A lesser valued altcoin could have significantly more investor interest, which is worth considering when examining overall value. Additionally, Bitcoin’s market dominance has begun to move down again over the past few days. Given how active the altcoin space has become, it seems unlikely that it will ever move much higher than it is now. 

Institutional adoption is one key area where Bitcoin’s hegemony is clearly under threat. For example, Vechain’s recent partnership with Walmart and Ripple’s partnership with MoneyGram are substantial moves that could dramatically increase the use of these platforms. Many such deals are presently taking place across the altcoin space, which is all but certain to eventually cut into Bitcoin’s relevance as a blockchain asset. 

It is worth noting that Bitcoin is seeing an uptick in adoption. More specifically, businesses are increasingly accepting it as payment, and development continues to move ahead on the Lightning Network. Also, fees have remained stable, averaging about USD $2, for the past several weeks.

The most important takeaway from the current data on blockchain use is that Bitcoin remains far and away the most important cryptocurrency, yet the blockchain space is continuing to diversify. Many altcoin platforms are gaining strength, even if such progress is not presently reflected by their market caps. Although Bitcoin will no doubt remain the most important, and valuable platform in the near term, its ability to permanently remain in that position is far from guaranteed. 

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Source: Crypto News