Step 1 for Companies: Buy Bitcoin; Step 2: Issue Their Own Token - Arca
After they've bought some bitcoin (BTC), companies will want to issue their very own tokens, and this may be coming sooner than we think, according to Jeff Dorman, Chief Investment Officer at a US-based blockchain- and crypto-focused investment advisor Arca.
"Once companies start purchasing bitcoin, it’s only a matter of time before they start issuing their own tokens too," said Dorman in a December 7 blog post. "Digital assets issued by companies are proving to be the greatest capital formation and customer bootstrapping tool ever created."
And we're closer to this reality than one may think, he said, giving two of the recent examples:
Airbnb’s filing for their upcoming initial public offering stated that the company's success will also depend on their ability to adapt to emerging technologies "such as tokenization, cryptocurrencies, new authentication technologies," etc;
venture capital firm Benchmark-backed, community-based app Supergreat is rewarding their reviewers by paying them in "supercoins," creating a cycle of engagement - but these can't be moved out of the app ecosystem.
Neither Airbnb nor Supergreat don't technically need a blockchain to have their tokens, but having digital assets instead of a coin that functions only within a specific ecosystem, would make the asset fungible with other assets outside that ecosystem, thus making them "more valuable, more discoverable, and would lead to further growth," argued Dorman. He added that "Loyalty points work. Liquid digital asset "pass-thru" tokens which function as both loyalty points and quasi-equity work better."
Besides corporations, university endowments are already investing in the world's number one crypto, continued the CIO, "so perhaps the first University token is close to coming to market too." According to him, parents may decide to purchase these coins for future educational credits, and these tokens, if the school is in high demand, could then be traded on the open market should the child decide not to attend that specific university.
Dorman concluded that "both companies and endowments are prime candidates to give investors direct exposure to their future liabilities rather than being forced to invest in areas they don’t understand or care about as a proxy."
The post quotes Merrill Lynch financial advisor as telling Arca that "this may be how people think about "saving" for the future." What financial advisors do "is bridge the gap between assets/cash flow now, to future liabilities (house and retirement needs), by investing in equity and fixed income which in theory should go up over a specific time period. But what if we knew the exact cost now for the future liability? If Health Care could be paid for up front in the form of a digital asset, or vacations, or housing expenses? This could change the formula," the advisor was quoted as saying, with Dorman adding that it's precisely digital assets that are changing this formula.
Meanwhile, some companies are already completing this first step - purchasing bitcoin. Dorman hence touched on the argument that "bitcoin may be the perfect corporate treasury asset, for now." He posed a question whether it makes sense to hold bitcoin as a cash substitute, stating that several companies, most prominently Square and Microstrategy "seem to think so," given their recent investments in BTC. But why hold cash then at all, particularly in this "relic" that is the current market infrastructure?
"Any company with a huge cash war chest is inefficiently using that capital, and is certainly primed for activism," said Dorman, but "March 2020 market crash taught us that maybe keeping a large "rainy day" fund is warranted instead of buying back stock and waiting for government bailouts."
After they've bought some bitcoin (BTC), companies will want to issue their very own tokens, and this may be coming sooner than we think, according to Jeff Dorman, Chief Investment Officer at a US-based blockchain- and crypto-focused investment advisor Arca.
"Once companies start purchasing bitcoin, it’s only a matter of time before they start issuing their own tokens too," said Dorman in a December 7 blog post. "Digital assets issued by companies are proving to be the greatest capital formation and customer bootstrapping tool ever created."
And we're closer to this reality than one may think, he said, giving two of the recent examples:
Airbnb’s filing for their upcoming initial public offering stated that the company's success will also depend on their ability to adapt to emerging technologies "such as tokenization, cryptocurrencies, new authentication technologies," etc;
venture capital firm Benchmark-backed, community-based app Supergreat is rewarding their reviewers by paying them in "supercoins," creating a cycle of engagement - but these can't be moved out of the app ecosystem.
Neither Airbnb nor Supergreat don't technically need a blockchain to have their tokens, but having digital assets instead of a coin that functions only within a specific ecosystem, would make the asset fungible with other assets outside that ecosystem, thus making them "more valuable, more discoverable, and would lead to further growth," argued Dorman. He added that "Loyalty points work. Liquid digital asset "pass-thru" tokens which function as both loyalty points and quasi-equity work better."
Besides corporations, university endowments are already investing in the world's number one crypto, continued the CIO, "so perhaps the first University token is close to coming to market too." According to him, parents may decide to purchase these coins for future educational credits, and these tokens, if the school is in high demand, could then be traded on the open market should the child decide not to attend that specific university.
Dorman concluded that "both companies and endowments are prime candidates to give investors direct exposure to their future liabilities rather than being forced to invest in areas they don’t understand or care about as a proxy."
The post quotes Merrill Lynch financial advisor as telling Arca that "this may be how people think about "saving" for the future." What financial advisors do "is bridge the gap between assets/cash flow now, to future liabilities (house and retirement needs), by investing in equity and fixed income which in theory should go up over a specific time period. But what if we knew the exact cost now for the future liability? If Health Care could be paid for up front in the form of a digital asset, or vacations, or housing expenses? This could change the formula," the advisor was quoted as saying, with Dorman adding that it's precisely digital assets that are changing this formula.
Meanwhile, some companies are already completing this first step - purchasing bitcoin. Dorman hence touched on the argument that "bitcoin may be the perfect corporate treasury asset, for now." He posed a question whether it makes sense to hold bitcoin as a cash substitute, stating that several companies, most prominently Square and Microstrategy "seem to think so," given their recent investments in BTC. But why hold cash then at all, particularly in this "relic" that is the current market infrastructure?
"Any company with a huge cash war chest is inefficiently using that capital, and is certainly primed for activism," said Dorman, but "March 2020 market crash taught us that maybe keeping a large "rainy day" fund is warranted instead of buying back stock and waiting for government bailouts."
Sweden Launches E-krona Feasibility Review
Sweden’s central bank, the Riksbank, has edged another step closer to launching its much anticipated central bank digital currency (CBDC), dubbed the e-krona – with a lengthy government review of the consequences of a national CBDC rollout beginning today.
Back in February this year, Sweden gazumped many of its European and intercontinental counterparts by announcing that it had begun testing the e-krona, which makes use of blockchain technology. The Riksbank has been working with technology provider Accenture on its token.
And in a new development, Bloomberg reported that Per Bolund, Sweden’s financial markets minister, has officially launched a feasibility review into the e-krona. The review will probably be complete by late November 2022, and will be spearheaded by Anna Kinberg Batra, the ex-chairwoman of the Riksbank’s finance committee.
The country has remained firmly agnostic about whether or not it will go ahead with the CBDC issuance, with the central bank stating categorically on its website that “no decisions have yet been taken on issuing an e-krona.”
However, the central bank governor Stefan Ingves wrote, back in mid-October, “There shall be digital state money as legal tender, an e-krona, issued by the Riksbank.”
Ingves will still need to convince both the Riksdag (the Swedish Parliament) and the government of the wisdom of the move, but has already submitted a proposal to parliament this year, asking it to appoint a panel of experts to judge the e-krona feasibility.
The Swedish government has taken pride in the fact that the Bank for International Settlements (BIS) declared in 2018 that the nation was the world’s most cashless region. The central bank claims that 90% of all monetary transactions in the nation are done completed without the use of cash.
Bloomberg quoted Bolund as stating,
“It’s crucial that the digitalized payments market functions safely, and that it’s available to everybody.” Depending on how a digital currency is designed and which technologies are used, it can have large consequences for the entire financial system.”
However, as reported, over the past few years Swedes have been increasingly concerned about the elderly, those living in rural areas and people from migrant backgrounds being left behind by businesses switching to Swish no longer accepting cash.
Last year all but one of Sweden’s political parties supported new laws requiring Sweden’s major banks to continue to offer cash services across the country.
Sweden’s central bank, the Riksbank, has edged another step closer to launching its much anticipated central bank digital currency (CBDC), dubbed the e-krona – with a lengthy government review of the consequences of a national CBDC rollout beginning today.
Back in February this year, Sweden gazumped many of its European and intercontinental counterparts by announcing that it had begun testing the e-krona, which makes use of blockchain technology. The Riksbank has been working with technology provider Accenture on its token.
And in a new development, Bloomberg reported that Per Bolund, Sweden’s financial markets minister, has officially launched a feasibility review into the e-krona. The review will probably be complete by late November 2022, and will be spearheaded by Anna Kinberg Batra, the ex-chairwoman of the Riksbank’s finance committee.
The country has remained firmly agnostic about whether or not it will go ahead with the CBDC issuance, with the central bank stating categorically on its website that “no decisions have yet been taken on issuing an e-krona.”
However, the central bank governor Stefan Ingves wrote, back in mid-October, “There shall be digital state money as legal tender, an e-krona, issued by the Riksbank.”
Ingves will still need to convince both the Riksdag (the Swedish Parliament) and the government of the wisdom of the move, but has already submitted a proposal to parliament this year, asking it to appoint a panel of experts to judge the e-krona feasibility.
The Swedish government has taken pride in the fact that the Bank for International Settlements (BIS) declared in 2018 that the nation was the world’s most cashless region. The central bank claims that 90% of all monetary transactions in the nation are done completed without the use of cash.
Bloomberg quoted Bolund as stating,
“It’s crucial that the digitalized payments market functions safely, and that it’s available to everybody.” Depending on how a digital currency is designed and which technologies are used, it can have large consequences for the entire financial system.”
However, as reported, over the past few years Swedes have been increasingly concerned about the elderly, those living in rural areas and people from migrant backgrounds being left behind by businesses switching to Swish no longer accepting cash.
Last year all but one of Sweden’s political parties supported new laws requiring Sweden’s major banks to continue to offer cash services across the country.
UK Regulator Makes Temporary Register for Crypto Firms Awaiting Permits
The British Financial Conduct Authority (FCA) has launched a temporary program for registering crypto companies that are waiting to obtain approval permits. The move from the financial regulator will enable a large number of crypto businesses to continue their operations beyond the January 10, 2021, deadline for registrations until at least July 9 of next year.
In a statement, the FCA explained,
“The FCA was not able to assess and register all firms that have applied for registration, due to the complexity and standard of the applications received, and the pandemic restricting the FCA’s ability to visit firms as planned.”
The temporary scheme is designed for companies that were already active in the UK crypto industry before January 10 this year, when the FCA was appointed as the anti-money laundering and counter-terrorist financing supervisor for the sector.
New companies that started operating after that date are obliged to secure full registration with the FCA before they can start offer their services to UK-based individuals. The requirements result were outlined in the country’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) regulations, published in 2017.
The FCA says that any crypto businesses that did not submit their applications by December 15 will not be eligible for the temporary registration scheme – and, as such, will be required to return cryptoasset holdings to customers and cease trading by January 10.
The regulator warned,
“Firms that do not stop trading by that date are at risk of being subject to the FCA’s criminal and civil enforcement powers.”
As of December 16, only four companies have so far been included on the FCA register.
These include two companies affiliated with the Winklevoss brothers’ Gemini crypto exchange, as well as the crypto platform Ziglu and the digital securities exchange Archax.
However, the temporary register has a far higher number of crypto industry players, with 91 entries.
Some of the bigger-name companies on the temporary list include the crypto exchange Bitstamp, the Revolut platform and the payments processor Skrill.
The regulator’s decision is likely to bring relief to scores of crypto industry players who are still waiting to receive registration from the UK authorities.
These include Jeff Hancock, the Co-Founder and CEO of crypto platform Coinpass, who headed over to the FCA’s Twitter account to personally thank the regulator for adding his business to the list.
The British Financial Conduct Authority (FCA) has launched a temporary program for registering crypto companies that are waiting to obtain approval permits. The move from the financial regulator will enable a large number of crypto businesses to continue their operations beyond the January 10, 2021, deadline for registrations until at least July 9 of next year.
In a statement, the FCA explained,
“The FCA was not able to assess and register all firms that have applied for registration, due to the complexity and standard of the applications received, and the pandemic restricting the FCA’s ability to visit firms as planned.”
The temporary scheme is designed for companies that were already active in the UK crypto industry before January 10 this year, when the FCA was appointed as the anti-money laundering and counter-terrorist financing supervisor for the sector.
New companies that started operating after that date are obliged to secure full registration with the FCA before they can start offer their services to UK-based individuals. The requirements result were outlined in the country’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) regulations, published in 2017.
The FCA says that any crypto businesses that did not submit their applications by December 15 will not be eligible for the temporary registration scheme – and, as such, will be required to return cryptoasset holdings to customers and cease trading by January 10.
The regulator warned,
“Firms that do not stop trading by that date are at risk of being subject to the FCA’s criminal and civil enforcement powers.”
As of December 16, only four companies have so far been included on the FCA register.
These include two companies affiliated with the Winklevoss brothers’ Gemini crypto exchange, as well as the crypto platform Ziglu and the digital securities exchange Archax.
However, the temporary register has a far higher number of crypto industry players, with 91 entries.
Some of the bigger-name companies on the temporary list include the crypto exchange Bitstamp, the Revolut platform and the payments processor Skrill.
The regulator’s decision is likely to bring relief to scores of crypto industry players who are still waiting to receive registration from the UK authorities.
These include Jeff Hancock, the Co-Founder and CEO of crypto platform Coinpass, who headed over to the FCA’s Twitter account to personally thank the regulator for adding his business to the list.
“When you criticize litecoin (LTC), you get hammered by people. It was a variation of bitcoin. A lot of people bought litecoin and say, well, I cannot afford a bitcoin, but I can afford a litecoin, which makes no economic sense but that was their argument. I think in pure store of value coins, I do not think a lot of the smaller ones will have long-lasting gigs. Now, then there are utility coins like, protocols, you think about ethereum (ETH), definitely, EOS, hashgraph, all of these coins that want to be the base layer of trust, where lots of things get processed.”
However, Novogratz estimates that “90-95% of the real talent that is entering the space as programmers are programming around the Ethereum world.”
And on the subject of Ethereum, he added,
“That is really where you are going to rebuild the future of finance and the future of lots of things.”
As reported, Ethereum already has more developers than Bitcoin.
Novogratz, who already warned banks over DeFi, opined that while “bitcoin is an easier story on a risk-adjusted basis,” he was “liking Ethereum more and more as I see this thing go.”
The businessman recalled that, back in 2017, he “would invest in sexier projects with good founders and decent communities, and as soon as there was liquidity, I would sell them.”
Novogratz also claimed that previous crypto bubbles have strengthened his focus on key investment parameters, such as market capitalization and fully diluted market capitalization.
Saying that this was the best investment lesson he learned in 2020, he advised investors to focus on the second marker, which refers to what a token’s market cap would be if all available coins in total supply were issued.
He stated,
“When you get the growth at an accelerating rate, you can stay long. Even if prices do not make sense, because that compounding of the second derivative really creates the excitement around it. If it was Zoom, like I am going to short Zoom, that was a mistake to short Zoom. They were growing at an accelerating rate.”
The CEO added that, as a rule of thumb, when market cap levels get to “stupid levels” and “when the community is valuing this new protocol at stupid levels, even in this wild bubble already with all equities,” investors have “got to sell.”
“You’ve got to take some profits off the table,” the Galaxy Digital CEO said.
Novogratz also cautioned crypto investors that paying attention to these markers would turn certain individuals into “momentum traders,” but would also help people “know the good projects,” so they would “not buy fundamentally on the big dips.”
However, Novogratz estimates that “90-95% of the real talent that is entering the space as programmers are programming around the Ethereum world.”
And on the subject of Ethereum, he added,
“That is really where you are going to rebuild the future of finance and the future of lots of things.”
As reported, Ethereum already has more developers than Bitcoin.
Novogratz, who already warned banks over DeFi, opined that while “bitcoin is an easier story on a risk-adjusted basis,” he was “liking Ethereum more and more as I see this thing go.”
The businessman recalled that, back in 2017, he “would invest in sexier projects with good founders and decent communities, and as soon as there was liquidity, I would sell them.”
Novogratz also claimed that previous crypto bubbles have strengthened his focus on key investment parameters, such as market capitalization and fully diluted market capitalization.
Saying that this was the best investment lesson he learned in 2020, he advised investors to focus on the second marker, which refers to what a token’s market cap would be if all available coins in total supply were issued.
He stated,
“When you get the growth at an accelerating rate, you can stay long. Even if prices do not make sense, because that compounding of the second derivative really creates the excitement around it. If it was Zoom, like I am going to short Zoom, that was a mistake to short Zoom. They were growing at an accelerating rate.”
The CEO added that, as a rule of thumb, when market cap levels get to “stupid levels” and “when the community is valuing this new protocol at stupid levels, even in this wild bubble already with all equities,” investors have “got to sell.”
“You’ve got to take some profits off the table,” the Galaxy Digital CEO said.
Novogratz also cautioned crypto investors that paying attention to these markers would turn certain individuals into “momentum traders,” but would also help people “know the good projects,” so they would “not buy fundamentally on the big dips.”
Telegram Forced to Monetize – and the American SEC May Be to Blame
The Telegram chat app – the popular communication tool of choice for the crypto community – could be forced to monetize thanks to a regulatory intervention from the American Securities and Exchanges Commission (SEC) that scuppered its tokenization and blockchainization plans.
In a frank post on his own channel on the platform Pavel Durov, Telegram’s CEO and founder, hinted that he can no longer afford to bankroll the chat app, stating that rising server costs and other expenses were costing him “hundreds of millions of dollars a year.”
He claimed that unlike the founders of WhatsApp – who sold their firm to Facebook in 2014 – he would not consider looking for a buyer. However, he wrote,
“Telegram will start monetizing from next year. In doing so, we will remain true to our values and the guarantees that we made in the past. … We will be able to monetize Telegram unobtrusively – most users will hardly notice any major changes.”
Durov stated that all existing Telegram services would remain free, and that its messaging services would remain ad-free. However, he added that Telegram would start charging to additional business-related functions and that “users with advanced needs" would be expected to pay.
Although Durov did not join the dots between the decision and the SEC’s ultimately fatal eleventh-hour intervention in the Gram token launch plan, media outlet Vedomosti did just that. The newspaper pointed out that, according to Telegram's prospectus released in 2018, the estimated Telegram operating costs for 2020 were USD 170m, or 31% more than in 2019.
The media outlet added that Durov had intended the ICO, which was to make use of a token named the Gram and reportedly raised USD 1.7bn in private, identity-guarded pre-sales, to be “one of the ways” Durov had envisioned to raise funds in Telegram prior to the SEC move.
The Gram would be used as a currency for in-app sales and B2B and B2C sales conducted via the platform and its TON blockchain network in the initial plans.
But the SEC’s intervention back in 2019, and later upheld by United States courts, put an end to all that. After a legal fight, Telegram finally conceded defeat in May this year, with plans to pay back all of its investors.
The SEC intervention also successfully demasked the previously anonymous investors in the TON network – much to Telegram’s embarrassment.
Durov has used his private fortune to pay for Telegram since its inception. He is thought to have amassed up to USD 480m for the sale of the VKontakte social media platform – Russia’s answer to Facebook.
The Telegram chat app – the popular communication tool of choice for the crypto community – could be forced to monetize thanks to a regulatory intervention from the American Securities and Exchanges Commission (SEC) that scuppered its tokenization and blockchainization plans.
In a frank post on his own channel on the platform Pavel Durov, Telegram’s CEO and founder, hinted that he can no longer afford to bankroll the chat app, stating that rising server costs and other expenses were costing him “hundreds of millions of dollars a year.”
He claimed that unlike the founders of WhatsApp – who sold their firm to Facebook in 2014 – he would not consider looking for a buyer. However, he wrote,
“Telegram will start monetizing from next year. In doing so, we will remain true to our values and the guarantees that we made in the past. … We will be able to monetize Telegram unobtrusively – most users will hardly notice any major changes.”
Durov stated that all existing Telegram services would remain free, and that its messaging services would remain ad-free. However, he added that Telegram would start charging to additional business-related functions and that “users with advanced needs" would be expected to pay.
Although Durov did not join the dots between the decision and the SEC’s ultimately fatal eleventh-hour intervention in the Gram token launch plan, media outlet Vedomosti did just that. The newspaper pointed out that, according to Telegram's prospectus released in 2018, the estimated Telegram operating costs for 2020 were USD 170m, or 31% more than in 2019.
The media outlet added that Durov had intended the ICO, which was to make use of a token named the Gram and reportedly raised USD 1.7bn in private, identity-guarded pre-sales, to be “one of the ways” Durov had envisioned to raise funds in Telegram prior to the SEC move.
The Gram would be used as a currency for in-app sales and B2B and B2C sales conducted via the platform and its TON blockchain network in the initial plans.
But the SEC’s intervention back in 2019, and later upheld by United States courts, put an end to all that. After a legal fight, Telegram finally conceded defeat in May this year, with plans to pay back all of its investors.
The SEC intervention also successfully demasked the previously anonymous investors in the TON network – much to Telegram’s embarrassment.
Durov has used his private fortune to pay for Telegram since its inception. He is thought to have amassed up to USD 480m for the sale of the VKontakte social media platform – Russia’s answer to Facebook.
Bitcoin Rallies Above USD 28K with Market Cap Over USD 0.5 Trillion
The most popular cryptocurrency, bitcoin (BTC) accelerated its rally, hitting USD 25,000, USD 26,000, USD 27,000, and USD 28,000 less than a day, while its market capitalization jumped above USD 0,5 trillion. (Updated at 11:43 UTC with the latest price data.)
At the time of writing (11:41 UTC), BTC trades at USD 28,257 and is up by 14% in a day and 20% in a week. The price rallied by 64% in a week and 278% in a year.
BTC is the best performing cryptoasset among the top 10 coins by market capitalization today. Its dominance, or the percentage of the total market capitalization, jumped above 70% for the first time since March 2017.
The most popular cryptocurrency, bitcoin (BTC) accelerated its rally, hitting USD 25,000, USD 26,000, USD 27,000, and USD 28,000 less than a day, while its market capitalization jumped above USD 0,5 trillion. (Updated at 11:43 UTC with the latest price data.)
At the time of writing (11:41 UTC), BTC trades at USD 28,257 and is up by 14% in a day and 20% in a week. The price rallied by 64% in a week and 278% in a year.
BTC is the best performing cryptoasset among the top 10 coins by market capitalization today. Its dominance, or the percentage of the total market capitalization, jumped above 70% for the first time since March 2017.
Colombian Watchdog Says Companies Can Convert Capital to Bitcoin
Big American companies like MicroStrategy have made the headlines this year with their bitcoin (BTC)-buying policies, but companies in Colombia may be set to follow suit – after a corporate watchdog in the nation green-lighted the practice of holding capital reserves in crypto.
In an official notice, the Superintendency of Corporations (Superintendencia de Sociedades), the nation’s corporations regulator explained that following a consultation, firms in Colombia are now legally permitted to use their capital to buy cryptoassets such as bitcoin (the only token explicitly named in the document) – so long as they abide by regulations outlined in the existing commercial code.
The watchdog added that providing the tokens companies bought could qualify as “intangible assets,” and “meet criteria that makes them recognizable on inventories as intangible,” firms were now free to take the crypto plunge.
The ruling is a major turnaround for the watchdog, which in early 2018 was still warning companies of the dangers of crypto investment, opining that tokens were too “volatile” to qualify as assets.
However, the new document contains a number of warnings about crypto, showing that the Superintendency has not yet altogether abandoned its previous position, writing that crypto “is not money or legal tender,” and cannot be used “as a form of payment.”
The watchdog also warned that no central bank or international monetary organization had recognized crypto as a form of money, and that tokens were in no way to be considered as a substitute for cash.
Big American companies like MicroStrategy have made the headlines this year with their bitcoin (BTC)-buying policies, but companies in Colombia may be set to follow suit – after a corporate watchdog in the nation green-lighted the practice of holding capital reserves in crypto.
In an official notice, the Superintendency of Corporations (Superintendencia de Sociedades), the nation’s corporations regulator explained that following a consultation, firms in Colombia are now legally permitted to use their capital to buy cryptoassets such as bitcoin (the only token explicitly named in the document) – so long as they abide by regulations outlined in the existing commercial code.
The watchdog added that providing the tokens companies bought could qualify as “intangible assets,” and “meet criteria that makes them recognizable on inventories as intangible,” firms were now free to take the crypto plunge.
The ruling is a major turnaround for the watchdog, which in early 2018 was still warning companies of the dangers of crypto investment, opining that tokens were too “volatile” to qualify as assets.
However, the new document contains a number of warnings about crypto, showing that the Superintendency has not yet altogether abandoned its previous position, writing that crypto “is not money or legal tender,” and cannot be used “as a form of payment.”
The watchdog also warned that no central bank or international monetary organization had recognized crypto as a form of money, and that tokens were in no way to be considered as a substitute for cash.
‘Kimchi Premium Return’ Reports 'Exaggerated'
Multiple media reports of a return to the “kimchi premium” – a phenomenon whereby bitcoin (BTC) and major altcoin prices on South Korean exchanges rises to markedly higher levels than on international trading platforms – may be “exaggerated,” according to a South Korean expert.
Mira Kim, a blockchain consultant based in South Korea,
“While last time around late 2017, you had all-comers involved in BTC trading, this time it seems it’s mainly the hardcore, loyal crypto folks who are getting involved. I think it’s something of an exaggeration to say we’re back in the spirit of those days.”
“The investors I deal with are quietly very optimistic about rising prices, but with so many regulations and restrictions coming in namely crypto tax and strict banking and compliance measures for crypto exchanges, most exchanges are conversely still quite depressed and concerned for their very survival,” Kim added.
Kim’s comments come weeks after another expert told that the prospects of a full-scale return to 2017 seemed unlikely.
However, trading volumes on major local exchanges are up sharply in the past few months.
In either case, data from kimchi premium price tracking site scolkg does indeed show a discrepancy between BTC and major altcoin prices on the “big four” South Korean exchanges (Upbit, Bithumb, Korbit and Coinone). But at the time of writing, the gap between prices on – for instance, Upbit/Korbit and Binance, bitFlyer or BitMEX is hovering between 2% and 4%.
While such margins are not altogether insignificant, some may argue that media outlets – both domestic and international – may have jumped the gun with calls of a “return to the kimchi premium.”
On Twitter, some concurred.
Statistics compiled by Cryptoquant also show some gaps in prices, but not the kind of sustained and notable wedge between international and South Korean exchanges’ BTC prices last seen in the very early days of 2018.
In the 2017 boom that saw septuagenarians spending their pensions on tokens and teens buying coins with their pocket money, the kimchi premium rose to just under 55% at its peak, with regular discrepancy levels of 10%-30% commonplace for a period of months.
Less than a year ago, the kimchi premium was replaced by a small “Korean bonus,” with prices in South Korea around 1% cheaper than on international platforms.
Multiple media reports of a return to the “kimchi premium” – a phenomenon whereby bitcoin (BTC) and major altcoin prices on South Korean exchanges rises to markedly higher levels than on international trading platforms – may be “exaggerated,” according to a South Korean expert.
Mira Kim, a blockchain consultant based in South Korea,
“While last time around late 2017, you had all-comers involved in BTC trading, this time it seems it’s mainly the hardcore, loyal crypto folks who are getting involved. I think it’s something of an exaggeration to say we’re back in the spirit of those days.”
“The investors I deal with are quietly very optimistic about rising prices, but with so many regulations and restrictions coming in namely crypto tax and strict banking and compliance measures for crypto exchanges, most exchanges are conversely still quite depressed and concerned for their very survival,” Kim added.
Kim’s comments come weeks after another expert told that the prospects of a full-scale return to 2017 seemed unlikely.
However, trading volumes on major local exchanges are up sharply in the past few months.
In either case, data from kimchi premium price tracking site scolkg does indeed show a discrepancy between BTC and major altcoin prices on the “big four” South Korean exchanges (Upbit, Bithumb, Korbit and Coinone). But at the time of writing, the gap between prices on – for instance, Upbit/Korbit and Binance, bitFlyer or BitMEX is hovering between 2% and 4%.
While such margins are not altogether insignificant, some may argue that media outlets – both domestic and international – may have jumped the gun with calls of a “return to the kimchi premium.”
On Twitter, some concurred.
Statistics compiled by Cryptoquant also show some gaps in prices, but not the kind of sustained and notable wedge between international and South Korean exchanges’ BTC prices last seen in the very early days of 2018.
In the 2017 boom that saw septuagenarians spending their pensions on tokens and teens buying coins with their pocket money, the kimchi premium rose to just under 55% at its peak, with regular discrepancy levels of 10%-30% commonplace for a period of months.
Less than a year ago, the kimchi premium was replaced by a small “Korean bonus,” with prices in South Korea around 1% cheaper than on international platforms.
Gaming Firm Outbids Rival in Battle for Control of Bithumb
The deal to acquire a controlling stake in Bithumb, South Korea’s market-leading crypto exchange, is not yet done – with another gaming giant wading into what could develop into a bidding war for the trading platform.
Per ZDNet Korea, NCSoft, a South Korean video game developer known for its Lineage series of gaming titles, has submitted a rival bid of around USD 596m for almost 66% of the shares in the trading platform, owned almost exclusively by troubled Bithumb executive Lee Jung-hoon, the largest shareholder in the holding company Bithumb Holdings as well as another firm named DAA, which has a 30+% stake in the exchange.
The news broke on January 8, after widespread reports of an all-but-done deal with another South Korean gaming behemoth, Nexon. The latter is part of a business empire that also comprises the crypto exchanges Korbit and Bitstamp.
NCSoft’s alleged bid comes much closer to Lee’s asking price, but the same media outlet has not ruled out the possibility of a second bid from Nexon. Multiple reports from South Korea yesterday stated that Nexon’s bid was much lower, at just USD 458m.
A video equipment-making firm named Vidente owns the remaining 34% of the shares and was not thought to be looking for a buyer. But a report from the Korea Times claimed that Vidente has distanced itself from the Nexon bid, and has not ruled out making a rival bid of its own for the platform, quoting Vidente as stating,
“We have yet to decide whether to sell our stake in Bithumb Holdings or to acquire an additional stake.”
The ZDNet Korea report’s author added that a third, equally high-profile party had also expressed concrete interest, namely the crypto exchange giant Huobi, which already operates the Huobi Korea trading platform. However, it is understood that Lee would prefer to avoid selling to an overseas buyer, and intends to sell to a domestic player.
The same media outlet hinted that NCSoft may be going out on a limb with its Bithumb bid, as its declared cash assets amount to around USD 1.465bn.
However, a domestic blockchain business expert yesterday stated that the price was already “discounted,” and stated that a sub-USD 500 million deal for Bithumb would be a “remarkable coup” considering the rude health of the crypto market.
The deal to acquire a controlling stake in Bithumb, South Korea’s market-leading crypto exchange, is not yet done – with another gaming giant wading into what could develop into a bidding war for the trading platform.
Per ZDNet Korea, NCSoft, a South Korean video game developer known for its Lineage series of gaming titles, has submitted a rival bid of around USD 596m for almost 66% of the shares in the trading platform, owned almost exclusively by troubled Bithumb executive Lee Jung-hoon, the largest shareholder in the holding company Bithumb Holdings as well as another firm named DAA, which has a 30+% stake in the exchange.
The news broke on January 8, after widespread reports of an all-but-done deal with another South Korean gaming behemoth, Nexon. The latter is part of a business empire that also comprises the crypto exchanges Korbit and Bitstamp.
NCSoft’s alleged bid comes much closer to Lee’s asking price, but the same media outlet has not ruled out the possibility of a second bid from Nexon. Multiple reports from South Korea yesterday stated that Nexon’s bid was much lower, at just USD 458m.
A video equipment-making firm named Vidente owns the remaining 34% of the shares and was not thought to be looking for a buyer. But a report from the Korea Times claimed that Vidente has distanced itself from the Nexon bid, and has not ruled out making a rival bid of its own for the platform, quoting Vidente as stating,
“We have yet to decide whether to sell our stake in Bithumb Holdings or to acquire an additional stake.”
The ZDNet Korea report’s author added that a third, equally high-profile party had also expressed concrete interest, namely the crypto exchange giant Huobi, which already operates the Huobi Korea trading platform. However, it is understood that Lee would prefer to avoid selling to an overseas buyer, and intends to sell to a domestic player.
The same media outlet hinted that NCSoft may be going out on a limb with its Bithumb bid, as its declared cash assets amount to around USD 1.465bn.
However, a domestic blockchain business expert yesterday stated that the price was already “discounted,” and stated that a sub-USD 500 million deal for Bithumb would be a “remarkable coup” considering the rude health of the crypto market.
This Multibillion Bitcoin Dump By US Gov Could Be a Drop in the Bucket
The bitcoin (BTC) price has been a runaway train of late and there is seemingly nothing that can get in its way. Some believe that even if one of the largest BTC whales, the US Government, decides to sell its stash now worth billions of USD it wouldn't have a material effect on the market as BTC trading volumes more than doubled in a month.
As reported, in November, the US Department of Justice (DoJ) has forfeited BTC 69,370, worth over USD 1bn at the time. At the time of writing (07:59 UTC), it's worth more than USD 2.7bn, as BTC is trading at USD 39,629 after it briefly touched USD 42,000 yesterday.
The US government now controls the 6th richest BTC address (and the 4th richest if we exclude addresses controlled by crypto exchanges).
Meanwhile, the US Attorney’s Office for the Northern District of California recently filed a civil complaint for the forfeiture of those coins. If history is any indication, the bitcoins could be due to be sold in an auction by the US Marshals Service. That is what happened in 2014 and 2015 when the US government gained control of more than BTC 144,000 — worth USD 122m at the time and USD 5.7bn today — and sold them.
Indeed, auctioning off the bitcoins could be tempting for an incoming administration for whom the money spigot is poised to open wider as the pandemic tightens its grip on the economy.
A matter of ‘US national security‘
If the US government takes a similar track this time around, it is difficult to know how the market would react until it actually happens. However, Pierre Rochard, a Bitcoin strategist at the Kraken exchange, points out that the sale would be a drop in the bucket compared to the robust trading activity in the BTC market of late. Today, the 24-hour BTC trading volume stands at around USD 70bn (it was around USD 30bn on average in December).
“So I don't think a USD 3 billion auction would have a material effect,” Rochard told.
But he said he’s concerned about the bigger picture: “I think the auction would undermine US national security.”
In a recent post on GitHub, Rochard further noted,
“The expeditious auctioning off of seized bitcoin in 2014 and 2015 was, in my view and with the benefit of hindsight, a mistake. The Federal Reserve can create an infinite quantity of US dollars, the proceeds received in the auction. Bitcoins can not be created out of thin air and there is a limited quantity of them.”
As a result, Rochard explains that he is “lobbying for legislation to prevent the auction from happening, for United States national security reasons.”
One of the bills he is supporting is the Bitcoin HODL Act, which would allow the US Marshals Service to “securely keep and store bitcoin assets acquired through seizure until further legislation is passed, effective immediately.”
Instead, the BTC would be held in a custodial wallet that would be managed by the US Treasury without the threat of selling, swapping, auctioning, or otherwise encumbering the assets until more legislation is afoot.
The DoJ did not respond to our request for comment.
Meanwhile, Rachid Ajaja, CEO and Founder of AllianceBlock, recently said that it is unlikely that BTC whales - those who hold enough BTC to impact price - are going to be selling any time soon.
“Bitcoin is experiencing a supply shock at the moment, and miners can't keep up with demand. For this reason, it's unlikely that any whales will relinquish BTC liquidity until the price is closer to USD 100k+,” he said, adding that any crash we do see will not be as drastic as those that we have seen before thanks to increased network effects and institutional involvement.
The bitcoin (BTC) price has been a runaway train of late and there is seemingly nothing that can get in its way. Some believe that even if one of the largest BTC whales, the US Government, decides to sell its stash now worth billions of USD it wouldn't have a material effect on the market as BTC trading volumes more than doubled in a month.
As reported, in November, the US Department of Justice (DoJ) has forfeited BTC 69,370, worth over USD 1bn at the time. At the time of writing (07:59 UTC), it's worth more than USD 2.7bn, as BTC is trading at USD 39,629 after it briefly touched USD 42,000 yesterday.
The US government now controls the 6th richest BTC address (and the 4th richest if we exclude addresses controlled by crypto exchanges).
Meanwhile, the US Attorney’s Office for the Northern District of California recently filed a civil complaint for the forfeiture of those coins. If history is any indication, the bitcoins could be due to be sold in an auction by the US Marshals Service. That is what happened in 2014 and 2015 when the US government gained control of more than BTC 144,000 — worth USD 122m at the time and USD 5.7bn today — and sold them.
Indeed, auctioning off the bitcoins could be tempting for an incoming administration for whom the money spigot is poised to open wider as the pandemic tightens its grip on the economy.
A matter of ‘US national security‘
If the US government takes a similar track this time around, it is difficult to know how the market would react until it actually happens. However, Pierre Rochard, a Bitcoin strategist at the Kraken exchange, points out that the sale would be a drop in the bucket compared to the robust trading activity in the BTC market of late. Today, the 24-hour BTC trading volume stands at around USD 70bn (it was around USD 30bn on average in December).
“So I don't think a USD 3 billion auction would have a material effect,” Rochard told.
But he said he’s concerned about the bigger picture: “I think the auction would undermine US national security.”
In a recent post on GitHub, Rochard further noted,
“The expeditious auctioning off of seized bitcoin in 2014 and 2015 was, in my view and with the benefit of hindsight, a mistake. The Federal Reserve can create an infinite quantity of US dollars, the proceeds received in the auction. Bitcoins can not be created out of thin air and there is a limited quantity of them.”
As a result, Rochard explains that he is “lobbying for legislation to prevent the auction from happening, for United States national security reasons.”
One of the bills he is supporting is the Bitcoin HODL Act, which would allow the US Marshals Service to “securely keep and store bitcoin assets acquired through seizure until further legislation is passed, effective immediately.”
Instead, the BTC would be held in a custodial wallet that would be managed by the US Treasury without the threat of selling, swapping, auctioning, or otherwise encumbering the assets until more legislation is afoot.
The DoJ did not respond to our request for comment.
Meanwhile, Rachid Ajaja, CEO and Founder of AllianceBlock, recently said that it is unlikely that BTC whales - those who hold enough BTC to impact price - are going to be selling any time soon.
“Bitcoin is experiencing a supply shock at the moment, and miners can't keep up with demand. For this reason, it's unlikely that any whales will relinquish BTC liquidity until the price is closer to USD 100k+,” he said, adding that any crash we do see will not be as drastic as those that we have seen before thanks to increased network effects and institutional involvement.
Further Details of ‘Offline’ Chinese Digital Yuan ‘Hard Wallet’ Emerge
The masterminds behind the digital yuan – the forthcoming Chinese central bank digital currency – have provided further explanation about a new “hard” wallet, which makes no use of smartphone technology.
Per Tencent’s media arm, the hard wallet, which resembles a conventional credit card but for a digital LCD readout in its top right-hand corner that lets users know their remaining balances, is being developed with an eye on elderly Chinese citizens, many of whom have little or no IT experience.
As reported earlier this month, the hard wallet is being used in a pilot at the Shanghai-based Jiao Tong University School of Medicine’s Tongren Hospital staff canteen.
The canteen has been fitted with portable and counter-top point-of-sale devices, featuring digital yuan interoperability. These have allowed canteen staff to carry out transactions using the digital yuan and the new hard wallet, which is the brainchild of the Postal Savings Bank of China.
At least four other state-owned commercial Chinese banks are working with the central People’s Bank of China (PBoC) on the new digital currency.
The hard wallet, said its architects, can be used offline and does not require a Wi-Fi or network connection to operate. The architects also claim that the solution will be of use to individuals suffering from dementia, ensuring accessibility options for a wide tranche of the population.
The card-like device makes use of Near-Field-Communication (NFC) technology, meaning that they can be used with a large array of conventional POS devices. Many Chinese POS devices already make extensive use of NFC-compatible e-pay hardware that lets them accept contact-free pay from smartphones.
The display screen on the hard wallet shows how much is being charged to the card in active transactions, and how many transactions can be made with the device before it needs to be synced with a PBoC-run ledger (possibly an ATM or card reader at a commercial bank).
Chinese media outlets have also reported that the hard wallet may also be fitted with certain anonymity-protective protocols, possibly allaying fears that the PBoC will use the token as a way to begin Big Brother-style monitoring of Chinese citizens’ spending habits.
A government-run agency has also stated that it is working on solutions for the visually impaired, with alt text, voice-operated functions and voice assistants being built into banks’ future versions of digital CNY-compatible apps.
The masterminds behind the digital yuan – the forthcoming Chinese central bank digital currency – have provided further explanation about a new “hard” wallet, which makes no use of smartphone technology.
Per Tencent’s media arm, the hard wallet, which resembles a conventional credit card but for a digital LCD readout in its top right-hand corner that lets users know their remaining balances, is being developed with an eye on elderly Chinese citizens, many of whom have little or no IT experience.
As reported earlier this month, the hard wallet is being used in a pilot at the Shanghai-based Jiao Tong University School of Medicine’s Tongren Hospital staff canteen.
The canteen has been fitted with portable and counter-top point-of-sale devices, featuring digital yuan interoperability. These have allowed canteen staff to carry out transactions using the digital yuan and the new hard wallet, which is the brainchild of the Postal Savings Bank of China.
At least four other state-owned commercial Chinese banks are working with the central People’s Bank of China (PBoC) on the new digital currency.
The hard wallet, said its architects, can be used offline and does not require a Wi-Fi or network connection to operate. The architects also claim that the solution will be of use to individuals suffering from dementia, ensuring accessibility options for a wide tranche of the population.
The card-like device makes use of Near-Field-Communication (NFC) technology, meaning that they can be used with a large array of conventional POS devices. Many Chinese POS devices already make extensive use of NFC-compatible e-pay hardware that lets them accept contact-free pay from smartphones.
The display screen on the hard wallet shows how much is being charged to the card in active transactions, and how many transactions can be made with the device before it needs to be synced with a PBoC-run ledger (possibly an ATM or card reader at a commercial bank).
Chinese media outlets have also reported that the hard wallet may also be fitted with certain anonymity-protective protocols, possibly allaying fears that the PBoC will use the token as a way to begin Big Brother-style monitoring of Chinese citizens’ spending habits.
A government-run agency has also stated that it is working on solutions for the visually impaired, with alt text, voice-operated functions and voice assistants being built into banks’ future versions of digital CNY-compatible apps.
Crypto and Tax in 2021: Be Ready to Pay More
As some may be aware, there are only two things certain in life, death and taxes, and while crypto was initially able to avoid tax (to varying degrees), it would seem that the taxman is finally catching up with the industry. The US Internal Revenue Service (IRS) introduced a new tax form at the end of 2020 that requires taxpayers to declare whether they’ve acquired or sold crypto in the past tax year, while 2020 also saw the UK’s HMRC begin developing a system to monitor the dealings of crypto traders.
According to a variety of tax experts working within crypto, 2021 will bring an even greater raft of new tax-reporting measures for the industry.
Paying taxes on crypto gains
Niklas Schmidt, a lawyer and tax adviser with the Austria-based Wolf Theiss, predicts that while most tax authorities worldwide continue to lag behind crypto, 2021 will see this situation change significantly.
“The most important crypto-related tax news that we can expect in 2021 is the extension of CRS to crypto exchanges,” he told.
CRS stands for Common Reporting Standard and is a system introduced by the Organisation for Economic Co-operation and Development (OECD) to combat tax evasion through the usage of offshore bank accounts.
In other words, crypto exchanges are likely to be required to report on their customers’ gains to their customers’ local tax authorities.
“Basically, if an investor opens a bank account in say Switzerland or Panama, the bank will ask the investor for proof of residency and in particular for his taxpayer identification number. Then, on a yearly basis, the bank will report the amount of interest, dividends, etc. earned by the investor as well as the total holdings to its local tax authority, which in turn will automatically transmit this information to the tax authority of the home country of the investor (which can then check whether the investor filed a correct tax return),” he said.
Schmidt added that the EU began a consultation to extend CRS to crypto exchanges at the end of 2020, while the OECD itself has announced that it will formulate a version of CRS for crypto-assets in 2021.
“If agreement on this were reached (which I believe will happen), then crypto traders using centralized exchanges will have to be aware that their tax office will learn about their crypto holdings. It will no longer be possible to do trades on foreign exchanges and thereby hope that the tax authorities will not learn about these activities,” he said.
United States: "Yes" or "No"
One holdout from CRS is the United States, which presumably feels no obligation to report to its ‘friends’ and ‘allies’ on the activities of customers of American businesses. However, it will nonetheless spend much of 2021 ramping up its efforts to track its own citizens’ dealing with crypto, so that it can ultimately spend more money on bombing other nations.
As reported, the IRS made it a lot harder to pretend you don’t have bitcoin (BTC) or other cryptoassets hidden away somewhere. They altered the standard 1040 form by putting this question on the front page: At any time during 2020, did you sell, receive, send, exchange or otherwise acquire any financial interest in any virtual currency? The taxpayer must check the box "Yes" or "No."
At the same time, the expanding requirements of the IRS might be complemented by recent initiatives from the Financial Crimes Enforcement Network (FinCEN), which recently drew the ire of much of the crypto industry by proposing a new reporting rule for transactions above a certain threshold.
“The new regulations would require banks, cryptocurrency exchanges, money service businesses and some other institutions (financial institutions) to obtain and report the identities of parties engaging in cryptocurrency transactions, including payments involving ‘unhosted wallets,’ if the transaction exceeds USD 3,000,” said international tax lawyer Selva Ozelli.
As some may be aware, there are only two things certain in life, death and taxes, and while crypto was initially able to avoid tax (to varying degrees), it would seem that the taxman is finally catching up with the industry. The US Internal Revenue Service (IRS) introduced a new tax form at the end of 2020 that requires taxpayers to declare whether they’ve acquired or sold crypto in the past tax year, while 2020 also saw the UK’s HMRC begin developing a system to monitor the dealings of crypto traders.
According to a variety of tax experts working within crypto, 2021 will bring an even greater raft of new tax-reporting measures for the industry.
Paying taxes on crypto gains
Niklas Schmidt, a lawyer and tax adviser with the Austria-based Wolf Theiss, predicts that while most tax authorities worldwide continue to lag behind crypto, 2021 will see this situation change significantly.
“The most important crypto-related tax news that we can expect in 2021 is the extension of CRS to crypto exchanges,” he told.
CRS stands for Common Reporting Standard and is a system introduced by the Organisation for Economic Co-operation and Development (OECD) to combat tax evasion through the usage of offshore bank accounts.
In other words, crypto exchanges are likely to be required to report on their customers’ gains to their customers’ local tax authorities.
“Basically, if an investor opens a bank account in say Switzerland or Panama, the bank will ask the investor for proof of residency and in particular for his taxpayer identification number. Then, on a yearly basis, the bank will report the amount of interest, dividends, etc. earned by the investor as well as the total holdings to its local tax authority, which in turn will automatically transmit this information to the tax authority of the home country of the investor (which can then check whether the investor filed a correct tax return),” he said.
Schmidt added that the EU began a consultation to extend CRS to crypto exchanges at the end of 2020, while the OECD itself has announced that it will formulate a version of CRS for crypto-assets in 2021.
“If agreement on this were reached (which I believe will happen), then crypto traders using centralized exchanges will have to be aware that their tax office will learn about their crypto holdings. It will no longer be possible to do trades on foreign exchanges and thereby hope that the tax authorities will not learn about these activities,” he said.
United States: "Yes" or "No"
One holdout from CRS is the United States, which presumably feels no obligation to report to its ‘friends’ and ‘allies’ on the activities of customers of American businesses. However, it will nonetheless spend much of 2021 ramping up its efforts to track its own citizens’ dealing with crypto, so that it can ultimately spend more money on bombing other nations.
As reported, the IRS made it a lot harder to pretend you don’t have bitcoin (BTC) or other cryptoassets hidden away somewhere. They altered the standard 1040 form by putting this question on the front page: At any time during 2020, did you sell, receive, send, exchange or otherwise acquire any financial interest in any virtual currency? The taxpayer must check the box "Yes" or "No."
At the same time, the expanding requirements of the IRS might be complemented by recent initiatives from the Financial Crimes Enforcement Network (FinCEN), which recently drew the ire of much of the crypto industry by proposing a new reporting rule for transactions above a certain threshold.
“The new regulations would require banks, cryptocurrency exchanges, money service businesses and some other institutions (financial institutions) to obtain and report the identities of parties engaging in cryptocurrency transactions, including payments involving ‘unhosted wallets,’ if the transaction exceeds USD 3,000,” said international tax lawyer Selva Ozelli.
COVID-19 Pandemic Accelerated Rollouts Of 'Game-Changing' CBDCs
Hastened by the pandemic, central bank digital currency (CBDC) initiatives will roll out in the next couple of years, becoming a "game-changer".
It’s the COVID-19 pandemic which we have to thank for “greatly accelerating the push for digital currencies to replace traditional cash and cross border transaction systems,” said Brian Gallagher, Head of Business Development at blockchain platform Partisia Blockchain. Besides the Chinese-state sponsored digital yuan, we’ve also seen discussions of a digital euro, digital dollar, digital yen, digital ruble, as well as a Saudi and UAE state-sponsored cryptocurrency for cross border trade between the two countries.
“These types of systems will roll out within the next 1-2 years. Before the pandemic, that timeline may have been closer to 3-5 years,” Gallagher said.
The first version of CBDCs may start seeing the light this year, according to Philippe Bekhazi, CEO of stablecoin platform Stablehouse. He said that “government-led CBDC initiatives will begin to materialize as we get further into 2021.”
Monica Singer, the South African Lead for major Ethereum-focused blockchain company Consensys, stated that it will be a “game-changer” when Central Banks introduce CBDCs. “Imagine a world when anyone could have their own e-Wallet … that can hold CBDCs which can be interchangeable with any other coins,” she said.
Singer added that she is “totally passionate” about using this technology to include the unbanked – those who’ve never had the chance to have a bank account or to own any asset to increase their wealth - of which the estimate is 1.7bn people.
“It is an amazing opportunity to give the unbanked the chance to benefit from financial products from not only currencies like stablecoins and CBDCs,” she concluded, “but also tokenized assets that they will be able to acquire in real-time, as these tokens of real-world assets will be readily available and fractional ownership will become the norm.”
Furthermore, with greater emphasis placed on digital payments among the general population, governments worldwide started to explore the use of CBDCs to reach the wider public amid lockdowns for stimulus plans, said Amrit Kumar, President and Chief Scientific Officer at blockchain platform Zilliqa (ZIL).
For instance, there’s Project Helvetia - an experiment between the Bank for International Settlements Innovation Hub Swiss Centre, the Swiss National Bank (SNB), and the financial market infrastructure operator SIX - which already trialed the technological and legal feasibility of transferring digital assets. This is just “a recent example that reflects the promise of the large-scale use of digital assets," Kumar said, and added,
“As a whole, the emphasis on digitalization seen in the past year across multiple aspects of society can only bode well for the future, largely setting the foundations for the widespread use of crypto assets for everyday transactions.”
However, it’s also the fast development of the Chinese digital yuan itself that hastened the discussion and ‘production’ of CBDC’s globally.
“2020 saw growing traction around the use of CBDCs, with the launch of China’s digital yuan further prompting central banks across the globe to accelerate their digital currency initiatives,” said Kumar.
As an example, he gave Singapore, which has been exploring the use of wholesale CBDCs, with the Monetary Authority of Singapore (MAS) finding that the time may have come “to take this from experiment to production. The case for CBDCs is strong, particularly in a time of economic turbulence,” Kumar concluded.
Hastened by the pandemic, central bank digital currency (CBDC) initiatives will roll out in the next couple of years, becoming a "game-changer".
It’s the COVID-19 pandemic which we have to thank for “greatly accelerating the push for digital currencies to replace traditional cash and cross border transaction systems,” said Brian Gallagher, Head of Business Development at blockchain platform Partisia Blockchain. Besides the Chinese-state sponsored digital yuan, we’ve also seen discussions of a digital euro, digital dollar, digital yen, digital ruble, as well as a Saudi and UAE state-sponsored cryptocurrency for cross border trade between the two countries.
“These types of systems will roll out within the next 1-2 years. Before the pandemic, that timeline may have been closer to 3-5 years,” Gallagher said.
The first version of CBDCs may start seeing the light this year, according to Philippe Bekhazi, CEO of stablecoin platform Stablehouse. He said that “government-led CBDC initiatives will begin to materialize as we get further into 2021.”
Monica Singer, the South African Lead for major Ethereum-focused blockchain company Consensys, stated that it will be a “game-changer” when Central Banks introduce CBDCs. “Imagine a world when anyone could have their own e-Wallet … that can hold CBDCs which can be interchangeable with any other coins,” she said.
Singer added that she is “totally passionate” about using this technology to include the unbanked – those who’ve never had the chance to have a bank account or to own any asset to increase their wealth - of which the estimate is 1.7bn people.
“It is an amazing opportunity to give the unbanked the chance to benefit from financial products from not only currencies like stablecoins and CBDCs,” she concluded, “but also tokenized assets that they will be able to acquire in real-time, as these tokens of real-world assets will be readily available and fractional ownership will become the norm.”
Furthermore, with greater emphasis placed on digital payments among the general population, governments worldwide started to explore the use of CBDCs to reach the wider public amid lockdowns for stimulus plans, said Amrit Kumar, President and Chief Scientific Officer at blockchain platform Zilliqa (ZIL).
For instance, there’s Project Helvetia - an experiment between the Bank for International Settlements Innovation Hub Swiss Centre, the Swiss National Bank (SNB), and the financial market infrastructure operator SIX - which already trialed the technological and legal feasibility of transferring digital assets. This is just “a recent example that reflects the promise of the large-scale use of digital assets," Kumar said, and added,
“As a whole, the emphasis on digitalization seen in the past year across multiple aspects of society can only bode well for the future, largely setting the foundations for the widespread use of crypto assets for everyday transactions.”
However, it’s also the fast development of the Chinese digital yuan itself that hastened the discussion and ‘production’ of CBDC’s globally.
“2020 saw growing traction around the use of CBDCs, with the launch of China’s digital yuan further prompting central banks across the globe to accelerate their digital currency initiatives,” said Kumar.
As an example, he gave Singapore, which has been exploring the use of wholesale CBDCs, with the Monetary Authority of Singapore (MAS) finding that the time may have come “to take this from experiment to production. The case for CBDCs is strong, particularly in a time of economic turbulence,” Kumar concluded.
Visa Wants to Work with Exchanges, Wallets on ‘Digital Gold’ Bitcoin
By Tim Alper
January 29, 2021
Visa Wants to Work with Exchanges, Wallets on ‘Digital Gold’ Bitcoin 101
Alfred Kelly. Source: a video screenshot, Youtube, Business Live ME
The CEO of payments giant Visa has stated that the firm wants to “work with wallets and exchanges” on handling crypto, in order to make its own card solutions interoperable with digital tokens – and has called bitcoin (BTC) and other “cryptocurrencies” “digital gold.”
The remarks were made by Visa supremo Alfred Kelly in a earnings call yesterday. During his talk, Kelly spent a significant amount of time discussing crypto. After differentiating a divide between “cryptocurrencies that represent new assets such as bitcoin” and “digital currencies and stablecoins” backed by fiat holdings, he stated,
“We see all cryptocurrencies as digital gold. They are predominantly held as assets that are not used as a form of payment in a significant way at this point. Our strategy here is to work with wallets and exchanges to enable users to purchase these currencies using their Visa credentials or to cash out onto our Visa credential to make fiat purchases.”
The Visa chief appeared to be keen to leave the door open for all crypto projects that show promise, pledging that should “a specific digital currency become a recognized means of exchange, there’s no reason why we cannot add it to our network, which already supports over 160 currencies.”
And Kelly appeared ready to court the custom of stablecoin issuers – as well as digital currency-issuing central banks. He said,
“For ... stablecoins and central bank digital currencies, these are an emerging payments innovation that could have the potential to be used for global commerce, much like any other fiat currency. We think of digital currencies running on public blockchains as additional networks … we see them as part of our network of networks strategy. … We are the clear leader in this space.”
Kelly was also keen to point out that it already has 35 partnership deals in place with what he termed “leading digital currency platforms and wallets,” with name-checks for Crypto, BlockFi, Fold and BitPanda, and was eager to add,
“The next leading network has a fraction of that.”
BTC trades at US 32,677 (08:46 UTC) and is up by 4.6% in a day and 5% in a week. It jumped by 19% in a month and 250% in a year.
By Tim Alper
January 29, 2021
Visa Wants to Work with Exchanges, Wallets on ‘Digital Gold’ Bitcoin 101
Alfred Kelly. Source: a video screenshot, Youtube, Business Live ME
The CEO of payments giant Visa has stated that the firm wants to “work with wallets and exchanges” on handling crypto, in order to make its own card solutions interoperable with digital tokens – and has called bitcoin (BTC) and other “cryptocurrencies” “digital gold.”
The remarks were made by Visa supremo Alfred Kelly in a earnings call yesterday. During his talk, Kelly spent a significant amount of time discussing crypto. After differentiating a divide between “cryptocurrencies that represent new assets such as bitcoin” and “digital currencies and stablecoins” backed by fiat holdings, he stated,
“We see all cryptocurrencies as digital gold. They are predominantly held as assets that are not used as a form of payment in a significant way at this point. Our strategy here is to work with wallets and exchanges to enable users to purchase these currencies using their Visa credentials or to cash out onto our Visa credential to make fiat purchases.”
The Visa chief appeared to be keen to leave the door open for all crypto projects that show promise, pledging that should “a specific digital currency become a recognized means of exchange, there’s no reason why we cannot add it to our network, which already supports over 160 currencies.”
And Kelly appeared ready to court the custom of stablecoin issuers – as well as digital currency-issuing central banks. He said,
“For ... stablecoins and central bank digital currencies, these are an emerging payments innovation that could have the potential to be used for global commerce, much like any other fiat currency. We think of digital currencies running on public blockchains as additional networks … we see them as part of our network of networks strategy. … We are the clear leader in this space.”
Kelly was also keen to point out that it already has 35 partnership deals in place with what he termed “leading digital currency platforms and wallets,” with name-checks for Crypto, BlockFi, Fold and BitPanda, and was eager to add,
“The next leading network has a fraction of that.”
BTC trades at US 32,677 (08:46 UTC) and is up by 4.6% in a day and 5% in a week. It jumped by 19% in a month and 250% in a year.
Binance Pay Launched 'Softly' and Binance Card 'Going Strong' - CEO
Major crypto exchange Binance has "softly, quietly launched Binance Pay" last Friday, currently in beta, said the CEO, discussing several other developing projects as well.
While it's relative hidden now, "if you can find the product, you can try it," joked CEO Changpeng "CZ" Zhao during the virtual Binance Blockchain Week, referring to the quiet launch of Binance Pay.
This is a basket product that the Binance plans to spend "a lot of effort on" this year, said CZ. While there is no announcement, the website's support section states that "Binance Pay is a contactless, borderless and secure cryptocurrency payment technology which allows you to pay and get paid in crypto from your friends and family worldwide."
It currently supports six currencies: binance coin (BNB), binance USD (BUSD), bitcoin (BTC), ethereum (ETH), swipe (SXP), and one fiat, EUR.
"We think that payments is one of the most obvious use cases for crypto," CZ said. However, it's much easier for merchants to accept cash and credit which people commonly use every day than currencies which the large majority of their customers do not use. "This way their business doesn't have to fluctuate with crypto," said CZ.
Meanwhile, users pay in crypto directly, allowing them "to stay completely in crypto," he argued.
Per the website, users can receive or pay up to USD 10,000 (equivalent) or 10 transactions in 24 hours, while funds received in Binance Pay will only be available for transfer to other wallets after 24 hours.
Binance Card, which works on the same 'user pays crypto, merchant receives fiat' premise, is one of the projects in Binance Pay, the CEO stated, while they launched an app-to-app payment prototype as well.
"Binance Card is still going really strong," he said, without providing numbers. Active Binance Card users are "growing really, really quickly ... at double-digit rates." While all European customers can sign up for the card now, more markets are "launching very soon."
The second to last update the CEO mentioned is that Binance launched the easy-to-use Lite mode in their app a while ago, geared towards new users "who may not be super-active traders," CZ said, while users in the countries where it's available can toggle between the Lite and the Pro version.
Lastly, Binance announced the 18th project on Binance Launchpad - SafePal (SFP) - which they said will follow a new Launchpad subscription format, with the recording of user BNB balances starting on February 2. CZ said that the exchange is a minority investor in the project, as it was a Binance Labs incubation project two years ago.
The new subscription format allows holders to commit an amount of BNB towards a token sale, said the exchange, "where their final allocation of the new token is determined by the ratio of their committed BNB against the total committed BNB by all participating users." There is a max cap of token allocation per user.
Major crypto exchange Binance has "softly, quietly launched Binance Pay" last Friday, currently in beta, said the CEO, discussing several other developing projects as well.
While it's relative hidden now, "if you can find the product, you can try it," joked CEO Changpeng "CZ" Zhao during the virtual Binance Blockchain Week, referring to the quiet launch of Binance Pay.
This is a basket product that the Binance plans to spend "a lot of effort on" this year, said CZ. While there is no announcement, the website's support section states that "Binance Pay is a contactless, borderless and secure cryptocurrency payment technology which allows you to pay and get paid in crypto from your friends and family worldwide."
It currently supports six currencies: binance coin (BNB), binance USD (BUSD), bitcoin (BTC), ethereum (ETH), swipe (SXP), and one fiat, EUR.
"We think that payments is one of the most obvious use cases for crypto," CZ said. However, it's much easier for merchants to accept cash and credit which people commonly use every day than currencies which the large majority of their customers do not use. "This way their business doesn't have to fluctuate with crypto," said CZ.
Meanwhile, users pay in crypto directly, allowing them "to stay completely in crypto," he argued.
Per the website, users can receive or pay up to USD 10,000 (equivalent) or 10 transactions in 24 hours, while funds received in Binance Pay will only be available for transfer to other wallets after 24 hours.
Binance Card, which works on the same 'user pays crypto, merchant receives fiat' premise, is one of the projects in Binance Pay, the CEO stated, while they launched an app-to-app payment prototype as well.
"Binance Card is still going really strong," he said, without providing numbers. Active Binance Card users are "growing really, really quickly ... at double-digit rates." While all European customers can sign up for the card now, more markets are "launching very soon."
The second to last update the CEO mentioned is that Binance launched the easy-to-use Lite mode in their app a while ago, geared towards new users "who may not be super-active traders," CZ said, while users in the countries where it's available can toggle between the Lite and the Pro version.
Lastly, Binance announced the 18th project on Binance Launchpad - SafePal (SFP) - which they said will follow a new Launchpad subscription format, with the recording of user BNB balances starting on February 2. CZ said that the exchange is a minority investor in the project, as it was a Binance Labs incubation project two years ago.
The new subscription format allows holders to commit an amount of BNB towards a token sale, said the exchange, "where their final allocation of the new token is determined by the ratio of their committed BNB against the total committed BNB by all participating users." There is a max cap of token allocation per user.
Can't Beat Crypto Regulators? Educate Them
Crypto industry players urge each other to focus more on educating regulators to avoid overregulation and help authorities to foster financial innovation.
According to Dave Hodgson, Chief Investment Officer at NEM Group and Managing Director at NEM Ventures, “one primary obstacle that we are facing going into 2021 is regulations that remain inconsistent and often unclear across national boundaries.”
However, some major companies are working with regulators in order to help them shape a more friendly environment, hopefully, not only for themselves.
For example, the CEO of major crypto exchange Binance, Changpeng Zhao, hopes for more regulatory clarity this year and expects to see "more positive results" of their efforts of working with regulators and helping them make better tools to improve compliance.
“The natural evolution of financial markets requires that regulation must be imposed to protect those that don't really understand the risks,” argued Monica Singer, the South African Lead for Ethereum-focused major blockchain company ConsenSys. As the regulators understand the products and the risks, they will be able to issue regulations and taxes where it’s applicable, she said, adding that taxes will “have to be imposed,” given that any transaction in the production of income should contribute to the government finances – as is the definition of taxes.
Bo Oney, Chief of Compliance of Bitcoin ATM operator Coinsource, stressed that regulation “should be crafted to foster continued financial innovation, without damaging the value accrued by consumers or investors. He hopes to see “a closer negotiation between regulatory authorities and virtual assets service providers in the near future.”
Meanwhile, Matthew Gould, Unstoppable Domains founder and CEO, told that it seems like “there's going to be another attempt to over regulate crypto” this year, but that “hopefully the crypto industry can come together to educate lawmakers and ensure innovation isn't halted from overburdensome regulation on our young industry.”
"Industry leaders will have to be proactive in educating policymakers on the ins and outs of these technologies to ensure that the regulations introduced help the space continue growing," added Erick Pinos, Americas Ecosystem Lead at Ontology (ONT).
However, while regulators are still learning, the industry might see some old-fashioned attempts to regulate this nascent space that targets the foundations of the traditional financial system.
'A flurry of challenges'
Philippe Bekhazi, CEO of stablecoin platform Stablehouse estimates that "we will see a flurry of regulatory challenges in both the US and EU markets, particularly in relation to AML/KYC compliance.”
“Overly onerous regulations will choke the free markets, and prevent the self-reporting that has ultimately bolstered the likes of Tether. Market corrections already present a high enough barrier, and any additional hurdles will discourage competition in the free markets,” Bekhazi warned.
Meanwhile, Anthony Lauriola, Chief Operating Officer at blockchain portfolio company Dan Holdings, which is currently in the process of expanding its scope globally and working to refine its know-your-customer (KYC) requirements, estimated that enhanced regulation is likely coming, especially in the US, while more North American cities and local governments may adopt payment of taxes in crypto. Furthermore, the rest of the world will “actually take a more relaxed role to regulation which might foster more adoption in emerging markets for crypto than more established ones,” he said.
Crypto industry players urge each other to focus more on educating regulators to avoid overregulation and help authorities to foster financial innovation.
According to Dave Hodgson, Chief Investment Officer at NEM Group and Managing Director at NEM Ventures, “one primary obstacle that we are facing going into 2021 is regulations that remain inconsistent and often unclear across national boundaries.”
However, some major companies are working with regulators in order to help them shape a more friendly environment, hopefully, not only for themselves.
For example, the CEO of major crypto exchange Binance, Changpeng Zhao, hopes for more regulatory clarity this year and expects to see "more positive results" of their efforts of working with regulators and helping them make better tools to improve compliance.
“The natural evolution of financial markets requires that regulation must be imposed to protect those that don't really understand the risks,” argued Monica Singer, the South African Lead for Ethereum-focused major blockchain company ConsenSys. As the regulators understand the products and the risks, they will be able to issue regulations and taxes where it’s applicable, she said, adding that taxes will “have to be imposed,” given that any transaction in the production of income should contribute to the government finances – as is the definition of taxes.
Bo Oney, Chief of Compliance of Bitcoin ATM operator Coinsource, stressed that regulation “should be crafted to foster continued financial innovation, without damaging the value accrued by consumers or investors. He hopes to see “a closer negotiation between regulatory authorities and virtual assets service providers in the near future.”
Meanwhile, Matthew Gould, Unstoppable Domains founder and CEO, told that it seems like “there's going to be another attempt to over regulate crypto” this year, but that “hopefully the crypto industry can come together to educate lawmakers and ensure innovation isn't halted from overburdensome regulation on our young industry.”
"Industry leaders will have to be proactive in educating policymakers on the ins and outs of these technologies to ensure that the regulations introduced help the space continue growing," added Erick Pinos, Americas Ecosystem Lead at Ontology (ONT).
However, while regulators are still learning, the industry might see some old-fashioned attempts to regulate this nascent space that targets the foundations of the traditional financial system.
'A flurry of challenges'
Philippe Bekhazi, CEO of stablecoin platform Stablehouse estimates that "we will see a flurry of regulatory challenges in both the US and EU markets, particularly in relation to AML/KYC compliance.”
“Overly onerous regulations will choke the free markets, and prevent the self-reporting that has ultimately bolstered the likes of Tether. Market corrections already present a high enough barrier, and any additional hurdles will discourage competition in the free markets,” Bekhazi warned.
Meanwhile, Anthony Lauriola, Chief Operating Officer at blockchain portfolio company Dan Holdings, which is currently in the process of expanding its scope globally and working to refine its know-your-customer (KYC) requirements, estimated that enhanced regulation is likely coming, especially in the US, while more North American cities and local governments may adopt payment of taxes in crypto. Furthermore, the rest of the world will “actually take a more relaxed role to regulation which might foster more adoption in emerging markets for crypto than more established ones,” he said.
Crypto Traders Might Find Familiar Playbook In GameStop Hearing Today
The GameStop (GME) saga is set to take another twist as a trader prepares to tell the American House of Representatives that social media has allowed retail traders to leveling the playing field with their bitter Wall Street rivals, a strategy that is also coming good for thousands of crypto investors in the locked-down world of the coronavirus pandemic.
In a virtual hearing of the House’s Financial Committee entitled Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide, a number of the saga’s key players will make their voices heard, including Reddit’s CEO and co-founder Steve Huffman and the under-fire Robinhood CEO Vlad Tenev, whose firm is also suspected of hoarding a 28% share in the runaway dogecoin (DOGE) token.
Social media-related activities have also seen the prices of tokens like the meme-themed DOGE token skyrocket, as some investors attempt to turn the tides of volatility in their favor.
Wall Street managers have accused r/WallStreetBets, a Reddit community, or "subreddit," and others of what amounts to “market manipulation.”
Meltem Demirors, Chief Strategy Officer at CoinShares, appeared set to grab the popcorn in anticipation of the hearing, calling the testimony “truly, a fine work of performance art,” and tweeting,
“Tomorrow’s hearing is going to be a circus and I, for one, am going to be glued to my screen.”
So much of a circus, in fact, that it may end up becoming a scene in the forthcoming WallStreetBets-themed movie.
Indeed, prepared statements show little in the way of remorse, indicating that many of the key players are unbent going into the hearing – and still have Wall Street locked in their crosshairs.
Instigator-in-chief Roaring Kitty (real name Keith Gill) is also set to testify and in prepared testimony, he spoke out in defense of the trade, stating that the committee would be better off investigating Wall Street’s “potentially manipulative shorting practices.”
He also defended his own bullish and outspoken social media activities, claiming,
“The idea that I used social media to promote GameStop stock to unwitting investors is preposterous. Hedge funds and other Wall Street firms have teams of analysts working together to compile research and critique investment ideas, while individual investors have not had that advantage.”
Gill added,
“Social media platforms like YouTube, Twitter and WallStreetBets on Reddit are leveling the playing field. And in a year of quarantines and COVID, engaging with other investors on social media was a safe way to socialize. We had fun.”
Sounds similar to what hoards of crypto traders are doing every day, or more or less 24/7.
Huffman, meanwhile, jumped to his social media platform’s defense in his own testimony – and that of its users. The WallStreetBets subreddit has been one of the most active communities on Reddit for months, and was the epicenter of the unprecedented pump on GameStop shares – a move that shook Wall Street to the core.
The Reddit supremo opined that “it is important to protect online communities like WallStreetBets.”
He added,
“WallStreetBets may look sophomoric or chaotic from the outside, but the fact that we are here today means they’ve managed to raise important issues about fairness and opportunity in our financial system. I’m proud they used Reddit to do so.”
The subreddit has now over 9.1m members. It had less than 3m members at the end of January.
And other witnesses have already had their two cents on the matter prior to the hearing – which commences at midday in Washington DC (17:00 UTC).
Jennifer Schulp, the Director of Financial Regulation Studies at the Cato Institute, a public policy think tank based in the American capital, is also set to testify on the matter. And she indicated that it was far too late to attempt to put the genie back into the bottle – meaning that WallStreetBets may not be the last time retail investors make a social media-driven stock market move of the GameStop pump’s scale.
The GameStop (GME) saga is set to take another twist as a trader prepares to tell the American House of Representatives that social media has allowed retail traders to leveling the playing field with their bitter Wall Street rivals, a strategy that is also coming good for thousands of crypto investors in the locked-down world of the coronavirus pandemic.
In a virtual hearing of the House’s Financial Committee entitled Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide, a number of the saga’s key players will make their voices heard, including Reddit’s CEO and co-founder Steve Huffman and the under-fire Robinhood CEO Vlad Tenev, whose firm is also suspected of hoarding a 28% share in the runaway dogecoin (DOGE) token.
Social media-related activities have also seen the prices of tokens like the meme-themed DOGE token skyrocket, as some investors attempt to turn the tides of volatility in their favor.
Wall Street managers have accused r/WallStreetBets, a Reddit community, or "subreddit," and others of what amounts to “market manipulation.”
Meltem Demirors, Chief Strategy Officer at CoinShares, appeared set to grab the popcorn in anticipation of the hearing, calling the testimony “truly, a fine work of performance art,” and tweeting,
“Tomorrow’s hearing is going to be a circus and I, for one, am going to be glued to my screen.”
So much of a circus, in fact, that it may end up becoming a scene in the forthcoming WallStreetBets-themed movie.
Indeed, prepared statements show little in the way of remorse, indicating that many of the key players are unbent going into the hearing – and still have Wall Street locked in their crosshairs.
Instigator-in-chief Roaring Kitty (real name Keith Gill) is also set to testify and in prepared testimony, he spoke out in defense of the trade, stating that the committee would be better off investigating Wall Street’s “potentially manipulative shorting practices.”
He also defended his own bullish and outspoken social media activities, claiming,
“The idea that I used social media to promote GameStop stock to unwitting investors is preposterous. Hedge funds and other Wall Street firms have teams of analysts working together to compile research and critique investment ideas, while individual investors have not had that advantage.”
Gill added,
“Social media platforms like YouTube, Twitter and WallStreetBets on Reddit are leveling the playing field. And in a year of quarantines and COVID, engaging with other investors on social media was a safe way to socialize. We had fun.”
Sounds similar to what hoards of crypto traders are doing every day, or more or less 24/7.
Huffman, meanwhile, jumped to his social media platform’s defense in his own testimony – and that of its users. The WallStreetBets subreddit has been one of the most active communities on Reddit for months, and was the epicenter of the unprecedented pump on GameStop shares – a move that shook Wall Street to the core.
The Reddit supremo opined that “it is important to protect online communities like WallStreetBets.”
He added,
“WallStreetBets may look sophomoric or chaotic from the outside, but the fact that we are here today means they’ve managed to raise important issues about fairness and opportunity in our financial system. I’m proud they used Reddit to do so.”
The subreddit has now over 9.1m members. It had less than 3m members at the end of January.
And other witnesses have already had their two cents on the matter prior to the hearing – which commences at midday in Washington DC (17:00 UTC).
Jennifer Schulp, the Director of Financial Regulation Studies at the Cato Institute, a public policy think tank based in the American capital, is also set to testify on the matter. And she indicated that it was far too late to attempt to put the genie back into the bottle – meaning that WallStreetBets may not be the last time retail investors make a social media-driven stock market move of the GameStop pump’s scale.
Ethereum Hits USD 2,000, Outshined by Bitcoin
The two largest cryptoassets, bitcoin (BTC) and ethereum (ETH), are on their journey of discovering new all-time highs. (Updated on February 1, 06:13 UTC, with the latest market data and comments from Elon Musk.)
Despite its recent high fees-caused problems that helped competitors grow, ETH surpassed USD 2,000 today for the first time, while BTC, which is still a USD 1trn asset, rallied above USD 56,000.
On Sunday (06:08 UTC), ETH trades at USD 1,951, correcting lower from its new all-time high of USD 2,043. The price is down by 3.8% in a day, trimming its weekly gains to less than 8%.
High ETH fees are dampening the rally as DeFi users are migrating towards competing, more centralized chains such as Binance Smart Chain, while competitors are using every opportunity to criticize ETH.
ETH sent to the ETH 2.0 deposit contract, where it's being locked for many months, surpassed ETH 3m (USD 5.9bn).
Grayscale Ethereum Trust received ETH 222,958 (USD 435m) since its reopening in February.
Meanwhile, at the same time, BTC is trading at USD 56,789, after it hit USD 57,851 yesterday. The price is up by 1.5% in a day and 21% in a week.
The prices of the two largest cryptoassets corrected after Tesla's Elon Musk said that "BTC & ETH do seem high." However, both BTC and ETH have rebounded since then with bitcoin showing more strength.
However, in April 2020, Musk also said that "Tesla stock price is too high."
Since then, the price of one of the hottest stocks went up by 458%. In the same period of time, BTC rallied by 572%, while ETH skyrocketed by 892%.
"I was expecting [BTC] to touch [the USD 50,000] level so that the media could get some headlines and then pull back somewhat considering the relentless one-way move we've seen the past 90 days but it's so far holding up well above USD 50,000 so there is very solid demand holding it up. Still expect strength in the medium term but don't think it will be without some volatility in both directions," Jeffery Wang, Head of America’s at the Amber Group, said in an emailed comment.
Also, according to Philip Gradwell, Chief Economist at Chainalysis, low BTC inflows to exchanges and high trade intensity when the price is rising suggests that bitcoin available to buy is falling while demand is rising, which indicates prices should rise.
"However ... there may be an increase in trading off of exchanges, for example via Over The Counter (OTC) brokers. So exchanges may not be giving a full picture of market conditions," he wrote in his newsletter, adding that large investors appear to have reduced their holdings by BTC 192,000 in the week of 8 February.
"It feels to me that we are in a ‘wait and see’ moment," Gradwell said, noting that while large investors seem to be cautious now, this is being balanced by retail demand on exchanges, which often follows the momentum of the market.
However, one of the most bullish non-crypto companies, US-based software developer MicroStrategy, confirmed yesterday that they were able to borrow over USD 1bn "for free" in order to buy more BTC, showing how strong demand from large investors is.
"The trend is clear: we are in a phase where some people are getting hilariously rich. The last phase of this was late 2017, but the realized gain on exchanges then was half of what it is now. And the gains being made now are equal to half of all the gains that have ever been made," Gradwell concluded, adding that if all the bitcoin ever deposited on exchanges was bought immediately and then only sold when it was withdrawn, the profit from that trade so far would be USD 78bn.
The two largest cryptoassets, bitcoin (BTC) and ethereum (ETH), are on their journey of discovering new all-time highs. (Updated on February 1, 06:13 UTC, with the latest market data and comments from Elon Musk.)
Despite its recent high fees-caused problems that helped competitors grow, ETH surpassed USD 2,000 today for the first time, while BTC, which is still a USD 1trn asset, rallied above USD 56,000.
On Sunday (06:08 UTC), ETH trades at USD 1,951, correcting lower from its new all-time high of USD 2,043. The price is down by 3.8% in a day, trimming its weekly gains to less than 8%.
High ETH fees are dampening the rally as DeFi users are migrating towards competing, more centralized chains such as Binance Smart Chain, while competitors are using every opportunity to criticize ETH.
ETH sent to the ETH 2.0 deposit contract, where it's being locked for many months, surpassed ETH 3m (USD 5.9bn).
Grayscale Ethereum Trust received ETH 222,958 (USD 435m) since its reopening in February.
Meanwhile, at the same time, BTC is trading at USD 56,789, after it hit USD 57,851 yesterday. The price is up by 1.5% in a day and 21% in a week.
The prices of the two largest cryptoassets corrected after Tesla's Elon Musk said that "BTC & ETH do seem high." However, both BTC and ETH have rebounded since then with bitcoin showing more strength.
However, in April 2020, Musk also said that "Tesla stock price is too high."
Since then, the price of one of the hottest stocks went up by 458%. In the same period of time, BTC rallied by 572%, while ETH skyrocketed by 892%.
"I was expecting [BTC] to touch [the USD 50,000] level so that the media could get some headlines and then pull back somewhat considering the relentless one-way move we've seen the past 90 days but it's so far holding up well above USD 50,000 so there is very solid demand holding it up. Still expect strength in the medium term but don't think it will be without some volatility in both directions," Jeffery Wang, Head of America’s at the Amber Group, said in an emailed comment.
Also, according to Philip Gradwell, Chief Economist at Chainalysis, low BTC inflows to exchanges and high trade intensity when the price is rising suggests that bitcoin available to buy is falling while demand is rising, which indicates prices should rise.
"However ... there may be an increase in trading off of exchanges, for example via Over The Counter (OTC) brokers. So exchanges may not be giving a full picture of market conditions," he wrote in his newsletter, adding that large investors appear to have reduced their holdings by BTC 192,000 in the week of 8 February.
"It feels to me that we are in a ‘wait and see’ moment," Gradwell said, noting that while large investors seem to be cautious now, this is being balanced by retail demand on exchanges, which often follows the momentum of the market.
However, one of the most bullish non-crypto companies, US-based software developer MicroStrategy, confirmed yesterday that they were able to borrow over USD 1bn "for free" in order to buy more BTC, showing how strong demand from large investors is.
"The trend is clear: we are in a phase where some people are getting hilariously rich. The last phase of this was late 2017, but the realized gain on exchanges then was half of what it is now. And the gains being made now are equal to half of all the gains that have ever been made," Gradwell concluded, adding that if all the bitcoin ever deposited on exchanges was bought immediately and then only sold when it was withdrawn, the profit from that trade so far would be USD 78bn.
MIT, Jack Dorsey & More Pour Resources into Bitcoin Development Efforts
Forward-thinking innovators are looking for new ways to power Bitcoin (BTC) development, with one of the world’s biggest tech universities, IT CEOs and entrepreneurial pop stars all turning their attention to the betterment of the Bitcoin network.
In the latest development, the Massachusetts Institute of Technology (MIT) has waded in via its MIT Media Lab-run Digital Currency Initiative (DCI).
The DCI has announced that as part of its new Bitcoin Software and Security Effort project, it will embark on a “four-year research and development program” to “harden the Bitcoin network and steward the industry's commitment to funding open-source software.
The DCI stated that it would be working with “industry leaders” on its initiative, which will see its project group work on Bitcoin Core development by “attracting domain experts in network and operating system security, compilers, programming languages and more to join the effort.”
The MIT group stated that it had already raised USD 4m worth of funding to help its cause, and hoped to raise double this amount over the long-term, with contributions coming from a number of leading BTC proponents and industry players – such as Twitter and Square chief Jack Dorsey, Fidelity Digital Assets, CoinShares, Cameron and Tyler Winklevoss of the Gemini group of crypto companies and perennial BTC bull Michael Saylor, the head of MicroStrategy and an MIT graduate.
The DCI project will see the collective “move from three to eight” senior Bitcoin developers and research professionals, bolster the system against software-based attack threats and inflation risks, as well as build up “long-term defenses against layer-1 Bitcoin Core bugs.”
Saylor, in typically pro-BTC mood, stated,
“Bitcoin is the most important innovation since the advent of the internet.”
But the MIT project is not the only big business-powered initiative aiming to shore up Bitcoin against future-related risks and network issues. Earlier this month, Dorsey and rap superstar Jay-Z announced that they would be stumping up BTC 500 (USD 23m) to the ₿trust, another Bitcoin development drive that will initially focus on bolstering teams in Africa and India.
Dorsey has also launched his own development initiative through Square’s Square Crypto unit, which is seeking to improve the Bitcoin user experience for ordinary participants.
Earlier this week, the Twitter boss splashed out a further BTC 1 contribution to the Brink initiative, a donation-funded Bitcoin network R&D drive, and a frequent recipient of Square Crypto funding. The Human Rights Foundation, Kraken and Gemini are also among supporters of the Brink drive.
Forward-thinking innovators are looking for new ways to power Bitcoin (BTC) development, with one of the world’s biggest tech universities, IT CEOs and entrepreneurial pop stars all turning their attention to the betterment of the Bitcoin network.
In the latest development, the Massachusetts Institute of Technology (MIT) has waded in via its MIT Media Lab-run Digital Currency Initiative (DCI).
The DCI has announced that as part of its new Bitcoin Software and Security Effort project, it will embark on a “four-year research and development program” to “harden the Bitcoin network and steward the industry's commitment to funding open-source software.
The DCI stated that it would be working with “industry leaders” on its initiative, which will see its project group work on Bitcoin Core development by “attracting domain experts in network and operating system security, compilers, programming languages and more to join the effort.”
The MIT group stated that it had already raised USD 4m worth of funding to help its cause, and hoped to raise double this amount over the long-term, with contributions coming from a number of leading BTC proponents and industry players – such as Twitter and Square chief Jack Dorsey, Fidelity Digital Assets, CoinShares, Cameron and Tyler Winklevoss of the Gemini group of crypto companies and perennial BTC bull Michael Saylor, the head of MicroStrategy and an MIT graduate.
The DCI project will see the collective “move from three to eight” senior Bitcoin developers and research professionals, bolster the system against software-based attack threats and inflation risks, as well as build up “long-term defenses against layer-1 Bitcoin Core bugs.”
Saylor, in typically pro-BTC mood, stated,
“Bitcoin is the most important innovation since the advent of the internet.”
But the MIT project is not the only big business-powered initiative aiming to shore up Bitcoin against future-related risks and network issues. Earlier this month, Dorsey and rap superstar Jay-Z announced that they would be stumping up BTC 500 (USD 23m) to the ₿trust, another Bitcoin development drive that will initially focus on bolstering teams in Africa and India.
Dorsey has also launched his own development initiative through Square’s Square Crypto unit, which is seeking to improve the Bitcoin user experience for ordinary participants.
Earlier this week, the Twitter boss splashed out a further BTC 1 contribution to the Brink initiative, a donation-funded Bitcoin network R&D drive, and a frequent recipient of Square Crypto funding. The Human Rights Foundation, Kraken and Gemini are also among supporters of the Brink drive.
MoneyGram Slapped With Lawsuit Over Ripple, XRP Partnership
The money transfer firm MoneyGram is facing a class action lawsuit claiming that the company made false and/or misleading statements about its partnership with American blockchain company Ripple and the legal status of the XRP token.
Per a press release by Rosen Law Firm, the suit has already been filed, and on behalf of purchasers of the securities of MoneyGram between June 17, 2019 and February 22, 2021.
According to the lawsuit, in this period, defendants made false and/or misleading statements and/or failed to disclose that:
"XRP, the cryptocurrency that MoneyGram was utilizing as a part of its Ripple partnership, was viewed as an unregistered and therefore unlawful security by the US Securities and Exchange Commission (SEC);
in the event that the SEC decided to enforce the securities laws against Ripple, MoneyGram would be likely to lose the lucrative stream of market development fees that was critical to its financial results throughout the Class Period;
as a result, defendants’ public statements were materially false and/or misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages."
The law firm claims that those who purchased "MoneyGram securities during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement."
A lead plaintiff is yet to be chosen.
MoneyGram and Ripple became partners, after the latter made a USD 30m initial investment in MoneyGram equity in June 2019. However, Ripple found itself in a long battle with the SEC over XRP, as the regulator claims that XRP is an unregistered security, which Ripple disputes.
MoneyGram recently claimed that its support for Ripple stayed in place, but still announced that it would suspend the receipt of "market development fees." Alex Holmes, the MoneyGram CEO, said at the time that they are "definitely supportive of Ripple's efforts, but at the same time, we have to do what is right for the organization."
In 2020, MoneyGram received USD 38m in net market development fees from Ripple in 2020, representing about 15% of the company’s adjusted earnings before interest, taxes, depreciation, and amortization. The company said it also faced logistical challenges in using the platform, as well as legal and reputational risks, following the lawsuit against Ripple.
The money transfer firm MoneyGram is facing a class action lawsuit claiming that the company made false and/or misleading statements about its partnership with American blockchain company Ripple and the legal status of the XRP token.
Per a press release by Rosen Law Firm, the suit has already been filed, and on behalf of purchasers of the securities of MoneyGram between June 17, 2019 and February 22, 2021.
According to the lawsuit, in this period, defendants made false and/or misleading statements and/or failed to disclose that:
"XRP, the cryptocurrency that MoneyGram was utilizing as a part of its Ripple partnership, was viewed as an unregistered and therefore unlawful security by the US Securities and Exchange Commission (SEC);
in the event that the SEC decided to enforce the securities laws against Ripple, MoneyGram would be likely to lose the lucrative stream of market development fees that was critical to its financial results throughout the Class Period;
as a result, defendants’ public statements were materially false and/or misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages."
The law firm claims that those who purchased "MoneyGram securities during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement."
A lead plaintiff is yet to be chosen.
MoneyGram and Ripple became partners, after the latter made a USD 30m initial investment in MoneyGram equity in June 2019. However, Ripple found itself in a long battle with the SEC over XRP, as the regulator claims that XRP is an unregistered security, which Ripple disputes.
MoneyGram recently claimed that its support for Ripple stayed in place, but still announced that it would suspend the receipt of "market development fees." Alex Holmes, the MoneyGram CEO, said at the time that they are "definitely supportive of Ripple's efforts, but at the same time, we have to do what is right for the organization."
In 2020, MoneyGram received USD 38m in net market development fees from Ripple in 2020, representing about 15% of the company’s adjusted earnings before interest, taxes, depreciation, and amortization. The company said it also faced logistical challenges in using the platform, as well as legal and reputational risks, following the lawsuit against Ripple.
DeFi On Bitcoin To Grow In The Shadow Of Ethereum
Decentralized finance (DeFi) is big and getting bigger, having accounted for only USD 1bn in total value locked (TVL) in July 2020 and now accounting for around USD 40bn. However, while almost everyone tends to treat the sector as a single, rapidly growing bloc, it’s actually composed of a number of sub-sectors that are respectively growing at varying rates.
One of these sub-sectors is DeFi on Bitcoin (BTC). Featuring platforms and products built on the Bitcoin blockchain, it remains small compared to the Ethereum (ETH)-based DeFi ecosystem, yet it’s starting to gain more attention.
Industry players speaking estimate it will remain a niche area within the overall DeFi landscape, with BTC mostly being moved to Ethereum-based DeFi rather than the other way around.
According to DeFiPrime’s latest figures, the Bitcoin blockchain accounts for 26 — or approx. 10.5% — of the 248 DeFi projects or platforms it currently lists.
This seems like a fairly respectable (if modest) proportion, yet if you look at total value locked in, you begin to realise that DeFi on Bitcoin is pretty miniscule.
For Ethereum-based DeFi, the TVL is at around USD 40bn, the top ten platforms all enjoying at least USD 1bn in TVL (according to DeFi Pulse). If you look at some of the leading Bitcoin DeFi projects, you realize that DeFi on Bitcoin doesn’t really come close.
He added that the Lightning Network — which is also technically DeFi — has a TVL of around USD 55m, according to DeFi Pulse. As such, he concluded, “overall, the DeFi ecosystem in BTC is small at the moment.”
Even platforms within the Bitcoin DeFi sub-sector agree with this assessment.
“As far as I know, the DeFi ecosystem on Bitcoin is very limited, since Bitcoin is not a smart contract platform like Ethereum or Tezos. Decentralized exchanges (DEX) based on Atomic Swaps (such as Atomex) are the most common applications on this topic related with Bitcoin,” said Igor Matcak, Atomex’s co-founder and core developer.
Likewise, a contributor to decentralized exchange Bisq (who wishes to remain anonymous) also acknowledged that Bitcoin-based DeFi is small, even if he takes issue with the narrow definition of DeFi.
“I've heard Hodl Hodl a peer-to-peer BTC trading platform and another project called Sovryn do lending with Bitcoin, but I'm not sure either of these projects serve a substantial base of users at the moment. So maybe the space is in an earlier stage of development on the Bitcoin side,” he told
Decentralized finance (DeFi) is big and getting bigger, having accounted for only USD 1bn in total value locked (TVL) in July 2020 and now accounting for around USD 40bn. However, while almost everyone tends to treat the sector as a single, rapidly growing bloc, it’s actually composed of a number of sub-sectors that are respectively growing at varying rates.
One of these sub-sectors is DeFi on Bitcoin (BTC). Featuring platforms and products built on the Bitcoin blockchain, it remains small compared to the Ethereum (ETH)-based DeFi ecosystem, yet it’s starting to gain more attention.
Industry players speaking estimate it will remain a niche area within the overall DeFi landscape, with BTC mostly being moved to Ethereum-based DeFi rather than the other way around.
According to DeFiPrime’s latest figures, the Bitcoin blockchain accounts for 26 — or approx. 10.5% — of the 248 DeFi projects or platforms it currently lists.
This seems like a fairly respectable (if modest) proportion, yet if you look at total value locked in, you begin to realise that DeFi on Bitcoin is pretty miniscule.
For Ethereum-based DeFi, the TVL is at around USD 40bn, the top ten platforms all enjoying at least USD 1bn in TVL (according to DeFi Pulse). If you look at some of the leading Bitcoin DeFi projects, you realize that DeFi on Bitcoin doesn’t really come close.
He added that the Lightning Network — which is also technically DeFi — has a TVL of around USD 55m, according to DeFi Pulse. As such, he concluded, “overall, the DeFi ecosystem in BTC is small at the moment.”
Even platforms within the Bitcoin DeFi sub-sector agree with this assessment.
“As far as I know, the DeFi ecosystem on Bitcoin is very limited, since Bitcoin is not a smart contract platform like Ethereum or Tezos. Decentralized exchanges (DEX) based on Atomic Swaps (such as Atomex) are the most common applications on this topic related with Bitcoin,” said Igor Matcak, Atomex’s co-founder and core developer.
Likewise, a contributor to decentralized exchange Bisq (who wishes to remain anonymous) also acknowledged that Bitcoin-based DeFi is small, even if he takes issue with the narrow definition of DeFi.
“I've heard Hodl Hodl a peer-to-peer BTC trading platform and another project called Sovryn do lending with Bitcoin, but I'm not sure either of these projects serve a substantial base of users at the moment. So maybe the space is in an earlier stage of development on the Bitcoin side,” he told
