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Wyoming Eyes Creation of Blockchain-Friendly Bank to Lure Bitcoin Startups.

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With regulations being one of the main reasons why traditional commercial banks give bitcoin a wide berth, state senators and representatives in Wyoming are eyeing a legislative fix to the problem.

Wyoming Blockchain Group Mulls Bitcoin-Friendly Bank

Legislators in the “Equality State” are currently considering drafting legislation that would allow the creation of a cryptocurrency bank to serve the needs of the digital asset and blockchain firms in the state. During a recent blockchain task force meeting, stakeholders discussed draft legislation that would see “special-purpose depository institutions” receive regulatory safe harbor. The blockchain task force is made up of state senators and representatives, as well as technical appointees including blockchain advocate and Wall Street veteran Caitlin Long.

 

Such a crypto bank would make it easy for cryptocurrency and blockchain firms to operate in the state, as they are currently shunned by traditional financial institutions.

“If a bank somehow realizes they’re dealing with crypto or blockchain currency in any way, a person’s accounts can be shut down immediately. The way I see it, that’s banks being discriminatory toward certain businesses,” Wyoming state legislator and the co-chairperson of the blockchain committee, Tyler Lindholm, told Star Tribune in an interview.

Bridge to the Old World

In essence, the task of the crypto-supporting bank would be facilitating the transactions and storage of both digital assets and traditional currency for cryptocurrency firms, allowing them to engage in a world where fiat currencies still rule and banks are hesitant to service bitcoin businesses.

The cryptocurrency depository institution would, however, not be a bank in the traditional sense of the word since it would not have the mandate to give out loans. And while traditional banks operate on a fractional-reserve basis, Wyoming’s crypto bank will be required to ensure that it maintains a cryptocurrency-to-liquid-funds ratio of 100%, essentially making it a “money warehouse” or a “transfer institution.”

Additionally, any unexpected losses made by the crypto bank would not be covered by the U.S. Federal Deposit Insurance Corporation. Per the draft legislation, the crypto bank would fall under the regulatory authority of Wyoming’s Division of Banking.

Membership Standards

Only established businesses will be allowed to become members of the bank with $5,000 being the minimum that will be allowed for storage with the bank. The blockchain bank will not be state-owned but will be in the hands of members who will be voted on by a board composed of industry professionals.

The state of Wyoming has generally had a progressive stance with regards to blockchain technology and cryptocurrencies. As CCN reported in March, the Equality State passed the HB-70 Utility ICO bill which not only offered a definition for utility tokens but also exempted them from securities laws. Wyoming’s state legislature also earlier this year enacted a law which exempts cryptocurrency miners and blockchain startups from paying property tax.

https://www.ccn.com/wyoming-eyes-creation-of-blockchain-friendly-bank-to-lure-bitcoin-startups/

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Did Ethereum Bottom Out at $170? Worst Part of ETH Drop May be Over.

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On Sept. 12, Ethereum (ETH) dipped below the $170 mark, dropping to $166 to hit its lowest point of the year.

Since then, within a 30-day period, ETH has shown promising recovery in its volume and momentum, rebounding from $166 to $230. Last week, on Sept. 23, the Ethereum price achieved $255.

Worst Part of the Drop is Over

The unexpectedly rapid growth of the initial coin offering (ICO) market in mid-2017 led many analysts to speculate that the price drop of ETH was largely triggered by the sell-off of Ethereum holdings by blockchain projects that have raised millions of dollars through public token sales.

Diar, a cryptocurrency research group, revealed in its weekly report that ICOs still hold more than 38 percent of the amount raised in their token sales. At the time, based on the findings of Diar, analysts speculated that if ICOs decide to liquidate their remaining ETH holdings, the price of Ethereum could decline further from its low suppot level.

“There is a big misconception that ICO companies have liquidated most of their ETH holdings. On average, all of these projects have moved or liquidated 62 percent of the amount that they initially raised. In other words, they are still holding 38 percent of the initially raised amounts. This, in turn, creates ETH selling pressures, which are unlikely to go away any time soon,” Diar chief editor Larry Cermak said.

However, on October 1, BitMEX Research, a subsidiary of major cryptocurrency exchange BitMEX, released a study entitled “Ethereum holdings in the ICO treasury accounts,” listing the holdings of ICOs and the estimated balance sheet of major blockchain projects.

The paper of BitMEX Research emphasized that most ICOs liquidated their holdings when the price of ETH was still at its high point to fund development and operations. Hence, the recent fall in the price of ETH cannot be solely attributed to the speculated sell-off of ETH by blockchain projects.

“We conclude that the ICO treasury accounts have a much lower level of exposure to the price of Ethereum than many may have thought,” the BitMEX team wrote. Quite what this means for the Ethereum price going forwards is unclear, however we believe we have shown the ‘panic sell’ thesis is either false or will only occur to a lesser extent than some expect.”

Narrative Was Wrong

From April to September, the price of ETH dropped from $780 to $200, by 74 percent. In the same period, the price of Ripple (XRP) declined from $1 to $0.25, by more than 75 percent. In mid-September, XRP initiated an impressive corrective rally and recorded a two-fold increase in its value.

ETH also initiated a corrective rally as the market demonstrated oversold conditions, but the recovery was not as strong as that of Ripple.

Even though ETH and XRP experienced virtually the same downtrend in the past five months, the decline in the price of ETH was attributed to the sell-off of ICOs while the downtrend of XRP was attributed to a normal market movement.

It is entirely possible that both ETH and XRP declined by around 75 percent simply because the market experienced a major correction and that the downtrend of ETH was not caused by the sell-off of ICOs.

https://www.ccn.com/did-ethereum-bottom-out-at-170-worst-part-of-eth-drop-may-be-over/

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Block.one Vows to Use its EOS Tokens to Prevent Voting Cartels.

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When cryptocurrency development firm Block.one concluded its initial coin offering (ICO) and released the first version of the EOSIO software, it didn’t just raise a record ~$4 billion in crowdfunded contributions — it also received 100 million of the 1 billion EOS tokens distributed through the network’s Genesis block. Now, the well-funded blockchain startup is vowing to use those tokens to stave off any block producer voting cartels, whether they are present now or arise sometime in the future.

Writing in an official statement published on the company’s blog, Block.one CEO Brendan Blumer stated the firm intends to use its EOS stake to ensure that the network’s on-chain governance model is characterized by a “free and democratic election process.”

He wrote:

“We are aware of some unverified claims regarding irregular block producer voting, and the subsequent denials of those claims. We believe it is important to ensure a free and democratic election process within EOS and may, as we deem appropriate, vote with other holders to reinforce the integrity of this process. We continue working on our potential involvement with the goal of empowering the intent of the greater community through a transparent process that incorporates community feedback.”

Blumer’s statement was prompted by allegations, first circulated on Chinese social media platform WeChat, that a group of block producers was operating a voting cartel.

EOS cryptocurrency

Unlike Bitcoin and other Proof-of-Work (PoW) cryptocurrencies, EOS does not use mining to secure the network, verify transactions, and introduce new coins into circulation. Rather, it uses a Delegated Proof-of-Stake (DPoS) consensus, through which users can “stake” their tokens to vote for a group of 21 entities — called “block producers” — who take turns validating transactions and adding blocks to the blockchain. According to an unverified document allegedly leaked by an employee of a top 21 block producer, node operators have formed a cartel to circumvent that democratic process.

Per the document, various block producers have inked mutual voting pacts, through which they agree to stake their tokens to vote for a group of candidates in exchange for the other candidates voting for them in return. The document further purports to show that at least one cryptocurrency exchange is also operating a pay-for-play scheme, voting for certain block producer candidates in exchange for a percentage of their revenue or outright EOS payments.

China-based cryptocurrency news source cnLedger reports that this exchange — Huobi — has denied having a financial relationship with other block producers.

 

As CCN reported, Block.one first announced in June that it planned to use its EOS tokens, which still account for nearly 10 percent of the cryptocurrency’s circulating supply, to participate in block producer elections.

However, those funds account for an even larger percentage of the network’s votes, since many token holders decline to stake their tokens and participate in on-chain governance. According to data compiled by block producer candidate EOS Authority, 54 percent of EOS tokens are currently staked, though — because votes “decay” over time to encourage users to remain active in network governance — actual voting power is much lower, at just under 26 percent.

https://www.ccn.com/block-one-vows-to-use-its-eos-tokens-to-prevent-voting-cartels/

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How Can Andreessen Horowitz Profit From its $15m Investment in a Stablecoin?

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On September 25, CCN reported that prominent venture capital firm Andreessen Horowitz invested $15 million in a stablecoin network called Maker.

Stablecoin is a cryptocurrency whose value remains stable by being hedged to the price of reserve currencies like the US dollar. Hence, Dai, the stablecoin of the Maker ecosystem, will always represent $1, regardless of the value of Bitcoin and Ethereum (ETH).

Last month, Andreessen Horowitz (A16Z) acquired 7 percent of the total supply of MKR, worth more than $15 million. In return, the firm received a 6 percent control over the network’s decision-making power.

Yield Return and Buy Back Program

The investment of A16Z in MKR is conceptually similar to putting dollar savings in a US-based bank. Upon placing a certain amount of money in a bank like Goldman Sachs or JPMorgan, an individual receives a monthly or yearly return based on the program offered by the bank.

With money obtained from its clients, the bank then loans the capital out to trusted businesses and individual investors with high interest to pay out its clients that provided the bank with an initial capital.

The 6 percent control over the Maker network acquired by A16Z allows the firm to see consistent yield return, a type of income returned on an investment through interest or annual percentage rate based on the investment’s market value, due to the unique structure of the Maker blockchain network.

Dai is a stablecoin that exists on top of the Ethereum network that is operated by Maker. The Maker blockchain platform also includes a major component called Maker (MKR), which loans out Dai to investors that put up Ethereum as collateral.

Investors send Ethereum into an escrow account embedded into a smart contract and in return receive Dai, which represents the value of the US dollar. Then, MKR coin holders receive an interest rate on the loan, as debtors payout MKR holders.

When the holders of Dai are required to pay back the amount of US dollars it borrowed from MKR holders, the holders pay interest to the Maker network. The network then burns MKR coins and essentially buys MKR with the interest, reducing the supply of MKR and pushing the price of the cryptocurrency up.

In the long-term, Andreessen Horowitz benefits from two sources of profit: yield income from loans and increasing price of MKR affected by the buyback program of Maker.

Merit of the Dai

Katie Haun, the general partner at Andreessen Horowitz, explained that Dai and the Maker blockchain network are balanced, which allows the value of Dai to be set at $1 at all times.

“A set of autonomous smart contracts coordinates and runs the Maker system, which means that anyone with an internet connection and collateral can create Dai without the need for trusted intermediaries. To ensure the system remains solvent, a network of market makers is incentivized to liquidate loans that risk becoming undercollateralized, thereby removing excess Dai from circulation and keeping the balance of Dai to collateral in check.”

However, Dai could be in danger of losing its value in flash crashes, a period in which the price of a major cryptocurrency drops by a large margin within a short period of time, possibly within minutes, which is highly unlikely.

https://www.ccn.com/how-can-andreessen-horowitz-profit-from-its-15m-investment-in-a-stablecoin/

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Alleged Bitcoin Launderer Alexander Vinnik Questioned by French Investigators, Lawyer Says Charges are ‘Trumped up’

Alexander Vinnik bitcoin launderer BTC-e

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The legal saga surrounding alleged bitcoin launderer Alexander Vinnik continues to grow more complicated, as law enforcement officials in three separate countries jockey for the authorization to extradite the alleged BTC-e administrator from Greece, where is currently in local police custody.

Russian state-operated news service TASS reports that French investigators questioned Vinnik on Monday in connection with what his lawyers have referred to as “trumped-up” charges in Paris.

“Today, on October 1, 2018, French investigators will try to question Alexander Vinnik in Thessaloniki as part of a criminal case initiated against him in Paris. It is no coincidence that the interview has been scheduled before Alexander’s extradition and aims to exert not only psychological pressure on my client, but also to obtain evidence of his guilt, which is absent in his case files,” Timofei Musatov, one of Vinnik’s attorney’s, told the publication, “judging from the questions provided by the French investigators in advance, the defense team concluded that there is no evidence of Alexander’s guilt in the case files, while the information the investigators rely on has been falsified.”

As CCN reported, Vinnik, a 38-year-old Russian national, was arrested last year at the request of the U.S. while he and his family were vacationing in Greece.

A U.S. grand jury has indicted Vinnik on 21 counts, alleging that, as operator of now-defunct cryptocurrency exchange BTC-e, he helped launder hundreds of thousands of bitcoins stolen from infamous Tokyo-based bitcoin exchange Mt. Gox.

btc-e bitcoin exchange

Vinnik, who claims that he merely a technician at BTC-e — not its administrator — has also been indicted in France and Russia. French prosecutors have charged Vinnik with laundering bitcoins worth around 133 million euros ($155 million), while Russian investigators have filed lesser fraud charges amounting to 750 million rubles ($11 million).

Various Greek courts have approved extradition requests from all three countries, suspending his legal fate in year-long limbo. Most recently, the Greek supreme court approved Russia’s extradition request, though it also plans to weigh in on requests from the United States and France. It is likely that the country’s Minister of Justice will make the final judgment on where Vinnik stands trial.

Unsurprisingly, Vinnik’s defense team has repeatedly argued that he should be extradited to Russia.

According to TASS, Vinnik’s defense team has added a former Greek MP as it seeks to both defend Vinnik against the allegations that he helped launder bitcoins now worth billions of dollars, as well as orchestrate his extradition to his home country of Russia.

“Attorney Zoe Konstantopoulou, formerly the youngest speaker of the Greek Parliament, is going to pose a lot of unpleasant questions for French justice system officials, based on the premise that, according to the defense, charges against Alexander Vinnik have been falsified,” Musatov told the publication.

Notably, blockchain forensics firm Elliptic has said that Vinnik’s case could have bearing on U.S. Special Counsel Robert Mueller’s investigation into Russian interference in the 2016 U.S. presidential election. According to Elliptic, Russian operatives used BTC-e to launder bitcoins in an unsuccessful attempt to cover their tracks. If true, that could provide Russia with all the more reason to fight to extradite Vinnik to his home jurisdiction.

Earlier this year, Greek police uncovered an assassination plot against Vinnik, which Russian state-owned media outlets suggested was perpetrated by a criminal individual or organization who is “extremely interested in him not coming to Russia.”

https://www.ccn.com/alleged-bitcoin-launderer-alexander-vinnik-questioned-by-french-investigators-lawyer-says-charges-are-trumped-up/

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Bitcoin Trading Volumes in Hyperinflation-Struck Venezuela Hits Record Highs.

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As the economic crisis in Venezuela worsens leading to a growing exodus of citizens out of the country, the demand for bitcoin and other cryptocurrencies has exploded.

According to Coin Dance, Venezuelans traded bitcoins worth nearly 300 million bolivars last week and the record could be broken again as so far this week bitcoin worth more than 292 million bolivars has already been traded. This is in continuation of a trend on the BTC/VES pair that began earlier in the year.

The worsening economic conditions have resulted in reports of Venezuelans fleeing the country in large numbers on foot and by bus after finding life intolerable in the socialist country. Per statistics from the International Organization for Migration, since 2015 around 1.6 million have fled and the number is still rising. Most of them have fled to other South American countries such as Colombia, Peru, Brazil and Argentina.

95% Devaluation

Besides an increase in demand for bitcoins as a hedge against the high inflationary conditions in the country, part of the reason for the record trading volumes in the BTC/VES pair has to do with the devaluation of the currency a few weeks ago. On August 10, five zeros were stripped off from the country’s currency after inflation levels that had risen to stratospheric levels, as CCN reported. However, this seems not to have solved matters as already the inflation rate is estimated to have reached a 100% even though the ‘new’ Venezuelan currency is less than two months old, per Bloomberg.

Other than devaluing the currency by 95% and renaming it the sovereign bolivar, Venezuelan president Nicolas Maduro also announced that the bolivar would be pegged to the Petro cryptocurrency which was unveiled earlier in the year. This was in the hopes of circumventing sanctions and gaining access to international finance besides bringing the persistent hyperinflation under control.

Low Uptake

Adoption of the petro cryptocurrency has, however, been low amidst wide skepticism with some questioning whether it exists at all. Despite this the government has soldiered on making efforts to boost the cryptocurrency by, for instance, decreeing that it would be the official currency of Petróleos de Venezuela, S.A. (PDVSA), the state oil company. Maduro has also pushed for the Petro to become the second unit of account, as CCN reported in late August.

“As of next Monday, Venezuela will have a second accounting unit based on the price, the value of the petro,” Maduro remarked on national television. “It will be a second accounting unit of the Republic and will begin operations as a mandatory accounting unit of our PDVSA oil industry.”

https://www.ccn.com/bitcoin-trading-volumes-in-hyperinflation-struck-venezuela-hits-record-highs/

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Ethereum Price Decline Hasn’t Hurt ICO-Funded Startups: BitMEX Research.

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With the ethereum price sitting more than 80 percent below its all-time high in mid-September, the conventional wisdom said that startups who had raised funds through initial coin offerings (ICOs) were likely driving the sell-off. ICOs, after all, had been conducted almost entirely using ETH, leaving hundreds of startups sitting on a steadily-depreciating asset. The convention wisdom, it turns out, was wrong, at least according to a new report from BitMEX Research.

Ethereum Price Decline Not Weighing Heavy on Blockchain Startups

That report, published Oct. 1, examined the time-lapsed ethereum balances of 222 projects that collectively raised $5.5 billion, as measured by the ETH/USD exchange rate at the conclusion of their respective ICOs. BitMEX Research tracked ICO selling over time to determine how the ethereum price decline had affected the bottom line of ETH-heavy balance sheets among token developers.

ethereum price chart oct. 1

ETH/USD | Bitfinex

The researchers found that ICO-funded projects have, on average and in USD terms, cashed out almost as much capital as they raised at the time of the sale.

Excluding EOS — which raised $3.8 billion in ETH and steadily exchanged those funds throughout its year-long ICO — the projects surveyed in the report raised just under $1.64 billion. To date, they have sold an estimated $1.56 billion in ether, realizing a net profit of $727 million over the value of ETH at the conclusion of the token sales.

Ethereum ICO fundraising

Source: BitMEX Research

Even after this year’s prolonged ethereum price decline, ICO-funded startups are still, in aggregate, sitting on $830 million worth of ETH, including $93 million in unrealized net gains.

ethereum ico balances

Source: BitMEX Research

Researchers: ICOs Likely Don’t Feel Need to Panic Sell

CCN previously reported that research firm Diar had debunked the thesis that ICO-driven selling had fueled an early-September ethereum price decline. At the time, ICOs continued to hold an average of 38 percent of the initially-raised ETH in their treasury addresses, while the other 62 percent had either been sold or moved to separate wallets.

Diar’s research had left open the possibility that startups might be holding enough ether to present an existential threat to the cryptocurrency’s market value, as a further ethereum price decline could trigger more selling.

It’s possible that’s true for startups who held their token sales when the ethereum price was trading near its all-time high of $1,432. Indeed, these projects have gross unrealized losses totaling $311 million, though, to date, they have realized just $34 million in losses by selling ETH for less than it was worth at the end of their ICOs.

However, the BitMEX Research report also paints a picture in which startups as a group are financially-secure enough to weather a prolonged bear market.

“Despite the 85% reduction in the Ethereum price from its peak, the projects have realised gains of US$727 million due to profits from Ethereum have they already sold, often selling before the recent price crash. The 3.8m Ethereum still on the balance sheets of these projects may not have that much of an impact on the Ethereum price, as its represents a reasonably small proportion of the 102 million supply of Ethereum.”

The report concluded by speculating that, “on a macro level, the projects may be feeling reasonably confident rather than needing to panic sell.”

https://www.ccn.com/ethereum-price-decline-hasnt-hurt-ico-funded-startups-bitmex-research/

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A Heart Beat: China’s Oldest Tech Publication to Accept Bitcoin Payments.

Beijing Sci-Tech Report (BSTR), the oldest technology publication in China, has recently announced that it will soon accept Bitcoin on its platform.

Starting 2019, BSTR will sell its yearly subscription at a price of 0.01 BTC, worth around $65. In an official press release, the publication emphasized that it plans to promote the usage of blockchain technology in a “real-world setting for practical actions,” by integrating the most dominant cryptocurrency in the market.

Questionable Timing

The announcement of BSTR to integrate Bitcoin into its platform comes in a period in which cryptocurrency trading and usage in China remain strictly banned.

Since September of last year, the government of China and local financial authorities have banned individual investors from investing in cryptocurrencies on both crypto exchanges and over-the-counter (OTC) platforms.

By imposing a blanket ban on digital asset investment, local regulators prohibited financial institutions, banks, and fintech payment networks like the $60 billion Alipay to censor transactions linked to cryptocurrency trading platforms.

Hence, the decision of BSTR to accept Bitcoin as a payment method suggests that the crypto sector of China still remains active after the ban implemented by the local government.

Recently, as CNLedger, a trusted news source in China reported, a hotel in China has started to accept payments in Ethereum as well, targeting a niche market within the country that is actively utilizing and trading cryptocurrencies.

“Ethereum Hotel, China’s first hotel that accepts $ETH as payment, is ready to open their business in National Scenic Area of Four Girls Mountain (Sichuan Province).”

Previously, in an interview with SCMP, Hong Kong-based cryptocurrency exchange TideBit chief operating officer Terence Tsang stated that while the government has crackded down most exchanges that are operating in mainland China, investors are trading digital assets in overseas markets like Hong Kong.

“The latest warning and potentially increased monitoring of foreign platforms is targeted at a batch of smaller exchanges that had claimed to be foreign entities, but are in fact operating in China claiming they have outsourced their operations to a Chinese company,” he explained.

With the emergence of fully audited stablecoins like Gemini dollar and PAX, it has also become possible for Chinese traders to purchase stablecoins through overseas markets and utilize international cryptocurrency-only exchanges to freely trade digital assets.

An exchange insider said that to fully crackdown on crypto trading, the Chinese government will have to ban the usage of VPN, which is very difficult given that VPNs operate outside of China.

BSTR is Serious About Bitcoin Adoption

The publication has said that if the price of Bitcoin increases exponentially by 2020, possibly to $250,000 as billionaire investor Tim Draper previously said, then it will offer customers that purchased its subscriptions at a rate of 0.01 BTC.

The refund policy implemented by BSTR demonstrates the intent of the publication to integrate Bitcoin solely to encourage the usage of digital assets and promote blockchain technology.

https://www.ccn.com/a-heart-beat-chinas-oldest-tech-publication-to-accept-bitcoin-payments/

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Shanghai Court Rules Ethereum is Protected Under Property Laws.

Shanghai Hongkou District Court has declared that Ether is protected as “general property” by law.

The statement was a result of an unjust enrichment case filed by a tech company in Beijing.

In September 2017, crypto companies in China started closing their doors after China banned ICOs and crypto exchanges. Caught in the middle of the ban was a company, headquartered in Beijing, which had released its tokens to raise Ether and Bitcoin in August 8, 2017.

However, the company reimbursed the funds to investors as early as September 4, 2017. Four days later, the company sent 20 ETH to a man named Chen, instead of an investor, due to “operational errors”. The company reached out to Chen and tried to contact him through text messages and legal letters. When it was clear that Chen was unwilling to cooperate with the company, an unjust enrichment case was filed.

Chen was able to justify his position by pointing out that Ether, as well as other cryptocurrencies, were not recognized as legal currency. Furthermore, China had banned the circulation of these virtual currencies completely. However, the court clarified that while both these statements were true, the country still considered Ether to be protected under the property law. Therefore, in June 2018, the court ruled in favor of the company.

The lawyers representing the company listed three important points for such cases in the future. Firstly, even though cryptocurrencies are banned in China, the country still supports crypto unjust enrichment cases under the Civil Law.

Secondly, the accused must be identified by the court under the Civil Procedure Law. Since the use of cryptocurrencies allow people to remain anonymous, it can result in legal problems. In this case, the company must maintain a digital chain of custody, such that they are able to submit communication records (from social media applications) to the court. Luckily, the tech company had sent Ether from two different companies, Nanchang Digital Network Technology Co. Ltd. and Hangzhou Rongzhi Technology Co. Ltd., which helped them in winning the case. However, it is advised that transactions should be completed via crypto exchanges, which already require users to fill personal details.

Thirdly, if funds are transferred to an account located abroad, the laws of the place where unjust enrichment has occurred are used.

Earlier in September 2018, China’s Supreme Court stated that blockchain evidence is now legal and admissible in court.

https://www.ccn.com/shanghai-court-rules-ethereum-is-protected-under-property-laws/

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Bitcoin Price Stabilizes at $6,550, Analysts Optimistic About Stellar Breakout.

Over the past 24 hours, the Bitcoin price has stabilized in the mid-$6,000 region. BTC eyed a breakout at a major resistance level at $6,800, but has slightly declined to the range of $6,550 to $6,600.

Most major cryptocurrencies including Ethereum (ETH), Ripple (XRP), and EOS have recorded fairly large losses in the range of 3 to 5 percent on October 1, failing to sustain momentum against both Bitcoin and the US dollar.

But, many technical analysts in the cryptocurrency community have expressed their optimism towards the short-term trend of Stellar, which remains as one of the few digital assets in the global market to have minimized losses throughout the past two days.

XLM Breakout Expected

Last week, XLM closed its weekly chart with a bullish run, demonstrating momentum following the formation of an ascending triangle.

Since September 29, analysts have referred to the positive technical indicators of XLM, predicting a Ripple-like short-term rally in the upcoming days.

At $0.262, as widely recognized technical analyst Carpe Noctom recently suggested, XLM is eyeing a big price movement on the upside if it can successfully surpass the $0.27 mark in the next 12 to 24 hours.

Another respected analyst with the online alias Satoshi Flipper noted:

“XLM about to pull a ripper right out of this symmetrical triangle, as long as BTC doesn’t ruin the party. Long here.”

But, the predicted breakout of XLM depends on two major factors: the short-term trend of Bitcoin and the ability of Stellar to surpass a major resistance level.

On September 27, the price of Bitcoin was expected to initiate a large rally to the $7,000 region as it moved closer to the $6,800 resistance level. After BTC failed to breakout of the $6,800 level, it fell below the $6,500 mark and BTC was forced to re-initiate a short-term rally once again.

As with most major cryptocurrencies and low market cap digital assets, as favorable the technical indicators of XLM are, the short-term performance of Stellar still ultimately depends on the performance of Bitcoin.

Where’s Bitcoin Headed?

Don Alt, a cryptocurrency investor, stated that the quarterly trend of Bitcoin remains bullish but BTC has to close its 3-month candle to demonstrate a positive short-term price movement.

“BTC quarterly update: Relatively promising close. The last few times we’ve gotten two quarterly close in such a tiny range was at the end of both bear markets. I don’t really trade based on fractals, it’s just something interesting to watch. Quarterly is still very bullish,” he explained.

The last time Bitcoin recorded two stable 3-month candles in mid-2016 led to a large mid-term rally. It is possible that the last quarter of 2018 could replicate a similar movement.

In the short-term, as in the upcoming days, the price trend of Bitcoin still remains uncertain. BTC will have to increase substantially in volume, by more than 20 percent, to initiate a solid movement to the upside, which is fairly unlikely.

https://www.ccn.com/bitcoin-price-stabilizes-at-6550-analysts-optimistic-about-stellar-breakout/

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Art Exhibit in France Celebrates Bitcoin’s 10th Anniversary with a Treasure Hunt.

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With the release of Bitcoin’s whitepaper approaching its 10 year anniversary on October 31, artists from around the world are celebrating by hosting an art exhibition in France.

Open to the public on September 28, the Bitcoin Art (r)evolution exhibit runs until 8 October 5 in Paris, a city known for being the “City of Art” as it is home to some of the world’s most renown museums and galleries.

The event organizer and French artist, Pascal Boyart, is eager to push forward the “Crypto Art’’ initiative through merging the world of art and crypto together by gathering crypto-friendly artists from around the world to congregate in Paris.

The exhibition is designed to showcase the potential of crypto-currencies through symbolism and practice, and by illustrating the viable use-cases that Blockchain technology offers to the art industry.

A highlight for event-goers will be a treasure hunt to discover bitcoins that are hidden in plain sight throughout artworks. International artists such as Andy Bauch, Coin Artist, Josephine Bellini, and many more are expected to exhibit their work that crosses the chasm between art and cryptocurrencies. Artwork for sale can be purchased using Bitcoin, Litecoin, Monero, or Ethereum.

Certifications of authenticity will be provided to all buyers of artwork, with certificates also being registered on Bitcoin’s blockchain to demonstrate how blockchain’s immutable characteristic can help combat forgery and counterfeit artwork, an issue that has cost the art industry millions of dollars to date.

Lorenzo Sconci, owner of Dubai-based Sconci Art Gallery, and CEO of crypto startup ArtWallet – a new blockchain-based ecosystem that records the provenance data of masterpieces on chain, and tokenizes masterpieces for them to be traded – expressed his thoughts on the upcoming exhibition and the “Crypto Art” movement:

“Without a doubt bitcoin and blockchain has been the biggest revolution over the past 10 years. As revolutions have shaped artistic expression throughout time, there is no doubt that crypto will accomplish the same.

This exhibition is a wonderful initiative – if not for art and its various forms, we would not possess the knowledge we have now of past history. This initiative will be fundamental in the “Crypto Art” movement as it will trace the beginning of how artists lived, interpreted, and synthesized the upcoming blockchain revolution.”

It has been almost 10 years since Bitcoin was first introduced to the world and we are only now beginning to witness the full potential that blockchain technology and cryptocurrencies can offer to the world. The art industry will undoubtedly benefit from the integration of cryptocurrencies as the industry has remained largely stagnant throughout its processes and standards for several centuries now.

In the next decade, we may see the art industry shift towards greater levels of decentralization as intermediaries between artists and their audiences wishing to purchase artworks slowly fades away from the picture, all of which may be fuelled by the incoming “Crypto Art” movement.

https://www.ccn.com/bitcoin-art-revolution-paris-exhibit/

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Cryptocurrency and blockchain events: 8 to 14 October.

Find out what's coming up in the world of crypto and whether it's actually worth being there when it occurs.

News breaks at cryptocurrency conferences. Staying ahead of the curve often means staying on top of events.

Cryptocurrency and blockchain events often showcase game-changers before they go mainstream and present valuable networking opportunities with some of the best-known names in cryptocurrency. Even if you can't make it in person, it's often worth keeping an eye out for live streams and other ways of telecommuting there.

Here's what's coming up next week, from 8 to 14 October.

Looking for other dates? Get the comprehensive list of crypto expos

PayExpo

9-10 October 2018

London

United Kingdom

XBlockchain Summit

9–10 October 2018

Bali

Indonesia

BLOCKCON 2018

10-11 October 2018

Santa Monica

United States

FSBDAC 2018

10-11 October 2018

Portsmouth

United States

Blockchain Fair Asia

11 October 2018

Taguig

Philippines

Blockchain Unbound

14-16 October 2018

Tokyo

Japan

PayExpo

Returning for its sixth year, the United Kingdom's largest payments expo is an event to share knowledge and meet with the disruptors and innovators driving change in the ever-expanding payments sector.

There will be panel discussions and keynote addresses on open banking, the essentials of cryptocurrency, enterprise-ready blockchains, and what it will take to make consumers believe that cash is no longer king.

Retailers and merchants, gaming operators, MNOs, startups, investors and transport operators attend free.

XBlockchain Summit

This event will be held at an exclusive resort in the Nusa Dua area, on one of Bali's most famed beachfronts, adjacent to the 2018 annual meetings of the International Monetary Fund (IMF) and the World Bank Group.

Some of the topics to be covered; the Internet for payments, blockchain in the face of economic change, the mainstream accessibility and future of cryptocurrencies, making blockchain real for business, financial inclusion in the age of automation, value of fans and why AI and blockchain need each other.

Speakers include Stellar Development Foundation co-founder Jed McCaleb, Republic of Lithuania Minister of Finance Vilius Šapoka, Republic of Mauritius Minister of Financial Services and Good Governance Dharmendar Sesungkur, NEM.io Foundation Council Member & Regional Head of SE Asia Stephen Chia and many more.

BLOCKCON 2018

This event, taking place in Los Angeles, will analyze and expand upon the importance of digital privacy, break down crypto baskets as investment vehicles, tackle tokenization and how to balance opportunities and challenges, consider what a young Warren Buffet would have used to manage his crypto, decentralization, AirBnB on the blockchain, ICOs, as well as discussing ways to eliminate loan sharks of the 21st century.

There's also the potential to win a free ticket to BLOCKCON 2018 by answering a Hotjar survey question.

FSBDAC 2018

Free State Blockchain Digital Assets Conference (FSBDAC) 2018, will take place in Portsmouth, New Hampshire. This exclusive conference brings together the financial sector, commentators, researchers, financial innovators and other blockchain enthusiasts to explore the opportunities and challenges that lie ahead for a future of tokenised assets. This year's event will also play host to the first annual New Hampshire Ravencoin Meeting.

You can check out a recap of last year's speakers here.

Blockchain Fair Asia

This event's theme is "Looking Beyond Blockchain Hype". The conference aims to explain how the latest blockchain developments prove that a major revolution is imminent. Speakers will discuss practical use cases beyond speculative investment, how to avoid cryptocurrency disasters, investment opportunities in the Philippines, the road to mainstream adoption and blockchain beyond the constraints of the financial industry.

There will be 10 venture capital firms, 20 exhibitors, 30 speakers and 1,000 attendees.

Blockchain Unbound

Early adopters, innovators and investors who have helped to shape the current landscape of the blockchain community will share the stage in Tokyo. Blockchain Unbound events are designed to drive social impact, spark business development and inspire attendees to forge meaningful relationships with fellow collaborators.

A core aspect of every Blockchain Unbound event is a focus on altruism. This year, the conference partners with Mama Hope, an international non-profit advocating for global societies. A portion of the event's proceeds will be donated to support community-led projects. Additionally, Blockchain Industries will announce a Women of Blockchain Foundation designed to aid other women around the world, specifically in emerging markets.

https://www.finder.com.au/cryptocurrency-and-blockchain-events-8-to-14-october

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India’s Central Bank Did Not Establish Blockchain, Cryptocurrency Unit: Report.

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The Reserve Bank of India has denied the creation of a new internal unit dedicated to cryptocurrency, blockchain and artificial intelligence (AI) research.

In late August, India’s most-popular financial daily, the Economic Times, reported that the Reserve Bank of India (RBI) had formed a new unit for researching and even regulating disruptive technologies like blockchain. The unit had been operational for a month at the time, the report claimed after citing two anonymous sources purportedly aware of developments at the central bank.

However, in a clear denial of the report, the RBI has refuted the claim altogether by revealing there was no crypto-focused formal unit within the central bank. The central bank was responding to a right to information (RTI) query by Naimish Sanghvi, who runs Indian industry publication Coin Crunch.

This, despite the RBI revealing within days from the original ET report in August that it had formed an ‘inter-departmental group’ to “study and provide guidance on the feasibility to introduce a central bank digital currency (CBDC)”, in its Annual Report 2017-18.

In early 2017, the RBI’s own research arm published a white paper on the merits of blockchain technology for the banking and financial sector domestically. In it, the central bank’s Institute for Development & Research in Banking Technology (IDRBT) – the country’s foremost banking research institute – concluded that blockchain technology had “matured enough” to power the digitization of India’s fiat currency, the rupee.

The embracive stance toward blockchain technology was further underlined by Indian prime minister Narendra Modi, the most powerful official in Indian public office, calling for “rapid adaptation” of the decentralized technology in a speech earlier this year.

While pro-blockchain, Indian authorities continue to adopt a hostile stance toward decentralized, public cryptocurrencies. In April this year, the RBI issued a nation-wide circular mandating all regulated financial institutions – including banks – to cease providing services to businesses in the cryptocurrency sector. The move has dampened robust trading volumes in the country. Last week, the banking ban’s telling impact resulted in the shuttering of Zebpay, one of India’s biggest cryptocurrency exchanges.

“The curb on bank accounts has crippled our, and our customer’s, ability to transact business meaningfully,” Zebpay said on Friday. “At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business.”

https://www.ccn.com/indias-central-bank-did-not-establish-blockchain-cryptocurrency-unit-report/

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Hong Kong Activates ‘Faster Payment System’ with 450,000 Public Registrations.

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Hong Kong has become the latest nation to introduce a 24×7, instant payments system as a fintech upgrade for retail payments in the country.

Aptly dubbed the Faster Payment System (FPS), the initiative was first announced by the Hong Kong Monetary Authority (HKMA) – the country’s defacto central bank – two weeks ago.

The new platform operates in real-time, all-the-time, to connect banks and stored-valued facility (SVF) operators, the HKMA said at the time. At launch, 21 banks including the majority of retail banks and 10 SVFs were participating in the system to provide the service to customers immediately.

Quite simply, the platform enables Hong Kong residents to transfer funds in real-time across banks and SFVs participating in the system by using the mobile number or email address of the recipient, rather than a bank account number, with added support for QR codes.

The FPS notably supports both the Hong Kong Dollar (HKD) and China’s fiat currency Renminbi (RMB) for settlements in the mainland. The HKMA will operate the book of settlement for HKD payments while the Bank of China (Hong Kong) limited performs the same role for RMB payments. The Hong Kong Interbank Clearing Limited will take up the mantle as the entire system’s operator.

To propel adoption, the HKMA also announced the Common QR Code Standard for retail payments with a free mobile app named Hong Kong Common QR Code (HKQR). The app converts multiple QR codes from various payment providers to a single, combined QR code to better facilitate payments among merchants, small and medium enterprises (SMEs) and the public to accept payments in a single code.

Source: Hong Kong Interbank Clearing Limited/FPS

Since its announcement, the FPS has seen over 450,000 registrations from the public as payees, the central bank revealed on Sunday while announcing the full launch of the service.

“After the full launch of the FPS on 30 September, Hong Kong will enter a new era of electronic payment as the FPS is a unique retail payment system in the world,” HKMA chief executive Norman Chan said during the ‘Activation Ceremony’ of the service.

The central bank executive also revealed the service would be free for small-value transfers, adding:

“We can enjoy an instant payment service which is round-the-clock, simple and convenient to use, robust and secure, with full connectivity while supporting both the Hong Kong dollar and the renminbi.  It is also free of charge for small-value fund transfer.”

A complete list of participants including settlement entities (licensed banks) and clearing entities (SVFs), as of September 28, can be found here.

The launch of the FinTech service comes at a time when the Hong Kong government is actively attracting blockchain professionals with friendlier immigration policies to boost the country’s economic development by investing in crucial jobs.

Hong Kong dollar image from Shutterstock.

https://www.ccn.com/hong-kong-activates-faster-payment-system-with-450000-public-registrations/

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Google Fraud Fighter Explains Risks Involved in Boasting About Owning Bitcoin

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People need to rethink before bragging about owning a lot of bitcoin in a public forum, as this might give way for scammers to target them, says a Google executive, who fights email frauds and abuses.

Speaking to CNBC, Mark Risher said that there has been an increase in attacks against people who hold cryptocurrencies in wallets. Boasting about owing bitcoin in public message boards can be quickly followed by criminal activities on their mail accounts, he said.

“It could just be a case of mistaken identity or guilt by association,” Risher stated. According to him, scammers are having a track of people’s personal social media posts and other sources before targeting them as victims to email scams.

“They could be using someone who seems to be low value to pivot toward somebody considered a higher value target, like somebody political in nature. Or maybe they saw that you were discussing Bitcoin on a public message board.”

Such messages or posts can give way to attackers to break into their email account and do a password reset on their cryptocurrency digital wallets linked to that email.

Risher oversees Google’s email fraud and protects its properties against cyberattacks. He said that few cryptocurrency wallets allow users to reset their passwords using their email, which allows attackers to open wallets using the reset link in the mail and loot cryptocurrencies.

Stating about a decade old “Nigerian Prince” scam, he said that it is not fair to associate that with the criminals today. The personal messages that we could receive from friends or family, often give way to new email attackers.

“You might think of this generic ‘Dear Sir or Madam, I am contacting you to ask you for a favor,’ but the truth is many of these attackers have done some serious research on their victims. So you might get what we call ‘social truth’ in your message,” he added.

As the amount of data we share increases, we tend to forget that the information shared does not disappear from the internet and thus “our data is all over the place”, he added.

Risher further said that such scams can be minimized if all the email addresses associated with financial accounts and cryptocurrency wallets are noted, keeping in mind the security associated with such financial addresses. Also, limiting the amount of sharing personal info regarding the cryptocurrency wallet or financial accounts on social media, can curb such crimes, he said.

https://www.ccn.com/googles-executive-fraud-fighter-explains-risks-involved-in-boasting-about-owning-bitcoin/

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Interview: Caitlin Long on Cryptocurrency Regulation and Why Wyoming is the Next ‘Crypto Valley’

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Note: This is part 2 in a multi-part interview series with Caitlin Long, a 22-year Wall Street veteran who formerly led Morgan Stanley’s Pension Solutions Group. Long, an ardent blockchain advocate, has been critical of Wall Street’s corrupt banking practices, which she fears institutions will integrate into their cryptocurrency products and services. Read part 1 here.

Part 2 of CCN’s Interview with Caitlin Long

 

CCN: The entire [framework of] regulation is just a mystery to me at this point. There are so many things that are obvious that you think makes sense that just aren’t out there as far as protections go. I think we saw a lot of that in 2008 where you had these retail investors saying, “I had this much money, what happened?” I think there was a case where you had a savings bank losing hundreds of thousands of dollars with Lehman Brothers, that wasn’t guaranteed because I think they were a citizen of Hong Kong.

CL: I was reading an IMF paper. Sad enough just on that basis, they were talking about the Lehman situation and in the meltdown in both Lehman and also in MF Global. Though that particular one wasn’t referred to in this IMF paper, they said that Lehman did not acknowledge the firewalls that we’re supposed to have firewalls of client assets. This is an issue for me, personally, that’s a fear that I had when you’ve got a brokerage firm that’s going under like Lehman was, like MF Global was, even though those client assets are supposed to be ring-fenced.

 

Well, guess what, when John Corzine the CEO of MF Global is trying to save the firm, he’s got a heck of an incentive to ignore those ring fences. Those ring fences are not a literal firewall. Those ring fences are just those assets that are sitting in a separate account, and people can go to jail if they dip into those clients separate accounts. Did John Corzine go to jail? So there you have it. There’s an awful lot of moral hazard when it comes to segregation of assets. Unless the assets are segregated on an open blockchain where it’s transparent, and you can see that they’ve not been messed with, then you can’t trust that your assets are truly being custodied in the manner in which they should.

CCN: Do you see blockchain being used as a custodian’s tool across every type of asset class?

CL: Yes, and in fact, that’s one of the things that I did say that was positive about the bad news that they [Bakkt] lept right over the “blockchain, not bitcoin” intermediate step that so many other firms are doing right now, which is, essentially, “Well, let’s not go all the way to natively digital assets. Let’s just try to tokenize, to try to improve and cut costs and all this duplication and reconciliation of information that we have to do among all the different counterparties on Wall Street. Maybe there’s a way that we can share a ledger for a toke; we don’t need to go completely open blockchain because we do kind of trust each other. So let’s do these private walled garden-type blockchains.”

In fact, actually, when ICE [Intercontinental Exchange] came out and said they were embracing bitcoin, that was a game changer for me because that is a natively-digital asset. It’s not a tokenized asset but natively digital. It never existed in anything other than native form at its genesis moment. It only ever existed on the blockchain, and it never leaves the blockchain, only its ownership changes. So that is a game changer. I think that ICE could be tremendously successful if it were to adopt that as a strategy as opposed to trying to sort of mess with bitcoin if you will and try to rehypothecate and commingle it.

Instead of trying to do that let’s go out and get natively-digital securities. As a stock exchange, ICE could be a real leader if they said, “Let’s forget this crazy structure where there’s one global security sitting in a vault at the DTCC for all of the Apple shares outstanding and let’s instead start actually issuing these things natively digital and allocated them out to their rightful owners.” So you don’t have any of this commingling and rehypothecation without explicit consent from the owners of the securities. I’d love to see that, and that would be a huge positive relative to where we are today.

CCN: But do you really think ICE is going to do that? I mean do they have incentive to?

CL: I sure hope so. As critical as I’ve been of ICE over the rehypothecation of bitcoin, I’ve been very complimentary of ICE as an institution. The CEO, Jeff Sprecher, is one of the most respected people on Wall Street and some people would say he saved in New York Stock Exchange. He’s the guy who engineered the digitization of equities markets in U.S. digital trading more than anyone else. That saved a lot of people’s money. Yes, are there are downsides to it because you’ve got things like high-frequency trading and all the manipulation that comes with that.

It created problems like anything else new would. Of course, we all know bitcoin has its own problems, too. But is it a solution to this overarching problem, which is that Wall Street doesn’t keep accurate track of who owns what and ends up always issuing more securities than are legally upstanding because the ledger systems can’t keep track. Yeah, and to me, that’s a huge problem. And I would rather see that solved and take on the new problems that they’re having natively-digital bearer assets involved than trying to sort of build a system, which is what we’ve been doing for the last 40 years.

CCN: One of the interesting things I found about ICE, in general, is…Sprecher’s background, he really comes out of [the] instant settlement market with…energy policy. I mean, they were competing directly with Enron.

CL: Yeah, I knew that that’s how we got to start with electricity trading, but I didn’t realize that that was instant settlement. I don’t know if it is or not, I just don’t know how that market works.

CCN: Okay, I think that’s going to heavily influence his thoughts going forward. Like you said in the beginning of this interview, your background is heavily going to influence what you do. I’d be really interested to see how that energy market is regulated and settled to try to see what Ice is planning here.

CL: Certainly that market became a lot less manipulated after Enron, and the CFTC moved in and regulated it to a much greater degree, but I’m just not familiar with it. I’ve never personally traded or done anything in that market, so just not qualified to speak about it. But your point is well taken. That’s where he came from, and he basically acquired a whole series of key infrastructure players in U.S. markets and global markets. He owns what may be the largest clearinghouse in Europe. This is a global giant in market infrastructure; it is literally too big to fail. I say that both in the positive and negative context that that means because one of the things that I wrote about in the last article on Forbes.com about rehypothecation and commingling is the financial regulation used to try to disperse credit risk around the banking system.

I’m thinking that it was really going to be pretty rare for the entire banking system to incur a run. So as long as all the credit risk was dispersed, widely distributed, widely decentralized way to use some of the crypto phrases that was the safest way to deal with credit risk. We’ve essentially centralized it, post-financial crisis, it’s centralized in organizations such as ICE and these things are literally too big to fail, and the rehypothecation of collateral is a means by which all of these organizations can look like they’re more solvent than they really are. The problem is that because of the way how repo accounting works, you have multiple parties recording that they own the same asset at the same time. That is the way U.S. GAAP accounting requires the accounting for repo transactions to work.

Consequently, it looks like both financial institutions are solvent because they both are reporting that they own the asset, but there’s really only one asset. In a normal functioning market, if nobody actually wants to go claim their asset, then its fine, but if you get runs on the system, that’s when you realize just how insolvent the system is. I would give hats off to CFTC regulator Christopher Giancarlo. He’s been talking about this for years, and he’s right that the regulators don’t have a way to back out [of] all that double and triple and quadruple, quintuple counting of assets to know just how solvent the system as a whole really is.

CCN: I want to hear a little bit about how you really took Wyoming and turned it into this “Crypto Valley” that’s now really competing with incumbent giant Delaware.

CL: Thank you. I grew up there in Wyoming, that’s the nexus and has stayed very close. I have served on charitable boards there for years, and I just knew that this was an alignment of interest between Wyoming wanting to bring software companies into the state. It also had one of the worst laws for bitcoin and once we got the ball rolling to fix that bitcoin law (specifically it was the money transmitter law that essentially required the Coinbases and Circles of the world to have to leave the state into 2015. We set out to fix that, and we ended up doing that and a lot more, and there’s going to be more to come and I think — stay tuned —  we actually have another task force meeting in September where we’ll work on legislation that’s going to be introduced in the next legislative session in early 2019 and we’re not done, there’s more going to be happening to support this industry in Wyoming and bring more companies into the state.

 

CCN: What do you think has been the most important as far as making Wyoming this crypto valley?

CL: Candidly, I actually think it’s the one that exempts crypto from property taxes. There’s no income tax in Wyoming, and there’s virtually no sales tax, virtually no property tax, it’s the lowest taxed state in the country and by coming out and saying that, given that there’s already no income tax, there also is no property tax. It’s very tax friendly. That’s meaningful.

Secondly, there is probably the one that got more attention, which is the utility token bill. That has run into the issues at the federal level, which is that everybody’s afraid of the SEC and running afoul of the SEC. What we’ve unfortunately seen is that more businesses have elected to go outside of the United States and domiciled their start-ups in places like Singapore, or Japan, or Malta, or Switzerland, or Gibraltar, then businesses that are taking the SEC risk and staying in Wyoming. That has definitely blocked the degree of success that we were hoping for in Wyoming, at least in the short term.

CCN: What federal regulation would you like to see for the U.S. to compete with these places like Malta that are very cryptocurrency and blockchain-friendly?

CL: I actually think what we did in Wyoming would be great. It is to say, we’re not going to change the securities laws, although there are several of those that need to be changed, but let’s acknowledge that certain things like airline points and gift cards and loyalty rewards programs can be traded in secondary markets and they’re not necessarily securities. If they’re not securities because they meet the criteria that we put in the Wyoming bill for not being securities in the State of Wyoming, then they are not going to be regulated by the SEC. The SEC has sort of played both sides there because they’ve come out originally and said that everything they’ve seen so far was a security. That comment just caused the entire industry to seize and frankly flee offshore. They walked it back since then, I think, in part because they saw just how many American businesses were actually fleeing offshore as a result.

I would like to see that. I’ve also suggested I’d like to see them do away with the requirement that if an open blockchain is used to custody an asset that setting up a requiring a qualified custodian for that asset, [which] actually introduces risk where those risks wouldn’t otherwise exist. A qualified custodian is like a pension funds custodian. We’ve been talking about them earlier in the in the interview, and the gist is that large investment adviser should manage more than $150 million or required to segregate their assets and hold them in a third-party custodian. The problem with that is, of course, if you’re having somebody hold digital assets in a third party, we’re back to the Andreas [Antonopoulos] point, “not your keys, not your bitcoin.” You can use multi-sig, you can use time locks, there’s a lot that you can use, but none of them is recognized under current qualified custodial laws. I actually think that that’s probably the most important change the SEC needs to make to support the industry, is take that old law, it’s outdated for this technology. If we’re talking about digital bearer assets, don’t introduce risk where otherwise doesn’t exist.

 

CCN: I think that makes a ton of sense there. Coming back to Wyoming, I’m curious about your perspective on New York’s Department of Financial Services actions over the past four or five years regarding blockchain, what they did right, what they did wrong, with your experience in that market.

CL: Way too heavy-handed. Wyoming took the approach of “let’s create enabling legislation rather than restrictive legislation.” New York did the opposite. New York said, let’s restrict, let’s not enable. It was arrogance frankly, that they thought everybody would want to be in New York, but a lot of the big players essentially just avoided New York. You saw Jesse Powell of Kraken talked very publicly about that. He’s just not in New York because he’s not doing business in New York; they have no jurisdiction over him. I agree with Jesse. I think New York — it’s acknowledged in the industry — that they went way too far and that needs to be rolled back.

CCN: The regulations there are just insane. And the cost to acquire a crypto license is beyond what a lot of these smaller startups can handle.

CL: Yes, that’s right. It’s unfair. It’s part of the thing that sends these smaller start-ups offshore. Once they’re gone offshore, the interesting question is, will they ever come back?

CCN: Do they really have any incentive to come back?

CL: Right. Once they’ve set up offshore, they incur costs to come back onshore. They’ll only come back onshore if it’s in their interest, but when we can capture businesses and have them set up in a local jurisdiction, and they have no switching costs, is that their genesis moment and that’s why again, Wyoming is going after this so hard, and I sure wish that the SEC would just clarify things. I think a lot of people are interested in just clarifying the rules and if we get clarity on the rules, then it gives lawyers the ability to advise clients saying yes that they can stay in the United States without risk of literally going to jail. Right now, there’s too much risk, and most lawyers are advising their customers to leave and go offshore.

CCN: Last question here. Up until this point in this podcast, we’ve pretty much just interviewed cryptocurrency founders. One of the questions I love to ask them is where you see your company in five years? I’m curious where you see this entire industry in five years, and in particular, how Wyoming fits into that?

CL: I think Wyoming is going to be the Delaware of this industry. I think a lot of companies are going to domicile there and existing businesses are already re-domiciling there in part for the tax and regulatory clarity. I think Wyoming is going to be the Delaware of the crypto industry. Where will the crypto industry be? I’m very convinced that money is going to be digital open blockchain tokens, i.e. bitcoin. It may not look like bitcoin today, because it’s going to over the next 20 years evolve substantially, but I do believe that it is such a superior system and it’s fairer to regular folks, especially folks [that] have limited means. It’s so much fairer than the system that we have today and that we will end up transitioning over to that how smooth that transition is going to be, is an open question. It all depends on whether the powers that be in the existing financial industry recognize that this is the direction that it’s heading. I will compliment ICE for recognizing that and being the first of the big mainstream institutions to dip their toes into natively-digital assets. This is just a much more superior system. Let’s keep that ball rolling.

Stay tuned for part 3 of CCN’s interview with Caitlin Long.

Note: This interview is part of the CCN Podcast. The podcast and this interview are also available on iTunesTuneInStitcherGoogle Play MusicSpotifySoundCloudYouTube or wherever you get your podcasts. Make sure you rate and subscribe!

https://www.ccn.com/interview-caitlin-long-on-cryptocurrency-regulation-and-why-wyoming-is-the-next-crypto-valley/

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How Binance Decentralized Crypto Exchange Beta Launch in 2019 Will Impact the Market.

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Binance, the world’s largest crypto exchange by daily trading volume, is set to launch a beta version of its decentralized exchange (DEX) by early 2019.

Changpeng Zhao, the CEO of Binance better known to the community as CZ, said on Saturday:

“Just had a productive meeting for Binance DEX (decentralized exchange), where BNB will be native gas, and the exchange don’t control user funds. Aiming for a public beta end of the year/early next year. Yes, we work on Saturdays, non stop.”

Why is Binance Launching a DEX?

In July, on CNBC Crypto Trader hosted by Ran Neuner, CZ stated that he personally believes decentralized exchange is the future of crypto.

In the long-term, CZ explained that users will be able to utilize non-custodial wallets to trade cryptocurrencies in a peer-to-peer manner with full control over their funds.

“I believe that decentralized exchange is the future. I don’t know when that future will come yet. I think we’re at an early stage for that so I don’t know if it’s a year, two years, three years, or five years. I don’t know but we got to be ready for it,” he said.

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Binance Coin (BNB)

As a centralized cryptocurrency exchange, most of its revenues and profits are generated by the fees charged by the exchange. But, decentralized exchanges can also charge a native fee embedded into the smart contracts utilized by the platform to broadcast transactions to the mainnet of public blockchain networks like Ethereum.

In October of last year, Ethereum co-creator Vitalik Buterin praised a model utilized by EtherDelta, a decentralized exchange, to incentivize developers for maintaining the platform.

“I think the EtherDelta model for developers getting paid is underrated,” he said.

At the time, a South Korea-based cryptocurrency user recommended Binance to Buterin on Twitter, mentioning its low 0.05% fee. Buterin responded that to use centralized exchanges, a process of setting up accounts is required. On decentralized exchanges, users can utilize existing wallets like MetaMask to trade.

“That requires setting up an account. I like EtherDelta precisely because it doesn’t. Just visit the site with MetaMask on and start using it. Not slow at all. I don’t give a damn about split-second trading. To me, speed includes login, deposit, withdrawal, logout time,” Buterin explained.

How Can Decentralized Exchanges Compete Against Centralized Platforms?

According to CZ, Binance is probably a more secure alternative to decentralized exchanges because of its strong architecture and infrastructure. Binance has never been hacked since its launch in 2017.

CZ emphasized that the real merit of using decentralized exchanges is in the freedom and control over user funds. On a decentralized exchange, users do not have to create user accounts or file withdrawal requests. Every trading activity is done on the blockchain with a non-custodial wallet.

Eventually, as the adoption of cryptocurrencies increases and fiat becomes less relevant in the cryptocurrency exchange market, traders will likely shift from centralized platforms to decentralized exchanges.

The Binance team remains uncertain when the change will happen but as CZ said, the company is getting ready for it.

https://www.ccn.com/how-binance-decentralized-crypto-exchange-beta-launch-in-2019-will-impact-the-market/

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Monero Launches Initiative to Combat Cryptocurrency Mining Malware.

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Earlier this week, the Monero (XMR) community announced the launch of a new website that aims to educate users on cleaning up crypto-jacking malware and ransomware.

Easing Malware Victims’ Confusion and Frustration

The ease of mining and privacy of Monero are standout features for the coin. However, the features attract bad actors who use the coin in malware.

Justin Ehrenhofer, the director of the Malware Response Workgroup, told CCN that two main factors make XMR attractive to hackers:

“Attackers like Monero for two reasons: 1) it is private, so they do not need to worry about companies and law enforcement tracing what they do with the Monero after they mine it, and 2) Monero uses a Proof of Work (PoW) algorithm that is CPU and GPU-friendly; thus, the infected machines are competitive. These two components are increasingly distinguishing factors for why attackers choose to mine Monero over other cryptocurrencies.”

The capability to use cryptocurrency in malware is not unique to Monero. Bitcoin and other digital currencies have been used in the same attacks described above, but XMR has privacy features that make it stand out.

Asked what led to the creation of the working group, Ehrenhofer said, “We created this workgroup to help the victims of these mining/ransomware attacks, who often have no idea what Monero, mining, and cryptocurrencies are… the increased prevalence of Monero-related malware prompted the formation of the workgroup.”

The new Malware Response website seeks to inform visitors on the ways to prevent and remove malware. As stated, it’s expected that visitors will land on the site frustrated and seeking answers, since most do not understand what is happening.

In addition to discovering if XMR-based malware is running on your computer, the site includes remedies for the three types of attacks that are used: browser-based mining scripts, system/PC based malware, and ransomware.

Cleaning Unwanted Cryptojacking Scripts

Bitcoin Theft

Scripts to mine Monero in the browser are occasionally deployed as an opt-in service as a way for visitors to fund websites. As CCN reported, Slate.com briefly added crypto mining as an option for visitors instead of advertisements. If readers opted-in, their browsers would mine XMR with their computers’ resources while they browsed the site.

However, attackers can also inject mining scripts into vulnerable websites without the webmaster or visitors knowing, which is known as “cryptojacking.” As CCN reported, McAfee labs reported that cryptojacking increased by 86% in the second quarter of 2018. Addtionally, for 2018 so far, illegal cryptojacking is up a shocking 459%, thanks largely to the leaks from the NSA’s hacking tools. Criminals then used these tools to infect computers with malware.

As the NSA (and Microsoft) have already admitted blame for the blunder, one would think they would be the entities creating an educational site like Monero’s.

Monero Community Is Firmly Against Malware

As cryptojacking attacks are new to webmasters/internet users and sometimes sophisticated, education is a key role in quickly discovering and responding to security breaches.

The Monero technology and community do not condone of any malicious activities that Monero is used in, as Ehrenhofer made clear.

“Monero itself and the community aren’t attacking computers, but the computers are attacked with some vulnerability and the attacker decides to run mining software on the compromised machines,” he said.

https://www.ccn.com/monero-launches-initiative-to-combat-cryptocurrency-mining-malware/

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Ripple-Hired Lobbying Firm Will Get Paid [Partially] in Cryptocurrency

A lobbying firm in America’s political capital that has been hired by cryptocurrency firms including Ripple will now get a certain portion of its fee paid in XRP.

 

The Washington, D.C.-based Klein/Johnson Group has been contracted by the San Francisco-based Ripple and several other firms in the cryptocurrency sector and will be paid for its services in the U.S. dollar and XRP, according to Bloomberg. The lobbying firm will reportedly receive a monthly fee of approximately US$25,000 in fiat and an additional 10,000 XRP.

 

 

 

Klein/Johnson has been hired by blockchain and cryptocurrency firms that are organized under Securing America’s Internet of Value Coalition umbrella body. The goal of the coalition is to lobby regulators as well as lawmakers on cryptocurrencies. Besides Ripple, other organizations that have joined the coalition include digital asset investment firm Hard Yaka, crypto custodian company PolySign, and entertainment and content digital payments platform Coil.

 

Lawmakers and Regulators

According to Izzy Klein, the co-founder of Klein/Johnson, the lobbying efforts of Securing America’s Internet of Value Coalition will be directed towards the U.S. Congress, the Securities and Exchange Commission  (SEC), and the Internal Revenue Service (IRS), as well as other government agencies and public organizations whose mandate and mission has a bearing on cryptocurrencies.

 

 

 

In the case of Ripple, for instance, there has been a long-running debate over whether the SEC should classify XRP as a security, a move which would place it under the market regulator’s scrutiny. While the SEC has offered clarity on bitcoin and ethereum (to some extent), XRP has not been accorded the same treatment despite an initiative to ensure it is not classified as a security. Three months ago, for instance, the CEO of Ripple Labs, Brad Garlinghouse, vehemently argued that the XRP token is not a security, as CCN reported:

 

“I think it’s really clear that XRP is not a security. XRP exists independent of Ripple and it would operate even if Ripple Labs failed. I don’t think that our ownership of XRP gives us control.”

 

Need for Regulatory Certainty and Clarity

With the debate yet to be settled — for XRP as well as other digital assets — 15 members of the U.S. Congress this week called on the SEC to offer clarity on cryptocurrencies and issue guidelines on initial coin offerings (ICOs).

 

In a letter signed by the 15 legislators hailing from both sides of the U.S. political divide and addressed to the chairman of the SEC, Jay Clayton, the authors pointed that there was uncertainty regarding how digital tokens are offered and sold. According to the members of Congress, this was slowing the pace of innovation in the world’s largest economy and driving business to other parts of the world where more clear rules and regulations exist.

https://www.ccn.com/ripple-hired-washington-lobbying-firm-will-get-paid-partially-in-cryptocurrency/

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Chinese Billionaire Bitcoin Investor ‘Done’ Investing in Blockchain Projects

Li Xiaolai, the founder of Beijing-based venture capital firm BitFund and a widely recognized billionaire Bitcoin investor in China, has publicly stated that he will personally move away from the blockchain and initial coin offering (ICO) space.

 

He said on China’s largest social media platform Weibo:

 

“From this day on, Li Xiaolai personally will not invest in any projects (whether it is blockchain or early stage). So, if you see ‘Li Xiaolai’ associated with any project (I have been associated with countless projects without my knowledge, 99% is not an exaggeration), just ignore it. I plan to spend several years to contemplate on my career change. As for what I’m doing next, I’m not sure just yet.”

 

Possible Reasons Behind his Decision

The cryptocurrency market has experienced its fourth worst correction in the past nine years, experiencing a 80 percent drop in valuation within the past nine months. Yet, the vast majority of ICO and blockchain projects have held most of their holdings in Ethereum and Bitcoin throughout the bear market and the ICO market still remains active to this day.

 

The decision of Li to abruptly exit the ICO and blockchain sector was likely fueled by two major factors: the crackdown on ICOs by the Chinese government and a significant increase in the number of scams in the blockchain market.

 

 

 

In June, CCTV, China Central Television, a state-owned network controlled by the government, released a documentary on blockchain and claimed that the technology has the potential to achieve a level of success that is in orders of magnitude larger than that of the Internet.

 

The statement released by CCTV came as a surprise to both the local cryptocurrency market of China and the global finance industry, especially given the ties of CCTV with the government.

 

“Blockchain is the second era of the Internet. The value of blockchain is 10 times that of the Internet. Blockchain is the machine that produces trust,” CCTV reported.

 

However, less than two months after the release of the report of CCTV, the government of China tightened its blanket ban on crypto, characterizing ICOs as illegal fundraising tools and prohibiting any promotion of token sales within the country.

 

 

 

An official document released by the government of China read:

 

“Such activities are not really based on blockchain technology, but rather the practice of speculative blockchain concepts for illegal fundraising, pyramid schemes and fraud. The main features are as follows:

 

Risk of illegal activities, unregulated overseas markets and inability to track or monitor transactions made in ICOs.

Deceptive, opaque and concealed fundraising methods, relying on celebrities and influencers to manufacture hype around investments to tempt investors.

Illegal operations like profit-generating pyramid schemes and creating Ponzi schemes by describing them as ‘financial innovations.’”

Considering the reputation of Li as a high profile billionaire investor based in China and the government’s dissatisfaction with the ICO market, it is highly likely that local regulations have encouraged Li and his team at Bitfund to move out of the blockchain market.

 

Not Out of Crypto

Li and his fund still hold a signifcant amount of Bitcoin and other major cryptocurrencies, which is estimated to be worth over a billion dollars. However, the reputation of the investor deterioated since his resignation from his role as managing partner of the $1 billion Hangzhou Xiong’An Blockchain Fund. The move was possibly made to recover his brand value and remove any association of his fund with illegitimate blockchain projects.

https://www.ccn.com/chinese-billionaire-bitcoin-investor-done-investing-in-blockchain-projects/

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