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Bitcoin ATM CEO: Cryptocurrency Needs Regulation to Survive.

In an exclusive interview with CCN, the CEO of the world’s largest Bitcoin ATM network took a hard stance against those who believe in a world where Bitcoin and its peers can survive unregulated.


Sheffield Clark, whose company — Coinsource — recently installed 17 new Bitcoin ATMs in Florida, stated that cryptocurrency is not a viable or realistic payment solution at this time, citing it as a major obstacle to be overcome for all in the space.


“With the time and cost that it takes to use Bitcoin to pay for everyday items as currently constructed, is not realistic for most people to use it in this way. It doesn’t make sense for them to. It is not easier or more cost efficient than traditional financial instruments at this time.”


Clark pointed out that BTC’s best use case at the moment is that of a speculative investment or means of trading and investing in other virtual currencies, something he says is evident from the use of the Coinsource Bitcoin ATM network, which is often used to exchange cash for bitcoin, which is in turn invested in altcoins for speculative purposes.


The CEO pointed out that the “primary Bitcoin ATM customer” comes from the one-third of the world’s population which are unbanked, leaving them with no choice other than cash or bitcoin. While the speculation is good for traders, Clark states that the volatile and speculative nature of the space makes life difficult for those turning to cryptocurrency out of necessity.


“You can get Bitcoin more into the mainstream media, put more kiosks on the streets, make it more easily accessible for all, and further educate the masses on its adoption, but until it is practical for someone to be able to buy a gallon a milk with it or put their life savings into it without having the risk of losing 20% of it in a week – adoption a high level by the general population will continue to be very slow if not stagnant.”



Sheffield said that many of Coinsource’s customers use cash to purchase bitcoin so that they can trade for altcoins.

Like many of our recent interviewees, such as Coinbase UK CEO Zeeshan Feroz, Clark feels that more regulation is the solution to many of the problems in today’s crypto space. He lamented the lack of regulation and the lack of continuity between individual states and the federal government, comparing this to marijuana regulation in the U.S., which varies greatly from state to state.

“The only consistency that I see between the states and the federal government regarding Bitcoin is the total lack of enforcement when it comes to the few regulations that are in place.”


This lack of regulation is a major problem in Clark’s eyes, and he doesn’t have much time for those who feel otherwise.


“Those with the idealistic belief that one of the most noble ideals about Bitcoin is that it was created as an “unregulated” currency are fools to believe that it actually survive, much less thrive in that environment. The truth is that Bitcoin and the companies behind it are regulated by the banks in which they depend upon in which to grow their business.


Without any firm regulation from the government, these banks can put whatever restrictions they want onto those companies, resulting in those companies having to comply with much stricter standards than those that would be regulated directly by the government itself – and it’s to the banks’ advantage because at some level Bitcoin is a competitor to their traditional financial instruments whether they want to admit it or not.”


Clark stated that the other option for businesses is to simply operate without a bank account, leading to higher overhead costs and higher fees for consumers. Coinsource markets itself as having the lowest fees of any competitors, and Clark expressed disbelief over the fact that there are people buying bitcoin at markups as high as 25%, something which he feels will be curbed with a more defined regulatory framework.

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Interview: Former Huobi US Compliance Chief Talks NY Cryptocurrency Exchange Report.

Harry Zhou, former general counsel and compliance officer for Huobi US, spoke with CCN about the latest report from New York’s attorney general on cryptocurrency exchanges.


Zhou helped set up the legal framework in New York for cryptocurrency exchanges, namely the application and regulations for the BitLicense. He represented Huobi for comments on the BitLicense proposal and is a leading expert on blockchain law and regulation.




Speaking with CCN, he discussed the overall impact the report could have on exchanges across the U.S., including efforts some exchanges are making to gain federal approval. Gaining federal approval for a banking charter would ease the cumbersome process of obtaining licenses as money transmitter businesses in each state.


OAG’s Report: Impact and Controversy

The Virtual Markets Integrity Initiative report, released Sept. 19, drew criticism for its threats towards exchanges that declined to participate, even though they do not have operations in New York. Barbara Underwood, New York’s attorney general, called out non-participating exchanges such as Kraken in her virtual markets report. However, Underwood has no jurisdiction outside of New York.


Zhou agreed that it was a strange move to threaten exchanges that do not operate in her jurisdiction. However, he stated, “Other state banking regulators will look at this report closely.”


He continued:


“Other state’s banking regulators are going to look at it closely. They will look at the claims brought up in the report, and see how they could also apply to exchanges operating out of their states. It won’t be ignored.”


State regulators will not throw out the OAG’s otherwise detailed report, as it has been in much of the crypto-spheres (Kraken CEO Jesse Powell has some of the most colorful responses). Zhou believes that the report could be widely used to vet exchanges in each state. Though there’s no sign of this happening yet, there are already large entities that regulate state banking and dictates state bank charters.

Trumping State Regulations with a Federal Banking License



The patchwork that each state has for banking charts causes a lot of headaches for U.S. exchanges, according to Zhou, who keeps a close eye on the developments between exchanges and regulators.




The solution that exchanges are attempting is to gain a federal banking license. Exchanges have more reasons to obtain a federal license now that a single state’s attorney general can turn sour toward cryptocurrency. This would translate to approval to operate nationally. Though the requirements and oversight are more stringent for federal banking charters, large exchange operators, such as Circle, are considering filing applications, as CCN reported. One such drawback, according to Zhou, is that “the federal banking license would mean that exchanges would need to hold much more capital in reserve.”


This reserve requirement might actually be a good thing for cryptocurrency investors, though, as it could bring extra peace of mind for those who worry about the solvency of their exchange.


The Office of the Comptroller of the Currency (OCC), the regulatory body that grants federal banking license, has already shown interest in the novel move of allowing fintech companies to receive the license. As a bureau of the Department of Treasury, the OCC announced  that it would receive applications from fintech companies seeking a banking charter.




The OCC’s special charter, known as regulatory “sandboxes,” and the application’s allegedly more lenient requirements, have drawn criticism from traditional, brick-and-mortar banks. Banks feel disadvantaged by the National Banking Act regulations while an easier route to licensing is available to disruptive fintech companies. Coincidentally, the New York State Department of Financial Services (NYDFS) has publicly rebuked the OCC’s decision to allow a special fintech charter.


Zhou believes that a federal banking charter would be granted eventually. It won’t be a matter of “if” but “when,” he said.

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Tether Has No Real Impact on Bitcoin price: University Researcher.

Contrary to the somewhat-popular idea that tether (USDT) issuance is used to manipulate crypto markets by boosting the price of bitcoin, a new academic study by researcher Wang Chun Wei of the University of Queensland Business School shows that the most widely-used stablecoin in fact has a negligible effect.


Tether and the 2017 Bitcoin Price Rally

Titled “The Impact of Tether Grants on Bitcoin,” the report examines the tether-bitcoin price manipulation theory using a Value-at-Risk (VAR) model to establish conclusively that while there is a positive correlation between USDT grants and bitcoin’s trading volume, this does not lead to any significant bitcoin price movement.


In July, CCN reported that researchers from the University of Texas claimed that market manipulators used Tether’s USDT token to artificially inflate the bitcoin price during its prolonged 2017 bull run. In the 66-page report, Professors John Griffin and Amin Shams argued that tether has been repeatedly used to provide price support for bitcoin during market downturns.




Using the VAR model however, the new study debunks these claims, stating that no empirical evidence could be found to support claims of a positive correlation between USDT grants and the 2017 bitcoin price rally.


An excerpt from the report reads:


“We find no empirical evidence supporting the notion that Tether grants cause subsequent Bitcoin returns to rise on a daily basis. In fact, when we examine the Bitcoin return equation of our VAR model, none of the lagged variables, impacts Bitcoin returns. This suggest Bitcoin returns are showing greater signs of market efficiency than previously studied on older datasets.”


Tether Issuance Correlates to Increased Trading Volume


BTC/USD | Bitfinex

The report does, however, find evidence of a positive correlation between issuance of USDT tokens and increased cryptocurrency trading the following day. The study’s estimates show that in the aftermath of a tether grant, both bitcoin and tether experience increased trading volumes. The researchers are quick to point out that trading volume spikes do not directly lead to bitcoin price increases; moreover, the effect on trading volumes is temporary, and volume generally returns to normal within five days.


This would seem to indicate that, after Tether issues new tokens, investors could be purchasing bitcoin and other coins with USDT, but in terms of net effect, the size of the grants is not large enough to create any kind of significant price manipulation effect in the bitcoin market.




The study also found that tether grants are autocorrelated, indicating that Tether deliberately breaks large grants into smaller blocks for issuance over several days, so as to minimise price impact on crypto exchanges. Even more significantly, the study found evidence to suggest that USDT trading volumes increase following downward bitcoin price movements, which could be a result of investors keeping their holdings in stablecoins during bearish periods.


The spike in USDT issuances around this period could thus be a result of Tether responding to increased demand by launching new grants rather than an attempt to shore up bitcoin’s support levels by purchasing it with newly-minted USDT.

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$10,000 Target: Novogratz Sees Bitcoin Jumping 30% in 2018.

Billionaire investor Michael Novogratz, a legendary ex-hedge fund manager, formerly of the investment firm Fortress Investment Group, has said that the Bitcoin price will likely see a 30 percent increase by the end of 2018.


Once Bitcoin surpasses major resistance levels at $6,800, $8,800, and $10,000, Novogratz stated that institutions will enter the market via trusted custodian solutions.




“It’s also a bull market in institutions building the infrastructure needed for real money investors to start investing in this space… I think that in three to six months from now, there will be an ‘all clear’ sign for people — big institutions and pension [funds] — to start investing,” he said.


Impossible Not to Reach $10,000

During an interview with CNBC Fast Money, Novogratz explained that it is impossible for Bitcoin not to rebound to the $8,800 to $10,000 range. Over the last three days, the crypto market has added $25 billion to its valuation, triggered by the 100 percent increase in value of Ripple and strong momentum demonstrated by Ethereum.


As CCN previously reported, Novogratz emphasized that the next long-term rally, which may lead the valuation of the crypto market to reach $20 trillion, will be triggered by FOMO (fear of missing out) amongst institutions like pension funds and hedge funds.




In the past month, Morgan Stanley and Citigroup have released their plans of adding crypto custodian solutions to their existing infrastructure in the months to come. With BitGo and Coinbase already operating as trusted and regulated custodian solution providers, there are sufficient products institutions can rely on to enter the crypto market.


As such, Novogratz stated that once Bitcoin demonstrates another strong short-term rally supported by individual investors and retail traders by the end of this year, more institutions will invest in the market.


“It won’t go there ($20 trillion) right away. What is going to happen is, one of these intrepid pension funds, somebody who is a market leader, is going to say, you know what? We’ve got custody, Goldman Sachs is involved, Bloomberg has an index I can track my performance against, and they’re going to buy. And all of the sudden, the second guy buys. The same FOMO that you saw in retail [will be demonstrated by institutional investors],” explained Novogratz.


It’s Not All Talk

In 2017, there were discussions on the movement of capital from the traditional finance sector into the crypto market. However, at the time, there was no infrastructure in place to lure in institutions, which meant that even if some institutions were attracted to the market, there were no services they could use to invested in the asset class.

With significant progress being made in recent months, companies like Coinbase and BitGo expect billions of dollars to come into the market and by 2019, as long as Bitcoin maintains momentum in the $8,800 to $10,000 range, the crypto market is expected to experience a substantial increase in valuation.




Although Bitcoin has not recorded a large upward movement in the past two days like Ripple and Ethereum, the dominant cryptocurrency has demonstrated stability throughout August and September, which is positive for the mid-term performance of the asset.

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Crypto Market Stabilizes After $25 Billion Surge, Can Bitcoin Price Breach $6,800?

Over the past 48 hours, the crypto market has increased by more than $25 billion, from $198 billion to $223 billion. Ripple and Ethereum have maintained momentum at a price range.


Since September 20, the crypto market has initiated a strong corrective rally resulted by extremely oversold conditions. But, as many investors expected, the massive upward momentum of most major cryptocurrencies and small market cap assets have led the market to retrace.





Stellar, Tezos, Waltonchain, and Status have recorded losses in the range of 6 to 8 percent, after demonstrating an increase in value of around 20 percent in the last 24 hours.


$6,800 is the Main Target For Bitcoin

Billionaire legendary investor Mike Novogratz, who famously has more than 20 percent of his net worth in the crypto market, has said that $6,800 is the major resistance level Bitcoin will have to break out from in the upcoming days.


Currently, as of September 22, the price of Bitcoin remains just under the $6,700 mark, and if the volume of the dominant cryptocurrency, which has increased from $3.3 billion to $5.8 within a week, can be sustained over the next 48 hours, it will be highly likely for Bitcoin to surpass the $6,800 resistance level in the short-term.




Naturally, if Bitcoin surpasses the $6,800 mark, it will lead the cryptocurrency into the $7,000 region, which could allow Bitcoin to test the $8,800 resistance level in the mid-term. Novogratz emphasized that $6,800, $8,800, and $10,000 are major resistance levels Bitcoin will need to overcome.


The short-term prediction of Novogratz echoes the viewpoint of Masayuki Tashiro, a prominent Japanese market analyst, who stated that the price of Bitcoin will likely surpass $9,000 by next month.


Already, as Tashiro explained in June, positive regulatory developments have been made in Japan and South Korea, which he stated that will push the price of cryptocurrencies to increase by large margins.


“Personally I am bullish, and by the time the outline of the regulations will come together in October, those investors who will feel safer will come back. I hope things won’t get as overheated as last year, but I believe BTC can win back the value of 1 million yen (9,020$) in range,” said Tashiro.


Where Market Goes Next

On September 22, the crypto market demonstrated a standard retracement after a major corrective rally, which is positive as if the market has continued to increase at the pace of this week, then it could have led to a large drop in price.


In the upcoming days, based on the volume and the momentum of the market alone, it is highly likely for the crypto market to potentially make its way to the $250 billion mark, which it has not seen since late July.




As such, the small drop in the price of most tokens and small market cap cryptocurrencies in the past 12 hours can be considered as a positive price movement for another short-term rally.

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How to Write an STO White Paper: A Step-by-Step Guide (Part I).

The cryptocommunity’s collectively rising interest in STOs is leading to an increasing demand for STO white paper writers. Due to the similarities with securities offerings, STO white papers must follow certain guidelines to stay on the right side of the law. While there are multiple ways of checking all the boxes, the following guidelines are the simplest way to achieve them.


An  STO white paper is the biggest and the most important marketing document of the product and if done wrong, can kill your product before it even begins.


Given the general absence of regulations surrounding cryptocurrency-based products, it becomes very important for the STO white paper to conform to a non-leading and non-speculative language.


White Papers killed the ICOs

Writing ICO white papers was a job prospect that gave birth to several faux writers parading as experts. You can’t blame them since the majority of the ICOs themselves were based on the same premise.


I have witnessed first-hand ICO companies offer $100 for writing an ICO white paper.




Dude! Good Luck for your $100 million ICO building a token based PaaS ecosystem. Also, skip!!


I mean, yes, there exist cheap knockoffs of the latest iPhones and the Galaxy Note devices, but do you buy them? If you cannot differentiate between a cheap knockoff and the real thing, conducting an ICO should be the least of your worries.




Thankfully, Security Token Offerings (STOs) are the worthy answers from the crypto-community to the challenge thrown by the regulatory authorities.


An STO is simply an ICO that consulted a real lawyer before proceeding with the token sale offering.




Look at Tezos with its securities class action lawsuit in the USA. While Tezos and its ridiculously named token — Tezzies might be right in spirit and intent, they quite possibly did not worry much about legal due diligence as much as they have to now.


Legal compliance is not a luxury but a requirement.


In a perfectly rational world, there would have been no need for another acronym — STO when the existing acronym — ICO encompassed both, tokenized assets, as well as, tokenized platform access.


The Emergence of STOs

However, we are where we are due to our decisions and actions.


Security Token Offerings are the hottest thing in the crypto-verse and another flood of cryptocurrency token offerings in the form of security tokens are just around the corner.




Another deluge of cryptocurrency writers will begin adding STO white paper development as a skill and begin offering it at $100 a piece. The problem does not lie in cheap alternatives. It lies in the potential ramifications that can arise from the usage of that cheap alternative.


Some things are expensive not due to inflation but the actual value that they represent.


My intention behind writing this article is to help white paper writers find a decent template for developing an STO white paper.


It will also benefit STO companies have some semblance of auditability when outsourcing  the writing of your STO white paper to cheaper writers.

A Few Global Rules for Writing an Sto White Paper:

Breakdown the content into several smaller sections to increase readability. However, do not add more than two headings on one page.

Keep the executive summary short. If you go over 300-450 words, you’re doing it wrong.

The key audience of your white paper is the crypto-investor. Add a token sales summary sheet with all the token sale related details in a neat table just after the executive summary.

Learn to make flowcharts. Lucidchart,, and OmniGraffle are very intuitive and easy to use.

Avoid repeating even one sentence. I repeat, do not plagiarize your own content, in the same white paper.

Last, but not the least, focus on your solution and not Blockchain. DLTs are a part of the solution. They are not the solution.

Sections of an STO White Paper:

An STO white paper must have the following 6 sections to ensure completeness of the documentation:


Legal Disclaimers

Industry Overview

Product Details

Technical Architecture

Tokenomics and Token Offering Details

Business Model

Team Members and Advisory

While the order of these six building blocks of an STO white paper can be altered, I feel that this ordering follows a natural flow and enables the reader to see a cohesive story.


Legal Disclaimers in an STO White Paper

Also known as Forward-Looking Statements, the Legal Disclaimers are provided by a law firm/agency after a review of the complete STO white paper by them. It should include the following items:



(Source: Josoft Technologies)

Clauses on Expectation of Profit — Since STOs allow an expectation of profit, the legal vetting of the product must include what is the expectation of profit, how will it be delivered, and how much risk is involved.

Allowed Countries — Due to their equity-like nature and their governance via laws which cover equities, the Security Token Offering will have one or more countries excluded from the STO if a particular country is allowed. For example, the PATRIOT ACT of the USA does not allow American citizens to make investments in Libya, South Sudan, and a few other notified countries. Thus, an STO which can be invested in by the nationals of Libya cannot have Americans participating in the STO. This information must be a part of the STO White Paper.

Rights and Benefits associated with Token Ownership — In an STO, the token architecture can be designed to provide voting rights, rights to dividends, and even ownership of the asset backing the token.

Privacy Policy of the Token Sales Event — This informs the reader about the scope and usage of the user data stored within the systems of the STO. Privacy policy gained importance since the emergence of GDPR and an STO white paper must at least provide a link to the privacy policy of the company.

How to Write about the Industry in an STO White Paper

Every STO addresses or ‘disrupts’ the operations of one industry or more.


For example, an STO of equity ownership belongs to the finance and investments sector.




Industry Overview is a crucial section and was often skipped by the ICOs of 2018. Investors (contributors in the case of ICOs) come from diverse backgrounds and do not know about the ins and outs of the industry. Thus, industry overview adds a wealth of information to the STO white paper for the benefit of the readers.



(Source: The BreakOut)

In this case, Industry Overview must talk about the following areas to achieve completeness:


History of the Industry (1 Page) — Brings the readers up to speed with the developments, innovations, and inventions over the past and how the innovation has slowed down. Present a balanced picture and try to pinpoint the problem to a specific area. For example, if you’re writing a white paper for an STO that is looking to solve the problems of supply chain management in an industry then talk about the intermediaries who slow down the process and consume a lot of the value created.

Constraints of the Stakeholders (1-2 Pages per stakeholder) — An STO addresses the problems of more than one stakeholder and affect the existing method of the functioning of the stakeholders. Since the proposed solution will involve a learning curve and is liable to be disliked by the stakeholders, it is imperative that the STO white paper lists the existing problems to remind the stakeholders of the need to innovate and improve.


Emerging Trends in the Industry (2 Pages) — Every STO white paper must be wholesome. Let’s be honest, Blockchain is never the only way to solve a problem. It is only one of the several ways that you/your client has chosen to employ to address the problem. This section will enable you to present an assessment of the other solutions that can solve the problem and present how your Blockchain-based solution is the best fit.


Market Potential (2 Pages) — There can be no product without a viable market potential. Product/market fit is not just a buzzword, it is a key requirement for the business to be successful. Try to present facts via charts, graphs, and infographics to present the existing market size, the future market size, and your scalability plas. 

Do keep in mind to not go over 10-12 pages while writing the industry overview section. If you go over, it will make the reader go through 10-15 minutes of reading time without even getting introduced to the project.


A good STO white paper straddles the fine line between an academic textbook and an advertisement material.


How to Write about the Product in the STO White Paper

This section should be the meatiest and the most cohesive piece of the white paper. By meatiest, it does not mean that it should have the most number of pages (for the record, it will be the Technical Architecture Section), but should be the mechanism that ties all the loose ends created during the industry overview section and present the chosen solution as the only emerging common theme in a natural manner.




For example, if you are writing a white paper for an STO that offers a solution for tokenizing a real estate plot, you will write about the constraints of the builders, buyers, and the regulatory authorities.


In the Product Description section, you must write how your solution addresses these problems. This section must be divided into the following sections to allow easy readability and provide natural reading breaks to maintain reader interest:


Solution Overview (1 Page) — This section must include a brief overview of the product being built. There is a high likelihood that the solution itself would be comprised of several modules that communicate with each other to become a complete unit. For example, a cryptocurrency exchange can have a portfolio, a wallet, and an algorithmic trading module that are all connected to each other in the backend but presented as different screens on the front end. Your solution section must contain a small paragraph on each of the modules and a simple diagram that shows the connection of all the modules.


Solution Details (5-10 Pages) — Depending on the complexity of your solution, this section can reach a length of up to 10 pages which should be the maximum limit. If you’re going overboard, you are not succinct enough in your description and will make the reader begin skimming. That is a dangerous territory to be in. If your reader does it once, he/she is likely to do it again.


Thus, this section must include details about your solution, neatly offer it as a sucker-punch to the problems enumerated in the problem sections above. To ensure that if the content in this section does not drive home the point that it is the only pertinent solution for all of the problems plaguing the industry, try depicting it as an infographic.


For example, if you are building a tokenized offering of a solar-powered plant, your solution details must include how:

People can buy/sell your tokens (Platform details)

How will the solar-powered plant be built

How you will prevent misuse

Details of the front end components (Mobile/Desktop Apps)

This completes the non-technical and non-financial side of our guide to developing a complete and cohesive STO White Paper. The details about creating the remaining sections can be found in second part of the 2-Part guide.

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South African SMEs Are Increasingly Embracing Blockchain Technology

South African SMEs are increasingly becoming interested in blockchain technology as firms look to creating businesses around the technology. 

South African SMEs Love the Blockchain Says PWC Survey

According to Paul Mitchell, PwC South Africa’s Fintech and Blockchain Lead, the openness to blockchain technology has been brought about by the fear of being left behind. Mitchell’s comments come after a global survey conducted by Big Four accounting and advisory firm PwC. They reveal that 84 percent of the surveyed businesses (mainly SMEs) have begun the implementation of blockchain technology.

Spending on blockchain technology is set to double this year to $2.1 billion globally and, according to reports, South Africa has been very accepting of the technology as they came in third for the fastest adoption rate in the world in 2017.

“The speed at which blockchain technology is being adopted is unprecedented. There is a growing recognition that this technology has profound implications in many areas, and we are watching it move from a start-up idea to an established technology in a fraction of the time it took for the Internet to be accepted as a standard tool,” says Mitchell.

Differences in Acceptance of Technological Advancements

South African SMEsYet, segments in South African businesses have not equally welcoming to these technological advancements.

The big banks in South Africa are actively investing in blockchain technology, and experimenting with the technology as a way to streamline processes, saving time and money.Startups and small and medium-sized enterprises (SMEs), on the other hand, are slower to adopt the latest technologies mainly because of the high costs involved. 

Even in the nature of technologies, differences exist. For example, enterprises prioritise the adoption of the Internet of Things (IoT) over big data, blockchain and artificial intelligence (AI), as part of their digital transformation initiatives. The research is based on 1,400 interviews with SME decision-makers across South Africa conducted by the SME Survey 2018.

South African enterprises are starting to prioritise strategies and budgets that embrace new IT norms, including an appreciation for the blockchain technology. Although high implementation costs can hold back adoption, companies are keen to adopt and adapt while learning from each other’s lessons. They have seen the changes in other markets and they are not willing to lag behind.

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Bitcoin ETF Proposals Possess Substantial Market Influence

This article aims to ensure that all market participants understand the significance of a potential Bitcoin ETF, what exactly a such an ETF entails, when they are likely to be implemented, and how they will impact the overall market.

ETFs Defined

Exchange-traded funds, commonly known as ETFs, are a traditional investment vehicle offered on all major stock exchanges around the globe. They allow exposure to an underlying asset or basket of assets offered in the form of a security that is proportionally represented by the fund’s shares. Most importantly, they allow exposure to a market without needing to physically hold or store the underlying asset. ETFs have become one of the most popular methods for passive investment by the masses in the capital markets.

As ETFs allow an individual to buy a basket of multiple assets, they mitigate strong price swings which individual stocks often suffer from, especially in the incredibly volatile cryptocurrency market. Any losses from assets which do not meet up to their promise are counterbalanced with assets which have performed particularly well and the growth of the overall industry during that period. Driving up the funds share price over time. The notorious investment tycoon Warren Buffett once proved the power of ETFs with a successful bet that the S&P 500 would outperform a collection of well-regarded Wall Street hedge funds over the period of a decade. His victorious bet displayed to the masses the power of such funds.

Bitcoin ETFs Market Impact

Bitcoin ETF ProposalsOne of the major barriers to mainstream investor fund inflows into the blockchain ecosystem has been the lack of institutional investors’ ability to purchase assets using traditional methods. Many do not understand that such market participants are simply not going to risk their capital on unfamiliar and unregulated cryptocurrency exchanges.

Instead, institutional money will enter the space once they can acquire cryptocurrencies without needing to hold the underlying asset, in a highly regulated and fully insured manner. Thus, for institutional investors crypto ETFs mitigate the risks of the industry whilst allowing them to profit from one of the greatest financial revolutions of our time. 

Although the impact of such institutional investors on the market will likely be of a speculatory nature in the first instance, this huge influx of money to the market will bring much-needed market exposure. The media love to shame the cryptocurrency ecosystem as much as feasibly possible, calling it a scam or a fad on a regular basis.

Institutional money would bring credibility to the entire industry and allow well-respected entities who have been quietly investing in the cryptocurrency space to come out of the woodwork and into the spotlight. Ultimately, this could lead to mainstream cryptocurrency adoption long term, as a result of the perceived integrity of the industry as a whole, and, potentially, a massive boost for the price of bitcoin.

Bitcoin ETF Calendar

Issuer Company Filing Date Status SEC Date
    “Physically” Backed by Bitcoin Holdings    
Winklevoss Bitcoin Shares Winklevoss Cap Mgmt 01/07/13 Denied 26/07/18
VanEck SolidX Bitcoin Trust VanEck & SolidX 05/06/18 Postponed 30/09/18
Bitwise HOLD 10 Cryptocurrency Index Fund Bitwise 24/07/18 Awaiting Approval Unknown
    Derivatives Based    
GraniteShares Bitcoin ETF GraniteShares 15/12/17 Denied 15/09/18
GraniteShares Short Bitcoin ETF GraniteShares 15/12/17 Denied 15/09/18
Direxion Daily Bitcoin 1.25X Bull Direxion 05/01/18 Denied 21/09/18
Direxion Daily Bitcoin 1.5X Bull Direxion 05/01/18 Denied 21/09/18
Direxion Daily Bitcoin 2X Bull Direxion 05/01/18 Denied 21/09/18
Direxion Daily Bitcoin 1X Bear Direxion 05/01/18 Denied 21/09/18
Direxion Daily Bitcoin 2X Bear Direxion 05/01/18 Denied 21/09/18
Evolve Bitcoin ETF Evolve Funds 21/09/17 Awaiting Approval Unknown

The table above displays cryptocurrency ETFs that are currently laying the foundations for their approval. Such firms are on a waiting list ready for their hearing with the U.S. Securities and Exchange Commission (SEC), who will ultimately determine their fate. The Winklevoss twins’ fund has already been turned down for the second time as of July, 26. Following this, the SEC has denied a following nine applications, predominantly from Derivatives based ETFs such as GraniteShares and Direxion. Such a decision results from their perceived inability to provide significant liquidity due to their market size, which could lead to significant market manipulation.  

BitcoinDespite such dismissals, the most important ETF which market participants should be fully aware of is the VanEck SolidX Bitcoin Trust who plans to release their ‘physically’ backed ETF on the Chicago Board of Options Exchange (CBOE). Recently, the SEC hearing date was postponed to the 30th of September. The CBOE has true industry influence as the largest options exchange in the world and has proven itself in the cryptocurrency market by introducing Bitcoin futures in December 2017. They have meticulously studied the failures of all previous ETF denials and reviewed their application accordingly. If an ETF is likely to get approved this year, this will most likely be the one.

Despite all the hype, some sceptics suggest that ETF delays are usual, with Copper being the last ETF to pass through the SEC. With their reasoning, the likelihood of an ETF being approved in 2018 is minimal. However, regardless of whether a decision happens in the next few months or not, the market has certainly been responding rapidly to both positive and negative news. The first Winklevoss twins ETF denial news caused a flash crash which quickly corrected, whilst the delay of the major CBOE proposal caused a more prolonged fall in bitcoin’s price. Ultimately, the market appears to be in a stalemate until a further delay, approval or disapproval occurs. The latter could cause a long-term downtrend, whilst an approval could see prices increase exponentially. As September, 30, looms, the market tension builds. Be sure to have a plan for all situations to ensure one maximises or minimises the ETF decisions’ impact on the market. 

This guest post was contributed by Adebayo Juwon, Country Manager (West Africa) at

*Readers should do their own due diligence before taking any actions related to the company, product or service. is not responsible, directly or indirectly, for any loss or damage caused by or in connection with the use of or reliance on any content, product or service mentioned in this guest post.*

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Bitmain Unveils Next-Generation ASIC Chip to Be Integrated into New Antminer Machines

Bitcoin (BTC) mining behemoth Bitmain has unveiled its next-generation ASIC chip soon to be used in the firm’s new “Antminer” crypto mining machines, Reuters reports September 21.

An Application-Specific Integrated Circuit (ASIC) chip is a piece of tailored mining hardware geared to mine cryptocurrency based on a specific hashing algorithm.

Bitmain CEO and co-founder Jihan Wu reportedly announced the new crypto-mining-specific ASIC chip BM1391 during his keynote lecture at the World Digital Mining Summit in Georgia.

According to Wu, Bitmain has now started to mass produce the chip and plans to integrate it into its next-generation Antminer machines.

The new “acceleration” ASIC chip is said to use an SHA256 algorithm and is based on a highly-advanced semiconductor manufacturing technology, 7nm (nanometer) Finfet. It reportedly integrates “more than a billion transistors,” using a special circuit structure and low power-intensive technology to optimize efficiency. According to CEO Wu, tests have shown the chip “can achieve a ratio of energy consumption to the mining capacity that is as low as 42J/T.”

Wu emphasized that as the industry matures, “exponential growth” in blockchain user traffic means that ever-greater processing power will be required to keep pace. He predicted that bleeding-edge computing technology development will also need to be integrated with blockchain to address the challenges facing the burgeoning industry.

Just yesterday, Bitcoin mining software manufacturer Bitfury Group unveiled its own ASIC chip dubbed Bitfury Clarke, which the firm plans to integrate into a range of hardware, including its mining servers.

In July, Cointelegraph reported that bearish crypto markets had negatively impacted the sale of ASIC chips, with a predicted price drop of 20 percent that month. The affected graphics card suppliers including the Taiwan Semiconductor Manufacturing Company (TSMC), as well as its integrated circuit (IC) design service partners like Global Unichip.

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India’s Blockchain Ecosystem Suffers as Antagonistic Government Policy Brings Exodus.

The fallout from India’s regulatory position on cryptocurrencies is leading to an exit of talent, businesses and investment from the country’s blockchain space on a scale paralleled only by a prior wave of tech industry flight during the internet boom of the late 90s and early noughties.

According to a recent News 18 report, a substantial number of developers, service providers and other organisations within India’s cryptocurrency and blockchain sphere have already fled, or are in the process of fleeing from India to jurisdictions with friendlier regulatory dispositions such as Thailand, Estonia and Switzerland.

Ring-Fencing by India’s Government

Recently, the central government of India has been engaged in a series of regulatory actions designed to ring-fence the Indian cryptocurrency industry, ostensibly to combat money laundering and tax evasion. CCN reported a few days ago that the Reserve Bank of India (RBI) filed an affidavit in the Supreme Court stating that under the provisions of the Coinage Act and the RBI Act, bitcoin is not recognized a valid payment system under the Indian constitution because there is no backing legal framework for it.

Spooked by this and other actions and pronouncements by government agencies and officials, the cryptocurrency ecosystem in India is experiencing an exodus of talent and investment comparable to the way India’s tech industry once hemorrhaged talent to Silicon Valley. The blockchain ecosystem, which includes developers, cryptographers, traders, cryptocurrency exchange platforms, blockchain service providers and other affiliated people and organisations is on the cusp of a new wave of brain drain, which could prove disastrous for the nascent, relatively small industry.

Speaking to News 18, a number of exchange platform owners revealed that they have already identified potential locations outside of the country and are in the process of relocating.

Asking not to be identified, one such owner said:

“There are talented people and companies in India’s blockchain community but the constant fear of a sudden shutter coming down is forcing them to move out. Moreover, why not? Business always thrives in a place which is product-friendly.”

Profiting from India’s Loss

Some popular destinations for blockchain talent and investment fleeing India’s hostile regulatory landscape include Singapore, the UK, Switzerland, Japan and Estonia, amongst others, but Estonia, in particular, seems to be doing better than most in benefiting from India’s loss of such people and organisations.

Already rated as one of the easiest places to do business in the world, and with a very blockchain-friendly regulatory atmosphere, Estonia also launched an e-residency programme in December 2014 which further simplified the process of registering a company in the country. Its representatives held a session in India with the aim of attracting entrepreneurs, eventually bringing in 200 registered Indian startups.

In India meanwhile, the government’s antipathy toward bitcoin and other cryptocurrencies continues unabated, with the RBI revealing recently that its blanket ban on banks facilitating crypto trading processes was not in fact based on research or benchmarking to global regulatory standards. The revelation, which was contained in an affidavit filed in response to a Right To Information request from a New Delhi lawyer, indicates that the government’s position on crypto trading is effectively based on negative sentiment as against actual regulatory concerns.

Amidst Indi’s tough stance on cryptocurrencies, however, the government continues to explore blockchain technology as a solution to many of its long-standing service delivery problems such as issuance of birth certificates.

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Point72 Exec Leaves the Firm to Launch Crypto Hedge Fund in October

Former equities portfolio manager Travis Kling has left billionaire Steven Cohen’s Point72 Asset Management to launch his own digital assets fund, Bloomberg reported September 21.

Point72 is an asset management firm founded in 2014 as the successor of investment company SAC Capital Advisors. The latter pleaded guilty to federal insider trading charges and paid a $1.8 billion fine. Point 72 has offices in New York City, Hong Kong, Tokyo, Singapore, London, Paris, and Palo Alto, while its staff is marked with former IBM executive Timothy Shaughnessy as chief operating officer.

The new Los Angeles-based fund called Ikigai will reportedly start on October 1 with partners’ capital, with plans to raise $15 million of outside capital on November 1. By mid-2019, Kling plans to increase Ikigai’s tokens portfolio to $100 million and its venture fund to $33 million.

At the time of launch, most of the funds will be in cash. The fund has a fee of two percent in addition to custody costs, while a minimum investment for accredited investors is $250,000.

Kling expressed confidence in cryptocurrencies, despite the current slump in markets, as interest in the space continues to grow. Kling said that “[cryptocurrency] will be a multi-trillion-dollar asset class,” adding:

“It will be part of our everyday lives. It’s still very early, but the development and growth of this technology will be exponential.”

In July, Cohen backed Arianna Simpson’s crypto and blockchain-focused hedge fund Autonomous Partners through his private equity firm Cohen Private Ventures. Simpson then said that her fund has held off from investing in Ripple (XRP) pending clarification from U.S. regulators as to whether XRP would be classified as a security.

In April, it was reported that 10 percent of crypto hedge funds could face closure in the subsequent eight months due to both market health and regulatory uncertainty. Kyle Samani, co-founder of U.S.-based fund Multicoin Capital, said that “new capital has slowed, even for a higher-profile fund like ours.”

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Largest Brazilian Brokerage to Launch Exchange for Bitcoin and Ethereum

The largest brokerage in Brazil will enter the crypto space by launching an exchange for Bitcoin(BTC) and Ethereum (ETH) in the near future, Bloomberg reported September 21.

Chief Executive Officer of Grupo XP Guilherme Benchimol told Bloomberg that the company will launch an exchange called XDEX in the coming months, with around forty employees. Grupo XP is the biggest financial group in Brazil, comprising companies with various business models.

XP has reportedly set a goal to have $1 trillion reais ($245 billion) under custody by 2020, which is four times what the company expects to raise by the end of this year. In addition, XP will launch a bank in the next few months.

Benchimol said that he “must confess, this is a theme I’d rather didn’t exist, but it does," adding that “we felt obligated to start advancing in this market." He noted that the company is being pushed into the crypto business by the popularity of cryptocurrencies among investors. 3 million Brazilians “have exposure” to Bitcoin, compared to only 600,000 that invest in the stock market.

Initially, Grupo XP announced its plans to launch an over-encounter (OTC) BTC exchange in April. The move was reportedly the first for XP, which first registered an outfit called XP COIN INTERMEDIACAO in August 2017. Later that year, following a 5 million reals (about $1.5 million) capital injection, the company rebranded to become XDEX.

Earlier this week, Brazil’s Administrative Council for Economic Defense (CADE) launched a probe into six major national banks regarding alleged monopolistic practices in the crypto space. Per a CADE report, “the main banks are imposing restrictions or even prohibiting ... access to the financial system by cryptocurrency brokerages.” The banks reportedly claim that the brokers’ accounts were closed due to the absence or lack of client data.

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Celsius Network to Manage Funds for United Nations Initiative

Decentralized lending and borrowing platform Celsius Network will manage the Sustainable Development Goals Impact Fund (SDG Impact Fund) within the United Nations’ Sustainable Development Goals initiative, according to a press release published September 21.

The Sustainable Development Goals is an international program focused on bringing a “better and more sustainable future for all.” It addresses global challenges such as poverty, inequality, climate change, environmental degradation, prosperity, and peace and justice. The initiative aims to achieve a series of targets by 2030.

Per the announcement, the SDG Impact Fund will be launched by financial services firm Fifth Element with the aim to raise several hundred million dollars and deploy them in both fiat and digital format using a public blockchain. The fund will purportedly be the first to accept and operate all forms of crypto and digital assets in compliance with the UN Sustainable Development Goals.

Within the partnership with Fifth Element, Celsius Network is reportedly looking to “bring power back to the people” by providing banking services typically reserved for top tier asset owners. Celsius CEO Alex Mashinsky said that "by offering earned interest rates up to 7.1 percent, we allow individuals to make the same passive income Wall Street has been making for years." Scott Stornetta, adviser to Celsius, commented:

“We see a great opportunity to use this technology to deliver the value collected by different U.N. organizations in a more precise and effective way to the people and organizations that need it most."

In February the United Nations International Children’s Emergency Fund (UNICEF) embracedcryptocurrency by starting a charity drive for Syrian children, asking PC gamers to use their computers to mine Ethereum (ETH) and donate their earnings. Later in April, UNICEF Australia also announced an initiative that allows users to give their computer’s processing power to mine cryptocurrency for charity.

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US Congressman to Introduce Bills Supporting Blockchain Technology, Cryptocurrencies

U.S. Rep. Tom Emmer (R-MN) is planning to introduce three bills to support blockchain technology and cryptocurrencies, according to a press release published September 21.

The three upcoming bills are entitled the “Resolution Supporting Digital Currencies and Blockchain Technology,” the “Blockchain Regulatory Certainty Act,” and the “Safe Harbor for Taxpayers with Forked Assets Act.”

The legislation is focused on the support and development of blockchain technology, as well as the establishment of a safe harbor for taxpayers with “forked” digital assets.

The bills would prompt the federal government to provide a “simple legal environment,” and restrict fines against individuals who report “forked” digital assets until the Internal Revenue Service (IRS) presents formal guidance on the appropriate means of reporting. According to Emmer, “taxpayers can only comply with the law when the law is clear.” The representative further commented on the initiative:

“The United States should prioritize accelerating the development of blockchain technology and create an environment that enables the American private sector to lead on innovation and further growth, which is why I am introducing these bills.”

Moreover, Emmer has taken up the position of co-chairman of the Congressional Blockchain Caucus, a platform for the industry and government collaboration to examine the implications of blockchain and digital currencies. According to the announcement, “the Caucus believes in a hands-off regulatory approach to allow this technology to evolve the same way the Internet did; on its own.”

Earlier this week, U.S. lawmakers called on the IRS to issue clarified and “comprehensive” crypto taxation guidance. The lawmakers argue that while the IRS has proactively continued to remind taxpayers of the penalties for non-compliance with its guidance, its failure to introduce a more robust taxation framework “severely hinders taxpayers' ability” to meet their obligations.

Also this week, Cointelegraph reported that the American National Standards Institute is going to discuss blockchain and Artificial Intelligence (AI) issues at its next Legal Issues and Joint Member Forum. The attendees will reportedly focus on legal and ethical concerns and explore concrete applications of blockchain technology and AI.

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Stellar price analysis 22 September: XLM skyrocketing as marketplace accelerates.

As with most tokens, XLM's value has increased rapidly.


Key takeaways

  • Stellar Lumens' digital token is off to the moon, as are most cryptocurrencies.
  • Trading volumes have risen more than 125% in the past 24 hours.
  • XLM surges on the back of XRP's market dominance.

Stellar's value has increased by almost one fifth (19%) in the last 24 hours of trading. The cryptocurrency is also performing tenaciously (14%) against bitcoin. Almost the entire marketplace is enjoying positive gains today.


In the early hours of this morning, the coin was priced at approximately US$0.251. It had crept up from lows of US$0.212 yesterday. The token fluctuated to a peak of US$0.275 before slipping back down to its previous value.

Other digital currencies have shot up this morning, including XRP (60%), Bitcoin Cash (12%), Cardano (12%), EOS (9%), Ethereum (8%), IOTA (7%) Monero (6%), Litecoin (6%), Dash (6%) and bitcoin (4%).

At the time of writing, XLM was valued at US$0.251.

24-hour trading volumes have more than doubled since yesterday, up from US$89 million to US$202 million.

While it’s possible that XLM's latest rally may have been encouraged by the recent positive sentiment permeating the cryptocurrency market, driven by XRP, there may be other factors involved in the price hike.

Chain and Lightyear merge to form Interstellar

Stellar Lumens is a token issuance and international payments-focused cryptocurrency and Chain is/was a builder of cryptographic products for use on decentralised ledgers. Together they are now Interstellar.

The nitty-gritty of the deal is that Stellar-backed commercial arm Lightyear acquired Chain to merge with it. Both the Lightyear and Chain brand names will be retired and replaced with Interstellar. The upshot of the deal is that Chain, along with some existing clients and services, will be moving onto the Stellar blockchain. Stellar will receive several new tools for businesses, enabling additional potential for real-world adoption.

Stellar, listed in the top ten coins by market capitalisation, recently eclipsed 1 million network accounts.

You can learn all about different exchanges, understand exactly how to buy and sell cryptocurrencies, calculate your taxes, discover digital wallets to hold assets and explore a list of all the alternative coins on the market.

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An AUD-pegged stablecoin is coming to Australia with Bit Trade.

The ability to move money at the speed of data, without the usual crypto downsides, is a powerful tool.

Stablecoins are well and truly in season now, with several unique offerings arriving in just the last couple of weeks. The most distinctive might be the Winklevoss twins' Gemini Dollar, a high profile and high-transparency collateralised Tether competitor, and ndau, the world's first unpegged stablecoin.

And now, an AUD-pegged collateralised stablecoin, courtesy of Bit Trade and Emparta. The so far unnamed new stablecoin will be designed to facilitate real direct crypto payments in conjunction with Emparta's blockchain employment infrastructure and Bit Trade's market services.

"We are excited to be partnering with Emparta and see enormous opportunities for the stablecoin in the Australian market," said Bit Trade managing director and co-founder Jonathan Miller. "The stablecoin is a core part of the Emparta Employment Infrastructure, Identity and Payments platform. We look forward to being one of the very first users of the stablecoin."

Towards adoption

"The need for an Aussie dollar-backed and redeemable coin is essential for the broader market adoption of digital currency throughout Australia and the world," said Emparta CEO Adam Sarris. "We see multiple uses for the stablecoin, and our partnership with Bit Trade enables us to maximise its utilisation and work with some of the most talented and experienced blockchain experts in Australia."

It's not the first Australian stablecoin project though. The third-gen uncollateralised Havven project sprang up in Australia as one of the first to explore the idea of a stablecoin supported by a self-sustaining algorithmic economy.

But that might be a bridge too far for real adoption.

An Australian dollar stablecoin that's transparently backed with a cold hard fiat treasury might be a much more reliable option for businesses and consumers that want to unlock the benefits of digital currency today, rather than gamble on a more experimental project. Plus, Havven uses a US dollar peg, which obviously isn't quite as useful in Australia.

"We are very different to Havven in that our stablecoin is designed for cash-based redemption and has a treasury collateralised with fiat currency," Sarris notes.

The best of both worlds

Emparta has every reason to be interested in an AUD stablecoin. Among its other features, Emparta lets businesses optionally pay employee wages in crypto, without the employer needing to hold and manage crypto, and is currently focusing its efforts on the enormous market for overseas workers.

juicy crypto words

The ability to move money with the speed and ease of moving data is a powerful advantage, and a collateralised AUD stablecoin retains the non-crypto benefits of concrete value and a stable price in Australia, while also enjoying the crypto advantages of seamless cross-border payments, plus frictionless, near-instant remittances for workers who want to send money home to their families.

As such, this new AUD stablecoin can deliver some very real benefits for workers who elect to be paid by it, and their employers, with minimal downsides.

"The ability to receive income payments in crypto, including a fully redeemable stablecoin is a key part of our service offering," Sarris says. "We have big plans for the stablecoin and the role it will play both for Emparta and beyond as we move into our next phase of growth."

"Beyond the obvious attraction for crypto traders, other key uses case for the stablecoin include a fiat (currency) on and off ramp for decentralised applications, as well as point-of-sale and escrow payments."

"We are continually intrigued by the myriad of use cases for cryptocurrency and blockchain and see a huge benefit for implementation of this technology into the Emparta employment services infrastructure, such as wage payments in cryptocurrency," Miller added.

But naturally, it's still of great interest to crypto traders, Miller observes. The ability to near-instantly convert volatile crypto to nice stable AUD during market downturns, without the costs of needing to go all the way to fiat, is a powerful part of any crypto trader's toolkit.

"Market volatility in the digital currency space makes a stablecoin a very attractive refuge for investors seeking stable returns and paves the way forward for a new way to access digital currencies in Australia," Miller said.

Australia is getting a reputation for its crypto sensibility, and a reliable AUD stablecoin might be a significant ingredient.

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Bitcoin and cryptocurrency round-up 21 September.

Is a bitcoin breakout coming? Zaif exchange gets hacked and New York AG accuses biggest exchanges of poor integrity. Here's your daily crypto wrap.

Lots going on in the markets right now -- with quite a few altcoins out-performing bitcoin.

Bitcoin (BTC)

Bitcoin has now broken through the $6500 mark, though.

According to technical analysis from CoinDesk, traders will be sitting on their hands a while longer, as there's still no clear indication of a break until around the $6,600 level, which is identified as the next target

And as this chart shows, Bitcoin pretty much sideways over last 30 days.

Ripple (XRP)

XRP has been performing strongly all week, but has spiked over 40% in the last 24 hours.

Changing hands for 46 cents USD at press time -- up from 28 cents a week ago.

More: XRP price analysis 21 September: Coin enjoys another substantial surge in value.

Earlier this week, Ripple's head of regulatory relations for Asia-Pacific and the Middle East Sagar Sarbhai told CNBC that we will likely see real-world adoption of the company's xRapid product -- which actually uses XRP -- in the next month or so.

EOS (EOS) has released the latest version of Version 1.3 contains an improvements to speed via new features for block producers, as well as a new SDK for smart contracts in C++, something that sets EOS apart from competing blockchains like Ethereum.

They have also announced the release of BancorX, which we reported on several days ago via a leaked blog post. BancorX will allow for cross-chain trading between EOS and Ethereum.

EOS is currently up by about 9% in the last 24 hours at $5.74 USD.

VeChain (VET)

VeChain Thor, the token of the VeChain network which is aimed towards supply chain management and dApp development, is enjoying a nice little boost off the back of it's fourth financial report.

The report details what how funds have been spent, as well as how much. That kind of transparency is relatively rare in cryptocurrency, so it's no surprise trader sentiment is positive.

VET is currently up about 6%.

Crypto news update

Japanese exchange Zaif hacked, $60 million lost

Japanese exchange Zaif has been hacked, losing about $60 million worth of cryptocurrency across bitcoin, Bitcoin Cash and Monacoin.

The attack seems to have been planned to take place right at the end of the work week, occurring Friday evening which meant that the exchange operators were unaware of anything being wrong until Monday - discovering the funds lost on Tuesday - and not reporting it till Thursday.

The funds were taken from one of the exchange's hot wallets. Two-thirds of funds belonged to users, with the remaining third belonging to the exchange.

News: Attorney General's report prompts accusations

The drama rolls on today with the release of a report by the New York State Attorney General, which sought to investigate integrity of cryptocurrency exchanges and their practices. The results of the report, named Virtual Markets Integrity Initiative have since ignited arguments between government and exchanges in both directions.

Before we go on, a bit of background on the report and how it works.

The initiative invited 14 exchanges who ostensibly operate in New York to complete a questionnaire about their organisation's practices.

4 exchanges declined to participate, saying they didn't trade in New York. The 4 exchanges were then investigated to see if this was true.

The report now alleges that 3 of those 4 exchanges were not telling the truth. They have now been reported to the Department of Financial Services for potential violations of New York's strict virtual currency regulations.

The exchanges reported were Binance, Kraken,

The rest of the report received voluntary information from major exchanges like Coinbase, Bitfinex, Gemini, Bittrex, Poloniex, BitStamp.

Together, with the 4 exchanges that were investigated, which also included Houbi, these exchanges accounted for staggering $76 billion of trade in the last 30 days, according to CoinMarketCap's adjusted volume data.

So we're dealing with some seriously big firms here, and unfortunately the feedback wasn't good at all. We have a few quotes from the report here, which shows at atmosphere of distrust by the Attorney General's office

"substantial potential for conflicts between the interests of the platform, platform insiders, and platform customers"

The report noted this was due to exchanges offering their own currency which is traded against others on the platform, Eg, Binance Coin, and exchanges having investments in cryptocurrency which are traded on the platform.

"Trading platforms have yet to implement serious efforts to impede abusive trading activity"

Some exchanges have taken steps to police the fairness of their platforms, the report notes, but most haven't.

"Protections for customer funds are often limited or illusory"

According to Franklin Bi - associate director at Wachsman Strategic Advisory Group and former blockchain strategy lead and VP for JPMorgan - the findings will have ripple effects over the next six months to a year. He says;

"The ramifications of this report will play out over 6-12 months, at least. The New York Attorney General’s Office leads the nation on these types of issues and this is as clear as it gets. Today is also vindication for everyone who sounded the alarm on how much improvement is needed across cryptocurrency market infrastructure. It may be tempting to dismiss this report as a one-off event, but it could be the beginning of a series of actions at the federal and state level."

The crypto industry are hardly ones to lay-down and take it from the government. Like I said before, this report has prompted accusations in both directions.

Kraken has come out of the gates swinging. For context it is one of the exchanges that provides trade data to CME to calculate its bitcoin futures contracts. CBOE are the second firm in America offering those same futures contracts.

So with that in mind, Kraken is now suggesting that the release of the report - one day before the expiration of CBOE futures contracts - is not dissimilar to an attempt at insider trading by someone within New York State Attorney General's office.

Certainly a big accusation. Although it may have been more of a tongue-in-cheek way of highlighting the potential for abuse in markets beyond cryptocurrency, rather than a serious accusation. "Quis custodiet ipsos custodes?" as Kraken said.

Kraken's stance toward the inquiry was clearly established months ago when the inquiry first began, and hasn't shifted since. This is what Kraken had to say back in April when it was asked to participate.

"We encourage regulators to resist the temptation to just swing at whatever's within arm’s reach. Think about your long-term strategy. If you make life too difficult for your neighbors, they might move away. And then you will be attempting to protect your consumers from the guys across the ocean, who couldn’t care less about your strong right hook," Kraken said. "Whether you think you have us by the balls or not, approaching us with some basic respect and having a conversation is always going to make the interaction smoother and help you get what you want faster than storming in with your 'or else' list of demands."

Strong words from the Kraken camp.

Blockchain can help the environment

Before we go let's move onto something more positive.

The World Economic Forum (WEF) has revealed a new study which has revealed over 65 different ways in which blockchain can help some of the most pressing issues facing environment.

Six key areas were specified as benefiting from the new technology, including;
• Climate change
• Conservation
• Oceans
• Water security
• Clean air
• Weather and disaster resilience

A pretty comprehensive list there. A few specific uses cases were given, like:
• Ensuring sustainability in supply-chains
• Funding mechanisms for low-carbon and sustainable economies
• Green energy trade (much like Power Ledger are already doing)

Pretty incredible considering it all started with a single whitepaper published by an anonymous forum user.

Here's an inspiring quote from Celine Herweijer, a partner at PwC UK, who published the report

"There is an opportunity for fresh ideas to harness this nascent technology to help deliver big gains for our environment. From transparent and trusted clean and ethical supply chains, to incentivising sustainable consumption and production, or underpinning the much needed transition to low carbon decentralised energy, water and mobility systems."

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Bitfury Clarke: A new generation of SHA-256 crypto mining chip.

That might be bad news at a bad time for Bitmain.

Bitfury's Bitfury Clarke was revealed on 19 September, as a SHA-256 ASIC mining chip able to reach hashrates up to 71 TH/s, and energy consumption as low as 88 mJ/HG, almost certainly not at the same time.

"The Bitfury Clarke ASIC is energy-efficient and designed to keep your mining operation low-cost and environmentally responsible [ie. cheap]," BitFury says.


"Aside from selling Bitfury Clarke chipsets, Bitfury is integrating Bitfury Clarke into its other industry-leading bitcoin mining hardware, including its mining servers and BlockBoxes, as well as in its own bitcoin mining centers in Canada, Norway, Iceland and the Republic of Georgia," BitFury says.

Individual mileage will naturally vary, but the peak performance numbers are quite impressive, depending on the unit price.

Competitor Bitmain's latest SHA-256 revealed, the water-cooled Hydro variant of the same Antminer S9 chip, is rated at 18 TH/s with energy consumption of 1728W.

On either side of the scale – more hash rate or less energy consumption – the Clarke beats it quite handily.

"The 14nm Bitfury Clarke ASIC is fully customized for SHA256 bitcoin mining. It can execute a hashrate up to 120 gigahashes per second (GH/s) and a power efficiency rate as low as 55 millijoules per gigahash (mJ/GH). The supply voltage required by Bitfury Clarke can be as low as 0.3 volts," BitFury says.

It also touts the customisability of the chip, letting miners adapt it for higher hash rate or lower energy consumption as needed. With many mining operations spending most of their lives teetering on the brink of unprofitability, the ability to downshift operations when bitcoin prices are low, and kick them up a notch when prices are high, could be a valuable option.

"Bitfury is looking at all factors, including silicon packaging, chip efficiency, optimal power distribution, cooling designs and speed of development when designing our mining hardware," said Valery Vavilov, CEO of Bitfury. "We think that this will lead to solutions that deliver the best ROI to our customers?—?regardless of ASIC size."

If it can deliver as promised, it might be bad news for competitor Bitmain, at perhaps the worst time possible.

Injury to insult

Crypto miner manufacturer and mining outfit Bitmain has recently been dogged by rumours of financial trouble after what seems to have been a disastrous gamble on Bitcoin Cash. Rumour has it that the planned Bitmain IPO is just a slightly desperate attempt to raise funds for continuing operations.

It might have backfired. New rumours suggest that disgruntled investors are now suing Bitmain for withholding crucial information (such as how illiquid its BCH holdings are) from investors. By many appearances, Bitmain is in a much tougher financial spot than its enormous on-paper earnings would suggest.

juicy crypto words

The Clarke now stands to hit Bitmain's profit margins in several exciting new ways, especially if it can deliver reliable performance close to the advertised peak.

Firstly, it might simply be a better product than anything Bitmain has put on the market. The Hydro is Bitmain's higher performing SHA-256 miner, but it has the major downside of needing an external water source and still might not be able to match the energy efficiency or performance of the next generation Clarke.

Secondly, Bitmain will be using the same miner for itself in operations around the world. This might herald sharper further rises in bitcoin's hash rate, much of it coming from Bitfury's side of the fence. This might hit its mining profits, and push Bitmain much closer to the deadly unprofitability line.

The nature of the mining industry means outfits whose hardware falls behind are at risk of falling off the wagon permanently. In proof of work, the most cost efficient miner at any given time is profitably growing their hash power share and setting a new benchmark. Every other miner has a short time in which to achieve similar cost effectiveness. Those which don't get there soon enough go out of business.

In this case, BitFury might be about to make a significant jump in cost-effectiveness, which will reset the clock for other mining firms.

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Charlie Lee tweetstorm explains Litecoin’s value proposition.

The crux might be that, despite little rational economic value, great PR is a tangible strength.

"Recently there has been a concerted effort to suppress Litecoin price by people/funds that are shorting LTC and by groups that see Litecoin as a threat. I will clear up this FUD and show why Litecoin has tremendous value," Litecoin founder Charlie Lee said, introducing a relatively concise 10-part Twitter rampage.

The move comes after Lee found himself in the crosshairs for completely divesting his LTC holdings, even after selling most of his Litecoin holdings at peak prices. It was an unusual move by crypto standards, where project owners typically like to demonstrate to followers that they have some skin in the game. That Lee managed to pull it off without completely alienating Litecoin followers might be a testament to his Twitter charisma if nothing else.

The tweetstorm presents a unique opportunity to examine Litecoin's value proposition straight from the horse's chicken's



Points and counterpoints

  • "FUD: Litecoin has lost its edge and can't differentiate itself from hundreds of other altcoins."
  • "TRUTH: Litecoin has one of the most secure networks of all altcoins. Litecoin has over $150MM of ASIC hardware protecting it. Litecoin dominates Scrypt mining by far... Miners have no incentives to attack the network because it will destroy the value of their ASIC hardware. Litecoin has a ton of liquidity, which is important for people to get in/out of LTC. It is on practically every fiat and crypto exchange (Gemini soon), even more than ETH."

Well and true, but all of those points are just Litecoin touting the exact same value proposition as bitcoin. Unless you have a strange personal preference for Scrypt-powered coins instead of SHA-256, this is just another way of saying "buy bitcoin rather than Litecoin".

Litecoin needs a value proposition that goes beyond just being "like bitcoin".

As Lee says, it's not accurate to say that Litecoin cannot differentiate itself from other altcoins. But a far more pressing problem for Litecoin is distinguishing itself from bitcoin with more than just lower fees.

"Litecoin is supported by 9+ payment processors: Aliant Payment, BTCPay, Coinbase, CoinGate, CoinPayments, Globee, GoCoin LTCPay and TravelbyBit. This makes it extremely easy for merchants to accept LTC. There are too many LTC merchants to count!"

But once again, these advantages still just position Litecoin as a worse version of bitcoin. If you want more payment processors, more hashing power or a more reliable and proven network, you go for bitcoin.

Plus, payment options are a way for people to dispose of Litecoin holdings, handing LTC to merchants who will then go on to immediately convert it to fiat. Each new payment processor is a new way of pushing Litecoin prices down. It's also a fairly irrelevant value proposition. Merchants who accept Litecoin will also accept fiat, and people don't buy cryptocurrency for the opportunity to buy a cup of coffee with it. They do so mostly because they hope it will increase in value.

Almost every reason to buy Litecoin is an even better reason to buy bitcoin. The sole exception is Litecoin's lower transaction fees and cheaper transactions.

  • "FUD: Litecoin is no longer needed now that Bitcoin can scale with LN."
  • "TRUTH: Many of the LN clients and apps also support LTC because they see the value of Litecoin. With atomic swaps, LTC interoperates with BTC on the Lightning Network."

"Litecoin will always be the cheapest and fastest on ramp to Lightning Network. And with solutions like submarine swaps, you can use on chain LTC to pay for a BTC lightning invoice! We will also have decentralized exchanges using atomic swaps. The possibilities are endless."

Can the Lightning Network save Litecoin?

The Lightning Network stands to drop bitcoin, Litecoin and other coin transaction fees considerably. Think of it as a high-speed highway where coins can move much more quickly and cheaply. The on-ramp Lee mentions is the point at which coins are moved on or off the Lightning Network, which involves paying the full transaction fee. Atomic swaps are a way of seamlessly converting coins.

Lee's vision is that once it's easier to swap bitcoin and Litecoin, people will prefer to use Litecoin as a cheaper way of getting on and off the Lightning Network. Objectively, Litecoin will continue to be cheaper and faster.

It does still raise a few questions though.

Firstly, it means Litecoin's future value is extremely dependent on the successful rollout of the Lightning Network. This isn't guaranteed to work as intended within a reasonable timeframe.

Secondly, there might be little reason to assume that people will prefer to use Litecoin once the Lightning Network rolls out. It's hard to say which way it will go, but from one angle it seems more likely that this will further cement bitcoin's superiority than it will bolster Litecoin.

For practical purposes, the Lightning Network closes the gap between bitcoin and Litecoin. So far people who buy Litecoin are doing so with the expectation that the reduced fees and transfer times are more likely to correlate with its future value. But so far, it's obvious that more people simply prefer bitcoin, higher fees and all.

It's not clear why the Lightning Network would necessarily change this dynamic, rather than giving people another reason to just stick with bitcoin.

The same assumptions which dictate that Litecoin will take off on the Lightning Network also dictate that Litecoin should already have taken off relative to bitcoin. But this just isn't the case. No matter what the fees and transfer times do, bitcoin is simply the much more popular choice, currently handling about 10 times as many transactions per day as Litecoin.

The Lightning Network will bring clear benefits to Litecoin relative to bitcoin. But based on previous events it still seems more likely to be Litecoin's undoing than its saviour.

  • "FUD: Litecoin as Bitcoin's testnet is not worth $3B."
  • "TRUTH: Even if Litecoin's only use case is a testnet, you can't put an absolute value on it. Need to look at it relative to Bitcoin. Litecoin's marketcap is only 3% of Bitcoin's marketcap. That is not very large at all!"

juicy crypto words

3% of bitcoin's market cap is enormous. Enormous enough, in fact, to place Litecoin as the seventh-highest market cap coin.

Litecoin has tended to brand itself as the silver to bitcoin's gold, to pull in buyers with the idea that its price is somehow naturally correlated to bitcoin. But reality doesn't really care about marketing maneuvers. Lee's point that 3% of bitcoin's market cap is too low for Litecoin rests on a potentially false premise.

  • "FUD: Litecoin has no development in the past 6 months."
  • "TRUTH: We don't work on the master branch, where people are looking. This is generally good Git practice! Proof: we released 0.16.2 last week and just released 0.16.3 today, which fixed the recent critical DoS bug."

True that.

  • "FUD: Charlie has quit Litecoin and doesn't care anymore."
  • "TRUTH: I'm working on Litecoin full-time and focused on Litecoin adoption. Proof: the fact that I spent time writing these 11 tweets! Litecoin also has the strongest crypto community. #LitecoinFam"

A cryptocurrency's community is a valuable asset, and Litecoin's is enough for some experts to assess Litecoin as a likely candidate for future price growth. Plus, cryptocurrency markets are often more emotionally than rationally driven. Litecoin's "bitcoin silver" branding is an asset which might rope in some buyers, especially new and inexperienced crypto fans looking for something that's "like bitcoin but better" and with a much lower price tag, and its keen community might help promote it as such.

Lee's breakdown of Litecoin's value proposition might not inspire much confidence in those looking for a rational reason to expect future growth, but it's undoubtedly a great example of community management and PR, which has always been one of Litecoin's key strengths.

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California prohibits cryptocurrency campaign donations.

US politics is loaded to the gills with dark money anyway. Maybe crypto could democratise the bribery.

California's campaign finance watchdog voted 3-1 to prohibit the use of cryptocurrency in political contributions in the state of California, The Los Angeles Times reports.

Most states haven't formally weighed in one way or another, but some have and California is the largest state to have explicitly landed on either side of the fence. The scorecard to date is:

  • Colorado, Montana, Oregon and Tennessee have explicitly allowed cryptocurrency contributions. It's probably no coincidence that these states reputedly have stronger libertarian leanings than the national average, in line with cryptocurrency as a whole.
  • Kansas, South Carolina, North Carolina and now California have prohibited the use of cryptocurrency in campaign contributions.

It wasn't a unanimous vote though, and the question has raised varying opinions across the board. Should cryptocurrencies be allowed as campaign contributions?

The main argument against is that it enables anonymous campaign donations. The main argument for is that politics is loaded with perfectly semi-legal anonymous campaign contributions anyway, but only for the rich. Crypto just democratises and streamlines utilisation of an existing legal dark-grey area, as nature intended.

Yea or nay

The arguments against cryptocurrency contributions stemmed primarily from the potential anonymity offered by the stuff.

Cryptocurrency, said California Fair Political Practices Commission (FPPC) commissioner Frank Cardenas, "is completely untraceable with respect to the identity of the individual."

As a blanket statement, this is factually inaccurate. Cryptocurrency can be untraceable, but it can also be much more cleanly tied to individuals than a suitcase full of cash, or all those checks for exactly $2,000.

But in this case, it might be mostly about keeping up appearances and catering to gut feelings. That is, after all, what democracy is all about.

Voter confidence in elections is already "waning", Cardenas noted, so banning cryptocurrency contributions might help settle voters' nerves. This might be especially relevant in light of the ussian-ray lection-ay nterference-ay, and findings that Russia's operatives were paid in bitcoin. Of course, the traceability of those bitcoin payments ended up being the hacker's undoing. They made the mistake of presuming cryptocurrency to be anonymous.

Commissioner Brian Hatch alluded to this.

"How do we know that they are not just a straw man for some oligarch or some foreign government?" Hatch asked. "This is a system that is designed to hide the source of the money, so why would we get into this?"

Several other participants also spouted interchangeable statements about cryptocurrency being anonymous.

The voice of dissent, in favour of crypto campaign donations, was commissioner Allison Hayward, who supported treating cryptocurrency donations the same as cash, except with additional protection in the form of a requirement that candidates disclose donor identities. FPPC staff attorneys issued warnings about this though, noting that unlike cash, there are no central bank records of transactions to act as a proxy for trustworthiness.

The fact that attorneys noted this suggests that it might be a legal side-effect, where blockchain records can only be regarded as reliable when it's convenient to do so. Blockchain records are apparently perfectly admissible evidence when prosecuting drug dealers, but can't be used to track campaign donations. How about that.

juicy crypto words

But to be fair, it might still be too early to formally allow cryptocurrency contributions on such a large field. The FPPC already has its hands full with the billions of dollars of perfectly legalish dark money political contributions flowing around the USA. It also does undeniably good work picking apart certain contributions on technicalities, uncovering the donors behind these massive illegal campaign contributions and then not being able to do anything because those donors are rich enough to be above the law.

Nicolas Heidorn, policy and legal director at Common Cause, suggested that cryptocurrency shouldn't be allowed "at least until the risks of this emerging technology are better studied and understood, and appropriate regulatory guardrails can be put in place."

Cryptocurrency donations, he said, might "hamper the commission's ability to trace donor funds and ensure state campaign finance laws are respected."

Sources don't say whether or not Heidorn managed to say "campaign finance laws are respected" with a straight face.

One of the voices in support of allowing cryptocurrency campaign donations was the Blockchain Advocacy Coalition, which represents various businesses in the blockchain and cryptocurrency industry.

"The transfer of cryptocurrency creates an immutable record, and this technology offers the public benefits in terms of transparency of political contributions," said group executive director Ally Medina in a letter to the panel.

The upshot of the decision is that anyone who sends or receives cryptocurrency campaign contributions in the state of California won't be reporting it, and that there are no formal systems in place for tracking cryptocurrency campaign contributions. California residents can pretend democracy is safe for another day.

Elsewhere, the Canadian government is trialing a blockchain-based system for publicly and transparently tracking research grants. This nifty project is already yielding great results and letting everyone see exactly where taxpayer dollars are going.

Transparency is an acquired taste.

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