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US Presidential Advisory Group to Discuss Stablecoins

5 years 3 months ago

The President’s Working Group on Financial Markets plans to discuss stablecoins at a meeting on July 19, the U.S. Treasury Department announced Friday.

Treasury Secretary Janet Yellen is convening the working group, which consists of major financial regulatory agency heads, to examine stablecoin regulation and risks, and to find suggestions for future work around this issue. The President’s Working Group is an interagency entity tasked with monitoring the U.S.’s financial markets.

In the press release announcing the meeting, Yellen said the meeting could help protect users, markets and the broader financial system from any risks that stablecoins pose, while still enabling the government to “assess the potential benefits.”

Related: Japan Increasing Efforts to Regulate Digital Currency: Report

“In light of the rapid growth in digital assets, it is important for the agencies to collaborate on the regulation of this sector and the development of any recommendations for new authorities,” she said.

The group expects to publish written recommendations in the near future.

The President’s Working Group already published one document about stablecoin regulation in December, which examined retail payments and sought public feedback on how these types of payments are being used.

The December statement warned there may be risks around stablecoins, particularly with regard to end user rights, know-your-customer and anti-money laundering issues, market integrity and monetary stability.

Related: Jerome Powell: I’m ‘Undecided’ on the Benefits of CBDCs

Federal Reserve Chairman Jerome Powell, Securities and Exchange Commission Chair Gary Gensler and Commodity Futures Trading Commission Acting Chair Rostin Behnam will also be part of Monday’s meeting. While the December iteration of the group asked former Acting Comptroller Brian Brooks to weigh in on its report, it’s unclear whether current Acting Comptroller Michael Hsu will be a part of any future recommendations.

The news comes just after Powell told Congress that greater regulations are needed around stablecoins before they can become a significant part of U.S. payments networks.

“Stablecoins certainly have some advantages in terms of faster payment systems and have some attributes of CBDCs [central bank digital currencies] but there are some risks with stablecoins right now,” Powell told the House of Representatives Committee on Financial Services. “I think the issue is that stablecoins are a lot like money market funds or bank deposits or a narrow bank.”

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SoftBank to Invest $75M in Peter Thiel-Backed Crypto Exchange Bullish

5 years 3 months ago

SB Northstar, an investment arm of Tokyo-based SoftBank, has agreed to invest $75 million in Block.one’s new subsidiary crypto exchange, Bullish.

According to a filing with the U.S. Securities and Exchange Commission, SoftBank will purchase 7.5 million shares for $10 each at the time of Bullish’s upcoming special purpose acquisition (SPAC) deal. Bullish has been valued at $9 billion. 

Bullish, which is backed by billionaire investor Peter Thiel and crypto investment firms like Galaxy Digital, is on track to go public by the end of 2021 via a SPAC merger with Thomas Farley’s Far Peak Acquisition Corp . Farley, a former president of the New York Stock Exchange, will become Bullish’s CEO. Block.one CEO Brendan Blumer will serve as chairman.

Related: Revolut Valued at $33B in $800M Fundraising Led by Softbank

Some in the crypto sphere have raised eyebrows at the newly launched Bullish’s plans to go public, suggesting that it is part of an effort to raise the value of the Block.one-associated EOS blockchain. Others, including billionaire crypto investor Sam Bankman-Fried, suggest Bullish’s real aim is to be a MicroStrategy-esque stock proxy for crypto. MicroStrategy is a business software company that has invested heavily into bitcoin.

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COVID-19 Stimulus Checks Fueled ‘Modest’ Jump in Bitcoin Price Last Year: Cleveland Fed

5 years 3 months ago

The first round of stimulus checks in the U.S. in April 2020 fueled a “significant but modest” bump in bitcoin trading volume and price, according to a study from the Federal Reserve’s Cleveland branch that was posted Friday.

Central bank researchers estimated the government’s $1,200 stimulus checks sent to Americans during the COVID-19 pandemic fueled a 3.8% jump in trading volume and a 0.7% rise in price. Overall, they estimated just 0.02% of the stimulus money ended up in bitcoin.

Framed against bitcoin’s wild volatility, these figures don’t add up to much. Further noting a 0.07% “permanent price increase,” the researchers said their findings are “modest compared to the 4.6% standard deviation” in bitcoin’s daily price swings. Nevertheless, the researchers said the jumps were “statistically significant.”

Related: Square Sets Out to Bring DeFi to Bitcoin

The findings add some hard data to lockdown-era whispers of a government-fueled surge in $1,200 bitcoin buys. Those purchases were happening, the researchers found, but almost exclusively among young, single investors with moderate incomes.

“This is consistent with the picture of a typical Bitcoin investor painted by surveys,” the researchers noted. Groups with a more acute need for stimulus payments, like families and the unemployed, did not ape in, they found.

Japan and South Korea also saw measurable bumps in their bitcoin markets after their governments’ respective stimulus rounds, according to the researchers.

Policymakers “should not be concerned” that crypto markets will gobble up future stimulus payments, the researchers said.

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FOX Token Rally: Yield Play or ShapeShift DAO Craving?

5 years 3 months ago

“ShapeShift has begun decentralizing,” the Colorado-based exchange’s CEO, Erik Voorhees, said in an announcement on Wednesday detailing the company’s decision to dissolve the corporate model and evolve into a decentralized autonomous organization (DAO). 

The disclosure lit a fire under ShapeShift’s governance FOX token, sending its price higher by over 300% to $1.16 in a matter of hours. And while the cryptocurrency has retraced to $0.55 in the past 24 hours, it’s still up almost 200% this week – a stellar performance considering the broader market lull. 

Analysts stand divided on whether the rally represents an ever-intensifying search for yield or investors cheering ShapeShift’s early-mover advantage as a DAO.

Related: Ripple Can Depose Former SEC Official in Lawsuit: Report

“The FOX token moved higher because people bought the token to provide liquidity in the new FOX/ETH pool to receive liquidity provider tokens,” said Nick Hotz, senior analyst at the U.S.-based investment management firm Arca. 

Read more: Voorhees Applauds Crypto’s Hyper-Capitalism as ShapeShift Goes ‘Gray’

ShapeShift was scheduled to start its initial liquidity mining program Friday. The program allows FOX holders to provide liquidity on the decentralized exchange Uniswap v2 and stake their liquidity provider tokens in the ShapeShift Staking Rewards contract for a proportional share in 15,768,000 FOX tokens that will be distributed over the following three months. 

Hotz told CoinDesk the program was paying a ridiculously high annual percentage yield (APY) of 20,000% on Wednesday. While the APY has slipped below 1,100% since then, it is still well above the yield offered by liquidity pools of the top decentralized finance (DeFi)-protocols like Venus, Curve, SushiSwap, according to CryptoCompare. The ultra-high returns may have enticed traders into buying the FOX tokens.

Related: Voorhees Applauds Crypto’s Hyper-Capitalism as ShapeShift Goes ‘Gray’


A DAO giveaway like the FOX airdrop has several advantages over traditional market initial public offers and may have attracted some value buyers. 

“ShapeShift users will become financially invested in the success of the project, incentivized to use the platform more frequently and recruit friends,” Arca’s Hotz said. “In comparison, IPO investors don’t have a voice in the companies’ decision-making unless they purchased stock. They have little incentive to evangelize for the company.” 

ShapeShift has earmarked extra tokens for paying people to use its products, incentivizing further customer acquisition, a feature never available to initial public offering subscribers.

Denis Hui, a DeFi portfolio manager at DAO Ventures, voiced a similar opinion, adding the price rally also shows “everyone wants the piece of an exchange” that has already established a niche. 

“ShapeShift has existed as a business for many years, has been generating revenue and is a leader in decentralized ownership,” Hui said in a LinkedIn chat. “So it is very different from many regular DAOs who only set up operations in the past year.”

Denis Vinokourov, head of research at Synergia Capital, said FOX’s reaction to ShapeShift’s decision reflects markets’ craving for a DAO – a democratized decision-making system using cryptocurrency and blockchains. 

While the decentralized finance space has seen explosive growth over the past 12 months with an influx of venture capital, achieving complete democratization has proven to be challenging. 

“DAO is a great idea on paper, but turning that into reality by unwinding various links to the foundation has proven difficult to achieve,” Vinokourov said. “The significant influence of venture capitalists over decision making has been particularly highlighted during the recent Uniswap approval of the $20 million education fund.”

Read more: DeFi Gets Proactive About Policy Thanks to a $20M Grant From the Uniswap Community

Recently, a DeFi education fund promoted by Harvard Law’s Blockchain and Fintech Initiative requested and received 1 million UNI tokens (the native coin of Uniswap) from the decentralized exchange’s treasury. Per the Reddit post, most of the Uniswap community opposed the idea of granting approximately $17 million, as of this writing, to the DeFi fund. However, the proposal was approved based on the votes of a few large UNI token holders. 

“Almost the total margin of victory came from the proposer itself and Penn Blockchain, which is sponsored by [venture capital fund] a16z and helped write the [World Economic Forum] report with several of the board members who will now hand out the UNI that left the treasury,” one of the Uniswap community members called “hlspunk” noted, according to Decrypt. 

The episode raises questions about decentralized token-based governance when large holders call the shots and probably explains the market’s reaction to ShapeShift’s plans to decentralize itself out of existence via one of the largest airdrops in history. 

As CoinDesk’s Brady Dale noted, “Many companies in crypto build a decentralized protocol but leave a business standing that takes part in creating profit atop their blockchain creation (case in point, Compound Labs just launched Treasury to do precisely that).”

ShapeShift, however, is going a step further by airdropping 340 million FOX tokens to all past users of the exchange (around 900,000 addresses) and 120,000 addresses on several well-known DeFi protocols.

“This is why the reaction by ShapeShift’s token has been so dramatic after it took steps to become a DAO,” Vinokourov said. “PR stunt or not, the reaction shows that it is exactly what markets want.”

UPDATE (July 16, 2021, 15:35 UTC): Corrects to say the Harvard initiative received 1 million UNI tokens worth approximately $17 million at press time.

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Terra Attracts $150M for DeFi Ecosystem Fund

5 years 3 months ago

Terraform Labs, the South Korean company behind the Terra public blockchain, has raised $150 million from a handful of major crypto investors, including Arrington XRP Capital, Pantera Capital, Galaxy Digital and BlockTower Capital. 

The $150 million commitment is to Terra’s Ecosystem Fund, which Terraform Labs uses to sponsor projects built on the Terra blockchain.

Terra, which is a Tendermint-based blockchain, deploys a suite of stablecoins based on its dollar-pegged TerraUSD (UST). Terra uses an algorithm to maintain a steady value for UST and its derivatives, incentivizing traders to purchase excess supplies of UST if there’s a drop in value in exchange for Terra’s native governance token LUNA. 

Related: Square Sets Out to Bring DeFi to Bitcoin

UST’s stability has led to a Terra boom, and investors are noticing the stablecoin. Earlier this year, Pantera Capital and Coinbase Ventures contributed to a $25 million funding round to help Terraform Labs build more UST-backed applications, like CHAI, a popular mobile payments dapp with over 2.5 million users in South Korea.  

The explosion of decentralized finance (DeFi) has led to a scramble for a truly decentralized stablecoin that is capable of scaling. Stablecoin projects like Tether’s USDT, the first successful stablecoin and still by far the largest, led to DeFi, but centralization has mired USDT in years of legal trouble. According to Terra’s founder and CEO, Do Kwon, other decentralized stablecoins like MakerDAO’s DAI are capital intensive and have thus struggled with scalability. 

TerraUSD, now the fifth-largest stablecoin with a $2 billion market cap, aims to solve the problem. Kwon hopes UST will become the inter-chain stablecoin of choice. 

The Ecosystem Fund will be used to develop projects in Terra’s DeFi ecosystem. Most of the projects currently being built on Terra are decentralized protocols and other applications aiming for mainstream adoption using Terra’s stablecoins. Terraform Labs will allocate the funds over the course of two years. 

Related: Japan Increasing Efforts to Regulate Digital Currency: Report

“We’re thrilled to have the continued support of many long-time, early investors in the Terra ecosystem,” Kwon wrote in an email to CoinDesk. “We’re delighted to offer the Ecosystem Fund as an opportunity for builders, entrepreneurs and our community to supercharge the Terra economy and build something extraordinary.”

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Bitcoin Miners Worth Over $1.3M Seized, 8 Arrested in Malaysia: Report

5 years 3 months ago

Police in Malaysia seized 1,039 bitcoin mining machines worth RM5.3 million ($1.3 million) and arrested eight people.

  • Police in the north-western city of Miri seized the machines in joint operations with Sarawak Energy (SEB), the region’s electricity company, between February and April, Bernama reported Friday.
  • Eight individuals were arrested and accused of stealing electricity from SEB, Miri police chief ACP Hakemal Hawari said.
  • “A total of six people have been successfully charged under Section 379 of the Penal Code for electricity theft and have been fined up to RM8,000 ($1,900) and jailed for up to eight months,” he said in a statement today.
  • The machines related to the court case were disposed of at Miri police headquarters today, the report said.

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Tether Hasn’t Printed New USDT in Weeks: 3 Possible Explanations

5 years 3 months ago

The money printer has gone quiet.

The parabolic growth in the market cap of stablecoin giant tether (USDT) suddenly came to a grinding halt at the end of May, just as bitcoin’s price was coming off its all-time highs. With bitcoin trading in a range of roughly between $30,000 and $40,000 ever since, a new round of chatter has been circulating linking the two events and echoing an old conjecture: Did Tether stop pumping up the price of bitcoin?

According to analysts and market participants who spoke to CoinDesk, however, the sudden pause of tether printing has instead revealed that the most traded cryptocurrency in the world is seeing its dominance threatened by three unprecedented challenges combining in a perfect storm to rattle the stablecoin: Trouble in its biggest geographic market has made it hard for traders there to buy USDT with fiat. One of USDT’s most promising competitors appears to be gaining market share. And regulatory pressure around the world is increasing.

Related: Hong Kong, Lithuania Issue Binance Warnings

An executive from Tether, while acknowledging the demand for USDT has fallen, argued that the trend is not exclusive to the token.

“Demand for tether ebbs and flows, and has been impacted by lower demand in recent weeks,” Paolo Ardoino, chief technology officer at Tether, said in a written response via a spokesperson, noting that USDT is not the only stablecoin that has seen reduced demand.

China’s crackdown on crypto

The crypto crackdown in China – both on bitcoin mining and trading – has hurt bitcoin’s prices, which are now down by 52% to around $31,000 from their all-time high at $64,928.14 in April.

But another victim of China’s renewed crypto crackdown is USDT, the stablecoin whose success can be largely attributed to its dominance among Chinese traders and investors. They routinely use the dollar-pegged stablecoin as an on-ramp to crypto markets through over-the-counter (OTC) brokers because fiat-to-crypto trading or buying digital assets with government-issued cash remains illegal in the country. 

Related: Binance to End Support for Stock Tokens

Last month, Chinese police arrested more than 1,000 people on money-laundering charges, alleging they used crypto to help them evade the law. Such action against OTC merchants may help explain why USDT’s growth has slowed significantly in China.

“It is extremely difficult to [go] on and off ramp in China [to crypto,]” Annabelle Huang, a partner at Hong Kong-based crypto asset manager Amber Group, said. “A lot of the OTC merchants have stopped deals.”

With bitcoin struggling to move above its current range of $30,000-$35,000, there is also no incentive for new cash in China to enter the crypto market.

“Tether’s market in Asia is mostly through OTC merchants, and with less cash going into the market, there is less demand for tether,” Rachel Lin, former vice president and founding partner at Singapore-based crypto investment firm Matrixport, said.

Hong Kong-based crypto lender Babel recently told CoinDesk that it cut its interest rates for USDT deposits because of weak demand for the stablecoin.

A spokesperson for Babel, however, would not say why demand has decreased recently.

It seems China’s crackdown on crypto-related money-laundering activities remains ongoing.  A report from South China Morning Post late Wednesday says that Hong Kong customs has shut down a local money-laundering syndicate that used crypto – specifically USDT – to process illegal funds worth about $155 million, the first crackdown of its kind in the city.

The news in Hong Kong “could pressure any Singapore and Hong Kong desks to reconsider trading USDT/USD [pairs],” Dan Burke, managing director of institutional sales in Asia-Pacific at BitGo, a custodian of digital assets, said.

USDC on the rise

While demand for USDT appears to have dried, the rising star of the stablecoin market is increasingly USDC, another dollar-pegged stablecoin powered by crypto financial services firm Circle.

Boston-based Circle recently announced its plan to go public using a special purpose acquisition company (SPAC), not long after it revealed its goal to expand USDC to at most 10 more blockchains outside Ethereum. 

Tron, a blockchain helmed by crypto influencer Justin Sun, is among the blockchains that recently started supporting USDC, and according to Circle’s website; one of the goals of doing so is “enabling [USDC] growth in Asia and around the globe.”

As it stands, there is more USDT on Tron than on Ethereum as traders in Asia favor blockchains that provide faster and cheaper transactions. That makes USDC’s entry to Tron a more enticing proposition. 

“I think USDC has a chance to compete in the stablecoin market in Asia against tether,” Sun told CoinDesk. “I feel like right now the stablecoin market in Asia is in need of a diversified infrastructure and clients in Asia are looking for more stablecoin options.”

According to Lin, unlike USDT, which is largely relying on the OTC channel, USDC can be easily purchased by investors in Asia thanks to the human-intensive customer service offered by Circle, the company that operates the stablecoin business.

“Doing business with USDC is very upfront,” Lin said. “They usually have a manager to work with you by email communications once you submit the required documents.”

It may be too early to conclude whether USDC can beat USDT’s dominance in Asia, but USDC is already winning in another white-hot sector in crypto: decentralized finance.

Nearly 50% of USDC supply is currently locked in smart contracts compared with tether’s 20%, according to data from Glassnode.

“USDC is increasingly being used for on-chain and payments use cases, which continue to grow,” Ryan Watkins, a research analyst at Messari, said. “Whereas USDT is primarily used for inter-exchange settlement and margin for derivatives, use cases which have pulled back as the market has calmed.”

Crypto bears vs. tether’s vulnerability

One of the lingering problems of USDT – its reputation within the crypto community – is a third obstacle the world’s largest stablecoin by asset size is facing. 

“The market is infused with bearish sentiment and traders are looking for a reason,” said Noelle Acheson, head of market insights at crypto prime broker Genesis Global Trading. “It’s FUD (fear, uncertainty and doubt) season, and tether’s vulnerabilities are almost always a part of that conversation.”

According to Acheson, the market is “starved” for explanations about why the price is so “listless” and USDT is a perfect target as long as the company behind the dollar-pegged stablecoin remains murky about its reserves. (Genesis is a subsidiary of Digital Currency Group, which also owns CoinDesk.)

More questions have been raised recently by regulators and governments around the world about USDT and other stablecoins. Testifying before the U.S.. House of Representatives’ Committee on Financial Services Wednesday, Federal Reserve Chairman Jerome Powell addressed a question from Rep. Anthony Gonzalez (R-OH) about Tether’s assets,  which, according to its disclosure in May, was nearly half made up of unspecified commercial paper.

“Commercial papers are short-term overnight obligations from companies, and most of the time they’re investment grade, most of the time they’re very liquid, it’s all good,” Powell said. But in the face of crises, “the market just disappears. And that’s when people will want their money. It’s very simple: These are economic activities very similar to bank deposits and money market funds, and they need to be regulated in comparable ways.”

Some of that bearish sentiment infused with regulatory concerns is reflected in the growth of the USDC/USDT trading pair on the Binance exchange. The trading pair is currently the most active one in the spot market to include the USDC stablecoin. In other words, Binance’s traders are swapping between USDC and USDT, potentially for a bet that USDT’s price will go down or at least because they find more utility in USDC

Some traders could be “borrowing USDT and swapping for USDC,” said Hassan Bassiri, vice president at Los Angeles-based asset management firm Arca. “You know USDC is worth $1, so you borrow USDT by swapping for USDC. If USDT isn’t fully backed, you can use USDC to buy back the USDT at a price lower than $1.”

To be sure, a counter-narrative for the increased trading volume in the USDC/USDT pair on Binance is that many small-cap tokens available on Binance only have trading pairs with USDT, said Lin, the ex-Matrixport VP.

Indeed, AXS, the latest hot token from Axie Infinity that hit a record high Wednesday, is available on Binance with trading pairs with USDT, Binance USD (BUSD) and BNB, according to CoinGecko, while there are almost no AXS/USDC trading pairs available on centralized exchanges. The trading pair of USDC/BUSD is another popular trading pair on Binance involving USDC; it is just behind USDC/USDT, BTC/USDC, and ETH/USDC by trading volume in the past 24 hours.

If traders are shorting USDT, they are doing so in response to FUD, Bassiri said. However, he dismissed concerns around the stablecoin. 

“USDT is fine [and has] always been fine,” he said.

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Bank of America Approves Bitcoin Futures Trading for Some Clients: Sources

5 years 3 months ago

Bank of America, the second-largest bank in the U.S., has approved the trading of bitcoin futures for some clients, according to two people with knowledge of the matter who spoke on condition of anonymity.

Like most institutions, the bank has been conservative in its approach to the crypto sector, but due to the large amount of margin required to trade the futures, it is now allowing some clients to access the crypto market, one of the sources said. Some clients are setting up to trade bitcoin futures, which are cash settled, and one or two may have already gone live, the other source said.

A number of investment banks are reportedly allowing clients to invest in crypto products. In March, Goldman Sachs confirmed plans to relaunch its cryptocurrency trading desk after a three-year hiatus, and in May, the investment bank started buying and selling bitcoin futures in block trades through Chicago Mercantile Exchange (CME) Group, using Cumberland DRW as its trading partner.

Related: First Midwest Bank Trust Division Holding 29.5K Shares of Grayscale Bitcoin Trust

Bank of America will also be using CME futures, according to one of the sources.

Bank of America declined to comment.

Earlier this month, it emerged that the Charlotte, N.C.-based bank had created a team dedicated to researching cryptocurrencies and related technologies. In 2018, Bank of America blocked financial advisers and clients from trading in bitcoin-related investments but that policy has now changed. 

CME bitcoin futures were launched in 2017. In May, the CME launched its “Micro Bitcoin” futures products in an attempt to capitalize on bitcoin’s price rally. 

Related: Bank of America Creates Team Dedicated to Researching Crypto

Earlier this year, CME took the prime spot on the list of the biggest bitcoin futures trading platforms, indicating a continued rise in institutional participation. 

The total open interest in the bitcoin futures market is sitting at $11.3 billion, down 59% from its April 13 peak of $27.3 billion, according to Arcane Research.

Update (July 16, 13:30 UTC): Adds that Bank of America declined to comment.
Update (July 16, 14:36 UTC): Notes that these futures, like all crypto futures, are cash settled.

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Hong Kong, Lithuania Issue Binance Warnings

5 years 3 months ago

Hong Kong and Lithuania became the latest places to warn crypto exchange Binance about its operations. Hong Kong’s markets regulator said Binance is not registered to operate in its jurisdiction, while the Bank of Lithuania said it warned the company about “its unlicensed investment services.”

  • Hong Kong’s Securities and Futures Commission (SFC) said Friday that no entity in the Binance Group is registered to conduct any regulated activity in Hong Kong.
  • The SFC raised concerns that Binance’s stock tokens could be offered to Hong Kong investors.
  • “Where the stock tokens are ‘securities,’ marketing and/or distributing such tokens – whether in Hong Kong or targeting Hong Kong investors – constitute a ‘regulated activity’ and require a license from the SFC unless an applicable exemption applies,” the regulator said.
  • Earlier today, Binance announced that it is discontinuing its stock token service, ending the sale of the tokens immediately and ceasing support for those already purchased in October.
  • Lithuania’s central bank also issued a warning about Binance’s “unlicensed investment services.”
  • The announcements by the SFC and the Bank of Lithuania follow a string of similar warnings from regulatory bodies elsewhere, including the U.K., Japan and the Canadian province of Ontario.
  • The U.K. Financial Conduct Authority’s ruling was followed by several major banks in Britain, including Barclays and Santander blocking their customers from using their cards on Binance’s platform.

UPDATE (July 16, 10:57 UTC): Adds details from SFC statement and earlier stock-token announcement from Binance.

UPDATE(July 16, 13:34 UTC): Adds Lithuania.

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XRP Eyes ‘Death Cross,’ Has Support at $0.51

5 years 3 months ago

XRP’s price chart looks set to produce the first “death cross” in five months, a signal analysts consider to be a bear market indicator.

The 50-day simple moving average (SMA) of XRP’s price is expected to cross below the 200-day SMA in the next day or two, confirming the so-called bearish death cross. While in theory the pattern implies a deeper sell-off, historical data suggests otherwise.

Previous occurrences observed in early February this year, March 2020, August 2019, April 2018, January 2017 and May 2016 marked major or interim price bottoms. One in May 2014 brought immediate selling pressure to the market.

Related: Ripple Can Depose Former SEC Official in Lawsuit: Report

Death cross’ dismal record as a reliable indicator is hardly surprising, as moving-average studies are based on backward-looking data. In other words, death crosses are the result of a prolonged sell-off and have limited predictive powers. More often than not, the market is oversold by the time the crossover happens.

The previous bearish crossovers (above left) were accompanied by an oversold, or below-30, reading on the relative strength index (RSI).

This time, however, the RSI is biased bearish. So, the possibility of the death cross inviting stronger chart-driven selling cannot be ruled out.

Immediate support is at the June 22 low of $0.51, followed by $0.43, which is the 61.8% Fibonacci retracement of the December to April bull run. The June 29 high of $0.73 is the level to beat for the bulls.

Related: Bitcoin Under Pressure, Faces Support at $30K

Also read: Ripple Can Depose Former SEC Official in Lawsuit: Report

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Binance to End Support for Stock Tokens

5 years 3 months ago

Crypto exchange Binance said it will no longer support tokens linked to stocks barely three months after it made them available on its trading platform.

Binance announced Friday that stock tokens are unavailable for purchase on its website effective immediately and support for such tokens will end on Oct. 14, with all positions closed the following day.

The embattled exchange said the move will allow it to focus on other products.

Related: Tether Hasn’t Printed New USDT in Weeks: 3 Possible Explanations

Binance introduced its stock token service in April, enabling customers to buy fractions of shares in companies, starting with Tesla and followed quickly by Coinbase. MicroStrategy, Microsoft and Apple were added shortly thereafter.

It did not take long for regulators to raise their eyebrows, with the financial watchdogs of the U.K. and Germany expressing concern in the following weeks.

The backlash against Binance has come to a head in recent weeks, with regulatory bodies around the world issuing warnings that the crypto exchange is not licensed to offer regulated services in their markets, including the U.K. and Japan.

The most recent warning came from Hong Kong, whose markets regulator announced today that Binance is not registered to operate in its jurisdiction.

Related: Hong Kong, Lithuania Issue Binance Warnings

CEO Changpeng “CZ” Zhao addressed Binance’s woes in an open letter July 7, calling compliance a “journey” and spoke of the need for “clearer regulatory frameworks” in response to the wider adoption of crypto.

Binance users in the European Economic Area and Switzerland who have bought stock tokens can migrate them to a new platform being built by CM-Equity AG, the German investment firm Binance worked with in the stock token venture.

The new platform is expected to open several weeks before the October deadline.

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Bitcoin to Become Dominant in Global Finance by 2050: Study

5 years 3 months ago

Bitcoin will be the dominant force in global finance by 2050, according to 54% of those surveyed by personal-finance site Finder. But 44% say it will never happen.

The “Bitcoin price prediction 2021” report, published Thursday, canvassed a panel of 42 experts from finance, technology and academia. Some respondents (15%) see that dominance point, labeled “hyperbitcoinisation” in the U.K. study, occurring as early as 2035.

Adoption by the developing world is seen as the key driver, with 33% of respondents saying bitcoin will become the currency of choice in developing nations within 10 years. A further 21% say that level of adoption is more than 10 years away.

Related: Bitcoin Heads for Its Worst Weekly Close in Over a Month

“The momentum will only pick up,” said Amber CEO Aleks Svetski, one of the panelists, citing El Salvador’s decision to adopt bitcoin as legal tender and its wide use in Venezuela as a means of beating hyperinflation. “The beauty is also that these broken nations will transform faster than major nations as bitcoin undermines the nation-state model.” 

The panel predicted bitcoin’s price will have climbed to $318,417 by December 2025. That’s 61% higher than in a similar survey conducted December 2020.

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Digital Yuan Used in $5B of Transactions, Says China’s Central Bank

5 years 3 months ago

The total value of transactions using China’s central bank digital currency (CBDC), the digital yuan, reached 34.5 billion yuan ($5 billion) by the end of the June, the People’s Bank of China said on Friday.

  • The PBOC also said for the first time that the CBDC will be compatible with smart contracts.
  • The total number of transactions was 70.75 million, spread among almost 21 million personal wallets and 3.5 million enterprise wallets, the central bank said in a white paper.
  • Digital yuan wallets will be tiered based on the amount of personal information provided, the central bank said. The tiers will determine transaction and balance limits.
  • Users will be able to open “least-privileged” wallets by default, without providing any personal information, and later upgrade them to unlock features.
  • The central bank also offered details on the trials planned for the 2022 Beijing Winter Olympics.
  • Unmanned vans, self-service vending machines, unmanned supermarkets, payment gloves, payment badges, Winter Olympics payment clothing, and other wearable devices will be deployed at the global sports event, it said.
  • The paper assessed that the basic design of the digital yuan is in place. Authorities will continue existing trials across the country, and launch new ones.
  • Trials for the digital yuan started over a year ago and were initially restricted to four cities – Chengdu, Shenzhen, Suzhou and Xiong’an – and were accessible only to whitelisted individuals.
  • They later opened to the public through lotteries in the four cities, and expanded to more cities, including Shanghai and Beijing.
  • There is no timetable for the launch of the central bank digital currency.

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Bitcoin Heads for Its Worst Weekly Close in Over a Month

5 years 3 months ago

Bitcoin is heading for its lowest weekly close in more than a month as selling pressure continues to drive the price towards $30,000.

  • At press time, the cryptocurrency is changing hands at $31,680.31, a 2.9% decline from the 24-hour top of $32,614.24, CoinDesk data shows.
  • Should the current candle close at or below this level, that would mark the steepest weekly sell-off since June 14.
  • Thursday’s drop was bitcoin’s biggest in over 10 days as it fell, once again, alongside the U.S. equities market.
  • A drop below the $31,000 daily support level may result in a deeper drawdown to $28,600 based on June 22’s prior low.
  • Low volume, as indicated in Thursday’s four-hour view, is consistent with a lack of trading interest in the short-term.
  • Traditional equities in Asia were mixed, with most markets reflecting a change of less than 1%.

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Japan Increasing Efforts to Regulate Digital Currency: Report

5 years 3 months ago

Japan’s Financial Services Agency has created a division to oversee “decentralized finance” and the Ministry of Finance is mulling boosting the number of staff focusing on digital currencies, Reuters reported on Friday, citing three officials it didn’t identify.

  • The move is a sign of increasing concern that new forms of private money could disrupt Japan’s financial system, according to the report.
  • Regulation would complement the Bank of Japan’s efforts on the central bank’s digital yen.
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Ripple Can Depose Former SEC Official in Lawsuit: Report

5 years 3 months ago
  • Ripple can depose the former head of the U.S. Securities and Exchange Commission’s corporate finance division about the agency’s policy decisions as the company faces an enforcement action, Bloomberg reported on Friday.
  • U.S. Magistrate Judge Sarah Netburn on Thursday ordered William H. Hinman to sit for questioning, saying the case involves “significant” policy decisions in the markets and the public interest is high.
  • The SEC alleged in December 2020 that Ripple Labs had conducted an ongoing and unregistered securities sale via the XRP (-0.8%) token closely associated with its brand. 
  • Ripple had sought to force the SEC to disclose why it came to the conclusion that bitcoin (BTC, -2.4%) and ether (ETH, -1.62%) were commodities, not securities like XRP.
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Blockchain Protocol Thorchain Loses 4K Ether in Attack

5 years 3 months ago

Thorchain suffered an attack that drained about 4,000 ethereum from the blockchain crypto trading protocol, according to a Thursday posting on the Runebase website.

The company tweeted that it would provide a “more detailed assessment and recovery steps” soon.

Network administrators wrote earlier in the day in a Telegram posting that the loss was more than three times that amount but updated the figure. They also wrote that the network had been halted while developers investigated the extent of the breach.

“While the treasury has the funds to cover the stolen amount, we request the attacker get in contact with the team to discuss return of funds and a bounty commensurate with the discovery,” the administrators wrote on Telegram.

Amid Health Crisis and Economic Embargo, Cubans Are Using Cryptocurrencies to Help Compatriots

5 years 3 months ago

Some Cubans protesting their government are turning to cryptocurrencies to get donations to people who need them. 

Residents in Cuba began protesting the government earlier this month, pointing to an economic embargo on the country and the rapidly worsening COVID-19 crisis. Cases nearly doubled on July 9, with positive results hitting 6,422 after only 3,664 the day before. Matanzas, the most affected province, registered half of the cases. 

On Twitter, hashtags #SOSCuba and #SOSMatanzas became trending topics in different parts of the world. 

Related: ‘They’d Rather Buy Bitcoin and Take That Risk’: An Interview With Paxful’s Nena Nwachukwu

Seeing what was happening in Matanzas, local entrepreneur Thais Liset started to think of ideas to aid her compatriots in that province and decided that donations would be the best option to help address the lack of medical supplies and food. 

Along with Cuban YouTuber Frank el Makina, Liset sought help from Erich García Cruz, one of the top Cuban crypto influencers who leads projects such as BitRemesas and QvaPay, two ventures focused on facilitating the inflow of remittances and the collection in dollars by Cubans using cryptocurrencies. 

Following the request, Garcia Cruz created a temporary account within QvaPay to receive donations without any commission. 

“All transactions are public so that everything that is happening in real time can be audited,” he told CoinDesk. 

Related: Republican House Campaign Arm to Accept Donations in Crypto

The cryptocurrency initiative seeks to receive money from Cubans abroad. Crypto provides the easiest and fastest way for individuals to donate, said García Cruz, who added that Cubans in Cuba were the ones who contributed the most. The initiative also allowed fiat transactions from Cubans in Cuba, although the number of cryptocurrency remittances was  higher, he said.

Many Cubans living abroad didn’t have accounts at crypto exchanges, García Cruz said.

“They are friends who live abroad and do not know much about how to operate cryptocurrencies, so we guide them step by step on how to buy in Binance or Coinbase,” García Cruz said. 

According to García Cruz, transfers in dollars are prohibited as an embargo imposed by the Office of Foreign Assets Control in the U.S. punishes banks that carry out those operations. 

However, he said some European banks aren’t covered by the ban, and private remittance agencies such as VaCuba and FonMoney were set up to circumvent the U.S. sanctions. 

FonMoney, for instance, receives transfers from euros, pounds sterling, Mexican pesos, Chilean pesos and Swiss francs. It then offers conversion to Cuban pesos or U.S. dollars and remittances to accounts in Cuba or prepaid cards, according to its website. 

Cubans have no access to Visa or Mastercard products because of the U.S. trade embargo, while Western Union, the world’s largest money transfer service, suspended U.S. dollar transfers to Cuba in November following the latest sanction from the Trump administration. 

Additionally, a drop in the tourism industry caused by the pandemic affected those Cubans who had income in dollars on the island.

In June, Cuba announced it would temporarily stop accepting cash bank deposits in dollars, arguing that U.S. sanctions restrict its ability to use that currency abroad. Bank transfers would continue to be available, the government said. 

The initiative

According to García Cruz, $2,000 has been raised so far, and crypto donations mainly help Cubans who don’t receive assistance from relatives abroad. 

Another crypto company that has joined the donation initiative is Slyk. 

“It can be used in Cuba by people who want to collect donations with any payment methods from Venmo to bitcoin,” Tim Parsa, the CEO of Slyk, told CoinDesk. 

Donations will be used to purchase medicine and masks to help Cuban people in Matanzas and other cities.

Slyk’s community manager and representative in Cuba is Camilo Noa, one of the ideologues behind the crypto donations. 

“So far we have purchased medicines, masks, alcohol, hand gel, chlorine, food, personal hygiene, clothing and other supplies. Donations have been delivered to people, hospitals and isolation centers,” he told CoinDesk. 

According to García Cruz, no system or institution is overseeing the deliveries. 

“It is about Cubans helping Cubans, being supportive and transparent with those who need it most,” he said.

Liset provides updates on her Twitter account on the quantities purchased, prices and the people to whom crypto donations are provided. 

After the government began arresting protestors, donations to Matanzas were put on hold, as people don’t want to leave their houses, Liset said. 

“Everything was going well. With special permits, we ourselves were sending medicines, medical supplies, food,” she said. 

Donations are currently earmarked for health personnel and patients of the so-called “Covid-19 Red Zone” in Matanzas. However, that could change in the future, as García Cruz has not stopped receiving requests from different provinces in the last few days. 

The Council for Democratic Transition in Cuba, recently created by opponents to the regime, issued a humanitarian crisis statement characterizing the health situation in Matanzas as “chaotic” on Saturday. 

“The chaos is total,” García Cruz said.

According to the local opposition media outlet 14ymedio, dozens of complaints were made about the collapse of the healthcare system, deaths of patients in their homes, a lack of medicine and medical supplies, and poor medical care. 

As a response to the role of social media in the protests, the regime started cutting off internet service.  

NetBlocks, a global internet monitor, posted on its Twitter that social media and messaging platforms have been restricted since Monday on state-run internet provider Etecsa. 

Cuban sources confirmed to CoinDesk that there are internet outages. In some cases, the sources took up to a day to respond to Telegram messages. 

In this context, cryptocurrency transactions are also “considerably affected,” Noa said. 

As seen in the public registry of QvaPay, no new donations have been registered in the last two days. According to García Cruz, this is happening because of the internet outages and many people have not even been able to use their wallets. “To that we have to add that there is a lot of political fear,” he said. 

Outside the system 

According to García Cruz, the most common cryptocurrencies used for donations are bitcoin and USDT, although the platform also accepts litecoin, tron and bitcoin cash, among others. 

Once donations in crypto are received, they are exchanged on the black market to fiat then used in the MLC stores — Spanish acronym for convertible free currency — where products can be purchased with foreign currency, García Cruz added. 

After generating the anger of part of the population, several of these stores were looted recently. 

In the last year, the number of MLC stores has multiplied in the country and concentrated the majority of food and basic goods. However, the majority of Cubans do not have access because they do not receive their salaries in dollars or euros. 

On January 1, Cuba ended its dual currency system by eliminating the Convertible Peso (tied to the U.S. dollar) and leaving the Cuban Peso in circulation, strongly devaluing the Cuban Peso, which now trades at $0.042. 

However, García Cruz said that the exchange rate on the black market is higher, of 60 Cuban Pesos per dollar, while cryptocurrencies are exchanged at 50 Cuban Pesos due to a supply and demand factor. 

Noa said that most Cubans do not understand the use of cryptocurrencies and those seeking help prioritize getting cash to buy food and medicine they need. García Cruz, however, estimates that there is a big crypto community of about 200,000 people in Cuba.

UPDATE (July 16, 2021, 02:43 UTC): Updated to clarify that the crypto donations aren’t specifically funding protestors.

Related Stories

Cubans Are Protesting Their Government. Some Expats Are Using Crypto to Support Locals

5 years 3 months ago

Some Cubans protesting their government are turning to cryptocurrencies to get donations to people who need them. 

Residents in Cuba began protesting the government earlier this month, pointing to an economic embargo on the country and the rapidly worsening COVID-19 crisis. Cases nearly doubled on July 9, with positive results hitting 6,422 after only 3,664 the day before. Matanzas, the most affected province, registered half of the cases. 

On Twitter, hashtags #SOSCuba and #SOSMatanzas became trending topics in different parts of the world. 

Related: ‘They’d Rather Buy Bitcoin and Take That Risk’: An Interview With Paxful’s Nena Nwachukwu

Seeing what was happening in Matanzas, local entrepreneur Thais Liset started to think of ideas to aid her compatriots in that province and decided that donations would be the best option to help address the lack of medical supplies and food. 

Along with Cuban YouTuber Frank el Makina, Liset sought help from Erich García Cruz, one of the top Cuban crypto influencers who leads projects such as BitRemesas and QvaPay, two ventures focused on facilitating the inflow of remittances and the collection in dollars by Cubans using cryptocurrencies. 

Following the request, Garcia Cruz created a temporary account within QvaPay to receive donations without any commission. 

“All transactions are public so that everything that is happening in real time can be audited,” he told CoinDesk. 

Related: Republican House Campaign Arm to Accept Donations in Crypto

The cryptocurrency initiative seeks to receive money from Cubans abroad. Crypto provides the easiest and fastest way for individuals to donate, said García Cruz, who added that Cubans in Cuba were the ones who contributed the most. The initiative also allowed fiat transactions from Cubans in Cuba, although the number of cryptocurrency remittances was  higher, he said.

Many Cubans living abroad didn’t have accounts at crypto exchanges, García Cruz said.

“They are friends who live abroad and do not know much about how to operate cryptocurrencies, so we guide them step by step on how to buy in Binance or Coinbase,” García Cruz said. 

According to García Cruz, transfers in dollars are prohibited as an embargo imposed by the Office of Foreign Assets Control in the U.S. punishes banks that carry out those operations. 

However, he said some European banks aren’t covered by the ban, and private remittance agencies such as VaCuba and FonMoney were set up to circumvent the U.S. sanctions. 

FonMoney, for instance, receives transfers from euros, pounds sterling, Mexican pesos, Chilean pesos and Swiss francs. It then offers conversion to Cuban pesos or U.S. dollars and remittances to accounts in Cuba or prepaid cards, according to its website. 

Cubans have no access to Visa or Mastercard products because of the U.S. trade embargo, while Western Union, the world’s largest money transfer service, suspended U.S. dollar transfers to Cuba in November following the latest sanction from the Trump administration. 

Additionally, a drop in the tourism industry caused by the pandemic affected those Cubans who had income in dollars on the island.

In June, Cuba announced it would temporarily stop accepting cash bank deposits in dollars, arguing that U.S. sanctions restrict its ability to use that currency abroad. Bank transfers would continue to be available, the government said. 

The initiative

According to García Cruz, $2,000 has been raised so far, and crypto donations mainly help Cubans who don’t receive assistance from relatives abroad. 

Another crypto company that has joined the donation initiative is Slyk. 

“It can be used in Cuba by people who want to collect donations with any payment methods from Venmo to bitcoin,” Tim Parsa, the CEO of Slyk, told CoinDesk. 

Donations will be used to purchase medicine and masks to help Cuban people in Matanzas and other cities.

Slyk’s community manager and representative in Cuba is Camilo Noa, one of the ideologues behind the crypto donations. 

“So far we have purchased medicines, masks, alcohol, hand gel, chlorine, food, personal hygiene, clothing and other supplies. Donations have been delivered to people, hospitals and isolation centers,” he told CoinDesk. 

According to García Cruz, no system or institution is overseeing the deliveries. 

“It is about Cubans helping Cubans, being supportive and transparent with those who need it most,” he said.

Liset provides updates on her Twitter account on the quantities purchased, prices and the people to whom crypto donations are provided. 

After the government began arresting protestors, donations to Matanzas were put on hold, as people don’t want to leave their houses, Liset said. 

“Everything was going well. With special permits, we ourselves were sending medicines, medical supplies, food,” she said. 

Donations are currently earmarked for health personnel and patients of the so-called “Covid-19 Red Zone” in Matanzas. However, that could change in the future, as García Cruz has not stopped receiving requests from different provinces in the last few days. 

The Council for Democratic Transition in Cuba, recently created by opponents to the regime, issued a humanitarian crisis statement characterizing the health situation in Matanzas as “chaotic” on Saturday. 

“The chaos is total,” García Cruz said.

According to the local opposition media outlet 14ymedio, dozens of complaints were made about the collapse of the healthcare system, deaths of patients in their homes, a lack of medicine and medical supplies, and poor medical care. 

As a response to the role of social media in the protests, the regime started cutting off internet service.  

NetBlocks, a global internet monitor, posted on its Twitter that social media and messaging platforms have been restricted since Monday on state-run internet provider Etecsa. 

Cuban sources confirmed to CoinDesk that there are internet outages. In some cases, the sources took up to a day to respond to Telegram messages. 

In this context, cryptocurrency transactions are also “considerably affected,” Noa said. 

As seen in the public registry of QvaPay, no new donations have been registered in the last two days. According to García Cruz, this is happening because of the internet outages and many people have not even been able to use their wallets. “To that we have to add that there is a lot of political fear,” he said. 

Outside the system 

According to García Cruz, the most common cryptocurrencies used for donations are bitcoin and USDT, although the platform also accepts litecoin, tron and bitcoin cash, among others. 

Once donations in crypto are received, they are exchanged on the black market to fiat then used in the MLC stores — Spanish acronym for convertible free currency — where products can be purchased with foreign currency, García Cruz added. 

After generating the anger of part of the population, several of these stores were looted recently. 

In the last year, the number of MLC stores has multiplied in the country and concentrated the majority of food and basic goods. However, the majority of Cubans do not have access because they do not receive their salaries in dollars or euros. 

On January 1, Cuba ended its dual currency system by eliminating the Convertible Peso (tied to the U.S. dollar) and leaving the Cuban Peso in circulation, strongly devaluing the Cuban Peso, which now trades at $0.042. 

However, García Cruz said that the exchange rate on the black market is higher, of 60 Cuban Pesos per dollar, while cryptocurrencies are exchanged at 50 Cuban Pesos due to a supply and demand factor. 

Noa said that most Cubans do not understand the use of cryptocurrencies and those seeking help prioritize getting cash to buy food and medicine they need. García Cruz, however, estimates that there is a big crypto community of about 200,000 people in Cuba.

Related Stories
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