CoinDesk Crypto

Bitcoin (BTC) was higher, changing hands just above $23,000 after dropping for two straight days from a record high around $24,300. 

“The market looks to begin a consolidation phase above $22,000,” according to Matt Blom, head of sales and trading for the cryptocurrency firm Diginex. “Further attempts to drive the market lower are likely to be met with firm support from the bulls.”

XRP (XRP), the digital asset used for payments, fell for a fourth straight day, down 17% over that stretch, after Brad Garlinghouse, CEO for San Francisco-based Ripple, said he had been informed by regulators that the company would be sued by the U.S. Securities and Exchange Commission. The coming suit is believed to relate to sale of XRP, and whether the tokens represent securities that needed to be registered with authorities. Ripple disputes the claim and argues that other branches of the U.S. government have deemed XRP to be a currency. 

Related: MoneyGram Takes Wait-and-See Approach as SEC Sues Partner Ripple

“It’s an attack on the entire crypto industry and American innovation,” Garlinghouse said in an emailed statement.

In traditional markets, European stocks recovered some of Monday’s steep losses while U.S. stock futures wavered between gains and losses, as investors assessed elevated coronavirus case levels alongside the rollout of vaccines and economic-stimulus measures.  

Market moves

Bitcoin was launched in early 2009, and during its first decade a lot of notable and well-respected investors, economists, bank executives and financial-news commentators said a lot of things about the cryptocurrency.

Times change, and it’s arguable that, in the push and pull of global markets, all that’s now old news or maybe just water under the bridge. 

Related: Market Wrap: Bitcoin Recovers to Nearly $24K; Ether Rides Bitcoin’s ‘Coattails’

But as First Mover reviews the year that was, anything said in 2020 is fair game. Here’s a brief rundown of some notable pronunciations on bitcoin, in chronological order, as bitcoin tripled in price to about $23,000 from $7,168 at the start of the year.

Jan 22, 2020. Peter Schiff, CEO, Euro Pacific Capital, via tweet: “I concede that many people who bought bitcoin in the past and sell it now will profit. But those who buy it now and hold will suffer a loss.” 

Feb. 24, 2020. Warren Buffett, billionaire CEO of the conglomerate Berkshire Hathaway, in CNBC interview: “Cryptocurrencies basically have no value.” 

Feb. 28, 2020. Greg Cipolaro, then-co-founder of Digital Asset Research, now head of research for NYDIG, in interview: “As interest rates decline, you’re more likely to tip the seesaw toward assets that don’t have yield, such as collectible assets like artwork or gold or bitcoin.”  

March 9, 2020. Connor Abendschein, a research analyst for Digital Assets Data, in email: “Bitcoin may find its footing and shine further down the road during this financial crisis.”

March 12, 2020. Kevin Kelly, lead analyst at the cryptocurrency analysis firm Delphi Digital, said: “Bitcoin and crypto in general still very much sit further out the risk curve in investors’ minds.”

April 2, 2020. Joe DiPasquale, CEO of BitBull Capital, in phone interview: “You have so many people trying to swing trade on crypto.” 

April 7, 2020. Rich Rosenblum, head of markets group at GSR, in email: “The record stimulus being deployed by central banks is a reminder of why bitcoin was created.”

April 6, 2020. Jay Hao, CEO of the Malta-based cryptocurrency exchange OKEx, in blog post: “Bitcoin possesses the characteristics of a super-sovereign currency.”

April 10, 2020. Arthur Hayes, CEO, BitMEX exchange, in blog post: “There are only two things to own during the transition to whatever the new system is, and that is gold and bitcoin.”

April 20, 2020. Mike Alfred, CEO of cryptocurrency analytics firm Digital Assets Data, said: “We are hearing and seeing increased retail interest.”

May 11, 2020. Paul Tudor Jones II, hedge fund manager, in CNBC interview: “We’re watching the birth of a store of value, and whether that succeeds or not, only time will tell.” 

May 18, 2020. Arcane Research, a cryptocurrency analysis firm, in report: “Bitcoin has been performing well, while the stock market has struggled… . If this trend continues, it could also be strengthened by people finally believing the narrative and then becoming a self-fulfilling prophecy.” 

May 27, 2020. Goldman Sachs Consumer and Investment Management Division, in presentation: “Cryptocurrencies including bitcoin are not an asset class. … We do not recommend bitcoin on a strategic or tactical basis.” 

June 2, 2020. Mike McGlone, Bloomberg Intelligence senior commodity strategist, in a report: “Something needs to go really wrong for bitcoin not to appreciate.” 

July 13, 2020. Arca Funds, digital-assets investment firm, in weekly update: “We believe bitcoin will remain the best insurance policy against currency collapse and a complete unwind of the financial system as we know it.”

Aug. 3, 2020. Messari, cryptocurrency research firm, in a report. “We know that it won’t take much of an institutional allocation until $50,000 bitcoin is back on the table.”

Aug. 14, 2020. Lennard Neo, head of research at Stack Funds, in a report: “Bitcoin could be a ‘risk-on hedging-type asset,’ where it performs relatively well in thriving markets, yet acting as a hedge to global uncertainties, displaying financial attributes that fall in between that of equity and gold.”

Sept. 9, 2020: Charlie Morris, chief investment officer of digital asset-focused investment firm ByteTree, in WhatsApp audio interview: “Bitcoin’s still small and has huge upside from here.”

Oct. 6, 2020: Marc Chandler, chief market strategist at Bannockburn Global Forex, in a video chat: “I just don’t know how bitcoin can replace the greenback.” 

Oct. 9, 2020: Mati Greenspan, founder of the foreign-exchange and cryptocurrency analysis firm Quantum Economics, tells subscribers: “It’s a bit surreal to see gigantic corporate entities now going knee-deep in bitcoin.” 

Oct. 22, 2020. Zac Prince, CEO of the crypto lender BlockFi, in an email: “This coalescing of fintech and bitcoin is yet another bullish development for investors.”

Oct. 23, 2020. JPMorgan analysts, in a report: “Even a modest crowding out of gold as an alternative currency over the longer term would imply doubling or tripling of the bitcoin price from here.”

Nov. 9, 2020. Stanley Druckenmiller, hedge fund investing legend, in CNBC interview: “Frankly, if the gold bet works, the bitcoin bet will probably work better.”

Nov. 10, 2020. Michael Saylor, MicroStrategy CEO, in interview: “Ultimately you have to find something which you can’t print more of that doesn’t have its fundamental underpinnings tied to a fiat currency, and the only thing that I can find right now is bitcoin.” 

Nov. 11, 2020. Ray Dalio, the founder and co-chairman of Bridgewater Associates, in interview with Yahoo Finance: “I don’t think digital currencies will succeed in the way people hope they would.”

Nov. 18, 2020. Jamie Dimon, CEO of JPMorgan Chase, at New York Times DealBook conference: Bitcoin is “not my cup of tea.”  

Nov 26, 2020. Nouriel Roubini, via tweet: “Bitcoin has no role in institutional or retail investors portfolios.”  

Nov. 30, 2020. Inigo Fraser-Jenkins, co-head of portfolio strategy team for Alliance Bernstein, in report: “The volatility of bitcoin has significantly reduced, making it more attractive in its potential twin roles both as a store of value and as a medium for exchange.”

Dec. 7, 2020. Wells Fargo Investment Institute, in report: “Cryptocurrency investing is a bit like living in the early days of the 1850s gold rush.”

Dec. 16, 2020. Scott Minerd, chief investment officer of Guggenheim Partners, in interview with Bloomberg TV: “Bitcoin has a lot of the attributes of gold and at the same time has an unusual value in terms of transactions.”

Dec. 18, 2020. Ruffer Investment, in portfolio update: “Bitcoin has survived trial by fire, becoming stronger through multiple cycles of boom and bust.” 

– Bradley Keoun

WATCH: 2020 Bears and Bulls: Before Wall Street Loved Bitcoin, They Hated It

Bitcoin watch

(Editor’s Note: CoinDesk’s Omkar Godbole, who writes Bitcoin Watch, is off this week.) 

What’s hot

Uniswap is the top gas guzzler on Ethereum (CoinDesk) 

Crypto exchange Huobi returning to U.S. after winning Nevada trust license (CoinDesk) 

Grayscale halts bitcoin trust inflows as JPMorgan warns slowdown could hit BTC price (CoinDesk)

India’s leading bitcoin exchange raises $13.9M from Block.One, Coinbase Ventures (CoinDesk) 

Coinbase crypto exchange is hiring for new Canada operation (CoinDesk)   

Investor inflows to cryptocurrency funds and products has risen to $5.6B so far in 2020, up seven-fold from 2019, CoinShares says (Reuters) 

Microstrategy has now spent $1.125B on bitcoin, at average price of about $16K, CEO Michael Saylor tweets (CoinDesk) 

Bitcoin mining-computer maker set to spin out business lines in bid to end year-long power struggle between top executives (The Block) 

Anthony Scaramucci’s SkyBridge Capital files with SEC to launch bitcoin fund (CoinDesk)   

Analogs The latest on the economy and traditional finance

U.S. Congress passes $2.3T spending bill covering $600 checks, supplemental unemployment benefits and money for schools, airlines and vaccine distribution – just hours after rank-and-file lawmakers got their first look at the 5,593-page measure; additional relief package could be needed by March (Bloomberg)

European Union rebuffs U.K. Prime Minister Johnson’s latest Brexit concession, with just nine days left before U.K. leaves single market (Bloomberg) 

Oil prices tumble as new coronavirus strain sparks travel restrictions (WSJ) 

China set to further reduce U.S. dollar’s weight in index used to set yuan’s daily reference rate (Bloomberg)

Tweet of the day Related Stories

• An SEC Victory in Ripple Case Would Render XRP ‘Untradeable,’ Market Pros Say
• Ripple CEO Warns SEC May Sue Company Over XRP Sales

Cryptocurrency project Verge, previously adopted for payments by Pornhub, is forging a new role as a means to pay for mobile charging.

• Verge Currency announced Tuesday it has teamed up with a U.S.-based firm called Voice Life to develop a new mobile charging device that accepts verge (XVG) as payment.
• The tech will be on display at the Consumer Electronics Show in January 2021.
• When launched, users will be able to use the VergePAY platform to fund a two-minute charge of mobile devices. XVG is the only cryptocurrency the system will use, a Verge representative told CoinDesk.
• The system will use a Far-Field Wireless Power Charging System from Voice Life. This “will ultimately convert ambient terahertz waves into storable energy,” according to the firm’s website.
• Voice Life CEO Robert Smith said, “The ‘holy grail of blockchain technology’ is going to be a real-time application that extends its utility beyond just improving financial transactions. We believe we are developing that application with Verge.”
• Pornhub previously used verge as its only cryptocurrency option for performer payouts after PayPal withdrew its services from the company. It has since added the tether (USDT) stablecoin and tron (TRX). More recently, it added bitcoin and litecoin payments.

Also see: PayPal’s Axing of Pornhub Model Payments May Boost Crypto Conversions

Related Stories

• Blockchain Bites: Pornhub’s Privacy Predicament, Argentina’s Crypto Boom, Israel’s DeFi Darlings
• Pornhub Adds Bitcoin and Litecoin Payments for Premium Content
• Pornhub Now Lets Models Get Paid With the Tether Stablecoin
• PayPal’s Axing of Pornhub Model Payments May Boost Crypto Conversions

Leading cryptocurrency exchange Coinbase asked the U..S. Treasury Department to extend the comment period on proposed know-your-customer (KYC) requirements from 15 days to the typical 60 days normally afforded such proposals.

• Coinbase noted that the Financial Crimes Enforcement Network (FinCEN), part of the U.S. Treasury, asked for comments on 24 questions, each requiring detailed analysis and extensive cost assessments.
• “Addressing all of the questions FinCEN has posed and the additional issues FinCEN has not yet considered would take much longer than 15 days in the best of times,” Coinbase said in its letter. “To do so in a handful of working days across the national holidays and during the latest surge in COVID is quite obviously impossible.”
• Under the advanced notice of proposed rulemaking announced last week, users who want to send cryptocurrencies from centralized exchanges to a private wallet would need to provide personal information about the owner of that wallet to the exchanges, if the amount sent is greater than $10,000 in one day. 
• The exchanges would also need to submit and store records involving such transactions with a total value over $10,000 in a 24-hour period, and maintain records for transactions over $3,000.
• The general public will have until Jan. 4, 2021, to provide comments or feedback (although another part of the document says feedback can be submitted within 15 days after the rule is published in the Federal Register, the national logbook, on Dec. 23).
• While 60 days of comment is the norm for such proposals, the Treasury cited “significant national security imperatives” for the shortened period.
• Coinbase attributed a more mundane reason for the shortened review period: “There is no emergency here; there is only an outgoing administration attempting to bypass the required consultation with the public to finalize a rushed rule before their time in office is done,” the exchange said in its letter to the director of FinCEN.

Read also: US Floats Long-Dreaded Plan to Make Crypto Exchanges Identify Personal Wallets

Related Stories

• Road to IPO: Coinbase’s Power Struggles
• US Floats Long-Dreaded Plan to Make Crypto Exchanges Identify Personal Wallets
• Coinbase Going Public Could Let the SEC Dictate Which Tokens Get Listed
• Ruffer Investment Used Coinbase to Execute $745M Bitcoin Buy

The U.S. Securities and Exchange Commission (SEC) intends to sue Ripple over its sale of XRP, CEO Brad Garlinghouse said Monday.

According to Fortune, the lawsuit will be filed in the near future, though no specific date has been provided yet. The suit had not been filed as of press time. Ripple cofounder Chris Larsen and Garlinghouse will be named defendants alongside the firm, Garlinghouse said.

“It’s an attack on the entire crypto industry and American innovation,” Brad Garlinghouse said in an emailed statement.

Related: Market Wrap: Bitcoin Dumps to $21.9K; ETH 2.0 Affected Ether Locked in DeFi

In an emailed statement, outside counsel Michael Kellogg, of Kellogg, Hansen, Todd, Figel & Frederick said, “This complaint is wrong as a matter of law. Other major branches of the U.S. government, including the Justice Department and the Treasury Department’s FinCen, have already determined that XRP is a currency. Transactions in XRP thus fall outside the scope of the federal securities laws. This is not the first time the SEC has tried to go beyond its statutory authority. The courts have corrected it before and will do so again.”

Ripple received word Monday that the SEC intended to sue, according to the Wall Street Journal.

Ripple is already being sued by XRP investors in a putative class-action lawsuit, on claims that the company said XRP’s price would rise. That suit, which began in 2018, continues its course through the courts.

The company has previously paid $700,000 in fines on charges it violated aspects of the Bank Secrecy Act brought by the Financial Crimes Enforcement Network (FinCEN), as well as an additional $450,000 in fines to the U.S. Attorney’s Office for the Northern District of California.

Related: Market Wrap: Bitcoin Pushes Past $23.7K While Crypto Locked in DeFi at All-Time High

Garlinghouse’s move Monday is reminiscent of how messaging platform Kik announced the SEC would file suit against it for raising $100 million to build Kin. Kik later settled the case.

Crypto company CEOs warning the broader industry of upcoming regulatory actions may be a bigger trend. Coinbase chief Brian Armstrong previewed potential U.S. Treasury Department rulemaking last month, weeks before FinCEN published a proposal for rulemaking.

XRP

XRP was developed and launched by Larsen’s Ripple Labs co-founder Arthur Britto and tech chief David Schwartz in 2012. Ripple maintains 55 billion XRP in escrow, releasing 1 billion every month. Unused XRP is returned to escrow.

According to Messari, Ripple has sold about $1.2 billion in XRP over the years.

XRP’s price fell after news of the impending lawsuit came out, dropping 12% on the 24-hour trading period to below 50 cents. The cryptocurrency’s price had already begun falling earlier in the day, joining a broader market decline.

An SEC spokesperson did not immediately return a request for comment. After the publication of this article, a Ripple spokesperson emailed the following statement, attributed to Garlinghouse:

The SEC is fundamentally wrong as a matter of law and fact. XRP is a currency, and does not have to be registered as an investment contract. In fact, the Justice Department and the Treasury’s FinCEN already determined that XRP is a virtual currency in 2015 and other G20 regulators have done the same. No other country has classified XRP as a security.

The SEC has permitted XRP to function as a currency for over eight years, and we question the motivation for bringing this action just days before the change in administration. Instead of providing a clear regulatory framework for crypto in the U.S., Jay Clayton inexplicably decided to sue Ripple – leaving the actual legal work to the next Administration.

This is an attack on the entire crypto industry and American innovation. By giving the stamp of approval only to Bitcoin and Ether (whose networks are at the mercy of the Chinese Communist Party), the SEC has picked the winners – disregarding an entire industry outside of these two tokens. Ignoring advice from national security experts and the U.S. government, Jay Clayton is handing over the future of our global financial systems – underpinned by blockchain and crypto technologies – to an authoritarian regime.

We are right and will aggressively fight – and win – this battle in the courts to get clear rules of the road for the entire industry in the U.S. We are on the right side of the law, the right side of policy and will absolutely be on the right side of history. In the meantime, it’s business as usual for Ripple and our hundreds of customers made up of the world’s top financial institutions that have come to depend on Ripple to deliver high-value solutions.

UPDATE (Dec. 22, 2020, 02:25 UTC): Updated with additional context.

Related Stories

• Robinhood Pays SEC $65M to Settle Allegations It Misled Customers
• Market Wrap: Bitcoin Solidly Trades Above $20K; Ether Jumps on Positive BTC, CME’s New ETH Product

After the past week’s record bitcoin volume for 2020, the price dipped on lower volume. Meanwhile, November’s dip in ether assets locked in DeFi can at least partially be attributed to the Ethereum network’s ambitious 2.0 upgrade.

• Bitcoin (BTC) trading around $22,843 as of 21:00 UTC (4 p.m. ET). Slipping 5.3% over the previous 24 hours.
• Bitcoin’s 24-hour range: $21,960-$24,081 (CoinDesk 20)
• BTC near its 10-hour moving average and below the 50-hour on the hourly chart, a sideways-to-bearish signal for market technicians.

Bitcoin’s price rode a roller coaster up and down over the past 24 hours. After a steady run above $23,800 in early hours trading, the world’s oldest cryptocurrency dumped as low as $21,960, according to CoinDesk 20 data. The price recovered somewhat to $22,843 as of press time. 

Lower-than-average volume led to a thinner-than-usual market Monday as many traders were likely staying on the sidelines with the holidays and new year quickly approaching. 

Related: Ripple CEO Warns SEC May Sue Company Over XRP Sales

“Trading activity is subdued. That doesn’t motivate anyone to trade on Christmas week,” said Misha Alefirenko, co-founder of crypto market maker VelvetFormula.

After Dec. 17’s combined volume record $4.7 billion day across major exchanges Bitfinex, Bitflyer, Bitstamp, Coinbase, Gemini, ItBit, Kraken and Poloniex, that figure was much lower, down to $2.5 billion as of press time Monday.

Despite this, big-time buyers in the over-the-counter market have helped keep bitcoin well above the $20,000 level, first breached back on December 16. 

Read More: MicroStrategy Splurges On Another $650M in Latest Bitcoin Investment

Related: Author Ben Mezrich on Capturing the Winklevii and Plans for a ‘Bitcoin Billionaires’ Movie

“Real demand from largely price-insensitive institutional buying drove us into that level, and the resulting fireworks we saw on the break came from the leveraged side as roughly half the market’s outstanding leveraged short positions were liquidated,” quant trading firm QCP wrote in an investor note Monday. 

On derivatives venue BitMEX, over $44 million in sell liquidations, the crypto equivalent of a margin call, occurred, which put some pressure on the market for bitcoin to head lower. Sell liquidations are triggered when leveraged long positions start losing a significant portion of the money the buyer posted to place the trade. 

“The $20,000 spot level … is now our firm bull/bear line, with $16,000 as our strong support,” QCP Capital said in its investor note. “We are lightening up on selling puts up here, as this week brings our very well flagged Christmas expiry, which is now officially the largest OI on record.” 

Open interest, or OI, is loaded up in the bitcoin options market for Dec. 25 expiration, according to data from aggregator Skew. 

The overhang of options expiration and the declining activity in the spot market may be the largest dynamics to watch for the market in the next several weeks.

Read More: Grayscale Halts Bitcoin Trust Inflows

“We could be looking at an extended consolidation from here, considering the weak Q1 seasonality and risks associated with the new administration after [U.S. President-elect Joe] Biden’s inauguration in mid-January,” QCP added.

ETH Locked in DeFi rising from November trough

The second-largest cryptocurrency by market capitalization, ether (ETH) was down Monday, trading around $609 and slipping 7% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

Read More: Uniswap Is the Number One Gas Guzzler on Ethereum

The amount of ether “locked” in decentralized finance, or DeFi, for “yield” or a return in exchange for providing liquidity, hit a high of 9.4 million ETH on Oct. 20. In November, the amount of ether locked dipped as low as 6.7 million before rebounding in December, at over 7.2 million ETH as of press time.

Cooper Turley, editor of newsletter DeFi Rate, told CoinDesk that Ethereum’s 2.0 upgrade dynamics, which also includes staking in the network, played a role in the amount of ether locked, dipping and then recovering somewhat. “People unlocked ETH to stake via [Eth 2.0] and trade it during the recent run-up,” Turley said. “Now that things have settled a bit, most that did not stake into [Eth 2.0] are depositing back into DeFi.”

Other markets

Digital assets on the CoinDesk 20 are mostly red Monday. One notable winner as of 21:00 UTC (4:00 p.m. ET):

• orchid (OXT) + 14.7%

Notable losers:

• bitcoin cash (BCH) – 12.7%
• litecoin (LTC) – 12.3%
• xrp (XRP) – 11.1%

Equities:

• Asia’s Nikkei 225 closed in the red 0.18% as a volatile Monday session led the index lower on concern over rising Japanese coronavirus cases.
• The FTSE 100 in Europe ended the day dropping 1.7% as the U.K. identified a new coronavirus strain over the weekend, concerning investors’ economic outlook.
• The S&P 500 in the United States dropped 0.40% as the new U.K. coronavirus strain and fresh lockdowns there caused investors to sell, dragging the index lower.

Commodities:

• Oil was down 2.6%. Price per barrel of West Texas Intermediate crude: $47.78.
• Gold was in the red 0.26% and at $1,876 as of press time.

Treasurys:

• The 10-year U.S. Treasury bond yield fell Monday dipping to 0.936 and in the red 0.70%.

Related Stories

• Uniswap Is the Number One Gas Guzzler on Ethereum
• First Mover: As Markets Turn Ugly, Bitcoiners Thank Secular Trend

Ethereum’s mining competition just got a bit hotter, even as the second-largest blockchain by market cap has begun the formal process of getting rid of its dependency on the industry all together.

Shenzhen, China-based mining firm Linzhi Inc. has begun rolling out a new Ethereum ASIC miner dubbed the Phoenix, reportedly three times more powerful than top options available today. As reported by CoinDesk, the journey to produce a more powerful and efficient Ethash ASIC miner was begun some two years ago by Chen Min, former CTO of mining giant Canaan.

Mining pool F2 Pool released a demo of the new machine on YouTube Saturday. The Phoenix outpaces the next best A10+ Pro at 2,600 megahashes per second MH/s to around 500 MH/s. Linzhi’s new machine is also more energy efficient clocking in at 3,000 watts per hour to the A10+ Pro’s 1,300 W, F2 Pool says.

Related: US Bitcoin Mining Firm Core Scientific to Triple Capacity With Massive 59,000-Machine Order

“If you look back on CoinDesk reporting about Linzhi dating back to the first article in September, 2018, it’s clear we had delays,” Linzhi Director of Operations Wolfgang Spraul told CoinDesk in an email. “Some due to underestimating the technology, then some due” to the coronavirus pandemic.

Read more: Ethereum Fees Plummeted 65% in October Following DeFi Volumes Back to Earth

Spraul said the firm is rolling out pre-orders and limited quantities to “developers, community, pool operators, etc.” Innosilicon carries the A10+ Pro for about $4,440 per unit while Linzhi has yet to release a public price figure.

Scrapping Ethereum mining

The new product comes as the Ethereum network has begun a technical transition from a proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS). That process began Dec. 1 with the launch of the Beacon Chain. That chain acts as a central conductor for the new blockchain network which uses coin deposits as a means of securing the network, called “staking,” over mining.

Related: What Is Proof-of-Work?

Read more: What Is Proof-of-Work?

Still, miners have at least a two-year runway with PoW on Ethereum. The current network, Eth 1.x, won’t be moved over to the new PoS blockchain until phase 1.5 of Eth 2.0.

The current Linzhi Phoenix demoed by F2 Pool will need at least one upgrade to stay useful before that transition, however.  

The Ethereum network’s directed acyclic graph (DAG) – a component of Ethereum’s PoW algorithm called Ethash – stands at just under 4 gb, while each Linzhi Phoenix only has a 4.4 GB memory. The incumbent A10, on the other hand, can house between 6 and 8 gigabytes, F2 Pool says. 

The Phoenix will need a bump in memory size or aftermarket components if it is not to become obsolete before phase 1.5. Spraul told CoinDesk in an email that the Phoenix miners currently rolling out are limited to quantities of pre-orders. The firm is “working on a successor with an increase in DAG memory – no specs yet,” he said.

Of course, other Ethash-based cryptocurrencies such as Ethereum Classic will still be using proof-of-work, meaning a market will still exist for the Phoenix even after Eth 2.0 phase 1.5.

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At the climax of a tumultuous year for the world’s number-one decentralized digital currency, bitcoin smashed all of its previous price records to eclipse the $20,000 mark and climb beyond it, crossing a threshold that once may have appeared well beyond the asset’s reach.

Anthony Scaramucci’s hedge fund SkyBridge Capital filed documents with the U.S. Securities and Exchange Commission Monday for what appears to be its first bitcoin fund.

The $9.2 billion asset manager filed a Form D for “SkyBridge Bitcoin Fund L.P.,” a private securities offering open only to accredited investors buying at least $50,000. The fund’s strategy and means of exposure were unavailable at press time.

SkyBridge granted two of its funds permission to “seek exposure to digital assets” in mid-November without specifically mentioning bitcoin. Since then, fund founder Anthony Scaramucci, who became known to broader public during his 11-day tenure as White House communications director for President Donald Trump, has further dabbled in bitcoin rhetoric through conversations with MicroStrategy CEO Michael Saylor.

Related: Institutional Bitcoin Shop NYDIG Raises $150M for Twin Crypto Funds

The Monday filings reveal SkyBridge has a newfound interest in chasing the oldest cryptocurrency more directly.

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Decentralized exchange Uniswap is the number one gas burner on Ethereum. It has been responsible for close to 30% of all transactions initiated on the network in the last 8 hours. 

Since as early as Nov. 13, Uniswap has consistently ranked as the top decentralized application (dapp) for the amount of fees used. The runner-up for this same time period, making up about 11% of total fees on Ethereum, is Tether, the company behind the eponymous dollar-pegged stablecoin that began to migrate its token supply onto Ethereum back in 2019. 

Computational resources on Ethereum are measured in units of gas and paid for by users on the network in the native cryptocurrency ETH. Since the official debut of the second iteration of Uniswap in March, users have paid close to 240,000 ETH to use the dapp, which is equivalent to roughly $146 million at time of writing. 

Related: Decentralized Stock Trading Launching on DeFi Platform Injective Protocol

More specifically, users have been paying for the Uniswap router, which enables swaps between Ethereum-based tokens. There are two other known components to Uniswap and that is its token distributor and governance token, UNI. These components are less frequently interacted with by users and only make up about 1% and 3%, respectively, of the transaction activity generated by the Uniswap router.

See also: As Tether Supply Hits Record Highs, It Moves Away From Original Home

Gas consumption highlights activity on Uniswap

As a decentralized exchange, Uniswap has created over 24,000 different markets for trading and attracts close to 100,000 weekly users. Given these figures, founder and CEO of Dune Analytics Fredrik Haga told CoinDesk he’s not surprised by the high gas consumption of the dapp in comparison to other DeFi applications on Ethereum.

“Trading is something many users do frequently and requires interactions all the time, while lending on the other hand (i.e. Maker/Compound) is more passive,” said Haga in an email. 

Related: Warp Finance Says It Recovered 75% of the $7.76M Funds Taken in Flash Loan Attack

While decentralized finance (DeFi) dapps like MakerDAO and Compound have higher amounts of total value locked (TVL) in their protocols, Uniswap takes the lead for the total amount of transactions initiated and gas consumed. 

See also: Total Value Locked, A Proxy for Investor Interest

Additional metrics like gas consumed highlight how the activity of DeFi apps can be compared and ranked in different ways according to their use case. 

Though TVL is the most popular metric for measuring the growth and activity of DeFi dapps, it often paints an incomplete picture of the myriad of ways DeFi is beginning to take off on Ethereum. 

Ilya Abugov, lead analyst at DappRadar, said in an interview with CoinDesk in November:

“It’s very important to supplement TVL with as many additional metrics as possible. There’s been a tendency to see TVL as the metric [for DeFi],  partially because it’s very elegant and simple. But that simplicity and elegance obscures some of the realities.”

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Grayscale Investments LLC has temporarily stopped accepting new investors in six funds, including its Ethereum Trust and Bitcoin Trust funds, both gateways for institutional crypto bets.

• The crypto asset manager’s website said Monday that its Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin and Digital Large Cap Fund Trusts are “currently unavailable” for new investors.
• Grayscale periodically closes off its crypto trusts to so-called “private placement” rounds. Such action happened repeatedly to GBTC in Q4 2019 – so the Monday halting is not unusual.
• Even with the temporary closing to new investors, Grayscale will still be able to obtain added capital from existing investors until it reopens again to new investors. On Monday JPMorgan analysts wrote that a dramatic slowdown in GBTC inflows could jack up the odds of a bitcoin price correction.
• New York-based Grayscale is owned by Digital Currency Group, the parent company of CoinDesk.

CORRECTED 12/21/20 19:31: Rewrites headline to emphasize the closing is temporary. Corrects to note the trusts can still obtain capital from existing investors.

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The Bank of Russia doesn’t believe a digital ruble will hurt its banks. 

Earlier this month, Russian banks warned the Bank of Russia that the digital ruble under discussion might weaken them if people pull their funds to rush into the new system. Introducing the digital ruble into Russia’s financial system might cost the country’s banks up to 25 billion rubles (~$34 million), according to Sber, Russia’s largest retail bank and the most vocal critic of the current approach to the central bank digital currency (CBDC). 

The Bank of Russia’s chairwoman, Elvira Nabiullina, shrugged off these concerns during a press conference on Friday.

Related: Bitcoin Scam Using Unauthorized Celebrity Images in Ads Traced to Moscow: Report

“We don’t see this [digital ruble launch] leading to any significant funds outflows or changes,” she said.  

Last week, Sber calculated that banks might lose up to 4 trillion rubles (~$54 billion) in liquidity in the first three years once the project launched. As a result, the money-strapped banks would have to increase interest rates about half a percent and restrict loans for retail as well as small businesses. 

Nabiullina was skeptical about this estimate, saying, “I’m not sure where these numbers are coming from,” and adding that interest rates would not be affected by the digital ruble but by inflation rates and general monetary policies. 

“If for some reason, unrelated to the digital ruble, banks experience a liquidity shortage, we have tools to fix that,” Nabiullina said. 

Protesting voices

Related: Robinhood Faces Legal Action from US Regulator Over ‘Aggressive Marketing’: WSJ

Echoing Sber’s sentiment, the National Council of Financial Market (NCFM), the Russian banks’ trade group, said in its letter to the Bank of Russia this week that an outflow of money from banks to the digital ruble system would make banks less stable and more dependent on loans from the central bank. (CoinDesk read the letter.) 

To prevent that, the NCFM recommends something similar to China’s digital yuan model, where the central bank would open digital ruble accounts for commercial banks, which will manage the digital rubles of retail users as part of their balance sheets. 

A similar model has been proposed by Sber’s Popov during a recent Zoom conference with the Central Bank. However, the regulator did not seem open to this approach. 

Russia’s financial regulator outlined the possible launch scenarios for the future central bank digital currency (CBDC) a few months ago in an analytical report. Most of these scenarios scare the country’s banks, the public discussion shows. 

The Bank of Russia seemingly favors a centralized model in which the regulator will be the administrator of the system and the banks will help onboard users, which the banks don’t like. 

In an open Zoom call with the regulator, several of Russia’s financial institutions voiced concerns that banks will be obliged to use their own budgets to integrate the digital ruble system and get no business upside. Further, the Bank of Russia could become a new government-backed mega-bank, while other banks will have to compete with it for Russian people’s money. 

A ‘strong hand’ approach

The Bank of Russia’s report does not really explain why the country might need a CBDC at all, says Vladislav Martynov, adviser to the Russian Cryptocurrency and Blockchain Association (RAKIB). He is also a member of the Ethereum Foundation and one of the earliest blockchain advocates in the country.

“The Bank of Russia would prefer not to bother about the digital ruble too much, but there is a movement [of CBDCs] around the world, central banks are working on concepts and the Bank of Russia can’t just sit around doing nothing,” Martynov said.

In these circumstances, the regulator viewed the launch of a CBDC as a chance to consolidate yet more power in the Central Bank, Martynov believes. 

“The spirit of the published report is very conservative: it’s about creating a new powerful monopoly, a new state bank that will be dominating the market while the role of commercial banks will be diminished” he said, referring to the Bank of Russia being a single administrator of digital rubles.

Another concern is that digital ruble adoption will be forced through in a top-down way, and government-controlled companies will be obliged to use it. Previously, this happened to the National Card Payment System (NSPK), Russia’s homegrown alternative to Visa and Mastercard. 

NSPK was created in order to keep the Russian economy going in case a new round of sanctions cut the country off from global payment networks – a threat that felt real several years ago. State-owned companies were obliged to issue NSPK cards, called Mir, to their employees. 

“We saw how the Mir cards were forcibly rolled out,” Martynov said. “So if they set a goal to [to roll out the digital ruble], they will see it achieved.” He added that the Bank of Russia, apparently, wants to get as many people using the digital ruble as possible.

A forced “mass adoption” of the digital ruble might become as disastrous for Russia as the enormous experiments of the USSR, like the nation-wide anti-alcohol campaign by Mikhail Gorbachev or the river reversal project, Martynov believes.

To be sure, the regulator hasn’t yet decided if the digital ruble will even happen at all. Since publishing the report, the Central Bank has been gathering public feedback, and will do so until Dec. 31. Nabiullina previously said that if the regulator does decide to continue with the CBDC, the first pilot might take place at the end of next year.

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A man who ran the now-bankrupt BitGrail exchange may have been behind a series of hacks that stole €120 million ($146.55 million) in cryptocurrency from his own platform, Italian police claimed Monday.

• It’s estimated that 230,000 BitGrail users lost funds in the breaches, which targeted the platform’s stores of the nano cryptocurrency, as reported by Reuters.
• The police said the perpetrator, a 34-year-old man from Florence named only as “F.F.”, is either behind the breaches or took no action to prevent them after the first attack came to light.
• “It is not yet clear whether he participated actively in the theft or if he simply decided not to increase security measures after discovering it,” Ivano Gabrielli, director of the national centre for cyber crimes, said in Reuters’ report.
• While in February 2018, F.F. contacted the Italian police to report the first hack, Italian authorities said it would have been simple to avoid later hacks, but instead, he “knowingly failed to prevent them.”
• The accused man faces charges of computer fraud, fraudulent bankruptcy and money-laundering.
• The amount lost in the attacks is the largest from a hack in Italy and one of the largest worldwide, according to police.

See also: Crypto Exchange EXMO Says Hackers Have Stolen 5% of Total Assets

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A surge in e-commerce and declining cash usage during the COVID-19 pandemic have boosted India’s state-led shared payments infrastructure.

According to the National Payments Corporation of India (NPCI), the nation will have processed over $425 billion in commerce by the end of this year. Emboldened by growth and eyeing expansion, the United Payments Interface’s (UPI) umbrella organization is  thinking about exporting the model to other countries. 

Developed under state guidance and regulated by the country’s central bank, the Reserve Bank of India, the payments interface began as part of the larger India Stack project, which pooled application programming interfaces (APIs) that could be used by public and private actors to build digital infrastructure. 

Related: India’s Banks Are Once More Serving Crypto Traders and Exchanges

While UPI is one of the prominent applications of the stack, other services include a unique biometric ID system, known as Aadhar, and electronic document storage. 

UPI enables both digital payments and peer-to-peer transfers for 200 banks that are part of the network, and for payment processors such as GooglePay. Put simply, UPI resembles a personal digital wallet that can be used to access and move around money from bank accounts. E-commerce platforms like Amazon and Flipkart have both integrated UPI, allowing residents to pay for goods directly using the platform. 

This interoperability is a key part of the pitch being made by the National Payments Corporation of India, the umbrella rule-making body for UPI, in favor of exporting the payments model. 

“We have started engaging with people overseas and the response has been very positive,” said Ritesh Shukla, CEO of NPCI’s international expansion subsidiary, speaking at a recent tech summit organized by Carnegie India and co-hosted by India’s Ministry of External Affairs. He added that the organization hopes to create an international product similar to UPI over the next couple of years. 

Read more: India’s State-Regulated Digital Payments Network Is Dominated by Google and Walmart

Related: India’s State-Regulated Digital Payments Network Is Dominated by Google and Walmart

While Shukla didn’t name any countries involved in the discussions, Bhutan launched a debit card tied to a similar network last month. 

According to Shukla, NPCI’s approach to the export is likely to be two-pronged: It would help countries that do not have an existing payments system to build one, while for countries that already have some form of existing payments network NPCI would help them upgrade it until it more closely resembles the UPI with respect to inter-bank operability. 

“You talked earlier about whether there will ever be another M-Pesa in Kenya, and this to me has the potential,” said Victor Malu, head of future financial systems at FSD Kenya, during the conference. 

M-Pesa was rolled out in 2007 by Kenyan telecom provider Safaricom and offered people an alternate way to transfer money using text messages. Seen as one of the earlier steps towards financial inclusion through digitisation, M-Pesa is similar to Venmo but doesn’t require a bank account. 

M-Pesa has about 24.5 million users in Kenya alone. But at the same time services like M-Pesa, and even bank accounts, are company-specific and can present hurdles when a user wants to move money from, for instance, a mobile account to bank account. 

But before UPI can go abroad, some problems need to be sorted out. As the volume of digital payments jumped in India under COVID-19 restrictions, the network’s servers also began to feel the heat. According to NPCI data, the State Bank of India (SBI), which processes the largest chunk of UPI transactions, had a failure rate of 5.31% for the 510 million transactions it processed in September. These failures were due to technical issues.

Keeping UPI going when activity spikes also requires Indian banks to upgrade their back-end infrastructure. The UPI system gives banks little incentive to invest in improving the system because they don’t earn anything from the mostly small-ticket expenditures made using the service.

In the absence of architecture to reliably process transactions and the missing economic incentive for banks to build one, the payment network could run into adoption hurdles. If unresolved, these issues could also make it harder for the NPCI to export the network. 

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Bitcoin was lower for a second day, retreating following an eight-day streak of gains that was the longest since June 2019. 

“A period of consolidation could be beneficial,” Simon Peters, an analyst for the trading platform eToro, wrote early Monday in an email, “allowing things to stabilize and cool down.”

In traditional markets, European shares fell the most since June as an apparent mutant strain of the coronavirus in the U.K. led the Netherlands, Belgium and France to impose border closures. U.S. stock futures pointed to a lower open, even after U.S. lawmakers agreed on a new $900B stimulus deal. Crude oil fell nearly 6%. Gold weakened 0.6% to $1,870.67 an ounce. 

Market moves

Related: Author Ben Mezrich on Capturing the Winklevii and Plans for a ‘Bitcoin Billionaires’ Movie

(Editor’s note: This is the sixth and final installment of First Mover’s recap of how the bitcoin market evolved over the course of 2020 and what it means for the future. Today we cover the period from October through December, when big investors and Wall Street firms suddenly started touting bitcoin as a hedge against central-bank money-printing, causing prices to double and reach a new all-time high.) 

Bitcoin proponents have tried myriad strategies over the cryptocurrency’s 11-year history to pitch it to prospective buyers.

Satoshi Nakamoto, the cryptocurrency’s inventor, designed Bitcoin to be a peer-to-peer electronic payments system outside the control of any person, company or government. For a while, some cryptocurrency analysts positioned bitcoin as a “safe haven” asset that would hold its value in times of deep economic dislocation and market turmoil. That proposition was dashed in March, when the initial global spread of the coronavirus sent global markets reeling, and bitcoin plunged 25% over the course of the month. 

What ultimately proved to be bitcoin’s breakthrough was big investors’ adoption of the cryptocurrency’s potential use as a hedge against central-bank money printing and the debasement of the dollar. The thesis derives from the hard-coded limits on bitcoin’s supply, as programmed into the underlying blockchain network; unlike government currencies that can be issued subjectively and at will by central bankers, only 21 million bitcoins can ever be created.

Related: Crypto Long & Short: Bitcoin Is More Than a Hedge Against Inflation – It’s a Hedge Against ‘Crazy’

As of early October, bitcoin prices were trading around $10,800, up 50% on the year. It was already an impressive gain, especially during a year when the global economy had suffered the worst contraction since the Great Depression. U.S. stocks were up 4%. 

Despite the outperformance, bitcoin analysts were still bullish. The blockchain network was growing, brokers cited continuing interest from buyers, positive-looking patterns were forming in price charts, options markets were hinting at further gains, the dollar was weakening in foreign-exchange markets, and there were few signs that governments and central banks would curtail the seemingly endless flow of stimulus money anytime soon. 

Yet, as of early October, few traders were betting that prices would more than double over the next three months, blowing past $20,000 to a new all-time high. 

And then, almost as if a gate were opened, big corporations and money managers started to pile into bitcoin, accompanied by a flurry of recommendations from once-skeptical Wall Street analysts. 

MicroStrategy CEO Michael Saylor shifted at least $425 million of his company’s corporate treasury into bitcoin. Square, the payments company, said it would put some $50 million, or 1% of its assets, into the cryptocurrency. PayPal, another payments company, announced it would allow 346 million customers to hold bitcoin and other cryptocurrencies, and to use the digital assets to shop at the 26 million merchants on its network. 

“It’s the sheer scale of PayPal’s reach that is attracting the headlines,” Jason Deane, an analyst for the foreign-exchange and cryptocurrency analysis firm Quantum Economics, wrote in a report in late October. “This could well go down in history as a watershed moment, the point at which bitcoin goes properly mainstream.” 

Analysts with JPMorgan Chase, whose CEO Jamie Dimon had famously called bitcoin a “fraud” in 2017, wrote that the cryptocurrency had “considerable” price upside. “Even a modest crowding out of gold as an alternative currency over the longer term would imply doubling or tripling of the bitcoin price from here,” they wrote.

Additional endorsements would flow over the coming months from the hedge-fund legend Stanley Druckenmiller, money managers SkyBridge Capital and AllianceBernstein, brokerage firm BTIG and life-insurance company MassMutual. Wells Fargo, the big U.S. bank, published a 2021 investment outlook with a full page discussing bitcoin’s big gains, even though executives said customers weren’t allowed to buy it in their accounts due to regulatory uncertainty. 

“I think cryptocurrency’s here to stay,” Rick Rieder, chief investment officer for the big mutual-fund company BlackRock, told CNBC on Nov. 20. 

Joe Biden’s victory in the U.S. presidential election reinforced investors’ belief that government stimulus money would continue for the foreseeable future, since the candidate had pledged to push for at least $5 trillion of new spending initiatives from education to housing, health care and infrastructure. 

In December, the Federal Reserve adopted “qualitative” guidance for its $120-billion-a-month of asset purchases – a form of monetary stimulus that relies on money printing. The move gave policy makers additional flexibility to continue the program as long as they deemed fit. 

Prices for bitcoin shot past $20,000 on Dec. 16, setting a new price record, and within days had surpassed $23,000. As of late Sunday, the cryptocurrency was changing hands at $23,642. 

“Bitcoin has graduated from ‘digital assets playground’ to ‘mainstream global investment,'” Jeff Dorman, chief investment officer for the cryptocurrency firm Arca Funds, wrote Saturday in a column for CoinDesk. “Investors now have the knowledge and means to buy bitcoin themselves, and we are seeing it in real-time, which happened quicker than we anticipated.”

What comes next? Analysts are still bullish. 

Dan Morehead, CEO for the cryptocurrency-focused money manager Pantera, recently cited a formula that projects a price of $115,000 by next August. Scott Minerd, chief investment officer for the Wall Street firm Guggenheim, predicted bitcoin could go to $400,000. 

The cryptocurrency investment firm NYDIG published an analysis arguing that the Bitcoin network’s growth could justify prices in the range of $51,611 to $118,544 in five years. Kraken Intelligence, a research unit of the digital-asset exchange Kraken, published results of a survey noting that clients expect an average bitcoin price of $36,602 in 2021.

Even the Kraken customers’ comparatively modest prediction would represent a 55% gain from current price levels. That could mean bitcoin outperforms again in 2021, with Wall Street analysts on average predicting a 9% return for U.S. stocks next year. 

A once-in-a-generation calamity like the coronavirus was bound to create extreme gyrations in global markets, with some assets proving big winners and some losing big. (Remember “The Big Short“?) 

The final few months of 2020 validated some investors’ bets that the economy wouldn’t return to its former strength anytime soon, and that trillions of dollars of fiscal and monetary stimulus, from governments and central banks around the world, would be needed on an ongoing basis to nurse any recovery. 

In hindsight, bitcoin was the biggest winner from that trade.

“The current macroeconomic environment is set up perfectly for an asset that blends the benefits of technology and gold,” the U.K. money manager Ruffer Investment said in a recent portfolio update, after confirming a bitcoin purchase worth more than $745 million. “Negative interest rates, extreme monetary policy, ballooning public debt, dissatisfaction with governments – all provide powerful tailwinds.”

Bitcoin marketers couldn’t ask for a more compelling selling point. As if this year’s 225% year-to-date price gains weren’t compelling enough. 

– Bradley Keoun

Bitcoin watch

(Editor’s Note: CoinDesk’s Omkar Godbole, who writes Bitcoin Watch, is off this week.) 

Token watch

The Graph (GRT): Indexing protocol’s digital token quintuples in price following launch last week of main network, with new listings on crypto exchanges Binance, Coinbase, Kucoin, OKEx and Kraken.  

Dogecoin (DOGE): Meme token spikes 20% to highest price since July after Tesla’s Elon Musk tweets about it to his 40M followers. 

Bitcoin cash (BCH): Also-ran cryptocurrency jumps to $380, highest since February, is now up 58% year-to-date. 

What’s Hot

U.S. Treasury Department proposes long-dreaded plan to make crypto exchanges identify personal wallets (CoinDesk) 

Slowing of Grayscale bitcoin fund inflows could prompt price correction, JPMorgan says (CoinDesk) 

Global head of equity strategy for Wall Street brokerage firm Jefferies initiates 5% long-only asset allocation for U.S. dollar-based pension funds, while cutting gold’s share to 45% from 50% (CoinDesk)  

Ruffer Investment used Coinbase to execute $745M bitcoin buy (CoinDesk) 

Decentralized stock trading (in Airbnb, Tesla, Amazon, Google shares) launches on DeFi platform Injective Protocol, using Band Protocol’s oracle technology (CoinDesk) 

Blockchain data suggest more institutions are buying bitcoin over-the-counter (CoinDesk) 

How two of Coinbase CEO Brian Armstrong’s top lieutenants got in screaming matches and then both exited in rapid succession (Excerpt from Jeff Roberts’s “Kings of Crypto,” published on CoinDesk website) 

Goldman Sachs reportedly wins mandate to lead Coinbase IPO preparations (Reuters)

“Bitcoin in portfolios represents more than a new recipe. It represents the need for a new recipe,” CoinDesk Research Director Noelle Acheson writes in weekly column (CoinDesk Opinion) 

Analogs The latest on the economy and traditional finance

U.S. lawmakers set to vote on $900B coronavirus-stimulus bill, including $600 checks for individuals, $300-a-week supplemental jobless benefit, $284B for Paycheck Protection Program (forgivable loans for companies), $15B to reinstate payroll reimbursements for airlines and $1B for airline contractors; when coupled with $1.4T bill to fund government operations, cost of total package is $2.3T (Bloomberg) 

Debate over Federal Reserve’s emergency-lending powers is unresolved, after Republican lawmaker insisted on provision barring U.S. central bank from restarting some programs set to Dec. 31, then deleted language that would have prevented “similar” programs from being launched (Bloomberg)  

Manhattan’s historic Chrysler Building still eerily empty (Bloomberg Businessweek)  

Federal Reserve affirms banks’ Countercyclical Capital Buffer (CCyB) should be set at zero, after November report found that “vulnerabilities” in money markets were “substantially” mitigated by the U.S. central bank’s own emergency-lending facilities (Federal Reserve) 

Fed allows banks to resume share buybacks (CNBC) 

Wall Street strategists see U.S. stocks gaining 9% in 2021 (CNBC) 

Yellen pressed to back strong dollar in reversal of Trump-era tone (Bloomberg)

Tweet of the day Related Stories

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U.K.-based cryptocurrency exchange EXMO disclosed Monday its hot wallets have been compromised and all withdrawal activity has been suspended. 

• In a blog post on Monday, EXMO said it had detected “large withdrawals” on Dec. 21 at 02;27 UTC, and reacted “immediately and re-deployed hot wallets.”
• Five percent of the total assets held by the exchange are said to have been stolen. Cold, or offline, wallets were unaffected, it said.
• EXMO said it is investigating the incident that saw losses of bitcoin, XRP, zcash, tether, ether and ethereum classic, according to early analysis
• The exchange asked users to not deposit funds in existing EXMO wallets for the time being.
• EXMO stressed that those users affected by the incident will be covered by the exchange.
• London police have been informed of the breach, while EXMO will “conduct a thorough security review that will include all parts of our systems and data,” per the post.

See also: Over $280M Drained in KuCoin Crypto Exchange Hack

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An Israel-based innovation hub focused on the proof-of-stake blockchain network Tezos is bringing out a security device it says will better secure the staked assets of network validators.

• Tezos Israel said in a press release Monday that the hardware security modules, developed in partnership with Hub Security, will allow validators (also known as “bakers”) to store their private keys in a secure cloud or in a separate physical unit, avoiding theft and network disruptions.
• Network validators must stake large amounts of cryptocurrency – that is, lock in funds a period of time – to qualify to validate the network. This approach requires “rigorous security,” said Eyal Moshe, CEO of Hub Security.
• A kind of server, the new device is powered by a mini hardware security module (HSM) that acts as the user’s “remote control” and software that allows “bank-level” two-factor authentication, according to the release.
• It is said to offer bakers a better alternative to cryptocurrency hardware wallets, which need to be physically connected to the computers running the network.
• The firms said using HSM technology enables “the safe use of encryption keys and secret information to operate sensitive applications while maintaining complete secrecy and privacy.”

See also: Licensed Swiss Crypto Bank Launches Tezos Trading and Staking

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“Crypto Stripe” Flexa Network has completed an additional raise of $6 million in a private sale of its AMP token released in September bringing the total to $20 million, as well as an infrastructure overhaul of its crypto payment platform, co-developed with venture firm ConsenSys.

Flexa is on a mission to bring crypto straight to merchants with its SPEDN digital wallet. The app allows users to spend multiple cryptocurrencies for point-of-sale purchases at merchants such as Nordstrom, Barnes & Noble, Express or Lowe’s. 

Flexa’s private sale of its AMP token ended Nov. 20. Newly disclosed players include Compound Finance founder Robert Leshner’s Robot Ventures II, Starwood Capital founder Barry Sternlicht, AlpInvest founder Volkert Doeksen and Innopay founder Douwe Lycklama.

Related: Evercore Says PayPal’s Crypto Offering Could Bring Big Business Boost

Flexa has taken a merchant-first approach to bringing crypto payments mainstream, Flexa co-founder Tyler Spalding told CoinDesk in a Zoom interview. The startup plans on gradually decentralizing its wallet service while providing more centralized software solutions for merchant partners, Spalding said.

Read more: ‘Crypto Stripe’ Flexa Raises $14 Million so You Can Buy Coffee With Bitcoin

“[Crypto] is outside the core payment flow, which is why you don’t see Target or Walmart or Home Depot or these other guys accepting this stuff, because it’s not a part of what they really do. We’ve been building this with merchants from the very beginning,” Spalding said.

Flexa converts FXC to AMP

The now out-of-favor Flexacoin (FXC) – sold in 2018 and 2019 private funding rounds – is being swapped for AMP in light of an upgrade to the payment network’s backend, he said. Flexacoin holders can migrate to the new token on a one-to-one basis through the official portal. Spalding said FXC was often mistaken for a payment token itself; the ERC-20 style token is merely infrastructure for the Flexa Network. 

The new model allows “conditional” staking of AMP tokens for collateral management without requiring they be transferred from the original address. The network includes a function, transferByApproval, that allows for more dynamic collateral governance of external accounts. Spalding claims the function is a novel Ethereum address feature necessitating the token swap. The project’s code was audited by Trail of Bits and ConsenSys Diligence.

Related: Binance, OKEx Payments Partner Banxa Set to Make Milestone Stock Exchange Listing

“Partition strategies can be used to systematically grant controller-like permissions to various actors in the ecosystem. This enables the AMP contract to execute common implementation situations for collateral managers,” a new technical paper shown early to CoinDesk states.

The crypto payments provider is also releasing the Flexa software as an open-source SDK in January, Spalding said.

Correction (Dec. 21, 16:20 UTC): The headline and leading sentence have been updated to clarify the amount raised in this round; $20 million has been raised to date.

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MicroStrategy has invested all of the proceeds of its $650 million debt issuance into 29,646 more bitcoin.

• CEO Michael Saylor announced in a tweet Monday that the latest purchase was made at an average price of $21,925 per bitcoin.
• The business intelligence firm now has 70,470 BTC worth over $1.596 billion in its treasury reserve.
• Saylor said in the tweet that MicroStrategy has spent $1.125 billion on bitcoin to date, at an average price of $15,964 per bitcoin.
• MicroStrategy held a $650 million convertible senior note sale in early December to raise funds for this allocation. Previous purchases relied on a $500 million glut in its corporate balance sheet.
• Issuing debt to buy bitcoin is a bold bet for any publicly traded company, especially for one whose business model does not even center on cryptocurrencies. CEO Michael Saylor has brushed aside all criticism nonetheless.

Read more: Michael Saylor: Bitcoin’s Cyber Hornet

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• MicroStrategy’s Bitcoin-Driven Offering Boosted to $650M After Notes Buyer Bought $100M More

Tech giant IBM announced a trial service for a privacy tech called fully homomorphic encryption (FHE), designed to vastly reduce the likelihood of sensitive data being exposed.

• FHE is an emerging technology – often described as the “holy grail” of encryption – designed to allow data to stay encrypted when being processed or analyzed in cloud or third-party environments.
• IBM said last week its new service, developed in-house, will allow clients to start experimenting with technology to improve the privacy of their internal IT architectures.
• “While current encryption techniques allow data to be protected during storage and in transit, data must be decrypted while it is being processed or analyzed – creating a window of opportunity where data is more vulnerable to theft or exposure,” said IBM. 
• Data leaks have become a major issue for enterprises. One making headlines this week saw personal details of clients of cryptocurrency hardware wallet maker Ledger exposed on an online forum.
• Research and advisory company, Gartner predicts that by 2025 at least 20% of businesses will be budgeting for programs that require homomorphic encryption, up from less than 1% currently.

Also see: Why Ledger Kept All That Customer Data in the First Place

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A Puerto Rico-based digital challenger bank is launching a custody service for digital assets, offering clients the chance to securely store and exchange major cryptocurrencies from early 2021.

FV Bank (which stands for fintech ventures) announced Monday it has received permission from the Puerto Rico Office of the Commissioner of Financial Institutions (OCIF) to provide custody services for bitcoin, ether, EOS, XRP, and “many” ERC-20 standard tokens. It will also allow “seamless exchange to fiat [currency],” according to a statement.

“We are targeting going live in Q1 2021,” an FV Bank representative told CoinDesk via email.

Related: SatoshiPay to Become First User of German Bank’s Euro Stablecoin

Almost as if the stars were aligned, banks like DBS, BBVA and Standard Chartered have recently been making announcements about providing digital-asset services, perfectly timed with the price of bitcoin reaching all-time highs. 

Read more: The Big Banks Positioned to Ride Bitcoin’s Bull Run

An announcement earlier this year by the Office of the Comptroller of the Currency (OCC) opened the door for U.S. banks to take custody of digital assets. This presented an opportunity for firms like FV Bank, a nimble innovator originally set up to provide U.S. banking services to fintech companies.

“When the OCC came out with their opinion back in July, we saw that as an opening and went to our regulator and sought clarification and permission as a bank to provide custodial services to our customers,” FV Bank CEO Miles Paschini said in an interview. “Our goal is to allow anyone, from an individual to an institution, to custody their digital assets and also have seamless banking services related to that custody.”

See also: Following OCC Letter, Some US Banks Appear Open to Providing Crypto Services

Puerto Rico is a Commonwealth of the United States with its own financial regulatory body, the OCIF. But all laws for banking and insurance in the jurisdiction are based on U.S. laws, such as the Bank Secrecy Act (BSA). Because Puerto Rico is part of the U.S. banking system, this allows FV Bank to hold a master account at the Federal Reserve Bank of New York.

Related: OCC Economist Cites Benefits of Issuing Bank Charters to Stablecoin Providers

Paschini said FV Bank has chosen a custody tech infrastructure partner, but its name has not been made public yet. In terms of liquidity, he said the bank will be working with several large over-the-counter (OTC) cryptocurrency trading desks. 

FV Bank’s regulated custody offering, which uses a technique called multi-party-computation (MPC) to protect private cryptographic keys, also comes with $20 million worth of insurance cover, sourced from the Lloyd’s of London market.

Read more: DBS Bank’s Digital Exchange to Begin Trading Crypto ‘Next Week’

“We’ll be starting out on day one with a $20 million-dollar policy and we’ll grow that policy commensurate with the assets under management,” said Paschini.

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