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Jack Abramoff has entered a plea agreement for his involvement in the alleged AML BitCoin ICO scam that has been accused of defrauding thousands of investors in 2018.

• The agreement, dated July 13, means Abramoff has pled guilty to charges of conspiring to commit wire fraud and to defraud investors.
• Abramoff was at the center of a lobbying scandal in 2005 where he overcharged clients millions and used funds to make illegal political donations. He pled guilty, served nearly four years and was released in 2010.
• In June 2017, Abramoff became marketing lead for the Las Vegas-based NAC Foundation to publicize the AML BitCoin initial coin offering (ICO).
• The AML BitCoin token was marketed as compliant with anti-money-laundering (AML) and know-your-customer (KYC) regulations; the project also said governments and public agencies were planning on adopting it.
• Per the filing, Abramoff said he became aware that no public body was actually close to adopting AML BitCoin and that NAC Foundation CEO, Roland Marcus Andrade, had “inappropriately” taken $1 million from the project’s funds.
• But Abramoff said he reached an understanding with Andrade and continued to publicize the project as well as solicit investors to purchase tokens.
• He claimed that a promotion that claimed AML BitCoin’s Super Bowel advertisement had been rejected by NBC and the NFL was false and misleading.
• Abramoff has yet to be sentenced; he faces up to five years in prison and a $250,000 penalty.
• Andrade was indicted last month on money laundering and wire fraud charges; he told CoinDesk he was the victim of government corruption.

See also: Centra Tech Co-Founder Pleads Guilty to Fraud After $25M Token Sale

See the full court transcript below:

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Evertas, an insurance provider focused on the cryptocurrency space, has raised $2.8 million in a seed round led by Morgan Creek.

• Plug n Play, Kailash Ventures, RenGen, Vy Capital and Wavemaker Genesis also participated.  
• Mark Yusko, founder, CEO and chief investment officer of Morgan Creek Capital, has joined Evertas’ board of directors as part of the deal.
• Evertas, which was formerly called BlockRe, says it offers a suite of services including risk audits, underwriting, investigations and claims handling.
• The company is looking to provide cover for both cold storage (where coins are held on devices with no connection to the internet) and hot wallets (which are connected to the web), said Evertas spokesman Phil Anderson. 
• The target audience is institutional, according to Anderson. This includes insurers and brokers, as well as institutional owners of crypto assets, exchanges, custody providers, funds, family offices and high-net-worth individuals.
• Evertas did not say which custodians or insurance industry firms it is already partnered with by publication time.
• Earlier this year, the firm received a license from the Bermuda Monetary Authority to operate as a ‘Class 3A’ insurer – classed as a small commercial insurer, required to maintain minimum capital and surplus of $1 million. 
• Among Evertas’ investors is former ConsenSys executive Andrew Keys, managing partner of DARMA Capital and a member of Kailash Ventures. 

Also read: DeFi Insurer Nexus Mutual Maxed Out by Yield-Farming Boom

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Revolut customers in 49 U.S. states can now buy, hold and sell bitcoin (BTC) and ether (ETH) on the digital bank’s crypto platform. 

The British fintech firm entered the U.S. in March and waited until it had already established its core products in the country before launching bitcoin services as well, said Revolut crypto chief Edward Cooper.

Revolut gained the regulatory permission to do this by partnering with New York-based trust company Paxos.

Related: Hong Kong’s National Security Law Could Threaten Local Crypto Brokerages

Paxos also announced Wednesday it was rolling out a new brokerage API service, allowing clients to provide buy, sell, send and hold options. Through the Paxos Crypto Brokerage, the firm acts as a custodian for its clients, such as Revolut, and manages the regulatory compliance aspects.

“What’s exciting about it is really lowering the barrier of entry for firms to get into crypto,” said Paxos CEO Chad Cascarilla. “You can plug into our APIs and we’ll provide you the regulatory ability and the technological capabilities to offer crypto for buying or selling.”

Read more: Crypto-Friendly Bank Revolut Launches in the US

In every U.S. state except Tennessee, Revolut allows customers to round up their transactions, converting spare change into crypto. Revolut also gives customers the ability to convert BTC and ETH among 28 global currencies, with plans to branch out into other cryptos in the future. 

Related: Weed Out the Soviet-Era Ponzi Scheme Eating Ethereum

In Europe, Revolut supports litecoin (LTC), bitcoin cash (BCH) and XRP. The company charges 2.5% for every crypto transaction that standard customers make and 1.5% for premium costumers. With around a million customers in Europe transacting in crypto, Revolut crypto arm is a “profit center” for the bank, Cooper said. 

The company’s next targets are in the Asia-Pacific region: Australia, Singapore and Japan, he added.

“We’ll launch the core product first and then see what steps we need to make to launch the crypto product,” Cooper said. “We’ll probably be fastest to market in the Australian market, so I’d imagine Crypto Australia is next.”

Read more: Australia Post Now Lets Customers Pay for Bitcoin at Over 3,500 Outlets

Unrelated to its expansion into the U.S., the bank recently changed ownership rules for crypto, making users the legal owners of their own coins. Revolut is also suspending the ability to make crypto card payments in Europe on July 27 and isn’t introducing the feature in the U.S. 

“We have got some feedback from users in Europe that they were spending and weren’t expecting for their crypto balances to be spent,” said Cooper. “We want to make that better. … We’ll launch it and probably have crypto-specific cards.”

Nikhilesh De contributed reporting.

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Two promoters of the crypto Ponzi scheme OneCoin were found dead in Mexico last month.

• A report last Friday by La Tercera said the bodies, identified as Oscar Brito Ibarra and Ignacio Ibarra (apparently not relations), had been found in suitcases by local police on June 30.
• The suitcases were dumped on a vacant lot in Mazatlan in the region of Sinaloa, a seaside town located about 1,000 kilometers (621 miles) from the country’s capital, Mexico City.
• The cause of death was suffocation, according to local police who are treating the case as a double homicide.
• Oscar was a Chilean national, while Ignacio came from Argentina.
• Both men, who were known associates, had been kidnapped two days earlier in Villa Carey, another neighborhood in Mazatlan.
• The two had been involved in promoting the crypto investment scheme OneCoin – called a fraud by prosecutors in the U.S. and elsewhere – throughout Latin America.
• They had reportedly convinced numerous individuals to invest in OneCoin through an entity called the Latin American Automotive Marketing Company (CLA), which accepted cryptocurrencies for car purchases.
• At CLA, Oscar and Ignacio promoted car sales to victims by claiming they could get better deals if they used the OneCoin system to make the purchase.
• In June, the pair traveled to Mazatlan to promote CLA, but shortly after arriving the pair were found dead.
• In November last year, a jury convicted OneCoin's lawyer, Mark Scott, who was found guilty of laundering $400 million for the scheme.
• An alleged leader of the scam, Konstantin Ignatov, has had his sentencing date adjourned for the second time while he continues to cooperate with U.S. prosecutors.
• Ruja Ignatova, OneCoin’s founder is currently on the run from law enforcement.

See also: Singapore Man Fined $72K for Promoting Crypto Ponzi OneCoin

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China wants to trial its digital yuan on online food seller Meituan-Dianping, as well as another two Tencent-backed companies.

• The Beijing-based company has held talks with the research wing at the People’s Bank of China (PBoC) over trialing the digital yuan on their platform, according to sources speaking to Bloomberg.
• The exact details of the collaboration are not yet known; the digital yuan is formally known as the Digital Currency Electronic Payment (DCEP)
• Listed in Hong Kong, Meituan-Dianping’s 400 million active users make it one of the largest food delivery platforms in the world; revenues in 2019 increased nearly 50% to RMB97.5 billion (~$14 billion).
• It is backed by internet giant Tencent who had a 20% equity stake just before the 2018 initial public offering and remains a major investor.
• Tencent, which also owns popular messaging and payments app WeChat, is set to be one of the primary commercial issuers for the digital yuan when it goes live.
• It has also set aside billions of dollars to invest in new technologies, including blockchain.
• Two other Tencent-backed companies are also said to be in advanced talks with PBoC.
• This includes video-streaming platform Bilibili, according to Bloomberg sources, which received a $300 million commit from Tencent in late 2018.
• Last week, ride-hailing startup Didi Chuxing said it would trial the digital yuan as a new payment option; Tencent invested $15 million in 2013.

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MOSCOW — No government can stop bitcoin transactions, which suggests the cryptocurrency is an ideal way for dissidents and activists to raise funds.

This should be especially true in Vladimir Putin’s Russia, where independent politicians and civic groups have been under increasing pressure from the Kremlin.

Opposition politicians, human rights groups and independent media are routinely harassed by law enforcement raids, steep fines and bank account freezes. Bitcoin, which allows pseudonymous donations, would in theory be a lifeline for political activists. The reality, however, is more complex.

Presidential hopeful raises bitcoin

Related: Russian Courts Can’t Agree on Whether Crypto Is Property

Leonid Volkov manages political operations for Alexei Navalny, Putin’s most prominent opponent. Navalny tried to run against Putin for president of Russia in the 2018 election but was ultimately barred by the Central Election Commission.

Navalny was nonetheless an impressive political fundraiser, including in crypto. Since December 2016, Navalny’s bitcoin wallet has raised 648 BTC. This money helped fund Navalny’s supporters in various locations across Russia as they ran for public office in their towns, investigated corruption in local governments, organized protests and so on. Navalny’s bid for the presidency ultimately failed, but his country-wide network of mobilized, loyal supporters is here to stay. 

Read more: Bug in Moscow’s Blockchain Polling System Can Reveal How Users Voted: Report

Navalny started fundraising for his campaign in 2016, two years before the presidential election, when there was time to experiment, Volkov says. The elections that year had not yet been officially announced, so ordinary restrictions on how candidates can raise and spend money didn’t apply. Navalny’s team “took a chance” and opened a PayPal account and a bitcoin wallet – neither of which would normally be considered legitimate campaign fundraising vehicles. 

Related: Bug in Moscow’s Blockchain Polling System Can Reveal How Users Voted: Report

“I don’t remember how much we raised back then, but bitcoin has never been more than 10%-15% of all our donations,” Volkov said. 

According to the 2019 report by Volkov, out of 191 million rubles (approximately $2.7 million) donated to Navalny during the last year, only 9.7 million ($140,000) came via bitcoin. 

‘They’re pissed they can’t control it’

Volkov believes Navalny’s bitcoin donors are mostly IT workers and entrepreneurs who want to donate large sums without drawing the ire of the Kremlin.  

Bitcoin donations are important for two reasons, Volkov explained.

“First, the average donation [in BTC] is higher and, second, this fundraising method is uncontrollable by the authorities. By being this way, it protects other methods, too,” Volkov said. 

This may sound like a paradox but it has a certain logic. Russian authorities can freeze bank accounts, which has happened to Navalny and his allies in the past. But thanks to bitcoin there is an alternative fundraising channel that can’t be shut down. So why bother blocking channels when you know people can easily find another way? 

“Our opponents understand they can’t cut us off from sources of funding because [if they try] at least a part of the donations will go into crypto,” Volkov says, adding: “Last time our accounts got frozen, we saw an uptick in bitcoin donations.”

Navalny’s bitcoin wallet is repeatedly mentioned by the Russian state-owned TV channel Russia Today to make the point the politician is using crypto to hide something suspicious. 

Read more: Russian Courts Can’t Agree on Whether Crypto Is Property

“They are pissed off by the fact that the government can’t control it, so they go for any insane speculation,” Volkov comments. 

Bitcoin can also work as a currency exchange tool, Volkov says. Navalny’s supporters abroad often use PayPal for donations, but withdrawing Russian rubles from a PayPal account is expensive. A cheaper way, it turns out, is buying bitcoin using the PayPal account and then selling it for rubles on a peer-to-peer platform like LocalBitcoins, Volkov says. 

This can lead to trouble, however. The team put the fiat proceeds from the bitcoin sales into bank accounts to pay salaries, rent and other expenses, Volkov said. But this activity looked like money laundering to law enforcement and became one reason for a criminal case against Navalny and his staff. 

Nevertheless, Volkov sees bitcoin as a useful tool.

“If you see your bank accounts start getting frozen, you can take your money out in crypto and keep it there until the dust settles,” he said.

Bitcoin still isn’t much use for real-life purchases, however.

“You can’t pay your office rent and rally equipment in bitcoin. There is no market of goods and services available for bitcoin for us, so we just immediately sell it for fiat,” Volkov says. 

Adoption problem

Navalny’s use of bitcoin, even with its limitations, is an exception to the rule. There are no other publicly known crypto fundraising campaigns at that scale. For some smaller fundraisers, bitcoin donations don’t have a major impact. 

“Russian civic organizations rarely use crypto as a crowdfunding tool,” says Elia Kabanov, a Russian science writer and blogger. One reason is that it’s not easy to organize systematic work with crypto, as most accountants don’t know how to deal with it, he says. 

Roskomsvoboda, an organization tracking internet censorship in Russia, has been raising donations in crypto since 2012. However, even among its internet-savvy and privacy-valuing supporters, not that many people are willing to donate crypto. According to Sarkis Darbinyan, Roscomsvoboda’s co-founder, crypto donations have been sporadic and generally doesn’t exceed 20% of total money raised.

There’s also the risk that crypto donations will attract the attention of law enforcement, as happened with Navalny. Plus, donations in crypto can not be used as a legal source of funding for an official political campaign, Kabanov says. Crypto is in a gray zone in Russia in general, with a regulation bill currently stuck in the parliament amid a lingering possibility of a broad-stroke ban. 

But the most important obstacle is that not many people in Russia use crypto or are familiar with it. 

Read more: Russia’s Ministry of Justice Latest to Criticize Proposed Crypto Ban

Crypto is “mostly for enthusiasts,” says Anton Yershov, head of staff at the Pirate Party of Russia, an unregistered party advocating for the easing of copyright laws. 

“People see that in their everyday lives, they can’t buy many things for crypto; plus, there is no clear regulation [for crypto in Russia] and, also, it’s easier to send money from your debit card than take care of a [crypto] wallet,” Yershov says.  

The Pirate Party is raising money in crypto, but it hasn’t been a huge success, Yershov says. When the group organized a conference for IT professionals, called CryptoInstallFest, people donated in crypto more than usual, Yershov said, but it still didn’t add up to much. 

Part of the problem is economic: Most Russians don’t have any savings at all, statistics show. The COVID-19 pandemic doesn’t help.

“People have been scraping the bottom since March,” Yershov said. This could make people less likely to dip into volatile crypto markets.

Easy fiat

“In Russia, people mostly use crypto either to get around the law, or IT workers use it for their personal purposes. But an ordinary donor who has a debit card or some money on his cell phone balance won’t use crypto to donate,” says Alexander Elkin, an IT worker at the fund Russia Behind Bars. 

The fund helps people who can’t afford lawyers, have a family member unfairly imprisoned or who have left prison with nothing but the clothes on their back. Started by the journalist Olga Romanova as a small group of women whose husbands were sent to jail for what they claimed were bogus charges, the movement grew into a fund with its network of lawyers and volunteers, and even education projects for prison inmates. 

Russia Behind Bars has also consistently annoyed penitentiary authorities with reports of bad conditions and torture in Russian prisons, including a poor response to the COVID-19 pandemic.  

This summer, the bank accounts of Russia Behind Bars were frozen. The only means of crowdfunding left are the electronic payment service Yandex.Money, PayPal and crypto. Russia Behind Bars has crypto addresses for bitcoin, ether, litecoin and XRP on its donation page.

Yandex.Money, owned by Russia’s most popular search engine provider, is fairly popular in Russia and neighboring countries, but the service is not beyond the reach of the Russian authorities. In 2017, Navalny’s account for donation at Yandex.Money was blocked. 

PayPal is not very popular among Russians because it’s relatively easy to send money between domestic bank accounts, and it recently announced it would stop providing domestic transfers in Russia starting August. Russian banks normally allow their clients to transfer money immediately, using a mobile banking app and a phone number of a receiver. 

Read more: Russia’s Economy Ministry Calls for ‘Controllable Market’ Rather Than Crypto Ban

If Russia Behind Bars ends up with all its fiat gateways blocked, Elkin says he might think about a tool that would allow people to buy bitcoin and donate it to the organization. There is no urgency at the moment, but that could change if pressure grows. 

Just three years ago, Russia Behind Bars used its bitcoin wallet to cover expenses such as airplane tickets and hotels even in remote parts of Russia, when the volunteers needed to visit people in faraway correctional colonies, according to founder Olga Romanova. 

But then the situation changed, and now the vendors are more wary of accepting crypto, especially after the Bank of Russia issued a letter in 2017 saying it sees allowing crypto payments and trading in Russia as “premature.” Now, only IT-related expenses, like computer software and the salaries for two IT workers at Russia Behind Bars are paid in bitcoin, Romanova said. 

“We’re not cashing bitcoin out. It’s hard enough to explain to the general public why there are investigations against us, and when there is crypto involved… [it would get even harder]” Romanova said. 

Another roadblock is there is no readily available software that would allow automatic regular donations, like via a subscription, says Roman Dobrokhotov, formerly a political activist and now the editor-in-chief of the investigative outlet The Insider. But the future might make crypto donations more relevant, for non-technical reasons.

“If the authoritarianism [in Russia] gets stronger, [crypto donations] might become more popular, people will be moving into this uncontrollable segment,” Dobrokhotov says.

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NASCAR driver Darrell “Bubba” Wallace has a new sponsorship deal that will see him sport the bitcoin logo at race events.

• According to a tweet from Twitter founder Jack Dorsey on Wednesday, Wallace’s race car will also feature the logo of Cash App, the mobile payments platform from Square, also founded by Dorsey.

• Cash App offers mobile banking services, as well as the ability to invest in stocks and bitcoin.
• Founder Dorsey is famously pro-bitcoin, having set up a team within Square – Square Crypto – to help with development of the cryptocurrency.
• He also added a feature to Twitter earlier this year that produced a bitcoin logo emoji when the hashtag is tweeted.
• Wallace is a professional race driver competing in the NASCAR Cup Series in a Chevrolet Camaro ZL1 1LE.
• An African-American, he recently made headlines after successfully pushing for the Confederate flag to be banned from NASCAR events during the Black Lives Matter protests.

Also read: Jack Dorsey Hopes Bitcoin Will Become Web’s ‘Native Currency’

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OneCoin, an infamous cryptocurrency pyramid scheme, makes an uncredited cameo appearance in a recently leaked FBI intelligence bulletin on the money laundering risks of private investment funds.

The main thrust of the bulletin, dated May 1, is that criminals and foreign adversaries of the U.S. “likely” use hedge funds, private equity and other investment vehicles to circumvent financial institutions’ anti-money-laundering (AML) procedures.

One of the four examples given by the FBI analysts involves a “fraudulent cryptocurrency investment scheme.” While the scheme is never named, the story told in the bulletin bears a striking resemblance to the OneCoin case. 

Related: Alleged Leader of OneCoin Ponzi Has Sentencing for Money Laundering Adjourned

Read more: Jury Convicts Crypto Ponzi Scheme OneCoin’s Lawyer on Fraud Charges

For example:

• The FBI says “an identified former partner of a major US law firm assisted others in laundering more than $400 million” in proceeds for the unnamed scheme. In November of last year, Mark Scott, a former partner at Locke Lord, was convicted of laundering that much on OneCoin’s behalf.
• The unnamed lawyer in the FBI memo moved the funds through “a series of purported private equity funds holding accounts at financial institutions, including those in the Cayman Islands and the Republic of Ireland.” Prosecutors described such maneuvers by Scott in those same jurisdictions.
• “The underlying source of funds, the perpetrator of the cryptocurrency scheme, was not disclosed to the bank during the initial due diligence review,” the FBI bulletin says, not naming the bank. Prosecutors accused Scott of hoodwinking the Bank of Ireland in this same way.

The FBI cited public information as well as “a human source with direct access” in its account. The bulletin’s other three examples of money laundering through private funds do not mention crypto.

Reuters first reported on the bulletin Tuesday. The bulletin is unclassified, but “law enforcement sensitive,” meaning it’s not supposed to be shared outside the federal government without FBI permission.

Related: Singapore Man Fined $72K for Promoting Crypto Ponzi OneCoin

While OneCoin was a scam, the veiled references to Scott’s crimes in the FBI bulletin are a salient reminder that banks, not cryptocurrencies, were used to launder the ill-gotten gains.

Read the full memo below.

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The crypto space has reacted positively to the new changes made to the BitLicense, Linda Lacewell, superintendent of the New York Department of Financial Services (NYDFS), said Tuesday.

Discussing recent updates to the state’s contentious crypto regulatory framework as part of the Global Leaders Webinar Series sponsored by Global Digital Finance (GDF) in partnership with Global Blockchain Business Council, Lacewell said some in the space may “curse” the regulator, but the new changes have been received rather well.

“The reaction has been very positive, and beyond positive,” she said.

Related: ING Joins Crypto Industry Body Working to Set Codes of Conduct

The session was hosted by Jeff Bandman, former fintech adviser to the U.S. Commodity Futures Trading Commission (CFTC).

Lacewell said she was not surprised by the industry’s reaction to the updates because the regulator worked on the license in confidence with industry players – both licenced and unlicenced – and experts to understand its shortcomings. 

“We’ve even had some licensees tell us that they’re very excited and interested in pursuing additional licencing with other potential parties that are all partners in the space,” Lacewell said. 

Crypto hub?

Lacewell said when she first took office last year, she immediately assigned personnel to work through a backlog of BitLicense applications that needed reviewing and that she has made numerous application decisions since then.

Related: New York Regulator Adds 3-Strike Rule for BitLicense Applicants

For instance, it took European crypto exchange Bitstamp four years after submitting an application to receive a license. Since Lacewell was appointed in June of 2019, six entities have received NYDFS accreditation.

“But then, beyond that, the area felt a little stale. And I thought to myself, we’re coming up on five years of having this licence and we need to take a fresh look,” Lacewell said. “I was very conscious of the criticisms about the licence and that it wasn’t pragmatic and that it favored a select few and they had to have a lot of money to get into the space.” 

Lacewell added the department had not put out much in the way of guidance to help companies navigate the “complicated application” for the license.

“We knew that, at a bare minimum, we needed to clarify and explain the regulatory regime and the licencing application,” Lacewell said. 

Since then, her office has made a number of changes to the Bitlicense including creating a conditional license designed not to burden startups with the heavy costs of applying for a full BitLicense. Instead, they can partner with existing licensed entities to legally operate in New York. 

The regulator is also allowing licensed companies to self-certify virtual currencies, and has issued guidance on coin listings for licensed platforms. To encourage innovation in the space, NYDFS has entered into a partnership with the State University of New York that would allow anyone to work on innovative projects or ideas by visiting one of the 64 SUNY campuses around the state.  

During the webinar, Lacewell said she wants the industry to work.

“Look, when it first started, people said fly-by-night, crazy idea, flawed [and] worse, right? But there are responsible actors in the marketplace. Any financial service or product can be abused, misused and turned into a bad instrument,” Lacewell said. 

Finally, Lacewell said NYDFS wants innovators in emerging technologies across the board to locate in New York and flourish.

“We want innovators right here in New York, which has been the birthplace of so much invention and ingenuity, historically, and has always set the standard not just for the rest of the country but the world. That’s what it means to be the birthplace of immigration, because change agents come here and we want you here,” Lacewell said. 

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British bank Standard Chartered has invested in Metaco, a crypto custodian focused on the institutional market.

• The Series A round was oversubscribed, twice, due to high demand; the 17 million Swiss franc ($18 million) raised will primarily go toward expansion to the U.S., Western Europe, and Southeast Asia, according to a press release.
• Metaco’s main product is SILO, which provides financial institutions with a cold storage and exchange service, as well as the ability to tokenize assets.
• Alex Manson, Standard Chartered’s head of ventures, said they had invested in Metaco to improve the undeveloped market infrastructure surrounding digital assets.
• Standard Chartered’s revenue was $15.42 billion in 2019; it’s unclear how much it invested into Metaco’s round.
• The round was led by Giesecke+Devrient, a Leipzig-based specialized printer in currency notes as well as, more recently, a manufacturer in smart cards.
• Other participants included Zürcher Kantonalbank, the fourth largest bank in Switzerland, and Swiss Post, the country’s postal service, which invested in a previous round in 2018.
• Olivier Laplace, director at Swiss Post Ventures and member of Metaco’s board, said the company’s clientele had grown considerably over the past three years.

See also: Swiss Tech Firm Metaco Taps Blockchain Think Tank to Bolster Services

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Bitcoin Core contributor Jeremy Rubin has revealed his work on a new smart-contract language for Bitcoin, which he hopes will increase the “financial self-sovereignty” of users.

Rubin demoed the new language, Sapio, on Saturday at a RecklessVR meetup presentation in virtual reality, with many audience members joining the talk in VR headsets. He plans to release the programming language as a part of his new research organization, Judica.

Stateful smart contracts allow users to lock up money so funds can’t be spent until certain conditions are met or a series of interactive steps have been taken. These contracts are most commonly associated with the Ethereum blockchain, which is very flexible, making stateful smart contracts easy to write.

Related: World Bank Investigates Smart Contracts as Financial Tools, With Mixed Results

Read more: How Do Ethereum Smart Contracts Work?

It’s lesser-known though that Bitcoin also supports several different types of more complex smart contracts, such as requiring more than just one person to sign off on a transaction before it can be spent. But compared to Ethereum, Bitcoin smart contracts are much more complicated and unwieldy to create, or they are stateless – that is, the conditions are met either all at once or not at all. Thus far, this has meant that there have been fewer options for developing smart contracts on Bitcoin.

Rubin hopes to further expand the smart contract use cases for Bitcoin to give users even more control over what they can do with their money. 

New possibilities for Bitcoin smart contracts

Sapio could work for Bitcoin smart contracts today. But most of the types of smart contracts Rubin envisions aren’t available on Bitcoin yet.

Related: DeFi Insurer Nexus Mutual Maxed Out by Yield-Farming Boom

He built Sapio specifically around CHECKTEMPLATEVERIFY (CTV), a change that, if adopted, could bring more smart contract features to the Bitcoin network, namely allowing users to secure their bitcoin in new ways.

In his talk, Rubin described CTV as a “a simple covenanting system for bitcoin.” The idea of covenants, which has been around for a long time, is to add security measures, such as baking in extra rules to a batch of bitcoin, preventing the owner of the bitcoin from sending to all but a few addresses.

“In practice, it means it allows you to do some more complex smart contracting [determining] how bitcoin can be spent when a coin is created,” Rubin said.

One use case for covenants is bitcoin “vaults.” Usually once a private key is taken, a malicious actor can scurry away with the associated coins. But locking up your funds in such a vault adds restrictions on the movement of bitcoin in the case of a mistake or another security issue. 

“I think vaults are one of the most important use cases that CTV is going to bring to the table. They bring an immense amount of financial sovereignty tools to a wide audience,” Rubin said, adding that this technology opens up the opportunity for users to do this by themselves without a third-party service provider.

Read more: The ‘Great Lockdown’ Is Boosting Demand for Bitcoin Custody Solutions

Vaults are currently possible in bitcoin, but could be much easier to create with CTV, Rubin argued.

While Rubin is most excited about vaults, CTV opens up a variety of other use cases, such as congestion control. CTV could help bitcoin users wait out high fees for a time where the blockchain has less transaction traffic, and, as such, lower fees.

Now that Rubin has created Sapio, a smart-contract language specifically for CTV, these use cases will become easier for developers to program and thus, easier for everyday users to implement.

Bitcoin as a ‘judiciary’

Rubin’s newly born research organization Judica will focus on this bundle of technologies. It plans to release tools it hopes will “massively expand the Bitcoin economy,” Rubin told CoinDesk in an email. 

The word “Judica” is Latin for “judgment”: Rubin sees Bitcoin as a judiciary, and he wants to push it to grow in this role. 

“If you look at the relationship between the market and the government, usually free-market absolutists will say that the government merely is an interfering agent and will go away. But if you take a closer look, the functionality of the courts is actually critical to the development of the economy. Without reliable courts or some judicial system (private arbitration counts, too), transacting with relative strangers is far too risky which severely limits economic activity.”

Bitcoin comes in and makes this all easier. “The ability to enforce contacts through a legal system (rather than through personal force) enables an economy to flourish,” he said.

But he argues Bitcoin is too limited in what it can do today.

“The Bitcoin blockchain serves the role as a judiciary, but right now the types of contracts it can resolve is fairly limited and it’s difficult to develop more advanced contracts,” Rubin added.

As a part of Judica, Rubin plans to release Sapio “along with designs for a myriad of smart contracts” implemented in the smart-contract language. As Judica is still in its early stages, Rubin said he’s looking for grants, funds and fellow team members to join in. 

Shipping CTV and Sapio

But it’s unclear when (and if) CTV will be deployed, Rubin explained in his talk. It’s a bigger Bitcoin change, so it might take time before the opcode is usable.

“I don’t know exactly when it’s going to happen. I’d like to see it sooner rather than later,” Rubin said.

Because Bitcoin is decentralized, there is no central authority to make decisions. As such, developers don’t always agree about the way forward. 

“If you ask each developer when [CTV will be deployed], you’ll get a very different answer,” Rubin said in his lecture. “There are a reasonable amount of people who say it’s three years from now – at least.” 

Rubin has been championing CTV, which, if successfully activated, would add these abilities to Bitcoin. Most changes to Bitcoin – large or small – are implementation details or local policies. However, because CTV changes a global consensus rule, it would be delivered via a “soft fork,” even though the actual code changes required for CTV are small. As such, it would require enough network participants to support it in order to activate smoothly. So, Rubin isn’t sure when the change will become available.

Read more: Hard Fork vs Soft Fork

Many bitcoin developers are more cautious, only giving their blessings to changes that have been vetted to a certain degree. 

But, in Rubin’s opinion, a timeline of three years is far too lengthy. He called this timeline “sad” and said, “It’s hard for me to make the case that this is important stuff to work on if it’s not really usable until at least three years from now.”

“Some people are, like, ‘Ship it and see if we can get it in in six months.’ I fall more in that camp,” he said, suggesting that changes should be made quickly while Bitcoin is still in its early stages and is more malleable. “I argue that Bitcoin is so early and experimental that we need to be pushing really quickly. Other people feel that Bitcoin is more ossified and needs to move really slowly.”

Rubin thinks that this sort of change is important to Bitcoin’s future. 

As he said in his presentation, “We need a lot of new [features], so that when we say ‘Bitcoin fixes this,’ it actually means what we think it does.”

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Markets globally are mostly flat Tuesday, and bitcoin is trading sideways along with them.

• Bitcoin (BTC) trading around $9,264 as of 20:00 UTC (4 p.m. EDT). gaining 0.43% over the previous 24 hours.
• Bitcoin’s 24-hour range: $9,099-$9,275
• BTC above 10-day and 50-day moving average, a bullish signal for market technicians.

The price of bitcoin is stuck in the $9,200 price range as low volumes continue to plague the markets, said Katie Stockton, an analyst for Fairlead Strategies. “Bitcoin has been tethered to its 50-day moving average recently after having suffered a loss of short-term momentum in June.” Bitcoin’s 50-day moving average is around $9,240 as of Tuesday. 

Read More: Bitcoin Volatility Metrics Are Like November 2018 All Over Again

Related: What It’s Really Like to Live on Bitcoin in the Middle East

Stockton says anything above that level would be a sign of bullish sentiment. “We would view a decisive move above the 50-day MA as an incremental positive because it would help prevent intermediate-term momentum from turning negative,” she added. 

The summer doldrums for the bitcoin market likely started not long after the May 12 halving, said David Lifchitz, chief investment officer for Paris-based quantitative trading firm ExoAlpha. 

“Bitcoin has been trading very technical post-halving since mid-May, essentially bouncing into a $8,100-$10,400 band,” Lifchitz said. “Since mid-June, Bitcoin has gone nowhere moving in a very narrow range of $9,000-$9,400,” he added. 

Read More: Bitcoin Halving 2020, Explained

Related: Bitcoin Volatility Metrics Are Like November 2018 All Over Again

Sasha Goldberg, senior trading specialist for crypto firm Efficient Frontier, said markets overall might not be pricing in the long-term economic impacts of the coronavirus yet. “Right now it seems that the markets are disconnected from what’s going globally. I think bitcoin will continue to stay in the range of $8,900-$9,400,” he said.

Still, bitcoin is up almost 30% this year. Sweden-based over-the-counter trader Henrik Kugelberg said economic uncertainty bodes well for bitcoin as investors look for places to sock away money. “People are anticipating a real bad global fall, with the actual toll of the first six months not seen until Q4,” he said. “I believe more and more asset managers are at least shifting some portfolio percentages into bitcoin.”

Uniswap dominating DEXs

The second-largest cryptocurrency by market capitalization, ether (ETH), was up Tuesday, trading around $241 after climbing 1.3% in 24 hours as of 20:00 UTC (4:00 p.m. ET). For the year, ether is up 75%, and part of that story has been the growth of decentralized finance (DeFi). 

The decentralized exchange, or DEX, Uniswap, which has been deployed since late 2018, is seriously taking on early mover advantages. With over $33 million in daily volume, Uniswap is conquering almost 60% of the DeFi market. 

Efficient Frontier’s Goldberg said other DEXs rely on Uniswap because of the platform’s diversity of offerings, which helps its volume numbers. “Uniswap has other services like flash loans and they are powering some other DeFi projects,” Goldberg told CoinDesk. “I also believe that some DEX’s are hedging their positions in Uniswap.”

Other markets

Digital assets on the CoinDesk 20 are mostly in the green Tuesday. Notable winners as of 20:00 UTC (4:00 p.m. ET): 

• chainlink (LINK) + 13%
• qtum (qtum) + 11%
• dogecoin (doge) + 6%

Read More: CoinDesk Quarterly Review, Q2 2020

Notable losers as of 20:00 UTC (4:00 p.m. ET): 

• lisk (LSK) – 2%
• 0x (ZRX) – 1%
• monero (XMR) 0.15%

Read More: BitGo Looks to Rally Exchange Clients Around FATF Travel Rule Product

Equities:

• In Asia the Nikkei 225 ended the day down 0.87% as losses in transportation stocks led the Japanese index lower.
• In Europe the FTSE 100 closed flat, up only 0.06%, on concerns about the coronavirus continuing to affect the economy. 
• The U.S. S&P 500 index gained 1.4% as reports of slowing coronavirus cases in hot-spot states boosted stocks.

Read More: Fidelity to Custody Bitcoin in Kingdom Trust Retirement Accounts

Commodities:

• Oil is in the green 1.6%. Price per barrel of West Texas Intermediate crude:  $40.02 
• Gold is flat Tuesday, up 0.37% at $1,809 per ounce

Read More: Bitcoiners Not Worried Fed Money Printer Has Stopped Going ‘Brrrr’

Treasurys:

• U.S. Treasury bonds were mixed Tuesday. Yields, which move in the opposite direction as price, were down most on the two-year bond, in the red 2.5%.

Related Stories

• First Mover: Bitcoiners Not Worried Fed Money Printer Has Stopped Going ‘Brrrr’
• Market Wrap: Stocks Make Gains While Bitcoin Sticks to $9,200

Multiple bills that threaten encryption are moving through the U.S. Senate and could pose a threat to technology that protects users’ privacy, industry pros say.

These bills include the Lawful Access to Encrypted Data (LAED) Act and the Eliminating Abusive and Rampant Neglect of Interactive Technologies (“EARN IT”) Act. While the Lawful Access to Encrypted Data Act was only recently introduced to the Senate, the EARN IT act has been in the works for months, and has been amended a number of times. 

Privacy advocates and product designers say such legislation would also curtail people’s privacy to a huge degree, fundamentally change existing technology and have an impact on everything from messaging and file sharing to privacy coins. 

Related: CoinSwap and the Ongoing Effort to Make Bitcoin Privacy ‘Invisible’

“The government basically would have mass surveillance powers into all of our communications,“ said Zcoin Project Steward Reuben Yap, referring to the LAED Act. “It’s saying, ‘Let’s drop the pretense and let’s just go for it.’ I think it’s really scary. It’s not just about cryptocurrencies as a whole though, it’s really about freedom.”

The bills in question

Sponsored by three Republicans, the LAED Act seeks to end encrypted communications by building in a backdoor for law enforcement to use. The bill lays out a legal framework for law enforcement to access encrypted data with a court order. 

The explicit goal of the EARN IT Act is to curb the spread of child exploitative content online, such as child sexual abuse imagery, though its impact could be far wider. In an initial draft, this was going to be done through stripping tech companies of liability protections for the content that is posted on their platforms. These protections currently exist in Section 230 of the Communications Decency Act, which prevents social media companies such as Facebook, Twitter and Reddit from content liability. 

Under an earlier draft of the EARN IT Act, companies would lose Section 230 protections if they didn’t follow the recommendations of a federal commission on child exploitative content. This could render companies like WhatsApp, which offers end-to-end encryption, liable for communications on the platform, unless they revoked end-to-end encryption.

Related: Binance Labs Leads $1M Seed Round in Crypto Tor Alternative HOPR

“They communicate using virtually unbreakable encryption. Predators’ supposed privacy interests should not outweigh our privacy and security,” said Attorney General William Barr at an event the day the bill was introduced.

There is no way for Ethereum, Bitcoin and other cryptocurrencies to comply.

Barr has long been a critic of encryption, dating back to his days in the George W. Bush Administration. 

The most recent version of the bill gets rid of the commission idea, delegating power to state legislatures to bring lawsuits against companies. It also adds an amendment that explicitly protects encryption. But organizations such as the Electronic Frontier Foundation (EFF), Center for Democracy and Technology and Internet Society claim the bill might respect encryption in name, but not in practice. 

Tools like client-side scanning, which could be used to check for child exploitative content, employs software to check files that are being sent against a database of “hashes,” or unique digital fingerprints. If it finds a match to certain kinds of images, they could be blocked, with the recipient notified, or the message could be forwarded to a third party without the user’s knowledge. Organizations such as EFF have said this violates encryption on a fundamental level.

“Tech companies’ increasing reliance on encryption has turned their platforms into a new, lawless playground of criminal activity,” said Republican Sen. Tom Cotton of Arkansas and one of the sponsors (with Sens. Lindsey Graham and Marsha Blackburn) of the LAED, in a public statement.

“Criminals from child predators to terrorists are taking full advantage. This bill will ensure law enforcement can access encrypted material with a warrant based on probable cause and help put an end to the Wild West of crime on the Internet.”

See also: EU’s Europol: Bitcoin Privacy Wallet ‘Not Looking Good’ For Law Enforcement

Child sexual abuse imagery is proliferating at an alarming rate on the internet. In 2019, tech companies reported nearly 70 million pieces of exploitative child content to authorities. Criminals also often use encrypted communications. EncroChat, a encrypted communications platform, protected criminals and their communications from the police, until law enforcement managed to infiltrate it. 

But weakening tools that protect everyone’s privacy may not be the best solution, say privacy advocates.  

The impact on tech and cryptocurrency

Yap, of Zcoin, said many kinds of technology could be impacted by the bill’s broad sweep. 

The LAED Act is aimed at electronic devices and operating systems. Providers of “remote computing services” are included, presumably to cover cloud computing services like Dropbox.

However, Yap said the bill’s definition of remote computing services can be stretched to include cryptocurrencies as well, because financial transactions are conceivably just another form of electronic communication.

“Given the trajectory of this legislation, people in the cryptocurrency industry, especially those like Zcoin [that] are privacy-focused, will very likely be affected,” said Yap. 

“It could mean that ‘providers’ of a privacy cryptocurrency that provided service to more than 1,000,000 users in the US are required to insert a backdoor.”

Privacy is not safe in their hands.

Ian Dixon, a Nevada-based programmer who previously mined bitcoin and runs a validator on a privacy-oriented blockchain network, said the bills are repackaged attacks on privacy, just with different language. 

“It doesn’t really seem possible to enforce, but it would essentially make blockchains illegal in general,” said Dixon. “There is no way for ethereum, bitcoin and other cryptocurrencies to comply.”

Matt Hill, the co-founder of Start9 Labs in Colorado, which develops decentralized internet tech, says he sees both pieces of legislation as falling into the same bucket, even if they are different in flavor. 

“The ultimate meaning is the same, which is that if you are a service provider of privacy or encryption, you are going to be subject to the whims of politics,” said Hill. 

“We hope politicians and our political system stays rational, and upholds individual rights to privacy, but if they don’t you are going to be subjected to force, whether it’s building a backdoor or handing over user data.”

See also: Public Opinion Shifts on Big Tech and Privacy During Pandemic

Hill said that even if these bills don’t pass, the very fact they’re sitting on the table and being taken seriously should be enough of a warning sign  for us to start thinking outside the political box.

“Privacy is not safe in their hands,” said Hill. “So we have to protect privacy with technology, as opposed to with laws.”

This is privacy-by-design tech, the kind that Start9 Labs develops, including a server that lets users run their own private networks and cut out middlemen who would otherwise have access to their data. 

Start9 Lab’s tech is built such that it can’t hand over any user data, even if legally compelled to, because it doesn’t have it. It builds the tech but doesn’t run the services on it. Given its products are open source, they can continue to run and protect user privacy, even if the company is shut down. 

See also: How Apple’s COVID-19 Policy Limited a Public Health App in Taiwan(Opens in a new browser tab)

Encrypted communications are regularly used by people such as dissidents and journalists, and are often a means of protecting sources or organizing in authoritarian countries. There is a risk that if the U.S., which has long held itself up as an example of freedom and democracy, moves to eliminate end-to-end encryption, other countries would also follow suit, and use such legislation to crack down on dissent. 

Finally, backdoors inevitably get used by bad guys, not just law enforcement. 

“There’s no such thing as a backdoor just for good guys,” said Daisy Soderberg-Rivkin, a fellow focusing on children and technology at the R Street Institute, a policy think tank in Washington, D.C. “This opens up users’ information to a whole mess of bad actors.”

UPDATE: The section about the EARN IT Act’s potential impact on services like WhatsApp has been updated.

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British startup Cryptograph launched this summer with its first round of auctions, raising more than $50,000 so far, with two days still to go.

• Prominent crypto developers and entrepreneurs including Gitcoin CEO Kevin Owocki, ShapeShift CEO Erik Voorhees and Parity co-founder Jutta Steiner auctioned digital autographs and notes related to their work. The digital doodles are used to generate non-fungible tokens (NFTs).
• The top earners so far include Ethereum creator Vitalik Buterin (whose notes sold for 77.35 ether (ETH), or roughly $18,719), Ethereum Foundation researcher Vlad Zamfir (25 ETH, roughly $6,050) and Tezos co-founder Kathleen Breitman (5 ETH, roughly $1,204).
• According to Buterin’s auction page, the autographed NFT includes his own “hand-drawn representation of this groundbreaking Quadratic Funding formula.” The bid for his digital autograph will go towards Gitcoin’s open-source grant programs.
• Ownership of the autographs, displayed in a virtual gallery, is publicly verifiable. Plus, contributors will be able to distribute funds across multiple charities.

Read more: Devcon Shows Ethereum’s ‘World Computer’ Is a Movement, Not a Product

Correction (July 14, 21:08 UTC): Vitalik Buterin’s notes raised 77.35 ETH, not 40 ETH as was previously reported.

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An Andreessen Horowitz (a16z) alum is launching a new venture firm focused on building a crypto-powered “ownership economy.” 

Jesse Walden, who focused on blockchain investments at a16z, announced his Variant Fund in a blog post published Tuesday.

Walden said the new fund is focused on the idea that the people who make platforms and products strong can share in their growth. He wrote:

Related: Kraken Adds 3 DeFi Tokens – COMP, KAVA, KNC

“Crypto exposed the power of ownership as a tool to drive users to contribute to protocols they use in deeper ways. Now, the opportunity is to follow the pattern, and build more accessible products (and protocols) that bootstrap adoption & participation through better economic alignment with users.”

He cites examples like Compound, which is distributing a large portion of its governance tokens to users; Reddit, which is starting to sort out how tokens fit into the Web 2.0 giant’s business model, and other examples.

In an email to CoinDesk, Walden said the fund is backed by a16z’s Chris Dixon and Marc Andreessen, Union Square Ventures and Compound’s Robert Leshner – “mentors I respect and have built relationships with over the years as both an entrepreneur and investor.”

Variant Fund has made investments already, Walden said, but they’ve yet to be announced.

Founder’s roots

Related: Market Wrap: Stocks Make Gains While Bitcoin Sticks to $9,200

Walden co-founded Mediachain, an a16z-backed blockchain startup that tracked ownership rights of online images and other intellectual property. After the firm was acquired by Spotify in 2017, Walden worked for the music-streaming giant for nine months before decamping to a16z.

“To help build the ownership economy, I’ll partner with entrepreneurs and communities at the earliest possible stages,” Walden wrote.

Read more: Mediachain is Using Blockchain to Create a Global Rights Database

Longtime political watchers might draw a connection between the “ownership economy” thesis and former President George W. Bush’s “ownership society” messaging.

In 2003, the president bemoaned a past where only a very few held equity in major companies, celebrating a present where it was possible for almost anyone to hold a share. 

What President Bush probably didn’t anticipate at that time was a future where people could own a company that exists only on the web and, like Bitcoin, has no one in particular in charge. As Walden described in another blog post from January, Variant appears built to help founders head in that direction.

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Syrian developer Ghass Mo has been living off freelance bitcoin gigs from Kurdistan, Iraq, for nearly two years. 

“I get paid in bitcoin for doing work on open-source projects related to the cryptocurrency industry,” Mo said. “The first programmer I met was Amir Taaki. … I learned a lot from him and he was supporting me.”  

It’s impossible to say how many people are like Mo, inspired by a chance meeting with a bitcoiner to embark on an educational journey toward financial sovereignty. These cases are often isolated, at least in the developing world. Yet, they are increasingly familiar to people who work with digital nomads. They are showing bitcoin can work as intended, as a global currency without borders. 

Related: Bitcoin Volatility Metrics Are Like November 2018 All Over Again

Read more: Bitcoin in Emerging Markets: The Middle East

Mo left Syria in his early 20s because of the civil war and became an unbanked migrant worker to support his family. This may sound bleak but Mo has a lot in common with the other developers he now works with online. 

He is a quiet man, a self-taught developer who rarely leaves his chosen Batcave except for shopping and rare outings. Mo has a perpetual five o’clock shadow and a minimalist home office setup, with just a few laptops, a monitor and always a cup of Arabic coffee. He’s never met most of the people he works with online, nor does he know of any local bitcoin meetups. He spends his evenings reading about Rust and studying at home with books like “Mastering Bitcoin.” 

“The ongoing war in Syria and lack of stability affected me,” he said. “Sometimes I spend months trying to finish an online course, translating every single word [from English]. … The people [I know] interested in this field of study could be counted on one hand.” 

Getting by

Related: Market Wrap: Stocks Make Gains While Bitcoin Sticks to $9,200

Like many other freelance developers earning bitcoin across the Middle East, Mo liquidates his bitcoin through a local exchange to pay for daily expenses. A local grad student who founded the Kurdcoin exchange, who asked to stay anonymous, has been operating a hawala-adjacent business for customers like Mo since 2017. 

Hawala is a traditional money network used to send value across the Islamic world for hundreds of years, long before bitcoin. Thanks to partnerships with long-standing hawala businesses, bitcoin has merely become another option offered by such money changers. This is very accessible to local people with a wide range of computer skills and access.  

“Facebook is our primary source for discovery for new clients. Word of mouth is the second,” said the anonymous exchange founder. “We also sell hardware wallets ourselves. We recently started this service, we’ve sold 10 in Iraq, and it’s increasing.”  

Read more: How Bitcoin Fits Into Lebanon’s Banking Crisis 

Mo and users like him can message the Kurdcoin accounts on social media, including Telegram, Twitter or Instagram. The exchange is supported by a staff of 10 people. Clients can pay online with bitcoin and pick up their cash at almost any local hawala business from Syria to Kurdish Iran. Mo also uses bitcoin to send money to his family. 

It was a great feeling when I realized I could buy food and other stuff using bitcoin.

“After the lockdown, due to the coronavirus, the borders between Iraqi Kurdistan and Rojava [Syria] have been closed,” Mo said. “Sometimes there are difficulties in transferring money and the fees increase several times.”

Local demand is much higher now, the exchange founder said, for the bitcoin that freelancers like Mo bring to the local market. 

Kurdish markets

“We’ve had some months where we did $10 million in volume and months with $500,000,” the exchange founder said of Kurdcoin’s volumes. 

Plus, business is up compared to the token-boom peak of late 2017. 

“There are many, many new customers coming,” the founder said. “There are 10-20 new leads for our exchange every day … some months we’ll have 1,000 prospective clients.”

He’s long since abandoned the failed token project that inspired the exchange’s name. Many people weren’t as lucky as Mo, to learn about bitcoin from a trusted mentor. Those who learned from token “scams,” the exchanger said, are now returning to his platform for bitcoin. 

Read more: Despite Bitcoin Price Dips, Crypto Is a Safe Haven in the Middle East

The exchange operator said he’s working with a team of lawyers and 10 advisers from abroad to try to establish a regulated way to conduct business in Kurdistan. Much like the American cannabis industry operates in a gray zone between state and federal laws, the Kurdish bitcoin industry operates despite vague restrictions issued by the Central Bank of Iraq. In the meantime, established hawala businesses handle the know-your-customer (KYC) process.

Loyal users

It’s been lucky that bitcoiners like Mo remain regular customers during the pandemic. 

Before the coronavirus crisis, the exchanger said more than half of his clients were from the southern, Arab regions of Iraq. They came to Western Iraq (Kurdistan) to buy or sell bitcoin. Now, with travel restricted, such business is done online. Multi-currency remittances have picked up due to the lockdown and both Iranian and Syrian currencies collapsing. 

“From the West of Iran, the Kurdish part, some people were also thinking of opening a Kurdish exchange,” the exchanger said about growing demand for bitcoin. “Banking here is underdeveloped in Iraq, probably one in 20 people has a bank account they actually use. … Almost all of our daily transactions are in cash. You buy a house with cash.” 

This cash economy suits unbanked migrants like Mo, who still manages to get enough freelance work to support himself and live comfortably in Iraq. Although electricity and WiFi access is reliable in Iraq, a vast improvement over Syria, he’s still unable to run or use local data centers. 

“I rely on providers abroad,” Mo said. “I’ve had to work several part-time jobs as a graphic designer and web developer to provide financial support for my family. … I’ve finished 10 online courses at Edx, four at Udemy and read more than 10 books about programming and bitcoin.”

He said learning about bitcoin dramatically changed his life over the past two years. 

“It was a great feeling when I realized I could buy food and other stuff using bitcoin,” he added. 

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A 29-year-old Texas man is in A-1 trouble after being charged Monday with siphoning nearly $1 million in Payment Protection Program loans meant for a barbecue company into a cryptocurrency trading account.

• Joshua Thomas Argires received a $956,600 loan for “Texas Barbecue” and allegedly transferred those funds into a Coinbase account where they “generated a profit” by investing in crypto, according to a criminal complaint unsealed Monday in U.S District Court for the Southern District of Texas. The complaint didn’t disclose the size of the alleged profit or which cryptocurrencies were allegedly traded.
• USPS investigators discovered Texas Barbecue had no documented employees, no online reviews and no bank account until 4 days prior to the loan request, according to a criminal complaint.
• Argires suggested that Texas Barbecue’s Coinbase account was how employees were paid, saying: “I don’t really manage that aspect of” the business. Investigators assert that Argires had exclusive control of the Coinbase account, and that Texas Barbecue never had any employees to pay.
• Charges against Argires, who allegedly collected more than $1.1 million in fraudulent PPP loans total, include wire fraud, making false statements to a financial institution, bank fraud and engaging in prohibited monetary transfers.
• In addition for his Texas Barbecue loan, Argires also received PPP funds for a company called Houston Landscaping, which also had no employees, the complaint reads. The funds obtained for Houston Landscaping were not deposited in Coinbase but were held in a bank account and depleted by ATM withdrawals, according to the complaint.
• PPP records indicate that a “Texas Barbecue” with identical information to Argires’ outfit received a loan from PrimeWay Federal Credit Union in Houston. PrimeWay could not immediately be reached for comment.

Read the unsealed criminal complaint below:

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• BitClub Programmer Admits Mining Scheme Stole $722M in Bitcoin

Binance announced the rollout of its crypto debit card, the U.K.’s central bank is thinking hard about a digital currency and the taxman cometh. Here’s the story:

You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here. 

Top shelf

AML Compliance
BitGo is offering API support for the Financial Action Task Force’s (FATF) “Travel Rule,” which stipulates the originators and beneficiaries of financial transactions over $1,000 be identified and that their personal data must “travel” with those transactions. BitGo’s offering seeks to remove the headache of identifying wallets and transferring personally identifiable information between clients that use the San Francisco-based firm’s technology or custodial services.

Related: First Mover: Bitcoiners Not Worried Fed Money Printer Has Stopped Going ‘Brrrr’

Binance Card
Binance has announced the first major rollout of a debit card allowing users to pay for goods and services in crypto. Users in the European Economic Area (EEA) will be able to apply for a card from August; those in the U.K. will be able to do so afterwards. The service is powered by Swipe, the online payments juggernaut. Users can spend crypto – currently bitcoin, Binance Coin, Swipe Coin, and Binance USD – at any merchant that supports Visa payments.

Retail Interest
Retail interest in Chainlink, which acts as a bridge between cryptocurrency smart contracts and off-chain data feeds, is now at the highest level it has been in well over a year. According to Google Trends, worldwide queries for the word “Chainlink” on the search engine reached a score of 100 in the week ended July 12, more than double what it was the preceding week. A score of 100 indicates it is the maximum number of searches observed for a term during a given time frame.  

Ethereum Reboot
Ethereum developers are aspiring to launch Eth 2.0 in 2020. The sum of account balances maintained by the network’s nodes – called the state – continues to grow larger and larger as applications and projects transact. Adoption is good, but runaway growth is bad. Independent developer Alexey Akhunov may have a solution – one pulled from Cosmos, the interoperability blockchain. His new proposal, dubbed “ReGenesis,” posted on EthResearch on June 24, would bring stateless client research to the current Ethereum chain (also known as Eth 1.x) by “nuking” certain nodes’ states and swapping them with a math proof on a rolling basis.

CBDCs
The U.K.’s central bank is discussing the possibility of launching a digital currency. Speaking during an online event, Bank of England Governor Andrew Bailey told a group of U.K. students on Monday his institution was having talks over the plan, as reported by Bloomberg Tuesday. Bailey said ongoing investigations would look at a central bank digital currency (CBDC), which would have implications across “payments and society.” Calling it a “very big issue,” he anticipated the CBDC could be a real possibility in several years, once the coronavirus has passed.

Quick bites

• Canadian Prime Minister Justin Trudeau’s half-brother was paid by the federal government to speak at a blockchain conference last year.
• What do Ethereum developers do when there’s no conferences to attend? 
• Paradigm is sponsoring a Bitcoin Core developer. (The Block)
• Bitcoin environmental impact grows following post-halving dip. (Decrypt) 

Tax Day

Related: Blockchain Bites: It’s Never Been Harder to Mine Bitcoin

The deadline to file and pay your taxes in the U.S. is tomorrow, and hodlers are as confused as ever. 

CoinDesk’s Nikhilesh De looks into how the Internal Revenue Service’s public guidance on crypto tax reporting fails to account for much of the innovative financial tools enabled by decentralized tech. Passive income earned through staking, highly leveraged margin trading and crypto earned through airdrops or hardforks all have antecedents, but retail investors taking advantage of these products are still in the dark about they have to do. That’s because the IRS hasn’t clarified the precise tax implications or forms associated with these services, tax pros say.  

“What the IRS has made clear is taxpayers need to file if they made (or lost) any money as a result of exchanging their crypto for fiat or another cryptocurrency, if they gained any crypto as a result of airdrops or hard forks, or if they gained funds as a result of staking or mining,” De writes. 

“Sometimes the IRS publishes final regulations more than a decade after taxpayers wish they were available. But it does make for unpredictable outcomes and forces individuals and businesses to file more in hope than expectation that they’ve acted correctly,” Kirk Phillips, a certified public accountant and author of “The Ultimate Bitcoin Business Guide: For Entrepreneurs & Business Advisors,” wrote in an op-ed.

While the IRS is working to create a guide for tax obligations, Phillips notes historically much “de facto tax guidance” comes from audits and tax court. There’s an irony in this as one public advocate, the IRS’s own Taxpayer Advocate Service, now claims a letter sent to crypto holders last summer may have violated taxpayers’ right to privacy and the right to be informed.

Another irony: Despite Bitcoin’s initial anti-state ideological underpinnings, the current tax landscape is likely one of the biggest barriers to mainstream adoption today. 

Market intel

Volatility Bands
Bitcoin’s ongoing low-volatility range play is reminiscent of the price doldrums observed ahead of a sudden 40% price crash in the second half of November 2018. This time, however, the price squeeze may end with a bullish move, as the spread between volatility bands and the 20-day moving average suggests. “A prolonged period of low volatility consolidation often ends with a violent move in either direction,” CoinDesk’s Omkar Godbole notes. But the macroeconomic climate – seen by monetary and fiscal stimulus and Bitcoin’s tripling from March lows – could precede a strong move to the higher side. 

It Hit
An index of 50 low-capitalization cryptocurrencies, the so-called Shitcoin Index, is up 114% so far this year. Launched in 2019 by FTX, the index was trading at an all-time high of $1,065 Monday after making all-time highs for the past three consecutive trading days. The novel futures product has outperformed bitcoin by 88 percentage points this year.

Opinion

Minecraft of Finance
Camila Russo, founder of The Defiant and author of “The Infinite Machine,” the first book on the history of Ethereum, out today, thinks Ethereum has achieved much of what it set out to do five years ago: become a “Minecraft of crypto-finance.” From token issuance to decentralized exchanges through to novel derivatives platforms, Ethereum is the base layer to an alternative and open financial system. “The next five years will be about strengthening these scaling solutions and making these financial applications more robust and secure,” she predicts. You can read an excerpt of her new book here: 

Podcast

The Real Story Behind Tesla’s Crazy Rally
Elon Musk is now richer than Warren Buffett and Tesla comprises more than 25% of the value of the entire auto market. In the latest episode of The Breakdown, NLW looks at the narratives behind this stock-market phenomenon including Musk’s cult of personality, the Robinhood effect and whether Tesla is a tech company. 

Crypto Memeing Related Stories

• Blockchain Bites: Coinbase’s Untraditional Investor Day and the Ethereum-EOS Arms Race in Latin America
• First Mover: Kyber Token’s Eightfold Increase Reveals Bet on Future Market-Share Growth

Riding the surge of interest in yield farming, cryptocurrency exchange Kraken is listing three tokens from the world of decentralized finance (DeFi).

• Compound (COMP), Kava (KAVA) and Kyber Network (KNC) will be listed by Kraken starting July 15, the company announced Tuesday in a blog post.
• COMP is the governance token that kicked off DeFi’s recent boom. Following its June 15 debut, the token was promptly added by Coinbase and others.
• Kava is a DeFi platform backed by Binance, Huobi and OKEx.
• Kyber Network is a decentralized exchange (DEX) whose KNC token became the runaway hit of early 2020. The firm recently announced the creation of a new type of yield farming, in which it would share trading fees with KNC token holders.
• In addition to the three DeFi tokens, Kraken announced it will also list Storj (STORJ), a token that powers a blockchain-based data storage network.

Read more: Kyber Network Is Bringing Yield Farming to DEXland

Related Stories

• Texas Man’s Alleged Use of PPP Funds for Crypto Instead of BBQ Has Feds Asking ‘Where’s the Beef?’
• Market Wrap: Stocks Make Gains While Bitcoin Sticks to $9,200
• Compound Tops $1B in Crypto Loans as DeFi Farmers Keep Digging for Yield
• First Mover: Twelve-Fold Gains for Aave’s LEND Token Might Be More Than DeFi Hype

Enterprise blockchain firm Digital Asset announced Tuesday that VMware is investing in the firm’s Series C funding round. 

• In an announcement on its website, Digital Asset said VMware joined Samsung Venture Investment Corporation and Salesforce Ventures as an investor in the firm’s funding round, which was announced in December.
• Brandon Howe, vice president and general manager of VMware blockchain, has also joined Digital Asset’s Board of Directors. 
• Initially marketed as a private blockchain provider for financial institutions, Digital Asset has shifted its focus to DAML, an open-source platform to help deal with smart contracts.
• The firm had also announced its platform has been integrated with VMware Blockchain, Amazon Web Services, Aurora’s database and Hyperledger Fabric, among others. 
• While the firm’s announcement did not disclose the amount of funding received from VMware, its Series C disclosure at the end of last year indicated it had managed to raise $35 million at the time. 

Related Stories

• Crypto Trading Platform CrossTower Raises $6M in Seed Round
• Accel, Coinbase Join $17M Funding Rounds for Institutional Crypto Trading Firm FalconX
• Staying Alive: Why the World of Enterprise Blockchain Has Turned to Collaborations
• Ashton Kutcher and Michelle Phan Invest in Lolli’s $3M Seed Round