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XRP is more like an alternative currency than a security, argues the former chair of the U.S. Commodities Futures Trading Commission (CFTC).

In an op-ed for the International Financial Law Review, Chris Giancarlo, who was chairman of the CFTC until last year, argued Ripple Labs hadn’t violated any U.S. securities regulations and that the third-largest crypto by market cap should have the same legal status as bitcoin or ether.

“XRP should not be regulated as a security but instead considered a currency or a medium of exchange,” he wrote with Conrad Bahlke of international law firm Willkie Farr & Gallagher. They said XRP doesn’t hit any of the “prongs” of the Howey Test – a landmark case that defines what is considered a security in the U.S.

Related: Free Transactions Invite Systemic Attacks on Blockchains, Researchers Find

According to Giancarlo and Bahlke, XRP was never marketed as a security, nor were investors promised any returns; the token has a very specific use case for liquidity and settlements; Ripple has never offered holders any rights of ownership or share of the profits. There is, he argues, no investment contract or formal relationship that exists between Ripple Labs and XRP token holders.

See also: Ripple Sues YouTube for Allowing ‘Scams’ That Promise Free XRP

But the linchpin in his argument appears to be that there’s a divergence between how Ripple has defined XRP and what token holders themselves actually use it for.

“Ripple has repeatedly emphasized the functionality of XRP as a liquidity tool and a settlement mechanism,” Bahlke write, but there are plenty of investors who use XRP as a means of payment or just buy it hoping its value will increase.

Related: Ripple Says XRP Lawsuit Fails to Show CEO Committed Fraud

There is no “commonality” that exists between investors, they continue. People who hold XRP hold it for multifarious reasons, unlike a security where the reasons for holding it are much more clear-cut.

As such, the fortunes of XRP investors aren’t tied to XRP in quite the same way as they would be with a security token. Some could benefit directly from XRP’s dollar-value staying low, others would want it to always remain high.

“[G]iven the juxtaposition between XRP’s intended use as a liquidity tool, its more general use to transfer value and its potential as a speculative asset, XRP holders who utilize the coins for different purposes have divergent interests with respect to XRP,” according to the authors.

That makes it very similar to other cryptocurrencies such as bitcoin and ether, both of which have been classified as definitely not securities by the Securities and Exchange Commission (SEC). Bitcoin is supposed to be used as electronic cash, but many use it as a store of value; ether was intended as “gas” to power a distributed network, but there are scores of investors who also use it as an alternative form of money.

“The fact that certain parties may acquire XRP with the hope that it may appreciate in value cannot be dispositive as the same is equally true of a large number of bitcoin and ether speculators,” Giancarlo said.

Just like bitcoin and ether, XRP should be classified as a token that comes with utilities, which are both defined in its white paper and have also emerged over time. “The increased adoption of XRP as a medium of exchange and a form of payment in recent years, both by consumers and in the business-to-business setting, further underscores the utility of XRP as a bona fide fiat substitute.”

See also: Mysterious Company Files New Lawsuit Over Ripple’s $1.1B XRP Sale

The article has raised a few eyebrows For one thing, Giancarlo didn’t head the regulatory authority that determined what did and didn’t count as a security. Others were also quick to point out the law firm where he now works has Ripple as a client.

Jake Chervinsky, general counsel at decentralized lender Compound, said the article was pretty much irrelevant. “There are only two opinions about XRP’s security status that matter: those of the courts & the SEC. Everything else at this point is noise,” he tweeted.

There are also one or two relatively unsatisfying arguments. Chief among them is how Giancarlo explains away the fact Ripple still controls the vast majority of the XRP supply: the 6 billion tokens it controls directly and the 49 billion held in an escrow account.

“Even though Ripple holds a large stake of XRP in escrow and funds its operations through the sale of XRP (as well as the sale and licensing of software), this is no different than bitcoin or ether miners selling mined tokens or the Ethereum Foundation using its ether holdings to develop and support the Ethereum architecture.”

On the other hand, there is no miner or other single entity in the Bitcoin or Ethereum ecosystems that controls as much of the total supply as Ripple Labs. There also isn’t just one entity responsible for issuing new bitcoin or ether into circulation, as there is with Ripple, which sticks to its tight schedule of putting one billion tokens up for sale every month.

Conflating Ripple’s sale of XRP with that of mining, therefore, feels a bit strong.

See also: Ex-CFTC Chair Christopher Giancarlo on Why He Launched Digital Dollar Project

As for Ripple not promising XRP investors any return on investment, there’s a court case rumbling on at the moment that accuses Ripple of doing just that.

The plaintiff in that case says remarks made by Ripple CEO Brad Garlinghouse, where he said he was “very, very long” on XRP, proves Ripple had promoted the tokens as an investment opportunity – more like an unregistered security than a “bona fire fiat substitute.”

• XRP
• Ex-CFTC Chair Chris Giancarlo Joins Swiss Effort to Fund COVID-19 Relief Projects

A languid Wednesday in traditional markets affected bitcoin as well although it’s been a steady six weeks where the world’s first cryptocurrency outperformed most traditional assets. 

Bitcoin (BTC) was trading around $9,265 as of 20:00 UTC (4 p.m. ET), slipping 1.3% over the previous 24 hours. 

At 00:00 UTC on Wednesday (8:00 p.m. Tuesday ET), bitcoin was changing hands around $9,500 on spot exchanges such as Coinbase. It then dipped 1.6% to as low as $9,348. The price is now below its 10-day and 50-day moving averages — a bearish signal for market technicians who study charts — but with little action, it looks to be going nowhere for the time being.

Related: US Fed Chair Says Private Entities Should Not Help Design Central Bank Digital Currencies

“The price of bitcoin managed to get only up to $9,600 Tuesday. Now fiat reigns,” said Constantine Kogan, crypto fund-of-funds BitBull Capital. 

Read More: Polychain Capital, Square Crypto’s Steve Lee Invest in Bitcoin Broker

In fact, since the start of May the price of bitcoin has only appreciated 5.6% overall. It’s a relatively sleepy performance when compared to the oil market, which has had a wild 2020. A barrel of crude has gained over 90% since the beginning of May. 

Oil is flat Wednesday, down 0.39% and priced at $37.71 as of press time.

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Uncertain economic times still motivate cryptocurrency traders and investors to remain steadfast in their investment thesis on bitcoin. “I am personally not negative on bitcoin and my view is based on several ingredients that have not changed or improved my outlook,” said Henrik Kugelberg, an over-the-counter cryptocurrency trader based in Sweden. 

One element Kugelberg points to is the debasing of the U.S. dollar. Since 2000, the number of dollars in circulation has jumped over 240%, from $565 billion to almost $2 trillion, according to Federal Reserve data. 

Other cryptocurrency advocates echo the same long-term outlook – that holding bitcoin is much better than owning traditional assets such as equities. Bitcoin is still up over 30% so far this year. Major global stock indices are either lower or just about even in 2020, and have been in negative territory since the middle of February. 

George Clayton, managing partner of alternative asset fund Cryptanalysis Capital, says continued fiscal stimulus is just an attempt to push equities above the 0% return level, but with major long-term side effects on the value of U.S. dollar. 

Read More: Number of Bitcoin ‘Whales’ Has Risen by 2% Since Halving

“A $1 trillion stimulus plan to build bridges, roads and rural 5G broadband that the Trump Administration is mulling over is perhaps the only piece of major legislation that stands a chance of passing both houses of Congress,” Clayton said. “It would be far more inflationary than the $500 billion in aid funneled to corporations that seems to be propping up stock markets.” 

The Nikkei 225 of publicly traded companies in Japan closed the day flat, down 0.56% as real estate and transportation stocks dragged the index down. 

The FTSE 100 index in Europe ended trading up 0.91% as energy stocks made gains. 

The U.S. S&P 500 index lost 0.36%, dragged down by the retail and travel sectors.

Digital assets on CoinDesk’s big board are mixed Wednesday. Ether (ETH), the second-largest cryptocurrency by market capitalization, is trading around $228 and slipped 2.1% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

The rise of tether on Ethereum since 2019 has shifted fee distributions on the network. With $5.7 billion of tether on Ethereum, the stablecoin has taken over fees paid by ERC20 contracts and even the network token itself, ether, according to data aggregator Glassnode.

The biggest cryptocurrency winners on the day include cardano (ADA) up 2.1%, iota (IOTA) in the green 1.3% and nem (XEM) gaining 1%. Significant losers include dogecoin (DOGE) down 3.2%, bitcoin SV (BSV) in the red 2.3% and qtum (QTUM) down 2.2%. All price changes were as of 20:00 UTC (4:00 p.m. ET).

Read More: Compound Has Been a DeFi Darling. Its New Token Is Priced Accordingly

Gold is trading flat as the yellow metal climbed 0.16%, trading around $1,728 for the day. 

U.S. Treasury bonds slipped Wednesday. Yields, which move in the opposite direction as price, were down most on the 10-year, in the red 4.2%.

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Private entities aren’t needed to build central bank digital currencies, said the head of the U.S. central bank on Wednesday.

Federal Reserve Chairman Jerome Powell, speaking before the House Financial Services Committee, said the idea of a digital dollar – a blockchain-based version of the current world reserve currency – is complex, and one that the Fed takes seriously, but also that the idea needs to be studied further before one can be created and implemented. However, in response to a question from Rep. Tom Emmer (R-Minn.), Powell said he believed private entities did not have a role in designing a digital dollar.

“I do think this is something that the central banks have to design,” he said. “The private sector is not involved in creating the money supply, that’s something the central bank does.”

Related: Market Wrap: Bitcoin Flat at $9.4K but Investors Are Holding On

Emmer was asking specifically about a recommendation from the Digital Dollar Project, which was launched earlier this year by former Commodities Futures Trading Commission Chairman J. Christopher Giancarlo, Chief Innovation Officer Daniel Gorfine and Accenture Director David Treat. The project suggested a digital dollar be issued by the Fed but designed in partnership with the private sector and accessible through a two-tiered banking system similar to the one in place in the U.S. today.

See also: Digital Dollar? Get Real, Financial Inclusion Advocates Tell Congress

Powell said the general public may not be receptive to the idea of private employees being responsible for the money supply because they’re not accountable to “the public good.”

Still, the idea is apparently being examined. A group of central banks have gotten together to discuss and better understand the concept as well as evaluate the implications on financial inclusion and concerns around cybersecurity, he said.

Related: In the Wildcat Era of Stablecoins, Commercial Banks Have New Rails to Ride

“If this is something that is going to be good for the United States economy and for the world’s reserve currency, which is the dollar, then we need to be there and we need to understand it first and best,” Powell said. “So we’re working hard on it.”

The chairman also briefly addressed concerns around the Fed’s ability to control a hypothetical digital dollar, saying it’s “a very difficult problem” to find a balance between knowing too much about an individual’s transactions and knowing too little. Powell did not have enough time to fully respond to the question.

Powell did acknowledge the concerns around implementing a tokenized version of the dollar and the implications of waiting too long to otherwise modernize the currency.

See also: Digital Dollar Project Calls for 2-Tiered Distribution System in First White Paper for US CBDC

“It’s our obligation to understand it well and not wake up one day and realize that the dollar is no longer the world reserve currency because we just missed a technological change,” he said. “So we’re not going to let that happen but at the same time there’s some very serious questions that have to be answered before we would want to implement a central bank digital currency.”

Bradley Keoun contributed reporting.

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The Austrian government is taking a considered approach to COVID-19 tech solutions after an initial rush to get some kind of contact tracing app out the door. The nation’s second wave of projects now includes blockchain.

Announced Wednesday, the country’s Federal Ministry for Digital and Economic Affairs awarded a €60,000 ($67,600) grant to a project called QualiSig, which uses elements of Austria’s digital identity system to create three COVID-related prototypes around fraud prevention, fake news and health data.

The QualiSig prototypes use the Ardor blockchain built by Swiss firm Jelurida and its Ignis tokenizing system. Developed by Danube University Krems researchers Thomas Wernbacher and Alexander Pfeifferhe, the other main partner is Austria’s A-Trust, which administers the citizen’s digital identity infrastructure.

Related: From Australia to Norway, Contact Tracing Is Struggling to Meet Expectations

quick correction: the app is developed by Alexander and Thomas, with the consultancy and guidance of Jelurida as it’s built on top of Ardor using Ignis

The prototypes will not be ready to make it into a live setting until at least eight months from now. But a more measured approach is probably to be welcomed, as handshake apps that have been rushed out by various governments continue to struggle with preserving user privacy, getting wide-spread adoption and, in some cases, have begun to show bugs. 

Read more: From Australia to Norway, Contact Tracing Is Struggling to Meet Expectations

Austria’s Stopp Corona app, which is backed by the Red Cross, has not been a big hit, with only 400,000 downloads and most of the population saying they don’t like the idea, according to Pfeiffer, who is working on QualiSig while completing a postdoctoral scholarship at MIT.

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“Austrians disliked the Stopp Corona app, which appeared quite quickly, and they didn’t install it,” said Pfeiffer. “One of the first problems was that it was not open source so we did not know the code behind it. We introduced the [QualiSig] project to gain the trust of Austrian citizens and give them some sense of agency that they can be part of this process.”

Out of the three proposed QualiSig prototypes, Pfeiffer believes the most important allows the verification of door-to-door testers for COVID-19, whereby members of the public can easily become victims of fraud.

The prototype requires a testing agent to show a QR code that is scanned by the citizen using a mobile phone, which leads to a verification page showing a digital signature from a public authority. It also shows details of the responsibilities the agent has to complete to conduct the test, perhaps signed by the Red Cross or a government health agency.

The tester’s verifiable credentials – to use a familiar term within the digital identity arena – are attached to an Ignis blockchain utility token, which cannot be transferred and received without the correct authorization on a digital ID wallet. 

“This system has to go hand-in-hand with marketing and information to citizens,” said Pfeiffer. “Besides COVID-19, I think it’s a use case that has the most potential to be actually rolled out to many different areas, any time a stranger knocks on the door and wants to ask you something.”

The second prototypes involve preventing fake news by circumventing email and using a signable blockchain token, while the third combines recent test results for COVID-19 (signed by a doctor or health official) with a person’s digital citizenship to allow them to take a flight or attend a concert. 

There are other projects working on similar apps, and concerns have been raised relating to the indiscriminate use of tech like blockchain in areas such as immunity passporting. Pfeiffer agreed “it can be very restrictive if people have to show a health test everywhere they go,” and this consideration has had a big impact on the team’s research, he said.

Read more: ‘Decentralized ID at All Costs’: Adviser Quits ID2020 Over Blockchain Fixation

“From a psychological point of view, it’s about socially and ethically building trust,” Pfeiffer said. “We want to decentralize the way data is stored and even offer users the chance to host their own node on the blockchain, so everyone is actually in control of data; you see your own data with the private key that you hold or shared key if you’re going to share data.”

In terms of timing, at the end of the eight-month build, the team will present the three “near-market prototypes” to the government for evaluation. Pfeiffer explained that because the tech is built using the Ardor mainnet, rather than a testnet, as well as real digital citizenship infrastructure, the prototypes can be transferred to real, live use in “weeks and not months”.

The Austrian government has so far funded 40% of the total cost of the project, which will work out at about €150,000 ($168,500) in total. The remaining sum will likely come from the university, said Pfeiffer.

“Actually, my company, Jelurida, which develops Ardor and Ignis is providing consulting for this project,” said Jelurida co-founder and core developer Lior Yaffe. “So we will probably absorb part of the cost to help this important project get on its feet.”

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Ryde, Singapore’s first carpooling app, will now let customers pay for rides with bitcoin. 

Starting next week, its users will be able to store and convert bitcoin to the company’s RydeCoin with zero transaction costs, the company announced Wednesday. Customers can top up a maximum of S$999 (just over US$700) in bitcoin at a time to pay for rides, and Ryde claims it will be the world’s first and only cryptocurrency wallet that allows users to pay for rides using bitcoin within its own e-wallet.

The company is not the first ride-hailing app to accept bitcoin payments. In 2018, Fold, an app that enabled micropayments through bitcoin lightning, welcomed Uber as a partner company. It allowed users to pay for Uber rides with bitcoin through an integration, but Ryde is the first to incorporate cryptocurrency as a payment method natively into its own app by allowing the storage and use of bitcoin through its built-in digital wallet RydePay. 

Related: BitPay Launches Prepaid Crypto Mastercard for US Customers

Ryde Technologies Founder and CEO Terence Zou told CoinDesk the addition of cryptocurrency as a payment method was always going to be the natural next step as its transaction volume increased. 

“I have been watching the developments of this particular space and increasingly I’m sanguine about the prospects of cryptocurrency and its usage,” Zou said. 

According to Zou, the company began working on integrating crypto features to its app in 2019, when 60% of Singaporeans still prefered cash transactions. The COVID-19 pandemic suddenly made cashless transactions more desirable, and the company accelerated development. 

A 2020 report by Crystal Analytics found Singapore was tied with the U.S. as the country with the third-largest number of bitcoin exchanges, with 25 operating platforms.

Related: National Science Foundation Funds Research Into Crypto Dollars

“Singaporeans have bitcoin but the use of bitcoin in Singapore is limited. We can purchase bitcoin at some ATMs and through crypto exchanges but not many merchants accept it,” Zou said.   

Things are changing. The Singapore government formally introduced the Payments Services Act 2019 which went into effect in January this year, and allowed some exchanges, including Coinbase, to operate without a license for a period of six months. Zou believes the act provides regulatory clarity for FinTech companies, and is more accepting of crypto exchanges looking to operate in Singapore.

As a technology firm, accepting bitcoin is only the first step in Ryde’s long-term plan to turn its RydePay wallet into a decentralized electronic ledger and open it to more cryptocurrencies. Ride hailing is a widely used service, and Ryde wants to be the first to facilitate the mass adoption of crypto usage in Singapore. 

Ryde already offers a range of cashless payment options including debit and credit cards, along with Apple Pay. Zou is confident the addition of bitcoin would create more value for their customers, and target a new constituency. 

“Singapore generally has a more relatively tech-savvy population,” Zou said. 

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The Drug Enforcement Administration (DEA) failed to adequately police its undercover agents’ handling of cryptocurrency, even years after one of its agents stole $700,000 in bitcoin in 2015, according to a new report from the U.S. Department of Justice’s Office of the Inspector General (IG).

Published in redacted form Wednesday, the IG report – an audit of “income-generating, undercover operations” – casts the federal government’s leading drug buster and frequent crypto cop as an agency whose efforts to clamp down on an apparent explosion in virtual currency money laundering got ahead of its own ability to monitor itself.

Issues pervaded across the DEA’s “Attorney General Exempt Operations,” the inspector general wrote, but problems prevailed in its handling of crypto.

Related: Coinbase Offers US Feds New Crypto Surveillance Tools

“The DEA’s management of virtual currency-related activities was insufficient due to inadequate headquarters management, lack of policies, inadequate internal control procedures, insufficient supervisory oversight and lack of training” for digital currency activities, the IG wrote.

Some of those problems manifested in the relative uniqueness of crypto money-laundering, which carries with it “unknown fees and spontaneous currency fluctuations” – complicating factors that are outside the scope of traditional schemes. 

But the DEA did not adapt itself to these new challenges. According to the IG report, its record-keeping was so poor that investigators struggled to match up transaction information with activities.

Even its own agents’ foul play did not prompt the DEA into action. Former DEA agent Carl Mark Force IV stole $700,000 in bitcoin during the investigation and takedown of the Silk Road dark market, but two years later, the agency still lacked adequate crypto controls.

Related: US Authorities Freeze COVID-19 Website Alleged Scammer Tried to Sell for Bitcoin

“We are concerned that following this incident the DEA did not implement additional internal controls specifically related to investigations involving virtual currency,” the report said.

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The number of bitcoin whales is at its highest level since 2017, as the network adjusts its difficulty setting for the first time post-halving.

Elsewhere, Canada is hiring a CBDC expert, Thailand is using a blockchain to issue bonds and Kraken is expanding into Australia. 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. 

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Post-Halving Jumps
On Tuesday, Bitcoin posted its biggest mining difficulty increase in nearly 2.5 years. Its 14.95% rise comes after two consecutive declines in difficulty following the May halving. Miners contributing hashing power to the network are now facing the fourth-most difficult two-week mining period in Bitcoin’s history. As of Tuesday, the number of bitcoin whales, or entities holding at least 1,000 coins, was 1,840, up nearly 2% from the level seen before the halving. The metric clocked a recent high of 1,844 on Monday, a level last seen in November 2017. The steady accumulation since the halving suggests investor confidence in the long-term bullish narrative surrounding bitcoin. 

On the National Stage
Canada’s central bank is getting serious about digitizing its currency with a new job posting for a CBDC Project Manager. “The Bank of Canada is embarking on a program of major social significance to design a contingent system for a CBDC, which can be thought of as a banknote, but in digital form,” the bank wrote. Meanwhile, the Public Debt Management Office within Thailand’s Ministry of Finance has announced plans to sell 200 million baht ($6.42 million) in savings bonds using a blockchain-based e-wallet. Elsewhere, the World Economic Forum has partnered with the Inter-American Development Bank (IDB) and Colombian officials to develop a proof-of-concept using Ethereum to add transparency to the nation’s public-private procurements contracts. Finally, Kraken is opening operations in Sydney, Australia.

Institutional Support
Bitcoin brokerage River Financial raised a $5.7 million seed round with backing from Polychain Capital, Slow Ventures, and Castle Island Ventures, among others. The capital will be used to scale River, as it seeks licensing across the United States. The firm currently offers a spot market, cold-storage solution and private client product in 15 states. Meanwhile, WisdomTree Trust, a prominent asset manager, may launch an exchange-traded fund (ETF) that could see 5% of the contract’s net assets placed in the Chicago Mercantile Exchange’s bitcoin futures contracts. That’s as a Deloitte survey of 1,488 executives from 14 countries found 39% of companies are integrating blockchain into their operations and 55% named the tech among the top five strategic priorities for their companies. (Decrypt) 

Legal Review
Former Bitcoin Core developer Peter Todd has settled his defamation lawsuit against fellow privacy-tech expert Isis Lovecruft, who tweeted in February 2019 that Todd was a “rapist.” Lovecruft, who uses nonbinary pronouns, claimed in 2019 that Todd sexually harassed and grabbed their arm, which he denied. On Tuesday, without deleting the original tweet, Lovecruft also tweeted, “Peter Todd never raped or sexually assaulted me.” Elsewhere, founders of the “Centra Card” crypto debit card pleaded guilty to a $25 million securities and wire fraud conspiracy, after completing an unregistered token sale backed by boxer Floyd Mayweather and music producer DJ Khaled. Finally, researchers at PeckShield believe a peer-to-peer crypto exchange in Korea, Good Cycle, is responsible for paying $5.2 million in fees to send two Ethereum transactions last week. Circumstantial evidence leads the researchers to believe the exchange may be engaged in a Ponzi scheme or blackmail. (Decrypt)

Related: Blockchain Bites: JPMorgan on Bitcoin, South Korea on CBDCs and the Porn Industry on Crypto

Protocol Level
The seven-day moving average of the total amount of “gas” used in transactions on Ethereum’s blockchain rose to a record high of 61.12 billion on Monday. Analysts say the growth of both transactions and the cost to process them is being driven by an increase in stablecoin usage and DeFi applications. That’s as the Stellar community gears up to vote on a raft of new network updates, grouped together as “Protocol 13,” to give exchanges greater control over how digital assets are traded on-chain and how they can enforce local regulations. Lastly, but not actually “last,” Ripple was ranked 28th on CNBC’s annual “Disruptor 50” list.

Social Good
The PAN protocol is a blockchain-based, censorship-resistant database for recording police misconduct built by the Police Accountability Now group and secured on Ethereum and the InterPlanetary File System (IPFS) distributed storage platform. (Decrypt) Elsewhere, the Giving Block launched the Crypto for Black Lives campaign to raise $1 million for nonprofits working on civil rights causes. (Decrypt)

COMP’s Capitalization Computation
Bullish trading in Compound’s new COMP tokens, released Monday, has given the project a fully diluted, implied market capitalization of nearly $785 million, well above Maker’s $546.2 million. This implied market cap is well above the $163.1 million locked in the protocol (MakerDAO, the largest network, has $487 million locked within its smart contract. Compound’s outsize market cap, relative to the total value locked in the protocol, “may signal the rally went too far,” The Defiant, a newsletter tracking the DeFi sector, wrote on Tuesday. Yesterday, COMP tokens were valued at $78.56 each. 

Second-Order Effects
Curve, a new automated market maker devoted exclusively to stablecoins, saw trading volume spike to $23.3 million yesterday. The sevenfold growth is driven by demand for the freshly issued Compound governance token, COMP, which has surged to a $774.3 million market cap since first being distributed on Monday. Traders are swapping stablecoins, searching for higher interest rates, on Curve to put back into Compound.  

Venezuela Is a Testing Ground for Digital Dollarization (and Zelle Doesn’t Like It)
J.P. Koning, a CoinDesk columnist and author of the Moneyness blog, digs into campaigns in Venezuela to repurpose digital U.S. dollars to combat hyperinflation in the nation’s local currency, using Zelle and other payments apps, and Zelle’s attempts – in turn – to limit the activity. “In the future, U.S. dollar stablecoins such as tether, paxos, or USD coin could be recruited by nations suffering from hyperinflation,” Koning said. “Unlike Zelle, these privately issued blockchain-based versions of the U.S. dollar do not put many limitations on usage.” 

From Moral Hazard to Business as Usual
Jesse Felder, a leading independent financial analyst, shares thoughts on the “Robinhood rally,” Fed policy and why Modern Monetary Theory is already here.

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Crypto startup CurioInvest is selling tokens for a rare supercar valued with a $1.1 million hard cap.

The tokens represent a limited-edition 2015 Ferrari F12 TDF, a supercar that in 2016 was valued around $450,000, but which was listed at auction in Los Angeles for more than $1.5 million just eight months later.

Rey Fernando Verboonen, CurioInvest’s co-founder, said that’s not surprising.

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“When you look at these assets, you see that rare collectibles have outperformed the S&P 500,” he told CoinDesk. “Classic cars and hypercars [a step above supercars] have performed the best.”

Since the start of 2010, the Ferrari Index – an average of the 13 most collectible Ferraris from the 1950s and 1970s – increased by over 233%. During that same timeframe, the S&P 500 – which included its longest bull run in history – increased 173%. While infinitesimal compared to the stock market, Verboonen says it shows supercars are a viable investment option.

There are still a total of 440,000 tokens available for investors, at an asking price of a dollar. The token is built on Ethereum’s ERC-20 standard, which Verboonen says will mean it can practically be traded on any exchange – CurioInvest has already partnered with Huobi – which will help facilitate a secondary market for the coins.

See also: Seychelles’ Stock Exchange Will List Ethereum Tokens Representing Supercars

Related: Andreessen Horowitz Forecasts Fourth Crypto Bull Cycle

Based in Liechtenstein, CurioInvest’s prospectus was given the nod by the country’s chief financial regulator. While it has hosted other supercar token sales before, Verboonen stresses this will be the first one open to European retail investors. U.S investors will not be able to participate.

Verboonen confirmed a private placement, which was only open to institutional investors, had already filled 60% of the total $1.1 million hard cap.

The token is set up as a bond, according to the prospectus shared with CoinDesk. Each token represents a share of whatever the car’s ultimate sale price. During the first five years, CurioInvest will only consider offers at a minimum 20% above the $1.023 million present valuation. If, after that time, the car still hasn’t been sold, it will go at auction to the highest bidder.

When the Ferrari is sold, the proceeds will be divvied up to token holders after costs, which Verboon estimates will be range between 25,000 and 50,000 CHF (~$26,000 – $52,700), assuming it’s held for the entire five-year cycle.

If the car is sold at a profit, CurioInvest takes a hefty 20% commission.

See also: Liechtenstein Regulators Approve Ethereum-Based Real Estate Fund

In the meantime, the Ferrari has been stored in a secure garage somewhere outside Stuttgart, Germany, where it will be kept in mint condition. “The conditions are very specific,” Verboonen said. “There’s not much dust in there and there’s climate control and [the cars] are handled with gloves.”

The token sale began on Monday and will continue until July 15, or until the $1.1 million hard cap is reached.

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Crypto exchange Coinbase is hoping to streamline how it adds new tokens to its platform. 

The San Francisco-based exchange rolled out a new open-source technical framework for asset listings Wednesday, making it easier for the company to integrate tokens it wants to add by giving developers a blueprint for what their projects need to provide.

Dubbed Rosetta, the release began as a project aimed at helping Coinbase more quickly add assets to its platform, product manager Nemil Dalal told CoinDesk.

Related: Kraken Launches Crypto Exchange Service in Australia

“Each blockchain has a node software. They’re all custom and they all have different APIs that you use, and so integration to them can often be very customized, [require] a lot of manual effort,” he said. “So what Coinbase built was some type of middleware that we use to be able to integrate with these blockchains.” 

The team is now open sourcing this technical framework for projects hoping to list their tokens on the exchange.

“The goal is to dramatically decrease the time it takes to bring a blockchain onto Coinbase,” he said.

See also: Cryptos on Coinbase’s New Exploratory List See Prices Jump 17% on Average

Related: Market Wrap: Stocks Rally on Possible Stimulus but Bitcoin Is Flat at $9.5K

To be clear, this framework is only applicable to blockchains that have never been integrated with Coinbase. Dalal said tokens that, for example, were built on the ERC-20 standard on Ethereum would not benefit from the project – since Coinbase has already onboarded Ethereum and ERC20 tokens, it already has the technical infrastructure to support new tokens. 

Nor does the framework let new projects bypass Coinbase’s other non-technical requirements for listing, which include security and legal reviews, among other factors. 

“None of that changes because those are our requirements based on our regulatory relationships, compliance relationships,” Dalal said.

Rosetta, which Coinbase began working on five or six months ago, is “middleware,” meaning it is a piece of software that sits between Coinbase’s own systems and the blockchain it’s working with. When implemented, its API will query the blockchain in question, checking on, for example, the number of tokens in a block. 

Dalal said knowing the balance for a given address with a block height is one of Coinbase’s requirements for security purposes. If a customer wants to withdraw some funds, the exchange needs to know exactly how many tokens it has and which block they’re from.

Jai Prasad, a product manager at Coinbase, told CoinDesk that this also necessary for the customer experience. 

“If you want to look up your balance on Coinbase’s app … the node API should return [your] balance at this block is 100 bitcoin,” he said. “Some nodes don’t do that, so nodes don’t give you the block number. You could look up your balance and it could show you a wrong balance, it could show 99 bitcoin but actually at this block it’s 100, so it’s pretty important for users and this is a design decision we’ve learned our users want.”

See also: Coinbase’s Ex-Lead Lawyer Sold $4.6M in Stock to Head US Banking Watchdog

Until this point, blockchains being onboarded to the Coinbase platform had to implement these types of features manually, which meant it could take months between the exchange approving a token listing and actually listing it. In theory, the amount of time can be reduced to just minutes or days.

“Coinbase’s team created this tooling that you are able to basically sync the whole blockchain and verify that every operation you are reporting is actually there and it’s consistent, which are kind of really important things when you want to [list something] on a custodian solution,” said Mariano Cortesi, an engineer with Celo, one of the teams which tested Rosetta.

He said the challenge for his team was ensuring that the important details Coinbase requires were all recorded, including when a balance changed. 

While Rosetta’s primary aim is to help Coinbase more easily onboard tokens to its own platform, Dalal said it can potentially see adoption beyond just this one use case.

If other exchanges and platforms start adopting and contributing to Rosetta’s code, it could theoretically unite the broader crypto ecosystem, he said.

“One thing that blockchains have come to us with is, ‘Look we have to talk to so many different exchanges, and they all have custom integration requirements,’” he said. “The power of something like this is that it makes it easier for us to talk to a bunch of different exchanges.”

Widespread adoption of Rosetta could spur interoperability, allowing devs to build similar tools that work across different blockchains.

This could extend to block explorers, Dalal said. 

“Obviously there’s very few asset-agnostic block explorers, ones that work across different blockchains,” he said. 

See also: Coinbase Outlines Tech Plan to Help Avert Future Outages

Now, Coinbase is putting Rosetta out to the broader community under an Apache license in the hopes that other exchanges will “kick the tires on it.”

“All the code is available, it can be forked, it can be edited, so if there’s another exchange or another project that wants to put their code on it they can do that and also suggest their own changes,” Dalal said. “In a perfect world there are people building on top.”

A handful of projects have already begun testing the new tools, including Filecoin, Celo, Near, Oasis, Coda, Ontology, Kadena, Handshake, Blockstack and Sia, Coinbase said in a blog post Wednesday. 

Kadena co-founder Will Martino said Rosetta was flexible enough for his multichain network (Kadena uses sharded chains to boost scalability) to integrate, despite the Kadena protocol’s unique features.

“This levels the playing field for projects and modernizes the exchange industry. Large, traditional, ‘old boys’ club’ VCs will likely look unfavorably upon Rosetta because it diminishes their perceived importance with listings while simultaneously maximizing the value of a project’s technical capabilities,” he said in an emailed statement. 

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China’s second-largest online retailer, JD.com, is teaming with blockchain privacy platform ARPA to protect the financial data of major clients.

Specifically, the data platform for the firm’s subsidiary JD Digits (formerly JD Finance) will integrate with ARPA’s blockchain-based network, which uses technology known as secure multi-party computation (sMPC). JD Digits was formed to help other companies modernize with cutting-edge technologies like AI and blockchain.

Under the partnership, the sMPC technology will be utilized “at scale” to offer a range of privacy features for financial companies working with JD Digits, ARPA said in an announcement Monday.

Related: From Australia to Norway, Contact Tracing Is Struggling to Meet Expectations

“We believe privacy is the cornerstone of finance and business. With ARPA privacy-preserving computation, JD’s institutional clients will have peace of mind that their data is kept encrypted all the way during the analysis,” said Cao Yi, director of new media at JD Digits.

See also: The Problem With Money Is ‘Too Much Privacy,’ Says Ex-US Treasury Secretary Summers

“One of the use cases for sMPC is the Value at Risk model (VaR). Financial institutions use the VaR model to measure the overall risk exposure in stocks and bonds,” Yi explained. “They want to keep the data of their positions private, the model parameters of fintech companies also need to be kept hidden.”

The privacy tech was borne out of a paper written in 1982 by Yao C. and enables multiple parties to undergo an exchange of data without revealing any definitive information.

Related: Crypto Long & Short: Cryptocurrency Markets May Be Decentralized but They’re Still Accountable

An example use case for sMPC is known as “The Millionaire Problem,” first theorized by Yao. It details two individuals wanting to find out which one is more wealthy without revealing their net worth to each other.

sMPC technology provides data protection in such a case and has been touted as a means of moving past single private keys for cryptocurrencies.

Also read: JD.com’s Finance Arm to Issue Asset-Backed Securities on a Blockchain

“Privacy-preserving computation is gradually being adopted and applied to financial and insurance risk control, OTC price consensus, asset management, digital marketing, and other fields,” said Felix Xu, co-founder and CEO of ARPA.

JD.com previously launched a blockchain-as-a-service platform alongside its first app – one that digitally tracked corporate invoices for one of the largest publicly traded insurers in China, Pacific Insurance, back in August 2018.

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A slew of investors is backing bitcoin brokerage River Financial to the tune of $5.7 million.

Announced Wednesday, the San Francisco-based startup has closed a seed round joined by Polychain Capital, Slow Ventures, Castle Island Ventures, DG Lab Fund, Cygni, Pfeffer Capital and IDEO CoLab Ventures, according to a release from the firm. Several individual investors participated as well, said a River spokesman, including Steve Lee of Square Crypto.

Launched in 2019, River’s first funding round adds its name to a growing body of cryptocurrency asset managers, differentiated by focusing exclusively on the first and largest cryptocurrency by market capitalization.

Related: Crypto Long & Short: Innovation Cycles, Crypto Venture Funds and Institutional Investors

Bitcoin is the heart and soul of the operation, said River co-founder and CEO Alex Leishman in a phone interview with CoinDesk. Leishman, who left Polychain to start the venture, said his fund wants to go in a “different direction” than Coinbase or other exchanges, hinting at criticisms leveled at retail exchanges for propping up little-known alternative cryptocurrencies.

“We do bitcoin better than any other financial institution,” Leishman said.

The fresh capital will be used for scaling River, particularly as it seeks licensing across the United States. The firm currently offers a spot market, cold-storage solution and private client product intended for family offices or high-net-worth individuals in 15 states with 25 more planned for this summer, Leishman said.

“We see River Financial as bridging the gap between traditional finance and Bitcoin,” Polychain Capital founder Olaf Carlson-Wee said in a statement. “The evolution of finance is only happening faster in the wake of the current global economic crisis, which has illuminated holes within traditional financial systems that can potentially be filled by Bitcoin.”

Related: Pantera Capital Crypto Hedge Funds Are Losing Double Digits, but Bitcoin Fund Is Up 10,000% to Date

Given macroeconomic uncertainties, River – like many other bitcoin firms – entered into 2020 strongly. The firm’s volume has increased 80% month over month since January and its client count has doubled over the same time period, Leishman said. The startup is eyeing profitability by year’s end, he added. 

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

Notably, River’s consumer composition consists of a demographic most would likely not suspect: baby boomers. That generation makes up 77% of the firm’s market to date, Leishman said. Investors over 55 years of age are looking for a hedge against inflation given erratic U.S. Federal Reserve monetary policy in response to the COVID-19 pandemic.

Just like boomers getting into the bitcoin game late, River’s entrance into the bitcoin asset-manager space has led to underrated pay-offs, too. 

Lightning Labs co-founder and CEO Elizabeth Stark – an adviser to the firm – told CoinDesk that River has embraced novel bitcoin tech that has helped the firm scale more quickly. 

Stark pointed to River’s integration with the Lightning Network as an example and said Leishman remains “at the forefront of bitcoin technology.” River also retains Blockstream co-founder Jonathan Wilkins as chief security officer (CSO), a January hire.

Read more: Blockstream Co-Founder Joins Bitcoin-Only Startup River Financial

“There’s still a lot of Bitcoin legacy tech [in the market]. River is Bitcoin future tech,” Stark said.

Stark said first movers in the cryptocurrency market such as exchanges have often failed to implement scaling techniques, such as segregated witness (SegWit) or batching. These technical upgrades keep the network healthy, but also aid in the average user’s purchase experience.

Not only that, but Stark said Leishman has a customer service habit you’d struggle to find elsewhere: Personal phone check-ins with normal users.

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The World Economic Forum (WEF) is working with the Colombian government to see if blockchain-based transparency can help prevent a hotspot for corruption, which happens in the process of bidding for high-value contracts to provide public goods and services.

WEF partnered with the Inter-American Development Bank (IDB) and the Office of the Inspector General of Colombia to develop a proof-of-concept (PoC) using the Ethereum public blockchain.

The aim of the project is to apply a high level of transparency to the procurement corruption use case in the context of the country’s system of government contracting. The PoC will be piloted in a live procurement auction for goods and services supplied to Colombia’s national university later this year.

Related: Ethereum Logged Its Busiest Week on Record

Public procurement invites corruption because it involves close, repeated interaction between government officials and the private sector, and vast sums of money. According to the Organization for Economic Co-operation and Development (OECD), governments collectively spend approximately $9.5 trillion on procurement contracts worldwide, and up to 30% of that is lost due to corruption.

“Originally, we were very open in terms of which division of the IG [Office of the Inspector General of Colombia] we would be working directly with,” said Sheila Warren, the WEF’s head of blockchain and data policy. “Most of the feedback we got from within the country after workshops that we ran there was that procurement would be the most conducive system to having a blockchain within it.”

These days, most countries operate e-procurement platforms, so the process of making tenders to build roads or schools, followed by the registration of vendors to bid for these contracts, is already digital. It also often involves some level of encryption so that the auction process is blinded to prevent collusion.  

So what does a blockchain bring to the table? 

Related: Mining Pools Distribute $2.4M Transaction Fee After Flood of Phoney Refund Claims [Updated]

The most conclusive advantage is the addition of a shared, immutable set of records that cannot be censored or altered, even by someone in the government, said Ashley Lannquist, the WEF’s project lead for blockchain and digital currency.

“I think the strongest value proposition is that you could have high confidence that no records are being deleted, no vendor bids are being denied. This came out as a key value-add and, of course, it comes the most from permissionless blockchains like Ethereum,” said Lannquist.

There were other blockchain benefits to be had, Lannquist said, such as automating and timestamping the periods for which bids would be evaluated and also the time slots for public comments to be made.

However, transparency of the full broadcast variety found on Ethereum can be a double-edged sword, at least when it comes to the majority of enterprise uses. For instance, the laws around procurement in Colombia require that vendors bidding on contracts must be anonymous, not pseudonymous.

“It’s a requirement of the law in Colombia that during the whole process there is anonymity,” said Ximena Lombana of the Office of the Inspector General of Colombia. “So companies are used to it and they know that it has to be this way. It depends on the law of the country; it could be different in other countries. But generally, it’s anonymous bidding in blind auctions.”

As such, WEF concluded the process of holding accounts on Ethereum, such that participants might have to repeatedly transact using crypto as gas, could possibly leak information relatable to the identity of participants. 

“The public, permissionless Ethereum blockchain, employed in the Transparency Project PoC, creates such challenges as vendors are required to send transaction fees with their bid offers,” the report states. “Because all system transactions are publicly viewable, steps must be taken so this transaction fee does not reveal the submitting vendor’s identity.”

This would not be the first time an enterprise user had a problem because they had to mess around with crypto to pay for gas on public Ethereum. Spanish bank BBVA ran into difficulties when it wanted to use the Ethereum mainnet like a public notary service for loans, but had to use a testnet in the end because European banks are forbidden to hold crypto.

The conclusion reached by the WEF is it might make more sense to use a “hybrid” blockchain. There are enterprise variations of Ethereum such as Hyperledger Besu that combine permissioning with access to the public mainnet. Another option could be Baseline Protocol, which uses the public chain to compare and verify purchase orders. 

“We thought of the pairing of public Ethereum with Hyperledger Fabric, for instance,” said Lannquist. “Some transactions happen on either one or the other, and you do want public [Ethereum] for the permanent record keeping.”

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Bitcoin’s price rally has stalled since the cryptocurrency underwent its third halving on May 11, but investor confidence in the cryptocurrency’s long-term prospects remains strong, data shows.

The halving event on May 11 saw the mining reward per block on bitcoin’s blockchain cut from 12.5 BTC to 6.25. The event was expected by many to accelerate the price uptrend from the low of $3,867 seen in March.

So far, though, the leading cryptocurrency by market value has failed to pick up a strong bid and continues to trade below $10,000 – a level seen two days ahead of the halving. Even so, larger investors, often called whales, continue to accumulate coins, as seen below.

Related: Ex-Bitcoin Dev Settles Defamation Suit Over Sex Assault Claims

As of Tuesday, the number of bitcoin whales, as represented by the tally of unique entities holding at least 1,000 coins, was 1,840. That’s up nearly 2% from the level of 1,811 observed on May 1, according to data from blockchain analytics firm Glassnode. The metric clocked a recent high of 1,844 on Monday, a level last seen in November 2017. 

The steady accumulation since the halving suggests investor confidence in the long-term bullish narrative surrounding bitcoin. 

Most analysts expect the cryptocurrency to rise sharply over the next 12 months on the back of the unprecedented fiscal and monetary stimulus delivered by authorities across the globe in the past three months. Bloomberg analysts said they expect bitcoin to challenge the record high of $20,000 by the end of 2020 on increased institutional participation.

For the whale metric, an entity refers to a cluster of addresses that are controlled by the same network entity and are estimated through Glassnode’s proprietary clustering algorithms. 

Related: Market Wrap: Stocks Rally on Possible Stimulus but Bitcoin Is Flat at $9.5K

See also: Bitcoin Whale Addresses Hit Highest Number Since August 2019

Glassnode considers it a more reliable indicator of investor participation – the number of individuals or businesses using the network – compared to the traditional approach, which considers the number of addresses on the network as a proxy to the number of users/holders.

The latter method is weak because a single user can hold coins in multiple addresses, the firm says. The same is true for exchange addresses, which hold coins belonging to more than one individual. 

Bitcoin’s current period in the doldrums could end with a bullish breakout above $10,000, given the steady accumulation by investors and other factors. 

“We are bullish in the medium term with a target of $12,000, said Matthew Dibb, co-founder of Stack, a provider of cryptocurrency trackers and index funds. Dibb, however, believes the move to $12,000 would be preceded by a few weeks of erratic trading. 

That possibility shouldn’t be ruled out, as bitcoin’s correlation with the equity markets has strengthened over the past week. The cryptocurrency fell sharply twice in the last week as stocks slipped over renewed coronavirus concerns. 

“Bitcoin is currently trading as a ‘risk asset’ and will likely be subject to continued volatility as further US economic data is released in the coming days,” said Dibb. 

While the immediate bull target is the psychological level of $10,000, support is seen at $8,900 (Monday’s low). A violation there would expose the next support lined up at $8,000.

Disclosure: The author holds no cryptocurrency at the time of writing.

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This week’s debut of live trading in the autonomous lender Compound’s digital token has provided a new data point on just how frenzied the speculation has become over the future of decentralized finance (DeFi). 

Compound, started in 2017, is the second-biggest decentralized lender, with the equivalent of $163.1 million locked in the protocol, behind larger rival Maker’s $487 million, according to the data provider DeFi Pulse.

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here.

Related: COMP’s Sudden Growth Has Swamped a DEX Dealing Only in Stablecoins

But a flurry of bullish trading in Compound’s new COMP tokens, released Monday, has given the project a fully diluted, implied market capitalization of nearly $785 million, well above Maker’s $546.2 million, according to another website, DeFi Market Cap.

Compound’s outsize market cap, relative to the total value locked in the protocol, “may signal the rally went too far,” The Defiant, a newsletter tracking the DeFi sector, wrote on Tuesday.  

The COMP digital coins are known as “governance tokens” because they give holders a right to vote on decisions affecting the management of the protocol, such as technical upgrades or whether to incorporate new assets onto the platform. Eventually, according to cryptocurrency research firm Messari, holders might also be able to get a share of fees paid into the system or vote to buy back tokens — similar to stock buybacks. 

Over the next four years, some 4.2 million of the tokens will be awarded to users, as part of a pool of 10 million tokens overall that also covers distributions to executives, employees and early investors such as the venture capital firm Andreesen Horowitz. 

Related: Ethereum Logged Its Busiest Week on Record

Trading in the tokens started Monday, when the project began distributing COMP to users of the system, and as of Tuesday they were changing hands at a price of $78.56 each, according to DeFi Market Cap. 

But so far, according to a Compound website, only 3,814 of the tokens have been distributed – worth about $300,000 at the current price. So the implied market cap of $785 million is based on trading in that limited set of tokens. 

Prices for the tokens had no preset value when they were released, and Compound Founder Robert Leshner, 35, said Tuesday in a phone interview that he really had no idea what to expect from the first few days of trading. 

A market in the COMP tokens has sprung up on Uniswap, an automated liquidity protocol, and on the digital-asset exchanges MXC, Hoo and Hotbit, according to Leshner. 

“We saw markets emerge for the COMP token and the price shoot up dramatically,” he said. “Because the asset was so new, there was a bit of a speculative fervor.”

CoinDesk’s Brady Dale reported Tuesday that Curve, an automated market maker, saw its 24-hour trading volume jump seven-fold, driven by demand for COMP tokens. 

There’s even an application on the website InstaDapp devoted to helping users “Maximize $COMP Mining.”

“This recipe is focused on maximizing your COMP token returns,” the site reads. 

The distribution of the governance tokens represents the next step in San Francisco-based Compound’s push to create a fully decentralized lending platform, which allows users to borrow assets contributed by other users, at a market-based interest rate. Leshner described it as a “money market for crypto assets.” 

“The distribution will be DeFi’s best case study of `progressive decentralization’ to date,” Messari wrote this week in a report on its website.

Over the past month, Compound (the company) relinquished control over the DeFi project to its 22,000 users, according to Leshner. The COMP tokens were put into a “reservoir contract” that will distribute them over the next four years to users, in proportion to their usage. 

“People have sort of watched this underlying protocol grow substantially over the years, and yesterday was day one that the public had a chance to participate,” Leshner said. “We were very deliberate about not setting expectations because we appreciate how uncertain crypto can be.”

The pricing of the tokens provides a glimpse of the potential payday for executives and investors in the project, who will retain tokens now worth hundreds of millions of dollars. 

Beyond the 4.2 million tokens allocated to users, some 2.4 million have been distributed to shareholders in Compound Labs Inc., which created the protocol, according to a Medium post. Investors include Andreesen Horowitz, Polychain Capital, Bain Capital Ventures, Coinbase and Paradigm Capital. 

Another 2.2 million are allocated to founders and team members, subject to a four-year vesting schedule, according to the Medium post. The remainder are reserved for community members and future hires.  

Compound Labs, the company, retains none of its COMP tokens, and currently has no revenue to speak of, said Leshner. It will now turn to other projects that could bring future revenue, he said, declining to describe them.    

Leshner said he isn’t worried that regulators might deem the token to be an improper securities sale since the company no longer has a role in building or managing the protocol. 

According to Leshner, the venture capital firms also are subject to a vesting period. That means they can’t immediately cash in on the bonanza.

But the point of the token distribution is that the project is no longer controlled by the founding company. 

“It’s sort of like this self-organizing anarchy,” he said. “There’s no centralized coordination of the token holders. It’s going to be left entirely to the community to figure out how to govern the protocol.”

In the meantime, traders in COMP tokens might need to put tighter controls on their own animal spirits.

BTC: Price: $9,488 (BPI) | 24-Hr High: $9,595 | 24-Hr Low: $9,421

Trend: Bitcoin’s ongoing sideways crawl may be nearing an end, with a key technical indicator reporting the lowest level of volatility in five months. 

The leading cryptocurrency has been restricted largely to a range of $9,000–$10,000 since May 28, except for Monday’s brief dip to $8,900, according to CoinDesk’s Bitcoin Price Index. 

As a result, the Bollinger bands width, a price volatility gauge, has declined to 0.09 – its lowest since Jan. 6. Bollinger bands are volatility bands placed two standard deviations above and below the 20-day moving average (MA) of price. Meanwhile, the Bollinger band width is calculated by dividing the spread between the volatility bands by the 20-day MA. 

In the past, bitcoin has witnessed big moves in either direction following a decline in the metric to or below 0.10.

For instance, Bollinger bandwidth dropped to 0.06 a week before BTC broke into a bull market with a high-volume move to $5,000 in April 2019. Similarly, bandwidth declined to 0.09 in early January, following which bitcoin rose from $7,500 to $9,000 in just two weeks. 

If history is guide, bitcoin could soon chart a notable upward or downward move, marking an end of the price consolidation.

Further, price action seen in the first two trading days of the week is signaling scope for a bullish move. Bitcoin rose by 1% on Tuesday, validating the strong dip demand, or seller exhaustion, signaled by a long lower wick attached to Monday’s chart candle and confirming a bullish revival. 

Put simply, the big move implied by the volatility squeeze could happen to the higher side. Key resistance levels are located at $10,000 (psychological hurdle) and $10,500 (February high).

Meanwhile, support is located at $8,900. A breach there would confirm a short-term bearish reversal and open the doors to the 200-day average at $8,219.

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Binance wants its new U.K. exchange platform to become a one-stop-shop for British and European institutions interested in investing in the digital asset class.

Per a report by Reuters on Wednesday, the firm said its new U.K. crypto exchange would offer a local fiat onramp into crypto, in both pound sterling and euros. Like its other fiat-to-crypto platforms, such as Binance Uganda, Binance Singapore, and Binance US, the new U.K. platform will launch with something like 65 digital assets listed.

But Binance U.K., which Reuters says will be regulated by the Financial Conduct Authority (FCA), the U.K.’s chief financial watchdog, will target a more traditional crowd. Binance U.K.’s new director, Teana Baker-Taylor, who only joined the exchange group last month, had previously worked as HSBC’s global strategy head.

Related: Custody Battle Pits Institutional Boomers Against Crypto Upstarts

As part of her role, Baker-Taylor is responsible for spearheading the exchange’s expansion across Europe. “Binance U.K. will also serve European customers,” a spokesperson told CoinDesk. “The platform caters to both the U.K. and European markets.”

The new U.K. platform is expected to launch sometime this summer.

See also: Number of Institutions Buying Crypto Futures Doubled in 2020: Fidelity Report

Like other crypto exchanges, Binance has experienced rising interest from institutional investors. The exchange told Decrypt in May, for instance, that the number of new institutional clients onboarded in Q1 2020 was nearly 50% higher than the preceding quarter.

Related: Bakkt, Galaxy Digital to Offer Bitcoin Trading, Custody Solution for Institutions

“As crypto services mature and evolve, we’re able to create new options to engage and capture interest from a wider audience with varying risk appetites, such as products that earn a yield for participation, like staking and passive savings,” Baker-Taylor said to Reuters.

Binance U.K. is under the FCA’s supervision as a cryptoasset exchange provider. A spokesperson said the platform will only do spot trades.

Binance has been operating a similar trading platform on the Channel island of Jersey, a British dependency, since January 2019. Like the U.K. platform, it allows users to buy and sell cryptocurrencies against the pound and the euro.

The spokesperson told CoinDesk that the Jersey platform will continue to operate independently of Binance U.K.

UPDATE (June 17, 12:50 UTC): This article has been updated with additional information from Binance over how their new U.K. entity would be regulated by the FCA.

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Binance wants its new U.K. trading platform to become a one-stop-shop for British and European institutions interested in investing in the digital asset class.

Per a report by Reuters on Wednesday, Binance said its new U.K. crypto exchange would offer a local fiat onramp into crypto, in both pound sterling and euros. Like Binance’s other fiat-to-crypto platforms, such as Binance Uganda, Binance Singapore, and Binance US, the new Binance U.K. platform will launch with something like 65 digital assets listed.

But the U.K. platform, which Reuters says will be regulated by the Financial Conduct Authority (FCA), the U.K.’s chief financial watchdog, will target a more traditional crowd. Binance U.K.’s new director, Teana Baker-Taylor, who only joined the exchange group last month, had previously worked as HSBC’s global strategy head.

Related: Custody Battle Pits Institutional Boomers Against Crypto Upstarts

As part of her role, Baker-Taylor is responsible for spearheading Binance’s expansion across Europe. “Binance U.K. will also serve European customers,” a spokesperson told CoinDesk. “The platform caters to both the U.K. and European markets.”

Binance U.K. is expected to launch sometime this summer.

See also: Number of Institutions Buying Crypto Futures Doubled in 2020: Fidelity Report

Like other crypto exchanges, Binance has experienced rising interest from institutional investors. The exchange told Decrypt in May, for instance, that the number of new institutional clients onboarded in Q1 2020 was nearly 50% higher than the preceding quarter.

Related: Bakkt, Galaxy Digital to Offer Bitcoin Trading, Custody Solution for Institutions

“As crypto services mature and evolve, we’re able to create new options to engage and capture interest from a wider audience with varying risk appetites, such as products that earn a yield for participation, like staking and passive savings,” Baker-Taylor said to Reuters.

Binance has been operating a similar trading platform on the Channel island of Jersey, a British dependency, since January 2019. Like the U.K. platform, it allows users to buy and sell cryptocurrencies against the pound and the euro.

The spokesperson told CoinDesk that the Jersey platform will continue to operate independently of Binance U.K.

• What the Stock Market’s ‘Robinhood Rally’ Means for Bitcoin
• Number of Institutions Buying Crypto Futures Doubled in 2020: Fidelity Report

The Public Debt Management Office (PDMO) within Thailand’s Ministry of Finance has announced it plans to sell 200 million baht ($6.42 million) in savings bonds using a blockchain-based e-wallet.  

In a statement released on its website Tuesday, the ministry said the bonds carry an extremely low face value of 1 baht ($0.032) each and would be sold through the state-owned Krung Thai Bank’s blockchain wallet. 

The statement said distributing the bonds through the blockchain e-wallet was a step towards increasing the efficiency of the government system and an investment in the true digital economy. According to a report by the local media outlet Bangkok Post, using blockchain technology allowed the debt office to reduce the face value of the bonds. 

Related: Facebook’s Calibra Rebrands to Novi, Details Wallet Tie-Up With WhatsApp

“With the blockchain system, PDMO can break up the amount of the savings bond face value to as low as 1 baht from the regular 1,000 baht,” said PDMO Director General Patricia Mongkhonvanit to the Bangkok Post. 

The Ministry of finance’s statement also noted that the 200 million baht bond issue was a pilot project to further financial inclusion by making it easier for people to subscribe to government issued bonds. The bonds carry an interest rate of 1.70% per annum and a maturity period of three years. 

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The Stellar community is gearing up to vote on a raft of new network updates that will give exchanges greater control over how digital assets are traded on-chain.

In a vote planned for later this week, anyone running a Stellar node will be able to decide on whether to pass a series of proposed updates – known collectively as “Protocol 13” – that will create a new authorization function for entities, such as exchanges, to enforce local regulations.

“Often, issuers of regulated assets want customers to be able to trade their assets, but they also need to exert a high level of control over who can hold them, how much they can hold and under what conditions they can sell or buy more,” reads a post from the Stellar Development Foundation (SDF), which developed and formally proposed the protocol update earlier this year.

Related: Mauritius Releases Guidance for Regulated Security Token Offerings

Known as “fine-grained control,” the new update means entities such as exchanges can set specific conditions for each and every digital asset traded on their order books. While Stellar already allows entities to prevent an account from purchasing a particular asset, the way it works presently is it also cancels any existing otherwise legitimate orders that account may have already made but haven’t been settled.

See also: Stellar Throws SatoshiPay a $550K Lifeline After Coronavirus Knocks Out Series A

“Protocol 13 introduces a new flag that allows you to revoke authorization while maintaining orders on the books, which makes it easier to tokenize regulated assets like securities,” reads the post:

“With fine-grained asset control, an issuer of a regulated asset can set the asset to require the new kind of authorization … and when a user wants to make a payment or new offer, the issuer can check to see if it’s allowed given regulation.”

Related: Tokensoft Teams With Signature Bank to Launch Real Estate Security Token Platform

The update might make it easier for security tokens to operate in the U.S.

Stellar-based exchanges can already block investors from prohibited countries, such as Iran or North Korea, but they could now fulfill other regulatory requirements. An exchange could prevent an investor from purchasing more than 5% of a company’s total stock until the investor filed a Schedule 13(D) Disclosure with the Securities and Exchange Commission (SEC).

Other aspects of Protocol 13 are designed to make operating an exchange easier and more flexible. A new “multiplexed account” will allow custodial services to create sub-accounts for their clients, allowing them to separate out and distinguish balances when all are held in a single address.

There will also be a new “fee bump” function, which is designed to enable businesses to quickly cover their user’s transaction fees as well as increase fees on low-value payments so they can settle during periods of high network activity.

See also: US Regulator Clears Security Token Trading System to Launch

The protocol upgrade comes a few months after SDF made an investment, then worth $715,000, into DSTOQ – a smartphone-based trading app. In April, a German company called Wevest, which focuses on providing financing for small businesses, announced it would use Stellar to build a platform for security token offerings (STOs).

Just this week, Mauritius released a regulatory framework for security tokens for businesses interested in setting up a legitimate STO platform or security token trading system on the island.

CoinDesk reached out to SDF for comment and had not received a response at press time.

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Kraken, one of the world’s largest exchanges by trade volume, is extending its services down under.

The California-headquartered firm announced on Wednesday that it would be opening operations in Sydney, Australia, with local clients able to fund their accounts in Australian dollars (AUD). The exchange said it would offer instant funding to those users who make deposits via Okso and PayID-enabled Australian bank accounts.

The new addition marks the seventh national currency in Kraken’s fiat on-ramps, joining the U.S. dollar (USD), Canadian dollar (CAD), Swiss franc (CHF), the euro (EUR), British pound (GBP) and Japanese yen (JPY).

Related: OKEx Taps Paxful to Provide New Fiat-to-Crypto On-Ramps

See also: ASX Accused of Trying to ‘Crush’ Rival Blockchain Trading System

“We’re thrilled to be launching Kraken Australia today at a time when Australian investors
increasingly turn toward cryptocurrencies to diversify their portfolios,” said Jonathon Miller, managing director of Kraken Australia.

Users of Kraken Australia will be able to execute trades in AUD against popular cryptocurrencies including bitcoin (BTC) ether (ETH), litecoin (LTC), XRP (XRP), bitcoin cash (BCH) and the tether (USDT) stablecoin. General users based outside the U.S. will also be able to trade AUD against USD, EUR and JPY.

Co-founded by Jesse Powell in 2011, Kraken established itself as one of the first major exchanges in the U.S. and currently offers the ability to trade in retail, spot, derivatives over-the-counter (OTC), margin and indices markets.

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According to Miller, retail investment in crypto has been on the rise with a record number of signups at Kraken since March. This has led the company to ramp up its employee base with 200 new workers to meet client demand.

Kraken acquired one of Australia’s longest-running cryptocurrency exchanges, Bit Trade, in January 2020. Its CEO, Miller, was appointed to lead Kraken’s operations in the nation at the time.

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The chief financial watchdog of Mauritius, an island-state off the coast of Madagascar, has created a regulatory regime for a full-fledged security token ecosystem in the country.

On Monday, the Mauritian Financial Services Commission (FSC) announced a framework specifically for security tokens. Together with a 15-page guidance document, the regulator said this was the start of a new licensing regime to enable fully regulated security token trading systems in the country.

Essentially, the new regime allows a new security token trading systems to become eligible for an FSC license. So far, it effectively authorizes a business to put a security token up for sale in an offering, an “STO,” as well as operate a trading house in the jurisdiction.

Related: Stellar Proposes Changes Allowing Exchanges to Better Enforce Regulations

In the pipeline for 18 months, an FSC spokesperson said the guidance was the start of recognizing security tokens, and the broader cryptocurrency bucket, as an asset class in their own right.

“This was crafted with full collaboration between the industry and the regulator,” said FSC CEO Thakoor Dhanesswurnath. “We already have a growing interest in these specific licenses and are expecting to receive several applications in the upcoming months.”

The spokesperson said further regulation regarding security token exchanges would be released sometime later this year.

See also: Mauritius Central Banker Confirms Island’s Digital Currency Plans

Related: Tokensoft Teams With Signature Bank to Launch Real Estate Security Token Platform

But there are a handful of requirements. License holders will have to sign up to a strict strict anti-money laundering (AML) and countering the finance of terrorism (CFT) requirements. Like traditional exchanges, they will be obliged to publish trading data daily and submit it for review by FSC.

A licensed security token trading system will also have to keep a minimum of 35 million Mauritian rupees (~$880,000) in fiat currency ready. They will need to engage a registered custodian, both for digital assets and for any fiat currency taken as part of the business.

The spokesperson said the new licensing regime will turn Mauritius, which has long presented itself as a crypto-friendly jurisdiction, into a regional hub for security token trading in both Africa as well as in nearby India.

See also: US Regulator Clears Security Token Trading System to Launch

Without the same legacy systems that have pinned down similar technological innovation in the developed world, the country of just over 1.2 million people, hopes it can gain an edge on some of the larger, more lumbering jurisdictions.

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