CoinDesk Crypto

The technical firm behind privacy cryptocurrency zcash (ZEC) is transitioning to a non-profit, called the Bootstrap Project, after a majority of shareholders elected to donate their holdings in the company.

“A majority of the investors and owners have informed us of their generous willingness to do this in support of our shared mission to empower everyone with economic freedom,” the Electric Coin Company (ECC) said in a blog post.

The stockholders’ donation comes as international governments have looked increasingly askance at encryption-backed technologies such as privacy coins and wallets. 

Related: Pantera Capital’s First Venture Fund Did Pretty Well. Its Second Fund? Not So Much

The ECC will continue operating under the same business structure, with Bootstrap acting as an umbrella firm of sorts. Bootstrap will be helmed, at least initially, by the ECC’s board of directors, zcash creator and ECC CEO Zooko Wilcox said in a Friday phone interview. The Zcash network is maintained by the ECC, independent developers and the Zcash Foundation.

A date for the ECC’s donation to Bootstrap has not been specified, but is aimed for around the network’s November hardfork, Canopy. The ECC has 24 investors, including Paradigm Capital co-founder Fred Ehrsam and venture capital firm Pantera Capital.

Zchanges

Practically speaking, the donation will free up cash flows for the ECC, which has continued to operate in the red regardless of a 160% year-to-date increase in the price of ZEC.

Under the Zcash founders’ agreement, the ECC receives 5% of miner revenue for developing the encryption tech backing the cryptocurrency. The ECC’s portion of future mining revenues will increase to 7% under Canopy, as agreed upon in February’s Zcash Improvement Proposal (ZIP) 1014.

Related: Bitcoin Trump-Dumps to $10,500; MetaMask Hits 1 Million Users

Yet, at a higher level, the donation will allow the ECC to more fully embrace a central plank in ZIP 1014 – that of all future mining revenue furthering zcash’s potential as an asset, and not enriching founders or early investors. Those involved in the project’s 2016 launch garnered 15% of mining revenue under the old scheme.

Read more: Zcash Trademark Talks Were About More Than a Logo

Outside observers suggest the move may be in keeping with the progressive decentralization ethos designed to keep regulators at bay. Deal Ninja attorney Gabriel Shapiro told CoinDesk the ECC’s shift to non-profit status was “potentially preferable to the status quo muddle of having a non-U.S. ‘foundation’ and a U.S. ‘development company’ with unclear rules of engagement between them.”

Wilcox said the ECC transition to a non-profit was “in alignment” with the community’s stipulations.

Pantera Capital’s Franklin Bi told CoinDesk in a phone call that the firm opted to donate its ECC shares because it was in the best interest of the zcash community. “[It’s] less about the tax benefit, but more so about the community,” he said.

Bi further said Pantera has never sold any of its ZEC holdings.

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Bitcoin (BTC) advanced to fresh two-month highs on Monday while ether (ETH) clocked three-week highs after Grayscale reported that its Ethereum Trust has become an SEC reporting company.

• BTC, the top cryptocurrency by market value, clocked a high of $11,524 at 13:45 UTC, the highest level since Sept. 2, and was trading at $11,480 at press time, gaining 0.95% over the past 24 hours, according to CoinDesk’s Bitcoin Price Index.
• Meanwhile, ETH, at the same time, was traded around $383.42 at press time, up 2.17% in the past 24 hours. That’s the highest level since Sept. 20.
• The rally came as digital currency asset manager Grayscale announced that its Ethereum Trust has become an Securities and Exchange Commission (SEC)-reporting company. 
• “This voluntary filing should not be confused as an effort to classify Grayscale Ethereum Trust as an exchange-traded fund (ETF),” Grayscale, which is owned by CoinDesk’ parent company Digital Currency Group, wrote in a press release on Monday.
• “The news will likely spur on another wave of Ethereum outperforming bitcoin, especially given the growing total value locked (TVL) across the DeFi universe,” Denis Vinokourov, head of research at the London-based prime brokerage Bequant told CoinDesk.
• Bitcoin has gained 59% this year while ether has rallied by nearly 200%. 
• Both cryptocurrencies added more than 6% last week following payments company Square’s disclosure of a $50 million BTC investment. 

Also read: First Mover: Bitcoin’s Best Week Since July Shows Limited Toll of UK Retail Crypto Futures Ban 

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With decentralized finance (or DeFi) having been the big success story in crypto this summer, investors look to be flocking to grab themselves a stake.

• Aave, one of the largest DeFi projects and provider of decentralized lending and borrowing, announced Monday that it has raised $25 million from investors Blockchain Capital, Standard Crypto and Blockchain.com Ventures.
• The project’s CEO, Stani Kulechov, said that the investment would go toward growing Aave’s team to better serve growing Asian markets and bringing DeFi “closer” to institutional investors.
• The investors in the strategic raise will take part in the protocol’s staking and governance, per a press release.
• According to data provider DeFi Pulse, Aave is currently the third largest DeFi protocol, with $1.15 billion in cryptocurrency locked in.
• Having seen explosive growth over the summer, the total value locked in all DeFi projects has plateaued somewhat in recent weeks and now stands at $10.79 billion.
• Per price data site CoinMarketCap, Aave’s LEND token is up 2.38% in 24 hours at time of writing.
• However, the protocol is in the process of migrating these over to a new AAVE token, as reported previously.
• The process will ultimately see ownership of the protocol shift over to a “genesis governance” built and approved by token holders.

Also read: Investors Flock to India’s DeFi Scene Months After Central Bank Ban Overturned

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Bank of Japan Governor Haruhiko Kuroda said Monday that the central bank will begin experiments on a central bank digital currency (CBDC) in the spring, Reuters reported.

• The experiments will seek to determine requirements and principles for the issuance of a potential digital yen.
• Kuroda also made clear his preparedness to impose added monetary easing steps, saying the BOJ still has tools at its disposal to fight the economic effects of the pandemic.
• Last week, South Korea’s central bank also said recently it will run trials of a CBDC during 2021, though it hasn’t decided if a launch will follow.
• China’s digital yuan is already in extensive testing, with the deputy governor of the People’s Bank calling this weekend for its launch to be accelerated.

Also read: Federal Reserve, 6 Other Central Banks Set Out Core Digital Currency Principles

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Grayscale Investments’ Ethereum Trust on Monday became a Securities and Exchange Commission (SEC) reporting company, a move that increases the trust’s transparency – and potentially its liquidity.

• The Ethereum Trust will begin regularly disclosing how much money is flowing through its passive ETH investment vehicle, according to SEC filings.
• Accredited investors who hold the trust will be able to sell after only a six-month lockup instead of the usual 12. 
• “We’re seeing interest from investors who have become more comfortable with digital currencies through bitcoin exposure, and are now looking at how else they can diversify within the asset class,” said Grayscale’s managing director, Michael Sonnenshein.
• The trust is Grayscale’s second crypto vehicle with shares registered under the Exchange Act of 1934, after its Bitcoin Trust became effective as a reporting company in January.
• Grayscale is part of Digital Currency Group, CoinDesk’s parent company.

Also read: Kraken Becomes First Crypto Exchange to Charter a US Bank

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While China has already taken the global lead in developing a central bank digital currency (CBDC), an official at the People’s Bank of China says the effort should be accelerated.

• Chen Yulu, deputy governor of the central bank, said in an article over the weekend that the digital yuan project should form an “independent” and “high-quality” element of the nation’s financial infrastructure, South China Morning Post reports.
• In comments published by the central bank’s own China Finance magazine, Chen added research and development for the digital yuan should proceed at faster pace, while pilots should show the CBDC is “controllable and safeguards the security of payments.”
• China recently announced a new focus on an economic strategy dubbed “dual circulation,” which would rely more on internal demand to buffer against international tensions, especially with the U.S.
• “We must serve dual circulation with fintech-led innovations,” Chen said about the digital yuan.
• The CBDC project is already thought to be closing in on a full launch, having been in testing in major cities with banks and commercial enterprises.
• Last week the city of Shenzhen, together with the central bank, launched a kind of lottery allowing local residents to apply for some of 10 million digital yuan that will be handed out.
• A report at the time suggested thousands of retailers are already set up to accept the digital currency.
• Other nations are still far behind, with many still at the investigation stage and a few others, such as South Korea and Japan, planning initial testing next year.

Also read: China Central Bank Official Reveals Results of First Digital Yuan Pilots

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Central banks are rushing into digital currencies without considering how the risks might outweigh any benefits, The Wall Street Journal said in its influential “Heard on the Street” column.

• The column, which is widely read on Wall Street and beyond, noted a survey by the Bank for International Settlements earlier this year that found one-fifth of central banks will likely issue some form of digital currency in the next six years. This rush might lead to some serious problems, the WSJ column said.
• Substantial risks to bank funding and financial stability should be weighed against trying to solve problems such as declining cash payments with a totally new, untested system instead of just trying to fix the existing structure.
• Why, the column asks, create digital currencies to address the shift to digital payments when mobile apps and cards are already filling that need?
• Digital currencies, with their security and anonymity, would make putting money in banks via deposits less attractive. This would reduce banks’ most stable source of funding, leaving them much more vulnerable, the WSJ column said.
• The only real benefit for digital currencies is security and privacy, and even that is against the interests of countries as it undermines their attempts to fight money laundering, according to the publication.

Also read: Federal Reserve, 6 Other Central Banks Set Out Core Digital Currency Principles

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Not everyone is happy with the U.K. Financial Conduct Authority’s decision to ban individual investors from speculating on bitcoin and other cryptocurrencies, and there’s an argument to be made that the agency’s rationale was hollow.  

But the ban is likely to have a minimal impact, partly because the market is so small, CoinDesk’s Muyao Shen reported Monday, citing analysts and industry executives who track the trading business.

Some U.K.-based brokerages that had offered the crypto derivative products to retail traders could see a drop-off in revenue, though big cryptocurrency exchanges including Kraken say the impact is likely to be minimal. While U.K. individuals can still trade the actual cryptocurrencies, there may be some traders who will seek to skirt the rules by trading on offshore exchanges. 

Related: Grayscale’s Ethereum Trust Granted SEC Reporting Company Status

The ban is set to take effect in January. Professional investors weren’t barred from trading cryptocurrency derivatives partly because they “have greater understanding of the risks and greater capacity to absorb potential investment losses,” according to an FCA report this month. 

“Those still keen on trading crypto derivatives will just find ways to open accounts in unaffected regions,” Don Guo, CEO of Broctagon Fintech Group, told CoinDesk in an email. “There is a stark risk that retail traders will simply trade on unregulated exchanges, which in fact puts them at more risk.”

Among those affected, the proposal does appear to be quite unpopular: The FCA report indicated that some 97% of comments submitted in connection with the rulemaking were opposed to agency’s proposed ban.

CoinDesk Research Director Noelle Acheson argued in her weekly Crypto Long & Short newsletter that the agency overstepped, since its “job includes protecting investors, not passing judgment on new asset groups.” One of the agency’s reasons for the ban was the “extreme volatility” in cryptocurrency prices, but bitcoin is far less volatile than many stocks, including Tesla. 

Related: It’s Time to Launch the Ethereum 2.0 Beacon Chain

Read More: UK Crypto Derivatives Ban Seen Having Limited Effect on Small Market

Bitcoin Watch

Bitcoin is struggling to extend the preceding week’s 6.6% gain, the biggest percentage rise since the last week of July. 

The cryptocurrency is currently trading in the red near $11,250, having printed highs near $11,500 over the weekend. 

The decline could be short-lived, as the global equity markets are trading in the green despite the resurgence of the coronavirus concerns across Europe. 

Besides, the bitcoin market looks strong – the cryptocurrency rallied last week even though miners ran down inventory by 1,000 BTC by selling more than they mined, according to the MRI figure provided by data source Bytetree.com. 

The miner’s rolling inventory (MRI) figure, which tracks the changes in miners’ inventory levels, held well above 100% last week, as those responsible for generating coins boosted supply. The five- and 12-week MRIs are also holding above 100%.

In other words, the buying pressure has been strong enough to absorb extra supplies from those responsible for generating the cryptocurrencies. That’s a bullish sign.  

Also, the payment company Square’s recent disclosure of their bitcoin investments has given market players a fresh shot of confidence, and technical bias has turned bullish with the cryptocurrency’s weekly close above $11,200.

As per charts, resistances are located at $11,500 and $12,000. On the downside, support is seen at $11,000, which, if breached, could cause some short-term technical traders to exit the market. 

– Omkar Godbole

Read More: Bitcoin down 1% after biggest weekly price gain since July

Token Watch

Bitcoin (BTC): Someone just moved $11M of bitcoin that was tucked away in idle wallets since being mined in 2010.

Yearn.Finance (YFI): Project creator Andre Cronje tells CoinDesk he’s quitting the project, then tweets a denial.

What’s Hot

China pushes to accelerate digital yuan as Japan, other countries push development of their own central-bank digital currencies (South China Morning Post) 

BitMEX cryptocurrency exchange hires anti-money-laundering expert as compliance chief after U.S. charges brought (CoinDesk)

World Bank estimates 1.7B people lack proper banking infrastructure to support monetary freedoms (Hacker Noon)

U.S. financial regulators are “reevaluating their previously held distrust of digital currency and assets,” and Wall Street broker-dealers may “play a role in implementing regulations regarding the secondary market trading of digital asset securities.” (Greenberg Traurig)

Analogs The latest on the economy and traditional finance

U.S. at risk of losing stewardship of global financial system to China, says Ripple Executive Chairman Chris Larsen, blaming SEC (CoinDesk)

China moves to slow recent gains in yuan versus dollar (WSJ)

Bank of England asks British lenders to assess their readiness for negative interest rates (WSJ)

Wall Street analysts are starting to spin as bullish a clear-cut victory by Joe Biden in U.S. presidential elections (Bloomberg)

Democratic house speaker Nancy Pelosi says stimulus talks are at a standstill citing a lack of funding for the program (CoinDesk)

Hong Kong’s Chief Executive Carrie Lam Cheng Yuet is set to announce a new policy that balances economic recovery with covid-19 safe procedures, slated for Oct. 14 (SCMP)

China’s oldest investment bank will commence its Shanghai public share sale Wednesday aiming to raise $1B for expansion (Reuters)

One small lender in Florida accounts for 100 of 252 small-business loans made through Federal Reserve’s emergency Main Street Lending Program (WSJ)

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Bitcoin (BTC) has crossed into bullish territory with the biggest weekly gain in 2.5 months.

• The top cryptocurrency by market value climbed nearly 6.6% in the seven days to Oct. 11, capping its biggest single-week percentage rise since the last week of July.
• The flipping of the stiff resistance of $11,200 (Sept. 18) into support is bullish, according to Stack Funds research analyst Lennard Neo.
• So far, however, the follow-through to the breakout has been poor: The cryptocurrency is currently trading in the red near $11,250, having printed highs near $11,500 over the weekend.

• However, the pullback may be short-lived, miner outflows suggest.
• Last week, bitcoin miners sold more than they generated and ran down inventory by around 1,000 BTC, according to data source Bytetree.com.

• The miners’ rolling inventory (MRI) figure, which tracks the changes in how much bitcoin miners are holding, held well above 100% last week; the five- and 12-week MRIs are also above 100%.
• Miners liquidate their holdings almost on a daily basis to cover operational costs but will offer more when they feel the market has the strength to absorb the additional coins without harming price.
• As such, the increased miner outflow is sign of strength in the market, according to Charlie Morris, chief investment officer at ByteTree Asset Management.
• Additionally, payment company Square's recent disclosure of major bitcoin investments has given market players a fresh shot of confidence, Philip Gradwell, chief economist at the blockchain analysis firm Chainalysis, told CoinDesk.
• The major portion of the last week’s 6.6% rise happened after Square announced its bitcoin investment on Thursday.
• While the path of least resistance for bitcoin appears to be on the higher side, a move to the next major resistance at $12,000 may remain elusive if the resurgence of the coronavirus cases across Europe, tanks global equities and boosts haven demand for the U.S. dollar.
• “The macro-environment factors still play a strong factor in the direction of BTC as its correlation to the SPX [S&P 500] continues,” data analytics firm Santiment noted.
• Disclosure: The author holds small positions in bitcoin and litecoin.

Also read: Bitcoin Nears $11.5K on US Stimulus Prospects, Seems to Confirm Bullish Trend

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Local government premises in Japan have been hit by a flood of extortion attempts demanding bitcoin over the least three months.

• According to a report by Japan Today on Monday, such threats have been received in at least 18 prefectures since July.
• The extortionists demand a payment in bitcoin to avoid the detonation of an explosive device, per the report.
• Austria has also suffered a spate of similar bomb threats, as CoinDesk reported back in August.
• Japan Post said that city halls or schools have been the subject of the threats, receiving an email demanding varying amounts of bitcoin.
• In one case in Yamagata City, the demand was for 40 bitcoin, worth over $454,000 at time of writing.
• The cases in Austria were demanding about $20,000 in bitcoin; prices were at slightly higher levels around $11,700 per bitcoin at the time.
• None of the Japanese victims have paid the extortionists, per Japan Today.
• Rather than choose major metropolitan centers, the attackers seem to be targeting local governments in rural areas, such as Sanjo, Niigata Prefecture; Tara, Saga Prefecture; and Minami, Tokushima Prefecture, among others.
• The report theorizes that the extortion attempts are coming from outside of Japan, though there seems to be no evidence to back up the claim.

Also read: Wave of Bitcoin-Seeking Bomb Threats Sparks Probe by Austrian Police

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Local government premises in Japan have been hit by a flood of extortion attempts demanding bitcoin over the least three months.

• According to a report by Japan Today on Monday, such threats have been received in at least 18 prefectures since July.
• The extortionists demand a payment in bitcoin to avoid the detonation of an explosive device, per the report.
• Austria has also suffered a spate of similar bomb threats, as CoinDesk reported back in August.
• Japan Post said that city halls or schools have been the subject of the threats, receiving an email demanding varying amounts of bitcoin.
• In one case in Yamagata City, the demand was for 40 bitcoin, worth over $454,000 at time of writing.
• The cases in Austria were demanding about $20,000 in bitcoin; prices were at slightly higher levels around $11,700 per bitcoin at the time.
• None of the Japanese victims have paid the extortionists, per Japan Today.
• Rather than choose major metropolitan centers, the attackers seem to be targeting local governments in rural areas, such as Sanjo, Niigata Prefecture; Tara, Saga Prefecture; and Minami, Tokushima Prefecture, among others.
• The report theorizes that the extortion attempts are coming from outside of Japan, though there seems to be no evidence to back up the claim.

Also read: Wave of Bitcoin-Seeking Bomb Threats Sparks Probe by Austrian Police

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BitMEX, the cryptocurrency derivatives exchange recently charged by U.S. authorities, has hired an industry veteran to lead its compliance efforts going forward.

• In a blog post Monday, the exchange’s operator 100x announced that Malcolm Wright will come aboard as chief compliance officer for the group.
• Wright comes with 30 years of experience in compliance and anti-money laundering, per the post.
• He currently chairs the Advisory Council and AML Working Group at Global Digital Finance, as well as being a speaker on topics including the Financial Action Tasks Force’s international guidance for regulators around virtual asset service providers.
• According to his LinkedIn profile, Wright is also an associate fellow of the Centre for Financial Crime and Security Studies at the U.K.’s Royal United Services Institute – a body working to address financial crimes.
• 100x said the new hire will lead the group’s compliance efforts internationally and will report to the new interim CEO and COO Vivien Khoo.
• Khoo replaced former CEO Arthur Hayes last week amid the fallout from the legal issues that hit the company on Oct. 1.
• BitMEX, other associated entities including 100x and its founders were charged by both the U.S. Commodity Futures Trading Commission and federal prosecutors in New York over allegations the exchange had illegally offered derivatives trading to customers in the U.S. and violated the Bank Secrecy Act.
• BitMEX’s operator has since said it will carry out business as usual but saw fit to shake up the executive team, removing Hayes and other founders Samuel Reed and Ben Delo from executive roles.
• The hire of the compliance chief would seem to be the latest reaction to the charges, and an effort to avoid similar situations going forward.
• 100x told CoinDesk the “compliance function” of the group was previously led by Khoo.

Also read: BitMEX CTO Released in US After Payment of $5M Bond

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Elon Musk has thrown doubt on a claimed sighting of a bitcoin ATM at the Tesla Gigafactory in Nevada.

• The ATM was first claimed to have been sighted by Twitter user Will Reeves who posted on Sunday that he had “just passed by and saw @elonmusk has a bitcoin ATM at the Gigafactory.”
• The tweet was accompanied by a Google maps image revealing the location of the ATM on the northern side of the massive factory complex.
• According to a Sunday report by Finbold, the ATM was installed by LibertyX in August of this year solely for the use by employees of the factory.
• However, Tesla founder and CEO Elon Musk said he didn’t believe the claim was “accurate” in a tweet on Monday. The post Musk was replying to has now been deleted, presumably in response to his tweet.
• CoinDesk reached out to Tesla for confirmation but had not received a reply by press time.
• However, Reeves’ sighting was apparently confirmed to CoinDesk by bitcoin ATM operator LibertyX in a direct message, which said: “We have enabled 3 traditional ATMs inside so employees can use their debit cards and buy bitcoin.”
• LibertyX now claims to have over 5,000 crypto ATMs in operation across the U.S., as well as a bitcoin buying service in around 20,000 stores.

See also: Bitcoin ATM Growth May Be a Boon for Money Launderers

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The timing couldn’t be better for regulation-focused trading platform Qume, which unveils a revamped set of services Monday. Even in its soft-launch phase, the derivatives exchange has been mopping up customers in the wake of U.S. charges against BitMEX.

“We’ve seen an uptick in users with about 2,000 customer sign-ups in the last week,” Aditya Mishra, CEO of the Singapore-based Qume, said in an interview. “In terms of specific trading volume, I guess we will really know in the next week or so.”

Nearly 30% of BitMEX’s bitcoin balance has been withdrawn by customers since U.S. regulators cracked down on the firm on Oct. 1, according to Coin Metrics, with big players like Binance, Gemini and Kraken being the immediate beneficiaries.

Related: UK Crypto Derivatives Ban Seen Having Limited Effect on Small Market

Having noticed that the crypto derivatives space operated “like the Wild West,” Mishra said the clampdown by U.S. regulators and federal prosecutors did not come as a huge surprise within the derivatives community.

The goal for Qume, from back in January 2019 when it began being built, was to be regulation-first, Mishra said. 

“Our focus was to build out a high-performance crypto derivatives exchange, and have it sit under some sort of regulatory framework,” he said. “In the last year and a half or so, the market has obviously evolved, and there are several other derivatives participants who have emerged. Some of them are doing pretty well for themselves but most operate in a fairly unregulated fashion.”

Read more: UK Crypto Derivatives Ban Seen Having Limited Effect on Small Market

Related: CME Sounding Out Crypto Traders to Gauge Market Demand for Ether Futures, Options

Qume, which is incorporated in Singapore, grew out of the sandbox of the Central Bank of Bahrain. In terms of know-your-customer (KYC) and anti–money laundering (AML) compliance, a team including former employees of JPMorgan and Nomura drafted up a regulatory framework. In addition, Qume last week completed the integration of Berlin-based Fractal, which uses AI and runs photos of new users across KYC databases in their home jurisdictions.   

The derivatives platform does not offer its services to customers based in the U.S. or retail customers in the U.K.

Just last week the Financial Conduct Authority finalized its ban on crypto derivatives to retail customers based in Britain.

DEX hybrid

Thanks to the explosive growth of decentralized finance (DeFi), firms like Qume are busy figuring out how to build bridges to a more decentralized trading experience, focusing on areas like custody.  

The platform, which previously raised $3.5 million with a cap table that includes DeFi darlings like Robert Leshner and Calvin Liu of Compound Finance, provides customers with a kind of hybrid offering that can operate like a decentralized exchange (DEX).

To this end, Qume teamed up with Hashflow, a protocol that helps platforms combine centralized order-matching and trade execution with decentralized custody and post-trade settlement.

To decentralize the entire trading experience is doable but kind of clunky, said Mishra, who claims to have struck a balance. He said Qume’s centralized aspect has sub-millisecond latency and institutional-grade throughput of between 100,000 and 200,000 transactions per second. On the other hand, the DEX component is there thanks to Hashflow’s second-layer protocol.

“So we can have two different sorts of customers,” said Mishra. “There is a certain type of user that really cares about decentralization and will only come and trade if they control their own keys. But then there is also the more traditional customer from India, for example, who just sees the volatility in the crypto markets, but doesn’t necessarily want any exposure to crypto as such.”

Read more: Crypto Long & Short: A UK Ban on Crypto Derivatives Will Hurt, Not Protect Investors

Rather than focusing on the typical Asia markets, Qume is directing its attention towards fresh pastures in India, the Middle East and Africa, said Mishra. The company is poised to make inroads to the Indian crypto market, driven by the acquisition of Indian spot exchange BitPolo back in August of this year.

“India is still a gray area for now but my personal opinion is there should be a regulatory framework for crypto, especially given the size of the developer talent pool in the jurisdiction,” said Mishra. “Just look at the strides being made in China. I think it would be a travesty if India is kept out of this technology revolution.”

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The U.K. Financial Conduct Authority’s decision to ban individual investors from speculating on bitcoin and other cryptocurrencies is likely to have a minimal impact, partly because the market is so small, according to analysts and industry executives who track the trading business.

Some U.K.-based brokerages that had offered the crypto derivative products to retail traders could see a drop-off in revenue, though big cryptocurrency exchanges including Kraken say the impact is likely to be minimal. While U.K. individuals can still trade the actual cryptocurrencies, there may be some traders who will seek to skirt the rules by trading on offshore exchanges.

The ban is set to take effect in January. Professional investors weren’t barred from trading cryptocurrency derivatives partly because they “have greater understanding of the risks and greater capacity to absorb potential investment losses,” according to an FCA report this month.

Related: Crypto Long & Short: A UK Ban on Crypto Derivatives Will Hurt, Not Protect Investors

“Those still keen on trading crypto derivatives will just find ways to open accounts in unaffected regions,” Don Guo, CEO of Broctagon Fintech Group, told CoinDesk in an email. “There is a stark risk that retail traders will simply trade on unregulated exchanges, which in fact puts them at more risk.”

Few U.K.-based retail investors trade crypto derivative products directly, according to Sui Chung, CEO of CF Benchmarks, which provides price indexes to exchanges including Chicago-based CME Group.

Instead, they normally go through so-called contract for difference (CFD) providers, Chung said. 

Regulated brokers and exchanges that had offered crypto derivatives and exchange-traded notes (ETNs) to retail traders included the Kraken-owned Crypto Facilities, CMC Markets and IG Index.

Related: CME Sounding Out Crypto Traders to Gauge Market Demand for Ether Futures, Options

“This has a very minimal impact on Crypto Facilities,” a Crypto Facilities spokesperson told CoinDesk in an email.

“We anticipate no material impact resulting from the FCA announcement as these products form a very small part of our diversified and global business,” IG Group told CoinDesk in a statement. ”The impacted revenue following the FCA restrictions would be less than 1% of IG Group’s overall revenue.”

As recently as May, crypto made up 2.7% of IG Group’s total revenue this year, of which the U.K. market was only 1% to 1.5%, according to a research note by Vivek Raja and Paul McGinnis, analysts from Shore Capital, on Oct 6. According to the note, crypto was within 18% of CMC Markets’ total revenue as of March.

Both CME Group and CMC Markets declined CoinDesk’s request to comment on this topic.

A research report released by the FCA on June 30 estimated that about 3.86% of the general population hold cryptocurrencies in the U.K., with 12% of respondents saying they “never” monitor the prices of their cryptocurrencies.

“Consumers seem to treat cryptocurrencies as a form of speculation akin to gambling, rather than as a payment or investment,” according to the report.

A separate FCA report this month indicated that some 97% of comments submitted in connection with the rulemaking were opposed to agency’s proposed ban.

“With most of the bigger firms, whether that’s Coinbase or Gemini, I think the majority of them aren’t affected by it,” Yang Li, the chief growth officer at Ziglu, a U.K.-based cryptocurrency platform, said in an interview with CoinDesk. “It was a niche product.”

A silver lining for bitcoin and other cryptocurrencies might be that with more robust regulations on nascent digital-asset markets might encourage more institutional investors to jump in.

“Any step toward a better-defined regulatory framework serves to legitimize crypto as a mainstream investment for those institutions,” said Dmitry Tokarev, CEO of London-based crypto custodian Copper, told CoinDesk via email.

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Democratic House Speaker Nancy Pelosi said Sunday that talks over a new stimulus package remain at a standstill, according to a report in the Wall Street Journal.

• Pelosi said the Trump administration’s nearly $1.9 trillion proposal still lacks adequate funding and has no plan for national testing and contact tracing, the WSJ reported.
• Meanwhile, the president laid responsibility for the holdup on the House speaker: “Republicans want to do it. We’re having a hard time with Nancy Pelosi,” the WSJ quoted the president as saying Sunday on Fox News.
• But yesterday it was reported that some in the GOP were reluctant to back the president’s proposal, instead voicing support for a much smaller package.
• In addition, the White House proposal would expand the Affordable Care Act’s provisions for people who have lost their jobs – and therefore insurance – during the pandemic. As many in the GOP have been trying to scrap the ACA, the proposal to expand it is problematic to say the least, the WSJ said.
• Why this matter in the crypto world: Bitcoin (BTC) prices have been buoyed this year as investors bet that trillions of dollars of government and central bank spending around the world in response to the coronavirus-induced slowdown will inevitably result in inflation, and therefore be positive for the cryptocurrency.
• With that in mind, should the two sides reach an agreement on a pandemic-relief package, the price of BTC could rise as a result.
• In recent trading, BTC was trading at $11,425, up 0.43% in the last 24 hours.
  

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Chris Larsen, Ripple co-founder and chairman of the payments technology company’s board of directors, said China’s “itching” to be the one that designs the next financial system and that the U.S. is “woefully behind.”

• Speaking at the LA Blockchain Summit last week, Larsen said the U.S. needs to face up to that it’s in a tech cold war with China with the fate of control of the world’s financial system at stake. Right now, China’s winning, he said.
• “China is just itching to be the one that designs this next system,” Larsen said. “They’ve committed $1.4 trillion to a variety of technologies and blockchain is right at the top of their list.” 
• It’s not just that China’s pumping money into technology, the regulatory environment in the U.S. is actively discouraging financial innovation, he said.
• “I just have to say it, in the U.S., all things blockchain, digital currency, they start and end with the SEC, Larsen said. “Instead of pivoting to encouraging U.S. innovation to keep up, they’ve done the opposite.”
• “We’re going to have to change up here or we’re going to lose our leadership, stewardship of the global financial system,” he said. “That would be a tragedy.”
• As CoinDesk reported at the time, Larsen also said his company could leave the U.S. if the regulatory environment doesn’t improve.
  

See also: SEC Will Be Forced to Give Crypto Guidance Despite Bureaucracy, Risk-Avoidance: Peirce

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Chris Larsen, Ripple co-founder and chairman of the payments technology company’s board of directors, said China’s “itching” to be the one that designs the next financial system and that the U.S. is “woefully behind.”

• Speaking at the LA Blockchain Summit last week, Larsen said the U.S. needs to face up to that it’s in a tech cold war with China with the fate of control of the world’s financial system at stake. Right now, China’s winning, he said.
• “China is just itching to be the one that designs this next system,” Larsen said. “They’ve committed $1.4 trillion to a variety of technologies and blockchain is right at the top of their list.” 
• It’s not just that China’s pumping money into technology, the regulatory environment in the U.S. is actively discouraging financial innovation, he said.
• “I just have to say it, in the U.S., all things blockchain, digital currency, they start and end with the SEC, Larsen said. “Instead of pivoting to encouraging U.S. innovation to keep up, they’ve done the opposite.”
• “We’re going to have to change up here or we’re going to lose our leadership, stewardship of the global financial system,” he said. “That would be a tragedy.”
• As CoinDesk reported at the time, Larsen also said his company could leave the U.S. if the regulatory environment doesn’t improve.
  

See also: SEC Will Be Forced to Give Crypto Guidance Despite Bureaucracy, Risk-Avoidance: Peirce

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Andrei Anisimov, whose LinkedIn profile still describes him as a “Senior Software Engineer” at Coinbase, tweeted Saturday that this had been his last week at the cryptocurrency exchange. At press time it wasn’t clear whether Anisimov was one of the 60 people who accepted a severance package that was offered this week.

• In a company-wide memo obtained earlier this week by CoinDesk, Coinbase CEO Brian Armstrong informed employees that 5% of the company’s 1,200-person workforce had accepted the severance package offered last week. 
• The severance offer was made in response to disagreement about Armstrong’s recent statement that his company’s policy was not to engage in “broader societal issues” or entertain employee discussions about it.
• According to LinkedIn, Anisimov had been with the exchange for just over a year.
• A direct message to him via Twitter seeking comment was read but not immediately responded to. In another Tweet he praised his former company, saying, “If you’re thinking of joining Coinbase – don’t hesitate, it’ll be worth it.”

Read more: 5% of Coinbase Employees Take Severance Offer Over ‘Apolitical’ Stance

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The rapidly growing city of Shenzhen will be giving away 10 million yuan (US$1.47 million) of China’s new sovereign digital money via lottery, as China seeks to test out and stimulate the usage of the digital funds, according to a report in the South China Morning Post.

• Winners will be announced on Sunday and the currency can be used at 3,389 shops. They can’t be transferred or moved into a regular bank account, the report said.
• The promotion is part of China’s plan to move solely to digital currency, known as the Digital Currency Electronic Payment (DCEP).
• The new currency has been used in more than a billion yuan worth of transactions across the country n a series of test programs over the past 12 months.
  
  See also: China Sees Advantages in Being First on New Digital Currency ‘Battlefield’

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