CoinDesk Crypto

Ukraine’s Ministry of Digital Transformation signed a deal last week with BitFury’s crypto-tracing spin-off Crystal Blockchain B.V. to kick-start the government’s virtual asset monitoring initiative, a company executive told CoinDesk.

• Crystal Chief Executive Marina Khaustova said ministry officials, who oversee Ukraine’s digital pivot and maintain links with the Ministry of Finance, will use the company’s software to trace the origins of suspicious crypto transactions. 
• Finance ministry officials have previously said they will trace all crypto transactions over $1,200 in accordance with international anti-money laundering (AML) guidelines and a 2019 Ukrainian law. 
• Khaustova said that the deal “is not limited to compliance tools access,” however. Digital Transformation officials were just as “eager to consult” on developing legislation and regulations for Ukraine’s burgeoning virtual asset sector as they were in enforcing crypto AML restrictions, she said.
• “The main goal of our cooperation is the rapid formation and legalization of the virtual asset market in Ukraine,” the ministry said in a press statement. The ministry did not immediately return a CoinDesk request for comment.

Related Stories

• Malaysian Watchdog Plans to Extend Crypto Regulations to Wallet Providers
• French Officials Move to Start Trial of Alleged BTC-e Operator Alexander Vinnik
• Carlos Ghosn’s $600K Bitcoin Escape Fee Paid via Coinbase
• Binance’s Fiat-Gateway Partner Banxa Expanding to US

Malaysia’s Securities Commission (SC) is planning a regulatory framework for wallet providers that will be built into its existing cryptocurrency legislation.

• In an announcement Thursday, the SC said it was looking to “compliment” its existing frameworks for digital asset exchanges and initial exchange offerings with the inclusion of wallet providers.
• While the commission offered no details of how the new framework might look, such entities play an important role in safeguarding of digital assets on behalf of clients, it said.
• Digital asset wallet providers or anyone with an interest are encouraged to contact the commission to discuss their current business operations or to provide feedback on the framework.
• The SC said such parties should arrange for a meeting before Aug. 14, 2020.
• After the cut-off date, the regulatory framework governing wallet providers will be added to the country’s Guidelines on Digital Assets.
• The regulator recently added Binance and eToro to a list of companies not authorized to operate within the country, saying the two firms did not comply with its securities laws.

See also: Singapore Begins Crackdown on Unlicensed Bitcoin Sellers

Related Stories

• French Officials Move to Start Trial of Alleged BTC-e Operator Alexander Vinnik
• Carlos Ghosn’s $600K Bitcoin Escape Fee Paid via Coinbase
• Binance’s Fiat-Gateway Partner Banxa Expanding to US
• Crypto Bank Hopeful Bitcoin Suisse Raises $48M in First-Ever Round

Cryptographers call out Craig Wright’s latest claims, blockchain business deposits are growing at Signature and Carlos Ghosn’s smugglers were paid in crypto.

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

Top shelf

Cryptic Payments
The son of former Renault and Nissan head and fugitive Carlos Ghosn used Coinbase to pay two men $500,000 in bitcoin to get his father out of Japan last December. U.S. prosecutors said Wednesday that Anthony Ghosn sent 63 bitcoin to Michael and Peter Taylor, a father and son team who smuggled Carlos Ghosn out. Coinbase gave evidence to Japanese investigators this week, showing a series of transactions between January and May 2020 from Ghosn’s Coinbase account to one belonging to Peter Taylor. Wednesday’s filing shows a bank account managed by Peter Taylor also received two wire transfers, totaling over $870,000, from Carlos Ghosn’s account in October 2019.

Related: First Mover: Crypto’s $35T Moment Could Come From Analog-World Stock Listings

Work to Do
The Office of the Comptroller of the Currency (OCC) said banks can provide custody services for cryptocurrencies. The move is widely praised as a step towards mainstreaming crypto. However, it’s unclear whether banks will immediately act on the regulatory clarification. Congressman Darren Soto (D-Fla.), said the letter was “an important step” to better integrate cryptocurrencies into the U.S. financial system, but cautioned “the federal government is still behind in incorporating” cryptocurrency. “I don’t expect you will see much change in the next three to four months, but then we might see some acceleration thereafter,” Trustology CEO Alex Batlin said. “This will come up as banks will be holding investment committees for funding approvals for the next year.”

Assessment of the Facts 
Four experts agree that Craig S. Wright’s latest claims about Bitcoin message-signing are wrong on the facts. Wright, who claims he’s Bitcoin’s pseudonymous creator, is embroiled in a legal battle that hinges on his purported ownership of a number of the earliest Bitcoin addresses. Recently, an anonymous user signed a public message using 145 of those keys, calling him a “liar and a fraud,” an accusation Wright countered by saying, “You cannot have a digital signature that is anonymous, by definition.” Four cryptography experts now dispute these claims, with Johns Hopkins associate professor Matthew Green saying, it “makes zero sense to me as a cryptographer… If Craig Wright is saying something meaningful here then he needs to slow down and explain it more clearly. Because the words he’s using sound like nonsense to me.”

Red Wall
Russia’s Federal Security Service, or FSB, the successor to the KGB, supervises all industries related to cryptography and may be holding back the local blockchain sector. The FSB’s rigid certification process for crypto companies could cost more than $100,000 and take at least a year, according to experts on the Russian enterprise blockchain market. Further, this borderless technology is sometimes stonewalled by the watchdog, which is distrustful of foreign-developed blockchains. It works in reverse too. Russian-made systems might end up isolated from the global market due to distrust of Russian government cryptography standards.

Future of the Internet
A debate hosted Wednesday night featuring Protocol Lab’s Juan Benet, Ethereum creator Vitalik Buterin and former Coinbase executive Balaji Srinivasan detailed competing visions for the future of the internet. While all parties agreed the world needs to move towards decentralized models – especially in social media – there were differing opinions about how and when data should be verified in distributed systems. “My impression is we are headed to a much better future where the data structures are going to be decoupled from the [user interfaces],” Benet said. “There will be many different systems built atop the same information graph.”

Quick bites

• Arca’s flagship crypto hedge fund is up 77% in 2020
• Crypto bank hopeful Bitcoin Suisse raised a $48 million Series A
• Central bank board member says CBDCs raise more questions than answers – calling it “helicopter money”
• Opera’s built-in crypto wallets have 170,000 monthly active users
• SEC registered broker-dealer is launching a security token platform called Gladius

The big idea

Related: Blockchain Bites: OCC’s Crypto Letter, Eth 2.0’s ‘Official’ Testnet and Dinwiddie’s Tokenized Airball

Signature Bank saw $1 billion in deposit growth in the second quarter of 2020 from the firm’s digital assets team, according to its latest filing. 

The New York-based bank is one of a handful – including Silvergate Bank and Metropolitan Commercial Bank – willing to take deposits from blockchain firms. And it’s a risk that seems to be paying off.  

Signature’s blockchain-related business lines represented one-eighth of the firm’s total $8 billion deposit growth this quarter. 

“The crypto industry is often a rich source of low-cost, non-interest bearing deposits for crypto-friendly banks like Signature,” CoinDesk’s Nathan DiCamillo reports. According to Signature CEO Joseph DePaolo on the firm’s earnings call, the cost of those deposits decreased to 56 basis points from 98 basis points because of the low interest rate environment.

“This is now the fourth consecutive quarter exceeding $1 billion in both total and average deposit growth, non-interest bearing deposits of $16.1 billion still represent a high 32% of total deposits since the second quarter of last year,” DePaolo said. 

For years, crypto and banking was like oil and water. Most of the Wall Street banking powerhouses – like Chase, Citigroup and Wells Fargo – were reluctant to enter into this poorly understood and underregulated market. 

In 2017, for instance, J.P. Morgan Chase CEO Jamie Dimon called Bitcoin a fraud. It now looks like he’s singing a different tune – with his bank taking on Coinbase as a client last May.

Brian Brooks, Coinbase’s former chief legal officer and now senior deputy at the Office of the Comptroller of the Currency, which recently issued a letter allowing crypto custody among chartered banks, said at the time the trend will likely continue. 

This doesn’t necessarily mean the original lot of crypto-friendly banks will be pushed out of the market. Silvergate, which once banked Coinbase, has plans to continue expanding its crypto services. 

In an industry of constant evolution, there will always be new paths to profits.

Market intel

Flatlining Interest
Volume and open interest on Bakkt has flatlined at $0 since June 15, according to Skew. The Intercontinental Exchange’s subsidiary launched its bitcoin options market in December 2019. Open interest for the exchange’s options market has suffered complete inactivity before, but the current 38-day streak dwarfs other periods. Bakkt’s options volume has also dropped to $0 since April 23, Skew said.

Going Public?
Digital-asset industry insiders say a move toward more public ownership of crypto firms could accelerate mainstream adoption. “By becoming publicly traded, cryptocurrency-focused companies could appeal to investors in the $35 trillion U.S. stock market. Back-of-the-envelope math shows that just a 1% allocation into crypto stocks could mean $350 billion of new investments for companies in the space,” CoinDesk’s First Mover reports. The total market value of all digital asset markets currently sits at $287 billion. According to CoinDesk Research, there’s more than two dozen publicly-traded firms, with many more like Coinbase and Ant Group rumored to be in the process of listing.

Opinion

Banks Won’t Bite
Alex Mascioli, head of institutional services for Bequant, thinks banks aren’t likely to jump at the opportunity to custody crypto assets. Last Wednesday, the Office of the Comptroller of the Currency (OCC) announced banks can offer crypto and digital asset custody to their clients, which could be a profitable new business line. However, there’s inertia standing in the way. “The bulk of banks and other sophisticated players in the old school markets don’t know much about our industry. Most of them don’t appear to have even done anything as basic as buying a fractional Bitcoin on Robinhood,” he writes. 

Podcast

Big Tech’s Effect on Small Biz
Sahil Bloom, an investor with Altamont Capital Partners, joins as a guest on the latest episode of The Breakdown to discuss the recent increase in joblessness claims, remote work and Robinhood traders. 

Who won #CryptoTwitter? Related Stories

• First Mover: Ethereum a Victim of Its Own Success as Fees Soar, Vitalik Complains
• Blockchain Bites: Coinsquare Conclusion, Ethereum Fees and a GPT-3 Poet

The Office of the Comptroller of the Currency (OCC), a federal banking regulator in the U.S., is rapidly expanding crypto awareness on Capitol Hill.

The OCC published an interpretive letter Wednesday announcing that in its view, nationally chartered banks are able to provide custody services for cryptocurrencies, a move that the industry widely praised as one that could help mainstream adoption of crypto, even though it’s unclear as to whether banks will immediately act  on the regulatory clarification. 

This development is likely to be very positive for the digital assets space, but major U.S. banks probably won’t be holding Bitcoin any time soon.

Related: Crypto Bank Hopeful Bitcoin Suisse Raises $48M in First-Ever Round

Congressman Darren Soto (D-Fla.), told CoinDesk in a phone call that the letter was “an important step” to better integrate cryptocurrencies into the U.S. financial system, though he cautioned that “the federal government is still behind in incorporating” cryptocurrency.

“We support further integration of cryptocurrency into the financial system, including allowing the major financial institutions to hold this currency. It’ll lead to further legitimization of crypto,” he said.

Across the aisle, Representative Tom Emmer (R-Minn.) agreed, telling CoinDesk in an emailed statement that providing custody is “a big step forward” for financial innovation. 

Both representatives are members of the Congressional Blockchain Caucus.

Related: Wyoming-Based Avanti to Open in October With a New Bank-Issued Digital Asset

“[Acting Comptroller] Brian Brook’s work should serve as a guiding light forward for the rest of our patchwork of financial regulators,” Emmer said.

A number of aspects of the letter make it interesting, said a Congressional staffer, who advises a lawmaker on fintech issues and asked for their name to be withheld. The first was its rapid release, given Brooks just took the job in May. The staffer said a number of lawmakers will claim that insufficient research was put into the benefits or detriments of the move.

Even the bullish Soto noted that the OCC’s announcement seemed hurried.

“We’ve seen some things rushed throughout the Trump administration so this isn’t particularly surprising,” Soto said, though he added, “it’s been a long time coming. This should have happened months or years ago.”

The Congressional staffer added that the form of the letter is interesting, in that it’s not an announcement or a rule. “It looks like it’s an interpretive letter, which maybe a specific bank asked for … and that’s fairly normal practice if regulations are a little ambiguous but usually … you don’t issue it writ large.” 

Starting a conversation

Up until now, the lack of regulatory clarity has meant mainstream financial firms like Fidelity have managed to get into crypto, but only by going the long way around and creating a separate legal entity, such as Fidelity Digital Assets. The OCC letter provides clarity so that banks can get closer to crypto without worrying about regulatory uncertainty. 

“People who are supportive of crypto and blockchain technology will see this as a very positive step, and the more skeptical crowd, this’ll further entrench their viewpoint,” the Congressional staffer said. “I think there’s a very large group of politicians who have never thought about this, so that’s the real benefit is it’ll start that discussion.”

Ron Hammond, a former aide to Rep. Warren Davidson (R-Ohio), agreed that the move might force a conversation around crypto, but noted that neither major party – Democrats or Republicans – currently have a platform around financial technology or digital assets. 

He expects Democrats as a party to come out against the move, he told CoinDesk in a phone call.

“Democrats already are skeptical of banks [and] they’re even more skeptical of digital assets, so you put those two together and you have a pretty big policy storm of mistrust in the system,” he said. 

Anti-money laundering and know-your-customer concerns may be brought up, along with the fact that Brian Brooks, the current Acting Comptroller of the Currency, has been neither formally nominated nor confirmed to his role. 

The conversation about crypto will not be limited to Capitol Hill. 

Alex Batlin, CEO of digital asset custody provider Trustology, and a former blockchain lead at BNY Mellon and UBS, told CoinDesk he expects there to be “a lot more conversations” about crypto in various company boardrooms this coming fall.

Open door

A number of barriers still remain before any nationally chartered banks are able to actually offer crypto custody services.

Hammond said that while the letter might provide cover for smaller banks, major ones would need more reassurance before they’d be willing to enter the space.

“I don’t expect you will see much change in the next three to four months, but then we might see some acceleration thereafter,” Batlin said. “I expect that after the summer, this will come up as banks will be holding investment committees for funding approvals for the next year.”

There are also concerns around whether the letter can provide binding guidance. The Congressional staffer noted that the relevant statutes could be interpreted differently by another administration, meaning a future letter or rulemaking process could tell banks the opposite of Wednesday’s missive. 

Still, the OCC’s overtures open the door for much less risky and cheaper routes into crypto for big banks, said Batlin. The way banks are likely to dip their toes in is by going the sub-custody route, he said, by partnering with small specialist organizations.

“That’s exactly what a global custodian like BNY Mellon does anyway,” Batlin said. “Now that this activity is going to be regulated, I expect the cheapest solution for bigger banks is to have some kind of semi-derisked trial of this is to use someone as a sub-custodian.”

Following Europe

The OCC letter brings the U.S. closer to the situation in Germany, where lawmakers provided clarity that essentially eased restrictions on banks providing custody of crypto assets.

Germany’s Financial Supervisory Authority (BaFin) released guidance earlier this year clarifying how firms based outside the nation could still provide custody services within Germany’s borders and remain in compliance with international law, such as the European Union’s Fifth Anti-Money Laundering Directive.

“The U.S. is following Europe, and the use cases are unlikely to be crypto coins,” said Phil Mochan, co-founder of Koine, a London-based custody and post-trade settlement solution for digital assets. “The banks in Germany are all saying they are not going to touch crypto coins, but are interested in primary issuance of securities on behalf of their clients.”

Mochan pointed out that simply providing cold storage of crypto keys does not resolve any of the post-trade activities needed for standard market infrastructure, which involves the emergence of blockchain-enabled central securities depositories (CSDs). 

Election approaching

Back in the U.S., the upcoming presidential election is one wild card that might determine whether the next Comptroller reverses the decision or not.

“I don’t see a situation where a [Republican President Donald] Trump nominee, whether he be Brooks or someone else, would overturn this but I can see a situation in a [Democratic Presidential nominee Joe] Biden administration where this gets overturned,” he said. 

That’s not to say a potential Biden administration would for sure overturn the move, and it’s unlikely to be a key priority, but the uncertainty remains. 

“There’s no notice or comments, [no] input [from] the industry,” Hammond said. “I can see a Biden administration being more concerned about that and probably striking down the [letter].”

Soto said Congress needed to take action to bring further clarity, starting with passing the Token Taxonomy Act (which Hammond wrote while working for Davidson) and the Digital Taxonomy Act (which Soto sponsored).

“We need to pass both those bills to establish basic definitions and jurisdiction so there’s no overreach by agencies and there’s more certainty,” he said. “I continue to be troubled by the fact that many new cryptocurrency firms have to spend [millions] due to the complex rules in the United States and that’s because we’ve left it solely to the agencies.”

Related Stories

• Blockchain Bites: OCC’s Crypto Letter, Eth 2.0’s ‘Official’ Testnet and Dinwiddie’s Tokenized Airball
• Binance Enters German Market via Partnership With Crypto Investment Firm

French officials have officially started the ball rolling for the trial of Alexander Vinnik, the alleged operator of an exchange said to have laundered millions of dollars for criminals.

• French prosecutors filed a petition to start the lawsuit against Vinnik on Wednesday, according to a news report from L’Express.
• Vinnik was charged on the day he arrived in France in late January after been extradited from Greece.
• He stands accused of extortion, aggravated money laundering, conspiracy, and harming automatic data-processing systems as the chief of the exchange BTC-e, closed by law enforcement agencies in 2017.
• A hot wallet address for BTC-e can be seen on blockchain explorers.
• The platform from Netherlands-based Crystal Blockchain shows that, while now empty, more than 733,000 bitcoin (around $7 billion) has passed through the wallet.
• It has remained inactive since September 2017 – a few months after Vinnik was detained by the Greek authorities.

• Once the French trial has concluded, Vinnik will be extradited to the U.S. and then Russia to face similar charges there.
• Vinnik has maintained he is innocent of all charges.

See also: New Zealand Police Seize $90M Linked to Alleged BTC-e Exchange Operator

Related Stories

• Malaysian Watchdog Plans to Extend Crypto Regulations to Wallet Providers
• Carlos Ghosn’s $600K Bitcoin Escape Fee Paid via Coinbase
• Binance’s Fiat-Gateway Partner Banxa Expanding to US
• Crypto Bank Hopeful Bitcoin Suisse Raises $48M in First-Ever Round

Ether, the second-largest cryptocurrency by market value, has more than doubled in value this year, leaving bitcoin, the crypto market leader, far behind. 

• Ether is trading near $275 at press time, representing a nearly 114% gain on a year-to-date (YTD) basis, according to CoinDesk’s Ether Price Index. 
• The cryptocurrency clocked a five-month high of $289 on Thursday despite increased exchange inflows.
• Ether’s YTD rise is over three times bigger than bitcoin’s 34% 2020 rally.
• bitcoin, the top cryptocurrency by market value, is currently trading around $9,550.

• Jehan Chu, co-founder and managing partner at Hong Kong-based trading firm Kenetic told CoinDesk that ether’s price is surging on increased general interest and the network’s popularity in the decentralized finance space. 
• Ethereum’s median transaction fee recently rose to its highest level since August 2018 due to a surge in transaction activity.
• Additional buying pressure for ether looks to be stemming from the excitement surrounding the impending transition from the proof-of-work mechanism (aka mining) to proof-of-stake in the network’s next big upgrade, dubbed Ethereum 2.0.
• Staking would allow investors to earn additional yield simply by holding ether to support the operations on the blockchain. 
• Glassnode data shows the number of addresses holding 32 ETH – the minimum balance needed to become a validator on Ethereum 2.0 – has increased by more than 12% this year, suggesting increased investor interest in the novel form of income.
• While bitcoin was expected to print solid gains following the May 12 miner reward halving event, the cryptocurrency has remained largely stuck in a range between $9,000 and $10,000.

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

Related Stories

• First Mover: Crypto’s $35T Moment Could Come From Analog-World Stock Listings
• Market Wrap: Bitcoin Hits 1-Month High; DeFi Value Locked Hits $3.3B
• No One Has Traded Bitcoin Options on Bakkt for Over a Month: Deribit Continues to Dominate
• Ether Stalls After 8% Rally as Exchange Inflows Spike

The son of former Renault and Nissan head and fugitive Carlos Ghosn used Coinbase to pay two men $600,000 in bitcoin to get his father out of Japan last December.

• U.S. prosecutors said Wednesday that Anthony Ghosn sent 63 bitcoin to Michael and Peter Taylor, a father and son team who smuggled Carlos Ghosn out of Japan on December 30, 2019.
• Coinbase gave evidence to Japanese investigators this week (see below), showing a series of transactions between January and May 2020 from Ghosn’s Coinbase account to one belonging to Peter Taylor.
• Ghosn transferred what was then worth $500,000 of bitcoin to Taylor in seven transactions – the 63 bitcoin would now be worth $608,000.
• Michael Taylor, a former green beret, and Peter Taylor are currently being held by U.S. authorities on the request of Japan, which is trying to extradite them.
• U.S. prosecutors filed the evidence in opposition to the Taylors’ bid to be released on bail.
• Wednesday’s filing shows a bank account managed by Peter Taylor also received two wire transfers, totaling over $870,000, from Carlos Ghosn’s account in October 2019.
• Ghosn was arrested in November 2018 on allegations of false accounting and then of shifting a personal loss of $16.6 million onto Nissan’s books.
• Pleading innocent, Ghosn was held under house arrest for more than a year until his escape.
• In December, he was smuggled out of the country in a double-bass case by the Taylors, who pretended to be a band playing at a dinner party.
• Ghosn is now hiding out in his childhood home of Lebanon, having accused the “rigged” Japanese justice system of denying his basic human rights.

See also: Wanted Wirecard Exec Said to Be Sheltered by Secret Service in Russia

See the Coinbase evidence below:

Related: Binance’s Fiat-Gateway Partner Banxa Expanding to US

Related Stories

• Crypto Bank Hopeful Bitcoin Suisse Raises $48M in First-Ever Round
• Central Bank Board Member Says CBDCs Raise More Questions Than Answers
• Opera’s Built-In Crypto Wallets Have 170K Monthly Active Users

The stock market isn’t usually considered an ally of cryptocurrencies, but with the big U.S. exchange Coinbase now rumored to be considering a share listing, some digital-asset industry insiders say a move toward more public ownership could accelerate mainstream adoption. 

By becoming publicly traded, cryptocurrency-focused companies could appeal to investors in the $35 trillion U.S. stock market. Back-of-the-envelope math shows that just a 1% allocation into crypto stocks could mean $350 billion of new investments for companies in the space. Compare that with the $287 billion total market value of digital-asset markets, and suddenly there’s a lot more capital going into the industry, even if it’s not directly into cryptocurrencies. 

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: Ether Leaves Bitcoin Behind With 2020 Gain of Over 100%

New listings and initial public offerings would also be sure to generate a raft of coverage on analog-world TV channels like CNBC, while the Wall Street Journal and Bloomberg News publish ostensibly breathless headlines on first-day trading action. No publicity is bad publicity, and all this just gives digital-asset companies generous exposure to a broader swath of potential investors who typically only deal in stocks. 

Steve Ehrlich, CEO of the crypto brokerage platform Voyager Digital, which has been publicly traded on the Toronto Stock Exchange since February 2019, told First Mover in a phone interview that stock-market listings promise a whole new vista for the cryptocurrency industry. 

“We always felt that being a public company was something that was necessary in the crypto space,” Ehrlich said, over the phone. “It’s great for the industry.”

A handful of crypto companies have already gone down the route of listing shares.

Related: Blockchain Bites: OCC’s Crypto Letter, Eth 2.0’s ‘Official’ Testnet and Dinwiddie’s Tokenized Airball

According to CoinDesk Research, there’s more than two dozen publicly-traded firms, from the the bitcoin-mining firm Argo, which listed on the London Stock Exchange in 2018, to the bitcoin-mining computer maker Canaan, which listed depositary receipts on the Nasdaq late last year. Bitmain, another mining-computer manufacturer, previously considered an initial public offering (IPO) in Hong Kong in 2018 and is rumored to be exploring a listing in the U.S. 

Earlier this month, industry sources told Reuters that the San Francisco-based exchange Coinbase, worth approximately $8 billion at its last valuation, was seriously considering a direct listing in 2021.

Just this week, the Alibaba affiliate company Ant Group announced it was planning an IPO in both Shanghai and Hong Kong at a reported $200 billion valuation. Although the company is best known for its payment app Alipay, the Hangzhou-based company also runs its own highly scalable blockchain network and is believed to be one of the planned primary issuers for China’s digital yuan.

Should it go through, the dual IPO would arguably make Ant Group the largest company operating in the blockchain space. 

Ehrlich, a long-time entrepreneur who previously served as a top executive at the online stock-trading firm E*Trade, said he welcomed the news that companies like Coinbase were now considering share listings. 

According to Ehrlich, not only can auditors scrutinize Voyager’s financial statements, they can also help to make sure company operates in an ethical and regulatory compliant manner. That could provide the accountability, transparency and comfort demanded by investors, especially for a still-maturing industry that has been pocked by controversies, scams, hacks and fraud. 

Binance, the largest exchange in the world, has resisted calls to divulge the location of its headquarters. Tether, the $10 billion stablecoin, is dogged by allegations that the token is not properly backed by dollar reserves. Just this week, the CEO of Canadian exchange Coinsquare was forced to resign after the local regulator found the exchange regularly made fake trades on the platform.

“Our customers love it, the transparency that comes with it,” Ehrlich said.

Yet another benefit: More listings might allow stock investors to bet on individual or multiple executive teams and strategies within the cryptocurrency industry. That way they’re not limited to putting all eggs into the bitcoin basket, as envisioned by proposed issuers of a bitcoin exchange-traded fund, which has yet to win approval from the U.S. Securities and Exchange Commission. 

It goes without saying that a bet on Coinbase would represent a bet on broad growth in digital-asset markets, including “altcoins” like ether and litecoin.  

Grayscale, which offers cryptocurrency funds known as “trusts” that trade like stocks, reported last week that total capital inflows into non-bitcoin products had climbed seven-fold in the past 12 months. (Grayscale is a unit of the investment firm Digital Currency Group, which also owns CoinDesk.)  

More stock listings could satiate growing investor appetite for exposure to a broad range of cryptocurrencies, similar to the way a mutual fund might buy a big, vertically integrated energy producer like Exxon for exposure to oil, natural gas, refining and retail distribution — without ever having to venture directly into commodities markets. 

In an industry where market-leading companies can get away with not disclosing their headquarters, the trend could help bring a much-needed dose of transparency and trust to the digital-asset space. 

Tweet of the day Bitcoin watch

BTC: Price: $9,561 (BPI) | 24-Hr High: $9,682 | 24-Hr Low: $9,454

Trend: Bitcoin is trading flat so far on Friday, after three consecutive daily gains. 

The leading cryptocurrency by market value is changing hands around $9,560, representing a very slight decline on the day. Bitcoin was rejected near $9,700 during Thursday’s U.S. trading hours. Prices are still up over 3% on a week-to-date basis. 

The weak tone seen at press time could be associated with the renewed risk aversion in traditional markets. The major European stock markets are down over 1% at press time seemingly due to China-U.S. tensions. China has announced the closure of the U.S. consulate in the southwestern city of Chengdu in retaliation to the U.S.’s recent decision to shut down Beijing’s diplomatic mission in Houston.

While bitcoin may face selling pressure, the immediate bullish bias confirmed by Tuesday’s 1.5% gain would be invalidated only if prices find acceptance below $9,480.

A strong bounce from that level would reinforce the immediate bullish bias and shift the focus to $9,800 – the resistance of the trendline falling from the December 2017 to June 2019 highs.

If prices establish a foothold below $9,480, we may see a deeper decline toward $9,150 (July 21 low). 

Related Stories

• First Mover: Ethereum a Victim of Its Own Success as Fees Soar, Vitalik Complains
• 3 Reasons Bitcoin’s Price Could Soon Rise to $10K

Digital banking infrastructure provider Banxa is making a move into North American markets.

• In a strategic partnership announced Thursday, Australia-based Banxa plans to leverage custody and settlement infrastructure from exchange platform Zero Hash to provide the regulatory and technology means for its expansion.
• The partnership will see Banxa expand its fiat gateway API solutions for exchanges, wallets and other crypto-related businesses across North America.
• Banxa’s CEO, Holger Arians, said the startup was in the final stages of a Toronto Stock Exchange listing that would position the company as the “first crypto payment service provider to be publicly listed.”
• Zero Hash is a registered Money Service Business under the oversight of FinCEN, and is also a registered Money Transmitter in over 40 U.S. states.
• It was awarded a “BitLicense” allowing it to operate in New York State in 2019.
• Banxa already provides a fiat onramp for users of Binance and Edge Wallet, among others.
• It recently raised $2 million in a Series A funding round back in January of this year.

See also: Seed CX to Close Exchange, Focus on Settlements in Company Shift

Related Stories

• Carlos Ghosn’s $600K Bitcoin Escape Fee Paid via Coinbase
• Crypto Bank Hopeful Bitcoin Suisse Raises $48M in First-Ever Round
• Central Bank Board Member Says CBDCs Raise More Questions Than Answers
• Opera’s Built-In Crypto Wallets Have 170K Monthly Active Users

Bitcoin Suisse has raised more than CHF 45 million (~$48 million) in its first-ever funding round.

• The Series A was for 16.4% of total equity – 10% newly-created – and completed in four months.
• It was led by Roger Studer, the former investment head of Vontobel, a private bank that held approximately $215 billion in assets under management at the end of 2019.
• A Zug-based financial services provider for the digital asset industry, Bitcoin Suisse said the funding round pushed its valuation to CHF 302.5 million (~$327 million).
• Some of the funding will expand the company’s lending business and staking services, as well as the custodial solution.
• Bitcoin Suisse is applying for a Swiss banking and securities dealer license, as well as a banking license in neighboring Liechtenstein.
• A spokesperson told CoinDesk it had set aside funding for new product offerings, should the license applications be successful.
• In a statement, Bitcoin Suisse said H1 2020 performance had been strong, with strong growth across its product and service range – the Series A satisfied capital needs for the foreseeable future.
• The spokesperson previously told CoinDesk that Bitcoin Suisse had started initial preparations for a public listing – either an IPO or direct listing – for some time in the next few years.
• A security token offering (STO) might also be in the works, but this will depend on market demand and Bitcoin Suisse’s capital requirements.
• The spokesperson told CoinDesk Friday that the Series A put the bank hopeful in a “good position” to move ahead with its listing plans.

See also: Swiss Banks Enter the Age of Bitcoin

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• Carlos Ghosn’s $600K Bitcoin Escape Fee Paid via Coinbase
• Binance’s Fiat-Gateway Partner Banxa Expanding to US
• Central Bank Board Member Says CBDCs Raise More Questions Than Answers
• Opera’s Built-In Crypto Wallets Have 170K Monthly Active Users

A board member of the Czech National Bank has provided a less than glowing opinion on the current viability of central bank digital currencies (CBDCs).

• Tomas Holub told 4H Production journalist Martina Sobkova in a wide-ranging interview on Tuesday that the role CBDCs had in providing direct liquidity to clients’ accounts was technically an “attractive concept.”
• However, Holub stopped short of praising CBDCs, which he dubbed “helicopter money,” because he hasn’t seen a solution that answers outstanding questions surrounding the nature of CBDCs.
• Helicopter money is a term used to describe newly printed money that distributed publicly to stimulate an economy in a recession or or at times of zero interest rates.
• Those questions included whether digital currency would be anonymous or not, whether anti-money laundering (AML) standards would be applied to the anonymous variant, and if the currencies would be interest-bearing.
• When asking these questions, Holub said, many more arise and he is yet to see any CBDC project that provided full, detailed answers.
• Holub also took aim at Czech law, which he said lacked the power to give the central bank the authority to issue citizens credit in the form of digital currency due to European legislation standards.
• When asked if the Czech Republic would be a pioneer in CBDCs, he said the country’s share of currency in circulation is still fairly high and is growing long-term, countering the idea of a liquidity crisis that might prompt such a launch.
• Still, a digital currency from the central bank is a future possibility, Holub said.

See also: Fed Paper: Central Bank Digital Currencies Could Replace Commercial Banks – But at a Cost

Related Stories

• Carlos Ghosn’s $600K Bitcoin Escape Fee Paid via Coinbase
• Binance’s Fiat-Gateway Partner Banxa Expanding to US
• Crypto Bank Hopeful Bitcoin Suisse Raises $48M in First-Ever Round
• Opera’s Built-In Crypto Wallets Have 170K Monthly Active Users

Opera’s web browser is slowly amassing a following among those advocating for a decentralized internet, with 170,000 users now engaging with its built-in Ethereum, Tron and Bitcoin wallets every month.

• Announcing crypto wallet usage numbers for the first time Friday, the longstanding Norwegian browser company gave some context to its two years-long courting of the Web 3, decentralized application (dapp) and distributed computing communities.  
• While the firm would not provide a breakdown of the numbers by blockchain network, Charles Hamel, head of crypto at Opera, said Ethereum is “by far the most popular.”
• While the wallet engagement figures pale in comparison to Opera’s total monthly active user-base (about 360 million) they’re not quite as far off from similar web-wallet products. MetaMask, a wallet browser extension provider, measured 192,000 monthly active users in May 2019.
• Opera worked on Friday to woo yet more wallet users by announcing that decentralized application clearinghouse Dapp.com will now power its Web 3 app store.
• U.K. users will now also be able to access the crypto top-up feature that Opera had previously rolled out in the U.S. and European markets. Fiat-to-crypto bridge company Ramp Instant will provide the U.K. service, Opera said.

Related Stories

• Carlos Ghosn’s $600K Bitcoin Escape Fee Paid via Coinbase
• Binance’s Fiat-Gateway Partner Banxa Expanding to US
• Crypto Bank Hopeful Bitcoin Suisse Raises $48M in First-Ever Round
• Central Bank Board Member Says CBDCs Raise More Questions Than Answers

In the American epic, Lonesome Dove, by Larry McMurtry, there are two characters who can see much further than the other members of their gang: Captain Gus McCrae and Joshua Deets. McCrae’s co-captain, Woodrow Call, and their fellow cowboys learn to take Deets and McCrae at their word when they say they see something out where the Earth bends.

Listening to Filecoin founder Juan Benet is like that. 

When he’s really trying to peer into the future of the internet, what he sees is hazy and chimerical, but he’s seeing something, anticipating either what must be built or the consequences of inaction.

Related: With Chat Privacy Under Threat in US, Firm Develops ‘100% User-Controlled’ Messaging

This stood out Wednesday night when Benet shared the Zoom stage with Ethereum creator Vitalik Buterin and former Coinbase executive Balaji Srinivasan, both of whom are strong futurists.

The conversation, sponsored by HackFS, ETHGlobal and Protocol Labs, was billed as a “debate,” but one had to wonder what these fellow travelers down blockchain’s volatile highway would actually disagree about. 

To state the low-energy dispute simply, Srinivasan is focused on urgently shaking up the information distribution system, whereas Benet is more worried about people ever trusting anything they don’t see themselves. That is: verification of source material.

“[People] don’t have a good mechanism for achieving truth,” Benet said. “That is a much worse state than where we are now, and that could be precipitated by centralized or decentralized media not taking these problems seriously.”

Get off Twitter

Related: Jack Dorsey Has Floated Decentralized Fact-Checking at Twitter. Here’s What That Could Look Like

Srinivasan strongly advocates that superusers of social media gradually exit networks like Twitter and start reverting back to their own blogs again. 

He’s been focused on this for months (see “This Week in Startups” from April and his keynote at Messari’s Mainnet virtual conference in June). More recently, he described how Twitter users could build a minimum viable product for monetizable distribution from their own web domains.

In Wednesday’s discussion, Srinivasan immediately linked the problems of social media with the problems of legacy media.

“Decentralized media also means if you give individuals the ability to monetize on their own, potentially pseudonymously, there’s less pressure for them to be part of an intellectual orthodoxy where they have to repeat certain nostrums to retain their job in an uncertain environment,” he argued. The successful Substack newsletters are the ones that stand out for their originality, he said. 

But Benet is not as ready to dismiss the practice of reporting as decisively as Srinivasan. He said:

“The entire history of journalism is filled with incredible important advances and improvements that came simply because there was a series of articles that caused an important change to happen. So just recalling that that’s the point, and even though right now the entire media incentive structure is kind of messed up, both in traditional media and social media, let’s figure out how we can build a system that promotes that.”

For his part, Buterin went straight to the problem of social media, though, describing what he felt like everyone believed Twitter to be, the great “water cooler” where all kinds of people could chat and cross over tribal lines.

It sort of started that way, but that’s not where it ended up. “All of these different tribes that really disagree with each other are really yelling at each other and it’s not at all clear that the result is better,” Buterin said.

Srinivasan praised Facebook, Twitter and others for taking buggy services and making them available to the masses, for free. 

But that all came at a cost, he argued.

“There’s an election happening every day on Twitter, and this is literally how policy is happening,” Srinivasan said. “Twitter is not always real life but it will be and it becomes real life.”

Scaffold of truth

Benet wants to see these networks disrupted, but he also thinks that with every new experiment on the distribution side we accrue a bit more technical debt on the validation side. Distribution of information is light years ahead of where it was in the 1980s, but, he said:

“Part of what’s happening now is we didn’t put in any way of controlling for manipulation vectors and attack vectors in the entire stack. We’ve created a set of systems that can balkanize not around access or thought but rather balkanize on manipulation targets. It’s very easy for attackers to divide the network.”

A core of this problem is disinformation campaigns that trick people into believing things about the world that aren’t true, in such a way that the untruths persist even when they are repeatedly debunked.

Benet is skeptical about future experiments in social media if they don’t happen alongside even more aggressive experiments in the verifiability of data and information.

“A number of the first-order suggestions for most decentralized media … will make that problem orders of magnitude worse, not better,” he said. “So I think in order to succeed here, we have to look ahead of those problems and start talking about those larger issues of how do you get to systems that are attack-resistant, and that enable some distributed notion of getting to truth.”

Srinivasan is also thinking seriously about the truth problem. He talked about two concepts: oracles and advocates.

Oracles are cryptographically signed data feeds that prove their provenance and the fact that they haven’t been tampered with. Advocates represent a proposal for machine-readable statements about perspective, a sort of “robots.txt” file for ideology, that would allow search engines and readers to understand the disposition of any writer as a way to characterize the arguments they make.

“I like where a lot of that is headed,” Benet said. “I think there’s a massive problem in just establishing truth.”

A more perfect web

In a TEDxSanFrancisco talk in 2016, Benet said the internet is “the planet’s most important technology.” But even then he felt it could be much better. 

On Wednesday, it was clear he was still only at the beginning of some very complex ideas about the future.

Benet spoke about using natural language processing to find ways to turn human speech into structured data, so factual data could be extracted from claims.

He also talked about the need for a way to describe “the scaffold of claims,” that is to look back in an organized fashion at the prior claims any given new claim is based on. This would help humans or machines go backward to identify the truth or non-truth of any particular argument.

Benet’s talking much more about the technical stack the web is built on here than he is about companies or business models. Almost everything on the web so far has been built on Linux, Apache, MySQL and Python, or versions thereof. That’s the stack. Benet thinks there could be a future where a universal data store of some kind is a part of that stack, one that many websites can draw from.

“My impression is we are headed to a much better future where the data structures are going to be decoupled from the [user interfaces],” Benet said. “There will be many different systems built atop the same information graph.”

And this was a point where Srinivasan agreed. 

It’s a crude version of it, but on some level Bitcoin already is what Benet is describing. It’s a shared database about the truth, only in Bitcoin’s case that truth extends no further than who owns which unspent transaction outputs. 

It’s a start, though, and one Srinivasan noted the wider world doesn’t really appreciate. He said:

“I think something that is massively still underappreciated by folks outside our space is the extent to which something like that already exists, in the sense that Coinbase and Binance and Blockchain.info … are all different layers over the Bitcoin and Ethereum blockchains.”

So maybe those two blockchains are the Captains McCrae and Call of this Web3 epic, leading us all like cantankerous cattle on the long road to the utopia of a decentralized Montana. 

It remains to be seen which of the two will have to carry the other’s corpse back to Texas, where he can give a last look at the burned-down saloon of our past internet, where Twitter played piano and Facebook tended bar.

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• Vitalik Buterin

Out of the nearly $8 billion in deposit growth that Signature Bank saw in the second quarter of 2020, $1 billion was raked in by the firm’s digital assets team, according to the bank’s most recent earnings report.

While Signature doesn’t break out its total deposits by business line, the increase is a record for the New York-based, crypto-friendly bank. On an earnings call, Signature CEO Joseph DePaolo also attributed deposit growth to an increase across every business line in the bank, including the blockchain-based payment platform Signet. 

The crypto industry is often a rich source of low-cost, non-interest bearing deposits for crypto-friendly banks like Signature, Silvergate Bank and Metropolitan Commercial Bank, and analysts have paid close attention to Signature’s deposit growth as a result. 

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

“This is now the fourth consecutive quarter exceeding $1 billion in both total and average deposit growth, non-interest bearing deposits of $16.1 billion still represent a high 32% of total deposits since the second quarter of last year,” DePaolo said on an earnings call on Tuesday. 

The cost of those deposits also decreased to 56 basis points from 98 basis points because of the low interest rate environment, the CEO added. For the sake of improving profitability, the bank wants to get the cost of deposits down around 40 basis points, the CEO said. 

The company’s executive vice president of corporate and business development, Eric Howell, commented on the earnings call that the bank’s net interest margin will be up if the bank gets back to a more “stable” deposit growth of between $500 million to $1 billion a quarter.

The bank earned around $117 million in second quarter 2020, a significant decrease from the $147 million in second quarter 2019 after putting up a provision for credit losses of $93 million this last quarter. 

Related: Silvergate Adds 46 More Crypto Clients in Q1 While Existing Customers Increase Deposit Levels

Notably, the bank made Paycheck Protection Program (PPP) loans to nine crypto companies.

Signet growth

Custody provider Copper announced on Monday that it had integrated with the bank’s blockchain payments platform, Signet. 

The integration means Copper clients like crypto exchanges will now get to use Signet for faster payments and settlement times in U.S. dollar transactions. 

“Previously, the process of paying and settling transactions was far more complex,” Copper CEO Dmitry Tokarev said in an emailed statement. “In order to route fiat currencies, customers had to go from their exchange account, back to Signature Bank, then back to their exchange account. Now, both fiat and digital assets can be moved within the Copper platform.”

Copper offers multi-signature custody and prime brokerage to its clients. This is provided by Copper’s Walled Garden infrastructure, giving clients access to trading facilities without taking digital assets out of custody. 

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Thursday was an up day for both bitcoin and ether prices.

• Bitcoin (BTC) trading around $9,590 as of 20:00 UTC (4 p.m. EDT). Gaining 2% over the previous 24 hours.
• Bitcoin’s 24-hour range: $9,364-$9,686
• BTC above 10-day and 50-day moving averages, a bullish signal for market technicians.

Read More: 3 Reasons Bitcoin’s Price Could Soon Rise to $10K

Bitcoin prices rose for a third straight day to its highest price in a month, reaching $9,686 Thursday. George Clayton, managing partner of New York-based Cryptanalysis Capital, expects it to go much higher. “We are bullish and higher prices are better for us, but the rise is really no big deal,” he said. 

Related: No One Has Traded Bitcoin Options on Bakkt for Over a Month: Deribit Continues to Dominate

Constantin Kogan, partner at crypto fund of funds BitBull Capital, pointed out The Fear and Greed index added 5 points at once and is in the “greed” zone.  “Bitcoin has risen above the psychologically important $9,500 mark. This indicates a positive sentiment from investors,” Kogan told CoinDesk.

A short squeeze in the cryptocurrency derivatives market may have helped to accelerate the price rise. Over the past week, some $61 million of short positions were liquidated, outweighing the $18 million of long liquidations on derivatives exchange BitMEX. As the short sellers got squeezed, bitcoin moved to $9,400 Tuesday, and then over $9,500 on Thursday. “Big levels are being tackled,” said Vishal Shah, an options trader and founder of derivatives exchange Alpha5.

Adi Yona of algorithm trading firm Efficient Frontier noted payments companies like PayPal jumping on the cryptocurrency bandwagon as more bullish sentiment. “Bitcoin has jumped in its last move. Paypal’s 325 million users could buy and sell bitcoins. This could have a major impact on volume and pricing as the crypto markets open up to new populations.”

Read More: PayPal Picks Paxos to Supply Crypto for New Service, Sources Say

Related: Ether Stalls After 8% Rally as Exchange Inflows Spike

BitBull’s Kogan also noted the performance of gold Thursday. Gold is nearing an all-time high, up 0.57% Thursday, at $1,882 per ounce. “Both bitcoin and gold almost completely won back their losses after the March dip in price,” he said. 

Read More: Banks in US Can Now Offer Crypto Custody Services, Regulator Says

Total value in DeFi over $3 billion

The second-largest cryptocurrency by market capitalization, ether (ETH), was up, trading around $273 and climbing 11% in 24 hours as of 20:00 UTC (4:00 p.m. EDT). Jack Tan, CEO of Taiwan-based Kronos Research, expects $300 ether soon. “It’s a continued bullish trend in my view, I would take profits around low-mid $300s.”

The total value locked in decentralized finance (DeFi) surpassed the $3 billion mark July 21, according to information from aggregator DeFi Pulse. The total value, at $3.37 billion Thursday, has quintupled since the start of 2020.

Stablecoin project Maker leads DeFi projects with $718 million in value locked. Lenders Aave and Compound follow with $560 million and $547 million, respectively. Decentralized exchanges (DEXs) Synthetix, with $483 million locked, and Curve, with $342 million locked, round out the top five. Of the top 35 projects on DeFi Pulse, only Bitcoin’s Lightning Network, with $9.4 million in total value locked, is not built on the Ethereum platform. 

Other markets

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

• tezos (XTZ) + 6.2%
• chainlink (LINK) + 5.5%
• xrp (XRP) + 4%

Read More: BitGo Now Supports Custody and Staking of Tezos’ XTZ

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

• 0x (ZRX) – 1.4%
• nem (XEM) – 1%
• lisk (LSK) – 0.50%

Read More: Banks in US Can Now Offer Crypto Custody Services, Regulator Says

Equities:

• In Asia the Tokyo Stock Exchange is on holiday. Hong Kong’s Hang Seng gained 0.45% as tech stocks pushed the index higher. 
• In Europe the FTSE 100 closed flat, up just 0.07% as increased stimulus measures boosted consumer confidence.
• The U.S. S&P 500 index fell 1.2%, dragged down by losses in tech stocks Microsoft, Netflix, Amazon and Tesla.

Read More: Twitter Hackers Saw DMs From 36 Accounts, Including CoinDesk’s

Commodities:

• Oil is down 1.8%. Price per barrel of West Texas Intermediate crude: $41.16

Read More: Ethereum a Victim of Its Own Success as Fees Soar, Vitalik Complains

Treasurys:

• U.S. Treasury bonds were mixed Thursday Yields, which move in the opposite direction as price, were down most on the 30-year, in the red 4.9%.

Read More: Ethereum 2.0 Developers Announce ‘Final’ Testnet Before Network Launch

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Bitcoin options traders have completely deserted Bakkt, with its volume and open interest flatlining at $0 since June 15.

• The Intercontinental Exchange’s subsidiary launched its bitcoin options market in December 2019. 
• Open interest for the exchange’s options market has suffered complete inactivity before, but the current 38-day streak dwarfs other periods. 
• Bakkt’s options volume has also dropped to $0 since April 23, according to Skew.
• Bakkt declined to comment when contacted by CoinDesk.

• The record for daily options volume in Bakkt is $528,000, set on January 8.
• According to Skew, 92% of bitcoin options trading volume is controlled by Panama-based exchange Deribit, which reported $101 million in volume Tuesday.

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Avanti Financial expects to open its doors this October with a new bank-issued digital asset.

Led by Wyoming blockchain advocate Caitlin Long, the crypto-friendly bank announced Thursday its application was accepted by the Wyoming Division of Banking on July 15. Avanti will open in the fall because the regulator accelerated the timeline of its application process. 

In the same announcement, Avanti revealed its plans to issue Avit, a programmable digital asset that can only be issued by banks and will be treated as a cash equivalent. With Blockstream as the bank’s technology partner, Long said in an interview that “one could presume that the Bitcoin blockchain will be involved,” but could not comment further. 

Related: Binance Enters German Market via Partnership With Crypto Investment Firm

Read more: Caitlin Long’s Avanti Raises $5M, Submits Wyoming Bank Charter Application Draft

If Avanti’s charter application is approved in October, the bank will be the only financial institution capable of issuing Avit. While Avit would not be pegged one-to-one to the U.S. dollar – because it’s a new digital asset, not a digital representation of a real-world asset – the currency would be 100% backed by a reserve of liquid traditional U.S. assets. (The bank requires this reserve for all the assets it custodies.)

Avanti claims Avit will not have the same delayed settlement and chargeback issues that traditional fiat payments face. Because an automated clearing house (ACH) transaction can be reversed several weeks after a payment has been made, exchanges and other asset service providers often hold traders’ cash for several days, Long said. 

“There’s a lot of counterparty risk in OTC trading of digital assets,” Long said. “Everyone wants to settle second. What we’re doing is offering the ability for both sides to settle simultaneously.”

Related: Banks in US Can Now Offer Crypto Custody Services, Regulator Says

The bank also claims Avit will not have the legal, accounting or tax issues associated with stablecoins.

“No one knows the legal enforceability of digital assets in the U.S. because they fall through the cracks,” Long said. “The legal clarity of all stableicons is not there. Tax and accounting is also far from clear.”

Read more: Banks in US Can Now Offer Crypto Custody Services, Regulator Says

Long argued that despite the Office of the Comptroller of the Currency (OCC) letter clarifying that U.S. banks may provide crypto custody, the special purpose depository institution in Wyoming is still the most advanced framework for crypto custody in the U.S. 

“The OCC and 49 other states do not yet have in place the comprehensive legal structure necessary for enabling digital asset custody without significant legal risk,” Long said in a press statement, adding: 

“They also do not have a roadmap for courts to adjudicate disputes involving digital assets and do not provide the certainty in bankruptcy that Wyoming provides for digital asset custodians. Its prudential standards make Wyoming the only jurisdiction in the U.S. where digital asset custody in a bank can truly be executed in a safe and sound manner.”

The Wyoming Division of Banking did not return a request for comment by press time.

Related Stories

• Standard Chartered to Launch Institutional Crypto Custody Solution
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Arca Capital Management’s flagship hedge fund – the Arca Digital Assets Fund – is up 76.74% in 2020, even as some cryptocurrency-focused hedge funds appear to be floundering and still others are folding due to lackluster demand.

• According to a monthly investor note obtained by CoinDesk, Arca Digital Assets Fund, which invests in crypto companies’ tokens, equities and bonds, has grown 9% or more every month this year except for in February (-3.24%) and March (-4.36%) when it followed global capital markets’s virus-induced plunge.
• The fund’s 76.74% year-to-date gains beat the S&P 500 (+1.12%), Bloomberg’s crypto index BCGI (+38.01%) and bitcoin (+30.39%). January’s 35.37% growth was the fund’s strongest single month of 2020. Last month it gained 9.9%, the investor note shows.
• Arca’s Investment Adviser registration documents reveal that Arca Digital Assets Fund had a gross asset value of $2,976,028 as of March 30. A source familiar with the matter told CoinDesk that Arca has doubled its assets under management every quarter of 2020. 

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• Boston Fed Wants to Hire a Digital Currency Engineer
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A broker-dealer registered with the Securities and Exchange Commission (SEC) is preparing to launch Gladius: a regulatory-compliant security token platform.

• New Hampshire-based Watchdog Capital said Thursday that issuers would be able to use Gladius to offer security tokens.
• In a statement, Watchdog said Gladius could provide companies with more access to capital as well as better opportunities for investors.
• Gladius, which has been built to be compatible with existing U.S. securities laws, is currently in beta mode.
• Bruce Fenton, CEO of Watchdog’s parent Chainstone Labs, told CoinDesk Gladius plans to host the first offering in the next three months.
• As Watchdog is a registered broker-dealer, Fenton said Gladius can be used for SEC-exempted offerings, including crowdfunds.
• Watchdog has to approve each offering; certain Reg A offerings may also need approval from the SEC.
• The broker-dealer does not have the appropriate licenses to offer secondary trading or custodial services on Gladius.
• The platform is blockchain-agnostic and can also be used to issue paper equity – investors can either pay in fiat or cryptocurrencies.
• Fenton said his company believes it’s the only broker-dealer launching a U.S. security token platform at this time.
• He added that security tokens may well open up a new regulated investment avenue for companies in the decentralized finance space.

See also: Mauritius Releases Guidance for Regulated Security Token Offerings

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• Arca’s Flagship Crypto Hedge Fund is Up 77% in 2020
• Prime Factor Capital Is Shutting Down: Lack of Capital Cited as Prime Factor
• Boston Fed Wants to Hire a Digital Currency Engineer
• Winklevoss-Owned Gemini Now Provides Custody for .Crypto Blockchain Domains

In a motion to dismiss a lawsuit brought by Ripple, YouTube argues it isn’t liable for crypto scammers using its platform. 

The motion filed on Monday in the  U.S. District Court for the Northern District of California, argues that under  Section 230 of the Communications Decency Act, “interactive computer services,” like YouTube, cannot be treated as publishers of third-party content and hence aren’t liable for it. 

• Ripple had sued YouTube in April, alleging that the video sharing platform did not sufficiently control XRP giveaway scams on its platform that caused monetary loss for users and hurt Ripple’s reputation. 
  
• The crypto firm’s lawsuit alleged that scammers have defrauded “millions of XRP valued at hundreds of thousands of dollars” from victims and cited at least one instance where a scammer apparently received $15,000 in XRP from a victim.
  
• In its motion to dismiss the lawsuit, YouTube argues that Ripple’s claims run up against  immunity provided against such lawsuits to online publishers under Section 230. The motion said that Ripple has filed the lawsuit “even though YouTube itself is a victim of the scam,” since the attackers took over user accounts on the platform.
  
• YouTube’s motion to dismiss the allegations boils down to the idea that the video-sharing giant did not willingly or knowingly engage in any of the scams or copyright infringement, and cannot be held liable for  any third party content on its website. The firm’s motion  also adds that it shut down such scams whenever it was alerted to them. 
  
• Responding to allegations that YouTube also helped scammers advertise their schemes by running paid ads for them, the video sharing giant’s motion to dismiss maintained that it could not be held liable for third-party content. “And whether YouTube ‘approved’ or ‘endorsed’ the ads by allowing them to be published is immaterial,” the motion noted. 
  
• YouTube argues that Section 230 protects the video-sharing giant from Ripple’s allegations and therefore the case should be dismissed. A Ripple representative did not immediately respond to a request for comment on YouTube’s motion to dismiss. 
  
• In another lawsuit filed against YouTube yesterday, Apple’s co-founder Steve Wozniak alleged that the firm had allowed bitcoin giveaway scams that use his likeness to thrive on its platform. Wozniak, along with 18 other plaintiffs, is seeking punitive damages and demanding that Youtube take down all such scams as well.
  
  
  

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