Price Analysis 18/09: BTC, ETH, XRP, BCH, LTC, EOS, BNB, BSV, XLM, ADA
Price Analysis 16/09: BTC, ETH, XRP, BCH, LTC, BNB, EOS, BSV, XMR, ADA
Price Analysis 19/08: BTC, ETH, XRP, BCH, LTC, BNB, EOS, BSV, XMR, XLM
Price Analysis 21/08: BTC, ETH, XRP, BCH, LTC, BNB, EOS, BSV, XMR, XLM
The United States Department of the Treasury has added multiple cryptocurrency addresses to its Specially Designated Nationals (SDN) list under the Foreign Narcotics Kingpin Designation Act, also known as the Kingpin Act. These addresses, and the individuals associated with them, have been deemed to be associated with foreign narcotics operators.
The Treasury updated its SDN list on Aug. 21. The three alleged narcotic operators associated with these addresses are Chinese citizens Xiaobing Yan, Fujing Zheng and Guanghua Zheng. The three individuals all have associated Bitcoin (BTC) addresses mentioned on the SDN list, and Guanghua Zheng additionally has a Litecoin (LTC) address.
As explained in a White House news release from 2015, the Kingpin Act exists to ban trading and transactions between narcotics traffickers and U.S entities — namely companies and individuals. Under the act, government branches coordinate to investigate foreign narcotics traffickers. They are then named in a list that is brought before the President, who subsequently determines whether it is appropriate to impose U.S. sanctions.
Mnuchin: Bitcoin is vulnerable to money laundering
As previously reported by Cointelegraph, U.S. Treasury Secretary Steven Mnuchin believes that Bitcoin is vulnerable to money laundering. Mnuchin said that he intends to closely monitor Bitcoin and believes that billions of dollars in cryptocurrency are used for illicit purposes.
Mnuchin has also claimed Bitcoin is used for money laundering much more effectively than the U.S. dollar. According to Mnuchin, the government combats “bad actors in the U.S. dollar every day to protect the U.S. financial system.”
Binance is expected to launch its upcoming exchange platform in the United States by the end of the year, with the company’s executive estimating that the platform will launch within “a month or two.”
In the interview, Changpeng Zhao (aka CZ), the CEO of Binance, predicted the launch despite acknowledging that many things are still “in flux” regarding the platform’s planned operations in the U.S.
CZ noted that the U.S. has historically enacted “very clear regulations” regarding financial technology, adding his expectation that despite current “uncertainties in the regulatory space,” early adopters in the industry will likely be better rewarded. He stated:
“The U.S. has always been a very important market; globally it’s one of the biggest markets for any business, including in cryptocurrency. We want to be fully compliant. Before we didn’t feel we had the experience to do that but now we have our partners so we want to take this opportunity to explore the market.”
Binance announces upcoming U.S. exchange
On June 14, 2019, Binance reviewed its terms of service to restrict U.S.-based individual and corporate customers from accessing its main platform, Binance.com, effective as of Sep. 12, 2019. At the time, 15% of Binance’s traffic came from customers residing in the U.S., down from 30% of traffic as of early 2018.
On the same day, Binance announced that it had begun preparations to launch an exchange to service cryptocurrency traders in the U.S. The announcement also revealed a partnership with a little-known firm called BAM Trading Services — with the partnership set to see Binance license its matching engine and wallet technologies to BAM to launch Binance US.
CZ indicated that operations of the U.S.-based platform will be “led” by BAM,” adding that the exchange will “serve the U.S. market market in full regulatory compliance.” Binance’s website quoted “a representative from BAM Trading Services,” who stated, “It is an honor to partner with Binance to launch the U.S. extension of Binance, leveraging its tier-one security and technology in tandem.”
Little is known of BAM Trading Services
Despite spearheading the efforts of the largest cryptocurrency exchange by volume to service in the U.S. market, very little is known about BAM. The company created a Twitter account during April 2019, the same month that Binance US started an account, with both accounts appearing to not have posted any tweets until the day before the partnership was announced — i.e., June 13.
The Twitter account provides no links to a website for the firm and has only posted nine tweets so far, with the only other social media account held by the company comprising a Medium page with just a single post.
The announcement of the partnership with Binance also came one day after the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) certified BAM Trading Services as a Money Services Business in California. Reports have shown that the Delaware Department of State’s Division of Corporations indicates BAM Trading Services was first licensed in the state of Delaware on Feb. 4, 2019.
Former Ripple exec appointed as BAM Trading Services CEO
On July 2, 2019, BAM announced that Catherine Coley, the former head of XRP institutional liquidity at Ripple, had been appointed as the company’s CEO. So far, Coley is the only representative of BAM to have been identified by name. Coley stated:
“I am honored to lead BAM and bring Binance.US to North America. […] This is just the beginning of a long journey ahead, and I look forward to working with Binance as a partner to unlock more potential for the blockchain ecosystem here in the U.S.”
CZ expressed his excitement regarding Coley’s appointment, stating, “Our community is very lucky to have someone as passionate, versatile, and hardworking as Coley to lead Binance.US.”
Binance develops ‘risk assessment framework’ for prospective U.S. listings
On Aug. 10, Binance announced that it had developed a “Digital Asset Risk Assessment Framework” to determine which crypto assets will be made available on the new platform. Among the specific criteria is whether listing a prospective asset will impact Binance US’s capability to comply with U.S. Anti-Money Laundering (AML)/Countering the Financing of Terrorisim (CFT) and securities laws. Prospective listings will also be evaluated on the security of transactions made using the protocol and how realistic the roadmap and aspirations of a given project are.
The exchange will also assess whether the core team behind a prospective listing has a clear strategy to solve a “real problem and make the world a better place,” in addition to examining whether the community supporting a project has “a record of reaching compromises and consensus” to move development forward, and considering whether meaningful interaction and communication is made between an assets community and its core developers. Lastly, Binance will consider if the supply and demand dynamics underpinning a market are “reasonably fair and likely to meet Binance US’s qualitative standards.”
Thirty crypto assets under consideration for Binance US
Of the approximately 160 cryptocurrencies listed on its main platform, Binance has announced that 30 crypto assets are currently under consideration to be listed on its U.S. exchange, including the top eight cryptocurrencies by market capitalization — Bitcoin (BTC), Ether (ETH), XRP, Bitcoin Cash (BCHABC), Litecoin (LTC), Binance Coin (BNB), Tether (USDT) and EOS.
Half of the prospective listings are among the top 20 crypto assets by market cap, including 11th-ranked Lumens (XLM), 13th-ranked ADA, 15th-ranked LINK, 16th-ranked DASH, 18th-ranked NEO, 19th-ranked ETC and 20th-ranked MIOTA.
Other stablecoins — such as USD Coin (USDC), TrueUSD (TUSD) and Paxos Standard Token (PAX) — may also be listed on Binance’s U.S.-based platform.
U.S. regulations pose a challenge to crypto companies
In the U.S., cryptocurrencies are regulated as commodities rather than currencies, with currencies being described as a claim to a physical legal tender of value, whereas crypto assets do not represent a claim on an issuer.
As such, commercial digital currency transactions fall under the regulatory jurisdiction of the U.S. Commodity Futures Trading Commission (CFTC). However, exchanges must register digital assets with the Securities and Exchange Commission (SEC) should they be deemed to comprise securities.
The sale of cryptocurrency is typically only regulated if the crypto asset is considered to be a security, or if an entity involved in the transaction is a money service business. The sale of cryptocurrency derivatives is also overseen by the CFTC.
U.S.-based crypto exchanges must also adhere to the tax regulations of the U.S. Internal Revenue Service in addition to AML/CFT and transparency requirements mandated by FinCEN. Crypto companies seeking to operate in the U.S. are also regulated by the Federal Trade Commission.
Related: US Crypto Review: Top-5 States With Welcoming Regulations
Overall, nine U.S. states have also developed cryptocurrency legislation at the state level — California, Nevada, Arizonah, Colorado, Texas, Wyoming, Illinois, Delaware and New York — further adding to the regulatory obligations for cryptocurrency exchanges seeking to operate in the U.S.
Cryptocurrency companies restrict access for U.S.-based customers
Many industry leaders have cited hostile U.S. regulatory guidelines as stifling innovation and driving an increasing number of cryptocurrency companies to bar U.S.-based users from accessing their platforms.
During May 2019, Poloniex exchange ceased offering trading services for nine crypto assets to U.S.-based traders, citing regulatory uncertainty. Regarding this, Gus Coldebella, the chief legal officer at Circle, stated:
“There’s no question that the current regulatory approach to crypto in the U.S. breeds uncertainty and could harm innovation. We have advocated for a clear, forward-looking regulatory framework so the U.S. can realize the full potential of crypto and blockchain technologies.”
At the start of June, Bittrex blocked U.S. customers from trading 32 crypto assets, with co-founder and CEO Bill Shihara describing regulatory uncertainty as “one of the biggest obstacles to advancing blockchain technology.”
Roughly two weeks later, Bancor opted to completely exclude U.S. users from accessing its platform.
Despite the regulatory hurdles faced by digital currency exchanges seeking to operate in the country, U.S.-based traders still comprise a major source of cryptocurrency trade volume.
Binance currently comprises one of the largest trading places according to adjusted volume rankings, with approximately $935 million worth of trades taking place on the platform during the past 24 hours, according to Coin360.
Binance to forge new partnerships to launch stablecoins
The partnership with BAM to launch Binance’s exchange in the U.S. appears as if it may comprise a blueprint for the company’s efforts to launch regional stablecoins.
Related: Binance Venus Aims to Outshine Libra and Chinese National Crypto?
On Aug. 19, 2019, Binance announced plans to launch “an open blockchain project” called “Venus,” described as an initiative to “develop localized stablecoins and digital assets pegged to fiat currencies across the globe.”
The company emphasized that it will seek to create “new partnerships” with “governments, corporations, technologies, and other cryptocurrency companies” to assist in the launch of stablecoins targeting both developed and emerging economies. The co-founder of Binance, Yi He, recently predicted that stablecoins will come to rival fiat currencies in the near term.
Price Analysis 23/08: BTC, ETH, XRP, BCH, LTC, BNB, EOS, BSV, XMR, XLM
Cryptocurrency and telecommunications company Telx Technologies announced the launch of the first crypto SIM card wallet that enables transactions via SMS.
According to the company’s Medium post published on Aug. 22, the card allows its users to send cryptocurrencies via SMS with their dedicated crypto phone number. Notably, these transactions do not require a smartphone or an active Internet connection. On the other hand, the system also offers no control over a user’s crypto wallet.
Crypto transactions on “dumbphones”
As the crypto community tried to teach those new to the space during the “Proof of Keys” event in January, there are significant disadvantages in not having direct control over a wallet. More precisely, placing one’s assets in a wallet managed by a third party forgoes the trustless, decentralized and disintermediated nature of the technology involved, according to many crypto enthusiasts.
That being said, having your private keys managed by a third party often enables a higher degree of user-friendliness. Telx also mentioned this in its announcement:
“At Telx our goal is to make transacting digital currency as easy and accessible as possible. This means creating solutions that technical and non technical people alike can adopt. We believe there is tremendous synergy between payments and messaging.”
Everything new is well-forgotten old
Per the Medium post, the crypto SIM card is available in over 180 countries, allows unlimited SMS messaging and supports Bitcoin (BTC), Litecoin (LTC), DASH, Zcash (ZEC) and Bitcoin Cash (BCH). To execute a crypto transaction via this service, its user can send an SMS to any phone number.
Lastly, the company promises to prevent SIM swapping and phone number porting, to accept transactions originating only from the proper SIM card, to protect the wallet with a dedicated PIN number and to provide backup keys in case of a theft or loss.
As Cointelegraph reported in May, Sean Coonce, engineering manager at cryptocurrency custodian BitGo, announced that he became a victim of a SIM swapping hack.
Price Analysis 26/08: BTC, ETH, XRP, BCH, LTC, BNB, EOS, BSV, XMR, XLM
Cryptocurrency custody providers seem to be springing up all over the global digital landscape in 2019, and the crypto platform Coinbase emerging as the leader in the sector. At their very core, custody platforms are designed to serve as independent storage/security units that are aimed primarily at institutional investors. These solutions, more often than not, tend to make use of a combination of various hot and cold storage technologies.
Also, while cryptocurrency exchanges and regular wallet systems conventionally utilize private keys (and other such security protocols) to protect an individual’s holdings, these alphanumeric phrases can be quite difficult to remember and have the potential to be stolen (or hacked) by individuals with sufficient knowledge of such things. In this regard, custody platforms help in eliminating any fears that investors may have because they are designed specifically to prevent the loss of one’s savings due to wallet thefts, misplaced private keys, etc.
Another reason why crypto custodians are gaining widespread traction is because of their regulatory-compliant design. In this regard, per the United States Securities and Exchange Commission (SEC), institutional investors that possess customer assets worth $150,000 or more are required by law (Dodd-Frank Act) to place their holdings under the control of a “qualified custodian.” To be more specific, the entities that the SEC lists under the aforementioned umbrella include:
- Savings associations.
- Registered broker-dealers.
- Futures commission merchants.
- Foreign financial institutions are also included in this definition.
There currently exist a very small number of traditional financial entities that are offering their customers custodianship-related offerings.
On the issue, Gongpil Choi, director of the Korea Institute of Finance — an agency that works hand-in-hand with the local government to research and evaluate financial policies that are designed to strengthen the country’s financial sector — was quoted as saying: “Even the traditional financial sector has seen the establishment of the custody market. Cryptocurrencies are more risky than traditional assets and the custody market in crypto will become a rapidly growing market.”
Coinbase is dominating the custody market
Coinbase’s recent foray into the institutional-grade custody solutions market indicates the firm’s resolve to dominate this rapidly growing domain. Additionally, the premier crypto exchange recently announced several acquisitions related to areas such as investment management and financial licences — thereby showcasing its serious shift to and focus on the institutional market. On the matter, Kenneth Yeo, CEO of Singapore-based crypto options trading platform Sparrow, pointed out in an email to Cointelegraph:
“Global market uncertainties (the trade war and political turmoil) have resulted in crypto increasingly becoming a safe haven. More and more crypto firms are gaining awareness of the huge potential and the current market gap for onboarding institutions to the crypto world. This marks an important shift among crypto giants to win over Wall Street.”
Yeo also believes that as the digital asset industry continues to mature, an influx of more sophisticated products that can rival traditional market offerings, such as derivatives, will be observed. Also, owing to the fact that Bitcoin’s appeal seems to be growing rapidly across the globe, mainstream entities are no longer ignorant of this asset class and are looking to expand their reach into this relatively untapped space.
Lastly, the recent increase in demand for crypto custody solutions (over the past 12 months or so) is quite natural, especially considering that institutional folks are buying over $200 million to $400 million worth of crypto per week these days. Similarly, in the crypto Wild West — where security breaches and hacks are quite common — Yeo pointed out that over the first half of 2018 alone, over $1.1 billion in crypto was lost due to theft and fraud. In this regard, custodians are able to provide traditional finance institutions with a sense of monetary security and long-term stability. Yeo added:
“We’ve experienced significant demand and interest from institutional investors for regulated custody solutions, it is no wonder that services such as custody solutions have been gaining traction. On top of custody, yield and risk management products have been highly sought after in the space.”
Coinbase takes over Xapo’s custody business
Around two weeks back, Coinbase CEO Brian Armstrong confirmed that his company had entered into an official agreement with storage giant Xapo in order to take over the firm’s custody business. If that wasn’t enough, the move reportedly put Coinbase at the helm of institutional management (for crypto), with the premier trading platform currently holding over $7 billion worth of digital assets in its coffers.
And while the financial specifics of the deal have not yet been made public, a source linked closely with media giant Fortune claimed that Coinbase paid around $55 million (a sum that was higher than what Fidelity had allegedly offered) to finalize the agreement.
Coinbase Custody’s Assets Under Custody (AUC) comprises funds that are owned by more than 120 clients (across 14 different nations). Additionally, in May of this year, the exchange’s AUC crossed the $1 billion mark. As a result of this latest deal, Xapo’s institutional custody business will be able to complement Coinbase’s associated infrastructure (related to this domain).
Coinbase’s cryptocurrency custody service was launched in July last year for institutional clients based across Europe and the U.S. Some of the currencies that are supported by the platform include Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), Ethereum Classic (ETC), XRP and Litecoin (LTC).
Xapo is licensed and regulated by the Gibraltar Financial Services Commission and has been classified by the regulator as being an electronic money institution. Not only that, the platform was also awarded a BitLicense by the New York State Department of Financial Services last year, thereby making it the sixth digital entity (at the time) to have gained the license.
Related: Crypto Custody: Adoption Shortcut or Blockchain Purists’ Nightmare?
Since its market inception, Xapo has been able to raise a little over $40 million from a number of established financial institutions such as Benchmark, Greylock Partners, Fortress Investment Group and Emergence Capital Partners.
Last but not least, over the past year or so, the crypto market has grown to encompass a number of new offerings (primarily related to Bitcoin futures) that have been released by various big-name players such as Bakkt and Binance. On the issue of expanding its product profile range, Coinbase released a post on its website stating that in the future, the company is looking to explore new ways to monetize and leverage crypto assets — primarily by means of staking, borrowing against crypto portfolios, and lending digital currencies to trusted counterparties.
Custody solutions are on the rise
According to a research piece released by the Bank of New York Mellon, the demand for crypto-centric custody solutions is currently at an all-time high. This is because many analysts believe that such offerings will help bridge the gap that currently exists between the institutional investment market and the digital industry.
In this regard, a fair few banks have reportedly been testing and rolling out their very own custody platforms. For example, Swiss bank Vontobel recently launched its Digital Asset Vault, which provides its clients with access to more than 100 banks and wealth managers — primarily as a means of giving instructions regarding the purchase, custody and transfer of digital assets using the institution’s existing infrastructure and regulated environment. Similarly, German stock exchange Börse Stuttgart, State Street, Fidelity as well as Coinbase are offering their customers similar services.
Current regulations in the U.S. require advisers to keep their client’s crypto assets with an authorized custodian. And since there exists no singular definition as to what the term “crypto safekeeping” means across Europe, the European Securities and Markets Authority has requested a number of countries located within the region to create a framework that establishes more clarity regarding the matter.
It is just the start
The wait for Bakkt’s much-hyped futures and custody platform will finally end later next month — on Sept. 23. According to a blog post released by the Intercontinental Exchange, or ICE — the governing body behind the New York Stock Exchange — Bakkt has been cleared by the NYDFS to serve as a qualified custodian.
Similarly, the Commodities Futures Trading Commission, or CFTC, has also given Bakkt permission to trade Bitcoin futures. Lastly, company officials have confirmed that the platform will be developed to a point (in the near future) so that customers will be able to physically settle contracts in BTC. Bakkt was supposed to go live late last year. However, due to certain regulatory issues, the platform was unable to obtain the necessary clearance to start selling its BTC futures contracts until mid-September.