Swiss Financial Regulator, FINMA, Licenses Local Bank To Carry Out The Crypto Transactions

Switzerland’s top financial regulator, Financial Market Supervisory Authority (FINMA) grants local banks, InCore, the first license to transact digital currencies. This adds to the accelerated efforts from the Swiss government in the blockchain field so far in 2020 with the government looking to implement a central bank digital currency (CBDC).

InCore, first Swiss bank licensed to transact crypto

In an official announcement released on Friday, May 29, InCore bank confirms its FINMA license allowing it to process digital currency transactions. This makes it the first business to business Swiss bank mandated to operate within the crypto industry opening up a gateway for customers across the globe.

The license allows institutional-based clients banking with InCore bank to buy, sell, trade, hold and transfer digital assets on their accounts. Opening up crypto transactions aims at promoting the overall development of blockchain-based payment systems to increase efficiency, reduce cost, and enhance transparency in the financial system.

Speaking on the new license, CEO of InCore Bank, Mark Dambacher, says the demand from customers for digital assets pushed the addition of the services. The bank aims to provide world-class services for its customers “without having to invest in infrastructure and new processes themselves”. He added,

“And this while maintaining the usual security standards. This is how we build a bridge to traditional asset classes.”

The bank recently announced its “Digital Services” division that will work on the strategic development of these new crypto transaction systems. The bank aims to separate and secure the crypto wallets differently according to Daniel Blatter, InCore bank Head of Digital Services,

“We guarantee the complete segregation of crypto customer assets on individual wallets, which means that the bank’s own capital requirements are not required.”

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Author: Lujan Odera

Chainlink’s Gas Consumption Keeping ‘Rock Solid’ at 1% Despite the Jump in Feeds & Nodes

The 12th largest cryptocurrency by market cap is currently seeing gains of 3.53% while trading at $4.24, with the rest of the crypto market.

It is one of the top cryptos that is up over 120% in 2020 so far in comparison to Bitcoin’s 30% return.

These gains also coincide with the slight uptick in its daily active addresses. These addresses have been trending up since the past year, as per the Santiment data.

ChainLink-santiment
Source: Santiment

The LINK holders also don’t have any intention of selling their tokens in the near future. The top 1% of LINK holders has actually grown by about 25% in the past year.

The holders are withdrawing from exchanges. In December 2017, it saw its biggest transfer to exchanges from 8.6 million to 125 million LINK.

Since a year back, it has been on a constant decline, currently around 70 million. They are either hoarding them or using them in Chainlink smart contracts for off-chain data which has grown by 1.3% YTD.

Chainlink is a decentralized network that provides price feed data to other blockchain networks. It basically provides a solution to the “oracle problem” through off-chain data.

This Ethereum-based platform has been consuming 1% of all gas since mid-March. The percentage of block space gas being consumed by a protocol shows just how much stress an application is putting on Ethereum’s bandwidth.

At Chainlink’s mainnet launch, when it was just with a single price feed (ETH/USD) and three nodes, it consumed 0.33% of Ethereum’s daily available bandwidth. Over 2019, it rose to 3.5% as the price feed spiked to two including BTC/USD with each having 21 oracle nodes.

During Black Thursday, this peaked at 6% when ETH fees skyrocketed only to now remain “rock solid” at 1% despite there now being over 30 price feeds. This could be because of “Chainlink networks moving to a deviation based schedule,” shared ChainLinkGod and CryptoSponge.

In order to create a sustainable oracle network, rewards paid to Chainlink nodes need to be higher than the costs spent by them in delivering the external data on-chain.

Now, because the Ethereum gas fees have been higher than normal lately, the profitability of these nodes has been declining.

chainlink-gas
Source: ChainLinkGod

Each price feed pays a different amount of LINK rewards to nodes depending on the security of a particular network.

And out of all the price feeds, ETH/USD and BTC/USD are the highest paying ones, which are in high demand by DeFi applications and contain higher levels of decentralization than most networks.

Initially, 33.33% of the total daily payments were paid to the Chainlink core team’s node which has since dropped to just 1.34%.

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Author: AnTy

South Korea is Proposing A Tax on Profits From Crypto-Fiat Transactions

The South Korean Ministry of Strategy and Finance is proposing a tax on profits from crypto-fiat transactions, reported a local news outlet.

The proposition was made earlier this week which also includes the sale of the token through initial coin offerings (ICO) and crypto mining organizations.

The full proposal is intended to be released in July and submitted to the assembly in September.

Under their current law, the country doesn’t impose a tax on the income generated from digital currency transactions. This is unlike the US, Germany, and Japan who treat crypto gains as taxable income. Singapore also levies value-added tax (VAT) on crypto transactions.

South Korea meanwhile is considering the capital gains tax or other income tax on the profits earned by domestic and foreign investors in the transfer of digital currencies. They are looking to apply the standard of “taxation where income is located.”

Just like in the securities trading taxation, in the event of loss, the tax won’t be applied.

However, this might not be as simple to establish the taxation policy. EDaily quoted Seung Seung-young, a researcher at the Korea Regional Tax Institute as saying,

“If you do business through a peer-to-peer (P2P) transaction without going through an exchange, there is a possibility of avoiding taxation.

Even with IP tracking, if there are a large number of targets, administrative costs will increase and it will be difficult to track each day.“

South Korea has been struggling over crypto taxes for quite some time now. In December, crypto exchange Bithumb got slammed with a $67 million tax bill that resulted in an ongoing lawsuit.

Earlier this year in March, new legislation was passed that legalized cryptocurrencies and provided a regulatory framework for them.

The same month, South Korea’s Financial Services Commission categorized cryptos as a “high-risk asset” which would prevent people DeFi platforms from operating in the country.

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Author: AnTy

Chinese Devs to Use Telegram’s Open-Sourced TON Blockchain To Launch Their Own Network

  • Chinese TON developers announce the launch of their variation of the TON blockchain after successive launches by TON Lab’s Free TON platform and New TON.
  • This comes shortly after the global messaging app, Telegram’s CEO Pavel Durov, backed out of the open-source blockchain project.

In an official announcement from the Chinese TON project, the third “fork” from Telegram’s abandoned TON blockchain is set to launch. The company aims to follow through with  Telegram’s vision of a decentralized blockchain project after Pavel’s move to pull the messaging app firm out of the $1.7 billion ICO project.

After a long and tough legal battle with the U.S. Securities and Exchange Commission (SEC), Telegram called it quits in the TON project. The $1.7 billion ICO will be partially redistributed to investors over the next year and further withdrawing their appeal lawsuit from the federal courts.

The abandonment by Telegram, however, does not stop the building process given the blockchain’s open-sourced build. The China TON Blockchain developers, led by founder, Tooz Wu, aim at “starting the TON Blockchain testnet in the first step, and recruit more nodes and developers to join the network”. The published announcement further reads:

“We also aim at testing the network, and then redesigning network rules that are more adapted to the current context, and invite more people to experience and use TON.”

A Battle for the Betterment of TON

The launch of Chinese TON opens up a competitive field as it battles for subscribers with TON Lab’s Free TON and New TON. Speaking on the latest announcement co-founder and CEO of TON Labs, Mitja Goroshevsky, believes more communities working on the project improves development rather than stifle it despite extra competition. He said:

“The technology is open for everybody and anybody can launch it. […]Users will decide which has the most technical depth, which is better [and] more decentralized.”

However, Chinese TON developers do not share the same feelings towards Free TON with a tweet from a top developer calling the token a “shitcoin.”

Telegram’s off the TON project

While the open-source development goes on smoothly, Telegram’s investors in the GRAM token ICO are threatening to sue the company.

In April, the company announced they will be calling off the project and redistributing 72% of the investment to U.S. customers immediately and overseas investors are given an option to wait a year to receive 110% of their investment.

Pavel, however, warned investors and users against any private developers and platform claiming partnerships with Telegram.

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Author: Lujan Odera

JP Morgan Chase Set to Pay $2.5 Million in Crypto Class-Action Lawsuit for Overcharging

The largest bank in the United States, JP Morgan Chase has agreed to pay $2.5 million to settle a class-action lawsuit related to charging higher fees in crypto transactions, reported Reuters on Thursday.

The lawsuit was over the bank’s 2018 decision to start treating the cryptocurrency purchases made with Chase credit cards as cash advances that result in higher fees for crypto customers.

As per the motion filed in Manhattan federal court on Tuesday, plaintiffs said the settlement would result in the members getting 95% of the fees that they were unlawfully charged. JP Morgan will be paying the fees but hasn’t admitted the wrongdoing.

Earlier this month, JP Morgan started offering its services to two crypto exchanges Coinbase and Gemini.

While Jamie Dimon, the CEO of the sixth-largest bank in the world by total assets called bitcoin a “fraud,” JP Morgan launched a stablecoin dubbed “JPM Coin” last summer.

The bank has even released its own blockchain platform called Quorum. Open-sourced in 2016, this Ethereum-based blockchain is designed for processing transactions within a permissioned network to solve performance and privacy challenges.

This week, another banking giant Goldman Sachs made headlines in the crypto space after it shared in its clients’ call that “bitcoin is not an asset class,” while categorizing it as nothing better than Tulipmania which is used for illicit activities and is prone to attacks and hacks.

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Author: AnTy

60% of Bitcoin Supply Not Moved in a Year, What Does it Say About the Next Bull Run?

May is coming to an end and bitcoin is looking to stay above $9,500, ending the month with about 8% returns.

The market sentiments are reacting and approaching “greed” once again. But this is the third time the sentiment is pushing to a greedy state and out of the fearful area. The good thing is we have stayed out of the “Extreme Fear” area for over a month now.

crypto-fear-greed
Source: Crypto Fear & Greed Index

However, there have been no significant changes in volatility over the past week but that can change quickly.

For the past two months, the last days of the month have recorded some of the large daily moves.

According to Income Shark, Bitcoin can yet again drop to $9,200 level with some “weird weekend action.” But it’s possible we will make our back to $9,600 level and if we break it, we could have a ride to $10,000 and if rejected, it might be the time to short.

Interestingly, there aren’t many bitcoins to be bought, especially given that Grayscale is absorbing more BTC than what’s been minted since halving. Already, its Bitcoin Trust holds about 2% of all BTC supply.

Meanwhile, the effects of halving have already started to dissipate with the hash rate increasing. The imminent Chinese monsoon would further balance things out as it would make electricity cheaper and “lead to a temporary increase in the rate of block generation and hence bitcoin production and sell pressure.”

Bitcoin velocity has also been dropping sharply since halving. The transaction activity might be seeing a temporary slow down but the “longer-term trend remains positive and is trending upwards,” noted Arcane Research.

An Exodus of BTC from Exchanges

We might not be in a bullish territory yet but the market is seeing bullish indicators. 60% of bitcoin supply hasn’t moved in more than a year, a level last seen before the bull run of 2017 started.

BTC-Supply
Source: Glassnode BTC-Supply

This increased level of hodling behavior can also be seen in the BTC balance on exchanges which have reached their lowest level in over a year, as per Glassnode.

One explanation of this exodus is the optimistic long-term sentiment that has investors withdrawing their funds from exchanges in favor of hodling in anticipation of a bull run. The growing number of bitcoin whales support this just as the continued holder accumulation over the past two months.

But this isn’t the whole story, this withdrawal trend is different for different exchanges.

Glassnode - BTC Balance on Exchanges
Source: Glassnode – BTC Balance on Exchanges

The steepest decline is recorded by Bitfinex of 66.6% that is 133,000 BTC since Black Thursday. After Bitfinex, the largest outflows are seen by BitMEX at 35.6% (105k BTC) and 24.6% (97k BTC) by Huobi.

In contrast to this, Binance and Bitstamp saw a slight increase in their BTC balance. Coinbase, however, remains the most popular exchange for holding BTC which has a balance of 968,000 BTC, decreasing only 0.2% during this time.

So it’s not just investors choosing to hold, or using cold storage for hodling, there could be many reasons at play.

Lack of trust could be one such reason in the case of BitMEX which experienced two DDoS attacks on Black Thursday. But this still doesn’t justify the continued decline of BTC balance on the exchange and why these funds haven’t moved onto other exchanges.

Moreover, even before the crash, the BTC balance of Huobi and Bitfinex has been on decline which only accelerated after Black Thursday. When the massive sell-off occurred, Bitfinex’s BTC balance had already dropped over 47% from its highest point in Dec. 2018.

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Author: AnTy

E-Commerce Giant, Amazon, Patents Blockchain Authentication Of Accepted Consumer Products

The world-leading e-commerce platform, Amazon Technologies Inc., filed a patent on blockchain technology for proving the authenticity of consumer goods in its online marketplace. The filing approved and made publicly available on Tuesday, May 26, 2020, describes the platform as an

“interface for verifiable tracking of an item through a supply chain using a distributed electronic ledger.”

The patent titled “Distributed ledger certification” was filed back in July 2017 with the U.S. Patents Office signaling a long term view of Amazon on distributed ledgers.

The platform aims at improving the trustworthiness of an item, service, or party as the world’s online marketplace grows to unseen levels. Currently, systems that lack transparency, coherency, referential integrity, or security set challenges for the global growth of online marketplaces. All these challenges reduce the trust between different parties – a problem that Amazon aims to solve with its DLT network.

The platform aggregates data from manufacturers, distributors, and shippers on an open network architecture to give the consumer real-time trusted information. The patent further touches on a possible implementation of permissioned enterprise network, Hyperledger.

Amazon in blockchain

In late September of last year, the company announced plans of hiring a specialist in blockchain in a bid to integrate decentralized ledger technologies in advertisements on the platform. The project will curb the mistrust between the sellers and buyers to create a more transparent and secure online marketplace.

Additionally, in late 2019, Amazon announced two blockchain-based products in early phase testing – Amazon Managed Blockchain and the Amazon Quantum Ledger Database.

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Author: Lujan Odera

Compound Roadmap to Full Decentralization to Begin with Issuance of COMP to Their Community

  • Compound will now issue COMP tokens to the users of their protocol in a bid to achieve full decentralization.
  • They have released an elaborate plan to be orchestrated over the course of four years as they seek to hand over the governance of the protocol to the Compound users.

News has emerged that Compound administrators of the DeFi lending protocol COMP now seeks to bring onboard their shareholders in the governance process of the protocol as they push towards achieving full decentralization.

In a post, Compound CEO, Robert Leshner, unveils the road map of how they intend to scale up governance to the entire Compound Community. COMP token holders and respective delegates would now be allowed to propose, debate, and vote on all matters relating to their protocol. The vast protocol boasts of locking in at least $100 million in its DeFi ecosystem.

Notably, the COMP governance token was unveiled this year in February, with the majority of the tokens being allocated to Compound top brass and investors. This is when they first included Compound users in decision-making, stipulating that with just 1% of the users backing a proposal they would be able to vote on whether the change was in their best interests. The CEO is convinced that complete decentralization is the way forward, as he shares the sentiment that if there was a Bitcoin corporation controlling the BTC, it wouldn’t be as popular.

“Distribution will be spread over 4 years”

According to CEO Leshner, those who leverage the Compound protocol will automatically qualify and continuously receive the governance tokens as the future of the protocol lay in their hands. 4,229,949 approximately 42% of the COMP token will be diverted to a Reservoir contract. It would in turn disburse 2,880 tokens daily in a four-year plan distribution plan. The plan is aligned to their objective of bringing more users into the governing of the Protocol.

It will trickle down to their array of markets: ETH, USDC, DAI based on the interests generated from the respective markets. From which they will be split 50:50 ratios for suppliers and borrowers with the COMP transferred straight to their wallets for transactions once their addresses reach the 0.001 COMP set threshold.

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Author: Lujan Odera

Crypto Payment Processor BitPay Sees More Use in Stablecoins than Layer-2 Solutions

  • Rising fees on the Bitcoin blockchain after the halving will not set BitPay, a crypto payments startup, into using layer 2 payment channels such as the Lightning Network or Liquid Bitcoin.

Bill Zielke, BitPay’s Chief Marketing Officer, revealed on Thursday this week that the company was not planning to integrate the layer 2 Bitcoin channels. Bill explains that Bitcoin transactions dominate the customers’ preference hence no rush to switch despite the fees reaching highs of $7 after a 256% spike earlier in the month.

The company switched from being a Bitcoin-only payment service, where merchants can accept crypto and convert it directly into fiat currency options including the dollar, euro, and British pound. Users can currently pay across selected merchant stores in North America and Europe using multiple cryptocurrencies including Bitcoin Cash (BCH), XRP, Ethereum (ETH), and stable coins including Binance dollar (BUSD) this April.

According to Zielke, Bitcoin currently holds over 95% of all the transactions on the platform with BCH coming in second with about 2% of the total volume transacted. Despite the skyrocketing Bitcoin fees since the halving, the BitPay’s CMO says the company will not be switching to Lightning Network and other Layer 2 solutions due to unsystematic risks they pose. He said,

“Lightning Network and the Liquid sidechain are not in our current plans or roadmap but we are always evaluating new and innovative alternatives and collecting customer input on use cases, importance, and priority.”

The current lockdown state across countries due to the COVID-19 virus is seeing more people spend time online shopping and BitPay aims to increase the use of crypto in day to day spending. Stablecoins have witnessed impressive growth in the first half of 2020 and the lack of volatility on these assets makes them ideal for spending.

Bill said the company is focusing on the stablecoin market following the addition of several stablecoins on the platform this year including PAX, BUSD, USDC, and GUSD.

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Author: Lujan Odera

Digital Dollar Foundation Releases Its First Whitepaper Urging The US Govt To Explore CBDC’s

  • Christopher Giancarlo’s Digital Dollar Foundation releases its first white paper on the digital dollar.
  • The projects aims at implementing a private-public partnership with the government and commercial banks in a “two-tiered” approach.
  • Can the U.S. challenge other global superpowers in developing their own CBDC?

The Digital Dollar Project alongside Accenture, an Irish-domiciled multinational professional services company, released its first whitepaper on Thursday, May 28, 2020. According to Giancarlo, the former chairman of the Commodity Futures Trading Commission (CFTC) called on the U.S. government to accelerate its efforts in developing its “digital dollar” or risk losing its control over values of the global financial system. Giancarlo said,

“What we’re hoping to be is a catalyst for a discussion here in the United States about what role the U.S. will play in this ongoing and accelerating global debate over the future of money in a new digital age.”

Digital Dollar Project Whitepaper Release

The 50-page reportThe Digital Dollar Project: Exploring a U.S CBDC” expounds on the project’s implementation arguing for a “two-tiered approach” in the system. The project will create a tokenized digital dollar with the same legal status as physical banknotes. The currency will then be distributed to commercial banks who then distribute it to the population similar to how cash is distributed through loans and on ATMs.

In a similar manner to the legacy financial systems, the foundation tier will be the Federal Reserve who through regulated intermediaries will distribute the digital dollar to users.

The key advantage of the two tired approaches rather than the current totally decentralized private cryptocurrencies is that it will be interoperable with current systems. Furthermore, the whitepaper aims at formulating a regulated wallet infrastructure to ensure the users’ transactions follow the KYC/AML compliance requirement.

Digital Dollar Should be Tokenized: Giancarlo

In an interview on the launch of the digital dollar white paper, Giancarlo said the current global view on money may have switched as more governments start exploring their own CBDC solutions. The current COVID-19 pandemic also has raised an alarm on the future of physical money and the question of what constitutes money given the widespread printing.

Earlier in March, the U.S House of Representatives brought forth possible plans in distributing a digital dollar token to efficiently disburse the COVID-19 CARE package Act funds to millions of Americans. The bill stated that users should be allowed to open retail accounts in the FED in order to receive the funds. However, opening an account with the Fed is the same as having a private institution such a corporate bank managing the account only that it will be a public institution doing it.

The white paper advises for a token approach instead of the account approach, whereby the dollar can be used across the globe not only within the U.S. Giancarlo said,

“We think a true U.S. CBDC addresses that problem but then so much more, including building a new architecture for money for generations to come that will serve not just under-banked populations here in the United States during a crisis … abroad and [spur] financial inclusion globally.”

After the completion of the platform (date remains unknown), Digital Dollar Foundation will launch test pilots. These pilots will test “proposed token’s impact on the money supply, technological choices, privacy concerns from users, government control and commercial exploitation, impact or use in sanctions and compliance with AML/KYC laws.”

Once the project is off the trial board, the Foundation and Accenture will present the findings to the relevant authorities according to Giancarlo. He said,

“We’re here to get the conversation going, to provide thinking, experience and expertise, and we will leave it to the policymakers to set the pace.”

Competition from the EU, Russia, and China

The U.S. is lagging behind in the race to a sovereign digital currency after accelerated efforts by top competitor, China. The People’s Bank of China (PBoC) earlier in the year released its

Earlier this year the European Central Bank (ECB) announced its plans to develop a retail central bank digital currency (CBDC) light of the COVID-19 pandemic. South Korea, Russia and Switzerland are some of the developed countries looking to launching their CBDC in the coming future.

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Author: Lujan Odera