G20 Set to Accept Digital Currencies; Green Lights Policy Changes for Regulatory Framework

The G20 members are set to accept digital payments as soon as November 2020, according to the Japanese media outlet, Kyodo News. This shift in attitude towards crypto assets coincides with increasing interest by oversight bodies.

Last year, the G20 was skeptical on digital assets’ ability to impact current financial ecosystems, this now seems to have changed as the members prepare for the annual summit to be held in Riyadh, Saudi Arabia.

Kyodo News detailed that the change in tact towards crypto ecosystems has been influenced by Facebook’s Libra proposal and China’s digital yuan. These two projects hit the crypto scene with a bang, fueling discussions across the board.

While China’s digital yuan is at its sunrise phase, Libra is still facing regulatory challenges. Nonetheless, the G20, which comprises 20 members, including the EU, has seen it fit to lay a framework for digital assets as well.

The changes in policy are scheduled to take effect as of October, just before the G20 annual summit. Discussions will revolve around digital currency use, money-laundering risks, and the challenges of using crypto as a form of payment. With such groundwork in place, G20 is optimistic about spreading the risk attributed to stablecoins as per an October 2019 report.

Global Progress in Digital Asset Frameworks

China continues to lead the way in CBDC progress, having recently piloted a digital yuan. The Asian superpower is now looking to integrate this PBoC backed digital currency with its existing financial ecosystem. Going by China’s active use of mobile payments via Alipay and WeChat, stakeholders are optimistic about a seamless integration in a move that will enhance the CCP oversight in digital payment networks.

The EU has made some fundamental progress in this field, especially in regulation. Currently, crypto-oriented businesses operating within its jurisdiction have to comply with the 5AMLD, which came into play earlier this year.

However, this framework has not been very friendly to all crypto-based entities as some had to relocate shops in search of more accommodating digital asset laws. Finally, the U.S, which has long been skeptical, are also looking into digital assets. CFTC Chairman, Heath Tarbert, recently said that they are waiting on the SEC guidance to go ahead with listing more crypto derivatives in the U.S market.

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Author: Edwin Munyui

Only 15% of Crypto Exchanges Hold User Funds in Cold Wallets: CryptoCompare Report

According to the monthly crypto exchange benchmark report by CryptoCompare, Gemini and Coinbase are at the top of the top crypto exchanges list with the highest score and “AA” grade. At the same time, Binance DEX grabs the first spot on the decentralized crypto exchanges’ list.

Top-tier exchanges like Coinbase and Binance are pushing the lower-tier ones such as Bitexbook out of the market. Top tier exchanges that have the lowest amount of risk for traders have been increasing their market share throughout 2020, which could be taken as a sign of a more mature market.

CryptoCompare-Report-Exchanges
Source: CryptoCompare

In Q4 of 2019, the top tier exchanges accounted for 32% of global volume, which jumped to 40% in Q2 of 2020. Lower tier exchanges’ market share meanwhile has continuously been on a decline from 68% in the final quarter of 2019.

Record Low Funds Lost in Exchange Attacks

Security at crypto exchanges at large, however, remains poor. Only a meager 15% of exchanges claim to hold 95% of user funds in cold storage, wallets that aren’t connected to the internet, and as such resistant to hackers.

12% of crypto exchanges use a third party custody provider to store user assets, up from 9% from Q4 2019.

4% of exchanges have been hacked in the last year. Most recently, UK-based crypto exchange Cashaa lost 336 Bitcoin, worth about $3 million in an attack, which resulted in a breach of one of its wallets.

The attack came when the industry is seeing a record low in funds lost in exchange attacks. Cashaa was one of the largest attacks of this year.

Source: TradeBlock

Just last week, a report from the Financial Action Task Force (FATF) came in, which the international financial watchdog said regulators need to meet in October to create a more robust global framework for crypto exchanges.

The report also found that about 5% of exchanges offer insurance on digital assets.

Inorganic Traffic Growth

June wasn’t a good month for crypto exchanges. As we reported, the volume dropped dramatically last month.

The same was the case for web traffic with Huobi losing the most – 31.7% between Q1 and Q2. Unlike other exchanges, OKEx saw an increase of nearly 240% in web traffic. Binance also saw a 9% increase.

“However, our research suggests that traffic growth for certain exchanges may be inorganic, as top traffic referrers were crypto ad or faucet sites,” said the quarterly report by CoinGecko for Q2 2020.

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Author: AnTy

Chinese Ride-Hailing Unicorn, Didi Chuxing, to Pilot Digital Yuan; First Mass Scale Use of DCEP

China’s ‘Uber,’ Didi Chuxing, will test run the digital yuan according to an announcement on July 8. The Chinese ride-hailing unicorn has over 500 million registered users and is optimistic that a ‘strategic partnership’ with the PBoC Digital Currency Research Institute will scale the DCEP adoption.

“Under PBOC’s overall DCEP strategy and operation timeline, DiDi’s DCEP taskforce will design and implement pilot DCEP projects following rigorous safety, security and governance standards.” read the announcement.

With only a few months of being in existence, the digital yuan pilot is already making a debut in China’s shared economy. This comes barely two months since it was first used to partially pay some state employees in pilot provinces. Now that the DCEP will be integrated with Didi Chuxing’s ecosystem, it might just be the beginning of a mass scale adoption as China looks to wipe out the fiat renminbi in circulation.

Notably, Didi Chuxing’s market muscle and financial position will be a big boost for the digital yuan. Currently, this ride-hailing service dominates the Chinese market with a valuation of $56 billion, operating across 400 cities. It also enjoys the backing of big tech like Apple, Softbank, Alibaba, and Tencent. While its value proposition goes a long way in the digital yuan roll out, Didi Chuxing noted that working with the PBoC is strategic for their fundamental goals as well,

“The partnership is a key milestone in DiDi’s ongoing initiatives to enhance the interconnectivity of online and offline economic sectors in China, as the government seeks to support the development of the real economy sectors with innovative financial services,”

China Setting Stage for the Digital Currency Economy

This development is no surprise, given the recent highlights of China’s digital yuan. As other countries continue with debates on adoption, China is miles ahead and could soon launch an official version of the DCEP. A former top executive of the PBoC recently said that the DCEP backend infrastructure is almost complete. However, no comments were made on an official launch date.

Looking at the ongoing works, this date could be sooner than most stakeholders expect. For starters, the digital yuan pilot is being facilitated by China’s banking and tech giants who have been tasked with digital wallet facilities, amongst other ecosystem functions. Also, major food chain retailers like Subway, Starbucks, and McDonald’s are reportedly looking to pilot China’s CBDC as well. Could this be finally sunrise for the project, which has been in the works since 2014? Well, the COVID-19 pandemic might just favor the odds as paradigm shifts to digital economies.

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Author: Edwin Munyui

Crypto Market Bounces Back by 44.5% in Q2 As BTC Gains 78% Since Black Thursday: CoinGecko

The market cap of cryptocurrencies has grown by 44.5% within Q2, according to the first quarterly report by CoinGecko.

In addition to this, Bitcoin’s price gained over 78%, making a comeback from the March bloodbath of Black Thursday. However, the activity in spot trading has gone down by 55%, contrary to expectations.

“Bitcoin’s average monthly price is now up 78% from the March bottom. It took roughly 48 days for the markets to recover from the vertical drop of the Black Thursday, the day when Bitcoin fell vertically by 35% (over USD 3000) in 24 hours.”

The report, published on July 3, marks the first in a series of three scheduled releases. As the world emerges from lockdowns, markets surged throughout Q2. Going by the stats, the trend appears to have been replicated in crypto markets hence debunking the notion that crypto markets are not correlated to traditional asset prices.

Crypto Market Bounceback

Though highly volatile, the digital asset ecosystem may have passed a resilience test, given the economic effects of COVID-19. The crypto market bounced back from the March lows and now seems to have consolidated in what most stakeholders consider a stable position.

Currently, the total market cap of crypto stands at $268 billion, with Bitcoin dominating this portfolio at 63%.

Looking back at the onset of Q2, things were more uncertain, although crypto maximalists have always been optimistic about mainstream adoption, especially with COVID-19 now at our doorsteps. Well, an increase of 44.5% could probably mean that some of the underlying factors have triggered a shift to crypto assets.

Nonetheless, trading activity has been down as crypto hotheads shift focus to DeFi. CoinGecko also noted that the reduced spot trading is likely attributable to more people HODLing and diminished market confidence after Black Thursday. The report reads:

“This may also simply be a result of investors HODL-ing, having no confidence to trade, or perhaps a market shift towards DeFi and Derivatives trading.”

The shift in liquidity towards DeFi networks has significantly boosted ETH, as it topped gains compared to BTC and Tether. The DeFi market is on its way to hitting $2 billion in total locked value, making the ETH prospects even better. While this is the case, the USDT is the most popular trading pair in both spot and derivative markets. A sign that stablecoins have also found a niche in this volatile ecosystem.

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Author: Edwin Munyui

Arca Labs Rolls Out Ethereum Based Fund After SEC Approves Digitally Transferrable Securities

According to a press release on Monday, July 6, 2020, Arca Labs, a digital asset investment firm, becomes the first-ever company to trade an SEC-registered Ethereum-based fund, ArCoin.

The bizarre case of the U.S Securities Exchange Commission (SEC) refusing to register a Bitcoin ETF gets even stranger as the securities regulator approved the trading of digitally transferable securities, in a first of its kind. ArCoin, the digital securities built on Ethereum blockchain, has become the first asset of its kind to be successfully registered under the Investment Act of 1940.

Arca Labs further plans to build more digitally transferrable assets that will be compliant to SEC’s laws in what they term as “portfolio of complimentary ’40 Act financial products”. Each ArCoin will represent a share in Arca’s U.S Treasury Fund, which is 80% interest-bearing, short-duration, U.S. Treasury securities.

A Groundbreaking Announcement

The blockchain world is looking at more regulated assets with this latest SEC approval giving a sense of a possible ETF approval in years to come. Rayne Steinberg, CEO of Arca Labs, referred to the announcement as “groundbreaking and transformative” in connecting the digital asset market to traditional finance. The CEO stated,

“It is truly exciting to be pioneering new digital investment products through our Arca Labs division that marry best practices used in traditional finance with the many potential benefits of digital and blockchain technology—this is the next stage of development for the digital ecosystem.”

The Benefits of ArCoin

The purpose of this Ethereum 1401-standard token is to combine the qualities of traditional finance regulation to the resilience of blockchain technologies. This digital innovation will enhance the overall security, provide regulatory oversight and transparency, otherwise lacking in the traditional field. Jerald David, the president of Arca Capital Management LLC, parent company to Arca Labs, said:

“ArCoin offers enterprises the opportunity to manage their business operations, treasury management, and payments with greater efficiency, less cost, faster settlement times, and direct tracking of all transactions.”

BEG reported Arca’s plans to launch the Blockchain traded fund (BTF) back in February to tokenize U.S Treasury bonds and bills.

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Author: Lujan Odera

Boomers and Gen-X Double Their BTC Investment, Recording More Growth than Millennials & Gen Z

According to a study by Mode Banking, “Bitcoin investments have been doubling every month since February among Boomers and Gen-X, signaling wider crypto adoption.”

Interest in bitcoin has always been much more robust in younger age groups than the older ones, but recently the Boomers, those from 1946 – 1964, have been taking a special interest in BTC as well.

As we reported, a Bitcoin financial services firm, River Financial Inc., reported Baby Boomers with over the age of 55, accounting for 77% of its growth since March, which in part was “inspired by the Federal Reserve’s unprecedented monetary intervention.”

Mode also found an initial uptick in BTC investments in March, during COVID-19, which was at the same time global markets crashed and countries went into lockdown. “As the global pandemic evolved, Boomers and Gen-X began accelerating their exposure to BTC on Mode’s platform,” reads the report by the London-based fintech firm.

Source: Mode Banking

With February, pre-COVID-19 month as a benchmark, both the age groups invested 2.24x more in BTC in March, 4.49x more in April, and a staggering 8.88x more in May than they did in February.

“We believe these to be very interesting findings, (…) they could potentially reveal an unprecedented change in the way investors think today, as a result of the global pandemic,” said Janis Legler, Chief Product Officer at Mode.

Boomers Closing the Gap

Millennials, those born between 1981 – 1996, and Generation Z from 1997 – 2012 dominated the bitcoin investment, growing 118% month-on-month before COVID-19 and 125% during the coronavirus pandemic.

During January and February, the bitcoin investments of the older generations grew twice as slow as of younger generations, 61% compared to Gen X and Gen Z.

However, during the pandemic, Boomers and Gen X (1965 – 1980) accelerated their BTC investment at 107%.

Source: Mode Banking

“Bitcoin is becoming popular among all age groups and is being endorsed by more mainstream investors every week. We expected Millennials to continue buying into cryptocurrencies, but to see more experienced investors also become increasingly interested in Bitcoin, is extremely promising for the growth of the industry,” Legler said.

According to the study, the global pandemic, national lockdowns, and economic crisis could “forever change” the mindset of investors towards money and wealth.

With the money printers of different countries going brrr…, the general public is trying to find ways to protect their wealth. It is also evident in the surge in global search interest for “Where to invest.”

Being tech-savvy, Millennials, and Gen-Z are expected to lead the adoption of bitcoin. However, Boomers and Gen-X getting into Bitcoin could be a “strong case for bitcoin to breakout” because they still own the vast majority of wealth, states the report.

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Author: AnTy

FCA Survey Estimates 1.9 Million People Currently Own Cryptocurrencies in the UK

According to a recent survey by the Financial Conduct Authority (FCA), which is working with the Government and the Bank of England, as part of a UK Cryptoassets Taskforce, more and more people are now aware of cryptos and getting into them. The survey states,

“We estimate 3.86% of the general population currently own cryptocurrencies. This amounts to approximately 1.9 million adults with the UK population (over 18) taken to be approximately 50 million.”

It is also estimated that 5.35% (2.6 million people) hold or held cryptocurrencies, up from 3% (1.5 million people) in 2019.

In this latest survey, 73% of adults compared to 42% last year have found to be heard of cryptos. Traditional media and online news are playing a part in this awareness with 28% of adults that were aware of cryptocurrencies had seen an advert.

Meanwhile, 45% of crypto owners have also seen a related advert and 35% of them said it made the purchase more likely. But those influenced were also more likely to subsequently regret the purchase. Crypto owners also understand the risks associated with the lack of protections, but the agency still states,

“the lack of such knowledge among some presents potential consumer harm to consumers.”

Bitcoin & Libra is all we know about

The research was conducted by FCA from 13 to 21 December 2019, with a nationally representative online panel of 3,085 respondents. After screening out those who haven’t heard about crypto, the agency added 483 individuals to the sample who were crypto owners for the “longer questionnaire.”

These crypto owners have a high technical knowledge and it has been found that 75% of them hold under £1,000, roughly $1,230, and half of them hold under £260, nearly $320.

Bitcoin remains the most recognized crypto while Libra, which doesn’t exist yet, 22% had heard about this upcoming stablecoin from Facebook.

Testing the knowledge of cryptocurrency owners it was found 90% conducted some research before purchasing cryptocurrencies, compared to 84% in 2019.

Speculation, Regulation, & Coinbase Domination

The most popular reason for buying cryptos remains speculation – ‘as a gamble that could make or lose money’ rather than as an investment of money.

Those investing for speculation purposes were also more likely to hold their cryptocurrencies for more extended periods. In comparison, those displaying a lack of basic knowledge tend to hold their cryptocurrencies for shorter periods.

While 12% never monitor the value of their holdings, 15% regret having purchased.

Almost 50% of cryptocurrency owners have never used digital assets, but a good 27% did use them to purchase goods and services.

Moreover, 31% of respondents who currently own crypto currently do not intend to purchase more crypto because they consider it too risky. 29% of these will buy more if it is regulated in the future.

Interestingly, 73.2% of consumers that do not currently own but plan to purchase cryptocurrencies in the future reported that the lack of regulatory protection has impacted their decision not to buy cryptocurrencies to date.

Unlike the previous times, this survey found that 8% of respondents used borrowed money to purchase cryptos. But these borrowers were most likely to be the ones displaying a lack of knowledge surrounding the technology underpinning cryptocurrencies or the absence of regulatory protections.

The crypto purchases were made majorly (83%) using only non-UK based exchange, with Coinbase being the most popular one with 63% followed by Binance (15%), Kraken (10%), Bittrex (8%), and Bitfinex (7%).

Also, a good 46% store their crypto on the exchange where they bought it, and only 24% keep it in on offline hardware.

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Author: AnTy

Celo Dollar (cUSD) Stablecoin Launches as the Libra Rival Eyes Digital Ecosystem Dominance

Celo Dollars (cUSD) stablecoins are now live on the platform’s mainnet according to a medium post by the foundation on June 29. This comes barely two months since Celo’s mainnet went live; the project has been making aggressive moves in both development and community growth. With Celo’s stablecoin (cUSD) now accessible, the foundation is optimistic that its vision of an all-inclusive financial ecosystem will be realized.

Notably, Celo’s infrastructure has been gaining popularity as its Alliance membership surged following its debut in March with an initial 50 members. Two months in, the number had grown to 75 as more players collaborate to expand Celo’s ecosystem. Prominent names contributing to this project include Bison Trails, Alpha Wallet, Paxful, Polychain, and Mercy Corps, to mention a few. Currently, the Alliance’s focus is in four areas; communications, policy, remittances, and international aid.

The Celo Dollar (cUSD)

As cryptocurrencies take the center stage of digital asset innovation, programmable money is a no brainer for today’s economy. It is, therefore, not surprising that the digital currency trend has been resilient since Bitcoin recorded ATH back in 2017. Consequently, crypto market players have come up with ways to eliminate some aspects of volatility hence the rise of stablecoins over the course of 2019.

Celo Dollar (cUSD) is designed to further enhance the grown of $34 billion P2P markets, $1.4 trillion PoS market, $248 billion gig economy, and $87 billion remittance market. Users can leverage the cUSD to make touchless merchant payments in the wake of COVID-19 preventive measures. They can also send or receive Celo Dollars locally and internationally at friendly fees that are as low as $0.01.

Finally, this Celo based stablecoin can be used to access financing by borrowing at interest. This is especially valuable in economies with a high unbanked population given the increase in smartphone accessibility hence the opportunity to operate on Celo’s network instead.

Celo’s Prospects

The Celo Alliance is considered a Libra rival in the digital currency space but may soon be in the clear should regulatory pressures favor its existence. It has been making significant milestones since we began 2020, including a $700k grant allocation to startups building on the Celo blockchain network. cLabs, Celo’s founding company, also raised $10 million in the Celo Gold (cGLD) token sale on CoinList in which around 509 global investors participated.

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Author: Edwin Munyui

Bitcoin Setting Up For Another Bull Run After COVID-19 Pandemic ‘Killed’ the First Set-up

According to a new model that on-chain analyst Willy Woo is working on, bitcoin was setting up for a bull run when coronavirus pandemic – the white swan “killed the party.”

The model picks the start of exponential bull runs and it suggests that we are close to yet another bull run and it could take yet another month to go.

But the time taken by the bitcoin to start this bull run is actually a good thing because “the longer this bull market takes to wind up, the higher the peak price,” he said.

The market is currently in an accumulation mode with holders taking this time to stack the sats, and “a long sideways accumulation band is ultimately a good thing.”

”Very clearly shows how COVID was a model breaking outlier” – On-chain analyst Willy Woo

As we reported, there are several indicators pointing out that the accumulation is going on in the market and investor confidence is growing.

Bitcoin daily active addresses are approaching levels not seen since 2018 but at the same time, active supply has been falling. Active supply is a measurement of the amount of supply moved on-chain within the last x days or years and while short-term supply surged in early 2020, longer-term active supply has dropped.

The fact that 1 year and 2 years active supply has dropped to two-year lows implies that “supply is increasingly being held for periods longer than one year, which supports the narrative that BTC is used as a store of value,” said Nate Maddrey, Research Analyst at Coin Metrics.

About 10.35 million BTC has moved on-chain within the last two years and about 7.4 million within the last year. Also, only 38.93% of bitcoin supply was active within the last year, the last time it was under 40% was in May 2016.

At the same time bitcoin balance on exchanges has been dropping since March sell-off.

Glassnode Bitcoin Exchange Balance
Source: Glassnode Bitcoin Exchange Balance

Currently, 14.3% of bitcoin’s circulating supply, 2.6 million BTC is in centralized exchange wallets, as per Glassnode.

The largest bitcoin holder is Coinbase at 954k BTC. At 2nd spot is Huobi but with not even half of Coinbase’s balance at 364k BTC, followed by Binance’s 267k BTC.

Coin Metrics also notes that Gemini which has been a relatively small exchange compared to its competitors at the beginning of 2017 now holds more bitcoin than Bitfinex, Bitstamp, Bittrex, Kraken, and Poloniex.

Amidst this, bitcoin realized capitalization has recovered and reached a new all-time high of $106.97 billion. In contrast to traditional market capitalization which values each unit of BTC supply uniformly at current market price, realized cap is calculated by valuing each unit at the price it was last moved on-chain or transacted.

Meanwhile, bitcoin continues to rebound three months after the March crash, currently trading under $9,100 in red while managing a mere $767 million in ‘real’ trading volume.

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Author: AnTy

Former PBoC Vice-Chair Says the Backend Infrastructure for China’s Digital Yuan is Complete

China’s much anticipated Digital Yuan backend development is complete, according to Wang Zhongmin, the former Vice-Chair of the PBoC National Council for Social Security Fund. Wang made this announcement during the virtual 2020 FinTech Forum that was held by Beijing’s Fintech 50 Forum in collaboration with Tencent FinTech Research Institute.

The initiative, which began around five years ago, is in its sunrise phase following a pilot in 4 Chinese cities. Going forward, PBoC is optimistic about replacing the fiat renminbi (RMB) in circulation with a digital yuan.

It, therefore, follows that Wang’s sentiments could signal an earlier integration with China’s monetary system. Notably, China fast-tracked the development of its PBoC backed digital currency after Facebook announced Libra last year.

With crypto assets on the rise, China is looking to emerge as a leader in this space, hoping to replace the U.S dollar as the world’s reserve currency.

According to Wang, the digital yuan would not only serve as a digital base currency but also a payment ecosystem that accommodates other crypto-assets and sovereign currencies. Its integration is, therefore, expected to spur greater cooperation and competition in the digital currency space while maintaining oversight.

Also, the move towards a digital yuan is in line with measures against the spread of COVID-19. Wang was keen to note that both governments and private entities have since taken into consideration digital payment tech.

Other notable jurisdictions that have moved to support a CBDC include Italy; the country’s banking association (ABI) recently said that they are ready to take part in the piloting of a digital Euro.

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Author: Edwin Munyui