China’s National Development & Reform Commission Adds Crypto Mining to Outdated Industry

About two dozen cryptocurrency firms have fled the country after PBOC explicitly warned foreign platforms about providing services to its citizens, calling them illegal financial activities.

In less than fifteen days since the People’s Bank of China issued new regulations to crack down even more strongly on the cryptocurrency industry in the country, more than 20 such companies have stopped providing services to users in China or have completely withdrawn from the Chinese market, according to a local report.

On Friday, the National Development and Reform Commission further added virtual currency mining back to its outdated industry category; an action expressed in the PBOC’s notice last month.

The NDRC first started publishing this industry reform catalog in 2005 and grouped industries into three categories to encourage, restrict or eliminate them.

According to the latest draft, crypto mining is an industry that uses outdated production processes and equipment.

Exchanges Shutting

This time the central bank has strengthened its regulations against crypto and explicitly warned foreign platforms about providing services to Chinese citizens, declaring them illegal financial activities.

The campaign has served as a “clearer signal to the cryptocurrency industry that the space for relevant institutions and professionals is being squeezed more and more,” said Su Xiaorui, a senior analyst at research firm Analysys.

Today, Justin Sun’s Poloniex exchange announced that it will cease its operations in mainland China as it cannot comply with the local laws only to inform later that their “last email was wrong.”

In its first email, Poloniex had said that the platform would restrict its operations from 7th October, 4:00 am (UTC), and that it had stopped its registration facilities on 4th October.

Executives Leaving

Leading crypto exchange Binance swiftly stopped registering new mainland Chinese users following PBOC guidelines. Another popular crypto exchange Huobi said it would phase out access to existing Chinese users by this year’s end, and earlier this month, it yet again issued an announcement confirming the details of the withdrawal of users in China.

This week, Huobi COO Zhu Jiawei further announced his exit from the company. Founder and chairman Li Lin clarified in a WeChat post that their COO had already quit in April, but they delayed publicizing the information to avoid negatively impacting the company. Binance’s chief financial officer Zhou Wei also left the company in May.

However, both the exchanges were already forced to move out of China in 2017 when Beijing stopped hosting fiat to crypto transfers. But until this year, Chinese users were still able to access those services through over-the-counter (OTC) services and crypto-to-crypto transactions.

No More Support

Other platforms like TokenPocket, BitMart, and BHEX have also stopped providing their services to Chinese users.

Miners like SparkPool, which is one of the largest Ethereum mining pools and data providers, have all fled China as well. Alibaba has banned the sale of crypto mining equipment, NBMiner, which develops management software for graphics cards, is no longer offering tech support to users in China, and the operator of the Feixiaohao app also ceased its operations in the country.

Even HyperDAO, which offers decentralized financial (DeFi) services, said it would no longer discuss cryptocurrency on Chinese social media and had quit all business on the mainland.

Major data aggregators CoinGecko, CoinMarketCap, and TradingView, are no longer accessible in mainland China either.

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Author: AnTy

Canada’s Security Regulator Releases New Guidance for Crypto-Trading Firms

Canada’s Security Regulator Releases New Guidance for Crypto-Trading Firms Relating to Advertising and Marketing

The Canadian Securities Administrators (CSA) has released fresh guidance for cryptocurrency exchanges on advertising and marketing along with the use of social media.

An umbrella group for securities regulators in the country, CSA published the guidelines this week in collaboration with the Investment Industry Regulatory Organization of Canada after they became aware of certain advertising activities and marketing strategies by crypto trading platforms (CTPs) that may breach certain requirements of securities legislation and/or raise investor protection or public interest concerns.

According to the joint staff notice, it assists those CTPs that are registered as a dealer, have applied for registration, or are considering establishing as a CTP.

The notice covers the false or misleading statements made in advertising and marketing materials and improper “gambling style” promotions and schemes that encourage trading or excessively risky trading.

“We wish to remind CTPs that registered dealers have an important role as gatekeepers of the integrity of the capital markets. They should not, by act or omission, engage in or facilitate conduct that brings the market into disrepute.”

These guidelines come on the heels of Canadian regulators tightening their noose on unregistered service providers.

As we reported last month, its security regulator prohibited regulated crypto exchanges from trading in Tether (USDT) stablecoin. In June, Binance announced that it is restricting its services for users in Ontario for “compliance” reasons. Earlier this year, the Ontario Securities Commission (OSC) had filed an enforcement action against crypto exchanges.

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Author: AnTy

Fidelity Urges the SEC to Approve A Bitcoin ETF As Another BTC Futures ETF Filed

Fidelity argues firms have to “fulfill financial backer need for direct openness to Bitcoin,” highlighting the need for a physically-backed Bitcoin ETF as the Bitcoin market has “developed and can uphold” the laws.

Fidelity Investments has urged the US Securities and Exchange Commission (SEC) to approve its Bitcoin exchange-traded fund (ETF) in a private meeting, reported Bloomberg.

Tom Jessop, the president of Fidelity Digital Assets (FDA) along with other executives, met with SEC officials over a video call on Sept. 8, according to a recent filing.

Laying down the reasons why the regulator should approve the proposed products, the executives pointed to increased investor appetite for crypto assets, the growth of Bitcoin holders, the existence of similar funds in other countries, and the regulator being slow to embrace, according to a presentation from the meeting.

“Bitcoin prospects-based items are not a vital interval venture before a Bitcoin ETP,” Fidelity said. “Firms ought to have the option to fulfill financial backer need for direct openness to Bitcoin” through ETFs enrolled under those 1930s laws, “on the grounds that the Bitcoin market has developed and can uphold them.”

In March, Fidelity filed the application for its Bitcoin ETF called the Wise Origin Bitcoin Trust.

According to Rebecca Sin, ETF Analyst at Bloomberg, the listing of crypto ETFs in the US “could boost ETF revenue to 20 billion over the next five years.”

As we have reported, several firms have filed their applications for a physically-backed Bitcoin ETF. In fact, the first such application was filed by Winklevoss twins eight years back, but not a single one has been approved yet.

“A progressively wide scope of financial backers looking for admittance to Bitcoin has highlighted the market need for a more differentiated arrangement of items offering openness to advanced resources for match interest,” Fidelity representative Nicole Abbott told Bloomberg.

However, recently, SEC Chair Gary Gensler did signal his openness to a futures-backed Bitcoin ETF as it offers increased investor protection.

Since Gensler’s comments, several firms have also filed for a Bitcoin Futures ETF, and the industry experts expect one to get approved by the end of this year.

On Tuesday, ETF Series Solution also filed for a Bitcoin futures ETF with Bitwise Index Services.

The Bitwise Bitcoin Strategy ETF was filed under the Investment Company Act of 1940 and seeks to invest in bitcoin futures and other financial products, including “Canadian-listed funds that provide exposure to bitcoin.”

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Author: AnTy

Asset Manager and Investment Firms Abruptly Withdraw Futures-backed Ether ETF

Asset Manager and Investment Firms Abruptly Withdraw Futures-backed Ether ETF, Another Bitcoin ETF Heads to the SEC

Investment firms ProShares and VanEck have withdrawn their Ether Futures ETF that was filed only just this week.

On Wednesday, VanEck filed for an Ethereum-based ETF that would invest in Ether futures, Canada’s approved and listed Ether ETFs, private Ether funds, and ETPs with exposure to ETH. ProShares also filed for an Ether futures-backed ETF called ProShares Ether Strategy ETF on the same day.

And now before the week was even over, both the firms abruptly withdrew their applications which according to Eric Balchunas, Senior ETF Analyst for Bloomberg could be propelled by the SEC.

“As long we ONLY see the Ether ones ejected, I’d say that’s decent news for bitcoin ETF. Sort of like them saying, look, let’s baby step this, only bitcoin rn. Stop exciting the crypto trade pubs with all these filings,” said Balchunas.

$400 billion asset manager giant Neuberger Berman which filed to have its $164 million Commodity Strategy Fund to invest up to 5% in Bitcoin and Ether through futures, filed a fresh one this week to only include Bitcoin and to “replace” the original.

Earlier this month, SEC Chair Gary Gensler made remarks that suggested he would look favorably upon futures-based ETFs.

Currently, there are still a dozen physically-backed Bitcoin ETF applications filed with the SEC along with several based on Bitcoin Futures contracts.

Amidst this, a new crypto ETF has been filed with the SEC.

Investment management firm AdvisorShares that offers a range of themed ETFs submitted an application for AdvisorShares Managed Bitcoin ETF.

This ETF will not invest directly in Bitcoin but in exchange-traded futures contracts on bitcoin and collateral, as per the filing. Morgan Creek Capital will serve as the sub-advisor of the Fund.

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Author: AnTy

Four New Firms Report Adding Exposure to GBTC and ETHE as Grayscale Discount Continues to Shrink

Four New Firms Report Adding Exposure to GBTC and ETHE as Grayscale Discount Continues to Shrink

In the latest institutional buying update, several firms added crypto exposure in the quarter ending June 30, 2021.

As first reported by MacroScope, according to the recent filings with the US Securities and Exchange Commission (SEC), Ancora Advisors disclosed holding 13,945 shares of Grayscale Bitcoin Trust (GBTC) and 2,674 shares of Grayscale Ethereum Trust (ETHE).

Cleveland-based Ancora with $6.2 bln assets under its management is a family wealth advisory, retirement plan, and investment management services provider.

Another company to join Ancora is Cleveland-based private investment firm Parkwood which increased its exposure to 125,000 shares of GBTC, from 93,000 GBTC shares at the end of March. It also added 189,275 shares of ETHE to its crypto exposure.

Boston Private Wealth, a part of SVB Financial Group (Nasdaq: SIVB), the parent company of $33 billion Silicon Valley Bank, reported owning 103,469 shares of GBTC, representing an increase of 17.3% from Q1. Boston Private Wealth didn’t report any ETHE holdings.

In addition to this list, Illinois-based wealth management firm Clear Perspective Advisors also reported owning only 7,790 GBTC shares.

GBTC is a $30.9 billion Trust of the world’s largest digital asset manager, Grayscale Investments, which is currently trading at a 10.46% discount, having shrunk from its mid-May high of 21.48% discount, according to Bybt. ETHE meanwhile is trading at a 4.72% discount, having recovered from 14.34% three months back.

Though small holdings, these latest holdings reveal that the mania of crypto has started to take effect and is reaching all the corners of the traditional market, big and small alike.

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Author: AnTy

Large VC Firms and Pension Funds Are Coming in Crypto and Inflating the Valuations: PwC

Large VC Firms and Pension Funds Are Coming in Crypto and Inflating the Valuations: PwC

Cryptocurrency companies are enjoying a rapid rise in valuations thanks to the entry of large investors, according to professional services firm PwC.

Big venture capital firms, private equity players, and even pension funds are replacing family offices and boutique firms in these fundraising campaigns of crypto companies, PwC Crypto Leader Henri Arslanian told Bloomberg in an interview.

Arslanian said these big names are putting a bid in for a higher valuation, making smaller venture capital firms unhappy. He added,

“This is happening a lot with very early-stage companies, say, $5 million to $20 million — the prices are being inflated.”

Back in 2020, crypto M&A was about $3 billion, but in 2021 this amount was raised in just the last two to three months alone. Crypto deals have heated up in recent months after crypto asset prices went skywards.

According to Arslanian, besides the regulatory risk, the challenge involves assessing the valuation of businesses that are a few months or years old. Another issue, he said, is a lack of suitable assets to invest in as there aren’t many companies that are “investable, looking for capital and could absorb $100 million.”

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Author: AnTy

Russian Ransomware Group, REvil, Attacks 200 Firms, Demands $70 Million in Bitcoin

Russian Ransomware Group, REvil, Attacks 200 Firms, Demands $70 Million in Bitcoin

Russian-based ransomware group REvil has again attacked no less than 200 firms in its latest operation. The group is demanding a ransom of $70 million in Bitcoin as ransom to release the stolen data.

Firms Hacked Through Software Supplier Kaseya

According to Reuters, REvil targeted software supplier Kaseya and used its technology management software to spread the ransomware via the cloud.

One of Kaseya’s tools, VSA, used by several firms, was encrypted with infected files, paralyzing hundreds of firms.

“More than a million systems were infected. If anyone wants to negotiate about universal decryptor – our price is $70 million in Bitcoin,” the ransomware group said as reported in a dark website, Happy Blog.

Updating firms on the incident, Kaseya said it was working on a patch that would increase the security of its VSA server. It also advised its customers to continue to remain offline until it is safe to restore operations.

Ransomware attacks by REvil have been constant these past few months. In May, the Russian group attacked a major pipeline firm, Colonial Pipeline, and received a $5 million ransom after spurring a gas crisis in the US.

That same month, JBS Holdings, the world’s largest meat company, was also attacked by the same group, which led to an $11 million ransom payment.

CNA Financial. CNA, one of the largest insurance companies in the US, reportedly paid $40 million in Bitcoin to restore access to its network after a ransomware attack.

Biden Taking Ransomware Attacks Seriously

Over the past few months, US president Joe Biden and his administration have taken a more serious stance on ransomware attacks.

The US Department of Justice (DoJ) had previously said that it would start treating these attacks with the same urgency it treats terrorism.

US Officials have spent the past few months scrutinizing these crimes while also tracing payments. Last month, the officials disclosed that they had recovered most of the $4.4m ransom paid to the hackers responsible for the Colonial Pipeline attack.

In a bid to curtail these attacks, last month, President Biden also met with Russian President Vladimir Putin to discuss and proffer solutions. Biden had told Putin that if ransomware attacks continued and were found to be from Russia, there would be consequences.

During a recent public appearance, Biden said that he had directed the US intelligence agencies to investigate the ransomware matter.

Biden’s statements come after the US Department of State’s official Victoria Nuland spoke about the Colonial Pipeline hack. In a meeting with Salvadoran president Nayib Bukele, Nuland said the US State Department was taking a tough look at bitcoin due to the Colonial Pipeline ransomware hack.

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Author: Jimmy Aki

Ledger Wallet And Shopify Face Class-Action Suit After Rogue Employee Leaks User Data

Crypto wallet provider Ledger and its e-commerce partner Shopify are in for a tough year.

Both firms are defendants of a class-action lawsuit filed against them following the aftermath of a phishing attack that saw a quarter-million of their customers’ details exposed online.

The lawsuit, which is the first of many, was filed by law firm Roche Freedman for John Chu and Edward Baton in California on April 6.

Shopify’s Employee Stole Customer Details

According to the 43-page document, the complaints allege that the defendants had been negligent in their duties of safeguarding customer’s personal details between April and June 2020.

The plaintiffs also ask for commensurate compensation for the damages incurred from the data breach and have asked the court to grant all relief allowed by law, including injunctive relief.

According to John Chu, he saw BTC and ETH worth over $267,000 stolen from his digital wallet, and Baton said that he lost $75,000 worth of XLM through phishing scams.

The duo claims to have been deceived by correspondence from the defendants.

Ledger and Shopify later identified the leak’s source as one of Shopify’s employees who shared full customer names, email, phone numbers, and shipping address on the database sharing website RaidForums. Following this, customers said they got strange calls and were threatened by unknown persons.

Ledger CEO Pascal Gauthier tweeted to reassure customers of the safety of their funds. He also assured that no hardware wallet was affected by the attacks.

Even though it’s been almost a year, the plaintiffs insist that the companies failed to notify affected customers or admit the full scope of the breach.

Speaking to The Block, Kyle Roche said the investigation had begun since the news of the breach became public knowledge. He said experts in the data security and cryptocurrency fields were consulted before any action was taken against the defendants.

In a July 2020 blog post, Ledger tried unsuccessfully to explain the breach admitting that only 9,500 users were affected by the attacks.

It published another blog post in the opening weeks of 2021, notifying customers about the changes they will be initiated in a bid to protect client’s data better. The cold storage wallet provider also admitted that its earlier number of affected customers was way off and said that the culprit leaked roughly 272,000 customer data.

It said it was creating a 10 BTC bounty fund for information that could lead to the culprits’ arrest.

Roche Freedman Is Crypto’s Bane

Even as the adoption of crypto has grown in a little over a year, many issues have cropped up. One of the most prevalent being malicious attacks that led to losses of digital assets by crypto owners.

US law firm Roche Freedman has been quite active in the past year as cases of retail investors seeing their crypto assets stolen due to the negligence of their service provider have grown.

In a report by investigative outlet OffshoreAlert, Roche Freedman filed 11 class-action lawsuits against 42 defendants. According to the filing, the listed parties were said to have allowed the investing public to trade unregulated cryptocurrencies.

The affected parties included popular exchanges like Binance, TRON, KuCoin, BitMEX, and others. Their company chiefs were not left out, with Binance founder Changpeng Zhao (CZ), Brendan Blumer, Dan Larimer, Vinny Lingham, and BitMEX co-founder and former CEO Arthur Hayes made the list.

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Author: Jimmy Aki

NYDIG Raises $200M from High Profile Investors, Insurance Firms’ Bitcoin Exposure Surpasses $1B

NYDIG Raises $200M from High Profile Investors, Insurance Firms’ Bitcoin Exposure Surpasses $1B

Soros Fund Management, New York Life, MassMutual, Morgan Stanley, Stone Ridge Holdings Group, and FS Investments are the big names, preparing to have an “explosion of innovation in Bitcoin products and services” in the coming months and quarters.

Bitcoin investment firm New York Digital Investment Group (NYDIG) has secured an investment of $200 million in a funding round led by some massive names.

Besides the parent company Stone Ridge Holdings Group, the strategic partners included Morgan Stanley, New York Life, MassMutual, Soros Fund Management, and FS Investments, announced NYDIG Monday. Bessemer Venture Partners and FinTech Collective, who led the two prior funding rounds, were also significant participants.

NYDIG will be working with these firms, which have been in partnership for years, for Bitcoin-related strategic initiatives spanning investment management, insurance, banking, clean energy, and philanthropy.

“These partnerships leave no doubt that institutional adoption of Bitcoin has arrived,” said Robert Gutmann, co-founder, and CEO of NYDIG. The firm is also planning to have an “explosion of innovation in Bitcoin products and services” in the months and quarters of partnership with these new investors.

NYDIG also shared that life, annuity, and property & casualty insurers now own, in aggregate, more than $1 billion of direct and indirect bitcoin exposure through the firm. Michael Saylor, CEO of MicroStrategy, which owns 91,064 BTC commented,

“Institutional funds are now flowing into Bitcoin at an accelerated rate via private equity, public equity, public debt, direct purchases of the commodity, & commodity futures.”

Towards the end of last month, Stone Ridge also filed with the SEC to add Bitcoin to its diversified alternatives fund. Anthony Scaramucci of SkyBridge called this open-ended mutual fund ready to buy BTC a “BIG deal.”

“Stone Ridge filing opens the door for every mutual fund to add Bitcoin (if they want to),” he said at the time.

While Bitcoin price is trading above $50k, there is simply no lack of bullish news in the market.

Goldman Sachs Group revealed substantial demand for digital assets from institutions as it works to reboot its Bitcoin trading desk. Additionally, in a survey of nearly 300 clients by the firm, 40% currently have crypto exposure.

“We see this as a hugely exciting time exploring the potential of that technology,” said Matt McDermott, global head of digital assets for Goldman Sachs Global Markets Division.

Today, PayPal also confirmed that it is acquiring the digital custody firm to “expand its initiatives to support cryptocurrencies and digital assets.”

The acquisition is expected to be completed in the first half of 2021, of which financial terms weren’t disclosed.

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Author: AnTy

Bitwise Files Application to Launch Exchange Traded Fund (ETF) for ‘Crypto Innovators’

  • Bitwise has filed to launch a new investment product, tracking performances of crypto companies.
  • Investment firms are expanding their operations as crypto demand continues to grow.
  • Asset managers and investment firms in the crypto industry are getting more creative as they look to attract new investors and grow their business.

This week, Bitwise Asset Management, a premier cryptocurrency fund manager, announced plans to launch a new product.

Tracking Crypto-Loving Companies

In its filing with the United States Securities and Exchange Commission (SEC), Bitwise confirmed plans to launch a Crypto Innovators Exchange-Traded Fund (ETF).

The filing explained that the new product would track performances of projects on the Bitwise Crypto Innovators Index. Bitwise describes “Crypto Innovators” firms with services and transactions in blockchain and crypto-facing sectors. These companies include asset custodians, digital trading services, wallet providers, and others.

The Bitwise Crypto Innovators Index will include firms that derive over 75 percent of their revenues from the crypto sector. Eligible companies are required to hold at least 75 percent of their net assets in cryptocurrencies. Bitwise is also looking into large-cap firms that have “dedicated business initiatives” focused on cryptocurrencies.

It is worth noting that Bitwise’s proposed ETF won’t invest in any cryptocurrencies or crypto-based derivatives firms. The company will also not participate in any Initial Coin Offerings (ICOs).

Good Times for Crypto Investment Companies

Bitwise has seen tremendous growth in its core business recently. Thanks to investors’ focus on cryptocurrencies, the firm has seen significant growth in its business. Earlier this year, the company’s assets under management (AUM) surpassed $500 million – a considerable increase from the $100 million in AUM that it held in October 2020.

In a press release, the investment firm explained that most of its new demand came in the fourth quarter of 2020 – a quarter where it surpassed inflows for 2018 and 2019 combined. Most of its new demand came from large investment houses – including hedge funds, financial advisers, family offices, and other institutions.

Bitwise’s most popular product remains its 10 Crypto Index Fund, which provides exposure to the ten largest digital assets by market cap. As the press release showed, the fund drew in $400 million from investors, with the Bitcoin and Ether-focused funds seeing exceptionally high demand. Now that it is launching a new fund, the company hopes to increase its business ventures beyond just cryptocurrencies themselves.

While Bitwise continues to grow in the institutional market, one company that’s in hot demand right now is Grayscale Investments. The New York firm is the industry’s largest asset management firm, and it is making significant expansion plays. It recently filed with the Delaware corporate registry to launch several investment trusts focused on the decentralized finance (DeFi) space.

According to its filing, Grayscale hopes to launch funds targeting top DeFi tokens, including DOT, AAVE, and ATOM. The company is looking to capitalize on the growing DeFi space, which has seen over $20 billion in new assets locked this year alone.

Grayscale is also looking to open investment trusts in top-performing altcoins ADA and XMR, allowing it to expand its current count. The company, which has over $25 billion in AUM, has also seen significant growth in its business as institutions tend to choose it as their go-to source for crypto exposure.

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Author: Jimmy Aki