US Lawmakers Appeal the Treasury Secretary & SEC; Do Not ‘Hinder American Leadership’

Four US lawmakers, Warren Davidson (R-Ohio), Tom Emmer (R-Minnesota), Scott Perry (R-Pennsylvania), and Ted Budd (R-North Carolina), sent a letter to Treasury Secretary Steve Mnuchin, “expressing our concern” about the rumored self-hosted wallet regulations.

Last month, Coinbase CEO Brian Armstrong tweeted that Mnuchin was “planning to tush out” new regulations that will require KYC for these wallets.

According to the letter, Mnuchin’s potential regulation would “hinder American leadership,” threaten user privacy, and “undermine the Treasury Department from stopping illicit actors from exploiting the financial system.”

Regulating self-hosted wallets might have the unintended effect of making anyone who uses them into a criminal, the letter said.

The US should have “regulatory parity” between the crypto ecosystems and the traditional financial system, it further added.

“Over-regulating self-hosted wallets will crush a nascent industry and leave the United States behind the rest of the world when it comes to harnessing the power of blockchain and cryptocurrency,” said Davidson in a statement published online where he asks Mnuchin to appear in the Peoples’ House and talk about what these regulations would do.

Regulated safekeeping of Crypto Assets

The same day, nine Congress members sent a letter to Securities and Exchange Commission Chairman Jay Clayton, asking the securities regulator to create clear guidelines on cryptocurrency custody and enable FINRA to approve broker-dealer applications.

The letter mentions that strong financial markets attract investment and serve as the foundation for a healthy economy, and adopting innovative technologies will only improve the functioning of securities markets. The letter says,

“Following the OCC’s lead, the SEC and FINRA should address the need for regulated safekeeping services for cryptographic assets.”

The congress members want the SEC to explicitly confirm that banks may act as good control locations for the custody of digital securities, advise FINRA on the requirements for broker-dealers to be able to custody digital securities for their customers, and instruct FINRA to approve broker-dealer applications that meet the necessary requirements.

“Doing so would greatly increase the uniformity and efficiency of safekeeping mechanisms for all security types, resolving uncertainty and creating an environment for the digital securities industry to flourish.”

Clayton is to step down from his role at the end of this year.

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Author: AnTy

Digital Yuan Pilot Records $300 Million in Transactions But No Launch Yet, says PBOC Governor

The pilot program on the digital yuan rollout across four cities – Shenzhen, Suzhou, Xiong’an, and Chengdu has been smooth, said Yi Gang, governor of China’s central bank People’s Bank of China.

Over 4 million transactions, totaling more than 2 billion yuan ($299 million) in the digital currency so far, have been made, he said.

As per the figures, the digital yuan pilot expanded 21% and 82% from the 3.3 million transactions valued at 1.1 billion yuan, respectively recorded in late August, according to South China Morning Post.

The PBOC pilot discovered 12,000 use cases for DCEP, up 80% from 6,700 ways as of late August. Yi said,

“So far, the experiment and pilot program have been (going) fairly smoothly.”

Legal Framework Needs Completion

The comments were made during the Hong Kong Fintech Week conference on Monday, where Yi was speaking on a virtual panel with Agustin Carstens, head of the Bank for International Settlements, and Klaas Knot, president of the Dutch central bank.

Despite the digital yuan usage expanding rapidly across Chinese cities, Yi said they are in the early stages of developing a central bank digital currency. On the launch of digital yuan, Yi said China first needs to complete,

“A fairly complicated, and complete legal framework and regulations (for digital yuan) that enhances its transparency.”

With DCEP, the world’s second-largest economy is accelerating towards a cashless society. The country’s digital payments transaction volume has actually been expected to surge to 412 trillion yuan by 2025, up from 201 trillion yuan last year.

A Global Framework for CBDC

As we reported, the central bank published a draft law last week aiming to provide the DCEP a legal status.

Yi didn’t say anything about that on Monday but said the PBOC had completed the architectural design of the (CBDC). He further reiterated that the pilots would also run at the Winter Olympics in 2022, for which QR codes, tap-and-go transactions, and other features will be available.

During the panel, which was moderated by the Hong Kong Monetary Authority’s chief executive Eddie Yue, Yi said the PBOC would also collaborate with other central banks to establish a legal framework for CBDs globally. Yi said,

“I would like to cooperate with the Bank of International Settlements, the Financial Stability Board and international central bankers to discuss a legal framework, [fostering] transparency and how to safeguard [the development] of central bank digital currencies.”

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Author: AnTy

KPMG Partners with Coin Metrics to Enhance Digital Asset Services for Institutional Clients

‘Big four’ accounting firm, KPMG, is expanding its blockchain product suite following a partnership with a leading crypto market data service provider, Coin Metrics. According to the announcement on Oct 27, the strategic alliance is meant to enhance the delivery of reliable data insights to bring more institutional clients into public blockchains and crypto-assets.

Notably, the announcement coincides with an increased interest in crypto by traditional financial institutions. Going by the trends, big players like PayPal will soon require advanced product suites in the blockchain niche for auditing processes. The KPMG partnership with Coin Metrics will see both firms integrate their blockchain products to serve institutional clients’ growing demand.

KPMG’s ‘Chain Fusion,’ a digital asset oriented product designed for financial firms, was launched as recently as June 2020. This product is set for integration with Coin Metrics’ Farum and Atlas, both of which propose value to KPMG’s core operations. Farum will enable KPMG clients to efficiently monitor risks by identifying fee volatility, transaction reorganizations, and network attacks.

Atlas, on the other hand, proposes value in transaction audits; this comes in handy with issues such as capital tax reporting, a niche where KPMG is a veteran player. KPMG’s Cryptoasset Services co-lead, Sal Ternullo, said that,

“The integration of Coin Metrics’ Atlas and Farum products and KPMG Chain Fusion provides a trusted foundation for the adoption of digital assets … Farum represents a significant step forward for custodians and exchanges who are exposed to often, unmonitored blockchain network risks that may impact their businesses.”

As the crypto market continues to gain traction, it is becoming evident that audit functions are necessary for the space to thrive. Well, KPMG is not the only ‘big four’ that has made a debut in crypto; its peer competitors PWC, Ernest & Young, and Deloitte have also shown interest. In fact, PWC recently partnered with ChainSecurity while Ernest & Young launched its crypto tax service a few months ago.

Also Read: KPMG Reveals Blockchain-Based Climate Accounting Infrastructure (CAI) for Greenhouse Gas Tracking

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Author: Edwin Munyui

Israeli Draft Bill Proposes Bitcoin be Defined as Currency to Cut Down the Hefty Capital Gain Tax

Four members of the Knesset, Israel’s legislative body, from the Yisrael Beiteinu faction, the secular nationalist political party, have submitted a private member’s bill seeking to amend the taxation of crypto-related activities so that the sale of bitcoin and crypto-assets isn’t subject to 25% capital gains tax, as per local media reports.

The private member’s bill, submitted by MKs Oded Forer, Yevgeny Soba, Yulia Malinowski Kunin, and Alex Kushnir, was tabled earlier this week on Tuesday that seeks to amend the way digital assets activities are taxed under the Income Tax Ordinance.

Under the ordinance, digital currency is considered an asset; as such, its sale and conversion in fiat currency are subject to capital gains tax. Currently, the tax on most capital gains in the country is 25%.

Section 91 of the Income Tax Ordinance, however, provides relief in the taxation of capital gains from short-term lenders or non-CPI linked bonds — they are taxed at only 15%.

“The regulatory reality in Israel is not adapted to the existing reality in the field,” claims the memorandum of the proposal.

The bill also seeks to add a section in the Ordinance, which deals with the “determination of distributed digital currency.” Under this proposed section, the Minister of Finance may prescribe provisions under which the digital assets shall be determined as a distributed digital currency.

The purpose of the bill is that Bitcoin and other digital assets are considered a currency for the taxation purpose.

“The State of Israel has the ability to be among the leaders in the field of digital currencies, if only it recognizes the use of the blockchain as a currency for everything. It is precisely in this period, when the economic future is unclear It is possible to promote digital payment options due to the social distance that has been forced on us,” said K Forer after the bill was submitted.

The same day another bill was tabled in the Knesset that seeks to allow reporting on digital asset trading once every six months or year.

Currently, those who sell digital currencies are required to submit a report to the tax authority within 30 days of the sale, along with paying an advance on the tax rate applicable to the capital gain arising from the transaction.

“The two bills passed last night by MKs Oded Forer and Sharan Hashakel are an infrastructure on which Israel can be developed as a global financial center and a leader in the field of digital currencies,” said Manny Rosenfeld, chairman of the Israeli Bitcoin Association.

Related Reading:

Breaking: European Commission Proposes Legislation to Turn Crypto-Assets into Regulated Financial Instruments

More Reading: US Lawmakers Propose Two New Bills to Streamline Digital Asset And Crypto Exchange Regulation

Also Read: Russia’s Ministry of Finance Tells Traders to Disclose Crypto Wallets Or Face Fines And Jail

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Author: AnTy

Bitcoin Must Outperform Altcoins To Kick Off A Long-Term Bull Market

For the past four days now, bitcoin has been hovering around $11,000. Trading in the green, the digital asset today went as high as $11,185 but with the ‘real’ volume only about a billion dollars.

Much like the spot trading volume, futures had a lackluster performance as well. From $28 billion on Sept. 3rd, it has come down to just $7.2 billion. On CME, the volume kept between $262 million and $445 million since the mid of last week.

Open interest also followed the same path, going down from $5.1 billion to $3.7 billion in the first few days of September. But unlike futures volume, OI has been slowly trending upwards, making it to $4 billion. On CME as well, OI jumped back to $500 million.

However, during this whole ordeal, Bakkt came out the winner, making new records. On Monday this week, the total volume (physically-settled + cash-settled) was $183 million. Then on Wednesday, this record was broken with $191 million. But the OI on Bakkt had no such fun as it remains near $10 million.

What’s Looking Good?

While bitcoin looked good this week, with the price around $11,000, analyst DonAlt is all about the $10,600 area, which according to him, “is still one of the most important areas on the chart.”

“This week closes below it? I’ll assume the top is in, and we’ll trade towards $8k. We close above it? I’ll close shorts and see what happens next,” he said.

Amidst this, European Central Bank will disburse its latest rounds of loans with interest as low as -1% that has led the funding costs to fall. ECB’s liquidity injections may raise excess cash in the euro area above 3 trillion euros ($3.6 trillion) for the first time.

Today, while BTC is looking green, altcoins are not having that great of a time which includes SAFE (-25%), BAL (-16%), KNC (-10%), CRV (-9%), Tezos (-8%), YFI (-7%), and LINK (-4%), with the top ones down between 1% to 3%.

Still, the likes of CREAM (43%), SASHIMI (42%), UNI (40%), YAMV2 (16%), BASED (8%), and Aave (5%) are making gains.

Signs of New Money Moving into Crypto

The leading cryptocurrency is taking its sweet time moving upwards. Up 50.5% YTD, in Q3 bitcoin, has made gains of only 20%, about half of Q2’s 42% returns. But it is still better than gold’s 10.15%, SPX 7%, dollar’s -3.69%, and WTI’s -6.5%.

Quarter third, however, hasn’t really been good for the cryptocurrency, except for in 2017, or stocks for that matter. The next quarter, on the other hand, historically has been dominated by greens — 82.8% in 2015, 62.60% in 2016, and 210% in 2017. In 2014, 2018, and 2019, however, Bitcoin recorded losses of 18%, 42.5%, and 13.60% respectively.

Also, as Juan Villaverde of Weiss Crypto Ratings notes, underneath the surface, we are seeing “crypto-assets establishing a solid base for a potentially explosive rally as we head into the final quarter of 2020.”

His takeaway from the current market action, where bitcoin is moving higher while altcoins are struggling in sharp contrast to the past couple of months,

“Bitcoin remains the benchmark for outside investor interest in the asset class.”

“I’ve often noted on these reports how no crypto bull market is sustainable without Bitcoin leading the way, at least in the early stages,” said Villaverde adding:

“it’s only when we see Bitcoin outperform the rest of the markets to the upside that we can say that new money is moving into the crypto space — a necessary prerequisite for a long-term bull market.”

But it also remains to be seen if bitcoin will continue to outperform over the next few weeks.

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Author: AnTy

Anheuser-Busch InBev, ING Bank, & Rolls Royce Join Mousebelt’s Blockchain Education Alliance

Blockchain Education Alliance, an initiative by Mousebelt, has gained four new significant members according to an announcement by the blockchain accelerator on August 17. They include margin crypto trading platform Multi.io, Rolls Royce, Belgium brewing firm Anheuser-Busch InBev and Dutch-based ING bank.

The project whose fundamental goal is to accelerate blockchain education and research now has 26 members following this addition. Having launched in October 2019, pioneer members included ETC Labs, Nem, LTO Network, Harmony One, Wanchain, ICON, Tron, and the Stellar Development Foundation. It was not long before the initiative attracted the likes of Binance, Mastercard, KuCoin crypto exchange, and Constellation Labs onboard as well.

With such players already approving the Blockchain Education Alliance strategy, some of its milestones include a 72-hour live blockchain education event that was held in May. This virtual conference was dubbed ‘REIMAGINE 2020’ and featured networking events, panel and debates, and a continuous livestream of the keynotes.

Given the prevailing lockdowns at the height of the COVID-19 pandemic, REIMAGINE 2020 attracted students from various universities, giving them exposure to cutting edge tech like blockchain as well as an opportunity to meet with the industry veterans. Mousebelt’s head of Education, Ashlie Meredith, further pointed out that they are looking to nature skills given the looming uncertainty in the global economy,

“In a time when many students will not be returning to campus, increasing opportunities for educational experiences, jobs and internships is of utmost importance.”

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Author: Edwin Munyui

Four Top Chinese State-Owned Banks Are Testing The Chinese Digital Yuan Project (DCEP)

In an unconfirmed report, four Chinese state-owned banks are gradually testing the ‘digital renminbi’ wallet app and Digital Currency/Electronic Payment (DCEP) system in different provinces across the country.

The reports, though unconfirmed, follow the recent comments by the People’s Bank of China (PBoC) confirming the “closed pilot of the digital RMB was completed” with plans to launch research on the legal digital currency underway in this second half of the year.

It was first revealed by a local newspaper, 21st Century Business Herald, who spoke with some of the employees working on the app. As reported, the app is in extensive scale testing in Shenzen and other parts of the country with four major banks – China Construction Bank, Bank of China, Industrial and Commercial Bank of China and Agricultural Bank of China – participating.

According to the report, users will need to have to open a digital account with either of the four banks to register the app. The digital wallets are then linked to various banks allowing the users to recharge their accounts and also spend on different utilities directly – similar to Alipay and WeChat payment services.

However, the app is still not publicly available for downloads as one respondent confirmed:

“Our bank is testing the ‘digital renminbi’ app on a large scale. The app cannot be downloaded publicly for the time being, and it has an identity code after opening it.”

The app allows users to transfer amounts to others by using their phone number or a QR code, pay, save, and spend RMB digitally across several merchants across China.

Read More: Will China’s CBDC See Strong Adoption Or Will Dollar Pegged Stablecoins Cause Resistance?

China has, in the past, hastened its efforts in launching a legal digital currency since the announcement of the Libra project, championed by Facebook. The leading committee on the digital currency, Central Bank’s Digital Currency Research Institute, launched closed pilot tests in Shenzhen, Suzhou, Xiong’an, and Chengdu in preparation for a Winter Olympics 2022 date release.

Moreover, the CBDC is in testing on Tencent Holding’s food delivery app, Meituan Dianping, as well as the Chinese Uber, Didi Chuxing, which are processing billions of dollars annually. China’s hastened launch of its DCEP project aims to reduce the dollar-influence across the country and East Asia.

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Author: Lujan Odera

As Decentralized Finance Continues to Evolve, Big Four Audit Firms Will Play a Major Role in DeFi

Big four audit firms are set to be a significant part of the Decentralized Finance (DeFi) ecosystem according to the latest blockchain industry report by German-based non-profit, dGen.

The DeFi space, which has seen tremendous capital gains in TVL, will grow even more prominent in the coming decade as per dGen insights on its report. Jake Stott, the co-founder of dGen, noted that support from other financial market stakeholders would be inevitable going forward. Tom Howard, Chief Strategy Officer at Mosendo, said;

‘Over time, traditional financial institutions will have no choice but to interact with  decentralized finance tools, slowly disinter-mediating the industry from the inside out.’

Functions like verifying the authenticity of an invoice, tracking payment settlements, and insurance claims could occur faster with the help of a blockchain. Their role will be to act as an intermediary between DeFi and traditional finance.

Dubbed the ‘Decentralised Finance: Usecases & Risks for Mass Adoptionreport, dGen paid particular attention to the DeFi space. Currently, over $2.5 billion in funds is locked within DeFi based products. It is an area that has been hailed as the future of markets given almost all traditional assets are finding their way onto Ethereum based protocols. Though still at its infancy stages, dGen acknowledged this underlying potential in DeFi stating that it,

“could leapfrog the current FinTech industry, providing a new structure of financial services.”

Consequently, this optimistic narrative has gained massive support from across financial services, tech, and the academia elite. DGen’s researchers are bullish that the market could grow past the trillion-dollar mark by 2030. The report highlights that DeFi will: “Provide income for thousands of gamers, streamers, and influencers”

It will also be adopted by European financial institutions who will switch to offering “DeFi-enabled savings and pension accounts.”

A recent Q2 report by industry giant, ConsenSys, concurs on the possibility of a DeFi future given historical growth rates in the past three months. It goes on to detail that Bitcoin tokenization protocols and Yield farming frenzy are the fundamental factors behind this growth as per now.

While the DeFi space has emerged as an avenue to make better interest compared to zero percent in some jurisdictions, it continues to face security threats arising from the core infrastructures.

“Knowledge and security risks will continue to reduce, on top of a growing number of securities in the event of a hack. It appears the solutions the industry needs to scale will come from within the industry itself.”

The team is, however, optimistic the underlying issues might be resolved in as little as one year. Kain Warwick, Founder of Synthetix told dGen,

‘Insurance on DeFi is still extremely limited[…] DeFi still has significant tail risk, so insurance is likely to remain very costly in the short term, but as protocols mature, costs should come down[…] allowing for simpler and more useful insurance to emerge’.

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Author: Edwin Munyui

Hot DeFi Token, Which is Up Over 800% In the Past Year, is the Latest Addition on Binance

The new listing on Binance is the hot DeFi token Synthetix.

Binance is listing four trading pairs – SNX/BTC, SNX/BNB, SNX/BUSD, and SNX/USDT, which will be opened for trading today at 12:00 PM (UTC). Deposits are already open on the exchange.

Built on Ethereum, Synthetix is a token for minting and trading synthetic assets, including cryptos, equities, leveraged tokens, and other real-world assets on its network.

The token SNX is used to earn exchange fees for collateralizing the protocol and can also be staked.

The 28th largest cryptocurrency by market cap, SNX, is up 225% in the past month and more than 830% in the past year. Currently, it is trading at $2.92 in the green.

This token was created back in 2017 when it was initially named Havven. Founded by Kain Warwick, who is also the creator of an Australian crypto payment platform, this project raised about $30 million via Initial Coin Offering (ICO) in March 2018.

Before starting the month, Synthetix launched native binary options as part of its Acrux upgrade. These options are types of contracts that provide a fixed return based on a binary outcome in the future and payout on a specific date.

Its DeFi ecosystem consists of a decentralized exchange and Mintr where SNX stakers can mint and burn Synths to manage their collateralization ratio, track fluctuation in debt, and perform other activities on the network.

Currently, this project is the third biggest one in the DeFi space, as per DeFi Pulse.

The total amount of value locked in this application hit a new all-time high of $393.5 million today, which has been on an uptrend since March 2020.

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Author: AnTy

Ethereum (ETH) Mining Pool, Ethmine, To Receive The $2.6 Million Transaction Fee Paid Out Mysteriously

After a four day wait, the Ethermine mining pool, in charge of verifying the abnormal multi-million transaction fees charged to send Ethereum last week, will distribute the funds to the miners. This follows the lack of response from the account holder who made the transaction.

According to a statement from Bitfly, the company behind the Ethmine pool, miners who were online at the time an unusual transaction took place, will receive the 10,668 ETH in tx fees paid (about $2.3 million at time of writing). After a five day wait and no response from the owners account, the transaction fee which was withheld by the exchange will now be distributed.

The multi-million dollar transfer fees

In the early morning of the London markets opening on Thursday of last week, a rather large transaction fee was noted by whale transfer aggregators leading to Bitfly suspending the distribution of the fees to miners yet. It was an abnormal fee that has never been witnessed before.

For a miniscule 350 ETH transaction from a whale account, the address paid close to $2.6 million in transaction fees at the time leaving the crypto world shocked. However, this was the second of such a transaction with China’s Spark Pool processing another abnormal ETH transaction – 0.55 ETH (~$140 USD) was sent for a $2.6 million transaction fee.

While no reports yet on what could have caused the wild variations in transaction fees, some analysts see this as a case of money laundering or extortion of some kind.

While the second transaction by Bitfly will take a totally different route as explained above, Spark Pool has locked the transfer fee from the miners and are looking for the best way forward on why such a transaction was made.

These two transaction fees break the record for the highest fees ever recorded on a blockchain by a long shot with a transaction fee of 236 ETH (~$130,000) paid in 2018 the previous record.

‘Many wrong senders’

Well, a number of people have come forward to claim the transaction was made by them but there is still no valid transaction id sent by any of the respondents. The official Twitter statement from the Bitfly Company reads,

“While multiple people claimed being the sender of this transaction none of them was able to produce a valid signature of the sending account.”

The distribution of the funds to the miners will be made to the miners according to a “hashrate snapshot took at the time (block #10241999) mined by our Ethermine pool”.

While this was the first time such a large move has occurred, Bitfly states that they will no longer withhold any transaction fee pay outs to miners despite the size of the transaction as it is “advertised policy.” It reads,

“Also we would like to make clarify that in the future we will no longer interfere in the payout of large tx fees.”

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Author: Lujan Odera