On Friday, Vladimir Putin, Russia’s president, signed one of the two digital assets bills into law, Russian media outlet RIA reports.
The new law was passed by Russia’s parliament, Duma, last week and states that firms can provide virtual securities on blockchain platforms provided they are well registered with the country’s central bank, Bank of Russia, as issuers as well as meet various provisions.
The new law also states that decentralized cryptos are taken to be a form of property that should be declared by the holders for taxation purposes.
The bill notes that as a property, cryptocurrency cannot be used to pay for goods and services in the country. However, businesses accepting crypto payments have until January next year to adjust to the new development.
According to RIA, the bill seems like a mild version of what was essentially proposed. Russian parliamentarians had developed a new proposal of the bill which would render any entity providing or trading cryptocurrency illegal in the country.
The first draft of the bill highly represented the skeptical stance that has been advanced by the country’s central bank. It led to widespread condemnation from the crypto community as well as from the country’s Ministries of Economic Development and Justice.
The law also states that Russian residents will now have a chance to challenge any transaction involving the digital currencies in a court of law provided the plaintiff has proof of transaction and is a crypto holder.
The Russian parliament is currently working on a more comprehensive digital bill that will touch on various issues regarding digital currencies. The bill is expected to be discussed and passed before the end of the year. However, no specific details on dates have been disclosed to the public.
Australia’s New South Wales Treasury Department has released a research paper looking into the regulation of blockchain and another emerging tech. According to the city’s authorities, catching up with the rapid technological progress could save New South Wales a significant amount of money in compliance costs. The paper reads,
“Even small improvements to our regulatory framework have the potential to drive significant economic benefits. A saving of just 5 percent of compliance costs in New South Wales could result in a net benefit between $0.6 billion and $4 billion.”
The research acknowledges that COVID-19 has indeed changed the outlook of businesses in New South Wales, making it necessary to review the current regulatory frameworks. Notably, one of the propositions towards changing the landscape is outcome-focused legislation. This means that legislation will be informed or follow innovation hence giving more space for ideas to thrive.
“Outcome-based regulation can provide the flexibility for businesses to innovate, adapt, and realize the potential of emerging technologies, without having to seek permission from regulators.”
Another factor that the NSW Treasury Department plans to look into is the overlapping of regulation. Currently, some of the laws in this state create quite an overlap when it comes to processes such as registration, compliance, and reporting. This has since made some businesses stall, especially those that heavily depend on a swift action by the NSW market watchdogs.
It is, therefore, not surprising that the NSW state has decided to play catch up or ‘pace the problem’ by fast-forwarding considerations on emerging tech regulatory frameworks. In doing so, the Australian city is optimistic that it will seamlessly recover from the effects of COVID-19 under proper oversight while adopting the latest tech,
“With new tools providing a roadmap for reform, the way forward for New South Wales is clear … Technology and AI can continue to play a role in assisting regulators to target opportunities for burden reduction and streamline reform moving forward.”
ErisX, the TD Ameritrade backed crypto exchange, has tapped into the Silvergate Bank Bitcoin-friendly services. This Chicago based exchange whose niche is institutional investors will now offer its clients more options when it comes to crypto account management. It joins the likes of Anchorage, Bitstamp, CEX, Coinbase, Gemini, and Kraken, which was onboarded to the Silvergate Exchange Network (SEN) back in November 2019.
The move will allow ErisX clients to access deposit and withdrawal facilities based on the U.S dollar ecosystem. Compared to the Fedwire system, SEN proposes a higher value according to ErisX CEO, Thomas Chippas:
“If you think about the traditional means of moving fiat today, most institutional market participants would utilize the Fedwire system … You’re talking about the availability of getting your money around 4:30 p.m. or 5 p.m., depending on the bank.”
He went on to note that the underlying fees are less costly than a Fedwire transfer. Going by this value proposition, it is not surprising that SEN has attracted a significant clientele within the past year. The platform’s transaction activity shot up to 31,405 in Q1 2020 compared to 14, 400 during the last quarter of 2019; It is also an improvement from the 7,097 transactions recorded in Q1 of the same year.
Notably, Silvergate, which is listed in the NYSE, has further ventured into product development based on crypto assets. The firm recently scaled access to SEN leverage, a financial product structured to offer U.S dollar-denominated loans with Bitcoin pegged as collateral. ErisX CEO has since hinted that they are also evaluating this product but are yet to decide to bring to the exchange’s clients.
The US Federal Bureau of Investigation (FBI) is now leading a federal inquiry into the Twitter scam after hackers seized control of “approximately 130 accounts” including those belonging to Jeff Bezos, Elon Musk, Barack Obama, Warren Buffett, Joe Biden, Kim Kardashian, and others in a bitcoin-related scam, reported Reuters citing unnamed two sources familiar with the matter.
“We are aware of today’s security incident involving several Twitter accounts belonging to high profile individuals. The accounts appear to have been compromised in order to perpetuate cryptocurrency fraud,” said the FBI.
Before some of the most high-profile users were compromised, the emails linked to Twitter accounts went for sale on gray market sites. While an email was up for $250 in digital currency, for $2,500, the buyer would get the account itself.
In theory, social media companies ban the sale of accounts, but an administrator at OGUsers, the account trading forum, told Reuters that the internet firms “pick and choose when to enforce that rule.”
Amidst this, Twitter has also stepped up the search for a chief information security officer.
The company meanwhile continues to lock accounts that had changed passwords in the past month but believes “only a small subset of these locked accounts were compromised.”
In a rare bipartisan agreement, both Democrats and Republicans say Twitter must explain how the security breach happened and what it is going to do to prevent future attacks.
Tough day for us at Twitter. We all feel terrible this happened.
We’re diagnosing and will share everything we can when we have a more complete understanding of exactly what happened.
💙 to our teammates working hard to make this right.
“This hack bodes ill for November balloting,” U.S. Senator Richard Blumenthal said in a statement while scolding Twitter for “its repeated security lapses and failure to safeguard accounts.” Senate Commerce Committee chairman Roger Wicker requested more information on the hack.
President Donald Trump’s account was not jeopardized during the attack, said spokeswoman Kayleigh McEnany. The White House has been in “constant contact with Twitter over the last 18 hours” to keep Trump’s Twitter feed secure,” she said.
Tracking the Money
Meanwhile, investigators are scouring for clues with those behind the security incident that scammed $120,000 worth of BTC out of people, shifting the funds around online accounts creating a digital paper trail.
The attackers received a total of $121,000 from over 400 payments, the largest one of $42,000 came from a Japan-based exchange, according to Elliptic which helps law-enforcement agencies track crypto-related crime.
About $65,000 were quickly moved to other bitcoin addresses, $60,000 of this were directed to an address that has been active since May and interacted with Coinbase and payment processors Bitpay and CoinPayments, said Whitestream, a blockchain intelligence company.
BitPay confirmed this, and a spokesperson said, “Available details are being shared with appropriate parties including law enforcement.”
The funds initially collected in three bitcoin addresses have been moved to 12 new addresses, as per Elliptic.
The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has asked crypto exchanges and other financial institutions to report any suspicious activities related to the hack, in an advisory issued on Thursday. The New York Department of Financial Services will also investigate the incident, said New York Governor Andrew Cuomo.
According to cyber researchers investigating the issue, the motive behind the attack was bragging rights more than financial gains.
“This doesn’t look like a particularly sophisticated hacking group,” said Roi Carthy, the chief executive of Hudson Rock.
“Why go through all of the effort of stealing these credentials, just to make a few bucks.”
The Twitter accounts of crypto exchanges could have been used to torpedo the price of bitcoin or make millions of dollars by shorting Tesla and sinking its price by using Musk’s account. Carthy said,
“There are so many better ways to scam crypto than what they did.”
However, it also makes sense they went with bitcoin because the digital asset was the best performing asset of the last decade and has been up over 135% since the March crash. It can also be used worldwide.
The U.S Food and Drugs Administration (FDA) is looking into integrating modern technology such as AI and blockchains to develop a new era of food safety.
In a blueprint document published on July 13, ‘New Era for Smarter Food Safety Blueprint,’ the FDA is looking into a new approach to food safety through leveraging modern technologies to “create a safer and more digital, traceable food system.”
The document focuses on new technologies, strategies, and leadership to offer the safest food possible, blockchain is mentioned as a key component in the blueprint.
The new era of modern food security and safety lies on four key pillars, namely the new business models and retail modernization, food safety culture, faster prevention and approach methods to outbreaks, and finally, a tech-enabled traceability feature such as AI, Big data, and blockchain.
When we look at how industries track, through digital means, the real-time movement of planes, ride-sharing, and packaged goods or how firms are harnessing big data to identify trends,” the blueprint reads.
“It is clear FDA, and our stakeholders should be looking at how to tap into new technologies that include, but are not limited to, artificial intelligence, the Internet of Things, sensor technologies, and blockchain.”
Blockchain technology also mentioned as a critical component in leveraging digital transformation whereby if implemented, it will help in “receiving receive critical tracking events and key data elements from industry and regulatory partners.”
FDA is critically looking at blockchain solutions to improve traceability and tracking of food and medicine. In May, BEG reported FDA’s successful completion of a pilot blockchain program together with IBM, KPMG, Merck, and Walmart to trace medication in the U.S.
Bitcoin will ultimately be a “great investment in 2H2020 as a flood of new investors flock into the space, and there just won’t be enough BTC offered to satisfy this new demand,” predicts Jeff Dorman, CIO at Arca.
In 2020, crypto investment management Arca predicted that thematic investing will drive crypto performance in rewards, structured tokens, staking, and DeFi which did happen in the first half of the turbulent year.
They predict that DeFi will “stay hot” in the remainder of the year but this also means the return will “cool down.”
While doing a post mortem of their 2020 predictions, Dorman shared that growth in Fan Engagement tokens is just getting started. Also, as we saw “no-coiners” getting pushed into the digital asset realm for various reasons viz. generational theft, data privacy, digitizing everything, nowhere else to turn, and distrust of financial institutions by millennials, they will continue to do so.
Bitcoin, an alternative to fiat, offers a hedge against the potential financial system collapse as such it will be a “logical choice” as people continue to see a return on capital, which is one of the latest predictions by Arca for the remainder of 2020.
“Bitcoin will remain the best insurance policy against currency collapse, even if many other coins enter the market or central banks launched their very own.”
This is because a recession is coming if it isn’t already here. But for equities, there are a lot more reasons to suffer.
As we saw in 2020, corporations don’t really have saved for rainy days and now they are also forced to consider “‘increasing societal value’ over ‘increasing shareholder value.’” Forced by societal pressures to enhance their communities and constituents, this will lead to “greater digital asset adoption,” Dorman said.
The coronavirus pandemic has already moved people further away from cash to contactless payment solutions. This was what has also been propelling central banks to accelerate their plans for state-backed digital currencies with China now much closer to the release as it uses the ride-hailing company, Didi, for the trial.
Even in the crypt space, Arca sees the rise of non-fungible tokens which are individually unique. By offering a way to create digitally verifiable ownership of assets like art, property, and collectibles, NFTs open up the ability to utilize these assets across platforms, he said.
“Creating a circular economy for legacy assets, as well as new assets, will be the next step towards the exchange of scarce assets.”
Already happening in the gaming industry, the sector is expected to “heat up” in the remainder of 2020 “as decentralized finance continues to gain steam and scarcity is becoming more attractive to the individual,” he said.
Symbol, an enterprise-focused blockchain project developed by NEM, is looking to tap into the Wine supply-chain business and help the industry save millions caused by tampering, theft, and counterfeiting every year.
Symbol would develop a blockchain-based supply chain management system to keep a check on the growing scale of fraud in the wine industry. The blockchain system is rumored to be quite capable and can process a large number of transactions every second.
Symbol’s system would keep track of every aspect, from the raw fruits being harvested on the grounds until the wine is made and delivered to the supermarket and retail shops. The blockchain would put extra emphasis on the privacy issues concerning buyers, sellers and distributors. To address this, another hybrid blockchain system will be integrated into the main blockchain.
The blockchain solution would implement smart contracts to counter tampering during transportation. The final payment settlement is complete, only if the delivered product meets all the quality and authenticity checks. The firm also explained the need for such a robust system and explained:
“This allows the producer or grower to engage in comprehensive blockchain-backed financial agreements, and make use of staggered payments using multi-signature accounts while being supported by a state of the art blockchain that can provide verification results in real-time.”
The NEM project is also planning to integrate a verification process for retailers as well as customers to ensure the end product being delivered to them is genuine.
Beam, one of the significant privacy-focused crypto assets, is moving into the DeFi space in a bid to disrupt the $1.5 billion booming market. The project has since confirmed its second hard fork on June 28, an upgrade that will facilitate its debut in the DeFi space. This milestone comes with several modifications in Beam’s ecosystem hence the bold move towards ‘Confidential DeFi.’
To enhance its privacy levels, Beam is built on the mimblewimble blockchain. This network designed to minimize transaction size to handle more activity, creating room for scalability. Also, it prevents one from reusing a blockchain address hence making it difficult for analytics firms to track crypto funds transferred on its chain.
With the DeFi market on a steep growth curve, Beam now wants to bring its underlying privacy features into this space. Currently, it is almost impossible to operate anonymously, given all transactions are recorded on Ethereum’s public blockchain. This also applies to the Ethereum Name Service (ENS) as well. Beam has since highlighted its goal as,
“Beam will enable true private and decentralized DeFi instruments like private stablecoins and private synthetics which will track commodity, stocks, and ETFs.”
Beam Upgrades in Preparation for DeFi
The new hardfork will facilitate the creation of Confidential Assets dubbed ‘Beam CA’ set to run within the network as independent tokens. This feature is part of Eager Electron 5.0, a recent upgrade designed for the creation of Confidential DeFi apps. Notably, the CA’s are linked with various assets ranging from commodities like gold to crypto-assets such as ETH.
Some fundamental privacy features embedded in the CA’s include sending assets via non-interactive transactions and an option to unlink transaction history. The Beam CA’s will be made available to users who can lock up to 3,000 Beam tokens, roughly $1,400 as of press date.
Apart from CA’s, the Beam hardfork lays the ground for scriptless smart contracts. Beam’s CTO, Alex Romanov, told Decrypt that the project would extend mimblewimble’s infrastructure to enable anonymity in the digital contracts,
“As a part of building a confidential DeFi platform on top of the Beam blockchain, we will enable the creation of Mimblewimble-based sidechains and integrate a wide variety of Scriptless Contracts to support escrows, collateralized debt positions, multiparty transactions, and Oracle-based settlements.”
The hardfork will also scale Beam’s DEX, which is currently available on atomic swaps as it completes the beta phase. Consequently, CA’s will be tradeable against frequently favored assets like BTC, LTC, BEAM, and QTUM once they debut.
Co-founder of the cryptocurrency firm Centra Tech admitted to conspiring to dupe investors into investing $25 million into the company by lying about an initial coin offering (ICO), the Justice Department said.
Robert Farkas, 33, and two other founders of Central Tech Inc., Sohrab Sharma, and Raymond Trapani were charged in 2018 with misleading investors by claiming to have developed a debit card, the “Centra Card,” that supposedly allowed users to make purchases using cryptocurrency at any business accepting Visa and Mastercard.
Before founding Centra Tech, the trio worked at a luxury car rental company in Florida called Miami Exotics, according to prosecutors.
They got celebrities including boxer Floyd Mayweather and music producer DJ Khaled to promote their ICO, who later settled with the U.S. Securities and Exchange Commission but didn’t admit or deny guilt in the settlement.
From July 30, 2017, through October 5, 2017, Farkas and other co-founders solicited investors to purchase unregistered securities in the form of digital tokens “CTR Tokens” issued by Centra Tech through an ICO.
The claims made by Farkas at that time were false including the purported Harvard-educated chief executive officer “Michael Edwards” who was a fictional person fabricated to dupe investors. Cetra Tech also didn’t have any partnership with Bancorp, Visa, or Mastercard and they neither have any money transmitter and other licenses in 38 states as claimed.
Farkas pleaded guilty on Tuesday in federal court in Manhattan of securities fraud conspiracy and wire fraud conspiracy, appearing by phone before the US Magistrate Judge James Cott.
He faces as much as a decade in prison but prosecutors agreed to seek a sentence of 70 to 87 months and a fine of as much as $250,000 under a plea agreement. Sharma and Trapani will go to trial in November.
MicroBT eating into Bitmain’s lead, having a share of 35% in 2019
Bitmain still leading in energy efficiency with its brand new Antminer S19 Pro followed by MicroBT’s Whatsminer M30S++, Canaan Avalon 1146 pro, and Ebang
“Competition has tightened within the ASIC manufacturing industry,” stated BitMEX in its latest research report noticing the presence of big players like Bitmain, Canaan, Ebang, and MicroBT.
According to the report, post halving, both the ASIC manufacturing and mining farm operating sector will consolidate further.
Meanwhile, China which is still dominant in ASIC manufacturing has already started losing share in the mining farm operator business to Europe and North America.
“The customer base is moving more and more out of China,” said MicroBT marketing manager Elsa Zhao. The average customer size is also growing considerably but instead of longer small businesses or individuals, they are now larger funds, he said.
The Race to Lead
In late 2012 to early 2013, Butterfly Labs was leading the bitcoin mining industry but after it was shut down on the request of the US courts, it left Avalon as the market leader.
However, from 2015 to 2018, it was Bitmain who had the dominant position with the most efficient products.
“At the height of Bitmain’s power during the 2017 bull market, its market share was around 75%.”
The largest bitcoin mining manufacturer Bitmain’s dominance has been reducing, significantly so in the last 18 months or so. The largest player in the space is currently going through a power struggle between the company co-founders Micree Zhan and Jihan Wu.
Amidst the increasing competition, MicroBT is the one gaining traction and eating into Bitmain’s lead, having a share of 35% in 2019.
Relatively new to space, the company is founded by the former director of design at Bitmain which completed a round of financing in January 2019 at a valuation of $700 million.
“it seems almost impossible to imagine Bitmain conducting a successful IPO until the above management difficulties have been resolved.”
Canaan however, did have a successful IPO and is the first Bitcoin ASIC manufacturer to market it to the public markets. But it’s performance has been extremely bad since the IPO, generating a full-year net loss of US$149.8 million in 2019. Canaan attributed these losses to COVID-19 but,
“going forward it may be challenging for the company to regain trust from investors following on from the write-down so shortly after the IPO.”
CAN shares are down 77% since the IPO while Bitcoin price is up 17% during the same period.
Just like Canaan, Chinese ASIC manufacturer Ebang is struggling with declining sales and inventory write-down driving losses. The company has also filed for an IPO in the US after a previous failed attempt to list in Hong Kong. The risk here, however, is lower.
When it comes to technology, Bitmain lost its lead in energy efficiency as well in the last year or so. MicroBT’s products have been more efficient than bitcoin, with the Whatsminer M30S++ operating at around 31 J/TH. However, it is marginally behind Bitmain’s brand new Antminer S19 Pro product at 30 J/TH.
Meanwhile, Canaan might release its 5-nanometer products in the market by 2021. In its quarterly report, it also mentioned the new Avalon 1146 pro, which will have an efficiency of 42 J/TH, compared to the currently on sale Avalon A1166 at 47J/TH. The new product, however, would still place it behind MicroBT and Bitmain.
Ebang’s latest product has an efficiency of about 57 J/TH, ranking it behind all of the other three players.
According to BitMEX, the lifespan of ASIC mining machines is likely to extend considerably.