DOJ’s First-of-its Kind Crypto Framework Targets Decentralized, P2P Platforms & Privacy

A 71-page long “Cryptocurrency Enforcement Framework” report has been published by the Attorney General’s Cyber Digital Task Force. It details the emergence of cryptocurrencies and the presenting opportunities for terrorists, rogue nations, and other criminals.

The report is described as “a cohesive, first-of-its-kind framework for those seeking to understand federal enforcement priorities in this growing space,” said Attorney General William Barr.

According to him, the US has been “enormously successful “ in blocking the criminals from using traditional currencies, and now wants to

“adapt our strategy and tools to 21st century financing, including to combat the use of cryptocurrencies to evade enforcement and harm our national security.”

The Attorney General recognizes the “tremendous promise” of cryptos and blockchain technology for the future, supporting the advancement of legitimate crypto uses and tech, but says it is “critical” that they follow the law as well.

Aiming for Privacy

The Framework divides the illicit use of crypto into three categories — financial transactions related to commissions of crimes, money laundering and covering legitimate activity from tax, and crimes like theft that directly implicates the crypto marketplace itself.

For this, DOJ, SEC, and CFTC are working together to explore legal and regulatory tools to address the threats and enforce federal law in the crypto space.

The report also points out the challenges the government is facing has been in respect to business models like kiosks, certain crypto exchanges, and casinos; and activities like “mixing” and “tumbling,” and “chain hopping,” which they say may facilitate criminal activity.

“Decentralized platforms, peer-to-peer exchangers, and anonymity-enhanced cryptocurrencies that use non-public or private blockchains all can further obscure financial transactions from legitimate scrutiny.”

According to the regulators, Web 3.0 in itself has a vision of — “humans will reclaim the internet, their data, and their anonymity from large outside forces” — can pose dangerous threats to public safety.

The agency is also fully aware of decentralized finance, which sees “exponential growth,” following the ICO boom.

The report came just days after deferral prosecutors went after crypto derivatives exchange BitMEX and its founders for preventing money laundering and arrested John McAfee over tax evasion charges and allegedly earning millions via crypto promotion.

The Department of Justice said in the report that it would “continue its aggressive investigation and prosecution of a wide range of malicious actors.” It further encouraged international cooperation in the investigations and making arrests.

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Author: AnTy

EU’s Draft Regulation to Fragment the Crypto Market with Special Focus on ‘Subset’ Stablecoins

The 168-page long leaked version of the draft legislation of “Markets in Crypto Assets (MiCA)” by the European Commission provides legal certainty about digital currencies.

To be issued later this month, the set of regulations will be covering the issuance and trading of digital assets across the bloc.

Europe is basically planning to regulate crypto-like other financial instruments with the purpose to “further enable and support the potential of digital finance in terms of innovation and competition while mitigating the risks.”

However, the European Commission is putting a particular focus on stablecoins, a “subset of crypto-assets” leading to market fragmentation.

This is no surprise given the calls for regulating them for some time now. As we reported, this month, first, Bank of England governor and then five of the European countries supported regulatory oversight for asset-backed coins like Facebook’s Libra.

Additionally, regulators believe stablecoins have the potential to become widely accepted and potentially systemic, and of course, the plans for CBDC are behind the decision.

The new regulation will establish specific rules for ‘stablecoins,’ including when these are e-money.

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Author: AnTy

Tether Finally Flips Bitcoin: Seizing Increasing Share of On-Chain Transfers

The popular stablecoin, Tether (USDT), has already long been managing more than double the ‘real’ trading volume of bitcoin. Still, now the 7-day average adjusted transfer value of it has also finally flipped the largest digital assets.

Tether’s 7-day average transfer value finally reached above $3.55 billion compared to Bitcoin’s $2.94 billion, taking more and more share of on-chain transfers, states Coin Metrics in its latest report.

USDT vs BTC Transfer Val
Source: CoinMetrics

Stablecoins are increasingly used in popular DeFi applications like Uniswap and Curve, both of which contributed to Tether’s recent surge.

Popular in Asia for on and off-ramps, Tether has also been used for capital flight in China, as per Chainalysis report. Chinese investors moved about $50 billion overseas over the past year due to the devaluation of yuan and trade wars.

The Rapid Growth

USDT has been enjoying massive growth in 2020, whose total supply has also hit the milestone of reaching over 13 billion on August 21st. The supply grew at a rapid rate, as it was less than 10 billion on June 1st, 2020.

In less than five months, Tether supply has grown over 2.6x, from less than 5 billion on March 1st.

Over 66% of Tether’s supply is issued on Ethereum, while the remaining 34% is spread on Tron, Omni, EOS, Liquid, Algorand, SLP.

Tether is further expanding to more networks as it recently announced that this expansion would now cover OMG Network. On August 19, a new USDT integration went live on the Ethereum-based layer 2 protocol.

This resulted in the daily active addresses of OMG Network shooting up to their highest levels since August 2018 and bringing record ETH fees, which went up to new all-time highs due to the rapid rise and fall of YAM, back down to earth.

Tether is the biggest gas guzzler after Uniswap on Ethereum Network and paid $6.4 million in fees in the last 30 days, as per ETH Gas Station. Despite a 28.4% drop week-over-week, ETH total fees remain relatively higher which resulted in bringing ETH average daily transaction fees over the large week to $3.8 million compared to bitcoin’s $1.4 million.

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Author: AnTy

Fed Nominee Judy Shelton is Pro-Crypto & Could Push Bitcoin Past $10,000

Yesterday, after a long time, Bitcoin finally made some moves at a time when everything from stocks, gold, and silver is surging to new highs.

However, we are still stuck below $9,500, and $10,000 is still not a reality.

But what could help propel the digital asset above the psychological barrier of $10,000 is pro-crypto Judy Shelton.

Judy Shelton is a controversial nominee for the Federal Reserve’s policymaking board, who cleared a significant hurdle to confirmation after a Senate Banking Committee voted to support the choice.

An economic adviser to Trump’s 2016 presidential campaign, the candidacy of Shelton for the Fed’s Board of Governors, was approved in a party-line vote, 13-12, despite objections from Democrats. The next and final stop will be a confirmation vote on the Senate floor where Republicans could block her way.

If approved, she would be one of the seven governors of the Fed. The good thing for the crypto market is she is pro-crypto.

“Money needs to be stable and provide the foundation for productive growth,” she had said previously, adding that she “like the idea of a gold standard and it could be used in a very cryptocurrency way.”

Shelton has drawn sharp criticism for her unorthodox view on monetary policy and has advocated for reduced Fed independence, which is supposed to be “independent and non-partisan.”

Some critics have warned that Trump might elevate her to replace Jerome Powell when his term ends in 2022, risking the independence of the US central bank.

Given that President Trump has regularly criticized the Fed on Twitter for too tight policy, not pushing interest rates into negative territory and not taking more dramatic actions, this will work in his favor.

“If Trump wins and Shelton is confirmed, she may be the front-runner to replace Powell. And if the GOP takes the Senate, a goldbug would then be at the head of the Fed. The market will have to wonder what is worse, if Warren as Treasury Secretary, or Shelton as Fed Chair,” said economist and trader Alex Kruger.

Shelton, who holds a doctorate in business administration while long favored returning the US to the gold standard, has questioned the need for a central bank-controlled benchmark interest rate.

She has also called for lower interest rates, which are in line with Trump’s demands for earlier monetary policy.

And all of this works in favor of not only stocks and gold but also bitcoin.

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Author: AnTy

Green Day: Market Enjoys BTC Waking Up from the Slumber as EU Approves $2T Stimulus Package

After a very long time, bitcoin moved today. It is just a 3% spike that saw the world’s leading cryptocurrency going from about $9,150 to $9,442 on Bitstamp. However, we have started to slide down, currently trading around $9,330 with $1.47 billion in ‘real’ trading volume.

By crypto market standard, it is a tiny move, but given that bitcoin has been acting like a stablecoin lately, this upwards move brought back the enthusiasm in the market and community.

“Bitcoin awaken from thee slumber. I’m getting fucking bored,” tweeted BitMEX co-founder and CEO Arthur Hayes.

As we reported, Bitcoin has been trading in a tight range for the past few months, which continues to keep on getting tighter. One month bitcoin price range in July actually has been to its historic low of 6%.

Today, bitcoin’s move came as EU leaders reached a €1.82 trillion (over USD $2 trillion) COVID-19 recovery package earlier this morning.

“It is an ambitious and comprehensive package combining the classical [budget] with an extraordinary recovery effort destined to tackle the effects of an unprecedented crisis in the best interest of the EU,” the EU leaders said in a joint declaration.

“Exceptional situations require exceptional efforts,” said German Chancellor Angela Merkel, who said the financial foundations for the next seven years had been laid out.

The small spike in Bitcoin price has OKEx BTC futures open interest surging 7.5% and trading volume increasing 14.5 times within an hour on the platform.

The market is excited but still waiting for the digital asset to break the recent high of $9,500 to “make the reversal a legit signal long.”

“About time we get some price action around here. Meme trendline broke. A daily close above $9,443 would be a higher close on the trend. Close above $9,700, and I’ll feel bullish. Close above $10k, and I’ll market buy in this corn,” said trader Josh Rager.

Green Markets

Today, everything is green.

Nasdaq rose to yet another all-time high to 10,837 only to slide to 10,731. Dow Jones jumped 0.98% to 26,943.

S&P 500 started by recording gains to 3,276 but is currently at 3,268 — the highest level since February and not far from its all-time high of 3,386. And Bitcoin’s correlation with the S&P 500 is still high at 64.6%, as per Skew.

“S&P500 and Bitcoin have been correlated and co-integrated last 10 years. S&P implied BTC price: $25K .. interesting times ahead!” said PlanB.

Precious metals are shining with both gold and silver hitting multi-year highs on stimulus and concern over the coronavirus.

Gold jumped 1.23% to $1,840 per ounce. But it is Silver, which is leading the charge with Citigroup seeing its prices rising to $25 in the next six-to 12 months.

According to economist and trader Alex Kruger, soon, most of the assets will look like silver even though “people will fight it, and the word “bubble” will be used with increased frequency.”

This is because of negative real rates, continued monetary & fiscal stimuli, coronavirus overrated (market over-reacted), and economic recovery.

And the US Federal Reserve has plenty of room yet, with its balance sheet as a percentage of GDP currently standing at 35% compared to the ECB’s 57% and the BoJ’s 118%.

“We moved to the “Fear is Good” stage, the more fear about coronavirus resurgence, the more fear among policy makers. And what do fearful policy makers do? They provide stimulus,” he said.

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Author: AnTy

Bitcoin Fork Successfully Prevents a 51% Attack that Could Have Resulted in a $75k Loss

On July 10, the Bitcoin Gold team saw an extremely long attack chain of over 1300 blocks, which have been mined since July 1, 2020, against the BTG network.

As per the announcement, the team has prevented the attack after detecting it early on and alerting the exchanges and mining pools about the potential attack.

The team released a new updated version of the Bitcoin Gold network at block 640,650, the most “honest” block mined by MiningPoolHub before the attack. This update, which wasn’t public knowledge, rejected the attacker’s chain when it was released on Friday.

For the attack, the perpetrator rented hash power on July 1 from NiceHash, a mining service provider, to secretly mine an alternative chain. The chain was mined for ten days and was 1,300 blocks long. On July 10, the secret chain was released by the attacker in an attempt to steal 8,000 BTG worth over $75k.

Now, everyone is required to upgrade their nodes to make sure they are on the honest chain.

“51% attack on BTG defeated by a user-activated soft fork providing a checkpoint and hence explicitly banning the attack chain. Excellent news,” commented Ethereum co-founder Vitalik Buterin. “In PoS, in such cases, the attacker would lose many millions of dollars to slashings/inactivity leak,” he added.

Bitcoin Gold might have successfully stopped a block reorganization attack, but it’s not the first time such a thing happened. The network has a history of reorg attacks, it faced a $70k attack earlier this year and then back in May 2018 lost $18.6 million in a double spent attack.

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Author: AnTy

Telegram Fined $18.5M As Court Battle With SEC Closes; Ordered to Pay Back $1.2B for ICO

  • After a long hard fight to launch and distribute the GRAM tokens, Telegram and the U.S. Securities and Exchanges Commission (SEC) agreed to settle.
  • The messaging app will pay the SEC an $18.5 million fine and distribute $1.22 billion back to its investors within the next four years.

According to a court filing on June 24, 2020, the U.S Southern District Court of New York Judge Kevin Castel, ordered Telegram to pay a civil penalty of $18.5 million to the SEC within the next 30 days for violating the securities laws in issuing its GRAM tokens during its public offering.

The court also ordered the disgorgement of the $1.7 billion ICO raised in 2018, asking Telegram to return $1.22 billion (72% of the ICO amount) as agreed in the ICO contract – if the project failed to launch. Telegram already stated that U.S. investors will receive 72% of their investment back with non-U.S. investors having the option to defer their payment for one year and receive 110% of their funds back.

A three-year watch

Telegram will also have a three-year “baby-sitting” period whereby they will need to give the SEC a 45-day notice before the launch or issuance of a similar token to GRAM –

“cryptocurrencies, digital coins, digital tokens, or (and) similar digital asset issued or transferred using distributed ledger technology.”

However, the company is only obliged to give notice to the SEC and does not constitute SEC giving approval or consent on the asset. The statement further reads,

“Nor should this [notice] be construed to require Defendants to provide the Commission with any information beyond the notice contemplated herein.”

A fair ruling?

Lawyer and governing council at Compound Finance, Jake Chervinsky, weighed in on ruling stating it may be the best outcome for Telegram. He tweeted,

“Telegram’s SEC settlement seems fair given the facts & circumstances surrounding the TON project & Grams offering (which were very bad for Telegram).”

The six-month-long court battle finally comes to a close but “sadly ends [this saga] on a confused District Court opinion”, Jake said on the court’s decision to use the Howey Test to prove Telegram’s token is a security. No more GRAMs, but TON blockchain lives on as an open-source network.

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Author: Lujan Odera

BTSE Crypto Exchange Launches Bitcoin-Denominated, Tether Gold (XAUT) Futures Contracts

Bitcoin (BTC) has long been referred to as ‘digital gold’ with the prospect of becoming a store of value. However, the digital coin has not lived to its said expectations to the shiny metal but one exchange is aiming to change this with the launch of Bitcoin priced futures tracking the price of Tether Gold (XAUT).

BTSE cryptocurrency exchange announced the launch of future contracts of Tether Gold (XAUT) priced in BTC rather than the dollar or Tether (USDT). This raises the questions of volatility and the possible forced liquidations of these contracts in case of wild price swings.

However, a statement from the company assures traders that the contract is bound to be less volatile than the dollar, as Gold and BTC price enjoy a positive correlation to each other.

The ‘safe haven race’

According to one of the spokesperson at BTSE Exchange, the new derivative products will allow the traders bet between Bitcoin and Gold as their preferred safe haven asset. The BTC-priced perpetual contract tracks the value of one Tether Gold (XAUT) token, which in turn tracks the value of one ounce of gold.

This is a first-of-its-kind product allowing traders to directly bet on whether the demand and value of BTC competes favorably with its physical gold counterpart as a store of value.

However, the volatility of both assets relative to the dollar is a reason to be cautious on trading this particular asset.

How risky are the XAUT/BTC futures contracts?

Perpetual contracts always run the risk of forced liquidations, especially on margin trades if the price variates too much, leaving the holder of the contract at a loss. In the past few months the Bitcoin derivative traders have witnessed millions of dollars’ worth of contracts liquidated as the price of BTC swung wildly between $10,000 and $3,500 in 2020.

Gold uncharacteristically also witnessed wild price swings in the first half of 2020 as COVID-19 pandemic affected a class of assets. Such wild swings may set the XAUT/BTC futures contract on a high liquidation ratio that may well keep most traders from it. However, the BTSE spokesperson said,

“If the two assets are positively correlated, then the price volatility of this new instrument is, by right, even lower than Gold/USD.”

The price of gold and BTC however does not show a strong positive correlation since the March “Black Thursday crash” when both SoV assets fell and rose dramatically in a week.

BTSE Exchange is quickening its steps to introduce new products on its platform, recently adding Turkish stablecoin, Bilira, to help the struggling economy.

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Author: Lujan Odera

Lending and Interest Income Could Be the Path to Boost Crypto Adoption

Bitcoin and cryptocurrencies, in general, have come a long way from the early days when they were regarded as an internet bubble waiting to burst.

However, even after a decade, one constant criticism is that digital assets haven’t found a niche, and cannot be spent as easily as it has been advertised for long.

The one feather that these digital assets can borrow from the traditional financial world is lending and borrowing, which is the backbone of the majority of the financial ecosystem and banks. This interest-based income, lending and borrowing have already gripped the digital asset world which is evident from a report from Credmark.

The Credmark report suggests that the crypto lending market has already peaked $8 billion in loan amount by the end of the fourth quarter of 2020.

At present, the market size has grown to $10 billion and expected to grow exponentially as the popularity rises overtime. Not only that the global peer-to-peer lending marketplace has also registered annual transaction volumes in upwards of $85 billion.

Lending and Credit Gaining Popularity in Crypto Verse

Genesis Capital, one of the leaders in the crypto credit market, registered its best quarterly performance in the first quarter of 2020, registering $2 billion in the new loan organizations. The firm doubled on its previous quarterly performance and also registered a 20% spike in active loans from the previous quarter.

Celsius Network, the retail-focused crypto lending platform, registered similar growth and currently boasts of 100,000 retail clients and 260 institutional clients spread across 160 countries. The firm has registered $8.2 billion in coin loans to institutional clients since its inception in 2018.

Crypto lending is mostly based on the underlying assets, which makes an easier process as debt is collateralized with the crypto asset. Apart from these asset-backed crypto lending, another form of a lending ecosystem has risen in popularity over the last year in the crypto space i.e decentralized finance (defi).

Defi is an Ethereum based ecosystem which offers decentralized credit system to users based on the collateralized asset.

Users can lock their Ether, Wrapped Bitcoin and other ERC-20 based tokens in smart contracts and withdraw a loan in non-asset backed stablecoin like Dai and USDC. The defi ecosystem has gained massive popularity in the past year, and the value of assets locked as collateral has already crossed the $1 billion mark.

Thus, looking at the popularity, demand and success of lending and borrowing ecosystems in the decentralized space, it could pave the path for mass adoption of crypto in the long-term.

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Author: James W

BTC On-Chain Metrics: Investors Bullish & Busy with Accumulation as Halving Approaches

  • Long term holders’ confidence largely unaffected by Bitcoin’s price drop
  • Investors capitalized on the discounted BTC and increased their positions

In less than a fortnight, Bitcoin reward halving would be here that will cut down Bitcoin’s inflation rate in half. And it’s to be seen how this supply deficit would be greeted by the market this time.

While price-wise the world’s leading cryptocurrency has already started to see action, in the past five days BTC/USD has jumped over 13% to $7,700.

Just like price, on-chain metrics are also suggesting bullish sentiment among the market with investors increasing their positions and HODLing on tight to their BTC.

glassnode-btc-miner-revenue
Source: Glassnode – BTC Miner Revenue

Investors optimistic as halving approaches

According to crypto analyst Glassnode, long term hodlers remain unfazed by the volatility, with 42.83% of all circulating BTC not moved for at least two years. In the past year, it increased by 10.4% despite the investors experiencing one of the largest market crashes in history.

One month from the Black Thursday, the number of BTC last active between one and three months ago also began to spike and has now hit YTD highs to 2,037,503.

This lack of movement means those that bought the bottom have been holding onto their new positions and market recovery has market participants favoring mid to long term holding strategies.

HODLer Net Position Change also remained positive during the bear onslaught only to climb to yearly highs in the latter half of April, suggesting long term holders not only held steady but also capitalized on the BTC discount to increase their positions.

Interestingly, the BTC balance on exchanges declined by over 10% since the February high. The outflow trend briefly interrupted when the price crashed only to accelerate after and since continuing.

“Withdrawal of funds from trading platforms could further reinforce the idea of more bullish long term expectations from traders,” noted Glassnode.

Source: Glassnode – BTC Exchange Balance

The increased interest in bitcoin is primarily from the retail sector as the total number of addresses holding BTC grew by nearly 25% with lower balance brackets hitting all-time highs.

Whales meanwhile are also making a comeback, with those entities holding at least 1,000 BTC hitting a 2-year high “exhibiting an accumulation pattern similar to one that we had seen in the lead up to Bitcoin’s previous halving.”

Both price and on-chain metrics are pointing towards an “optimistic outlook” from the investors ahead of halving but we are still in the midst of instability and uncertainty in both traditional and crypto markets.

As such, it is to be seen if the bullish momentum will continue or take a back seat after halving.

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Author: AnTy