“It’s Not Possible To Destroy Crypto,” says Tesla CEO Elon Musk

“It’s Not Possible To Destroy Crypto,” says Tesla CEO Elon Musk

The Bitcoiner and SpaceX CEO does believe that governments can “slow down its advancement” while noting that “cryptocurrency is fundamentally aimed at reducing the power of the Chinese government.”

“Any form of money has no power in and of itself except as an exchange of value between people,” said Tesla CEO Elon Musk in an interview on Tuesday.

Musk, who has a love and hate relationship with the cryptocurrency community, recently had some positive views to share on the industry.

In a wide-ranging interview at the Code Conference in Beverly Hills, California, on cryptocurrencies, Musk said, “There is value in crypto, but I don’t think it’s the second coming of the Messiah,” he added:

“But it will hopefully reduce error and latency in the legacy money system.”

This year, Musk made the waves by announcing that the electric car maker has $1.5 billion worth of Bitcoin on its balance sheet and started accepting BTC as payments. He later also revealed that he personally owns BTC, Ether (ETH), and Dogecoin (DOGE) and that SpaceX holds Bitcoin as well.

The crypto community was excited about Musk’s support, only for it to come crashing down the same as Bitcoin price when the billionaire made uneducated comments on the largest cryptocurrency’s impact on the environment and blockchain scalability.

At the event this week, Musk commented on his influence on the price of crypto, saying it is a good thing but “if the price goes up.”

Besides Musk, China’s crypto ban in the summer was also a contributing factor in the 50% drop in BTC price in the month of May. This past week, China’s strongest regulatory signal against crypto yet again is keeping the prices subdued in the market.

Commenting on China’s action against crypto, Elon said, “It would appear they don’t love cryptocurrency.”

This could be due to the country’s “significant electricity generation issues,” which may in part be due to “electricity shortages in many parts of China” resulting in random power outages as demand for power being higher than expected and “crypto mining might be playing a role in that,” he said.

But more than that, the decentralized nature of cryptos may present a challenge for the Chinese government.

“Cryptocurrency is fundamentally aimed at reducing the power of the Chinese government, and they don’t like that.”

Overall, he doesn’t believe that governments should take control of crypto. As for, if the US government should get involved in space, according to Musk, they should “do nothing.”

“It is not possible to, I think, destroy crypto,” he further said, adding, but it’s possible for governments to “slow down its advancement.”

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Author: AnTy

China’s Lehman Moment? Crypto Market Takes Note of Real Estate Giant Evergrande’s Debt Crisis

While the crypto market is contemplating the effect of Evergrande’s possible fallout, Tether has clarified that it is “doesn’t hold and never held,” commercial paper issued by Evergrande.

Real-estate giant Evergrande is looking more and more like the Lehman Brothers moment of China as investors brace for its collapse. According to experts, the Chinese Communist Party (CCP) will have to save the company, whose collapse would send shockwaves across the global economy.

Capital Economics estimated that the company has around 1.3 trillion yuan ($200 billion) in pre-sale liabilities as of the end of June.

Lehman Brothers collapsed in September 2008, dissolving $600 bln in US assets leading to the worst market crash since the great depression.

This week, anxious investors protested at the Shenzhen headquarters of the company as Evergrande said it is facing “unprecedented difficulties” but denied rumors that it is about to go under.

But on Tuesday, in a statement to the Hong Kong stock exchange, Evergrande said it had hired financial advisers to explore “all feasible solutions” and warned that there was no guarantee it would meet its financial obligations.

Evergrande blamed “ongoing negative media reports” for damaging sales in the pivotal September period.

“Evergrande’s collapse would be the biggest test that China’s financial system has faced in years,” said Mark Williams, chief Asia economist at Capital economics.

This, of course, poses a serious problem for CCP as Evergrande is a longstanding symbol of the country’s economically productive urbanization, and its business model is representative of “China’s highly debt-dependent growth model,” said Jean-François Dufour, head of French, China-focused consulting firm DCA Chine-Analyse.

Founded in 1996, the company pursued a very aggressive growth strategy and raised $9 billion in its IPO on the Hong Kong Stock Exchange in 2009. It now controls 778 real estate projects in 223 Chinese cities and directly employs nearly 200,000 people while claiming to have indirectly created more than three million jobs.

Reportedly, the company had only $13 billion to its name as of late June, while it is due to pay $15 billion to creditors by the end of 2021.

At the same time, banks are reluctant to lend them money, on top of which, “It’s become more complicated because of the restrictive monetary policy the government is currently pursuing,” Frédéric Rollin, an investment strategy adviser at Pictet Asset Management, told French 24.

According to Rollin, in 2020, compared to the US companys’ debt representing 85% of the gross domestic product (GDP) and 115% in the eurozone, Chinese companies’ debt represented 160% of its GDP.

With Evergrande bound to take at least one bank down with it if it goes bankrupt, China needs to prevent Evergrande from going under. And these shockwaves are to be expected to be felt beyond China because it counts big international companies like BlackRock, Allianz, and Ashmore among its investors.

This week, even the crypto community took notice of this, with Adam Cochran of Cinneamhain Ventures arguing on Twitter that “Currently both Tether and Circle hold commercial paper, and while I think it unlikely that either would have large swaths of Evergrande bonds, the whole market will reel a bit.”

Tether meanwhile clarified that it doesn’t hold any commercial paper issued by Evergrande; rather, its vast majority of the commercial paper is in A-2 and above rated issuers.

“Doesn’t hold and never held,” tweeted Paolo Ardoino, CTO of Tether and Bitfinex.

Meanwhile, Cochran is expecting the shockwaves to be felt in crypto as well because “while we can hope that crypto one day becomes a flight from the tradfi markets, right now its sufficiently intertwined to its movements.”

“This is a very big deal indeed,” said Matthew Graham, CEO of crypto VC firm Sino Global Capital, adding, but “for real estate and tradfi.”

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Author: AnTy

It’s Possible the US Gets Crypto, the “Next Internet Sized Opportunity,” Wrong says Coinbase Co-Founder

It’s Possible the US Gets Crypto, the “Next Internet Sized Opportunity,” Wrong says Coinbase Co-Founder

Fred Ehrsam, the co-founder of Paradigm, says China is already taking a stand on crypto, and it could beat the US in crypto that too “on multiple fronts.”

“The US is at a very important crossroads with crypto today,” says Coinbase Co-founder Fred Ehrsam, who is also the co-founder of crypto investment firm Paradigm.

In an interview with Bloomberg, Ehrsam talked about the regulation of cryptocurrency as more and more regulators are getting vocal about regulating the crypto space.

“The US is blessed with the best currency and the world’s reserve currency today,” and it also tends to be the de facto financial regulator for a whole bunch of the world, he said, noting that most of the highly valuable companies in the world are American Internet technology companies.

“I do think that crypto is a nuanced issue and that it’s possible the US gets crypto wrong.”

While regulators’ job is to mitigate risk and keep investors safe, at the same time, “crypto is the next Internet sized opportunity for the United States.”

According to him, crypto has the “potential to create as many if not more jobs than the Internet,” the same as economic growth.

China Could Beat the US in Crypto

Cryptocurrencies can actually help with the privacy internet issues as seen with big tech companies in the past decade, according to Ehrsam.

These technologies can be used to “continue to own our own data while still getting all the benefits of the Internet platforms we know and love,” he added.

Ehrsam further noted that China is already taking a stand on crypto, “for better or for worse.” On being asked if he has concerns that China is going to beat the US in crypto and if that’s kind of a big deal, Ehrsam said: “Candidly yes.. and it’s on multiple fronts…”

One front is government programs explicitly built using crypto, which is true both with their CBDC initiative, which is basically making a digital renminbi, and also true of local governments who are trying to use blockchain technology, he said.

Furthermore, most of the crypto mining is happening in China. But the recent crackdown on mining in the country is “actually a huge moment of opportunity today for miners in the United States or globally to step in and on the crypto side to make it more decentralized,” Ehrsam added.

It’s Still Very Early

During the same interview, Ehrsam advised new crypto adopters not to allocate more than what they are comfortable losing. “Perhaps it makes sense to allocate more but error on the conservative side when you’re allocating it first,” he said.

“It’s still very early and as the fundamentals improve over time conviction improves over time.”

He further advised focusing on technology in terms of where this is going and why it is important in the world. Also, “think about it on a fundamental basis,” because “if you have that belief, then it probably makes sense to own something in space. And if that belief grows, then you can always increase it.”

Lastly, Ehrsam said things are never as good as they seem, and things are never as bad as they seem, so think of a 10 to 20-year time horizon.

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Author: AnTy

Israel Releases Working Paper on Possible Digital Shekel Program

Israel Releases Working Paper on Possible Digital Shekel Program

Israel is continuing with its exploration of the likely issuance of its central bank digital currency (CBDC), the digital shekel, per an official statement,

Bank of Israel Accelerates CBDC Research Efforts

This follows the release of a working paper that requires feedback. Despite its reluctance to commit to a CBDC plan, the Bank of Israel said it was only preparing an action plan, which will ensure its preparedness to launch a CBDC if the situation arrives.

The action plan would prepare it to launch the digital fiat should the benefits outweigh the costs and potential risk. Its impact could be enormous on the existing monetary system.

The working paper details a draft model for a potential CBDC and how it would operate. It details the role of the apex bank and how it would handle issuance. Local payment service providers will be tasked with distributing the CBDC. Payment providers will also be tasked with offering enhanced functionality for the CBDC, including building the technology.

The bank believes a CBDC would allow a payment system that could adapt to a digital economy and create an efficient and inexpensive infrastructure for cross-border payments. It also thinks the digital shekel can usher in a cashless society.

Israel Remains Wishy-washy on CBDC

The Bank of Israel first started examining the possibilities of a digital currency in 2017. At the time, the governor set up a group to explore the issue. Still, a year later, the central bank announced that it was not issuing one because no advanced economy had issued a digital currency.

While countries like Israel continue to slowly research and tread carefully to issue a CBDC, numerous central banks worldwide actively explore the project with increased zeal.

China has long started piloting its digital yuan project in major cities across the country. Banks in cities like Shanghai have been active in promoting the digital yuan, persuading merchants and retail clients to download digital wallets and use the digital currency.

Norway is also another country exploring CBDCs. It recently disclosed that it would start testing technical CDBC solutions. Other countries like South Korea, Japan, and the United Kingdom are positioning themselves for a potential CBDC.

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Author: Jimmy Aki

Diem’s New Payment Solution With FireBlocks & First DAG Hints at a Possible Late 2021 Launch

Diem’s New Payment Solution With FireBlocks & First DAG Hints at a Possible Late 2021 Launch

Diem, formerly known as the Libra Association, announces a partnership with Fireblocks and the Israeli-based First Digital Asset Group (DAG) to launch a payment solution for institutions, merchants, and payment networks. The network is expected to power Diem into the largest payment network, allowing global financial institutions to connect to the system directly.

In a joint release from a crypto custodian, Fireblocks and First DAG, the new payment solution will be launched in the coming six months. It will allow financial institutions, banks, PSPs, merchants, and e-wallets to connect and facilitate transactions on the Diem network as soon as it launches.

The Facebook-led Diem Network was unveiled back in 2019, offering a multi-currency-backed stablecoin and global payment system. However, regulators worldwide are skeptical of Diem’s role in the global monetary policies – given the 2.8 billion customers that Facebook and WhatsApp have on their platforms.

The new project will be integrated on First DAG and Fireblocks, giving access to payment stations and merchants who will use Diem. According to First CEO, Ran Goldi the payment solution will allow merchants to accept stablecoins and Diem without ever interacting with the tokens. First will deal with the payment backstage details while the merchant receives their payment in their local currency. Goldi said,

“So if you are a merchant and you are already working with a payment service provider (PSP) that we have integrated with, you will able to accept Diem without any integrations.”

Notwithstanding, the platform will be fully compliant and collect any customer information needed – similar to regulated payment services such as PayPal and Visa. The platform will follow a strict onboarding process for custodians, wallets, exchanges, PSPs, and other VASPs operating on Diem, Michael Shaulov, Fireblocks’ CEO, said.

Spotify, a member of the Diem Network, moves to integrate the Diem payment solution in the near future. In December, the popular streaming app announced a vacant position of “Payment Strategist” in the Diem and Crypto space.

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Author: Lujan Odera

Bitcoin’s Bull Run Breaks Coinbase; Exposing Possible Issues Ahead of The Public Offering

Bitcoin’s Bull Run Breaks Coinbase; Exposing Possible Issues Ahead of The Public Offering

With Bitcoin ripping through milestones basically every week, investors are flooding the market, and activities are going through the roof. However, exchanges and trading platforms face the problem of sustaining their services with this influx of activities. Much like they did during 2017’s bullrun.

Activity Influx Downs Exchanges

Yesterday, top crypto exchange Coinbase reported that it experienced connectivity issues on its retail exchange and Coinbase Pro trading service.

In a tweet, the Silicon Valley firm apologized for the service outages on its mobile and web apps, adding that it worked on getting things back to normal.

The exchange provided an update a few hours later, confirming that operations had resumed. Of course, that is cold comfort for traders who have lost profit opportunities as Bitcoin BTC 2.83% Bitcoin / USD BTCUSD $ 40,843.19
$1,155.86 2.83%
Volume 86.71 b Change $1,155.86 Open $40,843.19 Circulating 18.59 m Market Cap 759.47 b
4 h Bitcoin’s Bull Run Breaks Coinbase; Exposing Possible Issues Ahead of The Public Offering 5 h Wrapped Monero (wXMR) Goes Live On Ethereum Extending DeFi Capabilities To Holders 5 h Gold Is Trashed As USD Regains Strength; Will Bitcoin Hold Onto its Gains?
made a historic push past $40,000.

In such a market rally, arbitrage and profit opportunities come and go in a flash. Exchanges that are unable to stay functional risk losing customers as efficiency now drives the market.

Coinbase isn’t alone in this problem. Kraken, another top exchange and trading platform, told customers on its website that response times on its platform were slower than usual, and its application programming interface (API) was operating sub-optimally. Some clients also claimed to have difficulties connecting to the exchange’s site and mobile apps.

Like Coinbase, Kraken’s issue stemmed from heavy traffic. The same can be said with Binance, Bitfinex and OKEx. The exchange explained that it saw an unexpected hike in trading and transaction volumes, leading to server outages. Hours later, the exchange’s service came back up.

The problem with outages isn’t entirely new for crypto exchanges. With each milestone that Bitcoin reaches, many trading platforms and exchanges have had issues dealing with the increased traffic. For Coinbase, however, this problem is quite a common one.

Last June, the exchange witnessed a 400 percent surge in trading activity as Bitcoin broke past $10,000 for the first time in months. Trading was halted once more in September when Bitcoin hit $12,000.

Time for Coinbase to Sit Up

Issues like these would undoubtedly hamper the company’s standing in the industry, and they couldn’t come at a worse time for it. Last month, Coinbase confirmed that it had sent draft legislation for an Initial Public Offering (IPO) to the Securities and Exchange Commission (SEC). The Form s-1 is a prerequisite for a public offering, and it solidifies rumors that the Silicon Valley firm has been working towards such a move for months now.

While analysts believe that Coinbase could be valued as high as $28 billion, service outages could hamper its plans and operations post-offering.

Robinhood, a crypto-friendly trading app, is rumored to be on the cusp of a public offering. However, with a history of service interruptions that marred its operations in 2020, the company decided to pause its expansion. This isn’t a line Coinbase would like to toe.

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Author: Jimmy Aki

Swedish Government Launches Exploration Into Digital Krona

The Swedish government was one of the first in Europe to explore a possible Central Bank Digital Currency (CBDC). It has now moved into an exploratory phase, with a panel studying the potential benefits and consequences of digitizing its currency.

Ready to Roll

On Friday, Blomberg reported that the Swedish government had launched a formal review of a possible e-krona. The review will explore the feasibility of moving its currency into the digital standard, utilizing its current digital payments infrastructure.

The Nordic country has one of the world’s most advanced cashless payment systems, and many believe that transitioning into a full-fledged CBDC won’t take as much effort as others. The initiative will be led by Anna Kinberg Batra, a former chairwoman of the Riksbank’s finance committee.

Per Bolund, Sweden’s financial markets minister revealed that the government expects to complete the review by the end of November 2022.

Bolund emphasized the need to ensure that the country’s digital payments infrastructure functions safely and inclusively. He added that depending on the technology’s design and utilization, it could have substantial consequences for its financial system.

The Question of Time

When it comes to CBDCs, most countries are in the exploratory phase. The European Union has confirmed that plans will explore a possible digital Euro soon, with the region looking to bolster digital payments and improve its overall economy.

However, even that effort still seems to be a long shot. The European Central Bank (ECB) believes its exploratory efforts would yield results in 2021, and it will begin drafting the module for the digital Euro then.

Experts from several European banks believe proof of concept for the digital Euro could arrive in the next half-decade. The panel, titled “Upgrading Money to the Digital Age: Introducing Digital Euro,” saw everyone agree that the most pressing task will be getting everyone on board with the specifics of the digital Euro. With that in mind, implementation could take years on its own.

Austėja Šostakaitė of the European Central Bank pointed out that the bank won’t even decide on whether to pursue the digital Euro until the middle of 2021. For her, the primary issue will be introducing the asset into the European financial ecosystem and ensuring that it collaborates effectively with bank money.

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Author: Jimmy Aki

$100M In Crypto Loans Liquidated On Compound After ‘Bizarre’ 30% Spike In DAI Price

  • Over $100 million in loans were liquidated on Compound after a possible oracle exploits on Coinbase.
  • A further $8 million in crypto loans were liquidated on dYdX, a DeFi lending platform.

Almost $103 million in loan collateral has been liquidated on Compound Finance, a DeFi lending and borrowing platform, over the last 24 hours after a price spike on DAI stablecoin on Coinbase. According to data aggregator, LoanScan, a further $7.81 million was also liquidated on the dYdX exchange, totaling close to $110 million in DeFi loan liquidations.

image1
Nearly $110 million in crypto loans liquidated over the past 24 hours after a DAI suddenly spikes 30% in price (LoanScan)

The momentary DAI price spike

DAI caused massive liquidations on Compound as the price of DAI momentarily spiked by 30% on Coinbase, the lending platform’s primary price oracle. According to Alex Svanevik, CEO at Nansen, a crypto-analysis firm, the liquidations arose from an under-collateralization of Compound users’ loans. Svanevik said,

“My understanding is that the DAI price on Coinbase was driven up to a premium of around 30%. Compound’s oracle uses Coinbase for pricing data.”

Nearly 45% of the total liquidated amount on Compound arose from one wallet address, the third-largest COMP farmer, facing liquidation in a total of $46 million.

So how exactly does a DAI price spike to $1.30 cause such massive liquidations?

As a lending/borrowing platform, Compound allows users to borrow and lend multiple cryptocurrencies across the platform. Borrowers must place more significant collateral than the loan they are receiving over collateralized loans. If, at any moment, the smart contract notices the loan is under-collateralized, then it will automatically liquidate the loan and repay itself. Svanevik further explains,

“This caused liquidations as the value of the loans exceeded collateralization-ratio thresholds.”

As DAI’s value spiked, the amount of DAI loaned out increased relative to the collateral provided, leading to under-collateralized positions, hence the liquidations.

Of the total $110 million in crypto loans liquidated, $56 million was from DAI borrowers, $38 million from Ethereum (ETH) borrowers, $10 million from USDC stablecoin borrowers, and $4 million from wrapped BTC (wBTC).

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Author: Lujan Odera

Ripple Shortlists A Move to Asia and Europe Should it Leave the US

Ripple Labs considers Japan, Singapore, Switzerland, UAE, and the UK as possible jurisdictions should the blockchain patent services company leave the US amidst a lack of regulatory clarity, said Ripple CEO, Brad Garlinghouse. In an interview with Bloomberg, he said,

“The common denominator between all of them is that their governments have created a clarity about how they would regulate different digital assets, different cryptocurrencies.”

When it comes to the US, authorities here are unclear on the status of cryptocurrencies, said Garlinghouse adding that there are different opinions on whether crypto is a currency, commodity, property, or security. “Regulation shouldn’t be a guessing game,” he said.

“Ripple is definitely a proud U.S. company, and we’d like to stay in the U.S. if that was possible, but we also need regulatory clarity in order for us to invest and grow the business.”

In “contrast” to the US, Garlinghouse said Japan had created an “environment for a very healthy market to develop.”

The country has already introduced a registration system for crypto exchanges about three years back. Moreover, Ripple has close ties with Japanese financial conglomerate SBI Holdings, and its CEO Yoshikata Kitao also sits on Ripple’s board since last year.

“Japan is one of our fastest-growing markets, in part because we have key partners like SBI,” he said. “I have spoken to the SBI team about the fact we are looking at” Japan as a potential destination, Garlinghouse said.

Ripple has been thinking of a move for some time now; in another of his interviews, Garlinghouse has said that China is already decades ahead in the digital currency sector.

In terms of a central bank digital currency, China has moved further ahead in its digital currency trial as it distributed 200 digital yuan to 50,000 people spendable at 3,000 retail outlets. Other central banks, including the Federal Reserve, meanwhile are still in the research phase.

The playing field won’t level until a country established a lead in “the internet of value,” he said.

The pandemic raised the interest in digital currencies and not just for CBDC. According to Garlinghouse, the coronavirus pandemic has given a “tailwind” to crypto markets because of all the money printing central banks have been doing.

While the monetary stimulus, which is “inflationary on some level,” drives the demand for crypto, a move away from cash is also helping, he said.

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Author: AnTy

FATF Releases Red Flag indicators To Identify Money Laundering Using Crypto

  • The Financial Action Task Force (FATF) releases report on how to identify possible red flags in crypto money laundering rings across virtual asset service providers, or VASPs in short.
  • The regulator highlights a number of ways that crypto exchanges can stop and curb illegal and illicit activity.

The report titled, Virtual Assets – Red Flag Indicators of Money Laundering and Terrorist Financing, outlines several red flags including those arising from irregular transaction patterns, anonymous transactions, arising from senders and receivers and sources of wealth profiles of the crypto users.

One of the red flags arises from the size and frequency of transactions whereby a money launderer could make multiple high frequency transactions over a period of 24 hours or staggered and regular transactions which stop shortly after they are made. Moreover, transferring virtual assets to exchanges with low or non-existent AML/CFT rules is also considered a red flag.

User profiling is also an excellent way of noticing possible money laundering and terrorist financing. Here, exchanges are tasked with checking on the transactions made and comparing it with the user’s profile.

This arises when a user deposits an unusual amount to their wallet which does not match the traders profile or recent transactions. This could signal the deposit is subject to checks of money laundering, scamming or a money mule. The report reads on transaction patterns as a red flags stating,

“Conducting a large initial deposit to open a new relationship with a VASP and funding the entire deposit the first day it is opened, and that the customer starts to trade the total amount or a large portion of the amount on that same day or the day after, or if the customer withdraws the whole amount the day after.”

Also quick deposits and withdrawals of full balance of virtual assets in a short period of time raises eyebrows.

Virtual asset accounts with no logical business explanation making frequent deposits and transfers off the exchange to less KYC friendly exchanges poses a red flag. Accumulation of funds from several unrelated exchanges or wallets sending small amounts to one virtual asset account before fully withdrawing the funds may be a money laundering scheme.

Regulators should also follow users who use anonymity enabled public cryptocurrencies and privacy coins such as Monero, Zcash and Dash closely, the report states. Also the exchange of public and transparent crypto coins such as Bitcoin for the anonymity enhanced cryptocurrencies also raises questions on the actions of the trader.

FAFT has pushed through KYC/ AML regulations and compliance rules for VASPs across the globe in a bid to curb money laundering and terrorist financing using crypto. The “Travel Rule” recommends that the 200 countries that follow it, say to mandate VASPs such as custodians and crypto exchanges to retain and share any information on possible illicit and illegal trades happening on their platforms.

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Author: Lujan Odera