MicroStrategy CEO: “Avalanche of Money to Flow from Institutions & Corporations into Bitcoin”

Michael Saylor is positive on regulatory parity and clarity and expects BTC first to replace gold then stock indexes. He is also hosting a conference for “thousands” of company executives to help them put BTC in their balance sheet.

While the weak hands were busy selling their Bitcoin, strong hands with deep conviction in Bitcoin took this as an opportunity to buy the dips. And MicroStrategy is the one that continues to increase its BTC stash.

The publicly-traded company announced on Friday that they purchased approximately 314 BTC for $10 million in cash in accordance with its Treasury Reserve Policy, at an average price of approximately $31,808 per Bitcoin. With this latest purchase, the company now holds approximately 70,784 BTC, representing 0.38% of Bitcoin’s circulating supply.

The price of Bitcoin went down just under $29,000 on Thursday, a dip of about 30% from this month’s all-time high of $42,000. As of writing, BTC/USD has been trading around $32,000.

Talking about this pullback, Michael Saylor, CEO of MicroStrategy, said it is volatile for traders who like this volatility and has been getting it for the last 10 years running but not to “investors with a one to four-year time frame.”

“It’s attracting a lot of capital in the asset class… I think it’s having a stellar year, and 2021 is going to be really good for Bitcoin,” said Saylor on CNBC.

Institutional Safe Haven Asset

Saylor has big expectations from the leading digital currency and sees it as a “technically superior asset.” He said, going forward, this,

“Institutional safe-haven asset” is going to first flip gold then replace it, after that Bitcoin is going to become the monetary index that replaces stock indexes like the S&P 500, the Dow, the bond indexes, and the like “because people want to store their money and they want a safe haven store of value over the next 10 to 30 years” and they “are going to be attracted to a digital asset that has no inflation in it.”

However, Saylor isn’t concerned about regulation like some because the incoming class of regulators is informed, thoughtful, and progressive, he said. “I think that crypto assets and Bitcoin have had a little bit of regulatory ambiguity in it,” and the regulatory parity and clarity is great for the industry which is “going to cause an avalanche of money to flow from institutions and corporations into Bitcoin,” Saylor said.

Avalanche of New Companies

MicroStrategy has been the first public company to put Bitcoin on its balance sheet, a move that has made Saylor popular among the crypto community.

As for those wondering if the company’s employees are fine with him betting the company’s future on BTC, Saylor said they are “delighted” that “we’re pioneers in commercializing integrating with this digital monetary network because this is going to be the future.”

Talking about his Bitcoin bet, Saylor pointed to the tech giants Google, Facebook, Amazon, and Apple about which people weren’t quite sure if they should embrace them when the internet first came along. But now companies that know how to use the internet and work with them “are the leading-edge companies, and they’re winning.”

Moving forward, corporations that are cash-rich who are finding it to be a liability are looking for an asset “that’s going to appreciate faster than the rate of monetary expansion,” which is Bitcoin.

As such, Saylor sees corporations embracing Bitcoin either on their balance sheet like MicroStrategy or building bitcoin into their products and services like Square this year. “I think you’re going to see an avalanche of new companies,” do this, he added.

To help these companies make an easier transition to Bitcoin, MicroStrategy is holding a conference in the first week of February to be attended by “thousands of executive officers and directors and advisors of corporations.”

“We’re going to publish our playbook, all of our accounting guidance, our legal guidance, all the work we did over the course of months in order to get ready to do this as a publicly-traded company,” said Saylor.

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Author: AnTy

Bittrex Delisting Privacy Coins Monero (XMR), Zcash (ZEC), and DASH Without Any Explanation

Kraken CEO dispels any regulatory pressure, says market removal could be something business-specific. Meanwhile, these coins drop 17% to 23% while DASH argues its “privacy functionality is no greater than Bitcoin’s.”

Cryptocurrency exchange Bittrex has announced the removal of privacy coins from its platform after removing XRP markets for its US customers. Monero (XMR), Zcash (ZEC), and DASH are the affected cryptocurrencies.

Starting Jan. 15, 2021, 23:00 UTC, BTC-XMR, ETH-XMR, USDT-XMR, BTC-ZEC, ETH-ZEC, USDT-ZEC, USD-ZEC, BTC-DASH, ETH-DASH, USDT-DASH, and USD-DASH would no more be available on the platform.

After this, Bittrex users would have up to 30 days, a period that may be shortened in “certain instances,” to withdraw any of these delisted tokens. The exchange states, after the withdrawal deadline, “there may be circumstances under which a user may not be able to withdraw a token due to events outside of Bittrex’s control.”

Up until now, only XRP XRP 5.48% XRP / USD XRPUSD $ 0.23
$0.01 5.48%
Volume 5.09 b Change $0.01 Open $0.23 Circulating 45.4 b Market Cap 10.34 b
8 h Bittrex Delisting Privacy Coins Monero (XMR), Zcash (ZEC), and DASH Without Any Explanation 2 d eToro and CEX Suspend Trading for US Customers; Grayscale Buys 3.23 Million XRP 3 d Binance US, Genesis, & Abra Suspends XRP Support; Bittrex & Uphold Clarifies No Plan to Delist
trading and deposits were suspended and only for the US customers due to SEC’s lawsuit against Ripple and its two executives for allegedly selling unregistered securities, but now more cryptos are being targeted. Trader CryptoSqueeze noted,

“Privacy coins are the next on the target list. Bittrex might just be the beginning. This is gonna be a rough and uncertain year for alts.”

Bitcoin BTC 7.79% Bitcoin / USD BTCUSD $ 33,331.76
$2,596.54 7.79%
Volume 77.75 b Change $2,596.54 Open $33,331.76 Circulating 18.59 m Market Cap 619.63 b
7 h GBTC Added $1.6B in December But Grayscale Hasn’t Purchased Any BTC in Over a Week 8 h Bitcoin Smashes $34,810 as Market Sees Some ‘Serious and Prolonged Investor Activity’ 2 d Altcoins’ Market Cap Still 59% Off its Peak as Bitcoin Dominance Exceeds 70%
and Ethereum ETH 25.18% Ethereum / USD ETHUSD $ 949.37
$239.05 25.18%
Volume 40.77 b Change $239.05 Open $949.37 Circulating 114.1 m Market Cap 108.33 b
2 d Altcoins’ Market Cap Still 59% Off its Peak as Bitcoin Dominance Exceeds 70% 4 d Bitcoin Going to $1 Million in the Next Decade Says Kraken CEO; Highlights ETH & DeFi 4 d Ethereum Is A ‘Huge Success Story’ But is ‘Undervalued’ in Terms of Institutional Buying
are free from any such uncertainties because they have been explicitly stated by regulators to not be a security because they are decentralized.

Meanwhile, Bittrex’s lack of explanation on their motive behind this decision has led the crypto twitter (CT) to speculate.

“Privacy is a constitutional right, not a crime,” said Jake Chervinsky, General Counsel at Compound Finance who shares his disappointment on exchanges removing crypto assets with privacy-preserving features. “There’s no law or regulation requiring this, just DOJ’s opinion that privacy is “indicative of possible criminal conduct,’” he added.

According to Josh Swihart, SVP of Growth at Electric Coin Company, the creators of Zcash, there could be more than what meets the eye here. He pointed out how US-based crypto exchanges Gemini and Coinbase recently added additional support for ZEC.

Meanwhile, other crypto exchanges clarified that there isn’t any regulatory pressure to delist these privacy-focused cryptos.

“Haven’t heard of anything on the regulatory side. Presumably, it’s something specific to their business,” said Jesse Powell, co-founder, and CEO of crypto exchange Kraken. He also shared that these cryptos meanwhile are not supported by Kraken in Australia because of being “banned by local fiat funding rails” and that they are working on the alternatives.

For now, the damage has been done to these cryptos price-wise as they performed poorly following the delisting news.

XMR dropped over 11% in the last seven days and is currently trading around $138, DASH lost 17% of its value in the last seven days and is now trading at $89 and after a 13% drop, ZEC is now keeping around $58.

Some believe XMR, DASH, ZEC’s loss can be Litecoin’s gain which is working on bringing privacy to the network. Ever since Bitcoin bulls went crazy in Oct., LTC also moved in tandem, up 183% in the last three months to climb the levels not seen since June 2019.

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Author: AnTy

Facebook-Led Libra Rebrands to ‘Diem’ in Attempt for a ‘New Start’ & Gain Regulatory Approval

Facebook has rebranded its stablecoin project Libra as “Diem” in its latest effort to gain regulatory approval. The new name comes after the Latin word “day” — denoting “a new day for the project.”

The Diem Network is preparing to launch its first digital coin as early as January next year, called the Diem Dollar.

First announced in June 2019, the project that aims to build a safe, secure, and compliant payment system received a lot of backlash from the regulators and raised concerns among the central banks over its impact on financial stability and monetary sovereignty. Stuart Levey, CEO of the Geneva-based Diem Association, said,

“The original name was tied to an early iteration of the project that received a difficult reception from regulators. We have dramatically changed that proposition.”

“We wanted a new start.”

image1

As we reported, the team is currently waiting to obtain a license from Swiss regulators to launch. It is also in talks with the US federal and state regulators but isn’t waiting for approval from them.

To satisfy regulators, Diem will comply with the sanctions and regulatory reporting requirements. “All of these design features we think make for a project we think that regulators will welcome,” Levey said.

The new network has also abandoned the 100-member goal and currently has 27 participants. The idea is to take things even more slowly; as such, just one digital currency — US dollar-pegged stablecoin — is being launched for now. It may pursue additional fiat-based cryptos later, said Levey. He added,

“We are not trying to cut all ties, by any stretch. It (the name change) is to signify that the association is operating autonomously and independently.”

The Diem Association also has no more plans to eventually transition to a permissionless blockchain to allow everyone to participate in verifying transactions.

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Author: AnTy

Crypto.com Becomes One of the First to Acquire Provisional Licenses from Maltese Authorities

Foremost cryptocurrency exchange Crypto.com has achieved another regulatory milestone. The company has bagged a preliminary approval from the Malta Financial Services Authority (MFSA) that governs how fintech companies operate on the island.

New Territories to Conquer

The two approvals are the Financial Institution License and a Class 3 Virtual Financial Assets (VFA) License, according to an official blog post from Crypto.com.

The Financial Institution License empowers Crypto.com to issue electronic money and act as a payment service, while the VFA means it could offer crypto custody services for customers in Malta. The exchange can also execute orders on behalf of Maltese traders and deal on its own account.

It’s worth noting that Crypto.com is yet to receive these licenses. An in-principle license means that the exchange will need to meet some conditions before getting full regulatory approval.

Kris Marszalek, the crypto firm’s co-founder, and CEO explained that the approval was in line with their objective to comply with regulators in the regions they operate. He added,

“Being one of the first cryptocurrency platforms to receive in-principle approval for a Class 3 VFA License and a Financial Institution License is an important milestone and we look forward to securing licenses in more markets throughout 2021.”

Hope for “Blockchain Island” Again

Widely referred to as “Blockchain island,” Malta has been taking significant steps to ensure effective oversight of its crypto industry. In 2018, the MFSA adopted the Digital Innovation Framework with a view on developing a robust regulatory environment for cryptocurrencies and blockchain innovation.

The framework included three acts – the Innovative Technological Arrangement and Services Act, the Digital Innovation Authority Act, and the Virtual Financial Asset (VFA) Act.

Many in the crypto industry saw the VFA to be the most important of all. It required businesses to seek approval with the MFSA before trading digital assets, launching Initial Coin Offerings (IOCs), or providing custody or brokerage services in Malta.

The Act also introduced VFA Agents – so-called “gatekeepers” that provide support and advisory services to crypto firms. The MFSA approved 14 VFA agents in May 2019, although not much was heard from the country since then – especially concerning approval for companies under the VFA framework.

Soon enough, businesses got antsy about Malta and its crypto environment.

In addition to the slow approval processes, reports surfaced that local banks were declining service to blockchain and crypto firms, explaining that opening accounts for the companies was “beyond their risk appetite.”

Silvio Schembri, Malta’s Minister of Economy, told the Times of Malta that banks were reluctant to serve crypto companies because they were waiting for the MFSA to approve licenses.

The MFSA also drew some controversy when it joined several other European regulators in adopting the European Union’s Fifth Anti-Money Laundering Directive (AMLD5).

It is unclear how Crypto.com’s development will impact industry insiders’ view of Malta going forward. However, considering that most have griped about the MFSA’s license regime, this could be an encouraging move.

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Author: Jimmy Aki

ErisX Obtains CFTC License to Provide Futures & Swaps Clearing Beyond Digital Assets

The Chicago-based crypto exchange, ErisX, gains regulatory approval from the U.S Commodities and Futures Trade Commission (CFTC) to start a clearinghouse for all types of futures and swaps. The crypto-focused exchange will expand its clearing services for fully collateralized swaps from digital assets to all traditional assets following the OK by the CFTC.

Back in July 2019, the firm gained the traditional designated contract market (DCM) license from the CFTC, allowing users to trade futures on the platform. The latest license granted to the firm is the traditional derivatives clearing license (DCO), which allows the firm to provide a clearinghouse for all fully collateralized swaps. Previously, ErisX provided these services to digital asset futures contracts listed on its virtual currency exchange – ErisX exchange.

ErisX, backed by TD Ameritrade, offers users both spot and physically settled futures contracts on Bitcoin (BTC) – recently announcing the launch of physically-settled Ethereum futures. The launch of these ETH-settled futures in the U.S is a first of its kind under the regulation of the CFTC.

Before the launch of ETH futures contracts, ErisX Clearing LLC received its approval of the lucrative BitLicense application offered by the New York Department of Financial Services (NYDFS). The exchange joins an exclusive list of crypto firms holding the license, including Binance, Coinbase, BitPay, Bitstamp, and Robinhood.

ErisX platform aims at integrating digital asset products and technology into a reliable, compliant, and robust capital markets workflow.

On the subject of the latest DCO license offered to ErisX, Laurian Cristea, General Counsel at ErisX, celebrated the move allowing listing and clearing of third-party contracts on their platform.

“Our trading platform is a high throughput, deterministic, low latency matching engine hosted in a world-class data center,” Cristea further said.

“Similarly, our clearing system is a reliable, web-based clearing engine designed to meet institutional requirements, and with real-time segregation balances, no other DCO can boast.”

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Author: Lujan Odera

Biggest Challenges Ahead for Crypto as Regulators Declare War on Privacy & Self-Custody

The start of the new quarter saw a slew of regulatory moves targeting the cryptocurrency space – “we’ve made the world stage,” which Fundstrat Global Advisors LLC believes is good for the overall crypto market because it’s just regulators “clearing up bad actors.”

While the “prevailing bull market trend is intact,” the ideological war over self-custody & privacy means “our biggest challenges still lie ahead,” said Jake Chervinsky, general counsel at Compound Finance.

As the crypto market continues to grow, the change is now coming.

Policymakers have taken a stern approach to KYC and AML on a global scale intended to prevent criminals from abusing the financial system.

With the goal that “crime doesn’t pay,” AML regulations deputize the “gatekeepers” financial institutions to act as government agents such as identify customers, surveil transactions, and file reports with the government.

Although AML regulations break down in the context of cash, which govt. are trying to get rid of it, it has its limitations because cash works only in-person and isn’t easy to move in large amounts over long distances.

As such, regulators are much more concerned about digital transfers.

Pursuing Crypto Aggressively

Up until now, they weren’t concerned much because, in their belief, crypto’s main utility comes from conversion into fiat, they can track crypto transfers via blockchain fairly easy, and there isn’t much criminal activity in crypto.

But, over the last year, as bitcoin gained geopolitical significance & fiat-pegged stablecoin volume exploded upwards, governments are now concerned about both illicit activity & the threat to their monetary sovereignty, noted Chervinsky.

Now, they’re enforcing AML regulations more aggressively.

As we saw in the case of BitMEX, which not only got tagged by CFTC for unregistered derivatives trading as expected, but DOJ also turned the case criminal, which “doesn’t happen often.”

The key takeaways from this action are that not only law enforcement and the regulators are paying attention to what you do, but those non-U.S. entities may also be subject to U.S. laws and willful ignorance or violation of US AML laws is serious, said Phil Liu, chief legal officer at Arca.

The Main Challenge

Last week, DOJ released a framework to cryptos where it described anonymous transactions as “a high-risk activity…indicative of possible criminal conduct” and an ominous warning in the form of “anonymity enhanced cryptocurrencies” for exchanges.

This war over privacy and restricting access to crypto is global as the international standard-setting body for AML regulation FATF said in June that the “lack of explicit coverage of peer-to-peer transactions…was a source of concern.”

“Swiss Rule” is already prohibiting self-custody “in the guise of verifying the owner of a private key.” And just last week, BIS said in its report on CBDCs that “full anonymity is not plausible.”

With FATF red-flagging hardware wallets, Europol prioritizing privacy wallets, and UK’s FCA banning crypto derivatives, the situation is serious.

“I fear we’re heading for a world where withdrawing crypto from exchanges to self-custody is restricted as a means of attacking privacy,” said Chervinksy, which according to him, is the main challenge for the crypto market for years to come.

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Author: AnTy

US Bank Regulators to Roll Out Uniform Rules for Crypto & FinTech Firms; Streamlining Licensing

  • In efforts to ease the regulatory process for payment services and crypto firms, the United States is set to introduce a unified set of regulations that will be used in about 48 states.

As per a press statement shared with Bitcoin Exchange Guide, money services businesses based in the United States, composed of crypto firms, will in the near future enjoy easy regulatory processes. The press statement explains that the Conference of State Bank Supervisors (CSBS) is set to launch a group of state regulators which will oversee all the licensing work.

CSBS will bring together 48 state regulators who have agreed to come up with a unitary set of supervisory rules. Until today, crypto-based firms as well as payment service companies were forced to adhere to numerous individual state regulations.

About 78 firms will benefit from the fresh simplified format and according to an official at CSBS, these companies move more than $1 trillion per year combined. The enactment of the unified state regulations will help ease operations across many states.

John Ryan, CSBS’s CEO, stated that the new initiative will come with numerous opportunities which will help businesses operating in the country to expand their services. Ryan also quipped that the new model will work safely just like in the old regime.

He explained that the states will not be giving up their authority but will realize efficiencies through sharing of information. Ryan also explained that although states will be sharing information, every state has the right to conduct and independent examination when the regulators deem it necessary.

The new initiative comes after several complaints were filed by crypto and fintech firms as they try to get a solution on having a state-by-state supervisory regime that delayed the licensing process. CSBS embarked on testing various approaches to determine what could work well in efforts to come up with a lasting solution. The current unified approach led to promising results which culminated in the establishment of a pilot initiative last year.

Western Union’s Rosemary Gallagher whose firm participated in the pilot program praised the initiative saying it will lead to a faster licensing process.

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Author: Joseph Kibe

FCA Proposes UK Crypto Exchanges And Wallets Share Money Laundering Data With Regulator

The UK’s top regulatory body, the Financial Conduct Authority (FCA), has proposed a new policy for crypto exchange and wallet custodians. This policy requires crypto companies to submit a detailed history or report on potential money laundering. The FCA noted that they are planning to extend certain obligations for crypto companies for the reporting of money laundering risks associated with their customer accounts.

The FCA first started demanding an annual crime report from financial institutions in 2016. As per the latest proposal made by the regulatory body, “crypto-asset exchange providers and custodian wallet providers” must provide the FCA with a report about their financial crime risk, “irrespective of their total annual revenue.”

It is to be noted that the policy is just a proposal at present, which has been put up for comments by the regulatory body until November 23rd and based on the feedback they receive, the FCA plans to release a policy statement along with new rules by the first quarter of 2021.

How Would New Policy Pan Out?

As per the new policy introduced by the FCA, some further information that crypto businesses might be required to submit the lists of customers put in the ‘high-risk’ category. List of customers who refused to provide their details or left because of the information demand from them along with the top 3 prevalent frauds.

The crypto companies would be required to submit “from their next accounting reference date after 10 January 2022.” The FCA also made a critical change towards crypto exchanges, which open their base in tax-havens but operates all around the globe. The new FCA policy defines “operates” as “where the firm carries on its business or has a physical presence through a legal entity.”

The FCA revealed that the main reason behind such policy changes is to harvest data from potential fraudulent companies so that the right amount of resources could be dedicated to these companies, which in turn would help in containing the money laundering risks. The FCA also stated,

“There may be additional reporting obligations that we might require of crypto-asset businesses in the future.”

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Author: James W

Germany’s Financial Authorities Introduce A Draft Bill On Blockchain Based Securities

  • Germany’s financial authorities aim at introducing electronic securities to modernize its regulatory and supervisory capabilities with blockchain technology playing a pivotal role, the draft bill states.

The German finance ministry, Federal Ministry of Finance (BMF), and the Federal Ministry of Justice and Consumer Protection (BMJV) have introduced a bill on August 11 on digitizing securities on blockchains. According to the official statement, the authorities aim to introduce a new law on electronic securities (eWpG).

Currently, financial instruments in Germany, classified as securities under civil law, must be securitized in a paper form document. The paper document allows buyers and sellers a point of contact to transfer the securities legally. The BMF and BMJV draft bill aims at replacing this paper form contract into an electronic system in a bid to improve the marketability of legal securities. The statement reads:

“To ensure the marketability of securities and legal compliance, however, it requires a suitable replacement of the paper document, for example, by an entry in a register-based on the blockchain technology.”

According to the draft bill, the introduction of blockchain technology will improve the overall liquidity of securities markets while providing regulatory clarity. The Federal Financial Supervisory Authority will be the leading monitoring and maintenance agency of these blockchain-based electronic stocks.

The draft bill further differentiates between central electronic securities register by a central securities depository and registers kept for issuing electronic bonds on distributed ledger technologies (DLTs) and other electronic bases.

With the introduction of blockchain-based e-stocks, Germany aims to strengthen its market for stocks while improving the overall securities industry. Introducing blockchains will also increase transparency, market integrity, and investor protection, the bill states.

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Author: Lujan Odera

Three Strikes, You’re Out for BitLicense Applicants Under NYDFS’ New Guidelines

New York’s regulatory and financial agency has issued a warning to Crypto companies vying for the states Bitlicense. According to the watchdog, companies could see their applications terminated if they fail to adhere to feedback.

This was made public on Wednesday, 24 June, when New York’s Department of Financial Services announced that it would be implementing a new ‘three-strike’ policy for each application. Implementing such a policy would allow the agency to respond more effectively to applications that do not adhere to requested feedback.

According to the Department of Financial Services:

“If all deficiencies, involving a particular application requirement, or set of requirements have not been fully and effectively addressed by the end of the response period for the third deficiency letter… the DFS may, without further notice, deny the application.”

The introduction of this ‘three-strike’ rule comes as New York celebrates the fifth anniversary since the Bitlicense was introduced. Since its conception, the state has been continually updating its regulatory framework for crypto companies to do business in New York easily. While Bitlicense’s structure has been regularly updated and re-evaluated, the state has approved only 25 companies. Even now, only 19 of them have received physical licenses.

One of the most recent applicants under New York’s Bitlicense was the derivatives clearinghouse company – ErisX in May.

So what was the true motivation behind making these changes, and implementing this rule? The agency mostly cited that it sought to help improve the existing procedure of applying for the BitLicense. Implementing a three strike policy would allow more responsive applicants to have their applications expedited. Meanwhile, companies that don’t adhere to regulatory concerns would have their applications rejected. The note continues,

“DFS believes this policy will benefit the majority of applicants who diligently advance their applications once they are under substantive review, allowing for more effective use of DFS resources.”

While the three strike rule is the most catchy change introduced, regulatory changes include the introduction of a checklist feature. The purpose is to ensure that companies have clear guidelines on what steps need to be addressed or have already been completed.

While these new regulations presume to make the process easier, publications have since argued that it may make the whole process far harder.

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Author: James Fox