PayPal Customers Bought the Dip on Bitcoin & Crypto

The losses that came late Thursday night was the biggest decline since the March sell-off. However, the largest cryptocurrency is still up 135% YTD with its investor base widening who are turning to it in search of a hedge against dollar weakness amidst loose monetary policy.

As we reported, just this week, VanEck launched a physically-backed Bitcoin ETP on the Deutsche Boerse Xetra exchange.

With PayPal diving in, the retail investors are piling in to chase the momentum. The volume on ItBit, the exchange service of Paxos, exploded on Nov. 26. BTC/USD accounts for over $50 million in volume.

ItBit Trading Volume

“It continues to attract both institutional and retail attention as a 21st-century substitute to the gold play,” said Byron Goldberg, who runs the Australian operations for crypto exchange Luno.

Just Noise Against the Larger Bullish Trend

The decline in prices, which has the market in distress even today, as BTC/USD trades under $17k, was exacerbated by unsustainably high leverage. Trader and economist Alex Kruger noted,

“Too many greedy longs bought the top on leverage, and made the price very vulnerable.”

This started soon after the market made a new 2020 high at nearly $19,500. The choppiness in the market is in part due to the Thanksgiving holiday in the US. Another reason could be the expiry of 78k Bitcoin options today. Shane Oliver, Head of Investment Strategy at AMP Capital Investors Ltd. in Sydney said,

“After big rallies in shares and various other assets, they are all vulnerable to a bit of a pause.”

“But Bitcoin more than most, as it surged higher far more and had become far more frothy with speculative interest.”

However, the market is showing resilience as any dips were almost immediately absorbed, making it a bullish dumping. Kruger said,

“I’m bullish. This correction represents noise against the larger bullish trend.”

“The steep contango structure that prevailed up until now finally narrowed,” said Denis Vinokourov of Bequant.

“Only time will tell whether this is the beginning of a longer and more extensive correction, but the overall market structure is very different to the last time Bitcoin traded near these levels. As such, the base scenario remains intact for now.”

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Author: AnTy

Chinese Police Won’t Return the $4.2B Seized PlusToken Funds; ‘Forfeit to the National Treasury’

PlusToken is back to worry the market. However, it is worth noting that many of the funds scammed by this Ponzi scheme have been getting sold over the years.

It has been more than 100 days, over three months, since these funds have been moved.

“This is bullish either way,” commented Su Zhu, the CEO of Three Arrows Capital.

Today, the reports came that as per the new court ruling, crypto assets worth over $4.2 billion have been seized by the Chinese police in a PlusToken Ponzi scam crackdown. The ruling came amidst the latest reports of China cracking down on online criminal activities.

The crypto assets involved in this scam were 194,775 BTC, 833,083 ETH, 487 million XRP, 1.4 million LTC, 27.6 million EOS, 74,167 DASH, 6 billion DOGE, 79,581 BCH, and 213,724 USDT that are seized by the law enforcement from seven convicts, according to the judgment made public on Thursday.

Unfortunately, these assets won’t be returned to the victims.

“The seized digital currencies will be processed pursuant to laws, and the proceeds and gains will be forfeited to the national treasury,” said the court, but nothing is mentioned about the when, what, and how of it.

The market expects these crypto assets to be released in the market in a “gradual manner.”

The PlusToken Ponzi scheme started its operations in May 2018; it duped more than 2.6 million members.

15 people have been convicted in the case so far who are in jail for two to 11 years with fines between $100k to $1 million. One convict also successfully laundered 145 million yuan worth of crypto into the Chinese Yuan.

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Author: AnTy

Russia Proposes Tax Code Changes; Digital Financial Assets to be Classified as Property

The prime minister of Russia, Mikhail Mishustin, has said that the government is considering categorizing digital financial assets (DFA) as a form of property. Mikhail, who was speaking at a recent Russian government session, noted that the authorities intend to forge a path for a civilized local crypto market. According to a transcript of the meeting, Mikhail acknowledged the growing interest in this emerging asset class, hence the need for advanced oversight informed by law.

Other than supporting the growing crypto industry, Mikhail’s legal propositions are set to protect consumers as well. In fact, the Russian prime minister was keen to highlight that the propositions will help DFA owners to safeguard their rights and interest with a guarantee of proper legal frameworks. He also added that taking such a direction will make it difficult for ‘shadow schemes’ to thrive within the Russian market.

Mikhail’s general sentiment was to amend the tax code to include the legal propositions that would recognize DFA’s as property,

“Let’s make a number of changes to the Tax Code so digital financial assets can be recognized as property, and their owners will be able to count on legal protection in the event of any illegal actions, as well as to defend their property rights in court.”

The prime minister who was appointed earlier this year has been vocal about prioritizing a digital economy’s growth. Previously, Mikhail was the lead of Russia’s tax agency, having to be at the helm for around a decade. His newly appointed role as the head of government comes when crypto assets are a major and unavoidable topic for most developed economies.

Notably, Russia has not been among the most crypto-friendly jurisdictions according to the latest oversight developments that target the operation of crypto assets. Back in September, the Ministry of Finance proposed to criminalize the non-disclosure of crypto accounts. The country is set to enforce its digital asset bill in January 2021, having being signed into law by President Putin.

Oversight Still Ambiguous

While the latest sentiments by Mikhail seem quite bearish for crypto fundamentals, an expert who spoke to Decrypt was of a contrary opinion. Artyom Tolkachev, the CEO of Tokenomica, said that Mikhail’s take had not brought anything new to the table. He mentioned that tax code amendment to feature DFA’s had already been announced some time back. Also, crypto-assets supposedly do not fall within the DFA category,

“It is important to understand that cryptocurrencies are not ‘digital financial assets.’ By their nature, DFAs are more like security tokens, so it is a bit strange that they were considered side by side at a government meeting.”

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Author: Edwin Munyui

CNBC’s Mad Money Host, Jim Cramer, Says ‘Not Too Late for Bitcoin’ Even at $19,000

Jim Cramer, the founder of The Street, took to Twitter to share with its 1.4 million followers that it is a good time to jump into Bitcoin. Cramer said,

“It is not too late for Bitcoin.. great alternative to gold… which I have always believed in.”

The host of CNBC’s Mad Money comments came when the largest digital asset is trading above $19,000, a level last seen during the peak of the December bull run. BTC is just inches, not even 5% away from its all-time high of $20,000.

While millennials are already into cryptocurrencies big time, boomers may make an entry into the market too.

Bitcoin is up 168% YDT, with the majority of these gains, nearly 80%, coming in these last two months.

Unlike BTC, which is strengthening its digital gold narrative, the precious metal itself is having a rough past few months. Ever since hitting a new high above $2,000 in August, the gold price has been on a decline. Up only 18.7% year-to-date, the bullion is down -3.74% this month, dropping to the $1,800 level today.

While gold is getting sold off, BTC continues to climb up, inching that much closer to its new ATH. As we reported recently, analysts at Deutsche Bank said that Bitcoin is seeing increasing demand to be used to hedge dollar risk, inflation, and other things for which previously gold has been used.

Bitcoin whales are the one that is busy accumulating bitcoin currently. In the short-term, a much-anticipated pullback could make an entrance, with the number of accumulation addresses falling.

However, going by the narrative that the rally is largely driven by professional asset managers, “this means that Bitcoin will play a more active part in portfolio construction, going forward,” said Denis Vinokourov of Bequant.

Talking about its implications for Bitcoin, he said it would make “its once cherished non-correlated asset appeal (…) unclear, but it makes sense that if more institutions hold it, the more likely it will become correlated to traditional assets.”

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Author: AnTy

CBDC’s Offer Better Privacy Propositions Than Big Tech Digital Currencies: New York Fed

  • Fed research concludes that government-issued digital currencies offer better user data privacy than private companies’ digital assets.
  • However, CBDCs are not the answer to all problems relating to the privacy of payment data.

The research paper titled, “Monetizing Privacy,” by Rodney Garratt Professor of Economics at the University of California, Santa Barbara (UCSB) and Michael Lee, an economist at Federal Reserve Banks – Federal Reserve Bank of New York, states that central bank digital currency (CBDCs) will outperform the private company-based stablecoins such as Libra in protecting the privacy of user payment transaction data.

According to the research, the big tech firms are susceptible to selling users’ payment data to firms searching for an extra buck to boost their profits. It further states that a digital currency offered by these big tech firms such as Libra, led by Facebook and VISA’s digital currency, could lead to troubling cases of data privacy.

A follow-up post on the NY Fed blog by Lee and Garratt states some of these companies could become monopolies as more users join their platform and give them their data. Transactions using digital currencies will enable big tech firms with a competitive advantage to stack up on transaction data, further killing competition across the market. The post reads,

“This gap in product quality enables the [monopoly] firm to set discriminatory prices between payment types, taking into account the profit-maximizing quantity of data it would like to extract from consumers.”

“As a consequence, consumers obtain only a small share of the surplus generated from their data.”

The paper further states that public digital cash such as Bitcoin (BTC) could mitigate data monopoly by big tech firms. However, volatility in prices, fluctuating blockchain fees, and the rising costs of energy by BTC mining raise adoption issues.

A case for central bank digital currencies

The financial payment system is turning digital as the world battles with social distancing due to the global Corona Virus pandemic. With private big tech–owned digital currencies failing in offering users privacy on their transaction data, the research paper focused on government-issued CBDCs as the solution to privacy concerns.

The paper further states that a CBDC could also function as a measure against big tech data monopolies. CBDCs, however, not only offer increased privacy to users but also reduces the overall cost of fees and are environmentally friendly. The post reads,

“Nevertheless, the possibility that a privacy-preserving digital payment method may improve consumer welfare represents a relevant consideration for central banks to take into account.”

Regulators and authorities are urged to create policies around the privacy-enabled digital cash to ensure users are protected. Moreover, Garratt and Lee further claim that the privacy digital currency’s design should ensure that “the ability for consumers to purchase products without revealing their private data to vendors” is factored during development.

‘CBDCs not the answer to all privacy problems’

Despite the benefits CBDCs offer over big tech-built digital currencies, the paper notes that they also pose their own challenges in transactions. A “reliable and robust system” must be built to ensure that the privacy-preserving platform is secure at all times.

Notwithstanding, looking at “the commitment to privacy, regulators and lawmakers would have to rethink how to adapt current anti-money laundering practices.” Finally, a privacy-enabled CBDC could also affect the banking industry and financial systems, the report noted.

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Author: Lujan Odera

US Regulator OCC Proposes ‘Fair Access’ to Banking Services For All Including Crypto Companies

The Office of the Comptroller of the Currency (OCC), the US’s national bank regulator, has proposed a rule that would forbid banks from providing their services to legal industries, including cryptocurrency companies.

As per the proposed rule, led by former Coinbase counsel Brian Brooks, fair access is promoted under which financial services could be denied by banks to customers only on the basis of “quantitative, risk-based standards established in advance.”

They can’t do so due to political pressures, to prevent the customer from entering or competing in a market or to benefit another person or business activity.

Published on Friday, the proposal does not explicitly mention cryptocurrency but is surely welcoming news for the industry, which has been time and again denied the services by the banks.

The proposal does mention Operation Choke Point, an initiative taken by the Justice Department under the Barack Obama presidency that reportedly aimed to shut down the fraudulent businesses and lenders.

It further reads that it has been revealed that the government agencies have pressured banks to sever their financial services access to “disfavored (but not unlawful) sectors of the economy.”

But neither OCC nor banks are well-equipped to balance these risks that are unrelated to the financial exposure, it said.

Marco Santori on US OCC
Source: @MSantoriESQ

“Fair access to financial services, credit, and capital are essential to our economy,” said Acting Comptroller of the Currency Brian P. Brooks.

“This proposed rule would ensure that banks meet their responsibility to provide their services fairly since they enjoy special privilege and powers because if the system fails to provide fairness to all, it cannot be a source of strength for any.”

The proposal is open for public comments until January 4, 2021.

This week, President Donald Trump nominated the acting Comptroller Brooks as the permanent head of the OCC, a five-year stint.

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Author: AnTy

SEC Chairman: Bitcoin Will Be Subject To ‘More Regulation’ As It Matures Into A Payment System

SEC Chairman Jay Clayton reiterated in his recent interview with CNBC that Bitcoin is not a security. However, more regulation could still be on the way from other government agencies, he added.

According to him, the leading digital asset resembles a store of value and a payment method. And it has been the “inefficiencies” in the traditional payment mechanisms that are boosting Bitcoin’s growth.

But if BTC becomes famous as a payment method, it can be subject to more regulation. Clayton told CNBC,

“I think we will see this maturation, and I think there will be more regulation in the payments (for bitcoin) area.”

“This is why Bitcoin should be neither a currency nor a payment network. The principles of humility & harmony dictate that we should allow technology partners to provide for payments & defer to governments on currency matters. BTC is a purely engineered Store of Value,” commented the CEO of MicroStrategy, Michael Saylor, who has emerged as a leading vocal Bitcoin proponent ever since his company replaced cash with BTC as a reserve asset.

Clayton will be stepping down from his position as the SEC Chairman by the end of this year, and the crypto community is excited, expecting the Bitcoin ETF to get the approval finally.

According to analyst Mati Greenspan, Clayton has been “single-handedly” responsible for holding back the progress of a Bitcoin ETF, and “him leaving is really good for Bitcoin & crypto.”

In his interview with CNBC on Thursday, Clayton further elaborated on why the SEC isn’t regulating Bitcoins currently.

“We do not regulate Bitcoin as a security. When people use crypto assets as securities to raise capital for a venture, the SEC regulates that.

And what was happening in the ICO craze was people were using ICOs and essentially making public offerings of securities without registering them with the SEC.”

Very clearly, Clayton has said that the SEC determined “Bitcoin was not a security” but “much more a payment mechanism and store of value,” adding “the government does regulate payments.”

Clayton has been in conversation with Squawk Box host Andrew Ross Sorkin who recently hosted Jamie Dimon, the CEO of JPMorgan, who still has no love lost for Bitcoin.

Dimon said Bitcoin is “not (his) cup of tea,” and if it continues to get bigger and bigger, it will be “regulated.” “My experience with the government is they can regulate whatever they want whenever they feel like it,” coped Dimon.

This may sound like Ray Dalio, who is also concerned about the government outlawing it. Still, the founder of the world’s largest hedge fund Bridgewater Associates recently came out and said that he might be missing something about Bitcoin and “would love to be corrected.”

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Author: AnTy

Ripple CEO’s Broken Record: Level Playing Field for XRP to Compete with China Controlled Bitcoin

Another interview, another strike from Ripple CEO on Bitcoin.

Brad Garlinghouse clarified that he is a bull on Bitcoin and that he owns it, but at the same time, he said,

“We need to acknowledge that when Bitcoin is more than 50 percent of the mining in China that China can control those technologies.”

He believes that the US needs to get in sync with other major economies regarding how to treat assets like XRP similarly. He said,

“The Chinese Communist Party is being very strategic and is very focused on dominating this technology. I worry that this will be the next 5G race… We lost that race and I think we are in danger of repeating that mistake again in the battle of what I think will be the future of our global financial and infrastructure of payments.”

Commenting on the ongoing rally in the cryptocurrency market, which has the leading digital asset up 154% YTD compared to XRP’s 55%, Garlinghouse said this rally would “last for a while.”

“What we’re seeing happen are some macro factors not the least of which is… you print billions and trillions in dollars in stimulus of fiat currencies.”

This is where many people take a look at the inflation hedges, and while gold has historically been the darling in that category, bitcoin and digital assets are being broadly viewed as the real inflation hedge, said Garlinghouse.

This has driven a lot of the activity we’ve seen lately to almost record highs, he added.

According to him, PayPal allowing its customers to buy, sell, and hold digital assets is what “kicked off this big run.”

As for PayPal not including XRP in its offering, Garlinghouse explained the digital asset “has been a topic of lots of speculation in terms of how the US regulatory environment would look at currency XRP which is separate from the company.”

He further shared that many of the regulators worldwide looked at and have been decisive about looking at XRP as a virtual currency, unlike in the US, where there isn’t the same clarity. Because of this clarity, companies like PayPal and Square are supporting bitcoin, said the Ripple CEO.

The irony is unintentional as a regulatory body in the United States, “we have given an advantage to Bitcoin what I’ll call the good housekeeping seal of approval from the SEC,” and this clarity and certainty has allowed the likes of PayPal to support it, said Garlinghouse.

This has been due to this lack of regulatory clarity that the company has been planning to move out of the US. Although Joe Biden has won the election, this doesn’t change things much, and Ripple needs a level playing field, he said.

“If we can’t compete effectively with these technologies, in this case, controlled by Chinese miners,” then Ripple has to look elsewhere, he concluded.

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Author: AnTy

Founder of Mexico’s Second Largest Broadcasting Company Invests 10% of Assets in Bitcoin

Mexico’s second-richest person, Ricardo Salinas Pliego, revealed on Wednesday that he has 10% of his liquid assets in Bitcoin. Salinas Pliego is the chairman and founder of Grupo Salinas, the conglomerate that owns the second largest broadcasting company in the country, TV Azteca.

The Mexican business, whose estimated net worth is US$13.2 billion in February 2020, had some love to shower on BTC as he said, “Bitcoin protects the citizen from government expropriation.”

As Dan Held, Director of Business Development for crypto exchange, Kraken, said, “The institutional herd is stampeding.”

Salinas Pliego may have revealed his love for Bitcoin only now, but he clarified that he has been into the digital asset since 2016 through Grayscale. He said,

“For me it’s no “stampede”, started with Grayscale at 800 dlls BTC in 2016.”

Besides the 10% of his “liquid portfolio” in BTC, the other 90% is in precious metals miners.

While praising BTC, he recommended “Saifedean Ammous’s The Bitcoin Pattern,” the best and most important tool to understand the flagship cryptocurrency.

“Bitcoin is a monetary network that gets stronger as more individuals & corporations adopt it to protect their treasury reserves. The fire in cyberspace is spreading…” Michael Saylor, CEO of MicroStrategy, the first publicly-listed company to make Bitcoin part of its balance sheet, an investment now up over 50%, commented on this development.

In another news, as we reported, Maisie Williams, who played Arya Stark in Game of Thrones, name-dropped Bitcoin on Tuesday, asking Twitter users if she should go long or short on it.

In true Arya Stark fashion, she shared later that day that she “bought some anyway” after 53.4% of the 902,304 votes came against it.

“@Maisie_Williams is wiser than most professional investors, 45.6% of her fans know the answer, & only .1% of the money has figured this out and moved onto the Bitcoin monetary network. Bitcoin is a risk worth taking. Bitcoin is hope.com,” said Saylor.

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Author: AnTy

Former Coinbase Exec Nominated by President Trump to Lead US Comptroller of the Currency

President Trump has made several nominations, amongst them being that of the Office of the Comptroller of Currency (OCC), where former Coinbase Chief Legal Officer Brian Brooks is currently at the helm acting capacity. He has now been nominated to serve in a permanent position for the next five years, should the lame-duck senate approve his appointment.

Brooks assumed his acting role at the OCC in May after Joseph Otting resigned from the position, prompting Treasury Secretary Steven Mnuchin to replace him. Before this, he had served as Coinbase’s general counsel, a background that made stakeholders optimistic of a more crypto-friendly OCC. Unsurprisingly, Brooks has introduced significant changes in line with Fintech and crypto services.

One of his office’s most popular moves was the announcement that regulated U.S banks could offer crypto custodial services. Since then, U.S banks have loosened their gun-shy approach towards crypto with some launching services in this niche. The OCC also announced in September that these financial institutions could further extend their services to stablecoin providers.

In a recent Forbes interview, the acting OCC head elaborated some options that payment companies, including crypto, can pursue to receive a federal bank charter. Per the breakdown by Brooks, firms can acquire this charter by applying for a non-depository bank charter, National Trust Bank Charter, or buying a depository institution.

Confirmation Still Uncertain

With the U.S elections just recently concluded, the Brooks appointment by outgoing President Trump could face some challenges if the senate does not act before Jan 20. This is when President-elect Joe Biden is expected to assume office, which means he could nominate another person for the position.

Notably, Brooks has faced a backlash from the Democrats in the past, especially with handling the COVID-19 pandemic. His appointment will first go through the U.S banking senate committee, which will hold a confirmation hearing before a decision is voted in the senate.

Meanwhile, Brooks has already welcomed the nomination by President Trump, noting that he will continue to advance the mission of the OCC if confirmed,

“As Acting Comptroller of the Currency, I am proud to contribute to this 157-year-old mission.

If confirmed, I will work ceaselessly to ensure the agency continues to fulfill its critical mission and the men and women of this agency have the resources, training, and leadership they need to succeed in their duties.”

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Author: Edwin Munyui