News

Usa plans to launch its digital currency

It seems the rumours about the launch of digital dollars have been confirmed. The US Federal Reserve has been making actual efforts to launch their Central Bank Digital Currency (CBDC).

Now, the Federal Reserve Board of Governors have partnered with some Federal Reserve Banks to develop basic policies and assess possible issues of risks. The Board has established a technology lab to test various platforms and solutions compatible with development and launch of a CBDC.

The same has been done by the Federal Reserve Bank of Massachusetts which has collaborated with the Massachusetts Institute of Technology (MIT) for that purpose. The Federal Reserve Bank of New York is engaged in defining trends relevant for central banks and their digital currencies.

Obviously, the USA realises the potential of digital currencies. That is why the country’s Federal Reserve Banks are making practical efforts to develop a viable CBDC. At the 20th Anniversary Chicago Payments Symposium, the president of the Federal Reserve Bank of Cleveland, Loretta J. Mester, stated:

“Other proposals would create a new payments instrument, digital cash, which would be just like the physical currency issued by central banks today, but in a digital form and, potentially, without the anonymity of physical currency.”

Digital dollar for relief payments

Rumours about the launch of the digital dollar popped up back in April 2020, when the US House of Representatives drafted a coronavirus relief package bill. As CoinIdol, a world blockchain news outlet, reported, the bill stipulated the creation of digital wallets for all citizens of the USA, where the Federal Reserve would allocate relief payments.

This scheme indirectly hinted to the possibility of creating the US CBDC in order to make the payment allocation possible. However, no practical measures for implementing the initiative have been reported until now. Ms. Mester commented on the framework developed by the House of Representatives:

“Legislation has proposed that each American has an account at the Fed in which digital dollars could be deposited, as liabilities of the Federal Reserve Banks, which could be used for emergency payments.”

Increasing interest

Despite practical efforts being made by the US Federal Reserve, the US citizens seem to still be cautious about this new digital form of money. A survey made by Genesis Mining hashpower provider, showed that only 24.8% of the surveyed citizens are willing to switch to the digital digital dollar, with 60% having refused to abandon fiat money.

However, as compared to 2019, this showed a significant increase of interest in digital money. Back then, only 13.3% of respondents were willing to turn to digital currency, while 76.2% were negative about it. At the same time, the number of those undecided increased from 10.5% to 15.3%. This proves that the overall rapid digitization has forced people to explore virtual means of payments as a viable alternative to fiat money.

Despite the CBDC will have little resemblance to cryptocurrencies such as bitcoin due to its centralized and fully controlled nature, its full-scale launch would give a country a significant economic advantage. For this reason, many central banks have been exploring the potential of CBDC.

For now, China has come the closest to actually launching its digital yuan. Currently, the People’s Bank of China has been practically testing the currency for micro-payments across several locations within the country’s borders. Considering the tensed relations between China and the USA, the full-scale deployment of the first CBDC can become vital in this rivalry.

Oct-3-2020 12:56:18 PM

Russian province lifts cryptocurrency mining ban

The government of a Russian province has lifted a two-year ban on cryptocurrency mining. The ban came into effect when mining farms brought the region to the brink of an energy crisis.
The Republic of Abkhazia, a province in the Russian Federation, has rebooted its crypto mining glory. According to the region’s official cabinet website, the new system will include regulation by the finance ministry and a two-month restriction on the importation of mining equipment.

During this period, the Ministry of Economics plans to develop a system regulating cryptocurrency mining, including an office to collect and analyze statistics and provide licenses. Likewise, the state power authority “Chernomoenergo” will set rules as to the amount of electricity used by these businesses.

Cabinet ministers prohibited mining in 2018 after farms threatened to use all of Abkhazia’s power. According to Jam news, Abkhazia became a Mecca of crypto mining because of the relatively low price of electricity. The business took up so much electricity, it threatened homes and stores with blackouts.

Russia’s Mining Ban Fiasco

The director of Chernomorenrgo, Ruslan Kvarichiya, said that the ban had the opposite of the intended effect. Technically, the law forbade mining equipment to be hooked up to Chernomorenergo’s grids. It did not, however, ban importing equipment into the territory. In the end, local energy companies had to deal with an unchecked increase in new farms.

The vice prime minister and minister of economics said that electrical engineers, “know better than anyone else,” how crypto mining continued to grow under the ban, an apparent hint at corruption.

The shadow economy of Bitcoin mining grew so large that, in September, the power grid once again approached a breakdown. To prevent a total energy collapse, ministers decided it would be better to legalize and regulate mining.

The Lesser of Two Evils

Though mining is booming in Abkhazia, Russia as a whole is a legal mess when it comes to crypto regulation. A Russian law will come into effect on Jan. 1, 2020, which bans somewhat inconsistent uses of crypto.

For example, while mining will not technically be illegal, miners will be unable to receive mining rewards in digital currency. While cryptocurrencies will be legal and regulated, using them as payment will be banned in the country.

Despite some nuances (for example, inheriting cryptocurrency) the new Russian law will be a headache for miners and traders. The legalization of mining in Abkhazia comes at an inopportune time, but considering the threat of the grid going offline, it may be the lesser of two evils.

Oct-3-2020 12:55:28 PM

Sec halts securities trading for vortex blockchain technologies

The U.S. Securities and Exchange Commission (SEC) has halted trading in the securities of Vortex Blockchain Technologies. The firm has reportedly not been filing certain periodic reports with the regulator.

In its statement, the watchdog revealed that it was temporarily suspending trading in the securities of the firm from September 23 to October 6.

“The Commission temporarily suspended trading in the securities of the foregoing company due to a lack of current and accurate information about the company because it has not filed certain periodic reports with the Commission,” the regulator said.

Following the trading suspension, brokers and dealers were warned against entering any quotation relating to Vortex’ securities. “If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action,” the SEC stated.

The little-known Vortex Blockchain Technologies is a company that claims to have operations in several areas related to digital currencies. Its bread and butter is block reward mining, which the firm claims is generating $250,000 in gross monthly revenue. On its website, it projects, “If bitcoin continues to grow as projected, we forecast a cumulative valuation in excess of (2) Two Billion Dollars within 3 years (2023).”

Other sectors where Vortex claims to be involved include mining equipment manufacture, digital currency wallet and exchange and consulting. It also touts its native token, VCoin, which it claims is an upgrade on Bitcoin and is “the coin of the future.”

The firm is headed by Craig Berman, who was the political director of Ron Paul’s 2008 presidential campaign. Berman incorporated the firm in 2013 in Nevada as UA Granite Corporation and reverse merged it with Vortex Network LLC in 2018. As per the latest SEC 10-Q Report, Vortex “relies primarily upon the sale of its securities and loans from its CEO and directors to fund operations.”

Oct-3-2020 12:53:10 PM

EU TO CREATE LEGAL CERTAINTY FOR CRYPTOCURRENCIES

The European Commission has put forward a prospective regulatory framework for cryptocurrencies and stablecoins, as discussed on the organization’s website and in original documents.

European Union: A Complete Crypto Framework

The new framework regulates several aspects of digital commerce, with a significant focus on cryptocurrencies (“crypto assets”) and blockchain companies (“DLT market infrastructures”). It clarifies explicitly which assets are considered “crypto assets” and provides rules for the digital finance industry.

The Commission intends to build upon existing rules. It notes that some crypto assets fall under existing laws, but that those laws predate cryptocurrency and blockchain as it is known today. As such, the new proposal suggests a regime for market infrastructures that handle cryptocurrency transactions.

The framework will also protect consumers against unregulated crypto markets. As such, it will regulate crypto custody services, custodial wallet providers, and exchanges.

It will also regulate stablecoins, a function that was incidentally requested by several EU countries earlier this month.

The proposed framework aims to cover all digital assets and services—not just publicly traded cryptocurrencies but also utility tokens, asset-backed tokens, stablecoins, and e-money tokens. It sets rules for DLT market infrastructures or companies that handle assets on a decentralized ledger.

The proposal does not treat all assets like financial instruments because each has different functions and risks.

Instead, the goal is to provide “legal certainty” around those assets within the European Union.

What Does This Mean for Companies?

In practical terms, the regulations under consideration mean that digital finance services will need to have a physical presence in the European Union to operate. They will also need to follow capital requirements and governance standards, and they will need to separate client assets from their own assets.

The rules are not merely restrictive; they also offer benefits. The Commission says that services that register in one jurisdiction will operate across the entire EU with an “EU passport.”

However, the proposal hasn’t been enacted yet, and it may change in the meantime. It will need to be agreed upon by legislators (European Parliament and the Council) before it takes effect.

Oct-3-2020 12:51:51 PM

VENEZUELA LEGALIZES CRYPTO MINING

Bitcoin mining in Venezuela is now a legal and regulated activity following years of regulatory hostility in the Latin American country. This is according to a new decree from Venezuela’s National Superintendency of Crypto Assets and Related Activities (SUNACRIP), which brings all activities related to crypto mining under its regulatory jurisdiction.

Under the new dispensation, Venezuelan miners will work under license from SUNACRIP, and they will be mandated to join a “National Digital Mining Pool” under the body’s supervision. The new regulation also creates a legal basis for the importation, sale, production and use of crypto mining equipment in Venezuela for the first time.

Venezuela’s New Crypto Mining Regulations

The decree, published on September 21 in Venezuela’s Official Gazette and signed by SUNACRIP superintendent Joselit Ramirez prescribes a registration and regulatory process for Venezuelan residents who wish to manufacture application-specific integrated circuit mining equipment in the country or operate mining farms.

To this end, it establishes a Comprehensive Registry of Miners which will have information on all crypto miners in Venezuela. The information to be captured includes the type of mining-related activity they are involved in and the type of equipment they work with. The regulation also establishes SUNACRIP as the sole regulator over the country’s entire crypto mining sector.

Moreover, it creates a National Digital Mining Pool which all miners on Venezuelan territory must join to avoid being in regulatory default. According to the decree, any miners in the country who do not join the pool will face “measures, infractions and sanctions, set forth in the Constituent Decree on the Comprehensive Crypto Assets System.”

Implications of Regulations

Venezuela has traditionally adopted a position on crypto mining that varies between vagueness and outright hostility. In 2017, CNBC described Venezuela as “one of the most dangerous places in the world to mine Bitcoin.” Earlier this year, the Bolivarian National Guard of Venezuela seized 315 Antminer S9 Bitcoin mining rigs, claiming they were not properly registered for operation in the country.

Despite this state of affairs, research published in May 2020 by the Center for Alternative Finance at the University of Cambridge ranked Venezuela among the world’s top ten contributors to the Bitcoin network’s hashing capacity and the top Bitcoin mining country in Latin America with 0.42% of the total hashrate.

In an economy decimated by hyperinflation, trade sanctions, political upheaval and battered export income that has effectively rendered the bolivar irrelevant, The Atlantic reports that Bitcoin miners in Venezuela can clear as much as $500 a month.

With the creation of the mandatory national pool for miners, SUNCRIP effectively assumes control over the payment of block rewards to crypto miners, which some fear will lead to extra taxation, frozen funds or delayed payments.

Oct-3-2020 12:50:52 PM

BITCOIN EXCHANGE BITHUMB UP FOR SALE

Bithumb, the largest cryptocurrency exchange in South Korea, is allegedly up for sale to the highest bidder, according to the South Korean news outlet Herald. Responsible for more than 50% of the domestic trading volume with 4.77 million users, Bithumb is considered the primary driver of cryptocurrency trading in the country.

According to the news report, Bithumb Holdings is now trying to sell its 74% stake in Bithumb Korea. Several buyers have already sent letters of intent, offering between $430 million and $604 million for the exchange. The interested parties are unknown at the time.

The Seoul Metropolitan police are currently investigating the exchange’s chairman Lee Jung Hoon for incurring deliberate investor loss of ~$25 million and evading property responsibilities. The police have also raided the exchange twice this month.

This makes selling Bithumb less than easy

The Korean branch of KPMG, Samjong KPMG, is in charge of the sale and enforcing compliance with local laws. The buyer will also be responsible for implementing the revised bill of the Special Payments Act starting from March 2021. The revised bill lays the foundational requirements for reporting and operation processes, regulates licenses for digital asset service providers, and ensures compliance with FATF recommendations.

According to local news outlets, the South Korean investment banking industry perceives the sale of Bithumb Holdings as an effort for investors to relieve themselves of the legal and managerial disputes, recover their investment, and exit the market unscathed.

BK Global Consortium was expected to purchase in 2018. The deal was scrapped after the investor failed to pay the full amount. The price at the time was allegedly $345 million.

Oct-3-2020 12:49:47 PM

LEAKED DATA OUTS BITCOIN INVESTMENT COMPANY AS SCAM

Ponzi schemes are competing with DeFi applications for bandwidth on the Ethereum network, making many decentralized applications practically unusable because of high fees.

A South African group calling itself “Anonymous ZA” has published fresh information that seemingly supports long-standing allegations that Mirror Trading International (MTI), an ostensible bitcoin investment company, is running a multi-level marketing scam. The new information, which was reportedly obtained after a breach of MTI internal systems, shows that the investment company is “entirely structured around a tree/pyramid scheme.”

According to a report, the leaked data suggests that MTI has a practice of distinguishing between “normal members and founder members.”

Assessing the data, Anonymous ZA says it would appear that while “deposits made by founder members are not easily traceable yet they (founders) seemingly get better ROI than regular members.” The data also shows that “founder members are also at the top of the pyramid scheme and earn more money from their binary bonuses than ROI or any other source.”

Perhaps in revelations that may lend credence to allegations often leveled against MTI, the report quoting Anonymous ZA says:

“The database further shows payouts of $ 86.25 million (8,171.6 BTC) to normal members, with $21.4 million (2,036.5 BTC) in the form of bonuses for referring new members. Payouts to founding members amount to $18.45 million (1,744 BTC).”

The report confirms that members are paid to recruit new members but it fails to provide the number of founding members.

Earlier in July, the Texas State Securities Board (TSSB) accused MTI of running a multi-level marketing scam as well, as it operated in the state of Texas without a license. The TSSB subsequently issued a cease and desist order against MTI and some of its employees. Afterward, the South African regulator, the Financial Sector Conduct Authority (FSCA) issued its own public statement which repeats allegations made by TSSB. However, the FSCA statement goes further by asking investors to withdraw their funds from MTI.

Anonymous ZA closes its statement in which it says “unless MTI can display or prove control of a Bitcoin wallet, or another storage facility to the value 17k BTC, it will stand by its view that: MTI is a Ponzi scheme.”

Meanwhile, following the latest revelations, the MTI management moved to confirm the breach in a fiery response. Cheri Marks, one of MTI’s founding members and spokesperson, suggests a criminal offense was committed by those behind the breach which occurred September 18. Marks then goes on to threaten legal action against the perpetrators as well those publishing stories based the illegally obtained information:

Yes, we had a security breach of our administration portal. Yes it was a criminal act. Yes we will be pressing charges and everyone publishing the personal information illegally obtained we will refer to our legal council.
Marks then attacks assumptions that MTI had stopped trading claiming that “in August over 34,000 withdrawals were effected to the tune of 5,933 bitcoin without so much as a hiccup.”

Throughout the rant, Marks challenges the media to name a single disgruntled investor out of the “170,000 that are growing their bitcoin with MTI.”

Still, Marks fails to adequately deal with concerns that founders are possibly getting larger payouts than the rest of investors. Instead, Marks chooses to boast about her status as founder saying:

“The fact that MTI has founder members is nothing new. Yes there is an extra profit share for them and this does not affect the company or the members in any way, nor is it a state secret.”

Throughout the seventeen-minute video, Marks complains of media bias and the “intention to slander, not to provide a decent and informed view of MTI, its founders, shareholders or members.”

Marks also briefly discusses MTI’s interactions with FSCA but fails to provide a satisfactory answer to why the regulator still went ahead and asked investors to withdraw funds even after the MTI “CEO opened our live trading account and BTC balance for the FSCA to see.”

Surprisingly, just after the encounter with FSCA, the investment company made the decision to invest in bitcoin only. Critics argue the move was intended to remove MTI from the tutelage of regulators. Meanwhile, reports say the FSCA has been made aware of the data leak and is looking into it.

Oct-3-2020 12:48:53 PM

OVER 40 BITCOIN FORKS ARE DOWN

Since the summer of 2017, more than 44 forks of the Bitcoin network were created and so far many of them have lost considerable value and are near worthless. To-date only a few of the forks that stem from Satoshi’s creation have remained relevant during the last three years.

There are three branches of Satoshi Nakamoto’s codebase that have commanded top positions within the top fifteen coins in the crypto coin market economy. Bitcoin (BTC), Bitcoin Cash (BCH), and Bitcoinsv (BSV) have all been top contenders for quite some time. Between the price, onchain activities, and community size only these three branches have data worth calculating.

Out of the $335 billion market cap stemming from all 7,600+ crypto assets, BTC captures 58% of the valuation, while BCH commands 1.2%. BSV’s market cap dominance on Sunday, September 20 is 0.83% Meanwhile, over 40 other Bitcoin network forks that were born after August 2017, have lost significant value during the last two years.

In 2017, just before the all-time price highs in the crypto economy, a great number of individuals and organizations decided to create forks from the BTC network. That year if you participated in the crypto economy, you surely heard about all the forks, snapshots, and airdrops that took place during the 12-month timeframe.

Each and every one of them had a unique name tied to the word “bitcoin,” and they all offered some benefits that BTC does not offer network participants.

This included bitcoin zero (BZX), micro bitcoin (MBC), bitcoin clean (BCL), bitcoin gold (BTG), classic bitcoin (CBTC), bitcoin cloud (BCL), big bitcoin (BBC), bitcoin atom (BCA), bitcoin interest (BCI), bitcoin smart (BCS), bitvote (BTV), bitcoin private (BTCP), and bitcoin rhodium (BTR).

The list goes on and on and most all of these coins besides the top three branches have shuddered in value during the last two years. Before launching these forks the creators told the public that every fork had a special purpose.

For instance, bitcoin gold (BTG) was supposed to make bitcoin mining decentralized by trying to bring CPU mining back to the codebase. Essentially, BTG changed BTC’s consensus algorithm from SHA256 to Equihash but quickly learned that the chain was far less secure.

Just like the Ethereum fork (ETC), bitcoin gold has been 51% attacked on various occasions since it was born. A recent study shows that a single BTG whale controls more than half the supply and the 51% attacks have caused the coin to get delisted from prominent exchanges.

Bitcoin gold is down 98.32% from the coin’s all-time high of $484 three years ago. The crypto asset has 898 KH/s of hashrate securing the chain but the cloud mining operation Nicehash controls 52.24% of the BTG hashrate on Sunday, September 20, 2020.

Another BTC fork project called bitcoin private (BTCP) told the public the coin’s benefits would be privacy features called zk-snarks. BTCP is down 98.8% since it’s ATH at $$86 two years ago and today the cryptocurrency is swapping for $0.10 a pop.

A BTC fork called bitcoin god (GOD) created by the well-known Chinese cryptocurrency investor, Chandler Guo, is down 99.9% since the coin’s ATH on January 13, 2018.

“Bitcoin God (GOD) will be forked off the main bitcoin chain at the block height of 501,225, which will happen on December 25th to be symbolic of me giving candy to all bitcoin holders,” Chandler Guo said via Twitter. Unfortunately, even though Chandler Guo shot for Christmas day, the fork at block height 501,225 happened two days later on December 27, 2017.

One of the early BTC forks born on November 24, 2017, called bitcoin diamond (BCD) is down 99% since the cryptocurrency’s ATH. Data shows that BCD’s highest price point was the day after it was born at block height 495,866.

At this time (11/25/17), BCD traded for $99 per coin and has steadily declined in value ever since that day. Interestingly enough, BCD is still worth $0.57 per coin and on Saturday, September 19, BCD saw a million dollars in trade volume. The bitcoin diamond trade volume globally is much larger than GOD’s $24 worth of swaps during the last day.

Each and every BTC fork, snapshot, and airdrop that is still trading on exchanges for a small amount of value can still be acquired today. However, most major cryptocurrency exchanges do not support these small market cap BTC forks unless they have decent liquidity.

Smaller crypto trading platforms, however, do still support these coins and it’s possible to still trade them for a fraction of value. Although, news.Bitcoin.com has reported on various occasions on how obtaining forked assets can be a “long and annoying process.”

Oct-3-2020 12:47:41 PM

CHAINALYSIS TO FIGHT CYBERCRIME AND MONEY LAUNDERING

The Wyoming Division of Banking has turned to blockchain analytics firm Chainalysis in an effort to combat cybercrime, money laundering and other criminal activities.

Wyoming to Work Closely with Chainalysis

The news of the partnership was announced on Chainalysis’ blog on Sept. 17. According to the blog post, the blockchain analytics firm will help the division strengthen its monitoring capabilities that it uses for tracing illicit activities pertaining to digital assets.

The Wyoming regulator will be using Chainalysis products and tools “to verify Wyoming banks’ compliance with anti-money laundering, Bank Secrecy Act, Know-Your-Customer, and sanctions.’’

The news of the partnership came just a day after the U.S. State of Wyoming granted the banking charter to the major cryptocurrency exchange Kraken.

Software for Verifying Wyoming Banks’ Compliance

The Wyoming Banking Board approved the application of Kraken to form a Special Purpose Depository Institution (SPDI) and allowed the exchange to develop a bank in the State of Wyoming. This is a significant step for the crypto space as Kraken becomes the first regulated cryptocurrency bank in the history of the U.S. With the Chainalysis partnership, however, it is clear the state also wants to maintain control and monitor closely crypto transactions.

Previously reported on how blockchain analytics firms provide insights to identify real-world threat actors, with Chainalysis stating that it could map addresses to real-world entities and further explaining:

“So that means, when you are in our product you can see that someone at Coinbase just sent X number of Bitcoin to someone at Kraken, or to a darknet market or to a child pornography site, or any number of services or entities on the blockchain. The way that we map it is through proprietary heuristics. It’s a combination of technology […] and actual people who work at our company and validate certain services.”

Wyoming at the Forefront of Crypto Regulation in the U.S.

The partnership with Wyoming is said to be a one-year agreement, during which time the blockchain analytics firm will train senior examiners at Wyoming on crypto tracing practices.

The Division will also be granted two monitoring software licenses to the Division of Banking as well as investigatory support as it eases into its new crypto-facing compliance duties.

In the meantime, Wyoming has been at the forefront of digital asset regulation in the U.S. ever since 2018.

Just last year, the Wyoming Legislature authorized the chartering of SPDIs as a new bank charter, and also established a legal framework for digital asset custody and fiduciary activities. Currently, Wyoming is working on developing regulatory policies revolving around crypto assets, so that digital currencies can be monitored and transacted in a secure way.

Wyoming Division of Banking is working to find a middle ground between crypto and traditional banking institutions, and it seems to have progressed and succeeded in integrating both, starting with Kraken crypto exchange.

Oct-3-2020 12:46:19 PM

South korea to deploy blockchain voting in apartments

The South Korean Government is working on integrating blockchain technology into people’s homes to make it easier for them to vote and enjoy other services

As the blockchain frenzy in South Korea continues, the government is taking the technology to the housing sector by pledging $1.27 million to the cause. The funds will go towards developing a blockchain-based platform that targets people living in apartments across the country.

The Ministry of Science in South Korea has chosen a local firm, Ksign, for this project. Ksign will develop a contact-free platform that would enable residents to engage with electronic voting while enjoying other benefits, such as parking space management and a few other housing-based measures.

The new blockchain platform will enable people to vote from their homes. The national government seems to be making this move as the country conducted its latest legislative elections on April 15, 2020, at a time when the Coronavirus pandemic continues to impact the world.

The platform will be designed to aid social distancing; the creators of the platform believe this will boost public health in apartment spaces. The blockchain platform will be available for use by homeowners, residents and the management of apartment buildings. In addition to electronic voting and parking space management features, the platform will also provide video conferencing and electronic payment solutions.

Keo Ja-in, vice president of Ksign, while commenting on the development of the platform, stated they are developing a decentralised identifier (DID) that can be applied to the token ecosystem. They intend to achieve this by controlling personal information and verifying the identity of users by controlling personal information. “The goal is to also create a token ecosystem that can be used in any store,” he added.

The DID is a new type of digital identifier that supports a verifiable, decentralised digital identity. A DID identifies a subject (an organisation, a person, a thing, data model, abstract entity or more).

Blockchain voting has been one of the main talking points in South Korea recently. On September 11, the head of the Seocho regional government discussed the possibility of bringing a blockchain-powered voting platform to residents.

The developers have no set timeline for the completion of the blockchain voting platform. However, South Korea will hold its presidential elections in 2022, and it would be exciting to see blockchain technology playing a role in the upcoming election.

Oct-3-2020 12:44:51 PM