Hong Kong Issues New Rules to Regulate Cryptocurrency Funds and Exchanges

Hong Kong’s securities regulator issued a statement setting out guidelines for funds dealing with cryptocurrency Thursday, Nov. 1, saying it could move to formally regulate exchanges.

In what it called “guidance on regulatory standards,” the autonomous Chinese territory’s Securities and Futures Commission (SFC) set in motion a series of steps that chief Ashley Alder hinted would culminate in a formal regulatory environment.

Hong Kong differs significantly in its approach to cryptocurrency from mainland China, with cryptoasset exchange and related activities legal, though formal regulation is pending.

“The market for virtual assets is still very young and trading rules may not be transparent and fair,” Bloomberg quoted Alder as saying during a fintech forum Thursday:

“Outages are not uncommon as is market manipulation and abuse. And there are also, I am afraid, outright scandals and frauds.”

The latest proposals pertain to any fund managers investing more than 10 percent of their holdings in cryptocurrency, with entities serving exclusively professional traders able to join a sandbox scheme designed to give more room to develop new products and services.

For others, a licensing process will require entities to inform the SFC about their business practices.

The statement reads:

“In order to afford better protection to investors, the SFC considers that all licensed portfolio managers intending to invest in virtual assets should observe essentially the same regulatory requirements even if the portfolios (or portions of portfolios) under their management invest solely or partially in virtual assets, irrespective of whether these virtual assets amount to ‘securities’ or ‘futures contracts.’”

Cryptocurrency exchanges could also fall under the the SFC’s supervision more directly in future.

“…It is proposed that the standards of conduct regulation for virtual asset trading platform operators should be comparable to those applicable to existing licensed providers of automated trading services,” it adds.

Hong Kong’s sharpening of its regulatory oversight comes while more and more jurisdictions move to do the same, as Bitcoin and major altcoin markets stabilize and a general acceptance of their longevity begins to crystalize.

Last week, Taiwan announced it would release dedicated rules governing Initial Coin Offerings (ICOs) by June next year, having previously chosen not to regulate the sector.

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Russia’s ‘Disappointing’ Cryptocurrency Legislation: Why Experts Consider the Bill a Failure

Russia has been trying to pass cryptocurrency legislation since the beginning of January 2018, with no success as of yet. The government’s main bill, “On Digital Technologies,” which was expected to be passed by July 1 — according to the wishes of President Vladimir Putin — will instead most likely be pushed back until an October Duma session.

According to Artem Tolkachev, the self-proclaimed “first” lawyer in the Commonwealth of Independent States (CIS) to begin working with Bitcoin (BTC) and blockchain startups, the reason the crypto bills didn’t make it on the July agenda was “because of the complexity of the subject and lack of consensus over the state authorities about how and what they should regulate.”

The problems arising within Russia over how to regulate cryptocurrencies have taken the form of conflicts between the Russian Central Bank’s more conservative stance and the Ministry of Economic Development’s willingness to embrace a new technology with the hope of attracting more business to the country.

Tolkachev, who has been chairman of the Russian Blockchain.community since 2016 and founded the Blockchain Lab at Deloitte CIS, said that the current version of the crypto and blockchain legislation — which takes its form in three draft bills — has not lived up to his expectations.

Speaking to Cointelegraph, Tolkachev said that “of course” he is “disappointed by the current version of the regulation,” noting that the three bills — “On Digital Technologies,” regulation of the central bank on crowdfunding (including Initial Coin Offerings (ICO) and amendments to the Russian Civil Code — were prepared independently, which makes their legislation “rather ineffective.”

Tolkachev added,

“I spent around two years discussing with the central bank, the Ministry of Finance, the Ministry of Economic Development, the general security service and all [the] other guys [about] how we can regulate this stuff. And I was trying to sell the idea […] that we can be the country who attracts that kind of business and have the crypto-friendly environment here. Unfortunately, we have what we have. What can I say? That’s it.”

Yuri Igorevich Pripachkin, the president of the Russian Association of Cryptocurrency and Blockchain (RACIB), told Cointelegraph that the group was also consulted during the formation of the cryptocurrency bill, but that the bill still contains some unfavorable terms. According to Pripachkin, the Russian cryptocurrency bill in its current form is “far behind the ones which were accepted in Belarus, Kazakhstan and many other countries like Singapore, Switzerland.”

So what exactly is Russia’s digital economy legislation?

At the end of January 2018, the first variant of a Russian crypto bill was presented by Russia’s Ministry of Finance (MinFin). The bill on the digital economy included a framework for the regulations surrounding crypto and blockchain-related technology — like smart contracts, mining and ICOs. Russia’s central bank was also preparing a draft law on crowdfunding.

Tolkachev clarified that the draft laws are “not creating regulation for existing cryptocurrencies and tokens,” but are specifically aimed at newly created ICOs:

“According to these draft laws, none of the existing cryptocurrencies, especially cryptocurrencies with nothing behind [them], for example, Bitcoin […] will be allowed in Russia. It wouldn’t be under the scope of this legislation at all. According to the three bills, we can talk only about some kind of asset-based tokens, not about cryptocurrency.”

This first variation of the bill was originally opposed by the Bank of Russia, according to local news outlet TASS, which reported at the time that the central bank disagreed with the way transactions between crypto, rubles and foreign currencies were laid out. However, MinFin noted that any sort of legislative ban on crypto transactions will “lead to the creation of conditions for the use of such currency for illegal purposes.”

Pripachkin told Cointelegraph that “MinFin and [the] central bank, they can’t find the golden middle, because they’ve got different opinions in terms of cryptocurrency legislation, so it affects [the] legislative process.”

At the end of February, Russian President Vladimir Putin announced that crypto regulation should become law no later than July 1, 2018. At this time, Russia’s central bank still wanted to criminalize ICO token investments, while MinFin was insisting on just regulation, according to local news outlet Parlamentskaya Gazeta. The outlet quoted Anatoly Aksakov, Chairman of the State Duma Committee on Financial Markets, who commented on the central bank’s position:

“The central bank has come out against the legalization of this kind of digital currency inasmuch as citizens could then actively invest in instruments without considering possible risks.”

Tolkachev noted that the state authorities like the Ministry of Economic Development are “much more about creating a good environment for business, for attracting new business,” and thus think the regulation should be changed from the current draft bills. On the other hand, Tolkachev notes that the central bank and the Minister of Finance are the “really conservative guys who don’t really want to see cryptocurrencies.”

In March of this year, a group of Russian deputies headed by the Chairman Aksakov submitted the first draft of legislation on cryptocurrencies and ICOs to the State Duma, as well as a draft of the bill “On Alternative Methods of Fundraising (Crowdfunding).”

This draft defines cryptocurrencies and tokens as digital assets, with trading only allowed through authorized cryptocurrency exchanges, and establishes KYC regulations for ICOs. Digital assets are also defined as property, not as a legitimate means of payment in the Russian Federation. This March version differs from the initial January variant in that it now echos crypto exchange requirements in United States — i.e., the verification of accounts for anti-money laundering (AML) and counter terrorist financing (CTF) purposes.

Russia Grapples With Cryptocurrency, Blockchain Reform

Tolkachev noted the problem with the bills were their references to “basic Russian AML/KYC rules,” as they “may not be effective for tracing and monitoring transactions with crypto assets.”

The March bill also suggests the maximum limit of an individual investment in ICOs be defined by Russia’s central bank rather than the January-suggested 50,000 rubles (about $800).

January’s disagreement between the central bank and MinFin had been solved in March, according to local news outlet Ria Novosti, with the Bank of Russia noting that it will be considered permissible to exchange rubles, foreign currencies or property for tokens issued by Russian ICOs, while it will not be allowed to use cryptocurrencies due to the possibility of “questionable transactions.”

Also in March, Igor Sudets, a member of the Duma’s expert panel on the digital economy and blockchain, said that due to the proposed bill’s limit on domestic investment in Russia ICOs, investors may not want to conduct Russian ICOs, according to Forklog:

“I very much hope that [ICO investment specifications] will be substantially finalized for the second reading. Because otherwise, nobody will want to conduct ICOs in Russian jurisdiction, since the main goal — to raise money — will be unattainable.”

In April, a review of the draft crypto bill added that the exchange of crypto for fiat of more than 600,000 rubles (about $9,500) or its foreign equivalent would fall under mandatory currency exchange regulation.

Pripachkin said that RACIB is currently working to create additions to the bill that can be proposed to the Duma, and hopes that the Russian officials will take the changes into consideration:

“For now, we’re working on preparation of some kind of tips, we really hope that they are going to hear us, according to these remarks we are preparing […] legal bodies should really understand that if they are going to accept the law which is not in the interested of such industry, then this industry is not going to survive.”

He noted that he does believe that the drafts “are going to be accepted and implemented later on.” Otherwise, in Pripachkins’ opinion:

“None of the foreign investors will come, and what is more — the local industries could leave the country.”

The problems that Pripachkin sees in the bill are that there is not a lot of clarity “in terms of the mechanism of ICOs, nor about crypto exchanging licensing,” but he does note that mining is noted as being classified as an entrepreneurial venture for taxation and VAT purposes.

Where the crypto bill is now

The most recent version of the bill was approved by the State Duma in its first reading on May 22 in an almost unanimous vote — 410 for and one against.

However, on Sept. 19, Russian news outlet Vedomosti reported on an updated version of the bill, which no longer contains a definition for “cryptocurrency,” and where mining is defined as the “release of tokens to attract investment in capital.” In the previous version of the bill, mining was the extraction of cryptocurrencies.

The bill does not make digital currencies a legitimate means of payment. Instead, the central bank, the Ministry of Finance and the Ministry of Economic Development will create separate guidelines for these currencies to be used as payment in “controlled quantities.” The bill also makes a digital confirmation by a user in a smart contract legally equivalent to their written consent.

And, while crypto exchanges don’t fall under the scope of the bills’ legislation, Tolkachev noted that Russians can still trade in crypto through peer-to-peer (p2p) transactions in a “so-called ‘grey zone.’” In a separate comment with Vedomosti, Tolkachev underlines that the draft law does not regulate transactions with cryptocurrencies. Russia’s Federal Financial Monitoring Service notes that crypto exchange operators are subject to Article 5 of Federal Law 115-FZ (AML and CTF) or they will lose their license.

Pripachkin told Cointelegraph that the “Russian crypto industry and crypto economy is headed [down] the best path […] It’s not a problem for us that we are restricted by legislation in Russia. But, of course we would love to have the first [legislative norms] in the world.”

Law in progress

At the beginning of September, Dmitry Peskov, a special representative of the Russian president, said that Russia was not ready for the circulation and issuance of cryptocurrencies, as it “contradicts the basic functions of government.” Peskov notes that the best way forward to develop the cryptocurrency sphere legally in the country is to create a regulatory sandbox to analyze the different aspects of the crypto industry.

To this end, the Central Bank of Russia also announced on Sept. 11 the successful test of an ICO trial conducted with Sberbank and the National Settlement Depository.

More recently, on Sept. 15, a lobby group of the Russian Union of Industrialists and Entrepreneurs (RSPP) announced that they were also working on an alternative crypto regulation bill in order to clarify the supposed contradictions in the existing bill “On Digital Financial Assets.” This new bill is set to be developed by Russian businessmen, including two of the richest businessmen in the country: Vladimir Potanin, of the nickel and palladium mining and smelting company Nornickel, and Viktor Vekselberg, head of the Russian innovation fund Skolkovo.

Elina Sidorenko, the vice president of RSPP, explained that the new version of the alternative bill will divide digital assets into three groups: tokens, which will be equivalent to securities, cryptocurrencies, and digital ‘signs.’ Sidorenko, who didn’t clarify what “digital ‘signs’” entailed, noted:

“Cryptocurrencies will have a special status, which has never appeared in Russian legislation before, and will be regulated on the basis of laws and regulations that will be issued by the Russian Central Bank. The central bank will issue licenses for exchange operations. In this regard, the status of crypto owners will be notably facilitated in comparison to securities owners.”

If approved by members of the RSPP, the bill can then be then discussed with Russian officials in October.

In mid-September, cryptocurrency exchange Huobi joined Russia’s VEB Innovation Fund to share notes on crypto regulation and help create “a legal basis that could compete with current promising jurisdictions.”

Putin and crypto

Although President Putin himself instigated the now-passed deadline for cryptocurrency regulation, the country’s leader has still not made any clear, definitive statements about the future of cryptocurrency in Russia.

However, cryptocurrency was mentioned during President Putin’s most recent live Q&A “Direct Line” with the public, where he spoke relatively negatively — albeit vaguely — about cryptocurrencies and their use cases, noting that they work partially in Japan but not in any other countries.

Russia Grapples With Cryptocurrency, Blockchain Reform

Tolkchev believes that the reason Putin chose to speak about crypto in “Direct Line” is the lack of consensus between the regulator and the state authorities,

“That’s why if he answers something, in some way, it would be something like a direct order to the regulators and the state authorities. I think he just doesn’t want to do it right now because a lot of discussions are taking place over this topic.”

Pripachkin added that Putin was just repeating the position of the central bank, and that RACIB in their proposed amendments to the crypto bill is “working on explanations [on] why they’re thinking somehow in the wrong way […] [and] trying to clarify the fears of the central bank.”

The future of crypto in Russia

Cryptocurrency use to avoid sanctions has become a topic worldwide after Venezuela, a country under international sanctions, created its oil-backed government cryptocurrency, the Petro, earlier this year.

In January, Sergei Glazyev, economic adviser to President Putin, said that a Russian government-created “CryptoRuble” would be able to alleviate some economic pressure caused by Western sanctions.

However, Tolkachev doesn’t think that Russia will be looking to cryptocurrencies to avoid sanctions anytime soon, especially as the CryptoRuble is “still nothing but a rumor that’s been denied a number of times by various state authorities”:

“I think from the [state’s] perspective, it’s not a very safe way to use some kind of cryptocurrencies which [the] state doesn’t control, to rely on it as a main source of dealing with the sanctions […] As far as I understand the current agenda, it’s not on the list, we can’t use crypto to beat the sanctions.”

On the other hand, Pripachkin was confident that the CryptoRuble project will eventually be implemented:

“This project will be created. Sergey Glazyev is highly advanced in economics, and he understands what he is talking about.”

But Tolkachev does think that Russia will continue to see cryptocurrencies as something to have control over, as that has been the Russian mentality for the past “10 years”:

“Russia and the Russian mentality of the last 10 years was about competing with the [rest of the] world and building something of our own. And of course the Russian government would like to have a control over the internet, over […] cryptocurrencies […] For such kind of situation where a lot of people are involved, a lot of new technology involved, the government would like to have a little bit more pressure than other countries because of the paradigm in which we are living.”

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Despite Ban, China Keeps Trading Cryptocurrency Thanks to Tether and VPNs, Says Report

Chinese traders are using virtual private networks (VPNs) as a major tool to circumvent the ongoing government crackdown on cryptocurrency trading, local media outlet South China Morning Post (SCMP) reported September 8.

According to SCMP, referencing reports from Beijing-affiliated Shanghai Securities Times, traders have begun leveraging stablecoin Tether (USDT) as a means of entering and exiting cryptocurrency markets.

Combined with a VPN, two traders can use an exchange platform notionally registered outside China as an intermediary to swap cryptocurrency for fiat currency and vice versa.

“[T]wo individuals who have both completed a ‘know-your-customer’ procedure with an exchange would swap ‘fiat’ currencies […] to tether,” the publication reports:

“The exchange plays the role of an overseer of such trades, and stands ready to adjudicate in cases of failed trades, or transactions that are not honoured.”

A Beijing district stepped up the general ban on cryptocurrency exchanges last month, seeking on a local level to ban over 120 websites of platforms attempting to serve would-be domestic consumers.

This, Hong Kong and Taiwan exchange TideBit CEO Terence Tsang told SCMP, is “targeted at a batch of smaller exchanges that had claimed to be foreign entities, but are in fact operating in China claiming they have outsourced their operations to a Chinese company.”

At the same time, the Post notes, there is currently no successful scheme in operation to block VPNs, allowing smarter traders to maintain access to forbidden online resources.

Chinese traders have pursued various means of crypto trading since authorities first began cracking down on the practice in September 2017, Cointelegraph has reported.

These have taken the form of using Hong Kong as a home from home for platforms themselves, while traders have resorted to peer-to-peer options, something the Chinese government has now also sought to shut down.

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July Roundup: Cryptocurrency Winners and Losers

Top performing cryptocurrencies were Bitcoin, Stellar, and Zcash while Binance Coin, Tezos, OmiseGO and Qtum were the biggest losers.

As another month passes in crypto land it is time to look back at the best and worst performing cryptocurrencies in July. Following the yearly lows in June things promised to be more positive in July. Total market capitalization climbed 14% from $257 billion to $293 billion by the end of the month. The first half of the month was in a down trend with a low of $243 billion on the 13th, this was followed by rally that took total market cap back over $300 billion for the first time since mid-June.

The charge has been largely the work of Bitcoin which has gained around 28% over the month. It started out trading around $6,400 and surged to a high of $8,345 before correcting to $8,180 by the end of July. The significant thing to note, however, is the rise in BTC market dominance as its price climbed at the expense of all of the altcoins. By the end of July Bitcoin commanded 48% of the crypto market, up from 42.6% on July 1st.

July Crypto Winners

Bitcoin Cash made some gains in July, climbing around $66 from $750 to $816 over the month. The almost 9% gain follows a month of heavy losses in June for BCH and was likely driven by its big brother’s performance.

Stellar had a stellar month jumping 53% in July from $0.193 to $0.296 at the end of the month. The price of XLM was driven by a new partnership with Singapore based payments provider, TransferTo, and another partner, SatoshiPay, entering the London Stock Exchange.

Cardano made small gains in July which follows three months of heavy declines. ADA ended the month up 11.6% to $0.154 from $0.138 at the start. It was down trending at the end of July though and Cardano usually falls fast in these market conditions.

Neo managed to claw back some marginal gains of just under 5% in July ending the month at $32.3. Similarly Ethereum Classic made a little over 6% ending July at $17.2, as did Nem climbing slightly by around 5% to $0.172. Rounding out the top twenty Zcash had a very good month climbing almost 28% to end it at $216.

Other crypto winners in July included 0x jumping 48%, BitShares bouncing 31% higher, and Bitcoin Gold climbing 15%.

July Crypto Losers

Ethereum did not move a great deal in July, starting out at around $455 and trading at $457 by the end of the month. ETH briefly broke above $500 on July 18 during the mini bull run but rapidly retreated back to previous levels around $460. It is the third month in a row that Ethereum has made no gains.

Ripple’s XRP lost 4% across July ending the month at $0.446, down from $0.465 on the first. Despite a growing number of partners and services, investment has not flooded back into the firm’s cryptocurrency.

EOS dropped 4.6% across July sliding back from $8.15 to $7.77. Since it’s over-hyped and maligned mainnet launch, and the all-time high of over $21 at the end of April, EOS has crashed 63% in the last three months.

Litecoin did not really move in July, ending the month where it started at just over $81. Stellar’s gain has been Litecoin’s pain as it fell to seventh spot in the coin cap charts. Iota was in a similar situation beginning the month at just over a dollar and ending it just under one.

Tron suffered a 5.2% fall in July with even Justin Sun’s torrent of tweets unable to keep the coin buoyed up. Monero started and finished the month at exactly the same price, $131, and Dash fared similarly dropping just 1.5% over the month.

Following a sterling month in June Binance Coin actually lost ground in July falling 10% from $14.68 to $13.22. Even though Tezos arrived on the scene in terms of market cap it actually got battered price wise in July crashing 53% to just over $2 from $4.4 at the beginning. VeChain had a very turbulent July and lost 5% following some wild swings to end the month at $2.50.

Other crypto losers in July included OmiseGO dropping 12%, Qtum sliding 13%, Lisk losing 8%, Bytecoin falling 6.7%, Zilliqa staying flat, Decred ditching 10%, and Aeternity rounding out the top thirty with no movement.

Bitcoin made most of the gains during the month largely at expense of the rest of the altcoins, only a few of which ended July higher than they started it. Total market capitalization only increased in July because $30 billion was poured back into BTC which showed all the signs of a solid recovery by the end of the month. To summarize crypto winners in July were Bitcoin, Stellar and Zcash. The biggest losers were Binance Coin, Tezos, OmiseGO and Qtum.

 

All figures from Coinmarketcap.com

Previous months: February | March | April | May | June

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SBI Invests $9 Million in Institutional-Grade Cryptocurrency Derivatives Platform


Japanese financial services giant SBI Holdings has invested $9 million in U.S. digital marketplace architect Clear Markets to fund the latter’s creation of a cryptocurrency derivatives trading platform built for institutional investors.

Nikkei Asian Review reports that SBI Crypto Investment has obtained a 12 percent stake in Clear Markets, which is headquartered in Charlotte, NC and has branch offices in New York, London, and Tokyo. Though the terms of the deal were not disclosed, the publication states that SBI likely paid 1 billion yen ($9 million) for its minority ownership position in the company.

In funding Clear Markets, SBI aims to build a derivatives exchange that allows institutional investors to trade investment products tied to the price movements of bitcoin and other cryptoassets. Such products — which may include futures, options, and swaps — allow institutions to hedge other positions that they may have in the cryptocurrency market, reducing risk and enabling them to lock in profits or mitigate losses.

Along with lack of access to regulated custodians, the dearth of cryptocurrency derivatives products is often cited by institutional investors as a reason that they have not felt comfortable allocating capital into this burgeoning industry.

At present, the U.S. is home to two regulated exchanges — CBOE and CME, both based in Chicago — that offer bitcoin futures contracts. Cryptocurrency trading platform LedgerX offers institutional investors several other derivatives products, including calls, puts, and day-ahead swaps, but it has yet to attract consistent, meaningful volume.

Nevertheless, industry analysts are confident that the tide will turn over the course of the next calendar year, largely due to the entry of new custodians into the market and the development of new platforms that provide institutions with more flexibility in how they obtain exposure to cryptoassets.

Earlier this month, SBI became the first banking institution to directly launch a cryptocurrency exchange. That platform, VCTRADE, serves Japanese retail investors.

Previously, SBI — which has formed a close partnership with U.S. blockchain startup Ripple — led funding rounds in several large cryptocurrency exchanges, including the Tokyo-headquartered bitFlyer and the San Francisco-based Kraken.

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Cryptocurrency Exchange Binance Buys Ethereum Wallet Service in First-Ever Acquisition


Binance, one of the world’s two largest cryptocurrency exchanges, has just completed its first-ever acquisition.

According to TechCrunch, the Malta-based exchange operator acquired Trust Wallet, creator of the eponymous mobile Ethereum wallet that includes support for ether, as well as ERC-20 and ERC-223 tokens. Terms of the deal have not been disclosed, but Binance confirmed that it included a mixture of cash, Binance stock, and Binance tokens (BNB).

Trust Wallet is not one of the better known Ethereum wallets. It has about 50,000 downloads on Android through the Google Play store, earning a 4.6 out of 5 star rating from 1,138 reviewers. Download statistics were not immediately available from Apple’s App Store, but the wallet had a comparable rating from a similar number of reviewers. For comparison, imToken, the most popular Ethereum wallet, has more than 5 million monthly active users, most of whom are based in Asia.

“The Trust Wallet team shares the same values as us and the products are very complementary,” Binance CEO Changpeng “CZ” Zhao told the publication. “For users who like to withdraw funds into a wallet now we have a product they can use.”

Zhao said that Trust Wallet will continue to operate independently, with Binance providing some administrative and marketing support and otherwise serving as a “godfather” to the wallet service.

By offloading those functions to Binance HQ, Trust Wallet’s development team will have more time to focus on its core product offering, perhaps hastening its planned support for other cryptocurrencies including bitcoin, EOS, and NEO.

The Trust Wallet acquisition comes as Binance is actively working on building a decentralized exchange (DEX), complete with its own public blockchain. Such platforms, which have also been announced by several other major exchanges, will allow users to trade cryptocurrencies without entrusting their funds to a centralized custodian and placing them at risk of hacks and exit scams.

Zhao said that Trust Wallet will serve as one of the Binance DEX’s default wallets, though it’s not clear when the platform will go live.

Binance’s centralized exchange currently ranks as the world’s second-largest cryptocurrency trading platform, with a daily volume of $1.3 billion. Only OKEx, which, like Binance, has created its own crypto token, opened an office in blockchain-friendly Malta, and unveiled plans to create a DEX, has processed more trading volume over the past 24 hours.

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Analysts: China’s Cryptocurrency Could Be Bigger Than Bitcoin

News

Experts believe China is far from uninterested in cryptocurrency despite its overt efforts at bans of one kind or another. In fact, it is widely believed the communist government is contemplating its own version of a state backed cryptocurrency. Should that be the case, analysts assume it could potentially be bigger than Bitcoin.

Also read: Coinbase Flexes Muscle, Creates Political Action Committee

IG: China Creating Government-Backed Cryptocurrency

Moving from speculation to near assurance, UK-headquartered online trading provider, IG Group (LON: IGG), posted a subtitle, “China to introduce a national cryptocurrency.” In all but assuming such was imminent, the report continued, “In a contradictory move to banning bitcoin, the People’s Bank of China (PBoC) initiated plans to create its own official digital currency.”

That’s a heck of a statement, and there seems to be little outside of this assertion to verify IG’s claims. The financial group itself has been around since 1974, and it provides clients with educational resources on leveraged FX products and CFDs, hoping they will earn in times of up or down markets.

Bigger Than Bitcoin: Experts Say Chinese Government Crypto a Real Threat

The company further acknowledges, “There has been no official statement regarding the national cryptocurrency’s name or launch date, which makes it difficult to prepare for. It would likely be introduced alongside China’s primary currency, the yuan, with the intention of catering to the millions of citizens who lack access to standard banking services.”

The Chinese government has been making noise of late, however. Its Center for Information Industry Development continues to release crypto rankings for some odd reason. It recently inked a crypto regulation deal with South Korea. And with a reported 3 million Chinese citizens continuing to hold their digital assets even despite bans, there does seem to be something of an appetite.

Bigger Than Bitcoin: Experts Say Chinese Government Crypto a Real Threat

What If?   

“The PBoC’s vision for its own cryptocurrency is based on taking back control of the finance sector. It has argued that without government control, a cryptocurrency could become a tool for drug dealers and terrorists,” IG insists.

So far, the only government to roll out a state-backed crypto, Venezuela, hasn’t exactly seen dividends. Admittedly, China has over a billion people, and their economy is in far better shape. But there is something to running up against the exact lure of crypto to begin with: folks seek it to be free of government minders. A state crypto just might be the worst of all worlds for those using it. Every transaction would be easily scrutinized, for example.

Bigger Than Bitcoin: Experts Say Chinese Government Crypto a Real Threat
Before the ban, in fact, China alone was basically the global crypto trading market for all intents and purposes. Just before the huge rise in prices, the government in September of 2017 lowered the boom. Something like 6% dropped off of BTC’s exchange rate, at least in the short term, as a result. The authors do admit, “It is unlikely that any government-backed cryptocurrency would kill off bitcoin or other large cryptos completely, but some of the smaller alt-coins could have a tougher time of it.” 

However, IG muses, “The PBoC have stated that only the digital currency issued by them will be recognised nationally, excluding other coins such as bitcoin or ether. As foreign cryptos are already banned in China, the government would essentially force mining operations to switch to the national crypto. This could impact global mining communities, and reduce the value of bitcoin as it becomes less popular. A government endorsement could see the crypto gain popularity worldwide, as it becomes seen as credible in the eyes of the public.” And there is more to consider, of course. IG lays out some interesting, moving infographics worth checking out. For now, it’s all just good fun. 

What are your thoughts on a China state-backed crypto? Let us know in the comments section below. 


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Six Tools Used by Hackers to Steal Cryptocurrency: How to Protect Wallets

In the early July, it was reported that Bleeping Computer detected suspicious activity targeted at defrauding 2.3 million Bitcoin wallets, which they found to be under threat of being hacked. The attackers used malware — known as “clipboard hijackers” — which operates in the clipboard and can potentially replace the copied wallet address with one of the attackers.

The threat of hacking attacks of this type has been predicted by Kaspersky Lab as early as November of last year, and they did not take long to become reality. For the time being, this is one of the most widespread types of attacks that is aimed at stealing users’ information or money, with the overall estimated share of attacks to individual accounts and wallets being about 20 percent of the total number of malware attacks. And there’s more. On July 12, Cointelegraph published Kaspersky Lab’s report, which stated that criminals were able to steal more than $9 million in Ethereum (ETH) through social engineering schemes over the past year.

 

Image source: Carbon Black

Briefly about the problem

The already mentioned Bleeping Computer portal, which works on improving computer literacy, writes about the importance of following at least some basic rules in order to ensure a sufficient level of protection:

“Most technical support problems lie not with the computer, but with the fact that the user does not know the ‘basic concepts’ that underlie all issues of computing. These concepts include hardware, files and folders, operating systems, internet and applications.”

The same point of view is shared by many cryptocurrency experts. One of them, Ouriel Ohayon — an investor and entrepreneur — places the emphasis on the personal responsibility of users in a dedicated Hackernoon blog:

“Yes, you are in control of your own assets, but the price to pay is that you are in charge of your own security. And since most people are not security experts, they are very much often exposed  —  without knowing. I am always amazed to see around me how many people, even tech savvy ones, don’t take basic security measures.”

According to Lex Sokolin — the fintech strategy director at Autonomous Research — every year, thousands of people become victims of cloned sites and ordinary phishing, voluntarily sending fraudsters $200 million in cryptocurrency, which is never returned.

What could that tell us? Hackers that are attacking crypto wallets use the main vulnerability in the system — human inattention and arrogance. Let’s see how they do it, and how one can protect their funds.

250 million potential victims

A study conducted by the American company Foley & Lardner showed that 71 percent of large cryptocurrency traders and investors attribute theft of cryptocurrency to the strongest risk that negatively affects the market. 31 percent of respondents rate the hackers’ activity threat to the global cryptocurrency industry as very high.

Foley & Lardner

Image source: Foley & Lardner

Experts from Hackernoon analyzed the data about hacking attacks for 2017, which can be conditionally divided into three large segments:

– Attacks on the blockchains, cryptocurrency exchanges and ICOs;

– Distribution of software for hidden mining;

– Attacks directed at users’ wallets.

Surprisingly, the article “Smart hacking tricks” that was published by Hackernoon didn’t appear to get wide popularity and warnings that seem to be obvious for an ordinary cryptocurrency user must be repeated again and again, as the number of cryptocurrency holders is expected to reach 200 million by 2024, according to RT.

According to research conducted by ING Bank NV and Ipsos — which did not consider East Asia in the study — about nine percent of Europeans and eight percent of U.S. residents own cryptocurrencies, with 25 percent of the population planning to buy digital assets in the near future. Thus, almost a quarter of a billion potential victims could soon fall into the field of hacking activity.

Apps on Google Play and the App Store

Tips e
– Don’t get carried away with installing mobile applications without much need;
-Add Two Factor Authorization-identification to all applications on the smartphone;
-Be sure to check the links to applications on the official site of the project.

Victims of hacking are most often smartphone owners with Android operating system, which does not use Two Factor Authentication (2FA) — this requires not only a password and username, but also something that user has on them, i.e., a piece of information only they could know or have on hand immediately, such as a physical token. The thing is that Google Android’s open operating system makes it more open to viruses, and therefore less safe than the iPhone, according to Forbes. Hackers add applications on behalf of certain cryptocurrency resources to the Google Play Store. When the application is launched, the user enters sensitive data to access their accounts and thereby gives hackers access to it.

One of the most famous targets of a hacking attacks of this type were traders of the American cryptocurrency exchange Poloniex, which downloaded mobile applications posted by hackers on Google Play, pretending to be a mobile gateway for the popular crypto exchange. The Poloniex team didn’t develop applications for Android, and its site doesn’t have links to any mobile apps. According to Lukas Stefanko, a malware analyst at ESET, 5,500 traders had been affected by the malware before the software was removed from Google Play.

Users of iOS devices, in turn, more often download App Store applications with hidden miners. Apple was even forced to tighten the rules for admission of applications to its store in order to somehow suspend the distribution of such software. But this is a completely different story, the damage from which is incomparable with the hacking of wallets, since the miner only slows down the computer operation.

Bots in Slack

Tips:
-Report Slack-bots to block them;
-Ignore bots’ activity;
-Protect the Slack-channel, for example, with Metacert or Webroot security bots, Avira antivirus software or even built-in Google Safe Browsing.

Since mid-2017, Slack bots aimed at stealing cryptocurrencies have become the scourge of the fastest-growing corporate messenger. More often, hackers create a bot that notifies users about problems with their cryptos. The goal is to force a person to click the link and enter a private key. With the same speed with which such bots appear, they are blocked by users. Even though the community usually reacts quickly and the hacker has to retire, the latter manages to make some money.

Steemit @sassal

Image source: Steemit @sassal

The largest successful attack by hackers through Slack is considered to be the Enigma group hack. The attackers used Enigma’s name — which was hosting its presale round — to launch a Slack bot, and ended up defrauding a total of $500,000 in Ethereum from credulous users.

Add-ons for crypto trading

Tips
-Use a separate browser for operations with cryptocurrencies;
-Select an incognito mode;
-Do not download any crypto add-ons;
-Get a separate PC or smartphone just for crypto trading;
-Download an antivirus and install network protection.

Internet browsers offer extensions to customize the user interface for more comfortable work with exchanges and wallets. And the issue is not even that add-ons read everything that you are typing while using the internet, but that extensions are developed on JavaScript, which makes them extremely vulnerable to hacking attacks. The reason is that, in recent times — with the popularity of Web 2.0, Ajax and rich internet applications — JavaScript and its attendant vulnerabilities have become highly prevalent in organizations, especially Indian ones. In addition, many extensions could be used for hidden mining, due to the user’s computing resources.

Authentication by SMS

Tips:
-Turn off call forwarding to make an attacker’s access to your data impossible;
-Give up 2FA via SMS when the password is sent in the text, and use a two-factor identification software solution.

Many users choose to use mobile authentication because they are used to doing it, and the smartphone is always on hand. Positive Technologies, a company that specializes in cybersecurity, has demonstrated how easy it is to intercept an SMS with a password confirmation, transmitted practically worldwide by the Signaling System 7 (SS7) protocol. Specialists were able to hijack the text messages using their own research tool, which exploits weaknesses in the cellular network to intercept text messages in transit. A demonstration was carried out using the example of Coinbase accounts, which shocked the users of the exchange. At a glance, this looks like a Coinbase vulnerability, but the real weakness is in the cellular system itself, Positive Technologies stated. This proved that any system can be accessed directly via SMS, even if 2FA is used.

Public Wi-Fi

Tips:
-Never perform crypto transactions through public Wi-Fi, even if you are using a VPN;
-Regularly update the firmware of your own router, as hardware manufacturers are constantly releasing updates aimed at protecting against key substitution.

Back in October last year, in the Wi-Fi Protected Access (WPA) protocol — which uses routers — an unrecoverable vulnerability was found. After carrying out an elementary KRACK attack (an attack with the reinstallation of the key) the user’s device reconnects to the same Wi-Fi network of hackers. All the information downloaded or sent through the network by a user is available to attackers, including the private keys from crypto wallets. This problem is especially urgent for public Wi-Fi networks at railway stations, airports, hotels and places where large groups of people visit.

Sites-clones and phishing

Tips:
-Never interact with cryptocurrency-related sites without HTPPS protocol;
-When using Chrome, customize the extension —  for example, Cryptonite — which shows the addresses of submenus;
-When receiving messages from any cryptocurrency-related resources, copy the link to the browser address field and compare it to the address of the original site;
-If something seems suspicious, close the window and delete the letter from your inbox.

These good old hacking methods have been known since the “dotcom revolution,” but it seems that they are still working. In the first case, attackers create full copies of the original sites on domains that are off by just one letter. The goal of such a trick — including the substitution of the address in the browser address field — is to lure a user to the site-clone and force them to enter the account’s password or a secret key. In the second case, they send an email that — by design — identically copies the letters of the official project, but — in fact — aims to force you to click the link and enter your personal data. According to Chainalysis, scammers using this method have already stolen $225 million in cryptocurrency.

Cryptojacking, hidden mining and common sense

The good news is that hackers are gradually losing interest in brutal attacks on wallets because of the growing opposition of cryptocurrency services and the increasing level of literacy of users themselves. The focus of hackers is now on hidden mining.

According to McAfee Labs, in the first quarter of 2018, 2.9 million samples of virus software for hidden mining were registered worldwide. This is up by 625 percent more than in the last quarter of 2017. The method is called “cryptojacking” and it has fascinated hackers with its simplicity in such away that they massively took up its implementation, abandoning the traditional extortion programs.

The bad news is that the activity of hacking has not decrease in the least bit. Experts of the company Carbon Black — which works with cybersecurity — revealed that, as of July 2018, there are approximately 12,000 trading platforms on the dark web selling about 34,000 offers for hackers. The average price for malicious attack software sold on such a platform is about $224.

Carbon Black

Picture source: Carbon Black

But how does it get on our computers? Let’s return to the news with which we started. On June 27, users began leaving comments on Malwarebytes forum about a program called All-Radio 4.27 Portable that was being unknowingly installed on their devices. The situation was complicated by the impossibility of its removal. Though, in its original form, this software seems to be an innocuous and popular content viewer, its version was modified by hackers to be a whole “suitcase” of unpleasant surprises.

Of course, the package contains a hidden miner, but it only slows down the computer. As for the program for monitoring the clipboard, that replaces the addresses when the user copies and pastes the password, and it has been collecting 2,343,286 Bitcoin wallets of potential victims. This is the first time when hackers demonstrated such a huge database of cryptocurrency owners — so far, such programs have contained a very limited set of addresses for substitution.

After replacing the data, the user voluntarily transfers funds to the attacker’s wallet address. The only way to protect the funds against this is by double-checking the entered address when visiting the website, which is not very pleasant, but reliable and could become a useful habit.

After questioning of victims of All-Radio 4.27 Portable, it was discovered that malicious software got on their computers as a result of unreasonable actions. As the experts from Malwarebytes and Bleeping Computer found out, people used cracks of licensed programs and games, as well as Windows activators like KMSpico, for example. Thus, hackers have chosen as victims those who consciously violated copyright and security rules.

Well-known expert on Mac malware Patrick Wardle often writes in his blog that many viruses addressed to ordinary users are infinitely stupid. It’s equally silly to become a victim of such hacking attacks. Therefore, in conclusion, we’d like to remind you of the advice from Bryan Wallace, Google Small Business Advisor:

“Encryption, anti-virus software, and multi-factor identification will only keep your assets safe to a point; they key is preventive measures and simple common sense.”

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Japanese Cryptocurrency Exchanges Plan Limits on Borrowed Margin Trading


Japan’s primary self-regulatory body for cryptocurrency exchanges is finalizing a proposal to enforce a limit on the amount of funds investors can borrow for margin trading of cryptocurrencies.

The Japan Virtual Currency Exchange Association (JVCEA) is proposing a 4-to-1 limit on margin trading wherein investors will only be allowed to borrow up to four times their original deposit, Nikkei reported Thursday.

The proposed plan, the JVCEA explained, is to limit the risk of losses faced by investors in a relatively volatile market that sees no restrictions on margin trading borrowing at the present time. The report further revealed that some domestic exchanges a leverage limit of up to 25-to-1, the default upper limit margin for foreign exchange trading.

The body is also considering exceptions under certain conditions such as effecting default circuit-breaker mechanisms based on market conditions.

While Japan’s Financial Services Authority (FSA) has taken an hands-on approach to regulating the cryptocurrency sector – domestic cryptocurrency exchanges are required to be licensed and registered by the FSA – the lack of rules in margin trading sees the cryptocurrency sector devising its own draft rules that includes bans on insider trading and plausibly restricting support for privacy-focused coins like Dash and Monero.

Launched in March, the JVCEA is a concentrated effort between Japan’s sixteen licensed cryptocurrency exchange operators to regain confidence and safeguard investors in the space following January’s $530 million hack of Tokyo-based exchange Coincheck.

According to the FSA’s own figures released in April, there are over 3.5 million active crypto traders in the country while annual trading in bitcoin soared from $22 million in 2014 to $97 billion in 2017. Pointedly, a significant majority of trading comprised of derivatives trading of cryptocurrencies, amounting to $543 billion last year.

Meanwhile, the FSA is also rumored to be looking at revising its existing regulatory framework by bringing cryptocurrency exchanges under the purview of the Financial Instruments and Exchange Act (FIEA). In such an event, the cryptocurrency industry would operate under the same laws afforded to traditional stock brokerages and securities firms.

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Vietnam’s Securities Watchdog Bans Industry from Cryptocurrency Activity: Report


The State Securities Commission of Vietnam (SSC), the country’s stock market watchdog, has reportedly forbidden industry firms from engaging in cryptocurrency-related activities.

Vietnam’s official state news agency is reporting that the country’s securities markets watchdog has ‘required’ the industry to not partake in “any issuance, transaction or brokerage activities related to cryptocurrencies” in a circular to all relevant institutions.

‘Under an announcement released early this week, SSC banned public companies, securities companies, fund management companies and securities investment funds from taking part in the activities,” an excerpt from the news report added…’and required them to obey legal regulations on anti-money laundering.”

At press time, the announcement enforcing a ban of cryptocurrency-related activities among companies within the sector could not be found on the SSC’s official website. The most-recent related investor notice was published on May 2, 2018, with the regulator warning investors to be cautious of investing in cryptocurrencies. The notice also urged industry firms including brokerages and asset managers to refrain from any cryptocurrency transactions until a legal framework is released.

According to the report, the SCC explains that its ban is in response to a directive [PDF] by the office of Nguyen Xuan Phuc, Vietnam’s Prime Minister on April 11 ordering several ministries, law enforcement authorities and the country’s central bank to strengthen the management of “activities related to bitcoin and other cryptocurrencies.”

That particular directive was a direct consequence of an unprecedented nationwide scam involving two fraudulent initial coin offerings (ICOs) that swindled 32,000 Vietnamese citizens out of a massive $660 million.

At the turn of 2018, a new legal framework came into effect outlawing cryptocurrency’s usage for payments in Vietnam. The prohibitive stance also sees adopters facing criminal prosecution with fines up to $9,000.

Last week, the State Bank of Vietnam, the country’s central bank, agreed with a government ministry’s proposal to suspend imports of Application-specific integrated circuit (ASIC) cryptocurrency mining equipment.

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Cryptocurrency Market Update: Stellar Flies High on New Partnership

Crypto land is still in the green, Stellar, ChainLink, Stratis and Komodo making good gains.

The correction has not happened yet and markets are still creeping higher. Only Bitcoin and a couple of altcoins seem to be the beneficiaries however. Total market capitalization has broken $300 billion and is holding just above it at the moment.

Bitcoin has remained stable on the day with no gains or losses, holding at $8,240 at the time of writing. It still may pull back to below $8k as traders take profits but is steady this morning. Ethereum has made a marginal gain of 1.8% to trade at $485 but has been flat over the week posting no gains since the same time last Thursday.

Altcoins are generally in the green at the moment with one or two enjoying double digit growth this morning. One of those coins is Stellar Lumens which is up 11% on the day according to Coinmarketcap. XLM is currently trading at $0.332, which is up from $0.297 this time yesterday. On the week Stellar has made 9% from $0.307 this time last week. The monthly picture looks even better with a gain of 73% from just under $0.20 this time last month. Against Bitcoin XLM is up 11.4% on the day to 4070 satoshis but down 3% on the week from 4200 sats on Thursday last week.

Momentum has been driven by the TransferTo partnership which will enable Stellar to be used in cross-border transactions in over 70 countries.

The announcement goes on to state; “Under this collaboration, financial institutions and partners of both Stellar.org and TransferTo will benefit from the combined network coverage, and be able to leverage new technologies to send and receive money more efficiently to more than 70 countries.”

Binance currently takes the bulk of Lumens trade with around 45% of the total. Daily volume has doubled over the past 24 hours from $100 million to $200 million as Stellar makes its move. It has already surpassed Litecoin in the market cap charts with $6.2 billion and sixth palace.

Other altcoins making moves today include ChainLink and Stratis which are both up around 15% and Komodo climbing 9% on the day. Total crypto market capitalization has inched up 1.6% to $303 billion but trade volume has plunged 25% from $20 to $15 billion on the day.

More on Stellar can be found here: https://www.stellar.org/

FOMO Moments is a section that takes a daily look at the top 25 altcoins during the current trading session and analyses the best performing ones, looking for trends and possible fundamentals.

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Indian Law Commission Recognizes Cryptocurrency as an ‘Electronic Payment’: Report


The cryptocurrency ecosystem in India may have just found a lifeline, albeit an unlikely one.

According to a legal report released in July 2018, the country’s lawmakers are considering legalizing the multi-million dollar sports betting industry – naming cryptocurrencies as a legally acceptable payment method akin to credit and debit cards.

India Explores Cryptocurrencies in Sports Betting

Titled “Legal Framework: Gambling and Sports Betting including Cricket in India,” the report explores the usage of digital payment mechanisms, including cryptocurrencies, as the country prepares to legalize the sports betting sector.

The report stems after police investigations into million-dollar betting allegations during the popular Indian Premier League (IPL) cricket matches revealed fan-favorite celebrities and politicians used “black money” for placing their bets, superseding the government’s widespread, yet ineffective, crackdown on betting circles.

After observing this fallacy, judges of the Indian Supreme Court proposed the legalization of the sports betting market, while appointing the Lodha Committee to explore this suggestion further while collaborating with the Board of Control for Cricket India (BCCI).

The committee stated there is a subtle boundary between match-fixing and recreational betting, and the former could undoubtedly remain a legal offense while the latter could serve as a means of generating tax, after legal regulation.

Interesting, the law commision considered cryptocurrencies as a method of digital payment akin to credit cards, debit cards, and net banking, stating:

“Similar restrictions should also be prescribed for the purpose of the amount one would be allowed to stake while using electronic money facilities of the likes of credit cards, debit cards, net-banking, VCs, etc.”

Citizens Await Cryptocurrency Regulations

The commission noted betting activities have become potentially more accessible in recent years after the rise of cryptocurrencies “since the transactions are difficult to trace.”

Unlike many countries, the Indian government made sports betting, and other forms of gambling, an illegal activity since the 1800’s. However, people flocked to using cash for placing their bets and created a criminal, yet vibrant, betting industry over the years.

Nischal Shetty, the founder of peer-to-peer cryptocurrency exchange WazirX, told Quartz:

“It is the first time that a body appointed by the government has given recognition to virtual currencies that they have value and can be used for a transaction. Therefore, it is a very positive sign, especially considering the report has come out after a lot of deliberation.”

Following the Indian central bank’s crackdown on cryptocurrencies, crypto-enthusiasts are awaiting developments and regulations for the burgeoning sector. At the time of writing, money cannot be withdrawn from cryptocurrency exchanges, although peer-to-peer exchanges like WazirX and Koinex Loop make cashing out possible.

The much-awaited July regulation on the legality of cryptocurrencies was shifted for September 11, 2018, hearing in the Indian Supreme court, as reported by CCN.

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Coinbase Enables Cryptocurrency Gift Cards in Europe and Australia


Cryptocurrency exchange giant Coinbase has struck a new partnership to enable customers in Europe and Australia spend their cryptocurrency at major retailers and services including Nike and Uber.

Coinbase is partnering WeGift, a London-based FinTech startup for the new service which allows its users to fundamentally withdraw their cryptocurrency into gift cards that can be used at over 120 retailers including Uber, Amazon and Tesco, among others.

The upside, WeGift explains on its website, is zero swap fees alongside an average bonus of 5% in gift card value after converting crypto from the user’s Coinbase account. ‘Customers purchasing an e-gift card will enjoy zero Coinbase withdrawal fees and bonuses on select e-gifts,’ Coinbase UK CEO Zeeshan Feroz said in an announcement.

“With the launch of e-gift cards, customers have a new option to spend their crypto balances, realizing its value to buy tangible things or experiences,” he added, underlining the benefits of enabling users to spend their cryptocurrency for physical goods and services.

He stated:

“From converting bitcoin into Uber credits or ether into a Nike shopping spree, customers will have greater flexibility and control over how they use their crypto.”

At launch, the service is only available to customers in Australia, the United Kingdom, Spain, France, Italy and the Netherlands. With a presence in 32 countries, Coinbase intends to rollout the feature in other markets over the next three months.

The new service follows the operator’s marked expansion into Europe this year after the San Francisco-based crypto giant received an e-money license by the Financial Conduct Authority (FCA), the UK’s financial regulator, granting it the means to provide e-money services as a cash alternative for 23 EU nations and the UK.

Coinbase’s other notable expansion in recent times sees the exchange carve an entry into Japan, one of the world’s largest crypto trading markets.

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FINMA Seeks to Stem Exodus of Swiss Cryptocurrency Firms

Finance

The Swiss Financial Market Supervisory Authority (FINMA) has met with representatives of the country’s banking sector in the hopes of stemming a nascent exodus among cryptocurrency companies from Switzerland. The companies’ departures have been attributed to two Swiss banks’ decisions to no longer provide financial services to businesses dealing with virtual currencies.

Also Read: India Exchange Unocoin Suspends Withdrawals Following Central Bank Demands

FINMA Acts to Prevent Crypto Exodus

FINMA Seeks to Stem Exodus of Swiss Cryptocurrency FirmsSwitzerland’s financial regulators are taking steps intended to stem the perceived exodus of cryptocurrency companies from the nation, recently holding discussions with the Swiss National Bank and bankers’ association on how to increase the accessibility of financial services to cryptocurrency ventures.

As it stands, many analysts have predicted that many companies operating with virtual currencies will continue to leave Switzerland in favor of jurisdictions whose financial institutions are more amenable to crypto companies, including Liechtenstein, Gibraltar and the Cayman Islands.

Officials Seek to Preserve Swiss Crypto Industry

Despite cryptocurrency-related activities comprising a small portion of Switzerland’s financial industries, Swiss officials are viewing the country’s virtual currency as a valuable asset that should be preserved.

The finance director of Zug – a Swiss canton has been dubbed “Crypto Valley” following the establishment of between 200 and 300 virtual currency companies in the jurisdiction during recent years – Heinz Taennler, has warned that the crypto exodus may continue should the government fail to take action to guarantee the provision of financial services firms operating with virtual currencies.

“All their banking relationships are going to Liechtenstein,” Mr. Taennler stated. “There are hundreds of jobs that have been created, and every job is important.”

Virtual Currency Firms Appeal to Central Bank

According to Thomas Moser, an alternate member of the governing board of the Swiss National Bank, several cryptocurrency companies appealed to the country’s central bank regarding concerns pertaining to the provision of financial services to the sector.

Mr. Moser stated that “They raised concerns about problems with opening bank accounts, which was a worry for them, and asked for help. I said this was not something the [Swiss National Bank] dealt with, but they should speak with FINMA.”

“We would not want to close the door on the opportunities that such innovation (cryptocurrencies) might bring,” Moser added.

Do you think that Swiss crypto firms will continue to seek alternative jurisdictions? Join the discussion in the comments section below!


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How Cryptocurrency Prices Work, Explained

4.

Tracking the price of Bitcoin gives us a good indication of the overall cryptocurrency market in the past 18 months.

Bitcoin started 2017 at under $1,000 and took a dip when China announced investigations into cryptocurrency exchanges in the country. At that point, the majority of Bitcoin trading took place in China, and the price of Bitcoin dropped to lows of around $775, while the overall cryptocurrency market cap stood at close to $15 billion.

Bitcoin made a slight recovery to well over $1,000 but by March 2017, dropped back down to below $1,000 when the SEC denied the go-ahead for a Bitcoin ETF. The overall market cap dropped $5 billion in two days.

In April 2017, Japan declared Bitcoin legal currency, which saw the price jump back up over $1,000. The total cryptocurrency market cap stood at around $26 billion at that stage.

From April 2017 to July 2017, Bitcoin steadily climbed close to $3,000 while the overall market cap went past $100 billion. However, by mid-July 2017, the price came crashing down to below $2,000 in a few short days when the Bitcoin/Bitcoin Cash split took place.

The effects were short-lived and, by the end of August 2017, Bitcoin recovered to almost $5,000 and the overall cryptocurrency market cap came close to $170 billion.

But then, on Sept. 4, China famously banned ICOs. The move, however, caused far less of a correction than was expected. Bitcoin did drop to around $3,300 by mid-September 2017 but quickly recovered and, by the end of September 2017, it reached well over $4,000. The cryptocurrency market cap was just below $150 billion at this point.

From here, the Bitcoin price really picked up momentum. By the end of October 2017, it had gone past the $6,000 mark and finished November 2017 at just under $10,000 per BTC.

In mid-December 2017, it reached highs of $20,000, but it finished the year at around $15,000, while the market cap closed the year at around $235 billion.

By the end of January 2018, the price of Bitcoin had come back down to around $10,000 and reached lows of $6,000 during February 2018.

In February 2018, we saw Bitcoin push back up past $11,000 and the overall market cap recovering to around $500 billion — after reaching lows of around $300 billion earlier in the month.

Since then, amid talks of increased regulation across the various markets, and other bumps — such as Google banning crypto ads — the price of Bitcoin has been on a steady downward trend, despite occasional, short-lived recoveries. As of the beginning of July 2018, Bitcoin is hovering around the $6,000 mark, with the total cryptocurrency market cap holding steady at around $250 billion.

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Ban U-Turn? India’s Central Bank Admits Cryptocurrency Regulation is Necessary


In a first, India’s central bank has called for the regulation of the domestic cryptocurrency sector during Friday’s hearing at the Supreme Court, weeks after enforcing a banking ban against crypto companies.

Earlier in April, the Reserve Bank of India (RBI) issued a circular that forbade all financial institutions – banks included – from offering services to businesses in the cryptocurrency sector. Furthermore, the policy also mandated banks to stop customers from purchasing cryptocurrencies using fiat funds in their banking accounts.

A public interest litigation (PIL) filed in India’s Supreme Court calling for regulation of the cryptocurrency sector saw the central bank absolve itself of any responsibility in framing a policy, claiming it was a policy matter requiring legislation through India’s Parliament rather than a subject of debate among courts.

Amazingly, the RBI then admitted that it – as a central bank responsible for framing monetary policies in the country – conducted no research nor consultation before enforcing the prohibitive policy in keeping banks from offering services to cryptocurrency businesses and exchanges.

As CCN reported last week, India’s Supreme Court finalized a September date as the final hearing from the crypto industry petitioning against the central bank banking ban. It has also come to light that the lawyer representing the central bank also underlined the need to regulate the sector, the first notable instance wherein the RBI has called for regulation as a matter of policy.

As reported by the Financial Express, RBI special counsel Shyam Divan told a bench led by chief justice Dipak Misra and justices AM Khanwilkar and DY Chandrachud that it was necessary to regulate bitcoin and other cryptocurrencies to prevent “illegal transactions” in the country. Last week’s hearing also had India’s attorney general KK Venugopal in attendance, signifying the importance of the petition and case overall.

The RBI’s softening stance, after years of repeated public warnings by the central bank, coincides with the timing of a final draft of regulations developed by an inter-governmental committee tasked to formulate a policy for the sector in the country.

Rumors are that Indian authorities are looking to classify cryptocurrencies as commodities, a move that would see cryptocurrency trading markets regulated similarly to traditional mainstream financial markets.

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Insurance Giants See ‘Big Opportunity’ in Cryptocurrency Storage Coverage


Big insurance companies such as XL Group, AIG and Chubb are quietly offering cryptocurrency insurance as cryptocurrencies and blockchain technology continue to gain acceptance.

While the insurance companies active in this sector are not doing a lot to publicize their activities, those interviewed said they can avoid liabilities.

According to Bloomberg more than a dozen underwriters are providing cryptocurrency coverage, although most insurers, when contacted, chose not to be interviewed.

More crypto startups, meanwhile, are viewing insurance coverage as important as they recognize the need for protection from crime, as well as coverage for legal actions against executives and board members.

Lucas Nuzzi, director of technology at Digital Asset Research, said insurance is a necessity for crypto companies, as such protection can make it easier for companies to work with banks.

Premiums Not Cheap

The premiums are not inexpensive, however, as underwriters in some cases are charging more than five times what an average business would pay to protect against loss and theft.

Crypto startups can pay premiums up to 5% of coverage limits annually. Companies seeking more coverage can require up to 12 underwriters, each of which can offer $5 million to $15 million in coverage one source noted.

Mike Belshe, CEO of BitGo, said the company met with about 75 insurers in May after discontinuing its coverage in 2016 due to the cost. The company became one of the first in the industry to receive insurance in 2015.

Allianz Sees ‘Big Opportunity’

Christian Weishuber, who represents Allianz, said cryptocurrency storage insurance represents a big opportunity. The insurer has offered individual coverage for cryptocurrency theft for the past year. Weishuber said digital assets are becoming more relevant to the “real economy.”

Insurance brokers Aon and Marsh & McLennan both said cryptocurrency insurance business has been good this year, despite the fact that the cost is too high for many companies in the space.

Marsh & McLennan created a 10-person team to service blockchain startups.

Aon has streamlined its standard insurance policy to hasten the underwriting process. The brokerage, which claims to account for half of the cryptocurrency insurance market, said some insurers have adjusted their general policies to offer cryptocurrency specific coverage.

Neither brokerage would name their insurer partners.

The brokerages also said that they are not familiar with any insurer having to pay any claims for crypto losses, despite all the reports about thefts and hacks.

Policies Vary

The coverages vary.

AIG said that after meeting with cryptocurrency trading platforms and custodians, the insurer has included crypto coverage in its standard policy forms, but it did not want to say how much business it has done in this area.

XL, for its part, said it has taken a careful approach to assessing risks and has analyzed the coverage on an individual case basis, but did not wish to give more details.

Chubb indicated it does not seek to offer coverage for crypto wallets or exchanges, and it did not wish to specify what types of crypto businesses it covers.

Lloyd’s of London this month released guidance on crypto coverage and instructed agents to exercise caution regarding cryptocurrencies.

Coinbase has coverage for a portion of its cryptocurrency holdings, including coverage for funds stored in hot wallets. The company disclosures do not indicate the amount that is covered for the deposits stored offline for security purposes.

Japan Leads

Coverage appears to be more available to companies in Japan.

Mitsui Sumitomo Insurance in Japan covers both internal and external risks, including employee theft, mistakes, unauthorized access. The insurer also provides security audits and does background checks for employees.

A transaction services provider, bitFlyer, offers coverage for payment transactions in Japan, covering merchants for gateway issues, mishaps and transaction delays to companies with POS systems. The coverage is offered through Mitsui Sumitomo Insurance.

Some Consider Self Insuring

Some crypto companies are exploring self insurance because of the high cost of available policies. In addition to the high cost, policies can take months to approve, and they include exclusions. A loss from service interruption might be covered while loss from theft is not. Some claim the exclusions render some policies useless.

Trustology, a London-based company that focuses on crypto custody services, is looking to protect accounts up to 85,000 pounds, which is standard coverage for a U.K. bank account, and is considering self insuring its customers’ funds.

Cryptalgo, which assists institutional traders with orders, is exploring self insuring on account of all the exclusions in some policies, according to company COO Hillik Nissani.

Also read: Cyberinsurance providers are coming for cryptocurrency exchanges

Insurers Face Questions

Insurers meanwhile face a number of questions as they expand into the cryptocurrency space.

Because cryptocurrency values fluctuate due to volatility, coverage can fall short of potential losss. Such a fate befell Circle Internet Financial, CEO Jeremy Allaire said.

To address this concern, insurance companies may need to insure based on value regardless of price. The fluctuations can result in major fluctuations in premiums that could prove unmanageable to both underwriters and their customers.

Phishing scams present another challenge. If such an attack causes cryptocurrency getting sent to the wrong wallet because the customer failed to check the SSL certificate to verify the identity of the server, is the insurance company liable for the loss?

Featured image from Shutterstock.

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A Cutting-Edge Multi-Cryptocurrency Hardware Crypto-Wallet from OraSaifu is About to Hit the Global Market


This is a paid-for submitted press release. CCN does not endorse, nor is responsible for any material included below and isn’t responsible for any damages or losses connected with any products or services mentioned in the press release. CCN urges readers to conduct their own research with due diligence into the company, product or service mentioned in the press release.

Bitcoin Press Release: Smart-tech company OraSaifu announces a revolutionary payment product; a hardware cryptocurrency wallet with a digital card screen display, packed with state-of-the-art security. It will enter the market in mid-July 2018.

July 20th, 2018, Tokyo, Japan  – The number of active blockchain wallet users today exceeds 26 million. In 2018 to date, Bitcoin wallet holders grew  to over 10 million. Furthermore, the daily trading volume of the top ten cryptocurrencies has risen to $3 Billion, and it’s about time a truly innovative cryptocurrency wallet enter the world.

All-in-One Digital Wallet with Cross Functional Payment Methods

OraSaifu has developed an all in one solution for those seeking a means to store their crypto without resorting to hardware, software or paper wallets. The OraSaifu wallet enhances all the present safety advantages of contemporary USB wallets like Ledger and Trezor, and also turns traditional bank payment cards into a mobile payment mode. For financial asset storage, transactions, and recovery, OraSaifu has created one card with two modes where all crypto digital currency exchange and bank card payment functions co-exist.

The Most Secure and Cutting Edge Wallet Hardware on the Market

What sets OraSaifu apart from any other wallet is its proprietary reliance on both a Trusted Execution Environment  (TEE) and SE technology on one secure chip, ensuring 100% security over assets and Near Field Communication (NFC) payments. OraSaifu provides a cold-wallet mode by using NFC and Offline QR code reading technology, which means it can be completely isolated from online connections. It also has unlimited storage, beating the majority of the competition that offer limited storage and single currency use.

In terms of security, all cryptocurrencies on the device are stored offline and require 2 step authentication for transactions, the USB port required to charge the device doesn’t have data transfer capabilities, thereby keeping private keys isolated from even your computer and reducing the risk of theft to near zero. Presently, OraSaifu supports the following digital currencies: Bitcoin, Ethereum, Litecoin, Zcash, Dash and over 20 other cryptocurrencies. It supports sending payments, receiving, checking account details and managing multiple addresses.

Unprecedented Artistic Design and Features

In addition to its ground-breaking security and functionalities, OraSaifu’s offers the sleekest design of any product in its class. With a diameter of a bank card, feather-like weight 4-inch bezeless display with an 83.37% screen to body ratio, beating out even the latest iPhone. Alongside the nifty asset storage and transaction features described above, the OraSaifu wallet also supports membership cards, business cards, door passes, Gym membership cards and so on. Everything is NFC enabled and OraSaifu can copy, store the data in one ultra-secure place.

Ora wallet also embedded the function of business cards, club membership cards management and door pass for user’s further exploration. Costo, Dicson, Walmart, Gym membership card, a work badge, a smart lock, anything NFC enabled, OraSaifu can copy it and store it, so users don’t have to go through millions of cards just to make through a door.

The OraSaifu hardware wallet is bound to exceed the expectation of most digital currency enthusiasts. It offers an artistic palm-sized interface, unlimited digital payment accessibility, and the highest of security features. Ultimately, the OraSaifu wallet will become a leader in the market for a reason: it is a product users trust with protecting their crypto and ushers in a new seamlessly efficient professional lifestyle.

About ORA

Ora Inc.was founded in 2013, with an ambitious concept to change the world of payments. Our R&D team members are former employees from Microsoft, IBM, Oracle, Nokia and Huawei, all with extensive experience in blockchain, big data, internet security, and mobile hardware fields. The UI design team is from Japan. OraSaifu has gained millions of USD first round angel investment, and is planning for its next round of fundraising from top global investors and institutions. Ora is actively building a connection with industry-leading blockchain technology parties and is looking forward to speaking with more potential business partners. Please contact us for more information.

Early Bird Sale

The OraSaifu smart wallet global launch will start on Indiegogo on July 19th, 2018, if interested in purchasing the OraSaifu wallet, the company has opened registrations for early bird sales here.