Category: Crypto Trends

Summary of the Subcommittee on Capital Markets, Securities, and Investment (Committee on Financial Services) Hearing: “Examining the Cryptocurrencies and ICO Markets” held on Wednesday, March 14, 2018 (10:00 AM)

General summary of the hearing

• The hearing was devoted to discussing cryptocurrencies, initial coin offerings (ICOs), and whether the current regulatory framework adequately protects investors.
• Drawing from a mix of academic and industry witnesses, the hearing highlighted the divergent viewpointson the technology held by some of the members of Congress.
• Ultimately, many subcommittee members expressed a commitment to strike a balance between oversight and the accommodationof technological innovation.

Closing statement by the subcommittee chair, Rep. Bill Huizenga (R-MI)

“I believe this is probably hello, not goodbye.”

Positive viewpoint

• Rep. Tom Emmer (R-MN)
• a member of the cryptocurrency-friendly Congressional Blockchain Caucus
• criticized politicians for calling for new regulations without taking the time to research and develop an adequate understanding of the technology

“I hear elected officials who don’t have any concept of what we’re dealing with here and how exciting it is talking about, ‘Oh my gosh, we’ve got to run in and regulate and create more government infrastructure,’” commented Emmer, adding that although there needs to be modest cryptocurrency regulation, the access to capital that ICOs provide “is something Democrats and Republicans should celebrate.”

• Some twitterers granted him the title of new “cryptodaddy”

Negative viewpoint

• Rep. Brad Sherman (D-CA)
• His biggest contributors are in finance and securities
• Used all the old and regurgitated arguments to bash crypto, really didn’t offer anything new
• Called cryptocurrencies a “crock” and expressed doubt that they can be used to accomplish any social good that cannot be achieved otherwise

“Perhaps we’ll have another hearing after a major terrorist event” is financed using cryptocurrency,” he quipped, adding elsewhere that cryptocurrencies are only “popular with guys who want to sit in their pajamas and tell their wives they’re going to be millionaires.”

• Lots of backlash on twitter

Other views

• Rep. Ted Budd (R-NC)
• Applauded ICOs and other blockchain-related fintech advancements
• Cautioned that the wrong regulations could threaten the US’ status as fintech leader

“Regulation in this space is something that the U.S. has to get right, because poor or rushed policy in cryptocurrencies really threatens our reputation in finance and technology,”

• Rep. Carolyn Maloney (D-NY)
• the ranking Democrat on the subcommittee
• working on a cryptocurrency oversight bill that would cover exchanges that offer trading services for digital assets

• Rep. Bill Huizenga (R-MI)
• chairman of the Capital Markets, Securities and Investment subcommittee
• declared his intention to pursue some kind of legislative action

“This panel, this Congress is not going to sit by idly with a lack of protection for investors.”

Coinbase view (local player in the industry):

• Awesome technology with great potential
• Can only realise this through responsible regulation
• Lack of understanding, and thus, the lack of suitable regulations is harming the space
• Because of this uncertainty, coinbase only operates with 4 cryptocurrencies: BTC, BCH, LTC and ETH
• Coinbase, he said, determined that these digital assets qualify as a “virtual currencies”
• the CFTC’s 2015 guidance that bitcoin and other virtual currencies are commodities,
• a recent ruling that supported the CFTC’s classification of bitcoin as a commodity
• the SEC’s July 2017 DAO report, which referred to Ether as a virtual currency.

Mike Lempres, Chief Legal and Risk Officer at Coinbase wallet and cryptocurrency exchange, stated that the power of the digital currency’s technology can transform “capital formation, innovation and economy,” saying that its “tremendous potential” can be only achieved through “responsible regulation.”

However, at the current stage, the US regulatory system “is harming healthy innovation” due to a lack of understanding of what should be allowed and what should be not, and how digital assets should be considered; either as securities, commodities, property, or money.

For Lempres, the goal is to ensure that potential benefits from new technology are not harmed by uncertainty resulting from “regulatory or legal missteps.” Lempres provided a short review of the main US regulatory bodies such as the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Internal Revenue Service (IRS), the Financial Crimes Enforcement Network (FinCEN), and Federal Trade Commission (FTC)

According to Lempres, the SEC, which is in charge of securities transactions, considers crypto as securities, while the CFTC who fully controls commodity derivatives transactions, claims that tokens are commodities. FinCEN has full authority for Know Your Customer (KYC) and Anti-Money Laundering (AML) matters, and considers tokens to be money. Meanwhile, according to the IRS, the digital coins should be considered as property for tax treatment. According to Lempres, this constitutes an extreme “lack of coordination.”

Answering a question from the Subcommittee chairman Rep. Bill Huizenga, Lempres stated that Coinbase cannot start supporting ICOs until the necessary regulations are adopted.

“We do not support any [ICO] at the current time because we are not sure what the regulatory [treatment] is… We are waiting for the dust to settle between the CFTC and SEC before we electively engage on supporting ICOs.”

* The information contained in this article is for education purpose only and not financial advice. Do your own research before making any investment decisions. (cashcofinancial)

Resources

Video of the hearing – https://www.youtube.com/watch?v=-CCqCsmCDdw

Strong Words, Little Action: ICOs Draw Fire at US Congress Hearing

Crypto Is a ‘Crock’? Twitter Reacts to House ICO Hearing

At DC Hearing, Coinbase Calls Out Federal Regulators For ‘Harming Innovation’

US Congress Debates ICOs, Cryptocurrency Regulation in House Subcommittee Hearing

An analytical piece on how the hearing relates to and impacts ETH

The past few days have seen a lot of negative and even conflicting news coming out from mainstream media regarding crypto. First published by Reuters and picked up by various media outlets such as The New York Times, there were reports on Jan 10th that “South Korea’s Major Cryptocurrency Exchanges Raided by Police, Tax Authorities“. They alleged that cryptocurrency exchange operators were “raided” by police and tax authorities amid suspicions of tax evasion this week.

After this was published, the values of most cryptocurrencies took a plunge. Bitcoin fell from just over $15k to a low of $13,105 in just a few hours. The market cap as a whole also dropped from over $800 billion to now around $700 billion.

Reports were embellished

Reports from inside South Korea however painted a different picture. They have said that the depiction of the events were not accurate and have been embellished by mainstream media outside the country.

https://twitter.com/iamjosephyoung/status/951366424416567297

FUD continues – clarifications from the government

The bad news did not stop there. Reuters also published today that South Korea plans to ban cryptocurrency trading. The reports state that “Justice minister Park Sang-ki said the government was preparing a bill to ban trading of the virtual currency on domestic exchanges.”

Because of the previous reports and the statements made by the Justice Minister, the government had to actually come out and clarify the issue. The Blue House, the executive office and official residence of the South Korean President, had to announce that there will be no cryptocurrency trading ban in the short-term.

https://twitter.com/iamjosephyoung/status/951428854085689344

Do your own due diligence

As with everything, it is always best to exercise due diligence and do your own research. Even with reports from mainstream media, you never know if they have their own agenda and it is important that you don’t give into the fear and hype. (www.biolighttechnologies.com)

With the Christmas holidays over, might we expect new money to pour into the markets? The past week saw a few dips in the market, with bitcoin falling to 11,000 and 13,000 on two separate occasions. The price has rebounded now back to over 16,000.

https://www.youtube.com/watch?v=vv9fZcN5i8I

Crypto as a store of value?

One big vision for crypto was it’s use as an alternative currency. It promoted fast and global transactions, as well as the security of cryptography. However, as we draw to the end of 2017, we’ve found that some cryptos, like bitcoin, have taken on a role as a store of value rather than as a currency. The popularity and high demand of bitcoin has caused transaction fees to sky rocket. As a result, using it for daily spending is very cost inefficient as the transaction fees may very well take up a large percentage of the actual purchase.

Nonetheless, it still works very well as a store of value. It’s accessible all around the world, as long as you have an internet connection you can send and receive it. In nations suffering from hyperinflation, like Venezuela, bitcoin can help people retain some of the value of their currency. It sort of functions like a form of digital gold.

Bitcoin God – more forks?

Forks look like they are here to stay. This year saw the coming of Bitcoin Cash, Bitcoin Gold, Bitcoin Diamond just to name a few. And they all had various levels of success.

Another one on the horizon is Bitcoin God, set to fork at block height 501225. Created by chinese developers, they say they will offer POS mining, large block sizes, smart contracts, and zero-knowledge proof. Only time will tell whether they can deliver on these promises, but all this forking business shows now signs of slowing down.

The content here is not financial advice. The above references an opinion and is for information purposes only.  It is not intended to be investment advice.  Seek a duly licensed professional for investment advice.

The newest craze to hit the internet is CryptoKitties. Aiming to appeal to a broader mainstream audience, CryptoKitties packages cryptocurrency into a cute, adorable, kitten-like representation. CryptoKitties is a game centered around breedable, collectible creatures called CryptoKitties. Each cat is unique and fully owned by the user.

One thing that makes CryptoKitties so special is that it is one of the world’s first games to be built on blockchain technology – in this case Ethereum. Users can buy, breed, trade or sell their CryptoKitty and all this information is stored on the ethereum blockchain. Through this sales market, some cats are going for over $100,000 USD.

CryptoKitty Backlash?

However, it seems that it is not all sunshine and rainbows for the new game. Due to it’s unexpected popularity, there is a massive clogging of the ethereum network and transactions have been slowed down as a result. There are currently over 20,000 pending transactions stuck and waiting to be processed at the time of writing. Not only does the increased traffic from CryptoKitties lead to a slow down in the network but it can also increase the cost of using ethereum as well.

The silver lining here is that public attention to ethereum and cryptocurrency in general have definitely increased. And with issues of scalability being highlighted for ethereum and other cryptocurrencies like bitcoin, this might be the tipping point to hasten developers into finding solutions for the problem.

Exchanges have updated their shutdown status and included the word “permanent” into the announcements. This comes at a time where no new announcements have been made by the People’s Bank of China (PBoC), however, there have been rumors that authorities have been talking directly with the exchanges. The circulating document titled “北京互金整治办：比特币交易平台15日晚必须发公告明确停止交易时间” sets a deadline for exchanges to announce their closure by the end of the 15th of September.  Where is an aggregated list of the announcements so far:

BTCC

1/ BTCChina will completely shut down its exchange businesses on September 30th.

— BTCC (@BTCCexchange) September 15, 2017

BTCChina has updated its phrases to say it will “completely shut down” its exchange business (previous “stop all trading“). Seems like they needed to include some finality (at least for now).

YunBi

YunBi has made an official announcement on their customer service zendesk that they will be permanently shutting down “永久性关闭” on the 20th of September.

1. 云币网将于北京时间 2017 年 9 月 20 日 00:00 永久性关闭所有品种交易功能；

ViaBTC

Via has issued an announcement today that they will close their website by the 30th of September. The reason for the shutdown is due to the ICO regulations put forth on the 4th of September, and no new legislation has been quoted on the shutdown notice.

OKCoin

Stopping RMB trading announcement 

Huobi

Stopped RMB trading. 

Will it really be “Permanent”

One of the major cultural differences between the East and the West is that China tends to use stronger language. Hence making something “illegal” or “permanent” doesn’t mean it will always be so. We saw with the ICO ban that after making it illegal, Chinese National TV CCTV-13 had a feature section where a chinese official came out to say the the ICO ban was just a “halt” rather than a “permanent ban”. Currently there is massive pressure to make things look good before the “19th National People’s Congress” on the 18th of October.

Sources

Coindesk

The Chinese Exchange ViaBTC partly responsible for Bitcoin Cash, has issued an announcement today that they will close their website by the 30th of September. This is the second exchange to do this, as BTCChina has also announced that they will stop all trading by the 30th as well. The reason for the shutdown is due to the ICO regulations put forth on the 4th of September, and no new legislation has been quoted on the shutdown notice.

On September 4th, China’s central bank together with six other departments released a public statement  on regulation policies and warning the risks of ICO projects. As a responsible cryptocurrency exchange platform, ViaBTC (www.viabtc.com) has made a serious decision to carry out the spirits of the policy – we will officially close the website www.viabtc.com for exchange business in Mainland China on September 30th. Before that we will complete processing of all withdrawal requests of CNY and cryptocurrency assets. ViaBTC mining pool (pool.viabtc.com) and cloud mining services will not be affected.

The arrangements are as follows:

Sept 25th: Closing of registration, asset deposits and all trading pairs

Sept 30th: Closing of website www.viabtc.com

Please make sure to withdraw all your assets including CNY and cryptocurrency before September 30th, after which ViaBTC website www.viabtc.com will be officially closed in Mainland China.

After a week of endless rumors from China, starting with the original announcement on Caixin calling the “end of exchanges in China“, the rumors have become a reality when it comes to BTCChina. BTCChina has announced today that they will stop all trading on BTCChina (The chinese version of BTCC) on the 30th of September.

The reason they gave for the was the Sept 4 announcement – the ICO ban. This means no additional announcements have been made from the government regarding closing exchanges. It might be that they are announcing the end of trading as a precaution, or they might be in contact with different government departments and cannot disclose the details. OKCoin and Huobi PR said they have not received notice from regulators and are operating normally

Cashing Out:

Immediately after the announcement, there was a flurry of trade activity on BTCC, with the price of Bitcoin falling to as low as $2600 USD. Currently prices on BTCC are around $450 USD cheaper than the international price.

Other Exchanges:

Binance: Service for international exchange not affected. Chinese not allowed to trade since sept 6th

Yunbi: Rumored to shut down in 3 months

After reporting the demise of cryptocurrency exchanges in China, Chinese financial paper CaiXin followed up a rumor that exchange YunBi will close within 3 months. Journalists from CaiXin interviewed Xiaolai Li (李笑来) who indicated that YunBi will Progressively shut down in 3 months (There are no other official sources to back this up, other than the Caixin Journalist). Xiaolai Li is known to be a major investor in YunBi and is known to have investments in the ICO platform, ICOINFO. It is important to note that YunBi is the only large exchange talking about a potential shut-down, other exchanges such as BTCC, Huobi, OKCoin, Btc38 and Viabtc have all come out to say they haven’t received any notices from the government.

BTC is trading for lower on Yunbi

A look at Coinmarketcap shows that BTC is trading at a lower price than competitors such as OKcoin. Currently Yunbi is trading at $3950 USD per bitcoin whilst OKcoin is trading at $4102. This might be sign that OKcoin users are more concerned and choosing to sell their Bitcoin. It is important to note that the current trade volume for Yunbi is only at 1. (https://northeastohiogastro.com) 2 Million USD, which is ranked #141 in terms of trade volume.

ICO connection?

It is possible that YunBi is under additional scrutiny because of its ties ICO trading. They previously unlisted coins such as QTUM, GXS, EOS, ANS, DGD, 1ST, GNT, REP, SNT, OMG, PAY, LUN, VEN. Their investor Xiaolai Li is also connected to ICOINFO, so this might make them a larger target for potential government control. The government explicitly wanted to break up the connection between ICO platforms and Exchanges, hence separating the streamlined ICO listing process.

Additional sources:

8BTC: Li Xiaolai: Yunbi Is Winding Down In 3 Months 

8BTC: “It Will Take Two or Three Years Before all Exchanges Are Shut Down in China”

韭菜日报:李笑来称云币网将在三月内逐步关闭；聚币网普通交易区或将全部暂停；3ICO 将于12日关站，请投资者尽快提现

A new article appeared on Chinese news media outlet caixin, claiming that Chinese authorities are looking to close cryptocurrency exchanges due to risks of money laundering. Caixin.com posted an article titled “虚拟货币交易所时代结束” (the age of crypto exchanges is over) and sparked off a massive sell-off that caused Bitcoin and ethereum prices to drop 5-10%. Whilst it was previously discussed that rumors are sometimes the precursor to legislation, this should be taken with a grain of salt. Due diligence needs to be done as to where the rumors come from (eg. state run media or just regular media). In this case, this rumor was posted on regular media with very little sources of information (no new quotes from government officials etc).

Here is how Twitter responded to this situation:

What we know so far:

• Article was posted at 9:56PM, an unlikely time for real government announcements
• Similar news was posted on Tencent news, perhaps interpreting same article?
• BTCC, okcoin and Huobi have reported no notices or changes from the government
• Article did not state any additional sources

Other media interpretations

Quartz : https://qz.com/1073049/the-ethereum-eth-price-and-bitcoin-btc-prices-are-crashing-on-a-china-trading-ban/?unique_ID=636405021008563934
8BTC: http://news.8btc.com/game-over-bitcoin-exchanges