Cyprus Securities Regulator Calls for Adoption of EU Anti-Money Laundering Framework

Cyprus’ securities regulator is calling for the transposition of an extended version of the European Union’s Fifth Anti-Money Laundering Directive into national law.

The Cyprus Securities and Exchange Commission (CySEC) is calling for the transposition of the European Union (EU)’s Fifth Anti-Money Laundering (AML) Directive (AMLD5) into national law — bringing local regulation of cryptocurrencies under its provisions. CySEC’s announcement and consultation paper on the matter were published on Feb. 19.

Тhe directive, which came into force on July 9, 2018, sets a new legal framework for European financial regulators to monitor crypto-related businesses and service providers in order to protect against money laundering and terrorism financing.

Specifically, the directive extends the scope of regulatory oversight to crypto exchanges and wallet providers, enforcing stricter transparency requirements directed at anonymous payments — whether made via exchanges or prepaid cards. EU member states must incorporate the directive into their respective national laws by Jan. 20, 2020.

In its announcement, CySEC notes that its fintech-oriented CySEC Innovation Hub has received multiple enquires from crypto-related entities, many of which do not yet “appear to fall within the existing regulatory framework.”

The agency thus advocates for the formalization of the AMLD5 into law, and proposes bringing several additional areas of crypto-related activity  in Cyprus under AML/CFT obligations. These, which are notably not included in the provisions of AMLD5, would be as follows:

“a) exchange between crypto assets, b) transfer of virtual assets, and c) participation in and provision of financial services related to an issuer’s offer and/or sale of a crypto asset.”

In its consultation paper, the agency states this extension is based upon its “judgement of the potential risk posed to investors’ protection and the integrity of the market, and the industry-accepted definitions.”

As recently reported, this January Ireland's cabinet approved a bill that would give effect to AMLD5 in the country.

Last December, Cyprus was one of seven southern EU member states to release a declaration calling for the promotion of the use of Distributed Ledger Technologies (DLT) in the region.

In fall, Invest Cyprus — the republic’s national investment partner — signed a Memorandum of Understanding (MoU) with Singapore-based blockchain platform VeChain Foundation to work on a series of national level investment strategies to foster blockchain innovation.

CEO of Japanese Finance Giant SBI Vests His Crypto Industry Hopes in Ripple and R3

Yoshitaka Kitao is vesting his future hopes for crypto in Ripple and R3 technologies.

Yoshitaka Kitao, CEO and representative director of Japanese financial services giant SBI Holdings, has singled out Ripple (XRP) and blockchain consortium R3 as reasons to remain optimistic about the future of the crypto industry — bear market notwithstanding. Kitao made his remarks during an interview with Japanese crypto news outlet Coin Post on Feb. 18.

SBI Holdings is an active partner of Ripple via their joint venture, “SBI Ripple Asia,” established to promote the use of XRP in Asian financial markets back in 2016.

In his interview with Coin Post, Kitao underscored that the protracted crypto market slump is not to be thought of as an end to the industry, and that SBI has been working intensively to foster the adoption of XRP among financial institutions.

He affirmed that the real demand for the asset’s use in cross-border remittances and settlement is already underway and will continue to burgeon— pointing to Santander’s use of Ripple’s blockchain-powered xCurrent and RippleNet platforms for international payments as an exemplary, high-profile case.

Aside from predicting that Ripple’s still-fledgling market capitalization would eventually grow to be a global standard, Kitao also made positive remarks in relation to enterprise blockchain consortium R3 — of which SBI is a member, as well as reportedly being the largest outside shareholder — as well as the R3 Corda settlement platform.

Alluding to the now-resolved legal disputes between R3 and Ripple, Kitao said he had encouraged the two former ostensible rivals”to cooperate on a joint venture, and was bullish on the potential impact of “Corda Settler” — R3’s universal payment settlement platform, which unveiled XRP as its first supported crypto in December.

Among the rest of his wide-ranging remarks, Kitao said he judged the “temperature of institutional investors [in regard to crypto] to be extremely hot,” noting that surveillance and real-time data on the crypto markets are improving, as well as clearing services.

Kitao said he hoped that Japan would spearhead cryptocurrency regulation and act proactively ahead of other global markets, such as the United States. He noted that SBI was awaiting more legislative clarity from the Japan’s watchdog, the Financial Services Agency, before launching its own crypto fund for institutional investors.

As previously reported, the past couple of years have seen SBI pursue multiple ventures in the crypto sector, including its own exchange — VCTRADE — alongside a series of investments in businesses developing crypto infrastructure and services. It also has its own blockchain initiative S coin platform, which it trialed for retail payments in September 2018, integrating R3 Corda technology.

In January, SBI published its nine-month financial report, which identified the implementation of R3 and Ripple technologies as a major part of its strategy.

In October 2018, SBI and Ripple’s XRP-powered payments app, MoneyTap, went live for account holders at selected Japanese banks — with the eventual ambition of including a consortium of 61 institutions (representing over 80 percent of all of Japan’s banking assets) in the service.

Ethereum’s Vitalik Buterin Discloses Non-ETH Crypto Holdings and Other Revenue Sources

Ethereum co-founder Vitalik Buterin has disclosed that his crypto investments are virtually exclusively devoted to the Ethereum network.

Ethereum (ETH) co-founder Vitalik Buterin has disclosed that his crypto investments are virtually exclusively devoted to the Ethereum network, in a post published to an “Ask Me Anything” (AMA) Reddit thread on Feb. 18.

The AMA post is dedicated the Ethereum leadership and accountability, asking those in leadership positions in the ETH community to share their possible conflicts of interest.

In Buterin’s summary, his total holdings of non-Ethereum ecosystem tokens — comprising Bitcoin Cash (BCH), Bitcoin (BTC), Dogecoin (DOGE) and Zcash (ZEC) — account for less than 10 percent of the value of his Ethereum holdings.

A further set of non-ETH Ethereum ecosystem tokens — comprised of Kyber (KNC), OmiseGo (OMG), Maker (MKR), (OMG) and Augur (REP) — are similarly reportedly collectively worth less than 10 percent of Buterin’s Ethereum (ETH) holdings.

Buterin also disclosed on the AMA that he has “significant corporate shareholdings” in blockchain research and development firm Clearmatics, as well as in scalability- and privacy-focused blockchain startup Starkware. The latter notably develops cryptographic technology such as zero-knowledge proofs, of which Buterin is a vocal proponent.

Aside from this, Buterin revealed his external revenue over the past 12 months — aside from the Ethereum Foundation — was accounted for by his advisory role for the tokens disclosed in his holdings.

Vitalik also discussed his non-financial involvement in other blockchain projects — including the ecosystems for the aforementioned tokens — as well as several non-token-based Ethereum-related organizations; such as L4, Plasma Group, EthGlobal and EDCON.

He is also reportedly involved in several non-token-based and non-Ethereum organizations — “mainly professional cryptography and economics circles” — which he didn’t specify.

As reported, Vitalik has recently been engaged in an Ethereum developers’ discussion in regard to a new smart contract creation feature set to be released in the forthcoming Constantinople hard fork.

Some community members had voiced their concerns that the feature could have negative security implications, which Buterin refuted, while emphasizing the need to evolve the feature in question with a longer roadmap in view.

FBI Outline Key Features of Scam ICOs, Warns Investors to Be Vigilant

The FBI has outlined what it believes to be the consistent threads running through fraudulent initial coin offerings.

The United States Federal Bureau of Investigation (FBI) has outlined what it believes to be the consistent threads running through fraudulent initial coin offering (ICO) schemes. The Bureau’s perspective was shared in an interview with Netherlands-based financial news site the Paypers on Feb. 19.

According to the FBI, the key strategies of scam offerings include misrepresentations of their directors’ professional experience, an engineered false impression of how much traction the ICO has garnered in the industry, and unrealistic promises of prospective returns on tokens:

“Like any investment product, rates of return can never be guaranteed and if it sounds too good to be true, it probably is.”

The FBI warned investors to conduct due diligence on any scheme and the individuals behind it, and to be on the lookout for entities that appear to be exclusively internet-based, where a physical address or contact is hard or impossible to come by.

The Bureau also suggested investors should be aware of which jurisdiction the offering is registered in — if at all — and to which laws and regulations it therefore falls subject to.   

The public can avail itself of the Financial Industry Regulatory Authority’s BrokerCheck system to verify the identities and registration status of entities, the FBI advised. Given that even well-known cryptocurrencies and products may carry heightened risks of volatility due to the nascent stature of the industry, the FBI advised prospective investors to only invest what they can afford to lose.

In regard to legitimate business operators of platforms such as virtual currency exchanges or cryptocurrency ATMs, the FBI noted that both the Financial Crimes Enforcement Network and multiple Federal District Courts have deemed such entities as subject to registration requirements. Failure to duly register is thus reportedly deemed to be in violation of federal money transmitting laws.

Looking ahead to the future, the FBI echoed the U.S. Securities and Exchange Commission (SEC)’s stance that a vast swathe of token offerings should be classified as securities and that, given the increasing proliferation of such assets — with many industry members anticipating a security token offering trend — investors should be wary of the heightened risks of fraud.

As previously reported, the FBI accounted for the highest number of law enforcement information requests sent to Erik Voorhees’ Switzerland-based cryptocurrency exchange ShapeShift last year.

In June 2018, the Bureau revealed it had 130 ongoing crypto-related cases, with dark web drug sales a particular concern. It nonetheless characterized the sector as accounting for merely “a small sliver” of the FBI’s activities overall.

Last year, the SEC attempted to educate investors by creating a mock ICO website that lured visitors with a “too good to be true investment opportunity.” The site employed the red flags the agency claimed to have identified in the majority of fraudulent ICOs, and redirected those who attempted to purchase the ersatz tokens to an educationally-oriented page on the SEC’s site.

Cryptocurrencies May ‘Upend the Digital World,’ Says Institutional Investor Consultancy

Cambridge Associates has advised that crypto represents a sound investment for institutional investors in the long term.

Crypto represents a sound investment for institutional investors in the long term, consultancy firm Cambridge Associates has advised, according to a Bloomberg report on Feb. 18.

Boston-based Cambridge Associates, which specializes in pension and endowment consultancy, reportedly works with institutions that collectively advise over $300 billion, with $30 million under management. In a research note published today, analysts at the firm reportedly wrote that:

“Despite the challenges, we believe that it is worthwhile for investors to begin exploring this area today with an eye toward the long term. Though these investments entail a high degree of risk, some may very well upend the digital world.’’

Assessing the 2018 cryptocurrency market slump, the analysts reportedly argued that the crypto investment landscape as a whole nonetheless robustly demonstrates “an industry that is developing, not faltering.’’

The document went on to advise prospective investors to thoroughly research and educate themselves about the space, and to explore diverse investment routes — from working with illiquid venture capital funds to direct spot market trading on crypto exchanges.

As reported, digital asset management fund Grayscale Investments’ latest crypto investment report revealed that the share of its capital inflow from institutional investors is on the rise.

Anticipating this trend will continue, ex-Goldman Sachs partner and founder of crypto merchant bank Galaxy Digital Mike Novogratz has recently forecast that the crypto industry as a whole is poised to undergo a structural shift, from “a people’s revolution to [an] institution[-led] one.

As reported, the $30 billion endowment of prestigious Ivy League American university Yale — helmed by stalwart investor David F. Swensen — was one of those to help raise $400 million for a major new crypto-focused fund in October.

Ethereum Client Parity’s Afri Schoeden Quits Social Media Amid Community Infighting

Afri Schoeden has withdrawn from social media amid a spate of infighting in the Ethereum community.

Afri Schoeden, release manager at blockchain infrastructure firm Parity Technologies, has withdrawn from social media amid a spate of infighting in the Ethereum (ETH) community.

In a tweet posted on Feb. 17, Schoeden stated that “until further notice [...] I will no longer respond on Gitter, Skype, Discord, Slack, Wire, Twitter, and Reddit.”

Parity Technologies is a United Kingdom-based blockchain infrastructure provider, known primarily for developing one of the most well-known clients for Ethereum, also known as Parity. Parity’s forthcoming “Polkadot” protocol — a form of “para chain” that links many different types of blockchains — is slated to be released in Q3 2019.

Shoeden’s decision to temporarily exit the social media space appears to have been prompted by the antagonistic responses to a series of his tweets last week, all of which have now been deleted.

One of the most controversial, tweeted on Feb. 14, purportedly contended that “Polkadot delivers what Serenity ought to be” — Serenity (or “Ethereum 2.0”) being the final upgrade for the Ethereum network, when the mainnet will transition to a proof-of-stake (PoS) consensus algorithm.

That same day, Shoeden had also reportedly stirred tempers with his tweet in regard to the purported limitations of the Beacon Chain (phase 0 of Ethereum’s transition to PoS), claiming:

“#Serenity Phase 0 will be a proof-of-stake beacon chain only interesting for investors (staking), no EVM transition functions, no smart contracts, thus no d-apps. And yet, we still look at another ~18 months timeline to launch phase 0 in 2020.”

One redditor’s top voted response to Schoeden’s remarks alleged his development work on Polkadot was in direct conflict of interest to the transition to Serenity, and further accused Shoeden of being allegedly “instrumental in delaying Constantinople launch from last October to January 16th and then again from Jan. 16th to February 27th.”

In regard to this latter accusation, the recent delay of the Constantinople hard fork — one of two system-wide upgrades that constitute the network’s third stage (Metropolis) of development on the way to Ethereum 2.0. — had little to do with Parity. Constantinople's earlier delay in October, meanwhile, was due to a consensus issue that was detected on the Ropsten testnet, affecting both Parity and the Ethereum client aleth.

Following the onslaught of criticism that surfaced in response to his arguably provocative Polkadot v.s. Ethereum 2.0 statement — with one redditor deriding Afri as “the Judas of our Ethereum community — Schoeden tweeted on Feb. 15:

“I want to clarify that I put out this tweet to stir discussion, not to cement a narrative.”

By press time, Parity representatives have not responded to Cointelegraph’s request for comment on Schoeden’s decision to step back from the discussion. Notably, core Ethereum developers — including Jeff Coleman and Hudson Jameson — have tweeted their firm support of Schoeden following his announcement.

As recently reported, the Ethereum core dev group is currently discussing a controversial new smart contract creation feature set to be released with Constantinople, dubbed Create2, which some have alleged could have negative security implications if it is not sufficiently reviewed.

Self-Professed ‘Satoshi’ Craig Wright Answers CFTC’s Request for Input on Crypto Markets

The controversially self-proclaimed “Nakamoto” and nChain chief scientist has filed two near-identical comment letters.

Controversially self-proclaimed “Satoshi Nakamoto” and nChain chief scientist Craig Wright has reportedly submitted two near-identical comment letters to the United States Commodity Futures Trading Commission (CFTC). Wright filed his two documents on Feb. 15 in response to the agency’s request for industry input and feedback on Ethereum (ETH)’s mechanics and market.

The closing deadline for responses to CFTC’s request for input (RFI) was Feb. 17, the agency having outlined its reasons behind gathering the information as follows:

“The input [...] will advance the CFTC's mission of ensuring the integrity of the derivatives markets as well as monitoring and reducing systemic risk by enhancing legal certainty [...] The RFI seeks to understand similarities and distinctions between certain virtual currencies [...] as well as Ether-specific opportunities, challenges, and risks.”

Both of the comment letters to the CFTC attributed to Wright affirm his claim to have worked “under the pseudonym of Satoshi Nakamoto,” with which he purportedly "completed a project [...] started in 1997 that was filed with the Australian government in part under an AusIndustry project registered with the Dept. of Innovation as BlackNet.”  

BlackNet — an alleged precursor to Bitcoin (BTC) — was submitted to the Australian government by 2001, according to a Feb. 10 tweet from Wright.

The tweeted BlackNet project has sparked considerable controversy over the past week, given Wright’s claims to have completed it seven years before the publication of the Bitcoin white paper, as well as its remarkable similarity to the textual detail of the latter.

One group of redditors has argued that the BlackNet paper has purloined the official Bitcoin white paper (published October 2008), which notably contained significant corrections to an earlier draft that had been shared by Satoshi in August 2008. By reproducing the corrected — not the original draft — version, the redditors contend that the 2001 R&D paper betrays itself as a ruse intended to misrepresent Wright as the bona fide creator of Bitcoin.

In his remaining comments to the CFTC on Feb. 15, Wright reportedly claimed that:

“The amount of misunderstanding and fallacious information that has been propagated concerning bitcoin [...] has resulted in my choice to start to become more public. The system I created was designed in part to end fraud as best as that can be done with any technology. The lack of understanding [...] has resulted in [...] a dissemination of old scams.”

As reported, Wright is currently mired in an ongoing legal battle over his alleged theft of Bitcoin (BTC) from the estate of deceased crypto developer David Kleiman. In mid-November 2018, Wright once again came into the crypto limelight in connection with the acrimonious fallout of the Bitcoin Cash (BCH) hard fork, which led to Wright’s preferred protocol spinning off into the newly-forked Bitcoin SV (BSV) token.

Aside from Wright, multiple crypto industry figures have responded to the CFTC’s FIR, including members of the Ethereum Foundation, Coinbase, Consensys and blockchain consortium R3. As reported, Chicago-based crypto exchange ErisX used its comment letter to the CTFC to argue a case for the prospective positive impact of regulated ETH futures contracts.

Crypto Markets See Bullish Growth, Asian Stock Markets Rally Ahead of US-China Trade Talk

Crypto markets are seeing a bullish surge of green, with all of the top twenty cryptocurrencies seeing growth between 2 and 12 percent.

Monday, Feb. 18: Crypto markets are seeing a bullish surge of green, with all of the top twenty cryptocurrencies seeing growth of between 2 and 12 percent, as data from Coin360 shows.

Market visualization by Coin360

Market visualization by Coin360

Top cryptocurrency Bitcoin (BTC) has seen a solid 2.9 percent in growth on the day and is trading around $3,742 to press time, according to CoinMarketCap data, bringing Bitcoin to a 2.38 percent gain on the week.

Bitcoin 7-day price chart

Bitcoin 7-day price chart. Source: CoinMarketCap

Ethereum (ETH) has seen the strongest 24-hour growth among the top 50 coins by market cap, rising close to 11 percent on the day to trade at roughly $137.65 to press time. The leading altcoin has seen consistent growth over its 7-day chart, which markedly accelerated this weekend, bringing its weekly gains to just over 13 percent.

As of Feb. 17, the asset’s strong performance in recent days has brought its price point to above that of Bitcoin Cash (BCH).

Ethereum 1-month price chart

Ethereum 1-month price chart. Source: CoinMarketCap

Ripple (XRP) is seeing milder growth on the day and is trading around $0.309 at press time. Up around 2.6 percent over the past 24 hours, the asset is up a mild 1.7 percent on the week. On the month, the asset has reported a loss of around 5.5 percent.

Ripple 7-day price chart

Ripple 7-day price chart. Source: CoinMarketCap

Despite trading at a lower price point to Ethereum, Bitcoin Cash (BCH) — currently the sixth-largest crypto by market cap — has seen bullish growth on the day, and is trading at $130.22. Up 6.5 percent on the day, the altcoin is also 4.5 percent on the week.

Strong 24-hour performances have also been seen by fifth-largest coin EOS (up over 3 percent), 10th ranked Binance Coin (BNB) (up 4.7 percent) and 9th largest crypto Stellar (XLM) (up 2.9 percent).

Among the top twenty coins, Maker (MKR), ranked 16th, is up the most, gaining close to 9 percent to trade at $555.85. Cardano (ADA), privacy-focused coin Monero (XMR), and Bitcoin SV (BSV), have all seen solid gains of 4.6, 3 and 3.8 percent respectively.

The total market capitalization of all cryptocurrencies is around $125.9 billion as of press time, up a strong 3.7 percent on the week.

7-day chart of the total market capitalization of all cryptocurrencies

7-day chart of the total market capitalization of all cryptocurrencies from CoinMarketCap

In an interview with Cointelegraph this week, prominent CNBC commentator Brian Kelly argued that Bitcoin is currently around 50 percent undervalued, and that the asset is likely near a bottom. While holding back on optimism in regard to the approval of a Bitcoin exchange-traded fund, Kelly predicted that 2019 would be better for the crypto markets overall, conceding however that 2018 had set “a pretty low bar.”

In adoption news, it appears that the forthcoming update of the Rakuten Pay mobile app from major Japanese e-commerce firm Rakuten will support cryptocurrency payments in addition to fiat.

Major Asian stock markets are meanwhile seeing a strong performance in the context of ongoing United States-China trade talks, which are set to continue in Washington this week. For mainland China, the Shanghai composite is up 2.68 percent, with the Shenzhen composite is up 3.7 percent. Hong Kong’s Hang Seng index is meanwhile up 1.54 percent, with Japan’s Nikkei 225 index up 1.8 percent.

Most Cryptos See Gentle Green Amid Exceedingly Calm Market Picture

Virtually all of the top 20 coins by market cap are seeing fluctuations of within 2 percent in both directions on the day.

Saturday, Feb. 16: Cryptocurrencies are seeing mild price action, with virtually all of the top 20 coins by market cap seeing fluctuations of within 2 percent in both directions on the day, as data from Coin360 shows.

Market visualization by Coin360Market visualization by Coin360

Top cryptocurrency Bitcoin (BTC) has seen fractional 0.37 percent growth on the day and is trading at $3,631 to press time, according to CoinMarketCap data. On its 7-day chart, the coin has jaggedly traded downward from an intraweek peak of almost $6,700 on Feb. 11 to a low of $3,610 on Feb. 14 — subsequently recuperating some of its losses. On the month, the coin has seen virtually no movement, trading down by a mild 0.8 percent in value.Bitcoin 7-day price chart. Source: CoinMarketCapBitcoin 7-day price chart. Source: CoinMarketCap

Ethereum (ETH) — holding on to its newly-regained position as largest altcoin by market cap — is up around 1 percent on the day to trade at roughly $123 to press time. The altcoin has seen moderate and consistent growth over the past seven days, bringing its weekly gains to just over 4 percent.

On the month, Ethereum is similarly stable, trading at virtually the same price point (0.4 percent down) as in mid-January.Ethereum 1-month price chart. Source: CoinMarketCap

Ethereum 1-month price chart. Source: CoinMarketCap

In the latest Ethereum core dev call, ETH co-founder Vitalik Buterin and others have dismissed allegations that a new smart contract creation feature set to be released in the forthcoming Constantinople hard fork will have negative security implications.

Also this week, Chicago-based crypto exchange ErisX submitted its comments to the United States Commodity Futures Trading Commission, arguing in favor of regulated ETH futures contracts.

Ripple (XRP) — like its larger market cap counterparts — is seeing virtually no price change on the day, and is trading around $0.301 at press time. Up a fractional 0.5 percent over the past 24 hours, the asset is down a mild 2 percent on the week. Monthly losses are starker, at close to 9 percent.

Ripple 7-day price chart. Source: CoinMarketCap

Ripple 7-day price chart. Source: CoinMarketCap

Industry commentators have this week discussed whether United States banking giant JPMorgan Chase’s newly-announced settlement stablecoin could pose a direct threat to XRP’s future. Ripple CEO Brad Garlinghouse has refuted these concerns, arguing that the so-dubbed JMP Coin “misses the point” of cryptocurrency.

A major exception among the remaining top 20 coins is Litecoin (LTC), which has has seen close to 4 percent in growth on the day to trade at $43.83. The altcoin has thus again dislodged EOS and Bitcoin Cash (BCH) as fourth-largest cryptocurrency by market cap, which it holds with a market cap of around $990 million.

EOS, now ranked fifth, is today seeing solid growth, up a solid 2.4 percent on the day to trade at $2.85. Privacy-focused crypto Monero (XMR), ranked 13th, is the only other major altcoin to see discernible growth — gaining about 2 percent on the day to trade at $48.16.

The heaviest top twenty loser meanwhile is Maker (MKR), ranked 17th, which is down 1.6 percent to trade at $509.65.

The total market capitalization of all cryptocurrencies is around $121 billion as of press time, up a fractional 0.25 percent on the week.

7-day chart of the total market capitalization of all cryptocurrencies from CoinMarketCap

7-day chart of the total market capitalization of all cryptocurrencies from CoinMarketCap

In other cryptocurrency news, major crypto brokerage Coinmama — which allows users to purchase Bitcoin and Ethereum using a credit card — has revealed it suffered a major data breach affecting 450,000 of its users.

And in adoption news, Liberstad — a private, anarcho-capitalist city in Norway — has adopted a cryptocurrency native to its blockchain-powered smart city platform. The new crypto will be the city’s official medium of exchange, with national fiat currencies to be prohibited.

ErisX to CFTC: Regulated ETH Futures Would Result in More Robust, Liquid Market

Chicago-based crypto exchange ErisX has filed a comment letter outlining the benefits of introducing regulated Ethereum futures contracts.

Chicago-based crypto exchange ErisX has filed a comment letter with the United States Commodity Futures Trading Commission (CFTC) in response to the agency’s request for feedback on Ethereum (ETH)’s mechanics and market.

The letter, submitted on Feb. 15, sets forth the exchange’s belief that “the introduction of a regulated futures contract on Ether would have a positive impact on the growth and maturation of the market.”

As reported, ErisX is a reboot of traditional futures market Eris Exchange, and is expected to begin support for spot trading in Bitcoin (BTC), Ethereum and Litecoin (LTC), as well as futures contracts, in the second half of 2019, pending regulatory’ approval.

The letter argues that “listing and trading Ether futures compliantly on CFTC regulated markets is consistent” with the CFTC’s efforts to foster “open, transparent, competitive, and financially sound derivative trading markets [and] to prohibit fraud, manipulation, and abusive practices in connection with derivatives and other products subject to the [Commodity Exchange Act] CEA.”

The CFTC has long determined that Bitcoin is a commodity, given that it aspires to replace sovereign currencies — rather than a security, which would bring it under the Securities and Exchange Commission (SEC)’s charge. After significant debate, Ether too was cleared of a securities classification in June 2018.

In its letter, ErisX outlines the conceptual distinction between Ethereum and its predecessor, noting that “Ethereum built upon some of the architectural principles of Bitcoin to extend [its] functionality of [a] distributed, (crypto-economically) secured, (blockchain-based) record-keeping system to include new computational capabilities for the execution of arbitrary code.”

In its diagnosis of the current state of the Ethereum market, the exchange affirms its view that a lack of regulatory clarity has prevented regulated enterprises from entering the sector, resulting in a preponderance of “unregulated or lightly regulated ‘exchanges’ [and] ‘brokers’ [emerging] to fill the gap, many of them off-shore.” The associated risks — including price volatility and liquidity fluctuations — are therefore:

“Not unique to Ether, but [may be exacerbated by] the current fragmented global market structure of trading platforms and ‘exchanges’ with significantly varying degrees of regulatory oversight and operational transparency and integrity.”

ErisX thus contends that standardized, CFTC-regulated ETH products would draw broader participation from institutional actors and commercial users, resulting in “more robust, liquid, and resilient markets,” better risk management and more efficient, accurate price discovery.

As reported, ErisX has this month appointed three veterans from Barclays, YouYube and the Chicago Board Options Exchange to fill executive roles, having announced the appointment of ConsenSys’ Joseph Lubin to its board of directors in January.

Vitalik Buterin Dismisses Rumors New Constantinople Feature Allows Attack Vector

Ethereum’s Vitalik Buterin has denied that a new Constantinople smart contract creation feature will have negative security implications for the network.

Ethereum (ETH) co-founder Vitalik Buterin and other core devs have dismissed allegations that a new smart contract creation feature set to be released in the forthcoming Constantinople hard fork will have negative security implications. The discussion was held during a Ethereum core developer call on Feb. 15.

The feature in question is called “Create2” — designated as Ethereum Improvement Proposal (EIP) EIP-1014 — and is intended to allow for interactions with a contract that does not yet exist on the blockchain — specifically, “addresses that do not exist yet on-chain but can be relied on to only possibly eventually contain code.”

Several ETH devs had voiced concerns that Create2 could introduce a potentially serious attack vector to the network, given the implication that smart contracts could purportedly be coded to change their address after being deployed. One had questioned whether the feature doesn’t “mean that any contract post-Constantinople with a self destruct [function in its code] is now more suspect than before?”

In a discussion of this and other comments, dev Jeff Coleman underscored that “one of the things that is counter-intuitive about Create2 is that theoretically redeployments can change the contract byte code, because the address is only a commitment to the init code. People need to be aware that init codes are part of auditing, [...] that non-deterministic init codes are a problem.”

Coleman stressed that those who are looking to audit others’ code need to look out for potentially “weird phenomena [...] especially if you combine Create2 with Create1, because the latter has a really weak assumption around address identity whatever the nonce is.” He added:

“When we look forward to where we want to end up [...] it would be to have all addresses [...] contracted via the init code. We need content-based addressing of contracts, and not just order-based addressing, which is what Create1 is. So if we get to the place where Create2 is standard, get rid of self destruct entirely [...] we could throw out this idea of a contract nonce.”

Like Coleman, Vitalik Buterin discussed Create2 in regard to a longer-term roadmap, saying:

“The one thing we need to keep in mind is more for the future, when thinking about rents and deletion; that’s a way that can lead to contracts being in a state to being not in a state without a self-destruct operation [...]. It’s not something we need to figure out in the next few weeks, but it's still useful to keep in mind when getting the ETH 2.0 sharding to a VM spec very soon."

Aside from Create2, the devs also noted they had found a prospective independent company for benchmark testing an application-specific integrated circuit (ASIC)-resistant proof-of-work (PoW) algorithm dubbed “ProgPoW.”

Having voted to implement the algorithm as Ethereum continues to evolve toward its eventual target of Proof-of-Stake (PoS), the devs had recently decided to delay its rollout until a third party audit would be completed. An ongoing, informal online vote over the implementation of ProgPoW shows the majority in favor.

Major Crypto Brokerage Coinmama Reports 450,000 Users Affected by Data Breach

Israel-based crypto brokerage Coinmama has suffered a major data breach affecting 450,000 of its users.

Israel-based crypto brokerage Coinmama — which allows users to purchase Bitcoin (BTC) and Ethereum (ETH) using a credit card — has suffered a major data breach affecting 450,000 of its users. The incident was disclosed in an official company announcement on Feb. 15.

The breach is reportedly part of a mammoth, multi-platform hack that affected 24 companies and a total of 747 million records — among them gaming, travel booking and streaming sites.

Coinmama says a list of around “450,000 email addresses and hashed passwords” of users who registered on its platform before Aug. 5, 2017 have been posted on a dark web registry:

“As of February 15, 2019, there has been no evidence of this data being used by perpetrators. Given the dated nature of the published data, we have no reason to suspect that any other Coinmama systems are compromised. Coinmama does not store credit card information.”

Aside from immediately notifying users, Coinmama says its response team is requiring all potentially affected users to reset their passwords upon login, as well as monitoring its array of systems for suspicious activity or unauthorized access. The platform says it is working to enhance its safeguards and track any external signals that the compromised data is being used.

Aside from new password requirements for potential victims of the hack, the site requests all users to ensure their passwords are robust and unique, and to avoid opening emails or attachments from unknown senders, or providing any personal data to any third party sites.

Although the data breach impacted not only Coinmama, but a gamut of companies outside the crypto sector, the hack represents the second high-profile system compromise in the industry this year.

On Jan. 15, tens of thousands of Ethereum (ETH) wallets hosted by New Zealand crypto exchange Cryptopia were hacked, leading to losses estimated to be worth up to $23 million — with the breach continuing for a couple of weeks after the incident’s detection.

A recent report from New York-based blockchain intelligence firm Chainalysis estimated that two — likely still active — organized hacker groups have reportedly stolen $1 billion in cryptocurrency, accounting for the majority of funds lost in crypto-related scams.

Norway: Anarcho-Capitalist Smart City Adopts Crypto as Sole Recognized Medium of Exchange

Liberstad has adopted a cryptocurrency native to its blockchain-powered smart city platform.

Liberstad — a private, anarcho-capitalist city in Norway — has adopted a cryptocurrency native to its blockchain-powered smart city platform as its official medium of exchange, according to a press release published on Feb. 12.

Founded in 2015, Liberstad is the outcome of the Libertania project, run by the nonprofit Liberstad Drift Association, which aims to create a city-society autonomous from government interference — eschewing taxes in favor of private sector funded services. As reported, the city’s freehold plots were first sold for either Bitcoin (BTC) or Norwegian krone in 2017, with around 100 prospective residents said to have bought into the project by April 2018.

John Toralf Holmesland, head of Liberstad Drift AS, has imputed the project’s inspiration to libertarian ideology and non-agression principles, writing:

“We want a society where people decide over themselves and can live together without government authorities. We want a society without government coercion, blackmail, surveillance or unnecessary violence.”

The nascent city has now adopted the cryptocurrency “City Coin” (CITY), which will be the only medium of exchange in Liberstad’s closed market: national fiat currencies are prohibited.

CITY is interoperable with Liberstad’s blockchain-powered smart city platform, “City Chain,” which allows city inhabitants and entrepreneurs to build and offer services “on a private, internal and voluntary basis” to replace government-run, public provisions.

The press release claims the disintermediated and trustless architecture of blockchain is the “key ingredient for the development and prosperity of sustainable and free city-societies.”

Future residents will reportedly interface with the City Chain platform by means of a municipal app “City Hub”: a dashboard which will allow the community to perform a range of civic functions — including identity management, creating and voting on city-wide initiatives, registering property, contract insurance, and more.

The City Coin uses a proof-of-stake (PoS) consensus algorithm in which block validators are selected based on the number of tokens a given node has staked in their wallet, rewarding stakeholders with tokens in return for securing the network.

As previously reported, Liberstad is one of many prospective smart cities to embrace blockchain worldwide: notably, the United Arab Emirates is actively pursuing the transformation of Dubai into the first blockchain-based smart megapolis by 2020.

In China, a division of e-commerce giant JD.com recently established a Smart City Research Institute to accelerate the development of smart cities with the use of artificial intelligence, big data, and blockchain technologies.

Hyundai Commercial Partners With IBM to Accelerate Blockchain Development

A financial services subsidiary of leading South Korean automobile manufacturer Hyundai has partnered with IBM.

Hyundai Commercial — a financial services subsidiary of leading South Korean automobile manufacturer Hyundai — has announced a partnership with American tech giant IBM to modernize its business model using blockchain. The news was announced on Feb. 13 at IBM’s annual tech and business conference “IBM Think 2019” in San Francisco, California.

Hyundai Commercial is reportedly “a corporate finance company that provides leasing and financial services for commercial vehicles and construction equipment.” The partnership with IBM will focus on using open source Hyperledger Fabric blockchain technology to create a new supply chain financing ecosystem for the Hyundai Commercial network.

Network participants — which include automobile dealers, distributors and manufacturers —  will have access to a real-time, shared view of all transactions on the blockchain, allowing for this data to be securely managed and efficiently distributed. The technology will also offer efficiency gains by automating hitherto manual processes.

The announcement also reveals that a separate Hyundai financial services subsidiary, Hyundai Card, will be partnering with IBM to implement its machine learning technology to create an artificial intelligence-based chatbot for customer services.

As previously reported, IBM is fast developing its blockchain-based offerings — across financial services, supply chain, government, retail, digital rights management, healthcare and insurance.

Recent projects include the use of blockchain and Internet of Things (IoT) to combat drought in the state of California, as well as a $700 million deal with one of Europe’s largest banks, Banco Santander, to accelerate the Spanish bank’s use of blockchain technology.

As reported, Chung Dae-sun — the nephew of the CEOs of Hyundai Group and Hyundai Motors — founded HDAC, a Korean blockchain-based IoT platform and issuer of the Hyundai-DAC token (DAC), alongside a fintech and blockchain subsidiary HyundaiPay.

Earlier this week, HyundaiPay signed a Memorandum of Understanding (MoU) to promote the growth of fintech startups in Busan, South Korea’s second most populous city.

Detected Cryptojacking Prompts Microsoft to Remove Eight Free Apps from Microsoft Store

United States-based software corporation Microsoft has removed eight Windows 10 applications from its official app store.

United States-based software corporation Microsoft has removed eight Windows 10 applications from its official app store after cybersecurity firm Symantec identified the presence of surreptitious Monero (XMR) coin mining code. The news was reported by Symantec on Feb. 15.

Stealth crypto mining — also know as cryptojacking – works by installing malware that uses a computer’s processing power to mine for cryptocurrencies without the owner’s consent or knowledge. According to Symantec, the firm first detected malicious XMR mining code within eight apps — issued by three developers — on Jan. 17.

After Symantec alerted Microsoft, the corporation is reported to have removed all eight products — although an exact date for their delisting is not provided.

The applications — which were marketed as part of the top free app listings on the Microsoft Store — reportedly included “a computer and battery optimization tutorial, internet search, web browsers, and video viewing and download,” and were issued by developers “DigiDream, 1clean and Findoo.” Upon closer investigation, Symantec has proposed that all eight apps have in fact likely been developed by the same person or group, rather than by three distinct entities.  

All the detected samples reportedly run on Windows 10, including Windows 10 S Mode, and were variously published between April and December 2018. They reportedly work by triggering Google Tag Manager in their domain servers to fetch a coin-mining JavaScript library. Once the mining script is activated, the target’s computer CPU cycle is hijacked to mine XMR for the app developers.

Symantec representatives told technology news website ZDNet that this is the first time cryptojacking cases have been found on the Microsoft store. The apps’ stealth success reportedly stems from the fact they run independently from the browser in a standalone (WWAHost.exe process) window. Moreover, they have “no throttling which means [they can use] up 100% of user's CPU time.”

As Synmantec notes, while the suspect apps all provided privacy policies, they unanimously omitted any mention of cryptocurrency mining. The firm’s analysis identified the strain of mining malware enclosed in the apps as being the web browser-based Coinhive XMR mining code.

Symantec says it has not been able to determine precise download or installation statistics, but observes that the apps received almost 1,900 ratings — whether or not these accurately reflect real users, or fraudulent bots, is difficult to ascertain.

Aside from Microsoft’s action to delist the apps, the mining JavaScript has also reportedly been removed from Google Tag Manager, following Symantec’s alert.

As reported, recent research from cyber security research firm Kaspersky Lab has revealed that cryptojacking overtook ransomware as the biggest cybersecurity threat —  particularly in the Middle East, Turkey and Africa.

Ripple CEO Brad Garlinghouse Says JPMorgan Coin ‘Misses the Point’ of Crypto

Following JPMorgan Chase’s announcement of the upcoming release of their own digital asset, Garlinghouse criticized the move on Twitter.

Ripple (XRP) CEO Brad Garlinghouse says the newly-announced digital asset from United States banking giant JPMorgan Chase “misses the point” of cryptocurrency, according to a tweet published on Feb. 14.

As reported, JPMorgan Chase revealed its blockchain-powered JPM Coin yesterday, saying the asset will initially be used to increase settlement efficiency in select operations. Directly following the announcement, Garlinghouse responded on Twitter:

“As predicted, banks are changing their tune on crypto. But this JPM project misses the point — introducing a closed network today is like launching AOL after Netscape’s IPO. 2 years later, and bank coins still aren’t the answer.”

The CEO linked his comments to an earlier article he penned two years ago, critiquing the prospects of proprietary bank-issued digital coins — which he dubs bank coins. In his earlier piece, Garlinghouse had argued that such projects are misguided, and would inevitably culminate in “an even more fragmented currency landscape than what we have today”:

“If banks of different digital asset groups want to settle trades with one another, they’ll have to make markets between their unique digital assets or trade between their digital assets and a common fiat currency. What a mess!”

Notably, as reported, JPMorgan has outlined that JMP Coin will be initially be focused on facilitating international settlements by major corporations, helping speed up transactions that currently take a day or longer using existing options such as SWIFT — a similar prospective area of application to that of Ripple.

Indeed, Garlinghouse just recently underscored Ripple’s own professed ambitions to supplant SWIFT’s global interbank network, commenting that “what we are doing on a day-to-day basis is in fact taking over SWIFT.”

A Bloomberg article has today cited multiple industry figures who argued that JMP Coin risks a becoming a direct threat by encroaching upon Ripple’s turf — the cross-border payments and remittance market for banks and enterprises.

One industry expert noted that “JPM’s project is much more evolutionary than revolutionary — it is utilizing a private, permissioned blockchain technology called Quorum, which is much closer to a Google Sheet than a Bitcoin. The project is clearly competing directly with Ripple Labs and their centralized cryptocurrency XRP.”

Lastly, unlike Ripple, JPMorgan Chase has designed its asset as a stablecoin by means of a U.S. dollar peg — which a different commentator argued could heighten its attractivity for financial institutions, who may shun a volatile unit of exchange for settlement and payments.

As Garlinghouse also noted, the JPMorgan Chase move represents something of a volte-face: the bank’s CEO Jamie Dimon is notorious for having openly condemned Bitcoin as a “fraud.” Dimon later diluted his antagonism in private comments to Cointelegraph at the World Economic Forum last year.

Grayscale Q4 2018 Report: Institutional Investors Provide 66% of Capital Inflow

The latest crypto investment report from Grayscale Investments reveals that capital inflow from institutional investors is on the rise.

Digital asset management fund Grayscale Investments latest crypto investment report released on Feb. 14 reveals that capital inflow from institutional investors is on the rise.

For Q4 2018, Grayscale reports that institutions accounted for the majority of investments — at 66 percent. As well, investors were almost exclusively based in the United States (99 percent), although full year statistics indicate a more distributed geography, with 33 percent offshore investors to 67 percent U.S.-based.

In its more detailed analysis of investor profiles, Grayscale notes that the protracted bear market has drawn clients whose perspective is long term: the high percentage of retirement accounts (40 percent) points to a multi-year investment horizon. Moreover, while dollar investments in crypto declined in Q4, Grayscale contends that institutional investors’ percentage allocation of their portfolio into the crypto sector remained roughly consistent throughout 2018.

Overall, the fund notes there has been a deceleration of new inflows into crypto products quarter-over-quarter in 2018: nonetheless, with Q4 investments at $30.1 million, Grayscale products hit a value of $359.5 million for the entire year — nearly twice the inflows of the previous four years (2014-17) combined.

Grayscale has been overseeing investments into crypto for over five years, launching a Bitcoin (BTC) Investment Trust back in September 2013 and then expanding to other single-asset funds — including Ethereum Classic (ETC), Zcash (ZEC) and Litecoin (LTC) — as well as diversified offerings, such as its Digital Large Cap Fund.

A further trend that the report identifies is the “return of the Bitcoin maximalist”: 88 percent of new inflows were into Grayscale’s flagship BTC Investment Trust, with investments into non-Bitcoin products slowing significantly. For the entire year, the BTC trust accounted for 67 percent, with 33 percent of capital invested in other crypto products.

As reported, an analysis from multinational investment bank and financial services company Morgan Stanley last fall hailed cryptocurrencies as a new institutional investment class, noting the proliferating formation of new funds targeting the sector.

Nonetheless, recent data indicates a shift in fund composition and strategy has occurred as the crypto winter continues: in 2018, the number of new crypto venture funds for the first time exceeded that of new hedge funds in the space.

HSBC Reports 25% Savings in Forex Trade Settlement Using Blockchain

London-based banking giant HSBC has revealed its blockchain-powered platform cut costs for forex trade settlement by a quarter.

London-based banking giant HSBC has revealed its blockchain-powered platform cut costs for foreign exchange (forex) trade settlement by a quarter, Reuters reported on Feb. 14.

According to Mark Williamson — chief operating officer of forex cash trading and risk management at HSBC — the bank processes anywhere between 3,500 and 5,000 trades a day using its proprietary blockchain solution “FX Everywhere.” These trades, worth $350 billion, demonstrate “[w]e’re going at a pace now [...] this is not a one-off proof of concept or just one or two trades.”

Williamson notably did not disclose the overall volume or value of forex trades settled by the bank using legacy processes — noting only that the blockchain-powered settlements represented a small proportion of the total.

In offering significant cost reductions of 25 percent, Reuters notes that the project shows the effective use of blockchain technology at scale by a major player in the global banking industry.

The platform — based on a distributed, but permissioned, ledger — reportedly allows HSBC to coordinate payments in real time across its trading hubs in the Americas, Europe and Asia Pacific.

Williamson told Reuters that HSBC is using the system to settle “billions of dollars” worth of payments each day with effective real-time risk management — again declining to give an exact figure for daily transactions. Nonetheless the COO reportedly forecast that a significant proportion of overall internal flows are likely to be settled on the system, adding:

“The more participants that you have joining the HSBC shared permissioned ledger and the ecosystem, the more efficient we’re going to become in providing services to our clients.”

As previously reported, HSBC’s last update on FX Everywhere was this January, when the bank revealed the platform had by then handled 3 million transactions (150,000 payments) — worth $250 billion — since its launch in Feb. 2018.

Beyond forex, HSBC is also one of a dozen banks to have launched a new blockchain trade finance platform last October, alongside BNP Paribas and Standard Chartered.

Top Crypto Exchange Binance’s CFO: Business Still Profitable, Despite Bear Market

The chief financial officer of crypto exchange Binance — currently the world’s largest by daily traded volume — has said business remains profitable, despite the market downturn.

The chief financial officer (CFO) of crypto exchange Binance — currently the world’s largest by daily trading volumes — has said business remains profitable, despite the market downturn. The CFO, Wei Zhou, made his remarks in an interview with CNBC on Feb. 14.

With Bitcoin (BTC) trailing below $4,000 for the past ten weeks — and trading around 82 percent lower than its all time price high of $20,000 to press time — Zhou implied that the exchange’s profitability is not wholly dependent on the wider market picture. "To date, even in this bear market, we still run a profitable business," he said.

AS CNBC reports, Zhou joined Binance in September 2018, having previously worked as CFO for Chinese jobs site Zhaopin and TV advertising firm Charm Communications, both of which reportedly went public under his stewardship.

Asked whether Binance could avail itself of Zhou’s experience to seek its own initial public offering, the CFO said there were no such plans in the short term.

Notably, Binance does not publicly disclose its financial figures, yet several hints have been given that suggest business is thriving, prior to Zhou’s statement.

Last November, Binance CEO Changpeng Zhao — better known in the industry as CZ — said the company was not concerned by the bear market-induced drop in trade volumes, noting that volumes remain far above those of  “two or three years ago.” He likewise stated that Binance’s business is “still profitable.”

Last summer, CZ disclosed that Binance’s revenue for the first half of 2018 had been roughly $300 million — again, notwithstanding bearish market valuations. He forecast at the time that net profit would hit between $500 million to $1 billion by the year’s end.

Notwithstanding Binance’s apparent health, other enterprises in the sector are feeling the pressure of the protracted market slump.

This week, a seasoned partner at a venture capital fund anticipated a venture evaluation downtrend across the crypto space, “given how much the volumes have decreased in the last year.” Analysts from global investment bank JPMorgan Chase have meanwhile underscored the bear market’s deleterious impact on prospective institutional investor interest.

Others — notably lenders in the industry — are reportedly weathering the downturn better, with the bear market purportedly fueling the growth of cryptocurrency creditors.

Binance has seen ~$546 million in trades over the 24 hours to press time, down almost 25 percent on the day, according to CoinMarketCap.

Chinese Tech Giant Baidu Launches Blockchain OS to Support DApp Development

Chinese search engine giant Baidu has launched its Baidu Blockchain Engine, an operating system designed to facilitate DApp development.

Chinese search engine and web services company Baidu has launched its Baidu Blockchain Engine (BBE), an operating system designed to facilitate decentralized application (DApp) development. The news was officially announced by Baidu’s cloud computing unit, Baidu Cloud, on Feb. 14.

Baidu Cloud states that it considers an open source, commercialized platform to be “the only way to build a blockchain operating system.” BBE has reportedly been built on the basis of Baidu’s “ABC” technology strategy — artificial intelligence (AI), big data and cloud computing —  and aims to make DApp development “as simple as creating a mobile app.”

Hoping to drive the commercial development of blockchain technology, Baidu Cloud proposes that BBE, built on an intelligent cloud platform, will positively impact the wider blockchain product landscape. The platform is designed to address the perceived shortcomings of currently available infrastructure, which purportedly encounters issues with inefficient single-machine storage, high data storage costs and, subsequently, computing bottlenecks.

As Baidu Cloud outlines, BBE provides developers with services such as multi-chain and middle-tier frameworks, as well as smart contract and DApp templates. It also outlines various mechanisms that aim to provide data security and privacy protection.

BBE is compatible with the Baidu private cloud, allowing customers to implement DApps for various business scenarios by means of a flexible blockchain-as-a-service platform (BaaS).

The Baidu Blockchain Lab has reportedly designed BBE with six functions in mind, spanning the provision of a “trusted computing environment, high performance and high throughput, scalable storage, cross-chain trusted interactions, smart contract support, and contract security audits.”

As reported, Baidu released the Baidu Blockchain White Paper V1.0 last September, which outlines the design of its “Super Chain” network system. The Super Chain, which forms part of Baidu’s ongoing endeavour to commercialize its cloud blockchain BaaS platform, is a stereo network that supports parallel sidechains.

CFTC Official Argues Against SEC’s Grounds for Disapproving Bitcoin ETFs

Brian Quintenz, a Commissioner at the U.S. CFTC, has argued against the notion that potential price manipulation should be a barrier to the SEC’s approval of a Bitcoin ETF.

Brian Quintenz, a Commissioner at the United States Commodity Futures Trading Commission (CFTC), has argued against the Securities and Exchange Commission’s (SEC) grounds for not approving a Bitcoin (BTC) exchange traded fund (ETF). Quintenz made his remarks during a panel at the BiPartisan Policy Center in Washington D.C. on Feb. 12.  

Quintenz specifically argued that potential price manipulation should not be a barrier to the SEC approving a Bitcoin ETF. The CFTC Commissioner participated in the panel alongside SEC Commissioner Heister Peirce. Peirce has notably earned the moniker of “crypto mom” due to her vocal dissent against the SEC’s move to twice reject a BTC ETF proposal from the Winklevoss twins.

As reported, the SEC has reiterated its qualms over inadequate “resistance to price manipulation” multiple times in its rulings or reviews of BTC-based ETFs. Quintenz drew a parallel between the SEC’s stance and that of his own agency, noting that the CFTC’s “jurisdiction over [...] [Bitcoin futures] contracts requires that they not be readily susceptible to manipulation.”

He went on, however, to underscore that the qualification of “readily susceptible” is an important nuance, given that any product — with sufficient resources — can be manipulated. Certain mechanisms, he proposed — such as basing a product on an index, rather than a commodity —  can in fact be used to make prospective manipulation significantly less likely:

“There are mathematical ways through a settlement index to design a contract where even if there isn’t a lot of liquidity on one exchange referenced, the index itself is not readily susceptible to manipulation.”

Quintenz gave the example of one of the BTC futures contracts that the CFTC has approved for market, which is designed to be settled to “multiple volume weighted average prices in five minute increments over the course of an hour across multiple exchanges.” This, he noted, means that for any actor intending to manipulate the settlement index:

“[...] they would have to have the majority of volume on multiple exchanges in multiple five minute periods. Could they do it? Maybe. Would we know about it? Immediately.”

Commissioner Peirce contributed to the discussion of her agency’s approach to reviewing proposed crypto-based products, noting that:

“At the SEC we have been unwilling to sign off on a Bitcoin ETF thus far. My concern is that it looks a bit like a merit based approach, judging the underlying Bitcoin market and saying we don’t think these are regulated enough. You know, there’s lots of markets that aren’t regulated, but we nevertheless build products on top of them.”

As previously reported, Peirce’s dissent from the SEC’s negative ruling on the Winklevoss BTC ETF application derived from her view that the agency had overstepped “its limited role.” According to the Commissioner, the SEC was focusing upon the characteristics of the underlying Bitcoin spot market, rather than the derivative the applicants had sought to list, in making its decision.

EOS Sees Second Day of Growth as Crypto Markets, Stocks See Scant Price Action

With a few notable exceptions, most of the top 20 cryptocurrencies by market cap are fluctuating 2 percent in either direction on the day.

Wednesday, Feb. 13: Cryptocurrencies are seeing tempered price action overall. With a few notable exceptions, most of the top 20 coins by market cap are fluctuating 2 percent in either direction on the day, as data from Coin360 shows.

Market visualization by Coin360

Market visualization by Coin360

Top cryptocurrency Bitcoin (BTC) has seen virtually no price change on the day and is trading at $3,628 to press time, according to CoinMarketCap data. On its 7-day chart, the coin is up 6.5 percent after a spike on Friday, Feb. 8, when Bitcoin soared by almost $300 in value. On the month, the coin has come almost full circle to trade down by a mild 1 percent.
Bitcoin 7-day price chart. Source: CoinMarketCap

Bitcoin 7-day price chart. Source: CoinMarketCap

Mike Novogratz, a former Goldman Sachs partner and founder of crypto merchant bank Galaxy Digital, has today argued that Bitcoin occupies a unique place in the crypto landscape and will become digital gold — a sovereign store of value. The entrepreneur pitched $8,000 as a feasible medium-term price point, arguing that the market is “not going to bubble back up.”

Ethereum (ETH) — which regained its position as largest altcoin by market cap on Feb. 11 — is up around 2 percent on the day and trading at around $123 to press time. Since its strong performance on Feb. 8, the altcoin has seen consistent growth in recent days, bringing its weekly gains to a bullish 19.4 percent.

Over the medium term, Ethereum is nonetheless trading slightly lower than it was at the start of its one month chart, down by around 1.6 percent.

Ethereum 1-month price chart. Source: CoinMarketCap

Ethereum 1-month price chart. Source: CoinMarketCap

Ripple (XRP), currently second-largest altcoin by market cap, is seeing virtually no movement on the day, and is trading around $0.302 at press time. Up a fractional 0.33 percent over the past 24 hours, the asset has however seen close to 4 percent in solid growth on the week. Monthly losses are at 9 percent.

Ripple 7-day price chart. Source: CoinMarketCap

Ripple 7-day price chart. Source: CoinMarketCap

Most of the remaining top 20 coins on CoinMarketCap are all seeing minimal changes. Litecoin (LTC) has seen close to a 2 percent loss on the day to trade around $42.54. After seeing exceptionally strong gains last week, LTC had briefly dislodged EOS and Bitcoin Cash (BCH) as fourth-largest cryptocurrency by market cap, but it is now back to fifth position, with a market cap of around $2.57 billion.

EOS, now ranked fourth, has today continued to consolidate its solid growth, up a solid 1.7 percent on the day to trade at $2.84 having seen gains of over 6 percent yesterday.

The biggest top twenty loser on the day is Dash (DASH), ranked 15th, down 2.8 percent to trade at $80.23.

The total market capitalization of all cryptocurrencies is around $120.5 billion as of press time, up around 8 percent on the week.
7-day chart of the total market capitalization of all cryptocurrencies from CoinMarketCap

7-day chart of the total market capitalization of all cryptocurrencies from CoinMarketCap

Reflecting on the difficulty of weathering the crypto bear market, a Bloomberg article today proposed that crypto investors and miners are increasingly turning to derivatives such as options as a means of pocketing cash short term.

In other media coverage of the crypto markets, Chinese alleged Bitcoin (BTC) billionaire Zhao Dong has this week stated his belief that an upturn — or crypto spring — will not come before 2020.

Stock markets are today seeing positive momentum, with the S&P 500 up 1.29 percent and Nasdaq up 1.46 percent. The CBOE Volatility Index (VIX) is down by around 0.45 percent.

Major oil futures and indexes are seeing green, with WTI Crude up 0.77 percent and Brent Crude up 0.72 percent. Mars US is up a stronger 0.99 percent, while the Canadian Crude Index has seen a round zero percentage change, according to oilprice.com.

Mike Novogratz: Bitcoin Will Be Digital Gold, ‘Sovereignty Should Cost a Lot’

Mike Novogratz has argued that Bitcoin (BTC) occupies a unique place in the cryptocurrency landscape.

Mike Novogratz, a former Goldman Sachs partner and founder of crypto merchant bank Galaxy Digital, has argued that Bitcoin (BTC) occupies a unique place in the cryptocurrency landscape. Novogratz made his remarks during an interview with Bloomberg TV on Feb. 13.

Reflecting on the proliferation of crypto assets, many of which have attempted to vie with Bitcoin (BTC)’s function as store of value, Novogratz argued that:

“There’s 118 elements on the periodic table, and only one gold [...] Bitcoin is going to be digital gold, a place where you have sovereign money, it’s not U.S. money, it’s not Chinese money, it’s sovereign. Sovereignty costs a lot, it should.”

Novogratz, while not providing a rationale for Bitcoin’s singularity, proposed that while blockchain in principle offers a robust system for the secure exchange of value, not all cryptocurrencies need to rely on its maximal security potentia. Unlike digital gold, less valuable, transactional cryptos may do better, he implied, to trade security for improved efficiency gains.

Bitcoin, which has recently settled around the $3,400-3,600 mark, is grinding along its bottom, Novogratz argued, and easily has the potential to go higher. Citing $8,000 as a feasible medium term price point, Novogratz nonetheless considered that “we’re not going to bubble back up.”

Reflecting on the protracted crypto winter, Novogratz quipped that the past year has demonstrated “just how painful popped bubbles can be.” Now that the retail frenzy has subsided — and with it, the inflated valuations of thousands of digital assets — the entrepreneur proposed that the industry as a whole is poised to undergo a structural shift, from “a people’s revolution to [an] institution[-led] one.

Novogratz noted that critical infrastructure for institutional investors to become comfortable with crypto is gradually falling into place — albeit temporarily slowed by the recent United States government shutdown. Forthcoming custodial solutions from New York Stock Exchange (NYSE) operator ICE’s Bakkt platform and investment giant Fidelity’s digital asset business indicate the institutional watershed “is just getting started,” he said.

As reported, while traditional financial institutions like Fidelity are beginning to step into the crypto sphere, veteran industry firms such as crypto exchange and wallet service Coinbase have also introduced their own custody solutions for institutional clients.

Novogratz’s perspective is shared by established analysts such as Netherlands-based Big Four auditor KPMG, which last fall argued that institutionalization is “a necessary next step for crypto to create trust and scale.”

UC Berkeley Launches Accelerator for Early Stage Blockchain Startups

The prestigious United States public school has launched a 12-week accelerator program for early stage blockchain startups.

Prestigious United States public school University of California, Berkeley (UC Berkeley) has launched a 12-week accelerator program for early stage blockchain startups. The launch was reported in an official announcement published on Jan. 28.

The Berkeley Blockchain Xcelerator is partly sponsored by venture capital fund Berkeley X-Lab Fund and is reportedly the result of cooperation between Berkeley Engineering’s Sutardja Center for Entrepreneurship and Technology, the Haas School of Business and Blockchain at Berkeley.

The latter is a student-run organization for blockchain innovation comprised of over 100 Berkeley students — as well as figures from industry and academia — which has reportedly designed and taught multiple blockchain and crypto-related for-credit courses, signing up over 70,000 tutees online to date. It has also reportedly developed blockchain proofs-of-concepts (PoCs) for a number of — unspecified — Fortune 100 firms.

Gloria Zhao, president of Blockchain at Berkeley, outlined the rationale behind an academia-housed accelerator program, proposing that:

“With such a nascent technology as blockchain, we see that a lot of subject matter experts and people making an impact in the blockchain space are students.  Blockchain at Berkeley strives to foster the entrepreneurial spirit in our students, so we are excited to help lead this initiative and assist the next generation of blockchain innovators.”

The accelerator program is reportedly open to blockchain projects globally; the selected participants will be mentored by entrepreneurs, alumni, faculty, investors and students as they prepare for demo day at the program’s close.

Underscoring its multi-pronged approach to promoting blockchain and cryptocurrency education — via its both dedicated venture capital fund, SCET Blockchain X-Lab, and its student-led organization — UC Berkeley also notes that its Entrepreneurship Center has launched a host of new labs devoted not only to blockchain, but also to innovation in data science, artificial intelligence and sustainability.

As recently reported, UC Berkeley has partnered with Ripple’s global University Blockchain Research Initiative (UBRI) to host a blockchain and fintech industry spring speaker series at the Haas School of Business. UC Berkeley is also working with UBRI to develop cross-departmental courses and funded research projects in the field, and to sponsor an upcoming blockchain hackathon.

Many universities worldwide have launched their own internal blockchain laboratories, research centers and degree programs and certificates — including the high-ranked university MIT in the U.S. and the IT University of Copenhagen.

Bloomberg: Investors, Miners, Turn to Derivatives to Survive Crypto Winter

Crypto investors and miners are turning to derivatives such as options in an attempt to survive the protracted market downturn.

Crypto investors and miners are turning to derivatives such as options in an attempt to survive the protracted market downturn, a Bloomberg piece argues on Feb. 13.

The article presents the increasing popularity of complex trading instruments as a means of pocketing cash short term as being symptomatic of just how difficult it has become to weather this bear market — the longest in industry history.

Sam Bankman-Fried, CEO of Alameda Research, a quantitative trading firm for digital assets in San Francisco, told Bloomberg:

“Anyone sitting on a stockpile of tokens saw in the bear market of 2018 that their business is at the mercy of crypto prices. It can be crucial for those players’ survival to have some cash if digital asset prices go down.”

With a host of seasoned financial professionals entering the digital assets space, the range of sophisticated trading instruments has diversified. As an example, Bloomberg cites a representative from Singapore-based crypto trading firm QCP Capital, who disclosed that the firm had recently bought a three-month call option for a notional sum equivalent to 250 Bitcoin (BTC) (~$900,000).

The strike price of the said contract has reportedly been set to $4,200 — so that if Bitcoin is trading below this at the time of the contract’s expiry, QCP’s counterparty will pocket a $666,250 premium and keep its BTC holdings. If, conversely, by April, Bitcoin is trading above $4,200, the counterparty will be required to sell its 250 BTC at that price, forgoing any prospective gain.

Given the fact that many of these derivatives contracts are private bilateral contracts, as Bloomberg notes, official statistics are scarce. Nonetheless, the article contends that miners — squeezed by falling market prices — have become one of the main sellers of a type of derivative similar to a covered call option.

The article goes on to warn that in many cases, tech innovators being pushed to brush shoulders with ex-Wall Street staffers can be akin to “swimming with sharks,” given the latter’s wealth of experience. As one ex-Citigroup credit derivatives trader turned crypto miner noted:

“[Miners]’d better be on their guard against being duped by the clued-in derivatives houses. The trading professionals will try to take the miners for a ride by getting them to sell options too cheaply.”

As a Cointelegraph analysis piece noted this week, the initial coin offering (ICO) market took a steep tumble last year — not in terms of overall capital raised, but in terms of the number of unique projects, which has been steadily falling since Q1 2018. The article identified regulatory uncertainty, alongside the market price collapse, as major factors driving the decline.

Former Mt. Gox CEO Mark Karpeles Rejects Brock Pierce’s Plans to Reboot Exchange

Mark Karpeles — former CEO of the now-defunct BTC exchange Mt. Gox — has refuted Brock Pierce's claims he can reboot the trading platform and accelerate creditor recovery.

Mark Karpeles — the former CEO of the now-defunct Bitcoin (BTC) exchange Mt. Gox — has refuted controversial crypto figure Brock Pierce's claims he can reboot the trading platform and accelerate compensation for Mr. Gox’s creditors. Karpeles made his remarks in private correspondence with Cointelegraph Japan on Feb. 12.

As reported, Pierce — a crypto entrepreneur who co-founded Blockchain Capital, Block.one and EOS Alliance — is attempting to galvanize a “GoxRising” movement, purporting that creditor recovery would be speedier if certain legal and technical barriers were to be overcome. The plan also includes creating a united, tokenized foundation for creditors.

His long-term aim is avowedly to reboot the platform — which notoriously suffered a hack in 2011 and subsequently collapsed in early 2014, resulting in the loss of 850,000 BTC valued at roughly $460 million at the time and about $3 billion at press time.

In recent comments to Cointelegraph, Karpeles challenged Pierce’s legitimacy in claiming he has the rights and ability to relaunch the exchange. The dispute hinges on a letter of intent to acquire Mt. Gox that was sent from Pierce’s company Sunlot Holdings Ltd. to Karpeles back in 2014. Given that no final agreement was reached, the letter was duly rescinded. As Karpeles has clarified to Cointelegraph:

“The letter of intent is a proposal, which was supposed to result in an agreement within 45 days, on condition of approval by the court, the trustee and/or anyone the court appoints.

As far as I know no agreement was reached within 45 days, nor did the court and the trustee approve such an agreement. We were working with our lawyers at the time in good faith to follow the terms defined there but failed to hear back from Sunlot after they assured they were working on this, including assisting in getting approval from the court.”

Karpeles’ second contention was with Pierce’s claims that his initiative could expedite creditor recovery. Pierce has allegedly claimed it could be settled within a year, rather than the 3-5 years it is currently estimated to take under the stewardship of Tokyo attorney Nobuaki Kobayashi. The attorney was appointed by a Japanese court to act as civil rehabilitation trustee for Mt. Gox’s bankruptcy estate. In response to Pierce’s claims that the process could be expedited, Karpeles said:

“As to distributing assets faster than the trustee, I haven't heard at this point anything that would make this possible from Gox Rising [sic]. The published plans seem to imply reviving Mt. Gox and creating a lot of complex legal structures which may take time to happen.”

As reported, Pierce’s plans hinge on his success in galvanizing around half of the exchange’s creditors — 12,000 out of 24,000 individuals — to join GoxRising. On this aspect, Karpeles remarked:

“I do not believe ‘presenting a united front’ would help things much, and if anything any attempt to push things against the advice of the court as Brock has done before would likely result in further delays. More than anything I do not believe at this point all creditors would align behind him, so it would likely result only in more divisions.”

As reported in December, Karpeles pleaded not guilty in the final argument for his ongoing trial.  Karpeles was charged with embezzlement of approximately 340 million yen (about $3 million) from Mt. Gox and manipulating the exchange’s ledgers to inflate its cash balance. Prosecutors are seeking a ten-year prison sentence for Karpeles, the final ruling for which is reportedly set to be delivered on March 15, 2019.

Blockchain Intelligence Firm Chainalysis Raises $30 Million From Accel, Others

U.S.-based blockchain intelligence firm Chainalysis has raised $30 million in a Series B round led by Accel, citing the stablecoin sector as a positive source of momentum.

New York-based blockchain intelligence firm Chainalysis has raised $30 million in a Series B funding round led by venture capital giant Accel, the company confirmed in a post on Feb. 12.

The fresh funding will reportedly be used to expand Chainalysis’ corporate operations, which include a proprietary Know Your Customer (KYC) product that allows financial institutions and digital asset trading platforms to vet and verify the identity of their clients.

The firm reports that the latest funding round was led by Accel, “with participation from existing investors.”

Chainalysis reports that it also plans to open an office devoted to research and development in London, with Accel partner Philippe Botteri set to join the firm’s board of directors.

In an interview with American business magazine Fortune, Chainalysis CEO Michael Gronager revealed that whereas 90 percent of the firm’s revenue formerly came from clients in the law enforcement sector — who used Chainalysis’ blockchain analytics tools to track illicit use of cryptocurrencies — corporate clients now comprise the lion’s share of the business, at 60 percent.

Aside from diversifying research and products, Gronager told Fortune that Chainalysis was benefiting from the momentum of the burgeoning stablecoin sector. As previously reported, 2018 saw the proliferating issuance and adoption of new stablecoins — a type of crypto asset designed to experience less price volatility — either by being notionally fiat-collateralized or via an algorithmic peg.

Chainalysis’ CEO remarked:

“Born out of the ashes of [the crypto bear market and Initial Coin Offering downturn] was the stablecoin as another way to easily and safely create tokens. This ability to trade U.S. dollars against crypto is very powerful.”

While not disclosing financial specifics, Gronager told Fortune that Chainalysis’ revenue had grown threefold since April 2018, when it raised $16 million from Benchmark Capital to increase the number of cryptocurrencies it monitors. However, the company is yet to become profitable, he noted.

As reported, Chainalysis also conducts research into the blockchain sector. This January, a report from the firm argued that two — likely still active — organized hacker groups have reportedly stolen $1 billion in cryptocurrency, accounting for the majority of funds lost in crypto-related scams.

Chainalysis’ co-founder and COO, Jonathan Levin, notably declined to comment as to whether the firm had contributed to the U.S. Department of Justice investigation into the alleged use of Bitcoin (BTC) to fund purported interference in the U.S. 2016 presidential elections. In connection with said allegations, twelve Russian intelligence officers were indicted in July 2018.

Crypto Asset Brokerage From Uber’s Ex-CTO Goes Public on Canadian Exchange

Crypto asset brokerage Voyager Digital — co-founded by the ex-CTO of Uber — has gone public on Canada’s TSX Venture Exchange.

Crypto asset brokerage Voyager Digital — co-founded by the ex-CTO of Uber — has gone public on Canada’s TSX Venture Exchange. The news was announced in an official tweet from Voyager on Feb. 11.

Shares are traded under ticker symbol VYGR.V, as a company blog post outlines.

The listing comes following the completion of a so-called reverse takeover — also known as a reverse initial public offering or backdoor listing.

Last week, Voyager had announced that its merger with former shell company UC Resources Ltd. was nearing completion. The moved allows the crypto brokerage to qualify as a TSX Venture Tier 2 Company.

Generally, a reverse takeover occurs when a privately held company merges with a publicly traded company — thereby bypassing at least some of the bureaucratic scrutiny involved in the process of going public, including regulatory issues and due diligence. Upon completion of the deal, the buyer gains automatic inclusion on the relevant stock exchange.

As the firm’s blog post notes, now that Voyager has gone public, it will be legally bound to disclose quarterly and annual reports. The company will also be required to report any mergers, acquisitions, insider trading, securities transactions by firm employees and ownership changes.

As previously reported, among its co-founders, Voyager counts E*Trade veteran Steve Ehrlich and Oscar Salazar — the former CTO at Uber and one of the company’s original employees.

The firm is working toward launching a zero-fee mobile crypto trading app, currently in beta stage development, that will allow investors to to trade and manage their digital assets across multiple crypto exchanges.

Last October, it reportedly launched its institutional trading service, and imminently plans to launch retail trading services for United States residents, followed by Canadians in Q3 2019.

Voyager is poised to enter the North American crypto trading sector amid steep competition from players such as crypto exchange and wallet service provider Coinbase, zero-fee stock and crypto brokerage app Robinhood and San Francisco-headquartered Poloniexacquired by Goldman Sachs-backed payments platform Circle last year.

Other crypto industry firms to have pursued a reverse takeover include Mike Novogratz’s crypto-focused merchant bank Galaxy Digital, which opted for the route in order to secure a listing on the very same TSX Venture Exchange.

New Proposed ETF Would Encompass Bitcoin Futures Alongside Sovereign Debt Instruments

Reality Shares ETF Trust has filed a proposal for an exchange-traded-fund (ETF) that would invest in a portfolio which includes both sovereign debt instruments and Bitcoin futures.

Reality Shares ETF Trust — a unit of crypto-focused fintech firm Blockforce Capital — has filed a proposal for an exchange-traded-fund (ETF) that would invest in a portfolio which includes both sovereign debt instruments and Bitcoin (BTC) futures.The ETF filing was submitted to the United States Securities and Exchange Commission (SEC) Feb 11.

ETFs are securities that track a basket of assets proportionately represented in the fund’s shares. They are seen by some as a potential ‘holy grail’ that would herald the widespread adoption of cryptocurrencies as a regulated and passive investment instrument.

The proposed fund, to be listed on NYSE Arca, is designed to “provide investment exposure to global currencies, both fiat and virtual currencies, that have been widely adopted for use (e.g., as store-of-value, international remittance, foreign-exchange trading) throughout the world.”

In regard to BTC futures, the fund would initially — if successful — invest via a wholly owned Cayman Islands-registered subsidiary in the cash-settled BTC futures that are currently traded on CBOE Futures Exchange (CFE) and the Chicago Mercantile Exchange (CME).

The filing notes that CFE and CME BTC futures positions will thus be valued “at their respective futures cash settlement values as published [...] at the close of each trading day.” It also proposes that the fund may evolve to invest in BTC futures that are traded on other exchanges in the future, but emphasizes that the fund “will not invest directly in [B]itcoin.” The filing adds:

“The Fund may gain most of its exposure to Bitcoin Futures through its investment in the Subsidiary, which invests in Bitcoin Futures. To the extent the Fund invests in such instruments directly, it will seek to restrict its income from such instruments to a maximum of 10 percent of its gross income [...] to comply with certain qualifying income tests necessary for the Fund to qualify as a regulated investment company.”

In addition to Bitcoin futures, the proposed fund will also allocate larger investments to more traditional “high-quality, short-term sovereign debt instruments listed for trading on U.S. exchanges and denominated in U.S. dollar, euro, British pounds sterling, Japanese yen and Swiss francs.”

As previously reported, a separate Bitcoin-related ETF by investment firm VanEck and financial services company SolidX — for listing on CBOE’s BZX Equity Exchange — is currently making a circuitous route through various filings with the SEC.

With multiple actors — including the Winklevoss twins — either failing or continuing to await the SEC’s approval of their BTC-related ETFs, crypto entrepreneur and CNBC analyst Brian Kelly has recently claimed there is “no shot” for a crypto ETF to get the regulatory greenlight in 2019.

Jack Dorsey Says Cash App Support for Lightning Network a Question of ‘When, Not If’

Twitter and Square CEO Jack Dorsey said that rolling out the Lightning Network on Square’s Cash App is a question of “when, not if.”

Twitter co-founder and CEO Jack Dorsey — also the founder and CEO of United States-based Bitcoin (BTC)-supporting payments service Square — said that rolling out the Lightning Network on Square’s Cash App is a question of “when, not if.” Dorsey made his remarks during an interview alongside Elizabeth Stark, co-founder of Lightning Labs, on the Stephen Livera podcast Feb. 11.

The Lightning Network (LN) is a second-layer solution to Bitcoin’s scalability limitations, which works by opening payment channels between users that keep the majority of transactions off-chain.

In response to a question regarding possible LN support on the popular Cash App — which became the number one downloaded finance app on Google Play this December — Dorsey said:

“We have a massive seller network of businesses [of different sizes] [...] We would love to make [Bitcoin payments] as fast and efficient and transactional as possible and that includes looking at our seller base and our register. It’s not an ‘if,’ it’s a ‘when.’”

Dorsey, who is well known for his conviction that Bitcoin will become the “native currency of the internet,” spoke during the podcast of his early fascination with the cypherpunk movement and his encounter with the “amazing, simple, beautiful” Bitcoin white paper in 2013, when Square was still in its early days.

Notwithstanding the “negative lens” that has filtered much of the awareness around Bitcoin, Dorsey said its spectacular brand traction and congruity with the internet’s core ideals have forged a unique resilience and lasting power for the coin. He set it apart from other cryptos, arguing that:

“It feels it’s the one that wants to be currency the most, versus others that are doing more general purpose things or distributed computing [...] I think [the altcoin space] has generated some really amazing ideas, but I’m focused on currency and the transactional aspect.”

In November 2018, Square reported it had generated $43 million in Bitcoin revenue for Q3 2018, up from $37 million the preceding quarter. That same month, the company’s market cap surpassed that of Twitter.

Just last week, Dorsey took part in a community project demonstrating the functionality of LN, dubbed  the “Lightning Torch.” The initiative entailed a series of transactions relayed between LN users, with each participant adding a nominal sum (10,000 satoshis, or ~$0.34) and passing it on to someone else they trust.

Last month, the Lightning Network passed a milestone capacity of $2 million and has a capacity of 656 BTC (about $2.39 million) at press time.