SEC is ‘open to discussion’ when it comes to crypto: Kraken chief lawyer

Kraken's Marco Santori points to the adversarial stance taken by some crypto firms towards regulators.

In the midst of a fraught period for some high-profile United States crypto firms and financial regulators, Kraken’s chief legal officer (CLO) is calling for a dose of pragmatism going forward.

Speaking on Bloomberg’s “QuickTake Stock” broadcast on Thursday, CLO Marco Santori told viewers, “You’re living in a fantasy world if you don’t believe that this industry is going to face heavier, more Wall Street-like regulation from governments in the U.S. and abroad.”

Santori’s comments follow threats by the United States Securities and Exchange Commission (SEC) earlier this month to sue the well-known crypto exchange Coinbase over a crypto yield program it deemed to be a security. The move sparked the exchange’s CEO, Brian Armstrong, to adopt a combative and resistant stance on social media, although the exchange has since announced it will scrap the program at issue, in line with the SEC’s wishes. 

Commenting directly on the developments, Santori said: “I’ve certainly followed Brian’s tweets, and I’ll say that look, you’re just not being honest with yourself about the crypto community if a little bit of you doesn’t think he’s saying what a lot of people are thinking.” He soon pivoted, however, taking pains to articulate the more pragmatic agenda he’s pursuing at Kraken:

“I can’t support that kind of approach with regulators. It’s never been successful historically, and from our experience, we’ve found the SEC to be open to discussion.”

Related: Coinbase seeks new exec to debate with policymakers

U.S. financial regulators, particularly under SEC chair Gary Gensler, have indicated they intend to introduce a host of policy changes this year that will affect token offerings, decentralized finance (DeFi), stablecoins, custody, exchange-traded funds and lending platforms. Despite his hawkish tone, Gensler has appealed to industry actors to engage with the agency going forward. With the regulatory outlook still evolving, the crypto markets meanwhile remain highly sensitive to the possible implications of each of the regulator's crypto-related public interventions

Basel draft rules make crypto too costly for banks to trade, says industry

Proposed rules would make "bank involvement in the cryptoasset market cost-prohibitive from a capital perspective," industry associations have told regulators.

Nine banking industry associations have submitted a letter to the Basel Committee on Banking Supervision (BCBS) in response to its proposal to introduce stringent capital requirements for banks looking to hold crypto assets on their books.

In June of this year, the BCBS had published a consultation paper which assigned a 1,250% risk weight to Bitcoin (BTC), meaning that banks would need to hold $1 in capital for each $1 worth of exposure they have to Bitcoin.

In their letter this week, industry groups — among them, the derivatives associations ISDA and FIA, the Institute of International Finance, European markets body AFME and the Chamber of Digital Commerce — argued that the prudential framework envisaged by the BCBS would create “material impediments to regulated bank participation in cryptoasset markets.” 

They argued that “certain elements of the proposal make bank involvement in the cryptoasset market cost-prohibitive from a capital perspective,” adding: “This approach is especially concerning given the rapid growth of cryptoasset-related market activity with participants that fall outside the perimeter of prudential and market regulations.”

To improve upon the BCBS’ proposal, the associates have argued for a more nuanced taxonomy of various crypto assets and their varying risk profiles. Instead of a crude “application of a single, undifferentiated 1250% risk weight,” the letter includes a detailed appendix that makes the case for taking into account aspects like the existence of a liquid, two-way market for some crypto assets.

Despite their numerous disagreements with the letter of the BCBS’ proposals, the associations nonetheless underscored the need for regulatory certainty “in the near to medium term, particularly given the pace of evolution and client demand for cryptoassets.” The letter also noted that at present, banks’ exposure to crypto remains limited but emphasized that the industry views this limited exposure as being “neither desirable nor sustainable” for several reasons.

Related: Bitcoin part of highest risk category in Basel's new bank capital plan

These reasons include the potential benefits that distributed ledger technology holds for the financial services sector and existing, significant demand for crypto-related products and services from customers. Moreover, the letter argued that the benefits of crypto assets and their underlying technology:

"Will be realized most widely and transparently when regulated banks [...] are able to play a meaningful role. In particular, the public and the regulatory community would benefit from bank involvement in the cryptoasset space because of this long history of identifying, monitoring and managing risks from both a prudential and conduct perspective on an ongoing basis.”

The letter has proposed that the BCBS should be able to make more use of the existing international prudential framework, e.g. Basel III, to achieve its goals and to implement a framework that is product agnostic.

54% of Salvadorans are not familiar with Bitcoin, survey suggests

A new survey suggests that most Salvadorans still don't have a clear understanding of Bitcoin or crypto.

El Salvador has made global headlines with its president's controversial introduction of Bitcoin (BTC) as legal tender – a move that has sparked dissent from many local citizens and was met with skepticism by the International Monetary Fund. A new survey suggests that despite these developments, most El Salvadoreans still know little about the veteran cryptocurrency and even less about its smaller-market cap counterparts.

Research conducted by the São Paulo-based agency Sherlock Communications suggests that 54% of Salvadoran respondents chose ‘none’ when asked which cryptocurrency they knew best out of a list of five leading coins.

While 40% chose Bitcoin over the other listed cryptos – Ether (ETH), Bitcoin, Dogecoin (DOGE)and EOS – the survey did not seek to probe the level or depth of the knowledge these respondents have of the coin. In correspondence with Cointelegraph, Patrick O’Neill, director of Sherlock Communications, commented:

“The data we collected from El Salvador made it very clear to us that there are very high levels of confusion regarding cryptocurrency, surprisingly as this may seem, given the circumstance.”

Answers to the survey’s other questions support this picture, with 46% of respondents choosing “none” when asked, “What would make you confident to invest in cryptocurrencies?” 18% answered that proper regulation would help them make the leap, with a similar figure (16%) responding that access to more reliable and user-friendly platforms would make the difference. 

Asked whether or not a local economic crisis would make them more or less likely to trust crypto, 35% answered “less likely,” and 28% responded that a fiscal downturn would make them “much less likely” to invest in the asset class. 24% held the opposite view, saying that an economic downturn would make them more interested in crypto. Again, however, more respondents – 41% – said that a poor economic climate would make no difference to their relationship with crypto.

Rather than outright hostility or enthusiasm, a plurality of the survey’s respondents – 42% – said that recognizing Bitcoin as legal tender was neither a good nor a bad idea. Out of the remaining respondents, 31% in total had a more or less negative view of the move, and 29% more or less positive.

Related: El Salvador acts on Bitcoin price dip and buys 150 BTC

Neutrality or indifference was again marked in answers to a question regarding the state of crypto in the country, now and in the future. 32% had no opinion on the matter, with the next largest share of responses identifying with the answer, “It’s a subject that has no future here.” 

In recent coverage of citizens' resistance to the government's new Bitcoin law, one resident told reporters that: “We don’t know the currency. We don’t know where it comes from. We don’t know if it’s going to bring us profit or loss. We don’t know anything."

MiamiCoin generated $2K every 10 minutes for the city, says mayor

Miami's mayor believes that if city-specific cryptos succeed, it would mean residents "won't have to pay a cent in tax."

Miami Mayor Francis Suarez has been celebrating the success of a recent initiative to fund municipal projects through the proceeds of a city-specific crypto protocol built atop the Bitcoin (BTC) blockchain.

On Sept. 13, Miami’s city commissioners voted to accept funds generated by a new cryptocurrency, MiamiCoin, which was launched in August by CityCoins. The coin is built on Stacks, an open-source network of decentralized apps and smart contracts that use the Bitcoin blockchain as a programmable base layer.

Hard-coded into MiamiCoin’s protocol is the requirement that 30% of all coins mined are routed to a digital wallet designated for the city. Those funds will be earmarked for spending on projects such as projects to mitigate the risks of climate change, funding initiatives for underprivileged communities, and investing in crypto education for tech entrepreneurs. 

Fox Business estimated last week that roughly $2,500 worth of Stacks (STX) at its then-value of $1.50 were being transferred into the city's wallet every 10 minutes. In an interview with Fox on Sept. 20, Mayor Suarez confirmed the ballpark figure, stating that mining proceeds generated over $2,000 every 10 minutes and "over 5 million USD over the last 30 days".

In voting to accept the funds raised since August, the Miami City Commission did not vote to spend them–yet. Instead, it accepted the USD equivalent of the proceeds and will hold them in reserve for future municipal spending. Conversion into fiat currency ensures that the city does not custody cryptocurrency directly. In his Fox interview, Suarez said of the initiative:

“It’s interesting because it’s not an involuntary tax, it’s not philanthropy, it’s something that is completely different and could revolutionize the way governments are funded in the future.” 

He added, “It’s theoretically possible that the city could generate enough taxes through MiamiCoin so that our residents don’t have to pay one cent in tax.”

Other metrics appear to indicate that Miami has been attracting more tech job postings over the summer, according to data shared by Antonio Delgado, the Vice President of Innovation and Technology Partnerships at Miami Dade College:

Related: Civic engagement and crypto: Miami unveils its own digital coin

In line with Mayor Suarez’s numerous pro-crypto initiatives, a Miami-Dade County commissioner backed a resolution this spring aiming to allow residents to use cryptocurrencies like Bitcoin to pay local taxes. The mayor had proposed an official resolution that would see Bitcoin become an acceptable payment instrument in various parts of the city's administration in February. The commission agreed to study the proposal's feasibility, rather than to take immediate steps to implement it.

DCG-backed Korean exchange faces closure if it can’t find banking partner

South Korean crypto exchange Gopax has told users if it can't resolve its banking difficulties before a looming regulatory deadline it will need to shut down.

South Korean crypto exchange Gopax, which is backed by Digital Currency Group, is facing potential closure ahead of the country’s fast-approaching deadline for platforms to submit their requests for an official operating license.

To be eligible for a license, all crypto exchanges must show evidence that they are operating using real-name accounts at South Korean banks. The catch is that domestic banks have, for the most part, refused to engage in any risk assessment process for the country’s numerous small-medium-sized exchanges, and have only been confident enough to service the country’s top four trading platforms: Upbit, Bithumb, Korbit and Coinone. The deadline for all license applications is now just one week away, on Sept. 24. 

In a notice to users published today, Sept.17, the Gopax team wrote that the exchange “is currently negotiating with a financial institution to establish a real-name verification deposit and withdrawal account,” as stipulated by the new regulatory regime. 

Until Sept. 24, the exchange will continue to operate its Korean won crypto trading services as normal but if the negotiations do not resolve the issue, Gopax has warned that it will inform users of the end of support for won transactions, deposits and withdrawals in a follow-up notice. The platform has already ceased services for non-Korean users, who are prohibited from using the country's exchanges under the new rules.

Gopax landing page accessed from outside of South Korea on Sept. 17. Source: https://www.gopax.com

Gopax’s operator is a company called Streami, which has received funding from Shinhan, one of South Korea’s largest commercial banks. The exchange operator has been proactive in trying to establish the platform’s compliance credentials, working to acquire an ISO/IEC 27001 certification and K-ISMS certification, both in 2017. CryptoCompare currently ranks Gopax as the top platform in the country when taking factors like legal and regulatory metrics, caliber of investment, quality of data provision, and trade surveillance into account.

Related: South Korean crypto exchanges face Sept. 24 deadline to submit licence request

Experts have estimated that close to 40 of South Korea’s estimated 60 crypto exchange operators will be forced to shut down due to the new licensing rules. The Financial Services Commission, which is overseeing the new regulations, has justified its requirements by arguing that there has been high demand from traders for more protection for their assets held at smaller cryptocurrency exchanges. 

Banks have themselves contested the incoming measures, arguing that they are essentially being asked to indirectly vet the country’s exchanges by having to take responsibility for issuing real-name accounts. One banking industry representative claimed that this is a “dangerous and costly task” for financial institutions. 

EU regulator sees crypto as sign of increased risk-taking in current climate

An ESMA report views crypto assets' volatility in the first half of 2021 as an indication of “possible market exuberance.”

The European Securities and Markets Authority (ESMA) has published its report on trends, risks and vulnerabilities in the EU markets during the first half of 2021 (1H21).

Its takeaways included the argument that crypto markets’ extraordinary volatility and growth make a compelling case for the need for a targeted regulatory regime, as sketched out in the European Commission’s proposed Markets in Crypto-Assets regulations.

Much has been riding on the EU and global market’s recovery during 1H21 amid the ongoing impact of the COVID-19 pandemic. ESMA’s report notes that the economic outlook has continued to improve overall, with the European economy now forecast to reach its pre-pandemic output by the end of 2022, earlier than had been expected. 

This recovery has been fueled by the relaxation of public health restrictions, some reduction in uncertainty, and central banks’ activism in providing supportive monetary policies. When it comes to the medium-term risks of the current climate, ESMA has taken the crypto markets as a bellwether of market sentiment and dynamics during the past six months:

"Rising valuations across asset classes, massive price swings in cryptoassets and event-driven risks observed in 1H21 amid elevated trading volumes raise questions about increased risk-taking behaviour and possible market exuberance."

This exuberance, in the ESMA’s view, has been visible in the GameStop saga and the broader rise of social media-fueled retail trading, coupled with the huge price growth in crypto assets in the first quarter of this year. Much of this increase in trading activity has been happening outside the EU’s regulatory perimeter, the report underlines, raising investor protection concerns.

The ESMA attributed rising consumer confidence during this period to a range of factors, including innovative new business models and gamified features in online and mobile trading platforms. Parallel to the retail trading boom, ESMA is keeping a close eye on Decentralized Finance (DeFi), noting that the 47 billion euros ($55.3 billion) locked in DeFi in early September was down from its heights in mid-May, yet up 1,200% from end-July 2020.

The ESMA recognized DeFi’s benefits, including disintermediation, 24/7 availability and censorship resistance, and noted that the increasing use of stablecoins and central bank digital currencies are likely to make the boundaries between traditional finance and DeFi more porous over time. However, especially due to institutional investors’ proactivity, the ESMA considered that there is a growing possibility that DeFi risks will spill over into the real economy, even though the market remains small for the time being.

Related: EU securities regulator warns about risks of ‘non-regulated’ cryptocurrencies

The report also noted that institutional investors are starting to consider Bitcoin’s (BTC) environmental impact in terms of their ESG targets, which is feeding into the growing interest in Ether (ETH). Alongside its environmental credentials, the ESMA attributed ETH’s success to its smart contract functionality, the DeFi boom, and the blockchain’s role in the nonfungible token ecosystem.

The regulator's assessment has been echoed by Pantera Capital CEO Dan Morehead, who this summer argued that the blockchain's upgrade will likely help Ether to outflank Bitcoin as the largest cryptocurrency.

Zip eyes millennials with planned launch of crypto trading in the US next year

Aussie "buy now, pay later" fintech found that BNPL users are 67% more likely to trade crypto than non-users.

Australian "buy now, pay later" (BNPL) firm Zip​​, the smaller rival to Square’s recently-acquired Afterpay, is hitching its future growth prospects to the cryptocurrency industry.

Zip USA CEO Brad Lindenberg told attendees at the company's first retail investor day that “The innovation around crypto feels like the internet did in 1995.” The company’s interest in crypto has previously been hinted at and is now materializing into concrete plans. A project integrates crypto trading functionality for United States users and enables its merchants to accept Bitcoin (BTC) payments.

Its internal research has bolstered Zip’s confidence in the move, which found that BNPL users are 67% more likely to trade crypto than non-users. Lindenberg moreover pitched crypto integration as a natural next step for a company seeking to cater to what he dubbed the “Millennial finance diet.”

Zip’s co-founder Peter Gray had told reporters earlier this summer that support for crypto trading and providing a digital wallet was among the top requests from Zip users, hinting that the firm understands its “younger generation of customers” and would roll out products and services targeted at them.

Alongside crypto trading functionality and merchant support for BTC payments, Zip also plans to launch a “BitcoinBack” feature in 2022 to allow its customers to convert cash rewards into BTC. All these offerings are slated for U.S. launch in 2022 but will eventually expand to a total of 12 global markets over the next 12-18 months, including Zip’s home turf in Australia.

Related: Square to acquire Australian fintech Afterpay in $29B deal

As reported just last week, AfterPay itself has signaled it is likely to pursue crypto services once the regulatory framework in Australia is more transparent. The BNPL pioneer advised a Senate inquiry into “Australia as a Technology and Financial Center” that merchants could slash payment costs by using crypto and that sidestepping traditional rails could create significant efficiencies.

Colombia uses gamification to teach youth about crypto and stock trading

Colombia invests over $30,000 to develop a gamified app that simulates crypto and stock trading for young learners.

Colombia’s government has chosen to fund a new app, board game and book to educate children and young people about investing in cryptocurrencies and the stock market. As reported by Cointelegraph Brazil, the game was proposed by Henry Jean Velásquez in response to a government appeal for innovative projects that can help foster financial literacy among young Colombians. 

As Velásquez has described it, the game, dubbed “B Coin: Learn to Invest in the Stock Market,” simulates the experience of retail trading as follows:

""The user enters at once to invest and competes against two more players [...] and has to interpret the movements of the stock market so as to buy and sell at the right time and earn money. S/he can buy stocks, cryptocurrencies, commodities and trade in the forex markets. Each asset has a specific trend that is simple to interpret."

The government’s appeal for proposals was issued as part of the Crea Digital Call 2021 framework jointly launched by Colombia’s Ministries of Culture and of Science, Technology and Innovation. As a winner, Velásquez will receive 119 million pesos (roughly $31,000) and will be expected to present a transformed version of his proposed game in the form of a downloadable graphic novel for Windows and Android in November. Beginning in December, B Coin will be distributed via popular app stores.

According to Velásquez, as cited in an announcement from the Ministry of Science, Technology and Innovation, "We are improving the project’s graphic and pedagogical aspects. Through creative consensus, we concluded that we are going to transform it into a graphic novel so that it is easier to teach." In addition to the new version, Velásquez will also produce a board game and book by March 2022 to further strengthen the project.

Velásquez has pointed to research conducted by his company Gameday that revealed that only one percent of Colombian schools teach economic literacy. His inspiration for B Coins was reportedly drawn from a Colombian government decree from 2014, which stipulated financial and economic education in Colombia as a topic that the country's schools should cover so that children and young people can better understand economics and the dynamics of the financial system.

As reported, some researchers in the United States have recently aired their concerns that American teens have developed a negative impression of trading, in part due to them having witnessed the GameStop saga. This has sparked efforts to change teens’ minds by promoting pro-stock market educational programs, including simulated stock market experiences and a curriculum designed to clarify the basic tenets of investing.

Related: Indian university joins Hedera decentralized governance council

By contrast, South Korean researchers have been concerned that millennials’ increasing reliance on speculative investments like stocks and crypto, funded by borrowing, is trapping them in a highly indebted situation. They have observed that many younger people view day trading as a “once-in-a-lifetime opportunity” to break out of their financial precarity and to help ​​them subsist amid an insecure job market, suppressed wages and prohibitively high real-estate prices.

Major UK hedge fund Brevan Howard launches crypto division

Brevan Howard also hired former CMT Digital CEO Colleen Sullivan to lead private and venture investments in crypto.

Brevan Howard, a United Kingdom-based hedge fund, plans to "significantly expand" its cryptocurrency and digital assets, according to a new report from Reuters.

Chief Executive Aron Landy, who has been at Brevan's helm since its co-founder and long-time crypto backer Alan Howard stepped down in 2019, has stated that the firm has a "commitment to rapidly expanding its platform and offerings in cryptocurrencies and digital assets." 

Brevan's strategy going forward with crypto is two-pronged. The firm is launching a new business division, "BH Digital," to manage its crypto and digital assets and has also hired CMT Digital Chief Executive Colleen Sullivan to lead private and venture investments in crypto.

Sullivan has led CMT Digital – a CMT Group division focused on crypto trading, blockchain investments, and legal/policy engagement in the industry – since late 2013. At Brevan, she would chair an investment committee dedicated to forging a new strategy focused on crypto technology. Landy has endorsed Sullivan's "exceptional track record in making highly successful crypto venture investments," adding that her appointment "will be of tremendous benefit to Brevan Howard clients."

Related: Regulating crypto could give it ‘halo’ of legitimacy, says UK watchdog

Brevan's crypto strategy under Landy suggests that Howard's departure has done little to dampen the firm's appetite for investing in the space. Under his leadership, the Brevan Howard Master Fund had announced it would allocate 1.5% to crypto this April, roughly $84 million. 

Howard himself has numerous crypto investments under his belt, including in EOS developer Block.one and the ICE-owned digital assets platform Bakkt. This summer he led a $25 million extension raise for London-based crypto services firm Copper.co and also invested in Asian crypto investment platform Kikitrade. He also has a 25% stake with One River Digital Asset Management, a United States-based hedge fund that purchased $600 million worth of Bitcoin (BTC) and Ether (ETH) in 2020.

Majority of Korean crypto exchanges to shut down this month, insiders say

Failure to meet South Korean regulators' new requirements is expected to wipe out tens of crypto exchange operators.

The deadline for South Korean crypto exchanges to meet new compliance requirements is looming fast, with all operators expected to submit requests for an official license with the Financial Services Commission (FSC) no later than Sept. 24.

Industry actors and representatives for smaller exchanges have contested the new requirements for much of the past year, yet without success. Now insiders reportedly expect that close to 40 of the country’s estimated 60 crypto operators will be forced to shut down.

The crux of their objection has been the obligation that all exchanges show evidence that they are operating using real-name accounts at South Korean banks. The FSC has justified by arguing that there is a high demand from customers for more protection for their assets held at smaller crypto platforms. Yet South Korea’s banks have, for the most part, refused to engage in any risk assessment process for applicant exchanges, except for the country's top four trading platforms. 

These four exchanges – Upbit, Bithumb, Korbit and Coinone – already account for over 90% of South Korea’s total traded volume, and experts have in recent months made the case that the FSC’s new framework is poised to further cement the country’s crypto space as a monopolized market.

Moreover, estimates by Kim Hyoung-joong – a professor and head of the Cryptocurrency Research Center at Korea University – predict that the mass exchange closures will eliminate 42 “kimchi coins” – a moniker for smaller altcoins that are listed on smaller platforms and traded against the Korean won. Lee Chul-yi, head of local crypto exchange Foblgate, has told the Financial Times that:

“A situation similar to a bank run is expected near the deadline as investors can’t cash out of their holdings of ‘alt-coins’ listed only on small exchanges. [...] They will find themselves suddenly poor. I wonder if regulators can handle the side-effects.”

Related: Regulations drive Korean exchanges to delist, warn against high risk coins

With altcoins estimated to account for 90% of traded volume in South Korea’s crypto markets, the FSC has reportedly advised those exchange operators who expect to shut down to notify their clients no later than Sept. 17. Cho Yeon-haeng, president of Korea Finance Consumer Federation, has claimed that customer protection is unlikely to be the priority for those exchanges facing imminent closure and that “huge investor losses” are therefore expected due to the freezing of assets and suspension of trading on smaller platforms.

The regulatory heat will also affect international exchange operators. Binance has already pre-emptively halted Korean won trading pairs this summer to ensure it does not foul Korean authorities.

The new measures have been designed to curb Koreans’ enthusiasm for crypto trading amid concerns that retail investors, especially those from younger generations, are borrowing excessively in order to trade as they struggle with suppressed wages, a frozen job market and ever-rising real-estate prices.

Nasdaq to provide price feeds for tokenized stock trades on DeFiChain

Nasdaq, alongside Finnhub and Tiingo, will be providing its price feeds to DeFiChain, a DeFi platform built on the Bitcoin network.

Tokenized stocks have had a shaky few months from a regulatory perspective, but that seemingly hasn't stopped legacy financial giants and decentralized finance (DeFi) advocates from inking new deals. 

Bloomberg reported today that Nasdaq, Finnhub and Tiingo, will be providing their price feeds to DeFiChain, a DeFi platform built on the Bitcoin (BTC) network.

DeFiChain offers trading in tokenized stocks that correspond to the underlying price of major listed firms like Tesla, Amazon and Apple. The tokenized stocks, similar to a now-retracted offering rolled out by Binance earlier this year, can be purchased in fractions without requiring investors to purchase a full, traditional share, for which custody of a physical share certificate is required. 

The tokenized stocks are collateralized by cryptocurrencies, removing the need for an intermediary, and can also be purchased in the form of decentralized loans. Available to trade 24/7, the purchase of a tokenized stock does not confer ownership of the underlying asset to its holder but rather allows them to potentially profit from the asset's price movements.

The decentralized stock trading system offered by DeFiChain makes use of a native token, DFI, as well as Bitcoin and the dollar-pegged stablecoin USD Coin (USDC). The platform's co-founder, Julian Hosp, said that the offering will open the door to many people who are frustrated by traditional markets.”  Yet advocates like Hosp will increasingly need to contend with the increased attention regulators are paying to the DeFi space.

Last week, the United States Securities and Exchange Commission was revealed to be investigating the startup behind the world’s largest decentralized cryptocurrency exchange (DEX), Uniswap. Citing growing regulatory pressure, the platform had already moved to delist dozens of tokens and tokenized stocks in late July. 

Related: Swiss-based Digital Assets AG launches tokenized stock offerings on Solana

Earlier that same month, sales of Binance’s highly popular stock tokens, which represented fractions of equity shares in firms such as Tesla and Coinbase, were suddenly suspended following pressure from Hong Kong's securities regulator and earlier reports that European and British regulators had been scrutinizing the offering for possible non-compliance with securities laws.

Trading Bitcoin’s like trading stamps, says Swedish central bank governor

In comments at a Swedish banking conference, Sveriges Riksbank Governor Stefan Ingves warned that private money “usually collapses sooner or later.”

The governor of Sweden’s central bank, the Sveriges Riksbank, has dismissed Bitcoin (BTC) as an altogether far-fetched alternative to government-backed fiat currencies. 

Speaking at a banking conference in Stockholm, Sveriges Riksbank governor Stefan Ingves argued, “Private money usually collapses sooner or later.” In a further disparaging remark, he claimed, “Sure, you can get rich by trading in bitcoin, but it’s comparable to trading in stamps.”

Notwithstanding Ingves’ view of Bitcoin’s weaknesses as a currency, he has taken its popularity among investors seriously. Highlighting consumer interests and money laundering as being of particular concern, the central banker conceded this June that the cryptocurrency had gotten “big enough” to merit close attention from regulators, central bankers and lawmakers across the globe.

Nor has Ingves’ low estimation of Bitcoin prevented the Riksbank from co-opting its underlying technology for the benefit of its own central bank digital currency development project. Sweden’s e-krona uses a proof-of-concept based on Corda, a distributed ledger technology solution from R3. The latest update on the e-krona pilot is that experiments are progressing, involving simulated participants to cooperating with real-world actors, specifically Sweden’s retail bank chain, Handelsbanken. 

Related: Bitcoin’s rising popularity will lead to more regulation, says Riksbank

While the Riksbank’s approach is in line with most central banks and governments, this week has witnessed El Salvador’s unprecedented government-mandated adoption of Bitcoin as legal tender. Despite Salvadorans’ anxieties about their government’s move, Cardano founder Charles Hoskinson and whistleblower Edward Snowden have this week claimed that other nation-states could also eventually incorporate the coin into their own monetary policy.

Insiders sold MicroStrategy stock after Bitcoin’s bull run

Notorious Bitcoin bull and MicroStrategy CEO Michael Saylor himself hasn’t dumped any company stock since 2012.

Virginia-based enterprise software company MicroStrategy has captured the attention of crypto and financial news outlets alike with its CEO’s atypical strategy of going all-in on Bitcoin, beginning in 2020, with some reporters quipping that the company has since morphed into something closer to a Bitcoin (BTC) investment vehicle than a software firm. 

Recent filings with the United States Securities and Exchange Commission suggest some of the company’s top-level executives are ambivalent about pursuing this strategy long-term.

The filings reveal that MicroStrategy chief financial officer Phong Le and chief technology officer Timothy Lang both unloaded stock in August of this year by exercising roughly 30% of the options they received as compensation. 

As Bloomberg reports, Lang exercised 10,000 of his awarded options on Aug. 26 and later sold all the converted shares, pocketing roughly $7.1 million. Phong, for his part, exercised 20,000 options between Aug. 2 and 6 then sold the shares in return for a little over $7.3 million. Each has held on to roughly 20,000 options. 

CEO Michael Saylor himself has not sold any shares since 2012, although he did reallocate 50,000 shares of Class A company stock to another of his firms, Alcantara LLC, this January.

The report notes that, while exercising options is commonplace for executives, Phong and Lang’s moves were made without a pre-arranged trading plan. Matt Maley, chief market strategist of Miller Tabak + Co., has claimed that the decision may be indicative of their concerns about the long-term viability of Saylor’s corporate strategy and his commitment to tying the company’s fate so closely to that of Bitcoin. “Senior executives do not sell stock if they think it’s going higher. It’s just a bad sign no matter how you slice it,” Maley reportedly said.

As of June 30, 2021, MicroStrategy held an approximate 105,085 BTC, with Saylor doubling down on his crypto strategy in late July by pledging to continue to amass more BTC. Earlier in June, the firm had announced a $400-million debt raise to expand its Bitcoin treasury holdings, and in August, MicroStrategy added a further 3,907 BTC to its holdings, bringing its total to 108,992 BTC, at a cost of $2.918 billion to the company.

Related: 3 Reasons Why MicroStrategy Adopted Bitcoin — And Why Others Will Too

As of the time of writing, MicroStrategy stock is down close to 9.4% on the day and just over 77% over the past six months. However, Ed Moya, a senior market analyst at Oanda, has argued that Phong and Lang’s sell-offs are unlikely to discourage MicroStrategy investors who share Saylor’s commitment to Bitcoin, given that the CEO’s “relentless support for Bitcoin has made the company a cryptocurrency trade and not necessarily a bet on the company’s software solutions and services.” He added, “The share price will likely continue to go the direction of Saylor and his bet on Bitcoin.”

One in four US teens would buy crypto if given money to invest, survey finds

The results of a new survey suggest teens are still more persuaded that the stock market is where they should invest, yet crypto is more popular than alternatives like real estate.

Researchers have attempted to probe North American teens’ perceptions of the stock market, cryptocurrencies and other investments in the high octane GameStop era. The results showed that cryptocurrencies edged ahead of some other asset classes like real estate, with 25% of teens saying they would invest in crypto if given hypothetical funds as compared with 24% in real estate. 

43% remain convinced that the best bet would be to invest their funds in the stock market, yet a large share - 37% - said they'd refrain from investing altogether.

These results were drawn from a survey jointly conducted by Junior Achievement and RSM US in mid-July of this year among a small sample of just over 1,000 teens aged between 13 to 17 years. 39% of respondents who had closely followed the GameStop saga agreed with the idea that investing in the stock market is a great way to make a quick buck, with 20% judging trading stocks to be too risky overall. Nonetheless, 40% continue to believe that stocks can be advantageous as a long-term investment. 

The survey’s leaders have indicated that they aspire to reestablish confidence amongst teens that buying into the stock market is really in their best interest and to temper the negative picture they may have after having witnessed the fate of GameStop's retail investors – as opposed to hedge funders – during the short squeeze. In the words of Jack E. Kosakowski, President & CEO of Junior Achievement USA:

"These results show that the recent 'meme stock' phenomenon could be having an adverse impact on teens' perceptions of what it means to invest in the stock market. Given the fact that the stock market plays a major role in helping countless Americans achieve a secure retirement, it's important that we help demystify it for the next generation."

Junior Achievement and RSM have been trying to change teens’ impressions by promoting pro-stock market educational programs, including simulated stock market experiences and a curriculum designed to clarify the basic tenets of investing. The challenge they face is that, according to the results of their survey, a vanishing majority - 51% – of teens said they believe the stock market is "'a good thing' for ordinary people."

Related: Parents, it’s time for ‘the talk’: Did your kid trade crypto in 2020?

As Cointelegraph previously reported, in many parts of the world, an increasing reliance on speculative investments has become conspicuous among millennials struggling to subsist in an era of suppressed wages, an insecure job market and forbiddingly high real-estate prices. 

In contrast to Junior Achievement's takeaways, Lee Han Koo, an economics professor at the University of Suwon in Korea, argued earlier this year that the difficult socio-economic environment has fueled a "desperate" perception among many young people that day trading represents a “once-in-a-lifetime opportunity” to break out of their insurmountable financial precarity. 

Report: CoinSwitch Kuber poised to become India’s second crypto unicorn

Following crypto exchange CoinDCX’s breakthrough to unicorn status this summer, CoinSwitch Kuber is rumored to be next in line – at a valuation close to twice that of its forerunner.

India’s recent past has been tumultuous on the cryptocurrency front, yet the local industry is nonetheless rumored to be on the verge of producing another crypto unicorn. 

According to an unconfirmed report published today, sources allegedly familiar with the matter have claimed that crypto exchange CoinSwitch Kuber is in the “advanced stages of talks” for a fresh financing round that would see the platform valued $2 billion.

That’s close to twice the valuation of the country’s first crypto unicorn: rival crypto exchange CoinDCX had raised $90 million in a Series C funding round this summer at a valuation of $1.1 billion. CoinDCX’s funding was led by B Capital Group and included Block.one, Coinbase Ventures, Polychain and Jump Capital. CoinSwitch Kuber has allegedly been engaging closely with Coinbase and Andreessen Horowitz (A16z). If the latter signs on, it would be the VC firm’s first investment in an Indian startup.

CoinSwitch Kuber’s strong growth to over 7 million monthly active users in August, up from roughly 4 million in April, could reportedly secure a further $100 million for the company, should the deal be finalized. While the ambiguous regulatory and legal landscape for decentralized cryptocurrencies in India has continued to deter a handful of high-profile businesses from entering the sector, the rise of trading platforms like CoinSwitch Kuber and CoinDCX - the latter has roughly 3.5 million users for its part - suggests retail investors are ever more enthusiastic. Investments in the Indian crypto sector meanwhile rose 600% between mid-2020 and June of this year.

Related: India to reportedly ditch Bitcoin ban agenda in favor of asset classification

In the wider startup sector, India has added three unicorns per month in 2021, resulting in a near-doubling of the overall number in the country: 51 as of last month. Meanwhile, the traditional financial sphere is absorbing innovations from the crypto space, with the Reserve Bank of India recently revealing it is weighing the merits of using a decentralized ledger for its proposed central bank digital currency (CBDC). Trials for the digital rupee will likely begin by the end of this year.

Cointelegraph has reached out to CoinSwitch Kuber for comment and will update this article should more information be forthcoming.

Regulating crypto could give it ‘halo’ of legitimacy, says UK watchdog

The chair of the United Kingdom’s Financial Conduct Authority has warned that over-extending the reach of regulators could backfire in the case of some cryptocurrency tokens.

Regulators must step up protections for consumers who invest in crypto tokens but also keep in mind that overreach could backfire, the chair of the United Kingdom’s Financial Conduct Authority (FCA) has cautioned.

In a new speech written for the Cambridge International Symposium on Economic Crime, Charles Randell, chair of the FCA and Payments Systems Regulator, said that there is currently a real problem with consumers who delve into the crypto sphere without due awareness of the risks. 

He singled out the role of influencers and paid-for advertising, in particular, noting that Kim Kardashian’s recent Instagram promotion of EthereumMax (EMAX), a brand-new token issued by “unknown developers,” “may have been the financial promotion with the single biggest audience reach in history.” 

While Randell reserved judgement on whether or not EthereumMax is itself fraudulent, the vast reach of such a campaign and its potential to mislead under-informed consumers should give regulators pause, he implied. 

Add to this dynamics such as retail investor hype, FOMO and the proliferation of pump-and-dump crypto-related scams, Randell claimed that many consumers remain blind to the financial risks they are courting by trusting influencer endorsements and savvy online token campaigns. 

To illustrate his point, Randell underlined that around 2.3 million U.K. citizens currently hold crypto, 14% of whom have “worryingly” used credit to purchase it. Moreover, 12% of crypto holders — roughly 250,000 Britons — mistakenly believe they will be protected by the FCA or U.K.’s Financial Services Compensation Scheme should things go wrong, according to the FCA’s research.

Randell nevertheless remains wary of overstepping the mark when it comes to the new asset class, emphasizing that U.K. consumers are free to engage in other unregulated speculative activities — from gold and foreign currencies to Pokemon cards — despite there being “no shortage of consumer harm in many of those markets”:

“So why should we regulate purely speculative digital tokens? And if we do regulate these tokens, will this lead people to think that they are bona fide investments? That is, will the involvement of the FCA give them a ’halo effect’ that raises unrealistic expectations of consumer protection?”

Related: Crypto and ‘meme stocks’ shunned by 90% of UK financial advisers

While the FCA currently regulates cryptocurrency exchanges and has banned the sale of crypto derivatives to retail consumers, Randell proposed that its measures going forward should begin with a limited scope of two interventions centered on stablecoins and security tokens.

Both, in his view, have the potential to offer “encouraging useful new ideas” for cross-border payments, financial infrastructures and financial inclusion, and should not be hampered by overbearing red tape.” Instead, he argued for a moderate approach, in line with existing rules for other FCA-regulated entities, to ensure that token issuers and blockchain firms are solvent and transparent. He also pointed to the success of the FCA’s regulatory sandbox and its role in enabling developers to test their ideas in a supportive and insulated environment.

Beyond stablecoins and security tokens, Randell argued that the FCA should go further in targeting misleading crypto asset promotions, which it has already been studying for over a year. In mid-July 2021, the FCA created an 11-million-British-pound (~$15 million) fund to run an online marketing campaign warning Britons, especially 18–30-year-olds, about the risks associated with many crypto investments.

Crypto and blockchain jobs’ share grew 118% in ten months, new data shows

Not only has demand for cryptocurrency- and blockchain-related expertise increased, but new data suggests that the kinds of roles being posted have shifted over time.

A new report gathering together the most recent data on the cryptocurrency and blockchain job market has suggested that higher levels of institutional adoption have spurred ever greater demand for expertise in the sector.

According to the employment website Indeed, cited today in Korea IT Times, as of mid-July 2021, the overall share of crypto and blockchain job postings on the platform has grown 118% compared to early September 2020. 

This solid growth has also come to a shift in the roles being sought after, with the share of management posts in crypto and blockchain increasing 29.87% year-on-year as of July 16. Human resource accounts have risen 200% over the same time frame, whereas software development jobs have dropped down to 29.7% of all crypto and blockchain posts compared with 34.8% the previous year. All data on the allocation of roles has reportedly been drawn from the crypto trading simulator, Crypto Parrot. 

As the Korea IT Times observes, blockchain-related roles tend towards a higher salary range than other technology posts, as they demand a strong knowledge of cryptography combined with expertise in ledger economics and object-oriented programming, among other areas. While crypto and blockchain - even DeFi - have steadily gained traction in educational institutions over time, the report alleges that many developers in the sector remain largely autodidact, suggesting universities and programs are lagging. 

The report further claims that reliance upon remote working during the pandemic may prove to be a good fit for an industry that prizes decentralization, encouraging core devs and researchers to engage with multiple partners and employers on different projects. 

Related: Major job postings from the crypto space in 2021

While the report does not provide data on the share of public and private sector employers seeking crypto talent, this year has seen everyone from Israeli intelligence agency Mossad to the Bank of England advertise related roles.

In the private sector, the crypto arm of asset management firm Fidelity Investments has reportedly been planning to grow its workforce by 70%, JPMorgan began accepting applications for blockchain-focused software developers, and Amazon has been seeking someone to lead its digital currency and blockchain strategy and product roadmap amid unconfirmed claims that the mega retailer intends to accept Bitcoin (BTC) payments by 2022.

Nigeria’s securities regulator establishes fintech unit to study crypto

With much of the Nigerian crypto market underground or peer-to-peer due to government restrictions, the country’s securities regulator is looking into ways to make investors safer.

In 2021, financial institutions operating in Nigeria have been the lever of a government crackdown on cryptocurrencies, beginning with February’s notorious central bank ban on lenders providing services to crypto exchanges in the country. With much of the Nigerian crypto market of necessity peer-to-peer, Nigeria’s Securities and Exchange Commission (SEC) now aims to introduce regulations that could regularize the industry and offer investors better protection.

According to a Sept. 2 report, the SEC has established a dedicated fintech division tasked with studying crypto and blockchain investments and products – knowledge it could then marshal into a future crypto regulatory framework. Director General Lamido Yuguda told Reuters this week that the agency is “looking at this market closely to see how we can bring out regulations that will help investors protect their investment in blockchain." 

Nigeria’s SEC, which considers that all crypto assets ”are securities, unless proven otherwise,” will only be able to establish a regulatory framework if crypto is once again integrated into the country’s banking system.  The agency is also reportedly looking to work with fintechs to strengthen the domestic market for securities to dissuade capital flight, which continues to beset multiple sectors.

Crypto’s exclusion from banking channels has not dampened enthusiasm for the asset class. On the contrary, in a year fraught with political and economic crises, including social and economic repression and rampant inflation, crypto adoption has continued to grow.

Related: Nigeria regulators recognize digital assets in stunning new statement

The Central Bank of Nigeria (CBN) is also partnering with a Barbados-based fintech as a technical partner for its proposed e-naira digital currency, preliminary guidelines issued in August. At a meeting of the country’s Monetary Policy Committee in Abuja this spring, CBN Governor Godwin Emefiele expressed his confidence that cryptocurrencies like Bitcoin (BTC) will eventually be legal in the country but stressed that the government would do its best to prevent them from being used to finance illicit activities.

US postal inspectors need ‘comprehensive crypto training,’ audit finds

An internal audit released by the United States Postal Inspection Service has recommended that the agency develop a "comprehensive crypto training program" to reduce risks during its investigations.

The United States Postal Inspection Service (USPIS), the law enforcement arm of the U.S. Postal Service, has conducted an internal audit of the way in which it carries out crypto-related investigations and found there’s significant room for improvement.

Notably, the USPIS handled only a small number of crypto-related cases during the two fiscal years under review — 2019 and 2020 — with a total of four closed cases for which postal inspectors seized crypto as evidence during an investigation and nine other cases that were managed under the USPIS’ “Cryptocurrency Fund Program,” established back in 2017.

This program was intended to specify standards and policies that can help account for cryptocurrency transactions during investigations and reduce any associated operational risks. As the report has emphasized, this is particularly important given that “The anonymity of cryptocurrency transactions and the significant fluctuations in the value of cryptocurrency create opportunities for abuse or theft when used during law enforcement activities.”

Despite the small volume of crypto-related activities, the USPS Office of Inspector General (OIG) had determined earlier this year that a self-initiated audit was necessary in light of the fact that cryptocurrencies can often be the “preferred medium of exchange” for illicit activities like ransomware campaigns, online scams and money laundering. 

Assessing operations during the two fiscal years under review, the audit report identified a “lack of standardized training” for USPIS employees regarding cryptocurrencies. This meant that postal inspectors who carried out undercover investigations and purchased crypto as part of their activities failed to comply with the guidance that had been established as part of the Cryptocurrency Fund Program.

While in some cases inspectors did use the program to account for crypto transactions they make for investigative purposes, the audit found that there are many legitimate instances when using the program may not be possible, as when certain crypto vendors only accept payment in the form of specific private cryptocurrencies. 

In these cases, inspectors needed to request standard investigative funds in the form of U.S. dollars and were personally responsible for all crypto-fiat conversions and the management of unused investigative funds. 

It is in these scenarios that the audit identified a breakdown in communication between management and inspectors, meaning that the program’s managers at present “cannot account for the total amount of cryptocurrency used for investigative purposes across the Postal Inspection Service.” 

The auditors were therefore required to conduct a manual keyword search for various crypto-related terms to try to ascertain whether or not crypto had been used in certain investigative cases, finding 1,064 unique case numbers that will now need to be manually reviewed. On this point, the audit report concluded:

“The Program is unable to carry out one of its primary purposes—to help postal inspectors manage the challenges associated with cryptocurrency’s inherent volatility—which ultimately leaves the Postal Inspection Service susceptible to theft, abuse, and mismanagement of federal funds.”

The audit report has recommended that going forward, the USPIS should ensure that the Cryptocurrency Fund Program has the information it needs to provide oversight and that the agency also develop a comprehensive cryptocurrency training program for all inspectors. Additionally, it has recommended a rehaul of current data management for investigative transactions, which have been inaccurate and include duplicates, again impacting the agency’s ability to accurately track and manage its crypto-related law enforcement activities. 

Related: Darknet, cryptocurrency and two intersecting health crises

According to Margaret McDavid,  deputy assistant inspector general in the OIG Office of Audit’s Inspection Service and Information Technology Directorate, the USPIS was “involved in the joint efforts to dismantle the Wall Street Dark Web Marketplace” in 2019, which led to the seizure of over $25 million in crypto.

BitPay wallet integrates 1inch Network DEX aggregator

Decentralized exchange aggregator 1inch has been integrated into the crypto wallet app BitPay, enabling users to access its rates for their crypto swaps.

1inch Network, a major decentralized exchange (DEX) aggregator and automated market maker, is broadening its reach by partnering with veteran crypto wallet provider BitPay. 

The two companies announced that 1inch’s DEX aggregation functionality is available for all users of the BitPay wallet — an app that allows individuals to manage, convert and spend 12 different cryptocurrencies through integrations with ATMs, Apple Pay, Google Pay and Mastercard. 

The 1inch Network partnership enables BitPay wallet users to use the DEX aggregator directly. 1inch Network announced wider integrations with different decentralized finance (DeFi) protocols and DEXs this year to strengthen its liquidity pools for its users

The network uses an algorithm called Pathfinder to search over 60 different liquidity sources on Ethereum, over 30 on Binance Smart Chain and over 20 on Polygon and Optimistic Ethereum. Over the past two years, the DEX aggregator has exceeded $65 billion in total volume on the Ethereum network, according to Tuesday’s announcement. In the winter of 2020, it secured funding from the likes of Pantera Capital and multiple crypto venture funds.

Related: 1inch launches mobile wallet on Apple iOS

1inch Network co-founder Sergej Kunz stated that the partnership with the BitPay wallet app provides an opportunity for the DEX aggregator to reach out to new audiences who would "benefit from the 1inch's attractive rates and user-friendly swap process.” With the integration, BitPay users will be in a position to swap their Bitcoin (BTC), Ether (ETH) or other holdings for various crypto assets at 1inch Network’s competitive rates without leaving the app. 

On Aug. 17, 1inch Network announced its deployment on the Optimistic Ethereum (OE) mainnet, following in the steps of fellow automated market maker Uniswap’s long-anticipated alpha launch of its v3 exchange on the OE mainnet. The use of the OE network is expected to significantly reduce user transaction fees and confirmation delays for both platforms.

MUFG boosts its crypto exposure following $41M Zipmex funding round

Thailand's Bank of Ayudhya, where MUFG holds a 76.9% stake, has participated in a $41 million raise for Asia-Pacific-focused crypto trading platform Zipmex.

Thailand's Bank of Ayudhya (BAY) – in which Mitsubishi UFJ Financial Group (MUFG) holds a 76.9% stake – participated in the latest funding round for the Asia-Pacific-focused crypto exchange Zipmex.

The $41 million raise, which saw the participation of two publicly traded Thai media firms and overseas VC funds in addition to BAY, accounts for the lion’s share of Zipmex’s total $52 million in funds raised to date. 

BAY’s corporate venture capital arm, Krungsri Finnovate, invests in startups across various fintech areas, including blockchain, lending, e-commerce and cross-border remittance. Commenting on the news of the Zipmex raise, its managing director today stressed to Reuters that “if we don’t stay close, technology will be further away from the bank.” 

For the exchange, the plan is to use the fresh funding to double its current user base to hit one million over the next six months. Zipmex is currently the only digital assets platform licensed in Thailand, operates under regulatory supervision in Indonesia and Australia, and has a notified regulatory exemption in Singapore. It is reportedly in the process of applying for a Major Payment Institution license with Singapore’s de facto central bank, the Monetary Authority of Singapore, which would enable it to provide digital payment token services in the city-state, among other offerings. 

At present, the Singapore-headquartered exchange conducts roughly half its business in Thailand, a fifth in Indonesia and the rest in Singapore and Australia, according to CEO Marcus Lim.

The exchange also has its sights on expanding its technology and compliance teams to roll out new digital assets products in lending, payments and securities. It currently offers exchange users two earnings accounts, one flexible and one fixed-term, and supports crypto spending through a partnership with Visa, with plans for its own crypto card launch later this year.

Related: Digital asset platform Zipmex partners with Visa in Asia-Pacific

In Thailand, Zipmex has also recently partnered with the largest operator of movie theaters in the country, Major Cineplex Group, and lo digital payment startup RapidZ to allow some moviegoers to buy tickets with cryptocurrencies like Bitcoin (BTC). 

Standard Chartered launches blockchain trade platorm with Chinese fintech

The joint venture operating the new blockchain-powered platform will be headquartered in Singapore and led by SC Ventures' Amelia Ng as CEO.

United Kingdom-based multinational banking firm Standard Chartered (StanChart) has launched a blockchain-powered trade finance platform through a joint venture with Chinese supply chain finance technology provider Linklogis.

Dubbed Olea, the platform will aim to meet the needs of institutional investors that are “seeking opportunities in an alternative asset class with businesses requiring supply chain financing," according to a report from The Korea Herald published Aug. 30.

The joint venture operating the platform will be headquartered in Singapore, where Amelia Ng from StanChart’s SC Ventures will lead as its CEO. Letitiat Chau, Linklogis’ vice chairman and chief risk officer, will serve as deputy CEO.

StanChart became Linklogis’ first global bank investor in 2020, one year after the two entities had signed a memorandum of understanding to jointly explore and develop solutions for the supply chain finance ecosystem. The bank has previously worked with China-based fintech leaders that include Alipay owner Ant Group, whose Antchain-based global trade platform Trusple has been used by StanChart, Citi, DBS Bank, Deutsche Bank and many others.

Olea is reportedly expected to help StanChart raise its profile in global digital trade finance and the choice to implement a blockchain infrastructure continues the bank’s ongoing engagement with the technology. Other multinational banks who have tapped blockchain for trade finance specifically include HSBC, BNP Paribas and Citi, whose joint platform was readied for commercial launch in Singapore in the second quarter of 2020.

Related: Trade finance: The latest industry to boost DLT adoption amid COVID-19

StanChart has itself previously collaborated on using blockchain for trade finance with many of these same banks through the eTrade Connect blockchain trade finance platform launched in Hong Kong in 2018.

That same year, the digital trade finance platform we.trade — which counts HSBC, Rabobank, Santander, Société Générale, UniCredit, Deutsche Bank, and others as founder banks — collaborated with the Hyperledger Fabric-powered IBM blockchain to complete its first live operations. 

Canadian Bitcoin miner Blockstream joins crypto unicorns with $3.2B valuation

Blockstream has secured $210 million in fresh investment from a U.K. private equity firm and crypto exchange Bitfinex’s operator.

Canada-based Bitcoin (BTC) infrastructure firm Blockstream, co-founded by cryptographer and cypherpunk Adam Back, has hit unicorn status with its latest valuation at $3.2 billion.

The company, which focuses on various Bitcoin-related areas — including operating as a mining service provider and developing renewables-based infrastructure intended to “green” the veteran cryptocurrency — has raised $210 million in its latest financing round, according to Canadian newspaper The Globe and Mail.

Blockstream’s new backers, which join existing investors such as Twitter CEO Jack Dorsey, are the United Kingdom-based private equity firm Baillie Gifford and Hong Kong-based iFinex, the operator of crypto exchange Bitfinex

In a statement about the grounds for Blockstream’s $3.2-billion valuation and the fresh capital investment, Baillie Gifford wrote that it has “enormous respect for Blockstream’s founders and management team” and believes that “its settlement network for Bitcoin-based assets and securities has the potential to transform the design and operation of capital markets.”

Blockstream chief strategy officer Samson Mow has reportedly said that the investment will support the company’s further growth and help it to expand its mining operations. The company has recently acquired ASIC maker Spondoolies and, according to Mow, plans to develop its own ASIC miner to use for its own operations and to sell on the retail market “sometime in 2022.”

Related: Unicorns in crypto: A growing herd of billion-dollar crypto companies

Mow also disclosed that Blockstream aims to raise more capital in the coming months to expand its various initiatives. These have to date included the Blockstream Satellite network, which broadcasts the Bitcoin blockchain worldwide 24/7 and the launch of a service called Blockstream Energy, which allows energy producers to sell surplus electricity to proof-of-work miners.

In March of this year, Blockstream announced the launch of a security token backed by the company’s mining operations, intended to serve as a more flexible alternative to investing in Bitcoin mining stocks or physical mining infrastructure.

Crypto ‘not protected by law,’ rules provincial high court in China

A provincial high court ruling in China has set a potential precedent by declining to protect a plaintiff’s $10,000 worth of lost crypto tokens.

Yet another blow has been dealt to China’s cryptocurrency community, with news of a new high court ruling in the Shandong province that has drawn out the consequences of crypto’s lack of legal status in the country.

As the South China Morning Post (SCMP) reported, the case in question was an appeal against a ruling this January by an intermediate court in the city of Jinan. The plaintiff in the case had lost 70,000 yuan (roughly $10,750) by investing in unnamed crypto tokens back in 2017, which friends of his had reportedly endorsed. Following the People’s Bank of China’s doubling down on its anti-crypto measures in 2018, the involved accounts were closed, leading to the loss of the tokens.

Shandong’s high court has now ruled this weekend against the plaintiff's case, which rested upon allegations of fraud, by affirming that “investing or trading cryptocurrency isn’t protected by law.”

Related: Russian Court: Theft of 100 BTC Isn’t a Crime Because Bitcoin Isn’t Property

As previously reported, Shandong’s ruling is in line with the judgment of some other provincial courts in China, as, for example, when a court in the Fujian province dismissed a Bitcoin-related case last year on the grounds that a digital commodity cannot be protected by Chinese law.

Yet a ruling that very same year had suggested otherwise when the Shanghai No. 1 Intermediate People’s Court ruled that a couple should be compensated for the theft of their Bitcoin. This echoed a 2019 ruling by the Hangzhou Internet Court, which became at the time the second Chinese court to have deemed Bitcoin (BTC) to be virtual property.

The SCMP’s claim that this weekend’s ruling could serve as a negative precedent for crypto users in China comes as Beijing escalates its antagonistic stance toward cryptocurrencies, especially as of spring 2021.

Swedish gov’t pays out $1.5M in Bitcoin to convicted drug dealer

The Swedish prosecutor had argued in court that the man should be stripped of his illicitly earned Bitcoin at the equivalent value in fiat currency at the time of his conviction.

The Swedish government has found itself in the unforeseen situation of paying out around $1.5 million worth of Bitcoin (BTC) to a convicted — and then jailed — drug dealer.

Two years ago, the man was convicted in a Swedish court for having illegally earned 36 Bitcoin through online drug sales. Yet, Tove Kullberg, his prosecutor at the time, had used the Bitcoin’s equivalent value in fiat to make her case. The court, therefore, judged that the man should be stripped of his illicitly earned Bitcoin at its then-value of 1.3 million Swedish kronor ($100,000).

In the period following the man’s conviction and imprisonment, his crypto stash had appreciated to such an extent that the Swedish Enforcement Authority, tasked with auctioning off the 36 BTC, needed to sell off just 3 BTC to satisfy the court’s demands.

That now leaves 33 BTC, worth $1.5 million, which must be lawfully returned to its owner. Speaking to Swedish radio, Kullberg said that the way she chose to argue her case was, in retrospect, “unfortunate in many ways [...] It has led to consequences I was not able to foresee at the time.” She added:

“The lesson to be learned from this is to keep the value in Bitcoin, that the profit from the crime should be 36 Bitcoin, regardless of what value the Bitcoin has at the time.”

Kullberg also stressed that as cryptocurrency continues to become ever more widely adopted, prosecution authorities would do well to invest in educating their workforce in the details of the industry. “The more we increase the level of knowledge within the organization, the fewer mistakes we will make,” she said.

Related: A legal asset after all? Governments are cashing in on seized crypto

Cryptocurrencies — whether due to their volatility or technical design — continue to challenge legal authorities and procedures worldwide. In the United Kingdom, a government-sanctioned task force recently proposed a dispute resolution framework that would help standardize the means of dealing with smart contract disputes. Due to the non-recognition of Bitcoin as legal tender or its surrogate, a Russian court last year ruled against restituting stolen crypto to the victim of a major crime. 

Analysts warn of ‘acute’ Q3 slowdown in Robinhood’s DOGE-reliant growth

Wolfe Research has told investors to consider the "outsized contribution" Dogecoin trading has made to Robinhood's recent growth.

Robinhood’s recent disclosure of the major boost that crypto has contributed to its second-quarter financial earnings is worrying some financial analysts, largely due to the “outsized” role that Dogecoin (DOGE) trading has played.

In an investor note this week, Wolfe Research’s Steven Cubak warned that “Robinhood’s growth within crypto is nothing short of remarkable, but the outsized contribution from Dogecoin simply cannot be ignored.”

As reported, Robinhood’s Q2 results revealed that crypto trading had surged to represent 41% of its revenue and that more than 60% of the app’s funded accounts traded crypto in the quarter. The company generated $233 million from crypto trading services for Q2 2021, up from $5 million for the entirety of 2020. 

Related: Robinhood shareholders want crypto wallets and a hat

An astonishing 62% of Robinhood’s crypto revenue in Q2 2021 derived from Dogecoin trades during the meme currency’s major social media-fueled pump – representing close to a third of Robinhood’s total transaction revenue.

In his note to investors, Chubak traced this exponential growth in Dogecoin’s contributions to the company’s revenue, from 6% in Q1 2021 to the 26% mark by Q2. He added that trading volumes for Dogecoin have dropped by roughly 78% in Q3 and are now tracking below Q1 levels. He warned:

“We believe the 3Q slowdown could be much more acute than many investors were anticipating [...] This may not phase fintech investors with a longer investment horizon but may give financial investors more conviction in the short thesis.”

Having launched its IPO this summer in an initially disappointing debut on Nasdaq, shares in Robinhood rapidly became so volatile that the stock exchange was forced to halt trading multiple times. Robinhood had itself done the same on its app in January, to popular outrage, as Dogecoin (DOGE) surged by 900%.

As of the time of writing, shares in Robinhood are down just over 5% on the day. 

Wells Fargo files for Bitcoin fund

Wells Fargo is offering its wealthy clients indirect exposure to Bitcoin through a new fund issued in partnership with NYDIG and FS Investments.

Wells Fargo – one of the oldest banks in the United States – has registered a new, pooled investment fund that offers its wealthy clients indirect exposure to Bitcoin (BTC).

Fargo’s filing of a “Notice of Exempt Offering of Securities” — also known as a Form D — with the United States Securities Commission (SEC), reveals that the fund is called “FS NYDIG BITCOIN FUND I,” reflecting the fact that it is being incorporated as a limited partnership with investment services company NYDIG and alternative assets manager FS Investments.

The notice indicates that Wells Fargo Clearing Services will receive placement and servicing fees for all clients it refers to the fund. It also shows that the fund’s first sale is yet to occur and that Fargo expects the offering to last more than one year.

NYDIG, an acronym for New York Digital Investment Group, is owned by Stone Ridge Asset Management, which has pursued a ​​Bitcoin-focused investment strategy through indirect exposure and making direct Bitcoin purchases via NYDIG

NYDIG has also partnered with JPMorgan Chase on a new Bitcoin fund this summer – just one of the megabank’s six crypto funds through which it has been offering crypto exposure to various clients.

Related: 60% of uber-rich family offices considering crypto or own it: Goldman Sachs

Fargo’s pivot to crypto reflects the asset class’s growing popularity on Wall Street, drawing in the likes of Goldman Sachs, BNY Mellon, JPMorgan Chase and Morgan Stanley. 

This May, Darrel Cronk, the president of Wells Fargo Investment Institute, told reporters that the institution now judges that the cryptocurrency space has “hit an evolution and maturation of its development that allows it now to be a viable investable asset” and has since begun offering exposure to its high-net-worth clients. As recently as December 2020, the head of real asset strategy at the institute had suggested it had little interest in crypto.

Thailand’s central bank outlines safeguards for a future retail CBDC

The results of a new study from the Bank of Thailand point to three key considerations for making sure a retail central bank digital currency doesn't adversely impact financial stability.

The Bank of Thailand has published the results of a new study into how to manage the implications of issuing a retail central bank digital currency (CDBC) for the country’s financial sector.

As distinct from a wholesale CBDC, which is limited to use by financial institutions and intermediaries, a retail CBDC is widely available for use by the general public. The Bank of Thailand, like many other central banks worldwide, has been engaged in CBDC research and development and now plans to begin testing a CBDC next year. Unlike the BoT, not all these central banks have committed to trialing specifically retail CBDCs.

From its latest study, the BoT has disclosed three key conclusions it has drawn for ensuring that retail CBDC issuance does not present risks for financial stability. Having previously identified a “flight to quality”  — i.e. consumers preferring CBDCs to existing fiat currency in certain situations — as a major risk factor, the BoT’s study notes that further challenges may include an adverse effect on monetary policy transmission or on existing financial institutions. To prevent this, the study suggests the following three points are crucial:

“(1) the CBDC shall be cash-like and non-interest-bearing, (2) intermediaries such as financial institutions shall be the distributors of CBDC to the general public, and (3) conditions or limits for converting CBDC shall be established.”

Such measures, the BoT suggests, will help to ensure that a retail CBDC does not compete with bank deposits and to “preserve the role of intermediaries in collecting deposits and providing credit as well as managing liquidity in the overall financial system.” These measures also provide a safeguard against runs on financial institutions, in the BoT’s view.

Related: Thailand’s central bank warns against ‘illegal’ THT stablecoin

Notably, the BoT predicts that public demand for a retail CBDC will grow over time and could lead to such a currency becoming an alternative form of payment in the future, in lieu of cash and existing forms of e-money.

Alongside these takeaways, the BoT has disclosed further details of its planned pilot for a retail CBDC in real-world situations. The pilot will be split into two tracks. The first, the “Foundation Track,” will begin in Q2 2022 and will involve using the currency to conduct cash-like activities at a limited scale, e.g. as payment or receipt for goods and services, as well as for conversion. 

The second, more ambitious “Innovation Track” will explore ways in which a retail CBDC can be used for more novel use cases, drawing on input from private sector actors and technology developers. The roadmap for this second track has not yet been finalized and the BoT indicates it is still developing the pilot’s format and assessing which actors will be eligible to participate in its conduct. 

As previously reported, the BoT has joined forces with several major banks across Asia to work on a project for a prototype cross-border CBDC, or Multiple Central Bank Digital Currency Bridge (m-CBDC) that uses distributed ledger technology. Other participant banks include the Hong Kong Monetary Authority, the Central Bank of the United Arab Emirates and the Digital Currency Institute at the People's Bank of China.

People’s Bank of China in Shenzhen ‘cleans up’ illegal crypto firms

The Shenzhen branch of the People's Bank of China launched a special “rectification” program against illegal crypto-related activities, beginning with a crackdown on 11 emerging companies.

The Shenzhen branch of the People’s Bank of China is taking a hardline approach to cryptocurrency-related activities deemed illegal. According to a report from state-run Shanghai Securities News yesterday, the branch has recently “cleaned up and rectified” 11 new companies suspected of engaging in illicit crypto trading.

The report did not disclose the companies’ names nor the details of how they were sanctioned. The action against crypto firms was carried out alongside a slew of wider-ranging measures against illicit cross-border trading of foreign currencies and stocks, with one target reportedly “a well-known domestic financial website that is suspected of publicizing illegal foreign exchange deposit transactions.”

In its summary of the branch’s agenda, Shanghai Securities News also noted that, parallel to its actions against firms in violation of the law, PBoC Shenzhen plans to:

“Carry out a pilot project of ‘precision education’ for financial consumers, use technology to enable accurate portraits of customers, and establish personalized risk prevention and education programs.”

Shenzhen authorities have consistently taken a stringent approach to the cryptocurrency sector, in line with Beijing’s increasingly toughened stance over the years. Although owning crypto has never been banned outright, the Chinese state has gradually ratcheted up restrictions on the industry since 2017. Over the past year, measures targeting crypto mining and trading have intensified, the former in part due to Beijing’s decarbonization commitments.

Related: China’s crypto industry is gone? Beijing’s crackdown keeps sending shockwaves

While decentralized cryptocurrencies are likely to remain subject to municipal and regional crackdowns for the foreseeable future, since 2020, Shenzhen’s government has been cooperating with the PBoC on promotional rollouts of China’s central bank digital currency and, as of last month, the city’s residents can already use the digital yuan on buses and subways and use it to top up their travel cards.

Thiel’s Valar Ventures leads 3rd raise for Bitpanda, at $4.1B valuation

Vienna-based Bitpanda's valuation has shot up to $4.1 billion, three times its value during the crypto broker's last private funding round in March.

Vienna-based cryptocurrency broker Bitpanda has closed its third major private financing round led by Peter Thiel’s Valar Ventures. 

Raising $263 million, and drawing in new investments from British billionaire hedge fund manager Alan Howard and REDO Ventures, the company is now valued at $4.1 billion. That’s three times its last valuation at $1.2 billion for its $170 million raise in March of this year. 

Bitpanda has now raised close to $500 million through various private financing rounds, counting three-time backer Valar Ventures alongside repeat investors that include LeadBlock Partners and Jump Capital. Since 2014, the company’s offerings have centered on cryptocurrency and precious metals brokerage. The platform is currently trialing a stock trading service that would be live 24/7.

In an interview with CNBC, Bitpanda co-founder and CEO Eric Demuth said that the stock offering would likely be ready by the end of this year. Having cemented its popularity among crypto users, the new service would bring the platform onto the same terrain as highly successful stock trading apps like Robinhood, whose profile — as well as trading volumes and, arguably, notoriety — shot up during the Gamestop saga earlier this year

One distinguishing feature of Bitpanda is its profitability; Demuth has said the company has been profitable for the past five years and, while not disclosing its exact annual revenues to reporters, is ostensibly on track to increase them sevenfold in 2021. With over three million users at present, still significantly lower than rivals like Robinhood and Revolut, that sets it apart from both. The latter’s IPO filing revealed a $1.4 billion quarterly loss early this year, and Revolut lost over $230 million in 2020 — up 57% from 2019.

In its March 2021 raise, Bitpanda had sealed investment from Robinhood-backer DST Global, which has not, at the time of writing, been publicly confirmed as a participant in this latest round.

Related: Crypto-friendly app Robinhood loses 8% in public Nasdaq debut

Bitpanda operates solely in Europe, with plans to expand to new markets like France, Spain, Italy and Portugal using the new funding. The company does not have imminent plans to go public but Demuth has spoken positively of Wise’s recent direct listing on the London Stock Exchange, which followed a listing method first used by Spotify on the New York Stock Exchange in 2018. He has ruled out an IPO via a merger with a SPAC — the route used by stablecoin issuer Circle for its NYSE public listing later this year.