Tether Integrates With Plasma Sidechain to Reduce Load on Ethereum
Tether has integrated the just-launched OMG Network Plasma sidechain, formerly known as OmiseGo, promising cheaper transactions as Ethereum’s fees skyrocket.
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Bitfinex’s Tether (USDT) stablecoin is now available on the OMG Network, a plasma-based Ethereum sidechain launched on June 1 by the project formerly known as OmiseGo.
The integration, also announced on June 1, marks the first time that Tether integrated an Ethereum sidechain to boost its performance. Tether is by far the largest “gas guzzler” on the Ethereum network at 8,900 ETH (about $1.84 million) in fees spent last month, according to ETH Gas Station. This is more than the next five protocols combined, one of which is reportedly a Ponzi scheme.
By delegating some of that volume to the OMG Network, Tether is hoping to ease the burden on Ethereum. Bitfinex’s CTO, Paolo Ardoino, said that “by migrating USDT value transfers to the OMG Network we save costs, drive performance improvements and relieve pressure on the root chain network.”
The OMG-based Tether network will be accessible through Bitfinex and “allow traders to react faster to trading opportunities,” Ardoino said, though given the network’s recent launch, there are no other venues that accept it yet. Stephen McNamara, the COO of OmiseGo, told Cointelegraph that discussions to integrate OMG with other exchanges and wallet providers are ongoing.
While Plasma was initially touted as the best layer-two solution for scaling Ethereum, major issues with it meant that the community’s enthusiasm shifted to Optimistic Rollups.
That left OmiseGo and several other projects alone when dealing with Plasma technology. The OMG Network, a complete rebranding of both OmiseGo and its parent company Omise, launched its mainnet beta on June 1 as well.
The project appears to have cut several corners to make its “More Viable Plasma.” Notably, the sidechain is based on “Proof of Authority” consensus, with the documentation noting that it is operated by a single entity. It nevertheless supports watcher nodes that verify the correctness of the transactions.
Other compromises include the inability to perform a “mass exit” from the sidechain, which was one of the biggest stumbling blocks of the initial Plasma concept, and a limited scope where only one chain will be created, instead of a full network of them.
Still, the network allows direct peg-ins of ETH or ERC-20 tokens, while reportedly reducing fees by 66%. This may become an attractive proposition as Ethereum fees continue to skyrocket.
Author: Andrey Shevchenko
Crypto Regulation News: Bank of France announces successful test of digital euro, South Korea is…
Vol. 44, 17th May — 1st June
- U.S. Congressman Brett Guthrie (R-KY) introduced a set of bills with a focus on the use of blockchain in the American economy and artificial intelligence to combat nefarious online activity.
- A U.S. think tank working towards a digitized dollar has released a white paper detailing inaugural aims and use cases for a central bank digital currency.
- Public records show that the lower chamber of Louisana’s state legislature has approved a measure that, if passed and signed into law, would create a framework for licensing businesses that work in the cryptocurrency sector.
- SEC Commissioner Hester Peirce believes that a Bitcoin exchange-traded fund could help more fairly price instruments such as Grayscale’s Bitcoin Trust.
- The Winklevoss twins believe crypto regulation and customer freedom can meet in the middle.
- Ripple CEO says US Regulators must embrace crypto or fall behind China.
- The Bank of France says it’s successfully completed an initial test of a central bank digital currency based on blockchain technology.
- Switzerland denies $103 million of COVID-19 relief for Crypto Valley.
- Albania passes new comprehensive law written by the Minister of Finance and Economy to regulate crypto activities.
- Unregistered Dutch crypto firms now face the prospect of closing their doors as the Netherlands’ enhanced anti-money laundering laws (AML).
- China’s new civil code will include cryptocurrency such as Bitcoin to be part of the legal inheritance.
- The government of South Korean is preparing to legislate crypto taxes by proposing a new amendment to the existing law. It will start taxing the profits of bitcoin and other cryptocurrencies next year, according to local media.
- India’s central bank, the Reserve Bank of India, seems to finally be clarifying its stance on financial services for cryptocurrency-related businesses.
- The Ministry of Digital Transformation of Ukraine published crypto draft law “On Virtual Assets” in response to FATF’s June 2020 deadline.
- Russian politicians suggest fines and prison terms of up to 7 years for illegal issuance and use of cryptocurrencies.
- Iran’s president has tasked officials at the central bank and ministries of energy, communications and IT with drafting plans for a national cryptocurrency mining strategy.
- Antigua and Barbuda take steps towards becoming crypto-friendly destinations in the Caribbean region.
- A list of countries that are ideal for crypto enthusiasts to live in.
- And much more!
Digital Currencies Could Threaten US Geopolitical Power, Warns JPMorgan: “There is no country with more to lose from the disruptive potential of digital currency than the United States,” say analysts at JPMorgan Chase & Co.
Global Central Banking Think Tank Launches Digital Monetary Institute: A global think tank for central banking, OMFIF, has announced the launch of its Digital Money Institute, aimed at bridging the gap between digital currency and traditional banking.
SEC Comm: A Bitcoin ETF Could Help Fairly Price Grayscale’s GBTC: In a Bloomberg interview, SEC Commissioner Hester Peirce said the approval of a Bitcoin (BTC) exchange-traded fund by the regulator could help price nonexchange-traded instruments such as Graysclale’s Bitcoin Trust, otherwise known as GBTC, more fairly.
The commissioner has again reiterated that in her opinion, the SEC is treating crypto-related financial instruments unfairly, applying to them unique requirements:
“Recently I issued a second dissent, saying: to me, it appears that the current Commission is not interested in approving any exchange traded products that’s available to a retail audience that has crypto underlying <…> which suggests to me that we have one standard for crypto products and then another standard for other types of products. And I don’t think that’s right.”
When asked whether the lack of an approved exchange-traded BTC instrument makes GBTC a more risky investment, she said:
“No, I think that’s a great point. And I think it is. I mean, I don’t want to think about any product and I haven’t tracked that product the way that you have. But I think that in general, with the reason that products that trade on exchanges are attractive is because they do offer this really good price discovery process and they work really, really well. And so that’s why people like to trade products on exchanges.”
She also jokingly said that if she were creating her own ETF right now, it would be something related to toilet paper:
“If I were making an ETF ticker now, I guess it would have to be something related to toilet paper. So PP or something like that.”
Joking aside, the lack of an approved Bitcoin ETF remains an obstacle to greater crypto adoption.
Cameron Winklevoss on Crypto Regulation: “Free-for-Alls Don’t Work”: Known for their regulation-friendly outlook within the crypto industry, Gemini exchange founders Tyler and Cameron Winklevoss hold a hybrid approach to privacy and government rules.
The twin brothers explained in a May 22 podcast interview with Peter McCormack that crypto adoption comes a need for some degree of regulation. Cameron added:
“The independence and sovereignty around crypto is unmatched with any technology before, but the onramps have to have an element of thoughtful regulation.”
Labeled as the 15th and 16th most influential people in the crypto space, Tyler and Cameron Winklevoss dove into Bitcoin following their suit of Facebook’s Mark Zuckerberg. The brothers founded the Gemini crypto exchange in 2015, which falls in line with regulations for New York-based exchanges.
“Free-for-alls don’t work,” Cameron said of unregulated markets. “At the same time, overregulating something will absolutely stifle it,” he continued. “It doesn’t have to be an either-or, or an all-or-nothing situation.”
Building on his brother’s comments, Tyler noted people can agree and disagree with regulation at the same time, depending on the angle. “You can be pro-regulation, but disagree with the state of regulation, he said.
Regulation needs to make sense, Tyler posited. Using an example from the early music industry, Cameron pointed back to the days of buying an entire album just for sake of listening to a song or two. Napster and other music pirating options came along later, changing the paradigm forever in a way that was too far away from regulation. Apple’s iTunes met in the middle of these two worlds, offering purchases of single songs for $0.99 each.
Gemini’s regulation serves to protect user privacy, Cameron explained. “We can’t mine your data and then go sell it,” he said. Meanwhile, other technology giants gorge themselves on customer data because no regulations forbid it.
“They’re corporate peeping Toms,” Cameron said.
Ripple CEO Says US Regulators Must Embrace Crypto or Fall Behind China: Brad Garlinghouse, the CEO of Ripple, has taken to Twitter urging U.S. regulators to get on board with cryptocurrencies, or risk losing global financial dominance to China.
The Crypto Enthusiast’s Dream: Top Countries That Tick All the Boxes: Alongside the internet, cryptocurrencies have made the world a global village. Here is a list of countries that are ideal for crypto enthusiasts to live in.
3 Common Compliance and Regulatory Pitfalls to Watch for in 2020: Using regulation to one’s advantage is the main factor of an innovative fintech business. The best way to achieve it is closely monitoring the shifting regulatory landscape.
Advancing Policy: Regulator and Industry Coordination Key to Swift Implementation: The art of enacting legislation in a timely fashion requires strong cooperation between regulators and industry officials.
Digital Dollar Project Releases White Paper Laying Out Groundwork for US CBDC: On May 28, the Digital Dollar Project released its white paper, a 30-page document detailing the potential applications of a CBDC. The white paper continues the nascent think tank’s work to push forward development of a digital dollar.
The paper details certain core tenets of what it considers a digital dollar and what it will push forward.
The Digital Dollar Project was founded by former leaders of the Commodity Futures Trading Commission and professional services company Accenture. One of those founders is Daniel Gorfine, the head of the CFTC’s fintech office until this past fall.
Gorfine told Cointelegraph, “What we’ve been trying to do through the digital dollar project is catalyze action and this paper is a key step in that direction.”
The new white paper expresses Gorfine and co-founder and former CFTC Chair J. Christopher Giancarlo’s documented interest in operating alongside traditional financial authorities and existing payment mechanisms including cash and Automated Clearing House Technology.
The paper charts out an impressive array of use cases for a digital dollar — for example, the colossal remittances corridor between the United States and Mexico. It also eagerly looks to future pilot programs to test these use cases out as separate components:
“Through engagement with stakeholders, the public sector, and our advisory group, we intend to refine these use cases further and identify potential pilots to test the value hypotheses and inform design decisions.”
Noting the importance of subdividing the wide range of tasks that a digital dollar will be expected to streamline, Gorfine said of pilots:
“Piloting can take place in different pieces or bites relative to the overall topic. You can imagine, for example, exploring tokenization and its impact on financial inclusion and access. You can separately look at government benefits programs and how to disburse to individual recipients.”
In keeping with the project’s desire to work within existing regulatory bounds, it explicitly does not seek to upend the current monetary system of the U.S. Several times it mentions maintaining the format of currency flowing from the Federal Reserve to financial institutions and then to the public:
“A digital dollar will be distributed through the existing two-tiered architecture of commercial banks and regulated intermediaries.”
While some recent legislation has called for direct consumer access to accounts with the Fed, Gorfine explained the Digital Dollar Project’s proposed structure as partially an effort at decentralization:
“Relying primarily on the private sector and regulated banks and money transmitters seems like a much better approach. Public solutions would only make sense if there are remaining gaps and problems to solve for. […] If you think about the way the Fed developed, it was attempting to decentralize the federal banking system and related policy decisionmaking.”
The white paper similarly calls for any digital dollar to operate within existing Know Your Customer or Anti-Money Laundering requirements. At the same time, both the white paper and the project’s founders have historically mentioned privacy as a central concern. That subject remains to be determined, based on the 4th amendment as well as future legislation.
“This is a very meaty and important area. Ultimately, these are policy choices that need to be made by the government,” Gorfine said of privacy. “I think what we flag in the paper is a champion […] model by anchoring and analogizing to physical cash.”
The COVID-19 pandemic stirred up a lot of talk about how to reconfigure the financial system to be more responsive, including a number of bills calling for a digital dollar.
Congressman pushes blockchain bill that seeks to provide more regulatory clarity: U.S. Congressman Brett Guthrie (R-KY) introduced a set of bills with a focus on the use of blockchain in the American economy and artificial intelligence (AI) to combat nefarious online activity.
The Advancing Blockchain Act is one of several bills related to emerging technology introduced through the Energy and Commerce Committee and Consumer Protection and Commerce subcommittee. The Republican committee said it hopes to create policies fostering innovation, securing supply chains and consumer protections “that ensure America beats China.”
Like many bills on the floor related to blockchain, the Advancing Blockchain Act is primarily a study bill. It tasks the Federal Trade Commission and Secretary of Commerce with creating a survey to examine how blockchain is currently being used in the U.S. and explore other use cases.
The measure also seeks to codify the jurisdiction of federal agencies. In that case, the bill could provide more regulatory clarity down the line by delineating which office oversees which aspects of use.
Still, the bill makes no mention of the use of blockchain for cryptocurrencies and digitizing assets.
Louisiana lawmakers advance bill for licensing crypto businesses: Public records show that the lower chamber of Louisana’s state legislature has approved a measure that, if passed and signed into law, would create a framework for licensing businesses that work in the cryptocurrency sector.
Sponsored by state rep Mark Wright, the legislation — filed earlier this year — seeks to create a process by which companies that focus on cryptocurrencies can seek and obtain licensure in Louisiana. Wright has previously pushed for a crypto-focused regulatory regime in the state.
The Louisiana House of Representatives approved Wright’s measure on May 20 unanimously, receiving 92 ‘yeas’ via roll call. It then moved to the state’s Senate, where, after a second reading, it was moved to the Committee on Commerce, Consumer Protection and International Affairs on May 21.
Congress Fears US Is Losing Battle to Malware and Darkweb Cyberweapons: As COVID-19 has the financial system more internet-dependent than ever, Congress is worried that the United States’ cyber defenses are not up to the current challenge.
Trump’s Fed Nominee Advocates a Gold-Backed Currency, Even a Crypto One: Judy Shelton, President Trump’s nominee for the Federal Reserve board of governors, has advocated for getting back to a gold standard, possibly “in a very cryptocurrency way.”
Wyoming’s Congressional Blockchain Committee Holds First Meeting: After graduating from task force to select committee this week, the blockchain crew within Wyoming’s state legislature held their first meeting on May 22nd.
SEC Orders ICO Startup to Return $25.5M to Investors: The United States Securities and Exchange Commission ordered crypto firm BitClave to return $25.5 million to investors.
U.S. bank regulator chief to depart, with Coinbase’s former top lawyer set to serve in acting capacity: The Office of the Comptroller of the Currency (OCC) has confirmed that Joseph Otting will step down from his post as Comptroller of the Currency this week. The announcement confirms that First Deputy and COO Brian Brooks will take over as Acting Comptroller.
Bank of France Announces Successful Test of Blockchain-Based Digital Euro: The Bank of France says it’s successfully completed an initial test of a central bank digital currency based on blockchain technology.
The bank says it’s the first in a series of tests to see if a digital euro has the potential to strengthen global financial markets. In the weeks ahead, the central bank will explore how the digital euro performs when sent from one bank to another.
The digital currency has been in development since late March. Its initial design is for use in the private sector and not for consumers.
The Bank of France is recruiting an economist with crypto experience and a strong background in game theory to help guide the launch process.
The central bank is following in the footsteps of China, which began a major trial of a digital form of the yuan in April.
Albania Approves Europe’s Most Comprehensive Crypto Law Yet: Albania’s Parliament signed a bill into law on May 21 plenary session a legal framework for cryptocurrencies.
The law, “On Financial Markets Based on the Technology of Distributed Ledgers,” first appeared before the Committee of Economy in October 2019 and was approved today with 88 votes in favor, 16 against and 3 abstentions.
Introduced by Albania’s Minister of Finance and Economy, the legislation looks to regulate the conditions for licensing all crypto activities in the country.
Beyond digital tokens, the law looks to monitor all infrastructure where DLT technology operates.
Denaj commented on the proposal that will ultimately be voted on in Parliament:
“The draft law aims to regulate the conditions for licensing, exercising the activity of operators and stock exchanges and supervising them, as well as preventing abusive practices in the market, where severe fines are stipulated for anyone who violates the provisions of the law.”
The minister said that the bill serves to make “the best use of the benefits offered by technology,” but also to address a range of potential risks. These include the creation of fraudulent schemes or unauthorized schemes to provide virtual assets, or the risks of using them for money laundering, terrorism financing or market manipulation.
This makes Albania the third European country (after Malta and France) to establish such a legal framework for cryptocurrencies.
Switzerland Denies $103 Million of COVID-19 Relief for Crypto Valley: The Swiss government has denied a 100 million franc request by the Canton of Zug for use in keeping local crypto companies afloat, according to local newspaper Tages-Anzeiger. Zug’s finance director Heinz Taennler initiated support for the financial package earlier in April to support local blockchain companies affected by the COVID-19 pandemic, but the answer he’s getting isn’t the one he wanted.
The Crypto Valley bailout was reportedly the only one out of “around two dozen” COVID-related applications to be rejected by the federal government. Local crypto firms will have to make do with a 15 million Swiss franc loan ($15.4 million) announced earlier today by the canton of Zug. Apparently “more than two thirds” of crypto startups that applied for a wider federal COVID-19 guarantee loan allegedly failed to receive it.
Per the new program, Crypto Valley startups can apply for a loan from any bank, which will reportedly be covered by a combination of the federal government (65%) and the canton of Zug (35%). Applications can be submitted from May 27, 2020 to August 31, 2020 via the federal platform. The requests will then be examined by the government and “experts from outside the administration.”
According to previous reports, nearly 80% of companies operating in Crypto Valley said they won’t make it through this year, as a lot of private equity investors were withdrawing their stake amid global economic uncertainty. As Cointelegraph reported earlier, COVID-19 took a major impact on the Valley’s local crypto ecosystem, as around 57% local firms had already laid off some of their employees, with more expected to follow suit.
Cointelegraph contacted Taennler’s press office for additional details, but was told that he’s not available. A representative for CV Labs, a Zug-based blockchain incubator, also declined to comment on this story.
Deadline: Unregistered Crypto Firms Face Shutdown in the Netherlands: Unregistered Dutch crypto firms now face the prospect of closing their doors as the Netherlands’ enhanced anti-money laundering laws (AML).
The amended Fourth Anti-Money Laundering Directive (AMLD4), which the Dutch Upper House passed on April 21, cites that companies offering crypto-to-fiat or crypto custodial services must register before the May 18th deadline or face consequences. Firms that offer crypto-to-crypto are not required to register.
A De Nederlandsche Bank (DNB) bulletin explains that crypto companies are now compelled to register and pay a fee.
The Netherlands’ central bank also highlights that those who fail to comply before will be penalized.
“If you have not submitted a draft application prior to the entry into force of the law, you cannot make use of the transitional arrangement and you must, therefore, cease your existing activities. If you are active without being subject to the transitional arrangement, this may have an effect on the assessment of your (subsequent) registration application. You will also be in violation and DNB can take enforcement action.”
Chinese Citizens Are Now Able to Inherit Cryptocurrency: The Thirteenth National People’s Congress and Chinese People’s Political Consultative Conference has come to an end on May 28. According to Xinhua news, the same day the parliament passed a new civil code; a legislation package that includes protecting the civil rights of inheritance, marriage, property, personality, contract and infringement.
The new code states:
“When a natural person dies, the legacy is the personal legal property left by she/he.” Lixin Yang, a professor of Renmin University of China told China Central Television that this means “internet property and virtual currency will be inherited”.
Dovey Wan, founding partner at Primitive Ventures also recently tweeted that Bitcoin users should care more about their Bitcoin private keys, regardless of the new law.
The new inheritance law, which allows China’s citizens to pass on their cryptocurrency and other virtual assets to their heirs, will come into effect on January 1, 2021, according to the report.
As Cointelegrah reported previously, a Chinese Court trial’s findings indicated that Bitcoin was a digital asset and should be protected by the law.
Governor of the People’s Bank of China Confirms Completion of Critical Advancements of the Digital Yuan: The People’s Bank of China has not yet announced an official release date for its upcoming digital yuan but leaked photos of a new national mobile app that’s currently under development shows that the country’s digital currency/electronic payment platform (DC/EP) is reimagining how the second-largest economy is planning to overhaul the movement of money.
At a press briefing held on May 22nd following China’s annual parliamentary meetings, known as the “Two Sessions”, the central bank’s governor Yi Gang outlined the country’s focus on the digital economy.
“At present, the digital economy is an increasingly important driving force for global economic growth. The development and application of legal digital currency is conducive to efficiently satisfying the public’s demand for legal currency under the conditions of the digital economy, improving the convenience, security and anti-counterfeiting level of retail payments, and accelerating the development of my country’s digital economy…
DC/EP has basically completed the top-level design, standard formulation, function development, joint debugging test, etc. under the premise of double-layer operation, cash (M0) substitution, and controllable anonymity.”
DC/EP is a two-layer system: 1) central banks to commercial banks and 2) commercial banks to retail users. While the pilot test for the retail layer of the new digital currency remains underway in four cities — Shenzhen, Chengdu, Suzhou and Xiongan — and has yet to conclude with an official launch date, analysts speculate that the central bank-dominated currency will have a major impact on the world stage.
Trade-offs are expected to be stark. While the national digital currency will give China a tremendous edge in terms of cross-border transaction speed and mobile access for people who do not have bank accounts, it will also allow the government to track every single transaction on a closed system that uses asymmetric cryptography. Trials are being conducted across a wide swath of industries, from transport to retail to payroll.
Says Harvard Kennedy School fellow Shirley Yu in an interview with CNA Insider,
“Ironically American franchises such as McDonald’s, Starbucks and Subway have become the first vendors of the Chinese digital currency.”
The “centralized cryptocurrency” is already challenging the notion that the global monetary system will remain static and forever reliant on the US dollar.
Yu says the technology is nothing but a digital form of China’s national currency, the renminbi (RMB), and it aims to replace cash, referred to as M0. When the central bank issues a hundred RMB, instead of printing a paper bill, it can issue digital RMB.
“So DC/EP does not really add any additional currency into the system. And because it replaces M0, it does not generate any interest on the money either.”
Ben Cavender, managing director of China Market Research Group, says that a digital currency that’s backed by the government will be heavily regulated.
“Basically, what the government is doing is saying, ‘We’re going to take some of the paper money that currently exists in the economy, and we’re going to get rid of it and exchange it for a digital currency.’”
Short-term expectations for how the digital yuan could replace the US dollar’s hegemony on the world state is more muted.
“In the short term, the US dollar is going to remain a haven in tough times. But I think over the longer term it’s very clear that there is going to be pressure to move more towards these state-backed digital currencies, whether it’s China’s or a handful of others that might end up being created over the next few years.”
China’s Congress Proposes Blockchain Development Fund: NPC, China’s parliament suggests a government backed blockchain development fund to build a better governance system.
Chinese Police Arrest 12 Fake ‘Huobi Officials’: Chinese authorities have busted a group of scammers allegedly claiming to be “Huobi officials”.
South Korea to start taxing Bitcoin profits in 2021: The taxation will also apply to bitcoin mining operations and income from initial coin offerings, should it be approved by Parliament.
South Korea’s Ministry of Economy and Finance proposed the amendments to the existing tax law to include the cryptocurrency industry, with backing from the Ministry of Information and Technology.
In September, the Ministry will table the amendments before Parliament. Once approved, the law will enter into force in 2021, allowing authorities to tax profits generated from the sale of digital assets for cash. Trades between cryptocurrencies will remain tax-free, and similarly those sold at a loss.
“We are reviewing capital gains tax or other income tax on profits gained by domestic and foreign investors in the transfer of virtual assets,” an official from the Ministry of Strategy and Finance was quoted as saying.
“The proposed tax amendment will be announced in July and submitted to the regular assembly in September,” the official added. The planned changes have been prompted by the idea of applying “tax where income is located”, officials said.
The Korean government has attempted to tax bitcoin in the past, most recently in January, but failed to enforce the regulations, reportedly because different government ministries could not agree whether bitcoin was an asset or not. Local crypto experts believe the proposed amendments will suffer the same fate.
Seung Seung-young, a researcher with the Korea Regional Tax Institute, told local newspaper E Daily that the planned law is not watertight in its current format, opening it to exploitation by investors. He opined:
“If you do business through a peer-to-peer transaction without going through an exchange, there is a possibility of avoiding taxation. Even with IP tracking, if there are a large number of targets, administrative costs will increase and it will be difficult to track each day.”
Kim Yong-min, chairman of the Korea Blockchain Association, notes that it will take three to four years before the government can set up infrastructure that truly understands cryptocurrency.
Japanese Exchanges React to Revised Crypto Laws Now in Effect: Atsushi Kuwabara from Japan-based exchange bitbank spoke to Cointelegraph regarding the new regulatory changes to the country’s crypto laws.
New Bill in Ukraine to Finally Let Crypto Firms Open Bank Accounts: Ukraine is getting closer to providing a legal status for cryptocurrencies like Bitcoin with a new draft bill published on Monday.
On May 18, the Ministry of Digital Transformation of Ukraine published a new draft bill “On Virtual Assets” that aims to determine the legal status of crypto assets, rule of their circulation and issuance in the country. The current version of the bill is not final and is open for discussion by the crypto community until June 5, 2020.
According to one of the co-authors of the new draft bill, the main purpose of the initiative is to finally enable local crypto firms like exchanges to open bank accounts. Michael Chobanian, the president of the Bitcoin Association Ukraine, an organization that co-authored the new bill alongside state authorities, law firms and industry players, says that crypto exchanges are still unable to set up a bank account in Ukraine to date.
As such, the proposed draft bill is designed to move the crypto industry out of the “grey zone” and finally bring legal presence to companies in Ukraine. According to the bill, virtual asset service providers — crypto exchanges, issuers and users — “have the right to open accounts in banking and other financial institutions.”
Unlocking sufficient benefits for the crypto industry in Ukraine has its costs though. Earlier this week, Andriy Khavryuchenko, founder of software firm DevNull.AI, tweeted that Ukraine’s bill “On Virtual Assets” would make all crypto wallets in Ukraine illegal, unless they registered with the Ministry.
According to the draft law, local firms are required to register in order to operate a fiat-to-crypto business in Ukraine legally, Chobanian elaborated to Cointelegraph. “If you do it without the registry, you are basically illegal, that’s what the law says,” Chobanian noted. The executive also pointed out that such firms will have to ensure Anti-Money Laundering, or AML, and Know Your Customer, or KYC, compliance.
According to Chobanian, the new bill comes in response to a request by the Financial Action Task Force, or FATF. Last year, they announced that they would seek to adopt AML guidelines for crypto by June 2020.
Ukraine has been considering a law to regulate crypto assets for at least four years. First reports on Ukrainian crypto regulation came in late 2015, when the Verkhovna Rada of Ukraine announced plans to define the legal status of Bitcoin by January 2016. Similar to Russia, none of the existing crypto legislation initiatives have been adopted so far in Ukraine.
Local authorities are reportedly working on at least three separate bills, including one devoted to cryptocurrency taxation. In late 2019, the Ministry of Digital Transformation of Ukraine reportedly partnered with the world’s largest crypto exchange, Binance, to collaborate on local crypto legislation. According to Chobanian, Binance has not participated in authoring the bill “On Virtual Assets”, but is expected to give their feedback about the proposed law.
Russia Proposes 2M Rub Fine and 7 Years in Jail for Illegal Crypto Use: Russian lawmakers have suggested punishments of up to 2 million rubles ($27,800) and seven years in prison for illegal turnover of digital assets and cryptocurrencies.
As reported by the Russian business channel, RBC, the draft amendments to the administrative and criminal offences codes were confirmed as genuine, but have not yet been agreed into law.
The punishments suggested are on a sliding scale, starting with administrative offences for violating proposed rules governing transactions using digital currencies in payment for goods or services rendered.
In this case assets can be seized, along with fines issued from 20,000 to 200,000 rubles ($278 to $2,780) to individuals. Officials face fines of 50,000 to 400,000 rubles, and legal entities can be fined between 100,000 and 1 million rubles.
Fines roughly double for organizing illegal turnover of digital assets or providing means to issue digital currency from within Russian territory.
The same acts can be considered criminal violations if they cause major damage to citizens, organizations or the state. These will incur larger fines, along with up to five years hard labor or seven years of prison time.
There is also a penalty for buying digital assets for cash on Russian territory, and for transferring funds from cryptocurrency to Russian bank accounts.
Yuri Pripachkin, President of the Russian Association of Crypto-economics and Blockchain, claims that the new package of laws essentially comprise a complete ban on cryptocurrency, and will not allow Russian businesses to benefit from this technology.
He believes that the new rules, if brought into law, could lead to a mass exodus of companies out of Russia to relocated in neighbouring countries with more crypto-friendly jurisdictions, saying:
In fact, [the Russian government] is proposing to build a new iron curtain in the digital economy with its own hands
Russia has been uncertain as to which direction to take on cryptocurrencies for several years, although it has recently been taking more concrete steps regarding regulation of digital assets.
Russian Police Arrest Former Post Office Branch Chief for Mining Crypto at Work: The Russian Police launched a criminal investigation against a former Russia’s regional post office chief, who managed to mine cryptocurrencies through the office’s network in a town of Mineralnye Vody located in the South of the country.
According to a report published by a local news outlet RNS, the SU Investigative Committee of Russia for the Stavropol region, the former branch chief is suspected of illegally installing and mining cryptocurrencies with “professional hardware” using the company power grid for nearly six months. The scheme established by the suspect was traced back to September 2019.
Telegram CEO Donates 10 BTC to Charity Project in Russia: Telegram CEO Pavel Durov donates 10 BTC to a Russian charity project backed by a local political activist.
Russian Authorities Disagree Over Lifting Telegram Ban: While Russia is facing disagreement over the legal status of Telegram and crypto, both continue operating in the country.
Iran’s President Asks Gov’t to Plan National Crypto Mining Strategy: Iran’s president has tasked officials at the central bank and ministries of energy, communications and IT with drafting plans for a national cryptocurrency mining strategy.
As reported by the Iranian news website ArzDigital on May 22, officials were briefed during the 137th session of Iran’s economic coordination headquarters earlier this week, chaired by President Hassan Rouhani.
The development comes shortly after the Iranian government announced a redenomination policy for the country’s fiat currency, the rial, in a bid to tackle crippling chronic inflation.
Earlier this week, Iran had also moved to include cryptocurrencies into its foreign currency exchange regulations and anti-currency smuggling enforcement efforts.
This will bring those crypto exchanges licensed by the Central Bank of Iran under the purview of existing regulatory regimes for foreign exchange currencies, amid a period of extreme capital outflows from emerging markets during the global pandemic.
Also this week, Iran’s central bank and domestic exchanges agreed to cooperate on efforts to stabilize the foreign exchange market, including a provision to use digital currencies where necessary to facilitate currency exchanges and return export currency.
The public health crisis, compounded by the persistence of the sanctions regime, has strained an ailing national economy, which had already contracted by 9.5% in 2019 and was faced with a 17.8% youth unemployment rate.
While further details of Iran’s national cryptocurrency mining strategy are yet to be clarified, Iran had already issued about 1,000 licenses to crypto miners in the country and gave the go-ahead to Turkish crypto mining firm iMiner to establish a 6,000-rig facility in Semnan province earlier this month.
The Iranian government authorized crypto mining as an industrial activity back in July 2019.
Amid a stifled economic climate, a general in the Islamic Revolutionary Guard Corps addressed a crowd earlier this year with calls for the country to make use of cryptocurrencies to circumvent the sanctions regime.
President Rouhani has himself argued in favor of creating an alternative currency, potentially a digital one, to loosen the grip that U.S. sanctions have as the “main tools of domineering hegemony and bullying” of specific nations.
RBI Says No Restrictions on Banks Providing Accounts to Crypto Traders: India’s central bank, the Reserve Bank of India, seems to finally be clarifying its stance on financial services for cryptocurrency-related businesses.
In response to a right to information request, the RBI clarified that there are no restrictions on banks preventing them from providing an account to cryptocurrency companies or traders. The request was initially filed by Harish BV, a cofounder of local cryptocurrency exchange Unocoin.
In 2018, the RBI released a statement restricting all regulated entities including banks from dealing with any organization or individual traders transacting in cryptocurrencies. After the ban, many companies and traders also received warning statements from their respective banks advising them to either stop their cryptocurrency activities or have their accounts suspended.
Things have since improved as in early March, the Supreme Court lifted RBI’s ban on financial entities from dealing with crypto-related customers.
However, uncertainties still abounded regarding whether banks could support accounts for such customers. Earlier this spring, some banks were reportedly still refusing services to crypto businesses.
Local fintech lawyer Mohammed Danish previously stated that the Supreme Court’s ruling on the ban did not include an order for the RBI to notify banks and request their compliance with the court order.
To clarify traders’ concerns as to why banking portals still prohibited transactions in virtual currencies, Harish BV filed an information request on April 25, asking the financial regulator if it still prohibited any banks from providing bank accounts to cryptocurrency companies or traders,
In response, the RBI wrote, “as on date, no such prohibition exists.”
After RBI imposed the banking ban on cryptocurrencies, most Indian blockchain and cryptocurrency startups registered themselves in countries with crypto-friendly regulations while still operating from India. Some of the most established Indian crypto businesses were either forced to close shop or move to a different country.
Harish BV told Cointelegraph that now that the RBI’s stance is crystal clear, the blockchain and cryptocurrency industry can flourish in India, opening digital assets to 1.35 billion Indians:
“After Supreme Court scrapping RBI’s Ban on crypto and RTI’s reply from RBI, it is clear that there is no need for any blockchain or crypto company to register out of India.”
ZebPay Commissions Chainalysis for Crypto Compliance in India: ZebPay teams up with Chainalysis to monitor transactions in India as the firm re-expands services in its home country.
Indian Banks Still Cryptophobic Despite No Banking Prohibition: Here are the legal resources available to Indian crypto users and businesses if a bank has declined services out of cryptophobia.
Antigua’s Crypto Regulation Bill Passes Lower Parliament: Antigua and Barbuda’s House of Representatives passed a cryptocurrency regulation bill on May 27. With this bill, they have taken steps towards becoming digital asset-friendly destinations in the Caribbean.
The regulatory framework, called “The Digital Assets Business Bill 2020”, aims to regulate crypto companies that establish their operations on the island and provide protection for both exchanges and their customers.
Among the critical inputs of the bill is the rule that all digital asset businesses in Antigua and Barbuda must obtain a license for “issuing, selling, or redeeming virtual coins,” operating as a payment service or electronic exchange, providing custodial wallet services, among others. Failure to comply with the legislation may subject companies to fines of up to $250,000. Managers may also face criminal charges, including jail time. The bill would empower the country’s Financial Services Regulatory Commission, or FSRC, to ensure that crypto companies enforce the legal framework.
Ayre Group, nChain, Bayesian Fund, and the Bitcoin Association were some of the industry members that advised the government as they drafted the framework.
Calvin Ayre, Economic Envoy for Technology for Antigua and Barbuda, has been an active voice in the country in favor of the crypto adoption and establishing a regulatory infrastructure.
In statements through his website, Ayre said the following:
“With this Act, Antigua is now at the front of the list of countries set to benefit from the application and tokenization explosion that is happening in front of our eyes on BSV.”
The final obstacle to the bill being passed will be the Antiguan Senate, which some consider a mere formality.
In the Caribbean, the Eastern Caribbean Central Bank, or ECCB, proposed in 2018 a pilot program to issue a blockchain-based digital currency backed by the central bank, to which Antigua and Barbuda adhere, who also use the common money known as the dollar of the Central Caribbean.
The pilot program, called DXCD, includes the following phases: development and testing, followed by rollout and implementation in the Caribbean countries for about six months. This could occur between June and December 2020.
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CryptoCorner: Amazon Patents Distributed Ledger Certification, DMG Blockchain Orders Additional 1,000 Miners
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Features are disclosed for an interface for verifiable tracking of an item through a supply chain using a distributed electronic ledger. For example, when an item is added to a catalog system, the item information may be included in the creation element at the start of the ledger for the item. A certification authority may be included to verify that items received correspond to the item included in the catalog based on one or more certification rules. If a certification rule is satisfied, a record may be added to indicate transfer of the item from a provider to the catalog system. The certification information may be dynamically presented with item description information such as in response to searches of the catalog system.
Crypto mining hardware giant Bitmain announced the launch of its Antminer T19 in an official blog post today. It is the third model in the company’s next-gen Antminer 19 series. Riccardo Mori, a Venezuela-based miner, told Cointelegraph:
“With the introduction of the T19 we can expect the network hashrate to substantially rise and consequently the mining difficulty to rise as well. This will lower the profitability and extend the expected ROI time once again.”
DMG Blockchain Solutions Inc. (TSXV:DMGI) recently ordered an additional 1,000 M30s miners. The press release indicates that “this deployment will increase DMG’s latest mining technology to 110 petahash,” and that it has added “90 petahash towards its stated 2020 year-end goal of 500 petahash of self-mining.” The company’s CEO, Dan Reitzik, explained:
“Our stated goal for self-mining in 2020 is 500 petahash of [the] latest ASIC mining technology. This deployment will add approximately 90 petahash to our existing fleet. We will continue to deploy more self-mining as opportunities arise. The new fleet is expected to be energized by mid-June 2020. The recent volatility in Bitcoin (“BTC”) prices demonstrate why industrial miners need to constantly deploy the most efficient technologies. Our newest miners are very efficient, even at the current depressed BTC price.”
Cointelegraph reports that a white paper from the Digital Dollar Project – a partnership between Accenture (NYSE:ACN) and former leaders of the Commodity Futures Trading Commission (CFTC) – has been released, which lays out potential applications of a USD-based central bank digital currency (CBDC). In addition to discussing various use cases for such a currency, former CFTC fintech office head Daniel Gorfine characterized its potentially decentralized structure to Cointelegraph:
“Relying primarily on the private sector and regulated banks and money transmitters seems like a much better approach. Public solutions would only make sense if there are remaining gaps and problems to solve for. […] If you think about the way the Fed developed, it was attempting to decentralize the federal banking system and related policy decisionmaking.”
Sam Mowers, Investorideas
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Macro Analyst: Ethereum Looks Like It Will Outperform Bitcoin in the Future
From the all-time high of $1,400, Ethereum is down by approximately 80%.
Due to a collapse in the ICO bubble and the narrative shifting from altcoins to BTC, the -80% performance ETH has registered is much worse than that of Bitcoin. From its all-time high of $20,000, BTC is down less than 50%.
While there are many believing the leading cryptocurrency will continue to outperform altcoins, a prominent investor is throwing his weight behind Ethereum.
Bitcoin’s performance may be impressive, but even more impressive is that of Ethereum.
The second-largest digital asset is up more than 22% in the past week alone, according to data from Coin360.com. Over that same time period, BTC is up “only” 14.45%.
Real Vision chief executive Raoul Pal, who commented on the chart of ETH/BTC after the recent breakout, said in reference to the chart below:
“It even looks like Ether will outperform Bitcoin at some point (no position yet). Please remember: No tribal attacks about bitcoin vs ethereum. They are two different things and two different ecosystems.”
ETH/BTC chart from prominent Wall Street investor and analyst Raoul Pal (@RaoulGMI on Twitter).
The chart shows Ethereum breaking out of a crucial resistance against Bitcoin that formed after the February highs.
Pal’s optimism about Ethereum’s prospects, especially against Bitcoin, has been echoed by a limited set of other market participants.
Per Mohit Sorout — partner at crypto hedge fund Bitazu Capital — it is “quite possible that ETH has printed a major cycle low [against Bitcoin],” pointing to the chart seen below. He claimed in late April that the chart shows a bullish “weekly market structure.”
As to why exactly the chart signals that upside is likely, he pointed to two factors:
- ETH/BTC has begun to print consecutive higher lows and higher highs, indicative of a reversal
- And the direction al movement index (DMI) indicator has recently crossed bullish.
Quite possible that $ETH/ $BTC has printed a major cycle low.
Weekly market structure is bullish👀 pic.twitter.com/0lYYK1V7zP
— Mohit Sorout 📈 (@singhsoro) April 25, 2020
Pal and Sorout are some of the only prominent crypto analysts to have said that ETH has a good chance at outperforming Bitcoin in the next bull run. Yet there are strong fundamental reasons to be bullish on the cryptocurrency.
As reported by NewsBTC previously, data site DeFi Pulse has shown that there is now $953 million worth of assorted crypto assets locked into DeFi applications.
It’s a trend that shows DeFi is growing, and as a result, so should Ethereum. The founder of Ethereum-based app MakerDAO said:
“4 million Dai was just minted with WBTC in a single transaction. This really showcases the latent demand for non-ETH assets, and it’s the beginning of a broader trend of DeFi acting as an economic vacuum that will eventually attract almost all value to the Ethereum blockchain.”
Author: Nick Chong