Crypto-digest for April 24: Bitcoin exceeded the $ 9,200 mark, in Japan it will be safer thanks to the reorganization, expert forecasts of the former top manager JPMorgan, Macau regulator warns public of gangster-backed ICO related to Cambridge Analytica, Another police official arrested In alleged Bitcoin extortion plot, Fear and HODLing at MIT: Blockchain experts weigh impact of SEC action
Bitcoin exceeded the $ 9200 mark
At night, the rate of the most common cryptocurrency in the world reached $ 9000, and then rose to $ 9200. After the recent drop in the exchange rate, Bitcoin has been showing steady growth for two weeks in a row. As early as Monday, the rate was at around $ 8850, which means that the value rose by 14% in a week.
In general, Bitcoin’s capitalization has also increased in recent years. At present, it is 400 billion. The total share of the country’s current currency is 37%.
Of altcoins a separate mention is the growth of Bitcoin Cash, about it below. Stable positive trends show the positions of EOS, Dash, Ethereum Classic, and TRON.
Japan is reorganizing crypto-market security rules
April 24 in Japan, there was an association of 16 largest sites for trade and exchange of cryptocurrency tokens. All of them are registered by the local financial regulator – the Financial Services Agency. The head of the organization was Taidzen Okayama, who is also the CEO of Money Partners.
With this action, the cryptocurrency market in the country hopes to restore the confidence of users. The popularity of the cryptocurrency trade fell somewhat after the incident of the theft of 500 million dollars from the Coincheck exchange.
Together with other companies, for example with BitFlyer, SBI Virtual Currency and GMO Coin, Taidzen Okayami announced the creation of the organization on April 23, during a meeting of company executives. The association will include all licensed exchanges in the country – a special set of general rules has been developed for their functioning. In addition, a list of preventive measures was developed to prevent incidents like hacker attacks on the Coincheck exchange.
In an interview, Okayama said: “I will take care that all precautionary measures are taken to improve the level of security of the cryptocurrency market in the country. We want to save customers and renew the level of user confidence for the stable development of the market. “
The reason for the appearance of the organization was a hacker attack on the Coincheck exchange, which resulted in the theft of 500 million dollars in a cryptocurrency equivalent. After this, the local financial regulator began a large-scale inspection of local exchanges. The trading floors were to receive a license for the right of further activity in the territory of the country. Okayama also noted that the association will assist in the further development of these crypto-exchanges.
Forecasts of the former JPMorgantop manager: financial revolution for cryptocurrencies
According to the former top manager of JPMorgan, Daniel Masters, digital money has become something that regulators, banks and governments can not fully control. The specialist believes that in the future, the tokens of the crypto currency will be considered an integral part of the world economy.
Daniel Masters is chairman of the Coinshares digital investment bank and director of investments in Globe Advisors. In an interview with Bloomberg, he compared the Blochein network and the Internet. He also explained in detail why only in 2017 large banks and financial organizations paid attention to the cryptocurrency market, although Bitcoin appeared in 2009. He noted that digital money feeds the world financial revolution.
“Until last year, crypto-economy world was in the “regulatory sandbox” – there were no international standards for trading cryptocurrencies. According to the former top manager, digital money has been in this position for the past 5 years, while the market capitalization has not exceeded 800 billion dollars. To the level of capitalization of 10-15 billion dollars, virtually any financial system is experimental. But when the market volumes exceed hundreds of billions of dollars, it is no longer possible to ignore the existence of crypto-economics”.
Also, the expert noted that it is unlikely that in the future there will be a war between the real phiatic economy and crypto-currencies, most likely the crypto-currencies will become a harmonious part of the world market.
According to calculations, Daniels Masters owns more than $ 800 million in Bitcoin, Ethereum, ZCash and Monero. The first investment he made in 2012, when Bitcoin cost only $ 100.
Macau regulator warns public of gangster-backed ICO related to Cambridge Analytica
Cambridge Analytica’s former employee, Brittany Kaiser, has revealed that the British data analytics firm was also working with data mining company Macau Dragon Group. The latter is also known as Dragon Corporation and is backed by gangster Wan Kuok-koi “Broken Tooth”; he was previously the gang leader of ex-14K triad. The news of their involvement came last week, and in turn, financial officials from Macau issued cryptocurrency crime warnings.
Cambridge Analytica’s whistleblower detailed the company’s activities to obtain user information from Facebook for the U.S. President Donald Trump’s 2016 election campaign. After Kuok-koi’s presence was noted in the crypto community, people became worried and many claimed that regulations would help avoid such acts in the future. Cambridge Analytica helped Dragon Corporation in advertising its $500 million ICO scheduled for next month. Both the companies were also planning to work on a system that would allow users to sell their personal data to advertisers.
After news websites reported the story, the Monetary Authority of Macau released a statement that covered the latest events along with a warning.
The media has reported that a Macau company was involved in an ICO [initial coin offering] recently. Monetary Authority of Macau reminds all Macau residents that cryptocurrencies are virtual products, but not legal currencies or financial tools. Residents should be aware of fraud and criminal activities associated with cryptocurrencies.
The authority also reminded residents that virtual currencies didn’t fall under the Financial System Act (FSA) of 1993.
Monetary Authority of Macau reiterates that any institution providing regulated financial services such as currency exchange, cross-border fund transfer and financial exchange platforms without permission violates relevant provisions of the Financial System Act.
Thus, crypto companies in Macau won’t receive any help from financial institutions in the future. However, some people have pointed out that no rules have been passed against casinos developing ICOs.
Another police official arrested in alleged Bitcoin extortion plot
Yet another high-ranking police official in the Indian state of Gujurat has been taken into custody in connection with a $1 million bitcoin extortion scheme.
According to the Hindustan Times, Amreli police superintendent Jagdish Patel was arrested Sunday on suspicion that he helped a group of police officers detain a local resident after which he was forced to give up his bitcoin. Police inspector Anant Patel, who is also based in Amreli, was similarly arrested last week and will be questioned at the same time as Jagdish Patel.
As previously reported, Anant Patel was one of 10 police officers accused of kidnapping, attempted extortion and corruption after businessman Shailash Bhatt, who alleges he was abducted, beaten and forced to turn over 200 bitcoins – an amount worth roughly $1.7 million at press time prices.
Two other locals were also allegedly abducted during the scheme, as alleged by the state’s Crime Investigation Department, which launched an investigation earlier this month following the complaints.
Anant Patel was previously thought to be the highest-ranking official related to the case, with the nine other suspects serving as constables.
But while arrests have been made, police director-general Ashish Bhatia said officials have not yet verified that the 200 bitcoins were ever transferred from Bhatt to Anant Patel.
The Hindustan Times also reported that Nalin Kotadia, a former elected official, has also been detained as a potential accomplice of the alleged scheme. It is unclear what role he may have played in the original abduction.
Fear and HODLing at MIT: Blockchain experts weigh impact of SEC action
Regulation: It’s good for you, but it’s going to hurt.
That seemed to be the main takeaway for the cryptocurrency industry from Monday’s Business of Blockchain conference at the Massachusetts Institute of Technology (MIT).
On the one hand, the event was clouded by speculation that the U.S. Securities and Exchange Commission (SEC) may go as far as to classify two of the top three coins by market cap, Ethereum and Ripple’s XRP, as securities. Such a determination could subject a wide swath of industry members to legal penalties – far beyond the promoters of recent initial coin offerings (ICOs) who were already on alert the last few months.
Those fears were reinforced late in the day when Gary Gensler, an old lion of financial services regulation, confirmed for the crowd that in his view, bitcoin’s two largest rivals may fit the description of securities in U.S. law.
“Ripple Labs sure seems like a common enterprise, or the Ethereum Foundation in 2014,” said Gensler, a former chairman of the Commodity Futures Trading Commission. “Ripple is doing a lot to advance the value of XRP.”
(The so-called Howey test says something is a security under U.S. law if it is an investment in a “common enterprise” offering an expectation of profits from the efforts of others.)
Yet, on the other hand, the general sentiment at the event was optimistic about regulators’ growing involvement in the space.
Neha Narula, director of the Digital Currency Initiative at MIT Media Lab, for example, told CoinDesk insufficient regulation can actually stifle innovation by deterring honest players because rampant scammers undermine market integrity.
And aligning with Gensler, Narula said, there need to be more honest conversations about the fact that many emerging cryptocurrencies are actually securities.
However, there may not be a bright line separating the two.
As Narula said:
“We’re realizing money versus equity isn’t a binary choice. It’s a spectrum.”
And that realization could have a serious impact on the cryptocurrency industry.
Patrick Murck, counsel at Cooley LLP and fellow at Harvard’s Berkman Klein Center for Internet & Society, told CoinDesk the token economy could be on the verge of a dramatic shift if the SEC agrees with Gensler.
If ether and XRP are deemed securities, cryptocurrency exchanges and general industry promoters or foundations, or anyone who sold or evangelized projects like Ethereum to the general public, could be subject to legal penalties.
“It would be like shooting fish in a barrel,” Murck said, adding:
“There’s nothing magical about the blockchain that absolves you from investor protection regulations if investors have to trust you to deliver something.”
Driving that point home, Gensler in his talk cited several reasons that the way Ethereum and XRP were issued and traded seemed to meet the definition of securities.
For example, the 2014 Ethereum crowdsale would have created an expectation of profit for the people who purchased tokens before the network went live.
“The Ethereum Foundation offering had a 50 percent appreciation right in the first 42 days written into the offering,” Gensler said on stage. (The industry think tank Coin Center in Washington, D.C. promptly issued a statement that “ether is not a security,” rebutting Gensler’s argument.)
Meanwhile, for issuers of new tokens, it’s almost impossible to walk the line, even with more feedback from regulators and lawyers.
For example, so-called airdrops, once viewed as a way to avoid breaking securities laws by simply sending free tokens to people who already have some type of cryptocurrency wallet, are instead creating a damned-if-you-do, damned-if-you-don’t situation.
If issuers fail to collect information about recipients of airdrops, they may inadvertently violate international sanctions (what if that wallet belongs to someone in Iran?). On the other hand, if they do collect such information, the airdrop may start to look like an investment in regulators’ eyes, according to Murck.
“The SEC has interpreted the first prong of the Howey Test broadly,” Murck told CoinDesk. “The collection of information may be enough to fit the first prong” – pegging an airdrop as “an investment of money.”
Even so, Murck joined others at the conference in welcoming regulators’ participation in the space.
“They’re becoming a part of our blockchain community and that’s a valuable thing,” Murck said.
Part of the value is clearing up uncertainty.
The shortage of such clarity was illustrated during a talk by Kathleen Breitman, a co-founder of the Tezos project.
When asked whether securities regulations apply to her project’s tokens, Tezzies, she responded:
“I don’t know. I don’t mean to play coy, I’m not just an attorney…I would recommend token holders comply with relevant laws.”
But Gensler said legal clarity is slowly emerging in this red-hot market.
“If you do an issuance now, in April 2018, do it under U.S. securities laws,” said Gensler, who is now a senior lecturer at the MIT Sloan School of Management, “It’s better to bring it into a public policy framework, even if there’s a little bit of a chill.”
And perhaps some cooling off would be healthy. MIT’s Narula said she is deeply concerned about the lack of due diligence completed for many, if not most, cryptocurrency projects. Just because the code is open source doesn’t mean that knowledgeable people have evaluated it.
“A lot of investors don’t know that. They go by signaling,” Narula said. “A lot of projects have had some pretty fundamental flaws that were exposed only after a project launched.”
If nothing else, the excited chatter in the halls of MIT suggested that regulatory encroachment has yet to put a damper on the energy being channeled into blockchain tech.
Amber Baldet, the former JPMorgan Chase blockchain expert, said what makes her optimistic about the space, writ large, isn’t skyrocketing coin prices or even regulatory clarity on the horizon. It’s the explosive growth of this community in the wake of the 2017 boom.
“In order to have an internet of value, people are going to have to interact with each other,” Baldet said, speaking to the need for an ecosystem that includes everyone from enterprises like her former employer to accredited investors to retail investors.
“You meet thousands of people tackling these challenges in unique ways.”