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Cryptocurrencies crater this week with Bitcoin down over 20%

Nov 23, 2018


Top 5 Cryptocurrencies sorted by 7 Day Price Percent Change

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Name Ticker Price 1H %Chg 24H %Chg 7D %Chg Market Cap Volume
XRP XRP USD$0.4 0.28% -7.44% -14.28% USD$16,255,265,441 USD$765,074,189
NEM XEM USD$0.08 -0.04% -8.08% -19.33% USD$685,926,499 USD$9,577,958
EOS EOS USD$3.54 0.56% -4.68% -22.32% USD$3,207,495,429 USD$910,744,519
Bitcoin BTC USD$4303.7 0.3% -4.0% -22.82% USD$74,842,806,330 USD$4,962,695,776
IOTA MIOTA USD$0.31 0.46% -3.84% -25.06% USD$863,249,799 USD$11,782,848

Developments in Financial Services

  • An Initial Public Offering (IPO) filing by the parent company of Silvergate Bank details that the bank serves a whopping 483 cryptocurrency clients with a combined USD$1.7bn in non-interest-bearing deposits, as of the end of 3Q2018. The total number of clients has increased 323% y/y from 114 in 3Q2017. Silvergate explains its clientele further in the report, saying, “The majority of our funding comes from non-interest-bearing deposits associated with clients in the digital currency industry,” while adding that the unique source of funding offers the bank many advantages compared to working with traditional financial institutions. 
  • Bart Smith, the head of digital assets at global trading and technology firm Susquehanna, said on CNBC’s “Fast Money” that he still believes in Bitcoin (BTC) long-term despite the recent market crash. During the interview, Smith emphasized that cryptocurrencies are a, “long game,” adding that, “every great idea is volatile.” Smith also commented that BTC and cryptocurrencies alike are being treated as an asset class, and this is not what they were originally intended for. Smith added that he believes the cryptocurrency sell-off, which began last week, was partially sparked by the contentious and “juvenile” Bitcoin Cash (BCH) hard fork on November 15th, 2018.   
  • Binance, the world’s largest cryptocurrency exchange, announced plans on Tuesday to invest USD$3 million into Koi Trading, an OTC trading desk, to launch their own cryptocurrency trading desk in the US. Koi Trading, which aims to offer a compliant global option for private cryptocurrency liquidity, also offers services for data science, quantitative research, and compliance consulting. Ella Zhang, Binance Labs’ CEO, said about the investment, “Koi Trading’s mission is to bridge fiat and cryptocurrencies in a compliant manner. This aligns with our broader vision at Binance to build the infrastructure which provides the freedom of value exchange globally.”  
  • Bitpay, a notable cryptocurrency payments processor, is partnering with cryptocurrency startup Paxos to offer stablecoin Paxos Standard (PAX) payments processing for settling transactions. According to today’s press release, the addition of PAX to Bitpay will allow clients to conduct transactions using cryptocurrencies while maintaining, “the trust and stability of the US dollar.”  
  • Grant Thorton LLP, the US arm of global accounting firm Grant Thorton International, has completed an attestation audit of Circle Internet Financial. The audit specifically focused on Circle’s dollar-pegged stablecoin USD Coin (USDC) and finds that the company had just under USD$127.5 million backing USDC, enough to redeem every token on the market. Although not a full audit, the attestation audit finds that Circle and its USDC stablecoin comply with standards set for by the American Institute of Certified Public Accountants. 
  • Intercontinental Exchange (ICE), the owner and operator of the New York Stock Exchange (NYSE), announced in a Medium post today that they are delaying the launch of Bakkt, a digital assets platform that will feature Bitcoin (BTC) futures trading. ICE is targeting a launch date of January 24th, 2019 for Bakkt, citing that, “given the volume of interest in Bakkt and work required to get all of the prices in place,” the company needed to delay the launch. According to the Medium post, which was written by CEO Kelly Loeffler, Bakkt is working closely with the US Commodity Futures Trading Commission (CFTC) to review Bitcoin futures trading and warehousing.  
  • KPMG, the Netherlands-based Big Four auditor, released a report on cryptocurrencies last week concluding that institutional investors must join the crypto industry in order for it to “realize its potential”. Called, “Institutionalization of Cryptoassets,”, the report discusses why and how institutional investors should consider entering cryptocurrencies while detailing challenges that will be faced before institutional investors will fully support the emerging asset class. The report reads, “Institutionalization is the at-scale participation in the crypto market of banks, broker-dealers, exchanges, payment providers, fintechs, and other entities in the global financial services ecosystem. We believe this is a necessary next step for crypto to create trust and scale.”  
  • Mike Lempres, head of policy at US-based Coinbase, has left the exchange and wallet provider to join investment giant Andreessen Horowitz. According to a Bloomberg report, Lempres left his position at Coinbase after being promoted from a position as Coinbase’s legal head in September. A statement from Coinbase quoted by the Bloomberg report reads, “As chief legal and risk officer during a time of tremendous growth for Coinbase, Mike was instrumental in building the company’s legal and compliance functions and driving our vision of trust through compliance.” 
  • MVIS, a German-based company, launched the world’s first cryptocurrency over-the-counter (OTC) index in partnership with, “three of the leading providers in OTC liquidity,” including Circle Trade, Cumberland, and Genesis Trading. Dubbed the MVIS Bitcoin US OTC Spot Index (MVBTCO), the OTC index will enable clients who trade OTC to use the index as a reliable benchmark and potential investment opportunity. 
  • Ping An Bank, a subsidiary of Chinese giant Ping An Insurance Group, is set to launch a boutique bank that will leverage blockchain, cloud services, and the Internet of Things (IoT), according to Chinese state-run news outlet People’s Daily. Boutique banks, compared to larger banks, are non-full services investment banks that provide more individualized services. Ping An Bank will use blockchain technology, artificial intelligence (AI), big data, and cloud computing in order to improve management, strengthen risk controls, cut costs, and increase transparency.  
  • SIX Swiss Exchange, Switzerland’s most notable stock exchange, has announced the launch of the world’s first multi-crypto based exchange-traded product (ETP), set to roll out this week. As per a report by the Financial Times, Swiss startup Amun AG will list the world’s first multi-crypto ETP under the index ticker HODL while tracking five major cryptocurrencies: Bitcoin (BTC), Ripple (XRP), Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC). Each cryptocurrency will maintain a specified weight in the ETP, with BTC accounting for roughly half of the ETP’s assets, XRP responsible for 25.4%, ETH responsible for 16.7%, and BCH and LTC representing 5.2% and 3.0%, respectively. The ETP will serve as a well-regulated tool for both institutional and retail investors to gain exposure to cryptocurrencies. 
  • The Gibraltar Blockchain Exchange (GBX), a venture by the Gibraltar Stock Exchange (GSX), has been awarded a license from the Gibraltar Financial Services Commission (GFSC), the county’s financial regulator. The blockchain platform, which was originally announced in November 2017, hopes to, “become the world’s first nationally regulated digital asset marketplace and ecosystem.” The blockchain exchange currently supports trading of Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH), Ethereum Classic (ETC), and the exchange’s native Rock Token (RKT). 


Regulatory Environment

  • A recent study published yesterday funded by Canada non-profit national research organization Mitacs Canada and regtech platform iComply was carried out by the University of British Columbia (UBC) and finds that Initial Coin Offerings (ICOs) are being held back by a regulatory “compliance trilemma”. As part of the study, UBC’s research team studied the ICO industry over six months and conducted 45 qualitative interviews with professionals from the ICO space, specifically those from finance, law, and science sub-sectors of the field. The study concludes that ICOs face difficulty due to a “trilemma” where only 2 of 3 objective can be addressed at a time -- the 3 objectives are having a compliant offering, reaching a distributed pool of investors, and delivering an ICO in a manner that is cost effective.  
  • According to Bank of Thailand Governor Veerathai Santiprabhob, the central bank’s plan to switch from fiat to digital currency will not happen within the “next 3-5 years”. Santiprabhob discussed that the long wait for a central bank digital currency is because they are difficult and time-consuming to create due to the complexity of the monetary system. In August, the Bank of Thailand announced that it has embarked on building its own wholesale central bank digital currency. 
  • After years of uncertainty, the government of India is likely set to reveal draft regulations for the country’s cryptocurrency sector before the end of 2018. According to a report by news outlet Quartz, a counter-affidavit filed by India’s ruling government in a Supreme Court case involving the country’s domestic cryptocurrency exchange industry challenging a banking ban by the central bank indicates that the country will reveal draft regulation by 2018’s end. An excerpt from the counter-affidavit states, “Serious efforts are going on for preparation of the draft report and the draft bill on virtual currencies, use of distributed ledger technology if the financial system, and framework for digital currency in India.” 
  • An article by Bloomberg reports that the US Department of Justice (DoJ) is investigating cryptocurrency market manipulation with a focus on the potential involvement of stablecoin Tether (USDT) and its affiliated cryptocurrency exchange Bitfinex. The development reported on by Bloomberg is part of a criminal probe opened into cryptocurrencies months ago. Specifically, the DoJ is allegedly investigating into how Tether issues new tokens, why the majority of USDT enter the market via Bitfinex, and whether or not “market tricks” aided in inflating the price of cryptocurrencies.  
  • In what is being called a “disaster” for the country’s cryptocurrency industry, the Norwegian Parliament has decided to roll back a tax structure that allowed for cryptocurrency miners to be taxed at the same rate as other industries in the country that use substantial amounts of power. Lars Haltbrekken, a Norwegian parliamentary representative, told local news outlet, “Norway cannot continue to provide huge tax incentives for the dirtiest form of cryptographic output as bitcoin. It requires a lot of energy and generates large greenhouse gas emissions globally.” Prior to this decision by the Norwegian Parliament, Norway’s cryptocurrency mining industry was one of the cleanest in the world, with 99% of energy usage being generated from hydropower. 
  • Rod Rosenstein, the US Deputy Attorney General, called for international cooperation in investigating crimes that are conducted using cryptocurrencies as a medium at the annual meeting of Interpol’s General Assembly. While Rosenstein acknowledges some positive use cases for cryptocurrencies, he went on to declare, “we must not allow cybercriminals to hid behind cryptocurrencies.” Rosenstein discussed that notable global cyber-attacks like the WannaCry ransomware attack leveraged cryptocurrencies in their criminal activity. “We must work together to make clear that the rule of law can reach the entire blockchain,” Rosenstein added.  
  • The Canadian House Finance Committee is recommending that the government regulate cryptocurrencies in order to prevent money laundering, as per a report by Canadian news outlet iPolitics. The Canadian House Finance Committee has held 18 meetings so far to review the Proceeds of Crime Money Laundering and Terrorist Financing Act (PCMLTFA), which occurs every 5 years -- as a result of its meetings, the Canadian House Finance Committee suggests that cryptocurrencies be regulated under the PCMLTFA. The Committee recommends three different ways to regulate cryptocurrencies, including by defining crypto exchanges as money-services businesses, instituting a licensing system for crypto exchanges, and regulating crypto wallet service to make tracking cryptocurrencies easier. 
  • The Colorado Division of Securities, the state’s securities regulator, is filing cessation orders against four Initial Coin Offerings (ICOs), as per an official statement on the regulator’s website. The four ICOs, who reportedly took part in fraudulent and illicit practices, include Global Pay Net, Credits LLC, CrowdShare Mining, and CyberSmart Coin Invest. According to the company statement, Global Pay Net Shares falsely claimed that investors would receive 80% of company profits while CrowdShare Mining guaranteed at least a 1,000% four-year return. 
  • The Cyberspace Administration of China (CAC) is calling on the country’s regulators to “accelerate” the development of blockchain industry standards, as per a document published last week. The document, authored by the Ministry of Industry and Information Technology’s Zhou Ping, argues that the development of blockchain industry standards is crucial to guide the selection and application of blockchain systems across diverse domestic industries.   
  • The Monetary Authority of Singapore (MAS) is expanding its regulatory framework to include payment providers in order to bring certain cryptocurrencies under its jurisdiction, as per a report by local news outlet The Straits Times. Members of the central bank’s board submitted the new Payment Services Bill (PSB) to parliament and it is set to replace two pre-existing pieces of legislation -- the Payment Systems (Oversight) Act and the Money-Changing and Remittance Business Act. The new bill will allow tokens like Bitcoin (BTC) and Ethereum (ETH) to fall under the central bank’s jurisdiction. 
  • The recent cryptocurrency market crash is allowing UK regulators more time to introduce new rules and regulation concerning the cryptocurrency sector, according to a Reuters report Tuesday. Of late, the UK’s Financial Conduct Authority has faced mounting pressure to introduce regulatory framework concerning the cryptocurrency industry. With the recent cryptocurrency market downturn, however, the Financial Conduct Authority has indicated that they will take a slower and more detailed approach to introducing cryptocurrency regulation. While speaking at a conference in London dedicated to cryptocurrency regulation yesterday, Deputy Director for Financial Services at Britain’s Finance Ministry Gillan Dorner detailed, “We want to take the time to look at that in a bit more depth and make sure we take a proportionate approach.”  
  • The Singapore Exchange has published its list of rules and expectations for listed companies that plan to raise capital through an Initial Coin Offering (ICO), as per a post on its official website last week. In the post, the Singapore Exchange detailed that companies interested in raising funds via ICO will be required to cooperate with Singapore Exchange Regulation (SGX RegCo) prior to the ICO. Additionally, firms seeking to raise funds through an ICO must provide legal and auditor opinions pertaining to the digital assets in question and their accounting treatment. 
  • The Spanish Ministry of Finance (Hacienda), will investigate the filings of 15,000 Spanish taxpayers to see who made cryptocurrency transactions over the last year in an effort to prevent tax fraud, as per a report by El Pais, Spain’s largest newspaper. After Spain’s National Fraud Investigation Office (ONIF) investigated dozens of Spanish financial institutions, companies, and intermediaries, a final group of 15,000 taxpayers were selected to undergo further inspection. Spain’s tax agency, the Agencia Estatal de Administración Tributaria, will assess whether taxpayers truthfully declared capital gains while investigating potential money laundering activities.  
  • The US Federal Election Commission (FEC) released a draft opinion dated November 13th, 2018 saying that cryptocurrency mining as a way to support election campaigns is permissible. Although some companies and firms were vying for cryptocurrency mining to support political campaigns to be considered a form of volunteering, it appears that the FEC is leaning towards considering cryptocurrency mining to support political campaigns as contributions. 


General News

  • As the hash war between Bitcoin Cash ABC and Bitcoin Cash SV is raging on, it appears that established cryptocurrency exchanges and platforms are leaning in favor of Bitcoin Cash ABC. On CoinMarketCap and Huobi, Bitcoin Cash ABC is already listed under the ticker BCH, the historical ticker for the original Bitcoin Cash token. Meanwhile, Bitcoin Cash ABC’s token is trading at USD$235.82 while Bitcoin Cash SV’s token is trading at just USD$57.51. 
  • Bitcoin Cash SV (BCHSV), one of two networks that resulted from last week’s Bitcoin Cash Network hard fork, underwent what is known as a blockchain reorganization yesterday and is facing criticisms of centralization. Seen as a setback for the controversial network, the blockchain reorganization was initially perceived as a malicious attack. A blockchain reorganization occurs when two miners solve a block at the same time and cause a temporary fork of the network. “This should not be possible in a decentralized system,” said Emin Gun Sirer, creator of the world’s first cryptocurrency to leverage a proof-of-work concept, explaining, “You can only invalidate your own block and create a new tail if you’re the majority miner. BCHSV is a centralized coin.” 
  • Bitcoin’s (BTC) 2018 bear market that has seen the staple cryptocurrency fall 79.7% from its high of USD$19,500 in January to a low of USD$4,035 in November is so far the smallest correction of five that BTC has observed to date. Four major corrections are defined in BTC’s history: from June 11th, 2011 through November 21st, 2011, the price of BTC fell 94.3%; from August 19th, 2011 until November 21st, 2011, BTC fell 83.3%; from April 10th, 2013 through April 12th, 2013, the price of BTC dropped 82.6%; and from November 29th, 2013 through August 18th, 2015, BTC fell 86.7%. 
  • Bitfury, a blockchain technology firm, has made two significant additions to its advisees, adding a former investment banker to its board of directors and a former US Securities and Exchange Commission (SEC) member to its advisory board. In a blog post today, Bitfury announced the appointment of Antoine Dresch, the co-founder of private equity fund Koreyla Capital who possess 20 years of investment banking experience with Morgan Stanley, Goldman Sachs, and UBS, to its board of directors. Also in the blog post, Bitfury announced the appointment of Annete Nazareth, a former SEC Commissioner, to its advisory board to provide guidance on regulatory matters relating to financial markets. 
  • France’s tobacco federation, The Federation des Buralistes, has reportedly been approved to sell Bitcoin (BTC) at tobacco distribution locations starting January 2019, although the French central bank does not support the plan. As per French radio station Europe 1, French tobacco retailers have formed a partnership with cryptocurrency startup Keplerk, who will provide a cash register software system to enable the BTC purchases. French tobacco retailers will offer to sell BTC vouchers in denominations of 50, 100, or 250 euros beginning January 1st, 2019. According to the French tobacco federation’s website, 25,000 tobacco retailers across France will take part in the partnership. 
  • Giga Watt, a major cryptocurrency mining firm based in Washington state, has filed for bankruptcy and reportedly faces eviction from its location. The major cryptocurrency mining firm filed for Chapter 11 protection after claiming that the company is, “insolvent and unable to pay its debts when due.” According to a report by news outlet Wenatchee World, the Port of Douglas County has already begun launching the eviction process. 
  • Huobi, a top global cryptocurrency exchange, announced the creation of a Communist Party branch to comply with obligations to the Chinese state. The news comes as Huobi appears to be advocating for closer ties with the Chinese government as it has launched a considerable international expansion this year. Chinese law requires that any company with more than three Communist Party member employees must establish its own Communist Party branch. Huobi is the first cryptocurrency industry member to launch a Communist Party branch, following giants like Baidu, Alibaba, and others.   
  • IBM and Columbia University have announced the launch of two blockchain accelerator program to assist startups trying to create innovation at scale. The two programs will fall under the Columbia-IBM Center for Blockchain and Data Transparency that was established this past summer. Each program will support ten different blockchain startups by offering a team of business mentors, providing technical support, access to IBM’s cloud technology resources, and access to Columbia's students and research community. The Columbia Blockchain Launch Accelerator will last eight weeks and is set to take place in New York City.  The IBM Blockchain Accelerator will target later-stage companies globally and also last eight weeks.   
  • Kraken, a US-based cryptocurrency exchange, is warning its users of the potential risks in trading the Bitcoin SV (BCH SV) token, the underlying token behind one of two of Bitcoin Cash’s new networks. In a Sunday blog post, Kraken said that the new BCH SV token, “does not meet Kraken’s usual listing requirements,” and, “should be seen as an extremely high risk investment.” Kraken goes on to cite risks associated with the investment, including that no wallets have yet supported replay protection for the BCH SV network, which is a way to prevent transactions from occurring on both BCH networks simultaneously. Kraken also discusses that BCH SV’s future may be “mutually exclusive” with other blockchains, due to developer leaders who have been “threatening” and “openly hostile” towards other blockchain networks. 
  • North Korea is reportedly set to showcase its technological advancements while exemplifying its support for blockchain technology after the country announced plans to hold a blockchain and cryptocurrency conference. This announcement comes after North Korea hosted a similar type of conference in August 2018. The conference will last a four week and feature some of the foremost experts in the cryptocurrency and blockchain industry, according to a report by Independent UK. While the conference will be open to Americans, North Korea reportedly will not allow delegates from South Korea, Israel, and Japan to attend.   
  • OKEx, currently the world’s second largest cryptocurrency exchange by trading volume, is responding to accusations that it “manipulated markets” by modifying Bitcoin Cash (BCH) futures settlements and forced the early settlement of futures contracts. After deciding to deliver early BCH futures trading ahead of the coin’s controversial hard fork, OKEx received a flurry of negative publicity with individuals complaining that OKEx had overstepped its bounds when it decided to force the early settlement of futures contracts.  OKEx responded to the criticism in a post sent to users, specifically addressing a Medium post by Amber Al, saying, “In the absence of evidence, Amber Al alleged us for trading against our own customers and manipulating markets,” and adding, “These are completely false allegations and the defamatory statements have caused serious damages to OKEx’s reputation.” 
  • RIF Labs, the think tank behind off-chain infrastructure solution RIF OS, has announced the acquisition of RSK Labs, the company behind Bitcoin-based smart contract protocol Rootstock (RSK). According to two separate blog posts published by each company, the deal will see RSK protocol developed to be integrated in both the Bitcoin and Ethereum network while supporting peer-to-peer transaction capabilities. RIF Labs’ blog post explains the acquisition further, saying, “The three principal components to the RIF OS announcement include the integration of RIF Labs and RSK Labs, the publications of RIF OS Protocols, and the launch of the first implementation of the RIF Directory Protocol (the Name Services component of RIS OF).” 
  • Rumors are circling the cryptocurrency community that Chinese mining companies have turned off a large number of mining rigs because the process is allegedly no longer profitable. According to Dovey Wan, partner with Primitive, the “turn off price” of the popular Bitmain Antminer S9 rig is around USD$3,800, but this can change based on difficulty and hashrate. Wan explained, “Many miners are mining at loss at the current price point, now it’s more economic to turn it off and take it off from the rack to reduce cost on electricity and opex.” 
  • Swiss Federal Railways (SBB), the national railway company of Switzerland, announced in a press release that it has successfully completed a proof-of-concept for a “self-sovereign” blockchain identity management system. Developed by Linum Labs, the blockchain system leverages uPort, an Ethereum-based identity management protocol, in order to increase efficiencies associated with paper-based processes used by the railway company’s workforce. Workers will be able to create digital identities and sign in and out of construction sites using the uPort application on their smartphones. 
  • The CEO of US-based software company Autodesk, Andrew Anagnost, said while speaking at the 2018 Autodesk University conference in Las Vegas that blockchain could aid in the fight against corruption in the construction industry. According to a report by the Australian Financial Review, Anagnost said in his speech, “What is blockchain good at? It’s a distributed, trusted ledger that cannot be altered and allows traceability and accountability. A technology like that in an environment like construction where various people involved in the process don’t trust each other is going to find some kind of application.” Although Anagnost detailed that Autodesk is considering how blockchain may play a role in the company’s future, Autodesk has yet to introduce any sort of blockchain products into its operations.  
  • The Chelan County Public Utility District, a county utility in the state of Washington, is proposing a new electricity pricing structure that would effectively increase the cost of electricity for cryptocurrency miners, according to Central Washington radio station KPQ. Citing Lindsey Mohns, the Customer Utilities Rate Adviser with Chelan County, the article reads, “What this new rate structure (Schedule 36) does is brings into a market consideration on the energy price because we will have to purchase power on the market to serve the variable load associated with cryptocurrency.” In the articles, KQP goes on to state that many members of the cryptocurrency community in Chelan County, Washington have expressed their displeasure for the new price structure. 
  • The Russian Authors’ Society (RAO), a major non-government organization, is launching a blockchain-based platform geared toward intellectual property-secured loans. According to a report by Russian news outlet TASS, RAO CEO Alexander Sukhotin revealed that the platform, dubbed CoFi, is in its final development stages and will launch in the first quarter of 2019. The platform has a goal of matching intellectual property right holders with investors that are ready to provide loans.  
  • Tom Lee, the co-founder of Fundstrat and prominent cryptocurrency advocate, is standing by his already-reduced price target of USD$15,000 for Bitcoin (BTC) by the year’s end. “Global markets have seen liquidity try up, and bitcoin is not necessarily a value asset -- so as growth stocks, tech, and FAANG come under pressure, it’s going to hurt bitcoin,” said Less in a CNBC interview, adding, “The downturn in FAANG is hurting those owning bitcoin.” 

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio