This is How the Crypto Space is Shaping up After a Week into 2019
2018 is done and dusted. It’s only been a week into the New Year and there are mixed prospects about the future of the cryptocurrency industry. Building on the developments of 2018, two Colorado have proposed a bill to exempt cryptocurrencies and digital assets from securities laws. A UK-based cryptocurrency exchange is entering the Bitcoin futures market where it will likely face stiff competition from Bakkt, a crypto project launched by the New York Stock Exchange’s parent company – Intercontinental Exchange (ICE). Japan’s financial regulator may possibly approve a Bitcoin exchange-traded fund (ETF) after shelving plans for crypto futures.
Bitcoin mining hardware maker Canaan Inc. considers U.S. IPO
Chinese based maker of Bitcoin mining hardware Canaan Inc. is considering going public in the U.S. after ditching plans for a public offering on the Hong Kong Stock Exchange, reported Bloomberg on Jan. 8.
With about 15 percent of the global market for Bitcoin mining chips, Canaan is the second largest manufacturer of Bitcoin mining hardware, according to a report released in February by Sanford C. Bernstein & Co.
Back in May 2018, it was reported that Canaan had planned to raise as much as $1 billion from a Hong Kong IPO. Sources who communicated with Bloomberg said the company is contemplating the possibility of selling its shares in the financial hub of New York in H1 2019. However, the matter is still at an early stage and may not even lead to a transaction.
Canaan let its IPO application expire in November last year as the bear market forced many crypto companies to make adjustments.
Canaan’s Chinese-based rivals – Bitmain, the largest manufacturer of hardware equipment and Ebang International – all had plans to IPO in Hong Kong but later shelved their plans most likely due to falling cryptocurrency prices.
Colorado Senators introduce a bill to exempt digital assets from securities laws
Two senators from the U.S. state of Colorado have filed for a new bill that will exclude cryptocurrencies and digital assets from securities laws. This comes barely a month after two U.S House of Representative members filed the Token Taxonomy Act, a proposal that intends to exempt digital tokens from being regarded as digital tokens.
The two senators – Stephen Fenberg (Democrat) and Jack Tate (Republican) filed a bill known as the “Colorado Digital Token Act” – which proposes to exempt digital tokens from security laws on the condition that they are not marketed as speculative or investment assets.
This development is aimed at removing regulatory uncertainty – something that has negatively impacted crypto businesses. A token has to meet several requirements in order to qualify for the exemption.
“The initial buyer provides a knowing and clear acknowledgment that the initial buyer is purchasing the digital token with the primary intent to use the digital token for a consumptive purpose and not for a speculative or investment purpose,” specifies the bill.
Reddit AMA: Winklevoss Twins still bullish on Bitcoin ETF
In a Reddit AskMeAnything (AMA) session held on Jan. 7, Cameroon Winklevoss stated that “Bitcoin is most likely the winner in the long run.”
Asked if Bitcoin will still hold its number one spot, the twins were bullish on the digital asset as they have traditionally been.
“Bitcoin is certainly the OG crypto! It’s hard to defeat network effects — so in terms of ‘hard money’ (i.e., store of value) Bitcoin is most likely the winner in the long term,” said the twins.
They went as far as saying that Bitcoin is a better gold than gold. “Our thesis around bitcoin’s upside remains unchanged. We believe bitcoin is better at being gold than gold. If we’re right, then over time the market cap of bitcoin will surpass the ~7trillion dollar market cap of gold.”
The twins have seen two of their Bitcoin ETF applications rejected by U.S regulators but they are still committed to getting the much-needed approval. They said that they are working hard to address the concerns of the regulators. They highlighted that their exchange, Gemini, is using Nasdaq’s SMART Market Surveillance technology to monitor the platform. They also said that they are lobbying for an industry self-regulatory body to monitor virtual commodity exchanges.
Anonymous source: Japan’s financial regulator to explore Bitcoin ETF
Japan’s financial watchdog may have abandoned plans to list cryptocurrency derivates but may approve an exchange-traded fund (ETF) that tracks digital assets, reported Bloomberg on Jan. 7.
The decision to abandon Bitcoin futures or Ethereum options marks a major blow to the evolving cryptocurrency market that is still reeling from the long-year crypto winter that saw Bitcoin’s price close the year below $4,000 – from a high of near $20,000 in December 2017.
The possibility of an ETF is crucial in reviving institutional interest in the Asian country after Tokyo-based Coincheck cryptocurrency exchange lost almost $530 million in NEM currency in a hack in January 2018.
According to an anonymous source who informed Bloomberg about the developments, the Financial Services Agency (FSA) is gauging institutional interest in ETFs for crypto assets.
In the last month of last year, the financial regulator ditched plans to amend the nation’s securities laws – a move that could have paved way for crypto futures and options to be listed on financial exchanges. The FSA felt that such crypto products would do nothing but fuel speculation.
ETFs remain a hotly contested topic as those involved in the crypto industry believe that exchange-traded funds can bring legitimacy to crypto products and drive institutional interest. The U.S and European regulators have rejected such products citing price manipulation and security concerns.
Speaking at an event in November last year, Jay Clayton, the Chairman of the U.S Securities and Exchange Commission said, “Those kinds of safeguards don’t exist in many of the markets where digital currencies trade.”
UK cryptocurrency exchange enters the Bitcoin futures market
Bloomberg reported on Jan. 7 that CoinfloorEX, a subsidiary of the UK-based cryptocurrency exchange Coinfloor is rebranding and will soon launch trading services of physical Bitcoin futures on the Asian market. The rebranded platform will be known as Coin Futures and Lending Exchange or CoinFLEX for short.
The new venture will be based in Hong Kong and will start to offer Bitcoin, Bitcoin Cash, and Ethereum futures contracts leveraged up to 20 times to Asian investors in February.
CoinFLEX is owned by a consortium that includes Roger Ver, an early Bitcoin entrepreneur and the proponent of the chaotic Nov. 15 Bitcoin Cash hard fork, Mike Komaransky – an early crypto investor, Traditional Technologies International Inc., CoinShares cryptocurrency exchange’s parent company Dragonfly Capital, and more.
In an interview with Bloomberg, Mark Lamb, the founder of CoinfloorEX and CEO of CoinFLEX said that the key distinction in favor of the new platform is that all future contracts traded will be physically delivered. This means that the investors will receive the underlying digital asset rather than a cash payment. This is important because making cash payments in the unregulated crypto market could potentially lead to manipulation.
“Crypto derivatives could become an order of magnitude larger than spot markets and the main thing that’s holding back that growth is the lack of physical delivery. Volumes are reduced because of a problem of trust when it comes to cash-settled trades,” said Lamb.
CoinFLEX has also made a big bet by trading its contracts against the controversial Tether stablecoin which lost its investor trust after it emerged that the parent company behind the stablecoin did not have enough USD reserves to back the tokens in circulation.
When the contracts expire, investors who are short will receive Tether after delivering Bitcoin and the other way round will work for longs. The new platform will have a contract that trades Tether against Coinbase and Circle’s USD Coin stablecoin.
To back up CoinFLEX’s decision to use Tether, Lamb said, “Tether is the most liquid, highest volume stable coin that exists right now and seeing the resolution of recent issues and attestations by banks and outside firms make us confident in using it as a stable coin.”
Bitrue cryptocurrency exchange adds more XRP base pairs
Bitrue cryptocurrency exchange announced on Twitter that they will be adding four more new XRP trading pairs by the end of the week.
“We’re happy to bring to you: $HOT/ $XRP, $NPXS/ $XRP, $DNT/ $XRP, & $PRO/ $XRP! 4 NEW XRP Base-Pairs which shall arrive by end of the week,” tweeted Bitrue.
This comes just after the exchange recently announced that it would be adding five XRP trading pairs by the first week of 2019. The exchange now has 22 XRP pairs and 19-based XRP pairs. The exchange is planning to pair XRP with VechainThor (THOR) and Cardano (ADA) in the future.
Ethereum Foundation Gives $5 million in grant funding to Parity Technologies
The Ethereum Foundation announced on Jan. 7 that it is giving $5 million in scalability, usability, and security grant funding to Parity Technologies. The foundation noted that Parity Technology in an invaluable member of the Ethereum ecosystem and have contributed to the development of Ethereum as a self-financed and open-sourced effort since their founding.
“The Ethereum Foundation is committed to funding teams and individuals building the common infrastructure around scalability, usability, and security. To that end, we couldn’t think of a more applicable fit for a grant given Parity’s constant push to raise the technical bar and their pinpointed focus on next-generation advancements like proof-of-stake, sharding, and WebAssembly,” said Ethereum Foundation in a blog post.
Part of the grant will fund Parity’s work on Casper, sharding, light clients, developer tools, QA, audits and infrastructure improvements. The funding will be delivered in several tranches and the first will be based upon the work already completed by the startup. The remaining amount will be released if the following milestones are completed:
• Completing eWasm (Ethereum flavored WebAssembly) compatibility work
• Shipping a wallet for mainnet
• The successful completion of Phase 0 and Phase 1 of sharding
The foundation expressed its gratitude for Parity’s work. “We are grateful for Parity Technologies’ hard work and commitment to Ethereum, and we hope that this grant serves as a reminder of how much they have already contributed, as well as an indicator of an exciting future,” said the Ethereum Foundation.
50 percent of Ethereum’s hash rate is controlled by two miners
The major selling point of digital assets is that they are decentralized – allowing a level playing field for everyone – but as their value continues to increase and the difficulty of minting new coins increases, these cryptocurrencies have become more centralized as few mining pools control these networks.
The Ethereum network recently suffered a 51 percent network and this is a cause for concern because it cuts at the core of what blockchains stand for.
According to LongHash data, only two mining pools – Ethermine and SparkPool_3 – control more than 50 percent of Ethereum’s hash rate. Bitcoin Cash is even more centralized as two mining pools – BTC.TOP and BTC.com – control more than 53 percent of the network.
With Bitcoin, it is a different story as BTC.com and Antpool control just over 29 percent. Things have changed for the better for Bitcoin network as these two mining pools (BTC.com and Antpool) once controlled 41 percent of the network hashrate.
This was a major cause for concern as the two mining pools are subsidiaries of Chinese based Bitmain Technologies, arguably the world’s largest manufacturer of Bitcoin mining hardware.
Bitfinex successfully completes is data migration to dedicated bare metal servers
Bitfinex and Ethfinex announced on Jan. 7 that they successfully completed the migration of data from AWS cloud to dedicated bare metal servers.
The two exchanges are now open for trading and their customers can benefit from advanced security and improved speed.
The performance is likely to perform twice faster due to dedicated hardware and new order submission gateways. The actual performance will also depend on how far the trader’s servers are located from the new Swiss data center.
The exchanges said that they have the most important security features in place and “these dedicated bare-metal servers will be inherently more secure, being self-hosted and running on dedicated custom hardware as opposed to cloud-based and reliant on a third-party service.”
In a separate incident, U.S based cryptocurrency exchange Poloniex briefly suspended its activities after experiencing technical difficulties.
“We are currently experiencing technical difficulties. Trading has been disabled and the site placed in maintenance mode as we work through the issue,” tweeted Poloniex.
However, the exchange was back online within a few minutes. “The site is back online and trading has resumed,” said the exchange in a tweet.
Bitcoin will be worth a lot or nothing, says Wall Street investor
No one has the crystal ball to predict the future but Wall Street investor Bill Miller thinks that “Bitcoin has the potential to be worth a lot and to be worth zero.” All or nothing.
Speaking to CNBC host Kelly Evans during the ‘Exchange’ show, Miller, the founder and CIO of investment management firm Miller Value Partners called Bitcoin an interesting technological experiment with higher lows every year.
He highlighted that Bitcoin’s lowest price in 2018 was in the $3,200 region but is now trading at around $4,000. Miller also noted that Bitcoin bottomed almost exactly 52 weeks (one year) after reaching its peak in December 2017 while the stock market did not reach its bottom for another three to four weeks.
The investor also said that the only reason why his investment portfolio includes crypto is that there is no correlation between crypto markets, bonds, and stocks. He concluded that he is a Bitcoin observer and not a believer.
Bitcoin fairy story is coming to an end, says a member of ECB’s Governing Council
There is still no general consensus about how the future of cryptocurrencies will be. While others – particularly Joseph Muscat, the Prime Minister of Malta sees cryptocurrencies as the future of money, Ado Hansson, the Governor of Estonia’s Central Bank sees Bitcoin as a fairy-tale story.
Speaking at a conference in Latvia, Ado, who also serves as a member in the Governing Council of the European Central Bank (ECB) said that digital currencies will die as “complete load nonsense,” reported Bloomberg on Jan. 7.
He warned that the Bitcoin bubble has started to collapse before adding that “I think we will come back a few years from now and say how could we ever have gotten into this situation where we believed this kind of a fairy-tale story.”
He pointed out that cryptocurrencies can be used by criminal actors and authorities have to step in and focus on investor protection “if grandmothers start investing in that.”
Estonia has granted close to 500 licenses to cryptocurrency exchange service providers in a space of one year and over 400 licenses to companies providing wallet services.
Estonia is still recovering from a $235 billion money laundering scandal involving the nation’s branch of Danske Bank, the largest bank in Denmark.
Advisor to Israel’s Prime Minister Denounces Bitcoin
The crypto industry has earned another critic in the form of Avi Simhon, the head of the National Economic Council and senior economic policy advisor to Israel’s prime minister who said Bitcoin is intrinsically inefficient and predicted that the digital asset will eventually disappear.
Simhon made these claims on Jan. 8 when he was speaking at Israel Bitcoin Summit at Tel Aviv University.
Simon argued that issuing Bitcoin at a national or global scale would cost the world trillions of dollars in energy costs. He compared this to printing money which costs less. According to Simhon, this reason alone prevents Bitcoin from functioning as a currency.
However, Simhon changed his tune a bit and said a number of governments may accept some form of digital currency.
“I am still quite confident that money as we know it will change,” he said. He further added that the adoption of digital currencies would have nothing to do with decentralization and P2P model of Bitcoin but the shift to a central bank-backed digital currency (CBDC).