Archive Monthly Archives: June 2018

Crypto Markets Rebound Significantly After a Week of Losses

Saturday, June 30: crypto markets are seeing a significant rebound after this week’s decline. All of the top ten cryptocurrencies by market capitalization are in the green with Cardano (ADA) being the biggest winner – up 18.6 percent over the past 24 hours, according to Coinmarketcap.

Market visualization from Coin360

Market visualization from Coin360

Bitcoin is up around 8 percent over the 24 hour period, trading at $6,391 at press time.

Bitcoin price chart

Bitcoin price chart. Source: Cointelegraph Bitcoin Price Index

Ethereum (ETH) is currently at $457, with an increase of around 12 percent over the past 24 hours.

Ethereum price chart

Ethereum price chart. Source: Cointelegraph Ethereum Price Index

The total market cap has seen substantial growth in 24 hours to press time, up from yesterday’s $232 billion to $258 billion today.

Total market capitalization chart

Total market capitalization chart. Source: Coinmarketcap

Cardano is up the most among the top ten coins by market cap. The cryptocurrency is up 18.6 percent in 24 hours to press time, trading at around $0.137 at press time, according to Coinmarketcap. Bitcoin Cash (BCH) boasts the second largest increase, up 14 percent and trading around $755.

Crypto markets have seen two significant slumps earlier this week when Bitcoin dipped below $6,000 on June 24 and June 29, the latter being the expiration day of CME Group’s Bitcoin futures.

On June 28, Robert Sluymer of Fundstrat Global Advisors predicted that Bitcoin must rally through the $6,300-6,400 resistance level to reverse the existing downtrend.

“…We have a critical stop level at the $5,800-6000… with a resistance level of $6,300-6400. If it can rally through that, I think there’s a chance Bitcoin could start to turn.”

Electric Scooter Startup Spin Seeks $125 Million In ‘Security Token Offering’


An electric scooter startup called Spin is trying to raise close to $125 million in what’s called a security token offering (STO), which sells tokens backed by real-world financial instruments, according to Axios and confirmed by TechCrunch.

The STO marks a new phase in funding following initial coin offerings, TechCrunch observed. STOs provide more security than ICOs since investors can purchase tokens backed by real-world financial assets. STOs, according to Axios, are “explicit securities” and not utilities.

Investors To Receive Company Revenue

Spin, which has already raised $8 million, according to TechCrunch, plans to raise funds from accredited investors who will receive revenue from the electric scooter business, according to an unnamed source.

Spin announced its expansion into the scooter industry in February, following Bird, which raised $300 million, and Lime, which raised $250 million, according to TechCrunch. Sequoia Capital led the Bird financing while GV led Lime’s.

TechCrunch published a chart showing Bird has secured $415 million in confirmed funding; Lime has raised $132 million in confirmed funding and $250 million in unconfirmed funding; Spin has raised $133 million in confirmed funding and Skip, another scooter company, has raised $31 million in confirmed funding.

Spin has secured an agreement with a company called Ninebot to buy 30,000 scooters per month for the remainder of 2018, the source said. Ninebot, according to its website, is a Beijing based company that makes and distributes short distance transportation vehicles.

Also read: Binance CEO says ICOs are ‘necessary,’ most VCs ‘have no clue’

A New Direction

Prior to its recent expansion into scooters, Spin ran a bike sharing platform. Following its launch in Seattle, Spin moved its bike sharing operation to South San Francisco in August. In January, the company introduced a stationless electric bicycle.

Spin has since switched direction to focus on electric scooters, the source said.

Electric scooter companies are currently waiting for the San Francisco city government to decide if they can operate their scooters in the city.

Spin’s founders have also invested in Layer Protocol, a blockchain based “reputation and rewards” protocol they plan to eventually integrate with the company’s service, Axios noted. According to its website, the company provides a dockless scooter sharing program.

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Media: Payments Provider Qiwi Launches Russia’s ‘First’ Crypto Investment Bank

Qiwi Blockchain Teсhnologies (QBT) has launched a crypto investment dubbed “HASH,” local news outlet Kommersant reports June 29. QBT is a subsidiary of Russia’s leading payment service provider Qiwi.

HASH, built on a “classic investment banking model” according to Kommersant, will provide a platform for initial coins offerings (ICO). Yakov Barinsky, QBT’s Chief Financial Officer (CFO), explained that HASH would “assist companies to go through the fundraising stage.”

As per Kommersant, HASH plans to cooperate international funds that specialize in crypto asset investing. According to Barinsky, the company already works with ten such funds with the largest one having a turnover of around $100 million.

Barinsky also said that HASH is going to provide crypto trading services starting next year, after the company obtains the necessary license. The Russian government is set to pass its major crypto and blockchain-related regulatory bill on July 1.

Founded in Moscow in 2007, Qiwi has become one of the largest online payment services in Russia with operations mostly in Russia, Ukraine, Kazakhstan, Moldova, Belarus, Romania, the U.S., and the United Arab Emirates. Recently, the company has been listed among 39 international firms that have partnered with the R3 consortium to test its know your customer (KYC) app.

Qiwi’s subsidiary QBT was launched in March 2017 with 100 million rubles in funding ($1.6 million) to develop internal blockchain products .

In July 2017, Qiwi partnered with IT educator Scream School to open a private “Blockchain Academy,” that offers a one-month course for IT professionals focusing on the principles of blockchain and the development of IT solutions based on it.

Japan’s Crypto-Friendly Regulator to Leave in Summer, What Will Change?


FSA

Nobuchika Mori, Japan’s longest-serving regulator and chief of Japan’s Financial Services Agency (FSA) who is responsible for most of the crypto regulations imposed by the Japanese government, is expected to leave this summer, according to FT.

Mori’s Forward-Thinking Approach

For many years, with strict capital controls and money laundering policies, Japan has always been known as a conservative region regarding policies pertaining to the finance sector and emerging markets. Traditionally, the Japanese authorities preferred not to take any risk in legitimizing new asset classes and emerging markets to ensure a platform is not provided to criminals, money launderers, and crime syndicates.

However, the conservative regulatory approach towards the finance sector and emerging markets inevitably led Japan to drift off from the forefront of technological development and innovation. Consequently, Mori established a new and a more aggressive strategy to welcome emerging markets, new technologies, and asset classes.

Leo Lewis, a Tokyo Correspondent for FT and a financial analyst based in Japan, emphasized that in recent years, starting with Japan’s integration of a national licensing program for crypto exchanges, Mori and his team of regulators have focused on implementing policies that can create a better ecosystem for startups and innovative fintech companies.

“Mr Mori knew, intimately, that Japan’s financial sector had fallen behind in IT, fintech, blockchain and its general embrace of the digital. Faced with an exciting, emerging genre that had already captured the imagination of the Japanese public, it must have been tempting to overlay on to crypto a load of pre-existing national ambitions centered on tech start-ups, fintech and encouraging more retail cash to flow around the system,” Lewis explained.

The admittance of Mori that Japan has fallen behind neighboring countries like China and South Korea in the technology, fintech, and cryptocurrency industries primarily due to overly strict and impractical regulations guided the Financial Services Agency (FSA) and other local financial agencies to overhaul existing regulatory frameworks and create new policies to embrace startups.

The forward-thinking approach of Mori and the rest of the FSA allowed Japan to eventually evolve into the largest crypto exchange market in the world, easily surpassing the US and South Korea. According to CryptoCompare, the Japanese market accounts for more than 62 percent of global bitcoin trades, nearly three-fold larger than the US.

The data shown above obtained from CryptoCompare is cryptocurrency market data as of June 28, subsequent to the $500 million hacking attack suffered by Coincheck, formerly Japan’s biggest cryptocurrency exchange. Even after the largest security breach in the history of the cryptocurrency industry, Japan has still been able to remain as a dominant force within the cryptocurrency market.

Influence Over Other Markets

Mori’s strong presence in the Japanese finance sector and Japan’s influence over the global cryptocurrency sector have affected various major cryptocurrency markets including the US and South Korea. This week, the South Korean financial authorities have drafted a new guideline for money laundering prevention targeted at crypto exchanges, based on the efforts of the Japanese government in cracking down money laundering activities by crime syndicates.

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Execs at Payments Giant Qiwi Launch Crypto Investment Bank

Executives at the blockchain arm of Qiwi, one of the largest e-payment providers in Russia, are launching a crypto investment bank, called HASH, to advise investors and help domestic companies tokenize their assets once appropriate regulations are in place.

The new enterprise is being launched by senior staff at Qiwi Blockchain Technology – a Qiwi subsidiary formed in March to focus on blockchain development and consulting.

Branded as “the first crypto investment bank in Russia,” HASH will manage clients’ ICOs, help them build their blockchain networks and raise funds.

The project has already partnered with an array of international fintech companies, including Bitfury Capital, Itech, InVenture, Target Global, Hosho, Wings, and RootStock, said Constantine Koltsov, partner at Qiwi Blockchain Technology and head of corporate relationships at HASH.

Koltsov added:

“We are going to make an international crypto bank providing trading services, research and ICO advisers … When the proper regulation is in place, we are going to help companies from traditional sectors of economy, like natural resources and heavy industry, to raise money through ICOs.”

In particular, HASH will also advise financial institutions on the quality of crypto projects they are considering investing in, since many of them have some apprehension towards ICOs, he said, due to the number of scams on the market.

Koltsov claimed that HASH was already working with a private oil and gas company on launching an ICO to raise $20 million, though he declined to name the firm.

ICOs can be helpful at a time when major Russian banks are under sanctions, and can have difficulty borrowing money from organizations in the West, he said.

As Russia has yet to pass regulations for blockchain and cryptocurrencies, HASH will initially work with projects registered in other jurisdictions, but Russian investors are free to participate in various ICOs with the company’s help, Koltsov said.

The Hash team expects that the Russia’s parliament to pass the bills regulating cryptocurrencies and blockchain this fall. Otherwise, the company will continue focusing on projects in different legal landscapes, he added.

Edit (14:25 June 20 2018): This article has been updated to make clear the relationship between Qiwi, its blockchain subsidiary and HASH.

Qiwi image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Payments Giant Qiwi Unveils Crypto Investment Bank

Qiwi, one of the largest e-payment providers in Russia, is launching a crypto investment bank, called HASH, to advise investors and help Russian companies tokenize their assets once the appropriate regulation in Russia is in place.

The company announced it was launching a new enterprise based on its fintech subsidiary Qiwi Blockchain Technology, created this past March. HASH, branded as “the first crypto investment bank in Russia,” will manage clients’ ICOs, help them build their blockchain networks and raise funds. The company has already partnered with an array of fintech companies around the world, including Bitfury Capital, Itech, InVenture, Target Global, Hosho, Wings, and RootStock, said Constantine Koltsov, partner at Qiwi Blockchain Technology.

He added:

“We are going to make an international crypto bank providing trading services, research and ICO advisers … When the proper regulation is in place, we are going to help companies from traditional sectors of economy, like natural resources and heavy industry, to raise money through ICOs.”

HASH will also advise financial institutions on the quality of cryptoassets they are going to buy. Now many of them have a considerable apprehension towards the ICOs, Koltsov said, as there is a lot of scams on the market.

Koltsov claimed that HASH was already working with a major private oil and gas company on launching an ICO to raise $20 million, though he declined to name the firm.

ICOs can be helpful at a time when major Russian banks are under sanctions, and can have difficulty borrowing money from organizations in the West, he said.

As Russia has yet to pass regulations for blockchain and cryptocurrencies, HASH will initially work with projects registered in other jurisdictions, but Russian investors are free to participate in various ICOs with the company’s help, Koltsov said.

Qiwi expects that the Russia’s parliament to pass the bills regulating cryptocurrencies and blockchain this fall. Otherwise, the company will continue focusing on projects in different legal landscapes, he added.

Qiwi image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

VeChain Arrives: What to Know About the $1.5 Billion Blockchain for Business

Yet another top-20 cryptocurrency has officially released live software.

As of 0:00 UTC Saturday, the first block on the VeChain blockchain, whose token supply is valued at $1.46 billion at writing, has been mined, marking a milestone for a project that aims to be among the first to convince enterprise businesses to adopt code tied to a crypto asset traded on a public market.

Seeking to address obstacles with public blockchains like ethereum and bitcoin (namely alleged governance inefficiencies, economic model issues and application design difficulties), the project also hopes to eclipse solutions like Hyperledger that have so far been the go-to platforms for business.

In short, founded by former CIO of Louis Vuitton China, Sunny Lu, VeChain hopes to be the first to put “real business” applications on a public blockchain.

“Right now, if we look at all the existing public blockchains, there is a common economic model which is from bitcoin that tries to motivate more people to join the network,” Lu explained.”The cost to use public blockchains is linked to the token valuation on the blockchain directly.

For the execution of more exotic blockchain features like smart contracts and decentralized applications, Lu argues this is a problem.

He told CoinDesk:

“It kind of generates a typical paradox which is, the more utility, the more use cases, the higher valuation of the token. It also means a higher cost to use the blockchain, and that means no one will use it anymore if the cost is too high.”

To solve this, VeChain uses a twin token system in which its VET asset functions as a store of value, and the VeThor token represents the underlying cost of using the blockchain. (The project is not alone in using such a system. Both Neo and Ontology also support twin tokens that seek to break up user behaviors.)

Still, another means by which VeChain has sought to differentiate is by emphasizing what Lu calls “ready to wear” software that reduces development time and costs.

“All of the public blockchains running in total decentralization mode are like naked blockchains to most enterprises,” Lu said. “Because it’s just open source for the core codes, if you want to build up an application, you’ve got to do everything by yourself starting from scratch.”

Early backing

But perhaps what distinguishes VeChain from its competitors is the extent to which enterprises are already said to be involved in that process. VeChain boasts partnerships with automobile manufacturers BMW and Groupe Renault, and global quality assurance and risk management company DNV GL.

Some partners, like DNV GL, have even taken on a more technical role in the project’s execution – specifically within its governance system, a key part of VeChain’s pitch to businesses.

Notably, the project uses a system called “proof-of-authority” (PoA) to govern how its blockchain rules can be altered, which Lu says offers enterprises “a balance between decentralization and centralization.”

VeChain is not the first project to attempt to walk this line.

EOS and Tron have also experimented with new governance models in which software users are positioned as “community members” that can use their tokens to elect delegates (nodes) to validate blocks.

In this way, VeChain’s consensus system has two components. The first, what Lu refers to as the “decentralized part,’ is that token holders have the ability to vote, and that the weight of their vote corresponds to the number of VET tokens they hold and whether or not they complete a KYC process.

Some token holders, like DNV GL, also run nodes, and to do so, must meet certain requirements.

“Every node will have specifications, not only about hardware, but about the security level and process, how to manage your nodes and your contribution to the VeChain community,” Lu told CoinDesk.

All voters use their “voting authority” to have a voice in decisions about technical modifications to the blockchain and to elect VeChain’s “Steering Committee.” This is what Lu calls “the centralized part,” which is the seven seat governing body of the VeChain foundation and its blockchain.

“Those seven seats of the committee, we will execute any decisions coming from the voting process, even including who should be next in the Steering Committee,” Lu said. “By doing that, you maintain the publicity or transparency of a decentralized part and also maintain the efficiency of a centralized part.”

Finding a sweet spot

So, while decentralization maximalists have been critical of the DPoS and PoA systems, businesses don’t seem to share their concerns.

Renato Grottola, senior vice president of digital transformation and M&A at DNV GL, told CoinDesk that he believes VeChain’s governance model represents “an optimal balance between centralization and decentralization, reducing uncertainty related to future developments.”

Likewise, Danny van de Griend, CEO of MustangChain, a startup which intends to use VeChain’s technology to create a more transparent equine industry with better data accessibility agrees.

“If you want to have it fully decentralized, it can become a mess,” he told CoinDesk. “You need a good balance between centralized and decentralized.”

De Griend continued:

You don’t have to think about the basics anymore. Those basic protocols are ready to be used, so you can think more now about, ‘What can I develop now for the stakeholders?'”

Grottola added that this makes it easy for DNV GL to develop supply chain-specific solutions,

“VeChain has been conceived as a platform; it combines blockchain technology with IoT and AI thus offering the possibility to develop supply chain solutions both at product/asset and enterprise level.”

 

More to build

But the launch Saturday won’t mark the end of VeChain’s development.

While Saturday marks the creation of the genesis block and the start of the generation of VeThor tokens, the blockchain won’t be fully functional for some time. Before the technology can be truly live, VeChain must migrate its tokens from the ethereum blockchain to its mainnet, a process scheduled for July.

Likewise, Lu acknowledges that mainnet launches, in which large sums of cryptocurrency are handled and transferred by developer teams, always come with risk.

“We have some enemies for sure,” Lu said. “People will try to attack.”

For this reason, he added that VeChain has enlisted several cybersecurity firms to conduct testing on its code prior to the launch. Likewise, the project has an “emergency response team” (ERT), which will “monitor the entire mainnet launch” to respond to issues.

According to Grottola, DNV GL is confident that VeChain’s measures will be sufficient to ensure a smooth launch.

“This is a normal practice in business, [but] not so common for crypto startups. That kind of structured approach has been one of the key criteria for choosing the VeChain initiative among other concurrent platforms,” he said.

Yet, partners are optimistic. Kurt Connolly, senior vice president of business development at sports and gambling platform Decent.Bet, which plans to use VeChain’s technology, said the company thinks the odds of a successful launch are in VeChain’s favor.

He told CoinDesk:

“We’re realists. We know that the next ‘perfect’ product launch will be the first ever ‘perfect’ product launch. There are always bugs to fix here or there.”

Sunny Lu image via VeChain

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Union Square Ventures to Invest in Crypto and Blockchain Long-Term Without Dedicated Fund

Union Square Ventures (USV), a private equity and venture capital firm, has plans to invest in blockchain and cryptocurrencies over the course of the next 10 years, CNBC reports June 29. Those plans, however, do not include establishing a separate fund.

Albert Wenger, managing partner at USV, told CNBC that “we see a lot of upside to keeping it under the same roof.” Despite prevailing the bear market in cryptocurrency, the company has an optimistic long-term view of the industry. Wenger said:

“Investors are rationally pouring a lot of money into this sector, because I think people are seeing the winning blockchain here might be worth a trillion, or a couple of trillion dollars. It’s not at all crazy to think that.”

Though Wenger echoed Steve Wozniak’s statement, that blockchain is a bubble similar to that of dotcom era, he argued that the risk could be justified for those investors who diversify their investments. “Certainly, for any one particular project there’s an extremely high chance it won’t work. As a result, if it works, the rewards will be very high,” he said.

Speaking about initial coin offerings (ICOs), Wenger called them an “innovative new financing mechanism,” though he said they are not suitable for every blockchain project. CNBC, with reference to research firm Autonomous Next, reported that in 2017, ICOs raised $6.6 billion and have reached $9.1 billion this year. Wenger asserted that the amount investors have raised in an ICO is not necessarily an accurate indicator of success. Wenger reportedly owns Bitcoin (BTC) and says that he is aware of the risks to retail investors:

“I don’t think you should be in the space and say ‘I’m only going to hold Bitcoin.’ At the moment, this whole space is a high risk space, and I don’t think anybody should be investing all of their life savings.”

New York-based USV specializes in startup financing, investing in organizations that apply technology-supporting applications, as well as Internet and web services that establish large networks. USV’s portfolio exceeds 100 companies, containing a number of crypto investments, which include digital currency exchange Coinbase and Ethereum-based virtual collective game CryptoKitties.

In April, USV and Andreessen Horowitz urged the U.S. Securities and Exchange Commission  to consider a cryptocurrency exemption at a private meeting. The crypto investors argued that ICO tokens should not be considered as investments, but as products that can be used to access services of startup companies. It would reportedly allow startups to carry out token sales without observing formalities such as business reviews and financial reports.

Austrian Financial Authority Calls for Tighter Regulation of ICOs and Cryptocurrencies

Board directors of the Austrian Financial Market Authority (FMA), Klaus Kumpfmüller and Helmut Ettl, have have offered proposals for stricter regulations on cryptocurrencies and initial coin offerings (ICOs), Cointelegraph auf Deutsch reports today, June 29.

According to an article published in the Austrian newspaper Die Presse on the June 29, Kumpfmüller proposed a “threshold-dependent” prospectus requirement for ICOs similar to that of securities. The FMA executive committee defined a “reasonable” threshold as two million euros. In addition, according to Kumpfmüller, there should be a concession obligation for distributors of cryptocurrencies and that these “will be treated like securities in the future”.

Ettle compared the proposed regulations to existing restrictions on financial institutions, “For the purchase and sale of foreign currency you need a mini-bank license.” So far, trading cryptocurrencies has no such analogous regulation under Austrian law. Last year, the FMA submitted around 30 statements regarding suspected legal violations in connection with cryptocurrencies and ICOs to the public prosecutor’s office.

According to Die Presse, FMA board members expressed their discontent with Austria’s Finance Minister, Hartwig Löger, who wants to strip the agency of some of its authority. In regular disputes between the FMA and the auditing authority (OePR), Löger calls for more “regulatory responsibility at the ministerial level”, which the FMA should then “reasonably execute.”    

According to the FMA executive board, matters such as money laundering have so far only been superficially regulated by law, and further oversight by the ministry should be seen as a positive development. However, there are “no serious problems” with regard to supervision and accounting, so transfer of competences would likely be regarded as “a political decision”. Ettl said it was crucial that the FMA retains “integrated and independent supervision.”

However, with regard to tightening regulations on cryptocurrencies, the FMA and the Finance Minister are not so far apart. When Löger called for tighter rules in the crypto sector in February, and for early regulation at the European level, both Ettl and Kumpfmüller approved and offered their participation in a “FinTech Regulatory Council” proposed by Löger.

Banks and Regulators Complete KYC App Test on R3 Blockchain Platform

39 financial firms partnered with blockchain consortium R3 completed more than 300 transactions via R3’s know your customer (KYC) application, according to a post on R3’s blog June 28.

R3’s KYC project involved major financial and banking institutions worldwide such as Deutsche Bank, ING, the National Bank of Egypt, Raiffeisen Bank International, and others. It also involved regulators and central banks such as the Central Bank of Colombia, the Federal Reserve Bank of Boston, and the Financial Superintendence of Colombia.

The transactions were conducted across eight timezones in 19 countries, wherein banks could request access to customer KYC data, and clients could grant or revoke access. Project participants ran a total of 45 nodes on Microsoft Azure, sharing data via the Corda network using CorDapp.

David E. Rutter, CEO of R3, said the goal of the the Corda-based KYC application is to speed up the usually “slow and time-consuming” process of verifying customer identity for financial transactions, also noting an “increasing demand for blockchain-based KYC solutions.”

Yorke Rhodes, Principal Program Manager of Azure Blockchain Engineering, commented that the initiative means to combine “technology and industry expertise” to facilitate the process of developинг blockchain projects by the banking sector, “aimed at solving shared business problems.”

On June 8, R3 reportedly revealed that the consortium’s internal financial targets are “10X short” of their revenue. A managing director of R3 told Fortune that the company is not in danger of running out of revenue, and will provide an update on their finances by the end of the calendar year.

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