BitDigest - Friday December 7, 2018
Digital currencies are in the red again with bitcoin (BTC) reaching a new 2018 low. Over the past few hours bitcoin has increased from $3,300 levels but this week has resulted in a loss to the crypto market of $20 billion with the current market cap of all digital currencies falling below $100 billion to $99 billion.
Over the seven day period, BTC is down 17.5%, ether (ETH) 24.6% and ripple (XRP) 18.9%. BTC dominance is now at 60.05%.
BTC hashrates are holding at this level but the sell off will likely lead to more miners temporarily shutting down rigs.
The bitcoin cash (BCHABC) versus bitcoin SV (BCHSV) battle appeared to be over but is now seeing the development of an unexpected story, a ‘flippening.’ According to coinmarketcap.com, BCHSV is trading at $105.81 and worth more today than its fellow nemesis. Over the past weeks’ Craig Wright’s supported token, trying to return to the original bitcoin in satoshi’s vision, has gained from mid 80 levels while Roger Ver’s version has lost more than twice its value. It is down 40% just over the past 7 days.
Cboe futures are not reporting properly this morning. CME pricing for December slide to $3,335. March 2019 pricing is even lower at $3,285.
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Joseph Lubin’s ConsenSys has announced he is reducing his staff, number over 1,000, by 13%. In a publicly issued note, the ethereum focused company announced the labor cuts calling it a “difficult” decision resulting in the streamlining of several parts of the business including ConsenSys Solutions, spokes, and hub services
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Digital Currency Group has announced it has formed Metaverse Ventures a wholly owned subsidiary that will invest exclusively in companies building products and services for Decentraland. The “mini-DCG” will fund development of applications and infrastructure running on Decentraland’s virtual reality based ecosystem.
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Morgan Creek Capital Management is looking for a Roubini-esk crypto-hater to make a Warren Buffet-like $1 million bet that their Digital Asset Index Fund will outperform the S&P 500 over the next 10 years.
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It is expected that the U.S. Internal Revenue Service (IRS) will receive a record number of cryptocurrency-related tax return claims this year. Dash Masternode servicer (and crypto account software provider) Node40 is predicting that many investors will decide to claim their losses, but this negative declaration could have a negative impact. Reporting the losses will inevitably lead to questions about individuals filers original purchase of digital currencies and whether or not they have filed in prior periods.
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Japan’s National Police Agency (NPA) is estimating that there were 6,000 cases of suspected money laundering relating to crypto in Japan during the first three quarters of 2018. If correct this would be 8x the final nine months of the previous year. But the increase is somewhat misleading, illicit activities may not be increasing, operators are much more diligent. The NPA attributed the rising number of reports to more operators getting used to the notification system. “We have seen some large-scale cryptocurrency thefts, and operators are believed to be scrutinizing transactions more rigorously,” NPA officials said.
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The SEC issued a statement announcing it has delayed its ruling on a proposed rule change required by the VanEck SolidX ETF until the end of February.
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Binance has announced it will be organizing its first conference in Singapore this January. The conference is expected to feature the Binance Conference will feature more than 70 speakers, including industry thought leaders, high-level executives, academics and heads of state, in a program filled with keynote speeches, panel discussions, fireside chats, and exclusive networking events. So far, the founders of TRON, NEO, and Qtum are speakers who plan to join Binance’s CEO Changpeng Zhao “CZ.”
Curated News
SEC Commissioner Says 'Don’t Wait on Bitcoin ETF' Announcement
Crypto leaning U.S. Securities and Exchange Commissioner (SEC) Hester Peirce believes the approval of a Bitcoin ETF remains an uncertainty and it could take years for it to be approved. Peirce said that investors should not wait on the ruling of the SEC as it could potentially take a long time before the SEC comes around and approve it: “Don’t hold your breath. I do caution people to not live or die on when a crypto or bitcoin ETF gets approved. You all know that I am working on trying to convince my [4 other] colleagues to have a bit more of an open mind when it comes to [crypto]. I am not as charming as some other people.” The commissioner added that a Bitcoin ETF could be approved tomorrow or in ten years time, there is not a timeframe the commission can provide on it. But, she emphasized that the institutionalization of crypto will inevitably occur, as the infrastructure surrounding the asset class strengthens over time.
Partisan Bills Introduced in House to Prevent Crypto Price Manipulation
Two congressmen have introduced bipartisan legislation aimed to help prevent cryptocurrency price manipulation. Representatives Darren Soto (D – FL) and Ted Budd (R – NC) have announced two bills, “The Virtual Currency Consumer Protection Act of 2018” and the “U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018, ”aimed at making the U.S. a “leader in the cryptocurrency industry.” The bills essentially ask the Commodity Futures Trading Commission (CFTC) and other U.S. financial regulators to come up with a roadmap to better regulate cryptocurrencies in order to protect individuals and businesses.
Malaysia Issues Statement on Regulatory Approach
Malaysia’ Securities Commission and Central Bank have issued a joined statement to provide clarity on the regulatory approach for the offering and trading of digital assets in Malaysia. While stressing that digital assets are not legal tender, the SC will regulate issuances of digital assets via initial coin offerings (ICO) and the trading of digital assets at digital asset exchanges in Malaysia. Regulations are currently being put in place to bring digital assets within the remit of securities laws to promote fair and orderly trading and ensure investor protection.
Swiss Post and Swisscom Launch Swiss-Only Blockchain Platform
Swiss Post and Swisscom are building a simple, secure and sustainable infrastructure for blockchain applications in Switzerland. The companies plan to use the permission blockchain to operate their own services as well as enable the development of other blockchain applications using the promising technology. The use of a permissioned platform will ensure that all data is maintained within Switzerland, meeting data and bank security concerns.
R3's Corda Being Tested in Euro Debt and Club Loan markets
R3’s Corda blockchain is being trialed in the Euro Debt Market and syndicated loan arena. In a proof-of-concept Itaú Unibanco borrowed US$100 million through a Club Loan from Standard Chartered (SC) and Wells Fargo over the Corda shared ledger. The participants were able to monitor loan agreement revisions, comments and the sequence of approvals over the ledger and track and subsequently audit any changes in terms leading up the deal closure. Separately, Rabobank, ING, Commerzbank and Natixis announced the completion of a live commercial paper transaction on a new Corda-based Euro Debt Solution application – the trade saw the successful issuance of EUR100,000 notional, with a one-day maturity.
Gazprombank to Launch Crypto Trading Service
Gazprombank, the banking division of Russian natural gas company Gazprom, plans to launch a cryptocurrency service next year. Gazprombank will be able to “buy, sell and transfer crypto assets and currencies on behalf of clients and provide a consolidated portfolio view, without any need for a crypto-wallet or private key management.”
Andreas Antonopoulos Explains Why Bitcoin Will Avoid a 'Death Spiral'
Best-selling author, speaker and bitcoin advocate, Andreas Antonopoulos has suggested that blockchain’s self-preservation mechanism, its difficulty adjustment, will continue to adapt to its its environment in order to incentivize the mining community – this mechanism will ensure that mining remains profitable and the incentive to support the bitcoin blockchain will continue. He believes it unlikely that miners have a long-range outlook, but the miners who tough it out through the current market downturn will reap substantial rewards. “If [miners] wait until the difficulty retargets and the difficulty becomes less – it gets easier to mine – then each miner who waits makes more profit because in the new scheme they have a greater percentage of the mining power than they did before. Let’s say if the mining power drops by 50%, the miners who stick around and wait for the difficulty retargeting are now twice as profitable after the retargeting. That’s a pretty good incentive to stick around.”
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BitDigest is a weekday news update on digital currencies and blockchain technology for friends and partners of Parsons & Whittemore, a single family office based in Rye Brook, New York. Receipt of BitDigest is by approval of the Author. The commentary, analysis, opinions and recommendations in this newsletter represent the personal and subjective views of the Author, and are subject to change at any time without notice. The information provided in this newsletter is obtained from sources which the Author believes to be reliable. However, the Author has not independently verified or otherwise investigated all such information. Neither the Author nor any of the Author's affiliates make any guarantee or other promise as to any results that may be obtained from reading this newsletter. While past performance may be analyzed in this newsletter, past performance should not be considered indicative of future performance. No reader should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. The Author is not making a solicitation or offer to buy or sell any securities of any kind.