The Abacus is back with CryptoAnalyst for their third weekly crypto recap. They’re going to show you in the ins and outs of this bombshell week for the space.
The Abacus Crypto Recap is a weekly update focused on two polar yet symbiotic elements of cryptocurrency markets—adoption and regulation. Here’s all the major happenings for this past week in crypto.
Bitcoin furthered its market dominance and SegWit2x was cancelled as cryptocurrencies continue their march towards global acceptance this week. Among other items, the search term “Buy Bitcoin” surpassed that of “Buy Gold,” over 100k new Coinbase accounts were created in a mere 24 hours, and several members of the traditional financial world announced various statements indicating an overarching belief that cryptocurrencies are here to stay. Without question, cryptocurrency has entered the spotlight.
- Bitcoin Hard-Fork Cancelled: It appears supporters of the controversial Bitcoin hard-fork SegWit2x have officially cancelled plans to enact the change. Originally intended to provide a scalable solution to Bitcoin’s future, the SegWit2x debate has created a sharp divide within the Bitcoin community which in some ways threatened the future of the currency itself. SegWitx supporters announced that while they still believe a scaling solution must be implemented, they did not want to move forward without consensus. The announcement read, “Unfortunately, it is clear that we have not built sufficient consensus for a clean block size upgrade at this time. Continuing on the current path could divide the community and be a setback to Bitcoin’s growth. This was never the goal of SegWit2x.”
- Bitcoin Ranked 32nd Global Currency: Jameson Lopp from BitGo, a blockchain security firm, has used his own proprietary index to calculate that Bitcoin is the 32nd highest-value currency globally. The metric is deduced by taking into account all paper money as well as digital stores and adding them up to arrive at a market cap. Bitcoin proudly ranks ahead of South Africa and Singapore, an incredible position for a completely decentralized, digital means of value.
- China Continues Its Quest For Government Backed Cryptocurrency: Yao Qian, in charge of cryptocurrency research for China’s central bank, said it is crucial that the country gets its own central bank-backed digital currency up and running as soon as possible while speaking at a forum in Beijing. He commented, “the development of [the] digital economy needs central bank-issued electronic currency more than ever,” adding, “It’s crucial to speed up the research and issuance.” Perhaps China is feeling the pressure more than ever after Russia’s announcement of the CryptoRuble.
- Credit Suisse maintains BTC Skepticism: Speaking at a New York TImes conference, Credit Suisse CEO Tidjane Thiam remarked, “From what we can identify, the only reason today to buy or sell bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble.” He joins a growing pool of famous investors like Warren Buffett who have recently spoken out against the fervent BTC gains.
- IBM Promotes Blockchain For Cannabis: IBM has issued a document to the government of British Columbia, suggesting that blockchain technology could be a great way to track the distribution and ensure the health and safety of the soon-to-be legalized cannabis industry. The document noted, “Blockchain’s relevance to regulating cannabis is similar to its many chain of custody applications in areas such as pharmaceutical distribution and food chains.”
- Bjork To Accept Crypto For New Album: Icelandic music sensation Björk will accept payments in cryptocurrency when her new album Utopia hits the shelves this month. Via a partnership with Blockpool, she will accept payments in Bitcoin, Litecoin, Dash, and Audiocoin. Those paying in Audiocoin will receive a reward of 100 Audiocoins.
- Ethereum Talks Scalability: Talk of Ethereum’s proposed Casper protocol was a highlight topic at this year’s Devcon3 conference. Poised to move Ethereum to a proof of stake model that prioritizes participation over computing power, concerns over the speed of implementation and security were levied at the conference. ETH founder Vitalik Buterin has said Casper and the switch to PoS are of the highest priority at the moment, and has suggested that his own design of the Casper protocol is easy to implement. Still, it seems much development work is needed before the change can begin to be enacted.
- Bitcoin Suprasses Gold (kind of): Perhaps cryptocurrencies are truly moving into the mainstream. Google search data doesn’t lie, and according to recent reports, searches for “buy bitcoin” have officially outpaced those of “buy gold.” The number #1 crypto by market cap may be well on its way to living up to its digital gold destiny.
- Litecoin Floods South Korea: Bitcoin’s longstanding offshoot Litecoin has hit one of South Korea’s most popular cryptocurrency exchanges known as Coinone. In its first 24 hours, $3.2M worth of LTC were traded. Currently the 5th most valuable cryptocurrency by market cap, Litecoin continues to play a substantial role in the future of cryptocurrency markets.
- Coinbase Adds 100k Users In 24 Hours: Due in large part to the frenzy of activity that followed the CME’s announcement of Bitcoin futures trading, Coinbase reportedly added 100,000 new users in 24 hrs. The frenzy of new users over a 24 hour period could be read as another stage in mainstream cryptocurrency adoption or the ever-growing state of a bubble ready to pop.
- Amazon Purchases 3 Crypto Domains: Amazon has sparked a frenzy of excited speculation following its registration of amazoncryptocurrency.com, amazoncryptocurrencies.com, and amazonethereum.com, joining amazonbitcoin.com in the slurry of crypto-related domains owned by the market giant. Given all of the excitement, the sentiment towards cryptocurrency acceptance at Amazon is relatively muted, with Amazon Pay VP Patrick Gauthier stating Amazon doesn’t plan on accepting cryptocurrency in the near future due to little demand.
- Deutsche Bank Strategist Claims End of Fiat Is Near: Jim Reid, lead strategist at Deutsche Bank has come out with a rather profound proclamation decreeing that the traditional fiat-based currency system is unsustainable and nearing its end. In his report on the topic, Mr. Reid claims that the monetary policies currently in place utilize extensive leverage and limitless money printing that could ultimately lead to extreme devaluation. He goes on to say, “… at some point there will likely be some medium of exchange that becomes more universal and a competitor of paper money,” a role he feels cryptocurrency is well poised to fill.
- Mining Goes Green: As cryptocurrency mining becomes increasingly difficult, the need to reduce overall costs and mine in an energy efficient manner is of paramount importance. The Japanese city of Kazuno is hoping to entice digital currency miners with the promise of renewable energy and affordable electricity. Miners Garage (a cryptocurrency mining operation) will become the first entity to take advantage of Kazuno’s clean energy with plans to launch its mining center as early as December 2017.
- Allianz Declares BTC Is Not A Currency: Mohamed El-Erian, Chief Economic Advisor of Allianz has warned that BTC can’t be thought of as a currency, arguing about Bitcoins: “… they’re still trying to find stability so it’s more of a commodity than it’s a currency.” He went on to say he worries that investors are propping up the price based on notions of adoption by banks and financial institutions but he is worried that adoption won’t come to pass.
- Goldman Sachs CEO Gives BTC Credibility: In an interview with Bloomberg, Lloyd Blankfein, CEO of global financial juggernaut Goldman Sachs, has said that while he isn’t necessarily comfortable with Bitcoin, he is open to the idea of it, clarifying his previously uncertain standpoint. Blankfein remarked, “Maybe in the new world, something gets backed by consensus.”
- Spanish Palace Hits The Market In BTC: El Palacio Badarji, a famed UNESCO world heritage palace on the spanish island of Ibiza, is making headlines for being listed for sale exclusively in Bitcoin. High-end real estate listings all over the world are beginning to use BTC for it’s efficiency and ease of use vs traditional banking, allowing for faster closing times and lower fees.
- Argentina’s Top Futures Market Greenlights BTC: According to a report by Bloomberg, Mercado de Termino de Rosario (Rofex), the largest futures market in Argentina, may begin offering Bitcoin futures to its customers. The firm plans to make an official announcement by year’s end. It’s expected Argentina will continue to quickly embrace cryptocurrency as massive inflation is putting adoption of BTC into the limelight.
ICOs continue to be a key item of discussion for government regulators and cryptocurrency exchanges around the world. This week New Zealand announced some of the most specific ICO regulations to date, and cryptocurrency exchange GDAX stated it would be taking a hard look at which tokens would be accepted on its platform. In addition, a number of arrests continue to pop up across the United States in conjunction with cryptocurrency-related money laundering.
- Malaysia To Crack Down On Crypto: Malaysia’s Security Commission is planning new cryptocurrency regulations. Chairman of the commission Tan Sri Ranjit Ajit Singh explained the SC is looking at relevant regulations and guidelines, including the secondary markets for trading digital assets. He went on to say, “… we would craft regulations to ensure that the trading values have the right conditions in place for market integrity and investor projection purposes.” This recent update assuages some concerns based on past comments that the country could be considering a ban of cryptocurrency altogether.
- New Zealand Declares Tokens Are Securities: New Zealand’s Financial Markets Authority has declared that ICOs will be considered securities in the country. They further clarified that “All tokens or cryptocurrencies are securities … even those that are not financial products. A security is any arrangement or facility that has, or is intended to have, the effect of a person making an investment or managing a financial risk.” The guidelines further state that tokens can be categorized as either debt securities, managed investment products, equity securities, or derivatives. The regulatory agency also indicated it could grant exceptions to the new policies in certain cases, as they boast, “One objective is to promote innovation and flexibility in our financial markets …”
- New Jersey Pastor Arrested For BTC Money Laundering: A New Jersey pastor has been sentenced to 5 years in prison after taking bribes from former bitcoin exchange coin.mx. The pastor helped the firm use a church-related credit union to funnel money to international recipients.
- Isle of Man Issues Licence For ETH Based Lottery: The government of the Isle of Man has issued a gaming license to Quanta for their Ethereum-based lottery. Daphne Cain, from the island’s Department of Economic Development remarked, “we are delighted to welcome a new company to one of the Island’s fastest growing sectors.”
- S. Treasury To Examine Cryptocurrency Ties To Money Laundering: The U.S. Treasury Department’s inspector general will review the Financial Crimes Enforcement Network’s methods of analyzing cryptocurrency crime related to money laundering and terrorism. The U.S government seems to be steadily increasing its surveillance of cryptocurrency-related money laundering activity.
- GDAX Keeps An Eye Towards ICO Compliance: Coinbase has laid out some of the listing requirements for it’s upcoming regulation compliant GDAX digital assets exchange, which seeks to list only ICOs that meet their specifications. Assets must be legal under U.S. securities laws, and tokens primarily used for fundraising and without utility will not be considered. GDAX will analyze the level of security and liquidity, along with the structure and transparency of the project. This is yet another step forward in the maturation of the ICO market, and speaks to growing concern about the sustainability of the majority of ICOs at present.
- Singapore Central Bank Calls Out Crypto Hype: Ravi Menon, head of Singapore’s central bank, has cautioned investors to be weary of the the hype surrounding blockchain technology, p2p lending platforms, and cryptocurrency in general. He warned, “I do see some collapse of the bubble in the fintech space.” Menon continued, “Some business models, some applications of technology are clearly overstretched,” adding, “At some point in the current euphoria about fintech, there will be some reckoning of that sort. But I do hope that it does not sweep away everything as it did in 2001, sweep away the good as well as the hype.”
- Indian Government Committee Considers Crypto Ban: India is purportedly considering an outright ban of crypto. An article appearing in the Economic Times stated that a government committee has advised lawmakers to close merchants and dealers active in cryptocurrencies. This comes at a time when cryptocurrency is flourishing in India, with exchanges like Zebpay adding hundreds of thousands of users. While these new reports may seem perplexing, it’s notable that like China (who also abruptly banned crypto exchanges) the Indian government has stated they’re working on their own government-backed cryptocurrency. This proposed ban on crypto could be a precautionary measure to allow a government-backed digital currency to flourish.
- Cyprus Exchange Commission Turns To Blockchain: The Cyprus Securities and Exchange Commission plans to integrate blockchain technology into its electronic payment systems, partnering with the Blockchain Technology for Algorithmic Regulation and Compliance Association for the proposed implementation. The commission boasted the technology is “of great interest to the financial industry because they [blockchain and DLT tech] have the potential to improve efficiency, augment security, eliminate duplications, simplify compliance and increase settlement speed, transparency and verifiability while preserving privacy and anonymity.”
- Philadelphia Day Trader Caught By SEC: The SEC has filed a suit against day trader Joseph Willner for using BTC to hide profits. Willner is accused of illegally taking control of over 100 brokerage accounts, using funds from those accounts to manipulate stock prices, then making trades against the inflated stock to make profits. He then transferred those proceeds into BTC, which the SEC claims totalled more than $700,000.
- State Bank of India Embraces Blockchain For KYC Laws: The state Bank of India has partnered with Intel Corporation to adopt blockchain technology to manage Know-Your-Customer laws. The protocol will utilize smart contracts and provide more transparency, efficiency, and security to the existing system.
- Australian Central Bankers Call Crypto Regulation Unnecessary: Tony Richards and David Emery, officials from the Reserve Bank of Australia’s Payments Policy Department, have said that cryptocurrency and blockchain technology does not pose any regulatory issues that need to be urgently addressed, and that the central bank will not support any efforts in regulating any core protocol behind blockchain networks. Australia has actively embraced the world of cryptocurrency, with relatively lax viewpoints towards regulation.
Cryptocurrency is increasingly being recognized as an invaluable player in the greater financial economy. Statements over the past week from a variety of individuals, including Goldman Sach’s CEO, indicate a warming to cryptocurrency trading.
More importantly, the launch of Bitcoin futures contracts on the CME and in Argentina’s Rofex signify profound evidence that mainstream financial institutions are increasingly seeing the merit in cryptocurrency.
— CMEGroup (@CMEGroup) November 7, 2017
While there are still many questions to be answered in terms of long-term regulations, these inroads are not to be taken lightly. As billions of dollars begin to pour into these newly minted financial instruments, Bitcoin will be inextricably connected to financial markets in the eyes of traditional investors.
This will mean the volatility of Bitcoin, and to a lesser extent cryptocurrency markets in general, will more directly affect the profit and potential losses of some of the wealthiest organizations and individuals in the world.
The last time Bitcoin reached uninhibited hype it crashed and hibernated for several years. While the fervent and unprecedented gains of late are likely to result in a heavy retracement, global adoption and implementation of Bitcoin and cryptocurrency in our financial systems suggest they may very well be here to stay.
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