The Abacus team is back at it again for their eleventh weekly crypto recap. Their recurring column will bring you up to speed on the all the major crypto headlines you need to know about.
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.
Adoption And Free Enterprise
The crypto craze is hitting mainstream businesses, with established companies like Telegram and Kodak announcing the launch of their own respective tokens. With all the recent fervor, some crypto exchanges are having trouble keeping up with the pace of new user accounts while Jamie Dimon has changed his tone, now stating that he regrets calling Bitcoin a fraud.
- Kodak To Launch Its Own Crypto: Kodak, the infamous maker of photography equipment, has announced that they’re launching their own cryptocurrency dubbed KODAKCoin. The coin is designed to manage rights ownership of photos on a digital ledger, while using the currency as a means of paying for rights to use the photos. Kodak CEO Jeff Clarke remarked, “For many in the tech industry, ‘blockchain’ and ‘cryptocurrency’ are hot buzzwords, but for photographers who’ve long struggled to assert control over their work and how it’s used, these buzzwords are the keys to solving what felt like an unsolvable problem. Kodak has always sought to democratize photography and make licensing fair to artists. These technologies give the photography community an innovative and easy way to do just that.” Kodak intends to offer the ICO to accredited investors as a regulation 506c offering. Kodak’s stock has more than doubled after the announcement this afternoon.
- Crypto Exchanges Can’t Handle The Heat: The surge of cryptocurrency investment has lead to so much demand that Binance, Bitfinex, and Bittrex have had to halt new users coming onto the platform as they scramble to meet infrastructure concerns. All three exchanges have reported record numbers of new users, with Binance recently reporting 250,000 new users a day. Bitfinex has stated that new signups will resume on January 15th.
- New York Stock Exchanges Continues Bitcoin ETF Plans: More details on the NYSE’s filing for Bitcoin ETF’s has come to light, with the entity apparently planning on offering 5 different ETF’s for both bullish and bearish positions linked to to the price of Bitcoin futures contracts offered on the CME and CBOE exchanges. The ETF’s will be available on the Acra stock exchange. The bullish ETF’s offer 1.25X, 1.5X, and 2X positions, signifying the returns on a given contract. The funds are only intended to be held for a day with the reports clarifying, “According to the Registration Statement, the 1.25X Bull Fund, 1.5X Bull Fund and 2X Bull Fund seeks daily leveraged investment results (before fees and expenses) that correlate positively to either 125 percent, 150 percent or 200 percent the daily return of the target benchmark.” The bear funds function inversely in the same capacity.
- Bitcoin Collides With The NFL: It’s not hard to fathom the lucrative intersection between cryptocurrency and sports betting given the incredible growth of digital currencies and the tracking and anonymity they provide. In that vein, fantasy sports betting league FanDuel is offering Bitcoin rewards as an incentive for using their platform. According to CFO Andy Giancamilli, “In awarding Bitcoin, we’re recognizing that most of our users are early adopters of technology and have a significant interest in cryptocurrency. Our fans love the prizing aspect of playing on our site and we think this will be a reward that they truly appreciate.” The companies Bitcoin Bowl Tournament costs $3 for entry and offers winners a reward of two Bitcoins.
- Real Estate Tokenization In Full Effect: NAREIG (North America Real Estate Investment Group), an organization focused on aiding Chinese real estate investors in overseas purchases, has announced a real estate coupon Ethereum token pre sale. The token will allow Ethereum holders to use these coupons to purchase properties. Dubbed HCT (house coupon token), the pre sale launch date is slated for January 16th. In regards to the launch, CEO of NAREIG Hunter Lin remarked, “We are thrilled to announce our own Real Estate Coupon Ethereum tokens and it will become the first Real Estate Coupon tokens in the industry. Instead of establishing a brand-new distribution platform, we issue our tokens on Ethereum. Given to NAREIG’s business model, we decided to use blockchain technology to develop our application.”
- Nvidia Keeps Booming With Bitcoin: Graphics card manufacturer Nvidia is increasingly being seen as an indicator for overall crypto market performance, as earnings predicated on sales of mining equipment have seen stock prices soaring, doubling in the last year. The company’s release of the Titan V graphics card has proven to be extremely powerful as an implement for cryptocurrency mining.
- Jamie Dimon Comes Around On Bitcoin: Jamie Dimon has once again spoken about Bitcoin, this time to remark that he regrets calling it a fraud, citing that his concerns revolved around “[what] governments are gonna feel about bitcoin as it gets really big, and I just have a different opinion than other people. I’m not interested that much in the subject at all.” The JP Morgan CEO continues to praise blockchain technology, remarking, “The blockchain is real. You can have crypto yen and dollars and stuff like that. ICO’s you have to look at individually.”
- Merrill Lynch Bans Bitcoin: In a move similar to JPMorgan, Merrill Lynch has banned their financial advisors from purchasing Bitcoin related investment products for their clients. According in an internal memo published by the Wall Street Journal, the bank has major concerns “pertaining to suitability and eligibility standards of this product.” The new policy prevents traders from advising regarding Bitcoin or any BTC related products. This latest news comes in contrast to other major banks like Goldman Sachs who have recently indicated the opening of a crypto trading desk coming in 2018 and entities like the NYSE who are fervently working to accommodate the incredible appetite for cryptocurrencies.
- IBM And Comcast Form Blockchain Fund: IBM and Comcast’s venture arm have announced the backing on a new investment fund focused on helping early stage startups working with blockchain technologies. Comcast will provide funding with IBM providing services and resources to the burgeoning companies. The program is seeking to invest $25-50,000 in 5-6 companies over the next six months. According to Co-founder of the investment group Rob Bailey, “There’s a massive opportunity in Fortune 500 companies. They don’t know which companies to work with.”
- ETH Facing Technical Issues Despite Price Surge: Technical issues on the Ethereum platform haven’t been enough to hold off all time highs, with Ethereum trading past $1,250 at the time of writing. A glitch in the ETH “gas oracle” that determines transaction pricing made it so expensive to move Ethereum that Bittrex had to halt the creation of new Ethereum wallet addresses. There have likewise been issues with new nodes downloading the entire blockchain. Given the incredible surge in activity Ethereum has experienced, some of these challengers are to be expected as the team hastily works to upgrade the platform.
- Verified Crypto Accounts Become Latest “Pump”: As cryptocurrency continues its ascent into the mainstream, exchanges are struggling to keep up with the near unrelenting demand. Some exchanges have halted new accounts altogether, while others have users reporting delays of multiple weeks before accounts can be verified. Perhaps inevitably, this had lead to a new secondary market of fully verified trading accounts for sale. This market is being bolstered as exchanges like Poloniex, a former bastion of the anti-authoritarian anonymous coin trading, now requires accounts to provide identification.
- Telegram Plans $500 Billion ICO: Popular messaging application Telegram is entering the ICO space with plans to launch its own token. The company plans on creating their own native blockchain, dubbed “Telegram Open Network” (TON), and using their own currency to power payments made via their app. They claim the new blockchain is a “third generation” product with superior capabilities to those of Bitcoin and Ethereum. Given the global nature and popularity of the telegram application and the legitimacy that comes with a large existing customer base, the ICO is expected to be one of the largest yet. The company is reportedly considering a raise of as much as $500MM for the pre-ico sale with the ICO expected to start as soon as March. More incredibly, early reports suggest that the presale may require a buy in of as much as $20MM, to be paid in fiat currency. According to the Telegram whitepaper, the currency of the network will be called “gram”, with the company using a combination of centralized and decentralized infrastructure to power transactions that they claim will help ensure scalability. Moving the application onto a blockchain could also help solve issues of censorship, with countries like Iran previously banning the app during periods of government protest. The white paper outlines the services the entity plans to offer. “TON Services” will be a platform for third parties that helps create mobile friendly interfaces for decentralized applications. “TON DNS” assigns names to accounts, which would allow DAPS to be accessed in a matter akin to a normal website. “TON payments” is a platform that allows payments via the TON network that will allow instant off chain remittance that Telegram claims to be as safe as an on chain transaction. “TON Blockchain” contains a master chain and 2 to the power of 92 accompanying blockchains replete with an “infinite sharding paradigm”. This would allow different blockchains to split and merge with changes in load, helping to keep transaction times down. The blockchain also contains buzzwords such as “Instant Hypercube Routing” and a Byzantine Fault Tolerant protocol, which further bolster efforts to maintain integrity of the blockchain.
Regulation And Government
- Venezuela Ready To Issue Its Digital Currency: President Maduro is ready to cash in on the crypto craze and is set to issue 100 million Petros in a rush to launch Venezuela’s new cryptocurrency. Each Petro will be back by 1 barrel of Venezuelan oil currently priced at $59 a barrel. Thanks to Venezuela’s rich oil reserves in the Orinoco oil field, president Maduro expects to raise $5.9 billion dollars based on current available barrels. Critics including a recent Forbes article have pointed out that the alleged cryptocurrency is not a cryptocurrency at all and is more akin to a “digital oil backed security.” The Venezuelan government has already begun moving forward with the mining infrastructure necessary to support the new digital asset. 860,000 potential miners have purportedly signed up via Venezuela’s registry of Cryptocurrency Miners.
- South Korea Leading The Charge On Global Regulation: South Korea was once considered the most friendly of crypto nations but as of late has been ringing the fear alarm. At a recent meeting of the Financial Stability Board (a consortium of regulators from 24 countries and 12 organizations including China, Japan and the IMF respectively) a prominent South Korean regulator called for the “international coordination to curb virtual currency trading.” As cryptocurrency trading continues to spike, nations and economic entities around the world will need to determine a global regulatory framework.
- Vermont Could Become A Crypto Haven: Vermont has been no stranger to the blockchain world and over the summer launched several studies into blockchain technology. It seems those studies have made an impact on some state legislators and prompted Senator Allen Clarkson to introduce a bill outlining the concept and classification of “digital limited liability corporations.” Under the new bill, firms would be required to pay a $.01 transaction tax following the issuance, trade, or transfer of a cryptocurrency. The bill is one of the first to place a framework around digital currency based companies.
- Harvard Professors Bet On BTC Crash Due To Regulation: According to Professor Kenneth Rogoff of Harvard University, Bitcoin will eventually see its downfall due to government regulation despite its myriad transaction benefits. Rogoff said “Small anonymous transactions with virtual currencies…would be desirable but large-scale anonymous payments would make it extremely difficult to collect taxes or counter criminal activity.” Renowned Bitcoin investor Vinny Lingham went to Twitter with a quick retort to the professors predictions. He tweeted, “ Vinny Lingham predicts collapse of educational institutions due to lack of government regulations around how professors are tenured!”
- Bitcoin Crackdown Continues In India: The sentiment regarding Bitcoin continues to grey in India with a recent “public interest litigation” filed in a Calcutta court to immediately regulate the world’s most valuable cryptocurrency. Bivas Chatterjee who filed the PIL declared, “Use of Bitcoin was maximised post demonetisation, when cashless economy was being promoted. In India, law enforcement agencies are confused… Either the government should ban Bitcoin by declaring it illegal like China or there must be a regulatory body to control its flow.”
- Brazil Embraces ETH: Brazil is on is way to becoming one of the primary users of the Ethereum protocol. Recent reports suggest the Brazilian Government plans to use Ethereum to process national petitions and enable citizens across the country to easily vote.. By using an in immutable platform the Brazilian government could ensure efficiency and trust between itself and the citizenship. In some cases even electoral votes could be moved onto the blockchain. Everton Fraga, an proponent of the initiative stated the new system would be “a celebration of democracy.”
- Texan Authorities Come Down On Bitconnect: Bitconnect has long been a thorn in the crypto community with many crypto investors calling it an outright scam. The Texas Securities Commissioner may not think Bitconnect is a scam but they have issued an immediate cease and desist for selling unlicensed securities. A report read, “The Securities Commissioner found that the BitConnect investments are securities, but were not registered as required by the Texas Securities Act and State Securities Board Rules and Regulations. In addition, the company is not registered to sell securities in Texas.” We’ll have to wait and see how Bitconnect identifies users in the state of Texas vs. global users and how they will ultimately respond to the commissioners demands.
- Bank of Israel Challenges “Currency” Naming Categorization: Last month Israel was discussing a national digital currency and now the Bank of Israel is questioning whether traditional cryptocurrencies are in fact currencies at all. Naudine Baudot-Trajtenberg, the current deputy Minister of the Bank of Israel told the Knesset Finance Committee “Bitcoin and similar virtual currencies are not a currency, and are not considered foreign currency.” As she continued her argument Baudot-Trajtenberg claimed Bitcoin is more akin to a “financial asset.” The deputy governor also expressed concerns surrounding the regulation of cryptocurrency stating, “Our assessment is that … there is a real difficulty in issuing sweeping guidelines to the system regarding the proper way to estimate, manage, and monitor the risks inherent in such activity.”
- Malaysia Moves To Shut Down ICOs: Malaysia has joined the list of countries beginning to actively monitor ICOs. Malaysia’s Securities Commision has issued a cease and desist to the Copy Cash Foundation after determining the ICO would “contravene relevant requirements under securities laws.” It would not be surprising for more ICOs to receive similar cease and desist letters after the Malaysia Security Commission claimed, “The SC continues to work with Bank Negara Malaysia and other enforcement agencies, including our foreign counterparts, to closely monitor such activities and will take appropriate action where necessary.”
- Switzerland Creates Blockchain Task Force: The Swiss government has launched a Blockchain task force to create a legal framework regarding the regulation of ICOs. The task force will be led by Finance Minister Ueli Mausrer and Economics and Education Minister Johann Schneider-Ammann. Schneider-Ammann stated, “[Blockchain is] becoming more important as a technology for many industries, not just crypto finance. [What is needed is liberal regulation], which opens opportunities for Switzerland’s position while at the same time reducing risks.”
The pace of cryptocurrency adoption has hit unprecedented levels, leading decade old business like Kodak to launch their own cryptocurrencies–perhaps signalling that a tokenized economy is not so farfetched. The news sent the stock of the once bankrupt company flying past the 100% 24 gain mark as if it was a crypto itself. Even nations are getting in on the craze with Venezuela sprinting towards the launch of its digital currency the Petro. However, despite the fever pitched excitement, technical issues continue to demonstrate that blockchains and the crypto financial ecosystem is still in its infancy. Ethereum’s technical issues although surmountable further prove the notion that this is still prototypical technology and the fact that exchanges had to halt new account creation raises questions around liquidity and general professionalism. As a response to all this, governments seem to be jumping into the driver’s seat as ICOs are receiving increased scrutiny from global governments and regulatory bodies around the world, are proposing regulatory frameworks to curb crypto trading. The counterweights of regulation and adoption will collide in unimaginable ways in the coming months as governments race to catch up with the almost trillion dollar market and crypto entrepreneurs and traders continue moving full steam ahead.
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