Hodler's Digest, Nov. 26—Dec. 2: Satoshi Makes a New Friend, Buterin Gets Negative Over Centralized Blockchains
Coming every Sunday, the Hodler’s Digest will help you to track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions, and much more — a week on Cointelegraph in one link.
Top Stories This Week
Nasdaq Notes Bitcoin Futures Could Launch in Quarter 1 2019, Bloomberg Reports
Major U.S. stock exchange Nasdaq still intends to launch Bitcoin futures, and may do so in the first quarter of 2019, according to “two people familiar with the matter.” Speaking to Bloomberg this week, the two unnamed sources note that Nasdaq has been “working to satisfy the concerns of the U.S.’s main swaps regulator, the Commodity Futures Trading Commission [CFTC], before launching the contracts.” Later in the week, it was revealed that Nasdaq had partnered with U.S. investment firm VanEck to jointly launch a set of “transparent, regulated and surveilled” digital assets products, a move that supports the unnamed sources’ claims.
Ohio Poised to Become First US State to Accept Bitcoin for Taxes
The U.S. state of Ohio is set to become the first state to accept Bitcoin (BTC) as a tax payment. According to the Wall Street Journal, the decision will at first only apply to business, but there are plans in place to extend the crypto option to individual taxpayers in the future. Beginning this week, the WSJ notes that all Ohio-based businesses will be able to register to pay their taxes in BTC, which will then be processed through crypto payments service BitPay.
Vitalik Buterin: Blockchain Tech Isn’t as Applicable in Every Industry as People Think
Ethereum (ETH) co-founder Vitalik Buterin said this week in an interview that the misapplication of blockchain technology in some industries leads to “wasted time.” Buterin noted that although there are a high number of companies that try to establish higher standards and transparency by using blockchain tech, he does not believe that blockchain can be applied usefully in every industry. Buterin specifically criticized the proprietary nature of corporate blockchain projects from tech giants like IBM, noting that crypto and cross-border payments are suitable industries for the technology’s use.
US Securities Regulator Charges Floyd Mayweather Jr., DJ Khaled for Illegal ICO Promotion
The U.S. Securities and Exchange Commission (SEC) has charged professional boxer Floyd Mayweather Jr. and music producer Khaled Khaled (known as DJ Khaled) for unlawfully advertising Initial Coin Offerings (ICOs). The SEC found that Mayweather did not disclose receiving payments for promoting three ICOs (including $100,000 from Centra Tech), while DJ Khaled failed to disclose a $50,000 payment from the same crypto startup. In May, Centra’s three co-founders had been formally indicted for running a fraudulent $32 million ICO in 2017.
Bitcoin Creator Satoshi Nakamoto’s P2P Account Goes Live, Posts One-Word Update
Anonymous Bitcoin (BTC) creator Satoshi Nakamoto’s P2P Foundation account became active this week, posting a one-word status and adding a Brazilian user to his friend list. The profile, which is associated with an email that had previously been hacked, has been offline since Nakamoto withdrew from online activity in late 2010. The one word post — “nour” — has no obvious meaning: a Google search finds an Urban Dictionary post for “the most loving, affectionate and caring person you'll ever meet,” while the word also is a transliteration of the Arabic and Ancient Hebrew for “light” or “life.”
Most Memorable Quotations
“I don’t understand this deeply, but the detail that jumped out at me is they’re saying ‘Hey, we own all the IP and this is basically our platform and you’re getting on it.’ And like, that’s… totally not the point….” — Ethereum (ETH) co-founder Vitalik Buterin, speaking out the corporate blockchain projects
“If you’ve got time, it will arise. It will not happen within three months, or one year, but in two to three years, and this is the golden time to be in crypto,” — Tom Lee, major Wall Street crypto bull and co-founder of Fundstrat Global Advisors
“I do see [Bitcoin] as a legitimate form of currency,” — Ohio state Treasurer Josh Mandel, speaking about adding a BTC tax payment option
Laws and Taxes
Liechtenstein Cryptoassets Exchange Receives “Business License” From Regulator
The Liechtenstein Ministry of Economic Affairs has reportedly given a “business license” to professional traders-focused Liechtenstein Cryptoassets Exchange (LCX). According to the business, the license is a “milestone” in developing a “fully regulated blockchain ecosystem,” targeting institutional and professional investors. The firm now plans to apply for a Financial Market Authority (FMA) license, as well as other regulators’ approvals to trade security tokens among other offerings.
US SEC Chairman Jay Clayton Reiterates Strict Stance on ICO, ETFs
Jay Clayton, the chairman of the U.S. Securities and Exchange Commission (SEC), implied this week how the regulator is maintaining its strict stance of Initial Coin Offering (ICO) compliance. In an interview, Clayton noted that there was still a need to conduct public token sales to U.S. customers while following SEC guidelines. Clayton refused to comment on the SEC’s pending decision on whether to allow Bitcoin exchange-traded funds (ETFs) to launch, noting only “we’ve been clear on some of the issues that are of concern to us.”
Malaysia Plans to Create Crypto Regulation by Quarter 1 2019, Says Finance Minister
According to Malaysia’s finance minister, the country will develop regulations for cryptocurrency and Initial Coin Offerings (ICO) in Q1 2019. Finance Minister Lim Guan Eng stated that the country’s regulator, the Securities Commission (SC), had given him the timeframe for the regulations, which will form “part of the SC's efforts to facilitate alternative fundraising avenues and new investment asset classes.” Also this week, the minister noted that any entity wishing to issue cryptocurrency must defer to the country’s central bank, Bank Negara Malaysia (BNM).
Coinbase Launches Over-the-Counter Trading for Institutional Investors
Major U.S. crypto exchange and wallet provider Coinbase revealed this week that they have launched over-the-counter (OTC) trading for institutional customers. In contrast to trading through a crypto exchange itself, OTC crypto trading will allow institutional investors to conduct direct trades between each other. Head of Sales at Coinbase Christine Sandler noted that the decision to open OTC trades came at a time of increased demand for the service from institutional players, who consider leveraging both exchange and OTC business as a “huge benefit” to their customers.
CLSNet Blockchain Payment Netting Service Launches With Big Banking Clients
U.S. forex exchange (FX) settlement giant CLS’ blockchain payment netting service went live this week, with Goldman Sachs and Morgan Stanley as some of the initial users of the service, which was built in conjunction with IBM. The blockchain netting service, which is described as the “first global FX market enterprise application running on blockchain in production,” also has “committed” participation from six international entities including the Hong Kong branch of the state-run Bank of China.
Abu Dhabi-Based Bank Completes “First” Sukuk Transaction on Blockchain
Al Hilal Bank, based in Abu Dhabi, the United Arab Emirates (UAE), has announced it has completed “the world’s first sukuk transaction” with the use of blockchain technology. Sukuk is a legal instrument, also referred to as “sharia compliant” bonds, which allows investors to generate returns without infringing on Islamic law. The sukuk transaction was worth a reported $1 million, sold by Al Hilal to a private investor with the participation of Swiss-based fintech company Jibrel Network, which has offices in Dubai.
Bahrain Finance Training Institute Launches Blockchain Academy
The Bahrain Institute of Banking and Finance (BIBF) announced the launch this week of what it claims to be the country’s first “Blockchain Academy.” The BIBF established in Bahrain in 1981 by approval of the Specific Council for Vocational Training, is an unregistered non-profit semi-government entity that provides training in the financial sector. The Blockchain Academy, according to the announcement, is designed to prepare participants to earn the international qualification of Certified Blockchain Professional C|BP and was developed by both the BIBF and Dubai-based training firm MyLearning Key.
Amazon Debuts Two New Blockchain-Related Products
E-commerce giant Amazon has announced the launch of two new blockchain-related services this week: Amazon Quantum Ledger Database (QLDB) and Amazon Managed Blockchain. QLDB is a ledger database, overseen by a central trusted authority, that will provide a transparent, immutable, and cryptographically verifiable log of transactions, while the Amazon Managed Blockchain can operate with QLDB, allowing users to adjust and manage a scalable blockchain network.
Mergers, Acquisitions, and Partnerships
“Code of Conduct” Association Launched for Crypto by Ten Blockchain, Fintech Firms
Ten financial and technology firms have established an Association for Digital Asset Markets (ADAM) in order to create a “code of conduct” for the cryptocurrency sector. Among the founding members of the organization include Mike Novogratz’s crypto merchant bank Galaxy Digital, global financial services firm BTIG, fintech firm Paxos — of recently-launched stablecoin PAX — and crypto liquidity solutions provider GSR. The group plans to work with regulators to create “comprehensive standards” for digital asset market participants.
Nasdaq and VanEck Partner to Release “Regulated, Surveilled” Digital Assets Products
Nasdaq, the world’s second largest stock exchange, and the U.S. investment firm VanEck have announced a partnership to launch a set of “transparent, regulated and surveilled” digital assets products together. The partnership, announced via a tweet and then at a New York crypto conference, supposes that the new products would use Nasdaq’s SMARTS Market Surveillance system, alongside VanEck’s MVIS digital asset pricing indices.
Microsoft Japan and LayerX Partner to Increase Domestic Blockchain Use
The Japanese arm of computer giant Microsoft has partnered with nascent blockchain startup LayerX to “accelerate” uptake of the technology in Japan. LayerX was created in August as a joint project between news curation app Gunosy and advisory service AnyPay, and sees blockchain integration for enterprise, including the application of smart contracts and general consulting. Using Microsoft’s Azure Blockchain-as-a-Service (BaaS) solution, the companies will work together to promote broader applications of blockchain.
ASUS Partners With GPU Mining Platform to Let Users Mine Crypto via Graphics Cards
Taiwan-based tech giant ASUS and GPU mining platform Quantumcloud have formed a partnership in order to allow users to mine crypto via their graphic cards. Per the terms of the partnership, owners of ASUS graphic cards will be able to mine crypto through Quantumcloud software and withdraw earnings using PayPal or Chinese app WeChat. Quantumcloud noted that it doesn’t guarantee profits, and that users need to consider usage costs on their own.
Blockchain Capital Leads Almost $13 Mln Funding Round for U.S. Securities Token Startup
Blockchain Capital has led a $12.75 million Series A funding round for American securities tokens startup Securitize this week. The platform, which enables the issuances of digital securities — or security tokens — of any asset, also had Coinbase Ventures, Global Brain, NXTP, OK Blockchain Capital, and Xpring at Ripple participate in the funding round. Blockchain Capital’s co-founder and managing partner Brad Stephens will join Securitize’s Board of Directors.
Decentralized Exchanges Completes $15 Mln Funding Round with Huobi and OKCoin
BHEX Exchange, a decentralized crypto exchange, finished a $15 million funding round this week with support from major exchanges like Huobi and OKCoin. According to BHEX, the new funding round also included support from Genesis Capital, among others. BHEX’s investment subscription has purportedly attracted over 70 investment institutions, while Blue Helix selected 40 to participate in the first round of investment.
Winners and Losers
The crypto markets are slightly in the green at the end of the week, with Bitcoin trading at $4,128.16, Ripple at $.37, and Ethereum at $116.48. Total market cap is around $134 billion.
The top three altcoin gainers of the week are FREE Coin, Etheera, and RabbitCoin. The top three altcoin losers of the week are ZeusNetwork, Cyber Movie Chain, and TRONCLASSIC.
For more info on crypto prices, make sure to read Cointelegraph’s market analysis.
FUD of the Week
Bitmain Sued for $5 Mln For Alleged Unauthorized Mining at Clients’ Expense
Crypto mining giant Bitmain is facing a class action lawsuit of $5 million that alleges the company mined crypto for its own benefit while its customers’ devices were in the process of setting up. According to the lawsuit, Bitmain is benefitting from the the lengthy “initialization” period that its ASIC [Application-Specific Integrated Circuit] devices need for set up. The plaintiff claims that the company’s ASIC devices are “preconfigured to use its customers’ electricity to generate crypto currency for the benefit of Bitmain rather than its customers.”
US Treasury Adds Crypto Addresses of Two Iranians to Sanctions List Over BTC Ransomware
The U.S. Treasury Department has sanctioned two Iranians allegedly involved in Bitcoin (BTC) ransomware scheme SamSam, including their Bitcoin addresses in a first for putting crypto addresses on a sanctions list. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) took action against two Iranian individuals, Ali Khorashadizadeh and Mohammad Ghorbaniyan, who are accused of exchanging Bitcoin into Iranian rials (IRR) associated with the scheme. OFEC has managed to identify two crypto addresses associated with the alleged Iran-based criminals, with 7,000 transactions in Bitcoin and around 6,000 BTC moved since 2013.
Bulgarian Prosecutors Detain Three Hackers Who Reportedly Stole $5 Mln in Crypto
Bulgaria’s Gendarmerie forces and specialized prosecutors have arrested three hackers allegedly involved in stealing $5 million in crypto this week. According to the investigation, the hackers used new methods and advanced computer skills, including specialized hardware, in the scam. The investigation, which began five months ago, has ended with the police seizing cryptocurrencies worth around $3 million, as well as computers, flash drives, and a hardware portfolio for storage of crypto data.
Novogratz’s Galaxy Digital Lost $136 Mln During First Three Quarters of 2018
According to a report from Bloomberg this week, Mike Novogratz's crypto investment bank Galaxy Digital has lost $136 million in the first three quarters of 2018. The banks realized and unrealized losses in Q3 amounted to $41 million, and the firm’s share price also dropped to a record low after tumbling 55 percent this month. Galaxy Digital explained the loss by pointing to the falling prices of Bitcoin (BTC), Ripple (XRP), and Ethereum (ETH), calling the lack of crypto trading volumes a “headwind” to success.
Zug Court Shuts Down Crypto Mining Firm Over Unregistered Initial Coin Offering
The cantonal court in Zug, Switzerland, has shut down cryptocurrency mining firm Envion AG for offering an allegedly unauthorized Initial Coin Offering (ICO). Envion, a Swiss-based off-grid mining company that touts itself as using decentralized, clean energy like hydroelectric and solar to power its mobile mining units, raised around $100 million through its mid-January ICO this year. The funding led to a conflict between the two partners at Envion, resulting in a court trial. This week, the court ruled to liquidate the firm, while noting the complete absence of any auditing function or board.
Prediction of the Week
Civic CEO Believes Bitcoin Will Trade Range-Bound for “Three to Six Months”
According to Vinny Lingham, the CEO of identity management startup Civic, Bitcoin’s (BTC) price will remain range-bound between $3,000 and $6,000 for the next three to six months. Speaking on CNBC’s “Fast Money,” the CEO noted that it is doubtful that the coin will break down the support level of $3,000 since there is “a lot of buying in the short term around that mark.”
Best Cointelegraph Features
Ohio state is looking to become the first in the U.S. to let businesses, and possibly later individuals, to use cryptocurrencies to pay for taxes. Cointelegraph spoke to Ohio’s State Treasurer Josh Mandel, the person responsible for the initiative, about how he sees the state becoming more of a blockchain hub as well.
Last week, Trezor, one of the leading crypto hard wallets, reported that one-for-one copies of their devices had been found, and warned customers to be careful of purchasing Trezors from unreliable sellers. The key difference between the real and fake Trezors? A holographic sticker on the box, which some critics say is too weak as a security measure.
The Bitcoin Cash (BCH) hard fork took place on Nov. 15, but the consequences are far reaching. Bitcoin ABC, which was backed by both BCH advocate Roger Ver and Bitmain founder Jihan Wu, ended up winning the allegiance of the majority of exchanges, but Bitcoin SV is far from being dead.