Visa and BlockFi to launch Bitcoin rewards credit card as adoption grows

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Beyond BitMEX: CFTC set a new record for lawsuits in crypto this year

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If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices.

3 reasons why Bitcoin price violently rejected near $20,000

What can I do to prevent this in the future?

If you are on a personal connection, like at home, you can run an anti-virus scan on your device to make sure it is not infected with malware.

If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices.

Bitcoin Faces Harsh Rejection as Analysts Eye Potential Consolidation Phase

Bitcoin

Bitcoin Faces Harsh Rejection as Analysts Eye Potential Consolidation Phase


  • Bitcoin faced an incredibly harsh rejection earlier this morning that caused its price to plummet
  • This came about directly following another test of the cryptocurrency’s all-time high, which was broken and tested on multiple occasions over the past day
  • The resistance here is still significant and should not be overlooked
  • Whether or not this level can be flipped into support anytime soon will offer serious insights into the entire market’s near-term outlook
  • One trader is now noting that although a few indicators are flipping bearish following the rejection, he is hoping for a consolidation phase

Bitcoin and the rest of the crypto market have been caught within the throes of an intense uptrend throughout the past few days and weeks.

Its momentum finally stalled yesterday when the crypto set new all-time highs on many different exchanges, with this coming about following a rebound from lows of $16,400 that were set just a few days prior.

The strength seen by the crypto in the time since its decline to these lows is a positive sign, but the overnight rejection at just under $20,000 shows how intense this region’s resistance level is.

One trader is now hoping that BTC sees a bout of consolidation, as this could bring multiple bearish indicators back into neutral or bullish territory.

Bitcoin Faces Dire Rejection at Just Below $20,000

At the time of writing, Bitcoin is trading down just over 5% at its current price of $18,700. This marks a notable decline from its recent highs of $19,800 that were set yesterday.

These highs marked the highest level seen by the cryptocurrency since 2017, and on some exchanges, marked an all-time high.

The resistance here is still significant and shows no signs of letting up anytime soon.

BTC’s RSI Flips Bearish as Analyst Eyes Consolidation Phase 

While speaking about this price action, one analyst observed that Bitcoin’s RSI indicator shows some signs of weakness.

That said, a consolidation phase around the cryptocurrency’s current price level could be its best hope, as this would allow the bearish indicators to drift back towards being neutral.

“Very confused by BTC. RSI shows some weakness. Dream scenario we consolidate here.”

Bitcoin

Image Courtesy of Wolf. Source: BTCUSD on TradingView.

So long as Bitcoin can set a higher low and continue holding above its intra-decline lows of $18,200, then the cryptocurrency could be poised to see another strong rebound in the days ahead.

Featured image from Unsplash.
Charts from TradingView.

Why Europe Bests the US at Attracting Crypto Startups

For years lawyers have warned of the risks associated with running a cryptocurrency business in the United States, especially when a token is involved. Regrettably, those risks are more apparent than ever.

As New York- and Austrian-licensed attorneys, we’ve talked countless clients out of publicly selling tokens in the U.S. or generally pursuing their businesses there. We’ve personally witnessed one of our European clients – a small fish by anyone’s account – fall victim to U.S. regulators’ zeal to shape the law through enforcement, presumably to establish precedent to go after bigger and badder actors in the distant future. 

Bryan Hollmann is of counsel at Stadler Völkel Attorneys at Law, a technology-focused law firm in Vienna, Austria. Oliver Völkel is a founding partner at the same firm.

The saying “the gears of justice turn slowly” is particularly true for U.S. regulators, who just this year have secured important court rulings against companies that sold tokens in 2017 and 2018. One thing is clear: Token issuers in 2020 and beyond cannot ignore U.S. securities laws without risking severe fines and litigation many years down the road.

Fortunately, the U.S. is not the only market in the world where companies can raise capital by selling tokens. We agree with U.S. lawyer Preston J. Byrne, who remarked in a CoinDesk opinion piece:

It is also true that there are, without a doubt, countries in the world that do countenance token offerings. Go there. U.S. securities laws are not meant to restrict the sale of tokens in those places.” (emphasis added)

New token sales

The European Union is one of the hottest regions in the world in terms of raising capital through token offerings, according to ICO Watchlist. And, as more and more companies choose to put the United States on the list of banned jurisdictions alongside countries like Afghanistan, North Korea and Syria, the EU is bound to become even more popular. 

In the last year, European-based projects like Polkadot (Switzerland) and Bitpanda (Austria) have sold tokens worth millions of euros through initial coin (ICO) or initial exchange (IEO) offerings. Leading blockchain projects such as Ethereum and MakerDAO are supported by Swiss foundations, and up-and-coming players like Bitpanda and Morpher (both of which are clients of the authors) are Austrian companies that have concluded financing rounds with prominent U.S. venture capital firms while maintaining their headquarters in Europe. On top of that, Bitpanda raised EUR 43.6 million in 2019 by selling BEST tokens. Morpher’s public sale of its own MPH token is currently underway.  

There are good legal reasons why companies are attracted to Europe. For starters, there is no Howey Test, which in 2018 led Securities and Exchange Commission Chairman Jay Clayton to declare that “every ICO [he’s] seen is a security.” Most European regulators, particularly those in the DACH region (Germany, Austria, Switzerland), distinguish security tokens and payment tokens from utility tokens and acknowledge that utility tokens, for the most part, are not subject to financial services or capital markets regulations. 

Unlike in the U.S., European regulators simply do not have a history of cracking down on token issuers. And token issuers are far less likely to get bogged down in private litigation in Europe than in the U.S.

Differing regulatory approaches

These differing regulatory approaches to token offerings can be attributed to historical financing methods used by companies in Europe and the U.S. as well as their distinct legal systems. In the U.S., equity offerings are still much more common than in continental Europe, where debt financing remains to a large extent the prerogative of banks and large financial institutions. 

If the present is any indication, our bet is on Europe having the upper hand.

Europe does not have as long a tradition of capital markets exposure as the U.S., and while European capital markets regulation was heavily influenced by the U.S., the need to harmonize the definition of “transferable securities” among the EU member states prevented the EU from employing the Howey Test outright when adopting the Markets in Financial Instruments Directive in 2004. In our personal experience, the constraints of the civil law tradition in continental Europe as opposed to the common law systems of the U.S. and the U.K. also prevent national regulators from introducing a Howey-like test via enforcement proceedings anytime soon, despite efforts to do so particularly with regard to token sales. 

In contrast to the U.S., the EU has made significant progress in codifying regulations governing token sales. On Sept. 24, 2020, the European Commission published a draft Regulation on Markets in Crypto-assets (MiCA), which establishes a disclosure regime for token sales, and lays the foundation for stablecoin issuers and cryptocurrency service providers to securely operate within the EU. The regulation is expected to enter into force in all EU member states by the end of 2022.

Once adopted, the legal framework will provide legal certainty for token issuers and will help establish Europe as the go-to jurisdiction for crypto businesses. Time will tell how the divergent regulatory approaches in Europe and the U.S. will shape the crypto industry going forward. If the present is any indication, our bet is on Europe having the upper hand.

Hackers Using Monero Mining Malware as Decoy, Warns Microsoft

Crypto-jacking is giving nation-state hackers a decoy for their more malicious attacks, warned Microsoft in a Monday report.

The company’s intelligence team said a group called BISMUTH hit government targets in France and Vietnam with relatively conspicuous Monero mining trojans this summer. Mining the crypto generated side cash for the group, but it also distracted victims from BISMUTH’s true campaign: credential theft.

Crypto-jacking “allowed BISMUTH to hide its more nefarious activities behind threats that may be perceived to be less alarming because they’re “commodity” malware,” Microsoft concluded. It said the conspicuousness of Monero mining fits BISMUTH’s “hide in plain sight” MO.

Microsoft recommended organizations stay vigilant against crypto-jacking as a possible decoy tactic.

Kraken’s Bitcoin Strategist: A $100,000 $BTC Cycle Top Is Too Conservative

In a recent interview, Pierre Rochard, Bitcoin Strategist at crypto exchange Kraken, said that the current Bitcoin bull ran could take the BTC price a lot higher than $100K.

Rochard, who is also the co-host of “Noded Bitcoin Podcast“, as well as Co-Founder of Satoshi Nakamato Institute, made his comments during an hour-long interview (that took place on November 26) on the very popular “Altcoin Daily” YouTube channel.

When asked if $100K was a realistic price target for Bitcoin, he replied:

“I think that’s unrealistic. I think that’s way too low. $100,000, I mean, that’s a 5x from where we’re at basically now, and I think that’s not even really a parabolic top if you were to look at the chart…

“One of my theories is that this cycle is going to be longer than all of the past cycles. And so, it’s going to take us longer to get to the top.

‘Maybe we’ll have a correction at $100,000, and then it’ll ‘crash down’ to $80,000, but then I think it’s going to make another run. I think the ultimate top for this cycle, it’s impossible to know ahead of time, and this is what makes me worried about people trading. The top might be $200,000, it might be $400,000, or it might be $600,000, and each one of those is multiples of the other.

“Trying to time it to me is kind of futile because we’re talking about literally billions, tens of billions, hundreds of billions of dollars flowing into Bitcoin over the next 18 months or next 36 months if we have a very long cycle. So where that moves the price, a lot of it is going to depend on how many coins are actually lost versus coins that are waiting for a very big price to come onto the market versus coins that are not going to come onto the market at all because the owners have a long-term view.

“A lot of the buyers in this cycle, they’re not ever going to sell. So, that’s the other part, is that if you’re a billionaire and you’re buying Bitcoin and it goes up 100x, that’s still not a life-changing amount. You already had your life-changing amount, right? You’re already a billionaire.

“So, these people don’t sell… They might rebalance, but even then, if they understand Bitcoin’s value proposition. they understand there’s no need to rebalance until we’re much further in the future because all of the other markets are dramatically overvalued. Stocks and bonds are hugely overvalued if you look at earnings or if you look at yields.”

Featured Image by “Maklay62” via Pixabay.com

Coinbase Will Support Eth2 Beacon Chain Staking

Coinbase Will Support Eth2 Beacon Chain Staking

Starting in early 2021, Coinbase will support ETH staking and distribution of client rewards once Eth2 Phase 0 is active as per a statement on Dec 1.

Service Available in Eligible Jurisdiction

The service will only be accessible to clients in eligible jurisdictions including the United States and any of the over 100 supported countries.

More details will be communicated in due course.

The exchange is making it clear that it is supporting the transition. Holders won’t be illiquid since they will “enable trading between ETH2, ETH, and all other supported currencies providing liquidity for our customers.”

Stakers willing to lock their 32 ETHs in the Proof-of-Stake (PoS) Beacon Chain mainnet via the official deposit contract are free to do.

Even so, Coinbase will assist in the distribution of rewards for clients whose balance is lower than the 32 ETH threshold.

Eth2 is Now live, over 880k ETH Deposited

With the Beacon Chain mainnet now active, there are over 27k official validators. At the time of writing, there were 880,672 ETH deposits and 27,512 validators. Validators continue to lock their coins in the Beacon Chain mainnet.

A week ago, 524,288 ETHs were needed to pave the way for today’s mainnet. Its failure would have seen the launch postponed for another week. However, it was the sharp spike in depositing activity three days before Nov 24 that saw the threshold met several hours before the deadline.

Notably, the deviation and acceleration highlighted the determination from the community of the need to shift to a new consensus algorithm. Unlike previous upgrades mired by delays, the migration to Eth2 is critical for the network.

Serenity Will Scale Ethereum and Fix the Problem of High Transaction Fees

Eth2 will be executed through several phases spanning years culminating in Serenity. The final phase will be scalable by several magnitudes sufficiently addressing the high Gas fees impeding adoption.

According to BitInfoCharts, an ordinary network user on Nov 30 paid an average of $3 to post any transaction. It was tripled the average on Nov 29 ($1) and may rise depending on the platform’s activity.

As BTCManager reported, Eth2 is now more decentralized considering the level of node distribution than Bitcoin. 

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Ruble or Rubble? Russian Institutions Have Concerns About Proposed CBDC

Russia is seriously considering whether or not it should launch a central bank digital currency (CBDC).

The Bank of Russia has started a series of consultations dedicated to the potential launch of the digital ruble, a CBDC pegged to the Russian ruble. The central bank has not yet decided if it wants to actually launch the project, but it is gathering feedback from would-be participants and users of the new payment system.

The regulator engaged representatives of several banks and other financial institutions via a Zoom conference on Monday. The overall tone of the conversation was cheerful, with many participants saying they are looking forward to piloting the digital ruble. However, several people hinted they are concerned about certain features of the project.

Sberbank’s alternative

Sberbank (recently re-branded as Sber) is the country’s largest retail bank and an active explorer of blockchain tech. Sber Chair German Gref announced Monday the company is looking into launching its own digital token, as well as a platform for trading digital assets.

The Bank of Russia, however, will not allow any other token to become a payment instrument in the Russian economy – just as no cryptocurrencies can be used for payments in Russia under a new law coming into force in January. 

“We will prevent issuance of any new payment tools. If there is a need of a crypto asset for the functionality [of a financial platform], the crypto ruble will be that asset,” said Sergey Shvetsov, deputy chair of the Bank of Russia, during the Zoom conference.

Sberbank Deputy Chairman Anatoly Popov voiced concerns about launching the digital ruble as a totally centralized system, where the Bank of Russia would manage users accounts. In this case, retail banks in Russia would have to compete with the regulator for customers.

“That would juxtapose banks and the Bank of Russia, and instead of the further development we’ll have a competition,” Popov said. “It would be a centralized system. This is the concern.”

Shvetsov agreed there indeed would be competition because the digital ruble would be a third form of money in Russia, not a replacement for cash or electronic payments. 

“Payments with the digital ruble will be competing with electronic payments, and both will be developing in parallel,” Shvetsov said. He added that retail banks will still have some advantage in this race as they can offer interest on deposits, while the digital ruble will not have such features. 

Searching for the model

To be sure, the exact design of the digital ruble has not been determined, and the Bank of Russia’s report offers several models for discussion, each with different approaches to centralization and the role of retail banks. 

In one possible scenario, banks will open accounts for their clients using the Bank of Russia’s platform, said Deputy Chairwoman Olga Skorobogatova.

“This will alow you to keep the existing client base and will also stimulate competition. We’re going to do a hybrid model,” she said.

In any case, the regulator apparently favors the model in which it will be managing the digital ruble accounts in a centralized way. Sber, on the contrary, suggested the banks should work as intermediaries, converting their clients’ balances into the digital ruble. 

Shvetsov showed a presentation outlining Sber’s concept of how the digital ruble should work. One of the key features he mentioned was the ability to “color” digital rubles according to permitted spending options. For example, if parents give their child money for lunch at school, the child wouldn’t be able to cash them out or spend the funds on cigarettes. 

The Bank of Russia disagreed with that, too. Although the regulator’s concept includes the “coloring” feature, making digital rubles less liquid is not something the regulator would support. It’s not seeking to limit users’ ability to cash out the digital rubles or convert them it into balances on bank accounts, Shvetsov said. 

“The kid would buy the cigarettes anyway. We both know it, right?” he joked. 

The cost of innovation

Another concern mentioned in the conversation was the potential financial burden for Russia’s financial institutions.

Roman Goryunov, the president of RTS (the association of Russian stock market operators), said that if market participants had to foot the bill for integrating the digital ruble into the economy, “it would be not a very good story.”

In the meantime, the financial incentive overall is not very clear, Goryunov said: “If we are applying all the existing regulations [to the digital ruble payments], it’s not clear why the transactions will become cheaper. We need either to change the regulation and eliminate some of the requirements, or we’ll have to artificially cut the commission fees, just to show that [the new system] is cheaper.”

Shvetsov indicated that these intermediary fees are not a part of the plan.

“The users will access their [digital ruble] accounts via the intermediaries, which will be competing for it,” he said, adding that the banks, obviously will try to keep their clients “by all means.”

The Bank of Russia’s approach will potentially cause many banks to shut down, warned Vladislav Kochetkov, head of the investment firm FINAM. Competition with the central bank will put the retail banks at disadvantage, as people would see a central bank option as a less risky way to store their money, he said, adding: 

“It’s important that the innovation does not have too big of a cost for the entire market.” 

The Bank of Russia talked to some of the banks and payment processors on Nov. 27, and, according to the Russian newspaper Kommersant, that was a second meeting on the issue. The regulator will accumulate feedback on its digital ruble report until Dec. 31, and then decide if it should be launched. If given a green light, the first pilot might take place at the end of next year.  

Gemini Donates $50K to HRF to Help Fund Another Round of Bitcoin Developers in 2021

The Human Rights Foundation has secured donations to fund even more Bitcoin developers in 2021, and it’s capping off 2020 by adding another beneficiary to its grant program. 

Shared exclusively with CoinDesk, the Winklevoss’ Gemini cryptocurrency exchange is donating $50,000 to the Human Rights Foundation to fund “open source software which [improves] the privacy, usability, and resilience of the Bitcoin Network.”

The fresh funding comes on the same day that the Human Rights Foundation is announcing its sponsorship of yet another developer, Gloria Zhao. An undergrad at UC Berkeley and president of Blockchain at Berkley, Zhao contributes to Bitcoin Core and is working on a project that would improve how “grouped” transactions are relayed. This advancement would, among other things, help with opening and closing payment channels on the Lightning Network.

Zhao’s grant comes from the third round of the Human Rights Foundation’s funding. Its first grant this summer went to U.K. Bitcoin developer Chris Belcher for work on the privacy-improving Coinswap protocol. 

A second round went to Evan Kaloudis for work on Zeus, a Bitcoin wallet with a full-node interface; Fontaine, the pseudonymous developer behind  Fully Noded, another Bitcoin full-node and wallet software; and Openoms, a pseudonymous developer who is working on an easy-to-use interface for JoinMarket, a privacy tool for mixing Bitcoin transactions.

The new funding from Gemini will go towards a new crop of sponsored developers in Q1 of 2021. Human Rights Foundation Chief Strategy Officer Alex Gladstein told CoinDesk that the foundation has already received many proposals and expects more to come. 

Adding to an increasing trend where crypto businesses will donate money to fund Bitcoin protocol development, Gemini joins a growing list of cryptocurrency exchanges, including Coinbase, Bitmex, OKCoin, Kraken, and Square Crypto, which have sponsored Bitcoin developers. Notably, the $50k funding is the second such grant from Gemini this month after it donated to Brink, an open-source Bitcoin development fund partly led by Bitcoin Core developer John Newberry.