Tag: bitcoin

Chinese crypto addresses sent $2.2 billion to scams, darknets in 2019-2021 -report, BFSI News, ET BFSI

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NEW YORK – Chinese cryptocurrency addresses sent more than $2.2 billion worth of digital tokens to addresses tied to illegal activity such as scams and darknet operations between April 2019 and June 2021, according to a report from blockchain data platform Chainalysis released on Tuesday.

These addresses received $2 billion in cryptocurrency from illicit sources as well, making China a large player in digital-currency related crime, it added. The report analyzes China’s cryptocurrency activity amid government crackdowns.

However, China’s transaction volume with illicit addresses has fallen drastically over the two-year period in terms of absolute value and relative to other countries, Chainalysis said. The big reason is the absence of large-scale Ponzi schemes such as the 2019 scam involving crypto wallet and exchange PlusToken that originated in China, it noted.

Users and customers lost an estimated $3 billion to $4 billion from the PlusToken scam.

The vast majority of China’s illegal fund movements in crypto has been related to scams, although that has declined as well, the Chainalysis report said.

“This is most likely because of both the awareness raised by PlusToken, as well as the crackdowns in the area,” said Gurvais Grigg, global public sector chief technology officer at Chainalysis, in an email to Reuters.

The report also cited trafficking out of China in fentanyl, a very potent narcotic pain medication prescribed for severe pain or pain after surgery.

Chainalysis described China as the hub of the global fentanyl trade, with many Chinese producers of the drug using cryptocurrency to carry out transactions.

Money laundering is another notable form of crypto-based crime disproportionately carried out in China, Chainalysis said.

Most cryptocurrency-based money laundering involves mainstream digital currency exchanges, often through over-the-counter desks whose businesses are built on top of these platforms.

Chainalysis noted that China appears to be taking action against businesses and individuals facilitating this activity.

It cited Zhao Dong, founder of several Chinese OTC businesses, pleading guilty in May to money laundering charges after being arrested last year.



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Bitcoin in bank account? How banks can partner crypto firms, BFSI News, ET BFSI

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Can’t beat them, join them.

After stonewalling cryptocurrencies and firms, banks are now coming around to the cryptocurrencies.

Indian bankers, which are not ready to touch crypto even with a barge pole following the regulator’s reluctance over cryptos, can parse the American Bankers’ Association’s (ABA) report on how lenders can partner from the new-age currency.

The ABA report

The American Bankers’ Association (ABA) has issued a new report that suggests banks consider partnerships with crypto firms based on the increased profitability of the sector and client interest. The ABA further suggests crypto use cases for banks with revenue models and regulatory issues for each use case.

“Cryptocurrency markets are rapidly evolving, and there is currently a diverse and complex ecosystem of companies offering access to digital asset products. The digital and programmable nature of these products means they can be used to facilitate many kinds of financial activities that increasingly mirror the products and services offered by traditional financial institutions, ” it said.

The use case for banks

n payments the blockchain-powered payment networks have the potential to allow for faster and more efficient payments, especially in cross-border transactions.

In lending blockchain technology can allow for cheaper, more secure, and more efficient lending processes while in settlements, distributed ledgers can provide cheaper and faster transactions between financial institutions.

Custody/Wallets provides independent/secure storage for users to hold and invest in crypto assets, while KYC/AML helps banks track the flow of funds and identify the parties involved in digital asset transactions

Digital identity distributed ledgers can provide the necessary record of information needed for authentication and verification purposes while given the proposed reporting structure for crypto transactions, the distributed ledger transactions can be easily found and reported in an efficient and timely manner.

Banks can offer business banking services to crypto companies such as corporate accounts, USD/fiat custodial accounts.

The customer can lend his or her crypto for interest and a bank could earn a fee or percentage of the crypto earned.

Banks could also charge fees for these services similar to a debit or credit card transaction and can provide crypto lending to borrowers for a fee.

Banks can look into revenue models that include charging transaction fees, listing charges for adding crypto to a platform, and deposit fees.

They can look at revenue from collecting the spread on transactions for crypto assets that are classified as securities.

The asset management use case for banks would enable a fee for service on a crypto portfolio.

In India, this will need the regulatory haze to fade first.



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China’s central bank says it will keep pressure on crypto market, BFSI News, ET BFSI

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China’s central bank vowed to maintain heavy regulatory pressure on cryptocurrency trading and speculation after escalating its clampdown in the sector earlier this year.

The People’s Bank of China will also supervise financial platform companies to rectify their practices according to regulations, it said in a statement on Saturday. Policy makers met on Friday to discuss work priorities for the second half of the year.

China launched its most intense crackdown on crypto trading and mining since 2017 in recent months, after a surge in Bitcoin and other tokens heightened authorities’ concerns over risks of fraud, money laundering and excessive energy usage. It also imposed a series of regulatory actions targeting monopolistic behavior at online payment platforms such as Ant Group Co. over the past year.

The central bank will act to prevent major financial risks and push to lower the number of high-risk financial institutions in key provinces, according to the statement. It will also accelerate its work to create a financial stability law, which was proposed by Deputy Governor Liu Guiping in March.

The PBOC reiterated that its prudent monetary policy will be flexible, targeted, reasonable and appropriate. It vowed to implement a good “cross-cyclical” policy design, a term widely interpreted to mean authorities will use a longer time frame when considering policy support and will avoid overstimulating the economy.



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Major Ethereum upgrade set to alter supply, fix transaction fees, BFSI News, ET BFSI

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NEW YORK: Ethereum, the second-largest blockchain network, is about to undergo a technical adjustment that will significantly alter the way transactions are processed, as well as reduce the supply of the ether token and sharply boost its price.

The scheduled coding revamp will go live on Aug. 4.

The upgrade known as Ethereum Improvement Proposal (EIP) 1559 is similar, analysts said, to a bitcoin “halving” event in which periodic adjustments reduced the supply of bitcoin. Each halving helped propel bitcoin’s price to higher records.

While bitcoin is the preferred store of value in the digital ecosystem, Ethereum has emerged as the leading financial infrastructure, settling over $12 billion of daily transactions, according to a Grayscale report released in February this year.

Andrew Keys, managing partner at DARMA Capital, said ether’s current price has yet to factor in the looming software upgrade.

He estimates that the expected software adjustment next week, coupled with another upgrade in the first quarter of 2022, should “easily quintuple the price of ether” by next year. On Thursday, ether was up 0.6% at $2,312.

WHAT IS EIP 1559?
EIP-1559 is a software upgrade that fundamentally changes the way transactions are processed on Ethereum by providing clear pricing on transaction fees in ether paid to miners to validate transactions and “burning” a small amount of those tokens. The burned tokens will be permanently taken out of circulation.

In token burning, miners would typically send the tokens to specialized addresses that have unobtainable private keys. Without access to a private key, no one can use the tokens, putting them outside the circulating supply. By reducing the number of tokens, the currencies that remain in circulation become rarer and more valuable.

WHAT IS THE CURRENT PRACTICE ON THE ETHEREUM BLOCKCHAIN?
Currently, a person or entity trying to send a transaction on the Ethereum network must pay a so-called “gas fee” in ether to miners to process their transactions.

But the exact transaction fee is not clear and market participants say there is no way of knowing the price beforehand.

This creates two issues, said Matt Hougan, chief investment officer at Bitwise Asset Management.

“First, it introduces a major uncertainty around whether you’ll get your transaction processed in a timely fashion,” he said. “Second, people overpay because they don’t know the clearing price and they bid too much to make sure the transaction is processed.”

WILL MINING, BUYING AND SELLING ETHER BECOME EASIER?
EIP-1559 changes this mechanism by setting a “base fee” paid to miners for each transaction, part of which will be burned. Participants can also include an optional “tip” with their base fee to speed up the process, if desired.

Another adjustment, market players said, is doubling the amount of space available in each block. Blockchains like Ethereum settle transactions in batches or blocks. Each block can contain only a certain number of transactions.

Blocks are propagated on Ethereum every 17 seconds and EIP 1599 is going to be deployed on Block 12,965,000, which is estimated to happen on Aug. 4, said DARMA’S Keys.

There was a bug bounty, which paid people if they found bugs. That has process has been completed.

WHAT DOES IT MEAN FOR ETHER SUPPLY?
Bitwise’s Hougan cited estimates that EIP-1599 will reduce ether’s overall inflation rate from roughly 4% a year to 3%. That is about half as large a reduction proportionately seen in bitcoin “halving” events, he said.

WHAT DOES IT MEAN FOR INVESTORS?
The change should make it easier for investors to understand the value of holding ether. Hougan said EIP 1559 should increase transactions on the Ethereum network and raise the use of ether, which will likely help bring a wave of institutional investors into the market.



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Next stop $50,000 or $150,000?, BFSI News, ET BFSI

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New Delhi: While equity investors are nervous about weak market sentiments, crypto investors are cheering the recent rally in the digital token market.

Bitcoin and ace digital tokens have gained as much as 30 per cent in the last seven days. The cryptocurrency hit the $40,000 mark on Wednesday and investors have set their eyes on $50,000 as the next target.

Analysts have varied opinions on Bitcoin and other digital tokens. However, they say investors should not fall prey to market cycles. Their long-term bullish view remains intact.

“If you believe in the Internet with its own money and governance, then the industry is just getting started,” said Siddharth Menon, COO, Wazir X. “Bitcoin could play a significant role as adoption goes up. Many institutional investors are getting greedy.”

However, they also have a word of caution for the new age investor.

Edul Patel, CEO & Co-founder, Mudrex, advises crypto investors be prudent in differentiating greed and fear in the financial markets.

“The recent rally has lured several inexperienced retail investors and traders into the markets, who have joined the frenzy to make a quick buck. However, they may get trapped if the larger players keep dumping,” he cautioned.

Market watchers are worried over the sustainability of this bull market. The crypto market is on a roll, despite weaker volumes. This suggests the party may get over soon, said market watchers.

There are multiple halts after a quick rally. Patel of Mudrex is advising investors to be extra-cautious in such markets and keenly track the volumes for further upside.

However, healthy corrections are good for the market as they give investors a decent opportunity to enter the markets. Bitcoin rose to $40,700 from $29,600 in just 10 days. Investors are now expecting $50,000 level, which is further 20 per cent up from current levels.

“The brief halt was more of market cycle correction after having a month-on-month bull run since March 2020. The $50,000 level could be a local top in a few months, but in a longer time period, the sky’s the limit,” said Menon.

Several analysts have predicted that Bitcoin could hit the $150,000 mark by 2022. However, Bitcoin is trading about 35-40 per cent down from its all-time high of $64,865.

“There are certain significant upgrades in the pipeline for both Bitcoin and Ethereum. These are expected to roll out by the end of this year, which can be game changer of the top crypto tokens,” said Patel of Mudrex.

Changpeng Zhao, CEO, Binance, is bullish on Bitcoin in the long run as a store of value and its potential to change the world for the better.



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Vauld raises $25 million Series A led by Valar Ventures

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Cryptocurrency platform Vauld has raised $25 million Series A led by Valar Ventures, a VC firm founded by Peter Thiel, Andrew McCormack, and James Fitzgerald. Other investors like Pantera Capital, Coinbase Ventures, CMT Digital, Gumi Cryptos, Robert Leshner, and Cadenza Capital also participated in the round.

The funding will be used to support its international growth and licensing as well as expand its retail crypto banking and investing platform. Vauld will also use this capital to hire at least a hundred new team members.

Vauld has built a platform for people to globally access and grow capital through lending and trading cryptocurrencies. In partnership with its respective exchange and custody partners, Binance and BitGo, Vauld claims to have users in over 160 countries. The company has raised a total of $27 million in funding till date.

“We’ve seen great momentum with Vauld and we attribute it to both our technology as well as our customer support. This capital will help propel Vauld to the next level of growth,” said Darshan Bathija, Vauld co-founder and CEO.

While Vauld is headquartered in Singapore, the majority of its team is based in India. The company claims to have seen more than 200x growth in its global user base over the last year. Vauld reported 124.4 per cent quarter-over-quarter growth in AUM between the first quarter of the fiscal year 2021 to the second quarter of the fiscal year 2021.

“Valar’s focus is on transformative financial services companies. What cemented the deal is Vauld’s global positioning and ambitions and the vision Darshan and his team have. We look forward to Vauld benefiting from our understanding of how to build a global business across Europe, Asia, and North America,” said Andrew McCormack of Valar Ventures.

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Bitcoin leaps 12% to test recent peaks, ether hits 3-week high

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Cryptocurrencies popped to the top of recent ranges on Monday as short sellers bailed out in the wake of a strong week and while traders hoped a handful of positive comments from influential investors might signal a turnaround in fragile sentiment.

Bitcoin rose as far as 12.5% to hit $39,850, its highest since mid-June during the Asia session, while ether hit a three-week peak of $2,344. On the heels of bitcoin’s best week in almost three months, the move put the squeeze on short sellers.

Tesla to resume accepting bitcoin

Last week, cryptocurrency enthusiast and Tesla boss Elon Musk said the carmarker would likely resume accepting bitcoin once it conducts due diligence on its energy use. It had suspended such payments in May, contributing to a sharp crypto selloff.

Twitter boss Jack Dorsey also said last week that the digital currency is a “big part” of the social media firm’s future and, on Sunday, London’s City A.M. newspaper reported -citing an un-named “insider” – that Amazon is looking to accept bitcoin payments by year’s end.

Also read: Reserve Bank working towards phased implementation of digital currencies

Brokers said that taken together the remarks were enough to finally lift the market from the floor of support where it has held steady since a May plunge, while data also pointed to heavy short-seller liquidations- suggesting many might have given up.

“Over the last five trading sessions we’ve seen general near-term bullishness in the market, driven by key technicals,as well as recent positive comments,” said Ryan Rabaglia, global head of trading at digital asset platform OSL.

“With a record $1.2 billion in shorts liquidated over the past 24 hours, the outlook and momentum for the week ahead is positive,” he said.

Bitcoin was last up 8% at $38,064, putting it within sight of resistance around June’s $41,341.57 peak just a week after it was testing support at $29,500. Ether was last up 5% at $2,304.

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Coindesk, BFSI News, ET BFSI

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Goldman Sachs Group Inc’s prime brokerage division is clearing and settling cryptocurrency exchange-traded products (ETPs) for some of its European hedge fund clients, Coindesk reported on Friday, citing people familiar with the matter.

The services are currently being offered to a limited number of clients and the bank is considering rolling them out for a broader customer base, the report said.

Goldman Sachs declined to comment on the matter.

The U.S. lender in March restarted its cryptocurrency desk amid growing interest by institutions in bitcoin, and said it was looking at ways to cater to a surge in demand to own and invest in the most popular cryptocurrency.

Goldman Sachs is one of several mainstream financial firms that has dived into the crypto space, despite wild price swings and widening regulatory crackdown on the digital assets.

Rival banks Morgan Stanley and JPMorgan Chase & Co have also started giving clients access to crypto funds, according to media reports.



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Twitter CEO, BFSI News, ET BFSI

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San Francisco: The online world needs a global currency, and our focus is on Bitcoin because with this cryptocurrency, we can reach every single person on the planet, Twitter CEO Jack Dorsey has stressed.

A staunch supporter of Bitcoin, Dorsey said that the world of cryptocurrency allows speed, a lot more innovation and opens up entirely new use cases.

“If the Internet has a native currency, a global currency, we are able to move faster with products such as Super Follows, e-commerce, Subscription, Tip Jar and we can reach every single person on the planet,” Dorsey said during the Q2 investors’ call on Thursday.

“There are three trends relevant to Twitter and our shareholders. AI, decentralisation and the Internet, finally having access to a global native currency in Bitcoin. All these will help us do our jobs better and we intend to lead the way in each,” he emphasised.

In Q2 2021, Twitter saw its revenue reached $1.19 billion, an increase of 74 per cent (year-over-year).

The micro-blogging platform now has 206 million average monetisable DAU (mDAU) in Q2, up 11 per cent.

“As we enter the second half of 2021, we are shipping more, learning faster, and hiring remarkable talent. There’s a tremendous opportunity to get the whole world to use Twitter,” said Dorsey.

Dorsey and rap artist Jay-Z recently announced to invest 500 Bitcoins (approximately Rs 174 crore) in an endowment to fund Bitcoin development with a focus on India and Africa.

For Dorsey, Bitcoin is like poetry and that he sees ample opportunity for Bitcoin to bring about a sea change in the world.

“Most people access the internet on mobile. Any solution we build must provide an excellent experience when using mobile, despite its shortcomings and liabilities. An uncompromising focus on mobile interaction is likely to include the most people,” he had said.

He has announced plans to consider making a hardware wallet for Bitcoin for the customers of its digital payments services company Square.



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Desi startup starts taking Bitcoin in payments despite govt warnings, BFSI News, ET BFSI

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NEW DELHI: Till now, Bitcoin and other cryptocurrencies are seen largely as an asset class to invest in to gain from price appreciation.

In the US, some businesses have also started accepting them as currencies for payments. Tesla famously started accepting it and then stopped it a few months back, citing environmental concerns. But CEO Elon Musk now says they may accept it again soon.

Microsoft, Coca Cola and AXA Insurance have also shown willingness to accept cryptocurrency as payment for select services and products in some territories.

In India, amid heavy resistance from the government and the Reserve Bank of India, cryptocurrencies are yet to gain a broader acceptance.

But one Indian startup has ventured out to start accepting cryptocurrencies for payments. The Rug Republic – a homegrown décor brand – is one. The Okhla, Delhi-based firm said it would accept top 20 cryptocurrencies for payments, but only from Indian customers.

Cryptocurrencies are neither legal, nor illegal in India. Lately, banks, likely on the insistence of RBI, have started disassociating from cryptocurrency exchanges. Other government agencies have also started tightening their noose against these tokens.

Their major concern is the anonymity that the blockchain network — the technology on which cryptocurrencies are based on — will lead to tax evasion, terror funding or any other nefarious activity. However, businesses are taking additional measures to track where the money is coming from.

“It is a misconception that crypto transactions cannot be tracked. It is easily verifiable on the blockchain, as opposed to the incredibly difficult ways money can be hidden in the real world. As we have seen with so many people during the Panama Papers episodes. Our invoices clearly mention that money was taken in certain currency on this date and at this price. Everything is absolutely above board,” said Raghav Gupta, Director at The Rug Republic.

Some sovereign countries such as Nicaragua and El Salvador have embraced cryptocurrencies, with the latter becoming the first country in the world to adopt Bitcoin as legal tender.

Gupta, who exports his products outside India as well, said his firm will not accept crypto payments outside India, as such transactions could be in violation of the Foreign Exchange Management Act (FEMA), as they constitute cross-border payments in a currency not recognised by RBI.

Is it a publicity stunt? Why else is he taking such a risk when the rules regarding cryptocurrencies are not clear? The promoter says he believes these tokens will eventually gain prominence in India. And, it will form a good asset base for him in some years.

“It is clear that not even 5 per cent of my revenue will come from it. I am extremely bullish on it in a 5-10 year scale. I am very happy to take this risk. Ethereum will be much more valuable by then,” said Gupta.



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