Award-winning cryptocurrency writer Gary McFarlane looks at bitcoin's tenth anniversary to looking at ripple and other alts' potential turning points.
Bitcoin is 10 years old and is arguably no nearer to becoming the "electronic cash system" envisaged by its creators.
Nonetheless it has proved itself as a medium for the transmission of value and it has spawned a $200 billion cryptocurrency industry that has now started to attract institutional interest.
The early adopter "cypherpunk anarcho-capitalists" imagined a world without banks and other financial intermediaries, overthrown by the disruptive power of the blockchain technology bitcoin is built on.
But from Goldman Sachs to the Bank of England, those very same intermediaries and established financial institutions are exploring ways in which distributed ledger technology could improve the efficiency of their operations. More on the Bank of England's plans below.
Adoption of bitcoin and its imitators has been much slower than many had hoped for, held back by regulatory uncertainty and the lack of user-friendly tools. but 2018 sees both a maturing marketplace and notable advances by a growing number of crypto start-ups with live products.
As we can see below, from expansion at Coinbase to the UK financial authorities pushing ahead with a fairly accommodative approach to regulations slated for next year, bitcoin and the crypto ecosystem are arguably well-placed for advance from a more stable foundation.
Bitcoin technical analysis
Although the bottom looks to be in for bitcoin it has failed repeated attempts to break above $7,000 over the past two weeks. It is now facing resistance at the 50-day simple moving average at around $6,370.
To have any chance of again challenging $7,000, the technical point to the next hurdle to surmount at $6,636. That would return BTC to the high last seen on 8 October before a precipitous drop of $400 two days later.
The most recent reversal on 29 October has dropped BTC back into a tight range, but a higher low than seen on the 8 October, but with lower highs to create a bearish trend line (red) line).
Bitcoin is currently 1% higher, trading at $6,303, according to coinmarketcap.com. The rest of the market is flashing green in sympathy, with EOS up 2.5% in the past 24 hours at $5.26, with IOTA and Tezos advancing 3%.
Speaking to Yahoo Finance, Arthur Hayes, co-founder and chief executive of BitMEX, reckons the bears won’t be hibernating anytime soon:
"My view is the volatility environment that exists right now could persist for another 12 to 18 months, the flatness"
UK cryptoassets taskforce final report published
The UK crypto taskforce which brings together HM Treasury, the Bank of England and the Financial Conduct Authority (FCA) to consider how to regulate the industry, concludes that blockchain technology has the "potential to deliver significant benefits in both financial services and other sectors, and all three authorities will continue to support its development".
Measures should be considered to "mitigate the risks that cryptoassets pose to consumers and market integrity; to prevent the use of cryptoassets for illicit activity; to guard against threats to financial stability that could emerge in the future; and to encourage responsible development of legitimate DLT and cryptoasset-related activity in the UK," the report concludes.
Legislation will be brought forward next year.
Tax considerations were not part of the Taskforce's remit and the Treasury will look into that separately.
It was in May that the taskforce had its first meeting, so the speedy publication of the report suggests that blockchain tech is being taken very seriously at the top of government.
Having said that, the government recently stopped the Royal Mint from launching a gold-backed crypto token. The initiative had received backing from the CME, the largest derivatives market in the world, but it later pulled out.
Crypto derivatives ban?
Further consultation will take place on the possible prohibition of derivatives products linked to certain crypto assets sold to consumers. Contracts for difference (CFD) products have been a concern for both the FCA and the European Union which recently forced brokers to introduce warnings on all their CFD products, including crypto, and to reduce the margins that can be offered to crypto traders.
Also, early next year the government will consult on how to regulate exchange tokens, exchanges and wallet providers.
"The Taskforce has also concluded that exchange tokens present new challenges to traditional forms of financial regulation."
Crypto exchanges such as Binance and others have their own tokens that can be used to pay fees at a lower rate than would otherwise be the case.
The taskforce also recommends bringing crypto within the purview of the FCA.
Self-regulatory industry body CryptoUK chairman Iqbal V. Gandham, who is also managing director of eToro's UK business, said:
"We are pleased that today's report announces a Treasury consultation on bringing cryptoassets within the regulatory perimeter of the FCA."
"It is also encouraging that the government has undertaken to continue monitoring developments in our fast-evolving market to ensure the regulatory environment is fit for purpose, as well as supporting the adoption of blockchain technology more broadly."
News of the report's publication may have contributed to selling pressure on 28 October as did the previous day’s hack at Canadian exchange MapleChange – a reminder, if one were needed, that monitoring and surveillance of the crypto market is a must to protect investors.
The report can be downloaded here.
eToro partners with Binance to trade BNB against fiat
Regarding exchange tokens, separately, eToro has announced the listing of BNB, Binance's exchange token.
eToro is pairing BNB with fiat, namely, USD GBP, EUR and yen.
Yoni Assia, founder of eToro, said of the BNB listing:
"We will continue to add the leading crypto assets to our range and we are pleased to add BNB to the platform."
Welcoming the deal, Binance chief executive Changpeng Zhao said:
"With this addition, the Binance coin can reach millions more people, many of whom are more accustomed to the traditional financial industry."
Not surprisingly, and not before time, the taskforce will crackdown on criminality in the sector by "implementing one of the most comprehensive responses globally to the use of cryptoassets for illicit activity".
Additionally, at the end of this year the Bank of England will be able to provide an update on progress in upgrading its inter-bank Realtime Gross Settlement System (RTGS) to interface with distributed ledger technology payment systems.
Malta attracting both old and new exchanges
With China's Binance already choosing Malta for it global HQ, Bittrex is jumping on the bandwagon with the launch of Bittrex International. The US exchange is among the most popular altcoin exchanges in western markets.
Bittrex International will be available to non-US investors and says it will be streamlining the listing of new tokens in weeks rather than months.
Chief executive Bill Shihara said:
"Bittrex International’s more efficient token listing process, combined with our reliable, secure and advanced trading platform technology, will make it easy to quickly feature the newest, most innovative blockchain projects for our international partners and customers."
The new exchange offering will have no fees for token listings.
Malta, which has a uniquely crypto-friendly regulatory framework – the Malta Virtual Financial Assets Act – and is a member of the European Union. That combination is proving particular attractive to crypto trading venues on the hunt for regulatory certainty and a supportive environment.
The press release states: "This international trading platform will operate within the regulatory framework established by the European Union and Maltese Government, including the Malta Virtual Financial Assets Act. The company will apply to the Malta Financial Services Authority to become a regulated Virtual Financial Asset exchange."
Bittrex customers on the international exchange will be required to conform to know your customer (KYC) and anti-money laundering (AML) procedures. These were introduced last year for all customers, with those choosing not to supply the necessary government-issued identification documents restricted in the amounts they can trade.
Existing and new customers outside the US, depending on laws in local jurisdictions, will automatically be redirected to Bittrex International (international.bittrex.com).
The Bittrex exchange was founded in 2014 but is not a regulated under US securities law.
Malta's strategy of becoming a global hub for crypto and blockchain development seems to be working.
A new exchange - Proassetz - has also chosen Malta as its base and is currently in beta.
It caters for 12 languages and has round-the-clock customer support.
Chief executive Manoj Dalmia told interactive investor:
"We came up with a vision of an extremely user-friendly and unique crypto exchange and our soft launch has gone smoothly."
He continued: "Based in Malta, our exchange offers cross-platform trading and a simplified interface. Proassetz is here to make trading in cryptos easier."
For now, especially for exchanges, Malta is the place to be.
But what happens when EU-wide crypto regulations come in?
The EU is expected to bring forward its own crypto framework next year, possibly in coordination with other financial authorities around the world. Those rules would trump Malta's and may not be as crypto-friendly.
Malta is the smallest member of the EU and as such has minimal leverage, although does have the right to veto on certain matters.
Coinbase valued at $8 billion, to list "hundreds" of tokens
Coinbase has completed a Series E funding round in which it raised a $300 million. The YUS exchange is now valued at of $8 billion.
Heading up the round was venture firm Tiger Global Management, joined by Y Combinator Continuity, Wellington Management, Andreessen Horowitz, Polychain and others, according to a blog by Coinbase chief operating officer Asiff Hirji.
The funds will help bolster its bid for global expansion through "building the infrastructure between fiat and crypto in regulated markets around the world" and to rapidly increase token listings, which today are comprised at just six assets.
The US exchange aims to "accelerate the adoption of cryptocurrencies and digital assets".
Coinbase also says it wants to work on developing utility applications for crypto, citing its tie-up with Goldman Sachs-backed Circle on the USDC stablecoin pegged to the dollar as an example.
The last leg of its strategy is focused on institutions and making it easier for them to get into crypto, in particular by offering rock solid custody solutions.
Good news for XRP and other top alts?
The use of the word "accelerate" by Coinbase suggests things will start moving a lot faster on the token listing front. That should be good news for top alts such as XRP, EOS, Cardano, Monero, Tron and the like.
Ripple's XRP has been criticised for its lack of decentralisation. If Coinbase was sticking with its digital asset framework regime for accepting new coins, then it should probably not list XRP.
However, given the token's popularity with crypto traders, Coinbase looks like it is loosening its approval criteria. Add to that the fact that Coinbase is now an XRP Custodian in New York State, it does seem more likely that XRP will get a listing.
Hirji dropped a very big hint that that is what Coinbase is planning to do:
"We see hundreds of cryptocurrencies that could be added to our platform today and we will lay the groundwork to support thousands in the future."
Coinbase has been expanding its footprint on Wall Street and has introduced Coinbase Bundles of weighted baskets of coins.
There was a rumour started by Ran Neu-Ner of CNBC Africa, claiming that Coinbase was about to announce it was going public, but that was ide of the mark, although recent developments may be part of the preparation work.
Barry Silbert's Grayscale Investments, the company behind the Bitcoin Investment Trust, with investments right across the crypto landscape, has received institutional funding to the tune of $330 million, according to a report by CNBC.
That's a 13x increase on last year and the most it has ever raised, in further confirmation that the big boys and girls are coming out to play.
"Investors are taking the pullback as an opportunity to increase their exposure," managing director Michael Sonnenshein told CNBC.
Industry consolidation continues apace
Bitstamp has been acquired by Belgian investment firm NXMH, the investment arm of South Korea's NXC conglomerate.
NXC also owns the Korbit exchange but Bitstamp, based in Luxembourg, will provide exposure to the European Union market of 500 million people.
NXC also owns games maker Nexon.
Bitstamp is one of the oldest and most reputable exchanges in the sector, founded in 2011 and based in Luxembourg.
Chief executive Nejc Kodrič will maintain a minority stake in the company with Pantera Capital holding 6% of the shares.
The last word this week goes to the crypto nemesis Jamie Dimon.
Speaking at an investment conference this week Dimon, chief executive of JP Morgan, had more unkind words for crypto: "I never changed what I said, I just regret having said it.
"I didn't want to be the spokesman against Bitcoin. I don't really give a shit, that's the point. Blockchain is real, it's technology, but Bitcoin is not the same as a fiat currency."
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