Bank Of America Listed Among Heavyweights Invested In $300 Million Blockchain Funding Round

On Thursday Paxos, a regulated blockchain infrastructure platform, revealed that Bank of America BAC -0.5% joined its $300 million dollar Series D round. Originally announced in April, the bank joins other well-known investors such as PayPal PYPL -2.1%, crypto derivatives exchange FTX, and Coinbase. The round was led by Oak HC/FT and gives Paxos a $2.4 billion dollar valuation, with it having raised $540 million across multiple rounds of funding.

This investment comes to light after the May 2021 announcement that Bank of America joined the Paxos Settlement Service, which allows for same-day settlement of stock trades. Other partners on the network include Credit Suisse and Japanese bank Nomura Holdings.

In announcing the new investors Paxos CEO Charles Cascarilla noted, “We’re at the beginning of a technological transformation where new market infrastructure is needed to replatform the global financial system. Paxos uses innovative technology to build the regulated infrastructure that will facilitate an open, accessible and digital economy. We’re defining this space and are excited to grow our enterprise solutions beside these market leaders.”

Additionally, Bank of America appears to be warming up to digital assets and cryptocurrencies. The bank created a research team in July to analyze the emerging asset class and its various applications. On July 16th it was reported that the bank would allow bitcoin futures trading for select clients.

By taking this step, it appears that Bank of America is following the lead of its fellow financial services brethren, who are increasingly engaging with the space, often in response to consumer demand. Bank of America is following the lead of its fellow financial services brethren, who are increasingly engaging with the space, often in response to consumer demand.

State Street STT -0.8% recently created an entire digital assets division, and in an interview with Forbes Jenn Tribush, Senior Senior Vice President & Global Head of Alternatives Product Solutions said, “We’re going to bridge between the innovation that’s happening within the digital world with solving the need for clients to be able to operate in this new paradigm so for me it’s incredibly important to have this level of focus within a dedicated division.”

Source: Bank Of America Listed Among Heavyweights Invested In $300 Million Blockchain Funding Round

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Critics:

Paxos – a provider of blockchain infrastructure – said Bank of America, crypto exchange FTX, Founders Fund and Coinbase Ventures were among a heavyweight list of investors in its $300 million Series D funding round, the firm disclosed on Thursday.

Oak HC/FT led the funding round, which the nine-year-old company announced in late April at a valuation of $2.4 billion. The round also included PayPal Ventures and Mithril Capital, among others. The firm has raised more than $540 million over multiple funding rounds.

The company noted that Bank of America joined the Paxos Settlement Service earlier this year. The platform uses blockchain technology to achieve same-day settlement of stock trades. Paxos started providing infrastructure for PayPal’s crypto service last year, which has extended to PayPal’s Venmo payments app. Credit Suisse, fintech Revolut and Societe Generale are among other customers.

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Haven’t Checked On That Bitcoin Account In A While? Your State Could Have It Liquidated

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If you know you have an old bitcoin or dogecoin account somewhere but haven’t gotten around the digging up your login information, you may have a nasty surprise waiting for you. With the rise of cryptocurrency, nine states have now adopted rules that include it as a form of unclaimed property and several more are requiring or recommending that companies report their unclaimed virtual currency.

That means that this fall, when banks, insurers, retailers and state government agencies are required to annually report and remit any unclaimed funds, your old cryptocurrency account could be liquidated and turned in to the state’s unclaimed property office.

There are a lot of concerns about this possibility, not the least of which is the fact that liquidating a cryptocurrency account prevents the owner from realizing any future gains. But there’s also a larger economic issue, says Kristine Butterbaugh a solution principal, at the tax firm Sovos.

“Some of our clients don’t want to liquidate these accounts because it could have an impact on the market as a whole,” she says. “We’re talking millions of accounts, potentially, across the country.”

What’s muddling things is a lack of clarity on the rules around cryptocurrency. Unclaimed property law is written for traditional property but now it’s being enforced for non-traditional property.

Here’s how unclaimed property law usually works: Every fall, businesses are required to remit any unclaimed property to the state. For accounts and other financial instruments to be considered unclaimed, they have to be dormant for three to five years, depending on the state. That means the account holder hasn’t accessed the account or responded to any communications. Once the account is deemed unclaimed, it gets transferred to the state’s general fund.

That’s all well and good when we’re talking about a traditional bank account that is sitting around earning minimal — if any — interest. But states aren’t equipped to hold cryptocurrency, so they’re telling firms to turn those accounts into cash before handing them over.

Now let’s say you watched the meteoric rise of dogecoin this past spring and decided to go hunting for those coins you invested in on a whim a few years ago. And when you finally tracked them down you discovered your account was liquidated back in November, robbing you of thousands of dollars in potential earnings? You’d probably be pretty angry.

“Companies are in a really uncomfortable position because they’re unsure whether or not they should be liquidating for fear of owner retribution down the road,” says Butterbaugh. “And then you have the state saying, ‘You have to,’ even if it’s not explicitly in the statute.”

States are also motivated to enforce unclaimed property laws because it’s a revenue gain for them. Although the state keeps track of the amount due and the rightful owner can still eventually claim the money at any time, states in the meantime can use the money for their general operations. This may seem like a gamble, but only about 2% of unclaimed property ever gets returned to the true owner, according to Accounting Today.

Delaware — home to more than a million companies — is one of the most aggressive states when it comes to auditing companies on unclaimed property law compliance and has secured hundreds of millions of dollars over the last decade in unclaimed property and fines.

So, companies are stuck between not wanting to get dinged for noncompliance and being afraid to liquidate a cryptocurrency account. They want more clarity on what to do and Butterbaugh says two places — New York and Washington, D.C. — are working on a solution.

But in the meantime, she advises companies dealing in cryptocurrency to start addressing their dormant accounts now.

I am a fiscal policy expert, national journalist and public speaker who has spent more than 15 years writing about the many ways state and local governments collect and spend taxpayer money. I sift through that complicated information then break it down in quick ways that everyone can understand. I’m most known by policy wonks for my work at Governing magazine and for my fellowship at the Rockefeller Institute of Government where I write about the intersection of government and the future of work. My work is also in the Wall Street Journal, Bloomberg, CityLab and other national publications. Frequent and enthusiastic radio and podcast guest.

Source: Haven’t Checked On That Bitcoin Account In A While? Your State Could Have It Liquidated

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Tokenized Apple, Tesla And Coinbase? Why Binance Is Bowing Out.

Binance Chief Executive Officer Zhao Changpeng Interview

Tokenized stocks, or digital assets pegged to the price of company shares, are no longer available for purchase on Binance.com. Offerings had included Tesla, Apple, and Coinbase shares, which Binance claims were fully backed through shares held by its partner, German-based investment firm CM-Equity AG.

Support for stock tokens was first made available on Binance.com in April, 2021, which was enabled through a partnership with Digital Assets AG, a firm focused on issuing tokenized financial products.

“Today, we are announcing that we will be winding down support for stock tokens on Binance.com to shift our commercial focus to other product offerings,” the announcement reads.

Although the exact reason for the about-face is unclear, Binance’s reversal on tokenized stocks comes as financial regulators around the world are putting pressure on the firm. Officials in Germany, Thailand, Japan, Canada, and the United Kingdom have all issued warnings about the exchange over recent months, the firm has been dropped by the payments processor Clear Junction, and certain banking relationships in Europe and around the world are coming into question.

More broadly, it raises doubts about Binance’s hyper growth strategy of rapidly launching new products around the world such as debit cards and derivatives products.

Users currently holding stock tokens have 90 days to sell their shares. Clients in the European Economic Area and Switzerland have the option to transfer their holdings to a new digital asset platform from CM-Equity AG. After October 14, 2021 they will not be able to manually sell or close their positions on the Binance site.

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Source: Tokenized Apple, Tesla And Coinbase? Why Binance Is Bowing Out.

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Critics:

Binance will list MicroStrategy, Microsoft and Apple, providing Binance users with exposure via the tokenization of equities. The tokens are expected to be denominated in the exchange’s stablecoin, BUSD.

The move means Binance users will be able to qualify for economic returns on the underlying shares, which will include potential dividends. The tokens also allow Binance customers to purchase as little as one-hundredth of a regular stock using BUSD.

Binance’s stock tokens are tokenized equities that can be traded on traditional stock exchanges. Each tokenized stock represents one ordinary share of the stock and is backed by a depository portfolio of underlying securities held by CM-Equity AG, Germany, according to the post.

Two stock tokens have begun trading on Binance including electric vehicle maker Tesla and cryptocurrency exchange Coinbase. Those listings are already ruffling the feathers of regulators who say the exchange has not acquired the necessary license to begin marketing equities to the public.

Cryptocurrency exchange Binance is allowing its users to buy fractions of companies’ shares with a new tokenized stock trading service, starting with Tesla.

  • The crypto exchange announced Monday the launch of Binance Stock Tokens, zero-commission digital tokens that qualify holders for returns including dividends.
  • As of 1:35 p.m. UTC (9:35 a.m. ET) April 12, users will be able to buy fractions of actual Tesla shares, which trade at $677 a share at the time of writing.
  • Users will be able to purchase as little as one-hundredth of a Tesla share, with prices settled in Binance USD (BUSD).
  • The exchange’s native crypto Binance Coin (BNB) has surged more than 25% in the last 24 hours, reaching an all-time high of $637.44. It is priced at $590.51 at press time. It’s not immediately clear what is driving the price of the coin.
  • It’s not the first tokenized stock play in crypto land: Terra Labs’ Mirror Protocol went live in December.
  • But where Mirror uses synthetic stocks (or tokenized representations of actual equities), the Binance product is “backed by a depository portfolio of underlying securities” managed by an investment firm in Germany.

See also: Binance Faces CFTC Probe Over US Customers Trading Derivatives: Report

Related Stories

Why Wall Street Is Afraid of Government-Backed Digital Dollar

Imagine Imagine logging on to your own account with the U.S. Federal Reserve. With your laptop or phone, you could zap cash anywhere instantly. There’d be no middlemen, no fees, no waiting for deposits or payments to clear.

That vision sums up the appeal of the digital dollar, the dream of futurists and the bane of bankers. It’s not the Bitcoin bros and other cryptocurrency fans pushing the disruptive idea but America’s financial and political elite. Fed Chair Jerome Powell promises fresh research and a set of policy questions for Congress to ponder this summer. J. Christopher Giancarlo, a former chairman of the Commodity Futures Trading Commission, is rallying support through the nonprofit Digital Dollar Project, a partnership with consulting giant Accenture Plc. To perpetuate American values such as free enterprise and the rule of law, “we should modernize the dollar,” he recently told a U.S. Senate banking subcommittee.

For now the dollar remains the premier global reserve currency and preferred legal tender for international trade and financial transactions. But a new flavor of cryptocurrency could pose a threat to that dominance, which is part of the reason the Federal Reserve Bank of Boston has been working with the Massachusetts Institute of Technology on developing prototypes for a digital-dollar platform.

Other governments, notably China’s, are ahead in digitizing their currencies. In these nations, regulators worry that the possibilities for fraud are multiplying as more individuals embrace cryptocurrency. Steven Mnuchin, former President Donald Trump’s treasury secretary, said he saw no immediate need for a digital dollar. His successor, Janet Yellen, has expressed interest in studying it. Support for a virtual greenback cuts across party lines in Congress, which will have a say on whether it becomes reality.

At a hearing in June, Senators Elizabeth Warren, a Massachusetts Democrat, and John Kennedy, a Louisiana Republican, signaled openness to the idea. Warren and other Democrats stressed the potential of the digital dollar to offer free services to low-income families who now pay high banking fees or are shut out of the system altogether.

Kennedy and fellow Republicans see a financial equivalent of the space race that pitted the U.S. against the Soviet Union—a battle for prestige, power, and first-mover advantage. This time the adversary is China, which announced this month that more than 10 million citizens are now eligible to participate in ongoing trials.

The strongest opposition to a virtual dollar will come from U.S. banks. They rely on $17 trillion in deposits to fund much of their core business, profiting from the difference between what they pay in interest to account holders and what they charge for loans. Banks also earn billions of dollars annually from overdraft, ATM, and account maintenance fees. By creating a digital currency, the Federal Reserve would in effect be competing with banks for customers.

In a recent blog post, Greg Baer, president of the Bank Policy Institute, which represents the industry, warned that homebuyers, businesses, and other customers would find it harder and more expensive to borrow money if the Fed were to infringe on the private sector’s historical central role in finance. “The Federal Reserve would gain extraordinary power,” wrote Baer, a former assistant treasury secretary in the Clinton administration.

Some economists warn that a digital dollar could destabilize the banking system. The federal government offers bank depositors $250,0000 in insurance, a program that’s successfully prevented bank runs since the Great Depression. But in a 2008-style financial panic, depositors might with a single click pull all their savings out of banks and convert them into direct obligations of the U.S. government.

“In a crisis, this may actually make matters worse,” says Eswar Prasad, a professor at Cornell University and the author of a book on digital currencies that will be published in September. Whether a virtual dollar is even necessary remains up for debate. For large companies, cross-border interbank payments are already fast, limiting the appeal of digital currencies. Early adopters of Bitcoin may have won an investment windfall as its value soared, but its volatility makes it a poor substitute for a reliable government-backed currency such as the dollar.

Yet there’s a new kind of crypto, called stablecoin, that could pose a threat to the dollar’s dominance. Similar to the other digital currencies, it’s essentially a string of code tracked and authenticated via an online ledger. But it has a crucial difference from Bitcoin and its ilk: Its value is pegged to a sovereign currency like the dollar, so it offers stability as well as privacy.

In June 2019, Facebook Inc. announced it was developing a stablecoin called Libra ( since renamed Diem). The social media giant’s 2.85 billion active users worldwide represent a huge test market. “That was a game changer,” Prasad says. “That served as a catalyst for a lot of central banks.”

Regulators also have concerns about consumer protection. Stablecoin is only as stable as the network of private participants who manage it on the web. Should something go wrong, holders could find themselves empty-handed. That prospect places pressure on governments to come up with their own alternatives.

Although the Fed has been studying the idea of a digital dollar since at least 2017, crucial details, including what role private institutions will play, remain unresolved. In the Bahamas, the only country with a central bank digital currency, authorized financial institutions are allowed to offer e-wallets for handling sand dollars, the virtual counterpart to the Bahamian dollar.

If depositors flocked to the virtual dollar, banks would need to find another way to fund their loans. Advocates of a digital dollar float the possibility of the Fed lending to banks so they could write loans. To help banks preserve deposits, the government could also set a ceiling on how much digital currency citizens can hold. In the Bahamas the amount is capped at $8,000.

Lev Menand, an Obama administration treasury adviser, cautions against such compromises, saying the priority should be offering unfettered access to a central bank digital currency, or CBDC. Menand, who now lectures at Columbia Law School, says that because this idea would likely require the passage of legislation, Congress faces a big decision: to create “a robust CBDC or a skim milk sort of product that has been watered down as a favor to big banks.”

By: Christopher Condon

Source: Cryptocurrency: Why Wall Street Is Afraid of Government-Backed Digital Dollar – Bloomberg

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Critics:

Wall Street is warming up to the idea that the next big disruptive force on the horizon is central bank digital currencies, even though the Federal Reserve likely remains a few years away from developing its own.

Led by countries as large as China and as small as the Bahamas, digital money is drawing stronger interest as the future of an increasingly cashless society. A digital dollar would resemble cryptocurrencies such as bitcoin or ethereum in some limited respects, but differ in important ways.

Rather than be a tradable asset with wildly fluctuating prices and limited use, the central bank digital currency would function more like dollars and have widespread acceptance. It also would be fully regulated and under a central authority.

Myriad questions remain before an institution as large as the Fed will wade in. But the momentum is building around the world. As the Fed and other central banks work through those logistical issues, Wall Street is growing in anticipation over what the future will hold.

“The race towards Digital Money 2.0 is on,” Citigroup said in a report. “Some have framed it as a new Space Race or Digital Currency Cold War. In our view, it doesn’t have to be a zero sum game — there’s a lot of room for the overall digital pie to grow.”

There, however, has been at least the semblance of a race, and China is perceived as taking the early lead. With the launch of a digital yuan last year, some fear that the edge China has ultimately could undermine the dollar’s status as the world’s reserve currency. Though China said that is not its objective, a Bank of America report notes that issuing digital dollars would let the U.S. currency “remain highly competitive … relative to other currencies.”

References:

Bitcoin Is Steady As It Braces For A Big Week

Led by bitcoin, most major cryptocurrencies have spent the past seven days in relative tranquility. Bitcoin and ether have been trading -0.69% and -4.46% on the week respectively, according to crypto data aggregator COIN360. The biggest movers are Binance’s BNB, which has added 6.95% over the same period, and Dogecoin, which is down by 8.28%.

As of 8.06 a.m. ET, bitcoin is still facing resistance at $33,576 though on-chain metrics are becoming more bullish. For instance, “bitcoin exchange balances have started to show signs of sustained outflows,” tweeted blockchain data and intelligence provider Glassnode. Approximately 40,000 BTC, or $1.37 billion, have been withdrawn over the last three weeks, reversing weeks of inflows that coincided with the 50% market crash. The withdrawals suggest that traders are moving their funds to outside wallets and aren’t looking to sell in the near term.

That said, there have been some standouts among altcoins. EOS, the native cryptocurrency of the EOS.IO blockchain platform, rallied nearly 11% in the last few days following the announcement that crypto startup Bullish is preparing for a public listing via a $9 billion SPAC deal. During the past year, Bullish received an initial capital injection of $100 million and digital assets, including 20 million EOS, from Block.one, the company behind EOS. Additionally, Block.one’s CEO Brendan Blumer will become the chairman of Bullish upon the transaction’s close.

Another big altcoin winner of the week is Terra (LUNA), a native token of the namesake protocol for issuing fiat-pegged stablecoins,  – up by 30.86%. The token seems to have found its footing after the volatility it saw in May. On July 7, Terraform Labs, the project’s creator, committed approximately $70 million to boost the reserves of its savings protocol Anchor. LUNA’s market capitalization has leaped from $300 million to $3.4 billion since January.

But all eyes will be on one of the largest releases of locked shares (16,240) in the Grayscale Bitcoin Trust (GBTC), bound to take place on July 17. In total, 40,000 shares will become unlocked in the coming weeks.

The trust, set up as a private placement where qualified investors can buy shares directly from Grayscale, requires investors to hold their shares for six months before selling them on the secondary market. GBTC saw massive interest in late 2020 and early 2021 among institutions looking for a simple way to get exposure to bitcoin.

Opinions on the impact of the event on the market differ. JPMorgan strategists think the selling will add pressure on the cryptocurrency. “Selling of GBTC shares exiting the six-month lockup period during June and July has emerged as an additional headwind for bitcoin,” wrote the bank’s analysts in a note issued earlier in June. “Despite some improvement, our signals remain overall bearish.”

Analysts at cryptocurrency exchange Kraken, however, seem to disagree: “market structure suggests that the unlock will not weigh materially on BTC spot markets anytime soon, if at all, like some have claimed.” Whether or not the unlock creates a catalyst for price action, it remains one of the most anticipated events of the week.

Follow me on Twitter or LinkedIn.

I report on cryptocurrencies and emerging use cases of blockchain. Born and raised in Russia, I graduated from NYU Abu Dhabi with a degree in economics and Columbia University Graduate School of Journalism, where I focused on data and business reporting.

Source: Bitcoin Is Steady As It Braces For A Big Week

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Critics:

Bitcoin was holding steady after surging to $40,000 following another weekend of price swings following tweets from Tesla boss Elon Musk, who fended off criticism over his market influence and said Tesla sold bitcoin but may resume transactions using it.

In other news, some 81% of fund managers believe Bitcoin is in a bubble, even after May’s 35% price crash, according to the latest Bank of America Global Fund Manager survey and reported by Coindesk.

genesis

The results for the period June 4-10 are up six percentage points from last month’s data, indicating sentiment on Wall Street has turned more bearish. 

The survey showed 72% of the fund managers surveyed think the recent uptick in inflation is transitory. Bitcoin is often seen as a hedge against inflation, and many crypto analysts attribute the cryptocurrency’s gains over the past year to concern about increasing inflation.

Last week, El Salvador became the world’s first country to recognize bitcoin as legal tender.

References

SoftBank Invests $200 Million In Brazil’s Largest Crypto Exchange

Brazil’s leading cryptocurrency exchange, Mercado Bitcoin raised $200 million from the SoftBank Latin America Fund, Mercado’s parent company 2TM Group announced today. The investment values 2TM Group at $2.1 billion and is SoftBank’s largest capital injection in a Latin America crypto company.

Following closely on the tails of SoftBank’s investment in the $250 million round raised by Mexican cryptocurrency exchange Bitso in May, the deal shows a growing interest in bringing bitcoin and other cryptocurrencies to Latin America.

“This series B round will afford us to continue investing in our infrastructure, enabling us to scale up and meet the soaring demand for the blockchain-based financial market,“ says Roberto Dagnoni, executive chairman and CEO of 2TM Group. “We want to be the main solution provider for corporate players.”

The São Paulo-based exchange aims to increase the number of listed assets (the exchange currently lists approximately 50 tokens) and grow its 500-member team to 700 by year’s end. Further plans involve regional expansion with focuses on Mexico, Argentina, Chile and Colombia and growth acceleration across 2TM Group’s portfolio, which also include digital wallet provider MeuBank and digital custodian Bitrust (both are subject to regulatory approval).

Founded by brothers Gustavo and Mauricio Chamati in 2013, Mercado Bitcoin has become the largest cryptocurrency exchange in the country. In January, it scored its first financing round co-led by G2D/GP Investments and Parallax Ventures with participation from an array of other investors.

Like many of its counterparts, Mercado Bitcoin has seen significant growth over the past year, with its client base reaching 2.8 million in 2021 – more than 70% of the total number of individual investors on Brazil’s stock exchange B3. Approximately 700,000 clients signed up just between January and May.

Over the same period, trade volume on the exchange had increased to $5 billion, surpassing the total for its first seven years combined. “Every single month [of this year], we are trading the full volume of 2020,” says Dagnoni.

“Mercado Bitcoin is a regional leader in the crypto space and the leading crypto exchange in Brazil. They are tapping into a huge local and regional addressable market measured by potential use cases for crypto,” says Paulo Passoni, managing partner at SoftBank’s SBLA Advisers Corp. (which manages the SoftBank Latin America Fund).

“At SoftBank we look to invest in entrepreneurs who are challenging the status quo through tech-focused or tech-enabled business models that are disrupting an industry – Mercado Bitcoin is doing just that.”

Despite the rapid growth of the local crypto market, Brazilian regulators have been lagging behind. In 2018, Brazilian antitrust watchdog, the Administrative Council for Economic Defense (CADE), opened an investigation into the country’s largest banks for allegedly abusing their power by closing accounts of crypto brokerages. The probe was ongoing as of last year.

In April 2020, Senator Soraya Thronicke proposed an extended set of rules for Brazil’s “virtual asset” businesses, custodians and issuers, consumer protection, crypto taxation and criminal enforcement, however no apparent action has been taken on the bill so far. Nonetheless, Dagnoni says the nation’s regulatory environment is favorable, and the company is closely working with regulators “to build a consistent framework for alternative digital investments in Brazil, in line with its vision of a convergence of the traditional and blockchain-based financial markets.”

Follow me on Twitter or LinkedIn.

I report on cryptocurrencies and emerging use cases of blockchain. Born and raised in Russia, I graduated from NYU Abu Dhabi with a degree in economics and Columbia University Graduate School of Journalism, where I focused on data and business reporting.

Source: SoftBank Invests $200 Million In Brazil’s Largest Crypto Exchange

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Critics:

SoftBank Group Corp. is a Japanese multinational conglomerate holding company headquartered in Minato, Tokyo. The Group primarily invests in companies operating in the technology, energy, and financial sectors. It also runs the Vision Fund, the world’s largest technology-focused venture capital fund, with over $100 billion in capital, backed by sovereign wealth funds from countries in the Middle East.

The company is known for the leadership by its founder and largest shareholder Masayoshi Son. It operates in broadband, fixed-line telecommunications, e-commerce, information technology, finance, media and marketing, and other areas.

SoftBank was ranked in the Forbes Global 2000 list as the 36th largest public company in the world, and the second largest publicly traded company in Japan after Toyota.

The logo of SoftBank is based on the flag of the Kaientai, a naval trading company that was founded in 1865, near the end of the Tokugawa shogunate, by Sakamoto Ryōma.

Although SoftBank does not affiliate itself to any traditional keiretsu, it has close ties with Mizuho Financial Group, its main lender.

See also

 

Say Goodbye To Bitcoin And Say Hello To The Digital Dollar

https://img.particlenews.com/img/id/2mPBQk_0aeawgZp00?type=thumbnail_1600x1200

Yesterday we talked about the prospects of a digital dollar coming down the pike. It seems clear that global governments will not allow non-sovereign forms of money to continue to proliferate.

The Senate Banking committee’s hearing on the digital dollar two weeks ago was not only a public exploration and introduction to the concept a central bank-backed digital currency, the hearing was also used as a platform to publicly assassinate the viability of the private (“bogus” in the words of Senator Warren) cryptocurrency market (bitcoin, stablecoins, etc.).

With this in mind, the Chinese government has continually tightened control over the crypto market in China, most recently cracking down on cryptocurrency mining in the country. The U.S. Justice Department announced a few weeks ago that it “recovered” $2.3 million in cryptocurrency of the ransom collected from the Colonial Pipeline hack. And today, it was reported that South Korea seized almost $50 million of crypto assets from citizens accused of tax evasion.

So the benefits of the private cryptocurrency market are being deconstructed by governments. Add to that, even after gaining traction, the private crypto market continues to be used primarily as a tool of corruption and speculation. With that, this chart set up argues for a typical bubble outcome (crash).

I founded billionairesportfolio.com — an online investment advisory site that gives the average investor access to sophisticated hedge fund analysis and strategies, all in an easy to understand format. I am also CEO of Logic Fund Management. I started my career with a London-based family office hedge fund that managed money for a French billionaire.

Source: Say Goodbye To Bitcoin And Say Hello To The Digital Dollar

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Critics:

A pair of U.S. congressmen have introduced a bill that would require the Treasury Department to evaluate the digital yuan, digital dollar and the actual dollar’s role in the global economy.

The bipartisan bill, introduced by Reps. French Hill (R-Ark.) and Jim Himes (D-Conn.), seeks to ensure the U.S. dollar remains the world’s reserve currency and directs the Treasury Department to publish a report that evaluates current policy and governance around the currency. This report would include details around central bank digital currencies (CBDC), among other issues.

Under the terms of the bill, dubbed the “21st Century Dollar Act,” the Treasury secretary (currently Janet Yellen) would submit a report to the Senate Banking and House Financial Services committees that includes “a description of efforts by major foreign central banks, including the People’s Bank of China, to create an official digital currency, as well as any risks to the national interest of the United States posed by such efforts.”

The report would update these committees on the Federal Reserve’s current status in researching a digital dollar. The bill would also require the Treasury Department to develop a strategy for boosting the dollar’s reserve status.

The report would detail “any implications for the strategy established by the secretary pursuant to subsection (a) arising from the relative state of development of an official digital currency by the United States and other nations, including the People’s Republic of China,” the bill said.

Keeping the dollar as the world’s reserve currency would be “good for American companies and workers as well as U.S. global influence,” Hill said in a statement.

USD Coin (USDC) is a digital stablecoin that is pegged to the United States dollar and runs on the Ethereum, Stellar, Algorand, and Solana blockchains. USD Coin is managed by a consortium called Centre,which was founded by Circle and includes members from the cryptocurrency exchange Coinbase and Bitcoin mining company Bitmain, an investor in Circle.

Circle claims that each USDC is backed by a dollar held in reserve. USDC reserves are regularly attested (but not audited) by Grant Thornton, LLP, and the monthly attestations can be found on the Centre Consortium’s website. USDC was first announced on the 15th of May 2018 by Circle, and was launched in September of 2018.

On March 29, 2021, Visa announced that it would allow the use of USDC to settle transactions on its payment network. As of June 2021 there are 24.1 billion USDC in circulation.

See also

Ethereum Creator Loses Over $400 Million As Crypto Market Collapses

TechCrunch Disrupt London 2015 - Day 2

Vitalik Buterin, co-creator of the world’s second most-valuable blockchain Ethereum, has taken a major hit to his net worth after the price of ether (ETH) dipped below $2,000 earlier on Monday.

As of 3:15 p.m. ET, ETH is trading at $1,938 according to Messari, down by more than 50 percent just five weeks after reaching its all-time-high of $4,338 on May 12. The decline of the second-largest cryptocurrency falls in line with the rest of the market, as crypto prices have fallen across the board since news broke of a renewed clampdown on bitcoin miners in China.

Buterin’s two main ether addresses currently hold 325,001 and 1,366 ETH worth a collective $632,499,246 as of 3:15 p.m. ET. The current value of his holdings is $457,500,754 less than the $1.09 billion it was worth on May 3 at 1:30 p.m. ET, according to Messari, when Buterin became the world’s youngest crypto billionaire at age 27. When ETH’s value first surpassed the $3,000 price level Buterin held 333,520 ETH worth $1.09 billion. Forbes is unable to account for the 7,153 ETH difference between his holdings now versus on May 3.

Ether’s current market capitalization is $223,752,321,616, second only to the original cryptocurrency, Bitcoin with a market capitalization of $606,843,934,844. Ethereum has gained notoriety this year as the birthplace of decentralized finance (DeFi) applications aiming to create decentralized alternatives to traditional financial services. At the time of writing there is $51 billion locked in the DeFi market, according to data aggregator DeFi Pulse.

Emily Mason

 

By:

 

Source: Ethereum Creator Loses Over $400 Million As Crypto Market Collapses

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Well, it’s not necessarily Ethereum that is a risky investment, it’s cryptocurrencies: They are highly speculative. Even though some experts and crypto supporters believe they could replace fiat currency one day, the answer is much more complicated.

Despite their bustling activity growth, efficiency, and impressive blockchain technology render, many countries are still anxious about cryptos replacing fiat currency. But even though peer-to-peer currency might be the bane of central banking systems around the world, the simple answer would be: no, cryptos won’t replace fiat. Why?

Because their usage is on the rise, their speculative popularity is why they won’t be adopted as mainstream legal tender: they are driven for value storage and speculative trading – rather than for transactional value.

For instance, very few mainstream businesses accept cryptos as legal tender – only 2’300 businesses accept it in the United States, which mostly only accept Bitcoins. When you consider that there are over 30 million businesses in the US, a thin fraction accepts Bitcoins, which puts Ethereum at a disadvantage.

As the past few weeks have proven, their volatility can be a double-edged sword: Between May 12 and May 24, Ethereum has lost nearly 50% of its value. While it has somewhat recovered since it is gut-wrenching to see.

Crypto Price Mayhem: Data Reveals Bitcoin Is Braced For A ‘Short Squeeze’

bitcoin, bitcoin price, crypto, image

Bitcoin traders and investors are still reeling from a steep sell-off that’s wiped around $1 trillion from the combined cryptocurrency market.

The bitcoin price has crashed from almost $65,000 per bitcoin to under $40,000 despite a flood of positive bitcoin news in recent weeks—including Twitter TWTR +0.2% chief executive Jack Dorsey teasing a bitcoin payments plan.

Now, analysis of bitcoin trading data has suggested the bitcoin price could be hit by a so-called “short squeeze”—when the price of an asset increases rapidly due to an excess of bets against it.

“Given bitcoin’s past market performance, when traders use excessive leverage to short the market during a horizontal price adjustment, there will often be a short squeeze phenomenon,” Flex Yang, the chief executive of Hong Kong-based crypto lender and asset manager Babel Finance, wrote in analysis seen by this reporter and pointing to market data that shows recent capital inflows are “from short-sellers and that leverage has greatly increased.”

Since the bitcoin and crypto market crashed in mid-April, the volume of bitcoin perpetual holdings on the crypto exchange Binance have increased by 110%, with the ratio of long to short traders reaching a new low of 0.89—pushing funding rates into the negative.

According to Yang, the reasons behind such excessive shorts include “many people are anticipating a bear market; bitcoin “holders are building hedges,” or “those who bought at high prices are locked in.”

Historical bitcoin price data between February and April 2018 and then again from June to late July 2020, suggests an increase in short-selling is often followed by a bitcoin price surge.

“In November 2020, there was a temporary sharp increase in the number of short-selling positions at a high price,” wrote Yang. “Afterwards, the price of bitcoin continued to rise, continuing its bull market position. No matter if the market outlook is trending downwards after rebounding or if bitcoin maintains its bull market status, short traders have always suffered the consequence of being squeezed out and liquidated.”

The early 2021 bitcoin price bull run was brought to a sharp halt in April when fears over a crypto crackdown in China and mounting concerns over bitcoin’s soaring energy demands sparked panic among investors.

Tesla TSLA +1.1% billionaire Elon Musk sent shockwaves through the bitcoin market when he announced Tesla would suspend its use of bitcoin for payments until the bitcoin network increased its use of renewable energy.

The bitcoin price has failed to recover its lost ground despite continued reports that Wall Street banking giants are increasingly offering bitcoin investment and trading services and the Central America country El Salvador revealed plans to adopt bitcoin as legal tender alongside the U.S. dollar.

Follow me on Twitter.

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com. Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.

Source: Crypto Price Mayhem: Data Reveals Bitcoin Is Braced For A ‘Short Squeeze’

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Critics:

Predictions of a collapse of a speculative bubble in cryptocurrencies have been made by numerous experts in economics and financial markets. Bitcoin and other cryptocurrencies have been identified as speculative bubbles by several laureates of the Nobel Memorial Prize in Economic Sciences, central bankers, and investors.

From January to February 2018, the price of Bitcoin fell 65 percent. By September 2018, the MVIS CryptoCompare Digital Assets 10 Index had lost 80 percent of its value, making the decline of the cryptocurrency market, in percentage terms, greater than the bursting of the Dot-com bubble in 2002.

In November 2018, the total market capitalization for Bitcoin fell below $100 billion for the first time since October 2017, and the price of Bitcoin fell below $4,000, representing an 80 percent decline from its peak the previous January. Bitcoin reached a low of around $3,100 in December 2018.From 8 March to 12 March 2020, the price of Bitcoin fell by 30 percent from $8,901 to $6,206.By October 2020, Bitcoin was worth approximately $13,200.

Bitcoin has been characterized as a speculative bubble by eight winners of the Nobel Memorial Prize in Economic Sciences: Paul Krugman, Robert J. Shiller, Joseph Stiglitz, Richard Thaler, James Heckman, Thomas Sargent, Angus Deaton, and Oliver Hart; and by central bank officials including Alan Greenspan, Agustín Carstens, Vítor Constâncio, and Nout Wellink.

The investors Warren Buffett and George Soros have respectively characterized it as a “mirage”and a “bubble”; while the business executives Jack Ma and Jamie Dimon have called it a “bubble” and a “fraud”, respectively. J.P. Morgan Chase CEO Jamie Dimon said later he regrets calling Bitcoin a fraud.

Tanzania Considers Crypto and Boosts Bitcoin as Nations Line Up Behind El Salvador To Embrace Decentralized Finance

Bitcoin

Tanzania became the latest country to signal its support for digital assets this weekend as its president instructed financial authorities to prepare for widespread use of cryptocurrencies, elevating bitcoin prices further after El Salvador became the first country to make bitcoin legal tender last week and Elon Musk outlined plans for Tesla to resume accepting bitcoin as a form of payment.

Key Facts

President Samia Suluhu Hassan called on the Tanzanian Central Bank Sunday to begin “working on” facilitating widespread use of cryptocurrencies in the East African nation.  While many in Tanzania have not yet embraced decentralized finance, Hassan said the Central Bank should “be ready for the changes and not be caught unprepared.

”Hassan is one of the most senior politicians to signal support for digital assets since El Salvador voted to adopt bitcoin as legal tender last week and helped give the flagging market a boost. The announcement helped bitcoin gain nearly 10% in 24 hours, nearly reaching $40,000 a token Monday morning.

The token was also buoyed on by news that Tesla would resume its use of bitcoin when there is proof the asset is obtained using around 50% clean energy.

What To Watch For

There is growing popular support for bitcoin adoption in Nigeria that also gained momentum over the weekend. Russell Okung, an NFL player of Nigerian descent, penned an open letter to the Nigerian president imploring the country to adopt a Bitcoin standard so as to avoid “falling behind.” Twitter and Square CEO Jack Dorsey, one of the most high profile crypto enthusiasts, tweeted his support of the idea a number of times over the weekend.

Key Background

While reaching its highest point in several weeks, bitcoin, along with the wider crypto market, is still recovering from a tailspin that rapidly wiped over $700 billion from the market’s value. This slump was primarily induced by Tesla announcing it would no longer accept bitcoin due to environmental concerns and China cracking down on the assets.

Support from the likes of El Salvador, alongside other countries and banks that may begin to adopt bitcoin, or other cryptocurrency tokens, the market has slowly started to recover, though remains volatile. Beyond Tanzania, lawmakers in a number of Latin American countries have expressed at least a casual interest in following El Salvador’s footsteps, including Brazil and Panama.

Further Reading

El Salvador Makes History As World’s First Country To Make Bitcoin Legal Tender (Forbes)

Tanzanian president urges central bank to prepare for crypto (Coin Telegraph)

I am a London-based reporter for Forbes covering breaking news. Previously, I have worked as a reporter for a specialist legal publication covering big data and as a freelance journalist and policy analyst covering science, tech and health. I have a master’s degree in Biological Natural Sciences and a master’s degree in the History and Philosophy of Science from the University of Cambridge. Follow me on Twitter @theroberthart or email me at rhart@forbes.com

Source: Tanzania Considers Crypto—And Boosts Bitcoin—As Nations Line Up Behind El Salvador To Embrace Decentralized Finance

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Critics:

The European Union has passed no specific legislation relative to the status of bitcoin as a currency, but has stated that VAT/GST is not applicable to the conversion between traditional (fiat) currency and bitcoin. VAT/GST and other taxes (such as income tax) still apply to transactions made using bitcoins for goods and services. 

In October 2015, the Court of Justice of the European Union ruled that “The exchange of traditional currencies for units of the ‘bitcoin’ virtual currency is exempt from VAT” and that “Member States must exempt, inter alia, transactions relating to ‘currency, bank notes and coins used as legal tender‘”, making bitcoin a currency as opposed to being a commodity. According to judges, the tax should not be charged because bitcoins should be treated as a means of payment.

According to the European Central Bank, traditional financial sector regulation is not applicable to bitcoin because it does not involve traditional financial actors. Others in the EU have stated, however, that existing rules can be extended to include bitcoin and bitcoin companies.

The European Central Bank classifies bitcoin as a convertible decentralized virtual currency. In July 2014 the European Banking Authority advised European banks not to deal in virtual currencies such as bitcoin until a regulatory regime was in place.

In 2016 the European Parliament’s proposal to set up a task force to monitor virtual currencies to combat money laundering and terrorism, passed by 542 votes to 51, with 11 abstentions, has been sent to the European Commission for consideration.

See also

References

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