Historic Bitcoin Futures ETF Debuts On New York Stock Exchange

The first bitcoin-linked exchange-traded fund in the United States today debuted on the New York Stock Exchange, presenting new investment opportunities for holders of brokerage accounts.

Though the offering, called the ProShares Bitcoin Strategy ETF (trading as BITO), falls short of what the cryptocurrency industry has long advocated for—funds that invest directly in bitcoin—its launch marks another watershed moment for the nascent market.

The anticipation propelled the world’s largest cryptocurrency to break above $62,000 for the first time since April on Friday, just below its all-time high of $64,957, set in the spring. At press time, it is trading at $62,903.

“BITO will open up exposure to bitcoin to a large segment of investors who have a brokerage account and are comfortable buying stocks and ETFs, but do not desire to go through the hassle and learning curve of establishing another account with a cryptocurrency provider,” says ProShares CEO Michael L. Sapir. He adds that the vehicle will help those who are hesitant about “creating a bitcoin wallet or are concerned that these providers may be unregulated and subject to security risks.”

Bethesda, Md. firm, an ETF provider with more than $64 billion in assets, filed an updated prospectus with the offering with the Securities and Exchange Commission late Friday after Thursday reports signaled that the SEC wasn’t likely to block a bitcoin futures exchange-traded fund.

ProShares will not invest directly in or hold the cryptocurrency but instead will be purchasing cash-settled, front-month CME bitcoin futures—monthly contracts with the nearest expiration date that trade on the Chicago-based CME exchange—and will charge a management fee of 0.95%, to be paid each year as a percentage of investment’s value, ProShares’ global investment strategist Simeon Hyman confirmed to Forbes. ProShares estimates annual expenses for those investing in the fund at $97 per $10,000 invested—less than half of the 2% world’s biggest bitcoin fund, Grayscale Bitcoin Trust, charges.

Many hope that the futures-based ETF will pave the way to ultimately launching a full-fledged bitcoin ETF. Industry participants have sought to launch one since 2013, when Tyler and Cameron Winklevoss, billionaire founders of cryptocurrency exchange Gemini, filed the first bitcoin ETF application. The SEC has rejected every previous filing to date.

Forbes’ director of data and analytics, Javier Paz, thinks this “SEC experiment” will help “absorb much of the popular demand for bitcoin without causing the cryptocurrency to skyrocket overnight.” Nearly 40 bitcoin ETF applications, including those from Cathie Wood’s ARK Investment Management, Galaxy Digital, VanEck, and Valkyrie, are pending the Commission’s review.

ProShares, which had previously filed with the Commission for two bitcoin ETFs in 2017, keeps its finger on the pulse. “As other ways to access bitcoin mature, we’ll keep an eye on it,” said  Hyman. “We’re always ready to consider additional solutions for investment.”

Follow me on Twitter or LinkedIn.

I report on cryptocurrencies and other applications of blockchain. A Russia native, I am a graduate of NYU Abu Dhabi and Columbia University’s Graduate School of Journalism

Source: Historic Bitcoin Futures ETF Debuts On New York Stock Exchange

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Cryptocurrencies Are Coming Back From the Brink. Here’s Why

After months languishing in the doldrums, cryptocurrencies are surging. On Monday, Bitcoin breached the $50,000 mark for the first time since May. Other coins — including Ethereum, Cardano’s ADA and Dogecoin — also edged higher.

And it was only a few weeks ago that some strategists were eyeing a possible drop to $20,000 for Bitcoin, months after it had hit an all-time high near $65,000 in April.

Instead, sentiment is rising across the board. Crypto’s latest swings are a sign that Bitcoin miners are back in business after a recent Chinese crackdown. At the same time, there is continued evidence of more mainstream acceptance. All of this is happening as the delta variant’s surge has muddied the timeline for a normalization of interest rate policy.

“There’s been an accelerating background of accumulation of crypto assets in the past couple months,” Jonathan Cheesman, head of over-the-counter and institutional sales at crypto derivatives exchange FTX, wrote in an email Monday. “Institutional flows in Bitcoin and Ether as well as a lot of retail activity in NFTs and gaming” are likely contributing, he added.

Here is a look at what is driving the increase — and what could come next:

A Shift in Sentiment

The cryptocurrency world is populated by a cast of characters whose voices can really influence prices. Lately, bullish noises have been boosting sentiment.

Take Elon Musk. Earlier this year, the billionaire caused heads to spin — and helped prices to boost and then plummet — when he said in March that Tesla Inc. would accept payment for its electric vehicles in Bitcoin but backtracked in May. He made his reversal on environmental grounds, expressing concern about the use of fossil fuels for cryptocurrency mining. Following those comments, Bitcoin lost about a quarter of its value in a week.

But here’s the latest twist: Over the past few weeks, Musk has been striking a more supportive tone. In late July he said he personally owns Bitcoin, Ethereum and Dogecoin and would like to see crypto succeed.

Superstar investment manager Cathie Wood is another influential voice in this space. A noted crypto bull, she told Bloomberg TV in May that she could see Bitcoin reaching a price of $500,000. More recently, she said she thinks corporations should consider adding Bitcoin to their balance sheets.

Hash Rate Signals

About a month ago, all the talk in the cryptocurrency world was of a Chinese crackdown. A ban on Bitcoin mining meant the abrupt shuttering of millions of computers that had been processing the transactions necessary to keep the crypto currency humming. Before the ban, around 65% of the world’s Bitcoin mining took place in China.

As computers went offline, the hash rate — a measure of the computing power used in mining and processing — halved in just two and half weeks.

As well as the practical implications, the aggressive moves by China laid bare the fact that the decentralized currency is still at the mercy of governments, which hit sentiment. Bobby Lee, one of the country’s first Bitcoin moguls, even said that China’s crackdown on cryptocurrencies will probably intensify and may even lead to an outright ban on holding the tokens. And in the U.S., a recent congressional debate over crypto rules added to the uncertainty.

However, the hash rate has rebounded and is up from its July nadir, according to data from Blockchain.com.

That recovery has helped restore confidence in the market that cryptocurrencies can flourish even in the face of opposition from legislators around the world.

Keep Your Eye on Jackson Hole

Prices of cryptocurrencies, like gold, tend to suffer when there is the prospect of interest rate hikes. The emergence of Covid’s delta variant may scramble plans to remove crisis-level monetary policy.

If Federal Reserve Chairman Jerome Powell were to strike a dovish note in his speech at the Jackson Hole conference this Friday, that could boost the currency, Oanda analyst Edward Moya said in a note.

The Kansas City Federal Reserve’s annual event, being held virtually again, is traditionally scrutinized for hints on upcoming changes in stance. Some Fed leaders have used it as a platform to explain new initiatives, as Powell did last year in unveiling a new monetary policy framework.

Even More Mainstream — and Main Street — Interest

Huge financial and consumer firms over the past year have increasingly been embracing crypto, giving the asset more legitimacy and driving up the price. Banks, brokerages and securities exchanges have been gearing up to meet demand. A watershed moment came in April with the U.S. stock market debut of Coinbase Global Inc., a crypto trading venue that’s shooting to establish a digital-money ecosystem.

This summer, there has been growing speculation that Amazon.com Inc. may become involved in the cryptocurrency sector. An Amazon job posting published online in July said the firm was seeking a “Digital Currency and Blockchain Product Lead.” After people found out about the post, Bitcoin surged to about $40,000. Amazon shares gained about 1% in New York. The company went on to say that the “speculation” about its “specific plan for cryptocurrencies is not true,” but the fact that the world’s largest retailer is exploring crypto has big implications for the shadowy and often hard-to-access market.

Walmart Inc. revealed it, too, was looking for some crypto help, with a job posting on Aug. 15 with responsibilities that would include “developing the digital currency strategy and product roadmap” and identifying “crypto-related investment and partnerships.” (As of Monday morning, visitors to the website were given a 404 error message.)

So… Where to From Here?

In these final days of summer, it’s now back in vogue to make $100,000 predictions.

As with any investment — or anything, really — it’s impossible to predict the future. But analysts do have a few estimations on how breaching $50,000 has changed Bitcoin’s prospects, at least in the short term.

Bitcoin is “getting nearer the higher end of what I expect as a new trading range in the low-$40,000s to low-$50,000s,” said Rick Bensignor, chief executive officer at Bensignor Investment Strategies.

Daniela Hathorn, an analyst at DailyFx.com, thinks that it may be a while before we see any further bullish momentum because $50,000 is a key psychological level for the currency.

“A pullback towards the $48,000 area would be the first sign of trouble,” she wrote in a note on Monday. “But the positive trend isn’t in any trouble as long as Bitcoin stays above its 200-day moving average at $45,750. Looking ahead, the key challenge for buyers will be to cement further gains towards $55,000 without losing momentum along the way.”

By: Emily Cadman / Charlie Wells / Joanna Ossinger

Source: https://www.bloombergquint.com/wealth/bitcoin-price-surge-reasons-why-ethereum-cryptocurrencies-are-rising
Copyright © BloombergQuint

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SEC Signs Deal To Investigate DeFi Transactions

Blockchain analytics firm AnChain.AI has signed a deal with the U.S. Securities and Exchange Commission (SEC) to help monitor and regulate the turbulent decentralized finance (DeFi) industry, according to a company spokesperson. The initial value of the contract is $125,000, with five separate one-year $125,000 option years for a total of $625,000.

According to CEO and co-founder Victor Fang, “The SEC is very keen on understanding what is happening in the world of smart contract-based digital assets…so we are providing them with technology to analyze and trace smart contracts.”

AnChain.AI is a San Jose-based artificial intelligence and machine learning blockchain startup that focuses on tracking illicit activity across crypto exchanges, DeFi protocols, and traditional financial institutions. In revealing the SEC contract, which started in May 2021, the company also announced today a $10 million Series A round of funding led by an affiliate of Susquehanna Group, SIG Asia Investments LLP, at an undisclosed valuation.

The deal comes on the heels of the SEC taking further interest in DeFi as it rapidly matures and grows in size. The industry currently manages more than $82 billion, and the largest decentralized exchange, Uniswap, processed over $1.8 billion worth of transactions in the last 24 hours, many of which included tokens that could be determined to be securities by the SEC.

Additionally, these platforms are becoming increasingly complex. Fang noted that the Uniswap platform is actually an amalgam of 30,000 separate smart contracts that execute the actual exchange of tokens.

The SEC’s first major action against the DeFi space came in 2018, when it shut down EtherDelta, a ‘DeFi’ exchange that it deemed to be operating illegally.

In an August interview with The Wall Street Journal, SEC Chairman Gary Gensler warned that DeFi operations are not immune from oversight because they use the word decentralized, and that “There’s still a core group of folks that are not only writing the software, like the open source software, but they often have governance and fees…There’s some incentive structure for those promoters and sponsors in the middle of this.”

SEC Commissioner Hester Peirce echoed this sentiment in a March interview with Forbes, but perhaps in an acknowledgement of the potential in DeFi asked these projects to come forward and be pro-active with the regulator, “When you start to look at the tokens themselves and try to figure out whether they’re securities, it does get kind of confusing.

In particular, it’s so hard in the DeFi landscape because there’s such variety. This is why I encourage individual projects to come in and talk to the SEC because it really does require a look at the very particular facts and circumstances.”

In addition to cataloguing and monitoring known wallets tied to illicit actors, AnChain.AI has built a predictive engine that can be used to identify unknown addresses and transactions that could be suspicious. This is all part of Fang’s goal to move beyond doing “post-incident investigations” to move the “defense all the way up to the upstream” and make it “preventive”.

Aside from government clients, AnChain.AI’s technology is also being used by centralized cryptocurrency exchanges and traditional financial institutions. In a press release, Ye Li, Investment Manager at SIG said of the investment, “AnChain.AI has made great progress in developing its market-leading crypto security technology to meet its customers’ broad demand in regulatory compliance and transaction intelligence.”

The SEC declined to comment.

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I am director of research for digital assets at Forbes. I was recently the Social Media/Copy Lead at Kraken, a cryptocurrency exchange based in the United States.

Source: SEC Signs Deal To Investigate DeFi Transactions

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Bitcoin Has No Value: People Bank’s Of China Official Announces Further Crackdown

Bitcoin (CRYPTO: BTC) and other cryptocurrencies “are not legal tenders and have no actual value support,” according to Deputy Director of the Financial Consumer Rights Protection Bureau of the People’s Bank of China (PBoC) Yin Youping.

What Happened: According to a report by local news outlet People’s Daily Online, Youping said that cryptocurrencies are purely speculative assets. He also advised the public to increase its risk awareness and stay away from the crypto market to “protect their pockets.”

Read also: Crypto’s Biggest Legal Problems

The PBoC official also said in anticipation of the possible crypto market rebound and their related operations in China, the central bank will monitor overseas cryptocurrency exchanges and domestic traders in collaboration with relevant authorities.

What Else: The institution also plans to crack down on the space by blocking crypto trading websites, applications, and corporate channels.

Per the report, PBoC — being a member of the Joint Conference to Deal with Illegal Fund Raising — actively cooperates with the lead department of the China Banking and Insurance Regulatory Commission.

As a result of this collaboration, the regulator created systems aiming for the monitoring, early warning, publicity, education, and overall combating of illegal fundraising powered by cryptocurrencies and blockchains.

Read also: Why Bangladesh will jail Bitcoin traders

Youping explained that PBoC’s next step will be establishing a normalized working mechanism, continue putting high pressure on illegal cryptocurrency-related operations, and continue cracking down on crypto-related transactions.

Lastly, the report intimates that “if the general public finds clues about illegal fund-raising crimes, they must promptly report to the relevant departments.”

By:

Source: Bitcoin Has No Value: People Bank’s Of China Official Announces Further Crackdown

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China’s crackdown on cryptocurrencies will probably intensify and may even lead to an outright ban on holding the tokens, according to Bobby Lee, one of the country’s first Bitcoin moguls.

Lee knows what it’s like to be on the wrong side of Beijing: He sold BTC China, the nation’s first Bitcoin exchange and at one point the second biggest worldwide, in the aftermath of a crackdown in 2017.

China has launched a new campaign against cryptocurrencies this year, taking action against miners and imposing curbs on crypto banking services and trading. The moves have fueled Bitcoin’s drop to about half its mid-April record near $65,000.

“The next thing they could do, the final straw, would be something like banning cryptocurrency altogether,” Lee said in an interview at his office in a WeWork space in downtown Shanghai, without elaborating on how a ban might be enforced. “I put it at the odds of 50-50.”

Lee recently returned to China after spending time in the U.S. and publishing a book, “The Promise of Bitcoin.” He’s now focused on his latest venture, Ballet Global Inc., which produces a hardware wallet that stores cryptocurrencies. Lee is still a Bitcoin bull, predicting it could end this year around $250,000 and reach $1 million by 2025. He declined to disclose his Bitcoin holdings.

Next year will be a bear market cycle. So we’ll see Bitcoin fall back down 50%-80% from the all-time high. I think Bitcoin will have its bull cycle every three or four years in the coming years. I expect Bitcoin to pass a million, two million dollars easily in the next 10-15 years. In fact the next cycle I predict to be in the year 2024 or 2025, and that’s when Bitcoin will cross half a million dollars and might even touch $1 million.

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Bitcoin Beach: The Cryptocurrency Experiment In El Salvador’s El Zonte

Last week, El Salvador’s legislature voted to become the first country in the world to adopt Bitcoin as legal tender. While the U.S. dollar will still be El Salvador’s official currency, all businesses in the country will have to start accepting Bitcoin barring extenuating circumstances (like lack of technological resources), and citizens will be able to pay their taxes and debts with the cryptocurrency.

The government is hoping that this futuristic economic policy will attract investment from cryptocurrency businesses, provide transformative financial resources for the 70 percent of El Salvadorans who are unbanked, and facilitate remittances, which amount to about 20 percent of the country’s gross domestic product. And, true to the madcap spirit of the Bitcoin community, El Salvador’s President Nayib Bukele has already directed a state-owned geothermal electric firm to start constructing Bitcoin mining facilities that will be powered by heat from the country’s volcanoes.

At the same time, critics have pointed out that the plan is very light on details and that Bitcoin is notoriously difficult to use as a day-to-day currency partly due to its volatility. In addition, there’s a good chance that a large swath of businesses in the country won’t even be able to feasibly accept the cryptocurrency; El Salvador has lowest rates of internet penetration in Latin America. Bukele, however, has been pointing to a small Salvadoran beach town called El Zonte where residents have been using Bitcoin for nearly two years as evidence that the cryptocurrency could help power the economy nationwide.

El Zonte is a village on the Pacific coast that has a population of about 3,000 people and is popular for surfing and fishing. While a beach town might sound affluent, El Zonte is not: According to Reuters, “El Zonte is visibly poor, with dirt roads and a faulty drainage system,” In 2019, an anonymous donor in the U.S. reportedly began sending Bitcoin to nonprofits in the area with the aim of finding ways to build a sustainable cryptocurrency ecosystem in the community.

Then nonprofit workers in El Zonte, in consultation with the donor, launched Bitcoin Beach, an initiative that injected the cryptocurrency into the local economy, set people up with digital wallets, and helped businesses set up systems to accept Bitcoin payments. Residents use a Venmo-like app payment system for exchanging Bitcoin, which was developed by a tech company in California called Galoy Money. Using the app, people can see which businesses accept Bitcoin and look one another up by username.

“This was just the perfect laboratory,” said Chris Hunter, co-founder of Galoy, of El Zonte. Hunter says El Zonte was a prime location for test-driving a Bitcoin payment system because of the lack of regulatory and tax burdens, the fact that most merchants and people don’t have credit cards, and dollarization of El Salvador’s economy. (El Salvador is one of around a dozen countries and territories that use the U.S. dollar as their official currency.)

He admits, though, that trying to get cryptocurrency systems up and running for an entire country is going to be exponentially more difficult than doing so for a 3,000-person village, and expressed skepticism that the government will meet its goal of getting the infrastructure in place by early September. “To support millions of people not just holding Bitcoin but spending it too, it’s certainly technically feasible. But to figure that out in 90 days is a pretty tight timeline,” Hunter said.

Although there has been some success in integrating Bitcoin into El Zonte’s economy—about 90 percent of families in the town have made a crypto transaction, according to Bitcoin Beach, to pay for things like groceries, utilities, and medical care—the project has not been without its obstacles. Reports indicate that some residents have struggled to access the payment system because of limited data plans and lack of access to more advanced smartphones.

Hunter claims that most people in the town seem to have lower-end Android phones that can support Bitcoin transactions, though he admits developers did run into some issues with getting the lower-resolution cameras on the devices to detect QR codes at local businesses. He also said that the local cell network in El Zonte is good enough for transactions.

But the reasons why crypto investors were drawn to El Zonte do not hold true throughout the country. Only 45 percent of the population in El Salvador has internet access.  It remains to be seen how exactly the national government thinks it will improve connectivity, particularly in rural areas, and get powerful enough devices into peoples’ hands to support a bitcoin economy. Bukele has floated the idea of building a network of satellites to improve coverage, but that obviously would take quite a while to implement.

Volatility remains a concern as well. In May, Bitcoin prices took a 30 percent dive after China implemented new digital currency restrictions and Tesla announced that it would no longer be accepting the cryptocurrency as payment. Around that time, Hunter says there was a corresponding decrease in the number of Bitcoin transactions in El Zonte. By all appearances, people were waiting for the value to go up again before using it.

Steve Hanke, professor of applied economics at Johns Hopkins University and director of the Cato institute’s Troubled Currencies Project, worries that average consumers and business owners won’t want to constantly engage in this sort of speculation when deciding whether to use their money. “Businesses tend to unload Bitcoin as fast as they can because of the fluctuating exchange rate. If you receive it in the morning, it could easily be down 5 or 10 percent by the close of business,” said Hanke. “Are you running a business in which you’re speculating in Bitcoin, or are you running a business where you’re selling clothes or shoes?”

Bukele has said that the government will set up a $150 million fund so that people can immediately cash out their Bitcoin for dollars, thus shielding them from some of the volatility. The details of this part of the plan are also scant, however, and Hanke notes that there’s a danger in El Salvador establishing itself as a country with permissive financial regulations that’s willing to exchange dollars for Bitcoin at any time.

For criminals who are in possession of large amounts of Bitcoin, El Salvador could be an attractive place to cash out. In the worst-case scenario, Hanke says, “You could essentially have Bitcoin holders who want greenbacks that are in a position to basically vacuum up all of the greenbacks that exist in El Salvador, and the place would collapse without it.”

By Aaron Mak

Source: Bitcoin Beach: The cryptocurrency experiment in El Salvador’s El Zonte

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Satoshi Nakamoto Collaborator Says His Bitcoin Fork, Zcash, Should Go Proof Of Stake And Wind Down Its Carbon Footprint

Zcash founder Zooko Wilcox might seem like an unlikely source to challenge Bitcoin’s ‘third rail’, its controversial, expensive, yet effective method of processing transactions, but in many ways he is the perfect candidate to offer an alternative.

After all, few know Bitcoin better than him.

An early and active participant on Bitcoin message boards, Wilcox frequently communicated and collaborated directly with the pseudonymous founder of Bitcoin, Satoshi Nakomoto. In fact, he authored the very first blog post on bitcoin, which Satoshi linked to on the original Bitcoin.org website. That is the ultimate seal of approval when it comes to crypto.

However, in an interview with Forbes, Wilcox made it clear that for as far as Bitcoin has come it is far from a fully-formed project in many areas.

For starters, the pseudonymous nature of the blockchain, which hackers and criminals are slowly finding out is not nearly as private as they hoped, was not the desired end state. As Wilcox tells it, “The fact is, like, to basically 100% of all the early bitcoiners, including Satoshi and Hal (Finney) and Nick (Szabo) and Adam (Back), and everyone…Privacy was like the main value proposition.”

If nothing else, it was clear that it deserved central billing alongside independence from central banks, the more common narrative of Bitcoin’s origin story.

The proposed solution back in 2010 was something called zk-snarks (Succinct Non-Interactive Argument of Knowledge). In short, zk-snarks can be used in a blockchain to hide not only the identities of the sender and receiver, but transaction amounts as well. Total privacy.

Back when Satoshi was actively developing bitcoin he had hoped to integrate zk-snarks into the network. However, by the time he stepped away in 2011 the technology was not advanced enough to install without slowing Bitcoin down (it is already slow even by crypto standards) or burdening it with too much data.

Wilcox was part of a team of scientists in 2012 who presented a proposal to integrate zk-snarks on top of Bitcoin at a conference in San Jose, but the core developers told them that the technology had to be proven on another blockchain before receiving serious consideration.

So that is exactly what Wilcox did – and a couple of years later Zcash was born.

It is also clear in his writings that Satoshi knew that bitcoin, if successful, would have a very large carbon footprint, something that my colleague Chris Helman pointed out in a recent article for Forbes, “It’s the same situation as gold and gold mining. The marginal cost of gold mining tends to stay near the price of gold. Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange. I think the case will be the same for bitcoin. The utility of the exchanges made possible by bitcoin will far exceed the cost of electricity used.”

It is on this point that Wilcox wants to use Zcash to move crypto forward, starting today. In a forthcoming blog post shared exclusively with Forbes, he is advocating for Zcash to move away from the same energy-intensive ‘proof-of-work’ consensus mechanism as Bitcoin to a more eco-friendly ‘proof-of stake’ approach.

The implications of such a transition could be huge. Zcash is a close cousin of Bitcoin, its code is actually based on Bitcoin, and if successful it could open the door to Bitcoin possibly eschewing mining as well.

So what exactly is ‘proof-of-stake’? Rather than operating millions of dollars worth of energy-consuming computing hardware racing to solve complicated math problems in exchange for freshly-minted bitcoin, nodes on the network post holdings as collateral at risk of forfeiture should they act dishonorably. Proof-of-stake is lighter, faster, and in the words of Wilcox even more secure than proof-of-work.

“I think proof-of-work has some security flaws, as has been demonstrated by the 51% attacks that have occurred (when a miner controls a majority of computing power on the network and can steal tokens). And I think proof-of-stake can provide a much more powerful kind of security and at lower cost.”

He also pointed out that under proof-of-work setups users have little recourse if the network gets attacked. However, on a proof-of-stake network the bad actors can be identified and have their tokens revoked so that the rest of the network can go on operating as usual. In fact, this is similar to an argument offered by Ethereum creator Vitalik Buterin, which is also going through an arduous transition from proof-of-work to proof-of-stake, to justify the switch.

When asked why he is advocating for the transition now, Wilcox points to a few key reasons, most notably that the proof-of-stake is ‘proven’ and no longer experimental. As evidence he points to the successful launch of networks such as Algorand, Cardano, Cosmos, and Tezos.

In fact, environmental concerns do not seem to be a leading justification for the shift, but rather his belief that proof-of-stake is the better all-around approach moving forward. He also recognizes that right or wrong, people are increasingly worried about crypto’s carbon footprint. Switching to proof-of-stake in his mind is then a win for everyone.

That said, while Zcash is based on Bitcoin and shares many of the same characteristics, down to its hard limit of 21 million units, the two networks are in different universes from adoption and scale points of view. ZEC (Zcash’s native token) is currently priced at $111.55, while bitcoin is nearly 350x bigger at $38,709. Bitcoin processes around 250,000 transactions per day, while Zcash hovers around 4,000. Additionally, the bitcoin network’s hashrate of 102,631,000,000,000,000,000 hashes per second is orders of magnitude bigger than Zcash’s 4,992,000,000.

That said, Zcash has tripled Bitcoin’s returns to investors year to date.

So even if Zcash makes a successful transition, that does not mean that bitcoin could simply follow the same path. Plus, bitcoin’s community has historically been resistant to major change, understandable given its focus on security, and the necessity of proof-of-work has become a hardened part of its ideology.

A final reason why things are moving forward now is because as Wilcox tells it, we are entering an inflection point when it comes to protecting our privacy from governments and corporations alike, “We’re both simultaneously seeing mega corporations and governments seizing more and more control over everyone, both in the east and the west…And we’re simultaneously seeing people worldwide becoming more aware and valuing their privacy more, their autonomy, their human relationships.”

He also believes that the stakes are being raised when it comes to central bank digital currencies (CBDCs) and fears of surveillance capitalism. That said, Wilcox would not be opposed to collaborating with banks around the world if they wanted to integrate Zcash and  zk-snarks, saying “We definitely could help them come up with improved or variants, zero knowledge proof that would serve their purposes. But we would do so only if that one they would feed back into ZEC, which is the engine of our mission, our mission is to empower and free everyone in the world.”

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I am director of research for digital assets at Forbes. I was recently the Social Media/Copy Lead at Kraken, a cryptocurrency exchange based in the United States. Before joining Kraken I served as Chief Operating Officer at the Wall Street Blockchain Alliance, a non-profit trade association dedicated to the comprehensive adoption of cryptocurrencies and blockchain technologies across global markets. Before joining the WSBA, I was the Lead Associate within the Emerging Technologies practice at Spitzberg Partners, a boutique corporate advisory firm that advises leading firms across industries on blockchain technology. Previously I was Vice President/Lead Strategy Analyst at Citi FinTech, where I drove strategic and new business development initiatives for Citigroup’s Global Retail and Consumer Bank business across 20 countries. I also served five years as a Senior Intelligence Analyst at Booz Allen Hamilton supporting the U.S. Department of Defense. I have a B.S. in Business Administration from the Tepper School of Business at Carnegie Mellon University and a M.A. in International Affairs from Columbia University’s School of International and Public Affairs. Additionally, I am a Certified Information Privacy Professional (United States, Canada, and the European Union) and a Certified Information Privacy Technologist at the International Association of Privacy Professionals (IAPP).

Source: Satoshi Nakamoto Collaborator Says His Bitcoin Fork, Zcash, Should Go Proof Of Stake And Wind Down Its Carbon Footprint

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

On Thursday trading

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.

Follow me on Twitter or LinkedIn. Check out my website.

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.”

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