Hodler’s Digest, June 11-17: A Regulatory Win for Ethereum and a Falling Market
Why does Ripple’s Brad Garlinghouse think that China could control most of Bitcoin? Find out more in our Hodler’s Digest.
Top Stories This Week
Fundstrat’s Tom Lee Points To Bitcoin Futures As Reason For Price Declines
Tom Lee released a report this week that posited that the reason for the falling price of Bitcoin can be linked to the expiration of Bitcoin futures contracts. According to Lee, Bitcoin’s price usually drops around 10 days before the expiration of the futures contract, but then rises again about 6 days after it expires.
German Government Doesn’t Think Bitcoin Threatens Financial Stability
Officials from Germany’s federal government do not believe that Bitcoin poses a threat to the existing financial structure, as the volume of crypto transactions is too low as compared to the size of the global financial system to be a great influence. However, the government added that cryptocurrency should be regulated as they continue to monitor the crypto space.
Wells Fargo Bans Credit Card Cryptocurrency Purchases
US bank Wells Fargo has announced a ban of cryptocurrency using their credit cards, citing the “multiple risks” associated with crypto usage. Wells Fargo said that their decision was in line with the “overall industry,” but they will monitor the issue as the market develops.
US Legislature Proposes Study Of Crypto Use In Sex Trafficking
A bill proposed in the US Congress calls for a study on how cryptocurrencies are used in sex trafficking. If the bill becomes a law, the US Comptroller General would need to research how virtual currencies and online marketplaces are connected to sex trafficking, as well as crypto’s use in the illegal drug trade.
Ripple CEO Claims Four Chinese Miners Basically Control Bitcoin
In an interview this week, Ripple CEO Brad Garlinghouse stated that an “underreported” story about cryptocurrency is that four miners in China control more than 50 percent of Bitcoin, meaning that China essentially controls Bitcoin. Garlinghouse went on to tout Ripple’s XRP as the best digital asset for settlement while casting doubt on future blockchain use for banks (a view shared by Ripple cryptographer David Schwartz).
Most Memorable Quotations
“Bitcoin is really controlled by China. There are four miners in China that control over 50 percent of Bitcoin. How do we know that China won’t intervene? How many countries want to use a Chinese-controlled currency? It’s just not going to happen,”— Brad Garlinghouse, Ripple CEO
“[Bitcoin] has this tenacity to it which it just keeps coming back. There are times when there are big run ups in the price, and the price goes down and its relevance in society seems to fade back. And it keeps coming back,” — Baiju Bhatt, Robinhood co-founder and co-CEO
“We try very hard to not be number one all the time,” — Changpeng Zhao (CZ), Binance CEO
Laws And Taxes
Lithuania Presents Comprehensive ICO Guidelines
The government of Lithuania has released a new set of ICO guidelines that officials herald as a move towards “certainty and transparency” in cryptocurrency regulation in the country. The guidelines, which cover crypto taxation, accounting, and AML, focuses on an ICO token’s “granting profits or governance rights” as the determining factor in classifying it as a security.
International Financial Action Task Force Reported To Prepare Crypto Exchange Rules
The Financial Action Task Force, a group that combats money laundering and terrorism financing, will begin developing binding rules for crypto exchanges in June, according to reports from a Japanese official. The new guidelines would involve requirements for exchanges in regards to anti-money laundering measures and reporting suspicious trade activity, and the organization would reportedly also look into how to work with countries that are working on banning cryptocurrencies.
Proposed Bills In Michigan Classify Blockchain Tampering As Crime
Two bills currently proposed in the Michigan state legislature would make altering the public digital record on a blockchain with intent to defraud into a felony punishable by up to 14 years in prison, as well as adding definitions of distributed ledger technology to the Michigan penal code.
Irish Foreign Investment Gov’t Agency Announces Blockchain Initiative
IDA Ireland, which is responsible for attracting direct foreign investment into Ireland, will be leading an initiative promoting blockchain investment and innovation in the country. “Blockchain Ireland” will work on collaboration with international companies on blockchain tech and will include an online platform touting Ireland’s “ideal location” for int’l blockchain firms. The initiative was developed by the Irish Blockchain Expert Group (IBEG), an IDA Ireland-led forum, the Department of Finance, Enterprise Ireland, and Consensys.
Second Largest Crypto Exchange To Offer Fiat-Crypto Trading Through Malta Exchange
Binance will be offering euro-cryptocurrency trading pairs through a separate exchange based in Malta, beginning with mainly euro-BTC pairs. The cryptocurrency exchange had opened both an office and a bank account in Malta this spring after receiving a warning letter from Japanese financial regulators.
Chrome Adblock Plus Extension Uses Blockchain To Spot “Fake News”
Adblock Plus developer eyeo GmbH will be using blockchain for its beta Trusted News browser extension that labels fake news media while marking the trustworthy sites. When opening a site, the extension will show whether the news source is “trustworthy,” “unknown,” “clickbait,” or “satire.”
CBOE President Says SEC Calling ETH Not A Security Paves Way For ETH Futures
The president of CBOE--which released the first Bitcoin futures last December--said that the SEC’s recent decision that Ethereum will not be regulated as a security has removed a big “stumbling block” from the possibility of offering Ether futures.
Walmart Receives Patent For Crypto-Powered Electrical Grid
U.S. retail giant Walmart has been given a patent for developing an electrical grid that would be powered by cryptocurrencies, helping companies manage energy consumption and regulate demand by using a publicly distributed transactions ledger. The blockchain-based system will show which devices consume the most power, allowing the networks to support each other if one consumes less energy.
Mergers, Acquisitions, And Collaborations
TRON Founder Acquires Software Firm BitTorrent
Justin Sun, blockchain entrepreneur and TRON platform developer, has reportedly acquired BitTorrent for an unspecified sum. Sun had reportedly first entered into negotiations with BitTorrent last September, but the deal was then suspended when BitTorrent started negotiating with other bidders against the letter of intent. The now allegedly completed acquisition was reported by Variety this week, with BitTorrent employees purportedly advised to not share any information about the acquisition.
IOTA, Volkswagen Demonstrate Autonomous Car Proof-of-Concept
Cryptocurrency IOTA and car manufacturer Volkswagen displayed their Proof-of-Concept using IOTA’s Tangle system for autonomous cars this week at the Cebit ‘18 Expo in Germany. The POC entails IOTA’s Tangle architecture transferring software updates “over-the-air” as part of Volkswagen’s new “Connected Car” systems.
Russian Corporate And Gov’t Giants, Gazprombank Create Joint Fintech Venture
Russian telecom company Megafon, Gazprombank, government corporation Rostec, and the USM Group have formed a $450 mln joint venture—MF Technologies—that will develop blockchain and Internet of Things (IoT) innovation.
VeChain Partners With Deutsche Bahn For Chinese Logistics Industry
Singapore-based blockchain startup VeChain (VEN) has collaborated with global logistics provider DB Schenker--a division of Deutsche Bahn--for a blockchain-based supplier evaluation system. The new DApp will use the VeChainThor blockchain with DB Schenker’s third-party logistics partners in China for supplier management purposes.
Digital Jersey Signs MOU With Binance To Create Crypto Exchange
Digital Jersey, an independent organization that represents the digital industries of Jersey in the Channel Islands, has signed a memorandum of understanding with crypto exchange binance to create a compliance base and exchange on the island. As part of the agreement, Binance will provide training in digital skills in the goal of promoting the blockchain industry in Jersey, and Digital Jersey will assist in establishing licensing and banking regulations on the island.
Winners And Losers
The crypto markets are still down this week, with Bitcoin far below $7,000 and Ethereum barely above $500.
Top three altcoin gainers of the week:
- Dragonchain (12.81%)
- ReddCoin (9.06%)
- Mithril (7.38%)
Top three altcoin losers of the week:
- Vertisaeum (-5.00%)
- Fusion (-4.69%)
- Basic Attention Token (-4.21%)
For more info on crypto prices, make sure to read Cointelegraph’s market analysis.
FUD Of The Week
EOS Mainnet Freezes After 48 Hours
Two days after its launch, the EOS mainnet “paused,” according to reports on Twitter and a Steemit post by the top 21 EOS block producers. Although the cause of the freeze is as of yet unknown, mainnet is reported to have gone back online after about four hours, according to an EOS-dedicated Telegram channel.
Court Orders Italian Authorities To Seize BTC From Bitgrail Wallets
An Italian court has ordered the seizure of Bitcoin from the wallets of hacked crypto exchange BitGrail, with the amount of Bitcoin taken unspecified. The court order comes amidst pre-bankruptcy proceedings for the exchange, following a court petitions by victims of the February BitGrail hack.
Tether Blamed For Bitcoin Price Manipulation In New Report
A paper from the University of Texas has pointed to purchases with Tether as responsible for Bitcoin price manipulation in 2017. According to the researchers, Bitcoin’s December price rise to $20,000 was due to Tether and its issuer Bitfinex, as purchases with Tether were timed with market downturns, thus causing Bitcoin’s price to go up.
Reports Finds Around $20 Mln ETH Stolen Due To Misconfigured Ethereum Clients
Chinese cybersecurity firm Qihoo 360 Netlab has found that about $18.1 mln in Ethereum has been stolen by various “threat actors” using the Remote Procedure Calls interface to gain access to Ethereum data like private keys. The cybersecurity firm first reported this vulnerability in March, when around $2,000-$3,000 was siphoned off into port 8545—and apparently the siphoning never stopped, bringing the figure closer to $20 mln.
Dutch Financial Authority Has “Serious Doubts” About Crypto Entities Following Laws
The Netherlands Authority for the Financial Markets sent a letter to market participants offering crypto investment opportunities this week, noting that it has “serious doubts” about whether they are conforming to licensing obligations. The letter also stated it doubted whether the managers of crypto investment institutions can even meet the licensing requirements due to the risks associated with crypto.
Prediction Of The Week
Geopolitical Analyst Predicts Blockchain Will Become “Obsolete”
George Friedman, a geopolitical analyst for online publication Geopolitical Futures, told CNBC this week that he predicts blockchain technology will be “obsolete” in the future. According to Friedman, since all encryption technology that has ever existed will someday be broken, blockchain is “ one of those hypes” that could be decrypted by either Russian, Chinese, or American intelligence services.
Bitcoin proponent and developer Jimmy Song delves into why smart contracts are actually “pretty dumb” and how it’s their execution really makes them powerful.
Lou Kerner, partner at CryptoOracle.io, discusses why next year is about to see a whole lot of security token issuance. His reasons? Wall Street is moving into crypto, most people prefer liquidity, and securities regulations have been around for a while, making it easier to work with regulators.