Abacus Weekly Crypto Recap #1

CryptoAnalyst is happy to welcome the team at The Abacus for their first weekly crypto recap with us. They’ve got everything you need to know about this past week’s major crypto happenings. This will be released on CryptoAnalyst every week on Wednesday.

The Abacus Crypto Recap is a weekly update focused on two polar yet symbiotic elements of cryptocurrency markets—adoption and regulation. By focusing on these two forces, we can best illustrate the confluence of governmental, independent, and institutional forces driving overall trends within this burgeoning industry.

Adoption

Bitcoin fever has hit Zimbabwe, the central government of Kazakhstan is considering the creation of a government-backed cryptocurrency, and traditional institutions like Bank of America continue their blockchain patent frenzy. It was another interesting week as the overall trend of cryptocurrency adoption continued its meteoric rise despite the noise coming from the Bitcoin Gold camp.

Coinbase Will Wait And See For BTG: Following a wave of discord, major U.S. exchange Coinbase has officially clarified its stance on the various BTC forks hitting the market. The current operating protocol (or legacy chain) will continue to use the BTC moniker, while the Segwit2X fork will be deemed B2X. As for the contentious Bitcoin Gold (BTG), Coinbase remarks the coin will be listed only “if the Blockchain proves to be secure and valuable.”

Following a wave of discord, major U.S. exchange Coinbase has officially clarified its stance on the various BTC forks hitting the market. The current operating protocol (or legacy chain) will continue to use the BTC moniker, while the Segwit2X fork will be deemed B2X. As for the contentious Bitcoin Gold (BTG), Coinbase remarks the coin will be listed only “if the Blockchain proves to be secure and valuable.” Kazakhstan Joins The Crypto Party: Kazakhstan is the latest in a raft of countries purportedly pursuing their own government-backed cryptocurrency. The announcement comes from the country’s Astana International Finance Center, who have signed a deal with Maltese firm Exante to aid with implementation. Kairat Kelimbetov, governor of the AIFC, remarked: “We believe that the AIFC can become an international hub for Blockchain operations and the development of the digital assets market is our key priority in the future.”

Kazakhstan is the latest in a raft of countries purportedly pursuing their own government-backed cryptocurrency. The announcement comes from the country’s Astana International Finance Center, who have signed a deal with Maltese firm Exante to aid with implementation. Kairat Kelimbetov, governor of the AIFC, remarked: “We believe that the AIFC can become an international hub for Blockchain operations and the development of the digital assets market is our key priority in the future.” Zimbabwe Goes Wild For BTC: Bitcoin was trading close to 10K (USD) in Zimbabwe as a lack of US dollars stirred basic liquidity concerns and Zimbabweans found an accessible alternative in the decentralized cryptocurrency. Zimbabwe is yet another example of Bitcoin’s ability to provide stability in countries where economic downturns are frequent.

Bitcoin was trading close to 10K (USD) in Zimbabwe as a lack of US dollars stirred basic liquidity concerns and Zimbabweans found an accessible alternative in the decentralized cryptocurrency. Zimbabwe is yet another example of Bitcoin’s ability to provide stability in countries where economic downturns are frequent. Sberbank Joins EEA: Major state-owned Russian bank Sberbank is the latest entrant into the Enterprise Ethereum Alliance. Sberbank joins 48 new member announcements earlier this week with giants like Intel, JPMorgan, Santander, and Microsoft already marking themselves as members. In February, Sberbank CEO Herman Gref remarked: “Two-and-a-half years is the horizon within which we can speak about the application of blockchain commercial operation.” Sberbank aims to develop centralized blockchain implementations like JPMorgan’s Quorum, focused on high speed and secure processing of institutional private transactions.

Major state-owned Russian bank Sberbank is the latest entrant into the Enterprise Ethereum Alliance. Sberbank joins 48 new member announcements earlier this week with giants like Intel, JPMorgan, Santander, and Microsoft already marking themselves as members. In February, Sberbank CEO Herman Gref remarked: “Two-and-a-half years is the horizon within which we can speak about the application of blockchain commercial operation.” Sberbank aims to develop centralized blockchain implementations like JPMorgan’s Quorum, focused on high speed and secure processing of institutional private transactions. Moscow Tinkering With MoscowCoin: In a rather befuddling turn of events, the city of Moscow may launch its own cryptocurrency, with the announcement coming just days after the assertion that the CryptoRuble would serve as the only official digital currency in Russia. Vladimir Efimov, in charge of Moscow’s Department of Economic Development and Policy, has confirmed the currency, MoscowCoin, is a distinct possibility. If nothing else, this news serves to show there may be some dissent amongst Russian politicians as to the correct implementation of government-backed currencies.

In a rather befuddling turn of events, the city of Moscow may launch its own cryptocurrency, with the announcement coming just days after the assertion that the CryptoRuble would serve as the only official digital currency in Russia. Vladimir Efimov, in charge of Moscow’s Department of Economic Development and Policy, has confirmed the currency, MoscowCoin, is a distinct possibility. If nothing else, this news serves to show there may be some dissent amongst Russian politicians as to the correct implementation of government-backed currencies. American Express Putting Rewards On The Blockchain: American Express is moving to implement blockchain technology into its in-house customer rewards system. By using the blockchain for record keeping, the credit card giant can offer more personalized, data-driven rewards. In a new patent filing last week, American Express detailed a concept for a system that analyzes historical spending patterns on a blockchain. The filing goes on to say, “The blockchain may provide enhanced security because each block may hold individual transactions and the results of any blockchain executables […].”

American Express is moving to implement blockchain technology into its in-house customer rewards system. By using the blockchain for record keeping, the credit card giant can offer more personalized, data-driven rewards. In a new patent filing last week, American Express detailed a concept for a system that analyzes historical spending patterns on a blockchain. The filing goes on to say, “The blockchain may provide enhanced security because each block may hold individual transactions and the results of any blockchain executables […].” Mastercard Staying One Block Ahead: Mastercard is opening up its blockchain settlement protocol to other users, allowing outside firms to access their API designed to ease cross border transactions. Ken Moore, Mastercard Labs Executive Vice President remarked, “By combining Mastercard blockchain technology with our settlement network and associated network rules, we have created a solution that is safe, secure, auditable, and easy to scale.”

Mastercard is opening up its blockchain settlement protocol to other users, allowing outside firms to access their API designed to ease cross border transactions. Ken Moore, Mastercard Labs Executive Vice President remarked, “By combining Mastercard blockchain technology with our settlement network and associated network rules, we have created a solution that is safe, secure, auditable, and easy to scale.” Ledger Joins Forces With Intel: Ever popular cold storage wallet maker Ledger has announced a partnership with Intel, integrating Ledger’s BOLOS operating system with Intel’s Software Guard Extensions security products in order to create new ways of securely storing cryptocurrency—a massive issue in need of new answers. The unification of technologies is focused around a concept dubbed “enclave” in which private keys are stored and transactions are created and signed.

Ever popular cold storage wallet maker Ledger has announced a partnership with Intel, integrating Ledger’s BOLOS operating system with Intel’s Software Guard Extensions security products in order to create new ways of securely storing cryptocurrency—a massive issue in need of new answers. The unification of technologies is focused around a concept dubbed “enclave” in which private keys are stored and transactions are created and signed. Wirex Planning Japanese Cryptocurrency Credit Card: UK firm Wirex has announced a new partnership with Japanese Financial group SBI to create a Japanese-focused cryptocurrency payment card. The news comes after Japan’s legalization of Bitcoin as a payment method, resulting in a boom, with over 300,000 Japanese storefronts accepting cryptocurrency. SBI is also working on a new currency that can be directly traded with Yen, enabling instant peer to peer payments.

Regulation

This week Russia became the latest country to propose regulations on ICOs and the Commodity Futures Trading Commission suggested ICOs should be treated as commodities. While months ago government regulation regarding ICOs may have induced panic amongst crypto-purists, the most recent claims pouring out from the Tezos Foundation serve as a reminder that a little bit of crypto regulation may not be so bad.

Putin Set To Regulate ICOs: Russian President Vladimir Putin has officially signed regulations regarding ICOs and mining, purportedly to be implemented by July 2018. The new regulations will see ICOs treated in much the same manner of fully regulated IPO offerings. The new laws also give the Russian government the purview to regulate activity relating to distributed ledger technology, cryptocurrency, tokens, and smart contracts, with more specifics arriving by December 20th. Andrey Kostin, CEO of Russian state owned bank VTB has taken the opportunity to reiterate their stance on cryptocurrency, claiming the bank “has not seen a lot of interest in Bitcoin,” going on to say, “There was some interest reported in the press, but I’ve not seen in Russia a lot of interest in Bitcoin, to be honest.” This latest round of news portrays a future environment of strict regulation in lieu of the potential for an all-out ban that seemed possible following the sentiment of Russian announcements over the last few weeks.

Russian President Vladimir Putin has officially signed regulations regarding ICOs and mining, purportedly to be implemented by July 2018. The new regulations will see ICOs treated in much the same manner of fully regulated IPO offerings. The new laws also give the Russian government the purview to regulate activity relating to distributed ledger technology, cryptocurrency, tokens, and smart contracts, with more specifics arriving by December 20th. Andrey Kostin, CEO of Russian state owned bank VTB has taken the opportunity to reiterate their stance on cryptocurrency, claiming the bank “has not seen a lot of interest in Bitcoin,” going on to say, “There was some interest reported in the press, but I’ve not seen in Russia a lot of interest in Bitcoin, to be honest.” This latest round of news portrays a future environment of strict regulation in lieu of the potential for an all-out ban that seemed possible following the sentiment of Russian announcements over the last few weeks. The Wolf of Wall Street Calls ICOs A Scam: Jordan Belfort, the well-known Wall Street penny stock scamster famously portrayed by Leonardo Dicaprio in the acclaimed film Wolf Of Wall Street, has publicly come out to admonish ICOs, claiming they’re “the biggest scam ever.” He goes on to say “Promoters of ICOs are perpetuating a massive scam of the highest order on everyone […] The problem is, if five or ten percent are trying to scam you, it’s a f**king disaster […] Such a huge gigantic scam that’s going to blow up in so many people’s faces.” He somewhat comically concludes, “It’s far worse than anything I was ever doing”. While the words of a well known scam artist recognizing his own work in ICOs is worrying, as the market matures and regulations proliferate, ICOs may become a mainstream and relatively low-hazard way to raise new capital.

Jordan Belfort, the well-known Wall Street penny stock scamster famously portrayed by Leonardo Dicaprio in the acclaimed film Wolf Of Wall Street, has publicly come out to admonish ICOs, claiming they’re “the biggest scam ever.” He goes on to say “Promoters of ICOs are perpetuating a massive scam of the highest order on everyone […] The problem is, if five or ten percent are trying to scam you, it’s a f**king disaster […] Such a huge gigantic scam that’s going to blow up in so many people’s faces.” He somewhat comically concludes, “It’s far worse than anything I was ever doing”. While the words of a well known scam artist recognizing his own work in ICOs is worrying, as the market matures and regulations proliferate, ICOs may become a mainstream and relatively low-hazard way to raise new capital. Mastercard CEO Attacks Crypto: Mastercard CEO Ajay Banga has released rather scathing remarks regarding non government-backed digital currencies. During an interview with the Economic Times, he remarked that the company is receptive to the technology but wouldn’t trust anything that isn’t guaranteed by a government entity. He states, “If the government creates digital currency, we will find a way to be in the game […] non-government mandated currency is junk.” Banga’s remarks are interesting as Mastercard has been investing heavily in blockchain technology to serve as a new infrastructure and protocol for payment processing and fulfillment. This serves as a good example of an entity that understands the potential of blockchain technology yet remains highly skeptical of digital currencies.

Mastercard CEO Ajay Banga has released rather scathing remarks regarding non government-backed digital currencies. During an interview with the Economic Times, he remarked that the company is receptive to the technology but wouldn’t trust anything that isn’t guaranteed by a government entity. He states, “If the government creates digital currency, we will find a way to be in the game […] non-government mandated currency is junk.” Banga’s remarks are interesting as Mastercard has been investing heavily in blockchain technology to serve as a new infrastructure and protocol for payment processing and fulfillment. This serves as a good example of an entity that understands the potential of blockchain technology yet remains highly skeptical of digital currencies. South Korea Planning Increased Regulations: The South Korean government has announced increased efforts to monitor cryptocurrency activity as trading volume continues to flourish in the heavily crypto-friendly country. Following a meeting with The International Monetary Fund on a variety of topics, plans to more closely monitor transactions were discussed as an increasingly needed measure to ensure safety and eventually parlay into regulation.

The South Korean government has announced increased efforts to monitor cryptocurrency activity as trading volume continues to flourish in the heavily crypto-friendly country. Following a meeting with The International Monetary Fund on a variety of topics, plans to more closely monitor transactions were discussed as an increasingly needed measure to ensure safety and eventually parlay into regulation. Overstock.com Stocking Up On Crypto: Overstock has announced coming software that will help short sellers identify and borrow shares they wish to trade against in an effort to curb the practice of naked short selling, in which investors never actually borrow the asset they’re trading on. This technology might eventually be utilized by regulators who will likely aim to curb naked selling on the blockchain, as they have in traditional markets.

Overstock has announced coming software that will help short sellers identify and borrow shares they wish to trade against in an effort to curb the practice of naked short selling, in which investors never actually borrow the asset they’re trading on. This technology might eventually be utilized by regulators who will likely aim to curb naked selling on the blockchain, as they have in traditional markets. ECB President Speaks Up On Crypto: President of the European Central Bank Mario Draghi has claimed that cryptocurrencies are not mature enough to be regulated. At a press conference last week, he said: “With anything that’s new, people have great expectations and also great uncertainty. Right now, we think that – especially as far as bitcoins and cryptocurrencies are concerned – we don’t think the technology is mature for our consideration.”

President of the European Central Bank Mario Draghi has claimed that cryptocurrencies are not mature enough to be regulated. At a press conference last week, he said: “With anything that’s new, people have great expectations and also great uncertainty. Right now, we think that – especially as far as bitcoins and cryptocurrencies are concerned – we don’t think the technology is mature for our consideration.” North American Market Watchers Warn of ICOs: The North American Securities Administrators Association (NASAA) has published its annual enforcement report which included a notable section on blockchain use. Comprised of local, state, and regional market regulators and watchdogs in North America, the group concluded that cryptocurrency trading is “likely to pose a significant risk to investors.” The report specifically called out the dangers of ICOs, stating “[…] NASAA members are closely watching this emerging market.”

The North American Securities Administrators Association (NASAA) has published its annual enforcement report which included a notable section on blockchain use. Comprised of local, state, and regional market regulators and watchdogs in North America, the group concluded that cryptocurrency trading is “likely to pose a significant risk to investors.” The report specifically called out the dangers of ICOs, stating “[…] NASAA members are closely watching this emerging market.” Tezos Initial Chaos Offering: No story paints the troubling possibilities of an ICO gone wrong more than Tezos. Initially the largest ICO of the year at 232M those funds are now worth 400M. The cryptocurrency which purported to hold a streamlined governance system is mired in controversy as the original founders do not seem to have access to the funds currently controlled by their partner, an independent Swiss Foundation headed by Johan Grevers. While the infighting drags on, development of the Tezos platform has been delayed, token purchasers have been left empty handed, and Grevers reportedly told Reuters that he is liquidating and reinvesting the raised funds at a rate of 10.2M per week.

No story paints the troubling possibilities of an ICO gone wrong more than Tezos. Initially the largest ICO of the year at 232M those funds are now worth 400M. The cryptocurrency which purported to hold a streamlined governance system is mired in controversy as the original founders do not seem to have access to the funds currently controlled by their partner, an independent Swiss Foundation headed by Johan Grevers. While the infighting drags on, development of the Tezos platform has been delayed, token purchasers have been left empty handed, and Grevers reportedly told Reuters that he is liquidating and reinvesting the raised funds at a rate of 10.2M per week. Australia Considering Anti-Laundering Regulations: The Australian Senate has been working on a bill that would apply existing anti-money laundering laws to cryptocurrency exchanges. Initially unveiled in August, the proposed legislation calls for criminal penalties for unlawful exchange operators. The bill also suggests the creation of a Digital Currency Exchange Register to be managed by Australian Transaction Reports and Analysis Centre. This bill serves to show that even crypto friendly countries like Australia are beginning to work on regulations that will bring cryptocurrency standards more in line with the well regulated world of traditional securities.

The Australian Senate has been working on a bill that would apply existing anti-money laundering laws to cryptocurrency exchanges. Initially unveiled in August, the proposed legislation calls for criminal penalties for unlawful exchange operators. The bill also suggests the creation of a Digital Currency Exchange Register to be managed by Australian Transaction Reports and Analysis Centre. This bill serves to show that even crypto friendly countries like Australia are beginning to work on regulations that will bring cryptocurrency standards more in line with the well regulated world of traditional securities. CFTC Considers ICOs Commodities: The Commodity Futures Trading Commission (CFTC) has signalled that it may consider ICO tokens commodities. In a publication released this week, the CFTC also remarked on the SEC stance for ICOs, stating: “There is no inconsistency between the SEC’s analysis and the CFTC’s determination that virtual currencies are commodities and that virtual tokens may be commodities or derivatives contracts depending on the particular facts and circumstances.”

Final Thoughts

The current barrage of ICO related headlines is only expected to increase as both regulators and institutional investors become increasingly privy to the many hazards engendered by such an open fundraising vehicle.

Going forward, we expect a confluence of investor maturity and new laws on the books to result in a less fervent, more fathomable ICO market that will eventually become a regulated, understood, and legitimate means of capital infusion for appropriate entities.

Wall Street trading firms jump into cryptocurrencieshttps://t.co/HD7EN7iEr5 — Naman Distro (@namandistro) October 23, 2017

At the moment, a cautionary approach to ICOs is prudent, with their inherent controversy likely serving as the lowest hanging fruit for regulatory implementation in the near future.

On the other side of the coin, the madness surrounding Bitcoin is cause for concern especially given the decrease in market cap after the Bitcoin Gold fork.

It could be argued that this serves as evidence that a number of individuals were simply purchasing Bitcoin in order to reap the benefits of “free money” and brings into question how large a drop investors should expect after the Segwit2X fork.

The fact that cryptocurrency space’s first-mover may be appreciating out of pure speculation and not because of inherent value or positive changes to the protocol itself should be a red flag for all crypto investors.

That being said, overall blockchain and even cryptocurrency adoption should be expected to continue, however, the crypto assets that survive long-term are up for debate given Bitcoins perplexing and seemingly unwarranted stratospheric rise.

Abacus is a cryptocurrency advisory and independent product development firm specializing in ICO strategies and cryptocurrency investment products. Through our content we aim to provide a voice of reason in the often overzealous world of crypto-markets.

Email david@theabacus.io to get in touch.

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