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Institutional Investors Making Huge OTC Crypto Purchases

Posted on October 3, 2018October 3, 2018 by Martin S.

While most of the world expected the bitcoin ETF to be the tipping point that would allow institutional money to come into the cryptocurrency market, it seems like the institutional investors have once again had their way despite the uncertainty that looms over the BTC ETF. In fact, according to recent OTC Trade Data, these institutional investors now dominate bitcoin markets with high volume trades. Yes, that is right – institutional investors are becoming more and more involved in the $220 billion cryptocurrency market than many people may realize and this is perhaps because they have been using back-doors for the purchases.

Many people believe that the next bitcoin bull run will be entirely driven by institutional investment which will be encouraged by the acceptance of a bitcoin ETF such as the those that are currently in the works at the United States Securities Exchange Commission.

The Current Situation

While some crypto market data analysts and providers estimate that the daily trading volumes of bitcoin are at around $4 billion, ShapeShift’s Coincap.io has revealed that the actual trading volume of bitcoin falls at around $2.7 billion. Coincap.io further revealed that, for most of the large-scale investment companies, institutions, and retail traders, the global crypto market has not reached enough liquidity to process the multi-billion-dollar trading orders. In other words, major digital asset trading platforms could liquidate large orders but it may have a large impact on the short-term price movement of cryptocurrencies.

Over the Counter (OTC) Trading

A number of high-net-worth individuals have been buying into cryptocurrencies and considering the amounts that they have been spending, it is safe to assume that these “individuals” are institutions or are at least part of them. As mentioned above, a peek into recent OTC trading data reveals a huge interest in bitcoin from these supposed institutional investors.

“Bloomberg reports that in April, daily OTC trades varied anywhere between $250 million and $30 billion, while exchanges only handled about $15 billion daily in that time by contrast. Corroborating this, Circle Financial CEO Jeremy Allaire confirmed that his company is seeing a triple-digit increase in OTC volumes. By contrast, according to data from CryptoCompare, exchange trade volumes are down 80 percent from their peaks at the same time as the increasing popularity of OTC,” reads Cryptoglobe’s comment on the issue.

This over-the-counter crypto market has facilitated between $250 million an $30 billion in digital currency trades per day in April, according to researchers. But, why is this happening?

Well, as it turns out, large digital currency traders like private sales simply because exchanges can move coin prices. Private sales are more appealing since the trading parties can fix the price in advance instead of having to worry about the fluctuations that are rife in the crypto market. Also, exchanges sometimes limit the number of coins that can be traded and this is certainly not ideal for large traders.

Google Ends Cryptocurrency Advertisement Ban

Posted on September 26, 2018September 25, 2018 by Laura P.

Barely five months after it rolled an advertisement policy that banned cryptocurrency advertisements, Google has decided to lift ban with plans to allow regulated cryptocurrency exchanges to buy ads in the United States and Japan. This new policy is scheduled to be rolled in October 2018 and will require the advertisers to apply for certifications within the specific countries within which their ads will be circulated.

The rapid growth in the popularity of cryptocurrencies has been great for the industry but it has also attracted additional scrutiny. For instance, in the United States, the Securities and Exchange Commission recently created a Cyber Unit tasked with handling online financial crimes to begin investigating companies that had stakes in the crypto or blockchain industry. The Cyber Unit also issued several subpoenas and charged a number of firms for alleged cryptocurrency fraud. Similar and even worse crackdowns have also been seen in other countries including China and India.

Widespread Rollout

Even though the digital currency boom has been a great source of wealth and excitement, it has been accompanied with quite a number of negative aspects that include spawned fraud as well as high-profile scams, both of which resulted from the lack of well-defined regulatory frameworks. It is for this particular reason that for a better part of the first of the year that many of the world’s leading tech giants – Google, Twitter, Facebook and Snapchat among others – moved to crack down on crypto-related advertising in a bid to stop some of the criminal activities associated with crypto. Unfortunately, the restrictions also affected legitimate crypto-related business and this is perhaps why some of the companies, namely Facebook and Google, have taken a step back.

“We don’t have a crystal ball to know where the future is going to go with cryptocurrencies, but we’ve seen enough consumer harm or potential for consumer harm that it’s an area that we want to approach with extreme caution,” Google’s Scott Spencer cited in June during the company’s original crypto ad ban.

The Updated Policy

While the tech giant’s updated ad policy will apply ton advertisers all over the world, the advertisements will only be allowed to run in Japan and the United States – hopefully, this will also change soon. Furthermore, as mentioned earlier the advertisers will be required to apply for certifications from each of the countries that they wish to advertise in (which are now only Japan and the U.S.) to have their ads served in those countries.

“The Google Ads policy on Financial products and services will be updated in October 2018 to allow regulated cryptocurrency exchanges to advertise in the United States and Japan. Advertisers will need to be certified with Google for the specific country in which their ads will serve. Advertisers will be able to apply for certification once the policy launches in October. This policy will apply globally to all accounts that advertise these financial products. For more details, see About restricted financial products certification. The Financial products and services page will be updated once the policy goes into effect,” Google wrote.

NY AG Says Crypto Exchanges Are at Risk of Manipulation

Posted on September 19, 2018September 19, 2018 by Martin S.

The New York Attorney General’ office on September 18 published a report that says that cryptocurrency exchanges are vulnerable to conflicts of interests, manipulation as well as many other consumer risks. The 32-page “Virtual Markets Integrity Report” highlights concerns that exchanges are not doing much to protect investors.

Launched in April, the “Virtual Markets Integrity Initiative” kicked off when Eric T. Schneiderman, the then-New York Attorney General, sent letters to thirteen cryptocurrency exchanges requesting information on their operations, internal controls as well as other key issues.

“The New York State Office of the Attorney General (the “OAG”) launched the Virtual Markets Integrity Initiative to protect and inform New York residents who trade in virtual or “crypto” currency. As a medium of exchange, an investment product, a technology, and an emerging economic sector, virtual currency is complex and evolving rapidly. The OAG’s Initiative, however, proceeds from a fundamental principle: consumers and investors deserve to understand how their financial service providers operate, protect customer funds, and ensure the integrity of transactions,” reads the statements from the Attorney General’s office.
“The industry has yet to implement serious market surveillance capacities, akin to those of traditional trading venues, to detect and punish suspicious trading activity.”

The Key Findings

The study found that the absence of accepted methods of auditing virtual assets has resulted in the lack of a consistent and transparent approach to the independent auditing of digital currencies trade on the exchanges. This, therefore, puts the customers’ funds in the various exchanges at risk of theft or cyber-attacks.

“New Yorkers deserve basic transparency and accountability when they invest – whether on the New York Stock Exchange or on a cryptocurrency platform,” Barbara Underwood, New York’s current Attorney General said in a statement. “Many virtual currency platforms lack the necessary policies and procedures to ensure the fairness, integrity, and security of their exchanges.”

One of the more bizarre revelations was that only four cryptocurrency exchanges have mechanisms for market manipulation detection and prevention in place. The four exchanges – HBUS, Coinbase, Gemini and Bittrex – are therefore the safest options for crypto investors.

On the flip side, the report went on to refer three major New York crypto exchanges – Gate.io, Binance, and Kraken – to authorities over charges of violation of state law for allowing trading on the part of New Yorkers.

The report has attracted an equal measure of support and criticism from the crypto exchanges and other stakeholders of the industry. Still, it is going to be a while before we finally see the ramifications of these findings.

Google Play Store’s Crypto-Mining Ban Not Going So Well

Posted on August 29, 2018 by Laura P.

A little over a month ago, Google banned cryptocurrency mining apps from its Play Store – this was made official when on July 27 the company pushed an update reading “we don’t allow apps that mine cryptocurrency on devices” to its developer policy. All of the existing apps that were in violation of the updated policy were given a 30-day grace period within which they were to revise their products to ensure that they comply with the new terms or face removal from the Play Store.

It has been 30 days since the ban was issued but despite the fact that the deferral period has expired, some apps that enable on-device crypto mining can still be found on the Play Store. Google is not entirely at fault in this case since it has been purging some of the offending apps. However, as it turns out, there is still a lot more work to be done. The company’s inspiration can be partly attributed to a number of security concerns that have led to probes and investigations into ICOs and crypto firms.

Earlier this month, the Google Play Store reportedly hosted an Ethereum (ETH) scam application. Discovered by Lukas Stefanko, a Slovakian malware researcher, the fraudulent “Ethereum” app was being offered for purchase at a price of around $388. According to Stefanko, the scam app was intended to dupe uninformed buyers into purchasing it when they mistook it for the original Ethereum cryptocurrency.

Some of the apps that are reportedly in violation of Google’s new developer policy but are still being hosted in the Play Store include Crypto Miner PRO, Pocket Miner, NeoNeonMiner and Pickaxe Miner. MinerGate, one of the mining apps that was axed from the store boasted of more than a million Android installs. The developers behind the app are however not amused because according to them they had made changes to the app in order to comply with Google’s updated developer policy.

“Mining on your phone directly was among the core features of the MinerGate app before the last changes in Google Play Development policies.” MinerGate wrote in an email addressed to Hard Fork. “With the last update, we are removing this functionality to meet the updated requirements.”

App Developers Going Rouge

Google begin its crackdown on crypto mining software when it announced that it be removing mining extensions from its Chrome Web Store following a revelation that a huge number of them were supposedly not in compliance with the company’s policies. The focus has since shifted to the Play Store and the affected parties are being to get crafty.

Many developers are already trying to find ways to bypass Google’s ban and distribute apps and Chrome extensions with on-device mining capabilities. Still, it will be up to users to decide on the best cause of action with regards to accessing apps with similar functionalities – downloading and installing apps from third parties is very risky. Be warned.

Indian Government Considering Crypto Tokens for Transactions

Posted on August 15, 2018August 15, 2018 by Laura P.

Following the recent ban on cryptocurrencies by Reserve Bank of India, it was assumed that the country would take a more partial stance as it reflects further on the issue of cryptocurrencies altogether. Well, as it turns out, the country has set up an inter-governmental committee called the “Inter-Ministerial Committee” (IMC) which has been tasked with drafting regulations and a roadmap for the concept of tokenization in both the public and the private sector.

“The committee is examining if crypto tokens can be used to replace smart cards such as metro cards in the public sector to start with. Similarly, in the private sector, it can be used in loyalty programs such as air miles where its use is limited to buying the next ticket and can’t be converted into money.”

Yes, that’s right. The India government may soon allow its citizens to pay for airline tickets and metro cards with crypto tokens regardless of the fact that the ban on decentralized digital currencies in the country is still ongoing.

Slight Delay

The government had previously planned to submit the proposal for the crypto regulations last month but according to a senior official close to the matter, the regulatory framework had experienced some minor setbacks and are therefore likely to be pushed forward to the end of the year. The official further revealed that the reason for the delay was because the “finance ministry panel is still evaluating how to treat blockchain and cryptocurrencies separately.”

“Blockchain is an interesting thing. We definitely want to milk it effectively for financial transactions. So all officials are really trying hard to understand how to separately use blockchain, without cryptocurrency… And understanding a new software takes time,” the official clarified.

Government Issued Crypto Tokens

News about this new development was made public on August 10 through a DNA India report that stated that the Indian government has been “considering launching crypto tokens for financial transactions in the country, even as the existing ban on cryptocurrencies is likely to continue.”

Even though the aforementioned tokens will be based on blockchain technology, they will not form a currency of their own – instead, they will be a mere representation of real money and not its replacement. Heading the committee is DEA Secretary Subhash Chandra Garg who has categorically denied that the government has allowed the use of cryptocurrency in a manner including payment systems – crypto is very poular in India and this was bound to come up.

“The committee is studying the possibility of using cryptocurrencies or the crypto technology (distributed ledger technology) for financial transactions and also what kind of regulations are needed for that. [While] the currency is totally banned, the committee is discussing its other usage and how it can be mainstreamed in India,” he said.

Goldman Sachs Reportedly Considering Crypto Custody Service

Posted on August 8, 2018August 7, 2018 by Martin S.

Having launched bitcoin futures trading in May, New York-based multinational investment bank, Goldman Sachs, is reportedly pondering taking the next step in the cryptocurrency market that will involve the launch of a crypto custody service. If the report, which was filed by Bloomberg, is true the move would make the investment bank the first large and credible institutional player to offer custody for cryptocurrency funds – this is exactly what the crypto market in the United States and the rest of the world have been waiting for.

If attainable, such an asset securing guarantee are at the very “least elusive in such an unregulated and fledgling market.” However, if realized, Goldman Sachs’ cryptocurrency custody services will certainly be a game-changer. In fact, it safe to say that just the talk of the offering itself is enough indication that there is growing demand for such services, and if they materialize they may even encourage more investors to participate.

Furthermore, supposing the offering gets the go-ahead, it will buff up the credibility of the cryptocurrency market, by acting as a vote of confidence of sorts for crypto. This would eventually pave way for the legitimization for the legitimization of the cryptocurrency index and hedge funds in as far as the institutional players are concerned.

According to Bloomberg’s anonymous source(s), deliberations on the matter are on-going but no timeline has been set for when the Wall Street giant will roll out the custody services. Goldman Sachs released a statement recently neither confirming nor denying the existence of such a move.

“In response to client interest in various digital products we are exploring how best to serve them in this space,” a spokesman for Goldman Sachs said. “At this point, we have not reached a conclusion on the scope of our digital asset offering.”

Goldman Sachs has been taking its time with its crypto-related projects – despite announcing a crypto trading desk in May, it is yet to set-up a full-fledged desk for the same. Still, sources close to the company have confirmed that the services are being worked on in the background and will be availed to customers once they are ready.

Still Wary About Bitcoin

Despite Goldman Sachs plans to launch various crypto-related projects, the firm is not going to begin making any bullish bitcoin price calls anytime soon.

“Our view that cryptocurrencies would not retain value in their current incarnation remains intact and, in fact, has been borne out much sooner than we expected,” a recent Goldman Sachs report stated. “We expect further declines in the future given our view that these cryptocurrencies do not fulfill any of the three traditional roles of a currency: they are neither a medium of exchange, nor a unit of measurement, nor a store of value.”

The AMLC Sets Its Sight on Casinos and Digital Currencies

Posted on June 20, 2018June 19, 2018 by Laura P.

Philippine’s Anti-Money Laundering Council (AMLC) has recently made a decision to bring digital currencies and casinos into their spotlight this year as it tightens its vigilant watch on dirty money. As clarified by Mel Georgie B. Racela, the AMLC Secretariat Executive Director, the council has now included the conversion of cash into poker chips and digital or virtual currencies in its coverage. This move is primarily aimed at plugging certain gaps that have been plaguing the anti-money laundering laws.

To begin with, the casino operators were given a six-month period – starting from this month – in which they are supposed to register with the AMLC. The compliance of the casino operators is expected to reduce the opportunities that criminals have to launder illegally obtained funds at the casino’s gaming tables. Prior to these new regulations, the Republic Act No. 10927 which was enacted last year required all the gambling operators to report their daily transactions worth at least P5 million to the AMLC.

However, it was until last week that the council published the Republic Act No. 10927’s implementation rules – casino operators now have until mid-December to sign up on AMLC’s online portal and begin submitting the required transaction reports.

The agencies National Risk Assessment 2015-2016 cited a considerably high risk of money laundering among casinos as well as many other financial service business. This was further elevated by the fact that it happened to coincide with the Bangladesh Heist in which $81 million in stolen funds vanished without a trace at casino gaming tables.

High Hopes

According to Mr. Racela, the threat level is going to reduce significantly as the agency’s new regulations take effect. Added to the fact that the casinos are now subject to a know-your-customer policy which will require them to report any suspicious transactions to the AMLC, it is quite obvious that everything is certainly bound to get better.

“If we make a reassessment of our national risk insofar as casinos are concerned, we believe that we will be able to reduce this from high risk to moderate,” Mr. Racela said on Monday, June 18 during the inaugural symposium of the Association of Certified Anti-Money Laundering Specialists Manila chapter.

The AMLC is looking to have the money laundering risks attached to casinos minimized in the next round of evaluations that is due in a couple of years (probably 2020) – the agency is confident that the new rules will eventually pay off.

As for digital currencies, while it is evaluating the best possible way of effectively going about it, the agency has confirmed that it has given its members the go-ahead to “study the suspicious transaction reports submitted by virtual currency exchanges.” Mr. Racela, however, noted that it is still too early to say whether or not the digital currency space will turn into an arena for money launders.

Cryptos Struggle to Regain Momentum after Bitcoin Hack

Posted on June 13, 2018June 12, 2018 by Martin S.

On Sunday, June 10, renowned South Korean-based cryptocurrency exchange, CoinRail, announced that they had been victims of a hacking attempt. According to the cryptocurrency exchange’s official website “70% of the coin rail total coin / token reserves are safely stored” and, “Two-thirds of the coins confirmed to have been leaked are covered by freezing / recalling through consultation with each coach and related exchanges. The remaining one-third of coins are being investigated with investigators, relevant exchanges, and coin developers.”

Following the cyber-attack and its subsequent announcement, the cryptocurrency market suffered a loss of a whopping $42 billion of its market value. The tweet that announced the hack also triggered a $500 drop in the crypto space in a little over an hour – bitcoin, for one, suffered a 10 percent drop to a two-month low. Many other digital currencies including Ethereum were dragged down as well.

The hack has further triggered a lot of debate regarding the safety of crypto as a whole. Global policymakers, for instance, have warned investors to be cautious in trading cryptocurrencies citing the lack of regulatory oversight.

“CoinRail is not a member of the group that promotes self-regulation to enhance security. It is a minor player in the market and I can see how such small exchanges with lower standards on security level can be exposed to more risks,” Kim Jin-Hwa, a representative at Korea Blockchain Industry Association pointed out recently.

Unexpected Impact?

Ideally, since the hack was on a relatively small crypto exchange, there is no reason for cryptocurrency holders, investors and even speculators to panic over such an occurrence. Unfortunately, this is not the case. Added to the fact that CoinRail is just one of the growing list of crypto-related companies that have been hacked in the past few years, the fact that many people are switching to crypto represents a much bigger concern.

The hack might not be the absolute cause of the plummeting price of digital currencies but it remains to be a key concern that should be addressed soon if the crypto future that we are hoping for will come to be.

Already, 14 major cryptocurrencies in South Korea have adopted necessary measures that are aimed at protecting crypto users – these include restrictions that allow the users to have no more than a single account. As for CoinRail, cryptocurrency trading has been suspended for now as the exchange collaborates with the local authorities as they investigate the hacking. Hopefully, once the CoinRail issuer is resolved, we will see a reversal in the downward trend in the prices of crypto – that is, if it indeed had something to do with the price drops.

Regulators in the US and Canada Crack Down on Crypto Schemes

Posted on May 23, 2018 by Laura P.

As the battle between the cryptocurrency regulation and the ultimate quest for liberation rages on, forty regulators in the United States and Canada have teamed up in an effort to regulated cryptocurrency investment schemes. The collaboration between two countries’ regulators has resulted in the largest crackdown in cryptocurrency scams of this scale in history. So far, there are 70 ongoing investigations with 35 more that have either been completed or are still pending.

CNBC reports that the collaborative effort, that is, the North American Securities Administrators Association (NASAA), has officials from 40 or more different state regulators working together to provide the much-needed coordinated responses to any cryptocurrency-based investment schemes such as Initial Coin Offerings (ICO’s).

The North American Securities Administrators Association (NASAA), as it turns out, is the oldest international organization whose primary goal is investor protection. It also boasts of a vast number of members that include securities administrators from states, provinces, as well as the territories in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico. The organization’s efforts have turned out to be very helpful in ensuring that the crypto industry flourishes safely – its approach involves policing investment opportunities in the United States and Canada such as in ICOs to ensure that they are legitimate and are being carried safely and within the legal boundaries.

“The crackdown comes amid growing attention in the U.S. to cryptocurrency scams, including by the Securities and Exchange Commission and the Commodity Futures Trading Commission. The SEC has brought several fraud cases against operators of initial coin offerings and last week launched a website to help investors recognize scams. William Francis Galvin, the state’s secretary of the commonwealth, said NASAA’s task force found roughly 30,000 crypto-related domain name registrations, many of which appeared in late 2017 as the price of bitcoin neared $20,000,” an excerpt from the CNBC report reads.

Praise from High Places

The NASAA crackdown operation that has since been dubbed “Operation Crypto Sweep” has been lauded by a number of industry bigwigs including Jay Clayton, the chairman of the United States Securities and Exchange Commission. In a statement that was released on Monday, May 22, Clayton said that the state and provincial regulators play a vital role in the protection of Main Street investors.

“The enforcement actions being announced by NASAA should be a strong warning to would-be fraudsters in this space that many sets of eyes are watching, and that regulators are coordinating on an international level to take strong actions to deter and stop fraud,” Clayton added.

In addition to this, Clayton pointed out the fact that NASAA’s efforts would drive out bad actors and scammers early on thus ensuring that governments adopt stances that are not going to choke off the crypto industry.

Bitcoin Receives Praise from IMF Chief Christine Lagarde

Posted on April 18, 2018May 9, 2018 by Martin S.

Bitcoin recently received an unexpected boost thanks to praises from International Monetary Fund (IMF) chief Christine Lagarde that detailed the global benefits of the decentralized digital currency. In a blog post that was published on Monday, April 16 the IMF boss pointed out that digital currencies such as bitcoin have the potential of offering fast and cheap transactions while blockchain, the underlying technology, can be used to make financial transactions more secure.

About a month ago, Lagarde published a blog post that was intended to caution people against the potential risks of cryptocurrencies. While she still has a few of the previous sentiments regarding precautionary measures to ensure a sustainable crypto framework, her most recent blog post leans more towards the potential benefits of crypto assets.

Lagarde still believes that there is a dire need for a crackdown on illicit activity involving crypto, something that she initially spoke of during the World Economic Forum 2018 back in January. Even so, she reiterates the essence of an “even-handed approach” from now on.

“Understanding the risks that crypto-assets may pose to financial stability is vital if we are to distinguish between real threats and needless fears. That is why we need an even-handed regulatory agenda, one that protects against risks without discouraging innovation,” Ms. Lagarde said. “A clear-eyed approach can help us harness the gains and avoid the pitfalls of the new crypto-assets landscape.”
“An important initial step will be to reach a consensus within the global regulatory community on the role crypto-assets should play. Because crypto-assets know no boundaries, international cooperation will be essential,” she added.

New York Opens Probe into Exchanges

Barely a day after Christine Lagarde made her support for bitcoin public, the office of the New York Attorney General sent out letters to 13 cryptocurrency exchanges. The letters require that the exchanges provide information that would help to improve transparency in the digital currency industry.

“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money. Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms,” NY Attorney General, Eric Schneiderman wrote. “Our Virtual Markets Integrity Initiative sets out to change that, promoting the accountability and transparency in the virtual currency marketplace that investors and consumers deserve.”

The letters included a questionnaire that requested information about the basic operation and fees, trading policies and procedures as well as the anti-money laundering and anti-hacking control measures they have put in place. While this probe is meant to protect the interests of New York-based cryptocurrency traders, it might have significant implications for the exchanges’ international customers.

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