Personal computers are illegally hacked by cryptocurrency miners to collect Monero cryptos.

Microsoft is replacing humans with AI to select and curate news stories on the companys Edge browsers and MSN site. That move will lead to over 20 people losing their jobs.

Googles Pixel Buds 2 has a connectivity issue, according to a growing number of user reports on the companys support forum and Reddit.

Facebook is making some updates to its user verification policy. With this change, page owners with large audiences need to confirm their identity with the social network.

Lastly, Indias Department of Telecom (DoT) has issued a notice to internet service providers (ISP) to block a file-sharing platform.

Crypto-jacking

Crypto-jacking is the process of illegally using someone elses computer to mine or collect Bitcoin or other types of cryptocurrencies.

In the UK, an 18-year-olds computer was crypto-jacked by miners to collect Monero cryptocurrency, the BBC reported.

Abdelrhman Badr did not know he was crypto-jacked until he noticed unusual activities in his computer. Even after turning his PC to sleep mode, the fans kept running.

And when he opened the laptop, the main login page would open up without the usual login page.

"My computer wasn't actually going to sleep at all," he told the BBC.

Badr serendipitously found about the mining when he was going through the computers program. The device has been sending information to a website he never heard of.

That website was collecting Monero cryptocurrency. In retrospect, Badr thought that an accidental download might have installed a malware in his pc.

Badrs computer falling prey to cryptocurrency mining is not on-off. A few weeks earlier, a pan-European group claimed to have attempted mining cryptocurrencies using multiple machines.

The practice of illegally collecting crpytocurrencies is currently on rise as the price of the asset is falling, according to Palo Alto Networks.

So, to reduce costs associated with mining, hackers resort to crypto-jacking.

AI to replace humans at Microsofts news curation division

Microsoft has decided to replace humans with AI to select, edit and curate news stories on the companys news webpage and Edge browser, the Guardian reported.

The move resulted in over 27 individuals losing their jobs at PA Media, a company contracted by Microsoft to manage its news page. The employees were told that the software companys decision to terminate its contract is a result of Microsofts global shift to use AI for news.

The PA Media team managing Microsofts MSN site does not file own stories. They only select articles from other news organisations and post them on Microsofts website. For hosting these articles, both Microsoft and the news organisation share advertising revenue.

We are in the process of winding down the Microsoft team working at PA, and we are doing everything we can to support the individuals concerned, a spokesperson at PA Media said in a statement.

We are proud of the work we have done with Microsoft and know we delivered a high-quality service.

Microsoft said that the company decision to use AI is not a result of the current pandemic. It has been evaluating its businesses on a regular basis to increase investment in some functions, and reducing in others.

Facebook to verify identity of users with large audiences

Facebook said it will verify identity of users with large audiences in the US in an effort to improve user experience in its apps.

The move will be the social networks extension of its page verification process started in 2018. Back then, Facebook verified users who manage Pages with a large group of followers.

The extension in the attestation policy comes at a time when the US is warming up for 2020 Presidential election. And the addition to the ID confirmation process may limit the spread of viral posts if the social network spots inauthentic behaviour.

The social media company wants to ensure that real people, and not bots, use its network. The move will also help users to know who is the actual person behind the content they see on Facebook. The messengers identity is important given their message reaches a large number of people.

If someone does not verify their identity or provides an ID that does not match a linked Facebook account, the speed of the viral post will be reduce so fewer users will see it.

And if the person posting the content is a Page admin, that person will need to complete a Page Publishing Authorization. Without completing it, their account wont be verified, and they cant post any content on the page.

The ID shared for verification will be stored securely and will not be shared on a persons profile.

Internet service providers in India asked to block WeTransfer

WeTransfer, a Netherlands-based file sharing platform, has been blocked in India on instruction from Department of Telecom (DoT) to internet service providers (ISP), Reuters reported.

The DoT had issued an order on May 18 to ISPs without giving a reason for blocking the site. The order invokes a clause from conditions laid out for granting licences to ISPs, Reuters said on reviewing the note.

Per the clause invoked by DoT, all ISPs must block websites in the interest of national security or public interest.

At this moment in time, WeTransfer seems to be blocked and unavailable in India, WeTransfer said in a blog post.

We are working hard to understand the reasoning behind this block, as well as how to get it reverted as soon as possible.

WeTransfer allows users to share and upload files of up to 2GB for free in one transfer. Paid users can transfer 20GB per upload.

Pixel Buds 2 users report issues

A growing number of Pixel Buds 2 report Bluetooth connectivity issues, 9to5 Google reported.

Several threads on Google support forums and some on Reddit show many users facing issues related to random audio cutouts, leading to brief pauses while connected to the buds.

The issues have been coming up since the first pieces were shipped, and Googles updates arent solving the connection problem.

Unfortunately, even with the latest version 295 update, the problem is not fixed, based on reports by users.

In one of the cases, even a replacement pair did not solve the issue.

A review on Reddit said: I was really excited to get these in today, but have had nothing but issues with them. While sitting at my computer they seemed to work fine, but I noticed that if I touched the left ear bud or moved my head too much, it would cut out.

Excerpt from:
Todays cache | Crypto-jacking, and more - The Hindu

Hackers are taking over computers to mine for cryptocurrency, with cyber-security firm Kaspersky saying Singapore has had a spike in cryptojacking attempts in the first three months of this year.

The firm said it blocked more than 11,700 cryptojacking attempts on devices here between January and March - an increase of more than three times from the same period last year, when there were about 2,900 attempts.

Cryptojacking is the unauthorised use of someone else's device to mine for cryptocurrency by solving complex mathematical problems.

In a recently published report, Russia-based Kaspersky said the spike in Singapore is the highest percentage increase in South-east Asia.

Hijackers target Singapore because its information technology infrastructure offers a healthy supply of bandwidth for cyber criminals to take advantage of.

"Cyber criminals use various means to install miner programs on many people's computers, and take all of the profit from cryptocurrency mining without incurring any of the equipment or electricity costs," said Mr Yeo Siang Tiong, general manager for South-east Asia at Kaspersky.

The hackers rely on social engineering tactics, such as fake links in e-mails or on websites, to dupe victims into installing malicious code onto their devices and wider networks, which turns them into mining tools.

"Miner" computers and devices perform a job similar to a central bank, recording transactions in a ledger publicly accessible to anyone while checking the validity of these exchanges.

For their work, those behind the mining computers are awarded cryptocurrency, which can make the enterprise profitable if the miners can put in the time and energy.

Cyber criminals increasingly prefer cryptojacking to other forms of attacks as it is often more profitable and presents a lower risk of being caught.

The uptick in cryptojacking cases could be due to more people working from home amid the Covid-19 pandemic, said Mr K.K. Lim, head of cyber security, privacy and data protection at law firm Eversheds Harry Elias.

Some of the computers used at home might not have been issued by companies and their security features may not have been kept up to date.

Number of cryptojacking attempts on devices here that were blocked by cyber-security firm Kaspersky between January and March.

Number of such attempts blocked by the company in the same period last year.

Also, these computers could be shared with other household members, who could have unwittingly downloaded risky programs or visited risky sites, said Mr Lim.

Mr Yeo said many workers might not have the full support of IT security teams working remotely, leading to a lower standard of cyber hygiene during this period.

Experts say there are some signs to look out for if one suspects a device has been hijacked for cryptojacking.

"The tell-tale signs for crypto mining can include the slowing down of computer speed, higher consumption of electricity and higher usage of Internet bandwidth," said Mr Bryan Tan, a lawyer from Pinsent Masons MPillay specialising in technology law and data protection.

Mr Yeo Siang Tiong, general manager for South-east Asia at cyber-security firm Kaspersky, said the strain on a device's battery from mining could cause it to physically be deformed too, due to having its processing cores work overtime to obtain cryptocurrency.

He pointed to a recent study by Kaspersky which found that phones that were used to mine for cryptocurrency through malware for two days straight became physically deformed due to the phone batteries expanding.

"Batteries will run down much faster than before, and devices may run quite hot. If the device uses a data plan, users will see data usage skyrocket," he added.

Mr K.K. Lim, head of cyber security, privacy and data protection at law firm Eversheds Harry Elias, said having in place proper Internet browser security features, which can scan for malicious software, will go a long way towards shielding users from falling victim to cryptojacking. But he added that nothing beats practising good cyber hygiene habits such as avoiding unknown links in e-mail and having updated security features.

Read the rest here:
Spike in cryptojacking attempts on devices here, says cyber-security firm - The Straits Times

Bitcoin has taken a tumble on Tuesday just as the 10K level looked to have been a thing of the past. This looks like a bank of orders have been triggered or some potential profit-taking has taken place. Either way, this leads to traderslooking for levels where the market might stop. First and foremost the price is now struggling at the 4-hour 200 period Simple Moving Average (SMA). Even looking back on the chart the 200 SMA seems to be a decent support andresistancezone on this timeframe but the volume on this move lower could be too hot to handle on this occasion.The next level down is the black support level at 9K. There has been 3 occasions on this chart alone where the 9K level has been used in a reactionary manner. Beyond this, there is another support zone near 7645.00 (marked in blue). This level is where a previous price drop back in March 2020 stalled. It then became a congestion point toward the end of April and could be a price magnet again.

The intense selling pressure surrounding cryptocurrencies caused Ethereum (ETH/USD) to fall sharply from multi-month highs it set at $253.50 earlier in the day.The pair erased near 7% in a matter of minutes and dropped all the way to $224 before recovering modestly. As of writing, ETH/USD was down 5% on the day at $235.50.

Stellar Lumen - Even the high performing XLM/USD lost more than 14% of its price within 11 minutes. Stellar is trading at $0.0784 as of writing after bulls bought half of thedip. XLM is now at risk of forming a nasty reversal doji candle on its daily chart if it drops and closes below $0.0757.

Ripple's XRPtoken has dipped below the 200 Simple Moving Average on the four-hour chart and is battling to hold onto the 50 and 100 SMA. Upside momentum has all but diminished. The fresh daily low of $0.1975 is the first support line to watch. It if followed by $0.1916, $0.1918, and $0.1855, which were all low points in the past week.Resistanceawaits at around $0.2060, which held XRP down before the latest surge, followed by $0.2138 and $0.2144, the two swing highs hit in early June.

From today onwards, Canadian firms operating with virtual currencies will be legally recognized as Money Service Businesses.

Cryptocurrencyexchanges and payment processors are now legally recognized as Money Service Businesses (MSB) within Canada.

June 1 saw the enactment of amendments to Canadas Proceeds of Crime (Money Laundering) and Terrorist Financing Act that were passed in June 2019 to address holes in the then-existing framework.

Candian crypto firms must now report all transactions exceeding 10,000 Canadian dollars ($7,403), and register and comply with the Financial Transactions and ReportsAnalysisCentre of Canada (FINTRAC).

One of the largestsemiconductor manufacturers in China, SMIC hasannounced plans to raiseUSD 2.8 billion in a public sale (IPO) on the Sci-Tech Board of the Shanghai Stock Exchange (SSE).

The Shanghai Stock Exchange approved the IPO and this will increase the overall competition in the Bitcoin mining firmware chipmaker industry.

SMICis already listed in Hong Kong is looking to push Chinas broader focusfor self-reliance when it comes to semiconductors, a field in which the worlds second-largest economy (China) isseen as lagging far behind the U.S.

Read more here:
Cryptocurrency Market News: It's a sea of red in the crypto market today - FXStreet

Hardware at the DeeCrypto retail store selling cryptocurrency mining equipment by such brands as ... [+] Bitmain, GPU, KeepKey, Embedded Downloads and Ledger now at risk as new law will make it harder for miners, others. (Photo by Artyom GeodakyanTASS via Getty Images)

Russias State Duma hates bitcoin, ether, ripple, you name it. If it is not the ruble, or a currency issued by a state, Russias government is not into it.

The government posted an updated version of their new draft lawOn Digital Financial Assetson Monday for public comment, along with it additional documents that significantly change the way cryptocurrency is regulated in Russia. Breaking the rules comes with legal penalties now. But the good news is, Russians dont have to give up their fixation on cryptocurrencies.

The law, which is not a major shift in tune from The Kremlin or the Central Bank in regards to official positions on privately issued crypto currencies, does however prohibit the circulation of all cryptocurrencies, as well as their mining and advertising.

ryptocurrencies go completely into the gray zone in Russia, says Artem Kalikhov, chief product officer of Waves Enterprise. People who own one or two bitcoins are not at risk. But all cryptocurrency exchanges and wallets hosted on Russian sites with a .ru at the end are now at risk.

The new law doesnt mean Russians cannot own digital financial assets legally. The Russian Central Bank has not yet introduced the rules for inclusion in cryptos as a security. The Russia crypto market is waiting for that still.

Russian officials have been arguing about crypto regulation since January 2018.

Anatoly Aksakov, chairman of the Russian State Duma's Financial Market Committee. You can own ... [+] cryptocurrencies like Bitcoin, but you should declare it. Cryptocurrency exchanges? Not welcome. (Photo by Vladimir GerdoTASS via Getty Images)

Anatoly Aksakov, a member of the Russian State Duma, says that the countrys new crypto law wont go into affect until the summer.

Aksakov said on Thursday of last week that people can buy and hold cryptocurrencies, but should declare it on their taxes. By declaring it, they will be given legal protections, since the cryptocurrency will be considered as a property. If they dont declare it, they will not have any legal protections. Either way, there will be no legal penalties for owning cryptocurrencies, according to a report by RBC Russia.

For us, at KickEX, this is bad news, says Anti Danilevski, CEO of the new KickEX, a crypto currency exchange run by the creators of KickICO back in the intial coin offering heyday a whole three years ago now.

We were initially regulated in the European Union, not in Russia, because we anticipated this, he says. Its a pity that cool technology startups are forced to leave the country and cannot operate in their homeland. We will transfer our team to the EU now, he says. Its painful for me to see that in the field of cryptocurrencies and digitalization, my country is moving backward while the whole world is moving forward.

Aksakov said there will be no digital currency platforms operating on the territory of Russia meaning no exchanges.

For now, the Russian crypto community is still chewing on the letter of the law, opening it up to interpretation.

The new digital law in Russia is designed to make it harder for tax evasion through ... [+] cryptocurrencies. Photographer: Chris Ratcliffe/Bloomberg

Digital money is not necessarily the same as digital assets, and the law seems to be concerned with tokens. They will get regulated, and most likely they will be adopted as private securities one day. If so, it will one day be possible to conduct regulated security token offerings in Russia, they believe.

In that case, maybe the hammer has not busted through the crypto piggy bank.

As far as I can see, this is a fight against cryptocurrencies, not with tokens or blockchain, Danilevski says.

To newcomers in the crypto space, its worth noting that there are distinguished differences between cryptocurrencies like Bitcoin, and other digital assets issued by a tech company issuing its own coin. While they all depend on blockchain technology; blockchain technology does not require cryptocurrency.

Waves was building a blockchain trading platform for the Moscow Exchange as a beta test to see how it would work to trade crypto currencies.

That market in Russia is developing steadily now, says Kalikhov. The attitude of Russian regulators is that cryptocurrencies are not allowed; and financial assets based on blockchain technology are going to be subject to regulation, but blockchain technology itself is still a go.

More:
Russia Sort Of Dropped The Hammer On Bitcoin, Crypto - Forbes

Stemming from the confined venue of speculation and economic theory, there is much to address regarding the probability of whether Bitcoin will ever reach $100,000.

To bring light upon the query in motion, well analyze long-standing economic theories versus economists doubts while taking under due consideration deeply-rooted market variables, projections, and global acceptance that are all bound to distill a change in the value of Bitcoin in one way or another.

The Most Diverse Audience to Date at FMLS 2020 Where Finance Meets Innovation

With these truths in mind, lets begin.

Cryptocurrency enthusiasts have long poised the likelihood of Bitcoin reaching $100,000.

Evidence of this can be noted from high-profile individuals such as Anthony Pompliano, Co-Founder and Partner of Morgan Creek Digital.

I still think Bitcoin will hit $100,000 by end of December 2021. Fixed supply. Increasing demand. Time will tell.

Charles Hoskinson, Ethereum Co-Founder, had tweeted in late 2019:

Then, of course, we have the more recent actionable insights rendered through The Great Monetary Inflation proclaimed by macro investor Paul Tudor Jones, who acquired Bitcoin as a hedge against inflation earlier this month.

Despite acquisitions and proclamations attesting to Bitcoins impending worth, one should also assess whether these claims are rather a publicity stunt to increase Bitcoin participation or rather a deep-rooted belief originating from a coupling between past experiences and a desperate desire of riches to prolong extravagant lifestyles.

Regardless, these speculations should be taken with a grain of salt and weighed accordingly.

While crypto enthusiasts rely upon speculation in the crypto news, investors and Bitcoin participants tend to primarily formulate their assumptions upon tangible evidence that is derived from projection models and macroeconomic theories.

Projection models such as the Bitcoin S2F Model and M2 capitalization theory project astronomical valuations for Bitcoin but as time has shown us one of these models has already been debunked.

Over the past few years, and more prominent now as a method used to combat the financial ramifications of the Coronavirus pandemic, quantitative easing has been performed by countries central banks.

Take for instance the U.S. Federal Reserve, which has been printing U.S. dollars at an exponential rate since 1970.

Perhaps the most noticeable effects of the exponential printing of U.S. dollars would be inflation, where the price of goods and services has been rising in unison to meet the money supply.

Generally, a healthy economy would be characterized through depreciation in prices due to entities finding more efficient and affordable alternatives for similar goods and services but that is not the case.

To highlight the core point of this theory, should the Federal Reserve continue to print U.S. dollars at an exponential scale then, as a result, the U.S. dollar price of Bitcoin will also continue to rise at an exponential rate until it has reached a value of $100,000 per Bitcoin.

Also known as the Bitcoin S2F model, the Bitcoin Stock-to-Flow Cross Asset Model ratio created by @100trillionUSD seeks to measure the effect of scarcity on BTC price through measuring current Bitcoin circulation and production rate.

As @100trillionUSD suggested in 2019 through Modeling Bitcoin Value with Scarcity, The predicted market value for bitcoin after May 2020 halving is $1trn, which translates in a bitcoin price of $55,000. That is quite spectacular. I guess time will tell and we will probably know one or two years after the halving, in 2020 or 2021. A great out of sample test of this hypothesis and model.

While it doesnt take a mathematician to deduce how significantly short this economic model failed, up to 8 additional flaws have been reported regarding the Bitcoin scarcity valuation model.

As a result, we can no more put stock in economic theory than we can through unwarranted speculations.

The most level-headed forerunners for predicting future Bitcoin prices may be contributed to economists who have yet to be proven incorrect regarding their cynical-based projections.

Such examples include the projection laid upon us by Kenneth Rogoff, an economist and Harvard University professor, who went on to express the following during a CNBC interview:

ATFX Thanks NHS Frontline Workers with 1k Fruit Boxes DonationGo to article >>

I think bitcoin will be worth a tiny fraction of what it is now if were headed out 10 years from now I would see $100 as being a lot more likely than $100,000 ten years from now.

Basically, if you take away the possibility of money laundering and tax evasion, its actual uses as a transaction vehicle are very small,

It should be noted that Rogoff isnt the only economist who feels that Bitcoin wont amount too much value in the future.

Joe Davis, a lead economist for Vanguard, a high-profile investment firm, stated, Im enthusiastic about the blockchain technology that makes bitcoin possible As for bitcoin the currency? I see a decent probability that its price goes to zero,

The bitcoin its value is based off of scarcity and an artificial scarcity thats out there, Its really tough to imagine where the long-term return comes from other than speculation. Joe Davis

If speculations regarding Bitcoins future applications are truly the driving force behind the volatility then the valuation of BTC as a whole is crippled as a result of diminished cash flow.

While speculation and debunked theories are two sides of the same coin, black swan events are an entirely different entity that has been known to characterize an era of hardship and uncertainty.

Unforeseen black swan events, such as the recent Coronavirus Stock Market Crash, have gone to illustrate that no economy is impervious to flaws while also dismantling the long-standing ideology that Bitcoin is a safe haven asset.

Given the ramifications that can materialize from the wake of black swan events, no Bitcoin valuation can be complete without the possible occurrence of these devastating events.

To expand, modern times must be taken into account.

Such as, those of us reading this have already survived one black swan event but given how countries are starting to open their borders and governing states are once again re-opening their economies, the likelihood of another black swan event occurring as the byproduct of a second outbreak of Coronavirus only increases with each easing of confinement limitations folded back.

Therefore, it would be optimistic to the point of foolishness not to weigh these truths in your mind when speculating the possibility of BTC reaching $100,000.

One variable piece of the puzzle that can significantly influence Bitcoins likelihood of $100,000 per coin would be the mainstream adoption of Bitcoin.

Should a significant surge in Bitcoin participation become present, then the generalized economic theory of supply and demand can be implemented as an increase in participation will likely be contributed to an increase in demand.

Through an increase in demand comes an appreciation of value, which given how Bitcoin supply is limited, should further strengthen the ideology that an increase in Bitcoin demand will increase the price of Bitcoin.

Lets ditch the economic theories and speculations to conduct some simple arithmetic.

The maximum sum of Bitcoins that will exist is 21 million.

Should the value of Bitcoin reach $100,000 per coin then the total potential market capitalization of Bitcoin, once all mined, would be equivalent to $21 million x $100,000 = $2,100,000,000,000 or $2.1 trillion.

According to CNBC in late 2019, the value of the global equities market surpassed $85 trillion, or $85,000,000,000,000.

It should be noted that the global value of the equities for 2019 started under $70 trillion, meaning it saw an increase of no less than $15 trillion throughout the year 2019.

To put that into perspective, should Bitcoin reach a value of $100,000 per coin (even if all were mined) that would mean that the market capitalization of Bitcoin would be more than 40xs less than what the value of the global equities market was at the end of 2019.

($85,000,000,000,000 global equities value / $2,100,000,000,000 = 40.4761904762)

Putting stock in speculations asserted by cryptocurrency advocates will get you no further than faulty economic theories that can in no way, shape, or form take under due consideration all the innumerable variables that nest their way into the ever-changing Bitcoin valuation equation.

Through M2 capitalization theory and the renowned principles of supply and demand, we are rendered rather convincing insights into the possibility that Bitcoin could reach $100,000 which is further strengthened when you compare the capped off Bitcoin market capitalization of $2.1 trillion to that of the $85 trillion for global equities in 2019.

While, at first, it may have seemed like a highly unrealistic projection of Bitcoin reaching $100,000, but when you stop to put it in perspective with the total value of global equities then it may appear, to some, as only a matter of time.

Regardless, and to conclude, it is impossible to accurately predict the value of Bitcoin in 10, 20, or even 40 years from now but if history has taught us one thing it would be that anything is possible.

Original post:
Bitcoins $100K Probability Speculation or Economic Theory Backed? - Finance Magnates

Updated: June 1, 2020 9:27:23 pm

Written by Radhika Pandey and D Priyadarshini

By striking down the Reserve Bank of India circular of April 6, 2018, the Supreme Court has given a fillip to crypto exchanges in the country. The circular had stopped traders and exchanges from accessing the banking system. Unable to conduct trades, several exchanges had shut down or moved overseas. Now, some have returned, others are seeing increased users and one has recently secured a multi-million dollar investment.

But the judgment has also rekindled the question of regulating crypto exchanges. There exists no clear legal and regulatory framework governing them. Recent reports suggest that the government may be mulling over a regulatory framework for cryptocurrencies. The RBI has also recently clarified that banks are not prohibited from providing services to traders and exchanges. Given the above, this article examines the broad contours of the possible approaches that can be taken to regulate crypto exchanges as they perform important functions but also carry significant risks.

Similar to stock exchanges, crypto exchanges provide an online platform or marketplace, albeit for cryptocurrencies. By also enabling trade or exchange of cryptocurrencies for fiat money, they connect the crypto and traditional financial systems. Regulators also look to exchanges for information on users and transactions, although this may depend on their organisational structure and functions. For example, centralised exchanges offer a single point of regulation. They have an entity in charge of the platforms governance and act as an intermediary throughout the trading process, namely, storing clients funds, monitoring trades and ensuring fulfilment of orders. But decentralised exchanges enable trades or exchanges on a peer-to-peer basis through an automatic process involving smart contracts. They make regulation challenging due to the anonymity of users and lack of central presence.

Crypto exchanges have also assumed importance due to their role in initial exchange offerings (IEO). Unlike initial coin offerings where the issue of coins or tokens is made directly to investors, with the latter responsible to assess the projects credibility, crypto exchanges intermediate and vet an IEO through due diligence of projects and KYC scrutiny of issuers. Crypto exchanges have therefore emerged as a key market infrastructure within the crypto-ecosystem.

But there are several concerns due to which regulation and supervision is required. In its heyday, MT Gox crypto exchange accounted for nearly 70 per cent of all Bitcoin transactions. Its hacking led to losses estimated in billions of dollars today. It went bankrupt. Investors claims are yet to be settled. More recently, the sudden death of the CEO of Canadas largest exchange in India left millions of investors money inaccessible in offline wallets. He alone knew the passwords. Such instances highlight some of the key risks associated with crypto exchanges the safety and security of cryptocurrencies and lack of investor/consumer protection in the form of recourse, and quick and orderly access to their own funds/assets.

Moreover, unlike traditional securities markets, crypto exchanges perform additional functions like custody of assets or funds, clearing and settlement. They are also known to co-mingle client and proprietary funds or assets sometimes. Such practices, without adequate internal checks and controls, lead to conflicts of interest, micro-prudential and consumer protection risks.

Of particular concern is the un-intermediated access given to retail investors of complex products without adequate disclosures or advice regarding their suitability. The borderless nature of cryptocurrencies and service providers (like wallets and payment processing) weaken the ability to enforce investors rights and recover their assets. Crypto exchanges are also known to enable circumvention of capital controls and commission of financial crime including money laundering and terrorism financing.

International experience illustrates some broad principles for regulating crypto exchanges. Typically, in jurisdictions that categorise cryptocurrencies as securities or other financial instruments, licensed crypto exchanges have emerged as a point of regulation, including for the implementation of anti-money laundering (AML) and terrorism financing (CFT) laws. Recognition then entails the application of existing securities laws as in the case of the US, UK, Japan or Hong Kong, or laws specifically designed for cryptocurrencies like Malta. International standard setting bodies like FATF and IOSCO too have provided guidance from time to time. Pertinently, IOSCOs recent report on cryptocurrency trading platforms recognises that risks currently associated with trading on such platforms and traditional risks in securities trading are similar. The report also notes that securities laws objectives like consumer protection and market integrity continue to apply even if underlying technology and business models of crypto exchanges pose unique challenges.

Accordingly, a legal and regulatory framework must first define cryptocurrencies as securities or other financial instruments under the relevant national laws and identify the regulatory authority in charge. Regulation must then define the entry points who can carry out crypto exchange and intermediary functions, who can trade and what can be traded. Operation of crypto exchanges or intermediaries like brokers or custodians can be subject to receiving regulatory licenses. Licenses may be issued based on compliance with eligibility requirements and a detailed scrutiny of operational policies and procedures on internal governance, risk management and financial resources. Trading can be restricted to approved cryptocurrencies as in the case of Japan. Exchanges can be required to screen undesirable cryptocurrencies that dont permit tracing or are vulnerable to cyberattacks. Regulations can also require the performance of stringent KYC checks and independent verification by exchanges before onboarding investors. Access to retail or unsophisticated investors can be prohibited (like Hong Kong) or intermediated through professional advisors.

Thereafter, regulation must provide for ongoing supervision on matters concerning safety and security of assets and funds, transparency of operations including trading and price discovery, comprehensive and timely disclosures on the cryptocurrencies traded including risks and suitability for retail investors, and compliance with AML/CFT requirements. Record keeping, inspections, independent audits, investor grievance redressal and dispute resolution may also be considered to address concerns around transparency, information availability and consumer protection. Ongoing regulation and supervision seek to reduce the possibility of exchanges failing. But when they do, regulation must enable investor protection through quick and orderly access to their funds or assets.

Cryptocurrencies are borderless and often transcend regulatory classifications (as security, commodity or payment mechanism for example). Establishing robust information sharing and coordination mechanisms between regulators and enforcement agencies within the country, and with relevant foreign agencies would therefore be crucial too.

The writers are fellows at the National Institute of Public Finance and Policy

The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Opinion News, download Indian Express App.

See original here:
Regulating cryptocurrency exchanges - The Indian Express

To print this article, all you need is to be registered or login on Mondaq.com.

Cryptocurrency-related activities have received little tolerancefrom the Chinese government. Initial coin offerings (ICO) werebanned in China in September 2017. Exchange platforms that tradedcryptocurrencies or provided facilitation services were alsoordered to be closed following the crackdown on ICO. Many exchangeschose to relocate to jurisdictions that are more favorable tocryptocurrencies than China. However, due to the long-armjurisdiction of the Chinese criminal laws, organizers and promotersof overseas ICO and exchanges may not be free from the jurisdictionof Chinese criminal laws, if those persons are Chinese citizens orif Chinese investors invested in overseas ICO or tradedcryptocurrencies on overseas exchanges.

Interestingly, it is not illegal to hold Bitcoins and othercryptocurrencies or even to buy or sell them in China. The Chinesegovernment also encourages the development and application ofblockchain technology, but made it clear that blockchain technologymust service the real economy.

1. ICO

China's Policy:

On September 4, 2017, seven government agencies of China, i.e.the People's Bank of China ("PBOC"), the CentralCybersecurity and Information Technology Lead Group of CommunistParty of China, the Ministry of Industry and InformationTechnology, the State Administration for Industry and Commerce,China Banking Regulatory Commission, China Security RegulatoryCommission and China Insurance Regulatory Commission, jointlyissued the "Notice regarding Prevention of Risks of TokenOffering and Financing" (the "Notice"). The Noticebanned all ICO in China and ordered that any organizations orindividuals who had previously completed ICO to make arrangementssuch as return of token assets to investors to protect investorrights.

Background:

To understand the harsh attitude of the Chinese governmenttowards ICO, we have to look at the big picture of China'seconomy and financial market. In the past 20 plus years, China hasenjoyed high speed economic development, which, many believe, cameat the cost of high leverage in the financial system andaccumulation of financial risks. In the past two years, control offinancial risks and stabilization of the financial system hasbecome the top priority of PBOC. Before ICO, internet platformsproviding P2P loans and micro lending had been targeted by PBOC andother financial regulators and are still in the process ofcleansing and rectification. It is no surprise that ICO, due to thesheer increase both in numbers and in the amount of funds raised,as well as some socially chaotic events caused by ICO, received thedeath sentence from PBOC.

Nature of ICO in the Eyes of PBOC:

In the Notice, ICO was described as a process by whichfundraisers distribute digital tokens to investors who makefinancial contributions in the form of cryptocurrencies such asBitcoin and Eethereum. The Notice further pointed out: "Bynature, it is an unauthorized and illegal public financingactivity, which involves financial crimes such as illegaldistribution of financial tokens, illegal issuance of securitiesand illegal fundraising, financial fraud and pyramidscheme."

Among the crimes mentioned in the Notice, "illegalfundraising", which generally means raising funds withoutgovernment approval, is a crime that has been widely used incracking down on undesirable financial activities as the scope ofthe crime can be interpreted very broadly.

Overseas ICO:

It should be noted that even ICO outside of China are notcompletely safe if they attracted Chinese investors. According toArticle 6 of the PRC Criminal Law, if any of the criminalactivities or results of such activities occurred in China, thecrime is deemed to have occurred in the territory of China. If theICO involved financial crimes based on Chinese criminal lawstandards, the promotors or organizers of those ICO may potentiallybe subject to Chinese criminal liabilities if they are Chinesecitizens. Even if they are not Chinese citizens, if overseas ICOattracted Chinese investors, they may still potentially be subjectto Chinese criminal liabilities.

Initial Miner Offerings (IMO):

After ICO was banned by the Chinese government in September2017, a new business model quickly became popular, which was called"Initial Miner Offerings" (IMOs). In contrast to ICO, theorganizers sell mining equipment to investors initially, and theinvestors are awarded with tokens or points for their miningactivities using the equipment. On January 12, 2018, the NationalInternet Finance Association of China ("NIFA")[1] issuedthe "Risk Alert concerning Prevention of Disguised ICOActivities", in which NIFA pointed out that an IMO involvesfundraising activities and is a disguised form of ICO. Followingthe NIFA alert, the IMO market in China also went down.

2.Exchanges

China's Policy:

The Notice also targeted cryptocurrency exchanges and orderedthat any so-called "fundraising and trading platforms"shall not:

- Offer exchange services between fiat currency, tokens and"virtual currencies";

- Buy or sell tokens or "virtual currencies", or buyor sell "virtual currencies" as a central counterparties(CCP); or

- Provide price determination or information intermediaryservices for tokens or "virtual currencies".

Adjustments of Market Players:

In the several months after the Notice, most of thecryptocurrency exchanges closed down their platforms in China butcontinued exchange business through platforms registered in foreignjurisdictions such as Japan, Hong Kong, Korea or otherjurisdictions which seemed to be more favorable to the exchangebusiness than China.

They also made adjustments to their business models. To avoiddirect confrontation with Chinese monetary authorities, someexchanges no longer provided exchange services between fiatcurrency and cryptocurrencies. Some chose to introduce a new token(such as USDT, QC, etc.) to their platforms which has valueequivalent to the value of fiat currency, as an intermediarybetween fiat currency and cryptocurrency. Investors may use fiatcurrency to buy this new token and then use this new token to buycryptocurrency.

Further, many exchanges launched peer-to-peer trading platformsthat support direct transactions between investors without theexchange acting as a CCP. On those platforms, one investor can buycryptocurrencies from another investor and pay the seller via banktransfers, Alipay or Wechat pay[1].

Legality of Adjusted BusinessModels:

Those modified business models are not entirely safe from theChinese criminal law perspective. Although major exchanges havebeen relocated overseas, they may still be subject to Chinesecriminal liabilities due to the long-arm jurisdiction of theChinese criminal laws. If the founders or managers of an exchangeare Chinese nationals, or they make decisions in China to operatethe overseas exchange, or the investors are in China, if theexchange performs prohibited functions, Chinese justice authoritieswould still have jurisdiction over those persons.

Access to Overseas Exchanges:

To further prevent Chinese investors from purchasing and tradingcryptocurrencies on overseas exchanges, China has blocked internetaccess to the websites of some overseas exchanges from China.According to Chinese laws, no person should use the internet toview information that violates Chinese laws and regulations. Thosewho access overseas exchanges via virtual private networks(VPN's) may potentially face risks if the exchanges containprohibited information. In January 2017, the Ministry of Industryand Information Technology ruled that only authorized VPN'scould be used in China. The sale or provision of VPN services bycompanies or individuals without telecom licenses issued by Chinesetelecom authorities became illegal.

3. Mining Activities

It was reported that on January 2, 2018, the Working TeamLeading Risk Control and Rectification concerning Internet Finance,a special task force established under the State Council, issuednotices to local governments requesting them to take measures to"guide" Bitcoin mining operators to exit from theirrespective regions. Since then, major miners reportedly decreasedor ceased their operations in China, once the largest mining basein the world, and moved to more favorable countries, similar to themove of the cryptocurrency exchanges.

4. Legality of Holding and TradingCryptocurrencies

In view of China's harsh attitude towards ICO,cryptocurrency exchanges and mining activities, some may assumethat it would be illegal for Chinese to hold or trade Bitcoins orother cryptocurrencies. This is not correct. No PRC law orregulation prohibits Chinese investors from holdingcryptocurrencies or trading cryptocurrencies . This seems to beconsistent with an early notice jointly issued by five Chinesegovernment agencies led by PBOC back in 2013, which defined Bitcoinas a special virtual commodity, but not a currency. That noticealso explicitly provides that Bitcoin does not have legal status asa currency and should not be circulated and used in the market as acurrency. This should still be the position taken by PBOC as oftoday.

Article 127 of the General Rules of the Civil Law of China,which took effect on October 1, 2017, provides that: "In caselaws have provisions on the protection of data and internet virtualproperties, such laws should be complied with." Some Expertsbelieve that this means that one of the basic laws in Chinarecognizes the legal status of cryptocurrencies as virtualproperty.

5. Transfer of Payments Using BlockchainTechnology

Senior officials of PBOC have publicly encouraged the use ofblockchain technology to improve the convenience, promptness andlow cost of retail payments. In fact, PBOC established its ownDigital Currency Research Institute for the goal of issuing digitalmoney. It should be noted, however, that China's digital moneywould still be fully controlled by the central government, incontrast to the nongovernmental nature of Bitcoin.

According to news reports, in December 2017, China MerchantsBank, Wing Lung Bank of Hong Kong and Wing Lung Bank, ShenzhenBranch have successfully completed cross-border transfers ofRenminbi[4] payments using blockchain technology. Many other bankshave reportedly made experiments and even progress on the use ofblockchain technology to improve their transaction systems.

6. The Future of Blockchain in China

Despite the ban on ICO and cryptocurrency exchanges, PBOC andother government agencies have consistently showed great enthusiasmtowards the application of blockchain technology for the goal ofmodernizing China's financial systems and becoming a worldleader in this new innovative technology. In recent years, variousguidelines and papers issued by the government have endorsedblockchain technology and even placed blockchain technology in thesame category of big data and artificial intelligence (AI). In thepast twelve months, many local governments sponsored the formationof sizable investment funds to make investment in startups ofblockchain technology and applications.

However, the endorsement of blockchain technology is not withoutreservation. In the view of PBOC, blockchain technology and digitalcurrency should be researched for the goal of better service to thereal economy. PBOC believes that blockchain technology can bedeveloped without the use of tokens, which are believed to havebeen the roots of various social problems such as illegalfundraising and fraud.

Footnotes

1. The current leaders of NIFA are former seniorofficials of PBOC, and alerts issued by NIFA often predict the nextmoves of PBOC.

2. Both of which are popular third party payment APPs inChina.

3. Given that cryptocurrency exchanges were banned inChina, cryptocurrencies may only be traded in a peer-to-peermanner.

4. Official currency of China.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

Read more here:
Regulation Of Cryptocurrency In China - Technology - China - Mondaq News Alerts

07:53 29/05/2020 Buks Viljoen, Correspondent

A man accused of stealing millions from Bitcoin investors appears to have made a run for it.

Investors who were contacted by News24 said they have not heard from the CEO of VaultAge Solutions (VS), Willie Breedt, since December when he promised to pay back their money.

The Hawks have stepped in to investigate after an investor opened a case of fraud against Breedt.

Some have speculated Breedt is staying at a luxury mansion in the well-known Marina Martinique Estate in Ashton Bay, Jeffrey's Bay.

However, officially he seems to be still out of the country.

According to information from the Department of Home Affairs, Breedt left the country for Mozambique on 21 December via the Kosi Bay border post.

There is no indication on the system he had returned to the country; however, a source said a glitch in the system might not have updated his movements.

Hundreds of investors

In the meantime, investors are concerned they will never see their money again.

VaultAge Solutions, which is not registered as a legitimate financial institution with the Financial Services Conduct Authority (FSCA), has more than 2 000 investors.

Millions of rand have been invested in Breedt's cryptocurrency scheme, with one investor depositing more than R6 million.

Pleas to return the money have fallen on deaf ears.

READ |Hawks investigate cryptocurrency CEO after investors cry foul

Besides a few generic emails from Breedt promising to repay the outstanding amounts, no other communication has been received.

"I don't have R50 in my purse," Lettie Engelbrecht from Krugersdorp said.

"We are pensioners and invested R200000. From December until April, we received payments on the growth of our investment. Since then, we never got any money. We are desperate and living on a shoestring budget."

In a written reply to News24, Breedt said: "I am busy attendingto the commitments I have made to members. The commitment is to have all the initial capital paid back by 31 May."

Case under investigation

He, however, did not respond to the questions about his whereabouts and his visit to Mozambique.

Hawks spokesperson Colonel Katlego Mogale confirmed they were still investigating the case and "cannot reveal any information at this stage".

Read more:
Investors fear cryptocurrency CEO accused of stealing millions could be on the run - News24

BitPay, the worlds largest provider of Bitcoin and cryptocurrency payment services, today announced the company wonBest Alternative Payment Solution from CNP Summit. Each year, the CNP Awards is the only awards competition honoring the companies, programs and solutions that have distinguished themselves in the card not present space throughout the year. Over the last few months, the CNP panel of independent industry experts and the nominees customers have been deliberating on the winners for this years program.

Businesses of all kinds are being forced to adapt and innovate in this unprecedented year, said D.J. Murphy, editor-in-chief of Card Not Present. Merchants in the e-commerce fraud and payments community, facing completely new online shopping and fraud patterns, are working hand-in-hand with service providers to respond. Weve done that as well. This year, were fortunate to be able to unveil the CNP Awardsthe standard by which companies in this industry are recognized and judgedvirtually for the first time. We congratulate all the winners and hope to see them and the rest of our community in person next year.

Recommended AI News:Topgolf and Golf Scope Partner to Launch New Virtual Reality Game

In selecting BitPay, CNP said that BitPay was one of the first platforms widely adopted for processing cryptocurrency and blockchain-based payments and has become one of the largest and most well-known in the space. It is one of eight first-time winners in this years CNP Awards, nabbing the Judges Choice award in the Best Alternative Payment Solution category. The company has traced the evolution of digital currency, starting by enabling mostly small businesses to leverage a new way to pay online and growing to service enterprises as cryptocurrency gained legitimacy. One of the reasons cryptocurrency continues to gain the confidence of merchants of all sizes is they are protected from chargebacks.

Recommended AI News:Proof Of Impact Launches B2B Platform So Companies Can Track Their Impact

In 2011, BitPay saw the potential to make it easy for businesses to accept blockchain payments and revolutionize the financial industry, said Bill Zielke, Chief Marketing Officer with BitPay. The CNP Award highlights this recognition and supports our goal to move cryptocurrency payments mainstream.

BitPay is a pioneer and leader in global blockchain payments. The Companys suite of products enable businesses to accept cryptocurrency payments globally for ecommerce goods and services or cross border transactions while receiving settlements in fiat currency. In addition, BitPay powers a secure wallet that can be used to store cryptocurrency, make payments or liquidate cryptocurrency to fund a Visa prepaid debit card or dozens of retail gift cards.

Share and Enjoy !

Read more:
BitPay Awarded Best Alternative Payment Solution from CNP Summit - AiThority

What is hodling?According to Bitcoin analyst Phillip Swift, 60% of all the Bitcoin (BTC) available has not moved in the last one year essentially, this 60% of the cryptocurrency has not been traded at all. This is known as hodling a term that means holding but is spelled as such due to a typing error.

60% of all bitcoin has not moved on the blockchain for at least 1 year. This is an indication of significant hodling. The last time this happened was in early 2016, at the start of the bull run, said Swift.Advertisement

Advertisement

Interest from institutional investors like Goldman Sachs turned Bitcoin investors bullishOne of the reasons behind the massive hodling in Bitcoin could be the interest from institutional investors like Goldman Sachs and hedge funds.Advertisement

Apart from GS, well known hedge fund manager and founder of Tudor Investment Corp., Paul Tudor Jones came out in support of Bitcoin. Bitcoin reminds me of gold when I first got into the business in 1976, he said in a market outlook note.

The best profit-maximizing strategy is to own the fastest horse. If I am forced to forecast, my bet is it will be Bitcoin, he further added.Advertisement

Bitcoin stalls at key $10,000 resistance level, but has significant upside if it can break through

Billionaire investor Paul Tudor Jones says he's loading up on bitcoin (GBTC)

See the article here:
Bitcoin hodl waves indicate 60% of the cryptocurrency is being hoarded analysts suggest a bull run could be - Business Insider India