Daily Archives: January 13, 2021

The U.K. Treasury has released a consultation paper to gather feedback from stakeholders concerning the governments regulatory approach to cryptocurrencies and stablecoins.

The consultation solicits opinions on how the U.K. can make sure its regulatory framework is equipped to harness the benefits of new technologies, supporting innovation and competition, while mitigating risks to consumers and stability, and incorporates advice from the Cryptoassets Task Force.

With a large proportion of crypto assets falling outside regulatory oversight, the Treasury says they may pose a risk to consumers and lack financial safeguards.

The U.K. is planning a a staged and proportionate approach to new crypto asset developments, taking a focus in the paper on stablecoins cryptocurrencies that generally aim to have a stable value by being backed by assets such as the U.S. dollar.

[T]he landscape is changing rapidly. So-called stablecoins could pave the way for faster, cheaper payments, making it easier for people to pay for things or store their money. There is also increasing evidence that [distributed ledger technology] could have significant benefits for capital markets, potentially fundamentally changing the way they operate, said John Glen, M.P., the Treasurys economic secretary, said in the papers introduction.

However, he said, such developments could pose a range of risks to consumers and, depending on their uptake, to the stability of the financial system.

The consultation focuses particularly on developing a sound regulatory environment for stablecoins, which the U.K. government considers have most urgent risks and opportunities.

Since the announcement of the Facebook-backed libra project (now rebranded as diem), regulators and governments worldwide have raised concerns over the potential effects of so-called global stablecoins on financial stability and even monetary sovereignty.

The U.K.s Financial Conduct Authority has already issued guidance on crypto assets including exchange tokens like bitcoin, ether and XRP setting out which do and dont fall under its jurisdiction in July 2019.

This new consultation will focus on the roles of crypto assets and stablecoins in payments and investment, as well as the use of blockchain or distributed ledger technology in financial markets. It will also look at additional regulatory actions that might be required in the space.

The paper marks the second Treasury-led crypto consultation. The first, announced last summer and concluded in October, set out plans to increase oversight into cryptocurrency promotions in order to protect investors. The results will be published in due course, the Treasury said in the new paper.

The FCA recently banned the sale of derivatives and exchange-traded notes, saying it considers the products to be ill-suited for retail consumers due to the potential harm they pose.

Responses to the consultation paper are being accepted until March 21.

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UK Treasury Calls for Feedback on Approach to Cryptocurrency and Stablecoin Regulation - CoinDesk - CoinDesk

An illustration of bitcoin on Euro banknotes.

Nicolas Economou | NurPhoto via Getty Images

The extreme movements up and down are relatively common for bitcoin and are expected to continue.

"The only thing I can expect for sure is volatility," said David Yermack, a professor of finance at New York University Stern School of Business. "From day one, this has been a risky investment for people."

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Bitcoin has seen both astronomical growth over the last decade and major selloffs at various points in between. Although many bulls point to its past performance as a sign that the cryptocurrency will continue to surge in the future, that might not happen, according to Yermack.

"It's a purely speculative asset," he said, adding that while bitcoin has grown in popularity, it's still not considered a mainstream investment, meaning that many have little information about the asset.

"You should never invest in anything that you don't understand," said Yermack.

Financial experts generally advise that people looking to invest in bitcoin allocate a small amount of their portfolio that they'd be okay with losing entirely to the asset. The U.K.'s Financial Conduct Authority just issued a similar warning.

"People should only invest really what they're willing to lose," said Daniel Polotsky, CEO of CoinFlip, one of the largest bitcoin ATM companies in the U.S.

He added that people near retirement, those who will need the money they're investing near term or people who are looking to trade frequently to make a profit may want to reconsider bitcoin as an asset for those goals.

"Maybe there are more opportunities to make money because it's so volatile, but it can get very addicting very quickly to start trading back and forth," he said. "And, most of the people that do that lose money."

People should only invest really what they're willing to lose

Daniel Polotsky

CEO, CoinFlip

If you are going to assign part of your portfolio to a speculative asset like bitcoin, take a disciplined approach and impose rules for buying and selling, said David Sacco, an economics professor at the University of New Haven.

"You can get experience and not blow yourself up in the process," he said.

There are also potential ways to invest in the idea of cryptocurrency without putting money directly into an asset as volatile as bitcoin, according to Yermack. That could mean investing in large technology companies utilizing Blockchain such as IBM or media companies with their own digital currencies, such as Facebook.

In addition, Coinbase, the largest U.S. cryptocurrency exchange, recently filed for an initial public offering, meaning it could be available to retail traders in the future.

To be sure, there are many bulls who see bitcoin exploding in value in the future as adoption continues and more large institutional investors buy into cryptocurrency.

To those determined to hold bitcoin for the long run, the most recent selloff after hitting a record high is not a huge concern.

"This is definitely to be expected," said Polotsky, adding that he expects bitcoin to continue to climb in the future and sees the recent dip as a potential buying opportunity for those that expect to hold the asset long-term.

"I think today we saw some profit taking investors liquidating, but if you're a bitcoin bull and you have a long-time preference, you know that corrections are normal," said Harry Alford, co-founder of Humble Ventures, on "Squawk on the Street" Monday.

He's not fazed by the recent selloff, he added, and believes that cryptocurrency can lead to financial freedom for Black Americans or other groups. "We're going to see a lot of skepticism turn into curiosity," he said.

Those who want to invest in bitcoin should assess where they stand with other personal finance and investing goals to determine if they have some extra money to put into a risky asset.

If you do, then it's fine to put some money in bitcoin, and to buy on a day when it's down, said Anjali Jariwala, a certified financial planner and CPA and founder of Fit Advisors in Torrance, California.

"Throw some money into it and kind of let it stay in there and season for a while," she said. "Just so you're not making decisions every time there's a fluctuation in price, which at this point happens every few days."

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Bitcoin's roller-coaster ride shows why people should be cautious before investing in cryptocurrency - CNBC

And that has meant cryptocurrency startups too have caught investors attention. CoinSwitch Kuber, a cryptocurrency investment platform, is the latest startup to raise $15 million from Ribbit Capital and San-Francisco based crypto-focused investment firm Paradigm.

This marks Ribbit Capitals first investment in a cryptocurrency firm in India.

While the crypto landscape in India remains nascent, it has been an exciting past 12 months and over time we believe India could be one of the largest global crypto markets. Ashish and the CoinSwitch team have shown tremendous resilience and strong execution in a challenging market, giving us confidence in their potential to build a market leader in the years to come, said Matt Huang, Co-founder and Managing Partner at Paradigm and Arjun Balaji, Investment Partner at Paradigm in a statement.

The Series A funding round also saw participation from Sequoia Capital India and CRED founder Kunal Shah.

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Amid all the Bitcoin hype, another Indian cryptocurrency startup CoinSwitch Kuber gets $15 million in funding - Business Insider India

Stefan Thomas, a German-born programmer living in San Francisco, has two guesses left to figure out a password that is worth, as of this week, about $220 million.

The password will let him unlock a small hard drive, known as an IronKey, which contains the private keys to a digital wallet that holds 7,002 Bitcoin. While the price of Bitcoin dropped sharply on Monday, it is still up more than 50 percent from just a month ago, when it passed its previous all-time high of around $20,000.

The problem is that Mr. Thomas years ago lost the paper where he wrote down the password for his IronKey, which gives users 10 guesses before it seizes up and encrypts its contents forever. He has since tried eight of his most commonly used password formulations to no avail.

I would just lay in bed and think about it, Mr. Thomas said. Then I would go to the computer with some new strategy, and it wouldnt work, and I would be desperate again.

Bitcoin, which has been on an extraordinary and volatile eight-month run, has made a lot of its holders very rich in a short time, even as the coronavirus pandemic has ravaged the world economy.

But the cryptocurrencys unusual nature has also meant that many people are locked out of their Bitcoin fortunes as a result of lost or forgotten keys. They have been forced to watch, helpless, as the price has risen and fallen sharply, unable to cash in on their digital wealth.

Of the existing 18.5 million Bitcoin, around 20 percent currently worth around $140 billion appear to be in lost or otherwise stranded wallets, according to the cryptocurrency data firm Chainalysis. Wallet Recovery Services, a business that helps find lost digital keys, said it had gotten 70 requests a day from people who wanted help recovering their riches, three times the number of a month ago.

Bitcoin owners who are locked out of their wallets speak of endless days and nights of frustration as they have tried to get access to their fortunes. Many have owned the coins since Bitcoins early days a decade ago, when no one had confidence that the tokens would be worth anything.

Through the years I would say I have spent hundreds of hours trying to get back into these wallets, said Brad Yasar, an entrepreneur in Los Angeles who has a few desktop computers that contain thousands of Bitcoin he created, or mined, during the early days of the technology. While those Bitcoin are now worth hundreds of millions of dollars, he lost his passwords many years ago and has put the hard drives containing them in vacuum-sealed bags, out of sight.

I dont want to be reminded every day that what I have now is a fraction of what I could have that I lost, he said.

The dilemma is a stark reminder of Bitcoins unusual technological underpinnings, which set it apart from normal money and give it some of its most vaunted and riskiest qualities. With traditional bank accounts and online wallets, banks like Wells Fargo and other financial companies like PayPal can provide people the passwords to their accounts or reset lost passwords.

But Bitcoin has no company to provide or store passwords. The virtual currencys creator, a shadowy figure known as Satoshi Nakamoto, has said Bitcoins central idea was to allow anyone in the world to open a digital bank account and hold the money in a way that no government could prevent or regulate.

This is made possible by the structure of Bitcoin, which is governed by a network of computers that agreed to follow software containing all the rules for the cryptocurrency. The software includes a complex algorithm that makes it possible to create an address, and associated private key, which is known only by the person who created the wallet.

The software also allows the Bitcoin network to confirm the accuracy of the password to allow transactions, without seeing or knowing the password itself. In short, the system makes it possible for anyone to create a Bitcoin wallet without having to register with a financial institution or go through any sort of identity check.

That has made Bitcoin popular with criminals, who can use the money without revealing their identity. It has also attracted people in countries like China and Venezuela, where authoritarian governments are known for raiding or shutting down traditional bank accounts.

But the structure of this system did not account for just how bad people can be at remembering and securing their passwords.

Even sophisticated investors have been completely incapable of doing any kind of management of private keys, said Diogo Monica, a co-founder of a start-up called Anchorage, which helps companies handle cryptocurrency security. Mr. Monica started the company in 2017 after helping a hedge fund regain access to one of its Bitcoin wallets.

Mr. Thomas, the programmer, said he was drawn to Bitcoin partly because it was outside the control of a country or company. In 2011, when he was living in Switzerland, he was given the 7,002 Bitcoin by an early Bitcoin fanatic as a reward for making an animated video, What is Bitcoin?, which introduced many people to the technology.

That year, he lost the digital keys to the wallet holding the Bitcoin. Since then, as Bitcoins value has soared and fallen and he could not get his hands on the money, Mr. Thomas has soured on the idea that people should be their own bank and hold their own money.

This whole idea of being your own bank let me put it this way: Do you make your own shoes? he said. The reason we have banks is that we dont want to deal with all those things that banks do.

Other Bitcoin believers have also realized the difficulties of being their own bank. Some have outsourced the work of holding Bitcoin to start-ups and exchanges that secure the private keys to peoples stashes of the virtual currency.

Yet some of these services have had just as much trouble securing their keys. Many of the largest Bitcoin exchanges over the years including the onetime well-known exchange Mt. Gox have lost private keys or had them stolen.

Gabriel Abed, 34, an entrepreneur from Barbados, lost around 800 Bitcoin now worth around $25 million when a colleague reformatted a laptop that contained the private keys to a Bitcoin wallet in 2011.

Mr. Abed said this did not dim his enthusiasm. Before Bitcoin, he said, he and his fellow islanders had not had access to affordable digital financial products like the credit cards and bank accounts that are easily available to Americans. In Barbados, even getting a PayPal account was almost impossible, he said. The open nature of Bitcoin, he said, gave him full access to the digital financial world for the first time.

The risk of being my own bank comes with the reward of being able to freely access my money and be a citizen of the world that is worth it, Mr. Abed said.

For Mr. Abed and Mr. Thomas, any losses from mishandling the private keys have partly been assuaged by the enormous gains they have made on the Bitcoin they managed to hold on to. The 800 Bitcoin Mr. Abed lost in 2011 were a small fraction of the tokens he has since bought and sold, allowing him to recently buy a 100-acre plot of oceanfront land in Barbados for over $25 million.

Mr. Thomas said he also managed to hold on to enough Bitcoin and remember the passwords to give him more riches than he knows what to do with. In 2012, he joined a cryptocurrency start-up, Ripple, that aimed to improve on Bitcoin. He was rewarded with Ripples own native currency, known as XRP, which rose in value.

(Ripple has recently run into legal troubles, in part because the founders had too much control over the creation and distribution of the XRP coins.)

As for his lost password and inaccessible Bitcoin, Mr. Thomas has put the IronKey in a secure facility he wont say where in case cryptographers come up with new ways of cracking complex passwords. Keeping it far away helps him try not to think about it, he said.

I got to a point where I said to myself, Let it be in the past, just for your own mental health, he said.

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Lost Passwords Lock Millionaires Out of Their Bitcoin Fortunes - The New York Times

After a strong 2020, the cryptocurrency market has started witnessing volatility in 2021 but the new year seems to have put the wind into the sails of at least one virtual currency.

Data from Coinmarketcap shows the price of Stellar (XLM) surged over 120 percent in the 12 days of 2021 to become the ninth-largest cryptocurrency by market capitalization.

On January 13, 3:45 pm, the token was trading at $0.29, up 123.07 percent, or $0.16, compared to the 2020 close of $0.13. Over one year, XLM is up 800 percent, with its latest spurt being accompanied by a rise in volumes -- dubbed by analysts as a good sign.

The immediate outlook for Stellar looks bullish, analysts said.

The price is above 50-day and 25-day exponential moving averages. Therefore, in my view, XLM will continue bouncing back as traders eye the all-time high of $0.40, Crispus Nyaga told InvestingCube. The cryptocurrency will have to fall drop below yesterdays low of $0.2123 to invalidate this trend, he added.

Analysts say this rally is driven by Ripple (XRPs) legal woes, such as its battle with the US Securities and Exchange Commission. (On December 22, SEC filed a lawsuit against Ripple Labs, XRPs largest stakeholder, for raising $1.3 billion over seven years by selling XRP to retail investors.)

Besides, XLM is also helped by Stellars announcement of its collaboration with Ukraine. The company is helping the Ukraine government in establishing a central bank digital currency (CBDC).

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This cryptocurrency has more than doubled in 2021: Know all about it - CNBCTV18

Benzinga

I'm a nosy person, so I elbowed my millennial colleague, Jessa, in the next cube over, and asked her, "Pssst... How much do you save for retirement per year?"Instead of ignoring me, she furtively Slacked me all of her financial details (it was like a giant ice cream sundae for a finance nerd): * Jessa, at 28, still owes $15,000 in student loans, and her husband, who is 30, still owes $20,000. * They owe $12,000 on their car loans. * Jessa and her husband have a $200,000 mortgage. * She currently saves $0 toward her retirement plan. (Sorry, but that's not enough, friend.) * She and her husband need help from Facet Wealth -- a virtual full-service financial planning service with dedicated certified financial planners.According to a survey by Bank of America, a surprising 16% of millennials between the ages of 24 and 38 now have at least $100,000 saved for retirement.Whooo hooo! That's cause for celebration. But what about Jessa? What does she need to do to get out of debt and save enough for retirement?Why Millennials Struggle to Save for Retirement Why do millennials like Jessa struggle to save for retirement? 1. Housing costs: The No. 1 response (37%) for millennials is the cost of housing, according to the Retirement Pulse Survey. 2. Supporting family members financially: Millennials often support extended family members with their income. This doesn't even involve the amount you need to save to put kids through college -- remember, financial aid doesn't cover everything. 3. Not enough income: The State of Our Money shares that more than half of millennials (55%) don't have a retirement savings account, such as a 401(k) or IRA. About 46% said unemployment was to blame. 4. Student loan debt: As of September 2017, the average graduate from the class of 2016 owed more than $37,000 in student loan debt, according to Student Loan Hero. "Yep, yep and yep," she said, when I showed her these numbers. "We hit three of these four categories. I just can't afford to put money in my retirement account right now."What My Millennial Colleague Needs to Do -- and Here's What You Can Do, Too! Feel like the percentages stack against you? Here's what to do next.Tip 1: Analyze interest rates. As soon as I said the words "interest rate," Jessa flopped over in her desk chair and pretended to fall asleep.I knew Jessa and her husband refinanced their home this past fall, and I asked her about their interest rates. She was paying only 3% on their home and student loans. I suggested asking Facet Wealth if they should invest in retirement more aggressively than pay down debt on their loans. (It's what I would vote for!) On the flip side, if you have high interest rates on your own student loans, I'd suggest asking Facet Wealth about paying off debt if your loans carry a higher rate than your investments earn before taxes. Tip 2: Consolidate those student loans -- but there's a catch. Consider consolidating student loan payments only if you can lower your payment without stretching out your loan term. In Jessa's case, she could use the extra money to start compounding her retirement savings.Tip 3: Get cracking on that retirement plan. Jessa must save at least 10% of her income. It's the rule of thumb cited by most financial advisors and other money experts. If Jessa doesn't want to struggle to keep her head above water after retirement, she needs to invest 10% of her income each year. And none of this "invest just enough to get the employer match" crap. In most cases, that's not enough retirement savings for most people and it won't scratch the surface toward creating a hefty nest egg. Tip 4: To get really rich, invest at least 15%. If Jessa wants to get really rich as a passive investor, she'll invest at least 15% of her income. She won't get Warren Buffett rich, of course, but if she wants at least $1 million in liquid assets beyond her home value, she'll shoot for saving 15%.That goes for anyone who invests for retirement. Tip 5: Never, ever borrow from your retirement plan. You can lend yourself money from your retirement account, but it's not a good idea. Jessa's retirement plan is off limits, and so is yours. Assume that money is in lockdown. Period.Why? * You lose compounded growth on your earnings. * You repay the loan with after-tax money, which means the interest you pay will get taxed again when you withdraw it at retirement (unless you borrow from a Roth 401(k). * If you leave your job, you'll have to repay the loan, typically within 60 days of leaving. If you can't, you'll owe taxes on the balance and a 10% penalty as well if you're under 55.You don't want to mess with all that.Tip 5: Take time to review what options are best for you. Once you've got retirement savings under control, you may want to take a look at other potential opportunities. Maybe Jessa and her husband want to dive into real estate investing or get cracking on several side hustles. Whatever it is, she needs to make sure it's worth her time and energy and can contribute toward her long-term goals.Tip 6: Do your own research. Jessa is a proud graduate of a liberal arts college, which means she's a lifelong learner. Here's another thing she'll do to maximize her success: She'll read everything she can get her hands on. She'll research funds and options within her 401(k), read investing books, books about real estate, articles about destroying debt and more. She'll absorb blog posts, listen to podcasts and develop her own investing philosophy. She'll be her own advocate when it comes to her own needs, risk tolerance and more, and you can, too.How Much Retirement Money Should You Aim to Save? Jessa is 28, but millennials span a wide range of ages -- from 24 to 38. Check out the rules of thumb for savings at each age.Savings Goal for Your 20s Accumulate 25% of your overall gross pay during your twenties. You might need to lower this amount if you've amassed a giant amount of student loan debt. Savings Goal for Your 30s Have at least one year of salary saved by the time you turn 30. If Jessa makes $100,000, she should have $100,000 saved. Savings Goal for Ages 35 to 40 Those of you on the mid-thirties end of the millennial spectrum should have double your annual salary saved. You should have four times your yearly salary saved if you're 40. Steps to Get There If she's serious about getting out of debt and saving enough for retirement, Jessa must do these three things.Step 1: Get started. This article won't help -- if she (or you) do nothing about it. You must take action if you truly want to save enough and get out of debt. It takes time and discipline and not even very much money per month (depending on your age).Step 2: Invest aggressively, automatically. Two facts: * If you start at 24, you can have $1 million at age 69. All you need to do is save $35 per month -- and get a 10% return on your investments. Save more, and you'll become a millionaire more quickly. * If you start at 40, you can save $1 million by saving $561 per month, assuming a 10% return. I informed Jessa that since she has $0 saved for retirement at this point, she can start saving at least $158.15 per month for 40 years with a 10% return and still be able to become a millionaire.$158.15 -- that's the cost of a pair of new shoes each month, I informed her. Get Facet Wealth on Your Side Nobody ever says, "Be your own doctor." Why would you assume, then, that you should be your own financial advisor (unless you're a financial analyst or advisor)?You need Facet Wealth, which can help you achieve a more prosperous life by helping you work with a dedicated CFP Professional at an affordable price.Jessa informed me that she'd signed up for our company retirement plan and also made a plan for getting out of debt the very next day.I bought her a cupcake and set it on her desk. It was cause for celebration.See more from Benzinga * Click here for options trades from Benzinga * 8 Must-Know Tips for Getting a Background Check on Your Work-from-Home Employee * 2021 Crypto Preview: Here's What's Coming Next(C) 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Cryptocurrency Stellar Has Surged 180% Over A Week Here's Why - Yahoo Finance

A California man who duped investors out of $147 million in a global digital currency scam of epic proportions has been sentenced to 10 years in prison, federal prosecutors said.

Steve Chen cheated some 72,000 investors worldwide by passing off his company US Fine Investment Arts as an extractor of amber and other gemstones from non-existent mines in the US, Dominican Republic, Mexico and Argentina, according to the US Attorneys Office for the Central District of California.

Prosecutors said Chen sold investors points for shares between $1,000 and $30,000 each when the company would later go public but he never intended for that to happen.

Chen, of Bradbury, later started peddling a phony digital currency called Gem Coins in September 2014 in lieu of the fake stock, falsely promoting them as legitimate cryptocurrency backed up by the companys gemstone holdings, prosecutors said.

Chen promoted the Ponzi scheme, which lasted from July 2013 to September 2015, using a marketing program that compensated investors for recruiting others with new USFIA investors payments, prosecutors said.

Because the primary focus was on recruiting other investors, rather than selling USFIA products to retail customers, the vast majority of investors were destined to lose money while making [Chen] very wealthy, prosecutors wrote in a sentencing memo.

The company offered cash, travel, luxury cars and homes throughout Los Angeles to investors who recruited others to buy the bogus investments, prosecutors said.

The amber and other gemstones cited in investment packages, including some at the companys Arcadia headquarters, were from domestic and foreign suppliers at very inflated prices despite being worth much less.

Gem Coins had no circulation in any industry, were not accepted by any merchants, and no economic value, prosecutors said in a statement Monday.

Chen, who pleaded guilty to conspiracy to commit wire fraud and tax evasion last June, was also ordered to repay more than $1.8 million to the Internal Revenue Service. In 2014, Chen reported an income of $138,015 when he had actually earned more than $4.8 million, prosecutors said.

A judge in the case who noted Chens litany of lies that led to a scam of epic proportions scheduled a hearing in July to determine how much he must repay victims.

A second man who worked with Chen has also been charged in the scheme. Leonard Stacy Johnson, 54, of Huntington Beach, pleaded guilty to tax evasion and making a false statement on an immigration document in July 2019. Hes set to be sentenced in May, prosecutors said.

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CEO who scammed investors with bogus cryptocurrency gets 10 years - New York Post