Category Archives: Cryptocurrency

North Island Chairman and Co-founder of Silver Lake Partners Glenn Hutchins and his son James, Co-founder of North Island Ventures, speak with Yahoo Finance editor-in-chief Andy Serwer about the cryptocurrency market as well as how the U.S. economy is doing months into the COVID-19 pandemic.

- Glenn Hutchins co-founded Silver Lake in 1999, and it has become one of the world's largest private equity firms investing in technology companies. It is invested in some of the biggest names in Silicon Valley, including Airbnb and Twitter. Hutchins serves on several boards and is a part owner of the Boston Celtics. He now runs North Island with his son James. It invests mainly in financial companies and the crypto space.

ANDY SERWER: Hello, everyone. I'm Andy Serwer, editor-in-chief of Yahoo Finance, and I'm joined by Glenn Hutchins, chairman of North Island-- He was the co-founder of Silver Lake and part owner of the Boston Celtics-- and his son James, who runs North Island ventures. Gentlemen, great to see you. Thanks for joining us.

GLENN HUTCHINS: Hello, Andy.

JAMES HUTCHINS: Hi, Andy. Thank you.

ANDY SERWER: So James, I have to start with you. I'm going to ask you, tell us how you guys work together and what's that like a little bit.

JAMES HUTCHINS: You know, it's actually been one of the most amazing experiences of my life. Growing up, my dad was just my dad. He was my little league coach. He was the guy that I sat and watched sports with. I kind of knew, off to the side, that he was this respected member of the private equity community, but he bring that home.

So it's been really nice to kind of see him in a work setting. And you know, he's just a fount of wisdom. He pulls on 30 years of experience IN investing this to help me and my partner Travis be better investors. And it's been a really amazing experience so far.

ANDY SERWER: Well, Glenn, that must make you feel pretty good, some nice words there from your son. And talk about--

Story continues

GLENN HUTCHINS: I think we can just stop right there, Andy.

ANDY SERWER: OK, we're done.

GLENN HUTCHINS: We're done.

ANDY SERWER: It's all downhill from here. Is that what you're suggesting?

GLENN HUTCHINS: Exactly.

ANDY SERWER: No.

GLENN HUTCHINS: Exactly.

ANDY SERWER: Anyway, that must be nice to hear. And talk a little bit more specifically about how you worked together and what James is doing right now. We're pretty familiar, I guess, with your career, but tell us what James is up to.

GLENN HUTCHINS: Yeah, so I would-- the first thing I would say, Andy, is this is not a family business. This is one of the early movers in the crypto venture capital space. James and his partner Travis both bring a very-- top-shelf investing experience. James was the head of research at Coatue, which is the world's largest tech hedge fund, I think. Travis had been the head of investments for Digital Currency Group, which is one of the leading cryptocurrency companies, where I sit on the board and I'm a shareholder. And so the first thing this is is these are two of the best investors kind of in the space, independent of, in my view, kind of our family relationship. That's kind of point one.

I think the second thing is that-- people need to understand is that James and Travis are the managing partners, and I'm just in the general partner. They're the ones really doing all the work and making the investments, doing the due diligence, working with the companies.

And my role has largely been to do two things. One is to help them think about investments and particularly, portfolio construction. And the second is to help turn these companies that we're investing in-- these projects that we're investing in-- into companies.

The cryptocurrency world is at the time period in which you're going from building products to forming business models around products. That's the stage of its development. And unlike other investors in this space that are focused primarily on the coins and the tokens, like Bitcoin or Ethereum or other things like that, we're overwhelmingly focused on building companies. And so that's my second contribution.

ANDY SERWER: Hey, James, I'm curious about the back and forth between you guys when it comes to crypto. And you know, I know your dad knows a lot about crypto. I mean, he was explaining it to me years ago. So at first, maybe the learnings came from him. But at this point, are you telling him stuff about crypto that he doesn't know?

JAMES HUTCHINS: Well, I mean, I'd say, you know, we both collaborate. You know, he brings this 30 years of investing in finance and technology. And I would say, you know, I'm taking what he taught me about crypto and kind of expanding it. So we've taken his view of how this is the next great kind of payments technology, and we're thinking about, how can you build new types of businesses, new types of online communities around that. So at the end of the day, we're kind of standing on his shoulders at all times, really.

GLENN HUTCHINS: So I came at this, Andy, as a-- out of fintech. And when you and I probably first talked about this many years ago, my view was this was the place that we could transform the cost and convenience of payments, which is a still undisputed part of the financial services accounting-- particularly credit cards, but also remittances, foreign exchange transactions, those sorts of things.

What James has done, together with Travis, is really extend my understanding, first of all, that this technology can address anything of value, not just the conventional payments world. And second, that it actually points in the direction of a brand new computing paradigm, which is really transformative.

ANDY SERWER: Glenn, let me shift gears a little bit and pick your brain about the recovery-- the US recovery right now. Where do you think we are at this point?

GLENN HUTCHINS: Well, so third-- second quarter was down 1/3. Third quarter was up 1/3, which means you're still about 17% short of where you started, right? Because you need to go back up 50% to get back to the-- get the 1/3 back that you lost. So we're starting out down about 17%.

And so the way I put it is the depression is over, and now the recession is setting in. We're not in a period of recovery. You shouldn't confuse the bounceback as one of recovery, in my view. And the long-term consequences of the damage done to the economy by the fundamental mismanagement of the pandemic are what we're dealing with right now. So I would say we're in-- we've gone from-- the good news is we're no longer in depression-like circumstances. The bad news is we're in pretty severe recession-like circumstances.

ANDY SERWER: And what about a stimulus here, Glenn, and why has Congress struggled so mightily to get this done?

GLENN HUTCHINS: Well, stimulus is absolutely vital. I mean, there's a piece of analysis up on the Brookings website right now that demonstrates we need about $2 trillion of stimulus to get back to trend growth. And it almost certainly needs to be heavily tilted toward unemployment insurance because that's what's clearly has had the most amount of impact, given the nature of this problem, which was a sudden shock to employment.

The political experts can explain to you why we're not getting anything done. Look, from my perspective, it's some combination of the Senate Republicans decided to focus on a Supreme Court nomination rather than stimulus. They clearly prioritized that, so valuable time was wasted there.

And according to the new, most recent analyses, they actually are-- you need 13 Republicans to team with the 47 Democrats to get something done. And there is such an ideological opposition to spending more money that they're actually having trouble getting-- rounding up-- getting consensus around those 13 Republicans to get things done. So I-- but I-- but that's just what I read in the newspapers. It's really too bad because the economy vitally needs it.

If we had had the OECD the average, the 38 most wealthy countries in the world performance with respect to management of the pandemic, we would've had about-- there's another Brookings report on this. We would have about 100,000 less people die and nearly 9 million fewer people unemployed. So we're in a-- you know, you saw the China economy starting to grow again. We're in a very bad place with respect to how we managed the pandemic. And the economic consequences that are manifest, and they're going to be long term and they need to be addressed.

ANDY SERWER: James, over to you, I want to ask you about crypto in the time of COVID. How has the pricing and the markets gone during this time? I mean, and it speaks to this larger issue of what is crypto in the world of crypto writ large correlated to? But why don't you take the first part of that first.

JAMES HUTCHINS: Sure. So like everything at the beginning of the pandemic in March, there was this risk-off period where there were some large drawdowns and selldowns both in the Bitcoin and Ethereum markets. However, you know, as people started to realize that, you know, cryptocurrencies are this global permission in this financial system where anyone can kind of access these markets, anyone can send money around the world, there has actually been a huge rebound. And actually, for the last three or four months, we've seen an enormous explosion in decentralized financial applications built on Ethereum. And so we've actually seen a huge boom time during the COVID crisis because people have started to understand the power of digitally-native finance in a time of kind of lockdowns and everyone stuck inside.

ANDY SERWER: And what do you think crypto-- you know, when will it sort of become-- hit-- become a mass thing, in terms of financial services? So right now, you keep saying it's sort of on the edges of things, and JPMorgan kind of says this-- yup, we're all-- we love crypto too, but you know, we're not really-- that's not mainstream for us. Talk to us about the future evolution of this world, if you will.

JAMES HUTCHINS: Sure, happy to. So we're starting to reach kind of mainstream adoption in the stablecoin space. So stablecoins are dollar-denominated crypto assets that live on these networks like Ethereum. And they allow anybody to kind of access the US dollar market. And this year, we're going to see about $800 billion of transactional value in stablecoins, which is about half of the percentage of kind of the annual global transaction volumes. So I would say we're getting pretty close to kind of real usage at a large scale in stablecoins.

And then the other place that we see kind of the beginnings of mass adoption is in crypto collectibles or video games. And so taking a step back, crypto networks are the first place where you can have provable digital ownership of items. For the first time, I can prove that I own a trading card, I own a piece of a video game. And companies like Flow are starting to build video games with large brands, like the NBA, in this game calle NBA Top Shot where you can buy, sell, and trade NBA trading cards. And I think that might be the first place where we see kind of real mass adoption of kind of crypto.

GLENN HUTCHINS: And the trading card isn't a conventional trading card like you'd think of it.

JAMES HUTCHINS: No.

GLENN HUTCHINS: Right? It's a unique video clip of your player doing something important as a trading card.

ANDY SERWER: It's all new stuff. Hey Glenn, how much of a existential threat is crypto to legacy financial services companies, ultimately?

GLENN HUTCHINS: Well, I-- look, I think that the important thing about crypto is that it worked inside the regulatory framework for various countries. So there will always be a role for deposit-- regulated deposit-taking institutions that operate inside the AML, KYC, deposit insurance, all that kind of heavy capital-invested type of framework.

The-- I think the primary place where crypto is addressable is all the other products and services that don't relate directly to deposit-taking and lending, for the technology associated with the infrastructure and the payment system, the custody system, the clearing, all the kind of stuff which turns out to be the high profit-margin business for a lot of these banks but aren't at the center of their regulated kind of mission. I think that's the kind of most important piece of it.

But the-- I think later on, what we will see is this new form of computing, which is decentralized, will eliminate the need for large hierarchical institutions, like big banks, to be the owners of the truth about who owns what. And as a consequence of which, that takes a massive amount of cost out of the system and revolutionizes the cost basis of finance. And that'll challenge the business model of some of the largest institutions. That could take time. But don't forget, in technology, we always overestimate what can happen in a year and underestimate what can happen in a decade.

ANDY SERWER: Right, sure enough. Hey, let me switch over to politics, Glenn. I remember you telling me early on in this campaign season that the candidate should be Joe Biden for the Democrats until proven otherwise. And I think that the way you actually framed that, it actually came to pass. In other words, there was no proving otherwise, and we have Joe Biden. How do you feel about him as a candidate right now, and what do you think his chances are to win very soon?

GLENN HUTCHINS: So Andy, one of my rules in investing is only fools predict interest rates, stock prices, and elections. So I'm not going to do that. But I will tell you, from a business person's perspective, I think the main point here is that the centrist-- centrists consistently have won in the Democratic party in '18 and '20.

And the kind of policies that Joe Biden is putting forward is those that he will adopt that he used-- that he ran on in the primaries and that he says he will adopt as president have been reviewed by, you know, places like Goldman Sachs and Moody's and Penn Wharton and all those and all are ones that will promote economic growth. So I think, from the business perspective-- business community's perspective, there should be nothing to be concerned about with respect to a Biden presidency, if it comes to pass.

ANDY SERWER: If it comes to pass, one of his proposals is an increase in taxes for corporations and Americans making more than 400k. That doesn't concern you?

GLENN HUTCHINS: Well, not-- it's a return to tax policy very similar to what happened during the Obama and Clinton administrations in which there was booming economic growth, terrific stock market performance. The reason why the analyses of those plans turn to be positive is that money turns around and gets reinvested in a variety of initiatives that are growth promoting.

And you know, you have to remember that the Trump tax cut was largely used for stock buybacks. It did not have-- generate significant increase either in investment or in employment. And so as a result of which, it didn't generate any economic growth. The economic growth of the four quarters preceding the Trump tax cut is identical to the economic growth in the four quarters following it.

ANDY SERWER: Right.

GLENN HUTCHINS: And so we need to have an economic policy that promotes growth and also that protects the balance sheet of the American government.

ANDY SERWER: Yeah. Back in May, you told me that many retail stores were likely to go away permanently after the pandemic. Still feel that way?

GLENN HUTCHINS: Well, look, I think there's a whole host of economic arrangements, largely around the bricks-and-mortar economy, that are going to have a very tough time. Well, you've seen the number of retail bankruptcies there've been, right? You know, and the weakest of those-- Penney, Sears, et cetera-- are kind of laboring mightily.

But also, I think commercial real estate will be significantly resorted, right? Plus other fundamental changes in commuting and all the infrastructure around that. So I think that the-- as we said earlier, the pandemic will cause-- accelerate a bunch of changes that are already in place plus promote some new ones, like the Zoom economy. But I think the weak wildebeest at the back of that herd it's probably the physical retail companies are were already laboring entering the crisis.

ANDY SERWER: James, does it matter for crypto if there is a Biden presidency or Trump second term?

JAMES HUTCHINS: No. I mean, we're very early in the life of crypto, and it's about just enabling developers to keep building. And I don't think politics really factor into how crypto will do in the next couple of years.

ANDY SERWER: Let me ask you both about LL Cool J, who is on our program. And I understand that you guys have maybe both a personal and business relationship with him-- or I guess I should say business and personal relationship with him. James, why don't I start with you?

JAMES HUTCHINS: Sure, so I call him Todd. So I met LL Cool J as Todd, in his business capacity. And he was beginning to start Rock The Bells, and I had done a lot of research in the digital media space. And you know, we really hit it off. He's a really exceptional person. And I helped him think through his business model on Rock The Bells, and it was just-- it was a really special experience. Todd was an incredibly gracious host to me in LA, and I'm really excited to-- about what he's building.

ANDY SERWER: Glenn, what's your take on this?

GLENN HUTCHINS: Well, look, I think it's great. Todd is a-- as James said-- is a really great human being. You know, he-- in addition to being kind of one of the people who created-- really invented rap, he had been very successful as an actor, in addition to being a performer, and a business person in the business space. He owns the franchise for "NCIS-- I guess-- Los Angeles," as well as "Lip Sync Battle," as well as having his own Sirius XM channel. So this is a-- he's a real entrepreneur and a polymath.

I had the good fortune of meeting him when we gave the award at Hutchins Center for African and American Research at Harvard. We got to know each other. I introduced him to the venture capitalists, Jeff Yang, who kind of put-- with whom he created Rock The Bells. And then they hired James to write the business plan with him. So it's been-- and we're all investors in it. So it's great. So we wish Todd nothing but the best.

ANDY SERWER: I still can't get used to calling him Todd, but I'll let you guys keep doing that. Hey, last question here for both of you-- Glenn, I'll start with you. What advice do you have for a father and son looking to work together?

GLENN HUTCHINS: All I say is James, what is your advice?

JAMES HUTCHINS: Oh man. You know, it's just all about, you know, leveraging the foundation that you have as a father and son. Don't try to be anything that you're not, and just go from there. I think that's the power of the relationship-- the business relationship that my dad and I have is that we don't try to be anything other than father and son, and I think that really makes us special and unique.

GLENN HUTCHINS: And I think the other thing I would say, Andy, is I think I would recommend this to a lot of parents who were thinking about this-- fathers and mothers-- is it's very important for the kids to go out into the real world and prove themselves first for two reasons. One is because they gain enormous experience and credibility. And the second is because then they have-- it's an addition to their self-confidence, that they know they were tested in the real world first before we did this thing together.

ANDY SERWER: We're going to leave it at that. Glenn Hutchins and James Hutchins, thank you both so much for your time, and best of luck to you.

GLENN HUTCHINS: Thank you, Andy.

JAMES HUTCHINS: Thank you, Andy.

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Glenn and James Hutchins on cryptocurrency and economic recovery - Yahoo Finance

Cashaa, a London-based online cryptocurrency platform, has tied up with the United Multistate Credit Cooperative Society to provide savings accounts and loans to its customers and crypto investors in India. The society has 56,000 customers and branches in Rajasthan, Delhi and Gujarat. The joint venture called Unicas will offer interest on crypto deposits and the society will also give out loans against cryptocurrency.

Cashaa provides clearing services and offshore bank accounts to cryptocurrency exchanges in India. "For rupee loans against crypto, since the cryptocurrency has to be deposited in our wallet as collateral, the approval is instantaneous. The deposit acts as lien in case of default. This is much easier than taking loans against real estate where title deeds and other documents have to be verified.

Customers can also maintain crypto savings accounts with Unicas and get interest in the same cryptocurrency as the deposit. For instance a bitcoin deposit will get interest in bitcoin, said Kumar Gaurav, CEO, Cashaa.

"We have 56,000 customers and 16 of branches. 90% of our branches are in Tier 3 cities and mostly in Rajasthan, Delhi and Gujarat. Through this tie up, we will open up a new market and also open up cryptocurrency savings accounts and loans for our customers. We are very excited to take this forward," said Dinesh Kukreja, CEO, The United Multistate Credit Cooperative Society Ltd.

Multistate Credit Cooperative Societies are regulated by the Central Registrar of Cooperative Societies rather than the RBI. No specific permission from the registrar is required for this, said Kukreja.

We will also be tying up with other cooperative credit societies in the coming months. We will modernise and digitise their operations. Their branches will act as lounges where people will be given information about cryptocurrency. Our strategy will also rescue a struggling cooperative credit sector which has been forced to close branches and lay off staff due to Covid 19," added Gaurav.

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Crypto platform makes banking entry in India with co-op credit society tie-up - Mint

It is our aim to provide our readers with report forCryptocurrency and Blockchain Market, which examines the industry during the period 2020 2026. One goal is to present deeper insight into this line of business in this document. The first part of the report focuses on providing the industry definition for the product or service under focus in the Cryptocurrency and Blockchain Market report. Next, the document will study the factors responsible for hindering and enhancing growth in the industry. After covering various areas of interest in the industry, the report aims to provide how the Cryptocurrency and Blockchain Market will grow during the forecast period.

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Regional Overview

In this part of theCryptocurrency and Blockchain Marketreport, we will be taking a look at the geographical areas and the role they play in contributing to the growth of this line of business. The areas of interest in this document are as follows Middle East and Africa, South and North America, Europe, and Asia Pacific. From the Cryptocurrency and Blockchain Market report, it becomes clear which region is the largest contributor.

Latest Industry News

From thisCryptocurrency and Blockchain Marketreport, the reader will also get to learn about the latest developments in the industry. The reason is that these products or services have the potential to disrupt this line of business. If there is information about company acquisitions or mergers, this information will also be available in this portion of the Cryptocurrency and Blockchain Market report.

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Post Covid-19 Impact On Cryptocurrency and Blockchain Market Revenue and Growth Rate Forecast 2020 to 2026-Intel Corporation, Microsoft Corporation,...

The Global Cryptocurrency Market report helps industry experts, analysts and business decision makers highlight the current market scenario, opportunities, upcoming market trends, and price analysis. This article on the global Cryptocurrency market offers in-depth analysis by brand, driver, restaurant, general product, and more.

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The prominent players covered in this report:

BitFury Group Limited, Microsoft Corporation, Ripple Labs Inc., Intel Corporation, Advanced Micro Devices Inc., Coinbase Ltd., NVIDIA Corporation, AlphaPoint Corporation, BitGo, Xilinx Inc. and BTL Group Ltd. among others.

To give a complete understanding of the Cryptocurrency market, we looked at the competitive scenario in detail, as well as the product portfolio of the major vendors scattered across different regions. The research report also contains SWOT analysis and industry analysis using PESTEL. The study includes a market attractiveness study in which all segments are compared based on their market size, growth rate and overall attractiveness in terms of investment opportunities and market value growth.

The global Cryptocurrency market is dominated by major players. Cryptocurrency companies in the global Cryptocurrency market have a wide geographic reach, a diversified product portfolio and a strong focus on innovation and research. While the big players dominate the global Cryptocurrency market, some emerging companies are gaining traction with their innovative products and technologies.

Many important companies are focusing on using tactics such as innovative marketing, new product launches, strategic acquisitions and promotional activities, strengthening their distribution networks, and increasing investment in R&D to increase their market share and presence in the global Cryptocurrency market.

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Cryptocurrency Market Segmentation

Type Analysis of Cryptocurrency Market:

Component Segment

HardwareFPGAGPUASICWalletOthersSoftwareMining PlatformBlockchainCoin WalletExchangeType SegmentEthereumBitcoinLitecoinDashcoinRipple (XRP)OthersEnd-User Industry SegmentMedia & entertainmentRemittanceE-commerce & retailPeer-to-peer paymentOthers.

The research also focuses on a comprehensive overview of global Cryptocurrency markets with market dynamics such as opportunities, drivers, constraints, and trends that are estimated to exploit the existing landscape and external status of Cryptocurrency markets. Likewise, the Global Cryptocurrency Market Report contains a number of internal and external factors affecting the industry.

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1. An analysis of the changing competitive scenario is proposed.2. For making informed decisions in business, it offers analytical data with strategic planning methodologies.3. A seven-year Global Cryptocurrency rating is offered.4. Helps to understand the main key product segments.5. Researchers shed light on market dynamics such as constraints, trends and opportunities.6. It offers regional analysis of the global Cryptocurrency market as well as multi-stakeholder business profiles.7. It offers extensive trend data that will influence the progress of Global Cryptocurrency.

1 Cryptocurrency Market Review2 Global manufacturer competition in the Cryptocurrency market3 global Cryptocurrencys: capacity, production, income (cost) by region)4 Global Cryptocurrency supply (production), consumption, export, import by region5 Cryptocurrency production in the world, income (cost), price dynamics by type6 Global Cryptocurrency Market Analysis by Application7 profiles / analysis of global Cryptocurrency manufacturers8 Analysis of production costs by Cryptocurrencys9 Value chain, sourcing strategy and buyers10 Analysis of marketing strategy, distributors / traders11 Analysis of market effect factors12 Global Cryptocurrency Market Forecast13 research findings and conclusions14 Appendix

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Cryptocurrency Market Share Analysis 2020 Top Companies, Business Growth with Size, Trends, Demand Status, Companies Overview with COVID-19 Post...

While the Report acknowledges the potential utility of blockchain technologyincluding its applicability to United States defense strategy, food safety, and the Federal Reserve Systems efforts to implement its own digital currencythe Task Force has detected three common illicit uses of cryptocurrency: (1) financial transactions associated with criminal activity, such as terrorism fundraising, exchanging illegal substances, and child exploitation; (2) money laundering and the shielding of legitimate activity from tax, reporting, or other legal requirements; and (3) crimes that directly compromise virtual asset markets themselves (often theft, fraud, and cryptojacking)[1].

The Report states that, in cooperation with a number of regulatory bodies, enforcement efforts have focused on money services businesses (MSBs) and virtual asset service providers (VASPs). MSBs include currency dealers or exchangers; check cashers; issuers and sellers of travelers checks, money orders, or stored value; money transmitters; and the United States Postal Service. VASPs provide services related to exchanging, transferring, and safekeeping virtual currencies.

The Report also identifies and defines specific business models that may facilitate criminal activities, likely foreshadowing future Department of Justice (DOJ) prosecution targets:

The government has a growing number of tools to prosecute criminal activity involving virtual assets. In addition to identifying familiar fraud, AML/CFT and BSA-related charges, and other provisions of the Criminal Code,[2] the Report summarizes the roles of agencies authorized to enforce regulations pertinent to cryptocurrency business models.

FinCEN. FinCEN primarily administers and implements the BSA, which includes maintaining a database that stores reports of suspected money-laundering transactions. FinCENs relationship with the DOJ centers on crime prevention (via compliance obligations targeting money laundering and terrorism efforts) and investigatory assistance with suspicious activity detected through the mandatory reporting. If a potential crime is identified, FinCEN will refer matters to DOJs Fraud Section, Money Laundering and Asset Forfeiture Section or a local United States Attorneys Office for criminal investigation and prosecution. Interestingly, MSBs need not have a physical presence in the United States to be subject to the BSA; an MSB doing business in the United States may trigger BSA requirements. As a key player in cryptocurrency enforcement, FinCENs role suggests that compliant reporting will maximize the efficacy of the BSA database and promote integrity of cryptocurrency markets.

OFAC. The Treasurys Office of Foreign Assets Control (OFAC) administers and enforces economic and trade sanctions against targeted foreign countries and regimes; terrorist groups; international narcotics traffickers; those engaged in activities related to the proliferation of weapons of mass destruction; those engaged in malicious cyber activities; and other entities that present threats to the national security, foreign policy, or economy of the United States based on U.S. foreign policy and national security goals.[3] Thus, entities that provide or participate in online commerce or process transactions in digital currency must be aware of OFAC sanctions and enact appropriate controls.

OCC. The Treasurys Office of the Comptroller of the Currency (OCC) is responsible for issuing rules and regulations applicable to banks, as well as imposing corrective measures when banks act illegally or exhibit unsafe or unsound practices. The OCC has confirmed in a July 22, 2020 Interpretive Letter that OCC-governed banks may provide custody services to lawful cryptocurrency businesses, as long as banks engage in proper risk management and regulatory and legal compliance.

SEC. The Securities and Exchange Commission also plays a critical role in the cryptocurrency space, particularly through the regulation of the rapid growth of the initial coin offerings (ICOs) market and its widespread promotion as a means for new investment opportunity, which has provided fertile ground for malicious actors to swindle investors.[4] ICOs promote the sale of digital tokens to raise capital in exchange for funding an entitys new project or platform. The Report boasts several enforcement actions made possible through collaboration with the DOJ.

CFTC. The Commodity Futures Trading Commission (CFTC) has statutory authority to regulate certain aspects and uses of virtual assets. Along with multiple federal courts, the CFTC has found certain virtual currencies to be commodities under the Commodities Exchange Act, and thus subject to CFTC oversight. CFTCs jurisdiction is implicated when a virtual currency is the underlying asset in a derivatives contract, or if there is fraud or manipulation involving a virtual currency traded in interstate commerce.[5] Successful enforcement actions show examples of fraudulent activity, which include illegal offerings of margined or financed retail virtual currency, fictitious trades on derivatives platforms, and virtual currency Ponzi schemes.

IRS. The Report also provides a helpful reminder that general tax exposure attaches to virtual currency transactions because the Internal Revenue Service (IRS) treats virtual currency as property. Thus, [i]ncome, including capital gains, from virtual currency transactions is taxable, and virtual currency transactions themselves must be reported on a taxpayers income tax return.[6] Failure to accurately report taxable income could therefore also trigger an investigation and potential civil or criminal actions.

The DOJ intends to continue to pursue tax-related prosecutions for failure to report income from virtual currency and assist with John Doe summons matters, which are IRS investigations approved by a federal court in order to locate taxpayers who are unknown to the IRS. In fact, the IRSs 2020 Draft 1040 adds a line requiring tax payers to answer the question: At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? In the past, taxpayers had to report their virtual currency activityor not, and risk receiving a letter from the IRS requesting amended returns that report virtual currency transactions and income. The 2020 Draft 1040 reflects a more proactive approach to enforcement of virtual currency reporting that likely will result in greater scrutiny of individuals dealing in cryptocurrency and other virtual assets.

State Authorities and International Regulations. Responsible for protecting the investing public through licensing investment firms, registering securities offerings, and enforcing other state securities and banking laws, state authorities are actively investigating virtual currency activity, mainly issuance and sales of ICOs. The Report identifies New York as a proactive state seeking to regulate and gather information in the virtual asset and ICO space.[7]

Internationally, the Financial Action Task Force (FATF) serves as the global standard-setter for AML/CFT standards. In June 2019, FATF issued updated Recommendations setting forth a framework of measures that countries should implement to combat money laundering and terrorist financing. The United States was a founding member in 1989 and served as president from July 2018 to June 2019, during which time it made it a FATF priority to regulate VASPs.

As virtual currency rapidly evolves to apex technological complexity, this framework may appear to be a tangled web of regulatory aspirations arriving too late; however, the Report boasts a number of recent prosecutions that reflect competent enforcement by each of the above authorities. In addition to the notable changes to IRS Form 1040 referenced above, the indictment earlier this month against John McAfee for alleged tax evasion was a strong signal to the cryptocurrency community that DOJ is serious about enforcement. McAfee has been a vocal proponent of cryptocurrency and he allegedly earned millions through consulting and other services.

The Report further confirms DOJs intention to continue developing strategies to respond to the threat of virtual assets, which include:

The release of the Report by DOJ should send a strong message to all who use cryptocurrency or otherwise service the cryptocurrency market that the government is intent on engaging in much stronger regulation and enforcement in the future. If you or your company operate in the cryptocurrency space, you would be well-served to carefully review the developing laws and regulations so you can build an adequate compliance framework and respond to potential threats accordingly.

[1] The Report defines cryptojacking as [t]he unauthorized use of someone elses computer to generate (or mine) cryptocurrency. Report at 16.

[2] The Report references several statutes, including: 18 U.S.C. 1343 (Wire Fraud); 18 U.S.C. 1341 (Mail Fraud); 15 U.S.C. 78j and 78ff (Securities Fraud); 18 U.S.C. 1029 (Access Device Fraud); 18 U.S.C. 1028 (Identity Theft and Fraud); 18 U.S.C. 1030 (Fraud and Intrusions in Connection with Computers); 18 U.S.C. 921 et seq. (Illegal Sale and Possession of Firearms); 18 U.S.C. 2320 (Possession and Distribution of Counterfeit Items); 18 U.S.C. 2251 et seq. (Child Exploitation Activities); 21 U.S.C. 841 et seq. (Possession and Distribution of Controlled Substances); 18 U.S.C. 1956 et seq. (Money Laundering); 18 U.S.C. 1957 (Transactions Involving Proceeds of Illegal Activity); 18 U.S.C. 1960 (Operation of an Unlicensed Money Transmitting Business); 31 U.S.C. 5331 et seq. (Failure to Comply with Bank Secrecy Act Requirements); 18 U.S.C. 982 and 21 U.S.C. 853 (Criminal Forfeiture); and 18 U.S.C. 981 (Civil Forfeiture).

[3] Report at 26.

[4] Id. at 29.

[5] Id. at 32.

[6] Id. at 33.

[7] Report at 34.

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Cryptocurrency 101 DOJs New Cryptocurrency Enforcement Framework Provides Guidance And Promises Of Heightened Scrutiny Of Virtual Assets Through...

A pro-democracy protester gives the three-finger salute while holding up a sign on an electronic ... [+] tablet during an anti-government rally on the outskirts of Bangkok on October 19, 2020. (Photo by Jack TAYLOR / AFP) (Photo by JACK TAYLOR/AFP via Getty Images)

In a COVID-19 era marked by aggressive political consolidation and economic troubles, there have been sparks of protests around the world. From Hong Kong, to the United States to Nigeria, to Thailand, to Belarus and beyond no corner of the world has been untouched by a wave of fresh political protests.

Their causes are diverse: fighting against established political classes, opposing police brutality or calling for reexaminations of elections with possibly fraudulent vote counts.

Yet their concerns are common: they are aligned against powerful and entrenched politicians who largely control trust within their borders. From use of force against dissidents to regulations that control domestic banking systems to the control of state-affiliated media, political incumbents have a lot of power to wield to advance their interests. In order to create meaningful dissent, you have to work around that power.

Cryptocurrency offers one way to doing so. From the payment processor side, you can set up your own payment service using open-source software such as BTCPay. With decentralization, you dont rely on any third-party organization to vet or potentially censor your payments, and there are no processing fees: a stark contrast from the conventional banking system in nation-states that are largely dependent on the corpus between political and legal power to maintain their good financial standing.

An example of this is the Feminist Coalition, an organization of Nigerian activists, moving to accept donations in bitcoin as part of the #EndSARS movement dedicated to fighting police brutality in Nigeria. The Feminist Coalition has reported that its bank account has been shut down, along with a donation link provided by centralized payment processor Flutterwave. Flutterwaves chairman is Tunde Lemo, a former deputy governor of the Central Bank of Nigeria.

The move to bitcoin not only helps the Feminist Coalition to be resilient to censorship for payment processors who are entrenched in traditional power structures, it also helps donors decide the level of privacy they need to make donations to a cause that might be frowned upon in official circles.

People can choose to use Wasabi wallet and the combination of tools they bring to the fore (broadcasting via the Tor network, using CoinJoin to more deeply anonymize transactions) to express a strong desire for privacy. They can use a bitcoin address they dont use very often and which cant be strongly tied to their identity to send cryptocurrency donations. Or they can choose to express a very loose expression of privacy by sending from a more centralized exchange with stricter identity rules such as Coinbase.

The essential point is that people can send cryptocurrency when centralized exchanges censor payment processing and theres no other ways to transact, and they can choose how strongly they want to link their personal identity to financial transactions in the face of political repression and political power.

This same dynamic is what happened with Hong Kong Free Press, an English-level media organization that has pro-democracy support and perspectives within Hong Kong which is also using BTCpay to accept bitcoin and donations.

Given the new national security law, its possible that payment processors might shut off Hong Kong Free Press and their access to the financial resources required to operate and its possible that they might go after with their donors, especially ones with weaker privacy protections.

In Thailand, where pro-democracy protestors have emerged, protestors have put up signs asking for others to buy bitcoin. In Belarus, government employees fired for supporting the political opposition have been supported with grants partially financed through cryptocurrencies by the BYSOL organization, an organization founded by civic society and technologists that support[s] anyone who was repressed, prosecuted, or lost their jobs because of participating in strikes or peaceful protests in Belarus.

Those facing political prosecution fill out a form that took one just ten minutes to figure out, and then theyre set up on a mobile cryptocurrency wallet, then sent grants and support. BYSOL is fundraising with bitcoin and ethereum as funding options. The organization has raised slightly over $2 million USD to send out to support protesters for their bravery if they are economically tied to the state and are punished for it.

Around the world, as protests mount, cryptocurrencies are starting to be used in various ways to go around established political power and to support protestors and dissidents. Each use further bolsters the case that cryptocurrencies can help support meaningful dissent and political diversity even in the face of extreme repression.

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Dissidents Are Turning To Cryptocurrency As Protests Mount Around The World - Forbes

Are cryptocurrencies a new form of money and, if so, do they threaten state power?

Our friend Nic Carter has recentlycommentedon these questions indialoguewith the Federal Reserve Bank of New York. We would like to add our perspective and thoughts on this, as we believe there is value to be derived from discussing these matters in depth. For better and worse, we believe that blockchains such as Bitcoin, Ethereum and Handshake (in which I am involved) have features that make them a novel threat to the powers that states derive from currency issuance but only a very marginal threat. This fairly mild conclusion flows from more controversial premises.

Steven McKie is a founding partner and managing director at Amentum Capital, developer on HandyMiner and HandyBrowser for Handshake and host of the BlockChannel podcast. A version of this article first appeared on Amentum's blog.

The New York Fed writers name three kinds of money: fiat money, money with intrinsic or commodity value and claim-backed money. Without getting lost in the weeds, we think this overcomplicates things. All money that we can think of falls into two categories: either it has intrinsic value (like edible grains) or it doesnt. If it doesnt, then its value comes from the supposition that someone else values it.

This mysterious someone else might be totally unspecified, as when we suppose someone will pay us for gold; or it might include a specific party, such as a state, that promises to take the money in exchange for, e.g., discharging tax obligations. Bitcoin, like gold in the post-gold-standard era, falls into the former category. It has no intrinsic value and nobody in particular has promised to exchange anything for it. We just guess that someone will.

But we should not be surprised that the worlds most popular kinds of money are the ones that states explicitly promise to honor. For states, such promises are an extremely important instrument of their power. For example, by only accepting dollars as tax payment, the United States obliges its hundreds of millions of people to make sure they have dollars handy. Because of this, everyone in the world knows they can sell their dollars to someone (i.e., to U.S. residents). Moreover, everyone knows that by accumulating dollars they gain certain leverage over the United States. This situation enables the United States to print its own money and in so doing, project its power around the world.

The power to print money also gives states another kind of power: It enables them to maximize their productivity. By increasing the money supply, they can pull more people on the margins of the economy into the productive process. But this comes at the cost of the scarcity of money and, because it puts the newly minted money directly into the pockets of the less-powerful, tends to decrease the power of those who have already accumulated a lot of money. Hence, artificial constraints of the money supply, like the gold standard, are often associated with extremely conservative politics. Constraining the money supply hurts productivity, but it preserves social hierarchies.

This is where the more benign hopes of transcending nation-states mix with the darker fantasies of so-called bitcoin maximalists. On the one hand, a meaningful alternative to national currencies could allow people in abusive regimes not to rely on their governments worthless promises. On the other hand, a mechanistically fixed supply of money could put an unequal social hierarchy beyond the reach of democratic power, as the gold standard once did.

Bitcoin, in this respect, is very much like gold. And like gold, it poses no active threat to state currencies or state power. For the value of state currencies as described above is predicated upon the actual, practical power of states. Throughout modern history, the preeminent reserve currency has been the coin of the worlds preeminent military power. Only if states lose their status as the main global powers are their currencies likely to follow suit.

Cryptocurrencies are only playing around the margins of this reality. Still, they can play an interesting role because they have features that prior non-state currencies did not. For example, they can facilitate coordination and communication between their holders. Imagine if all the holders of gold could, for example, vote on whether to mine more. Moreover, some cryptocurrencies have intrinsic value, such as ether (paying for the use of a distributed network), or HNS (paying for domain names on a decentralized registry).

The ongoing improvements in global cooperation that happen in the bitcoin/crypto private sector derive from the many players that ensure a proof-of-work (PoW) system remains secure.

The intricacies that go into the production of hashrate, such as power and chipmaker pricing negotiation, manufacturing, international sales and marketing, mining pools and hashpower secondary markets. All are playing a piece in hardening relationships locally and internationally.

Therefore, a properly secured chain has then worked its way into regional regulations and labor, becoming a localized economic staple over time as it approaches scale. And, the second-order effects that come from that embedded chain of incentives include a public blockchain that is secure, not just technically but socially and politically. The most secure chains possessing such widespread economies of scale become powerful economic instruments of finance and political social progress (albeit slowly, but each new major public chain hastens this emergent process, thankfully).

In essence, though these systems may at first seem adversarial to state power by their very design, if you look more closely youll see they inherently (slowly) improve diplomacy via scalable trustless cooperation and international business over time.

To understand more on the alchemy of PoW hashpower and how it naturally derives incentives for international business cooperation, see thisongoing series from Anicca Research. The trustless systems we deploy globally have powerful consequences, and its important that we as an industry understand how to continually scale the positive aspects of decentralized monetary systems, without amplifying the negative effects such as centralized financial influence.

States are not wrong to be somewhat threatened by these hard-to-assess possibilities. If many people decide they would rather hold cryptocurrencies than state-backed currencies, it will diminish states abilities to project power through their coins.

But states still have the armies, the police and on a good day anyway democratic legitimacy. All of that still matters, and will for a long time.

Read the rest here:
Cryptocurrency Is Just a Minor Threat to the State- CoinDesk - CoinDesk

Since September, several reports in Indian media outlets have highlighted incidents of unsuspecting customers being allegedly duped of their money through crypto ponzi schemes

In the past too, incidents of wealthy businessmen losing their money through fake crypto wallets have come to light

Between 2017 and 2019, Indian investors have reportedly lost more than $500 Mn to cryptocurrency scams operated within the country and abroad.

Even as crypto stakeholders in India argue against the perceived need for an outright ban on cryptocurrencies in India, reports of crypto ponzi schemes in different parts of the country continue to puncture their cause.

Since September, several reports in Indian media outlets have highlighted incidents of unsuspecting customers being allegedly duped of their money by scamsters believed to be operating crypto ponzi schemes.

In Bengaluru, the police are investigating three companies Long Reach Global, Long Reach Technologies and Morris Trading Solutions. According to the police, these companies collected at least INR 15K each from over 11 lakh people from across the country to invest in a new cryptocurrency called Morris coin. The police have also arrested a 36-year-old man from the Malappuram district of Kerala who is the CEO of all the three entities.

Last month, Delhi Police was investigating an alleged cryptocurrency exchange scam, believed to have been operated by one Pluto Exchange, which marketed itself as a cryptocurrency investment firm and had its offices in Connaught Place. One of the complainants was asked by one of Pluto Exchanges founders to invest in a new cryptocurrency that the firm had launched. The complainant was assured that he would receive 20-30% returns on his investment.

After investing about INR 5 lakhs in the scheme but not receiving any payout, the complainant tried to approach the companys officials, only to find that the exchanges office had shifted from India to Dubai. In the preliminary investigation, it was found that the 43 complainants had invested close to INR 2 Cr in the scheme.

In the past too, incidents of wealthy businessmen losing their money through fake crypto wallets have come to light. Such platforms target users through emails and SMSes, asking them to deposit their bitcoins or other cryptocurrencies in a new crypto exchange to get the opportunity to trade with other users globally. Once users have deposited their crypto assets in the exchange wallet, the operator shuts down the portal, with the users losing access to their crypto earnings.

According to data quoted by cryptocurrency news platform Cointelegraph, between 2017 and 2019, Indian investors have lost more than $500 Mn in cryptocurrency scams operated within the country and abroad.

Amid continued speculation about a ban on cryptocurrencies in India, scant government regulation and no clear law for cryptocurrencies in India contributes a great deal to motivating scamsters in the space. Further, a lack of awareness about digital currencies amongst the public is also a factor. While there is a case to be made about scamsters in the space soiling the name of several genuine and well-meaning crypto exchanges trying to pioneer a crypto revolution in the country, scamsters potential for stitching elaborate frauds under the guise of running a crypto exchange cant be ignored either.

Besides ponzi schemes, other notable modes of crypto scams include fake altcoins (cryptocurrencies other than bitcoin) being made available at attractive prices on certain crypto exchanges. Those who find bitcoin and the popular cryptocurrencies expensive are drawn to these altcoins, only to find that the new coin isnt a genuine cryptocurrency, something thats sooner than later discovered by the relevant authorities. Such fake coins are routinely removed from circulation. However, by the time that happens, millions of dollars worth such fake coins have already been sold to users.

The easiest way to identify a crypto scam is to realise when offers and assured interest returns on an unheard-of cryptocurrency sound too good to be true.

Sumit Gupta, the founder and CEO of Indian crypto exchange CoinDCX, has said in the past that the surging popularity of cryptocurrencies in India would only give rise to more such fraudulent schemes.

To guard against such frauds, Gupta suggested that users should conduct their due diligence before working with cryptocurrencies. This can be done by finding out whether the mobile app for the crypto wallet is linked to an official website for the platform. Further, users should peruse other users comments, reviews and feedback for the app on the internet and the Google Play Store. The number of users and downloads are other important metrics to go by before trusting a platform.

The most important factor in judging a crypto schemes authenticity still rests in judging whether schemes promising implausible returns can ever come through. While crypto enthusiasts and seasoned traders will always stay clear of fraudulent schemes, those new to the ecosystem can do well with internet-based research before depositing their money in new platforms or buying new cryptocurrencies.

By the time of publication, Bitcoin was trading at $11,833, a 2.76% hike from last week. Bitcoins market cap was around $219 Bn.

Ethereum was trading at $370, a 3.85% decline from last weeks trading price. Its market cap was around $41.8 Bn.

A recent report by the World Gold Council, a major market development organization for the gold industry, highlighted that crypto was the fifth-most popular investment tool in Russia, behind savings accounts, foreign currencies, real estate and life insurance. Ranked next to crypto is gold, both accounting for 17% and 16% respectively of active investments made by those surveyed by the World Gold Council. The report is based on a survey of 2,023 online interviews with investors from cities across Russia. The respondents are active investors those who made at least one investment in the 12 months preceding the survey. You can read the full report here.

A report notes that Bitcoins dominance among cryptocurrencies in terms of trading volume is hitting away at the prolonged craze for Decentralised Finance or (DeFi) in the market. While market cap dominance remains below 60%, earlier this month, the trading dominance of BTC has spiked to levels not seen since 2017 when the price hit an all-time high at $20,000. With Bitcoins trading volume increasing, the global trend suggests that the market for DeFi tokens or altcoins to slump. It remains to be seen whether this trend will affect the Indian crypto market, where crypto exchange platforms have just started developing decentralized exchange platforms. You can read the full report here.

See more here:
Cryptocurrency This Week: Crypto Ban In The Air, Crypto Scams Everywhere - Inc42 Media

Bitcoin (BTC) was gaining for a fourth straight day, approaching the $12,000 price threshold the cryptocurrency failed to hold in August when it last rallied past that level.

The market has started to move again, the Norwegian cryptocurrency-analysis firmArcane Researchwrote Tuesday in a report.

Intraditional markets, U.S. stock futures pointed to a higher open as investors bet U.S. lawmakers could reach agreement on a new stimulus bill.

Market moves

Privacy coins like monero (XMR) and zcash (ZEC) are suddenly in vogue despite regulators efforts to crack down on them.

These digital tokens, which come with features allowing users to obfuscate their identities and hide the amounts transferred, have surged in value this year. Moneros price has nearly tripled in 2020, and zcash has doubled. According to the data firm Messari, a group of 21 digital assets with anonymity-enhancing features has gained 142% this year, compared with bitcoins 60% gain.

The bullish market tone comes even as U.S. Internal Revenue Servicerecently hiredblockchain analytics firms Chainalysis and Integra FEC to develop transaction tracing tools for monero and other protocols used to obscure identities. Andthe U.S. Department of Justice earlier this month published anextensive reporton its enforcement framework for digital assets,citing the use of anonymity-enhancing cryptocurrenciesas a risk to anti-money-laundering programs and effortsto combat terrorismfinance.

Some cryptocurrency analysts say the jump in prices for privacy tokens might just be coincidental, a function of speculation on the part of traders keying off price-chart patterns or algorithms. But it might be that traders think privacy tokens will occupy a key spot in fast-developing, international digital-asset markets and payment systems precisely because so many users dont want to transact business under the glare of monitoring by governments, banks or exchanges.

Cryptographers and researchers are always going to be one step ahead on privacy, Riccardo Fluffypony Spagni, one of the Monero networks maintainers,told CoinDesk in an interview.

In other words, theregulatory inquiriescould turn out to be net positives for monero.

It gets visibility in the market,David Jevans, CEO of blockchain forensics firm CipherTrace, told CoinDesk in a telephone interview. People should be able to pay for day-to-day expenses without having to fear hitting regulators radar and provide identity proofs.

Top 10 "privacy coins" tracked by the cryptocurrency data firm Messari, ranked by year-to-date returns.

Bitcoin watch

Bitcoin daily chart.

The path of least resistance for bitcoin is to the higher side.

The cryptocurrency jumped more than 2% Monday, confirming a descending triangle breakout. The pattern indicates the rally from the Oct. 8 lows near $10.,500 has resumed.

Open interest in bitcoin futures listed on the Chicago Mercantile Exchange, which is considered synonymous with institutional interest, jumped over20% to a seven-week high of $624 million Monday, validating the bullish breakout on technical charts.

Further, macro factors look to be aligned in favor of the bulls. The likes of the European Central Bank and the Reserve Bank of Australia are expected to ramp up monetary stimulus over the next two months a long-term positive development for the perceived store of value assets like bitcoin and gold. Traditional markets are pricing additional inflation-boosting U.S. fiscal stimulus.

Buta number of big sell orders appear positioned around $12,000, which could make it harder for bulls to engineer a quick move past that mark.

As such, the focus has shifted to resistance located at $12,476 (August high). On the downside, the Oct. 16 low of $11,200 is the level to target for the bears.

Token watch

Filecoin (FIL):Decentralized file-storage protocolreleases token rewards in advance after crypto miners rebel against unfair economic model.

Binance (BNB):Worlds largest cryptocurrencyburns 1.1% of supply of its BNB exchange tokens, fourth-highest ever.

Uniswap (UNI):Vote to reduce quorumfails to garner quorum.

Curve DAO (CRV):Decentralized stablecoin-swapping platforms tokens hitfresh all-time lows.

What's hot

Bloomberg analyst Mike McGlone says bitcoin has a history of adding zeroes, sees tethers market capitalization eclipsing ethers next year. (Bloomberg Intelligence)

Corporation-focused R3s Corda Network gets new regulation-friendly digital currency, XDC, calling it a next-generation bitcoin or XRP. (CoinDesk)

Federal Reserve Chair Powell says its more important to get digital dollar right than to be first. (CoinDesk)

A Puerto Rico-based bank founded by gold bug and long-timebitcoinskeptic Peter Schiff is under investigation over suspicions it facilitated tax evasion for high-risk clients. (CoinDesk)

Analogs

The latest on the economy and traditional finance

European investors rattled as number ofnew daily coronavirus reaches record high. (CNBC)

International money managers bet on Biden victory in U.S. presidential election to spur gains on non-U.S. assets, weaken dollar. (Reuters)

U.S. investment bank behemoth Goldman Sachs reaches deal with U.S. Department of Justice to pay more than $2B for role in Malaysia 1MDB scandal. (Bloomberg)

Investing legend Bill Miller calls Federal Reserves inflation-averaging policy the most significant change in U.S. monetary policy in 40 years. (CNBC)

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First Mover: Monero Leads Privacy-Coin Rally as Bitcoin Trips on Path to $12K - CoinDesk - CoinDesk

Source

Bitcoin (BTC-USD), as well as the blockchain enterprise sector in general, has become increasingly correlated with stocks in recent months. Due to the upcoming election, the lack of progress on the fiscal stimulus front, uncertainty about the state of the economy going forward, the likelihood of an increase in volatility, as well as other factors, things could get messy in the blockchain enterprise segment in the weeks ahead.

Bitcoin: 1-Hour Chart

Source: Binance.com

We see that BTC is forming what appears to be another head and shoulders pattern, similar to the prior ones in the chart above. Furthermore, Bitcoin got rejected at the critical $11,800 resistance level recently and broke through support at $11,500. More recently BTC has been testing the $11,250 area of support and is dangerously close to breaking below this crucial level. If $11,250 gets penetrated, Bitcoin could melt down further below $11,000 and possibly retest $10,500, as well as $10,000 support levels next.

Source

Despite the possibility for short-term downside, we remain quite bullish on BTC and the overall digital asset segment long term. As the above chart illustrates, BTC moves in waves, and the top of each wave is substantially higher than the previous top.

I see no reason for this trend to end, and the next major top will likely be substantially higher than the previous one around $20,000. In fact, I believe the next major top could be around $75,000, but it will likely take some time (1-3 years) to get there.

Since the mid-March bottom, Bitcoin has roughly tripled, while the S&P 500/SPX (SP500) has appreciated by about 58%. Despite the clear outperformance, we see that Bitcoin has been moving largely in tandem with the stock market. This was also apparent during the February/March meltdown as stocks and Bitcoin essentially meted down simultaneously.

So, here we are now. The presidential election is approaching, certain economic indicators as well as some key company earnings are coming in worse than expected, fiscal stimulus seems to be off the table until after the election, volatility appears to be picking up, and Bitcoin coupled with stocks could experience another notable leg lower.

Despite the apparent correlation with stocks, we remain very bullish on Bitcoin and select blockchain enterprises in the intermediate and long term. One reason for this is because Bitcoin and systemically important digital assets are likely to play an increasingly important role in the future economy, as some offer valuable services and others serve as digital currencies/payment systems.

Furthermore, Bitcoin and other key "coins" are essentially inflation proof, as there is only a certain amount that can ever exist in circulation (Bitcoin 21 million). A stark difference to the dollar and fiat currencies in general that are being debased on a perpetual basis and can be printed endlessly if so desired by central banks.

Bitcoin is the gold standard of the digital asset market, and it serves as a payment system as well as a unique store of value mechanism.

Transactional Coins

Litecoin (LTC-USD): If Bitcoin is akin to digital gold, then Litecoin is somewhat akin to digital silver. It may not be the store of value that Bitcoin is in the digital world, but it is a far more efficient transactional vehicle.

Bitcoin Cash (BCH-USD): Bitcoin Cash is another transactional coin, much like Litecoin that can handle scale, speed, and cost far more efficiently than Bitcoin.

Zcash (ZEC-USD): Zcash is another top and very promising transactional coin, but is more encrypted, thus making transactions more difficult to track.

Dash (DASH-USD): Another top transactional coin, similar to Zcash.

Monero (XMR-USD): This is the only top transactional coin that I am aware of that is essentially untraceable.

Please understand me correctly. I am not talking about nefarious transactions, money laundering, etc. here. I am simply pointing out that there are coins that can be used with a certain degree of anonymity, and in my view, there is nothing wrong with that. The government does not need to know when, where, and how I spend my own hard-earned money. This is my personal libertarian viewpoint, and everyone is welcome to their own.

Functional Blockchain Enterprises

Not all digital assets/blockchain enterprises are created equal. In fact, the ones that I am discussing are all different and have their own unique role to play in the future economy. Transactional coins are designed to work as currencies/payment systems, while functional coins are designed to perform a particular function/offer a service.

For instance: Ripple (XRP-USD) enables banks to perform interbank and other transactions far more efficiently and less costly than traditional methods.

Ethereum (ETH-USD) handles smart contracts and various applications.

Cosmos (ATOM-USD) specializes in connecting blockchains together.

Other functional coins we see substantial potential going forward include: Tron (TRX-USD), Tezos (XTZ-USD), Swipe (SXP-USD), EOS (EOS-USD), Cardano (ADA-USD), and several others.

How to get exposure without going through crypto exchanges

I understand that not everyone is comfortable with cryptocurrency exchanges, blockchain wallets, etc. Unfortunately, the market is rather thin on alternative options (although Bitcoin futures are available).

This Is Where the Grayscale Trust Comes In

For now, market participants can get exposure to several "coins" through the Grayscale Trust.

So what does the Grayscale Trust offer?

Well, market participants can get exposure to Bitcoin through Grayscale's OTC (GBTC) trading vehicle. Likewise Grayscale offers similar trading instruments for Ethereum (OTCQX:ETHE), Bitcoin Cash (OTCQX:BCHG), Ethereum Classic (OTCQX:ETCG), Litecoin (OTCPK:LTCN), and a diversified large cap-fund (OTCQX:GDLC). Other crypto trading instruments appear to be on their way as well from Grayscale.

Volatility in stocks appears to reflect poorly on Bitcoin and the digital asset market in general. As there is likely to be more volatility ahead in stocks as well as other key markets, Bitcoin/blockchain enterprises could decline in the short term. Nevertheless, intermediate and long term, we remain extremely bullish on this segment and see a lot of upside potential ahead in the next 1-5 years and beyond.

However, in this uncertain environment, our portfolio's 25% allocation in Bitcoin and other digital assets feels a bit heavy. Therefore, we began locking in profits in some blockchain enterprises after the $11,500 level was unable to hold up. Intuition tells me that $11,250 may fail in upcoming sessions as well, and a mini meltdown to around $10,500-$10,000 is plausible. Therefore, we are reducing our digital asset holdings to raise our cash position, but we will reenter the market once volatility calms down after the election and we have a clearer view on where markets are headed next.

Want the whole picture? If you would like full articles that include technical analysis, trade triggers, portfolio strategies, options insight, and much more, consider joining Albright Investment Group!

Disclosure: I am/we are long ASSETS MENTIONED. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article expresses solely my opinions, is produced for informational purposes only and is not a recommendation to buy or sell any securities. Please always conduct your own research before making any investment decisions.

Continued here:
Bitcoin: Another Mini-Meltdown Appears Likely - Seeking Alpha