| Market Reports

The Weekly Hash – September 2-6

Check out the most important news in the world of crypto this past week with the experts at Kraken.

This digest is prepared for informative purposes only and does not represent an investment recommendation or investment advice. Please see our full disclaimer at the bottom for more information.

See below all the important happenings this week in the world of crypto, presented by the experts at Kraken:

  1. Central Bank of Argentina: Argentina restricts US dollar purchases as its currency crisis escalates
    • The central bank of Argentina imposed restrictions on USD purchases of $10,000/month to “maintain exchange stability and protect savers” of its currency, the Argentine peso (ARS)
    • Citizens must request special permission to purchase any amount beyond the limit
    • Exporters must liquidate their FX earnings in the local market within a deadline of five days, and no companies will be allowed to accumulate USD
    • Last month, the ARS/USD pair tanked +30%, as the country’s president Mauricio Macri lost a primary election; local stocks and bonds also experienced a severe crash
    • Link to The Block’s report
  2. The Block: Nearly 10% of India’s richest investors are looking to increase allocation to cryptocurrency
    • Citing data from Hurun Report, Quartz reported that ~36% of India’s high-net worth individuals are pessimistic about the Indian economy over the next 3yrs, pushing them to invest in safer and alternative assets (i.e., real estate), with a similar percentage of people saying they are avoiding risk altogether when it comes to future investing
    • While nearly half of the respondents don’t know much about virtual currency, 9% of wealthy Indians would increase their allocation to crypto over the next 3yrs
    • Among those who were educated about it, the largest group indicated a preference to invest in BTC (29.15%); the next 8.74% preferred ETH and 6.80% would like to invest in XRP
  3. Bloomberg: Investors Rush Into Gold
    • Global inflows into gold bullion-backed ETFs topped 100 tons in August to hit the highest since Feb. 2013 as the China-U.S. trade war worsened, the U.S. cut  interest rates, risk assets took a knock, and central banks signaled looser monetary policy
    • For the third straight month, gold holdings rose 101.9 tons and brought total known assets to 2,453.4 tons as of last Friday, compared to a combined 154.1 tons addition in June and July
    • Bullion price has appreciated +19% this year, hitting $1,555.07 on Aug. 26th, the highest since 2013
  4. Cointelegraph: First Blockchain-Exclusive Birth Certificates Recorded in Brazil
    • In a project developed by Growth Tech in partnership with IBM, the first birth certificates recorded exclusively using blockchain (without the need of the registry) were issued in Brazil 
    • The project aims to eliminate bureaucratic obstacles in the birth registration process and to be more efficient and transparent 
    • The registration was made through Growth Tech’s Notary Ledgers platform, which provides virtual notary services
    • The child registration method has three stages: The “Live Birth Statement” made by the hospital, the parents create a digital ID on the platform, and finally the info is sent to the notary office
  5. Korea Central News Agency: North Korea denies it amassed $2B through cyberattacks on banks
    • North Korea’s National Coordination Committee of the DPRK for AML/CFT denied allegations that it obtained $2B via cyberattacks on banks and crypto exchanges, and accused the U.S. for spreading rumors, “Such a fabrication by the hostile forces is nothing but a sort of a nasty game aimed at tarnishing the image of our Republic and finding justification for sanctions and pressure campaign against the DPRK”
    • The statement added that the UN is “re-enacting the same old trick as the Hitler fascist propagandists used to cling to”
  6. U.S. District Court: Craig Wright Challenges Court Order Requiring Him to Pay 500K Bitcoin
    • Wright’s attorney Andres Rivero is requesting a 14-day extension to file a motion challenging Magistrate Bruce Reinhart’s order in favor of Dave Kleiman’s estate, which required self-proclaimed BTC creator Craig Wright to pay 500k BTC to the plaintiff
    • Rivero stated that Wright “does not concede that Magistrate Reinhardt had the power to enter the order that he did,” adding that entrepreneur’s legal team will need an additional 14 days to address the legal validity of the order
    • Any motion challenging the order would be due on Sept. 10th, but Wright’s request moves it to Sept. 24th
    • Wright’s legal team cited a major hurricane threatening Florida as justification for the extra time, “Central and South Florida are currently threatened by a major hurricane. Hurricane Dorian is expected to make landfall in Florida early next week and counsel for Dr. Wright have been expending significant time preparing for the hurricane, which has limited their ability to work on this matter”
  7. Cointelegraph: City of São Paulo to Use Blockchain Registry for Public Works
    • The municipal gov’t of São Paulo, Brazil, contracted blockchain firm Construtivo to implement blockchain registry for its public works projects after poor conditions forced the closure of several bridges and roads, despite significant public investment in their construction
    • Construtivo president Marcus Granadeiro said the platform will improve access to project-relevant data for all stakeholders, “It is imperative that data from all construction work assets in the city of São Paulo or from ongoing projects be available online to any decision maker. Process and document management takes place in real time from anywhere”
    • Granadeiro added that using blockchain for public works projects will allow the city to identify the source of problems that may surface years after a project’s completion
  8. Cointelegraph: Burger King Lets You Pay Your Way in Germany — With Bitcoin
    • The German version of Burger King (BK) now accepts BTC payments in its delivery website and mobile app
    • It’s unclear whether BTC is also accepted in Germany’s +600 physical BK restaurants
  9. The Block: Advisory firm suggests US Congress to regulate crypto sector under the Bank Secrecy Act
    • Strategic advisory firm, Financial Integrity Network (FIN), recommended the U.S. Congress to create a new class of financial institution, virtual asset service providers (VASPs), under the Bank Secrecy Act (BSA) to better regulate crypto-related firms based on the type of service(s) they provide
    • FIN’s VP for Product Dev and Services David Murray said, “Some VASPs are currently regulated as money transmitters under the BSA. Others are not regulated at all … Even for those VASPs currently regulated as money transmitters, the regulations are insufficient to protect virtual assets from exploitation”
    • The U.S. Senate Committee on Banking, Housing, and Urban Affairs’ subcommittee on National Security and Int’l Trade and Finance, will hold the “Human Trafficking and its Intersection with the Financial System” hearing today to discuss ways to detect and prevent human trafficking-related financial txs
  10. Reuters: Dutch central bank to regulate crypto firms from January 10, orders them to register
    • The Dutch central bank will begin regulating companies that offer crypto-related services on Jan. 10th, and firms must register to remain in business, “In concrete terms, firms offering services for the exchange between cryptos and regular money, and crypto wallet providers, must register with De Nederlandsche Bank”
  11. The Block: Crypto enquiries in Japan continue to drop for the 5th quarter in a row
    • Japan’s FSA released statistics of its Counseling Office for Financial Services Users, saying that it received only 494 enquiries about cryptoassets in 2Q19 as compared to 574 in the 1Q19 and 788 in 4Q18; the figures are sharply down from 1,231 crypto enquiries in 3Q18, and 1,602 in 2Q18
    • The regulator accepts general questions, consultations and opinions regarding financial products and services, and addresses them via a counselor
    • The total number of investment enquiries, rose to 2,164 in the 2Q19 as compared to 1,999 in 2Q18
    • 406 (18%) enquiries were related to listed shares, 232 (10%) related to FX and 152 (7%) related to investment trusts, while others were general and misc. queries
  12. Reuters: HSBC processes first blockchain letter of credit using Chinese yuan
    • HSBC completed the first CNY-denominated, blockchain-based LoC tx via the Voltron trade finance platform, which was developed by eight banks including BNP Paribas, Standard Chartered and HSBC
    • The deal involved Hong Kong-based MTC Electronic exporting a shipment of LCD parts and panels to its parent company, Shenzhen MTC, based across the border from Hong Kong and was completed in 24hrs compared to the typical 5-10 days for conventional document exchange
    • Ajay Sharma, HSBC’s Regional Head of Global Trade and Receivables Finance for APAC, said that while txs on platform have primarily been individual pilots, progress is being made toward a full proposition and potentially a commercially acceptable model for banks, “We are hoping that we will have something by end of the year, maybe the first quarter of next year, where will we know from Voltron what it costs, at which point, a lot of banks who might be sitting on the sidelines will be able to make a decision … Clearly we are hoping that through this technology, the unit cost of doing a transaction comes down, along with other benefits, such as speed”
    • Citing SWIFT data, HSBC said 1.2M LoC’s worth $750B were issued into and out of China alone in 2018
  13. CoinDesk: Human-Trafficking Expert Urges US Congress to Regulate Crypto Miners
    • In a hearing on human trafficking at the Subcommittee on National Security and International Trade and Finance (part of the Senate Banking Committee), Financial Integrity Network (FIN) VP for Product Dev and Services David Murray recommended that Congress create a new class of regulated financial institutions known as “virtual asset transaction validators” (i.e. crypto miners), requiring them to know who their counterparty is, “For these essential actors in cryptocurrency transactions, such a regulatory regime would emphasize counterparty financial institution due diligence … The lack of systemwide financial crimes compliance (FCC) governance for some existing cryptocurrencies allows criminals space to operate and makes it difficult for the United States to isolate rogue service providers from the U.S. financial system”
    • Murray argued that miners must at least govern who can participate in networks and vet issuers, exchanges and/or custodians they serve
    • He added that mining isn’t currently regulated under the Bank Secrecy Act, “but virtual asset transaction validators could be gatekeepers for virtual asset systems if they are brought into the scope of the BSA”
    • Murray contended that the openness of such systems makes them useful to criminals, including human traffickers, “The trend toward decentralized and autonomous systems threatens our ability to control access to the U.S. financial system”
    • Nebraska State Attorney General Douglas Peterson and Nebraska State Senator Julie Slama also brought up the use of crypto in human trafficking in their prepared remarks
    • Murray noted, “Imposing regulations on people and entities who perform these functions almost certainly would make it difficult for some existing implementations of blockchain-based payments to continue operating as they do today,” however, the Bank Secrecy Act’s job isn’t to “enable or accommodate all manner of financial products and services, regardless of the threat that they pose to financial transparency”
  14. Cointelegraph: Ripple Transfers 500 Million XRP From Its Escrow Wallet, Hires US Legislative Assistant to Push Global Adoption
    • According to Whale Alert, Ripple transferred 500M XRP (~$130.1M) from its escrow wallet on Sept. 3rd
    • In late August, Twitter user @CryptoBitlord started a petition entitled “Stop Ripple dumping,” which has since secured 3k/10k signatures, “The only logical explanation is that Ripple are dumping on us. And not small amounts either. Literally billions”
  15. Cointelegraph: Bitcoin Network Computing Power Nears 90 Quintillion Hashes per Second
    • Data from Blockchain.com shows that BTC’s network hash rate grew 25% in a week, hitting an ATH of 87 quintillion hashes per second (h/s) as of Sept. 3rd
    • The figure passed 80 quintillion h/s for the first time in early August and has set new highs on an almost daily basis in recent months
    • Ron Hammond, who was involved in the formation of the Token Taxonomy Act, tweeted that he is the new manager of gov’t relations for Ripple
    • The XRP Daily said, “Ripple works with more than 50 governments around the world and now somebody from the U.S. Government is managing the government relations at Ripple, which is awesome. Glad to see Ron Hammond join the team and help build the internet of value”
  16. Bloomberg: Burundi Bans Trading of Digital Currencies
    • Burundi banned all crypto trading, saying it couldn’t offer digital money user protection in the event of any issues 
    • Alfred Nyobewumusi, a director at the central bank’s micro-finance dept., said some Burundians lost money while trading virtual currencies and asked the gov’t to intervene, “Strong measures could be taken against all those who will not respect this decision”
  17. PwC: PwC Luxembourg embraces crypto-payments
    • PwC Luxembourg will start accepting BTC payments from Oct. 1st to show its commitment to comply with the needs of clients as well as support the growing national crypto ecosystem
    • PwC Luxembourg called BTC the “first peer-to-peer payment mechanism that cannot be compromised and is based on a decentralised trust model”
    • PwC Luxembourg added that it has partnered with an unnamed, regulated local exchange to provide the best experience, “The Firm acknowledges the challenges of this move and has carefully reviewed its internal policies and procedures to meet the standards required by the crypto industry and closely collaborated with a local regulated exchange to provide the best payment experience”
  18. Cointelegraph: NSA Working to Develop Quantum-Resistant “Crypto”
    • Bloomberg Tech reporter William Turton tweeted that the NSA is working to develop a quantum-resistant crypto, “Anne Neuberger, Director of NSA’s new Cybersecurity Directorate says that the agency will propose hardware and software standards again. Also notes agency is working to build quantum resistant crypto”
    • Neuberger noted that the NSA has identified 4,000 ransomware attacks daily, noting that this prevalence was a “key concern” for the U.S. 2020 presidential elections
    • She said the agency’s newly-established Cybersecurity Directorate, due to start work in October, would focus on mitigating the threat of influence operations by Russia, as well as IP theft and cyber-espionage attacks from China
    • Neuberger singled out North Korea as being creative in its cyber warfare strategy, pointing to the rogue state’s use of crypto to compile funds for President Kim Jong-Un’s regime
    • While Cointelegraph reported that the NSA is working on a cryptocurrency, CoinDesk noted that Neuberger’s comment may indicate that the NSA is working on a cryptography technology, not a cryptocurrency, with the twin meanings of the term “crypto”
    • Link to Microsoft News’ coverage of Neuberger’s presentation
  19. Cointelegraph: Bitcoin Is Using Less Energy Despite Record Hash Rate, New Data Shows
    • Despite BTC’s hash rate setting new highs on an almost daily in recent months, data from Statista indicates that energy consumption is becoming rapidly more efficient
    • Energy consumption as of July was 69.79 terawatt hours per year, but the figure was 71.12 terawatts with a hash rate that is nearly 60% lower than just a year prior
  20. Bloomberg: Fewer People Are Sending Bitcoin to Largest Crypto Exchanges
    • According to TokenAnalyst & Blockchain.com, the number of unique addresses sending BTC to exchanges such as Binance and Bitfinex has been declining since peaking in 2017
    • The number of addresses sending BTC to Bitfinex is at a 2yr low, while the amount on Binance dropped to early 2018 levels
    • TokenAnalyst Sid Shekhar said this signals a “lack of retail interest in general currently in crypto … If we go by the ‘Bitcoin as safe haven in times of recession’ narrative, the number of new users/buyers should actually be increasing”
    • According to Blockchain.com, BTCUSD exchange trade volume is at its lowest point since May
    • SimilarWeb reported that web traffic to Binance and Bitfinex is at a four-month low
    • Data from Chainalysis shows that BTC on-chain tx activity has nearly quadrupled this year, peaking in July following a price rally ended in June
  21. The Block: Paxos embraces gold-pegged crypto as ‘sea change’ in gold trading
    • Paxos received NYDFS approval to launch PAXG, a cryptoasset pegged 1:1 with 1oz. of gold and is being accepted at crypto lending firms SALT Lending and Genesis Global Trading
    • Paxos is betting that PAXG will attract gold investors to crypto trading while also seeing adoption by crypto-native investors looking to diversify their portfolios
    • Paxos’ CEO Charles Cascarilla said PAXGUSD is now available on Paxos’ exchange, itBit, with additional trading pairs to be listed soon, “Either you can make gold very tradable or you can own real gold … And very tradable gold is not real gold”
    • Traditional gold investors can buy/sell PAXG instantly with their gold bars stored in a vault in London
  22. Bitcoin.com: Indian Government’s New Report Views Crypto Positively
    • The Indian Ministry of Finance announced that the Steering Committee on Fintech-Related Issues has submitted its final report to the finance minister, describing that the “use of digital tokens resolves the issue of multiple currencies, improves liquidity and capital compliance costs, allows for micro-payments and expedites the payment process, which further eliminates liquidity risks … The mechanisms surrounding cryptocurrencies, particularly the blockchain and initial coin offerings (ICOs), are revolutionizing the global fintech landscape”
    • The report details how ICOs work and emphasizes that token issuance “has emerged as an innovative way of capital raising by fintech businesses,” citing that 790 ICOs had been issued as of Sept. 25th, 2018 to raise a total of $20B since and +$346M year-to-date
    • Garb said the mandate of this committee “was to take stock of developments in the fintech space globally and in India, study the regulatory climate in various geographies, identify application areas and use cases in governance and financial services, [and] suggest institutional regulatory upgrades enabling fintech innovations”
    • The Steering Committee report suggests that tokens can be either a utility, which “entitle future access to a company’s product or service,” or a security, which is defined by the U.S.’ Howey test, “The regulation of coins or tokens depends on the characteristics and the purpose for which they are being issued”
  23. Cointelegraph: Mystery 94K BTC Transaction Becomes Richest Non-Exchange Address
    • According to data from Bitinfocharts, the recipient wallet of a mysterious 94,504 BTC ($1.031B) tx on Sept. 6th is now presumed to be the richest non-exchange address
    • The tx consolidated BTC from 92 different inputs from 15 addresses into just one address that now holds 94,505.8 BTC
    • The sender paid $700 in fees at 480 sats/byte; because the cost of getting a tx included in the next block is currently 23 sats per byte, the sender overpaid by 20x and should have only spent ~$35
    • TokenAnalyst data indicates that at least 1/3 of the tx originated from Huobi, while Glassnode tweeted that the figure was actually +73k BTC
    • The Block claims that 56% of the tx came from just one address, which also moved 124,178 BCH (~$36.7M) and 124,178 BSV (~$16.3M), while the remaining 42% came from three other addresses
    • Crypto Herpes Cat tweeted that at least two BTC wallets involved in the tx belong to Huobi, with one of the specified wallets directly involved in the tx
    • Whale Alert reported that the tx didn’t involve any known wallets and didn’t belong to any specific crypto exchange or crypto-related firm
    • Some analysts suggested the funds may be tied to Bakkt as it starts accepting client deposits today
  24. Decrypt: Vitalik Buterin: “Very confident” about phase zero of Ethereum 2.0
    • Speaking on the 80,000 Hours podcast, ETH creator Vitalik Buterin said he is “very confident” about the technical aspects surrounding the phase zero launch of Ethereum 2.0 early next year, but is worried that users won’t use the new PoS network the way it was intended, “For example, are people just going to be lazy and run all their staking nodes on AWS … Are people going to be lazier and just do all their staking by sending their money to Binance, and Binance are going to stake for everyone? Are people going to stake in ways that are insecure and lead to a bunch of people getting hacked at the same time? And how decentralized is it actually going to be? … some of the uncertainty is starting to be resolved already … I’m pretty confident that there aren’t any showstoppers” 
    • He stated, “When, Ethereum 2.0 launches, we’re taking this kind of multi-pronged strategy where we first launch proof-of-stake, then we let it run for a bit, prove itself, then do sharding
    • Buterin added that he believes that oft-criticized stablecoins are more stable than people make out, “The thing that you’re trying to optimize for isn’t a lack of fine day-to-day movements, it’s minimizing the probability that the thing just suddenly one day does something catastrophic”
  25. CoinDesk: Ethereum Picks Early October for Testnet Activation of Istanbul Hard Fork
    • Ethereum Foundation community manager Hudson Jameson announced that the testnet launch of Ethereum’s Istanbul hard fork is set for Oct. 2nd, “For anyone listening in who doesn’t know how this works, we pick a block number that we estimate to be around the 2nd of October … However, that might be one or two days behind or forward from that date based on how fast blocks are produced between now and then”
    • Originally targeted for Sept. 4th, the testnet activation was pushed back to Oct. 2nd due to the large volume of EIPs that were submitted for review; of the ~30 EIPs that were deliberated on by developers, only six have been accepted for inclusion in Istanbul with eight other EIPs tentatively planned for a proceeding hard fork, dubbed “Berlin”
    • Mainnet activation will similarly be postponed till November, although a specific date and block height was deliberately left unspecified given cautious sentiment from Ethereum devs about prematurely committing to new target dates for Istanbul, “One of the lessons learned in the [previous] Byzantium fork last year is that we shouldn’t try to set the testnet and mainnet fork at the same time … Let’s start with setting the testnet fork and see how that goes and find a period of stability before revisiting when to set the mainnet fork,” said Infura Chief Infrastructure Engineer E.G. Galano during the Ethereum dev call
    • Speaking on the initial security audit done by Least Authority over the proposed ProgPoW implementation, a proposed EIP that would block ASIC mining on the network, Least Authority CEO Liz Steininger said, “On a high-level, [ProgPoW] reaches its design goals. It’s reasonable towards its intended economic effect. No major issues there. That said, we did find one [potential] attack … and had some recommendations about things that could be done to have better assurances of ProgPoW working as intended in the future”
    • Jameson added that there is still another audit on ProgPoW pending completion, “[Bob Rao] is doing a very extensive hardware audit … Bob’s audit should be coming out very soon. It’s in final stages [and] is going to answer a lot more of the questions and speculations around ProgPoW”
    • Barring any significant security concerns raised by these auditors, developers are expected to proceed with the ProgPoW activation in the following “Berlin” hard fork
  26. The Block: Fed Chair Jerome Powell: Consumers are not “clamoring” for central bank backed cryptocurrencies
    • At a forum in Switzerland sponsored by the Swiss Institute of Int’l Studies, Fed Chair Jerome Powell spoke about central bank digital currencies and Facebook’s (FB) Libra coin and said, “We are following the whole question of digital currencies … It’s not something that we are actively considering. For us, it raises significant issues that we would want to see resolved … If you think about one currency that was for the United States it would really need to be cyber secure … it’s one thing to be able to counterfeit paper currency, it’s another thing to hack into a cyber currency and create, with a computer, however much of it you want”
    • The chairman also cited the lack of demand for digital currencies, saying that “consumers have plenty of payment options … they are not clamoring for this”
    • In regards to FB’s Libra, Powell noted that the stablecoin could be “systematically important very quickly” due to the size of Facebook’s userbase; however, Powell warned that “Libra would need to be held to the highest regulatory and supervisory expectations … this is not going to be a sprint to implementation”
  27. The Block: Malta finance regulator to ‘actively monitor’ crypto firms to prevent money laundering
    • The Malta Financial Services Authority (MFSA) published a 3yr strategic plan for 2019-2021, claiming it will “actively monitor” licensed crypto businesses in the country to improve AML measures, “We will continue to work closely with the FIAU [Financial Intelligence Analysis Unit] and other national and international authorities, including the newly set-up Malta Digital Innovation Authority (MDIA)”
    • The regulator has already invested and is in the process of implementing SupTech (supervisory tech) intelligence tools, to better identify fraud and prevent money laundering in order to protect investors
    • The MFSA concluded that SupTech intelligence tools will help to automate regulatory processes and audit the risk management of Malta-licensed virtual asset businesses


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