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. Brave: Brave Expands Crypto Tipping to Reddit and Vimeo After Twitter
   • Brave launched a new version of its browser that enables users to tip BAT on Vimeo and Reddit
   • The updated also includes the ability to select a default search engine during onboarding and included fixes for various PDF issues
2. FINMA guidance: stringent approach to combating money laundering on the blockchain
   • Switzerland’s FINMA issued banking and securities dealers’ licenses to two blockchain startups, SEBA Crypto and Sygnum; the licenses will allow the firms to provide services to institutional and pro customers
   • Sygnum said its ”plans for corporates include the ability to raise new capital by producing asset tokens based on existing financial assets, thereby lowering capital raising costs and improving liquidity for issuers and investors” 
   • SEBA Crypto said that the license is a “milestone for the entire digital asset market ecosystem,” and that the bank is expected to launch in early October
   • FINMA also issued guidance, which says that existing AML laws apply to blockchain payments, as the “inherent anonymity of blockchain technology presents increased risks … Institutions supervised by FINMA are only permitted to send cryptocurrencies or other tokens to external wallets belonging to their own customers whose identity has already been verified and are only allowed to receive cryptocurrencies or tokens from such customers … FINMA-supervised institutions are thus not permitted to receive tokens from customers of other institutions or to send tokens to such customers”
3. Ethereum Foundation: Announcing Ethereum Foundation and Co-Funded Grants
   • The Ethereum Foundation launched a new round of funding for the development of Serenity or ETH2.0, which will bring PoS, sharding, and other scaling solutions to Ethereum
   • The Ethereum Foundation, Protocol Labs and ConsenSys recently “granted substantial awards to leading client development teams currently tasked with delivering long-standing multi-client testnets as development approaches the launch of Phase 0”
4. Cointelegraph: Bitcoin Realized Market Cap Hits $100 Billion for the First Time
   • According to Coinmetrics.io, BTC’s realized market cap (i.e., calculated from multiplying the price each bitcoin last traded by the size of each trade) passed its ATH of $100B on Aug. 25th
   • Cryptography pioneer Nick Szabo added that the realized market cap progress comes in tandem with some of the lowest volatility seen on the network since 2012, “The long-term chart reflects the superior deep safety, global seamlessness, and monetary soundness of Bitcoin”
   • BCH, ZEC, XLM and ETH posted the worst declines against BTC this year, while BNB was the best investment this year (up 44% against BTC since Aug. 2018)
5. CoinDesk: Judge Recommends Ruling in Favor of Kleiman in Craig Wright Case
   • According to a source familiar with the matter, Judge Bruce Reinhart recommended that plaintiffs (Kleiman family) be awarded 50% of the BTC (500k BTC, or +$5B) and IP that Wright held prior to Dec. 31st, 2013
   • Wright won’t be entitled to a jury trial and can’t oppose the order though he can appeal
   • Reinhart’s order must be adopted by the District Judge, Beth Bloom, before becoming final (assuming Wright’s attorneys don’t file any exceptions or objections)
   • The +$5B payout could attract an estate tax rate of 40%, which Kleiman’s estate would have to pay; as a result, there are now fears that 200k BTC could be dumped on the market to settle the $2B bill, potentially causing a crash
   • In an interview with Modern Consensus, Wright said he would comply with the court order, and noted that the Judge didn’t rule on whether or not he was Satoshi Nakamoto
   • Link to Cointelegraph’s follow-up report
6. Lolli: Lolli Partners with Petco to Celebrate International Dog Day!
   • BTC rewards app Lolli partnered with major pet retailer Petco to allow its customers to earn up to 3.5% sats of their purchases on Petco.com
   • Lolli users can earn a flat 5,000 sats payment for sharing a photo of their dog and commenting on the partnership
7. Cointelegraph: Brazil Central Bank Adopts IMF Guidelines for Crypto Classification
   • The Central Bank of Brazil announced that it will follow IMF guidelines in classifying bought/sold cryptoassets as non-financial products and as such, will be accounted as goods on the central bank’s balance sheet
   • Since purchasing/selling crypto involves the execution of FX contracts, the central bank considers selling/buying cryptoassets in their export and import statistics
   • Because Brazil is a net importer of cryptoassets, this apparently has contributed to lowering the trade surplus on its balance sheet
8. The Block: Kraken OTC serves institutional clients managing billions despite slow growth among Wall Street counterparties
   • Kraken OTC trading head Nelson Minier said the desk is engaging with more mature financial firms, but not as quickly as he had anticipated
   • Minier said Kraken serves some funds as large as $5-$20B
   • As part of an effort to court additional hedge fund business, Kraken’s OTC desk hired institutional sales to service institutional demand; although broad interest from institutions has yet to be seen,  Minier stated, “that’s changing, and now it’s changing slowly … It’s slower than I would want to believe”
   • Minier said BTC is the “Holy Grail of portfolio management,” adding that its historic returns should be a draw but many managers are wary of crypto’s high risk, ”These guys should be killing themselves to put this in their portfolios but the problem is that they have constituents that they have to pander to which is the investors and people still think that this is a joke and it’s going to zero”
9. Bloomberg: SEC Chief’s Crypto Skepticism Sets Up Facebook Clash Over Libra
   • During Facebook’s hearings last month, David Marcus argued that Libra wouldn’t fall under the agency’s jurisdiction because it is more like cash than a security held by investors
   • Behind the scenes, lobbyists for the Libra campaign have aggressively made the same argument, according to people familiar with the matter
   • No one at FB has met with Chairman Clayton, FB representatives have instead discussed their plans with SEC staff members
   • The company stated, “we know that the journey to launching Libra will be a long one and that we cannot do this alone… engaging with regulators, policy makers and experts is critical to Libra’s success. We will take time to get this right”
   • In two interviews with Clayton, Clayton talked about his views on the crypto universe and expressed the following: (1) Clayton does not believe there are reasons why the 85-year-old securities laws shouldn’t apply to ICOs and tokens, citing, “just to be clear, I am not looking to expand the securities laws to capture things… I am generally not in the law-expansion business. But I am not in the head-sticking-in-the-sand business either;” and (2) on Libra, a number of observers have suggested Libra resembles and ETF… Clayton avoided commenting directly on Libra, but noted that if something looks like an ETF and operates like an ETF, the laws say it should be regulated like an ETF
   • Clayton commented, “if we have a way to reduce the cost of payments internationally, through technology, I am all for it… but you can’t sacrifice basic principles of securities law, and other law, to allow it to happen”
   • Clayton has been working with the Treasury Department’s Financial Stability Oversight Council as well as central banks, law enforcement agencies, and regulators around the works on potential risks with the crypto industry long before FB’s entrance into the industry
   • Jeremy Allaire commented, “[the SEC has] asserted a very authoritative position and a very conservative one, which I think doesn’t mesh with the technical reality of what’s happening in this space”
   • Clayton added, “I think a lot of people got excited that somehow we would change the rules to accommodate the technology and they invested their time and effort thinking that would happen… I have been pretty clear from the start, that ain’t happening”
   • Clayton noted that the intense interest in FB’s plans is a positive, because it forces governments and central banks to look more closely at whether laws and rules need to be updated, “it’s been an effective focal point for domestic and international regulators”
   • Link to Cointelegraph’s report
10. Yahoo! Finance: Hong Kong protests are accelerating bitcoin adoption
    • The pro-democracy, anti-gov’t protest movement in HK, which has now entered its 12th week, is prompting local businesses and individuals to switch to using non-sovereign, decentralized digital currencies
    • HK dept. store Pricerite announced it would begin accepting BTC, LTC and ETH at its 14 locations in HK, adding that it will be able to convert crypto into HKD in real-time using BTC’s Lightning Network (LN)
    • BCH is also proving popular among protest supporters, and measures are being taken to further promote the crypto, as well as to support dissidents
11. Cointelegraph: XRP Community Is Threatening a ‘Takeover’ if Ripple Execs Keep Dumping
    • The negative market consequences of Ripple selling XRP to its clients are prompting XRP holders to fight back via “a community takeover”
    • Twitter user @CryptoBitlord quipped to his 102k followers, “I’m thinking about forking $XRP so we don’t have to deal with the founders dumping. — This will be a community effort. Retweet if you’re in”
    • CryptoBitlord started a change.org petition entitled “Stop Ripple dumping”  3wks ago, which has secured ~2,500 signatures
    • Bitlord tweeted to Ripple’s CEO and CTO today, “Brad Garlinghouse, Joel Katz, you now have 60 days to stop dumping XRP or we will stage a community takeover. If it’s a decentralized network like you say, we have the power to do it”
    • Garlinghouse responded, “XRP sales are about helping expand XRP’s utility — building RippleNet & supporting other biz building w/XRP ie Dharma & Forte. Reality is we DECREASED our sales by volume Q/Q and since then the inflation rate of XRP circulating supply has been lower than that of BTC and ETH”
12. Parity: Parity Delays Ethereum Network Hardfork Over Implementation of EIPs
    • Parity core dev Wei Tang said Ethereum’s Istanbul hardfork will be delayed until Sept. 6th because the organization needs two more weeks before devs can select a block number for the fork, “We need time till 6th September to finish the implementation. Not only because we accepted EIPs late but right now we just happened to be a large code base refactoring and we probably want to merge them first before merging Istanbul EIP”
    • Block number for the hardfork will occur after Parity’s implementation is complete, and a mainnet hardfork will only occur after a testnet block number is picked
    • Wei cited concerns pertaining to gas issues, cautioning that it would be best to resolve them before implementing a hardfork since it will be more complicated to change course once the fork has already occurred; as a result, he argued that this may delay the mainnet’s launch even more
    • Link to Cointelegraph’s report
13. Forbes: Alibaba, Tencent, Five Others To Receive First Chinese Government Cryptocurrency
    • According to sources familiar with the matter, the People’s Bank of China (PBoC) is giving its first round of central bank digital currency (CBDC) to Alibaba, Tencent, five banking organizations, and one unknown entity
    • The sources named are Paul Schulte, who previously worked as head of the China Construction Bank, and an anonymous individual identified as part of China’s CBDC project
    • China’s CBDC, which is abbreviated as DC/EP for Digital Currency/Electronic Payments, is allegedly ready to ship and could roll out as early as Nov. 11th
    • These eight institutions will disperse the DC/EP tokens to China’s citizens and others participating in business with the renminbi
    • The PBoC is keen on circulating the DC/EP tokens to buyers in the U.S. too, via correspondent banks, but not immediately
14. The Block: Kingdom Trust sues competitor BitGo and Bitcoin IRA for allegedly using its trade secrets to steal clients
    • In 2018, Kingdom Trust (KT) disclosed confidential info to BitGo under a merger agreement that referred Bitcoin IRA clients to the custodian; the merger was terminated, however, and BitGo launched its own custody services soon after
    • KT has now filed a lawsuit against BitGo and Bitcoin IRA for allegedly misleading KT customers into transferring their funds from KT to BitGo after allegedly obtaining KT’s customer lists and other trade secrets
    • Bitcoin IRA allegedly sent emails and letters directly to KT clients and encouraged them to file complaints to banking regulators against KT for delaying transferring their digital assets
    • Following KT’s lawsuit, Bitcoin IRA’s parent company, Digital IRA, filed a countersuit against the custodian accusing KT of thwarting customers’ requests to transfer their crypto to competing custodians
    • Regarding the referral program between Bitcoin IRA and KT, Bitcoin IRA claims that the custodian abused the program and employed “unfair” and “deceptive” tactics when some customers asked to move their accounts to another custodian
15. Cointelegraph: Portugal Tax Authority: Bitcoin Trading and Payments Are Tax-Free
    • Jornal de Negócios reported that Portugal’s Tax Authority clarified that both crypto trading and payments in crypto are exempt from VAT and income tax in the country
    • Link to official ruling document
16. Fintech Futures: PNC becomes first US bank on RippleNet
    • PNC, the eighth-largest U.S. bank with ~$400B in assets, has become the first U.S. bank to start using the RippleNet for cross-border payments
    • PNC Treasury Management is now offering RippleNet-based cross-border payments solutions to its commercial clients, claiming that the blockchain solution will give them “the ability to receive a payment from an overseas buyer against their invoices instantly, transforming the way they manage their global account receivables and allowing them to better manage their working capital”
    • Link to Cointelegraph’s report
17. Forbes Contributor: CME Bitcoin Futures Now Average $370 Million In Trading Per Day
    • CME Managing Director and Global Head of Equity Products and Alternative Investments Tim McCourt said that CME posted record numbers in 2019 for BTC futures trading, ”Year-to-date, bitcoin futures are averaging 7,237 contracts per day, which is a 132% increase from the same period last year”
    • McCourt added, “There is a lot of broad investor interest in cryptocurrency, as well as growing interest in a variety of applications for cryptocurrencies and blockchain technology. It will be interesting to see how this new market continues to grow and scale. For us at CME Group, a major focus is education, and making sure our customers have all the tools they need to make solid strategic decisions around crypto”
    • In May 2019, CME tallied its most successful month of BTC futures trading since the product’s inception in 2017, “Trading an average of more than 13,600 contracts each day, equal to ~$515 million in notional value or 68K equivalent bitcoins … On May 13, BTC traded a record single-day volume of 33,677 contracts (168K equivalent bitcoin or $1.3B notional)”
    • McCourt said that as BTC’s slump throughout 2018 and part of 2019 took its toll on the market, but that CME never contemplated discontinuing its BTC futures products, “It’s important to remember that CME Group is a neutral marketplace … Our role is to help bitcoin market participants manage their risk, regardless of whether the underlying price goes up or down … We’re pleased with the growth of CME Group bitcoin futures so far”
18. Cointelegraph: Blockchain Activity at Top Universities Increased Since 2018
    • Using rankings from US News and World Report (including both undergrad and graduate level offerings), Coinbase reported that 56% of the world’s top-50 universities now offer at least one course on crypto or blockchain – up from 42% in 2018
    • Twice as many students took blockchain or crypto courses when compared to last year and many top universities have a student-run clubs related to blockchain or crypto
    • ~70% of the top-50 universities offered crypto and blockchain courses external to their computer science depts. in areas like law, the humanities and economics; however, Computer Science is still the most common area with 32.2% of the offerings
    • Ripple’s Head of Social Impact Ken Weber recently stated, “Currently, over 40% of the world’s top 50 universities already offer at least one class on blockchain or crypto assets. But this is tied to different disciplines such as law, engineering, mathematics and business administration. To truly close the skills gap, universities around the world must expand these programmes to offer blockchain and crypto-asset training courses that directly relate to roles in industry”
19. Brave: Wikipedia is now a Brave Verified Publisher, Ready to Receive BAT Donations from Brave Users
    • Wikipedia is now a verified publisher on the Brave platform, joining +240k publishers and creators able to receive BAT donations from Brave’s +7M monthly active users
    • Brave users can contribute BAT to Wikipedia with the integrated Brave Rewards system in the Brave browser, choose to make one-time or recurring monthly donations, purchase BAT for their integrated wallets, or earn BAT monthly from viewing opt-in, privacy-preserving Brave Ads
    • Users in regions that don’t currently show Brave Ads can donate BAT from occasional grants they receive from Brave
20. The Block: Crypto project Decred adds privacy features to its coin
    • Decred added privacy-focused features to its crypto DCR, claiming that it has found a “middle ground” between two extremes – BTC and other privacy coins – offering the “right amount of privacy” (as seen in figure below)
    • Decred explained that its privacy implementation is “simple, creative and adaptable,” and that it requires only hundreds of lines of code for the core logic, compared to thousands or tens of thousands for other privacy implementations, “Less code means less to break”
    • The privacy features are based on CoinShuffle ++, a P2P coin mixing protocol, which uses “simple code and proven cryptography”
21. Constellation: Constellation tackles big data and blockchain with the U.S. Air Force
    • Blockchain firm Constellation, which helps secure data silos from traditionally locked sources, partnered with the U.S. Air Force to help automate its big data management (e.g., drones, planes, and satellites)
    • Termed Multi-Domain Command and Control by the U.S. Air Force, Constellation will improve interoperability by connecting various data silos for the armed force wing, and will also provide audit trails and real-time overviews of data sources
    • Constellation’s Mathias Goldman stated, “Currently, the data lifecycle is very broken with data storage being siloed while data creation, management, and hygiene is a semi-manual process … The USAF is looking to automate much of their big data initiatives in a secure manner”
    • Constellation will build systems between creation, storage, and management for future decision making to allows users to manage downstream data flows with encryption; however, the type of metadata Constellation will work with has yet to be chosen
22. Yahoo! Finance: Bitcoin mining revenue tops $14 billion
    • According to Coin Metrics, all-time BTC mining revenue broke $14B, and while hashrate has been rising, the revenue has increased at a higher rate
    • BTC mining revenue took 8yrs to first break $5B, and an additional eight months to do it again – reaching $10B by ~Aug. 2018
    • Since then the rate has slowed, currently on track to break $15B in early 2020
    • BTC hashrate has similarly exploded since EOY 2017; at the start of 2018, it was at 15.5M TH/s, rising to 2018’s peak of 60M TH/s in Sept., and hitting an ATH of 83.5M TH/s at the time of writing
23. Cointelegraph: China Telecom Releases White Paper on 5G Blockchain Phones
    • Sina reported that major phone operator China Telecom released a white paper on blockchain-powered, 5G smartphones that intends to solve major issues in operating mobile networks, including fraud, harassment, loss of data and crimes related to ID theft
    • The white paper also describes a project of SIM card-based blockchain digital asset management system (e.g., managing anti-theft and anti-loss by creating blacklists associated with trusted IMEIs and encrypt it via blockchain. When a device gets blacklisted, carriers, smartphone suppliers and end users can immediately identify and disable stolen devices through the tech)
    • The 5G blockchain has five major application scenarios involving digital ID verification, financial application, supply chain tracing application, judicial application and express delivery industry
    • China Telecom claimed that the poor performance of existing blockchain smartphones is due to the majority of blockchain mobile phone manufacturers using blockchain to speculate on market hotspots rather than to bring the actual power of the tech to the industry
24. SBI Holdings: Announcement Regarding Implementation of Interim Shareholder Benefits with XRP
    • SBI Holdings’ subsidiary, Morningstar Japan K.K., launched an interim shareholder benefits program that grants 30 XRP ($7.65) to shareholders who hold +100 shares of Morningstar Japan K.K (+$329), regardless of the shares held by them
    • Eligible shareholders will have to open a free account with crypto exchange SBI VC Trade, and Morningstar Japan K.K will then transfer XRP from its account to shareholders’ accounts
    • The company will email shareholders more details about the program in mid-November, and the deadline for applying for the benefits program is Mar. 31st, 2020
25. The Block: Bitcoin’s Lightning Network found to have security vulnerabilities
    • Australian software programmer and a BTC lightning coder Rusty Russell tweeted that security issues have been discovered in “various lightning projects which could cause loss of funds”
    • Russell didn’t provide specific details, but said more info will be issued in 4wks
    • In the meantime, users should upgrade the following affected BTC lightning nodes: Common vulnerabilities and exposures (CVE) -2019-12998 c-lightning < 0.7.1; CVE-2019-12999 lnd < 0.7; and CVE-2019-13000 eclair <= 0.3
26. The Block: A firm owned by billionaire hedge fund manager Alan Howard plans to launch $1B crypto venture
    • Elwood Asset Management’s CEO Bin Ren told The Financial Times Elwood that the firm, owned by billionaire hedge fund manager Alan Howard, is planning to launch a $1B venture that will invest in crypto hedge funds
    • While details of the venture aren’t yet finalized, it could allow investors to consider factors such as risk appetite, expected returns and liquidity requirements
    • Investors will be presented with a portfolio of funds to invest in, and would be charged a fee for the service, on top of the fees investors pay to access the underlying funds
    • Elwood has been screening crypto hedge funds and has identified up to 50 that “probably satisfy [its] due diligence”

he information in this report is provided by, and is the sole opinion of, Kraken’s research desk. The information is provided as general market commentary and should not be the basis for making investment decisions or be construed as investment advice with respect to any digital asset or the issuers thereof. Trading digital assets involves significant risk. Any person considering trading digital assets should seek independent advice on the suitability of any particular digital asset. Kraken does not guarantee the accuracy or completeness of the information provided in this report, does not control, endorse or adopt any third party content, and accepts no liability of any kind arising from the use of any information contained in the report, including without limitation, any loss of profit. Kraken expressly disclaims all warranties of accuracy, completeness, merchantability or fitness for a particular purpose with respect to the information in this report. Kraken shall not be responsible for any risks associated with accessing third party websites, including the use of hyperlinks. All market prices, data and other information are based upon selected public market data, reflect prevailing conditions, and research’s views as of this date, all of which are subject to change without notice. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Kraken and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of, or located in a jurisdiction where such distribution or use would be contrary to applicable law or that would subject Kraken and/or its affiliates to any registration or licensing requirement. The digital assets described herein may or may not be eligible for sale in all jurisdictions.

DISCLAIMER

The information in this report is provided by, and is the sole opinion of, Kraken’s research desk. The information is provided as general market commentary and should not be the basis for making investment decisions or be construed as investment advice with respect to any digital asset or the issuers thereof. Trading digital assets involves significant risk. Any person considering trading digital assets should seek independent advice on the suitability of any particular digital asset. Kraken does not guarantee the accuracy or completeness of the information provided in this report, does not control, endorse or adopt any third party content, and accepts no liability of any kind arising from the use of any information contained in the report, including without limitation, any loss of profit. Kraken expressly disclaims all warranties of accuracy, completeness, merchantability or fitness for a particular purpose with respect to the information in this report. Kraken shall not be responsible for any risks associated with accessing third party websites, including the use of hyperlinks. All market prices, data and other information are based upon selected public market data, reflect prevailing conditions, and research’s views as of this date, all of which are subject to change without notice. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Kraken and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of, or located in a jurisdiction where such distribution or use would be contrary to applicable law or that would subject Kraken and/or its affiliates to any registration or licensing requirement. The digital assets described herein may or may not be eligible for sale in all jurisdictions.