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

1. SEC: SEC Halts Alleged $1.7 Billion Unregistered Digital Token Offering
2. CoinDesk: The IRS Will Now Ask if You Own Crypto in the Most Widely Used US Tax Form
3. WSJ: Mastercard, Visa, eBay Drop Out of Facebook’s Libra Payments Network
4. The Block: Grayscale Sees Record Q3, Hitting More Than $400M in Inflows Over The Past Year
5. CNBC: Facebook’s Libra Coin a Catalyst for Reform, Swedish Central Bank Chief Says
6. Grayscale: Grayscale Investments Announces Approval of Public Quotation for Eligible Shares of Grayscale Digital Large Cap Fund
7. CoinDesk: Facebook-Led Libra Forms Governing Council After Big-Name Departures
8. Bloomberg: Facebook’s Marcus Vows to ‘Move Forward’ With Libra, Add Members
9. Circle: Bermuda Becomes 1st National Government to Accept Tax Payments in USDC Stablecoin
10. Financial Post: Bank of Canada Exploring Digital Currency That Would Replace Cash, Track How People Spend Money
11. The Block: Feds Take Down One of The Largest Child Exploitation Sites; Seeks to Seize Bitcoins
12. CoinDesk: Blockchain-Shy Bank of America Quietly Pilots Ripple Technology
13. The Block: Telegram Agrees to Voluntarily Halt Token Sales for Now; Argues That Grams Are Not Securities
14. Brave: Brave Reaches 8M Monthly Active Users and Delivers Nearly 400 Privacy-Preserving Ad Campaigns
15. Bitstop: Miami International Airport gets its first Bitcoin ATM
16. BIS: Investigating the Impact of Global Stablecoins
17. Reuters: FATF Chief Says ’Stablecoins’ Could Hinder Efforts to Stamp Out Money Laundering
18. Oxford English Dictionary: These ARE The Words You Are Looking For—The OED October 2019 Update
19. Bitcoin.com: SEC Wants Second Look at Bitwise Bitcoin ETF Proposal

1. SEC: SEC Halts Alleged $1.7 Billion Unregistered Digital Token Offering
   • The SEC filed an emergency action and obtained temporary restraining order against two offshore entities, Telegram and its TON subsidiary, for conducting an alleged unregistered +$1.7B securities offering in the U.S. and overseas
   • SEC Division of Enforcement co-director Stephanie Avakian said the emergency action is “intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold,” and added that Telegram failed to provide its investors with info about the gram token and Telegram’s own operations
   • TON was expected to go live on Oct. 31st, but the launch is now TBD
2. CoinDesk: The IRS Will Now Ask if You Own Crypto in the Most Widely Used US Tax Form
   • According to a recent draft of the IRS’ Form 1040 (i.e., main form U.S. taxpayers use to report income) that was circulated to tax software companies and journalists, the regulator plans to ask taxpayers if they received, sold, sent, exchanged, or otherwise acquired any financial interest in any virtual currency
   • The IRS stated, “Taxpayers who file Schedule 1 to report income or adjustments to income that can’t be entered directly on Form 1040 should check the appropriate box to answer the virtual currency question. Taxpayers do not need to file Schedule 1 if their answer to this question is NO and they do not have to file Schedule 1 for any other purpose” 
   • The IRS asked its software partners to send comments on the new form in the next 30 days
3. WSJ: Mastercard, Visa, eBay Drop Out of Facebook’s Libra Payments Network
   • Visa, Mastercard, Stripe, and eBay are backing out of Facebook’s Libra association after lawmakers, central bankers and regulators expressed deep concerns about the project
   • Head of Calibra David Marcus tweeted, “I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up”
   • Some of the companies are open to rejoining the association in the future, such as Visa and Mastercard, however that decision will purportedly depend on how well Libra can fully satisfy all requisite regulatory expectations
4. The Block: Grayscale Sees Record Q3, Hitting More Than $400M in Inflows Over The Past Year
   • Grayscale’s annual inflows hit a record +$412M at September end and hit a record quarterly inflow in 3Q, approximately $254.9M
   • Grayscale’s Managing Director Michael Sonnenshein says the firm counts a number of hedge funds with several of billions of dollars as clients, “I actually think that we had a day where we raise over $75 million in a single day — which was the largest inflow we ever had in a single day”
   • In total, the firm has +$2B in AUM and AUM grew by $107M in 3Q (excluding its flagship GBTC product)
   • Sonnenshein added, “Most of our institutional investors are actually not crypto hedge funds. It really runs the gamut — we have tons of global macros funds who maybe look at digital assets as a way to be short fiat money or thinking about all the economic and political turmoil going on globally”
5. CNBC: Facebook’s Libra Coin a Catalyst for Reform, Swedish Central Bank Chief Says
   • Swedish Central Bank (Riksbank) governor Stefan Ingves said Facebook’s Libra has been an “incredibly important catalytic event” forcing central bankers to reconsider their primary product: money
   • Ingves said Riksbank has had to reconsider its own development in light of private currency alternatives
   • He added that the development of a new kind of currency happens only once every few centuries, “Part of my job is to produce a good/service called the Swedish krona which is convenient to use for Swedish citizens, and if I’m good at that in a technical sense then I don’t have a problem. But if I were to start issuing 20-kilo copper coins the way we did in 1668, then we soon would be out of business”
   • Ingves cautioned that most private sector money initiatives “have collapsed sooner or later”
6. Grayscale: Grayscale Investments Announces Approval of Public Quotation for Eligible Shares of Grayscale Digital Large Cap Fund
   • Grayscale Investments received FINRA approval for a crypto index fund, dubbed the Grayscale Digital Large Cap Fund (DLC), that will trade under symbol GDLCF on OTC markets
   • DLC isn’t registered with the SEC, so it isn’t subject to disclosure or other U.S. securities laws requirements
   • BTC accounts for 80% of the fund, 10% is controlled by ETH, and the remainder 10% is made up of XRP, BCH, and LTC
   • Fund components will go to pay for ongoing expenses rather than DLC generating income
   • DLC offered private placement to accredited investors since Feb. 2018 and shares created through private placement become eligible to sell publicly after a one-year holding period
7. CoinDesk: Facebook-Led Libra Forms Governing Council After Big-Name Departures
   • 21 organizations formally signed the Libra Association charter and appointed a board of directors on Oct. 14
   • The initial board members are Calibra cofounder David Marcus, Andreessen Horowitz general partner Katie Haun, Xapo CEO Wences Cesares, PayU general counsel Patrick Ellis, and Kiva chief strategy officer Matthew Davie
   • PayPal veterans Bertrand Perez, Dante Disaprte, and Kurt Hemecker will comprise the Association’s executive team
   • The Association claims that +1,500 organizations have expressed interest in joining the project
8. Bloomberg: Facebook’s Marcus Vows to ‘Move Forward’ With Libra, Add Members
   • Libra co-creator David Marcus said he doesn’t fault companies that pulled out of the association and noted that he’s optimistic more organizations will sign on despite regulatory opposition, “I totally respect the fact that those businesses and those leaders have a responsibility to their shareholders, employees and stakeholders. We are going to move forward. We are going to add more members”
   • ~25% of informally-committed Libra Association members, such as Stripe, Visa, and Mastercard, backed out of the effort on Oct. 14 when the charter was officially signed, purportedly in response to passive-aggressive letters the firms received from U.S. Senators Sherrod Brown and Brian Schatz that urged the companies to “carefully consider” how they would manage potential risks associated with Libra before proceeding with the project
   • Regarding the letters, Marcus stated that such correspondence can have a chilling effect, “For these types of letters to be circulated for a thing that is an idea — a project — and telling people you should not explore innovation [that is a concern]. The core of our financial system has not evolved much. Consumers all around the world are paying the price for it”
   • There are 1,500 organizations who have expressed interest in signing on, though so far only 180 of them meet the organization’s criteria
9. Circle: Bermuda Becomes 1st National Government to Accept Tax Payments in USDC Stablecoin
   • The Bermuda gov’t will accept payments for taxes, fees and other gov’t services using USDC as part of a broader effort to support the use of USD-backed stablecoins and DeFi protocols
   • Link to CoinDesk’s report
10. Financial Post: Bank of Canada Exploring Digital Currency That Would Replace Cash, Track How People Spend Money
    • Canada’s central bank gave an internal presentation to its governor, Stephen Poloz, and its board of directors on a two-year research project focused on exploring the issuance of its own digital currency
    • The presentation claims a central bank-issued digital currency (CBDC) would offer “all the benefits” of central-banked backed assets and “all the convenience and security of wireless, electronic payments”
    • The presentation went on to state, “We need to innovate to stay in the game. Cryptocurrencies may become a direct threat to our ability to implement monetary policy and lender of last resort (LOLR) role”
    • The CBDC could also ostensibly help authorities collect more info, “Personal details not shared with the payee, but could be shared with police or tax authorities”
11. The Block: Feds Take Down One of The Largest Child Exploitation Sites; Seeks to Seize Bitcoins
    • According to an unsealed indictment, U.S. and Korean authorities have tracked and taken down Welcome to Video, one of the world’s largest online marketplace for child pornography, by analyzing BTC’s blockchain
    • IRS-CI Chief Don Fort said, “Through the sophisticated tracing of bitcoin transactions, IRS-CI special agents were able to determine the location of the Darknet server, identify the administrator of the website and ultimately track down the website server’s physical location in South Korea. This large-scale criminal enterprise that endangered the safety of children around the world is no more.  Regardless of the illicit scheme, and whether the proceeds are virtual or tangible, we will continue to work with our federal and international partners to track down these disgusting organizations and bring them to justice”
    • Between Jun. 2015 and Mar. 2018, Welcome to Video received ~420 BTC (~$335,000) through 7,300 txs from users in the U.S., U.K., and South Korea that were used to pay for child pornography videos, which were downloaded +1M times
    • Welcome to Video was allegedly ran by Jong Woo Son, a 23yr-old South Korean national who is serving his sentence in South Korea; 337 site users from countries like U.S., U.K., South Korea, and Canada have been arrested and charged by local gov’t enforcement agencies
    • Prosecutors filed a civil forfeiture claim to recover funds from 24 BTC accounts associated with three crypto exchanges, and according to the DOJ, these funds will be returned to victims of the crime
12. CoinDesk: Blockchain-Shy Bank of America Quietly Pilots Ripple Technology
    • Bank of America (BofA) quietly piloted Ripple’s DLT although details of the pilot were not given, “Bank of America has been part of Ripple’s Global Payment Steering Group since 2016 and we did a pilot with them”
    • Ripple identified BofA as a “customer” in a presentation given at a seminar held by the IMF last year, and when asked about this, a Ripple spokesperson would neither confirm nor deny whether BofA was a customer and BofA declined to comment
13. The Block: Telegram Agrees to Voluntarily Halt Token Sales for Now; Argues That Grams Are Not Securities
    • In a filing on Oct. 16, Telegram agreed to stop selling and delivering its Gram tokens, and said an injunction is thus not needed
    • However, the SEC insists that Telegram should enter into a preliminary injunction that the SEC requested in a filing last week and produce by Oct. 24 documents requested by the regulator
    • Telegram argued that Grams aren’t securities and the SEC’s allegation “runs counter to longstanding Supreme Court precedent, the SEC’s own views relating to other cryptocurrencies, and common sense”
    • Telegram said it has been engaged with the SEC “over the past 18 months” without being informed that the SEC was going to take legal action against them, and the firm is now accusing the regulator of failing to advise them on TON and waiting “until the eleventh hour to file an ex parte application to enjoin Telegram’s launch” 
    • The firm sent an email to investors that reads, “We had intended to launch the TON network in late October. However, the recent SEC lawsuit has made that timing unachievable. We disagree with the SEC’s legal position and intend to vigorously defend the lawsuit. We are proposing to extend the deadline date in order to provide additional time to resolve the SEC’s lawsuit and work with other governmental authorities in advance of the launch of the TON network”
    • These investors must sign a form approving the deadline extension before Oct. 23, and these investors can get back “approximately 77 percent” of their money if the majority chooses not to sign by the date
    • TON’s launch will be pushed back from Oct. 30 to April 30, 2020, and the next court hearing is scheduled for Oct. 24
14. Brave: Brave Reaches 8M Monthly Active Users and Delivers Nearly 400 Privacy-Preserving Ad Campaigns
    • As of Oct. 16, Brave browser has reached 8M monthly active users, +2.8M daily active users, and +290,000 Brave Verified Publishers of which “200,000 of those are YouTube creators, 33,000 are website publishers or creators, 15,000 are Twitch streamers, and since we announced our support for Twitter tipping on August 1st, 28,000 Twitter accounts have joined to receive Basic Attention Tokens”
    • Brave launched its ads on an opt-in basis +6 months ago, and the company has since concluded 385 campaigns and accumulated 97M ad confirmation events with high user engagement rates, “Platform engagement is extremely high, with a click-through rate of 14% (the industry average is just 2%). More importantly, 12% of click-throughs result in page visits of 10 seconds or longer. There have been 2.36 million 10-second active page visits overall”
15. Bitstop: Miami International Airport gets its first Bitcoin ATM
    • Bitstop has installed the first Bitcoin ATM at Miami International Airport, the third-busiest airport in the U.S. in terms of int’l passenger traffic
    • Bitstop co-founder Doug Carrillo said,  “More and more people prefer to travel with Bitcoin instead of cash for convenience and security. Miami International Airport is a perfect place for our customers to conveniently exchange their dollars for Bitcoin and vice versa when traveling domestically or abroad”
16. BIS: Investigating the Impact of Global Stablecoins
    • The Group of Seven (G7) nations released a 37-page report on stablecoins – which was produced by the BIS – that examines the challenges, risks and benefits that global stablecoins (GSC) may pose
    • The BIS defines a GSC as an initiative built on an existing large customer base with the potential to scale rapidly (e.g., Facebook’s Libra coin)
    • The document reads, “The working group report finds that stablecoins, regardless of size, have implications ranging from anti-money laundering efforts across jurisdictions to operational resilience (including for cyber security), consumer/investor and data protection, and tax compliance. Global stablecoins may amplify those challenges and could also pose challenges to competition policy, financial stability, monetary policy and, in the extreme, the international monetary system”
    • The group, consisting of France, U.S., Japan, Canada, Italy, Germany, and U.K. economies, admits that stablecoins have highlighted the inefficiencies of int’l transfers and suggests that authorities could develop roadmaps to improve efficiency and lower the cost of payments and financial services
    • The G7 stated that cryptoassets, including BTC, have hitherto failed to provide a “reliable and attractive” means of payment or store of value and that crypto isn’t a solution as they are “highly volatile,” have scalability limits, complicated UI’s, and issues in governance and regulation, among other challenges, “Thus, cryptoassets have served more as a highly speculative asset class for certain investors and those engaged in illicit activities rather than as a means to make payments”
    • Stablecoins, however, have no established int’l classification, and may not actually be stable, according to the group; but as stablecoins “might be more readily usable” as a means of payment and store of value, issuers should ensure regulations are enforced, “No global stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks […] are adequately addressed, through appropriate designs and by adhering to regulation that is clear and proportional”
    • The group added, “Central banks, individually and collectively, will assess the relevance of issuing central bank digital currencies (CBDCs) in view of the costs and benefits in their respective jurisdictions”
    • The Libra Association responded to G7 saying that Libra will “operate with transparency and in partnership with regulators […] Libra is being designed to work with existing regulatory institutions and apply the protections they provide to the digital world — not disrupt or undermine them”
    • Link to coverage by CoinDesk, The Block & Ledger Insights
17. Reuters: FATF Chief Says ’Stablecoins’ Could Hinder Efforts to Stamp Out Money Laundering
    • FATF president Xiangmin Liu said stablecoins, including Facebook’s Libra, could spark the mass adoption of crypto and P2P transfers, cutting out the need for regulated middlemen and hindering efforts to halt money laundering and terror financing, “If stablecoins were to become widespread, it could potentially lead to new risks regarding money laundering and terrorist financing. It is our job to ensure the new risks in connection with stablecoins will be adequately addressed”
    • The regulator said both stablecoins and the companies behind them would be subject to global standards on crypto and traditional financial assets
    • That FATF will report on stablecoins to finance ministers and central bankers from the Group of 20 developed countries (G20) in 2020
18. Oxford English Dictionary: These ARE The Words You Are Looking For—The OED October 2019 Update
    • The Oxford English Dictionary (OED) added “satoshi” to its compendium of the English language
    • The OED defines a satoshi as “the smallest monetary unit in the bitcoin digital payment system, equal to one hundred millionth of a bitcoin,” or 0.00000001 BTC
    • The OED’s policy reads, “Our role is to monitor and record emerging vocabulary so that we can make new terms available to our dictionary users as soon as they start to gain traction”
19. Bitcoin.com: SEC Wants Second Look at Bitwise Bitcoin ETF Proposal
    • The SEC sent a letter dated Oct. 15 to ICE concerning its recent order disapproving NYSE Arca/Bitwise’s BTC ETF proposal, “This letter is to notify you that, pursuant to Rule 431 of the Commission’s Rules of Practice, 17 CFR 201.431, the Commission will review the delegated action. In accordance with Rule 431(e), the October 9, 2019 order is stayed until the Commission orders otherwise […] The Office of the Secretary will notify you of any pertinent action taken by the Commission”
    • The regulator emphasized that its disapproval “does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment”
    • Notably, this action isn’t new to the Commission as it did the same with three orders for nine bitcoin ETFs in August last year

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