The Weekly Hash – January 13 – 17

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. Japan Times: Financial Services Agency to Limit Leverage in Cryptocurrency Margin Trading to Twice the Deposits Made by Traders
  2. Lightnet: Lightnet Raises $31.2 Million in New “Series A” Financing
  3. CoinDesk: SEC Produces Evidence That Telegram Kept Selling Tokens After $1.7B ICO
  4. FN London: ETF Challenger Plans to Launch Regulated Cryptocurrency
  5. FCW: Treasury Tests Blockchain-Based Grant Tracking
  6. Bloomberg: JPMorgan Strategists Say Bitcoin’s Intrinsic Value Remains Below Market Price, ‘Suggesting Some Downside Risk’
  7. The Block: Total Volume on Non-Custodial Crypto Exchanges Hit 9-Month Low in December
  8. The Block: 12 Percent of America’s 100 Biggest Charity Organizations Accept Bitcoin
  9. CoinDesk: Dish Network Files Patent for Blockchain-Based Anti-Piracy System
  10. Kraken: Kraken Acquires Australia’s Longest-Running Crypto Service Provider Bit Trade
  11. CoinDesk: Kraken Futures to Expand Into Russia After New Hire
  12. Cheddar: Regulated Derivatives Will ‘Legitimize’ Crypto, Says CFTC Chair
  13. CoinDesk: US Judge Gives Craig Wright Until Feb. 3 to Access 1.1M Bitcoin at Heart of Ongoing Lawsuit
  14. SEC: Initial Exchange Offerings (IEOs) – Investor Alert
  15. Grayscale: Grayscale Bitcoin Trust Announces Resumption of Private Placement
  16. MoneyGram & EbixCash: MoneyGram and EbixCash Sign Exclusive Strategic Agreement to Expand Presence in India
  17. LinkedIn: The Most In-Demand Hard and Soft Skills of 2020
  18. Kraken: Kraken Hires Veteran Cryptocurrency Journalist Pete Rizzo
  19. CoinDesk: Bitwise Withdraws Bitcoin ETF Application With the SEC
  20. CoinDesk: More Than Half of Financial Advisors Want Better Regulation Before Investing in Crypto
  21. CoinDesk: The FBI Is Now Reaching Out to QuadrigaCX Victims
  22. The Block: NBA’s Sacramento Kings partner with ConsenSys to Launch Sports Gear Auctions on Ethereum
  23. Anchorage: Announcing Anchorage Trading + Merkle Data Acquisition
  24. WSJ: Former Regulator Known as ‘Crypto Dad’ to Launch Digital-Dollar Think Tank
  25. ARK Invest’s Yassine Elmandjra: Bitcoin’s Share of PoW Mining Rewards Now Above 80%
  26. The Block: Chainalysis Traced $2.8 Billion in Bitcoin Being Sent to Crypto Exchanges by Criminals Last Year
  27. The Block: New Hampshire Legislators Kill Crypto Tax Payments Bill
  28. Grayscale: 2019 Digital Asset Investment Report
  29. CSA: Guidance on the Application of Securities Legislation to Entities 
  30. Libra: Steering Committee Now Governs Libra Technical Development
  31. Bloomberg: Crypto Terrorism Funding Grows More Sophisticated, Study Finds
  32. Ledger Insights: Australia’s Central Bank Explores Digital Currency
  33. OK Senate: Oklahoma Lawmaker Proposes State-Chartered Crypto Depository
  34. The Block: Ripple-Backed Crypto Wallet BRD Ventures Into Enterprise Blockchain Market, Aiming to Serve Banks and Others
  35. CoinTelegraph: Russia’s New Prime Minister Sets Course for Digital Economy
    • Japan’s Financial Services Agency (FSA) plans to limit crypto margin trading leverage to 2x the deposits of traders in an effort to reduce the risks of losses associated with volatile price fluctuations
    • The FSA decided on this leverage cap, which is stricter than the industry’s self-imposed cap of 4x, based on past price fluctuations and crypto regulations in Europe and the U.S.
    • The rule will be included in the revised Financial Instruments and Exchange Act, which will go into effect in spring
    • Japan Times contended that ~80-90% of txs via crypto exchanges are margin trading
    • Exchange operators are expected to alter their business models as the new rule may lead traders to lose interest in crypto margin trading
    • Bangkok-based FinTech firm Lightnet raised $31.2M in a Series A funding round led by major financial and business groups, including UOB Venture Management, Seven Bank, Uni-President Asset Holdings, HashKey Capital, Hopeshine Ventures, Signum Capital, Du Capital and Hanwha Investment and Securities
    • The firm aims to replace the “inefficient” SWIFT system by offering blockchain-based remittance services
    • The proceeds will go towards strengthening Lightnet’s Stellar blockchain-based platform and serve billions of unbanked migrant workers in Southeast Asian markets
    • Lightnet’s Vice-Chairman Tridbodi Arunanondchai said, “It’s vital that we build an ecosystem to provide Lightnet access to our partners’ vast user base and facilitate deeper penetration into local markets. We project that within three years, Lightnet will facilitate over $50 billion worth of annual transactions through our industry- leading partner network.” 
    • The firm is building several solutions, with the first expected to carry out its inaugural transaction this quarter
    • Lightnet CEO Suvicha Sudchai said the company plans to add ~500,000 agents across Asia, as well as partnerships with remittance firms such as MoneyGram, Seven Bank, Yeahka, and Ksher
    • Coverage by CoinDesk
    • The SEC filed documents that prove at least two entities invoiced Telegram for commissions from selling the firm’s GRAM tokens in summer 2018, roughly three months after the token sale concluded, “These documents undermine Telegram’s claimed affirmative defense that the Offering was exempt under Regulation D. First, Telegram either raised more than the $1.7 billion for which it claimed an exemption, or it did not raise $1.7 billion as of March 29, 2018 and the later funds may have been raised through underwriters.”
    • Investment fund Da Vinci Capital and another entity called Gem Limited requested commissions of $209,783 and $1.1M, respectively, for “subsequent sales” of purchase agreements for grams
    • Da Vinci Capital sold +$2M worth of grams to a fund managed by its portfolio company, ITI Funds, on June 20, 2018, and Gem Limited sold $8.6M worth of grams to a firm named Goliat Solutions and $4.5M to Space Investments Limited on July 2, 2018; both sales occurred after the GRAM sale in Feb. & Mar. 2018
    • While the SEC argues that under Telegram violated Regulation D by not taking reasonable steps to ensure the purchasers (i.e., Da Vinci Capital & Gem Limited) didn’t act as statutory underwriters (i.e., aren’t selling securities for the issuer for commissions), Telegram argues that the commissions were finders’ fees to non-U.S. persons and entities for introducing grams to other investors
    • WisdomTree, an asset manager with $63.8B AUM, plans to launch an SEC-regulated stablecoin to get ahead of industry giants BlackRock and Fidelity Investments in the digital currency space
    • The stablecoin will be pegged to a basket of assets, such as gold, fiat or gov’t debt
    • The firm denied to comment on whether it has initiated talks with the SEC
    • Coverage by The Block
    • Craig Fischer, the U.S. Treasury Department’s Innovation Program Manager, said the dept. has almost completed a proof-of-concept that tokenizes letters of credit (LoC) to track the flow of grant money from federal reserves to grantees
    • Fischer said tokenization helps identify grant recipient, grant amount and key dates like when it was awarded
    • Fischer noted that grant recipients would need to have an e-wallet associated with a bank account to receive a tokenized LoC, adding that access will be role-based for security purposes, “This isn’t the Bitcoin network, where everything is visible [to everyone].” 
    • The Dept. is working with San Diego State University, Duke and the National Science Foundation on the trial since September, and it is expected to conclude at EOM
    • JPMorgan strategists, led by Nikolaos Panigirtzoglou (MD for Global Market Strategy), reported that Bitcoin’s intrinsic value is still below market price, “The gap has not yet fully closed, suggesting some downside risk remains.”
    • JPMorgan calculates intrinsic value by treating BTC as a commodity and looking at the marginal cost of production including computational power employed and cost of electricity
    • The market price has declined by ~40% from its peak, while the intrinsic value has increased by ~10%
    • Coverage by The Block
    • The total monthly volume on non-custodial digital asset exchanges fell to $180M in December, the lowest volume since March’s figure of $148M
    • The share of non-custodial vs. centralized volume was 0.30% in Jan. 2019, but rose +67% by EOY to more than 0.50%
    • The report noted, “However, while still relatively negligible, the share of volume traded on non-custodial exchanges increased in comparison to the amount traded on the centralized exchanges. … The lack of liquidity, simplicity, as well as blockchain constraints, are among the reasons non-custodial exchanges haven’t caught on yet.”
    • Uniswap is currently tied with Kyber Network for the most non-custodial volume
    • Non-custodial exchanges likely won’t capture a significant portion of the centralized exchanges’ volume for the foreseeable future
    • 12% of America’s top 100 charities of 2019 accept BTC donations
    • Over 90% of these charities use third-party payment processors
    • 58.3% use BitPay as their main payment processor
    • TV giant Dish Network published a patent application for a new “anti-piracy management system” that uses blockchain to enable owners to track how their content is being used
    • The system allows owners to embed an identification mark (e.g., ownership data, owner’s name and contact info) into the content’s code that can be stored and regularly updated using DLT
    • Dish said the proposal can better monitor and enforce ownership rights, alerting platforms to when content is used without permission
    • The system also allows uploaders to purchase content directly from the owners
    • Kraken acquired Australian crypto exchange Bit Trade to focus on being the premier crypto service in Australia with the best AUD liquidity, trading experience, and support for both institutional and retail clients
    • Kraken’s combined offering now includes a multi-exchange aggregator that combines several trading platforms into a single UI to ensure best price and execution for clients, as well as one of the largest OTC desks in Australia
    • The acquisition includes the entire Bit Trade team, led by Jonathon Miller, who will become Managing Director for Kraken in Australia
    • Kraken Futures hired former ICBIT founder Aleksey Bragin in Nov. 2019 and now intends to grow its Russian presence with in-person visits and Russian-language social media groups
    • Kraken offers BTC, ETH, BCH, LTC and XRP futures contracts and sees ~$17M in daily volume for BTC futures alone
    • Head of BD Kevin Beardsley believes the abundance of tech talent, especially in crypto, makes Russia an attractive market, “Russia is the most under-appreciated market in crypto today […] The conversation is dominated by the U.S. and China, probably a bit less Japan and Korea. Even [though] Russia is objectively a leader in the infrastructure building and has a large community, it gets relatively little coverage.” – Beardsley cited Telegram and TradingView as two examples of teams predominantly from Russia and surrounding nations
    • Bragin said, “Russian traders increasingly consider cryptocurrency to be just another asset class, alongside commodities and currencies. The rapidly growing number of individual traders, combined with the increasing acceptance of trading cryptocurrency, represent clear, positive signals for the growth cryptocurrency futures trading in Russia.”
    • Bragin added that while the crypto derivatives market in Russia is still young, it’s already “developed into one of the most important markets […] Cryptocurrency derivatives started attracting traders from the classic futures market in 2018, it grew in 2019 and trading experts expect the trend to continue in 2020.”
    • Beardsley noted that the expansion won’t involve spot trading or see fiat on-ramps for the Russian ruble because crypto-crypto futures trading is the safest way to enter the market as it presents “a relatively low risk of [the exchange being used for] money laundering.”
    • Yakov Barinsky, CEO of HASH CIB, a crypto management firm that actively trades derivatives, said 10-15% percent of trading volume on the most popular crypto derivatives exchanges (e.g., Kraken, BitMEX, and Deribit) comes from Russian traders, adding that Russian traders might be bringing in ~$4M of trades on Kraken’s BTC futures
    • CFTC Chairman Heath Tarbert said the agency is helping create a regulated futures market investors would be able to “rely on” for better “price discovery, hedging and risk management,” adding that he believes regulated derivatives will instill market confidence in crypto
    • Tarbert noted, “By allowing [cryptocurrencies] to come into the world of the CFTC,” investors can better access trusted and regulated financial products, improving overall confidence in the asset class, “It’s helping to legitimize [digital assets], in my view, and add liquidity to these markets.”
    • The chairman reiterated that his perspective will only extend to crypto the CFTC currently classifies as commodities
    • Tarbert also said that it isn’t clear yet whether XRP is a security or a commodity, and that the CFTC has been working closely with the SEC over the last year “to really think about which falls in what box.”
    • Coverage by CoinDesk & The Block
    • U.S. Judge Beth Bloom said the previously established “fact” that the Kleiman estate (plaintiff) retains a 50/50 ownership in Craig Wright’s assets and intellectual property is up for debate
    • Bloom said that because the previous hearing with Judge Reinhart was focused solely on the amount and location of Wright’s BTC, Wright’s partnership with David Kleiman was beyond Reinhart’s remit, adding that the amount of BTC at the center of the case “remains an issue”
    • Wright claims the encrypted Tulip Trust with his alleged 1.1M BTC (~$8.9B) fortune is currently inaccessible because several keys are held by an unnamed intermediary and that it would be “impossible” identify his BTC before the  “mysterious” bonded courier returned 100% of the assets to his control on Jan. 1, 2020
    • Bloom is giving Wright until Feb. 3 for the courier to unlock the trust, “The Court questions whether it is remotely plausible that the mysterious ‘bonded courier’ is going to arrive, let alone that he will arrive in January 2020 as the Defendant now contends.” 
    • Wright hasn’t confirmed publicly whether the courier arrived and hasn’t moved BTC said to be held in the trust
    • The SEC is urging investors to use caution before investing in IEOs, “Be cautious if considering an investment in an IEO.  Claims of new technologies and financial products, such as those associated with digital asset offerings, and claims that IEOs are vetted by trading platforms, can be used improperly to entice investors with the false promise of high returns in a new investment space.  As described below, IEOs may be conducted in violation of the federal securities laws and lack many of the investor protections of registered and exempt securities offerings.”
    • The agency established that some IEOs are unregistered securities offerings and that, if the IEO involves securities, the online trading platform on which the IEO is being offered may need to register with the SEC separately as a national securities exchange or operate pursuant to an exemption, such as an ATS license (requires the platform to become a registered broker-dealer), “Noncompliance with the federal securities laws means the IEO and/or trading platform may be operating unlawfully and the investor and market protections and remedies these laws are intended to provide may be absent.”
    • U.S. Federal securities laws also apply to overseas-based IEOs being offered in the U.S.
    • Grayscale Bitcoin Trust (GBTC), which has +$2.06B in AUM as of January, resumed private placement of its shares for accredited investors, available for daily subscription at net asset value
    • Investors will have to hold their GBTC shares for a one-year period as the firm currently doesn’t operate a redemption program; if Grayscale’s November filing with the SEC to register GBTC is passed, investors will be able to liquidate their holdings in 6 months
    • According to Charles Schwab, GBTC is popular  (i.e., one of their top-10 equity holdings) among Millennials (between 25-39 years of age)
    • Coverage by The Block
    • Ripple-backed remittance services provider MoneyGram partnered with Indian money transfer firm EbixCash, a wholly-owned subsidiary of Nasdaq-listed Ebix, to serve as MoneyGram’s “exclusive” partner in India
    • MoneyGram aims to serve “millions” of users in the country via EbixCash’s 320,000 distribution outlets – spread across 4,000 cities and +75,000 villages – and to service inward remittance volumes of $3B annually
    • MoneyGram CRO Grant Lines said, “India remains the world’s top recipient of remittances, and we’re excited to better serve this critical market through our partnership with EbixCash, a leading brand with an approximate 80% share of locations in the country.” 
    • It is not clear whether MoneyGram will utilize Ripple’s blockchain platform in the country
    • Blockchain tops the list of most in-demand, hard skills employers are looking for in 2020, ahead of cloud computing, AI, and scientific computing for employers in the US, the UK, France, Germany, and Australia
    • Notably, Blockchain didn’t appear on 2019’s list
    • The report called the tech “a business solution in search of problems”; however, “the business world […] is voting with its jobs, and companies seem to be saying that the potential is worth the gamble.”
    • IBM, Oracle, JPMorgan Chase, Microsoft, Amazon, and American Express are among companies hiring for blockchain workers
    • A recent survey from job site Indeed showed that the share of job postings per million for crypto/blockchain roles increased by +26% YoY
    • While job postings are increasing, interest in the blockchain industry is correlated with BTC’s price
    • Coverage by Decrypt & CoinTelegraph
    • Kraken hired former CoinDesk Editor-in-Chief Pete Rizzo to work as Editor-at-Large; he will be responsible for driving content related to new products and services as we grow int’l reach, deepen our suite of innovative products and connect with new crypto users
    • Rizzo said, “At this stage in my career, I wanted the opportunity to work with a larger team that was trying to acquire users and get people interested in bitcoin and cryptocurrency. I think there’s a huge opportunity to get more people engaged in what’s going on.”
    • Rizzo added, “Kraken has a great reputation with industry veterans and experts, which really isn’t very common. Additionally, the scale and sophistication of its current users allow the exchange to offer exciting products and services that I don’t think can be ideated elsewhere. The company is big enough to acquire new users but still find synergies with crypto natives – that’s rare. This is a very difficult balance to achieve, and one that I’m looking forward to helping accelerate with some new ideas.”
    • Bitwise Asset Management & NYSE Arca withdrew their BTC ETF application with the SEC
    • The commission previously said the proposal didn’t meet legal requirements to prevent market manipulation or other illicit activities
    • Bitwise’s Global Head of Research Matthew Hougan said, ”This is the next step towards our long-term goal of bringing a bitcoin ETF to market, and we plan to refile our application at an appropriate time. We are currently working hard on answering the questions that the SEC raised in its 112-page response to our initial filing. We remain fully committed to the development of a bitcoin [exchange-traded product], and will update you when we have more details on our timeline.”
    • The SEC has hitherto rejected at least a dozen BTC ETFs
    • According to an annual survey of 415 financial advisors conducted by Bitwise, advisors are increasingly bullish on BTC’s future but hesitant to invest in it for their clients or themselves
    • 6% invest clients’ funds in crypto, and the holdouts largely plan to continue avoiding crypto in 2020; 55% said they will “probably” or “definitely” not invest in crypto this year, while 7% said they “probably” or “definitely” will
    • 38% are “unsure” what they’ll do this year
    • Bitwise’s Global Head of Research Matthew Hougan said, “Advisors are intrigued by crypto’s proven history of delivering uncorrelated returns or high returns.”
    • 56% said “regulatory concerns” are preventing them from embracing crypto
    • 42% indicated regulation was their top concern, while 58% said “better regulation” could spur them to invest
    • Hougan noted that advisors control $24T in assets, dwarfing BTC’s market cap of ~$160B, “Crypto people are over-focused on institutions as the next wave of adopters and under-focused on advisors, who control just as much as the institutions.”
    • 64% project BTC it will add value by 2025, while 8% think the market will crash by year’s end
    • 76% said they fielded clients’ crypto questions in the past year; 35% believe that some clients are investing in crypto themselves
    • Hougan said advisors’ attitudes towards the market made strides through 2019 compared to Dec. 2018 when BTC’s price made historic lows, advisors are more positive this year, “Last year people were not sure if crypto would survive. Now people are more confident.”
    • FBI Victim Specialist Valerie Gauthier is emailing QuadrigaCX victims to alert them of a new portal containing info about the case, “A criminal investigation can be a lengthy undertaking, and, for several reasons, we cannot tell you about its progress at its time.”
    • Victims can contact the FBI at quadrigavictims@fbi.gov, though “inquiries about the status of the case will not be addressed.”
    • The Sacramento Kings basketball team is releasing an Ethereum-based sports memorabilia auction platform that will use Consensys-backed Treum to authenticate every auctioned item and establish a transparent audit trail recording the gear’s history and any future sale, loan, or showroom exhibition
    • The system’s first live auction features Kings guard Buddy Hield’s jersey and will take place today; proceeds will go to Hurricane Dorian relief efforts
    • The highest bidder will receive the gear, a Certifications of Authority, and a digital token containing the item’s historical and future records
    • According to Collectable.com, America’s sports memorabilia market boasts an estimated value of $5.4B per year
    • Sacramento Kings CTO Ryan Montoya said, “We have integrated blockchain technology into our business across multiple platforms, including our reward program, and now our fans will have the opportunity to securely purchase authentic game-worn merchandise in real-time using an innovative blockchain-based solution.”
    • Crypto custodian Anchorage acquired data analytics firm Merkle Data for an undisclosed amount
    • The firm is launching a brokerage service, dubbed Anchorage Trading, for institutional clients; for a flat fee of 10bps per trade, institutions can store crypto with Anchorage and trade from their platform
    • Anchorage already integrated Merkle Data’s product into its new trading feature
    • Anchorage CEO Nathan McCauley said, “Customer demand drives the market, and institutional investors want a single solution for all their crypto needs: custody, trading, staking, voting, and more. Our goal is for Anchorage to be that solution. Different providers may take different paths to meet customer demand, but given the current fragmentation across the B2B crypto marketplace, we expect to see further consolidation.”
    • Former CFTC Chair J. Christopher Giancarlo is launching a non-profit think tank, called the Digital Dollar Foundation, to study converting USD into a fully electronic, blockchain-based currency
    • The former chairman believes the U.S. risks losing the advantages from having the dominant global currency if it falls behind rivals like China, “Like with the physical infrastructure of this country, if you don’t modernize and keep up with the times, those strengths will begin to fray.”
    • Global consulting giant Accenture PLC is supporting the foundation and its main initiative, the Digital Dollar Project, which will encourage research and discussion of the advantages of digitizing the dollar; it’s expected to be officially launched later today
    • The Digital Dollar Foundation’s other founders are  former CFTC official Daniel Gorfine and Giancarlo’s brother Charles Giancarlo, a longtime Silicon Valley executive who has worked for Cisco Systems Inc. and private-equity firm Silver Lake Partners
    • The founders are providing the initial funding for the foundation, while Accenture’s main role will be to provide research and logistical support
    • BTC miners are paid +$15M/day, representing ~83% of total miner salary across all major PoW coins
    • The total rewards paid across BTC, ETH and other major PoW cryptos including ZEC, LTC, ETC, BCH and BSV were +$18M
    • Since mid-2017, BTC’s miner salary share has increased ~250% and is nearing pre-ETH levels
    • Coverage by CoinDesk
    • Chainalysis traced $2.8B in BTC sent by criminals to crypto exchanges in 2019, the bulk of which went to Binance (27.5%) and Huobi (24.7%), “While exchanges have always been a popular off-ramp for illicit cryptocurrency, they’ve taken in a steadily growing share since the beginning of 2019. Over the course of the entire year, we traced $2.8 billion in Bitcoin that moved from criminal entities to exchanges.”
    • 75% of the total received on the two exchanges went to 810 of the highest-receiving accounts (received +$100B worth in 2019), “Overall, just over 300,000 individual accounts at Binance and Huobi received Bitcoin from criminal sources in 2019.”
    • These accounts likely belong to OTC brokers that “are typically associated with an exchange but operate independently”; Chainalysis claimed that although Huobi and Binance both have KYC procedures, such requirements are lower for OTC desks
    • In a list of 100 major OTC brokers that Chainalysis believes to provide money laundering services, 70 of them are on Huobi; the 100 brokers together could account for as much as 1% of all BTC activity in a given month
    • A proposed law in New Hampshire that would have allowed taxes and fees to be paid in crypto has been rejected
    • The bill would have instructed the New Hampshire state treasurer to “develop an implementation plan for the state to accept cryptocurrencies as payment for taxes and fees and allows state agencies to accept payment in cryptocurrencies after July 1, 2020.”
    • Grayscale Investment brought in $607.7M from investors during 2019, exceeding the cumulative amount from 2013-2018 and bringing the total to $1.17B
    • Grayscale saw back-to-back quarterly inflows of +$225M in 3Q and 4Q
    • GBTC brought in $193.8M in 4Q, the largest quarterly raise since inception
    • Grayscale grew its investor base by +24% in 2019, $146.9M of which came from new clients
    • 36% of all Grayscale clients now allocate to more than one product issued by the firm
    • 71% of Grayscale’s total investment figure came from institutions, primarily hedge funds, which marks a steady increase from 66% in 2018
    • A Grayscale spokesperson said, “As the largest digital currency asset manager, we feel that our numbers are indicative of broader market sentiment and institutional flows into digital currency. I think there was a lot that happened in Q4 that continued to sustain investor demand.”
    • Coverage by The Block
    • The Canadian Securities Administrators (CSA) said that national securities laws may “apply to Platforms that facilitate the buying and selling of crypto assets, including crypto assets that are commodities, because the user’s contractual right to the crypto asset may itself constitute a derivative.”
    • Exchanges that maintain control of customer funds are subject to such laws, even if they don’t trade assets that might be considered securities or derivatives, while non-custodial exchanges appear more likely to not fall under them, “Staff is aware that some Platform operators are of the view that the Platforms they operate are not subject to securities legislation because they only allow for transactions involving crypto assets that are not, in and of themselves, derivatives or securities. However, based on our analysis of how trading occurs on Platforms, we note that some Platforms are merely providing their users with a contractual right or claim to an underlying crypto asset, rather than immediately delivering the crypto asset to its users. In such cases, after considering all of the facts and circumstances, we have concluded that these Platforms are generally subject to securities legislation.”
    • The CSA will consider such events occurring if the exchange: “…immediately transfers ownership, possession and control of the crypto asset to the Platform’s user, and as a result the user is free to use, or otherwise deal with, the crypto asset without further involvement with, or reliance on the Platform or its affiliates, and the Platform or any affiliate retaining any security interest6 or any other legal right to the crypto asset…”; and “[If] following the immediate delivery of the crypto asset, the Platform’s user is not exposed to insolvency risk (credit risk), fraud risk, performance risk or proficiency risk on the part of the Platform.”
    • The Libra Association established a Technical Steering Committee (TSC) and elected 5 members to direct the technical roadmap for the Libra network, form Technical Working Groups to fast-track research into selected specific issues, guide codebase development, and build a healthy and engaged Libra developer community
    • The elected members include Anchorage co-founder Diogo Monica, Calibra core product lead George Cabrera III, Bison Trails founder Joe Lallouz, Union Square Ventures partner Nick Grossman and Mercy Corps emerging tech director Ric Shreves
    • The TSC plans to publish a governance framework by EOM Mar. 2020 that “will include the process by which the open source community can propose technical changes to the network and a transparent process for evaluating those proposals.”
    • Chainalysis reported that terrorist financing schemes using crypto are becoming more sophisticated
    • For example, terrorists collected crypto donations worth tens of thousands of dollars in one campaign last year, a quicker way to raise funds and more difficult for researchers to track
    • Terrorist organization AQB collected funds through a website that generated a new BTC address for every donor to send funds to, the first verified example of such tech deployed by a terrorist organization (a prior effort in 2016 used a single address for donations); this campaign raised as much money in nine months, and attracted more donors, than a 2016 campaign by another organization that ran for 2yrs 
    • Crypto exchanges accounted for the largest chunk of the funds that AQB received last year
    • Chainalysis co-founder Jonathan Levin said, “Once we identify these campaigns, our exchange customers are starting to block payments or filing suspicious activity reports based on information we are providing. I think there’s an increase in collaboration between the exchanges and the law enforcement community when it comes to this.”
    • The Reserve Bank of Australia (RBA) trialed a wholesale CBDC that runs on a private, permissioned version of Ethereum, and plans to extend its exploration this year
    • The RBA’s Innovation Lab simulated the token issuance to commercial banks, including the banks exchanging the tokens and redemption by the bank
    • The CBDC could be used in specialized payment and 24/7 instant settlement systems, for atomic txs or delivery, and as programmable money
    • Oklahoma senator Nathan Dahm proposed creating a state-chartered financial institution that would serve as “the central depository for virtual currency used by governmental agencies in this state” in an effort to provide a level of state-backed infrastructure for crypto- & blockchain-related work
    • The proposed bill’s intro date is Feb. 3rd, indicating that the bill is at its earliest stages in development, “This new financial institution shall be fully supported by blockchain technology and innovations. The new financial institution shall have the highest level of expertise with customer identification, anti-money laundering and beneficial ownership components […] The new financial institution shall be designed to seamlessly integrate into existing banking and financial institution regulations that protect consumers while limiting regulations that restrict innovation and technological advances for new financial products, data transmissions and recordkeeping.”
    • The depository wouldn’t be created overnight, but rather it would empower OK’s State Banking Dept. and the Dept. of Commerce to “coordinate and develop plans, make recommendations to the Legislature and establish requirements and a strategy” for its launch; a report on the initiative would be due by July 1, 2021
    • Coverage by The Block
    • Crypto wallet BRD established a new venture, dubbed “Blockset,” to provide enterprise blockchain infrastructure to banks, financial services institutions and consultancy firms, among others
    • BRD’s CMO Spencer Chen said Blockset provides “ready-to-use” tools, which help firms to build blockchain applications quickly and at a lower cost, “Ten of the top 15 companies that are hiring the most for blockchain projects are not crypto companies; they include companies such as Cisco, Verizon, JPMorgan Chase, et al. That’s the segment Blockset wants to own.”
    • Chen noted that BRD’s investor SBI Holdings is one of Blockset’s first customers, adding that the idea of setting up Blockset came from SBI, “SBI initiated the discussions for us to commercialize our infrastructure IP into Blockset. They had a critical need for Blockset for some of their initiatives. That’s when we made the decision to expand into the enterprise blockchain market.”
    • Blockset plans to work with competing blockchain  enterprise firms, such as KPMG, to help them reduce costs, “Many of the initial implementations of Blockset revolved around cost-savings and reducing the engineering resources needed to maintain their homegrown environment.”
    • Chen said Blockset is set to “very soon” release “cost-model calculators” to help “large” firms quantify the real costs of their blockchain business and help address ROI, “Over 20 financial titans are already evaluating Blockset”
    • BRD co-founder & CEO Adam Traidman said that “90% of major banks” are today exploring crypto
    • BRD claims to serve +3M users for its wallet business with +$6B worth of crypto under its protection, “Now we’re expanding to help large enterprises to build more usability into crypto apps so that we can reach the next 30 or 300 million consumers.”
    • Russian PM Mikhail Mishustin called on the country to prioritize the development of the digital economy, outlining the need for institutional reforms
    • Mishustin said the country should implement modern information technologies, “The state should become a digital platform that is created for people.”
    • Mishustin made this statement after the Russia’s former PM Dmitry Medvedev announced they were resigning

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