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

 

1. Bloomberg: Halting $9.8 Billion in Theft Is Key to Crypto Growth, KPMG Says
2. Ledger Insights: BIS Analyzes Securities Tokenization, Future of Payments, CBDC
3. The Block: 98% of Bitcoin Mining Machines Will Never Produce a Block, Says PwC Analyst
4. FT Alphaville: The Art of Redefining Success, MoneyGram and Ripple Edition
5. The Times: Lloyds of London Doubles Down on Bitcoin Wallet Insurance
6. CoinTelegraph: There Are Now Over 7,000 Cryptocurrency ATMs Worldwide
7. Bloomberg: U.S. Sues to Tap Crypto Accounts Tied to North Korean Hack
8. Decrypt: Germany Recognizes Bitcoin as a Legal Financial Instrument
9. Hyperledger: Hyperledger Announces Eight New Members, including Clear, Conduent and Walmart
10. Federal Reserve: Federal Reserve Issues FOMC Statement
11. The Block: Tron Takeover? Steem Community In Uproar as Crypto Exchanges Back Reversal of Blockchain Governance Soft Fork
12. Algorand: Marshall Islands to Power World’s First National Digital Currency with Algorand and SFB Technologies
13. Kraken: Tron (TRX) Trading is Coming to Kraken
14. Bloomberg: Cryptocurrency Bourses Win India Case Against Central Bank Curbs
15. The Block: ConsenSys and EY Announce Enterprise-Targeted Protocol That’s Built on Ethereum and Backed By Microsoft
16. Bloomberg: Facebook Weighs Libra Revamp to Address Regulatory Concerns
17. BNN Bloomberg: Singapore Crypto Startup Seeks to Triple Value to $300 Million
18. The News.Asia: Amendment to Special Reporting Act Passes – Cryptocurrency Now Fully Legal in South Korea
19. CoinTelegraph: Chainalysis—Only 1% of $1 Trillion Transacted in Crypto in 2019 Was Illicit
20. BTC Manager: Ukraine Mandates Citizens to Declare Bitcoin (BTC) Holdings for Tax Purposes
21. CoinDesk: BitGo Reveals Bitcoin Lending Push; $150M Booked So Far
22. The Economic Times: RBI to Seek Review of Supreme Court Order on Cryptocurrency
23. SCMP: Bank-Backed Blockchain Keeps Trade Finance Flowing in Virus Choked Supply Chain, HSBC Says
24. Les Echos: French Court Recognizes Bitcoin as “Money”
25. CoinTelegraph: Ethereum Whales Accumulate in Anticipation of ETH 2.0
26. Bloomberg: This Utility Heats New York State—And Mines Its Own Bitcoin

   

1. Bloomberg: Halting $9.8 Billion in Theft Is Key to Crypto Growth, KPMG Says
   • Big Four accounting firm KPMG reported that ~$9.8B in digital assets have been stolen by hackers since 2017 because of lax security or poorly written code, adding that the crypto market needs to contend with heightened rules on crypto custody in order to keep growing
   • Co-leader of KPMG’s crypto asset services Sal Ternullo said crypto adoption amongst institutional investors has led to competition for a place in portfolios, making custody more important than ever, “Institutional investors especially will not risk owning crypto assets if their value cannot be safeguarded in the same way their cash, stocks and bonds are.” 
   • The report stated, “As crypto-assets proliferate, custodians have a tremendous opportunity to profit — both by earning management fees for delivering straightforward custodian services, and also by offering adjacent services only possible in the emerging crypto ecosystem.”
   • KPMG noted that even established financial institutions with mature compliance programs must “enhance their methodologies to address the unique considerations for crypto-assets and related data-management challenges.”
2. Ledger Insights: BIS Analyzes Securities Tokenization, Future of Payments, CBDC
   • The Bank for International Settlements (BIS) published its quarterly report exploring how technology is impacting banking and financial markets
   • BIS Head of Research Huyin Song Shini stated, “The pace of change and potential for disruption have propelled payment systems to the top of policymakers’ agenda.”
   • BIS General Manager Agustín Carstens said, “The most transformative option for improving payments is a peer-to-peer arrangement that links payers and payees directly and minimises the number of intermediaries […] Central banks have a core role in payment systems, and the changes under way require them to step up and play a more significant part in improving the safety and efficiency of these systems.”
   • The report said tokenizing securities on DLT may streamline the settlement cycle, but because traders are allegedly accustomed to the sluggish settlement cycle, an upgrade to a DLT system might make it more efficient than some investors are willing to bear, “Market participants might not want to move to shorter settlement cycles, as this could increase liquidity requirements and give market-makers less time to source the cash or securities needed for settlement.”
   • The researches contend that there are many barriers in the short-term to any meaningful DLT securities system being implemented, such as ongoing legal questions over security tokens and operational risks
   • The report added that DLT and smart contracts are “yet to be proven” in clearing and settlement and will need to grapple with the prevailing account-based systems, “The ability of tokenised systems to interoperate with account-based systems will be key to their success.”
   • Regarding CBDCs, the bank asked: Should they be retail or wholesale focused? Account-based or token-based? Ought they run on a distributed ledger, a centralized model, a hybrid system? Are CBDCs necessary at all?; while the BIS doesn’t definitively answer these, it plots out the considerations each would involve (e.g., they clarify there’s no point developing digital money that lacks advantages over the existing payment systems, consumers won’t use a CBDC less convenient than cash/credit, and retailers won’t tolerate a system unable to run on “peak demand.”)
   • How decentralized a CBDC system is also in question, “The key vulnerability of a conventional architecture is the failure of the top node, for example via a targeted hacking attack. The key vulnerability of DLT is the consensus mechanism, which may be put under pressure, for example, by a denial-of-service type of attack.”
   • Coverage by CoinDesk
3. The Block: 98% of Bitcoin Mining Machines Will Never Produce a Block, Says PwC Analyst
   • Alex de Vries, a blockchain specialist at PwC, said there are ~4M active BTC mining rigs and ~75,000 blocks are produced every during their average lifetime of 1.5 years, meaning < 2% machines are able to produce a block to verify BTC txs and the remaining 98% of machines never produce any blocks, “It’s a serious problem in terms of economic sustainability. One could classify regular proof-of-work as proof-of-useless-work.”
   • De Vries added, “The lifetime of course varies, but if you look historically, you do see bitcoin mining devices follow Koomey’s law (doubling of computational power every 1.5 years). If you look at Bitmain IPO data you see they sold well over 4 million of Antminer S9 family devices over the past years (see Carbon Footprint of Bitcoin report, published last year), so that’s a very plausible number.”
   • Regarding mining pools, de Vries said, “They bundle and distribute the work, but that doesn’t change that at the end of the line the ‘winning’ number is only found once every 10 minutes by a single one of those devices. Pooling is just a specific strategy to perform the random number generation; doesn’t alter the substance.”
   • The specialist also believes energy consumption by BTC miners is also a cause of concern, as he claims the carbon footprint of a single tx is equal to spending 52,043 hours watching YouTube
   • Speaking about proof-of-stake systems as a potential solution, he concluded, “There’s little doubt that such a system would reduce bitcoin’s energy need by around 99.9% (and e-waste would be even more negligible). I don’t necessarily see this as the ultimate solution, but a step in getting the right mindset with regard to creating something truly sustainable.”
4. FT Alphaville: The Art of Redefining Success, MoneyGram and Ripple Edition
   • Ripple CEO Brad Garlinghouse said XRP sales form a significant chunk of the company’s profitability, “We would not be profitable or cash flow positive [without selling XRP] […] Well XRP is one source. I don’t know how to answer that because if you took away our software revenues, that would make us less profitable. If you took away all our XRP, that makes us less profitable. So I don’t think about it as one thing.”
   • Garlinghouse revealed that companies that use Ripple’s solutions are incentivized with XRP depending upon “the shape and size and type and how high a priority” they are
   • Ripple client MoneyGram, whose agreement is scheduled to expire on July 1, 20203, received $11.3M in XRP from Ripple during 3Q-4Q2019
   • Coverage by The Block
5. The Times: Lloyds of London Doubles Down on Bitcoin Wallet Insurance
   • Major insurance firm Lloyds of London partnered with crypto insurer Coincover to expand liability insurance coverage to hot wallets
   • Within its 2020 crypto crime report, Chainalysis said that hot wallet attacks were a factor in the two most prominent exchange hacks of 2019 (Binance and Upbit)
   • Matthew Greaves – an underwriter for Atrium, Lloyd’s underwriter syndicate – said, “There is a growing demand for insurance that can protect cryptocurrency as it becomes increasingly popular. It is a testament to Lloyd’s that the market has put together an innovative solution to mitigate these new risks and protect against theft—from physical as well as online vaults—thereby providing customers with peace of mind that their assets are safe.”
   • Coverage by Decrypt & CoinTelegraph
6. CoinTelegraph: There Are Now Over 7,000 Cryptocurrency ATMs Worldwide
   • According to CoinATMRadar, there are > 7,000 crypto ATMs worldwide from 42 different manufacturers operating in 75 countries, 1,000 of which hit the market after October of last year
   • The first BTC ATM was installed in a Vancouver coffee shop by Robocoin in 2013
   • The most recent data indicates 11.7  crypto ATMs are installed per day on average
7. Bloomberg: U.S. Sues to Tap Crypto Accounts Tied to North Korean Hack
   • The U.S. sued to gain control of 113 crypto accounts North Korea allegedly used to steal more than $250M from BTC and ETH exchanges in 2018
   • The complaint says hackers used phishing emails containing malware to target South Korean and other nearby exchanges, “The phishing campaign targeted thousands of email accounts at exchanges around the world and personal email accounts of prominent people within the cryptocurrency ecosystem, to include CEOs of major exchanges.”
   • The gov’t began looking at the alleged hacks after the UN Security Council found in 2019 that North Korea was using stolen crypto to finance its military and circumvent sanctions
8. Decrypt: Germany Recognizes Bitcoin as a Legal Financial Instrument
   • Germany’s financial regulator BaFin officially defined cryptocurrencies as financial instruments that are: 1) not issued or guaranteed by any central bank or public body; 2) don’t have the legal status of currency or money; 3) can be used by individuals or legal entities as a means of exchange or payment; 4) serve investment purposes; and 5) can be transmitted, stored and traded electronically
   • The document notes that cryptocurrencies aren’t to be confused with various types of “electronic money” which have other sections of the law dedicated to them
   • The classification was based on definitions written by other regulators and enforcement agencies, such as the FATF
9. Hyperledger: Hyperledger Announces Eight New Members, including Clear, Conduent and Walmart
   • Open-source blockchain consortium Hyperledger added eight new members to its platform – Aiou Technology, Clear, Conduent, Joisto Group, Tangem, Tokenation and Walmart
   • Six new Hyperledger Certified Service Providers were also revealed, including Beijing Proinsight Technology, Kompitech, LimeChain, Mindtree, Xoaa, and Zhigui
   • Associate members joining this month include Directorate of Information Technology (DIT) of Maharashtra
   • Walmart Global Tech VP Sanjay Radhakrishnan said, “We’ve seen strong results through our various deployments of blockchain, and believe staying involved in open source communities will further transform the future of our business.”
10. Federal Reserve: Federal Reserve Issues FOMC Statement
    • The Fed announced an emergency interest rate cut for the first time since the 2008 financial crisis to counteract economic risks from the spreading coronavirus, “The coronavirus poses evolving risks to economic activity. The committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.”
    • The interest rate was cut by 0.5 percentage points to a range between 1-1.25%
    • The central bank’s monetary-policy committee hadn’t been scheduled to make its next decision on interest rates until Mar. 18
11. The Block: Tron Takeover? Steem Community In Uproar as Crypto Exchanges Back Reversal of Blockchain Governance Soft Fork
    • On Feb. 14, decentralized blogging platform Steemit entered into a “strategic partnership” with TRON that saw Steemit’s chairman sell the platform to TRON founder Justin Sun; the community implemented a soft fork on Feb. 24 that deactivated the voting power of a large number of tokens owned by TRON and Steemit due to concerns of centralization
    • Steemit then utilized resources from major exchanges like Huobi, Binance, and Poloniex to reverse the fork, prompting a community outcry
    • The Steemit team, consisting of “the Tron folks and Steemit Inc together,” justified its action by calling the soft fork “criminal and illegal […] Soft Fork 0.22.2 was maliciously structured, intending to freeze a handful of very targeted accounts and taking away their rights and possession to their owned asset, and may be deemed illegal and criminal,” the post said. “They even threatened to hard fork, and nullify all existing STEEM token, putting every good STEEM holder, developer and community interest at danger […] For the next 4-6 weeks, the Steemit team will be using the voting rights to resume the order of the community while having an open channel for meeting community members and Witnesses. After the 4-6 weeks period, the Steemit team will give the governance back to the community when it’s back in order and mutual agreement.”
12. Algorand: Marshall Islands to Power World’s First National Digital Currency with Algorand and SFB Technologies
    • The Marshallese Sovereign (SOV), the Marshall Islands’ national digital currency that was designed to avoid reliance on the USD, will officially be created using the Algorand blockchain
    • SFB CTO and co-founder Jim Wagner said Algorand’s protocol has “functionality required to issue, manage and distribute the SOV on a global level,” which ensures that the digital currency “will be built on a scalable and secure platform.”
    • The IMF previously asked the nation to “seriously reconsider” the project because the potential benefits from revenue gains appear “considerably smaller” than the potential costs arising from economic, reputational, compliance and governance risks
    • 24M SOVs will be created initially, 40% of which will be available for sale globally, ”Each year, the supply of SOV will increase by just 4%. This rate has been chosen to promote long-term sustainability and is algorithmically fixed by the SOV blockchain, so the supply cannot be manipulated.”
    • The SOV will be introduced through a token pre-sale and rights to future SOV will be sold in a series of auctions as part of a time-release monetary issuance (TRMI), which is expected to “begin soon and will last for 18 months”
13. Kraken: Tron (TRX) Trading is Coming to Kraken
    • Kraken will list Tron (TRX) on Mar. 5, trading will be available on Kraken, Kraken Pro, and OTC
    • The initial trading minimum will be 500 TRX (~$9)
    • Available pairs: TRX/USD; TRX/EUR; TRX/XBT; and TRX/ETH
14. Bloomberg: Cryptocurrency Bourses Win India Case Against Central Bank Curbs
    • The Supreme Court of India lifted the central bank’s ban on domestic financial institutions from providing banking services to crypto exchanges, which was imposed in April 2018
    • Sumit Gupta, founder of exchange aggregator CoinDCX, said “The uplifting of the ban by Supreme Court is going to open new opportunities for India in terms of investments, economy and a market as a whole. As few of the surviving petitioners of the case, we are thankful to the Supreme Court for hearing our side of the story. We have always seen crypto as a potential to unlock India’s dream of becoming a $5 trillion economy.”
    • Coverage by CoinDesk & Economic Times
15. The Block: ConsenSys and EY Announce Enterprise-Targeted Protocol That’s Built on Ethereum and Backed By Microsoft
    • ConsenSys and EY jointly formed the Baseline Protocol, a project that will allow enterprises to access Ethereum-based DeFi services without having to publicize their private info
    • Roughly 75% of the work has been done and the project is transitioning from a close-knit team consisted of the two firms to a larger one with participation from Microsoft, AMD, ChainLink, Core Convergence, Duke University, Envision Blockchain, MakerDAO, Neocava Splunk, UniBright, Provide, and W3BCLOUD
    • ConsenSys’ group executive for enterprise mainnet John Wolpert said businesses using internal record-keeping systems like ERP and CRM have difficulty synchronizing their data with counterparts, adding that blockchain provides a potential solution but many are deterred due to the risk of exposing business secrets to potential competitors
    • The protocol uses messaging, digital signatures, a zero-knowledge algorithm, and other techniques to create a common frame of reference that teams need to stay in sync
    • Each step in the workflow is compartmentalized, thereby allowing an individual to work on a separate segments without knowledge of other steps
    • The end goal is to let current enterprise systems vendors, solutions firms, and cloud providers improve their products based on the protocol
16. Bloomberg: Facebook Weighs Libra Revamp to Address Regulatory Concerns
    • According to people familiar with the matter, Facebook and the Libra Association are considering redesigning the Libra project so that the network accepts multiple coins, including those issued by central banks, in an effort to woo global regulators and regain momentum 
    • Facebook is weighing a recast of Libra with an emphasis on a payments network that could operate with multiple coins, such as coins issued by central banks and fiat backed
    • The association will re-introduce Libra “soon” and Facebook “remains fully committed to the project.”
    • Libra Association head of policy & communications Dante Disparte said, “The Libra Association has not altered its goal of building a regulatory compliant global payment network, and the basic design principles that support that goal have not been changed.”
    • Coverage by MSN & Decrypt
17. BNN Bloomberg: Singapore Crypto Startup Seeks to Triple Value to $300 Million
    • Crypto-finance venture Matrixport, which was founded by Bitmain’s CEO Wu Jihan, is allegedly raising $40M in a funding round at a post-investment valuation of $300M
    • The startup took in $7-$8M in revenue for 2019 and expects that to more than double this year, according to a slide deck shared with investors
    • The firm was valued at $114M in a previous round
18. The News.Asia: Amendment to Special Reporting Act Passes – Cryptocurrency Now Fully Legal in South Korea
    • The Korean National Assembly passed an amendment that would officially give the domestic cryptocurrency market clear legal oversight in South Korea 
    • The amendment alters the Act on Reporting and Use of Specific Financial Information, which was drafted based on FATF’s guidelines, to account for crypto business activity
    • Crypto firms in Korea will have to comply with KYC/AML requirements, and those that have conducted ICOs will need to partner with an approved Korean bank to verify the real names of participants and bank account info, ”This is to impose obligations to effectively prevent money laundering and public threat financing from virtual asset providers, and to prescribe matters to be followed when financial companies conduct financial transactions with virtual asset providers.” 
    • Blocktower Capital investor Steve Lee said, ”[This is] very meaningful as it will give clarity to many aspects of the crypto market in the region where there are many ‘gray’ areas. The regulation will make cryptocurrency, crypto custody, crypto exchange to be regulated under traditional laws and provide clear rules for exchanges to open bank accounts for the customers. Very positive news for crypto community in South Korea and it will build the foundation for institutional players and investors to more actively engage in the crypto space.”
    • The legislation is subject to presidential approval; if signed into law, it will become effective next March, and by Sept. 2021, all crypto businesses will need to be in full compliance
    • Coverage by The Block & Decrypt
19. CoinTelegraph: Chainalysis—Only 1% of $1 Trillion Transacted in Crypto in 2019 Was Illicit
    • According to Chainalysis, >$1T worth of crypto txs took place in 2019, of which only 1.1% were illicit
    • Illicit txs on a percentage basis have been diminishing over time
    • 2019 saw more crypto exchanges hacked than ever, but only the third-highest amount stolen
    • The majority of freshly mined coins are going straight to exchanges
20. BTC Manager: Ukraine Mandates Citizens to Declare Bitcoin (BTC) Holdings for Tax Purposes
    • According to Forklog, Ukraine‘s National Agency for Prevention of Corruption (NAPC) defined clear rules for declaring crypto as intangible assets 
    • The new rules, which are in line with FATF’s guidelines, oblige individuals to report crypto held by them or their family members and the declaration must include the name of the virtual asset, the date when it was last purchased, the number of coins that were bought, and its price on the last day of the reporting period
21. CoinDesk: BitGo Reveals Bitcoin Lending Push; $150M Booked So Far
    • Crypto custodian BitGo, which allegedly processes 15% of all global BTC txs, launched a separate legal entity for lending services, dubbed BitGo Prime LCC
    • The new entity has built up a loan book of $150M and plans to grow to become a full-scale prime broker
    • The firm is targeting larger investors and traders with the new offering, with loan sizes of $1M-$8M
22. The Economic Times: RBI to Seek Review of Supreme Court Order on Cryptocurrency
    • According to people familiar with the matter, the Reserve Bank of India (RBI) – which issued an order to cut off crypto firms from the country’s financial system in April 2018 – plans to fight the Supreme Court’s recent ruling that overturned its ban
    • The RBI will lodge a review petition over the ruling that the RBI had not been balanced in issuing the order
    • Concerns that the restarting of crypto trading could pose a risk to the banking system were cited as the primary reason behind the central bank’s response
    • Coverage by CoinDesk & The Block
23. SCMP: Bank-Backed Blockchain Keeps Trade Finance Flowing in Virus Choked Supply Chain, HSBC Says
    • After completing >$30M worth of letter-of-credit (LoC) txs last year during its trial period, the Contour blockchain trade finance platform (formerly Voltron) is ready for commercial launch during 2H2020
    • The platform was developed by eight banks, including HSBC, Standard Chartered, CTBC Holding, ING, Bangkok Bank, BNP Paribas, SEB, and Citi
    • Ajay Sharma, HSBC’s regional head of global trade and receivables finance for APAC, said LoC’s using blockchain have helped companies continue with their commercial trades even during the new coronavirus epidemic, “Leveraging blockchain for trade finance has overcome the physical constraints we are having today.”
    • The company will be staffed by ~20 employees by EOY
24. Les Echos: French Court Recognizes Bitcoin as “Money”
    • A French court issued a ruling between French BTC marketplace Paymium and crypto investment firm BitSpread that officially recognized BTC as “money”
    • Paymium loaned BitSpread 1,000 BTC in 2014 and expected to also be repaid the equivalent amount of BCH following the 2017 BTC hard fork
    • The court ruled that like fiat currencies, BTC is a fungible intangible asset and the BCH belonged to BitSpread, similarly to how dividends are paid out to a shareholder
    • Coverage by U.Today, CoinTelegraph & Decrypt
25. CoinTelegraph: Ethereum Whales Accumulate in Anticipation of ETH 2.0
    • Blockchain data analysis firm Santiment reported that whales appear to be accumulating ETH in anticipation of ‘ETH 2.0’, with the percentage of ETH supply controlled by the top-100 wallets at ~25%, “[Large investors] have a collective sentiment of the token being undervalued and believe it’s a great mid to long-term hold play.”
    • The company cautioned that signs of accumulation don’t guarantee parabolic price action in the short term, “Sometimes these price rises take a bit of time after these accumulation rises.”
    • According to TokenAnalyst, the wallets of Huobi, Binance, Bitfinex, Poloniex, Okex, Gemini, Kucoin, Bitstamp, Kraken, and Bittrex hold ~18.5M ETH combined (~16.8% of ETH’s total supply)
26. Bloomberg: This Utility Heats New York State—And Mines Its Own Bitcoin
    • Upstate New York power plant Greenidge Generation installed a mining farm in its facility that is comprised of ~7,000 mining rigs and powered by electricity generated on-site; the facility can mine an average of 5.5 BTC (~$50,000) every day
    • Kevin Zhang, director of Greenidge’s blockchain strategies, said the initiative would provide potential investors with unique exposure to both the crypto and energy markets
    • The server farm comes as part of a $65M renovation of the plant, which includes transforming the plant from coal to natural gas as well as investing in the electrical infrastructure needed to power the mining rigs
    • Greenidge’s CFO Tim Rainey added, “Due to our unique position as a co-generation facility, we are able to make money in down markets so that we’re available to catch the upside of volatile price swings,” 
    • Rainey expects the operation will stay profitable after BTC’s halving in May, “We are in a favorable market position regardless of how the halving materializes. […] Due to our unique position as a co-generation facility, we are able to make money in down markets so that we’re available to catch the upside of volatile price swings.”
    • The server farm consumes 14 MW of the 106 MW of Greenidge’s capacity, which is enough to power >11,000 average U.S. homes
    • Coverage by CoinDesk, CoinTelegraph, & The Block

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