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Crypto VC Firm Digital Currency Group Invests In Pro-Crypto Silvergate Bank

The headline of this article incorrectly stated that DCG invested $114 mln into Silvergate Bank. The headline has been updated.

The Digital Currency Group (DCG), a cryptocurrency venture capital firm, has reported they have invested in the Silvergate Capital Corporation, which contains the crypto-friendly Silvergate Bank, in a tweet yesterday, Feb. 26.

The Silvergate Capital Corporation had posted on its site yesterday, without disclosing the investors, that they had sold 9.5 mln shares of Silvergate stock through a private placement for a total of around $114 mln. The news post writes about the projected goals behind the acquisition:

“Proceeds from this placement will support further growth in the Bank’s nationwide fintech deposit initiative and its business banking and residential lending activities.”

Cryptocurrency companies have traditionally had a hard time finding banks to accept them as customers. Over the weekend, the Bangkok Bank terminated the account of the Thai Digital Asset Exchange, and in January of this year, several Indian banks suspended or limited the accounts of crypto exchanges.

Tether, a digital token backed by fiat currency, also experienced banking problems in 2017 when all international wires to Tether were frozen by Tether’s Taiwanese banks.

DCG also tweeted that it has “huge news” from multi-currency mobile-payments app Circle, which is a DCG portfolio company:

Circle announced their acquisition of crypto exchange Poloniex yesterday, writing in their press release that they hope to grow Poloniex into a “robust multi-sided distributed marketplace.”

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Venezuela Launches Free Cryptocurrency Training Course For Citizens

The Venezuelan government has launched a free cryptocurrency training course to teach its citizens how to buy, sell and mine digital currencies, particularly the oil-backed Petro that has been recently issued by the state, local news outlet Telesur TV reported on Saturday, Feb. 24.

The opening of the “Granja Laboratorio Petro” in Caracas takes place days after the launch of the oil-backed national cryptocurrency of Venezuela Petro (PTR) on Feb. 20.

Carmen Salvador, a teacher of cryptocurrency trading at the newly established training course, comments that the school offers “a completely free training,” noting that “in any international market a trading course cost more than $500 to $800.”

Many of our young people here find it impossible to have this amount of resources, [but] the Venezuelan state is guaranteeing that all can participate through these plans,” Salvador said.

Venezuela launched its own oil-backed cryptocurrency in order to attract foreign investors, bypassing the economic sanctions that are enforced against the country by the United States and the European Union.

Since the beginning of the pre-sale (ICO) of Petro on Feb. 20, at least $735 mln worth of investments have allegedly been secured, according to a tweet posted by president Nicolás Maduro. Another report by the Venezuelan news outlet Actualidad claims that a total of $1 bln has been raised in the first two days of the Petro sale.

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Canadian Diamond Mining Company Hires New CEO, Turns To Blockchain

Canadian diamond exploration and mining company Lucara Diamond has appointed a new chief executive in a move towards modernizing the diamond industry with Blockchain technologies, the Financial Times reported today, Feb. 26.

The new CEO, Eira Thomas, will lead the company after its recent purchase of Clara Diamond Solutions for $29 mln, or 13.1 mln shares. Clara is a digital platform that utilizes both cloud and Blockchain technologies to “[ensure] diamond provenance from mine to finger,” according to the Nasdaq press release.

Lukas Lundin, chairman of Lucara, said,

“We believe that Clara will not only modernise the entire diamond sales process but unlock additional value for all participants across the diamond market.”

Blockchain systems are seeing increased use in supply chain management as they can streamline the process by permanently recording each transaction on the Blockchain, significantly increasing transparency.

Lucara’s turn to Blockchain comes a month after De Beers, one of the world’s largest diamond producers, launched a pilot Blockchain initiative also for tracking a diamond’s supply chain to ensure each diamond is conflict-free.

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Northern Ireland Property Developer To Accept Bitcoin As Payment Option

Hagan Homes, one of Northern Ireland’s biggest residential property developers, will now be accepting Bitcoin (BTC) as a payment method, the Belfast Telegraph reported Feb. 22.

Jamesy Hagan, the managing director of Hagan Homes, said there is both an increasing international interest in working, living, and investing in Northern Ireland, as well as a “significant growth in the use of Bitcoin worldwide:”

“Our acceptance of this new channel reflects our willingness to respond to the market.”

The Belfast Telegraph writes that Hagan Homes is reportedly the first house-building firm in the Republic of Ireland to accept BTC payments.

Hagan did recognize the challenges in accepting Bitcoin as payment. He noted the current volatility in the crypto markets, with BTC’s price going from $20,000 to $7000 in the span of just a few months:

“Of course, there are some risks to using Bitcoin for payment due to the cryptocurrency’s volatility, but buyers and sellers are finding creative ways to deal with these challenges […] By incorporating the learning from our peers into our approach we can embrace this innovation.”

Bitcoin payments for properties have already taken place in cities across the US, as well as in the United Arab Emirates and Indonesia. Blockchain technologies have seen a rising use in real estate as well, with the city of South Burlington, Vermont implementing a pilot Blockchain program in Jan. 2018 to record real estate transaction.

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Original Pizza Day Purchaser Does It Again With Bitcoin Lightning Network

Laszlo Hanyecz, the man that completed the world’s first documented Bitcoin (BTC) transaction for a physical item in 2010 — 10,000 BTC for two pizzas — has now bought two more pizzas using the Bitcoin Lightning Network.

Hanyecz posted on the Lightning-dev mailing list today, Feb. 25, that he had to get his friend in London to “sub contract” out the pizza delivery to a local pizza place in order to pay on the Lightning Network, because “pizza/bitcoin atomic swap software” is yet unavailable.

However, according to Hanyecz, the transaction still “demonstrates the basic premise of how this works for everyday transactions. It could just as well be the pizza shop accepting the payment directly with their own lightning node.”

The original BTC-pizza transaction took place on May 22, 2010 and has been celebrated as Bitcoin Pizza Day ever since. There is a Twitter feed dedicated to a daily posting of what 10,000 BTC equals according to that day’s market value — today’s value is tweeted as $97,560,750.

This time around Hanyecz paid 649000 satoshis, or 0.00649 bitcoins, which equals around $62 for both pizzas.

In order to receive the pizza, Hanyecz decided that the best way to prove he had paid for it was to show the driver the first and last four characters of the hex string of his Lightning payment hash preimage, and if it matched with what the driver had, he would get his pizza.

Hanyecz posits the pizzas as prizes to be received only if the lightning transaction can be done successfully, writing that if he couldn’t show the driver the pre-image, “the pizza would not be handed over and it would be destroyed.”

The trial was a success, Hanyecz got his pizzas, but he added that “it’s probably not a good practice to share the preimage.”

Hanyecz included a link in his post to several photos of him and his family enjoying the pizzas, one kid wearing an “I love pizza” shirt, the other in an “I love Bitcoin” one, and the notepad with the partial preimage displayed in front of the pizza box:

Laszlo Hanyecz

The first ever documented physical purchase on the Lightning Network, a “second layer” payment protocol considered the next step in BTC’s evolution by increasing the capacity of the network for a global audience, reportedly took place on Jan. 20 of this year. Reddit user /u/btc_throwaway1337 posted that he bought a VPN Router through a payment channel provided by TorGuard, a purchase comparable in significance to the original Pizza day.

Hanyecz ends the post about his successful lightning BTC-pizza transaction by asking his readers, “So is there any point to doing this instead of an on chain transaction?  For what I described here, probably not:”  

“The goal was just to play around with c-lightning and do something more than shuffling a few satoshi back and forth.  Maybe eventually pizza shops will have their own lightning nodes and I can open channels to them directly.”

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Culprits Apprehended In Alleged Icelandic Bitcoin Miner Theft

Icelandic information technology service Advania has confirmed with their security footage that the police have apprehended the right two men for the three burglaries at data centers in Iceland last December and January, local news outlet Visir reported Feb. 21.

Visir had earlier reported that there were three burglaries in total, from a period of Dec. 5, 2017 to Jan. 16., 2018, and that 600 graphics cards, 100 power supplies, 100 motherboards, 100 memory discs, and 100 CPU processors had been taken from a house in the municipality of Reykjanesbær.

The burglars also broke into data centers in municipality of Borgarbyggð, with a total of 600 PCs stolen from both places.

Advania announced that the thieves had broken into a new building under construction in Reykjanesbær in mid-January, but that the building had fortunately been well-covered with security cameras.

Advania told Visir that what was stolen was “not a device that stores data and there was only a financial loss,” but that they cannot specify what kind of equipment was stolen due to the ongoing investigation.

Several of Advania’s data centers are designed specifically for Bitcoin (BTC) mining, and Iceland as a country has become a hotspot for crypto miners drawn to the naturally cold climate and access to renewable sources of energy.

According to local news outlet Ruv, police have been monitoring energy consumption for abnormal increases after the theft, for the stolen computer equipment reportedly can be used to mine BTC, an energy-heavy process. It is not yet known if the equipment still remains in Iceland; Ruv reports that the two men currently in custody have not been cooperative with the police.

The total amount stolen from all three burglaries is estimated at 200 million krónur, or $1,990,000.

Eyjólfur Magnús Kristinsson, CEO of Advania Data Centers, said that either a quarter or a fifth of that total value had been stolen from Advania.

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Coinbase, GDAX Exchange Platforms Introduce Full SegWit Support


Exchange and wallet service Coinbase and its professional trading platform Global Digital Asset Exchange GDAX both announced they had implemented Segregated Witness (SegWit) support for Bitcoin transactions in blog posts published Friday, Feb. 23.

In their blog pos, GDAX characterizes SegWit technology as “a critical step forward in the development of Bitcoin” and promises support for SegWit transactions will be made available to 100% of their customers “over the coming days”. Coinbase also said they would be rolling out support for all customers over the next week.

SegWit technology is designed to reduce transactions times and fees on the Bitcoin network.  Many popular Bitcoin exchanges and services have been plagued network congestion from inefficient use of block space, a problem SegWit seeks to solve, resulting in widespread frustration among customers.

The past week has seen several major SegWit adoption milestones. The latest version of Bitcoin Core, which was released for public editing Feb. 15, introduced full SegWit support for the first time. Just a few days later, on Feb. 20, the same day Coinbase said it had finished SegWit testing, major crypto exchange platform Bitfinex also announced full SegWit support for all customers.

This week was also marked by record low transaction fees on the Bitcoin network, down significantly from all-time highs in December, 2017 and January, 2018.

When GDAX announced that Bitcoin Cash (BCH) would be available to trade on their platform in mid January 2018, the news fell flat for many traders, who would have rather seen the implementation of SegWit on the platform prioritized.

Moving forward, both GDAX and Coinbase noted in their blog posts that they’re committed to implementing additional scaling solutions for the Bitcoin network, including so-called ‘Layer 2’ solution, the Lightning Network.

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Tesla Billionaire Elon Musk Says He Owns $2.5K In BTC, Or ‘Literally Zero Cryptocurrency’

Elon Musk, the tech billionaire and entrepreneur known for founding and leading Tesla Motors and SpaceX, revealed on Twitter Thursday Feb. 22, how much Bitcoin (BTC) he owns — 0.25 BTC or about $2,478 as of press time, or 0.000012% of his total net worth.

Musk’s cryptocurrency holdings reveal comes after a number of fake accounts posing to be various well-known figures, including Musk, cropped up on Twitter promising crypto donations to those who send them crypto.

On Feb. 22 a Twitter user concerned about the scam accounts asked Musk in a tweet “why is all the spam popping up lately?”

Musk responded that he had already reported the issue to Twitter CEO Jack Dorsey to no avail. Evidently as a way of explaining his surprise at the multiple scams, Musk noted in the same tweet that apart from the 0.25 BTC a friend had given to him “many years ago”, he “literally own[s] zero cryptocurrency.”

The Bitcoin sum he reports to own is indeed an extremely small fraction of Musk’s total net worth, which stands at $21.4 billion as of Feb. 24.

In November 2017, Musk denied rumors suggested by former SpaceX intern Sahil Gupta that Musk was probably Satoshi Nakamoto, the legendary anonymous creator of Bitcoin.

As Cointelegraph reported Feb. 21, a cloud security firm recently reported that Tesla’s non-password protected Amazon Web Service’s (AWS) software container had been hacked to mine cryptocurrency over an as yet unknown period of time.

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Pump and Dump in Crypto: Cases, Measures, Warnings

The pump and dump, an age-old scheme to quickly raise the value of a worthless asset and then selling it to reap the profits from the price increase. Not only is the pump and dump illegally under the securities laws, but it is also extremely popular in the world of Blockchain technology, cryptocurrency, and digital assets.

How does it work

In a pump and dump scheme, the price of a worthless asset-usually a penny stock with a low market cap-is artificially inflated through well-planned marketing. False statements, misleading statements, a large number of social media posts, co-signs, and other chicanery are used to get the word out that a worthless asset is actually a hot buy that investors do not want to miss out on (the pump).

To support these claims, the price of the worthless asset is increasing rapidly due to the well-planned pump. Once investors get word about the worthless asset and see its price rising rapidly, more investors start to buy up shares of the stock.

This is when individuals who are in on the pump and dump scheme will sell or “dump” the shares of the overvalued asset. These individuals profit from selling the asset at or near its peak for many times more than the price they purchased it at. When they begin to sell their shares of the overvalued asset, the price of the asset tanks and corrects to a more accurate and appropriate valuation.

Internet for pump and dumps

Before the invention of the Internet, pump and dumps were much harder to organize. Individuals had to organize pump and dumps in person, via telephone, or via snail mail. Pump and dump schemes were often organized by “Boiler Rooms,” outbound call centers that were known for using dishonest sales tactics like promoting penny stocks to turn a profit.

With the creation of the Internet, it became far easier to execute a pump and dump scheme. These days, individuals converse in chat rooms, via messaging apps, and on Internet message boards to coordinate a pump and dump. With all the venues that the Internet provides to converse with each other, the Commodities Futures Trading Commision (CFTC) has become wary that pump and dump schemes could even sway professional investors into taking on an amount of risk that they did not intend to undergo.

CTFC virtual currency customer protection advisory statement

On Feb. 15, the CTFC released their first Pump and-Dump Virtual Currency Customer Protection Advisory statement.

“Customers should know that these frauds have evolved and are prevalent online. Even experienced investors can become targets of professional fraudsters who are experts at deploying seemingly credible information in an attempt to deceive.”

The advisory even quoted messages from an online chatroom coordinating a pump and dump, 

“15 mins left before the pump! Get ready to buy.” “Five minutes till pump, next message will be the coin! Tweet about us and send everyone the link to telegram (sic) for outsiders to see what we are pumping so they can get in on the action too!! lets (sic) take it to the MOON!!!!!”

In the scheme cited above, the entire pump and dump process only lasted eight minutes.

The CTFC warns consumers:

“Customers should avoid purchasing virtual currency or tokens based on tips shared over social media. The organizers of the scheme will commonly spread rumors and urge immediate buying. Victims will commonly react to the currency’s or token’s rising prices, and not verify the rumors. Then the dump begins. The price falls and victims are left with currency or tokens that are worth much less than what they expected. From beginning to end, these scams can be over in just a few minutes.”


As the market for cryptocurrency continues to grow, government organizations give the burgeoning market the attention that it needs to develop. This includes releasing detailed reports like the CFTC Primer on Virtual Currencies, holding hearings with Congress, and giving consumers all the available information they have to mitigate the chance that the consumer will be susceptible to fraud or manipulation.

Pump and dump schemes are illegal and considered securities fraud by the SEC. In most regulated markets like the London Stock Exchange and the New York Stock Exchange, they are illegal as well. The CTFC is even offering a 10-30 percent bounty for any pump and dump whistleblowers who are able to lead the CTFC to monetary sanctions of $1 mln or more.

However, pump and dump schemes aren’t illegal on cryptocurrency exchanges. Cryptocurrency exchanges are not regulated; there is no piece of the legislature about cryptocurrency exchanges. So even though a pump and dump is unethical, it is not officially illegal (yet).

Cointelegraph reached out to anti-money laundering (AML) specialist Joe Ciccolo, founder of BitAML-a company that provides anti-money laundering solutions for digital currency startups. When asked about the legal status development of pump and dumps in the cryptocurrency market, and if it is possible to whistleblow in an unregulated industry, Ciccolo said:

“The CFTC, like other financial regulators, will continue leveraging existing enforcement resources. Whistleblower programs, a common regulatory tool, have generally worked remarkably well at putting crucial and credible information into the hands of investigators. The CFTC has rightfully prioritized consumer education and protection by focusing on detecting and deterring fraudulent activities, such as pump and dump schemes, while not stifling early innovation in the crypto space.”

Case: market manipulation on Bittrex

A well-planned pump and dump could earn investors over 100 percent return on investment. In one case, an altcoin pumping group was able to pump a coins price by over 950 percent. At 11:40 a.m. on July 2 the moderator of the chatroom announced that the next pump would take place in 20 minutes on Bittrex. 15 minutes later, the moderator announced that the pump and dump would take place in 5 minutes (12:00 pm). At 12 p.m. the moderator announced the name of the coin, SLS, and sent a link to the relevant market on Bittrex. At the start of the pump, the SLS coin was worth .0046 BTC ($11.61 based on July 2 price). At the height of the pump, SLS was worth .0438  BTC ($110 based on July 2 price), and after the dump, SLS was back at .0059 BTC ($14.90).



Image source: Altcoin Pumping Group 2/2 Telegram Chat

In November of 2017, a Business Insider investigation revealed that traders were coordinating pump and dumps on Bittrex and Yobit via the messaging app Telegram. Shortly afterward, Bittrex issued a statement:

“A general statement about market manipulation tactics:  Bittrex actively discourages any type of market manipulation, including pump groups.  Consistent with our terms of service, we will suspend and close any accounts engaging in this type of activity and notify the appropriate authorities.”

Following the announcement, pump groups on Telegram warned their members that Bittrex would be cracking down on manipulative behavior. One group-Trading signals for crypto-canceled their pump and dumps due to Bittrex’ policy change. Another group-Fake Pump&Dump Hunter-was interested in knowing if Bittrex’s announcement was a scare tactic or if it had actually been enforced. Fake Pump&Dump Hunter requested that any user who had their account suspended by Bittrex get in contact with them.




Image source: Business Insider

Pump and dump groups often have thousands of members. At one point, Trading signals for crypto had over 7,000 members. Some members are professional investors and pump organizers who invested in the coin way before the date of the pump; others are retail investors, who find out which coin is being pumped at the same time the pump begins.

Four CTFC warnings

Although the cryptocurrency industry is maturing and taking the necessary steps to merge with the traditional banking and finance system. Blockchain and cryptocurrency is still in its Wild West phase. Due to a lack of regulation and consumer protections in the cryptocurrency markets, there are still enough opportunities to pull off fraudulent and manipulative schemes like the pump and dump. That is why it is always better to do independent research of the assets you are interested in investing in, and to only take on an amount of risk that allows you to sleep comfortably at night.

To protect investors against manipulative markets, The CTFC’s advisory also gave consumers the following warnings:

  • “ Don’t purchase digital coins or tokens because of a single tip, especially if it comes over social media.
  •   Don’t believe ads or websites that promise quick wealth by investing in certain digital coins or tokens.
  •   Do not participate in pump-and-dump trades; market manipulation is against the law and many participants end up losing money.  
  •   There is no such thing as a guaranteed investment or trading strategy. If someone tells you there is no risk of losing money, do not invest.”
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Coinbase Informs 13K Affected Customers Of Imminent Data Handover To IRS

US-based cryptocurrency exchange and wallet service Coinbase sent an official notice Friday, Feb. 23 to approximately 13,000 of its customers whose information it is legally required to turn over to the US Internal Revenue Service (IRS).

The IRS had initially asked Coinbase in July 2017 to hand over even more detailed information on every one of its then over 500,000 users in an attempt catch those cheating on their taxes. However, another court order in Nov. 2017 reduced this number to around 14,000 “high-transacting” users, which the platform now reports as 13,000, in what Coinbase calls a “partial, but still significant, victory for Coinbase and its customers.”

On Friday, Coinbase told the around 13,000 affected customers that the company would be providing their taxpayer ID, name, birth date, address, and historical transaction records from 2013-2015 to the IRS within 21 days.

Coinbase’s letter to these customers encourages them “to seek legal advice from an attorney promptly” if they have any questions. Their website also states that concerns may also be addressed on Coinbase’s Taxes FAQ.

The ongoing legal battle between Coinbase and the US government dates back to November, 2016, when the IRS filed a “John Doe summons” in the United States District Court for the Northern District of California.

On Feb. 13, personal finance service Credit Karma released data showing that only 0.04 percent of their customers had reported cryptocurrencies on their federal tax returns so far this tax season.

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SEC Director of Investor Education: ‘Don’t Flip A Coin’ Over Crypto Investments

The US Securities and Exchange Commission (SEC) investor’s website published a light-hearted notice this week to all investors considering buying the “latest new cryptocurrency or token.”

Lori Schock, the Director of the SEC’s Office of Investor Education and Advocacy, wrote an informal post aimed at the everyday retail crypto investor, beginning with an anecdote from a visit to a retirement home where she spoke with senior citizens about investing.

According to Schock’s post, one senior citizen approached her after the lecture, asking:

“My children keep telling me I need to hurry up and invest in bitcoin—is it safe, have I already missed the boat?”

Schock’s light-toned post comes after a number of more serious statements from the SEC’s official website over the past year regarding the risks around Initial Coin Offerings (ICO) and detailed testimony on the roles of the SEC and the Commodity Futures Trading Commission (CFTC) regarding virtual currencies.

The SEC post explicitly says that Schock’s post is not investment advice on cryptocurrencies, but advice for those considering beginning an investment in the crypto market.

Schock underlines from the start how crypto investments do not fall under the SEC’s security protection laws, suggesting readers look at SEC Chairman Jay Clayton’s Dec. 2017 statement on crypto and ICOs for more information:

“You should understand if you lose money there is a real chance the SEC and other regulators won’t be able to help you recover your investment, even in cases of fraud.”

She then warns investors not fall for “high-pressure sales tactics” or to listen to celebrity endorsements as your basis for investment decision:

“Just because your favorite celebrity says a product or service is a good investment doesn’t mean it is.”

Schock’s note to investors about celebrity endorsements comes the same week that “Zen Master” Steven Seagal announced his brand ambassadorship with Bitcoiin2Gen, a new coin that markets itself as “not an MLM company or a Pyramid Scheme or any Scam.”

Schock says that beginning crypto investors should “ask questions and demand clear answers,” about what exactly they are investing in, like “‘[w]ho exactly am I contracting with?’ and ‘[w]hat will my money be used for?’”

She recommends not putting in more money than you are willing to lose, and diversifying your investments to spread the risk:

“One way to spread risk is to diversify your investments.  Don’t put all of your eggs in one basket. That way, if one of your investments loses money, the other investments can make up for it […] Cryptocurrencies may be today’s shiny, new opportunity but there are serious risks involved […] most importantly, don’t flip a coin when you’re making investment decisions.”

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Turkey, Iran To Release State-Backed Cryptocurrencies On Heels Of Venezuela’s Petro

The governments of Turkey and Iran are both considering developing their own government-backed digital currencies, following on the heels of the Feb. 20 pre-sale of Venezuela’s national oil-backed Petro coin.

Feb. 21, a day after the Petro’s launch, Iran’s Ministry of Information and Communications Technology (ICT) tweeted that Iran’s Post Bank is working on releasing a cryptocurrency:

“In a meeting with the board of directors of Post Bank on digital currencies based on the blockchain, I […] prescribed […] measures to implement the country’s first cloud-based digital currency.”

Feb. 22, two days after the Petro’s launch, Middle-Eastern news outlet Al-Monitor reported that Turkey’s Nationalist Movement Party (MHP) deputy chair and former Industry Minister Ahmet Kenan Tanrikulu is publically considering launching a “national Bitcoin” called the “Turkcoin”, described in his 22-page report on regulating the crypto market.

Tanrikulu’s report comes two weeks after a Feb. 7 CNN Turk interview with Turkey’s Deputy Prime Minister Mehmet Simse where he mentioned that the government would be preparing to release a national cryptocurrency.

Last November, the Iranian cyberspace authority, the High Council of Cyberspace (HCC), “welcome[d] Bitcoin” and announced that they were working with the Central Bank of Iran on a report on cryptocurrencies. On Feb. 21 the Central Bank of Iran said that it was actively working on a way to “control and prevent” cryptocurrencies in Iran.

Turkey’s government had previously taken a harsh stance on Bitcoin (BTC) and cryptocurrencies, when lawmakers from the Directorate of Religious Affairs (Diyanet) said in November, 2017 that trading crypto was “not compatible” with Islam due to its speculative nature and lack of government control.

However, Tanrikulu told Al-Monitor that since there is no mention of cryptocurrencies in Turkish law, buying and selling crypto is legal in Turkey:

“The use of cryptocurrencies can be considered legal since our law contains no prohibition […] buying and selling with cryptocurrencies and creating money through Bitcoin mining are not within the scope of criminal activity in Turkey today.”

Tanrikulu’s report adds that crypto regulation is definitely needed in Turkey to prevent money laundering and fraud, and that the creation of a government-controlled “bitcoin bourse” is one way to do so.

Venezuela’s Petro has been seen by some critics as solely a way for the country to avoid the Western sanctions imposed on the country; Iran is also currently facing international sanctions.

The Petro is not the first government-backed cryptocurrency to be launched — the local government in Dubai launched the state-backed emCash in October 2017, and in 2017 Kazakhstan, Japan, and Estonia have all brought up the possibility of releasing their own government-backed cryptocurrencies.

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Bank Of America: Our ‘Inability To Adapt’ Could See A Failure To Compete With Crypto

Bank of America (BoA) has admitted to US regulators it may be “unable” to compete with the growing use of cryptocurrency.

In its annual report to the Securities and Exchange Commission (SEC) this week, filed Feb. 22, the major US bank for the first time highlights cryptocurrency as an area that may cause it “substantial expenditure” as it tries to remain competitive.

Our inability to adapt our products and services to evolving industry standards and consumer preferences could harm our business,” BoA states in the filing.

As banks worldwide eye the cryptocurrency phenomenon, direct interaction remains low. The lack of uptake formed a central reason why the European Central Bank confirmed it had opted for a hands-off approach to legislating the area earlier this month.

While BoA has sought to innovate in the sphere, receiving a patent for its proposed cryptocurrency exchange system in December 2017, it has come in for criticism more recently after blocking its clients from credit card purchases of cryptocurrency.

As the report to the SEC continues, the institution’s keen awareness of the threat posed to its core business offering by competitors becomes clear.

“…The competitive landscape may be impacted by the growth of non-depository institutions that offer products that were traditionally banking products as well as new innovative products,” BoA forecasts. The report continues:

“This can reduce our net interest margin and revenues from our fee-based products and services. In addition, the widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services[.]”

The bank also pointed to staff retention failures and “increasing competition” in the financial services industry as being detrimental to its prospects.

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South Korean Cryptocurrency Exchanges Evaluate Self-Regulations

An association of South Korean cryptocurrency exchanges said that it is planning to check if its members are following a set of self-regulatory cryptocurrency measures adopted last year, local journal Yonhap News reported Feb. 21.

The Korean Blockchain Industry Association, which is currently comprised of 33 of South Korea’s cryptocurrency exchanges, stated that it is going to carry out evaluations of 21 participants, including major trading platforms Coinone, Bithumb, and Korbit.

In mid-December 2017, the Korean Blockchain Industry Association announced that it plans to “establish a set of specific ethical codes on the virtual currency bourses, including insider trading and market manipulation” after the South Korean financial authorities began considering cryptocurrency regulations.

The self-regulatory move among South Korean exchanges was intended to provide more transparency in trading to alleviate worries over the country’s “Bitcoin frenzy” in December 2017, during which a sudden influx of South Korean investors started buying Bitcoin.

Last week, in the UK, seven of the world’s largest cryptocurrency companies, including Coinbase, formed the country’s first self-regulating trade body, CryptoUK. On Feb. 16. Cointelegraph reported that another self-regulating cryptocurrency body is being considered in Japan by the country’s two cryptocurrency industry groups, but decision has yet to be finalized.

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French Regulator: Online Crypto Derivative Firms Must Abide By Stricter Standards

France’s financial markets regulator has said that online platforms which support cryptocurrency derivative trading must receive approval to offer such services, report trades to a central repository, and may not advertise their digital asset derivatives.

On February 22, France’s top financial regulator, the Autorité des marchés financiers (AMF), published a press release indicating that online platforms which allow users to trade in cryptocurrency derivatives may no longer advertise those financial products and must be approved “to offer investment services.”

Though EU legislation does not officially define what a “derivative” is, the document notes, the legal framework known as the Markets in Financial Instruments Directive (MiFID) provides a basis for defining certain financial instruments as derivatives. Following its own analysis, the AMF has determined that derivatives based on digital assets fit this definition.

As a result, online marketplaces offering these financial products are subject to a related set of regulations, the MiFID II.

In addition to the requirement that they receive official approval to operate and the prohibition on advertising, these platforms will be obliged to adhere to MiFID II’s “conduct of business rules.” They will also have to abide by a provision of a regulation known as EMIR, which requires over-the-counter derivative trades to be reported to a central “trade repository.”

In a speech in January, France’s finance minister called for proposals aimed at preventing virtual currency from being used to launder money, evade taxes, and finance terrorism, and asked a former Bank of France deputy governor to investigate cryptocurrencies.

Translations by the author.


Adam Reese

Adam Reese is a Los Angeles-based writer interested in technology, domestic and international politics, social issues, infrastructure and the arts. Adam is a full-time staff writer for ETHNews and holds value in Ether and BTC.

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