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With SEC Battles Brewing, What is the Path Forward for Crypto Regulations?

In light of Kik’s recent announcement of a crowdfunding campaign to bring about a new Howey Test for cryptocurrencies as well as a statement from SEC Director of Corporation Finance William Hinman regarding the possibility of ICOs being eligible for relief from enforcement, regulatory confusion abounds. What is clear is that regulations are suffocating development […]

The post With SEC Battles Brewing, What is the Path Forward for Crypto Regulations? appeared first on CryptoNewsReview.

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In light of Kik’s recent announcement of a crowdfunding campaign to bring about a new Howey Test for cryptocurrencies as well as a statement from SEC Director of Corporation Finance William Hinman regarding the possibility of ICOs being eligible for relief from enforcement, regulatory confusion abounds. What is clear is that regulations are suffocating development of crypto platforms and ambiguity only makes the situation worse. The question remains: what is the path forward for crypto regulations and how does the blockchain community arrive at an answer?

Here’s What We Know from the SEC

The SEC released a Framework for “Investment Contract” Analysis of Digital Assets that was to supposedly provide clarity as to how token projects would be evaluated. The problem is that according to this framework, just about any token should be categorized as a security. Circle reacted to this in a Medium blog post as follows:

“Since every project is likely triggering one of the factors [listed in the SEC framework], no project — and no exchange that decides to list the project’s tokens — can rely on the guidance to reduce the risk of enforcement. The foreseeable consequence of this is chilling innovation in the U.S. and nudging crypto projects toward jurisdictions with greater regulatory clarity — neither of which is good for U.S. business.”

Other leaders of token projects are feeling justifiably boxed-in by the SEC’s framework as well. It doesn’t seem right for every token to automatically be considered a security. Afterall, currencies such as USD are not securities. Hotel reward points are not securities. Virtual monies in games are not securities. The list goes on.

If we are to read into Hinman’s recent comments at the SEC’s FinTech Forum in Washington, D.C., we could interpret that perhaps the agency realized its error and is attempting to provide hope. Pointing to TurnKey Jets as an example of a project that secured a no-action letter, Hinman said, “even if some aspect of the project was not fully developed, the SEC may have still been willing to provide no-action relief.” Though his comment suggests that the SEC could be forgiving when it comes to evaluating crypto projects whose tokens initially appeared to be an investment contract before evolving into a token with a true use case, most token projects will be hesitant to take the SEC’s word for it.

So, What are Token Projects to Do?

The continued lack of clarity as to how token projects will be categorized by the SEC lead Kik to take drastic measures. The messaging app that raised $98 million in its 2017 ICO received a notice warning that the agency may seek enforcement action and now faces a lawsuit. Kik responded by initiating a campaign to crowdfund $5 million in crypto to fight the SEC in court, ideally resulting in the creation of a new Howey Test for cryptocurrencies. Though the optics of a project that already raised nearly $100 million now asking for more money to fight its own legal battles are a bit dubious, many token projects agree that something needs to be done.

Circle’s team believes, “Congress must pass laws to seize the unique opportunities created by the innovations in crypto and blockchain technologies and businesses.” The company and industry partners support “the Token Taxonomy Act, which among other things would exclude digital tokens from the definition of a security.”

To the positive, Montana passed a bill to exempt utility tokens from securities laws this May; hopefully other states may look to Big Sky Country as an example. Most important for the token economy is that the innovative spirit that brought bitcoin, ethereum, and so many other revolutionary concepts to life will not be held back by the bureaucracy’s lack of understanding and appreciation for the values of decentralization.

Contributed article by Gov van Ek, Co-founder of BitCar

Source: https://cryptonewsreview.com/with-sec-battles-brewing-what-is-the-path-forward-for-crypto-regulations/

Blockchain

Bad guys can’t cash out their loot in 2016 Bitfinex hack

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Assets stolen from Bitfinex crypto exchange in a hacking incident back in 2016 will take over a century to be cashed out, blockchain intelligence firm Elliptic said in its latest report.

On Thursday, the company published a statement about the infamous hack that resulted in Bitfinex losing 120,000 bitcoin (valued today at around $7 billion). It detailed nearly 80% of the illegally obtained funds are still in the hacker(s) wallet.

The remaining 21% have been moved around by the malicious cyber attackers that have only managed to launder 4% of their total haul, which is approximately $270 million.

A roadblock for the attackers

Elliptic pointed out that the reason for their thesis is the evolution of crypto tracking tools, regulations, and law enforcement methodologies that make stolen or ill-gotten digital assets very challenging to cash out today.

The intelligence company explained that the hackers used “peel-chains” to exchange the stolen funds. In this method, crypto tokens are moved around numerous times, moving fast from wallet to wallet, and only a small amount of the bitcoin is “peeled off to their actual destination along the way.”

Back then, it was extremely hard to track crypto-assets laundered using this method. But today, the emergence of automatic tracing systems capable of determining the ultimate source or funds in an address makes the job a lot easier for the authorities.

The hacker after the cyber attack

After the successful attack on Bitfinex in 2016, the laundering process started in 2017 through the largest darknet market that time – Alphabay. Later that year, it was shut down by law enforcement, prompting the move to Hydra – the biggest illegal marketplace today.

Cryptoslate cited part of the report from Elliptic, stating, “After a hiatus in 2019, the launderers returned to Hydra in 2020 and are currently depositing $3 million of the stolen bitcoin every month.”

According to the report, to date, there is now approximately $72 million worth of the stolen cryptocurrency sent to Hydra.

 

Image courtesy of Cointelegraph News/YouTube

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://bitcoinerx.com/blockchain/bad-guys-cant-cash-out-their-loot-in-2016-bitfinex-hack/

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Three reasons why Cardano is going on this price trajectory

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Rising trade volume across spot and derivatives exchanges have supported Cardano’s ongoing price rally over the past few weeks and months. The altcoin, at the time of writing, was trading at the $2.32-level, with the crypto gaining by 20% in 24 hours to touch one ATH after the other. The aforementioned hike in price and trade volume were evidenced by the increase in market capitalization as well.

Thanks to the aforementioned factors, Cardano is now ranked third among the market’s top-10 altcoins, based on data from CoinMarketCap.

What’s more, based on the attached chart, currently there is more ADA staked than in the past 30 days. In fact, it is at nearly half a million. With 100% of its HODLers profitable at the press time price level, ADA’s rally is likely to be a long one, especially with the altcoin’s staking rewards data offering a similar conclusion. With a relatively high percentage of ADA staked, a direct relationship has emerged between staked ADA and ADA’s price.

While the current on-chain sentiment is slightly bearish, the net network growth stood at a positive 5%. Further, while there has been a slow drop in large transactions, that could mean that more retail traders are buying ADA v. HODLers and institutions. Unless trade volume drops and cascading sell-offs occur, the price is likely to hold at its current price level.

In the case of Cardano, the concentration by large HODLers has remained largely below 30% and this is key to its ongoing rally. Top memecoins and altcoins that are rallying like DOGE, LINK, BNB, and ETH, among others, have a high concentration by large traders. This is essential to supporting the price at its key levels.

$80 billion worth of large transactions have transpired over the past week and the inflows are anticipated to increase even more. Less than 15% HODLers have held ADA for over 12 months, despite YTD gains of over 500%. And, ADA’s HODLers are lower in numbers than expected. Ergo, the short-term ROI could be the key reason for the short HODLing duration.

Based on data from Messari, the ROI over the past week was nearly 40%.

Why Cardano's price rally is a long one

ADA short-term ROI || Source: Messari

In the past year, the ROI was over 700%. This is a relatively high gain for HODLers, despite several dips.

ADA’s latest developments and the increasing demand in the second phase of the altseason make it one of the hottest altcoins to buy and HODL. In fact, one can argue that ADA continues to remain undervalued at the press time price level.


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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://ambcrypto.com/three-reasons-why-cardano-is-going-on-this-price-trajectory

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Data shows the ‘Bitcoin price drops ahead of CME expiries’ claim is a myth

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Historically, activity surrounding the Bitcoin (BTC) monthly futures and options expiry has been blamed for weakening bullish momentum. A few studies from 2019 found a 2.3% average drop in BTC price 40 hours before the CME futures settlement date. 

However, as Cointelegraph reported in June 2020, the effect faded away. While 2020 seems to have rejected the potential negative impact of CME expiries, so far, the current year appears to validate the theory. Bitcoin’s price has been suppressed ahead of futures and options expiry in the first three months of 2021.

Bitcoin performance before and after CME expiry, USD. Source: TradingView

Some investors and traders have pointed out that Bitcoin’s incredible rally after the recent futures and options expiry dates has become a trend.

BTC has effectively rallied in the days following the expiry, but expanding this analysis uncovers a less-than-satisfactory trend.

Three consecutive events don’t prove a trend

The past 13 months have been nothing short of spectacular for Bitcoin, as the cryptocurrency posted 788% gains. August 2020 turned out to be the worst month, as BTC presented a 7.5% negative performance. Thus, choosing random starting points within the month will likely show a similar positive trend.

For example, if one uses the “last quarter” moon phase as a proxy, the odds that a rally takes place after each event are very high.

Bitcoin performance after “Last Quarter” moon, USD. Source: TradingView

As depicted above, indeed, Bitcoin rallied after five out of the last six instances. The only conclusion might be that positive trends are the norm rather than the exception during bull runs.

Although there might be some explanation to the reason behind Bitcoin’s end-of-the-month underperformance, these are only hypotheses.

While market makers and arbitrage desks could benefit from suppressing the price after a rally, other forces, including leverage futures longs and call option holders, would balance that out.

Bitcoin price did not drop in three of the last seven expiries

Therefore, it makes sense to analyze the potential price suppression ahead of the expiry instead of looking for explanations for a rally during a bull market.

Bitcoin performance before and after CME expiry in 2020, USD. Source: TradingView

Both October and December 2020 expiries failed to present any negative pressure ahead of such dates. Meanwhile, the 12% positive performance on the five days that preceded the most recent April 30 expiry also puts a big question mark on how meaningful the CME event really is.

Considering there hasn’t been a price decrease ahead of monthly futures and options expiries in three of the last seven instances, this evidence should put a nail in the coffin of the unfounded myth.

As mentioned earlier, trying to develop theories on why sellers acted more aggressively on specific dates is unlikely to yield results.

As shown above, Bitcoin’s price failed to underperform in three out of the last seven expiries. A 57% success rate should not define a trend when a positive performance after a specific date has been proven common during a bull run.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cointelegraph.com/news/data-shows-the-bitcoin-price-drops-ahead-of-cme-expiries-claim-is-a-myth

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