Korean Central Bank Study: Issuing Digital Currency Poses Financial Risk

Korean Central Bank Study: Issuing Digital Currency Poses Financial Risk

Researchers from South Korea’s central bank say issuing a central bank digital currency (CBDC) could have negative ramifications for the economy. The Bank of Korea (BoK) published a study on Thursday, which modeled how a CBDC issuance might affect on liquidity at commercial banks. It found that if the public could access the theoretical digital currency directly, commercial banks’ demand deposits, or reserves, could be reduced – leaving them with a cash shortfall. That could eventually force them to compensate by raising interest rates on loans, the central bank explained. “This has negative effects on financial stability, which increases the likelihood of bank panic in which commercial banks are short of cash reserves to pay out to depositors,” the report states. According to CoinDesk Korea, report co-author Kwon Oh-Ik said that, if a CBDC is issued, “supplementary measures should be taken so that they do not adversely affect financial stability.” In June 2018, the BoK said that issuing a CBDC could pose a “moral hazard” by adversely affecting monetary policy and destabilizing the economy. The Bank of International Settlements (BIS), known as the central bank of central banks, also warned last spring that if any country’s central bank is looking to develop and launch a CBDC, it should “carefully weigh” the implications of doing so, especially as they relate to monetary policy and overall economic stability. On the other hand, Christine Lagarde, managing director and chairwoman of the International Monetary Fund (IMF) has encouraged the “exploration” of CBDCs in the light of decreasing demand for cash and rising preference for digital money. A November research report from IBM found that most polled central banks believe they should issue a wholesale CBDC, although they were uncertain if blockchain can provide sufficient cost and efficiency benefits. Bank of Korea image via Shutterstock 

Little Relief in Sight as Bitcoin Price Closes at 7.5-Week Low

Little Relief in Sight as Bitcoin Price Closes at 7.5-Week Low

View Bitcoin suffered its lowest UTC close in over seven weeks on Wednesday, reinforcing the bearish view put forward by the rejection at the 50-candle moving average (MA) on the 6-hour chart yesterday. The close at multi-week lows also dashed hopes of a falling wedge breakout. The cryptocurrency also created a bearish outside reversal candle on the daily chart yesterday, opening the doors for a drop to falling channel support at $3,230. A strong move above the 50-candle moving average on the 6-hour chart, currently at $3,434 will likely weaken bearish pressures and yield a corrective bounce to the resistance near $3,650. With bitcoin (BTC) closing yesterday at the lowest level in 7.5 weeks, the gradual sell-off is showing no signs of abating. On Wednesday, the leading cryptocurrency by market value ended the session (as per UTC) at $3,328 – the weakest daily close since Dec. 16 – according to Bitstamp data, dashing hopes of an upside break of the falling wedge pattern carved out over the last six weeks. Further, BTC created a bearish lower high at the crucial resistance of the 50-candle moving average (MA) on the 6-hour chart. That average line has thwarted several fledgling rallies over the last three weeks, as discussed yesterday. As a result, the slow drip sell-off from December highs above $4,200 witnessed over the last six weeks is likely to continue. BTC could soon challenge recent lows near $3,300 and may extend the decline toward the low of $3,100 seen in December. At press time, BTC is trading largely unchanged on the day at $3,380. Daily chart As seen above, yesterday’s high and low engulfed Tuesday’s price action as indicated by a bearish outside candle. Effectively, the day began with optimism but ended on a pessimistic note, meaning the “sell-on-rise” mentality is still strong. Hence, the cryptocurrency risks falling to the descending channel support, currently at $3,230. Supporting that bearish case are the 14-day relative strength index of 38 and downward sloping 20-day moving average (MA). 6-hour chart On the 6-hour chart, the 50-candle MA has proved a tough nut to crack for close to three weeks. A convincing break above that average, currently at $3,434, might lead to a stronger rally toward resistance at $3,658 (high…

The Daily: 13% of Shoppers Would Buy Amazon Crypto, Wirex Adds Stablecoin

The Daily: 13% of Shoppers Would Buy Amazon Crypto, Wirex Adds Stablecoin

In Thursday’s edition of The Daily we feature a recent survey that shows 13 percent of shoppers would be happy to buy cryptocurrencies under the Amazon brand. We also cover a new stablecoin integration by crypto card provider Wirex and a token promoted on Coinbase Earn. Also Read: Abra Adds Stocks and ETF Investing to Its Crypto Exchange App Survey: 13% of Shoppers Would Buy Amazon Crypto Online commerce giant Amazon (NASDAQ: AMZN) has one of the strongest brands in the world. What started out as just an online bookstore has become almost a force of nature, taking over entire industries. The company also enjoys a great deal of trust with consumers, especially in the U.S. market where some people allow Amazon to unlock their front doors to make in-home delivery (Amazon Key), install its AI-powered listening devices (Alexa) and even to run the cloud computing systems of the CIA. It would be fair to say that Amazon is more trusted and liked than most banks. Given this fact, it is not surprising that a good portion of its customers would also trust Amazon with their digital finance needs. A recent survey of over 1,000 Amazon clients by the financial portal Investing.com found that 12.7 percent of them would feel comfortable purchasing cryptocurrencies under the Amazon brand. This could be assumed to be anything from an integrated cryptocurrency wallet to an Amazon-issued token. Wirex Adds First Stablecoin Popular online bank and crypto debit card issuer Wirex has added a first stablecoin to its list of supported cryptocurrencies. Users of the Wirex platform in the European Economic Area (EEA) can now buy, store, convert and spend dai (DAI) with their Wirex Visa cards, the U.K.-based company announced in a recent blog post. This is the seventh token made available for Wirex users as the service already supports bitcoin core (BTC), litecoin (LTC), ripple (XRP), ether (ETH), waves (WAVES) and wollo (WLO). “We want to give our customers access to a full array of cryptocurrencies. Stablecoins are yet another variation of crypto that demonstrates how easily and efficiently it can be integrated into everyday life,” commented Wirex co-founder Pavel Matveev. His co-founder Dmitry Lazarichev added: “Dai is an excellent tool to make international payments at low costs without…

NZ Police Report Says ‘Excellent Progress’ Being Made in Cryptopia Hack Investigation

NZ Police Report Says ‘Excellent Progress’ Being Made in Cryptopia Hack Investigation

Police in New Zealand are working with international law enforcement to track down hackers who reportedly stole over $16.1 million from local exchange Cryptopia, the police reported in a press release Feb. 7. Cryptopia, which suffered an attack beginning Jan. 15 and lasting around two weeks, has lost funds from tens of thousands of Ethereum (ETH) wallets. After confirming they were investigating the case Jan. 16, police revealed today that they are coordinating an international effort to track both the funds and perpetrators, in a report attributed to Detective Inspector Greg Murton. “The stolen cryptocurrency is being actively tracked by Police and specialists worldwide due to the nature of the cryptocurrency blockchains being publicly available,” Detective Inspector Murton commented, adding: “Excellent progress is being made in the investigation and we are working with Cryptopia management plus current and former employees who have been providing valuable assistance.” The report also notes that the “investigation is expected to take a considerable amount of time to resolve due to the complexity of the cyber environment.” Murton added investigations at Cryptopia’s New Zealand headquarters would conclude by the end of next week. As Cointelegraph reported, the hackers appeared eager to liquidate the stolen funds, resulting in preventative measures taken by fellow exchange Binance when it emerged they were attempting to sell the coins on its platform. At the same time, commentators have voiced doubts over the effectiveness of the police operation, arguing the nature of the hack means it is less likely to result in convictions. “No one seems to have a clue what’s going on. But this hasn’t come out of the blue,” local news outlet Stuff quoted Auckland University associate professor of commercial law, Alex Sims, as saying Feb. 5.

QuadrigaCX: Indian Hospital Releases Details About CEO’s Death

QuadrigaCX: Indian Hospital Releases Details About CEO’s Death

Fortis Escorts, a private hospital in the Indian city of Jaipur, has released details about the death of Gerald Cotten, CEO of Canadian cryptocurrency exchange QuadrigaCX. In a statement shared with CoinDesk on Thursday, Fortis Escorts said that Cotten was admitted to the hospital on Dec. 8, 2018 at 9:45 p.m. IST (16:15 UTC) and died of cardiac arrest at around 7:26 p.m. IST (13:56 UTC) on Dec. 9, 2018. Two separate documents released previously – a statement of death issued from J.A. Snow Funeral Home and a death certificate issued from the Government of Rajasthan’s Directorate of Economics and Statistics – also state that Cotten died on Dec. 9, 2018 in Jaipur, the state capital of Rajasthan. Cotten was brought to the hospital in a “critical condition” with “pre-existing Crohn’s disease and was on monoclonal antibody therapy every 8th week,” the statement from Fortis Escorts reads. At the time of admission, Cotten was diagnosed to be suffering from septic shock and other serious issues relating to his exacerbated condition. “On 9th December, 2018, the patient suffered a cardiac arrest but was revived by CPR [cardiopulmonary resuscitation]. The patient heart condition continued to deteriorate and the patient suffered a second cardiac arrest at 6:30 p.m. [13:00 UTC],” the statement from the hospital states. It continues: “Despite the best efforts of our clinicians the patient could not be revived and was declared dead approximately at 7:26 pm. All standard medical procedures and guidelines were followed to treat the patient. The information of his death was communicated to the relevant authorities.” Cotten’s death is at the center of the concerns and rumors surrounding the QuadrigaCX exchange, which went offline last week owing millions to its thousands of customers because the CEO had died apparently without leaving a way for staff to access the computer storing its funds. In a sworn affidavit filed Jan. 31 with the Nova Scotia Supreme Court, Jennifer Robertson, identified as the widow of QuadrigaCX founder Gerald Cotten, said the exchange owes its customers roughly 250 million CAD (US$190 million) in both cryptocurrency and fiat. The exchange has since sought creditor protection in the court. On Tuesday, a Supreme Court judge granted the exchange its application, giving it a 30-day stay of proceedings to try and recover any…

Swiss Stock Exchange SIX Plans Blockchain Platform in H2

Swiss Stock Exchange SIX Plans Blockchain Platform in H2

Switzerland’s top stock exchange, SIX, aims to roll out a blockchain platform to speed up trading later this year. Reuters reported Feb. 6 that SIX chairman Romeo Lacher said the planned new SIX Digital Exchange (SDX) will initially operate alongside the existing SIX platform. Currently, a trade takes several steps to complete, which can take days. However, using a distributed ledger knocks out two of the stages and can reduce the trade lifecycle to fractions of a second, Reuters added. The report cites officials as having said that SDX will launch offering trading in certain stocks, with a wider range of stocks and bonds to follow. Exchange-traded funds could ultimately be on offer too, and possibly even tokenized physical assets such as art. Lacher told the news source that the SIX supervisory board will “probably” make the final decision late in the summer, as it is still working out legal and regulatory issues with Switzerland’s financial markets regulator, FINMA. SIX first announced the new DLT-based platform last July, with CEO Jos Dijsselhof saying at the time: “This is the beginning of a new era for capital markets infrastructures. For us it is abundantly clear that much of what is going on in the digital space is here to stay and will define the future of our industry.” Once the new platform is live, SIX plans to use it itself to raise funds later in the year, according to Reuters. “We want to start with our own security token offering,” Lacher said. Last November, SIX announced it would launch the first ever exchange-traded product (ETP) tracking multiple cryptocurrencies. The Amun Crypto ETP goes by the ticker symbol HODL, and tracks an index the “top 5 crypto assets in terms of market cap and liquidity.” SIX stock exchange image via Shutterstock

State-Issued Digital Currencies Can Squeeze Banks, Says South Korea Central Bank

State-Issued Digital Currencies Can Squeeze Banks, Says South Korea Central Bank

South Korea’s central bank issued a warning over central bank digital currencies (CBDCs) a week after saying it would not introduce one itself. The development was reported in local news outlet Yonhap News Agency, Feb. 7. CBDCs, which are also known variously as state-backed or government-backed digital currencies, involve a blockchain-based version of a country’s fiat currency either replacing or circulating in tandem with paper notes and coins. A number of governments are currently examining the feasibility of using a CBDC, while South Korea formally decided against the measure in late January. The decision came as a result of a six-month consultation process from Bank of Korea (BoK). Now, the central bank has claimed in a report that a CBDC would result in mass withdrawals of funds from private institutions, squeezing liquidity and pushing up interest rates. “The CBDC is a kind of a BOK-issued bank account. People trust it more than one in a commercial bank,” Kwon Oh-ik, one of the authors of the report explained to Yonhap, adding: “Demand deposits are one of the biggest sources of loans by banks. When people pull out their money, banks raise rates, or lower the reserve ratio, to secure more funds.” Seoul has opted not to make significant changes to its stance on cryptocurrency as a whole in recent weeks. Last month, lawmakers similarly ruled out a U-turn over their ban on initial coin offerings in the country. According to a report from the Bank of International Settlements — an organization based in Switzerland made up of 60 of the world’s central banks — last month, around 70 percent of central banks worldwide are conducting some form of CBDC research as of this year.

Ethereum Foundation Weighs $15 Million Bid to Build ‘Randomness’ Tech

Ethereum Foundation Weighs $15 Million Bid to Build ‘Randomness’ Tech

At the cutting edge of blockchain research is a potential $15 million dollar venture by the Ethereum Foundation centered around a technology called Verifiable Delay Functions (VDFs). Acting as a source of computer-generated randomness that is unpredictable and unbias-able, VDFs are envisioned for use in a highly-anticipated “proof-of-stake”(PoS) system called Serenity which the ethereum network will migrate to in the next few years. What’s more, the ability to generate secure randomized numbers – if implemented in Serenity – would be a feature that can be leveraged by all decentralized applications (dapps) on the platform once integrated into the ethereum codebase. Speaking to current viability studies on VDF technology, Ethereum Foundation researcher Justin Drake told CoinDesk: “We’re basically doing all this groundwork to make an informed go, no-go decision on the bigger project. The bigger project is 15 million dollars on that order of magnitude. So we want to make sure that if we do go ahead it’s going to be successful.” And in terms of making the final decision on the technology, Drake stressed that the process of decision-making would be multi-layered. “To an extent we need the buy-in from the wider ethereum community that this is a good idea and that the foundation should be spending this money,” said Drake. “This is something where we can reach rough consensus on public calls.” For now, Drake told CoinDesk that a number of essential tests will be carried out by ethereum developers before a final “go, no-go decision” is made on the incorporation of the technology into Serenity. One of these tests, called the RSA ceremony, will require hundreds of randomized individuals spread out across the globe to participate in an experiment which tests the security of random number generation by a VDF. Outside of the RSA ceremony, there will also be a worldwide circuit competition requiring participants to test and create specialized firmware also called ASICs to run VDF computations. As Drake elaborated: “In the VDF, we basically need an ASIC which is very low latency, that is very fast. The so-called circuit – the way transistors connect in the ASIC – needs to follow a clever algorithm … We don’t need it to be the fastest in the world, just fast enough.” ‘A fundamental new…

Bitcoin, Altcoins Are Vulnerable to New Lows, Fundstrat Warns Clients

Bitcoin, Altcoins Are Vulnerable to New Lows, Fundstrat Warns Clients

Cryptocurrency markets could soon hit lower lows and continue their record bear market, investment and analysis firm Fundstrat Global Advisors warned in an email quoted by Bloomberg on Feb. 6. Writing to traders, one strategist at the firm, Robert Sluymer, forecast that on the basis of current performance, there was a chance Bitcoin (BTC) and altcoin prices could dip further. BTC/USD has fallen around 2.2 percent over the past week to trade at $3,370 as of press time Thursday, as many altcoins have seen bigger drops. Sluymer said: “The price structure for most cryptocurrencies remains weak and appears vulnerable to a pending breakdown to lower lows.” Fundstrat is known within the cryptocurrency space for providing some of the more upbeat narratives on the future of Bitcoin in particular. Enthusiasm appeared to wane in recent months, however, with popular senior Fundstrat strategist Tom Lee announcing he would no longer make public predictions about BTC/USD in December 2018. “We are tired of people asking us about target prices,” Bloomberg quoted him as telling clients at the time, nonetheless adding he thought Bitcoin’s fair value should be worth $150,000. Belief in a broad market resurgence in 2019 remains patchy among other major proponents. While John McAfee has infamously stuck by his $1 million prediction for next year, cryptocurrency exchange Quoine’s CEO also told Cointelegraph he thinks Bitcoin will break its all-time highs of $20,000 within the next eleven months.

A Millennial and Crypto Love Story: How This Generation Is Ghosting Banks

A Millennial and Crypto Love Story: How This Generation Is Ghosting Banks

America’s youth has long been in a bad relationship with banks. Their predatory, self-serving practices have left a bad taste in the mouths of many young consumers, who have historically acclimated and resigned themselves to the system as they aged. Millennials have been accused of killing almost every industry, from golf to napkins, but now they’re on the cusp of the biggest breakup yet – with banks. Millennials might finally be the generation to leave their deadbeat ex and have the passion and optimism to envision a new way of doing things financially. Also read: The Crucible of Privacy: Why Decentralized Exchange Is the Only Way Breaking up With Banks During the 2008 financial collapse, the Fed had to lower interest rates to 0 percent, right around when millennials were graduating from college (in debt from bank loans) and trying to build up their finances. Millennials could barely earn interest on their deposits, while banks continued to use those same deposits to charge consumers 25 percent interest on credit cards and keep over 90 percent of the value to themselves. Bank executives have had record earnings and bonuses since 2009, while most Americans struggle to finish the month in the green. This is a completely one-sided relationship, with millennials giving and banks taking. Besides, healthy relationships are based on trust, and millennials just don’t trust banks. According to a 2018 study by Edelman, 77 percent of affluent millennials feel the traditional financial system is “designed to favor the rich and powerful.” 75 percent worry about the global financial system being hacked and losing their personal information, and 77 percent think it’s a matter of time before finance’s “bad behavior” leads to “another global financial crisis.” So banks are bad news, and they don’t even pretend not to be. 70 percent of affluent millennials feel that financial service companies “make the purchasing process unnecessarily confusing/frustrating” and 71 percent say these companies leave them feeling “unsure” and “out of their depth.” This is a recipe for an unstable, manipulative relationship. Luckily, millennials have the sense to realize that and pull the plug. The millennial disruption index slates banking as the most ripe industry for disruption, and reports that 71 percent of millennials would rather go to the dentist…