Free Markets and the Future of Blockchain

Free Markets and the Future of Blockchain

J. Christopher Giancarlo is Chairman at U.S. Commodity Futures Trading Commission, the agency of the US government that regulates futures and options markets. This will be the last time I speak to you from the CFTC. Nevertheless, before I go, I wanted to share some thoughts, which I have been saving. My five years at the Commission have been an immense privilege. In the time that I have served, I have learned a lot about the issues facing America’s farmers, ranchers, producers, energy firms and other users of commodity futures who depend on the CFTC-regulated markets for their risk management needs. It has also been my honor to work on so many issues close to the hearts and minds of the crypto community, not least of which are: virtual currencies, distributed ledger technology (DLT) and fintech broadly. I am appreciative for the time I had to serve as chairman and especially humbled by the moniker of “Crypto Dad” that I was given by this fantastic community of vibrant, bright, ambitious people. I look back on my time at the Commission since first being sworn in back in 2014, and I marvel at the swift pace of change in issues facing the agency. When I first joined as a Commissioner, the CFTC was just coming off five intense years of feverishly writing Dodd-Frank rules to reform Wall Street in the wake of the biggest financial crisis in America in more than 70 years. I could not have predicted at the time that virtual currencies, DLT and fintech would become such a major part of the conversation for our agency. I feel fortunate to have been at the helm during this time to be a voice in government to quiet some of the fears and calls to dismiss or squash this new technology. I recently identified several factors that are challenging the work of regulators: the extraordinary pace of exponential technological change, the disintermediation of traditional actors and business models, and the need for technological literacy and big data capability. I said that the CFTC’s response to rapidly changing markets and technological developments, including blockchain technology and cryptocurrencies, is built upon the following four cornerstones: Adopting an “exponential growth mindset” that anticipates the rapid pace of technological…

Congressman Emmer to Reintroduce Tax Bill Focused on Crypto Hard Forks

Congressman Emmer to Reintroduce Tax Bill Focused on Crypto Hard Forks

U.S. Representative Tom Emmer plans to reintroduce a bill that would benefit taxpayers who hold cryptocurrency resulting from blockchain network splits, or hard forks. Emmer revealed his intention to reintroduce the “Safe Harbor for Taxpayers with Forked Assets” bill, first announced in 2018, during a panel on the relationship between government and technologies at Consensus 2019 on Monday. The Minnesota congressman was joined on stage by Chamber of Digital Commerce president and founder Perianne Boring, Fidelity Investments deputy general counsel David Forman, and CoinDesk advisory board chairman Michael Casey. For his part, Emmer reaffirmed his commitment to supporting the development and use of blockchain tech and cryptocurrencies, and bemoaned the complex network of regulators that the industry must navigate, pointing to the CFTC, the SEC, and others who “all have bits and pieces” of the regulatory picture, but have failed to provide regulatory certainty. He indicated that Congress’ job is “getting government in line” such that the blockchain industry can generate new opportunities and innovations. In practice, the certainty that Emmer and his Blockchain Caucus, co-chaired by Representatives David Schweikert and Darren Soto, have sought to provide has come in the form of measures like proposing that crypto miners should not be classified as money transmitters. CoinDesk has further learned that the Safe Harbor for Taxpayers with Forked Assets bill would prevent the IRS from penalizing unreported crypto assets gained through hard forks until the IRS issues clear guidance on their regulatory treatment. The bill may also include airswaps, which were not covered in the bill’s earlier iteration. However, Emmer noted that Congress still has some work to do before it could effectively advocate for the blockchain industry. “You have members who have quite frankly a range of understanding and backgrounds, and there isn’t a lot of range when it comes to blockchain technology,” he said.  “A lot of them have these preconceived notions, all they’ve ever heard of is the Silk Road.” During the panel, Boring contended that the U.S. government lags behind other areas of the world in its exploration of blockchain. The EU, for example, has already invested 80 million euros in blockchain initiatives, she said, adding that they plan to invest 340 million euros by 2020. Boring also pointed to China…

EBay Denies Rumors It Will Start Accepting Crypto, Despite Advertising at Crypto Event

EBay Denies Rumors It Will Start Accepting Crypto, Despite Advertising at Crypto Event

EBay has denied rumors that it is going to start accepting cryptocurrency as a payment method, according to a Bloomberg report on May 14. Speculation has been mounting since the e-commerce giant took out ads at the Consensus conference in New York City. One of the billboards said: “Virtual Currency. It’s happening on eBay.” It has been suggested that this week’s surge in crypto prices, which has happened without explanation, was linked to hopes that eBay was preparing to embrace crypto. Given how the online auction site bills itself as “the world’s largest marketplace,” such a move would have been a major milestone in the industry’s quest to achieve mainstream adoption, Bloomberg reports. But addressing the rumors directly, an eBay spokesperson said: “Cryptocurrency is not accepted as a form of payment on the eBay platform, nor is it part of our payments strategy.” The online marketplace does currently have a section marked Virtual Currency, where people can use traditional monetary forms to purchase crypto from sellers. The eBay clarification is not the only rumor that has been discredited over recent days. Excitement had started to build in the crypto community in April when a tweet suggested that TD Ameritrade, which holds an estimated $1.3 trillion in assets, was testing bitcoin (BTC) and litecoin (LTC) spot trading on its brokerage. But Sunayna Tuteja, the company’s head of digital assets, told Bloomberg: “Currently we’re not. We have what we call paperMoney, which is what our clients can try for trading strategies. It was a simulation. So there was no actual execution.” Despite these denials, other major brands have confirmed this week that they will allow customers to spend crypto in their stores. On the first day of the Consensus conference, the likes of Whole Foods Market, Barnes & Noble and Bed Bath & Beyond were confirmed as launch partners for a new app called Spedn, which facilitates crypto transactions via the Flexa network.

RIF Labs Launches 3rd-Layer Scalability Solution Capable of Processing Up to 5K TPS

RIF Labs Launches 3rd-Layer Scalability Solution Capable of Processing Up to 5K TPS

RIF Labs — owner of bitcoin-based smart contract sidechain Rootstock (RSK) developer RSK Labs — has launched a third-layer scalability solution capable of processing up to 5,000 transactions per second. The news was revealed in a press release from RIF News on May 14. As reported, RSK Labs and its decentralized app (DApp) infrastructure protocols RIF OS began as a spin-off from Rootstock, having been initially launched by several senior executives from the latter’s creator — the startup RSK Labs. The two structures became fully integrated when RIF Labs acquired RSK Labs in November 2018. Originally conceived by Bitcoin Core developer Sergio Lerner, the Rootstock sidechain saw several years’ development before its initial mainnet release in January 2018. As blockchain engineer Albert Szmigielski outlined during the project’s early days: “Essentially Rootstock aims to be what Ethereum is, a decentralized, Turing-complete smart contract platform. However, Rootstock aims to utilize the Bitcoin ecosystem rather than creating a new one from scratch.” RIF Labs’ new offering is a third-layer scalability solution dubbed Lumino, now officially live, which supports processing 5,000 TPS on the RSK sidechain. In its ambitions, the solution is close to the Lightning Network, which works to mitigate scalability limitations by opening state channels between users that keep the majority of transactions off-chain, turning to the underlying blockchain only to record the net results. With Rootstock reportedly capable of processing up to 100 transactions per second, Lumino aims to provide an off-chain solution that will facilitate near-instant transaction processing levels regardless of the increasing weight of the bitcoin blockchain. As revealed earlier this week, RIF Labs will now soon be rebranding as IOV Labs, in a bid to differentiate the organization from both the open-source RSK and RIF OS protocols. Lumino is also further reportedly compatible with the Name Services component of RIF OS, which enables users of state and payment channels to use aliases rather than complex hexadecimal addresses. In recent remarks to Cointelegraph, Ethereum (ETH) co-founder Joseph Lubin claimed that the Ethereum blockchain will become about 1,000 times more scalable within 18 to 24 months, once it completes its transition to Ethereum 2.0 (also known as Serenity).

ShapeShift’s Voorhees: Bitcoin Won’t Become Trillion-Dollar Asset Without More Bubbles

ShapeShift’s Voorhees: Bitcoin Won’t Become Trillion-Dollar Asset Without More Bubbles

The CEO of instant cryptocurrency exchange platform ShapeShift told Bloomberg TV on May 15 that bubbles are an essential part of the industry’s growth. Speaking in an interview, Erik Voorhees argued that the volatility seen in bitcoin (BTC) and altcoin markets over the years is a necessary phenomenon for a nascent asset. “There have to be bubbles in crypto because crypto is taking over the world, and it’s not just going to advance 5% per month without end,” he told the network. He then added: “If it did that, people would start buying it up and frontrunning it and turning it into a bubble.” Voorhees, whose firm offers trading wholly within the cryptocurrency realm and does not involve fiat currency conversion for users, was speaking as bitcoin set its highest price in over a year. As Cointelegraph reported, a slow bull market which began early April gathered speed this month, with BTC/USD advancing over $8,000 to cap monthly gains of over 60%. Voorhees did not identify a specific reason for the newfound market optimism, arguing the rise was due to mass individual trader activity. “There’s no way to go from a zero-dollar asset into one that is worth trillions without massive speculation and massive volatility and cyclical bubbles,” he continued. ShapeShift suffered at the hands of increasing regulatory scrutiny over the past year, Cointelegraph reporting on a sharp rise in law enforcement requests to the company. The 2018 cryptocurrency bear market also took its toll on performance, ShapeShift making roughly one third of its staff redundant in January.

PR: Bitcoin.com Partners With Travala.com to Boost Bitcoin Cash Adoption

PR: Bitcoin.com Partners With Travala.com to Boost Bitcoin Cash Adoption

The partnership will see Travala.com integrated in the official Bitcoin.com wallet with almost 4 million users London, United Kingdom –– May 15, 2019 — Travala.com, – leading blockchain travel booking platform, has announced a partnership with Bitcoin.com to empower millions of travelers to save on hotel stays. Travala.com is transforming the travel industry, by offering an average of 15% savings on hotel bookings as well as the option to pay with several leading cryptocurrencies, including Bitcoin and Bitcoin Cash. This partnership will empower millions of users to participate in a cheaper, fairer, and more inclusive travel economy. Commenting on the partnership, Matthew Luczynski, CEO, and Founder of Travala.com said, “A reflection of our unwavering commitment towards cryptocurrency adoption, we’re excited to partner with an industry titan to champion the growth of the crypto community. With over 80% of the bookings on our platform made chiefly in digital currencies, the partnership will allow us to leverage Bitcoin Cash’s global network for greater real-world usability. We are excited to work closer with Roger and the Bitcoin.com team.” “Importantly, this is also a powerful demonstration of the synergies between both the travel industry and disruptive technologies, as we strive to significantly lower the barriers of entry. The past year has seen our team achieve a number of milestones, from having recently exceeded our equity crowdfunding target, to the steady growth of our ecosystem, we look forward to seeing even greater progress as we build a transformative future for the online travel industry,” added Luczynski. With a reach of over 210 countries and territories Travala.com’s portfolio of over 82,000 destinations serves as a gateway to a more efficient travel booking experience. Opening the doors to lower hotel prices and a more streamlined booking platform, Bitcoin Cash holders will now be able to choose from almost 600,000 property listings for their next holiday, with ease, through the use of their Bitcoin.com wallet. Roger Ver, CEO of Bitcoin.com said, “Our work is guided by a stout belief in Bitcoin Cash as a model of economic freedom and this includes the continual expansion of offerings under our current suite of products and services. By providing additional functionalities compatible with the lifestyle choices of our community, this partnership exemplifies the value of digital…

SEC Slaps Blockchain Author Alex Tapscott, Firm With Fines Over Securities Violations

SEC Slaps Blockchain Author Alex Tapscott, Firm With Fines Over Securities Violations

The U.S. Securities and Exchange Commission (SEC) has fined blockchain author Alex Tapscott and his investment firm NextBlock Global over securities violations. The SEC says that Canada-based NextBlock had been offering securities that were not registered with the SEC “in any capacity” and that false misrepresentations were made about the firm when soliciting investors. The agency has therefore ordered Tapscott, co-author of the book “Blockchain Revolution,” to pay a $25,000 penalty and also issued a cease-and-desist on further securities violations by him or his firm. The SEC said it had taken into account the remedial acts “promptly undertaken” by Tapscott and NextBlock when agreeing the terms of the settlement. It also said that, following the firm’s payment of a 700,000 Canadian dollar (roughly US$520,000) administrative penalty, it had not imposed a further civil penalty on the company. NextBlock was launched in 2017, raising $20 million via convertible debentures – a type of debt instrument – at the time to invest in blockchain and cryptocurrency companies, the commission said. The SEC further said that, in order to solicit funds from investors in the U.S., Canada and elsewhere, NextBlock and Tapscott falsely claimed that as many as four “prominent” individuals in the blockchain industry were serving as advisors to the firm. NextBlock and Tapscott also initiated a second funding round and hired two Canadian investment banks as advisors for the effort, as well as to help list the firm on the Toronto Stock Exchange, according to the order. However, due to media reports of misrepresentations to investors, NextBlock canceled the round and its initial public offering plan. Later, NextBlock voluntarily initiated court proceedings in Ontario to wind up operations and liquidate its existing digital asset holdings, and return the funds to debenture holders with principal investment plus profits (approximately 140 percent as of March 2019). Tapscott has voluntarily surrendered his right to collect his share from NextBlock’s profits worth over $2 million, an amount that was retained by the firm and formed part of the distributions to debenture holders, the order states. Alex Tapscott image via CoinDesk archives

Bitcoin in Space? It Helps With Connection Woes, Says Blockstream’s Adam Back

Bitcoin in Space? It Helps With Connection Woes, Says Blockstream’s Adam Back

Adam Back, CEO of bitcoin technology startup Blockstream, dove into the lesser-known uses for beaming bitcoin from space during a presentation at Consensus 2019 on Tuesday. The startup launched its cryptocurrency-focused satellite product nearly two years ago with the primary goal of giving people who don’t have an internet connection another way to download a bitcoin full node, the most secure form of connecting to and using the network. But while that’s the reasoning they give out for the most part, Back went into some other use cases where a satellite connection can have value, first pointing to “political disruption,” when people are stuck in the middle of political mayhem that’s out of their control. Back said: “One of the first things that happens in a coup, like in Arab Springs, is that [those in power] disconnect the internet.” In this scenario, satellites offer an alternative way to connect to the bitcoin network. Along those lines, mostly when talking about technology satellites, advocates emphasize that the technology has the ability to onboard people who are less fortunate, maybe living in a part of the world that doesn’t have easy access to the internet. But Back actually made the case that it can provide user cases for people in luckier situations, too. First, and perhaps most practically, Back argues that this is actually, in some ways, cheaper than a normal internet connection. You can save on the bandwidth costs of a normal internet connection by outsourcing a satellite to download bitcoin updates for you. Then there’s the privacy angle. If you aren’t careful, anyone can glimpse online to see the IP address associated with your node. But with a satellite connection, it’s much harder to see who’s connecting to it to grab the full node data. “It gives you a great deal of privacy. By using satellite to receive a full node, no one knows you’re participating in the bitcoin network,” Back said. Finally, downloading a bitcoin full node by satellite also offer an alternative in the case of outages, which exchanges and merchants are all privy to as they need to run some form of node to connect to the network This bad for miners, who can lose money, as they won’t be able to mine…

Crypto Prime Dealer SFOX Partners With New York Bank to Offer New FDIC Protection

Crypto Prime Dealer SFOX Partners With New York Bank to Offer New FDIC Protection

Institutional cryptocurrency prime dealer SFOX has partnered with a New York bank to offer state-insured bank accounts for traders, the company confirmed in a blog post on May 14. SFOX, which says the move is an industry first, stated the deal with M.Y. Safra Bank primarily targeted institutional investors and funds. The company has been active in the trading space since 2014, and counts businesses such as Blockchain.com and Overstock subsidiary tZero among its clients. With Safra, SFOX traders will now have access to insurance through the United States government’s Federal Deposit Insurance Corporation (FDIC) worth up to $250,000. “SFOX’s partnership with M.Y. Safra Bank represents another step forward in our mission to provide our clients with the best place to trade cryptoassets,” CEO Akbar Thobhani commented in the blog post. He added: “M.Y. Safra’s Bank proven track record of providing custom banking solutions to institutions and HNWIs made them the ideal choice for taking SFOX trading one step closer to the goal of a truly frictionless and reliable trade experience across all cryptoassets.” As part of the deal, other features will also become available to institutional traders, including holding funds in named bank accounts, which the companies say further reduces counterparty risk. As Cointelegraph reported, institutional interest in the crypto sector is showing signs of major expansion this month. As bitcoin (BTC) prices reach yearly highs, record trading volumes have been reported by Bitcoin futures provider CME Group, while the Grayscale Bitcoin Investment Trust continues to trade at around a 25% premium over standard market rates.

Hacked New Zealand Exchange Cryptopia Appoints Liquidators, Trading Suspended

Hacked New Zealand Exchange Cryptopia Appoints Liquidators, Trading Suspended

Hacked New Zealand-based cryptocurrency exchange Cryptopia has appointed David Ruscoe and Russell Moore from consultancy and audit firm network Grant Thornton New Zealand as liquidators. The news was revealed in an official Grant Thornthon announcement on May 15. Grant Thornton New Zealand (NZ) is the local network of Grant Thornton International — a major professional services network of independent accounting and consulting member firms. As Cointelegraph has reported in mid-January of this year, Cryptopia revealed that it had been the target of a security breach resulting in significant losses, with the attack continuing for two weeks after its initial detection until the exchange managed to regain control of its wallets. According to Grant Thornton NZ, Cryptopia has decided to go into liquidation as it has been unable to return the business to profitability, notwithstanding management’s reported efforts to reduce costs. The decision has been deemed to be in “the best interests of customers, staff and other stakeholders,” the announcement states. The liquidators will reportedly conduct an investigation and focus on securing assets for the benefit of stakeholders, during which all trading services on the platform will be suspended. In a statement, David Ruscoe outlined: “We realise Cryptopia’s customers will want to have this matter resolved as soon as possible. We will conduct a thorough investigation, working with several different stakeholders including management and shareholders, to find the solution that is in the best interests of customers and stakeholders.” Ruscoe added that given the complexities of the case, Grant Thornton NZ expects the investigation “to take months rather than weeks.” The liquidators are said to be working alongside independent experts and the relevant authorities to determine the company’s obligations. Grant Thornton NZ will publish an initial report to the New Zealand Companies Office website next week. As reported in January, Cryptopia had initially told users that  it was undergoing unscheduled maintenance, issuing several updates before officially reporting the breach. An analysis from blockchain infrastructure firm Elementus estimated in February that as much as $16 million worth of ethereum (ETH) and ERC-20 tokens were siphoned from the platform during the attack — $3.2 million of which were later traced in liquidations on exchanges such as Etherdelta, Binance and Bitbox. Earlier this month, major crypto exchange Binance was…