10 Years After Lehman: Bitcoin and Wall Street Are Closer Than Ever

10 Years After Lehman: Bitcoin and Wall Street Are Closer Than Ever

Hank Paulson, former secretary of the U.S. Treasury, called it “an economic 9/11.” Having loaded up on mortgage debt that went sour, then failed to find a savior in the government or private sector, the 158-year-old Wall Street investment bank Lehman Brothers filed for bankruptcy on Sept. 15, 2008. The fallout over the following days, weeks and months would threaten to topple the entire financial system, necessitating trillions of dollars in rescue lending to banks and other firms by governments and central banks. The global financial system hadn’t looked more fragile at any point since 1929. Worse, support for the system was undermined by the fact that Wall Street executives still collected multimillion-dollar bonuses – even as millions of the taxpayers, who helped fund those bonuses, lost their homes. Within a couple of months of Lehman’s bankruptcy, though, a new piece of technology would debut – almost unnoticed – one that appeared to offer an alternative to this catastrophe-prone system. On October 31, 2008, an unidentified individual going by the name Satoshi Nakamoto published the bitcoin white paper to a cryptography mailing list. The paper described “a purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution.” Satoshi had almost certainly been working on the protocol for months or years prior to Lehman’s collapse but, according to Cornell computer science professor and blockchain researcher Emin Gun Sirer, there was a timely motive to the launch. Sirer told CoinDesk: “It’s very clear that Satoshi was affected by the events that led up to the financial crisis of 2008, and then it’s obviously recorded in the genesis block as well.” Sirer is referring to the Times of London headline bitcoin’s creator pointedly inserted into the first bitcoin block ever mined, on Jan. 3, 2009: “Chancellor on brink of second bailout for banks.” As awareness of bitcoin spread, different people saw different things in it, but for many, it represented an alternative to fiat currency issued by central banks (which had just fired up the proverbial printing presses again) and the fractional reserve banking system (which had nearly collapsed beneath a mountain of lending). Most of all, it promised to bypass the financial institutions…

Government-Funded Drug Trafficking Makes USD the World’s Dirtiest Currency

Government-Funded Drug Trafficking Makes USD the World’s Dirtiest Currency

News Pablo Escobar. Joaquín ‘El Chapo’ Guzmán. Rick Ross. Household names, each and every one of them; drug lords collectively responsible for punting billions of dollars’ worth of narcotics. Yet their crimes pale in comparison to those their prosecutors have been perpetrating for years. After decades of fueling proxy wars and trafficking, the US government has powder on its hands – a combination of gunshot residue, cocaine, and heroin. Those same agencies that would decree what the public can and can’t do with their cryptocurrency have broken every rule in the book. Also read: Terrorists Prefer Cash to Crypto, According to Congressional Testimony Bitcoin, Drug Barons, and High Hypocrisy In a 6×8 feet concrete cell in a Colorado penitentiary, prisoner 18870-111 meditates silently. He will perform this daily ritual another 18,250 times in his lifetime, which shall be expended within the confines of his cramped enclosure. The 34-year-old is serving life without parole, officially for operating a sprawling drugs marketplace. Unofficially, his life term isn’t for drug trafficking however – it’s for doing so without cutting the US government a slice of the action. His name is Ross Ulbricht and his crimes are a drop in the bucket to those perpetrated by the three-letter agencies whose fingerprints are all over his prosecution. Even if one takes the view that drug dealing and money laundering are unlawful – and there are many, particularly in the Bitcoin community, who would demur – the hypocrisy of law enforcement is breathtaking. Many of the officials who would lock up dealers for life think nothing of committing the very same crimes. Sometimes these are rogue agents operating alone, such as Carl Force and Shaun Bridges, who helped bring down Ross Ulbricht while committing even more egregious crimes and tainting the evidence trail. But the most serious cases of government-orchestrated malfeasance see orders taken from the very heart of the so-called deep state. A Short History of US Government Lawlessness As the following examples show, there is a very strong case for asserting that the US government, typically operating off the books through shadowy proxies, is the world’s largest cartel. What follows is a handful of the crimes we know to have been committed with the blessing of US agencies. Consider this…

Manufacturing Giant Rostec to Manage Data on Waves Blockchain Platform

Manufacturing Giant Rostec to Manage Data on Waves Blockchain Platform

Rostec, the Russian state-owned manufacturing conglomerate, is entering the blockchain fray. The corporation, which holds stakes in 700 industrial entities in Russia, is working with the Waves platform to develop a blockchain system to manage data on its vast holdings, which include the carmakers Autovaz and Kamaz and the firearms manufacturer Kalashnikov. Announced Thursday, Rostec has signed an agreement with Vostok, a startup founded by the Waves platform team. The two partners will invest a combined $2 million to bootstrap the project, but Rostec’s share was not disclosed. Over the next month, the joint team will present a roadmap for the project. The project will pave the way for the application of blockchain technology to Rostec’s operations – specifically, for standardizing, collecting and analyzing data about the products manufactured under Rostec’s supervision, which include both military and civilian goods. The information coming from these disparate locations to Rostec’s head office is not standardized and thus difficult to parse. Blockchain is expected to improve the organization and security of this data, some of which is sensitive military information. Smart cities The project will also seek to develop solutions for so-called smart cities, which leverage data to manage urban resources more efficiently. To that end, the project would facilitate the sharing of data via blockchain between federal and municipal government bodies and citizens. Rostec has already been piloting smart city technology in several Russian cities designed to automatically regulate and adapt power consumption, traffic management, the work of street cameras with face recognition and other systems. These systems will be migrated to blockchain rails, Vasiliy Melnikov, a press representative of Rostec, told CoinDesk. For Waves, the deal is a high-profile partnership that offers the opportunity to reach major players in the Russian economy. “Working together with Rostec, which is the main provider and driver for projects in digital economy, will not only get us access to the wide range of corporate and government clients but also will give us a strong impulse for the further development,” Waves’ and Vostok’s CEO Sasha Ivanov said in a statement. Rostec was created in 2007 as a state-funded corporation responsible for accelerating technological development in Russia and is chaired by Sergey Chemezov, one of the closest public officials to president Vladimir Putin.…

Sales Tax and Bitcoin in the United States Can Be Confusing

Sales Tax and Bitcoin in the United States Can Be Confusing

Taxes Over the last two years in the US, the federal government and states have been trying to grasp the concept of cryptocurrencies and apply them to traditional finance laws like taxes. The task has proven to be extremely difficult for federal agencies and officials however. One confusing issue is the application of state sales tax towards a purchase made with bitcoin. A great majority of states across the US have zero guidance on this issue and some states like New York, New Jersey, and California have entirely different ways of handling digital currency purchases and sales tax. Also read: Bitcoin Cash Hard Fork Debate Reconvenes After the Stress Test Sales Tax and Bitcoin  Bitcoins and taxation is not the most popular topic, and both topical conversations seem to mix like oil and water these days. In the US, most cryptocurrency enthusiasts understand that according to the Internal Revenue Service (IRS), digital currencies like bitcoin are considered property for Federal tax purposes. Essentially this means that current property transaction laws apply to transactions using virtual currencies. The US taxpayer is required to report the character of gains or losses from the sale or exchange of a cryptocurrency from the value it was acquired for at the time and for the value of the final sale. Additionally, the IRS treats cryptocurrencies like a ‘convertible virtual currency’ (CVC) which means theoretically if merchants accept a currency like bitcoin the state tax could be applied to both the merchant and customer. However, only a few states offer clarification on the issue of sales tax and bitcoin purchases. Most US states have absolutely no guidance whatsoever on how a merchant and customers should handle sales tax. The few states that do offer some descriptive laws on state sales tax and cryptocurrencies also provide two different methods of applying sales tax to digital currency purchases. The subject was covered in a recent BNA tax report this week and the topic has been discussed in great detail over the last five years. New Jersey’s Technical Assistance Memorandum For instance, back in 2015 the state of New Jersey published a Technical Assistance Memorandum (TAM-2015-1 -R) which explains bitcoin and other cryptocurrencies are to be treated as a CVC. If a customer purchases an item…

Huobi to ‘Aggressively’ Enter Japanese Market

Huobi to ‘Aggressively’ Enter Japanese Market

Exchanges Crypto exchange Huobi is entering the Japanese market by acquiring a majority stake in one of the 16 government-approved crypto exchanges in the country. The company says it plans to “aggressively scale this trading platform into the largest in Japan,” with an eye on global expansion in the future. Also read: 160 Crypto Exchanges Seek to Enter Japanese Market, Regulator Reveals Huobi Entering Japanese Market Huobi is expanding into the Japanese market by acquiring a majority stake in Bittrade, a Japanese government-approved crypto exchange. Bittrade’s owner announced on Wednesday, September 12, that Huobi Global’s wholly-owned subsidiary, Huobi Japan Holding Ltd., “will take a majority stake” in the exchange. Speaking of his strategic partnership with Huobi, Singaporean entrepreneur Eric Cheng, who owns 100% of Bittrade, said: The parties intend to aggressively scale this trading platform into the largest in Japan with the potential to extend its services globally. Established in China in 2013, Huobi has since moved its headquarters to Singapore. The company now claims to have an accumulated trading volume of over US$1 trillion, with “millions of users” worldwide. “Geographically, Huobi has compliance teams in Singapore, Korea, Hong Kong, Australia, the UAE, Luxembourg, and other countries around the world,” the company wrote. In addition, Huobi has been expanding to other regions through partnerships with local companies. Last month, Huobi announced that it is launching crypto exchanges in the Philippines, Russia, Taiwan, Indonesia, and Canada. Bittrade Already an Approved Exchange in Japan One of the biggest hurdles in entering the Japanese market right now is getting approval from the Financial Services Agency (FSA). Since Japan legalized cryptocurrency as a means of payment in April last year, all exchanges in the country are required to register with the FSA. Last year, the agency approved 16 crypto exchanges. However, the approval rate has plummeted since the hack of Coincheck in January. The agency has since tightened its evaluation process of new exchanges. This has led to 13 of 16 quasi-exchanges to withdraw their applications. Bittrade is one of the 16 FSA-approved crypto exchanges. Last week, Japan’s e-commerce giant Rakuten acquired Everybody’s Bitcoin, one of the three remaining quasi-exchanges, to fast-track into the Japanese crypto market. Bittrade Previously Acquired by Singaporean Entrepreneur In May, Cheng “acquired 100 percent stake in…

Fintech Investor Ribbit Capital Sets $420 Million Goal for Its Latest Fund

Fintech Investor Ribbit Capital Sets $420 Million Goal for Its Latest Fund

U.S.-based venture capital firm Ribbit Capital, the portfolio of which includes notable cryptocurrency and blockchain projects, is aiming to raise $420 million for its latest fund, according to an SEC filing dated September 12. The fund will reportedly be the fifth venture of Ribbit with limited partners, while the $420 million figure is a “nominal increase” from the $300 million the company attracted last year. Founded in 2012, Ribbit’s portfolio is marked by cooperation with such industry leaders as cryptocurrency exchange Coinbase, zero-fee stock and crypto trading platform Robinhood, finance company Credit Karma, and automotive insurance platform Root Insurance. Ribbit Capital has also invested in Andreessen Horowitz, Battery Ventures, and Cross River Bank, which according to TechCrunch provides the “sole link” between many fintech companies and regulated financial institutions. In April, U.K.-based alternative banking app Revolut raised $250 million in a Series C investment round led by Ribbit Capital, along with two other venture capital firms DST Global and Index Ventures. The raised money gave the company an overall $1.7 billion valuation and thus making them a “unicorn” – a startup with over a $1 billion valuation. Robinhood began offering trading services for digital currencies in February, having raised $363 million in a series D funding round and $110 million in a series C round. Following the funding rounds, Robinhood was valued at $5.6 billion, making it the second most valuable fintech startup in the U.S. Coinbase, which was founded in 2012, has since grown to be a leader among crypto exchanges and wallet services in the U.S. This year, Coinbase extended its services when it launched Coinbase Pro, and evolution of GDAX that is geared towards individual traders. Recently, the exchange opened trading for four cryptocurrency pairs with the U.K pound sterling.

Mexican State Bank Announces Stricter Rules for Crypto Exchanges

Mexican State Bank Announces Stricter Rules for Crypto Exchanges

All crypto exchanges and banks providing crypto services in Mexico will now be obliged to receive a permit from the Bank of Mexico (Banxico), according to a September 10 circular published in the official daily of the Mexican government, the Diario Oficial de la Federacion. The letter called “General provisions on operations related to electronic payment funds” states that Banxico is responsible for issuing crypto-related permits. To get one, a company dealing in digital currencies must provide a detailed business plan complete with a description of their operations, the commissions they plan to charge, and the mechanism they will use to verify customer identity. Additionally, banks are not permitted to make cryptocurrencies available to users if their accounts were created on the same day. Financial entities are also obliged to identify all customers involved in cryptocurrency trading. Furthermore, any assets acquired by crypto beneficiaries have to go through additional validation checks. Per Banxico, these measures will help prevent money laundering and illicit activities. According to news outlet Criptonoticias, institutions interested in receiving Banxico compliance must have submitted their applications by September 11. However, they may apply again in March 2019 when a new piece of fintech legislation is expected to be passed into law. Despite the new regulations issued by Banxico, Mexico could soon face a cryptocurrency boom by the end of 2018, according to Amir Manzur, the founder of local crypto exchange Cubobit. Manzur told Forbes Mexico that the introduction of comprehensive fintech law in March will only strengthen consumer confidence in digital currencies, encouraging people to further invest.

Huobi ‘Aggressively’ Enters Japanese Market With Plans to Become the Largest Exchange

Huobi ‘Aggressively’ Enters Japanese Market With Plans to Become the Largest Exchange

Exchanges Crypto exchange Huobi is entering the Japanese market by acquiring a majority stake in one of the 16 government-approved crypto exchanges in the country. The company says it plans to “aggressively scale this trading platform into the largest in Japan,” with an eye on global expansion in the future. Also read: 160 Crypto Exchanges Seek to Enter Japanese Market, Regulator Reveals Huobi Entering Japanese Market Huobi is expanding into the Japanese market by acquiring a majority stake in Bittrade, a Japanese government-approved crypto exchange. Bittrade’s owner announced on Wednesday, September 12, that Huobi Global’s wholly-owned subsidiary, Huobi Japan Holding Ltd., “will take a majority stake” in the exchange. Speaking of his strategic partnership with Huobi, Singaporean entrepreneur Eric Cheng, who owns 100% of Bittrade, said: The parties intend to aggressively scale this trading platform into the largest in Japan with the potential to extend its services globally. Established in China in 2013, Huobi has since moved its headquarters to Singapore. The company now claims to have an accumulated trading volume of over US$1 trillion, with “millions of users” worldwide. “Geographically, Huobi has compliance teams in Singapore, Korea, Hong Kong, Australia, the UAE, Luxembourg, and other countries around the world,” the company wrote. In addition, Huobi has been expanding to other regions through partnerships with local companies. Last month, Huobi announced that it is launching crypto exchanges in the Philippines, Russia, Taiwan, Indonesia, and Canada. Bittrade Already an Approved Exchange in Japan One of the biggest hurdles in entering the Japanese market right now is getting approval from the Financial Services Agency (FSA). Since Japan legalized cryptocurrency as a means of payment in April last year, all exchanges in the country are required to register with the FSA. Last year, the agency approved 16 crypto exchanges. However, the approval rate has plummeted since the hack of Coincheck in January. The agency has since tightened its evaluation process of new exchanges. This has led to 13 of 16 quasi-exchanges to withdraw their applications. Bittrade is one of the 16 FSA-approved crypto exchanges. Last week, Japan’s e-commerce giant Rakuten acquired Everybody’s Bitcoin, one of the three remaining quasi-exchanges, to fast-track into the Japanese crypto market. Bittrade Previously Acquired by Singaporean Entrepreneur In May, Cheng “acquired 100 percent stake in…

Crypto Exchange OKCoin Expands Trading to 20 More U.S. States

Crypto Exchange OKCoin Expands Trading to 20 More U.S. States

Digital currency exchange OKCoin has announced its expansion of token-to-token trading into twenty new U.S. states, according to a statement published September 12. Per the announcement, OKCoin has extended trading services to the states of Alaska, Arizona, Colorado, Idaho, Illinois, Indiana, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, Tennessee, Texas, Utah and Wisconsin. Jim Nguyen, Vice-President of Marketing at OKCoin, stated in the blog post that the exchange collaborated with regulators in each state in order to comply with both federal and state laws. OKCoin CEO Tim Buyn said: “In order for the cryptocurrency market to reach its full potential, exchanges like OKCoin have to work with existing and new regulators for convertible virtual currency, digital goods, and/or securities.” The announcement states that OKCoin has also applied for money transmittal licenses (MTL) for both token-to-token and fiat-to-token trading. Upon receiving the licenses, OKCoin plans to bring its trading platform to other states. Meanwhile, the founder of OKCoin affiliate crypto exchange OKex Star Xu was allegedly detained in China in relation to suspected digital currency fraud on September 11. According to tech media ZeroHedge, a group of investors in WFEE Coin — a company of which Xu was reportedly a shareholder — complained to local police about allegedly fraudulent practices at the company. However, in 24 hours Xu was released from police questioning, denying the allegations of fraud. When Cointelegraph reached out to OKEx, the company denied Xu had any equity involvement with WFEE. Andy Cheung, COO, said: “Mr. Xu has no equity relationship with WFEE and its company. Though WFEE has acquired OKBC’s [OK Blockchain Capital] and several other capitals’ investment, the afterward changes of WFEE white paper and team members have not been given notice to OKBC.”

Cash to Crypto Trade Blooming in Moscow, Reports Say

Cash to Crypto Trade Blooming in Moscow, Reports Say

Exchanges Buying cryptocurrency in Russia these days increasingly means parting with fiat cash, be it Russian rubles or American dollars. According to numbers quoted by local media, the 24-hour market turnover, just in Moscow, reaches a staggering $50 million dollars on peak days. Some say the cash-crypto trade resembles the wild-wild-east street forex of the 90s, while others claim that if it’s not prohibited then it’s allowed.       Also read: Ukrainians Advised to Pay 19.5% Tax on Crypto Incomes Multi-Million Cash Market for Crypto in the Capital Last year’s skyrocketing prices have tremendously increased the popularity of cryptocurrencies around the world and Russia is no exception. The 2017 all-time highs drew a lot of attention and investment creating a multi-million dollar cryptocurrency market in Moscow which is still blooming. A big part of it involves cash transactions and as there are no dedicated regulations in the country yet, this type of crypto trading is neither legal nor illegal. According to estimates quoted by the local press, the daily crypto turnover in the capital alone is between $10 and $20 million USD but it sometimes peaks at $50 million. A number of currency exchange shops and individual traders in Moscow are offering the service of fast and anonymous purchases and sales of cryptocurrency with rubles and dollars. An investigation by leading Russian business edition Vedomosti has found that the situation resembles that of the notorious 90s when forex deals were sealed right in the street. Now anyone can go to an office with a bag of cash, change it to crypto without identifying themselves or proving the origin of the funds. Isn’t it the same with fiat-to-fiat exchange? According to Roman Zaguba, a representative of the UK-based crypto bank Wirex, most of these exchangers dwell on peer-to-peer platforms like Localbitcoins. Because of the lack of relevant laws, online trading platforms are also entirely outside of the legal field. The draft legislation that was voted on first reading in May and was supposed to be adopted in July has been delayed. The texts of the initial three bills have been synchronized and the revamped law “On digital financial assets” will be presented for public discussions in October before it’s reviewed again in the State Duma and hopefully…