Author: Jody McDonald

Jody is a Brisbane-based freelance writer who specialises in writing about business, technology, and the future of work.

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Coinbase Crypto Exchange Crypto Wallets NFTs

Apple Blocks Coinbase NFT Transfers Over In-App Purchase Dispute

Leading cryptocurrency exchange, Coinbase said it’s been forced to remove non-fungible token (NFT) transactions from the iOS version of its wallet app, following Apple’s decision to apply its ‘Apple tax’ to these transactions.

Coinbase said the NFT feature had been disabled to get around a block on its latest app release due to Apple’s transaction fees policy.

Apple’s policy doesn’t straight-up ban NFT transfers, but it does require that 30 percent of the gas fees — the blockchain network fees paid by users to process the transactions — are paid directly to Apple. 

Complying is Impossible: Coinbase Boss

Coinbase’s official Twitter account posted a thread on Thursday explaining why the NFT functionality had been removed from its iOS wallet app. Coinbase pointed out that it was not possible for it to comply with Apple’s policy as Apple’s in-app purchase system doesn’t currently support crypto.

The thread also likened Apple’s policy to “trying to take a cut of fees for every email that gets sent over open internet protocols.”

Coinbase CEO, Brian Armstrong, tweeted that conversations with Apple had recently started to become “absurd” as Coinbase struggled to navigate what they consider nonsensical policies imposed by Apple.

Cryptosphere Reacts

On Twitter, many users have expressed their frustration with what they perceive as excessive greed interfering with the growth of crypto.

Others pointed to Solana’s soon-to-be-released Saga phone as a potential way around Apple’s policies.

Apple announced in October that NFT in-app transactions would be subject to the same 30 percent fee as all other types of in-app transactions. Apple’s insistence on applying their tax to NFT transactions has meant that NFT marketplaces and other crypto-centric functionality has remained largely absent from its App Store. 

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Banking Crime Payments Regulation

Brazil Legalises Crypto as a Payment Method

The Brazilian Chamber of Deputies, the equivalent of Australia’s House of Representatives, has approved legislation to legalise the use of cryptocurrencies as a payment method throughout the South American nation. Before the legislation becomes law, however, it must be approved by the executive branch of the Brazilian government. 

The new law will not recognise Bitcoin or any other cryptocurrency as legal tender, as was done in El Salvador last year. Instead, it adds cryptocurrencies to the definition of legal payment methods within the country, along with air mileage rewards programs.

Details of the New Legislation

The bill containing the new legislation, which was authored by Aureo Ribeiro, was passed by Brazil’s senate in April of this year but has been stuck in the nation’s lower house for several months.

In addition to recognising crypto as a legal payment method, the new law will allow for the creation of licenses for cryptocurrency exchanges, crypto custody providers and virtual asset managers. 

The law will also require that exchanges avoid the commingling of company assets and their customer’s assets, in what appears to be an attempt to avoid a repeat of the FTX collapse.

Legislation Creates New Crime

The bill also establishes the new crime of fraud involving virtual assets with a minimum penalty of two years in prison and a maximum of six years, plus a monetary fine.

It also adds to Brazil’s regulatory framework around crypto, declaring that any virtual assets defined as securities will be regulated by the nation’s securities watchdog, the CMV. Assets not defined as securities will be regulated by a body yet to be determined by the executive branch but expected to be the central bank.

Companies will have 180 days to comply with the new legislation after it passes into law.

What it Means for Crypto’s Growth

Once the new legislation is signed off by the executive branch, banks in Brazil could start allowing customers to pay for goods and services using crypto as an alternative to credit and debit cards, which may lead to significant growth in the use of cryptocurrencies.

Already, some banks in Brazil have begun offering crypto-based services — in October, the Warren Buffet-backed neobank, Nubank, announced its plan to launch its own cryptocurrency in the first half of 2023. 

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Dogecoin Markets Payments Social media

Dogecoin Rallies on the Back of Elon Musk’s Twitter 2.0 Plans

The price of everyone’s favourite dog-themed meme coin, Dogecoin, has surged over the past week on the back of a tweet from the new Twitter owner, Elon Musk. Musk’s tweet got the Doge army’s tails wagging as it outlined his plans for the social media platform, which included a vague reference to payments.

Data from CoinGecko shows Dogecoin’s price jumped from US$0.088 before Musk’s tweet on November 27 to US$0.108 at the time of writing, an increase of 22.2 percent. Over the week, Dogecoin is up a whopping 37.9 percent: a significant increase given the current bear market.

What Did Musk Tweet?

Ever since Musk purchased Twitter last month, Dogecoin enthusiasts have been hopeful that the famously Doge-interested billionaire would somehow integrate the coin into Twitter. 

In his Tweet on November 27, Musk outlined the progress he’d made since taking over the platform and also listed some future plans for what he referred to as Twitter 2.0 — The Everything App.

Some of the new features Musk listed included encrypted direct messages, long form tweets, relaunched ‘Blue Verified’, and a vague and mysterious reference to payments. 

Despite no direct reference to Dogecoin, the mention of payments coming to Twitter was enough to spark FOMO, triggering something of a buying frenzy and causing the meme coin’s price to spike.

Musk’s mysterious slide deck image with a blank space for payments. Source: @elonmusk on Twitter

Earlier Rumours Contribute to FOMO

Previously, just after Musk’s purchase of Twitter in late October, rumours had begun circulating, fuelled by speculation from tech blogger Jane Manchun Wong, that the company had commenced work on a crypto wallet that would allow users to deposit and withdraw crypto. This earlier speculation saw Dogecoin’s price jump 40 percent at the time and may have played a part in the excitement about Musk’s tweet.

Some in the crypto community have poured cold water on the idea of Dogecoin for payments — pointing out that unlike many other distributed ledgers, Dogecoin doesn’t natively support smart contracts and may not be suitable as a payments platform due to shortcomings in security, privacy and capacity for scaling. 

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Australia Bitcoin Independent Reserve Investing Surveys

Bitcoin Dominates Brand Awareness as Voted by Aussies

Bitcoin (BTC) is far and away the most well known cryptocurrency, with over 90 percent of Australians having heard of the OG crypto, according to a 2022 survey by Australian cryptocurrency exchange Independent Reserve.

The Independent Reserve Cryptocurrency Index (IRCI) is an annual cross-sectional survey of the attitudes of 2,000 Australians towards cryptocurrency and is designed to reflect the age, gender and demographics of the broader Australian population.

Aussies Consider Bitcoin an Investment

This year’s IRCI found that more Aussies than ever before consider Bitcoin an investment asset, at just under 30 percent. This rise coincides with a downward trend since 2019 in the number of people who consider Bitcoin a form of money, a scam, or had simply not thought about it enough to answer.

The survey also found that plenty of Aussies knew about crypto other than Bitcoin, with 42.9 percent having heard of Ethereum, 35.8 percent aware of Dogecoin, and 15.1 percent familiar with XRP.

Bitcoin and Ethereum are the most well-known cryptocurrencies in Australia. Image source: Independent Reserve

Short-Term Sentiment Falls

While awareness of crypto is high, sentiment has fallen compared to last year’s survey, with Independent Reserve’s overall index dropping from 54 to 45. According to Independent Reserve, a score of 100 would “indicate complete awareness, optimism, trust and adoption” while 0 would indicate the opposite.

Independent Reserve said a more negative sentiment in 2022 reflected lower crypto ownership rates and a fall in short term confidence in crypto. Despite this drop in sentiment since 2021, overall ownership rates remain up in 2020. 

The steepest drop in crypto ownership occurred in the 18-24 age group where it dropped from 56 percent in 2021 to just 33.3 percent this year. In other age groups, ownership rates actually held steady or grew.

Long Confidence Remains Strong

Despite the drop in short-term sentiment, the survey found Aussie’s longer term confidence in crypto remains strong:

  • Only eight percent of respondents said they plan to get out of crypto entirely;
  • 44 percent said they plan to increase or diversify their crypto holdings;
  • 45 percent said they would hold.

When asked what they thought Bitcoin’s price would be in 2030, the most popular response from both crypto owners and non-owners was between $30,000 and $100,000, indicating many believe Bitcoin’s value will grow considerably from where it sits today.

The prospect of crypto eventually being widely accepted by people and businesses was highly correlated with age, with all age groups under 44 strongly believing it was likely. People aged between 45 and 54 years old were fairly evenly split between likely and unlikely, while those over 54 considered it unlikely.

Categories
Binance Crypto Exchange Crypto News FTX Kraken

Binance Releases Proof of Reserve System – Kraken CEO Unsatisfied

In the wake of the collapse of FTX, cryptocurrency exchanges are rushing to convince customers that they’re safe and not likely to suddenly collapse — at least not in the next few weeks. Recently large exchanges like Crypto.com and Kraken have released proof of their reserves, and now Binance is following suit. 

Last Friday, Binance announced its new proof of reserve system, which allows customers to verify that their funds have been included in the proof of reserves report by querying data in a Merkle tree. Binance claims this proves that customer funds are held on a full-reserve basis.

However, Binance’s new system has been met with criticism by the CEO of rival crypto exchange Kraken, Jesse Powell.

Powell referred to the system as “hand wavey bullshit” that provides nothing more than a cryptographic hash of an entry in a spreadsheet, which does nothing to show that Binance holds more assets than it owes.

Powell’s Criticism Explained

Powell said a meaningful proof of reserve audit must include all client liabilities with negative balances excluded, user-verifiable cryptographic proof that all accounts have been included in the audit, and cryptographic signatures verifying the exchange’s control over the wallets containing the assets.

Without this information, Powell said proofs of reserve such as those released by Binance are “worthless” and tell users nothing of value about an exchange’s financial position.

Powell’s Kraken exchange has implemented a similar Merkle tree-based proof of reserve system that he claims is more rigorous than that offered by Binance. However Kraken does acknowledge its system has some shortcomings of its own. 

Crypto Journalists Cop It

Binance wasn’t the only target in Powell’s sights: he also took aim at crypto journalists for failing to understand the flaws in Binance’s system.

Previously, Powell had criticised the Binance-owned crypto tracking website, CoinMarketCap, for its implementation of its new proof of reserves feature, which he says simply includes a list of wallets and does nothing to clarify if an exchange has more assets than liabilities. 

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Australia DeFi Illegal Regulation

ASIC Sues Aussie Fintech Company Block Earner Alleging Unlicensed Services

Australia’s financial markets watchdog is taking Aussie crypto platform Block Earner to court for allegedly providing unlicensed financial services and running an unregistered managed investment scheme. 

The Australian Securities and Investments Commission (ASIC) announced Wednesday November 23 that it had commenced civil penalty proceedings against Block Earner — the trading name for Web3 Ventures — in the Federal Court.

“We are concerned that Block Earner offered financial products without appropriate registration or an Australian Financial Services licence, leaving consumers without important protections. Simply because a product hinges on a crypto-asset, does not mean it falls outside financial services law.”

ASIC Deputy Chair Sarah Court

ASIC has been active when it comes to enforcement in the crypto space of late, taking legal action against the company being the Qoin token in October this year.  

Block Earner CEO Cites Lack of Regulatory Clarity

Bringing decentralised finance to the masses has been the catch-cry of Block Earner, which offers a range of fixed annual yield products backed by crypto, USD reserves and physical gold. ASIC said Block Earner’s crypto-asset-related offerings were financial products, which comes with a requirement to hold an AFS licence — which Block Earner does not have.

Speaking to Business News Australia, Block Earner co-founder and CEO Charlie Karaboga described the legal action as a “disappointing outcome”. He said the startup had invested in infrastructure to be able to operate compliantly and protect its customers against crypto market volatility. 

“Needless to say, lack of clarity around regulation in Australia for cryptocurrency-related products creates friction between regulators and innovators like Block Earner in our industry. In an ideal world, we would build these products in a regulatory sandbox with more clarity around licensing regimes. In the future, we look forward to working with ASIC and other regulators in this space to make Australia an innovative space for the crypto industry.”

Block Earner co-founder and CEO Charlie Karaboga

ASIC Supports Regulation to Protect Consumers

ASIC said it supports the development of an effective regulatory framework covering crypto assets in order to protect Australian investors — who have demonstrated a strong interest in crypto. 

Research released by ASIC in August 2022 found many new, young investors had become active in financial markets and 44 percent reported holding crypto. Just 20 percent of crypto owners considered their investment approach to be ‘risk-taking’, and many said they sourced information from social media, podcasts and financial influencers.

In its statement about legal proceedings against Block Earner, ASIC highlighted its concerns about consumers’ vulnerability in their rush to embrace crypto:

“Crypto-assets are risky, inherently volatile and complex and ASIC remains concerned that potential investors in crypto-assets may not fully appreciate the risks involved. ASIC supports the development of an effective regulatory framework covering crypto-assets to protect consumers and investors.” 

ASIC Deputy Chair Sarah Court
Categories
Crypto Exchange Crypto News FTX Regulation

Top Crypto Data Platform CoinMarketCap Launches Proof of Reserve Tracker

A new feature released by leading crypto price-tracking site CoinMarketCap reveals more data about crypto exchanges’ reserves — the assets that enable a company to cover potential withdrawals by customers.

With the contagion of FTX’s highly damaging collapse continuing to spread, and Proof-of-Reserves being touted as a needed failsafe against future incidents, the website’s move to give people information about crypto exchanges has been welcomed by many. 

According to CoinMarketCap, its new ‘Proof of Reserves’ feature “provides transparency to cryptocurrency reserves through a verifiable auditing practice.” The data seems to be drawn from audited proof of reserves information that the exchanges themselves have made public — with these sources aggregated by CoinMarketCap for the convenience of its visitors. For instance, it lists as a source this tweet from Crypto.com:

“More and more cryptocurrency exchanges have begun revealing their proof-of-reserves in the wake of the recent industry disquiet, and we believe in the importance of giving CMC users all of the information possible about each exchange, project and token.”

CoinMarketCap statement about its Proof of Reserves data

What information can you now get?

By exploring the web pages dedicated to each exchange featured on CoinMarketCap, users can now view details including:

  • The total assets held by the exchange
  • Public wallet address ownership
  • The balance, price and value of the public wallets.

A true sense of a company’s solvency is typically derived from the difference between its total assets and its total liabilities. Obviously, CoinMarketCap doesn’t have access to every company’s full balance sheet, and this feature at least gives investors some indication of an exchange’s ability to meet its financial obligations. 

Capital Adequacy and Audits on the Agenda for Australian Regulators

Safe-keeping crypto investor funds by licensing exchanges and custody arrangements are being considered by the Australian Government, which recently hinted it would prioritise legislation in 2023 in response to the FTX collapse.

The recently finalised Senate Select Committee report into digital asset regulation recommended establishing a market licensing regime for exchanges, and stressed: “The key requirements of a new DCE Market Licence category should include, at a minimum, requirements relating to capital adequacy, auditing and responsible person tests.” 

CEO of digital asset mining company Mawson Infrastructure Group, James Manning is quoted in the report airing his concerns about the current lack of compliance standards: “There’s no audit obligation. As you pointed out, there’s no capital adequacy obligation. There’s no one verifying this, yet some of these exchanges are holding billions of dollars of assets.”

Categories
Banking Crypto News FTX Markets

Crypto Lender Genesis Warns Potential Bankruptcy

The fallout from the FTX fiasco could also topple crypto brokerage Genesis, which has warned customers it may need to file for bankruptcy unless it can urgently secure additional funding, according to reports published by Bloomberg and the Australian Financial Review.

An unidentified person cited in reports claims Genesis has been in talks with companies including crypto exchange Binance, in an attempt to raise US$1 billion in new capital for its lending arm, but with no success so far. 

While FTX and its disgraced CEO Sam Bankman-Fried had a broad footprint of associated ventures, Genesis’ troubles seem to have arisen as a consequence of the overall market turmoil caused by the exchange’s collapse.

Bankruptcy Warning Lending Liquidity Issues  

Genesis offers digital asset trading, derivatives, lending and custody services and posted third-quarter results in 2022 showing it had US$2.8 billion in total active loans. 

On November 16, Genesis tweeted it was temporarily suspending redemptions and new loans for its lending business because FTX’s collapse and reduced market confidence had led to “…abnormal withdrawal requests which have exceeded our current liquidity.” 

Genesis had previously clarified that while it had around US$175 million in locked funds in its FTX trading account, “our operating capital and net positions in FTX are not material to our business.” Upon halting loans it reiterated that its spot and derivatives trading and custody businesses remained operational.

It said at the time it was working on a plan for its lending arm, including sourcing new liquidity:

It’s clear those efforts have not paid off yet. While it seems there’s no immediate plan to file for bankruptcy, Genesis’ shaky position has further destabilised crypto markets — Bitcoin’s price dipped briefly immediately following the news.

Categories
Australia Crypto Memes Payments Shiba Inu

Fully Integrated SHIB Restaurant Set to Open in Australia

Touted as ‘Australia’s first #cryptoDINER’, a Shiba Inu themed restaurant called Shiba Wings is set to open on the Gold Coast and will accept crypto payments in exchange for its menu of hot wings, burgers and beers.

A tweet and video by Australian-based SHIB crypto enthusiast SHIB Planet revealed the new restaurant would use the NowPayments platform to accept cryptocurrency as payment. He also suggested the owners were open to future integration with Shibarium — the layer 2 upgrade to improve the scalability of SHIB on the Ethereum blockchain.

Shiba Inu (SHIB) is considered a ‘meme coin’ — tokens inspired by popular culture and internet jokes— and was created on the back of the success of Dogecoin. Although it seems much of its appeal comes simply from the cute imagery of the Shiba Inu dog breed, SHIB is currently ranked 13 in market value by CoinMarketCap.

Shiba Wings ‘Coming Soon’ to Surfers Paradise

According to Shiba Wings’ social media, the diner will open “soon” and will be located on Cavill Avenue in the Gold Coast suburb of Surfers Paradise. A number of mock-ups of the restaurant’s decor shared online show prominent Shiba Inu and Bitcoin imagery and a market ticker displaying crypto prices. 

Mock-up of the inside of the new Shiba Wings store. Source: Shiba Wings Facebook

Other Shiba Inu branded food ventures have been launched around the world including burger joints in Italy and a ‘Shiba food park’ in Venezuela. 

Categories
Bitcoin Crypto News Economics

El Salvador to Start Purchasing 1 Bitcoin a Day

The President of El Salvador, Nayib Bukele, announced via Twitter that the Central-American nation will start accumulating Bitcoin (BTC) at the rate of one Bitcoin per day starting from today, November 18, 2022. 

El Salvador previously became the first country in the world to recognise Bitcoin as legal tender last year and already reportedly owns 2,381 Bitcoins. 

So far however, El Salvador’s foray into Bitcoin investing hasn’t paid off — the nation is estimated to have spent around US$100 million on Bitcoin, which is currently valued at around US$40 million, meaning it’s currently sitting on unrealised losses of around US$60 million.

The International Monetary Fund has previously warned that the country’s use of Bitcoin poses “large risks” when it comes to the stability of El Salvador’s financial institutions, financial integrity, consumer protections, and liabilities related to the use of public money to fund Bitcoin’s adoption.

We’re Still Early, Says El Salvador

El Salvador had not bought any BTC since July, when it picked up 80 BTC at the price of around US$19,0000 per coin.

But since BTC’s price has fallen in the wake of the FTX collapse, El Salvador apparently believes now is the time to start dollar-cost averaging. 

On Twitter, Bukele explained his belief that BTC is “the opposite” of FTX, stating BTC was designed specifically to avoid frauds and bank runs, and that purchasers of BTC are “still early.”

Justin Sun Chimes in to Match El Salvador 

The founder and CEO of the Tron blockchain, Justin Sun, responded to Bukele’s announcement by stating that Tron DAO will also start buying 1 BTC per day to store in its reserve. The Tron DAO Reserve is used by Tron to maintain the value of Tron-based stablecoins and to mitigate other financial risks to the blockchain.

If El Salvador continues to buy at the rate of 1 BTC per day for a prolonged period of time it could substantially increase its bitcoin holdings by the the time the next crypto bull market arrives. 

For a country already saddled with significant national debt, this aggressive BTC accumulation strategy is high risk — both Bukele and the citizens of El Salvador will be praying it pays off over the next few years.