Author: Jody McDonald

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

Categories
Crypto News Investing Regulation South Africa

South Africa Classifies Crypto Assets as Financial Products

Bitcoin infront of South African Flag

In a milestone decision for crypto regulation, South Africa declared on October 19 that all crypto assets are, in fact, financial products. 

This declaration from South Africa’s Financial Sector Conduct Authority (FSCA), the nation’s financial services regulator, means that all crypto assets are now governed by the Financial Advisory and Intermediary Services Act, 2002 and will be subject to the same regulation as other financial products.

The declaration was signed by South Africa’s Commissioner of the FSCA, Unathi Kamlana, and came into effect immediately.

What Now Qualifies as a Crypto Asset in SA?

The declaration includes a definition of what qualifies as a crypto asset. The definition used is quite broad, defining a crypto asset as a ‘digital representation of value’ that meets the following three criteria:

  1. It’s not issued by a central bank but it is able to be traded, transferred or stored, allowing it to be used for payment, investment or other uses;
  2. It applies cryptographic techniques; 
  3. It uses distributed ledger technology (such as blockchain).

What Does it Means for Crypto Investors in South Africa?

For the first time, cryptocurrencies will be regulated in South Africa, which stands to bring significant benefits to investors and consumers — such as improved legal protections for victims of scams and improved anti-money laundering (AML) and know your customer (KYC) compliance. 

Regulation will also lead to more clarity around the legal status of cryptocurrencies that may encourage more commercial and enterprise use cases, such as real-world asset tokenisation and partnerships between traditional financial institutions and crypto-based businesses.

Despite the benefits of regulating crypto, there are fears that increased regulation and KYC requirements may lead to marginalised people losing access to crypto services on which they rely, with some suggesting people who earn under a certain threshold should be exempt from KYC requirements.

According to Finder’s Cryptocurrency Adoption Report, released in August 2022, 4.2 million South Africans own crypto, that’s 10 percent of the population, slightly lower than the global average of 15 percent.

Categories
Bitcoin Crypto News History

Bitcoin Added to the Guinness Book of World Records

Bitcoin and trophy

Alongside quirky honours like ‘Tallest man ever’ and ‘Largest living cat’, Bitcoin (BTC) has now been immortalised in the Guinness World Records (previously known as The Guinness Book of Records). 

Guinness World Records has recognised several of the OG cryptocurrency’s most noteworthy achievements, including its status as the world’s oldest cryptocurrency and the most valuable cryptocurrency.

These entries, and a host of other crypto-related entries, were included in the 2023 edition of the annual compendium. Other notable new entries into the Guinness World Records recognised topical subjects such as TikTok and space travel.

Listing Reflects Crypto’s Relevance

In addition to the records mentioned above, the 2023 edition of the Guinness World Records includes quite a few other Bitcoin and crypto-related records. 

Some of the more notable entries include:

  • The most expensive NFT artwork went to an artist known as Beeple (real name Mike Winklemann) for his work ‘Everydays: The First 5000 Days’, which sold in March 2021 for a whopping US$63,346,250. 
  • The first country to adopt Bitcoin as legal tender is listed as El Salvador on September 7, 2021.

Other crypto-related entries appearing on the Guinness World Records website include:

  • Largest Bitcoin Fraud
  • First Commercial Bitcoin Transaction
  • First Bitcoin Transaction
  • First Minecraft Server With a Bitcoin Economy
  • First Country to Adopt Bitcoin as Legal Tender
  • Most Valuable Cryptocurrency
  • Oldest Cryptocurrency
  • First Cryptocurrency Exchange
  • First Blockchain
  • Largest Cryptocurrency Hack
  • First Decentralised Cryptocurrency
  • First Seizure of Cryptocurrency
  • First NFT
  • First Tradable NFT
  • Largest Cryptocurrency Winning Jackpot in an Online Poker Tournament
  • Most Expensive NFT Artwork (Limited Edition)
  • Most Expensive NFT Artwork (Open-Edition Auction)
  • Largest Seizure of Cryptocurrency
  • Most Valuable Sports Club NFT
  • Most Expensive NFT Collectible
  • First Ethereum NFT
  • Highest Floor price for an NFT Collection
  • Richest Crypto-billionaire (Current)
  • Highest Transaction Volume for an NFT Collectible Game
  • Most Expensive Tweet Sold at Auction

Speaking to Coin Telegraph, a representative from Guinness World Records explained the publication’s interest in crypto:

“[Guinness World Records] tries to reflect that year’s zeitgeist and the topics our readers are likely to be discussing…We will be watching this space with interest over the next few years, as the technologies that underpin crypto develop and find a wider range of applications.” 

Guinness World Records Spokesperson
Categories
Banking Crypto News DeFi Payments

Mastercard and Paxos Team up to Help Banks Offer Crypto Trading

Mastercard and Paxos

Mastercard announced Monday that it is extending its partnership with cryptocurrency trading platform Paxos to create a program to make it easier for banks and other financial institutions to offer crypto trading services to their customers.

The program, called Crypto Source, will see Mastercard act as a bridge between Paxos and banks, with Paxos providing cryptocurrency trading and custody services on behalf of the banks.

Partnership Aims to Increase Retail Confidence in Crypto

Mastercard said its role in Crypto Source is largely about creating a secure, trusted bridge between crypto markets and traditional banking. By providing this bridge Mastercard hopes to increase both banks’ adoption of crypto trading services and retail investors’ confidence and willingness to engage with crypto markets. Mastercard’s President of Cyber & Intelligence Ajay Bhalla explained:

“At Mastercard, trust is our business. What we are announcing today is a connected approach to services that will help bring users safely and securely into the crypto ecosystem. Our recent investments in this space, such as the acquisition of CipherTrace and Ekata, are providing us with a unique set of capabilities to help provide our customers and consumers with the most technically advanced solutions available in the market.” 

Ajay Bhalla, President, Cyber & Intelligence at Mastercard

Mastercard’s role centres around verifying transactions, ensuring security and regulatory compliance, and helping banks implement the technology into their existing systems. Mastercard said banks would also be able to offer additional functionality, such as digital receipts and loyalty programs, to augment the core functionality. 

Program Deepens Mastercard’s Links With Paxos

Paxos is a blockchain-focussed company perhaps best known for their gold-backed cryptocurrency PAX Gold (PAXG), which has worked with numerous large finance companies, including PayPal, on crypto-related projects. 

Last year, Mastercard worked with Paxos to enhance its payment card offerings, making it easier for its partners, such as banks and crypto exchanges, to convert cryptocurrencies into fiat currency.

Crypto Source builds on Mastercard’s pre-existing relationship with Paxos and deepens its involvement in crypto ecosystems. Speaking about the relationship, Mastercard’s Chief Digital Officer, Jorn Lambert said:

“We’re excited to build on our long-term partnership with Paxos – co-innovating to bring safe and secure technology to financial institutions. Our crypto product innovations will provide choice at scale and continue to bring one-of-a-kind opportunities to financial institutions as they seek to offer new, advanced services to their customers”

Jorn Lambert, Chief Digital Officer, Mastercard

According to Mastercard, Crypto Source is currently in a pre-pilot phase, the company has not yet announced a date for a broader rollout of the program.

Categories
Crypto Exchange Crypto Wallets Regulation Russia

Several Crypto Exchanges Close Russian Accounts Following EU Sanctions

cryptocurrency on a russian flag

A number of cryptocurrency exchanges, including Bitcoin.com, LocalBitcoins and Crypto.com, have reportedly opted to stop serving Russia-based customers following a raft of new sanctions enacted by the European Union against Russia on October 6th.

This news follows an earlier move by the blockchain-focussed developer Dapper Labs’ to ban Russian citizens from accessing its services. With numerous major exchanges set to follow suit, Russian residents’ access to crypto markets seems severely restricted.

New Sanctions Further Restrict Russian Access to Crypto

Previous sanctions had limited the value of crypto transfers between EU nations and Russia to €10,000, or approximately US$9,700. These new sanctions go much further, essentially banning the provision of crypto-asset wallet services to any person residing in Russia:

“Decision (CFSP) 2022/1909 removes the threshold for the existing prohibition on the provision of crypto-asset wallet, account or custody services to Russian persons and residents, thereby banning the provision of such services regardless of the total value of such crypto-assets…It shall be prohibited to provide crypto-asset wallet, account or custody services to Russian nationals or natural persons residing in Russia, or legal persons, entities or bodies established in Russia.” 

Offical Journal of the European Union, Volume 65

It’s unclear if this ban includes non-custodial wallets, such as those offered by Bitcoin.com and Crypto.com, or if it’s limited to custodial wallets held on exchanges and used by customers for trading.

Exchanges Set to Block Russian Customers Starting This Month

According to reports in the Russian media, Bitcoin.com gave Russia-based customers until October 27th to remove their assets from the exchange. After the deadline, Bitcoin.com will block customers from accessing their accounts.

Peer-to-peer crypto exchange, LocalBitcoins, blocked access to its services by Russian residents on October 7th, the day after the new sanctions were announced.

Many other exchanges will follow, with most major exchanges, including Binance and Coinbase, reportedly working towards complying with the new sanctions as quickly as possible. Having said that, it’s not currently known exactly when Russian access to most exchanges will end, as it could take some time to safely and effectively implement the restrictions.

Could Any Exchanges Defy The Sanctions?

It’s unclear whether any crypto exchanges intend to defy the new restrictions and continue offering services to Russian residents. 

Bitfinex has previously expressed opposition to EU sanctions against Russians. In March of this year, Bitfinex CTO Paulo Ardoino, expressed concern about cutting services to Russia, saying Bitfinex was prepared to safeguard customers’ access to their accounts unless ordered to do otherwise by regulatory agencies.

Categories
Bitcoin Crypto News Economics Market Analysis

Latest US Inflation Report Higher Than Expected – Bitcoin Swings 6%

Bitcoin with chart in the background

A higher than expected CPI figure from the US Department of Labor released on October 13 saw Bitcoin’s (BTC) price immediately plummet, before recovering to sit up 1.5 percent.

The inflation figure of 8.2 percent was higher than the 8.1 percent most market watchers had predicted, sending both crypto markets and traditional financial markets tumbling. 

According to data from CoinGecko, immediately following the news Bitcoin’s price dropped over three percent from just over US$19,000 to US$18,317. In the hours since the initial decline, both traditional and crypto markets rallied strongly. At the time of writing, Bitcoin was changing hands at US19,423.

Recovery Follows Traditional Markets

After the initial rapid fall, traditional markets closed the day up, with the Dow up 2.8 percent on the day and the S&P 500 up 2.6 percent. The popular view is that crypto markets reacted to what was going on in the traditional markets and tracked their behaviour.

Analysts aren’t entirely sure what caused the traditional markets to rally so strongly after the initial impact of the CPI announcement, but some say the high CPI figure was simply already priced in.

Core Inflation High, Markets Await November Rate Announcement

The core inflation figure, which came in at 6.6 percent, is perhaps even more worrying than the headline figure. Core inflation, which excludes food and energy prices, now sits at its highest level in forty years and suggests high inflation may be becoming a more permanent feature of the US economy. 

With such a high core inflation figure it’s now likely the US Federal Reserve will issue a large rate hike when they meet in November. 

Further evidence of a likely large rate increase comes from data on federal-fund futures trading from CME, which suggests a strong chance of an interest rate rise of 75 basis points, or 0.75 percent. 

Generally, rate hikes have been bad news for risk-on investments like cryptocurrency, so the next few months may be a tough time for the crypto markets.

Categories
Bored Ape Yacht Club Crypto News NFTs Regulation

SEC Investigates Bored Ape Creator Yuga Labs 

bored apes

Yuga Labs Inc., the company behind the wildly successful non-fungible token (NFT) collections Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) is being investigated by the US Security and Exchange Commission (SEC), according to a report from Bloomberg. 

Speaking to Bloomberg, an anonymous source claims that the SEC is looking into whether Yuga Labs’ NFTs should be regulated like stocks and should therefore comply with disclosure laws applicable to traditional securities. 

The SEC will apparently also be examining Yuga Labs’ governance and utility token, Ape Coin (APE), which has been distributed to holders of their NFTs.

Case to Clarify Status of NFTs

The main issue of law that the SEC is seeking to clarify in this case is whether or not NFTs should be regulated as securities. 

An earlier report from Bloomberg published in March of this year had previously revealed the regulator had started looking closely at the NFT market generally, so an investigation specifically into Yuga Labs, one of the most prominent market participants, is not entirely surprising.

Yuga Labs One of the Largest Players in NFT Space

Since launching in 2021, Yuga Labs has grown to become one of the largest and most successful players in the burgeoning NFT collectibles space. The company’s Bored Ape Yacht Club (BAYC) NFT collection, which depicts cartoonish apes, soared in value following their release, hitting a record sale price of a whopping US$3.4 million dollars in October of 2021.

To support Yuga Labs’ growing NFT ecosystem, the Ethereum-based Ape Coin governance token was released and distributed to NFT holders earlier this year through a separate body known as the Ape Foundation. Ape Coin was released by this foundation rather than by Yuga Labs due to regulatory concerns. 

Around 62 percent of Ape Coin was distributed to community members, with 15 percent going to NFT holders. A sizeable percentage also went to Yuga Labs and the founders of BAYC. 

At the time of writing, data from Coin Gecko showed Ape Coin was down around four percent on the news of the investigation.

Yuga Labs “Happy to Cooperate“

Yuga Labs claims it’s happy to cooperate with the SEC’s investigation and understands the regulator is keen to learn more about the booming crypto industry:

“It’s well-known that policymakers and regulators have sought to learn more about the novel world of Web3. We hope to partner with the rest of the industry and regulators to define and shape the burgeoning ecosystem. As a leader in the space, Yuga is committed to fully cooperating with any inquiries along the way.”

Yuga Labs Spokesperson, speaking to Bloomberg

The SEC hasn’t spoken publicly about this case, but based on other cases it’s clear the regulator believes virtually all crypto assets should be viewed as securities and adhere to relevant securities law. 

SEC Chair, Gary Gensler, has repeatedly stated that he believes many forms of crypto could pass the Howey Test — the standard under US law used to determine if an asset is a security, which centres around an investor pledging money to an enterprise with the intention of making profits from its efforts. 

Categories
Australia Crime Crypto.com Illegal

Melbourne Couple to Face Trial Over $10.4M Crypto.com Blunder

crypto.com

A Melbourne couple who spent most of a A$10.4 million refund they received in error from cryptocurrency exchange Crypto.com are set to face trial. An administrative mistake made by an employee in Bulgaria saw the couple receive the huge sum instead of what should have been a A$100 refund.

Jatinder Singh, 37, and his partner, Thevamanogari Manivel, 40, appeared in Melbourne Magistrate’s Court on October 11 to hear the charges against them. 

At the hearing, Singh pleaded not guilty to theft and dealing with property that is the suspected proceeds of crime while Manivel pleaded not guilty to negligently dealing with property that is the suspected proceeds of crime. 

Employee Blunder Turns $100 Into $10.4M

The error which led to the couple’s unintended windfall occurred on May 12, 2021 when a Crypto.com employee based in Bulgaria was processing a refund. Rather than entering the correct cash amount of A$100 in the ‘amount’ field, the employee inadvertently entered an account number. This simple mistake resulted in over A$10 million being deposited into Manivel’s Commonwealth Bank account.

Upon receiving the enormous payment, Singh claims he thought he had won a competition run by Crypto.com after supposedly receiving a notification from the Crypto.com app. However, Crypto.com claims there was no competition that involved a $10 million prize at the time, and even if there were, the company doesn’t notify winners of competitions through in-app notifications.

Couple Bought Up Big Time

After receiving the erroneous refund, the court was told Manivel bought four houses, numerous vehicles, furniture and art. The court was also told A$4 million was transferred to a bank account in Manivel’s home country of Malaysia.

Crypto.com was unaware of the mistake until it was revealed in an audit of the company’s finances in December 2021, around six months after it occurred.

Despite Attempt to Flee, Couple Couldn’t Escape the Fallout

Manivel was arrested in March of this year at Melbourne airport with a one-way ticket to Malaysia, in what prosecutors say was an attempt to flee the country.

Both Manivel and Singh have been committed to stand trial at a later date, Manivel was released on bail while Singh remains in custody awaiting trial.

Crypto.com is also pursuing civil action against the couple in an attempt to recover almost A$3 million dollars which is yet to be paid back.

Categories
Crypto News NFTs Real Estate Scams

Sydney Cafe Owner Aims to Turn Remote Island into Crypto City

The owner of a busy Sydney café, Denys Troyak, recently closed up shop, packed his bags and jetted off to help build what he hopes will become a crypto utopia in the Pacific island nation of Vanuatu. 

According to a report from the ABC, Mr Troyak is now running operations for the supposed crypto-paradise-in-the-making, a private city to be known as Satoshi Island. Named after the pseudonymous founder of Bitcoin, the island is touted as the place to be for crypto industry professionals and crypto-enthusiasts.

ABC’s report indicates supporters of the idea having already invested in plots of land on the island valued at between $900 and $11,000.

NFT-Based Land Deeds in Crypto-Centric Paradise

One of Satoshi Island’s key investor selling points is its promise to allow people to own land on the island and have their ownership represented in the form of non-fungible tokens (NFTs) rather than traditional paper deeds. 

The team behind Satoshi Island claim these NFTs can be bought and sold much more easily than traditional real estate, allowing investors to easily trade their NFTs on secondary markets if and when they decide they want to take profits.

In addition, Satoshi Island plans to release citizenship NFTs which will verify a holder’s right to live and work on the island and entitle them to additional perks such as access to airdrops and early mints. Notably, however, Satoshi Island isn’t a country in its own right: it’s a part of Vanuatu and these NFTs will not grant holders citizenship of Vanuatu.

Image source: Satoshi Island website

Haven’t We Seen This Before?

You may be thinking this all seems a bit far fetched, and indeed there have been several previous attempts to establish crypto-utopias on tropical islands that have failed for various reasons.

Perhaps because of the poor track record of these kind of projects, Satoshi Island has attracted its fair share of critics. One of the key concerns these critics have raised is that under Vanuatu law the NFT buyers can’t actually own the land they’re being sold. 

Speaking to the ABC, Mr Troyak himself said, “one cannot own land in Vanuatu…NFT holders have exclusive rights to the blocks of land on Satoshi Island” — how this squares with claims on the Satoshi Island website that investors can “own a real piece of the island” is not clear.

Image source: Satoshi Island website

Another issue facing the team behind Satoshi Island is that in January the Vanuatu Financial Services Commission (VFSC) issued a notice warning investors the project could be a scam. This notice has since been removed after Satoshi Island took legal action against the VFSC claiming it was harming their business. But doubts still remain and the Vanuatu Government continues to evaluate the project.

In related news, Boracay, an island off the west coast of The Phillipines has been labelled ‘Bitcoin Island’, on the back of growing support for crypto as a form of payment among local businesses driven largely by promotional activity by the crypto wallet app Pouch.

Categories
Binance BNB Crypto News DeFi Hackers

Binance Network Suffers $560 Million Code Exploit

hacker with phone with binance logo

An exploit of a bug in the Binance-run blockchain network, BNB Chain, allowed a hacker to ‘trick’ the BNB Chain’s BSC Token Hub bridge into sending them roughly US$560 million worth of BNB tokens. This incident renewed concerns involving the security of cross-chain bridges.

The Binance team responded by suspending activity made on the Binance blockchain, freezing a majority of the stolen assets. It’s estimated that the hacker made off with roughly US$100 million worth of assets on other chains.

Within a day of suspension, BNB Chain tweeted that the bridge was up and running again:

In the days following the hack, the price of BNB fell by 5-7%.

Source: CoinMarketCap

Investor funds safe, extra BNB created

BNB Chain is not the first cross-chain bridge to experience a major hack — around $US$625 million worth of WETH and USDC was drained from Ronin earlier in 2022, considered one of the biggest hacks in the history of crypto. 

As the BNB Chain hack was revealed, Binance CEO Changpeng ‘CZ’ Zhao quickly moved to reassure users, tweeting that funds were safe:

The ‘extra’ BNB were essentially created from nothing, through an exploit of the bridge’s code.

A detailed analysis tweeted by security expert @samczsun explains how the hack may have been carried out, summarising by saying, “there was a bug in the way that the Binance bridge verified proofs which could have allowed attackers to forge arbitrary messages.”  

Next Steps: On-Chain Governance Vote

BNB Chain has said governance votes will determine how to approach the next steps in relation to whether to freeze the hacked funds, whether to use BNB Auto-Burn to cover the remaining hacked funds, and how to deliver a Whitehat program to find future bugs and reward hackers with bounties.

The platform also committed to contributing to a broader conversation about the vulnerabilities in cross-chain bridges, stating:

“We will openly share the details of the postmortem and all lessons on how to implement more advanced security measures to shore-up these vulnerabilities.”

BNB Chain
Categories
Blockchain Crypto News Gaming Metaverse NFTs

Industry Giants Announce Big Moves into Blockchain Gaming

gamer with hands in the air

The world of blockchain gaming continues to boom, with prominent gaming industry figures, including Sega, Epic Games and PUBG creator Brian Greene, all announcing new blockchain-based projects within the past fortnight.

Blockchain games have generally been poorly received by seasoned gamers, as they’re often brimming with micro-transactions, gambling and/or NFT collectibles. Despite this, blockchain gaming has expanded rapidly over the past few years, growing over 2000% in 2021 alone.

The enthusiasm shown for blockchain projects from reputable industry figures in the past few weeks perhaps marks the start of a transition to higher quality and more positively received games. 

PUBG Jumps Into The Metaverse

The first big announcement came from PUBG creator, Brian Greene on September 28, when he announced his next project, known as Artemis, will be a blockchain-based metaverse game featuring NFTs. According to Greene, Artemis will be an open-world game that will allow players to make anything they can imagine.

In an interview with the HitPoints Substack, Greene was keen to point out the game will not be a cash grab, an accusation levelled at some other blockchain-based games:

“The only way this exists is if it’s made for everyone, and it’s not made for money.” 

Brian Green, PUBG Creator

However, Greene also says players will be able to make money in the game by selling their creations to other players. 

Greene is aware of the pushback against blockchain from the gaming community, but insists he’s committed to using the technology in Artemis, saying “I’m just going to do what I’m going to do…but it doesn’t matter if it’s called the metaverse. I don’t care what people want to call it.”

Epic Games Launches Playable Demo Of Solana-based Star Atlas

The next piece of news came from Epic Games, who released a playable demo of the Solana-based game Star Atlas. The demo, which is a pre-alpha release built using Epic’s Unreal Engine 5, allows players to explore a virtual 3D showroom and inspect ships and other vehicles which they’ve purchased as NFTs. 

Access to the Star Atlas demo is currently limited to holders of Star Atlas NFTs, although access codes will eventually be given to some select non-NFT owners. 

The developer of Star Atlas, ATMTA, says they’ll gradually add more features to the playable demo over the coming months, including the ability for players to take their ships out for a test flight. The date for the full release of Star Atlas hasn’t been specified, but it’s expected to still be several years away.

In addition to releasing the demo, ATMTA also released a developer toolkit designed to ease the development process for others looking to create Unreal Engine 5-powered games leveraging Solana.

Sega Announces Plans To Launch First Blockchain Game

Finally, gaming icon Sega, has announced it’ll be launching its first blockchain-based game in collaboration with developer Double Jump Tokyo. 

The game will be based on Sega’s Sangokushi Taisen arcade franchise and will leverage the Japanese Oasys network, which is designed specifically for blockchain gaming and integrates with Ethereum, Astar Network, and potentially other blockchains.

Sega and Double Jump Tokyo haven’t clarified exactly how blockchain will be incorporated into the game and haven’t specified a release date.