Author: José Oramas

José is a journalist and translator with a keen interest in blockchain and cryptocurrencies.

Categories
Australia Crypto News Institutions

ASX Highlights Risks of “Not Your Keys, Not Your Coins”

The Australian Securities Exchange (ASX) has issued a warning to Australians about the risk of leaving their crypto assets in a centralised exchange, stating that they should understand the risk associated with not holding their private keys.

According to a PDF submission to the Senate Select Committee on Financial and Regulatory Technology, crypto exchanges are a business just like any other and are subject to cyber-security attacks, so Aussies should weigh the risks of leaving their funds in exchanges.

In most cases, the custodian of the underlying digital assets is the exchange itself, and the user does not have access to their private key unless they choose to transfer their digital assets to an address away from the exchange and for which they directly manage the private key.

‘Not Your Keys, Not Your Coins’

The phrase “Not your keys, not your coins” is one of the many mantras of the crypto community. Relying on a custodian, usually a crypto exchange, entails a risk as these platforms are subject to various types of attacks. 

The ASX prompted the committee to consider and evaluate what regulations can be taken to address these concerns, besides disclosing the terms of custodial rights, capital technology, and operational management issues.

In saying this, we also note that crypto assets and crypto exchanges are subject to inconsistent, and in some cases minimal, regulation globally. Any measures such as those canvassed above would need to be considered in the context of the broader regulatory framework considered appropriate, in view of the nature and risks associated with these assets and activities.

ASX report

The ASX cited examples from last year, most of them hot wallet breaches. Several crypto exchanges were subject to these attacks, along with third party access, hacks, and more.

In September 2020, KuCoin experienced a hot wallet breach, losing over US$275 million. The attacker managed to steal several funds including BSV, ETH, BTC and USDT. KuCoin CEO Johnny Lyu said that most funds were recovered, though this hasn’t been verified. 

ASX Stockbrokers Prepare for the New Trading Platform

The warning comes shortly after news that stockbrokers were spending millions to adapt to the ASX trading platform upgrade.

The new ASX platform, which is expected to go live by mid-2022, uses blockchain technology to register and control financial transactions. Yet it seems that traders are bearing the high costs associated with the upgrade when they try to interact with the platform.

However, a spokesman told the Australian Financial Review newspaper that this was a change that people had requested, and costs were subject to the manner in which they connected to the platform.

Categories
Crypto News Cryptocurrencies Institutions Investing

Survey Shows 70% of Institutional Investors Plan to Buy Crypto in Near Term

A recent survey by Fidelity Digital Assets, a multinational financial services corporation, has revealed that 70 percent of institutional investors are interested in buying cryptocurrencies.

Vast Majority Will Own Crypto by 2026

According to the survey, seven out of 10 respondents plan to buy digital assets in the near future and 96 percent of them aim to do so by 2026.

The survey ranged across investment banks, hedge funds, endowments, family offices, and financial advisers. It’s worth noting that Fidelity is one of the first traditional financial services that embraced cryptocurrencies. 

The message is clear – institutional adoption is growing, at least according to Fidelity’s last year survey. In 2020, the company found that only 36 percent of institutional investors would dare to invest in digital assets, and only 27 percent of US-based institutions had invested in Bitcoin and Ethereum.

Covid-19 Outbreak Was the “Catalyst for Investors”

Tom Jessop, president of Fidelity, said the pandemic was the catalyst for many institutional investors to look out for alternative assets while the traditional market was collapsing. 

The pandemic – and fiscal and monetary measures in response to it – has been a catalyst for many institutional investors to define their investment thesis and operationalise it.

Tom Jessop, president, Fidelity Digital Assets

A total of 1,100 institutional investors from across Asia, Europe and the US were surveyed. Interestingly, it appears that Asian investors had more exposure to the crypto market compared to North American and European institutions.

Yet some institutions remained sceptical, expressing fear of market manipulation and high volatility.

Corporate Crypto Conversion

As more institutions explore crypto and blockchain technology, it seems natural that clients would want insightful knowledge about the crypto market. According to a recent report, 26 percent of financial advisers would recommend cryptocurrencies to their clients in the next year.

Australians are leading the way when it comes to adoption. Earlier this year, Crypto News Australia reported that more than 5 million Aussies will own crypto by the end of 2021.

Additionally, 40 percent of millennials and 31 percent of Gen Zs favour digital assets over real estate, and the average Aussie crypto investor has 12.5 percent of total assets in crypto.

Categories
Australia Blockchain Crypto News

ASX Brokers Are Spending Millions to Adapt to the New Blockchain-Based Upgrade

It seems stockbrokers are having a rough time adapting to the high cost of the new upgrade to the Australian Securities Exchange’s (ASX) broker platform, CHESS (Clearing House Electronic Subregister System).

During a Senate economic committee hearing, Judith Fox, CEO of the Stockbrokers and Financial Advisers Association (SAFAA), said the implementation of blockchain technology had resulted in elevated costs for the group’s members as they try to adapt to the new trading platform.

Many of our members are spending millions of dollars in order to be able to interact with the new distributed ledger technology [DLT] that the ASX is implementing.

Judith Fox, CEO, SAFAA

The ASX, which regulates Australia’s A$2.5 trillion sharemarket, partnered with Digital Asset in 2016 to develop a prototype based on blockchain technology.  The new system runs on the VMWare blockchain and uses the DAML smart contract language.

The project has been delayed on various occasions to allow participants and regulators to adapt to the volatility of trading early in the coronavirus pandemic, but it should be fully live in April 2023.

Higher Cost of Messaging

The platform creates a “single source of truth” through blockchain technology. In the previous version of the ASX, messages were sent back and forth creating multiple records of ownership.

Now, brokers who use the messaging function may have to pay higher costs associated with the ASX’s upgrade, depending on how they use it. “This was a change that people requested,” a spokesman told the Australian Financial Review newspaper.

This will be primarily due to the manner in which they connect, the features they wish to use, or their need to integrate the new system into their downstream environments. Customers have choice about how they wish to interact with the new CHESS system. The choices they make will determine the costs.

ASX spokesperson

Categories
Australia Bitcoin Crypto News

“Bitcoin Will Go to Zero,” Claims Australian $113 Billion Fund Manager

Australian fund manager Hamish Douglass is not so keen on Bitcoin and the crypto market. He says investors are exposed to its high volatility and uncertainty, and most crypto enthusiasts are simply believing an “illusion” that will ultimately end up at zero.

Douglass, chairman and chief investment officer of the US$113 billion fund manager Magellan Finance, believes cryptocurrencies will have a broader role within investors’ portfolios, but they will “either be asset-backed or they will be central government-backed. So maybe there is some truth in gold coin after all.”

I predict all these forms of cryptocurrencies that are not backed by central banks or backed by assets will ultimately go to zero. I can’t tell you when it will happen, but it’s inevitable that it will go to zero.

Hamish Douglass

Bitcoin Will Bottom Out, Again

Douglass’s comments, as reported in The Australian newspaper, sound like another headline that would prompt FUD in the market once again, like those from other investment banks and hedge fund managers who claim bitcoin and the crypto market are worthless in the long run.

Financial institutions have changed their tunes over time

Yet there are investors and fund managers who have highlighted the benefits of cryptocurrencies, especially in times of financial crisis such as 2020’s Covid-19 outbreak. A week ago, Crypto News Australia reported that New Zealand’s KiwiSaver fund purchased BTC when it was trading at around US$10,000 in October 2020, achieving substantial gains on its holding despite the market correction after BTC hit its all-time high of A$79,800 in April 2021. 

On the other hand, Douglass’s portfolio didn’t do so well during November/December 2020 as most of its equity assets were going downhill. He says he doesn’t regret it, and while the crypto market flourished during those months and institutional capital came in, he reaffirms that investors should go to “sleep at night not worrying that if something blows up, so will our portfolio”.

Am I worried that we have this defensive side? No. I could’ve done a bit better in September and October and could’ve weighted the portfolio to some more cyclicals and put a bit more risk on.

Hamish Douglass

“I Regret Not Buying Enough Bitcoin”

In contrast to Douglass, there is a hedge fund manager who did regret not buying enough bitcoin in recent years and it’s Avenue CEO Marc Lasry, also co-owner of the NBA’s Milwaukee Bucks. “As more people keep using BTC, it’s going to keep moving up,” Lasry said in June. “It just happened a little bit quicker than I thought it would.”

Categories
CBDCs China Crypto News

It’s Official – Chinese CBDC Will Be Controlled by Smart Contracts

The People’s Bank of China (PBoC) has issued a whitepaper outlining the progress of China’s CBDC, formally called e-CNY. The document, released on July 16, reveals the e-CNY uses smart contracts programmability as part of one of its seven major features.

E-CNY obtains programmability from deploying smart contracts that don’t impair its monetary functions. Under the premise of security and compliance, this feature enables self-executing payments according to the predefined conditions or terms agreed between two sides, so as to facilitate business model innovations.

PBoC whitepaper

Implications of “Programmable Money”

This is the first time that the PBoC has clarified the use of smart contracts. But two researchers of the PBoC’s digital currency research lab have stated contrary opinions on the programmability layer of the e-CNY.

Mu Changchun, head of the research lab, and Fan Yifei, vice governor of the central bank, said the digital yuan could support smart contracts to boost its performance as a currency, but beyond a currency, smart contracts could “undermine the renminbi by adding extra social or administrative functions”.

The Chinese View of Smart Contracts

The PBoC believes in “state-led innovation” and that the issuance of a digital currency such as the e-CNY belongs to the state. The currency is a centralised, two-tier system that uses distributed technology.

The right to issue e-CNY belongs to the state. The PBoC lies at the centre of the e-CNY operational system. It issues e-CNY to authorised operators which are commercial banks, and manages e-CNY through its whole life cycle. Meanwhile, it is the authorised operators and other commercial institutions that exchange and circulate e-CNY to the public.

PBoC whitepaper

Moreover, the report didn’t fail to criticise cryptocurrencies and the rise of altcoins, saying the intrinsic volatility of crypto represents a huge risk to the stability of society and financial security.

Cryptocurrencies such as bitcoin are claimed to be decentralised and entirely anonymous. However, given their lack of intrinsic value, acute price fluctuations, low trading efficiencies and huge energy consumption, they can hardly serve as currencies used in daily economic activities. In addition, cryptocurrencies are mostly speculative instruments, and therefore pose potential risks to financial security and social stability.

PBoC whitepaper

CBDC Research, Development and Trials

In 2017, the same year the crypto market began one of its rallies, the PBoC created a task force to study and research the use cases and properties of a CBDC, while also seeking advice from several international organisations.

Since then, the Chinese government has carried out several domestic trials. In June, authorities in Xiong’an, a region southwest of Beijing, announced that salaries of residents would be paid in digital yuan.

The e-CNY has been put to the test in multiple Chinese locations through 20 million retail e-CNY wallets. As of June 30, the number of transactions exceeded 70 million, totalling 34.5 billion yuan (US$5.3 billion).

Meanwhile, as Crypto News Australia reported earlier this month, the Reserve Bank of Australia has also been conducting research on implementing a CBDC.

Categories
Crypto News DeFi Scams

Bondly Token Crashes 90% in Potential DeFi Rug Pull

Bondly Finance, a decentralised NFT platform, has suffered an alleged exploit from an unknown attacker.

The project claims that an “unknown party” minted 373 million $BONDLY tokens and sold them in the trading pools, causing a price drop of 90 percent in the following hours.

While the Bondly Finance team claims they were hacked and highlighted it on Twitter and Telegram, some in the crypto community are not fully convinced.

PeckShield, a blockchain security and data analytics company, said that only the owner could perform the minting, which suggests that developers were behind the attack.

According to Xuxian Jiang, founder of PeckShield, the owner pulled the trigger in transferring out 373 million tokens to sell through various exchanges. The attacker’s address used several decentralised exchanges to move the funds, which were worth about US$7.5 million at press time. 

Yet Another Exit Scam

Scams, exploitations and rug pulls (properly called exit scams) are becoming increasingly common in the DeFi space.

As Crypto News Australia reported in March, TurtleDex – a so-called DeFi storage platform – rug-pulled its investors by draining US$2.5 million in Binance Coin (BNB) from trading pools in the Binance Smart Chain (BSC). This exit scam, along with the Meerkat Finance example in the same month, caused a lot of controversy in the DeFi community, prompting other scammers to follow suit.

Earlier this month, the WhaleFarm token dropped almost 100 percent after developers drained liquidity pools filled with several coins, stealing over US$2.3 million.

Traders should be cautious when investing in a DeFi protocol and look for several red flags, such as exaggerated yield returns, a whitepaper that looks more like marketing instead of offering a solution to a problem, and anonymous developers.

Categories
Australia Bitcoin Cash Crypto Debit Cards Crypto News Ethereum Payments Ripple

First Aussie VISA Crypto Debit Card Officially Approved

Visa has approved the issuance of physical crypto debit cards to allow Australians to pay for goods at local stores and venues without having to exchange crypto to fiat, but using bitcoin (BTC) and other assets directly.

There are various companies working together to bring the first crypto spending card to Australians. Aussie software technology firm Novatti Group is in charge of the card issuance while New York-licensed custodian BitGo will safeguard the assets.

Transactions will be made through CryptoSpend, an Australian startup that called the attention of the payment giant and approved the project after reviewing the startup’s compliance with anti-money laundering regulations. 

Co-founder of CryptoSpend, Richard Voice, says the number of Aussie users who want to use crypto in their local stores is increasing every day.

We have customers that range from 18-year-old students to 70-year-old grandmothers. [This] further emphasises the growing appetite for people of all ages to use crypto as an everyday currency.

Richard Voice, CryptoSpend

First BTC Spending Card in Australia

There are several crypto debit cards for Aussies, but their use is restricted and no Australian payment application is in charge of their issuance.

Visa has already approved debit cards issuance for various crypto-exchanges worldwide, but they are not yet available in Australia. This card, which is slated to arrive in September, is the first to allow Aussies to use cryptoassets on an Australian payments card.

Australian customers can download the app via AppStore or Google Play and fund their portfolio with other assets besides bitcoin, including ethereum (ETH), ripple (XRP), and Bitcoin Cash (BCH).

In February, the number of users on the Visa network increased exponentially as they were using crypto cards to convert crypto to fiat to spend it on merchants worldwide. The payment giant said this trend was “unmistakable”.

For the tens of millions of people using those platforms, one of the simplest ways to spend crypto is through a Visa card. We’re seeing digital wallets and crypto platforms build payment products entirely with digital currency.

Visa spokesperson
Categories
Australia Binance Australia Crypto News

Binance Australia’s Growth Continues Through Q2 2021

The first months of 2021 were a success for most global crypto exchanges as cryptocurrencies entered the mainstream. Many Aussie exchanges were recording massive inflows of users, deposits, and hitting record trading volumes.

Such was the case for Binance Australia – by far the leading exchange in the country – which now reports massive growth in Q2 2021.

Binance AUS Breaking Records in Q2

Binance Australia is still reporting record growth following a successful first quarter. On June 1, the exchange achieved an all-time high of A$615 million in trading volume in a single day.

Here’s a breakdown of some of Binance Australia’s other notable achievements in Q2 2021:

  • Apr 14 –  hits then all-time high of A$190 million in 24-hour trading volume
  • Apr 22 – Binance Charity Foundation launches the Tree Token
  • Apr 23 – hits new all-time high of over A$280 million in daily trading volume
  • May 19 – hits another all-time high with the A$600 million trading volume
  • June 10 – Binance Australia hosts a panel discussion about NFTs with some of the top NFT creators in Australia: Lil Bubble, James Newbury, Mathew ‘Sekure D’ Fabris, Bianca Beers and Demas Rusli

Media Presence, Customer Connection and Local Events

As the local crypto community keeps growing, Binance Australia has established a media presence hosting local events to link with the community. Its constant connection with customers has reinforced its position as the leading exchange in the country, besides offering educational content for anyone keen to learn about the space.

The exchange has supported charity, organised local events, and explored the current market for NFTs (Non-Fungible Tokens). On June 17, the exchange hosted a panel with various artists and content creators to discuss the opportunities for NFTs in Australia.

There are more projects to come this year as the exchange keeps hitting new records with trading volumes and AUD deposits. To learn how to deposit AUD into Binance Australia, check this Crypto News Australia guide for everything you need to know.

Categories
Australia Crypto News

7 Aussie Universities to Research Digital Finance After $181 Million in Grants

The Australian federal government has granted A$60 million to fund a new program called Digital Finance Co-operative Research Centre (DFCRC), which will focus on the digital finance sector and the latest financial technologies.

The project, which expects to partner with industry leaders worldwide, has garnered the attention of local industry partners who injected an additional $121 million – totalling A$181 million.

These partners include the Reserve Bank of Australia, National Australia Bank, Macquarie Bank, Origin Energy, the National Stock Exchange of Australia, and Digital Asset (partly owned by the ASX).

Whether it’s through the creation of dynamic registers enabling the instant exchange of assets and commodities, or the use of artificial intelligence technologies to improve regulation and compliance, the benefits could amount to billions of dollars in both efficiencies and new business opportunities each year.

Christian Porter, Minister for Industry, Science and Technology

Seven universities – Macquarie, UTS, RMIT, LaTrobe, Wollongong, UWA and Curtin – are participating in the project to undertake the necessary long-term research to help make Australia a global leader in digital finance.

Universities will explore the decentralised finance space and potential use of blockchain technology, as well as investigating a suitable regulatory framework to facilitate digital assets trading. On the other hand, industry partners will focus on:

  • the mining sector and the tokenisation of commodities and precious metals
  • the property industry
  • banks and the development of CBDCs (Central Bank Digital Currencies)

Supporting Australia’s Digital Finance Development

The Australian government has been a strong supporter of the development of studies and research in fintech and finance technology. In 1991 it founded the Co-operative Research Centre (CRC), providing it with over A$5.2 billion in grants. The consortium works with professionals in fintech, industry, research and regulatory fields.

Minister for Industry, Science and Technology Christian Porter says the funding will ensure the research program has all the necessary tools to become a leader in the fintech field, providing education and training to equip the required high-skilled workforce.

On March 14, the government allocated A$6.9 million to two blockchain pilot programs as part of the Australia Blockchain Roadmap, a 52-page document that outlines how to progress to a blockchain-powered future for the country and turn it into a global fintech hub.

Another government program, the Blockchain Pilot Grants, has invested in two projects to help overcome regulatory hurdles: Queensland-based tech company Everledger, which received A$3 million, and Convergence.Tech, over A$2.6 million.

Categories
Australia Blockchain Crypto News Ethereum Solana

Australia’s Power Ledger Ditches Ethereum for Solana Blockchain

Australian renewable energy trading platform Power Ledger has announced its migration from Ethereum to Solana, favouring the latter’s higher throughput and speed. 

Power Ledger will migrate its Powerledger Energy Blockchain to Solana, benefiting from its PoH (Proof of History) consensus, allowing greater scalability and better overall performance than the traditional Proof of Work mechanism.

The Power Ledger technology stack was originally built on a low-power POS consortium chain called EcoChain in 2016 before transitioning to a modified fee-less Proof-of-Authority Ethereum consortium chain in 2017. That served its purpose in the short term but the limitations of this solution were always very apparent, including low transactions per minute.

John Bulich, co-founder, Power Ledger

However, the company isn’t terminating its relationship with Ethereum. The platform is moving its blockchain to Solana and staking will happen there, but POWR (Power Ledger’s utility token) will continue to use the ERC20 standard.

POS will occur on our Powerledger Energy Blockchain but will be linked to our existing POWR (ERC20) token, which remains on Ethereum mainnet, with both the stake and rewards convertible and payable in existing POWR tokens.

John Bulich

Solana is Gaining Traction in the DeFi Market

Solana’s high throughput, speed, and innovative technology have caught the attention of the DeFi market, putting pressure on Ethereum to meet investors’ demand for higher scalability and speed as adoption increased.

As reported last month, Solana received a funding injection of US$300-450 million to challenge Ethereum. Meanwhile, Ethereum developers are working in ETH 2.0 in a major protocol upgrade that will improve transaction time, scalability, and shift from Proof of Work to Proof of Stake.

Solana on the other hand has Proof of History – a consensus mechanism introduced by CEO Anatoly Yakovenko as an alternative to Proof of Stake and Proof of Work. PoH can be defined as a cryptographic clock that puts a timestamp on every transaction to prove it occurred on the network within a given period.

Last year, Power Ledger successfully completed a trial with US wholesale electricity provider American PowerNet.