Category: Bitcoin

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Russia Central Bank Moves to Ban Investment in Crypto

According to a report by Reuters, the Central Bank of the Russian Federation (CBR) is looking to ban crypto investments. In a directive issued earlier this week, the bank has also barred mutual funds from investing in digital currency.

Russia Rebels Against Crypto

The Russian Federation, which has long argued against cryptos – citing concerns of risks to financial stability, money laundering, and possible financial terrorism – has yet again spoken its mind.

After issuing concerns over the security implications associated with cryptos, the federation eventually gave them legal status in 2020 but banned their use as a means of payment. Following this, the central bank is now in talks with market players and experts regarding a possible overall ban on cryptos.

Should a ban be approved by lawmakers, it would apply to new purchases of crypto assets but not those made in the past. Russia’s current stance amounts to a “complete rejection” of all cryptos, a source close to the bank has said.

According to the bank, the annual volume of crypto transactions conducted by Russians amounts to about US$5 billion, with CBR first deputy governor Ksenia Yudaeva claiming the use of cryptos lowered the efficiency of monetary policy. According to Yudaeva, “The situation in developed market countries more and more resembles the so-called shadow financial system.”

CBR Seeks to Ban Mutual Funds from Investing in Crypto

Adding to the bad news for investors, Russia has issued a directive that prohibits Russian mutual funds from directly or indirectly investing in crypto assets.

According to the CBR, funds cannot invest in digital currencies or in “financial instruments, the value of which depends on the price of digital currencies”. The proposal issued by the CBR, in line with its hard stance on decentralised digital money, comes after the regulator urged stock exchanges to avoid trading securities tied to cryptocurrencies in July 2021.

Despite its firm stance against cryptos, Russia is currently working on a Ruble-backed central bank digital currency (CBDC). A pilot program was set for launch this month, but the deadline has been moved with a prototype expected to be created in “early 2022”.

Hacking a Cause of Concern for Russia

Hacking has become a hot topic in the crypto world as the incidence continues to rise. Of particular concern is the involvement of Russian-based hackers. In October, Google’s Threat Analysis Group (TAG) spent a good deal of time fending off hackers attacking the accounts of YouTubers to hijack and repurpose them to run ads for crypto scams. TAG had found that the perpetrators of the campaign were recruiting hackers from a “Russian-speaking forum”.

Last month, the US Department of Justice announced charges against a REvil ransomware affiliate responsible for the hack against the Kaseya MSP platform in which ransom demands totalled US$767 million. Law enforcement has also impounded an additional US$6.1 million from another REvil ransomware affiliate, Russian national Yevgeniy Polyanin, who remains at large.

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Banking Bitcoin Crypto News Cryptocurrencies

Bank of England Says BTC ‘May Be Worthless’, But Pound Down 98% Against BTC in 5 Years

The Bank of England (BOE) is well-known for its hawkish stance towards Bitcoin, so it should come as no surprise that its deputy governor, Sir Jon Cunliffe, has now claimed that Bitcoin “could theoretically or practically drop to zero”.

The facts however, suggest otherwise.

Pound Sterling priced in BTC. Source: TradingView

Danger to the Established Financial System

Cunliffe told the BBC that Bitcoin poses a threat to the stability of the financial system. With 2.3 million digital asset owners in the UK and with cryptocurrencies representing just over 0.1 percent of total household net asset value, he recognised that the risk at present was not terribly significant. He remains, however, concerned due to its volatility.

Their price can vary quite considerably and they could theoretically or practically drop to zero … the point, I think, at which one worries is when it becomes integrated into the financial system, when a big price correction could really affect other markets and affect established financial market players.

Sir Jon Cunliffe, deputy governor, Bank of England

The deputy governor also felt that at present the standards and regulations relating to crypto were “not there yet”:

We really need to roll our sleeves up and get on with it, so that by the time this becomes a much bigger issue, we’ve actually got the regulatory framework to contain the risks.

Sir Jon Cunliffe, deputy governor, Bank of England

Inflation More Dangerous?

On the same day as Cunliffe’s comments, in a blogpost published by the BOE the bank offered an unusual criticism of Bitcoin’s scarcity saying “its scarcity may even, ultimately, render Bitcoin worthless”. The mechanics of how that would play out remain somewhat of a mystery.

It went on to say: “Now, so far, Bitcoin has not performed [as] well as money. Quick recap: money issued by central banks, fiat money, acts as a ‘store of value’ – it preserves the spending power of income and wealth, so that you can be confident that a pound, say, will buy about as much in a year’s time as it would today.”

Ironically, the timing of these comments could not have been less opportune as the UK has just recorded its highest inflation in 10 years.

Worse still is the fact that, relative to Bitcoin, the Pound Sterling is down 60.89 percent over the past year and 98.31 percent over the past five years.

Fiat currency performance in BTC. Source: Priceinbitcoin

Despite being largely antagonistic towards crypto, the BOE is in the process of investigating a digital pound, dubbed “Britcoin”.

Fiat Currencies Inherently Inflationary

While potentially offering some benefits, the “Britcoin” is unlikely to overcome the fundamental problem with fiat currencies – that they are inflationary by nature, with unpredictable monetary policy and controlled by central authorities with a proclivity to increasing its supply, which naturally and ultimately leads to debasement.

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Bitcoin Crypto News Insurance

$2.5 Billion Insurance Firm Lemonade Adds $1 Million in BTC to its Balance Sheet

With US inflation up 6.8 percent over the past year, leading insurance company Lemonade has purchased a million dollars’ worth of bitcoin to help offset further erosion of its balance sheet.

It’s a move that could well prove a precedent for other large American businesses yet to invest in digital assets.

Lemonade, holding US$2.5 billion in assets, reported the purchase in an S-4 form that US publicly traded companies file with the Securities and Exchange Commission. “The company has ownership of and control over the purchased bitcoin asset and uses third-party custodial services to secure it,” Lemonade said in its accompanying statement. “The digital assets are initially recorded at cost and are subsequently remeasured on the consolidated balance sheets at cost, net of any impairment losses incurred since acquisition.”

Crypto Investment Catching On Among Large Non-Crypto Concerns

Lemonade’s move into crypto suggests that investing in cryptocurrencies is gaining popularity among businesses aiming to join the trend started by large companies such as Tesla and Latin American e-commerce giant MercadoLibre, which in Q1 2021 purchased US$7.8 million in bitcoin.

All three companies have a way to go to challenge the king of bitcoin balance sheets, MicroStrategy. The 25-year-old business intelligence, mobile software and cloud-based services company co-founded by Michael Saylor now holds a total of 122,478 BTC on its balance sheet at the remarkably low average entry price of US$29,861.

Although MicroStrategy owns less than 1 percent of total bitcoin supply, it has the highest BTC holdings of any public company. Chances are it will soon have a raft of challengers.

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Bitcoin Crypto News

90% of BTC’s Supply Has Been Mined, 119 Years Left to Mine Remaining 10%

Bitcoin has reached a historic milestone, with 90 percent of the entire 21 million hard cap supply already issued. It took 12 years to mine the first 90 percent and it is estimated that the following five percent will take another four years. Remarkably, the last five percent will take north of 100 years to be issued.

Bitcoin issuance and inflation. Source: Glassnode

Growing Scarcity

As of the morning of December 13, Bitcoin’s scarcity was highlighted as it eclipsed the 90 percent issuance rate at block 714,000, with 18,899,910.25 Bitcoin mined.

Its scarcity is further amplified considering a 2020 report by Glassnode which established that around 78 percent of Bitcoin was held by illiquid entities – HODLers who have no intention of selling it.

This appears to have continued into 2021, at least according to an October report, also by Glassnode, which found that 70 percent of supply hadn’t moved in five months. Other factors that serve to further entrench Bitcoin’s scarcity in the long run include growing institutional and retail adoption, as well as increased levels of HODLing by miners.

21 Million or Less?

Despite 90 percent of Bitcoin being mined, it is well-known that a material amount has been lost, stolen, or sits in otherwise unrecoverable wallets. Estimates vary, but on all accounts the numbers are significant.

A 2019 report found that at least 1.5 million bitcoins were assumed to be lost or stolen. A 2021 Chainalysis report found that as many as four million bitcoins were owned by accounts that couldn’t access them.

Others, such as this Reddit user, suggest that 3-5 million bitcoins are lost, stolen or otherwise inaccessible:

Estimates of 3-5 million [bitcoin] are out there. You can see onchain metrics showing how much bitcoin hasn’t moved [in the] last decade but that would be the highest possible, and there are some that just haven’t moved even though they possess the keys. I believe it’s around 3 [million], but we will very likely never know and it will continue to slightly go up. We also have a delay factor in the data because people within 10 years may have lost as well. It’s just assumed [for the] first couple of years [the] biggest losses occurred, so we key in on that data.

Fickle_Mix_3847, Reddit user

Whatever the true amount, one thing is for certain, as Satoshi himself said: “Lost coins only make everyone else’s coins worth slightly more. Think of it as a donation to everyone.”

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Australia Banking Bitcoin Crypto News Cryptocurrencies Dogecoin Ethereum NFTs

Survey Finds Most Australians Still Have No Idea About Crypto or NFTs

Contrary to findings published last week by the Independent Reserve Cryptocurrency Index (IRCI), a new Saxo Markets survey reveals only one in 10 Australians knows what a cryptocurrency is, with those older than 65 even less certain.

There is also a divide between the sexes, according to the Saxo survey. Around 21 percent of Australian men claim to have a handle on what cryptocurrencies are and how they work, compared to just seven percent of women.

These findings stand in stark contrast to the IRCI survey, which found that:

  • 28.8 percent (or almost three in 10) of Australians either own or have owned crypto (up from 18.4 percent in 2020); and
  • the proportion of women who own crypto has almost doubled in 12 months from 10.1 percent in 2020 to 20 percent.

The Saxo poll found that bitcoin was easily the best-known crypto, albeit with an underwhelming 38 percent of Australians surveyed recognising the name. The next most familiar cryptocurrencies were Ethereum, ringing a bell for 12 per cent of Australians surveyed, and Dogecoin next on 8 per cent.

By comparison, the IRCI survey found that nine in 10 Australians were aware of bitcoin with more than one in five owning it. The next-ranked crypto was Ethereum, at 11 percent (up from 5 percent ownership in 2020), on a relative par with the Saxo survey.

Three in Four Australians ‘Unaware’ of NFTs

Perhaps the most surprising Saxo statistic was that 75 per cent of Australians apparently have not even heard of non-fungible tokens (NFTs), though they’ve been by far the hottest blockchain commodity in 2021. Below is a table relating to Saxo’s findings:

As Australian Crypto Owners Push Toward a Million, a CBDC is On the Way

Last week, Australian Federal Treasurer Josh Frydenberg estimated that more than 800,000 Australians have owned cryptocurrency at least once. Crypto was a “fast-moving area” that the government needed to get ahead of, Frydenberg said, while also declaring both the Commonwealth and Reserve banks were planning to introduce a central cryptocurrency.

The Saxo survey found that 42 per cent of Australians would use a cryptocurrency if it were made legal tender tomorrow, but only one in four agreed that cryptos should be declared legal by the government. If cryptos were in legal circulation, one in three Aussies said they would incorporate them in their savings or retirement plans.

In August, the 2021 Global Blockchain Survey conducted by multinational accounting firm Deloitte revealed that 76 percent of respondents believed crypto would be a strong alternative to, or outright replace, fiat money within the next decade.

According to a May survey by TradingView, cryptocurrencies had by then become Australians’ second-most preferred assets, outranking traditional assets such as bonds and futures. Just a month later, another survey by international crypto exchange Kraken found that 40 percent of millennials preferred investing in digital assets over real estate.

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Bitcoin Markets

Bitcoin Rises Amid US’s Highest CPI Inflation in 39 Years

For much of 2021, the Federal Reserve claimed that inflation was “transitory”, linked to pandemic-related supply chain bottlenecks. But since it finally admitted that inflation is here to stay, things have gone from bad to worse, as the latest consumer price index (CPI) shows inflation running red hot, its highest level in 39 years. Bitcoin shot up on the news.

Bitcoin price action. Source: Trading View

Energy Costs Soar

On Friday, December 10, the US Bureau of Labor Statistics published CPI data for the 12 months ending November, measuring 6.8 percent, the largest 12-month increase since the period ending June 1982.

November CPI print showing 6.8%. Source: US Bureau of Labor Statistics

Energy proved to be one of the main contributors to the dramatic increase with costs rising by close to 60 percent. That, coupled with soaring house prices and increased food costs (6.1 percent), has left many US consumers under increased financial pressure, a phenomenon unlikely to change in the near-term. Given that the recent increase is 0.6 percent higher than October’s CPI numbers, some commentators have warned that December is likely to be even worse.

Bitcoin, the Inflation Hedge

Despite rising above US$50,000 upon news of the latest CPI data, Bitcoin has since pulled back, and at the time of publication is trading at US$46,997.

As Michael Saylor continues his mission to “orange pill” the corporate establishment, one of his most recent successes appears to be Tucker Carlson of Fox News. Reacting to the latest inflation news, Saylor posted a clip of Carlson which encapsulates Bitcoin’s “why”.

When people say that Bitcoin is an inflation hedge, critics are often quick to point to short-term volatility as evidence to the contrary. The reality is that in the short term, Bitcoin often acts as a “risk-on” asset, like equities. However, over the long run, it is “risk-off” (like gold) and best considered as default insurance on a basket of fiat currencies. Argentinians certainly hold this view, given that recent inflation has exceeded 50 percent.

As President Joe Biden raised the US’s debt ceiling once again on December 11, the sentiment among many Bitcoiners was inevitable, summed up in Kenny Florian’s take:

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Bitcoin Bitcoin BSV Crypto News Cryptocurrency Law

Self-Proclaimed ‘Satoshi’ Craig Wright Cleared of Charges, But Liable for $100 Million

A US federal jury has found that Australian businessman Craig Wright – who not only credits himself as the inventor of Bitcoin but also claims to be Satoshi Nakamoto, its pseudonymous creator – owes US$100 million in compensatory damages to a company founded by his former friend and associate, the late Dave Kleiman.

Wright testified that Kleiman had helped him edit a white paper that explained the foundation of Bitcoin, but he insisted the two weren’t business partners. Kleiman died in 2013, and his brother Ira brought the federal civil lawsuit on behalf of Kleiman’s estate and the company he founded, W&K Info Defense Research.

“I feel remarkably happy and vindicated,” Wright said after the verdict was announced. “I am not a fraud, and I never have been.” He added that he had offered Kleiman’s estate “US$12 million many years ago, which if [they] had taken then in bitcoin, when it was $200, and kept it – you can do the math”.

Asked to comment specifically on the verdict against W&K, Wright said it means that “I owe my ex-wife more money” – referring to the fact that Ira Kleiman’s control of W&K is being challenged in a county court. Both Wright’s ex-wife and current wife claim to control a third of W&K and are suing Ira Kleiman, alleging he didn’t have authority to bring the federal suit. Those cases have been on hold pending the outcome of the federal suit.

Case Sets Historical Crypto Precedent

Vel Freedman, representing the plaintiffs, also approved of the verdict: “We just won $100 million!” Though a long way short of what he’d sought – up to $36 billion for the value of bitcoin in dispute, $126 billion for intellectual property and $17 billion in punitive damages – Freedman said the verdict set “a historical precedent in the innovative and transformative industry of cryptocurrency and blockchain”.

What follows is an edited extract of the joint statement released by Freedman and his legal colleagues:

We are immensely gratified [this verdict reflects] that Craig Wright wrongfully took bitcoin-related assets from W&K. Years ago, Wright told the Kleiman family that he and Dave Kleiman developed revolutionary Bitcoin-based intellectual property. Despite those admissions, Wright refused to give the Kleimans their fair share and instead took those assets for himself.

Vel Freedman, Roche Freedman

Earlier this year, the London High Court granted a default judgment in Wright’s favour for copyright infringement against “Cøbra”, the pseudonymous operator and publisher of the bitcoin.org website. Wright had sued Cøbra for unlawfully publishing the Bitcoin whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System”.

Aside from legal costs, the order required that “Cøbra” remove the whitepaper and put a notice on its website informing visitors of the default judgment for a period of six months. That deadline elapses at the end of December.

As for the default judgment itself, to the order of US$48,400, it’s not clear if Wright offered to share the spoils with the Kleiman estate. In any case, the $100 million in compensation won this week makes it look like pocket change.

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Bitcoin Crypto News Ethereum Markets

Crypto Markets See Red Following $2.5 Billion in Liquidations Over the Weekend

Over the weekend of December 4-5, a confluence of factors led to a dramatic crash in crypto markets. Against an uncertain macro backdrop of potential tighter monetary policy, surging inflation and fears over the new Omicron variant of Covid-19, derivative markets added fuel to the fire resulting in some US$2.5 billion in liquidated positions in 24 hours.

Longs liquidated. Source: Cryptorank

Double-Digit Drawdowns Across the Board

As the NASDAQ dropped 2 percent on December 3 against a broader risk-off sentiment, crypto markets tanked, resulting in all of the top 20 cryptocurrencies by market cap, save for stablecoins, posting double-digit losses within 24 hours. BTC dropped 18 percent within 24 hours, while ETH faired slightly better, dropping 17 percent in the same period.

According to CoinGecko, the market cap of the entire crypto market dropped by 15 percent to US$2.34 trillion, down from a high of over US$3 trillion when bitcoin soared above $US$69,000.

Commentators have suggested that large institutional selling triggered a broader market shift, with reports indicating that one institution alone sold over US$500 million in bitcoin. This, the report continues, triggered “aggressive liquidations” in the crypto derivatives market:

The other factor driving the sharp declines across the board was that, comparatively speaking, the market was “thin” as it occurred outside of typical trading hours.

Leveraged Liquidations, Nothing New

By definition, leveraged trading amplifies both gains and losses. When the market is bullish, traders tend to go long and pile on the leverage. This works well until the market moves against you. When that happens, traders need to post more collateral to maintain the margin requirement, or face forced liquidation. At scale, a failure by traders to meet their maintenance margin creates a cascading liquidity flush, creating rapid double-digit declines as seen in April this year.

Following April’s meltdown, many exchanges reduced leverage available to traders from 100x to 20x. Notwithstanding, bloodbaths such as those experienced over the December 4-5 weekend remain largely driven by leverage.

Will Clemente, a leading on-chain analyst who is known in the community for “calling it like it is”, pointed out the benefit of flushing liquidity and maintained his overall bullish view toward Bitcoin.

Justin d’Anethan, Hong Kong-based head of exchange sales at cryptocurrency exchange EQONEX, believes many investors will view this recent decline as an opportunity:

If anything, this is the opportunity to buy the dip for many investors who might have previously felt like they missed the boat.

Justin d’Anethan, head of exchange sales, EQONEX

Following the meltdown, crypto markets have recovered to a limited extent. At the time of publication, both ETH and BTC are up from the weekend’s low. ETH is up 11 percent, trading at US$4,122, while BTC is up only 5 percent, trading at US$48,656.

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Australia Bitcoin Crypto News ETFs Ethereum

Australia’s First Spot Crypto ETFs Launching Through ‘ETF Securities’ and ’21Shares’

ETF Securities will partner with 21Shares to provide Australian investors with access to the country’s first direct Bitcoin and Ethereum exchange-traded funds (ETFs), along with a best-in-class blockchain education and research centre.

Australia Gets its First Direct BTC and ETH ETFs

Subject to regulatory approvals, the ETFS 21Shares Bitcoin ETF (EBTC) and ETFS 21Shares Ethereum ETH will provide Australians with a way to invest in Bitcoin and Ethereum, via funds operated by the new partnership between ETF Securities and 21Shares. Zurich-based 21Shares, backed by Cathie Wood, has currently almost US$3 billion in assets under management in its 20 European crypto exchange-traded products (ETPs) available across eight exchanges. 21Shares has managed Bitcoin and Ethereum ETPs for three years and was additionally responsible for creating the world’s first physically-backed crypto ETP in 2018.

Graham Tuckwell, executive chairman of ETF Securities Australia, had this to say:

Once we had decided to build a range of crypto ETFs for the Australian market, there was only one partner we wanted to work with and that’s 21Shares. They are [at] the cutting edge of crypto ETPs in the world today.

Graham Tuckwell, executive chairman, ETF Securities Australia

Along with the ETFs, the partnership will also offer a research and education centre to be built on 21Shares’ investment-grade and cutting-edge research – some of the world’s most comprehensive. The research covers a vast array of different blockchains and cryptos, not only Ether and Bitcoin but also lesser-known, fast-growing cryptos such as Avalanche, Solana and Polygon.

The centre aims to explain in simple English how the often-complicated crypto and blockchain-verse works, and will also feature the latest crypto news, various blockchain metrics, price action and important news on miners, custodians and other companies involved in the supply chain.

Hany Rashwan, chief executive of 21Shares, expressed that the company was excited to take on the partnership to launch cryptos ETFs for Australian investors: “This partnership is an opportunity to combine our expertise to provide the simplest and most transparent way to access the best performing asset class of the last 10 years.”

Australian ETFs Undergo Explosive Growth

The announcement of the partnership between ETF Securities and 21Shares comes as welcome news amid Bitcoin ETF applications growing out of control. There are 34 Bitcoin ETF applications currently pending approval, with the number rising every day.

The ETF joins BetaShares ETF in offering crypto investment to the Australian market. BetaShares, an Australian crypto ETF, launched in early November and surpassed all expectations as A$5.2 million was traded in only five minutes, smashing Australian Securities Exchange trading records.

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Bitcoin Crime Crypto Art Crypto News NFTs

Silk Road Founder Drops NFT, Causing a Stir Among Bitcoiners

Silk Road founder Ross Ulbricht, who was convicted six years ago on conspiracy charges of money laundering, computer hacking, fraud and drug trafficking, is auctioning his own non-fungible token (NFT) for charity.

In May 2015, Ulbricht was handed two life sentences plus 40 years without the possibility of parole. After two unsuccessful appeals in 2017 and 2018, he remains in a US Penitentiary in Tucson, Arizona.

“Decades of incarceration stretch out in front of me,” Ulbricht writes in his prison blog, titled My NFT:

As I face that future – my eventual old age and death in this cage – I find myself looking for meaning and purpose. Why am I here? What good can I do with the time I have left and from where I am?

Ross Ulbricht, My NFT

Aged 29 when he was arrested and with time on his hands, Ulbricht reconnected with his art, producing illustrations that told the story of what he was going through. “Then someone said, ‘You should sell your art as an NFT. The community will love it’.”

Life in a Box, graphite pencil drawing, one of 10 artworks in the Genesis Collection NFT. It depicts Ulbricht’s shared cell in New York City, before he was moved to the Federal Penitentiary in Tucson, Arizona, where he remains. Ulbricht was 32 at the time he completed this drawing.

Hence the Ross Ulbricht Genesis Collection NFT, an assembly of writings and 10 artworks with an original animation by Seattle-based audiovisual artist Levitate. The singular NFT is being auctioned on the SuperRare platform, with bids closing December 8.

Proceeds Will Support Prisoners and Families and Fund Further Legal Efforts

As well as supporting other prisoners and their families, proceeds from the NFT sale will fund a trust dedicated to efforts to free Ulbricht from a life in prison. These include new legal proceedings.

At the time of Ulbricht’s arrest in 2013, Bitcoin was the only means of exchange on the Silk Road platform. While some devotees of Bitcoin and other cryptocurrencies recognise Ulbricht’s vision as an original catalyst for blockchain adoption, just as many have greeted news of his NFT offering with derision:

Among Ulbricht’s supporters, however, @CryptoCobain possibly pleaded his case most articulately:

Just over a year ago, Crypto News Australia reported on a police seizure of nearly US$1 billion in bitcoin from Silk Road‘s hoard.