Category: Crypto News

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Australia Crypto News Trading

ASIC’s New 46-Page Report Details Regulations Around Crypto Trading

Australia’s financial regulator has laid out guidelines relating to the inclusion of cryptos in exchange traded products (ETPs) and is seeking market participants’ input to shape its position within the regulatory landscape.

In a consultation paper published on June 30, the Australian Securities and Investment Commission (ASIC) set out a range of proposals around making crypto assets available to retail investors through licensed Australian markets. The paper covers whether cryptos are suitable for use as an underlying security in an ETP, how they’re categorised, pricing mechanisms, risk management, and other related issues.

The paper also noted that feedback will be used to adjust rules for local operators, to promote market integrity and to protect consumers:

We consider that crypto-asset ETPs have unique features and risks which need to be recognised by market operators and product issuers in performing their functions and meeting existing regulatory obligations. 

ASIC states that the only crypto assets likely to satisfy its expectations currently are Bitcoin and Ethereum. However, it expressed a willingness to collaborate with licensees to establish criteria to assess other crypto assets. 

Under this approach, market operators could determine that a particular crypto asset is an appropriate underlying asset for ETPs on their market. 

ASIC defines ETPs as open-ended investment products that are traded on a financial market and invest in, or give exposure to, various assets or asset classes. This covers exchange traded funds (ETFs), managed funds, and securities such as exchange traded commodities (ETCs) and exchange traded notes (ETNs).

ASIC Recognises Strong Interest in Aussie Crypto ETF, Seeks Public Comment

In Australia, we are aware of interest in, and demand for, domestic crypto-asset ETPs. However, we are also aware of the real risk of harm to consumers and markets if these products are not developed and operated properly.

ASIC is inviting public comment up until July 27, 2021. The regulator is especially keen to hear about the likely compliance costs, effects on competition and other impacts of its proposals, as well as ideas on alternative approaches. 

Comments should be sent by July 27 to [email protected] with the subject heading ‘CP 343 Submission – [Entity Name]’.

ASIC Takes Cautious Approach

ASIC has so far taken a cautious approach when it comes to crypto.

In February, the regulator came out to refute claims it had a policy to stop Bitcoin ETFs, with its commissioner explaining that with appropriate rules in place, such products could be made available in Australia.

ASIC has also been actively targeting scammers and adopting other regulations to improve consumer protections, including reducing CFD (Contracts for Difference) leveraged trading available to retail traders from 30:1 to 2:1.

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Australia Blockchain Crypto News Industries

ASX’s New CHESS Platform Set to Enter Testing Phase This Year

The Australian Securities Exchange (ASX) is updating its broker platform with blockchain-based technology. The upgraded CHESS system has been undergoing rigorous testing to ensure it can deal with the increasingly large sharemarket in Australia.

The Clearing House Electronic Subregister System (CHESS) is essentially the ASX’s system for securing, settling and clearing the Australian AU$2.5 trillion sharemarket.

The Need For Blockchain Technology

The exchange started the replacement project in 2015 and selected Digital Asset as its technology partner in January 2016 to develop a prototype based on blockchain technology. The new system improves on the previous one by creating a “single source of truth” through distributed ledger technology, where previously messages of ownership were sent back and forth leading to multiple records of share ownership.

At the start of the Covid-19 pandemic, trading volumes had reached unprecedented levels, hitting equity volumes around 7 million trades a day in March 2020 compared to normal daily averages around 2 million. Thus, creating a scalable solution became imperative.

The New System Might Not Be Available to the Public until Mid-2022

The project has already been delayed three times. In September 2018 ASX pushed the live date to late 2020, and in July 2020 it was further extended to April 2022. The testing program will continue to the end of the 2022 calendar year before the system goes live in April 2023.

One of the reasons for this extension was to allow participants and regulators to cope with the volatility of early pandemic trading, and then to allow the new system to be redesigned to accommodate a huge increase in trading volumes.

ASX chief executive Dominic Stevens said the synchronised ledger was being stress-tested to see if it could deal with high daily trading volumes, with about 40 market participants also testing the clearing and settlement system’s new code. By the end of July, ASX predicts it will have completed the code and will publish this into a “customer development environment” at the end of August.

The project is moving to operational implementation, as opposed to a technology build. We are reaching that turning point over the next six months.

ASX Chief Executive, Dominic Stevens

Since the ASX’s equities trading outage last November, some have questioned the necessity of such an ambitious technological endeavour that has far-reaching economic implications.

It needs a lot of testing as it’s a big ecosystem of value. But when you look at what was [designed] during the course of 2018, that is basically finished and is out there in the market.

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Crypto News Regulation

Robinhood Crypto Trading App Fined $70 Million for Misleading Customers

Robinhood Financial has agreed to pay a record US$70 million to resolve a range of allegations, such as misleading customers, allowing ineligible traders to use high-risk strategies, and poorly supervising technology that failed, locking millions of customers out of trading.

The $70 million settlement with FINRA (Wall Street’s self-regulator) includes a $57 million fine and about $12.6 million in payments to customers who were negatively impacted by the US company’s actions.

This is not the first time that Robinhood has had a run-in with a regulatory body. In 2019, FINRA fined the company US$1.25 million for failing to guarantee customers the best price on their trades. And in 2020, Robinhood was fined another $65 million by the SEC for misleading customers about the true costs of trading using its commission-free facility.

High-Risk Strategies

Robinhood was accused of exposing customers to several high-risk trading strategies, such as options and margin trading. Options, which allow traders to buy or sell shares at set prices in the future, can vastly amplify gains or losses. The company allegedly used bots to approve traders for options accounts without a human presence in the middle to properly determine whether they were actually eligible or not.

Robinhood was also charged with failing to disclose to more than 800,000 customers who were approved for options accounts that their trading could involve the use of margin lending, which exposes traders to losses significantly larger than the money invested. Tragically, a 20-year-old customer killed himself last year after he thought he’d lost more than US$700,000 using the app to trade options with margin lending activated. Subsequently, the family took Robinhood to court and settled the matter.

Service Disruptions

In March 2020, just as pandemic panic started wreaking havoc on the stockmarket, Robinhood’s trading platform experienced a series of technological disruptions, including one outage that locked users out of trading for more than 24 hours. Being blocked from trading during one of the worst crashes in recent history resulted in catastrophic losses for many traders.

Rocket Ship or Sinking Ship?

Robinhood, which had fewer than 500,000 users in 2015, has now surged to more than 31 million users. At the start of the year, during the Gamestop short squeeze, Robinhood was a popular choice because it provided easy access to the stockmarket for everyday people, which many regarded as revolutionary or game-changing. However, with its third large fine in as many years, you can’t help but wonder how many cannonballs can this ship take before it starts to take on water?

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Crypto News NFTs

Internet Inventor Sells Original Source Code NFT for $5.4 Million

English computer scientist Sir Tim Berners-Lee famously invented the internet in 1989. Now, more than three decades later, a blockchain-based token representing the original source code has been sold by Sotheby’s in an online auction.

Sir Tim Berners-Lee. Source: Guardian

Auction Highlights Internet’s Impact on Society

Sotheby’s catalogue outlined what was included in the sale and provided an articulate expression of the significance of the internet in the modern era:

Over the past several centuries, humankind has seen a succession of paradigm shifts that have brought us forward into the Modern Era … but none has had as seismic an impact on our daily lives as the creation of the World Wide Web. Sir Tim’s invention changed everything, and created an entirely new world, democratising the sharing of information, and creating new ways of thinking, interacting and staying connected to one another.

Sotheby’s

Internet Source Code as an NFT

Of course, the internet itself has not been sold, but rather an NFT containing the original source code. The identity of the buyer remains a mystery and Berners-Lee intends to donate the proceeds to charity.

Visualisation of Internet Source Code, Sotheby’s

Sotheby’s commented that it was considered extremely valuable since it is one of a kind and more so that it was “minted” by Berners-Lee himself.

The symbolism, the history, the fact that they’re coming from the creator is what makes them valuable — and there are lots of people who collect things for exactly those reasons.

Cassandra Hatton, Sotheby’s global head of science and popular culture

Included in the sale are NFTs representing 9,555 lines of code written in 1990-1991 (including an “embarrassing spelling error“), a 30-minute animated visualisation of the code, a digital poster of the code, and a digital letter written by Berners-Lee in June 2021, reflecting on his invention.

NFTs – Legitimate Asset Class?

NFTs are in their infancy and, of course, mania and speculation are to be expected in such conditions. Some will turn out to be worthless and others worth a fortune. For now, it’s difficult to say how it will play out.

“CryptoPunk 7804” sold earlier this year for US$7.6 million. Larva Lab

NFTs raise all sorts of unique legal questions, including those related to copyright. Last month, Jay-Z successfully blocked the unauthorised sale of a digital version of his debut album but how this will apply in different contexts remains unknown.

At present, one could argue it is easy to see how the original source code of the internet NFT is likely to retain value over those belonging to a fleeting reality TV star or a relatively unknown quirky local artist.

Much like the dotcom companies of 2000 where most trended towards zero, the same could be said of many NFTs today. Some types and specific applications will become embedded in our culture and most in time are likely to be written off to irrational exuberance.

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Australia Crypto News Gold India Investing

Indians Switch Gold for Crypto – Crypto Investment Skyrockets 19,900% in a Year

In India, where well-to-do citizens own more than 25,000 tonnes of gold, investments in crypto mushroomed from about US$200 million to nearly US$40 billion in the past year, which translates to a massive 19,900% jump.

Entrepreneur Richi Sood, 32, is one of those Indian citizens to have pivoted from gold to crypto. Since December 2020, she’s invested US$13,400 into Bitcoin, Dogecoin and Ethereum.

Richi Sood

Sood’s timing has been fortuitous so far. She cashed out part of her position when Bitcoin broke through US$50,000 in February and then bought back in after the recent tumble.

I’d rather put my money in crypto than gold. Crypto is more transparent than gold or property and returns are more in a short period of time.

Indian entrepreneur, Richi Sood

Younger Cohort Cracks on to Crypto

Sood is just one of a growing cohort of Indians – now totalling more than 15 million – buying and selling digital coins. Much of the interest in India is centred on the 18-35 age group, says Sandeep Goenka, co-founder of India’s first cryptocurrency exchange.

They find it far easier to invest in crypto than gold because the process is very simple. You go online, you can buy crypto, you don’t have to verify it, unlike gold.

Sandeep Goenka, co-founder of ZebPay

India Mirrors Australian Crypto Trend

The crypto landscape in India mirrors the trend in Australia, where a survey earlier this year indicated investors were favouring cryptocurrencies over gold and expressing a high level of interest in crypto debit cards. As in India, younger people are also demonstrating the most enthusiasm for crypto, even favouring digital assets over real estate.

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Crypto News DeFi Stellar Stellar Lumens

Stellar Lumens (XLM) is Launching a Decentralised Exchange (SDEX)

Open source blockchain payment network and protocol Stellar is another step closer to enabling decentralised finance (DeFi).

Two potential changes to the protocol that would enhance DeFi exchange through the introduction of automated market makers (AMMs) were discussed via a recent meeting of the Stellar Development Foundation, which was live-streamed on YouTube. 

There’s general agreement that AMMs, which allow for the creation of liquidity pools, are a simple way to attract capital and enable high volumes of trading, and that introducing them to the protocol would have great benefits for the network. It means better liquidity, which means better exchange, which means better cross-currency payments.

Justin Rice, Head of Ecosystem, Stellar Development Foundation

Adding AMMs and liquidity pools to the Stellar Decentralised Exchange (SDEX) has the potential to attract more traders and reduce transaction costs. Improving liquidity is a key facet of Stellar network’s 2021 roadmap.

DeFi Exchanges Transforming Trade 

Market participation on DeFi exchanges is increasing significantly: monthly trading volume was on track to exceed US$55 billion in January, while open source and privacy-focused web browser Brave recently announced plans to build a decentralised exchange aggregator.  

It remains to be seen whether enhancements to the functionality of Stellar will further increase the popularity of its native digital currency, the Lumen (XLM), which experienced a breakout in late 2020.

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Crypto News Cryptocurrencies Regulation United Kingdom

50+ Crypto Companies Withdraw Licence Applications Amid UK Crypto Regulation Fears

More than 50 crypto companies have withdrawn their applications to conduct business in the UK due to demanding requirements set by the Financial Conduct Authority (FCA).

Applicants Not Up to Scratch?

Early in June, the FCA released a report concerning a “significantly high number” of crypto firms that had been warned for not meeting anti-money laundering (AML) standards. This legislation is intended to stop criminals from hiding money used for or gained from criminal activities.

A significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations. This has resulted in an unprecedented number of businesses withdrawing their applications.

FCA

Only 5 crypto asset firms have been admitted to the FCA’s formal register so far. They reportedly had 90 pending registration requests, of which 51 had withdrawn in early June and another 13 have since followed suit.

The FCA had previously issued a notice to UK consumers to inform them there were 111 unregistered crypto companies operating in the country.

Registration Period Extended

At the start of the new year, it was announced that companies that failed to meet the FCA’s AML requirements would be forced to refund all customer deposits and stop services until they could comply with the requirements set up by the regulatory agency.

The FCA has extended the temporary registration regime to 31 March, 2022. This allows businesses that have applied for registration to continue operations while awaiting the outcome of the assessment.

Additionally, there are schemes in the UK that help investors if a company were to go bust, but these don’t apply to those in the crypto industry. This law could possibly sway investors against putting their money in crypto.

It is unlikely that consumers will have access to the Financial Ombudsman Service or Financial Services Compensation Scheme, irrespective of whether a firm has temporary or full registration.

FCA

In January 2020, the FCA became the official AML regulators for the UK’s crypto market. The FCA has since taken action against some major platforms, including Binance. Apart from regulators in the UK and Japan, Canadian authorities have also issued warnings to Binance.

Binance must cease any financial promotions in the UK, but in the meantime its trading services have not been affected.

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Bitcoin Crypto News Markets

Panic Selling Caused Record Bitcoin Weekly Losses of US$3.4 Billion

Up to US$3.4 billion in realised losses in Bitcoin were recorded last week, according to on-chain data by Glassnode. This is the highest capitulation ever recorded in the history of Bitcoin. 

Realised Losses Spike as Investor Uncertainty Rages

Losses in Bitcoin are realised when bitcoin bought at a higher price is spent or sold at a lower price. Last week’s panic selling indicates a high level of uncertainty in the market, especially among short-term holders. 

About 23.5% of Bitcoin in circulation is held by short-term holders and according to Glassnode, the majority is underwater (unrealised loss). This shows why the selling pressure is higher among short-term holders than long-term holders, most of whom are still in profit.  

Source: Glassnode

Despite that, some long-term holders sold during the week, their spending offset about US$383 million from the total realised loss of $3.833 billion in Bitcoin to US$3.45 billion. This is because most of them sold for a profit. Only 2.44% of Bitcoin’s circulating supply held by long-term holders is underwater.

Bullish Factors For Bitcoin

Bitcoin was trading at US$34,905 on 1 July and was down only about 4.18% over the previous 24 hours. Judging by Bitcoin’s market performance, this past month and the whole of Q2 were not exactly favourable for Bitcoin in terms of value. However, there have been a lot of indicators to suggest Bitcoin has not yet reached the top of the bull cycle.

On 29 June, the Puell Multiple signalled only the fifth buying opportunity in Bitcoin’s history. Crypto News Australia has also reported on the growing stablecoin reserves across all exchanges and the increasing rate of Bitcoin accumulation by long-term holders.

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Australia Bitcoin Crime Crypto News Monero

Aussie Couple Charged for Operating DarkMarket Platform Accepting Bitcoin and Monero Payments

German prosecutors have charged the Australian couple allegedly behind DarkMarket, one of the world’s largest illegal marketplaces operating on the darknet.

DarkMarket was shut down on 11 January and the suspected operator of the marketplace, a 34-year-old Australian man, was arrested near the Germany-Denmark border soon after. It is alleged that his 32-year-old wife was responsible for the design of the website and mediation of customer disputes. The couple, who are living in Australia and cannot be named for legal reasons, have now been officially charged by German prosecutors.

German news breaks of DarkMarket seizure. Source: Europol

What Was DarkMarket?

DarkMarket was a virtual marketplace that sold all manner of illegal items. It operated on the darknet and users paid with crypto such as Bitcoin and Monero.

Illegal drugs of all kinds, counterfeit money, stolen or forged credit cards, malware and many other illegal goods were traded on ‘DarkMarket’.

Koblenz Prosecutor General’s Office

DarkMarket was a huge marketplace with almost 500,000 users and more than 2,400 sellers. Over 320,000 transactions were made during its operation: more than 4,650 Bitcoin and 12,800 Monero were traded (at the current rate, this represents more than €140 million, or A$220 million worth).

Humble Origins … in a Hackathon

DarkMarket’s origins are quite fascinating. In 2014, DarkMarket was one of the winners of the Bitcoin Expo hackathon in Toronto, Canada. The project was described as a decentralised marketplace that could not be shut down. The official Ethererum Twitter account even put up a post congratulating the team:

Crypto Crackdown Goes Global

Of late, there appears there to be an increased global crackdown on those using crypto for nefarious purposes.

At the start of the month, Chinese police arrested 1,100 people for crypto-related money laundering charges. And in April, a Swedish-Russian citizen was arrested for operating a darknet Bitcoin website, Bitcoin Fog, and was accused of laundering over US$366 million.

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Adelaide Australia Crypto Art Crypto News NFTs

Australian Artists Are Creating Physical NFT Art Exhibitions

Australian multimedia artist Dave Court is the first in his field to stage a physical Non-Fungible Token (NFT) exhibition in his home state of South Australia, and one of the first in the southern hemisphere.

Court, who is based in the SA capital of Adelaide, decked out an otherwise ordinary brick house in colours and light as part of a unique art installation. The house has since been demolished, though collectors can still purchase a digital piece of it online.

Interior of the former Ironbank house, as painted by artist Dave Court

In what would become Court’s so-named ‘House Party’ exhibition, the house at Ironbank in the Adelaide Hills was enhanced with a kaleidoscope of colours in paint and light just before it was torn down in 2020.

It’s something I’ve wanted to do for a long time and then the opportunity came up to paint a house last year … I combined that with other things I was working on in the studio and it [all] came to fruition in this exhibition.

Adelaide artist Dave Court
Artist Dave Court in his Adelaide studio. Image: Angela Skujins/CityMag

The digital works that have outlived the house feature augmented and virtual reality which effectively recreates the original building. Included among these works is NFT artworks that can be bought online with cryptocurrency.

NFT Artworks Break Out in Australia and Worldwide

Earlier in June, Hobart’s Museum of Art & Philosophy (MAP) launched Australia’s first NFT gallery in the Tasmanian capital with an exhibition to coincide with Hobart’s annual Dark Mofo festival.

In June, Binance announced its own NFT Marketplace, saying it would support the NFTs of various creators from Australia through its ‘100 Creators’ campaign.

NFTs are also making waves in the international art world. Just two weeks ago, Sotheby’s sold an NFT artwork for a world record price of US$11,754,000.