CryptoPotato https://cryptopotato.com Crypto Blog Tue, 22 Sep 2020 19:28:35 +0000 en-US hourly 1 https://wordpress.org/?v=5.3.4 https://cryptopotato.com/wp-content/uploads/2020/07/cropped-potato-fav2-32x32.jpg CryptoPotato https://cryptopotato.com 32 32 CoinGecko: 23% Participate In Yield Farming But 40% Can’t Read Smart Contracts https://cryptopotato.com/coingecko-23-participate-in-yield-farming-but-40-cant-read-smart-contracts/ Tue, 22 Sep 2020 21:30:15 +0000 https://cryptopotato.com/?p=68936 A recent survey revealed that yield farming is a growing trend but highlighted concerns that farmers are not fully aware of the associated risks.

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Despite the growing DeFi craze in the past few months, a recent survey compiled by CoinGecko revealed that just 23% participate actively in some form of yield farming. However, many of the farmers answered that they don’t know how to read smart contracts but were enjoying high ROIs.

Yield Farming Is A Growing Trend

This year can be safely categorized as the decentralized finance (DeFi) boom. The rapid explosion of its popularity could be attributed to some extent to yield farming – the process of earning a return on capital by locking up funds with specific protocols and receiving rewards.

The popular cryptocurrency data aggregator CoinGecko conducted a survey to shed some light on users’ perspective and approach towards digital assets, the DeFi sector, and yield farming in particular.

As the chart below illustrates, nearly all respondents have heard of the two largest cryptocurrencies – Bitcoin and Ethereum. 94% have purchased at least one digital asset, while 81% have heard of liquidity mining or yield farming.

Participants Heard Of BTC/ETH/Yield Farming. Source: CoinGecko
Participants Heard Of BTC/ETH/Yield Farming. Source: CoinGecko

Interestingly, out of 1,347 respondents, only 23% answered that they had participated in yield farming in the past two months. According to CoinGecko, this indicated that yield farming is “still a niche but growing trend.”

The survey also demonstrated that yield farming is primarily dominated by males (90%), while females were only 6%. The remaining 4% preferred not to answer (or were binary).

Yield Farming Dominated By Males. Source: CoinGecko
Yield Farming Dominated By Males. Source: CoinGecko

Farmers Don’t Know How To Read (Smart Contracts)

The past several months displayed that the DeFi field doesn’t lack risks. Whether it was human errors or hacks, numerous protocols failed, resulting in significant losses for investors.

Most of the study participants (79%) claimed that they understand the associated risks to a “reasonable extent.” However, 40% of yield farmers answered that they don’t know how to read smart contracts, and 33%% were not aware of impermanent loss.

According to CoinGecko, these results suggested that farmers are unable to calculate their real ROIs and are “extreme risk-takers for the sake of the high returns.”

Nevertheless, 93% of respondents noted that they had massive ROIs of at least 500% from yield farming. CoinGecko commented that these results are “not a surprise find as many of the current new pools provide insanely high APY of over 1,000%. Our opinion is that these high yields offered are not sustainable as it comes with high risk.”

The large rewards for farmers mean that they don’t mind paying the higher fees on the Ethereum network. Over 70% answered that gas fees of $10 or more per transaction seemed reasonable at this point.

Yield Farmers' Behavior. Source: CoinGecko
Yield Farmers’ Behavior. Source: CoinGecko

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ECB President Reiterates Digital Euro’s Complimentary Role https://cryptopotato.com/ecb-president-reiterates-digital-euros-complimentary-role/ Tue, 22 Sep 2020 19:22:36 +0000 https://cryptopotato.com/?p=69015 Speaking on the matter of the digital Euro, the ECB's president reiterated that it has a complementary role.

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European Central Bank President Christine Lagarde reiterated the Eurozone central bank’s stance that the development of a digital euro is meant to complement, not replace, cash — mitigating fears that Europe’s monetary union is not pushing for a cashless society.

The further solidifying of this stance from Lagarde came via yesterday’s online meeting of the Franco-German Parliamentary Assembly, during which the French politician and lawyer stated:

We need to fully reap the potential gains from digital technologies […] In a more digital economy, we also need to ensure the strength and autonomy of European payment systems. […] We are also exploring the benefits, risks and operational challenges of introducing a digital euro. A digital euro could be a complement to, not a substitute for, cash; it could provide an alternative to private digital currencies and ensure that sovereign money remains at the core of European payment systems.

Sovereign Money Under Threat

Lagarde’s reference to a “private digital currencies” may potentially point to Facebook’s Libra cryptocurrency project and may illustrate a fear that other corporate giants may seek to implement their own private digital currencies.

The Libra project has, thus far, struggled to gain positive traction. Regulators across the world have largely taken an immediate and negative stance against the introduction of private currencies from Big Tech behemoths, like Facebook.

Meanwhile, the recent rise in decentralized finance is also putting pressure on the traditional financial system, especially considering the fact that it coincides with severe economic pressure from 2020’s COVID-19 pandemic — the latter point Lagarde herself acknowledged in yesterday’s speech. With the global economic situation in a highly-questionable state, the ECB presumably feels pressured to advance financial solutions via the latest fintech and blockchain-based techniques.

Europe’s in the middle of the CBDC race

Despite Lagarde’s statement, the introduction of a digital euro is far from a done deal. Currently, a task force assigned to study the potential effects of a central bank digital currency, or CBDC, has yet to be announced — though is expected to be introduced “in the coming weeks.”

The European Central Bank’s potential interest in a digital euro stands somewhere between China’s full-steam-ahead push to introduce its CBDC as soon as possible and the United States lagging approach to the potential future of currency.

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Bitcoin Price Falls Back Under Major Resistance, Here’s What to Expect Next (BTC Analysis) https://cryptopotato.com/bitcoin-price-falls-back-under-major-resistance-heres-what-to-expect-next-btc-analysis/ Tue, 22 Sep 2020 17:11:59 +0000 https://cryptopotato.com/?p=69008 Bitcoin has returned into its former range between the 0.236 Fibonacci level at $10,446 and $10,000 after prices crashed a further 3% yesterday, around 15:00 (UTC+1). This was the level that took over nine days to successfully clear earlier in the month and could keep prices suppressed again if volume remains low. On the 4-hour […]

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Bitcoin has returned into its former range between the 0.236 Fibonacci level at $10,446 and $10,000 after prices crashed a further 3% yesterday, around 15:00 (UTC+1).

This was the level that took over nine days to successfully clear earlier in the month and could keep prices suppressed again if volume remains low. On the 4-hour timeframe, we can also see long wicks above the last four candles, which suggest bears are defending this strong resistance level vehemently.

The unfilled CME gap below is now looking like a possible threat once again if BTC bulls fail to recover from this period of consolidation.

Price Levels to Watch in the Short-term

Right now, all eyes are on BTC closing above the 0.236 Fibonacci level on the 4-hour chart at $10,446 and breaking out of the range early. From there, the next likely bull target above would be the $10,580, which has consistently been a key S/R level for BTC since July 28, 2020.

Above that, we have the 50 EMA line (blue) at $10,700 and the 0.382 Fibonacci level at $10,836 as the next major targets if BTC continues retracing back towards $11,000. This particular Fibonacci level is also being reinforced by the 200 EMA, which could make a breakout above this line even more difficult.

Looking below, we have the primary channel support (yellow line), which recently caught the bottom of the aforementioned crash yesterday at around $10,290. This will continue to be a major area to watch as it has not been closed beneath since April 26 on the daily chart. If this were to happen, it should be construed as a significant bearish warning.

If prices continue to break to the downside, then the main support zone (green) between $10,200 and $10,000 should provide a safety net for bitcoin’s price from falling into the CME gap below.

BTC falling into the oversold region on the 4-hour RSI should also create some buying pressure to help prop up prices if there is another sharp decline soon.

Total market capital: $335 billion
Bitcoin market capital: $193 billion
Bitcoin dominance: $57.7%

*Data by Coingecko.

Bitstamp BTC/USD Daily Chart

bitcoin trading
BTC/USD chart via Tradingview

Bitstamp BTC/USD 4-Hour Chart

Bitcoin trading chart
BTC/USD chart via Tradingview

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Member Of Bitcoin Ransom Group The Dark Overlord Sentenced To Five Years In Prison https://cryptopotato.com/member-of-bitcoin-ransom-group-the-dark-overlord-sentenced-to-five-years-in-prison/ Tue, 22 Sep 2020 14:59:25 +0000 https://cryptopotato.com/?p=69000 Nathan Wyatt, a UK national, was sentenced to five years and prison and fined $1.5 million for his involvement in the hacker's group - The Dark Overlord.

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A UK national has pled guilty and will be sent to prison for his involvement in the notorious hacker’s group “The Dark Overlord.” The organization breached and stole sensitive information from numerous companies and demanded the ransoms to be paid in Bitcoin.

The Dark Overlord Member Imprisoned

The US Department of Justice announced yesterday that Nathan Wyatt, 39, has pled guilty to conspiring to commit aggravated identity theft and computer fraud. Consequently, he received a sentence to five years in federal prison and has to pay nearly $1.5 million in restitution.

According to the documents, Wyatt was an active member of the infamous “The Dark Overlord” hacker’s group. His responsibilities included initiating contact and handling the ransom negotiations.

The organization has been responsible for stealing tons of personal and client information from healthcare providers, accounting firms, etc. Bleeping Computers even reported that the group hacked Netflix in 2017.

Nathan Wyatt. Source: Sky News
Nathan Wyatt. Source: Sky News

“Nathan Wyatt used his technical skills to prey on Americans’ private data and exploited the sensitive nature of their medical and financial records for his own personal gain.

Today’s guilty plea and sentence demonstrate the department’s commitment to ensuring that hackers who seek to profit by illegally invading the privacy of Americans will be found and held accountable, no matter where they may be located.” – commented Acting Assistance Attorney General Brian Rabbitt.

Bitcoin’s Involvement

Upon remotely accessing the computer networks of numerous companies without authorization, The Dark Overlord contacted the victims to demand ransom not to share the sensitive information. Wyatt admitted that the demand varied from $75,000 to $350,000. However, the hacker’s group always requested the same form of payment – Bitcoin.

A few years ago, The Dark Overlord took responsibility for an attack that saw thousands of insurance claims from the September 11th terrorist attacks stolen. According to Forbes, they planned to use those files to spread fears regarding conspiracy theories.

The Dark Overlord even started several online crowdfunding initiatives, saying that they will release documents once they reach specific financial goals ranging from $250 to $2 million in Bitcoin.

The group justified its actions by asserting that they were spreading only the truth. However, they reportedly told Forbes that “we are doing this to fuel our Bitcoin wallets.”

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Chainlink Price Analysis: LINK Seeks Support After Losing 27% Weekly https://cryptopotato.com/chainlink-price-analysis-link-seeks-support-after-losing-27-weekly/ Tue, 22 Sep 2020 14:15:26 +0000 https://cryptopotato.com/?p=68991 Chainlink has now dropped by a total of 27% over the past week as it crashes beneath $9.00 today. The coin is trading at support at the July high-day closing price as the bulls attempt to stall the downtrend. Against Bitcoin, LINK has fallen into the support at the .618 Fib Retracement at 0.000826 BTC. […]

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  • Chainlink has now dropped by a total of 27% over the past week as it crashes beneath $9.00 today.
  • The coin is trading at support at the July high-day closing price as the bulls attempt to stall the downtrend.
  • Against Bitcoin, LINK has fallen into the support at the .618 Fib Retracement at 0.000826 BTC.
  • LINK/USD – Bearish Momentum Reaches Oversold Conditions

    Key Support Levels: $8.67, $8.05, $7.66.
    Key Resistance Levels: $9, $10, $10.40.

    Five days ago, LINK penetrated beneath crucial support at the $10.40 level (downside 1.618 Fib Extension), which stalled the market decline during the early September price fall. Since then, LINK broke below $10 and continued down until it found support yesterday at the $8.67 level – the July high-day closing price.

    LINK had spiked lower toward $8.20 yesterday, but the bulls recovered to allow the daily candle to close above the aforementioned support at $8.67.

    With LINK creating another fresh low for September yesterday, it does seem like the buyers have left the market. If the sellers push beneath the $8.00 level, LINK can be expected to continue much lower until support is met around $6.00.

    linkusd-sep22
    LINK/USD Daily Chart. Source: TradingView

    LINK-USD Short Term Price Prediction

    If the sellers push beneath $8.67, the first level of support lies at $8.05 (downside 1.414 Fib Extension). This is followed by support at $7.66 (.886 Fib Retracement), $7.00 (July support), and $6.60 (downside 1.618 Fib Extension). The last level of support to highlight lies at $6.00 as the rising trend is located here.

    On the other side, resistance first lies at $9.00. Beyond this, additional resistance is found at $10, $10.40, $11.90 (bearish .382 Fib Retracement), and $13 (bearish .5 Fib Retracement).

    The RSI has finally reached extremely oversold conditions and has bounced slightly. This could suggest the sellers are overextended and might take a break from their bearish activity. Additionally, the Stochastic RSI is in the process of producing a bullish crossover signal.

    LINK/BTC – Sellers Break 3-Month Rising Trend Line

    Key Support Levels: 0.000826 BTC, 0.0008 BTC, 0.000756 BTC.
    Key Resistance Levels: 0.0009 BTC, 0.00094 BTC, 0.001 BTC.

    Likewise, the sellers are in control of LINK/BTC. A few days ago, the bears pushed LINK into the support at 0.000917 BTC (downside 1.618 Fib Extension). This level of support was further bolstered by a 3-month old rising trend line.

    Unfortunately, the buyers could not defend this support as LINK penetrated beneath the trend line and continued lower until it reached the support at 0.000826 BTC (.618 Fib Retracement).

    linkbtc-sep22
    LINK/BTC Daily Chart. Source: TradingView

    LINK-BTC Short Term Price Prediction

    Looking ahead, if the support at 0.00826 BTC breaks, support can be found at 0.0008 BTC (downside 1.272 Fib Extension), 0.000756 BTC (downside 1.414 Fib Extension), and 0.0007 BTC.

    On the other side, the first level of resistance lies at 0.0009 BTC. This is followed by resistance at 0.000943 BTC and 0.001 BTC.

    The RSI has also reached extremely oversold conditions here and the Stochastic RSI is also about to produce a bullish crossover signal.

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    ECB Report: Stablecoins Should Not Be Named Stablecoins https://cryptopotato.com/ecb-report-stablecoins-should-not-be-named-stabecoins/ Tue, 22 Sep 2020 13:31:29 +0000 https://cryptopotato.com/?p=68983 The European Central Bank believes that it has the necessary instruments to regulate stablecoins, while arguing that their name should be replaced.

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    In a recent report on stablecoins, the European Central Bank (ECB) questioned the accuracy of their name arguing that it may be misleading to users. The paper also highlighted that stablecoins could have a significant role in a digital economy if adequately regulated.

    The Name Stablecoins May Not Be A Proper Fit: ECB

    Whether they are backed by a fiat currency like the US dollar or commodities such as gold, stablecoins were created to provide a “stable” alternative to the highly volatile cryptocurrency market. Their role inside and outside the cryptocurrency field has been expanding rapidly in the past few years.

    However, it seems that the ECB doesn’t consider the term “stablecoin” to be appropriate. In a recently released paper examining the nature, use cases, and potential of stablecoins, the ECB wrote:

    “The term “stablecoin” may be perceived to have positive connotations in terms of stablecoins’ intrinsic stability and usability as a form of money, but these features are neither intrinsic to, nor a prerogative of, stablecoins in and of themselves – instead, they can be attained only through appropriate design and effective risk management.”

    Further below the paper, the ECB noted that the name should be substituted upon establishing clear regulatory principles on stablecoins’ usage. Although the document didn’t offer an alternative, it said that it needs to be a “choice of terminology to shift the emphasis away from the issuer’s promise of stability.”

    European Central Bank Building. Source: Fortune
    European Central Bank Building. Source: Fortune

    ECB Has The Tools To Regulate Stablecoins

    Similarly to the US Commodity Futures Trading Commission, the ECB argued that stablecoins require a proper legislative framework. However, the report highlighted that the central bank has the necessary tools to establish concrete regulations.

    “The Eurosystem’s oversight framework will cover stablecoin arrangements that qualify as payment systems, regardless of the technology used and organizational setup.

    Furthermore, stablecoin arrangements that set standardized and common rules for the execution of payment transactions between end-users may fall under the oversight framework for payment instruments and schemes, which is currently being revised.”

    The ECB asserted that it had provided a range of “supervisory powers” to banks enabling them to mitigate the risks stemming from stablecoin-related activities. Nevertheless, banks should also establish an appropriate risk management framework to commensurate their role in stablecoin usage.

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    RSKSwap: On the Path Towards Solving Liquidity Problems on Decentralized Exchanges https://cryptopotato.com/rskswap-on-the-path-towards-solving-liquidity-problems-on-decentralized-exchanges/ Tue, 22 Sep 2020 12:59:48 +0000 https://cryptopotato.com/?p=68933 RSK brings forward a smart contract platform that expands the existing capabilities of the Bitcoin network.

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    [Featured Content]

    RSK is a popular smart contract platform. It expands the existing functionalities of Bitcoin’s network by delivering greater scalability and the possibility to create, deploy, and import smart contracts on top of Bitcoin’s network. RSKSwap, created by the developer ecosystem, is another contribution to the DEX market, which has seen exponential growth all along 2020.

    Enter RskSwap

    RSK Swap is a class of decentralized exchange that allows users to swap various ERC-20 tokens instantly while charging them a fee of 0.3%. The protocol is intended to solve the liquidity problem of decentralized exchanges, and it comes with a few main benefits:

    • It’s entirely decentralized, so no one has direct control.
    • It is permissionless, meaning that anyone can use it.
    • Anyone can verify the execution, making the protocol secure.
    • In addition, it’s censorship-resistant, which is an important quality at present times.
    • Additionally, much like Uniswap, there are no general restrictions for listing tokens.

    Every single ERC20-based token has its very own smart contract and its liquidity pool, and if there’s none, it can be easily created. Once the token has its liquidity pool, anyone can contribute to it to earn the 0.3% fee that goes to the liquidity provider.

    rskswap-min
    RSK-Swap

    A Fork of Uniswap V2

    According to the official announcement, RskSwap is a fork of the popular Uniswap V2 Protocol. At the time of this writing, Uniswap remains the most widely used decentralized exchange on the Ethereum network.  More interestingly, Uniswap even launched its very own governance token called UNI.

    When individuals stake their assets and become liquidity providers, they receive the fee reward in the native token of the pool they stake in. This has created some exciting opportunities for investors because speculation is known to drive the price of said tokens insanely high. Of course, this also brings the risks of impermanent loss when yield farming and needs to be considered very carefully.

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    World’s First Bitcoin ETF Approved with Expected Launch in Bermuda by End of Year https://cryptopotato.com/worlds-first-bitcoin-etf-approved-with-expected-launch-in-bermuda-by-end-of-year/ Tue, 22 Sep 2020 11:05:54 +0000 https://cryptopotato.com/?p=68960 The world will finally have its first official Bitcoin exchange-traded fund — though maybe not quite where you would expect.

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    The first-ever Bitcoin ETF will be launched on the Bermuda Stock Exchange (BSX) by Hashdex, a regulated Brazilian fund manager, and Nasdaq after garnering approval for the “Hashdex Nasdaq Crypto Index” four days ago.

    The news continues Bermuda’s legacy of being a crypto-friendly offshore international business and financial center.

    Three million Class E shares will be issued for trading and the exchange-traded fund is expected to go live by the end of 2020.

    Hashdex currently boasts $46.4 in assets under management across four funds and uses Xapo, Kingdom Trust, and Vo1t for services relating to crypto custody. KPMG is the firm’s auditor.

    ‘When Bitcoin ETF?’

    For years now, many Bitcoin proponents and cryptocurrency enthusiasts have been asking the question “when Bitcoin ETF?” While one is officially on the way for the Bermuda Stock Exchange, the prospect of such a regulated, insured, and institutional-focused vehicle for BTC exposure appearing on exchanges in the United States appears grim.

    Bids from various parties — such as the Winklevoss twins, VanEck, SolidX, and Wilshire Pheonix — have all been rejected by the U.S. Securities and Exchange Commission or pulled by the applicants. The securities regulator has frequently claimed that applicants failed to provide enough evidence that the BTC market is resistant to manipulation.

    Speaking on the matter was the SEC’s Chair, Jay Clayton, who said that a Bitcoin ETF in the US is possible, but there’s a lot of work to be done.

    ‘Biggest Front-Running Opportunity of Your Life’

    However, former Goldman Sachs executive and well-known fund manager Raoul Pal believes that a Bitcoin ETF is coming to the U.S. very soon. He recently stated:

    “I’m going to give you the biggest front-running opportunity of your life: they will get an ETF across the line. There will be billions of dollars that pour into it. Every pension plan will allocate some money to it. Every family office will allocate some money to it. And the more the price goes up, the more they will allocate.”

    Whether or not Pal’s prediction comes to fruition remains to be seen. However, it stands to reason that the SEC is objectively aware of the BTC market’s continued maturation and correlation to the equities markets. As such, it may take a more favorable stance as new Bitcoin ETF applications come across its desks.

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    Free DeFi Money: MEME Airdrop Now Worth $700,000 https://cryptopotato.com/free-defi-money-meme-airdrop-now-worth-700000/ Tue, 22 Sep 2020 10:13:10 +0000 https://cryptopotato.com/?p=68955 MEME token's price has skyrocketed to a high of almost $2,000, bringing the total value of the airdropped tokens to almost $700,000 in free DeFi money.

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    The DeFi space continues to amaze with stunning developments happening on a daily basis. Announced on August 18th through a Medium Post, Meme protocol is quickly catching speed with its native token hitting almost $2,000 a couple of hours back.

    The interesting thing is that it has a very limited supply of 28,000 tokens and most of it was distributed through an airdrop to people who joined their Telegram group.

    MEME Airdrop Worth $700,000

    Data from Etherscan shows that 72 people received around 355 MEME tokens as part of the protocol’s initial distribution. Worth pennies back then, the 355 tokens are currently trading at around $1,500 each.

    However, a couple of hours back, the price for MEME peaked at almost $2,000, bringing the total worth of the airdrop to about $700,000. Not bad for free DeFi money.

    Commenting on the matter of being one of the lucky few was Anthony Sassano, who, two days ago, confessed that he got the airdrop.

    I was one of the original airdrop recipients of 350 MEME tokens and sold them on day 1 because, at the time, it was just a random token with no use. Turns out that it became a legit project and 350 MEME is currently worth $300,000. 

    Of course, that was two days ago when the price of the MEME token was below $1,000. Today, its value more than doubled.

    Aidrops: The New “Fair” Distribution

    Back in August, Andre Cronje, the founder of Yearn Finance, announced the launch of YFI – a particularly scarce governance token with a supply of just 30,000. The thing that the community seemed to like a lot about it was the fact that it was all distributed to the community as people were able to provide liquidity and farm it.

    Now, it seems that airdrops are all the rage. First in line was Uniswap – the most popular automated market maker and decentralized exchange protocol. It launched its UNI governance token a few days back and everyone who used the platform before September 1st received a minimum of 400 UNI tokens. The price for the coins surged to an all-time high of almost $9 and the value of the airdrop reached around $3500.

    With MEME, people who got the airdropped tokens could currently sell them for much more, but of course, the number of users is substantially lower.

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    US Banks Can Now Hold Reserves on Behalf of Stablecoin Issuers: OCC https://cryptopotato.com/us-banks-can-now-hold-reserves-on-behalf-of-stablecoin-issuers-occ/ Tue, 22 Sep 2020 08:47:00 +0000 https://cryptopotato.com/?p=68891 In a letter published on Monday, the Office of the Comptroller of the Currency (OCC) allowed banks in the US to hold funding reserves for stablecoin-issuing companies.

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    The Office of the Comptroller of the Currency (OCC) is turning out to be the greatest supporter of the US cryptocurrency industry.

    Yesterday, the banking regulator issued a letter that greenlighted national banks and federal savings associations to hold “reserves” on behalf of stablecoin issuers. The stablecoins in the discussion are fiat-collateralized, i.e., backed by the US dollar or fiat currency of any other nation.

    US Banks Allowed To Hold Reserve Funds For Stablecoin Issuers

    On Monday, the OCC published an ‘interpretive letter’ directing ‘federally chartered’ financial institutions in the United States to hold reserve funds for stablecoin issuers.

    …a national bank may hold such stablecoin “reserves” as a service to bank customers…

    The above will apply to only the stablecoin issuer that ‘has sufficient assets backing the stablecoin in situations where there is a hosted wallet’. Also, stablecoins need to be “backed on a 1:1 basis by a single fiat currency where the bank verifies at least daily that reserve account balances are always equal to or greater than the number of the issuer’s outstanding stablecoins.”

    Commenting on the development, Brian P. Brooks, Acting Comptroller of the Currency said:

    National banks and federal savings associations currently engage in stablecoin-related activities involving billions of dollars each day. This opinion provides greater regulatory certainty for banks within the federal banking system to provide those client services in a safe and sound manner.

    US SEC Adds To The OCC’s Stablecoin’ Interpretation’

    Soon after the OCC issued its letter of stablecoin reserve holding guidance for national banks and federal saving associations, the SEC jumped in to add its opinion as well. A staff statement from The Securities and Exchange Commission Strategic Hub for Innovation and Financial Technology Staff (FinHub Staff)impressed more on the ‘security’ aspect of crypto assets.

    Whether a particular digital asset, including one labeled a stablecoin, is a security under the federal securities laws is inherently a facts and circumstances determination. This determination requires a careful analysis of the nature of the instrument, including the rights it purports to convey, and how it is offered and sold.

    The message is clear for stablecoin and crypto token issuers in general. ‘Market participants,’ as the SEC mentioned them collectively in the statement, should work within the confines of the securities laws. And refrain from engaging in activities that attract punitive federal action.

    …market participants may structure and sell a digital asset in such a way that it does not constitute a security and implicate the registration, reporting, and other requirements of the federal securities laws.

    The Fin Hub staff also admitted that a certain cryptocurrency or digital asset may not necessarily fall within the regulatory framework that the SEC has defined. It has encouraged crypto token producers to work in unison with the SEC so that the structuring, marketing, and functioning of digital assets comply with the federal securities laws.

    The Staff stands ready to engage with market participants to assist them and to consider providing, if appropriate, a “no-action” position regarding whether activities with respect to a specific digital asset may invoke the application of the federal securities laws.

    Circle CEO Welcomes OCC’s Letter

    Jeremy Allaire, the CEO of the USDC stablecoin issuing company Circle, expressed his appreciation at the OCC’s guidance letter. According to Mr. Allaire, it recognizes the efforts of his company to revolutionize the web-based usage of ‘digital dollars’:

    As an issuer of USD Coin (USDC), the guidance validates the approach we have taken in building a resilient, powerful and open standard for the use of digital dollars on the internet.

    He added to his statement by saying that the OCC guidance will empower more stablecoin-based businesses and firms to continue building on this aspect of cryptocurrency technology while remaining compliant with federal laws.

    With this clarity from the US Treasury Department around the standards for banks to hold reserves on behalf of stablecoin issuers, businesses of all sizes, fintech firms and banks can have more confidence in building on this innovation, while also ensuring that the guardrails and risk management expected from the US banking system can be applied to this new age of internet money.

    Not The First Crypto-Friendly Gesture From The OCC

    Earlier last month, Brooks, who functioned as Coinbase’s former Chief Legal Officer, said that financial payments need to happen ‘virtually instantaneously.’ He added to the sentiment by stating that ‘the crypto phenomenon cannot be ignored.’

    As reported by CryptoPotato, the Acting Comptroller of the Currency, in an interview with CNN’s Julia Chatterley, mentioned that a blockchain and crypto-friendly ‘payments charter’ needs to be introduced. And that his job as the Comptroller of the Currency is to identify innovation that can solve the inefficiencies that currently plague payments.

    In July this year, Mr. Brooks allowed banks regulated by the Federal Reserve to offer crypto custody services.

    The post US Banks Can Now Hold Reserves on Behalf of Stablecoin Issuers: OCC appeared first on CryptoPotato.

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