Remitano Weekly (08/04): What’s behind last week’s surge in the price of Bitcoin?

Bitcoin increased to $5,000? Let’s find out the reason behind the surge along with other interesting crypto news since last week.

GOOD READS

What’s behind last week’s surge in the price of Bitcoin?
Last week saw the price of Bitcoin surge to more than $5,000 in just under an hour, before settling back to the $4,900 range for the rest of the week. The big move in the markets was primarily due to improving technical market factors, as well as the looming Bitcoin halving set to take place in mid-2020. This price pattern has been seen a year out from previous halvings as well.

Sand, death, and cryptocurrency – life in a decentralized Syria
One autonomous region of Syria is experimenting with blockchain and decentralized governance as a way to retain its independence in the face of the Syrian government. Local merchants are looking into solutions for accepting crypto, and the local government is embracing the political philosophy of democratic confederalism – a philosophy which happens to have a lot in common with blockchain.

Crypto is about to start looking more like your bank
A new banking standard from the FATF (Financial Action Task Force) is set to introduce crypto regulations and KYC guidelines that look strikingly similar to bank regulations today. Many crypto exchanges will likely attempt to comply with the regulations, but preserving customer anonymity and remaining independent of regulators could be a tight line to walk for many.

COMMUNITY NEWS

European union launches international association of trusted blockchain applications

2019-04-07

The European Union announced the launch of the International Association of Trusted Blockchain Applications (INATBA) on its official website on April 3. More than 100 members who have signed the charter include IBM, Accenture and Deutsche Telekom. Among the blockchain-related members number Iota, Ripple, ConsenSys, and the Sovrin Foundation.

Per the announcement, INATBA aims to bring together industry startups, small and medium enterprises (SMEs), regulators and standard setting bodies to bring blockchain and distributed ledger technology (DLT) into the mainstream. It is also noted  that the new organization is willing to promote the use of decentralized technologies by establishing a dedicated regulatory framework.

During the Brussels ceremony, European Commissioner for Digital Economy and Society Mariya Gabriel noted that the EU is committed to fostering the development of blockchain. She said:

In today’s economy, there is less and less time to build trust in the way it happened in the past. To fight cancer, to balance renewable energy, to trace the authenticity of goods, actors must be able to trust one another without meeting face-to-face. And how can we achieve this? Of course, with the help of blockchain.

Number of active Bitcoin wallets increased prior to crypto market surge

2019-04-07 (1)

The number of active Bitcoin (BTC) wallets increased in the two weeks leading up to the recent cryptocurrency surge. There a high number of digital wallets holding Bitcoin became active two weeks before the cryptocurrency market rally. Bitcoin skyrocketed on April 2, gaining 15 percent over the night and pushing over $4,500 for the first time this year.

According to Flipside Crypto, 40 to 50 percent of all Bitcoin had been held in digital wallets that were inactive from one to six months, while the average has reportedly been 10 percent since March 15. Eric Stone, co-founder and head of data science at Flipside Crypto, said that “there are more people warming up to the idea of buying Bitcoin.”

Stone also said that the price moves are usually the result of the interest in cryptocurrencies from a few large holders. The recent move purportedly reflects the case last fall when Bitcoin spiked 40 percent, although this time many smaller investors are “waking up.” The recent crypto market jump could also be linked to algorithmic trading, which is a method that uses automated software to detect trends and determine when trades should be made.

SEC staff publish framework for determining if digital assets are investment contracts

2019-04-07 (2)

Staff at the United States Securities and Exchange Commission (SEC) have published a framework to help market participants ascertain whether or not a digital asset is deemed to be an investment contract, and therefore a security.

Notably, the framework is the work of two SEC Commissioners: Bill Hinman, director of the SEC’s Division of Corporation Finance and Valerie Szczepanik, Senior Advisor for Digital Assets and Innovation — colloquially known as the Commission’s “crypto czar.”

The guidance is therefore not a rule, regulation, nor statement of the U.S. Commission, which has reportedly neither approved nor disapproved its content.

As the authors stress, the framework is not intended to be exhaustive nor to provide formal legal advice, but to serve as an analytical tool that will help operators of initial coin offerings (ICO) and token issuers determine whether their offering is likely to fall subject to federal securities laws. Market participants are thus urged to further consult the formal rules and regulations available on the SEC’s Strategic Hub for Innovation and Financial Technology (FinHub).

The framework focuses on determining whether a digital asset has the characteristics of one particular type of security — an investment contract — rather than covering the full gamut of possible security classifications.

In accordance with the 71-year old Howey Test, such a contract is deemed to exist where there is an investment in a common enterprise, in which investors are reasonably led to expect profits that other generate.

The authors’ framework tackles in detail all aspects of the Howey test in regard to digital assets, beginning with the investment of money and the distinct element of a common enterprise that holds for investment contracts. In regard to this latter, the authors note, “in evaluating digital assets, we have found that a ‘common enterprise’ typically exists.”

The framework devotes just over six pages to the most complex criterion — “a reasonable expectation of profits derived from the efforts of others” — noting that this is usually the “main issue in analyzing a digital asset under the Howey test.”

The authors state that a large part of the inquiry for this criterion focuses on the economic reality of the transaction itself and “what character the instrument is given in commerce by the terms of the offer, the plan of distribution, and the economic inducements held out to the prospect.”

Collected by Remitano