Tech

Can Cryptocurrency Regulation Revive Its Reputation?

Published

7 months ago

29 June, 2024

Can Cryptocurrency Regulation Revive Its Reputation?

They called him the “Crypto King,” but after a month-long trial, a New York jury took less than five hours of deliberations to find Sam Bankman-Fried guilty of charges including fraud and money laundering.

The 31-year-old cryptocurrency billionaire now faces decades in prison after his arrest last year after his exchange, FTX, went bust. He had pleaded not guilty to all seven charges.

Bankman-Fried’s extraordinary fall from grace coincided with a rocky 2022 for the cryptocurrency industry. The stablecoin Terra, touted as one of the most reliable digital currencies, lost 96% of its value in a single day.

Bitcoin, perhaps the best-known of all cryptocurrencies, lost more than 60% of its value last year. It was the second worst year in the history of the digital currency (it was down 73% in 2018).

But the biggest negative news for cryptocurrencies has been FTX, which has been promoted by A-listers such as supermodel Gisele Bundchen, comedian Larry David and NFL star Tom Brady, putting an “acceptable” face on what is still considered by many to be a risky investment.

‘Wild West’

Michael Lewis, author of books such as Moneyball and The Big Short, both of which were later adapted into Oscar-nominated films, recently wrote a book about Bankman-Fried. Speaking on The News Agents podcast, he said that “Cryptoland is the Wild West” and suggested that other exchanges are structured like FTX, but are out of reach of U.S. prosecutors.

The challenges of 2022 have led to increased calls to introduce regulations – or even specific regulators – for cryptocurrency and digital assets, but how will this and can it work?

“Unfortunately, cryptocurrency scandals and a lack of regulatory clarity have made cryptocurrencies almost a dirty word in the financial services world,” explains Sasha Skoryk, head of banking at Clear Junction.

“The term ‘crypto’ is used so loosely that we don’t really understand all the components of digital assets and blockchain technology.

“What’s holding back this mass adoption of digital ledger technology is that some of these cryptocurrencies are so volatile and can change in price very quickly. That makes them risky and not something that can be easily adopted by businesses, for example. But there are so many elements of cryptocurrencies that have the potential to transform the way we make payments.”

Effective regulation can “provide the critical confidence that both institutions and individual investors need to confidently enter or re-enter a market,” adds Spectrum Search founder and CTO Peter Wood.

“The crypto space is nascent and therefore highly susceptible to volatility, misinformation and fraudulent activity. The introduction of a dedicated regulator can effectively act as a stabilizing force by setting clear standards, enforcing compliance and ensuring consumer protection.

“Such oversight not only adds credibility, but also streamlines processes, making it easier for new entrants to adopt and innovate. On the other hand, the challenge is to find the right balance.”

However, he cautions that there is a fine balance to be struck.

“Overly restrictive regulations can stifle innovation and drive away potential investors and technology leaders, which is counterproductive to restoring the cryptocurrency world’s reputation.”

VARA

For the UAE, cryptocurrency and digital assets are seen as a huge opportunity. In fact, at the recent GITEX conference in Dubai, a local government official told TechInformed that the goal is to make the emirate the “Switzerland of cryptocurrencies” by acting as a neutral and welcoming home for digital asset companies.

To achieve this, Dubai became the first region to launch its own independent regulator for virtual assets: after several years of development, the Virtual Assets Regulatory Authority (VARA) went live in March 2022.

VARA’s mission includes the aim of making Dubai a “regional and international hub for virtual assets and related services”, but also to “promote shared responsibility in developing efficient and tailored regulations to protect customers and curb illegal practices in coordination with the relevant bodies”.

TechInformed asks VARA Vice President Deepa Raja Carbon to explain why Dubai chose to create a regulator specifically for the virtual assets sector.

VARA Vice President Deepa Raja Carbon

He explains: “When we were created, cryptocurrencies were not viewed in the same way that they have been in the last six months. It was an industry that every jurisdiction globally wanted to promote and nurture to help grow.

“Part of the Dubai 2033 plan, laid out last year, was to target new economy sectors, and everything from blockchain and the metaverse to artificial intelligence and virtual assets fell under that mandate.”

The 2033 plan was drawn up by Ruler Sheikh Mohammed bin Rashid Al Maktoum to steer Dubai’s economy towards new areas and opportunities, including transforming the city into one of the world’s leading smart cities.

According to these plans, the new economy sectors account for approximately $100 billion of that goal.

“One of the obvious things that this formulation doesn’t address is any regulation of virtual assets,” adds Raja Carbon. “So if you stopped thinking about virtual assets as a vertical and started thinking about them as a horizontal, almost a cross-section, none of the other ones would be able to be attractive or grow with it. For that scalability, we needed to build a foundation, and that’s VARA.”

In February this year, VARA issued the highly anticipated Virtual Assets and Related Activities Regulations 2023, which sets out the regulatory framework governing virtual assets and all related activities in the emirate, with numerous updates announced since then. Its mandate concerns only the Emirate of Dubai.

Now, more than 800 companies operate in Dubai in the space covered by VARA without licenses, although Raja Carbon has set a target that by the end of the year all these entities will have the correct registration or are in the process of doing so. of registration, to obtain a VARA license to operate.

“So by the end of the first quarter of next year, they will either formally apply for our license, or they will close completely,” he adds.

To address the broader market and those companies that may be connected to virtual activities but not directly in that space, VARA has launched the Dubai Legacy Program, which is expected to impact around 850 companies. This will allow them to go through a transition period to align their activities with VARA regulations through a temporary license.

VARA only covers the Emirate of Dubai: the rest of the UAE has its own crypto rules under the Emirates Securities and Commodities Authority (ESCA), while payments are still regulated by the Central Bank of the UAE.

So how does VARA balance Dubai’s goal of becoming a leader in this sector, with the need to protect itself from bad actors through regulation?

“We’ve set ourselves up to be a very agile regulator,” explains Raja Carbon. “I don’t just mean agile in terms of responding to the market, but also in terms of regulations that need to change, knowing that this is not a static industry. It’s dynamic, it’s going to change, and regulators are only as good as they are aware of what the market can do.

“Our regulations will constantly evolve, but we need to protect those who need protection the most, and that means not being completely vague so that a person isn’t sure where they’re going to land.”

Dubai: We built this city on blocks and chains

Around the world

At the moment, there are few signs that other countries are willing to follow Dubai’s lead with a dedicated regulator, but many are moving.

Spectrum Search’s Wood points to Switzerland and Singapore as two nations that stand out for embracing a “proactive, but balanced approach” to cryptocurrency.

He explains: “The Monetary Authority of Singapore provides clear guidelines and promotes innovation while ensuring investor protection. The Swiss “Crypto Valley” in Zug has become a global hub thanks to its forward-thinking regulatory framework that is both business- and investor-friendly.

“It is the synergy between clear rules, accessibility to regulators, and an overall progressive mindset that makes these countries stand out in the cryptocurrency legislative landscape.”

TI analyzes the latest regulatory moves in the largest markets

WE: The nation announced a new framework in 2022 that opened the door to further regulation. The new directive gave power to existing market regulators such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

The SEC has already moved toward regulating the industry with its widely publicized lawsuit against Ripple, alleging it raised more than $1.3 billion by selling its native token, XRP, in unregistered securities transactions. More recently, the SEC has targeted exchanges and companies like Coinbase (COIN) and Binance (BNB) for their crypto products. SEC Chairman Gary Gensler has spoken openly about cryptocurrency and called it “a Wild West.”

China: China classifies cryptocurrencies as property for inheritance purposes.

The People’s Bank of China (PBOC) has banned cryptocurrency exchanges from operating in the country, saying they facilitate unauthorized government financing.

Additionally, China imposed a ban on Bitcoin mining in May 2021, forcing many of those involved in this activity to shut down operations entirely or relocate to jurisdictions with a more favorable regulatory environment.

And in September 2021, cryptocurrencies were banned entirely.

However, the country has been working on the development of the digital yuan (e-CNY). In August 2022, it officially began launching the next round of its central bank digital currency (CBDC) pilot test program.

European Union: Cryptocurrencies are legal in most of the European Union (EU), although governance of exchanges depends on individual member states.

The EU’s Fifth and Sixth Anti-Money Laundering Directives (5AMLD and 6AMLD) recently came into force, tightening KYC/CFT obligations and standard reporting requirements.

In September 2020, the European Commission proposed the Markets in Crypto-Assets Regulation (MiCA), a framework that increases consumer protection, establishes clear conduct in the cryptocurrency sector and introduces new licensing requirements. It was provisionally agreed in 2022.

In April 2023, Parliament passed measures allowing legislation requiring certain crypto service providers to apply for an operating license. This legislation is intended to provide regulators with the tools they need to monitor cryptocurrencies used for money laundering and terrorist financing.

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Tech

The Information Hires Peterson to Cover Tech, Finance, Cryptocurrency

Published

6 months ago

29 July, 2024

CoinFlix Staff

The Information Hires Peterson to Cover Tech, Finance, Cryptocurrency

My life is nice

Tech news site The Information has hired Business Insider actress to cover technology, finance and cryptocurrencies.

She was part of Business Insider’s investigative team. She was also previously a corporate technology reporter and a technology deals reporter.

Peterson has been with Business Insider since June 2017 and is based in the San Francisco office.

She previously worked for Folio as an associate editor. She holds a bachelor’s degree from the University of California-Davis and a master’s degree from New York University.

Chris Roush

Chris Roush is the former dean of the School of Communications at Quinnipiac University in Hamden, Connecticut. Previously, he was the Walter E. Hussman Sr. Distinguished Professor of Business Journalism at UNC-Chapel Hill. He is a former business reporter for Bloomberg News, Businessweek, The Atlanta Journal-Constitution, The Tampa Tribune, and the Sarasota Herald-Tribune. He is the author of the leading business journalism textbook, Show Me the Money: Writing Business and Economics Stories for Mass Communication, and of Thinking Things Over, a biography of former Wall Street Journal editor Vermont Royster.

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Tech

Trump Courts Crypto Industry Votes, Campaign Donations

Published

6 months ago

28 July, 2024

CoinFlix Staff

Trump Courts Crypto Industry Votes, Campaign Donations

Author, Brandon Livesay
Role, BBC News
July 27, 2024

Donald Trump said at one of the biggest cryptocurrency events of the year that if he is re-elected president, he will fire the chairman of the U.S. Securities and Exchange Commission (SEC) on his first day.

On Saturday, Trump was the keynote speaker at Bitcoin 2024, a gathering of industry heavyweights in Nashville, Tennessee.

The Republican presidential candidate used the event to woo voters and encourage the tech community to donate to his campaign.

Cryptocurrencies have emerged as a political battleground for Republicans, with Trump saying that the Democratic Party and Vice President Kamala Harris were “against cryptocurrencies.”

The crowd was at its most animated when Trump declared, “On day one, I will fire Gary Gensler,” the SEC chairman appointed by now-President Joe Biden. The crowd applauded loudly and began chanting “Trump” at this statement.

SEC files charges against ‘Cryptocurrency King’ Sam Bankman-Frittosentenced to 25 years for stealing billions of dollars from customers of his cryptocurrency exchange FTX.

Speaking for about 45 minutes, Trump outlined some of his ideas for the industry if he wins the November election. He said he would make the United States the crypto capital of the world. His support for the sector is a 180-degree reversal from his comments in 2021, when he told Fox Business he saw Bitcoin as a “scam” that influence the value of the US dollar.

Trump told the crowd at the event that he would retain 100% of the Bitcoin currently owned or acquired by the U.S. government, adding that it would be a “national stockpile of Bitcoin.”

The former president also said he would “immediately appoint a presidential advisory council on Bitcoin and cryptocurrencies.”

He talked about the power needed to mine cryptocurrencies. “It takes a lot of electricity,” he said, adding that he would build power plants “to do that” and that it would “use fossil fuels.”

In recent months, some tech leaders have seen growing support for Trump’s presidential campaign. Tesla founder Elon Musk, who is the world’s richest person, has backed Trump. And cryptocurrency moguls the Winklevoss twins, who attended his speech on Saturday, have also come out in support.

Trump noted that his campaign accepts cryptocurrency donations, saying that in the two months since allowing cryptocurrency transactions, he has received $25 million (£20 million) in donations. However, he did not say how much of the payments came from cryptocurrency.

Trump used his speech to frame cryptocurrency regulation as a partisan issue, saying the Biden administration was “anti-crypto.”

Several Republican lawmakers also attended Trump’s speech, including Senators Tim Scott and Tommy Tuberville. Former Republican presidential candidate and Trump ally Vivek Ramaswamy was also in attendance.

The event was also attended by independent presidential candidate Robert F Kennedy Jr. and Democratic Party congressmen Wiley Nickel and Ro Khanna.

Earlier, during Bitcoin 2024, Democratic Congressman Nickel said that Kamala Harris was taking a “forward-thinking approach to digital assets and blockchain technology.”

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Tech

WazirX Crypto Exchange Hack and Its Bounty Program: What Does It Mean for Crypto Investors in India?

Published

6 months ago

28 July, 2024

CoinFlix Staff

WazirX Crypto Exchange Hack and Its Bounty Program: What Does It Mean for Crypto Investors in India?

On July 18, India Cryptocurrency exchange WazirX has been hit by a cyber attack which resulted in the loss of over $230 million worth of digital assets from one of its wallets. The exchange responded by suspending regular trading and reporting the incident to Indian authorities and other cryptocurrency exchanges. The company also launched two reward programs for ethical hackers who can help the exchange trace, freeze, and recover stolen funds.

WazirX said there was a cyberattack on a multi-signature wallet operated through a digital asset custodian service known as Liminal. Multi-signature wallets have a built-in security feature that requires multiple parties to sign transactions.

“The impact of the cyberattack is over $230 million on our clients’ digital assets,” WazirX said in a blog post, adding that INR funds were not affected. The company has firmly denied that WazirX itself was hacked and has brushed aside rumors that it was tricked by a phishing attack.

The exchange also noted that it was “certain” that its hardware keys had not been compromised, adding that an external forensic team would be tasked with investigating the matter further.

But Liminal, after completing its investigation, said: “It is clear that the genesis of this hack stems from three devices compromised by WazirX.”

Meanwhile, WazirX founder and CEO Nischal Shetty said that the attack would have been possible only if there were four points of failure in the digital signature process.

Who is behind the cyber attack?

WazirX has not yet disclosed the suspected parties or perpetrators responsible for the hack. However, news reports have emerged that North Korean hackers were responsible for the incident.

On-chain analytics and other information indicate “that this attack was perpetrated by hackers affiliated with North Korea,” blockchain analytics platform Elliptic said.

In response to The Hindu’s questions to WazirX about the North Korean hackers, cryptocurrency exchange WazirX directed us to its blog and said it was working with law enforcement to investigate whether a known malicious group was behind the attack.

“This incident affected the Ethereum multisig wallet, which consists of ETH and ERC20 tokens. Other blockchain funds are not affected,” WazirX said in its official blog, specifying that approximately 45% (according to preliminary work) of cryptocurrencies were affected by the attack.

The company largely placed the blame on the process of securing Ethereum multisig wallets and said that the vulnerability was not unique to WazirX.

How important is WazirX in the cryptocurrency industry?

WazirX calls itself India’s largest cryptocurrency exchange by volume. As of June 10, it reported total holdings of ₹4,203.88 Crores, or 503.64 million USDT. Tether [USDT] It is a stablecoin, that is, a cryptocurrency pegged to the value of the US dollar, but it is not an official currency of the United States.

When The Hindu tried to access WazirX Public and Real-Time Reserve Proof After the hack, we were greeted with a notice that the page was under maintenance.

WazirX has received both positive and negative reviews in India. The Enforcement Directorate froze the exchange’s assets in 2022, criticizing its operating procedures and lax Know-Your-Customer (KYC) and Anti-Money Laundering (AML) regulations.

“By encouraging obscurity and adopting lax AML norms, it has actively assisted around 16 accused fintech companies in laundering proceeds of crime using the cryptocurrency route. Accordingly, equivalent movable assets amounting to Rs 64.67 Crore in possession of WazirX have been frozen under the PMLA, 2002,” the ED said in a statement.

What will happen to WazirX assets?

It is unlikely that the stolen WazirX assets will be fully recovered anytime soon. This is due to the very nature of cryptocurrency, where assets can be easily mixed, transferred, converted, and sent to anonymous wallets. The chances of asset recovery are even slimmer if it is confirmed that North Korean hackers are behind the incident.

CEO Shetty said on X on July 22 that “small” portions of the stolen funds had been frozen, but declined to provide further details. He added that the majority of the funds had not been moved from the attacker’s wallet.

In recent years, North Korean hackers have stolen billions of dollars in cryptocurrency, aiming to circumvent various financial and economic sanctions.

WazirX is currently working to resume normal operations and has planned to launch an online survey to decide how to resume trading on the platform.

While the Indian exchange has defended its security practices and highlighted the challenges facing the cryptocurrency industry as a whole, savvy crypto traders will be looking for action plans and accountability, rather than emotional reassurance.

What does your rewards program consist of?

WazirX has announced two bounty programs: one to gain more information about stolen funds, and the other to recover them. Both programs are open to everyone except WazirX employees and their immediate family members.

Under the first program, WaxirX will reward up to $10,000 to anyone who can provide the exchange with information that can help freeze the funds. If the bounty hunter is unable to freeze the funds on their own, they should work with WazirX by providing enough evidence to facilitate the process.

But “if the participant fails to freeze and/or does not cooperate with WazirX to facilitate the freezing of funds, then the participant will not be entitled to any rewards,” the exchange said.

The second program, called White Hat Recovery, is aimed at recovering funds. Participants are offered 10% of the amount recovered as a white hat incentive.

“This reward will be paid only after and subject to the successful receipt of the stolen amount by WazirX. The above rewards will be payable in USDT or in the form of recovered funds at the sole discretion of WazirX,” the exchange noted.

The bounty programs are expected to last for the next three months.

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Tech

Trump Vows to Make US ‘Crypto Capital of the Planet and Bitcoin Superpower’

Published

6 months ago

27 July, 2024

CoinFlix Staff

Former President Donald Trump speaks at the 2024 Bitcoin Conference.

Speaking to a crowd of supporters at the Bitcoin 2024 Conference in Nashville, Tennessee, former President and Republican candidate Donald Trump said that if elected, he would make the United States the “crypto capital of the planet and a Bitcoin superpower.”

Trump added that he would “appoint a Presidential Advisory Council on Bitcoin and Cryptocurrencies,” which would have 100 days to “design transparent regulatory guidance that will benefit the entire industry.”

Trump has publicly opposed cryptocurrencies until recently. His latest statements serve as a rallying cry for a tech industry that has long called for more flexible regulatory oversight.

Shortly after taking the stage, Trump spent several minutes naming some of the conference attendees, at one point describing Winklevoss Twins Cameron and Tyler as “male role models with big, beautiful brains.” The former president has continued to speak out against electric car mandates and called for more fossil-fuel burning power plants.

Trump also said he would order the United States to withhold all Bitcoin it currently owns “in the future.” The U.S. government reportedly holds billions of dollars in Bitcoin.

About three years ago, Trump called Bitcoin “a fraud“that is “competing against the dollar.” In February 2024, the former president said that establishing a central bank digital currency would represent a “dangerous threat to freedom.” Yet, in May, Trump declared that he was “good with [crypto]“, adding, “if you’re pro-cryptocurrency you’d better vote for Trump.” That same month, he said he would commute with the Silk Road founder Ross Ulbricht’s Sentencingand his campaign said it would accept cryptocurrency donations.

Recent comments from Trump and independent presidential candidate Robert F. Kennedy Jr. have helped make cryptocurrency regulation a major political issue in the 2024 U.S. presidential election. This comes as the SEC intensifies its scrutiny of the cryptocurrency industry. SEC Chairman Gary Gensler, appointed by President Joe Biden, called the activity “full of fraud, scams, bankruptcies and money laundering.” Trump drew applause at the conference after promising to “fire” Gensler. (U.S. presidents have the power to appoint the heads of many federal commissions, including the SEC.)

With Biden out of the raceVice President Kamala Harris’s campaign advisers have He is said to have contacted to cryptocurrency leaders in an effort to “reset” relations with the industry. Harris’s campaign has not yet said whether her stance on the industry differs from Biden’s.

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