- Germans Lead the way! – Germany has been leading the charge across Europe in recent months to embrace the world of Cryptocurrency. Germany’s most recent backing comes in the form of how Cryptocurrency will be treated for VAT purposes. In summary: “Converting crypto to fiat is VAT free – Mining is VAT free – in game currencies are not equal to fiat – exchanges are not always VAT free – Cryptocurrencies are equal to fiat if they are used as payment and both sides agreed.” This is according to a Finance brief released by the German Finance Ministry. It is regulations such as these that will boost both the adoption and image of Crypto to those still yet to enter the space. Well done Germany!
$1 Trillion Asset Manager wants in! – Wellington Management Company based out of Boston USA are one of an already long line of Investment and Asset Managers to let it be known that they are investing into Cryptocurrency indirectly. They will be using a combination of Derivatives to speculate on the price movements of Bitcoin and investment into companies that have connections with Crypto related ventures such as IBM, Square, Nvidia and AMD. The news angle related to this story is the size of Wellington. This is the first company of its size to make it publicly known that they are interested in the space and would like to provide access to it for their clients.
- The megre reaction to this story is a sign of the times. Less than 4 months ago this would have been global news. Now it’s almost on the fringe of the gossip column. Things move fast in Crypto land. Maybe too fast… Traction is growing and adoption is now just over the horizon. Prepare yourself Hodlers!
- SegWit Transactions Double – Segregated Witness (a technology intended to speed up Bitcoin/Blockchain transactions) has doubled its volume of trades in the last three days. Both Coinbase and Bittrex recently confirmed that they had implemented the use of SegWit. Transaction fees are now as low as $2. The lowest in 4 months. With further adoption and integration across the remaining exchanges it is likely that we will see both lower fees and faster confirmation times helping to strengthen Bitcoin’s use case further.
3 banks in 3 days make bold Crypto claims but is it just smoke screen? – JP Morgan has now joined a number of banks that include Goldman Sachs in claiming that Cryptocurrency could potentially be a threat to their business models. Cryptocurrency is without question a disruptive technology and one that will alter the mechanics of many industries across the world in years to come. But can Crypto really disrupt the “Almighty Banks”?
- I believe these statements in part to be true but also a ploy. Current banking systems are at threat of disruption where blockchain is concerned, this is a certainty. Unless they alter its unlikely they will survive in their current guise. What is concerning is their admission of this threat. It is very unlike large banking institutions to make it known publically that they are vulnerable. It is believed that Bank’s have been indirectly and directly manipulating the value of Cryptocurrency for a quite some time, driving prices higher and lower at their discretion. This is still the belief for some. This manipulation was interpreted by many experienced investors as fear. A fear that Crypto could and would grow large enough to be a genuine threat. The Bank’s recent statements now give this a degree of “truth”. I however am a complete skeptic. I regard the recent statements as complete bulls**t. This is simply another market manipulation tool. Pure propaganda. JP Morgan alone supposedly has control of “$2.5tln of assets”. 2.5x the size of the entire Crypto market. The total value of all actual Cash invested into Crypto is supposedly between $50bln and $100bln. What does this actually mean? It means that Crypto is not a threat in anyway shape or form to Banks as things currently stand. Yes the Technology is, but are we really that naive in thinking that banks aren’t working on their own Cryptocurrencies? The recent statements in my opinion are nothing but a means of giving a false impression. For what precise reason and benefit to the bank’s I do not yet know… time will tell…
- Today, mobile payments App – Circle, purchased
Poloniex for $400mln. Circle currently operate a business that primarily consists of sending money for free on a global basis over the internet using a mobile application. Circle has investment backing from Goldman Sachs, Breyer Capital and Baidu to name a few. Circle’s acquisition of Poloniex opens up another new line of business to complement their existing payments system. In their blog they state – “our forthcoming Circle Invest app enables individuals to tap into crypto asset investment through a simple, seamless, mobile experience.” “Now Poloniex addresses another key element of Circle’s product foundation: An open global token marketplace.”
This is big news for the Crypto space. It’s essentially an indirect means of banks and equivalent industry gaining exposure to crypto currency and feathering their crypto nests from afar.
- This is what I have been waiting for. The start of Mergers and Acquisitions in the Crypto Space. – Everyday companies choose to consolidate their efforts and join forces resulting in a better overall company. “Greater than the sum of its parts.” This appears to be the first notable organisation that has been purchased by another of a similar related sector. Poloniex is ranked 14th in terms of trading volume. I would be prepared to bet a healthy sum that within the next 6- 12 months this could be a top 5 Exchange. It’s almost a given that Circle’s investors are the ones behind the purchase of Poloniex in order to gain an indirect exposure to cypto-currency’s potential upside and its technology. Owning a piece of crypto via a proxy/buffer such as Circle means that the investors can reap potential rewards without the current headaches associated with ownership such as regulation adherence and possible negative public perception.
- As a Financial Adviser, I understand Mergers and Acquisitions. The positive effects and impact upon how markets and sectors develop as a result is typically very positive. With 1523 coins in existence as of today, it is very clear that we are sitting on a shed load of ‘shitcoins’. The press and critics of Crypto currency suggest that 90% of coins will disappear. This is true, to a degree.
- My own belief is that huge swaths of coins (Companies/Projects) will see the benefit of merging forces. It’s very evident that the people in Crypto are leading the way in innovation and rethinking current infrastructures across all industries.
- Most coins do add benefit to the Crypto space, whether it is a unique idea, technology, algorithm or protocol. But unless this idea is proven and/or huge in potential it’s now difficult to get a foothold. The majority of new and existing coins only add benefit in very small doses and probably not enough to survive beyond their initial funding, hence going under. However, think of it like this – what would the value be if Ethereum joined forces with Quantstamp? Komodo with 0x? Golem with WePower? The list is endless and I am sure you can think of your own examples of what could be if some coins (Teams) were to join forces.
- Now imagine – what if Amazon was to merge with VeChain? Nebulas with Google? OmiseGO with TD Ameritrade? Steem with YouTube. Again, I am positive you can think of even better combinations.
- 90% will disappear, that is a given – but the people involved wont. Current developers and programmers working on your favourite projects probably won’t be there in 2 to 3 years time. They hopefully will have been merged with another project or fully fledged company that helps to compliment their skill set and the tech they are working on. I sincerely hope that this is a sign of things to come in the Crypto space.
US IRS chases down historic Tax – Coinbase issued an official statement to all of its clients informing them that they had been forced to hand of the records of around 13,000 individuals who were classified as “high transactor’s” within the 2013-2015 period. Coinbase went on to explain that back in 2016 they fought a legal battle with the IRS in court. The IRS initially wanted 500,000 records. The court ruled partially in favour on Coinbase, but not the 13,000.
- This is a significant retrospective action by the IRS. Many retail investors to date are still unaware that they may even have to pay tax let alone may have to consider paying tax from a few years ago. This is likely to create ripples around the world for other tax authorities seeking to lay claim to a portion of the Bull Run gains of 2017. You have been warned, always pay the tax man! For more information on Tax please see my free guide.
ICO’s fall in volume – Merely a month ago it seemed like there was a new hot ICO being launched every few days and everyone was spreading that painful illness known as “FOMO”. It is very evident that since Chairman Clayton’s words at the SEC Meeting in early February, calling for a more cautionary approach to investing in ICO’s, that the pace and number being issued have fallen. This is in equal measure for two reasons; 1. The team behind the ICO now recognise that regulation is real thing and that what they are launching is likely to be considered a security by the SEC and in turn will need to now or retrospectively adhere to SEC guidelines or face shut down. 2. The SEC are now taking a more hands approach in the market by calling ICO’s founders/board members and warning them of the potential breach they may face should Crypto-currency face SEC regulation in the future.
In summary – Regulation of ICO’s will provide investors with more protection but probably lower returns. Securitising the Crypto space is a positive move for investors. It forces ICO’s/Coins to provide investors with more upfront information before their release and an aim to provide a return on profits made. A large number of ICO’s that have been launched have consisted of a basic (sometimes copied) White Paper, a website with nothing on and specifically no promise or obligation of any return at all even if profitable. Securitising these assets will force them to provide investors with basic layers of protection.
- A quote from Adv. Aviya Arika, Head of Blockchain Innovation at Porat & Co. Law Firm, which I personally feel nails all aspects of the implementation of Crypto-currency Regulation:
“Contrary to what your instinct may tell you, regulation actually makes cryptocurrencies prices flourish.
Regulatory uncertainty, as well as outright bans by governments, have proved to be harmful to the crypto markets.
When an investor/user is not sure about how they are going to be taxed when they sell their crypto, or about the mere legitimacy of their use of crypto, they will most likely steer clear of it altogether or just hodl until further notice. These behaviors lead to a bearish market.
However, when regulators shed light on the way they view cryptocurrency, investors and users feel more certain regarding the way they can use crypto, whether it be as a medium of exchange, a financial instrument or any other form.
Generally speaking, I think that as more jurisdictions regulate and clarify legal statuses of cryptocurrencies, crypto markets will become substantially more stable and widely adopted. – Credit for quote to” – Nikolai Kuznetsov
Pan-Euopean Regulationof Crypto-currency on the horizon? – Austria’s Finance Minister Hartwig Löger has suggested that it might be in the best interests of future Crypto-currency regulation if it mirrors that of existing trading rules already in place for gold and derivatives. This would help to potentially reduce crypto-currency being used as a means of money laundering. Löger is due to make a number of proposals to the EU Commission in March one of which centres on money laundering in Crypto-currency. It is likely that this will be one of a number of proposals made to the Commission and the start of a regulatory introduction for Crypto-currency across Europe. In a statement to Bloomberg he said – “Cryptocurrencies are significantly gaining importance in the fight against money laundering and terrorism financing. That’s an important aspect for the changes we support. We need more trust and more security.”
- This is a good move in my opinion. Addressing the fears and concerns that Government hold most dear (besides how to tax Crypto of course) means that once a position has been taken on AML/CTF at a European level regarding Crypto, the industry will naturally improve its image with the mass markets. This could result in further investment into the space as well as better integration with existing infrastructure.
Bitmain Vs Nvidia – Bitmain have been in business just 4 years and are already making more profit than Nvidia who have been in business for 24 years! Bitmain have apparently reported operating profits of between $3bln – $4bln, while Nvidia reported $3bln. Yes, this is crypto-mania gone mad. Will it last? Probably. Bitmain specialise in the manufacture of ASIC Miners. These are the leading mining rigs in Bitcoin mining and have significantly better mining capabilities than graphics card based (Nvidia) mining rigs. The cost difference is huge at the same time with Bitmain Antminer S9’s selling for between $3000 and $4000. The average top end Nvidia graphics card (mining rig) might sell for between $750 and $1000. The question is, will Nvidia continue to focus on their core Graphics card clientele, or will they expand into Mining specific cards like Samsung are intending to do?
- Monero, the number one privacy coin, by market cap, recently announced that they would update their mining difficulty in favour of GPU Miners in order to reduce their reliance and dependence upon the more powerful ASIC miners. Why? Bitmain is a Chinese company. They currently dominate the ASIC market with a 70-80% share. Chinese Officials have made it difficult for companies like Bitmain to operate in China. Monero have taken steps to adjust the mining difficulty of their coin. Their aim is to equalise the difficulty between ASIC and GPU mining. This is to avoid Chinese Regulators indirectly having too much control over the potential of the Monero Network. I wonder if other coins/tokens that are largely backed by ASIC miners will consider doing the same? This might change Nvidia’s attitude to incentivising Retailers to choose Gamers over Miners.
- National Crypto-currencies – Since 2017 Public Officials from countries around the world have been claiming that their country is working on releasing their own Crypto-currency. In my opinion their motives and statements have been both questionable and fruitless. Until the Petro. The Petro has apparently raised $735m so far, with a target of $6bln. Whether or not this project is considered a success remains unknown. Yesterday, a Turkish Public Official claimed that Turkey was working on its own Crypto-currency. He said that “The world is advancing toward a new digital system. Turkey should create its own digital system and currency before it’s too late.” A report associated with the claims proposed that the currency would likely be asset backed by State Owned Assets that include the likes of; Turkish Airlines, the Istanbul Stock Exchange and Turk Telekom. Is this just hot air and a means for another Public Official to get his head above the parapet?
Robinhood has launched! – The Robinhood platform is known to provide commission free trading for Equities. It’s now launched its own platform across the Crypto-currency space. What does this mean and what is the impact? Robinhood has indicated that over 4m people have signed up to use its Crypto-currency application. Robinhood is rolling out their platform across the US in certain States only; US states California, Massachusetts, Missouri, Montana, and New Hampshire. The reason for the limited launch is based on the lack of and hugely differing “Crypto-currency Regulation” between each State. Robinhhood is a very popular Equity Trading platform and is helping to bridge the gap between Equity (Mainstream) Investors and Crypto Investors. At present Robinhood has 16 Coins available on its platform. The question I have is how many of the 4m users are existing investors vs. new investors to the space? Also, how quickly can they get the platform launched globally? I want commission free trading!
- Markets fall – Markets have fallen for a second day after the recent bounce from a recent market cap low of $279bln back up to $519bln. We now sit at $436bln. The fall appears to be correlated in some way to Bitcoin reaching both Technical and Psychological Resistance levels between $9,900 ($10,000) and $11,800. The Resistance appears to be linked to levels we were at back in early December 2017 when a flood of Retail investors entered the market. No other regulatory or political news appears to have been the catalyst for these sell offs across the board. The market is likely to be in a state of consolidation before a move higher (my opinion/not advice).