Top Crypto News – 21/06/2018

Amid Crypto Bear Market, Attention Turns to Small-Time Investors


“It’s all being bought by retail.”

Speaking at CB Insights’ Future of Fintech conference Wednesday, Nasdaq president and CEO Adena Friedman hit on a theme almost everyone at the event echoed: the central role normally marginal figures – small-time investors and millennials in particular – play in the cryptocurrency market (as well as financial technology or “fintech” more broadly).

During the first day of the conference in New York City, Friedman spoke about retail investors – who she called “Mr. and Mrs. 401(k)” – and their interest in crypto tokens created via initial coin offerings, or ICOs, a funding mechanism that exploded in late 2017 and early 2018.

And while Freidman expressed “real concerns about transparency” and the fear that ICOs could “take advantage of people,” she acknowledged that the technology opens up access to the early-stage investments, particularly now that IPOs are subject to so many rules that she said “no longer serve a purpose … or protect investors.”

Even though IPOs are a big source of revenue for Nasdaq, Freidman said of ICOs:

“You want to make it so that retail has access to great companies.”

Still, quite a bit of ambivalence was displayed about the fundraising mechanism, made popular by ethereum’s ERC-20 standard but now available in several different forms on many different blockchains.

Even as a conservative Republican with inclinations toward light regulation, Mick Mulvaney, the acting head of the Consumer Financial Protection Bureau (CFPB), raised the frightening prospect of no oversight at all – speculating on what would happen if Mt. Gox “became a regular occurrence.”

However, he went on to recognize that the application of old laws and regulations to cryptocurrency could produce “an absurd or unintended result,” which the CFPB wants to avoid.

Retail will be fine

Still, several speakers noted that retail investors will need both help and protection in interacting with the high-risk, high-reward ICO market.

These are not wealthy investors, after all, who the SEC treats – in Friedman’s words – “like big boys, big girls.”

In contrast, Vlad Tenev, co-CEO of Robinhood, the millennial-focused, mobile-only investing platform, expressed no hint of high-minded concern for retail investors. These small-time traders are Robinhood’s “bread and butter,” he said unapologetically.

The app started out offering commission-free trades in equities, followed by options – commonly regarded as high-risk investments – and then, in January, added bitcoin and ether to the investment options. In May, the company raised $363 million in a Series D to build the “largest crypto platform.”

This move into crypto – which is currently available to people in 16 states – came after large numbers of users began requesting that Robinhood list cryptocurrencies, Tenev said, making no mention of agonizing over how best to protect this group of investors.

If anyone should be worried about their financial futures, it is the stock brokerages and cryptocurrency exchanges that charge high fees, he continued, adding:

“If you look at cryptos, people are paying exorbitant fees right now – four, five percent per transaction – and it’s very similar to brokerage before we came in and lowered fees dramatically.”

Robinhood’s small-fry millennial customers, he seemed to be saying, are too smart to pay those kinds of fees.

Don’t mention the bears

And yet, what went mostly unsaid at the conference was telling.

Bitcoin prices have waltzed off a cliff since hitting nosebleed highs around $20,000 in December 2017. According to CoinDesk’s Bitcoin Price Index, the cryptocurrency is trading for around $6,750 at the time of writing – down more than two-thirds from its all-time high.

But no one seemed particularly eager to talk about the pain this bear market might have caused retail investors. Friedman and Mulvaney hinted at it in the abstract but made no mention of the fact that many retail investors are nursing steep losses right now.

At the same time, speakers and attendees sometimes appeared to salivate over the goldmine that millennials and other small-time investors represent. Soon the younger generation will be worth trillions of dollars, a CB Insights researcher pointed out in one presentation.

And Tenev boasted that over a million people signed up to Robinhood’s waiting list to trade cryptocurrency within the span of a few days – this at the very height of the recent mania. He also mentioned that equity trades on the platform are often in the “tens or hundreds” of dollars – in other words, implying that its users are hardly wealthy (though maybe they’re just cautious).

As such, it was perhaps easy for some to come away from the conference with the same see-sawing misgivings that Mulvaney and Friedman seemed troubled by.

While some ask why regular people shouldn’t be able to access potentially lucrative crypto opportunities, the space is rife with half-truths, sketchiness and outright scams, and in turn, another question presents itself: should often-inexperienced investors be expected to fend for themselves? These questions aren’t likely to go away soon.

But this new asset class, Robinhood’s Tenev said:

“Has staying power, significant staying power.”
Future of Fintech conference image via CoinDesk
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North Carolina Banking Bill Passes — Adds Virtual Currency License Requirements


North Carolina House Bill 86 Includes Money Transmission Changes and Licensure Guidelines in Regard to Virtual Currencies Passes Unanimously

North Carolina Banking Bill Passes — Adds Virtual Currency License Requirements On June 14, 2018, North Carolina’s general assembly unanimously ratified House Bill 86 which adds new language to the state’s permissible investments and statutory trust under the Money Transmitters Act. The bill’s final revision includes legal definitions concerning virtual currencies like bitcoin and other tokens. North Carolina’s legislation also requires the licensure of businesses that work with cryptocurrency activities. Furthermore, the state’s Commissioner of Banks Ray Grace can request data from the licensed cryptocurrency firm at any time. North Carolina House Bill 86 states:

If the licensee possesses virtual currency as permissible investments under this Article, the Commissioner may at any time request that the licensee verify, in a manner acceptable to the Commissioner, aggregate virtual currency transmission obligations outstanding and virtual currency held as permissible investments, including virtual currency stored offline.

Coinbase Believes North Carolina’s Bill ‘Helps Cryptocurrency Companies Comply With the Letter of the Law’

North Carolina Banking Bill Passes — Adds Virtual Currency License Requirements
Coinbase executive Mike Lempres

Commissioner Grace had also helped write the revised edition which included virtual currency definitions and licensee requirements. The firm Coinbase applauded the passage of House Bill 86 and formally thanked the banking commissioner, representatives Tim Moore, Dan Bishop, Jon Hardister, Bill Rabon, Stephen Ross, Jason Saine, and Jeff Tarte for helping bolster the legislation.

“Passage of House Bill 86 exemplifies how regulators and legislators can work together to foster innovation by either licensing cryptocurrency money transmissions or exempting cryptocurrency from money transmission laws,” the Chief Legal and Compliance Officer at Coinbase, Mike Lempres said last Thursday.

By helping cryptocurrency companies comply with the letter of the law, leaders in both states are paving the way for the economic and social benefits of this new technology to flourish within their communities.

The firm also complimented the state of Wyoming for recently passing its blockchain and cryptocurrency legislation after it had issues with the state prior to the passage of Wyoming’s guidelines. A while ago Coinbase suspended its services to Wyoming residents and the firm said at the time that the state’s Division of Banking made Coinbase operations impractical. As both North Carolina and Wyoming change their money transmissions laws the state’s look like they may see more business operations due to the legislative changes.

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Korean Government Details Regulatory Plans After Multiple Crypto Exchange Hacks


Korean Government’s Solution

Following recent reports of multiple security breaches at cryptocurrency exchanges, the South Korean government has revealed the details of the new bill to regulate crypto exchanges, local media report.

Korean Government Details Regulatory Plans After Multiple Crypto Exchange Hacks
Choi Jong-ku.

On Tuesday, June 19, South Korea’s second largest crypto exchange, Bithumb, posted a notice on its website and tweeted that about 35 billion won (~US$31 million) worth of cryptocurrencies was stolen. However, the exchange promptly removed the notice and deleted its tweets about the theft shortly afterward. The Bithumb incident came just 10 days after the country’s seventh largest crypto exchange, Coinrail, claimed that it was hacked on June 10, with the damage estimated at approximately $40 million.

Choi Jong-ku, Chairman of the country’s top financial regulator, the Financial Services Commissions (FSC), commented on the Bithumb news on Wednesday. He was quoted by Newsis saying:

In order to prevent this, we need to make the [crypto] transaction system stable and strengthen the protections of the traders by virtual currency handling businesses.

He explained that an amendment bill to the Act on Reporting and Using Specified Financial Transaction Information has already been submitted to the National Assembly in order to achieve this.

Crypto exchanges are currently “in the blind spot” of the Korean regulators, Newspim wrote, adding that they are “expected to be monitored by the financial authorities through the ‘report system’.” The publication elaborated, “This will block illegal money laundering using virtual currency exchanges and enhance the rules for transactions with commercial banks in cooperative relations such as opening virtual accounts.”

The Revised Bill

Korean Government Details Regulatory Plans After Multiple Crypto Exchange HacksAccording to the proposed bill, the government “will define a virtual currency exchange as a virtual currency handling business,” the publication described, noting that the obligation to prevent money laundering will be imposed on all crypto handling businesses.

“If the bill passes the National Assembly, a virtual currency exchange must be obliged to report to the Financial Intelligence Unit (FIU) as a virtual currency handling business and be regularly supervised by the FIU,” the news outlet detailed. If the authorities find any illegal activities, then the Financial Supervisory Service (FSS) and the FIU will inspect and investigate them.

Son Sung-eun, FIU’s Director of Planning and Cooperation Team, was quoted saying:

We could not afford to let virtual currency centers become a hotbed for money laundering.

The proposed amendment also obligates all financial companies to “preserve financial transaction data and information related to the implementation of obligatory transaction reporting, high cash transaction reporting, customer confirmation, etc. for five years.”

Penalties and Punishments

Sanctions will be imposed on any crypto businesses in violation of or failing to comply with the financial regulators’ rules. They include “recommending the dismissal of officers at the same level as banks and securities companies, suspending business operations, warning of institutions, and corrective orders.”

FIU manager Kim Ji-woong explained one particular disciplinary measure:

The defendant’s fines will be charged at 30 million won [~$27,077] if the virtual currency provider does not go through the customer verification process or does not check or report suspicious transactions.

Hong Sung-ki, Vice Director of Virtual Currency Countermeasures, was quoted by Hankyung reiterating that the enactment of this bill “does not mean that virtual currency exchanges are legally recognized and absorbed into the system.”

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SVK CRYPTO PODCAST 165 – 20/06/2018 – Elastos Founder Rong Chen on Blockchain Operating Systems!

Welcome to the SVK Crypto, 15 Minutes of Crypto Fame, brought to you by your host, Charles Storry. We provide daily cryptocurrency content and analysis on topics such as Bitcoin, Ethereum, Altcoins and ICO’s.

We not only produce our daily content we feature CEO’s of all exciting ICO’s! Stay tuned to find out more!

If you’d like to stay in touch or get more info from me, please SUBSCRIBE to the channel and spread the good word!

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Top Crypto News – 20/06/2018

Crypto Exchange Bithumb Halts Withdrawals Amid $31 Million Hack


Bithumb, one of the largest cryptocurrency exchanges in South Korea by trading volume, is halting asset deposit and withdrawal services after hackers stole 35 billion won (or $31 million) from the platform.

The company said in an announcement today that the hack happened between late Tuesday night until early Wednesday morning Korean time. Though Bithumb has yet to disclose which cryptocurrency or in what amount had been damaged, it said in the announcement that the loss will be covered by the platform.

Meanwhile, the company said other assets have been moved to a cold wallet that stores cryptocurrencies in an offline environment that is not accessible through the internet. As such, Bithumb said investors should “immediately discontinue depositing cryptocurrencies until further notice.”

The exchange has not responded to CoinDesk’s request for comment.

As of press time, Bithumb is seeing over $300 million 24-hour trading volume on its platform, making it currently the sixth largest exchange in the world, data from CoinMarketCap shows.

The hack marks the second incident in less than two weeks in South Korea. As previously reported by CoinDesk, Coinrail, a smaller cryptocurrency exchange in the country also reported that it was hacked on June 10.

Though the platform did not disclose the amount of the damage, other sources suggested at the time that $40 million worth of cryptocurrencies could be at risk.

CoinDesk will continue monitoring the evolving situation.

Korean won image via Shutterstock
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Medium Is the Latest Platform to Start Censoring Crypto Companies


Medium Wields the Banhammer on Bug Bounties

Medium Is the Latest Platform to Start Censoring Crypto CompaniesMedium is the crypto community’s platform of choice for long reads and thought leadership pieces. It’s a place where the latest thinking on tokenomics, hashing algorithms, blockchain scaling and much more can be found. It’s also where ICOs and other cryptocurrency projects publish details of their crowdsale, bug bounties, and other initiatives for the benefit of their community. In the past week, however, Medium has begun inexplicably suspending the blogs of crypto projects. The reasons for its decision are sketchy, but the suspensions seem to be triggered by content discussing airdrops or bug bounties.

In a post entitled “Status, Medium, and Censorship”, Ethereum-based messaging platform Status wrote, on June 15: “Medium is currently one of the primary communication channels of the cryptosphere. Blockchain-based visionaries, both affiliated with projects and independent free-thinking technologists, have all made Medium a critical part of how they communicate. Recently, we attempted to publish a blog post announcing our latest Bug Bounty Program. The post was immediately suspended, followed by an automated email noting a general violation, without detailing any specifics, and a link to Medium’s recently updated policy regarding cryptocurrencies.”

Medium Is the Latest Platform to Start Censoring Crypto Companies

They continued: “Though we had not violated any of these policies, we re-submitted several revisions that carefully edited out any potential trigger words, like “bounty”, “ETH,” and “SNT”. The post was never successfully published.” Status is not the only project to have been suddenly suspended without warning: this week’s Medium page also succumbed to the same fate. It’s since been restored, but the most recent blog post, discussing its airdrop, has gone. While’s Medium blog is hosted on the Medium platform, Status’s is self-hosted on their own domain. In each case, the end result has been the same: sudden suspension.

Creeping Censorship Is an Attack on Cryptocurrency

When Google and Facebook announced that they were calling a stop to ICO ads, few mourned their loss. But when other platforms joined in, including Twitter and, bizarrely, email marketing service Mailchimp, it led to fears that cryptocurrency was facing a concerted global attack. Be it through imitation or collusion, company after company has begun censoring or excluding crypto projects, whilst allowing far more egregious content including affiliate schemes, hate speech, and spam.

Medium Is the Latest Platform to Start Censoring Crypto Companies
Evan Williams

In its terms of service, Medium states that “We can remove any content you post for any reason” but does not specify what sort of content might give the company grounds to exercise that right. There is nothing that explicitly excludes cryptocurrency, airdrops, or bug bounties. Medium was founded by former Twitter CEO Evan Williams. While fellow co-founder and current Twitter CEO Jack Dorsey is extremely bullish on bitcoin, Evans’ only discernible comment on cryptocurrency is a single tweet posted five years ago.

“We worry that the seemingly arbitrary decision to suspend our blog is a sign of a troubling trend,” finish Status. “We’re concerned about the creeping censorship around cryptocurrencies. We want our society to be freer for everyone. We believe the forces of censorship and centralization often are closely bound and we worry when we see the power to freely express ourselves so arbitrarily limited.”

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$800 Million: ICON’s Token Swap to Take Place Within 24 Hours


The countdown has begun for smart contracts protocol ICON’s June 20 token swap.

On Wednesday, investors will swap their existing ethereum-based ICX tokens, used for project fundraising, for coins on a live version of ICON, effectively exchanging all existing tokens in an elaborate code migration. Launched in 2017, ICON aims to connect independent blockchain communities, each with their own governance proposals, to a governing blockchain based on a protocol called loopchain.

ICON sold 50 percent of its ICX token supply for the idea in a sale last September, raising 150,000 ETH worth around $42,750,000. The project launched its blockchain in January this year, and according to CoinMarketCap, it has a collective market capitalization of about $800 million.

Still, investors have yet to be issued ICX tokens.

As such, ICON’s swap will be implemented at an exchange rate of 1:1 (1 ethereum ICX token for 1 mainnet ICX coin) via the ICONex wallet from June to September 25, as well as through supporting exchanges. Users will have until Wednesday to transfer their tokens to Binance and Upbit, and until Thursday for Bithumb – the only three exchanges supporting the swap, according to ICON.

In the event that, instead of using the ICONex wallet, token holders wish to have an exchange carry out the migration process, ICON has advised users to have approximately 0.002 ETH in their ICX-ethereum wallet in order to pay for the transaction.

Once ethereum tokens are swapped for ICX coins, the fundraising tokens will be burnt, with those that don’t make the swap being locked once the swap period ends. This is to prevent further use of the tokens. (ICON has not yet indicated how token holders can track the progress of the swap.)

But if tomorrow will mark the live version of the long-awaited platform, it hasn’t all been smooth sailing in the run-up to the swap. For example, there has been some confusion within the community as to when the token migration was set to occur.

Unlike other projects, such as EOS, ICON opted to conduct its token swap after its mainnet launch. The project said at the time of the launch that it planned to delay the swap, projected for March in the project’s roadmap, until after it released its native wallet.

However, by early April, the project had yet to announce the date of the swap, and later apologized for what it called a “lack of communication leading to confusion throughout the community,” in an update on its Medium page.

Additionally, the project encountered some technical difficulties.

On June 16, a bug was discovered in ICON’s smart contract, allowing any user except the smart contract creator to disable token transfers. Although developers resolved the issue the same day, that didn’t stop users from faulting the project for its coding oversight in this instance.

Like other projects, ICON has also expressed concerns over potential scams. Yesterday, the ICON Foundation warned users of those who could be impersonating the project during the swap, such as actors requesting ICX to be sent to individual wallets rather than the ICONex wallet and supporting exchanges.

In addition to releasing its mainnet and preparing for the token swap, ICON recently announced partnerships with the Deloitte Startup Advisory Group and social media platform Line Plus, adding to their list of enterprise partners which include Samsung, Wanchain, Hyundai and Aion.

Railroad image via Shutterstock
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SVK CRYPTO PODCAST 164 – 19/06/2018 – Tron Founder Acquires BitTorrent

Welcome to the SVK Crypto, 15 Minutes of Crypto Fame, brought to you by your host, Charles Storry. We provide daily cryptocurrency content and analysis on topics such as Bitcoin, Ethereum, Altcoins and ICO’s.

We not only produce our daily content we feature CEO’s of all exciting ICO’s! Stay tuned to find out more!

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Top Crypto News – 19/06/2018





UBS CEO: Blockchain Is ‘Almost A Must’ for Business


The CEO of Swiss financial services giant UBS Group AG endorsed blockchain technology in an interview, suggesting that it is “almost a must” for business.

Sergio Ermotti told CNBC Monday that the technology can help companies become more efficient, thereby reducing costs for certain operations. In general, technology will help firms free up resources, but blockchain in particular “is a great way” to increase those efficiencies.

He said:

“Our industry will continue to be under pressure, in terms of gross margins. It’s no doubt. The only way you can stay relevant is not only by being strong in terms of capital, in terms of products, the quality of the people you have, advice you give to clients. You need also to be able to price it correctly.”

During the interview, Ermotti said that the blockchain technology “will be as crucial and disruptive, and changing as regulation was in the last 10 years.”

This is not the first time Ermotti has praised blockchain technology without similarly praising cryptocurrencies. During another interview with CNBC in October, he said he was far more bullish on blockchain than he was about cryptocurrencies specifically.

His comments echoed those of UBS chief investment officer Mark Haefele, who referred to bitcoin as being risky last year, as previously reported by CoinDesk.

Putting action to words, UBS is currently backing a blockchain-based trade finance platform, Batavia, in partnership with IBM. CoinDesk reported in April that the platform has conducted its first live cross-border transactions with corporate clients.

UBS image via Shutterstock.
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Swiss Crypto Company Acquires License to Distribute Funds to Investors


First Point of Contact for Crypto Assets

Swiss Crypto Company Acquires License to Distribute Funds to InvestorsCrypto Fund AG, a Zug-based subsidiary of the Swiss Crypto Finance Group (CFG), has received a license to distribute collective investment schemes to qualified investors, Reutersreported. According to an announcement by CFG, this is the first time a crypto business is granted such permission by the authorities in Switzerland.

The Swiss Financial Market Supervisory Authority (FINMA) confirmed the decision. However, the financial watchdog did not specify if this was in fact the first license of this kind.

According to another important clarification in the report, the permission does not mean the firm is allowed to operate as an asset manager for crypto funds. Nevertheless, the acquired license is a deliberate step, as confirmed by the company’s Chief Executive Officer, Jan Brzezek:

Getting the FINMA license is a big step in the right direction to establish us as the first point of contact for crypto assets.

Crypto Fund AG is also seeking another permission from financial regulators in Switzerland. This one would allow it to create a passive investment vehicle tracking a bench marked index of up to 10 of the most liquid cryptocurrency assets and digital tokens on the market. The index is calculated and maintained by Swiss bourse SIX.

Crypto-Friendly Nation with Positive Attitude

Getting the FINMA license is a big step in the right direction to establish us as the first point of contact for crypto assets.In recent years, Switzerland has established itself as a crypto-friendly jurisdiction. The country has its “Crypto Valley” in the canton of Zug, where Crypto Fund AG is registered. Many other crypto and blockchain businesses are either headquartered or represented there, including companies like the Chinese mining giant Bitmain. The Alpine nation has been considering the possibility to issue a state-backed cryptocurrency, although its central bank has admitted through an official that private digital currencies are better than any state-issued coin.

Businesses from the traditional financial sector have also benefited from the positive regulatory attitude of Swiss authorities. Hypothekarbank Lenzburg, a legacy financial institution, recently announced it was offering bank accounts to crypto companies, as reported. The bank’s management expressed desire to work with the young crypto sector, speaking of that as a “matter of credibility.”

Getting the FINMA license is a big step in the right direction to establish us as the first point of contact for crypto assets.But not only the private fintech industry and financial sector are interested in cryptocurrencies and the underlying distributed ledger technology. The fully state-owned Swiss Federal Railways, for example, has been selling bitcoin to its passengers for almost two years at over 1,000 ticket vending machines.

And the city of Zug, home of the Crypto Valley, is accepting payments in bitcoin and ether for municipal services, including company registrations. Authorities there are also planning to conduct a blockchain-based vote on questions of local importance.

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Payments Firm Square Receives BitLicense from New York


Services granted the license. Square first indicated back in March that it had submitted paperwork to receive a BitLicense, a move later confirmed by a spokesperson.

“DFS is pleased to approve Square’s application and welcomes them to New York’s expanding and well-regulated virtual currency market. DFS continues to work in support of a vibrant and competitive virtual currency market that connects and empowers New Yorkers in a global marketplace while ensuring strong state-regulatory oversight is in place,” Superintendent Maria Vullo said in a statement.

Square’s bitcoin-buying option – through its Cash app – first debuted last fall, after which the company began steadily providing access to a greater number of users. New York had, until today, remained a major U.S. market in which Square had yet to receive permission to operate.

The company’s move into the crypto space has already proven its worth, recent figures show. In May, Square reported that it had booked a small profit on $34 million in crypto-related revenue through is Cash app.

Jack Dorsey image via CoinDesk
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SVK CRYPTO PODCAST 163 – 18/06/2018 – Andreessen Horowitz believe in the Tokenisation of Real World Assets!

Welcome to the SVK Crypto, 15 Minutes of Crypto Fame, brought to you by your host, Charles Storry. We provide daily cryptocurrency content and analysis on topics such as Bitcoin, Ethereum, Altcoins and ICO’s.

We not only produce our daily content we feature CEO’s of all exciting ICO’s! Stay tuned to find out more!

If you’d like to stay in touch or get more info from me, please SUBSCRIBE to the channel and spread the good word!

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Top Crypto News – 18/06/2017






Metropolitan Bank Is Handling Millions for Crypto Clients (And It Wants More)


To most banks in the U.S., cryptocurrency businesses are pariahs. To Metropolitan Commercial Bank, they’re “pioneers.”

At least, that’s how the New York financial institution’s chief technology officer, Nick Rosenberg, describes them.

“We’re certainly very interested in growing this vertical,” Rosenberg told CoinDesk of the bank’s crypto clientele. “We’ve learned that it’s a serious industry. There are some very smart people involved. There are some very interesting ideas coming out that could really change the way people do business.”

While most banks cling to the adage “blockchain not bitcoin,” Metropolitan stands out simply by being one of the very few to enthusiastically court deposit business from crypto firms.

These clients include a few exchanges, as well as hedge funds and other crypto investors that bank at Metropolitan because it’s easier to quickly move their money to those exchanges. (To be clear: the bank only handles fiat for customers and does not touch crypto itself.)

So far, it’s proven a lucrative niche for Metropolitan. In the first quarter, cash management and foreign exchange conversion fees from cryptocurrency clients totaled $3.4 million, the bank disclosed in an investor presentation. This helped drive a more than 300 percent increase from a year earlier in Metropolitan’s total non-interest income, to $5.4 million, according to a Securities and Exchange Commission filing.

If that doesn’t sound like a lot of money, keep in mind that Metropolitan is a community bank. With just $1.9 billion in total assets, it’s less than one-1,000th the size of JPMorgan.

What’s more, that triple-digit rate of growth is astronomical for the U.S. banking industry, where non-interest income for all institutions climbed a measly 7.9 percent during the same period, according to data from the Federal Deposit Insurance Corp.

Yet despite the lucrative demand from crypto companies for banks to provide fiat liquidity and other traditional services, bitcoin-friendly banks like Metropolitan are still as rare as they were three years ago.

“It’s extremely challenging,” said Joe Ciccolo, president of the compliance service provider BitAML Inc. Referring to another sector that banks have famously shunned, he added:

“The legalized cannabis industry are having a much easier time than our cryptocurrency clients.”

‘High-touch relationship’

One reason Metropolitan Bank is an outlier in embracing the crypto industry is that most banks can’t stomach the risks. Chief among them is the regulatory risk.

Anti-money-laundering regulations require banks to identify their customers and even their customers’ customers, plus track the flow of funds. While public blockchains can help banks and law enforcement trace the movement of money, the pseudonymous nature of crypto addresses makes it hard to determine who is ultimately sending and receiving funds.

Bitcoin’s historical association with underground drug markets certainly doesn’t help.

“It’s very difficult for a bank to maintain a pro-bitcoin stance,” said Ciccolo, citing the high turnover among compliance officers. “If you have a new officer come into a financial institution, they may take the opportunity to put a different stance on high-risk customers such as crypto companies.”

As bullish as they may be, Metropolitan’s bankers still recognize the risks of working with crypto clients. “It’s a high-touch relationship,” Rosenberg said, meaning one requiring extra diligence.

With regard to risk management, Rosenberg said there are two crucial keys to serving crypto clients.

The first is being extremely selective about client acquisition, only working with companies that take compliance as seriously as the bank does. The second is maintaining an open dialogue with regulators.

“Law enforcement departments, in general, are understanding that cryptocurrency is not all about illicit payments, it has a value and it has a legitimate purpose,” Rosenberg said. “It’s just a matter of spending time explaining it, understanding what their concerns are, making them feel comfortable that we are mitigating those concerns, and that we have the right controls in place.”

Other risks

Compliance aside, Metropolitan also has to insulate itself from the volatility its cryptocurrency customers live with every day. As noted above, the bank only works with fiat currency like dollars, never touching cryptocurrency directly.

But more subtly, it’s minimized the risk to its own balance sheet in the event crypto depositors’ balances suddenly shrink. To illustrate why this would be a concern, the settlement accounts it maintains for exchanges totaled $281.2 million on March 31, representing 17.4 percent of the bank’s total deposits, according to the SEC filing.

Such a high concentration might normally be worrisome.

However, Metropolitan isn’t using these accounts to fund long-term assets like mortgages, just cash and equivalents. So, even if they were drained at once, it’s far from a run on the bank.

“They do not utilize a lot of these deposits in their everyday operations, just because they do know there is significant volatility there,” said Collyn Gilbert, an analyst and managing director at the investment banking firm Keefe, Bruyette & Woods.

To be sure, Metropolitan held another $100.8 million in corporate accounts for cryptocurrency firms, making up 6.2 percent of total deposits as of March 31. And these accounts do fund assets on the balance sheet.

But corporate accounts, which clients use for normal business activities like payroll, are less volatile than settlement accounts, which hold money only temporarily until a transaction is completed, Gilbert said.

Yet there’s one more risk Metropolitan has encountered in the crypto space: what finance types call “headline risk.”

In January, the bank sent its customers a reminder of what it said was a longstanding policy of not accepting crypto-related wire transfers from entities outside the U.S. Word leaked out to the press, which reported this was a new policy prompted by fraud. Metropolitan had to issue a public denial of that claim to quell backlash.

Reaping rewards

Setting aside the fee income and interest-free funding on deposits, there’s a more intangible benefit Metropolitan gains from banking cryptocurrency firms, one that arguably compensates for all the risks.

Namely, it gets a front-row seat to the revolution and is learning about how cryptocurrencies perform in the wild.

“I think Metropolitan was intrigued by the structure, more than just bitcoin, but the structure of that currency market in general,” Gilbert said. “The technology behind it is what has really been intriguing to this management team.”

Ciccolo agreed that serving this sector has given Metropolitan a competitive advantage.

“There’s a dual benefit for those banks that are willing to step out there,” he said. “Not only does it present a new book of business their competitors don’t have, so they can grow their customer base and reach, at the same time, it also gives them a sneak peek at some of the technology that might be impacting their world in traditional finance.”

Indeed, the bank’s director of new products, Kyle Hingher, said Metropolitan hopes to someday be one of the leading banks serving the emerging token economy, once the opaque regulatory landscape clears up.

“We’re looking at this market as a new asset class,” Hingher said. “We’d like to do more for the new asset class.”

For now, of course, even companies with cypherpunk ideals benefit from working with traditional banks to tap into audiences and services that utilize fiat currencies. Liquidity lends any crypto startup greater usability.

“If something is really going to succeed, it’s going to require a banking partnership,” Hingher said.

Looking ahead, the Metropolitan banker is keeping close tabs on the emergence of security tokens and blockchain-based settlement systems.

“The opportunity is to merge technologies and that potential for something brand new that could be earth-shattering and change everything. The potential for that, I think, outweighs all the crash-and-burn scenarios,” Hingher told CoinDesk, concluding:

“We call ourselves the entrepreneurial bank. We want to work with this new space rather than butting heads.”

Image via Metropolitan Commercial Bank
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EOS May Be Live But It’s Still Got Crypto Critics Debating


After a messy weeks-long process, CoinDesk broke the news yesterday that the EOS blockchain is officially live.

To some, it’s already an event for the cryptocurrency history books.

Still, if you haven’t been following the event closely, it might beg the question, ‘What is EOS anyway?’

When we talk about EOS, think about a cloud computing service like Amazon Web Service. It’s a platform for the storing or hosting of data, except rather than using a centralized server, EOS is attempting to distribute the data in a distributed system using blockchain technology.

It was created by blockchain startup,, and was able to gather over $4 billion to develop its open-source software over a year-long initial coin offering (ICO).

Last week, however, turned its code over to the world, or more specifically, to developers willing to work on the software as well as 21 block producers who will approve its transactions. The idea is that, in order to be more efficient than your average blockchain, EOS reduces the number of individuals or companies that can validate transactions.

Rather than competing in a global open market like bitcoin’s, users who own tokens are constantly voting for block producers.

The votes

Sounds pretty ideal right? Well, the trick is getting a global network no one is supposed to control off the ground.

Some questioned the set-up, as it ensured the voting process went on for some time while all the distributed users of the network struggled to coordinate. In this way, the more damaging criticisms might come from those who were eager to point out this has been done before (with varying results).

Overall, it’s safe to say this voting process looked a bit confusing from the outside, and other market observers were perhaps a bit too quick to cast judgement.

Some even went so far as to blame the plan of action for the token’s poor market performance over the last few weeks.

Education to come

These comments point to a central issue – EOS operates differently than other blockchains.

This means it’s still taking the industry a while to see what EOS is trying to create and that this vision actually adds value to the users it wants to reach.

As long-time industry observers point out, it’s still not really clear who would want a blockchain that’s not that decentralized. After all, blockchain believers cite decentralization as a key advantage of blockchains over the existing financial system.

As these tweets show, some already have their minds made up about how EOS will work.

Some even go so far as to argue past investments are influencing current opinions on the project.

But with EOS is ranked as the number five cryptocurrency on CoinMarketCap, there are those who remain eager to defend its vision.

As the tweet below shows, crypto Twitter might be divided on this view for some time to come.

EOS money image via Shutterstock
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An Inside Look at the Electron Cash Wallet Coming to iOS


Electron Cash Is Coming to iOS

An Inside Look at the Electron Cash Wallet Coming to iOSThe Electron Cash wallet is a reputable bitcoin cash (BCH) wallet that’s been around for quite some time. At the moment the client is available for Mac, Linux, Windows, and Android for mobile phones. However, the wallet’s development team and lead developer Jonald Fyookball are in the midst of building the Electron Cash application for iOS users. Fyookball has allowed access to the beta testing using Apple’s Testflight system so we could experiment with the wallet, and share our experience with our readers.

Experimenting With Beta Version 3.2.0 on Testflight

When opening the wallet users are greeted by a neon-blue like screen that says Electron Cash, from here the user can choose a few options when they launch the app for the first time. The choices given are the usual create new wallet, import an existing seed, or use existing public or private keys. We created a new wallet and the Electron Cash iOS interface gave us a new twelve-word mnemonic phrase to write down. After finishing writing the seed down, the wallet asks you to re-type all twelve words, but it doesn’t take too long because words are predicted and easily-tappable after a few letters are typed. You also encrypt the wallet with a password, and are given the option to name it as well. Remember your password and mnemonic phrase give you access to your funds, and keeping them a secret is a top priority.

An Inside Look at the Electron Cash Wallet Coming to iOS

The Electron Cash iOS app always asks you for your password whenever you open it or if you want to sign an outgoing transaction. In the wallet interface there are five main settings which include wallets, addresses, coins, contacts, and the settings section. The wallet section is basically the main page you are greeted with after entering your password. It shows the name of the wallet(s) and you can toggle to different wallets in the first field on the top of the page. The page will also show you all the transactions that have occurred for that specific wallet. On the very top, there is a blue banner with a green light indicating the client is synced up and online. If it was red this would indicate the wallet is not online and synced to the BCH network.

Moving on to the addresses page it will show a bunch of addresses both used and unused. You can toggle between funded addresses and unfunded addresses, alongside if they are receiving or change addresses as well. The Electron Cash wallet allows users to create contacts by utilizing an individual or organizations’ address so you can easily send funds to any recurring contact. The coins area shows BCH transactions that have been sent or received but are not yet confirmed.

An Inside Look at the Electron Cash Wallet Coming to iOS

The Electron Cash Wallet Has Numerous Adjustable Settings

The wallet’s settings section is where you can make a bunch of changes to the wallet, like change your password, and view your mnemonic phrase if you needed to see it again. In the settings, the Electron Cash iOS client has an address converter so a person can change a legacy address into the Cashaddr format. This section also offers a variety of features like the ability to change the fee to max static or the user can choose a custom fee. Below that where it says transactions, you can choose to utilize change addresses, multiple change addresses, and whether or not the wallet will spend only confirmed coins. Following this section, you can change the appearance, choose what block explorer you want to use. From here users can also set the fiat settings so you can view the value of coins in USD, EUR, and many other monetary units.

An Inside Look at the Electron Cash Wallet Coming to iOS

The wallet works very well for being in its beta (3.2.0) testing phase and Electron Cash users will be sure to enjoy this wallet. There were a few occasions where it was difficult to remove the keyboard and view the lower fields on the screen in the earlier versions we tried prior to the 3.2.0 upgrade released just the other day. Since then we’ve found the app works like a charm, and haven’t found any difficulties using it. The Electron Cash developers have also been looking for testers on the subreddit /r/BTC over the past few weeks in order to get feedback.

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