Top Crypto News – 02/10/2017

Senate 2018 Budget Adds $1.5 tln to National Debt: Bitcoin Bubble?

 

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The US Senate Budget Committee has released its 2018 proposed budget for approval in the larger congressional body. The proposal will then be matched with the House proposed budget and worked out for final approval, before being sent to the White House.

The Senate proposal contains provisions that will increase federal spending for this year, adding a jaw-dropping $1.5 tln to the national debt over the next year. Committee members have suggested that the tax cuts would produce economic gains, which would offset the total debt spending.

After 2019, the proposed budget would begin to cut non-defense spending, resulting in substantial budget savings over the next decade. The goal of both the Senate and House proposals is to balance the budget in that time.

Bitcoin unstable?

After recent comments by the Federal Reserve officers regarding trust in the government, the new budget seems more confidence-eroding than building. While the government can continue to print money and increase the national debt (now nearly $19 tln), Bitcoin is held at a fixed supply.

Multiple analysts have pointed out that as long as Bitcoin continues to increase in use cases and liquidity, the price per Bitcoin will inevitably increase. Just as the Federal Reserve has printed money to maintain a debt ratio, Bitcoin’s stability will drive the price up, which should greatly ease investor fears of a bubble.

Written by cointelegraph

Sweden Poised to Become Leading Scandinavian Cashless Society through Bitcoin

 

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Sweden is fast-moving to follow through on its plans to become the world’s first cashless society.

While this is seen as a good sign for digital currencies on a new progressive frontier, it brings issues, such as privacy concerns, when every transaction is surveyed. Nevertheless, the country is still rooting for Bitcoin as the answer to provide anonymity similar to the traditional cash system.

Potential profits in cashless

As seen by many of Sweden’s financial institutions, companies make no profit from the use of cash, as it lacks harvestable personal data and it has to be physically managed. Due to this problem, finance is potentially changing to cashless transactions, with Sweden leading the way.

Reports show that 900 of Sweden’s 1,600 bank branches no longer store cash, and they will no longer accept cash deposits. There is a gradual decrease in numbers of ATMs, and the circulation of the Swedish krona fell from 106 bln in 2009 to 60 bln in 2016.

This has left Sweden’s central banks, such as Riksbank, wondering if the country should introduce a digital form of government-backed money. Bitcoin is one of the leading solutions.

Privacy concerns

According to Visa, cards are the main form of payment in Sweden, and the public uses them three times more often than the average European. Swish, a very popular mobile app in the country, uses phone numbers to allow anyone with a smartphone to transfer money from one bank account to another in real-time.

The developers of Swish include Nordea, Handelsbanken, SEB, Danske Bank, and Swedbank.

Gradual adoption of cashless society

Louise Henriksson, a Swedish teaching assistant says:

“I don’t use cash any more, for anything. You just don’t need it. Shops don’t want it; lots of banks don’t even have it. Even for a candy bar or a paper, you use a card or phone”.

Bjorn Ulvaeus of the Abba Museum, carries no cash at all, and cites personal safety as the main reason as to why a cashless Sweden is beneficial for its citizens:

“We don’t want to be behind the times by taking cash while cash is dying out… There was such a feeling of insecurity… It made me think: what would happen if this was a cashless society, and the robbers couldn’t’ sell what they stole?”

The downside of having to go cashless is that it marginalizes those who may not have bank accounts and a mobile phone.

Bitcoin does not require its users and adopters to have a bank account, making it at least an improvement in that area, and it also allows the user to spend their money, if not totally anonymously, in a way that is close enough to mimic the anonymous usage of cash.

Sweden, along with other Scandinavian countries such as Norway and Denmark have long said no to cash.

As previously reported, the Chamber of Commerce of Denmark has already proposed to allow most retailers, except for essential services like hospitals, post offices and the like, to ensure that all financial transactions are done electronically, and essentially ban cash. In fact, the Danish Government has “set a 2030 deadline to completely do away with paper money.”

By the looks of it, these Scandinavian countries are strong-willed in following through with their set goals, as Sweden has also explored other ways to use Blockchain in their public services, including land registry.

 

Written by Cointelegraph

 

US State Department to Host Blockchain Forum on October 10

 

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The US State Department will host a forum on Blockchain on Oct. 10. The event will take place in George C. Marshall Center, Washington, DC where various offices from the State Department and other parts of the US government, as well as those from the private sector, will join the one-day workshop organized by the Blockchain@State initiative.

According to the group, the mission of the event is to “explore both the policy implications and potential applications” of the tech within the context of US diplomatic efforts. The group was originally launched earlier this year.

Moreover, they have the goal of tracking Blockchain developments and keeping the department informed of new applications with the technology. The US State Department is looking to boost its research resources in support of a new working group focused on Blockchain.

Reporting to Thomas Debass, the director for innovation and the acting special representative for global partnerships, the group will track developments in Blockchain and prepare bi-weekly briefings to keep the initiative informed of new applications in the field.

Participating companies

Included in the list of participating companies are the IBM, Microsoft, Pricewaterhouse Coopers, ConsenSys, and many other firms. Part of the discussion in the Blockchain workshop is the presentation of cases among participating companies.

Furthermore, the workshop will also lecture about how Blockchain can assist with various global issues, including humanitarian crises.

Although some details are unclear at this time – the opening keynote speaker is only identified as a “High-Level U.S. Government Official”, per EventBrite – confirmed speakers include Toomas Ilves, former president of Estonia, and State Department chief information officer Frontis Wiggins.

“Blockchain is not just for Bitcoin. And it’s not just for the private sector. Nations and cities around the world are actively utilizing this technology to transform the work of government. This is happening now. And the Department of State cannot afford to wait to explore applications of this technology to the work of international development and diplomacy”.

This will be the second Blockchain-related forum involving the State Department this year, after an inter-agency event held in July.

The US State Department will host a forum on Blockchain on Oct. 10. The event will take place in George C. Marshall Center, Washington, DC where various offices from the State Department and other parts of the US government, as well as those from the private sector, will join the one-day workshop organized by the Blockchain@State initiative.

According to the group, the mission of the event is to “explore both the policy implications and potential applications” of the tech within the context of US diplomatic efforts. The group was originally launched earlier this year.

Moreover, they have the goal of tracking Blockchain developments and keeping the department informed of new applications with the technology. The US State Department is looking to boost its research resources in support of a new working group focused on Blockchain.

Reporting to Thomas Debass, the director for innovation and the acting special representative for global partnerships, the group will track developments in Blockchain and prepare bi-weekly briefings to keep the initiative informed of new applications in the field.

Participating companies

Included in the list of participating companies are the IBM, Microsoft, Pricewaterhouse Coopers, ConsenSys, and many other firms. Part of the discussion in the Blockchain workshop is the presentation of cases among participating companies.

Furthermore, the workshop will also lecture about how Blockchain can assist with various global issues, including humanitarian crises.

Although some details are unclear at this time – the opening keynote speaker is only identified as a “High-Level U.S. Government Official”, per EventBrite – confirmed speakers include Toomas Ilves, former president of Estonia, and State Department chief information officer Frontis Wiggins.

“Blockchain is not just for Bitcoin. And it’s not just for the private sector. Nations and cities around the world are actively utilizing this technology to transform the work of government. This is happening now. And the Department of State cannot afford to wait to explore applications of this technology to the work of international development and diplomacy”.

This will be the second Blockchain-related forum involving the State Department this year, after an inter-agency event held in July.

 

Written by cointelegraph

Cryptocurrency Flash Crash Draws Scrutiny From Watchdog

 

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A popular digital-coin exchange is drawing scrutiny from U.S. regulators over a June flash crash that erased most of the value in the second-largest cryptocurrency before traders had time to blink their eyes.

The Commodity Futures Trading Commission has requested information from Coinbase Inc. about a June 21 incident on its GDAX platform in which the ether digital token suffered a precipitous drop, falling to 10 cents from $317.81 in milliseconds before quickly recovering, said two people familiar with the matter.

Among the issues the agency is focused on is what role leverage might have played in the plunge, as Coinbase allowed traders to use borrowed money to make bigger wagers than would have otherwise been possible, said the people, who asked not to be named because the review isn’t public.

The CFTC inquiry is the latest sign that federal authorities are growing worried about a market with scattershot oversight that has attracted big money. Coinbase, which says it has served 10.6 million customers and facilitated $20 billion in digital currency transactions, is regulated by various states through a patchwork system.

It’s not registered with the CFTC, the main U.S. watchdog of currency futures. Coinbase doesn’t allow traders to buy and sell derivatives, and firms don’t typically fall under the regulator’s direct jurisdiction unless they allow swaps trading. Coinbase does hold licenses with financial agencies in dozens of states, as well as Puerto Rico, according to its website.

‘Full Cooperation’

The CFTC sent San Francisco-based Coinbase a letter with a list of questions, including queries about margin trading, one of the people said. Coinbase began offering margin accounts in March, as it sought to attract institutional investors by providing them loans to amplify their bets. The company disabled the service after the June crash.

“As a regulated financial institution, Coinbase complies with regulations and fully cooperates with regulators,” the company said in an emailed statement. “After the GDAX market event in June 2017, we proactively reached out to a number of regulators, including the CFTC. We also decided to credit all customers who were impacted by this event. We are unaware of a formal investigation.”

CFTC spokeswoman Erica Elliott Richardson declined to comment.

$12.5 Million Trade

Coinbase’s ether plunge was caused by a single $12.5 million trade — one of the biggest ever — that prompted selling by other investors. The decline triggered automatic sell orders from traders who’d requested to bail on the currency if prices dropped to certain levels, and led GDAX to liquidate some margin trades.

While the drop was dramatic, it was also temporary. Computer algorithms quickly started issuing buy orders that drove prices back up to $300 within 10 seconds.

Bitcoin and other cryptocurrencies have surged this year. But regulators and financial executives are concerned that investors are inflating a bubble that’s destined to pop. South Korea banned margin trading in bitcoin and ether Sept. 29 after China earlier cracked down on digital currencies. Last month, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon likened cryptocurrencies to the infamous Dutch tulip bulb mania of the 17th Century.

Sharp Reversal

One risk of allowing margin trades is that in a sharp market reversal, trading platforms could run into problems if investors can’t repay the money they’ve borrowed.

That’s what happened in January 2015 when the currency brokerage FXCM Inc. almost toppled after Switzerland shocked markets by letting its currency appreciate. When the franc jumped, FXCM customers lost more money than they had in their accounts, forcing the company to seek a $300 million bailout from Leucadia National Corp.

Coinbase’s GDAX had a margin funding limit of $10,000. To qualify, investors had to meet at least one of several qualifications laid out under federal law.

For instance, individuals can only trade with borrowed money if they have more than $5 million invested in various financial markets and are using their margin accounts purely to hedge risks. Individuals are exempt from the hedging requirement if they have more than $10 million invested. The rules are looser for institutional investors, such as hedge funds and corporations.

Rising Complaints

Last year, the CFTC sanctioned a different digital token market, Bitfinex, for allowing investors who didn’t meet the $10 million threshold to make margin trades. Bitfinex also broke the law because it didn’t deliver some bitcoins that investors had bought using leverage within a required timeframe, the CFTC said. Instead, it held the tokens in accounts that it owned and controlled, according to the regulator. Bitfinex agreed to pay $75,000 to settle the case, without admitting or denying the allegations.

 

Coinbase has suffered outages and other performance problems as it’s struggled to handle the surge in volume that’s accompanied skyrocketing cryptocurrency prices. It has also faced a sharp increase in customer complaints. Almost 500 consumer grievances have been flagged about the company this year on a database maintained by the Consumer Financial Protection Bureau, compared with just six for all of 2016.

Coinbase and investors who use it to trade have piqued regulators’ interest in the past. In 2016, the Internal Revenue Service asked a court for permission to serve a summons against Coinbase, seeking records about taxpayers who have traded digital currencies.

It also has attracted prominent investors including Marc Andreessen’s venture capital firm and the New York Stock Exchange. In August, Coinbase received $100 million from a group led by Institutional Venture Partners, a Menlo Park, California-based venture capital firm.

 

Written by Bloomberg

 

Police Confirm North Korean Connection in Bitcoin Exchange Phishing

 

North Korean leader Kim Jong Un claps with military officers at the Command of the Strategic Force of the Korean People's Army (KPA) in an unknown location in North Korea

Law enforcement officials have confirmed that hackers from North Korea sought to steal bitcoins from exchanges in South Korea.

In a report released last week, the Republic of Korea’s National Police Agency (NPA) said the incidents – which were said to be ultimately unsuccessful – did occur. It further detailed that 25 employees at four different exchanges were targeted in 10 separate “spear phishing” attempts since July.

Spear phishing is when a would-be hacker pretends to be someone else in order to trick the victim into providing login or other details.

The confirmation comes several weeks after cybersecurity firm FireEye published a report on the attacks.

AFP, citing regional news source Yonhap, reported that those behind the attacks pretended to be security specialists and sent emails with malware included as attachments. The police report further indicated that the hacking attempts also targeted smartphones, suggesting that they may have been attempting to compromise devices used for two-factor authentication.

Perhaps most notably, the NPA indicated that none of the investigated attempts resulted in either the loss of funds or an actual security breach, according to AFP. No exchanges were identified in the report.

The Permanent Mission to the United Nations of the Democratic People’s Republic of Korea did not respond to a request for comment.

 

Written by Coin Desk

 

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