Top Crypto News – 27/03/2018

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Israel Officially Declares Bitcoin Is Not a Security


Israel’s ISA Declares Bitcoin Is Not a Security

“As a general rule,” the ISA Committee revealed, “cryptocurrencies that are designed to be used exclusively as a medium of payment, clearing, or exchange and are not limited to a specific venture; that do not confer additional rights; and are not controlled by a central entity — will not be deemed securities.”

Analysts are convinced this could be a precedent-setting decision, as developed economies all over the globe struggle with how to classify cryptocurrencies. Israel has been a leader of sorts, with a rather hands-off approach when it comes to regulation of crypto. Bitcoin ATMs in the country, as opposed to those in the United States for example, do not ask for basic know your customer identification. Put in fiat, receive bitcoin.

Israel Declares Bitcoin is Not a Security
Ms. Anat Guetta

“The question of whether a cryptocurrency should be considered a security will be decided on the totality of the circumstances and features of each case in accordance with the purposes of the law,” the report detailed. “As a general rule, cryptocurrencies that confer rights similar to the rights conferred by traditional securities such as shares, bonds, and participation units, will be deemed securities. In contrast, cryptocurrencies that represent rights to a product or service and are acquired solely for the purpose of consumption and use and not for investment purposes, will not be considered securities.”

Recommendations were given to ISA Chair Ms. Anat Guetta. The newly appointed Chairwoman, so far, has been somewhat hostile to bitcoin, announcing earlier this month how her agency would ban it from the nation’s stock exchange indices. “We have decided to prevent the exposure of passive investors to companies whose main activity involves cryptocurrencies. Investment in these companies is high risk, speculative and volatile. We also published a detailed warning to investors about the dangers of investing in cryptocurrency,” Ms. Guetta stressed.

A Delicate Balance

Summer of last year, the ISA set up the ICO committee. It exists to “examine the application of the Securities Law to public offerings and issuances in Israel based on distributed ledger technology (DLT). The committee was assigned to study and analyze these ventures, draft a comparative international review of the relevant law, and outline a recommended regulatory policy in areas related to the Securities Law, with the overarching aim of striking a balance between promoting technological innovation and protecting the investors,” the ISA release explained.

Israel Declares Bitcoin is Not a Security

A key litmus test for whether a crypto is a security basically comes down to “if the token cannot be used when it is issued or if it can be traded on a secondary market, these may be indications that its acquisition was made for investment rather than for consumption purposes.”

It is clear from the document that regulators are attempting a delicate balance as they face realities brought about by cryptocurrencies and their spawn, ICOs. For the crowdfunding mechanism, the committee urged, “The use and extension of specific existing and future capital raising tracks for ICOs should be considered, including an examination of the following issues: lenient regulation for small-scale ICOs; raising capital through ICOs on crowdfunding platforms; defining a provisional framework for ICOs pilots, in the form of a regulatory sandbox, including oversight of the cryptocurrency developers, and; examining the option of relying on foreign regulation that applies to cryptocurrencies.”

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Coinbase Announces Support for Ethereum ERC20 Tokens


Coinbase announced today it’s intention to add ERC20 support to several of its suite of products.

Historically, Coinbase announcements have caused huge retail influxes of retail investors, erratic price swings, and even allegations of market manipulation. That’s why it was a surprise today when Coinbase‘s latest announcement came not with a bang but a bearish whimper. Prices are down across the board today and there has been very little reaction to Coinbases momentous announcement. Whether or not the market chooses to react in the next 24 hours, one thing is for sure. Coinbase’s addition of ERC20 support will have wide-reaching effects around the cryptocurrency markets for years to come and cannot be overlooked.

What is ERC20?

ERC20 is the standard used by Ethereum tokens and smart contracts. It serves as an interface to which anyone wishing to issue a token or write a smart contract must comply. There are a total of 59,948 Ethereum contracts out there. Although Ethereum’s market share has shrunk, they almost single-handedly dominated the ICO bull market of 2017.

For instance, many of the most successful currencies such as EOS which raised $185 million in just 5 days, Bancor which raised $153 million, and at least 2 more that raised $70 million or more. ERC20 tokens are seen as the bedrock of ICOs, and blockchain applications by fans of Ethereum.

How will this affect Coinbase?

Coinbase has a number of products this will affect. The first, and potentially the most important for institutional investors is Coinbase Custody. While unfamiliar to many retail investors, Coinbase Custody is a digital asset custody service that provides secure storage and financial controls of large holdings. No one knows how many customers are using custody, but it is seen as the most prominent digital asset custodian in the U.S. Therefore, the addition of ERC20 tokens might open up the door for a more diverse set of cryptocurrency trusts.

GDAX, Coinbase’s digital asset trading platform, which currently only supports Bitcoin, Ethereum, Litecoin, and Bitcoin Cash will “wait for additional regulatory clarity” before adding more assets. It’s unclear what this means, in what jurisdictions they are seeking more guidance on regulation, or what their legal concerns are. Coinbase also has not established a timeline on this so whether or not it happens in 2018 is up for speculation.

Coinbase, the companies flagship product will continue following the process it instituted after the Bitcoin Cash insider trading scandal and price pump of only adding coins to Coinbase after they have been listed on GDAX.

Coinbase Asset Management, the companies index fund, will include any new assets on a market capitalization basis. I.e. if you invest $100,000 and new ERC 20 Token x has 20% of the market cap of coins on Coinbase,  you will own $20,000 of token x.

Coinbase also announced that their payment processing product, Coinbase Commerce, has no plans at all to accept payments in any other cryptocurrencies. This is obviously a blow to all of the coins wishing to be used for real-time transactions but highlights the cautious approach the company is taking.

How will this affect CryptoMarkets?

The move has failed to give the markets any confidence with the total market capitalization down around $30 billion. The move couldn’t even boost Ethereum which is odwn almost 10% today. I could be wrong, but I think if this move had come when the market cap was at $700 billion reactions would have been stronger.

Featured image from Shutterstock.

Cryptocurrency Exchanges in Chile Call Out Banks for Denying Them Services


Banks Taking the Law Into Their Own Hands

Cryptocurrency Exchanges in Chile Call Out Banks for Denying Them ServicesChilean cryptocurrency exchanges are fighting for their right to open a bank account in the country in order to serve clients who are switching over from fiat. BUDA and Crypto MKT have condemned the closing of their local banking accounts and said that a bank representative told them that they had instructions to “not open an account for anyone that has relation to cryptocurrencies “.

The two companies made a joint public statement warning that: “The lack of knowledge and regulatory clarity has given rise to the fact that some banks, out of fear, misinformation or perhaps by strategy, are refusing to provide their services to anyone who has any relationship with any digital asset.” Adding that “in Chile the regulation is in the hands of a few, who are acting as de facto regulators and are opting to prohibit.”

BUDA and Crypto MKT called on ABIF to “make its position transparent” and to define whether companies linked to cryptocurrencies will have access to banking services, or if the banks “are determined to prevent the existence” of the young industry. In addition, the exchanges called for both the authorities and the public to pay attention to the issue, “before it’s too late.”

Exchanges Play By the Rules

Cryptocurrency Exchanges in Chile Call Out Banks for Denying Them ServicesTo showcase how they are not a possible legal risk to the banks, the two exchanges highlighted that they “have developed safe platforms of the latest technology for the protection of their customers and have opened channels of collaboration with authorities”, in addition to explaining to the public the characteristics, advantages and risks of trading these type of assets. Both firms, they add, pay taxes, are registered with the relevant Chilean financial authorities, and follow standard prevention of money laundering and anti-terrorist financing guidelines.

Banks preventing exchanges from opening accounts is a problem in many places around the world, but legal victories are possible. Last month the Supreme Court of Israel issued a temporary injunction order forbidding the country’s Bank Leumi from sweepingly halting the account activity of the Bits of Gold bitcoin exchange.

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ONO, the First Blockchain-based Social Network in China, Officially Announces Run for EOS Super Nodes


The campaign for the 21 super nodes around the world has become the hottest topic in the Internet and in venture capital circles recently ever since the EOS’ main network came online two months ago. EOS, a popular project of blockchain 3.0, has been receiving attention since its inception. In addition to BM’s own accomplishments, its DPOS consensus mechanism, the speed of a million transactions per second, and its top 10 traded market cap at present, EOS has been proven to be a great possibility for next-generation blockchain infrastructure. Today, ONO, the first blockchain social network, is announcing that it will officially run for the EOS super nodes, indicating its campaign for the EOS global 21 super nodes has officially kicked off.

Today, DApp ONO, the first blockchain-based social network of China, has simultaneously announced on founder and CEO Xu Ke‘ s micro-blog and ONO’s official micro-blog, that ONO will formally participate in the bid for EOS 21 global super nodes. Shortly after, in an official ONO telegram group, ONO said: “This is an exciting time! World-wide participants of the EOS ecosystem coming together in the bid for the global EOS super nodes will be responsible for serving all humanity! ONO is ready to provide computing and bandwidth support for global network users. If the bid is successful, ONO will build an appropriate network for the entire ecosystem along with the other 20 super nodes around the world.

ONO’s confidence to run for the EOS global super nodes is based on its strong and stable technical support. More importantly, as the world’s largest free, decentralized social network, ONO is also about to be deployed on EOS Testnet, becoming the first deployed blockchain DApp on EOS in the world. This is worthy of attention in the entire blockchain industry.

As to why ONO chose to engage in strategic planning with EOS, it is speculated that ONO will be rolled out by the end of April, implementing an invitation system to limit access to a certain number of seed users. The migration of EOS is the key to satisfying the community operation needs and is also related to setting the tone in early social network construction. It has been reported that the improved EOS is able to support large-scale active users and is fully appropriate for use in the social media field. When the EOS main line is officially released and meets the requirements, ONO will also immediately migrate from EOS Testnet to the EOS main network. Based on this strategic relationship between the two parties, it is clear that ONO is very important for EOS. Just last weekend, Xu Ke, ONO’s founder and CEO, was invited to talk about the products and ecosystem with the blockchain-development community at the EOS-DApp Ecosystem Development Conference in the world’s largest EOS community attraction zone in Chengdu.

Different from POW mechanisms and POS mechanisms, EOS adopts the DPOS consensus mechanism, which has speed and efficiency as its highlight. EOS claims to support millions of transactions per second in the future, benchmarking Ethereum to become the head of the underlying public chain. It can solve the existing low performance problem of blockchain applications, poor security, development difficulties, and excessive reliance on processing fees. As of early March 2018, more than 50 organizations or institutions worldwide have applied to become EOS super nodes. Whether or not ONO, the first blockchain-based social network in China, will become the dark horse, is worth looking forward to.

When EOS completes its system goals, any team in the world will be able to develop the required DApps faster on EOS, making blockchain applications officially enter the next milestone.

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