In news that no Blockchain Monitor reader wants to hear, technical analysts are sounding the alarm bell on bitcoin. On Dec. 6, bitcoin slid below its 52-week low to around $3,400, which comes on the heels of November, in which it experienced its worst month in seven years. Chartists forecast that bitcoin could drop another 60 percent, to around $1,500. Fundamental analysts have blamed the drop on regulatory pressure, the recent hard fork and the choppy conditions in global markets generally. Due to the price drop, many bitcoin miners have ceased operations. This appears to have resulted in the second-largest drop in Bitcoin block hashing difficulty in history, with a drop of 15 percent reported on Dec. 3. A cryptocurrency mining pool recently reported that breakeven for mining operations, depending on various factors, is between $3,891 and $11,581, which means at current prices, many large-scale miners will spend more on mining than the price for which they can sell the bitcoin.
The plunge isn't stopping the capital markets industry from moving forward with new ideas, however. Institutional investors will now be able to trade on the cryptocurrency exchange Poloniex. These investors will have access to different cryptocurrency trading pairs and API interfaces as well as no-fee transactions on all bitcoin/U.S. dollar (USD) coin trades made this month. In Hong Kong, a Chinese investor will be heading up a stablecoin project within a blockchain fund. This "stable digital currency system" will focus on major currencies, beginning with instruments pegged to the yen, Aussie dollar and USD.
In regulatory developments, the New York Department of Financial Services (DFS) announced approval of a new virtual currency with commercial banking applications. Launched by a regional, New York state-chartered bank, the blockchain platform allows no-fee transfers of virtual currency between client accounts at the bank. DFS announced that to gain approval, the bank had to, among other things, implement, monitor and update effective risk-based controls and other measures to prevent money laundering or terrorist financing. In national news, Rep. Warren Davidson (R-Ohio) announced a forthcoming plan to regulate initial coin offerings and cryptocurrency offerings. The proposed legislation would create a new asset class that would regulate tokens in a way that allows them to avoid being classified as securities.
Overseas, the Swiss market regulatory body, FINMA, published new rules allowing licensed fintech companies to accept public deposits of about $100 million. An applicant seeking licensure must provide details about its business plan, asset storage methods and anti-money laundering policies, and the applicant cannot invest or pay interest on the funds received. In France, 26 companies and five banks have completed a block-based know-your-customer (KYC) test where participants were able to implement KYC checks on a shared network. And a Singapore-based cryptocurrency exchange, Huobi, recently acquired a license to operate in Gibraltar.
Caveat emptor: An MIT study reported that pump-and-dump schemes account for about $7 million in cryptocurrency trading each month. Fraudsters buy a coin at a low price, work to boost its value, then sell holdings before new buyers are able to get out. Investors should be heartened that according to the report, this represents only 0.049 percent of traded volume and new tools are emerging that it is hoped will drop this to zero. Researchers investigating these frauds believe they have developed an algorithmic tool that will be able to spot the coins targeted for pumping and dumping before the scheme begins.
For more information, please check out the following links:
- DFS CONTINUES TO LEAD RESPONSIBLE INNOVATION IN NEW YORK'S FINTECH INDUSTRY WITH NEW VIRTUAL CURRENCY APPROVAL FOR COMMERCIAL BANKING TRANSACTIONS
- Crypto Exchange Poloniex Launches Institutional Trading Services
- Institutional accounts now available on Poloniex
- S. Rep. Warren Davidson announces legislation to regulate initial coin offerings at Blockchain Solutions conference
- Swiss FinTech licence: FINMA publishes guidelines
- Swiss Fintech License Allows Blockchain, Crypto Firms to Accept $100 Mln in Public Funds
- 26 French Companies, Five Banks Complete Blockchain-Based KYC Trial Based on R3's Corda
- Billionaire Crypto Investor to Develop Stablecoin Within Hong Kong-Based Blockchain Fund
- Huobi Gains Gibraltar DLT License, Plans Global Exchange Rollout in 2019
- Bitcoin Falls as Technical Indicators Point to More Pain in 2019
- Study: Pump and Dump Schemes Account for $7 Million of Monthly Trade Volume
- Machine learning identifies cryptocurrency scams before they happen
- Bitcoin Faces Second Largest Difficulty Drop in History After Latest Adjustment
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