The Blockchain Brief – The week in five headlines
The case getting stronger for crypto as commodities in the US
The fourth case already seems to be establishing that crypto are getting the commodity treatment in the US. Federal Judge Rya Zobel ruled that U.S. Commodity Futures Trading Commission (CFTC) has authority “ to prosecute fraud and manipulation in the crypto space ”, in a case involving the MBC ( “my big coin” token ) .
Whereas the My Big Coin Pay Inc. argued that there are no derivatives or future contracts trading on MBC, the judge recognized previous case law and argued that, as in the other three cases, the MBC fell under “ the broad definition of commodity under the CEA ”, and that “ the CFTC has the power to prosecute fraud with respect to commodities including virtual currencies ”.
Institutional buyers surpass individual buyers for large transactions
With the relative stability of crypto over the past six months, crypto investments are becoming attractive for traditional financial institutions. A Bloomberg article voices the reality that many players on the crypto market have become aware of over the past six months: institutional buyers like hedge funds have begun to stockpile crypto via massive private buys.
Instead of going through exchanges, which option presents certain disadvantages, like investors seeing prices rise live or exchanges not having enough volume, institutional buyers often buy from miners, either directly or through brokers. The advantage in this case lies not only in volume, but also in the cleanliness of the coin: crypto delivered straight from the farm is sure to be clear of suspicions of any illicit activity.
A second North-European bank under fire for money laundering
After Danske Bank saw its stock price take a hit following allegations of money laundering to the tune of $234 billion through its Estonian branch, now it’s the largest bank in Northern Europe, Nordea, that has come under suspicion for being allegedly involved in a massive international money-laundering scheme. The Finland-headquartered Nordea is apparently being investigated for enabling illicit activities on behalf of a Russian client, during 2010-2013, through a Danish branch that has closed for a while. The money-laundering claim is as yet unconfirmed.
Cryptocurrency big-shots seek approval from traditional financial institutions
After Poloniex announced it was delisting several coins and removing margin and lending products for US customers in a move to better comply with the direction regulation is going, now Coinbase is reshuffling its higher echelon to make room for more members with ties to traditional financial institutions. Adam White, head of Coinbase’s institutional platform group, is exiting after 5 years. Charles Dodds and Jonathan Kellner, both with ties to Charles Schwab, are in.
Poloniex is now owned by Circle, the massive conglomerate that has received funding from financial top investors like Goldman Sachs and Accel, as well as blockchain big shots like Bitmain and Blockchain Capital. Coinbase has long touted its interest in attracting institutional investors, and is now targeting Tiger Group to push its valuation at $8+ billion.
Alibaba eyes blockchain with administrator intervention rights
Yesterday, the U.S. Patent & Trademark Office (USPTO) has revealed a patent submission by a subsidiary of Alibaba that attempts to “remedy” what they perceive as a failure of the system to allow authorities to intervene in the case of illegal activities. The patent offers “a blockchain-based transaction processing method that enables special transactions like administrative intervention in a blockchain.”
The patent application allows for dedicated administrator accounts that can send special smart-contract transactions to nodes, instructing them to conduct a certain operation on the problematic account. To prevent the criminal targeting of these administrator accounts, the patent suggests “ that the supervision power against the blockchain is not centralized in one designated account ” to ensure effectiveness and credibility of supervision, and to prevent “ the loss of all supervision power over the blockchain when one designated account is compromised ”.