CoinDesk Crypto

A gold-backed digital asset created by Paxos will soon launch for trading on cryptocurrency exchange Binance. 

• From Aug. 26, Binance customers will be able to trade PAX Gold (PAXG) against the exchange’s own stablecoin BUSD and exchange token Binance coin (BNB), as well as bitcoin (BTC).
• PAX Gold “will offer [its] users an easy and safe opportunity to gain exposure to real, regulated gold,” said Rich Teo, Paxos co-founder and CEO Asia.
• A New York-based crypto exchange and stablecoin issuer, Paxos launched the gold-backed stablecoin last September.
• Each Ethereum-based token has the legal title to an ounce of physical gold stored in the Brink’s London vault, though traders can own as little as $1 worth.
• Binance’s decision to add support for PAXG comes nearly three weeks after gold’s price reached a record high of $2,075 per ounce.
• The historical inflation hedge has rallied by 27% this year and analysts at Goldman Sachs expect prices to rise further to $2,300 in the next 12 months.
• “Gold is an asset that has had enduring value from generation to generation. With PAX Gold now on Binance, investors can easily get and trade gold with the click of a button,” said Changpeng “CZ” Zhao, CEO of Binance.
• Pax Gold has been approved by the New York Department of Financial Services.
• Also announced Tuesday, CF Benchmarks has launched a benchmark price index for Pax Gold against the U.S. dollar.
• The index will provide a daily settlement and spot rate, refreshed every second, according to an announcement.
• With the traditional gold markets only operating on weekdays, PAXG “opens new opportunities for financial markets,” said Sui Chung, CF Benchmarks CEO.

Also read: Binance.US Expands Into Florida, Eyeing Millions of Potential New Traders

Related Stories

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• 3 Australian Businesses Tap Chainalysis to Monitor Risky Cryptocurrency Activity
• UK Watchdog Eyes Extension of Money Laundering Risk Reporting to Crypto Firms
• Australian Conman Extradited Over Alleged Fraud Involving $1.2M in Bitcoin

Market moves

The explosive growth of decentralized finance, or DeFi, on the Ethereum blockchain has brought unwanted attention to the recent surge in congestion on the network, with a resulting jump in transaction fees.

There’s another consequence for crypto traders: Rising volatility in prices for ether, the blockchain’s native cryptocurrency. That’s especially true when ether’s volatility is compared with that of bitcoin. 

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team and edited by Bradley Keoun, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here.

Related: Blockchain Bites: Bitcoin’s ‘Rich List,’ Ethereum’s Volatility, DeFi’s Shakeup

The three-month spread between ether’s implied volatility and bitcoin’s has increased to 29%, the highest in six months, according to data source Skew. As recently as June 28, the spread was as low of -2.8%, meaning bitcoin had the higher implied volatility at that point.

Volatility often carries a negative connotation because traders often consider it a barometer of risk. In this case the rising spread appears to indicate a wide range of expectations in how DeFi might ultimately affect usage of the Ethereum network and demand for the ether. 

“Ether’s rising volatility is a byproduct of its own success,” Denis Vinokourov, head of research at Bequant, a London-based cryptocurrency exchange and institutional brokerage, said in a Telegram chat.  “Success comes with risks, the need to hedge.”

Implied volatility represents the market’s expectations of how volatile or risky an asset would be over a specific period. It’s not necessarily bullish or bearish: Heightened implied volatility simply means that future price swings might lie ahead.

Related: Jerome Powell’s Coming Inflation Speech May Weigh On Dollar and Boost Bitcoin: Analysts

“Investors are focused on DeFi and mindful of a potential big move in ETH,” Emmanuel Goh, CEO of the crypto-derivatives data firm Skew, told CoinDesk in a Telegram chat. 

DeFi tokens have been among the hottest performers in cryptocurrency markets this year, with steep rallies in Chainlink’s LINK and the Kyber Network’s KNC. The open-source lending protocol Aave’s LEND token has risen more than 30-fold.

The Ethereum network’s recent spell of congestion has pushed the average transaction fee to record highs above $6.

The heightened volatility expectations might also be an indication of how volatile prices have been this year for ether itself. The second-largest cryptocurrency has tripled, gaining on bitcoin, which is up a respectable 64%. 

Demand for options, or the need to hedge, tends to pick up with price rallies and major fundamental developments, and implied volatilities are primarily driven by the net buying pressure for options contracts like price calls and puts. 

This is what success looks like right now for Ethereum. 

– Omkar Godbole, Markets Reporter

Bitcoin watch

Despite the recent pullback in bitcoin prices, analysts are still bullish in the long term, with Federal Reserve Chair Jerome Powell expected to bolster inflation expectations in a highly anticipated speech Thursday.  

• “Powell has previously stated that he doesn’t think inflation is a significant risk and is prepared to see it overshoot to meet his objectives,” Charlie Morris, chief investment officer at ByteTree Asset Management, told CoinDesk in a WhatsApp chat.
• “The major impact for crypto out of this symposium would be a change in monetary policy and further depreciation of the dollar, which could propel bitcoin higher,” said Matthew Dibb, co-founder of Stack.
• Multiple rejections above $12,000 seen over the past three weeks have put brakes on the rally from July lows below $9,000.
• A deeper pullback may be seen if the immediate support at $11,000 is breached, according to analysts at Stack, a provider of cryptocurrency trackers and index futures.
• The 10-year breakeven rate, which measures the inflation expectations, has risen to pre-Covid levels above 1.6% from the low of 0.5% observed during the March crash.
• Bitcoin has pretty much tracked inflation expectations higher over the past five months, while the dollar index has declined by nearly 10%.
• The cryptocurrency has witnessed bigger year-to-date gains in the U.S. dollar terms, compared to the rally seen in terms of other currencies like the euro and the Japanese yen.
• The data suggests bitcoin’s recent rally has been primarily fueled by the broad-based sell-off in the dollar.

– Omkar Godbole, Markets Reporter

Analogs The latest on the economy and traditional finance

S&P 500 forward P/E multiple now at 25.98, highest since dot-com era (WSJ)

Gold ETFs now hold more gold than every central bank except Federal Reserve (BNN Bloomberg)

Nouriel Roubini sees “no clear alternative currency” to replace USD as reserve currency (MarketWatch)

Money-market yields so close to negative that BlackRock, Fidelity cut fees (WSJ)

HSBC, ABN, Credit Suisse, UBS cutting back as margins shrink, loan losses swell (WSJ)

Tweet of the Day What’s Hot

Central banks in countries with large populations of off-the-books workers are moving faster on digital currencies (Bank for International Settlements)
A recent paper by the Bank for International Settlements looks at the economic reasoning behind central bank digital currencies and how they may be shaped for future implementation via mainstream adoption.

Boston Fed evaluating 30-40 blockchain networks for digital dollar (CoinDesk)
The Federal Reserve Bank of Boston, one of 12 regional Federal Reserve banks operating under the U.S. central bank, is evaluating more than 30 different blockchain networks to determine if they would support a digital dollar.

Bitcoin addresses with >1K BTC hits record high, suggesting growing institutional interest (CoinDesk)
There are more than 2,000 addresses holding over 1,000 bitcoin, potentially reflecting increased interest from institutions and high-net-worth investors.

Bitstamp to migrate customer accounts from London to Luxembourg (CoinDesk)
Cryptocurrency exchange Bitstamp told CoinDesk it will migrate its customer accounts from its London-based Bitstamp Limited to its entity in Luxembourg.

– Sebastian Sinclair, Reporter

Related Stories

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Quorum, the enterprise blockchain platform developed by mega-bank JPMorgan Chase, is being acquired by ConsenSys, the Brooklyn, N.Y.-based Ethereum venture studio.

Additionally, JPMorgan has made an undisclosed strategic investment in ConsenSys, the companies said in a statement. Neither ConsenSys nor JPMorgan would confirm the size of the investment made by the bank.

ConsenSys did confirm it was in the process of raising funds and has a range of additional investors joining JPMorgan. 

Related: cLabs Acquires Summa to Boost Crypto Interoperability on Celo

In terms of how the acquisition will be integrated into the Ethereum conglomerate, from now on, JPMorgan will be a customer of ConsenSys, which is offering software support and services to projects deployed on Quorum. 

All enterprise work being done at ConsenSys will now fall under the new “ConsenSys Quorum” brand, and ConsenSys plans to merge its existing protocol engineering roadmap with Quorum, leveraging the best of both codebases.

“One of the parts of taking over this technology is that we’ll be supporting JPMorgan in [its] blockchain efforts,” ConsenSys engineering manager Daniel Heyman said in an interview. “Then we’ll be able to leverage a lot of the work that JPMorgan has done that’s been internal for a long time, and support the ecosystem as other people want to use that technology.”

Victim of success

As more projects began building on Quorum, a privacy-centric fork of Ethereum, it became obvious to many in the blockchain world that a bank isn’t the right place to maintain a large scale open-source software project. It was first rumored that Quorum could be heading to Brooklyn in February of this year. 

Related: Token Sales Are Back in 2020

JPMorgan and CEO Jamie Dimon received a lot of press for the “JPM Coin” project, which is tokenized cash on the Quorum ledger. Other high-profile initiatives within the bank include the Interbank Information Network, which has over 200 other banks as members, and Dromaius, a debt issuance platform on Quorum.  

“As of today, JPM Coin will be built on top of ConsenSys Quorum,” said Heyman. “So while JPM Coin is 100% JPMorgan’s, we’re very excited that we’ll be supporting it as a software vendor and helping make them successful, as well as other projects like the Interbank Information Network.”

Other projects on Quorum – such as tokenized loans being done by IHS Markit or AURA, the track-and-trace system being built by LVMH – will not receive any funding from ConsenSys, Heyman said, but they will be in line for other benefits. 

“Anyone building on Quorum will get a proper software vendor behind their technology,” said Heyman. “They’ll get a roadmap that’s very explicit publicly maintained that they can build against and move towards, and a suite of features and functionality they can now purchase to accelerate their time to market.”

Interoperability play 

Another important factor for ConsenSys is locking down interoperability between Quorum and Hyperlegder Besu. The latter is an enterprise Ethereum client built by ConsenSys engineers from the ground up to be compatible with the Ethereum public mainnet. The main elements to be aligned to make Besu and Quorum talk to each other include the consensus mechanisms, API interfaces and privacy tools, said Heyman.

“Besu will continue exactly as it is, which is part of the Hyperlegder community and not ours to control. Obviously we’re heavily invested in moving it forward,” Heyman said. “When we sell an enterprise Ethereum stack, we’re going to be calling it ConsenSys Quorum, and it will have two options: the Go Quorum–based version, or the Hyperledger Besu–based version.”

The JPMorgan news was welcomed by Brian Behlendorf, executive director of Hyperledger, who said it was exciting and positive for the enterprise blockchain community.

“It answers concerns about commercial support for enterprises [that] have deployed Quorum and, more importantly, it helps efforts to bring greater interoperability and code re-use between Quorum and Hyperledger Besu,” Behlendorf said in an email to CoinDesk.

Behlendorf, a respected figure in the open-source software world, said the acquisition should make it easy for enterprises that prefer Java, or prefer the Apache 2.0 license, or even prefer to work with other Besu-based vendors, to join the various Quorum-based networks that have emerged. 

“This is textbook open-source ‘co-opetition’ at its finest, where competitors can realize they’re actually stronger working together than trying to divide a market,” said Behlendorf. “We look forward to helping ConsenSys and JPMorgan (who are both Hyperledger Premier Members) and other ecosystem members drive adoption.”

In terms of whether Quorum engineers previously employed at the mega-bank would be making the trip to Brooklyn and joining ConsenSys, Heyman said: 

“Yeah, absolutely. We’ll be working closely with the JPM engineers on this and we’re going to be building out our own team dedicated towards Quorum on the protocol group.”

Related Stories

• Audius Rallies EDM Artists, Crypto VCs to Back Vision for Music Payments on Ethereum
• How the EEA Made Ethereum Palatable to Big Business

Quorum, the enterprise blockchain platform developed by mega-bank JPMorgan Chase, is being acquired by ConsenSys, the Brooklyn, N.Y.-based Ethereum venture studio.

Additionally, JPMorgan has made an undisclosed strategic investment in ConsenSys, the companies said in a statement. Neither ConsenSys nor JPMorgan would confirm the size of the investment made by the bank.

ConsenSys did confirm it was in the process of raising funds and has a range of additional investors joining JPMorgan. 

Related: cLabs Acquires Summa to Boost Crypto Interoperability on Celo

In terms of how the acquisition will be integrated into the Ethereum conglomerate, from now on, JPMorgan will be a customer of ConsenSys, which is offering software support and services to projects deployed on Quorum. 

All enterprise work being done at ConsenSys will now fall under the new “ConsenSys Quorum” brand, and ConsenSys plans to merge its existing protocol engineering roadmap with Quorum, leveraging the best of both codebases.

“One of the parts of taking over this technology is that we’ll be supporting JPMorgan in [its] blockchain efforts,” ConsenSys engineering manager Daniel Heyman said in an interview. “Then we’ll be able to leverage a lot of the work that JPMorgan has done that’s been internal for a long time, and support the ecosystem as other people want to use that technology.”

Victim of success

As more projects began building on Quorum, a privacy-centric fork of Ethereum, it became obvious to many in the blockchain world that a bank isn’t the right place to maintain a large scale open-source software project. It was first rumored that Quorum could be heading to Brooklyn in February of this year. 

Related: Token Sales Are Back in 2020

JPMorgan and CEO Jamie Dimon received a lot of press for the “JPM Coin” project, which is tokenized cash on the Quorum ledger. Other high-profile initiatives within the bank include the Interbank Information Network, which has over 200 other banks as members, and Dromaius, a debt issuance platform on Quorum.  

“As of today, JPM Coin will be built on top of ConsenSys Quorum,” said Heyman. “So while JPM Coin is 100% JPMorgan’s, we’re very excited that we’ll be supporting it as a software vendor and helping make them successful, as well as other projects like the Interbank Information Network.”

Other projects on Quorum – such as tokenized loans being done by IHS Markit or AURA, the track-and-trace system being built by LVMH – will not receive any funding from ConsenSys, Heyman said, but they will be in line for other benefits. 

“Anyone building on Quorum will get a proper software vendor behind their technology,” said Heyman. “They’ll get a roadmap that’s very explicit publicly maintained that they can build against and move towards, and a suite of features and functionality they can now purchase to accelerate their time to market.”

Interoperability play 

Another important factor for ConsenSys is locking down interoperability between Quorum and Hyperlegder Besu. The latter is an enterprise Ethereum client built by ConsenSys engineers from the ground up to be compatible with the Ethereum public mainnet. The main elements to be aligned to make Besu and Quorum talk to each other include the consensus mechanisms, API interfaces and privacy tools, said Heyman.

“Besu will continue exactly as it is, which is part of the Hyperlegder community and not ours to control. Obviously we’re heavily invested in moving it forward,” Heyman said. “When we sell an enterprise Ethereum stack, we’re going to be calling it ConsenSys Quorum, and it will have two options: the Go Quorum–based version, or the Hyperledger Besu–based version.”

The JPMorgan news was welcomed by Brian Behlendorf, executive director of Hyperledger, who said it was exciting and positive for the enterprise blockchain community.

“It answers concerns about commercial support for enterprises [that] have deployed Quorum and, more importantly, it helps efforts to bring greater interoperability and code re-use between Quorum and Hyperledger Besu,” Behlendorf said in an email to CoinDesk.

Behlendorf, a respected figure in the open-source software world, said the acquisition should make it easy for enterprises that prefer Java, or prefer the Apache 2.0 license, or even prefer to work with other Besu-based vendors, to join the various Quorum-based networks that have emerged. 

“This is textbook open-source ‘co-opetition’ at its finest, where competitors can realize they’re actually stronger working together than trying to divide a market,” said Behlendorf. “We look forward to helping ConsenSys and JPMorgan (who are both Hyperledger Premier Members) and other ecosystem members drive adoption.”

In terms of whether Quorum engineers previously employed at the mega-bank would be making the trip to Brooklyn and joining ConsenSys, Heyman said: 

“Yeah, absolutely. We’ll be working closely with the JPM engineers on this and we’re going to be building out our own team dedicated towards Quorum on the protocol group.”

Related Stories

• Audius Rallies EDM Artists, Crypto VCs to Back Vision for Music Payments on Ethereum
• How the EEA Made Ethereum Palatable to Big Business

Crypto custody provider BitGo has filed paperwork with New York’s financial regulator to offer its services in the state.

In an announcement Tuesday, the company said it was seeking approval from the New York State Department of Financial Services (NYDFS) to act as a trust in the jurisdiction.

It plans, if approved, to operate as an “independent, regulated qualified” custodian under the state banking law.

Related: Binance Says Licensed Entities Can Now Use Its Stablecoin After Watchdog Approval

BitGo said it was targeting “strong demand” from institutional investors based in New York for secure and regulated storage of large amounts of digital assets.

See also: BitGo Now Supports Custody and Staking of Tezos’ XTZ

After July guidance from the Office of the Comptroller of the Currency allowing U.S. banks to act as crypto custodians, BitGo said it’s expecting a “dramatic increase in market demand for its products and services from banks, pension funds, hedge funds and other fiduciaries.”

BitGo Trust Company is already a qualified custodian through the South Dakota Division of Banking.

Related Stories

• BitGo Now Supports Custody and Staking of Tezos’ XTZ
• Crypto Exchange Group Eyes ‘Bulletin Board’ System for FATF Compliance: Coinbase Exec
• NYDFS Chief Calls Industry Reaction to BitLicense Changes ‘Beyond Positive

Blockchain application platform Qtum will soon undergo a hard fork enabling network participants to stake and earn rewards from tokens held in offline wallets.

• Announced Tuesday, the fork – when the blockchain divides to provide an alternative version with different features – will usher in a new code release at block 680,000, expected Aug. 28.
• The upgrade will enable offline wallet address owners to delegate their blockchain-based holdings – technically termed unspent transaction outputs (UTXOs) – to an online node operating Qtum’s proof-of-stake (PoS) consensus.
• PoS is a distributed consensus mechanism that allows users to vote on governance decisions and support the blockchain by dedicating, or “staking,” tokens, earning them network fees as a reward.
• Qtum previously only allowed participants to stake tokens online via a full node, but participation was limited by users who did not want to, or could not, run a full node.
• Offline staking is expected to increase participation, while also enhancing Qtum’s “democratic, distributed, and secure” functionality, according to a statement.
• The fork is being supported by cryptocurrency exchanges including Binance, Huobi, OKEx, Coinone, CoinDCX and Gate.io.
• Qtum launched in 2017 as a hybrid blockchain featuring aspects of Bitcoin and Ethereum to provide smart contract functionality for distributed app developers seeking an alternative platform.

See also: Cardano Introduces Proof-of-Stake With ‘Shelley’ Hard Fork

Related Stories

• 3 Australian Businesses Tap Chainalysis to Monitor Risky Cryptocurrency Activity
• UK Watchdog Eyes Extension of Money Laundering Risk Reporting to Crypto Firms
• Australian Conman Extradited Over Alleged Fraud Involving $1.2M in Bitcoin
• Binance.US Expands Into Florida, Eyeing Millions of Potential New Traders

U.S. Federal Reserve Chair Jerome Powell is expected to bolster expectations of inflation during his keynote speech at the Jackson Hole Economic Policy Symposium on Thursday.

According to analysts speaking to CoinDesk, that could ultimately lead to further drops in the dollar and greater buying power for bitcoin traders and investors.

• The Fed chief is expected to signal tolerance for higher inflation during the speech, with the central bank having mostly missed its 2% inflation target since 2012.
• “Powell has previously stated that he doesn’t think inflation is a significant risk and is prepared to see it overshoot to meet his objectives,” Charlie Morris, chief investment officer at ByteTree Asset Management, told CoinDesk over WhatsApp.
• A more relaxed approach to managing price pressures could power a stronger rise in long-term inflation in the U.S.
• “The major impact for crypto out of this symposium would be a change in monetary policy and further depreciation of the U.S. dollar, which could propel bitcoin higher,” said Matthew Dibb, co-founder of Stack.
• Inflation is expected by many in the cryptocurrency space to be a driving factor for bitcoin gains, as it’s perceived to be a hedge asset similar to gold.
• The symposium, attended by central bankers, Federal Reserve members, economists, financial organizations and academics, among others, will be held virtually this year.

Inflated expectations

• The 10-year breakeven rate, which gauges the market’s expectations of inflation, has risen to pre-coronavirus levels above 1.6% from a low of 0.5% observed during the March markets crash.
• Bitcoin has largely tracked the metric higher over the past five months, while the dollar index has declined by nearly 10%.
• The cryptocurrency has witnessed greater year-to-date gains in U.S.-dollar terms compared to those seen against other currencies such as the euro and Japanese yen:

• The data suggests bitcoin’s recent rally has been to some extent fueled by the diminishing value of the dollar.
• While the rally appears to be on pause right now, bitcoin looks well positioned to benefit from a resurgence in inflation and further devaluation of the dollar over the long term.
• At press time, bitcoin is trading near $11,550, representing a 1.8% drop on the day, according to CoinDesk’s Bitcoin Price Index.
• Multiple rejections above $12,000 seen over the past three weeks have put brakes on the rally from July lows below $9,000.
• A deeper pullback may be seen if the immediate support at $11,000 is breached, according to analysts at Stack, a provider of cryptocurrency trackers and index futures.

Also read: As Fed Nears Inflation Rubicon, Analysts See $50K Bitcoin in Play

Related Stories

• First Mover: Ether Price Swings Make Bitcoin Look Tame as DeFi Speculation Spreads
• Australian Conman Extradited Over Alleged Fraud Involving $1.2M in Bitcoin
• Market Wrap: Bitcoin Hits $11.8K; Ethereum Gas at All-Time High
• ‘Bitcoin Rich List’ Reaches All-Time High

U.S. Federal Reserve Chair Jerome Powell is expected to bolster expectations of inflation during his keynote speech at the Jackson Hole Economic Policy Symposium on Thursday.

According to analysts speaking to CoinDesk, that could ultimately lead to further drops in the dollar and greater buying power for bitcoin traders and investors.

• The Fed chief is expected to signal tolerance for higher inflation during the speech, with the central bank having mostly missed its 2% inflation target since 2012.
• “Powell has previously stated that he doesn’t think inflation is a significant risk and is prepared to see it overshoot to meet his objectives,” Charlie Morris, chief investment officer at ByteTree Asset Management, told CoinDesk over WhatsApp.
• A more relaxed approach to managing price pressures could power a stronger rise in long-term inflation in the U.S.
• “The major impact for crypto out of this symposium would be a change in monetary policy and further depreciation of the U.S. dollar, which could propel bitcoin higher,” said Matthew Dibb, co-founder of Stack.
• Inflation is expected by many in the cryptocurrency space to be a driving factor for bitcoin gains, as it’s perceived to be a hedge asset similar to gold.
• The symposium, attended by central bankers, Federal Reserve members, economists, financial organizations and academics, among others, will be held virtually this year.

Inflated expectations

• The 10-year breakeven rate, which gauges the market’s expectations of inflation, has risen to pre-coronavirus levels above 1.6% from a low of 0.5% observed during the March markets crash.
• Bitcoin has largely tracked the metric higher over the past five months, while the dollar index has declined by nearly 10%.
• The cryptocurrency has witnessed greater year-to-date gains in U.S.-dollar terms compared to those seen against other currencies such as the euro and Japanese yen:

• The data suggests bitcoin’s recent rally has been to some extent fueled by the diminishing value of the dollar.
• While the rally appears to be on pause right now, bitcoin looks well positioned to benefit from a resurgence in inflation and further devaluation of the dollar over the long term.
• At press time, bitcoin is trading near $11,550, representing a 1.8% drop on the day, according to CoinDesk’s Bitcoin Price Index.
• Multiple rejections above $12,000 seen over the past three weeks have put brakes on the rally from July lows below $9,000.
• A deeper pullback may be seen if the immediate support at $11,000 is breached, according to analysts at Stack, a provider of cryptocurrency trackers and index futures.

Also read: As Fed Nears Inflation Rubicon, Analysts See $50K Bitcoin in Play

Related Stories

• Australian Conman Extradited Over Alleged Fraud Involving $1.2M in Bitcoin
• Market Wrap: Bitcoin Hits $11.8K; Ethereum Gas at All-Time High
• ‘Bitcoin Rich List’ Reaches All-Time High
• Canadian Software Startup Puts 40% of Cash Reserves Into Bitcoin

Several Australian companies have turned to products from blockchain forensics firm Chainalysis in a bid to improve their regulatory compliance and reduce risks for users.

• Announced Tuesday, Australian cryptocurrency exchanges Coinjar and Coinspot will utilize Chainalysis’ KYT (Know Your Transaction) and Reactor applications to monitor for high-risk activity.
• Coinspot CEO Russell Wilson said customer protection from bad actors was a “top priority” and that he supported moves to promote trust and compliance across the crypto industry.
• Meanwhile, Australia-based payments provider Assembly Payments will utilize Chainalysis' Kryptos product, a type of industry reference directory, to review profiles of crypto businesses leveraging know-your-customer verification details.
• Chainalysis Chief Revenue Officer Jason Bonds said Australia was a “key component” of the firm’s aim to improve global trust and compliance practices in the crypto market.
• According to Chainalysis, Australian crypto trading volumes in 2020 have risen significantly to around $1 billion in monthly activity, doubling the previous year’s monthly recorded volumes.
• Chainalysis was recently contacted by the Federal Bureau of Investigation and other U.S. government agencies for an investigation into the notorious Twitter hack that used high-profile accounts to promote a well-worn bitcoin scam.

See also: Crypto Tracer Chainalysis Raises $13M as It ‘Doubles Down’ on Government Ties

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• Blockchain Project Qtum Moves to Boost Network Participation With Offline Staking
• UK Watchdog Eyes Extension of Money Laundering Risk Reporting to Crypto Firms
• Australian Conman Extradited Over Alleged Fraud Involving $1.2M in Bitcoin
• Binance.US Expands Into Florida, Eyeing Millions of Potential New Traders

The Financial Conduct Authority (FCA), a U.K. regulator, is seeking to oblige more firms, including some working with cryptocurrency, to report how they manage the risks of financial crime.

• In a consultation paper published Monday, the FCA said under the expanded scope of its financial crime reporting obligation it would require crypto exchanges and wallet providers to provide detailed information annually on systems and controls put in place to tackle crimes such as money laundering.
• The regulator said that currently only 2,500 out of the roughly 23,000 firms under its oversight must provide such data, including banks, building societies and mortgage providers.
• Aside from crypto firms, the extended measure would include entities such as all companies regulated by the Financial Services and Markets Authority, payment providers, electric money institutions and multilateral and organized trading facilities.
• The FCA said the extra information the reporting would provide would enable it to be more “date led” in its supervision and widen its insight into firms that may carry money laundering risks.
• The consultation period is open for feedback from interested parties until Nov. 23, 2020.
• In June, the U.K. government said it was looking to increase oversight into cryptocurrency promotions in order to protect investors, with the new supervisory role falling to the FCA.

Also read: UK Regulator Grants License to Digital Security Exchange Archax

Related Stories

• Australian Conman Extradited Over Alleged Fraud Involving $1.2M in Bitcoin
• Binance.US Expands Into Florida, Eyeing Millions of Potential New Traders
• Brazil’s Central Bank Tasks Group With Laying Out Road Map to Digital Currency Issuance
• Canadian Software Startup Puts 40% of Cash Reserves Into Bitcoin

After a dramatic arrest, an Australian serial conman has been extradited to New South Wales to face fraud charges involving over $1 million in bitcoin.

• A Tuesday report by The Sydney Morning Herald said Peter Foster had been escorted by detectives to Sydney, NSW, from Queensland where he had been arrested last Thursday.
• Foster was tackled by undercover police pretending to be early morning joggers on a Port Douglas beach in the northern state.

• After an investigation that kicked off in June, police alleged that from April last year Foster masqueraded under the false name Bill Dawson and scammed victim Konstantinos Stylianopoulos.
• Stylianopoulos had entrusted bitcoin to Foster who then allegedly transferred it to his own account at the Australia-based crypto exchange Independent Reserve.
• The fraud netted Foster 1.73 million Australian dollars (US$1.24 million)-worth of bitcoin in transactions of between $125,000 and $890,000 on multiple occasions.
• Foster has been described as a career criminal, having previously spent time in jail in Australia, the U.K., the U.S., and Vanuatu for fraud-related crimes.
• Paul Dunstan, the Sydney City Police area commander detective acting superintendent, noted Foster’s repeat offenses and said Foster was “a significant fraud offender.”
• The charges relating to his arrest include five counts of publishing false and misleading material to obtain advantage and 10 counts of dishonestly obtaining financial advantage by deception.
• He is also being charged with knowingly dealing with proceeds of crime with intent to conceal, according to the Herald.
• On Tuesday, Foster’s legal representation appeared in Sydney’s Central Local Court via video link opting not to apply for bail. The case will return to court on Oct. 22.

See also: Australian Woman Jailed for Theft of More Than 100,000 XRP

Related Stories

• UK Watchdog Eyes Extension of Money Laundering Risk Reporting to Crypto Firms
• Binance.US Expands Into Florida, Eyeing Millions of Potential New Traders
• Market Wrap: Bitcoin Hits $11.8K; Ethereum Gas at All-Time High
• ‘Bitcoin Rich List’ Reaches All-Time High

Decentralized finance (DeFi) credit market Aave has pulled ahead of stablecoin mint MakerDAO for the title of most collateral staked on Ethereum, according to DeFi Pulse.

Aave now has $1.47 billion-worth of different crypto assets staked for credit lines, while MakerDAO has $1.45 billion in total value locked (TVL). 

“Reaching the highest TVL was possible due to the wide range of developers building on top of Aave who are expressing their innovation in DeFi,” Stani Kulechov, Aave CEO, told CoinDesk. “This innovation has sparked interest from institutions who are now dipping their toes into Aave.” 

Related: DeFi Aggregator Bella Protocol Announces $4M Seed Round

Read more: What Is Yield Farming? The Rocket Fuel of DeFi, Explained

This is only the second time that a project has had more “total value locked” (TVL) than MakerDAO, as measured by DeFi Pulse. On June 20, fueled by a yield farming rush spurred on by the initial distribution of its governance token COMP, Compound took the lead for collateral locked up until late July.

For context, though, when MakerDAO and Compound switched positions, each had about $480 million in TVL. MakerDAO now has well over twice the collateral locked up as it had then. 

In the recent surge of interest in DeFi, four projects have now broken $1 billion in assets as measured by DeFi Pulse at different times: MakerDAO, Compound, Aave and Curve.

Fertile soil

Related: DeFi Is Just Like the ICO Boom and Regulators Are Circling

Founded as EthLend, Aave was conceived as a peer-to-peer crypto lender, funded by a 2017 initial coin offering that raised $16.2 million, according to Messari. It later pivoted to the pooled lending approach it uses today.   

With creative new communities of yield farmers coming up with wild schemes, Aave has proven to be a key financial backbone of some projects, as Devin Walsh of CoinFund explained to CoinDesk.

In particular, she noted that Curve and Yearn Finance rely on Aave. “Stablecoin deposits into either of those protocols will ultimately be deposited into Aave’s money markets. Both Yearn and Curve’s yield farming programs have contributed to the massive spike in TVL over the past few weeks and in particular over the past week,” she wrote in an email. 

Read more: Five Years In, DeFi Now Defines Ethereum

Another relevant project is Opium, which announced Saturday it had created a credit default swap (CDS) on the Aave protocol. A CDS is a type of contract that insures the buyer against a third party defaulting on a loan. These instruments are best known for their role in the 2008 financial crisis, though they arguably provide markets an early warning signal of credit problems.

Aave has announced a governance token distribution plan, but it has not yet taken effect. So while liquidity mining is coming to the protocol, it’s not driving the current surge.

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Beijing-based decentralized finance (DeFi) aggregator Bella Protocol announced Tuesday it has raised $4 million in a funding round led by Arrington XRP Capital. 

• According to a press statement emailed to CoinDesk, investors in Bella’s funding round also include Alphabit, Consensus Labs, Force Partners and CGS Dubai, among others.
• Marketed as a one-stop shop for DeFi assets, the firm’s asset management platform is currently under development.
• The firm said its platform aims to fix the complex user experience issues related to DeFi assets, such as the need to hop among different protocols and platforms in pursuit of high yields.
• “What Bella is aiming to solve with 1click and flex saving are the three largest barriers to achieving DeFi or crypto mass adoption – high gas fees, complex user journey and poor user experience,” Michael Arrington, founding partner of Arrington XRP Capital, said in the emailed statement.

Read more: DEX Aggregator 1inch Raises $2.8M From Binance Labs, Galaxy Digital and More

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Binance’s U.S. affiliate has taken Florida off its cryptocurrency trading “no-fly list” and on Monday opened for business in the sunshine state. 

• The expansion into America’s third-most populous state follows Binance.US’s July procurement of a Floridian money transmitter license under the name “BAM TRADING SERVICES INC.”
• Florida was one of the 13 states not included in Binance.US’s original game plan. When the exchange launched in 37 states last September, Binance.US avoided states whose licensure regimes required additional vetting.
• Binance.US chief Catherine Coley, who grew up in Orlando, told CoinDesk the two-year Florida license grants her exchange access to what is now its second-largest potential market: 12 million eligible traders. 
• “We’re well aware that not every single person above the age of 18 is going to download Binance.US tomorrow, but it is a huge population that is ripe for understanding how digital assets work,” she said. 
• Heavily populated states such as New York and Texas are still out of bounds for Binance.US. Coley said more states will be added as their respective money transmitter licenses clear. 

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A hacker has stolen data on more than 1,000 users from CryptoTrader.Tax, an online service used to calculate and file taxes on cryptocurrency trades.

The hacker broke into a CryptoTrader.Tax marketing and customer service employee’s account on a support center platform, according to a source who came across the hacker on a dark web forum. With this access, the hacker could see customers’ names, email addresses, payment processor profiles and messages sometimes containing cryptocurrency incomes.

The hacker then screengrabbed samples of this sensitive information, posted them on the forum to entice potential buyers of the data trove and sent additional pictures to the source, who shared this evidence with CoinDesk.

Related: These Illicit SIM Cards Are Making Hacks Like Twitter’s Easier

See also: Even the IRS Admits Some Crypto Tax Regulations Are ‘Not Ideal’

David Kemmerer, a co-founder and the chief executive of CryptoTrader.Tax, confirmed to CoinDesk that a hacker gained unauthorized access on April 7 to the marketing and customer service employee’s account. The hacker was able to see support center details in the materials and downloaded a file containing 13,000 rows of information, including 1,082 unique email addresses, Kemmerer said.

CryptoTrader.Tax’s security team investigated the breach and found tax filing account passwords and CryptoTrader.Tax’s website were not compromised, Kemmerer said. The team then alerted parties affected by the breach and took steps to improve security measures and monitoring systems across internal and third-party applications, Kemmerer said. 

Operated by Kansas City-based Coin Ledger Inc., CryptoTrader.Tax allows users to import trades from 36 cryptocurrency exchanges and auto-generate cryptocurrency income gains and losses in tax reports exportable to TurboTax, the popular tax preparation software.

Related: Russia, With Bitcoin Playing Bit Part, Tried to Hack 2016 US Election, Senate Report Finds

See also: Crypto Taxes: Still Confused After All These Years

To pay for subscriptions, premium users also enter billing information into Stripe, a payment processor. Stripe is connected to CryptoTrader.Tax’s support center platform and shows customers’ email addresses and general locations, but it does not expose physical addresses or credit, debit and banking information, according to the Stripe website.

The hacker also accessed marketing communications, referral numbers, commission earnings and revenues from affiliates who promote the CryptoTrader.Tax service on websites and social media, according to the materials reviewed by CoinDesk and Kemmerer. 

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Cryptocurrency exchange Bitstamp told CoinDesk it will migrate its customer accounts from its London-based Bitstamp Limited to its entity in Luxembourg. But operations at Bitstamp Limited will not be affected by this decision, according to the company.

“[This is] a move that has been planned for months,” Vasja Zupan, chief operating officer of Bitstamp, confirmed with CoinDesk in an email response. “This does not involve any relocation or change in operations, staff or offices.”

The exchange currently has three physical locations around the globe, according to its website. The exchange, Bitstamp Ltd., is in London, while its payment institution, Bitstamp Europe S.A., where the accounts will be moving, is based in Luxembourg. Bitstamp also has its offices in New York. 

Related: India May Be Starting Its Biggest Bitcoin Bull Run Yet

The exchange was granted a license to operate as a fully regulated payment institution in Luxembourg in 2016, in an attempt to expand its crypto trading service throughout the European Union.

At press time, Bitstamp had not responded to CoinDesk’s follow-up questions regarding the reason it moved accounts from London to Luxembourg, but TrustNodes reported on Aug. 21 it was likely because of an increased chance of a “no deal” Brexit between the European Union and the U.K.

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The bitcoin market is experiencing low volume Monday but ether continues to fuel DeFi’s growth.

• Bitcoin (BTC) trading around $11,737 as of 20:00 UTC (4 p.m. ET). Gaining 0.34% over the previous 24 hours.
• Bitcoin’s 24-hour range: $11,592-$11,823.
• BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

Read More: Leveraged Funds Take Record Bearish Positions in Bitcoin Futures

Bitcoin’s price opened the week heading higher, hitting $11,823 on Monday before dipping lower. “Bitcoin has settled into a consolidation position at $11,700,” said Daniel Koehler, liquidity manager at cryptocurrency exchanges OKCoin. “It appears that traders are waiting for better fills at $11,000,” he added.

Related: ‘Bitcoin Rich List’ Reaches All-Time High

Darius Sit, managing partner of quantitative trading firm QCP Capital, expects the final full week of August to be quieter than earlier in the month, when the world’s oldest cryptocurrency hit a 2020 high of $12,485 on spot exchanges like Coinbase. 

Read More: Bitcoin Surges Past $12,000 to New 2020 High

“One thing we were looking at is that August tends to be a weak month for both BTC and ETH,” said Sit. “So if that seasonality plays out, this last week of August might see some weakness.”

Spot volumes on major BTC/USD exchanges Monday are low. For Luxembourg-based Bitstamp, for example, it was just $27 million, well below its $91 million daily average.

Related: Canadian Software Startup Puts 40% of Cash Reserves Into Bitcoin

Interestingly, there are more addresses now with 1,000 or more bitcoin than ever before. The count of those on the “Bitcoin Rich List” has reached a high of 2,190. Those addresses hold nearly 7.87 million BTC, the equivalent of $92.2 billion. 

Nonetheless, many stakeholders who are usually bullish are expecting some retrenchment from bitcoin’s price gains, including Rupert Douglas, head of institutional trading for digital asset broker Koine. “We’ve come a long way quickly. I wouldn’t be surprised by a pause or a pullback,” Douglas said. OKcoin’s Koehler echoed that sentiment. “Momentum is still signaling bullish, but it’s unclear if we should test the $10,000 breakout area before moving higher,” said.  

Douglas also noted ether (ETH) continues to steal bitcoin’s spotlight. “Overall, ETH is stronger and I think will continue to outperform BTC,” he said. 

Read More: Marathon Brings New Bitcoin Mining Rigs Online

Into the ether

Ether, the second-largest cryptocurrency by market capitalization, was up Monday, trading around $401 and climbing 2.1% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Ether Volatility Now Highest in Six Months Compared With Bitcoin’s

The amount of “gas” used, denoted in gwei, worth 0.000000001 ether on the Ethereum network, hit an all-time high Sunday, reaching 79,294,213,632 gwei, according to aggregator Glassnode. A unit of measure to execute operations on the network, gas is used within Ethereum to conduct transactions or use smart contracts. The record amount of gas used is viewed as a sign that Ethereum’s utility for decentralized finance, or DeFi, is higher than ever. 

However, George Clayton, managing partner of Cryptanalysis CapitaI, has concerns whether Ethereum’s heavy usage can be sustained given that average fees for using the network have gone as high as $6.68 in August. “I think the gas issue is leaving Ethereum vulnerable,” he said, “vulnerable to competing smart contract public blockchains. Something has to give.”

Other markets

Digital assets on the CoinDesk 20 are mostly green Monday. Notable winners as of 20:00 UTC (4:00 p.m. ET): 

• tezos (XYT) + 5.5%
• bitcoin sv (BSV) + 3.7%
• monero (XMR) + 2.4%

Read More: Binance Taps DeFi Excitement to ‘Fuel’ Expansion Strategy in India

Notable losers as of 20:00 UTC (4:00 p.m. ET):

• qtum (QTUM) – 5.3%
• basic attention token (BAT) – 4.2%
• decred (DCR) – 3.1%

Read More: Anything-Goes Token Market Repudiates Rich-Only Venture Capital Club

Equities:

• Asia’s Nikkei 225 ended the day up 0.28%, led by Nintendo, which rose 4.79%. Concerns over the health of Japan’s prime minister damped sentiment.
• Europe’s FTSE 100 closed in the green 1.7% as optimism for a coronavirus vaccine treatment boosted the index.
• The United States’ S&P 500 gained 0.80%, hitting an all-time high thanks to stocks in the tech and travel sectors.

Read More: No Collateral Required: How Aave Brought Unsecured Borrowing to DeFi

Commodities:

• Oil is up 0.29%. Price per barrel of West Texas Intermediate crude: $42.39.
• Gold was in the red 0.64% and at $1,926 as of press time.

Read More: Leveraged Funds Take Record Bearish Positions in Bitcoin Futures

Treasurys:

• U.S. Treasury bonds all climbed Monday. Yields, which move in the opposite direction as price, were up most on the two-year, in the green 8.4%.

Read More: Over $1M in Ryuk Ransomware Bitcoin Was ‘Cashed Out’ on Binance: Report

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There are more than 2,000 addresses holding over 1,000 bitcoin, potentially reflecting increased interest from institutions and high-net-worth investors.

• The Bitcoin Rich List, or the number of addresses holding all that bitcoin, is at a record high, according to data site Glassnode.

• At press time, 2,190 addresses contain 1,000 or more bitcoin, according to data compiled by BitInfoCharts. The previous record was 2,184 on Sept. 28, 2019. Bitcoin‘s price was $11,717, up 0.28% from the previous 24 hours as of 19:15 UTC.
• The total amount of bitcoin held in accounts of 1,000 or more was 7,868,823 as of press time. That amounts to $92.2 billion.
• In the wake of the coronavirus pandemic, more investors have been looking into bitcoin and other cryptocurrencies as alternative investments to traditional markets.
• George Ball, the former chief executive of Prudential Securities and now CEO of Sanders Morris Harris, told Reuters earlier this month that bitcoin or another cryptocurrency is a very “attractive” investment and hinted that many “very wealthy” investors and traders have turned to bitcoin.

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Chinese tech conglomerate Huawei has set up a blockchain-based platform for the Beijing government to better track and manage its citizens’ data in everything from medical records and property registration to real-time vehicle parking status.

• Huawei’s cloud services branch has enabled the project with blockchain technology such as smart contract and distributed ledgers, according to a report by state media People’s Daily on Monday.
• The Beijing government project is part of China’s “New Infrastructure Initiative” to transform digital governance with blockchain so data can be immutable and shared among different government agencies. 
• The Beijing government project aims to leverage the blockchain platform to make data shareable among more than 50 agencies within the municipality.
• The new platform will help the government monitor coronavirus cases, streamline the process for people to register their real estate and find parking spots for local citizens in real time. 
• Huawei, as the poster child of Chinese tech, has met with heavy scrutiny and political resistance from the western world.
• The U.S. has barred Huawei’s major semiconductor suppliers from selling chips to the company, while both the U.S. and U.K. have banned local telecom companies from using Huawei’s 5G devices and technology for national security reasons. 
• The move also echoes the Chinese central government’s shift toward boosting domestic demand for emerging technology and services as techno-nationalism rises and the global market weakens.

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The tech branch of Moscow’s city hall plans to broadcast on the internet videos from cameras in public spaces and may also sell those videos to third parties, according to reports.

• The Department of Information Technologies at Moscow City Hall will purchase cameras to install inside and outside of 539 hospitals in Moscow, the Russian newspaper Kommersant wrote.
• The same department organized the blockchain-based electronic voting in Moscow and one more Russian region this summer when Russians voted to amend the country’s constitution. The voting process was criticized for the weak data protection.
• Video from the cameras will be accumulated on a central server, and there will be an option to provide access to the data for purchase, according to documents. The video can also be broadcast via open channels in the internet.
• According to Kommersant, journalists found similar terms in other contracts for surveillance cameras already operating in Moscow. The Department’s press office told the publication that it was just standard wording for such contracts.
• Russian publication MBK Media wrote in December that access to footage from Moscow street cameras was on sale on the dark market, with an option to get access to individual cameras or to the entire system.

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