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FTX exchange has listed an Airbnb derivatives product ahead of the home rental giant’s initial public offering (IPO) on Thursday.

• Announced Wednesday, the pre-IPO contracts will give traders exposure to Airbnb’s performance based on its market capitalization at the close of its first day of trading on the Nasdaq stock exchange.
• After that point, the contracts will automatically become fractional stocks contracts with the respective Airbnb stock, said FTX.
• Airbnb is expected to list its shares under the ticker symbol “ABNB” later today.
• The Wall Street Journal reports, the company has priced its shares at $68 per share bringing Airbnb a valuation of about $47 billion based on a fully diluted share count which also includes the proceeds of the offering. The IPO is expected to raise around $3.7 billion.
• FTX outlines on its website that If the Airbnb stock does not list and trade publicly by March 9, 2021, FTX reserves the right to roll back trades on its ABNB product.
• The brokerage services for the contract are being provided by CM-Equity AG in Germany.
• FTX is now known for launching thematic derivative products. During the run-up to the the U.S. presidential election period in October, FTX began offering TRUMO, BIDEN and other candidate-based contracts.
• At the time of publication, the ABNB contract was trading up around 6%.

See also: Cryptocurrency Advised by Signal Founder Goes Live, Begins Trading on FTX

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• Cryptocurrency CEO Donated Second-Largest Amount to Joe Biden’s Campaign

Two U.S. government agencies are taking action against the founder of a cryptocurrency project who allegedly pulled an exit scam and avoided taxes while spending the proceeds on a lavish lifestyle.

According to an indictment filed in the U.S. Southern District Court of New York and unsealed on Wednesday, the Internal Revenue Service (IRS) has charged Amir Bruno Elmaani, a.k.a. “Bruno Brock,” on two counts of tax evasion.

Elmaani, who created a blockchain protocol called Oyster Pearl, is alleged to have made “millions of dollars” from an initial coin offering of its pearl (PRL) cryptocurrency in 2017. Those tokens were purportedly to be used for the purchase of online data storage that fueled Oyster protocol.

Related: Would the STABLE Act Make Running an Ethereum Node Illegal?

Rather than reporting the income earned from the sales to the IRS, Elmaani allegedly falsified his 2017 tax return and failed to file one in 2018, instead pocketing the millions.

“As it turns out, Elmaani was funneling the proceeds of his alleged cryptocurrency scheme through a shell company that hid the true nature of his financial interests,” said William Sweeney Jr, the FBI’s assistant director in a Department of Justice statement.

According to the indictment, Elmaani used $10 million in proceeds to buy multiple yachts (where he stored gold bars), real estate and home renovations, as well as spending $1.6 million at a carbon-fiber composite company.

The maximum penalty of a criminal charge for tax evasion carries a maximum of five years per count, meaning Elmaani could be facing up to 10 years in a federal prison.

Related: Over 13% of Bitcoin Crime Proceeds Laundered Through ‘Privacy Wallets’: Elliptic

Meanwhile, the Securities and Exchange Commission (SEC) filed a separate civil action against Elmaani on Wednesday.

He is charged with conducting an illegal securities offering of PRL tokens and profiting from “minting millions of unauthorized tokens for himself at no cost and selling them into the secondary market, thereby causing the value of others’ tokens to plummet.”

Beginning October 2018, Elmaani – operating under his pseudonym Bruno Brock – exploited a smart contract on the Ethereum blockchain to create new tokens to be sold at a below-market price before creating new ones for himself for free.

At the time, Elmaani said he was retaining millions of PRL in accordance with his “founders share” and in the process claimed he had to move his PRL tokens to a different wallet in order to avoid double taxation, per the DoJ indictment.

By inflating the fixed supply of PRL through his access to the protocol, it’s claimed Elmaani was able to convert his newly minted PRL tokens to other cryptocurrencies using a “foreign-based exchange.” After discovering the alleged foul play, the exchange ceased all trading for PRL which left investors holding bags of essentially worthless tokens.

The SEC said, “Elmaani made approximately $570,000 in illicit gains through the minting and sale of Pearl tokens and, as a result of his sales, the price of Pearl tokens fell by nearly 65%, resulting in significant losses for investors.”

Elmaani used a coin mixer – a service designed to conceal the true origin or destination of cryptocurrencies on a given blockchain – before transferring funds to family members and friends, after which he transferred them to his own accounts, according to DoJ.

“The underlying scheme was old-fashioned fraud and tax evasion,” said Audrey Strauss, acting Manhattan U.S. attorney. “Thanks to the FBI and IRS Criminal Investigation Division, Elmaani is now in custody and facing federal prosecution.”

See also: Over 13% of Bitcoin Crime Proceeds Laundered Through ‘Privacy Wallets’: Elliptic

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Four U.S. lawmakers want Treasury Secretary Steven Mnuchin to rethink his rumored crypto wallet regulations.

Reps. Warren Davidson (R-Ohio), Tom Emmer (R-Minn.), Ted Budd (R-N.C.) and Scott Perry (R-Penn.) sent a letter to Mnuchin Wednesday, “expressing our concern” about rumored self-hosted wallet regulations that the Secretary apparently intends to implement in the coming weeks.

Coinbase CEO Brian Armstrong tweeted last month that Mnuchin was “planning to rush out” these new regulations, which would apparently require crypto exchanges to verify know-your-customer data for self-hosted wallets before they could send cryptocurrencies off of their platforms and into the wallets.

Related: Ripple CEO Walks Back Threat to Leave US

According to Wednesday’s letter, this potential regulation would “hinder American leadership,” preclude U.S. actors from participating in the space, and “undermine the Treasury Department from stopping illicit actors from exploiting the financial system.”

Requiring exchanges to maintain this much KYC data could also threaten user privacy, the lawmakers wrote. Rather, the U.S. should have “regulatory parity” between the traditional financial system and the crypto ecosystem.

Implementing regulations around self-hosted wallets might have the unintended effect of turning anyone who currently uses one into a criminal, the letter added.

In a statement published online, Davidson said “before Treasury issues midnight rules on the regulation of self-hosted wallets, Secretary Mnuchin should come to the Peoples’ House and speak to representatives about what his regulations would do.”

Related: Coinbase CEO: Trump Administration May ‘Rush Out’ Burdensome Crypto Wallet Rules

“Over-regulating self-hosted wallets will crush a nascent industry and leave the United States behind the rest of the world when it comes to harnessing the power of blockchain and cryptocurrency,” he added.

This is the second letter most of these lawmakers sent Wednesday; earlier in the day, Emmer led a letter sent to Securities and Exchange Commission Chairman Jay Clayton, asking the securities regulator to create some clear guidance on crypto custody and direct the Financial Industry Regulatory Authority to approve broker-dealers from the space.

Clayton intends to step down from his role at the end of 2020.

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Stablecoin issuer and crypto services firm Paxos has filed to become a federally-regulated bank in the U.S.

According to a public document released Wednesday and dated Dec. 8, Paxos is seeking to create the Paxos National Trust, filing an application with the Office of the Comptroller of the Currency (OCC). It joins crypto payments firm BitPay and custody provider Anchorage in seeking a federal charter to operate as a bank.

The bank would operate out of New York (where Paxos is already located), according to the filing. The company, which already has a New York trust charter and a slew of licenses, currently offers cash custody, gold custody, cryptocurrency services, digital asset issuance, securities clearing, commodities trading and other services.

Related: Crypto Startup BitPay Files to Become Federally Regulated US Bank

Notably, the firm’s crypto brokerage offering was tapped by PayPal earlier this year to power the payments giant’s cryptocurrency service.

“U.S. law is organized at both a state and federal level. The national charter was designed expressly to allow banks to conduct business across state lines more easily. This flexibility allows a young company like Paxos to focus resources on building great products. A national Trust Bank charter provides us with flexibility to operate across the U.S. while continuing to adhere to the highest regulatory standards,” general counsel Dan Burstein said in a blog post.

Read more: Crypto Startup BitPay Files to Become Federally Regulated US Bank

As with BitPay, the application will see a 30-day comment period as the next step in the process before it can proceed, though there’s no guarantee it will be granted. However, Acting Comptroller Brian Brooks has said in public statements he would like to see fintech firms – like crypto companies – secure federal charters so they can more easily operate across the country.

Related: Charles Cascarilla: PayPal Whisperer

Anchorage filed early last month for a federal charter, though the status of this application is unclear.

If approved, these companies would join Kraken and Avanti as some of the first crypto-native banks in the U.S., though the latter two secured state charters from the Wyoming Division of Banking, rather than go the federal route.

Zack Seward contributed reporting.

UPDATE (Dec. 9, 22:55 UTC): This article has been updated with additional information.

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A South Florida federal district judge sentenced a Washington, D.C., man to six years in federal prison for operating a $25 million diamond investment scheme that included a crypto component. He must also pay over $23 million in victim restitution. 

The accused, Jose Angel Aman, and his partners were sentenced by U.S. District Judge Rodolfo A. Ruiz II of the Southern District of Florida for soliciting funds from people in the United States and Canada for purported diamond contracts. 

Aman and his partners promised investors the money was safe and backed by an inventory of actual diamonds, the U.S. Department of Justice (DOJ) said, but Aman “rarely used investors’ money to purchase, cut and resell rough diamonds. Nor did Aman have a $25 million diamond inventory.”

• The DOJ said Aman also had a cryptocurrency venture, Argyle Coin, LLC, that was set up only after funds for the regular diamond investment scheme began to dry up.
• While the accused solicited new funds on the pretext of  developing a crypto token backed by diamonds, the announcement said only a fraction of the funds were used to develop that token and the rest went to “purported interest payments to the earlier investors and to benefit himself and his partners.”
• “To conceal the fraud, Aman made purported interest payments to existing investors with money from new investment victims. At the end of the investment period, Aman and the partners would convince the investors to roll over their money by falsely claiming that the investors had the full value of their investments to put into new deals,” according to the DOJ.  These “Reinvestment Contracts” were used to buy time until Aman could locate new investors and additional money, DOJ added.

Related: US Justice Department Extradites Alleged Co-Founder of Crypto Ponzi Scheme From Panama

• Chinese Authorities Have Seized a Massive $4B in Crypto From PlusToken Scam
• Visa’s Planned $5.3B Purchase of Fintech Firm Plaid Challenged by US DOJ
• US Seizes $24M in Crypto as Part of Brazilian Probe Into $200M Fraud Scheme

Bitcoin is holding just above $18,000 but analysts are mixed on where it will head, DeFi’s total value locked looks to have momentum but that might have to do with crypto market conditions.

• Bitcoin (BTC) trading around $18,355 as of 21:00 UTC (4 p.m. ET). Slipping 1.9% over the previous 24 hours.
• Bitcoin’s 24-hour range: $17,630-$18,836 (CoinDesk 20)
• BTC near its 10-day moving average and below the 50-day, a sideways-to-bearish signal for market technicians.

The price of bitcoin fell for the third straight day this week, dropping to as low as $17,630 Wednesday, according to CoinDesk 20 data. Price has bounced back somewhat to $18,355 as of press time. 

Read More: Bitcoin’s Options Market Skews Bearish as Spot Price Loses Ground

Related: Bitcoin News Roundup for Dec. 9, 2020

“Obviously we are now seeing the impact of temporary bullish exhaustion,” said Andrew Tu, an executive for crypto quant trading firm Efficient Frontier. “After failing to break the all-important $20,000 psychological figure several times, having been held down repeatedly between $19,000 and $20,000 over the last two weeks, we are now seeing a correction for BTC.” 

On Dec. 3, bitcoin hit a high of $19,464 before slumping, according to the CoinDesk 20.

“In the medium run, the continued bullish news from institutional players, like the recent Wells Fargo report, should drive the price upwards past the $20,000 resistance, assuming that the macro landscape doesn’t dramatically change,” Tu added. 

Read More: Why Wells Fargo Won’t Recommend Bitcoin to Clients

Related: Bitcoin’s Rising Popularity With Investors Means Gold Will ‘Suffer’: JPMorgan

“The recent run-up from $10,000 was primarily driven by spot volumes as U.S. financial institutions are increasingly buying up bitcoin,” said Jason Lau, chief operating officer San Francisco-based exchange OKCoin. “This means that funds are not overextended on leverage right now like in previous rallies and these institutions have capital to deploy to buy any dips.” 

Total volume on major CoinDesk 20 exchanges were higher Wednesday than they have been any other day this week, at $1.3 billion as of press time.

“Since bitcoin didn’t break the $20,000 threshold, we have started to witness a weakening bullish trend,” said Jean Baptiste Pavageau, partner at quant trading firm ExoAlpha.

According to data from Skew, funding rates for long leveraged positions are dropping, indicating a more bearish trend. That’s because traders appear to be seeking more downside exposure than rocket-fueled bullish positioning.

“We expect the price to retest $16,000 first and to bounce on its major support at $13,000 in case of further correction,” added Pavageau. “The bullish trend would still be intact on a larger scale since the second part of this year.”

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Wednesday, trading around $573 and climbing 1.8% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

The amount “locked” in Ethereum-based decentralized finance, or DeFi, has been flirting with an all-time high of $15 billion for the first time, according to data aggregator DeFi Pulse. Locking value in DeFi provides these protocols with liquidity. In turn, investors get a “yield” on their assets, usually quoted in average percentage yield (APY) terms on those assets. 

Drilling down, the amount of ether locked is still hovering near 7 million total ETH.

Meanwhile, the amount of bitcoin locked has been dropping for most of the past month and was at 162,703 BTC as of press time.

John Willock, chief executive officer of Tritum, a diversified crypto investment firm, says market dynamics are playing a role in total value locked nearing $15 billion while crypto appears to be withdrawn from DeFi. 

“The total value in dollar terms of assets locked in DeFI is highly levered to the price change of ETH, BTC and to a lesser extent the long list of other non-stablecoin crypto tokens circulating in the ecosystem,” Willock said. “Price buoyancy and positive sentiment drive a lot of the activity in chasing speculative opportunities in all of crypto, and DeFi is very much the same.”

Digital assets on the CoinDesk 20 are mixed on Wednesday. Notable winners as of 21:00 UTC (4:00 p.m. ET):

• stellar (XLM) + 9.2%
• ethereum classic (ETC) + 6%
• chainlink (LINK) + 2.3%

Notable losers:

• orchid (OXT) – 6.1%
• omg network (OMG) – 1.5%
• kyber network (KNC) – 1%

Read More: Bitfury to Sell Its 38% Stake in Bitcoin Miner Hut 8

Equities:

• Asia’s Nikkei 225 climbed 1.3% as coronavirus vaccine deployment and potential U.S. stimulus had investors pushing the buy button in Japan.
• Europe’s FTSE 100 ended the day flat, in the green 0.08% as officials scurry in hopes to finalize a possible Brexit deal, leaving investors uncertain. 
• In the United States the S&P 500 dropped 0.90% as a sell-off in tech stocks led the index lower despite some optimism on a stimulus package.

Commodities:

• Oil was flat, up 0.08%. Price per barrel of West Texas Intermediate crude: $45.62.
• Gold was in the red 1.6% and at $1,838 as of press time.

Treasurys:

• The 10-year U.S. Treasury bond yield climbed Wednesday jumping to 0.939 and in the green 2.1%.

• First CoinSwap Test Could Herald an Era of Stronger Bitcoin Privacy
• First Mover: Why Wells Fargo Won’t Recommend Bitcoin to Clients

Patrick Sells is going from banking cryptocurrency businesses shunned by most financial institutions to pitching crypto-related services to banks that may suddenly be warming to the sector.

Sells, the former chief innovation officer of New York-based Quontic Bank, is joining New York Digital Investments Group (NYDIG) as its head of bank solutions, the company announced Wednesday.

Sells will be responsible for developing NYDIG’s custody, execution, financing and anti-money laundering and know-your-customer compliance services for banks through a white-labeled offering.

Related: Mass Adoption of a Digital Euro Could Be a ‘Clear Negative’ for Europe’s Banks: BofA

In other words, if banks want to offer crypto trading and custody to their customers, NYDIG stands ready to do all the work for them behind the scenes. And such banks might be out there, judging from the public comment letters filed by a handful of U.S. institutions over the summer in response to a national regulator’s request for input. 

One of only 26 companies to receive New York State’s rarefied BitLicense, NYDIG is best known for managing multi-million-dollar crypto funds and offers prime brokerage and custody services to institutional clients. It raised $150 million for twin crypto funds earlier this month. It is a unit of Stone Ridge, an alternative asset manager handling $10 billion for clients.

Quontic is a tiny bank with only $1.4 billion in assets, about 0.044% the size of JPMorgan. Sells and his former boss, Quontic CEO Steven Schnall, provided hard-to-come-by bank accounts to cryptocurrency firms and gave Quontic employees a crypto education by handing out $20 in bitcoin to each staff member.

Sells won American Banker magazine’s Digital Banker of the Year award in 2020, and revealed that he was working with Schnall on a deposit product tied to crypto.  

Related: Crypto Startup BitPay Files to Become Federally Regulated US Bank

While the crypto industry has historically been served by only a handful of banks, several new banking options are on the horizon, from new chartered Wyoming-based community banks designed to handle digital assets to crypto payments firm BitPay filing to become a national U.S. bank.

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The French Ministry of Finance unveiled sweeping know-your-customer (KYC) requirements on all cryptocurrency companies operating in and servicing the country on Wednesday, a move that could ultimately strip the French crypto space of any semblance of anonymity.

All virtual asset service providers must immediately begin checking their customers’ identities, verifying “beneficial owners” and prohibit anonymous crypto accounts, according to the press release from Finance Minister Bruno Le Maire.

He called the action a necessary step in France’s fight against terrorism. The press release invoked a terrorist cell that apparently financed itself with crypto until its dismantling in September 2019. “We must drain the euro from all terrorist financing channels,” Le Maire declared in a tweet.

Related: French Authorities Arrest 29 Suspected of Using Crypto to Fund Extremists in Syria

Massive new KYC requirements appear to be France’s first volley in a wider broadside against anonymity in crypto. The finance ministry said it is also preparing “new regulatory provisions” to fast-track “digital identification solutions” for crypto transactions.

“This demand, which emanates from players in the ecosystem, will make it possible to fight against the anonymity of transactions in digital assets while facilitating the identification of users,” the ministry said.

The Block first reported France’s KYC plans Tuesday.

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• ‘I Failed Terribly at Keeping My Identity Secret’: Scott Alexander on the Value of Pseudonymity

Nine U.S. lawmakers asked the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) to clarify how crypto firms can become registered broker-dealers and provide custody services for crypto assets.

In a joint letter sent to SEC Chairman Jay Clayton Wednesday, the bipartisan group of representatives wrote they want the SEC to build out the requirements that would enable crypto firms to custody digital securities, and in turn allow FINRA to approve broker-dealer applications for the space.

The letter pointed to recent guidance by the Office of the Comptroller of the Currency (OCC), which published an interpretative letter in July declaring that federally regulated banks may provide custody services for cryptocurrencies.

Related: OKCoin Agrees to List Blockstack’s STX Token in US Following New Network Launch

The lawmakers specifically ask the SEC to take three actions:

• Confirm that banks can provide custody services for digital securities
• Create requirements for crypto custody services that FINRA can use to assess broker-dealer applications
• Tell FINRA to approve broker-dealer applications from the crypto industry

The issue has been outstanding for years. CoinDesk reported in June 2019 FINRA had been sitting on a number of broker-dealer applications from firms that touch crypto, some for over a year. FINRA had taken no actions to approve or disapprove these applications, letting them sit in a sort of limbo.

In a joint statement referenced by Wednesday’s letter, the SEC and FINRA said various concerns needed to be addressed, such as whether the custody provider could prove that no other party had control of its private keys and how they could prevent unauthorized or accidental transfers.

Broker-dealers in the crypto space may also lose Securities Investor Protection Act protections if the crypto assets are deemed to not be securities, the agencies said.

Related: Blockstack’s Stacks Tokens Could Be Tradable in US Amid New Blockchain Launch

Reps. Tom Emmer (R-Minn.), Warren Davidson (R-Ohio), Bill Foster (D-Ill.), David Schweikert (R-Ariz.), Darren Soto (D-Fla.), Ted Budd (R-N.C.), Dan Crenshaw (R-Texas), Ralph Norman (R-S.C.) and Ro Khanna (D-Calif.) co-signed the letter, which was also sent to the other four SEC Commissioners and FINRA CEO Robert Cook.

Clayton, who has served as SEC Chair since 2017, announced last month he intends to step down from his position at the end of this year.

To date, only a few companies in the crypto space have become registered broker-dealers, including Watchdog Capital, Harbor (which was acquired by BitGo) and Prometheum.

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• Ripple Is Cashing Out a Third of Its Stake in Surging MoneyGram

Morgan Stanley Investment Management’s Chief Global Strategist Ruchir Sharma waxed bullish on bitcoin’s potential to usurp the U.S. dollar for payments in a Wednesday Financial Times op-ed.

• “Today, most bitcoins are held as an investment, not used to pay bills, but that is changing,” Sharma wrote. He cited increasing BTC usage in small pockets of international trade and PayPal’s recent move to tap cryptocurrencies as a funding mechaism.
• Considered in the context of falling faith in ever-growing dollar reserves, this trend could bode well for the market-leading cryptocurrency. Sharma argued that “bitcoin will gain” as its traditional competitors falter.
• Sharma cautioned the bitcoin bubble may yet burst. Even if it does, governments and their money printers should be shaken.
• “Do not assume that your traditional currencies are the only stores of value, or mediums of exchange, that people will ever trust. Tech- savvy people are not likely to stop looking for alternatives until they find or invent one,” Sharma warned.

• Worsening US Dollar, Inflation Metrics Bode Well for Bitcoin’s Continued Rally
• Debate Rages on Whether a Digital Dollar Will Unleash Inflation
• PayPal’s Move Is Good for Crypto Adoption but Not So Much for Profits: Morgan Stanley
• Inflation Is the Cruelest Tax

A digital euro may still be far off but Bank of America is warning it could be bad news for the region’s banking industry if there is mass public acceptance. 

In a Tuesday report, BofA analysts said digital euro accounts to individuals, if they are seen as a popular alternative, would cut into commercial bank deposits and possibly harm the region’s banking sector. 

“Money, like internet data, has a strong tendency to monopoly,” noted the analysts in the report. The European Central Bank is concerned by the Libra (now Diem) Association working to get its diem dollar stablecoin off the ground, as well as China’s continuing efforts with its digital yuan. Thus, “the ECB perceives the risk” of a monopoly, say the analysts, and may be thinking it’s “better to move quickly and ensure a digital euro.” 

• The BofA analysts view a digital euro as “predominantly a downside risk” for banks because while reducing costs and complexity in the payments chain for individuals, it would also reduce the need for third parties. 
• “A [digital euro] that functions for transactions could prove a convenient substitute for current accounts,” added the BofA analysts. 
• Banks in Europe already face considerable deposit requirements under the current financial system, the analysts note, so the competition coming from a widely adopted digital euro could further eat into deposits. 
• Signs that a digital euro might arrive “in a form that actually was going to be mass adopted by the population would be a clear negative for the [banking] industry’s value,” the BofA analysts warn.

• Crypto Asset Manager NYDIG Hires Tech-Savvy Banker to Pitch Its Wares to Institutions
• Crypto Startup BitPay Files to Become Federally Regulated US Bank
• Jesse Powell: Bitcoin Banker
• Standard Chartered Bank to Launch Crypto Trading for Institutional Investors: Sources

Cryptocurrency exchange OKEx is seeing slight signs of activity from its mining pool after losing 99.5% of its hashrate this autumn after the exchange suspended withdrawals from trading accounts.

OKEx bitcoin pool miners seemed to jump ship through late October and into November as the pool’s hashrate dropped from over 5,000 petahashes per second (PH/s) to below 20 PH/s only two weeks after the exchange suspended withdrawals. 

Now the pool is starting to show signs of life. Although still significantly below its previous hashrate levels, OKEx Pool’s hashrate has rebounded to 198.67 PH/s, up by a factor of 11 from its lows in November of 18 PH/s.

Related: Bitfury to Sell Its 38% Stake in Bitcoin Miner Hut 8

In an email to CoinDesk, CEO Jay Hao said his firm’s strategy for gradual improvement and recovery ensures “regular in-depth communication with miners” to understand their “current and future needs.” Thanks to this, the pool is gradually recovering, according to Hao. 

But the road to full recovery is long.

Before October, OKEx Pool was one of the world’s 10 largest mining pools, mining an average of more than 250 blocks per month in 2020, according to data from BTC.com. 

In November, the pool only found three blocks. It has mined zero blocks so far in December.

• Secondary Mining Markets Surge Amid ASIC Manufacturing Delays
• Square to Support Greener Bitcoin Mining as Part of Zero-Carbon Pledge
• Bit Digital Completes $13.9M Deal for New Mining Machines

Bitso raised $62 million to expand its Latin American footprint. One of the world’s oldest banks will issue a euro stablecoin on the Stellar blockchain. Elliptic, a blockchain analytics firm, found 13% of the proceeds from crime involving bitcoin travel through “privacy wallets.”

Cornered market?
Latin American crypto exchange Bitso has raised a whopping $62 million funding round, the largest in the region for a digital asset firm. Announced Wednesday, Mexico City-based Bitso’s Series B also heralded the first investment in crypto by renowned fintech VC firms QED Investors and Kaszek Ventures, which led the fundraise. With the capital, the company, which now boasts over over one million users and has cornered the Mexican and Argentinian crypto markets, looks to expand to the rest of Latin America, particularly Brazil.

Stellar stablecoin
Germany’s Bankhaus von der Heydt (BVDH), one of the world’s oldest banks, will issue a euro stablecoin on the Stellar blockchain network. Bitbond, a component in the project, has already partnered with the Stellar Development Foundation to issue a euro-denominated stablecoin with Tempo, and has also received approval from the German regulator BaFIN to issue tokenized bonds, also on Stellar. A fiat currency transfer is held at an escrow account at BVDH, which then triggers the issuance of the stablecoin.

Related: First Mover: Why Wells Fargo Won’t Recommend Bitcoin to Clients

Declining profit
The British arm of the U.S. cryptocurrency exchange Coinbase saw a sharp downturn in business in 2019, with annual profits dropping by nearly a quarter year on year as a result. In a filing with the U.K.’s business registrar Companies House on Tuesday, Coinbase UK reported turnover of €94.8 million (US$114.9 million) in 2019, down 38% from €153 million ($185.6 million) in 2018. Still, after taxes, Coinbase UK netted some €5.1 million ($6.2 million) – though that, too, is down by 22.5% from €6.6 million ($7.9 million) the year before.

Bertelsmann-backed
Greenfield One, an early-stage crypto venture firm based in Berlin, has secured its first major backers for a second fund, including an investment from publishing giant Bertelsmann. Greenfield invests in “crypto networks and developer teams that use blockchain-based technology to create the infrastructure for Web 3.0,” according to the press release. “There seems to be a trend emerging with existing Ethereum applications moving over to other ecosystems, which is something we are excited about even though we remain long-term bullish on Ethereum,” Sebastian Blum, of Greenfield, said.

Downgraded
Following MicroStrategy’s latest bid to raise funds to invest in bitcoin, Citibank analysts have downgraded the company’s publicly traded stock. Citi analyst Tyler Radke lowered his recommendation on MicroStrategy to “sell” from “neutral,” warning investors in a Tuesday research note the company’s recent bitcoin euphoria may be overextended. Radke cited CEO Michael Saylor’s “disproportionate focus” on bitcoin as a potentially troubling trend for the business intelligence company. He also said MicroStrategy’s planned $400 million debt offering to fund additional bitcoin purchases signals “incremental risk to the story.”

Crypto index
Bitwise Asset Management announced Wednesday its 10 Crypto Index Fund is now live as a public-traded cryptocurrency index fund. Listed under the ticker symbol “BITW” and open to U.S. investors, shares of the fund will be tradable through traditional brokerage accounts and the assets will be custodied with Coinbase Custody Trust Company. The fund will track the Bitwise 10 Large Cap Crypto Index, a diversified, market cap-weighted index of the 10 largest cryptocurrencies. As of Nov. 30, the fund held approximately 75% bitcoin and 13% ethereum. The firm has had several failed bids to launch a bitcoin exchange-traded fund (ETF).

Related: Valid Points: Ethereum 2.0 Soars Past 1M ETH Staked

Washed?
Elliptic, a blockchain analytics firm, found 13% of the proceeds from crime involved bitcoin travel through “privacy wallets” – a 2% increase from 2019. In a report published Wednesday the firm estimated that some $160 million in bitcoin was laundered through privacy wallets this year, typically originating from scams, thefts and the darknet. These are tools like Wasabi Wallet and CoinJoin transactions, which work by mixing BTC transactions to obscure the users.

• SWAPPING COINS: First CoinSwap test could herald an era of stronger Bitcoin privacy (CoinDesk)
• OVER TROUBLED: Bridgewater’s Ray Dalio softens stance on crypto, saying the assets “established themselves” and were interesting “gold-like asset alternatives.” (CoinDesk)
• VALID POINTS: Ethereum 2.0 soars past one million ETH staked. (CoinDesk)
• KYC, OUI OUI? France is on the verge of imposing mandatory KYC rules for all crypto transactions, industry sources say. (The Block)
• CRYPTO ATTACKED: Websites including Trezor, Poloniex and The Block have all suffered DDoS attacks in recent days. (Decrypt)
• RIPPLING OUT: For Ripple co-founder Jed McCaleb continues to receive and sell XRP, including a recent 30 million XRP dump. (Decrypt)
• CRYPTO THESES: Messari’s annual report tops 130 pages. (Messari)

Short sell
Omkar is breaking out terms like “downside break” and “key support” “verge of crossing” and “bearish territory.” I am, of course, referring to CoinDesk’s markets oracle Omkar Godbole, who pieces together the market intel you’re reading right now. According to Godbole, bitcoin’s price position doesn’t look great – “bitcoin’s options market has flipped bearish for the short term, as demand rises for ways to hedge against further sell-offs in the spot market” – as the market dipped to its lowest level since Nov. 29, $17,640. While it has since bounced back (at press time), there are a growing number of shorts being taken out. Some 300 contracts are betting another fall to $17,000 have been traded on Deribit since midnight UTC, for instance.

Most influential
CoinDesk went live yesterday with its annual Most Influential series, a package of 12 stories, and accompanying non-fungible (NFT) artworks, honoring those who have had the biggest impact in the crypto industry this year.

Among the “most influential” are Paxos’ Charles Cascarilla, for his involvement in getting PayPal to offer crypto functionality; Protocol Lab’s Juan Benet, for launching the decentralized file storage network Filecoin; and Linda Lacewell, for lowering the barrier to entry to operating a regulated crypto firm in New York, among many more.

It’s an exciting series with tons of great writing and big personalities. I encourage you to check it out. Additionally, CoinDesk has teamed up with crypto charity platform The Giving Block as well as NFT marketplaces Nifty Gateway and Super Rare to auction off portraits of the nominees. Six crypto artists contributed work, who will all split their profits from the sold artworks with charity.

• Blockchain Bites: Square’s Green Bitcoin Pledge, $15B AUM in Crypto Funds
• First Mover: Wells Fargo Bitcoin Briefing Could Signal Bull Run Intact

Looking to make someone (or just yourself) happy this yuletide holiday? Give the gift of crypto art.

As part of the launch of this year’s “Most Influential People in Crypto” list, CoinDesk is auctioning off 12 original artworks featuring the honorees.

The list includes Juan Benet (who launched Filecoin this year), Andre Cronje (a prime mover in the emergence of decentralized finance) and Amiti Uttarwar (the first female Bitcoin Core developer). 

Related: Amiti Uttarwar: Building Bitcoin’s Future

CoinDesk also recognizes Balaji Srinivasan for early and prescient calls to take COVID-19 seriously; Linda Lacewell, the head of the New York State Department of Financial Services, for an open approach to crypto regulation; Michael Saylor, who started the trend of listed companies buying bitcoin for treasury management; and Kraken co-founder Jesse Powell, for winning a banking license in Wyoming. 

Read more: The Most Influential People in Crypto 2020

Also recognized: Zhou Xiaochuan (the “father of the digital yuan”), Cathie Wood, Bitcoin Protesters, Hayden Adams and Charles Cascarilla.

The NFTs were created by the following leading digital artists: Alotta Money, XCopy, Osinachi, Matt Kane, Sarah Zucker, Yonat Vaks and Olive Allen. 

Related: Hayden Adams: King of the DeFi Degens

NFT platforms are auctioning the art now on Nifty Gateway (until Dec. 31) and Super Rare (Matt Kane: the end of this week).

The artists have agreed to donate 50% of the proceeds to charities (of their choice) working with cryptocurrency donations company The Giving Block.

CoinDesk’s Most Influential 2020 list honors 12 people who defined the year in crypto and blockchain, who come from all quarters of the crypto and Web3 universe.

Collectors will be able to bid on 12 unique 1-of-1 portraits of this year’s honorees.

Proceeds of the auction will go to charities including the Rainforest Foundation, No Kid Hungry, The Bail Project, Gamers Outreach, International Medical Corps, She’s the First and SOS Children’s Villages. 

“We’re thrilled to be a part of this year’s Most Influential series, giving collectors the opportunity to own a unique piece of digital art that looks back on a historical year for the crypto industry while giving back to the community around them,” said Nifty Gateway co-founder Duncan Cock Foster. 

“The NFT community has been incredibly generous when it comes to supporting amazing causes. Our first few NFT auctions have raised a combined $50,000+ for participating nonprofits. We’re excited to be working with the Nifty Gateway and CoinDesk team again to raise money for seven great causes,” said Alex Wilson, co-founder, The Giving Block.

• Balaji Srinivasan: The Man Who Called COVID
• Zhou Xiaochuan: The Father of the Digital Yuan

Crypto payments firm BitPay has filed to become a national bank in the U.S.

According to a Dec. 8 legal notice published by the Atlanta Journal-Constitution, BitPay has applied to the Office of the Comptroller of the Currency (OCC) to organize a federally regulated bank, dubbed the BitPay National Trust Bank, headquartered in Georgia. The news was first reported by The Block.

The filing calls for a 30-day comment period, with comments to be directed to the OCC licensing director.

Related: Mass Adoption of a Digital Euro Could Be a ‘Clear Negative’ for Europe’s Banks: BofA

OCC Acting Comptroller Brian Brooks announced earlier this year he would seek to set up a licensing framework for fintech startups, including crypto firms, to streamline their operations within the U.S. At present, crypto exchanges and other digital payment firms typically must acquire money transmitter licenses in each of the U.S. states and territories in which they hope to operate.

According to BitPay’s application, the total capitalization its national bank would receive for shares issued would fall just under $12 million, with 120 million shares to be issued.

By becoming a national bank, companies like BitPay could bypass this state-by-state regime.

The acting comptroller said in September his agency would be ready to begin processing applications. More recently, he told CNBC the crypto space could expect to see additional good news as the year ends.

Related: Jesse Powell: Bitcoin Banker

However, his move has sparked pushback from banks and Democrat lawmakers who see his focus on crypto as excessive and de-regulatory.

Last week, U.S. Rep. Maxine Waters (D-Calif.), who chairs the House Financial Services Committee, wrote a letter to incoming President Joe Biden asking him to overturn a number of actions conducted by his predecessor’s agency heads, including all of Brooks’ crypto actions.

It’s unclear whether Biden will do so at this time.

Brooks is also up to take on a full five-year term at the OCC. President Donald Trump nominated the former Coinbase general counsel to the role last month, though the Senate has yet to announce a confirmation vote. If Brooks is not confirmed, Biden or his designated Treasury secretary nominee, Janet Yellen, may announce a different name.

Rep. Rashida Tlaib (D-Mich.) has also introduced the STABLE Act, which would require all stablecoin issuers to secure bank charters.

BitPay confirmed the move in an emailed statement.

“Our operations as a national trust bank will be subject to strict safety and soundness requirements, which will provide our customers with assurances that our services remain best in class and allow us to be subject to a uniform regulatory framework,” the statement said.

UPDATE (Dec. 9, 2020, 17:17 UTC): Updated with additional information.

• Standard Chartered Bank to Launch Crypto Trading for Institutional Investors: Sources
• Spain’s Second-Largest Bank Will Soon Launch Crypto Services: Sources

Bitcoin mining hardware manufacturer Bitfury has filed to sell its remaining 38% stake in Toronto Stock Exchange-listed mining company Hut 8.

The Amsterdam-based manufacturer filed a notice of intention to distribute securities on Dec. 3 for the sale of 37,226,958 shares of Hut 8. At current prices, the stake is worth $56.6 million. 

Until September, Bitfury held over 40 million shares when it parted with an initial 4 million HUT shares priced at $0.94 each as payment for “a strategic commercial agreement with a third party,” per a press release. 

Related: Secondary Mining Markets Surge Amid ASIC Manufacturing Delays

Hut 8 currently has 96.73 million total outstanding shares. Trading at $1.52 at last check, shares have dropped 12% in December. 

Bitfury’s filing doesn’t specify whether it plans to sell the shares privately or via an exchange. Hut 8 declined to comment on the filing, and Bitfury did not respond to CoinDesk’s request for comment. 

Hut 8 and Bitfury first partnered in December 2017 to launch bitcoin mining data centers in North America. At the time, the then-CEO of Hut 8, Sean Clark, referred to his company as “a proxy for Bitfury in North America.” 

But it is a proxy no longer.

Related: Square to Support Greener Bitcoin Mining as Part of Zero-Carbon Pledge

Update (Dec. 9, 16:24 UTC): Updated fifth paragraph when Hut 8 declined to comment.

• Bit Digital Completes $13.9M Deal for New Mining Machines
• Bitcoin Miners Saw 48% Revenue Increase in November

Fidelity Digital Assets will allow its institutional customers to use bitcoin as collateral against cash loans, according to a press release Wednesday.

• The new service will target bitcoin investors who are keen to turn their holdings into cash without selling, as well as hedge funds, miners and over-the-counter trading desks, Tom Jessop, president of Fidelity Digital Assets, said.
• The Fidelity Investments subsidiary will hold the cryptocurrency and not make loans itself.
• Partnering on the initiative is crypto lender BlockFi, which will help manage risk by offering cash worth 60% of a loan backed by bitcoin, according to the firm’s CEO, Zac Prince.
• “As the markets grow, we’d expect that this becomes a fairly important part of the ecosystem,” said Jessop.
• In order to receive the loan, a Fidelity customer will have to have an account with BlockFi.
• Last November, Fidelity Digital was granted a trust company charter from the New York Department of Financial Services, allowing the firm to custody bitcoin for institutional investors.

Also read: Fidelity Digital Assets Expands Crypto Custody Service to Asia

• Bitcoin a ‘Potential Store of Value’ That’s Very Volatile: Fidelity Digital Assets Head
• Fidelity’s Crypto Arm Responds to 6 Common Bitcoin Criticisms
• Fidelity Digital Assets Is Hiring More Crypto Engineers
• Fidelity Digital Assets Expands Crypto Custody Service to Asia

The number of criminals using so-called privacy wallets to facilitate crypto money laundering is on the rise, according to Elliptic, a U.K.-based blockchain analytics company.

The firm estimates that over 13% of the proceeds from crime involving bitcoin are now being transferred through such wallets, up from just 2% in 2019, according to a report published Wednesday.

Elliptic said privacy wallets, such as Wasabi Wallet, have tools that help obfuscate the identity of users. An example is the automatic peer matching and sending of CoinJoin transactions, in which bitcoin is mixed within one transaction.

Related: Ohio Bill Enabling Blockchain Use by Government Moves to State Senate

The wallets are proving popular as a means to avoid the risks of centralized coin-mixing services, such as theft of funds by service providers and authorities running “honeypot” sites, per the report.

In 2020, Elliptic estimates $160 million in bitcoin from the darknet, thefts and scams has been laundered through privacy wallets.

The hack of prominent Twitter accounts in the summer promoted a crypto scam that raised $120,000 in different cryptocurrencies, much of which was laundered through Wasabi Wallet, the report indicated. The same thing is said to have happened following the September KuCoin exchange hack where $280 million in crypto stolen.

See also: Payza Founders Sentenced in $250M Money Laundering Case

Related: Darknet Markets Face Headwinds After Year of Mixed Results

Elliptic acknowledged there are legitimate uses for privacy wallets, but said criminals have been quick to latch onto the new services.

The trend poses a “growing challenge for regulators, law enforcement and compliance professionals seeking to combat financial crime in cryptoassets,” the firm said.

CORRECTION (16:05 UTC, Dec. 9 2020): Fixed error in percentages in second paragraph.

• Private German Bank to Launch Cryptocurrency Fund
• Ringleaders of PlusToken Scam Jailed for Up to 11 Years

Latin American crypto exchange Bitso has raised a whopping $62 million funding round, the largest in the region for a digital asset firm.

Announced Wednesday, Mexico City-based Bitso’s Series B also heralded the first investment in crypto by renowned fintech VC firms QED Investors and Kaszek Ventures, which led the fundraise. Also involved in the round were existing shareholders Coinbase and Pantera Capital.

Nigel Morris, co-founder and managing partner of QED Investors, and Nicolas Szekasy, co-founder and managing partner at Kaszek Ventures, are joining the board of Bitso.

Related: Crypto Remittances Prove Their Worth in Latin America

“We have been talking to QED and Kaszek for a really long time and they have been interested in crypto but hadn’t pulled the trigger until now,” said Daniel Vogel, CEO and co-founder of Bitso. “I think the conviction from them is because we are really focused on making this technology accessible to the people of Latin America.”

The spectre of deflationary currencies has driven Bitso user numbers to over a million, and a crypto market share of 97% in Mexico and 77% in Argentina, Vogel said. 

A steady expansion of real-world use cases is behind the VC interest, he said, such as remittances, where crypto enjoys a share of the $36-billion-a-year U.S.-Mexico corridor.

“In the case of the U.S.-Mexico remittances, Bitso has processed over a billion dollars worth,” said Vogel. “That’s exciting because it’s the technology being put to use for the benefit of the consumers, more than just speculation.”

Related: Coinbase UK Discloses 22% Profit Drop in 2019

Read more: Why It’s Time to Pay Attention to Mexico’s Booming Crypto Market

Bitso raised a (previously undisclosed) $15 million Series A round in October 2019, Vogel said, and currently employs about 200 staff.

The firm will use a portion of the latest fundraise to build out a Brazil-based operation, which was given a toe-hold launch earlier this year.

“Brazil is probably the most exciting place to be building out how we envision crypto-powered financial products for the end customer,” Vogel said. “So there’s going to be a very strong commitment from Bitso in Brazil where we aim to triple the size the team over the next 12 months.”

• Coinbase to Support Spark Token Airdrop to XRP Holders
• Bolivia Essentially Banned Crypto but Blockchain Advocates Are Pushing Back