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Texture Capital is preparing to launch a digital securities trading hub for private capital markets after getting the green light from a U.S. financial regulator.

With its Financial Industry Regulatory Authority (FINRA) broker-dealer registration and alternative trading system go-ahead, revealed to CoinDesk Tuesday, Texture moves closer to taking its issuance marketplace live.

The one-year-old blockchain company is the latest tokenization outfit hoping to capture even a sliver of the hulking marketplace for private securities. The U.S. Securities and Exchange Commission told Congress in an August report that companies and funds raised $1.5 trillion through so-called “Regulation D” exempt offerings in 2019.

Related: Russian Metal Giant’s Tokenization Firm Expands to America

Although mountains of capital stream into Reg D offerings, the securities themselves seldom flow around. “Most [private] securities do not trade in a secondary market” the SEC report said. Lockup periods and other restrictions account for some of the illiquidity.

According to Texture CEO Richard Johnson, the right tech stack can fix that.

“Other participants have tried and had some success – e.g., Nasdaq Private Market, Forge and the newly announced ClearList,” Johnson said. “This demonstrates the demand for institutional access to private companies.”

However, Texture believes it gains an edge by using “the latest technology” (blockchain), and by” tackling the underlying problems with private securities market structure,” he said.

Related: Securitize Goes License Shopping With Acquisition of SEC-Registered Broker-Dealer

Also read: Russian Metal Giant’s Tokenization Firm Expands to America

Issuing a security token on-chain can help bring efficiency and transparency to private securities, the CEO continued. Similarly, building the secondary trading hub right into the platform might allow investors to flip their tokens far more seamlessly than they otherwise could.

Johnson is also keen on ensuring non-blockchain companies see the appeal of tokenized securities.

Texture hopes to have 20 issuers on its platform in the next six months. For comparison, tZero, one of the best-known security token marketplaces, only has three. But getting more tokens up and running will be a boon for overall liquidity, Johnson said.

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Bitcoin was higher, though barely, appearing to settle into a new range over the past several days between roughly $14,800 and $15,600. 

“Should bitcoin prices consolidate this week,” wrote Matt Blom, head of sales and trading for the digital-asset firm Diginex, “it would set us up for the next leg up towards $17,000.”

In traditional markets, European and Asian shares inched up while U.S. stock futures pointed to a lower open. Gold rose 0.7% to $1,876 an ounce. 

Market moves

Related: Gemini Exchange Building ‘Wrapped Filecoin’ for the Ethereum Network

Bitcoin’s price slide Monday amid a vaccine-powered surge in U.S. stocks sent cryptocurrency analysts scrambling to explain the investment logic, while highlighting the on-again, off-again synchronicity between digital-asset and traditional markets. 

The progress reported by Pfizer toward developing a vaccine could portend a faster-than-expected recovery in the global economy. A rebound in consumer demand would bring about faster growth in corporate earnings and thus improve prospects for stocks.

An economic acceleration also theoretically could speed up inflation and by extension boost bitcoin, seen by a growing number of investors as an inflation hedge similar to gold. The investing legend Stanley Druckenmiller told CNBC on Monday that he owned “many, many more times gold than I own bitcoin, but frankly if the gold bet works, the bitcoin bet will probably work better.”

But nothing is simple in the art of pinpointing fickle and topsy-turvy market narratives, especially during a year when the hand of governments and central banks has been particularly heavy, in the form of trillions of dollars of fiscal and monetary stimulus they’ve pumped into the financial system.  

Related: 3 Reasons Bitcoin Has Rallied Over 60% in Just Two Months

According to Bloomberg, economists immediately began to speculate that any improvement brought by a vaccine might simply relieve pressure on the U.S. lawmakers to rush out a new coronavirus stimulus bill, or on the Federal Reserve to accelerate its $120 billion-a-month in asset purchases. All things being equal, less stimulus might mean less inflation. 

“Assuming the Pfizer vaccine is as effective as currently indicated, it will take several months to manufacture and inoculate large segments of the population,” wrote Thomas Perfumo, strategy director at Kraken Intelligence, an analysis unit of the similarly named cryptocurrency exchange. “The key question is whether additional fiscal stimulus is on the horizon and how asset values, including bitcoin, continue to digest the swell in unprecedented fiscal and monetary response.”

Of course the 11-year-old bitcoin has defied market prognosticators for most of its history, and some cryptocurrency traders say the daily price movements represent little more than a statistical random walk, or maybe correlation without causation. Bitcoin has blown away every other major asset class in 2020, with a 113% year-to-date gain versus 10% for stocks and 24% for gold. 

Bitcoin’s price correlation over the past 90 days with both stocks and gold stands at a positive but weak level of 0.35, where 1 represents perfect synchronicity, -1 a perfectly inverse relationship, and 0 no connection at all.

It might also be weak to draw too many inferences beyond just that the bitcoin bet appears to be winning. 

Bitcoin watch

Bitcoin (BTC) has chalked up a stellar price rally in the past two months, reaching 33-month highs close to $16,000.

The uptrend began in early September after buyers bought a dip below $10,000, and gathered pace in the second half of October. Last week, prices reached a high of $15,971, a level last seen in January 2018. That’s a 63% price gain in eight weeks, according to CoinDesk’s Bitcoin Price Index.

Over 2018 and 2019, bitcoin often languished below $10,000, struggling to recover from a crash that followed the late 2017 surge to record highs near $20,000.

So what’s behind the rapid gains in recent weeks? Here are three of the primary factors driving the bull market:

• Increased institutional participation: “Over the past eight weeks, we have seen various notable public companies and hedge funds enter the cryptocurrency market with sizable deployment of capital,” Matthew Dibb, co-founder, and COO of Singapore-based Stack Funds said.
• Supply crunch: “Between Grayscale’s GBTC trust, MicroStrategy and the influx of other large spot buyers, the supply of bitcoin is beginning to look more scarce,” Dibb said. Grayscale is owned by CoinDesk’s parent firm, Digital Currency Group.
• Technical breakout: Bitcoin’s bullish bias strengthened following the cryptocurrency’s convincing break above $12,500 in the third week of October. 

– Omkar Godbole

Read More: 3 Reasons Bitcoin Has Rallied Over 60% in Just Two Months

Token watch

Bitcoin SV (BSV): Flaw in Bitcoin SV multisig wallet puts funds at risk. 

Ether (ETH): Options open interest climbs to record $570M, according to Skew, a provider of crypto-derivatives data:

What’s hot

Beijing municipal government conference notes plans to pilot central-bank digital currency in China’s capital (CoinDesk) 

U.S. government’s tendency to move at slower pace than private sector when it comes to innovation isn’t a bad thing, says SEC Commission Hester “Crypto Mom” Peirce (CoinDesk)

Binance.US joins Gemini, Kraken and ErisX on Silvergate Bank’s SEN Network, which allows companies to move U.S. dollars instantly between cryptocurrency exchanges (CoinDesk)  

Analogs The latest on the economy and traditional finance

The U.S. continues to stare at a mountain of potential debt defaults and decline in asset prices due to coronavirus, Fed says in semiannual report (Reuters)

New Zealand central bank proves “kiwi whale” as ownership of country’s government bonds shoots to 37% from 6% in seven months (Bloomberg) 

U.S. banks tighten loan standards to households even as demand increases for mortgages and auto loans (Federal Reserve):

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Crypto services provider Anchorage said it received third-party certification that the controls supporting its financial reporting and operations are adequately secure.

The SOC 1 Type 1 report is granted after an independent third-party audit of a company’s internal systems and controls supporting client financial reporting, in addition to exclusive control of private keys.

Achieving SOC 1 Type 1 certification is a milestone for San Francisco-based Anchorage, which has spent much of the past two years building out its services. In October 2019 it added a governance platform for on-chain voting, months after introducing stellar inflation and tezos staking to clients holding either crypto asset.

Related: Casa Rolls Out ‘Bank-to-Wallet’ Bitcoin-Buying Services for US Customers

This past January Anchorage launched a crypto platform for its institutional investors and acquired data analysis firm Merkle Data.

Read more: Crypto Custodian Anchorage Teases Growth Plan With 2 Executive Hires

“What sets the Anchorage report apart is a heavy emphasis on our ability to prove exclusive control, confidentiality and availability of private keys,” said Jennifer Lee, head of compliance.

Anchorage said it will be working with EY, which conducted the SOC 1 Type 1 certification process, to complete Type 2 evaluations on a regular basis. Type 2 certifications are considered more rigorous as they’re an examination of a company’s controls over a period of time whereas Type 1 evaluations are of a particular point in time.

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Cryptocurrency exchange Gemini is developing a “Wrapped Filecoin” (wFIL) service enabling the decentralized storage platform’s native token (FIL) to be used on the Ethereum network.

• In a company blog post on Monday, U.S.-based Gemini said it was on the hunt to work with Ethereum developers wishing to add wFIL to their own products and platforms.
• Once complete, users will be able to convert FIL stored in their exchange accounts to wFIL at a 1:1 ratio, which can then be withdrawn to any Ethereum address. The wrapped token can also be exchanged back to FIL.
• Gemini said FIL tokens will be held in Gemini’s storage solution with “full transparency,” meaning users can verify the amount of FIL the exchange holds is equal to the total wFIL in current circulation.
• The Filecoin network is a decentralized alternative to platforms like Amazon Web Services on which users can use FIL to purchase storage space via an open market.
• In 2017, the open-source project raised $257 million in a two-stage token offering of 200 million FIL.
• The “decentralized model offers a compelling alternative to existing centralized cloud storage offerings,” Gemini’s post reads.

See also: Gemini Exchange Launches Crypto Trading Against the Euro

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Bitcoin (BTC) has chalked up a stellar price rally in the past two months, reaching 33-month highs close to $16,000.

The uptrend began in early September after buyers bought a dip below $10,000, and gathered pace in the second half of October.

Last week, prices reached a high of $15,971, a level last seen in January 2018. That’s a 63% price gain in eight weeks, according to CoinDesk’s Bitcoin Price Index.

Related: First Mover: Bitcoin Needs No Vaccine as Druckenmiller Lays Down ‘Better Bet’

Over 2018 and 2019, bitcoin often languished below $10,000, struggling to recover from a crash that followed the late 2017 surge to record highs near $20,000.

So, what’s behind the rapid gains in recent weeks? Here are three of the primary factors driving the bull market:

1. Increased institutional participation

“Over the past eight weeks, we have seen various notable public companies and hedge funds enter the cryptocurrency market with sizable deployment of capital,” Matthew Dibb, co-founder, and COO of Singapore-based Stack Funds said.

On Sept. 15, listed business intelligence firm MicroStrategy (NASDAQ: MSTR) announced the purchase of $250 million worth of bitcoins, and three weeks later payments company Square (NYSE: SQ) also disclosed its investment in the bitcoin market.

Related: Ex-Microsoft Dev Gets 9 Years in Prison Over $10M Theft Involving Bitcoin Mixing

In October, leverage in the derivatives market was also skewed bullish, with institutions holding record long positions in bitcoin futures listed on the Chicago Mercantile Exchange.

Also read: Institutions Take Record Bullish Bets in Bitcoin Futures, Shrugging Off Exchange Missteps

The increased institutional participation likely created upward pressure on prices. Further, it buoyed broader market sentiment and likely prompted more buyers to join the market.

The number of bitcoin whale entities – clusters of addresses held by a single network participant holding at least 1,000 BTC – rose to four-year highs at the end of October. Retail participation increased, too, as suggested by the “accumulation addresses” metric rising to record highs.

Since the coronavirus pandemic hit, expectations for additional U.S. fiscal stimulus alongside the Federal Reserve’s ongoing inflation-boosting bond purchase programs have triggered fears of a dollar sell-off, and motivated both institutions and retailers to put at least some money into bitcoin.

“The talks of further stimulus efforts has put bitcoin on the map as a quasi-safe haven, possessing many of the store-of-value qualities of gold, despite its relatively [brief] existence,” Dibb said.

Also read: World’s Growing Stockpile of Negative-Yielding Debt a Positive for Bitcoin, Say Analysts

2. Supply crunch

Large spot buyers, mostly institutions, have created a shortfall in bitcoin liquidity, pressuring prices to the higher side.

“Between Grayscale’s GBTC trust, MicroStrategy and the influx of other large spot buyers, the supply of bitcoin is beginning to look more scarce,” Dibb said. Grayscale is owned by CoinDesk’s parent firm, Digital Currency Group.

Further, retail investors took direct custody of their coins by moving them from exchanges to their own wallets, adding to the drying up of sell-side liquidity. The total number of bitcoins held on cryptocurrency exchanges has fallen 9% to 2,404,788 BTC in the past two months, according to Glassnode data.

The decline in exchange balances is indicative of strong holding sentiment in the market.

3. Technical breakout

Bitcoin’s bullish bias strengthened following the cryptocurrency’s convincing break above $12,500 in the third week of October.

Back then, many analysts had pointed to $12,500 as the level to beat for the bulls. That’s because the cryptocurrency had declined sharply following a rejection near $12,500 in August.

“The real resistance level is around $12,500-ish, so, until a meaningful breakout above that level, nothing is done,”  David Lifchitz, chief investment officer at ExoAlpha, told CoinDesk on Oct. 20.

Indeed, the eventual breakout above $12,500 looks to have invited stronger chart-driven buying pressure.

Bitcoin ended the third week of October above the key hurdle and remained bid in the following two weeks. Now support, at $12,500, hasn’t been tested since.

Also read: Billionaire Hedge Fund Investor Druckenmiller Says He Owns Bitcoin in CNBC Interview

At press time, bitcoin is changing hands near $15,390, representing a 113% year-to-date gain.

Disclosure: The author holds small positions in bitcoin and litecoin.

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Telos has partnered with open-source weather technology company Telokanda Weather Group to launch an initiative to collect and share weather data in West Africa on the Telos public blockchain. 

Telokanda will use the Telos blockchain to help university students and farming communities record and share weather data with the goal of improving climate research, hurricane tracking and local weather forecasting, the companies said in a statement Tuesday.

According to the announcement, the project was developed by a team in West Africa that includes former Boeing and NASA engineer Nicolas Lopez. 

Related: Australian Senator Touts Blockchain Tech for ‘One-Touch’ Government

High-altitude weather balloons, launched by citizens in West African countries, will carry lightweight devices called radiosondes into the air while beaming atmospheric data, including pressure, temperature and wind speed, back to Earth.

The project hopes to motivate citizens to participate in weather data collection by developing a method of sending digital currency instantly to people who launch their weather balloons, incentivizing timely and consistent launches, the announcement said.

The announcement said that once a weather balloon transmits data to the blockchain, a smart contract will trigger payments in telos tokens (TLOS) to the operators’ digital wallets. Each reward of about $15 can be converted to local fiat currencies such as the Nigerian Naira or Ghanaian Cedis via the Sesacash app. 

A spokesperson for the project told CoinDesk via email that at first rewards will come from the Telos Worker Proposal System but in the future, the funds will come from NGOs that want to use the data for weather forecasting and research. 

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So far Telokanda has partnered with the University of Uyo and Rivers State University in Nigeria, as well as Academic City where students will launch the balloons and track the data. 

Read more: Chainlink to Provide Data for Farming Insurance Startup Arbol

“This project can quickly grow into one that will save lives and help prevent billions of dollars in weather damage while rewarding local participants for their efforts,” Douglas Horn, chief architect of the Telos blockchain, said in a statement to the press. 

The project has so far completed eight launches.  

Starting out, Telokanda plans to have each university launch one balloon per week, scaling up to daily launches by 2021, the spokesperson said.

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Blockchain-based agriculture trading platform Cerealia has announced its commercial launch, Bloomberg reports Tuesday.

• Aiming to facilitate trading of physical grains, Cerealia is focusing on the international market for Russia, the world’s largest wheat supplier.
• The project has already undergone a series of trial transactions with participating companies from Japan, Dubai, Ukraine, Turkey, Algeria and Brazil, per the report.
• Allowing shipments as big as 20,000 metric tons, Switzerland-based Cerealia aims to provide faster trades and more traceability using blockchain tech.
• “Traders can now be 100% certain they really did the trade, versus traditional over-the-phone brokerage,” CEO Andrei Grigorov said.
• The agri-trading industry has been eyeing the potential benefits of blockchain for some time.
• In 2018, four of the biggest agricultural corporations said they would use blockchain and AI to bring the international grain trade into the digital age.

Also read: Australia’s Biggest Grain Exporter Trials Blockchain Tracking System

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Lawyers of embattled former U.S. Football League player and National Football League investor Reginald Fowler have filed a motion to withdraw as his representative counsel in a case involving alleged illegal cryptocurrency operations.

• In a court document filed Monday, no definitive reason was given for the motion due to attorney-client privilege.
• However, Fowler’s lawyers, James McGovern and Michael Hefter of law firm Hogan Lovells, cited Local Civil Rule 1.4, which states an attorney for a party may be allowed a court order to withdraw for a “satisfactory reason.”
• According to the motion, filed in the U.S. Southern District Court of New York, McGovern and Hefter have informed Fowler multiple times since Feb. 26 of this year that they wished to withdraw.
• They asked the court to delay deadlines in the case to allow Fowler’s new representation to get up to speed.
• Fowler is one of two individuals accused of running a “shadow banking” service for cryptocurrency exchanges. The other individual, Ravid Yosef, remains at large.
• Allegedly acting under the guise of processing real estate transactions, the pair opened bank accounts with various financial institutions to illegally store funds on behalf of cryptocurrency exchanges.
• Crypto Capital, the “shadow bank” Fowler stands accused of operating, is allegedly tied up in an $850 million black hole of crypto funds that went missing from the Bitfinex exchange in 2019.
• In October, Fowler was said to be considering reopening plea bargain talks.

See also: Prosecutors Detail ‘Shadow Bank’ Accounts in Fowler Crypto Case

See the court document in full below:

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Lawyers of embattled former NFL player and investor Reginald Fowler have filed a motion to withdraw as his representative counsel in a case over alleged illegal cryptocurrency operations.

• In a court document filed Monday, no definitive reason was given for the motion due to attorney-client privilege.
• However, Fowler’s lawyers James McGovern and Michael Hefter of law firm Hogan Lovells cited Local Civil Rule 1.4, which states an attorney for a party may be allowed a court order to withdraw for a “satisfactory reason.”
• According to the motion, filed in the U.S. Southern District Court of New York, McGovern and Hefter have informed Fowler multiple times that they wished to withdraw since Feb. 26, 2020.
• They asked the court to delay deadlines in the case to allow Fowler’s new representation to get up to speed with the case.
• Fowler is one of two individuals accused of running a “shadow banking” service for cryptocurrency exchanges. The other individual, Ravid Yosef, remains at large.
• Allegedly acting under the guise of processing real estate transactions, the pair opened bank accounts with various financial institutions to illegally store funds on behalf of cryptocurrency exchanges.
• Crypto Capital the “shadow bank” Fowler stands accused of operating is allegedly tied up in an $850 million black hole of crypto funds that went missing from the Bitfinex exchange in 2019.
• In October, Fowler was said to be considering reopening plea bargain talks.

See also: Prosecutors Detail ‘Shadow Bank’ Accounts in Fowler Crypto Case

See the court document in full below:

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A former software engineer at Microsoft received a nine-year prison sentence Monday for an elaborate multi-million dollar criminal scheme involving bitcoin and digital gift cards.

Ukrainian citizen Volodymyr Kvashuk, 26, was sentenced in the U.S. District Court in Seattle for 18 federal felonies related to his scheme to defraud Microsoft of more than $10 million. This marks the first case of its kind in the U.S., according to a press release by the Department of Justice.

Kvashuk was involved in the testing of an online retail sales platform for Microsoft from August 2016 until he was fired in June 2018. He had used his employee access to steal “currency stored value,” (CSV), namely digital gift cards. He then resold that value online and used the proceeds to fund a lavish lifestyle including a $1.6 million lakefront home and a $160,000 Tesla car.

Related: Market Wrap: Bitcoin Drops as Low as $14.8K; ETH Options Open Interest at Record High

What initially began as a small sum of $12,000 in CSV using his own email account access, Kvashuk eventually moved on to email accounts belonging to other employees in order to mask the growing thefts. Kvashuk then employed a bitcoin mixing service attempting to conceal the source of funds arriving in his bank account.

“Stealing from your employer is bad enough, but stealing and making it appear that your colleagues are to blame widens the damage beyond dollars and cents,” said Brian Moran a U.S. attorney for the Western District of Washington.

Over a period of seven months, Kvashuk’s illegal activity saw a total of $2.8 million in bitcoin transferred to his bank and investment accounts. He then filed fake tax return forms claiming the bitcoin had been a gift from a relative, according to the department’s statement and court records.

Kvashuk must now pay more than $8.3 million in restitution – the value of CSV redeemed by third parties who had purchased stolen Microsoft gift cards. The software giant was able to block a further $1.8 million in CSV redemptions totaling more than $10.1 million, according to a court memorandum filed on Nov. 2 in the Western District of Washington.

Related: Why Bitcoin Needs Philosophy

In February, Kvashuk was convicted of five counts of wire fraud, six counts of money laundering and two counts of aggravated identity theft by a Jury. His sentencing concludes a 16-month trial.

The Ukrainian citizen was also convicted on two counts of filing false tax returns, and one count each of mail fraud, access device fraud and access to a protected computer in furtherance of fraud, a court judgment document shows.

“Kvashuk’s criminal acts of stealing from Microsoft, and subsequent filing false tax returns, is the nation’s first bitcoin case that has a tax component to it,” said Ryan Korner, IRS Special Agent. “Today’s sentencing proves you cannot steal money via the Internet and think that bitcoin is going to hide your criminal behaviors.”

See also: US Charges 6 With Laundering Mexican Drug Cartel Cash Using Crypto and Casinos

See Government’s sentencing memorandum in full below:

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Crypto market maker Amber Group will service its clientele of institutional traders with the help of BitGo Trust, the custodial arm of the Palo Alto-based security firm.

BitGo’s status as a qualified custodian should draw more high-net-worth investors to Amber from places like Hong Kong, Taiwan and Seoul, the companies said.

The Hong Kong-based market maker, which has an average daily trading volume between $100 million and $200 million, is building on its existing business relationship with BitGo. (Amber Group’s suite of offerings, which includes Amber Pro and Amber App, have used BitGo security tech since 2018.)

Related: Sygnum Bank Now Stores Digital Assets With Taurus Group

Back in February, Amber closed a $28 million funding round led by Paradigm and Pantera Capital and including Coinbase Ventures. BitGo Trust clients include Pantera, Bitstamp, Nexo, CoinJar and others.

Read more: Crypto Finance Startup Amber Raises $28M in Series A Led by Pantera, Paradigm

Amber’s decision was partly swayed by BitGo’s $100 million in Lloyd’s of London–backed cold storage insurance cover, said BitGo’s Nick Carmi.

“The insurance that comes with our trust custody just adds another component of security and trust for the clients – and that’s why they are with us,” Carmi, the custodian’s head of financial services, said in an interview.

Related: Hong Kong’s Securities Watchdog May Soon Regulate All Crypto Trading Platforms

Asked for his reasoning on the broadening of the firm’s custody partnerships, Amber Group CEO Michael Wu said via email that it came down to the custodian’s “track record, shared insurance scheme and integration with [the BitGo] lending desk.”

Nimble storage?

Some custodians claim that deep cold storage, which involves some degree of manual processing to get the funds online, is not suitable for the sort of fast turnaround professional trading operations require. 

BitGo’s Carmi said the inventory immediately needed for market making and high-frequency trading can be held in hot wallets, or those connected to the internet. “Whatever they are not using stays in cold storage,” he added.

Wu could not comment on the exact breakdown of funds that sit in Amber’s cold wallets at any one time. 

“The majority of funds are always being utilized and moved around for various trading, lending and other activities,” said Wu. “Our engagements with new custody partners are driven by business demand as the firm continues to grow.”

Read more: Record $616M of Wrapped Bitcoin Minted in September

Amber has also been getting a taste of BitGo’s wrapped bitcoin (WBTC), a tokenized version of bitcoin (BTC) primed for easy usage on Ethereum’s various decentralized finance (DeFi) apps.

BitGo’s Carmi said WBTC naturally flows into the institutional custody business as savvy investors hunt for yield. 

“We are the sole custodians and the only counterparty that can mint WBTC,” he said, “and BitGo Trust is the custodian of the BTC that’s being held for minting.”

Wu could not comment on the volume of WBTC Amber is trading. “We only began trading WBTC recently, primarily as a result of DeFi opportunities,” he said.

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Publicly traded bitcoin mining company Riot Blockchain reported earnings for the September period Monday, noting a significant increase in revenue and hash power from a year ago with plans for continued expansion.

• Reporting over $2.4 million in mining revenue, the Castle Rock, Colo.-based mining firm increased revenue by 42% from the same period in 2019. The company’s mining revenue clearly benefited from a 15% increase in the price of bitcoin during the Q3 in addition to its increased hash power.
• Riot filings show it mined 222 BTC in Q3 2020, up 41% from the same period last year, but slightly lower than the 227 BTC mined in Q2 2020. In 2019, Riot switched to mining bitcoin exclusively, CEO Jeff McGonegal told CoinDesk. Previously, the company also mined litecoin and bitcoin cash.
• Riot reported a current mining capacity of 556 peta hash per second (PH/s), meeting its goal set in its Q2 earnings release, which represents a 450% increase from its Q3 2019 hash power of 101 PH/s. 
• Riot plans to continue aggressively expanding its mining operations, per its earnings report, through four purchase agreements with mining manufacturer Bitmain for a total of 16,600 S19-Pro machines. The firm expects incremental delivery and deployment of its new machines through the end of Q2 2021.
• Concurrent with an increase in mined bitcoin and the leading cryptocurrency’s 114% year-to-date rally, Riot’s cryptocurrency corporate liquidity grew from $7.2 million in Q2 to $9 million in Q3. Its cash reserves ballooned from $9.1 million to $30.1 million over the same period.

• Riot shareholders enjoyed the lowest quarterly loss per share since the company first fully deployed its cryptocurrency mining hardware in Q2 2018. The loss per share dropped to $0.04 in Q3, a 50% improvement from a loss per share of $0.08during the same period last year.
• Riot shares were trading hands at $3.50 at Monday’s close, up 32% from the start of Q4. They’ve risen more than 200% year to date.

Update (November 9, 4:27 UTC): This article has been updated to reflect 222 bitcoins mined in the Q3, not 224 as was previously reported.

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Publicly traded bitcoin mining company Riot Blockchain reported earnings for the September period Monday, noting a significant increase in revenue and hash power from a year ago with plans for continued expansion.

• Reporting over $2.4 million in mining revenue, the Castle Rock, Colo.-based mining firm increased revenue by 42% from the same period in 2019. The company’s mining revenue clearly benefited from a 15% increase in the price of bitcoin during the Q3 in addition to its increased hash power.
• Riot filings show it mined 224 BTC in Q3 2020, up 43% from the same period last year, but slightly lower than the 227 BTC mined in Q2 2020. In 2019, Riot switched to mining bitcoin exclusively, CEO Jeff McGonegal told CoinDesk. Previously, the company also mined litecoin and bitcoin cash.
• Riot reported a current mining capacity of 556 peta hash per second (PH/s), meeting its goal set in its Q2 earnings release, which represents a 450% increase from its Q3 2019 hash power of 101 PH/s. 
• Riot plans to continue aggressively expanding its mining operations, per its earnings report, through four purchase agreements with mining manufacturer Bitmain for a total of 16,600 S19-Pro machines. The firm expects incremental delivery and deployment of its new machines through the end of Q2 2021.
• Concurrent with an increase in mined bitcoin and the leading cryptocurrency’s 114% year-to-date rally, Riot’s cryptocurrency corporate liquidity grew from $7.2 million in Q2 to $9 million in Q3. Its cash reserves ballooned from $9.1 million to $30.1 million over the same period.

• Riot shareholders enjoyed the lowest quarterly loss per share since the company first fully deployed its cryptocurrency mining hardware in Q2 2018. The loss per share dropped to $0.04 in Q3, a 50% improvement from a loss per share of $0.08during the same period last year.
• Riot shares were trading hands at $3.50 at Monday’s close, up 32% from the start of Q4. They’ve risen more than 200% year to date.

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The U.S. government operates at a slower pace than the private sector when it comes to innovation, but this isn’t necessarily a bad thing, said Securities and Exchange Commission (SEC) member Hester Peirce.

Speaking Monday at CoinDesk’s Bitcoin for Advisors event with financial adviser Steve Sanduski, the second-term commissioner shed light on how the securities regulator is approaching financial technology innovation, including cryptocurrencies. 

“Regulators are slow and there’s a reason we’re slow. We need to have [a] process in place so that we make sure when we’re changing rules people have notice that we’re thinking about changing a rule and they can comment,” she said. 

Related: Financial Advisors, Bitcoin Is the Next Amazon

Ideally, regulations and guidance would not limit which technologies can be used, allowing innovators to build a wide range of compliant tools and platforms. 

That being said, Peirce noted that certain regulations are very dated, and said she would like to see the agency move faster in certain areas, pointing to cryptocurrencies as one example.

“There are circumstances where we have a framework at the SEC that was built in the 1930s and 1940s and added on over time,” she said. “Certainly now that we’re seeing what’s happening in the crypto space, for example, there are areas we are going to have to make adjustments and I do think we should move faster … I’m impatient there.”

Allowing token offerings to operate in a regulatory safe harbor like the one Peirce has proposed and creating retail access to bitcoin through regulated products like an exchange-traded fund (ETF) are two areas where the SEC could move more quickly, she said. 

Related: Why Crypto Is the Next Big Trend in Financial Planning

Asked how much influence the SEC’s five commissioners have on such decisions, she noted that usually the agency’s staff approves or disapproves products like ETFs. The commissioners themselves do not normally get involved, but “in the case of the bitcoin [ETFs] we’ve been able to weigh in,” she said.

Read more: Mapping the Future of the SEC (There’s a Nonzero Chance Hester Peirce Takes Over)

Other areas, like approving broker-dealers to provide digital asset services in the U.S., are more complicated due to the fact that there are multiple regulatory authorities overseeing these companies, she said.

Asked about the future direction of the SEC, given the projection that former Vice President Joe Biden will be the next president of the United States, Peirce said regulators are likely to continue working on crypto.

“I think those things are tied together in the sense that certainly the president is the one who’s going to nominate the chairman; but even within, you’ve seen some really great steps taken by a regulator like the Office of the Comptroller of the Currency where the OCC sat down and said, ‘Hey we’re not really great at handling innovation’ so [it] set up an office of innovation,” she said.

She also pointed to the fact that there are congresspeople on both sides of the political aisle who are bullish on crypto and said support for the sector is bipartisan.

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When Bitcoin SV (BSV) forked from Bitcoin Cash, its mandate to create a faster, payments-focused blockchain required gutting some of Bitcoin’s key technical features. 

In doing so, it gutted some of Bitcoin’s key features; now, it’s worse off for it.

One of these features, the so-called pay-to-script hash (P2SH) function, allows a user to send a transaction by signing it to a “script” rather than a public key address. These scripts create special conditions that must be met in order to access the bitcoins sent to them, and they are most often used in multi-signature transactions – or, transactions that require more than one party to approve.

Related: Market Wrap: Bitcoin Drops as Low as $14.8K; ETH Options Open Interest at Record High

Before P2SH transactions came to Bitcoin in 2012, Bitcoin’s only transaction type would send payments to a public key address through the pay-to-public-key-hash (P2PKH) function.

BSV’s homebrewed multisig wallets have been hacked

Bitcoin Core developer and former Blockstream CTO Gregory Maxwell posted on Reddit’s r/bsv that BSV developers removed the P2SH feature some time ago from the BSV blockchain’s code. In the ElectrumSV wallet (“and presumably elsewhere,” Maxwell says in the post), developers replaced the feature with a bootleg, BSV-specific version called “accumulator multi-sig” that utilized P2PKH transactions instead.

There’s a reason Bitcoin uses P2SH for multisig and not P2PKH, because the latter is not ideal for multi-signature transactions.

It’s so insecure, in fact, that BSV holders are losing funds, Maxwell says in the post.

Related: Buggy Code in This Compound Finance Fork Just Froze $1M in Ethereum Tokens

“These scripts had no security at all,” he explains. 

According to Maxwell, the code’s architects only checked to see if the multisig transactions would work with the exact number of private keys needed to send the transaction (a multi-sig wallet requires more than one private key to authorize a transaction). They did not test transactions if more or fewer keys than necessary are present.

In his testing, Maxwell found two significant problems: first, that multi-sig spends fail if more than the minimum number of keys sign a transaction. Second, anyone could tap the multi-sig funds “with too few signatures (such as none at all).”

Read more: In Big Block Hard Fork, Craig Wright’s Bitcoin Has Left Nodes Behind

One BSV user, Aaron Zhou, lost 600 BSV to an attack exploiting this weakness on his multi-signature wallet. When enquiring about the loss to a developer in a BSV chatroom, Zhou said that he trusted “it was safe enough” because “it was introduced by CoinGeek,” a pro-BSV media outlet bankrolled by Calvin Ayre, a close friend of BSV creator Craig Wright.  By way of response, a developer in the chat chastised Zhou by saying he should only have committed “small amounts” to the wallet.

If it ain’t broke, don’t fix it

With a tone of frustration in his post, Maxwell said that “the error could have been avoided with even the most basic testing or review.”

The fiasco is a reminder that cryptocurrency development comes with trade-offs and requires diligence. BSV’s founders and proponents have marketed it as payments-focused coin with massive block sizes and blisteringly fast transaction times. To achieve these properties, BSV developers chose to strip Bitcoin’s code of key features. As evidenced by the multi-sig fiasco, this can come at the expense of security.

When money is on the line, you can’t move fast and break things. Often criticized as a slow-grinding, too-conservative process, Bitcoin development often proceeds with the principles of caution and precision in mind. 

Unsurprisingly, as a Bitcoin Core developer Maxwell favors this methodical approach over the perfunctory one.

“This situation would have been avoided entirely had BSV not ripped out the competent, time-tested and highly peer-reviewed mechanisms for multisig by Bitcoin in favor of far less efficient home-brew crypto,” said Maxwell.

“Kinda makes you wonder what amazing bugs are lurking in their node software or wallets. I can say for sure: I’m not going to run any of it and risk finding out.”

Developers at ElectrumSV have not yet returned answers to questions from CoinDesk.

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Bitcoin is gyrating amid rallying global stock markets while ether options traders ramp up open interest as the Ethereum network heads for an ambitious upgrade.

• Bitcoin (BTC) trading around $15,384 as of 21:00 UTC (4 p.m. ET). Gaining 0.05% over the previous 24 hours.
• Bitcoin’s 24-hour range: $14,845-$15,842
• BTC above its 10-day and 50-day moving average, a bullish signal for market technicians.

After bitcoin rallied over $200 on news that Pfizer’s vaccine trial showed it was 90% effective in preventing coronavirus infections, the price suffered a drop of almost $1,000 within hours Monday. The sell-off went from $15,842 shortly after Pfizer’s announcement early in the morning to as low as $14,845 around 16:30 UTC (8:30 a.m. ET). It has since recovered, changing hands at $15,389 as of press time, according to CoinDesk 20 data. 

“Bitcoin’s retracement through the $15,000 level is a continuation of the gradual move downward during the past few days,” said Guy Hirsch, managing director for U.S. at multi-asset brokerage eToro. “Though today, it feels different than the likely profit-taking that occurred over the weekend.”

Related: Flaw in Bitcoin SV Multisig Wallet Puts Funds at Risk

Cindy Leow, portfolio manager for multi-strategy crypto trading firm 256 Capital Partners, has been tracking bitcoin’s volume-weighted average price, or VWAP, as a indicator as prices take a break from a rally that took the world’s oldest cryptocurrency to record 2020 highs the past week. VWAP gives an average price at which an asset has traded throughout the day based on both volume and price.

Read More: Bitcoin’s Weekly Close Above 2019 High Leaves Runway Clear to $20K

“In the short term, we’re entering into whipsaw markets that typically follow huge gains,” Leow noted. “We see immediate support at BTC’s monthly VWAP of $14,700, from which BTC has steadily bounced off of, indicating that buyers still maintain control.” 

A change in market dynamics is also playing a role in staving off possible price downside. That’s due in large measure to the waning influence of leveraged derivatives venue BitMEX, which is facing lawsuits and the ire of U.S. regulators. 

Related: Why Bitcoin Needs Philosophy

“It’s fascinating that this whole move up last week from $13,900 to $15,900 happened with so few long liquidations and barely any corrections so far,” Leow said. “We suspect this is largely an effect of trading volumes going from BTC-margined futures to USDT-margined futures, as USDT-margined traders are by default technically in a short BTC position.” 

Liquidations on BitMEX, as tracked by data aggregator Skew, are on the decline.

Meanwhile, traditional markets are seeing major action Monday, the first trading day since a clear winner in the U.S. presidential election was decided. Former Vice President Joe Biden is set to take office in early 2021.

Read More: Crypto Impact Unclear After Joe Biden Unseats Donald Trump 

Stocks are up across major global indices.

• The Nikkei 225 closed in the green 2.1% as investors signaled optimism the incoming U.S. president will promote closer ties to Asia than the incumbent.
• Europe’s FTSE 100 ended the day up 4.6% as positive investor sentiment on a coronavirus vaccine lifted the index.
• In the United States the S&P 500 gained 2.7% as good news regarding the effectiveness of coronavirus vaccines from both Pfizer and BioNTech boosted the index.

In addition, big moves are occuring in major commodities, with oil way up and gold way down.

• Oil was up 7%. Price per barrel of West Texas Intermediate crude: $40.01.
• Gold was in the red 4.4% and at $1,864 as of press time.

Read More: Markets Spike as Coronavirus Vaccine Trial Shows 90% Success Rate

“With the S&P 500 touching a new all-time high today alongside news of a Pfizer COVID vaccine showing strong promise, it will be interesting to see how BTC behaves in the weeks ahead,” said Daniel Kohler, liquidity manager at San Francisco-based cryptocurrency exchange OKCoin. “For the past few weeks we were seeing a rise in BTC and S&P 500 correlations — with BTC trading at levels not seen since 2017, it will be interesting to see if that trend reverts or we continue to see outperformance.”

In fact, the trend does already seem to be reverting, with correlation dropping this past week through Friday’s close.

“Surprisingly, given the recent correlation with equities, bitcoin’s immediate price action has been much more choppy,” added Denis Vinokourov, head of research at crypto brokerage Bequant.

Ether options interest at all-time high

The second-largest cryptocurrency by market capitalization, ether (ETH), was down Monday trading around $447 and slipping 1% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

Open interest in ether options hit a record high Sunday, at over $570 million. The last time open interest approached that level was Sept. 1, when it was at $544 million.

Greg Magadini, chief executive officer of data aggregator Genesis Volatility, says the progress of the Ethereum’s network’s move to upgrade to “2.0” has options traders increasingly placing their bets on the outcome. 

“On the night of the U.S. elections, we saw the quiet release of the ETH 2.0 deposit contract,” Magadini told CoinDesk “As we inched closer to the launch of Phase 0 the excitement triggered an increase in ETH option volume traded last week.”

Other markets

Digital assets on the CoinDesk 20 are all red Monday. Notable losers as of 21:00 UTC (4:00 p.m. ET):

• 0x (ZRX) – 3.5%
• litecoin (LTC) – 3.2%
• bitcoin sv (BSV) – 3.2%

Read More: Crypto Lender Cred Files for Bankruptcy After Losing Funds in Fraud

Treasurys:

• U.S. Treasury bond yields all climbed Monday. Yields, which move in the opposite direction as price, were up most on the two-year bond, jumping to 0.179 and in the green 17%.

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Binance.US, the American affiliate that shares a name with the world’s largest crypto exchange, has joined the Silvergate Exchange Network (SEN), a 24/7 instant settlement network used by some of the largest trading entities in the space.

SEN, which replaces clunky wire transactions by allowing corporates to instantly move U.S. dollars between crypto exchanges including on nights and weekends, saw its volume increase $7.8 billion to $17.4 billion in the first quarter, according to a recent Silvergate Bank earnings call.

Existing members of Silvergate’s SEN payment network include Gemini, Kraken and ErisX. 

Related: Leaked Docs Reveal How Binance Dealt With US Regulations: Report

“We’ve launched SEN for our corporate clients so now they’re able to move dollars through Silvergate around the clock instantaneously,” Binance.US CEO Catherine Coley said in an interview. “It’s a huge advantage for clients that are trying to get funds into Binance.US to be able to buy and sell cryptocurrencies, and we’re excited to see the impact on the rest of our liquidity.”

Read more: Silvergate Bank Sees 40% Increase in Deposits From Digital Currency Customers

Coley said all the API integrations with SEN had gone smoothly, having conducted testing with around a dozen or so clients. “We’ve seen about five times the growth of their current trading behaviors on the platform by just the testing of SEN,” she said.

Binance.US has been working hard, jumping through various regulatory hoops to reach this point. The company had also been working with Nevada-based Prime Trust, which remains a dollar custody solution for retail customers of Binance.US, Coley said.

Related: SoFi Receives Conditional US Regulatory Approval to Establish National Bank

“We are thrilled to welcome Binance.US to our rapidly growing Silvergate Exchange Network,” Alan Lane, Silvergate CEO, said in a statement. “We are confident the SEN will accelerate their vision and bring value to their business.”

Binance.US’s relationship with Binance, the octopus-like crypto conglomerate of global partnerships and affiliations, has been the subject of some scrutiny. In a recent Forbes article, the U.S. division was alleged to be little more than a kind of regulatory decoy.

“Binance.US has from day one operated as a regulated entity and we’re fully compliant both at a federal and a state level,” said Coley. “We focus heavily on our BSA [Bank Secrecy Act] and AML [anti-money laundering] program.”

A great part of being in SEN, said Coley, is that it opens up Binance.US to a number of businesses that had been blocked from using the exchange until now. 

“Now we have SEN, this is unlocking a lot of access for folks that have been wanting to work with but haven’t been able to because we were not kind of operating in their style,” she said.

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Two Beijing-area regional bodies – the Beijing Local Financial Supervision and Administration and the Tongzhou District government – held a conference Monday that made note of the People’s Bank of China (PBoC) Digital Currency Research Institute’s plan to build a legal digital currency test zone and digital financial system in China’s capital as part of the “China (Beijing) Pilot Free Trade Zone Overall Plan.”

While plans to test the digital yuan in Beijing were discussed in August, the talk at this regional-level conference indicates the pilot is being included in state-level planning, as noted in the policy document about the “pilot free trade zone” in Beijing and other cities.

• Also discussed at the conference the two co-hosted, according to a report by Chinese news outlet Sina, was the implementation of China’s “two districts” policy, which includes relaxing market access for foreign financial institutions, development of international wealth management and green finance, and the launch of digital currency experiments, among other things. 
• The Chinese government’s planned pilot for its central bank digital currency (CBDC) in Beijing follows a similar effort in the city of Shenzhen. There, the government gave away $1.5 million worth of the digital currency, although by some reports users haven’t been too impressed with the digital yuan so far. 
• The People’s Bank of China’s Governor Yi Gang recently said digital yuan trials have successfully carried out over four million transactions worth about $299 million. 
• The move to expand digital currency trials to Beijing also follows the rollout strategy outlined by the Commerce Ministry in China. According to an August report by Bloomberg, digital currency tests are also likely to be held such areas of northern China as the coastal city Tianjin and Hebei Province and the city cluster in the Yangtze River delta region including Shanghai. 

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Billionaire U.S. investor Stanley Druckenmiller, who just weeks ago was said to be shorting the dollar, is long on bitcoin.

• Druckenmiller said on CNBC Monday he owns bitcoin, becoming the latest high-profile, ultra-high net worth investor to get in on the benchmark digital currency.
• Though he said his gold position is “many many more times” larger than his bitcoin allocation, Druckenmiller predicted his bitcoin would outperform.
• “Frankly if the gold bet works the bitcoin bet will probably work better because it’s thinner, more illiquid and has a lot more beta to it.”
• “It has a lot of attraction as a store of value to both millennials and the new West Coast money, and as you know, they have a lot of it.”
• Druckenmiller also said he’s anticipating a 3-4 year decline in the dollar. Just weeks ago, a Bloomberg report revealed Druckenmiller was betting against the dollar.

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Amidst the chaos of the U.S. 2020 Presidential election, former Congresswoman from Wyoming Cynthia Lummis won the race for a Senate seat, making her the highest-ranking elected official in the nation’s history who is also an outspoken advocate for Bitcoin.