CoinDesk Crypto

Bitcoin opened the week recovering from a dip while ether balances on centralized exchanges fell.

• Bitcoin (BTC) trading around $13,673 as of 21:00 UTC (4 p.m. ET). Slipping 1.2% over the previous 24 hours.
• Bitcoin’s 24-hour range: $13,221-$13,877
• BTC above its 10-day but below the 50-day moving average, a sideways signal for market technicians.

Bitcoin’s price dipped as low as $13,221 at around 12:00 UTC (7 a.m ET), according to CoinDesk 20 data. It subsequently rebounded up to $13,673 as of press time.

Read More: Bitcoin Revisits $13.5K After Posting Best Month Since April

Related: Decentralized Exchange Volume Dropped 25% in October

“It’s interesting to see that today, as the S&P and gold price rose, BTC dropped in today’s market open,” said Andrew Tu of Efficient Frontier, a crypto quant trading firm. “In recent weeks, we have been seeing BTC price diverge from the equities market.” 

Bitcoin’s 90-day correlation, where zero means no mutual relationship, has been dropping since Oct. 18. 

“If this becomes a long-term trend, this could be a very positive sign for BTC should the equities market continue to correct over the medium to long run,” Tu added. Equities are faring quite well Tuesday, with major indexes were in positive territory.

• The Nikkei 225 in Asia ended the day in the green 1.3%, as gains in logistics and industrial stocks helped to lead the index higher.
• Europe’s FTSE 100 closed up 1.3% as upbeat manufacturing numbers for October outweighed lockdowns ordered by the British government.
• In the United States the S&P 500 finished the trading day up 1.2%, helped by a surge in buying as positive manufacturing numbers boosted sentiment.

However, the optimism in equities may not last. “Markets are likely to be unpredictable during the U.S. elections and any unexpected shocks to the system could cause the type of mass sell-off in traditional assets that has in the past brought digital assets down as well, though those dips tend to usually be only temporary,” cautioned Guy Hirsch, U.S. managing director of multi-asset brokerage firm eToro. 

Related: First Mover: Bitcoin Retreats Before US Election After Dominating Crypto in October

Bitcoin volumes for Monday on major spot exchanges totaled $490 million as of press time, much higher than the past month’s average of $257 million and closing in on this past Monday’s $502 million total. 

However, higher volume than this past month’s average is not translating into major price action Monday with an uncertain U.S. presidential election looming Tuesday, Nov. 3.

“This is the calm before the storm,” said David Lifchitz, chief investment officer of ExoAlpha. “Most investors remain prudent and don’t want to take a bet on an event whose outcome is binary: Will there be panic selling or a relief rally on Nov. 4?” 

Options traders see a 51% chance bitcoin is over $13,000, a 42% probability of the price of BTC over $14,000 and a 27% chance of surpassing $15,000 for November expiration. 

Crypto could see some big movements once there is some clarity on the election and pent-up capital is unlocked, added Zachary Friedman, chief operation officer of trading firm Global Digital Assets. “Right now, pre-election, capital is staying sidelined in a wait-and-see fashion.”

Ether on exchanges drops

Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Monday, trading around $387 and slipping 1.8% in 24 hours as of 21:00 UTC (4:00 p.m. ET). 

Read More: DeFi Trading App Dharma Now Connects Directly to US Bank Accounts

The amount of ether in reserve, or held by major centralized exchange addresses, a metric calculated by data aggregator CryptoQuant, has dropped to 11,628,046 ETH, a low not seen since Aug. 14, 2018. 

One factor for the decline, according to Denis Vinokourov, head of research at digital asset prime broker Bequant, is the rise of decentralized exchanges, or DEXs, and the proliferation of liquid cryptocurrency pairs on those venues. 

“The number of currencies available to trade on DEXs rose to 8,000 in October versus 1,500 in early January,” Vinokourov noted. “The top venue that is Uniswap now commands liquidity of close to $3 billion, which is actually an increase from the levels observed in September.”

Other markets

Digital assets on the CoinDesk 20 are mostly red Monday. One notable winner as of 21:00 UTC (4:00 p.m. ET):

• 0x (ZRX) + 0.32%

Notable losers:

• dash (DASH) – 5.8%
• orchid (OXT) – 5.1%
• ethereum classic (ETC) – 4.8%

Read More: Opium Raises $3.3M to Make Exotic Crypto Derivatives Available to All

Commodities:

• Oil was up 3.8%. Price per barrel of West Texas Intermediate crude: $37.09.
• Gold was in the green 0.95% and at $1,895 as of press time.

Treasurys:

• U.S. Treasury bond yields were mixed Monday. Yields, which move in the opposite direction as price, were up most on the two-year bond, jumping to 0.160 and in the green 5.1%.

Related Stories

• Bitcoin Revisits $13.5K After Posting Best Month Since April
• By the Numbers: More Bitcoin Bulls Than Ever Before

The U.S. Securities and Exchange Commission (SEC) has increased limits dictating how much capital companies can raise before registering in a move that could be a boon for security token offerings (STOs).

• Companies can now raise $5 million in total under Regulation Crowdfunding provisions (previously: $1.07 million), $75 million under Regulation A+ (previously: $50 million) and $10 million under Rule 504 of Regulation D (previously: $5 million), the SEC said.
• As CoinDesk reported in March, the heightened caps could make it easier for startups to conduct security token offerings without running afoul of the regulator.
• SEC also relaxed certain restrictions governing document filing, solicitation practices and accredited investor investment limits in the Monday announcement.
• Chairman Jay Clayton said the changes will ease the burden of capital formation for small and medium-sized businesses.

Read more: SEC Proposal Could (Eventually) Unleash Security Token Sales

In addition to making it easier to raise funds, startups will be able to raise more money and provide themselves a bit more runway as they try to launch operations than under the old caps.

Related Stories

• First SEC Official to Say Ether Is Not a Security Is Leaving the Agency Later This Year
• Election 2020: What’s at Stake for the Crypto Industry
• Vortex Blockchain’s Registration Revoked for Failure to File Reports With SEC
• Kik’s Token Survives SEC Battle, No Barrier to Exchange Listings, Says Kin Foundation

Mastercard President Michael Miebach said the payments processor’s massive trove of cryptocurrency patents will give it an edge once central bank digital currencies (CBDC) debut.

• Mastercard’s cryptocurrency intellectual property “puts us in a good position” for a CBDC future, Miebach told analysts during the firm’s Oct. 28 Q3 earnings call.
• “The link into an acceptance network is critical” for a CBDC, he said. “So we hold some patents in [the crypto] space that link these transactions right back into our network where it can be used. And this is how we can bring value, and it brings value to us.”
• Miebach further asserted Mastercard is “the leading payments player” for crypto IP. That may be true for now, but perhaps not for long. Ant Group affiliate Alibaba is on track to hold an unprecedented number of blockchain patents by the end of the year.
• A company spokesperson did not immediately answer questions regarding the size of Mastercard’s crypto IP trove.
• Miebach said Mastercard is talking with world governments on their plans for a CBDC.
• Miebach is slated to become Mastercard’s chief executive in early 2021.

Read more: Mastercard Releases Platform Enabling Central Banks to Test Digital Currencies

Related Stories

• In the CBDC Race, It’s Better to Be Last
• Paxful to Roll Out Crypto Debit Card for US Customers
• China Should Take Part in Creating Global Regulatory Framework for Digital Currency, Xi Says
• Crypto Exchange Huobi Adds Direct Visa, Mastercard Payments

Monthly volume on decentralized exchanges fell for the first time since April, dropping 25% after three consecutive months of doubling aggregate volume through Q3, according to Dune Analytics.

Aggregate trading volume on decentralized exchanges fell to $19.4 billion in October, down from $25.8 billion in September amid a respite for speculative interest in decentralized finance (DeFi) applications and assets. Even highly anticipated new entrants like SushiSwap and Serum reported over 60% declines in volume last month. 

The sector’s continued cooling is demonstrated by DeFi index futures trading on FTX, which have dropped 29% so far in Q4, currently trading at $1,556. 

Related: Uniswap Proposal to Airdrop More UNI Falls Short in Governance Vote

October’s drop in aggregate volume would have been larger if not for an anomalous record-setting day of trading on Oct. 26. Uniswap and Curve each reported over $2 billion in trading volume that day, an all-time daily record for both trading platforms and extraordinarily higher than the few hundred million dollars in volume per day through most of October.

The widespread drop in volume was simply an expected decline after “peak euphoria from DeFi and yield farming craze” of the past few months, according to Jack Purdy, decentralized finance analyst at Messari, who remains optimistic about the long-term potential for DeFi protocols and assets despite October’s performance.

Notably, last month’s volume decrease didn’t extend to 0x, which reported a 50% increase in trading volume. Purdy told CoinDesk, “0x didn’t see the same parabolic growth as some of the other decentralized exchanges, so it never had the chance to correct to a more normal level.”

To Purdy, the trading platform’s outlier growth demonstrates that “0x traders are more committed long term to decentralized exchange trading as opposed to buying the newest governance token that was first listed on an automated market maker.”

Related Stories

• FTX Raises ‘TRUMP’ Futures Margins as Price Suggests Lower Expectations of Election Win
• Uniswap’s $40M Governance Vote Closes on Halloween and Some UNI Holders Fear for Price
• Market Wrap: Bitcoin Hits $13.6K; 500K ETH Options Pile Up for December

Huobi said Monday the rumors alleging one of its senior executives had been arrested were false.

“We have become aware of rumors within our community about the arrest of a Huobi senior executive by local officials,” the company told CoinDesk. “We can share with confidence that these rumors are false. All of Huobi’s management team members have been accounted for and have not been detained or arrested.”

“We understand that the spread of false information can lead to concerns about the safety of user assets, but please rest assured your assets are safe,” the company said. 

Related: PBoC Governor Says ‘Successful’ Digital Yuan Trials Have Transacted $299M

Unsubstantiated rumors on social media and other media outlets said the exchange’s chief operating officer, Robin Zhu, was arrested on Monday. The exchange claimed Zhu was on a business trip and will be present at a company meeting on Tuesday morning Beijing time.

Huobi had said its operations were unaffected by unspecified “rumors,” according to an earlier statement on its Chinese website. 

However, a few prominent Chinese crypto firms have already kept news that senior executives were “cooperating” with police to themselves for weeks before publicly disclosing these investigations.

Read more: OKEx, Still Paralyzed by Founder’s Arrest, Details Plans for Bitcoin Cash Hard Fork

Related: China Should Take Part in Creating Global Regulatory Framework for Digital Currency, Xi Says

In June, rumors about Dong Zhao, co-founder of Chinese crypto lending platform Renrenbit, “cooperating” with the police for related investigations spread in the Chinese crypto community for over two weeks before the company confirmed the news. 

Another Chinese exchange, OKEx, announced in October founder Star Xu has been under investigation for weeks and the exchange would suspend withdrawals of crypto assets from the platform. The statement came out at least one week after Xu was detained by the police, and users still cannot withdraw their funds

Related Stories

• OKEx, Still Paralyzed by Founder’s Arrest, Details Plans for Bitcoin Cash Hard Fork
• Huobi Beefs Up Venture Arm With Former DragonFly Partner Leading DeFi Investments

The Tron blockchain halted creation and execution of blocks due to a “malicious contract” against a super representative on Nov. 2, according to multiple reports.

First reported by Crypto Briefing, the smart contract blockchain halted block production at 10:00 UTC for some two hours, according to Reddit users. The event is notable as it validates centralization concerns raised against Tron, which already holds an infamous reputation in blockchain circles.

Tron uses a Delegated Proof-of-Stake (DPoS) consensus mechanism. DPoS blockchains sacrifice decentralization for throughput by centralizing certain transaction activities to majority nodes.

Related: Market Wrap: Bitcoin Tests $13.6K as DeFi Total Value Locked Dips Below $11B

Read more: Justin Sun’s BitTorrent to Acquire Esports Platform for New Streaming Ecosystem

Tron CEO Justin Sun followed reports with a tweet thread stating that the pause in block production was caused by an attacker exploiting the latest Tron software. Updating the node’s software began block production again, Sun said.

The platform’s native token, TRX, is down 3% in 24 hours, according to the CoinDesk 20.

Tron did not return questions for comment by press time.

Related Stories

• Justin Sun’s BitTorrent to Acquire Esports Platform for New Streaming Ecosystem
• Market Wrap: Bitcoin Tests $12K; Ethereum Fees Fall to 3-Month Low
• Market Wrap: Bitcoin Regains $10.6K; High-Balance Ether Addresses Decline

October saw the first time the total value locked in all DeFi protocols closed below the month’s starting value. Square Crypto is sponsoring a bitcoin wallet designer. A new civil suit alleges BitMEX executives were looting profits.

At stake

DeFi contraction
In the last week of October, DeFi protocol tokens were bleeding red. 

MakerDAO, one the largest and most successful decentralized lenders, started the week at $2.1 billion locked in. By Friday, that had dipped to $1.96 billion, according to DeFi Pulse. Compound, Aave and Curve similarly shed a few million from their valuations. 

Related: First Mover: Bitcoin Retreats Before US Election After Dominating Crypto in October

In aggregate, DeFi lost $1.5 billion in the last five days of the month, according to DeFi Pulse. With those losses, October marked the first time since the sector’s bull market began that the amount of cryptocurrency “locked in” DeFi contracted compared in the span of a month. 

It wasn’t a steep decline. DeFi’s cumulative valuation stood at $11.28 billion on Oct. 1, and only retreated to $11 billion locked up on Oct. 31. Industry publication Decrypt called the ecosystem’s monthly top at $12.4 billion.

It was this minor decline that may have triggered a more than $2.5 billion sell-off seen this weekend, where the ecosystem retreated to lows of $8.5 billion last seen in early September. 

With prices reverting back to over $11 billion (at press time), it doesn’t appear that DeFi is dead.

Top shelf

Related: Crypto Long & Short: Wyoming Is Crypto’s ‘Wild West,’ Which Is Exactly What We Need

Digital transfers
Over 4 million transactions totaling more than 2 billion yuan ($299 million) have been conducted using China’s digital yuan, Yi Gang, governor of the People’s Bank of China, said. Speaking at the Hong Kong Fintech Week conference on Monday, Yi said the COVID-19 crisis has also accelerated the need for contactless banking, creating challenges for central banks looking to balance consumer needs and safety. That said, the central banker also played down the prospect of an imminent launch, saying the digital yuan project is still in the early stages.

Squaring the crypto
Square Crypto, the cryptocurrency arm of the payments company, has awarded a grant to a designer building easy-to-use bitcoin wallets. Announced via tweet Friday, Maggie Valentine’s development work will answer the question: “How can we provide an intuitive experience for non-crypto users while preserving the security of a user’s funds?” The award comes less than a month after Square said it had purchased 4,709 bitcoins for $50 million, representing 1% of the firm’s assets.

Cayman consensus
The Cayman Islands, an autonomous British Overseas Territory in the Caribbean, is building a regulatory framework for “virtual asset service providers” (VASPs). Announced Saturday, the Caymans’ Ministry of Financial Services has entered “Phase One” of the framework, a set of rules spelling out the nation’s anti-money laundering (AML) and terrorist financing regulations. VASPs already working in the Caymans, or planning to, will need to notify and register with the Cayman Islands Monetary Authority (CIMA) and comply with the AML/CFT rules. “Phase Two,” slated to come into force next June, will look at licensing requirements and “prudential supervision” for VASPs.

Voted down
A proposal to distribute UNI tokens to those left out of a previous airdrop was not adopted in Uniswap’s second governance vote. While many votes were in favor, a quorum was not established, reports CoinDesk’s Zack Steward. Proposed by decentralized finance (DeFi) portal Dharma, “Prop 2” would have sent 400 UNI tokens each to 12,619 addresses that interacted with Uniswap through third-party apps, following a surprise airdrop on Sept. 17, that sent free tokens to anyone who had directly used the platform. A threshold of 40 million voted UNI tokens fell short by less than 2.5 million.

Corporate raiders?
The top officers of HDR, the parent company of crypto trading platform BitMEX, which has been charged with facilitating unregistered trading and other violations, systematically looted $440,308,400 from HDR accounts, a civil lawsuit claims. The suit, filed on behalf of plaintiffs BMA LLC, Yaroslav Kolchin and Vitaly Dubinin, alleges executives began diverting BitMEX’s profits after becoming aware of possible charges in 2019. The U.S. Commodities Futures Trading Commission (CFTC) and the Department of Justice both announced charges against BitMEX on Oct. 1. A spokesperson for HDR called the new civil claims “spurious.”

Quick bites

Blockchain could make dismantling nuclear warheads more secure, King’s College London claims in a recent report. (CoinDesk)

Nigerians protesting police corruption and concerns about a possible internet shutdown are adopting decentralized VPNs, along with bitcoin. (CoinDesk)

Following Coinbase’s announcement, peer-to-peer digital asset marketplace Paxful will launch a Visa debit card. (CoinDesk) 

Mongolia’s oldest bank will offer services including cryptocurrency remittance, custody, deposits, asset management and loans (Modern Consensus)

eToro has unveiled a free insurance scheme covering customers for up to £1 million if the firm should ever become insolvent. But crypto holders are left out in the cold. (CoinDesk)

European Central Bank President Christine Lagarde said the agency is seeking public comments about a digital euro, implying a broad retail offering is now on the table. (Survey)

Market intel

Pop and drop
After October’s 28% bitcoin rally, the market appears to be cooling off. On Saturday, BTC notched a 33-month high of $14,093, but was unable to stay above that level. Trading in the mid $13Ks, this minor pullback has validated the short-term bull fatigue. “Unless the market can establish above $14,000, there is a risk that rally stalls here in favor of a healthy retreat,” Joel Kruger, a currency strategist at LMAX Digital, told CoinDesk. At the low end, bitcoin could revisit the former hurdle-turned-support of $12,500.

Who won #CryptoTwitter? Related Stories

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• Blockchain Bites: Ripple’s MoneyGram Pump, OKEx’s Bitcoin Cash Plan, Bitcoin’s Birthday

Publicly traded mining company Hut 8 announced Jaime Leverton as its new CEO Monday, set to replace interim CEO Jimmy Vaiopoulos on Dec. 1.

• Former CEO Andrew Kiguel stepped down in late April and then-CFO Vaiopoulos was elevated on a temporary basis while the company’s board of directors searched for a permanent replacement. With Leverton’s appointment, Vaiopoulos will return to his prior role for the Toronto-based company.
• Leverton is joining Hut 8 from her current position at eStruxture Data Centers, where she’s chief commercial officer. From Leverton’s LinkedIn profile, it appears her role at Hut 8 will be her first position in the cryptocurrency industry.

Related Stories

• Bitcoin Miners Saw 8% Revenue Increase in October
• Bitcoin Transaction Fees Rise to 28-Month High as Hashrate Drops Amid Price Rally
• ‘A Race Toward Zero’: With Hashrate in the Clouds, Bitcoin Mining Is Less Profitable Than Ever
• Marathon Purchases Additional 10,000 S-19 Pro Miners From Bitmain

The team behind the Bitcoin Lightning Network’s leading software implementation is launching a marketplace for Lightning users to lease liquidity for payments on the second-layer network.

Today, Lightning Labs announced the release of Pool, “a non-custodial, peer-to-peer marketplace for Lightning node operators to buy and sell access to liquidity,” according to a press release. The service will allow Lightning Network users to lend out bitcoin in payment channels in return for yield. Businesses and services providers can then draw on this liquidity when needed to manage Lightning Network payment flows.

“Efficient capital allocation is one of the most widely felt pain points when using the Lightning Network. Existing node operators do not have access to pricing signals to help determine where in the network their outbound liquidity should be allocated, and new node operators have no way to signal that they need new inbound liquidity,” the press release states.

Related: Putting Pressure on Bitcoin’s Lightning Network Vulnerabilities Will Strengthen It

“Lightning Pool brings these two sides together into a single market while allowing them to maintain custody of their funds.”

Pool provides a marketplace for Lightning Network liquidity

Bitcoin’s Lightning Network offers cheaper, faster payments than Bitcoin’s primary network by offloading these payments onto a “second layer” (a software that is built on top of the original Bitcoin software).

Lightning manages payments through two-way payment channels, where either side holds a certain amount of the funds locked up in a channel. Sending payments outside of a channel requires a “routing” transaction. (Say Alice has a channel with Bob and Bob has a channel with Carol; if Alice wants to send a payment to Carol, she can route it through Bob.

But what happens if Bob doesn’t have enough funds in his channel to complete the payment?

Related: 4 Bitcoin Lightning Network Vulnerabilities That Haven’t Been Exploited (Yet)

This is the problem Pool wants to ameliorate. Businesses or users managing multiple channels can buy liquidity from the marketplace when they need to top off channel reserves for routing. On the other side of this transaction, Lightning Network node operators can employ their idle bitcoin by offering it up as liquidity on Pool. 

“Pool adds market pricing signals to the system so that individuals know where capital is needed. Someone could go on the market and say, ‘I want 1 BTC for 1 month and I’ll pay 3%,’” Lightning Labs CTO Olaoluwa Osuntokun told CoinDesk.

Orders are matched in a “frequent batch auction.” After a window for accepting bids and asks ends, Pool’s engine matches buyers and sellers based on their rates. When the auction block clears, the payments to fund each payment channel are batched into a single transaction to save money on on-chain fees.

“Whenever you put up a bid or ask, you either get that rate or better, depending on the clearing price per batch,” Osuntokun said.

To start, payment channels will have a maximum leasing time of two weeks, or in Bitcoin time, 2016 blocks, though Osuntokun said they will diversify the leasing intervals to up to six months. Liquidity providers will receive fees up-front on their Pool account, but Lightning Labs hopes to implement a “per block interest rate,” wherein interest is paid out instantly to a provider’s Lightning wallet roughly every ten minutes with each new Bitcoin block.

‘LiFi’: Lightning-native financial services

Lightning Labs is marketing the service as a flagship for Lightning Finance or “LiFi,” a way for Bitcoiners to generate non-custodial yield on their bitcoin holdings, as opposed to lending them through a custodian like BlockFi or turning them into wrapped bitcoin for DeFi yield farming.

The service has been in a closed alpha with “many of the major exchanges, wallets, and service providers testing this in the background and to make sure it has enough liquidity on it when it launches.” The maximum order amount at launch will be 10 BTC, though Lightning Labs will raise this in the future once the platform has been sufficiently stress tested.

“In our general style of being more cautious, right now the max account size is 10 BTC. Pool is still early and this isn’t DeFi; we don’t want them depositing a million dollars from day one.”

Related Stories

• Lightning Vulnerability Discovered; LND Node Operators Urged to Upgrade ASAP
• New on Bitcoin’s Lightning Network: LND Adds Accounting Feature, c-lightning Gets an Upgrade

The startup for trading in decentralized finance (DeFi), Dharma, has now enabled automated clearing house (ACH) purchases in 10 U.S. states.

ACH enables direct transfers from U.S. bank accounts so that users can go straight from holdings in U.S. currencies to cryptocurrencies. Purchasing tokens from a bank account incurs a 1.5% fee and there’s a limit of $25,000 in purchases per week.

With the new feature, Dharma is betting it can stand out in the crypto space by making accessing blockchains easier, in much the same way Coinbase did.

Related: Binance Labs–Backed ‘DeFi Credit Union’ Bringing Higher Yields to Savers in Nigeria

Read more: Every Credit Card a Tribe, Every Crypto Coin a Scaling Debate

“Making an investment in DeFi has, up until now, been a bifurcated and highly technical process. Now, it’s as easy as downloading an app and connecting your bank account,” Dharma CEO Nadav Hollander said in a press release.

Dharma will offer all the assets available on Uniswap, covering gas fees for all users. Users can also trade between cryptocurrencies within the Dharma app.

To access ACH services, Dharma is using the API of financial services company Plaid, Hollander told CoinDesk via email. “We are processing ACH transfers through a direct partnership with a well-known bank active in the crypto space,” he added, without disclosing the bank’s name.

Related: Opium Raises $3.3M to Make Exotic Crypto Derivatives Available to All

When announcing its funding round in February 2019, Dharma was focused on lending over Ethereum. It shifted to stablecoin-based savings in Summer 2019. It then introduced trading in July 2020.

Purchases from bank accounts are available in the following U.S. states: Arizona, California, Georgia, Massachusetts, Michigan, Montana, Pennsylvania, Texas, Virginia and Washington.

Read more: Uniswap Proposal to Airdrop More UNI Falls Short in Governance Vote

“Our goal in building ‘the Robinhood of crypto’ is to bridge the final gap between these blossoming markets and the millions of individuals who will want to tap into them as they gain popularity and mindshare,” Hollander said.

The move comes on the heels of a Uniswap governance proposal put forth by Dharma being defeated over the weekend. 

Update (Nov. 2, 16:56 UTC): Adds information on how Dharma is processing its ACH transfers.

Related Stories

• Uniswap Proposal to Airdrop More UNI Falls Short in Governance Vote
• MakerDAO Members Voting on a Safeguard Against BProtocol Flash Loan-Type Attack

The Takeaway:

• Nigerians are adopting more VPNs, including decentralized VPNs.
• The adoption comes as #EndSARS protestors are concerned the government may limit access to parts of the internet.
• Mysterium, a decentralized VPN, is trying to reach crypto users in parts of the world that grapple with actual and potential internet censorship.

The decentralized virtual private network (VPN) Mysterium is seeing an increase in users in Nigeria over the last few weeks as protests have roiled the African country. 

Nigerians are protesting police corruption and specifically calling for the end to the special anti-robbery squad (SARS). In 2017, following protests, the government supposedly disbanded the police unit. But early in October, as reports emerged of SARS allegedly killing a young boy, protesters have again taken to the streets. 

Related: Binance Labs–Backed ‘DeFi Credit Union’ Bringing Higher Yields to Savers in Nigeria

As CoinDesk’s Sandali Handagama wrote in October, “the police unit stands accused of illegal killings, extortion and torture of innocent civilians. Many of its victims over the years were young men between the ages of 18 and 35.”

Read more: Nigeria Protests Show Bitcoin Adoption Is Not Coming: It’s Here

The user increase seen by Mysterium comes at a time when concerns over a partial shutdown of the internet in Nigeria has given rise to more interest in VPNs overall. After government security forces opened fire on unarmed protestors in Lagos on Oct. 20, killing 12, VPN searches in Nigeria went up 239% compared to the previous 30 days, according to digital research firm Top 10 VPN. 

What a VPN offers

A VPN lets its users create a secure connection to another network and is often used to access restricted websites and content, shield their browsing activity from public WiFi and provide a degree of anonymity by hiding their locations. 

Related: Police Brutality Is Global, So Is Bitcoin

ISPs (internet service providers) can see all browsing history of its users, according to Mysterium Product Head Jaro Satkevic. This may allow oppressive governments to either censor internet access or punish some citizens for political reasons. VPNs encrypt all the traffic and hide any information from ISPs. They also hide the user’s IP address from websites he or she is browsing.

“I first discovered Mysterium on airdrop.io, was curious and read about the project. Before then I used other conventional VPN,” said Ian, a Nigerian man who has supported the #EndSars protests online and in person. (“Ian” is a pseudonym. He asked to remain anonymous for his safety.) 

“I believe VPN use has increased in part due to the #EndSARS protest. Recently, more people saw the need to use VPN in Nigeria for safety on social media, Twitter especially.”

The benefits of decentralization

Mysterium is a decentralized VPN, meaning it’s not controlled by a central company. As Top 10 VPN has regularly reported, nearly three-quarters of free VPNs on the market have some level of vulnerability, share or expose customer data, or even contain malware.

Mysterium’s decentralized architecture means that, by design, it cannot log users’ activity, and is resistant to being shut down. The more nodes that join, the faster, stronger and more censorship-resistant it becomes.

“The biggest issue of centralized VPN companies is that they can also collect logs of their consumer browsing history,” said Satkevic. “Most of them have a ‘no-logs policy’ but it is really hard to recheck, and there are many stories when hackers got access into user browsing logs collected by VPN companies.”

Technically, it is relatively easy to detect that traffic is coming from a VPN server because they’re hosted at a datacenter, according to Satkevic. In the Mysterium network though, most of the exit nodes are residential (hosted by people in their homes), which makes it much harder to detect. This allows users to get access to a bigger array of geoblocked services. 

Since the exit nodes are hosted by a decentralized community it’s not possible for one centralized authority to hold users browsing history. 

Paying for Mysterium

“On top of that, in Mysterium we’re using P2P [peer-to-peer] crypto payments (using payment channels) which adds an additional privacy layer,” said  Satkevic. “The Mysterium team has no information on our consumers (no names, no email, no credit card information).”

Their payment model is pay-as-you-go in crypto VPN, where you essentially rent someone else’s IP address for whatever rate they choose to charge. So, for example, a U.S. resident could rent out their home IP address to someone in Iran. They could even choose to do so for free. 

Mysterium emphasizes that due to its pay-as-you-go structure there are no lock-in fees, contracts or subscriptions associated with it. 

Read more: Nigerian Banks Shut Them Out, so These Activists Are Using Bitcoin to Battle Police Brutality 

Mysterium’s native token is MYST. As a dapp, Mysterium needed a token, and while the company originally allowed people to pay in ether, they had to switch plans as ETH’s transaction fees rose. At the time of writing, CoinGecko lists MYST at about $0.11.

From testnet to mainnet

Right now, while Mysterium is running on a test net, it’s free. The company is battle testing the code in real-world environments and configurations, giving away MYSTT (testnet tokens) to users, and also paying out bounties to node providers with real MYST.

Savannah Lee, a communications manager at Mysterium, said the main payment mechanism in the core network will be crypto P2P, using a pay-as-you-go model.

“But Mysterium is open source, so anyone is invited to create their own commercial application on top of it,” said Lee. “This was done by Portals Network, who accepts credit card payments and even provides a subscription-based service.”

Lee said Mysterium was ready to deploy its P2P infrastructure on the Ethereum mainnet, but due to the crazy-high transaction fees it needed to move from a L2 to an L3 solution. A solution is in development, according to Lee, with the goal being to have P2P payments live onthe Ethereum mainnet or some of its sidechains by the end of the year. 

In the meantime, Mysterium has been working to attract users, targeting groups of people who have limited internet access in their countries. 

Before the #EndSARS protests, it had increased user activity in places like Pakistan and India. In recent months, India has banned various apps from the country and placed other restrictive measures on the internet. 

Why Nigerians are using VPNs

Ian said he uses Mysterium to give himself a degree of anonymity online. As a data analyst, he said he has an idea of how easy it is to get people’s information and personal data on the internet.

He was drawn to Mysterium because he’s enthusiastic about blockchain technology in general. 

“I have read about a lot of other projects and adopted some I found valuable,” he said. “Knowing that I can pay for a VPN service using a utility token and stay secure online made me interested in Mysterium, so I decided to give it a try.”

Read more: Nigerians Are Using Bitcoin to Bypass Trade Hurdles With China

Gabriel Olatunji came to Mysterium in a more streamlined way – to watch one of his favorite shows that was not available in Nigeria, “The Tudors.” He moved over from another VPN after he found it was blocking certain IPs. 

“Initially, there were issues with the service, especially random disconnections, but the issues have been resolved with the new updates,” he said. “I found MysteriumVPN because of Netflix, but rising concerns of a possible internet regulation made me use the product more.”

Preserving social media for social activism

Olatunji sees the increase in VPN use as directly linked to the #EndSARS protests, in part because since the onset of protests there have been concerns the government would “pull the plug” on parts of the internet. Even prior to the protests there was talk of a bill to regulate social media, which he said was apparently “aimed at suppressing the voice of the masses.” At that time, VPNs were seen as a way to protect against the impact of the prospective bill had it been passed. 

“The government in Nigeria sees social media as a threat that challenges their dubious acts,” he said. “The  #EndSARS protest started on Twitter, and people were attacked, arrested and had their human rights violated for protesting on Twitter. The government threatened to shut down social media because obviously they saw it as a threat. The CEO of Twitter was sued for actively supporting the #EndSARS protest. That’s when people saw the need to have VPNs for privacy and security.”

Read more: Human Rights Foundation Funds Bitcoin Privacy Tools Despite ‘Coin Mixing’ Legal Stigma

He, too, has taken part in the protests. 

“Although I have never been a SARS victim, one of my dad’s friends was framed for an offence he didn’t commit and money was extorted from his family before he was released,” said Olatunji. 

This experience, and seeing other experiences shared on social media, encouraged him to get involved. 

Considered a tech hub with a young population and a rising aptitude for cryptocurrencies, countries like Nigeria are the kinds of areas Mysterium wants to support, and where it sees itself as a useful tool. 

“There are a lot of decentralized VPNs out there, and we’re all trying to work together or work on the same kind of solutions,” said Lee. “But I think the thing about Mysterium is we’re very much research and community driven. So we really do want to reach people in places like Nigeria, where people have cryptocurrency already, because we think that these people are already ahead of the curve when it comes to tech.”

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Peer-to-peer digital asset marketplace Paxful is launching a crypto debit card.

The Visa card enables users to convert cryptocurrencies to U.S. dollars at time of purchase and comes via partnership with cryptocurrency fintech platform BlockCard.

Users will be able to make payments and withdraw funds at over 45 million merchants and ATM locations worldwide, according to a press statement. At launch, the card is available to U.S. users only, but will expand to other regions going forward, Paxful said Monday.

Related: Coinbase to Launch Crypto Debit Card in US for Retail Spending

The partnership is touted as plugging a hole in traditional banking that has left as many as 1.7 billion unbanked, according to the latest figures by the World Bank. Meanwhile, in the U.S. 25% of households are either unbanked or underbanked, according to a 2017 survey by the Federal Deposit Insurance Corporation.

See also: Coinbase to Launch Crypto Debit Card in US for Retail Spending

“Access to reliable and affordable financial products is indispensable,” Paxful CEO and co-founder Ray Youssef said. “Whether looking to invest in education, start a business, or simply manage the financial demands of everyday life, there should be a viable option for everyone across the globe.”

The debit card will be issued virtually while users await a physical card to be mailed to them via Blockcard’s service. A minimum balance of $10 will be required.

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Bitcoin miners generated an estimated $353 million in revenue in October, up 8% from September, according to on-chain data from Coin Metrics analyzed by CoinDesk.

The revenue increase came as bitcoin soared through October, closing the month up nearly 30% at $13,800 on Coinbase. Seasonal shifts in mining hardware in late October also caused an increase in miner revenue as the network’s hash rate dropped, causing transaction processing to slow and fees to climb through late October. 

Revenue estimates assume miners sell their BTC immediately.

Related: Bitcoin Mining Firm Hut 8 Appoints Jaime Leverton as CEO

Network fees brought in $42.9 million in October, or just over 12% of total revenue, the highest percentage since January 2018. Fee revenue increased as average fees soared in the second half of October, reaching $13.45 on Friday. 

Fees climbed as bitcoin suffered its most severe congestion in nearly three years, as the mempool – a holding depot for transactions awaiting confirmation – filled up due to a drop in hashrate caused by miners taking machines offline, as CoinDesk previously reported. Specifically, some miners in China’s Sichuan province took machines offline to relocate to other areas with cheaper electricity sources as the region’s rainy season ended. 

Notably, fees as a percentage of total revenue continues a strong upward trend since April after the block subsidy halving in May. Increases in fee revenue are important to sustain the network’s security as the subsidy decreases every four years.

At the end of Q3, cryptocurrency traders predicted significant upside for bitcoin as they rotated money from alternate cryptocurrencies (altcoins) to bitcoin. Quarter to date, bitcoin is up 26%, outperforming nearly every altcoin with a large market capitalization.

If this trade thesis continues to be valid through the rest of Q4, miners can have hopes for a higher BTC price and subsequent revenue growth through the end of 2020.

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Bitcoin was lower around $13,200, retreating after reaching a fresh 2020 high near $14,100 on Oct. 31. 

Tuesday’s presidential election in the U.S. “is going to be the driving force for global markets,” Matt Blom, head of sales and trading for the cryptocurrency-exchange owner Diginex, told clients in a note. 

Analysts have warned that markets could see extreme volatility if the election results are murky, and the Federal Reserve has a regularly scheduled meeting just days afterward. 

Related: Bitcoin Revisits $13.5K After Posting Best Month Since April

“It seems we will have to wait until after tomorrow when the U.S. goes to the polls before we see any further clarity,” Simon Peters, an analyst for the trading platform eToro, wrote Monday in an email.  

In traditional markets, Asian and European indexes rose and U.S. equity futures pointed toward a higher open after last week’s steep drop. Oil prices fell to a five-month low, while gold strengthened 0.5% to $1,888 an ounce.  

Market moves

If it seemed like an unusually bullish month for bitcoin (BTC), the markets agreed.

The oldest and largest cryptocurrency surged 29% in October, the most among the CoinDesk 20 list of top digital assets. 

Related: Crypto Long & Short: Wyoming Is Crypto’s ‘Wild West,’ Which Is Exactly What We Need

Litecoin (LTC) was the second-best performer in the group, with a 22% return, followed by bitcoin cash (BCH) at 16%. 

CoinDesk reported around the start of the month (here and here) that digital-asset analysts were turning more bullish on bitcoin. Some traders had started rotating funds into the cryptocurrency from smaller tokens like Compound’s COMP and Yearn.Finance’s YFI that surged in price earlier this year amid an explosion in popularity of “decentralized finance,” or DeFi.  

“We are seeing a return to bitcoin dominance,” said Andrew Ballinger, an analyst at Wave Financial, a digital-asset-focused investment manager based in Los Angeles and London.  

The renewed interest in bitcoin, now with a market capitalization of about $250 billion, coincided with new signs of growing interest in the cryptocurrency from institutional investors as well as big companies like PayPal and Square. A resurgence of the coronavirus along with a deteriorating U.S. economic outlook kindled speculation that authorities would push to provide more fiscal and monetary stimulus; that might push up bitcoin’s price, seen by many investors as a hedge against inflation.  

Bitcoin’s performance also stood out versus traditional assets. The Standard & Poor’s 500 Index of large U.S. stocks slid 2.8% in October, and gold slipped 0.1%. 

The question going forward is whether bitcoin reverts to the mean or if it gets carried up on a groundswell of investors piling into the only big trade that really seems to be working in 2020. Bitcoin is up 92% year to date, versus a 1.2% gain for the S&P 500. 

The biggest losers in the CoinDesk 20 in October were Orchid (OXT), with a price decline of 25%, and 0x (ZRX), down 21%.

Bitcoin watch

Bitcoin is feeling the pull of gravity at press time, having failed to keep gains above a key hurdle over the weekend. 

The top cryptocurrency is currently trading near $13,450, representing a 2.3% decline on the day. Prices reached a 33-month high of $14,093 on Saturday, shrugging off the recent coronavirus-led stock market instability. 

However, the move above the June 2019 high of $13,880 was short-lived. The cryptocurrency’s inability to secure a foothold in the wake of overbought readings on technical indicators seems to have disappointed chart traders and could be fueling the price pullback. 

According to some analysts, the failed breakout, coupled with continued instability in traditional markets, could lead to a bigger bitcoin price drop in the short-term. 

“If we consider overbought daily technicals plus failure to beat the 2019 high resistance and a risk-off backdrop, it is perfectly reasonable to anticipate the possibility for a healthy decline ahead,” Joel Kruger, a currency strategist at LMAX Digital, told CoinDesk.

Besides, many fear the results of the election will not be immediately clear, resulting in a period of uncertainty for the markets.

All these factors considered, the possibility of bitcoin revisiting the former hurdle-turned-support of $12,500 cannot be ruled out.

That said, a price crash looks unlikely, as the cryptocurrency currently has a strong bid from institutions, trader and analyst Nick Cote told CoinDesk last week.

Token watch

Filecoin (FIL): Crypto miners paying interest up to 40% to borrow decentralized data storage provider’s FIL tokens, to meet required proof-of-stake threshold. 

Uniswap (UNI): Quorum not achieved on governance proposal to airdrop $40M of UNI tokens to users who interacted with DeFi market maker through third-party apps, despite apparently overwhelming support. 

Horizen (ZEN): Crypto lender Celsius works with Horizen, developer of privacy token ZEN, to run experiments for decentralized way of proving reserves (CoinDesk)  

What’s hot

Chinese central-bank governor more than 4M transactions totaling about 2B yuan ($299M) have been conducted using digital yuan. (CoinDesk) 

Bitcoin mining difficulty set to drop by an estimated 15%, as blockchain network automatically rebalances from decrease in hashpower due to end of China’s rainy season (HASHR8) 

ECB’s Lagarde seeks public comments on digital euro, implying broad retail offering is now on table (CoinDesk) 

Australian central bank partnering with multiple prominent domestic banks to explore possible use of digital currency (CoinDesk)  

Analogs The latest on the economy and traditional finance

Bank of England expected this week to increase size of asset-purchasing program by 100B pounds to £845T ($1.1T) (Reuters) 

Activity in China’s factory sector accelerates at fastest pace in decade as domestic demand surges (Reuters)  

Former U.S. Food and Drug Administration chief warns that U.S. is at “beginning of the steep part of the epidemic” (CNBC) 

Rich buyers fleeing cities and coronavirus fuel housing boom in Montana, as remote-working shift untethers high-paying jobs from offices (Bloomberg) 

Chinese President Xi calls for independent and controllable supply chains to ensure industrial and national security, as U.S. moves to cut country off from key exports (Bloomberg)  

U.S. billionaires, numbering roughly 200 people, got $1T richer during Trump’s term (Bloomberg) 

Tweet of the Day Related Stories

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A Nigeria-based startup is looking to bring decentralized finance (DeFi) to the world of credit unions. Built on the Binance Smart Chain, Xend Finance announced Monday its public launch and a $1.5 million strategic funding round.

“A major problem faced by these credit unions or cooperatives is a constant devaluation of the currency, because most of the time our economy is unstable,” Xend founder and CEO Aronu Ugochukwu told CoinDesk in an interview. 

With backing from Binance Labs, Google Launchpad, AU21 Capital, TRG Capital, Matic co-founder Sandeep Nailwal and others, Xend aims for financial inclusion in the developing world by converting deposits into crypto and harvesting yield on DeFi platforms like Compound and Aave.

Related: DeFi Trading App Dharma Now Connects Directly to US Bank Accounts

The protocol also allows users to create their own credit unions and cooperatives, eliminating traditional middlemen.

“Traditional credit unions have a number of limiting drawbacks,” said Ugochukwu, “including only 1% annual percentage yield returns and geographical limitations.” By contrast, a press statement touted as much as 15% APY on Xend users’ savings.

By tapping into DeFi, small savers can stake their local currency and earn compounded interest in a stable currency, Ugochukwu said, like the U.S. dollar. 

The platform has already received $1,000 from one local cooperative to help onboard five of its members, including a group of doctors at the University of Nigeria Teaching Hospital (UNTH).

Related: Decentralized VPN Sees Increased Use in Nigeria Amid #EndSars Protests

Xend, a traditional fintech company and parent company of Xend Finance, has already built a network of 55,000 users which Ugochukwu hopes to bring over to the new DeFi platform.

“Crypto is amazing in Nigeria,” he said.

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Investment platform eToro is now providing a free insurance scheme that will pay its customers holding traditional assets up to £1 million ($1.292 million) if the firm should ever become insolvent. 

• In an emailed announcement on Monday, eToro said the new policy is underwritten by Lloyd’s of London and would apply in “the unlikely event that eToro were to enter a state of insolvency.”
• If it goes bust, the firm said the policy would “cover clients for losses above the relevant financial compensation schemes to a value of £1 million, and in accordance with the purchased policy.”
• In the U.K., the Financial Services Compensation Scheme would cover up to £85,000 (around $110,000) held in investments.
• The policy also covers both cash held on eToro’s platform and open accounts but cryptocurrencies are not included because they are “unregulated assets,” the firm stated.
• eToro said the insurance would bring its millions of global users “additional peace of mind.”

Also read: Bitstamp Adds Crypto Crime Insurance for Assets Held Online

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Crypto derivatives exchange Opium has closed a $3.25 million funding round involving investors such as QCP Soteria, Kenetic Capital and Sam Bankman-Fried’s Alameda Research. 

The Amsterdam-based startup allows for users to launch custom and exotic decentralized derivatives that anyone with an internet connection and an Ethereum wallet can access. 

Founder and CEO Andrey Belyakov told CoinDesk in an interview that Opium was created to solve three problems in the traditional derivatives market: transparency, barrier to entry and cost-efficiency. 

Related: Uniswap Proposal to Airdrop More UNI Falls Short in Governance Vote

“You cannot make derivatives unless you’ve got millions of dollars to spare,” Belyakov said. He added that all three of these problems can be solved with blockchain because then “everyone can run his own derivatives.” 

The protocol was designed over two years ago, long before decentralized finance (DeFi) popped into an $11 billion market over the summer. 

“We are making DeFi more efficient in the short term but our long-term goal is to compete with traditional derivatives in this huge market,” Belyakov said.

Last month, Opium introduced credit default swaps for tether (USDT) to insure buyers in the event of a default by Tether, the issuer of the world’s largest stablecoin and fifth-largest cryptocurrency overall. 

Related: MakerDAO Members Voting on a Safeguard Against BProtocol Flash Loan-Type Attack

Read more: New Crypto Derivatives Let You Bet on (or Against) Tether’s Solvency

The company told CoinDesk it also has plans to launch different credit default swaps to compete with other solutions on the insurance market.

Investor Jehan Chu, co-founder of Kenetic Capital, said in a press statement:

“Opium’s BYOD (build your own derivative) platform will unlock value across inefficient markets and industries and will power DeFi through its evolution to tokenize capital markets.”

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Nations working to take nuclear weapons out of commission should turn to blockchain to build trust and make the process more secure, according to a new policy report.

As reported by King’s College London on Monday, research from the university’s Centre for Science and Security Studies (CSSS) suggests that using blockchain would help parties to the Nuclear Non-Proliferation Treaty build trust and make dismantling nuclear weapons more “safe, secure and reliable.”

Titled “The Trust Machine: Blockchain in Nuclear Disarmament and Arms Control Verification,” the policy report is aimed to provide policymakers a non-technical look at how blockchain technology could them conform to the requirements of nuclear disarmament verification.

Related: Library of Congress Reports Surge in Crypto Law Searches

Among the specific benefits the technology can offer for the dismantling data management process, the report’s authors list “an immutable, encrypted record of chain-of-custody for treaty-accountable items,” allowing third parties to verify the disarmament without actually seeing the data.

Another is a “cryptographic escrow” for national declarations allowing sensitive data to be released in a phased manner.

The team – led by CSSS Research Associate Dr. Lyndon Burford – further says blockchain could provide a secure data platform for location sensors and environmental monitors. This could enable real-time monitoring at remote sites, “automatically alerting participants to potential treaty violations,” the report suggests.

With nations unwilling to expose sensitive data concerning nuclear weapons, Dr. Burford said governments “often lack sufficient trust in each other to cooperate on such measures.”

Related: The Potential Ripple Effects of Ethereum 2.0, Explained

The report’s title reflects the possibility that blockchain could be a tool to build that trust by offering an encrypted, tamperproof way to manage the data around warhead dismantling, according to the report.

Also read: How the Bitcoin Blockchain Is Being Used to Safeguard Nuclear Power Stations

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Bitcoin’s bulls are taking a breather after a double-digit price gain in October.

• The leading cryptocurrency by market value is trading near $13,500 at press time, representing a roughly 2% decline on the day, according to CoinDesk’s Bitcoin Price Index.
• The minor decline comes after last month’s 28% rally, the biggest single-month gain since April.
• On Saturday, bitcoin had surged to a 33-month high of $14,093 but quickly fell back.
• Some analysts think a bigger pullback may be seen in the short-term.
• “If we consider overbought daily technicals plus failure to beat the 2019 high resistance and a risk-off backdrop, it is perfectly reasonable to anticipate the possibility for a healthy decline ahead,” Joel Kruger, a currency strategist at LMAX Digital, told CoinDesk.

• Bitcoin’s failure to establish a foothold above the June 2019 high of $13,880 has validated the short-term bull fatigue signaled by the 14-day relative strength index (above left).
• As such, some technical traders may feel tempted to take profits, forcing prices lower.
• “There might be small corrections, as some market participants, who bought at lower prices, may exit the market,” Ashish Singhal, CEO of cryptocurrency exchange CoinSwitch, said.
• Further, continued coronavirus-induced weakness in stock markets could trigger a global demand for cash, as seen in March, aggravating the technical pullback.
• Another source of risk for bitcoin is the U.S. presidential election on Tuesday, according to Singhal.
• Many fear that the results of the election will not be immediately clear, resulting in a period of uncertainty for the markets.
• All these factors considered, the possibility of bitcoin revisiting the former hurdle-turned-support of $12,500 cannot be ruled out.
• “Unless the market can establish above $14,000, there is a risk that rally stalls here in favor of a healthy retreat,” Kruger said.
• While a pullback could be seen, analysts don’t foresee a price crash, as the cryptocurrency currently has a strong bid from institutions, trader and analyst Nick Cote told CoinDesk last week.
• Disclosure: The author holds small positions in bitcoin and litecoin.

Also read: $14K: Bitcoin Briefly Hits Highest Level Since January 2018

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The Cayman Islands, an autonomous British Overseas Territory in the Caribbean, is building a regulatory framework for “virtual asset service providers” (VASPs).

• Announced Saturday, the Caymans’ Ministry of Financial Services has already published an initial set of rules that came into into effect Oct. 28.
• These kick off what the ministry calls “Phase One” of the framework, which will determine how the Caymans will regulate and enforce anti-money laundering (AML) and countering the financing of terrorism (CFT) measures.
• VASPs already working in the Caymans, or planning to, will need to notify and register with the Cayman Islands Monetary Authority (CIMA) and comply with the AML/CFT rules.
• “Phase Two,” slated to come into force next June, will look at licensing requirements and “prudential supervision” for VASPs.
• A new virtual assets bill to bring in provisions to facilitate the phased rollout of the new rules was published last Thursday and will be presented at the next sitting of the Cayman Islands Legislative Assembly.
• The Ministry said the new framework will “strengthen” the government’s ability to draw new entities or individuals to set up base in the Caymans.
• Phase One also comes as the Cayman Islands is being assessed by the Financial Action Task Force and the Caribbean Financial Action Task Force on its efforts to combat proliferation financing (CPF) – that is, funding of weapons of mass destruction.
• The new rules aim to align companies in the jurisdiction with the CFP, AML and CFT rules, the Ministry said.

Also read: The US Crypto Enforcement Framework Is a Warning to International Exchanges

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