“Cryptocurrency Is Not Money”, Says Russia

The Russian Parliament is about to pass a draft bill on cryptocurrencies and digital tokens in which they are considered assets. Unfortunately, locals and tourists won’t be able to pay for goods and services using cryptocurrencies in Russia.

Russian Parliament To Regulate Cryptocurrencies

The bill outlines the legal framework for mining and blockchain-based transactions and legalizes terms such as “digital financial asset”, officially defined as a security in electronic form “created using encryption methods, of which the legal title of ownership is verified by making a digital record in the register of digital transactions”.

The bill, drafted by the Russian Finance Ministry, also makes the distinction between a digital token and a cryptocurrency based on the number of producers, one person versus several persons (miners), respectively.

The draft law regulates all forms of exchange as it allows digital tokens and cryptocurrencies to be converted into fiat currency only through licensed exchanges of digital financial assets and existing trading platforms that have stock exchange licenses.

Based on this draft, cryptocurrencies are not an authorized means of payment in Russia, which means they are not money. Elvira Nabiullina, President of the Central Bank of Russia, called Bitcoin “quasi-money”.

“The purpose of these bills is to define the scope of action and of the regulations of cryptocurrencies, not their prohibition, and this is good news for Russia”, Anti Danilevski, Chief Executive Officer of blockchain crowdfunding website KickICO, told Forbes.

“For us, as a company, it is important to act legally…so once you get a better sense of the rules, it allows projects from the real economy to launch their ICOs here, instead of doing it in other countries.”

Regulation of initial coin offerings (ICOs) should limit the investment of non-accredited investors. Individuals who are not registered as qualified investors are able to invest 50,000 rubles ($900) at the most.

Olga Sorokina, a partner with consulting firm KeyICO, commented: “The bill needs to go through Parliament and, no doubt will be amended. We can at least see the base and the shape of the future law now: the Russian authorities want to tightly control the cryptocurrency and tokens turnover (as they do) with the securities market. Any legal crypto transaction should go through a licensed operator, being under the state control.”

The tightening of the regulation responds to the rise in scams and fraud within the cryptocurrency world.  Russia had its first ICO criminal case earlier this month, submitted against Bananacoin. The ICO organizers, a team of Russian entrepreneurs, are being accused of embezzling the funds raised, which amount to a total of $3 million.


Subscribe to our newsletter

Bithumb, one of Korea’s largest exchanges with a daily volume of $850 million (94,000 BTC), has announced the listing of ICON (ICX), which is being called ‘Korean version of Ethereum’, to celebrate the launch of Bithumb PRO.

Bithumb Gives Away ICON to Celebrate Launch of Bithumb PRO

Through deliberation of Bithumb Cryptocurrency Deliberative Committee, the exchange is launching an ICON Airdrop from March 21 to March 25, 2018 exclusively for members who trade 1 million Won (KRW) or more within the event period. The reward date is scheduled on April 6, 2018.

The ‘Korean version of ETH’ will be distributed to market participants based on the sign-up period. Recent users, who joined the platform less than six months ago, will be rewarded with only 2 ICX. The number grows with seniority: 5 IXC for six months to one year; 10 ICX for one to three years; 20 ICX for more than three years using the exchange.

The airdrop amount is given upon one account per one mobile phone number. The exchange will only deliver the corresponding coin quantity after deducting 22% in taxes on amounts higher than 50,000 Won (KRW).

Additionally, Bithumb is offering a 1% payback on all ICX deposits and transactions during the same period. This event is for all Bithumb members who choose to deposit ICX, which is only available in Bithumb Pro at the moment. The event may expire without prior notice on cashback exhaustion. The amount is paid based on whatever is smaller among deposit and traded amounts. Moreover, rewards are capped at 50,000 ICX.

ICON ranks #20 on coinmarketcap.com, with a market cap of US$1.3 billion (146,939 BTC) and a daily volume of US$154 million. The altcoin has a circulating supply of approximately 386 million ICX from a total supply of 400 million ICX. Binance is by far the cryptocurrency exchange where most ICON is traded.

On account of the announcement made by Bithumb, demand for ICON skyrocketed in the last 24 hours. The ICX is up over 45 percent as it trades at $3.20, at the moment of writing. The trading volume of the cryptocurrency picked up since early European morning, from US$ 53 million to US$ 160 million, in approximately four hours.

ICON, Korea’s new currency, was launched by DAYLI Financial Group, on September 20, 2017. The company also announced the listing on Bithumb:

CX Token is listed on Bithumb Exchange today!
You can buy and sell ICX Tokens freely on the Bithumb Exchange.
(Listing time may be adjusted depending on market conditions.)

Bithumb users are cheering the listing as ICON will now be traded in Korea. The ICON airdrop events are scheduled to end on March 25, 2018.

CryptoKitties, the ‘world’s most successful blockchain game’, announced it has raised $12 million in funding led by Andreessen Horowitz (a16z) and Union Square Ventures (USV).

CryptoKitties Raises $12M From Horowitz, Union Square

A blockchain-based game where users collect and breed digital cats was able to raise $12 million from a number of angel investors, including Andreessen Horowitz (a16z), Union Square Ventures (USV), Fred Ehrsam (Coinbase co-founder), Naval Ravikant (AngelList founder), and Mark Pincus (Zynga founder).

A huge success on the Ethereum network, the blockchain-based virtual game is breaking away from its parent company, Canada-based Axiom Zen, and being spun off as a separate venture.

The company’s vision, best described as “the future is meow”, is an unlimited world of play, built by everyone who chooses to be a part of it.

Where ownership is real, and the things you create and discover, you can keep forever. Where games can be entire economies, unlocking mutual incentives for players and builders to extend the gaming experience.

A wide number of ‘fat cats’ are onboarding the spin-off. CryptoKitties is also taking the money and support from angel investors and seed funds such: as Bill Tai (kitesurfing VC and Board Member of BitFury); William Mougayar (Founder of Token Summit); Avichal Garg (Expert at Y Combinator); CAA Ventures; Digital Currency Group; Version One; Rising Tide Fund; YesVC (a new fund started by Caterina Fake; co-founder of Flickr); Jyri Engstrom;  and Hex Capital.

The game allows users to fully own unique CryptoKitties, built on ERC-721 tokens, which cannot be replicated, taken away, or destroyed. Each one carries unique number and a 256-bit distinct genome with DNA that can be passed to offspring.

It is one of the first blockchain-based games in the world, in an attempt to deploy the technology for recreational and leisurely purposes. The growing popularity of the game was able to congest the Ethereum network in December 2017, as it reached an all-time high in transactions.

As of December 2017, Etherscan, an ethereum analytics platform, reported a sixfold increase in pending transactions on Ethereum since CryptoKitties was released the week before. 

Axiom Zen will continually release a new CryptoKitty every 15 minutes until November 2018. The rest of supply is determined by breeding of crypto-kitties. Based on their limited genomes, there is a limit of 4 billion total cats that can be bred. Users are able to put them up for sale for a price set in ETH. The priciest CryptoKitty ever sold was valued at 246.9255 ETH.

Bladetec, a UK tech company with past experience in IT support for NATO and the UK Ministry of Defense, is building the first Bitcoin mine in Europe funded by investors in a limited company protected by UK law.

Bladetec Raising £10 million To Build Largest Bitcoin Farm In The UK

Located in the Southeast of the United Kingdom, the facility – Third Bladetec Bitcoin Mining Company (TBBMC) – will cover 3,500 square feet divided in three locations in London, Surrey, and Suffolk.

In order to build and operate the farm for up to two years, the company is raising £10 million from investors. With the money, Bladetec “will acquire approximately 1000 ASIC (Application Specific Integrated Circuits)-based Mining Computers all running at 43 Terra-Hashes per second (a speed so unfathomably fast, it’s nigh on impossible to quantify; suffice to say, it’s the fastest available globally today)”, says the campaign published on Envestry.

This will create a significant global mine, placing them in the world’s top 25 and as a result of this dominant position, produce significant returns for shareholders.

The TBBMC project offers wants a minimum investment of £5,000 from each investor. Due to its Bitcoin’s volatile nature, the project allows for four different growth scenarios with up to 45% capital growth per year and an exit within 2 to 3 years. At that stage, shareholders’ returns “will be based on the proceeds of the sale of the mined Bitcoins and the ASIC machines”.

The four different scenarios range from a 40% drop in BTC price to an eventual +50% rally. The return on investment after 24 months is projected to go as high as £210,157 with an initial investment of £100,000, according to the company’s projections. If the price of Bitcoin does drop by 40%, an investor would lose approximately 22% of capital.

According to The Telegraph, the company is planning to mine 1,280 bitcoins in the two-year period. It is hard to predict how much those Bitcoins will be worth in two years. At current prices, they would be valued at £7.8 million, but much can change and probably will before 2021. Most of the funds raised are destined to be spent on energy costs, even as Bladetec reaches an agreement with a wind farm to keep the energy bills low, as intended.

Bitcoin farming is more attractive for business in countries with colder weather, such as China and Iceland. The Icelandic authorities, however, may implement a tax on Bitcoin mining due to the energy consumption. And the Chinese government insists on ending all cryptocurrency trading and mining in the country.

The Financial Stability Board (FSB), the body that coordinates financial regulation for the G20, resisted calls from some members to regulate cryptocurrencies.

G20 Regulatory Body Rejects Regulating Cryptocurrencies

Too little consensus was found during the Financial Stability Board (FSB) meeting to pursue radical action toward the cryptocurrency world. Mark Carney, Governor of the Bank of England and current Chairman of the FSB, said in a letter:

“The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time.”

Carney, however, was explicitly in favor of regulation in a speech earlier in March: “A better path, I suggest, would be to regulate elements of the cryptocurrency ecosystem to combat those illicit activities, promote market integrity, and protect the safety and soundness of the financial system. Indeed, the time has come to hold the crypto asset ecosystem to the same standards of the rest of the financial system.”

Now, the FSB Chairman suggested that whoever succeeds him would lead a financial watchdog more focused on reviewing rules rather than pushing through new standards. Carney will stand down next year.

Resistance to regulation from the leading central bankers and finance ministers is a new trend ever since U.S. President Donald Trump ordered American regulators to scale back on it. The FSB now presents itself as an open, disciplined and efficient body which has scrapped a quarter of its working groups.

“As its work to fix the fault lines that caused the financial crisis draws to a close, the FSB is increasingly pivoting away from the design of new policy initiatives towards dynamic implementation and rigorous evaluation of the effects of the agreed G20 reforms.”

In a hearing at the U.S. Congress last week, Coinbase’s CLO Mike Lempres said there is no need for further regulation, but more clarity regarding the roles of the financial watchdogs.

In the meantime, the Winklevoss twins are about to create a self-regulatory body for cryptocurrencies, ‘Virtual Commodity Association’.

In February, the ECB’s Chair of the Supervisory Board Daniele Nouy told CNBC that regulating cryptocurrency is “not exactly very high on its to-do list”. Europe has no cryptocurrency regulation and Bitcoin does not pose a threat to the Euro, in the eyes of the European Central Bank. Mario Draghi, Governor of the ECB, said Bitcoin isn’t mature enough to be regulated.

The cryptocurrency world may have started about ten years ago, but there’s still much room for improvement in its underlying technology. The last thing this new industry needs is regulation that harms its potential to change the world as we know it. The new paradigm may be a reality in five years time if regulators don’t press too hard.


BitMEX, Bitcoin Mercantile Exchange, found further evidence supporting speculation that Noble Bank, a full-reserve bank based in Puerto Rico, is a major cryptocurrency center and is harboring Tether’s assets as its primary reserve bank.

BitMEX Says Tether Has Primary Reserve Bank In Puerto Rico

A few weeks ago, BitMEX published a research piece in response to rumors that Tether has some link to Puerto Rico. After analyzing public financial data, the exchange found strong growth in the cash balance in the International Financial Entities (IFE) banking category. In spite of an unusual balance-sheet structure, the researchers weren’t able to draw any strong conclusion from the data. Until now.

Aggregate financial-system data for the year of 2017, released by the office of the Commissioner of Financial Institutions of Puerto Rico, point to a 248% growth in bank deposits in Q4 2017 in the International Financial Entities (IFE) category, amounting to $3.3 billion. Additionally, total assets in the category were $3.8 billion, up 161% in the quarter.

BitMEX sees a connection between this extraordinary growth in bank deposits and the large increase in the value of cryptocurrency assets over the same period, resulting in large cash inflows into cryptocurrency-related banks.

During Q4 2017, the value of Tether in issue has increased by 215% to $1.4 billion, which supports the thesis presented in BitMEX’s first post regarding Noble Bank as Tether’s primary reserve bank.

The thesis concluded that Tether has two choices: reform the system to include KYC/AML procedures, which may require a fundament change of its architecture and leave the public blockchains; or risk being shut down by the authorities.

The research article argues that ‘their problem’ with Tether is not its use for criminal activity per se: “We have not found any evidence of criminals using Tether to launder funds. As it stands, we think an imminent shutdown is unlikely.” The problem, they explain, is what happens with censorship resistance systems. They eventually get shut down.

“A potential way around this is to try to build a distributed system that cannot be shut down (…). Whether Bitcoin or other proof-of-work-based systems can achieve this is still unproven, in our view.”

Tether is the second most liquid cryptocurrency in the world, with a volume of $2.83 billion per day, according to Coinmarketcap.com. The cryptocurrency token has come increasingly under pressure for having ended their relationship with the company responsible for auditing them, Friedman LLP.

BitMEX may have found consistent data supporting the idea that Puerto Rico is becoming a cryptocurrency haven. And that seems to be an inevitable result of its unparalleled tax incentive: no federal personal income taxes nor capital gains tax, all without having to renounce the American citizenship.

Tether and sister company Bitfinex is not exclusively using Noble Bank as a reserve bank. Dutch ING Bank confirmed the company has a bank account there.

Ari Paul, CIO and managing partner of cryptocurrency hedge fund BlockTower Capital, took to Twitter to share his thoughts on what might drive the next bull market: adoption as P2P cash, institutional portfolios, privacy, and marketing.

Hedge Fund CIO Ari Paul Explains Next Bull Market In Bitcoin

Ari Paul explained his views of how the adoption of cryptocurrency will unfold. As a reminder, it should be acknowledged that he placed, on behalf of his cryptocurrency hedge fund BlockTower Capital, a $1 million bet that Bitcoin will hit $50,000 in 2018.

The Bitcoin investor started off by disregarding mass user adoption as a short-term driver for the bull market. For most cryptocurrency use cases, mass user adoption is still years off: “Less than 10 million people “use” crypto today, and aside from use as “digital gold” or “payment rail”, other use cases won’t have meaningful traction for 18+ months at fastest.”

Ari Paul noted that adoption of cryptocurrency as cash will drive the market upwards in the mid-term. He pointed to real adoption of cryptocurrency as P2P cash for its technological viability and its potential to go ‘viral’ thanks to big-budget marketing.

Moreover, Ari Paul believes that third-party custody, banking relationships, index funds, and more trusted exchanges, “will support gradual adoption of Bitcoin and maybe other “Coinbase coins” in institutional portfolios”. The “digital gold” momentum will not include “anything that’s ICO’ed in the last 2 years.”

Then, the crypto influencer argued that Bitcoin will find much growth in demand as individuals fight for their privacy in a world that increasingly embraces surveillance states. Ari Paul foresees inevitability in the power of privacy in the cryptocurrency world:

If Bitcoin is adopted *because* it supports anti-money laundering measures by investors, that opens the door for a specifically non-AML competitor.

Finally, Ari Paul recognized that the easy money obtained by so many cryptocurrency projects, some sitting on $200 million in capital and others over $1 billion, should be able to drive the bullish market.

“Unlimited budgets coupled with the world’s best marketers produce amazing results”, he wrote on Twitter. “They can create at least pumps, and with smart consumer applications maybe some real adoption.”

Ari Paul and his crypto hedge fund are still nine months away from the option contract expiry. It is certainly possible to have the Bitcoin price surpass the $50,000 mark. In 2017, the currency reached twenty times its worth from January to December. If $50,000 is reached in 2018, the bet will pay out on a 30 to 1 odds.

A study found that cybercriminals launder $80-$200 billion a year and are moving away from Bitcoin as Monero offers greater anonymity.

Cybercriminals Launder Up To $200 Billion Each Year, Says Report

Virtualization technology-focused security firm security firm Bromium announced the findings of an independent study into the macroeconomics of cybercrime. “Into the Web of Profit,” a report released by the company, concludes that cybercriminal proceeds make up an estimated 8-10 percent of total illegal profits laundered globally, which amounts to $80-$200 billion each year.

Additionally, the report found that virtual currencies are now the primary tool used by cybercriminals for money laundering. Monero, a cryptocurrency that provides greater anonymity, is becoming criminals’ favorite as they move away from Bitcoin.

Dr. Mike McGuire, Senior Lecturer in Criminology at Surrey University and author of the report, said:

“It’s no surprise to see cybercriminals using virtual currency for money laundering. The attraction is obvious. It’s digital, so is an easily convertible way of acquiring and transferring cybercrime revenue. Anonymity is also key, with platforms like Monero designed to be truly anonymous, and tumbler services like CoinJoin that can obscure transaction origins. Targeted organizations must do more to protect their customers.”

The study also found that in-game purchases and currencies are spurring a rise in gaming-related laundering, as China and South Korea become hotspots for gaming-currency laundering; PayPal and other digital payment systems are employed by cybercriminals to launder money; and digital payment systems laundering often involves the use of micro-laundering techniques where multiple, small payments are made so laundering limits aren’t triggered.

Gregory Webb, Chief Executive Officer of Bromium, commented: “We invested in this research to instigate a meaningful conversation about how to disrupt the economic systems and poor security practices that enable cybercrime around the world; frankly because it’s far too easy for them.”

“Today it is easy for hackers to infect machines, steal data, and hold businesses and individuals for ransom or sell stolen IP because enterprise defenses are not fit for purpose. It is equally easy for them to wash that money and convert it into cash – and the rise in the use of unregulated, virtual currencies is making this even easier. We need to attack the problem in a different way. Law enforcement, the cybersecurity industry and both the public and private sectors need to be vigilant about disrupting cybercrime. Protecting applications that access sensitive data is an absolute requirement. We need a whole new approach to cybersecurity or these figures will continue to increase over time.”

While cryptocurrencies have become more popular within the cybercrime industry, it remains unclear whether the impact of digital currencies is large enough to attract the attention of regulators, given that the majority of criminal operations globally are still funded by fiat money, or cash.

John McAfee, founder of the software company McAfee Associates and firm crypto believer, predicts Bitcoin will reach $1 million by 2020. McAfee was named Senior Security Adviser at CryptoSecure, a security solutions provider that prevents cryptocurrency hacking.

CryptoSecure appoints John McAfee as Senior Security Adviser

CryptoSecure, a ‘hackproof’ security solutions provider, has announced the appointment of Bitcoin investor and security expert John McAfee as Senior Security Adviser. The timing of the announcement serves to boost the hype around the company’s initial coin offering (ICO).

The cryptocurrency industry has been plagued with hacks right from the start, with the Coincheck heist being only the most recent. John McAfee’s expertise, both technical and industry-specific, will be a valuable asset for the company:

“Mr. McAfee met the CryptoSecure team on a recent Blockchain cruise conference at which he was the keynote speaker. During an early morning discussion on the security deficiencies of the cryptocurrency market, he was appraised of CryptoSecure’s military-grade hybrid Blockchain, Trusted Solaris OS, One Time Pad infrastructure project. When Mr. McAfee saw CryptoSecure’s first product ‘SafeWindow’ operating he immediately recognized the breakthrough potential to deliver the security so badly needed in the cryptoverse. Realizing that money could not buy this, he decided to join the CryptoSecure team as Senior Strategic Advisor”

McAfee commented on his appointment:

“Cyberattacks threaten to end cryptocurrency. Hackers now have the ability to steal from any wallet, computer or exchange. This is why I joined the Cryptosecure team. With advanced technology to end this crisis.”

The startup describes John McAfee as a brilliant, and controversial Internet and crypto pioneer and visionary, who spent his early years as a programmer for NASA’s Institute for Space Studies, and later created the world’s first commercial anti-virus software.

The statement then added that he concentrates his passion and genius towards the future of cryptocurrency and blockchain technology. He is a champion of the people and a fierce advocate against the increasing incidence and nature of cyber-attacks.

Earlier this year, McAfee left MGT Capital Investment, where he was chief cyber security visionary. The company ended the year 2017 with $9.5 million of cash, no debt, and minimal payables. The picture darkens if we take the words of MGT CEO Robert Ladd, who said he received feedback stating it might be “easier” to get back on the New York Stock Exchange if it chose “to not have John McAfee be an officer or director of the company.”

On his way out, McAfee commented: “I am looking forward to toiling in obscurity as the world’s foremost authority of all things cyber and crypto!”

Playboy Enterprises, the “American men’s lifestyle and entertainment” company, most known for its adult material, has announced it will start taking cryptocurrencies in exchange for its products.

Playboy Develops Online Payment Wallet

The adult entertainment company founded by the late Hugh Heffner is developing an online payment wallet, which people can use to pay for its online content and games.

Available by the end of 2018, the decision to accept cryptocurrency payments latest attempt to adjust to the changing online landscape, where adult content is mostly free and in high supply.

Reena Patel, Chief Commercial Officer and Head of Operations at Playboy Enterprises, stated that the decision follows the cryptocurrency hype worldwide;

“As the popularity of alternative payment methods continues to grow around the world, along with the reach of Playboy’s digital platforms, we felt it was important to give our 100 million monthly consumers increased payment flexibility. This innovation gives the millions of people who enjoy our content, as well as those in the future who participate in our casual gaming, AR and VR platforms, more choices with regard to payment and in the case of VIT, an opportunity to be rewarded for engaging with Playboy offerings”

Scott Flanders, Chief Executive Officer of the company in 2015, was very aware of the fundamental change in the porn industry and decided to stop publishing naked photographs in its print magazine. A decision that was ultimately reversed in 2017. “You’re now one click away from every sex act imaginable for free”, he told the New York Times.

The online payment wallet will accept a wide number of cryptocurrencies. Among them is the Vice Industry Token (VIT), a decentralized blockchain platform that monetizes adult videos while rewarding viewers for watching them. VIT wants to be the alternative to ad-supported porn websites that allow viewers to watch porn for free.

By integrating with VIT, visitors will be able to pay and earn tokens to view Playboy TV’s original content, as well as comment on and vote for content. The company also has plans to integrate cryptocurrency to its casual gaming, AR and VR initiatives in the future.

The Vice Industry Token argues:

“The original paradigm in mainstream and adult entertainment was that people paid for the content they consumed; whether by subscription or pay-per-view. With “tube” websites becoming popular, there was a shift toward free-viewing. While free content was certainly desirable, wouldn’t it be better if you could get paid for it, too?”

VIT has raised 24074.91 ETH so far.

In January, NewsBTC has reported the launch of Eroiy, a payment method for the adult entertainment industry based on the NEM protocol.