G20 Finance Leaders: Stablecoins Present Serious Regulatory Risks

The G20 finance chiefs of the world agree that global stablecoins give rise to a set of public policy and regulatory risks.

On Oct. 18, Reuters reported that the G20, an international forum for the governments and central bank governors from 19 countries and the European Union, have called upon the International Monetary Fund to examine various macroeconomic implications of global stablecoins, including monetary sovereignty issues in its member countries.

Members say stablecoins pose a serious risk to global finance
Per the report, the nations agreed that global acceptance of stablecoins will give rise to a set of serious public policy and regulatory risks. G20 finance ministers stated:

“Such risks, including in particular those related to money laundering, illicit finance, and consumer and investor protection, need to be evaluated and appropriately addressed before these projects can commence operation.”

Bank of Japan’s Governor Haruhiko Kuroda said that the G20 summit will begin with a debate regarding stablecoin regulations — following proposals from global regulatory bodies like the Financial Stability Board and the Financial Action Task Force. Kuroda stated:

“Some emerging countries have concerns on what could happen if stablecoins backed by a huge customer base become widely used globally [...] But this is not just a problem for emerging economies. It could have a broader impact on monetary policy and financial system stability.”

Stablecoin concerns multiply among major economies
The news follows a recent report by the G7 task force stating that stablecoins such as Facebook’s Libra present a significant risk to the global financial system.

In the report requested by the G7 finance ministers and central bank governors, the task force confirmed that the group of the seven wealthiest nations would not allow any global stablecoin to launch without addressing related challenges and risks.

Here’s How Much Bitcoin Is Currently Locked Up in Sidechains

Almost $77 million of Bitcoin (BTC) is currently unavailable to use on the network — not because it is lost, but because it is locked up in sidechains.

Bitcoin sidechains: a nascent market
Data from block explorers confirms that as of Oct. 17, a total of 9,661 BTC ($76.96 million) or a tiny 0.054% of today’s Bitcoin supply resides in three major sidechain projects.

Sidechains are separate blockchains tied to a cryptocurrency’s regular blockchain, i.e. mainchain. Users can interact with it via a pegging mechanism; they send funds to and from the sidechain, with security features ensuring coins are not available on both chains at once.

Sidechains have existed for several years and have various functions depending on developers’ aims.

Blockstream’s Liquid sidechain, or LBTC, for example, focuses on interexchange operability while giving traders enhanced features not yet available on the Bitcoin mainchain.

Binance Chain leads balances
Liquid, which launched in October 2018, currently includes a modest 89 BTC ($709,700). That figure is dwarfed by the largest sidechain, Binance Chain, which has 9,001 BTC ($71.74 million).

Even the Wrapped Bitcoin (WBTC) sidechain, which is in fact an Ethereum-based ERC-20 standard token, has 571 BTC ($4.55 million) — more than Liquid.

WBTC debuted in January this year, while Binance Chain — cryptocurrency exchange Binance’s in-house project — got its mainnet unveiling in April.

This week, wallet provider Blockchain and digital asset manager CoinShares launched a Bitcoin sidechain of their own in the form of a gold token network.

Aliant to Pay Part of Employees’ Compensation Packages in Bitcoin

United States merchant services provider and payment processing firm Aliant Payments will be paying each of its employees part of their compensation package in cryptocurrency.

In a press release on Oct. 16, Aliant said that the offer reflected a desire that employees become invested customers in the shift to digital currency.

Aliant’s evolving crypto payments processing solution
Aliant launched its crypto processing system for merchants, dubbed CryptoBucks, back in 2017 and developed a proprietary, fully compliant solution in July 2018 to process crypto payments, converting them to USD, and offering merchants next day payouts.

In a statement, Aliant CEO Eric Brown proposed that:

“Adoption happens when you’re able to earn cryptocurrency, and then go on to spend it.”

Brown further underscored that with the inclusion of cryptocurrency into employee compensation packages, each member of the Aliant team will have “a vested interest in cryptocurrency not just as something they work on in the office.”

Merchant solutions and in-house employee adoption
Alongside Aliant, other industry firms have been working to diversify crypto processing solutions for merchants.

Blockchain technology firm Bitfury Group has launched e-commerce software for merchants and several other tools — including an open-source Bitcoin (BTC) wallet and a hardware payments terminal — in a bid to drive wider adoption of Bitcoin’s off-chain scalability layer called Lightning Network.

Meanwhile, workplace initiatives to drive crypto adoption among employees include the recent move by Big Four audit firm Deloitte to enable staff to pay for canteen purchases using a mobile Bitcoin wallet.

Telegram Channel TON Board ‘Takes a Break,’ Deletes Message History

Following a recent red flag from the United States regulators, a private Telegram channel for Telegram Open Network (TON) investors is taking a break.

Temporary halt for more clarity
On Oct. 12, TON Board channel on Telegram announced a temporary halt of work due to the increased level of regulatory uncertainty.

TON Board has also deleted all previous posts on its Telegram channel, making the latest announcement the sole post on the channel at press time.

As noted in the channel description, TON Board is a private channel created by investors and for investors in the TON as well as for future major holders of Grams. The channel has around 2,400 subscribers at press time.

In the announcement, TON Board stated that it is taking a break to analyze new information and adapt policies. The channel noted that they are planning to come back as soon as they have more clarity on the legal status of the TON and Gram, as well as an allowed type of analysis that may be published about them.

SEC flags Gram weeks before launch
The move comes after the United States Securities and Exchange Commission (SEC) abruptly announced that Telegram’s $1.7 billion Gram token sale in 2018 was illegal. On Oct. 11, the regulator filed an emergency action and restraining order against Telegram and the TON in order to prevent the initial investors from being able to acquire Grams.

The regulatory announcement took place just weeks before the much-anticipated TON launch in late October, as officially planned by the firm. In preparation for the launch, Telegram released the terms of use for its native cryptocurrency wallet Grams Wallet on Oct. 8, noting that Telegram should not be used in jurisdictions where its services are prohibited by any applicable law, regulation or rule.

One day before the emergency action, major U.S. crypto exchange and wallet service Coinbase announced that it plans to provide its digital custody support for Gram as soon as it goes live. Previously, a digital asset custodian of software firm Anchor Labs declared that it will be the first entity qualified to support institutional custody for Gram, noting that the token will launch on Oct. 31.

Next Bitcoin Halving May Not Lead to Bull Market, Says Bitmain CEO

Jihan Wu, co-founder and CEO of Chinese mining giant Bitmain, believes the next Bitcoin (BTC) block reward halving may not lead to a bull market, but the coin’s price will grow in the long term.

According to Chinese industry news outlet 8BTC’s report published on Oct. 11, Wu made his remarks during the World Digital Mining Summit held in Frankfurt.

Bulls may be late this time
Per the report, Wu explained that the crypto market moves in cycles and this time the next bullish phase may not start after the halving. He is also confident that in a long-term perspective crypto enthusiasts should invest in mining hardware, adding:

“There are many uncertainties, but now is a good time to invest in crypto mining. If I were a miner, I would not stop mining but continuing to invest in mining equipment. We are currently in a short-term correction of price. Having a long-term perspective is significant. If bitcoin’s price remains unchanged after halving, the efficiency of existing equipment must be improved to balance efficiency and computing power.”

Long-term perspective
Wu also promised that the company’s five nanometer mining application-specific integrated circuits will enter mass production in early 2020 while three nanometer chips are already in production. Furthermore, he stated that the firm has set up repair centers which are expected to reduce repair time to three days by the end of 2019.

Wu also confirmed that Bitmain will launch the World Digital Mining Map, a service which will connect mining hardware owners with mining farm owners, and the Ant Training Academy — its mining training service.

As Cointelegraph reported on Oct. 9, Bitmain announced two new series 17 Bitcoin mining machines.

Coinbase Gets E-Money License In Ireland, Expanding European Foothold

Coinbase is expanding its European foothold with an e-money license from the Central Bank of Ireland.

“One of just a few companies”
On Oct. 11, Zeeshan Feroz, the CEO of the United Kingdom arm of San Francisco-based cryptocurrency exchange Coinbase, announced that the exchange had become “one of just a few companies,” to have received an e-money license in Ireland.

Coinbase opened its first office in Dublin, Ireland, in October 2018 to help expand its operations in Europe and as a contingency plan for when the U.K. leaves the EU. The Coinbase U.K. CEO said:

“Europe represents a huge opportunity for Coinbase and today’s announcement is another positive step for us in the region. The approval from the Central Bank of Ireland will now enable us to expand our Irish operation and deliver a better product to customers across some of our fastest-growing markets. It will also allow us to secure passporting for our customers across the EU and EEA.”

Martin Shanahan, CEO of IDA Ireland reportedly congratulated Coinbase on receiving the e-money license from the Central Bank. IDA Ireland is the Irish state agency responsible for attracting foreign investment to the country. Shanahan said:

“Coinbase’s choice of Dublin for this operation reinforces the strength of Ireland as a destination for financial services companies, providing a consistent, certain, pro-enterprise policy environment for businesses to grow and thrive.”

Coinbase among the cleanest crypto exchanges
Cointelegraph recently reported that according to a report by the Canada-based Blockchain Transparency Institute (BTI), Coinbase is one of the cleanest cryptocurrency exchanges in the industry.

Ripple CEO: Facebook’s Libra Will Not Launch Before 2023

Brad Garlinghouse, the CEO of blockchain payments network Ripple, thinks that Facebook will fail to launch its Libra digital currency before 2023.

Garlinghouse bets on a 3-year Libra delay
Speaking in an interview with Fortune on Oct. 7, Brad Garlinghouse argued that regulatory pushback would continue to plague the project that was only announced in June, noting:

“I would bet that Libra… let's say, by the end of 2022, I think Libra will not have launched.”

Garlinghouse also noted various problems governments have raised with Facebook around the world over its digital currency plans.

As Cointelegraph reported, it was Germany’s finance minister who most recently vented concerns, arguing that money issuance should remain in the hands of the state.

Tim Cook, the CEO of Apple, said likewise on Oct. 4, adding that the tech giant would not follow Facebook’s lead.

Facebook left with fewer allies
“I think maybe it would have been better received if Facebook had not been the point of the arrow,” Garlinghouse continued. He added that regulators likely saw Libra as a Facebook project.

The comments come after a particularly tough week for Facebook’s Libra Association, the nonprofit behind the project. On Friday, PayPal, one of its major backers, pulled out of participation altogether, citing worries that its own reputation would suffer.

“We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future,” a representative of the firm told Cointelegraph.

John McAfee’s Decentralized Crypto Exchange Launches in Beta

American entrepreneur and vocal crypto advocate John McAfee has launched a decentralized exchange (DEX) running on the Ethereum (ETH) blockchain.

McAfee DEX is set to run in a beta release status as of Oct. 7, according to the new platform’s official website and McAfee’s personal Twitter feed.

“Centralized exchanges are our weak point”
On Oct. 5, McAfee’s tweet unveiled the new platform, stating that “it takes time for enough users to join to make it real, but if you play, and be patient,” the exchange can serve as “the door that frees us from Government's cornerstone of control: Fiat currencies. It can't be shut down.”

In an embedded video, McAfee argues that the cryptocurrency community faces the question of whether its aspirations are limited to merely expanding the possibilities for pure speculation — “all about money” — or are about an ideal, namely freedom.

After denouncing governments’ control over fiat currencies and the losses this presents to individual liberty, McAfee turned to the crypto space: “centralized exchanges are our weak point,” he said, pointing to China’s move to shutter domestic exchanges in September 2017.

McAfee continued:

“A distributed exchange can’t be shut down by anyone. Decentralized meaning that nobody controls it, distributed meaning that it is everywhere and therefore impossible to stop. We’ve had privacy coins, that’s the other part of this equation, because privacy coins with decentralized, distributed exchanges is the goose that lays the golden egg for us. We don’t use it though.”

McAfee DEX beta: the details
According to the details released so far, McAfee DEX reportedly will entail no Know Your Customer checks, block no jurisdictions and charge a single platform fee of 0.25% for takers. It will not charge maker fees and will also reportedly be open sourced.

Any ETH-based token (ERC-20 standard) can be added without a fee to the beta version, with more unspecified tokens to be supported in the future.

“Don’t expect miracles”
In his Oct. 5 video, McAfee pointed to the low number of traders currently using decentralized exchanges, considering that this makes them “useless.” For his DEX, McAfee urged users:

“Play with it, don’t expect miracles at first. Play with it until it becomes real.”

As Cointelegraph previously reported, non-custodial decentralized crypto exchanges enable users to trade peer-to-peer, using smart contracts to automate deal matching and asset liquidation in order to allow users’ funds to remain under their control.

As of January 2019, a survey of over 400 international crypto exchanges indicated that decentralized platforms accounted for just 19% of the global exchange ecosystem, and their trading volumes amounted to less than 1% of those on centralized exchanges.

This April, major centralized exchange Binance launched its own DEX on its native mainnet. Other major exchanges eyeing their own DEX include OKEx and Bithumb.

Former US Army Interpreter Gets 30 Years for Dark Web Fentanyl Trade

A former interpreter for the United States military forces was sentenced to 30 years in jail for dealing fentanyl, which led to the death of a U.S. Marine.

Drugs paid for with cryptocurrencies
According to a Reuters report from Oct. 3, a former Iraqi U.S interpreter was sentenced to 30 years in federal prison without the possibility of parole for using the darknet to sell fentanyl.

Alaa Mohammed Allawi pleaded guilty to the drug charges and acknowledged using the now-defunct online darknet market Alpha Bay to sell a variety of hard drugs, such as oxycodone laced with fentanyl, while accepting payments in cryptocurrencies.

In 2017, Allawi’s drug exploits eventually led to the death of a Marine, who took one of his pills at a party while stationed at Camp Lejeune, North Carolina. Special agent, Will Glaspy, said:

“From his use of the dark web, to his clandestine manufacturing of counterfeit pills laced with fentanyl, to his drug sales targeting college students, Allawi operated with little concern for the people in our communities.”

Crypto and illegal drug sales
Cointelegraph previously reported that according to Ciphertrace’s report on Anti-Money Laundering, almost all drugs sold on darknet marketplaces are purchased with cryptocurrencies. The darknet provides an environment that is attractive, lucrative and, for the most part, safe for illegal drug traffickers.

Professor Talis Putnins, co-author of an influential University of Technology Sydney report on cryptocurrency and illegal drugs, had this to say about cryptocurrencies:

“Cryptocurrencies have fundamentally transformed the way illegal drugs are bought and sold, shifting much of the activity from a cash-based, physical ‘on the street’ market to an online marketplace.The online illegal drugs trade needed two fundamental things to take off. One is an anonymous communications platform, which was provided by the darknet and underpinned by TOR (an anonymous communications protocol). And the second important piece was an anonymous or private way of making digital payments that was difficult to trace by authorities. That is the role that cryptocurrencies have played. Thus, they are an integral part of the online drugs trade.”

Update: PayPal Officially Pulls Out of Libra Association

Disclaimer: This article previously stated that PayPal was possibly withdrawing from the Libra Association. It has since been updated to reflect its official withdrawal.

Payment processor PayPal has officially left the Libra Association, the governing body of Facebook’s Libra digital currency.

Libra “Pre-work” is not enough for PayPal
As news agency Financial Times reported on Oct. 3, PayPal did not attend a meeting of 28 Libra backers on Thursday.

Following the payment provider’s no-show, a spokesperson for the firm told Cointelegraph on Oct. 4 that it officially left the association, adding:

“We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities.”

The developments come on the back of existing rumors that up to three more of those backers are also considering quitting their roles as future node operators. The Times quoted a person close to PayPal as saying:

“It doesn’t seem that there was a lot of pre-work done with regulators. [Payments] companies don’t want that [regulatory scrutiny] to bleed into their businesses.”

Other key players reportedly wavering
As Cointelegraph reported on Oct. 2, the impetus behind similar worries for Visa, Mastercard and Stripe was ensuring Libra did not harm their relationships with regulators.

Libra has created controversy with lawmakers worldwide since its inception, with a common narrative revolving around the digital currency taking power over money away from governments.

Stripe subsequently denied it was considering a U-turn. Also this week, Libra developers outlined a roadmap for progress, revealing nodes were already testing communication with one another.