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South African Gov’t Reveals It Has No Plans to Ban Crypto in Recent Consultation Paper

The South African Reserve Bank (SARB) has issued a consultation paper assessing the benefits and risks of cryptocurrencies. The paper, developed jointly with a number of the country’s government agencies, was announced in an official statement published Jan. 16.

In the document, titled “Consultation Paper on Policy Proposals for Crypto Assets,” South Africa’s government clarifies that it does not intend to ban either cryptocurrency trading, or crypto payments at the moment.

The consultation paper further proposes that all crypto asset trading platforms, as well as custodial services, payment service providers, and crypto ATMs, should be required to register with the the Intergovernmental FinTech Working Group (IFWG). IFWG was recently established by the South African government with the goal of fostering fintech innovation while maintaining uninterrupted functioning of the financial markets.

According to the paper, crypto-related businesses will have to comply with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) requirements of the Financial Intelligence Centre Act.

The consultation paper has been jointly developed by several major state agencies, such as the Financial Intelligence Centre (FIC), Financial Sector Conduct Authority (FSCA), National Treasury (NT), South African Revenue Service (SARS), and the SARB, the central bank of South Africa.

According to the agencies’ joint statement announcing the paper, the document will be open to public feedback until Feb. 15, 2019.

In early January, Cointelegraph reported that South African government has launched a regulatory working group dedicated to cryptocurrencies and blockchain. The group is set to release a final research paper on the industry over the course of 2019, according to the country’s Minister of Finance Tito Mboweni.

In June 2018, the SARB revealed that it has successfully tested its Proof-of-Concept (PoC) for an interbank payment system that tokenizes fiat using Quorum, an Ethereum-based (ETH) private blockchain.

Belarus Launches Trading Platform Enabling Customers to Buy Tokenized Securities

Belarus has launched a trading platform that enables customers to buy tokenized versions of shares, gold and other traditional assets, Reuters reported Jan. 15.

The project is reportedly backed by two companies, Larnabel Ventures and VP Capital. According to Reuters, the government of Belarus has not yet commented on the launch of the platform, but it was covered by the state news agency BelTa.

The platform will allow traders to buy shares, precious metals, foreign exchange and other traditional assets from Belarus, as well as from other countries, with cryptocurrencies.

Since its launch, the platform has reportedly issued 150 different types of tokens, with each corresponding to a traditional financial instrument. The company expects to eventually grow this number to 10,000.

According to the Reuters’ article, the government of Belarus has exempted transactions with tokenized securities from taxation until 2023. However, when registering on the new platform, traders will have to pass an Anti-Money Laundering (AML) verification procedure.

Reuters reported that the platform received 2,000 registration applications within the first two hours from launch.

In November 2018, Belarus High-Technologies Park, a national special economic zone dedicated to the IT industry, established the rules for the operation of the cryptocurrency market in the country.

Earlier in May, the country’s Minister of Communications and Informatization Sergey Popkov said that digital technologies are a top priority for Belarus due to their ability to transform the economy, public administration and social services.

On Jan. 3, 2019, Estonian trading platform DX Exchange announced a product similar to the one that was launched by Belarus. It reportedly allows cryptocurrency users to purchase tokens that are backed by stocks of various major companies, including Google, Facebook and Amazon.

Bakkt Announces Details of Bitcoin Futures Contracts

The much anticipated Bakkt platform by the Intercontinental Exchange has today announced further details about its Bitcoin Futures product that was due to launch today. The forthcoming exchange platform will be offering physically delivered daily futures contracts with an aim to bring greater regulatory oversight to Bitcoin price discovery.

The contracts will be traded in BTC/USD and will use the ICE’s electronic trading platform. However, Bakkt itself is still pending full regulatory approval.

Bakkt Gives Investors First Glimpses of Opening Product

The Intercontinental Exchange has posted a list of details about the highly anticipated Bakkt platform’s first product. The venture, which is expected by many to become a one-stop-crypto-shop of sorts and aiding in regulated price discovery, is starting out by offering one day, physically delivered Bitcoin futures.

Although there is nothing too dramatic in the details published earlier, for anyone hoping to trade using the Bakkt platform, they should provide further insight into the nature of the product offered.

According to the Market Specifications released today, the trading screen product name for the Bitcoin contracts offered by the platform will be the “Bakkt BTC (USD) Daily Future”. Each contract will be a 1 BTC in size. Prices will be quoted in US dollars up to two decimal places. The minimum price fluctuation will be $2.50 per contract, reducing to 1c per Bitcoin on block trades of 10 BTC or more. There will also be no upper limit on daily prices and fees will be charged at 50c (incorporating both exchange and clearing) per side of a trade. There will, however, be a position limit of 100,000 lots in any one contract date.

The trading times for the Bakkt platform will be between 20:00 and 18:00, with a pre-open at 19:55. Meanwhile, daily settlement will occur between 16:58 and 17:00 each day. All times are in Eastern Prevailing Time. To oversee the delivery of these futures contracts, a regulated custody solution, known as the Bakkt Warehouse, will be used.

Additionally, the Bakkt platform is looking for experienced members of staff to help bring its vision of a fully regulated Bitcoin trading venue to light.

Bakkt Forging Ahead Whilst Still Pending Approval

The Bakkt platform was first announced last summer to great excitement. The fact that the Intercontinental Exchange (the owner of the New York Stock Exchange) is behind it has stamped an air of legitimacy over the Bitcoin space for many. At the time of the announcement, the mention of the likes of Microsoft and Starbucks being involved in the platform in some capacity also generated anticipation.

Since then, those behind the project have been working hard to flesh out the final details for launch. This has included raising a massive $182.5 million from its first round of funding.

The platform itself was due to launch in mid-December but owing to an underestimation of the processes requiring finalising prior to the platform’s first day trading, the opening date was put back to today back in November of last year.

However, since then yet another major stumbling block has hindered the opening of Bakkt. The platform is yet to gain regulatory approval from the Commodities Futures Trading Commission. This has meant that the launch has had to be postponed until such approval is secured. With today’s publishing of final product details, however, it seems that the Bakkt platform is now only waiting for a green light from the CFTC for it to finally open for business.

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Japan’s financial regulator is considering allowing Bitcoin (BTC) exchange-traded funds (ETF), an anonymous source told Bloomberg on Jan. 7.

Citing a person familiar with the matter, the publication reports that the Financial Services Agency (FSA) is testing interest in an ETF with a view to potentially giving the instrument the green light to trade on domestic markets.

The move would place Japan in direct contrast to the United States, where regulators are risk-averse on ETFs but permit physical Bitcoin futures trading, something the FSA has rejected.

This, Bloomberg notes, came due to the Japanese regulator “concluding that such products would achieve little besides stoke speculation.”

Appetites for an ETF worldwide remain mixed. While some cryptocurrency advocates argue their acceptance would help Bitcoin’s image and popularity, others from within the industry claim the increased speculation and lack of physical Bitcoin ownership involved would have a detrimental effect.

Discussing the U.S. stance on ETFs, securities lawyer Jake Chervinsky stood firm on his opinion that lawmakers were unlikely to change tack anytime soon.

Speculation had arisen that the ongoing government shutdown in Washington could see the Securities and Exchange Commission (SEC) give an ETF automatic approval.

“It's true that a proposed rule change is auto-approved if the SEC doesn't make a decision by the deadline, but in reality it would never happen,” he wrote Saturday, clarifying:

• “The SEC has enough staff to put out a decision, even if it's a one-pager saying ‘denied for reasons to be explained later.’”

Intercontinental Exchange’s Bakkt platform is still slated to begin offering Bitcoin futures on the U.S. market later this month, a move which Nasdaq has said it will copy in 2019.

United Arab Emirates and Saudi Arabia Collaborate on New Cryptocurrency

The United Arab Emirates (UAE) and Saudi Arabia have announced an agreement to cooperate on the creation of a cryptocurrency, UAE official news agency Emirate News Agency reports on Jan. 19.

According to the report, the Executive Committee of the Saudi-Emirati Coordination Council has held a meeting in UAE capital Abu Dhabi, with 16 members in total from both countries, in order to discuss the join initiatives in the Strategy of Resolve.

The Strategy of Resolve is comprised of seven initiatives, including civil aviation, financial awareness youth training, and the development of a cross-border digital currency. According to the article, the cryptocurrency “will be strictly targeted for banks at an experimental phase with the aim of better understanding the implications of blockchain technology and facilitating cross-border payments.”

The joint cryptocurrency project will also research the effect of a central currency on financial policies.

The initiative reportedly seeks to protect customer interest, create standards for technology, and consider the cybersecurity risks while determining the impact of central currencies on monetary policies, Emirate News Agency reports.

Vulnerability Is Found in Constantinople Hours After ETH Devs Call It ‘Least Eventful’ Hard Fork

Ethereum’s (ETH) Constantinople hard fork faces a delay over a newly discovered security vulnerability allowing a reentrancy attack. The critical issue was detected by smart contract audit firm ChainSecurity and reported in a blog post Jan. 15.

According to the company’s report, the Constantinople upgrade introduces cheaper gas cost (transaction fees) for some operations on the Ethereum network. As an unexpected side effect, this allegedly enables reentrancy attacks via the use of certain commands in ETH smart contracts.

A reentrancy vulnerability allows a potential attacker to steal cryptocurrency from a smart contract on the network by repeatedly requesting funds from it while feeding it false data about the malicious actor’s actual ETH balance.

Afri Schoedon, the hard fork coordinator at Ethereum and release manager at blockchain infrastructure provider Parity Technologies, has confirmed on Reddit that the core developers of Ethereum are aware of the vulnerability.

Schoedon explained that an all-core-dev call has been scheduled on Friday, Jan. 18, to decide on further steps in relation to the newly discovered loophole. According to him, the launch of Constantinople has been postponed until at least the next week:

• “We will decided (sic) further steps on Friday in the all-core-devs call. For now it will not happen this week. Stay tuned for instructions.”

On the same day that the vulnerability was discovered, Ethereum’s core developers said that they expect the upcoming fork to be the least eventful one in the history of Ethereum. Their remarks were reported in a Bloomberg article published Jan. 15.

Constantinople was first trialed on the Ethereum public testnet Ropsten in mid October last year, and had been intended to be swiftly activated on the main blockchain by the end of October–November 2018.

After facing technical hurdles, its launch was delayed to be implemented at Ethereum block 7,080,000, expected Jan. 16. Given the fork’s focus on primarily technical improvements, Ethereum core dev Lane Rettig told Bloomberg:

• "I really can’t imagine a less contentious hard fork, to be honest. Of all the hard forks in the history of Ethereum, it’s probably the least eventful one."

As reported, in earlier discussions of Constantinople, some devs had proposed it would be less controversial, or even political, to change the term for the transition from hard fork to “update.”

The main impact of the shift will be the reduction of mining rewards for each block from the current 3 ETH to 2. The downward adjustment could reportedly help to reduce the inflation and volatility that is allegedly associated with miners selling ETH to cover their costs and boost revenue.

If reduced incentives equate to less support from miners, as Bloomberg notes, this could render the network more susceptible to the possibility of a 51 percent attack — a risk that has been robustly demonstrated in the recent attack on Ethereum Classic (ETC).

Yet, as reported, the reduction is unlikely to be controversial, as it has long been in the works to gradually reduce rewards to zero as the network readies for its planned transition to a Proof-of-Stake (PoS) consensus algorithm.

The high stakes involved in implementing hard forks were thrown into stark relief last November, when the Bitcoin Cash (BCH) community splintered into two warring factions over a scheduled hard fork.

MIT Professor: Blockchain Can Allow for More Inclusive, Borderless Economy

Blockchain can allow for the creation of a borderless economy, Massachusetts Institute of Technology (MIT) professor Silvio Micali claimed in a interview on Bloomberg’s Daybreak Asia, Jan. 21.

Speaking on the show, Micali outlined three major properties of blockchain systems that must function simultaneously to enable a more inclusive and borderless economy — security, decentralization and scalability. According to MIT’s Ford Professor of Engineering, until recently, only two of those three basic properties could have been achieved simultaneously at any time.

When asked about scalability in particular, Micali stressed that a decentralized system really needs superior technology to provide the same level of participation and confidence that is enjoyed by centralized systems.

When asked about security breaches in blockchain systems, Micali stated that centralized systems are far more vulnerable to hacking attempts, pointing to the frequency of security and privacy breaches that repeatedly take place among centralized institution of various sorts.

The professor expressed optimism about blockchain in terms of security, noting the level of security built into the concept of a trustless system:

• “Only a true decentralized system, where the power is really so spread that is going to be essentially practically impossible to attack them all and when you don’t need to trust this or that particular node, is going to bring actually the security we really need and deserve.”

Recently, a group of major United States universities, including MIT, Stanford University and the University of California, Berkeley, announced the launch of Unit-e, a cryptocurrency project touted as a “globally scalable decentralized payments network.”

Earlier in January, MIT Technology Review issued an article claiming that 2019 will become the year when blockchain technology finally becomes normalized.

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SEC Filing for Vaneck Solidx Bitcoin ETF Withdrawn

Cboe BZX Exchange has withdrawn its filing with the U.S. Securities and Exchange Commission (SEC) for Vaneck Solidx bitcoin ETF. The U.S. government is currently shut down and the ETF could have been automatically approved had it not been withdrawn. Vaneck says that the withdrawal is temporary as it is actively working to “build appropriate market structure frameworks for a bitcoin ETF.”

Bitcoin ETF Filing Withdrawn

The SEC announced on Wednesday that Cboe BZX Exchange Inc. has withdrawn its proposed rule change to list and trade shares issued by the Vaneck Solidx Bitcoin Trust.

The proposed rule change for the bitcoin exchange-traded fund (ETF) was published in the Federal Register on July 2 last year. On Sept. 20, the commission instituted proceedings to determine whether to approve this proposed rule change. On Dec. 6, it designated Feb. 27 as the date to make its decision.

Gabor Gurbacs, Vaneck’s Director of Digital Asset Strategy, tweeted: “The bitcoin ETF filing has been temporarily withdrawn. We are actively working with regulators and major market participants to build appropriate market structure frameworks for a bitcoin ETF and digital assets in general. Will keep you updated.”

Vaneck CEO Jan van Eck clarified the situation to CNBC:

• “The SEC is affected by the shutdown. So, we were engaged in discussions with the SEC about the bitcoin-related issues — custody, market manipulation, prices. And, that has to stop … We had the application pulled and we will refile and re-engage in the discussions when the SEC gets going again.”

No Automatic Approval

The deadline for the SEC to make its decision on the Vaneck Solidx bitcoin ETF was Feb. 27. If no decision was made by that date, which was possible since the U.S. government is currently shut down, the ETF would be automatically approved. However, securities lawyer Jake Chervinsky recently explained that it was extremely unlikely since the SEC would likely have measures in place to avoid missing this type of deadline.

Furthermore, Chervinsky pointed out that even if the ETF is automatically approved, it can easily be undone after the shutdown is over. He tweeted in response to Cboe’s withdrawal decision:

• “[The] withdrawal implies that they expected denial & didn’t want another SEC order setting bad precedent for the future … There will be no bitcoin ETF in Q1 2019.”

What do you think of Cboe’s decision to withdraw the bitcoin ETF filing with the SEC? Post your comments below.

There is no denying that 2018 has been the year from hell for cryptocurrencies. The majority of them, including the big daddy Bitcoin, have lost over 80% from their peaks almost a year ago. Industry analysts are now looking to 2019 and their predictions of what is to come are not all doom and gloom.

Big Things to Come to Crypto in 2019

Fintech and crypto leader Henri Arslanian from PwC China and Hong Kong spoke to Bloomberg with his analysts on what to expect next year. Firstly a greater number of institutional investors and banks are expected to enter the space. Some will be offering their own products while others will be seeking new partnerships with established crypto companies. He went on to state that there will also be more investment going on, citing Goldman’s backing of Circle as an example.

When asked why 2019 will be different Arslanian mentioned regulatory clarity which is something that has been lacking this year, especially in the US. More clear and defined regulations will provide a layer of comfort for larger institutional investors. Mentioning the US specifically he said;

“Even here in the US … there are some bipartisan initiatives to try to make the US more competitive when it comes to crypto assets,”

Referring to the ‘Bitcoin bubble’ as labeled by the presenter he added that a year-long market correction has cleared a lot of the ‘noise out of the sector’. Adding that a lot of companies that raised funding in crypto will be hurting now unless they have hedged earlier in the year when prices were a lot higher.

In addition to predicting more security tokens and stablecoins in 2019 Arslanian stated that “Crypto grew from being a baby to a toddler in 2018”. The coming year will see more growth and stability especially with security tokens that add a level of financial security since they are backed by tradable assets such as real estate.

Timing the Bottom

Twitter has its own array of crypto experts and market analysts and they too have predicted a turnaround in 2019. Willy Woo has slated Q2 as the end of the bear market;

“Putting together the blockchain view, I suspect the timing for a bottom may be around Q2 2019. After that we start the true accumulation band, only after that, do we start a long grind upwards.”

Others have analyzed the charts and call a $3,000 BTC floor that will turn around in the second half of 2019. Either way there is a lot more in store for crypto in 2019, and things are only just beginning...

CBOE Will Not List Bitcoin Futures in March, Cites Need to Assess Crypto Derivatives

The Chicago Board Options Exchange (CBOE) will not add a new Bitcoin (BTC) futures market in March, the firm said in a statement on March 14.

Per the statement, CBOE is re-evaluating how it approaches trading digital assets. CBOE said:

• “CFE is not adding a Cboe Bitcoin (USD) (“XBT”) futures contract for trading in March 2019. CFE is assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading. While it considers its next steps, CFE does not currently intend to list additional XBT futures contracts for trading.”

The currently listed futures, XBTM19, will expire in June. CBOE notes that all currently listed futures are still available for trading.

In December 2017, CBOE launched Bitcoin futures trading, followed closely by its competitor, the Chicago Mercantile Exchange (CME).

Futures contracts give investors exposure to an underlying asset — in this case Bitcoin — without the need to actually own any. Instead, investors buy contracts that track the underlying price of the asset and speculate on whether the contract price will increase or decrease by its expiration date. In the case of the CBOE Bitcoin futures market, the difference is then settled in U.S. dollars.

Earlier this week, a report from Bloomberg stated that the Bitcoin price could be headed for another large selloff. Analysts said that key technical indicators such as the Moving Average Convergence Divergence had been moving downward since mid-February. Bloomberg analyst Mike McGlone said:

• “The entire industry is ripe to resume a path to lower prices. Conditions are akin to November [2018], just prior to the collapse...”

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Ethereum Devs Propose Activating Constantinople Hard Fork in Late February

Ethereum core developers have proposed activating Constantinople – a planned system-wide upgrade that was called off earlier this week – in late February.

Also called a hard fork, Constantinople is now estimated by developers to go live some time between Feb. 26 and Feb. 28, with a block number to be determined at a future date.

The proposal was made during a core developer phone call on Friday morning, and participants on the call included ethereum creator Vitalik Buterin and other developers, including Hudson Jameson, Lane Rettig, Afri Schoedon, Péter Szilágyi, Martin Holste Swende, Danny Ryan and Alexey Akhunov, among others.

The decision comes after smart contract audit firm ChainSecurity flagged on Tuesday a security vulnerability in one of five Ethereum Improvement Proposals (EIPs) set for inclusion in Constantinople relating to data storage costs on the blockchain.

As a result of the vulnerability, Constantinople, now set for activation next month, will not feature inclusion of the buggy EIP, which will be tested and refashioned for inclusion in a subsequent hard fork.

Instead, Constantinople will be issued in two parts simultaneously on the main network. The first upgrade will include all five original EIPs and a second upgrade will specifically remove EIP 1283.

This strategy – first suggested by Szilágyi during today’s call – is meant to ensure that test networks and private networks that have already implemented the full Constantinople upgrade can easily implement a fix without rolling back any blocks.

“My suggestions is to define two hard forks, Constantinople as it is currently and the Constantinople fix up which just disables this feature…By having two forks everyone who actually upgraded can have a second fork to actually downgrade so to speak,” explained Szilágyi.

The decision comes after smart contract audit firm ChainSecurity flagged on Tuesday a security vulnerability in one of five EIPs set for inclusion in Constantinople relating to data storage costs on the blockchain.

Speaking to CoinDesk on Tuesday, Matthias Egli – COO of ChainSecurity – highlighted that the issue was likely not picked up by core developers when running tests on the software given that the impact is rooted in smart contract development, not necessarily “[ethereum virtual machine] core” development.

A prompt decision to reactivate Constantinople sooner rather than later was needed in part due to prolonged activation of ethereum’s difficulty bomb – a piece of code embedded into the blockchain making block times increasingly longer over time.

Meant to encourage transition to a new consensus algorithm known as proof-of-stake (PoS), a delay of the bomb was suggested in EIP 1234 due to insufficient research at present for a transition to PoS.

Once activated on mainnet, Constantinople will include EIP 1234 and delay the difficulty bomb for a period of 12 months.

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