BTC

OSC Commissioner Debunks Arguments Against Bitcoin, Green-Lights Bitcoin Fund

04/11/2019 by Idelto Editor

A commissioner of the Ontario Securities Commission (OSC) has debunked the arguments against bitcoin used to deny the public offering of The Bitcoin Fund. Among others, the commissioner rules that bitcoin is neither illiquid nor more susceptible to manipulation than other commodities, real volume and real trading in bitcoin exist, and it is not the role of securities regulators to approve or disapprove of the merits of bitcoin.

Also read: 23 Central Banks Divulge Their Digital Currency Requirements

Director’s Refusal Axed, Fund Green-Lighted

The Ontario Securities Commission (OSC) published a document Wednesday detailing Commissioner Lawrence P. Haber’s reasons to overturn the commission’s previous decision regarding 3IQ Corp and The Bitcoin Fund. A preliminary prospectus for the public offering of this fund was filed with the OSC’s Investment Funds & Structured Products branch (IFSP) in October last year. However, in February, the IFSP refused to issue a receipt of The Bitcoin Fund’s prospectus after its staff raised a number of concerns.

3IQ Corp and The Bitcoin Fund subsequently applied for a hearing and a review of this decision. After multiple hearings, Commissioner Haber ruled on Tuesday that the staff’s concerns “do not warrant denying a receipt for The Bitcoin Fund’s prospectus” and ordered the IFSP director’s decision to be set aside and a receipt for a final prospectus of The Bitcoin Fund issued. Unless the staff can find new grounds for refusal, the final prospectus can be used to offer securities to the public.

Canadian investment fund manager 3IQ Corp. confirmed Wednesday that “it has received a favorable ruling” from its public hearing before an OSC panel regarding The Bitcoin Fund. The fund will be a public, non-redeemable investment fund that will invest all of its assets in bitcoin. 3IQ, which also manages a private crypto investment fund, will be The Bitcoin Fund’s investment and portfolio manager.

Not Our Job to Decide the Merits of Bitcoin

In the document, Commissioner Haber addressed every concern raised by the IFSP staff. He began by stating that this case “is not about the merits of bitcoin as an investment” because “It is not the role of securities regulators to approve or disapprove of the merits of securities being offered to the public.” He pointed out that all prospectuses filed in Canada even say on the cover page that “No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise.” The commissioner remarked:

It is also outside the scope of the authority of securities regulators to immunize investors against risk or against loss. And, it is not the job of securities regulators to ban speculation or risk-taking.

The document further explains that while bitcoin is “a novel asset in an emerging and evolving market,” it can later mature and change significantly, adding that although some assets in this class fail and become tulip bulbs, others can become gold and the next generation of technology. “Securities regulators are not mandated to try to pick winners and losers,” the document details.

Bitcoin Is Not Illiquid

As a key reason for rejection, the IFSP staff submits that “Bitcoin is an illiquid asset … Therefore, by holding bitcoin, the fund would not comply with the restriction against holding illiquid assets set out in section 2.4 of NI 81-102.” Commissioner Haber disagreed. He said: “I do not agree with Staff’s submission … I find that Staff has not shown that bitcoin is an illiquid asset, as defined in NI 81-102,” emphasizing:

I find that there is sufficient evidence of real volume and real trading in bitcoin on registered exchanges in large dollar size, both in absolute terms and compared to other markets for commodities and equities, which constitutes a liquid market.

The commissioner referenced some existing investment products providing exposure to bitcoin such as Grayscale Bitcoin Trust (GBTC) which is available to Canadians.

Price Manipulation

The IFSP staff also decided that it is not in the public interest to issue a receipt for the fund’s prospectus due to concerns about its “ability to value its assets for investors given the significant market integrity concerns regarding the trading of bitcoin,” “the security and safekeeping of the fund’s bitcoin,” and “the fund’s ability to file audited financial statements, as required.”

Regarding price manipulation associated with crypto assets, Haber concluded that the staff “has not established that the fund will be unable to arrive at a net asset value that satisfies the requirements of NI 81-106.” While acknowledging the existence of fake volumes and unregistered market trading, the commissioner said the “Staff has not proven that true price discovery in the bitcoin market is prevented by insufficient ‘true trading’ or price manipulation, at least on the regulated exchanges.” He added that the evidence presented to him suggests that wash trading and fake volume are used primarily to attract more traders and issuers, and “did not establish systemic and sustained manipulation of the price of bitcoin.”

The commissioner also placed weights on the steps taken by the company to mitigate the risks of manipulation such as its selection of MVIBTC as the index and the fund’s non-redeemable structure. He also noted that other bitcoin holdings, such as GBTC, have been successfully valued, adding:

It is worth noting that bitcoin is a commodity, not an equity or other security … The risk of market manipulation exists in all commodity markets. Many of Staff’s stated concerns could apply equally to other commodities, such as precious metals or foreign currencies. Staff did not persuade me that bitcoin is more susceptible to manipulation than other commodity products.

Regarding custodian and security risk, the commissioner said, “Like any valuable commodity, I accept that bitcoin can be stolen or lost.” He conveyed that the staff did not establish that the fund’s custodians do not follow sufficient practices for safeguarding bitcoin. Commenting on New York-based Gemini Trust Company which will act as a custodian of the fund’s bitcoin, Haber opined, “I am not persuaded that there was sufficient evidence that professional, regulated crypto-asset custodians, like Gemini, have suffered losses of customer assets.”

Staff’s Lack of Authority

Commissioner Haber also disagreed with the staff’s submission that investor protection extends to the assets the fund proposes to hold or the markets in which they trade. He explained that if the staff’s analysis were to apply to The Bitcoin Fund, then “it would amount to a ban on any funds holding bitcoin, regardless of their structure or management.” Furthermore, he pointed out that “the length of Staff’s proposed ban would be uncertain,” emphasizing that the ban would effectively remain in place until the staff’s concerns have diminished, elaborating:

Staff has not provided any authority for imposing such an indeterminate ban.

Investor Protection

Since investors have other means of acquiring bitcoin, the commissioner questioned how the staff’s proposed ban would protect them from “unfair, improper or fraudulent practices.” On the contrary, he expects it will ensure that investors could not invest in bitcoin through a public fund, reiterating:

Denying investors the opportunity to invest in bitcoin through a public fund would not promote fair and efficient capital markets and confidence in capital markets.

“Instead, it would suggest that investors should acquire bitcoin through unregulated vehicles, and capital market participants should be encouraged to create those vehicles,” the commissioner opined. He believes that “The issuance of a receipt for the final prospectus of the fund would promote efficient capital markets by creating an alternative to GBTC,” which he noted is available to Canadian retail investors but trades at a significant premium to its net asset value. It would also “promote efficient capital markets by giving retail investors a means of diversifying their investment portfolios through access to an additional uncorrelated asset class,” the commissioner concluded.

What do you think of Commissioner Haber’s reasonings and his decision to overturn the staff’s rejection? Let us know in the comments section below.

Images courtesy of Shutterstock.

Did you know you can buy and sell BCH privately using our noncustodial, peer-to-peer Local Bitcoin Cash trading platform? The local.Bitcoin.com marketplace has thousands of participants from all around the world trading BCH right now. And if you need a bitcoin wallet to securely store your coins, you can download one from us here.

The post OSC Commissioner Debunks Arguments Against Bitcoin, Green-Lights Bitcoin Fund appeared first on Bitcoin News.

Billion Dollar Bitcoin Lawsuit Continues as Craig Wright Breaks Settlement

03/11/2019 by Idelto Editor

In early September, the high-profile court case Kleiman v. Wright looked as though it was coming to an end as the two parties reached a non-binding settlement. Then on October 30, without much notice, Wright explained that he couldn’t finance the settlement and the agreement was broken. Now the trial will start again and the Kleiman estate hopes to depose Wright’s former chief financial officer, James Wilson on November 8.

Also Read: Satoshi ‘Nakamolto’ Emerges With Great Hair and Questionable Claims

Wright Breaks the Non-Binding Settlement as the Billion Dollar Bitcoin Lawsuit Continues

Australian native Craig Wright, the man who claims to be Bitcoin’s inventor, will be seeing more court proceedings in the near future as the notorious Kleiman v. Wright case is back on. Craig Wright is being sued by Ira Kleiman, the brother of the now-deceased David Kleiman, for allegedly interfering with David’s bitcoin assets and intellectual property after he died. Last September, news.Bitcoin.com reported on how the two parties were seemingly headed toward a settlement as both legal teams came to a non-binding settlement. This happened after the judge ruled the Kleimans were to be awarded 50% of Wright’s alleged BTC holdings and 50% of his blockchain intellectual property (IP). However, the Kleiman estate has filed a new court document which details that “Craig could no longer finance the settlement and was “breaking” the non-binding settlement agreement.” So Roche Freedman LLP wrote in the filing that after a lot of “lost time” the team will be “shifting back into preparing for trial.”

Following the broken settlement, the law firm explained it was in contact with James Wilson, the chief financial officer (CFO) of Craig’s companies in 2012-2013. This period of time is when Dave Kleiman was still alive and Wright alleged that he sold Dave interest in his businesses in exchange for BTC. Although Wright’s legal team, Rivero Mestre LLP, came back five hours after the Kleiman estate requested permission to depose Wilson and informed the plaintiffs they would not consent to the deposition on November 8. Wright’s council said the team would need to consent to a video deposition at a later date.

“Due to the unexpected failure of settlement negotiations, and the soon approaching discovery cutoff, the parties are short on time,” Roche Freedman’s filing notes. “Mr. Wilson’s presence in the United States next week obviates the need for the parties to go through the legal, logistical, and expensive steps of securing a deposition in Australia. And while Craig won’t have been afforded a full 14-days notice, he has received 7-days notice.” The Kleiman estate’s court filing adds:

Importantly the fact that Craig doesn’t have 14-days notice of this deposition is a product of his own conduct. He asked the parties to pause the litigation process and concentrate on amicably resolving this dispute, only to pull his consent with no advance notice, without good cause, and at a time when it simply wasn’t possible to give him the full 14-days notice.

James Wilson and Cryptoloc Technology

According to the Twitter handle ‘Seeking Satoshi,’ James Wilson is a former business associate of Wright’s and co-patent holder. “So the court in Florida would like to have a chat with Jamie Wilson, one time CFO for one of Craig’s dodgy companies and co-patent holder for Cryptoloc. But what does the court want from Jamie?” Seeking Satoshi asked on Twitter. “Do they think Jamie can shed some light on Craig’s financial dealings with Dave? Or do they suspect that Dave was involved in the development of Jamie’s ‘Cryptoloc’ and may be owed some money for his hand in the IP behind it?” The researcher continued:

I doubt the court will uncover much from speaking with Jamie and I don’t think any IP, bitcoin or money will be found that belongs to Dave. At some point, the court will realise there is no Tulip trust and no bitcoin and that Craig has led everyone on a goose chase.

Wilson is also mentioned in a blog post called “From the Bygone Days of Yore — Part 1,” written by Wright in June. Wright stated at the time that he had video link meetings with “Jamie Wilson, Robert Urquhart, and Dave Kleiman” with lawyers present in 2012. Roche Freedman’s motion requests that the court allows them to depose Wilson on November 8 with the defense team present via video-link. According to the court documents, a trial is scheduled to start on March 30, 2020, depending on the proceedings.

What do you think about the Kleiman v. Wright lawsuit involving billions of dollars worth of bitcoin? Let us know what you think about this subject in the comments section below.

Image credits: Shutterstock, Twitter, Wiki Commons, Fair Use, and Pixabay.

Did you know you can verify any unconfirmed Bitcoin transaction with our Bitcoin Block Explorer tool? Simply complete a Bitcoin address search to view it on the blockchain. Plus, visit our Bitcoin Charts to see what’s happening in the industry.

The post Billion Dollar Bitcoin Lawsuit Continues as Craig Wright Breaks Settlement appeared first on Bitcoin News.

CME Group Publishes Bitcoin Options Specifications

02/11/2019 by Idelto Editor

In mid-September, the foreign exchange company CME Group announced the launch of options on its bitcoin futures contracts in Q1 2020, pending regulatory review. CME Group executive Tim McCourt said there was “increasing client demand” for the firm’s bitcoin derivatives and now the company has published specifications for the options products.

Also Read: French Ministry of Education Publishes Bitcoin Resource Guide for Educators

CME Group’s Bitcoin Options

The global markets company CME Group has provided clients with the ability to hedge or trade benchmark options on futures across nearly every asset class. The firm has an average daily volume of $4.3 million this year and aims to offer options on bitcoin futures so investors can have a variety of different methods to trade the asset. When CME announced the launch of bitcoin options, McCourt detailed that the new product will provide “clients with additional flexibility to trade and hedge their bitcoin price risk.” This week, following Bakkt’s recent volume surges, CME published the preliminary contract specifications for the options. Price values will be based on the CME CF Bitcoin Reference Rate (BRR) which is determined by a variety of major crypto exchanges.

The contract unit will consist of one bitcoin futures contract, which is approximately five BTC quoted in USD. There’s a minimum price fluctuation and the listing cycle will mirror the firm’s bitcoin futures exposure. CME’s bitcoin options on futures will be traded between Sunday through Friday on Globex and Clearport. The company notes that the BTC options product is subject to revision and review by financial regulators. “We’re working to launch options on those futures,” McCourt said to crypto analyst Benjamin Pirus in a recent interview. “The option on the bitcoin future will give the holder of that option, either a put or a call, the right — but not necessarily the obligation, to either purchase or sell the underlying futures contracts at maturity.” McCourt further stressed:

It’s very similar to the way other options in the marketplace work. The difference here is the underlying, or the deliverable, of the options contract, is a CME Group bitcoin future.

Is Bitcoin Being ‘Tamed’ Like a Traditional Investment?

Bakkt’s physically-delivered bitcoin futures product has been getting a lot of fanfare lately after the exchange topped a few new records and CEO Kelly Loeffler announced Bakkt will be offering options on bitcoin futures as well. Despite the all-time highs at the Bakkt warehouse, CME Group’s BTC derivatives have seen much more volume. CME’s Globex saw 7,242 bitcoin futures contracts on October 28 and 3,284 in open interest. The following days on Globex through November 1, contracts were between 2,200 and 3,687. November’s CME bitcoin futures contracts today stand at 2,641 contracts and December positions are starting to pile up as well.

The crypto derivatives markets and products have matured a great deal since they launched and it’s been a touch less than two years since CME launched its BTC-based futures. At the time, the company’s chairman emeritus Leo Melamed told Reuters in an interview that adding BTC futures was a “very important step for bitcoin’s history.” Melamed added that he believed institutional investors would be very interested in the new asset class. “We will regulate, make bitcoin not wild, nor wilder. We’ll tame it into a regular type instrument of trade with rules.” Since then a slew of different companies have offered bitcoin-based derivatives products and futures are coming to other cryptocurrencies like ETH and BCH as well. Reports detail that BCH futures are expected to debut on a CFTC-regulated exchange in Q1 2020.

What do you think about CME’s bitcoin options specifications? How do you feel about the overall growth of crypto-based derivatives? Let us know what you think about this subject in the comments section below.

Image credits: Shutterstock, CME Group, Bitcoin Futures Volume Globex, and Pixabay.

The post CME Group Publishes Bitcoin Options Specifications appeared first on Bitcoin News.

23 Central Banks Divulge Their Digital Currency Requirements

02/11/2019 by Idelto Editor

Twenty-three leading central banks participated in an in-depth survey on their digital currency developments and requirements, including fungibility, convertibility, and availability. They also discussed the timeframe for issuing consumer-ready central bank digital currencies and divulged their greatest concerns about implementing them.

Also read: China Ranks 35 Crypto Projects as President Xi Pushes Blockchain

The First CBDC: When and Where

The OMFIF, the Official Monetary and Financial Institutions Forum, is an independent think tank for central banking, with a focus on economic and monetary policy, asset management and financial supervision and regulation. The organization published a 36-page report this week on retail central bank digital currencies (CBDCs), commissioned by IBM. Entitled “Retail CBDCs: The next payments frontier,” the report encompasses an “in-depth survey of officials from 23 central banks in advanced and emerging economies,” the OMFIF explained.

The central bank survey, which was conducted between July and September, “projects that the first CBDC will be produced within five years in a small economy and respond to a specific policy objective with a well-defined use. The OMFIF added that a number of central banks worldwide are seriously considering developing and issuing a consumer-ready CBDC, which is likely to require some form of public-private partnership. The report elaborates:

We are likely to witness the introduction of a central bank – that is fiat – retail digital currency within the next five years, either as a complement to or as a substitute for notes and coins.

As for which country will be the first to issue a central bank digital currency, the OMFIF asserted that “It is improbable that the first such issuance will come from a G20 central bank; it is considerably more likely to be launched in a smaller and less complex economy in response to a specific policy objective and use case.”

A number of G20 countries are exploring how they can issue CBDCs, with some closer to doing so than others. Some people believe that China will be the first country to issue one since the head of the PBOC’s digital currency research institute said in August that it was “almost ready.” However, PBOC Governor Yi Gang clarified in September that there was no timetable for its rollout, emphasizing the need for further research. Moreover, a cryptography bill was recently passed in China after President Xi Jinping made a bullish speech about blockchain technology.

23 Central Banks Talk CBDCs

The OMFIF surveyed 13 central banks from advanced economies and 10 from emerging markets. Among respondents, 69% revealed that “providing an alternative to cash and other payment instruments” was their main motivation for exploring the development of a central bank digital currency. 62% believe that CBDCs could improve cross-border payments which are currently still cumbersome, expensive, and slow, unlike domestic retail payments which have become fast and efficient. The report details:

CBDCs should be available offline and function wherever cash is currently used, with 73% of respondents requiring CBDCs to be available under all circumstances. More than 20% prefer decentralised systems to improve resilience.

Among the central banks surveyed, 69% “identified CBDCs’ ability to foster trust in monetary authorities and the financial system as their key strength,” the report describes, noting that they are not explicitly concerned about private sector digital challengers.

Respondents also believe that “CBDCs must be fully fungible and convertible to and from fiat currency to solve frictions in end-to-end payments and remittance networks” and should “have a disaster recovery plan, especially in jurisdictions where there is a higher frequency of weather-related power outages or network connection issues.”

Meanwhile, 29% are concerned about the potential impact of implementing CBDCs on financial stability, with almost 45% suggesting that “there would be a risk of reduction in commercial bank money and functions in the monetary system.” However, 83% felt their role would not change significantly. The report further reveals:

82% said their greatest financial stability concern from CBDC implementation was the risk of digital bank runs happening at a higher speed than before.

In addition, 50% of respondents “expressed distinct concern about the possibility that a material change could occur in the market structure and stakeholder profile,” emphasizing that “This may result in the widespread use of decentralized, private digital currencies as an alternative to public money.” 64% of respondents said that “outsourceable ‘intermediation’ functions, such as customer onboarding, would be important for CBDC implementation.” The OMFIF also noted that, based on the survey results, they “do not envisage privately-issued digital currencies gaining significant traction or acceptance in a universal context, although there may be closed private networks in which they operate.”

Do you think central banks should issue digital currencies? Do you think China will be the first to issue one? Let us know in the comments section below.

Images courtesy of Shutterstock and the OMFIF.

The post 23 Central Banks Divulge Their Digital Currency Requirements appeared first on Bitcoin News.

Video: Will Bitcoin Crash or Double in Price After the Halving? Miners Have Their Say

01/11/2019 by Idelto Editor

Will Bitcoin Double in Price After the Halving? Miners Have Their Say

Will the price of bitcoin double or crash during the upcoming halving next year? And how will the mining industry adapt to their revenue stream being cut in half over night? See what professional miners from around the world have to say on the matter.

Also Read: US, EU and UK Companies Can Now Pay Workers in Bitcoin Cash via Bitwage

Miners Talk Bitcoin Halving 2020

The Bitcoin.com team has recently talked with ten prominent people from the crypto mining industry about the upcoming halving at the World Digital Mining Summit 2019 in Frankfurt. Some think that it might cause miners’ revenues to crash, others think prices will quickly rise to compensate for the diminished rewards, all agree it will be a pivotal event for the industry.

The full list of mining experts interviewed in the video includes: Marco Streng, CEO of Genesis Mining; Thomas Heller, F2Pool Global Business Director; Sean M. Walsh, CEO & Chairman of the Board, Hyperblock Inc; Dr. Mervyn G. Maistry, Board Member Cyberian Mine; Carson Blake, CEO of SBI Crypto; Alexander Levin, CEO of Asicseer.com; Eric P. Yingling, an independent miner; Nick Damico, CTO at BitPatagonia; Hugh Tian, Co-founder of Antpool; and Åsmund Myhre, CEO of Oslofjord Datacenter.

In terms of the professional mining industry it seems we should expect to see a major concentration of the business as the halving will take place. Those with larger hashing power and access to cheaper sources of energy will squeeze out from the market operations that need higher margins to survive and make a profit. “The halving is a brutal wipe-out event,” explained Marco Streng. “It knocks out immediately the miners who are not efficient enough and shows no mercy.”

We might also see fluctuations and changes in global hash power distribution during the few weeks that are expected to pass between the BCH halving and the BTC halving, as SHA-256 miners will switch to the most profitable chain to mine at the time.

With regards to the effect the halving will have on prices opinions are more split. We could see prices double as miners will need to keep their current revenue streams, or even take off not long after as has happened in the past. “If you look at six months before the halving and six month after the halving in both previous instances you see massive upward surge in the price of bitcoin,” commented Sean Walsh. “It is a bit scary being a miner and knowing that your revenue stream is gonna get cut in half over night but the exchange rate will more than compensate for the reduction in our bitcoin denominated revenue.”

Watch the whole video on the official Bitcoin.com Youtube channel for the full remarks from all the mining professionals, subscribe and make sure to leave a comment to join the discussion.

What and When Is the Next Halving?

Every time a new block is mined, those who facilitated it are rewarded with a set amount of coins. But once every 210,000 blocks this set reward amount is programmed to decrease by half, hence the name halving. This mechanism was created by Satoshi Nakamoto to ensure current supply is limited, making coins more scarce as there will never be more than 21 million in circulation. It can also create upward pressure on the price in contrast to most fiat currencies that only lose value over time due to inflation.

The first ever halving took place in 2012 when the block reward initially set to 50 coins fell to just 25. The second and last halving so far took place in 2016 when the block reward dropped from 25 to just 12.5 coins.

The upcoming bitcoin cash halving event is expected to be during April 2020. After this happens, BCH miners will lose half the current block reward (12.5 BCH) and receive just 6.25 BCH and fees per block mined. The BTC halving is expected not far after that in May 2020. A German bank recently predicted a tenfold increase in the BTC price when the upcoming block reward halving takes place.

If you want to enter the crypto market before next year’s halving occurs, you can safely and securely purchase bitcoin cash (BCH) and bitcoin core (BTC) with a credit or debit card at buy.Bitcoin.com. You can also trade digital assets for cash in person privately on our noncustodial, peer-to-peer marketplace, local.Bitcoin.com, or try our recently launched premier trading platform, exchange.Bitcoin.com.

What do you think will happen to cryptocurrency prices after the 2020 halving? Share your thoughts in the comments section below.

Images courtesy of Shutterstock.

Verify and track bitcoin cash transactions on our BCH Block Explorer, the best of its kind anywhere in the world. Also, keep up with your holdings, BCH and other coins, on our market charts at Bitcoin.com Markets, another original and free service from Bitcoin.com.

The post Video: Will Bitcoin Crash or Double in Price After the Halving? Miners Have Their Say appeared first on Bitcoin News.