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The post SEC Weighs In on ICO Tokens as Securities; Ether Still Labeled “Currency” appeared first on Bitcoin Magazine.

CoinDesk takes a look at new developments in the Mt Gox case, attempting to provide an easy-to-read overview of the complex events.

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Howard Marks, billionaire investor and founder of Oaktree Capital Management is adamant about his stance on cryptocurrencies like bitcoin, Ether and others: “They’re not real.”

Marks reiterated this three times to clients Wednesday in his latest Oaktree memo.

“I’d guess these things have arisen from the intersection of (a) doubts about financial security — including the value of national currencies — that grew out of the financial crisis an (b) the comfort felt by millennials regarding all things virtual,” writes Marks. “But they’re not real.”

Marks has clearly done his homework. The 22-page letter is full of research notes and quotes from the New York Times, Wall Street Journal and others about blockchain-based currencies. But he’s still unconvinced that they hold any long-term promise.

“Some people are eager to speculate on digital currency for profit,” he writes. “Others want to put a little money into these to-date-profitable phenomena rather than run the risk of missing out. But they’re not real!”

It all comes down to optimism, says Marks. As soon as our current bull market takes a nosedive, bitcoin and ether speculators could take a big hit.

“They’re likely to keep working as long as optimism is present,” writes Marks. “But their performance in bad times is far from dependable. What will happen to Bitcoin’s price and liquidity in a crisis if people decide they’d rather hold dollars (or gold)?”

Marks isn’t the only old-school Wall Street player to be skeptical of digital currencies. Major banks like Morgan Stanley have recognized bitcoin’s use as a value-holding asset, but are hesitant to call it a true currency.

For people like Marks, Bitcoin has a steep learning curve. It’s not as simple as traditional fiat currency, with notes backed by a central bank and transferred through clearinghouses. Instead, bitcoin utilizes a blockchain, which can instantly credit and debit ledgers of parties involved in a transaction.

It looks like Marks has some more reading to do to catch up.

“Nobody has been able to make sense to me of these currencies,” he writes.

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The post Four Visions for Scaling Bitcoin: A State of Digital Money Panel appeared first on Bitcoin Magazine.

Bitcoin is set to be given the same financial safeguards as traditional assets. The US Commodity Futures Trading Commission has granted LedgerX, a cryptocurrency trading platform operator, approval to become the first federally regulated digital curr...

New reports have connected an arrest in Greece today with a bitcoin exchange long known for its secrecy.

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So far this year the higher-yielding, more economically-sensitive fixed income sectors have posted the strongest returns and the lower-yielding market segments generally delivered positive single-digit returns—arguably a respectable performance give the trend towards tighter monetary policy both in Europe and in the U.S.

As it is probably too early to call an end to the long phase of gradual global economic growth and abundant liquidity, we believe fundamentals and market technicals still present value-adding opportunities in fixed income given steep yield curves and the potential for tighter spreads.

That said, fixed income risk assets are climbing a wall of worry, and we believe that these risks will likely mount in the coming quarters while higher valuations and tighter spread levels reduce comfort margins. Here is a tour of the most prominent risks that keep us up at night.

Central bank policies

After extraordinary monetary stimulus over the past several years, major central banks appear set on tightening in an environment where inflation is still running below official targets. All of the G3 central banks have turned less accommodative in the recent past, increasing the risks of overtightening going forward.

• Of the G3 central banks, the Federal Reserve likely poses the greatest overtightening risk—one that may ultimately pull the next recession forward. The risks from the Fed stem from the reduction in U.S. labor overcapacity, a decline which has underscored the concern that the reduction will spill over into inflation pressures. Resolving the wide gap between the Fed’s median dot at the end of 2019, at 2.9%, and the market’s implied policy rate, at 1.66%, could prove painful. These risks could rise if potential replacements for Fed Chair Yellen and other FOMC voters carry more hawkish policy views.
• With European Central Bank asset purchases reaching self-imposed limits and a formal tapering decision possible by September of 2017, this shift could weaken some of the key supports that have bolstered European and global growth over the past several years.
• Chinese authorities may well choose to reduce the economic credit stimulus of approximately a quarter turn of GDP per year after they have held their 19th Congress in the fall of 2017 and the retiring members of their Politburo have been replaced.  

Geopolitical risks

While geopolitical risks can stem from a number of places, the Middle East and North Korea are two locations of particular concern in mid-2017.

• The ultimatum issued to Qatar is a symptom of a more fractious Gulf, with rising tensions between Saudi Arabia/GCC and other players including Qatar, Turkey, and Iran. This deepens the stakes and risks in a region already beset by weak oil prices. Near-term risks include escalation of regional political tensions, while longer term—unless oil prices recover—the region faces falling FX reserves, budget strains, and weakness in the banking sector.
• North Korea’s ongoing tests of its nuclear and missile capabilities pose a challenge to the Trump administration, and the risks remain that Chinese and other diplomatic efforts will fail to rein in the regime, triggering a military confrontation.
• Additional risks emanate from the Trump agenda in the U.S. and from the upcoming Italian elections in Europe. However, Trump bump expectations have subsided, while near-term risks in Europe have also faded somewhat due to the pick up in growth, consolidation of the political center in Germany and France, and the potential for reforms in France.

Exogenous event risks

These risks are hard to enumerate, let alone quantify, but they are no less real than those threats in plain sight. Here are two that bear watching.

• A global pandemic from diseases, such as Zika, Ebola, or a respiratory virus, such as SARS, remains a concern due to growing global populations and urbanization, human encroachment into new environments, increasing frequency of heat waves and flooding, international travel, civil conflict zones, and poor medical coverage in frontier countries.
• As a whole, global cyberattacks, unplanned IT or communication outages, and data breaches constitute a growing threat to markets, which are vulnerable to attacks on e-services or on entities that provide critical physical or financial infrastructure. For example, the Wannacry attack in May 2017 crippled computers in 100 countries, including those used by the UK's National Health Service.

Despite these walls of worry, however, we believe there are still multiple avenues to add alpha across the fixed income spectrum on a risk-adjusted basis. Below we share some of our sector views over the near term.

Investment Grade Corporate Debt: Modestly positive given fair spread levels, strong investor demand, and economic growth momentum. Still favor U.S. money center banks.

Global Leveraged Finance: Neutral on U.S. high yield given room for additional spread tightening but elevated macro tail risks. Prefer the CCC portion of the U.S. market (offset with higher cash balances), but are exploring opportunities across all quality buckets. Cautious on energy. Favorable on European high yield given the supportive technical backdrop and low default expectations.

Emerging Markets Debt: Positive. We view bouts of volatility as buying opportunities. In hard currency, we are maintaining a barbell position. In local rates, we look for rate cuts in several countries and are emphasizing relative value in EMFX.

Municipal Bonds: Neutral. Strong technicals to start Q3 should begin to abate by quarter end; in addition, solid outperformance vs. U.S. Treasuries in Q2 leaves valuations less attractive compared to earlier this year.

Global Rates: Constructive based on attractive tactical opportunities throughout the developed rates markets as central bank policies progress on varied trajectories.

Agency MBS: Underweight in favor of high-quality spread sectors.

Structured Products: Positive on top-of-the-capital structure assets and the fundamentals of GSE credit risk mezzanine cashflows. Cautious on GSE spreads at current levels and negative on CMBS mezzanine tranches.

Arvind Rajan, Ph.D., is a Managing Director and Head of Global and Macro at PGIM Fixed Income, heading the FX, Global Bond, Emerging Markets Debt, Investment Strategy and Economic Research teams. PGIM Fixed Income is one of the largest fixed income managers in the world, with $654 billion AUM

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NOW WATCH: A hacker reveals the most secure thing you can do to your passwords

He is said to be part of a gang accused of laundering billions of dollars using the digital currency.

Authorities have reportedly arrested a man believed to be behind a money laundering scheme orchestrated through bitcoin.

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AMD released its quarterly earnings after the bell Tuesday and the stock took off.

A beat on earnings and revenue, coupled with a higher than expected forecast for the rest of the year, sent AMD's stock up about 8%.

In the earnings call following the company's release, Lisa Su, CEO of AMD, said something surprising.

"Relative to cryptocurrency, we have seen some elevated demand," Su said. "But it's important to say we didn't have cryptocurrency in our forecast, and we're not looking at it as a long-term growth driver. But we'll certainly continue to watch the developments around the blockchain technologies as they go forward."

Su said that despite a boost in graphics processing unit sales due to increased demand from cryptocurrency miners, the company wouldn't focus on the exploding market.

Cryptocurrencies like bitcoin and Ethereum have grown by headline-setting margins this year. Miners are those who lend their often specially-built computers to the cryptocurrency networks to help with complex computing required to verify payments on the platforms. Miners have been buying up lots of GPUs recently in an attempt to make their computers faster and grab a larger portion of the growing cryptocurrencies.

"If you look at GPUs across the world, the inventory in the channel is actually quite lean. And so we're working on replenishing that inventory," Su said. "Our priority, though, really is on our core market, which is the gaming market."

Nvidia, AMD's biggest competitor, is taking the opposite approach. The company is developing a mining specific chip that directly addresses the growing market. A product page for an unreleased Nvidia-based card says a mining-specific chip can increase the hash rate by 36% compared to other general purpose cards.

Cryptocurrencies are notoriously volatile, with hundred dollar moves in the price of Bitcoin the norm, rather than the exception. The currencies have generally been increasing in value but the volatility could greatly affect demand for GPUs as interest wanes with declines prices.

Su addressed this concern, saying that AMD is "doing quite a bit to make sure that [it] protects against any downside as it relates to cryptocurrency," which could also be a reason AMD isn't developing a mining specific card. "We're ensuring that we're not over-calling the demand," Su added.

AMD is up 34.66% this year.

Click here to watch AMD's stock price in real time...

SEE ALSO: AMD spikes after earnings beat

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A group of miners unhappy with scaling proposal Segwit2x have created Bitcoin Cash, an alternative that could fork the bitcoin network on Aug. 1.

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Jared Kushner, a senior aide to US President Donald Trump, revealed to Congress that the extortionist demanded the release of Trump's tax returns.

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One of the most-hyped areas in tech investing right now looks certain to come under additional scrutiny after a decision by US regulators.

On Tuesday, the Securities and Exchange Commission (SEC) said that "ICOs" (Initial Coin Offerings) can sometimes be considered securities — and as such are subject to strict laws and regulations.

For the uninitiated, ICOs are a fancy new way of fundraising enabled by digital currencies like Ethereum — participants invest money and receive digital "tokens" in return. Thus far, it has been largely unregulated, with some ICO crowdfunding events raising hundreds of millions of dollars — leading some observers to argue that it is a massive bubble.

But the SEC's warning means that this free-for-all may not last forever. In a statement, it said (emphasis ours):

"The Securities and Exchange Commission issued an investigative report today cautioning market participants that offers and sales of digital assets by 'virtual' organizations are subject to the requirements of the federal securities laws. Such offers and sales, conducted by organizations using distributed ledger or blockchain technology, have been referred to, among other things, as 'Initial Coin Offerings' or 'Token Sales.' Whether a particular investment transaction involves the offer or sale of a security — regardless of the terminology or technology used — will depend on the facts and circumstances, including the economic realities of the transaction."

In other words: It doesn't matter how you dress it up, if it looks like a security and smells like a security, the SEC is going to treat it like a security. And that means sales must be registered in advance — though not all token sales will necessarily qualify. The devil is in the detail.

In an emailed statement, Peter Van Valkenburgh, director of research at bitcoin non-profit Coin Center, said: "What the SEC did not say is that all tokens are securities. Rather, they suggest a facts and circumstances test but only analyse the facts and circumstances surrounding last year’s DAO token sale.

"We believe that applying the same facts and circumstances test to other tokens will mean that some do not fit into the definition of securities, particularly tokens with an underlying utility rather than a mere speculative investment value. Our securities framework and other research explains why this is the case. We hope clear guidance from the SEC to that effect will be forthcoming."

Prior to the announcement, there was uncertainty as to the regulatory status of ICOs, and some startups in the space took steps to pre-empt it. The EOS token sale (which raised more than $200 million), warned in its FAQ that it "does not believe that the distribution of EOS Tokens or the EOS Tokens themselves are securities, commodities, swaps on either securities or commodities, or similar financial instruments ... and should not be considered as a type of investment." It also banned US citizens from buying EOS Tokens.

The SEC specifically investigated the DAO crowdsale in 2016, a high-profile token sale that was subsequently hacked. It ruled that the tokens "were securities and therefore subject to the federal securities laws" — and by not registering, it violated the law.

The regulator is not bringing charges relating to the DAO, instead warning (emphasis ours):

"In light of the facts and circumstances, the agency has decided not to bring charges in this instance, or make findings of violations in the Report, but rather to caution the industry and market participants: the federal securities laws apply to those who offer and sell securities in the United States, regardless whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are purchased using U.S. dollars or virtual currencies, and regardless whether they are distributed in certificated form or through distributed ledger technology."

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Goldman Sachs has issued a new forecast for the price of bitcoin, finding it will likely remain volatile before testing all-time highs again.

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I sold them via LocalBitcoins, but HSBC kept blocking my account

When my girlfriend became pregnant I decided to sell my bitcoins to decorate a nursery. I auctioned them via localbitcoins. You put your coins into an escrow account, wait for an offer and, when the buyer has paid by Bacs, you release the coins. The buyers are verified by email, telephone and an official ID.

After a couple of days I had an offer. The buyer transferred the funds into my HSBC bank account; I released the coins. The same buyer made another purchase of £530.

Main image:  THE crypto-catastrophe seems to have been averted: the price of bitcoin is moving back up towards $3,000. Last week a majority of bitcoin “miners”—firms and individuals operating powerful computers that process transactions in the crypto-currency before they are confirmed—signalled support for an upgrade of the system to increase its capacity. An alternative proposal, which was supposed to be implemented on August 1st, could have led to at least two versions of bitcoin. Has the “bitcoin civil war”, as some call it, come to a peaceful end after more than two years of infighting?The dispute is predictably arcane. At issue is the size of a “block”, the name given to the batches into which bitcoin transactions are assembled before they are confirmed. It is currently set at one megabyte, which means that the system can only handle around seven transactions per second (conventional payment systems, such as Visa, can process thousands). With demand now often surpassing the limit, users had to pay up to $5.50 on average to get a transaction dealt with speedily. To ease the congestion, one camp wants to increase the size of the block from one to two megabytes. The other favours packing transactions more efficiently with something called “segregated witness”, or “SegWit”, which would remove ...

Main image:  THE crypto-catastrophe seems to have been averted: the price of bitcoin is moving back up towards $3,000. Last week a majority of bitcoin “miners”—firms and individuals operating powerful computers that process transactions in the crypto-currency before they are confirmed—signalled support for an upgrade of the system to increase its capacity. An alternative proposal, which was supposed to be implemented on August 1st, could have led to at least two versions of bitcoin. Has the “bitcoin civil war”, as some call it, come to a peaceful end after more than two years of infighting?The dispute is predictably arcane. At issue is the size of a “block”, the name given to the batches into which bitcoin transactions are assembled before they are confirmed. It is currently set at one megabyte, which means that the system can only handle around seven transactions per second (conventional payment systems, such as Visa, can process thousands). With demand now often surpassing the limit, users had to pay up to $5.50 on average to get a transaction dealt with speedily. To ease the congestion, one camp wants to increase the size of the block from one to two megabytes. The other favours packing transactions more efficiently with something called “segregated witness”, or “SegWit”, which would remove ...

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