Coin News

MSX PLC, the digital asset arm of the Malta Stock Exchange, has signed a Memorandum of Understanding (MoU) with Binance to launch a digital exchange for trading security tokens, per its press release. The MoU follows Binance's decision to continue its operations on the island in recognition of the country's favorable crypto climate.

Earlier in July 2018, the Malta Stock Exchange (MSE) launched the MSX PLC as an investment vehicle that seeks partnership with leading crypto exchanges to create joint ventures in the country. At the time of the launch, an MoU was signed with OKEx to launch an institutional grade security-tokens trading platform dubbed OKMSX.

Speaking with Bitcoin Magazine, Chairman of the Malta Stock Exchange Joe Portelli said the exchange is thrilled about the MoU signed with Binance.

“Both parties believe Malta offers a well-regulated and pragmatic framework for the listing and trading of security tokens. We anticipate security token offerings will have a major positive impact on the global capital markets.”

The new security tokens platform will leverage the MSE's track record and extensive experience in "regulatory compliance and client due diligence" in collaboration with Binance's substantial international reach.

Changpeng Zhao, CEO of Binance, said his company was thrilled to be part of the builders of the "blockchain ecosystem in Malta" which has become a global hub for blockchain-based companies thanks to its "active and transparent crypto regulations."

“This partnership will allow Binance and MSX to host traditional financial assets on blockchain technology through security tokens. We look forward to bringing more innovations to Malta and further establishing our presence here,” he added.

Malta has long been a crypto-friendly environment which is why many blockchain businesses like Binance and OKEx set up shop there. In July 2018, the Maltese Parliament passed three blockchain bills into law which established a regulatory framework for the country's blockchain sector.

The founder of cryptocurrency exchange OKEx was detained for questioning on September 10, 2018, by Shanghai police to investigate a case of suspected digital currency fraud related to WFee coin. As of 9:30 pm local time, on September 11, he was released.

Star Xu, who was a shareholder in WFee coin, was surrounded by seven or eight people at the hotel he was staying at in Shanghai and taken to a local police station for questioning, according to Sina news. In a follow up, Sina reported the suspected fraud took place in Beijing; therefore, documents related to the investigation will be handed to the Beijing police.

According to reports, the Shanghai police were responding to several complaints they received about WFee — likely from investors who had lost money in the scheme.

According to data on coinlibo.io, the coin began trading in March 2018, mainly on OKEx. In the last few days, the value of the coin, which had trading pairs with bitcoin (BTC) and ether (ETH), took a 90 percent dive in price, going from $.00033 per coin to $0.00012475. According to the WFee’s website, the company also had its own trading platform WFEEx, where investors could purchase the coin.

“WFEEx is an innovative digital asset trading platform based on blockchain technology, and WFee is the only platform currency on the WFEEx exchange,” the company says on its website. “Holders of WFee coins can participate in trading mining, voting on the currency, exchanges and other airdrops, and can also apply to become a WFee professional investor.”

Xu founded OKEx in 2014. The Hong Kong-based exchange went on to become the second largest cryptocurrency exchange by 24-hour trading volume. However, earlier this year, some critics argued the exchange is a "ghost town" and up to 93 percent of its trading volume was nonexistent.

On April 11, 2018, OKEx announced its plans to expand to Malta, a nation island in the Mediterranean that is attempting to build a regulatory framework for blockchain technology and, by extension, cryptocurrency.

The news of Xu’s detainment comes at a time when China has escalated its crackdown on crypto exchanges and initial coin offerings (ICOs). Last month, South China Morning Post reported that the Chinese government will block access to 124 websites operated by offshore crypto exchanges, shut down websites related to ICOs and ban payment services from accepting cryptocurrencies.

In what it deems a first for both enforcement actions, the United States Securities and Exchange Commission (SEC) is charging two entities with registration failures.

First in line, TokenLot LLC, the self-named “ICO Superstore,” is being charged with acting as an unregistered broker- dealer in the “first case charging unregistered broker-dealers for selling digital tokens after the SEC issued The DAO Report in 2017.” A seminal document in defining ICOs and tokens as securities, the DAO Report was released in July of 2017 and classified DAO tokens as unregistered securities following the infamous 2016 hack.

In “its first-ever enforcement action finding an investment company registration violation by a hedge fund manager based on its investments in digital assets,” the SEC has also charged Crypto Asset Management LP (CAM) with operating as an unregistered investment company while falsely branding itself as the “first regulated crypto asset fund in the United States.”

CAM and its sole manager Timothy Enneking reportedly raised over $3.6 million in 2017 by providing illegal investment management services. The company also facilitated “an unregistered non-exempt public offering” and invested roughly 40 percent of its funds in cryptocurrencies, but, upon facing action from the SEC, CAM terminated the public offering and instituted a buyback for its investors. In addition, Enneking acquiesced to the SEC’s censure and agreed to pay a fine of $200,000 without confirming or denying the charges.

Facing its own pressure from the regulatory agency, TokenLot and its principals, Lenny Kugel and Eli Lewitt, paid $471,000 in disgorgement with $7,929 in interest, agreeing to “retain an independent third party to destroy TokenLot’s remaining inventory of digital assets.”

“Without admitting or denying the SEC’s findings,” the agency claims, Kugel and Lewitt will each pay individual fines of $45,000 and have “agreed to industry and penny stock bars and an investment company prohibition with the right to reapply after three years.”

These penalties come after TokenLot handled funds from more than 6,100 clients and managed over 200 different cryptocurrencies in the process. Its business model operated under trading profits and taking a “a percentage of the money that TokenLot raised for ICOs.” The majority of the Michigan-based company’s trading activity took place after the DAO Report was released, ceasing in February 2018of this year.

“U.S. securities laws protect investors by subjecting broker-dealers and other gatekeepers to SEC oversight, including those offering ICOs and secondary trading in digital tokens,” Stephanie Avakian, co-director of the SEC’s Enforcement Division said in the press release regarding TokenLot. “We continue to encourage those developing digital asset trading businesses to contact the SEC staff at FinTech@sec.gov for assistance in analyzing registration and other securities law requirements.”

Earlier today, FINRA, the SEC’s self-regulatory complement in the private sector, filed a complaint against Timothy Tilton Ayre for “the unlawful distribution of an unregistered cryptocurrency security called HempCoin,” in conjunction with his publicly traded company, Rocky Mountain Ayre. Both cases are emblematic of how the largely unregulated cryptocurrency industry continues to grapple with formal regulatory organizations as its popularity increases.

A year-old legal battle between two of the crypto industry’s leading organizations is coming to a close.

After a volley of countersuits that had the companies jumping from courthouse to courthouse, Ripple and R3 have brokered a settlement that will put the drama to rest. The terms of the settlement, however, are being kept under wraps by both parties.

The legal proceedings date back to July of 2017 when R3 accused Ripple and Brad Garlinghouse of breaching an agreement that would allow R3 to purchase 5 billion XRP, Ripple’s native currency, at a rate of $0.0085 before September 2019. By the time the court proceedings came to light, XRP was trading at $0.26.

After the Delaware Chancery Court threw the case out, the suit continued in the California State Supreme court when Ripple filed a countersuit against R3 to dismiss the suit. After this case was thrown out, as well, the case was moved to New York.

In the ongoing case’s latest filing, Ripple claimed, “R3 breached separate and distinct promises it made to Ripple and XRP II.” This included withholding information that financial institutions J.P. Morgan, Goldman Sachs and Morgan Stanley would be leaving R3’s consortium during the terms of the agreement, these banks being integral to Ripple’s adoption, the company claimed.

Seeing as R3 failed to “assist Ripple [in signing] up a single bank,” the countersuit sought to nullify the original agreement and award Ripple with a settlement for related damages.

Ripple has become a familiar defendant on the floor of the U.S.’s judicial system. Aside from its legal trouble with R3 — arguably its most important court case to date — the blockchain company is currently juggling three separate lawsuits charging it with the sale of unregistered securities.  

At press time, neither R3 nor Ripple had responded to Bitcoin Magazine’s request for comment.

A year-old legal battle between two of the crypto industry’s leading organizations is coming to a close.

After a volley of countersuits that had the companies jumping from courthouse to courthouse, Ripple and R3 have brokered a settlement that will put the drama to rest. The terms of the settlement, however, are being kept under wraps by both parties.

The legal proceedings date back to July of 2017 when R3 accused Ripple and Brad Garlinghouse of breaching an agreement that would allow R3 to purchase 5 billion XRP, Ripple’s native currency, at a rate of $0.0085 before September 2019. By the time the court proceedings came to light, XRP was trading at $0.26.

After the Delaware Chancery Court threw the case out, the suit continued in the California State Supreme court when Ripple filed a countersuit against R3 to dismiss the suit. After this case was thrown out, as well, the case was moved to New York.

In the ongoing case’s latest filing, Ripple claimed, “R3 breached separate and distinct promises it made to Ripple and XRP II.” This included withholding information that financial institutions J.P. Morgan, Goldman Sachs and Morgan Stanley would be leaving R3’s consortium during the terms of the agreement, these banks being integral to Ripple’s adoption, the company claimed.

Seeing as R3 failed to “assist Ripple [in signing] up a single bank,” the countersuit sought to nullify the original agreement and award Ripple with a settlement for related damages.

Ripple has become a familiar defendant on the floor of the U.S.’s judicial system. Aside from its legal trouble with R3 — arguably its most important court case to date — the blockchain company is currently juggling three separate lawsuits charging it with the sale of unregistered securities.  

At press time, neither R3 nor Ripple had responded to Bitcoin Magazine’s request for comment.

The Financial Industry Regulatory Authority (FINRA), a non-profit watchdog for public brokerage firms in the U.S., has had its first run-in with the cryptocurrency industry. The self-regulatory organization is filing a complaint against a Massachusetts man for “the unlawful distribution of an unregistered cryptocurrency security called HempCoin.”

Timothy Tilton Ayre, FINRA alleges, illegally associated sales in his publicly traded company, Rocky Mountain Ayre Inc. (RMTN), with the marijuana industry token. Allegedly purchasing the rights to HempCoin in June of 2015, Ayre rebranded the coin as an RMNT-backed security, FINRA’s complaint states.

According to FINRA, Ayre attempted to market his “worthless” company and sell shares through HempCoin by advertising the cryptocurrency as “the first minable coin backed by marketable securities.” Heralding HempCoin as “the world’s first currency to represent equity ownership” in a public company, Ayre reportedly guaranteed that each token represented 0.10 shares in RMTN.

Since Ayre never registered HempCoin with the SEC, FINRA is charging him with “unlawful distribution of an unregistered security.” Moreover, the self-regulatory body accuses Ayre of defrauding investors “by making materially false statements and omissions regarding the nature of RMTN’s business, failing to disclose his creation and unlawful distribution of HempCoin, and making multiple false and misleading statements in RMTN’s financial statements.”

FINRA explains in its statement that the filing does not constitute legal action. As “an initiation of a formal proceeding,” Ayre can respond to the filing by requesting a formal disciplinary hearing. In the event that Ayre’s defense doesn’t hold up and he’s found guilty, he could be fined, censured, suspended or barred from the securities industry; relieved of his gains; and/or forced to pay reparations to investors.

The filing is the first action taken by a self-regulatory industry against an individual involved in the cryptocurrency industry, and it’s the first time FINRA has engaged with a securities dispute directly relating to the cryptocurrency market.

That said, formal regulators have wrestled with the unregistered sale of securities before, even outright scams. Both FINRA and the SEC’s reckoning with token projects and the sometimes unscrupulous actors who promote them continues to insert itself into the debate on the distinction between utility/security tokens and the merit of cryptocurrency regulations.

Ethereum is embracing the Constantinople milestone at the end of November 2018, after DevCon4 in Prague. Constantinople is the latest Ethereum release, introduced through a hard fork, that will include five Ethereum Improvement Proposals (EIPs):

• Bitwise shifting instructions (EIP 145) in the Ethereum Virtual Machine (EVM) allow for direct manipulation of bytes on the EVM layer.
  
• Skinny CREATE2 (EIP 1014) adds a new opcode that creates a contract but determines the deployed address differently to the existing CREATE opcode.
  
• The EXTCODEHASH opcode (EIP 1052) adds an opcode which returns the keccak256 hash of a contact’s byte code.
  
• Net gas metering for SSTORE (EIP 1283) introduces a new gas cost scheme for the SSTORE opcode.
  
• The difficulty bomb delay (EIP 1234) stabilizes block times and issuance by keeping block times at approximately 15 seconds for another 12 months and reducing block rewards to 2 ETH.
  

To the regular application user, these updates offer nothing noticeably different, except perhaps an update to their Ethereum clients. For developers, these EIPs provide extended capabilities to the EVM, allowing for improved flexibility for smart contract development. All of these changes are backward compatible, ensuring previously deployed smart contracts remain usable and secure.

This hard fork does not address scalability yet. Layer 1 scaling solutions, such as sharding + casper or Shasper, are still in the research phase and will not be addressed before the Serenity milestone which is not expected to be deployed to Ethereum until 2020 or later.

A more tangible change to the Ethereum user experience is the use of Plasma chains and state channels. They are currently in development and some are being tested in experimental production environments. For regular users, this means the first Layer 2 scaling solutions will be available soon, allowing for a higher rate of transactions that are crypto-economically ensured, which is an important step toward faster and cheaper transactions.

Making the Decisions

For a closer look into how the decisions on the accepted proposals were made, the Ethereum Foundation live-streams core developer calls on LivePeer and YouTube after posting a public agenda and call for participation on GitHub prior to the meeting. More technical information specifically about the Constantinople release can be found at Constantinople Progress Tracker on GitHub containing an overview of Ethereum client teams implementing each of the accepted proposals.

Miners, investors and other community members were invited to a call to state their opinions during the last Ethereum Core Devs Meeting 45. This was done to get an idea of what the different stakeholders that make up the network think. A week later, Ethereum Core Devs Meeting Constantinople Session #1 was spent largely debating EIP 1234. A majority of the developers were in agreement that, although current signaling mechanisms for ascertaining consensus are not optimal, the best option is to have the conversations openly.

The nature of the Constantinople session was constructive, as Afri Schoedon, technical communications engineer at Parity Technologies, concluded:

“What we are doing here is not [trying] to dictate a new block reward, but we are trying to find a compromise, somewhere in the middle. Agreeing on 2 ETH per block is the best thing we can do.”

Another more important discussion point was Programmatic Proof of Work (ProgPoW), a modified version of Ethash. Consensus algorithms resistant to Application-Specific Integrated Controllers (ASICs) have become relevant due to concerns from community members and small miners regarding current progress made to ASICs targeting the Ethereum network and interfering with current mining incentives. There is a strong community sentiment in favor of changing the algorithm.

The main conclusion of the developer meeting was that much more work has to be done on testing and integration before a move to a new consensus algorithm in an upcoming hard fork is realistic. The main decisions concluded upon in the August 31 session can be summed up through a quote by Piper Merriam, core developer with the Ethereum Foundation:

“I believe this is us making the decision to reduce issuance to 2; to do another hard fork 8 months after Constantinople; and to push the difficulty bomb to 12 months after Constantinople.”

Developers are looking forward to a subsequent hard fork in summer 2019, the Istanbul milestone, when we can expect to see more improvements and potentially a change to the Ethash consensus algorithm. In summary, Constantinople is an important step forward for Ethereum in optimizing the Ethereum Virtual Machine and the tools for the future of Ethereum contract and DApp development.

Thank you Hatcher Lipton and Greg Markou for helping with edits..

Lightyear Corporation, a universal payments network built around Stellar’s open financial protocol, has announced the acquisition of Chain, in a merger that sees both brands combine to form a new entity called Interstellar.

Under the terms of the merger, Interstellar will help organizations build applications on the Stellar Network while the Stellar Development Foundation will remain fully independent. Former Chain CEO Adam Ludwin also becomes Interstellar CEO, while Jed McCaleb takes over as Interstellar CTO.

Chain became prominent as a startup that builds enterprise-level blockchain applications for financial organizations such as Visa, Citigroup, Nasdaq and many more. The company had also raised around $40 million from partners including Thrive Capital, Citi and Orange.

The combination of both companies creates a high-level, end-to-end blockchain development solution that will enable organizations to issue, exchange and manage assets on a flexible, scalable and multifunctional public network.

Speaking with Bitcoin Magazine, Interstellar CEO Adam Ludwin said, "At heart, we believe enterprise adoption of blockchain is synonymous with digitizing the assets issued by enterprises, and that is exactly what is being accelerated with this merger."

Ludwin expressed admiration for Stellar and said that he looks forward to engaging with Stellar's technical expertise.

“Chain has worked from inside the enterprise, while Stellar has focused on the network between organizations. As a single team, we will have a complete view and set of capabilities to make value-over-IP a reality,” he noted in a company statement.

Chain's cloud ledger solution, Sequence, provides a reliable framework for tracking assets as they move between private ledgers and the Stellar network, making Interstellar the ideal choice for enterprises and developers to build innovative products on the Stellar platform.

“Chain’s team has led the market for enterprise adoption of blockchain technology, which is a critical component of building a future where money and digital assets move over open protocols,” said McCaleb.

In addition to Chain's cloud product — Sequence — Interstellar's new portfolio will also include StellarX, a full-featured trading app for Stellar’s universal marketplace.

As an emerging cog in the global digital economy, cloud mining offers a tool for enthusiasts to mine cryptocurrencies such as bitcoin without having to acquire hardware or other oft-required elements. On the heels of this development, growing numbers of companies are offering cloud mining accounts at an affordable cost.

Once established, cloud miners become participants in a mining pool that allows them to purchase certain levels of “hash capacity.” This gives them a share of profits proportional to the amount of hashing power that’s been allotted to them. Since cloud mining is facilitated by the cloud, issues associated with equipment maintenance and energy costs are mitigated. All mining rigs are housed and maintained by a host company, with the user simply needing to register and buy mining contracts or shares.  

New Energy, New Solutions

On course to become a formidable player in the cloud mining world is Hashtoro, a U.K.-based cloud cryptocurrency service that provides a turnkey means of acquiring computing power without the need to purchase hardware or actually mine cryptocurrency.

Hashtoro is equally suited for everyday users as well as companies seeking to jump into the game and diversify their portfolios across mining platforms without having to acquire and maintain hardware equipment. An active company that launched in May of 2018, Hashtoro is already offering Bitcoin, Ethereum and Litecoin mining contracts. Hashtoro's infrastructure is situated in several crypto friendly European locales that provide access to cheap renewable energy sources.  

New users can utilize cloud mining for bitcoin and altcoins immediately upon receipt of payment. Payouts are issued daily, while allowing users the ability to reinvest mined withdrawals. Detailed metrics are available to evaluate and assess mining activity levels.

“We offer cryptocurrency solutions for users that desire to get into crypto mining but can't afford to buy, or lack the technical knowledge to set up, mining equipment,” said Hashtoro’s chief product officer Alexander Petersons. “Our mining opportunities are available even to those with low budgets, as our platform has a low barrier to entry. The minimum price to start mining is just 20 euro, which is a major advantage over our competitors.” 

Petersons went on to say that Hashtoro’s users range from the tech savvy to the nontechnically inclined. Users, he said, all are seeking to take advantage of the potentially high financial returns in the crypto market.  

“There are many types of investors in the crypto space, much like you would find in any other commodity market,” Petersons explained. “Our potential investors are typically in it for the long haul.”  

Another beautiful feature about Hashtoro, according to Petersons, is that the company mines all three cryptocurrencies, LTC, BTC and ETH, in equal proportions, in order to spread out risks.

“For example, early in the year, it was very profitable to mine ether and litecoin, but when their prices fell, it became more lucrative to mine bitcoin,” Petersons said. “Our system determines which currency is the most profitable to mine at the current moment and dynamically switches to mine that particular currency.” 

Then there is Hashtoro’s instant activation feature. 

“Normally, you would need to wait a long time until the equipment is delivered,” Petersons said. “Shipment and customs can take a while. With Hashtoro, users can start getting their profits straightaway, after payment for a contract is made. Our service also features regular daily payouts which allow users to regularly reinvest their earnings to purchase more hashrate or just hold [the profits] in their Hashtoro wallet.”

Charting a New, Eco-Friendly Mining Future

Hashtoro’s infrastructure is fueled exclusively by renewable energy. This is why the project is rapidly becoming one of the most profitable and ecologically safe cloud services on the planet.

That optimism, however, has been tempered a bit by recent market volatility.

“While the market has experienced a period of decline in 2018, I believe that it’s temporary,” Petersons said. “The fact is that it’s probably the seventh time that the cryptomarket has been declared ‘dead.’ But it will recover again.” 

Petersons believes that “under certain conditions,” bitcoin could still reach $50,000 this year. With this price uptick, he predicts a shift from personal- to cloud-based mining due to the growing difficulty of hash calculations.

“We are on a steady course to providing customers with the best service in cloud mining, by offering cheap, unlimited mining contracts with low maintenance fee,” he said. “We feel that this service helps to lower the threshold for first-time users to entry, minimizing the risks concerning the maintenance of bitcoin mining farms. So yes, no doubt, I expect there will be more cloud mining in upcoming years.”

Note: Trading and investing in digital assets is speculative and can be high risk. Based on the shifting business and regulatory environment of such a new industry, this content should not be considered investment or legal advice.

As an emerging cog in the global digital economy, cloud mining offers a tool for enthusiasts to mine cryptocurrencies such as bitcoin without having to acquire hardware or other oft-required elements. On the heels of this development, growing numbers of companies are offering cloud mining accounts at an affordable cost.

Once established, cloud miners become participants in a mining pool that allows them to purchase certain levels of “hash capacity.” This gives them a share of profits proportional to the amount of hashing power that’s been allotted to them. Since cloud mining is facilitated by the cloud, issues associated with equipment maintenance and energy costs are mitigated. All mining rigs are housed and maintained by a host company, with the user simply needing to register and buy mining contracts or shares.  

New Energy, New Solutions

On course to become a formidable player in the cloud mining world is Hashtoro, a U.K.-based cloud cryptocurrency service that provides a turnkey means of acquiring computing power without the need to purchase hardware or actually mine cryptocurrency.

Hashtoro is equally suited for everyday users as well as companies seeking to jump into the game and diversify their portfolios across mining platforms without having to acquire and maintain hardware equipment. An active company that launched in May of 2018, Hashtoro is already offering Bitcoin, Ethereum and Litecoin mining contracts. Hashtoro's infrastructure is situated in several crypto friendly European locales that provide access to cheap renewable energy sources.  

New users can utilize cloud mining for bitcoin and altcoins immediately upon receipt of payment. Payouts are issued daily, while allowing users the ability to reinvest mined withdrawals. Detailed metrics are available to evaluate and assess mining activity levels.

“We offer cryptocurrency solutions for users that desire to get into crypto mining but can't afford to buy, or lack the technical knowledge to set up, mining equipment,” said Hashtoro’s chief product officer Alexander Petersons. “Our mining opportunities are available even to those with low budgets, as our platform has a low barrier to entry. The minimum price to start mining is just 20 euro, which is a major advantage over our competitors.” 

Petersons went on to say that Hashtoro’s users range from the tech savvy to the nontechnically inclined. Users, he said, all are seeking to take advantage of the potentially high financial returns in the crypto market.  

“There are many types of investors in the crypto space, much like you would find in any other commodity market,” Petersons explained. “Our potential investors are typically in it for the long haul.”  

Another beautiful feature about Hashtoro, according to Petersons, is that the company mines all three cryptocurrencies, LTC, BTC and ETH, in equal proportions, in order to spread out risks.

“For example, early in the year, it was very profitable to mine ether and litecoin, but when their prices fell, it became more lucrative to mine bitcoin,” Petersons said. “Our system determines which currency is the most profitable to mine at the current moment and dynamically switches to mine that particular currency.” 

Then there is Hashtoro’s instant activation feature. 

“Normally, you would need to wait a long time until the equipment is delivered,” Petersons said. “Shipment and customs can take a while. With Hashtoro, users can start getting their profits straightaway, after payment for a contract is made. Our service also features regular daily payouts which allow users to regularly reinvest their earnings to purchase more hashrate or just hold [the profits] in their Hashtoro wallet.”

Charting a New, Eco-Friendly Mining Future

Hashtoro’s infrastructure is fueled exclusively by renewable energy. This is why the project is rapidly becoming one of the most profitable and ecologically safe cloud services on the planet.

That optimism, however, has been tempered a bit by recent market volatility.

“While the market has experienced a period of decline in 2018, I believe that it’s temporary,” Petersons said. “The fact is that it’s probably the seventh time that the cryptomarket has been declared ‘dead.’ But it will recover again.” 

Petersons believes that “under certain conditions,” bitcoin could still reach $50,000 this year. With this price uptick, he predicts a shift from personal- to cloud-based mining due to the growing difficulty of hash calculations.

“We are on a steady course to providing customers with the best service in cloud mining, by offering cheap, unlimited mining contracts with low maintenance fee,” he said. “We feel that this service helps to lower the threshold for first-time users to entry, minimizing the risks concerning the maintenance of bitcoin mining farms. So yes, no doubt, I expect there will be more cloud mining in upcoming years.”

Note: Trading and investing in digital assets is speculative and can be high risk. Based on the shifting business and regulatory environment of such a new industry, this content should not be considered investment or legal advice.

Two crypto companies, Gemina Trust and Paxos, got a green light from a New York state regulator to launch their own stablecoins pegged 1:1 to the U.S. dollar.  

New York Department of Financial Services (NYDFS) gave an okay to Gemini Trust, the crypto exchange founded by the Winklevoss twins, to launch Gemini Dollar (GUSD). It also gave a nod to Paxos Trust, the company behind the over-the-counter (OTC) exchange itBit, to issue Paxos Standard (PAX). Both coins launched on September 10, 2018.  

Since Tether (USDT), the most recognized of the stablecoins, launched in 2014, many other stablecoins have followed, all pegged to the value of some underlying asset, like another currency. In general, stablecoins provide a digital alternative to cash and serve as a hedge against volatility.

Some critics claim, however, that stablecoins are being used for money laundering and, in the case of Tether, to manipulate the price of bitcoin. This is why the NYDFS says it has gotten stringent assurances from Gemini and Paxos.

According to the NYDFS’s press release, Gemini and Paxos tokens are subject to the Bank Secrecy Act, anti-money laundering and Office of Foreign Assets Control controls “to prevent the Gemini Dollar or Paxos Standard tokens from being used in connection with money laundering or terrorist financing.”

“These approvals demonstrate that companies can create change and strong standards of compliance within a strong state regulatory framework that safeguards regulated entities and protects consumers,” NYDFS superintendent Maria Vullo said in a statement.

Unlike Tether, which runs on the Omni Layer on top of the Bitcoin blockchain, both Gemini Dollar and Paxos Standard are ERC-20 coins that run on the Ethereum blockchain.

According to Gemini’s blog post, traders who have a Gemini account can convert U.S. dollars 1:1 into Gemini Dollars and withdraw them to a specified Ethereum address. Conversely, if they move Gemini Dollars back into their Gemini account, they can convert them back into fiat.

Gemini says U.S. dollars backing its stablecoin will be kept in a U.S.-based State Street Bank and insured through the Federal Deposit Insurance Corporation's "pass-through" deposit insurance program, subject to applicable limitations. Independent auditor BPM Accounting and Consulting will review the company's bank holdings on a monthly basis. Also, the smart contract controlling the Gemini Dollar has been audited by Trail of Bits.

When Bitcoin Magazine asked if Gemini has plans to integrate the new stablecoin into other services or platforms, such as wallets, point-of-sale platforms or other exchanges, its response was non-committal:

"As the Gemini dollar is an ERC20 token on the open source Ethereum network, it can be sent to any Ethereum address. We look forward to its adoption by third parties, including other exchanges and wallet providers."

In Paxos’ case, customers can purchase and redeem tokens directly through Paxos.com. According to the company’s press release, investors using the itBit exchange or OTC desk will be able to redeem their crypto holdings for Paxos Standard “instantaneously.” itBit will also trade Paxos Standard tokens OTC.

Paxos says it works with a third-party, independent public accounting firm to monthly review and attest that Paxos Standard tokens are fully backed by actual dollars. Additionally, the Paxos Standard smart contract has been audited by blockchain auditor (Nomic Labs) to ensure that the code is solid and operates the way it is supposed to.

According to the NYDFT, both Paxos and Gemini will be subject to charter revocation if they fail to comply with any of the provisions of the agency’s approval.

When we last discussed the ETH-USD pair, the price was testing support in the mid $200 range.

Since then, the market has dropped another 30% as ether tests the waters in the upper $190 range:

Figure 1: ETH-USD, 1-Day Candles, Macro Trend

The volume on the current drop has been exceptionally high compared to the beginning of its descent from the $800s. However, one thing to note is how little the last few candles have progressed compared to the large amounts of sell volume accompanying the movement — and this actually makes sense on a basic level. Oftentimes, markets love nice round numbers (in our case, $200) and you can clearly see a line of historic support in the $200 range (shown by the red dashed line).

However, something to keep in mind is this humongous bear pennant that ether recently broke out of:
Figure 2: ETH-USD, 1-Day Candles, Bear Pennant

This bear pennant has a staggering price target approximately in the $80–$100 range, meaning we are only halfway through its measured move. It should be noted that targets are just targets. Just because a pennant has a price target, that doesn’t mean the full move must be realized.

Currently, the market is testing support on very high volume, which means there is a significant level of supply absorption. At this level, there are some eager bulls buying up the panic sellers. Whether or not their buying pressure will be enough to initiate a rally remains to be seen. Although the current daily candle hasn’t closed, there is a bit of indecision present over the last couple days:

Figure 3: ETH-USD, Daily Candles, Double Doji Set-up

This candle set-up is called a “double doji”. You can basically think of it as a visual representation of market indecision. This shows us that, even though the intraday volatility was high, the actual deviation between the opening and closing price of the candle was quite low. Although there is indecision, its very possible that the bearish pressure could ultimately win over the bulls, and we could see further capitulation from the long holders. However, this does give the bulls a shot a possible rally.

And, given the extremely high number of open short positions (highest in history, in fact) on Bitfinex, I would say the bulls have a decent shot at a sizeable short squeeze/short covering rally:
Figure 4: ETH-USD, Daily Candles, BFX Short Count

Summary:

1. ETH-USD has been dropping like a rock over the last few weeks as it managed to realize a 30% devaluation in a very short period of time.
   
2. ETH-USD is testing support at the moment as it sees a bit of market indecision on very high volume.
   
3. With the shorts stacked at all-time high values, it is very possible that we could see a sizeable short squeeze if the buying pressure manages to overwhelm the sellers at this price level.
   

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