Cryptocurrency Exchanges in Colombia Are Uncertain about Regulatory Sandbox

Alexander Salazar
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Cryptocurrency Exchanges in Colombia Are Uncertain about Regulatory Sandbox

Vakano, CEO of Panda Exchange, believes that government attitudes will slow investment. Alejandro Beltrán, representative of Buda, considers that this sandbox will have little impact on the sector.

In early February 2020, the Ministry of Finance of Colombia issued a decree creating a regulatory sandbox for the financial technology (FinTech) area in that country. A major factor leading to the creation of this test instance is the absence of the cryptocurrency sector, especially in the case of exchanges.

The aforementioned document makes no mention of cryptocurrencies or crypto assets, but it does mention the growth undergone by the FinTech industry. The report indicates that, of over 150 financial institutions that have sought advice, at least 76% belong to the financial technology area.

Likewise, it also presents the space as an auspicious instance for financial institutions to conduct “controlled tests of new business models, applications, processes or products that have components of technology innovation.” Cases like those of electronic payments and digital loans are mentioned, but nothing is stated about cryptocurrencies.

Uncertainty and Reluctance among Exchanges

That absence has led to expect the exclusion of the sector from this process. However, what prevails among Colombian exchanges is the uncertainty or skepticism about the expected advances for the country’s cryptocurrency industry.

Alejandro Beltrán, the Colombian representative of the exchange of Chilean origin Buda, believes that the document presented by the Ministry of Finance leaves more doubts than answers to cryptocurrency companies. Even though his inclination is towards considering that sandbox effectively excludes the sector, Beltrán claims that it is not definitively known.

The sandbox as a space for experimentation could include blockchain-based projects for developments in the financial sector, according to Beltrán. The representative of Buda said that the Colombian government’s recent moves towards blockchain research are aimed at exploring the usefulness, risks and projections of these technologies for the country.

The CEO of Panda Exchange Arley Lozano, also known as Vakano, believes that the cryptocurrency sector has been omitted by the Financial Superintendency. According to the executive, Colombia shows itself to be at the forefront of technology but maintains a position against certain advances such as Bitcoin and the other cryptocurrencies.

Cryptocurrency Circumvention

Vakano himself commented that the government is openly promoting blockchain whilst avoiding cryptocurrencies. In his opinion, this situation is based on the excuse that Bitcoin and other cryptocurrencies can be used to launder money. He noted that even coffee is used for that in the South American country.

On the other hand, Alejandro Beltrán assessed that the subject of cryptocurrencies is in a legal limbo. He alleges that the government does not even dare to call them “cryptocurrencies” but “crypto assets” in order not to collide with the concept of “legal tender”.

Beltrán stated that, despite this position, working groups are currently being held with the participation of various institutions from Colombia. Among them are the Bank of the Republic, the Ministry of Finance and the Superintendency of Industry and Trade. The representative of Buda added that the goal is to reach a consensus on cryptocurrencies.

By Alexander Salazar

Authorities in Ukraine Ratify They Allow to Mine Cryptocurrencies

Josselyn Avila
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Authorities in Ukraine Ratify They Allow to Mine Cryptocurrencies

Authorities in Ukraine Ratify They Allow to Mine Cryptocurrencies

Ukrainian government authorities have issued a statement reaffirming that users have the freedom to mine in their territory. They explained that there is no supervision by regulatory bodies.

Ukraine reaffirms its commitment and enthusiasm through crypto technology. A few days ago, authorities assured that it is possible to mine in their territory without having state supervision or any prohibition that prevents their activity.

In this way, Ukraine has become one of the countries that have made great efforts to establish adequate parameters and establish the crypto industry. They also hope that this freedom of mining can attract more investors to the sector and boost the use of blockchain technology.

Although Ukraine currently does not have regulatory standards for the use of this technology, in recent months it has managed the realization of a legal framework that helps to update the established laws.

Among the movements most expected to make around the crypts is to allow a powerful attraction for cryptocurrency companies to find in the country a friendly and growing place for their businesses. Ukraine’s position on digital assets and blockchain technology is contradictory to the position of the rest of Europe, which sees this technology as a strong risk of economic imbalance.

In this sense, in an attempt to get the attention of experts in cryptocurrency technology, the Ministry of Digital Transformation of Ukraine invited mining communities to settle in the country since mining is legal in Ukraine. Users will not need to request licenses or permits for their activity. To justify the total freedom of mining in the country, the Ministry assured that this technology is already regulated and limited by the blockchain protocol they use, as well as by their users.

Although there is some freedom for these assets to operate in the country, Ukraine is preparing a reform to the Law against Money Laundering, which would be able to include digital assets among the new assets to be inspected. These legal tools only seek to create a secure environment so that potential investors and companies that work within the country with cryptocurrencies can have support from the state to avoid illegal acts that harm their businesses.

Non-Regulation Could Bring Negative Consequences

Although there are many countries today that view cryptocurrencies as a potential risk to their economies, severe prohibitions that harm all digital activity have not been established. Rather they have tried to dismiss and detract from this activity so that people see negatively the use of crypto assets.

This ambiguous environment could mean an even bigger problem, since cryptographic activity would not be legally addressed, resulting in the lack of regulators that prevent illegal acts with cryptocurrencies.

This is why some authorities of different countries in Latin America believe that establishing a cryptocurrency company is highly risky; especially, when the developers do not have the legal tools to help protect the activities and businesses they conduct.

Every company must have a certain type of legal support that provides security by the regulatory agencies of the country where they work; this ensures success and growth for the company.

Determining the importance of regulatory tools for this technology would allow companies to have the security they need to establish them in the territory, achieving healthy and productive growth.

By María Rodríguez

MasterCard is Now Part of a Team That Teaches All about Blockchain

Maria Rodríguez
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MasterCard is Now Part of a Team That Teaches All about Blockchain

The multinational participates in a project to train the next generation of blockchain developers in more than 80 student associations around the world.

The Blockchain Education Alliance of the blockchain accelerator MouseBelt now has 11 new members. Among these founding members are Ripple‘s innovation arm Xpring and MasterCard, the multinational financial services based in Purchase, New York, United States.

The new members include the innovation arms of payments startup Ripple and crypto exchange Binance; as well as representatives from Neo, KuCoin and Ethereum scaling solution Matic Network.

They join the 13 previous companies that are Stellar, TRON, Hedera, ICON, LTO, Nervos, Orbs, Emurgo, Ontology, Harmony One, Network, NEM Labs, and Wanchain. All of them became part of the alliance when it was announced last October 2019. The group intends to teach all about cryptocurrencies and blockchain technology.

Blockchain Education Alliance is also an initiative to promote blockchain innovation through education. The main objective is to provide university students with the knowledge they need to enter the world of blockchain technology.

More Benefits for Blockchain

The Education Alliance intends to maintain a network of industry and academic leaders to develop educational initiatives. In this way, it will also make it possible to accelerate the mass adoption of blockchain technology, something that would help expand its use.

As part of its activities, MouseBelt organizes meetings with personalities of the crypto industry, as well as hackathons to support the cooperation and the creation of opportunities to learn more about blockchain technology. Members can also meet with researchers to develop new use cases of blockchain technology and help the industry grow.

“Universities need established experts in the space to help develop curriculum and projects to share valuable knowledge. We have an opportunity to have a positive impact on how blockchain technology is introduced to students, which will result in more blockchain developers, more innovative research, and higher quality companies”, Ashlie Meredith, Director of MouseBelt University said last November.

A University Program

The Blockchain Education Alliance is part of MouseBelt’s university program. This is an initiative to train the next generation of blockchain developers in more than 80 student associations all around the world.

“The members all share our ethos: The best way to invest in the space is to make long-term investments in education (…) the better the education, the better developers and projects we will see”, Meredith added.

The university program has also established partnerships with some of the world’s leading engineering departments, such as UCSB and UC Davis, through their UC Blockchain Initiative.

Warren Paul Anderson, Head of Developer Relations at Ripple’s Xpring incubator, said joining the alliance allowed them to prepare prospective developers with the skills and resources they need.

“MouseBelt’s mission to promote blockchain technology at the curriculum level within universities is directly aligned with that of Xpring”, he said.

Interest in Blockchain

MasterCard handles more than $14 trillion worth of payments every year. It is one of the world’s largest payment providers worldwide.

The multinational has been showing interest in cryptocurrencies and blockchain technology. Last year, it joined as a founder member of Libra, the cryptocurrency of Facebook. Visa, the main competitor of MasterCard, also joined the project. But both companies left the association in October 2019 due to some restrictions imposed by the U.S. Securities and Exchange Commission (SEC).

But this is another opportunity for MasterCard to get closer to blockchain technology and, probably, help develop new platforms and improve the adoption of Distributed Ledger Technology.

By María Rodríguez

Central Bank Digital Currencies Are Good for Bitcoin, CEO of DGC Says

Maria Rodríguez
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Central Bank Digital Currencies Are Good for Bitcoin, CEO of DGC Says

Issuing CBDCs would pave the way for institutional interest in digital currencies, according to Barry Silbert.

The creation of central bank digital currencies around the world would benefit Bitcoin according to the founder of the world’s largest digital asset manager.

Barry Silbert, CEO of blockchain venture capital firm Digital Currency Group (DCG) gave his opinion about Bitcoin and the current market that could change with the appearance of central bank digital currencies.

Silbert recently spoke about “The State of Digital Currencies”. He mentioned many important digital asset-related issues such as Bitcoin’s role in the generational shift in wealth, stablecoins, decentralized finance and central bank digital currencies (CBDC).

The Use of Central Bank Digital Currencies

CBDCs are virtual currencies that are issued and controlled by a federal regulator. Central banks considered creating their cryptocurrencies since different companies and governments around the world issued their digital currencies to offer and exchange them for products or services.

These CBDCs are different from Bitcoin and altcoins. They are similar to fiat money but in the digital form. This is due that CBDCs are controlled by regulators whilst cryptocurrencies are not.

One of the countries that are preparing projects related to central bank digital currencies is China. The Asian country will launch a digital currency called Yuan which would be the first real-world test of its CBDC.

A new survey conducted by the Bank of International Settlements revealed that at least 10 % of central banks are likely to issue a CBDC for the general public in the short term.

How CBDCs Could Be Good for BTC?

Silbert, who also is the founder and CEO of the digital currency asset manager Grayscale Investment, considers that central banks that develop their own fiat currency-backed digital currencies might be providing more power to Bitcoin. The expert says that this would pave the way for institutional interest in digital currencies such as Bitcoin.

According to Grayscale CEO, Bitcoin and other non-central bank cryptocurrencies could eventually benefit from the same infrastructure that is used by the widespread adoption of CBDC.

“So at one point in the future, we might have 80 different CBDCs. And if that happens, it would trigger a tremendous amount of investment in operators of financial systems where essentially every financial institution would then have to be able to safely store and transact CBDCs and, guess what, if they build that infrastructure, that same infrastructure could be used for non-central bank digital currencies like Bitcoin”, he said.

Besides, the CEO of Digital Currency Group hopes that central banks will not be capping the supply of Bitcoin or other cryptocurrencies. He thinks that central banks will eventually require users to get involved with the existing digital financial systems.

The founder of DGC also commented that CBDCs are important for the current market because they contribute to the future value proposition of digital money.

Japan is considering issuing its digital currency since China is working in its Yuan project. But the truth is that the benefits of CBDCs for Bitcoin would be seen when there are other central bank digital currencies in the market of current digital assets.

By María Rodríguez

Alleged Money Laundering of USD 311 Million in Bitcoin Is Charged to DropBit CEO

Alexander Salazar
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Alleged Money Laundering of USD 311 Million in Bitcoin Is Charged to DropBit CEO

Between 2014 and 2017, Harmon allegedly laundered at least 354,468 BTC. Currently, the alleged laundered funds would be worth USD 3.7 billion.

It was recently reported that Larry Dean Harmon, CEO of crypto wallet provider DropBit, was accused of allegedly laundering USD 311 million in Bitcoin through transactions on the Darknet.

Last December, Federal authorities charged 36-year-old Harmon with conspiring to commit money laundering, operating an unlicensed money transmission business, and transmitting unlicensed money, as reported by cleveland.com last February 12th, citing an indictment document.

The CEO of DropBit, who was arrested last February 6th, is accused of having sold illicit drugs through the Darknet market AlphaBay, which was closed by authorities in 2017. It should be noted that the market was a major supplier of fentanyl and heroin.

Between 2014 and 2017, Harmon laundered at least 354,468 BTC (equivalent to more than USD 311 million at the time) through a mixing service called Helix, of which he was the owner. Those bitcoins have a present value of more than USD 3.7 billion at the time of writing this article. Federal prosecutors are seeking millions of US dollars in financial penalties and want Harmon to lose all his property.

For his part, Jake Chervinsky, a general counsel at the startup Compound, a decentralized finance (DeFi) lending protocol, described the case as “difficult” on his Twitter account, saying that the Department of Justice is “going too far by charging for unlicensed money-transmission offenses.”

At the same time, Crypto podcast host Peter McCormack tweeted last February 12th that Harmon was denied bail as he is considered a flight risk although all his possessions have been confiscated, citing a discussion with the brother of DropBit CEO Gary Harmon.

However, DropBit is expected to continue to provide its service, since Gary Harmon and the developers of the application are using its funds, according to McCormack.

In the indictment documents, there is evidence of the advertising activity of Helix as a tool for mixing bitcoins, which are then exchanged for new cryptocurrencies that are not marked by its use on the Darknet. Advertising messages helped authorities to build the case against Harmon. It should be added that Helix has reportedly been promoting mixing services on the Darknet market AlphaBay since 2016.

Cryptocurrency Mixers

A cryptocurrency mixer is defined as a platform that provides a system to make transactions difficult to track. These services allow Bitcoin users to hide the origin of their transactions and are used to provide them with more privacy and a certain level of anonymity.

Even though their origin has not been accurately determined, cryptocurrency mixers were widely used on sites such as Silk Road, an online black market that was operated from the deep web and accessed through the Tor browser.

To conclude, it is worth mentioning that this has not been the only case of illegal operations conducted with Bitcoin on the Darknet. Cryptocurrency firms have reported a growing number of scams against people of all ages, especially those with limited knowledge of technology resources and cryptocurrency spaces.

By Alexander Salazar

Report Indicates that the Lowest-Rated Cryptocurrency Exchanges Move 73% of the Global Market

Alexander Salazar
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Report Indicates that the Lowest-Rated Cryptocurrency Exchanges Move 73% of the Global Market

Among the lowest-ranked cryptocurrency exchanges are sites like LocalBitcoins and Buddha. According to CryptoCompare, the volume of these platforms was about USD 275 billion.

Those cryptocurrency exchanges regarded as the lowest-ranking have gained about 6% of the global volume of exchange of cryptocurrencies compared to better-positioned platforms, according to the assessment by the firm CryptoCompare.

In its most recent report for the last quarter of 2019, CryptoCompare places 73% of the global exchange in this type of cryptocurrency exchange. These are platforms whose rating is between C and E, that is, the lowest-ranked platforms on its list. The report notes that, for the previous quarter, these cryptocurrency exchange sites, among which are platforms like LocalBitcoins or Buddha, moved about 67% of the global volume.

Besides, during the last quarter of last year, cryptocurrency exchanges whose rating was between AA to B handled the remaining 27% of the global volume of exchange in the cryptocurrency market, according to the document. It is worth noting that these markets had moved one-third of the global volume in the penultimate quarter. The firm lists a total of 48 cryptocurrency exchanges located within that range, considered to be that of elite sites.

The assessment described by CryptoCompare is based on a scoring system that considers security, legal status, investments, management, provision of data, monitoring of exchange activities and market quality.

According to data from CryptoCompare, cryptocurrency exchanges whose rating ranges between AA and B moved a little more than USD 100 billion. The rest had a volume of more than USD 275 billion, according to the report.

In the same way, Cryptocurrency exchanges with a C rating, that is, those that meet half of the rating applied in the report moved more than half of the total volume, with about USD 203 billion traded. In percentage terms, the incidence of these markets is 53%.

New Cryptocurrency Exchanges in First Ranking Place

The report also reflects several changes in the ranking of cryptocurrency exchanges. Among them is the emergence of itBit, based in Singapore, which holds the number 1 position. This site, which belongs to the company Paxos Trust, scored 77.5 points out of 100 possible, according to the CryptoCompare index.

Along with this cryptocurrency exchange site, only Gemini and Coinbase are rated with AA. The top 10 in the ranking is completed by Kraken, Bitstamp, Liquid, Bitfinex, OKEx, bitFlyer, and OKCoin, the last of which was among the first ahead of Luno and Binance.

The list presented by CryptoCompare in its report also highlights changes by two other sites. Poloniex fell from the 10th position losing a total of 9 places on the list, while Huobi Korea climbed 19 places to reach 22.

It should be added that a recent report submitted by the analytics company Glassnode indicated that Bitcoin deposits at cryptocurrency exchanges during 2019 decreased by up to 60%. In that way, weekly averages and daily deposits at the beginning of January reached their lowest point since November 2016, as detailed in the study.

By Alexander Salazar

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