July 23 – 29, 2018 | Bitcoin Security, ETFs & More Crypto News

3iQ Research Group consolidates the top five cryptoasset stories of interest
to investment advisors and our investors.


Nasdaq Hosts Private Meeting With Crypto Exchanges

July 27, 2018 – Nasdaq has reportedly hosted a closed-door crypto meeting in Chicago this week, which included representatives of major crypto exchanges in an effort to encourage and validate the role of cryptocurrencies in today’s financial markets. According to an unnamed source, some of the topics discussed included issues surrounding regulation, as well as the necessary tools required to provide sufficient surveillance on these digital assets. Additionally, the source reported that this will not be the last meeting of this nature, noting that there should be an “ongoing dialogue” amongst Nasdaq and the participants at the meeting.

While cryptocurrencies have had a history of exchange theft, fraud, illiquidity, and few reputable custody services, Wall Street continues to show interest in the space as these realities have evolved significantly. Nasdaq CEO Adena Freidman has been optimistic about the role of regulations in the cryptocurrency market, partnering the major stock exchange with a number of cryptocurrency exchanges in an effort to provide clearer surveillance. “I do believe that over time we’re going to find that there is [real] utility” in cryptocurrencies, said Freidman.

Read the full article here.


Bank of Canada: Bitcoin is Safe From a 51% Attack, Double Spending

July 26, 2018 – The Bank of Canada has released a working paper titled “Incentive Compatibility on the Blockchain”, which notes that the largest cryptocurrency, bitcoin, is safe from double-spend scenarios and 51% attacks. These issues in the blockchain have long been discussed, and have primarily been seen on smaller blockchain networks and coins. Essentially a form of cheating, double-spending and 51% attacks pose a threat to some blockchain networks, as users try to tamper with ownership records on the blockchain with hopes to defraud counterparties. In the case of Bitcoin, researchers at the Bank of Canada have concluded that in addition to its massive network size, double-spend scenarios and 51% attacks will not take place due to the massive cost and energy required to do so on its Proof of Work (PoW) network. The Bank of Canada also compares other consensus mechanisms, such as Proof of Stake (PoS), to the Proof of Work (PoW) consensus mechanisms which are used on the Bitcoin and Ethereum blockchains.

“Many other protocols have been discussed that try to save on the costs associated with running a blockchain. Protocols based on proof-of-stake (PoS) allocate the right to update the blockchain randomly across users. The chance of any user to win the right is linked to his stake in the system, for example, the number of units of cryptocurrency the user owns. However, these alternative systems usually do not possess a key feature of PoW: one needs to spend a large number of resources to be successful in cheating, and being unsuccessful means that one has incurred a large, irretrievable sunk cost.”

Read the full article here.


SEC Commissioner: Bitcoin is Regulated and Matured for an ETF

July 27, 2018 – Hester Peirce, a commissioner at the US Securities and Exchange Commission (SEC), has expressed disappointment with the SEC’s decision to reject another bitcoin ETF as she believes that Bitcoin is both regulated and matured enough to have a place in traditional financial products. Pierce thinks that the “premature” decisions of the SEC has led to less investor protection, as they have dismissed the growing institutionalization of the Bitcoin marketplace. Top investment banks and regulated financial institutions such as Goldman Sachs, JP Morgan, and Morgan Stanley have already delved into Bitcoin-related investments and products over the last few months. Some analysts have claimed that the recent rise in major cryptocurrency prices has in part been due to the anticipation of bitcoin-related ETFs, but the SEC’s decision to reject another ETF has held back retail investors from getting exposure to cryptocurrencies – all while major investment banks continue to develop their own crypto products and services.

“Apparently, bitcoin is not ripe enough, respectable enough, or regulated enough to be worthy of our markets,” said Peirce. “In addition, I am concerned that the Commission’s approach undermines investor protection by precluding greater institutionalization of the [Bitcoin] market. More institutional participation would ameliorate many of the Commission’s concerns with the [Bitcoin] market that underlie its disapproval order.”

Read the full article here.


Hedge Fund Manager: This Bitcoin Comeback Could be for Real

July 23, 2018 – Brian Kelly, the founder and CEO of digital currency firm BKCM LLC, believes that the rally currently underway in bitcoin should continue. In an interview, Kelly notes that some of the big reasons for bitcoin’s sell-off, such as the forced selling of Mt.Gox’s bitcoin and other tax-related sell-offs, forced the price of bitcoin lower earlier this year. “That appears to be over,” said Kelly, labeling the cryptocurrency market “a very reflexive one”. He thinks that the more valuable Bitcoin becomes, the more investors will want to invest in it.

Kelly believes that earlier this year, there were a lot of big sellers in bitcoin – but most of that is over. The growing amount of institutional interest is an indicator that this rally in bitcoin is not over yet. “I can tell you from the calls that I’m getting, people that looked at [bitcoin] in December and didn’t like the price are coming back now and saying, ‘Alright, this thing is not going away. We need to understand what it is. Where does this asset class fit into our portfolio?'” said Kelly.

Read the full article here.


Low Bitcoin Mining Margins are Potentially Strangling Supplies

July 24, 2018 – New data released from cryptocurrency data provider Cryptocomposite has indicated that Bitcoin miners have been selling their newly minted coins just to meet operating expenses, potentially strangling supply in the bitcoin market. Despite recent rallies in the prices of leading cryptocurrencies, miners are finding it difficult to be profitable in a market where margins have shrunk drastically since the December-peak in the crypto market. Over the past few weeks, when prices were lingering under $8000 USD each per bitcoin, miners’ margins were getting squeezed to the point that they had to sell their newly minted coins just to cover electricity and other operating expenses. During this time, some miners had to leave the market. Just a few days ago, Bitcoin miners sold a total of $17.3 million USD worth of coins, while just earning $14.4 million USD.

“Historically, many miners didn’t sell 100% of their coins, and were waiting for the price to appreciate,” said Kyle Samani, a managing partner at Multicoin Capital Management. “I suspect many of them are selling now.” Nic Carter, the co-founder of Coinmetrics, said: “I’d expect that at these relatively low price levels, miners are selling off all of their new takings — they can’t afford not to.”

Read the full article here.


3iQ Global Cryptoasset Fund: Price as at July 27, 2018

3iQ is the first regulator approved multi-cryptoasset portfolio manager in Canada, providing accredited investors with exposure to bitcoin, ether, and litecoin through its 3iQ Global Cryptoasset Fund.


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2019-08-06T19:54:33-04:00 July 29th, 2018|