Tag: btc

A Closer Look at the Crypto Regulation Proposed in the UK

On By mehranmuslimiblogIn UncategorizedLeave a comment

The UK is considering introducing crypto regulation with the aim of protecting its consumers and promoting the growth of its economy. As the country strives to become a leading hub in the crypto industry, regulation is deemed necessary. Incidents such as the collapse of FTX have highlighted the urgency of regulation in this area. A clear and transparent regulatory framework will reduce the risks associated with crypto investments for consumers. The proposed regulation is still in the consultation stage and is expected to be finalized by the end of April.

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Objectives of UK crypto regulation

The main policy objectives of doing the regulation include:

  • To encourage crypto regulation
  • Educate consumers about the risks associated with crypto investments
  • Preserve financial stability of the UK
  • Preserve market integrity of the UK

The proposed crypto regulations will be rolled out in two phases when they become law. Stablecoins will be addressed in the second phase, which will happen later in the year or early next year. At the moment, NFTs are not part of crypto regulation.

The UK has categorized crypto into different categories: Exchange cryptos, algorithmic tokens, governance tokens and fan tokens. Bitcoin and Ethereum fall under exchange tokens.

Initial governance method used

Crypto activities are currently not regulated by the Financial Conduct Authority (FCA). Decentralized finance makes it even harder to regulate, given its decentralized nature. Despite this, the UK introduced KYC and AML requirements for crypto exchanges in January 2020, requiring all exchanges to register with the FCA and subjecting violators to two years imprisonment. Many companies found the process lengthy and cumbersome, leading to some companies leaving the UK.

 Brief summary of the proposed  regulation

Crypto assets activities

They were the main target of the regulation. There is, however, one rule for all cryptos. This may be ridiculous as the crypto options are many. It would also be better if the regulation would be tailored according to risk. It is hard to tell the crypto activities occurring within Britain’s borders.

Crypto regulation will apply to crypto assets occurring within the UK. There is still the risk of UK citizens acquiring crypto from less regulated areas outside the UK.

As mentioned earlier, regulation of crypto assets will take place in two phases. The activities under phase two will include ICOs, crypto borrowing and lending, crypto custody services.

Decentralized coins such as Dai will not be subject to regulation. They will be treated as unbanked assets like BTC and ETH since they are unbanked. Dai may be affected since it is backed by USDC since it is a stablecoin requiring regulation. The UK is not planning to ban algorithmic stablecoins. Decentralized, algorithmic and NFTs are favored as the regulation only applies to cryptos not crypto coins and tokens. Regulations will come later.

Regulations related to new crypto

New crypto includes coins and tokens listed on exchanges and not necessarily creation of coins and tokens. According to the new requirements:

  • Investors are given accurate info
  • Investors are compensated if misled
  • Forging crypto offerings should be banned
  • Exchanges to do a due diligence on all cryptos they list and give detailed info to users
  • Exchanges act as issuers of crypto with no issuers such as BTC.

Cryptos already listed have not been addressed. It is unclear if they will be subject to the same disclosure rules.

 Regulations on Exchanges

Exchanges will be required to:

  • Be More liquid and be resilient
  • Be More transparent
  • Have Accurate on and off chain data

Exchanges will also need to do detailed data reporting, and establish a bankruptcy process.

Regulation on other crypto intermediaries such as market makers

They will need to address conflict of interest, sufficient liquidity, and detecting market manipulation. Generally, market makers have the same requirements as exchanges.

General market abuse requirements

In crypto there are many market abuse incidents that are not covered under financial regulation. The new regulation will control market abuse such as pump and dump schemes and market manipulation. Defaulters will face punitive action. The public will also be taught how to identify market manipulation.

Regulation of crypto borrowing and lending

Some exchanges such as FTX were using customer funds and illiquid tokens as collateral for loans because crypto lending and borrowing is not regulated. The new regulation will ensure risk disclosure, balance sheet disclosure, and clear user contracts.

Conclusion

The United Kingdom is currently undergoing the consultation phase for the proposed crypto regulation aimed at protecting consumers, boosting the economy, and maintaining the financial stability and market integrity of the country. The regulation will aim to educate consumers about the risks associated with crypto, provide accurate information to investors, and control market abuse. The new regulation will bring clarity to the crypto industry and enhance the UK’s position as a crypto hub. Overall, the proposed crypto regulation is a significant step forward for the UK in establishing a fair, transparent, and secure environment for the growth and development of the crypto industry.

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Bitcoin on the Brink: What Could Trigger a Capitulation?

On By mehranmuslimiblogIn UncategorizedLeave a comment

Bitcoin has been on a roller coaster ride over the past few weeks, with prices swinging wildly from highs of around $80k by June 2021 to lows below $15k in the past few weeks. This volatility is nothing new for Bitcoin, but it seems to ramp up as we approach what could be a critical juncture for the digital currency.

So, what exactly is a capitulation? The Cooperate Finance Institute has a concise definition.


In the financial world, it generally refers to a situation where investors give
up on an asset and sell it en masse, leading to a sharp decline in prices. This can often be seen as a final stage before prices bottom out and begin to rebound.

In the case of Bitcoin, a capitulation could be triggered by several factors, including the following:

When miners receive rewards in Bitcoin for verifying transactions, they are motivated to keep the network secure. However, if the price of Bitcoin falls below the cost of mining (i.e., electricity and other expenses), miners will be operating at a loss. As a result, they will be less likely to continue verifying transactions, and the Bitcoin network will become less secure. This is known as a miner capitulation. 

In a severe case, it can lead to a Bitcoin death spiral, in which the price of Bitcoin falls so low that no miners are willing to continue verifying transactions. This would make Bitcoin unusable as a currency, as there would be no way to verify transactions. Therefore, it is important for the price of Bitcoin to remain high enough to incentivize miners to keep the network secure.

Brain Drain

When people are anxious about the future, they tend to sell their assets and move their money into assets they see as safer. In the case of Bitcoin, when people become anxious about its future, they sell their Bitcoins and move their money into assets like the US dollar. 

This mass exodus of money from Bitcoin to other assets causes the price of Bitcoin to drop, which leads to even more people selling their Bitcoins, causing a downward spiral.

Closed/Overprotective Community

There have been a few times in Bitcoin’s history when the community has become too closed off and overprotective, leading to a capitulation. One such example was when Introducing NFTs to Bitcoin forums and discussion groups led to a massive flame war that ended in many members leaving the community. Another example was when the Bitcoin Lightning Network was first proposed, there was a lot of infighting, and eventually, some members left to start their own projects. While it’s understandable that people want to protect their investments, Ultimately, these capitulations happen because the community becomes too insular and fails to listen to new ideas. To avoid this in the future, it’s important for the community to remain open-minded and willing to discuss new proposals. 

Increased Regulation from Governments 

When a government begins to tighten its regulation of a particular industry – in this case, Bitcoin – it can significantly impact the market. In the case of Bitcoin, when it was announced that the governments of South Korea and China were planning to introduce new regulations around cryptocurrency, the price began to drop significantly. 

This is because investors felt that the increased regulation would make it more difficult to trade or use Bitcoin, so they began selling off their holdings. As more investors sold off their holdings, the price continued to drop until it reached a point where many people decided to sell their coins at a loss. This caused an overall panic in the market and led to a massive capitulation event.

Bitcoin Verdict

The jury is still out on whether or not Bitcoin will survive in the long term. However, it is clear that several factors could trigger a capitulation event.

If the price of Bitcoin falls too low, miners will be incentivized to leave the network, which could lead to a death spiral. Additionally, if investors start to panic, they may sell their holdings en masse, which could also lead to a capitulation.

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Google’s bitcoin war is dumbing down

On By mehranmuslimiblogIn BitcoinLeave a comment

As you are probably aware, Google has a fraught relationship with Bitcoin (BTC) in particular, and cryptocurrencies in general. It’s a problem, because YouTube, which Google owns, is awash with videos about digital assets. What we have seen is that whenever possible, Google has tried to raise barricades against the oncoming tide of crypto information, in all its forms, including apps and websites, which has caused crypto fans to accuse the media giant of censorship.

We have only just begun 2020, and already Google has lashed out by removing Bitcoin Blast, a BTC rewards game from the Google Play store, on the gorunds that it uses “deceptive practices.” According to Billy Bambrough at Forbes, Bitcoin Blast was available on the Apple app store on 24th January, but was removed a week later. Apple said that it violated certain of its app policies, but said it could come back if it “can be brought up to code.”

Daniel Rice, cofounder and chief technology officer at Bling, the make of Bitcoin Blast, said in a post, “We were not removed for being involved with cryptocurrency,” but added, “it’s also possible that Bitcoin Blast will never return to an Apple platform.”

The irony is that Bitcoin Blast’s users rather liked the puzzle game that rewards users with bitcoin-redeemable loyalty points and boasts a 4.5 rating from some 20,000 ratings and 13,000 reviews. They complained to Google about the sudden removal of their entertainment. And this had a positive effect. Although, Bling, did have to make a public plea for support, and it was only after this happened that Google reversed its decision.

It isn’t the first time that Google has waded reversed a decision regarding a crypto-related app or site. It tried to ban most of the bitcoin-related content creators from YouTube, only to face a backlash from users that forced a change of heart.

Not long after this, Google suspended the popular MetaMask crypto wallet and mobile browser app backed by Ethereum incubator ConsenSys from the Play Store, only to eventually reinstate it.

This behaviour is rather odd, and it is no wonder that companies such as Bling are questioning what their future relationship they might have with Google, if any at all. Bling’s CEO, Amy Wan wrote, “Google’s suspension cited their ‘deceptive behavior’ policy … but did not state exactly what behavior Google thought was deceptive,” and she advices other businesses to avoid putting all their products on a Google platform. Furthermore, she said that Google couldn’t answer the question regarding what was “deceptive” about the Bitcoin Blast app.

As Billy Bambrough says, Google’s “twitchy trigger finger and the speed at which the ban hammer falls is, understandably, making people nervous.”

Certainly, it needs to rethink its battle strategy, because at the moment, it looks like every action is a simplistic knee-jerk reaction, rather than a well-considered approach based on evidence.

Youngest Bitcoin Millionaire’ Willing to Stake it All on Metal Pay

On By mehranmuslimiblogIn Bitcoin, cryptoLeave a comment

Erik Finman made his name as the youngest ever bitcoin millionaire and is one of 17,000 bitcoin addresses containing more than $1 million worth of bitcoin.

The young crypto enthusiast is now backing Metal, a P2P crypto payments app, which launched in 2017, but has been revamped as an “all-in-one digital banking platform for cryptocurrency.”

Finman has been predicting that bitcoin (BTC) will reclaim its $20,000 value this year, simply because of the entrance of Facebook into the crypto market with its Libra stablecoin. He also referred to the fact that candidates in the upcoming US presidential elections have been talking up bitcoin, as has Apple.

Oddly enough, last year, Finman claimed that bitcoin was dead during the worst moments of the 2018 bear market that left most major tokens down almost 90% in value.

Finman, who has also tried to encourage passive investment in bitcoin with his CoinBits project said, “Bitcoin could be at $50,000 per bitcoin without all the fragmentation.” But you can’t change the fees,” he added. “You can’t change the loading times. I’m very pro-crypto and pro-bitcoin but with just one coin you can only do so much.”

Metal, which also has the Metal (MTL) native token, peaked at over $13 per token in September 2017 as bitcoin and cryptocurrency excitement reached fever-pitch, but has failed to hold almost all of that value as users and investors dried up, slumping to just $0.30 per MTL currently.

As Billy Bambrough writes at Forbes, “Finman’s support for metal comes as Metal Pay relaunches to compete with more directly with the likes of Venmo and PayPal, payment platforms that want users to store and send cash on their apps.”

Finman’s partner at Metal, founder and chief executive of Metal Pay, Marshall Hayner said, “We’ve worked for years to make certain that all laws and regulations are met in an effort to deliver the best possible product for our user base. With this launch, we truly believe that Metal Pay has the opportunity to become bigger than bitcoin.”

In other media coverage, Finman and Hayner also claim that Metal Pay will kill off Facebook’s Libra, when the contentious stablecoin finally launches. How that works out, remains to be seen.