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Former CFTC Chair Calls For More Cryptocurrency Regulations

CFTC Cryptocurrency Regulation 2019

A report published by the Brookings Institution and authored by Harvard University fellow Timothy Massad calls for improved regulation of cryptocurrency.

Massad, who served as chairman of the United States Commodity Futures Trading Commission (CFTC) during President Barack Obama’s administration, outlined the need for regulations on digital currencies, including their use in illicit activity, as well as providing a way to reduce the risk of cyber attacks.

In the report, Massad explains that the current landscape of cryptocurrency leaves the market open for fraud due to the absence of traditional market standards imposed on securities and derivatives, a feature which only serves to hurt investors via the lack of protection. Massad also targeted cryptocurrency exchanges and their lack of oversight, which has led to repeated instances of fraud, market manipulation and conflicts in interest. He then stressed the need for regulations imposed on exchanges in order minimize operational risk while putting into place measures to safeguard investors.

“Crypto exchanges are not required to have systems to prevent fraud and manipulation, nor are there rules to prevent or minimize conflicts of interest. Crypto exchanges can engage in proprietary trading against their customers, something the New York Stock Exchange cannot do. Regulations to minimize operational risk and ensure system safeguards are needed, just as with securities and derivatives intermediaries.”

The 60 page report also took a shot at the shortcomings of Bitcoin, namely the failure of cryptocurrency to fulfill its original intention. Instead of providing trust, Massad wrote that Bitcoin and other cryptocurrencies have created “regulatory distraction” which has contributed to an even greater problem in lack of accountability,

The hype surrounding Bitcoin and other crypto-assets has contributed to regulatory distraction. Bitcoin’s creators promised it would solve the “trust problem” and reduce our reliance on centralized financial intermediaries. However, it has not reduced our reliance on financial intermediaries or eroded the power of our largest institutions. Indeed, crypto-assets have created new financial intermediaries that are less accountable than the big banks.

The former CFTC Chairman called upon the powers of the U.S. Congress to address the issues related to crypto market fraud and the looming problem cybersecurity and potential illicit use through digital assets. As for handling the lack of regulation in cryptocurrency exchanges, Massad is not alone in advocating for reform.

The Winklevoss Twins, who recently made headlines for their comments about Facebook’s stablecoin, have been a driving force for cryptocurrency regulation through their crypto exchange Gemini. While the twins have previously been denied in their attempt to create the first U.S. Securities & Exchange Commission approved Bitcoin ETF, they believe self-policed and self-generated regulation to be the surest path to enticing institutional investment.

However, some community members have continued to embrace the lack of regulation for the cryptocurrency industry. While diminished oversight does allow for manipulation and fraud, it also prevents coin projects from making concessions in their decentralization, thereby fulfilling the original promise of crypto as an alternative to government-run fiat. In addition, the fear is that greater regulation will make the industry no different than that of the traditional financial markets, including the uneven influence imposed by established banking players.

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Dukascopy Begins Airdrop of Dukascoin: The First Crypto Ever Created by a Bank

Dukascopy, a Swiss-based online bank and forex broker, has decided to take a step forward in financial services innovation by integrating the use of cryptocurrencies and blockchain technologies into the range of services provided to its clientele.

Dukascoin Render. Courtesy: Dukascopy

After a strong design and testing phase dating back to September last year, the bank has finally initiated the airdrop of its crypto Dukascoin (DUK+), a speculative cryptocurrency, which seeks to reward its users, increase its clientele and popularize the use of its messaging service “Dukascopy Connect 911.”

Andre Duka, CEO of Dukascopy Bank, was the man in charge of making the announcement, explaining that the team had to go to great effort for the token to have the highest technological and legal standards:

I take this big event as a historic milestone for both the blockchain industry and the traditional banking sector.

Recently, we have observed many announcements from banks about their in-house crypto projects, yet, to the best of my knowledge, no working solutions have been deployed to the market. In our case, we confirm the real start of a bank’s crypto currency after a year of intense legal, technological and emotional effort that has required the consolidation of all our skills and knowledge

Dukascoin: A First Of Its Kind

For now, the token is not listed on any exchange. The trading of this cryptocurrency takes place on Dukascopy’s internal platform. According to the whitepaper, For each new client who opens a Mobile Current Account, 20 Tokens will be issued: 5 to the client, 5 to the introducing agent and 10 to the bank.

Dukascoin Price, March 2019. Courtesy Trustnodes

While the DUK+ is a token that serves as a means of payment and speculative asset, Dukascopy plans to issue another token called Dukasnotes, which will function as a stablecoin.

Currently there is no specific date of launch of the stablecoin; however, it is known that it will be backed by fiat currency guarded by the bank and will have a unique identifier, so that while the DUK+ are ERC-20 tokens, the Dukasnotes could be tokens of different architecture (maybe ERC-721?).

In an open letter to his clients, Dukascopy’s CEO appeared quite optimistic about the project and invited interested parties to investigate about Dukascoin and Dukasnotes to take advantage of the opportunities offered by these new tools:

As a CEO of the bank, I’m excited about the project and invite everybody to take a look at the unique opportunities which will be offered at the initial stage of the project. I guarantee there are many interesting options worth exploring. Those who are interested to follow the Dukascoin project, I welcome to check the web site that was specifically created for the ICO project. There you can find all the latest news, features, dates as well as the project’s white paper.

The post Dukascopy Begins Airdrop of Dukascoin: The First Crypto Ever Created by a Bank appeared first on Ethereum World News.

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Bank of America Interested in Cryptocurrency Storage Patent

Cryptocurrency–Despite the lack of positive price movement in the cryptomarkets over the preceding weeks, adoption and recognition for the industry continues to climb. While 2018 has the makings to be remembered as the worst bear cycle in the lifetime of crypto, many pundits within the industry have been keen to point out that adoption for cryptocurrency is at its highest point, with multiple fintech firms and banks looking to move into the space of blockchain and cryptocurrency.

Bank of America, the second largest banking chain in the United States, has recently filed its second patent related to cryptocurrency custodian control, this time proposing a system that provides cryptocurrency storage for large-scale enterprise.  According to public documents filed to the U.S. Patent and Trademark Office and published on Thursday, Bank of America is primarily targeting institutional investors and other enterprise in forming a source for securing private keys. This comes in addition to a similar cryptocurrency patent application filed in 2014, giving some credence to the idea that the Charlotte, North Carolina-based bank is looking to make a move into cryptocurrency, albeit in a limited capacity for now.

Details about the patent involve the use of a computing device to manage blockchain encryption tags, building upon the earlier patent by Bank of America to create a digital vault storage system for large-scale, institutional cryptocurrency usage. Predicated on the patent’s design is the idea that cryptocurrency could become a ubiquitous form of payment, reaching market saturation levels necessary for consumers to adopt en masse. Similar to the current model of storing fiat in banks, the BoA patent is building upon the idea that consumers will want a place to safeguard their crypto outside of the use of private keys–which have been pegged as a bit too complex for the average user in terms of growing mainstream adoption. BoA’s method involves the creation of digital vaults, similar to their physical counterparts, with the bank being entrusted custodian status over the funds–essentially forgoing the role of the individual in maintaining private key security and ownership. Specifically, the patent alludes to the need for improved technology if cryptocurrency continues to gain traction as a payment source,

“Enterprises may handle a large number of financial transactions on a daily basis. As technology advances, financial transactions involving cryptocurrency have become more common. For some enterprises, it may be desirable to securely store cryptocurrency.”

Relative to other firms, the second largest banking branch in the United States has had an active presence in cryptocurrency, having already applied for dozens of crypto-related patents over the years. While the most recent filing focuses on the creation of a digital vault and custodial ownership, BoA also has patents pertaining to cold-storage, and payment methods for crypto that exchange in real-time. The list of patents and their nature give the indication that the bank is looking to prepare itself in the event of Bitcoin going mainstream, despite several BoA executives having been critical over the use of cryptocurrency, unsurprising comments given the relationship between crypto and the traditional world of banking. 

In addition to the aforementioned negative comments related to cryptocurrency, Bank of America has denied certain customers access to the purchase of crypto through credit cards.