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Virgin Bitcoin — Most In-Demand Crypto That Is Regulated Differently?

Demand for virgin Bitcoin is currently at its all-time high.

In a world where the global crypto community continues to face a growing number of regulatory hurdles with each passing day, the term “virgin Bitcoin” is starting to become more common among digital currency enthusiasts. However, it is of utmost importance to clarify what this term actually means and the significance it carries. 

According to Dave Jevans, the CEO of CipherTrace, virgin Bitcoins are essentially BTC tokens that do not have a transaction (TX) record associated with them. As a result of this, coins lack a defined attribution history, making them extremely useful for money launderers as well as other miscreants looking to mask the source of their illegally procured funds. Not only that, even the recipient typically has no traditional means of verifying the origin of the funds in question since virgin btc cannot be linked with any wallet or other cold storage entity.

Also, the Bitcoin blockchain serves as a decentralized ledger that allows anyone to follow the transaction history of a particular token with the touch of a button. For example, each Bitcoin carries with it a cryptographically provable history that contains a detailed record of ownership and transaction data associated with the token. Simply put, if a particular Bitcoin has been used to process even a single illegal activity in the past, all of its subsequent transactions will be tainted. This, according to Jevans, is one of the main reasons why certain cyber-savvy criminals go to such great lengths to launder their cryptocurrencies before putting them to use.

Virgin BItcoins on G-20 agenda  

With all of the aforementioned information in mind, it is important to consider that, at the recently concluded G-20 summit that took place in Osaka, Japan, the core governing committee agreed to adopt the standards of the Financial Action Task Force (FATF) — which are conventionally used in relation to fiat currencies — even for digital assets. On the subject, Cointelegraph spoke with Flex Yang, CEO of Babel Finance, who shared his thoughts on the issue at hand:

“When these standards go into effect, interexchange transactions will require transparency regarding senders and receivers of cryptocurrency. This opens doors to a wide berth of scrutiny as regulators probe different ledgers to determine what wallets participated in illicit crypto exchanges, hacks, etc. Bitcoin remains of interest to institutional investors, but their threshold for risk is much lower. With uncertainty as to how the crypto world will conform to the FATF standards, many traditional investors feel it best to air on the side of caution.”

Yang then went on to highlight the importance of virgin Bitcoins and how tainted crypto can become extremely tough to use when dealing with regulated financial institutions. For example, he pointed out that, if there existed even a sliver of proof that a particular Bitcoin had been used for shady activities in the past, that token could very well be seized or held indeterminately by regulators for a variety of legal reasons.“It’s like trying to deposit money in a bank that is from a drug cartel or criminal enterprise; banks will refuse to process transactions,” Yang explained.

So is it just virgin Bitcoin that people are after? 

As things stand, it appears as though a whole host of institutional investors are primarily looking to source virgin BTC, even though a uniform regulatory code applies to other altcoins as well. Simply put, nearly any currency — be it digital or fiat — can be used to facilitate illegal transactions. However, since Bitcoin offers its owners more transparency when compared to hard cash, virgin coins can be painted clean in a much easier manner. 

Additionally, it appears as though the Chinese government is particularly interested in virgin Bitcoins, even though it has not outwardly expressed any sort of leniency for individuals who may be in possession of these digital entities. According to Yang, China has yet to take any major action against its sprawling mining community. This is quite noteworthy because the demand for virgin Bitcoin seems to be spiking rapidly across the globe, and it seems as though mining operations in China are continuing to thrive and grow with each passing day. Yang then went on to say:

“The buyers are from US and other more regulated areas. China’s miners are just sellers….. Buyers may be pursuing these coins because of their novelty as well as the perceived ease-of-compliance in regulatory uncertainty. In truth, virgin Bitcoin might not benefit family funds or intuitions/individuals making the purchase. Still, there is clearly more confidence in virgin (or white) coin and it continues to fetch high premiums as a result.”

What is the problem with using Bitcoin that has a shady past?

At the very heart of the issue, Jevans notes that BTC that has a dark transaction history attached to it has more often than not been procured through a host of illegal pathways, such as global money laundering exercises or terrorism-related activities. And even after a particular token has been exchanged a large number of times, its payment trail can still quite easily be traced by investigators — thereby putting the owner at risk. The CEO of CipherTrace expounded on the topic by saying:

“Dark Tx histories also impede the fungibility of the btc if these tokens have a lower value. This a big concern for hedge funds that are concerned that their entire fund could be tainted by a few bad tokens. While this is less likely to affect those holding small amounts, larger traders could potentially, and unwittingly, hold larger amounts of stolen assets, lowering the value of their investment pool through association.”

Essentially, it appears as though even a single shady transaction can render a coin or token unclean. However, what is interesting is the fact that criminal Bitcoin can be sanitized by local governments by them selling such commodities after making a clear note of their past transactional history. The best example of this is when the United States Marshals Service held a sealed bid auction back in 2018 for a total of 3,813 Bitcoins (estimated to be worth $51.5 million at the time).

Virgin Bitcoin data worth taking a note of 

  • As per CipherTrace’s crypto intelligence team, over 75% of all transactions taking place on the black market are facilitated using Bitcoin.  
  • A large number of cyber criminals make use of techniques such as coin mixing to try and sever the path attached to a particular digital currency. And while it may still be possible to view the transaction history of a given token using advanced cryptographic methods, coin mixing makes the process extremely complicated. 
  • Russian conspirators involved with the alleged 2016 election hack in the U.S. were presumed to have funded their operations in part via a host of different Bitcoin mining operations based across the globe. 
  • In a similar vein, Jevans told Cointelegraph that virgin Bitcoins were also used to fund the registration payment for dcleaks.com.
  • CipherTrace’s studies have revealed that the recent crackdown carried out by the Iranian government on its mining sector were premeditated. Not only that, there are strong indicators suggesting that the local regime is currently making use of the confiscated mining gear for its personal gains.

Lastly, Jevans also commented on the premiums associated with virgin Bitcoin and how they differ from premiums related to regular BTC. On the subject, he was quoted as saying: 

“When we investigated BestMixer in November of 2018 they charged 5% for their Gamma level which was supposedly virgin coins. CipherTrace research revealed that these tokens were not in fact unused rather they had been cleansed via exchange hopping. This certainly raised the visibility and value of freshly mined coins. Moreover, the falling regulatory curtain is raising the value of clean coins as it becomes harder to launder funds through regulated exchanges.”

Additionally, according to Yang, premiums associated with virgin Bitcoin currently lay around the 10% mark. However, established players who have been operating within this domain for many years now are known to markup virgin coins by over 30%.

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Group of Digital Asset Trade Associations to Establish Global Cryptocurrency Association

A group of trade associations representing several national Virtual Asset Service Providers announced the launch of a global collaboration for firms in the industry.

A group of national trade associations representing the local Virtual Asset Service Providers (VASPs) announced their intention to establish an association to provide a global representative for firms in the industry in a press release shared with Cointelegraph on June 29.

Per the release, the aforementioned Japanese trade association signed a Memorandum of Understanding (MoU) in Osaka aiming to establish the association. The associations that signed the agreement include the Australian Digital Commerce Association (ADCA), Singapore Cryptocurrency and Blockchain Industry Association, Japan Blockchain Association, Korean Blockchain Association, Hong Kong Blockchain Association, and the ​Taiwan Parliamentary Coalition for Blockchain & Industry Self-Regulatory Organization.

The signing ceremony took place at the inaugural V20 VASP summit, which took place in parallel with the G20 meeting in Osaka which has seen VASP representative collaborate with regulators. ADCA founder and V20 convenor Ronald M. Tucker commented:

“We’ve brought everyone on the journey to create a new body that will assist in establishing a means to engage with government agencies and the FATF to ensure our best interests are understood and valued at an international level.”

The press release explains that the MOU aims to establish dialogue with governments and regulators, support information exchange, promote policy and procedures, increase awareness of the industry and facilitate compliance.

As Cointelegraph reported earlier this month, G20 finance ministers and central bank governors asked the Financial Stability Board (FSB) and global standard-setting organizations to monitor risks around crypto assets.

Adam Back, who invented the hashcash proof-of-work system and was one of the first people to work on bitcoin (BTC), spoke about the positive uses of blockchain at this year’s G20 summit.

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Ripple (XRP) Could Surge or Tank in the Next Three Days

Ripple XRP

Ripple’s XRP prices are on the rise
spurred on by its recent partnership with Money Gram. The cross border money
mover has elected to use Ripple’s xRapid and XRP to settle its foreign exchange
transactions. Consequently, Ripple Inc, which owns 60 percent of all XRP now,
also owns MoneyGram shares worth $30 million. There is also the option of purchasing
$20 million more worth of MoneyGram equity in the near future.

Speaking on the development Money
Gram’s chief executive and chairman, Alex Holmes said:

 “Through Ripple’s xRapid product, we will have the ability to instantly settle funds from US dollars to destination currencies on a 24/7 basis, which has the potential to revolutionize our operations and dramatically streamline our global liquidity management.”

The MoneyGram International Inc shares have also soared past the 155 percent  after its tie-up with Ripple. The giant cross border money transactions giant has over $1.4 billion in annual revenue. Pundits say that the match between Ripple and MoneyGram highlights increased investments into and from blockchain. It also shows that the crypto industry is getting off the sidelines and going mainstream.

XRP Prices in The Balance

Is the XRP price rise going to hold or
slide back to normalcy once the excitement recedes? A lot more is going on
globally this week that could keep the surge on, or halt investor interest. The
G20 leaders summit happening in Osaka Japan on June 28-29 is one of those
events whose outcome could spur or cause a crypto dump.

US President Donald Trump and Chinese President Xi Jinping have gone head to head in a trade war that’s have been turning investor attention to crypto. The leaders of the world’s biggest economies have gone for tit for tat tariffs skirmishes. This has, however, escalated to defense and geo-strategic concerns. The indication that the US Federal Reserve was getting reactionary on interest rates in return has been a big shot in the arm for cryptocurrencies.  

The shift in policy by the Federal
Reserve has positively influenced the fortunes of other financial assets,
especially crypto and gold.   On June 19,
for instance, Jerome Powell, the chairperson of the US Federal Reserve,
indicated that they were going to maintain the interest rates at the 2.25-2.5
percent target range. With that, Bitcoin’s prices surged past the $11,000 mark,
gaining impressive gains of $1,000 in a day.

As it is, the Federal Reserve is
maintaining the current borrowing costs, defying the pressure from a government
concerned about a cooling economy. If the Trump, Xi Jinping meeting in Osaka,
nevertheless, brings about an economic cease-fire, the Fed might not need to
take drastic measures. This might lower the current surge in interest in crypto
and gold considered as safe havens in an uncertain Wall Street future.

The BIS Rising Interest in Digital Assets Regulation

The V20 summit will commence alongside the G20 summit. This platform is devoted to virtual asset service providers’ (VASPs) and is set to discuss the Financial Action Task Force (FATF) recommendations. There also will be a discussion on the FATF’s forthcoming proposal and its impact.

The Bank of International Settlements is also publishing its Annual Economic Report and Annual Report on June 30. The BIS is not particularly bullish on crypto and has issued a warning beforehand on financial services offered by tech firms. It has said that they could bring in new risks for the banking sector.

What the upcoming publication holds may influence the XRP price since its C-level team has been making headways with the world’s central banks. More good news for Ripple is that SBI Ripple Asia is planning a full launch Money Tap app in-store payments.  The app is dependent on xCurrent, and the SBI Holdings CEO Yoshitaka Kitao joined Ripple’s board. SBI is also launching real-time XRP trading in its virtual currencies exchange.

The post Ripple (XRP) Could Surge or Tank in the Next Three Days appeared first on Ethereum World News.

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Cypherpunk Adam Back Speaks of Blockchain Benefits at G20 Meeting of Finance Ministers

Adam Back, a cypherpunk who was one of the first people to work on BTC, attended a seminar at the G20 meeting of finance ministers.

Adam Back, who invented the hashcash proof-of-work system and was one of the first people to work on bitcoin (BTC), spoke about the positive uses of blockchain at G20. Cointelegraph Japan reported on Back’s comments at a meeting of finance ministers and central bank governors in Japan on June 8.

Sitting next to the governor of the Dutch central bank, Back said he believed blockchain was another move to open networking — and said financial institutions stand to benefit from the technology because it would mean international transfers no longer need to go through intermediary banks with questionable creditworthiness.

When speaking in Fukuoka City at the seminar entitled ‘Multi-Stakeholder Governance for a Distributed Financial System,’ Back said BTC and other crypto assets “are the electronic cash for the global internet world.” He added:

“I don’t see it as large enough to affect monetary policies for major currencies like the euro and Japanese yen.”

Back’s attendance was defended by Junei Murai, a University of Tokyo professor who moderated the discussion. He said:

“It was meaningful to show a place where various stakeholders gather to build a decentralized financial system.”

Japan’s Financial Services Agency has described Back as a legendary cypherpunk who was able to facilitate useful discussions about the role that crypto and blockchain can play in the future. Back is also the founder and CEO of Blockstream, a blockchain development company.

After the G20 meeting, a joint communiqué co-signed by leaders urged the Financial Stability Board and global standard-setting bodies to monitor the risks surrounding crypto assets — warning that while they could pose benefits to the economy, money laundering and terrorism financing are potential byproducts.

In the run-up to the meeting, crypto advocates had warned that a “balance should be found between privacy and compliance” in any strategy pursued by the G20.

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G20 Finance Leaders Ask Global Regulators to Consider Multilateral Response to Crypto

G20 finance ministers and central governors ask the Financial Stability Board and other regulators to consider a multilateral approach to crypto.

G20 finance ministers and central bank governors have asked the Financial Stability Board (FSB) and global standard-setting organizations to monitor risks around crypto assets. The request was made in a joint communiqué published on the website of Japan’s Ministry of Finance on June 9, following the G20 meeting held in Fukuoka, Japan.

The leaders that cosigned the document state that they urge relevant institutions to give greater consideration to crypto assets and consider appropriate action:

“We ask the FSB and standard setting bodies to monitor risks and consider work on additional multilateral responses as needed.”

The joint statement also points out that “technological innovations, including those underlying crypto-assets, can deliver significant benefits to the financial system and the broader economy.” This exact sentence was also included in the document released after the G20 summit held in July last year in Buenos Aires. After expressing such optimism, the authors of the paper also raised concerns over those technologies:

“While crypto assets do not pose a threat to global financial stability at this point, we remain vigilant to risks, including those related to consumer and investor protection, anti-money laundering (AML) and countering the financing of terrorism (CFT).”

The latest statement notes that the involved parties look forward to the adoption of the Financial Action Task Force’s (FATF) Interpretive Note and guidance on crypto assets “at its [FATF’s] plenary later this month.” The leaders also state that they reaffirm their commitment to applying the recently amended FATF standards for crypto.

The document also states that the finance ministers and central bank governors welcome work concerning crypto carried out by international regulatory bodies, the International Organization of Securities Commissions and the FSB.

As Cointelegraph reported yesterday, blockchain analysis firm Chainalysis, which has “engaged directly with global regulators,” noted that it would be surprising if the involved parties agree on something new during the G20 summit this year.

In April, Japanese media reported that during the meeting of central bank governors and finance ministers in Fukuoka, leaders were expected to establish new AML regulations.

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What to Expect at G-20: Money Laundering and Crypto Discussion

On the eve of the G-20 Financial Ministers and Central Governors Meeting.

One of the main themes to be discussed at the G-20 Financial Ministers and Central Governors Meeting this weekend has to do with money laundering and cryptocurrency. What kind of agreement would be a surprise? Even for the purpose of introducing Anti-Money Laundering (AML), should we allow our financial privacy to be compromised? Alexander Zaidelson, the CEO of Beam, shared his views with Cointelegraph.

A new agreement on crypto and AML?

Jiji Press, a major Japanese publication, recently reported that there will be “a new kind of agreement as to cryptocurrency and AML/CFT.“ But for blockchain analysis firm Chainalysis, which has “engaged directly with global regulators,”  it is surprising if they agree on something new. Jesse Spiro, head of policy at Chainalysis, expects Financial Action Task Force (FATF) guidance, which will be published later this month, to reflect the draft guidance that they issued in March this year.

“It would surprise us if FATF substantially modified the pre-existing draft in any major substantive way.”

He summarized the FATF draft as an agreement in the industry that “certain standards, including proper Know Your Customer (KYC), enhanced due diligence (EDD), transaction monitoring, and suspicious activity reporting are necessary to combat money laundering”

The Financial Action Task Force (FATF) is an intergovernmental body formed to fight money laundering and combat the financing of terrorism. In a previous G-20 meeting, the G-20 said that they would “commit to implement the FATF standards as they apply to crypto-assets.”

An official self-regulatory organization in the host country watches the G-20 closely

The Japan Virtual Currency Exchange Association (JVCEA) refrained from predicting the outcome of the G-20 summit but told Cointelegraph that it would be ready for compliance:

“We are watching global movements as to AML/CFT very closely. We supervise our members, Japanese crypto exchanges to make sure that they comply with them.”

According to Alexander Zaidelson, the CEO of a privacy coin-centered Beam, the governments “may eventually strengthen the regulatory scrutiny to on- and off-ramps, i.e. places where cryptocurrency can be converted into Fiat currency, mostly exchanges” He also added that there also may be an “attack” on unregulated exchanges.

Beam is known as a privacy coin that adopts a protocol called MimbleWimble, which seeks to improve both privacy and scalability at the same time. When asked if he is concerned that the G-20 might somehow ban anonymous coins, Zaidelson answered:

“I don’t think it is possible to ban anonymous coins, and the regulators understand it.”

He continued:

“I think that a balance should be found between privacy and compliance, where people can choose the level of compliance that works for them. It is similar to how cash works today – private people do not need to report cash transactions, but businesses do.”

Although it is possible that the regulators could make it difficult to convert fully anonymous coins to fiat, Zaidelson argues that privacy coins’ opt-in compliance can deal with that case.

Money laundering, Privacy, and Public Interest

“I think that privacy is a basic human right,” according to Zaidelson, which he thinks is something to keep in mind when talking about money laundering. For him, it is not acceptable if the regulators have all financial transactions available for review at any given moment:

“It is not possible to check every PC and every mobile phone for the presence of a crypto wallet. It is not possible to block the Internet. Instead of engaging in a futile fight against anonymous cryptocurrency, the regulators should work together with the developers and find ways to make them a part of the existing ecosystem.”

Spiro of Chainalysis thinks of the balance between money laundering and privacy in terms of “public interest and safety.” He went on to say:

“For example, the European GDPR laws, which were enacted to protect privacy, have clear rules that outline when the transmission of personal data warranted, including if it is ‘in the public interest,’ or necessary to protect the public.”

Spiro thinks a similar criterion should be applied to cryptocurrency. He sees the merits of “cryptocurrency compliance best practices like KYC and blockchain analysis” in “detecting and preventing illicit activities such as child exploitation, human trafficking, narcotics trafficking, and terrorism.”

At the same time, he makes sure that Chainalysis does not collect any personally identifiable information from exchanges. What they can do instead is know “a particular address belongs to a customer at that exchange, not who the customer is”

It might be worthwhile checking what the G-20 agreement this weekend might imply for the balance between privacy and money laundering.

Read more about the previous G20: G-20 Summit Results: Crypto Is Important for Global Economy, Needs to Be Regulated and Taxed