Weekly Recap 02.11.2019. – 08.11.2019.

Telegram Releases Crypto Wallet Despite Recent SEC Lawsuit

Telegram, the messaging app company turned blockchain startup, has released an early desktop wallet for its “gram” token.

Now users can download the test app for MacOS, Windows and Linux 64 bit on Telegram’s official website and get their keys on the TON testnet. The wallet asks users to save 24 seed words and create a password for payments, after which the wallet is ready to receive and send grams.

TON, an ambitious blockchain project by Telegram, which raised $1.7 billion in a closed token sale last year, had been previously scheduled to launch until October 31. In September, the team released the code for a full node, a validator node and block explorer, signaling that the project had been on its way to launch.

However, the launch was postponed after Telegram was sued by the SEC, which deemed grams to be unregistered securities and asked the court to prevent Telegram from delivering tokens to investors. Telegram subsequently got an approval from investors to postpone the launch until April 31, 2020, to win more time to clear the situation with the SEC.

The company is going to meet the SEC in court on February 18 and 19, 2020, in New York. (Neutral)

A Single Whale on Bitfinex Likely Manipulated Bitcoin’s Historic Surge

According to two U.S. academics, a single market whale on cryptocurrency exchange Bitfinex likely manipulated bitcoin’s historic surge of over 2,000% in 2017.

John Griffin, a professor at the University of Texas and Amin Shams, an assistant professor at Ohio State University, have jointly updated a paper they first published in 2018, saying that one entity on Bitfinex moved the bitcoin’s prices in 2017.

The updated, peer-reviewed paper, shared with Bloomberg and set to be published in a forthcoming Journal of Finance, examined stablecoin tether (USDT) and bitcoin (BTC) transactions, concluding that BTC purchases on Bitfinex increased whenever bitcoin’s value fell by certain increments.

“Our results suggest instead of thousands of investors moving the price of Bitcoin, it’s just one large one,” Griffin told Bloomberg, adding: “Years from now, people will be surprised to learn investors handed over billions to people they didn’t know and who faced little oversight.”

Bitfinex general counsel Stuart Hoegner rejected the claims, saying that the paper is “foundationally flawed” because it is based on an insufficient data set. “This is a transparent attempt to use the semblance of academia for a mercenary money grab. Updates or not, the paper lacks academic rigor,” Hoegner said. (Neutral)

China Introduces Blockchain-Based Identification System for Cities

On Nov. 4, Chinese daily tabloid newspaper Global Times reported that the newly developed identification system was jointly launched by three institutes in the city of Shijiazhuang.

The blockchain-based identification system will assign a unique, global digital ID to Chinese smart cities, aiming to improve the connectivity and data sharing between these cities. Smart cities across China have been able to apply for their own city identification code since Sunday.

Zhang Chao, director of the Zhongguancun Industry and Information Research Institute of Two-dimensional Code Technology, said that the system was developed by China, adding:

“The system will be independently distributed and managed by China, with a unified distribution rule, a resolution of distributed storage and tamper-resistant code.”

China has been focused on smart city development for several years, as new and more complicated challenges arise from an increasingly urbanized population.

Smart cities employ and integrate a variety of technologies to make municipal operations more efficient, including self-driving cars, renewable energy, energy-efficient buildings and communications systems. (Positive)

US Federal Reserve Hiring New Manager to Research Digital Currencies

On Nov. 3, the U.S central bank posted a new job opening to its website, looking for a new manager who is expected to contribute to the research of digital currencies, stablecoins and distributed ledger technologies.

Besides the principal duties and responsibilities, the position also requires the manager to promote and contribute to the development and implementation of new policies, regulations and research in relation to retail payment systems.

The new hire will be part of the Retail Payments section, which oversees the Federal Reserve Banks’ check and automated clearinghouse services, facilitates research in retail payments innovation, and addresses policy and regulatory issues concerning retail payment systems.

The listed maximum salary grade is federal grade 29, meaning that the Fed is willing to pay up to $250,700 per year.

A month ago, two members of the U.S. House of Representatives Financial Services Committee asked the Federal Reserve whether there are any plans to launch a U.S. dollar digital currency, expressing their concerns that the importance of the U.S. dollar could be in jeopardy “from wide adoption of digital fiat currencies.”

The fact that the central bank has now expanded the role of its Retail Payments manager to include digital currencies, stablecoins and distributed ledger technologies, could be an indication that the Federal Reserve is at least researching the possibility. (Neutral)

European Central Bank to consider Eurocoin

A draft document issued by the European Union suggests that the union should consider issuing its own digital currency.

Reuters reported on Nov. 5 that the draft in question — which is still subject to amendments — urges member states to develop a common approach to cryptocurrencies, possibly banning high-risk projects.

If the draft in its current form is approved, which could happen as early as next month, it could have far-reaching consequences. More precisely, Reuters suggests that such a law could escalate into an EU regulatory campaign against cryptocurrencies.

The draft prepared by the Finnish EU presidency also suggests that the European Central Bank should consider issuing its own digital currency.

The draft will be discussed this Friday, and perspective on its adoption will be presented on Dec. 5. (Positive)

European Union to Regulate Stablecoins

The European Union is taking a closer look at how to regulate stablecoins, but has no plans to issue one of its own.

A group within the EU presidency is working on a draft political declaration regarding the regulation of stablecoins. First reported by Reuters, the declaration will say the EU should regulate stablecoins in particular.

“This is a rather short declaration that is about the EU position on how to handle those new types of cryptocurrencies. The focus is on how those cryptocurrencies should be regulated.”

The declaration is being developed in response to Libra, the global stablecoin project introduced by Facebook in June. Despite regulatory qualms about the stablecoin, Libra has so far proceeded, with its governing council formally signing onto the project last month.

The declaration does not specifically recommend that the EU should develop its own cryptocurrency in response to Libra. (Neutral)

Hong Kong Regulator Will Unveil New Set Of Regulations For Cryptocurrency Exchanges

Hong Kong’s financial regulator — the Securities and Futures Commission (SFC) — will publish a new set of regulations for Bitcoin (BTC) and cryptocurrency exchanges today. The news was announced by Chief Executive Ashley Alder at a local fintech event.

The new requirements will detail how exchanges much approach custody, compliance such as Know Your Customer and Anti-Money Laundering rules, among other issues.

“The framework will enable virtual asset trading platforms to be regulated by the SFC, a major development which builds on a way forward I outlined at the same time last year,” said Alder.

SFC first established guidelines for crypto funds and exchanges in November 2018. Now, a year later, the regulator is taking that work forward, Alder told the conference on Wednesday.

Commenting on the news, private investor Dovey Wan says that this is a big deal for the entire cryptocurrency industry. She points out that Huobi, in particular, may already be on its way to becoming the first licensed exchange in Hong Kong. (Neutral)

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