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As Crypto Markets Grind Lower, Institutional Adoption Continues to Grow

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Two of Russia’s largest banks have launched portfolios dedicated to trading bitcoin and other cryptocurrencies, the local Kommersant newspaper reported Friday. The pilot projects are the latest examples of widening institutional acceptance of digital currencies in spite of the market’s recent correction.

Russian Banks to Offer Crypto Portfolios

Russians with bank accounts at Sberbank and Alfa Bank will soon be able to trade cryptocurrencies in a designated fund that will track price movements on some of the world’s largest exchanges. The portfolio, which is being overseen by the Bank of Russia, will include bitcoin, Ethereum and Litecoin.

Although the full list of assets has not been provided, the portfolio will be revised four times a year, with a trading algorithm balancing the holdings.

Sberbank is Russia’s largest financial institution, with the central bank owning 50% of its authorized capital. Alfa Bank is one of the country’s largest private banking institutions.

Although cryptocurrencies are largely unregulated in Russia, Justice Minister Alexander Konovalov recently confirmed that the asset class falls under the definition of “other property.” Two draft bills on cryptocurrency are still pending in the State Duma.

The Russian government had initially said it would ban cryptocurrencies as they could be use for money laundering and terrorist financing. As digital assets grew in popularity, government agencies took a decisive u-turn, with President Vladimir Putin even considering the launch of a state-backed cryptocurrency.

Institutions Preparing for Cryptocurrency Trade

Financial institutions from New York to London are planning to launch cryptocurrency trading operations in the not-too-distant future. An April survey by Thomson Reuters showed that one-in-five major banks are considering cryptocurrency trading in 2018, a sign that the niche industry is gaining mainstream acceptance.

Goldman Sachs has been gradually scaling its crypto operations in pursuit of a bitcoin trading operation that is expected to launch later this year. While Goldman won’t be trading bitcoin outright, it will serve in the capacity of market maker for bitcoin futures.

It has been argued that the first wave of institutional adoption of cryptocurrency was poorly timed given the market’s steep losses over the last two quarters. This has led to greater industry consolidation as major firms swept in to acquire cryptocurrency exchanges. Earlier this year, Monex Group announced it would acquire and rehabilitate Coincheck, a Japanese exchange that was hacked for $530 million. Goldman-backed Circle has also bought out Poloniex, one of the world’s largest digital exchanges.

In the realm of blockchain adoption, banks are pouring billions into new commercialization initiatives. According to a recent study by Greenwich Associates, blockchain budgets for major banks in 2017 swelled by 67% to $1.7 billion.

San Francisco startup Ripple has already brought on board hundreds of clients to test drive its blockchain-based payments and liquidity platforms. This includes big-name clients such as UBS, Standard Chartered and Santander.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 502 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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World’s Largest Asset Manager BlackRock Is Exploring Bitcoin

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The floodgates could be about to open in the cryptocurrency market. BlackRock, the world’s largest asset management firm, with $6.3 trillion in assets under management, is exploring bitcoin. The firm reportedly has established a working group to determine opportunities surrounding cryptocurrencies and blockchain technology, according to Financial News London.

The reaction is twofold. If BlackRock can do for bitcoin what it did for exchange-traded funds (ETFs), as the firm is largely responsible for opening up nearly every American’s 401(k) plan to ETFs, this would be a complete game-changer for cryptocurrencies. On the other hand, BlackRock chief Larry Fink in 2017 characterized bitcoin as an “index of money laundering.” What a difference a year can make.

Bitcoin Futures

Based on the report in Financial News, BlackRock has tapped various individuals from the company to comprise the blockchain exploratory group. This group is being spearheaded by Terry Simpson, a multi-asset strategist for the firm. Simpson and the team are expected to research ways in which BlackRock could benefit from bitcoin — specifically bitcoin futures — and share those findings with the senior management team, which would include Mr. Fink.

Incidentally, now that Ethereum is clear of being designated as a security, reports suggest that  ETH futures could be on the horizon.

BlackRock is also interested in gauging the temperature of its rivals that are participating in the space. JPMorgan has an asset management arm and the firm has a blockchain business. Jamie Dimon, JPMorgan CEO, also previously dissed bitcoin, similar to BlackRock’s Fink. For BlackRock to jump into bitcoin futures could bolster liquidity in the market and invite other asset-management firms to enter the space.

We don’t want to get ahead of ourselves, as it’s early days for BlackRock’s crypto committee. But clearly, there is enough potential opportunity on the institutional investment side for the firm to take these next steps. With the rise of custody solutions from the likes of leading cryptocurrency exchange Coinbase, it’s only a matter of time before hedge funds and other big investors jump in.

The development comes in the midst of a mini-rally in the broader cryptocurrency market, one that has been led by the No. 5 cryptocurrency by market cap, EOS, which is currently advancing nearly 9%. The rally has also bolstered the Ethereum price to within reach of $500.

It’s unclear if the BlackRock development is what turned the markets around, but given the influential nature of the world’s largest asset manager, it’s certainly contributing to the positive sentiment among crypto market participants after last week’s disappointing showing.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 24 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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South Korea’s Blockchain Association Draws Ire for Green Lighting Exchanges

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South Korea has the dubious distinction of allowing two of the major security breaches at cryptocurrency exchanges this year — Coinrail at around $40 million and Bithumb at $31 million.

But a self-regulatory agency in the country — the Korea Blockchain Association (KBA) — just gave its stamp of approval for the security of a dozen crypto exchanges operating there, including one of the companies that suffered a hack. The move is controversial at best and self-serving at worst at a crucial time in the industry when new and veteran crypto investors alike are awaiting market security.

The KBA is comprised of nearly two-dozen blockchain companies including Bithumb and about a dozen other local cryptocurrency exchanges such as Coinone and Korbit, as pointed out by The Korea Times. Here’s the rub.

Officials from these companies are the very individuals who performed in-house inspections of the safety and security of South Korea’s 12 leading cryptocurrency exchanges including recently hacked Bithumb, which despite apparent flaws were green-lighted at a Seoul press conference. According to CCN, the exchanges are: “Dexko, Hanbitco, OKCoin Korea, Huobi Korea, Bithumb, Upbit, Neoframe, Gopax, Cpdax, Coinzest, Korbit and Coinone.”

But the exchanges didn’t pass with flying colors, which taints the review and could give traders and investors a false sense of security for directing funds onto these platforms.

“This inspection does not guarantee the absolute safety of the 12 exchanges. The result indicates the 12 exchanges satisfy the minimum requirement for their operations. It is like a driver’s license. It is hard to tell whether they are good drivers or not” according to KBA Chairman Jeon Ha-jin.

The KBA appears to have kowtowed to the exchanges, doubling its review period in an attempt to give the trading companies more time to meet their seemingly loose standards.

South Korea’s Crypto Landscape

The Ministry of Strategy and Finance said today that the government will “ease requirements for new technology support, including the blockchain technology investment support.” This is expected to include expanded tax reductions “for new growth engine investment.”

Indeed, South Korea’s cryptocurrency regulatory landscape is evolving. Last month, the Financial Services Commission unveiled new guidelines to combat money laundering activity at financial institutions that transact in virtual currencies. Regulators also appear to have probed a trio of leading banks that have facilitated cryptocurrency accounts — Nonghyup, Hana Bank, and Kookmin.

The bottom line is that policymakers are requiring exchanges and banks alike to follow stricter know-your-customer standards, all of which is encouraging despite where the self-regulating KBA fell short and is a step toward the crafting of formal regulation of the cryptocurrency industry in South Korea.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 24 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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President Trump Unleashes Task Force Targeting Crypto-Fueled Fraud

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As a businessman, Donald  Trump has been curiously mum on the topic of cryptocurrencies — until now. The U.S. president has signed an executive order to activate a task force whose mission is protecting consumers against fraud in the cryptocurrency space, according to Bloomberg. It’s a sign that the U.S. government is throwing more resources at this nascent market even as any formal regulatory policy remains elusive.

Regulation is expected to be among the catalysts for a turnaround in the bitcoin price, but so far all U.S. agencies have been able to do is create peripheral groups to target scams.

At the helm of the new security unit, which was unveiled on Wednesday, is the U.S. Department of Justice. In addition, the task force is comprised of regulators from the U.S. Securities and Exchange Commission, which has its own digital currency task force, as well as officials from the Federal Trade Commission and the Consumer Financial Protection Bureau.

The Trump administration is lumping crypto-fueled fraud with that of other white collar crimes such as money laundering and Ponzi schemes, for instance, with a particular focus on protecting the elderly and veterans from these nefarious activities. It’s Trump’s stamp on an Obama-era security unit that was formed in response to the Great Recession. By signing an executive order, President Trump can control the focus and direction of the group’s activities, which now includes bitcoin.

On the Radar

It’s not as though crypto fraud isn’t already on the radar of government officials. In recent days, the U.S. DOJ announced the sentencing of a “so-called Bitcoin Maven” who was charged with running an unlicensed crypto-to-fiat transfer operation and laundering bitcoin that was obtained from narcotic-fueled transactions.

Theresa Lynn Tetley of Southern California, a former real estate investor, was sentenced to more than a year in federal prison in addition to fines and forfeiting 40 bitcoin, hundreds of thousands of dollars in cash and gold bullions, all of which she obtained illegally.

Tetley advertised on LocalBitcoins.com, which is a platform for buying and selling bitcoin locally. Meanwhile, Facebook in recent weeks eased its ban on select cryptocurrency projects and many in the cryptocurrency community are wondering if Twitter will follow in its footsteps, especially after Justin Sun, founder of the Tron Foundation, tweeted about having received a visit from Twitter at the Tron offices.

President Trump is a Wall Street guy, with the Trump Building perched prominently on 40 Wall Street, a stone’s throw from the New York Stock Exchange. He made his fortunes in real estate, which incidentally is an industry that has begun to support bitcoin for payments.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 24 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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