bitcoin exchange

Today, New York Attorney General Eric T. Schneiderman initiated the Virtual Markets Integrity Initiative, a reality discovering investigation into the arrangements and practices of platforms utilized by purchasers to exchange virtual or “crypto” monetary forms like bitcoin and ether. As a component of a more extensive push to secure cryptographic money speculators and purchasers, the Attorney General’s office sent letters to thirteen noteworthy virtual cash exchanging platforms asking for key data on their activities, inside controls and defends to ensure client resources.

The attorney general is asking for data on the platforms’ activities, inside controls, and safeguards to ensure client resources, as per an announcement from Schneiderman’s office. “As the letters explain, the initiative seeks to increase transparency and accountability as it relates to the platforms retail investors rely on to trade virtual currency, and better inform enforcement agencies, investors, and consumers,” Schneiderman said in a statement.

Platforms

The Investor Protection Bureau of the Office of the Attorney General sent letters to the following virtual currency trading platforms:

The initiative, in which the attorney general’s office sent letters to 13 virtual cash exchanging stages, tries to expand straightforwardness and responsibility as it identifies with the online offices that retail speculators depend on to exchange virtual money and better educate requirement offices, financial specialists, and shoppers.

Virtual Markets Integrity Initiative Questionnaire

The letters sent to the platforms include the questionnaire. It comprised of following sections:

  • Ownership and Control
  • Basic Operation and Fees
  • Trading Policies and procedures
  • Outages and Other Suspensions Of Trading
  • Internal Controls
  • Privacy and Money Laundering
  • Protection against Risks To Customer Funds
  • Written Materials

“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money. Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms,” said Attorney General Schneiderman. “Our Virtual Markets Integrity Initiative sets out to change that, promoting the accountability and transparency in the virtual currency marketplace that investors and consumers deserve.”

A journey through Bitcoin Village.

Ever since around Thanksgiving, it’s been impossible to tune out all of the noise that Bitcoin is making in the media. First, it was Bitcoin’s meteoric rise to $20K, followed by an abrupt crash, downward spiraling all the way down to under $6K at one point. The widespread mania prompted (foolish) people to remortgage their homes to avoid missing out on the promise of Lambos and wealth beyond our wildest dreams. Dreams that quickly turned into nightmares for many, as FOMO turned to FUD in a mere few months.

Beyond the wild swings in price due to its volatile, speculative nature, those that have been embracing the cryptocurrency as a replacement for the almighty dollar, have begun to show the rest of the world what life using Bitcoin is like.

Bitcoin Village,” a small section of Portsmouth, New Hampshire, is taking lead and showing the rest of the world that cryptocurrency is indeed a currency that can be used for everyday occurrences, like dining out at your favorite restaurant, visiting a theatre, ‘getting your hair did’, or shopping at a local mom and pop retail boutique.

The journey started with STREET, a casual dining restaurant that was featured on an episode of the Food Network’s ‘Diners, Drive-Ins, and Dives’, entitled ‘Sausage, Seafood and Shawarma’. Flyers for Bitcoin that include a “quick-start guide” and references to a “world famous” Bitcoin tour. Marketing materials in the lobby call out that Bitcoin is “accepted here” and boasts that “people who paid with Bitcoin saw food prices drop by 75%” likely referencing Bitcoin’s parabolic value increase in 2017.

The signage boldly asks “can your money do that?”

STREET also accepts other cryptocurrencies, such as Dash, Bitcoin Cash, and Litecoin. When management was asked “why crypto,” the response was “there wasn’t a reason not to accept it,” citing how easy it was to integrate an app into their iPad-based point-of-sales system. STREET’s sister restaurant, an eclectic pizza parlor located in the same plaza called STREET’ZA also accepts the same cryptocurrencies.

Also on this famed Bitcoin “tour” was La Maison Navarre, a French pastry shop; Fresh Press, a 100% organic smoothie and foodie spot; Lair’s Bench, a brewpub; and Fezziwig’s Food and Fountain, which offers coffee, tea, crepes, milkshakes, and ice cream sundaes. And that only covers food.

Sol Sunwear, which was the first retailer to join the Bitcoin revolution that started in Portsmouth, takes a tongue in cheek approach to their accepting cryptocurrency. Like STREET, each shop accepting crypto in Bitcoin Village has unique signage to alert customers and passer-by that Bitcoin is accepted here. At Sol Sunwear, a shop that sells designer eyewear, the sign reads “Bitcoin millionaires prefer Prada and Valentino.”

Another fashion outlet, Cotillion Bureau, offers second-hand clothing selected for its craftsmanship.

As a tourism hotspot, Bitcoin Village is also home to a few gift shops that offer unique and interesting trinkets. Pickwick’s Mercantile is one of them. Their “feminine” counterpart is Lady Pickwick’s. Deadwick’s Ethereal Emporium is chock full of oddities including crystal balls, costumes, antiques and more – a stark contrast to the technologically advanced nature of Bitcoin and cryptocurrencies. All of these places will accept cryptocurrency alongside traditional dollars and cents.

For entertainment, 33 Artspace offers a local value for live performances, and the Seacost Repertory Theatre is a historic venue for plays, musicals, and more. Portsmouth School of Ballet, Portsmouth Smoke and Vape, Oomph Hair Salon, Port City Coin and Jewelry, Pickwick’s at the Banke, and even Portsmouth’s local Lens Crafters franchise accepts Bitcoin and other cryptocurrencies. Yoga classes at Bikram Yoga Portsmouth can be paid for using crypto. Crypto can buy you almost anything in this town.

Portsmouth is also home to the Blockchain Institute of Technology and offers hands-on education on blockchain development. Passing by the window, students were hard at work while unmanned computers had screensavers that flashed the images of various cryptocurrency tokens.

Last but not least, the tour ends at the Portsmouth Free State Bitcoin Shoppe. This is where it all started, the “Cryptoanarchy Mecca,” as the two founders define it. Their mission is to “help people use better money.” At the Free State Bitcoin Shoppe, everything from crypto related T-shirts, cold storage hardware wallets, books, and propaganda are available – but here, only cryptocurrency is accepted. That’s right, they’ll turn away fiat money and encourage you to use their crypto ATM if you don’t already own Bitcoin or one of the many other cryptocurrencies accepted here (including Bitcoin Cash, Dash, Zcash, Monero, Ripple, Ethereum, Litecoin, and Dogecoin). It’s the founders of the Free State Bitcoin Shoppe that encouraged other retailers in the area to get involved in the “movement.”

And what a job they’ve done. No other place on the planet offers such a wealth of diversity in its people and its businesses, yet also accept cryptocurrencies so widely and openly. Portsmouth, NH has always been an innovative community, but it’s the one place on Earth where the future of currency – a future led by cryptocurrencies – is already in practice.

The Issue

On January 17th, 2018 the court of Midden-Nederland ordered Koinz Trading BV to pay the mining proceeds of 0.591 bitcoin to Mr. J.W. de Vries, or pay a 10,000 euro fine. Koinz Trading BV had two options: either pay up or declare insolvency.

About two weeks later, the company filed a claim for bankruptcy. If granted, the court would be unable to enforce the 10,000 euro fine. Paying the claim in bitcoin is the only remaining option, which can only happen after recognizing bitcoin as a verifiable claim. A verifiable claim essentially means proving the delivery of an underlying asset (property, assets, wire transfer) is possible.

The Ruling

According to a court document published March 20th, the court states that bitcoin seems to carry the hallmarks of a property right:

“Bitcoin exists, according to the court, from a unique, digitally encrypted series of numbers and letters stored on the hard drive of the right-holder’s computer. Bitcoin is ‘delivered’ by sending bitcoins from one wallet to another wallet. Bitcoins are stand-alone value files, which are delivered directly to the payee by the payer in the event of a payment. It follows that a Bitcoin represents a value and is transferable. In the court’s view, it thus shows characteristics of a property right. A claim for payment in Bitcoin is therefore to be regarded as a claim that qualifies for verification.”

The court found that bitcoin’s characteristics make it a verifiable claim. Since the obligations of the contract between Mr. De Vries and Koinz Trading BV were in bitcoin, the unpaid amount should be paid back with the same currency.

Conclusion

Koinz Trading BV owes 0.591 bitcoin to Mr. De Vries even after being granted bankruptcy. Due to volatility, both the business and investor face increased foreign exchange risk if bitcoin-denominated contracts are enforced in bitcoin rather than the fiat-equivalent. This ruling could set precedence in common-law systems having significant impacts in the burgeoning cloud mining industry and beyond.

Bitcoin Futures

U.K.-based cryptocurrency exchange Coinfloor has announced that it will be launching a physically settled bitcoin futures next month, making it a first.

Speaking at the Futures Industry Association’s annual conference in Boca Raton, Florida, Mark Lamb, co-founder of Coinfloor, said to Reuters that:

When you talk to the liquidity providers, they all say the same thing, which is they want a physically delivered futures contract so they can hedge their exposure across exchanges.

In December, Chicago-based registered exchange CME Group Inc and Cboe Global Markets Inc started offering exposure to cryptocurrencies such as bitcoin. Bitmex, CryptoFacilities also offer bitcoin futures, whereas Wall Street investment firm Cantor Fitzgerald self-certified a new contract for binary options tied to bitcoin, as announced by the U.S. Commodities Futures Trading Commission (CFTC). This makes Coinfloor, at least, the sixth company to list a product offering exposure to digital currencies.

However, unlike the aforementioned organisations, which deliver cash settled contracts, Coinfloor will be providing physically settled contracts. This means that when the contract expires, the asset that is being traded – bitcoin – will be delivered.

According to Lamb, there has been cause for concern among investors and large proprietary trading firms regarding cash settlements, with many believing that they can easily be manipulated. He is of the opinion that individuals may try to move the price of the indexes or auctions on spot exchanges that set futures prices in their favour.

After the first day of trading for the Cboe exchange in December, the platform saw the price of bitcoin jump in value by $1,000, pushing the price of one coin to above $17,000.

However, the idea of bitcoin futures is still looked at with some concern. In response, in January, J. Christopher Giancarlo, the chair of the CFTC, announced that the regulator would be developing a ‘heightened review‘ process for how cryptocurrency derivatives, such as bitcoin futures, come to the market.

The regulator has also come under fire in the past from the Futures Industry Association (FIA) for allegedly not consulting with the organisation regarding the CME and Cboe product launches. According to the FIA, the agency rushed through the process by permitting the exchanges to ‘self-certify‘ their bitcoin futures contracts.

Featured image from Shutterstock.

Arizona Could be the First State to Accept Bitcoin for Tax Payments

Arizona could become the first state that allows its citizens to pay their income taxes in Bitcoin. Senator Warren Petersen is sponsoring Senate Bill 1091 (SB 1091)–a bill that would allow income taxes to be paid in Bitcoin and other cryptocurrencies by the year 2020 if approved.

The bill passed Senate on Thursday–February 9th, 2018–and will be moving on to the House. Although public opinion has trended towards optimism regarding digital currencies of late, Arizona legislators have been considering everything that could possibly happen if the Arizona Department of Revenue (ADoR) allows citizens to pay their income taxes in Bitcoin–including what could go wrong.

Volatility

For instance, what if a citizen paid their income taxes in Bitcoin and minutes later there is a price swing of 10%?  When the ADoR receives confirmation on the transaction, the amount they will receive is most likely going to be worth less than what the citizen intended their income tax payment to be.

During Thursday’s hearing, Senator Steve Farley from Arizona said,

“What this does in effect is transfer the volatility risk off the person paying their taxes and onto the Department of Revenue and thus all other taxpayers. We take American dollars at the Department of Revenue to pay taxes. I think American dollars ought to be good enough.”

What Farley and other legislators in opposition to the bill are worried about is the volatile nature of Bitcoin. The Department of Revenue (DoR) would prefer possessing less volatile currencies with a more predictable store of value. For this reason, Bitcoin and other cryptocurrencies are an extremely unattractive option for the DoR. For example, according to BlockExplorer, the price of bitcoin was $20078.40 on December 17th. on December 22nd–the price of Bitcoin was $12015.10–$8063.3 less and a 40% decline from the December 17th price of nearly $20,000.

Ultimately, it is up to the House to determine the future of SB 1091. Despite the outcome–whatever it may be–it is a good sign that Blockchain related discussions and debates are spreading from r/Bitcoin, Twitter, and Medium.com and beginning to appear in college lecture halls and courtrooms. Although the future of cryptocurrency is an uncertain one, the fact that a digital asset and its underlying technology is being discussed by lawmakers and financial overseers in a professional setting is a good indication that there will be future growth in the industry.