hooded man with hand out bitcoin regulation

Welcome to your daily Block Explorer roundup. Hope you had a great weekend! Today we’re looking at bitcoin regulation as Coinbase’s UK CEO claims we need more. But first, let’s take a glance at the markets.

All the top 20 coins are in the green today after a fairly quiet weekend.

1. Bitcoin – $6715 (+ 0.7%)
2. Ethereum – $277 (+ 1%)
3. Ripple XRP – $0.33 (+ 1.8%)

Things are strangely calm out there at the moment. In fact, bitcoin is around the least volatile it’s been all year. Historically, a period of calm is usually snapped by a wild swing upward or downward, so don’t be surprised if we see some big price movements this week.

Biggest winner and loser in the top 20

IOTA crypto logo transparent background

Biggest winner: IOTA (+ 15%)
Biggest loser: Zcash (- 0.1%)

IOTA is leading the pack today after Fujitsu said it is “well-equipped to help roll out IOTA as the new protocol standard.” IOTA aims to facilitate the ‘internet-of-things’ using blockchain technology, so a partnership with IT giant, Fujitsu, will open a lot of doors.

Does crypto need more regulation?

“[Regulation] is the best way to provide individuals and institutions a safe environment to invest.”

That’s the verdict from UK Coinbase CEO, Zeeshan Feroz. He told CCN that regulation is a good thing for the cryptocurrency market in 2018, explaining that a lack of regulation leads to risk in the market.

“We see the value in having some form of regulation for crypto exchanges as a means of ensuring due diligence and transparency in the crypto space.”

The issue of regulation in crypto is a controversial one. Many claim it will bring transparency to the market (and allow institutional investors to wade in). Others, however, see it as destroying the values and decentralized ethos on which bitcoin was built.

Where do you stand on bitcoin regulation? Do we need more to help attract  investors? Or should we keep bitcoin as decentralized as possible? Let me know in the comment section below.

Wild bitcoin price predictions 2018: from $3,000 to $20,000 +

Over the weekend we’ve had yet more wild price predictions for bitcoin.

The bull: Tom Lee of Fundstrat Global Advisors doubled down on his previous prediction that bitcoin will rise above $20,000 by the year-end.

He says hedge funds are playing a bigger role in bitcoin behind the scenes which could lead to a surge in prices. He also pointed to the correlation between bitcoin and emerging market stocks.

The bear: Anthony Pompliano had originally predicted a $50,000 price tag by the end of 2018. He now says he was wrong, by about four years.

He sees bitcoin plunging to $3,000 and says the market might not bottom out until late 2019. As for a full recovery, that’s not on the cards until 2023, based on how long it took bitcoin to recover from previous spikes.

With four months left in the year, where do you see the price of bitcoin going? $3,000 or $20,000+?

That’s all for today’s roundup. We’ll see you back here tomorrow.

In case you missed it: Why do Bitcoin ETFs Keep Getting Rejected?

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The Canadian Securities Administrators (CSA) released a Staff Notice this week (June 11, 2018) providing additional guidance on the securities law implications for offerings of coins and tokens.  The notice was prepared by the CSA in response to common inquiries from cryptocurrency businesses and their advisors. Specifically, the notice addresses the sale of “utility tokens” and identifies scenarios where these sales may also have elements of investment contracts and be subject to securities regulation.  

 

On the topic of utility tokens, CSA Staff Notice 46-308 states:

“We have received submissions from businesses and their professional advisors that a proposed offering of tokens does not involve securities because the tokens will be used in software, on an online platform or application, or to purchase goods and services. However, we have found that most of the offerings of tokens purporting to be utility tokens that we have reviewed to date have involved the distribution of a security, namely an investment contract. The fact that a token has a utility is not, on its own, determinative as to whether an offering involves the distribution of a security.”

 

The notice goes on to highlight a few common scenarios for proposed coin and token offerings that could give rise to various securities law implications.  These scenarios include situations where:

  • A token is intended to be used in the operation of software or an online application that does not yet exist or is still under development, or the token is intended to be used to purchase goods and services that are not yet available
  • Tokens are not immediately delivered to buyers once purchased
  • The stated purpose of the offering is to raise capital, which will be used to increase the coin or token’s value or support the business issuing the coin or token
  • A business offering the coin or token or involved in its sale makes statements suggesting that the coin or token will become more valuable, or take other steps to create an expectation of profit

 

The CSA advises that any business seeking to offer coins or tokens to Canadians consult qualified securities legal counsel.  The CSA also invites applications to the CSA Regulatory Sandbox, which allows fintech companies an opportunity to test and develop innovative business offerings in an environment where they can work collaboratively with regulators and have temporary exemption from some consequences of securities regulation that may otherwise apply.  The sandbox approach to regulation is something that has also been pursued in Bermuda and the UK.

Who are the Canadian Securities Administrators (CSA)?

While most countries have national securities regulators, Canadian securities regulation is solely the jurisdiction of provincial and territorial governments.  The Canadian Constitution divides powers between the federal and provincial government and gives provinces the jurisdiction to regulate property and civil rights.  These provincial and territorial regulators are participants of the Canadian Securities Administrators, which is an organization that aims to promote consensus and harmonized regulations across the different jurisdictions.

 

What are “Staff Notices”?

Staff notices are issued either by a single regulator or by a group of regulators, such as the CSA.   Staff notices do not change securities legislation, reporting requirements or other policies and procedures.  Instead, the notices provide businesses and the public with insight into how regulators are interpreting and applying existing regulations.  The notices often focus on recent issues or areas of concern for the regulator and attempt to provide guidance on these matters to businesses and other market participants.  

Reddit and GitHub user iminehard noticed their cellphone experienced interference while near their impressive GPU mining farm. Following this, iminehard investigated the issue and found that there was a definite increase in noise around a specific LTE range. iminehard’s testing methodology and results are covered in more detail below.

“TL;DR – Large number of GPUs in open air crypto currency mining “rigs” emit substantial spurious emissions/noise on portions of the LTE spectrum used in the United States.”-GitHub and Reddit user iminehard

Testing for interference

iminehard documented their testing methodology along with their results. Testing made use of a Laptop, an RTL-SDL tuner, and an omnidirectional antenna for said tuner. SDL, or Software Defined Radio, allows you to use a computer to capture and produce RF signals, using its CPU to process the signals. This is different from regular radio, which uses specialized hardware to process the signal. Iminehard used this to capture the frequencies on which LTE operates.

Chart comparing parts of the RF spectrum between tests
Mining in blue, idle in green

The first pair of tests iminehard performed was a single GPU inside a case, first at idle, but overclocked and with fans on, and the second with the mining software bminer running. No perceptible difference can be seen on the charts comparing the LTE spectrum between the two tests. The lack of difference between the charts could mean a few things. Namely, it could mean that the case used blocked or grounded out the interference. Otherwise, it could mean that the interference generated by a single GPU is undetectably negligible.

Moving forward, iminehard tested their mining farm, with interesting results:

 

iminehard's GPU mining farm
iminehard’s GPU mining farm

iminehard used the same testing method that was used above on their farm. And unlike the previous test, there was a significant change in what iminehard called “range 1” of the LTE spectrum used by the United States (617-746 MHz).

Chart of RF spectrum showing the difference between tests
Mining in blue, idle in green. Sourced from iminehard’s investigation on GitHub

Results of interference

As shown above, there is some definite interference caused by large-scale GPU farms. This interference may cause service disruptions for those trying to use cell phones within the field. Due to the fact that this may cause service interruption, the farms may break federal laws regarding intentional interference. Or may cause the FCC to come knocking on your door asking you to knock it off.

Shielding to prevent interference

The above tests were performed on ‘open’ GPUs. ‘Open’ referring to the fact that the GPUs were not mounted in a metal case. A metal case may provide some shielding for the interference that the GPUs release, either due to grounding or construction. Aside from being sure to mount all GPUs in a real case, one could build a Faraday cage around the entire farm. A correctly built faraday cage should contain all the interference within the cage. One major downside to using a Faraday cage is that Faraday cages are conductive. If it collapses, it could damage equipment.

Photo by Pok Rie from Pexels

In a highly-attended public hearing held on May 14, 2018, the Chelan County public utility district (PUD) approved a three-month extension of a moratorium on the approval of electric service for new cryptocurrency mining operations.  The low energy costs in the Mid-Columbia Basin have attracted cryptocurrency miners from as early as 2013.  However, when Bitcoin soared in value in late 2017, the region saw a large increase in inquiries and applications from cryptocurrency miners.   

The current moratorium in Chelan County was unanimously approved in March, with officials requesting time to review and assess the potential impacts of increased cryptocurrency mining and electricity demands within their communities.  Citing similar energy concerns, the City of Plattsburgh in New York became the first municipality to ban cryptocurrency mining in early March, enacting an 18-month moratorium on all cryptocurrency mining operations.

Chelan County is one of three rural Washington counties (Chelan, Douglas, and Grant) served by five hydroelectric dams operating in the Mid-Columbia Basin.  The dams generate approximately six times the amount of energy required by residents and businesses, allowing the PUDs to subsidize local energy cost by exporting the surplus energy at premium rates.  While cryptocurrency mining operations may bring economic value to the rural region of Chelan County and surrounding areas, residents are also concerned that the increased local demand for electricity will result in an increase in household energy costs.  

The availability of low-cost electricity has also attracted unauthorized mining operations to Chelan County and the Mid-Columbia Basin.  These operations are sometimes established in residential areas, where the infrastructure and equipment are not designed to support heavy loads of electricity.  Chelan County PUD cited the risks posed by these unauthorized operations in its initial announcement of the moratorium, emphasizing the health and safety risk to its staff and county residents.  Shortly after implementing the moratorium, the Chelan County PUD directed its staff to enforce compliance with the moratorium by imposing fees and fines, disconnecting service, and reporting the unauthorized use of energy to law enforcement as theft.  

While restrictions on cryptocurrency mining activity have primarily been implemented at a local level, governments could take steps to regulate mining activity at a larger scale.  In January, Bloomberg reported that China was discussing taking steps to regulate energy usage by cryptocurrency mining operations, a move that could have a large impact on the global mining industry.  Given the increased attention to the energy demands of proof-of-work cryptocurrencies like Bitcoin, it seems likely that energy regulation will play an important role in the increasingly complex regulatory environment for cryptocurrencies.

The price of bitcoin has surpassed the $8,800 mark, rising 6 percent within the last 24 hours. Trading volumes across the major cryptocurrency exchanges have also increased beyond $26 billion for the first time in a while.

Upward trend.

Last month, bitcoin tested the $9,200 mark, but it didn’t take long before it fell to $6,500 after failing to sustain the momentum to bounce off $8,200.

Based on the fluctuations in the price the market has witnessed in recent weeks, it is quite likely that bitcoin will test the $9,200 mark again as it did last month, and it could even surpass it. A movement above the $9,200 level it reached late March could see bitcoin price entering the $10,000 region before April ends.

Psychological threshold.

Investors highlighted the $10,000 mark for bitcoin in November last year was both a psychological threshold and a key milestone. They predicted it would surge substantially, way before it got to $10,000. Bitcoin was relentless towards the ending of last year.  After breaking the $10,000 ceiling – it rose to $14,000 and eventually to $20,000, where the decline started.

Since the corrections of February this year, and the series of regulations in recent weeks, the market has struggled to hold forth any form of stability. As always, the price of most altcoins and tokens have taken a cue from bitcoin which has been battered since the turn of the year. Regional exchanges in Japan and South Korea have not been spared either as both have witnessed a decrease in trading volumes.

The new trend in the price of BTC is an ideal position for the currency to rally round for both the short and mid-term, given that more people are getting aware of cryptocurrency as adoption has increased.