Cryptoassets Correct After Impressive Spring Rally: BTCManager’s Week in Review July 17
The price of bitcoin has decreased over 33 percent since its all-time high just under $3,000 on June 12. By the end of calendar week 28, BTC-USD dipped below the $2,000 mark for the first time since May 27, 2017.
The uncertainty surrounding the implementation of SegWit2x on August 1, which aims to upgrade the bitcoin blockchain to combat its scalability issues has investors hedging their bets by selling their bitcoin holdings to take profit before a potential chain split could crash the price in the coming months.
The cryptoasset market overall also experienced a correction with the price of ether dropping from $400 to below $150 within weeks as the ICO hype is starting to take its toll on the Ethereum blockchain and its cryptocurrency price.
Other leading altcoins such as ripple, ethereum classic, and litecoin also booked losses this past week, dropping by over 40 percent, 17 percent, and 23 percent respectively as the cryptoasset market is going through a full-blown correction after its spring rally, which saw prices go up too much too fast to be sustainable.
This week’s review is compiled from contributions by Alex Lielacher, Jamie Holmes, Joseph Young, and Michael Scott.
Further reflecting the ongoing uncertainty around today’s cryptocurrency tax environment, newly released court documents appear to reveal the intention of the U.S. Internal Revenue Service (IRS) to more narrowly focus its investigation in its ongoing saga on obtaining user information from Coinbase.
According to the July 6 notice, the IRS is only going to be seeking records on users who have conducted “at least the equivalent of $20,000 in any one transaction type (buy, sell, send, or receive) in any one year during the 2013-2015 period.” This news seems to align with an article in Fortune, where the IRS noted that it wouldn’t be seeking information that could compromise customer account security.
This news aside, the IRS left the window open to seeking more information on the users in question indicating that it may still elect to “issue summonses in individual examinations of Coinbase users for the information that it no longer seeks in this proceeding.”
On July 12, Swiss private bank Falcon Group, which has 50 years of expertise in wealth management, announced it will be the first Swiss bank to offer blockchain asset management solutions to its clients.
Through cooperation with Bitcoin Suisse, Falcon Group now offers its clients the opportunity to buy and store bitcoin with cash holdings, with the private bank facilitating the access to exchanges and storage methods. Clients can leave the technical setup and acquisition of bitcoins via exchanges to Falcon’s blockchain asset management specialists, taking out much of the complexity associated with crypto assets.
The Swiss financial regulatory body, FINMA, recently approved bitcoin asset management, prompting the move by Falcon group. Also, given similar features similar to gold and both assets are complicated to obtain and secure, the recent move by Falcon Group displays the growing institutional interest in cryptocurrency. Also, a bitcoin ATM has been installed in the lobby of Falcon Private Bank`s headquarters in Zurich, accessible to the public during business hours.
Scotland-based startup Etherplay is using the Ethereum network to power the first-ever transparent skill gaming platform built on the blockchain. The platform is reminiscent of old school arcade gaming, where gamers pay to play simple games to beat the high score. The difference is that to play you have to pay in ether and the high scorers enter a jackpot to win ether.
The platform uses the Ethereum “world computer” as its backbone. The team believes that this enables for a transparent, free, and fair platform where players are assured of their rankings in the scoreboards. “For Etherplay [the Ethereum network] allows us to build a transparent and verifiable system. You can be sure that players are all treated equals and if we at Etherplay were trying to bend the rules, this would be visible to the whole world.”
Bitcoin certificate has become the most traded structured product on the traditional Swiss stock exchange, according to local sources.
Initially, issuers of the bitcoin certificate being traded on the Swiss stock exchange released 20 million Swiss franc worth of certificates, which is worth around $20 million. As demand started to increase from both individual and institutional investors, the supply of bitcoin certificates was increased by the issuers, to 40 million francs (approximately $40 million).
Within a relatively short period of time, bitcoin certificate has become the most traded structured product on the Swiss stock exchange, with consistent mainstream media coverage from well-respected financial media networks such as the Wall Street Journal as well as recognized regional mainstream media outlets.
Alternative investment firm North Capital announced that it has launched a new Ethereum investment fund called Proof Ethereum LCC that aims to capitalize on the growth of the Ethereum blockchain and the increase in the value of ether.
Proof Ethereum will “engage in mining of ether, in buying and selling mining contracts and royalty agreements, and will provide ‘proof of stake’ and other technology services related to Ethereum,” as well as hold ether as an investment, according to the company’s offering document.
Leading Australian banks ANZ and Westpac have concluded a successful trial where blockchain technology was used to digitize the issuance of bank guarantees in the commercial property leasing sector. The duo teamed up with IBM as well as shopping centre operator Scentre Group in order to test the technology.
In the commercial property market, bank guarantees are preferred by both the landlords and the tenants since there are benefits on both ends. Tenants are able to acquire property leases using a guarantee instead of a rental bond or a cash deposit, which allows for enhanced financial flexibility while the landlord is assured of rental income without having to deal with the administrative burdens related to the management of cash deposits.
Though guarantees are essential documents, they come with several challenges due to their physical nature. Guarantees require a high level of safekeeping since they are prone to damage as they are typically in the form of letters. For landlords with many tenants, storing these documents soon becomes a logistical challenge. There is also a lack of standardization as different banks use different verification methods before issuing the guarantees. The tracking of guarantees is a great challenge as well. Blockchain technology could be used to remedy all these shortcomings, according to the three firms involved in the project.