2019's Top 10 Institutional Actors in Crypto

There were signs in 2019 that large institutions are moving closer to embracing cryptocurrency and blockchain technologies.

Slowly but surely, institutional players are moving into the crypto/blockchain neighborhood.

According to a 2019 Fidelity Investments survey, about 22% of institutional investors already have some exposure to digital assets, with most investments having been made within the past three years. Moreover, 4 in 10 respondents say they are open to future investments in digital assets over the next five years.

“Institutional investor involvement in cryptocurrency in 2019 has been primarily about getting the infrastructure in place, such as the opening of Fidelity Digital Assets and Bakkt,” Jonathan Levin, co-founder and chief strategy officer of Chainalysis, told Cointelegraph, adding: 

“Now that the infrastructure is in place, we expect institutional volume to come as long as they can get comfortable with the compliance and market risks of cryptocurrency.”

Banks and insurance companies seem to be more engaged than other institutional segments, commented Levin, “but once institutional support from these key sectors are in place, we expect an uptake from investors such as funds and family offices.” 

Clearly, there is still work to be done — particularly with regard to compliance — but with that as a preamble, here are our top 10 institutional actors in the last year:

1. Libra Association (stablecoin)

In June, Facebook aroused the crypto — and financial — world with its announcement of a new digital currency, Libra, and the formation of a Switzerland-based, non-profit organization, the Libra Association, to manage it — with a mandate to “help reinvent money and transform the global economy.”

The permissioned blockchain-based currency was to be tethered to a basket of bank deposits and short-term government securities. The new association began with 27 corporate partners, including Mastercard, Paypal, Visa, Vodafone, eBay and Uber.

The project ran into immediate headwinds, however, especially from global regulators who feared for their own fiat currencies and the creation of a shadow banking system. Two United States senators wrote a letter to Mastercard and Visa, among others, expressing “deep concern” that the project could destabilize the global financial system — as well as facilitate criminal and terrorist financing. Apple CEO Tim Cook said companies like Facebook shouldn’t be in charge of a global currency. Partners exited, and, by late 2019, one-quarter of the original partners were gone, including Visa, Mastercard, PayPal and eBay. 

Reports of Libra’s demise may be premature, though. Central bankers have been spurred to pilot their own digital currency projects in anticipation of Libra’s debut, and, in early December, the Libra Association was still projecting a 2020 stablecoin launch at least in some parts of the world, like Europe. 

Related: Libra Might Become Unrecognizable by Navigating Regulatory Concerns

2. JPMorgan Chase & Co. (stablecoin)

In February, J.P. Morgan, the largest bank in the U.S., introduced JPM Coin, claiming to be the first bank to create and test a digital coin representing fiat currency. The goal was to allow instantaneous payments between the bank's institutional clients on a permissioned blockchain platform. 

The stablecoin was to be 1:1 redeemable in a fiat currency (U.S. dollars) held by J.P. Morgan — unlike most stablecoins, like Tether (USDT) and USD Coin (USDC), that claim to have a 1:1 fiat collateral. It was slated to roll out in late 2019, but it had still not launched publicly as of Dec. 10.

J.P. Morgan has been actively exploring blockchain and crypto-related initiatives for several years — notwithstanding the fact that CEO Jamie Dimon once called digital currencies a "fraud." Its Interbank Information Network, a bank payment and data-sharing network based on J.P. Morgan’s in-house blockchain platform Quorum, implemented in 2018, has some 365 global members today and will expand in 2020 to Japan. 

Related: Ordinary Stablecoin or XRP Killer? What We Know About JPMorgan Chase’s New Cryptocurrency

3. Intercontinental Exchange/Bakkt (exchange)

A new institution-sized exchange company joined the crypto world in September 2019 when Intercontinental Exchange (ICE), which also owns the New York Stock Exchange, launched Bakkt, the first exchange to offer physically settled Bitcoin (BTC) futures contracts. The Chicago Mercantile Exchange, by comparison, has been settling BTC futures contracts in fiat currency, not Bitcoin, since December 2017. 

After a slow start, Bakkt’s Bitcoin futures volume edged higher through 2019 and, on Nov. 27, hit a new all-time high with 5,671 futures contracts traded (volume: $42.5 million). 

In early December, Bakkt launched the first regulated Bitcoin options and cash-settled futures in the U.S. The announcement came just a few days after Bakkt CEO Kelly Loeffler was named to fill the U.S. Senate seat of Georgia’s retiring Johnny Isakson (R).

Related: Wall St to Washington: Bakkt Launches New Products, CEO Joins Senate

4. U.S. Commodity Futures Trading Commission 

The incoming chairman of U.S. Commodity Futures Trading Commission (CFTC), Heath Tarbert, said in October that Ether (ETH), as well as Bitcoin, are commodities — not securities — and, as such, will be regulated under the Commodity Exchange Act with the CFTC as its primary regulator. 

“My guess is that you will see in the near future Ether-related futures contracts and other derivatives potentially traded,” stated Tarbert. 

This statement provided regulatory clarity and some relief to Bitcoin and Ethereum developers and investors, present and future. If the CFTC was going to regulate BTC and Ether, then surely it wasn’t going to ban them, which is a real concern. 

In his first public appearance in October, Tarbert also emphasized the importance of blockchain and digital assets. The U.S. has been falling behind in blockchain innovation, receiving little support from U.S. policymakers and regulators, according to Perianne Boring, CEO of the Chamber of Digital Commerce. However, here the chairman of the CFTC said, “I want the United States to lead because whoever leads in this technology is going to end up writing the rules of the game.” This was an “incredibly important” development, Boring told Cointelegraph. 

Related: CFTC’s New Chairman: Who Is Heath Tarbert, What He Thinks of Crypto

5. Fidelity Investments (custody):

Custody isn’t the most exciting segment of the crypto world, arguably, but it is a critical one, especially as the industry matures. It figures in many real-life investment decisions. How, for instance, will older Bitcoin holders pass on their BTC to their heirs when they die? 

In 2019, Fidelity Investments, the mutual fund colossus ($7.2 trillion under administration), stepped up with a full rollout of its Fidelity Digital Assets custody unit, four years in the making, which targets institutional investors like hedge funds, family offices and market intermediaries.

The firm’s carefully charted deployment route was marked by a series of milestones: Initial research (2014), formation of a blockchain incubator and initiation of a proof-of-concept process (May 2015), acceptance of Bitcoins as charitable donations by Fidelity Charitable (November 2015), formation of academic and industry partnerships (June 2016), acceptance of Ether for charitable donations (September 2017) and Fidelity Digital Assets unit announced (October 2018). 

In mid-December 2019, Fidelity Digital Assets announced that it may add support for Ether in 2020 if there is sufficient demand for it.

Related: Financial Institutions Use Stablecoins to Shake Things Up in 2020 

6. Utility Settlement Coin project/Fnality International (bank consortium)

Settling cross-border trades is often cited as a promising use case of blockchain technology, and, in 2019, a global banking consortium moved closer to putting that proposition to the test.  

In June, 14 financial institutions from the U.S., Europe and Japan collectively invested $60 million in a new company, Fnality International, that will build an Ethereum blockchain, upon which trades among the banks will be settled using a token called the Utility Settlement Coin (USC) — backed with cash collateral deposited in central banks.

Spearheaded by Switzerland’s UBS in 2015, the Utility Settlement Coin project’s additional shareholders include Banco Santander, Bank of New York Mellon, Barclays, CIBC, Commerzbank, Credit Suisse, ING, KBC Group, Lloyds Banking Group, Mizuho Bank, MUFG Group, Nasdaq, Sumitomo Mitsui Banking Corporation and State Street Bank & Trust.

One key challenge facing the consortium will be interoperability, according to Olfa Ransome, Fnality’s chief commercial officer:

“Not only must interoperability be achieved between legacy and digital venues and platforms, but also between competing blockchains — to support atomic settlement regardless of the standards and protocols — and between different means of on-chain payment.”

The platform is expected to be operational by mid-2020 once regulatory approvals have been secured.  

Related: Bank to Basics: USC Project Seeks to Disrupt Traditional Wholesale Banking

7. Fairfax County Retirement Systems (pension fund)

In February, Virginia's Fairfax County’s Retirement Systems (FCRS) became the first U.S. pension fund to invest at least a portion of its retirement holdings ($21 million) in cryptocurrency assets. The allocation, through Morgan Creek Digital, was just a small portion of the system’s assets, “given that the blockchain technology industry is still in its early stages," explained FCRS to its participants. It reportedly invested another $50 million in a second Morgan Creek Digital fund in October.

Pension funds’ conservative mandates have made them reluctant crypto investors until now; they are generally more cautious than hedge funds and university endowments. 

 Related: First Pension Funds Investing in Crypto — a Sign of Things to Come?

8. Chicago Mercantile Exchange (exchange)

Bakkt drew many of the crypto exchange headlines in 2019, but the Chicago Mercantile Exchange (CME), the world’s largest futures market, notched the most Bitcoin futures contracts. At its height, in May 2019, CME was averaging $515 million in daily volume and more than 13,600 futures contracts each day. On May 13 alone, Bitcoin traded a record daily volume of 33,677 contracts, equivalent to over 168,000 BTC (worth $1.705 billion at the time). 

CME’s activity dropped toward the end of 2019, though — from a year-to-date daily average of more than 7,000 Bitcoin futures contracts in May to less than half of that by early December.  

CME continues to expand its crypto product offerings, however, announcing in November plans to introduce options on Bitcoin futures contracts by mid-January 2020. Some industry players believe the Bitcoin derivatives market will one day dwarf the BTC spot market. 

Related: CME's Futures Options Sprinted Out of the Gate but a Marathon Lies Ahead

9. B3i Services AG (insurance consortium)

In July, the insurance industry’s high-profile blockchain consortium, B3i Services AG, announced its first product, a catastrophe excess-of-loss reinsurance coverage. The consortium expected it to be on the market for the January 2020 renewal season. 

Formerly known as the Blockchain Insurance Industry Initiative, B3i, incorporated in 2018,   employs blockchain technology to reduce friction in the transfer of risk. Each reinsurance contract in the network is written as a smart contract atop an open-source Corda blockchain platform. The smart contracts are capable of automatically validating a condition and can determine, for example, whether an asset should go to a nominee or back to the source, or a combination thereof. 

B3i started with five insurance companies experimenting with Ethereum in May 2016. Today, the consortium encompasses 18 insurance companies and reinsurers from five continents — including Aegon, Allianz, Axa, Swiss Re, Liberty Mutual, Munich Re, Tokio Marine and Scor, among others. 

10. Harvard University (university endowment)

When it was reported in April that Harvard University’s investment arm, Harvard Management Co. (assets: $38.3 billion), was making its first crypto investment, it was hailed as a win for the cryptocurrency/blockchain sector, which has struggled to attract institutional investors with deep pockets. 

Admittedly, the investment in blockchain-toolmaker Blockstack tokens was worth less than $12 million, a drop in the bucket for the world’s largest university endowment, but following Yale University’s lead in 2018 — that school invested in two crypto funds, managed by Andreesen Horowitz and Paradigm, respectively — it could signal a growing trend among high profile U.S. universities. Other elite university endowments, including Stanford and MIT, have been quietly testing the crypto waters, reported Cointelegraph in May.

Related: Ivy League Universities Set to Boost the Crypto Industry With an Injection of Institutional Investment

Compliance issues persist

Key obstacles remain, however, before institutions really plant their flag in crypto/blockchain territory. Chainalysis conducted a poll of financial institutions last November, in which more than half of the respondents cited compliance in one form or another as the issue preventing them from investing more in cryptocurrency. Also, 39% said they worry about the inability to control illicit activity, while nearly 18% indicated that they are unsure of their ability to comply with government regulations in the space. 

With growing commitments from heavyweights, like Fidelity, JPMorgan and ICE, however, and even stirrings from endowments and pension funds, there were clear signs in 2019 that large institutions are moving closer to embracing cryptocurrency and blockchain technologies in 2020. 

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Is the Future of Blockchain Tech Innovation in the East?

The U.S. could lose its position as the innovation leader as the Asian tech market has grown on the global stage.

Since the end of World War II, the United States has been an undisputed global leader in innovation. From putting a man on the moon to the “Traitorous Eight” of Fairchild and the birth of today’s Silicon Valley, the U.S. has been at the forefront of embracing emerging technology. This position has given the country a strategic advantage in dictating how technology is adopted and setting the basic standards for its use. However, as we enter the new decade, the U.S. is at risk of losing its place as the leading innovator to Asia, impacting our technological future significantly.

The rise of China

The largest competitor to the American innovation hegemony is China. Over the past few years, China has heavily focused on developing emerging technologies such as blockchain and AI. While PwC survey respondents viewed the U.S. as the most advanced territory developing blockchain today, they believe that in the next three to five years, the leader will be China. 

Over 500 projects have registered with China’s Cyberspace Administration since being required to do so this past January. There are nearly three times as many blockchain-related patents filed in China than the next closest country. China’s spending on blockchain technology will exceed $2 billion by 2023 according to a report from American market intelligence firm IDC. Even local governments are pledging funds to blockchain projects.

Related: What Happens If the US Loses the Blockchain War?

A national priority

All this activity and interest in blockchain technology has come about because the Chinese government openly supported it.

Blockchain development became a national priority when it was included in the country’s “13th Five Year Plan” back in 2016. China President Xi Jinping reinforced its importance to the country’s future during a speech in late October of last year, stating:

“We must take blockchain as an important breakthrough for independent innovation of core technologies, clarify the main directions, increase investment, focus on a number of key technologies, and accelerate the development of blockchain and industrial innovation.”

He also stressed that “it is necessary to lead the standard setting and right to speak in the world.”

Related: How Will China Pursue Xi Jinping's Blockchain Adoption Plan?

“De-intermediarization”

China is not known for little government oversight, and its approach towards blockchain is no different. A Chinese official even explained on state TV: 

“When talking about blockchain, many people are talking about ‘decentralization.’ I’d like to make a small change to the word. I think the essence of blockchain is ‘de-intermediarization.’ There is no way to get rid of the center.”

The standards China would like to set strongly differ from the underlying philosophy of peer-to-peer transactions created without the involvement of a state or central party. For blockchain pursuits, this might pose an uncomfortable thought, as Washington Post columnist Josh Rogin described: “While Westerners envision blockchain-based Web 3.0 as an open system, China could build a closed blockchain that it controls and corrupts for its own purposes.”

By leading the standard setting, China could significantly steer the industry in any direction of its liking and potentially limit the adoption of certain blockchain platforms it can’t control.

Related: Why the Fed Needs to Start Issuing Digital Dollars

Beyond the Great Wall

One way to set standards is to work with other global players early.

Partnering with 12 EU member states and 5 Balkan countries, China created the China-CEEC Blockchain Centre of Excellence, “focused on boosting the applied and fundamental research on blockchain and DLT technologies.”

China also formed a banking consortium with the other BRIC countries to “collaborative research on distributed ledger and blockchain technology in the context of the development of the digital economy.”

Even Walmart and IBM joined forces with JD.com and Tsinghua University to create the Blockchain Food Safety Alliance to “enhance food tracking, traceability and safety in China.”

China isn’t the only one

While China is certainly in the best position to lead blockchain innovation, it’s not the only country that could outpace the U.S. this coming decade.

The Korean market also has potential to become a leader for blockchain adoption in the world. The country is pioneering blockchain adoption in many areas of large business, startups and government. The Ministry of Science and Technology in South Korea has launched initiatives for training blockchain developers, and the Seoul Metropolitan Government plans to invest over $1 billion in blockchain and fintech startups by 2022.

A major part of enterprise blockchain development is happening in India. India is the number one country worldwide in the highly specialized field of systems integration engineering, and as a global leader in software innovation, India houses some of the world’s leading blockchain teams. India’s blockchain development leaders are leading decision-making and engineering for enterprises around the globe.

Not too late

While other countries are gaining on its position, the U.S. can still take action to keep its place as the leading global innovator. Through a combination of government intervention, investment and partnering with both private and public enterprises, the U.S. can support young industries like blockchain, fostering its growth and setting the standards for its use.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Tal Kol is the co-founder of Orbs. Tal previously co-founded Appixia, a mobile app startup acquired by Wix.com, and was the head of mobile engineering at Wix.com. He is an expert on blockchain applications and the former head of engineering of Kin at Kik Interactive.

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Bitcoin Startup Casa Names New CEO as Node Service Goes Open-Source

Bitcoin startup Casa is charging into 2020 with a new look – by winding down its hardware product and shuffling its front office.

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Financial Firm SBI Holdings to Offer XRP Cryptocurrency as Shareholders’ Benefit

Japan's crypto-friendly financial firm SBI Holdings is to give shareholders the option to receive the XRP cryptocurrency as a benefit. They can alternatively accept health supplements.

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Bitcoin Price Pulls Back to $9.2K, BTC Realized Cap Hits All-Time High

Bitcoin price hitting a 3-month high on rising volume hints at a bullish trend that puts $10K within reach.

Bitcoin price (BTC) pulled back to $9.2K levels on Jan. 31, or almost 1% lower over the past 24 hours, after exceeding $9,500 earlier today. 

“It’s over 9 thousand” BTC price hits new 2020 high

The move to $9,530 resulted in a new 3-month high for BTC/USD alongside rising volume, pointing to an overall bullish trend that has persisted in the first month of 2020.

Bitcoin daily price chart. Source: Coin360

Meanwhile, the founder and CEO of Global Macro Investor, Raoul Pal, suggested today that more interest rate cuts by the United States Federal Reserve are coming, which is expected to have a positive effect on the cryptocurrency market. 

“The bond market, already rallying on weakness saw the light immediately and 2-year yields collapsed, breaking key supports and a new cyclical low,” he tweeted on Jan. 31, adding: 

“The Fed are going to have to cut aggressively and soon.” 

Pal, a former head of equities and equities derivatives at Goldman Sachs UK office, explains that the bond market trend is now set and that the reaction of central banks is well understood.

“The commodity markets rightly got the signal fast too. The knock-on effects are now spreading slowly into the currency markets. That is where I think where the next phase lies,” explained Pal. 

Bitcoin daily price chart. Source: Coin360

Adding to strengthening fundamentals for Bitcoin such as record hash rate and mining difficulty, on-chain data monitoring service Glassnode reported on Jan. 31 that the Realized Cap (1d MA) has hit a new all-time high over $100 billion. 

BTC Realized Cap. Source: Glassnode 

The Realized Cap is an alternative calculation of Bitcoin’s market capitalization derived by multiplying the price each Bitcoin last traded by the size of each trade. This figure has now passed $103,459,450,323.361, which is higher than the previous all-time high of 103,455,655,651.676 observed on Nov. 18, 2019.

As reported by Cointelegraph, the Realized Cap broke $100 billion for the first time last August. 

Bitcoin following bullish scenario 

In January, the price of Bitcoin is following a bullish scenario, as presented earlier this month by Cointelegraph Markets analyst, Michaël van de Poppe. 

Similarly, the price has broken to the upside in recent weeks, breaking a 7-month old downtrend to the upside, signaling the likely end of downward momentum amid an overall shift in market sentiment. 

“The targets based on previous support/resistance and Fibonacci levels first include $8,000. If that’s broken, the price is ready to aim for $9,100-9,500, which would typically shift the sentiment from fear to neutral,” correctly predicted Van de Poppe in a Jan. 4 analysis. 

Currently, the crypto & fear index reading currently 55, or Greed, according to the latest data, which suggests that a short-term pullback in price is now likely.

Bitcoin Fear & Greed Index. Source: Alternative.me 

“There may be a bit of a selloff but I’m still expecting the bulls to finish the week strong and looking to buy dips,” said Cointelegraph Markets contributor and analyst filbfilb in private comments. 

The overall cryptocurrency market cap now stands at around $254 billion and Bitcoin’s dominance rate is 66.3%. Large-cap altcoin performance was mixed with Litecoin (LTC) as the standout gaining 4.19%, and Ether (ETH) slightly in the green over the past 24 hours.

Bitcoin SV (BSV) was among the notable losers down over 10% by press time, alongside Ethereum Classic (ETC) and Dash (DASH), which were down 10.3% and 7.4%, respectively.

Keep track of top crypto markets in real time here

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Overstock’s tZERO to Launch Broker Dealer in First Half of 2020

Overstock’s blockchain arm tZERO aims to launch a cryptocurrency market broker dealer service in the first half of 2020.

Overstock’s blockchain arm tZERO aims to launch its cryptocurrency and digital asset broker dealer service in the first half of 2020.

In a letter to investors released on Jan. 30, tZERO CEO Saum Noursalehi provided a recap of the company’s progress over the last year and highlighted tZERO’s goals for 2020. One of the main objectives of the company is to roll out a digital assets broker dealer in the first half of the current year, dubbed tZERO Markets.

Noursalehi said that the company is working closely with regulators on the matter, and further added that “this is an important initiative as it will allow us to integrate our web and mobile app experiences in the future, enabling investors to trade digital securities and cryptocurrencies on one platform.”

As previously reported, tZERO’s Boston Security Token Exchange filed an application with the SEC to approve the launch of a market for publicly traded registered security tokens, in October 2019. The exchange asked asks the commission to “adopt rules to govern the trading of equity securities on the Exchange” which “would operate a fully automated, price/time priority execution system for the trading of ‘security tokens.’”

Broker dealers receive the green light from the SEC

Last November, Harbor, a digital platform for alternative assets, received a transfer agent license from the SEC. The license enables Harbor to maintain financial records of security token ownership, track account balances and pay out dividends while attracting blockchain companies that are looking to conduct Reg A+ offerings.

The blockchain-based startup Blockstack was the first-ever digital token offering to receive the go-ahead from the SEC to run a $23 million investment round under Regulation A+. Founders of Blockstack Muneeb Ali and Ryan Shea reportedly spent 10 months and approximately $2 million to get approval from the SEC for a Reg A+ offering.

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‘Key Milestone’ for Hyperledger as Fabric Blockchain Platform Reaches 2.0 Release

Version 2.0 marks the most significant release since Fabric first launched in 2017.

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Bitfinex Users Can Now Trade Tether Gold Stablecoin Against Bitcoin

After launching trading of gold-pegged stablecoin Tether Gold last week, Bitfinex cryptocurrency exchange now allows users to trade Tether Gold against Bitcoin.

After launching trading of gold-pegged stablecoin Tether Gold (XAU₮) last week, Bitfinex now allows users to trade Tether Gold against Bitcoin (BTC).

On Jan. 30, Bitfinex has rolled out three margin trading pairs for Tether Gold, a digital asset backed by physical gold, which was introduced by Bitfinex’s affiliate firm Tether on Jan. 23.

The crypto exchange exchange now allows traders to trade Tether Gold against Bitcoin as well as the U.S. dollar and dollar-pegged stablecoin Tether (USDT).

Margin trading — a feature that enables traders to borrow funds to increase leverage — will require an initial equity of 20% and provide a maximum leverage of 5x, Bitfinex noted.

Tether has been accused of not backing its USDT token with enough dollars 

Tether Gold is one of the stablecoins launched by major cryptocurrency firm Tether alongside the controversial stablecoin USDT. Known as the world’s leading stablecoin, USDT has been subject to multiple controversies as some reports suggested that Tether does not have enough dollars to back the token. The company has been struggling to convince the public that USDT is backed by the appropriate amount of dollar holdings.

Meanwhile, Tether Gold is claimed to be the “best way to hold gold” as its physical gold storage backing is purportedly held in a Swiss vault, adopting “best in class security and anti-threat measures.”

Tether and Bitfinex are facing a lawsuit on crypto market manipulation

On top of the controversy around Tether’s USDT, both Tether and Bitfinex have been accused of cryptocurrency market manipulation, with some ongoing lawsuits alleging that the companies caused Bitcoin’s 2017 bull run that lead up to the all-time-high of $20,000 per coin. 

As the companies have faced multiple suits on the matter, a court in New York ordered on Jan. 24 to merge four lawsuits against Tether and Bitfinex. As recently reported by Cointelegraph, the consolidation of suits has raised questions regarding the plaintiff’s leadership.

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Silk Road Marketplace Senior Adviser Pleads Guilty in US Federal Court

The senior adviser to Silk Road operator Ross Ulbricht had pled guilty to one count of conspiracy to distribute narcotics in a Manhattan Federal Court.

A senior adviser to the operator of the Silk Road dark web marketplace has pled guilty to one count of conspiracy to distribute narcotics in a Manhattan federal court. According to a United States Department of Justice press release dated Jan. 30, Roger Thomas Clark was a key figure in the development of Silk Road, advising on all aspects of the enterprise, and even attempting to arrange a murder-for-hire to protect its interests.

Silk Road creator Ross Ulbricht described Clark, who used a number of online aliases such as “Variety Jones,” and “Plural of Mongoose,” as a “real mentor,” who advised about the security and running of the site.

Clark was purportedly instrumental in advising Ulbricht to concoct a cover story that he had sold the Silk Road website, and was responsible for gathering information on the authorities’ investigation of the site.

Additionally, Clark is accused of urging and facilitating an attempted murder-for-hire of a Silk Road employee who was suspected of stealing $350,000 of Bitcoin (BTC) from the organization, prosecution of which is ongoing.

Silk Road legacy continues

The Silk Road marketplace was created by Ulbricht in January 2011, and operated until 2013. It facilitated the sale of narcotics and other illegal goods and services, using a Bitcoin-based payment system to hide the identities of users, until its infiltration and eventual closure by the FBI.

As Cointelegraph reported, jailed Ulbricht has a lot of support in the cryptocurrency community, with Tim Draper recently calling for his release. Ulbricht himself has remained a supporter of Bitcoin, recently predicting that the price would hit $100,000 in 2020.

New data suggest that the use of cryptocurrencies on darknet markets doubled last year. A recent report from a New York-based blockchain analytics firm Chainalysis found that darknet markets have significantly increased their share of total incoming crypto transactions in 2019, doubling from 0.04% in 2018 to 0.08%.

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Crypto Tax Software Developers Get Serious About System Standards

A growing number of crypto tax software developers are trying to bolster their products’ technical credibility with the CPA’s stamp of attestation.

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IBM-Backed Hyperledger Fabric Releases Version 2.0

Hyperledger Fabric had a major release with version 2.0, which significantly improves performance while adding some decentralization aspects for data sharing.

Hyperledger Fabric released version 2.0 of its enterprise distributed ledger technology (DLT) platform, according to a Jan. 30 announcement. Several major features were added to the platform that improve how its different participants communicate with each other.

Hyperledger Fabric is one of the several products of the Hyperledger consortium, which features dozens of important industry players and is primarily backed by IBM.

Fabric is a private or “permissioned” blockchain network that is used in industries such as finance and supply chains. It allows companies to control access to their networks and keep sensitive data private, while enabling some cross-industry cooperation through dedicated channels and verifiable smart contracts.

Version 2.0 made some notable improvements to decentralization by adding a new management system for chaincodes, Fabric’s term for smart contracts. Multiple organizations can now agree on key parameters of a chaincode, which can then be used on the shared ledger. 

In addition, chaincodes can be tweaked by single organizations before being committed to the ledger, which ensures that everyone agrees on what data can be shared with each other.

Data sharing has also been streamlined to work on a need-to-know basis. Organizations can now choose to share data privately with specific members of their immediate network, which removes the need to define complex channel combinations to do the same.

Finally, several performance improvements were introduced, involving parallelization of tasks and more efficient program flows. Hyperledger claims that this allows the network to support thousands of transactions per second.

What is Hyperledger Fabric?

Fabric is a highly modular DLT platform that was designed for use in industries. Unlike public blockchains, it answers to the need for businesses to maintain secrecy in their operations. For example, it allows users to customize the price of a product for each client, with none of them knowing what the others are paying for it.

At the same time, Fabric can facilitate cooperation between different industry players with its shared ledger. Companies are allowed to choose which data they want to disclose, while the validity of secret data is ensured through cryptographic mechanisms.

On a technical level, Fabric is extremely flexible. Consensus between organizations can be reached in a variety of ways, while smart contracts can have multiple architectures — those similar to Ethereum, Bitcoin, or even completely different types.

Smart contracts can be programmed in mainstream languages such as Go, Java and Javascript, in addition to Solidity. 

As an enterprise product, it features rolling and asynchronous upgrades, which is similar to how mainstream software works.

Fabric recently overtook its competitors in terms of development activity.

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Bitcoin Heads Into Historically Positive February on a Bullish Note

Bitcoin's 30% rise in January has put the bulls into the driver's seat, opening the doors for a continued rally into five figures.

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Genesis Crypto Lending Firm Hits New Record in Loan Originations in Q4 2019

Over-the-counter digital currency trading and lending firm Genesis has closed the fourth quarter of 2019 with record high loan originations since its inception.

Over-the-counter digital currency trading and lending firm Genesis closed the fourth quarter of 2019 with record high results in loan originations since its inception.

Per a Jan. 30 press release, Genesis facilitated over $4.25 billion in loans since its incorporation in March 2018, which made Q4 the best in company history. Genesis originated more than $1.1 billion in loans and borrows for its institutional customers, with total active loans of $545 million, showing a 23% increase compared to $450 million in Q3.

Genesis noted an increase in its active loan book and originations despite a 14% decline in the Bitcoin (BTC) price and other digital assets. The amount of borrowings in U.S. dollars also continued to grow and constituted 37% of the company’s active loan portfolio in Q4 2019.

Crypto loans market highlights

As of December 2019, the entire crypto loaning industry was estimated to be worth $4.7 billion and the number of crypto loan platforms was growing rapidly, according to a report made by blockchain company Graychain Ltd.

While lenders had only earned a combined $86 million in interest since 2018, the demand for cryptocurrency loans was growing. In Q1 2019, over 5,400 new loans were issued, and in the second, at least 18,500. The volume of lending also increased, with lenders issuing $64.8 million in loans in the first quarter and $159.3 million in the second.

Just recently, major cryptocurrency lending company BlockFi added support for Litecoin (LTC) and USD Coin (USDC), and crypto lending and borrowing platform Celsius announced that it would be implementing compounding interest on cryptocurrencies deposited in its wallet.

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Does Algorand 2.0 Prove an Appealing Option for Developers?

Government agencies, sports franchises and mainstream exchanges are first real-world adopters of the popular “pure proof-of-stake” Algorand blockchain.

Algorand officially unveiled a suite of new features to its pure-proof-of-stake network at the end of November, dubbed Algorand 2.0. The latest suite of technical innovation by the emerging “frictionless finance” network, the upgrade encompasses the official commissioning of smart contracts on the network, along with the Algorand Standard Assets, or ASA, and atomic transfers. 

Algorand started off with a bang through its $60 million initial coin offering, which led into its vaunted technology upgrade — Algorand 2.0.

Designed for building decentralized finance products, enterprise-scale DApps, and business-ready blockchain solutions, Algorand 2.0 presents a compelling option for developers focused on adoption beyond the ultimately limited world of crypto.

Related: How MIT Joined Ethereum in the Race for the PoS Blockchain

The move came just before 2020 — a year proclaimed by Polkadot founder and Solidity creator Gavin Wood to be characterized by the looming “Blockchain Wars” between competing public blockchains. 

When it comes to public smart contract platforms, however, Ethereum still reigns king. While pulling developer talent away from its impressive network effects remains any protocol’s biggest challenge, Algorand continues toward growing adoption with different audiences: the public and private sectors.

High-profile partnerships launching with Algorand upgrades

With the launch of 2.0, Algorand is growing the technical capabilities of its protocol on pace with its list of formidable partners. Saving the best for last, Algorand finished 2019 with major projects underway, such as World Chess’ launch of a hybrid initial public offering, Fondazione Bordoni working with Algorand for the Italian government, the International Blockchain Monetary Reserve launching a microfinance platform for Southeast Asia on Algorand, a Sharia-compliant certification from Dubai, and $60 million in real estate tokenized on the Algorand blockchain by AssetBlock. 

The collaborations follow the ALGO token’s listing on several prominent exchanges, including Coinbase and Binance, who upgraded ALGO to support the V2 0.2 implementation.

In the public sector, Algorand’s recent partnership with Fondazione Ugo Bordoni, or FUB, in Milan to explore the potential economic and technical impact of Algorand’s protocol on developing Italy’s “trust infrastructure.” Mirella Liuzzi, under-secretary of State of Ministry of Economic Development, stated: 

“The signing of the agreement between the FUB and the Algorand Foundation, signed at the Milan meeting of the European Blockchain Partnership of which Italy is co-president, once again confirms the international role assumed by our country on the subject and the attention of the MiSE towards emerging technologies such as the Blockchain also through the promotion of technical-scientific synergies on the subject.”

Adoption isn’t just a function of savvy business development, however. There is a lot of new technical innovation that is helping Algorand break away from competing layer one protocols like EOS and Tezos in real-world utility.

Algorand 2.0 is appealing to developers 

Network effects in crypto networks are paramount, especially in terms of developer adoption. As mainstream business and consumer sectors have yet to adopt DApps or public blockchains as their primary financial infrastructure, attracting motivated developers — who ultimately design the products with which end-users interact — remains one of the most difficult objectives for any upstart network in the market. 

While user experience and consumer utility are the primary inducements of the mainstream, versatile yet powerful technology is a major draw for the blockchain world’s invaluable technical talent.

For example, the current ascendance of “next-generation” blockchains is predicated on the notion of improving areas where Ethereum initially struggled. High gas costs, limited on-chain transactions per second, or TPS, and costly resources for running full nodes opened the door for these platforms to steal developer interest.

Ethereum still maintains the vast majority of the developer talent pool, but Algorand 2.0 presents some promising long-term capabilities — and encouraging mainstream interest.

The Algorand 2.0 release includes a trio of developments for its layer one on-chain functionality: 

1. Algorand Standard Assets (ASA)
2. Atomic Transfers
3. Algorand Smart Contracts in layer one (ASC1s)

ASA primarily focuses on one of the crypto market’s principal initiatives to attract institutional adoption: The digitization of financial assets. The ASA enables developers to digitize virtually any type of financial asset (e.g., securities, regulatory certificates, etc.) on layer one of the network. The framework is standardized, a necessity for interoperability and regulatory compliance, and can include asset characteristics such as non-fungible, fungible and restricted assets. 

In the case of restricted assets, a company such as a financial institution could issue a digitized asset using the ASA and Algorand’s Role-Based Asset Control mechanism for features like privileged asset transactions (e.g., “whitelisting”), quarantining account transfers for investigative purposes, or force-transferring assets for legal purposes. 

This is markedly different than smart contract platforms like Ethereum, where standardized protocols such as ERC-20 lack clear guidance on the semantics of its events, despite being a standard to enable functionality between wallet interfaces. 

Atomic Transfers — another feature released in Algorand 2.0 — are an exciting prospect for the broader industry. Also baked into the first layer of Algorand, Atomic Transfers are a trust-minimized method for inducing batched transactions between multiple parties, concurrently. 

In an Atomic Transfer, all transactions are either executed at once, or not at all.

Related: DEX, Explained | Cointelegraph

The method gained appeal in arbitrage trading strategies for DEXs on Ethereum but came with several limitations. Algorand expanded the concept of atomic transfers to include a much faster execution (a downstream consequence of Algorand’s high TPS), reduced fees, and most importantly — multi-party transfer of ASA assets using Atomic Transfers. 

Immediate use cases for Algorand’s atomic transfers include efficient matching funding, instant settlement of complex interactions, and multilateral trades. 

Finally, the last (but not least) integration of Algorand 2.0 is the introduction of official smart contract support into the on-chain layer. 

Due to Algorand’s high-performance and stake-based consensus, smart contracts can be executed virtually instantly at drastically reduced costs. Smart contracts are crafted with custom rules and logic, and can facilitate complex economic interactions using ASA, atomic transfers, and a transaction primitives language written by Algorand, specifically Transaction Execution Approval Language, or TEAL, which is a bytecode-based stack language used for validating and executing transactions within Algorand. TEAL operates within nodes in Algorand to determine whether or not transactions are valid, and TEAL programs should be concise, as they run in-line with block assembly and validation.

ASC1 contracts on Algorand have several downstream consequences, including regulated disbursements, cross-chain atomic transfers, and even the removal of private key management requirements for ASC1-governed accounts. 

But to better understand these perspectives from a broader context, it is important to evaluate how Algorand is partnering with other organizations to leverage the advantages of its 2.0 suite. 

Conclusion

Moving forward, 2020 will ultimately prove a pivotal year for the “Blockchain Wars” romanticized by Gavin Wood. 

Only time will tell if Algorand and the class of accompanying public blockchain networks can steal some of Ethereum’s market share before the pending release of Ethereum’s Serenity upgrade. 

The clock is ticking to return results that attract both institutional and mainstream adoption. 

Algorand 2.0 is a compelling start to serving the mainstream (versus purely crypto) world and should, at the very least, pique the interest of developers in the decentralized finance sector looking to extend Ethereum’s pioneering of the blossoming open finance movement. 

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Andrew Rossow is a millennial attorney, law professor, entrepreneur, writer and speaker on privacy, cybersecurity, A.I., AR/VR, blockchain, and digital monies. He has written for many outlets and contributed to cybersecurity and technology publications. Utilizing his millennial background to its fullest potential, Rossow provides a well-rounded perspective on social media crime, technology and privacy implications.

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1% Bitcoin No Longer ‘Crazy’ for Portfolios, Says Morgan Creek CEO

Morgan Creek founder and CEO Mark Yusko says Bitcoin is one of the most asymmetric assets he has ever seen in his career as a fund manager.

Bitcoin (BTC) represents an investment in technology and innovation, making it a must-have in any portfolio, suggested the CEO of Morgan Creek Capital, Mark Yusko, in an interview with Max Keiser on the Keiser Report, published on Jan. 30.  

Morgan Creek CEO: Bitcoin exposure boosts portfolios

Keiser began by noting that portfolios with even 1% exposure to Bitcoin have more alpha or, in other words, have outperformed just about everything over the past five years. 

By definition, alpha represents the performance of a portfolio relative to a benchmark. Portfolio managers seek to generate alpha by diversifying portfolios to remove unsystematic risk.

“It’s incredible,” said Yusko. “If you took 1% of all the endowments and foundations five years ago, that would have been $6.7 billion out of $670 billion. You took that one percent — half percent from stocks, half from bonds — instead of making 7.2%, which is what they made, they would have made 9.2% or 200 basis points better. Two on 7.2% is a lot of alpha.”

But while conceding that Bitcoin had a non-zero probability of price going to zero, he also pointed out that it offers ten-to-one downside capture. This, according to Yusko, makes Bitcoin one of the most asymmetric assets he has ever seen in his career. 

He also suggests that it will become increasingly normal for traditional funds to seek exposure, continuing: 

“So the idea that ten years from now we won’t look back and say that as a fiduciary of a pension fund, sovereign wealth, family office, etc. you had to have exposure to this asset, is crazy.”

Bitcoin showing staying power as an asset class

Evidence is indeed mounting that Bitcoin becoming increasingly accepted among investors, particularly as the price of BTC is currently climbing back toward the $10,00 mark.  

Cryptocurrency market monthly performance. Source: Coin360

With Bitcoin’s rising volumes and open interest on the Chicago Mercantile Exchange, new institutional investment products, not to mention outperforming everything including Amazon stock and gold in recent years, BTC is looking increasingly attractive to investors. 

Admittedly, many fund managers still view Bitcoin as some scam or scheme, notes Yusko, as opposed to what he says is truly an evolution of technology, in which Bitcoin will play a fundamental role as a base layer protocol.

Keiser: “You’re owning a piece of the protocol”

But while both Keiser and Yusko agreed that most cryptocurrencies will fail, Bitcoin and perhaps a handful of other cryptocurrencies may provide an opportunity that’s quite different from dot-com era tech stocks. 

“The protocol is the application,” said Keiser, equating it to an opportunity of buying shares in the concept of email in the 1990s. He continued: 

“With Bitcoin, you have that opportunity. You’re owning a piece of the protocol that’s dominating.” 

As Cointelegraph reported last month, Bitcoin has dwarfed all other assets in returns over the past decade at nearly 9,000,000 percent. So far this year, however, BTC isn’t even the best performing asset. Tesla stock, or TSLA, is up 38% year to date compared to Bitcoin’s 30%.

In October, Cointelegraph reported on investment management firm VanEck explaining why Bitcoin improves investor portfolio performance, with BTC’s low correlation to traditional assets cited as one of the main reasons.

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Deribit to Launch Daily BTC Options as Regulated Competition Heats Up

Launching Feb. 3, the daily bitcoin index options will appeal to a different kind of trader, the firm says.

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Cybercriminals Hide Crypto Mining Script Behind Kobe Bryant Wallpaper

Microsoft’s Security Intelligence team has found a malicious coin mining script in html code buried in Kobe Bryant desktop wallpaper.

Opportunistic cybercriminals are capitalizing on the death of basketball legend Kobe Bryant earlier this week by setting booby-traps for those searching for mementos of the star. According to a tweet by Microsoft Security Intelligence on Jan. 31, hackers are hiding malicious html code containing a cryptojacking script in desktop wallpaper of the NBA all-time great.

Cryptojacking is a practice whereby cybercriminals hijack processing power from other computers to mine cryptocurrencies remotely. 

Following the tragic helicopter crash which claimed the lives of Byrant, his 13-year old daughter, and seven other occupants, there has been increased interest in the star from both fans and the general public.

Perhaps unsurprisingly, it did not take long for cybercriminals to take advantage of this. An increasing number of people searching for information and images of the star is just a fresh crop of potential victims.

The Microsoft team found the malicious html file, Trojan:HTML/Brocoiner.N!lib with its Defender Virus Protection software. The coin mining script was disguised as a desktop wallpaper featuring an image of Bryant. The website hosting the coin miner was blocked by the software.

Reminiscing or cashing in?

As Cointelegraph reported, Bryant’s death brought an outpouring of grief from across social media, including a personal account from Tron founder Justin Sun. Bryant was an avid supporter of crypto, and Tron in particular, having discussed the future of blockchain with Sun on stage at the niTROn conference in 2019.

As a gesture of respect, Sun announced that this year’s niTROn conference would be dedicated to the star. However, given Sun’s prior history of dubious promotional methods, some on social media were quick to criticize this move as a shameless cash-in.

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Third-Party Trackers Are Pulling Your Data Off Ring’s Android App

A new report from the Electronic Frontier Foundation details the personally identifiable information pulled from your Ring app.

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Ledger Wallet Co-Opts Controversial Pro-Brexit Slogan for Cryptocurrencies

On the eve of the U.K.’s exit from the EU, French crypto hardware wallet firm Ledger has attempted to co-opt the notorious pro-Brexit “Take Back Control” mantra for crypto.

As the United Kingdom exits the European Union, a new ad campaign by French crypto hardware wallet firm Ledger is reviving one of the most divisive pro-Brexit slogans, “Take Back Control,” to ambiguous effect.

An email shared with Cointelegraph on Jan. 30 revealed Ledger’s mock-up of a planned billboard for an installation in London’s Canary Wharf, one of the capital’s prime financial districts.

Ledger’s plans for a digital billboard in London’s Canary Wharf. Shared with Cointelegraph via email

The billboard reads ”Let’s Take Back Control For Real” — a modified version of the 2016 pro-Brexit campaign’s notorious “Take Back Control” slogan, which became an anti-EU rallying cry for a restoration of the nation state’s sovereign control over its policies, borders, and economic policy.

“For Real”?

As Ledger presents its campaign, the phrase “take back control for real” implies that the “individual can be empowered with complete financial freedom, where borders are bridged and you are fully in charge of your own funds in a network that everyone can join.”

Yet the original tagline has a particular, charged history in the context of the U.K. referendum and Brexit vote. At the time, it was viewed as a call for the sovereign state's increased intervention in restricting immigration into the country.

U.K. politician and Brexit Party founder Nigel Farage mobilized the slogan for a racialized anti-immigration agenda during the 2016 campaign, as with his notorious "Breaking Point" poster, portraying a deluge of migrants and the tagline "We must break free of the EU and take back control of our borders."

Nigel Farage photographed in front of Leave EU’s “Breaking Point” poster. Source: New Statesman archive via Google Images. 

The photograph for the poster depicted migrants crossing the Croatia-Slovenia border in 2015, a scene of mostly young males of color. It was later reported to the police on the grounds that it incited racial hatred and breached U.K. race laws. 

Cointelegraph reached out to Ledger to clarify its use of the polarizing slogan. In response, a representative for the firm wrote that:

“Regardless of one's political stance, the campaign itself is quite powerful and well-executed. We particularly like its slogan - though we saw how crypto really [gives] control back to the people.”

Ledger also argued that there are “quite a few similar themes” between Brexit and Crypto, although it conceded areas in which they are “at times opposing each other”:

“For example, crypto is all about borderless financial freedom, whereas the Brexit focuses on closing its borders with financial freedom from the EU in mind.”

As to the future of a post-Brexit U.K., Amandine Doat, associate general counsel and head of public policy at Ledger said, “We should hope for convergence and not fragmentation with the U.K. leaving the EU. Alignment of regulation between EU and the U.K. even after the U.K. leaves is crucial to the development of strong Europe presence at global level.”
In contrast to these hopes, yesterday, the eve of Brexit day, Prime Minister Johnson clarified to the public that:

“The manifesto on which the government was elected was very clear that there will be no alignment. We have always been very clear that we are leaving the EU’s customs union and single market and that means that businesses will have to prepare for life outside of these.”

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