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On November 22, the White House announced the re-nomination of Jerome Powell to serve as the chairman of the Federal Reserve Board. 

Powell, a Republican who began his current term under President Trump, has enjoyed a reputation as a moderate in volatile times. Thanks to that reputation, he has been the presumptive candidate for Biden’s nomination for months. Treasury Secretary Janet Yellen, herself a former Fed chair, praised “[t]he steady leadership of Chair Powell and the Federal Reserve” in a statement alongside the nomination.

Recently, however, rumors have emerged that the Biden administration was giving more consideration to Fed governor Lael Brainard as a future chair. Brainard, while more appealing to the progressive wing of the Democrats, was expected to face a tougher time among Republicans in the Senate.

Nonetheless, the White House’s announcement carefully highlighted the nomination of Brainard to serve as vice chair. Indeed, the announcement uses Powell’s name 16 times to Brainard’s 14. 

Sherrod Brown (D-OH), who chairs the Senate Banking Committee that will oversee Powell’s confirmation hearings, said in a separate statement: “Chair Jerome Powell has led our economy through a historic pandemic, and under his and President Biden’s leadership, unemployment has fallen and workers are seeing increased bargaining power.”

The Biden administration still has three openings to fill on the board of the Federal Reserve, including a vice chairmanship of supervision that Randal Quarles recently vacated. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

cLabs — one of the companies behind the Celo blockchain network — has experienced a tech snafu, and the company is pointing fingers at a star developer who recently parted ways with the project.

In a forum post published Sunday, Tim Moreton, head of engineering at cLabs, claimed that cLabs fired former Summa founder James Prestwich on the basis of misconduct.

Second, Moreton claimed that 15 minutes after Prestwich was fired, he activated a recovery mode on Optics — Celo’s cross-chain swap protocol — that could have given Prestwich control over the whole protocol.

“We do not believe funds in the bridge are currently at risk. Neither the Ethereum nor Celo networks are impacted. But this type of takeover has no place in the community,” Moreton said.

In response, Prestwich said: “I have never been a keyholder on Optics recovery mode. I am disappointed that cLabs and Celo have chosen to bring their bullying into public spaces, and that they chose to lie about me to attack my reputation. On the advice of my lawyer, I have nothing else to say right now.“

The Block has reached out to Prestwich and cLabs for comment and will update this article should we hear back.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Investing in cryptocurrencies has rapidly gained wide adoption and media attention, with the development of the Metaverse, Non-Fungible Tokens (NFTs), DeFi 2.0 and Web 3.0. As a result, the industry as a whole has enjoyed exponential growth over the past twelve months alone. To put this growth into context, there are now in excess of 77 million users1 globally and 6,000 coins/tokens in 2021¹ compared to 0.89 million global users1 and 66 coins/tokens in 2013².

However tempting to newcomers investing in digital assets is, it’s essential the necessary research and due diligence is carried out, as with any form of investment carries risk. To assist new investors to navigate the myriad of considerations, requires a partner that’s familiar with the latest regulations, while also understanding crypto technology and the broader industry. Huobi Technology Holdings Limited (“Huobi Tech”, stock code: 1611.HK) is committed to becoming the leading one-stop compliant virtual asset service platform in Asia.

Research shows that the demand for crypto and blockchain technology will continue to grow over the next three years, with the market estimated to grow exponentially from $3 billion USD in 2020 to $39.7 billion USD in 2025³. Blockchain technology will also continue to provide value-add to businesses (primarily in the finance, private, healthcare and retail sectors) by an estimated $3.1 trillion USD by 2030⁴ 

We believe that factors such as regulation, security, price stability and risk management play an important role in shaping user adoption and these are catalysts within the industry that can usher digital assets into more mainstream acceptance and adoption. 

Value of Adding Crypto into Asset Allocation Mix

Investing in cryptocurrencies can produce significant gains, but with that can come an element of risk. The cumulative impact of digital asset investment should complement a broader asset portfolio, which are key factors for retail and institutional investors. Cryptocurrencies such as Bitcoin has almost no correlation to other traditional asset classes, and therefore provides clear diversification benefits. RIA Digital Asset Council reports, one percent of Bitcoin exposure will not reduce the fixed return of the overall return on investment (ROI), but provide a higher risk-adjusted return. In other words, digital assets are rapidly becoming important mainstream investments. 

Even though owning digital assets can help diversify an investor’s portfolio risk, issues related to taxation, auditing and other factors could put some off from entering the space. Nonetheless, regulated crypto funds can be an easier gateway under these circumstances. 

One of Huobi Tech’s wholly-owned subsidiaries, Huobi Asset Management (Hong Kong) Limited, has obtained approval to conduct Type 4 (Advising on Securities) and Type 9 (Asset Management) regulated activities from the Securities and Futures Commission of Hong Kong (SFC). It has created a variety of asset management products and services for professional investors, including a multi-asset fund, a BTC tracker fund, an ETH tracker fund, a crypto mining fund and the first multi-strategy virtual asset fund in Hong Kong. 

The Importance of Crypto Custody Service

Assets such as cash, bonds or stocks are usually held by third-party custodian’s such as a bank. However, this is not the case for digital assets. Crypto such as Bitcoin and Ethereum are very different from traditional assets. In the sense, they are built on blockchains and managed through private keys. In the world of blockchain, crypto custodians offer custody services to protect clients’ assets on their behalf.

Recently, large investment banks are opening crypto desks, and private bank clients are looking to invest in digital assets. Crypto assets are becoming an alternative investment and even a new asset class to many investors. Long-term holders of these assets may include banks, family offices, asset managers, brokers or retail investors. These players focus on their core business and do not want to deal with operational complexity in securing their crypto assets. Often it takes time and money to establish good operational and technological environment to hold custody for such assets. That’s where third-party custodians come to play.

Compliance is an important aspect for investors. For those who invest on behalf of their clients, an independent third-party custodian is required to reassure their clients and regulators that their assets are protected by a neutral party. A compliant and licensed crypto custodian would be audited regularly by a governing body or CPA firm, and is subject to the rules and regulations, such as anti-money laundering to ensure financial transparency.

Benefits for Investors to Use Regulated Exchange

KYC/AML is mandatory before a client can start trading. Crypto exchanges are required to apply the same stringent standards as licensed banks or financial institutions, so that all related policies and procedures are fully audited. The checks go both ways, while it could prolong a client’s onboarding process, the benefit is that every participant on the platform can be sure that whoever they are transacting with is legitimate. This process can also protect the platform from being implicated by suspicious client accounts or transactions.  

One of the primary concerns investors have is that their assets are protected on the platform. Similar to any other financial institutions, regulated exchanges are required to segregate clients’ and firms’ assets. Clients’ assets including digital assets are stored on separate accounts and wallets, under an associated entity, owned by the exchange. Should there be any financial issue with the platform itself, would not affect a clients’ assets.

Regulated exchanges have an obligation to maintain fair and orderly markets, similar to established stock exchanges. Trading activity is monitored closely by the financial industry’s standard market surveillance tools. Malicious trading patterns such as spoofing or layering will be also flagged. If this occurs, exchange operators can investigate and remove the accounts from operating.

Cryptocurrencies are still considered a new asset class, but with anything novel, can bring factors that may seem risky to investors. However, with tighter regulations being introduced by industry bodies, central exchanges that initiate these new regulations, will in turn provide investors with a safer environment to trade and invest, which will ultimately increase adoption rates in the months and years to come. 

¹Source: https://www.statista.com/statistics/647374/worldwide-blockchain-wallet-users/
²Source: https://www.statista.com/statistics/863917/number-crypto-coins-tokens/  
³Source: https://financesonline.com/blockchain-statistics/
⁴Source: https://media.consensys.net/gartner-blockchain-will-deliver-3-1-trillion-dollars-in-value-by-2030-d32b79c4c560

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto payments infrastructure service MoonPay has announced that it has raised a monster $555 million from Coatue and Tiger Global, hitting a $3.4 billion valuation. The company was previously bootstrapped and profitable, generating $150 million in net revenue this year. 

Today’s announcement confirms an earlier report from The Information. 

MoonPay allows users to pay for crypto and digital assets via card, Apple Pay and even open banking. Since its inception in 2019, the company has facilitated transactions in over 90 cryptocurrencies, building a user base of over 7 million. 

The company recently received a shout out from talk show host Jimmy Fallon during his interview with digital artist Beeple. Fallon used the company’s services to buy his first NFT.  

“I was lucky enough to sit down for coffee with Jimmy,” says co-founder and CEO Ivan Soto-Wright. “A friend of mine introduced me to him last week during NFT.NYC and, organically, he was like, let me shout it out on the show.”

Fallon described the company as “PayPal for crypto.” Asked if he agreed with this assessment, Soto-Wright said that although he aspires for MoonPay to be its own brand, he sees the payment tool becoming the “passport” to Web3 as PayPal was to e-commerce.

Funding the future of payments

But for now, the company doesn’t plan to go into other product lines to become a crypto super-app. Instead, it’s focused on tapping into the appetite for NFTs in the entertainment industry and further increasing mainstream adoption of crypto. 

”We’ve connected millions of people to billions of dollars worth of digital assets. Now, the ambition is to connect billions of people to trillions of dollars worth of digital assets,” says Soto-Wright. 

Describing his path to founding MoonPay, Soto-Wright talks of how he was fascinated about how crypto enabled anybody with an internet connection to access financial services and send money across the world. 

“I think the media spent a lot of time talking about price movements of bitcoin or price movements of these digital assets,” he says. “Whereas for me, it’s a story about billions of people around the world who didn’t have access to a bank account.”

MoonPay is taking on venture capital money as a way to fund recruiting and to enable the company to pursue mergers and acquisitions. Its priorities are increasing security private key security and enabling even more localized payment methods in Latin America and Asia, according to Soto-Wright.

Another reason the company pursued funding from Tiger and Coatue was to stay competitive, from a valuation standpoint, in a sector where unicorn status has become commonplace.  

“In the VC founder community recently, you’re seeing incredible fundraises,” says Soto-Wright, adding that he and his co-founder Victor Faramond maintain “majority control” of the business. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The United Kingdom’s Financial Conduct Authority (FCA) is looking to hire a third-party crypto forensics service provider by mid-December at the latest.

According to a tender offer published by the FCA on November 15, the contract is valued at £500,000 ($672,000) with a tenure of almost two years, ending on December 6, 2023.

“The FCA is seeking the services of a third-party firm specializing in this area who can provide access to a platform that can support the robust and efficient analysis of cryptoasset blockchain data and provide training and ongoing support in the use of this platform,” the tender offer stated.

As part of the contract scope, the FCA is looking for a system that offers robust blockchain data monitoring capabilities. The FCA also wants the system to allow easy integration with its internal regulatory functions.

According to the tender notice, the FCA deems the ability to monitor and analyze blockchain data as an essential regulatory tool. The document also linked the procurement drive to the regulator’s ongoing crypto business registration exercise by stating that effective monitoring of these registered firms was necessary to ensure compliance with anti-money laundering laws.

Meanwhile, the FCA has been criticized for the long waiting period crypto businesses have faced when trying to register. The FCA has extended the application deadline for crypto firms until March 2022.

In January 2020, the FCA assumed regulatory oversight of the U.K.’s crypto asset space, enacting a registration regime for businesses in the sector. The regulator also extended its financial crime reporting requirements to include virtual asset service providers in April.

While the tender offer specified a one-off contract with no recurrence, the posting did indicate the possibility of a 24-month tenure extension.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Celsius Network has doubled down on its Bitcoin mining investment, adding a further $300 million.

In an interview with The Block on Monday, Celsius CEO Alex Mashinsky said that the investment was made to expand its proprietary Bitcoin mining hash rate and power capacity in North America.

“These are commitments for this year and next year — so we will be adding [mining] capacity all the time until the end of next year,” he said. He noted that the firm will break down the expected hash rate growth over the coming months.

This $300 million investment follows the $200 million that Celsius invested earlier this year in Bitcoin mining equipment and equity of Bitcoin mining firms Core Scientific, Rhodium Enterprises and mining pool Luxor Technologies. Core Scientific is going through a merger deal with the goal of going public, while Rhodium has filed for a U.S. initial public offering for a placeholder amount of $100 million.

The investment puts the centralized lending and yield-earning platform on track to becoming one of the major Bitcoin mining firms in North America. 

Mashinsky said Celsius now has an operational mining fleet of about 22,000 Bitcoin ASIC miners, most of which are Bitmain’s newest generation of AntMiner S19 series. The firm announced earlier this month during Bitmain’s conference in Dubai that it also has pending orders for Bitmain’s newest AntMiner S19XP model that boasts a computing power of 140 terahashes per second (TH/s).

Celsius’ increased investment is part of a Bitcoin mining infrastructure and fundraise boom in North America that seeks to capitalize on the opportunity created by China’s crackdown on the mining sector.

“A lot of people that are buying machines, they think the competition is just not gonna be there, but obviously now there are a lot more participants, more players, so you really have to be good at this business,” Mashinsky said. 

What’s unique about Celsius is that it will use the bitcoin it mines as part of its existing lending business. The company lends bitcoin to institutions to earn interest and pays out bitcoin-denominated interest to deposit customers. Celsius touts $28.6 billion in assets as of November.

Celsius started to get into the mining sector in 2020 and issued loans and equipment leases to mining firms like Core Scientific and Argo Blockchain for their facility expansion plans.

“We are catering to miners who don’t want to sell their bitcoin and we lend them against their bitcoin or their hash power so they can basically send us bitcoin [as collateral] when they mine it,” Mashinsky said. But he added that the company will only do so for machines that are based in Europe or North America, rather than more unstable regions.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

El Salvador has struck a deal with crypto firms Blockstream and iFinex to advance its efforts in the bitcoin market. 

The country is set to issue so-called Bitcoin bonds to “accelerate hyperbitcoiization and bring about a new financial system on top of Bitcoin,” according to Blockstream. 

The county will issue $1 billion through a bitcoin bond via Blockstream’s Liquid Network. The proceeds of the bond could support the development of volcano powered bitcoin mining. 

“This bond offering is something we think will be attractive to a wide range of investors ranging from cryptocurrency investors, investors seeking yield, HODLers, and ordinary people,” Blockstream said in a blog post. “We believe this bond has the potential to accelerate hyperbitcoinization and bring about a new financial system built on top of Bitcoin.”

El Salvador, which deemed Bitcoin legal tender in the country earlier this year, is set to grant Bitfinex’s parent company the country’s first crypto license. 

“Finex is focusing on helping the government of writing a digital tokenized securities law and the government will provide to iFinex the first license in that new regulatory framework so that the ES government will issue and launch their volcano mining bond on bitfinex securities,” Paolo Ardoino of Bitfinex said in a statement to The Block. 

El Salvador President Nayib Bukele said this past summer that he would leverage the country’s volcanos to mine bitcoin via “100% clean, 100% renewable, 0 emissions energy.”

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

A California man who in February agreed to plead guilty to felony charges of money laundering and operating a crypto exchange without proper licensure has been sentenced to three years in federal prison, according to a release from the U.S. Department of Justice.

As The Block previously reported, Hugo Sergio Mejia operated a Bitcoin-to-cash money transmitting business without a license approved by the Financial Crimes Enforcement Network (FinCEN) — the branch of the Treasury Department responsible for ensuring legal financial transactions — between May 2018 and September 2020. 

In that time, prosecutors say, Mejia exchanged at least $13 million in assets and at certain points knowingly did so for parties he had been informed were involved in illicit drug trafficking. He also set up companies named Worldwide Secure Communications LLC, World Secure Data, and The HODL Group LLC to hide the nature of his business. 

Mejia officially pleaded guilty to the charges in July of this year, as per the DoJ statement, and had faced up to 25 years in prison. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

In the short term, it’s difficult to anticipate whether inflation will take place and how significant any potential fluctuations in a currency’s purchasing power may be. However, the moment you zoom out you are faced with a harsh reality – every major national currency has steadily (and in some cases rapidly) declined in value over time, and there are no exceptions to this unambiguous trend.

This trend long preceded the rampant money-printing triggered by the COVID-19 pandemic, though the past year has indeed given rise to an unprecedented increase in the global money supply. Nearly 21% of all U.S. dollars in existence were minted in the past year, and while the Federal Reserve’s quantitative easing does not involve the actual printing of new physical dollars, the result still comes down to flooding the markets with cash to keep borrowing cheap. The total money in the U.S. shot up from $4.6 trillion in 2000 to $19.5 trillion in 2021, and it’s no surprise that the USD has lost over a third of its relative purchasing power in the past two decades alone.

What does this mean for investors? For one, it’s worth increasing your investment exposure to hard assets. The USD has lost 98.2% of its purchasing power relative to gold over the past century, and generally assets like real estate and previous metals have maintained their market value significantly better than every national currency. However, out of all your available investment options, cryptocurrencies have the most asymmetric advantages and the strongest track record.

Cryptocurrencies are relatively new, and there is a big difference in quality and design between different crypto projects. Many of the same criticisms levied against cryptocurrencies apply to fiat currencies like the USD, EURO, and JPY, but the truth is the leading crypto projects are hard-coded to have a predictable, capped supply. This means that, unlike the USD and other national currencies, the supply of Bitcoin, Ethereum, and other major cryptocurrencies cannot be unilaterally expanded or changed by anyone. Nearly 90% of the total supply of Bitcoin has already been created, and there is no way to change this total supply cap now or in the future. And even though most blockchain projects are open source, you cannot secretly duplicate a cryptocurrency network since a cloned project will not have the transaction history as the original project its derived from. In other words: unlike fiat currencies, your cryptocurrencies cannot be diluted through supply inflation.

Also, portfolio diversification is especially crucial during periods of economic uncertainty. It’s extremely risky to put all your eggs in one basket under current market conditions, whether that basket consists of stocks, commercial real estate, or crypto. The key is to allocate your holdings across multiple uncorrelated assets and rebalance your portfolio over time. The price of Bitcoin is only loosely correlated to the S&P 500, with a 180-day correlation coefficient of 0.2, and the cryptocurrency’s correlation with gold is -0.08. Many other cryptocurrencies move in tandem with Bitcoin’s movements, and these loose correlations to traditional investments underscore crypto’s potential as an effective portfolio diversifier.

At the end of the day, we believe there is a responsible way to invest in crypto without taking on too much risk. The best way to do this is through a crypto lending platform like Vauld, which lets you earn 12.68% APY on your USD-backed stablecoins, which is more than the SPY’s historical returns. And since Vauld does not subject its users to any deposit/withdrawal fees or mandatory lock-up periods, investors can stay flexible and rebalance their investments whenever they want. Additionally, Vauld offers investors an array of automated investment plans, which allow investors to easily diversify into a particular blockchain sector or emergent market trend. And in order to mitigate against worst-case scenarios, investor funds stored in Vauld’s cold wallets are insured to the tune of $100 million by Lloyd’s London. 

As an all-encompassing digital wealth management solution, Vauld lets you trade crypto and access real-time market intelligence, while offering among the highest yields in the industry. The team behind Vauld believe it’s irresponsible for investors to place all their money and trust in a national currency system that has proven to decline in value over time. Similarly, it would also be reckless to invest everything you have in cryptocurrencies or other alternative assets. What Vauld enables is a balanced approach to wealth preservation and growth using the latest technology and most reliable, predictable yields. To take advantage of all these features and more, register with Vauld today.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Square’s secretive TBD project, which earlier this year was framed by founder Jack Dorsey as “a decentralized exchange for Bitcoin,” has debuted a new white paper.

The 18-page document sketches out the design principles and ambitions for the project, which it describes as “a protocol for discovering liquidity and exchanging assets (such as bitcoin, fiat money, or real world goods) when the existence of social trust is an intractable element of managing transaction risk.”

Dubbed the tbDEX protocol, the proposed protocol “facilitates decentralized networks of exchange between assets by providing a framework for establishing social trust, utilizing decentralized identity (DID) and verifiable credentials (VCs) to establish the provenance of identity in the real world.”

Additionally, the protocol aims to create “a ubiquity of on-ramps and off-ramps directly between the fiat and crypto financial systems without the need for centralized intermediaries and trust brokers.”

“This makes crypto assets and decentralized financial services more accessible to everyone,” the paper’s authors write.

Source: TBD protocol white paper, Square

At the heart of the proposed system are efforts to create the ideal balance of trust and digitized identity, with the authors noting:

“The tbDEX protocol approaches trust differently than other decentralized exchange protocols in the sense that it does not utilize a trustless model, such as atomic swaps. At first blush, this is not optimal, especially when considering the end goal of providing access to a trustless asset like bitcoin. However, the reality is that no interface with the fiat monetary system can be trustless; the endpoints on fiat rails will always be subject to regulation, and there will exist the potential for bad behavior on the part of counterparties. This means that any exchange of value must be fundamentally based on other means of governing trust — particularly reputation.”

Looking ahead, the TBD team is hoping Friday’s white paper release will result in feedback from the broader community of those interested in the project.

“This initial draft of the whitepaper is meant to establish a conceptual understanding of the high-level design of the proposed tbDEX protocol. It should not be considered complete or final. It represents a proposed design for public comment,” the authors wrote. “Future revisions of the whitepaper will address incomplete elements and currently unforeseen issues or challenges.”

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.