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Bitcoin mining firm Argo Blockchain, currently listed on the London Stock Exchange, is exploring a potential secondary listing on Nasdaq.

Announcing the news on Tuesday, Argo said the timing or the terms of the listing are yet to be decided. Market and other conditions will be the guiding factors, it said.

The news comes as Argo is building out a mining facility in Texas, U.S., with a power capacity of 200 megawatts (MW). The firm currently has three mining facilities in Canada with a total capacity of 35 MW, where it mines bitcoin and zcash, according to its website.

Founded in 2017, Argo listed on the London Stock Exchange in August 2018 and currently has a market capitalization of over $666 million, according to The Block’s Data Dashboard.

The company’s stock, like most other crypto mining stocks, has outperformed bitcoin, per the dashboard. Argo’s stock is currently trading at around $175.

Operational update 

Argo also provided an operational update for June, saying that it mined 167 bitcoin during the month, worth about $5.8 million at current prices.

The June production brings the firm’s total amount of bitcoin mined year-to-date to 883 (worth nearly $31 million). In all, Argo owns 1,268 bitcoin (worth over $44 million) as of June.

Argo CEO Peter Wall said June saw big changes in the crypto sector — a decline in total global hash rate and mining difficulty — as mining machines went offline in China.

The Bitcoin network saw a 28% decline in mining difficulty, witnessing the biggest drop in hash rate since the network went live in 2009. This came as the mining difficulty adjusted to the massive drop in hash rate from 160 exahashes per second (EH/s) to 90 EH/s in a month.

“Argo has capitalized on these changes, continuing to deliver strong revenue at an impressive margin,” said Wall.

Argo generated mining revenue of over $6 million in June compared to over $7.6 million in May. The firm’s average monthly mining margin was around 78% during June compared to 82% in May.

© 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.

Quick Take

• Australia still lacks a comprehensive regulatory framework for digital assets.
• If Australia were to pursue a simple and liberal regulatory framework, it could potentially become an attractive alternative to other Asia-Pacific jurisdictions.

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Europe’s largest crypto asset manager CoinShares is set to acquire the exchange-traded fund (ETF) business of Elwood Technologies, which is owned by hedge fund heavyweight Alan Howard, for $17 million.

Elwood was founded in 2018 and together with Invesco, the asset management firm, launched the Invesco Elwood Global Blockchain Equity UCITS ETF, which sought to give investors exposure to listed companies generating earnings from blockchain technology. The index has amassed over $1 billion in assets under management since its launch in 2019. 

The transaction will be settled through an equity swap, for which CoinShares will issue 1,298,322 new ordinary shares at a price of $13.09 per share. Elwood’s equity research team will also join CoinShares as part of the deal.

The Block revealed in June that Elwood had pivoted away from fund management to focus on software. Elwood now styles itself as “a one-stop technology platform to enable institutions such as neobanks, fintechs, and asset managers to access and trade crypto assets across exchanges and liquidity providers with a single API,” according to a person close to the company. 

Howard, who owns Elwood, is also the fourth largest shareholder in CoinShares with a position that, in March of this year, was worth around $61.5 million.

CoinShares expands

For CoinShares, which recently listed on the Nasdaq First North Growth Market, the move will expand a suite of products that currently offer investors passive exposure to major cryptocurrencies.

“As the popularity of thematic ETFs continues to grow, we have seen notable performance dispersion between strategies targeting similar exposures,” said CoinShares CEO Jean-Marie Mognetti. “With investors seeking exposure to cryptocurrencies as well as equities benefiting from blockchain technology, the Elwood Index and Invesco are natural partners for CoinShares.”

Howard, who set up and, until 2019, was CEO of the hedge fund Brevan Howard, has made a spate of investments in the crypto sector in 2021. His investments include British crypto payments app Bottlepay, Cologne-based neobroker Nextmarkets, recently launched crypto exchange Bullish Global and Komainu, the Jersey-regulated crypto custodian backed by Nomura.

© 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.

Barclays U.K. customers can no longer transfer funds to Binance, after the bank banned any payments made by credit or debit card to the exchange until further notice. 

“It’s our responsibility to help protect your money,” the London-based bank’s support page tweeted on Monday, adding, “With this in mind we’ve taken the decision to stop payments made by credit/debit card to Binance until further notice, to help keep your money safe.”

The announcement comes nearly two weeks after the Financial Conduct Authority (FCA) said Binance Markets Limited was not authorized to carry out crypto operations in the U.K. 

“No other entity in the Binance Group holds any form of U.K. authorization, registration or license to conduct regulated activity in the U.K.,” the regulatory body said in a statement. “The Binance Group appear to be offering UK customers a range of products and services via a website, Binance.com.” 

Binance in more hot water

The U.K. is the latest in a growing list of countries that have accused the crypto exchange of not having the authorization to undertake regulated activity. 

In mid-May, it was reported that the exchange was facing an investigation by the U.S. Internal Revenue Service as well as the Department of Justice. On June 25, Japan’s Financial Services Agency (FSA) issued a second warning against the exchange, saying it is still operating in the country without registration.

On June 26, the exchange announced it would no longer serve Ontario-based users after the Ontario Securities Commission began taking legal action against unregistered exchanges. Last week, Thailand’s Securities and Exchange Commision (SEC) announced it had filed a criminal complaint against the exchange for unregistered operations.

The exchange, which was founded in 2017, was initially based in China, but following an increase in crypto regulation, moved initially to Japan, then Malta, before decamping and calling itself “decentralized” with no headquarters. It hasn’t revealed which entities it uses to carry out exchange activities, where those entities are based and if they are regulated there.

While the exchange has entities in multiple offshore locations, it has now stated that its Cayman Islands entity isn’t being used to carry out exchange activities — following a statement last week by the Cayman Islands Monetary Authority (CIMA), which said the exchange was not licensed to offer crypto services.

“Binance.com has always operated in a decentralized manner. We do however, have entities incorporated under the laws of the Cayman Islands performing activities that are permitted by law and not related to operating crypto-exchange trading activities,” a Binance spokesperson told The Block in a statement, adding, “We will work with regulators to address any questions they may have.”

A call for more transparency

Not only did the FCA put out a statement about Binance in particular but it also sent a letter calling on e-money firms operating in the country to make it clear to their customers how their money is protected. Plus, the regulator told them to clarify the difference between placing money with an e-money firm as opposed to in a traditional bank account. 

“We are still concerned that many e-money firms are not adequately disclosing the differences in protections between their services and traditional banking, in particular, that FSCS protection does not apply,” the FCA wrote, emphasizing the importance of giving clients “a fair and prominent indication of any risks.”

The FSCS, or Financial Services Compensation Scheme, protects the deposits of an individual or a company for up to £85,000. If an authorized financial services firm fails, like a bank, for instance, the scheme may be able to pay compensation if the involved individual or company is not able to. 

The FCA gave exchanges six weeks from the publication of the letter to remind their customers of how their money is protected and to make clear FSCS protection does not apply to them. Since then, various crypto firms including Coinbase, Wirex, and Uphold have issued statements to their clients. 

© 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 group of crypto lobby groups spread across the United Kingdom, Europe, the United States and Asia has called for “well-balanced” approaches to regulating the Decentralized Finance (DeFi) sector in an open letter to the Financial Action Task Force (FATF).

Addressing the FATF’s executive secretary David Lewis, the so-called “Global DeFi Coalition” has produced six guiding principles for governing DeFi organizations.

“It is crucial that the rapid growth of DeFi is well understood by authorities to adequately align their regulatory approaches to this space,” the group wrote in its letter.

They warn that a premature crackdown by regulators risks “stifling innovation and preventing new ideas from emerging” and have called for an open dialogue between industry and regulators through the medium of consultations and working groups.

“The letter aims to help authorities avoid potential pitfalls by providing regulatory recommendations by the industry,” the group added.

The coalition is comprised of ACCESS (Singapore), Bitcoin Association (Switzerland), Blockchain Association (U.S.), Blockchain for Europe (Europe), CryptoUK (U.K.), and the International Association for Trusted Blockchain Applications (INATBA). Together, these groups represent more than 350 companies.

The FATF’s current standards

The FATF recently revealed that just 58 out of 128 reporting jurisdictions have adopted its standards for regulating crypto firms. 

In its second 12-month review of the progress made by national regulators, published July 5, the intergovernmental organization stated that “many jurisdictions have continued to make progress” implementing its revised standards — which make so-called Virtual Asset Services Providers (VASPs) subject to anti-money laundering (AML) and counter-terrorism financing (CTF) rules.

Of the 58 regulators that have adopted the standards, 52 are now regulating VASPs and six have banned such operators entirely. 70 jurisdictions are yet to act on the recommendations.

“These gaps in implementation mean that there is not yet a global regime to prevent the misuse of virtual assets and VASPs for money laundering or terrorist financing,” the FATF stated in a press release.

Progress on the ‘Travel rule’

The FATF has, however, hailed progress in terms of introducing systems to help crypto firms implement its infamous ‘travel rule’ — which is technically still in draft form, with finalized guidance expected in October, following a recent delay. The travel rule calls for VASPs to transmit originator and beneficiary information between one another for transactions of over $3,000.

The FATF’s 12-month review of its guidance last year sparked concern in the DeFi industry by stating that jurisdictions uncomfortable with non-custodial wallets could ban exchanges that permit their use in peer-to-peer transactions. Why? Because as the Global DeFi Coalition points out in its letter, “DeFi protocols allow individuals to perform a variety of financial transactions electronically on a non-custodial basis without the participation of an intermediary.”

The coalition’s six proposals are outlined in full below.

1. Regulation imposed on a business should consider broader contextual factors in relation to the corresponding business model. This should help to ensure the issuance of rules that are pragmatic and enforceable. For example, a business that processes transaction data without having access to any client funds might be subjected to data retention rules, but it should not have any obligations to freeze or otherwise interfere with client assets if it cannot technically do so.
2. Regulation should not introduce analogue or manual steps into otherwise digital processes. An exclusively digitally acting financial intermediary should be allowed to entirely rely on digital data in its business process (i.e. know-your-customer, where we have observed recent examples where exchange onboarding obligations have been created that require in-person know your customer (KYC)). The same is true for the introduction of manual verification steps into otherwise fully automated processes, which destroys the potential and opportunity of otherwise scalable business models, thereby harming economic growth.
3. Allow financial intermediaries to collaborate when identifying clients. Across regions, the law requires every financial intermediary to repeat the complete KYC process for every client, even when other financial intermediaries have identified the same client immediately before that. In a decentralised setup with many independent actors rendering part of a financial service, this can lead to a user having to complete all KYC forms multiple times just to execute a single transaction. This puts decentralised setups at a disadvantage compared to centralised service providers. In order to avoid overly redundant paperwork, financial intermediaries should be allowed to share client information for the purpose of fulfilling KYC duties and to rely on third party identity proofs instead of having each intermediary repeating the same steps again for the same client.
4. Regulation should recognise the reduced risk of public blockchain-based transactions and therefore develop a differentiated, risk-based approach. Internationally, AML regulation is based on a “risk-based approach”. When dApps provide for publicly visible transactions, they pose a much lower money-laundering risk than private transactions. A risk-based approach should consider this variety of new applications and their specific risks and apply more differentiated measures. These new challenges cannot be solved with the established solutions. Pushing them into traditional, opaque setups will only increase the ML/TF risks. The lower risk of open blockchain-based transactions should be recognised and transparency rewarded.
5. Implementation guidelines of basic regulatory principles should be conducted in a collaborative way with the DeFi industry. Regulators should collaborate with industry experts (including coders) firstly, to inform themselves about this rapidly developing space, from a technological and a broader perspective. This will help policymakers and authorities to understand the likely future path of DeFi developments and draw regulatory response strategy. Second, a multi stakeholders approach should be taken to develop regulatory principles and guidance for DeFi. Third, given the fast pace of DeFi developments, authorities should maintain a continuous dialogue with the DeFi community to keep up to date with the latest developments and trends and in order to respond adequately, timely and in a flexible manner.
6. Given the global nature of crypto, an enhanced level of cooperation and collaboration between regulators and the industry is required. We encourage to further enhance the level of global collaboration between regulators and agencies as well as of regulators with the global industry in newly founded fora to enable and deliver innovative, consumer-friendly and harmonised regulatory principles. In parallel, regulators should take a broader look at their mandate to respond to the innovation coming out of the industry space. Furthermore, closer collaboration will also ensure regulators are able to fulfill their respective mandates, while not only enabling innovators to innovate, but also will help to improve the existing regulatory regimes. In line with the regulator’s mandate, this could lead to more efficient execution, leaner structures and better consumer protection. Overall, closer collaboration between regulators and the global industry will lead to better rules, easier application and reduced costs. In return, such gained efficiencies will result in more efficient, globally applicable regulatory principles, while increasing consumer and investor protection, economic growth and creating jobs worldwide.

© 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.

Quick Take

• China’s crackdown on bitcoin mining has led the network’s hash rate to drop by more than 50%.
• But what caused the negative approach? Was it just environmental concerns?
• This timeline maps out how the crackdown developed, while exploring the reasons behind it.

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A former employee has reportedly pleaded guilty to embezzling NZD 245,000 (USD 172,000) worth of cryptocurrencies and stealing customer data from the now-defunct New Zealand-based crypto exchange Cryptopia. 

According to a report by local news outlet Stuff, the ex-employee has admitted to two charges: theft by a person in a special relationship, and theft of over NZD 1,000 (USD 700). He will receive his official sentence on October 20. The Christchurch district court has granted the man interim name suppression.

The ex-employee reportedly had issues with management about the handling of private keys for many wallets held by the exchange. At one point, the employee made an unauthorized copy of private keys from Cryptopia’s wallets and saved it on an external storage device, transferring the information to his personal computer. 

Per a summary of facts from the hearing, this gave him access to tens of thousands of digital wallets and access to over NZD 100 million (USD 70.2 million) worth of different cryptocurrencies.

Unrelated to the exchange’s main hack

Cryptopia was one of New Zealand’s most popular crypto exchanges. At its peak, the exchange had over 80 staff members and more than 1.4 million customers globally. 

That was until January 2019, when a hacker stole over NZD 25 million (USD 17.5 million) worth of cryptocurrencies — 15% of the exchange’s holdings — making it the largest theft in the country to date. 

The exchange was forced into a liquidation process after the hack. Accounting firm Grant Thornton is managing the ongoing process. According to Stuff.co.nz, however, the recent charges are unrelated to the 2019 hack. 

After the exchange began its liquidation process, Cryptopia’s entire staff was laid off, but the ex-employee apparently kept his copy of the private keys.

The hack was noticed after someone told the exchange’s liquidators they had accidentally deposited some bitcoin into an old Cryptopia wallet and requested the funds be returned. After reviewing Cryptopia’s wallets, the liquidators saw 13 bitcoins had been illegally withdrawn from various wallets in a series of transactions, some of which had been laundered via a mixing service. At the time, the laundered bitcoin totalled about NZD 235,000 (USD 165,000). Then the man stole more cryptocurrency, worth about NZD 10,000 (USD 7,000). 

“The defendant admitted that he was frustrated with Cryptopia but also motivated by the belief that he could get away with the theft as he thought nobody would ever check the old deposit wallets,” read the summary of facts, as reported by Stuff.

The ex-employee said he had returned some of the stolen currencies and offered to pay back the remaining amount. 

© 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 Philippine Stock Exchange (PSE), the national stock exchange of the Philippines, wants to provide crypto trading when regulators give the green light for it.

PSE president and CEO Ramon Monzon told CNN Philippines on Friday that the exchange would be an ideal platform for crypto trading because it has both the trading infrastructure and investor protection safeguards in place.

PSE, however, is currently awaiting guidelines from the Philippine Securities and Exchange Commission (SEC) and other regulators on cryptocurrencies, said Monzon.

The SEC in 2019 said it will issue draft guidelines for crypto exchanges. Last year, SEC chairman Emilio Aquino said the SEC has draft rules in place along with public comments and is looking to finalize them. But the regulator is yet to issue any rules.

Last year, the central bank of the Philippines approved several crypto exchanges in the country, including Bitan Moneytech, Rebittance Virtual Currency Philippines, and Bexpress. The central bank treats local crypto exchanges as remittance and transfer companies. They are also required to put in place other measures, including anti-money laundering and consumer protection mechanisms.

© 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 ransomware attack at the end of last week has sparked a federal investigation, according to comments from U.S. president Joe Biden.

Biden remarked on the ordered investigation during a public appearance on Friday. Reuters reported Friday that hackers exploited the systems of a Florida-based IT firm to hit a number of businesses worldwide with ransomware. Among the affected firms was a Swedish supermarket chain, according to the BBC, forcing the closure of hundreds of stores. 

Biden said that officials “were not certain” as to the original source of the attack, per reports of his remarks.

“The initial thinking was it was not the Russian government but we’re not sure yet,” he was quoted as saying.

Officials in the White House and beyond have spent the past month or more signaling a more serious stance on ransomware attacks, including a stated push for increased analysis of cryptocurrency networks to trace payments. 

In early June, federal officials revealed that they had recovered some of the funds paid out following an attack on the U.S.-based energy firm Colonial Pipeline. Colonial had paid out 75 BTC following an attack a month earlier. 

© 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.

Cryptocurrency exchanges saw a significant decline in volume during the month of June compared to May, according to data gathered by The Block Research.

Per The Block’s legitimate volume index, exchanges posted $958.3 billion — a 56% decline from May’s $2.18 trillion. The index hasn’t posted a sub-$1 trillion figure since January.

As in previous months, Binance was the volume leader, accounting for 69.7% of the recorded volume. Coinbase, FTX and Kraken encompassed 8%, 4.2% and 4.1% of the data, respectively. 

For more data insights from June, check out the by-the-numbers breakdown by The Block Research’s Lars Hoffmann. 

© 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.