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A major critic of the co-variance argument, Alex Kruger, a macro cryptocurrency analyst, took to Twitter to offer his sarcastic take, referring to both the stock and foreign exchange markets and their relationship with bitcoin.

“Now that the 'Stocks drive bitcoin higher' meme has been proven wrong once again, this is a good time for the 'CNH [Chinese Yuan Offshore] hedging drives bitcoin higher' meme to make it back to the stage,” Kruger said.

Safe haven or not, bitcoin's price remains significantly up since the year began.

Early Wednesday UTC time, it was up 94 percent up from the price of $3,689 witnessed Jan. 1, CoinDesk’s Bitcoin Price Index shows.

At press time, the cryptocurrency is changing hands for $7,140 and is down 48.5 percent from its 2019 high at $13,880, witnessed June 26.

So even if bitcoin may not qualify as digital gold, long-term holders have nothing to fear from the price volatility bitcoin is currently experiencing, said Eddie Alfred, co-founder of Digitial Assets Data.

This period is an anomaly, he said.

“Observing 29-day periods since the genesis of bitcoin, we have seen 195 days where BTC has been down 25 percent or more from its recent high. That means the market has faced similar conditions on about 5 percent of days in BTC’s history,” Alfred said.

Disclosure: The author holds no cryptocurrency at the time of writing.

According to an updated F-1 filing with the U.S. Securities and Exchange Commission (SEC) on Monday, the firm aims to raise between $432 million and $504 million via the offering of 36 million American depositary shares (ADSs) at a price of between $12 and $14. Each ADS represents three ordinary shares.

The target raise is much higher than when the firm's prospectus was first filed in mid November, when a figure of $100 million was proposed.

OneConnect plans to list on the NYSE with the ticker “OCFT” on Dec. 12, according to Nasdaq. The IPO’s underwriters include Morgan Stanley, Goldman Sachs, JPMorgan, HSBC and Bank of America.

The filing values the company at around $4.7–4.9 billion, down from a $7.5 billion valuation at the time of its last fundraise – a round backed by Japanese private equity giant SoftBank.

OneConnect reported revenue of $222 million and an operating loss of $160 million for the first nine months of 2019, according to Nasdaq.

Reuters reported in September that the firm had been seeking to go public in Hong Kong with a $1 billion target, but shifted to the U.S. hoping to raise a higher amount. It now seems OneConnect has settled for half that amount, if the report was correct.

Because of various cost pressures weighing on the Boston-based bank, there has been a dramatic streamlining of the global blockchain team in the past few weeks. A former State Street engineer, who wanted to remain nameless, said the cuts numbered over 100 blockchain developers.

A second person familiar with the situation said “most of the blockchain team had gone,” and that the number let go was “upwards of 100.” There are now “only a few token people left” from the team, this person said, meaning “token” as in perfunctory, not in the crypto sense.

(All told, State Street has 39,407 employees worldwide, according to its latest quarterly filing with the Securities and Exchange Commission).

“They are moving away from this giant in-house DLT initiative,” the source said of State Street. “They are more focused on digital assets, stablecoins, custody, and the USC initiative [the Utility Settlement Coin being developed by bank consortium Fnality].”

Ralph Achkar, managing director of digital products at State Street in London, acknowledged that it had “streamlined some of the people in those teams,” declining to give exact numbers of those let go.

But that streamlining should not be taken to mean “we are not focused on distributed ledger,” he said. “That is absolutely not the case.”

Innovator’s dilemma

Previously, a large DLT team at State Street had been working with the Hyperledger Fabric open-source permissioned blockchain software.

The aim was to create a single book of record, which could run State Street’s investment book at the front end, an accounting book of record for the middleware and a custody book of record on the back end. This new DLT system would remove the need to reconcile between hundreds of databases, involving hundreds of man-hours each day.

Now, however, the bank is now describing its approach as “ledger-agnostic,” and relying more on outside providers.

“If something is Fabric-related we still have some Fabric engineers on board,” said Achkar, who runs a digital asset product development and innovation team in London, complemented by similar teams in the U.S. and Singapore. But his objective is to identify the best business cases, rather than the best protocol, he said.

“I think the choice in approaching that space was, do we need to have all of these resources internally, or can we actually build partnerships and work with other providers in the market?” he said.

Most big banks face the same issues as State Street in grappling with how best to upgrade legacy systems. When the system in question controls over $30 trillion in asset movements, digital transformation is not going to happen overnight.

“There is an innovator’s dilemma,” said Achkar, using a well-known term for the challenge to large incumbent players of adopting technologies that would disrupt their business models. “What we recognize is that some of the processes that might appear to be inefficient in the market today are there for a reason.”

Market rules and market structure have been put in place to ensure bad behaviors can be detected early on, or prevented altogether, he said. “We don’t believe that you are going to throw everything you have done away and replace it with new tech and everything is resolved. It's hard to imagine it happening that way.”

New kid on the block

In any case, State Street’s loss has turned out to be a gain for others.

Moiz Kohari, the former global chief technology architect at State Street, who left the bank in April to co-found DLT-based data privacy startup Manetu, has been busy hiring.

According to its website, Manetu has so far hired former State Street senior vice president Greg Haskins, as chief technology officer; former SVP of enterprise data Conor Allen as head of product; and former managing director Binh Nguyen as chief scientist.

“I on-boarded some of the big names to my Manetu team on Nov. 5,” said Kohari. “There are others from the bank behind them who I’m not going to name; multiple maintainers on the Hyperledger project.”

Bloomberg reported Tuesday that a Danish court had ruled that the northern European bank is justified in the ban due to the risks associated with cryptocurrencies.

The case was brought against Nordea by a financial industry union in Denmark, claiming a crypto ban would interfere with the personal lives of staff.

“We filed suit because of the principle that everyone obviously has a private life and the right to act as a private individual,” union chairman Kent Petersen said in a statement. “It was important for us and our members to establish what rights managers have. In this case, it was more far-reaching than what we find to be appropriate.”

Expressing concerns over harm to the reputation of the bank and its clients, Nordea had warned its employees in early 2018 against crypto trading because “the risks were too high.” The bank cited a lack of regulation and connections to criminal activity such as money laundering to back up its case, Bloomberg writes.

Staff would still be allowed to invest in financial instruments tied to cryptocurrencies and were not prohibited from holding cryptos purchased before the ban.

Some commentators are pointing out on crypto Twitter that the staff ban is perhaps ironic, as Nordea itself has been accused of money laundering.

Reuters reported in March that Finnish broadcaster Yle said leaked documents showed the financial group had allegedly handled €700 million euros ($775 million) in suspicious transactions between 2005 and 2017 that were linked to Russia. In its defense, the bank said it had reported suspicious behavior to relevant authorities.

Then, in June, the bank's offices were searched by the Danish state prosecutor as part of a criminal investigation into money laundering.

Sweden's financial watchdog also warned the firm in 2018 over deficiencies in how it followed anti-money laundering rules, according to another Bloomberg piece at the time.

Taking over from Robert A. Cohen, who left the post for a position in the private sector in August, Kristina Littman will be the agency's new chief of the Division of Enforcement’s Cyber Unit, according to an SEC announcement on Monday.

Joining the SEC as a staff attorney in 2010, Littman rose in the ranks to become a senior advisor to SEC Chairman Jay Clayton in the summer of 2017. In that role, she has advised Clayton on regulatory and policy relating to cryptocurrencies and digital assets, as well as international affairs, trading and markets, the SEC said.

“Kristy’s innovative thinking and extensive experience within the Commission have made her an invaluable advisor and, most importantly, a tireless defender of America’s investors,” said Clayton. “She will be an excellent leader for the Cyber Unit as it continues its work in this critical and continually evolving area.”

The Cyber Unit was founded in 2017 as a way to tackle cybersecurity issues and protect investors against wayward members of the developing blockchain and crypto industry.

Under Robert Cohen, the unit pursued actions against initial coin offerings the agency considered fraudulent. Littman will inherit notable ongoing crypto lawsuits, including one against Kik Interactive for allegedly engaging in an unregistered $100-million securities offering. Telegram is also fighting a similar SEC-brought case over its gram token.

Cohen left the SEC for a partner position at corporate law firm Davis Polk & Wardwell LLP – a company that has represented crypto firms including Coinbase, as well as major financial institutions.

With a J.D. and an M.B.A. from the School of Law at Rutgers University, Littman had practiced at a law firm specializing in corporate and securities litigation prior to joining the SEC.

Littman's varied experience "as an investigator, a trial lawyer, and a senior advisor – have prepared her well to lead the Cyber Unit,” said Steven Peikin, co-director of the Division of Enforcement.

The spec, Stratum V2, could significantly change how bitcoin mining functions and would add security and efficiency to mining pools, the entities that organize miners spread across the world.

Although it aims to improve bitcoin mining pools in a number of ways, the primary benefit comes from a component that reduces one of the most pressing problems in bitcoin: mining pool centralization.

"If this protocol does everything it promises, 'mining centralization' as an argument will be completely dead," bitcoin developer and educator Jimmy Song said.

Meanwhile, Square bitcoin developer Matt Corallo, one of the designers of the protocol, wrote in a recent Reddit AMA: "This is huge for mining centralization. Instead of being focused on the centralization of pools (which is the world we're in today), we can focus on the centralization of actual miners [and] farm owners!"

Last year, Corallo revealed BetterHash, a plan to combat the centralization problem in mining pools. Now Braiins and Corallo are pooling their work to build one protocol that fixes a number of current mining pool issues.

Mining has long been a difficult proposition for individual miners. In the early days to bitcoin, miners from around the world began connecting to so-called mining pools to earn a more consistent paycheck. All of the miners worked in tandem and when one member of the pool got lucky, the thinking went, the entire pool benefited.

In time, weighted mining pools emerged as a safer, more profitable way of mining by taking in all of the bitcoin earned by their miners and redistributing them based on mining power contributed. Unfortunately, according to recent data from Blockchain.info, only three mining pools control over 50% of bitcoin's mining power, thereby centralizing the mining power in a few hands.

This is a problem. When one of the miners in a mining pool wins a block and rakes in the 12.5 bitcoin reward, the mining pool decides which transactions go into that block. Bitcoin experts worry that these centralized entities could use this power to censor transactions they don't like.

To prevent this, Stratum V2 supports "job negotiation" modeled off of Corallo's BetterHash. This changes the relationship between the miner and the mining pool. Instead of mining pools deciding what transactions go into blocks, miners decide which ones to include.

"[If] there are cases of transaction censorship in the future, we have a security measure in the protocol that miners can use to circumvent the censorship," Capek said.

This also means that miners, not mining pools, will be able to vote on protocol upgrades to bitcoin if Stratum V2 is adopted by mining pools.

"With the job negotiation protocol, miners can also choose their block header version field. This allows them freedom in any potential voting via BIP8/BIP9 style mechanism," Capek said.

All that said, Capek stressed that the new specification is not necessarily a "silver bullet" for mining centralization. He pointed out that the mining pools that want to censor bitcoin transactions could simply opt-out of adopting the protocol.

"At the same time it's important to mention that a pool that would 'intentionally' perform such censorship would not allow its users to negotiate their jobs," he said.

Meanwhile, Luke Dashjr, veteran bitcoin coder, argued on Twitter that there are other aspects of mining centralization that still need to be addressed. For example, the fact that only a handful of companies produce mining hardware, the computers made specifically for producing bitcoin, is also a grave threat to decentralization.

Decentralization isn't the only draw in Stratum V2. Mining pools will have an incentive to adopt the new protocol because it will save them money and prevent attacks that could cause them to lose rewards. First, it makes transferring data back and forth more efficient. It could also make stealing mining pool hash power much harder.

"Last but not least, we have addressed the security aspects by allowing fully encrypted and authenticated communication using the current state of the art technology called 'Noise Protocol Framework,'" Capek said.

This peer-reviewed technique is the same technology used by the mobile messenger WhatsApp and bitcoin's lightning network.

Braiins is still finalizing a few features in the specification, such as deciding which encryption algorithm to use for hiding data from snoops, Capek said. But a version is available to test and most of the Stratum V2 specification draft is now up for review.

Capek expects it to take at least 12 months for mining pools to adopt the protocol.

"Getting everybody on board is a matter of realizing the benefits on the security and efficiency side, which in turn leads to saving some operational costs," he said.

The network would be tested in 54 cities across the country as well as Hong Kong and Singapore for projects such as smart city management, Wenchao Shi, president of China UnionPay said in October at the test announcement.

“When developing an app, people would think about Android and IOS systems,” Shi said. “We hope BSN would be the first thing that people would think whenever they want to develop their own blockchain technologies.”

Huobi China has been trying to steer away from crypto trading in the country and establish itself as a blockchain services provider since the 2017 crackdown on crypto exchanges.

In the same year, the company kicked off its global expansion and transferred its trading businesses to Singapore, Japan and South Korea with local operations in each country, according to a timeline provided on its website.

Headquartered in Hainan province, one of the southernmost parts of China, Huobi China firmed up its relationship with the Chinese government by establishing a Communist Party of China branch in its local blockchain subsidiary Beijing Lianhuo Information Services LLC in November 2018.

As a result, many in the investor community, including the likes of popular trader and analyst Josh Rager, believe the relief rally has ended and the overall bearish trend, as represented by the drop from $10,000 to $6,500, has likely resumed.

That argument appears logical with the daily chart reporting a fresh lower-high pattern.

Bitcoin jumped to $7,800 on Friday, as expected, but faced rejection at the resistance of a trendline sloping downwards through Oct. 26 and Nov. 15 highs.

The cryptocurrency also failed to close (UTC) above $7,775 – the 38.2 percent Fibonacci retracement of the drop from $10,350 to $6,511.

In effect, the bulls could not preserve the upside momentum after Friday's rejection at key levels and the cryptocurrency has faced selling pressure ever since.

Bitcoin has now established a "bearish lower high" at the falling trendline resistance.

Further, the 8-hour chart is now reporting a flag breakdown, which implies a resumption of the sell-off from recent highs near $10,350.

All that said, a bullish reversal pattern confirmed last week on the three-day chart is still valid.

BTC created a hammer candle in the three days to Nov. 26, signaling seller exhaustion following a notable sell-off.

More importantly, the cryptocurrency rallied 8 percent in the three days to Nov. 29 and found acceptance above the hammer candle's high of $7,380, marking a strong follow-through to the hammer candle and confirming a short-term bearish-to-bullish trend change.

The bullish pattern would be invalidated if and when bitcoin find acceptance under $6,847 – the low of the green candle.

The pullback from $7,870 lacks substance, with trading volumes dropping over the last 48 hours. A low-volume pullback is often short-lived.

Meanwhile, the daily chart MACD histogram, an indicator used to identify trend changes and gauge the strength, is offering a bullish signal with an above-zero reading.

As a result, bitcoin looks unlikely to violate support at $6,847 and may rise back to the falling trendline resistance, currently at $7,665.

The short-term bullish case would strengthen if prices manage to clear the lower high at $7,870 established over the weekend.

It's worth noting that, as per technical analysis theory, setups on longer time frames take precedence over intraday charts. So, while bitcoin is looking heavy on the 8-hour and daily charts, the pattern on the three-day chart warrants caution on the part of the sellers.

When asked by state-operated news agency RIA, the central bank offered the opinion that "private cryptocurrencies cannot be equated with fiat money and cannot be legal tender."

"If it is decided to ban cryptocurrencies as a means of payment at the legislative level, we consider it appropriate to support this position,” the banking authority said.

Legislation clarifying the legal status of cryptocurrencies, including mining and token sales, was reported to be passing through the State Duma by the end of the last summer session, but has seen delays. Two of three planned bills were passed in 2018, however, one regarding digital rights and the other covering crowdfunding, RIA says.

The Bank of Russia justified its support of a possible ban, saying:

Recently, the institution's chairperson, Elvira Nabiullina, said that, after research, the bank sees no strong reason to launch a national cryptocurrency that would override the potential risks.

Nabiullina has also warned of the risks of crypto investment, compared it with gambling at a casino, according to RIA. In October, she said, "“There is a worldly wisdom that free cheese is only in a mousetrap: easily earned money quickly leaves."

Blockchain compliance solutions provider CipherTrace says in its Q3 Cryptocurrency Anti-Money Laundering (AML) Report, published Wednesday, that around one third of the top 120 exchanges are "weak" when it comes to know-your-customer (KYC) verification, while fully two-thirds "lack strong KYC policies."

The FATF guidance, which is more or less obligatory for its 39 member nations and jurisdictions to adopt in regulation, stipulates that exchanges, or virtual asset providers (VASPS), must obtain, store and be able to pass on data on their users when transactions worth $1,000 or over are made. This provides a digital paper trail that can be followed in order to prevent financial crimes such as money laundering or terrorism financing.

CipherTrace says there's now just seven months left for the members to align legislation with the guidance, and VASPs to set up solutions in order to remain in compliance. However, it says, some 65 percent of exchanges are not yet able "to handle basic KYC, let alone comply with the stringent new funds 'Travel Rule'."

The firm's researchers found that they were able to transact 0.25 bitcoin daily with little or no KYC at 35 percent of exchanges tested, described as "weak" AML protections in the report. Forty-one percent were "porous," CipherTrace found, with "some sort of ID verification process," while just 35 percent had "strong" KYC, with multiple levels of verification, including a proof-of-address requirement and perhaps video or telephone calls.

CipherTrace further says that the Travel Rule is "problematic" for so-called privacy coins, cryptocurrencies that offer features that can obfuscate a transactor's data. Such features put these cryptos at odd with FATF's guidance, making exchanges unable to comply with the Travel Rule.

Already, some exchanges have been delisting such coins, including zcash, monero and dash, citing compliance with national regulators' moves to align with FATF's stipulations.

However, the report says that the researchers found 32 percent of exchanges, including some with less-then-strong KYC, still list privacy coins.

The firm states, though:

Indeed, a planned suspension of zcash and dash trading support by OKEx Korea was put under review in October, partly thanks to efforts by the Electric Coin Company – the co-developer of zcash – to assuage the exchange's fears.

Josh Swihart, the Electric Coin Company's VP of marketing and business development told CoinDesk at the time, “Zcash is entirely compatible with all FATF recommendations including the travel rule."

It should be noted that CipherTrace, as well as other blockchain analytics firms, is offering paid-for solutions said to help exchanges comply with FATF guidance.

Speaking at a joint conference held by the European Central Bank and the National Bank of Belgium, outgoing executive board member Benoît Cœuré said the bank will examine the potential influences of digital currencies over the existing financial system.

“A digital currency of this sort could take a variety of forms, the benefits and costs of which the ECB and other central banks are currently investigating, being mindful of their broader consequences on financial intermediation.” Cœuré said.

However, he advocated for private companies to continue their own work in the space.

“But potential central bank initiatives should not discourage or crowd out private market-led solutions for fast and efficient retail payments in the euro area,” he said.

The speech came on the heels of Cœuré’s appointment as head of the newly established Innovation Hub at the Bank for International Settlements this month.

Effective on Jan. 1 2020, he will lead the institution’s effort to help central banks explore the benefits of financial technologies such as a digital currency.

European central banks in general have been speaking out about cryptocurrencies recently.

French central bank first deputy governor Denis Beau said last week the eurozone would consider building a blockchain-based settlement system for the euro and potential a digital currency to address payment issues between institutions in the area.

However, the ECB has struck down a proposed cryptocurrency proposed by Estonia in September 2017, stressing the euro is the only valid money in the European area.

Senior officials from the bank also said in the past that they do not consider digital currencies such as bitcoin to be a threat and cryptocurrencies do not pose risks on financial risks on financial stability.

In this vein, Cœuré said, the bank is not “ignoring” the development of cryptocurrencies, but simply does not think it as a risk to the bank of the euro.

The bellwether cryptocurrency has tumbled 11.5 percent in the last week or so, likely due to a lack of positive catalysts entering the picture and China's latest crackdown on digital asset trading. It briefly dipped below the psychological level of $7,000 and as of this writing is trading around $7,117. But zooming out the lens a bit and taking a macro perspective, experts note at least three plausible reasons to think this may be just a hiccup for bitcoin.

On the demand side, institutional trading platforms like Bakkt and Fidelity Digital Asset Services (FDAS) are starting to see uptake. Retail bitcoin purchases are on the rise at the popular consumer app Square as well. And all else equal, the expected halving of mining rewards next year bodes well on the supply side since it will reduce the amount of new bitcoin regularly injected into the market.

“While the latest drop in price is a short-term cause for concern, the fundamentals around BTC and increasing institutional adoption continue up and to the right,” said Jehan Chu, Co-Founder and Managing Partner at Kenetic, a venture capital and trading firm based in Hong Kong.

After a disappointing start in September, the Bakkt futures market has started to ramp up in earnest, hitting an all-time high on Nov. 22, with 2,728 contracts traded. That was a 68 percent increase on the day prior while open interest was up 29 percent on the day. Open interest refers to the total number of outstanding derivative contracts that have not yet been settled.

A subsidiary of Intercontinental Exchange (ICE, which also owns the New York Stock Exchange), Bakkt is a regulated platform and exchange for the purchase, sale and storage of crypto assets aimed at institutional traders and companies.

Its role has been to increase confidence and trust within the crypto-sphere amongst larger funds by offering more sophisticated trading instruments such as futures contracts that can be utilized to hedge against risk.

“It's actually good that it's going to take longer for bitcoin to hit the next all-time high because it shows how the market is maturing and with more institutions jumping in,” said Josh Rager, an analyst and co-founder at Blockroots, an education platform for trading focused on the BTC market and crypto-assets.

Similarly, platforms targeting large investors, such as FDAS, launched earlier this year by mutual-fund powerhouse Fidelity Investments, provide a vital service for those larger funds seeking a safer avenue to enter crypto without having to rely on exchanges to store their crypto. They are likely boosting long-term sentiment by providing custody options for digital assets, experts told CoinDesk.

Fidelity Digital Assets, the nascent cryptocurrency trading business servicing institutional investors, also features an onboarding service with dedicated client support that makes the process of entering the space more convenient and legit from a large investor’s perspective.

Institutional adoption continues at a “rapid pace," said Gabor Gubacs, director of digital assets strategy at asset management firm VanEck.

“Lower BTC prices are more accessible and healthier entry points for new BTC allocators,” said Gubacs.

To be sure, it's not as accessible as some may have hoped. Gurbacs' firm, for example, withdrew a proposed bitcoin exchange-traded fund (ETF) from consideration by the U.S. Securities and Exchange Commission (SEC) in September, after the regulator signaled it was in no hurry to approve any such vehicle for retail investors. Instead, VanEck is selling shares in an ETF-like bitcoin fund strictly to institutions.

Another encouraging sign for the bulls is the fact that first-time buyers of bitcoin through Square's Cash app have roughly doubled, with the company's bitcoin revenue climbing 244 percent year-over-year to $1.27 billion in the third quarter.

Admittedly, Square only started offering bitcoin purchases in November 2017 (near the peak of the last bull market), so that triple-digit growth is from a small base. Also, the company's profits from bitcoin sales have been comparatively tiny, in the low seven figures.

Still, for Chu, the data bolsters the case for optimism, when combined with the developments on the institutional side.

"Bakkt trading volumes are steadily increasing, retail purchases on Square are at high levels, and platforms like Fidelity continue to create comprehensive access to Bitcoin for their customers – all of which are bullish long-term signs for bitcoin," Chu said.

Then there are the key metrics about the asset itself. Rager noted that the hash rate, a measure of how much computing power is being devoted to the bitcoin network, has tripled since the previous all-time price high of $20,000 December 2017.

In his interpretation, institutions are selling to force weaker hands to capitulate, so the larger funds can accumulate BTC at lower prices ahead of the halving expected in May 2020.

Jonny Moe, a crypto day trader and analyst, agreed that the halving was the single biggest factor relating to the bullish long-term case and that BTC itself is a deflationary currency whose purchasing power should grow over time.

“To this point, all the evidence we have is that price has respected this disinflation in supply,” Moe said. “Until we see it stop following this four-year cycle, the most simplistic long term view is to just respect it and let it continue.”

But bear in mind that this point is up for debate. Some traders aren't sure history will repeat itself. Previously, those buying bitcoin in anticipation of the halving had the wind at their back, in the form of an already-bullish market, crypto trader Willy Woo noted recently.

"Well this time around, we have gone $14k->$7.5k and that's killing off weak miners who are dumping and dying," Woo tweeted. "This adds to the already bearish action, so no happy front running 6-months out due to sell pressure. You can't draw repeat fractals, the fundamentals are different."

Disclosure: This author holds no cryptocurrency at the time of writing.

At a meeting on Nov. 27, the Federal Council – the executive body that constitutes the federal government – adopted a proposal to improve the legislative framework for the nascent technology. According to a notice from Switzerland's federal finance department, the move is aimed at "increasing legal certainty, removing barriers for applications based on distributed ledger technology (DLT) and reducing the risk of abuse."

The legislation, developed as a "blanket framework," proposes amendments to nine federal acts across civil and financial market law, according to the announcement.

The nation is already known as one that is crypto and blockchain friendly, with its Zug region playing host to a large number of industry firms. Facebook also chose to incorporate the Libra Association in Switzerland.

In 2018, the Federal Council issued a report saying that it would regulate crypto and blockchain largely under existing financial laws, though an amendment to securities laws was also propose to increase the legal certainty of crypto tokens. The same year, the Financial Market Supervisory Authority introduced a new fintech license with “relaxed” requirements that could be applied to blockchain and cryptocurrency firms.

In today's announcement, the Federal Council said the 2018 report had demonstrated that Switzerland's existing legal framework is "well suited" for new technologies such as DLT. However, it also showed that there's room for improvement in some areas.

To address those, the Federal Council opened up a number of proposed amendments to existing laws for consultation in March. Following around 80 responses, the amendments have been further revised and, now, adopted by the council.

The proposed legislation is expected to be examined by the Swiss parliament in early 2020.

Blockchain advisory firm Akomba Labs ran bloXroute's "Blockchain Distribution Network" (BDN) on an Ethereum node in Singapore between Nov. 11 and Nov. 27, finding that average block propagation time – the time a block needs to be produced and shared throughout a blockchain – dropped to 172 milliseconds, less than half the current average time of 360 milliseconds.

Akomba utilized data from a Chinese mining pool as part of the two-week test.

Akomba’s results indicate BDN could have a modest but potentially cascading effect on block propagation in the Ethereum mainnet, one of the largest public blockchains and one of the more expensive to transact on, with gas prices around 20 cents. It is also a frequent target in the scalability debate.

“Ethereum feels the burn of the scalability bottleneck more than any other blockchain out there,” said Uri Klarman, bloXroute CEO. “It's losing momentum, it's losing market share. They feel the problem. Most others don't.”

BloXroute’s approach is a layer 0 solution that reduces transaction size and thus speeds up block      propagation time. BDN could broadcast 4 bytes for a 500 byte transaction, for example.

“We don't send the entire block because if the other gateways know the transaction out of there, you don't need to send the actual data itself – only pointers saying which transactions are there” said Klarman.

BloXroute had previously tested BDN on the ethereum mainnet in September to similar results. At the time, it clocked about 25 percent reduction in block propagation time.

Klarman said that BDN is already running in some large mining pools and will continue to be gradually introduced to larger pools. Once it does, he says block capacity will increase and fees could fall – if, that is, the added capacity outstrips network demand.

In September, ethereum miners voted to raise the GAS limit to 10 million, up 25 percent from the previous ceiling. That move was made to combat network congestion, and Klarman said demand immediately ate the extra space up.

“We know there is demand for these transactions, which lead us to where we are right now,” he said.

And though XSGD will be a Singaporean-pegged stablecoin, its launch coincides with governments’ close scrutinization of stablecoin regimes, including in the US.

Elliptic already has experience routing out such activity. One of the early startups to provide crypto transaction tracking services, the firm issued a report last week tying $400 million in XRP to illicit activities like ponzi schemes.

“While the promise of the digital economy is a truly exciting one, it is also imperative that established standards around security and compliance remain uncompromised,” Amrit Kumar, president at Zilliqa, said in a statement.AML oversight adds another layer to the Zilliqa blockchain. In June it announced smart contract support.

According to a report from Tech Crunch, a company spokesperson said: "We’ll be winding down operations at Omni and closing the platform by the end of this year." Omni has made no announcement on Twitter, however, and its blog site is not operational at press time.

It was reported in October that Coinbase was in talks to acquire Omni's engineering team to further development of its educational project Coinbase Earn. That news came as Omni was reportedly laying off staff as it struggled to make profits after selling its physical storage business in May, TechCrunch says.

Coinbase has now taken on the dev team, according to the report, with a spokesperson saying:

Last year, Omni raised $25 million in a funding round led by Ripple executives Stefan Thomas and Chris Larsen, who invested directly with the XRP cryptocurrency. The firm has reportedly raised $35 million all told.

The company had started off as a kind of Uber for personal storage, collecting items from users' residences and holding them in a warehouse until needed again. Its low fees proved to be too low for a viable business, though, the report says.

It then moved on to offering a platform for users to rent out items they were not using, before morphing the service again into a similar rental service for stores, but those too failed to bring in sufficient revenue, according to TechCrunch.

A new class-action suit, filed by Eric Young and Adam Kurtz at the district court in the Western District of Washington on Nov. 22, draws heavily from details that emerged in the case brought by the New York attorney general in April against the same two firms.

It's also the second class action to have been brought in recent months relying on the New York case, which is still ongoing as the defendants appeal over whether they must continue to produce documentation. The attorney general claims, among other things, that that the tether (USDT) stablecoin was not fully backed by U.S. dollars.

In a lengthy list of claims, Young and Kurtz specifically allege that Bitfinex and Tether "monopolized and conspired to monopolize the Bitcoin market," as well as manipulated the market, manipulated information or made inaccurate claims.

Further, "Defendants’ misconduct caused prices of Bitcoin futures, and the prices of Bitcoin underlying the Bitcoin futures, to be artificial during the Class Period [Oct. 1, 2014 to present]," Young and Kurtz say, adding:

Both lawsuits also cite a study authored by professors at the University of Texas at Austin claiming that a single Bitfinex account used USDT to inflate the price of bitcoin in the lead up to its 2017 all-time high of around $20,000.

While the case has been brought at the federal court in Washington State, Young and Kurtz are based in Pennsylvania and New York, respectively. Both say they are bitcoin traders who traded at artificial prices due to the alleged actions of the defendants.

"At all relevant times, Defendants, including the employees that conducted Defendants’ affairs through illegal acts, knowingly and intentionally made false statements to U.S. Bitcoin investors and the public for the purpose of concealing Defendants’ scheme," the suit states, further alleging that the defendants profited at plaintiffs' expense.

Bitfinex took to its blog Sunday to call the Washington case "mercenary and baseless," and suggest that such lawsuits "are a continuing affront to the efforts and dedication of Bitfinex's customers and all participants in the digital currency ecosystem."

"As we predicted last month, mercenary lawyers continue to try to use Bitfinex and Tether to obtain a payday. To be clear, there will be no nuisance settlements or settlements of any kind reached. Instead, all claims raised across both actions will be vigorously contested and ultimately disposed of in due course," the exchange wrote.

The U.S. Department of Justice has reportedly looking into the allegations of market manipulation for some time, but has not yet made any conclusions public.

The following article originally appeared in Institutional Crypto by CoinDesk, a free newsletter for the institutional market, with news and views on crypto infrastructure delivered every Tuesday. Sign up here.

Issuers have submitted proposal after proposal for a bitcoin-based exchange-traded fund (ETF), and the SEC has delayed or rejected each one. It’s time, however, to ask why and if the SEC’s frustration over not having jurisdiction over cryptocurrencies is clouding their judgment. In my opinion, the answer might well be yes.

To start, it is important to recognize that there is a lot of investor interest in bitcoin as well as other digital assets. Nothing the SEC can do will diminish that, so the only relevant question is if a bitcoin ETF meets the standards for such a product and is consistent with other approved ETFs. That said, the SEC argues that bitcoin, despite having multiple markets that meet a reasonable standard for displayed price discovery, does not meet that standard.

From the disapproval ruling:

This analysis has three main flaws: First, there are a number of bitcoin “exchanges” (1) that are subject to money center or trust bank regulation with transparent order books and matching methodologies. There is no proof of “fake” trades at those exchanges and they comprise enough liquidity to be meaningful for the purpose of price discovery, as will be discussed later.

Second, ETFs have been approved for gold, silver and other precious metals where the underlying spot markets are demonstrably inferior to bitcoin. The precious metals spot market is almost completely negotiated. As a result, in the case of approved precious metals ETFs, the futures markets are the sole basis for price discovery of the ETF itself. Since there are now multiple regulated futures markets for bitcoin in the U.S., however, it is hard to understand the SEC’s logic in stating that there is insufficient price discovery from those futures markets.

Delving into the comparison deeper, it is important to recognize that the SEC has approved ETFs for gold, silver, platinum, oil and other commodities whose spot market is much more opaque than the market for bitcoin and whose markets are also susceptible to manipulation.

Unlike gold, where spot prices are loosely provided on disconnected websites and transactions happen on a negotiated (almost completely manual) basis, bitcoin pricing is provided by many markets running electronically available order books that are subject to various regulators. As a result, the spot crypto markets are far more transparent than those of spot commodities, with far more liquidity available at tighter spreads.

To put this into context, I checked several leading websites for buying or selling gold coins or rounds and the average spread between buying and selling was over 4%. It is certainly possible that for larger-sized orders that the spreads might have been smaller, but it seems unlikely to have been much tighter. That contrasts with a bid-offer spread, inclusive of retail exchange fees for bitcoin that average well under 1%, even for order sizes as large as 500-1000 bitcoin (larger than an ETF creation or redemption unit). For example, as I write this, the per-coin cost to buy 500 bitcoin across regulated exchanges, net of (retail level) fees, is $8,491 (calculated using CoinRoutes software), while the per-coin cost to sell 500, net of the same fees, is $8,438 (2). Using our patent-pending RealPrice mechanism, we could stream the price to redeem or create a full bitcoin ETF in real time, which is a level of transparency well beyond many underlying assets who have approved ETFs.

The third flaw in the analysis is that there have been many allegations of manipulation related to other commodities that already have ETFs, so it seems like the SEC is holding bitcoin to a much higher standard. It is particularly ironic that the SEC cited the possibility of manipulation in the commodity, considering the recent RICO case against precious metals traders. We must recognize that there is always the potential for manipulation, but the question the SEC should ask is if bitcoin is more subject to such behavior and if its markets are harder to surveil than other approved underlying assets. Once again, the answer is no.

Bitcoin has multiple regulated futures markets in the U.S., giving the CFTC similar jurisdiction as they have in precious metals, and, unlike precious metals, the spot markets have significant electronic (and therefore auditable) data on buyers and sellers. These markets represent a critical mass of transparent, displayed liquidity, which should be the defining characteristic for this decision. It ensures that there would be available data for the CFTC to utilize when there are allegations of manipulation.

Before concluding, I would like to make two other points. First, it should not matter if the SEC is skeptical about bitcoin, or if they are worried that it will go to zero. The agency should not be determining what investments are good or bad, but rather if the information made available to investors, including market data, is accurate and fairly provided.

Second, despite the SEC’s insistence that it is protecting investors by rejecting these applications, the result is harmful. Retail investors that want to invest in bitcoin are driven towards fund products that have significant premiums to their net asset value. Such premiums could, of course, evaporate and hand investors larger losses than had they purchased an ETF. In addition, unsophisticated investors are using a variety of retail platforms to buy bitcoin that charge significantly higher fees or spreads that would likely be offered via an ETF, and feature weaker investor protection regulation by a wide margin.

Finally, it is important to address the SEC’s contention that “fake” or manipulated markets outside of the U.S. represent a problem for a bitcoin ETF. This is simply wrong. The markets they reference can be excluded from calculations of available liquidity and price. In fact, many commodities trade at different prices in other parts of the world, but those prices are ignored by U.S.-issued ETFs.

In conclusion, I believe that the SEC, perhaps due to its bias against the asset itself, is improperly delaying an ETF approval. Considering the availability of real-time, fully priced liquidity, using only markets that are regulated in the U.S., as well as the existence of multiple CFTC-regulated futures markets – the time is now.

(1)   The markets call themselves exchanges, but they are not exchanges in the SEC definition of the term.

(2)   Using CoinRoutes' cost calculator and retail fee tiers at all exchanges accepting US clients. Exchanges used in this example were Coinbase Pro, Kraken, Bitstamp, itBit, SeedCX, ErisX, Bittrex, Binance.US and Gemini.

Led by the Chinese central bank, five financial and technology authorities jointly published the Bluebook of Blockchain on Thursday, outlining illegal and fraudulent schemes in the blockchain industry.

Approximately 89 percent of blockchain firms in China – some 25,000 – might have tried to create and issue their own tokens, while only 4,000 are fully focused on blockchain applications, Yedong Zhu, president of the government-backed nonprofit Beijing Blockchain Application Association, said in an interview with Chinese state media CCTV at the report’s launch.

The most common crypto issuance process, the ICO, has been deemed illegal by the Chinese government after its 2017 crackdown. However, it still allows crypto mining operations and possession of crypto assets in the country.

The findings come amid the Chinese government’s most recent crackdown on barred financial operations related to ICOs and crypto trading. Major Chinese cities, such as Beijing and Shanghai, have rolled out inspection plans with a view to shutting down any remaining crypto exchanges.

The authorities have gone so far as to close any marketing firms that promote crypto companies and those that masqueraded as blockchain companies to launch ICOs.

According to the report, more than half of the 28,000 blockchain companies are based in the Guangdong province of southern China, next to the Chinese Silicon Valley Shenzhen, while the rest generally run their operations from Beijing and Shanghai.

“We need to make sure the blockchain firms that illegally raise funds and commit financial frauds are not included in the government blockchain support programs,” Zhu said

The report is one of the three “bluebooks” that guides Chinese authorities on how to regulate the emerging fintech industry. The other two reports focus on technologies used by regulators and financial technologies.

The bank’s wholesale car financing arm has filed a patent application describing a distributed ledger-based version of floorplan lending, a revolving line of credit that allows car dealers to borrow against retail inventory.

Every car sold in the U.S. has an individual vehicle identity number (VIN). The bank reckons that these can be anchored to a blockchain, assisted by a range of other telematic and geolocation sensors, which can remove inefficient manual pain points around auditing inventory on the dealership floor.

“The floorplan lending process involves periodically doing a physical inspection or audit of all the inventory on the dealership's lot," said Kevin Point, head of research and development at Chase Auto. "That means that a human being actually travels to the dealership, identifies the vehicles and then reconciles that inventory, if the loan's outstanding, on both the dealer's and the bank's accounting system.”

Banks like JPMorgan, which have been busy testing and heads-down building blockchain systems for the last several years, are now clearly looking for practical opportunities that will see their bottom line improved by the tech.

About 17 million new cars are sold each year in the U.S, said Point, and when you add in used vehicles there are many millions sitting on floorplan lines of credit. Tracking them on a distributed ledger “will achieve cost savings over time. We believe these could be significant on an industry-wide basis,” he said.

The move is a slight departure for the Quorum blockchain, a private variant of ethereum developed by JPM. Previously, Quorum was used solely for abstract financial operations, issuing debt or linking payment networks of correspondent banks and such like. By contrast, the new Chase Network of Assets involves verifying physical objects.

Christine Moy, blockchain lead at JPMorgan, described it as a pilot in that it’s being tested with real dealership partners, but not in production yet. She also said Network of Assets could be applied more broadly, adding that JPMorgan is speaking to automakers about the blockchain system, but was not at liberty to say which ones at this time.

“Not only is JPMorgan and Chase Auto seeking to solve its own problem, basically it will benefit the vehicular and equipment industry at large," Moy said. "The Network of Assets is the foundation for this particular application and use case, but can also be the foundational piece for many other value-added applications and services for auto manufacturers, other banks and finance companies, and dealerships, related to devices with telematics connectivity."

As well as allowing much more in the way of real-time risk management, the DLT system is designed to prevent a practice known as “double flooring."

"This is when accidentally (or fraudulently) a dealership may pledge one vehicle as collateral for one floorplan contract to one bank, but also pledge the same collateral for another floorplan contract with another bank," Moy said.

JPMorgan's idea is not entirely novel. For instance, Tata Consultancy Services, part of the Indian multinational group, has also been looking at blockchain for floorplan financing.

However, JPMorgan’s Quorum efforts are well established with a vibrant community around the tech, and it also provides the potential interoperability with tokenized payment systems such as the bank's embryonic JPMCoin in a next-generation blockchain world.

For now, wholesale auto financing is a solid start, said Point.

“Because of the unique identifiers, telematics, the auto industry and its counterparties are a great way to get adoption out there quickly and that will drive efficiencies into different areas of finance,” he said.

Ivan Bogatyy, researcher at investment fund Dragonfly Capital, dropped a Medium bombshell last Monday, disclosing an “attack” capable of identifying 96 percent of the active senders and receivers on the grin network through the employment of “sniffer nodes.”

As the smoke cleared, one question emerged: What is privacy in crypto, anyway?

Gathering praise from the likes of ethereum co-founder Vitalik Buterin, litecoin creator Charlie Lee and others, Bogatyy detailed grin’s structural issues – issues, he claims, stemming from Mimblewimble itself.

Mimblewimble – the much-heralded privacy protocol created in 2016 – anonymizes transactions through batching inputs per block, like a CoinJoin. After mixing the numbers associated with a sender in a pool of similar transactions, equivalent values are spit out on the other side as unidentifiable outputs.

Styled a confidential transaction (CT), this process typically works pretty well once it scales to a large enough anonymity set, wherein the sheer number of inputs shields the knowledge about the outputs after a mixing. In CT, the amount and public addresses are never exposed, mainly because addresses don’t exist in the Mimblewimble universe, just transaction inputs and outputs.

The first two cryptocurrencies based on Mimblewimble launched in January 2019: grin and beam. But, for both coins, "transaction graphing" remains a problem.

A well-connected sniffer node can sit on either side of the CoinJoin in what is called “linking.” Built on the same peer-to-peer (P2P) network as bitcoin, nodes communicate changes to the ledger from one to another and a sniffer can pick out how transactions move by being well-connected to its peers. In fact, Bogatyy said it only took 200 of the 3,000 current peers on the grin blockchain to flesh out 96 percent of transaction sender and receiver addresses at the small cost of a $60 per week subscription to Amazon Web Services.

This issue was well known beforehand, however.

The Grin Foundation’s Open Research Problems page on GitHub publicly cited the problem as a point for future research along with analysis from Token Daily’s Mohamed Fouda over a year ago. Moreover, grin has never promised full anonymity, but only CT with the possibility of adding anonymity features down the road.

To Bogatyy, the research is about correcting public misunderstandings about privacy coins. But to Mimblewimble developers, the piece amounted to a smear.

“While some technical experts guessed that the vulnerability likely exists, I don't think anyone knew the extent,” Bogatyy said in an email. “Before I ran the experiments, I couldn't know myself it would be 96 percent.”

He said the goal of his research is to make the “technical knowledge more accessible.”

“I think Grin devs are very competent and don't overpromise, but the public perception diverged from the technical fundamentals and followed the legend a little too much,” Bogatyy said.

All privacy coins aren't created equal. Rather, a privacy coin is one iteration of a subjective vision of privacy externally limited by what distributed protocols are physically capable of accomplishing.

In the case of Mimblewimble, CT is not much more than bitcoin with throw-away public addresses plus hidden transaction amounts, according to zcash co-founder and cryptographer Ian Miers.

“But we all know intuitively what privacy means: if you pay your psychiatrist or purchase a series of banned books from an online market, no one learns you saw a doctor and no one is going to kick down your door and search your house for illicit books,” Miers said in an email.

But in the world of public blockchains, where transaction data can be viewed and verified by all participants, there's a catch.

“Because we all know cryptocurrency has a privacy issue, outsiders latch onto anything and hype it out of proportion,” Miers said.

Grin’s version of Mimblewimble is joined by others, namely beam, which Bogatyy also addressed in his research.

Noting the trouble with transaction graphing long ago, beam developers have implemented numerous amendments to Mimblewimble, including decoy outputs to break linkability, according to beam developer Guy Corem.

That’s why he’s taking issue with Bogatyy’s research.

“Beam and Grin developers were aware of transactions linkability from way before mainnets launched,” Corem said in a Telegram message. “[Bogatyy] didn't look at Beam's implementation. For example, in his technical write-up, he wrongfully stated that the decoys aren't being spent.”

Decoy improvements or not, Bogatyy remains unimpressed. Following transactions through whisper nodes remains too easy even with the added protections, Bogatyy said.

“Ultimately, the best version of decoy-heavy Mimblewimble would look like a worse version of Monero,” Bogatyy said on his GitHub page. (It should be noted that no privacy coins are listed in Dragonfly’s portfolio.)

To grin developers, Bogatyy’s views are far off the mark.

Writing in a Medium post, grin developer Daniel Lehnberg said Bogatyy confused basic points such as transaction outputs versus addresses in the Mimblewimble system, misstated grin’s original privacy claims and did not contact grin developers while saying he did.

As it relates to transaction graphing, Lehnberg called the 96 percent figure irrelevant.

“Other than that 'Output A spends to Output B', it’s less clear what exactly is being identified here or what else the author is able to accomplish with this information," Lehnberg wrote. "While it would be desirable to avoid leaking the transaction graph, the graph alone doesn’t necessarily reveal sender and receiver outputs."

But, as Miers points out, you can still trace grin transactions regardless if they have addresses or not.

“It’s like you have a map of some part of New York City but you just don’t which part because all the street names are missing. But the moment someone tells you the name of one intersection on the map, you can work out the rest,” Miers said. “The attack on Grin created this map with blank streets. You need one more step to give out the names, but that is the easy part.”

Furthermore, once you know a transaction’s beginning and end points, it doesn’t matter to anyone how much you spent, just that you spent it somewhere.

“So the world will learn you paid Pornhub or bought a lambo, but they won't directly know for how much,” said Miers. “It isn't useful unless it's combined with much stronger privacy technology.”

As ethereum's Buterin noted on Twitter, privacy depends on the number of users in an anonymity set: The more users mixing funds, the safer the funds pulled from the pool.

But it's different for grin due to the nature of its protocol, which natively doesn’t have addresses like bitcoin to match transactions to, grin's Lehnberg wrote on Medium:

Reviewing Bogatyy’s research, Lehnberg said he is skeptical of how he was able to “uncover who paid who in the Grin network,” as Bogatyy claimed on GitHub. Grin’s development team has only gone so far as to say the issue could reveal “entities,” not individuals.

“It's one thing to say, ‘oh this theoretical attack is really straightforward and easy to carry out,’ it's another to actually do it,” Lehnberg said on Telegram.

While the two sides may disagree over the technicals, Miers remains positive about Mimblewimble but characterizes grin as only a footnote in privacy coins' history.

“Grin is a project that shows a lot of promise, but right now it isn’t accurate to call it a privacy coin or even a privacy project,” Miers said.

FDAS, a unit of Fidelity Investments, is one of several firms attempting to bridge Wall Street with the wild world of crypto, along with Bakkt, the bitcoin futures market launched this year by Intercontinental Exchange.

It's a bold challenge. For example, OTC desks have been easier to bring on board than exchanges, FDAS has found.

“We apply a very high standard of counterparty evaluation, involving a rigorous risk management and onboarding process,” said a spokeswoman. “This approach is something we’ve been able to apply to OTC desks with post-trade settlement more readily than working with an exchange”

Earlier this week, FDAS won a trust charter from New York’s Department of Financial Services. The charter allows FDAS to onboard New York clients and gives the firm more credibility with clients that are fiduciaries looking for a custodian with a trust license.

While Jessop wouldn’t name the New York clients that FDAS is onboarding, Galaxy Digital recently announced that it was using FDAS and Bakkt to custody its two new bitcoin funds. Other New York clients will be onboarded in the next five to six weeks, Jessop said.

FDAS has a diverse client base, including hedge funds, family offices, an investment advisor and a small, U.S.-based pension fund, Jessop said. “The interest in that [pension fund] segment is there.”

“We’ve been surprised over the course of the year about the level of interest and amount of work people have done to understand the asset class,” he said.

After FDAS has onboarded New York clients, it plans in the new year to begin onboarding new assets, developing its trading capabilities, scaling its business and pursuing licenses in other states where it is not currently doing business.

As a privately held company, Fidelity has been able to experiment with innovative technology without worrying about short-term payoffs. An R&D division, the Fidelity Center for Applied Technology (FCAT), has studied the crypto space closely, even mining bitcoin.

FCAT recently completed a proof-of-concept with security token facilitator Tokensoft, according to a Medium post by Tokensoft Head of Operations Lawson Baker

Bits and Blocks Club, an FCAT internal learning group focused on digital assets and blockchain, launched a restricted ERC-1404 token on ethereum which “Fidelity employees used … in a closed-loop rewards system designed to encourage employees to attend internal events and other activities.”

"From [European] banks to innovation labs at financial institutions like Fidelity's, TokenSoft is seeing traction up-market for institutional customers for security tokens and other financial assets," Baker wrote in an email. "We think this trend will really show up in Q1 2020 when customers with potential registered offerings plan to come to the market."