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Bitcoin kept surging and briefly hit the $10,000 mark this week, continuing a rapid recovery from its precipitous crash to less than $4,000 in early March. Its gains have been fueled by media attention leading into Monday’s halving event—bitcoin’s first two halvings both led to meteoric price rises, though macroeconomic conditions are far more uncertain now than they were in 2012 and 2016.
Some insiders fear that the event may be overhyped; bitcoin researcher Lennard Neo said, “we believe a short-term pullback is highly likely immediately post-halving, as traders begin taking profits.” But the long-term outlook remains bullish for most, especially in conjunction with the anticipation of inflation that may result from the vast stimulus packages signed into law to revive the economy.
Zooko Wilcox knew he was treading into a legal and moral gray area when he gathered a coalition of people to build a truly anonymous cryptocurrency they called zcash. “I might end up in jail. I might get murdered or extorted. I might go broke,” Wilcox recalls thinking. “But it’s way too important not to do.”
In recent years, it appeared that the Electric Coin Company CEO’s fears were being realized. Zcash use appeared to be on the rise for illegal activity, and several exchanges delisted the currency amid regulatory pressure. In response, Wilcox sought out an unorthodox partnership, commissioning an independent report by a mainstream think tank, the Rand Corporation.
The report released this week showed that zcash actually isn’t used for a large proportion of illicit cryptocurrency transactions at all. Less than 1% of the illegal offerings that mentioned cryptocurrency on the Rand Dark Web Observatory mentioned zcash. More than 50% unsurprisingly mentioned bitcoin.
EXCHANGE-TRADED OFFERING: NO AMERICANS ALLOWED
Toronto-based investment manager 3iQ Corp. completed a $48 billion offering in its Bitcoin Fund traded on the Toronto Stock Exchange, but it isn’t registered to serve U.S. investors. It’s a closed-end fund that behaves much like the sort of exchange-traded fund that has been hotly anticipated among bitcoin investors. The SEC has rejected multiple applications for similar products in the U.S.
BIPARTISAN BLOCKCHAIN SUPPORT
The majority of eligible Americans received their CARES Act stimulus checks efficiently last month, but tens of millions were still waiting for their cash weeks after the bill was passed. A bipartisan group of 11 members of Congress, including former presidential candidate Tulsi Gabbard, reacted by sending a letter to Treasury Secretary Steven Mnuchin urging the U.S. Treasury to use blockchain to make payments more efficient.
The Options Clearing Corporation is moving its $72 billion worth of equities on loan across the Americas to the Axcore blockchain built by New York-based Axoni. The partnership marks another big enterprise deal for Axoni three months after Citi and Goldman Sachs conducted a blockchain equity swap on a separate platform it built.
SELF-TOKENIZATIONS: BUYER BEWARE
A growing number of decentralized finance enthusiasts are launching self-tokenizing schemes, usually taking the form of an investment in exchange for some predetermined portion of the tokenizer’s future salary. NBA player Spencer Dinwiddie did it in January, selling tokens as a securities offering to accredited investors.
But most of these makeshift schemes don’t fall under the purview of securities law like Dinwiddie’s does, raising red flags that contradict a core tenet for most crypto investors. “the settlement assurances you have are based on trust, so it’s the exact opposite of real cryptocurrencies,” says tokenized real estate executive David Hoffman. “The whole entire system is based on trust in the tokenizer.”
Bitcoin Is Staging a Comeback Reminiscent of 2017 Bubble Frenzy [Bloomberg]
Bitcoin Halving: How It Works and What It Means [Investopedia]
The CoinDesk 50: The Most Important Projects in Blockchain & Crypto [CoinDesk]