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This week in the news: Some lawsuits, PwC “no shit Sherlock” moment and $1.4B stolen in crypto this year.
[5:45] JPMorgan Chase Will Pay $2.5M (to settle a class action suit) For Secretly Charging Extra Fees In Crypto Purchases
JPMorgan doesn’t sell crypto. What this means is that when they were processing transactions with credit cards. Credit cards and crypto aren’t a good match. Credit cards have chargebacks, crypto does not. Imagine that someone buys a ton of crypto, says it wasn’t them, and charges back. That can create quite the issue. That is probably why JPMorgan charged additional money, to give themselves a margin, just in case they had some type of extra fraud.
But there was a class action suit, and they lost. Probably because they didn’t disclose the fact properly. It probably doesn’t mean that JPMorgan won’t continue to charge extra fees, but they will have to disclose it.
[8:00] Ripple Suffers Early Defeat As Judge Rules XRP Securities Lawsuits Will Proceed As a Consolidated Suit
This is not really a loss for Ripple. Would you rather have to assemble a legal team and have them work on many concurrent cases, rather than focusing on one case with all the same accusations?
Kevin sees this as a defeat only for Ripple in the fact that they didn’t dismiss some of the cases. But to be honest, when a case is brought against you as a company or an individual, you generally know whether it’s going to go forward.
So, this is not an early defeat. It just gets them to focus on one case instead of multiple cases.
[9:22] PwC’s Henri Arslanian: Blockchain Auditors to Play ‘Pivotal Role’ in Crypto
This is Kevin’s “no shit, Sherlock” of the week. PwC does audits, and what they’re saying is that audits on chain will become pivotal when blockchain is used for transactional purposes. Uh, yeah. The term “blockchain auditor” might be overstated here.
With the fact that everything on the blockchain is public and is in the same place and easy to automate, PwC is probably more worried to go out of business, and they need to figure out how to scale in a market where they are needed less.
[11:20] US gov puts $5 million bounty on Venezuela’s head of crypto
Head of crypto is probably not the right term for the guy, the guy behind the petrodollar. According to the government it was a complete success, and according to reality it was an abject failure.
The US is a country you really don’t want to have a “wanted reward” from, especially if you are an individual with lots of exposure, because more than likely, they’re going to find you.
He’s wanted for money laundering, and Kevin thinks that the days are numbered for him. He’ll probably get picked up rather quickly.
[12:27] Crypto Criminals Have Already Stolen $1.4B in 2020, Says CipherTrace
If you look at that in context of the overall size of the crypto market, it’s kind of alarming. But it’s the thing we’re always talking about — “not your crypto, not your keys” is a mantra that a lot of people use. Kevin thinks it’s rather asinine. Mainly because the reason why you’ve seen hacks at crypto exchanges is simply bad procedure. There can always be cases where there’s a bad apple, and there should be procedures in place to protect the company and clients from those bad apples.
It’s just a matter of a maturing market place. As the market matures, these things will happen less often. Similarly to how the internet was in the beginning, with the dialup modems and never to chat with strangers and never to put your personal information online, now all of our personal information is online. The security and the usability of the internet got greatly increased. That’s what’s going to happen with crypto.
It is important to be careful where you put your money, digital assets or not.
[15:31] Nasdaq, Microsoft, IBM, R3 Form InterWork Alliance to Set Tokenization Standards
Kevin was really trying to find something interesting in this article, but couldn’t find anything. They’re forming a standard for digital assets. They may come up with a “standard”, but it won’t be the only, and eventually, there will be multiple “standards”. And in the future, we may, may get a universal standard.
We still don’t have a standard of database structures for example. And Kevin doubts we will have a blockchain or tokenization standard soon. But if Nasdaq adopts something and moves it over to their other operations in the Baltics, it will push people to use that standard. Buti it doesn’t mean big time players will follow. They will probably come with their own standards. Especially banks, CSDs, and other institutions.
The ex-head of Nasdaq famously said that “in 5 years, everything will be tokenized”. However, Nasdaq themselves have been pretty quiet on the tokenization front. So this is the first time where Kevin has seen something where their name has been in a more substantive matter.
[17:12] CBDC development ‘not a race’: Chris Giancarlo
Kevin would hope that developing a central bank issued digital currency wouldn’t be a race. If you’re racing to develop it, you’re going to make mistakes. And a mistake in something like that, could be quite detrimental to the movement as a whole. Anybody who’s tied to crypto and wants to see tokenization and see digital assets move to become the new traditional, they need to make sure that they don’t make a mistake.
If you are a crypto buff and all about decentralization, you’re not going to like it, but this is going to get digital assets and digital money in the hands of many many many more people than currently have access at the moment. If something happens where there’s a massive technical glitch, money is lost, even for a minute, it will be a huge stopping block for the progression of adoption.
Kevin agrees, it shouldn’t be a race. But for some countries it most definitely is a race. Once China comes out with their CBDC, Russia won’t be that far behind. Once Russia does it, other major nations will start to come on board as well. Once we have a Commonwealth nation doing it, other Commonwealth nations will follow suite.
Curious to learn why CBDCs are a hot topic in the Corona crisis?
[19:08] Russia Sort Of Dropped the Hammer on Bitcoin, Crypto
This isn’t the first time that there has been laws that were proposed or passed in Russia that were either viewed as very bad or very good for the industry. Kevin thinks they’re still trying to figure out exactly how their country is using Bitcoin and other digital assets, whether it is detrimental to them or if there is an advantage there. Does it make sense to put in more restrictive laws, to potentially pull out their own CBDC and facilitate some of the best pieces of crypto using that and getting rid of something negative.
Kevin thinks this is not the last we will hear from Russia, and Kevin doesn’t think that what we have heard in the past few weeks about Russia will necessarily be the “end all” for regulation in Russia. But it will remain fluid for the next 12-18 months, while they figure out how to take full advantage while mitigating risk.
[20:24] Cryptocurrency Firms Now Recognized as Money Service Businesses in Canada
As Kevin just said in the other explanation, once the US has some type of regulation framework, usually the world adopts. Canada, being a neighbour, has many similar regulations to what exist in the US.
The US regulates cryptocurrency trading firms as money service business, and Canada is now doing the same thing. Not really much of a surprise. Kevin doesn’t necessarily think it’s the right way, but if you look at the way crypto is traded, it’s not traded as a normal “western union style exchange”, even if remittance is a perfect backdrop for crypto assets, but when you talk about how crypto actually transacts, it transacts much more like currency. But they’re regulating as a deliverable means of remittance, versus, in many cases, non deliverable means by way of speculative trading. And even when it is deliverable, it is only deliverable because it’s a digital asset. So, Kevin doesn’t think this is the correct way, but it makes sense as their first step, as they already have money service businesses built into their regulatory framework.
[22:04] Story from Policy & regulation EU’s Europol: Bitcoin Privacy Wallet ‘Not Looking Good’ For Law Enforcement
One of the great things about Bitcoin that law enforcement realized is that they can track it really easily. A privacy wallet that takes away that ability, is not something that law enforcement is going to like. There is always going to be a back and forth about how much privacy should be allowed to individuals, versus how much power should be given to police to be able to “protect” all the individuals.
Unfortunately, things like what is happening in the world right now with Corona and rioting in the US, the government will always look to take away freedom from its citizens. Sometimes because they actually do want to protect, that they believe they are protecting, but many times simply because authoritarianism is easier to govern. And if people are willing to accept this “new normal”, then it’s that much easier as well. Especially during election year when candidates are hated by the other side.
Check out our Medium post to read more crypto market news!
Live Questions – CoinMetro updates and Cryptocurrency News Today
[26:40] How is your client acquisition cost looking?
Right now, as most of you probably know, we have launched CoinMetro’s new affiliate program. That new affiliate program is giving 5 euro worth of crypto to the person that is being invited in, and 5 euro to the persons that are inviting them. So thus, 10 euros. We also have some admin costs, if people are withdrawing those funds. But in fact, the vast majority aren’t withdrawing those funds. The affiliate program promo sold out within a week, generated just under 8000 new users and has now ended.
So, slightly over 10 euro for this particular campaign. In other campaigns, we’re still fine tuning. The most recent information Kevin had about our US campaigns did put it higher than 10 euro. Mainly due to some “obvious tweaks”. In marketing, some things obviously require changing, but A/B testing is always useful.
If we can get user acquisition costs somewhere around even 20 euro, as we start to increase the revenue per client per month, then we’re still good to go and our general strategy of pushing/pulling funds into marketing will still be very viable.
[28:48] What’s the new partner for mid-June?
It is a marketing partner, based in the EU. They do a lot of retargeting, and specialize in bringing signups to companies like us. They do not work specifically in crypto, though the have. And they’re quite well known. We signed a contract with them this week.
[34:33] Any news on debit cards?
We were just asked by our BaaS provider to provide finalized designs. We haven’t done that yet as we have the rebrand coming, and we are going to tweak our 4-5 card designs. Once the design is fully in and we are fully onboarded, we’ll have the cards 30 days later.
[35:13] According to the Q2 roadmap, we should have new TraM managers?
It’s always going to be on the table. We just got a new fulltime UI/UX guy, and he got ample experience and has worked on several known world-wide projects, one of which started here in Estonia. One of the things he’ll be working on now is the TraM frontend. With TraM more fine tuned, it will be easier to bring on new public TraM managers. There are already other private TraMs.
[37:07] Is the new Go! Dashboard ready?
We had a meeting today, and the design layer has been implemented on the sandbox. So it could potentially be launched in the coming days. We will just have to see if everything is ready to be launched. Also some tweaks on the mobile version extending into next week.
[42:40] What happened with the “listing criteria” with the bank, to list new assets?
That listing criteria never emerged. That is one of the reasons we started talking to the new BaaS provider.
Within the next 10 days, we’ll be able to list what we want. That doesn’t mean that there won’t be a process. We still have guidelines of our own.
We have a few stablecoins on tap, and we’re looking at a few other assets that people have asked for, and also some that we can get liquidity behind.
[44:37] Any news on USD?
Contract signed last Friday, with the new provider. We’re waiting for feedback, expected within 2-4 weeks.
[47:44] When are individual IBANs going to be ready?
Will be coming at the same time as we launch with the BaaS provider. Could happen today, could happen in a week. It will take a bit of time to add the virtual IBANs to the new Dashboard though.
[52:17] What about the merchandise shop?
It’s coming along, and it is Kevin’s personal project. It is rather simple, just a Shopify page. But Kevin has not yet had time to finalize it.
[55:10] What percentage of these new signups do you think will end up as active traders?
Based on typical conversion rates in the FinTech industry, you want to see 30-40% that go from putting in an email to going through KYC, and from there, you usually want to see roughly 10% become active. Over a long period, that might drop to 5%.
So out of those 400, Kevin would say that 15-20 will become active. Which is still not that bad, to be honest.
[57:26] Any updates on the CSD or upcoming tokenization “ICOs”?
Next week we will officially be in a sprint to connect CoinMetro and Ignium in an automated way. The work will start on wireframes on what will be the sandbox page on CoinMetro, which will basically be cards for all different offers, and click to participate through the Ignium website without leaving the CoinMetro page. Once the primary sale is done, trading will start to happen on a clone of the Exchange platform, built for the sandbox. Deadline is the first week of July.
[58:35] Any writeup on the CSD bond project?
Not yet, but there will be one shortly. Over the next two weeks, we will start to talk a bit about the CoinMetro bond on our blog, and maybe elsewhere as well.
[59:15] What news with GBP?
Still waiting on the API keys, hopefully within a week.
[1:00:30] What is the definition of an active user for an exchange?
For FX, we usually define active as in trading within the last 90 days. Here, we constitute it as some transaction on the platform, within the last 30 days.
[24:20] “Kevin Explains Crypto” Term: CBDC
Now that you are up to date with crypto market news, let’s focus on crypto education.
CBDC stands for Central Bank Digital Currency.
Many people confuse stablecoin or smart token. The difference between those two is that the actual value can fluctuate on the market. A smart token is, just like a stablecoin, pegged to an underlying currency, usually a fiat one. With a smart token, the actual rate does not fluctuate. It remains pegged.
So, many people confuse themselves between stablecoin/smart tokens vs CBDC. They think it’s a stablecoin issued by a central bank. The main difference here is that the CBDC is actually legal tender. It is basically a smart token, because the value doesn’t change. It changes in value to other CBDC currencies, just like Euro/Dollar value changes. But one CBDC is always worth one CBDC. But it is not backed by a fiat currency. It is legal tender. So that’s the main difference. And on the surface, that might not seem like such a big difference, but it is actually quite a massive difference. It means that you are actually transacting in the currency. You are not entrusting another person to actually have the fiat underneath, giving value to the stablecoin.
Interested in learning more? Have a look at the video where Kevin explains “CBDC”:
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That’s a wrap for this week’s crypto market news with CoinMetro Founder Kevin Murcko! Please join us next week for more CoinMetro reports, Bitcoin news feed, Altcoin prices and Ethereum news! We’ll be live on CoinMetro’s Facebook and YouTube Channel at 12 PM (UTC). Make sure you submit your questions to the CoinMetro subReddit!
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