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Feds announce largest seizure of cryptocurrency connected to terrorism – NBC News

Federal law enforcement officials said Thursday that they had conducted the “largest-ever seizure of cryptocurrency” connected to terrorism.

Prosecutors unsealed three civil forfeiture complaints and a criminal complaint in federal court in Washington. The forfeiture complaints involve the Al-Qassam Brigades, better known as the military wing of Hamas, in addition to al-Qaeda and ISIS.

The U.S. also indicted two Turkish nationals, Mehmet Akti and Hüsamettin Karatas, on charges of operating an unlicensed money transmitting business. Authorities have now seized millions of dollars across 300 cryptocurrency accounts, four websites and four Facebook pages connected to these groups.

Michael R. Sherwin, acting United States attorney for the District of Columbia, called this case “historical and unprecedented” at a news conference in Washington.

More than 18 months ago, the al-Qassam Brigades invited supporters through a website to donate to their cause via Bitcoin, calling such donations “untraceable.”

Bitcoin and other cryptocurrencies are pseudonymous but not fully anonymous. As law enforcement agencies, particularly the IRS, have shown for years, such accounts can be tracked and linked to particular suspects.

A banner for the al-Qassam Brigades, the military wing of Hamas, encouraged supporters to donate via Bitcoin.Department of Justices

With approval from a judge, federal law enforcement seized control of the al-Qassam Brigades’ site for a time, diverting donations from a site intended to fund terrorism and sending them instead to Bitcoin accounts controlled by the U.S. government.

A second campaign involved a Syria-based group that explicitly sought to accept Bitcoin donations to fund terrorists in the region.

Federal law enforcement agencies, and in particular the IRS, partnered with the digital forensics company Chainalysis to conduct blockchain analysis as a way to specifically identify how and where various bitcoins moved around.

According to Chainalysis, an Idlib, Syria-based entity known as the “BitcoinTransfer Office,” serves as the central hub for receiving such Bitcoin-based donations to fund militant activity, particularly those affiliated with Al-Qaeda.

“However, BitcoinTransfer remains active as a service,” the company wrote in a Thursday blog post. “Given its facilitation of extensive terrorism financing activity, it’s crucial that cryptocurrency businesses examine past transactions for exposure to BitcoinTransfer and monitor transactions to address any possible future exposure.”

The third case links Murat Cakar, another Turkish national who the government described as an “ISIS facilitator who is responsible for managing select ISIS hacking operations,” to a COVID-19 fraud.

According to the criminal complaint, Cakar operated a website called FaceMaskCenter, which purported to sell N95 face masks that had been approved by the Food and Drug Administration, when in fact they had not.

“IRS Criminal Investigations’ ability to trace funds used by terrorist groups to their source and dismantle these radical group’s communication and financial networks directly prevents them from wreaking havoc throughout the world,” said Don Fort, the head of the IRS Criminal Investigation, said in a news release.

Pete Williams contributed.

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305 Venezuelan Municipalities to Collect Tax in Cryptocurrency Petro – Bitcoin News

Venezuela’s national tax harmonization agreement has been signed by the council representing 305 municipalities. They have agreed to use the country’s cryptocurrency, the petro, as the unit of account for tax payments.

Taxing in Petro

The Bolivarian Council of Mayors signed Venezuela’s National Tax Harmonization Agreement on Sunday, placing the cryptocurrency petro as the unit of account for the payment of taxes and fines in 305 municipalities. The country is comprised of 335 municipalities, incorporated into 23 states and the capital district.

Calling the agreement “historic,” Vice President Delcy Rodríguez stressed that the prohibition of collecting taxes and duties in foreign currency has been established because the unit of account for this tax is now the petro, local news outlet Ultimas Noticias conveyed. She added that for the first time in Venezuela’s history, a municipal tax harmonization was achieved.

Venezuelan President Nicolas Maduro supports the signing, instructing Rodríguez to ensure that the harmonization of all taxes is maintained to avoid double taxation. Rodríguez explained that to achieve this, a single registry of municipal taxpayers will be created and administered by the Bolivarian Council of Mayors. It will function as a digital tool for the consultation, information exchange, and monitoring of companies with branches in different municipalities to verify declaration made in one mayor’s office but paid in another. In the future, it can also be used to cross-check information with the national tax system, she described.

Rodríguez further noted that the tax harmonization agreement also simplifies administrative procedures, such as reducing the reference codes for economic activities, industries, and businesses from 600 to 30. Sharing Rodríguez’s sentiment, Mayor Erika Farias commented:

This tax harmonization agreement, which we have reached after a great debate among the 305 Bolivarian mayors, is an unprecedented event in our country.

During the signing, Mayor José Alejandro Teran highlighted that using the petro as the unit of account for calculating taxes is not only innovative, but it also helps protect against hyperinflation, which he attributes to U.S. sanctions.

What do you think about Venezuela collecting taxes in petro? Let us know in the comments section below.

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Chainlink Is Rising in the Cryptocurrency World—Here’s How It Works, and What It’s Worth – Newsweek

While Bitcoin remains the dominant force in cryptocurrency, a new offering called Chainlink is gaining steam—entering the top five tokens in terms of market cap and enjoying a surge of attention in the online community.

According to CoinMarketCap, a platform that tracks the ups and downs of crypto-coins and global exchanges, Chainlink is now valued at roughly $6 billion, with a single token, known as a Link, currently worth the equivalent of around $17.

For comparison, a bitcoin is currently priced at around $11,500, and the cryptocurrency as a whole now has a market capitalization of more than $210 billion.

In 2017, the value of Bitcoin surged as hype and speculation about its potential shot into overdrive, forcing up the value of a coin to almost $20,000 before it eventually crashed. In 2020, its closest competitors include Ethereum, Ripple (XRP) and Tether.

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Chainlink has now entered the fray, with Google Trends indicating people are searching for news about the coin. A Reddit community has attracted over 20,000 members and— for better or worse—it has been often mentioned on 4Chan’s /biz/ finance board.

On its website, Chainlink is described as a “framework for building decentralized oracle networks that give your smart contract access to secure and reliable data inputs and outputs.” That’s a lot to take in. So we asked a crypto expert to explain.

Chainlink is at its core a means of bridging the gap between the world of blockchains and the outside world,” Charles Hayter, the CEO and co-founder of tracking platform CryptoCompare, told Newsweek over email, explaining its purpose.

Chainlink is a framework for creating decentralized oracle networks. Oracle networks act as a source of information bridging the real world and the world of blockchains.

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“Its architecture and design are quite complex, but in simple terms it aims to solve the problem of trust and centralization of sources by harnessing a secure and decentralized network of information providers where data is crowd-sourced, reliability and accuracy are incentivized, and bad providers of information are disregarded and punished,” he added. “Powering this ecosystem and system of incentives is the Link token.”

Top 5 Cryptos by Market Cap (13Aug,2020)
The top five cryptocurrencies by market capitalization, according to CoinMarketCap. CoinMarketCap/Screenshot

Broadly, Chainlink is used to enhance smart contracts, which are agreements including a buyer and seller online using crypto, in which the transaction stored on a blockchain. Link is based on the Ethereum blockchain, which is dedicated to those transactions.

It acts as a “bridge between cryptocurrency smart contracts and off-chain resources like data feeds, various web APIs, and traditional bank account payments,” CryptoCompare says, showing Chainlink had a strong upward trajectory in the past month.

Blockchains are by design intended to be trustless and decentralized, and many have applications running on their networks, like smart contracts,” Hayter told Newsweek.

“Smart contracts, programs running on blockchains like Ethereum, are tamper-proof agreements that automatically execute when real-world conditions are met.

“But in order to get information, like the price of an asset or whether an event has taken place—which is needed for smart contracts to function—there needs to be a trustless, decentralized source of information to tell the blockchain that the conditions have been met,” the cryptocurrency expert continued. “Without this, there may be all kinds of manipulation or falsification, particularly when financial stakes are high. Achieving this is a tricky problem, and one which Chainlink has been designed to solve.”

Santiment, a platform that provides daily crypto market insights, tweeted on August 10 that Link had become a “mainstay” on its Emerging Trends platform in recent days. It suggested it could be surging due to FOMO—fear of missing out.

“It doesn’t necessarily mean the long-term fundamentals of a project have changed from being solid hold options, but their presence on this list has been indicative of some artificial hype caused by crowd elation,” Santiment noted on Twitter.

Yesterday, Santiment noted the Link token was now up by 68.7% over the last week, but warned the recent price rally may not be here for the long-term.

“Speculative interest has exploded, and we’ve looked into some concerning signs for the #1 trending coin,” the platform’s official Twitter account elaborated.

Chainlink has existed since 2017, but officially launched in 2019 as a way to “provide external data to smart contracts on any blockchain,” one of its explainers says.

As with other cryptocurrencies, most famously Bitcoin, Link’s values will remain volatile, likely to fluctuate based on trading influenced by news, rumor and online chatter.

Addressing the recent swell of activity, CryptoCompare‘s Hayter explained: “Link has seen its price surge enormously in recent months with the ascent of DeFi [Decentralised Finance]—where oracles are particularly useful—and in line with a slew of impressive partnership announcements including Google Cloud and Oracle.”

“Link has seen major speculative interest. It has been one of the best-performing crypto assets of 2019 and 2020, with a year-to-date ROI of 668.65 percent,” he said.

Cryptocurrencies
In this photo illustration of the litecoin, ripple and ethereum cryptocurrency ‘altcoins’ sit arranged for a photograph on April 25, 2018 in London, England. Jack Taylor/Getty
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Why It’s Time to Pay Attention to Mexico’s Booming Crypto Market – CoinDesk – CoinDesk

Luis Sosa, 39, the creative director at a startup in Mexico City, watched with skepticism as his friends invested in bitcoin a decade ago. Even after they made good on their investments, Sosa kept his distance. 

Now, his attitude toward crypto is changing, but not for the reasons you’d think. 

“With the increasingly onerous banking requirements in Mexico, I am very tempted to use crypto, especially to buy things online,” Sosa said. 

Sosa is not alone. In a trend that is largely unnoticed outside of the country, Mexico is embracing cryptocurrency at a breakneck speed.

In the eight months between September 2019 and May 2020, the trading volume of Mexico’s leading crypto exchange, Bitso, grew by 342%, according to the exchange. Earlier this year, Bitso announced it had surpassed 1 million users on its platform, of which 92% are Mexican. 

For comparison, there are 35 traditional brokerages in the country with under 400,000 active trading accounts in total, according to Mexico’s financial authority, CNBV.

“It is truly shocking because we are seeing how only one cryptocurrency exchange has demonstrated greater potential than 35 dedicated investment management entities,” said Eloisa Cadenas, CEO of consulting firm CryptoFinTech and professor at the Mexican Stock Exchange Group.

mexico_bitso_v6
Source: Bitso (Chart via Shuai Hao for CoinDesk Research)

But…Why?

Sosa is drawn to crypto in part for its potential to transfer money more easily. In Mexico, that is becoming increasingly hard to do. In its effort to crack down on criminal activity, Mexico may have made simple transactions difficult for ordinary citizens as well.

The country has long struggled with tax evasion and money laundering. But two years ago, Mexico decided to put substantial prevention methods in place. In August 2019, right before Bitso’s trade volume began its dramatic climb, the government began implementing new fintech laws that sought to govern financial service providers in the banking and private capital sectors, from entrepreneurs to crowdfunding institutions. 

According to the new laws, tech firms that hold deposits for users had to register as a financial institution within the country. But compliance was expensive, with applications running over $35,000 and the law requiring businesses – even startups – to have a minimum annual profit of $100,000. National media reported at the time that of the 500 listed startups in the country, 201 had to be approved by regulators to continue operations. Once the new laws rolled in, only 85 ended up applying for accreditation. Bitso was among the firms approved to continue operations in Mexico.  

Read More: Experts Say Mexico’s Regulations Raise the Bar ‘Too High’ for Crypto Entrepreneurs

In order to comply with the new banking laws in Mexico, PayPal announced it will no longer be holding deposits on customer accounts. Now, it only processes payments as an intermediary, which means Sosa can no longer maintain a balance on his account. When Sosa’s mother, based in New York, wants to send him money, she can use PayPal or Western Union if she pays a transaction fee. Instead, she sends funds from her Apple Pay account to Sosa’s, where the funds remain inaccessible until he travels to the U.S. 

With the increasingly onerous banking requirements in Mexico, I am very tempted to use crypto, especially to buy things online

Crypto trading platforms can facilitate faster money transfers at a lower cost than banks. According to Cadenas, who is also pursuing a PhD in financial engineering, the combination of Mexico’s stringent new banking laws, expensive financial services and large unbanked population is driving public interest in cryptocurrencies.  

Like other countries, crypto is used primarily for speculation and trading in Mexico, Cadenas said. But the multibillion-dollar flow of remittances into the country, particularly from the U.S., and the difficulties involved in money transfers, have created a unique business opportunity for crypto platforms that promise to make transactions easier and cheaper. 

“Internally, we can say that the use of cryptocurrencies is becoming more attractive compared to what other financial institutions offer,” Cadenas said. 

Record-Breaking Remittance Flows

In 2014, Bitso launched Mexico’s first bitcoin exchange. 

According to Bitso co-founder and CEO Daniel Vogel, in 2016 Bitso grew thanks to young adult gamers in Mexico paying for video games with bitcoin on the digital media platform Steam. But all that went away the following year, when bitcoin’s value soared from $900 to $20,000 in a matter of months. By the end of the year, bitcoin transaction fees also spiked, accounting for up to 40% of a single transaction. The young gamers simply couldn’t afford it anymore. 

“Transaction fees went through the roof, from costing a fraction of a penny to $20 or $30 on their Steam accounts, and that use case just disappeared,” Vogel said.    

The year of speculation was 2017, with crypto market capitalization reaching $600 billion, and U.S.-based crypto exchange Coinbase becoming the #1 app on iTunes

“But this is Mexico. You don’t have as much disposable income as places like the U.S. or Europe or Asia. And so even though trading revenue did go up, we didn’t grow as much as some of the international players,” Vogel said. 

But there was a massive untapped market just begging for new players: remittances. Bitso had already partnered with payment platform Ripple to enable the quick transfer between dollars and pesos via liquid XRP, and the firm began processing remittance transactions.

Read More: The New US-Mexico-Canada Trade Pact Holds Opportunity for Distributed Tech

“We transacted, I think on a weekly basis, almost 10% of the remittances from the U.S. to Mexico and on a monthly basis over 7% of remittances. And that was super exciting,” Vogel said.  

Today, with the COVID-19 pandemic spreading through the region, Mexico’s central bank reported that in June 2020, Mexican workers in the U.S. sent home a whopping $3.56 billion in remittances, up 11% from the previous year. 

Almost all of those transactions were electronic transfers, through bank accounts, Western Union, PayPal’s Xoom and crypto trading platforms like Bitso. But there are charges involved. Last year, Mexico President Andrés Manuel López Obrador blasted Western Union and Xoom for charging high fees on remittance transfers. For instance, Xoom charges up to 4% in transaction fees, and earns profits on the exchange rate each time money is sent to Mexico. 

Internally, we can say that the use of cryptocurrencies is becoming more attractive compared to what other financial institutions offer

Comparatively, depending on which exchange you use, the transfer cost of that money via cryptocurrency can be as low as 0.1%, Cadenas said. According to Bitso’s website, a number of withdrawal methods, including bank transfers, are free for users receiving funds through the exchange. 

According to Cadenas, Bitso processed 3.5% of incoming remittances in January this year, which increased to 5.3% in a matter of weeks. 

But there’s another problem: A 2018 global database on financial inclusion published by the World Bank revealed 63.1% of Mexican adults (ages 15 and above) didn’t have a bank account. 

The Banks

According to Jonathan Terluk, senior economic and public policy analyst at EMPRA, an emerging markets consulting firm that focuses on Mexico, the country’s large unbanked population and cash-driven informal sector is made up of workers or businesses that are not registered with the government.

Between 55% and 60% of the total employed population in the country belong to this informal sector and are paid in cash, he added. 

Mexican citizens without bank accounts use digital payment systems provided by the likes of Oxxo, a chain of grocery stores akin to America’s 7-Eleven franchise, that accepts cash payments for everything from groceries to phone bills and electric bills. The system also processes payments for online purchases, and allows users to deposit money into debit cards or bank accounts. Since it has partnered with Xoom and Western Union, remittances can be sent to your nearest Oxxo for cash pickup.

“We’ve had to come up with all these workarounds, because people don’t trust credit cards or banks that much and a lot of people just use cash,” Sosa said. 

One reason for the general distrust in banks, Cadenas said, is that Mexico’s traditional financial services are expensive. The average annual interest rate for a credit card can be around 27.4% in Colombia, while the weighted annual interest rate of a classic credit card at Mexico’s Citibanamex is 56.3%. According to Cadenas, the annual interest on a personal line of credit is around 21% in Colombia, approximately 45.34% in Peru and 67.2% or higher in Mexico

“To give an example, if today I request a [line of] credit of approximately $10,000, in five years, I will end up paying $30,000, it’s crazy,” Cadenas said, after calculating the amount on the government’s credit simulator.

By contrast, anyone can create an account and wallet on crypto exchanges to start trading. Setting up an account is usually free, and exchanges may charge a trading fee (Bitso charges between 0.05% and 0.5%). 

Bitso’s transfer platform works like peer-to-peer lending app Venmo, where you can store, send and receive money free of charge. To serve the large population without bank accounts, crypto platforms usually offer multiple withdrawal methods that include transferring funds directly to your mobile phone, or a digital coupon to avoid bank deposit fees. 

Taxes

Another reason why crypto might be an appealing option to a population that feels exploited by traditional financial services is that even though crypto platforms are regulated in the country, there is no comprehensive framework on how it’s taxed. 

In accordance with anti money-laundering requirements, crypto firms must report transactions  (one-time or over a period of six months) exceeding roughly $2,500 to the financial authority as a “vulnerable transaction,” Diego Ramos Castillo, crypto litigator and founding partner of a commercial law firm in Mexico told CoinDesk. Beyond that, there are no specific rules for crypto: Mexico is still trying to figure out exactly how to tax it, and right now, there is room for a bit of interpretation. 

Read More: Central Banks, Stablecoins and the Looming War of Currencies

For instance, according to Ramos, there are certain tax perks to storing your wealth in crypto: If you want to open and maintain an account that holds any type of foreign currency, you are required to declare any gains or losses you have made during a period of time, even if those are just price fluctuations of the currency you’re holding. 

But you can hold your funds in stablecoins – cryptocurrencies backed by fiat assets in order to reduce volatility – more easily, Ramos said. Stablecoins are not considered a foreign currency so “you can have an account holding stablecoins, that would be the same as having a U.S. dollar account but you have the tax benefit of not having to report or declare the gains or losses until you sell the stablecoins,” Ramos said.  

Regulations

The fintech regulations enacted last year included a whole chapter on virtual assets. 

As a consequence of the bill, exchanges were no longer allowed to hold or custody fiat currencies without a license. But applying for compliance was expensive and threatened to put crypto startups and entrepreneurs out of business. 

A provision in the bill also required Mexico’s central bank to issue specific secondary rules on how virtual assets would be regulated. According to Ramos, the law banned financial institutions from issuing or transferring the “risk of cryptocurrency” to the customer in any way. But institutions were still allowed to use crypto for internal operations, Ramos said. 

Read More: Mexico is Getting Eight New Cryptocurrency Exchanges 

But the regulations issued by the central bank sounded worse than they actually were, Ramos said, because the government did not ban crypto or call it illegal, and that was good enough. 

“The central bank recognized that crypto activities were permitted in Mexico. They were not illegal. What they were saying with this secondary provision was that financial institutions should take care and if possible avoid participating actively in the crypto industry,” Ramos said. 

So operating a crypto business in Mexico is expensive, thanks to the new fintech licensing requirements, but well within the law.  

Looking Ahead

It will take some time for crypto firms to become the leading processors of remittances, or the go-to digital payment system in Mexico. Across the country, cash is still the preferred method of payment and cryptocurrencies are not widely accepted. The industry has its own shortcomings, starting with the fact that not many people understand how crypto works, and it seems daunting compared to a short walk to the nearest Oxxo. 

Sosa, for instance, will still need a bit more convincing before he actually opens a bitcoin wallet. 

“For the average consumer, I still find it’s just way too onerous. And, you know, I’m not gonna ask my mom to create a crypto wallet because that means that I’m going to spend six days walking her through it,” Sosa said. 

Nevertheless, startups are continuing to enter the Mexican crypto space. For instance, while Bitso is looking to expand outward, having already established itself in not only Mexico but also in Argentina, startups like crypto exchange Mexo are uniquely targeting local users. Mexo co-founder and partner Bo Zhou told CoinDesk that everything about the platform, starting with its Spanish-language website, is designed to attract users in Mexico to conduct local transactions. AirTM, headquartered in Mexico, provides blockchain-powered dollar accounts to users worldwide. Last year, the startup distributed $300,000 in donations to Venezuelans in need. 

Read More: Crypto Exchange AirTM Targets Troubled Markets With $7 Million Raise

It appears Mexico not only has a large population open to exploring alternatives to traditional financial services, but a number of factors have aligned almost perfectly to facilitate mass adoption. It can also play a role in advancing financial inclusion, Cadenas said.

“Cryptocurrencies in Mexico are a reality for those who not only seek to invest, but for individuals and companies that have the enthusiasm to improve their living conditions with more accessible financial products,” Cadenas said. 

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Ripple Aims to Become the Amazon of the Cryptocurrency World – Cointelegraph

The much-debated blockchain firm Ripple is now planning to expand its use case far beyond just streamlining cross-border payments in partnership with national and international banks.

Ripple had focused its efforts solely on cross-border payments for the past five years when Brad Garlinhouse joined the company as the chief executive officer.

Despite their unprecedented success as a software solution provider to financial entities, Ripple has seemingly come to a realization that the company’s core value still lies in the associated cryptocurrency XRP and the Ripple blockchain.

While the company had mostly worked with banks and directly funded millions to blockchain and cryptocurrency startups, it is now taking a step back and revising its growth strategy.

According to a Financial Times report, Ethan Bear, the head of Ripple’s developer efforts said that they were moving from “writing cheques to writing code,” implying that the company was planning to go big on promoting the creation of new applications on the Ripple network.

Showing optimism about the move to make their blockchain platform equally worthy as the highly-rated cryptocurrency, Garlinghouse said they wanted to make Ripple the Amazon of the cryptocurrency world:

“Amazon started as a bookseller and just sold books. We happen to have started with payments. Two years from now, you’re going to find that Ripple is to payments as Amazon was to books.”

The report also mentioned that Ripple was working on developer tools to help with the creation of blockchain-based applications that explore new use cases on the Ripple network. The company had announced its open-source developer platform back in October 2019, but it was earlier only meant for finance-related applications.

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PumaPay facilitates mass adoption of crypto currencies – Verdict

As a dynamically expanding blockchain-based payment solution provider, PumaPay has a vision to become one of the main contributors paving the way towards mass crypto adoption.

The startup aims to offer a complete, fully decentralised blockchain-based payment system that allows anyone to transfer and receive payments virtually in any currency, with the PMA token acting as the facilitator of value, without worrying about risks associated with volatility.

With their new hybrid solution, PumaPay differentiates itself from other payment service providers.

Combining crypto with traditional finance, their service now enables payments to be made and received in any currency, with the PMA token acting as a means of value transfer, by virtually anyone from merchants of all varieties to end-users.

With measures in place to ensure zero exposure to volatility for all parties and easy onboarding and offboarding to crypto the PumaPay solution offers maximum utility to all.

PumaPay CEO, Yoav Dror, said: “By providing innovative and much-needed developments ready to be utilised in the emerging crypto space, we bring the community one step closer to mass crypto adoption. As of today, we have managed to close the loop and offer a fully comprehensive, blockchain-based payment solution that mitigates widespread concerns regarding accessibility, regulation, volatility and usability.”

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A fully decentralised blockchain-based payment system

PumaPay is one of the most innovative providers of a fully decentralised blockchain-based payment system. Since their establishment, the company has maintained that its vision is to be one of the frontrunners in supporting mass crypto adoption.

To date, PumaPay continues to refine their technology, adding new features that are slowly helping their vision come to fruition. The latest developments are no different.

PumaPay is a comprehensive, advanced billing system that combines the advantages of blockchain technology with the flexibility and ease-of-use of credit cards.

The innovative payment system aims to bring usability to cryptocurrencies by designing a set of tools based around PumaPay’s innovative PullPayment protocol.

Brands waiting to integrate with the PumaPay Protocol

PumaPay’s flexible solution will adapt to any business logic in order to allow for the creation of all the familiar and common billing models. PumaPay already supports the Subscription billing model, previously possible only with credit cards, including simple subscription and subscription with a free or paid trial-period.

In the near future, it will introduce more billing models, such as top-ups and utility payments.

As the next generation payment system, PumaPay has already gained popularity among a growing network of businesses which have committed to adopt its solution.

There are currently more than 100 brands from different industries including fintech, lifestyle brands, adult entertainment and more, waiting to integrate with the PumaPay Protocol.

Among them are reputable names such as Iron FX, Vivid Entertainment, and CCBill, to name a few.

VIDEO: PumaPay Pull Payment Protocol

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With $16bn in cryptocurrency, Ripple attempts a reset – Financial Times

San Francisco start-up Ripple can lay claim to having created one of the most valuable cryptocurrencies. Its digital tokens, known as XRP, have a total value of almost $30bn, behind only bitcoin and Ether.

But, eight years after launch, Ripple is still trying to find compelling uses for the blockchain technology underpinning its currency that would justify such a high figure. Now, in an effort to draw more users, it has struck out in a new direction: to try to become the Amazon of the cryptocurrency world, using its platform to support activities far beyond the original cross-border payments system it hoped to build.

The popularity of XRP has already made Ripple — and its leaders — far richer than most start-up software companies. The company has cashed in more than $1.2bn of its own holdings of the cryptocurrency since early 2017.

It is also still sitting on about 55 per cent of the total supply, worth around $16bn at current prices — far overshadowing its underlying technology business. As a result, the value of the company is tied “mainly to the XRP, with an option on a small software business”, said one former executive.

Brad Garlinghouse, chief executive, admitted that Ripple is swayed heavily by the value of its crypto hoard. “We are a capitalist, we own a lot of XRP,” he said. “So do I care about the overall XRP market? 100 per cent.” But he added that the company’s aim was to “deliver a lot of utility through XRP”, something that is likely to take “years” as it develops applications that use its blockchain technology — and, by extension, justify the high price of the currency.

The battle to win over the banks

Ripple’s original aim, to build a more efficient, wholesale cross-border payment system, has made slow headway with the banks that were the original target for the technology.

Santander, the Spanish lender that invested in Ripple in 2015, recently chose not to use XRP at the heart of an ambitious new international payment network — a sign that even some of Ripple’s strongest backers do not yet see a use for its core technology. Cedric Menager, the network’s chief executive, suggested that XRP was not actively traded in enough markets yet to support Santander’s needs. The bank wanted to “give the best [user experience] as quickly as possible and also operate in as many currencies and corridors as possible from the beginning,” he said.

Column chart of Value of XRP sold each quarter ($m) showing Ripple’s cryptocurrency sales stall

Ripple said that Santander was still using some of its software in the payments service and was “one of our largest and most important customers”. The company also claims a high growth rate for the XRP facility at the heart of its system, though it does not provide absolute figures, and also says many banks are using some elements of its software.

Many observers say Ripple was always facing an uphill battle in trying to win over the banks, which have already invested heavily in current technology and benefit from the current system.

“It’s like Uber trying to disrupt the taxi industry by working with the taxis,” said Michael Arrington, the founder of the TechCrunch news site and now at a $100m cryptocurrency hedge fund.

Mr Garlinghouse blames uncertainty in the US over whether XRP tokens should be regulated as securities for discouraging more companies from using Ripple’s blockchain. He and the company also face a lawsuit over claims they sold unregistered securities.

Ripple has subsequently drawn on its main asset — its cryptocurrency reserves — to try to draw more users to its technology as it looks beyond the banks.

In cross-border payments, the company’s focus has turned to remittances, where customers face high fees to send relatively small amounts through money transfer companies. Last year, Ripple used some of its cash to buy a stake in MoneyGram, as well as Bitso, a Latin American cryptocurrency exchange. The investments helped to put its technology at the centre of about 7 per cent of all remittances from the US to Mexico in June, the company said.

But the success only represents one market, and has come at a cost. Moneygram’s filings show that Ripple handed it $31m in “market development fees” to encourage use of XRP in the first half of this year — payments that accounted for 60 per cent of Moneygram’s operating profit.

Mr Garlinghouse defended the subsidies and said it was common practice for payment companies to use financial incentives to generate activity on their networks. He also said the need for payments such as this had fallen as activity had picked up: “If you look at more recent customers, it’s a different dynamic now than when we first got started.”

‘The Amazon of payments’

Ripple has also handed out hundreds of millions of dollars to stimulate wider uses of blockchain technology. A year ago, it said it had distributed the equivalent of more than $500m — much of it in the form of XRP — through its Xpring fund, as a way to seed more new applications that use blockchain technology and might, indirectly, benefit Ripple in the long run.

That included handing $260m worth of cryptocurrency to Coil, a start-up building a decentralised online media marketplace where creators can sell directly to consumers. Most of the money was earmarked as grants to attract developers and creators to join Coil’s market, said Stefan Thomas, the company’s chief executive and a former Ripple chief technology officer.

A year after launching a blogging platform, however, Coil seems to be generating little in return for the handouts. A German blogger identifying himself only as Benny has publicly disclosed his earnings on the service since the start of this year: the micropayments received for attracting readers add up to only about $15. However, over the same period, Coil has given him $2,250 worth of XRP as an incentive to keep writing.

Ripple has since cut back on the Xpring handouts and instead is now trying to produce the tools that developers need to create their own applications to run directly on its blockchain. Ethan Beard, who runs Ripple’s developer efforts after once holding the same position at Facebook, said the company had moved from “writing cheques to writing code”.

According to Mr Garlinghouse, this latest effort — which he described as an extension of the company’s strategy, rather than a full shift in direction, will turn Ripple into a broader blockchain platform in much the way Amazon has become a platform for a wide range of ecommerce.

“Amazon started as a bookseller and just sold books. We happen to have started with payments,” he said. “Two years from now, you’re going to find that Ripple is to payments as Amazon was to books.”

Speculators are not giving up

The gamble is a reversal from the position Mr Garlinghouse took when he joined Ripple as chief executive five years ago and narrowed its focus to payments.

Unlike Amazon, however, Ripple has not yet produced a hit with its first application, leaving it without a big base of active users to sell other services to. Also, it has a controversial reputation in many parts of the cryptocurrency world, where its attempts to build bridges with the existing financial system clash with the radically anti-establishment motivations of many developers.

“It gets a lot of hate in the crypto world, because it’s trying to be close to the banks,” said Mr Arrington. In one sign that some of the most potentially disruptive new applications are not being attracted to its platform, a wave of experimentation in decentralised financial applications — known as DeFi — has been drawn instead to the Ethereum blockchain.

Despite Ripple’s struggles to find more uses for XPR, meanwhile, the speculators who have made it a fixture of the cryptocurrency markets are not giving up. Prices were subdued for much of this year, missing out on the jump for bitcoin and Ether, but then soared almost 50 per cent in the final week of July, putting them at their highest level since the coronavirus crisis hit.

Even the prospect of a long search for a purpose does not shake the confidence of the cryptocurrency’s biggest supporters. “It can take centuries for currencies to catch on,” said Mr Thomas at Coil.

Additional reporting by Nick Megaw

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Crypto News

Link Price Surges 32% to Overtake Bitcoin Cash as 5th-Largest Crypto by Market Cap – CoinDesk – CoinDesk

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Crypto News

Market Wrap: Bitcoin Rebounds to $11.5K; Ethereum’s Gas Woes Worsen – CoinDesk – CoinDesk

Bitcoin is making up for lost gains after hitting a one-week low. Over on Ethereum, the fee situation continues to be problematic for traders.

Bitcoin rebounded Wednesday, making gains from a 24-hour low of $11,119 on spot exchanges like Coinbase, a price point not seen since Aug. 5. 

Constantin Kogan, partner at crypto fund-of-funds BitBull Capital, sees a sideways market where the price of bitcoin could go either way. 

“If sellers take control of the market, it is likely that BTC will be seen at $11,390 per coin. However, there is a chance the market will overcome resistance at $12,000 and retest the annual high at $12,300,” Kogan told CoinDesk. 

Where the market goes next may very well hinge on the largest players. Institutional interest has a huge role in the crypto market for 2020, added Kogan. “Bitcoin is in many ways repeating the movement noted in the fourth quarter of 2016, on the eve of the 2017 crypto boom,” he said. “But this time institutions also play an important role in the market.” 

One promising statistic: Bitcoin spot volumes are much higher this month than last month so far, with July Coinbase volumes averaging $100 million and August at $198 million so far per day, according to data aggregator Skew. 

Increased volume in August has clearly led to a jump in volatility, added Rupert Douglas, head of institutional sales for crypto brokerage Koine. Traders like to take advantage and profit from higher volumes. “There’s a lot more upside to this market, but there will be sharp pullbacks along the way,” Douglas told CoinDesk. 

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Wednesday trading around $388 and climbing 2.7% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

The average fee on the Ethereum network required to conduct transactions, including in decentralized finance, or DeFi, applications, is as high as it has ever been. It is currently at 0.009255 ETH, which is over $3.60. In Ethereum’s five-year existence as a platform, fees are now literally off the charts, according to data aggregator Blockchair. 

These fees, also known as gas, are causing pain for traders. This is particularly true for market makers that have seen the price of gas double in just the past week and cannot predict just how much higher it might go in the near term due to the explosion of interest in DeFi overall. 

“It’s jamming up a lot of decentralized exchanges,” said Peter Chan, lead trader for crypto trading firm OneBit Quant. “We and a few other market makers have been forced to stop quoting since gas cost is so high.”

Digital assets on the CoinDesk 20 are mixed Wednesday. Notable winners as of 20:00 UTC (4:00 p.m. ET): 

Notable losers as of 20:00 UTC (4:00 p.m. ET):

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Crypto News

Russia Developing AI System to Monitor Cryptocurrency Transactions — Prototype Now in Use | Regulation – Bitcoin News

Russia is reportedly developing a system using artificial intelligence to track and analyze transactions involving cryptocurrencies, such as bitcoin, dash, and monero. The system prototype has already been created and is currently being tested. This news followed the signing of crypto regulation into law by President Vladimir Putin.

Russian Crypto Monitoring System

The Russian government is planning a new system to track bitcoin transactions, local media RBC reported Monday, citing a letter to Parshin Maxim Viktorovich, Deputy Minister of Russia’s Digital Development, Communications and Mass Media. The letter, which it has seen, describes a plan for the Federal Financial Monitoring Service of the Russian Federation (Rosfinmonitoring) to monitor cryptocurrency transactions.

Rosfinmonitoring is tasked with collecting and analyzing financial transactions to combat domestic and international money laundering, terrorist financing, and other financial crimes. According to the letter:

Rosfinmonitoring plans to develop a system for analyzing cryptocurrency transactions using artificial intelligence (AI).

The project, called “Transparent Blockchain,” will “partially remove the anonymity of participants in transactions with cryptocurrencies in Bitcoin, Ethereum, Omni, Dash, and Monero systems,” the letter reportedly notes. The authorities, the Bank of Russia, and financial organizations will be able to use the system to monitor and analyze the movement of cryptocurrencies, identify service providers, and conduct investigations related to their illegal circulation.

The letter also details an “urgent need” for Rosfinmonitoring to monitor crypto transactions to give the government control over the circulation of cryptocurrencies. This is to prevent crypto assets from being used in “illegal schemes,” it adds, giving some examples of “drug trafficking, tax evasion, cybercrimes, contract killings, sale of information from closed databases, [and] financing of extremism.”

Furthermore, Nikita Kulikov, member of the State Duma’s expert council and founder of Pravorobotov Autonomous Non-Profit Organization, noted that Rosfinmonitoring plans to create an AI to “monitor the entire internet in search of illegal actions with crypto assets,” such as signs of money laundering and terrorist financing.

The prototype of this system has already been created and tested in the field of drug trafficking control, the letter details. It was developed by the Lebedev Physical Institute of the Russian Academy of Sciences, one of the leading Russian research institutes specializing in physics. The Ministry of Internal Affairs became acquainted with this prototype and got interested in its use, the letter elaborates.

So far, the system has been developed without federal funding. However, to take it to the next level and provide it as a governmental service, preliminary data suggests that the project will require 760 million rubles ($10.33 million) from the federal budget: 440 million rubles this year, 230 million rubles next year and 90 million rubles in 2023.

A law regulating cryptocurrencies in Russia has recently been signed by Putin. It provides cryptocurrency with a legal framework but prohibits its use for payments.

What do you think about Russia developing a crypto monitoring system? Let us know in the comments section below.

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