Unlicensed EU Brokers Lose Payment Option, eToro’s Stablecoin: Best of the Week

Rumours never die

Stox, a Tel Aviv-based blockchain company that was promoted by boxer Floyd Mayweather, responded to the resurfacing of allegations that it is running a scam.

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The claims, which had originally circulated a year ago, claim that the company has been secretly closing up shop – suspiciously offloading money, undoing business partnerships, closing its office, and losing its CEO. The claims also implicated Moshe Hogeg, CEO of Sirin Labs. The company raised around $33 million when it opened, so this is significant.

The company released a statement explaining what happened to the money, and that it had already explained this a year ago, and that it closed its office because it moved its operations to Europe. The vacating CEO explained his decision in a blog post.

Australian broker releases new platform

AxiCorp, an Australian foreign exchange brokerage, signed a partnership with Celer Technologies, a software firm from London, to open a new trading platform called Axi-One.

The new venture is suitable for private and institutional customers, but hight net worth parties will benefit more. It is connected with seven different exchanges and allows trading in foreign exchange, CFDs, and commodities.

Illegal brokers in Europe running out of options

Skrill, an internet-based payments company, sent all brokers in the European Union that use its services to send it a copy of their licences. It specifically mentioned binary options and CFDs, and gave only a few days to comply.

The company informed its customers that those without licences to operate will be unable to take in money from the 30th of November, and will be unable to return money from two weeks after that date. Skrill is following in the footsteps of Visa and MasterCard, which have taken similar action.

Interview with management team of FXCM Pro

FXCM Pro, the institutional branch of foreign exchange brokerage FXCM, attended the Finance Magnates London Summit last week. Finance Magnates spoke to the management team about how th business is developing.

They told Finance Magnates about their new members of staff, how the company has been listening to customer feedback, how senior executives are more involved day-to-day decision making.

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THey also explained why it “is in the interests of the so-called prime-of-primes to maintain the ambiguity of what exactly constitutes a prime-of-prime provider.”

Chairman of the Foundation Council of the Cardano Foundation pushed out for puzzling behaviour

Cardano, the blockchain “developed from a scientific philosophy”, is governed by three bodies – IOHK, EmurgoHK, and the Cardano Foundation. Or at least it was.

Michael Parsons, who headed the non-profit Cardano Foundation since its inception in September 2016, had not been pulling his weight. Apart from not directing the body to do any of the things it was supposed to be doing, he also hired family members to key positions, refused to publish company financial information, and made moves to take over all of Cardano.

After the heads of the other two branches spoke out publically about this behaviour, Parsons stepped down. IOHK and EmurgoHK will work to cover what the Cardano Foundation was supposed to be doing.

eToro “absolutely” going to release its own stablecoin

Yoni Assia, CEO of eToro, a ‘social trading’ brokerage, announced that the company will be releasing its own stablecoin.

He said this while giving a speech at the Finance Magnates London Summit last week.

Assia said that the cryptocurrency will be released in 2019, but did not specify as to when exactly, nor did he respond to questions on the subject.

Analysis: how to cash in on popularity

Many cryptocurrency companies, which began as small startups, now find themselves as multi-million dollar enterprises. The question facing them now is how they can best make money from this success.

Some companies acquire others; some sell out to bigger entities. Some have released their own cryptocurrencies, trying to cash in on their brand awareness; others are going public, completing the route to institutionalisation.

In this analysis, Finance Magnates examines all four paths, collecting comments from various sources. In which direction is your favourite company going?

Cryptocurrency Price Analysis for the week November 12 to November 18

Key Highlights:

  • Bitcoin Cash Fork Chaos that brought the markets down,
  • XRP is now ahead of Ethereum at second place by market cap,
  • Opposite view from the regulators as IMF says Govts Should Set Up Own Cryptocurrencies while the European Commercial Bank calls Cryptos an Evil Swamp,
  • Finally, a Crypto Exchange-Traded Product will go live on Swiss Stock Exchange Next Week,
  • OKCoin Launches In Latin America

Among major news this week, Bitcoin Cash, the project that forked away from the Bitcoin blockchain in August 2017, “hard forked” (split) into two different coins: “Bitcoin Cash ABC” (BCH ABC) and “Bitcoin Cash SV” (BCH SV). In the aftermath of the fork, the Bitcoin Cash ABC chain has more accumulated proof of work, and its native currency, BCH ABC, was trading higher on (futures) exchanges. Most Bitcoin Cash ABC proponents, therefore, felt victorious — though many Bitcoin Cash SV proponents have not yet conceded defeat. Although, just before the fork, the cryptos finally broke their stability, only to plunge down 10%. Nearly all major currencies took the beating but did see some mild recovery post the fork.

This BCH fork led downpour in the crypto market and subdued prices over past few months, resulted in Ethereum losing its second spot to XRP. Ethereum’s value plummeted 38.6 percent in the past three months, dropping its market cap to $18.1 billion. XRP’s value rose 61.1 percent in that same period, pushing its market cap to $20.5 billion.

Among regulators, IMF head Christine Lagarde said, Governments should consider offering their own cryptocurrencies to prevent the systems becoming havens for fraudsters and money launderers. According to The Guardian report, Lagarde said that central banks had to work quickly to establish digital cash for burgeoning networks of private financial transactions or risk their mushrooming into trading networks that were inherently unstable.

While IMF had a positive view, European Central Bank (ECB) executive board member Benoit Coeure has stated that cryptocurrencies like Bitcoin are the evil spawn of the 2008 financial crisis, reported Bloomberg. He further added that was an extremely clever idea, but not very clever idea is a good idea. Speaking at the Bank for International Settlements in Basel, Coeure seconded the Bank for International Settlements (BIS) chief Agustin Carstens’ idea that Bitcoin is a “combination of a bubble, a Ponzi scheme, and an environmental disaster” and said, “Few remember that Satoshi embedded the genesis block with a Times headline from January 2009 about U.K. banks’ bailout. In more ways than one, Bitcoin is the evil spawn of the financial crisis.”

Finally, An exchange-traded product tracking an index of five leading cryptocurrencies reportedly will start trading on Switzerland’s Six stock exchange next week. The product will be available to both retail and institutional investors. The Financial Times reported on Friday that Switzerland’s Six exchange has given a green light to a cryptocurrency exchange-traded product (ETP). The news outlet elaborated:”The Amun Crypto ETP, which will start trading next week on the Six exchange in Zurich, has been designed to track an index based on the movements of five leading cryptocurrencies”

Among international expansions, US-based OKCoin recently announced the launch of its licensed exchange platform in Latin America by offering fiat-to-crypto trading between the Argentine peso and several major cryptocurrencies. The exchange offers cryptocurrencies including Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, Ripple, Cardano, Stellar, Zcash and 0x. The exchange plans to open an office in Buenos Aires and build up a team to support its business throughout Latin America.

Price AnalysisChart Source: coin360.io

Bitcoin (BTC):

Bitcoin finally broke its stability as the pre BCH fork meltdown took the coin down by 10% breaking the USD 600 support. The prices hit the high point of USD 6,434.21 and the lowest point of USD 5,358.38 during the week. The exchanges that were more active, in volumes, with BTC across various pairs this week were, BitMex (15.24%), CoinBene (3.85%) and Binance (2.48)
Among prominent voices, prominent crypto analyst Tom Lee, who once targeted Bitcoin to reach $25000 by end 2018 is lowering his prediction to $15000

Ethereum (ETH)

Ether prices took a beating and lost its long-standing second place to XRP. Ethereum on the top, this week was at USD 212.62 and were at lows of USD 170.19 breaching the USD 200 mark by distance. The markets that were more active, in volumes, with ETH across various pairs this week were OEX (4.90%), BitForex (3.83%) and LBank (3.80%)
Among news surrounding Ethereum, Mike McDonald, creator of MKR Tools, revealed that 1,000,000 ETH – roughly 1% of the total supply of Ether – are locked in a MakerDAO’s smart contract.

Ripple (XRP)

XRP moves to second place as Ethereum takes a beating. On the top, this week the prices of XRP were at USD 0.525536 and towards the bottom, it quoted USD 0.430398. The exchanges that were more active, in volumes, with XRP across various pairs this week were Bitbank (14.20%), Binance (8.08%) and UpBit (5.72)
For XRP this week, Binance CEO, CZ, Hints at how XRP can become a base currency on the platform
The Other Movers and Shakers
The Other coins that made to the top and bottom this week according to Coin Market Cap (accessed on November 18 at 1:30 pm IST) were

Movers

– Nasdacoin – Showing a rise of 222.89%
– On.Live – Showing a rise of 71.43 %
– Fox Trading – Showing a rise of 68.88%

Shakers

– Olive – Showing a drop of 84.64%
– Provoco Token – Showing a drop of 70.71%
– InvestFeed – Showing a drop of 59.04%

What do you think would be the sentiment of the crypto markets next week? Do let us know your views on the same.

Cryptocurrency Price Analysis for the week November 12 to November 18
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Cryptocurrency Price Analysis for the week November 12 to November 18
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Bitcoin Cash Fork Chaos that brought the markets down, XRP is now ahead of Ethereum at second place by market cap,Opposite view from the regulators as IMF says Govts Should Set Up Own Cryptocurrencies while the European Commercial Bank calls Cryptos an Evil Swamp, Finally a Crypto Exchange-Traded Product will go live on Swiss Stock Exchange Next Week, OKCoin Launches In Latin America
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Bitcoin Price Analysis Nov.18: A recess ahead of the storm?

Over the past days since our latest price analysis and overview, we saw Bitcoin consolidating around the $5400 – $5500 range. As we can see, the current high since the severe drop lies at $5620 which is precisely where Fibonacci retracement level of %38.2. This is the first significant resistance area before a possible correction.

Along with our long-term prediction, in my opinion, the Bitcoin market had just started the last cycle which is known as capitulation. This doesn’t mean that the Bitcoin is bullish from now on, but after a long period of consolidation, the capitulation is the latest stage of the market cycle. Bitcoin will decide to turn bullish once most of the people declare on “its death”, and this we’ve not seen yet.

Looking at the 4-hour chart:

  • Looking at the bigger time-frame, the Bitcoin daily chart: As mentioned before, the first target had been reached very quickly at $5300. The $5000 – $5300 might hold as possible support. Next possible support areas are $5000, $4500 and $3700. As we mentioned in the horror prediction – $2700 – $3000 is the possible bottom.
  • Zoom in to the current’s situation: Bitcoin is forming a symmetric triangle which it’s getting tighter and expected to break. In my opinion, the higher the chance is a breakdown. The next support area lies around $5450 and $5300.
  • Resistance levels lie at ~$5650 (Fibonacci retracement level %38.2), and $5700 – $5800 area which is now support turned tough resistance. The next significant resistance lies at another support turned tough resistance – $6K.
  • The RSI indicator: After visiting yearly low areas, the RSI is back above the critical level of 30. This could be the first bullish sign, as long as it keeps its head above that level.
  • Scholastic RSI oscillator is at its highest levels and about to cross there. The market is overbought, and this indicates on a possible correction down.
  • Trading volume: after the massive volume following the days of the drop, the current weekend carries low volumes like before.
  • BitFinex open short positions are at 22.3K. In their weekly high the number was 27.7K.

BTC/USD BitStamp 4-Hours chart

Cryptocurrency charts by TradingView. Technical analysis tools by Coinigy.

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XRP Has A Good Chance Of Taking On Bitcoin In The Near Future

2018 has been a largely bearish year, and Bitcoin’s status as the most popular has attracted a lot of investment capital, although XRP has garnered some good following too. The most recent market events have left many with the indication that XRP may soon surpass Bitcoin to take the top spot.

While Bitcoin has maintained its dominance in terms of market capitalization, it’s currently not the most advanced cryptocurrency in the market. Others like XRP have come up to challenge it’s supremacy with their technical advantages.

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Bitcoin Is On A Shaky Ground

The recent upgrade of the Bitcoin Cash network sparked a fierce hash war between the camps of Craig Wright’s Bitcoin Cash Satoshi Vision (BCHSV) and Roger Ver’s Bitcoin Cash ABC (BCHABC). As a result, Bitcoin was affected price-wise, dragging the entire market down with it. This undesirable development has left many skeptical of whether Bitcoin’s perception as a truly decentralized system is real anymore, given the clear demonstration that the actions of a handful of people can adversely affect its standing.

In other words, this realization puts Bitcoin’s utility into question. As such, a good percentage of investors have turned to other alternatives looking for better utility and security. In that sense, XRP has emerged as a pretty great choice. The fact that the crypto is slowly recovering even as Bitcoin and others struggle to stay afloat adds to the charm.

XRP Has Edged Out Ethereum

Although some may still harbor misgivings about XRP not being totally decentralized, the crypto has endured the bashing and become one of the largest in the market. After a close battle with and surpassing Ethereum in total market cap twice in a month, XRP has now managed to edge out the rival and grab the second spot right behind Bitcoin.

This is mainly due to Ripple’s efforts to expand its customer base over the recent months. More banks are joining the RippleNet where XRP is used as a base currency in cross-border funds transfer using XRapid.

What’s Next?

RippleNet offers fast transactions with negligible fees, and banks want that. Some of the largest banks in the world, like Santander, Bank of America, and UBS, have already joined the network. Given that the number of institutions joining RippleNet is expected to grow exponentially in the coming months, it’s safe to say that XRP’s market cap will also grow exponentially. That could put Bitcoin within range and possibly strip it of its top position.

 

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Switzerland approves the very first cryptocurrency ETP includes Bitcoin, Ethereum, XRP, Bitcoin Cash and Litecoin

While the whole cryptocurrency community has been waiting for the SEC to approve a Bitcoin ETF, Switzerland has yet again proved that they are one step ahead than any other country in terms of encouraging institutional investors to participate in this space.

According to reports by Financial Times, Switzerland’s main stock exchange has opened its doors for the first ETP tracking multiple cryptocurrencies. SIX Swiss Exchange, based in Zurich, will start the trading of Amun Crypto ETP from next week. The ETP is designed to track an index of the five well-known cryptocurrencies. This includes Bitcoin [BTC], Ethereum [ETH], XRP, Bitcoin Cash [BCH] and Litecoin [LTC].

The division is set to 24.4% XRP, 16.7% Ethereum, 5.2% Bitcoin Cash, 3% Litecoin and the rest will be Bitcoin. The annual management fee for the ETP is 2.4%. Additionally, it is unclear on which fork of BCH they will be opting for since the fork took place earlier this week. The fork has resulted in the network splitting into two, commonly known as BCHSV, which is an upgrade from nChain’s Craig Wright and Coingeek, and BCHABC, which is an upgrade from Bitcoin ABC and Bitmain.

Co-founder and CEO of Amun, Hany Rashwan stated that the exchange-traded product is formed in a way that it meets the standards which are set for a traditional ETP that is extensively opted by the investors. He further added:

“The Amun ETP will give institutional investors that are restricted to investing only in securities or do not want to set up custody for digital assets exposure to cryptocurrencies. It will also provide access for retail investors that currently have no access to crypto exchanges due to local regulatory impediments.”

Dag1975, another Redditor said:

“This might encourage the SEC to allow an American ETF. The rest of the world doesn’t wait for US regulators.”

Cryptolicious501, another Redditor said:

“Well if 50% to 60% investors grew a pair and said fck the SEC the bull run would begin… its as simple as that. The fact that the SEC has almost all investors cowering in the corner, “P-p-please, master… SEC when?” bespeaks volumes of investor psychology or lack there of. :/”


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Dominance of XRP over Ethereum [ETH] isn’t new; gap in market caps broadens

Priya is a full-time member of the reporting team at AMBCrypto. She is a finance major with one year of writing experience. She has not held any value in Bitcoin or other currencies.

Reasons Behind The New Bitcoin Crash

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Cryptocurrency investors and supporters experienced quite a shock last week with the latest Bitcoin crash. Almost every single one of top 100 cryptocurrencies trading in the red. Not only that, but most of them experienced massive losses, often larger than 12%, or even 15%.

The event was unexpected and all cryptos, with the exception of a handful of stablecoins, lost a large part of their value. However, as always, Bitcoin is the one receiving the most attention, especially since this is the first time that BTC has dropped below $6,000 in a long while. Right now, Bitcoin is still losing value, with its current price being at $5,503.11 per coin, and a drop of 12.76% in the last 24 hours.

After the initial shock, a lot of investors started wondering and researching the new crash. The main question still remains: Why did this happen?

While this is more than understandable, especially considering how much money, time, and patience people have invested in crypto, the reasons behind the new crash remain obscure to many. Because of that, we are now going to explain two events that are most likely to be causing this situation.

1. The selloff

This is believed to be the main reason for the new crash of Bitcoin. The selloff came as a consequence of the last year’s bull run, which has launched BTC and other coins to entirely new heights. Because of that, numerous new investors entered the market, bought significant amounts of BTC, and then made even more profit after the price skyrocketed and reached $20,000.

Now, a year later, they realized that they are facing huge capital gain taxes because of these investments.

As a consequence of this realization, many who never had to pay taxes before ended up being quite shocked. The selloff emerged as the only solution to this problem, and the US citizens did not think twice about it.

2. Bitcoin Cash hard fork

Bitcoin Cash (BCH) was one of the coins that made the most headlines in the last few weeks. For months now, the coin was scheduled to receive a new upgrade, scheduled for today, November 15, 2018. However, two parties arose within its community, both with its own idea of how BCH should look like.

Because of this, a hard fork is expected to occur today, and another coin — Bitcoin SV — to emerge. However, due to the chaos and uncertainty regarding the upgrade, the fork, as well as because of alleged plans of taking over BCH blockchain, investors started panicking and getting rid of their coins for the time being.

As a result, all currencies hit the new low, led by BTC which had its value drop for around $1,000 below its alleged bottom.

While the situation with digital currencies is not too optimistic at the moment, and many see this as a return of the bears instead of just a one-time incident, things might not be so bad. A lot of experts believe that now is the right time to buy, as they expect cryptos to have a price correction in a few days. With the most people being convinced that BCH hard fork is causing the drop, this might be possible.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.

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Huobi Exchange’s Plans for Russia Go Well Beyond Crypto Trading

Huobi, the third-largest crypto exchange by trading volumes, is seeking to fill a void in Russia’s cryptocurrency community.

This month, the exchange opened an office in Moscow, the first major crypto trading platform to have a physical presence in the country, notably with a Russian-language call center. But Singapore-based Huobi’s ambitions go further, into lending and renting space for Russian miners, shaping the country’s regulations and training local blockchain talent.

The call center alone may be a significant differentiator, however. Even though leading crypto exchanges like Binance, OKEx and Bitfinex now have Russian-language interfaces, getting real-time support in case of tech problems have been a headache for many users in Russia who don’t speak English, Chinese or Korean.

“None of the big exchanges would answer your request in Russian,” a Russian trader named Anton, who didn’t want to disclose his full name, told CoinDesk.

For several years, the void was filled by the now-defunct exchange BTC-e, which had not only a Russian support staff but a network of local over-the-counter (OTC) dealers who had been facilitating the purchases of cryptocurrencies in absence of regulated fiat on-ramps in the country.

But BTC-e was shut down by the U.S. FBI in July 2017. Subsequently, a new platform named WEX picked up its job until July, when fiat and crypto withdrawals were frozen.

Since then, there has been no mainstream platform offering comprehensive support for users in Russia. So now Huobi is stepping in aggressively.

Concierge service

Huobi’s 30-person Moscow office opened November 12. In addition to the call center, this site provides back office support for OTC trading and listing, and personal managers for big clients, Andrew Grachev, the head of the Russian office, told CoinDesk.

“If someone wants to start trading with $1,000, he can come to the office and register with the help of a personal manager,” Grachev said.

To attract as many new users as possible, Huobi Russia is offering commissions lower than 0.1 percent for users who trade more than 50 bitcoin in two weeks during November, the company’s website says. Also, users will get a monthly “cash back” reward, Grachev said: 20 percent of trading fees users pay on the exchange will come back to their account in the form of Huobi tokens, which then can be used on the platform to pay for services, or cashed out.

Initially, Huobi’s plans were even more ambitious: the exchange wanted to enable deposits in Russian roubles, but the local experts said it’s a bad idea.

“They consulted with us a lot, and in the end, I think, we made them feel disappointed,” Vladimir Demin, head of the Center of Digital Transformations at the Russian government-owned development bank Vnesheconombank (VEB), told CoinDesk. “They were interested in providing fiat operations, but we told them it’s impossible.”

However, Russian users will be able to buy cryptocurrency for roubles using the exchange’s Huobi OTC service, and seamlessly transfer it to their trading accounts, Grachev told CoinDesk. The OTC platform is online, but it has too few users from Russia so far, so Huobi plans to lure local OTC traders with commission rates lower than on other OTC platforms, Grachev said.

Regulatory consulting

With three bills related to blockchain, cryptocurrencies and initial coin offerings (ICOs) currently stuck in the Russian parliament, the State Duma, the local regulatory environment is unclear and arguably unconducive to the industry’s growth.

However, government-backed institutions are watching the field closely and launching various local  blockchain pilots for government services, like distribution of government-sponsored prescription drugs or land registry.

“We started from projects on blockchain without using tokens or cryptocurrencies,” Demin said. “But we understand that using this technology only in a non-token way is like jumping half-way over the abyss.”

In August, Huobi signed up with the VEB’s Center of Digital Transformations and has been providing expertise that will be adapted for Russia by local experts and used in the development of future regulation in the country, Demin said.

“We were looking at this field and Huobi came out as the most suitable partner as they are already working with the governments of Australia, Singapore, China,” he said, adding:

“We are consulting the Bank of Russia and State Duma to add some practical elements to those bills.”

Further expansion

In addition to opening the Moscow office, Huobi will train blockchain entrepreneurs attending a special program for blockchain startups at Plekhanov University of Economics, one of the top Russian universities.

The university is in the process of finalizing a contract with Huobi, Nadezhda Surova, head of the University’s Department of Entrepreneurship and Logistics, told CoinDesk.

Initially, Huobi came to the university in search of tech professionals, she said, and later an expert committee within the Russian government’s Ministry of Digital Development approved the partnership.

Huobi’s further plans in Russia include offering loans for miners to buy specialized mining chips, or ASICs, and space for them to rent, Grachev said. According to him, these services might become available as soon as the first quarter of 2019.

Coming to Russia is a part of larger expansion plans by Huobi: in August, the exchange announced plans to open offices in the Philippines, Russia, Taiwan, Indonesia, and Canada, South China Morning Post reported.

According to CoinMarketCap, Huobi’s total 24-hour volume (excluding no-fee trades and transaction mining) is $595 million, making it No. 3 among exchanges after Binance and OKEx.

Moscow image via Shutterstock

50% Favor Bitcoin as Long-Term Investment in Former US Rep Ron Paul’s Twitter Surveyм

Former U.S. Congressman Ron Paul has asked Twitter users Nov. 15 how they would prefer to receive $10,000 if they had to keep it in this form for a decade, with the majority picking Bitcoin (BTC) .

Of the respondents, 50 percent answered that they would prefer to receive their $10,000 in Bitcoin, the second most chosen asset was gold (37 percent), the third U.S. 10 year treasury bonds (11 percent), and the last was the U.S. dollar at only 2 percent.

Screenshot of Ron Paul’s Nov. 14, 2018 tweet. Source: Twitter

Bitcoin’s price had recently been stable for a long time, until it had lost over 10 percent in 24 hours the day before the survey started. An analyst at Fundstrat, an advisory firm, has predicted that Bitcoin will take “weeks, if not months” to recover, and analysts at Bloomberg Intelligence say that the coin’s price could be on its way to $1,500.

Former Texas representative Paul already conducted an identical survey on Dec. 5 2017, with relatively similar results: the U.S. dollars scored the same, and Bitcoin received just 4% more than in the most recent poll.

Bitcoin’s price at the time of the December 2017 survey was around $11,500, and was about to hit its all-time-high of $20,000 on Dec. 17 2017.

A similar but more cryptocurrency-centric survey has been conducted on Twitter by Ran NeuNer — founder and CEO of crypto investment and advisory business Onchain Capital. In his version of the poll, the possible answers to the same question were Bitcoin, Ripple (XRP), Bitcoin Cash Satoshi’s Vision, and American Airline Miles.

Screenshot of Ran NeuNer’s Nov. 17, 2018 tweet

Screenshot of Ran NeuNer’s Nov. 17, 2018 tweet. Source: Twitter

There are still three hours left in NeuNer’s poll by press time, and most of the respondents (52 percent) have answered that they would prefer to hold XRP. The second most popular answer is Bitcoin (39 percent), the third is American Airline Miles (7 percent), and the least popular is Bitcoin Cash Satoshi’s Vision (2 percent).

At press time, XRP has increased by 6.97 percent in the last 24 hours and has again overtaken Ethereum’s (ETH) market cap to take the number two spot on CoinMarketCap.

Deloitte Blockchain Chief: Bad Crypto Headlines Making Clients ‘Nervous’

“Can we stop talking about my bad brother?”

That’s how Linda Pawczuk, leader of Deloitte Consulting’s financial services industry blockchain group, describes the conversations she often has these days with executives and board members of client companies.

Pawczuk’s team is squarely focused on helping decades-old, global enterprises figure out how to use distributed ledger technology (DLT) to transform their paper-based business processes for a digital age. But recently, she said, these clients have been asking about the wilder side of blockchain they’ve read about in the news: the initial coin offerings (ICOs) that have incurred the wrath of the Securities and Exchange Commission, for example, or the illicit uses of bitcoin and other cryptocurrencies.

She told CoinDesk:

“The boards are asking us about it because it’s in the news for bad actors, and boards are nervous that blockchain is affiliated with bitcoin and altcoins and ICOs, and what do boards do to protect their investors? So it hasn’t helped us, the association with the bad actors.”

Pawczuk wryly added that her team at Deloitte sometimes refers to ICOs as “the donor market,” meaning that the investors are not going to get their money back.

While it’s good that regulators are cracking down, she said, the hype creates a distraction.

“Unfortunately we got those things that create angst,” Pawczuk went on. “I’m invited to the meetings all the time, and I have to explain why they shouldn’t be concerned about the security of information [on a blockchain], explain what is the perspective on bitcoin and the 2,000 altcoins — and we’re explaining this, but we’re like, ‘Can we stop talking about my bad brother? Can we start talking about my brother who is the Olympic champion?’”

That Olympic champion, in her analogy, is DLT.

In a wide-ranging interview, Pawczuk, who took over her team at Deloitte in April after predecessor Eric Piscini left to form a blockchain startup, shared her perspectives on what kind of consortiums work best in getting enterprises to adopt this tech; why she’s queasy about vendors offering free proofs-of-concept; why Deloitte isn’t pursuing any work in the hot stablecoin sector; and whether she sees public chains playing any role at enterprises.

Which consortia work

Stepping back, Pawczuk spends most of her time working with what she calls “digital shift” companies — enterprises that “have been existing for hundred of years, some of them, but grew up in traditional process models and decided to migrate to more distributed technologies.”

To rally such companies around DLT, Pawczuk believes, it’s best to use a consortium that has already built a reputation as a neutral party over many years, not one created specifically to develop and promote a technical platform.

She has an example ready: The Institutes RickBlock Alliance, whose formation Pawczuk oversaw in her previous job, when she led Deloitte’s blockchain efforts in the insurance sector for three years. In this case, the focal point was the Institutes, an insurance industry group that’s been around for more than a century.

“The Institutes has for many decades serviced the property and casualty insurance industry, they are non-profit, and it’s a very trusted entity. You don’t have to create trust, and you have membership already,” Pawczuk said.

Using The Institutes to set up RiskBlock, it was easy to sign up 30 insurance companies as members, she said. The blockchain is in production and now the alliance is eyeing expanding beyond North America.

Such structures, Pawczuk argued, have an advantage in that unlike Hyperledger or R3, they are not invested in pushing a particular technology.

“Hyperledger has a horse in the race‚ it’s a platform. R3 is trying to bring different parties together and get them to agree on something for the sole purpose of blockchain. There are consortium plays where the trusted party already exists, as opposed to manufacturing a trusted party for the sole purpose of transaction.”

So does that mean that, for example, SWIFT, the international financial messaging service that’s been around since the 1970s, would be an ideal vehicle for organizing a blockchain used by banks and corporates?

“Maybe,” Pawczuk said. “They are already the intermediary. They’re already providing the abundance of the capabilities required, including a set of standards, that the industries have already come together to agree to.”

To be fair, RiskBlock is using R3’s Corda platform — but, according to Pawczuk, the project has been blockchain-agnostic from the start and put as its first priority bringing the insurers on board.

A consortium should not be interested in gaining profits out of its membership, Pawczuk said. “When a consortium or an influencer is forming, they are looking for ways to monetize the data, to monetize the service. You can’t be a neutral party and also focus on an economic model that is self-serving. It’s just replacing an intermediary with another intermediary.”

Free stuff

For similar reasons, Pawczuk is skeptical about the practice among some enterprise blockchain vendors of building proofs of concept for free.

“The more interesting story here isn’t the technology, it’s business model disruption and how do we look differently at paradigms,” she said. “So we get a little bit queasy when we hear about all these free proofs of concept that’s being built, because it’s the technology being applied to the solution.”

Rather, the business requirements should determine the technology.

“If you’re building free proofs of concept, but you’re missing the business context around it, like regulatory, AML/KYC, tax and all the other stuff, you really aren’t servicing the client holistically,” Pawczuk went on, without naming names. “Another thing that makes me nervous is proofs-of-concepts being built by students that have never had to coexist in the environment where large high volume transaction systems do exist. Blockchain does not replace all core systems.”

Asked about the recent trend of creating stablecoins, or cryptocurrencies designed to maintain parity with fiat, Pawczuk said Deloitte is not doing any work in the area, and sounded uninterested in pursuing it. (At least one of its competitors among the Big Four, PwC, is advising two separate stablecoin projects.)

But aren’t stablecoins an opportunity for firms whose core competency is auditing, given that these assets are typically backed by fiat in a bank account and investors would want reassurance that the money is there?

Pacwczuk replied that it’s way too soon to go there without regulatory clarity.

“Auditors are going to follow the regulators. Period,” she said. “And the regulators are moving at a respectable pace, because we now we have to figure out something we have never dealt with before: the auditability of decentralized systems.”

Public and private

But even if Deloitte isn’t pursuing any stablecoin projects, that doesn’t mean its core business is steering clear of crypto. The firm is said to be doing system and organization controls (SOC) audits for a number of crypto custody solutions.

Further, while Deloitte’s blockchain consulting mostly involves permissioned blockchains, rather than the open kind that power cryptocurrencies, Pawczuk believes in the end, industries will need a hybrid of both.

“Let’s look at the insurance model,” she said by way of example. “Let’s say you and I are in a vehicle accident, and you have one carrier, I have another carrier, and carriers can settle, but what about that other guy there that’s called a body shop? He’s not necessarily in the permissioned blockchain, because there are thousands of body shops, but could he be on the public network? So now you have a hybrid structure.”

The key to such a structure will be making sure these systems can talk to each other. “I’m less concerned about the actual DLT layer, I’m more concerned about the interoperable system layer, because there is the whole set of services and middleware that make this whole stack function,” Pawczuk said.

Another rival, Accenture, recently announced a so-called “interoperability node”, designed to connect the main enterprise blockchains: R3 Corda; Hyperledger Fabric; Quorum, developed by global bank JPMorgan Chase; and Digital Asset. But Deloitte has staked out its own blockchain interoperability claim, connecting trade finance blockchain data, as demoed in May at Consensus 2018.

And despite the distractions created by crypto’s turbulence, Pawczuk gave credit to the predecessor of all the blockchain systems being built now, concluding:

“The fact that bitcoin is a real use case landed global appeal, got people to focus on blockchain. We would never be talking about process capabilities like blockchain, and the disruption of blockchain, had it not been for bitcoin.”

Linda Pawczuk photo via Deloitte.

Asia-Pacific Newswire