Blockchain Bites: Bitcoin’s Path to $ 20K, Ethereum’s “ Unannounced ” Fork, and Biden’s Crypto-Friendly Choices

The Ethereum Infura fell, causing a break in the chain. The second largest bank in the world will issue $ 3 billion in blockchain bonds. President-elect Joe Biden’s transition team includes some well-known cryptocurrency commentators.

Split chain
On Wednesday morning, around 08:00 UTC, the Ethereum infrastructure provider Infura revealed a service outage for its mainnet API Ethereum, related to one of the main blockchain clients, Geth. Industry participants have begun to speculate on a possible “chain split” or unplanned and unannounced type of hard fork. The problem probably stems from the split between node operators who have and have not updated Geth. “Those who haven’t updated their geth nodes for a while (I assume at least several months) have split up with those with new geth versions,” said Nikita Zhavoronkov, chief developer of Blockchair, adding that his services were restored afterwards. update. At press time, Infura has identified the root cause and has begun work towards recovery.

Blockchain bonds
The second largest bank in the world (market capitalization), China Construction Bank (CCB), will issue bonds worth $ 3 billion on a blockchain. These tokenized bonds (offered at the state bank’s Labuan, Malaysia branch) will be able to be traded for bitcoin and US dollars on Fusang’s digital asset exchange. Tokenization reduces the number of financial intermediaries and costs associated with issuing, which means that CCB can offer certificates for as little as $ 100 (instead of the typical $ 4,000 price) and offer returns of 0.75% (compared to industry standard of 0.25%).

Cold Tokenization
Despite a DeFi cooldown, the number of tokenized BTCs on Ethereum has increased by 21% since September. There are now over 150,000 BTC, worth around $ 2.3 billion, on Ethereum. However, the trend has slowed significantly. According to data from Dune Analytics, around $ 360 million of bitcoins were tokenized in October, up from $ 737 million tokenized in September. Notably, the pace of tokenization still outpaced the mining emission rate for the third consecutive month.

Trust in the brain
President-elect Joe Biden yesterday announced his transition team, a “brain trust” of policymakers with some with close ties to the cryptocurrency industry. In particular, former CFTC chairman and noted blockchain commentator Gary Gensler will lead Biden’s financial policy transition team, responsible for the Federal Reserve and banking and securities review. Simon Johnson of MIT, who wrote on blockchain technology; Chris Brummer of Georgetown and Mehrsa Baradaran of the University of California, known for their comments on Facebook’s Libra project; and one of the “digital dollar” architects, Lev Menand, was also cast as part of the transition team.

Consolidation of coins
Market analysts are largely optimistic about bitcoin’s prospects of testing all-time highs of $ 20,000, although many expect a period of consolidation in the coming weeks and months. CoinDesk market reporter Omkar Godbole writes: “Further substantial gains seem unlikely in the short term, as the cryptocurrency’s 60% rally from $ 9,800 to $ 15,900 over the past couple of months seems excessive, according to technical charts.” A position also taken by Patrick Heusser, a senior cryptocurrency trader at Crypto Broker AG based in Zurich, which expects a consolidation between $ 14,000 and $ 16,000 in the coming weeks. Decreasing liquidity on the sales side, driven by more institutional action, could be a factor here, Godbole notes.

Coins for privacy
Colorado-based cryptocurrency exchange ShapeShift has removed a list of privacy coins including zcash (ZEC), monero (XMR), and dash (DASH).

Citing regulatory concerns, Veronica McGregor, ShapeShift’s chief legal officer, told CoinDesk’s Brady Dale that the action was taken to “derisk” the company.

At the moment, it seems ShapeShift is the only one disabling some privacy coins. There has been no immediate change to regulatory policy that could have incentivized the move, although the general push of priority guidance would suggest that privacy coins are in the sights of financial watchdogs.

Dale spoke to Peter Van Valkenburgh, research director of the Coin Center and a board member of the zcash Foundation, who likened privacy coins to money bags, currently the preferred denomination for criminal activity.

The US Financial Crimes Enforcement Network, or FinCEN, “says fundamentally, you need to make sure you take reasonable steps from a cost-benefit analysis to prevent the proceeds of crime from flowing through your institution,” Van Valkenburgh said.

What he calls a reasonable step is still open to interpretation given the broad mandate of laws like the Bank Secrecy Act. Van Valkenburgh noted that these vague regulations offer cryptocurrency companies ways to offer privacy coin services, “just like the banks handle cash. “

Specifically, monero, the 14th largest cryptocurrency by market cap and the only one of the coins in question that offers privacy by design, is something of a pariah for centralized exchanges. Of the major exchanges, only Kraken offers XMR trading, Decrypt reported.

Blockchain forensic firm CypherTrace was exploited by the Department of Homeland Security to breach Monero’s privacy protections, while the IRS offered a similar contract to Chainalysis and Integra to breach monero, zcash, dash, grin, komodo, verge and horizon .

Offering a pinnacle behind the hood of regulatory conversations, Coinbase CEO Brian Armstrong basically said this summer that regulators speak softly but carry a big stick.

“A lot of it is behind the scenes conversations where [regulators] I’m kind of saying, ‘We really don’t think you should do this. And then we have the conversation: “Well, are you telling us you don’t like it, or are you telling us that you will sue us if we do?” Armstrong would have said.

To be sure, when it comes to financial oversight, US financial regulators have both soft power and money behind them.