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Author Archives: David Drake

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David Drake, Contributing Journalist.Reach him directly at David@LDJCapital.com.

FATF Report: UK Poses Low Risk for in Money Laundering and Terrorist Financing

  By David Drake   Global anti-money laundering policy maker, FATF (Financial Action Task Force), has noted a drop in risks relating to money laundering and terrorism financing in the UK cryptocurrency space. Even so, the agency has stated that there is nothing to suggest these activities occur on the crypto space but deems them an emerging risk. The report comes as good news for crypto players in the country in light of recent scam that have left many investors with thinner wallets and deprived trust. As more exchanges pop up in Europe and Asia, large-scale investors will welcome an environment where they can feel safe even if the threats are merely abstract. Deliberate Actions In the UK, the safer environment for cryptocurrency trading did not happen by chance. The country has made deliberate steps to institute actionable measures that effectively combat terrorist financing and hacking. Policy makers in the ... Read More »

US Congressmen Introduce Bipartisan Bills to Eliminate Crypto Price Manipulation

  By David Drake   The need for closer scrutiny of cryptocurrencies, in the face of a strict regulatory environment in the US, has seen Congress develop a contingent solution. In the early days of December, 2018, two members of the US Congress introduced a bipartisan bill proposing elimination of crypto price manipulations. The ability to set and affect pricing in the nascent crypto market has led to increased volatility characterised by sharp price fluctuations. This has created uncertainty in the market, keeping  institutional investors – one of the key groups necessary to validate digital assets – at bay. The two legislative bills put forward by Darren Soto and Ted Budd, are dubbed, ‘U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018′ and ‘Virtual Currency Consumer Protection Act of 2018′ respectively. Until the SEC makes a definitive ruling on an operational definition for digital assets and creates an environment ... Read More »

How FATF’s Validation on UK Crypto Exchanges Could Boost Industry Growth

  By David Drake   Terrorist financing and money laundering are two major threats facing most financial institutions around the world. Where appropriate actions are not taken, these threats challenge the reliability and steadiness of financial institutions. Having recognized the enormity of these threats, the UK has taken measures to minimize their occurrence with a view of protecting its interests, within and outside the country. The Financial Action Task Force (FATF), a global standards institution on countering financing of terrorism and money laundering recently gave the country a shot in the arm. In its report, FATF stated that crypto exchanges in the UK face less risk when it comes to money laundering and terrorist financing. Even so, this does not rule out the possibility of these risks occurring in UK’s cryptomarket because the anonymous nature of digital currencies poses high risk. Risk Plans For this reason, the FATF has asked ... Read More »

How Proposed US Crypto Regulation Could Tackle Market Manipulation

  By David Drake   In an ideal situation, markets need to be competitive where there are many buyers and sellers so that no single player can dictate or influence prices. This helps in creating public confidence, resulting to increased trade and efficiency in transactions. But this is not always the case. Due to the urge to make super profits, market players have use numerous manipulation methods to fulfil their needs by selecting players. In traditional markets, regulators have ensured that there are systems in place to monitor, investigate and identify market manipulation efforts with a view of prosecuting individuals involved. Trading Gap In the nascent cryptocurrency market, price manipulation is increasingly becoming an issue of concern and systems need to be put in place. Since the market does not have a  regulation on market manipulation, there are contradicting reports from various stakeholders on this matter. It is important to ... Read More »

The Real Reason FATF Report Could Benefit UK’s Cryptocurrency Industry

  By David Drake   Concerns have been raised worldwide on the potential use of cryptocurrencies to finance terrorism and aid money laundering practises. This is because the technology underlying digital currencies is characterised by individual privacy through trading of pseudonymous and/or anonymous coins. Recent statistics by CipherTrace, a blockchain and cryptocurrency firm based in California, show an increase in these vices. According to the report, $1.2 billion worth of coins was laundered through cryptocurrencies such as Zcash and Monero in the second quarter of 2018. Regulatory bodies have noted these threats and have been working on frameworks to minimize their occurences. One such body is the Financial Action Task Force (FATF), an outfit that develops global policies to tackle money laundering and terrorism financing. Low Risk In its latest report on anti-money laundering risk assessment in the UK, FATF noted that cryptocurrency exchanges in the country pose a low ... Read More »

Crypto vs Institutional Investors: What Issues Must Industry Players and Governments Address?

  By David Drake   Cryptocurrencies have captured the attention of a growing number of companies and institutions. The Dutch audit firm, KPMG, is among the latest firms to focus on cryptocurrencies. As one of the leading four global audit firms, KPMG launched a report that clearly shows digital assets are worth considering, but insist that institutionalization is key to their success. The utilization of blockchain and token transactions made KPMG believe that the tokenization will shape the global economy moving forward. For KPMG experts, tokenization will be one of the most impactful innovations powered by cryptocurrencies in the coming years. According to the report, digital currencies are capable of revolutionizing the financial sector by creating an open system. The Big Question Such a system would be free of centralized control, provide wide access to financial resources as well as affordable and faster payment solutions that connect people anywhere. Acknowledging ... Read More »

What will it Take for Bitcoin’s Price to Recover in 2019?

  By David Drake   2018 was by all means a difficult year for cryptocurrencies, but the last two months have been even more challenging for the leading digital currency, Bitcoin. In November, Bitcoin traded at less than $4000, the lowest it has reached since October 2017. This price drop sent waves of panic across the market even as the prices of other cryptocurrencies plunged in a trend that lasted several weeks. The price of Bitcoin tumbled despite the fact that Bloomberg reported in a research by the Cambridge Center for Alternative Finance that in the initial three quarters of 2018, the number of verified digital currency users almost doubled. According to the research, the number of cryptocurrency users hit the 35 million mark in 2018, up from 18 million in 2017, and 5 million in 2016. The number of cryptocurrency accounts also increased significantly to reach 139 million in ... Read More »

Government vs Industry Players: What Role Does Each Have in Bringing Institutional Capital to the Crypto Market?

  By David Drake   Cryptocurrencies are becoming essential to the global market. According to KPMG, they are indeed vital, but will take time before they reach their full potential. Currently, the crypto market is primarily speculation-driven as retail investors choose startups based on their ability of their crypto product to add value. Because of their nature and unpredictability, KPMG  suggests virtual currencies will need the input of institutional investors to flourish in future. Institutional investors such as hedge and grant funds are seen as key to contributing to the stability of digital currencies. They are likely to address inequity in the cryptomarket by allowing large volume trading without causing a crash in exchanges as recently witnessed in price drops. Over the years, institutional investors have steered clear of cryptocurrencies due to their unpredictability. However, as the potential of virtual currencies increases, investors are expanding their asset portfolios to include ... Read More »

Trading With Cryptocurrencies is Risky, Warns Peruvian Government

  By David Drake   The topsy-turvy cryptocurrency roller coaster ride hit another descent as the government of Peru put up a staunch resistance to its trade and use. This came as the prices of Bitcoin and other leading cryptocurrencies took a huge hit last month, suffering an 80 percent fall in value since the start of the year. The Peruvian central bank took a stand against cryptocurrencies, warning investors that dealing in these digital coins is risky business. The proclamations against cryptocurrencies are true, they have highly volatile prices, are vehicles for illegal activities, and are highly prone to fraud because of their decentralized system. However, ignoring what can be viewed as a great avenue for fiscal change can also be a costly mistake. Governments and regulators have the responsibility of finding a way to ingrain digital assets in their financial systems to benefit fully from their huge and ... Read More »

The merits and demerits of Hong Kong’s SFC resolutions and their impact on the crypto industry

  By David Drake   Global popularity of cryptocurrencies is undisputable. However, differences in the way digital assets are handled and the disparities across crypto exchanges have been on the rise, making it necessary for countries to develop regulations. In Hong Kong, the Securities and Futures Commission (SFC) intends to regulate the crypto market to prevent possible digital currency fraud. Just recently, Hong Kong’s SFC stated that it will introduce new governing rules and course of actions for the crypto market. Specifically, the regulator intends to focus on digital currency exchanges and funds operations. The SFC observed that current rules do not consider digital assets as securities or future contracts and are therefore not regulated by it. This means that those dealing in digitals assets are prone to insecurities. Due to this, the SFC resolved to safeguard investor assets by including them in the regulations. In the new regulations, those ... Read More »

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