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Author Archives: David Drake

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

The Real Reason Coinbase Hired Jeff Horowitz as Chief Compliance Officer

  By David Drake   Jeff Horowitz’s appointment as chief compliance officer at Coinbase, the largest cryptocurrency platform in the US, could herald a new era of investment opportunities for institutional investors. Formerly the managing director of Pershing LLC and banking regulator at the FDIC, Horowitz’s addition is expected to help Coinbase expand into new markets. His experience working in industries that require compliance with anti-money laundering policies could easily be the eye-opening experience, bigwig investors need to buy into cryptocurrency. Coinbase ranks 12th globally as a cryptocurrency exchange and boasts of an average crypto volume of $156 million daily, split across Bitcoin, Bitcoin cash, Litecoin, and Ethereum. With the newly added Coinbase Custody, the exchange hopes to attract large-scale investors such as hedge funds, by enticing them to diversify their portfolios to include cryptocurrencies. Just recently, Coinbase hired a broker-dealer and its move to include  Horowitz is a necessary ... Read More »

90% Project Failure: What Does this Mean for the Cryptocurrency Market?

  By David Drake   Forrester, a market research firm has forecasted a grim future for blockchain. In a report released recently, the firm estimates that up to 90% of active blockchain projects will either be put on hold or abandoned altogether. The report, further states that adoption of distributed ledger technology in businesses has reduced drastically in the United States. Though these market predictions may not sound encouraging for the nascent blockchain and crypto market, market players see them as positive signs of market growth, where hype is differentiated from reality. According to Aljaž Pogorelčnik, media consultant at BehaviourExchange, the predictions are results of simple market logic where too much hype has been used as a marketing tool. He says, “The way we see it is that many of the so-called blockchain projects – wanting to jump on the hype train – tried to create an artificial need for ... Read More »

How Coinbase is Strengthening Its Structures to Attract Institutional Investors

  By David Drake   This year has seen the creation of more than 100 cryptocurrency hedge funds. Several large financial institutions have announced plans to launch cryptocurrency trading. Development of blockchain-based innovations has also hit a whole new level. Creation of platforms such as Gath3r for web-mining monetization, IOU for e-commerce loyalty solutions and URAllowance for family smart contracts has seen companies utilize blockchain technology to solve real problems. These changes have seen different players, including cryptocurrency exchanges, position themselves to facilitate the entry of institutional investors into the cryptocurrency space. Coinbase, the largest cryptocurrency exchange in the US, is one such player. In May of this year, Coinbase launched a new service called ‘Coinbase Custody’. Through this service, the cryptocurrency exchange targets big financial institutions and is part of an institutional product suite. At the time of the launch, Coinbase said the maturing cryptocurrency market is rapidly attracting ... Read More »

2-Way Bitcoin ATMs: Can they Solve the Crypto Hacking Problem?

  By David Drake   Bitcoin ATMs are increasingly gaining popularity. Just last month, 55 new Bitcoin ATMs were installed in different cities, representing a 1.6% increase, from 3415 at the start of the month, to 3470 across 72 countries. However, the most captivating news about Bitcoin ATMs was the entry of two-way Bitcoin ATMs into the market. Malta, a forerunner and revolutionary in all things cryptocurrency became the first country to install these kind of ATMs. Australia is following closely. Already, two companies in the country, Stargroup and DigitalX, have come together in a partnership to develop two way ATMs that cryptocurrency enthusiasts can use to buy as well as sell Bitcoin. For cryptocurrency companies like BQT, Qupon and HFC Coin, two-way ATMs will open new avenues for the industry by enabling users to convert fiat currencies into digital currencies and vice versa. Speeding the Process Cryptocurrency players see ... Read More »

Two Reasons Why Institutional Investors Avoid Digital Assets and How Coinbase is Addressing Them

  by David Drake   Coinbase, one of the leading cryptocurrency exchange, is positioning itself to attract institutional investors. The exchange recently hired Jeff Horowitz, formerly the managing director and chief compliance officer of Pershing LLC, as its chief compliance officer. By hiring Horowitz, Coinbase hopes to expand the innovative market through his guidance as well as add new services which include Coinbase custody and broker dealing to its portfolio. Previously, Horowitz has been credited for introducing programs in anti-money laundering and regulation in leading financial institutions including Goldman Sachs. His experience will be important to Coinbase as the exchange aims to provide cryptocurrency solutions for institutional investors and hedge funds. Decentralized Tokens With the growth of the cryptocurrency sector and the increasing interest by governments to examine its operations, there is need for companies to ensure compliance with  industry regulations. Horowitz’s background in compliance and regulation will ensure that ... Read More »

The Real Reason Why J5 Is a Timely Collaboration

  by David Drake     Early last month, the United States tax agency, Internal Revenue Service (IRS) announced that it had formed a new taskforce to investigate international tax crimes and money laundering in the cryptocurrency industry. The global collaborative effort dubbed Joint Chiefs of Global Tax Enforcement (J5) involves tax agencies from five countries, namely the United States, Canada, the United Kingdom, the Netherlands and Australia. For some players in the cryptocurrency space, the J5 initiative is an attempt to address previous tax tracking gaps. Alex Karasulu, co-chief executive officer and founder of OptDyn says, “The J5 takes a directed multilateral approach in reaction to previously failed attempts to track transnational tax crimes. The Foreign Account Tax Compliance Act (FATCA) of 2010 was designed specifically to acquire the data needed to detect tax crimes committed by US citizens abroad by having them report overseas account information.” The Basis According to Karasulu, ... Read More »

With J5 Scrutiny, Are Crypto Startups Ready for Tax Liabilities?

  by David Drake   For the first time, representatives of the Joint Chiefs of Global Tax Enforcement, dubbed as J5, met in Montreal, Canada last month. The JF comprises of Australian Taxation Office (ATO), the Fiscal Information and Investigation Service (FIOD) of The Netherlands, the Canada Revenue Agency (CRA), Her Majesty’s Revenue and Customs (HMRC) of the United Kingdom and the Internal Revenue Service Criminal Investigation (IRS-CI) of the United States. They met to map out a plan on how to investigate international tax crimes and money laundering. They also wanted to contain the growing threat to tax administrations by cryptocurrencies. We asked two blockchain platform CEOs about their opinions regarding this recent development, Edward W. Mandel, CEO of BQT and Alex Karasulu, co-CEO and founder of OptDyn. BQT is a P2P exchange platform with innovative hedge trading features while OptDyn is the maker of Subutai, the first global ... Read More »

Will South Korea’s Move to Embrace Cryptos Improve Support for ICOs?

  by David Drake    Since January of this year, South Korea has been making headlines for taking drastic measures in the cryptocurrency industry. The country was the first to pass regulation requiring players in the industry to synchronize their trading details with those in the bank. The country even went further to  place a ban on initial coin offerings (ICOs). Despite all this, South Korea is now on the path to lessen these restrictions. The regulatory agency in the country, the Financial Services Commission (FSC), has made public its plans to actualize cross border regulation of cryptocurrencies. At the same time, the Bank of Korea has said that digital currency investments pose no threat to the financial market in the country. According to the bank, the balance of cryptocurrencies in domestic banks accounted for 8% of the total $1.79 million deposited in brokerage houses by the end of 2017. ... Read More »

Fake ICOs: How Can Cryptocurrency Investors Stay Safe?

  by David Drake     Growth of the cryptocurrency industry has led to an increase of fraudulent projects that falsify information in order to attract investors. Crypto-flare is one such project. Recently, I noted that the project  has flagrantly faked its advisors and management. The site alleges that Saars Levi is its CEO and co-founder , and lists me as an advisor alongside Pialy Aditya in a attempt to give unsuspecting investors confidence in their product. I spoke to Levi and Aditya and confirmed that none of them has been approached to serve in the project. The site has clearly been bending the truth. Another site, Glitzkoin has a plagiarized white paper, directly copied from Cedex. A Major Problem Fake cryptocurrency projects continue to hit headlines as enterprising people create fake sites that imitate actual projects with a view of siphoning money from unsuspecting investors. It is estimated that such ... Read More »

How South Korea is Positioning Itself to become a Crypto Market Leader

  by David Drake     South Korea has been a key contributor to cryptocurrencies but in this country, the industry has had to contend with big challenges. Such challenges include an initial coin offerings (ICOs)  ban, regulatory changes and hackings that led to the loss of huge amounts of money, almost bringing the industry to its knees. However, things are beginning to take a turn for the better. The Bank of Korea has gone public saying cryptocurrency investments pose no significant risk to South Korea’s financial market. To back up its claim, Bank of Korea says domestic banks held cryptocurrencies valued at $1.79 billion by the end of December 2017, which translates to 8% of all deposits make in brokerage banks in the country. No Opposition Similarly, the Korean Financial Services Commission (FSC) confirmed that it is not opposed to cryptocurrencies because they do not pose significant risk to the ... Read More »

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