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American Bar Association Business Law Section Committee on Derivatives and Futures Law
American Bar Association Business Law Section Committee on Derivatives and Futures Law Winter Meeting 2018 Naples, Florida Friday, January 19, 2018 10:15 a.m. to 11:30 a.m. NEW PRODUCTS / FINANCIAL TECHNOLOGY Moderator for the Program: Conrad G. Bahlke, Willkie Farr &Gallagher LLP Speakers: Geoffrey F. Aronow, Sidley Austin LLP Debra W. Cook, Depository Trust & Clearing Corporation Katherine Cooper, Law Office of Katherine Cooper Isabelle Corbett, R3 David Lucking, Allen & Overy LLP Brian D. Quintenz, Commissioner, U.S. Commodity Futures Trading Commission ABA BUSINESS LAW SECTION DERIVATIVES & FUTURES LAW COMMITTEE 2018 WINTER MEETING NEW PRODUCTS / FIN TECH PANEL 2017 Developments in US Regulation of Virtual Currencies and Related Products: Yin and Yang January 5, 2018 By Katherine Cooper1 2017 was a year during which virtual currencies began to move into the mainstream financial markets. This generated significant legal and regulatory developments as U.S. regulators faced numerous novel products attempting to blend the old with the new. Although facing so many novel issues, the regulators’ responses tell a familiar story of the struggle to balance the yin of customer protection with the yang of encouraging financial innovation and competition. Below is a summary of 2017 developments from the SEC, CFTC, OCC, FinCEN and the States. I. Securities and Exchange Commission a. Bitcoin Exchange-Traded Products A number of sponsors of proposed Bitcoin exchange traded products had applications for approval pending before the Securities and Exchange Commission at the beginning of 2017. In March 2017, the SEC rejected a proposal backed by Tyler and Cameron Winklevoss.2 The Bats Exchange proposed a rule amendment which would list the shares of the Winklevoss Bitcoin Trust for trading. -
CRYPTOCURRENCY: a PRIMER Accept Bitcoin3—Including Amazon.Com, What Is Cryptocurrency? Target, Paypal, Ebay, Dell, and Home
CRYPTOCURRENCY: A PRIMER accept bitcoin3—including Amazon.com, What is cryptocurrency? Target, PayPal, eBay, Dell, and Home Depot—with anywhere from 80,000 to There is no one standard definition of 220,000 transactions occurring per day, cryptocurrency.1 At the most basic level representing over $50 million in estimated cryptocurrency—or digital currency or daily volume.4 virtual currency—is a medium of exchange that functions like money (in Cryptocurrencies allow for increased that it can be exchanged for goods and market efficiencies and reduced services) but, unlike traditional currency, transaction costs. At base, is untethered to, and independent from, cryptocurrency transactions are: national borders, central banks, sovereigns, or fiats. In other words, it . Private—no personal information is exists completely in the virtual world, required to complete a transaction;5 traded on multiple global platforms. These currencies are designed to . Fast—they are settled almost incorporate and exchange digital instantaneously, unlike credit card information through a process made transactions or wire transfers that possible by principles of cryptography, require days; which makes transactions secure and . Irrevocable—because transactions are verifiable. The most well-known settled almost immediately, there are cryptocurrency is bitcoin, which was no resulting chargebacks or possibility created back in 2009 and which still for disputes between buyer and seller; dominates the virtual currency market today.2 . Inexpensive—transaction costs are generally less than 1% if an intermediary is used, rather than the Why do they matter? customary credit card processing fee of roughly 2.5%; and Cryptocurrency is relevant to most . Global—neither buyer nor seller businesses and financial firms. -
Virtual Currencies and Terrorist Financing : Assessing the Risks And
DIRECTORATE GENERAL FOR INTERNAL POLICIES POLICY DEPARTMENT FOR CITIZENS' RIGHTS AND CONSTITUTIONAL AFFAIRS COUNTER-TERRORISM Virtual currencies and terrorist financing: assessing the risks and evaluating responses STUDY Abstract This study, commissioned by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs at the request of the TERR Committee, explores the terrorist financing (TF) risks of virtual currencies (VCs), including cryptocurrencies such as Bitcoin. It describes the features of VCs that present TF risks, and reviews the open source literature on terrorist use of virtual currencies to understand the current state and likely future manifestation of the risk. It then reviews the regulatory and law enforcement response in the EU and beyond, assessing the effectiveness of measures taken to date. Finally, it provides recommendations for EU policymakers and other relevant stakeholders for ensuring the TF risks of VCs are adequately mitigated. PE 604.970 EN ABOUT THE PUBLICATION This research paper was requested by the European Parliament's Special Committee on Terrorism and was commissioned, overseen and published by the Policy Department for Citizens’ Rights and Constitutional Affairs. Policy Departments provide independent expertise, both in-house and externally, to support European Parliament committees and other parliamentary bodies in shaping legislation and exercising democratic scrutiny over EU external and internal policies. To contact the Policy Department for Citizens’ Rights and Constitutional Affairs or to subscribe to its newsletter please write to: [email protected] RESPONSIBLE RESEARCH ADMINISTRATOR Kristiina MILT Policy Department for Citizens' Rights and Constitutional Affairs European Parliament B-1047 Brussels E-mail: [email protected] AUTHORS Tom KEATINGE, Director of the Centre for Financial Crime and Security Studies, Royal United Services Institute (coordinator) David CARLISLE, Centre for Financial Crime and Security Studies, Royal United Services Institute, etc. -
Rev. Rul. 2019-24 ISSUES (1) Does a Taxpayer Have Gross Income Under
26 CFR 1.61-1: Gross income. (Also §§ 61, 451, 1011.) Rev. Rul. 2019-24 ISSUES (1) Does a taxpayer have gross income under § 61 of the Internal Revenue Code (Code) as a result of a hard fork of a cryptocurrency the taxpayer owns if the taxpayer does not receive units of a new cryptocurrency? (2) Does a taxpayer have gross income under § 61 as a result of an airdrop of a new cryptocurrency following a hard fork if the taxpayer receives units of new cryptocurrency? BACKGROUND Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, and a store of value other than a representation of the United States dollar or a foreign currency. Foreign currency is the coin and paper money of a country other than the United States that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance. See 31 C.F.R. § 1010.100(m). - 2 - Cryptocurrency is a type of virtual currency that utilizes cryptography to secure transactions that are digitally recorded on a distributed ledger, such as a blockchain. Units of cryptocurrency are generally referred to as coins or tokens. Distributed ledger technology uses independent digital systems to record, share, and synchronize transactions, the details of which are recorded in multiple places at the same time with no central data store or administration functionality. A hard fork is unique to distributed ledger technology and occurs when a cryptocurrency on a distributed ledger undergoes a protocol change resulting in a permanent diversion from the legacy or existing distributed ledger. -
Detecting Roles of Money Laundering in Bitcoin Mixing Transactions: a Goal Modeling and Mining Framework
ORIGINAL RESEARCH published: 06 July 2021 doi: 10.3389/fphy.2021.665399 Detecting Roles of Money Laundering in Bitcoin Mixing Transactions: A Goal Modeling and Mining Framework Mingdong Liu 1, Hu Chen 2 and Jiaqi Yan 3* 1School of Economics and Management, Southeast University, Nanjing, China, 2School of Software Engineering, South China University of Technology, Guangzhou, China, 3School of Information Management, Nanjing University, Nanjing, China Cryptocurrency has become a new venue for money laundering. Bitcoin mixing services deliberately obfuscate the relationship between senders and recipients, making it difficult to trace suspicious money flow. We believe that the key to demystifying the bitcoin mixing services is to discover agents’ roles in the money laundering process. We propose a goal- oriented approach to modeling, discovering, and analyzing different types of roles in the agent-based business process of the bitcoin mixing scenario using historical bitcoin transaction data. It adopts the agents’ goal perspective to study the roles in the bitcoin money laundering process. Moreover, it provides a foundation to discover real- world agents’ roles in bitcoin money laundering scenarios. Edited by: Keywords: goal modeling, money laundering, bitcoin mixing transactions, data analysis, agents’ roles Xiao Fan Liu, City University of Hong Kong, SAR China INTRODUCTION Reviewed by: Daning Hu, Financial crimes not only directly disturb the national financial order and affect social stability Southern University of Science and but also occur with other crimes to provide financial support for various types of organized Technology, China fi Hong-Liang Sun, crimes. Money laundering is a nancial criminal activity, which mainly refers to the processing Nanjing University of Finance and of illegal income by various means to cover up and conceal its source and nature. -
Beauty Is Not in the Eye of the Beholder
Insight Consumer and Wealth Management Digital Assets: Beauty Is Not in the Eye of the Beholder Parsing the Beauty from the Beast. Investment Strategy Group | June 2021 Sharmin Mossavar-Rahmani Chief Investment Officer Investment Strategy Group Goldman Sachs The co-authors give special thanks to: Farshid Asl Managing Director Matheus Dibo Shahz Khatri Vice President Vice President Brett Nelson Managing Director Michael Murdoch Vice President Jakub Duda Shep Moore-Berg Harm Zebregs Vice President Vice President Vice President Shivani Gupta Analyst Oussama Fatri Yousra Zerouali Vice President Analyst ISG material represents the views of ISG in Consumer and Wealth Management (“CWM”) of GS. It is not financial research or a product of GS Global Investment Research (“GIR”) and may vary significantly from those expressed by individual portfolio management teams within CWM, or other groups at Goldman Sachs. 2021 INSIGHT Dear Clients, There has been enormous change in the world of cryptocurrencies and blockchain technology since we first wrote about it in 2017. The number of cryptocurrencies has increased from about 2,000, with a market capitalization of over $200 billion in late 2017, to over 8,000, with a market capitalization of about $1.6 trillion. For context, the market capitalization of global equities is about $110 trillion, that of the S&P 500 stocks is $35 trillion and that of US Treasuries is $22 trillion. Reported trading volume in cryptocurrencies, as represented by the two largest cryptocurrencies by market capitalization, has increased sixfold, from an estimated $6.8 billion per day in late 2017 to $48.6 billion per day in May 2021.1 This data is based on what is called “clean data” from Coin Metrics; the total reported trading volume is significantly higher, but much of it is artificially inflated.2,3 For context, trading volume on US equity exchanges doubled over the same period. -
Bitcoin Tumbles As Miners Face Crackdown - the Buttonwood Tree Bitcoin Tumbles As Miners Face Crackdown
6/8/2021 Bitcoin Tumbles as Miners Face Crackdown - The Buttonwood Tree Bitcoin Tumbles as Miners Face Crackdown By Haley Cafarella - June 1, 2021 Bitcoin tumbles as Crypto miners face crackdown from China. Cryptocurrency miners, including HashCow and BTC.TOP, have halted all or part of their China operations. This comes after Beijing intensified a crackdown on bitcoin mining and trading. Beijing intends to hammer digital currencies amid heightened global regulatory scrutiny. This marks the first time China’s cabinet has targeted virtual currency mining, which is a sizable business in the world’s second-biggest economy. Some estimates say China accounts for as much as 70 percent of the world’s crypto supply. Cryptocurrency exchange Huobi suspended both crypto-mining and some trading services to new clients from China. The plan is that China will instead focus on overseas businesses. BTC.TOP, a crypto mining pool, also announced the suspension of its China business citing regulatory risks. On top of that, crypto miner HashCow said it would halt buying new bitcoin mining rigs. Crypto miners use specially-designed computer equipment, or rigs, to verify virtual coin transactions. READ MORE: Sustainable Mineral Exploration Powers Electric Vehicle Revolution This process produces newly minted crypto currencies like bitcoin. “Crypto mining consumes a lot of energy, which runs counter to China’s carbon neutrality goals,” said Chen Jiahe, chief investment officer of Beijing-based family office Novem Arcae Technologies. Additionally, he said this is part of China’s goal of curbing speculative crypto trading. As result, bitcoin has taken a beating in the stock market. -
Optimal Execution in Cryptocurrency Markets
Claremont Colleges Scholarship @ Claremont CMC Senior Theses CMC Student Scholarship 2020 Optimal Execution in Cryptocurrency Markets Ethan Kurz Follow this and additional works at: https://scholarship.claremont.edu/cmc_theses Part of the Finance Commons, and the Mathematics Commons Recommended Citation Kurz, Ethan, "Optimal Execution in Cryptocurrency Markets" (2020). CMC Senior Theses. 2387. https://scholarship.claremont.edu/cmc_theses/2387 This Open Access Senior Thesis is brought to you by Scholarship@Claremont. It has been accepted for inclusion in this collection by an authorized administrator. For more information, please contact [email protected]. Claremont McKenna College Optimal Execution in Cryptocurrency Markets submitted to Professor Benjamin Gillen and Professor Chiu-Yen Kao written by Ethan Kurz Senior Thesis Spring 2020 May 11, 2020 Acknowledgements I would like to thank my family and friends for keeping my spirits up and being a great support system. I would also like to extend my deepest gratitude towards my thesis readers, Professor Benjamin Gillen and Professor Chiu-Yen Kao for their patience and thoughtful guidance throughout this process. Contents 1 Abstract 1 2 Introduction 2 3 Literature Review 6 3.1 Stock Market Microstructure . .6 3.2 Cryptocurrency Market Microstructure . .8 3.3 Microstructure in Almgren-Chriss . 11 4 Almgren-Chriss model 14 4.1 The “Efficient Frontier" . 14 4.2 Optimal Strategies . 14 4.3 Comparative Statics . 15 4.4 NYSE Stock Parameters and Models . 18 5 Empirical Analysis of Cryptocurrency Markets 23 5.1 Choosing Parameters and Modeling . 23 5.2 Comparison of the Markets . 25 5.2.1 Consumer Value Provided by Coinbase . -
Gary Dewaal Special Counsel and Chair, Financial Markets and Regulation
Gary DeWaal Special Counsel and Chair, Financial Markets and Regulation New York Office +1.212.940.6558 [email protected] Practices Gary DeWaal brings substantial experience from both industry and government FOCUS: Financial Markets and Funds to his practice counseling clients on exchange-traded derivatives and Broker-Dealer Regulation cryptoassets. He advises a worldwide client base on transactional and Distributed Ledger Products, Services and Technology regulatory matters relating to those and other complex financial products. ESG and Sustainable Investing Gary's clients benefit from his deep well of contacts and practical knowledge Financial Markets Litigation and Enforcement from his prior work with the world's largest exchange-traded derivatives broker Futures and Derivatives and, before that, as a senior trial attorney with the Division of Enforcement at International the US Commodity Futures Trading Commission (CFTC). Investment Management and Funds Quantitative and Algorithmic Trading Tapping deep knowledge to clear regulatory hurdles Industries Gary understands the urgency that drives the financial industry. His business Finance and Financial Markets background also gives him a unique understanding of his clients' products. This Private Client Services allows him to provide fast and practical responses to clients, often consulting Education directly with business executives as opposed to legal staff. JD, The State University of New York Buffalo Law School Before joining Katten, Gary interacted with regulators worldwide as the Group MBA, The State University of New York at General Counsel of Fimat (later known as Newedge), the exchange-traded Buffalo, with honors BA, The State University of New York at derivatives and securities broker. He also served in both business and legal Stony Brook, with high honors, Phi Beta roles for Brody, White & Co., and, before that, as a senior trial attorney with the Kappa, Omicron Delta Epsilon CFTC's Division of Enforcement. -
Pwc I 2Nd Global Crypto M&A and Fundraising Report
2nd Global Crypto M&A and Fundraising Report April 2020 2 PwC I 2nd Global Crypto M&A and Fundraising Report Dear Clients and Friends, We are proud to launch the 2nd edition of our Global Crypto M&A and Fundraising Report. We hope that the market colour and insights from this report will be useful data points. We will continue to publish this report twice a year to enable you to monitor the ongoing trends in the crypto ecosystem. PwC has put together a “one stop shop” offering, focused on crypto services across our various lines of services in over 25 jurisdictions, including the most active crypto jurisdictions. Our goal is to service your needs in the best possible way leveraging the PwC network and allowing you to make your project a success. Our crypto clients include crypto exchanges, crypto investors, crypto asset managers, ICOs/IEOs/STOs/stable and asset backed tokens, traditional financial institutions entering the crypto space as well as governments, central banks, regulators and other policy makers looking at the crypto ecosystem. As part of our “one stop shop” offering, we provide an entire range of services to the crypto ecosystem including strategy, legal, regulatory, accounting, tax, governance, risk assurance, audit, cybersecurity, M&A advisory as well as capital raising. More details are available on our global crypto page as well as at the back of this report. 2nd Global Crypto M&A and Fundraising Report April 2020 PwC 2 3 PwC I 2nd Global Crypto M&A and Fundraising Report 5 Key takeaways when comparing 2018 vs 2019 There -
Virtual Currency
Office of Legislative Research Research Report December 12, 2014 2014-R-0290 BITCOINS - VIRTUAL CURRENCY By: Michelle Kirby, Associate Analyst ISSUE BITCOINS The use of bitcoins as virtual currency, the laws that Bitcoin is a form of virtual or digital currency. It is govern it, and other states’ attempts to regulate it. not legal tender and is not backed by any This report updates OLR Report 2014-R-0050. government. Federal agencies such as SUMMARY the U.S. Treasury “Bitcoin” is a form of virtual or digital currency, that Department, the Government Accountability allows financial transactions to be conducted on a Office, the Internal network using computer codes. It is a form of Revenue Service, and the exchange that operates like a currency but does not Congressional Research Services have issued have all the attributes of real currency. guidance on how existing laws apply to virtual There are no federal or state laws that specifically currency activities. govern bitcoins. However, many existing laws apply to A proposed federal law certain virtual currency activities. calls for a five-year moratorium on bitcoin The U.S. Treasury Department’s Financial Crimes regulation. Enforcement Network (FinCEN) has provided guidance New York has proposed indicating that, under federal law, a virtual currency regulation that would, user is not a money transmitter and is therefore not among other things, subject to the registration, reporting, and require firms engaged in virtual currency to have a recordkeeping regulations for money services BitLicense. businesses (MSBs). However, virtual currency California has enacted a administrators and exchangers may be regulated as law that allows the use of money transmitters but should not be considered alternative currency. -
Open Door for Forces of Finance at the ECB Five Hundred Lobbyists for the Financial Sector at Large in the European Central Bank – by Invitation Table of Contents
Open door for forces of finance at the ECB Five hundred lobbyists for the financial sector at large in the European Central Bank – by invitation Table of contents Table of contents 2 Introduction 3 1. The ECB advisory groups: mandates and composition 5 2. Regulatory capture via advisory groups 10 3. Ethics rules 15 Conclusion 20 Endnotes 21 Published by Corporate Europe Observatory, October 2017 Written by Kenneth Haar Edited by Katharine Ainger With thanks to Vicky Cann, Theresa Crysmann and Pascoe Sabido Design and layout by Stijn Vanhandsaeme ([email protected]) 2 Table of contents Open door for forces of finance at the ECB Introduction It matters how the European Central Bank (ECB) makes its decisions, and it matters who it considers its experts and advisors. Especially if those advisors bear all the traits of lobbyists for the financial sector, and not least when the ECB is becoming a more and more powerful institution. In response to the financial crisis it has seen its mandate and working area increased. Supervision of the biggest banks has been handed over to the ECB, it is taking on a bigger role in setting up rules and procedures for financial markets, it has become co-administrator of debt ridden countries, and a series of asset purchasing programmes have seen it spend trillions to boost the European economy. Yet an incredible two thirds of the banks and financial entities under ECB supervision hold 346 seats in its own advisory groups, and this is just the tip of the iceberg when it comes to conflicts of interest between the role of the ECB and those whom it chooses to advise it.