Crypto News From Brazil and Portugal: Aug. 24-31 in Review

Crypto News From Brazil and Portugal: Aug. 24-31 in Review

Major expansion of payment systems in Brazil and no taxes on BTC transactions in Portugal in news of the week from Cointelegraph Brasil.

This week saw major expansion of crypto payments in Brazil, new standards freeing Bitcoin from Portuguese taxes, and the allegedly fraudulent Grupo Bitcoin Banco’s refusal to pay clients their deposited funds. 

Brazil's central bank adopts IMF guidelines

Brazil’s central bank announced that it would classify cryptocurrencies according to International Monetary Fund (IMF) guidelines on Aug. 26. With the new classification under IMF standards, traded cryptocurrencies will be classified as non-financial products and as such, will be counted as goods on the central bank’s balance sheet.

Cointelegraph Brasil reported that the classification of cryptocurrencies as a good is significant, as recognition of cryptocurrencies as property would make them eligible to be used as a payment mechanism.  

Major payment processor adds crypto to POS

Cielo, Brazil’s largest payment processor network, announced that they would be adding crypto transactions to their Point-of-Sale (POS) devices, numbering some 1.4 million throughout the country. 

Customers will reportedly be able to use their mobile phones to scan QR codes generated on Cielo POSs to make payments in several cryptocurrencies including Bitcoin. Moreover, the company may be trying to launch payment services that do not require POS devices at all, and instead can be processed on mobile app alone.

Portugal Tax Authority Does Not Plan to Tax Bitcoin Transactions

Per an Aug. 26 report by Portuguese business newspaper Jornal de Negócios, Portugal’s tax agency does not plan to implement value-added taxes (VAT) on Bitcoin transactions or trading. 

The news follows up on existing Portuguese policy not to tax income from Bitcoin trading. However, Cointelegraph notes that these are rulings by the tax authority, rather than a parliamentary body, and could easily change in the event of new legislation.

Major Brazilian developer conducts first land purchase on the blockchain

MRV, one of Brazil's largest construction companies, has reportedly carried out its first blockchain-based real estate purchase. According to the company press release announcing the transaction, the land registration process went from up to four months to four days 

Allegedly fraudulent Bitcoin group has no plans to pay clients

In what may qualify more readily as a lack of news, Grupo Bitcoin Banco reportedly "has no deadline to pay anyone" after reports that the group is actually a scam. Customers have complained for several months that they are unable to withdraw funds that they invested in the group.

Grupo Bitcoin Banco, which last week alleged that the police had carried out a search of their offices with excessive force, claimed that they had frozen withdrawals on May 24 in response to criminal activity on their platform, adding up to a “scam estimated at $50 million.”

US Air Force Steps Up Blockchain Use: What Else Is the Pentagon Up To?

US Air Force Steps Up Blockchain Use: What Else Is the Pentagon Up To?

New blockchain-based initiatives from the US Air Force have Cointelegraph looking at prospects for the technology throughout US defense agencies.

This week saw twin reports from smart contract startup Simba Chain and blockchain data management firm Constellation, both of whom announced contracts with the United States Air Force. 

New utility in USAF

Judging by these developments, the U.S. Air Force is looking seriously at new tech to shore up supply chains and rearrange data. Simba Chain has reportedly been tasked with prototyping a blockchain approach for the registration and tracking of additive manufacturing — also known as 3D printing — components throughout their lifecycles. Meanwhile, according to the original press release

“Constellation's technology will help securely unlock traditionally siloed and non-accessible data and data sources. This is commonly referred to as Multi-Domain Command and Control (MDC2) at the U.S. Air Force.” 

According to Constellation, the Air Force expects the company to facilitate the various fleets — drones, planes, satellites — that the branch is responsible for. 

Simba Chain, meanwhile, is itself an initiative founded in 2017 with a grant from the Defense Advanced Research Projects Agency (DARPA) to the University of Notre Dame, originally to facilitate an unhackable communication platform. 


The Air Force is not alone in delving deeper into blockchain technologies. 

The branch’s needs share much in common the U.S. military more broadly. Namely, massive data processing and vast backlogs of contracts facilitating diverse supply chains delivering everything from Tomahawk missiles to tweezers — all of which demand vital security precautions. Consequently, the broader U.S. Department of Defense (DoD) has been looking seriously at a range of blockchain technologies for increased security applications.

Last month, Cointelegraph reported on the DoD’s newly announced four-year plan, in which the department put forward the prospect of a “Block Chain Cybersecurity Shield.” Named uses for the technology included:

“Facilitating communication between units and headquarters, and transmitting information between intelligence officers and the Pentagon. DARPA also has been trying to develop an unhackable code — which blockchain could facilitate — because the technology offers intelligence on hackers who try to break into secure databases.”

Back in March, the White House’s budget request for 2020 mentioned similar concerns while asking for $9.6 billion to fund DoD cybersecurity initiatives, citing:

“DOD’s three primary cyber missions: safeguarding DOD’s networks, information, and systems; supporting military commander objectives; and defending the Nation.”

The DoD’s recent four-year plan did not explicitly mention the breadth of supply chain applications that companies like Simba Chain may be working on for the Air Force, but cybersecurity needs are evolving.

Supply chains

In a report from 2017 on blockchain tech, Washington-based think tank the Foundation for the Defense of Democracies focused on the need to preserve the “National Security Industrial Base,” illustrating the emergence of a:

“National security challenge related to the globalization of manufacturing supply chains is the phenomenon of attacks in which substandard, counterfeit, or maliciously-modified electronic components are introduced into the hardware on which the national security industrial base (the “NSIB”) operates.”

The famous case of the 2019 National Defense Authorization Act and its ban on Huawei’s electronics is an eye-catching example of the need to be certain of a supply chain, invoking as it did the threat of a foreign power using planted hardware to hack U.S. defense agencies. 

But while cybersecurity is an evocative word, likely to attract funding, some of the military’s supply chain needs are as simple as cost. Back in June of this year, Booz Allen Hamilton, one of the largest government contractors in the U.S., reviewed prospects for incorporating blockchain into federal agencies. 

Among Booz Allen’s recommendations for the DoD was distributing 3D printers to deployed units and then putting 3D plans for various hardware and parts onto the blockchain to save on the expense of manufacturing those parts in the U.S. and then shipping them — much like what Simba Chain is proposing to do for the Air Force. 

Or contract certainty?

Contracts may be a more mundane concern and therefore often removed from the military’s PR, but they are obviously critical. According to the U.S. Government Accountability Office, in 2018, the Air Force spent $71.3 billion on contractors within the DoD’s overall $358.3 billion contractor budget. 

The DoD depends on a truly global supply network, spanning borders and languages. At the same time, the Pentagon is prone to levels of bureaucratic waste that are the stuff of legend, constituting $125 billion over five years according to a buried internal report from the beginning of 2015. The report’s primary recommendations for savings? Cutting back on contractors, streamlining IT and encouraging earlier retirement.  

It is conceivable that blockchain in the military — in the form of Simba’s recently launched smart contract-as-a-service platform or something similar — may end up having the greatest ramifications in the least exciting of applications — the office rather than the battlefield. For now, however, that remains speculation.

Crypto News From the Spanish-Speaking World: Aug. 24-31 in Review

Crypto News From the Spanish-Speaking World: Aug. 24-31 in Review

From Cointelegraph en Español: Paypal changing policies in Mexico, new crypto payments in Spain and more government announcements about the Petro from Venezuela.

The Spanish-speaking world saw a number major developments this week, with several companies accepting cryptocurrencies as a form of payment and the Venezuelan government making new claims about the use and acceptance of the controversial Petro coin.

Here’s the past week of crypto and blockchain news in review, as originally reported by Cointelegraph en Español.

Spain: Eurocoinpay introduces cryptocurrency payments

On Aug. 24, Cointelegraph en Español reported that in Spain, Eurocoinpay introduced the possibility of making payments and collections with cryptocurrencies, through an application to make transactions in various shops. The firm's CEO, Herminio Fernández, reportedly said:

“Eurocoinpay is a cryptocurrency payment and collection platform whose app, available for Android and Apple, allows you to pay and collect with the cryptocurrency you choose on a daily basis in restaurants, supermarkets or other shops. It also allows customers to make and receive micropayments, as well as send funds to any part of the world with cryptocurrencies, automatically and in real time."

Venezuelan government: more than 7 million people are saving in Petro

Venezuela’s Superintendent of Cryptoactives, Joselit Ramirez, announced on Monday, Aug. 26, that the “Petro Savings Plan” is being used by 7 million Venezuelans within the national economy, and that about 12 million operations have been carried out with the Petro cryptocurrency within the system. 

"It is guaranteed that the money will not depreciate," Ramírez said when he finished his presentation on the weekly radio program of the state radio RCN called "Venezuela in Crypto."

The remittance platform called “Patria Remesas,” will allow citizens working abroad to send money to Venezuela.

Given the Venezuelan government’s history of not delivering on promises related to the Petro, Cointelegraph advises readers to approach Ramírez’s announcement with skepticism.

PayPal changes policies in Mexico to avoid fintech regulation

On Aug. 30, Cointelegraph en Español reported that in Mexico, the multinational payment processing company PayPal is about to change its policies, just when the deadline for authorizations of the Fintech Law expires.

These policy changes mean that PayPal won’t allow its clients to store any balances in their PayPal accounts, which the company hopes will exempt PayPal from qualifying as a payment processing company and being regulated through the Fintech Law.

Popular Venezuelan pharmacy starts accepting crypto payment

Farmarato, a popular Venezuelan pharmacy, announced on Aug. 30, that with the use of Cryptobuyer Pay, it would be accepting cryptocurrencies such as Bitcoin (BTC), Dash, Litecoin (LTC), and Binance Coin (BNB). The pharmacy has as well enabled a wallet for each of these coins in order to receive donations for medicines to Venezuelans in need.

Javier Rojo, CM de Farmarato, added that the pharmacy was also "thinking of those people who are outside of Venezuela and have their families here. People abroad can pay with cryptocurrencies so that their families in Venezuela receive the medicines.”

How Facebook Libra Is Seeking Compliance, but May Not Launch by 2020

How Facebook Libra Is Seeking Compliance, but May Not Launch by 2020

Facebook Libra is seeking worldwide compliance, but experts are sceptical that the project can meet its 2020 release date due to regulatory uncertainty.

For the cryptosphere, August was marked by the hotly debated announcements of world giants regarding the releases of international cryptocurrencies. The People’s Bank of China (PBoC) announced the imminent release of a national digital currency, Walmart began developing its own blockchain, Binance launching the Venus project, and Pavel Durov’s TON finally shared its release date.

The race was also joined by Facebook, which kept the development of its cryptocurrency a secret until the very last second. At the moment, the company is actively hiring specialists who can convince financial regulators to give the Libra coin the right to exist — and even launched a testnet of the future network. 

Will the entities behind Libra (i.e., the Libra Association, which includes Facebook) be able to defeat the skepticism of regulators and the fear of world governments? 

The dogs bark, but the caravan goes on 

On June 18, Facebook co-founder and CEO Mark Zuckerberg announced the launch of the new cryptocurrency, Libra. The global media has had various reactions to the news. Governments and central banks of many countries perceive Libra as a real threat to the global financial system, while users expressed concerns about the recurrence of data leaks.

Related: Facebook’s Libra Coin: Initial Reactions Mixed

Despite attempts by world leaders to obstruct Zuckerberg, the latter is preparing to launch the system and even hired a group of lobbyists to find a compromise with the regulators. The specialists are thought to be needed to convince the United States and European financial regulators that the cryptocurrency will work within the framework of the current legislation and that any risk will be mitigated.

On Aug. 27, Cointelegraph reported that the group was joined by a former member of the U.S. Senate Committee on Homeland Security and Governmental Affairs. It was also reported that Facebook hired Susan Stoner Zuk, a former assistant to Republican Sen. Mike Crapo. Her role includes engaging with lawmakers regarding the project — and according to her, first of all, these will be the Republican senators.

Facebook has also thought through the technical implementation of the project. On Aug. 27, the Libra Association released its bug bounty program, promising a $10,000 reward for finding a security vulnerability.

The launch of the digital ecosystem is scheduled for 2020, but may be delayed due to global complicating factors. So, what is preventing Libra from launching?

Lack of permission from the U.S. government

Facebook’s Libra cannot be issued in the U.S. without the official permission of the authorities. The U.S. Treasury Department said the corporation is required to confirm high-quality security standards. Otherwise, it won’t be able to publicly offer its product.

The main threat is the risk of the new cryptocurrency being exploited for illegal use, as claimed by the U.S. Federal Reserve Board. Jerome Powell, its chairman, believes that Facebook should discuss the cryptocurrency project with regulators before publicly launching Libra, saying:

“Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability. These are concerns that should be thoroughly and publicly addressed before proceeding.”

Some members of the government appeared to be less soft on Libra. California Rep. Maxine Waters, a Democrat, who also chairs the U.S. House Financial Services Committee, advised IT corporations to stop cryptocurrency development until Congress and regulators examine all potential risks. According to the congresswoman, the new currency could seriously compete with the U.S. dollar.

Related: US Congress on Libra Overview: Trust, Privacy and Genocide Accusations

Before the official announcement of the project, the U.S. Senate requested corporation for an explanation on the tools that will be used to collect and process data from future users of the payment network. 

However, key questions remained unanswered. The authorities are trying to understand whether the system will be truly decentralized and how it will fight against the shadow market. The general attitude of the U.S. authorities toward Zuckerberg's new brainchild can be seen in an eloquent tweet by President Donald Trump, in which he wrote:

“Facebook Libra’s ‘virtual currency’ will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks.” 

David Marcus, the CEO of Libra’s native wallet, Calibra, and Mark Zuckerberg assured the authorities of the transparency of their intentions, arguing that all transactions would be pseudonymous, and that they would spend as much time as needed to meet all requirements and standards.

The intransigence of regulators

On Aug. 25, Cointelegraph reported that the U.S. regulators visited Switzerland, where Libra had registered its activities, to conduct a series of inspections. However, after the meetings, the regulators still had questions related to the legal status of the Facebook’s cryptocurrency. Waters said:

“My concerns remain with allowing a large tech company to create a privately controlled, alternative global currency.” 

Moreover, the “Zuck Buck,” as Democratic Rep. Brad Sherman jokingly nicknamed Libra in his tweet on July 17, could be a red rag for terrorists and other criminals, writing that “Mark Zuckerberg is sending a friend request to oligarchs, drug dealers, human traffickers and terrorists” by launching Facebook’s Libra cryptocurrency. 

U.S. Secretary of State Michael Pompeo shared Sherman’s concerns, adding that the development of anonymous transactions could reduce the level of security in the world, saying:

“We should use the same framework that we use to regulate all other electronic financial transactions today.”

It seems that to counteract this, Zuckerberg is actively trying to connect with regulators. He reportedly consulted with the Treasury, the Securities and Exchange Commission (aka the SEC), the Commodity Futures Trading Commission (commonly known as the CFTC) as well as Western Union executives. 

In April, he discussed with Bank of England Governor Mark Carney and the U.S. Department of the Treasury over how the future payment system could be regulated. However, the result of the meetings is still unknown.

Pressure from other countries

Concerns about Libra’s growing influence have also been heard outside of the U.S. Several countries expressed their fears immediately following Libra’s announcement:


“We will limit or prohibit the creation of such sites.”

The United Kingdom:

“The Bank of England approaches Libra with an open mind but not an open door.”


“It is out of question that it [Libra] become a sovereign currency.”


“Whatever it is, it would be a private cryptocurrency and that’s not something we have been comfortable with.”

More specific concerns were formulated by the South Korean authorities. The country’s Financial Services Commission said that the transition of 2.4 billion Facebook users to a new asset could cause capital outflows from developing economies. 

Despite this, regulators did not propose specific measures to counter the threat of the monetary monopoly. However, the Chinese government has — and not only has it expressed its negative position, but is also apparently ready to take emergency countermeasures. On Aug. 10, the country’s central bank said it was ready to issue a national cryptocurrency.

Related: Chinese National Cryptocurrency Turns Out Not Being an Actual Crypto

In developing countries, which are precisely what Libra is oriented toward, the new cryptocurrency may spread quickly. But the consequences for these national economies may become difficult to predict. That is why governments may want tight control over the Libra Association.

Exit of key members and partners of the project

Project partners are also concerned over Facebook's struggle with regulators. It seems no company has agreed so far to pay the $10 million to join the network. Meanwhile, some of them said they would make the final decision on joining the organization only after the principles of Libra's work would become clearer. 

Seven out of 27 companies have reportedly joined on the condition that they would not have to promote or use the Libra token, leaving the right to refuse if something goes wrong. In an interview with the Financial Times, one of the partners noted that:

“I think it’s going to be difficult for partners who want to be seen as in compliance [with their own regulators] to be out there supporting [Libra].”

Another supporter criticized the social media giant for its ill-conceived strategy, saying that:

“Some of those conversations [about regulation] should have taken place before the launch, to understand how regulators would think about it, so there wasn’t so much pushback.”

Facebook’s spoiled reputation

At a hearing before the House of Representatives Financial Services Committee earlier in July, lawmakers expressed doubts about the future security of Facebook's cryptocurrency, as the company had previously been fined $5 billion for collecting, storing and misusing user data. 

Facebook itself replied that user data won’t be shared between the new project and the existing social media network. At least, this is what was promised in the announcement released by Facebook, as Libra would function under the Libra Association and Facebook would be just one of the participants. Nevertheless, some members of the crypto community suggest that Libra will give Facebook a new tool for collecting user information.

It is difficult to avoid the numerous scandals related to Facebook’s inability to protect the privacy of users, which led to the fact that the social media giant assigned the project management to the Libra Association. As Marcus noted, if the company controlled the network, very few would want to "jump on it and make it theirs."

Thus, Facebook is attempting to solve the problem of distrust by removing the burden of sole responsibility and instead distributing it among the members of the Association. This will make the network more credible, as Zuckerberg noted:

“It [the blockchain] is decentralized — this means that it is managed by many different organizations, and not one, which makes the system as a whole fairer.”

Will the Zuck Buck be given a chance?

Thus, it seems there are just two potential outcomes. Libra may lose out to the regulators, and as a result of which, Facebook will be forced to close the project. In this case, decentralized systems that do not require permission will receive a big impetus for development, since they will be the only real alternative that will be able to help avoid regulatory pressure. 

In the second scenario, Libra will succeed in the free market, in which private tokens will compete with fiat currencies. In this case, each user will have to choose between functions such as fiat binding, decentralization, privacy, etc.

Regarding the likelihood of Libra being released in 2020, legal and financial experts unanimously stated that the project is most likely technically ready, while unresolved legal issues may interfere with its implementation in time. Christian Ellul, Director of E&S Group, said:

“From a technical point of view I would believe that the Libra team will be ready to launch by the date to which they committed — the stakes from a marketing and reputation point of view are too high for the deadline not to be met. From the legal point of view the story may be different. Different countries will undoubtedly treat Libra differently due to the very different legal regimes that exist — this could potentially pose a stumbling block to its success and its widespread adoption.”

Tom Debus, a managing partner at data service provider Integration Alpha, agreed that regulators may make life hard for Libra:

“I have a hard time believing that all of the regulatory aspects will be sorted during 2020 - this will take longer. However, with the necessary compromise and pivoting on scope and legal frameworks involved some initial features and services might be able to go live even though the full vision might not (yet) be implemented.”

However, a cryptocurrency from Facebook has every chance of finding widespread use, according to financial expert Benjamin Tsai, who is the president and managing partner at Wave Financial. He believes that:

”Libra was set up to be pan-sovereign. This was unfortunate, and hard for all the countries to get behind. If they started with issuing USD-Libra, JPY-Libra, EUR-Libra, and GBP-Libra first, then that would have cushioned the blow a bit. They can always decide to play with the exchange rate thereafter or just de-peg completely. [...] The governments do understand that this will happen at some point, and the Libra Association needs to sell the idea that they can do a good job of executing on this digital currency plan.”

Eric Benz, CEO of the cryptocurrency exchange platform Changelly, thinks that:

“Libra poses a threat to the legacy financial institutions rather than to Bitcoin itself. Since Bitcoin is a cryptocurrency with a volatile nature, its price grows in value along with the increased global interest. Libra, on the other hand, plans to have a fixed price, thus it cannot be considered as a source of investment.”

Kyrgyzstan Proposes Draft Law to Introduce Crypto Mining Taxation

Kyrgyzstan Proposes Draft Law to Introduce Crypto Mining Taxation

The Ministry of Economy of Kyrgyzstan has submitted a draft law which proposes the taxation of crypto mining.

On Aug. 28, the Ministry of Economy of Kyrgyzstan has submitted the draft law “On Amending the Tax Code” with the aim of introducing cryptocurrency mining taxation.

New tax proposal

According to news outlet Kabar, the draft law was specifically developed to allow for the possible taxation of crypto mining.

The taxation on cryptocurrency mining is expected to increase budget revenues and to contribute to the principle of fair taxation in the Kyrgyz Republic.

The Ministry of Economy of Kyrgyzstan seems to be exploring two possible options to implement taxes on cryptocurrency mining. The first option would be the taxation of income, while the second would be taxing expenses incurred during cryptocurrency mining. 

The report suggests that the Kyrgyz government stands to earn some 300 million som ($4.2 million) — significant in a country whose annual budget stands at around $1 billion.

Kyrgyzstan explicitly banned cryptocurrencies back in July 2014

As Cointelegraph previously reported, Kyrgyzstan explicitly banned cryptocurrencies back in July 2014, followed by the National Bank of the Kyrgyz Republic issuing a statement warning that the use of Bitcoin and other virtual currencies as a form of payment is illegal under the national law.

Despite the ban on cryptocurrencies, the Kyrgyz Republic has now around 80 thousand technical devices that allow for cryptocurrency mining.

US-China Trade War and Its Effect on Cryptocurrencies

US-China Trade War and Its Effect on Cryptocurrencies

China’s central bank relies on centralization and suppression of open technologies such as blockchain, with its next step being to issue a national stablecoin.

The People’s Bank of China (PBoC), the country’s central bank, has announced that it is planning to launch a central bank digital currency (CBDC), inspired in part by Facebook’s Libra project. 

David Marcus, the head of Facebook cryptocurrency wallet Calibra, and known as the co-creator of the company’s venture into cryptocurrencies, had this to say on Twitter:

“Like I said: if we don't lead (and by ‘we’ I mean the Free World, *not FB*) others will. It wasn't a figure of speech, an exaggeration, or a spin of the reality we face. It was the truth.”

In the shadow of United States President Donald Trump’s trade war with China, we are beginning to see the battle lines drawn in a war for global monetary supremacy, with China’s offering representing centralized control and including the suppression of foreign influences. Marcus’s tweet clearly alluded to this clash of East vs. West — but it’s notable that he is taking aim at U.S. regulators and Congress — in particular, the House Financial Services Committee, which is chaired by Democrat Rep. Maxine Waters — to espouse a contrasting regulatory approach based on capitalism, freedom and less central regulation.

Related: Digital Yuan: Weapon in US Trade War or Attempt to Manipulate Bitcoin?

China, the great “centralizer”

China has historically suppressed technologies controlled by outsiders in favor of those under its own influence, and the “Great Firewall of China” has been used to suppress social media sites like Twitter, search engines like Google and messengers like WhatsApp, as well as to promote homegrown alternatives like Sina Weibo, Baidu and WeChat respectfully.

As such, foreign cryptocurrencies have been similarly suppressed in China. Back in 2018, China issued a ban on any and all crypto activities, including all access to international exchange platforms. And according to Zhou Xiaochuan — the ex-governor of the People’s Bank of China — local financial institutions have been instructed by regulators that digital currencies should not be recognized as tools for retail payments.

Thus, close observers of China should not be surprised to see the PBoC launching its own homegrown CBDC initiative despite government bans. It would be consistent with past technology policies for foreign cryptocurrency projects to be suppressed in favor of this upcoming PBoC coin, and it would also be consistent for this project to be highly centralized.

The government of China has had a tremendous history of benefitting from the power of centralization — but it also has a deep understanding of what a revolution looks like and where it can come from. As such, it has been quick to nip cryptographic assets in the regulatory bud.

While China is expected to launch a single, centralized, monolithic digital currency and suppress all others, the West is expected to launch a plethora of initiatives — both for retail payment and remittances, such as Facebook’s Libra and Telegram’s TON, but also business-to-business, or B2B, examples such as JPM Coin and Signature Bank’s digital payments platform called Signet. 

The battle for stability

One of the biggest criticisms to date of cryptocurrencies for payments is their volatility, which is illustrated most strikingly by the story of Lazlo Hanyecz (who paid 10,000 Bitcoins for a couple of Papa John’s pizzas in the early days of Bitcoin). Another major criticism is the uncertain regulatory status, especially in regard to the status of cryptographic assets as a security in the eyes of regulators such as the U.S. Securities and Exchange Commission (SEC).

If a cryptographic asset were to maintain a stable value, it would be hard for the SEC to view it as a security, which requires that buyers expect appreciation in the value of securities. This emboldens compliant players such as Facebook or large banking institutions, which have everything to lose from any compliance irregularities.

Payments, the killer application

Because of the regulatory certainty and usability of so-called “stablecoins,” consumer-facing payments would be a killer application for regulated financial services on blockchain.

Payments will generally have two kinds of suppliers: banks and messengers. The banks will be the suppliers of interbank and enterprise payment networks — e.g., the People’s Bank of China coin, JPM Coin or Signature Bank’s Signet project).

The second kind of supplier will be the dominant provider for consumer payments, including peer-to-peer (P2P), e-commerce, in-game, point-of-sale and international remittance applications — namely, mobile messenger apps. The biggest in this category is, of course, Facebook’s Libra project. 

But Libra is not alone in this space — South Korea’s messenger Kakao has launched a similar project based on a public blockchain called Klaytn. Telegram (which raised $1.7 billion) is launching TON, which is tied to its messenger that claims over 200 million users. And in the Japanese market, the dominant messenger, Line, has partnered with Visa and promises to bring its user base of over 200 million users onto the blockchain.

The use of a mobile messenger as a consumer payments platform is already a proven application in China, where WeChat Pay and AliPay are the dominant payment providers (neither of which currently use a blockchain-based cryptographic asset). The S&P recently conducted a survey that found 90% of adult internet users in China use WeChat Pay, 94% use Alipay and 86% use both. This duopoly also becomes a factor in the global payments clash between East and West. 

The PBoC is rumored to be working with eight institutions that will be the first beneficiaries of the new currency — including Alibaba, Tencent, China Construction Bank, the Industrial and Commercial Bank of China, the Bank of China, the Agricultural Bank of China, Chinese banking association Union Pay and an eighth beneficiary that has yet to be named.

With the huge potential of users coming from messengers, logical payment applications include P2P payments (especially since messengers come with user identities, prebuilt social graphs and communities, trusted friends and family networks, and the ability to communicate about or request payments), in-game payments (as game economies include virtual goods and become a natural target because mobile apps are a natural environment to deliver virtual goods), online services (including music and online content subscriptions), e-commerce (which may come later due to the need for real-world delivery of goods) and remittances.

Why “stablecoin” is a bad name

First of all, stability is a feature rather than a category. Generally speaking, most stablecoins belong to the category of asset-backed tokens. In most cases, the assets are held in a reserve, and if the market value of the coin were to drop, the reserve assets are used to buy back the coin until it regains the target price level. 

Similarly, more coins can be released from a reserve if the demand for the coin warrants. A reserve ratio determines how much of an asset is needed in order to support the stability of the price of a coin. Obviously, a 100% (or greater) reserve ratio should preserve a 1:1 ratio of the coin to the underlying asset, thereby theoretically allowing a coin to maintain stability.

The reason why “stablecoin” is a bad name is that there are literally no assets in history that have been known to exhibit a stable value over time — they are only stable relative to the value of another asset. Because of this, there isn’t any universal way to establish a stable threshold of value that is long-lasting. 

Another optional property of a stablecoin is redeemability — which means any holder of the circulating asset can, at any time, redeem the circulating asset for the asset in the reserve. The U.S. dollar, for example, isn’t itself stable over time, as the purchasing power of USD has dropped by 95% since 1913. 

USD relative purchasing power (1913-2011)

This decline accelerated in 1971, when the dollar ceased to be backed by gold and silver. Because of this, a cryptographic asset tied to the price of the U.S. dollar (or any other asset) should not be considered a “stable” coin but rather a “pegged coin” — meaning that its value is pegged to the value of something else. 

Therefore, a stablecoin can only be less stable that the underlying asset, never more. This is why Facebook has opted to use a trick adopted by central banks, which is to hold a basket of relatively stable assets — typically other national currencies — which reduces the risk exposure to single currencies. 

Another reason why “stablecoin” is a misnomer is that stablecoins aren’t even stable relative to the underlying asset — they are typically subject to small fluctuations that are either regulated by the central bank controlling the money supply or by arbitrage traders who expect the central bank to restore the pegged value. 

But the biggest reason why “stablecoin” is a terrible name for any cryptographic asset is that it’s typical for any pegged, centrally banked asset to be relatively stable vs. the underlying asset — until it’s not. A pegged asset like a currency can lose its peg, which generally results in devaluation of the currency — typically because the reserve is insufficient to buy the value of the currency back up to the pegged level. 

In general, schemes that maintain a high reserve ratio maintain a basket of reserve assets, don’t expose themselves to market speculators and offer redeemability have the highest chance of maintaining their value.

Where it would lead

With the announcement of Libra by Facebook, every player in the game no longer has to guess what the table stakes are, and it’s time for the players to put their antes in. The People’s Bank of China reportedly added nongovernmental organizations to its network. “Inspired by Libra” and by the work South Korea’s Klaytn is doing with its governance council, the PBoC has certainly mirrored what Facebook has done with the Libra Foundation.

With billions of messenger users and bank customers being introduced to blockchain-based payment solutions, we can be sure that every major organization in the world will have to craft a response to this unprecedented situation. And the competition between nations and ideologies — such as China vs. the West — can actively accelerate the delivery of solutions that will form the basis for mass adoption of cryptographic assets. 

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Miko Matsumura is a co-founder of the Evercoin Exchange, a noncustodial mobile wallet-based exchange, and a general partner at Gumi Cryptos, an early stage venture capital investor in cryptographic assets and blockchain technologies. Gumi Cryptos is a member of the governance council of Klaytn, the public blockchain and payment token for the Korean messenger company Kakao.

Australian Coder Warns Users of Lightning Network’s Vulnerabilities

Australian Coder Warns Users of Lightning Network’s Vulnerabilities

Australian software programmer Rusty Russell warns users of security issues found in various Bitcoin’s Lightning Network projects, urges to update the software.

Australian software programmer and Bitcoin’s (BTC) Lightning Network coder Rusty Russell warned users that “security issues have been found in various Lightning projects which could cause loss of funds.”

Urgent update recommended

On Aug. 30, Russell published a tweet urging LN nodes operators to update their software as soon as possible. According to the message, his warning concerns all versions of c-lightning prior to 0.7.1, lnd older than 0.7, and eclair up to version 0.3.

Notably, just earlier this month blockchain development company Blockstream announced the release of the version 0.7.2 of its BTC scalability software c-lightning.

Details to be released

In a PGP-signed message published on Linux Foundation’s domain Russell explicitly warns users of security issues and promises that more details will be released in the future:

“Full details will be released in 4 weeks (2019-09-27), please upgrade well before then.”

Lightning Network is a second-layer off-chain Bitcoin scalability solution meant to enable instant and near-free BTC payments. Blockstream’s chief strategy officer Samson Mow recently said that Bitcoin is bad for payments, but Lightning Network could solve this. 

As Cointelegraph reported earlier this month, Andreas Antonopoulos announced his new “Mastering Lightning Network” book, co-authored by René Pickhardt and Lightning Labs CTO Olaoluwa Osuntokun.

Ex-ConsenSys Exec Joins Security Token Project Dusk Network

Ex-ConsenSys Exec Joins Security Token Project Dusk Network

Kavita Gupta, former ConsenSys ventures head, joins security token offering project Dusk Network that aims to help companies tokenize their equity shares.

Former blockchain firm ConsenSys’ ventures head Kavita Gupta joined security token project Dusk Network.

As industry news outlet The Block reported on Aug. 30, Gupta joined Dusk Network, an Amsterdam-based startup trying to help companies tokenize their equity shares. Dusk Network co-founder Mels Dees claims that the company is also working with a regulated European stock exchange and have partnered with a major cryptocurrency exchange.

Fundraising for private companies

Gupta, who worked at McKinsey, HSBC, and the World Bank, believes that Security Token Offerings (STOs) can address various impediments that keep private companies from tapping into public markets. Per the report, STOs provide a way for companies to maintain control while also raising capital by selling fewer shares, compared to a public listing. Gupta explained:

“A lot of companies in Silicon Valley keep on pushing IPOs because the founders want to keep control. Using pre-IPO liquidity they would still be able to raise money without calling it a Series D or Series E. This middle point should be there.”

According to Gupta, STOs allow companies to determine the right price for the IPO. She explained:

“This is the best way for them to test the market on what is the price the market really is willing to offer them, instead of two or three IPO banks telling you what is your value in the market. [...] It is going to change how companies are deciding if they are doing IPOs. For a lot of companies they might not even go through IPOs.”

As Cointelegraph reported in July, Latin America’s biggest investment bank BTG Pactual plans to shift its security token offerings — a pipeline of over $1 billion in sales — onto the Tezos blockchain.

Amanie Advisors Support Ether’s Compliance With Islamic Finance Law

Amanie Advisors Support Ether’s Compliance With Islamic Finance Law

Ether’s compliance with Islamic religious law receives approval from Islamic finance and Sharia advisory firm Amanie Advisors.

Islamic finance and Sharia advisory firm Amanie Advisors have established Ether’s (ETH) compliance with Islamic religious law.

Ether receives Sharia endorsement

In a blog post published on their website, Amanie Advisors announced that the firm has collaborated with the Ethereum Foundation to establish the platform’s compliance with Sharia religious law. As a result of the collaboration, the company released a paper with the main purpose of illustrating Ethereum’s compliance with Islamic morals, which concedes a Sharia endorsement of the project and the coin.

In the white paper, the advisory firm says that — as with other cryptocurrencies — there are uncertainties when it comes to Ethereum’s compliance with Sharia law, which maintains strict standards for financial activities and condemns, in particular, usury. More precisely, Amanie Advisors raised questions as to whether Muslims should mine or trade Ether, or even deploy smart contracts or decentralized applications (DApps) on the platform.

Hopes of increased Islamic participation

The company noted that before conducting their research the hypothesis was that if Ether is deemed Sharia-compliant, then the Islamic community will be more eager to get involved with it. This, in turn, could result in the development of Sharia-compliant smart contracts and DApps, developments that are reportedly lagging. The author of the post writes:

“It is hoped that with the findings, parameters and guideline outlined in this paper, it would serve as a catalyst to the Islamic finance market, and wider Muslim population to enter and participate in the space as well.”

At the beginning of August, CEO of Amanie Advisors Suhaida Mahpot said that she saw the current reluctance to accept crypto among the Islamic community as a matter of undertainty, explaining that: 

“We need to educate institutions more about how digital currencies can be accepted, and how the transparency from using cryptocurrency would benefit the wider society. Perhaps, this mindset will change over time.”

As Cointelegraph reported in July last year, Stellar, an open-source platform for distributed payments, is reportedly the first distributed ledger protocol to obtain Sharia compliance certification in the money transfer and asset tokenization field.

Bitcoin Price: 4 Key Similarities to Previous Bull Market Corrections

Bitcoin Price: 4 Key Similarities to Previous Bull Market Corrections

Bitcoin price fell below $10K once again. But historical data is showing several similarities to previous corrections within larger bull market cycles.

While Bakkt clients will be able to deposit their funds into the Bakkt Warehouse next week on Sept. 6, Bitcoin price is trending downwards after falling below $10,000 in the run-up to the event. 

So is this already priced in or the market cycles are just repeating themselves? Let’s take a look at some key similarities to previous bull market cycles. 

Similarities I & II: 100-week MA & 21-week EMA providing support

BTC/USD Weekly chart. Source: Tradingview

BTC/USD Weekly chart. Source: Tradingview

A common discussion lately on Crypto Twitter suggests that there’s a confluence between the so-called Bitcoin (BTC) price “bubble” top of 2017 and the last top at the end of July at $13,935. In a sense, parabolic movements tend to repeat the same stages over and over again. However, there are some substantial differences between them. 

The top of 2017 came at the end of a market cycle, which essentially started with the confirmation of the 100-week Moving Average (MA) and 21-week Exponential Moving Average (EMA) during January 2016. 

However, the top of July 2019 was essentially the first peak above the 100-week MA and did not face the euphoria comparable to the period in December 2017. So, are they comparable? 

Basically, during the whole bull market of 2016–2017 there were several parabolic movements ending in a retracement. 

The start of this was the period during Q4 2015 and the beginning of January 2016 through which Bitcoin price ended the bear market with a parabolic move and found support at the 100-week MA and 21-week EMA. 

After this confirmation the market has seen several corrections of 30-40%, which are quite healthy for an upwards trending market. 

With that in mind, it makes more sense to compare the previous parabolic movement towards the first parabolic movement coming out of the bear market in 2015, as that was the kickstart of a new cycle. 

Relying on the chart, this could mean that Bitcoin price could face another test of the 100-week MA or the 21-week EMA to confirm the bullish perspective and face a period of accumulation prior to the halving event. 

The past halving events on Litecoin and Bitcoin saw upwards price movements a few months prior to the actual event. If history repeats itself, we could see some upwards movements in Q1 of 2020.  

Similarity III: 200-day Moving Average support

BTC/USD Daily chart. Source: Tradingview

BTC/USD Daily chart. Source: Tradingview

Another indicator of a bullish market is the support of the 200-day MA. During the previous cycle, Bitcoin always found support on the 200-day MA and, during the later phases, also on the 100 MA, which is currently moving around $7,500. 

Meanwhile, the latest BTC price drop below $10K means it just lost the 100 MA, which is comparable to the start of the last cycle in January 2016.

Similarity IV: Altcoins getting crushed 

Altcoin dominance. Source: Cointrader

Altcoin dominance. Source: Cointrader

The last few months haven’t been good to altcoins. While Bitcoin price is moving upwards and continues to range, altcoin investors are punished more and more by the market. 

This leads to the fear of buying altcoins and we are getting stuck in a vicious cycle. However, we have been here before. 

Back in 2015 — while Bitcoin was moving from $196 to $505 — altcoins didn’t follow suit. Instead, they began to move when Bitcoin price bottomed out of its first parabolic run on January 15, 2016 (the touch of the 100-week MA and 21-week MA confirming the bottom).  

If we take a look at an altcoin market cap dominance chart, it’s easy to see that it has retraced down to the lowest level in two years, while the RSI is showing a level of 22. This means that altcoins were being sold heavily during the past period. 

Notably, a potential support level and a trendline are coming into play. Comparable to the beginning of 2016, in which the dominance of altcoins fell from 16% to 8% — this occurred prior to big upwards movements. For example, Ether (ETH) went up by 1700% in the months after, Vertcoin went up by 800%, etc.

Comparing these two analyses with the technical point of view of the market, it is to be expected that Bitcoin needs a natural period of accumulation, through which altcoins will eventually catch up and move alongside with BTC/USD. 

To date, altcoins have been following Bitcoin (e.g. Bitcoin price all-time high in December 2017, altcoin all-time high in January/February 2018).

In other words, this leads me to believe that altcoins will start to move as soon as Bitcoin is ranging/bottomed out from this parabolic move. 

Total market cap excluding BTC 

Total crypto market cap excluding Bitcoin. Source: Tradingview

Total crypto market cap excluding Bitcoin. Source: Tradingview

The total market capitalization (excluding Bitcoin) has shown a move upwards to the $125 billion area of resistance, which acted as a support during 2018 and retraced down since then. 

According to the chart, it’s currently testing an important level. If the market is able to find support here (at $62–66 billion), the old resistance of November/December 2018 will act as a support. 

This will lead towards a new higher low, and potentially the disbelief phase and a new cycle. The current market capitalization of altcoins is $66 billion, which is equal to the market capitalization of altcoins in March 2019 when the price of Bitcoin was $4,000. Simply put, this is the ultimate carnage for altcoin holders. 

What scenarios are there?

BTC/USD. Source: Tradingview 

BTC/USD. Source: Tradingview 

At this point, Bitcoin price has broken an important trendline. This caused the price to drop from $10,200 to the support level of $9,300, which is being tested for the third time as we speak. 

Bullish scenario

BTC/USD bullish scenario. Source: Tradingview

BTC/USD bullish scenario. Source: Tradingview

In a bullish scenario, the price has to break the $9,800 level (old support before the dropdown) and reclaim that as support. If Bitcoin is able to do so, then we’re aiming at $10,800 again (trendline and horizontal resistance zone). 

Bearish scenario

BTC/USD bearish scenario. Source: Tradingview 

BTC/USD bearish scenario. Source: Tradingview 

If Bitcoin won’t be able to break the $9,800 level again and turns it into resistance (or the $9,650 zone), the lower support levels at $8,900 and the possible area around $8,500 are likely to be tested, given the prior analysis of the 100-week MA ranging around $8,500 and the CME futures gap at $8,500.

In case of a bearish breakdown, it might be expected that the drop will be quite short. If we turn to Crypto Twitter, the majority tends to believe in a move towards $8,500. 

This could also lead to a very brief drop, which can be bought up quickly, or to a move that never happens on that level (frontrunning). Of course, it’s quite common that when the majority expects a move to happen, the exact opposite occurs.

All in all, the movements of Bitcoin price are seemingly natural and healthy for an upwards trending market, and offer opportunities to buy the dip. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Can PACs Popularize Cryptocurrency Donations in US Politics?

Can PACs Popularize Cryptocurrency Donations in US Politics?

Can PAC give crypto a push? BitPAC — conceivably the only active crypto-centric political action committee — announced its plans to hold an ICO...

Earlier this week, BitPAC — conceivably the only active crypto-centric political action committee (PAC) — announced its plans to hold an initial coin offering (ICO). The committee will reportedly issue a utility token called Politicoin, which will then be used to support its candidates running for public office.

So, can PACs become a gateway for cryptocurrency-based contributions in United States politics while select states and high-profile nominees like Hillary Clinton explicitly refuse to accept digital assets during political campaigns? 

PACs, Super PACs and Super Super PACs: What are they?

In the most basic sense, PACs are organizations that raise and spend money to elect and defeat political candidates. PACs represent business, labor or ideological interests, and are barred from coordinating directly with the office-seekers they endorse. 

The first PAC was established around 1944, when the Congress of Industrial Organizations (CIO) was raising money for the reelection of President Franklin D. Roosevelt. The CIO was collecting money via voluntary contributions from union members directly rather than union treasuries to bypass the Smith Connally Act of 1943, which forbade unions from contributing to federal candidates. 

PACs are regulated by the U.S. Federal Election Commission (FEC). After the Citizens United v. FEC (2010) and Carey v. FEC (2011) court cases, the so-called “Super PACs" and “Hybrid PACs” (also referred to as “Super Super PACs”) emerged respectively. Both of them are subject to considerably less limitations than the original one. 

Related: World Leaders Talk

Thus, a standard PAC can only donate up to $5,000 to a candidate or candidate committee for each election and $15,000 to a political party per year. Super PACs, on the other hand, cannot make any direct contributions, but can spend unlimited amounts of funds in support of their candidates independent of their campaigns — and can pool donations of any size. 

Finally, Hybrid PACs can give limited amounts of money directly to campaigns and committees (the same as traditional PACs), while still making independent disbursements in unlimited amounts (the perk available to Super PACs). Both Super and Hybrid PACs have been criticized for exploiting the relaxed laws on campaign financing since they accept money from deep-pocket donors. 

Dan Backer and his BitPAC, a crypto-centered hybrid committee with plans for an ICO

Dan Backer, the founding attorney of, a campaign finance and political law firm,  who successfully argued the aforementioned Carey v. FEC case in 2011, boldly called himself “the father of the Hybrid PAC” in a conversation with Cointelegraph. He is also the founder of BitPAC, the first ever Bitcoin (BTC) political action committee that was initially registered in 2014. In an email sent to Cointelegraph, he wrote:

“BitPAC is a hybrid PAC, so it may accept and disburse candidate contributable dollars to candidates, and accept unlimited contributions for non-candidate contribution purposes. Hybrids are the premiere form of political action committee. I should know, I’m the father of the Hybrid PAC”

Soon upon establishing, BitPAC sent paper wallets containing BTC to several candidates, bipartisan and bicameral, to see how they would report those donations to the FEC. None of them cashed out, Backer told Cointelegraph:

“I discovered this as a fluke when asked how candidates reported their receipt of the BTC (I knew how we reported it, not how they did) and wanted to check. First candidate, didn’t report it.  second candidate, didn’t report it, and on and on. So, we pulled the paper copies of the paper-wallets we kept (FEC regs require us to keep financial records for 3 years), and recovered the BTC.”

At the time those contributions were made, each wallet contained around $250. By the time Backer had recovered them, they were worth around $16,000 per unit. That money influx prompted him to reestablish BitPAC (as it was formally terminated in 2018 due to the donors’ inactivity in regard to the donated BTC), and additionally launch Politicoin, an ERC-20 token run on the Ethereum (ETH) blockchain. Backer explained the mission behind the new token to Cointelegraph:

“The purpose is to facilitate the normalization of crypto-contributions in the political giving landscape, both to donors who are interested in that and candidates and their consultants/vendors who generally are agnostic to money as long as they get it. Our longer term plans with politicoin will make that possible.”

The funds raised during the forthcoming ICO will specifically be used to support Dan Bishop, a Republican candidate for North Carolina's 9th Congressional District in the U.S. House of Representatives in a special election. “Bishop is demonstrably pro-crypto & pro-innovation and the NC-09 special is NOW,” Backer told Cointelegraph when asked to explain that specific endorsement. He then went on to add: 

“We can demonstrate what is probably the most important point: voters generally don’t know about and don’t care about crypto.”

Bishop was one of the representatives who supported House Bill 86, which has relaxed regulations for digital currency businesses in his state, as major U.S. cryptocurrency exchange Coinbase stressed in a blog post last year. 

Backer seems confident about his ICO plans, as he told Cointelergraph that they should not be met with resistance from regulatory agents like the Securities and Exchange Commission (SEC):

“Our approach is in-line with that already approved by the Federal Election Commission (FEC), and in essence we’re providing the token to contributors, but not providing a marketplace or treating it as a security in a way that would trigger potential SEC subjugation.”

The pitfalls of accepting crypto-based donations in U.S. politics

Accepting cryptocurrencies as political donations is not a common practice in the U.S. — although committees can legally receive Bitcoin as a contribution, as the FEC ruled in 2014. At this point, just one 2020 presidential candidate is accepting crypto donations — Andrew Yang, a Democrat with a background in tech and law, who vocally supports pro-crypto regulations. 

However, in order to make a crypto-based donation, donors are required to book "a 15-minute phone call with a member of the compliance team” so that they can ensure that the funds are being provided by a U.S. resident eligible to vote — same as with BitPAC.

Indeed, while it is easy to track a transaction made in cryptocurrencies due to the blockchain technology, it is difficult to identify the party behind the said payment. Understandably, that makes regulators nervous, especially in the light of investigations into foreign intervention, which might have disrupted the 2016 presidential race, along with the public’s general mistrust in cryptocurrencies. 

As per a 2018 survey conducted by blockchain-oriented research firm Clovr, 62% of Americans who are eligible to vote think that crypto donations could be used illegally in the U.S. political system. Moreover, certain states — namely California and South Carolina — have completely prohibited donations submitted in cryptocurrencies at the county level, while other states — like Montana and Colorado — have imposed additional limitations for such donations. 

Related: US Crypto Review: Top-5 States With Welcoming Regulations

Cointelegraph previously reported on several U.S. politicians who successfully raised funds via crypto. However, some of those campaigns resulted in negative publicity, which could be the reason why certain candidates, like Hillary Clinton, have deliberately rejected crypto donations in the past. 

For instance, in May 2018, Obama’s former aide on crypto and digital technologies, Brian Forde, was criticized for accepting BTC donations during his campaign for the U.S. House of Representatives. Specifically, in an ad by Forde’s opponent, Forde’s donors were pictured as “Bitcoin speculators that oppose cracking down on drug deals and human trafficking.” 

Nevertheless, some PACs are happy with current regulations. Humanity Forward Fund (Humanity FWD), a Super PAC supporting Yang, has been accepting donations in BTC via the Lightning Network since July 2019. Its co-founder, Seth Adam Cohen, told Cointelegraph that the process has been easy, as there are no limitations involved in the process. He elaborated: 

“However, we found the pitfall to be trying to accept ‘all’ or even ‘many’ coins. That’s why we started with only Bitcoin and will slowly add coins if there is interest. Each additional coin means more #Math and more reporting requirements. So the demand from the crypto community needs to be there to make it worthwhile.”

Humanity FWD accepts contributions via ActBlue, a fundraising platform created by the eponymous nonprofit organization, in which donors are asked to provide their personal information. “The burden is on us, or a campaign, to verify that information,” Cohen told Cointelegraph. He went on:

“Please note that on actblue you don’t even have to check a box to verify you read the requirements. People often accidentally donate to actblue who aren’t supposed to, because they didn’t read the fine print. With we make people check a box and certify they are eligible donors and provide the necessary information. Then our compliance team double checks any that seem even a little questionable.”

Another 2020 presidential candidate who was accepting cryptocurrency donations, Eric Swalwell, dropped out of the race in July, just two months after announcing a crypto donations campaign. His supporters could make contributions using six supported cryptocurrencies — BTC, ETH, Bitcoin Cash (BCH), Stellar (XLM), Bitcoin SV (BSV) and White Standard (WSD). 

WSD is the native token of the White Company — a blockchain firm that was processing cryptocurrency donations on Swalwell’s behalf during his campaign. The company CEO Elizabeth White told Cointelegraph, “We actually feel that current regulations are completely adequate for the purpose of political donations.” However, it could be burdensome for political candidates to accept crypto donations without the help of a third party, she added:

“It is very difficult for them to do so if they try to do it on their own. A good example was Andrew Yang's campaign which basically gave out the same BTC and ETH deposit address to every donor, so it was impossible to know who was actually sending money.”

White Pay generated a unique deposit address for each donor, and as they are valid for only a short period of time, contributions could be matched to identities that are collected during the onboarding through a Know Your Customer, or KYC, form. White also elaborated that her company would immediately convert all crypto donations into USD to comply with the FEC requirements and to remove “any exposure to crypto volatility by the campaign.” White told Cointelegraph. “We also track the IP address, so that any irregularities may be noted (such as a donor with a US address but logging in from say Russia).”

Thus, current regulations seem to allow accepting crypto donations at the federal level, which could even seem surprising for a country that is often being criticized for the lack of regulations for cryptocurrencies. 

However, the public demand for that option is not there yet, which prompts many candidates to not deal with an additional reporting routine for the FEC, which come in hand with cryptocurrency donations. As Daniel Weiner, a senior counsel at the Brennan Center for Justice, who previously worked as a counsel for the FEC, told the Fast Company magazine: 

“Cryptocurrency, like every other wacky thing in our world today, is something of value. But it’s the same way no major presidential campaigns accept donations of live chickens. Because that’s not very practical for them.”

That seems to perfectly illustrate the position of the general public, who might know that cryptocurrencies could be worth a few hundred (or even thousand) dollars, but have yet to witness their practical implementation.