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DeFi regulation must not kill the values behind decentralization



DeFi regulation must not kill the values behind decentralization

Cryptocurrency brought us peer-to-peer payments that continue to elevate participation in the global economy for millions of people without access to traditional banking services. The rise of decentralized finance (DeFi) promises to further expand access to financial services, including savings, lending, derivatives, asset management and insurance products.

This innovation, which empowers financial inclusion, should be allowed to flourish in a regulated environment where individuals and institutions are protected and suspicious activity is identified and reported. But how do you regulate these decentralized products without completely removing the core attributes of financial inclusion and decentralization?

Know Your Customer (KYC) procedures are a critical function to assess risk and a legal requirement to comply with Anti-Money Laundering (AML) laws that vary by jurisdiction. Most of these AML laws are instituted for good reasons: to deter criminals by making it harder for them to launder money obtained through illegal activities (e.g., human or drug trafficking, terrorism, etc.). AML regulations require financial institutions to know the true identity of their customers, monitor transactions and report on suspicious financial activity.

Why regulators see DeFi as a major problem

Given that decentralized applications (DApps) have no central, controlling entity, there is little clarity around who is responsible for ensuring DApps, including DeFi applications, adhere to existing laws and regulatory requirements. Let’s say a ransomware attacker uses a decentralized exchange (DEX) to launder their stolen funds. Who is responsible for reporting their transactions? Who goes to jail or pays the fine for a failure to report? The members of the decentralized autonomous organization (DAO) who govern the DApp? The developers who developed the code?

Though these questions remain mostly unanswered, global money-laundering watchdog the Financial Action Task Force (FATF) recently proposed guidelines making it clear that “The owner/operator(s) of the DApp likely fall under the definition of a VASP [virtual asset service provider] […] even if other parties play a role in the service or portions of the process are automated. […] The decentralization of any individual element of operations does not eliminate VASP coverage if the elements of any part of the VASP definition remain in place.”

This suggests that DApps (DEXs and other DeFi applications) will be responsible for complying with country-specific laws enforcing FATF, AML, and Counter-Terrorism Financing (CTF) standards.

Related: FATF draft guidance targets DeFi with compliance

The Bitcoin Mercantile Exchange (BitMEX) serves as an example: Though BitMEX is a centralized exchange, the enforcement actions taken against the platform’s founders by the Commodity Futures Trading Commission (CFTC) and the U.S. Department of Justice (DOJ) have implications for DeFi. The CFTC charged the operators with violating AML laws while the DOJ charged the founders with violating the Bank Secrecy Act (BSA). As a result, DeFi platforms offering financial products to United States residents would be required to register for appropriate operating licenses, with a failure to do so leading to potential enforcement action against identifiable founders/creators or operators.

Regulation vs. privacy: Are they really at odds?

Remember that regulations are currently aimed at businesses rather than individuals. So, your peer-to-peer transactions are not of great concern to regulators, unless you’ve laundered millions of dollars in cryptocurrencies and are funneling them through a crypto platform’s payment network. At that point, the exchange would be required to identify the transaction as suspicious and alert the regulatory body in their jurisdiction.

At this elevated phase of the investigation, if law enforcement requests certain personally identifiable information (PII) correlated with the transaction, the exchange is required to provide it. This is why centralized exchanges need users to complete KYC — so that they have this PII if it is requested. But, the vast majority of DEXs do not have fully compliant processes. Do DEXs need to dismantle the freedoms of our decentralized revolution to meet evolving compliance standards?

Related: Will regulation adapt to crypto or crypto to regulation? Experts answer

Putting users in control

By leveraging those selfsame values of user control and privacy that drew millions of people to crypto in the first place, we can empower users with the ability to selectively share PII when required and offer DApps a built-in identity layer that will help them achieve compliance goals. Though compliance is certainly more complicated in a decentralized environment, the effective use of digital identity to enable permissioned access to DApps is how we ensure the long-term viability of the greater crypto economy and financial inclusion for millions.

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.

Christopher Harding is the chief compliance officer of Civic. After spending a decade with leading accounting firm KPMG in various risk management roles worldwide, he joined digital banking firm Lending Club where he developed, formalized and implemented new risk governance structures and risk management processes.

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Bitcoin (BTC) Drops Below $60,000 But Correction Could Be Short-Lived



Bitcoin (BTC) Drops Below $60,000 But Correction Could Be Short-Lived

Bitcoin (BTC) is likely in the middle of a short-term correction that has taken it below $60,000. Following this correction, a rebound in price is likely. 

BTC decreased considerably on Oct 26 and created a bearish engulfing candlestick.  This is a type of bearish candlestick in which the entire upward movement from the previous day is negated with an equal or larger drop the next day.

The main support area is found between $52,400 and $53,350. This range is made up of a short (white) and a long-term (black) Fib retracement level and a horizontal support area. There is also a minor support level at $56,550, created by only the short-term Fib level. 

Technical indicators support the continuation of the decrease.

The MACD, which is created by short and long-term moving averages (MA) is falling. Currently, the MACD is still positive, indicating that the short-term trend is moving faster than the long-term trend. However, it’s decreasing, signaling that the MA is decelerating.

The RSI, which is a momentum indicator is also decreasing. It’s above 50, signaling that momentum is still bullish, but the decreasing RSI indicates that momentum is also losing strength.

BTC gets rejected

The six-hour chart shows that BTC is moving underneath a descending resistance line since the Oct 20 all-time high price. 

More recently, the line rejected the price on Oct 25 (red icon), initiating the current downward move. The rejection also coincided with the $63,650 resistance area.

As long as the descending line remains unbroken, the short-term trend is considered bearish.

Wave count

The short-term wave count shows that BTC is likely in an A-B-C correction, which is potentially contained inside a parallel channel. For a long-term wave count analysis, click here.

Currently, BTC is in the C wave, which is the final portion of the correction and after which a rebound in price is likely.

There is considerable support near $56,500 and a drop to those levels would give waves A:C an exact 1:1 ratio. Furthermore, it would coincide with the support line of the channel. In addition to this, the area coincides with the short-term Fib support outlined in the first section. 

For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.


All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Bitcoin drops $1K in five minutes in fresh dip below $60K



Bitcoin drops $1K in five minutes in fresh dip below $60K

Ethereum slips below $4,000 as an anticipated correction suddenly takes hold of crypto markets.

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Bitcoin drops K in five minutes in fresh dip below K

Bitcoin (BTC) fell sharply on Oct. 27 as $60,000 finally gave way to two-week lows.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Bitcoin bites into major buy wal

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD nearing $58,000 at the time of writing, hitting its lowest since Oct. 15.

The move follows multiple retests of $60,000, with Bitcoin now taking liquidity in a large support wall with $57,000 as its base.

Analysts, as Cointelegraph reported, were already prepared, with some data suggesting a deeper dive to a low as $50,000 would still preserve the overall bull trend.

#Bitcoin couldn’t break through $63.6K and tests the other side of the range.

Might be dropping another time if $61.6K can’t break and then I’m looking at $58K next. pic.twitter.com/HIsvhE5ZlZ

— Michaël van de Poppe (@CryptoMichNL) October 27, 2021

Commenting on the situation meanwhile, Charles Edwards, CEO of investment firm Capriole, blamed leveraged traders for sparking the volatility.

“Basically Bitcoin looks incredible here on most metrics, but leverage traders have gone out of control,” he argued.

“We won’t get sustainable price rises until that changes.”

Data showed $500 million being liquidated in a single hour across cryptocurrency.

Altcoins lose big on trend reversal

Ether (ETH) led a bleed from altcoins Wednesday, falling below its hard-won $4,000 support line.

ETH/USD 1-hour candle chart (Bitstamp). Source: TradingView

Related: Expanding ecosystem and $1.86B futures open interest back Solana’s $250 target

Several of the top ten cryptocurrencies by market cap saw daily losses of over 15%, including Dogecoin (DOGE) and Solana (SOL).

Shiba Inu (SHIB) was still largely in the green, up 23% on the day despite the market turnaround and continuing a wild month.

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Redditors cheer as GameStop assembles team of NFT experts



Redditors cheer as GameStop assembles team of NFT experts

“Future creators won’t just build games but also the components, characters, and equipment. Blockchains will power the commerce underneath,” Gamestop’s Head of Web3 Gaming job listing reads.

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Redditors cheer as GameStop assembles team of NFT experts

GameStop (GME) is assembling a team of blockchain and NFT experts to work on the firm’s upcoming NFT platform.

The firm’s GME stock is a cult favorite amongst retail traders as a result of the r/wallstreetbets and Robinhood saga earlier this year. On Reddit the r/Superstonk community boasts 659,000 members, and is dedicated to hosting business and stock discussions related to GME.

A post about GameStop’s job listings yesterday has received more than 10,000 upvotes at the time of writing, with many members posting bullish sentiments over GameStop’s latest move.

GameStop quietly unveiled a bare-bones website for its NFT marketplace in May. The site currently features a Nintendo Gameboy-style gaming console with an Ethereum logo, along with a message calling out for recruits to work on the platform.

Since then the firm has held its cards close to its chest, however on Oct. 25 it listed a total of eight jobs for crypto-friendly candidates, including three roles for NFT experienced software engineers, three jobs for product marketers and with two roles focused on Web3 based gaming.

One of the listings for the Head of Web3 Gaming job says that GameStop is looking for someone with experience with “Ethereum, NFTs and blockchain-based gaming platforms.” The firm has also hinted that there are some plans related to the Metaverse in the works.

“GameStop is looking for a unique individual who can help accelerate the future of gaming and commerce. In this future, games are the places to go, and play is driven by the things you bring. Future creators won’t just build games but also the components, characters, and equipment. Blockchains will power the commerce underneath,” the job listing reads.

Web3, billions in revenue, NFTs, Ethereum Layer 2. probably nothing. $GME pic.twitter.com/s3PiaqtWQl

— Chris SilvΞstro (@vestro) October 26, 2021

Related: Reddit may be preparing to launch its own NFT platform

Members of the r/Superstonk community were singing the firm’s praises yesterday, with “Triaspia2” calling it one of the “best job listings” they had seen, while pledging to buy more GME as it was a “bullish signal.”

Redditor “Donnybiceps” was equally bullish, noting that:

“NFTs are the future and people who haven’t gotten on board the GME train while knowing all these clues then you should be blaming yourself for not thinking this through.”

GME has had a volatile performance in October, going as low as $166 before bouncing to around $187 and subsequently crashing down again. However, according to data from Tradingview, the price of GME has still gained 2.8% this month to sit at $178 at the time of writing. The year-to-date gain for GME is a whopping 844%.

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