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Bitcoin Lightning node and FinCen: ‘It’s just silly. Honestly, people, stop with this stuff,’ says Legal Officer




Bitcoin Lightning nodes & FinCen Guidance: 'It's just silly. Honestly, people, stop with this stuff,' says Legal Officer
Source: Unsplash

The Financial Crimes Enforcement Network [FinCen] issued its guidance on the ‘Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies’ on May 9, 2019. The guidance elucidates how money transmission regulations apply to a business involved in providing convertible virtual currency services. This includes P2P exchanges, wallets, hosted and un-hosted wallets providers, multi-sig wallet providers, kiosks, providers of anonymity-enhanced convertible virtual currencies, and more.

This created a lot of buzz in the crypto-verse, with several influencers speaking about the impact this would have. Emin Gun Sirer was one of them and stated that this was “mostly bad news”. Others included the Chief Legal Officer of Blockchain, Marco Santori, who went on to explain that this would have “major implications for wallets, exchanges, ICO issuers, dApps, DEXs”.

Marco Santori tweeted,

Further, the Legal Officer spoke about the guidance’s stance on wallets, stating that non-custodial wallets were not going to be considered as money transmitters in the United States, adding that they would be unregulated. The officer said,

“This is an historic day for @blockchain, @Ledger @BRDHQ , @EdgeWallet and all the rest. I’ll confess to personal delight here, too […] Why? Because, even if many crypto users rely on their availability, they do not *control* funds any more than an operating system or a mobile device does.”

Santori also spoke about what the guidance meant for exchanges. He stated that usually, banks send customer’s personal identifying information to the receiving financial institution when the customer makes a transfer. He added that this was for “backup purposes”, a way for the FinCen to gain access to data even if “one of the banks goes bust”. The Legal Officer said,

“FinCEN says crypto exchanges have to do this too […] How is the exchange supposed to know whether it is for another FI or just a noncustodial wallet? There is no real way to implement this without an interstitial (mandatory?) layer over the core network, just so that FIs can message each other […] Anyway, that’s a nightmare.”

Further, Santori also spoke about the most controversial topic surrounding the guidance, Lighting nodes and money transmitter license. On this, he stated that FinCen did not mention anything pertaining to the Lighting nodes nor will they. He said, “It’s just silly. Honestly, people, stop with this stuff.”

However, the guidance did shed light on its regulatory stance on Decentralized Exchanges [DEX].

This was followed by Satori explaining its impact on ICOs and developer applications, stating that according to FinCen, ICO sellers could fall under money transmitter regulations in a few situations. Importantly “only if they actually transmit money”. He said,

“FinCEN mostly speaks in jargon here so I’ll boil it down: software development? not regulated. *deploying* software? still not regulated deploying software that transmits money? Very much regulated Not super helpful but as good as their guidance gets.”

To this, Riccardo Spagni, the lead developer of Monero [XMR], said,

“FinCEN comes out swinging, and confirms that Bitcoin, Monero, and others are safe in developing and deploying cryptocurrency software.”

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Priya is a full-time member of the reporting team at AMBCrypto. She is a finance major with one year of writing experience. She has not held any value in Bitcoin or other currencies.


JP Morgan: Big banks stand corrected as Bitcoin rally past intrinsic value; admits current surge mirrors 2017 rise




JP Morgan: Big bank stands corrected at Bitcoin rally past intrinsic value; admits current surge mirrors 2017 rise
Source: Pixabay

Big banks are riding a FOMO wave as the Bitcoin bull-run is just beginning. Spearheaded by the changing colors of JP Morgan, which recently forayed into the digital assets world, the banking elite is now suggesting that their initial stance on Bitcoin and the larger cryptocurrency world might have been off.

A recent chart by JP Morgan shows the current BTC price veer upwards chiding the “intrinsic value” the big bank placed on the virtual currency.

Based on the article by Bloomberg, the price of the coin would reverse towards the end of December 2018 and then make marginal gains until May 2019, all under the $5,000 mark. In reality, the BTC price, after dropping to “rock bottom” at just above $3,100 in early December 2018, edged upwards.

Several spurts of growth were seen in early January and February, prior to a massive April ascendance. On April 2, Bitcoin did away with the bank’s value mode and amassed a daily gain of over 15 percent, fuelling its current rise. Breaking the $5,000 ceiling in the process, which was pegged to remain intact well into May 2019, the king coin is now almost $3,000 ahead of the mark and is not looking to stop.

Source: Bloomberg

It should be noted that JP Morgan’s “intrinsic value” is calculated on the basis of the marginal cost of production, electricity prices, and hash rates. This model does not take into account, at least on absolute terms, the anticipatory effect of the 2020 halving, which, according to a slew of analysts is the behind the price rise.

Nikolaos Panigirtzoglou, the MD in the Global Market Strategy team at JP Morgan stated that Bitcoin breaking through its “intrinsic value” showed signs of mirroring its 2017 bull run. He evidenced this move by comparing the pre-December 2017 slump to the one seen prior to the current bullish swing.

The analyst added:

“Over the past few days, the actual price has moved sharply over marginal cost. This divergence between actual and intrinsic values carries some echoes of the spike higher in late 2017, and at the time this divergence was resolved mostly by a reduction in actual prices.”

With the analyst admitting that the imparting of an “intrinsic or fair value” to a cryptocurrency, much less a volatile one like Bitcoin, is a “challenging” ordeal, a mere JP Morgan acknowledgement of a Bitcoin bull-run is a remarkable sign for the digital assets industry, especially given the bank’s and its CEO Jamie Dimon’s Bitcoin-bashing in the past.

Mati Greenspan, senior market analyst at eToro attested to the same, adding a key point that JP Morgan failed to take into account in their calculation. He stated:

“Great to see JPM finally admitting that Bitcoin has intrinsic value.
Now wait till they understand that miners who run a surplus tend to begin hording.”

Despite Bitcoin slumping at press time, recording a 1.23 percent decline against the dollar, the prospects look positive. After recording a massive gain on 19 May, briefly surging past $8,000 for the second time in a week, Bitcoin created a High-Low [HL] at $7,100, which many analysts look at with glee.

This HL immediately following last week’s pull-back caused due to post-Consensus bears, a Bitstamp sell-order and market correction showed the king coin’s bullish persistence and can even be a foundation for a $9,000 ascendance, defying any “intrinsic value” expectations.

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