On 18th September, the Attorney General of New York released a report titled ‘Virtual markets Integrity Initiative Report’. The report, authored by Barbara D. Underwood, has created ripples in the cryptocurrency community by calling out digital exchanges and their fraudulent activities after conducting inquiries into their workings.
The first part of the report talked about the “Jurisdiction, Acceptance of currencies and fees”. The exchanges that came under the umbrella of the investigation are Bitfinex, bitFlyer, Bitstamp, Bittrex, Coinbase, Gemini, HBUS, itBit, Poloniex, and TIDEX.
The subsection of the report touched upon how exchanges need to adhere to certain principles and directives suggested by the Office of the Attorney General [OAG].
Some of the information that the exchanges need to divulge includes:
The geographical location of the base of operations, ie. The location of incorporation and the headquarters: This clause, according to the OAG, is mainly targeted at companies that have offshore branches. This allows the Office to monitor these branches after a string of companies had defected to other countries, thereby taking the power to act away from the OAG when shady activities are committed.
Four exchanges –Huobi, Binance, Gate.io, and Kraken– refused to respond to the survey conducted by the OAG. Coincidentally, these four exchanges have bases outside the United States.
The ambit of jurisdictions under which customers can trade on the exchange: The OAG watches over what currencies are chosen by the exchanges for trading, which can be U.S Dollar, Euros or any other fiat currency. Exchanges also need to notify the Office about the different type of cryptocurrencies that they trade in, for example, Bitcoin, Ethereum, XRP etc.
The other factor that the Office checked during the survey was the various safeguards put in place that makes transactions safer and scam-free. Methods such as Know Your Customer [KYC] approvals and identity verifications were the standards basis for the survey.
The amount of fees associated with maintaining an account and the trading parameters: This clause gives the OAG the authority to look into the fee architecture followed by the exchanges. Most exchanges charge customers on a pay per transaction model as well as several other sub charges that follow up after trades.
The Attorney General has gone ahead and stated that the survey on these factors was conducted keeping in mind customers who trade in digital assets. This includes details that surround the interchange of fiat currency and the full disclosure of all transaction details. This was especially noted in lieu of masqueraded fees that trip up users.
The Office of the Attorney General has also explicitly given a statement that targets the four exchanges that refused to respond to the survey. It said:
“Customers should understand that the four trading platforms that refused to participate in the OAG’s Initiative may not make their full schedule of fees available publicly, and that certain customers may receive preferential rates. Further, customers should be aware that those venues may not disclose certain fees in advance, and customers could find that transacting on those venues is more expensive than anticipated.”
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Bitcoin’s on-chain/off-chain valuation indicators the key point of focus as coin heads to $13,000
With the rise in Bitcoin’s price, the rest of the cryptocurrency market has followed suit by displaying a green trend across the board. In a recent series of tweets by popular cryptocurrency analyst Adam Tache, users were informed about the top Bitcoin on-chain and off-chain valuation indicators, derived from on-chain valuation models.
The analysis touched on the Mayer Multiple created by dividing the price by the all-important – 200 day moving average. The current average Mayer Multiple stands at a figure of 1.39, which may climb higher. Looking at previous figures, the normal Mayer Multiple figures stated that if the value shoots up to 2.4, then Bitcoin eventually retraces back to a comfortable 1.5. The Mayer Multiple is usually considered as the original indicator used to clock the valuation of Bitcoin.
Another major indicator discussed in the thread was the NVT Ratio invented by Willy Woo, Partner at Adaptive Fund. The indicator is used to calculate Bitcoin’s prominence or value in the cryptocurrency space by evaluating the amount transacted on the blockchain as a “proxy for investment flow and bear and bull market cycles.”
At the moment, the NVT ratio for Bitcoin is in an abnormal region compared to the start of previous bullish patterns. The NVT ratio was above the “bear market” separator, which meant that the cryptocurrency was overbought. When Bitcoin is overbought, it usually means that the buying pressure is much higher than the selling pressure. Adam Tache opined,
“NVT signaling overbought is likely due to a number of factors — namely the proliferation of exchange-based, purely off-chain txs driving short-term price action.”
The analysis also pointed out the liveliness of the Bitcoin indicator created by Tamas Blummer. The indicator showed the inverse count of lost or ‘HODLed’ Bitcoin, while stating that when the ratio increases, long-terms holders of the cryptocurrency decrease their positions. The indicator conveyed accumulation of Bitcoin when the ratio decreased.
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