Tag: CRYPTOCURRENCY INVESTMENT

2022 was a tough year for crypto with a decline in venture

by Blockchain News

The year 2022 will go down in history as a challenging one for cryptocurrencies, as the gloomy market circumstances were reflected by a decrease in the amount of venture capital (VC) financing pouring into the blockchain and cryptocurrency industries.

A analysis by Blockdata reveals that there would be consistent decreases in financing on a quarterly basis through the year 2022. This comes after a period of growing venture capital investing into the larger Web3 field through 2021.

Blockdata closed out the final quarter of 2022’s analysis of the value of venture capital financing by noting a 34% decrease from the previous quarter’s total. The data was obtained from CB Insights. When compared to the first and second quarters of the year, the third quarter’s results were much worse, falling by 67% and 53%, respectively.

After reaching a record high of $11 billion in investments and 692 agreements in the first four months of 2022, the ensuing decline in venture capital investment occurred quarterly after that point.

Blockdata identifies a number of reasons for the decrease in venture capital financing for cryptocurrency and blockchain-related projects in 2017. The collapse of the Terra ecosystem, which cost $60 billion and occurred in May 2022, is noted as a trigger event that led to the eventual insolvency of bitcoin lending businesses Three Arrows Capital and Celsius.

The implosion of FTX in November 2022 contributed further to the volatility that permeated throughout the space, while the global macro conditions in capital markets, which were affected by rising interest rates and inflation, also played a role in the decline of investments made by venture capitalists.

As a direct consequence of this, venture capitalists only contributed $3.7 billion to financing during the fourth quarter of 2022. This is a 61% decrease compared to the $9.6 billion that was contributed during the same period in 2021. The overall capital received by blockchain and cryptocurrency firms fell by 11% annually, from $32 billion to $29 billion, bringing the total to $29 billion.

A good conclusion that Blockdata notes is the fact that the number of trades in 2022 is expected to increase by 35% compared to 2021. According to the company, there has been a slowdown in venture capital expenditure, but investors are still eager to fund blockchain-based technology, apps, and businesses. This is despite the fact that venture capital spending has been on the down.

According to the findings of the research, investments in venture capital are gradually moving toward “non-volatile ideas.” These innovations include cross-chain bridges, payments and remittances, loans, decentralized autonomous organizations, asset management, and digital identity management.

The fourth quarter saw a number of significant venture capital investments. Amber Group was successful in obtaining the most money, bringing in $300 million during a Series C round in December 2022. This was done in order to combat drawdowns of certain goods that were impacted by the FTX scandal.

During the fourth quarter, there were a total of nine “blockchain mega-rounds,” each of which resulted in the receiving of more than $100 million in investment. Only Uniswap and Celestia, with respective market values of $1.7 billion and $1 billion, were able to achieve the coveted “unicorn” designation during the fourth quarter of the previous year.

Due to their participation in thirteen separate fundraising rounds for blockchain and cryptocurrency businesses, Coinbase Ventures has been recognized as one of the most active corporate venture capital investors until 2022.

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Scammers Target Australians in Cryptocurrency Call Center Scheme

by Blockchain News

It has come to light that people of Australia are the principal targets of a sophisticated multinational network of con artists that operate out of call centers focused on bitcoin. The network is believed to have originated in China. The heart of operations for the network may be found on the continent of Australia. It is commonly believed that the administration of this network is being handled by criminal syndicates that have their headquarters in Israel.

As part of a large-scale operation, law enforcement officers from the countries of Serbia, Germany, Bulgaria, and Cyprus carried out house searches in a total of eleven locations across the country of Serbia, including four call centers. These locations included the country’s capital city of Belgrade. Officials from the island nation of Cyprus were responsible for the operation’s coordination. During the course of this operation, they discovered evidence showing that Australians were among the citizens of all of the other countries who were exposed to the highest degree of examination. This information suggests that Australians were among those subjected to this level of inspection. The material was made available to the general public on February 23 via the dissemination of an article that had been authored by The Australian and published on that day.

Fifteen individuals and about 1.46 million dollars’ worth of cryptocurrencies were seized into custody as a direct result of the operations, which were carried out as a direct consequence of the acts.

It would seem that con artists who work out of these contact centers are using advertisements on social media in an effort to persuade fresh victims into falling for their schemes. They achieve this goal by ensuring prospective investors that any investments they make would result in a significant return on the cash that they have invested. The findings of the research reveal that individuals do engage in this activity, which testifies to the notion that it is prevalent since it indicates that people do participate.

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LinksDAO and Spey Bay Golf Club

by Blockchain News

LinksDAO, a golf business run by a decentralized autonomous organization, is considering making a bid to buy the recently placed up for sale Spey Bay Golf Club in Scotland, which is estimated to be worth approximately $900,000.

After a few weeks of informal discussion, the proposal vote was officially opened on February 20 by LinksDAO, which describes itself as a “global group of golf enthusiasts” with the goal of building the “world’s greatest golf community.” This event followed the official opening of the vote on February 20.

It would be the very first time that the DAO has ever purchased a golf course.

At the time this article was written, more than 88 percent of the 4,100 LinksDAO tokenholders had already voted in support of the proposal. The voting period will officially end on February 22 at 12:00 p.m. Eastern Time.

The proposal stated that the LinksDAO acquisition committee will meet with the relevant parties required to construct a “compelling offer” for the purchase of the club “with the full intent of successfully purchasing the golf course” in the event that the final tally remains in favor of the purchase.

The authors of the proposal, who identified themselves as “Bez,” “Jim,” “cbruce,” and “nickwalkermsu,” explained that even though the majority of the DAO’s research efforts have been focused on locating an appropriate golf course purchase in the United States, “this listing was too special to ignore.”

“During the course of our hunt for a golf course to buy, we came across a potentially advantageous piece of real estate in Scotland known as the Spey Bay Golf Club. The purpose of this vote is to decide whether or not we should proceed with making an offer and working toward purchasing the course.

The writers also said that the course is “playable now,” and they mentioned that the course’s high ceiling in comparison to its inexpensive price makes it a worthwhile investment.

According to the authors’ explanation, “even a price that is quadruple the ‘recommended price’ would be lower than most subpar courses we have reviewed so far in the United States.” 

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SEC to Keep Close Watch on Crypto Brokers and Advisers

by Blockchain News

This year, cryptocurrency brokers and financial advisors that provide or provide advice regarding cryptocurrencies will be brought within the jurisdiction of the United States Securities and Exchange Commission (SEC).

In a statement released on February 7, the Division of Examinations of the Securities and Exchange Commission (SEC) outlined its priorities for the year 2023. The statement suggested that brokers and advisers dealing in cryptocurrency will need to exercise increased caution when offering, selling, or providing recommendations regarding digital assets.

It was said that SEC-registered brokers and advisors would be extensively monitored to see whether or not they followed their “respective standards of care” while offering financial advice, making recommendations, or referring clients to other professionals.

The Securities and Exchange Commission will also investigate whether or not these organizations “routinely” evaluate and update their processes in order to guarantee that they adhere to “compliance, transparency, and risk management policies.”

This announcement was very similar to the priorities that were released by the SEC in 2022; however, it appears that this year the regulator is placing more emphasis on the standards of care and practices by brokers rather than their consideration of the unique risks presented by “emerging financial technologies,” which was highlighted in 2022.

The most recent statement was issued after a report indicated that the SEC has been examining registered investment advisors that may be delivering digital asset custody to their customers without necessary credentials. The article was published almost two weeks after the most recent statement.

According to a report from Reuters, the investigation being conducted by the SEC has apparently been ongoing for a number of months but has been elevated to the top of the priority list after the failure of the cryptocurrency exchange FTX.

The Investment Advisers Act of 1940 stipulates that in order for investment advice businesses to be eligible to provide custody services to customers, the firms must also comply with the custodial precautions that are outlined in that act.

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SEC Probes Investment Advisers Offering Crypto Custody Without Proper Qualification

by Blockchain News

The United States Securities and Exchange Commission (SEC) has begun an investigation into traditional financial advisors on Wall Street to determine whether or not these advisors grant custody of digital assets to their customers without having the necessary qualifications. The purpose of this investigation is to determine whether or not these advisors grant custody of digital assets to their customers.

According to an article that was published by Reuters on January 26, which cited “three sources with knowledge of the matter,” the investigation that is being conducted by the SEC has been ongoing for a few months, but it appears to have picked up speed after the collapse of the cryptocurrency exchange FTX.

According to the sources, the Securities and Exchange Commission (SEC) has never disclosed to the general public the inquiries that it is presently doing since the investigations that it is currently conducting are confidential.

According to a report by Reuters, the majority of the work that the SEC is putting into this investigation is focused on determining whether or not registered investment advisors have complied with the laws and regulations regarding the custody of client cryptocurrency holdings. This is the primary focus of the SEC’s investigation into whether or not registered investment advisors have complied with the laws and regulations regarding the custody of client cryptocurrency holdings. The SEC is conducting an investigation into registered investment advisers to see whether or not they have complied with the rules and regulations that govern the custody of client bitcoin assets. This is the major focus of the inquiry.

To be able to continue to comply with the custodial protections outlined in the Investment Advisers Act of 1940 and to be able to provide custody services to customers, investment advisory firms are required to be “qualified” under the legislation. This qualification is a prerequisite for providing custody services. This regulation is in place to ensure that consumers of investment advice businesses have access to safe and secure custody services.

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ARK Invest CEO: Crypto Assets Will See Huge Turn

by Blockchain News

The chief executive officer of the cryptocurrency and technology investment business ARK Invest predicts that this year will see a significant shift in the value of crypto assets due to a decline in inflation and a shift in monetary policy by the Fed. Cathie Wood, CEO of ARK Invest and Chief Investment Officer, provided an assessment of the macroeconomic forecast in a video blog post for the firm that was published on January 23.

She said that there were several signs pointing to reduced inflation, which “suggests that the Fed should pivot shortly.” She was referring to the recent pivot that the Fed made.

As the macroeconomic outlook improves and financial constraints are eased, this would be positive for risky assets such as cryptocurrency.

She also said that the company anticipates inflation would decrease to the 2% goal level set by the Fed.

Nevertheless, Wood anticipated that inflation may go below this level and perhaps into negative territory since the money supply has been declining. This is due to the fact that the money supply has been falling.

She said that the market is now awaiting a signal from the Federal Reserve, and she went on to say that “we expect it will happen in the first half of 2023.”

She said that the portfolios that ARK Invest manages ought to perform rather admirably in the event that interest rates are set to fall below forecasts.

ARK operates not just a cryptocurrency asset fund but also a blockchain venture investment fund, a disruptive innovation fund, and six active exchange-traded funds that are centred on technology and fintech (ETFs).

While this was going on, ARK Chief Futurist Brett Winton was discussing artificial intelligence (AI), and he said that advancements in this field will speed up in 2023.

Additionally, he predicted that crypto assets will see a significant change for the better this year. ” Public blockchains, cryptocurrencies, and crypto assets, all of which are going through a turbulent moment right now, are likely to become even more distinguished due to their scarcity in an era of plenty.”

He went on to say that whenever there is a shift in the macro environment and the Federal Reserve “changes its spots,” there is a greater possibility for “growth and value realisation inside the venture and public market area.”

Wood came to the conclusion that the recent technical advances will lead to deflation, which in turn would “create a boom in the goods and services linked with this innovation.”

The most recent action taken by ARK Invest was to realise a profit on a portion of its holdings in Grayscale Bitcoin Trust (GBTC) and then load up on 320,000 shares of Coinbase (COIN), which are now valued at around $17.6 million.

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Living on a volcano: The outlook of El Salvador’s crypto mining industry

by Cointelegraph

El Salvador, the first nation to adopt Bitcoin (BTC) as legal tender, has recently announced the relaunch of its wallet app Chivo, which is supposed to patch the previous version’s stability and scalability issues. The update is welcomed news for the Central American country’s crypto experiment, which faced some hurdles and harsh criticism over the last few months. While much of the observers’ attention has been focused on aspects such as retail adoption of crypto and geopolitical implications of Bitcoin’s legal status in El Salvador, the progress of the nation’s mining industry toward achieving President Bukele’s moonshot vision has been less discussed lately. Here’s what the current prospects of El Salvador’s mining industry look like.

“Endless” possibilities

In October 2021, when El Salvador had already become the world’s first country to adopt Bitcoin, one of its main energy sector officials shared his optimistic view on the prospects of crypto mining in the country.

President of the state-run Lempa River Hydroelectric Executive Commission Daniel Alvarez told journalists about the “endless possibilities” to produce energy via hydroelectric, solar, wind and tidal power plants with “willpower” being the only component needed to succeed. “We don’t spend resources that contaminate the environment, we don’t depend on oil, we don’t depend on natural gas, on any resource that isn’t renewable,” he also remarked.

El Salvador’s current energy capacity, however, is rather modest. Reportedly, it has only two geothermal power plants — one at the base of the Tecapa volcano and one in Ahuachapan — that already contribute to Bitcoin mining. Together, they generate slightly under 200 megawatts of electric power and only one of them allocates 1.5 megawatts — the only known figure to date — to Bitcoin mining. Hence, the El Salvador leadership’s ambitions would clearly demand massive developments of new facilities. It looks like they definitely have some ideas in that department.

The Bitcoin city megaproject

In November 2021, El Salvador’s President Nayib Bukele announced his plans to build a new Bitcoin city. The settlement is to be constructed in a ‘“coin shape” at the base of the Conchagua volcano whose geothermal energy would be used to mine Bitcoin. In Bukele’s vision, it should become a perfect combination of glittering neon lights and near absence of taxation:

“Residential areas, commercial areas, services, museums, entertainment, bars, restaurants, airport, port, rail — everything devoted to Bitcoin.”

Keeping up with the regional traditions, this ambitious construction project is to be backed by a bold financial scheme — $1 billion in bonds — half of which would go directly to city construction and the other one would be invested in Bitcoin. The bonds are supposed to last 10 years and pay 6.5% annual interest to their holders. Any investor with a bond share upwards of $100,000 ould qualify for Salvadoran citizenship.

The scheme is backed up by major crypto industry players. Canada-based blockchain technology enterprise Blockstream is responsible for issuing the bonds in the form of tokenized securities on Liquid blockchain while Bitfinex would host them on its platform. According to Samson Mow, chief strategic officer of Blockstram, by the end of the bond’s 10th year, its annual percentage yield will sit at 146% level, as, according to his forecast, BTC price would reach the $1 million mark within five years. That would make El Salvador “the financial center of the world” and “the Singapore of Latin America.”

The many challenges

There is a host of issues accompanying the Salvadoran Bitcoin turn: political backlash against President Bukele and his initiatives, pressure from the IMF and other international actors and the early troubles of the Chivo app. When it comes to plans of massively beefing up the country’s mining infrastructure, there is a number of stumbling blocks as well.

The Bitcoin city announcement saw the existing fiat-denominated El Salvador bonds plummet and raised a number of questions from investment experts, the main one being, “Why buy Bitcoin-backed Salvadoran bonds if you could just buy Bitcoin?” Some pointed out that the country already has a record of failed charter city plans, as well as the fact that the Conchagua volcano, which is supposed to power the city and its BTC mining operations, has recently shown some noticeable seismic activity.

Worse, still, some critics argue that El Salvador’s overall energy profile does not offer great crypto mining potential. One concern is that the country still has to import around 20% of its energy mainly from Honduras and Guatemala. According to some estimates, current industrial energy rates in El Salvador range from $.13 to $.15 per kilowatt-hour while the global average price of Bitcoin mining is around $.05 per kilowatt-hour.

The data from the recent study by DEKIS Research group at the University of Avila ranks El Salvador as number 73 in the global crypto mining potential ranking — while 35% of energy comes from renewable sources. For example, in the United States, this proportion stands at around 7.5%. The levels of national R&D expenditure, human capital index and energy prices put El Salvador closer to the least sustainable countries for mining operations.

Pivoting to renewables

Despite some obvious limitations, the notion of El Salvador’s “endless possibilities” when it comes to mining is not a mere bravado. Like many other Latin American nations, El Salvador possesses a hefty, if yet unrealized, the potential for renewable energy. Talking to Cointelegraph, Philip Ng, vice president of corporate development at green data centers provider Soluna Computing, emphasized the global trend in the direction of making renewable energy more accessible, also noting that it should benefit countries like El Salvador:

Renewable energy is now astonishingly affordable, with the cost to build wind falling 72% since 2009 and solar falling 90% over the same period […] Renewable technologies offer a profound opportunity for South American power markets. Renewable energy assets can be built at a significantly smaller scale when compared with conventional energy. The result is that grids no longer face large transmission and infrastructure buildout costs when trying to add cheap and clean power.

Ng offered the example of Chile, whose recent investments in renewable energy have allowed the country to transition from a net importer of carbon fuels to an exporter of renewable energy. A crucial step in triggering such transition is demand, which is not an easy thing to grow in countries with relatively small populations.

One solution could be to establish a “consumer of last resort,” or a layer of users that would ensure that power producers have a diversified revenue stream and don’t have to rely solely on the utilities. Bitcoin miners could become such a class of consumers. Establishing such an arrangement would also mean that power producers never have to curtail their excess production. A case in point is Kenya, where hydroelectric plants share excess renewable energy with crypto mining facilities.

Responding to Cointelegraph’s request, a Blockstream spokesperson said that an announcement regarding the status of El Salvador’s Bitcoin bonds project will follow at some point in Q1 2022. It is yet to be seen if Nayib Bukele’s exotic aspiration to build a coin-shaped city at the foot of a volcano will materialize in a pragmatic strategy that attracts foreign investments. But, even today it is clear that getting ahead in the renewable energy race will be vital for the success of El Salvador’s massive crypto mining projects.

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Indonesian regulator takes cue from Islamic NGOs, bars crypto sales for institutions

by Cointelegraph

Indonesia’s financial watchdog the Otoritas Jasa Keuangan (OJK) warned financial institutions in the country against offering or facilitating crypto-asset sales.

On Tuesday, the official Instagram account for OJK posted a warning against the growing number of crypto Ponzi schemes and risks of crypto investments owing to the market’s volatility. The official post also quoted the chairman Wimboh Santoso who said financial institutions are strictly prohibited from offering crypto sale services in any form. The official post read:

“OJK has strictly prohibited financial service institutions from using, marketing, and/or facilitating crypto asset trading.”

The current warning against crypto investments and prohibition of crypto trading services for financial institutions comes on the heels of several calls for a ban on crypto use from the country’s leading Islamic non-government organizations (NGOs). As Cointelegraph reported earlier, a total of three Islamic organizations have issued a fatwa against crypto use by Muslims, deeming it haram.

In October 2021, major Islamic organization the Nahdlatul Ulama deemed crypto haram due to its allegedly speculative nature. A month later, the Indonesian Ulema Council, declared crypto haram as a transactional tool. However, it noted that cryptoassets can be used as an investment tool if they abide by Sharia tenets. Muhammadiyah became the third Indonesian Islamic organization to issue a fatwa against cryptocurrency use as a payment and investment tool.

Indonesia over the years has grown to become one of the leading crypto economies in Asia. The total crypto transaction reached 859 trillion rupiahs ($59.83 billion) in 2021, up from 60 trillion rupiahs ($4.18 billion) in 2020. 

Related: Vibe killers: Here are the countries that moved to outlaw crypto in the past year

Crypto assets are regulated as tradable commodities in Indonesia, governed by the trade ministry and the Commodity Futures Trading Regulatory Agency. The ministry is currently working on setting up an independent market for digital assets called the Digital Futures Exchange, expected to be launched in the first quarter. However, crypto as a form of payment tool is illegal in the country.