Cryptocurrency market recovery stalled. Bitcoin and all major altcoins are mostly range-bound during early Asian hours. The market is a mixture of red and green, as there are no clear price patterns at the moment. The total cryptocurrency market capitalization settled at $196 billion unchanged from this time on Tuesday; an average daily trading volume decreased to $66 billion. Bitcoin's market share settled at 66.2%.

BTC/USD has settled above $7,000 to trade at $7,070 at the time of writing. The first digital asset has stayed in a tight range since Tuesday as the recovery stalled on approach to $7,350 resistance. Currently, the nearest support comes at psychological $7,000, reinforced by the upper line of 1-hour Bollinger Band. A sustainable move above this barrier will trigger further sell-off towards $6,800.

Ethereum is hovering above $145.00, off the intraday high registered at $148.90. The second-largest digital asset with the current market capitalization of $16 billion, has lost over 1.3% since the beginning of the day and stayed unchanged in recent 24 hours. ETH/USD is supported by $144.00 with the lower line of 1-hour Bollinger Band located below this handle. An initial resistance is created by the daily high and upper line of 1-hour Bollinger Band on approach to $149.00

Ripple's XRP topped at $0.2242 on Tuesday and retreated to $0.2180 by press time. SMA100 (Simple Moving Average) 1-hour limited XRP's recovery and pushed in back within the short-term downside trend. While the coin has gained nearly 1% on a day-to-day basis, it is still down as compared to the levels registered at the beginning of the day.

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The Cryptocurrency Market Update: Bitcoin sits above $7,000 as the trading range is narrowing - FXStreet

Ethan Lous book, Once a Bitcoin Miner, is forthcoming from ECW Press.

In the wake of the latest B.C. bitcoin scandals, I talked to the executive director of the provincial securities commission, Peter Brady, who warned investors to be careful because, sometimes, there is nothing the regulator can do.

Then I talked to a 62-year-old technology illiterate named Keith who reached out because he needed someone to help him buy bitcoin, face to face. I later learned someone I know had already tried to help him, with little success. If Keith had contacted someone malicious and there are many he could have easily been led into something shady and ended up with no recourse.

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Those two conversations are jarring when juxtaposed and underscore a growing problem, particularly in the West. In just over a month, the B.C. Securities Commission has issued three statements on separate cryptocurrency matters, including an announcement of an active investigation, a departure from usual practice.

Therein lies a quagmire: What do you do when the sector is hard to police, but shady operations are easy to set up and the world is filled with clueless victims? A heavy hand is bad for innovation, but so is lawlessness. And innovation, believe it or not, is something in which Canada had a head start. It would be a travesty to see it eroded by the Wild West.

Cryptocurrency has become its own multibillion-dollar industry and enriched many, and its barely 10 years old. Everyone in it, even the most knowledgeable, had come from somewhere else. It is a land of new beginnings, where anyone can rise high. But that frontier also attracts the uninitiated, seeking fast riches and the snake-oil salesmen and slipshod wildcatters seeking the same.

The scene is particularly rife in the coastal British Columbia, home to the worlds first bitcoin ABM, the first registered cryptocurrency investment firm in the country and numerous listed blockchain companies. The sector has an oversized presence there, with great potential. But that also amplifies the bad actors.

The B.C. commissions first statement warned about two products that used the cryptocurrency name, but resemble a pyramid scheme. Two other statements came on the same day this month, about the trading platforms ezBtc and Einstein Exchange, accused of owing millions to users. Those bring to mind the collapsed QuadrigaCX, also from Vancouver, whose users claim more than $200-million.

There is no solution in sight. There are new rules proposed, but they deal only with exchanges and are crafted by securities regulators with complicated requirements. Observers have questioned whether it is even their business, given bitcoin is widely considered to not be a security. Some say the rules are so onerous, they will chase exchanges away.

Self-regulation has long been talked about. But if there was the will, it would have happened already. Cryptocurrency has a sharp individualistic bent and the community has rarely agreed on anything.

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In that vacuum come bandits and charlatans and the wrong sort of attention that ripples. It affects the programmer who hesitates when considering blockchain work. It affects the bank that refuses accounts to cryptocurrency businesses. It affects the misguided city that considered banning bitcoin ABMs.

Outside cryptocurrency circles, many do not know and inside, many forget that the biggest players in the sector have strong Canadian roots. Ethereums ether, the second-most valuable cryptocurrency, was started by a Torontonian. Binance, the worlds biggest exchange, was founded by a Vancouverite.

Neither has a significant presence in Canada, with Binance never having had any to begin with. That is not directly because of the lawlessness, whose symptoms only recently showed to the wider public. But the resulting disrepute, unnecessary and undeserved, stands in the way of what would keep future Ethereums and Binances in this country.

Canada has all the potential to be the leading hub for cryptocurrency and blockchain, its name invoked in the same way Switzerland is for watches. The powers that have the ability to make it so, to craft permissive policies. But when all they see is scandal and turmoil, they question whether it is worth the trouble.

It may be chicken-and-egg. While exchanges serving Canadians may be tied to the land, cryptocurrency itself is borderless. Do firms flee because there are no permissive policies? Or are there no policies because firms have fled?

Whatever the case, the path to more innovation begins with the disparate parties coming together to pay some serious attention to this space and the cleansing of a temple that, to many outside, has been flushed thick with the scent of thieves.

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It begins in the Wild, Wild West.

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Cryptocurrency policies must combat snake oil without stifling innovation - The Globe and Mail

South Korea is showing that it isnt overly difficult to create the necessary framework for the cryptocurrency industry. According to the Korea Joongang Daily, government officials are closer to legitimizing Bitcoin, thanks to the passage of a bill that creates the foundation for virtual assets in the country.

The South Korean National Assembly, through its national policy committee, has approved legislation that would classify digital currencies as digital assets, paving the way for them to receive legal status in the country. The move is seen as a positive step forward and the Financial Services Commission (FSC) agrees that the designation will allow for more transparency and investments in crypto.

As legitimate assets, businesses dealing with crypto will be obligated to adopt the same anti-money-laundering regulations that exist for other types of currencies. Bitcoin would also be governed by the same rules that are currently in place for other financial transactions, allowing the digital currency space to move forward on a much larger, regulated scale.

The legislation asserts that all crypto-related businesses will have to register with, and report to, the Financial Intelligence Unit of the FSC. Any entity that doesnt follow these requirements, or that doesnt acquire an Information Security Management Systems permit or that allows falsification of identification related to accounts, will not receive approval to operate. That alone will have its own consequences.

However, there will also be consequences if any entity doesnt create internal oversight policies and procedures that are consistent with standards established by the Financial Action Task Force. The FATF is taking a strict stance on crypto transactions, just like it has already done with other types of financial transactions, and will hold the industry to higher standards than what have previously been allowed.

The new bill in South Korea isnt quite ready to be implemented, although its getting there. The next step is for it to be approved by the state judiciary committee and, if that happens, the National Assembly as a whole. If it makes it through all the steps, it would officially become law one year later.

South Korea is one of a handful of countries that were quick to realize the importance, and the reality, of digital assets. It has been leading the way toward more global acceptance while other countries, such as the U.S., have been almost completely opposed to seeing crypto become the norm. Those countries who have fallen behind are now going to have to catch up with the rest after coming to the realization that crypto is here to stay and will inarguably be a major part of a global financial system.

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Cryptocurrency steps closer to legalization in South Korea - CoinGeek

On November 5, 2019, Vietnam-based cryptocurrency exchange VinDAX was hacked, losing half a million U.S. dollars worth of funds spread across 23 different cryptocurrencies.[1] The VinDAX hack marks the latest in a series of cryptocurrency exchange hacks and data breaches that have taken place this year, and is part of a larger and growing trend of digital currency heists that have occurred since Bitcoin, the first cryptocurrency, was introduced in 2008.[2] In July of this year, Japan-based cryptocurrency exchange Bitpoint was also hacked, losing about $32 million in cryptocurrency,[3] and earlier this year, hackers stole $16 million worth of cryptocurrency from New Zealand-based Cryptopia.[4] Losses from cryptocurrency hacks this year alone are reported to have totaled around $1.39 billion worth of assets.[5]

Background

Cryptocurrencies are built on a technology called blockchain a distributed ledger technology in which transactions are recorded across a network of peer-to-peer computers. Since the most well-known cryptocurrency, Bitcoin, together with the underlying blockchain technology, was developed by one or more developers using the pseudonym Satoshi Nakamoto and published in a white paper in 2008,[6] blockchain has been praised for its intrinsic security, as well as qualities that allow cryptocurrency holders to remain largely anonymous. But the same features that have made blockchain an innovative financial technology also make cryptocurrencies an attractive target for theft; once stolen, the nature of blockchain technology makes it extremely difficult to trace the culprits and track down the stolen assets.

Cryptocurrencies generally are based upon a system that uses a public digital key, which is used for identification (similar to a bank account number), and a private digital key (similar to a personal identification number to access that account), which is used for encryption and authentication. The other component of the system is the wallet, which stores cryptocurrencies. Each wallet has a unique address, which is used for sending and receiving funds. A user starts with an address, which in turn generates a private key and a public key using an algorithm; the private key grants the user ownership of the funds at a specified address. When sending funds, the system software identifies the transaction with the private key (without disclosing it), which validates for the benefit of all on the relevant network the authority of the user to transfer the funds from its address (which it does by generating a unique digital signature for every transaction a user undertakes). The public key, which is the public address for the wallet (in effect the address is a representation of the public key) and is intended to be shared, is derived from the private key (that is, the private key generates the public key). At the heart of the cryptography system is the one-way aspect of these components: the public key cannot be derived from the address, and the private key cannot be derived from the public key.

Experts say that one of the safest ways to store cryptocurrency is by using what is known as a hardware wallet.[7] This is an off-line device like a thumb drive, in which a users private keys are stored. These devices often require passwords, backed by sophisticated encryption systems, and multi-factor authentication procedures in order to gain access to the private keys stored on them. (These devices do not store cryptocurrency assets themselves, but rather the private keys associated with the cryptocurrency assets in the blockchain system.) The problem with this system is that it is cumbersome. Accessing funds requires having the hardware wallet on-hand, and then engaging in a lengthy process of opening up the hardware wallet and gaining access to the private keys stored in the wallet. This can make it hard to respond quickly to the highly volatile cryptocurrency marketplace.

The solution to which many resort is keeping their funds on the exchanges they use to buy and sell cryptocurrency (examples include Coinbase, Bittrex and CEX.io). However, since the cryptocurrencies themselves are not actually on the exchanges, what this technically means is that the users are storing their private keys on the exchange. The exchanges therefore act as warehouses of private keys associated with hundreds of millions, and often billions, of dollars in cryptocurrency assets. Not surprisingly given the concentration risk, these exchanges have increasingly become a favorite target for high-value hacks.

Cryptocurrency hacks not only result in significant loss of personal holdings; they also create wild fluctuations in cryptocurrency markets. After a $37 million hack of the Korean exchange Coinrail in 2018, Bitcoin (the first, and most popular cryptocurrency) lost approximately 11% of its market value.[8] A similar drop occurred after hackers stole 120,000 Bitcoins from Hong Kong-based exchange Bitfinex in 2016.[9]

In light of the increasing number of cryptocurrency exchange hacks in recent years, companies that invest in cryptocurrency projects or have significant holdings in cryptocurrencies should keep the following in mind:

What should companies with significant holdings in cryptocurrencies be considering?

Due diligence

Companies considering investing in cryptocurrencies may want to undertake a thorough due diligence analysis of the cybersecurity measures, response protocols, and access controls for their preferred method of storing their private keys, whether that method involves using an exchange, a hardware wallet, or some other method.

Companies may also want to engage outside counsel or retain in-house expertise to advise them as to their legal obligations for how they store their private keys. For example, companies may need to determine whether applicable SEC laws and regulations require the use of a qualified custodian for holding private keys, as well as their obligations for instituting specific controls and response procedures for protecting against the loss of clients assets.

Use offline or hardware wallets

As discussed above, there are few safer ways to secure cryptocurrency assets than using a hardware wallet for maintaining private keys. While these hardware wallets are commercially available, large investors may consider instead engaging computer engineers that can build custom hardware wallets. Similarly, as discussed above, companies may want to consider engaging a reputable, insured, qualified cryptocurrency custodian service for storing private keys.

What should companies that are investing in cryptocurrency businesses be considering?

When investing in a cryptocurrency exchange project, invest heavily in cybersecurity.

Cryptocurrency users have many exchange options, and they tend to be fairly discriminating about which they choose to use based on the exchanges reputations for cybersecurity and history of cyber penetrations. A new cryptocurrency exchange will need to earn a reputation for integrity and cybersecurity in order to attract users (unless, as is sometimes the case, the exchange offers certain desirable cryptocurrencies that are not available on other available exchanges). Nothing will cripple a new cryptocurrency exchange faster than a successful cyber penetration, and the short history of cryptocurrency is rife with now-defunct exchanges that either went bankrupt and/or lost all user confidence after a cyberattack.

If your company is contemplating investing in a cryptocurrency exchange project, robust cybersecurity should be considered. This includes not only technical cybersecurity measures, but also robust cybersecurity policies, compliance and reporting mechanisms, and audit controls. Capable in-house expertise or outside firms can help you develop these procedures, and your company may want to secure this expertise well before your project launches.

When investing in a cryptocurrency blockchain project, develop cyber penetration response policies in advance.

As discussed above, most cryptocurrency hacks do not compromise the blockchain itself, but the exchanges where the transactions occur and the private keys are stored. These hacks can devastate the cryptocurrency market. But a cryptocurrency blockchain or platform can itself be compromised, and when this happens, having the right response procedures in place is critical.

An example of this was seen with Ethereuma blockchain-based smart contract[10] system that used the cryptocurrency Ether to compensate the operators of the computational engine that powers the blockchain system and as a medium for the exchange of value for the performance of smart contracts. In 2016, an organization called the DAO[11] developed a smart contract system built on the Ethereum platform designed to facilitate venture capital fund investment. Hackers exploited a flaw in that smart contract system, resulting in the theft of $50 million worth of Ether. A vote was held within the Ethereum community about how to respond to the hack, with a majority voting to do a hard fork[12] of the Ethereum blockchain. Since the blockchain represents a history of all transactions since its inception, a hard fork is effectively a way to reverse time by erasing the history of the transactions on the blockchain system since the occurrence of the compromising event (hard forks can also be planned events so the rules and protocols governing the blockchain can be updated). This hard fork was extremely controversial within the Ethereum community because it resulted in the reversal of both legitimate and illegitimate transactions, and the value of Ether and confidence in the Ethereum platform temporarily suffered as a result.

One of the reasons the DAO hack was so disruptive to the Ethereum community was because of the debate that ensued within that community over how to respond to it. Thus, companies considering whether to invest in a cryptocurrency project should consider not only how to gird their projects against technical hacks, but also how to develop and disseminate response policies that would give users assurance that the cryptocurrency project would commit to a predictable, controlled course of action in response to various compromising events.

Excerpt from:
VinDAX Is the Seventh Cryptocurrency Exchange Hacked This Year: What Should Investors Be Considering? - Lexology