With this years incredible gains in the price of bitcoin, the number of hedge funds with exposure to cryptocurrencies is exploding. Fund administrator MG Stover & Co, accounting firm Auther Bell, and law firm Cole-Frieman & Mallon alone have62 in the pipeline.

Also read:Hedge Funds Are Quietly Investing in Bitcoin

As the prices of bitcoin and other cryptocurrencies skyrocket, a large number of traders are seeking to launch hedge funds investing in them. Hedge Fund Alert recently reported that the number of hedge funds investing in digital currencies is exploding. The publication quoted CPA Corey Mclaughlin, managing member at Auther Bell, who said:

Ive been in the hedge fund space since 1998, and Ive never seen anything like it in volume of launches in a particular area. Its just crazy.

Matt Stover, founder of MG Stover & Co,shared the sentiment. This is the first time I can remember where we have had a hard time keeping up with the sales calls, he said.

Institutional investors are surprisingly interested in cryptocurrencies, according to hedge fund lawyer Karl Cole-Frieman. I wasnt expecting so many institutional players to be interested in the asset class, he was quoted saying. Recently, news.Bitcoin.com reported that hedge funds are quietly investing in bitcoin. With this years explosive gains in the price of bitcoin, Hedge funds that offer cryptocurrency exposure are seeing windfall gains.

Among client funds administered by MG Stover & Co., 12 of them are running digital-currency strategies. The firm has also made agreements to service 25 more, the publication detailed. Arthur Bell is working with about 15 fund managers on cryptocurrency funds and expects to take on 20 more in the near future. Meanwhile, Cole-Frieman & Mallon has helped set up 7 cryptocurrency funds this year and has 17 more in the pipeline. Altogether, 62 new cryptocurrency hedge funds will be brought the market by these three firms alone.

Among the new entrants, there are both those simply taking long bets on bitcoinas well as those devising hedge fund-like strategies, such as capturing the arbitrage among various currencies, the publication conveyed. Bitcoins value has risen over 200% this year.

I think the majority of these cryptocurrency [funds] are trying to ride the opportunity du jour, noted Neal Berger, founder of investment advisory firm Eagles View Capital. Its an access point for people who cant buy it themselves or dont want to learn how to do it.Former Goldman Sachs executive Matthew Goetz, co-founder at Blocktower Capital, described:

Its a wildly inefficient market where alpha potential is abundant more than anything weve seen in our careers. We think its a rare opportunity for investors. Its not often theres a new capital market being born in front of you.

How do you think the many hedge funds entering the space will affect the price of bitcoin? Let us know in the comments section below.

Images courtesy of Shutterstock

Need to calculate your bitcoin holdings? Check our tools section.

Continued here:
Hedge Funds Investing in Cryptocurrencies 'Exploding' 62 in Pipeline - Bitcoin News (press release)

In early June, Russian President Vladimir Putin attended the annual St. Petersburg International Economic Forum. The headline moment at the event was a wide-ranging and at times combative interview with Megyn Kelly. But Putin quietly made news in another wayhe signaled an official volte-face on the issue of cryptocurrencies, digital financial instruments such as bitcoin.

As recently as a year ago, the Russian government had threatened to jail users of bitcoin for up to seven years. The Kremlin had also toyed with the idea of creating its own digital currency to compete with bitcoin. Many observers speculated that Russia would then make all other digital currencies illegal to force adoption of its coin.

But sometime last year, something changed. Perhaps the Kremlin realized that creating a proprietary digital ruble defeated the purpose of having a dispersed-ledger digital currency. Possibly they observed the huge sums of money being poured into blockchain technology by Silicon Valley, and resolved to make sure Russia didnt get left behind when the technology became popular. (The blockchain is essentially a ledger with thousands of copies that gets updated every time a transaction takes place.)

Or maybe they just woke up to the vast array of possibilities that cryptocurrencies could offer in the service of money laundering.

Putinand the rest of his oligarch friendshave a problem. The Magnitsky Act, which established strict sanctions on named Russian citizens, and the Russian hacking scandal currently consuming American politics, have woken up governments to the colossal amount of ill-gotten Russian cash being invested within in their borders.

Many countries, including France, Switzerland, Ukraine, and Poland, have launched investigations into Russian money passing through their banking systems, while others, such as Cyprus, Greece, and China seem to still be looking the other way. In March, the Organized Crime and Corruption Reporting Project published a study entitled, The Russian Laundromat Exposed, revealing the vast and complex banking mechanisms that oligarchs use to skirt international financial controls.

From Putins perspective, the solution to this dilemma could be cryptocurrencies. And the Ethereum platform (which is based on the blockchain model) appears to be the Russians digital currency framework of choice. Ethereum allows clients to create their own digital smart contracts which can have a multitude of uses that transcend mere currency applications. Using Ethereum, for example, a startup recently raised nearly $4 million in an initial coin offering (think IPO) to begin manufacturing zirconium in Magnitogorsk, Russia. Each ZrCoin, issued by the company represents 1 kilogram of synthetic zirconium.

At a forum in Moscow in April, a Russian politician named Andrei Lugovoi sang the praises of the blockchains versatility. He cited a World Bank study predicting that 10 percent of world GDP would be stored with the help of the blockchain as early as this year. He also said he expected a draft bill in the Russian Duma on regulation of cryptocurrencies would be made public in the second half of 2017.

If Lugovois name sounds familiar, its probably because he was one of two men implicated in the 2006 death of Russian spy Alexander Litvinienko in London, via radioactive polonium-210 poisoning. A former KGB officer himself, Lugovoi is now an MP in the far-right LDPR party. Hes also deputy chairman of the Duma committee on security and anti-corruption.

Last year, Lugovoi told a conference that blockchain-based currencies could become the best way to get around U.S. and EU sanctions. This is is [sic] a rare situation where the sanctions policy of the West gives rise to the opportunity for homegrown business to create something new and allow the national economy to move forward, Lugovoi said, according to Newsweek.

And the Russian blockchain community is indeed growing. A conference held in Moscow in May attracted hundreds of people; another is planned for September. And a group of banks working under the supervision of the Russian Central Bank is currently testing a proprietary Ethereum-based masterchain. Not only that, but Russias largest online retailer, Ulmart, is expected to begin accepting bitcoin in September. And another politician suggested setting up a Crypto Valley on the Crimean Peninsula to raise regional funding in the part of Ukraine that Russia annexed in 2014.

At the St. Petersburg forum, Deputy Prime Minister Igor Shuvalov enthused that Putin had caught the digital economy bug, and that the president had attended a small closed working group on the subject in which he kept them talking about the technology well past midnight. Putin even met privately with the founder of Ethereum, 23-year-old Canadian-Russian Vitalik Buterin on the margins of the conference.

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Its no surprise Putin is excited. Even Ethereums most ardent supporters will admit that once money is in the cryptocurrency loopthat is, after its been exchanged for fiat moneyits devilishly hard to track, by design. Cryptocurrency transactions are anonymous, dont respect national borders, and are now nearly instantaneous. In theory, at least, its the holy grail of money laundering.

As I write this, the market capitalization of all cryptocurrencies is still relatively modest, just under $100 billion, approximately what shoe-maker Nike is worth. But the market is growing by leaps and bounds. Ethereums flagship token, the ether, was up 4,000 percent for the year earlier this summer.

Most cryptocurrency transactions are perfectly trackable, thanks to a distributed ledger. (That sort of verification is part the appeal.) But trackable is not attributable. And in order for financial laws to function properly, some level of attribution must be built into the system.

As more governments agree on regulatory regimes to integrate cryptocurrencies into their business, more money will flow into them. Oligarch-sized transactions that would be difficult to impossible now will become more and more possible.

This isnt a problem in countries that operate under the rule of law. The United States and others are already working on laws and regulatory frameworks that will eventually be able to fully accommodate cryptocurrencies and take advantage of their unique properties. For example, its now possible to trade bitcoin and ether as easily as yen and euros.

But what about in kleptocracies like Russia, where laws are bent and molded to facilitate, rather than prevent, corruption? Its not hard to imagine a situation where regulations are either designed to be ignored for the benefit of certain people, or are simply toothless and thus throw the door open to all manner of illicit activity.

The Magnitsky Act has been a thorn in the side of Putin and his cronies for a long time. But as we stand at the threshold of a new era in the world of finance, he may think hes found a way to beat it.

Continued here:
Why Is the Kremlin Suddenly Obsessed With Cryptocurrencies? - Daily Beast

This picture taken on April 7, 2017, shows a man walking past a signboard informing customers that bitcoin can be used for payment at a store in Tokyo.

AFP/Getty Images

If you owned bitcoin prior to Aug. 1 and slept in a little that morning, you would have woken up to find your stash had doubledsort of.

Before Aug. 1, there was a single bitcoin currency simply called bitcoin, or BTC. Like most cryptocurrencies, bitcoin avoided having a central bank that verified transactions by maintaining a constantly verified ledger of transactions that was distributed across thousands of computers. This ledger is called the blockchain, and up until Aug. 1, there was only one of it. That day, at 8 a.m. Eastern, an alternative coin called Bitcoin Cash, or BCC, was born when the bitcoin blockchain split in two. Bitcoin Core, as the original currency is now called, and Bitcoin Cash have identical ledgers until Aug. 1. Now each currency maintains a separate ledger, and since cryptocurrencies are represented by their blockchains, that means bitcoin has effectively split in half, giving each user a bank account filled with both currencies.

The question of why bitcoin split is a deeply political one, as much about the philosophy of what bitcoin should be as it is about practical concerns of payment speed and per payment surcharges. As David Z. Morris described in Future Tense in June, the dispute centers on the maximum size allowed for any block in the blockchain. This is a technical point, but you can think of it as arguing over how many transactions are allowed on one page of the ledger. The original limit, imposed by pseudonymous creator Satoshi Nakamoto either as doctrine or temporary fillerdepending on whether you support BTC or BCCwas 1 MB of data. This low limit is leading to delays in the amount of time it takes a transaction to be verified, which is itself leading to higher surcharges for premium verification. (For a primer on how this all works, click here.)

If transaction time were the only issue, though, there wouldnt be a three-year-long flame war and a battling subreddits, one for each coin. There are two other issues. One is that the BTH folks think that allowing larger blocks hinders small players from mining bitcoins, centralizing power in the hands of large mining entities. Bitcoin was created as an alternative to centralized currencies, however, so greater centralization is a serious accusation. Point for BTC.

BTC has proposed a size increase of its own, one that comes with an even greater philosophical change. Segregated Witness, also known as SegWit2x, aims to fit more transactions on one page of the blockchain ledger by doubling the size of the page (that is, doubling the blocksize limit), and by reserving all space on the page for transactions. Right now, each page (each block) contains transaction details (Alice gave Bob 2 BTC), and signatures (I, Alice, agree to give Bob these 2 BTC). Instead of making the page much longer, SegWit2x wants to create more space on the page by erasing the signatures and reserving that space for transactions. Many believe this proposal changes the fundamentals of bitcoin more than BCC does, and in terms of structure of the chain, they are right. Thats why some supporters of BCC oppose the name alternative coin, they view what theyre doing as closer to Satoshis vision than BTC. Point for BCC.

However, the Highlander there can be only one approach is a false choice. To understand why, we need to look at the recent history of another cryptocurrency, Ethereum. Back in June 2016, $50 million were siphoned away from the Ethereum blockchain by some clever thieves. However, the thieves werent quite as clever as they thought. Because of the way they drained the money, they had to wait 28 days before they could withdraw it and, presumably, retire to some tropical locale. In that time, Ethereum made a hard choice, one that Gavin Wood, co-founder of Ethereum, called the single most important moment in cryptocurrency history since the birth of Bitcoin. Rather than let the thieves make away with the money, a large portion of Ethereum users forked the blockchain so that the transactions that stole the ETH never happened.

A lot of people were upset by this. It violated the spirit of the blockchain. The purists split off and started their own cryptocurrency called Ethereum Classic (ETC). A year later, both currencies are still used (though ETH is worth far more than ETC) and are fairly stable. In fact, their combined value is greater than the original value.

The same thing seems to be happening with bitcoin. According to Quartz, BCC is already the third most valuable cryptocurrency, behind BTC and ETH. And, just like the Ethereum split, the BTC-BCC market is worth more than the original market was. However, while there can be more than one currency, thats not to say there will be. It took six hours for the first BCC block to be mined, a process which usually takes about 10 minutes on BTC. That block was 1.9 MB, larger that BTC would allow, but the next block on BCC was only .04 MB, stoking fear that not enough miners had adopted BCC. Whether the achievement of BCCs debut as a new cryptocurrency is a Pyrrhic victory for the founders or a resounding success will hinge on the answer to that question.

Read the original post:
Bitcoin Has Split Into Two Cryptocurrencies. What, Exactly, Does That Mean? - Slate Magazine (blog)

National police forces in Europe are seeking new cash forresearch onhow to tacklecybercrimes involving cryptocurrencies.

According to an evaluation report released late last month, the Swedish Police Authority and its counterparts in Austria and Germany arepreparing to bid for fundingfrom a program called Horizon 2020, aEuropean Union research initiative.

Specifically, the funds would be sourced from Secure Societies, a sub-section of that program focused on cybercrime initiatives. Through Horizon 2020, which was launchedin 2014, the EU has made a total of80 billion ($94.6 billion) available to cover a wide range of research areas.

Settingout the law enforcement agencies' plans, the report states:

"At present, the Swedish Police are participating in a consortium with the [Federal Police Force]in Austria and its counterpart in Germany to prepare a bid for Secure Societies on virtual currencies and the Darknet."

While the report didn't reveal the amountsto be solicited bythe three police agencies, it highlights the Internal Security Fund (ISF) a European Commission funding pool with a total of3.8 billionallocated for member countries' police forces overthe seven years until2020.

The basic allocation for Sweden under this fund currently is 21 million, according to the ISF.

Swedish police car image viaRoland Magnusson/Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [emailprotected].

Read the original:
Swedish Police to Seek EU Funds for Cryptocurrency Research - CoinDesk

A South Korean lawmaker has proposed amending the country's Electronic Financial Transaction Act to more closely regulatecryptocurrencies.

According to several South Korean media outlets, including theFinancial NewsandSeoul Economic Daily, the proposal was put forth this week by Park Yong-Jin, a representative from theDemocratic Party who has been at the center of recent regulatory deliberations.

The amendments would seek todefine digital currency businesses and classify different partiesas digital currency traders, brokers, issuers and managers.

Itfurther mandates businesses hold deposits or provide insurance to hedge against potential cybercrime incidents, and aims toapply a 500 million South Korean won ($450,000) capital reserve threshold for any business that operates cryptocurrency trading service prior to seeking an approval from the authority.

Provisions for preventingmarket manipulation and money laundering usingdigital currencies are also included in the changes.

Parkis seeking a moreregulated environment amid recent surging prices of major cryptocurrencies like bitcoin and ethereum. Theproposalfollowsa recent panel hosted by the politicianat a public hearing to argue for regulations coveringdigital currency.

As for a next step, the bill is expected to be presented to the regular session of the National Assembly in September, at which point, it needs the approval of the country's Financial Services Commission.

As reported by CoinDesk, the financial regulator convened its first initiative last November to launcha regulatory policy on cryptocurrency. However, as of today, its policy plans still remain unclear.

Seoul, South Korea image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [emailprotected].

Read more:
South Korean Lawmaker Seeks to Tighten Cryptocurrency Rules - CoinDesk