Danish Tax Agency to Collect User Data from Crypto Exchanges

The Danish Tax Agency has got the green light to collect trader information from local cryptocurrency exchanges to see if they are paying their dues. The agency, in Danish called the Skattestyrelsen, announced Monday that this is the first time the country’s Tax Council has given it access to crypto traders’ data – information that includes trades, names and addresses, and central person registration (CPR) number. Three unnamed crypto exchanges will now have to hand over the data for the period spanning 2016–2018. In its application to the Tax Council, the Skattestyrelsen said it sought to “obtain information on unexecuted taxpayers’ and companies’ virtual currency transactions.” The move comes in the wake of information the agency said it received from Finland’s tax authorities regarding Danish traders’ activity on an unnamed Finnish exchange. “Without going too far, I think you can say that this is a big market that we need to look into,” Karin Bergen, personal tax director at the Skattestyrelsen, said in the announcement. In a statement issued last month, the agency said that nearly 2,700 Danish citizens traded over 100 million Danish krone ($15.35 million) worth of cryptos during 2015–2017 on the Finnish bitcoin exchange. “This is probably just the tip of the iceberg,” Bergen said at the time, adding, “Although it is a relatively small bitcoin exchange, the information is a very valuable source that clearly shows trends and patterns in the field.” Last month, the agency, citing a study by the National Tax Board, said that there are up to 450,000 local citizens that have considered trading in cryptocurrency, but only half of them are aware of the tax rules. It emphasized that crypto traders must pay tax on any profits, while losses can be claimed for the tax deduction. Source: www.coindesk.com

Coincheck Wins Crypto Exchange License 12 Months After Major Hack

Japanese crypto exchange Coincheck, which suffered a $530 million hack in January of last year, is now a licensed entity. Monex Group, the Japan-based online brokerage firm that acquired Coincheck for $33.5 million following the cyberattack, announced Friday that the exchange is now registered with the Kanto Financial Bureau, under the country’s Payment Service Act, effective immediately. The license was approved by the country’s Financial Services Agency (FSA), on the basis of Coincheck’s improved risk management and governance systems with “concrete internal controls and customer protection in mind,” Monex said. Following the massive hack of around 500 million NEM tokens in January 2018, the FSA had orderedCoincheck to strengthen its security systems and submit a business management improvement plan to the authority. At the time, the exchange was not registered with the regulator. The breach also forced Coincheck to suspend its services for some months. Since then, the exchange has been phasing back in its operations. By November 2018, it had reinstated services for all listed cryptos on its platform. Now with the license in place, Coincheck joins the growing list of regulated crypto exchanges in the country, including financial services giant SBI Holdings, which operates a registered platform called VCTRADE. U.S.-based exchange unicorn Coinbase has previously said it expects to become licensed in Japan in 2019. All crypto exchanges in Japan came under anti-money laundering (AML) and know-your-customer (KYC) rules in April of 2017 when the country’s legislature passed the Payment Service Act and recognized bitcoin as a legal method of payment. Over 160 firms are planning to apply for the crypto exchange license, the FSA said back in September, adding that it is looking to increase its staffing levels to speed up the review process. Source: www.coindesk.com

Overstock’s tZERO Begins Distributing Its Security Token to Investors

Security token trading platform tZERO, a portfolio company of digital retailer Overstock, has begun the process of giving investors control of tokens bought during a sale the firm completed last August. In a letter sent to investors late Thursday, tZERO CEO Saum Noursalehi outlined the first steps toward taking custody of the tZERO security tokens. TZERO wrapped up the $134 million offering in August, and in October said that it had completed the issuance of the tokens, which were then locked up in a custodial wallet until January 10, as outlined in a press statement at the time. “As you are aware, on October 12, 2018 we completed the issuance of the tZERO security tokens. The tokens have been locked up in wallets maintained by tZERO on behalf of our token holders for 90 days following the issuance,” Noursalehi wrote. “Now that the three-month lock-up period has concluded, you must decide where to hold your security tokens.” According to the letter, investors now have two options: create a brokerage account with broker-dealer and tZERO partner Dinosaur Financial Group or hold the tokens in a personal wallet, which is subject to a two-step verification process, according to tZERO. “If you initially choose to hold your security tokens in your personal wallet, you may later move your tokens into a digital securities brokerage account you open up with Dinosaur,” the firm said. What isn’t clear at this time is exactly when tZERO is expected to begin actual trading of the security token on its platform. In the letter, tZERO told investors to “look out for another tZERO update regarding the commencement of security token trading.” Jonathan Johnson, the president of Medici Ventures – which oversees Overstock’s blockchain efforts, including tZERO – told CoinDesk last month that the security token platform will officially go live in January. A prototype of it was unveiled last April. Source: www.coindesk.com

Token Exchange DX.Exchange Says It Has Patched Security Vulnerability

Security token trading platform DX.Exchange says it has patched a security vulnerability that allowed anyone to access user authentication tokens. DX.Exchange, which went live on Monday, offers crypto tokens representing shares in a number of Nasdaq-traded firms. The company uses Nasdaq’s matching engine and financial information exchange protocol to facilitate the trading of these digital securities. However, in its first few days, the platform revealed sensitive data, including password reset links, as reported by Ars Technica. It is unclear how many user accounts were at compromised, though an anonymous trader told the news site that he collected “about 100 … tokens over 30 minutes.” Ars further reported that it was able to collect “a large number” of authentication tokens. In a statement, the DX.Exchange attributed the bug to “an authentication token error,” but said the issue was resolved before any damage could occur. Daniel Skowronski, the exchange’s CEO, said in a statement that user funds were not at risk, explaining:
“We are happy to report that the vulnerability has been successfully patched, and no user funds were compromised … Customer funds were always safe, our multi layer advanced monitoring and defense mechanism was able to avoid any further issue.”
The statement went on to note that any developers who discover bugs in the future can report them to the exchange directly through a bug bounty program. Source: www.coindesk.com

Bitcoin Price Tumbles 10% as Crypto Markets Flash Red

The price of bitcoin fell more than 10 percent during Thursday’s trading session as the cryptocurrency erased a large portion of its recent gains. At 6:00 UTC, bitcoin opened the trading hour at a price of $4,018, but fell to $3,748 before the hour was complete. After trading sideways until 16:00 UTC, the sell-off accelerated to a low of $3,570, according to CoinDesk pricing data. Bitcoin’s current price of $3,610 reflects a $367 difference and more than 9 percent drop from its 24-hour opening price of $3,995, CoinDesk data further reveals. In the last 24-hours, a total of $6.4 billion of bitcoin was traded across exchanges as its total market capitalization fell roughly 7 percent from $70 billion to $64 billion. The broader market has accompanied bitcoin in its latest dip as it usually does when bitcoin markets show weakness. According to Coindesk’s Crypto-Economic Explorer (CEX), 18 of the 19 tracked cryptocurrencies are reporting double-digit 24-hour losses, with several extending depreciation beyond 15 percent including litecoin (LTC), neo (NEO) and cardano (ADA). Cardano is the worst performers today, currently printing an 18 percent loss. As it stands, the total capitalization of the cryptocurrency market is registering $122 billion, down 10.2 percent on the day according to CoinMarketCap. Disclosure: The author holds BTC, AST, REQ, OMG, FUEL, 1st and AMP at the time of writing. Source: www.coindesk.com

Two Thirds of Korean Crypto Exchanges Fail Government Security Check

Only a third of cryptocurrency exchanges inspected got a full pass in a recent government security audit. The Ministry of Science and ICT, the Korea Internet & Security Agency and the Ministry of Economy and Finance inspected a total of 21 crypto exchanges from September to December 2018, examining 85 different security aspects. Notably, only 7 of them – Upbit, Bithumb, Gopax, Korbit, Coinone, Hanbitco, and Huobi Korea – cleared all the tests, CoinDesk Korea reported Thursday. The remaining 14 exchanges are “vulnerable to hacking attacks at all times because of poor security,” the Ministry of Economy and Finance said, though it didn’t name the platforms. The agencies put down the security failures to “insufficient establishment and management of security system such as basic PC and network security.” The exchanges were inspected in a review that looked different aspects of administrative, network, system and operational security, as well as database backup and wallet management. South Korea has lost many millions of dollars in cryptocurrencies through hacks at exchanges such as Coinrail (over $40 million) and Bithumb (over $30 million). Back in February, the country’s officials said that they believed North Korean hackers were behind the attacks. Indeed, North Korea’s infamous hacking group, Lazarus, has been reported to be behind the theft of $571 million in cryptocurrencies since January 2017, according to a report from cybersecurity vendor Group-IB. In the wake of the security breaches, South Korea’s Financial Services Commission, in July of last year called on politicians to pass a bill regulating domestic cryptocurrency exchanges with urgency in order to counter lax security in the industry. Source: www.coindesk.com

Security Token Trades on Regulated Platform in Market First

A regulated alternative trading system (ATS) has facilitated a secondary trade of security tokens on a blockchain in a milestone for the development of this market. SharesPost, a registered broker-dealer, ATS and registered investment advisor, said Wednesday it had executed its first secondary transaction with BCAP tokens issued by Blockchain Capital. The tokens, which run on top of the ethereum blockchain, represent shares in the Blockchain Capital III Digital Liquid Venture Fund. SharesPost did not disclose the size of the trade for reasons of confidentiality, though SharesPost Digital Asset Group CEO John Wu told CoinDesk that it was essentially a proof-of-concept transaction. The Digital Asset Group is the division within SharesPost which oversaw the test. “This was a small trade, it’s like a pilot program, we’re ‘running the water through the pipes’ to make sure,” he explained. “To our knowledge, this was the first trade of digital securities by an Alternative Trading System and broker dealer in which the ATS custodied the digital securities. This clears the path for companies to do compliant STO’s in the U.S. and provide their investors with secondary liquidity.” While SharesPost is the first registered firm to also custody the crypto assets it traded, it is not the first to conduct a secondary transaction overall. OpenFinance Network, another regulated ATS and broker-dealer, already offers BCAP tokens for trade, according to a press release. Previously, SharesPost offered custody of digital assets and support for over-the-counter trading (OTC) of digital securities. Next, the company intends to launch real-time trading order books. The company claims that it will be able to provide sufficient liquidity for institutions or other accredited investors shifting into digital assets. In a statement, SharesPost founder and CEO Greg Brogger predicted that ultimately, digital securities will play a prominent role in private capital markets. Speaking to the significance of the BCAP trade, he explained:
“Now companies can efficiently raise capital and provide liquidity globally by leveraging blockchain technology in a way that complies with securities laws. We are very excited to be connecting the more than 50,000 institutional and individual accredited investors using the SharesPost marketplace with companies and funds like Blockchain Capital that are leading the way.”
Blockchain Capital co-founder and managing partner Bart Stephens added in the announcement that “SharesPost is unique in its support of private companies and funds because they offer a comprehensive platform on which our investors can interact to enable liquidity.” In particular, Stephens said SharesPost will benefit the investor community by providing data and analysis on issuers and assets listed on its platform. Editor’s note: This article has been updated to note that OpenFinance Network has already conducted a similar secondary transaction, though it does not provide custody solutions. Source: www.coindesk.com

Thai Finance Ministry Awards Licenses to 4 Crypto Firms, Rejects 2

Thailand’s Ministry of Finance has granted digital asset business licenses to four crypto firms, while rejecting two other applications. The news was announced Tuesday by the country’s Securities and Exchange Commission (SEC), which clarified that crypto businesses are regulated under the “Emergency Decree on Digital Asset Businesses B.E. 2561 (2018).” The four firms receiving licenses include three crypto exchanges, Bitcoin Exchange, Bitkub Online, Satang Corporation (Satang Pro), and one crypto broker-dealer Coins TH Co., the SEC said. Failing to win a license were Cash2coin and Southeast Asia Digital Exchange (SEADEX). The regulator said the two firms had not met the required standards – for example, custody systems and know-your-customer (KYC) processes were “inconsistent” and the effectiveness of their cybersecurity systems could not be verified. As a result, Cash2coin and SEADEX will have to cease business operations by Jan. 14, and have been told to return clients’ assets under their custody, the SEC said. The firms can, however, reapply for the license provided the approval criteria are ultimately met. Meanwhile, the SEC is still considering another application from a firm called Coin Asset. The company has made some executive changes which the SEC considers “material information” for license consideration. Until a decision is made, Coin Asset is permitted to carry out business operations. Thailand first announced its crypto licensing rules in July of last year, with 20 crypto firms applying for the license within a month. The rules require projects that intend to offer crypto services to gain approval from the SEC before starting operations. Source: www.coindesk.com

Venezuela Calls US Sanctions Against Its Petro Cryptocurrency ‘Discriminatory’

Venezuela is pushing back against U.S. sanctions before the World Trade Organization, including ones imposed against its controversial cryptocurrency efforts. The complaint, filed late last month and published this week, addresses a number of actions taken by the U.S. in recent years, claims that the country is infringing on Venezuela’s rights under the General Agreement on Tariffs and Trade (GATT) signed in 1994 and the General Agreement on Trade in Services (GATS). Notably, the complaint notes certain restrictions placed upon “Venezuelan digital currency” transactions. “The United States has imposed certain coercive trade-restrictive measures on the Bolivarian Republic of Venezuela in the context of attempts to isolate Venezuela economically,” the complaint reads. Venezuela first announced it was developing a cryptocurrency, the petro, near the end of 2017. The currency was launched in 2018 and has since been ordered into use within several different industries by the nation’s strongman president, Nicolas Maduro. However, the controversial token has seen pushback as well, in particular from U.S. lawmakers, who have denounced the cryptocurrency, and more strongly by President Donald Trump, who signed an executive order targeting the petro last March. Venezuela’s complaint claims that these sanctions are “discriminatory coercive trade-restrictive measures.” In particular, the complaint explains, the measures mean Venezuelan financial services and financial service suppliers receive “less favorable” treatment than services and suppliers in other WTO member nations. For that reason, such measures are in violation of Article II:1 of the GATS, which states that no member nation will treat another member less favorably than any other nation, according to Venezuela. The complaint goes on to say:
“Furthermore, inasmuch as digital currencies originating in the United States are not subject to the same prohibitions as Venezuelan digital currencies, the United States is according less favorable treatment to Venezuelan financial services and service suppliers than to like domestic financial services and service suppliers, in violation of Article XVII:1 of the GATS.”
Article XVII:1 says member nations will not treat financial services and service suppliers of other nations less favorably than they treat such providers in their own nations. According to Reuters, the U.S. has 60 days to respond to Venezuela’s complaint. Should the nation fail to do so, Venezuela can then ask the WTO to decide on the complaint’s merits. Source: www.coindesk.com

Beam Announces ‘Critical’ Vulnerability in Mimblewimble Crypto’s Wallet

The team behind Beam, a newly released privacy-oriented cryptocurrency, announced Wednesday that a “critical vulnerability” has been discovered in its wallet software. Disseminating the information from their official Twitter account, Beam urged users to uninstall the Beam Wallet application immediately and redownload a patched version of the application again from their website. The project’s GitHub page – which echoes the warning regarding the wallet software – states that “details for the vulnerability and the CVE will be published within a week to avoid exploits.” The GitHub page further states:
“[The] Vulnerability affects all previously released Beam Wallets both Dekstop and CLI. DO NOT DELETE THE DATABASE or any other wallet data. The vulnerability DOES NOT affect wallet data, secret keys or passwords.”
The announcement specifies that the vulnerability found in the wallet software was discovered solely by the Beam developer team “and not reported anywhere else.” In a post on Discord, CTO Alex Romanov said that “the issue was already fixed” and that miners and nodes are unaffected. The situation comes just days after Beam became the first cryptocurrency to go live utilizing the privacy tech known as Mimblewimble, which is touted as a means by which transactions can be made confidential and effectively untraceable. Beam launched ahead of Grin, another implementation of the technology that is expected to launch next Tuesday. Source: www.coindesk.com