The Estonian Ministry of Finance is about to add amendments to the national AML regulation, bringing tighter cryptocurrency regulation.
The Estonian Ministry of Finance will shortly add amendments to a recently-passed financial bill that are meant to “tighten” crypto-related regulation, Estonian financial newspaper Äripäev reports Nov. 28.
According to the article, a new version of the Anti Money Laundering (AML) and Terrorist Financing Prevention Act came into force this week in Estonia, conforming legislation to the EU’s so-called “Fourth Money Laundering Prevention Directive.”
The regulation introduced this week reportedly introduces “virtual currency exchange service providers” and “virtual currency payment service providers,” while before there only was “alternative means of payment service provider.”
Still, the Financial Supervision Authority (FI) has since announced that cryptocurrencies and the companies offering crypto-related services introduce money laundering risks, which is reportedly the reason for the new amendments, according to Äripäev.
Canada is also looking towards more regulation to prevent crypto from being used for money laundering, as the Canadian House Finance Committee recommended during its review of the Proceeds of Crime Money Laundering and Terrorist Financing Act (PCMLTFA) in mid-November.
Crypto markets go green on the first day of December, with Bitcoin breaking and holding the $4,200 threshold.
Market visualization from Coin360
Following multiple plunges below the $4,000 threshold yesterday, Nov. 30, Bitcoin (BTC) has managed to finally hold $4,000 support today. The major cryptocurrency is now trading at $4,202, up 4.5 percent over the past 24 hours to press time. Bitcoin is down around 1.9 percent over the week, according to data from CoinMarketCap.
Bitcoin price 7-day chart. Source: CoinMarketCap Bitcoin Price Index
Ripple (XRP), the second cryptocurrency by market cap, is seeing milder gains, up around 3 percent over the past 24 hours and trading at $0.37 as of press time. The coin is seeing considerable losses over the week, down more than 7 percent.
Ripple 7-day price chart. Source: CoinMarketCap Ripple Price Index
TRON (TRX) and NEM (XEM) are seeing the biggest gains among the top 20 coins by market capitalization. TRON, ranked 11th on CoinMarketCap by press time, is up 6.5 percent, also holding a significant grown over the week — more than 11 percent. NEM is up 7 percent, seeing around 5 percent gains over the past 7 days.
Bitcoin Cash’s (BCH) hard fork, Bitcoin SV (BSV), is seeing a massive increase over the past 7 days, up more than 45 percent over the period. The hard forked cryptocurrency is ranked nine on CoinMarketCap and is trading at around $94, seeing a small growth over the day — around 0.1 percent.
Total market capitalization has seen a marked increase over the day, having spiked from around $129 billion to as high as the current $137 billion. Daily trade volume has been stable over the day, accounting for $16 billion, while seeing a small drop to $15 billion at press time.
Total market capitalization 24-hour chart. Source: CoinMarketCap
While the markets have taken another dip recently, Bitcoin fundamentals, such as cost per transaction and number of transactions, have increased, as noted by crypto evangelist Anthony Pompliano, a partner at crypto investment firm Morgan Creek Digital Assets.
The crypto believer also stressed the increasing power of Bitcoin’s hash rate, claiming that it has almost “quadrupled in the last year or so,” while the number of Bitcoin nodes has been 98 percent up over the last two years, the expert said, citing data from Bitnodes.
Concluding his analysis, Pompliano argued that price of a cryptocurrency is “only one measurement of value for an asset,” stating that underlying fundamentals is the main focus of the future value of the currency. He wrote:
“Don’t be distracted by the noise. Focus on the fundamentals. Bitcoin isn’t going anywhere.”
More about Amazon’s recent blockchain-related offerings.
On Nov. 28, e-commerce giant Amazon announced two blockchain-related products: Amazon Quantum Ledger Database (QLDB) and Amazon Managed Blockchain. The company hence marked its further expansion into the field of blockchain technology, which started with blockchain-related patents and collaborations that Amazon has seemingly chose over working with cryptocurrencies, per se.
So what are those new projects and are they going to change the crypto industry?
QLDB: Cryptographic, but centralized database
As per Amazon’s website, QLDB is a ledger database designed to provide “transparent, immutable and cryptographically verifiable log of transactions,” which is overseen by “a central trusted authority.”
Thus, all changes are purportedly recorded on-chain, while the new product is also able to automatically scale to “execute 2–3X as many transactions than ledgers in common blockchain frameworks.” Indeed, Andy Jassy, the CEO of Amazon Web Services (AWS), reportedly stated that the QLDB “will be really scalable, you’ll have a much more flexible and robust set of APIs [application program interfaces] for you to make any kind of changes or adjustments to the ledger database.”
Additionally, QLDB allegedly uses a cryptographic hash function (SHA-256) to generate a secure output file of data’s change history, serving as a proof that “validates the integrity of data changes.”
“With QLDB, your data’s change history is immutable — it cannot be altered or deleted — and using cryptography, you can easily verify that there have been no unintended modifications to your application’s data,” according to the description on Amazon’s website.
Walter Montes, co-founder of the Costa Rican Blockchain Community, told Cointelegraph that — being a centralized product — QLDB cannot be compared to decentralized solutions, although it does attempt to do so in its roadmap:
“It makes no sense to compare things like transactions per second from a centralized service to a decentralized one. There are reasons why these things are decentralized and these are not merely technical ones. Amazon seems to miss the point by comparing QLDB with a blockchain.”
Even if one attempts to compare QLDB with permissioned blockchains, which are common among industry-level corporations because of their security, there are major distinctions between the two, says Montes:
“Permissioned blockchains handle cryptography in a decentralized way, which provides properties like historical evidence […] Another relevant point is the value of the smart contracts or chaincodes, which function as agreed and signed rules on how to modify the data. At least in the public information, they only address the immutability promise, but what about the governing rules of data? Without that, they only log whatever happens, with no real proactive control.”
That technically makes QLDB a database, argues Eyal Shani, a blockchain researcher and former software engineer, as well as Aykesubir consultant:
“QLDB is a normal database from that sense, [while] a blockchain database is also an immutable ledger […] the QLDB tech is another layer of software which eases the development of ledger-like software.”
Montes also agrees that QLDB resembles a conventional database, adding that its cryptography feature still makes it inferior to blockchains in terms of safety.
“Cryptography may calm down some users but doesn’t provide the security and robustness that a blockchain provides. [It is more] like a marketing tool.”
Moreover, the fact that there is a central authority overseeing the whole process might make it less reliable among competing businesses:
“Imagine six banks of the same size trusting one of them (a competitor) to hold a ‘cryptographically linked-list’ that they can verify. They simply won’t trust it. [Instead], they’d end up creating their own data store and then checking data versions daily. Cryptography is there in part to verify things, but when you can’t even do that, it falls short.”
Why QLDB avoids decentralization?
So who are the potential users of Amazon’s QLDB solution? Perhaps those who have become skeptical of the blockchain buzzword, now that the hype has begun to settle, suggests Shani:
“Some believe in that as much as Satoshi and some don’t want to hear about decentralization, possibly because of the bad reputation it had and the excessive amount of speculators in the cryptosphere.
“It’s marketing buzz, we see it with artificial intelligence and [the] Internet of Things, too. That may continue to happen until creating a real decentralized blockchain is as easy as creating a database today.”
Therefore, with further development of blockchain comes greater adoption. It might take more time until decentralization becomes a more trusted solution among corporations looking to shield their data from tampering:
“Decentralization of trust as a concept is something that could fundamentally disrupt some industries, but it’ll take time until we get there. The public and the regulators would have to change their mindset in order for that to happen fully […] Meanwhile, the use of blockchain-like applications and tokenization of assets is already a big jump to many industries and will ease the change into blockchains in the long run.”
Amazon Managed Blockchain: Add-on to QLDB or independent blockchain solution?
Amazon Managed Blockchain, which was announced along with the QLDB, “makes it easy to create and manage scalable blockchain networks using the popular open source frameworks Hyperledger Fabric and Ethereum,” but also works with QLDB itself, according to the company’s website.
Further, the product automatically scales depending on the needs of specific applications and is deployed in managing certificates, inviting new users to the network and tracing metrics, such as memory and storage resources and usage of computer, Amazon argues. AWS CEO Andy Jassy claims that this service “is going to make it much easier to use the two most popular blockchain frameworks [Ethereum and Hyperledger Fabric].”
Shani questions that argument by stating that Ethereum and Hyperledger blockchains are already “easily” set up in the industry’s present circumstances. The blockchain researcher also emphasizes the vagueness of Amazon’s press release:
“Governance in distributed protocol is an important aspect, but it’s unclear in what manner Amazon achieves this. If they implemented it in a centralized manner, how different is that from QLDB?”
Montes, in turn, doesn’t believe that a managed blockchain service offering may be around for long because “it limits open scalability (in a technology that is based on network-effects) by locking it up into a single cloud provider.” However, such solutions might be useful for testing and proof-of-concept (PoC) operations, he adds.
Still, the fact that a company as large as Amazon announced new blockchain-related products might seem like a healthy sign for the industry.
“From a macro point of view, the more research and development being done around Ethereum, the more the protocol strengthens and grows into a global adoption as a standard,” Shani concludes.
North Korean hackers have reportedly carried out over 30 attacks on cryptocurrency users, according to a cybersecurity company.
The CEO of cybersecurity firm Cuvepia declared that his company detected over 30 attacks on crypto-bearing individuals probably carried out by North Korean hackers, English-language media site South China Morning Post reports Nov. 29.
Kwon Seok-Chul, the CEO of the aforementioned South Korean cybersecurity company, said that the new targets of the suspected North Korean cyberattacks “are just simple wallet users investing in cryptocurrency.” He then added that many cases probably haven’t been detected, and that there may have been well over 100 attacks.
As the article states, the “targeting of individuals holding virtual currencies such as Bitcoin (BTC) marks a departure from its previous methods.” As Cointelegraph reported this October, North Korea allegedly backed two cryptocurrency scams this year: hacks funded by the country reportedly comprise of 65% of all cryptocurrency stolen to date.
Simon Choi, founder of cyber warfare research company IssueMakersLab, attributes the shift towards attacking individuals to cybersecurity enhancements by exchanges and financial institutions:
“Direct attacks on exchanges have become harder, so hackers are thinking about alternatively going after individual users with weak security.”
Choi also said that most targets have been wealthy South Koreans since “they believe that if they target CEOs of wealthy firms and heads of organisations” then “they can take advantage of billions of won in virtual currencies.”
According to Luke McNamara, an analyst at cybersecurity company FireEye, “it’s possible from previous intrusions they’ve been able to collect information” about “people using these [cryptocurrency] exchanges.”
McNamara explained that “when they understand and know the targets” then “they are able to craft lures specific to those organisations or entities.” He added that this makes them “effective at what they are doing.”
As Cointelegraph reported, Kaspersky Labs claims that North Korean hacker collective Lazarus Group used the “first” macOS malware to hack a crypto exchange. Experts have also argued that North Korea increasingly uses cryptocurrencies to avoid U.S. sanctions.
Interros Group and Sberbank in partnership have carried out an OTC foreign exchange repo deal on blockchain.
Sberbank and Interros Group have carried out an over-the-counter OTC foreign exchange repurchase agreement (repo) transaction employing smart contracts on a blockchain, Reuters Russia reports Nov. 30.
The Interros Group is a Moscow-based private equity firm founded by Russian oligarch Vladimir Potanin in 1990, with stakes in Norilsk Nickel, pharmaceutical company Petrovax Pharm, and ski resort development firm Rosa Khutor.
Head of global markets department and vice president at Sberbank, Andrei Shemetov, informed Reuters that the transaction is real, legally binding, and has been “concluded in electronic format using a smart contract and digital signatures through the IT platform of Sberbank.”
The aforementioned article also mentions that while Shemetov “did not disclose the scope of the transaction,” he “indicated that the amount corresponded to the average volume of the interdealer repo transaction.”
Shemetov further explained that “the transaction is a currency repo secured by the pledge of Eurobonds of the Russian issuer of the first tier.” He also described how blockchain will improve the services offered by Sberbank:
“In the long term, the conclusion of transactions through the blockchain platform will reduce transaction costs and errors through automation, as well as increase transparency and trust among all participants in the financial market.”
Reuters reports that Shemetov cited “the creation of a software environment with the ability to audit data on a bilateral basis” and “automation of settlement and operational functions” as advantages of blockchain-based repo transactions.
The article further declares that the smart contracts used — which will be part of the “overall decentralized infrastructure of the financial market” — have been written in the Go programming language and have been deployed on the Hyperledger Fabric Platform. The system permits real-time monitoring of “covenants and other market conditions.”
As Cointelegraph recently reported, Sberbank CEO Herman Gref has predicted that blockchain will be used on an industrial scale in one to two years, after having said this October that blockchain technology will be “ready” in three to five years.