George Town, Cayman Islands, Dec. 03, 2018 (GLOBE NEWSWIRE) --
On Monday, Bitcoin Hit Its Lowest Mark of the Year, $3,500

This week bitcoin, the original cryptocurrency, has hit its lowest mark for the year, $3,500. Last week it dropped to $4,600, and it appeared that things just couldn't get any worse. But naturally that's exactly what happened. Market players panicked: they believed that the $6,000 mark, at which bitcoin traded for quite some time, was the ultimate "rock bottom," and this is the rate at which most cryptocurrency buys were conducted. The rate dip below $6,000 triggered massive sell-offs, which snowballed and caused the further price collapse.

Overall, in the past week the cryptocurrency market lost more than $50 billion, and in total from mid-November – the time when market capitalization plunged below the psychologically significant mark of $200 billion – a total of about $80 billion. Bitcoin is just now starting to make a weak recovery, trying to at least hang on to $4,000 rate.

The reasons for the downward spiral are complex and interconnected: panic fed by the long-term bear trend, speculators activity, the questionable and risky Bitcoin Cash hardfork, traders' inclination to divest of bitcoin and invest in Tether stablecoins. Also, because of the general decrease in liquidity, major institutional players are yet to invest large sums into cryptocurrencies. The lack of inflow of new capital resulted in the market's continued low liquidity and overall touchiness. Any and all of these factors may have triggered the recent collapse.

The Bitcoin Cash hardfork was also an interesting case. It made quite a splash and undoubtedly played a major role in the market crash. As of right now, the main result is the wild upswing of one of the new forks, Bitcoin Cash SV. In just two weeks it jumped from 1733rd to the 9th place in the list of top cryptocurrencies. Naturally, its developers have already claimed that their currency is now the authentic bitcoin. The situation most definitely bears close monitoring as things evolve rapidly.

Daria Generalova, Managing Partner at ICOBox, has this to say: "All signs point to the fact that large institutional investors are chomping at the bit to move into the digital assets market, and introducing services for institutional investments would serve to increase the market's liquidity. One can even hypothesize that the recent developments are a very sophisticated, well-planned campaign devised by the whales of the industry. Only the fittest survive in the cryptomarket. The crash will rid the space of amateur speculators, and once institutional investors have come in and grabbed the lion's share of the tokens at dirt-cheap prices, the cryptocurrency values may skyrocket."

Code of Conduct for the Crypto Industry: Long-Overdue and Welcome

Ten financial and tech companies have just announced that they are establishing an Association for Digital Asset Markets (ADAM) to develop a “code of conduct” for the cryptocurrency market. ADAM’s founding members include such serious market players as merchant bank Galaxy Digital, global financial services firm BTIG, fintech firm Paxos, and crypto liquidity solutions provider GSR.

ADAM will be working with regulators to create “comprehensive standards” for digital asset market participants and provide a framework for “ethical conduct” and “professionalism,” according to the freshly issued press release.

Dima Zaitsev, Head of International PR at ICOBox, salutes the news. "Transparency is at the very core of blockchain technology. Yet humans will always be humans, and this industry, like many others, has been plagued by unsavory practices pretty much from the start. Creating and fine-tuning the rules of the game is extremely important. As the authorities around the globe are pondering how to regulate the wild crypto market, it is imperative that we as industry participants get a seat at the table."

ADAM’s code of conduct is intended to work in conjunction with existing laws and regulations to help develop a fair and well-organized digital asset market and provide an added layer of confidence to both innovators and investors. The new partners envision the code that will include guidelines on "market integrity, risk management, KYC and AML, custody, record keeping, clearing and settlement, market manipulation, data protection, and research."

Ethereum Developers Are Looking to Make Big Changes Soon

It appears that a private meeting of Ethereum developers took place at the DevCon4 conference in October to discuss the future of the network. The discussion seemed to focus on accelerating major changes to the network, now rumored to be scheduled for June 2019. Talks of large overhauls have been public for a while but apparently developers are stressing that the impending changes need to be kept private for now to ensure early stage coordination before inviting public feedback.

Ethereum is currently the most popular blockchain development platform and any updates will have industry-wide effects. The set of changes in June will likely focus on alterations to Ethereum’s virtual machine (EVM) and changes to the costs of smart contracts by introducing “rent” for storing the contracts. The developers are seeking to make Ethereum more efficient and manageable by making computation more dynamic and storage more compact.

Ethereum creator Vitalik Buterin is reportedly wary of private discussions about the future of the network, calling for as much transparency and community input as possible. Because so many projects are being developed on the Ethereum platform, any changes will likely spark passionate debate and lead to contentious actions. It is believed that the developers are already planning a hardfork because the update will be so significant.

ICOBox Managing Partner Daria Generalova says, "Rapid innovation is always welcome, but as a community, we cannot be careless in our efforts to push forward. Hopefully the Ethereum updates will be unveiled sooner than later and uncontroversial. We don’t need another BCH situation."

Judge Re-Ignites Debate Over SEC’s Labeling of Tokens as Securities

A US district judge in California ruled that the Securities and Exchange Commission (SEC) failed to prove tokens issued by Blockvest during its ICO qualified as securities. The judge argued that Blockvest’s tokens did not pass the Howey Test, because the investors did not expect to make a profit, and therefore, do not qualify as securities.

However, Blockvest’s legal troubles are far from over. Aside from failing to properly register with the SEC, Blockvest advertised that their project had approval from the Blockchain Exchange Commission, which is not a real governmental regulatory body. Both are illegal and will have legal ramifications.

Blockvest’s ICO was a small and unsuccessful fundraising attempt, only collecting ten thousand dollars from thirty-two investors who were mostly friends of the founder, but it does highlight that the debate on token properties is just getting started.

Legal protection for both token issuers and token buyers will be paramount moving forward. Clear regulatory guidelines need to be established, but cases like this highlight that much debate still needs to be had before concrete regulations are laid down. Tokens are a new type of exchange medium and must be handled as such.

In the short term, Blockvest is a good example of how not to run an ICO. False claims about accreditation and registration, relying on friends for funding and a hazy marketing strategy are all recipes for disaster.

"Legal challenge to the SEC’s regulations on tokens as securities is a small win for crypto. Not because tokens shouldn’t be regulated as such, but because it sets the stage for further discussion on how they should be handled," says ICOBox CEO Andriy Zinchuk.

Dima Zaitsev
ICOBox
415-481-8528
dima@icobox.io