Business Insider reports: The bitcoin price was set for its biggest one-week fall since September on Saturday morning, having slipped around 10% since Monday...

Bitcoin came under selling pressure this week after Janet Yellen, Joe Biden's pick for Treasury secretary, suggested the use of cryptocurrencies should be "curtailed" because they were used mainly for "illicit financing".
Writing at Nasdaq.com on Thursday, CoinDesk shared a link to U.S. Treasury Secretary nominee Janet Yellen's later written responses to the same questions, where Yellen states that bitcoin and other cryptocurrencies also offer potential benefits to the U.S. and its allies.

"At the same time, it also presents opportunities for states and non-state actors looking to circumvent the current financial system and undermine American interests. For example, the Central Bank of China just issued its first digital currency." I think it is important we consider the benefits of cryptocurrencies and other digital assets, and the potential they have to improve the efficiency of the financial system. At the same time, we know they can be used to finance terrorism, facilitate money laundering, and support malign activities that threaten U.S. national security interests and the integrity of the U.S. and international financial systems.

I think we need to look closely at how to encourage their use for legitimate activities while curtailing their use for malign and illegal activities. If confirmed, I intend to work closely with the Federal Reserve Board and the other federal banking and securities regulators on how to implement an effective regulatory framework for these and other fintech innovations.

An anonymous reader quotes a report from Bloomberg: European Central Bank President Christine Lagarde took aim at Bitcoin's role in facilitating criminal activity, saying the cryptocurrency has been enabling "funny business." "For those who had assumed that it might turn into a currency -- terribly sorry, but this is an asset and it's a highly speculative asset which has conducted some funny business and some interesting and totally reprehensible money-laundering activity," Lagarde said in an online event organized by Reuters.

The remarks, made in a conversation largely focused on the euro-area's economic outlook, show top policymakers are taking notice as a speculative fever sweeps cryptocurrency markets. Bitcoin prices have more than doubled since November and topped a record $41,000 earlier this month. Concerns over money laundering and the ability of financial firms to know the identities of their clients have been at the forefront of the cryptocurrency debate. While critics say that instruments like Bitcoin make the illicit transfer of funds easier, crypto advocates say the network of digital ledgers known as the blockchain allows money to be traced more easily than cash and can actually help law enforcement.

Bitcoin breached the $20,000 level for the first time in history Wednesday, as crypto enthusiasts pointed to increased demand from institutional investors for the red-hot digital currency. From a report: The world's most-valuable virtual currency traded 4% higher to a price of around $20,327, according to market data from Coin Metrics, taking its year-to-date gains to more than 180%. Bitcoin has been on a tear this year. Analysts say it's gotten a boost from big-name investors such as Paul Tudor Jones and Stanley Druckenmiller moving their own assets into the cryptocurrency, while tech firms such as Square and MicroStrategy have also sought to flock into bitcoin.

Bitcoin investors, which include top hedge funds and money managers, are betting the virtual currency could more than quintuple to as high as $100,000 in a year. From a report: It's a wager that has drawn eye-rolls from skeptics who believe the volatile cryptocurrency is a speculative asset rather than a store of value like gold. Since January, bitcoin has gained 160%, bolstered by strong institutional demand as well as scarcity as payment companies such as Square and Paypal buy it on behalf of customers. Bitcoin is within sight of its all-time peak of just under $20,000 hit in December 2017. It debuted in 2011 at zero and was last trading at $18,415. Going from $18,000 to $100,000 in one year is not a stretch, Brian Estes, chief investment officer at hedge fund Off the Chain Capital, said. "I have seen bitcoin go up 10X, 20X, 30X in a year. So going up 5X is not a big deal."

PayPal has partnered with cryptocurrency company Paxos to launch a new service. PayPal users in the U.S. will soon be able to buy, hold and sell cryptocurrencies. More countries are coming soon. From a report: PayPal plans to support Bitcoin, Ethereum, Bitcoin Cash and Litecoin at first. You'll be able to connect to your PayPal account to buy and sell cryptocurrencies. Behind the scenes, Paxos takes care of trading and custody. In early 2021, PayPal wants to let you use your crypto assets as a funding source for your PayPal purchases. This could be a good way to use cryptocurrencies for everyday purchases without having to convert cryptocurrencies on an exchange first. There are 26 million merchants that offer PayPal around the world. For those merchants, customers paying in crypto won't have any impact. Everything will be converted to fiat currency when a transaction is settled. As part of today's move, PayPal has been granted a conditional BitLicense by the New York State Department of Financial Service. It should be able to launch its crypto service in partnership with Paxos in New York.

America's dreaded tax-collecting agency is sending "a strong warning to millions of crypto holders who aren't complying with the law that they must file required forms," reports the Wall Street Journal. The front page of this year's tax forms — just below "Name" and "Address" — will ask filers to declare whether they've received or exchanged any virtual currencies.

The Journal calls it "setting a trap for cryptocurrency tax cheats." "This placement is unprecedented and will make it easier for the IRS to win cases against taxpayers who check 'No' when they should check 'Yes, '" says Ed Zollars, a CPA with Kaplan Financial Education who updates tax professionals on legal developments... The change to the crypto question and other recent actions show the IRS is taking cryptocurrencies seriously as a threat to the tax system, whether the noncompliance is by enthusiasts who owe little or by sophisticated international criminals. In two recent nontax criminal cases — one involving theft by North Korea and the other involving the sale of child pornography by a Dutch national — the IRS has provided key assistance because of its growing expertise in cryptocurrencies....

For their part, many crypto users are angry with the IRS's guidance, which treats bitcoin, ether and their kin as property rather than currency. So if a crypto holder uses it to buy something or exchanges one cryptocurrency for another, there's usually a capital gain or loss to report on the tax return. "Buying a sandwich with cryptocurrency shouldn't be a taxable event," says Sean Cover, a New York City cryptocurrency holder who works in finance for a nonprofit group. He says that in 2017 he had more than 500 transactions on several platforms, and it took him 10 hours to prepare his crypto tax forms even though he paid for special software. Like some members of Congress, Mr. Cover supports a $200 threshold before crypto transactions would need to be reported. The IRS says it's up to Congress to change the law....

Meanwhile, the IRS is forging ahead with other crypto compliance measures. Earlier this month, it offered rewards up to $625,000 to code-breakers who can crack so-called privacy coins like Monero that attract illicit activity because they claim to be untraceable... The IRS is also sending a new round of letters to crypto holders who may not have complied with the tax rules, expanding on last year's mailing of about 10,000 letters. Tax specialists say the recipients are often customers of Coinbase, which was ordered by a federal court to turn over information on some accounts to the IRS.

The Office of the Comptroller of the Currency (OCC) is letting all nationally chartered banks in the U.S. provide custody services for cryptocurrencies. From a report: In a public letter dated July 22, Senior Deputy Comptroller and Senior Counsel Jonathan Gould wrote that any national bank can hold onto the unique cryptographic keys for a cryptocurrency wallet, clearing the way for national banks to hold digital assets for their clients. The letter marks a major development for the crypto industry. Previously, custody was the province of specialist firms, such as Coinbase, which typically needed a state license, such as a trust charter, to offer the service to large investors. Now, large, regulated financial companies that already provide similar safekeeping services for stock certificates and the like could enter the fray.

The letter, which appears to be addressed to an unidentified bank or similar entity, notes that banks may offer more secure storage services compared to existing options, and that both consumers and investment advisors may wish to use regulated custodians to ensure they don't lose their private keys, and therefore, access to their funds. "Providing custody for cryptocurrencies would differ in several respects from other custody activities," the letter said. It pointed to the need for digital wallets, adding that because they exist on a blockchain, there is no physical possession for cryptos. "The OCC recognizes that, as the financial markets become increasingly technological, there will likely be increasing need for banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers," the letter said. Banks can provide both fiduciary and non-fiduciary custodian services, the letter said.

The Quadriga cryptocurrency exchange that saw millions of dollars disappear just as its founder died was a "fraud" and Ponzi scheme, according to the Ontario Securities Commission. CBC.ca reports: The regulator said Thursday that Vancouver-based Quadriga's late founder Gerald Cotten committed fraud by opening accounts under aliases and crediting himself with fictitious currency and crypto asset balances, which he traded with unsuspecting clients. Cotten, the OSC said in a new report, ran into a shortfall in assets available to satisfy client withdrawals when the price of the crypto assets changed. He started running a Ponzi scheme that covered the shortfall with other clients' deposits, the agency determined.

"What happened at Quadriga was an old-fashioned fraud wrapped in modern technology," the OSC said. "Quadriga did not consider its business to involve securities trading and it did not register with any securities regulator. This lack of registration facilitated Cotten's ability to commit a large-scale fraud without detection. So did the absence of internal oversight over Cotten." On Thursday, the OSC attributed about $115 million of the $169 million clients lost to Cotten's "fraudulent" trading. Another $28 million was lost when Cotten used client assets on three external crypto asset trading platforms without authorization or disclosure. The OSC said he also misappropriated millions in client assets to fund his "lavish" lifestyle and because he was in sole control of the company ever since 2016, he "ran the business as he saw fit, with no proper system of internal oversight or controls or proper books and records." "Ernst & Young, Quadriga's bankruptcy trustee, was only able to recover $46 million in assets to pay out to clients," the report adds.

An anonymous reader quotes a report from CNN: It's official, Akon has his own city in Senegal. Known as "Akon City," the rapper and entrepreneur tweeted Monday that he had finalized the agreement for the new city. Akon, who is of Senegalese descent, originally announced plans for the futuristic "Crypto city" in 2018 saying that the city would be built on a 2,000-acre land gifted to him by the President of Senegal, Macky Sall. The new city would also trade exclusively in his own digital cash currency called AKoin, he said. The official website for the city said at the time it would be a five-minute drive from the West African state's new international airport. According to a video posted to the project's Facebook page, "all transactional activity" in Akon City will be conducted using AKoin.

"What's worrying is that, at this stage, there doesn't appear to be any white paper for Akon's cryptocurrency, so it's hard to gauge exactly what we're in for," reports The Next Web. "The associated website does however hype the release of a white paper and an 'explainer video' sometime before February this year."

Google will soon offer checking accounts to consumers, becoming the latest Silicon Valley heavyweight to push into finance. The Wall Street Journal: The project, code-named Cache, is expected to launch next year with accounts run by Citigroup and a credit union at Stanford University, a tiny lender in Google's backyard. Big tech companies see financial services as a way to get closer to users and glean valuable data. Apple introduced a credit card this summer. Amazon.com has talked to banks about offering checking accounts. Facebook is working on a digital currency it hopes will upend global payments. Their ambitions could challenge incumbent financial-services firms, which fear losing their primacy and customers. They are also likely to stoke a reaction in Washington, where regulators are already investigating whether large technology companies have too much clout.

The tie-ups between banking and technology have sometimes been fraught. Apple irked its credit-card partner, Goldman Sachs Group, by running ads that said the card was "designed by Apple, not a bank." Major financial companies dropped out of Facebook's crypto project after a regulatory backlash. Google's approach seems designed to make allies, rather than enemies, in both camps. The financial institutions' brands, not Google's, will be front-and-center on the accounts, an executive told The Wall Street Journal. And Google will leave the financial plumbing and compliance to the banks -- activities it couldn't do without a license anyway.

An anonymous reader quotes a report from TechCrunch: A Dutch court has ruled that Facebook can be required to use filter technologies to identify and preemptively take down fake ads linked to crypto currency scams that carry the image of a media personality, John de Mol, and other well known celebrities. The Dutch celerity filed a lawsuit against Facebook in April over the misappropriation of his and other celebrities' likeness to shill Bitcoin scams via fake ads run on its platform.

In an immediately enforceable preliminary judgement today the court has ordered Facebook to remove all offending ads within five days, and provide data on the accounts running them within a week. Per the judgement, victims of the crypto scams had reported a total of ~$1.8M in damages to the Dutch government at the time of the court summons. It's not yet clear whether the company will appeal but in the wake of the ruling Facebook has said it will bring the scam ads report button to the Dutch market early next month.

The IRS's criminal division identified "dozens" of potential cryptocurrency tax evaders or cybercriminals after a meeting this week with tax authorities from four other countries. Bloomberg reports: Officials from the U.S., U.K., Australia, Canada and the Netherlands -- known as the Joint Chiefs of Global Tax Enforcement -- shared data, tools and tax enforcement strategies to find new leads in a quest to mitigate cross-border money-laundering, tax evasion and cybercrime. The IRS's cybercrime unit has developed expertise in "who is moving the money and where it's going," Ryan Korner, a senior special agent in the IRS's Criminal Investigations office in Los Angeles, said in a call with reporters Friday. "We have tools in place that we didn't have six months or a year ago."

The effort is part of the Internal Revenue Service's renewed focus on fighting tax evasion tied to cryptocurrency as digital currency has become more popular and gained in value. The agency has struggled in recent years to enforce tax laws and keep up with criminals as technology has advanced. "Tax fraud is not a new crime, but the sophistication with which criminals commit tax fraud has significantly increased through cyber-related activities in recent years," the joint chiefs said in a statement. "Data breaches, intrusions, takeovers and compromises are the new tools that criminals use to commit tax crimes." The IRS is preparing for a new wave of cryptocurrency audits. The agency sent letters to more than 10,000 people earlier this year, warning that they might be subject to penalties for skirting taxes on their virtual investments. The IRS and its partners are using data from previous enforcement activities to find new criminals, Korner said. Using the data from the five countries gives them a broader view of how accounts, money and people are connected.

David Marcus, the head of Facebook's cryptocurrency projects, says that Bitcoin is digital gold, but it's not a good currency for transactions. From a report: "I don't think of Bitcoin as a currency. It's actually not a great medium of exchange because of its volatility," Marcus said speaking at the New York Times DealBook Conference in New York. "I see it as digital gold." Marcus said Bitcoin is like gold because you can hold on to it as an investment just as people do with actual gold, but the drastic upswings and dips that Bitcoin goes through makes it a bad option for people who need a system to send remittances across borders. That is a key market that Facebook is targeting with its Libra cryptocurrency and Calibra digital wallet. Unlike Bitcoin, Libra's value will be tied to currencies like the U.S. dollar and the Euro, which will help it remain stable. Marcus said a key reason that Bitcoin has not been regulated out of existence is because it is not perceived to be a medium of exchange. "It's an investment class that's decorrelated from the rest of the market," Marcus said. "Why feel threatened by that?"

"The price of Bitcoin skyrocketed overnight, rising by nearly 40 percent from a recent low," reports Newsweek: The sharp turn came as Chinese President Xi Jinping spoke highly of the decentralized technology on which the digital currency is founded, telling members of the Political Bureau of the Central Committee that the country should "seize the opportunity" of blockchain... China banned cryptocurrency exchanges in 2017, and Xi's comments are believed to be among his first to embrace blockchain technology so thoroughly.

The price of Bitcoin cracked $10,000 briefly Friday night, a symbolic but notable threshold the digital currency has not reached in over a month, at which point it had been enduring a steep sell-off. Xi's speech may have suggested to investors that a potentially expansive consumer base for cryptocurrency could begin to open, although other reporting has suggested that Bitcoin could instead face China as a competitor, rather than an open market. Mu Changchun, a deputy director at the People's Bank of China, said at an event sponsored by the China Finance 40 Forum in August that the country is "close" to releasing its own cryptocurrency. The bank has apparently been working on such technology since last year.

Bitcoin has had something of a volatile week, owed in large part to testimony delivered Wednesday by Facebook CEO Mark Zuckerberg, whose company is seeking to develop its own cryptocurrency: Libra... Democrats on the committee were largely unsatisfied with Facebook's promises, and analysts have suggested that their lack of enthusiasm may have cast a pall over cryptocurrencies more broadly, contributing to a major sell-off of Bitcoin Wednesday. The price sank to its lowest in five months. Increased regulatory scrutiny of Libra was largely credited for the decline. However, recent events, such as Xi's speech and a potential "short squeeze," have reinvigorated interest in Bitcoin, even if the market for cryptocurrencies remains plagued with uncertainty.

Facebook CEO Mark Zuckerberg will testify before the House Financial Services Committee on Wednesday, telling lawmakers that the Facebook-backed libra cryptocurrency "will extend America's financial leadership as well as our democratic values and oversight around the world." From a report: "While we debate these issues, the rest of the world isn't waiting. China is moving quickly to launch similar ideas in the coming months," Zuckerberg said in his prepared remarks. "Libra will be backed mostly by dollars and I believe it will extend America's financial leadership as well as our democratic values and oversight around the world. If America doesn't innovate, our financial leadership is not guaranteed."

Zuckerberg's testimony comes after a rough few weeks for the Libra Association, which is the group that governs the libra cryptocurrency. The Libra Association saw its membership dwindle down to 21 after the departures of Visa, Mastercard, PayPal, eBay, Stripe, Booking and Mercado Pago. When Facebook announced libra, the social media company said that it planned to launch the digital currency in 2020. Since then, the company has said that it will not launch Libra until it receives regulatory approval. Zuckerberg reiterated that stance in his prepared remarks. "Even though the Libra Association is independent and we don't control it, I want to be clear: Facebook will not be part of launching the Libra payments system anywhere in the world until US regulators approve," Zuckerberg said. In his remarks, Zuckerberg also stressed that the future of the libra cryptocurrency is now in the hands of the Libra Association, not Facebook. "By design, we don't expect to be leading those efforts going forward," Zuckerberg said. "The Libra Association has been created, has a governance structure in place, and will be driving the project from now on."

Malware that mines cryptocurrency made a comeback over the summer, with an increased number of campaigns being discovered and documented by cyber-security firms. From a report: The primary reason for this sudden resurgence is the general revival of the cryptocurrency market, which saw trading prices recover after a spectacular crash in late 2018. Monero, the cryptocurrency of choice of most crypto-mining malware operations, was one of the many cryptocurrencies that were impacted by this market slump. The currency also referred to as XMR, has gone down from an exchange rate that orbited around $300 - $400 in late 2017 to a meager $40 - $50 at the end of 2018. But as the Monero trading price recovered throughout 2018, tripling its value from $38 at the start of the year, to nearly $115 over the summer, so have malware campaigns.

These are criminal operations during which hackers infect systems with malware that's specifically designed to secretly mine Monero behind the computer owner's back. Starting with the end of May, the number of reports detailing crypto-mining campaigns published by cyber-security firms has exploded, with a new report published each week, and sometimes new campaigns being uncovered on a daily basis.

At least three of the 28 entities that have signed on for Facebook's planned Libra currency are now getting nervous about the project, according to a new report from the Financial Times. And Facebook is just as worried about being the only company currently with its "neck out," as regulators push back against the plan to create a new digital currency from thin air. From a report: The companies, which some have dubbed the "crypto mafia," include heavy hitters from Silicon Valley and Wall Street, like Uber, Spotify, Visa, and Mastercard. They're all partners in the Libra Association, a new organization based in Switzerland that is coming under scrutiny from governments around the world. The Chair of the U.S. Federal Reserve, EU antitrust regulators, the French Finance Minister, the Senate Banking Committee, the House Committee on Financial Services, and the Secretary of the U.S Treasury have all expressed doubts about Libra, so it's easy to see why some companies might be getting cold feet. But these companies aren't just worried about Libra's future as a digital currency. Their main concern seems to be that government regulators may want to look deeper into each company's primary business after they're done tearing Libra to shreds.

Forbes notes that other financial transaction platforms hope to benefit from Facebook's struggles in launching its Libra cryptocurrency -- including Celo. The key value proposition of the assets running on top of the [Celo] platform is that they are immune to the wide swings in volatility that have plagued leading crypto assets in recent years. Many are designed to mirror the price movements of traditional currency, and most have names that reflect their fiat brethren, such as the Gemini Dollar. This is a critical need for the industry, as no asset will be able to serve as a currency if it does not maintain a consistent price. However, rather than being a centralized issuer that supports the price pegs with fiat held in banks, Celo has built a full-stack platform (meaning it developed the underlying blockchain and applications that run on top), that can offer an unlimited number of stablecoins all backed by cryptoassets held in reserve.

Furthermore, Celo is what is known as an algorithmic-based stablecoin provider. This distinction means that rather than being a centralized entity that controls issuances and redemptions, the company employs a smart-contract based stability protocol that automatically expands or contracts the supply of its collateral reserves in a fashion similar to how the Federal Reserve adjusts the U.S. monetary supply... Additionally, a key differentiator for Celo from similar projects is that for the first time its blockchain platform allows users to send/receive money to a person's phone number, IP address, email, as well as other identifiers. This feature will be critical to the long-term success for the network because it eliminates the need for counterparties in a transaction to share their public keys with each other prior to a transaction.

And now... Celo is open-sourcing its entire codebase and design after two years of development. Additionally, the company is launching the first prototype of its platform, named the Alfajores Testnet, and Celo Wallet, an Android app that will allow users to manage their accounts and send/receive payments on the testnet.

This announcement and product is intended to be just the first of what will be a wide range of financial services applications designed to connect the world.
Celo's investors include LinkedIn founder Reid Hoffman and Twitter/Square CEO Jack Dorsey, the article points out, as well as some of Libra's first members, "including venerated venture capital firm Andreessen Horowitz and crypto-unicorn Coinbase."

President Donald Trump on Thursday night warned Facebook over its plan to create digital currency Libra, a move that poses a new obstacle to the company's cryptocurrency ambitions. From a report: "Facebook Libra's 'virtual currency' will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks," Trump said in a series of posts on Twitter. In the tweets, the president also expressed scepticism of digital currencies in general. "I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air," Trump wrote. "Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity." Trump's entrance into the debate over Bitcoin and Libra could mark a significant development for crypto enthusiasts. The White House has largely remained silent on the subject even as federal regulators like the Securities Exchange Commission, Commodity Futures Trading Commission and units of the Treasury Department have grappled with how to regulate virtual coins.

An anonymous reader quotes a report from the BBC: Bitcoin uses as much energy as the whole of Switzerland, a new online tool from the University of Cambridge shows. The tool makes it easier to see how the crypto-currency network's energy usage compares with other entities. However, one expert argued that it was the crypto-currency's carbon footprint that really mattered. Currently, the tool estimates that Bitcoin is using around seven gigawatts of electricity, equal to 0.21% of the world's supply. That is as much power as would be generated by seven Dungeness nuclear power plants at once. Over the course of a year, this equates to roughly the same power consumption as Switzerland. "The University of Cambridge tool models the economic lifetime of the world's Bitcoin miners," the report adds. "It uses an average electricity price per kilowatt hour ($0.05) and the energy demands of the Bitcoin network. Finally, the model assumes that all the Bitcoin mining machines worldwide are working with various efficiencies."

A study published last month in the scientific journal Joule found that the electricity used for Bitcoin produces about 22 megatons for CO2 annually. That is as much as Kansas City in the U.S.