April 13th, 2022

Are Regulations and Sanctions Driving Change in the Crypto Industry?

The powerful combination of incoming crypto regulation in the US, and the immediate global impact of Russian sanctions, mean the crypto exchange market looks to be in for a serious shake up in 2022. Just this week US Senator Elizabeth Warren announced a new piece of legislation to stop crypto businesses outside the US from working with sanctioned companies. It also authorizes the Financial Crimes Enforcement Network (FinCEN) to force US citizens with crypto transactions of $10,000 or more to report them.

Clearly global sanctions against Russia have moved crypto exchanges firmly into the center of geo-politics for the first time. Coinbase announced it was banning 25,000 Russian accounts. While Binance declared that: “To unilaterally decide to ban people’s access to their crypto would fly in the face of the reason why crypto exists.” But just as revealing was the news from Wasabi Wallet that it will start introducing censorship methods into its mixing procedures, showing that fear of regulation was starting to impact beyond mainstream exchanges even before Warren’s planned legislative action.

What this means in all probability is that the advantage the exchanges outside the US had in largely ignoring regulations, benefiting from lower overheads and restrictions to their business activity is well and truly over. It’s not all bad news, as the positive response to the US administration’s crypto executive order shows, but it certainly means the industry needs to consider what this means for the long term, and what this means for crypto investors and traders looking for the best deal or the most secure transactions.

The US executive order underlines the seismic changes in the administration’s approach to crypto by seeking “to establish the first-ever comprehensive federal digital assets strategy for the United States” and by directing the Depart of Commerce to create a framework that “drives U.S. competitiveness and leadership in, and leveraging of, digital asset technologies.” In summary the administration’s six key priorities, according to the fact sheet, are to protect US interests, protect global financial stability, prevent illegal uses, promote responsible innovation, financial inclusion, and US leadership. As confirmed in a CoinDesk report, the order does not lay out specific positions the administration wants agencies to adopt, or impose new regulations on the sector. Indeed, it was welcomed by many in the industry who see it as a positive step forward. According to Jeremy Allaire, the CEO of Circle, which runs stablecoin USDC, “this is a watershed moment for crypto, digital assets, and Web 3 akin to 1996/1997 entire government wakeup to the commercial internet.”

Circle CEO Jeremey Allaire in a Twitter thread responding to the news.

But as the legislative moves by Senator Warren demonstrate, its actions and not words that count. The recent news of action to reign in the SEC by the US Congress after its enforcement arm chased “information from unregulated cryptocurrency and blockchain industry participants in a manner inconsistent with the Commission’s standards for initiating investigations” shows that significant risks for crypto exchanges remain while the US decides its crypto policy.

Despite the understandable focus on the US crypto regulation in recent weeks this sea change hasn’t appeared overnight, for example the China ban on crypto trading and mining took place in 2021, after the ICO ban in 2017. In contrast in Singapore, a leading location for the crypto industry, as late as July 2021, while the rest of the world was hellbent on cracking down on crypto, “crypto players like Binance have found Singapore to be a paradise of opportunity, even while a regulations storm looms over the industry in other parts of the globe.” As recently as last October following the latest crypto crackdown in China, the city-state of Singapore was seen as a chief beneficiary of fleeing businesses.

But then in December 2021 Binance, with a daily turnover of US$76 billion, no doubt fed up with the delays and opaqueness of the MAS licensing system, withdrew its Singapore application. In 2022 how Binance responded is also revealing, with its move to partner with Paysafe in the UK, providing the exchange with access to the UK payments network despite concerns from the UK financial regulator the FCA. While this week Binance’s CEO CZ has been meeting Brazilian regulators after signing an MOU to buy a securities brokerage and secured a virtual asset license in Dubai in a series of moves underling its look to secure its future in a more regulated crypto marketplace.

All these moves, along with competitors such as FTX and Coinbase, are to establish a future in the more regulated global environment in crypto. Anndy Lian, chairman of BigONE Exchange said, “I believe these twin forces of policy regulation led by the US, and even tighter Russian sanctions on crypto transactions, will in the near future in the next 12 – 18 months result in an expanded more regulated sector with greater competition particularly between exchanges and tighter profit margins than in the past.” Speaking after his expert contribution to Crypto Expo Dubai, Lian suggested this meant that decentralized exchanges, and privacy platforms, will be more clearly separated from the mainstream than in the past. “What does this mean for mainstream exchange service and offerings? The bottom line is that it’s got to be led by the needs of the community, by the exchange’s users,” he added.

How best to accomplish this community involvement is clearly still up for grabs. Notable are the remarks by Ethereum’s co-founder Joseph Lubin who has questioned the longer term viability of Solana, which in his eyes pays overly generous rewards to users validating transactions on the network, all backed up by generous VC cash. Solana needs to “figure out a more sustainable business model for the network”, Lubin said. In response to Lubin’s criticism, Solana Labs, said that “simply looking at protocol revenue doesn’t tell the full story of the long-term performance” of a blockchain’s economic model. Figuring out the economic model for crypto businesses, faced with new regulation and Russian sanctions, whether decentralized or centralized, is key to the future of the long term future of the crypto sector.

Speaking on the panel ‘Why are crypto exchanges still flourishing?’ at Crypto Expo Dubai on March 16 Lian warned: “I believe being regulated is a very good thing, it’s the reason I invested my time in giving cryptocurrency and blockchain advice to government over the years. But the thing is we also have to understand the other side of the crypto startup equation which is innovation; if we kept ourselves solely in the sandbox environment, in a closed regulated environment it the real risk is the innovative decentralized aspect will be lost and we’ll end up with a centralized world.”

Original Source: https://www.securities.io/are-regulations-and-sanctions-driving-change-in-the-crypto-industry/

Anndy Lian

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com

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March 10th, 2022

How NFTs create new opportunities in the entertainment industry

The non-fungible token (NFT) community Arabian Camels is making a $50 million Hollywood film called “Antara.” The movie makers recently announced a highly anticipated NFT drop for the project, which allows holders to partly fund the movie, own a share of digital rights and benefit from its box office achievements.

NFTs started out as standalone pieces of art and memes by individual creators and today is a massive industry that’s swarming with innovative NFT projects today. In 2021 alone, an estimated $41 billion worth of NFTs were sold, which is a testament to their growing popularity and value.

Major industries like art and gaming have benefited from NFTs already, and recent developments suggest that the realm of entertainment could be next in line to receive a transformative blow from the NFT industry.

Integrating NFTs into the movie business

Worth over $2.2 trillion, the global entertainment industry isn’t only one of the most valuable industries in the world but also a huge part of our culture. Over the span of a century, the industry has never failed to amaze its audience with enticing movies, TV shows, music, and it has stood the test of time, staying relevant even today.

The entertainment industry has historically been quick to adapt to technological advancements, whether with the advent of television sets back in the day or streaming services of the 21st century, and it uses these technological advancements to its advantage to keep viewers hooked. So, it’s only natural that when a revolutionary technology like NFTs presents itself, the industry embraces it. The opportunities this brings to the table are truly groundbreaking.

Transforming the entertainment industry

NFTs in entertainment have the potential to completely transform the way films are made, produced, and distributed, democratizing this unilateral industry in the process. To understand this better, we go back to Arabian Camels’ Antara project. This big-budget Hollywood epic is one of the first films to be produced by the NFT community, demonstrating the concept of movie NFTs.

For the makers and producers of films, this means that they’re no longer limited by budget constraints or the difficult financing methods of top production houses. Movie NFTs provide a way for them to distribute part ownership of the movie to its viewers, raising the required funds in the process. This is especially useful for budding filmmakers and artists who are hardly visible in the industry. Specific roles like “producer” can be represented and offered as an NFT, making its owner the producer of the film. And through all the stages of filmmaking, NFTs can be offered as a way to include the community in the decision-making process, market the project and build a loyal fanbase beforehand.

For the elite production houses and large film franchises with millions of followers, however, NFTs provide a unique opportunity to solidify their fandom in the metaverse. Multiple production studios like Disney are already working on NFT marketplaces and in a recent development, Lionsgate signed a strategic partnership with the NFT platform Autograph to create NFTs for huge franchises like Mad Men, John Wick, and The Hunger Games.

“NFTs present a tremendous opportunity for mixed-reality world-building experiences, deepening user engagement and interaction and fostering a community for our hundreds of millions of global consumers to create one-of-a-kind digital collections and Autograph is the optimal destination for this discovery,” claims Jenefer Brown, Executive VP & Head of Lionsgate Global.

The NFTs to be released could range anywhere from character avatars to video clips from the films.

Now, in the case of emerging artists, technicians, musicians and directors, NFTs could be their on-ramp to popularity within the industry. The fact that Ben Mauro, a Hollywood concept artist, earned more in seven minutes with his NFT collection than he has in the 12 years of working in Hollywood is telling. Just like Mauro, these emerging artists could use NFTs in unique ways to represent their talent, garner an audience and increase their visibility in the industry.

Movie merchandising is another realm where NFTs in entertainment could make a huge difference. Fans have long been collecting posters, clothing and character figures from their favorite films, and NFTs add a new dimension to this. The rarity of NFTs gives fans the satisfaction of owning a part of the film that cannot be replicated. Celebrities can also make the most of this opportunity by creating NFT merchandise collections for their fanbase. This particular trend has picked up quite recently and celebrities like Eminem, Justin Beiber, SnoopDogg and Jimmy Fallon have all followed suit.

While these are the current use-case scenarios, Anndy Lian, Chairman of BigOne exchange, says that NFTs could soon be embedded into movies, making them interactive and giving users something to hunt for.

If we look at the whole picture, the integration of NFTs into the entertainment industry allows users to actively participate every step of the way. Both viewers and creators have the chance to connect beyond the screen and thus take the industry to unimaginable dimensions.

How NFTs open closed doors

Since its inception, the entertainment industry has been opaque in its operations, shutting down external interference. This stringent way of operation vastly limited opportunities for emerging artists trying to make it in the industry. But with the NFT integration, the entertainment industry is now opening its door to a wider section of artists, producers, and viewers. While producers and creators have new ways of monetizing their work and raising funds, viewers now have a way to directly participate in the industry’s happenings, not only to fund films but also earn from their gain. This symbiotic relationship between viewers and creators could change the face of global entertainment in the years to come.

Original Source: https://venturebeat.com/2022/03/08/how-nfts-create-new-opportunities-in-the-entertainment-industry/

Anndy Lian

www.anndy.com

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March 1st, 2022

Market Manipulation in the Cryptocurrency Industry

News last week of the first ever seizure of NFTs by the UK tax agency in response to suspected tax fraud was a sign that last year’s booming NFT economy maybe running into some roadblocks in 2022. While recent data show that trade in NFTs rose from $106 million in 2020, to $44.2 billion in 2021, it’s a sign this meteoric rise is attracting the attention of authorities. And in the US, following reports of insider trading in NFTs and price manipulation, crypto-related crimes are the focus of a new National Cryptocurrency Enforcement Team. While there has been a lag in enforcement, as criminal and tax enforcement authorities struggle to play catch up, it’s clear cases of fraud and market manipulation in the crypto market are likely to hit the headlines in ever growing numbers in 2022.

Just last month it was reported that OpenSea NFT marketplace rival LooksRare was experiencing significant wash trading as some traders were taking advantage of its token-based rewards system. LooksRare gives away its own LOOKS token to users who trade in specific collections, worth over $12 million a day back in January. What raised suspicions was the trading back and forth of NFTs for inflated prices, which appears to have been motivated by a desire to boost the share of trading rewards. “Such wash trading tactics to manipulate token rewards distribution may not be illegal, but it’s distorting the data coming out of the marketplace,” argued Andrew Hayward in Decrypt. “LooksRare can tout figures that show significantly higher trading volume than OpenSea, but when the bulk of the top transactions appear to have been executed purely to game the system, the data holds little value,” he added.

The problem of wash trading in NFTs is a critical problem, both for the industry at large as well as for individual investors who want to invest in this exciting asset class without fear of fraudulently inflated prices. The practice of wash trading is when someone both buys and sells the same NFT or cryptocurrency to give the impression of greater trading volume, creating an impression of greater demand; this in turn helps inflate the NFTs price and attractiveness to buyers. In a recent investigation into this practice blockchain experts Chainalysis discovered that 262 NFT sellers had conducted more than 25 times to a self-financed address, in other words wash trading. While more than half the wash traders made a loss, by paying more in gas fees than they made, the investigation found that, “110 profitable wash traders have collectively made nearly $8.9 million in profit from this activity. Even worse, that $8.9 million is most likely derived from sales to unsuspecting buyers who believe the NFT they’re purchasing has been growing in value, sold from one distinct collector to another.”

Of course, market manipulation is wider than the NFT market, and in a relatively unregulated environment this has the tendency to increase the volatility of the market, affecting market sentiment and pricing. Although in principle cryptocurrency and tokenized assets rely on decentralized networks, the dangers of crypto criminal activity force regulators to monitor the crypto sector. Indeed, the market is still so easy to manipulate that even a tweet by a famous influencer. While Matt Damon’s ‘Fortune Favors the Brave’ crypto ad was widely mocked on social media, it underlines the power of celebrity endorsement in the space which shows no sign of changing. In the recent Super Bowl leading marketplace Coinbase spent close to $14m on a simple bouncing QR code-based ad, but the remainder drew heavily on celebrity endorsement, from LeBron James giving advice to his teenage self to comedian Larry David satirizing the fear of missing out in an FTX ad. It’s true the core appeal of NFTs going forward is the way it enables a direct relationship between fans and celebrities, the power of celebrity is also ripe for exploitation.

Within the wider cryptocurrency market, regulators are increasingly focusing on this kind of market behavior with recent warnings to retail investors in Singapore. While the FCA in the UK is currently consulting on concerns about “the ease and speed with which people can make high-risk [crypto] investments by proposing a significant strengthening of its rules on how high-risk financial products are marketed.” Sarah Pritchard, Executive Director of Markets at the FCA, explained the thinking behind the current action in preparation for the UK Government bringing the promotion of crypto investments under the FCA’s remit: “Too many people are being led to invest in products they don’t understand, and which are too risky for them. People need clear, fair information and proper risk warnings if they are to invest with confidence, which is the central aim of our consumer investments strategy.”

Typical market manipulation strategies:

Pump and dump

Pump and dump refer to an individual or a group pooling funds to inflate a token and profit from the price growth, by selling a token once it has attracted the attention of other investors, at an inflated price. While so-called ‘pump and dumps’ have made a lot of money for a few people, the causalities are new investors who are unaware of what is going on are more likely to fall victim and lose their money.

Wash trading

As outlined wash trading is the practice of buying and selling a NFT or token asset to yourself to inflate its volume, which in turn attracts attention and helps inflate prices. There are numerous instances where unregulated exchanges or crypto traders use this method by trading a token in huge volumes for its value to receive attention, distorting the market even further and benefiting the manipulators.

Spoofing

This strategy was prevalent, particularly in the early days of cryptocurrency, and it is still used on small, unregulated exchanges. The approach involves placing a huge order to generate create fake demand. Essentially, the order can influence a bullish or bearish sentiment to the favor the fraudulent trader. Typically, they will place big sell orders to trick novice investors into panic-selling, before removing their sell order and acquiring tokens at a lower price.

How to best avoid market manipulation

The best advice to crypto investors is to conduct thorough research to avoid falling prey to manipulated cryptocurrency projects. You can also cross-check all information about a token to verify and fully understand the factors behind an asset’s movement and price action. Furthermore, traders can make informed selections by sticking to making decisions based on longer term trends rather than recent bias. It’s also critical for you to diversify your portfolios to protect yourself from unforeseen market manipulation, as the likelihood of market manipulation affecting all your crypto assets is low. And to bear in mind that the lower the volume of certain coins is makes them easier to manipulate.

The cryptocurrency market is risky like any other asset trading market. The downside is that continued market manipulation is prompting regulators to step up their efforts to monitor the cryptocurrency market. However, with big money to be made market manipulators will seek to conceal their actions, so investors still need to educate themselves on how to detect and deal with these issues. Within the industry cryptocurrency exchanges are taking the initiative, for example with the recent launch of the Crypto Market Integrity Coalition, to help combat fraud and promote public and regulatory trust. BigONE Chairman Anndy Lian said that in terms of NFTs there needed to be a common industry standard to ensure both ownership and copyright. “I always encourage everyone in crypto to work hard for their holdings. Shill properly, ethically, and smartly. It is a fine line between good shill and spam. My motto is ‘respect everyone’. This is my way of life. But when I see a scam, I will point it out. At the end of the day, it’s a shared responsibility between crypto community members and the teams behind crypto projects.”

Original Source: https://www.securities.io/market-manipulation-in-the-cryptocurrency-industry/