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Ripple Becomes Second-Largest Fintech Firm in the US, Sold $500,000,000 in XRP to Fund Crypto Startups: Report



The blockchain-focused remittance company Ripple has earned the number two spot on a new list of the most valuable companies in fintech.

The San Francisco remittance company was valued at $10 billion after raising $200 million in a Series C funding round in December. The 10 biggest fintech companies in America 2020, according to Forbes, places Ripple in second place, just behind the payment processing giant Stripe, which is valued at $35 billion, and ahead of crypto exchange Coinbase, which is valued at $8.1 billion.

Robinhood, Chime, Plaid, SoFi, Credit Karma, Opendoor and Root round out the top 10.

Ripple’s valuation is partly fueled by its ownership of more than half of the total supply of XRP, the third-largest cryptocurrency by market cap.

Last year, the company sold $500,000,000 worth of XRP and according to Forbes, used the proceeds to invest in blockchain and cryptocurrency startups. In July of 2019, Ripple announced that it had reached that figure of half a billion dollars in total investments through its fundraising arm Xpring.

Here’s a look at Ripple’s sales throughout the year.

Ripple’s fundraising and development arm Xpring has invested in a number of crypto-based startups including Kava Labs, Dharma Protocol, Raised in Space Enterprises, Robot Ventures and SendFriend.

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Countries Buckle Up as FATF’s Travel Rule Deadline Approaches



The Financial Action Task Force (FATF) published its travel rule last June, in which it proposed a means through which cryptocurrency exchanges and other asset custodians could operate while also staying in compliance with existing Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. 

In that time, several countries have taken different paths towards regulating the crypto space concerning information control and user identity. 

When the FATF proposed the travel rule, it explained in an accompanying press release that it would be giving its member countries a maximum of a year to ensure full compliance and get their native crypto industries in line. Now that the deadline seems to be up, several countries have done their bit to adopt progressive rules concerning the agency’s requests.

Compliance is Strong in the U.S.

In the United States, the Bank Secrecy Act forms the basis of AML regulations. Financial institutions have complied with the regulation for decades, but in 2013, the Financial Crimes Enforcement Network (FinCEN) demanded that cryptocurrency companies should be made to ensure full compliance as well. The agency also enacted its BSA travel rule for crypto companies last year, issuing its guidelines to digital asset service providers. 

Earlier this week, Steve Mnuchin, the Secretary of the United States Treasury, announced at a hearing with the Senate Committee on Financial Services that the FinCEN is also working on developing cryptocurrency laws. As he explained to the Committee, the agency has seen the rapid rise in crypto use, and while they recognize the fact that the technology is innovative, they would also work to ensure that these assets don’t end up being used like Swiss bank accounts. 

Uneven Compliance Across Europe

 The European Union is a bit of a different case. As an economic bloc, the Union has accepted that the cryptocurrency space needs to be effectively regulated, and it has adopted the FATF travel rule completely. Then, the stakes were even higher for crypto companies in the EU when the block adopted the Fifth Anti-Money Laundering Directive (AMLD5). 

The AMLD5 isn’t as stringent as the FATF’s travel rule, but it does put some significant responsibilities on crypto firms in the EU. The most significant of these responsibilities has been about customer record-keeping, a decision that has led to the mass exodus of cryptocurrency firms in the region.

Regardless, the AMLD5 came into full effect on January 10, and several crypto companies in the EU have still committed to fighting it. There’s also the issue of the United Kingdom, which left the EU earlier this year. While it complied with the regulations up until its exit, there hasn’t been any word on whether that will continue.

 Countries On the Way to Compliance 

Switzerland, which is seen by many as the most crypto-friendly nation, also recently made amendments to its Payment Services Act to comply with the FATF’s rules. Last week, the Swiss Financial Market Supervisory Authority reduced the threshold for unidentified crypto exchanges from 5,000 CHF ($5,000) to 1,000 CHF ($1,000). It’s expected that other components of the Act could also be amended likewise. 

Singapore is also working on falling in line. In December, the Monetary Authority of Singapore confirmed that it “intends to amend the PS Act to fully align with the most recent enhancements to the FATF Standards.”


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Building Up a Base for Crypto: The Story of Coinbase’s Brian Armstrong



At the helm of Coinbase since founding it with Fred Ehrsam in 2012, Brian Armstrong has weathered rough storms of compliance law to operate the largest crypto exchange active in the United States. 

Both Coinbase’s stature within the industry and Armstrong’s extracurricular activities moving adoption and regulation forward — particularly within the U.S. — have ensured his position in Cointelegraph’s top 10. 

Major changes at Coinbase in 2019 set the stage for 2020

As the exchange is not publicly traded, evaluating it is tricky. At the end of October 2018, Coinbase announced a massive $300 million funding round that put the firm’s value at $8 billion, but subsequent estimates are difficult.

In addition to high-profile startup acquisitions like Neutrino and Blockspring, Coinbase Custody bought Xapo’s custody service in August, putting the value of Coinbase’s total assets under custody at $7 billion. At the time, the firm said this made them the largest crypto custodian in the world. 

Similarly looking to make crypto more accessible to more people, Coinbase launched a Visa debit card linked to crypto early in April, which it subsequently expanded across Europe in April.

In his own broader summary of the past decade in crypto, Armstrong gave his version of the major events, putting Coinbase’s survival as a firm second to Bitcoin’s resilience since 2010. This was through a time when high-profile attacks on crypto exchanges like Mt. Gox left many skeptical that the entire business model of a crypto exchange was feasible, given the ingenuity of hackers. 

Describing the central achievement of Coinbase over the past decade, Armstrong said: 

“We made cryptocurrency easier to use in the process and introduced tens of millions of new people to this new technology.”

The cryptosphere at large

Armstrong’s outlook on the past 10 years contained insights that extended beyond Coinbase. It’s clear from the topics he outlined in the blog post that the crypto billionaire has his eyes on the transformation of crypto into a fully compliant industry, capable of coping with traditional institutions and regulators. 

And why not? There’s money in it, or at least Armstrong says there is. In August, he estimated Coinbase’s revenue from institutions, saying, “We’re seeing $200–400M a week in new crypto deposits come in from institutional customers.”

But beyond strictly a money-grab, Armstrong is clearly focused on the long-term value of making crypto accessible and relatively stable. For Coinbase, this meant an early flirtation with governments. Armstrong wrote: 

“The decade started off with cryptocurrency being totally unregulated. Coinbase was (as far as I know) the first crypto company to really take regulation seriously because we felt it would increase adoption long term. We started applying for money transmitter licenses in the U.S. starting around 2013.”

In addition to somewhat gleefully noting the role of former Coinbase employees in establishing the three major crypto-first venture capital firms, Paradigm, Polychain and A16z Crypto, Armstrong clearly framed the past decade as a process of mainstreaming crypto. Mass adoption seems to be a central point in his thinking.

Armstrong’s ambitions for adoption

Coinbase’s brand has extended far beyond its original business of exchanging crypto. In addition to its expanded roster of businesses, the firm’s involvement in lobbying and compliance is always on the rise. Jan. 16 saw major additions to the exchange’s Crypto Ratings Council, which provides ratings on digital tokens to advise whether they qualify as securities — a classification that makes their issuers subject to regulation by the Securities and Exchange Commission.

In an “ask me anything” livestream on YouTube in July, Armstrong explained that his vision for Coinbase is for the firm to move beyond crypto trading, instead offering broader support to advance mass mainstream adoption. What exactly that looks like remains to be seen, but further engagement on both the policy and institutional fronts seems likely.

What to look forward to

On Jan. 3, Coinbase published a follow-up to Armstrong’s rundown of the 2010s in crypto. This time, the blog was looking forward to the next decade. 

Armstrong foresees not just greater adoption of crypto, but that such adoption will be strongest in the developing world: “In particular, countries with high inflation rates and large remittance markets where crypto can really shine.” 

Perhaps more controversially, Armstrong predicted increasing privacy integration into major blockchains. Privacy coins like Monero and Dash have fallen under particular scrutiny from regulators, who see such capabilities as a mechanism for crime and illicit financing. 

Whatever the future brings for crypto, Coinbase and Brian Armstrong look set to play major roles in shaping the industry to come. 

Brian Armstrong is ranked #6 in the first-ever Cointelegraph Top 100 in crypto and blockchain.


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 BoE Economist Gives Nuanced Explanation of Bitcoin’s “Digital Gold” Problem  



Peter Zimmerman, a senior economist at the Bank of England (BoE), has voiced his opinion on Bitcoin and the limitation its volatility poses. In a staff working paper published earlier this week, the Economist explained that several limitations of the inherent blockchain technology seem to be causing a conflict between users who are trying to use Bitcoin and those who simply want to speculate on the top cryptocurrency. 

Bitcoin’s Perfect Catch-22

The paper, which doesn’t reflect the official views of the BoE concerning Bitcoin or any of the other cryptocurrencies, explained that several people have looked at Bitcoin’s mechanics and are now treating it like digital gold. Due to this, many are hoarding the asset rather than spending it- a phenomenon which, amongst other things, has led to the price volatility that we all associate with the digital asset today. 

“When cryptocurrency is more valuable, households become reluctant to spend it on fees. Instead, they prefer to hoard it and endure slower settlement times. I call this a ‘digital gold’ effect: when cryptocurrency is more valuable, agents view it as an asset to store, rather than money to spend,” Zimmerman explained in the working paper. 

The Economist made it abundant that Bitcoin is essentially stuck in a catch-22, a situation where mutually conflicting or dependent situations make it difficult to find a way out of a challenging circumstance. 

He explained that the fact that the Bitcoin blockchain has a limited transaction range and that its value is governed by its usage in making payments are responsible for this challenge. As speculation continues to rise, he explained, Bitcoin’s use as a means of payment becomes more stifled. Investors who see this and start to send Bitcoin’s price surging to congest the Bitcoin blockchain, leading to difficulties in payment efficiency and a reduction in Bitcoin’s real value. 

However, he offered a possible solution for escaping this self-jinx. “My results suggest that price volatility may fall and payments usage increase if, in the future, a greater volume of speculation could be carried out outside the blockchain. Recent developments such as the evolution of cash-settled derivatives markets or the introduction of the Lightning Network could have profound consequences,” he explained in the post.  

Digital Gold Arguments Can be Spun

Of course, Zimmerman’s definition of digital gold seems to differ from those of several others in the digital asset space. Most recently, Coinbase published a blog post explaining the link between the top crypto asset and the digital gold moniker, pointing out that the halving- and the subsequent reduction in Bitcoin’s supply rate- will make Bitcoin more comparable to gold. 

In its blog post, Coinbase explained that since the gold standard breaking in 1971, the asset has risen by over 4,000 percent in value and has become more valuable than other assets due to its scarcity. The exchange argued that Bitcoin fits this description due to its Proof-of-Work makeup, adding that it also has the advantage of being transferred faster and more effectively than gold. 


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