Why the Uniswap exchange offered to share profits with its token holders

The Uniswap proposal involves distributing a portion of the commissions. And which it charges from exchange pool liquidity providers to the UNI token holders involved in managing the protocol

The management token of leading decentralized exchange Uniswap (UNI) rose 70% in just an hour and a half on February 24. And reaching the maximum since April 2022. This happened after the developers suggested sharing the service’s revenue with token holders.

The UNI token is the management token of Uniswap, the largest decentralized cryptocurrency exchange by capitalization. Its holders can participate in the management of the protocol through voting on various community proposals. Right now, the UNI token is trading at $10. But trading volumes dropped by more than 50% a day after the initiative appeared. The total value of blockchain assets on Uniswap exceeds $5 billion.

Uniswap Foundation announced a new motivational strategy for UNI token holders. The company plans to distribute commissions from protocol transactions to UNI token holders. And actively participating in the protocol management process. Key parameters related to commissions will continue to be controlled by the Uniswap Foundation itself.

Devin Walsh, executive director of the Uniswap Foundation, said the proposal aims to incentivize active delegation (of votes). And which will lead to the long-term success and sustainability of the protocol.

This isn’t the first time the idea itself has been brought up for discussion, but this is the time when it could actually be implemented. According to Blockworks analyst Matt Feibach, it is unlikely that the Uniswap Foundation would have taken such a step without carefully assessing the sentiments of the largest token holders.

The idea of sharing profits with token holders immediately resonated with other projects. Following Uniswap, the Frax Finance protocol team is going to put a proposal to the community to vote on the distribution of the protocol’s revenues among the holders of the project’s derivative tokens. Following the publication that Frax plans to follow Uniswap’s lead, the FXS token reacted with a short-term rise of 16%.

Our experts also note that the founder of the largest NFT platform Blur and the new blockchain ecosystem Blast under the pseudonym Pacman is also interested in the implementation of a user reward mechanism. And like Uniswap: he stated that the Blur community should follow their lead. The Blur token reacted to the publication by growing by more than 10%.

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4 promising altcoins for medium-term investments, opinion of Crypto Upvotes experts

Today, let’s consider the idea of investing in four altcoins. Each of the presented options has a fairly high capitalization.

And volatile technical model and are real active projects. The assets are also traded on large centralized exchanges. So why invest in altcoins. And not to buy Bitcoin  or ETH? There are quite a lot of reasons, let’s highlight the main ones:

  • Moving away from the classic concept of buying market leaders;
  • Achieving more meaningful financial results due to volatile asset models;
  • Portfolio diversification;
  • Striving to “beat the market” in terms of returns;
  • Some altcoins are near historical lows, which increases the calculated mathematical expectation of the transaction.

All of the above points lead to one goal – to increase portfolio returns by acquiring volatile assets.

Filecoin (FIL)

30th place by market capitalization. Up to 40% of the crypto portfolio. In 2023, the price approached the $2.3 multi-year lows twice. Each test of the level resulted in creation of trend source – market maker’s position to buy. The source consolidation level is $4.3 and is equal to current prices. From a technical point of view, this is a great time to buy the asset.

After the breakdown of the $9 level, the price will move into the global growth phase with the aim of reaching the locked volume (market maker’s position to sell) – $24. And then to the range of $35 – $41.5, where it is necessary to close the position.

Thus, the trade would look as follows:

  • Buying at current prices ($4.4)
  • Take Profit (TP) $35 – $41.5
  • Stop Loss (SL) $2.2
  • Expectation up to x10

VEChain (VET)

38th place by capitalization. This is one of the altcoins that is suggested to buy up to 20% of a cryptocurrency portfolio.
This technical combination is the basis for the formation of a position in the asset with the main goal of reaching the locked volume of $0.076. Based on which, we can plan the trade as follows:

  • Buying at current prices ($0.0186)
  • TP $0.076
  • SL $0.013
  • Expectation x4

EOS (EOS)

52nd place in Crypto Market Capitalization. This is one of the altcoins that is suggested to buy up to 20% of a cryptocurrency portfolio.
The technical picture of the asset differs from the previous ones. Mainly by the fact that the source of the trend is just forming in the market. And as a consequence, it is possible to form a position at the beginning of a growing cycle.

It is possible to enter the deal both at current prices ($0.744). And in case of decrease to the level of $0.69. It is also possible to consider a combined option – to enter the deal at current prices. And on the part of the capital allocated for this asset, and after the decrease to gain on the rest. Thus, it will be possible to utilize all allocated funds for this asset. And form a position with a low average purchase price.

After exceeding the level of $0.832, the source will be considered fixed. And the asset will move into the growth phase with the targets of $1.36, $2.75, $5.

The trade will be as follows:

  • Buy at current prices
  • Extra at the decrease to $0.69
  • TP $1.36, $2.75, $5
  • SL $0.48
  • Expectation up to x6.7

Dash (DASH)

93rd place in capitalization. This is one of the altcoins that is suggested to buy up to 20% of a cryptocurrency portfolio.
At the moment, a trend source is being created. At this stage, a position with a low average purchase price can be formed.

Transaction structure:

  • Purchases at current $31
  • Additional at the decrease to $28.6.
  • TP: $68, $126, $215
  • SL: $20

Disclaimer:

Crypto-Upvotes does not provide investment advice. This material is for information purposes only. Cryptocurrency is a volatile asset that can lead to financial losses.

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Venture capitalists have become more active, on which projects are they investing

In July, two venture capital funds raised more than $350 million to invest in cryptocurrency and blockchain startups.

The volume of investments in crypto startups has fallen for five consecutive quarters. But some venture capitalists are still making multi-million dollar bets on blockchain projects.

Fortune’s source said Polychain Capital, one of the most prominent venture capital firms in the cryptocurrency space. And has raised about $200 million in its fourth fund. This fundraising can be considered a positive signal for the industry. The event indicates continued investor interest, despite a period when the volume of funding has decreased for both startups and venture capital firms.

The event indicates the continuing interest of investors. And despite the period when the volume of funding has decreased for both startups. As well as for venture capital firms.

Founded in 2016 by Olaf Carlson-Wee – one of the first employees of the Coinbase exchange – Polychain Capital has quickly joined the list of leaders in the cryptocurrency venture capital market. The firm has invested in Coinbase, Uniswap, CoilnList, dYdX, Matrixport, Scroll and dozens of others.

According to Pitchbook, Polychain has raised three funds with $2.6 billion in assets under management, and while this amount is volatile due to the fact that some of the Polychain funds are held directly in a few liquid crypto stocks. Several services, such as CoinMarketCap or Messari, separately highlight Polychain’s portfolio. According to them, the company invests in bitcoin (BTC), Ethereum (ETH), Polkadot (DOT), Avalanche (AVAX), Cosmos (ATOM), Filecoin (FIL), Maker (MKR), Tezos (XTZ), Compound (COMP) and other assets.

Polychain has deployed most of the previously raised capital in 2022 and 2023, according to a Fortune interviewee.

And before starting to raise a fourth $400 million fund, which reporters have now learned about. As for the $200 million already raised, Polychain has signed new agreements with investors or partners to begin placing those funds. At the same time, the company will continue to attract new investors in order to raise the full amount.

The attraction of new financing was accompanied by a reorganization of Polychain’s team of about 25 people, about 15 of whom are engaged in market research. According to the interlocutor of the publication, three employees from the research group were dismissed. And another with a background in data science was hired. One of the general partners also left the company to start his own project.

According to Fortune’s source, Polychain will primarily consider Ethereum-based “second-tier” infrastructure solutions for investment. And such as Arbitrum or Scroll, as well as in projects such as EigenLayer.

According to Pitchbook, global cryptocurrency VCs raised just $1.7 billion in 12 funds in the first half of 2023.

In comparison, they raised $22.5 billion in 91 funds over the course of 2022. On the same day as the new fund raising from Polychain was announced. And Bloomberg reported that another cryptocurrency venture capital firm, CoinFund, raised $158 million to support early-stage crypto startups.

According to the company’s CEO Jake Bruchman. That for the new fund managed to attract more funds than originally planned. Investor interest in the fund was higher than expected.

The last year and a half in the cryptoindustry was held in the crisis. But during this time CoinFund managed to raise $550 million, Brukhman told reporters. The year 2022 was “extremely challenging,” he said. Part of the problem was that major players in the market became interested in cryptocurrencies at the stage of their growth. But they changed their minds about investing when they saw prices fall sharply.

The new investment fund CoinFund is also the fourth for the company. Under the previous funds, the company supported startups such as, for example, Dapper Labs (creators of the FLOW blockchain). Or the blockchain infrastructure service Blockdaemon. Funds from the new fund have already been partially invested in the startup Giza. And which deals with the implementation of artificial intelligence in smart contracts. And in the company Superstate, which plans to combine decentralized finance (DeFi) with mutual funds.

More investments

CoinFund plans to invest the raised funds in startups. Which are at the intersection of cryptocurrencies and artificial intelligence. Previously popular areas such as NFT are now not interesting to investors due to the market lull and capitalization decline of the largest projects.

Our experts note that CoinFund will also continue to invest directly in cryptocurrencies and tokens. And the company has an advantage here. When it comes to crypto market regulation in the US, there is uncertainty over whether cryptocurrency tokens are considered securities. And that was vividly demonstrated in the recent ruling by a judge in the US Securities and Exchange Commission’s (SEC) lawsuit against Ripple Labs. However, CoinFund is a registered investment adviser. And can make investments in securities, so even equating their portfolio crypto assets with securities shouldn’t pose a problem.

According to Alex Felix, CoinFund’s chief investment officer. That now about 90% of the company’s transactions are directly related to the purchase of cryptocurrencies and tokens. According to him, the company still believes that this industry can coexist with traditional finance in a regulated manner.

 

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Arkham project to trade cryptocurrency wallet owner data, how much demand it has and how ethical it is

The launch of a new Arkham project to trade data on cryptocurrency wallet owners has raised questions about the ethics of disclosing such information

Cryptocurrency exchange Binance reported on July 18 that it has completed the public sale of tokens of the Arkham Intelligence (ARKM) analytics service. The token trades opened at $0.05, but shortly after the start of trading on the exchange, the ARKM rate soared to $0.75.

Arkham Intelligence has developed its own platform to visually analyze data in the most popular blockchains. With its help, you can view data about cryptocurrency wallets and movement of funds. And in doing so, matching wallet owners and analyzing their actions. This is applicable, for example, for investors when studying the chain of transactions of successful traders. Or for exchanges and law enforcement agencies when tracking the movement and conversion of stolen cryptocurrency.

Wide functionality and successful marketing strategy. Which includes a referral system and airdrop of future tokens, helped the project attract a user base.

Together with the announcement of the launch of the token, which received the ticker ARKM. And its distribution via airdrop and presale on the Binance Launchpad platform, the developers also announced the launch of the Arkham Intel Exchange marketplace. And on which the token will be used. On the site will be organized data marketplace, where buyers will be able to put up a reward for information. Which can be obtained from the analysis of cryptocurrency wallets, including for the identification of specific individuals who own these wallets. The service itself is promoted under the banner of ” deanonymizing the blockchain.”

This provoked a wave of discontent in social media discussions. And the company began to be accused of an unethical approach to personal data and privacy.

Despite the fact that data on all transactions in blockchains is public. But linking them to real people is often difficult. And privacy for many people is one of the fundamental factors in using cryptocurrencies as opposed to existing banking and payment systems.

There is no direct prohibition on “de-anonymization of blockchain”. However, it is related to the personal data of users on the web. And which clearly did not give consent for someone else to have access to them. Our experts believe that it will be important to distinguish between the personal data of users on this platform and those that they have provided to exchanges.

From an ethical point of view, this approach infringes on the basic principles and fundamentals of blockchain. Such as privacy and simultaneous transparency. When law enforcement obtains information about user accounts on exchanges.This becomes a kind of restriction of rights for the greater good. In the situation of selling data, not everything is so clear-cut. Because sellers and buyers operate with other people’s data, obtained not always in a legal way.

Our experts believe that many ordinary users will not be happy to find themselves and their wallet in such a database. This increases the risk that a person will become an object of attack of fraudsters. And they will know who owns the wallet and how much money he has.

Law enforcement agencies, cryptocurrency tracking systems or private researchers could act as such a platform’s services.

At the early stage, the use of the service will be limited to a narrow circle of users, our experts believe. Cryptocurrencies were created as an alternative to centralized systems. And many users want to remain anonymous and do not want to disclose data about themselves and their transactions. On the other hand, regulators have policies aimed at disclosing user data for the sake of their own safety. And they are introducing mandatory Know Your Customer (KYC) procedures on marketplaces to identify malicious users and hold them accountable.

A promising technology that would help both parties. According to our experts, the Zero Knowledge Proof (ZK) protocol is a promising technology that would help both parties. With it, it is possible to develop a technological solution that balances human privacy for the general public. And by allowing limited fragments of data to be disclosed to government agencies.

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Cryptocurrency trading volumes rise amid optimism over ETF

Cryptocurrency trading volumes rose in June for the first time in three months.

The optimism of cryptocurrency traders is linked to an application by management company BlackRock to open a Bitcoin Exchange Traded Fund (ETF).

Total spot and derivatives trading on centralised exchanges rose 14% to $2.71 trillion.

Increased volatility following the SEC lawsuit against Binance US and Coinbase. As well as a positive market outlook following bids for spot bitcoin ETFs by companies such as BlackRock and Fidelity contributed to increased trading activity last month.

Cryptocurrency spot trading volumes remain at historically low levels. The second quarter was the lowest since the fourth quarter of 2019.

One of the world’s largest investment firms, BlackRock, is set to launch an exchange traded fund (ETF) for Bitcoin. This is an important step for the market due to BlackRock’s reach. And also because the fund will allow investors to buy bitcoin as ETF shares from a regular brokerage account.

In an application filed with the US Securities and Exchange Commission (SEC). The company is asking to be allowed to trade the cryptocurrency through the iShares Bitcoin Trust vehicle. It will be a spot fund, meaning that when its shares are purchased, there will be an actual purchase of coins in the market. It will also make it easier for institutional investors, including pension funds, to own cryptocurrency. Our experts note that as of the end of March, BlackRock had more than $9 trillion under management.

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11.5 billion dollars in cryptocurrency lost in 2022 due to hackers and scammers

Bitcoin’s share of illicit cryptocurrency transactions has decreased significantly due to the emergence of many other networks. Scammers and hackers favor the TRON blockchain

$11.5 billion in various cryptocurrencies were lost by their owners in 2022. This happened as a result of hackers and scammers activity. TRM Labs, a smart blockchain solutions company, conducted a study and found. That the collapse in cryptocurrency prices since 2021 had no meaningful impact on the dollar volume of related crimes.

At least $7.8 billion was invested in pyramid schemes in 2022, according to TRM Labs. And $3.7 billion was stolen from hacks. Another $1.5 billion in digital assets was spent on the darknet, a marketplace specializing in the sale of illegal drugs, analysts said.

About $2 billion of the money stolen by hackers was stolen as a result of attacks on firewalls. And which allow the transfer of cryptocurrencies from one blockchain to another. Our experts point out that criminals are also increasingly resorting to such schemes to make it harder to track the movement of assets.

Recall that in 2016, two-thirds of stolen cryptocurrencies were in Bitcoin. And in 2022, it accounted for just under 3%. According to the report, Ethereum (68%) and Binance Smart Chain (19%) dominated.

And if in 2016 Bitcoin was the only cryptocurrency used to finance terrorism. By 2022, it was almost completely replaced by TRON blockchain assets – their share was 92%, according to the report. This network became popular because of low fees. And that’s why most of the USDT stablecoin’s turnover occurs on TRON.

In May 2023 alone, hackers and fraudulent cryptoprojects stole $71 million in cryptocurrency. Also in early June, the biggest hack of the year occurred. A hacker stole over $100 million from Atomic Wallet cryptocurrency users.

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SEC head Gary Gensler compared cryptocommunity to huckster and fraudsters of 20th century

Gary Gensler said that securities laws helped defeat financial fraud in the 1930s and will help the cryptocurrency industry today

Gary Gensler, head of the Securities and Exchange Commission (SEC), compared the cryptocurrency industry to the American stock market of the 1920s, full of “huckster and fraudsters”.

Speaking at the Piper Sandler Global Exchange & Fintech Conference on June 8, Gensler said that the passage of securities laws in 1933 and 1934 in the United States helped fight stock market scams. These same laws will also help “clean up” the cryptocurrency market.

“With widespread non-compliance with the law, it’s honestly not surprising that we’re seeing a lot of problems in these markets. We’ve seen this story before. It’s reminiscent of what we had in the 1920s before the federal securities laws were introduced. Hucksters, fraudsters, and Ponzi schemes. And the public was lining up in bankruptcy court,” said the SEC Chairman.

The solution, according to Gensler, is for cryptocurrency issuers and trading platforms to comply with securities laws. He said that the laws of the 30s allowed American securities markets to “flourish” for the next 90 years. And today’s “cryptocurrency securities markets” should also benefit from these laws. Therefore, they are no “less worthy of the protection” of those laws.

The SEC argues that most cryptocurrencies fall under the definition of securities. And even if the tokens have additional utility (which the cryptocurrency community cites to deny the regulator’s position). That doesn’t take “cryptocurrency is a security” out of the definition of an investment contract, Gensler said.

He explained that cryptocurrency exchanges must comply with securities laws. And including the requirement to separate “exchange, broker-dealer and clearing functions.” In his view, such separation “helps mitigate conflicts that can arise when such services are combined.”

Our experts note that two days earlier, speaking on CNBC on June 6, Gensler said that cryptocurrencies are essentially unnecessary. In his opinion, digital fiat currencies-the dollar, the euro, and others-are sufficient.

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What is the Howey test. Why the SEC is evaluating cryptocurrencies by 1940s standards

Chief US exchange regulator equates cryptocurrencies with securities according to Howey test criteria list . Which were developed in the middle of the last century and uses this as one of the main arguments

The U.S. Securities and Exchange Commission (SEC), , is actively increasing pressure on the cryptocurrency industry. The main U.S. exchange regulator has already filed lawsuits against two major cryptocurrency exchanges. The agency is making a number of allegations against both exchanges. And the main one is the recognition of a number of cryptocurrency assets. Which are traded on the platforms as unregistered securities, falling under the competence of the regulator.

In the lawsuits, the SEC highlighted a list of crypto-assets on both exchanges, which collectively includes 19 coins. And several of them, including Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS), are listed in the charges for both venues.

According to the documents, they all fall under several of the agency’s designated criteria in one way or another. That’s pre-sale or fundraising. As well as promises to improve the project through continuous business development and marketing, the use of social networks to demonstrate the capabilities and benefits of the project.

The SEC uses the criteria of the so-called Howey test. This test, created by a 1946 Supreme Court decision. Which was related to the Florida citrus plantation deals. And is the basis of the SEC’s securities control authority. Which are considered “investment contracts.” And do not fall under familiar categories such as stocks and bonds.

Although the concept originated in the middle of the last century. But the SEC still applies it to actual assets, including cryptocurrencies. Because the U.S. has yet to develop a unified regulatory approach to crypto-assets. And it may be the one that ultimately forms the basis for cryptocurrency regulation.

Florida citrus plantations equated to cryptocurrencies

The Securities Act of 1933 lists financial instruments. Which fall within the definition of a security. And therefore within the scope of SEC regulation. They are stocks, bonds, bills of exchange, security-based swaps and more than a dozen other instruments. The document also cites the term “investment contract,” which arose as a result of a court decision related to the Howey test.

At the time, the SEC sued the W.J. Howey Company and Howey-in-the-Hills Service for selling citrus plantation lots in Florida to the public along with a service contract. Which gave Howey-in-the-Hills the right to lease and own the plots. Howey, with the necessary experience and equipment, remained responsible for growing, harvesting and marketing. The purchasers of the plots received a share of the profits.

Based on this arrangement, the commission accused Howey of offering and selling unregistered securities in violation of the Securities Act. The case went all the way to the Supreme Court. The judge concluded that these transactions clearly belonged to investment contracts under the Act. And introduced the very criteria that became known as the Howey test.

It includes four key elements that must be met to be considered a securities transaction.

1. investment of money. This can be any type of capital, such as cash, checks or current cryptocurrencies.

2. Joint venture. This means that the investor’s income is tied to the success of the entire venture. Not just the success of its individual investments.

3. a reasonable expectation of return. This means that investors must have a reasonable expectation of profit, either through their own efforts or the efforts of others.

4. Profits derived from the efforts of others. This means that investors must rely on the efforts of a promoter or third party to make a profit.

The Howey test is still used to this day by the SEC to determine whether certain financial products are securities. Some examples of assets and transactions that have been found to be securities under the Howey test. Also include initial coin offerings (“ICO”), tokenized assets, and investment contracts.

New guide to applying the Howey test to cryptocurrencies

The SEC has issued guidance on applying the Howey test to cryptocurrencies and other blockchain-based assets. The SEC has stated that many cryptocurrencies and tokenized assets are securities. Because they meet the four elements of the Hoey test.

One high-profile example is the case of the failed Telegram messenger ICO. That’s when Pavel Durov was able to raise a record $1.7 billion on the sale of Gram tokens to qualified investors. In 2019, the SEC filed a lawsuit against Telegram. And in doing so, claiming that Gram tokens are securities. Also that Telegram violated the law by conducting an unregistered sale of assets. In the complaint, the SEC also cited the Howey test. And argued that Gram tokens meet all four criteria of the test.

Another high-profile example is the case surrounding Ripple’s XRP token. In December 2020, the SEC filed a lawsuit against Ripple. In doing so, claiming that XRP is a security and that Ripple violated securities laws by conducting the initial sale of the tokens. And in its complaint, the SEC again cited the Howey test.

How projects try to bypass the Howey citrus test

Focusing on the U.S. market, crypto businesses are forced to consider the Howey test. Now some projects are calling their assets a governance token. Which is used to vote the decentralized autonomous organization (DAO) created under the project. However, such tokens are also traded on cryptocurrency exchanges. And are valued in the billions of dollars, so it remains to be seen. How regulators will behave towards them in the future.

Many projects offer their tokens only outside the US. In doing so, they restrict U.S. users from trading or participating in token giveaways (airdrops). Some blockchain services reach an agreement with the SEC. In doing so, they often pay significant fines if their asset is found to be a security.

Our experts note that Coinbase, meanwhile, intends to defend its position. It filed a countersuit against the SEC. In doing so, intending to obtain clear rules from the regulator for dealing with crypto-assets. The platform has openly stated that it has no plans to delist tokens. Which the SEC considers to be securities and wind down staking services. According to Coinbase, the company has more than $5 billion on its balance sheet to maintain operations. And to pay legal fees.

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Large market maker Cumberland withdrew from Coinbase and Binance almost $70 million of assets

Cumberland withdrew $46 million in Ethereum, 23 million BUSD and other coins from leading cryptocurrency exchanges

Cumberland, one of the largest cryptocurrency market makers, withdrew about $70 million from Coinbase and Binance exchanges in the last two days. The company took $46 million in Ethereum, 23 million BUSD ($23 million). As well as other coins after it became known that the Securities and Exchange Commission (SEC) sued the two exchanges.

Cumberland is a subsidiary of Chicago-based trading firm DRW, created in 2014. It provides liquidity on leading centralized and decentralized crypto exchanges.

Cumberland took about 20,000 ETH ($37 million) from the Coinbase exchange and 4.85,000 ETH ($9 million) from Binance, according to analyst service Lookonchain.

In addition to Ethereum, Cumberland withdrew other cryptocurrencies, analysts noted. Among them were tokens Axie Infinity (AXS), Shiba Inu (SHIB), Compound (COMP), Chainlink (LINK), Curve DAO (CRV) and Aave (AAVE).

A week earlier, in late May, Cumberland stopped trading Firecoin (FIL) because the SEC classified the cryptocurrency as a security token. That is, assets that fall under the definition of securities.

A security token is a crypto-asset that represents a certain amount of ownership of something. For example, part of a company. They can be issued by a business or government and serve the same purpose as securities (stocks).

In addition, Nansen data shows that Cumberland has withdrawn more than 23 million BUSD from Binance in the past 24 hours, noted cryptojournalist Colin Wu. The market maker transferred them to Paxos, the company that issued the stablecoin. The firm has been banned from issuing new tokens, but it continues to redeem old ones.

It also became known that Robinhood will review its work with some cryptocurrencies.

Our experts note that Robinhood provides users with access to 18 cryptocurrencies. These include Solana (SOL), Cardano (ADA) and Polygon (MATIC). These have now been called unregistered securities by the SEC in lawsuits against cryptocurrency exchanges.

 

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Where to best register a cryptocurrency business

Crypto Upvotes experts told which jurisdictions are comfortable for cryptocurrency to live and work in. And also told what factors determine the choice to register a crypto project in the chosen region

The regulation of cryptocurrencies around the world ranges from a complete ban on digital tokens to their recognition as legal tender. From time to time, governments pass laws that force crypto-businesses to migrate.

For example, China’s 2021 ban on cryptocurrency mining caused a mass exodus of miners from China. In 2023, due to stricter regulation in Canada and the U.S., many exchanges stop operating there. And now they are moving to countries in Asia and Europe. Binance and Bybit have already announced their departure from the Canadian market, Coinbase plans to open an office in Dublin.

On the other hand, certain regions are adopting clear regulatory rules for the crypto industry. And this also attracts cryptocurrencies. Hong Kong has allowed retail trading of digital assets since June 1. Huobi, Gate.io, OKX and many other exchanges are already entering the local market. Gemini and Bybit are opening offices in Dubai, while Binance has been operating there since last spring.

Most projects choose two simple rules simply and cheaply

Any cryptocurrency startup wants to cut costs as much as possible at the initial stage. This includes legalization of their activities.

For a cryptocurrency company, registration and licenses are primarily needed to interact with the outside world. For example, to place their applications in the App Store or Google Play. Or opening corporate accounts on major exchanges, our expert explains.

The most important criteria for selection are three parameters:
– Ease of opening a legal entity (ideally distant registration).
– Speed (ideally a few days)
– Price, which does not exceed a few thousand dollars.

As a bonus may be the presence in the company’s charter of the prescribed cryptocurrency activity. And especially in jurisdictions where obtaining a cryptolicense is impossible or not required. Because this process usually requires much more time and expenses than the registration itself.

Popular jurisdictions for crypto business registration

It is because of the speed, simplicity and low-cost of doing business that regions such as Georgia or the Seychelles are popular. Because these countries win in comparison with, for example, Dubai or Hong Kong. So there everything is a little bit more complicated, longer and more expensive.

The most favorable jurisdictions are the ones that support the crypto market. And they have special regulation and, in addition, they provide preferential tax treatment for such businesses. The most obvious example of such a region is Dubai. In addition, the Arab Emirates is relatively neutral in the international financial market in terms of various geopolitical aspects.

Our experts point out that Hong Kong, Switzerland and the Netherlands also have a positive attitude to cryptocurrency business. And they have regulation, but their taxation regime is not as favorable.

There are countries that are not against cryptocurrency. But at the level of regulators they warn both businesses and consumers about the high risks of such assets (e.g., Georgia). Such jurisdictions, as a rule, are against the use of cryptocurrency on their territory. And especially use as a means of payment.

Some cryptocurrency exchanges choose Ireland’s capital Dublin for the fact that the country is part of the EU. And has an established reputation as a financial and technological center. It also provides a favorable tax regime for its residents.

Our experts note that Dubai, Hong Kong and Georgia are increasingly in the news as cryptocurrency-friendly regions. But not just because they are somehow particularly favorable to cryptocurrencies. Rather, it is because they are generally friendly to relocating businesses, including cryptocurrency businesses.

There are no special preferences for cryptocurrency projects. As well as there are no prohibitions preventing the activities of cryptocurrency companies. Practice shows that the absence of bans is enough. To attract a significant number of companies in the current situation. Who are looking for their new place to work.

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