Italian Court Orders Bitgrail Founder to Refund $170M of ‘Missing’ Cryptocurrency

An Italian court has ruled that Francesco Firano, founder of defunct cryptocurrency exchange Bitgrail, was at fault for the disappearance of $170 million worth of the nano digital currency on his exchange last year. Firano, who called himself "The Bomber," is now "required to return as much of the assets to his customers as possible."

Court Seizes Firano's Personal Assets to Repay Victims

In its ruling, the Italian Bankruptcy Court, which enlisted the services of a court-appointed technical expert, concluded that both Bitgrail and Firano personally be declared bankrupt and forfeit their assets.

According to documents released by the Bitgrail victims advocacy group, the court's decision, delivered Jan. 21, authorizes the seizure of Firano's personal assets. So far, more than $1 million worth of assets have been seized, including a luxury vehicle, the group said. Digital assets worth several million dollars have also been confiscated from Bitgrail accounts and moved to accounts managed by trustees appointed by the court.

he documents show that Firano repeatedly mishandled security matters pertaining to the private keys of Bitgrail users, including his alleged transfer of client funds into wallets belonging to the exchange. Firano had failed to put in place suitable safeguards to prevent repeat, unauthorized withdrawals of nano from the exchange, the court said.

That's despite tens of millions of dollars worth of nano going 'missing' on several occasions due to duplicate withdrawals being fraudulently made from a single request due to a bug. The court berated Firano for not appropriately disclosing the suspicious transactions to his customers.

For example, the court found that the nano reported lost by Firano on Feb. 9, 2018 had actually been removed from the exchange months earlier, between July 2017 and December 2017. In total, about 10 million nano tokens left the exchange clandestinely during this period, with Firano's alleged full knowledge, but he did nothing about it.

The most damaging detail relates to how, just days before announcing the $170 million ( 17 million nano) theft, the Bitgrail founder moved 230 BTC (about $1.8 million at the time) into a personal account on another exchange called The Rock Trading, in a bid to swap it for euros. The documents show that Firano had also tried to withdraw money through a bitcoin ATM linked to that exchange.

The court appointed expert concluded:

Therefore it was the Bitgrail exchange that actually requested to the node multiple times to allow the funds to leave the wallet (funds that in fact, had already left the account after the first request) and not the Nano network that allowed multiple withdrawals. The shortfall reported by Firano in February was caused by a transfer request generated by Bitgrail multiple times upon receiving a single request from the user.

Victory for Investors as Firano Seeks Way Out

Meanwhile, Francesco Firano attempted to cheat his way out of the mess. After nano withdrawals were closed on the Bitgrail exchange in January 2018, Firano promised to repay investors 20 percent of their funds, but only "if they agreed to sign a waiver foregoing any legal action against him."

Later, he announced plans to reopen the exchange and release a new token called Bitgrail Shares, which would be used to reimburse the victims over time. Users called him out, wary that it was an elaborate exit scam, and opted to go to court. Firano argued in a losing case that his exchange was a mere provider of services and that the currencies deposited on the exchange were "regular" since he could not freely use the deposited coins.

A Bitgrail advocacy group has called the court ruling "both a huge win for crypto users and a cautionary tale for cryptocurrency exchange owners, who have been provided with a clear example of how not to run an exchange or handle a loss of funds."

Petitions to End RBI Crypto Banking Ban Advancing in India

A lawyer representing the Internet and Mobile Association of India in its writ petition against the RBI banking ban has shared new details of the progress to lift the ban with news.Bitcoin.com. The supreme court recognizes the urgency of hearing the RBI case without waiting for the Indian government to introduce crypto regulation.

The Urgency of Hearing RBI Ban Case

The Indian supreme court is hearing two crypto-related issues. The first concerns the crypto banking ban by the country's central bank, the Reserve Bank of India (RBI). The other concerns the Indian government's cryptocurrency regulation, lawyer Jaideep Reddy explained to news.Bitcoin.com on Monday.

He represents the Internet and Mobile Association of India (IAMAI), on behalf of Nishith Desai Associates, in its writ petition against the RBI circular in the country' supreme court. The IAMAI is an industry body whose members include a number of local crypto exchanges. In its circular dated April 6 last year, the central bank banned financial institutions under its control from providing services to crypto businesses.

In the latest supreme court hearing, "The matter was actually heard for a reasonable period of time," said Reddy, who represented the IAMAI in that hearing.

The petitioners' counsel told the court that "the constitutionality of the RBI circular is a separate issue from the government of India committee's decision" on crypto regulation, he recalled. "The court in the last hearing appreciated that the issues regarding the RBI circular on the one hand, and the larger government policy decision on the other, were separate." He continued:

After hearing IAMAI, it observed that the exchanges' businesses are nearly shut as a result of the RBI circular, and that, therefore, the issue of the validity of the circular needs to be heard and decided without waiting for the government committee's overall policy recommendation. The counsel for the RBI agreed to this approach.

"As of now, the petitioners have been pressing for the issues on the RBI circular to be heard," the lawyer reiterated, noting that "the court needs to decide whether the circular is legally and constitutionally valid or not."

RBI Ban Case Set for End of February

Without asking either party to submit additional documents, the supreme court set the next hearing to the end of February, due to "other pre-scheduled matters in the coming weeks," Reddy said, emphasizing:

While the judges orally observed that the matter should be placed on the top of the list and on a Tuesday, the official order only states that it will be listed in the last week of February. The exact date and order of listing will become known once the official list is released closer to the last week of February.

"We hope for a detailed hearing in which the court will hear all the arguments for and against the RBI circular and ultimately decide whether to uphold it or not," the advocate concluded.

Petitions to Be Heard

The media reported that several petitions had been filed against the RBI ban. Reddy shared with news.Bitcoin.com:

There are at least 5 petitions currently pending in the supreme court in connection with crypto-assets. Of these, 3 challenge the legal and constitutional validity of the RBI circular while 2 are public interest litigations on the broader issue of the need for crypto-asset regulation.

He emphasized that "IAMAI's petition only challenges the RBI circular." While noting that "The petitions are simultaneously listed so there is no concept of any petitioner leading the others," he also pointed out that "Generally, the seniority of the counsel influences who leads the arguments on a particular day."

Counter-Affidavits Filed by Government

The media also reported that the RBI had filed a counter-affidavit with the supreme court. Reddy confirmed to news.Bitcoin.com that "The RBI has filed a counter-affidavit responding to the IAMAI petition," adding that "It cites various concerns associated with crypto-assets." He elaborated:

We have responded in detail to the RBI's counter-affidavit by filing a rejoinder on behalf of IAMAI responding to each point. In our view, the mere fact that crypto assets have certain risks does not warrant a complete banking embargo.

The advocate further explained: "Crypto assets also have benefits and are essential to the success of blockchain technology. The constitution requires that restrictions on fundamental rights be reasonable and proportionate."

There is another counter-affidavit filed with the supreme court, Reddy conveyed. "The Union of India (i.e., the federal government) filed a counter-affidavit in some of the other petitions regarding the status of the government committee's deliberations on the legal issues surrounding virtual currency," he noted. "No date was given by which the ultimate report would come out. However, the counter-affidavit states that a draft report and draft law are soon expected to be placed for the consideration of the committee."

Falcon Private Bank Launches Crypto Wallet With Support for Direct BTC and BCH Transfers

Switzerland's Falcon Private Bank has introduced a cryptocurrency wallet as well as support for direct transfers of BTC, BCH, ETH and LTC for private and institutional investors. The bank said investors can now directly transfer cryptocurrencies to and from its own "segregated Falcon wallets." They can also convert their digital coins into cash.

Fully Bankable Blockchain Assets'

In a press release published on Jan. 21, Falcon claimed that its latest offering "makes blockchain assets fully bankable." The Zurich-based bank also claimed to provide secure storage thanks to its "proprietary custody solution."

"Clients can place trading orders conveniently through e-banking or a dedicated relationship manager," said Falcon. "Digital assets are included in portfolio statements as well as in tax reporting documents."

The bank stated it had developed a process that ensures full compliance with Switzerland's anti-money laundering and know-your-customer laws and regulations. It claimed to have a multi-level protection that covers hardware, software, and transaction processes. "Our custody solution has been audited and reviewed by independent providers," Falcon detailed.

Martin Keller, chief executive officer of the Swiss private bank, commented:

Falcon has … demonstrated its expertize … in the digital assets space by merging traditional private banking services with innovative financial solutions.

 Progressive Switzerland Allows Crypto Firms to Flourish

Founded in 1965 as Ueberseebank, Falcon Private Bank is Switzerland's 26th largest foreign-controlled bank by total assets. The bank has more than $15 billion worth of client assets under management and has offices in Abu Dhabi, Dubai, London and Zurich.

It was licensed as a bitcoin asset management company by the Swiss Financial Market Supervisory Authority (FINMA) in July 2017. However, the bank has reportedly set its minimum bitcoin investment threshold at two million Swiss francs ($2 million), cutting off many Swiss citizens from investing through it.

Switzerland has taken a progressive stance toward cryptocurrencies by legalizing their use and formalizing crypto transactions in a range of different contexts. But some crypto projects still struggle to open bank accounts, and cryptocurrency-focused bankers and investors still complain about a relative lack of regulatory clarity, as it remains unclear whether cryptocurrencies can be considered legal tender in certain contexts.

Switzerland sees virtual money and blockchain technology as strategic innovations in global finance. It is therefore determined to maintain and expand the jobs it has to offer in the field. The country's tax regulator views cryptocurrencies as assets that should be subject to wealth taxes and declared on annual tax returns.

How to Buy Bitcoin Anonymously

Buying bitcoin is not a revolutionary act. Nor should it be. And yet the way statists, apparatchiks and politicians bang on, you'd think the mere act of acquiring digital currency was akin to receiving the keys to a pandora's box in which lurks every illicit artifact known to man. One day, these dinosaurs will begrudgingly concede that buying bitcoin is no more seditious than buying a soda with a $20 bill. But until then, you'll want to preserve your privacy when acquiring cryptocurrency.

Buy Your Bitcoin, Keep Your Privacy

The reasons why you might want to keep bitcoin ownership to yourself don't require rehashing. Put simply, though, it's no one's damn business what you want to do with your money or how you wish to store your wealth. In the future, governmental scrutiny of bitcoin ownership will look as archaic and benighted as state intrusion into the religious or sexual preferences of its citizens. By the time that day comes, bitcoin may be worth a lot more than it is today. The steps you take to preserve your privacy in the present, therefore, may prove particularly precious in the future. Just think about 2011 bitcoiners who had no need to conceal their ownership at the time, only to find themselves sitting ducks once those bitcoins multiplied 3,000x by 2017.

Anonymously buying bitcoin in small amounts is relatively easy, though getting your hands on larger quantities without having to jump through hoops can be harder. Just as it's common practice to use fake personal details when signing into public wifi, the same can be done when buying bitcoin through ATMs and terminals such as the newly repurposed Coinstar machines. Doing so will require a burner phone or a secondary SIM card that isn't tied to your real world identity. Alternatively, search for "receive SMS online" to find links to services that will provide you with a one-time number.

Buying Bitcoin in Person

In addition to BATMs, which can be used to buy a few hundred bucks' worth of crypto at a time, P2P sites like Localbitcoins.com enable you to locate sellers in your area and meet them in person. Better still, if you have acquaintances who work in the cryptocurrency industry or mine crypto, you should be able to purchase bitcoin directly from them, since they'll be obliged to periodically liquidate some of their coins for fiat to cover living expenses. Newly mined coins are particularly precious (which is why they've been known to fetch a premium on OTC markets) because they have no history associated with them.

Purchasing bitcoin face-to-face (or face-to-ATM) brings its own risks, of course, particularly from a privacy perspective. If you would prefer it that no one knew of your business – not the miner you're buying crypto from, nor the surveillance cameras watching you feed banknotes into the BATM in the 7/11 – you'd be better served transacting online. While this removes the ability to transact in cash, there are privacy gains to be made elsewhere.

Anonymously Buying Bitcoin Online

Finding a bitcoin marketplace that won't KYC the hell out of you isn't easy, but there is one platform that stands out from all the boot-licking exchanges willing to do the government's bidding. Its name is Bisq, and what it lacks in liquidity and spot prices, it makes up for in privacy. The range of payment methods the P2P marketplace accepts is extensive: face-to-face is even an option, if you're fortunate enough to live within range of a seller. Generally speaking, you'll need to make payment using an e-wallet or bank transfer. While this entails certain compromises from a privacy perspective, it's easy to disguise the nature of the transaction using a generic banking reference such as "Car" or "Video editing."

Just as Localbitcoins.com will connect you with sellers willing to meet face-to-face, it will link you online in a manner similar to Bisq. Once again, if paying by bank transfer, you can put whatever you like on the pay-in reference, as most sellers do, as putting "bitcoin" on a bank reference is asking for account suspension. (This will change one day, but by the time it does, banks will no longer be relevant and will be begging bitcoiners for business.) It's easy to set up a Localbitcoins account using a private email account, such as Protonmail, and a fake social media account and burner number if you're particularly cautious. Hodl Hodl is another P2P market where verification is optional rather than enforced. The number of available offers is low, but Hodl Hodl has a wider range of cryptocurrencies including XMR and EOS.

Buy Privately Then Stay Private

Anonymity measures shouldn't end the moment you've bought bitcoin. It's an ongoing mindset that calls for using privacy-centric wallets such as Wasabi, avoiding sending funds to exchanges that enforce KYC, and also avoiding address reuse. But those are all topics we'll cover in one of our next "How To" guides. Like bitcoin itself, privacy is likely to become an increasingly precious commodity in the years to come. The steps you take now to preserve yours will pay future dividends.

Bulgarian Tax Authority to Inspect Crypto Exchanges and Traders

The National Revenue Agency of Bulgaria is preparing to conduct inspections on cryptocurrency trading platforms and their customers. The authority wants to make sure that both are fulfilling their obligations under the country's tax and social security laws.

Nine Crypto Companies Subjected to 'Control Actions'

The tax service plans to investigate companies that have declared the trading of digital assets as their core business activity, Bulgarian media reported quoting an official announcement. It also wants to find out more about how these platforms operate.

The main concern is that the transactions related to the exchange of virtual currencies are anonymous. This, according to the regulator, comes with risks of revenue concealment and tax evasion.

The National Revenue Agency (NRA) has already conducted a study of the Bulgarian entities working in the sector. The tax authority said it has assigned "control actions" in regards to nine companies.

Crypto Income Must Be Reported on Tax Returns

Once the checks are completed, tax officials will analyze the data gathered for the users of these platforms. The main task is to determine whether these taxpayers have reported their income from cryptocurrency transactions.

In Bulgaria, profits from crypto trading are treated as income from the sale of financial assets. Private individuals are expected to declare these revenues on their annual tax returns. A flat income tax rate of 10 percent is applied to the positive balance from these transactions in fiat currency.

Profits earned by businesses are subject to taxation under the Corporate Income Tax Act, with the same tax rate. Bulgarian residents are obliged to file their tax declarations and pay their taxes for the previous year by April 30. Annual corporate tax returns should be submitted by March 31, 2019.

Awaiting European Regulations

Bulgaria has not yet adopted a dedicated legislation on the taxation of income from crypto-related activities such as trading and mining. The applicable rules are based on a clarification notice issued by the NRA several years ago. Currently, digital coins are taxed like other financial instruments and Bulgarian authorities reference the general EU regulations and the European practice in the field.

However, the treatment of cryptocurrency profits varies significantly between EU member states. Tax rates can be anywhere between 0 and 50 percent. Interpretations regarding the legal status of digital assets are also quite diverse. Cryptocurrencies and the industry built around them remain largely unregulated in most EU countries. Recognizing that as a major problem, many officials have urged for unified rules across the European Union. Two regulatory agencies recently called for the adoption of common EU regulations.

European regulation may be needed to level the playing field, the European Banking Authority (EBA) said in a report. EBA advised the European Commission to conduct a comprehensive analysis and determine what action is required at the EU level to address the issues regarding the opportunities and risks presented by cryptocurrencies and related technologies. In another report to the Commission, the Council and the Euro Parliament, the European Securities and Markets Authority (ESMA) stated that crypto assets need an EU-wide approach to ensure investor protection.

The Daily: Bittrex Opens OTC Desk, Bakkt Acquires Futures Team

In today's edition of The Daily, we cover a number of stories that show how the cryptocurrency ecosystem is evolving to become more inviting to institutional investors. Bittrex exchange opens an OTC trading desk, Bakkt "acquihires" a futures compliance team, and Swiss investment bank Vontobel launches a custody solution.

U.S.-based digital asset exchange Bittrex has announced that it has opened an over-the-counter (OTC) desk, which includes trading on nearly all 200 tokens available on the platform. It will offer approved customers with reduced price risk, rapid trade execution and guaranteed pricing for large trades, which are typically $250,000 or greater. The new OTC desk will also accept both cryptocurrency and USD wire transfers for deposits.

"We're excited to offer this new, game-changing trading option for our customers," said Bittrex CEO Bill Shihara. "With one of the most extensive selections of digital assets of any OTC desk available, this offering will be another way for Bittrex to further advance adoption of blockchain technology worldwide, while also providing our customers with price certainty and a fast and easy way to trade large blocks of digital assets."

Bakkt Acquires Futures Team

Bakkt, the digital asset subsidiary of  Intercontinental Exchange (NYSE: ICE) which recently raised $182.5 million, has completed its first acquisition. The company announced it entered into an agreement to acquire certain valuable assets of Rosenthal Collins Group (RCG), an independent futures commission merchant.

The goal of the deal is to purchase capabilities needed for developing the bitcoin futures platform. The transaction is expect to close in February and will include the members of the RCG team joining Bakkt. It is said to enhance the company's risk management and treasury operations with both systems and expertise, as well as to contribute to its regulatory, AML/KYC and customer service operations.

"This acquisition underlines the fact we're not standing still as we await regulatory approval by the CFTC for the launch of regulated trading in our crypto markets," stated Bakkt CEO Kelly Loeffle. "Our mission requires significant investment in technology to establish an innovative platform, as well as financial market expertise to deliver the most trusted fintech ecosystem for digital assets."

Vontobel Launches Crypto Vault

Investment bank Vontobel, the third-largest provider of B2B custody and execution services in Switzerland, has launched a 'Digital Asset Vault'. The service allows Vontobel's clients, which include over 100 banks and wealth managers, to issue instructions for the purchase, custody and transfer of digital assets integrated within their familiar banking infrastructure and regulated environment. Financial intermediaries could also use the service to offer their own clients a solution for digital assets.

"Digital Asset Vault represents the logical next step in the development of our range of services for digital assets. With our innovative strength and experience, we have thus closed the gap between existing and digital assets. By incorporating digital assets into our own banking infrastructure, we have also become the first provider to already meet the high standards required by financial intermediaries and their regulators," stated Roger Studer, head of Vontobel Investment Banking.

Waves Platform; Web3 Apps and Products: Trustless, Synergistic and Monetizable

We live in the era of tectonic shifts in society and technology. The shape of the future world is still quite vague, and changing all the time. Futuristic concepts that have been proposed not so long ago stop making sense or need to be adjusted. One thing is obvious — development of the Internet will be crucial for the development of the world we live in, and what happens to the Internet will essentially happen to the world.

The concept of Web3.0 that emerged almost twenty years ago acquires a more tangible shape only now. Because of the emergence of the blockchain technology we are starting seeing some products that can be called Web3 prototypes. It's still too early to lay out the standards for the future Web, we might need some more products to actually understand what those standards should be. On the other hand, we could define Web3 products essentials, since now we have all the major ingredients for building applications that are essentially different from the applications we are accustomed to now.

Web1, the original Internet, was just a collection of interlinked documents with very little interactivity. Web2, the Web we use now, is interactive but centralized, it essentially mimics the structure of human society with ineffective vertical structures, controlling but at the same time vulnerable. Current Internet infrastructure quite often brings out the worst in society: due to the increased number of social connections we get fragmentation and segmentation on steroids — despite its global nature the Internet paradoxically leads to less, not more, connectivity in many cases.

Web3 was proposed as Semantic Web, a Web of Meaning. It might sound different from the Web3 we have in mind now, but if we look more closely we'll see that it's not really the case. "Semantic" in this setting means understandable by computers and running according to protocols, decentralization is essential in the true semantic approach. Protocol becomes the king of Web3, there's no need for trust any more, once established Protocol runs indefinitely and cannot be manipulated.

Web3 needs decentralization in its core; decentralization is not the whole of it but it is the foundation for other technologies. This is the glue that connects disparate technologies in a synergistic consortium. Web3 is holistic, it does not pit one technology against another, it brings them together on a layer which minimizes the need for trust.

Web3 is going to be deeply intertwined with the society structure, in Web2 you have some stale concepts brought over to the Internet, now the process becomes reversed — Web3 leads the way, showing more effective approach to human interaction.

So what are the essential features of Web3 Products and applications?

Web3 products minimize the need for trusted third parties and let you control your data.

All the data created by the user is controlled by the user; she explicitly allows access to her data including all the data she produces. Private keys are stored on the user side, there is no need for centralized user authentication. Data storage is as decentralized as possible; only encrypted data can be stored in a centralized way. Access to sensitive user data is fully controlled by the user.

Web3 products are synergistic. Combination of different technologies is essential, combined they produce new added value.

Combinations of IoT, Big Data, AI and distributed ledgers are very natural, they create trustless data processing environment that cannot be manipulated.

Monetization of Web3 products is transparent. There's no hidden monetization through collected user data. You get what you paid for, and you know how the money is made.

New technology begets new economy. Through tokenization we achieve transparency in Web3 business models. Decentralized does not mean non-monetizable, it means monetizable in a new and transparent way.

So what Web3 products are we going to see soon? Browsers with an integrated blockchain layer and private keys stored on the user side; uncensored or community-censored social networks where access to the network cannot be denied and user data deleted uncontrollably; messengers that run on blockchain private/public key pairs and, even if not completely decentralized, allow for multiple public servers; enterprise systems running on a decentralized layer and processing huge amounts of data in real time.

Web3 concept is inclusive, it it not a concrete product, it is rather a philosophy that can be implemented for any application type. In 2019 first true Web3 products will be launched.

Thailand Issues 4 Cryptocurrency Licenses, Rejects 2 Exchanges

Thailand has officially granted licenses to three cryptocurrency exchanges and one broker-dealer. Two exchanges have been rejected and one is still being reviewed. These seven companies have been temporarily allowed to operate in the country. Two of them will now begin closing down their businesses.

The Thai Securities and Exchange Commission (SEC) announced on Tuesday the results of the applications for crypto business licenses. Seven companies applied for a license and have been allowed to operate their crypto businesses while the regulators reviewed their applications.

The country's ministry of finance "has granted digital asset business licences to four applicants," the Thai SEC detailed, noting that two applications have been rejected and one is still under review.

Three crypto exchanges and one broker-dealer have received licenses. The three approved exchanges are Bitcoin Exchange Co. Ltd. (Bx), Bitkub Online Co. Ltd. (Bitkub), and Satang Corporation (Satang Pro). The approved broker-dealer is Coins Th Co. Ltd.

Meanwhile, the license application filed by local crypto exchange Coin Asset Co. Ltd. is still being reviewed but the company is permitted to keep operating while the decision has not been made. The delay is due to "a change of company executives, which is material information for the consideration of the application," the commission described.

Two Crypto Exchanges Closing

The applications for crypto exchange licenses filed by Cash2coin Co. Ltd. and Southeast Asia Digital Exchange Co. Ltd. (Seadex) have been rejected. The Thai SEC revealed:

The applicants failed to meet the approval criteria regarding important work systems.

The commission added, "For example, the systems for custody of client assets and know your customer (KYC) were inconsistent with the SEC's acceptable standards, while the sufficiency of their IT security and cyber security systems could not be verified."

The two businesses have been notified of the closing down procedure by the Thai SEC.

The country's ministry of finance is allowing both of them to continue operating until Jan. 14 "to ensure proper proceeding of related matters including notification to the clients regarding asset refunds or asset transfers to other digital asset operators according to the clients' order," the SEC noted. The two are required to return customer assets and notify the commission of the results. However, the regulator clarified:

The application rejection this time does not invalidate their right to apply for a digital asset business licence in the future as long as the application criteria are met.

Institutional Investors Are Changing the Cryptocurrency Market

Last year, reports emerged that George Soros and the Rockefeller family were beginning to take positions in the emergent crypto asset class, according to Bloomberg. The family's $26 billion Soros Fund Management was supposedly considering trading digital assets. The Rockefeller family's VC arm, Venrock, decided to take a different approach by partnering with Coinfund to assist entrepreneurs in launching blockchain businesses. 

Mike Novogratz, the chief executive officer of Galaxy Investment Partners, said he sees Q1 and Q2 2019 as a period when more institutions will start to come into crypto. He also expects the crypto markets to turn bullish again in 2019. 

Previously, investors were hesitant to enter the crypto markets due to high volatility and lack of regulation, but this is changing, with large players starting to take positions. How Institutional Investors Are Changing the Cryptocurrency Market

Stefan Neagu, co-founder of digital identity management system Persona, said: "BTC attracted large players, as the institutional investors saw BTC as an investment instrument. This helped the crypto market because it was not a playground anymore, but rather the sandbox of a limited group of people with money from a real economy being shifted to the crypto market."      

In 2018, over-the-counter (OTC) market makers have thrived, with many institutional traders shifting to OTC. Etoro announced that it had opened an OTC platform for institutional buyers and Coinbase and Hodl Hodl launched OTC desks in November. 

According to cryptocurrency research group Diar, institutional cryptocurrency trading on traditional exchanges has been diminishing in volume due to BTC being welcomed into major outfit portfolios this year. There has instead been a shift to OTC trading. 

During OTC market hours, there has been an increase in BTC trading volume by 20 percent, while Grayscale's Bitcoin Investment Trust (GBTC) volumes were down 35 percent in 2017 vs. 2018 for the same period. It seems institutional traders might be shifting towards higher liquidity OTC physical BTC markets. 

Hive Criticizes Norwegian Government Amid Concession Cuts to Miners

Hive Blockchain Technologies has published an update regarding the company's response to the Norwegian Parliament's recent approval of a legislative bill that will restrict cryptocurrency miners from accessing the tax relief on electricity consumption available to other power-intensive industries. The release criticizes the government's "unilateral" move to suspend the subsidy without consulting with representatives of the mining industry and discusses proposed changes to the loan agreement pertaining to Hive's sole asset located in Norway.

Hive has taken aim at the Norwegian government's decision to revoke subsidies on power consumption that are available to energy-intensive industries operating in Norway. The legislative bill moving to revoke cryptocurrency miners' access to the subsidy was passed in early December and is expected to take effect during March of this year.

Hive states that it is "deeply disappointed and frustrated" by the proposed legislative changes, expressing its dissatisfaction with the government's decision to take "unilateral" action without "discussion, consultation, or dialogue with the industry."

The company describes the bill as comprising a "significant impediment" to Norway's capacity to attract long-term foreign investment in the country, warning that the bill will deter "all energy-intensive industries" that are considering "long-term capital investments" from establishing operations in Norway.

Hive to Conduct Assessment of Damages to Kolos Data Center

As a result of the legislative changes, Hive states it will conduct an assessment of the impact of the bill on the economics of its sole Norwegian asset, the 'Kolos' data center.

On Dec. 20, 2018, Hive issued a letter to debt holders associated with the Kolos acquisition proposing changes to the loan agreement pertaining to the asset. The company is currently seeking a one year extension of the term of the approximately $2.4 million loan that financed the asset's acquisition while the Hive determines the impact that the legislative changes will have on the value and future plans for the Kolos data center. Hive expects to have completed its damage assessment prior to the end of the fiscal year on March 31, 2019.

In November 2018, Norwegian parliamentary representative Lars Haltbrekken criticized the subsidies available to cryptocurrency miners, stating that Norway "cannot continue to provide tax incentives for the most dirty form of cryptographic output as bitcoin."