Crypto Confab Weekly: In a U.S.-China Trade War, Bitcoin Wins

China’s Currency Devaluation Propels Bitcoin Rally

Bitcoin came out on top in an escalating trade war between China and the United States. In response to President Trump’s mounting list of tariffs imposed on its products, China devalued its currency last week to levels not seen since 2010. The announcement of devaluation coincided with a rally in Bitcoin’s price. The original cryptocurrency jumped by approximately 10 percent within less than 24 hours after China’s announcement. 

The rally following China’s move was also a net positive for the cryptocurrency markets, as alt-coins rose in tandem with Bitcoin. 

Crypto enthusiasts believe Bitcoin is maturing as a safe haven for investors afraid of volatile global markets. Jeremy Allaire, CEO of crypto-based payments platform Circle, pointed to the relaxing of China’s stance on Bitcoin as another possible reason for its rise in price.

One of the reasons Bitcoin is considered a “safe haven,” is its relation to other assets. When it was introduced to the world in 2009, Bitcoin displayed little to no relation to other assets. Over the years, however, the peaks and troughs in its price lead or follow those of other assets. 

As of this writing, Bitcoin accounts for 68.6% of all crypto trading. Bitcoin’s price action has begun mirroring that of alternative assets. Gold, another refuge for investors spooked by volatility, also benefited from China’s action. The precious metal is up by 17% since the start of this year.     

Kik Files Response to SEC Case

Messaging startup Kik filed an aggressive response this past week to the SEC’s case against Kin, the token used on its platform. The SEC contends that Kin is an unregistered security and, therefore, subject to a phalanx of disclosures and regulations. It had previously filed an equally strong and damning case against the company, quoting an email from a Kik board member stating that the foray into cryptocurrencies was a “Hail Mary” pass by the platform to resuscitate user and revenue growth.

But the Canadian startup’s filing states that the SEC’s case makes a “consistent effort to twist the facts by removing quotes from their context and misrepresenting documents and testimony” and “badly mischaracterizes” its position. Kik provided three instances where the federal agency misquoted conversations and emails between its founders and board members. Regarding the “Hail Mary” quote, Kik quoted another board member’s response to the comment. “The more I think about it, I think this is a great idea. People call it a hail Mary but to me that is a longshot and I really do not think it is a long shot,” the board member wrote.

When it made its initial filing against the SEC, Kik had stated that its intent was to gain regulatory clarity on the status of tokens. Its latest filing ensures that the case will drag on for some time. This is unlike other instances where startups have either capitulated to the agency’s demands or paid penalties to fall in line. Interestingly, Kik’s latest filing follows the SEC’s announcement of a no-action letter against Pocketful of Quarters (PoQ), which some have termed as “regulatory baby steps”.

New Jersey Cracks Down on Unregulated ICOs As Rhode Island Moves To Regulate Crypto  

New Jersey stopped the sale of two unregulated token offerings this past week. The crackdown is a reminder that securities regulators across much of the country are still watching the space, despite a precipitous downturn in funding levels. The New Jersey Bureau of Securities charged the Unocall and Zoptax offerings with an unregulated sale of securities and providing materially false and misleading statements and omitting important information, such as the identity of its backers. Zoptax promised Zoptax coins to investors while Unocall offered daily interest rates of between 0.18% to 0.88% through staking of their coins to investors.

Meanwhile, Rhode Island said it would begin regulating cryptocurrencies from January 2020 onwards. The Ocean State said that businesses that transfer cryptocurrencies, or possess crypto coins, will need to comply with AML and KYC provisions. They will also need to ensure that customer assets are placed in safe custody, meaning cryptocurrencies will have to be stored with a digital custody provider. 

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