Hey, Hodlers, did you miss me? I know you probably went a little crazy this week with Bitcoin’s price jump: to sell or not to sell? Everyone has their own theories, which I’ll get into soon, but my personal opinion is that it’s an unexplainable gift from the gods and let’s just not look too closely lest it turns on us The one thing we can agree on is that Elon Musk was seemingly inspired by the crypto fervor and hopped on Twitter this week to proclaim his love for Dogecoin (this was close enough to April Fool’s that I slightly question his true dedication

) Ladies and gentlemen, I’m back, I'm Molly Jane, and this is your weekly Hodler’s Digest Let's take a look at the latest market updates This week following alt-season, where many altcoins were outperforming BTC, Bitcoin surged 15% in an hour, breaking through the $42K resistance and eventually reaching a high of $5K After exile in a long crypto winter, Bitcoin was finally back in the driving seat

There are many theories, ranging in various degrees of credibility First up is longtime Bitcoin bull Tone Vays He thinks that the recent surge had no specific trigger, in an interview with Cointelegraph earlier in the week, he said that he always expected BTC to hit $5K once it had passed $4,2K Shorts are liquidated, there were short squeezes, more people jumped onto the hype, and a lot of news media always look for a trigger to cause big drops and big rises I would say more than half the time they are just trying to match news to something that it doesn't necessarily needed news to happen

Some of the more interesting theories include Brexit, algo trading and even an April fools joke The ongoing Brexit debacle has led to a lot of panic and uncertainty in the UK, their version of FUD A recent study found that 66 billion pounds have been wiped off the market since last June, so there is speculation that investors might be converting their pounds into Bitcoin ahead of Britain leaving the EU Although when that actually happens, is anyone’s guess

A more mysterious theory has to do with algo trading, or algorithmic trading According to Bloomberg, there were reports of a $100 million BTC order that triggered computer mechanisms The order, allegedly spread around major exchanges, Coinbase, Kraken and Bitstamp, led to the price surge The real trigger, of course, was the SEC approving a Bitcoin ETF, that’s the real reason Apart from the fact that it never happened, on April fools, the publication Finance Magnates ran with the headline: "SEC Drops the Bomb: Approves Bitcoin ETF"

This is, perhaps, one of the less credible catalysts for the surge We spoke to Ran Neuner about his thoughts on what's happening I actually published a tweet a few days ago where I said: "There are over a million people on crypto twitter and not a single one of them can tell us why the market went up" And I've heard all of the conspiracy theories, I've heard about the algo trading, I've heard about the mysterious $100 million order, I've heard about the Russians loading up on cryptocurrencies I've heard about the fact that it may be related to the SEC and, of course, that it may be related to the article by Finance Magnates around the April Fool's joke that they did about the SEC approving the ETF

None of those makes sense and I think essentially what we should accept is that the reason why the market went up is because crypto as an asset class has been oversold for a long period of time Now as to why it went up so fast, so quickly, I'm not sure that anybody has been able to unravel the puzzle But what we can say is, we know that the market has been depressed, because if you look at the fundamentals of the market which is the adoption of the technologies, the number of apps being built on blockchains, the number of users that are growing, there has been much more progress than the markets have given us credit for And I think it was the case of the market playing catch up The US Security and Exchange Commission issued the long awaited framework providing guidelines for startups planning to issue tokens in compliance with US federal law

While not legally binding, the framework is meant to be “an analytical tool to help market participants assess whether the federal securities laws apply to the offer, sale, or resale of a particular digital asset” The criteria applied reflect those of a Howey Test, the standard methodology adopted in the US to define whether a transaction can be defined as an investment contract and, therefore, a security The question of whether a token is a security or not has major implications for the issuer In case the token falls under the definition of a security, than the company that issues, it needs to undergo a time consuming and expensive regulatory process According to the definition provided on the framework, “an "investment contract" exists when there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others”

Despite the fact that many welcomed the framework as a significant step forward towards crypto regulation, many observers criticized the document to be far too vague in many aspects For instance, the concept of “Active Participant” – a key figure contributing to define a token as security – is very broadly defined in the framework as someone whose managerial role can have an impact on the success of the digital asset Among other questions which remain unanswered include in what case a token stops being considered a security, and how the regulations apply to tokens which are issued outside the US We talked to Drew Hinkes, attorney and general counsel for Investment Bank Athena Blockchain, and Aaron Krowne, principal attorney at Krowne Law, and asked them to discuss the new framework So in that respect it's not quite as helpful as a full fledge law passed by the legislature might have been or even rulemaking or even formal guidance

Putting forth more detailed questions and considerations is helpful for people who want to launch systems and helpful for their attorneys, because it clarifies and gives more granular information to allow them to analyze these systems to determine whether they think it makes sense to offer them as securities or not, determine whether it makes sense to seek no action letters or not Overall, I believe that this is a positive development for the industry in the United States It's positive from the perspective of the public in sort of putting together the communications from the SEC some of which they've made, but it's been sort of scattered in various speeches and other statements and some of it is more new It looks kind of like a series of potential red flags and the temptation is to try to completely avoid any red flag, right It's a concern at least

So, in that sense I'm worried about a chilling effect for clients and I have to go to clients and say, well, you know, there's A, B and C are red flags and SEC is either listing them or emphasizing them here in these releases they've made So, have to think twice about doing some of these things And so in that sense while the SEC gave something it also, I think, effectively took something away in terms of potential breathing room for ICOs as we have known them Some of the top red flags that have that sort of nature, that come out of this release, and the SEC repeatedly emphasized these, were the aspect of having kind of a third party market or market making for a token So something that's off your platform

And, of course, the classical example is crypto exchanges, right But it could be other things as well, engaging with a market maker for instance They mentioned the use of tokens the sale proceeds for development or really any sort of general purposes as an area of concern So that, obviously, is a huge motivator for ICOs generally is to raise money for development So, if that's a red flag, obviously, that's throwing some serious cold water on the sector

It again focuses on at a certain point whether an instrument that was issued as a security is no longer appropriately thought of as a security, because there's no longer reliance on the issuer or some central actor to create value or to create the return And while the elaboration on the factors I think was really helpful, it doesn't give us what we need as practitioners to understand what to do with that information I think, if people using tokens to raise funds had to behave themselves over the last three years you may find a more cooperative regulator But what did we do when we found that it was easy to sell tokens to each other, we committed rampant fraud, we ripped each other off left and right, we manipulated markets and we did all of the things that regulation exists to prevent That’s just their posture and that's not going to change anytime soon

The only thing that would change that I think is if there was some new legislation, let's say, created the ability to have a regulatory sandbox in the US, which other countries have done as you know And it's certainly a great facility, but we just don't have the legal provisions in the US for it Fintech giant PayPal has made its very first investment in a blockchain technology company, joining a Series A funding round into privacy-focused startup Cambridge Blockchain The startup provides blockchain-based solutions allowing financial institutions to give customers total control over their own data Neither PayPal, nor Cambridge Blockchain have disclosed the size of the investment but, according to data published by the SEC, the amount should be less than $3

5 million Considering the multi billion dollar size of a company such as PayPal, the investment is quite modest, but it is still the sign PayPal is continuing its exploration of blockchain technology, which might have massive consequences in terms of spreading adoption As PayPal co-founder Luke Nosek pointed out at the World Economic Forum this year, at its inception, PayPal was inspired by the same ideas of decentralization as the foundation of blockchain The initial mission of PayPal was to create a global currency that was independent of interference by these, you know, corrupt cartels of banks and governments that were debasing their currencies Eventually, he explained, PayPal could not fully realize that vision due to pressure from financial institutions

That did not prevent the company from taking some steps into the crypto space, for instance, by partnering with US crypto exchange Coinbase, which implemented PayPal withdrawals for fiat currency By partnering with Cambridge Blockchain, it seems PayPal understood the growing demand of personal data privacy Currently, around tens of billions worth of data are sold annually, with the data owners earning zero profit By leveraging blockchain technology, Cambridge Blockchain aims at giving back to individuals the ownership of their digital identities, preventing centralized data owners such as Facebook and Google to make a profit out of them We talked to Matthew Commons, CEO at Cambridge Blockchain, and asked him to give us more insight into their partnership with PayPal

Their really business problems where you don't necessarily want one entity to see all the data and control all the data So, we think that identity itself is really a natural application area for a blockchain And when we look at the early deployments of our software, it's typically been in the financial institution space and involving the sharing of Know Your Customer Data and onboarding data So it's a big pain point Know Your Customer checks are typically fairly expensive, fairly time consuming and not the best customer experience

For Cambridge Blockchain we found the best early traction in Europe, mainly because of things like the GDPR and the strong data privacy rules, it just provides more challenges for managing sensitive data in centralized databases So, when we look at at the PayPal use cases a lot of them are similar in nature So, we're exploring things, many of them having to do with Know Your Customer checks, sharing customer data both within the PayPal ecosystem as well as potentially with external parties and making an onboarding process that is faster, lower cost and a better customer experience So, Matthew, how is your product going to benefit a big company such as PayPal? I think PayPal is absolutely a supporter of strong data privacy, and I think even more so than that I think the market is really starting to demand that much more so than in the past

I think Europe has always been a leader in data privacy, I think you see that with things like GDPR But some recent events, I mean, whether it's the hack of Equifax, whether it's the Facebook Cambridge analytics scandal, these have been real perception changing events and have driven an increasing awareness of data privacy on a global basis, especially in the United States, where you have a new data privacy law that was recently passed in California and there's actually discussion of the federal data privacy law as well So, I think that the world is changing, I think people are starting to be more concerned about how their personal data is managed I think they're starting to demand more control over that So, I think that broader context is definitely shaping this investment as well

So what do you think about PayPal’s stance towards data privacy issues? So, a lot of it is reinvesting in R&D and also working on scaling the technology to much larger numbers of users You know, we're starting our deployment How do you plan to use the funds you just raised? In Luxembourg which will be with about 600,000 end users And that's that's going very well Coinbase has expanded into cross-border payments with XRP and USDC

Anyone with a Coinbase account can send and receive funds internationally, convert them into local currency all without having to pay a fee, apart from on-chain fees for transactions outside of Coinbase Last month, Ripple began a big push for cross-border payments and remittances by partnering with India’s federal bank, who now use the Ripple network for cross-border remittances — they also launched two remittance platforms in the UAE for making payments to India While there are some clear use cases for the tech, Coinbase’s decision to expand into this area was not welcomed by everyone

CEO Brian Armstrong opted to do an AMA on Youtube, many of the questions were pretty softball We love Bitcoin, hopefully anybody who comes to meet me in person, they'll be able to make friends with us But some were more critical For example, one participant took issue with Coinbase’s assertion that Ripple and USDC was optimised for cross border transmissions, compared to BTC saying: “the rationale of faster processing is BS given BTC has many more fiat off-ramps for those internationally” Brian Armstrong responded: You can definitely send BTC off platform as well and use it for remittance

I think you’re referring to the landing page that we put out that was sort of emphasizing some of the use cases around it, don’t read too much into that Like, you can do remittance with crypto on Coinbase in XRP, BTC and USD Coin, all of the above Eventually, Armstrong agreed with the participant that Bitcoin does have more fiat off-ramps Unsurprisingly, one topic that didn’t come up was the whole Neutrino affair Coinbase recently acquired Neutrino, whose leadership were members of Hacking Team, a tech company that worked with repressive regimes to monitor political activists and journalists

Despite the fact that it wasn’t mentioned, the scandal still cast a shadow When he spoke about the most ‘ambitious’ thing he wanted to do in the next five years, he mentioned Venezuela, saying: 50% or more of all transactions in the economy are happening in crypto like that would be amazing, maybe, you know, honestly like overthrow some corrupt dictators in the world that would be awesome Coinbase cannot be held responsible for the past actions of the Hacking Team, but it certainly doesn’t look good, when the head of an American company casually talks about overthrowing foreign leaders, no matter how corrupt This episode is sponsored by YouHodler Is your regular wallet empty, but your crypto wallet full? If you are a hodler with no cash, you can now borrow fiat, hassle free! Youhodler provides crypto backed loans, which means you can borrow up to $30,000 in cash instantly and use your crypto assets as collateral

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There were a million theories for the sudden price surge this week, in the comments below give us your reason, ridiculous answers only And as always, remember to like, subscribe and hodl