NEW YORK/WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission on Thursday stood by a decision blocking an exchange-traded fund that would have tracked bitcoin, citing concerns about market manipulation.
Brothers Cameron (L) and Tyler Winklevoss talk to each other as they attend a New York State Department of Financial Services (DFS) virtual currency hearing in the Manhattan borough of New York January 28, 2014. REUTERS/Lucas Jackson
The securities regulator found "unpersuasive" arguments that the bitcoin ETF proposed by Cameron and Tyler Winklevoss, the twin brothers who founded crypto exchange Gemini Trust Co LLC, would be sufficiently protected from manipulation, it said in a 92-page analysis bit.ly/2K3GoWG posted on its website.
“Regulated bitcoin-related markets are in the early stages of their development,” the SEC said, saying that it “cannot...conclude that bitcoin markets are uniquely resistant to manipulation.”
But the agency did not completely shut the door to such products coming to market once the bitcoin market has matured, offering some hope for at least five other bitcoin ETF proposals that are still pending before the regulator.
Bitcoin BTC=BTSP turned negative after the SEC"s ruling, and last traded down 2.9 percent.
The virtual currency can be used to move money around the world quickly and with relative anonymity, without the need for a central authority, such as a bank or government. A fund holding the currency could attract more investors and push its price higher.
The SEC said there was not enough evidence that efforts to thwart manipulation of the ETF’s price or that of the underlying bitcoin market would be successful.
The SEC had blocked the Winklevoss ETF from coming to market in March 2017, but then faced an appeal from CBOE Holdings Inc’s (CBOE.O) Bats exchange, which applied to list the ETF.
The parties can appeal the SEC’s decision in federal court.
CBOE and Gemini did not immediately respond to requests for comment.
The Winklevoss twins are best known for their feud with Facebook Inc (FB.O) founder Mark Zuckerberg over whether he stole the idea for what became the world’s most popular social networking website from them. The former Olympic rowers ultimately settled their legal dispute, which was dramatized in the 2010 film “The Social Network.”
The SEC’s decision to block the ETF was voted for 3-1 by its sitting commissioners, with Republican commissioner Hester Peirce voting against. In a statement, Peirce said she believed the product met the legal standard.
“More institutional participation would ameliorate many of the Commission’s concerns with the bitcoin market that underlie its disapproval order,” she said, adding that the ruling “sends a strong signal that innovation is unwelcome in our markets.”
Reporting by Trevor Hunnicutt in New York and Michelle Price in Washington; additional reporting by Anna Irrera in New York; editing by Phil Berlowitz and Leslie Adler
SEOUL (Reuters) - South Korean cryptocurrency exchange Bithumb said 35 billion won ($ 31.5 million) worth of virtual coins were stolen by hackers, the second local exchange targeted in just over a week as cyber thieves exposed the high risks of trading the digital asset.
FILE PHOTO: The logo of Bithumb is seen at its cryptocurrencies exchange in Seoul, South Korea, January 11, 2018. REUTERS/Kim Hong-Ji/File Photo
Bithumb said in a notice on its website on Wednesday that it had stopped all trading after ascertaining “some cryptocurrencies worth about 35 billion won were seized between late yesterday and early morning today.”
The exchange, the sixth busiest in the world according to Coinmarketcap.com, said it had stored “all clients’ assets in safe cold wallets,” which operate on platforms not directly connected to the internet.
It added that the company would fully compensate customers.
The Bithumb theft highlights the security risks and the weak regulation of global cryptocurrency markets. Global policymakers have warned investors to be cautious in trading the digital currency given the lack of broad regulatory oversight.
In Ho, a professor at Korea University’s Blockchain Research Institute, said the stolen coins were most likely to be from the more insecure ‘hot wallets.’
“Since coins in the cold wallets are not at all wired to the internet, it would have been impossible for hackers to steal those in cold wallets unless they physically broke in,” said In, a blockchain expert at the research center.
Bithumb did not immediately respond to Reuters’ request for comments, and its statement did not say whether the stolen coins were stored in its ‘hot wallets’.
Mun Chong-hyun, chief analyst at ESTsecurity, said digital coins would continue to be juicy targets for hackers around the world.
“No security measures or regulations can 100 percent guarantee safety of virtual coins. It is held anonymously and in lightly-secured systems, which makes them an irresistible target,” Mun said.
On the Luxembourg-based Bitstamp, bitcoin BTC=BTSP was down 1.8 percent at $ 6,612.92 by 0351 GMT, extending losses as a series of intrusions on cryptocurrency exchanges in recent weeks sparked concerns over security.
It has fallen roughly 70 percent from its all-time peak hit around mid-December 2017.
On June 11, another South Korean cryptocurrency exchange Coinrail said it was hacked. The cyber attacks come after a high-profile theft of over half a billion dollars worth of digital currency at Japan’s exchange Coincheck earlier this year.
In January, South Korea banned the use of anonymous bank accounts for virtual coin trading to stop cryptocurrencies being used in money laundering and other crimes. But the government said it does not intend to go as far as shutting down domestic exchanges.
Bithumb trades more than 37 different virtual coins, according to Coinmarketcap.com
HONG KONG (Reuters) - Two Chinese bitcoin mining equipment makers plan to raise up to $ 1 billion each from Hong Kong listings this year, riding on strong global interest in cryptocurrencies, IFR reported on Tuesday, citing people familiar with the plans.
FILE PHOTO: A token of the virtual currency Bitcoin is seen placed on a monitor that displays binary digits in this illustration picture, December 8, 2017. REUTERS/Dado Ruvic//File Photo
Canaan Creative filed a listing application to the Stock Exchange of Hong Kong on Monday, IFR, a Thomson Reuters publication, reported.
Zhejiang Ebang Communication has also started working with advisers on a proposed Hong Kong float of up to $ 1 billon, reported IFR.
Ebang listed on China’s National Equities Exchange and Quotations, also known as the New Third Board, in 2015 and was
delisted from the over-the-counter market in March after announcing in January that it would seek a Hong Kong listing.
Chinese bitcoin mining equipment makers are hungry for capital to fund their growth as the heightened interest in cryptocurrencies has led to a surge in demand for their machines.
Canaan, which sells “Avalon” mining machines with customised super-fast ASIC chips, made revenue of more than 1 billion yuan in 2017. Although cryptocurrencies can be mined using regular computer equipment, specialised processing devices dedicated to mining are more effective and can generate more income.
The company’s co-chairman Jianping Kong told Reuters in April that he expected China’s push to promote the domestic chip industry to help drive growth for the company.
Credit Suisse, CMB International, Deutsche Bank and Morgan Stanley are joint sponsors for Canaan’s float, according to IFR.
Canaan Creative declined to comment. Ebang could not be immediately reached for comment. All the banks didn’t immediately respond to a request for comment.
Canaan’s IPO valuation has yet to be set as there is no listed comparable and the prices of cryptocurrencies have
fluctuated a lot, reported IFR. It was valued at $ 500 million in mid-2017, IFR said, attributing it to one of the people.
Reporting by Fiona Lau at IFR; Additional reporting by Sijia Jiang; Writing by Julie Zhu; Editing by Muralikumar Anantharaman
NEW YORK (Reuters) - New York state on Monday authorized the Gemini Trust Co exchange founded by internet entrepreneurs Cameron and Tyler Winklevoss to offer trading of the privacy-focused cryptocurrency Zcash, making it the world’s first licensed Zcash exchange.
FILE PHOTO: Entrepeneurs Tyler and Cameron Winklevoss arrive at the Metropolitan Museum of Art Costume Institute Gala (Met Gala) to celebrate the opening of "Manus x Machina: Fashion in an Age of Technology" in the Manhattan borough of New York, May 2, 2016. REUTERS/Lucas Jackson
The state’s Department of Financial Services said it also approved Gemini to offer custody services and trading of Bitcoin Cash and Litecoin in the future.
Zcash’s market value was roughly $ 1.3 billion on Monday, according to CoinMarketCap.com, while Bitcoin Cash and Litecoin’s respective values were $ 25 billion and $ 8.3 billion. Bitcoin’s market value was about $ 150.1 billion.
“With smart and thorough regulatory oversight, the development and long-term growth of the industry will remain thriving,” Financial Services Superintendent Maria Vullo said in a statement.
Cryptocurrencies are digital tokens that use encryption techniques to secure transactions. Industry critics say the market is opaque and vulnerable to risks such as money laundering.
Last month, then-New York Attorney General Eric Schneiderman asked Gemini and 12 other cryptocurrency trading platforms to provide details about their operations and safety measures.
Zcash incorporates the technology “zk-snark,” short for zero-knowledge succinct non-interactive argument of knowledge, which lets people trade with each other in anonymity.
Gemini said it expects to begin accepting Zcash deposits on Saturday, May 19, with trading to begin three days later.
“We are proud be the first licensed exchange in the world to offer Zcash trading and custody services and look forward to providing customers with a safe, secure, and regulated place to buy, sell, and store Zcash,” Gemini Chief Executive Tyler Winklevoss said in a statement provided by Vullo’s office.
The Winklevosses, who are 36-year-old twins, in 2008 reached a $ 65 million settlement with Facebook Inc and founder Mark Zuckerberg over who had the idea for the social media website.
They also competed in the men’s rowing competition at the 2008 Summer Olympics in Beijing.
Reporting by Jonathan Stempel in New York; editing by Chizu Nomiyama and Jonathan Oatis
The Federal Reserve Bank of St. Louis has provided some high-profile validation for a core premise of Bitcoin and other cryptocurrency. A blog post this week based on an earlier Fed research paper said that “bitcoin units have no intrinsic value” – but added that currencies “such as the U.S. dollar, the euro, and the Swiss france . . . have no intrinsic value either.”
The post, titled “Three Ways Bitcoin is Like Regular Currency,” doesn’t precisely endorse Bitcoin or cryptocurrency. In another recent report, the St. Louis Fed was critical of Bitcoin’s inefficiency. Cryptocurrency has also become rife with scams since its surge in value last year, and may constitute a global risk because it enables clandestine money laundering, capital flight, and tax evasion.
But the St. Louis Fed has provided a credible rebuttal to one of the most widespread and misguided criticisms of cryptocurrency: That, because it isn’t tied to a particular real-world commodity, it should have a monetary value of zero. As Fed researchers point out, since decoupling from the gold standard in the early 1970s, almost all global reserve currencies rely on nothing but trust to function as a media of value exchange.
In the case of the dollar, that’s mostly trust in the U.S. government and economy. For Bitcoin and other cryptocurrencies, it’s trust in computer code and, at least to some extent, developers.
Surprisingly, the Fed’s new statement also echoes one of the predominant arguments that cryptocurrency fans use to disparage government-backed currency – though in a rather roundabout way. The post argues in part that “there’s a limited supply” of both cash and Bitcoin. The libertarian boosters at the heart of the crytpocurrency movement have often argued that Bitcoin is better than government currency because central banks can devalue national currencies through inflation, while Bitcoin has a strictly fixed supply. Though the Fed’s post points out that it doesn’t actually print cash – in the sense of physical notes – it acknowledges its ability to expand the money supply.
NEW YORK (Reuters) - Soaring crypto-currency prices last year are estimated to result in U.S. tax liabilities of $ 25 billion, adding further selling pressure to these assets in the short term, according to a research note by Fundstrat Global Advisers on Thursday.
A bitcoin logo is seen at a facility of the Youth and Sports Ministry in Caracas, Venezuela February 23, 2018. REUTERS/Marco Bello
This could mean a massive outflow from crypto currencies to the dollar by April 15, the deadline for filing taxes this year, the firm said.
“We believe selling pressures (in crypto) have been amplified by capital gains tax-related selling this year,” said Thomas Lee, Fundstrat’s co-founder and head of research. Lee was formerly J.P. Morgan’s chief equity strategist from 2007 to 2014.
Still, Fundstrat believes the outlook for bitcoin should improve after the April 15 tax deadline. It reiterated its mid-year target of $ 20,000 and year-end forecast of $ 25,000.
Bitcoin in 2018 has lost more than 50 percent of its value, with other crypto currencies such as ether and ripple also hurt by intense regulatory scrutiny around the world.
Bitcoin last traded down nearly 2 percent at $ 6,673.53 on the Bitstamp platform. In December last year, bitcoin hit a record just shy of $ 20,000.
Virtual currencies led by bitcoin grew $ 590 billion in 2017 in terms of market value, compared with an $ 11 billion increase in 2016, Fundstrat said, estimating that 30 percent of crypto holders are in the United States.
The $ 25-billion tax liability accounts for 20 percent of the expected total tax payments for capital gains of around $ 168 billion in 2017, the research firm said. The projected tax liability is based on taxable gains for crypto of $ 92 billion, it added.
Fundstrat also said crypto exchanges posted record profit in November and December and are expected to have huge tax liabilities, which should add to further selling in crypto-currencies. Many of the exchanges have net income exceeding $ 1 billion in 2017 and keep their working capital in bitcoin and ether, the research firm added.
To meet these tax liabilities, exchanges need to sell bitcoin and ether.
Reporting by Gertrude Chavez-Dreyfuss; Editing by Bernadette Baum
LONDON (Reuters) - One of the biggest bitcoin exchanges has struck a rare deal which will allow it to open a bank account with Britain’s Barclays, making it easier for UK customers of the exchange to buy and sell cryptocurrencies, the UK boss of the exchange said on Wednesday.
Workers are seen in at Barclays bank offices in the Canary Wharf financial district in London, Britain, November 17, 2017. Picture taken November 17, 2017. REUTERS/Toby Melville
Large global banks have been reluctant to do business with companies that handle bitcoin and other digital coins because of concerns they are used by criminals to launder money and that regulators will soon crack down on them.
San Francisco-based exchange, Coinbase, said its UK subsidiary was the first to be granted an e-money license by the UK’s financial watchdog, a precursor to getting the banking relationship with Barclays.
The Barclays account will make it easier for British customers. Previously, they had to transfer pounds into euros and go through an Estonian bank.
“Having domestic GBP payments with Barclays reduces the cost, improves the customer experience...and makes the transaction faster,” said Zeeshan Feroz, Coinbase’s UK CEO.
The UK is the largest market for Coinbase in Europe, and the exchange said its customer base in the region was growing at twice the rate of elsewhere.
A collection of Bitcoin (virtual currency) tokens are displayed in this picture illustration taken December 8, 2017. REUTERS/Benoit Tessier/Illustration
Feroz said that it took considerable time to get a UK bank on board, partly because Barclays needed to be sure that Coinbase had the right systems in place to prevent money laundering.
Regulators across the globe have warned that cryptocurrencies are used by criminals to launder money, and some exchanges have been shut down.
“It’s a completely brand new industry. There’s a lot of understanding and risk management that’s needed,” Feroz said.
Despite growing interest in both digital currencies and the technology behind them, some big lenders have limited their customers ability to buy cryptocurrencies, fearing a plunge in their value will leave customers unable to repay debts.
In February, British banks Lloyds and Virgin Money said they would ban credit card customers from buying cryptocurrencies, following the lead of JP Morgan and Citigroup. [nL8N1PU10Y]
Coinbase said it had also become the first crypto exchange to use Britain’s Faster Payments Scheme, a network used by the traditional financial industry.
Reporting by Tommy Wilkes and Emma Rumney; Editing by Elaine Hardcastle
NEW YORK (Reuters) - Bitcoin rose above $ 10,000 on Thursday for the first time in more than two weeks, as investors bought back the digital currency after having fallen 70 percent from its all-time peak hit around mid-December.
On the Luxembourg-based Bitstamp, bitcoin rose as high as $ 10,095.82 and was last at $ 10,060.26, up 6 percent on the day.
Most major U.S. credit card issuers have now banned the use of their cards to buy Bitcoin or other digital currencies, in a move intended to decrease both financial and legal risk.
Bank of America began blocking cryptocurrency purchases on Friday, according to Bloomberg. JPMorgan did the same on Saturday.
Citigroup also says it is halting cryptocurrency purchases on credit, and Capital One and Discover had already enacted their own bans. That means all of the top five credit card issuers have announced or implemented bans.
The moves are above all in the banks’ self-interest. As Fortune previously reported, the mania surrounding cryptocurrency late last year appears to have motivated many retail investors to use credit cards as leveraging tools, buying more cryptocurrency than they could afford. With Bitcoin down roughly 50% from December highs, many of those investors are likely underwater right now, and may not be able to pay off their initial Bitcoin purchases soon, if ever.
Further, as Bloomberg points out, banks may be responsible for monitoring customers’ behavior to prevent money laundering after they make a credit-backed Bitcoin purchase, a tough standard for them to comply with.
The bans — or more to the point, the news of the bans — may exacerbate ongoing declines in cryptocurrency prices. After a hefty bounce Saturday morning, crypto markets broadly retreated on Sunday. Bitcoin is now trading at around $ 8,500 from a December high near $ 20,000.
In the longer term, however, tighter cryptocurrency investment controls, whether from regulators or lenders, seem likely to help mitigate the consequences of both hype and scams. For much of 2017, those threatened to overshadow the underlying promise of blockchain technology, which is still in the very early stages of evolution.
TOKYO/SINGAPORE (Reuters) - Bitcoin extended its sharp tumble of the past 24 hours, skidding more than seven percent on Wednesday in a rapid downturn in fortunes as investors were spooked by fears regulators might clamp down on an asset whose value has skyrocketed in the past year.
The price of the world’s biggest and best-known cryptocurrency fell to as low as $ 10,567 on the Luxembourg-based Bitstamp exchange, not far from its six-week nadir of $ 10,162 touched the previous day. The session’s high was $ 11,794.07.
It led the fall in cryptocurrencies, although others such as Ethereum and Ripple, have also slid sharply this week after reports South Korea and China could ban trading, sparking worries of a wider regulatory crackdown.
“Cryptocurrencies could be capped in the current quarter ahead of G20 meeting in March, where policymakers could discuss tighter regulations,” said Shuhei Fujise, chief analyst at Alt Design.
At its lows on Tuesday, Bitcoin had fallen 25 percent in the session, its biggest daily decline in four months. It was a far cry from its peak close to $ 20,000 in December, when the virtual currency had risen nearly 2000 percent over the year.
Tuesday’s decline followed reports that South Korea’s finance minister had said banning trading in cryptocurrencies was still an option and that the government plans a set of measures to clamp down on the “irrational” cryptocurrency investment craze.
Separately, a senior Chinese central banker said authorities should ban centralised trading of virtual currencies as well as individuals and businesses that provide related services.
“Bitcoin is deciding whether this is the moment to crash and burn,” said Steven Englander, head of strategy at New York-based Rafiki Capital.
“My conjecture is that cryptocurrency holders are trying to decide whether to abandon Bitcoin because its limitations mean it will be superseded by better products or bet that it can thrive despite them.”
Bitcoin futures maturing on Wednesday on the Cboe Global Markets Inc’s Cboe Futures Exchange were at $ 10,740, with 1,586 contracts traded, after having opened at $ 10,850. The open interest was 2,895 contracts. The Cboe 14 March 2018 contract was quoted at $ 11,130.
The futures are cash-settled contracts based on the auction price of bitcoin in U.S. dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs Cameron and Tyler Winklevoss.
The MVIS CryptoCompare Ripple Index, which covers the performance of a digital assets portfolio which invests in Ripple (XRP), a cryptocurrency developed by Ripple Labs, dropped 15 percent to $ 7,298 on Wednesday.
That equity index has seen a 66 percent slide in its value since the start of the year. Ripple itself was quoted at $ 1.15 on website CoinMarketCap, down from a high of $ 3.81 on Jan 4.
“The run-up in Bitcoin created a mystique of one-way trading which is being shaken but the pricing requires faith that there will always be demand,” Englander wrote.
“This is far from guaranteed given the existence of alternatives with better characteristics.”
Reporting by Hideyuki Sano in TOKYO; Writing by Vidya Ranganathan; Editing by Shri Navaratnam
SINGAPORE/TOKYO (Reuters) - Bitcoin extended its recovery in holiday-thinned trading on Tuesday, rising 10 percent to be up more than a third from last week’s lows of below $ 12,000.
Bitcoin, the world’s biggest and best-known cryptocurrency, fell nearly 30 percent at one stage on Friday to $ 11,159.93 and, despite a late recovery, had its worst week since 2013. At 0445 GMT on Tuesday, it was quoted around $ 15,049 on the Luxembourg-based Bitstamp exchange.
The digital currency had risen around twentyfold since the start of the year, climbing from less than $ 1,000 to as high as $ 19,666 on Dec. 17 on Bitstamp and to over $ 20,000 on other exchanges. But it has posted heavy declines since.
While bitcoin investors and analysts believe the decline in its value was a natural correction after a heady run-up in prices, there have been further warnings from market regulators and central banks.
“There is no right current price which would reflect the right current valuation,” said Andrei Popescu, Singapore-based co-founder of COSS, which describes itself as a platform that encompasses all features of a digital economy based on cryptocurrency.
“Taking profit is right, while buying into a long term projection is also right. You don’t have to be right in this market, just less wrong than the rest,” Popescu said.
Shmuel Hauser, the chairman of the Israel Securities Authority, said on Monday he will propose regulation to ban companies based on bitcoin and other digital currencies from trading on the Tel Aviv Stock Exchange.
Singapore’s central bank last week issued a warning against investment in cryptocurrencies, saying it considers the recent surge in their prices to be driven by speculation and that the risk of a sharp fall in prices is high.
Prices of rival cryptocurrencies, which slid along with bitcoin last week, have also recovered, with Ethereum, the second-biggest cryptocurrency by market size, quoted around $ 771, up from Sunday’s low of $ 689 but still far from highs around $ 900 hit last week.
(Reuters) - Major cryptocurrency exchange Coinbase said on Wednesday it will investigate accusations of insider trading, following a sharp increase in the price of bitcoin cash hours before it announced support for the virtual currency.
Bitcoin cash, a clone of bitcoin, jumped to $ 8,500 on Coinbase’s exchange on Tuesday afternoon, hours before the San Francisco-based exchange launched trading in bitcoin cash.
Trading in bitcoin cash will be suspended until 1200 ET (1700 GMT) Wednesday, a Coinbase status page showed.
Meanwhile, bitcoin, the world’s most popular cryptocurrency, fell more than 10 percent on Wednesday to a one-week low of $ 15,800. Bitcoin has risen some 1,700 percent this year and nearly 80 percent this month alone.
"If we find evidence of any employee or contractor violating our policies — directly or indirectly — I will not hesitate to terminate the employee immediately," Coinbase Chief Executive Brian Armstrong said in a blog post. (bit.ly/2CMbaA3)
Additionally, Coinbase employees have been restricted from trading in bitcoin cash for several weeks, Coinbase said on Twitter.
Earlier on Tuesday, traders on Twitter alleged that news of Coinbase’s launch of bitcoin cash support had been leaked before the official announcement.
Bitcoin cash was created on Aug. 1 when Hong Kong-based exchange Bitfinex said a minority of bitcoin miners would create a new version of bitcoin to make trading faster and easier.
Reporting by Nikhil Subba and Mekhla Raina in Bengaluru; Editing by Amrutha Gayathri and Sai Sachin Ravikumar
(Reuters) - A suburban New York hospital technician accused of using bitcoin and other cryptocurrencies to launder money meant for the militant group Islamic State was arrested on charges of money laundering in support of a foreign terrorist organization and bank fraud, prosecutors said Thursday.
Federal prosecutors in New York’s Suffolk County claimed in court papers that Zoobia Shahnaz, 27, used fraudulent credit cards and loans to accumulate $ 85,000, which she attempted to transfer to the radical group Islamic State before attempting to go to Syria to join it.
Prosecutors said that after traveling to Jordan to work with the Syrian American Medical Society, Shahnaz returned to the United States and applied for six credit cards, which she used to buy bitcoin and other cryptocurrencies.
The resident of the hamlet of Brentwood in Islip on Long Island appeared before a federal judge late on Thursday and was ordered detained, prosecutors said.
Shahnaz’ lawyer, Steve Zissou, did not immediately respond to a request for comment on the case.
After borrowing about $ 85,000 with fraudulently obtained credit cards and loans and withdrawing another $ 22,000 from bank accounts in her own name, Shahnaz sent funds to recipients in Pakistan, China and Turkey, prosecutors said.
Some of that money came in the form of $ 63,000 in bitcoin and other crypto-currencies purchased with the credit cards, prosecutors said.
Arraignment and detention documents released on Thursday showed that Shahnaz, a U.S. citizen born in Pakistan, was arrested on Wednesday.
Prosecutors said that in July Shahnaz obtained a Pakistani passport and booked a flight to Pakistan with a layover in Istanbul with the intention of going to Syria. She was stopped by law enforcement investigators at John F. Kennedy airport and questioned about her trip and the financial transactions, prosecutors said.
She had $ 9,500 in cash with her, just under the limit of $ 10,000 that a person can take out of the country without declaring it to immigration and customs officials, they said.
Subsequent searches of Shahnaz’ electronic devices showed numerous searches for Islamic State-related material, including travel checklists.
She faces three charges of money laundering, including money laundering in support of a foreign terrorist organization, and is also charged with bank fraud. She faces up to 20 years in prison on each of the money laundering charges and up to 30 years for the bank fraud charge.
Reporting by Sharon Bernstein; Editing by Cynthia Osterman
NEW YORK/SYDNEY/LONDON (Reuters) - Bitcoin futures eased back from an initial surge of almost 22 percent to trade up 13 percent on Monday, in an eagerly awaited U.S. market debut that backers hope will confer greater legitimacy on the volatile cryptocurrency and lead to its wider use.
Virtual currency Bitcoin tokens are seen in this illustration picture, December 8, 2017. Picture taken December 8. REUTERS/Dado Ruvic/Illustration
Although bitcoin futures were already offered on some unregulated cryptocurrency exchanges outside the United States, the Chicago-based Cboe Global Markets’ (CBOE.O) launch marked the first time investors could get exposure to the market via a mainstream regulated exchange.
The debut on Sunday night may have caused an early outage of the Cboe website. The exchange said that due to heavy traffic, the site “may be temporarily unavailable”.
The one-month bitcoin contract <0#XBT:> opened trade at 6 pm local time (2300 GMT) at $ 15,460, dipped briefly before rising to a high of $ 18,700 and then slipping again.
As of 1112 GMT the one-month future was up 13 percent from the open at $ 17,450, around $ 1,000 higher than the “spot” bitcoin price - the price at which bitcoin is currently being bought and sold.
The two-month contract was trading at $ 18,880, while the three-month contract was changing hands at $ 19,040.
“The premiums have so far been very high, demonstrating that few want to take the short side of the trade,” said Altana Digital Currency Fund manager Alistair Milne, whose fund has $ 35 million in assets under management.
In just over 12 hours after the launch, 2,780 contracts had been traded, meaning around $ 48.5 million had been notionally invested. That compares with daily trading volumes of more than $ 20 billion across all cryptocurrencies, according to trade website Coinmarketcap.
Just 13 trades of the two-month contracts had been traded.
“It will take time for derivative volumes to build up, but eventually if they prove to be a significant percentage of the global trade, they should in theory help stabilize things,” said Milne.
Most fund managers at mainstream asset management firms and other institutional investors say they will not be lured into the market by the launch of the futures.
“There’s no place for bitcoin in a multi-asset portfolio given the very high volatility,” said Robeco Chief Investment Officer Lukas Daalder.
“We’ve looked at it in the past but if you look at the number of times that you need to trade to keep your exposure at the same level, after one week you need to rebalance the portfolio already,” he added.
On the Luxembourg-based Bitstamp BTC=BTSP exchange, bitcoin prices surged 12.5 percent on the day to $ 16,570, close to an all-time high of $ 16,666.66 hit on Friday.
Bitcoin is up more than 1,500 percent so far in 2017, having started the year at less than $ 1,000, and its gains in the past month have been rapid.
CASH-SETTLED
Experts had worried that the risks associated with the currency’s Wild West-like nature could overshadow the futures debut. Bitcoin tumbled 20 percent in 10 hours on Friday.
“Even if there is an institution or institutional-sized trader out there, they are going to want to make sure that the mechanics work first, just for the futures,” said Ophir Gottlieb, chief executive officer of Los Angeles-based Capital Market Laboratories.
“I think the excitement will come when the futures market is established. That can take a few days,” Gottlieb added.
Sparks glow from broken Bitcoin (virtual currency) coins in this illustration picture, December 8, 2017. Picture taken December 8. REUTERS/Dado Ruvic/Illustration
The futures are cash-settled contracts based on the auction price of bitcoin in U.S. dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs and brothers Cameron and Tyler Winklevoss. Bitcoin was quoted at $ 16,674 on the Gemini exchange.
While bitcoin’s price rise mystifies many, its origins have been the subject of much speculation.
It was set up in 2008 by someone or some group calling themselves Satoshi Nakamoto, and was the first digital currency to successfully use cryptography to keep transactions secure and hidden, making traditional financial regulation difficult if not impossible.
Central bankers and critics of the cryptocurrency have been ringing the alarm bells over the surge in the price and other risks such as whether the opaque market can be used for money laundering.
“It looks remarkably like a bubble forming to me,” the Reserve Bank of New Zealand’s Acting Governor Grant Spencer said on television on Sunday.
“We’ve seen them in the past. Over the centuries we’ve seen bubbles and this appears to be a bit of a classic case.”
Many investors have stood on the sidelines watching its price rocket. However, it is possible to buy bitcoin without having to spend the full price of one coin. Bitcoin’s smallest unit is a Satoshi, named after the elusive creator of the cryptocurrency.
Slideshow (3 Images)
Somebody who invested $ 1,000 in bitcoin at the start of 2013 and had never sold any of it would now be sitting on around $ 1.2 million.
Heightened excitement ahead of the launch of the futures has given an extra kick to the cryptocurrency’s scorching run this year.
The CME Group (CME.O) is expected to launch its futures contract on Dec. 17.
CONTROVERSIAL MOVE
Bitcoin fans appear excited about the prospect of an exchange-listed and regulated product and the ability to bet on its price swings without having to sign up for a digital wallet.
Others, however, caution that risks remain for investors and possibly even the clearing organizations underpinning the trades.
“You are going to open up the market to a whole lot of people who aren’t currently in bitcoin,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
The launch has so far received a mixed reception from big U.S. banks and brokerages, though.
Several online brokerages, including Charles Schwab Corp (SCHW.N) and TD Ameritrade Holding Corp (AMTD.O), did not allow trading of the new futures immediately.
The Financial Times reported on Friday that JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N) would not immediately clear bitcoin trades for clients.
Goldman Sachs Group Inc (GS.N) said on Thursday it was planning to clear such trades for certain clients.
Bitcoin’s manic run-up this year has boosted volatility far in excess of other asset classes. The futures trading may help dampen some of the sharp moves, analysts said.
“Hypothetically, volatility over the long run should drop after institutions get involved,” Gottlieb said. “But there may not be an immediate impact, say in the first month.”
Additional reporting by Chuck Mikolajczak and John McCrank in NEW YORK,; Michelle Chen in HONG KONG and Helen Reid in LONDON; Editing by Lisa Von Ahn, Will Dunham and Gareth Jones
Whereas railroads and Detroit automakers used to be the nuts and bolts of a well-rounded portfolio, today’s world runs on silicon chips and bits. There’s a reason Nvidia(nvda) has been one of the S&P 500’s best stocks two years in a row. The largest semiconductor maker by market capitalization is benefiting from virtually every tech trend—with its chips powering everything from Tesla’s self-driving cars, to Amazon’s and Microsoft’s cloud services, to the machines that mine the digital currency Bitcoin. Though Nvidia stock, at 47 times next year’s earnings, isn’t cheap, analysts expect revenue to soar 37% in the next fiscal year, justifying that price tag.
Ian Mortimer, comanager of the top-performing Guinness Atkinson Global Innovators Fund, is bullish on Nvidia. Further down the supply chain, he also likes Applied Materials (amat), which manufactures the equipment to make the chips, and trades at just 14 times 2018 earnings. In the past, such stocks have traded at a discount because they tended to have long down-cycles—slow periods between, say, the new iPhone or PlayStation launch. But the boom in A.I.-driven technology means semiconductors are far less cyclical, if not entirely recession-proof. “The demand is coming from other places that didn’t use to exist—smart homes, smart cars, etcetera,” Mortimer says.
While Nvidia’s chips are used in “the brain of the car,” Mortimer says, he also owns German chipmaker Infineon, whose sensors facilitate a host of more practical functions—from automatically opening and locking doors to detecting obstacles—that are nevertheless increasingly essential to electric and modern vehicles from Tesla, BMW, and many others. Infineon trades at 25 times earnings.
For income-conscious investors, tech also has more dividend-paying stocks than ever. In 2000, when Microsoft and Cisco(csco) were the two most valuable companies in the S&P 500, neither paid a dividend. Now, Cisco, which paid its first dividend in 2011, yields more than 3%; the S&P 500 average is around 2%. What’s more, after being nearly written off as a washed-up “cash cow,” Mortimer says, Cisco expects revenue to grow this quarter for the first time in two years. Pushing into cybersecurity and cloud services has put Cisco on the precipice of a comeback—reminiscent, in a way, of where Microsoft (whose dividend yields about 2%) was a few years ago, when its transition to cloud computing was just beginning to revive its growth. “There’s also some reassurance in the staying power of the older stalwarts, Mortimer adds: “It gives you a little bit more of that diversification, without having all your eggs in very high-growth companies that may or may not come through.”
