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Texas chases after Wyoming with crypto law proposal, but challenges remain

Will Texas follow in Wyoming’s footsteps to become the next crypto-friendly U.S. state?

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Everything is bigger in Texas, but when it comes to crypto-friendly legislation, this doesn’t seem to be the case… just yet. On March 12, 2021, Texas Representative Tan Parker introduced the Uniform Commercial Code, also known as UCC, amendment bill (House Bill 4474) to better adapt commercial law to blockchain innovation and digital asset regulations.

Specifically speaking, the Texas UCC amendment bill aims to recognize virtual currencies under commercial law. Lee Bratcher, president of the Texas Blockchain Council — an organization recently established as a trade association intended to make Texas a leader in national blockchain growth — told Cointelegraph that the Texas Blockchain Council worked closely with Texas legislators to draft this bill, noting that if passed, it would change the business law around the definition of digital currencies and the legal definition of control:

“The Texas Blockchain Council has been working with uniform law commission around the language of the UCC amendment bill, along with other stakeholders to make sure they are all comfortable with the language.”Texas aims to rank second to Wyoming, but concerns remain

According to Bratcher, HB 4474 is similar to what Wyoming is already doing with its Digital Asset Law, which was passed on Feb. 26, 2019, and put into effect on July 1, 2019. “If the UCC amendment Bill passes, Texas would solidify a leadership position alongside states like Wyoming that have already blazed a trail towards regulatory clarity,” commented Bratcher.

While notable, a few unaddressed challenges remain. Caitlin Long, chief operating officer and founder of Avanti Financial Group — a Wyoming bank formed to serve as a bridge between digital assets and the U.S. dollar payments system — told Cointelegraph that HB 4474 is similar to Wyoming’s law in one respect: It aims to define virtual currencies. Long stated:

“That’s a huge positive, because in most U.S. states, the legal status of Bitcoin is unclear, which means that judges have no roadmap to adjudicate disputes, and parties do not have clarity regarding their rights and obligations.”

Long further noted that if HB 4474 passes, then Texas will join Wyoming as the only U.S. state to clarify this critical area of the law. “Both the Texas and Wyoming laws do so in the right way, which is to recognize control of the virtual currency as the determining factor,” Long remarked.

However, Long pointed out a critical gaping hole in HB 4474. According to Long, the bill does not define how a lender can establish an enforceable lien on a virtual currency. “In the legal parlance, this is called, ‘how to perfect a security interest,’” she commented.

Long explained that she is worried that Bitcoin (BTC) owners will become “mired in a lien mess in the U.S.” because U.S. commercial law doesn’t clarify which liens on Bitcoin are enforceable. This has become even more worrisome for Long, as she pointed out that there has been a huge rise in lending secured by Bitcoin as collateral in recent years:

“I think a lien mess is already building in Bitcoin. Bitcoin owners are at risk of being hit with old, unknown liens on their coins, which they had no way of discovering before purchasing — and the higher the Bitcoin price goes, the greater the financial incentive that lawyers have to pursue such claims.”

Unlike HB 4474, Long noted that the Wyoming law clearly states how lenders can create an enforceable lien on Bitcoin while also providing for the cleansing of dormant liens. Unfortunately, HB 4474 has not done this just yet. Rather, HB 4474 clarifies that an innocent purchaser won’t be subject to such adverse claims, adhering to the “take free” rules.

Although this is the case, Long pointed out yet another concern, further questioning what would happen to valid liens that were in force before HB 4474 potentially becomes a law. “Would Bitcoin lenders no longer have a valid lien in Texas? And will this affect the willingness of Bitcoin lenders to lend to Texas customers?”

Texas remains positive despite concerns

Although some critical concerns remain regarding HB 4474, Bratcher remarked that more guidance will eventually be formed around the UCC amendment bill: “We are working to produce a framework that moves in the same direction of Wyoming, and we will be following up with additional legislation in the future.”

Meanwhile, some Texas-based crypto companies have already expressed excitement for HB 4474. Joseph Kelly, CEO of Unchained Capital — a Bitcoin native financial services company — told Cointelegraph that the firm does a lot of business locally and that having greater clarity around Bitcoin’s treatment under Texas statutes will help his company while encouraging other states to follow suit:

“As Texas and other states pass updates to their UCC that defines Bitcoin and spells out reasonable and commercial methods for perfecting a security interest in Bitcoin, it will help consumers and the industry avoid messy scenarios, lower average interest rates, and bring a greater proliferation of Bitcoin as acceptable collateral.”

The challenges around liens still remain, however. While the solution is still unknown, Long hypothesized that Texas may be taking an approach that explicitly favors institutional lenders at the expense of decentralized finance projects and other peer-to-peer lenders.

“Institutions have a way to perfect their security interests (by treating Bitcoin the same way that securities are treated under commercial law — as IOUs), but individuals and DeFi projects don’t have that option available to them,” Long commented. She further noted that she hopes Texas will be able to fix this in the same way that Wyoming did, as an amendment to the proposed law.

Regardless of the outcome, it’s notable that Texas has been taking measures to catch up to Wyoming in terms of crypto and blockchain regulations. In addition to HB 4474, Bratcher mentioned that three other blockchain bills were also being filed. While Bratcher is aware that these bills do not go as far as Wyoming’s bills, he believes Texas will rank right under Wyoming if Texas’ blockchain legislation passes, adding:

“Texas is the second-largest economy in the United States, and our congressional delegation is 10 times the size of Wyoming. We have much more influence in D.C. We just want to affirm what Wyoming is doing and come alongside them with a big economy and congressional delegation.”However, Long pointed out a critical gaping hole in HB 4474. According to Long, the bill does not define how a lender can establish an enforceable lien on a virtual currency. “In the legal parlance, this is called, ‘how to perfect a security interest,’” she commented.

Source: https://cointelegraph.com/news/texas-chases-after-wyoming-with-crypto-law-proposal-but-challenges-remain

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Chainalysis raises $100M in Series E funding led by Coatue

Chainalysis secures its second $100 million investment round in three months.

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Chainalysis has secured hundreds of millions of dollars in the second quarter as venture firms allocate more resources to the emerging blockchain sector.

Chainalysis raises $100M in Series E funding led by Coatue

Blockchain analytics company Chainalysis has secured $100 million in Series E financing, bringing its total valuation to a staggering $4.2 billion and highlighting once again the tremendous growth of the cryptocurrency industry.

The round was led by global investment manager Coatue, with additional participation from 9Yards Capital, Altimeter, Blackstone, GIC, Pictet, Sequoia Heritage and SVB Capital, Chainalysis announced Thursday.

Chainalysis said the funds will go toward expanding its blockchain data capabilities, which includes investing in new data tools, software and APIs.

“We believe blockchain data is the asset that can help public and private sector organizations understand the risks and opportunities surrounding this asset class and promote its adoption safely and successfully,” the company said.

Chainalysis’ valuation has more than doubled in the last quarter thanks to several strategic investments. As Cointelegraph reported, the company closed out a $100 million Series D round in March led by Paradigm, a crypto-focused investment firm. At the time, Chainalysis’ director of communications Maddie Kennedy told Cointelegraph that the funds will be used to expand the company’s enterprise data offering.

Related: Crypto-finance company Amber Group valued at $1B following $100M raise

Mega-million-dollar funding rounds have become commonplace in the cryptocurrency industry over the last six months. Venture firms have poured billions into crypto startups this year alone, with the likes of Andreessen Horowitz going a step further by announcing a new $2.2 billion crypto venture fund.

What’s more, dealmaking seems to be happening irrespective of current market conditions, which marks an important evolution from the 2017 bull market that saw venture funding dry up once the initial coin offering mania faded.

Source: https://cointelegraph.com/news/chainalysis-raises-100m-in-series-e-funding-led-by-coatue

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Crypto miners eye cheap power in Texas, but fears aired over impact on the grid

Can Texas meet the electricity demands of migrating Chinese Bitcoin miners?

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The recent crackdown on crypto mining in China has seen concerns expressed over the potential impact a hashrate migration could have on Texas’ unreliable electricity market, as an increasing number of dislocated miners eye the Lone Star State.

Texas’ abundant sources of renewable energy and highly deregulated power grid make the state an obvious choice for migrating miners from China and elsewhere, with 20% of Texan electricity being generated by wind as of 2019.

Speaking to CNBC, Brandon Arvanaghi, a former security engineer at crypto exchange Gemini, predicted Texas will see “a dramatic shift over the next few months” as miners look to set up shop.

“We have governors like Greg Abbott in Texas who are promoting mining. It is going to become a real industry in the United States, which is going to be incredible,” he said, adding:

“Texas not only has the cheapest electricity in the U.S. but some of the cheapest in the globe.”

Castle Island Ventures’ founding partner, Nic Carter told CNBC that half of the world’s hashing power could ultimately exit China’s borders and will need new homes, stating:

“Every Western mining host I know has had their phones ringing off the hook. Chinese miners or miners that were domiciled in China are looking to Central Asia, Eastern Europe, the U.S., and Northern Europe.”

Global hash rate has fallen by one-third since early May following reports that China’s mining industry would be subjected to stricter supervision.

But is the Texan power grid up to the challenge of providing power for an influx of more crypto miners? The Electric Reliability Council of Texas (ERCOT) has just requested that Texans curb their electricity usage amid the recent heatwave that saw many residents turning up their air conditioners earlier this week.

Roughly 12,000 megawatts of generation capacity was offline as of Monday — enough to power 2.5 million homes. ERCOT described the scale of forced outages as “very concerning.”

The regulator warned that a failure to heed the request could result in a repeat of the widespread winter power failures that left 69% of Texans without electricity, and roughly half without water in February. According to Buzzfeed, February’s outages could have resulted in up to 700 deaths in the state.

Angela Walch, a Texas research associate at University College London’s Centre for Blockchain Technologies, tweeted her concerns regarding the share of Texas’ electricity being devoted to Bitcoin mining, emphasizing that her family has been “asked to reduce our air conditioning use, not run washing machines & dryers, etc.”

Obviously, Bitcoin is not the sole cause of this cluster*^% that our poor political leadership in Texas has caused.

But, I am curious to know the portion of the grid it uses. Maybe Bitcoin miners are the first to be shut down in times of grid stress.

— Angela Walch (@angela_walch) June 15, 2021

However Tierion CEO Wayne Vaughan responded by asserting that much of the electricity used to power Texan mining operations comprised stranded resources that “would never be able to reach your home to power your appliances.”

Others argued that wholesale Bitcoin mining operations could actually alleviate Texas’ power issues, with Texas’ seasonal surges in electricity demand incentivizing miners to sell power back to the state’s grid that otherwise go uncaptured.

In September 2020, the Peter Thiel-backed crypto miner Layer1 in West Texas reported it had reaped profits exceeding 700% by selling renewable electricity back to the grid amid surging summer demand.

While up-to-date data for global hashrate distribution is not available, the Cambridge University’s Bitcoin Electricity Consumption Index (BECI) estimates that China represented 65% of the world’s hashing power as of April 2020.

Earlier this month, district regulators in Western Xinjiang and Yunnan issued notices mandating the suspension of virtual currency mining enterprises. BECI estimates the two regions account for 40% of the country’s hash rate.

Castle Island Ventures’ founding partner, Nic Carter told CNBC that half of the world’s hashing power could ultimately exit China’s borders and will need new homes, stating:

Source: https://cointelegraph.com/news/crypto-miners-eye-cheap-power-in-texas-but-fears-aired-over-impact-on-the-grid

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Bitcoin price hits $40K as Paul Tudor Jones slams Fed inflation claims

Bitcoin price action is back at $40,000 as Paul Tudor Jones recommends a 5% BTC portfolio.

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Bitcoin (BTC) passed $40,000 on June 14 as a consolidation period snapped to unleash a solid breakout.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewBTC price breaks out past $40,000

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD gaining 3% in under an hour, reaching $40,500 on Bitstamp.

The largest cryptocurrency capitalized on upside which resulted from a new positive tweet from Elon Musk over possible acceptance by Tesla in the future.

Earlier, Cointelegraph reported on traders betting on a leg up to around $47,000 before a correction.

A look at buy and sell positions on major exchange Binance showed support at $38,000, wit resistance at $40,500 the next hurdle for bulls.

Buy and sell levels on Binance as of June 14. Source: Material Indicators/TwitterTudor Jones advocates 5% BTC allocation

Bitcoin reached a $2 trillion market cap because of a “dichotomy” in Federal Reserve policy which “questions” its credibility, says famous trader Paul Tudor Jones.

In an interview with CNBC on June 14, the founder of Tudor Investment Corporation sounded the alarm over advancing inflation.

After last week’s consumer price index (CPI) report showed that U.S. inflation had hit a 13-year high, Bitcoin’s deflationary nature has rarely looked so appealing.

For Tudor Jones, the idea that higher inflation is just temporary due to recent events, as suggested by the Fed and central banks in general, is a myth.

“It’s somewhat disingenuous to say, for them to say, that inflation is transitory,” he told CNBC’s Squawk Box segment.

Today’s environment is entirely different to that which saw episodes of inflation in the past, such as 2013, and as such, there is little sense in the Fed applying the same forecasts.

CPI was much lower then, Tudor Jones noted, while now, unemployment and jobs also roughly equal each other.

Related: Paul Tudor Jones says Bitcoin is ‘like investing early in Apple or Google’

Meanwhile, gold and Bitcoin have provided a refuge for many. Despite the precious metal vastly underperforming Bitcoin in terms of gains, it remains near record highs.

“When you look at the Fed today and the Fed back then, you wonder how can you have such wildly different policy views on what constitutes the right levels for employment, the right levels for inflation,” he continued.

“How can you have that with an eight-year timeframe? It’s almost like a split personality and you wonder why Bitcoin has a $2 trillion market cap and gold’s at $1,865 an ounce. And the reason why is you have this dichotomy in policy that again questions — questions — the institutional credibility of something.”

Ultimately, a 5% Bitcoin allocation is one of the only things he advocates to those seeking portfolio advice.

“I say, ‘OK, listen, the only thing I know for certain is I want to have 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities at this point in time,'” he added.

A look at buy and sell positions on major exchange Binance showed support at $38,000, wit resistance at $40,500 the next hurdle for bulls.

Source: https://cointelegraph.com/news/bitcoin-price-hits-40k-as-paul-tudor-jones-slams-fed-inflation-claims

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