San Francisco-based digital currency exchange Kraken is making yet another acquisition, scooping up Dutch exchange CleverCoin.

The deal is Kraken’s second acquisition of 2016, coming just over five months after it purchased New York-based Coinsetter, which had acquired Canadian bitcoin exchange CAVirtex the year before.

The integration of CleverCoin’s services and its customer base into Kraken’s platform is set to take place this Wednesday on 29th June. The terms of the deal were not disclosed.

While Kraken is acquiring the assets and customer base of CleverCoin, the team behind the exchange isn't carrying over to the new owners.

When reached for comment, CleverCoin CEO Karsten Nilsen said that he and co-founder Christian de Kok wouldn't be joining Kraken as part of the deal, and will move on to another business focused on enterprise IT.

Founded in early 2014, CleverCoin spent that year expanding its services to move past its initial market in The Netherlands, looking to capture greater market share in Europe.

Kraken CEO Jesse Powell said that the deal was buoyed by what he described as a brightening outlook for digital currencies, pointing to recent price increases and clarification on regulatory questions as key drivers.

He said in a statement:

"The acquisition of CleverCoin will empower Kraken with greater liquidity and a significantly expanded customer base in Europe, our flagship market."

Blog posts on CleverCoin’s website suggest that the acquisition was motivated, at least in part, by past issues with a payment processor they were using.

On 15th April, the exchange announced that it had stopped processing orders, and later that month it was still working on the problem. Earlier this month, the company said that it had “found a solution” and would make further details known on 28th June – the date of today’s announcement.

Nilsen referenced the processor issues in an email to CoinDesk, while also highlighting the existing relationship between the two exchanges.

"We have known the Kraken team since being at [startup accelerator] Boost VC, lately we lost one of the biggest payment providers we were working with and we started talking and managed to come up with a great deal together," he told CoinDesk.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Kraken.

Acquisition image via Shutterstock

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ItBit is considering whether to add support for ether, the native cryptocurrency of ethereum, to its digital currency exchange, according to its CEO.

In an interview last week, CEO Charles Cascarilla reported that itBit doesn’t currently deal in ether via its exchange or over-the-counter trading offerings. However, he suggested this could change following moves from competitors Coinbase and Gemini, both of which recently added support for ether.

Cascarilla told CoinDesk:

"Clearly ethereum is trying to create more functionality and there are benefits and risks to doing that. [But] we’ve been looking at it."

Cascarilla cited the recent demise of the ethereum-based fund The DAO as a potential risk factor, though he said he doesn’t think it "diminishes" the value of ether or ethereum itself.

The comments come as sources suggest itBit is increasingly focusing on blockchain post-trade solutions, and that more resources are being devoted away from its exchange operations.

According to data from Bitcoin Charts, itBit is currently fifth among USD bitcoin exchanges, reporting average 24-hour trade volumes of about 11,000 BTC, or just over $7m.

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Friendly regulatory policies were rapidly turning London into a capital for blockchain innovation, that is until last week’s decision by the UK to leave the European Union left some wondering if this market position will be impacted.

From establishing a safe zone for blockchain firms to passing a measure that exempted bitcoin from value-added tax, the nation had arguably helped pave the way for measures currently under consideration in the EU while putting pressure on regulators in the US to rethink their policies on FinTech innovation.

If nothing else, the EU referendum, nicknamed the 'Brexit', has brought an air of uncertainty into an environment that had long been lauded by the technology's advocates as forward-thinking and permissive.

Prior to last week's vote, many European companies had taken to incorporating in the UK to "avoid red tape in their home countries", according to Wardynski & Partners attorney and digital currency specialist Jacek Czarnecki. But after the UK's exit from the EU, he argued its appeal could decrease.

Czarnecki told CoinDesk:

"At least in short term London will lose as a candidate for [Europe's] digital currency capital. They still have much to offer, but considerably less than before and moreover with a large uncertainty as to the future."

If the UK’s vote puts its status as a digital currency leader among European nations in jeopardy, other cities are poised to take over.

Czarnecki said Luxembourg, Berlin and Stockholm are all positioned to become stating points of digital currency commerce in Europe, while Rik Willard of blockchain consultancy firm Agentic Group, adds Zurich to the list of cities that have proven attractive for new industry companies.

Time for renegotiation

To help minimize the fall-out from Britain's vote to leave the EU, at least one member of the of the area's blockchain community believes the commonwealth should engage in friendly negotiations with its neighbors in Europe.

Adam Vaziri, a board member of the non-profit education and advocacy group, UK Digital Currency Association, told CoinDesk:

"Depending on what is renegotiated that pragmatic UK influence on blockchain regulation may be deflated."

In February, the FCA established a "safe space" to let UK firms experiment with financial technology, including blockchain, but that policy could be upended by the vote.

According to Vaziri, the change could be positive or negative. Currently, he said, the FCA can only exempt UK companies from its own rules, but EU mandates still apply.

"Depending on what is negotiated with the EU, you may end up with the FCA having even more discretion in how it deals with blockchain companies," Vaziri said.

One interesting possible path forward is that the UK could join as an independent member of the European Economic Area.

Currently members of the EU are also members of the EEA, but non-EU member such as Iceland, Liechtenstein and Norway, are also members, an option available to the UK, according to Vaziri.

Under such a membership, UK companies would be subject to certain European financial regulations and passporting advantages, but it would not have as much influence over the making of EU policy.

All agreements honored

In addition to being a hotbed for startups from around Europe looking to partner with regional banks, the Central Bank of England itself has taken steps to explore the potential applications of blockchain technology.

For now, those agreements and others negotiated between UK companies and those in the EU will be honored, according to a statement by the Financial Conduct Authority (FCA), released on Friday. But that, too, could change.

From the FCA statement:

"The longer term impacts of the decision to leave the EU on the overall regulatory framework for the UK will depend, in part, on the relationship that the UK seeks with the EU in the future."

Of note, Vaziri says that for now "there will be no impact on any existing passported entity" doing business in the UK and hoping to take advantage of laws that require EU member-states to honor some of each other's laws.

One such company, Circle Internet Financial was awarded an e-money license from the FCA that gave it influence over regulatory policies presently being discussed in both the UK and elsewhere in Europe.

Circle and the FCA both declined requests for comment.

Brexit image via Shutterstock

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Ernst & Young revealed today that multiple bidders claimed 24,518 BTC (worth roughly $16m at press time) as part of a scheduled bitcoin auction that began on 20th June and ended on 21st June.

E&Y, the professional services firm that oversaw the sale, did not disclose the price paid by bidders or the number of bidders involved, though it said participants had been notified of auction outcomes.

However, given that the funds were held in a publicly available bitcoin wallet, analysis indicates that as many as three to four winners were awarded funds in the sale. (The bitcoin wallet holding the funds was first identified by bitcoin user Adam Meister on YouTube).

Data from blockchain data provider Skry shows unknown winners claimed 13,999 BTC ($9.25m), 6,517 BTC ($4.27m)  and 1,999.99 BTC ($1.31m), with the largest winner claiming seven 2,000 BTC blocks as part of the auction.

At press time, at least one transaction block was unaccounted for in the transactions, with 1,999 BTC still unspent in the original wallet.

In statements, E&Y transactions partner Adam Nikitins said that the auction drew “significant interest” from participants including bitcoin exchanges, digital asset investment funds and high net worth individuals.

Nitkins said:

"The process was very competitive and demonstrates the growing appetite for digital assets such as bitcoin."

Prior to the auction, participants indicated a willingness to enter the bidding process due to what they said has been the recent scarcity of bitcoin sellers given the sharp increases in the digital currency's price in the weeks leading up to the event.

As previously reported, the funds were originally confiscated by the Australian government in connection with the prosecution of a Silk Road user who plead guilty to commercial drug trafficking in 2014.

Australia auction image via Shutterstock

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The ethereum community is inching closer to blacklisting funds taken from The DAO.

Software patches were released late last week that, if accepted by a majority of miners, would place a hold on funds siphoned from The DAO earlier this month. Specifically, the patch would make it so that miners running the new software won’t be able to accept transactions from blacklisted addresses affiliated with the troubled fund.

The patch works by giving miners the opportunity to flag that they support the soft fork, and then use their clients to lower a metric called the 'block gas limit', which puts a cap on the amount of gas (an element of ethereum transactions) that can be included in a block.

Miners, which compete to add new transaction blocks to the network, can already change their own block gas limits, but in this specific case, the mechanism allows for a form of miner-based voting to be held on ethereum.

Once the network reaches block 1,800,000, if the overall network is below a threshold of 4m gas per block, the soft fork will activate.

A blog post published by the Ethereum Foundation frames the release as an alternative to more controversial changes to the network.

The post states:

"While many have suggested an immediate hard fork, the implications of such action are yet to be fully understood. An alternative suggestion was the creation of a soft fork allowing miners to temporarily put certain transactions on hold, attempting to recover the funds without any invasive action on the ethereum protocol itself."

The DAO is a project built on ethereum that, prior to its collapse, had raised more than $150m worth of the cryptocurrency ether in a bid to create a smart contract-based funding vehicle for other initiatives using the ethereum platform.

The ethers were raised through a crowdsale for publicly traded voting tokens that could be used to vote on different proposals.

However, owing to an element of its smart contract code, the funds were compromised, an event that sparked an effort to derail whoever was behind the incident. This has so far included steps by a group of ethereum developers to use the same exploit to relocate those funds.

Further, last Friday’s patch release came days after developers involved with ethereum began deliberating possible solutions to the issue.

The release is being billed as a referendum of sorts on the question of forking the ethereum network in a bid to stymie those behind the recent attacks on the DAO. The idea of instituting a network change in the wake of the incident has sparked both support and criticism from stakeholders.

Data provided by Etherchain.org indicates that many mining pools (groups that consolidate hashing power to increase their chances of mining the next block) have made the change, and if this trend continues, the soft fork is expected to take hold on 30th June. Some pools in the Ethereum ecosystem had already begun "voting" on the measure amid continued debate among community members about the idea.

One key caveat is that DAO token holders who had opted to use the smart contract code to break off into their own sub-organization will find themselves locked out as well.

However, the blog post indicated that future moves could include an additional fork to open up those accounts.

Image via Shutterstock

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A bitcoin investment firm led by two former JPMorgan traders has published a note which speculates that the EU referendum in the UK could lead to the ultimate decline of the euro, thus boosting the value of the digital currency.

The comments follow positive appreciation in the price of bitcoin after the UK announced it would leave the European Union last week, an event some market observers believe allowed the non-governmental digital currency to showcase its advantages as a hedge in times of uncertainty in more traditional markets.

As a result of the event, Global Advisors Bitcoin Investment Fund (GABI) owner Russell Newton wrote in an email to investors that it is time for them to begin preparing for the "ultimate death" of the euro currency.

The former JPMorgan commodities strategist wrote:

"If – or when – we see the break up of the zone and the currency, I believe bitcoin will fill some of the vacuum. Bitcoin’s inverse correlation to weakness in fiat currency regimes around the world has been seen many times and very markedly in the run up to the Brexit."

Elsewhere, Newton took aim at the traditional financial system as "inefficient" and "overregulated", pointing to the success of startups like Facebook and Amazon as reasons to be bullish about a new technology platform that could disrupt financial markets.

Newton went on to predict that bitcoin’s price will remain robust in July, and that ether, the native cryptocurrency of ethereum, will likely become part of an "ecosystem of blockchain-based solutions", though he believes bitcoin to be more resilient today.

Overall, Netwon spoke broadly about the benefits of digital currencies in the context of the financial system.

"Bitcoin and blockchain offer a future filled with creativity, functionality and indeed use cases that we cannot yet conceive," Newton continued, concluding:

"I believe that Brexit will invoke the feeling, at least in the UK, that bigger, structured, controlled and mandatory management is not the way forward, in politics, life or finance."

Correction: An earlier version of this article stated that the UK was part of the eurozone. 

Cracked euro via Shutterstock

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