Cryptocurrencies End the Week in the Red as Investor Enthusiasm Wanes Following SEC Defering VanEck-SolidX Bitcoin ETF Until September 30
Aug 10, 2018
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Developments in Financial Services
- Barclays is hosting a hackathon next month that puts rival blockchain technologies against each other in an attempt to disrupt the global derivatives market. Participants will be asked to use the ISDA Common Domain Model (CDM) and apply it to distributed ledgers to model post-trading processing of derivatives contracts.
- Brave, the privacy-focused web browser launched by a co-founder of Mozilla, plans to roll out a tipping add-on to its cryptocurrency payments platform. Users will now be able to tip other users via twitter and reddit via a Basic Attention Token wallet.
- Börse Stuttgart, the second largest stock exchange in Germany, has announced plans to build an end-to-end system to facilitate cryptocurrency trading. Its proprietary cryptocurrency trading platform, Bison, was developed from one of Börse Stuttgart’s subsidiaries, Sowa Labs. In addition, Börse Stuttgart plans to launch a ICO platform which will facilitate the issues of digital tokens and will make it easier to launch ICOs in a transparent and standardized way.
- ConinJar, a Bitcoin startup based in Australia, is introducing a digital currency fund which will track both Bitcoin and a combination of Bitcoin, Ethereum, Ripple and Litecoin (based on total supply). In order to qualify for the fund, investors will need to have AUD$2.5mm in net assets and AUD$250,000 in annual income. Cryptocurrency assets will be held in multi-signature digital wallets which should provide extra levels of security for investors.
- Swiss private bank Maerki Baumann has agreed to begin serving cryptocurrency firms. However, unlike its Zurich counterpart Falcon Bank, Maerki does not plan on currently offering cryptocurrency asset management or custody services
- Crypto MKT, a Chiliean cryptocurrency exchange, has announced that it has integrated with 5,000 merchants through a JV with Flow.cl. The platform is called CryptoCompra.com and is available in Chile, Argentina, Brazil and Europe but is only targeting Chileans. It is now possible for Chilean to pay for goods across these regions using Bitcoin, Ethereum or Stellar while merchants will receive their payments in fiat currency.
- Dan Morehead, CEO of Pantera Capital, believes crypto traders are overreacting to news that the SEC decided to defer its decision about the VanEck-SolidX ETF. In an interview with CNBC, Morehead argues for investors to take a long-term view and offers a very interesting observation: the last asset class to be approved for ETF certification was copper and copper has been on earth for 10,000 years.
- Gabrotech is developing a blockchain platform that will allow loyalty programs to offer rewards in digital assets. The company is proposing to launch a digital wallet which will aggregate loyalty programs rewards into one place for users. According to Gabrotech, a single household is enrolled in 25 programs on average, but the rate of their utilization remains low, ranging from 10% to 80%.
- The lightning network is now making it easier Bitcoin to become the P2P payment system that many early Bitcoin adopters believed. Apps are built on layer-two technology and permits users to send small amounts of money P2P. Unlike other payment systems like PayPal where the fees could eat up a large portion of tiny transaction, the fee on the lightning network is only 10 satoshis or a fraction of $0.01.
- Goldman Sachs, according to Bloomberg, plans to launch a custody business for crypto funds while remaining undecided about its own cryptocurrency plans going forward. The bank continues to investigate several different digital assets but hasn’t made a decision on a product offering. Bloomberg speculates that Goldman’s launch of a custody business will lead to other business developments like prime-brokerage services.
- Binance is enforcing structure rules for listings and partnerships. Specifically, the rules appear to be targeting confidentiality around coins that are to be listed on the Binance platform.
- The cryptocurrency exchange platform Coinbase has boosted its instant buying limit to USD$25k for those customers that have completed Coinbase’s site identity verification process. At the moment, current Coinbase customers have to wait 5 days for funds to settle. The reasoning by increasing the limit is to permit new Coinbase customers to begin trading immediately.
- The Philippines is taking a positive perspective to cryptocurrencies and is implementing a new framework for ICOs. The report, a 37-page document outlining rules for ICOS puts the Philippines in-line with other Asia countries like Japan, Singapore and Thailand.
- The SEC has postponed a decision on the VanEck-SolidX Bitcoin ETF until September 30, 2018. According to the SEC announcement, the SEC has receive 1,300 comments on the proposed ruling.
- SEC Commissioner Hester Peirce, during an interview on CNBC, suggests the SEC’s role is limited to considering the market for a Bitcoin ETF, not whether there is price manipulation in Bitcoin. Commissioner Peirce argues that like gold and oil, the SEC should focus on whether the market for Bitcoin is working.
- UK Financial Conduct Authority (FCA) is looking to create a new global initiative (GFIN) to improve collaboration between different fintech technologies, something similar to blockchain. GFIN will work with 11 different financial regulators to help fintech firms interact more easily with other financial authorities across different countries.
- Adius, a decentralized music-sharing protocol, has raised USD$5.5mm in a Series A funding round. While there is no release date yet, Audius seeks to use blockchain technology to help artists control the music they share. The Audius platform, which is based on a musician-owned ecosystem, will allow artists to publish work rather than using platforms like SoundCloud. In comparison to SoundCloud, Audius will offer musicians greater control of their intellectual property.
- The Head of Research at the Bank for International Settlements (BIS) argues that bitcoins and other cryptocurrencies are “masquerading” as real currencies. In an interview with Bloomerg, Hyun Song Shin suggests that digital cash is merely a “record keeping device” and is worthless: value only increases when others accept. The irony of this commentary is not lost on us here at Quantamize…what exactly is fiat currency again?!
- China Fundan University, according to a patent application from this past January, suggests it has developed a decentralized exchange for unused power. The blockchain network will use nodes to broadcast requests for sales or purchases using smart contracts to match requests. Smart contracts will be matched be based on volume and price with a digital currency facilitating transactions between buyers and sellers. The initiative to create a decentralized exchange for unused powers is in response to the growing supply of renewable energy in China, especially solar power generated by households, which is often generated in excess of demand in some regions.
- Collie, a coal-mining town in Australia, could possibly see the first solar-powered bitcoin mining farm. Data center operator DC Two, DC Two’s subsidiary D Coin and solar farm builder Hadouken are hoping to build the first bitcoin mining facility powered by solar powere in Collie. The first phase of the build-out is expected to supply 4 megawatts and will be launched in 2019 (assuming no regulatory hiccups).
- Dish Network is now accepting subscription payments in Bitcoin Cash. This initiative is alongside Dish’s move to the Bitpay blockchain payment system for Bitcoin.
- 90 companies are joining IBM and Maersk to participate in their new blockchain platform. The new blockchain platform being developed by IBM and Maersk, now formally called TradeLens, has been attracting interest for a diverse number of companies: port operators, customs authorities, logistics companies and ocean-going carriers.
- Lightning Network activity on the Bitcoin mainnet has passed 3,000 nodes with capacity for ~100 BTC MTD in August. According to 1ml.com, the network capacity has increased 85% in the past thirty days to 97 BTC (USD$628,000).
- Ready-to-use malware for Bitcoin ATMs was found being sold online according to Tokyo-based security software manufacturer Trend Micro. According to Trend Micro, there were advertisements on the darknet where criminals could buy the malware for USD$25,000 with a EMV-enabled and NFC-enabled debit card.
- ShapeShift has acquired Bitfract, a Texas-based startup, that is developing a tool to permit users to exchange different cryptocurrencies with greater ease. Bitfract’s technology will allow for Bitcoin to be exchanged for several different cryptocurrencies at the same time using a specialized API. The goal is to make it easier for crypto-buyers to swap cryptocurrency portfolios without having to execute numerous executions.
- South Korea biotech company Macrogen, the leading gene sequencing service provider in South Korea, is developing a blockchain platform based on genomic big data. Macrogen is working with a local tech firm, Bigster, to bring this product to the marketplace. The two companies hope to use blockchain technology to create a medical big data ecosystem that will provide better security for sensitive genomic and personal information.
- During an interview at Tech Crunch Sessions, Ethereum founder Vitalik Buterin strongly advocated for decentralized exchange. Uing some hyperbole, Buterin stated that he hopes “centralized exchanges burn in hell”. Binance founder Changpeng Zhou responds to Buterin’s comments by remarking that decentralization for the sake of decentralization is not ncesaarilly better. Buterin’s biggest issue with centralized exchanges is that they, through the ability to decide what cryptocurrency lists, dictate which cryptocurrencies become big (in terms of make capitalization).
- A study by Yale Researchers Aleh Tsyvinski, a professor in the economics department and Yukun Liu, a Ph.D. candidate in the Department of Economics are suggesting a new system of factors to predict price trends in major cryptocurrencies. While typical factors used in stocks are ineffective in predicting price moves in cryptocurrencies, the study suggests traders consider time-series momentum effects. The objective of Tsyvinkski and Liu’s paper is to highlight risk-return tradeoffs in major cryptocurrencies like Bitcoin, Ethereum, and Ripple.
- Yeoman Capital founder and well-known cryptocurrency evangelist David Johnson argues the strategy of massively distributing new crypto tokens to users that already own cryptocurrencies should be replaced by a smarter, targeted approach that he calls “smartdrops”. The idea behind the “smartdrops” framework, which is already beginning to gain momentum, would help blockchain startups market to users who are interested in being stakeholders. Johnson clarifies that he is not arguing for replacing ICOs but suggests the “smartdrops” approach will help blockchain startups build sustainable communities and create real software projects before reaching the Initial Coin Offering stage.