Cryptocurrencies edge lower for week as CBOE withdraws Bitcoin ETF application
Jan 25, 2019
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Developments in Financial Services
- An unconfirmed report published by Business Insider indicates that Mike Novogratz’s Galaxy Digital, a notable cryptocurrency merchant bank, is raising at least USD$250mm to offer loans to crypto-related companies. The report cites two individuals familiar with the matter while claiming that Galaxy Digital will close the first round of fundraising for its crypto credit fund in March. According to the article, Galaxy will allow lenders to use crypto assets, real estate, and/or crypto mining hardware as collateral. The article by Business Insider comes after Bloomberg reported earlier this month that there was increased demand for crypto lending services in 2018.
- Bakkt, the long-awaited cryptocurrency platform venture by the Intercontinental Exchange, announced in a Tweet on Tuesday that is in search of a number of high-ranking positions. The tweet by Bakkt contains vacancies for eight different high-ranking positions, including a director of blockchain engineering, a blockchain developer, a director of security engineering, and a senior full stack engineer. Bakkt is hiring for US positions in Atlanta and New York City and international positions in Hong Kong, Tokyo, San Francisco, London, Tel Aviv, and Singapore.
- Blockchain Exchange Alliance, the Singapore-based holding company that maintains a controlling stake in major cryptocurrency exchange Bithumb, is interested in being listed on US public markets through way of a reverse merger, according to a new CNBC report. The CNBC report notes that publicly-traded holding company Blockchain Industries has a binding letter of intent with Blockchain Exchange Alliance -- to be listed on US equity markets, Blockchain Exchange Alliance would have to acquire Blockchain Industries. If successful, the reverse merger would result in the first publicly traded cryptocurrency exchange in the US.
- BZX Equity Exchange, owned by the Chicago Board Options Exchange (CBOE), has officially withdrawn its request for a US Securities and Exchange Commission (SEC) rule change that would allow the listing of a Bitcoin (BTC) exchange-traded fund (ETF). The CBOE’s BTC ETF application being considered by the SEC was also backed by prominent investment firm VanEck and financial services company SolidX. As per a CBOE spokesperson, the decision to withdraw was driven by broken down talks with regulators as a result of the US government shutdown.
- Ed Tilly, CEO of the Chicago Board of Exchanges (CBOE), explained in an interview with Business Insider that lack of a Bitcoin-based exchange-traded note (ETN) is preventing cryptocurrencies from truly growing. Tilly’s comments come amid the ongoing US government shutdown, which is another point of frustration for the cryptocurrency industry and the potential approval of nine Bitcoin (BTC) ETF applications being considered by the Securities and Exchange Commission. “I have two regulators that are not taking calls right now. That doesn’t mean there is nothing we are interested in. It means nothing is going to happen in this government shutdown.”
- Major US-based cryptocurrency exchange and wallet service Coinbase has announced the addition of services to enable users in the US to claim crypto trades on their taxes. In addition to an extensive crypto tax educational guide, Coinbase also added integration with popular tax software TurboTax on its platform. Coinbase aims to add clarity for its users regarding cryptocurrency transactions and their tax requirements with the launch of its new services.
- Overstock, a US e-commerce giant who is transitioning business practices into the blockchain and crypto industry, has launched live secondary trading of its tZEROtokens, as per a press release Thursday. Secondary trading of tZERO is available only to accredited investors through a digital securities account at Dinosaur Financial Group, who will act as a broker-dealer. CEO of tZERO, Saum Noursalehi, said on the token launch, “The world of security tokens has lacked a regulated venue for secondary trading. The trading of our own security tokens is the cross of the Rubicon for the new world of digital assets. This will create liquidity, democratize access, bring transparency and efficiency to global markets, and accelerate the adoption of security tokens.”
- Prior to arriving at the Davos World Economic Forum in Switzerland, President and CEO of Nasdaq Adena Friedman published a blog post on LinkedIn where she details that, “cryptocurrencies could still be a global currency of the future.” Friedman argues that the next phase of cryptocurrencies will define the asset class’ future. In addition to discussing cryptocurrencies, Friedman discussed unicorn IPOs, the future of AI technology, and environmental, social, and governance (ESG) investing ideals in her post.
- The London Stock Exchange Group confirmed in an official post on Tuesday that its Millennium Exchange trade-matching technology will power AAX, a new crypto exchange venture launched by Hong Kong-based ATOM Group. AAX will reportedly launch in the first half of 2019 and aims to provide a, “scalable,” and, “compliant,” cryptocurrency trading platform, according to ATOM Group. AAX will be the first cryptocurrency exchange to use the London Stock Exchange Group’s Millennium Exchange trade-matching technology.
- US-based crypto exchange Coinbase has launched cross-border wire transfer services via the SWIFT network for high-volume Coinbase Pro and Prime users in Europe and Asia, according to an official announcement Tuesday. Additionally, the post details that, “select Coinbase Prime customers globally will also have access to our US and European over-the-counter (OTC) trading desks and Coinbase Custody.” Coinbase Custody is a service mainly for institutional customers that stores large amounts of cryptocurrencies.
- A new report published by the Bank for International Settlement (BIS) finds that problems in Bitcoin (BTC) will only be solved if the network departs from a proof-of-work (PoW) verification protocol. As per the report published on Monday, “Simple calculations suggest that once block rewards are zero, it could take months before a Bitcoin payment is final, unless new technologies are deployed to speed up payment finality.” The report goes on to discuss that, although second-layer network solutions like the Lightning Network may help scaling, “the only fundamental remedy would be to depart from proof-of-work.” The report notes that such a departure from PoW would likely come from social coordination or institutionalization.
- De Nederlandsche Bank (DNB), the Dutch central bank, and the Netherlands Authority for the Financial Markets, the country’s financial regulator, are planning a regulatory framework that could introduce a licensing scheme for domestic cryptocurrency exchanges and wallet service providers. A joint report published by the two Dutch authorities cites, “high financial crime risks,” as reasoning for the licensing scheme pertaining to domestic cryptocurrency industry.
- Elizabeth Rossiello, the CEO and founder of African blockchain startup BitPesa, has been appointed by the World Economic Forum (WEF) to serve as one of two co-chairs of the Global Blockchain Council, as per an official press release. According to reports, Rossiello has been working with industry experts and the Global Blockchain Council’s thirty members at the WEF Annual Meeting in Davos, Switzerland to determine the agenda and priorities of the council. As per the press release, the Global Blockchain Council was established, “to shape a global technological policy and corporate governance agency,” in the fields of cybersecurity and blockchain.
- Huw van Steenis, a senior adviser to Bank of England (BOE) Governor Mark Carney, said in an interview with Bloomberg on Monday that cryptocurrencies fail fundamental financial tests. Van Steenis, who boasts tenure at Schroders and Morgan Stanley, responded when asked about the potential threat cryptos pose to economic stability, “I’m not so worried about cryptocurrencies. They fail the basic tests of financial services. They’re not a great unit of exchange, they don’t hold value, and they’re slower.”
- New Hampshire lawmakers are beginning to consider legislation that would effectively legalize state payments, including payment of fees and taxes, in Bitcoin (BTC), as per documents that were originally published January 3rd. “This bill requires the State Treasurer to develop an implementation plan for the state to accept cryptocurrencies as payment for taxes and fees beginning July 1, 2020,” bill NH HB470 reads, adding that, “The plan shall address any accounting, valuation, and management issues and also identify an appropriate third party payment processor that will process cryptocurrency transactions at no cost to the state.”
- Pennsylvania’s Department of Banking and Securities (DoBS) published new guidance for the state’s local cryptocurrency industry detailing that crypto exchanges and service providers are not required to have a money transmission license to operate. The DoBS detailed in its announcement that Bitcoin (BTC) and other cryptocurrencies are not considered money in the state. As per the guidance released, “To date, no jurisdiction in the United States has designated virtual currency as legal tender.”
- The International Monetary Fund (IMF) visited the island of Malta, commonly known as blockchain island, and found that the growth of blockchain in the country has created significant risks of money laundering and terrorism financing, according to a report by the Times of Malta. Although Malta’s Financial Intelligence Analysis Unit recently implemented what the IMF recognizes as sound measures, the international financial body is still recommending Malta close loopholes in supervisory and enforcement systems. The IMF reportedly warned Malta that, “The increasing number of financial entities under supervision, the rapid development of new products, the evolving regulatory environment and the tightening of the labor market have put the Malta Financial Services Authority under considerable strain.”
- The New York State Department of Financial Services (DFS) has granted Bitlicenses to Robinhood and LibertyX, according to an official release Thursday. Robinhood, the popular zero-commission stock and cryptocurrency trading application, was also granted a money transmission license from the DFS. LibertyX is the first entity to be granted a Bitlicense that will allow users to buy Bitcoin (BTC) with debit cards from traditional ATMs. The state of New York’s Bitlicenses system was first introduced in 2015 and allow entities to handle cryptocurrencies under regulatory requirements set by the DFS.
- A new survey published by the Global Blockchain Business Council, a global trade association, finds that 40% of institutional investors believe blockchain could be the most important innovation since the Internet. The survey questioned 71 investors with the results being revealed at the World Economic Forum in Davos, Switzerland. 38% of those surveyed also believe that firms will need to reveal their approach to blockchain technology within the next five years.
- A report published by crypto analytics firm Diar indicates that on-chain Ethereum (ETH) transaction value hit an all-time high in December 2018. Users conducted transactions worth 115mm ETH in December 2018, the largest monthly total excluding activity following a hard fork caused by a DAO hack in 2016. The US dollar value of ETH on-chain transactions in December 2018, however, recorded a 22-month low of USD$815mm, down from USD$1.1bn a year prior.
- Aetna, a US-based health insurance giant, is partnering with IBM to develop a blockchain platform for the healthcare industry, according to a Reuters report Thursday. Aetna and IBM also issued a joint statement specifying that the blockchain platform will be tailored to streamline insurance claims processing and payments. Other notable US companies, including PNC Bank, Health Care Service Corporation, and Anthem Inc. Have also joined the blockchain initiative.
- Bitfury Group, a notable blockchain technology firm, has unveiled a suite of tools for merchants and developers to facilitate wider adoption of the Lightning Network, an off-chain scaling solution for Bitcoin (BTC). New products related to the Lightning Network include an open-source Lightning Network-enabled BTC wallet, a hardware Lightning Network payments terminal, e-commerce software for merchants, various developer tools, and a public Lightning Network node to facilitate the creation of Lightning Network payment channels.
- MITNews reports that researchers at the Massachusetts Institute of Technology (MIT) have developed a cryptocurrency whose transaction verification process requires 99% less data to be stored compared to Bitcoin (BTC). Dubbed Vault, the prospective cryptocurrency is set to be unveiled in a presentation at the Network and Distributed System Security Symposium (NDSS) next month. The report by MITNews details that Vault, “lets users join the network by downloading only a fraction of the total transaction data,” while adding that, “In experiments, Vault reduced the bandwidth for joining its network by 99% compared to Bitcoin and 90% compared to Ethereum, which is considered one of today’s most efficient cryptocurrencies. Importantly, Vault still ensures that all nodes validate all transactions, providing tight security equal to its existing counterparts.”
- The British Standards Institution (BSI), the United Kingdom’s national standards body, is partnering with blockchain firm OriginTrail with an aim to revamp supply chain technology, according to a press release on Thursday. Specifically, the BSI hopes to enable more options for businesses to prove the compliance of their supply chain to various regulators. BSI CEO Howard Kerr commented in the press release, “In today's increasingly interconnected world, transparency and traceability throughout the supply chain is vital,” while adding that, “This strategic partnership aims to provide our clients with the ability to demonstrate the authenticity of their compliance through the digital records of the assessments and certifications they have achieved from BSI.”
- The Institute for Fintech Research at Beijing’s Tsinghua University (THUIFR) is partnering with Ripple to offer the Blockchain Technology Research Scholarship Program (BRSP), a blockchain research scholarship. The research scholarship program aims to recruit the best graduate students in China to study global blockchain development and regulations in the industry. Head of Global Operations and Partnership at Ripple, Emi Yoshikawa, said on Twitter regarding the partnership that Ripple is, “excited to work with Tsinghua University Institute for Fintech Research and help develop the next generation talent for blockchain in China.”
*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio