Cryptocurrencies remain stable through week as JPMorgan Chase announces JPM Coin
Feb 15, 2019
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Developments in Financial Services
- According to a Bloomberg report, cryptocurrency miners and investors are using derivatives in an attempt to survive the crypto bear market. Bloomberg highlights in the article that crypto derivative instruments, such as options, are beginning to gain popularity as a means to generate short-term cash. The report by Bloomberg quotes Sam Bankman-Fried, CEO of quantitative digital asset trading firm Alameda Research, who said, “Anyone sitting on a stockpile of tokens saw in the bear market of 2018 that their business is at the mercy of crypto prices. It can be crucial for those players’ survival to have some cash if digital asset prices go down.”
- Bakkt, the highly anticipated digital assets trading platform operated by the Intercontinental Exchange (ICE), officially completed its first acquisition, according to an official tweet from the company. The tweet reads, “With today’s closing of our transaction with Rosenthal Collins Group, we welcome great new team members to Bakkt,” adding that, “RCG’s remarkable heritage, culture, and expertise will help us build out a trusted institutional infrastructure for digital assets.” Additionally, ICE discussed in an investor earnings call that it expects Bakkt, “will generate $20 million to $25 million of expenses based upon the run rate in the first quarter.”
- Banco Santander, one of the largest banks in Europe, has agreed to pay USD$700mm to partner with IBM and accelerate the bank’s development of technologies, including blockchain. According to an official press release published on Wednesday, the agreement will last five years and will aim to enhance Banco Santander’s services using mainly emerging technologies like blockchain, artificial intelligence, and big data. The press release quotes David Soto, the IBM General manager Santander Group, who said, “Santander Group is leveraging IBM technologies to support their security and regulatory work, and to rapidly develop new services that meet emerging customer demand by tapping into IBM’s unique technology and industry expertise.”
- Coinsquare, a major Canada-based cryptocurrency exchange, announced the acquisition of StellarX, a zero-fee decentralized payment network based on the Stellar network based in Bermuda. Coinsquare will now aim to seek regulatory approval for StellarX to operate and expand its services through Coinsquare’s compliance. In December 2018, Coinsquare acquired BlockE, a private Stellar wallet that will likely become the new anchor wallet for the StellarX exchange.
- JPMorgan Chase (JPM), a US banking giant, will become the first US bank to launch its own cryptocurrency, according to a report by CNBC Thursday. Dubbed JPM Coin, the cryptocurrency will be designed to increase settlement efficiency, specifically for international transactions that currently take a day or longer on the SWIFT network. Umar Farooq, JPM’s blockchain lead, discussed the company’s ventures into blockchain technology with CNBC, saying, “So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction. The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this.”
- Nasdaq will launch two new indices to track the prices of major cryptocurrencies Bitcoin (BTC) and Ethereum (ETH) on February 25th, according to an official company press release. The Bitcoin Liquid Index (BLX) and Ethereum Liquid Index (ELX) will offer a way for investors to track real-time price updates for two of the largest cryptocurrencies by market capitalization. The two new indices are enabled through a partnership with US blockchain and crypto asset market data firm Brave New Coin.
- Terry Duffy, CEO of derivative market CME Group, said that government involvement will be key to the success of cryptocurrencies while interviewing with Bloomberg on Thursday. Duffy told Bloomberg, “The key to the success of any currency, whether it’s fat or crypto, is going to be associated with the government. So I think the government needs to be more involved.”
- Union Bank, a major Philippines bank, has officially launched the Philippines’ first two-way cryptocurrency ATM in collaboration with the country’s central bank, Bangko Sentral ng Philipinas (BSP). According to an article published by news outlet Philstar, the two-way ATM will provide, “an alternative channel to convert their pesos to virtual currency and vice versa.”
- Brian Quintenz, a Commissioner at the US Commodity Futures Trading Commission (CFTC), argued against the reasoning put forth by the US Securities and Exchange Commission (SEC) for not approving a Bitcoin (BTC) ETF while speaking on a panel at the BiPartisan Policy Center on Tuesday. Specifically, Quintenz argued that potential price manipulation should not be the barrier to BTC ETF approval by the SEC. Quintenz went on to suggest that basing a product off an index can sometimes make manipulation less likely, saying, “There are mathematical ways through a settlement index to design a contract where even if there isn’t a lot of liquidity on one exchange referenced, the index itself is not readily susceptible to manipulation.”
- In a research report published on Monday, the New York Federal reserve argued that cryptocurrencies will not become an international monetary phenomenon in the coming years that challenges the dollar. In its report, the New York Fed commented, “Cryptocurrencies, set up to challenge the conventional structure of payments in official currencies, thus far are unlikely to meet criteria for international roles in the near to medium term.”
- Luxembourg, a small European national, officially passed a bill that creates legal framework pertaining to securities issued on a blockchain. According to an official release published by the country’s Chamber of Deputies, the bill was passed on February 8th with 58 members voting in support of the legislation and only 2 voting against it. In its release, the Chamber of Deputies said, “The bill should provide greater certainty for investors and make the transfer of securities more efficient by reducing the number of intermediaries.”
- The Bank of Spain, the country’s central bank, published a notice warning citizens of the risks involved in transacting through unregulated cryptocurrencies. The document published by the Bank of Spain outlines that regulators in the country have yet to pass any legislation in regard to cryptocurrencies, crypto exchange platforms, or cryptocurrency industry members. The Bank of Spain warned investors that, in cases where cryptocurrencies were used for the purchase of goods or services, it would be an, “impossible mission,” for a consumer to claim their rights if anything with the transaction went awry.
- The US Securities and Exchange Commission (SEC) officially began its review of a rule change proposal for NYSE Arca’s Bitcoin (BTC) exchange-traded fund on February 11th, according to an SEC document published today. As per the SEC document, NYSE Arca proposed that shares of the Bitwise Bitcoin ETF Trust list and trade under NYSE Arca Rule 8.201-E. The US SEC will now have 45 days, beginning February 15th, to review and make their decision regarding the rule change -- if deemed necessary by the SEC, the review period may be extended for up to 90 days.
- The US Securities and Exchange Commission (SEC) took to Twitter on Sunday to reiterate regulatory guidelines for initial coin offerings (ICO). In a tweet on its official Twitter account, the SEC provided a link to a section of its website that outlines the regulatory organization’s view on ICOs. A summary of the guidance on the SEC website reads, “Companies and individuals are increasingly considering initial coin offerings (ICOs) as a way to raise capital or participate in investment opportunities. While these digital assets and the technology behind them may present a new and efficient means for carrying out financial transactions, they also bring increased risk of fraud and manipulation because the markets for these assets are less regulated than traditional capital markets.”
- Baidu, the Chinese tech and search engine giant, announced the launch of Baidu Blockchain Engine (BBE), an operating system to enable decentralized application (DApp) development. According to an announcement by Baidu Cloud, BBE aims to make DApp development, “as simple as creating a mobile app.” BBE was built based on Baidu’s “ABC” technology strategy, which stands for artificial intelligence (AI), big data, and cloud computing.
- Busan, the second-largest city in South Korea, signed Memorandum of Understanding (MoU) with blockchain firm Hyundai Pay, as per an official press release published Monday. As part of the MoU, Busan and Hyundai Pay will promote the development and growth of blockchain startups and jobs in the South Korean city.
- Fold, a cryptocurrency payments startup, saw over 150 people use its Domino’s web-based portal to buy pizza this week. Through Fold’s web-based portal to Domino’s, users can purchase pizza and other items from the popular US-based chain using the Lightning Network, an off-chain Bitcoin (BTC) scaling solution. According to Fold product lead Will Reeves, “We’re trying to make bitcoin fun again and illustrate that lightning is at a point where it is mainstream-ready.” Fold plans to integrate shopping options at Starbucks, Whole Foods, Dunking Donuts, Target, and Ubers in its web portal over the next 6 months.
- Hyundai Commercial, the financial services subsidiary of South Korean auto manufacturer Hyundai, is partnering with IBM to increase efficiencies in its business model using blockchain. Specifically, the partnership will focus on employing Hyperledger Fabric blockchain technology to build a new supply chain financing system for Hyundai Commercial.
- KT Corporation, one of South Korea’s largest telecommunication companies, was chosen to develop a local cryptocurrency for the South Korean city of Gimpo. According to a report by news outlet ZDNet Korea, the local cryptocurrency, dubbed K token, will launch in April following the completion of a pilot project in March. Gimpo will reportedly issue 11bn won worth of the new cryptocurrency per year, worth more than USD$9.7mm.
- Most digital tokens will have a value of 0 in the long-run, that is, according to Barry Silbert, CEO and founder of Digital Currency Group and Grayscale Investments. While speaking during a phone interview with CNBC, Silbert said, “I’m not a believer in the vast majority of digital tokens and I believe most will go to zero.” Silbert went on to add in the interview, “Almost every ICO was just an attempt to raise money but there was no use for the underlying token.”
- QuadrigaCX, the Canadian cryptocurrency exchange that owes CAD$250mm (USD$190mm) to its users following the death of its founder and CEO, reportedly lost another CAD$500,000 by mistake last week. In an initial report by court-appointed monitor Ernst and Young (EY), the Big 4 auditing company said that QuadrigaCX moved more than 100 Bitcoin (BTC) into a cold wallet it cannot access. EY wrote in its report, “On February 6, 2019, Quadriga inadvertently transferred 103 bitcoins valued at approximately $468,675 [CAD] to Quadriga cold wallets which the Company is currently unable to access. The Monitor is working with Management to retrieve this cryptocurrency from the various cold wallets, if possible.”eThe
- Scott Gottlieb, a Commissioner of the US Food and Drug Administration (FDA), is suggesting the creation of an open pilot blockchain platform for the pharmaceuticals industry. According to a press release published last week, The Pilot Project Program Under the Drug Supply Chain Security Act will aim to connect and integrate pharmaceutical companies through use of emerging innovative technologies. FDA Commissioner Scott Gottlieb commented in the press release, “We’re invested in exploring new ways to improve traceability, in some cases using the same technologies that can enhance drug supply chain security, like the use of blockchain.”
- The US state of California is seeking to tackle drought through a collaboration between IBM Research and SweetSense, a sensor tech provider, according to an official press release published Friday. IBM Research and SweetSense is partnering with non-profit organization The Freshwater Trust (TFT) and the University of Colorado Boulder to use blockchain technology and Internet of Things (IoT) to sustainably manage groundwater use in, “one of the largest and most at risk aquifers in North America.”
- University of California, Berkeley (US Berkeley) is set to launch a 12-week accelerator program aimed at blockchain startups in their early stages, according to an official announcement. Dubbed the Berkeley Blockchain Xcelerator, the accelerator program is sponsored in part by venture capital fund Berkeley X-Lab Fund. Gloria Zhao, president of Blockchain at Berkeley, discussed the reasoning behind the accelerator program, saying, “With such a nascent technology as blockchain, we see that a lot of subject matter experts and people make an impact in the blockchain space are students.”
*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio