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Cryptocurrency Morning Brief

Jul 03, 2018

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  • A group of European banks have announced that they have completed a cross-border financial trade using IBM’s blockchain platform, The transaction was completed over the last week and involved 10 companies and four partner banks. Some of the companies involved include: Deutsche Bank, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Societe Generale and UniCredit. The platform will operate on 11 European countries and the next phase will be to add additional companies and customers.
  • The initial coin offering (ICO) market is still setting records with almost USD$12bn raised in the first half of 2018, according to Coinschedule. In comparison, USD$3.8bn of ICO funding was raised in 2017. ICOs remain controversial as a recent study shows that 20% of ICOs are scams. Bitcoinist is reporting that there are now 800 ICO tokens that are dead, meaning there is no liquidity. Bobby Lee, co-founder of BTCC cryptocurrency exchange, said that 95% of ICOs are not based on blockchain technology but rather database projects.
  • DigiTimes, a premier Asia technology news source has reported that there has been a large decrease in interest for mining hardware, reflecting a potentially important decline in mining capacity. Last year, Ethereum’s hash rate grew by over 25 times, and prices for mining hardware increased substantially. However, falling cryptocurrency prices combined with a notable increase in mining difficulty has caused mining growth to stall. The news source claims that GPU prices could drop by over 20% because of decreased demand and an overstocking in GPU cards.
  • Financial firms that are registered with Thailand’s Association of Securities Companies (ASCO) are looking to create a jointly-owned cryptocurrency exchange. Firms have been rumored to also want to offer an initial coin offering (ICO) portal and become digital asset broker dealers in the region. Chairperson of the ASCO, Mrs. Pattera Dilokrungthirapop has hinted that ASCO will facilitate the firms’ applications with operating in accordance with the country’s SEC. Pattera did establish that interested firms will be grouped to make the process less burdensome.
  • Coinbase has recently launched a new cold storage custody option called Coinbase custody. According to Bloomberg, Coinbase has accepted 10 deposits from hedge funds and family offices for the new service. Coinbase is currently offering custody for more than USD$20bn in crypto assets according to Sam Mcingvale, head of Coinbase custody. The new custody service requires a minimum balance of USD$10mm and charges a 0.10% monthly fee and a USD$100,000 set up charge
  • The Japanese Financial Services Agency (FSA) is considering changing the legal basis for how it regulates cryptocurrency exchanges. The current conditions allow the FSA to regulate the exchanges under the Payment Services Act. However, the FSA is considering using the Financial Instruments and Exchange Act (FIEA) instead. With the change, exchanges will have stronger customer protections and the exchanges will have to manage customer funds separately from corporate assets. Additionally, the FIEA will open the possibility to crypto derivatives like exchange traded funds (ETFs).