HyperLinq : Weekly Digital Asset Digest 12
The HyperLinq Weekly Digest is the one-stop source for the HyperLinq community to access relevant news involving digital assets, where we essentially outline key industry updates that our members may have missed. We are always open to suggestions and feedback so please do not hesitate to let us know what you think!
Huobi Launches OTC Desk for Institutional Investors : Helen Partz | CoinTelegraph
Major global crypto exchange Huobi has launched a regulated over-the-counter trading desk for institutional investors, according to a blog post on May 15. The new OTC crypto trading platform, Huobi OTC Desk, is fully regulated by the Gibraltar Financial Services Commission, and enables major fiat-to-crypto and crypto-to-crypto trading pairs. Jeff Adams, Senior Sales Manager for Huobi Global, stated that the launch of Huobi OTC Desk was driven by demand from investors for large volume transactions, claiming that the company has seen an "unfilled need" for such services. Speaking at a special Huobi meetup event in New York, Adams also stressed a surge of interest by traditional traders who "are still uncomfortable jumping into unregulated trading environments". According to the announcement, Huobi OTC Desk supports major cryptocurrencies such as bitcoin and ether , as well as fiat currencies including the United States dollar , euro , and British pound sterling . Earlier this year, Huobi reported that its P2P OTC desk has become one of the most traded OTC platforms worldwide. The desk offers OTC transactions in bitcoin, ether, eos , major stablecoin tether , Huobi Token , as well as ripple , which was listed in March 2019.
The shutdown of Coinnest on April 18, one of the major crypto exchanges in South Korea, showcased the intense brutality of the 16-month bear market, which came crashing down as soon as bitcoin achieved an all-time high at a price of $20,000. While not many major crypto exchanges have closed their operations in the past year, most exchanges — with the exception of some platforms considered to have real daily volumes by Bitwise Asset Management — have struggled to maintain a stable inflow of revenue. The bear market was particularly difficult for small exchanges that are known to strategically inflate their volumes to appeal to users on leading market data platforms like CoinMarketCap. Profit margins sharply dropped due to an overall drop in daily volumes for smaller exchanges such as Korbit in South Korea, creating a difficult environment to survive in. Cryptocurrency exchanges generate the overwhelming majority of their revenues through fees that occur when trades are executed. When daily volumes of crypto assets drop, exchanges suffer a dip in revenue.
Samsung’s Budget Smartphones Will Reportedly Have Cryptocurrency and Blockchain Features : Adrian Zmudzinski | CoinTelegraph
Budget smartphones released by South Korean consumer electronics giant Samsung will reportedly feature cryptocurrency and blockchain features, local English-language local media Business Korea reports on May 14. Per the report, the crypto and blockchain-related functionality included in the Samsung S10 will be included in other Galaxy smartphone models. The electronics producer also reportedly plans to cooperate with telecommunications companies on blockchain-based mobile identification cards and local currencies. As Cointelegraph reported at the end of February, the new Galaxy S10 series smartphones released by South Korean tech giant Samsung will apparently have wallet functions for ether (ETH), bitcoin (BTC) and two other tokens. At the end of April, an anonymous source told to a crypto industry news outlet Samsung may end up developing a public-private blockchain complete with its own token. And this week, HTC also announced a low-cost version of its blockchain smartphone would appear around Q3 2019 with a full BTC node, as well as in-wallet ERC-20 token swaps.
Microsoft’s Blockchain Obsession, Including ID Push, Is Good for Bitcoin : Nick Marinoff | CCN.com
The company recently announced that it would be building a decentralized identity network on top of the Bitcoin blockchain, the oldest and arguably most trusted blockchain within the space. The network will be built in accordance with standards set by the Decentralized Identity Foundation, which Microsoft claims can overpower the "throughput issues" commonly witnessed on the Bitcoin blockchain. For Microsoft, the move likely means two things, the first being that they are looking to accomplish what several other companies either haven’t or couldn’t in the past. The second thing is that Microsoft clearly views blockchain as a technology that’s not part of the future but rather already here. Since 2017, Microsoft’s dealings in blockchain have increased tenfold, with executives recently announcing that they had joined hands with coffee king Starbucks to provide the company with support for its blockchain, Internet of Things , and artificial intelligence divisions. In many ways, this is just a deeper step into blockchain territory for Microsoft. Another solid addition to its already growing blockchain department. For bitcoin, however, the news is another push toward mainstream status and legitimacy.
Crypto Custodians Foresee Growth in Partnerships with Traditional Custodians : Max Boddy | CoinTelegraph
Alexandre Kech, CEO of Onchain Custodian, predicted that collaboration between crypto and traditional custodians will grow. Kech’s remarks came during a panel called "Custody: The New Global Competitive Landscape", part of Consensus 2019 on May 14. "We have the agility, both in terms of compliance and technology, to deploy those coins way faster". By Kech’s reasoning, traditional custodians are often reluctant to take on new coins due to institutional barriers. They partner with crypto custodians so that they can gain access to these assets for their customers. Fellow panelist Matt Jennings, CEO of Kingdom Trust, said that his organization has "worked with the large, traditional custodians for a long time". Jennings noted that these institutions are inherently conservative, saying "Their offerings are limited. They are for a limited group of customers and they typically own a limited group of assets and I don’t see that being any different in crypto space". Given these limitations for each individual custodian, Jennings sees space for everybody. CEO of Coinbase Custody Sam McIngvale agreed with the other speakers, adding that selling custody is ultimately selling "trust and a track record". As Cointelegraph previously reported, the lack of trusted custodial solutions remains a deterrent to potential professional and institutional investment in crypto assets.
SEC Commissioner Implores the Agency to Provide Regulatory Clarity for Cryptocurrency : Mitchell Moos | CryptoSlate
The lack of action from the SEC poses a problem to the cryptocurrency industry. Startups taking advantage of fundraising via tokens are exposed to the risks of securities laws, including the costly ‘recision’—where a company is compelled to return all funds raised back to investors. As Peirce puts it, «securities laws do not cease to operate as the industry develops.» Ripple may be one example of such a scenario. There is controversy that the company’s XRP token may qualify as a security, which would pose legal costs on Ripple. Currently, the potential threat of securities classification may be hampering Ripple’s ability to push adoption of XRP. Instead, Peirce stated that it is the Commission’s duty as a regulator to provide the public with clear guidance as to how organizations can comply with U.S. securities laws. The basis for current U.S. securities laws stems from the Securities Act of 1933 and the Securities Exchange Act of 1934. In a formative court ruling, SEC v. W.J. Howey Co., an oft-used standard was born—the ‘Howey Test.’ Determining whether an asset qualifies as a security has four main parts:
- It is an investment of money
- There is an expectation of profits from the investment
- The investment of money is in a common enterprise.
- Any profit comes from the efforts of a promoter or third party.
Although the framework may seem simple, there are dozens of other considerations, Peirce pointed out. To effectively navigate these rules it is necessary for a company to hire the services of a seasoned securities lawyer, which costs a startup hundreds of dollars per hour, and still does not necessarily protect a company from enforcement actions. These securities laws were created over 80 years ago and leave much open to interpretation. This uncertainty, says Peirce, will result in companies relocating to more crypto-friendly jurisdictions overseas. There is evidence suggesting that exchanges that remained within the U.S. are at a competitive disadvantage because of costs related to the inaction of regulatory agencies.
Indian Crypto Traders Were Reportedly Not Affected By Proposed Crypto Ban : Omar Faridi | CryptoGlobe
Nischal Shetty, the CEO of Indian digital asset exchange WazirX, has said that the recent recommendation from India’s government departments to completely ban cryptocurrencies has not had any negative impact on local crypto trading volumes. According to Shetty, "similar news" regarding a potential cryptocurrency ban in India had surfaced in October 2018. This, as local traders are "waiting for concrete information" and substantive updates regarding cryptoasset regulations from India’s government. Jacob Mani, Head of Marketing at Estonia-registered, Indian crypto exchange InstaShift, confirmed that reports regarding the cryptoasset ban "haven’t deterred anyone." (sic) In fact, Mani revealed that InstaShift had recently experienced a surge in crypto trading volumes since widely-used Indian exchange Koinex had been going through scheduled maintenance.