HyperLinq : Weekly Digital Asset Digest 19
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!
Libra Isn’t a Cryptocurrency. It’s a Glimpse of a New Asset Class : Noelle Achison | CoinDesk
Coming from an organization so tied to the question of identity , it is surprising that Facebook’s Libra coin seems confused about its own. The organization has chosen to brand Libra "a stable global cryptocurrency", and the label "cryptocurrency" has been replicated by media around the world. Yet Libra is not a cryptocurrency. Don’t get me wrong – those of us in the sector appreciate the global attention given to the concept since the announcement. But in this case the definition matters beyond semantics: it will affect eventual use cases and regulatory treatment. It could also transform how investors view both stablecoins and blockchain-based securities going forward. First, let’s look at why it’s not a cryptocurrency. While definitions vary, one key characteristic of cryptocurrencies is their resistance to censorship. For this, they need to be "decentralized enough" to prevent any one group from deciding who gets to transact. Libra does not yet fulfill that criteria, and although the Foundation has said it plans to move towards a "more decentralized" system over time, doing so is entirely in its hands. Furthermore, the value of a Libra coin is not created by the underlying technology, the market, math or however you choose to understand bitcoin and similar assets. It’s a digital representation of a basket of fiat currencies and other securities. Libra is more like an ETF than a fiat-backed stablecoin. We can try to argue that short-term government debt is more a currency than a security. But even without the telltale use of the word, the regulators’ approach to stablecoins is still up in the air. At the Crypto Evolved conference in New York last month, SEC Deputy Director Elizabeth Baird was asked for her take on stablecoins. Her response was blunt: "I think they’re securities". Others have posited that even relatively simple fiat-backed stablecoins could be characterized as swaps or "demand notes", both of which would be treated as securities. And the SEC’s head of digital assets, Valerie Szczepanik, confirmed at a hearing last week that it does not matter that the stablecoin "does not have an expectation of profits". Note that this is Libra coin we’re talking about, not the Libra Investment Token which is obviously a security. We’re talking about the token that Facebook hopes will become the de facto payment mechanism for most of the world. Asset-backed representations of value have been currencies before – think of the dollar and other national currencies back in the days of the gold standard. But they were backed by a commodity that was not controlled by any one entity and did not have an "issuer". The Libra proposition is very different. As its ecosystem matures, it could provide stable returns through lending or collateralization – many funds prize liquidity and stability over high risk and performance. But that’s not going to set the securities world on fire. The main impact will come not so much from Libra itself, but in the glimpse it offers of where a new asset class could emerge. The idea of securities as payment mechanisms is innovative and could open up a host of potential use cases. The requisite stable value need not necessarily mean limited upside, as new share issuance as a sort of value-linked dividend could maintain a peg while providing the holder with a return. Instead of the share price going up, an algorithm would issue you more of them, and destroy some if the value went down. Your wealth would fluctuate, while the price of the share remains stable. The fiscal friction from using a security as payment would not be an issue for institutions, since they generally have back offices well versed in handling this. Another intriguing thread to pull on is the idea of securities backed by a basket of currencies and government debt. We could see the emergence of custom-made securities that hedge the currency risk of the issuer. Currency hedges are a major concern for both corporates and investors – imagine a debt instrument that packages those complex equations into a stable yield, or into a pre-hedged token for use in either capital markets or supply chain transactions.
KuCoin Gears Up To Launch Cryptocurrency Derivatives Trading Platform : Sumedha Bose | BTCWires
KuCoin, the popular crypto is all set to launch their new cryptocurrency derivatives trading platform, KuMEX. The organization has released an announcement that this new platform is all set to release in the market in its public beta on July 9 18:00 (UTC+8). The platform has been devised and developed independently by the KuMEX team and it will allow trading of all leveraged contracts. Starting right from Bitcoin Perpetual Contract, the platform will offer up to 20 times leverage. It’s a lucrative offer for those who engage in derivatives trading. For now, KuMEX’s plan is to deposit 1 XBT of demo funds into each user account for simulated trading. Their announcement states that the beta will be live for 3 weeks from the date of launch and will offer 10,000 KCS in rewards during the first week of the event.
Brazil’s BTG Pactual Plans $1 Billion Crypto Token Partnership : Alastair Marsh | Bloomberg
Banco BTG Pactual SA, Latin America’s biggest standalone investment bank, has teamed up with Dubai asset manager Dalma Capital to sell more than $1 billion worth of so-called security tokens. The partners have a pipeline of deals for tokenization, which refers to the process of transforming real assets into tradeable digital contracts that live on a blockchain. While many traditional financial firms have been reluctant to embrace cryptocurrencies, they have shown greater openness to security tokens. Goldman Sachs Group Inc. Chief Executive Officer David Solomon said in June that his firm was conducting "extensive research’" on tokenization, and it would be safe to assume "all major financial institutions around the world’’ are doing similar. The firm is now exploring how such tokens might affect capital markets, said Andre Portilho, the BTG partner responsible for its token initative.
UK Regulators Approve First Cryptocurrency Hedge Fund : Daniel Kuhn | CoinDesk
Prime Factor Capital was the first crypto hedge fund approved as a full-scope alternative investment fund manager by the Financial Conduct Authority, according to Bloomberg. Though approved by the UK watchdog, the firm will abide by European regulations. Under these guidelines the firm will be allowed to hold more than 100 million euros in assets under management. It is the first agency to be approved to invest exclusively in the cryptocurrency asset class. "Most vehicles for investing in cryptocurrencies are outside the scope of regulators and that’s a big problem in a market that has such a bad reputation", Adam Grimsley, Prime Factor’s chief operating officer, told Bloomberg. Prime Factor is required to appoint a custodian under EU regulations to ensure and validate investors’ returns and the fund’s holdings. This custodian will act independently of the firm and also provide cash flow reconciliation. The team is comprised of former employees from Blackrock, Legal & General, Goldman Sachs, and Deutsche Bank. On their website, company CEO Nic Niedermowwe published a report titled "The Fallacy of Uncollateralised Stablecoins", in which he argued that uncollateralised stablecoins are problematic. He has also considered such subjects as the scalability of bitcoin. The company did not respond to a request for comment.
Binance Launching Crypto Futures Trading Platform With Up to 20x Leverage : Marie Huillet | CoinTelegraph
Changpeng Zhao, CEO of top crypto exchange Binance, has revealed the company plans to launch a futures trading platform, with initial support for BTC/USDT contracts at a leverage of up to 20x. The CEO made his announcement during a keynote speech delivered at the Asia Blockchain Summit in Taipei earlier on July 2. According to Cointelegraph’s reporter at the scene, Zhao — better known by his industry moniker "CZ" — indicated that while there is as yet no exact launch date for the new "Binance Futures" trading platform, a simulation test version is expected within a few weeks. As previously reported, news of a futures launch comes shortly after CZ’s confirmation that margin trading is now in beta testing and will soon be supported by the platform. The company has also continued to roll out new trading pairs and features for its non-custodial trading platform, Binance DEX — most recently two new stablecoin trading pairs.
Twitch Enables Bitcoin Payments, Goldman Sachs Might Launch a Digital Token : Joe Tenebruso | TheMotleyFool
Twitch is once again accepting Bitcoin as a form of payment, according to Blockonomi. The video-game streaming platform had previously allowed users to pay for subscriptions with the popular cryptocurrency, but that feature was removed earlier this year. BitPay, a payments processor that converts cryptocurrency into fiat currency, is likely processing the Bitcoin payments, according to Blockonomi. So although Twitch is unlikely to be receiving actual Bitcoin, one of the most popular gaming platforms in the world enabling Bitcoin-based payments is another significant step toward mainstream crypto adoption. Crypto enthusiasts have long viewed the possibility of Amazon accepting Bitcoin as a powerful potential catalyst toward the cryptoasset being recognized as a legitimate currency. And with other major companies, such as Facebook, moving aggressively into the crypto space, many industry watchers believe it's only a matter of time before the e-commerce juggernaut makes a crypto-related move of its own.
South Korea’s Second Biggest City Wants to Create a Local Cryptocurrency : Helen Partz | CoinTelegraph
Busan, South Korea's second most-populous city after Seoul, is considering the launch of a local cryptocurrency, Korean tech news publication ETnews reported on July 1. According to the report, Busan city authorities are seeking to develop a blockchain-based digital currency project in collaboration with BNK Busan Bank, a subsidiary of local holding company BNK Financial Group. By issuing a local digital currency, Busan expects to revive the local economy, as well as to secure the leading position in blockchain, the report notes. The news comes amid the upcoming establishment of South Korea’s blockchain regulation-free zone, for which Busan was selected as the preferred bidder along with its competitor Jeju Province, as reported in April 2019. In April, South Korea’s Ministry of Small and Medium Businesses and Startups said that the government plans to provide "extensive support if Busan develops its own blockchain-based currency structure or token economy". Earlier in February 2019, Busan signed a Memorandum of Understanding with blockchain company Hyundai Pay with the purpose of promoting blockchain industry through "contribution to the development of local ICT industry through mutual growth with related start-up businesses". Previously, South Korea’s government revealed plans to invest $3.5 million to create a blockchain-enabled virtual power plant in the city of Busan.
BitMEX Hits $1 Trillion Annual Trading as Bitcoin Futures Explodes : Ben Brown | CCN.com
BitMEX, a bitcoin derivatives exchange, has surpassed $1 trillion in annual trading volume, according to a tweet by founder Arthur Hayes. It comes as bitcoin futures trading volumes explode to record highs on the Chicago Mercantile Exchange platform. Demand for bitcoin derivatives, which allow users to open up long and short positions on bitcoin’s price movement, is booming. BitMEX is popular for its high-leverage margin trading. Cumulatively, the exchange has now seen more than $1 trillion traded in the last year. It’s a stunning feat, considering bitcoin languished at bear-market lows for most of the 365 trading days. The CME bitcoin futures platform, which launched in late 2017, has also seen record interest. The exchange traded a record notional value of $1.7 billion on Wednesday last week on the day bitcoin hit a 2019 high. Both CME and BitMEX offer a platform for traders to short, or bet against, the bitcoin price.
"Such data don’t necessarily mean hedge funds are placing outright bets that bitcoin will drop. The short bets could also be part of hedging strategies: for instance, a fund with a portfolio of bitcoins might go short at CME as insurance against the value of bitcoin dropping"
BitMEX founder Arthur Hayes is set to debate Nouriel Roubini, a renowned bitcoin critic, on Wednesday 3rd July. Roubini took a swipe at Hayes on Twitter, claiming the BitMEX volume is fake, citing a BitWise study into exchange manipulation.