The Poloniex cryptocurrency exchange is looking for big money. It announced in a Medium post this past Tuesday that it is moving forward with a plan to offering support for institutional accounts that will be made available for a number of trading pairs and APIs (application programming interface).
The post reads, in part, “We are excited to announce that institutional accounts are now available on Poloniex! Institutions large and small can enjoy the benefits of our large curated selection of crypto asset trading pairs, dedicated support and robust API services. Poloniex customers also enjoy no fees on BTC/USDC trades in the month of December.”
Poloniex was acquired by Goldman Sachs-backed Circle this past February for $400 million. With the new accounts, Circle will give investors the ability to conduct over-the-counter (OTC) trades using its Circle Trade platform, provided they’re ready to make an investment of at least $250,000. In addition, Circle will offer institutional services through Poloniex, as well as trading pairs with the Circle-created USDC stablecoin.
When 2018 kicked off, everyone expected to see a lot of institutional investors joining the crypto space. The rollout has been extremely slow, with only Coinbase being the major exchange to go after the investment class this past May. Coinbase is also looking to introduce an OTC crypto desk, but that isn’t expected to be introduced until sometime next year.
Poloniex has had a rough year. It has seen the exchange shuffle around its services a number of times and announced in October that it would be removing margin trading and lending products for U.S. customers by the end of the year. This past summer, it received a lot of backlash from users who had become locked out of their accounts after the exchange introduced new verification procedures. It had to deal with mounting pressure at the end of last year as users began flocking to the platform in response to the meteoric rise of Bitcoin Core’s (BTC) price, and wasn’t able to keep up with the load.
Poloniex is still in a solid position, despite the bumps in the road. This past October, a report by DRW Holdings Inc. showed that institutional investors now make up the largest segment of crypto buyers for transactions of more than $100,000, displacing high net worth individuals at the top of the list.
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There has been a lot of talk by several mainstream financial entities in the past two years that they could be considering launching different cryptocurrency products. While some, such as the CME Group and CBOE exchanges, have already taken the step, many others are still trying to get the ball rolling. One, the NASDAQ exchange, has had plans in the works for a while and has now confirmed that it hopes to launch its platform beginning sometime early next year and that it will start with Bitcoin Core (BTC) futures.
In a recent interview with news outlet The Express in the UK, NASDAQ VP of Communications Joseph Christinat reiterated the company’s position that it is still moving forward, despite the current market slump. He said that there’s been “more than enough work dedicated into the endeavor to make remove the question of regulatory approval. We will do this, and it is definitely happening.” Christinat added that the biggest challenge now is to receive approval by the U.S. Commodity Futures Trading Commission (CFTC).
NASDAQ, the world’s second largest stock exchange, has been developing its crypto portfolio for the past several years. It had hoped to launch one or more products this past summer, but revealed that it would postpone the launch in order to develop a platform that would be “unique enough” to attract a large following.
Christinat added, “We have put in plenty of financial resources and energy into delivering the capability to make this operational, and we’ve been on it for quite some time. Long before the market turbulence. The current atmosphere won’t affect our timeline in any way. We are going to do this no matter what comes.”
NASDAQ is joined by companies such as Fidelity Investments and the Intercontinental Exchange (ICE) that are preparing to introduce cryptocurrency trading products. Fidelity has said that it is still on target for a December launch for its offerings, while ICE, which is developing the Bakkt platform, has had to delay its launch from December to next January at the earliest.
What is still not known is how the BTC futures will operate. When CME and CBOE introduced their futures products last year, they were offered as cash-backed futures. Bakkt has said that it anticipates being the first to offer futures that are physically settled and would more than likely maintain those bragging rights even if NASDAQ decided to go the same route.
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The U.S. could be inching closer to creating a regulatory framework for cryptocurrencies and initial coin offerings (ICO). Representative Warren Davidson from Ohio has been working on a new bill that is designed to pave the way for crypto and ICO regulations, according to media outlet Cleveland.com, and would clarify the definition of cryptocurrencies.
The bill will be presented to the House of Representatives for discussion. It looks to create a new and unique asset class that would cover crypto and ICOs, allowing the government to regulate the crypto space more thoroughly. The legislation is designed to prevent digital assets from being classified as securities and would allow the federal government to maintain complete regulatory oversight of token offerings.
There is a lot of confusion in the U.S. regarding how to define cryptocurrencies. The Securities and Exchange Commission (SEC) has said that, with the exception of Bitcoin Core (BTC) and Ether (ETH), the majority of cryptocurrencies are securities. On the other hand, the Commodities Futures Trading Commission (CFTC) asserts that they are commodities.
Two additional agencies, the U.S. Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN), both say that crypto is money. Without a central definition in place, standard regulations cannot be created.
Davidson is somewhat of a proponent of cryptocurrencies, or at least of the space in general. He has been pushing for regulation of crypto and assisted in the writing of a letter to the SEC this past September in which he asked that the commission speed up its introduction of legislation in order to prevent tech companies from leaving the U.S. The letter read, in part, “Current uncertainty surrounding the treatment of offers and sales of digital tokens is hindering innovation in the United States and will ultimately drive business elsewhere. We believe that the SEC could do more to clarify its position.”
Even if the bill were to pass through the House, it would still need to be considered by the Senate. Ultimately, this means that regulations shouldn’t be expected to come anytime soon. Perhaps they’ll be implemented sometime next year, but there’s still a long road ahead.
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To be or not to be – that is the question. In the case of the Bitmain initial public offering (IPO), it’s looking every day that it isn’t to be. A new revelation uncovered by a Twitter user that follows the company almost religiously has shown that the once mighty cryptocurrency mining equipment manufacturer is teetering more toward crashing into the ground in a thunderous explosion.
BTCKING555 tweeted a few days ago that Bitmain’s losses in the third quarter of the year could have been as much as $740 million. If accurate, it would mark the worst quarter in the company’s history, but continues a slide that Bitmain has been experiencing since before the beginning of March.
The tweet reads, “We got leak of Bitmain Q3 numbers! COMPLETE DISASTER. The company lost $740 Million including losses on inventory and bitcoin cash! And this is not accounting for hash war costs!”
BTCKING555 alludes to possible additional losses that could top $1 billion due to Bitmain having a large investment in Bitcoin BCH. Since the digital currency’s value has been cut by more than half its recent value, Bitmain is out a substantial amount of cash.
Bitmain would have no one to blame but itself if it were to fizzle. In preparation of an IPO that was expected to launch this past September, the company falsely claimed to have received backing by a number of international companies. It also ran up substantial debt with a chip supplier – to the tune of $1 billion. It finally paid just over two-thirds of the debt, but there hasn’t been word on whether it has made good on the outstanding portion.
The company has been accused of using customer equipment for its own mining purposes. It faces a class-action lawsuit in California over the allegations, only adding to the uncertain future of its operations.
The company also presented an IPO prospectus with the Hong Kong Stock Exchange that had blatant errors. The ability of Bitmain to completely disregard regulations and present data that has been verified as false should be enough to make any investor skeptical about giving the company any money. Add this to its mounting financial issues are cringe-worthy and should not only make investors say “No, thanks,” but should make them run away screaming.
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The Swiss financial regulator has issued fresh guidelines for fintech startups, giving leeway to licensees to accept up to CHF100 million ($100.1 million) in public deposits, in a radical move designed to boost innovation in the sector.
The move comes as part of the new Banking Act, which has been designed in part to create more favourable conditions for fintech businesses, including expanding the options for crowd-lending models within a regulatory sandbox environment.
The guidelines are part of a wider strategy of supporting the crypto sector by the Federal Council of the Swiss Financial Market Supervisory Authority, which aims to boost Switzerland’s profile as a global destination for crypto and fintech startups.
Crucially, the new guidelines give crypto businesses the ability to accept deposits from the public without the need for the same authorisations as a bank, enabling them to explore innovative models without the full range of compliance expectations.
According to a statement from FINMA, which will oversee firms in the regulatory sandbox and is responsible for issuing the new licenses, the measures will begin to come into effect at the turn of the year. It explained, “With the new measure, companies with special authorisation can accept public funds of up to CHF100 million from 1 January 2019, provided they neither invest nor pay interest on these funds.”
The statement goes on to reference amendments to the Bank Ordinance (BankO), which will come into force in April 2019, noting, “In the BankO, the sandbox will additionally be extended to include crowdlending business models, whereby public funds up to a total amount of CHF1 million can one day be brokered not only for commercial and industrial purposes but also for private consumption.”
The fintech license is aimed at startups looking to explore models of taking deposits, without investing or paying interest on those deposits.
The policy is designed to help cement the reputation of Switzerland and the city of Zug as a haven for cryptocurrency innovation, with an already established and booming crypto sector in the country.
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Medici Ventures, a wholly-owned subsidiary of Overstock.com, Inc., has purchased a 10% stake worth $2.5 million in Grainchain, a blockchain software provider that facilitates payments in the agricultural sector.
According to the terms of the acquisition, Medici will have the option to purchase another 10% in the company at a later date.
Grainchain said in its press release that currently, small- to medium-sized farms were behind much of agricultural output worldwide, and that these lacked the resources for more modernized and secure transactions. This is where blockchain technology is seen to help, while cutting middlemen and allowing farmers to keep more earnings.
“At the end of the day, we’re just leveling the playing field for the farmer, giving them much more power and control over the selling process,” Grainchain CEO Luis Macias said.
At present, Grainchain offers its services in the U.S. and Mexico, but said that the Medici acquisition will allow for an expansion of operations to Central and South America.
Medici President Jonathan Johnson said of the investment, “Producers operate on razor-thin margins and are up against a host of factors far beyond their control… GrainChain helps to support those producers by simplifying and securing the measuring and payment process and bringing unprecedented transparency to the industry.”
Grainchain was founded in 2013, and uses a three-part blockchain-based system to eliminate error and fraud in the process of delivering goods to end-users. According to the company, smart contracts are used between buyers and sellers, and Internet of Things (IoT) devices measure both weight and quality of grains at each step of the way. According to its website, the company has facilitated about 84,000 transactions with over 1,400 active participants, and has overseen the processing of nearly 5.3 billion pounds of various commodities.
While Overstock is most known as a retailer, it has also invested in blockchain through subsidiary Medici, which also holds a stake in VinX, a company that tracks wine futures through blockchain. It has been estimated that about 20% of wine worldwide is labeled fraudulently, which makes blockchain a potential alternative to present tracking systems for wine.
Overstock has also invested in tZero, a new exchange specifically for the selling of tokens.
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A payment processor with a significant footprint in the U.S. has joined forces with tech company Vaultbank to bring crypto payments to retail customers. SpotOn, which provides a payment processing solution to more than 100,000 merchants in the country, will soon include crypto payment transactions to its platform, allowing retailers to accept a number of digital currencies, including Bitcoin Core, Ripple, Ether and Stellar.
According to a company press release, customers will now be able to pay in the currency of their choice and merchants can choose whether or not to almost instantaneously convert crypto payments to fiat, or to hold them in their original form. SpotOn also has additional developments in the pipeline, including the introduction of a crypto-based loyalty rewards program and the ability to buy and sell crypto directly on its platform.
SpotOn President RJ Horsely states, “Today’s ever-evolving digital market demands that merchants need a payment service capable of accepting a wider diversity of currencies including virtual currencies. Our new technology will allow thousands of SpotOn merchants to accept cryptocurrency without having to onboard to another payment processor or manually convert cryptocurrency funds into fiat.”
Vaultbank is a firm that creates, issues and trades financial instruments using the blockchain. SpotOn invested in a seed-funding round held by the company, which is developing a platform that will allow users to buy, sell and spend their crypto assets on a single solution. The Vaultbank website indicates, “The Vaultbank Platform plans to tokenize securities like Mutual Funds, and will be a securities compliant platform that performs KYC [Know Your Customer], AML [anti-money laundering], FATCA [Foreign Account Tax Compliance Act] and Accreditation. Users will be able to buy and sell security tokens and top utility tokens at industry competitive rates.”
Vaultbank Chief Operating Officer Aaron Travis added in the press release, “This partnership empowers the customer to pay in whatever digital currency they want, while the merchant gets paid in what they want, dollars.”
By giving merchants an easy-to-use crypto payments solution, coupled with the ability to convert the funds into fiat, can go a long way to helping crypto be accepted as an alternative payment solution. The market volatility has kept many retailers away, concerned about losing revenue. However, transferring funds to fiat – until the markets stabilize – helps to counter this issue.
Coinbase users now have an extra option available to them when choosing to withdraw their funds from the cryptocurrency exchange. In a move that didn’t receive a great deal of fanfare, Coinbase has added PayPal to its platform, allowing users to make easy fiat withdrawals through the payment services solution. As an added bonus, the withdrawals don’t incur any additional fees.
No official announcement of the PayPal support was provided by Coinbase. However, users have reported receiving an email informing them of the capability. The only mention of it in on the Coinbase website is in the company’s FAQ, and reads, “Beginning in November, Coinbase will add the ability for customers to link their PayPal and Coinbase accounts. Depending on country of residence, customers can either withdraw cash to PayPal or sell their crypto to their PayPal account.”
In order to make a withdrawal using PayPal, users must complete Coinbase’s Know Your Customer process. Once that’s complete, they receive an email confirming that they’re eligible to take advantage of the implementation.
Withdrawals using PayPal are available in U.S. dollars, UK pounds and euros. Currently, only customers in the U.S., Canada, the UK and the European Union are eligible, but this could change soon. Coinbase mentions in its FAQ that it plans to provide support for the Australian dollar, as well as the Canadian dollar, in the near future.
Whether or not deposits will be facilitated through PayPal remains to be seen. It seems like a logical next step, given the platform’s wide range of services.
This isn’t the first time Coinbase has integrated PayPal into the exchange. PayPal withdrawals were available last year, but Coinbase temporarily suspended the option and subsequently eliminated it completely due to what it described as performance issues.
PayPal has over 244 million customers and managed 7.6 billion payment transactions last year. That level of volume could prove to be extremely beneficial to Coinbase and help increase mainstream adoption, as long as it is marketed properly.
According to a number of reactions in social media, the withdrawal capability is somewhat spotty. Some have indicated that it takes up to 13 days to receive the funds and others – even those living in the specified countries – have said that the service doesn’t work at all. It may be a work in progress, but should prove to give Coinbase, and cryptocurrencies, a significant boost.
CoinZoom, a U.S.-based cryptocurrency exchange, will soon start its operations in Australia after its subsidiary, CoinZoom Australia, received approval from the Australian Transaction Reports and Analysis Centre (AUSTRAC).
According to the announcement, CoinZoom Australia will be able to offer its services to people across Australia lawfully. The exchange will now be able to accept and exchange fiat and digital currencies including BTC, Bitcoin Cash, Litecoin, Ethereum, Ripple and other alt coins.
Under the license, CoinZoom Australia will provide its services to people in Australia and around the world.
CoinZoom CEO Todd Crosland stated that receiving the license will help actualize the company’s vision of providing global cryptocurrency traders with innovative trading technology. He added that the license was an essential step in the company’s goal to provide globally compliant digital currency trading.
With the license in place, CoinZoom is expected to launch Coin Zoom Australia next year, possibly in the first quarter of 2019. Customers wishing to use the exchange will be required to comply with Anti Money Laundering (AML) and Know Your Customer (KYC) requirements in America and Australia.
The exchange will provide a simple and easy “one-stop user experience” to link their credit card, bank account, and cryptocurrency wallets. CoinZoom’s trading platform also offers customers a pattern recognition system; CoinZoom Rewards debit card, and social trading capabilities.
CoinZoom has been offering crypto services to people in the United States for quite some time. It is registered as a money service business (MSB) with the Financial Crimes Enforcement Network (FinCEN) to operate in all 50 states.
AUSTRAC has been actively involved in trying to make sure businesses in the crypto space follow regulations during their operations. The authority has also grown its global network of financial intelligence. In November, the financial authority appointed the first ever AUSTRAC financial intelligence analyst to be posted in China. To facilitate its activities, AUSTRAC received additional funding of $5.2 million from the Australian government. In addition to helping grow its global imprint, the funding was aimed at assisting the authority to conduct a more profound analysis of risks, money laundering activities, threats, and terrorist activities in the country.
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Another mainstream financial company has seen the light. Calastone, a global funds network based out of London, is going to switch its entire fund trade clearing services system to the blockchain. According to a report by Reuters, the transition is expected to take place next May.
Calastone’s move will put all of its services on a shared ledger. It will allow the company to automate nine million messages, reportedly worth more than $217 billion, that are sent back and forth between counterparties each month. Reuters points out that the company processes mutual fund trades for more than 1,700 financial companies, including Schroders, Invesco and JPMorgan Asset Management.
Under the current operating system, three distinct messages are required when an enterprise wishes to purchase a fund. The first places the order, the second provides the receipt and the third confirms the purchase price. Calastone’s chief marketing officer, Andrew Tomlinson, states, “The more you can automate, the more you de-risk, you more you streamline, the more you speed up.”
By switching to the blockchain, the company anticipates that the entire global fund industry – not including the U.S. industry – could save as much as $4.3 billion annually, per data Calastone received from the Deloitte audit company. This savings is possible by allowing companies to optimize trading and settlement processes and would a welcome relief to an industry that has seen higher costs due, in part, to the financial crisis of 2008.
Julien Hammerson, CEO of Calastone, told the Financial Times yesterday that funds are currently “hampered by continually rising costs and threat of competition, ultimately rendering the current system economically and operationally unsustainable.” The company has asserted that, by implementing blockchain technology, the mutual fund industry alone could save as much as $2.6 billion.
Calastone is just the latest to make the leap to blockchains. Last month, the Depository Trust & Clearing Corporation, a global post-trade market firm, began testing a new platform that is based on distributed ledger technology. DTCC is behind the Trade Information Warehouse, an event processing system that is used for about 98% of all credit derivatives transactions around the world.
Some traditional finance pundits are still too hesitant, or too naive, to understand the value of the blockchain. They continue to hold on to yesterday, arguing that blockchains aren’t secure, that they’re exposed to the risk of fraud and that there is a risk of data being lost. Of course, just a few key words can put those arguments to rest – Deutsche Bank, Wells Fargo (guilty of both losing data and of scamming customers) and Marriott.
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