Crypto Newsletter July 5th 2018
The SEC made a proposal to “modernize the regulatory framework for exchange traded funds (ETFs). The proposal would allow certain ETS that satisfy certain conditions to come directly to the market without the cost and delay of obtaining an exemptive order.
Takeaway: It is unclear if an ETF containing a cryptocurrency would fall under those “certain conditions”. If an ETF containing a cryptocurrency did fall under those conditions, it would mean that it would be much easier for people to invest in cryptocurrencies. However, considering how unique cryptocurrencies are, it would make sense that an ETF with exposure to a cryptocurrency would have to experience more scrutiny before coming to the market.
Coinbase Custody is officially open for business and apparently 10 hedge funds and family offices are already using their custody service.
Takeaway: Coinbase Custody was mentioned in last week’s newsletter but now it is officially active. Coinbase Custody makes it easier to store large sums of cryptocurrencies, which will making holding large sums of cryptocurrencies more attractive.
Bloomberg recently reported that Tether trading on Kraken’s exchange showed to red flags for regulators. The article from Bloomberg mentioned how big and small orders did not equally affect the price of Tether and that there were oddly specific order sizes.
Kraken responded and explained how Tether should not fluctuate with big and small orders because unlike Bitcoin, each tether in circulation is pegged to $1. The price should never fluctuate that far off from $1. Kraken also added that Kraken’s Tether volume is not big enough to account for the price discovery of USDT.
In retaliation, Kraken stated “If we are to take up our pitchforks against market manipulation, guide your torches toward this illumination: the Bloomberg News piece was published on June 29th, the last business day of trading for Q2, and expiration date of numerous futures contracts. It raises red flags.”
Takeaway: This is not the first time Kraken has aggressively defended itself. Kraken’s response shows how media sources may be biased and may have ulterior motifs. Before trusting headlines like “Tether Defies Logic on Kraken’s Market, Raising Red Flags” try to be aware of the actual contents within the article and evaluate if it is coming from a biased source.
The new FCoin exchange is listing new currencies based off how many deposit accounts a currency accumulates, which means that many people are sending their ERC20 tokens to FCoin and congesting the network.
Takeaway: Ethereum has not experienced that many network problems since cryptokitties was popular, but FCoin demonstrated how the Ethereum network can still easily be slowed down. There are several new Ethereum DApps that are scheduled to be released soon. Augur is one particularly on our radar. If Ethereum does not create a scaling solution before those DApps hit the market, there could be server congestion in the future.
Binance opened its first fiat-crypto exchange. The exchange, Binance Uganda, supports trading with the Ugandan Shilling (UGx) fiat currency.
Takeaway: Binance continues to spread its influence. It added trading for the Ugandan Shilling, which may not be as in high demand as the US Dollar or the Euro, but it shows that Binance will be able to onboard more fiat currencies in the future. Cryptocurrencies are intended to help people in countries without stable currencies, and Binance is on track to make that a possibility.
Biannce detected Irregular trades from API users and Binance quickly suspended trading and withdrawals. Most noticeably, 1 Syscoin (SYS) was sold for 96 BTC. Binance will allocate 10% of its trading fees to a Secure Fund for Users so that it has a fund to pay out lost money to users if something like this or a hack happens again.
Takeaway: Binance did not get hacked. A third party API was compromised and people that used that third party API for a trading bot, were forced to make certain trades. The only people that were affected were those that gave out their API keys. Do not trust anybody with your API key or your account password.