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Turkey’s president said Friday that “we haven’t forgotten” President Trump’s unusual letter and said that, in time, “steps will be taken” in response to it. “Don’t be a fool,” Trump had warned Recep Tayyip Erdogan the letter about Turkey’s military offensive in Syria. Trump’s letter “did not go hand in…
Global markets business CME Group said that institutional interest toward the firm’s Bitcoin futures is thriving and 2019’s third-quarter data showed a record number of open interest. Moreover, despite the lackluster start, the Intercontinental Exchange’s (ICE) Bakkt platform has seen an increase in interest with the company’s physically-settled bitcoin futures product.
CME Group’s Bitcoin Futures Continue to Prosper
Since going live with its bitcoin futures in December 2017, CME Group’s BTC derivatives has allowed individuals and organizations the ability to hedge exposure to the digital currency. Throughout 2018 and 2019, CME has seen a significant rise in open interest in its bitcoin futures. This summer CME saw unprecedented numbers compared to the volumes recorded a few months prior.
“CME Bitcoin futures reached a record $ 1.7B in notional value traded on June 26, surpassing the previous record by more than 30% — The surge in volume also set a new open interest record of 6,069 contracts as institutional interest continues to build,” CME Group stated. The Chicago-based exchange detailed on October 11 that open contracts during the third quarter grew significantly in comparison to Q3 2018. The number of outstanding positions almost doubled and the company explained that the rise stems from institutions.
The news follows CME’s announcement that due to “growing interest in cryptocurrencies and customer demand for tools to manage bitcoin exposure” the exchange would begin offering options on Bitcoin futures (BTC) in early 2020. The day before it’s third-quarter update, CME Group’s global head of equity index and alternative investment products, Tim McCourt, explained there is a huge interest in bitcoin futures in Asia. For instance, cryptocurrency miners based in Asia appreciate derivatives products because they can hedge their costs. Even though the company is preparing for BTC options, McCourt disclosed that CME is not planning to provide physically-settled products like Bakkt. In an interview, McCourt stated:
While futures give you a one-for-one exposure, whereby the movement of the underlying bitcoin translates directly to a specific dollar value per contract, an option gives you varying strike-price levels and can give you either downside protection, or upside exposure at a fraction of the underlying [assets’] price.
Bakkt’s Bitcoin Futures Volume Spikes and Ethereum and Bitcoin Cash Derivative Products Are Coming Soon
When Bakkt launched its physically-settled bitcoin futures the first week was quite dismal and only started to pick up steam after it executed its first block trade between Galaxy Digital and XBTO. Despite the weak start, Bakkt’s BTC trading volumes rose sharply on October 10, from 25 contracts to 224 contracts seeing a 796% rise. The Bakkt Volume Bot shows that futures volumes touched 53 on October 15 and went up 49% with 79 contracts the day after.
Bakkt CEO Kelly Loeffler believes the future of these derivatives products is just getting started and recently wrote about the subject in a blog post called “The Dawn of an Asset Class.” “Seamless coordination between ICE Futures U.S., ICE Clear US, and the Bakkt Warehouse is an important feature of Bakkt’s Bitcoin Futures,” Loeffler wrote for FIA’s global futures magazine. “Much like cotton and coffee futures contracts that can go to physical delivery, many of the same processes apply to the Bakkt Bitcoin Futures,” Loeffler added:
The Bakkt Warehouse stands between the customer and the clearing member to securely manage bitcoin movements based on deep domain knowledge, along with significant investments in infrastructure and operations. This design allows clearing members to manage margin balances in USD or U.S. Treasuries, rather than bitcoin.
The market has shown demand for futures products tied to BTC, but there’s a strong desire for other cryptocurrency derivatives products as well. At Yahoo Finance’s All Markets Summit in New York City on October 10, Heath Tarbert told the press that he believes Ethereum-based futures will be coming. “It is my view as Chairman of the CFTC that Ether is a commodity, and therefore it will be regulated under the CEA. And my guess is that you will see in the near future Ether-related futures contracts and other derivatives potentially traded.” Further, David Shin, the head of the exchange business at Bitcoin.com recently revealed that the public could see a bitcoin cash (BCH) futures products in Q1 2020.
What do you think about the rising interest in Bitcoin and other cryptocurrency products? Let us know what you think about this subject in the comments section below.
Image credits: Shutterstock, Pixabay, CME Group, Bakkt Volume Bot, Twitter, and Bakkt.
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In an interview published in August, James Mattis promised that his silence on all things Trump wouldn’t be “eternal.” CNN reports that on Thursday evening, the former defense secretary lifted the veil just a bit, making joke s about the president at the annual Alfred E. Smith Memorial Foundation Dinner,…
The U.S. SEC, Fincen and CFTC issued a rare joint statement Friday addressing regulation of “activities involving digital assets.” Citing crypto’s perceived role in money laundering and terrorism, the regulatory power trio prescribed stricter adherence to anti-money laundering (AML) policies and know your customer (KYC) protocols. The statement is a highly visible product of the new crypto reality: for many, it’s no longer about Satoshi’s vision, but regulated, de-clawed digital assets for the obedient masses.
Centralization of Decentralized Money
For all the bluster about “Bitcoin revolution” that pervaded the cryptosphere not so long ago, permissionless money, along with calls for death to central banks, the once roaring lion of crypto opinion now seems to have been transformed into a skittish, whimpering kitten. Bitcoin maximalism has brought with it the unthinking zealotry common to religious fanaticism, and those who want to moon lambo as fast as possible are happy to hear about government adoption and approval even if it means sacrificing core utility.
Let’s be clear, Bitcoin as a technology cannot be centralized if people don’t want it to be, but if they fail to use freely, it can indeed be neutralized as such. It’s not a silver bullet or standalone cure-all. Bitcoin requires human action.
In their joint statement, the U.S. regulatory groups assert:
The leaders of the U.S. Commodity Futures Trading Commission, the Financial Crimes Enforcement Network, and the U.S. Securities and Exchange Commission (the “Agencies”) today issued the following joint statement to remind persons engaged in activities involving digital assets of their anti-money laundering and countering the financing of terrorism (AML/CFT)obligations under the Bank Secrecy Act (BSA).
In and of themselves, such prescriptions for adherence to regulation are nothing at all new. Taken with the cropping up of new international regulatory bodies, calls for globalized tax regulations, and increasing talk of the necessity of KYC/AML policy, however, and a new picture emerges. One of an already operational crypto surveillance state. The polar opposite of what Bitcoin was designed to create.
The World Financial Dragnet
Major financial and economic regulatory bodies are becoming less and less confined to their own respective nations. The Joint Chiefs of Global Tax Enforcement (J5) is a coalition formed in 2018 by the United States Internal Revenue Service (IRS) consisting of the IRS and related agencies from Australia, Canada, the Netherlands and the U.K. The coalition was created in part to help fight “the growing threat to tax administrations posed by cryptocurrencies and cybercrime and to make the most of data and technology.” The J5 maintains:
[We are] are committed to combatting transnational tax crime through increased enforcement collaboration. We will work together to gather information, share intelligence, conduct operations and build the capacity of tax crime enforcement officials.
The existence of the J5 also makes another recent story all the more pertinent — the Organisation for Economic Co-operation and Development’s (OECD) call for a unified taxation approach. As the OECD’s recent proposal maintains: “In a digital age, the allocation of taxing rights can no longer be exclusively circumscribed by reference to physical presence. The current rules dating back to the 1920s are no longer sufficient to ensure a fair allocation of taxing rights in an increasingly globalised world.”
In other words, major corporations and their digital revenue may soon be taxed internationally, regardless of physical presence in a country. This could make practices like relocation to avoid harsh economic conditions or sanctions less efficacious or outright impossible. With the current state of rampant KYC/AML requirements for individual users of centralized exchanges, one wonders how long it will be until individuals are taxed similarly on their own digital assets via similar “guidelines.” The proposal states openly:
Once it is determined that a country has a right to tax profits of a non-resident enterprise, the next question is how much profit the rules allocate to that jurisdiction.
A Decentralized Pushback
Not everyone in the crypto space is standing in wide-eyed wonder at Bitcoin’s supposed acceptance from the “big boys” of Washington and Wall Street via vapid talk about the importance of blockchain and sensible regulation. Bitcoin was explicitly created to be a P2P cash system that was open to everyone. Cropping up in the face of the growing global dragnet are peaceful, permissionless solutions such as decentralized exchanges, peer-to-peer trading platforms, and privacy protocols.
What first gave Bitcoin its value and meteoric rise to success was its decentralized, permissionless financial power. Heading right back to the same dying, unethical system cryptocurrency advocates were seeking to escape in the first place, and begging for its acceptance, is ultimately a dead end. Contrast this with the powerful adoption of crypto now happening worldwide in spite of obstacles, and there’s no need to “fight” the powers that be, per se. With enough people simply using crypto as cash peacefully, regardless of politicians’ scribbles, the old castle is set to fall under its own weight once a critical mass is achieved. Now that’s something Satoshi, surely, could be proud of.
Op-ed disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.
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Rudy Giuliani may be a metaphorical “hand grenade”—as former White House official John Bolton thinks —but he is a handsomely paid hand grenade for sure. Reuters reports that Giuliani collected $ 500,000 last year for work with a company co-founded by a Ukrainian-American associate, Lev Parnas. If that name…
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Coinbase has secured a new legal foothold in Europe. The San Francisco-based cryptocurrency exchange has received an e-money license from the Bank of Ireland, which it can potentially use to continuing serving its customers across the continent, in case Brexit causes any disruptions.
Coinbase Granted an Irish E-Money License
Coinbase announced over the weekend that the cryptocurrency exchange has been granted an e-money license by the Central Bank of Ireland. This is the second such European regulatory approval the company has obtained, as in March 2018 it received an e-money license from the U.K.’s Financial Conduct Authority (FCA).
When Coinbase opened the Dublin office exactly a year ago, they said the local team would complement the company’s operations in London. Now, being one of just a few companies to receive the Irish e-money license, they can also rely on the new Ireland team to legally serve clients across Europe. This option could be particularity useful if a no-deal Brexit affects the acceptance of the British license by regulators on the continent.
“The approval from the Central Bank of Ireland will now enable us to expand our Irish operation and deliver a better product to customers across some of our fastest-growing markets. It will also allow us to secure passporting for our customers across the EU and EEA,” stated Zeeshan Feroz, the UK CEO of Coinbase. “We are committed to ensuring that our customers have the same safeguarding and security as any regulated financial institution, and the approval of a second European regulatory authority demonstrates our position as the world’s most trusted cryptocurrency platform.”
Ireland to Become Next Crypto Industry Hub?
Ireland has been very succusful in attracting multinational tech giants such as Apple, Google and Facebook to operate from its jurisdiction by offering them one of the most attractive tax regimes in Europe. The approval of Coinbase by the Irish central bank might be an indication that the country is open to becoming a launchpad for the European market to the digital assets industry as well.
The CEO of IDA Ireland, the state sponsored agency responsible for the attraction of foreign direct investment into the country, Martin Shanahan, commented: “Coinbase’s choice of Dublin for this operation reinforces the strength of Ireland as a destination for financial services companies, providing a consistent, certain, pro-enterprise policy environment for businesses to grow and thrive.”
Coinbase has also been busy recently securing its legal position across the pond. About two weeks ago it led a group of digital finance companies in the formation of the Crypto Rating Council, a member-operated organization created to help market participants comply with U.S. federal securities laws. The other founding members of this industry body are Anchorage, Bittrex, Circle, DRW Cumberland, Genesis, Grayscale Investments and Kraken. The purpose of the council is to provide a joint assessment of whether a specific token should be considered a security under American law.
What do you think about Coinbase getting an e-money license from the Bank of Ireland? Share your thoughts in the comments section below.
Images courtesy of Shutterstock.
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