BitDigest - Monday June 24, 2019
Bitcoin breaks $11,000, pulls back to $10,600. ETH above $300
Global financial watchdog issues first attempt to establish uniform approach to regulating the cryptocurrency market
Wright did not disclose bitcoin holdings in trial
The Headlines
FATF Issues Global Approach to Regulating Crypto
The Financial Action Task Force (FATF) has issued a new statement recommending member countries register and supervise all cryptocurrency-related firms such as exchanges and custodians. They should also carry out detailed checks on customers and report suspicious transactions. The FATF initiative marks the first attempt to establish a global approach in regulating the cryptocurrency market and was released days ahead of the upcoming G20 Summit in Japan.
BIS Warns Against Large Tech Digital Currencies
The Bank of International Settlements has authored a new report warning that the developed of financial service offerings by large technology firms, such as Alibaba, Amazon, Facebook, Google and Tencent, could enhance the efficiency of financial services provision, promote financial inclusion and allow associated gains in economic activity. However, these companies have the potential to quickly become systemically relevant financial institutions and therefore, the activities of these companies are a matter of broader public interest that goes beyond the immediate circle of their users and stakeholders.
Russia May Allow Crypto Trading
The Russian Ministry of Finance is considering allowing crypto trading. Deputy Minister of Finance Alexei Moiseyev said his country may include a provision to allow crypto trading in the countries soon to be released bill.
G7 to Create Task Force Around Libra
France appears to be heading up a G7 task for to study how central banks will be able to ensure that cryptocurrencies like Libra will be governed by regulations ranging from money-laundering laws to consumer-protection rules. France, which holds the rotating presidency of the Group of Seven nations, has said it does not oppose Facebook’s creating an instrument for financial transactions. But it adamantly opposes that instrument becoming a sovereign currency. “We want to combine being open to innovation with firmness on regulation. This is in everyone’s interest,” said Governor Francois Villeroy.
Libra Needs to Address Regulation
The Governor of Australia’s Central Bank is not threated by Libra. “There’s a lot of water under the bridge before Facebook’s proposal becomes something we’re using all the time” he declared. Governor Philip Lowe added that numerous regulatory issues will need to be addressed first.
Linda Lacewell Confirmed as New Head of DFS
The New York State Senate has confirmed Linda Lacewell as the new Superintendent of the New York State Department of Financial Services (DFS). As the acting Superintendent Lacewell promoted regulated innovation and expanded New York’s thriving virtual currency marketplace through the approval of new BitLicneses for Bitsamp and Tagomi.
Wright Did Not Disclose Bitcoin Holdings
In a surprise development in the ongoing Kleiman v Wright lawsuit, it was revealed that Craid Wright did not actually comply with a court order and provide a list of his personal bitcoin holdings as of December 21, 2013. Wright has sought a court order sealing the proceedings from the public. Wright could now be held in contempt of court at either the civil or criminal level.
Interest continues to surround this story to see whether Wright will identify bitcoin holdings believed to below to original bitcoin developer Satoshi Nakamoto.
Market Data
Bitcoin Shorts is Only Handful of Traders
Twitter user @Silver_Watchdog posted that the majority of all bitcoin future shorts is only being held by a small handful of traders. Four or less traders hold almost 70% of all btc short futures positions. (COT Data),” he tweeted. He said that the crypto market has too many longs promulgating FOMO and suggests that the market needs “players like Jim Chanos or Muddy Waters to exposure the frauds.”
Exchange and Product News
Libra Uses Hedera's Governance Model
Hedera Hashgraph, a decentralized pubic network, believes that Libra is copying its governance model and ran a full-page ad in the Wall Street Journal announcing it. The ads read “Thank you Facebook Libra. Imitation is the sincerest form of flattery.” Hedera founder and Chief Scientist Leemon Baird admitted to holding meetings with Facebook executives last year. Baird explained “I do think that they have recognized that this council that we created was a good idea. … people were saying, ‘that’s crazy, you can’t have a council.’ And now I think people are going to realize… You need to have huge companies that compete with each other, that are able to balance each other, spread around the world, that’s what you really need to have trust in something.”
Galaxy Digital Introduces Crypto Options
Galaxy Digital is starting to offer cryptocurrency options contracts. Galaxy Digital’s global head of business development, Yoshi Nakamura confirmed the new offering saying the options business is “relatively new” and that appetite for it “continues to increase.” It is being reported that interest in the options is being driven by non-crypto native firms such as traditional hedge funds and family offices.
Zcash to Undergo New Deveopments
Zcash, the privacy protecting digital currency, is developing new features to make “Zcash usable by 10 billion people by 2050.” The Zcash development team is making modifications to its protocol that would allow it to handle thousands - or even millions - of transactions per second – they are considering using sharding to split the network into subnetworks and processing the data associated with them separately.
Thoughts on the Ecosystem
Libra, a Centralized Wolf in Decentralized Sheep’s Clothing.
Joe Lubin, the founder of ConsenSys and a co-founder of Ethereum, has raised concerns about the release Libra by posing the rhetorical question, “don’t I need to trust Facebook and other intermediaries to trust Libra?” Rather than creating a trustless platform, Lubin suggests that potential users are being forced to “trust in Libra.” Besides requiring a trust that the digital currency will actually be backed by a basket of currency and bonds, “it requires our trust that Libra will eventually transition to a more “permissionless,” decentralized system, whereby anyone can validate the network, rather than the restrictive… initial 28 firms.”
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BitDigest is a weekday news update on digital currencies and blockchain technology for friends and partners of Parsons & Whittemore, a single family office based in Rye Brook, New York. Receipt of BitDigest is by approval of the Author. The commentary, analysis, opinions and recommendations in this newsletter represent the personal and subjective views of the Author, and are subject to change at any time without notice. The information provided in this newsletter is obtained from sources which the Author believes to be reliable. However, the Author has not independently verified or otherwise investigated all such information. Neither the Author nor any of the Author's affiliates make any guarantee or other promise as to any results that may be obtained from reading this newsletter. While past performance may be analyzed in this newsletter, past performance should not be considered indicative of future performance. No reader should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. The Author is not making a solicitation or offer to buy or sell any securities of any kind.