SEC suspends bitcoin and ether ETN over “confusion” (med impact)
On Monday, the SEC suspended until September 20 the trading of two exchange-traded notes (ETN) from trading in the US, the Ether Tracker One and Bitcoin Tracker One issued by crypto fund provider XBT Provider AB, a subsidiary of the UK company CoinShares, due to confusion in their descriptions, according to the SEC.
Both ETNs are listed on the Nordic Nasdaq exchange in Stockholm and have been recently added to US fund manager Fidelity’s suite of products for customers in the US. The two funds offer investors exposure to the spot price performance of bitcoin and ether – though were described by the company as “non-equity linked certificates”.
The fund provider responded:
Bloomberg: ‘Crypto crash now officially worse than Dotcom bubble’ (low impact)
Mainstream media has always been quick to point out the fallacies and failings of cryptocurrencies and draw comparisons with the great Nasdaq Dotcom boom and burst in the 2000s, implying that the overhyped market has already been and gone.
This week Bloomberg announced that the 80% crypto rout this year was ‘officially’ deeper than the 78% Nasdaq drawdown in 2000 – losing $640 billion in market capitalization since January. For comparison, Bloomberg used the MVIS CryptoCompare Digital Assets 10 Index, a market cap-weighted index that tracks the performance of the 10 largest and most liquid digital assets and is reviewed once a month.
The article quoted an FX trader:
The Nasdaq is also market cap-weighted though it is recalculated continuously on a daily basis. In 2000, the top 15 companies in the Nasdaq had a combined market capitalization of $6.6 trillion, the total crypto market had a market cap at its January peak was around $850 billion – which raises the question of the relevance of comparing the Nasdaq with just one of many crypto asset indices.
Citigroup may issue digital asset receipts (low impact)
The parent company of CitiBank is developing a new product that would allow it to trade cryptocurrencies with “less volatility”. The product would be a play on American Depository Receipts (ADRs) – a certificate of title to a number of shares in a non-US company deposited with an overseas bank – with Digital Asset Receipts, or DARs.
It is unclear yet how they would be drawn up or how regulators would view them but they would supposedly give mainstream investors more access to the crypto market.
Winklevoss Twins to issue Gemini stablecoin (low impact)
If nothing else, 2018 has been a boom year for stablecoins with an explosion in products offering everything from crypto-backed, fiat-backed and even gold-backed coins, and the Winklevoss brothers continued the trend this week with the announcement of a Gemini USD-pegged stablecoin.
It’s unclear yet how it would work or be backed but that aside it would be the first Federal Deposit Insurance Corporation (FDIC) regulated stablecoin
China starts trialling its blockchain platform (low impact)
Although largely overlooked in Western media, the progress of China and the PBOC in creating their own digital currency and ecosystem continues at a steady clip.
A trade and finance blockchain, backed by the country’s central bank was officially put into action this week in Shenzhen, as reported by local media 21jingji.com, apparently titled the ‘Guangdong-Hong Kong-Macao Great Bay Area Trade Finance Blockchain Platform’.
This follows on from news last week that the PBOC’s Digital Currency Research Lab is expanding its research centers outside Beijing and has opened a new fintech center in Nanjing, the capital of the eastern province Jiangsu.
WEF: Blockchain could boost EM trade by $1 tr (low impact)
The World Economic Forum released research which indicated that blockchain tech could benefit small and medium-sized (SME) businesses in emerging markets the most by opening up new channels of financing and credit that they have been restricted from by improving transparency in accounting and solvency risk.
The research estimates that it could unlock $1 trillion of funding. The Asian SME market is one of the hottest markets for VC-fintech investing at the moment, and big tech firms like Amazon are also investing in digital banks and SME lending, particularly in India.
Ripple and R3 reach undisclosed agreement in $19b lawsuit (med impact)
On Monday, Ripple announced it had reached an undisclosed agreement in the lawsuit with R3 over the 5 billion XRP call option agreement with the rival blockchain company made in 2017. The coin dipped on the news mid-week to $0.25.
The option gave R3 the right to buy 5 billion XRP at a rate of $0.0085 each, $42.5m in total. To put that in context, that’s almost 8% of the 39.7b XRP in current supply.
The coin subsequently surged over 3000% to an all-time high of $3.84 – or $19b for the sum of coins in question and the payout never happened: R3 argued Ripple reneged on the deal while Ripple argued R3 didn’t fulfill the agreed contract.
This is one of a slew of court cases Ripple Labs has been fighting over the past year and perhaps the most significant to date. The other outstanding cases relate to XRP being sold as a security. Despite a plunge of 90% from its all-time high, XRP is still the third-ranked crypto by market cap.