Cryptocurrency finance startup Circle has stopped its line of research reports saying it needs to reconsider the offering.
In a post on its website on Tuesday, Circle reached out to consumers of the service, saying:
“While we’ve made significant progress with our content offerings, it’s time to evaluate our contribution and overall strategy. With that in mind, we’ve decided to pause Circle Research activity for the time being as we decide on a future direction for the program.”
Circle Research had provided weekly and quarterly overviews of the crypto space, looking at markets, blockchain news and industry news.
The move may be a continuation of apparent cost-cutting moves by the firm which offers cryptocurrency payments via an app, OTC trading and spot trading via its Poloniex exchange platform (acquired in February of last year). It’s also part of a consortium including Coinbase that has launched a stablecoin pegged to the U.S. dollar called USD Coin (USDC).
Three months ago, Circle said it would wind down the Circle Pay app, with a closing date for the service of Sept. 30. At the time the firm’s CEO, Jeremy Allaire said it makes sense to focus more on USDC and “wallet services that take a bigger step toward reaching our original vision for a free, open and transparent global payments network.”
And in May, 30 staff were let go – roughly 10 percent of its employees – with Circle citing market conditions and “an increasingly restrictive regulatory climate in the United States,” as the reason.
Automaker Daimler has carried out its first transaction on the blockchain-based Marco Polo trade finance network.
The pilot commercial trade transaction saw the firm – which owns Mercedes-Benz among other brands – process the data required to exchange payments with engineering firm and parts builder Dürr, according to a press release sent to CoinDesk on Wednesday. German bank Landesbank Baden-Württemberg (LBBW) was also involved in the trade.
The pilot involved an order and delivery agreement for a balancing system from Dürr subsidiary Schenck arranged over Marco Polo. Payment was prearranged through a conditional commitment from Daimler’s bank.
Once the ordered equipment was delivered, the fulfillment data was entered onto Marco Polo and automatically reconciled with the agreed transaction data, thus triggering an irrevocable payment obligation.
Founded by startups R3 and TradeIX, Marco Polo is built on R3’s Corda blockchain platform. The network aims to deliver real-time connectivity, boost transparency in trading relationships and lower barriers to accessing capital.
Currently, arranging traditional paper-based payments for international trade transactions is inefficient and and slow, requiring multiple systems and a number of intermediaries such as logistics providers, insurers, customs authorities, according to LBBW’s announcement.
The pilot – conducted in “minutes instead of days” – had persuaded Dürr and Daimler that blockchain can make the process “faster and simpler,” said the bank.
Susanne Schlegel, CFO of Schenck and Dürr Division Measuring and Process Systems, said:
“We focus on efficiency increases not only with regard to our machines and systems, but also to our business processes. The successful pilot project between Daimler and LBBW demonstrates the intrinsic efficiency potential of digital trade finance processes. Innovative platforms and technologies such as Marco Polo and Corda allow us to reduce complexities in order fulfillment – to the benefit of all participants”
The ability to automatically trigger payments was a milestone for the network, announced in August. Marco Polo’s first such transaction involved LBBW and Commerzbank and saw logistics provider Logwin AG adding data to the blockchain to initiate the payment obligation.
Marco Polo has also announced notable new members in recent weeks, with both Bank of America and Mastercard signing up to the project seeking new efficiencies in their trade finance businesses.
Venture capital firm 1confirmation is announcing a new, $45 million fund for investing in cryptocurrency startups.
Led by early Coinbase employee Nick Tomaino, the firm’s first fund, focused on seed rounds, amounted to $26 million.
“We wanted to start off relatively small, prove out the model and raise more capital if the model was working,” Tomaino told CoinDesk in an email. “The model is working well and we had strong support from our existing [limited partner] base to launch a larger second fund.”
He says he’s broadly optimistic about the crypto industry. In a blog post shared with CoinDesk in advance, Tomaino wrote:
“Today, the current total market value of crypto assets is ~$272B and investment/speculation is the only mainstream use case. We think in the next five years, that total market value will surpass $1T as the investment/speculation use case continues to grow and other mainstream use cases emerge.”
1confirmation has invested in a wide array of new companies in the industry, including BloXroute, Tendermint, OpenSea and Commonwealth. The firm invests in both startup equity and cryptocurrency tokens.
While Tomaino declined to detail participants in the new fund, he noted that it is “largely backed by our existing Fund I LPs.” When 1confirmation was first announced, limited partners included: Peter Thiel, Marc Andreessen, Balaji Srinivasan, Brendan Eich, Runa Capital and Real Ventures, among others.
This larger fund will allow for the company to write larger checks while continuing to capitalize on being close to pioneers in the space, Tomaino told CoinDesk.
He wrote in an email:
“For Fund I, our focus was providing early stage capital for founders building infrastructure and middleware for the decentralized web. For Fund II, we’re continuing that focus with larger checks as a result of the larger fund (Fund II checks are generally between $1M and $2M, where Fund I checks were between $250K and $1M).”
In his blog post, Tomaino emphasizes the importance of not chasing the trend so much as investing in “focused, disciplined, mission-driven founders.” Further, he predicts that bitcoin will continue to be the market leader and that ethereum will follow close behind, particularly as the platform for decentralized finance.
“While the story for ETH as a store of value is not as strong as the story for BTC as a store of value and a lot of Ethereum infrastructure challenges remain unsolved, we think that Ethereum as a platform for innovation is here to stay and ETH’s future as Internet money for open, inclusive financial products (aka DeFi) is bright.”
The lightning-friendly Fold App, which allows users to spend bitcoin on goods like clothes and pizza and then earn bitcoin-back rewards, just added fiat capability after raising its first round as an independent startup.
Fold product lead Will Reeves told CoinDesk the startup spun out of Thesis with a $2.5 million raise led by Craft Ventures, CoinShares, Slow Ventures, Goldcrest Capital and Fulgur Ventures, among others. Reeves said that capital will go towards cementing partnerships, both in the cryptocurrency and retail space.
“We’ll be rolling out subscription options for merchants and consumers soon that will provide premium services and highest rewards,” Reeves said, adding:
“When people spend fiat at retailers they will receive BTC rewards. They can spend those rewards or withdraw them to an on-chain address. In the future, we are releasing an update that allows people to withdraw rewards directly to lightning, which will lower fees and make it more usable.”
In short, the app can be connected to a debit card for bitcoin-back on regular purchases through the app, or users can send bitcoin to the Fold App from their independent wallets. A mobile Fold App with the full features currently available via desktop, Reeves added, is slated for launch in October. Until then, the mobile app is also available to users that sign up through Fold’s website for early access.
CoinShares co-founder Meltem Demirors told CoinDesk Fold App is unique, compared to other retail-focused bitcoin apps, because it encourages users to use non-custodial wallets.
“I’m excited to work not only with Fold, but also with our community of portfolio companies, corporate partners, and other service providers to build an integrated user experience around bitcoin payments,” she said.
While there are several other retail-focused crypto apps gaining traction, like Lolli and Flexa, Fold is the most focused on lightning payments. Fold App is already integrated with two lightning-friendly wallets, BlueWallet and Breez. This is what attracted Fulgur Ventures partner Oleg Mikhalsky to the investment.
“We believe the lightning network has the ability to become an interesting payments rail for various applications due to features like instant final settlement, cost-efficient micro-transactions, the ability to ‘stream’ payments and the support of other assets over Lightning in the future,” Mikhalsky told CoinDesk, adding:
“We, as investors, are in a learning mode as well. We’re placing our bets on different types of applications and models and learning from them. Supporting startups that experiment with how to drive adoption is one of our priorities.”
Lolli told in July that it, too, was planning to eventually add lightning options. So it remains to be seen how the retail app race will play out.
In the meantime, Fold is offering a type of crypto training wheels to retailers like Macy’s, Target and Amazon. On the merchant side, they only see a payment processed by Fold, not the users’ credit card or bitcoin wallet address. This offers more privacy than directly shopping via the merchant’s website. Fold then cashes out the payment for merchants, which typically choose to receive the value in fiat.
“We can settle in fiat or bitcoin, yet all major merchants choose to settle in fiat now so they don’t take volatility risk or accounting overhead,” Reeves said, adding:
“Fold can seamlessly transition them when they are ready because we are already directly integrated into their point-of-sale systems.”
Galen Moore is a member of the CoinDesk Research team. The opinions expressed in this article are the author’s own.
The following article originally appeared in Institutional Crypto by CoinDesk, a weekly newsletter focused on institutional investment in crypto assets. Sign up for free here.
It’s a lively time for bitcoin derivatives – or at least for those writing about them. For those trading them, it may be business as usual.
The Chicago Mercantile Exchange (CME) announced Friday it is preparing to offer options trades on its bitcoin futures contract. It’s a surprising move, because options volume to date rounds to zero, as a percentage of reported volume in futures and swaps.
Still, nobody in crypto has had an options counterparty as reliable as CME before.
The announcement gives CME a way to offer options without having to build much anew. Why should it? CME’s bitcoin futures market represents a tiny percentage of its overall volume.
Nevertheless, CME may be feeling a shade of anxiety about its leadership position in regulated crypto derivatives markets, with Bakkt rolling out a regulated bitcoin futures contract this week that, unlike the Chicago exchange’s, is settled in actual bitcoin rather than cash.
After all, other people in Chicago who trade a lot of bitcoin seem to think physically settled futures are important. Maybe CME’s announcement lets it steal a little of Bakkt’s thunder.
Speaking of Bakkt, its October 2019 monthly and daily contracts launched Monday. First-day volume in the monthly contract was just 71 BTC. That’s rather anemic, compared with the start of the CME product in December 2017, which isn’t necessarily apples to apples, given CME futures launched near bitcoin’s all-time highs.
The Bakkt one-day futures contract is the more intriguing product of the two. It could be anything from a CFTC-regulated fiat onramp to a duplicate of the popular BitMEX perpetual swap, if traders use its T+2 settlement to build a forward curve and continue to roll the contracts.
So far, traders aren’t. Volume in Bakkt’s one-day futures was all of 2 BTC on Monday.
The first regulated bitcoin futures came in December 2017, just before bitcoin’s price began a long slide down 83 percent from its all-time high. With volumes under $100 million, however, it would be hard to argue that futures trading brought sanity to the markets.
Instead, it’s more likely that slow demand for the new product punctured the myth of institutional demand for bitcoin exposure, pent up behind compliance departments’ insistence on a regulated product.
That myth is alive and well today among retail-focused crypto “analysts,” as a search for “bakkt volume fail” will show you. If you were around in 2017, you didn’t need time travel to know to short bitcoin on Monday: you had seen this movie before. Even the least-sober among us in 2019 recognize the obvious, that institutional investors’ interest in bitcoin is developing slowly, when it is developing at all.
For institutional investors, derivatives offer readily understood solutions to operational obstacles related to custody, investability and risk. (Regulated bitcoin futures are structured the same as futures in, say, frozen concentrated orange juice.)
Still, today the lion’s share of the volume is on unregulated exchanges that don’t operate as clearinghouses and offer leverage up to 100X.
These products could not be interesting to any regulated asset manager, but they are interesting.
Despite persistent doubts as to the reliability of their reported volumes (especially with OKEx and Huobi), bitcoin traders on the largest over-the-counter (OTC) trading desks know there is liquidity in these markets. Their hedging strategies rely on that liquidity.
Other than that, volume on these leveraged trades is probably all crypto hedge funds and, as one trader put it to me, “degenerate gamblers,” trading on their own accounts.
Bitcoin futures are structured much like orange juice concentrate futures, but everyone knows that orange juice concentrate, when mixed with more volatile things can become rather flammable. There are important qualities that set bitcoin apart from other asset categories and these qualities of the underlying are taken into account by institutional investors evaluating bitcoin derivatives.
For example, there may not be natural hedges in a bitcoin futures market. If you don’t believe that, compare global operating expenditure for gold miners to those of bitcoin miners. This isn’t Kansas.
Derivatives may be gold bricks paving the road to institutional investment in bitcoin, but it’s a long way to the Emerald City. Right now, the CME futures volume is as good a guide as any to investors’ progress along that road.
You may have seen charts showing the rise in CME volumes in May. That rise also coincided with a twofold increase in the price of bitcoin. Measured in bitcoin terms, CME futures volume surged in July and is now back trading at a modest growth rate over Q1 levels.
Meanwhile, no fewer than four other startups are readying new derivatives offerings for the U.S. institutional and other regulated markets. All are focused on physical settlement.
It remains to be seen whether physical delivery will be a feature that compels market participation. It’s not always very important in derivatives built on other asset categories.
One thing appears certain: no new financial instrument is likely to “unlock” institutional demand, as most institutions are only beginning to answer the question of why they would invest in bitcoin in the first place.
- With the hash rate or miner’s confidence hitting record highs, bitcoin’s three-day narrowing price range looks set to end with a bullish breakout.
- A range breakout would open the doors to $10,956 – the bearish lower high created on Aug. 20.
- A break below Friday’s low of $10,154 would confirm a range breakdown and could yield a sell-off to $9,855 (Sept. 11 low).
Bitcoin’s latest bout of consolidation may end up with bullish breakout, as a key metric of miner confidence has hit all-time highs.
The top cryptocurrency by market value has clocked lower daily highs and higher daily lows over the last three days and is currently trading at $10,300 on Bitstamp, little changed on a 24-hour basis.
The cryptocurrency has charted the narrowing price range amid a surge in non-price metrics including a rise in the network’s hash rate – a measure of the computing power dedicated to mining bitcoin.
Notably, the two-week average hash rate reached a record high of 85 exahashes per second (EH/s) around 19:00 UTC on Friday. Further, mining difficulty – a measure of how hard it is to create a block of transactions – also jumped to a new all-time high of nearly 12 trillion.
Hash rate can be considered a barometer of miners’ confidence in the bitcoin price rally. After all, they are more likely to dedicate more resources to the computer intensive process that secures the network and processes transactions if they are bullish on price. Miners would likely scale back operations if a price slide is expected.
Hence, many observers, including the likes of Changpeng Zhao, CEO of Binance, and former Wall Street trader and journalist Max Keiser believe prices follow hash rate.
Zhao tweeted on Friday that, a rising hash rate means “more miners are investing in BTC,” while few other observers stated that sellers should think twice before betting against the most secure blockchain (the higher the hash rate of a cryptocurrency network, the more expensive it is to attack).
It is worth noting, though, that the market is divided on the relationship between price and hash rate.
Some observers believe the hash rate follows price and the metric’s stellar performance represents overtly exuberant miners.
That said, the price is likely to follow the hash rate this time, as over-exuberance is typically observed at market tops or near record highs. As of now, BTC is down almost $10,000 from the record high of $20,000 reached in December 2017.
Further, with the next reward halving (supply cut) due in less than a year, market sentiment is quite bullish. The sustained uptick in miners’ confidence is more likely to draw fresh bids, possibly leading to a positive feedback loop.
Daily and 4-hour charts
Bitcoin has charted (above left) back-to-back inside bar candlestick pattern on the daily chart over the last three days. The first inside bar appeared on Friday as that day’s high and low fell within Thursday’s trading range. The second and the third inside bar candle was created on Saturday and Sunday, respectively.
Inside bars indicate consolidation and lack of volatility, often ending with an explosive move on either side. A break below the first inside bar’s (Friday) low of $10,154 would imply range breakdown and could yield a stronger sell-off to levels below $9,855 (Sept. 11 low).
A break above Friday’s high of $10,458 would imply range breakout and open the doors to $10,956 (July 20 high).
The falling wedge breakout confirmed on the 4-hour chart (above right) last week is still valid. So, the probability of range breakout is high.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Venezuela’s largest bank, Bank of Venezuela (BDV), has added support for the country’s controversial Petro digital currency.
Bank of Venezuela hints at crypto wallet
As cryptocurrency news outlet Decrypt reports on Sept. 13, BDV clients have discovered a new section in their online banking account dedicated to cryptocurrencies.
At present, the publication states, the only crypto wallet only caters to Petro, but as the section appears under development, speculation suggests more tokens may follow.
Petro, launched by the Venezuelan government, is notionally pegged to the country’s oil reserves. The subject of criticism from the outset, Petro subsequently faced international sanctions after suspicions arose the government was using it to evade existing restrictions.
Bitcoin trading hits 120 billion bolivars
As Cointelegrpah reported, Venezuela is becoming increasingly reliant on decentralized cryptocurrencies such as Bitcoin (BTC), as other alternatives prove unreliable.
Huge inflation affecting the national currency, the Sovereign Bolivar (VES), continues to produce trading records on P2P bitcoin exchange Localbitcoins.
For the week ending Sept. 7, the most recent period for which data is available, Venezuelans traded over 120 billion VES for Bitcoin.
LocalBitcoins weekly trading volumes for Sovereign Bolivar (VES). Source: Coin Dance
A Californian politician has become the first elected official to use cryptocurrency to purchase cannabis in the United States.
A press release shared with Cointelegraph on Sept. 11 revealed that Berkely City Councilmember Ben Bartlett used Bitcoin Cash (BCH) and the stablecoin Universal Dollar (UPUSD) to make the purchase at Ohana Cannabis, a dispensary in Emeryville, CA.
The purchase was part of a live demonstration of crypto-financial technology conducted by blockchain company Cred and the Blockchain Advocacy Coalition. The latter is a group of California-based businesses and consumers that work to promote transparent blockchain legislation at a state and national level.
Cannabis Tax Remittance Via Stablecoin
According to the press release, the initiative forms part of the Blockchain Advocacy Coalition’s sponsorship of a new bill (AB 953) that would enable California to accept cannabis tax remittance via stablecoin. During the demonstration, the team at Cred was reportedly on hand to explain the ins and outs of blockchain and stablecoin technology to local elected officials.
The transaction involved Ohana accepting Bitcoin Cash by using Cred’s LBA token as a translation utility, with sales and city tax proceeds settled in Universal Dollar.
Universal Dollar — which runs on the Ethereum blockchain and is pegged to the US dollar — was developed by the Universal Protocol Alliance, a coalition of blockchain firms including Cred, Uphold and Blockchain at Berkeley.
In a statement, Dan Schatt — co-founder of Cred and the Universal Protocol Alliance — outlined:
“Not only does crypto result in significant cost reduction for consumers and merchants, but it also enables highly productive tax collection, transparency, and predictability for city and state governments.”
Crypto for the Green Rush industry
As the press release notes, 70% of California’s state cannabis industry is unbanked, significantly increasing both the risks and costs faced by local governments required to accept tax remittance in large cash deposits.
Councilmember Bartlett remarked that in providing a cash-free mechanism for cannabis tax remittance, the proposed AB 953 bill represents a piece of innovative legislation appropriate for the 21st-century so-dubbed Green Rush industry.
The politician has now reportedly requested Berkley City staff to prepare a report on acceptance of cannabis taxes using stablecoin technology.
Back in 2018, the state of Ohio was hailed for its pioneering acceptance of Bitcoin (BTC) for enterprises’ tax liabilities. Several other U.S. states had pursued — but not yet succeeded in implementing — similar initiatives prior to Ohio.
Alfa-Bank and X5 Retail Group partnered to launch a blockchain liquidity management service in Russia.
According to a press release published by the bank on Sept. 12, the service — dubbed Distributed Treasury and Cash Management (DTCM) — enables Alfa-Bank’s corporate clients to manage their payments, loan and deposit products, as well as liquidity pool inside the holding.
A bank created for the user
The service is described as a “bridge to the Bank-as-a-Service (BaaS) model for corporations.” Director of the Alfa-Bank Center for Innovations Research and Development Denis Dodon explained:
“The key difference between DTCM and other offers available on the market is that we give our client not just a channel to send orders to the bank but a way to shape up business logic of the product and actually ‘create a bank’ for the client’s convenience.”
A Waves enterprise blockchain implementation
Unlike the traditional banking model, the BaaS model allows the clients to customize the service. DTCM is hosted on the Waves enterprise blockchain platform and employs smart contracts.
X5 Retail Group CFO Svetlana Demyashkevich commented:
“The experience gained jointly with Alfa-Bank and Waves Enterprise constitutes a new benchmark in our interaction with banks: we get a unified treasury application, improve data management, and cut costs and operational risks.”
Demyashkevich also explained that X5 intends to broaden the use of Distributed Ledger Technology to optimize processes. She added that the technology will “be used in other forms of interaction with partners, such as payments, encashment and optimized collaboration with insurance companies.”
As Cointelegraph reported earlier today, major Spanish bank Banco Santander has issued what it claims is the first end-to-end blockchain bond.
French economy minister Bruno Le Maire said on Sept. 12 that French authorities won’t tax crypto-to-crypto trades, but will tax when cryptocurrencies are sold for fiat currency.
Bloomberg Tax reported on Le Maire’s declarations on Sept. 12. Per the report he noted:
“We believe that the moment the gains are converted into traditional money is the right time to assess tax.”
Easier transaction tracking
The author of the report also explains that such an approach to taxing cryptocurrency trading would help with tracking transactions, which he believes to be a common challenge in crypto-to-crypto trading. Le Maire also reportedly addressed Value-Added Tax (VAT) application to cryptocurrencies.
More precisely, he explained that VAT is to be applied to cryptocurrency transactions only when they are used to acquire an asset or a service. France is reportedly already implementing the new approach to cryptocurrency taxation.
Meanwhile, in Portugal
As Cointelegraph reported at the end of August, Portugal’s Tax Authority has clarified that both cryptocurrency trading and payments in crypto will not be taxed in the country.
Also in August, a tax bill seeking to allow the exclusion of gain or loss on like-kind exchanges of virtual currency has been introduced in the United States House of Representatives.