Dallas Mavericks owner, Mark Cuban, has revealed that he does not own any crypto assets. The U.S billionaire was speaking at a YouTube interview with fellow shark tank investor, Kevin O’Leary.
Cuban went ahead to further state that he prefers neither Bitcoin nor Gold for an investment as of press date. According to him, both assets are valued in a similar way with the larger underlying being speculative fundamentals;
“With Bitcoin, some people value it as a store of value, which makes it like baseball cards, art [and] gold.”
He noted that investors who hold these assets are hopeful of a black swan in the current fiat currency markets to push their asset prices up. However, buyers need enough liquidity to purchase in such a market for the likes of BTC and Gold to realize the speculated capital growth.
Besides lack of an intrinsic value, Cuban lamented of crypto’s complex nature which makes it even harder for a bigger part of the world’s population to integrate;
“Crypto is so complicated for 99 percent of the population. Do you put it in a device? Do you print it out? How do you keep from being hacked, and who’s going to host it for you?”
Blockchain tech was however hailed as a viable solution in existing industries by the Dallas Mavericks boss. Cuban said that crypto has made stakeholders to overlook the fundamentals of distributed ledgers while they actually have a basic intrinsic value.
One of the oldest and largest digital assets custodians, BitGo, has decided to start lending out Bitcoin (BTC) and other cryptocurrencies to big investors.
The announcement was made on Thursday. BitGo was founded in 2013 by Mike Belshe, its current CEO. The lending service started being tested a few months back, already racking up around $150 million in open loans. Nick Carmi, BitGo’s head of finance stated,
“We started our lending with BTC, and very rapidly expanded into other cryptocurrencies such as ETH, LTC, BSH, DASH, stablecoin and fiat. Bitgo’s lending services can support over 15 different coins. All of our loans are collateralized, some at above 100% and others at below depending on the coins, the term and the counterparty credit.”
Cryptocurrency Lenders Work Much Like Traditional Banks
Cryptocurrency lenders have the same business model with traditional banks. They take assets from depositors, pay an interest for those assets and after offer loans with a higher interest rate. In the situation in which the borrower fails to pay, the lenders can seize the collateral. BitGo’s newest decision to lend BTC comes because lenders have reported a great runaway growth in comparison with traditional banks. Nick Carmi added,
“We are not interested in a high-volume, low-margin business; we are building deep relationships with our clients to drive value for them and to create a long term, sustainable business.”
Most BitGo Loans Denominated in BTC
Until now, most of the BitGo’s loans are being denominated in BTC. According to the company’s official website, Belshe was a self-custodian had even offered his custody services to other tech investors back in 2010, by securing digital coins on a laptop he was keeping online under his couch. Since the industry is bombarded with reports of scams, hacks and regulatory problems, the safekeeping of cryptocurrency assets has become a very important priority for the biggest investors.
BitGo Planning to Buy Harbor
The prices for BTC almost doubled last year, now being up 22% ever since 2020 started. This is in contrast with the Standard and Poor’s 500 Index, the large US stocks’ benchmark, which went down 4.3% this year because of the coronavirus outbreak, after climbing 29% last year.
In February, BitGo said it’s planning to buy Harbor, the blockchain-based startup known for its failed efforts of tokenizing $20 million of shares in 2019, in a high-rise building from South Carolina. On Thursday, Belshe said his company is melding Wall Street’s way of work with what the Silicon Valley has to offer in terms of tech innovation.
The Criminal Assets Bureau (Cab) has confiscated 12 online accounts, wallets containing 6,000 bitcoin of a drug dealer who had €55 million (over $59.6 million) of his fortune in the digital currency but lost the keys to access his wallet after hiding them with his fishing rod, which has now gone missing, reported the Irish Times.
This also means, these €53.6 million worth of bitcoin are also out of the Cab’s reach, which has been apparently the biggest case in the Cab’s 25-year history. Bitcoin advocate Andreas Antonopoulos said,
“Funny how people who create money by fiat think they can also seize it by fiat, even when it’s not fiat. “But we said we seized it. In writing and on official paper and everything! What do you mean it’s not seized?” Crypto: I respect your authority but I doubt your ability.”
However, trader Crypto Gainz says, even still,
“you know the amount of bitcoin and presumably the owner of the address(es) Now try it with monero. You wouldn’t even know the amount seized. It wouldn’t warrant a headline.”
Punishment of stupidity
The drug dealer Clifton Collins, 49, from Dublin, originally bought most of his bitcoin in late 2011 and early 2012 using cash that he made from growing crops of cannabis. In the last decade, Bitcoin’s value soared 9 million percent and is currently trading at $9,630.
In early 2017, during the last bull run, he had these over 6,000 BTC in one account but because it might be too easy for hackers to access, Collins spread it across 12 accounts, 500 Bitcoin worth €4.5 million in each wallet.
Collins printed out the code on a piece of paper and hid it inside the aluminum cap of his case containing his fishing rod which he kept at his rented home in Cornamona, Co Galway. But a burglary during the time he was arrested and jailed for possession of cannabis lost him his fishing rod and the codes to access his wallet. However, Collins has reportedly come to terms with the loss of the money and took it as a punishment for his own stupidity.
For now, Cab has been able to access only a small stash of Bitcoin valued at €1.5 million that he had in other accounts and seized them along with €100,000 in cash.
Garda officers are hopeful that advances in technology would allow them one day to access the bitcoin that they haven’t’ been able to so they could be sold.
A New Jersey lawmaker introduces a bill to regulate the cryptocurrency and digital assets industry. The bill states each virtual asset company must obtain and maintain their operation license with the authorities in the state.
In a public report released on Feb. 20, New Jersey’s Assemblywoman, Yvonne Lopez (D-Middlesex), introduced a bill titled “Digital Assets and Blockchain Act” to the House. The bill is set to be tabled on the New Jersey Assembly Financial Institutions and Insurance Committee to be discussed. If the bill passes into law, then cryptocurrency companies in the state will be required to obtain operating licenses from financial authorities.
The innovation economy keeps New Jersey competitive, however we must also ensure consumers remain protected. This Digital Asset and Blockchain Technology Act accomplishes both of these goals and creates an infrastructure for the virtual currency industry to thrive in NJ! https://t.co/SiEEAuMz8q
The bill is set to protect consumers from the risks and dangers digital assets pose to their investment, according to the official announcement. Lopez said,
“We must take steps to protect consumers looking to invest in cryptocurrency, while also allowing the sector to continue to develop and expand in New Jersey.”
Crypto firms in New Jersey to obtain licenses
If the DAB Act passes through to law, the blockchain and cryptocurrency companies will need to register with authorities and obtain an operation license from the New Jersey Department of Banking and Insurance. Companies with licenses from other recognized states will also be allowed operation in NJ. The announcement further reads,
“In the application process, a cryptocurrency business would be required to disclose its legal name and any fictitious or trade name the applicant uses to conduct business.”
Notwithstanding, crypto companies in the state will need provide a slew of information to the financial authorities including but not pertained to,
“any license revocation, suspension, rejection or other disciplinary action taken against the applicant in another state; a list of criminal convictions, deferred prosecution agreements, and pending criminal proceedings against the applicant; and anti-money laundering and anti-terror financing policies.”
While the overall stance on regulation in crypto and blockchain world is heavily looked down upon by crypto actors, cofounder of the Blockchain Association of New Jersey, Guillermo Artiles, believes protection of investors in the field is important for the field to grow. He said,
“Those with businesses connected to these novel technologies are eager to ensure there are protections against questionable activities for the sake of the industry’s legitimacy. As a new industry, image is important.”
BitMEX has 34k BTC in the insurance fund and $2bln+ in customers’ assets with $1.5bln in open interest
Binance catching up quickly on liquidity – a key long term success factor for a derivatives exchange
Exchange remains in a very strong position but competition is real, its number of daily users has been decreasing
Total Open Interest (OI) across contracts on BitMEX currently is north of $1.5 billion. This is the number of open positions on BTC/USD trading pairs on the cryptocurrency derivatives exchange. Usually, whenever OI reaches $1 billion, increased volatility in BTC price is expected.
“Open interest is a proxy for leverage and it’s a useful metric … bitcoin traders often talk of $1B as a sell signal,” pointed out economist and trader Alex Kruger.
Crypto research firm Delphi Digital also tried to quantify the significance of the trend in its report from last year.
On looking into returns and frequency of price decline during all hours not spent above 1B from June to Sep. 2019, it found, “The frequency of declines shows how it’s basically a coin flip when looking at your average time period.”
Despite a challenging H2 19, BitMEX funds grew
Meanwhile, the exchange has $320mln in the insurance fund & $2bln+ in customers’ assets.
Popular Seychelles-based BitMEX continues to be trusted by its customers to keep their funds safe, with the balance in their cold wallet continuing to increase.
Crypto data platform Skew reports, “With 34k BTC in the insurance fund, the exchange most likely runs the most capitalised crypto-native clearing house in the industry.”
“Customers continue to trust BitMEX with their funds!” said Skew despite the exchange having a “more challenging” second half of last year.
BitMEX kicked off H2 of 2019 on a bad note when the US Commodity Futures Trading Commission (CFTC) launched a probe into the exchange in July. The CFTC considers cryptos like bitcoin commodities and has jurisdiction over their derivatives, as such requiring BitMEX to register with the agency to cater to traders in the US.
Arthur Hayes, CEO of the exchange that offers margin trading with up to 100x leverage told Bloomberg at that time,
“We continue to monitor all legal and regulatory developments around the world and will comply with all applicable laws and regulations; we reject any allegations of criminality, manipulation or unfair treatment of our customers, who are at the center of everything we do.”
But this wasn’t all, a few months later in November, the exchange accidentally leaked sensitive data of its users because the company failed to apply a blind copy to its mass email servers.
Other catching up with its liquidity
While BitMEX continues to face such issues, competition in the perpetual swap product it created started heating up as well.
In terms of liquidity — a key long term success factor for a derivatives exchange — although of XBTUSD contract remains the best in the industry, Binance has been catching up quickly since the start of the year.
The world’s leading cryptocurrency exchange is also offering perpetual contracts and its liquidity is now getting closer to BitMEX.
To reward the liquidity providers, Binance announced this week that they will introduce negative fees for select trading pairs for those market makers whose 30-day volumes exceed 1,000 BTC.
BitMEX remains in a very strong position but competition is real
BitMEX’s volume, Skew found is in multi-billion on a daily basis but the increased competition means it “has to share the pie with other venues.” This means BitMEX “remains in a very strong position but competition is here for real!”
The effects can already be seen in its number of daily users which has been slightly decreasing.
“Until July last year, a day with <20k users was a slow day, >20k looks since August to be more of a strong day.”
Following a series of consultative forums with the virtual assets community, UK’s Financial Conduct Authority (FCA) has revealed that its revising crypto businesses registration fee upwards. The regulator has henceforth rolled on two distinct registration fees for crypto-based businesses according to their sizes AMBCrypto reports.
The regulator announced that enterprises with a net income of £250,000 from crypto assets activities will be levied a fee of £2,ooo. In addition, the regulator said that firms with more than £2,000 net income from crypto activities will have to pay £10,000 registration fee.
The revised registration fees requirements comes after a discussion of the proposals by the regulator that were released last year in October. Initially, the regulator had proposed a flat fee of £5,000 for all crypto-based businesses. The new fee structure was arrived at following protests from start-ups and smaller businesses.
The new fee structure from the regulator still raised some protests from the smaller businesses operating in the UK. However, the regulator has remained firm about the updated fee structure explaining that the agency is fully funded by the levies and fees it collects from the businesses it regulates. As per the press statement, the operation costs have increased in the last couple of years owing to the increased amount of work that the agency has to undertake while regulating the crypto-based businesses, hence the need to update the fees and levies upwards.
The regulator told off the protestors saying that anyone getting into business is aware that there are costs to be taken care of and it is normal for businesses to even anticipate losses in their nascent years.
Last month, the regulatory body announced that it is set to take up an enhanced mandate in regulation of cryptocurrencies in the country. The regulator also revealed that it will assume fresh supervisory mandate when it comes to virtual assets.
As per the press release, businesses already involved in crypto assets activities have until January next year to register with the regulator. Such businesses have to hand over completed registration applications before the end of June this year.
BitMEX and Kraken were the only ones who see more outflows. However, Kraken registered the net outflow of a whopping $18 million. The largest net inflow meanwhile has been of $15 million which was recorded on Bitfinex.
Overall, taking these prominent eight cryptocurrency exchanges into account, the total net inflow has been $36 million while $23 million was the net outflows.
About the net inflows seen by Binance for both Bitcoin and Ethereum, its CEO Changpeng Zhao said,
“It has become a day for people to withdraw from exchanges they trust less well to ones they trust more. Let’s do it more often.”
However, Proof for Keys day marks, “Not your keys, not your Bitcoin (crypto)” that requires the holders to take their crypto assets off the exchanges and withdraw their funds from these platforms and other third parties as well.
Bitcoin offers financial sovereignty to everyone who wants it, but only if you hold your own private keys. Today is #proofofkeys day: Withdraw coin from custodial sites (exchanges, gambling) to eliminate custodial risk & be in control of your financials#notyourkeysnotyourbitcoin
Mayer also shared the data regarding the amount lost in the exchanges hack last year to remind and urge people to claim ownership of their property.
In 2019, the market lost $130 million in Quadriga and $16 million in Cryptopia in January, $23 million by Bithumb and $7 million by DragonEx in March and then in May, Binance lost $40 million in BTC along with the latest one of $50 million by Upbit in November.
This 2019 list includes more exchanges, some doesn’t even have the estimated amount that has been lost.
However, as we saw, instead of moving the funds out of the exchanges, overall, investors put more money into them.
Bitcoin, an uncorrelated asset moved along with gold as demand for safe-haven assets rose due to geopolitical tensions in the Middle East
Bitcoin might Moon if there is a war with Iran as it is the “best place” for flight capital – Clem Chambers of ADVFN.com
Trading volume meanwhile is below $200 million and dropping further on weekends
Four days into 2020 and Bitcoin saw a surge of 8% where it went from $6,850 to above $7,400.
As we reported, Bitcoin spiked in value just like gold which was because of the geopolitical tensions in the Middle East after the US airstrike killed Iranian general Qaseem Soleimani that pushed the demand for safe-haven assets.
Iran has been one of the “hotbeds” for Bitcoin adoption, propelled by the crippling US sanctions and its unstable economy.
Mati Greenspan, founder of investment firm Quantum Economics in his Friday newsletter points out how
“Until today bitcoin has largely been seen as an uncorrelated asset that does not usually react directly to what’s happening in other markets.”
However, he notes that the Iranian market in itself is likely “too small and slow” to have caused this 8% upwards move in BTC price single-handedly.
What’s more likely is “one or several players have been waiting on the side for a good buying opportunity below $7,000 per coin and it seems one has presented itself.”
Economist and trader Alex Kruger also said that the narrative of Bitcoin being a safe haven and soaring because of Iran is “absolute nonsense.”
But Bitcoin might Moon if there is a war with Iran
Clem Chambers, CEO of private investors website ADVFN.com, however, says, Bitcoin will “moon” if the US has a war with Iran.
In the longer term, he says whenever there is trouble in the capital controlled countries like China and Iran, Bitcoin will be a “key asset.” This is because,
“while there are trillions in gold and oil to suck up demand, there is only a smattering of bitcoin to take the sort of buying surge a country like Iran could create were the situation to spin up into a large scale conflict.”
Bitcoin, according to him, is the “best place” for flight capital for those wanting to protect their assets.
In the short term, $8k is next
No matter the reason, Kruger sees Bitcoin heading higher.
Currently, the world’s leading cryptocurrency is trading at $7,298 with 24 hours gains of 0.72%, as per Coincodex. Meanwhile, trading volume is still low at below $200 million.
The 7-day average real trading volume has been continuously moving down. On January 1st, 2020, the volume was as low as $192 million. This level was last seen in April 2019.
During the weekends also the volume remains low. In fact, the middle of the week sees over 50% more volume than weekends, unlike earlier last year. Arcane Research notes,
“Although this could be related to the holiday period and less activity during weekends, this is not a positive trend for the leading cryptocurrency in the space.”
Fidelity Digital Assets (FDAS) thinks that in the future, custodians will work from behind the scenes to store cryptocurrencies for clients from different firms.
At the same time, its enterprise-based platform for crypto transactions, Fireblocks, has just passed an EY audit that confirms it complies with data security standards, which has led to talks with Wall Street clients.
FDAS Doesn’t Have Any Plan to White-Label Its Custody Services
FDAS is a Bitcoin (BTC) custodian and broker for institutional investors. It doesn’t have any plan to white-label its services, this being just a theory about the future it has launched. What it has announced is that this month it’s going to open a new European entity. At the moment, FDAS sources its liquidity mostly from over the counter (OTC) trading desks, but it has plans to have its own crypto exchange until this year is over.
Fireblocks Was Awarded a SOC 2 Type II Certification
After a 6-month audit on how Fidelity’s Fireblocks processes, protects and manages customer data, the company was given a Service Organization Control (SOC) 2 Type II Certification. Fireblocks’s service allows institutions to move digital assets securely. Its platform was launched in June and it supports 180 cryptocurrencies in addition to 22 exchanges. In an EY report, it’s mentioned that Fireblocks met or exceeded the SOC 2 Type II criteria and that it’s going to be evaluated every year in order to comply with all security standards.
Few Crypto Businesses Have the SOC 2 Type 2 Accreditation
According to Fireblocks’ co-founder and CEO, Michael Shaulov, only a few crypto businesses are SOC 2 Type II accredited. Now, the company is looking for clients from outside the crypto world, like financial institutions that want to try the asset class. It has been confirmed that is already in talks with Wall Street firms.
SolarisBank has recently announced that it is has created a new unit called Solaris Digital Assets in order to offer crypto-custody services to clients. The German fintech company has been backed by recognized investors such as BBVA or Visa.
SolarisBank Launches New Crypto Subsidiary
The company located in Berlin is now working so as to offer custody solutions to clients that were already able to have access to digital banking services offered by the firm. SolarisBank received over $63 million from investors in order to start working on solutions in relation to the crypto space.
The cryptocurrency market has been evolving during the last years and custody solutions have been highly demanded by firms and investors all over the world. At the same time, regulatory agencies have been focusing in order to create clear regulations for crypto custody services.
The subsidiary of SolarisBank, Solaris Digital Assets, is planning to be compliant with all the regulatory requirements imposed by the German authorities. The main goal is to be able to offer crypto-related custody solutions to clients. The firm is going to be applying for a crypto license to offer custody to clients as soon as in 2020.
Despite the new products available for both large and retail investors in the market, custody remains as one of the most important topics for the industry.
At the moment, there are some partners that are testing the custody product created by the company and that would eventually be combined with other traditional banking services. This would be very useful to bridge the current gap that there is between the traditional financial market and digital assets.