It is important to look at the crypto-based derivatives market when we talk about Bitcoin (BTC). This year, several new companies such as the Intercontinental Exchange’s Bakkt have entered the game and started to plant the seeds for a future in which Bitcoin derivatives will be a major force in the market.
The volumes of derivatives markets are growing up recently. Looking at the perpetual swaps done on BitMEX, for instance, we can see that 2,363 perpetual swaps were done last year and that this year we have seen 2,681 of them, with around 40 days until the end of the year. This is a major growth.
This has led some experts to believe that the derivatives market will have a major impact on the industry, especially when it comes to reducing the volatility that plagues the Bitcoin industry.
Before the derivatives market got so important, most exchanges derived prices in spot trading from larger exchanges which had a higher volume. Even though they did this, not all markets were necessarily highly liquid. Now, however, the growth of derivatives markets, which are more liquid, is set to influence prices.
The more liquidity a market has, the less volatility it will have. Part of the reason why Bitcoin went up and down so quickly was that it is still a small market because it was not so popular yet. Now, the market is more diversified and sophisticated than ever and the volatility will probably be affected by these trends.
Author: Rebecca Asseh
On Monday, Netki announced it has completed upgrading its digital ID services in order to assist crypto-based companies to adhere to the stringent global rules and guidelines set to combat money laundering.
According to CoinDesk, the TransactID has been upgraded to include two fresh features like the capability to break down certificates of an individual’s identity into lesser pieces of personally identifiable information (PII). The other feature is the capability for both senders as well as receivers of funds to ask PII from one another.
Netki CEO, Justin Newton, explained that prior to the upgrade there was a single big atomic transaction where information was shared on each other on both ends. He added that with the new features, the new protocol will be much more of a conversation and each side will be able to ask and share personal pieces of identification with one other.
The new features comes after Financial Action Task Force (FATF) released new guidelines in June that require virtual asset service providers (VASPs) that comprise of crypto exchanges, to share information on their clients with each other during the transfer of money in order to make sure the law enforcement agencies can have an information trail.
Although FATF guidelines are not binding, about 37 members of the outfit are anticipating to enforce them through legislation in the next 12 months.
Even before the implementation of the FATF’s standards, some countries are already taking measures to crack down on fraud and financing of illegal activities using cryptos. For instance, U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) recently said that the travel rule now applies to crypto exchanges like other financial institutions.
While TransactID was developed for use in the US, the recommendations by the FATF to apply the travel rule even on cryptocurrencies, means that Netki had to go back to the drawing board and come up with a product which can be customized to fit to a country’s interpretation of the standards.
Author: Joseph Kibe