Crypto Exchange Bybit Suspends Trading for UK Customers Due to FCA Derivatives Ban

Crypto Exchange Bybit Suspends Trading for UK Customers Due to FCA Derivatives Ban

Crypto exchange platform Bybit is set to cease operations for UK-based customers citing the recent regulations issued by the regulator in regards to crypto derivatives.

In an official announcement, the firm stated that it would end its services to UK customers on March 31. The firm said the decision was reached in efforts to adhere to the regulations issued by the Financial Conduct Authority (FCA). The exchange said,

“To comply with the Financial Conduct Authority’s (FCA) ban on crypto derivatives, Bybit will cease to provide services to customers from the United Kingdom.”

The firm is now advising its customers to close any positions and withdraw their entire funds before month-end.

Derivatives are financial instruments that monitor the prices of a given asset which in this case is cryptocurrency. Clients are not supposed to have any spot crypto when purchasing these products. Usually, high leverage is used for these products highly popular in the crypto space.

Last year, the UK financial regulator, FCA, prohibited the trading of crypto derivatives and exchange-traded notes (ETNs) in a move that sent shock waves in the market. The regulator said that these products were not suitable for retail clients as the underlying assets are highly volatile in nature.

The regulator started implementing the ban in January this year, but various firms such as Bybit still went on with the basic operations to the existing customers. However, this is set to change as customers based in the UK will not be permitted to create new accounts. Bybit stressed that sign-ups from UK phone numbers as well as IP addresses are henceforth restricted.

Bybit is ranked as one of the largest crypto derivatives in the world. CoinGecko reports that the exchange has transacted above $11 billion over the past day for just ten trading pairs.

The close of operations for UK-based clients is a major blow to the company as more than 5% of all the site’s visitors are from the UK.

Noteworthy, the firm stated that it was in talks with the UK authorities to find a solution for the existing and new clients.

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Author: Joseph Kibe

Latin American Crypto Exchange, Bitso, Acquires Derivatives Trading Platform Quedex

Latin American Crypto Exchange, Bitso, Acquires Derivatives Trading Platform Quedex

Bitso, a crypto exchange serving the Latin America region, has finalized the acquisition of Quedex, a Gilbrator licensed crypto derivatives trading exchange.

The completion of the deal will help Latin America’s most popular crypto company, to scale up its product portfolio and add important technological know-how to its toolkit, explained Daniel Vogel, the exchange’s CEO.

The details of the deal remain scanty but Vogel revealed that Quedex was advised by PwC on the sale process.

Last December, Bitso which is supported by crypto giants like Coinbase Venture and Pantera Capital, rose to prominence after raising over $62 million in efforts to enhance its capacity by expanding to new regions and introducing new products.

According to Vogel, Quedex became the first crypto derivatives exchange to be granted a license under Gilbrator’s asset regulatory policy which is the same framework that regulates Bitso.

Vogel also stated that the deal will allow Bitso to have nice top-notch tech. Vogel added in an interview,

“As the industry grows and trading volumes increase, one of the big challenges is building really high-performance, low-latency trading engines, and the Quedex team has done that. So, the idea is to replace our entire trading infrastructure with Quedex’s trading infrastructure.”

The CEO revealed that the firm plans to enter the Brazilian market in the near future. He also revealed that plans are underway to introduce new products such as crypto futures, options, and leveraged trading in Mexico.

Vogel explained that all the Quedex’s staff will be incorporated, more so the engineers, to oversee the integration of a fresh trading engine platform. Currently, Bitso has over 200 employees stationed in more than 25 countries.

Quedex’s CEO, Wiktor Gromniak, said he was pleased to be joining Bitso, and expects to bring the company’s top-notch tech to serve the Latin America region. He said that Bitso’s mission was in tandem with Quedex’s in making crypto useful.

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Author: Joseph Kibe

BitMEX Partners With Chainalysis to Enhance KYC/AML Compliance On The Exchange

BitMEX Partners With Chainalysis to Enhance KYC/AML Compliance On The Exchange

The crypto derivatives exchange extends its partnership with crypto intelligence firm, Chainalysis. The partnership will bolster the exchange’s ability to stop illicit transactions.

In a post on the BitMEX blog, the exchange confirmed an extension and expansion of its partnership with Chainalysis, a blockchain surveillance tool. The extended partnership will see BitMEX integrate the blockchain intelligence provider in a bid to identify and stop illicit transactions conducted on the crypto derivatives exchange.

BitMEX will leverage Chainalysis’s Know Your Transaction (KYT) screening capabilities to investigate illicit activities to enhance compliance on the exchange. This technology has been widely integrated by other exchanges and governments tracking crypto transactions to stop “money laundering through detecting and flagging risky or suspicious behavior,” the report reads.

“As a responsible player in the crypto space, we must maintain a well-rounded, agile compliance function to detect bad actors and illicit transactions,” Malcolm Wright, the Chief compliance officer at BitMEX, said.

“Chainalysis offers a highly innovative solution that supports our vigilance to these threats, and we are glad to partner with them.”

The exchange is rapidly complying with international KYC/AML laws following the recent lawsuits charging BitMEX’s top executives for money laundering, market manipulation, and unregistered trading. In October, the exchange announced the User Verification program, which forced every trader on the platform to be fully verified by November 5th. Last week, the exchange confirmed that all users had been fully verified to keep up with global KYC/AML compliance.

Furthermore, BitMEX has partnered with Eventus Systems, a leading surveillance and risk management firm, to “mature its trade compliance capabilities.” The exchange also added Refinitiv World-Check One to its list of compliance suite tools to enhance its anti-crime financial compliance in November last year.

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Author: Lujan Odera

BitMEX’s Crypto Derivatives Exchange Now Has All Users As ‘Fully Verified’ Traders

BitMEX’s Crypto Derivatives Exchange Now Has All Users As ‘Fully Verified’ Traders

Cryptocurrency exchange BitMEX says all the users on its platform are now completely verified.

Last year, the company was having issues with U.S. regulators. As a result, the firm set out to make sure it completes its customer verification program to stay off regulators’ scrutiny.

The BitMEX User verification program was introduced on 28 August 2020. It required BitMEX users to follow a four-step verification process similar to the verification of IDs on several cryptocurrency exchanges.

The verification process takes only five minutes to complete the entire process. Users were asked to upload the proof of address and IDs, take selfies, and provide answers to multiple-choice questions before they can complete the registration.

The user verification deadline was on December 9th, as only verified users are allowed to make transactions, including deposits and withdrawals on the platform.

After the December 9th verification deadline, more than $100 billion worth of transactions have been exchanged, as the firm confirmed that 100% of its users are now completely verified.

BitMEX said that with the completion of the verification exercise, the Seychelles-based company had become one of the world’s biggest derivatives exchanges with a completely verified user-base.

In 2019, the Commodity Futures Trading Commission (CFTC) started investigating BitMEX to determine whether U.S. traders are using its platform.

Then last year October, the regulatory body filed a case against BitMEX for allowing users who are not fully registered to trade on its platform.

After the case, the exchange decided to employ a new compliance chief and shaken up its executive team.

“We’re pleased to confirm that our User Verification Programme has been successfully implemented,” the company stated in its blog.

A major milestone for BitMEX

Chief Compliance Officer of 100x Group Malcolm Wright commented on the development. He said BitMEX is now one of the few non-US-based crypto derivatives that have implemented the know-your-customer (KYC) policy for users to complete their transactions.

He said the achievement is a notable one because of the time and effort it takes to develop a vigorous compliance function that will meet international standards.

Chief executive Officer of the 100x Group Alexander Höptner also commented on the development. According to him, the user verification completion is a major milestone towards what the company hopes to achieve in the future. 100x Group is the holding structure for BitMEX.

He further revealed that it would help BitMEX become a high-performance platform with open-interest and top-level liquidity. Höptner says it places the company in an excellent position to increase both the institutional and retail investors.

It will further give users the chance to boldly trade crypto derivatives without sacrificing performance, liquidity, or security.

BitMEX’s technology has been regarded as the best in class because of its top tier product innovation, Wright added. As all users on the platform are completely verified, the company has shown its commitment to maintaining the legal requirements to operate in any international environment, he stated.

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Author: Ali Raza

UK’s FCA New Law Prohibiting Sale of Crypto Derivatives to Retail Traders Takes Effect

UK’s FCA New Law Prohibiting Sale of Crypto Derivatives to Retail Traders Takes Effect

  • The U.K Financial Conduct Authority (FCA) law prohibiting the sale of crypto derivatives products to retail investors comes into effect today. The law has raised divided opinions across the crypto players claiming the law will send retail investors to unregulated exchanges.

In October 2020, the FCA introduced a new set of crypto laws to govern the sale of derivatives on these assets, – which have become effective as of January 6th, 2021. According to the law, cryptocurrency service providers are prohibited from selling, marketing, and distributing crypto-related investment products to retail customers given the risk these assets hold.

“The FCA considers these products to be ill-suited for retail consumers due to the harm they pose,” FCA’s statement in October 2020 reads.

The financial regulator questioned the valuation metrics of the underlying crypto assets, market interference, proceeds from financial crime, and extreme volatility of crypto prices as reasons to stop the sale to retail customers. Notwithstanding, retail customers do not clearly understand these assets, the report read the “customers lack a legitimate investment need in these products.”

The FCA statement claims that investment in crypto ETNs and CFDs could cause customers to, “suffer harm from sudden and unexpected losses.”

With the ban kicking off today, the crypto community is in a divided territory as critics come out strongly claiming the flawed nature of the law, while others praise the steps taken by the financial authority. Critics argue that the rule limits retail investors (even the seasoned ones) from investing in crypto derivatives. They further argue that retail clients should be given equal opportunities as institutions.

Additionally, Komodo’s director of business development, Jason Brown stated the laws were made in a rush and didn’t involve other authorities and jurisdictions. The lack of involvement of any other country or region in creating these policies, according to Brown, distorts blockchain regulation across jurisdictions.

“What the blockchain industry needs the most is consistent regulations across jurisdictions,” Brown stated.

Other critics argued the prohibitive law will set individual customers to look for unregulated avenues and offshore cryptocurrency exchanges to invest in crypto derivatives which will make it even harder for the FCA to regulate them. This could cause even bigger harm to retail consumers than trading on regulated crypto exchanges, Dermot O’Riordan, partner of Eden Block explained.

Despite the criticism, some players in the crypto field are welcoming the law positively as a risk management tool for “reckless retail investors.” Speaking on the positive effects of the law, Gunnar Jaerv, COO of First Digital Trust said,

“More people would have to buy the ‘actual’ assets meaning that there would be real money going into the assets and will be priced into the market.”

This will stabilize the extreme volatility in the market as well as having stable prices, volumes, and market capitalization across the crypto market, he added.

The FCA in December extended the temporary registration regime period to July this year allowing crypto services providers in the process of obtaining a license to continue with their operations.

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Author: Lujan Odera

Superbowl Prediction Market Goes Live on Derivatives Exchange, FTX

Superbowl Prediction Market Goes Live on Derivatives Exchange, FTX

Cryptocurrency derivatives platform, FTX has listed the “National Football Conference Superbowl 2021” (NFC-SB-2021) contracts.

The annual championship game of the National Football league is played on the first Sunday in February which this time falls on Feb. 7.

FTX is now allowing people to bet on the future of this game.

Those residing in the US, Canada, the European Union, the UK, Singapore, the UAE, Cambodia, Turkey, mainland China, and Hong Kong SAR, among other prohibited jurisdictions, however, are not allowed to trade these contracts.

These futures contracts expire to $1 if a team in the National Football Conference (NFC) wins the 2021 Superbowl and $0 if a team in the American Football Conference (AFC) wins. If there is no winner by July 1, 2021, these contracts will expire at $0.50.

Both NFCWIN-SB-2021 and AFC-SB-2021 are ERC20 tokens that will be redeemable on FTX for either $1, $0, or $0.5 based on the results of the Superbowl. These spot tokens are tradeable on the platform.

Currently trading at a market price of 0.423, they have an open interest of 535 SUPERBOWL with a trading volume of $101 in the past 24 hours.

FTX continues to jump on the trends and bridge the gap between crypto and mainstream markets. So far it has listed Pre-IPO contracts of the likes of Coinbase and Airbnb, tokenized mainstream stocks like Tesla, Google, Netflix, and launched the prediction market of 2020 US Presidential.

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Author: AnTy

Germany Banning Derivatives Trading with its New Tax Law Starting 2021

Germany Banning Derivatives Trading with its New Tax Law Starting 2021

You better make only profitable trades; losses are severely publishable by law.

Germany has made changes to its law that no longer allows the losses from income from forward transactions, crypto derivatives trading to be deductible.

In 2020, regulators around the world tightened their noose on cryptocurrencies, and Europe is making a move against derivatives trading.

The new regulation within the framework of the annual tax law has been approved. Under this new law, the limit of losses from forward transactions that can be offset against profits has been increased to up to EUR 20,000, from the previous EUR 10,000, reported a German publication site.

“If the trader realizes option transactions with a total profit of 1,000,000 euros and transactions with a total loss of 800,000 euros in one year, he will not only have to pay withholding tax on the profit of 200,000 euros but also on 990,000 euros from 2021,” explained the tax advisors.

This is because only 10,000 euros can be offset from the total losses of 800k euros, and 790k euros are carried forward to the following years.

God forbid if someone made more in losses because then it gets even worse. Not only did you lost assets in a trade, but you will also suffer from a significant tax burden. Independent researcher Hasu, noted,

“At the bottom line, this law effectively bans all derivatives trading starting 2021. But it’s even worse than that because people are still allowed to trade and generate tax debt far in excess of their profit. I’m in shock about the malice behind this.”

The regulators have already announced that warrants and certificates are not classified as futures and CFDs are forward transactions.

The new regulation that is to be applied from January 1st, 2021, will increase the tax burden of private investors significantly, but the good thing is “the courts have to clarify to what extent this provision is constitutional.”

“As others have pointed out, this law is likely unconstitutional, and it’s a huge surprise to see it ratified. Expect a wave of lawsuits against German gov + good chance it will be overturned. But this can take months to years, so be careful in the meantime.”

Hasu Researcher

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Author: AnTy

Binance Backed Layer-2 DEX, Injective Protocol, Launches Solstice Testnet

Injective Protocol, the Binance backed cross-chain DeFi derivatives trading platform, is launching its testnet according to a publication on TechCrunch yesterday. This milestone comes as a significant step in the DeFi derivative market where action has been picking up in recent months; Injective Protocol plans to bridge the existing gap between chains so that derivative traders can operate freely across multiple decentralized exchanges.

This initiative allows DeFi derivative traders to operate on Ethereum and Cosmos blockchain networks’ likes without being limited to a particular chain. Injective Protocol leverages the Tendermint-based Proof-of-Stake (PoS) consensus to power an ecosystem where traders can engage in cross-chain derivatives trading. The project enjoys a $3 million funding from Binance and other prominent crypto investors, who include Pantera Capital & Hashed.

Pantera Capital has successfully existed in crypto, having invested in heavyweights like Bitstamp, Kik, and Blockfolio. A partner at the firm, Paul Veradittakit, praised the Injective Protocol cross-chain DEX derivatives exchange model;

“Injective’s Solstice testnet trades and feels like a state of the art derivatives exchange, but it’s actually entirely supported by a fully decentralized infrastructure.”

Notably, this project has been under the wraps for around two years as the team validated it with sizeable institutional traders, market makers, and funds. The co-founder and CEO, Eric Chen, previously worked in a blockchain-oriented fund where his role spun around cryptographic research. So far, Injective Protocol has already established partnerships with leading blockchain firms like Frontier, Ramp DeFi, and Elrond.

Meanwhile, DeFi operations continue to experience the increased activity as more participants join the nascent crypto niche. DEX volumes went up by almost 70% during the summer DeFi craze, a trend that is unlikely to reverse in favor of centralized crypto exchanges. DeFi innovations like Injective Protocol tout solutions to the underlying CeFi challenges include exchange hacks, exit scams, and front running.

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Author: Edwin Munyui

ErisX Launches Cash-Settled Contracts to Help Limit Investors Exposure to Market Volatility

The cryptocurrency derivatives platform ErisX has now introduced cash-settled bounded futures to protect against market volatility and enable short positions in the crypto market.

Chief Executive Officer of ErisX Thomas Chippas said the firm wants to encourage traders interested in trading spot Bitcoin. By adding physically settled futures to the platform, traders will protect the futures clearinghouse and futures exchange.

Unlike physically settled contracts, the nature of cash-settled contracts means they do not need Bitcoin delivery. This enables investors to still profit from Bitcoin, even when they don’t have enough to invest heavily.

Chippas reiterated that the only way investors and traders will be drawn to physically traded futures is when exchanges start offering them on margin. He further revealed that ErisX has reached out to the U.S. Commodities Futures Trading Commission (CFTC) to enable the exchange to provide margined accounts for physically settled futures.

Meanwhile, the launch of cash-settled bounded futures, according to Chippas, will offer both lower and upper bonds on losses and gains, which protects investors from high volatility in the market.

Since 2017, exchanges have been offering cash-settled futures in the U.S. Cboe, and CME rolled out their products the same year, although the former stopped offering Bitcoin futures last year.

Traders can gain more crypto exposure through the platform.

ErisX gained approval from CFTC to offer additional trading services on its platform.

There is a minimum potential risk of trading cash-settled contracts, and it requires less collateral than other contracts.

Bounded Futures also protect holders against volatility in the market, as it enables short positions in the market. Traders can quickly cash out in the market when they discover that the trade is going against them.

The contracts are entered and settled in cash, enabling customers to gain more crypto exposure, even those who may have restricted access in the market.

He added that the bounded funds would offer traders the chance to profit even from a volatile market by allowing cost-efficient strategies. As a result, they manage their risks effectively and still reap good rewards from their investments.

“These contracts are one initiative among many that we have been working on to simplify access to the crypto markets,” Chippas said, pointing out that the goal of the exchange is to make trading simpler for traders.

Offering lesser trading risks

Another interesting feature is the bringing of all options on a single platform for traders. As it stands, ErisX offers traders the right access to crypto markets while maintaining performance and security. It’s currently the only US-based exchange that allows customers to trade regulated and spot futures on a single platform.

The exchange also has a reward or bonus policy where new clients are rewarded with a $50 token for their next transaction after completing signup and making their first transaction.

The exchange says it’s in the company’s goal and interest to continue offering maximum security and protection of traders’ funds even as they take advantage of the market volatility.

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Author: Ali Raza

FTX CEO Made the Second-Largest Contribution of $5.2 Million to Joe Biden Campaign

Sam Bankman-Fried, the founder and CEO of cryptocurrency derivatives exchange FTX, has contributed $5.2 million to the US Democratic presidential candidate Joe Biden’s campaign.

Banman-Fried is the second highest contributor to Biden’s campaign after Michael Bloomberg, who contributed $56 million. The financial data firm founder who also ran briefly for his personal bid for the Democratic presidential nomination accounted for almost three-quarters of the total $79.5 million, which came from 100 donors.

According to the Associated Press, Biden is currently leading the race with 264 electoral votes, just six electoral college points away from securing the 2020 presidential election, compared to Donald Trump’s 214.

The donations came from organizations’ PACs that means the individual members, owners, employees, or individual’s immediate families as the organization themselves are prohibited from donating.

Other top continuators to Biden, in the same range as Bankman-Fried, has been Renaissance Technologies and the largest shopping mall operator in the US Simon Property Group.

The $74 billion US quant hedge fund RenTec actually has been eyeing the bitcoin futures market as per its regulatory filing.

Banman-Fried made the donation through its trading firm Alameda. Commenting on this, one trader said, “If it’s good for crypto and US laws around trading crypto, I couldn’t care less.”

Adam Cochran on FTX CEO

“There’s a common misbelief that Republicans are “better” for crypto than Democrats. Ask anyone who works on crypto policy in DC & they’ll tell you that’s not true,” said Jake Chervinksy, the General Counsel at Compound Finance.

He further noted how it was under Trump that crypto first gained global significance, but he said he’s “not a fan” and “his administration’s policies have reflected that view.”

It has also been during President Trump’s term that the IRS added the infamous “do you own crypto” question. Chervinksy believes, “Democrats can be convinced to support a de minimis tax exemption for crypto spending since it advances financial inclusion.”

Moreover, there are many aspects of the technology such as consumer protection, financial inclusion, disintermediation of Wall Street, and “Big Tech” that are attractive to Democrats.

“Soon, we’ll have a chance to convince President Biden of how valuable crypto can be to the USA. I’m optimistic!” he added.

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Author: AnTy