CME Q3 Revenue Doubles Driven by BTC Futures, The Exchange Is Increasing Contract Limits for the ETF

CME Q3 Revenue Doubles Driven by Bitcoin Futures, The Regulated Exchange Is Increasing Contract Limits for ETF

Regulated platform CME Group reported its third-quarter profit more than doubling thanks to the approval of the exchange-traded funds (ETF) tied to CME Bitcoin futures seeing immense traction and trading in the futures exchange operators’ energy and interest rate products surging.

CME reported revenue of $1.1 billion and operating income of $614 million, while net income was $927 million for the third quarter.

The average daily volume of CME rose 14% from a year earlier to 17.8 million contracts. Its Bitcoin futures volume meanwhile increased by 170% versus the Q3 of 2020.

“The launch of ETFs based on CME’s bitcoin futures is validation from the industry of what we’ve known for some time, that CME bitcoin futures are the leading source of bitcoin price discovery in the industry,” Sean Tully, global head of financial and OTC products, said on a call with analysts.

In October, so far, the average daily volume for CME’s bitcoin contracts is up 57% compared to September, to over 12,000 contracts or over 60,000 equivalent BTC worth a record $3.5 billion per day.

Ether futures are also off to a good start since their launch in the first quarter of this year.

Additionally, CME Group is increasing the spot position limit on the amount of Bitcoin futures contracts that the ETF can own.

ProShares Bitcoin Strategy ETF (BITO) was the first Bitcoin ETF listed on the NYSE on Oct. 19 and became the fastest fund to amass $1 billion in assets. A few days later, Valkyrie Funds also launched its Bitcoin ETF.

Both the funds invest in bitcoin futures contracts listed on the CME Group and do not directly invest in cryptocurrency.

Currently, there is a strict limit of 2,000 spot futures contracts that ETFs can own, but the heightened interest in Bitcoin ETFs has caused the CME to increase this limit to 4,000 in November, said Terry Duffy, chairman, and chief executive of CME Group.

“We feel very confident from a risk perspective that we are not being reckless in any which way, shape, or form, and this has been vetted by our entire team and with the regulators. We’ve filed for those changes as we are confident that the product is mature enough to increase the size of the limit.”

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Author: AnTy

Square’s Bitcoin Revenue Tops $2.72 Billion in Q2 and Reports Impairment Loss of $45M

Square’s Bitcoin Revenue Tops $2.72 Billion in Q2 and Reports Impairment Loss of $45M

Twitter co-founder and CEO Jack Dorsey’s Square reported another profitable quarter with its Bitcoin yearly revenue surging 200% year over year to $2.72 billion from $875 million. Bitcoin gross profit meanwhile rose from $17 million to $55 million.

Square’s Cash App reported a “significant growth” of 3x YoY in bitcoin revenue, with bitcoin gross profit being 2% of it.

Total net revenue was $4.68 billion in the second quarter of 2021, up 143% YoY, and excluding bitcoin, the total net revenue was $1.96 billion, up 87% YoY.

In Q2, Cash App also reported a gross payment volume of $42.8 billion, up from $33.1 billion in Q1. The App also reached 40 million monthly transacting active customers in June.

In its Q2 financial letter to shareholders, the company noted that Bitcoin’s YoY growth was due to increases in the price of bitcoin and bitcoin actives and growth in customer demand.

However, Q2 saw bitcoin revenue and gross profit declining from Q1 due to relative price stability affecting the trading activity compared to prior quarters.

As for the $220 million investment in Bitcoin ($50 million in 4Q20 and $170 million was invested in 1Q21) that Square is holding on its balance sheet, resulting in the company reporting an impairment loss of $45 million, up from $25 million in Q1 due to Bitcoin being an indefinite-lived intangible asset which is subject to such loss if its fair value decreases the carrying value during the assessed period.

The San Francisco-based company mentions the impairment loss because GAAP (generally accepted accounting principles) requires any decreases in market price below carrying value to be recognized. Still, no upward revisions are recognized when market price increases until Bitcoin has been sold.

Still, the fair value of Square’s investment in bitcoin was $281 million based on observable market prices as of June 30, 2021. This is $127 million greater than the carrying value of the investment.

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Author: AnTy

Only Axie Infinity and Polygon Projects See Increasing Revenue in the Past Month

In the cryptocurrency space, Ethereum is the leader in terms of earning revenue which remains the case even during the ongoing low activity times.

With just under $160 million in revenue, the second-largest network is bringing in some big numbers, followed by Uniswap at $104 million and PancakeSwap’s $45.21 million in the past 30 days.

The Bitcoin network has only earned $43 million in revenue and Binance Smart Chain $39 million.

While Ethereum is a clear winner, this revenue on the blockchain decreased by 14.50% in the last 7-days and 84.34% in the last 30 days.

This downtrend is pretty much the story of all the crypto market as volume has died down after the prices cashed 50% to 75% during the recent sell-off. While institutions are on the sideline, retail has taken a break as the market goes sideways.

Still, a handful of projects are still able to record growth during these times. Axie Infinity is one of them whose token AXS also surged 300% in the past week.

The project continues to grow, seeing $14.27 million in volume, an increase of 41% in 7-days and 285.85% in 30 days, as per TokenTerminal.

It is also leading the non-fungible token (NFT) space, with more than 15,000 traders bringing in $13.71 million in volume. Axie Infinity’s sales, volume, and traders, every metric is recording a surge, as per Dapp Radar.

Ethereum side-chain protocol Polygon is another one with over 18% and 305.95% increase in the past week and month. While generating $359.33k in revenue, which is growing since May and gaining momentum in June, Polygon also has just over $8 billion in TVL.

Meanwhile, in the past week, Synthetix also recorded a 24% increase in its revenue, with Nexus Mutual being the other one.

When it comes to lending protocols, the original decentralized protocol MakerDAO leads the DeFi sector in terms of revenue. Based on cumulative protocol revenue in the past 365 days, it overall ranks as the second biggest protocol after BSC-based PancakeSwap at $57.1 million. Meanwhile, its competitors Compound and Aave had $24.4 million and $7.6 million, respectively.

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However, Aave is leading in terms of monthly users with its market share in June at 57.5%, while Compound has 23.9% and Maker 18.6%. Aave has really grown in popularity as a year back, while Aave had 10.4%, COMP’s market share was 42.7%, and Maker 46.9%.

While Compound still leads when it comes to the total outstanding amount, Aave has been gaining strength at over $3 million and under $1 million, respectively, while the total borrow amount on Maker is more than a million dollars.

Overall in the DeFi sector, the same as the entire crypto market, the number of users has fallen to September levels, with only a few thousand new accounts being opened daily, which was as much as 40k in mid-May. Nic Carter, the founding partner at Castle Island Venture, said in an interview,

“DeFi is going to be challenged because it relies on this injection of new liquidity, and ultimately a lot of DeFi yields are a function of new buyers supporting token prices,”

“I don’t think DeFi is going away, it just might be a less attractive place to park capital in the next few months.”

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Author: AnTy

Coincheck Sees 5x Surge in Revenue; Japan Assembly Members Seek ‘Tax-Free’ Crypto Zone in Tokyo

Coincheck Reports 5x Surge in Revenue, Japan Assembly Members Call to Make Tokyo a Special ‘Tax-Free’ Crypto Zone

During the period of Oct. and March, Monex Group acquired a crypto exchange that was hacked in Jan. 2018 gained 210,000 users. Meanwhile, ruling party members want to transform the city into a crypto “trading center.”

Japan is now aiming to boost its cryptocurrency industry with a member of the ruling party Tokyo Metropolitan Assembly wanting to transform the capital into a “trading center” for cryptos. And for this, they are advocating for a 0% tax on cryptocurrency trading.

Assembly member Yuu Ito talked about bolstering the city’s financial sector by increasing its involvement in the digital asset industry.

“According to our research, the number of financial institutions that are gathered in the city is key to our success or failure,” Ito was quoted as saying, “unfortunately, Tokyo is lagging behind in that regard.”

Fellow Tokyo Metropolitan Assembly member Nobuko Irie is of a similar opinion as she said,

“The country is printing deficit-financing bonds in the wake of the corona. Even in Tokyo, we must create new financial resources by setting technology that can generate wealth like blockchain as a growth strategy.”

While praising the rising bitcoin adoption, she raised concerns about how politicians were handling the situation and urged for necessary action to make Tokyo a crypto trading center.

“Politicians should now tackle the issues of monetary policy and taxation around bitcoin. If you do it in the nation, you will lose the sense of speed, so create a special zone in Tokyo to use it tax-free in the city. I think it is the role of politicians to identify issues and clear them systematically while running.”

Virtual currency and blockchain can also be used to turn its economy around, Irie said.

Gains on cryptocurrencies are taxed as capital gains, but Bitcoin “is originally a currency, therefore, it’s not easy to use unless taxation is set to 0%,” said Ito.

Moving Forward

Japan has been seeing a growth in crypto adoption until the crypto exchange Coincheck was hacked in January 2018, which has been acquired by online brokerage Monex Group. Hindering the growth of the crypto frenzy in the country, people are now hopeful of moving to the next stage after undergoing a period of scrutiny and renewal.

Coincheck’s revenue actually increased fivefold to ¥20.8 billion (over $191 million) in the 2020 fiscal year compared to the previous year, as per earnings released by the Monex Group last month.

The exchange also gained 260,000 users, out of which 210,000 were accumulated in the second half of the business year ending in March, reported Japan Times. However, the volume on the exchange only including the BTC/JPY pair, is still only about $150 million, as per CoinGecko.

According to CryptoCompare, JPY has the fifth biggest share of BTC volume by currency after Tether (USDT), USD, Binance stablecoin BUSD, and EUR.

“Due to our hacking problem, not only us but each Japanese cryptocurrency exchange had to strengthen measures to protect customers” and prevent cyberattacks, money laundering, and other inappropriate transactions, said Yusuke Otsuka, an executive, and co-founder of Coincheck.

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Author: AnTy

A New, Much Higher ATH: Cash App’s Bitcoin Revenue Jumps 11x to $3.51 Billion

A New, Much Higher ATH: Cash App’s Bitcoin Revenue Jumps 11x to $3.51 Billion

Twitter and Square CEO Jack Dorsey says the long-term focus is on “enabling bitcoin to be a native currency” of the internet.

Twitter CEO Jack Dorsey’s payment firm Square has posted another record quarter thanks to Bitcoin.

The company beat Wall Street expectations as soaring demand for bitcoin fueled a jump in cryptocurrency transactions on its peer-to-peer payment service Cash App.

Cash App generated $3.51 billion in Bitcoin revenue, up 11x from a year earlier at $306 million. This record number came in the quarter when the largest cryptocurrency became a trillion-dollar crypto asset, with the BTC price going from just under $30k to $62k.

Meanwhile, the gross profit from Bitcoin transactions was $75 million, which is the fees that Square collects, another all-time high.

Square represents one of the best data sets on retail investment trends on Bitcoin, notes crypto trader Light.

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During the company’s post-earnings call, Jack Dorsey told analysts that they view bitcoin as “the internet’s potential to have a native currency.” He said,

“This is going to be a long-term focus, enabling bitcoin to be a native currency. It removes a bunch of friction for our business, and we believe fully that it creates more opportunities for economic empowerment around the world.”

In February this year, San Francisco-based Square invested $170 million in Bitcoin that increased its bet on the digital assets from $50 million in Q4 of 2020, overall representing about 5% of its total cash.

The company’s record Q1 2021 was also strengthened by the shift to digital transactions spurred by the pandemic that had gross payment volumes on Square rising 29% to $33.1 billion.

The total net revenue of the company jumped about four-fold to $5.06 billion.

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Author: AnTy

Total Value Locked (TVL) in DeFi Surpasses $100 Billion; Revenue is Ready to Hit $1 Bln

Total Value Locked (TVL) in DeFi Surpasses $100 Billion; Revenue is Ready to Hit $1 Bln

Decentralized finance (DeFi) continues to grow at a fast pace, with more and more value getting locked up in the applications.

Today, the total value locked (TVL) in them has surpassed a whopping $100 billion, as per DeFi Llama. While DeFi Pulse currently shows just above $50 billion, it covers about half of the projects listed by DeFi Llama.

Lending protocol, Compound Finance, dominates the DeFi TVL with over $10 billion.

Interestingly, the sector’s real growth started only last summer when yield farming drew in the crowd with exceptionally high APYs. At the beginning of 2020, the TVL was a mere $675 million and about $20 billion at the start of this year.

Today, there are nearly 25 DeFi projects with more than $1 billion in TVL.

The growth of DeFi intensified this year as other blockchains like Binance Smart Chain (BSC) provided users, particularly smaller ones, with a cheaper alternative to Ethereum (ETH). As of writing, BSC has about $27 billion in TVL.

Much like TVL, DeFi’s other metrics recorded similar growth, including the users who are aiming to hit the 2 million threshold after hitting the 1 million milestone only in early December, as per Dune Analytics.

Before the 2020 summer, only a handful of people were using DeFi projects, but today Uniswap (UNI) alone has nearly 1.3 million users. Meanwhile, Compound (COMP), 1inch (1INCH), Kyber (KNC), Balancer (BAL), and SushiSwap (SUSHI) all have between 100k to 300k users.

As more and more people come into the space and use these applications, the cumulative revenue of these protocols is also increasing, now aiming for $1 billion.

Popular DEX Uniswap yet again leads with more than $90 billion in revenue, up from just $4 million in July 2020. Other notable revenue generators include Compound, SushiSwap, and Aave earning between $30 to $40 billion.

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Author: AnTy

IRS Gets Approval to Receive Financial Records of Circle’s US Customers

The court has authorized the US Internal Revenue Service of Joe Doe summons to Circle and its predecessors and affiliates, including Poloniex, for those engaged in crypto transactions worth at least $20,000 between 2016 and 2020.

US District Judge Richard Stearns of Boston has issued an ex parte order allowing the US Internal Revenue Service (IRS) to serve a John Doe summons on Circle, including its affiliates, division, and subsidiaries cryptocurrency exchange Poloniex.

Poloniex was sold by Circle in 2019 to Tron founder Justin Sun after less than two years of acquiring it for $400 million.

The IRS believes thousands of taxpayers are not telling the government about their income from crypto transactions. As such, the agency filed a petition for an order approving the service of an IRS John Doe summons on Circle.

Now, the court has ordered and adjudged the IRS to serve a summons upon the Boston-based digital currency platform Circle Internet Financial for the financial records of its US customers who had an account at the platform or any of its predecessors and engaged in cryptocurrency transactions worth at least $20,000 between 2016 and 2020.

The financial records include account registration records, Know-Your-Customer due diligence, money laundering reports, account funding, and activity records.

The IRS told the judge that it has good reason to believe Circle customers are not reporting their tax liability from crypto income.

At this time, it hasn’t been mentioned just how many Circle customers might be subject to the John Doe summons. As per the accompanying memo, Circle is regulated as a “money services business” (MSB) with the Financial Crimes Enforcement Network (FinCEN).

As an MSB, Circle is required to maintain certain records, including transactions worth more than $3,000, the name and address of both the sender and recipient, the amount of the transaction, the date of the transaction, and other identifying information.

The memo further mentions that as of July 2019, Circle had served over 8 million customers with over $200 billion in trading volume of more than 60 types of digital assets.

The IRS had also won a similar 2017 decision on Coinbase, under which the agency sent a notification letter to over 10,000 taxpayers and asked them to file amended returns and pay back taxes.

The IRS said Coinbase notifications resulted in about $25 million in revised assessment.

Coinbase had put up a fight against the John Doe summons, but it only resulted in the IRS narrowing the scope of its demand slightly as the court sided with the government. In the Justice Department announcement of Stearns’ order, IRS Commissioner Chuck Rettig said this summons is

“a step to enable the IRS to uncover those who are failing to report their virtual currency transactions properly.”

The DoJ said the US petition does not allege that Circle is engaged in any wrongdoing.

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Author: AnTy

Contentious EIP-1559 Seeking Community Consensus as Ethereum Miner Revenue Hits an ATH

Contentious EIP-1559 Seeking Community Consensus as Ethereum Miner Revenue Hits an ATH

Ethereum fees are the talk of the town; everyone from small users to even big players feels the brunt of it.

Even some projects have fallen victim to the high fees, which are yet again on the rise. The average transaction fee in USD is back near ATH above $23; in ETH terms, it is at 0.013, and gas prices are nearing 200 Gwei again.

Last month, Ethereum miners raked in nearly $830 million in revenue, over $325 million of which was from transaction fees. In February so far, the revenue has reached $678 million, with fees accounting for more than half of it ($357 million).

And here comes Ethereum Improvement Proposal (EIP) 1559, which will bring the largest change to how the users will bid for blockspace. The proposal targets to decrease network fees by increasing block size.

First proposed in March 2019 by Ethereum co-founder Vitalik Buterin, the EIP 1559 aims to offer better UX and security while preventing economic abstraction, which is the ability to pay fees in an asset besides Ether.

As we reported, the world’s largest asset manager, Grayscale, praised the proposal, which it said may also serve as a deflationary mechanism and creating a “positive feedback loop for Ether’s price.”

While many are in support of it like F2Pool, not everyone is in favor.

Bitfly, one of the largest Ether mining pools, is one of those who are against the proposal and believes the update would put Ethereum’s future at risk. In January they said,

“We have been supporting Ethereum with its perfect imperfections since genesis and would like to encourage the developers to look into solutions that do not rely on fee burning in order to get the buy in of the miner community for EIP-1559.”

Flexpool, which is a tiny mining pool, has been against the proposal and gaining some support from other pools.

As such, a community call will be held next week to share their opinion on the update that is supposed to burn the majority of the transaction fee instead of offering it to the network miners.

The call will bring all the stakeholders together to understand the “pressing need of the proposal and address any concerns in hopes of coming to a community consensus.”

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Author: AnTy

eToro Social Trading Platform Hits A Record $600 Million In Revenue in 2020

eToro Social Trading Platform Hits A Record $600 Million In Revenue in 2020

  • eToro, the social trading platform, registered a record-breaking gross revenue of $600 million across 2020.
  • Over $1.5 trillion was traded on the platform as demand for cryptocurrencies surged in the year’s latter stages.
  • The app allows users to copy trade strategies across several assets, including cryptocurrencies, precious metals, and equities.

In an exclusive report on Finance Magnates this Tuesday, top social trading app, eToro, released its 2020 report, which shows a surging interest in cryptocurrency products on the platform. Over the past year, eToro registered a record gross revenue of $600 million as the interest in commission-free trading grows worldwide.

The social trading app started as an app that allows novice users to copy trade the strategies of experienced traders and has since added a host of other services. Speaking of the impressive revenue growth, eToro Co-founder and CEO Yoni Assia explained that the company is experiencing a rapid growth rate in the number of clients.

Over the past year, the company has experienced tremendous growth in its client base, growing over 30% in the last three-quarters of 2020 to 17 million customers. Additionally, the traders completed over $1.5 trillion in trading volumes across 2020, representing a 400% influx from 2019 records.

Crypto is Gradually Taking Over

According to a statement from Assia, the stock market remains the largest contributor to trading volumes on the platform with electric vehicles leading the charge. Tesla and Nio, a Chinese electric car company, led the rankings in trading volumes, closely followed by big tech companies such as Apple, Microsoft, and Alibaba.

However, cryptocurrencies seem to be gradually overtaking the interest in stock markets on eToro, Assia believes. This year, the company suspended its buy order functionality, citing increased demand for Bitcoin on the platform.

“2020 was a big year for stocks [but] 2021 to date has been dominated by crypto headlines,” he said. “So far this year, we have seen crypto trading volumes of more than 25X the same period of time last year.”

eToro has completed some big plays in the crypto industry in the past few months showing its commitment to growing space adoption. The firm introduced Visa-enabled crypto debit cards in the UK, launched its own stablecoin, GoodDollar, and rolled out its staking services to users.

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Author: Lujan Odera

Bitcoin Miners Busy Accumulating BTC; Revenue from Fees Surges 2300% This Year

Bitcoin Miners Busy Accumulating BTC; Revenue from Fees Surges 2300% This Year

BTC miner outflow is nowhere near the previous tops, it is actually even below the 2019 local top.

2020 has been a good year for miners given that their revenue from fees increased from $0.1 million at the beginning of the year to $1.7 million as of Dec. 20th.

The daily miner revenue increased by 31% over the past week, as miners raked in more revenue through fees amidst the strong week for bitcoin price and activity levels.

The rising prices of the digital asset pushed the average fees on the bitcoin network to past $12, a jump of more than 4,185% from the average fee of a mere 2 cents in January 2020.

Miners are also not cashing out their BTC at these prices as seen in the amount of miner unspent supply, BTC that has never left the miner address, which has been increasing since the last halving and currently stands at 1.7 million BTC. Glassnode noted,

“Despite the recent rally, Bitcoin miners are not spending more BTC than usual. The Miner Outflow Multiple, which shows when BTC miner outflow is high with respect to its historical average, is far from previous tops and even below the 2019 local top.”

BTC Miner Outflow

Source: Glassnode

Bitcoin miners’ monthly revenue has been surging since September. In the month of November, they recorded $521.69 million in both subsidy and fees, last seen in September 2019. So far, this month $443.65 million have been raked in by them in revenue.

Ever since Bitcoin halving in May, which cut down the miners’ reward in half, fees have been accounting for 8% to 12% of miners’ total revenue, up from 1% at the beginning of this year.

Interestingly, while the price of Bitcoin is currently ranging from $22k and $24k, the stocks of publicly listed BTC mining companies have been up.

In the last 24 hours, Riot Blockchain shares are up 32%, Marathon Patent Group 21.5%, and Bit Digital’s 3.8%.

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Author: AnTy