Cryptocurrencies Are A “Pure Trading Instrument,” says CEO of World’s Largest Hedge Fund

Cryptocurrencies Are A “Pure Trading Instrument,” says CEO of World’s Largest Hedge Fund

Luke Ellis, the CEO of Man Group, says cryptocurrencies have “no inherent worth whatsoever” and compared them to tulip bulbs mania but added that it’s suitable for trading.

“If you look at cryptocurrencies as a whole, it is a pure trading instrument. It has no inherent value. It’s a tulip bulb,” said Ellis, whose largest publicly listed hedge fund manages $127 billion in assets (AUM) as of March 31.

The London-based hedge fund manager uses quantitative models to make profits off of trends in markets, and crypto is one of them.

Ellis said cryptocurrencies were one of about 800 markets plus thousand of stocks and credits that they operate in. He said,

“We like to be long and short depending on what the models say is likely to happen in the market, and we will trade it in the long and short term with the same happiness and in as large a size as the market liquidity allows you to trade.”

“We trade S&P futures to sushi rice futures.”

But just because the hedge fund trades crypto doesn’t mean they are an asset management product in which they “offer value.” Crypto assets, he maintained, are “things to trade because they go up and down a lot.”

Like many people from traditional finance, Ellis is still in the phase of preferring blockchain technology, which he believes has potential, then cryptos that can be of “infinite numbers” because anyone can launch one any day.

While Ellis has his concerns and doubts about cryptocurrencies’ value, he understands what’s driving investors towards them. He said,

“The thing that worries customers the most is inflation.”

“I think we will stay in a world of very low rates until central banks lose control, and when they lose control, it will not be fun.”

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Author: AnTy

Binance and FTX Cut Down Leverage to Just 20x from Over 100x

The average leverage used on FTX is about 2x, says CEO Sam Bankman-Fried, while CZ says this move has been in the interest of Consumer Protection.

“Today, we’re removing high leverage from FTX. The greatest allowable will be 20x,” down from 101x, announced Sam Bankman-Fried, the CEO and founder of cryptocurrency derivatives platform FTX over the weekend. Ceteris Paribus commented,

“No-brainer considering FTX users don’t seem to be ultra degens and puts them on better standing with regulators. IMO the argument about high leverage isn’t even if it’s right or wrong, regulators will not allow it in the long-run. may as well front-run it.”

Just last week, FTX had announced that it had raised $900 million, with a valuation of $18 billion, from many big names, including Coinbase ventures and to whom buying financial giants like Goldman Sachs or CME is “not out of the question” either.

The decision to reduce leverage has come as the crypto market experiences a strong bounce off of lows.

Binance, which has exited its investment in FTX, has also joined in. CEO Changpeng Zhao said on Twitter that they have already started limiting new users to a maximum of 20x leverage a week ago. Previously, it offered a maximum of 125 times leverage.

“In the interest of Consumer Protection, we will apply this to existing users progressively over the next few weeks.”

Meanwhile, several hedge funds have curbed their trading on Binance amidst a growing regulatory crackdown on it, the Financial Times reported.

An Effective Margin System

“After lots of back and forth, we’re going to be the ones to take the first step here: a step in the direction the industry is headed and has been headed for a while,” said Bankman-Fried as he explained in one of his famous Twitter threads.

While some are not happy with this cut-down, especially as the market seems to be getting back in the bull mode, others praised this move, noting that extremely high leverage doesn’t turn out to be positive in the long term. Not to mention, crypto is inherently highly volatile and sees big moves regularly.

“A great move,” said Austerity Sucks, adding, above 20x is “just marketing, and is associated w/shadiness now (“100x group”) there’s no real strategic benefit to such high leverage (except maybe spreads), and can legit hurt retail.”

In the Twitter thread, Bankman-Fried further shared his reasoning behind the same, noting that their product and margin system “tend to attract sophisticated users,” and liquidation on FTX normal orders happens without any extra loss.

He further shared that, much like every other exchange, on FTX as well, liquidations are “a tiny fraction” (less than 1%) of volume and positions. And while “many users have expressed that they like having the option, very few use it,” added Bankman-Fried.

According to him, the average leverage used on FTX is about 2x, and high leverage is not an essential part of the crypto ecosystem.

“An effective margin system is integral to an efficient economic system,” said Bankman-Fried.

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Author: AnTy

$9.5T BlackRock CEO says, Investors May Not Come to Them for Crypto, Not That “Type of Demand”

$9.5T BlackRock CEO says, Investors May Not Come to Them for Crypto, Not That “Type of Demand”

This could be why Larry Fink didn’t take a single question about crypto in the past two weeks while on his business travels but for the US stock market, he believes “the trend line is still going to be upward,” due to “the amount of cash that is looking to be put to work.”

BlackRock CEO Larry Fink said he does not see much demand for crypto assets.

In an interview with CNBC Squawk Box published Wednesday, Fink said while he has been asked about Bitcoin and cryptos, in the past two weeks of his business travel, not a single question has been asked about digital assets.

“That is not part of the focus on retirement and long-term investors,” he said, adding, “We see very little in terms of investor demand on those types of things.”

While acknowledging that that kind of demand may not come to the asset manager, he said retirement funds are more interested in their portfolio over the long term. Fink said,

“Quite frankly, they may not come to BlackRock for that type of demand, but I would say for all the pension funds and insurance companies, for all that RIAs that we are talking to for their clients on behalf of their retirements, the dialogue is about how should I navigate my portfolio and how should I think about my portfolio over the long horizon.”

Previously, the CEO of the world’s largest manager said the leading cryptocurrency “had caught the attention and the imagination of many people” who are “fascinated” by it but noted that it hadn’t proven its long-term viability.

Just back in April, he said, Bitcoin can become a “great asset class.”

At the time as well, he said, “We make money on it, but I’m not here to tell you that we’re seeing broad-based interest by institutions worldwide,” adding that institutions may be “talking to somebody else.”

Upwards Trajectory

The asset management firm reported an adjusted quarterly profit of $10.03 per share during the quarter, beating the estimate, and had its assets under management surging to a record $9.49 trillion.

Still, BlackRock today fell 1.4% in premarket action.

Meanwhile, in his interview with CNBC, Fink said the long-term trend remains strong while talking about the US stock market. But, of course, he’s “not” saying that it’s going to be a straight-line upward. He added,

“But overall, with the amount of fiscal stimulus and monetary stimulus, and more importantly with the amount of cash that is looking to be put to work, I believe the trend line is still going to be upward.”

This, combined with low or negative rates is why, “Asset owners are the biggest beneficiaries of monetary policy,” he said.

As for meme stocks, Fink is hoping for improved financial literacy so that instead of only focusing on speculating, more people are investing in the long run — “I look at this as a possibly good first step,” he said.

However, he does not believe that inflation will be transitory as the Federal Reserve has been emphasizing; rather, it will be “more systematical.” Fink said,

“I believe it is a fundamental, foundational change in how we navigate economic policy…now we are saying jobs are more important than consumerism.”

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Author: AnTy

There’s “More Interest in Ether,” says Fidelity Digital Assets President

There’s “More Interest in Ether,” says Fidelity Digital Assets President

And they “want to be ahead of that demand,” something also recognized by SkyBridge Capital which has rotated its Bitcoin profits into Ether. Client type is also expanding from hedge funds and family offices previously to now cover retirement advisers and corporations.

Fidelity Digital Assets is looking to increase its staff by about 70% as demand for cryptocurrency services from institutional investors continues to be strong.

FDA is a unit of Boston-based asset manager giant Fidelity Investments Inc.

The company plans to add about 100 new employees in technology and operations in Dublin, Boston, and Salt Lake City, said Tom Jessop, president of Fidelity Digital Assets, in an interview.

This increased headcount will help the business develop new products and further expand into the crypto sector besides Bitcoin, he said.

Last year “was a real breakthrough year for the space, given the interest in Bitcoin that accelerated when the pandemic started,” said Jessop adding.

“We’ve seen more interest in Ether, so we want to be ahead of that demand.”

Besides Fidelity Digital Assets, as we reported, a big bitcoin proponent, SkyBridge Capital, has also ventured into the second-largest cryptocurrency.

The company trimmed its position in BTC to keep it from growing further and rotated “a small amount of the capital into Ethereum,” revealed Co-Chief Investment Officer​ Troy Gayeski in an interview.

Gayeski defined Bitcoin as the market leader in terms of store value and Ethereum as the market leader in terms of transaction use.

Institutional investor demand for Bitcoin, Ether, and other crypto-assets is only rising, said Fidelity Digital Assets’ President.

He further noted that while previously their clients tended to be hedge funds and family offices, they have now expanded to retirement advisers and corporations who want to hold crypto as an asset class.

“Bitcoin has been the entry for a lot of institutions,” Jessop said. “It’s now really opening up a window on what else is going on in the space.” A big shift is in “the diversity of interest” from new and existing customers, he said.

The company is also pushing to offer trading throughout the week, as is the norm in the cryptocurrency industry, unlike the traditional market.

“We want to be at a place where it’s full-time for most of the week.”

Besides trading and holding Bitcoin, Fidelity Digital also allows its institutional customers to use the crypto asset as collateral against cash loans through its partnership with BlockFi.

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Author: AnTy

Japan’s SBI Holdings Says XRP Ledger Can Be Used To Build NFT Markets

Japan’s SBI Holdings Says XRP Ledger Can Be Used To Build NFT Markets

Japanese financial group, SBI Holdings believes the XRP token and XRP Ledger can be used alongside non-fungible tokens (NFTs).

Tokenization Could Be An Opportunity For XRP Ledger

In a new report titled “Current Management Information Briefing,” SBI listed reasons why it thinks XRP could be great for NFTs. The group argues that XRP has extremely low transaction fees and is an asset that settles transactions instantly. The company stated,

“The blockchain XRP Ledger has the ability to tokenize not only XRP but also a variety of other assets and has extremely low transaction fees that can be settled instantly with a very low environmental impact because it does not use mining and has decentralized trading capabilities.”

Citing a blog post on Ripple’s website dubbed “Building a More Sustainable, Scalable, and Accessible Future for NFTs with XRPL”, SBI said NFTs can be issued on the XRP Ledger.

The firm added that XRP community members have already proposed a model for NFTs showing that Ripple is thinking in that direction. The model will be formally adopted upon review and voting by the XRP community, SBI disclosed.

NFTs are digital assets that are established as unique contracts on a blockchain to indicate the true owner of a digital product.

The company’s Fintech arm subsidiary, SBI Remit announced plans to collaborate with the bank to build a RippleNet-based international remittance platform.

This partnership would SBI Remit which already uses RippleNet to join hands with Hamamatsu Iwata Credit Bank to create a RippleNet-based international remittance platform.

RippleNet is aimed at tackling the high demands of rapid, low-cost payments while changing the landscape of cross-border international payments.

RippleNet has a host of banks and money services businesses on its network that use its solutions to provide a frictionless experience to send money globally.

Ripple’s Focus On Expanding RippleNet

Ripple is continuing its plan on expanding the RippleNet network. SBI Ripple Asia, the joint venture between SBI Holdings and Ripple, is part of Ripple’s efforts in extending RippleNet’s use.

In May, the joint venture introduced Cambodia’s first international remittance service using blockchain rails. The partnership is aimed at delivering the money-transfer service between Cambodia and other countries using RippleNet.

Ripple is also broadening RippleNet in Europe. The firm just hired a Managing Director to head its European operations.

The new managing director Sendi Young would oversee strategy and champion the expansion of the RippleNet technology.

Ripple has previously described the European market as a critical one for the company. The company has experienced high transactions and customer growth in the region. In addition, a quarter of its customers currently are based in Europe.

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Author: Jimmy Aki

“More Rigid Policies Are Yet To Come,” Says Chinese Media While Beijing Subway Runs e-CNY Test

“More Rigid Policies Are Yet To Come,” Says Chinese Media While Beijing Subway Runs e-CNY Test

The Chinese media group Caixin Global published an editorial this week with the title, “It’s Time to Declare War on Cryptocurrency.”

The editorial talks about how no other country than China has been more determined to “put an end to speculative trading of digital currencies” as the People’s Bank of China (PBOC) instructed several financial institutions and payment services to stop providing crypto-related services.

The latest development in China cracking down on crypto mining and derivatives trading has more than 10,000 mining machines stopped in Yunnan.

The Bitcoin hash rate has already fallen quite drastically, sending the block time to 2010 levels representing the shutdown of Chinese miners. And these miners have already either moved or are in the process of moving overseas.

40% of the miners actually want to move outside China while 45% of the miners choose to continue mining and wait in China, and 14% of the miners have chosen to sell machines, as per Chinese publication Wu Blockchain’s survey of 409 crypto miners.

Amidst this crackdown, on Tuesday, Beijing Subway has launched a test of DCEP / e-CNY payment where users can scan their payment QR code for entry and exit.

Those who have activated ICBC’s digital RMB service can participate in the swipe and ride test via the Yilutongxing app, Beijing municipal travel app, within the 24 operating lines of Beijing Subway and 4 suburban railways.

This experiment will further extend to Beijing Subway and be used in multiple scenarios, including ticket sales and at gates.

It Ain’t Over!

According to Caixin’s article, the latest regulatory measures are the result of policymakers’ ever-growing understanding of the emerging risks associated with crypto and the country’s needs to better manage financial risks and to transition to a low-carbon economy.

“This is an unmistakable signal that more rigid policies are yet to come,” it said.

While the piece acknowledges that every time a cryptocurrency comes under regulatory pressure, “it always comes back even stronger than before,” it goes on to state that the Chinese government is serious this time, and speculators are advised to give up or risk going broke.

Overall, it is pretty clear that “cryptocurrency mania is fundamentally destructive,” and it should be “stamped out at all levels like doctors working to eradicate a virus.”

According to trader and economist Alex Kruger, “it clearly ain’t over, likely more actions to come, but do think the worst is priced in.”

Besides Caixin Global, Global Times also published a piece this week that states Bitcoin will only live underground and that virtual currencies are considered illegal currencies and illegal investment products.

Bitcoin was actually defined as a virtual commodity by the Central Bank of China in 2013. A few months ago, Li Bo, the deputy governor of PBOC, said Bitcoin should be used as investment tools or alternative investments.

This week, IMF President Kristalina Georgieva proposed to appoint Li Bo as vice president, effective August 23, 2021.

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Author: AnTy

Coinbase’s Goal is to List ‘Every’ Crypto Asset, says CEO Brian Armstrong

Coinbase’s Goal is to List ‘Every’ Crypto Asset, says CEO Brian Armstrong

The biggest cryptocurrency exchange in the US, Coinbase co-founder and chief executive officer Brian Armstrong took to Twitter on Monday to remind the crypto community just how it lists assets.

“Our goal is to list *every* asset where it is legal to do so,” he said.

Besides following the listing standards in terms of legality and safety, Armstrong said, the firm doesn’t have an opinion on the value of each asset.

“We are asset agnostic, because we believe in free markets and that consumers should have choice in the cryptoeconomy. This is how we’ll have the most innovation.”

Over time, Coinbase will provide tools to give customers ratings and reviews of assets to make more informed decisions. However, Armstrong said, listing on Coinbase shouldn’t be taken as an endorsement of that asset.

Coinbase has started to list more and more cryptocurrencies to its exchange recently, and the exchange has been focused on adding more assets, with CFO Alesia Haas saying last month,

“We’re making big investments to improve the speed of our asset addition.”

Armstrong also shared late on Monday that they are working to keep up with the “incredible amount of assets being issued” and interacting with the asset issuers who are “building the future of this industry.”

For this, Coinbase will be increasing its staff to engage with all asset issuers in a timely manner through its AssetHub, where it encourages crypto projects to list their assets across Coinbase projects and promote them to over 56 million customers, as previously done by Algorand (ALGO), Polkadot (DOT), Dogecoin (DOGE), Cosmos (ATOM), and Compound (COMP).

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Author: AnTy

Key Fed Official Bullish on Stablecoins, Says it May Support Dollar’s Role in the Global Economy

Key Fed Official Is Bullish on Stablecoins, Says it May Support Dollar’s Role in the Global Economy

Fed’s vice chair for supervision, Randal Quarles, calls for taking “strong account of the potential benefits of stablecoins” while being skeptical about a CBDC, arguing potential benefits of a digital dollar are unclear and can pose considerable risks.

Randal Quarles, the Federal Reserve’s vice chair for supervision, gave a speech on digital money that reflects his bullish views on stablecoins, provided they can be regulated properly while being skeptical about the need for a central bank digital currency (CBDC).

“Stablecoins are an important development that raise difficult questions,” including how their widespread adoption would affect monetary policy or financial stability, commercial banking system, and if they represent a fundamental threat to the government’s role in money creation.

“In my judgment, we do not need to fear stablecoins,” said Quarles at the 113th Annual Utah Bankers Association Convention, Sun Valley, Idaho.

He noted that the central bank has traditionally supported responsible private-sector innovation, and consistent with this tradition,

“we must take strong account of the potential benefits of stablecoins, including the possibility that a U.S. dollar stablecoin might support the role of the dollar in the global economy.”

As for the concern that stablecoins challenge our monetary sovereignty, it is “puzzling” because our existing system depends on private firms creating money every day, he said.

However, there is appropriately a strong regulatory interest in how these fiat-based cryptos are constructed and managed, he added.

The stability risk could arise if the stablecoin is invested in multiple currency denominations, is a fractional rather than full reserve, the pool is invested in illiquid instruments, and the holders don’t have a clear claim on the underlying asset.

“When our concerns have been addressed, we should be saying yes to these products, rather than straining to find ways to say no,” said Quarles.

As for crypto assets like Bitcoin, according to Quarles, they seek to create value in the coin through other means like intrinsic mechanisms to ensure scarcity or anonymity and do not play a significant role in today’s payments or monetary system.

As per him, unlike gold, which has industrial uses and aesthetic attributes, bitcoin’s principal additional attractions are its novelty and its anonymity, and while anonymity will make it the target for increasingly comprehensive scrutiny from law enforcement, the novelty is a rapidly wasting asset.

“Bitcoin and its ilk will, accordingly, almost certainly remain a risky and speculative investment rather than a revolutionary means of payment, and they are therefore highly unlikely to affect the role of the U.S. dollar,” said Quarles.

Besides stablecoins and crypto-assets not being a threat to the financial system and as such do not require a response with a CBDC, Quarles said already the general public transact mostly in digital dollars.

Also, the Fed and private-sector interbank payment services already offer an array of options that facilitate efficient, electronic US dollar payments.

Overall, the US dollar payment system is “very good, and it is getting better,” and the potential benefits of a CBDC are unclear, and it could pose considerable risks, he concluded.

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Author: AnTy

Mexico’s 3rd Richest Man Bashes Fiat as “Fraud,” says BTC Should Be in Every Investor’s Portfolio

Mexico’s 3rd Richest Man Bashes Fiat as “Fraud,” says Bitcoin Should be in Every Investor’s Portfolio

Ricardo Salinas Pliego says he is working on making his bank the first in Mexico to accept Bitcoin, which he called “the new gold.”

Mexican billionaire Ricardo Salinas Pliego said his bank is on the way to start accepting Bitcoin.

“Sure, I recommend the use of Bitcoin, and me and my bank are working to be the first bank in Mexico to accept Bitcoin,” Mexico’s third-richest man and owner of Banco Azteca said in a tweet in response to Michael Saylor, the billionaire founder and CEO of Microstrategy.

Saylor quoted a video in which Salinas said Bitcoin should be part of every investor’s portfolio and bashed fiat currencies, calling them “fraud” and “stinky.”

Salinas shared that he has been studying cryptocurrencies a lot and found that it’s an asset that has international value and trades with enormous liquidity at a global level, and that is enough reason for it to be part of every portfolio.

According to him, the finite supply of Bitcoin, 21 million, is the “key” part, and that’s why he doesn’t believe anything that Ethereum does because it doesn’t have a finite supply.

“For all I know, they emit more, and your asset depreciates.”

Talking about the fiat being a fraud, Salinas explained how when he started in 1981, the Mexican peso was 20:1 against USD, and today it is at 20,000:1, and the situation is even worse in Argentina, Venezuela, and Zimbabwe.

He said fraud is inherent in the fiat system, pointing to the US where the monetary emission went to the moon, and the dollar as hard money is a joke.

When asked what he would take — gold, silver, Bolivars, Argentine pesos, and Mexican pesos, Salinas wasn’t interested in any of it, but he said,

“I would take Bitcoin.”

Last year, Salinas said that he holds 10% of his liquid portfolio invested in the cryptocurrency. The Mexican tycoon’s fortune has risen $2.8 billion this year to $15.8 billion, according to the Bloomberg Billionaires Index.

In response to MicroStrategy’s Saylor saying, “If you are hoping to preserve your wealth for a generation, Ricardo Salinas suggests you invest in bitcoin. The strategy is simple – choose the highest quality asset you can find and hodl,” Salinas said,

“Bitcoin is the new gold.”

The cryptocurrency is much more portable and so much easier to transport than having gold bars in your pockets, he added.

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Author: AnTy

UK’s Financial Regulator’s Notice has ‘No Direct Impact’ on Binance, says Exchange after FCA Ban

UK’s Financial Regulator’s Notice has ‘No Direct Impact’ on Binance, says Exchange after FCA Ban

The leading cryptocurrency exchange, Binance, said that they are aware of the recent report about a notice sent by the UK’s financial regulator in relation to Binance Markets Limited (BLM) that ruled that the firm cannot conduct any “regulated activity” in the UK.

“The FCA UK notice has no direct impact on the services provided on Binance.com. Our relationship with our users has not changed,” clarified Binance.

According to the exchange, BML, acquired by the Binance Group in May 2020, is a separate legal entity and does not offer any products or services via the Binance.com website.

Binance hasn’t launched its UK business or used its FCA regulatory permissions yet, said the exchange.

“We take a collaborative approach in working with regulators and we take our compliance obligations very seriously. We are actively keeping abreast of changing policies, rules and laws in this new space.”

Over the weakened, as we reported, Binance gave its Ontario, Canada-based users six months to exit their positions and leave after the Ontario Securities Commission (OSC) accused it and several other crypto trading platforms of failing to comply with provincial regulations.

Last week, Japan’s Financial Services Agency (FSA) also warned Binance for the second time in three years that it is operating in the country without permission.

Now, the Financial Conduct Authority (FCA) has ruled that they can’t operate in the UK while issuing a consumer warning, advising people to be wary of adverts promising high returns on crypto asset investments.

The FCA said that BML is not currently permitted to undertake any regulated activities without the prior written consent of the FCA and has until Wednesday, June 30, to comply with the ruling.

The exchange must also clarify its website, social media channels, and other communications that it is no longer permitted to operate in the UK.

Moreover, no entity in the Binance Group holds any form of authorization, registration, or license to conduct a regulated activity in the UK, said the regulator. Binance Markets won’t be able to resume its UK operations without prior written consent.

While people in the UK are not allowed to use Binance’s services to speculate, they can still use the website to purchase and sell cryptocurrencies, analyst Colin Stone told BBC.

“A significantly high number of cryptoasset businesses are not meeting the required standards under the money laundering regulations, which has resulted in an unprecedented number of businesses withdrawing their applications,” an FCA spokesperson said. More than 90% of the firms assessed have withdrawn applications following the FCA’s intervention.

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Author: AnTy