Libra Noise Cancellation: Tune Out The Poiticians, Libra Is Going To Happen

In spite of all the bluster, partners bailing, and constant congressional hearings, we’d put our money on Libra eventually being a things and Facebook getting what it wants – its own native payments system. Call it crypto, call it ‘paypal next’, call it whatever you want, but it is going to happen. It just might look, sound, and feel different than what the social media giant initially envisioned.

Via CoinTelegraph:

“Meanwhile, the furor over the controversial Libra has begun to take a more political undertone, both within and outside the United States. Arguments for and against the project now seem to include issues surrounding the trade war between the U.S. and China.”

“In Europe, China’s response to Facebook’s crypto project (the creation of yuan-pegged digital currency) and Libra itself, have sparked some commentators calling on the European Central Bank to adopt a digital currency for the EU. In some ways, it appears Libra has ignited a new currency war, one that might take place in the digital realm, with several counties floating their own central bank digital currencies (CBDCs).”

“For Libra, the regulatory hassle might constitute only part of its trouble, as the project could face stiff competition from payment giants, especially in China and other parts of Asia. Some of these payment companies are already identifying Libra as a potential competitor ahead of its launch.”

Whether it executes specifically on its initial mission, or some ‘frankenstein’ version of Libra emerges after checking itself out of the regulatory hospital – you can still bet that the powers that be at Facebook will eventually prevail. Libra will happen.

Instagram, WhatsApp, Oculus, and a number of other acquisitions (don’t forget the dummies at Snap that should’ve sold to FB); Zuckerberg always gets what he wants.

Bakkt Update: Consumer App Is Coming, Starbucks Partnership Takes Shape

The intrigue around Bakkt and the scale of their operations continues to take shape. Not only are all of the ‘levers’ in place; given that their parent company and full scale architectrue backed by ICE and its myriad commodities platforms – but the Starbucks partnership has always held significant intrigue. Today’s Medium post begins to shed some light on what that will look like.

“While users are exposed to digital assets including bitcoin, cashbacks and rewards, Bakkt highlighted their efforts in supporting “a superset of digital assets, including cryptocurrencies as seamlessly as investors transact in stocks in a retail brokerage account.” Moreover, the company also shared its vision is to provide a consumer platform for managing a digital asset portfolio, “whether they wish to store, transact, trade or transfer their assets.”

“Based on his past experiences, Mike Blandina, Bakkt’s Chief Product Officer mentioned, that by driving more integration and efficiency across digital wallets, transaction processing and payment acceptance, “there are meaningful opportunities for merchants and consumers to seamlessly interact using digital assets in ways that have not been previously considered.” To sum up Bakkt’s efforts, Blandina said that Bakkt’s focus will be on four key areas: digital asset infrastructure, marketplace access, maximizing control and establishing trust.”

Starbucks remains the largest app based payments ecosystem in the United States – boasting better than 27M users – larger than Apple pay, Samsung Pay, or Google Pay. Bakkt hitching its consumer facing strategy to Starbucks is as good a decision as we’ve seen in the crypto space; remarkable even. 

The relative ‘efficacy’ of the partnership is yet to be seen, and it should be said that the partnership with Microsoft focused on things like encryption and user funds safety may ultimately be the bigger deal. Still, the branding cache’ and headlines play really, really well.

You’d do well to never bet against Sprecher and his squad, They have a long history of winning in the financial markets. So far, even with the delays, Bakkt remains in an enviable position.

CME Bitcoin Futures Expand: Further Proof That Institutions Are Starting To ‘Get It’

When the needle begins to move it may be to late for the huddled masses to benefit from reasonable Bitcoin price levels. Global banking institutions continue to push real capital into Bitcoin and the flagship futures contracts at the CME have made that clear.

CME launched its Bitcoin futures contracts in December 2017 and since then it has attracted a ton of institutional interest towards the Bitcoin derivatives market. Each CME contract consists of 5 BTC which is settled at the end of each month. The Bitcoin futures volume on CME is also a great indication of market sentiment as investors usually go short in a bear market and start hedging long in the bull market.

Despite the price tussle in the last month, institutional investors have started to go bullish on Bitcoin again, as evident from the increasing number of investors going long on CME’s Bitcoin Futures market. Several crypto analytical firms have recently revealed that the number of investors going long on Bitcoin has started to rise again, after falling to almost zero. Currently, the long-holdings on CME have just gone above 1,100.

No longer is Bitcoin viewed as just a cypherpunk movement via’ neckbeards’ and anarchists. Those days are long gone – and have been replaced by commitments from Fidelity, CME, Bakkt (of the Intercontinental Exchange family), Microsoft and other corporate behemoths. In other words, CME volumes are just starting to catch up to the underlying architecture and dialogue. Long term, it seems higher BTC prices are ahead.

Poloniex Pursuit: Former Crypto Exchange Volume Leader Hits Reset, Circle Spins Off

Back in late 2017 Poloniex was the place to be in crypto. The hands down volume leader and alt-coin king that managed nearly 60% of stated crypto exchange trading volume. Those halcyon days are long past and Poloniex now processes less than 1% of the industry’s trading volume. One could call Circle’s $400M acquisition a disaster, but that might just be a bit too kind.

Via Poloniex’s blog today:

” We are excited to announce that we are spinning out from Circle into a new company, Polo Digital Assets, Ltd., with the backing of a major investment group. The spinout will free us to focus on the needs of global crypto traders with new features, assets and services. Our first new offer to Poloniex traders is that effective October 21, 2019, all spot trading fees will be reduced to 0% until the end of the year. Poloniex intends to continue beyond that with highly competitive and creative pricing models for traders.”

The advent of KYC and AML destroyed Poloniex’s leadership position as most users ignored the new regulatory requests and took their account, eventually, to Binance. Binance, of course, is the current leader amongst crypto exchanges when it comes to volume.

Poloniex attempt to shift back to a stand alone entitiy as well as ‘re-brand’ is interesting and worth watching. But a ‘death spiral’ is just that when it comes to exchange volume. Volume is the game when it comes to any exchange anywhere, in crypto or in traditional finance. Cut and dried. Two years go Poloniex was the unquestioned volume leader; now, they are just a footnote.

INSIDER: CFTC AND ETHEREUM: As The CFTC Requests Ethereum Comments, Insider Considers Commodity Designation A ‘Done Deal’

Previously the CFTC formally requested ‘public comment’ concerning whether or not Ethereum should be designated as a commodity or not (the ‘not’ would then throw it into the security designation and open up a whole mess of issues). Obviously, Ethereum and every coin/dapp that has been built on it has a vested interest in a commodity designation by the CFTC.

Here is the body of the request by the CFTC:

The Commodity Futures Trading Commission (“Commission” or “CFTC”) in furtherance of the LabCFTC initiative is seeking public comment and feedback on this Request for Input (“RFI”) in order to better inform the Commission’s understanding of the technology, mechanics, and markets for virtual currencies beyond Bitcoin, namely here Ether and its use on the Ethereum Network. The Commodity Exchange Act (“CEA”) grants the Commission regulatory authority over the commodity futures markets. The Commission is seeking public feedback in furtherance of oversight of these markets and regulatory policy development. The input from this request will advance the CFTC’s mission of ensuring the integrity of the derivatives markets as well as monitoring and reducing systemic risk by enhancing legal certainty in the markets. The RFI seeks to understand similarities and distinctions between certain virtual currencies, including here Ether and Bitcoin, as well as Ether-specific opportunities, challenges, and risks. The Commission welcomes all public comments on these and related issues.

Many have made the case that Ethereum is significantly more ‘centralized’ than Bitcoin and thus have serious questions about its commodity-type traits. Others believe that the breadth of the ERC-20 (at a minimum) ecosystem makes the case for its decentralization – thus making it a clear commodity.

Whatever the arguments are either way we believe, based on one conversation with a staffer at the CFTC, that the request for comment is a mere formality. Internally the decision to designate Ethereum as a commodity is all but made.

**We have two separate and reliable sources connected to the CFTC. One was willing to give us an anonymous comment, the other spoke with us but asked that the comments be left out of this article.

As per the thinking at the CFTC:

“The request for comment is seen as a reasonable procedural process to check the box before announcing the commodity designation. Chris understands the digital assets landscape really, really well and knows that there is less consensus on this than there was for Bitcoin. This step will give some background to the decision and he expects the comments to be largely in favor of a commodity designation.”

Any policy decision in the crypto space will have long-lasting and even unintended consequences. It makes sense to consider every angle and every reasonable outcome of a commodity designation for Ethereum. Several institutions are counting on the decision going in that direction.

ErisX, Bakkt, Fidelity, ETrade, TD Ameriprise, and others have plans to list/trade Ethereum based on its eventual designation as a commodity. ErisX has already announced its intentions, Bakkt initially listed Ethereum as one of its two launch tokens before they decided to wait for the formal word from the CFTC, and Goldman Sachs is preparing to offer an Ethereum based product for its upper-crust clients.

The ripple effects of this decision will resonate throughout 2019 and give context to every other token that claims to be a commodity/utility and not a security.

The CFTC and Chris Giancarlo are playing it smart.

MARK CUBAN: Bitcoin, Gold, and Bananas? Cuban Is All Over The Place On BTC

Mark Cuban is a renowned entrepreneur, Dallas Mavericks owner, TV personality, and highly sought after interview. But a crypto expert he is not. In a far ranging interview the topic of Bitcoin and crypto were raised and ‘The Cubes’ was all over the place; at times sounding like a no-coiner and others like a hodler.

“I say it’s like gold. Gold is a religion: people who are really into gold — they’ll tell you that there’s a bad depression and things go to hell in a handbasket, if you own gold then you’ll be okay. No, you won’t! You carry around a gold bar — someone’s gonna hit your ass, knock you out and steal your gold bar and it’s gonna happen again and again and again. I’d rather have bananas, I can eat bananas. Crypto… Not so much.”

Comparing Bitcoin to gold is a reasonable position and not necessarily out of the mainstream. But that isn’t where he stops.

“Did you ever see someone who collected baseball cards? And they were really, really, really proud of their baseball cards because they kept saying they were going to go up in price? Comic books — same thing, even artwork. There’s no real intrinsic value, you can’t eat a baseball card […] Your artwork might look good on the wall but not much you can do with it. Bitcoin — there’s even less you can do with it: at least I can look at my baseball card […] I can look at artwork.”

I don’t know, the high end art markets have performed pretty well over the past decade. Cuban goes on to echo one of Warren Buffet’s lamest Bitcoin takes, connecting the digital asset to being valued at ‘whatever someone will pay for it’. Which of course is the literal definition of value in a free market economy. Lulz.

“Here’s the thing about crypto, particularly Bitcoin: Bitcoin is worth what somebody will pay for it.”

But as the interview comes to a close, Cuban comes full circle and all but proves that he probably holds some Bitcoin in his portfolio.

“Look, all I am saying is to be careful what you invest in. At worst Bitcoin and other cryptocurrencies are ‘stored value’, I’m not sure what they are at their best.”

Bananas, baseball cards, artwork, gold, and yet, stored value. A crypto expert Mark Cuban is not.

Bitso Is The Belle Of The Ball: Who’s Who Of Crypto Invest In Mexico-based Exchange

Bitso is this weeks ‘it’ girl, grabbing investment dollars from Ripple, Coinbase, Jump Capital, DGC, and Pantera. A literal who’s who of investment partners that have decided there is plenty of value still to be extracted from the trading of digital assets abroad.

” As reported by crypto publication The Block, the new investment round also involves major investors including United States-based crypto exchange and wallet provider Coinbase, Jump Capital as well as existing investors such as Digital Currency Group and Pantera Capital. The amount of investment has not been disclosed.”

Even though the amount of the investment has yet to be disclosed, you can bet it isn’t a peasants wage. One of, if not the most, profitable areas of the crypto space is the exchange ecosystem. BitMex and Binance regularly book revenues in the tens of millions, if not hundreds, on a quarterly basis. The consortium of investors are betting that their capital and advice could serve to push Bitso into that same stratosphere.

According to the report, the raised funds will help Bitso expand its business to Argentina and Brazil, among other Latin American countries.

As noted by Ripple, Bitso is the largest Mexican crypto exchange that was established in 2014 with a purpose to provide financial services for both banked and unbanked with blockchain technology and digital assets. To date, the customer base of the exchange accounts for 750,000 users.

Noting that its partnership with Bitso takes roots from the company’s beginning in 2014, Ripple says that the firm plays an important role in RippleNet’s United States-Mexican corridor by providing liquidity for payments. Earlier in 2019, Ripple launched On-Demand Liquidity (ODL) capabilities with MoneyGram into Mexico, where Bitso was a key exchange partner, Ripple added.

Bitwise ETF Denied; Bitcoin ETF Strategy Adjusts, May Follow VanEck

In an expected move the SEC denied the ETF submission of Bitwise and penned a long and detailed ‘opinion paper’ that documented the decision. That decision was widely expected by experts across the crypto ecosystem, and yet developments have ensued. Most notably, Bitwise’s response to the decision.

The verdict on Bitwise’s ETF proposal had seen multiple delays prior to this week’s final decision, which the SEC had no choice but to make, according to statutory rules. The news release states:

“We deeply appreciate the SEC’s careful review. The detailed feedback they have provided in the Order provides critical context and a clear pathway for ETF applicants to continue moving forward on efforts to list a bitcoin ETF. […] We look forward to continuing to productively engage with the SEC to resolve their remaining concerns, and intend to re-file as soon as appropriate.”

Bitwise’s response denotes a path forward, but hedges with “…re-file as soon as appropriate.” That doesn’t say ‘as soon as possible’ – an important distinction.

“We’re closer than we’ve ever been before to getting a Bitcoin ETF approved,” CEO Matt Hougan told mainstream media on Oct. 7. 

Still, more than a year-long dialogue with regulators has not been for nothing, says the company, concluding:

“While we were not able to satisfy the SEC’s concerns inside the statutory 240-day review window afforded these filings, and while they have identified the need for additional data and context to interpret our key findings, we are pleased with the progress that the industry has made and believe that, with additional research and continued progress in the broader ecosystem, the remaining concerns and challenges raised in this order will ultimately be satisfied.”

In September, another ETF proposal, this time from VanEck and SolidX, was withdrawn by its sponsors. VanEck, notably decided on a wholly separate route that has seen the firm garner significant institutional interest in its Bitcoin product.

We wonder, will Bitwise choose a similar path, somewhat dodging regulators altogether, ergo; ultimately forcing their hand? Time will tell.

JP MORGAN COIN: Privacy Is Paramount; Bank Aims To Hide Transaction Details

JP Morgan seems to be listening to some of the serious discussions within the crypto community. Specifically, the issue of privacy. And while most wouldn’t associate the largest bank in the world with the idea of privacy they seem to be taking notes as to what matters most to the movement: privacy.

**before we go further let’s make one thing clear – we do. Or believe that JPM will actually build a token that finds itself outside of the reach of US and global regulators. So ‘privacy’ in this context is limited.

As per a CoinDesk post moments ago: “Revealed exclusively to CoinDesk, JPMorgan has built an extension to the Zether protocol, a fully decentralized, cryptographic protocol for confidential payments, compatible with ethereum and other smart contract platforms and designed to add a further layer of anonymity to transactions. The New York-based financial institution will open-source the extension Tuesday, and is likely to use it with Quorum, the bank’s homegrown, private version of ethereum.”

“Zether, which was built by a group of academics and financial technology researchers including Dan Boneh from Stanford University, uses zero-knowledge proofs (ZKPs), a branch of mathematics which allows one party to prove knowledge of some secret value or information without conveying any detail about that secret.”

So privacy, in this case, means the ability to conceal the transaction addresses and the amounts that are being sent and received. This is about as far as a heavily regulated organization like JP Morgan could ever get away with, and even this is probably pushing the limits.

Still, from 50,000 feet, this is an effort that pushes the crypto narrative along in earnest. JPM using crypto industry products to open source their entry into the space adds a significant level of validation – even if some in crypto aren’t interested in this type of validation.

It will be interesting to eventually see what JPM unveils and how it is used in both the institutional and retail space.

MORGAN STANLEY COPYCAT: FOLLOW FIDELITY: Morgan Stanley Is Watching Fidelity’s Digital Assets Initiative Closely, Planning Similar Offering

Morgan Stanley has seemingly been planning some sort of crypto initiative for longer than their clients can wait. According to sources at the global investment bank, clients (institutional and UHNW retail) have grown impatient with Morgan Stanley and ‘talk’ of crypto accessibility.

The sources discussed a small percentage of the client base keeps asking the firms bankers and brokers why they aren’t out in front in regards to crypto. Specifically, a straight line is being made by some as to Goldman Sach’s (it is well known in traditional finance that Morgan Stanley and Goldman Sachs are bitter rivals) consistent investments in the crypto ecosystem, BitGo and Circle, to name just a couple.

Those Goldman Sachs led investments position the firm to quickly scale up once the regulatory landscape is clear and defined. Morgan Stanley hasn’t made those any ‘in-kind’ investments that match Goldman’s and clients and brokers have been grumbling about it.

But there may be some hopes according to two sources that we spoke to at the bank. Morgan Stanley leadership is enamored with the path that Fidelity is taking and believe they can take the same path – and fashion it to be of interest to the firms largest institutional and UHNW clients.

“Are we behind? Yes. That really can’t be disputed at this point.” said our first source near the top of the communications org chart at Morgan Stanley. “But that won’t be the case once we commit to a particular strategy. We believe we are well positioned when the time is right.”

A second source closer to the broker ranks had this to say, “The word we hear is that leadership finds the Fidelity model for crypto appealing. And that could be the way it goes down here. Whatever strategy they choose, it needs to come quickly. We are getting asked about it daily. It does seem like clients that are aware of Bitcoin in particular see it as digital gold. That phrase has popped up often with UHNW clients.”

The digital gold narrative from uber-wealthy individuals and families is interesting. It means, if nothing else, that for those looking for Bitcoin information, the digital gold narrative is resonating.

“Clients that ask about crypto seem to be aware of Bakkt as well and question us as to our involvement and accessibility within their framework”, our second source described. “It is revealing what messaging seems to be making its way into these clients hands and sticking. Bakkt and digital gold seem to be moving in lock step – expect our firm (Morgan Stanley) to play along and once involved market it ($BTC) as such.”

Interesting conversations yesterday that reveal how traditional market players and dealing with the growth of Bitcoin and crypto at large. The bigger picture, that these firms have finally embraced, is that Bitcoin isn’t going away. And they are hell-bent on being there when mass investment follows an increase in awareness and adoption.