| Market Reports

The Weekly Hash – September 16-20

Check out all the important happenings this past week in the world of crypto, brought to you by the experts at Kraken.

This digest is prepared for informative purposes only and does not represent an investment recommendation or investment advice. Please see our full disclaimer at the bottom for more information.

See below all the important happenings this week in the world of crypto, presented by the experts at Kraken: 

  1. CoinDesk: Deutsche Bank Joins JPMorgan’s Crypto Payments Network
    • The Financial Times reported that JPMorgan’s blockchain-based payments initiative, the Interbank Info Network (IIN), added Deutsche Bank as its latest member and has now onboarded 320 banks
    • The bulk of the IIN member banks process USD payments, but Deutsche Bank is both Germany’s largest bank and the global leader in clearing EUR-denominated payments
    • JPMorgan Managing Director of Treasury Takis Georgakopoulos said that since IIN would have “very big natural limitations” if IIN members were only drawn from the bank’s client pool, the addition of Deutsche Bank will “help us drive towards ubiquity”
    • Ole Matthiessen, Deutsche Bank’s Global Head of Cash Management, stated that with his bank having recently cut back its investment banking business and now relying more on tx banking, joining IIN is “an important step” that would reduce Deutsche’s costs and also allows it to offer better services to clients
    • Matthiessen added that IIN’s plan to have 400 members by EOY is on track, and that other major banking members are likely to be announced very soon
  2. CoinDesk: CME’s Bitcoin Index Provider Wins First EU Crypto Benchmark License
    • CF Benchmarks, which provides the indices for CME’s BTC futures, has become the first crypto index provider to be recognized as a Benchmark Administrator by the FCA under the EU Benchmarks Regulation (BMR); as a result, financial institutions can use the company’s indices in any European financial products after the BMR takes full effect on Jan. 1st, 2020
    • CF Benchmarks CEO Sui Chung said, “Here in Europe the use of indices and provision of indices is regulated, so for all regulated firms in Europe if they use a benchmark then they have to make sure that it comes from a regulated benchmark provider”
    • Chung added that CF Benchmarks will maintain this license even if the U.K. exits the EU in the next few months, “Even in a Brexit scenario this particular piece of financial regulation has equivalency status between the U.K. and Europe”
  3. BitPay: BitPay Launches Support for Ethereum
    • BitPay will add support for ETH “very soon,” allowing merchants worldwide to accept ETH, store it in their BitPay wallets, and to allow BitPay Prepaid Visa Card holders to add ETH to their debit cards
    • Merchants like Microsoft, Newegg, Dish Networks, FanDuel and Avnet will be able to support the currency without any additional integration effort on their end, and will also be able to process cross-border txs
  4. Cointelegraph: Share of SegWit-Spending Bitcoin Transactions Now Over 50%
    • According to transactionfee.info stats, the percentage of SegWit-spending BTC txs reached an ATH of 50.5%
    • The average BTC tx fee increased by ~200% MoM in April while on-chain tx volume rose 43% during April and resulted in full blocks; meanwhile, SegWit approached 40% of the total txs per block and blocks regularly exceeded the 1MB block limit
    • Decrypt reported that if all txs were using SegWit, BTC’s limit of 2,500 txs every 10 mins (capped by its 1MB block) could theoretically be pushed up four-fold from 4 to 16 TPS
  5. Wells Fargo: Wells Fargo to Pilot Internal Settlement Service Using Distributed Ledger Technology
    • Wells Fargo will pilot a native, DLT-based internal settlement service, dubbed Wells Fargo Digital Cash, to book transfers of cross-border payments within its global network using digitized cash and allow for int’l locations to exchange digitized cash among themselves
    • The network will be a reusable enterprise utility for Wells Fargo to build and deploy multiple DLT-based applications
    • Wells Fargo’s Head of Innovation Lisa Frazier said, “As a result of the increasing digitization of banking services globally, we see a growing demand to further reduce friction regarding traditional borders, and today’s technology puts us in a strong position to do that […] We believe DLT holds promise for a variety of use cases, and we’re energized to take this significant step in applying the technology to banking in a material and scalable way. Wells Fargo Digital Cash has the potential to enable Wells Fargo to remove barriers to real-time financial interactions across multiple accounts in multiple marketplaces around the world”
    • The digital cash achieves near real-time transfers without impacting the underlying account, tx postings or reconcilement infrastructure with int’l txs (where platforms and process differ)
    • Wells Fargo locations worldwide will be able to “exchange funds in expanded operating hours without limitations from traditional posting infrastructure or differences in infrastructure across the network”
    • Final settlement will occur without an intermediary, reducing transfer time and costs, and corporate clients won’t have to change their payment processes, cash management responsibilities or relationship management practices to benefit
    • The pilot is planned for 2020 and is expected to complete USD transfers initially before expanding to multi-currency transfers and the entire global Wells Fargo branch network
    • The proprietary network won’t be connected to any other digital cash solutions emerging in the financial services markets today
  6. CoinDesk: Ex-CFTC Chair ‘Crypto Dad’ Giancarlo Joins Digital Chamber Trade Group
    • Former CFTC Chair Chris Giancarlo (aka ‘Crypto Dad’) joined the advisory board to the Chamber of Digital Commerce, a trade group focused on blockchain and crypto policy in the U.S.
    • Giancarlo stated, “The Chamber is at the epicenter of this emerging field of technology that can only be described as a movement […] I’m looking forward to joining this group of advisory board leaders, from many fields and areas of expertise, whom are already working to promote the adoption of this transformative technology. It is my hope that together we can streamline and modernize the regulatory environment and encourage further blockchain innovation”
    • Since leaving the CFTC, Giancarlo also joined the board of directors at American Financial Exchange, an electronic interbank lending system
  7. Harbor: iCap Equity Unlocks Liquidity for Over $100M in Real Estate Debt Funds Using Blockchain-Enabled Harbor Platform
    • Real estate investment firm iCap Equity is leveraging Harbor’s blockchain-enabled alternative assets platform as a private secondary marketplace to enhance liquidity in four existing real estate funds managing +$100M in assets; as a result, iCap’s 1,100+ investors and 17 SEC/FINRA registered placement agents can compliantly buy/sell iCap securities with one another
    • iCap’s CEO Chris Christensen stated, “iCap provides high-yield investment opportunities for investors, but those investments typically come with a 3 to 5 year lock-up period because they are based in real estate […] Now, with Harbor, we are able to provide the same strong returns, but also an option for investors to more easily liquidate if desired. It provides the best of both worlds, and is a game-changer for not only real estate-based investments, but the entire alternative investment industry”
    • Harbor’s CEO Josh Stein said, “iCap Equity is pioneering a more efficient and liquid model for real estate investment funds, where they can lock up capital without locking up investors […] The Harbor platform allows iCap Equity to provide a better experience for investors and placement agents and offer liquidity options with fine-grained control over access and capabilities in the marketplace. Ultimately, we believe more liquid alternative investments will allow investors to allocate more of their portfolio to higher-return private assets”
  8. Cointelegraph: Bitcoin Addresses Worth $100,000 or More Hits All-Time-High
    • Data from BitInfoCharts reveals that the number of BTC wallet addresses holding more than 10 BTC (~$100k) hit an ATH of 157,210 addresses as of Sept. 17th
    • The holdings of 140,940 addresses with 10-100 BTC are worth a total of +$46B, the 14,221 addresses with 100-1k BTC are worth +$36B, the 1,942 addresses with 1k-10k BTC are worth +$48B, and just 4 addresses hold 100k-1M BTC worth a total of +$5B; in sum, the holdings of the 157,210 addresses with more than 10 BTC are worth +$136B 
    • There are 2,118 wallets worth +$10M each and 17,273 addresses with holdings worth +$1M
    • The top 4 addresses are exchange wallet addresses, but as previously reported, the number five spot was taken by a mystery 94k BTC (~$1B) tx that occurred earlier this month
  9. CFTC: Chairman Tarbert Announces Executive Leadership Appointment
    • The CFTC is appointing Dorothy D. DeWitt, GC of Coinbase’s Business Lines and Markets, to succeed the CFTC’s former Director of the Division of Market Oversight Amir Zaidai in serving as the agency’s Director of the Division of Market Oversight 
    • At the CFTC, Dewitt will supervise derivatives platforms and swap data repositories, including the evaluation of new platform-trade products like BTC futures 
  10. Luxembourg Times: Deloitte Staff Can Pay for Lunch in Bitcoin in Test Run
    • In a test run by Deloitte’s Luxembourg unit, staff will be able to pay for lunch in BTC, though there are no plans to roll out BTC payments to clients 
    • Laurent Collet, a partner for Strategy regulatory and Corporate Finance Dept. at Deloitte Luxembourg, said, “We think it’s good to have our employees assess this new technology”
    • Deloitte rival PwC’s Luxembourg branch is set to accept BTC payments from clients beginning Oct. 1st, having collaborated with an unnamed local regulated exchange for the move
    • Link to The Block’s report
  11. Hedera Hashgraph: Decentralized Applications Go Live on Hedera Hashgraph as Mainnet Opens to Public
    • Hedera Hashgraph, a public blockchain which claims to support 10,000 TPS compared to Ethereum’s 15 and Bitcoin’s 3, launched its mainnet beta with 26 dApps for the general public
    • Hedera also offers smart contract and file services, and both are currently throttled to 10 TPS; however, the firm plans to increase speed “methodically throughout the remainder of 2019”
    • Amongst the 26 dApps to go live on Hedera are AdsDax, a decentralized ad platform that has allegedly conducted +2M txs in 10 days, Chainlink, which will provide Hedera-based applications with “reliable oracles” and connectivity to off-chain data, and Certara, a drug development consultancy service focused on providing “advanced analytics and demonstrate data provenance on health-related transactions”
    • Hedera Hashgraph Chief Scientist, Dr. Leemon Baird, said, “We welcome developers globally to build decentralized applications on our platform, and are excited to see what they will build […] With Open Access, our council members have also begun running nodes”
    • The governing council of Hedera includes blue-chip companies such as IBM, Boeing, Deutsche Telekom, Tata and Nomura, among others
    • Link to reports for CoinDesk & The Block
  12. U.S. Army Contracting Command: US Army Seeks Blockchain Experts Who Can Trace Bitcoin in Real-Time
    • The U.S. Army Contracting Command (ACC) of New Jersey issued a pre-solicitation notice for crypto investigation service providers
    • The crypto analytics solution that will be used by the U.S. Army Criminal Investigation Command (USACIDC) in criminal investigations and other missions
    • The contractor(s) must provide a cloud-based, online service – not reliant on hardware/software – that can assist law enforcement in identifying and pursuing actors using crypto for illicit purposes such as fraud, extortion and money laundering
    • The contractor(s) should provide the source of the crypto txs along with the capacity to offer multi-crypto analysis from BTC to other major cryptos; furthermore, providers will be required to offer “real-time Bitcoin and other cryptocurrency transaction tracing,” including service attribution and identification, as well as being able to identify tx patterns and interactions with other entities
  13. SEC: VanEck/SolidX Withdraw Their BTC ETF Proposal
    • Cboe BZX Exchange withdrew its VanEck/SolidX BTC ETF proposal from the SEC for the second time on Sept. 13th
    • The proposal was previously delayed twice, and the SEC’s final deadline to approve/reject the rule change was Oct. 18th; some speculate that the filing was pulled in anticipation of facing rejection from the SEC, which would’ve made it more difficult for them to file another BTC ETF proposal in the future
    • In an interview on Sept. 4th, VanEck’s Head of ETF Product Ed Lopez said the firm would continue to pursue an ETP, “We still strongly believe the marketplace and many investors would be better served to have a regulated product out there and this is just one small step towards that and right now it happens to be only available to institutions”
    • Link to CoinDesk’s report
  14. New York Federal Reserve: Fed Conducts First Repo Since 2008 Financial Crisis
    • Today the Fed conducted its first repo operation in over a decade to maintain the federal funds rate within the target range of 2% – 2.25% after overnight repo rates exploded to 10% (4x their target)
    • While the Fed didn’t reach their targeted $75B cap, it successfully completed a repo of +$53B, which was split as $41B with TSYs as collateral at a 2.1% stop out rate, $0.6B with Agencies as collateral at a 3.0% stop out rate, and $11.7B with Mortgage-backed securities as collateral at a 2.1% stop out rate
    • The Fed is expected to cut interest rates by 25bps today
    • Link to coverage by ZeroHedge & Cointelegraph
  15. Reuters: Germany Vows to Fight Any Efforts to Issue Parallel Currencies
    • German Chancellor Angela Merkel’s cabinet passed a blockchain strategy that will see the gov’t liaise closely with its European and int’l allies to prevent stablecoins from becoming alternative currencies, and propose legislation this year which would allow the introduction of blockchain-based e-bonds; the intent is to boost the digital transformation of the economy while tackling the risks stemming from new tech
    • Finance Minister Olaf Scholz said blockchain could contribute to this as it was a building block of the future Internet, “We want to be at the forefront and further strengthen Germany as a leading technology location […] At the same time, we must protect consumers and state sovereignty […] A core element of state sovereignty is the issuing of a currency, we will not leave this task to private companies”
    • Berlin will intensify its existing dialogue with the Bundesbank, Germany’s central bank, about digital central bank money to explore the current state of developments and address possible risks
  16. Fortune: Blackstone CEO Steve Schwarzman Dismisses BTC
    • Blackstone CEO, Chair and Co-Founder Stephen Schwarzmanis said he isn’t a fan of BTC and doesn’t plan to own any, “I don’t have much interest in that because it’s hard for me to understand”
    • Schwarzman believes that gov’t issued currencies are safer because they “control bad behavior” and ensure that the economy is “as insulated as it can be from excesses,” while crypto only encourages criminal activities, “The idea that you can transact without anybody knowing anything, you could have a lot of criminal behavior — dirty money, drug money — running all over the world. It only encourages that kind of activity”
    • Schwarzman admitted that he may be a “limited thinker,” and that if cryptos can solve the issue of criminal activities, then “it might be OK”
    • While Schwarzman dismissed BTC, he’s in favor of blockchain and added that Blackstone could invest in blockchain companies 
    • Link to coverage by The Block & Bitcoinist
  17. Cointelegraph: Turkey Announces Plans for National Blockchain Infrastructure
    • The Turkish gov’t plans to establish a national, open-source blockchain infrastructure to utilize DLT in public administration and to analyze use cases such as land registration, academic certificates and customs to determine potential public sector applications
    • The Ministry of Industry and Tech plans to work with Turkish regulators to create a regulatory sandbox for blockchain applications
    • The gov’ts document states, “Blockchain, which became popular with virtual currencies like Bitcoin, delivers a distributed communication infrastructure to provide trust between parties on transactions without the need for a central authority. This feature enables many different use cases that address transparency and reliability issues, from smart contracts to supply chains. Because it removes any intermediaries, blockchain technology builds new business models that will shape the future”
  18. CNBC: SEC Chair Clayton Doesn’t See BTC Trading on a Major Exchange Until it is ‘Better Regulated’
    • SEC Chair Jay Clayton said BTC needs better regulation before being listed on major traditional exchanges like NYSE or Nasdaq, “If [investors] think there’s the same rigor around that price discovery as there is on the Nasdaq or New York Stock Exchange … they are sorely mistaken […] We have to get to a place where we can be confident that trading is better regulated”
    • Earlier this month, Clayton said that while “progress is being made” on the BTC ETF, bitcoin businesses still need to address some of the SEC’s lingering concerns such as crypto custody and the threat of price manipulation on unregulated exchanges
  19. Abra: Abra Now Available at All 7-Eleven Stores in The Philippines
    • Abra partnered with ECPay to allow Abra users in the Philippines to convert fiat to BTC through any of ECPAY’s 6,000 retail outlets across the Philippines, including all 7-Eleven stores; the minimum deposit is PHP 500 ($9.59) and the daily limit is PHP 100,000 ($1,917) with a 2% tx fee
    • The partnership’s intent is to make acquiring crypto easier, “Using new digital tools that open up financial access shouldn’t be hard. And they shouldn’t be complicated. Moving cash to crypto and other digital assets should be simple and fast. That’s why we are really excited to announce our new partnership”
  20. Vice: North Korea is Building its Own Cryptocurrency
    • Alejandro Cao de Benos, the official managing North Korea’s crypto conferences and a special delegate for the nation’s Committee for Cultural Relations, said North Korea is developing its own crypto to “avoid international sanctions and circumvent the U.S.-dominated global financial system […] We are still in the very early stages in the creation of the token. Now we are in the phase of studying the goods that will give value to it”
    • The crypto won’t be a digitized North Korean Won (KPW), but instead will be “more like bitcoin or other cryptocurrencies”
  21. Cointelegraph: Ethereum Tests 25% Capacity Increase as Network Fees Hit Bitcoin Level
    • Ethereum Co-Founder Vitalik Buterin confirmed that testing is currently underway to improve network performance and reduce tx fees as a direct response to network congestion largely due to USDT’s recent move from BTC’s Omni Layer to Ethereum
    • Mining pool Bitfly tweeted, “Given the current #Ethereum network congestion we have started to test raising the block gas limit to 10M gas” (a shift to 10M gas per block would translate to a total capacity increase of 25%)
    • According to Coin Metrics, Ethereum users paid $182,899 in tx fees vs. Bitcoin’s $185,993 as of Sept. 15th
    • Data from Bitinfocharts shows that since Sept. 1st, the average ETH tx fee has increased from ~$0.11 to ~$0.39
  22. Forbes: Bitwise to SEC – 3 Reasons The World is Ready For a BTC ETF
    • Bitwise gave a presentation to SEC commissioners Robert Jackson, Hester Peirce, and Elad Roisman, explaining the three reasons why it believes the crypto market is mature enough for the first BTC ETF on a major exchange: spot market efficiency, institutional-grade custody of cryptoassets, and a growing futures market
    • Bitwise said that spot market efficiency has increased since the average deviation of BTC price on crypto exchanges has decreased since Dec. 2017
    • The firm reasoned that as hackers have proved adept at stealing BTC from exchanges, other companies and individuals, cryptoassets are increasingly custodied by large institutions
    • While Bitwise presents BTC futures trading at CME as another sign of maturity, BTC futures at Cboe were closed down in March due to a lack of interest
    • Bitwise’s Global Head of Research Matt Hougan said, “The reality is that the bitcoin market of today bears little resemblance to the crypto market of a few years ago […] The crypto market today is one dominated by firms like Jane Street and Fidelity; it’s one where regulated, institutional custodians provide world-class service and are insured by Lloyd’s of London
  23. CME: Options on Bitcoin Futures
    • Pending CFTC approval, the CME will launch options on BTC futures in 1Q2020 in response to growing interest in crypto and customer demand for tools to manage BTC exposure
    • The options contract will track to the CME CF Bitcoin Reference Rate (BRR), settle into actively traded CME BTC futures, offer BTC traders potential to save on margins through margin offsets, mitigate risk of counterparty default through central clearing, and expand choices for managing risk and building strategies
    • CME Global Head of Equity Index & Alternative Investment Products Tim McCourt said the move aims to provide clients with “additional tools for precision hedging and trading […] Based on increasing client demand and robust growth in our Bitcoin futures markets, we believe the launch of options will provide our clients with additional flexibility to trade and hedge their bitcoin price risk. These new products are designed to help institutions and professional traders to manage spot market bitcoin exposure, as well as hedge Bitcoin futures positions in a regulated exchange environment”
    • Since the 2017 launch, the CME has seen 20 “successful” futures expiration settlements, with +3,300 individual accounts trading the contracts and ~7,000 CME BTC futures traded on average each day
  24. Fortune: Ripple Asks to Toss Lawsuit Over Crypto Securities
    • Ripple filed a motion to dismiss all seven claims in an XRP class action lawsuit that seeks unspecified damages and a declaration that XRP is a security 
    • Most of Ripple’s arguments involve technical issues related to this specific plaintiff, while it just briefly touches on the legal classification of XRP, stating federal regulators have concluded that it is a currency and a commodity rather than a security
    • Ripple contended that the plaintiff can’t rely on California consumer laws in light of overriding federal securities rules, adding that the plaintiff filed the case too late and bought XRP from a secondary market rather than Ripple directly 
    • While some investors characterized Ripple’s initial sale of XRP as “ongoing” and “never-ending,” the company points to the investors’ own complaint to note that its first XRP sale took place in 2013, thus, falling outside the 3yr window (firms are protected from lawsuits related to the sale of unregistered securities once 3yrs has passed)
    • Link to Compound Finance GC Jake Chervinsky’s twitter thread on the motion
  25. The Block: Congresswoman Maxine Waters’ Committee Holding a Crypto Hearing With SEC Next Week
    • The U.S. House FSC will hold a hearing, dubbed “Oversight of the Securities and Exchange Commission: Wall Street’s Cop on the Beat,” with SEC Chair Jay Clayton and Commissioners Robert Jackson, Elad Roisman, Allison Lee and Hester Pierce, on Sept. 24th to discuss topics such as crypto, private markets vs. public markets, enforcement, and fiduciary
    • While the memo doesn’t specify which areas the committee will focus on in the crypto space, it could discuss regulations such as the application of securities laws to crypto, “The Federal securities laws apply to securities, including stocks, bonds, and investment contracts, regardless of whether they are digital […] The Libra Investment Token could amount to a security since it is intended to be sold to investors to fund startup costs and would provide them with dividends. The Libra token itself may also be a security, but Facebook does not intend to pay dividends and it is unclear if investors would have a ‘reasonable expectation of profits.’ However, the offer of Libra could be integrated into the offering of the Libra Investment Token, thereby deeming both securities […] Like ETFs, Libra would be redeemable by certain authorized resellers and bought and sold in the open market”


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