| Market Reports

The Weekly Hash – September 9-13

Check out the latest news and updates 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: Stellar to Airdrop 2 Billion XLM Crypto Tokens Worth $120 Million
    • The Stellar Development Foundation and messaging service Keybase announced a 2B XLM airdrop ($120M), the largest in Stellar’s 5yr history, that will be disseminated in monthly increments of 100 XLM (~$6M) to Keybase’s +300k active users over the next 20 months, “All you have to do is have an authenticated Keybase account, and your XLM will appear in your wallet – automatically, every month, for as long as the airdrop continues”
    • Three months of airdrops are guaranteed, with the program’s continuation beyond that dependent on hitting “basic success metrics”
    • Stellar Development Foundation CEO Denelle Dixon said Keybase is a key part of its larger adoption strategy, “The foundation’s mandate is to deliver lumens [XLM] into the world. This is part of that plan. The up to 2 billion is a really great way. And we will have checks along the way”
    • Dixon said the move is an investment not only in Keybase users but the kind of projects the company says upholds its vision, “The number seems much more rational when looked at over a 20-month period […] It demonstrates that we think this is a valuable opportunity for users of Keybase to get to know us. They aren’t crypto-first”
    • Keybase is adding on- and off-ramps and XLM-based payment functionality across the web in the coming months, among other features
    • Keybase is taking a different approach than other messaging apps ramping up their crypto efforts (e.g., Facebook and Telegram) as it’s working with an existing crypto instead of developing one in house, “Keybase believes Stellar can fulfill bitcoin’s original goal of fast, cheap, worldwide payments”
  2. Chosun: LG to launch blockchain smartphones in response to Samsung
    • South Korean electronics giant LG plans to launch a line of blockchain-friendly smartphones to rival Samsung’s new Klatyn blockchain smartphone, “LG is likely to respond to Samsung’s innovation initiative” 
    • An industry insider said the company has already held discussions with local dApp devs and had worked out a use case for its future product
    • Link to The Block’s & Cointelegraph’s report
  3. The Block Genesis (Quick Take): Lightning Network is becoming more distributed but a single entity still holds 61% of the network’s capacity
    • In the +1.5 years that LN has been live on BTC mainnet, a total of 32,200 channels have been opened, 4,800 nodes have active channels and the total capacity is now $8.6M 
    • The number of channels, the average number of channels per node, and LN’s capacity has, however, decline -20% in the past 4 months
    • The largest single entity, LNBIG.com, holds 61% of LN’s capacity but the concentration of capacity amongst the top 10 nodes has been decreasing
    • In June 2018, 10 of the largest LN nodes had 53% of the network’s capacity, in January they had 38%, and now they have  ~32%
    • The first LN implementation developed by Lightning Labs launched in beta 1.5yrs ago in March 2018
  4. CNBC: SEC Chairman Jay Clayton speaks at the Economic Club of New York
    • SEC Chair Jay Clayton had prepared remarks for the Economic Roundtable in New York on Sept. 9th
    • Regarding the SEC’s progress in making a decision on BTC ETF’s, Clayton’s comments indicated that they are seeing progress along their concerns on custody and secure custody of the asset, and that they remain significantly concerned about the trading aspect of BTC, particularly the lack of securities exchange-style protections and enforced rules that ensure pricing is fair and orderly
  5. Cointelegraph: Bitmain Launches Two New S17 Bitcoin ASIC Miners
    • Bitmain announced two new S17 miners, the S17e and the T17e, that will feature improvements that should translate to higher efficiency, more stable operation and greater longevity (e.g., both models feature a dual tube heat dissipation system, enhancing the longevity of the hardware and its stability)
    • The S17e has a hash rate of 64 TH/s and operates with a power efficiency of 45 J/TH, while the T17e offers a hash rate of 53 TH/s and a power efficiency of 55 J/TH
    • Bitmain claims that the software embedded into the two new ASICs has higher cybersecurity standards to prevent malicious attacks
    • The S17e and T17e will be released in three batches: the first batch will be available for sale on Sept. 9th and is expected to be delivered in the first 10 days of November, the second batch will be sold on Sept. 10th and will be delivered in the period starting on Nov. 11th and ending on Nov. 20th,  and the third batch will be sold on Sept. 11th with its delivery scheduled for the period starting on Nov. 21th and ending on Nov. 30th
  6. Defix: NASDAQ Lists DEFX a New Decentralized Finance Index For Blockchain Markets
    • Nasdaq added a new index, dubbed Defix, that aims to offer investors and traders a means to track “popular” DeFi-focused blockchain tokens, including MakerDao, Augur, Gnosis, Numerai, 0x and Amoveo
    • Defix, which was launched by the London-based Exante brokerage, is listed by NASDAQ under the ticker DEFX and can be tracked on TradingView and Google, with a listing on Yahoo Finance planned in the future
    • Exante plans to launch a fund based on the Defix index this autumn, and will be offered through a “secure, financially accredited agency”
    • Link to CoinDesk’s report
  7. Cointelegraph: Decentralized Brave Browser Tops Chrome in Google Play Rankings in Japan
    • According to a Reddit post on Sept. 8th, Google Play ranking data (determined by how well apps perform against several key metrics such as crash rates, app-not-responding rates, excessive WiFi, location or processing in the background) shows that Brave has overtaken its rival browsers such as Firefox, Opera and Chrome in Japan for the first time
    • The Google Play ranking data from Sept. 10th shows that Brave sits at number 11 on the list, while its closest competitor Firefox occupies 14th place
    • Per a screenshot from Sept. 8th in the Reddit post, Brave was downloaded 2M times last month, while Firefox only saw 553k downloads
  8. Reuters: Swiss-based Libra will have to meet tough U.S. standards – U.S. Treasury
    • U.S. Treasury Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker said any crypto project, including Facebook’s Geneva-based Libra, operating in all or substantial parts of the U.S. will clearly have to satisfy U.S. regulatory standards, “Whether it’s bitcoin, Ethereum, Libra, our message is the same to all of these companies: anti-money laundering and combating the financing of terrorism has to be built into your design from the get-go”
    • The Treasury official will meet with FINMA today to discuss not only the application of proper AML measures but also to prioritize taking enforcement actions against companies flouting those rules
    • She added, “Switzerland, like a number of other countries, has promoted itself as a hub for fintech and for innovation, and so of course any country that promotes itself in that way — in my view, it’s incumbent upon that country to take these particular concerns at the highest level in(to) the utmost regard” 
  9. VanEck: VanEck/SolidX New BTC Trust Assets Total $41.4k in First Week
    • In its first week since launch, VanEck/SolidX’s BTC Trust 144A Shares total net assets are just 4 BTC (~$41.4k) 
    • The product, which VanEck describes as being akin to an ETF, caters strictly to “qualified institutional buyers” (QIBs)
    • Link to Cointelegraph’s report
  10. FINMA: FINMA publishes ‘stable coin’ guidelines
    • The Swiss FINMA issued a supplement to its ICO guidelines that classifies stablecoins under the existing approach of blockchain-based tokens, and stated that rules for stablecoins may differ depending on which assets they are backed by (e.g., currencies, commodities, real estate or securities), “The concrete design of ‘stable coins’ can vary greatly in legal, technical, functional and economic terms. Therefore, no fully generic classification is possible […] Money laundering, securities trading, banking, fund management and financial infrastructure regulation can all be of relevance”
    • For Facebook’s Libra, the services planned by the project would “clearly go beyond those of a pure payment system and therefore be subject to […] additional requirements”
  11. Libra: Libra Association Pursues Payment System License Under FINMA Lead Supervision
    • Libra’s Head of Policy and Communications Dante Disparte announced that the Libra Association is seeking a payment system license and requested a ruling to clarify its regulatory status from the Swiss FINMA, “We are engaging in constructive dialogue with FINMA and are encouraged to see a feasible pathway for an open-source blockchain network to become a regulated, low-friction, high-security payment system”
    • FINMA confirmed receipt of said inquiry, saying that the way Libra project is currently envisaged would require a payment system license from FINMA on the basis of the Financial Market Infrastructure Act (FMIA)
  12. Mastercard & R3: Mastercard and R3 Partner to Develop New Blockchain-Powered Cross-Border Payments Solution
    • Mastercard partnered with R3 to develop and pilot a new blockchain-based solution for cross-border payments that will initially focus on connecting global faster payments infrastructure, schemes and banks supported by Mastercard’s clearing and settlement network
    • R3’s CEO David Rutter said the firm will connect Corda, its open-source blockchain platform that includes +300 global financial services firms, tech firms, central banks, regulators and trade associations, with Mastercard’s ecosystem, “Corda was designed specifically for enterprise use cases such as this, and we look forward supporting Mastercard in bringing blockchain-enabled payments businesses across the globe”
  13. The Block: Domino’s Pizza France giving away €100K in bitcoin
    • Until October 6th, the French unit of Domino’s Pizza is giving away €100k (~$110k) in BTC or cash to lucky customers in celebration of their  30th anniversary
    • The company also provided a tx schedule on its ‘game rules’ page, saying that it will transfer BTC to a winner’s wallet by Dec. 16th, “The winner will remain alone and solely responsible for the management and security of this wallet”
  14. Independent: France Says Facebook’s Libra Cryptocurrency Will Be Blocked In Europe, Won’t Tax Crypto-to-Crypto Trades
    • Speaking at an OECD conference on blockchain and crypto, French Economy and Finance Minister Bruno Le Maire said France will block the development of Facebook‘s Libra as it purportedly poses a threat to monetary sovereignty, “I want to be absolutely clear: In these conditions, we cannot authorise the development of Libra on European soil […] It would be a global currency, held by a single player, which has more than two billion users around the world. The monetary sovereignty of states… is under threat”
    • Le Maire expressed concerns that Libra may “substitute itself as a national currency” and potentially cause financial disruption, “I don’t see why we should dedicate so much effort to combating money laundering and terrorist financing for so many years to see a digital currency like Libra completely escape those regulatory efforts”
    • Le Maire added that he discussed the creation of a “public digital currency” with outgoing ECB president Mario Draghi and Christine Lagarde, who will take over his position later this year
    • Libra’s Head of Policy and Communications Dante Disparte said Le Maire’s comments “further underscore the importance” of working with regulatory bodies, “In the nearly three months since the intent to launch the Libra project was announced, we have become the world’s most scrutinised fintech effort […] We welcome this scrutiny and have deliberately designed a long launch runway to have these conversations, educate stakeholders and incorporate their feedback in our design… We recognise that blockchain is an emerging technology, and that policymakers must carefully consider how its applications fit into their financial system policies”
    • The finance minister also said France will tax crypto gains when they’re converted into “traditional” currency, but crypto-to-crypto txs remain tax exempt as it will help with tracking of txs, “We believe that the moment the gains are converted into traditional money is the right time to assess tax”; by the same logic, VAT will only be assessed when a crypto is used to acquire an asset or a service
    • Link to The Telegraph’s report
    • Link to CNBC’s report
    • Link to Bloomberg Tax’s report
  15. The Block: ECB Resumes Quantitative Easing After 9 Months And Cuts Rates For The First Time In 3 Years
    • The ECB will resume its QE program in November with monthly purchases of €20B (~$22.13B) in bonds, and will cut the deposit rate from -0.4% to -0.5% in its first time since March 2016
    • The QE program, which was paused in Dec. 2018 after buying €2.6T ($2.88T) of bonds, will run “for as long as necessary” (or at least until it starts seeing an increase in its key interest rates)
    • President Trump tweeted, “[The ECB] is trying, and succeeding, in depreciating the Euro against the VERY strong Dollar, hurting U.S. exports”
  16. Santander: Santander Launches The First End-to-End Blockchain Bond
    • Banco Santander issued and settled a one-year, end-to-end bond on Ethereum worth $20M that carries a quarterly coupon of 1.98% and will exist solely on the blockchain until maturity
    • The automation of end-to-end process has helped Santander reduce the number of intermediaries required in the process, thus making the tx “faster, more efficient and simpler”
    • Santander Securities Services is serving as a tokenization agent and custodian of the crypto keys for the tokenized bond and tokenized cash, “The cash used to complete the investment (on-chain delivery-versus-payment) and the quarterly coupons have also been tokenised, i.e., represented digitally on the blockchain”
    • Fintech startup Nivaura lent technical support to Santander, while law firm Allen & Overy provided legal advice
  17. CoinDesk: Bitwise Taps BNY Mellon as Transfer Agent for Proposed Bitcoin ETF
    • Bitwise filed an amendment to its Bitcoin ETF S-1 form on Sept. 11th, listing BNY Mellon as the administrator and ETF custodian, Foreside Fund Services as the marketing agent and Cohen & Co. as an auditor, although the firm hasn’t yet named a BTC custodian for the trust its ETF would be built on
    • The firm also filed an opinion which says the ETF should be taxed like a Grantor Trust (similarly to the SPY and gold ETFs), i.e., the trust would be taxed similarly to the underlying asset – BTC – and therefore be taxed as property
  18. Forbes: From CryptoKitties To Cardi B: Warner Music Joins $11 Million Investment In Ethereum Replacement
    • CryptoKitties’ parent firm Dapper Labs raised $11.2M (and a total of $39.2M to date) in a new funding round from investors including Andreessen Horowitz, Digital Currency Group, and Warner Music Group; the new funds will be used to build out Dapper Labs’ new blockchain, Flow
    • Investors in this new funding round will receive an equity stake in Dapper Labs, with an option to convert their stakes into Flow’s native token once the firm has received SEC approval
    • Dapper Labs CEO Roham Gharegozlou claimed that Flow is built as a “developer-friendly blockchain… to support the next generation of games, apps, and…digital assets […] Imagine on flow, the possibility of a platform for billions of sports fans to trade verified, authentic and limited edition digital memorabilia in real time around the world”
    • Dapper Labs is also exploring use cases for Flow through their partnerships with Warner Music and Ubisoft
    • Warner Music SVP of BD Jeff Bronikowski said the music giant is looking for ways to create unique tradable merchandise featuring its roster of talent including Cardi B and Bruno Mars, “We think that as people spend more time crafting their persona in the digital realm, digital goods and collectibles is a great way to express that fandom”
    • Dapper Labs partnered with Ubisoft to develop a race car game in which unique cars can be traded between players
  19. CME: CME Files to Double Monthly Open Positions Limit of its BTC Futures
    • The CME filed a request with the CFTC to increase its monthly spot open position limits for its BTC futures from 1,000 contracts per spot month to 2,000 for an investor; since each contract represents 5 BTC, a trader’s maximum exposure would double from 5,000 BTC (~$50M) to 10,000 BTC (~$100M)
    • Few traders (if any) are holding that many open positions right now, given that the CME saw the number of open interest contracts reach an ATH of ~6,100 in July
    • However, a CME spokesperson said the exchange sees room for this market to grow and is seeking to increase these limits “based on the significant growth and acceptance of our financially-settled CME Bitcoin futures markets, as well as our analysis of the underlying bitcoin market”
    • If approved by the CFTC, the change would go into effect on market close on Sept. 30th
    • The single- and all-month accountability level would remain at 5,000 contracts, meaning CME would continue to scrutinize only those traders whose open positions exceed the threshold
    • Link to CoinDesk’s report
  20. Bloomberg: Jack Dorsey’s Square Is Testing a New Free Stock Trading Service
    • Square is piloting a new Cash App feature that would enable users to make “free” stock trades, although an exact launch date has yet to be determined
    • The feature would position Square as a direct competitor to Robinhood, but unlike Robinhood’s current product, Square’s initial iteration of the feature won’t offer options and margin trading
    • Cash App saw its number of total users jump from 3M to 9M after launching its crypto trading feature, and had +15M monthly active users as of Dec. 2018
    • Link to The Block’s report
  21. Spiegel: German Government Does Not Want to Allow Facebook’s Libra
    • The German Grand Coalition, the governing coalition of the two biggest political parties in Germany, is looking to deny the launch of stablecoin projects like Libra
    • Christian Democratic Union of Germany (CDU) parliamentarian Thomas Heilmann said members of the German gov’t will approve the country’s blockchain strategy this month which will “not allow market-relevant private stablecoin” to exist in the country, “Up to now, the economy has done a great job in countering crises and inflation with measures taken by central banks […] Once a digital currency provider dominates the market, it will be quite difficult for competitors”
    • Link to The Block’s report
  22. Les Echos: Libra Scheduled to Launch in 2H20, Says Libra Association Chief
    • Libra Association Managing Director and COO Bertrand Perez said Libra is scheduled to launch sometime in 2H2020, “We are firmly maintaining our launch schedule, between the end of the first half of the year and the end of 2020”
    • Perez said the association is “fully aware” of the AML/CFT-related issues, and is optimistic that the stablecoin will launch as scheduled as the association will work with regulators to solve “all” problems 
    • He clarified that Libra’s reserves will include USD, EUR, JPY, GBP and SGD, noting that CNY will be excluded
  23. Reuters: Spooked by Facebook’s Libra, Euro Zone to Step up Work on Public Cryptocurrency
    • Euro zone gov’ts and central banks are working on a long-term plan to launch a public digital currency in hopes that it would make projects like Facebook’s Libra redundant 
    • The 19-country bloc is pursuing a tough regulatory approach should Libra seek authorizations to operate in Europe and is also considering a common set of rules for virtual currencies
    • ECB board member Benoit Coeure said Libra was “a wake-up call” and had revived efforts to widen the uptake of an ECB-backed project for real-time payments in the euro zone, known as TIPS, which was met with caution by banks after launching last year, “We also need to step up our thinking on a central bank digital currency”
    • An ECB official said the project could allow consumers to use e-cash, which would be directly deposited at the ECB, without need for bank accounts, financial intermediaries or clearing counterparties; however, the technical feasibility remains to be seen and opposition from banks is likely
    • France’s Minister of the Economy and Finance, Bruno Le Maire, said “a common framework” for crypto is needed for the 28 EU countries, and that he had a plan to make the “public digital currency” work and will discuss it with other ministers next month


The information in this report is provided by, and is the sole opinion of, Kraken’s research desk. The information is provided as general market commentary and should not be the basis for making investment decisions or be construed as investment advice with respect to any digital asset or the issuers thereof. Trading digital assets involves significant risk. Any person considering trading digital assets should seek independent advice on the suitability of any particular digital asset. Kraken does not guarantee the accuracy or completeness of the information provided in this report, does not control, endorse or adopt any third party content, and accepts no liability of any kind arising from the use of any information contained in the report, including without limitation, any loss of profit. Kraken expressly disclaims all warranties of accuracy, completeness, merchantability or fitness for a particular purpose with respect to the information in this report. Kraken shall not be responsible for any risks associated with accessing third party websites, including the use of hyperlinks. All market prices, data and other information are based upon selected public market data, reflect prevailing conditions, and research’s views as of this date, all of which are subject to change without notice. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Kraken and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of, or located in a jurisdiction where such distribution or use would be contrary to applicable law or that would subject Kraken and/or its affiliates to any registration or licensing requirement. The digital assets described herein may or may not be eligible for sale in all jurisdictions.