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US CFTC Chair: Blockchain and Crypto Are Two Key Phenomena Transforming Today’s Markets

Chairman Giancarlo says blockchain and cryptocurrencies are two key phenomena that are transforming today’s markets.

United States Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo has said the agency’s fintech innovation hub LabCFTC is the regulator’s internal stakeholder in a landscape of exponential technological change and market evolution.

Giancarlo made his remarks during his last appearance as CFTC chairman before the 44th Annual International Futures Industry Conference on March 14, in an address entitled “Improving the Past, Tackling the Present, and Advancing to a Digital Market Future.”

Giancarlo is expected to be replaced this year by the U.S. president’s nominee for the CFTC chairmanship, Heath Tarbert, assuming the latter’s confirmation.

In his remarks, Giancarlo identified “the disintermediation of traditional actors and business models” as a key factor that challenges existing regulatory models, isolating blockchain and cryptocurrencies as two key phenomena that are transforming today’s markets.

To respond to the challenge that this exponential change poses for federal regulators, the chairman noted that a cornerstone of the CFTC’s approach was the establishment of its own internal stakeholder: LabCFTC.

According to Giancarlo, LabCFTC —  which launched two years ago — has had over 250 separate interactions with both big and small innovators, conducting lab hours across the U.S. and internationally.

The chairman stressed that the lab is not a regulatory sandbox and does not exempt firms from CFTC rules, but rather aims to provide an “internal and external technological focus.” He said:

“Internally, it means explaining technology innovation to agency staff and other regulators and advocating for technology adoption. Externally, that means reaching out and learning about technological change and market evolution, while providing a dedicated liaison to innovators.”

Among its activities, Giancarlo highlighted the lab’s fintech cooperation agreements with global regulators — in London, Singapore and Australia — as well as its publishing of technology primers and public feedback solicitations.

Giancarlo notably aligned the hub’s creation and work as part of a nationwide trend across agencies, stating that “every US federal financial regulator has either created or is creating a program similar to LabCFTC.”

Aside from the Lab, the chairman noted that the CFTC is embracing market-based solutions for innovation, as with its authorization of Bitcoin (BTC) futures, and is striving to become a quantitative regulator — one that is “able to conduct independent market data analysis across different data sources, including decentralized blockchains and networks.”

As previously reported, LabCFTC’s two fintech educational primers have been devoted to virtual currencies (October 2017) and smart contracts (November 2018). In December, the lab solicited public and industry comments on the Ethereum (ETH) blockchain as part of its evaluation of prospectively authorizing Ethereum futures contracts.

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Crypto Futures Provider Volumes Increase 500 Percent After Acquisition by Kraken

U.K. futures provider Crypto Facilities’ trading volumes increased over 500 percent after being acquired by U.S. crypto exchange Kraken.

United Kingdom-based crypto exchange and futures provider Crypto Facilities has significantly increased its trading volumes after being acquired by crypto exchange Kraken, according to the information shared with Cointelegraph Tuesday, Mar. 5.

Cointelegraph spoke to Sui Chung, head of cryptocurrency pricing products at Crypto Facilities, according to whom the platform’s trading volumes have increased more than 500 percent.

Chung said that company’s average daily trading volume was around $7 million per day in January. However, following the acquisition announcement, it has increased to $32 million per day in February, reaching up to $110 million one day that month.

Chung linked the boost to a strong latent demand for crypto futures from the Kraken customer base, with the number of daily users steadily growing throughout the month. He confirmed that Crypto Facilities’ trading volume reached almost $1 billion during the month of February. He further explained that Crypto Facilities can offer services to Kraken users that are compliant with Anti-Money Laundering (AML) and Know Your Customer (KYC) policies.

Kraken bought Crypto Facilities for in a “nine-figure deal” on Feb. 4. As Cointelegraph reported following the matter, Crypto Facilities is fully regulated by the U.K.’s Financial Conduct Authority, giving Kraken a major foothold in the European market.

Earlier this week Goldman Sachs-backed cryptocurrency finance firm Circle bought SeedInvest, a crowdfunding platform and registered operator of a broker-dealer. The deal that was initially announced in October was concluded after approval by the United States Financial Industry Regulatory Authority (FINRA).

In January, Bakkt, the digital assets platform backed by the New York Stock Exchange, acquired certain assets in futures merchant Rosenthal Collins Group. The company obtained regulatory approval by the U.S. Commodity Futures Trading Commission for the launch of regulated trading in crypto markets.

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Futures Exchange Promises Zero-Fees: Startup Hits One Million Sign-Ups for Waitlist

A cryptocurrency futures exchange wants to appeal to a wider net of traders by offering crypto futures contracts as well as traditional futures markets, all with zero fees.

Blockchain startup Digitex Futures is ready to launch its commission-free futures exchange. The platform is planning to add traditional futures markets — including forex, metals, commodities and indexes — to crypto options in order to attract different groups of traders.

One of the goals of the new startup is to fill the gap that Digitex sees in the exchange market. The company notes that regulated exchanges offer high security, together with high fees. Smaller platforms are cheaper for traders but riskier, as they are more attractive for crypto criminals.

For example, in January 2019, New Zealand exchange Cryptopia was attacked, and thousands of its users lost their funds from Ethereum (ETH) wallets. The damage from the cyber theft was estimated at over $16.1 million.

Decentralized exchanges charge lower fees and provide better security, but a lack of user adoption causes low liquidity, Digitex says.  

The company says they have already managed to build one of the most active communities in the industry, with more than 65,000 members in the Digitex Telegram channel. In February 2019, Digitex announced that it reached 1 million users who signed up on their waitlist and who are looking forward to Digitex’s platform launch.

The company says that, because of the high demand for their project, they are ready to release the exchange on April 30. Moreover, plans for the upcoming quarter include a mobile app for rapid-fire trading on the go.

“Digitex aims to hit the sweet spot by optimizing all the features a trader needs,” Digitex says. The company will provide automated market makers, an easy-to-use, one-click trading user interface, assured liquidity through high demand and zero trading fees.

Digitex is available here

Traditional futures markets

Digitex Futures is planning to offer its users not only a wide range of crypto futures contracts for Bitcoin (BTC), Litecoin (LTC) and ETH, but also traditional futures markets — including forex, metals, commodities and indexes. They will also be adding stocks during the third quarter of the year, as well as additional cryptocurrency futures markets according to demand.

The company says the goal is to expand its platform beyond the crypto market and appeal to traditional retail futures traders who are interested in commission-free trading on the markets that they are familiar with. Digitex will also add spot markets during the second half of 2019, which the company says should “make the audience for the exchange potentially massive.”

Digitex was developed on the Ethereum blockchain, and the company states that it will be one of the first platforms to implement Ethereum’s scaling solution, the Plasma protocol, after its launch in the third quarter. Due to the new protocol, Digitex Futures won’t hold their users’ funds.

All account balances will be sent to a smart contract programmed on the Ethereum blockchain. The platform will be noncustodial, so the traders will be responsible for their own private keys. They will be offered the opportunity to create decentralized accounts, which will go live after Digitex implements the Plasma protocol to its system in the third quarter of 2019. At the same time, the company will guarantee that the funds are secure and protected from hacker attacks.

Although the exchange is free, traders who want to use the platform have to buy Digitex’s native cryptocurrency, the DGTX token, through the Digitex Treasury or one of the company’s exchange partners. The startup says zero fees should increase the demand for the exchange, and as a result, will cause increased demand for the DGTX token.

Learn more about Digitex

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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Launch Timeline for Bakkt’s Bitcoin Futures to Be Clarified Early 2019: ICE

The operator of the New York Stock Exchange posted an update for the launch of Bakkt’s physically settled daily Bitcoin futures contract.

 

The Intercontinental Exchange (ICE) announced an update on the launch of the Bakkt Bitcoin (USD) Daily Futures Contract in an official notice Dec. 31.

The document from ICE — the operator of the New York Stock Exchange (NYSE) and creator of digital assets platform Bakkt — states that “[f]ollowing consultation with the Commodity Futures Trading Commission [CFTC], ICE Futures U.S., Inc. expects to provide an updated launch timeline in early 2019 for the trading, clearing and warehousing” of Bakkt’s Bitcoin (BTC) futures contract.

The document reiterated that previously the firm had been targeting Jan. 24, 2019 as a launch date, but that the date “will be amended pursuant to the CFTC’s process and timeline.”

The statement also outlines the particular nature of Bakkt’s futures contracts, stating:

“The Bakkt Bitcoin (USD) Daily Futures Contract is a physically-settled daily futures contract for bitcoin held in Bakkt Warehouse, and will be cleared by ICE Clear US, Inc. Each futures contract calls for delivery of one bitcoin held in Bakkt Warehouse, and will trade in U.S. dollar terms.”

As Cointelegraph also reported today, Bakkt has completed its first funding round, raising $182.5 million from 12 partners and investors.

ICE initially announced the intention to create an “open and regulated, global ecosystem for digital assets” powered by the Microsoft cloud infrastructure this past August.

The founder of Galaxy Digital — a crypto investment firm that invested in Bakkt — cited Bakkt’s pending launch as one of the industry developments that could help turn around the downward trend in crypto markets this year.

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How Traditional Financial Instruments Are Breaking Out in the World of Crypto

Want to remove some of the volatility from your investments? Here’s a look at some of the traditional financial instruments making waves in the crypto world.

The crypto market has been brutalizing of late – but many traders don’t realize that there is a plethora of financial instruments out there. Each offer investors a new way to back crypto, without relying on the highs and lows of cryptocurrency prices in an erratic and volatile market.

But what are these alternatives – and are they really everything they’re cracked up to be?

In many cases, some of the new products emerging in the crypto market are iterations of services that have existed in the old-fashioned financial world for years. Bonds are a good example. These have been kicking around for more than 500 years – and back in 1694, they were issued by the Bank of England to fund a war against France.

How do they work? In essence, they are a fixed-income instrument that amounts to something of an “I.O.U.” Lenders give businesses the money that they need to achieve their aspirations, with borrowers usually receiving interest rate payments once per year until the full amount of the loan is due. When it comes to interest, this could fluctuate based on variable rates, or it may be fixed.

Bonds have already been gaining momentum – with the World Bank hitting the headlines back in summer 2018. On August 10, the first blockchain-based bond was issued by the biggest bank in Australia – Commonwealth Bank of Australia. This is not the first debt instrument to be issued through blockchain – with Spain’s BBVA signing a $117 million loan over the summer in a bid to benefit from the traceability and transparency of smart contracts.

The hope is that crypto bonds could enable blockchain-based businesses to generate money to grow – offering them an alternative from ICOs, which have had something of a torrid time of late. Although research in October suggested that more than $20 billion had been raised through initial coin offerings since the beginning of 2017, this has been slowing of late – with ICO funding for August 2018 ranked the slowest for 13 months.

Futures: The future?

Futures have been a hot topic of discussion in the crypto world ever since Bitcoin reached the dizzying highs of $20,000 towards the end of 2017.

These conversations have rumbled through right up to today, with the volatility seen in the crypto market showing no signs of abating. In brief, futures involve two parties agreeing to buy or sell cryptocurrencies at a previously agreed-upon price on a set date. Rather than being used as a mechanism that helps to boost profitability, futures are often relied upon as a way to mitigate risk.

Why is this a compelling financial instrument? Let’s say you believe that Bitcoin’s value is going to rise in the coming months. You can buy a three-month contract for one Bitcoin at the current price and receive it at contract’s conclusion. If the price of Bitcoin rises dramatically over those 90 days, you would be buying it at the same price, resulting in a tidy profit.

Of course, this instrument can work conversely. Let’s imagine that you bought Bitcoin at an optimal moment, but you think that the price is about to fall precipitously. Through futures, you have the opportunity to enter into an agreement where you sell the Bitcoin at its current price in three months’ time – and if its value tumbles, you pocket the profit. It’s fair to describe such behavior as a bet, as no one can predict where the market is going, but if you’re experienced and have insight into crypto movements, futures could prove indispensable.

So yes: futures can help traders shield themselves against the perils of fluctuation – and give investors in countries where crypto is banned a chance to get involved. That said, it isn’t without risks. Given the dramatic highs and lows seen in crypto in recent months, you could argue that futures are tantamount to gambling. Red or black?

There are other options

Puns can never let you down during a heavy feature that focuses on crypto financial instruments. If you don’t think that futures are the future, options are an option for you. These instruments mean that you have the right to buy or sell Bitcoins at a particular price when the options mature, but you are not obligated to complete the transaction. There is often a premium for using these financial services.

These dramatic shifts in the crypto market have sparked diversification by digital asset platforms – giving investors greater choice. Bonds, futures and options are beginning to flourish in the industry. For example, Bibox, an AI-driven exchange, has just launched bonds, aiming to give new opportunities to traders.

A slowdown in ICOs has meant that startups are looking for new ways to raise capital, while investors are on the lookout for new ways to protect and grow their assets. Whether derivatives gain momentum in 2019 is yet to be seen, but there’s no doubt that chatter surrounding financial instruments is on the increase.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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Tom Lee: CBOE Ethereum Futures May Hurt ETH, But Benefit Bitcoin (BTC)

BTC Could Rise As A Result of Ethereum Futures

Even in a market downturn, development in this nascent industry rages, with firms continually releasing innovative products and services that could change the future of crypto. And as reported by Ethereum World News previously, the CBOE, the foremost US-based options exchange, is just months away from launching Ether futures that will be based on Gemini markets.

This news immediately sparked speculation about the effect this vehicle would have on the market, with many optimists noting that this futures contract should help to propel the price, development, and maturation of Ethereum, and subsequently, the growth of this industry.

While many agreed with this hope, Tom Lee, the head of research at Fundstrat Global Advisors, expects this news to benefit the price of Bitcoin (BTC) more than the price of Ethereum (ETH).

Speaking with Business Insider reporters, Lee, who has become well-known, if not near-infamous for his seemingly undying bullish sentiment on Bitcoin, noted that Ether futures will allow speculators to weigh down on the price of ETH.

His claims seem to be corroborated by the historical price action of Bitcoin following the initial CBOE and CME futures release. Since Bitcoin futures debuted in mid-December of last year, prices tanked, with Bitcoin briefly touching $20,000 before tumbling to $7,200 as it stands today. Some think thatEthereum Blockchain Token this is no unfortunate coincidence, but rather, the effect of short sellers placing bets against Bitcoin via the futures market.

As such, the Fundstrat Bitcoin bull then noted that the same effect, albeit likely not as drastic, could occur this time around as well, with the planned December 2018 introduction of the CBOE-backed Ether futures contract potentially lining up with a substantial decline in the price of ETH.

On the other hand, however, Lee added that the introduction of Ether futures may alleviate some of the pain placed on Bitcoin by bears, as the short interest may translate from the BTC contract to the ETH contract. The Fundstrat executive elaborated, stating:

“Since December of this year, if one was bearish on any aspect of crypto but did not want to own the underlying, they could short BTC. They can now short eth, means the net short on BTC in futures would fall.”

Some skeptics of this theory pointed out that it is somewhat counterintuitive, but upon thinking about it further, it is clear that Tom Lee’s thought does hold some credence at the very least.

Ethereum has already had a bad year, so many are hoping that the eventual introduction of these futures will not hamper the price of the asset further. But for now, only time will tell what the short to mid-term fate of the second largest crypto asset will be.

At the time of writing, Ethereum is down 1.4% in the past 24 hours, as it currently sits at $294 after falling from yesterday’s highs at $303.

ethereumImage Courtesy of TradingView.com

Photo by JESHOOTS.COM on Unsplash
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Bitcoin Breaks Above $7,000 as Crypto Market Rallies Into Green

Tuesday, August 28: crypto markets are seeing strong positive momentum bolster a persuasive recovery, as Bitcoin (BTC) breaks above the $7,000 price point and all but 3 altcoins amid the top 100 cryptocurrencies post strong gains on the day. Growth among the top ten largest assets ranges between 4.5 to almost 20 percent, as Coin360 data shows.

Market visualization from Coin360

Market visualization from Coin360

Bitcoin (BTC) is trading at around $7,016 at press time, up around 4.2 percent on the day, according to Cointelegraph’s Bitcoin price index.

The top coin has seen several days of recovery since its brief price dent August 22 in the wake of toughened anti-crypto measures in China and a fresh series of disapproval orders for several Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC).

Bitcoin’s 7-day price chart

Bitcoin’s 7-day price chart. Source: Cointelegraph Bitcoin Price Index

On the week, Bitcoin is up a strong 4.1 percent, with its monthly gains now around 9.1 percent.

Ethereum (ETH) is trading around $289 at press time, up a solid 3.4 percent on the day.

While, the coin has yet to reclaim the $300 price point — which it last held August 20 — today, August 28, has seen the first persuasive upswing in price performance after a jagged and tentative week range bound between $270-280. Ethereum is now up 3.4 percent on the week; on the month, losses are just slightly down and remain at a stark 37.8 percent.

Ethereum’s 7-day price chart

Ethereum’s 7-day price chart. Source: Cointelegraph Ethereum Price Index

Among the top ten coins by market cap, Cardano (ADA) is up over 9 percent to trade at $0.10 at press time, with Litecoin (LTC) up 7.64 percent and Ripple (XRP) up 7.3 percent to trade at $61.88 and $0.35 respectively.

The strongest top ten performer is IOTA (MIOTA), soaring a staggering 19.4 percent on the day and capping two days of rapid growth to trade around $0.71 at press time.

IOTA’s 7-day price chart

IOTA’s 7-day price chart. Source: CoinMarketCap

IOTA’s growth has skyrocketed since August 27’s announcement that Japanese ICT conglomerate Fujitsu is launching an IOTA-based proof-of-concept (PoC) for audit trail processes in the manufacturing industry.

Among the top twenty coins on CoinMarketCap, TRON (TRX) is up 14.5 percent on the day to trade around $0.03, NEO is up 15.77 percent at $21.18 and DASH, ranked 13th, has outstripped all the top 100 cryptos on the day by rising 27 percent to $186.54.  

Dash’s 7-day price chart

Dash’s 7-day price chart. Source: CoinMarketCap

Total market capitalization of all cryptocurrencies is at around $230.55 billion at press time, up around $15 billion since the start of trading Monday 27th.

7-day chart of the total market capitalization of all cryptocurrencies

7-day chart of the total market capitalization of all cryptocurrencies from CoinMarketCap

As the crypto spot markets rally, and Bitcoin reclaims ground above $7,000, fresh data from the U.S. Commodity Futures Trading Commission (CFTC) shows that bearish positions for non-commercial contracts of Bitcoin (BTC) futures are also on the decline.

As shown by the negative total tally on the CFTC’s latest Commitments of Traders (COT) report, the market is still overall net short, yet the new figure of -1266 indicates a sharp turnaround from the -1926 recorded earlier this summer.

Blockchain, meanwhile, has this week drawn the attention of two of the “Big Four” global audit firms, Deloitte and PwC, both of whose fresh reports revealed high percentages of enterprise executives convinced by technology’s potential.

In the banking sector, JP Morgan CIO Lori Beer has this week said that blockchain will “replace existing technology” within a few years, and today, Germany’s joint stock company Deutsche Boerse (DB) furthered its partnership with blockchain-based liquidity provider HQLAx by making a million euro investment to become a minority shareholder.

To cap it off, the South Korean government has just announced its state-sponsored blockchain hackathon to encourage the technology’s inroads into the public and private sectors.

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Upside Calling? Bearish Bets on Bitcoin Futures Hit Record Low

The bearish sentiment in the bitcoin (BTC) futures market hit a record low last week, likely indicating the worst of the plunge in the leading cryptocurrency is behind us.

The non-commercial futures contracts of Bitcoin futures, traded by large speculators and hedge funds, totaled a net position of -1266 contracts in the week ended Aug. 21 – the lowest on record, according to the data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The futures data indicates the speculators are the least bearish on BTC since the futures listing back in December.

A negative total represents net short positions (bearish bets) and a positive tally indicates net long positions (bullish bets).

The sharp drop in the bearish sentiment, as represented by the steady decline in the net short positions from the high of -1945 seen ten weeks ago to -1266, adds credence to the signs of bearish exhaustion indicated by BTC’s defense of $6,000 since mid-June.

At press time, BTC is changing hands at $$6,715 on Bitfinex.

Weekly chart

As seen in the above chart, BTC printed lows below $6,000 three times in the last ten weeks, but the drop was short-lived, that is, all three weekly candles closed (Sunday’s close as per UTC) above the psychological mark.

So, it seems safe to say that for BTC, the path of least resistance is on the higher side. The short-term technical charts are also echoing similar sentiments.

Daily chart

The upward sloping 5-day and 10-day moving averages (MAs) indicate a short-term bullish setup. Further, the 50-day MA is about the cross the 100-day MA in a bull-friendly manner.

4-hour chart

The ascending trendline and the rising 50-candle MA and 100-candle MA favor a move higher toward $7,000.

That said, BTC’s inability to cross the psychological hurdle of $6,800 over the weekend is a slight cause for concern. However, only a break below the channel support, currently seen at $6,600, would abort the short-term bullish view.

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  • The bearish net positions in the bitcoin futures markets hit a record low last week, validating the argument put forward by the technical charts that the cryptocurrency has likely bottomed out around $6,000.
  • A break above $6,800 (psychological resistance) would bolster the already bullish technical setup and would open the doors to $7,000.
  • A move below the ascending trendline seen in the 4-hour chart would weaken the bullish case and could yield a drop to $6,230 (Aug. 20 low).

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; Charts by Trading View

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