Wednesday, May 13, 2020

📌 JP Morgan Adopts Crypto, BTC Halving Results, and ETH Futures Contracts

May 13, 2020 | Issue #117

MUST READS

Big-Name Investor Embraces Crypto

One of the smartest and most successful investors of the last quarter-century is now long on Bitcoin.

Macro investor, Paul Tudor Jones, is buying Bitcoin as a hedge against the inflation he sees coming from central bank money-printing.

Here are some great lines from the man himself...

⚠️ On Bitcoin's scarcity premium:

"It is literally the only large tradeable asset in the world that has a known fixed maximum supply."

💸 On Bitcoin's portability:

"A great store of value can be seamlessly moved from one jurisdiction to another with little or no transaction costs. Cash is obviously good for that; gold is ok but clunky; but, of course, nothing beats Bitcoin, which can be stored on a smartphone among other options."

📝 More from Jones:

"The best profit-maximizing strategy is to own the fastest horse."

"Bitcoin reminds me of gold when I first got into the business in 1976"

"The most compelling argument for owning Bitcoin is the coming digitization of currency everywhere, accelerated by the pandemic"

As Meltem Demirors pointed out, it is worth noting that PTJ isn't exactly "buying Bitcoin." In fact, he's buying a CMEGroup futures contract that's cash settled and tracks the price of Bitcoin. There's a difference.

Either way, it's a huge validation.

J.P. Morgan Finally Opens Accounts For Bitcoin Exchanges

JPMorgan Chase & Co. has taken on Coinbase and Gemini as banking customers, according to people familiar with the matter. This is the first time the bank has accepted clients from the cryptocurrency industry. Queue Jamie Dimon's ironic, old criticisms.

Meanwhile, Irish cryptocurrency firms are being refused banking services despite the State's promotion of blockchain.

The Final Bitcoin Halving Block had a Secret Message

The Bitcoin halving just happened. But inside the penultimate halving block, is a homage to the very creation of Bitcoin itself...

Here's what it says.

Also, for those wondering what exactly happened on Bitcoin's biggest day in years, here's a quick breakdown.

TL;DR: It turned out to be a real snoozefest. The price dipped from around $8,900 to ~$8,400 then... climbed back to its current price. Furthermore, the hash rate, which was predicted to take a hit as older miners went offline, actually increased.

ErisX Launches First US Ethereum Futures Contracts

This week, crypto derivatives platform ErisX expanded its physically-settled futures products to include Ether (ETH) for US clients.

Note: Physically-settled futures contracts deliver actual tokens upon expiry, rather than the fiat equivalent... and should bump up ETH market activity.

The contracts will be standardized and regulated by the CFTC and both individual and institutional investors will be able to access them with monthly and quarterly expirations.

Buying Gold Has Never Been Easier…

Using a SmartMetals account with Hard Assets Alliance you can buy, sell, and store precious metals right from your computer.

Fully insured... real... physical gold… stored at the world's most trusted vaults… sell any time… just a few clicks away.

Click here for more details.

SPONSOR

DEEP DIVE

Binance Adds Its Own Leveraged Tokens After Removing Competitors

After recently announcing the delisting of FTX leveraged tokens, saying the products confused customers, Binance has quietly added its own leveraged tokens. Binance claims their products differ from the competition because they incur smaller fees, tout less risk, and give enhanced protection.

Some though, like Larry Cermak, are not so convinced explaining that this is not only a hypocritical cash grab by Binance, but that their token actually removes transparency in the market.

A Research Paper Shows that the Majority of EOS, Tezos, and XRP Transactions are Valueless

After examining the network traffic of EOS, Tezos, and XRP over a three month period, researchers from Cornell found that only a small fraction of the transactions are used for value transfer purposes...

According to the paper:

95% of the transactions on EOS were the result of an airdrop of a valueless token
82% of transactions on Tezos were used for maintaining consensus
Only 2% of transactions on XRP were considered valuable

Trump and Chip Makers Seek Semiconductor Self-Sufficiency

The Trump administration and semiconductor companies are looking (paywall) to jump-start development of new chip factories on US soil as concern grows about reliance on Asia as a source of critical technology.

Marty Bent explains how this could benefit the future security of the Bitcoin network.

REGULATORY FRONT

Telegram Founder Pavel Durov Says the Firm's TON Blockchain Project is 'Over'

After stating less than two weeks ago that they would be launching their blockchain network in April 2021, Telegram has announced that they are abandoning the project.

Durov cited the ongoing legal battle with the SEC, which alleged that Telegram's $1.7 billion ICO in 2018 constituted an illegal securities offering.

Durov concluded with some precautions and of course, some harsh words for the SEC.

TWEET OF THE WEEK

TOP SHELF

Progress must keep pace with need. An overriding theme during day three of Consensus: Distributed was that the pace of technological development - driven by interconnected but diffuse organizations - must keep up with (or keep in mind) the needs of actual people and societies.

“To solve a problem you need to see it first,” said Tyrone V. Ross, director of community at Altruist, a platform for financial advisors. Only by working directly with communities can organizations truly come to understand their financial needs.

There’s disagreement in and outside of crypto on how to best orient technological progress for these needs. But the fact is, the industry is hurtling towards a set of rules that will redefine the ecosystem for it. The so-called “Travel Rule,” a new set of guidelines proposed by the Financial Action Task Force last spring, will attempt to inject structure into the largely anonymized crypto economy.

FATF’s Virtual Asset guidelines ask for exchanges and some wallet providers to maintain identifying information about the senders and receivers of crypto transactions. It’s due to become industry-standard this June, with the question remaining whether crypto is ready for it.

“Crypto is not designed to have a Travel Rule solution,” Noah Perlman, chief compliance officer of Gemini, said at CoinDesk's Consensus: Distributed virtual conference. While the exchange will work to comply, “it’s hard” to meet the conflicting needs of regulators and their clientele.

“We want to help law enforcement and provide more transparency,” Coinbase’s Chief Compliance Officer Jeff Horowitz said. “It really is a conversation between privacy versus transparency.”

Transparency in this case means righting the wrongs of unchecked technological progress. “Anonymity is a big goal for creators of this technology,” but the experiment went a different way when bad actors began exploiting the systems, said Merav Shor, counsel at eToro. “Anonymity has to be compromised to a certain degree,” she said.

Yaya Fanusie, of Cryptocurrency AML Strategies, agreed. Despite challenges with implementing it right now, these rules are “a path to scalability.” At some point, he argued, crypto needs to meet the challenges and expectations of the traditional financial system.

While some propose that the Travel Rule, and its antecedents like the Bank Secrecy Act (enacted in 1970), are unconstitutional out of hand, many see regulation as a catalyst to mainstream adoption.

Speaking on the DeFi Risks and Regulation Workshop, Jake Chervinsky, counsel for Compound said, “The government isn’t trying to kill DeFi.” “They understand there’s a lot of promise in this space,” with potentially huge benefits for expanding access to financial services.

He added that the government understands that this technology will be built and would prefer the innovation takes place within US borders.

THE COINDESK 50

The CoinDesk 50 is an annual list celebrating the movers and shakers of the crypto industry. We've already highlighted Binance, Cosmos, Brave, Bitmain, MakerDAO, Besu and the People’s Bank of China, and will continue to announce five new names a day until the end of Consensus: Distributed. You can read the full list here.

Bitcoin Is Still King
Bitcoin is the reason why we're writing these words and you’re reading them now. Its implementation 11 years ago kicked off a whole industry composed of competing forms of currencies and novel financial instruments. It got people thinking about what money is, could be and whether they should have direct control over their economic lives. But Bitcoin itself is building: A decentralized group of core developers is keeping its core spinning, while hundreds of other technologists are finding ways to improve its usability, privacy and scaling. The world’s first cryptocurrency, theorized and encoded by the long-silent Satoshi Nakamoto, still dominates this industry, in both market capitalization and brand recognition. Bitcoin is king because no one person controls it. Bitcoin is king because it grants sovereignty. Bitcoin is king because it knows it's not wearing clothes. Full story

COINDESK: COVID RESPONSE

#NYBWGives
CoinDesk has joined Gitcoin, The Giving Block and Ethereal Summit to support charities helping communities in difficult times. We're raising $100,000 and giving you a voice through the quadratic funding model. Learn how it works and how to donate.

In addition, New York-based abstract artist Mr. Star City created an original piece of artwork, shown above, as a part of Consensus: Distributed. The art, inspired by love, unity and technology, will be up for auction this week. Follow @coindesk on Twitter to find out how to bid — the proceeds will go to the same cause.

CONSENSUS MAGAZINE

Generation Crypto
Freelance journalist Jess Klein writes about an emerging psychographic of people who see the world through the lens of decentralization. In a series of eight profiles, Klein examines “Generation Crypto,” a diffuse grouping of people of all ages, races and sexes, bound together as “children of Satoshi.”

In this excerpt taken from the series, Klein profiles Tyrone Ross Jr., a financial advisor for the crypto-rich. Read the full series here.

Financial advisor Tyrone Ross, Jr. ducked into a coffee shop in Midtown Manhattan wearing a checked blazer and a pocket square in February to meet with me, a simple activity that’s unimaginable now. He approached with a wide, disarming smile, and its effect was immediately clear: This is a man I would trust with my money.

Ross’s young, tech-savvy clients invest in crypto. Most of them are men, “but there’s a lot of women interest,” he says. For many, crypto was their first investment. “As a black American, someone who was trying to push black folks into stocks for a while, they would never listen,” says Ross. “But for whatever reason, a lot of people just jumped into crypto, and are now reverse-engineering getting into stocks later.”

Not much has changed for Ross’s clients because of Covid-19, at least not in terms of their investment strategies. Ross has also been working with his team virtually for the past two years, so working from home is no obstacle. And as of late March, he had yet to receive a single “panic call” from a client. “I literally had clients calling me, Are we buying here or what?” he says. At least one bought the drop.

After all, crypto investors are used to riding ups and downs in its volatile market. If anything, Ross is hoping that the Covid-19 pandemic will help reveal crypto’s virtue as an option for the un- or under-banked.

“The best example I have of that is my own family,” he says. His parents have gone most of their lives without bank accounts, but now they have one and they’re nervous, asking Ross if they should withdraw their money. “My mom said, ‘I’m not putting my money in any bank,’ and that’s all I need to hear,” he says, to convince him that there’s not enough trust in the traditional financial system. Sure, his mom calls crypto “space money,” but Ross firmly believes that cryptocurrency’s product market fit is with those suffering most from America’s significant class divide—one that’s being blown open even further by the pandemic.

“The fall of Rome is happening,” he says. “The United States is being brought to its knees.” So he’s bullish on bitcoin, perhaps even more so than usual. While much of the world is scrambling or on pause, Ross is building a project that will allow financial advisors to seamlessly access bitcoin, and he’s confident that the smartest people in the world, now all stuck at home, are working on progressive crypto projects, too.

“Once we come out of this…the world is going to look different,” he says. “Digital everything is going to become a thing, and the only thing that’s missing right now is a true global money that’s run on the internet.”

“We have that,” he adds. “Crypto just needs its iPhone moment, and this may be it.”

BEST BACKGROUNDS AT CONSENSUS: DISTRIBUTED

Auryn "Watching the World Burn" Macmillan

HOW TO USE BRELLA

To access all of the deeper cuts available through Consensus: Distributed, you'll need to login through Brella , our virtual conferencing platform. You can create an account through Gmail, LinkedIn, Facebook or set one up manually on Brella. Your profile will be the way you match and network with others. As soon as you're set up, you’ll be directed to a dashboard showing other registrants.

Brella is easy to use and has a number of features to help you through this virtual experience. There are multiple tracks of simultaneous programming happening inside Brella. You’ll also be able to browse the entire agenda, bookmark sessions and build your own schedule.

Brella is a great networking tool as well, be sure to check out some of the social features available in-page, and reach out to the people and organizations that pique your interest. Celo, for one, is hiring.

COINDESK CONFESSIONAL

CoinDesk sent out a questionnaire meant to gauge the innermost feelings and thoughts of the crypterati. Loosely based on the “Proust Questionnaire” popular during the fin de siecle, we’re hoping their honest answers will reveal insights about our own age of transition.

Meltem Demirors responded to our prompts with the first thought that came to mind.

CRYPTO QUESTIONS

Your favorite blockchain protocol?
Bitcoin forever and always
Your #1 favorite crypto hero?
Satoshi
Your favorite quality in an entrepreneur?
Curiosity – people ask “why?”
Your biggest fear?
Loss of freedom and agency
What would you value bitcoin at today?
$10k
One word on how you got into crypto?
The internet
Who is your crypto hero?
Satoshi (same as 2)
What should crypto disrupt next?
First disrupt money, next comes the state
Public or private?
Public, but with privacy
Permissioned or permissionless?
Permissionless
Your best example of sovereignty?
Running bitcoin
Your net worth?
Hah, absolutely not
What defines Satoshi?
Spiritual leader of a social movement that will change the course of human history
Your favorite economist?
Anna Schwartz, who co-authored the influential book “A Monetary History of the United States” with Milton Friedman which analyzed the Fed’s role in perpetuating the Great Depression, for which he received the Nobel prize, but she did not. She was a brilliant analyst of monetary policy, and very outspoken in her criticism of the Fed. Legend!
Which living person do you most despise?
No one. I don’t have enough energy to despise other people. Indifference is more powerful than hate.
When and where were you when you first heard about BTC?
Don’t recall, but I was working on an M&A project in China when I first started down the rabbit hole, so I was in a random hotel room somewhere in China realizing I actually did not really like my job or my life very much.
Do you mine? Would you mine?
No and maybe, I do run a full node but mining is a specialized activity that requires scale.
Your favorite revisionist moment from crypto history?
Everything surrounding the DAO “hack” and what happened afterwards. Even calling it a “hack” is wildly mis-leading.
Your favorite non-crypto book?
Tie between Siddhartha by Herman Hesse and Dune by Frank Herbert
Your most visited webpage?
Twitter, of course

CRYPTIC LIFESTYLE

What inspires you?
Observing how little we know about the world and ourselves and how much is left to learn and understand
What is your main fault?
Obsessive to a fault but only on the most esoteric and niche topics that are rather impractical
Your main hero characteristic?
Competent
What is your current state of mind?
Same as every day, excited and scared all at once
What or who do love the most?
My tribe – my family and friends
When and where were you happiest?
Skiing. I go into a flow state and have an out-of-body experience. Best ski season was winter 2014-15 when I moved to Breckenridge CO for six weeks and skied every day.
What gets you out of bed?
I honestly can’t believe that I get to do things I find interesting and challenging as my job, so I don’t really have a strict boundary between “work” and “life” or “office” and “home” so I’m generally just eager to work on whatever I’m working on right now
What is your motto?
Blowing sh** up
What would you like to be?
Content
Where would you like to live?
Wherever I like
Your favorite television show or movie?
The Life Aquatic is the best film ever
Your most vivid memory?
All I can say is it involved dancing
Your greatest achievement?
Whatever I do today. The past is the past, and the future hasn’t arrived, so today is it!
What do you rely on?
Caffeine and curiosity fuel me
What would you change about yourself?
Saying no to more things, including books, ideas, thoughts, and people. I’m working on it!
Where will you be in 10 years?
Wherever I’m supposed to be, I don’t have a “plan,” just a direction of travel
Your favorite fiction character?
Easy - Molly Millions from the Gibson’s Sprawl trilogy. She is a trained assassin cyborg who wears leather and has mirror eyes and razorblade fingernails.
How do you spend your free time?
Reading and being outside
What do you want your legacy to be?
My memoir will be short and sweet - “Meltem. She had a good time.”
How would you like to die?
In a way that gives my loved ones peace and closure

FIRST MOVER

Derivatives May Have Blunted the Halving’s Volatility Spike
There now exists a developed derivatives market in the crypto economy, a fact that may affect the calculus of a post-halving bull run. “What's changed is the ease of going short,” CoinDesk’s First Mover team writes in their latest newsletter . “The majority of volumes this week have been in futures rather than spot,” he wrote. “We’re seeing that on the [over-the-counter] side. For example, GSR has had its biggest May ever and we’re only 12 days in.” Derivatives aid price discovery, perhaps keeping bitcoin’s price in a tighter range.

MEDIA DIET

Bitcoin Steady Near $9K as Trump Touts ‘Gift’ of Negative Interest Rates
Bitcoin has ended a four-day losing trend and is trading steady around $9,000 amid rising speculation the U.S. could eventually adopt negative interest rates. “As long as other countries are receiving the benefits of Negative Rates, the USA should also accept the “GIFT”. Big numbers!,” Trump tweeted Tuesday.

Exchange Run by Ex-Morgan Stanley Team Drops Trading Fees for Subscription Model
Crypto derivatives exchange Phemex is swapping out its existing trading fee structure for a new subscription model it says will make frequent trading more accessible. The Singapore-based exchange, which only launched in November, said its new Premium subscription model would encourage clients to trade as much as they like on the platform without towering fees.

Standard Chartered Claims First Yuan-Based Letter of Credit Issued on a Blockchain
The London-based bank says it has issued the first blockchain-based international letter of credit (LC) transaction using China's national currency, the yuan, and R3 Corda’s trade finance network Contour.

Investors on CoinList Pour $10M Into Celo Token Sale in Roughly 12 Hours
Silicon Valley blockchain startup cLabs just raised $10 million for the Celo project through a token sale to investors on the CoinList platform, building on $30 million in venture capital funding from firms like Polychain Capital and Andreessen Horowitz (a16z).

WHO WON #CRYPTOTWITTER

Copyright © 2020 CoinDesk, All rights reserved.

Our mailing address is:
250 Park Avenue South New York, NY, 10003, US

Want to change how you receive these emails?
You can update your preferences here.