Friday, October 23, 2020

PayPal's 'conditional BitLicense' 🗽 / Brazil's 'digital bank' IPO 🇧🇷 / Hong Kong welcomes China's CBDC 🇭🇰

NYDFS made PayPal's listings possible with a never-before issued "conditional BitLicense"...
                                                           
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Ripple Eyeing Move to London Over XRP-Friendly Stance: Garlinghouse

PLUS: China's tether crackdown, CME's rocketing open interest, and more
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October 23, 2020
By Daniel Kuhn
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Top shelf

Chinese officials are cracking down on tether trades. The CME bitcoin futures exchange is heating up, signalling institutional interest. And Kik’s kin token will continue development following a $5 million SEC settlement. 

Ripple, across the pond
Ripple CEO Brad Garlinghouse has given more insight on the company’s possible move away from the U.S., saying that the legal status of the XRP cryptocurrency is key. Talking to CNBC Friday, Garlinghouse said his blockchain payments infrastructure company could potentially relocate to London where the nation’s regulator "clarified" that XRP is not a security and is used like currency. Ripple is currently engaged in a U.S. legal dispute with investors who claim that XRP is an illegally issued security. The Securities and Exchange Commission has not been clear on the issue. Switzerland, Singapore, Japan and the United Arab Emirates are also on the table for potential headquarters.

Tether crackdown
Chinese authorities, including the nation’s central bank, have arrested 77 suspects and shuttered three gambling sites said to have “whitewashed” illicit funds using the tether (USDT ) stablecoin. Announced over WeChat, the PBoC’s Huizhou said the suspects had laundered 120 million yuan ($17.95 million) obtained through illegal online gambling activity, in part through USDT. In July, several crypto over-the-counter (OTC) traders were detained in order to assist with state investigation efforts involving illegal economic activity. It is "illegal to open casinos and participate in gambling online," the PBoC said. "Don't be curious and lucky. Any 'disguise' can't escape high-pressure supervision."

Institutional interest
The Chicago Mercantile Exchange (CME) has become the second-biggest bitcoin futures platform by number of open contracts, signaling institutional interest. As of Thursday, bitcoin futures contracts worth $790 million were open on the CME, according to data source Skew, topping 15%  of the total global open interest. "The CME's rise is predominantly led by institutional participation, as most entrants from that segment are prohibited from dealing in unregulated derivatives listed on retail platforms such as BitMEX and Binance," said Matthew Dibb, co-founder of Stack Funds. This happens as rival options exchange BitMEX targets DeFi-focused futures listings, including yearn.finance (YFI). 

Whopping buy
Grayscale Investments has added $300 million worth of cryptocurrencies to its balance sheet in a single day, CEO Barry Silbert tweeted late Thursday evening. The additional sum brings the total held under management to $7.3 billion. “The move comes at a time when the hype surrounding PayPal's foray into the crypto markets has drawn additional attention from big-name investors including Paul Tudor Jones II,” CoinDesk’s Sebastian Sinclair reports, and follows on the digital asset manager’s best quarterly results to date announced last week. (Grayscale is CoinDesk's sister firm, both owned by Digital Currency Group, of which Silbert is a founder.)

Kicking back?
Kik’s $5 million Securities and Exchange Commission settlement won’t kill kin, the non-profit behind the token announced. The "cloud of uncertainty has dissipated," the Kin Foundation claimed in a blog post. With Kik’s remaining treasury and Kin’s reserves, project leaders intend to continue "active development" of the open-source Kin SDK, the new Code wallet and a switch to the Solana blockchain. The foundation also alleged the SEC isn't considering Kin a security and the judge didn't find the token in violation of securities laws. Therefore, Kin "should be free to trade on exchanges."



Most Influential 2020: Cast Your Vote
2020 has not been a good year by most metrics. There is no way to avoid this in a year-end retrospective.

Every year, CoinDesk recognizes the “Most Influential” people working to expand cryptocurrency and blockchain’s reach. It’s a list of the 10 outsized individuals who have gone the furthest and done the most.

In this most unusual year, we need your help determining who should be named as Most Influential. Check out the list of the top contenders and cast your vote by Oct. 31.

Quick bites




Crypto state
With the U.S. Election Day two weeks away and mail-in ballots coming in, much is at stake - including crypto policy over the next four years.  

Like it or not, this election will matter for the crypto industry. Our latest limited-run newsletter, The State of Crypto: Election 2020 by regulatory reporter Nikhilesh De, aims to walk you through why.

At stake: Will new crypto products be approved or allowed to operate in the U.S? Will regulators target more overseas exchanges and platforms like BitMEX? Will the U.S. launch a “digital dollar” or some other form of central bank digital currency?

These questions will come down to who takes the reins at the various financial regulators and government departments. Over the next several days, we'll map out the possible outcomes and introduce analysis of the candidates. 

Our limited-run newsletter will run Mondays, Wednesdays and Fridays from Oct. 23 at least until Election Day. Subscribe to The State of Crypto: Election 2020.

At stake

What's immaterial?
In the buzz around PayPal’s announcement to extend crypto trading and transaction services to a third of a billion users, the fintech giant’s negative role in bringing bitcoin to national attention may have been elided. 

Last night, Bitcoin OG Jameson Lopp, tweeted, “9 years ago PayPal paved the way for proving Bitcoin's value to the world when they shut down WikiLeaks' account.”

In what was called “potentially the most significant attack on WikiLeaks” at the time, PayPal, then one of the principle means of moving money online, froze the German foundation’s account. This action was a wake up call for some about the dangers of web censorship. 

Satoshi Nakamoto, when creating Bitcoin, had been thinking about financial freedom and the power that banks and payment processors have to revoke it, based on their own contingent, ever-changing and unequally-applied “terms of service.” 

Of course, some of Nakamoto’s last words to early Bitcoin advocates were to resist using bitcoin to fund Wikileaks. He thought the network was too young and fragile to incur the government and public scrutiny that would result from supporting a bank-blocked organization. 

It’s with some irony that PayPal has reentered the picture. As reported, the firm’s crypto services will be fully-custodial, fully-KYC’d and will fall under its terms of use. 

So why enter? CoinDesk’s Danny Nelson reported yesterday that Morgan Stanley analysts believe the cryptocurrency community will likely benefit more than PayPal’s bottom line from the services. 

The move "should expand crypto acceptance online, which to date has stalled at 1% of the top 500 internet retailers," wrote the Morgan Stanley analysts. While the services will "likely [be] immaterial to earnings."

With rumor saying PayPal is also exploring purchases of cryptocurrency companies including bitcoin custodian BitGo, the question of what is good for crypto becomes more urgent.

Who won #CryptoTwitter?

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