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Crypto Exchange

Private finance emerges as crypto’s next major growth catalyst

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Long gone are cryptocurrency’s days as an obscure hub for experimental ventures in cryptography. 2020 marked a seminal year for the space, with cryptocurrencies taking major strides into the mainstream as governments, supranational organizations and corporate entities alike made significant entrances into an industry they collectively call the “digital asset space.”

As per centralized authorities’ choice, cryptography and its primary feature, privacy, have been relegated from the front-and-center role they once played as cryptocurrency’s main attractions. In their place, a breadth of ever-more enticing DeFi applications has taken the limelight on the back of enhanced liquidity, yield farming and unprecedented economic models.

DeFi is a game-changer

In 2021’s opening act, the trendlines have only advanced further. The DeFi umbrella has expanded convincingly over the landscape of cryptocurrency, attracting investors and enthusiasts whose preferences speak for themselves: DeFi’s double-digit APRs and seamless user experience are simply more enticing than the subtle, systemic benefits conferred by a privacy-centric exchange.

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And who can blame the users — for as long as the benefits of DeFi remain at odds with the prerogative of personal privacy, the former will continue to grow at the expense of the latter. It is no longer a broad lack of awareness that holds back public interest in privacy but a current of ever-expanding trade-offs that individuals must forfeit in order to retain it. For privacy to become an intrinsic characteristic of our future systems of exchange, it must be released from its burden of mutual exclusivity; only then can it take the form of a universally adaptable feature — a virtually costless accessory of sorts.

Private finance is coming

Such is the imperative that has triggered the organic emergence of blockchain technology’s newest sector — one that stands to disrupt a nascent crypto industry already renowned for its disruptive potential. Arriving under the label “PriFi,” the up-and-coming private finance campaign brings privacy back on-stage by bringing it back on-chain — that is, into the Ethereum and Polkadot ecosystems — to integrate privacy into a robust network of rapidly evolving applications of decentralized finance.

Until now, privacy solutions have remained siloed on standalone, privacy-oriented blockchains, isolated from the ever-expanding features of the DeFi landscape. Thus, the private finance movement aspires not so much to avail users access to privacy in and of itself but to do without tradeoffs, borders and restrictions — and its calling could not come at a more critical moment.

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GameStop is the catalyst

Since cryptocurrency’s historic formation in the wake of the 2008 financial crisis, nothing has more resolutely united the world’s retail investors than the late-January market antics dubbed by NBC as “GameStop mania.” When a number of high-profile hedge funds got caught over-leveraged in short positions, retail investors congregated en masse in an online Reddit community called r/Wallstreetbets in order to bid up prices of the assets underlying the funds’ short positions — most notable among them shares of GameStop and AMC stock.

After a succession of short squeezes in which the leverage-heavy funds were forced to pay out billions to cover their short positions, centralized companies, such as Robinhood, Charles Schwab, TD Ameritrade and others, restricted trading activity on the exponentially appreciating stocks, thereby protecting the remaining capital of the exposed funds. Shocked, outraged and effectively left out to dry, retailers could only speculate as to the backdoor briefings and deal-making that preceded the coordinated authoritarian market controls.

But like with all manias, financial and otherwise, loss and grievance provide opportunities to learn and adapt. For retailers in 2021, that has meant awakening to a pair of sobering realizations: that centralized markets only remain free as long as they serve centralized powers and that surveillance is a primary supporting feature employed by such power structures.

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In light of the trading restrictions placed on GameStop and AMC, among others, a fresh wave of rallying retail investors is now turning to the crypto space to make its next move. But this time, it is not for crypto’s native digital assets but for a new line of emergent derivatives: fully private, on-chain synthetic assets whose values are securely pegged to traditional financial instruments — stocks, commodities, bonds, insurance products and more.

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Crypto Exchange

Genesis tests end-of-day pricing for institutional crypto futures product

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Cryptocurrency brokerage firm Genesis Global Capital has announced the completion of a first-of-a-kind trade that will pave the way for new institutional crypto futures products.

Genesis has executed the first-ever over-the-counter (OTC) block trade of a Basis Trade at Index Close (BTIC) transaction using Bitcoin futures contracts issued b Chicago Mercantile Exchange (CME). The trade was made in collaboration with derivatives market maker Akuna Capital according to a Sept. 26 announcement.

This is the first time a BTIC has been used for cryptocurrencies as it is more commonly used in equities markets. This form of trading allows investors to buy and sell futures contracts with prices based on the end-of-day close of the index.

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CME Group Global Head of Equity Index and Alternative Investment Products, Tim McCourt, said that the product was the next step in offering greater exposure to CME’s Bitcoin derivatives and Ethereum futures, with the Ether contracts having launched in February. He elaborated on the advantages of this new trading vehicle, explaining:

“BTIC enables market participants to more efficiently trade the basis while providing a regulated marketplace for real-time price discovery and enhanced trading precision for institutional participants who want to optimize holdings between the futures and spot markets.”

Genesis provides liquidity to CME Group for its BTC and ETH futures and options products.

In May, the CME launched micro Bitcoin futures which are contracts worth 0.1 BTC. The offering was designed to allow institutional traders to hedge their risks to crypto assets.

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By the end of June, the product had surpassed a million traded contracts suggesting that there is a high demand for smaller positions in crypto among institutional investors still testing the waters. This latest product is another example of diversifying the options for well-heeled investors to gain exposure to crypto markets.

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Crypto Exchange

Huobi outlines plan for Chinese investors after halting crypto trading

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The uncertainties sparked by China’s blanket ban on crypto trading have taken a downturn as homegrown crypto exchanges such as Huobi take proactive measures to protect and return existing investments residing on the mainland. 

Speaking to Cointelegraph in this regard, Du Jun, co-founder of Huobi Group, said that the crypto exchange wants to ensure the safety of the users’ assets as part of its social responsibility:

“Customers will be able to transfer their assets to other exchanges or wallets over the next few months. Specific measures and operating rules will be outlined in future announcements.”

Citing a possibility of a communication gap with Chinese investors amid the ban, the crypto exchange is also working on other ways to protect customer assets until the users can move them to offshore exchanges or wallets.

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Chinese investors amounted to more than 30% in terms of trading volumes prior to the crypto ban, but as Jun suggests, Huobi has seen increased adoption in the Southeast Asian and European markets. However, the exchange expects that “any short-term impact on Huobi revenues will be mitigated as our global business continues to grow.”

While observing the ban on crypto trades and mining as imposed by the People’s Bank of China and other Chinese regulatory authorities, Jun plans to double down on Huobi’s compliance efforts and continue to build compliant operations on a global scale.

Crypto exchanges in mainland China, including Huobi, began stopping new customer registrations soon after a new crypto ban became effective on Friday. Huobi later announced that all Chinese accounts from the mainland will have been closed down by 24:00 UTC+8 on Dec. 31, 2021. 

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Historically, China has been responsible for the lion’s share of Bitcoin (BTC) mining. Given the lack of support from the ruling government, Chinese miners have continued to move off-shore into crypto-friendly jurisdictions.

According to a recent Cointelegraph report, the latest ban marks the Chinese regulators’ 19th attempt to curb Bitcoin and cryptocurrencies in the past 12 years. While the decision to ban crypto trades in China caused a few unwary investors to momentarily panic-sell, Bitcoin’s price continues to show bullish signals, given the proactive support from crypto exchanges and users across the globe.

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Binance

Binance Suspends Spot Trading and Fiat Channels in Singapore

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Binance.com, the global cryptocurrency exchange platfrom announced the suspension of spot trading, fiat purchase channels, liquid swap, and fiat deposit functions. The suspension would come into effect from 26th October. The exchange also requested Singapore users to withdraw their tokens and cease their trades by the effective date. The exchange in its official press release said,

“As the market leader, Binance constantly evaluates its product and service offerings. We will be restricting Singapore users in respect of the Regulated Payments Services in-line with our commitment to compliance. Users in Singapore are advised to cease all related trades, withdraw fiat assets and redeem tokens by Wednesday, 2021-10-26 04:00 AM UTC (12:00 PM UTC+8) to avoid potential trading disputes.”

Binance’s trouble in Singapore began after the Securities Commission in the country put Binance.com under Investor Alert List. In the wake of the first regulatory action, Binance ceased certain product offerings in the country before suspending key crypto trading features altogether. It is also important to note that Binance’s Sister company in Singapore has applied for a regulatory license and has been granted an exception until a decision is made on its filing despite the global platform facing regulatory scrutiny.

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Binance Continue to Face Regulatory Setbacks

Singapore was considered to be the next home for Binance after facing regulatory scrutiny from nearly a dozen countries. However, the recent series of events suggest Singapore regulators are also going after the global exchange despite harbouring its sister company. The world’s leading exchange’s regulatory troubles seem to meet no end as more countries continue to enforce action against it.

The crypto exchange has taken several decisions to mend its ways with regulators over the past couple of months, right from suspending derivative offerings in several countries to on-boarding regulatory experts. However, that hasn’t changed much, now the crypto exchange plans to establish a centralized headquarters and also looking for a change of CEOs if that can help.

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