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Coinbase’s GDAX Crashes Briefly on Record-High Traffic

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Thursday, Dec. 7 will go down as a memorable day in the world of cryptocurrency after bitcoin added more than $5,000 in the span of 12 hours. The unprecedented traffic caused Coinbase’s GDAX exchange to crash as the spread on BTC/USD widened the most in recent memory.

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GDAX Goes Down

Coinbase confirmed via tweet on Thursday that its services were down for some clients due to record-high traffic.

“We are currently experiencing record high traffic. This is resulting in some customers having slow performance or issues logging into their Coinbase.com accounts. We are actively working to resolve this as quickly as possible,” the company tweeted.

The value of bitcoin surged from $16,000 to a record $19,500 on GDAX in less than three hours. It was around this time that clients had troubles accessing their accounts. According to CCN, the cryptocurrency plunged immediately after crossing $19,000. The exchange went down at around 11:58.

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Thursday wasn’t the first time Coinbase went down. The exchange was non-operational for about an hour last Friday, just two days after a major outage.

Coinbase has more than 11 million active users, with the exchange adding more than 100,000 accounts during Thanksgiving weekend. However, the platform has drawn the ire of some investors due to its unresponsive customer service department. Although Coinbase has tried to automate much of its customer service, support staff continue to field questions from investors experiencing technical difficulty or wishing to increase their account.

Bitcoin Trade Volumes

Daily turnover in bitcoin has reached unprecedented levels amid the latest record-breaking rally. On Thursday, more than $17.3 billion worth of bitcoin was transacted globally, according to CoinMarketCap. The 24-hour turnover was as high as $28 billion earlier. Taiwan’s Bitfinex and South Korea’s Bithumb were responsible for roughly a quarter of total transactions combined. GDAX came in third at roughly 8% of daily transactions.

Bitcoin was last seen trading at $16,822 for a gain of 2%. The cryptocurrency has added more than 60% in the last five days, bringing its total market cap to nearly $272 billion.

Th latest buying frenzy comes days before CBOE is planning to launch the first bitcoin futures contract. The contract will be listed under the ticker symbol “XBT,” and will be free through December. CME Group will launch its own bitcoin futures product later this month.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Swiss Banks Join Forces to Launch Ethereum Platform

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Switzerland’s largest banks have converged on a new blockchain initiative powered by the Ethereum network. The new program will be implemented just in time for new regulations related to counter-party reference data.

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Banking giant UBS announced Monday it has united with Barclays, KBC, SIX and Thomson Reuters to advance the MiFID II data collection project. MiFID II is a revamped version of the Markets in Financial Instruments Directive, which is intended to offer greater protection for investors. MiFID II officially comes into force Jan. 3, 2018.

The joint program will be powered by Ethereum smart contracts, and will be run on the Microsoft Azure cloud platform. Specifically, it will allow participants to align their Legal Entity Identifier (LEI) reference data against industry consensus. In other words, it will allow financial institutions to identify and sort out anomalies. The smart contracts will reconcile anonymized reference data on the blockchain without compromising the bank’s exclusive access to the source data.

The program was incubated in London at a UBS blockchain development lab.

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“Traditionally, a firm such as ours quality checks data against multiple sources but we do not have a quality baseline against peers”, Christophe Tummers, Head of Data at UBS, said in a statement released Monday. “Through using blockchain-inspired smart contracts, the reconciliation of data can happen in almost real-time for all participants, anonymously.”

UBS blockchain strategist Emmanuel Aidoo said this was an important project because it “establishes blockchain benefits in a broader context than clearing and settlement.”

Blockchain technology has been well received by the traditional banking community, which views the new technology as a conduit for future growth, transparency and resiliency. However, these same institutions have been much more critical of blockchain-based cryptocurrencies, such as bitcoin and ether.

The announcement had no discernible impact on ether prices. The world’s second-largest cryptocurrency by market cap continued to trade around $470 U.S. Ether briefly traded at record highs over the weekend before giving up gains ahead of the planned launch of bitcoin futures. Ethereum continues to be the platform of choice for developers, startups and financial institutions looking to leverage smart contract capability.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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South Korea Loosens Grip on ICOs

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Initial coin offerings (ICOs) will not be banned in South Korea after all, according to a recent decision by the central government. Although the market will still be governed by strict regulations, institutional players will have the opportunity to invest in the burgeoning market.

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ICOs Will Not Be Banned

South Korean newspaper Chosun reported Friday that the government is looking to regulate the ICO market and will allow institutional investors to participate in the controversial crowdfunding model. Chosun revealed that several government agencies have formed a task force to sort out a regulatory framework for ICOs. They include the Ministry of Strategy and Finance, Financial Services Commission, Fair Trade Commission, Financial Supervisory Commission and Ministry of Justice.

The task forces are investing the possibility of taxing cryptocurrency investors, as well as implementing Know Your Customer (KYC) and Anti-Money Laundering (AML) policies for institutional investors. These protocols have already been adopted elsewhere and currently form the basis of the Simple Agreement for Future Tokens (SAFT) protocol.

A task force spokesperson told Chosun:

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“Currently, the task force is considering imposing stricter regulations for investor and consumer protection within the cryptocurrency market.” The spokesperson added “in regards to ICOs, the government will likely impose regulations to enable institutional investors to invest in ICOs.”

That being said, South Korea will still keep a tight lid on public access to ICOs, with the spokesperson clarifying that only institutional investors will be able to enter the market.

The spokesperson added: “It is not possible to allow any citizen of South Korea to invest in ICOs. However, the government may allow institutional investors that meet capital requirements established by the Financial Supervisory Commission.”

South Korea has adopted a fairly laissez faire approach to cryptocurrency, which has made the Asian nation a prime destination for traders. The South Korean yuan is the third most traded fiat currency involved with cryptos, behind only the Japanese yen and U.S. dollar. South Korean exchanges were at the center of the latest bitcoin rally that took prices north of $19,000.

Last month, South Korea’s Financial Supervisory Service (FSS) said it had no plans to monitor cryptocurrency exchanges. According to FSS head Choe Heung-sik, “supervision will come only after the legal recognition of digital tokens as a legitimate currency.”

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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America’s Largest Banks Do Not Support Bitcoin Futures

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The pending arrival of bitcoin futures has sent cryptocurrency prices through the roof, but for Wall Street, the new derivatives products are being met with criticism. In fact, the world’s largest banks are reportedly halting the move.

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FIA Issues Statement

The Futures Industry Association (FIA) has cautioned the Commodity Futures Trading Commission (CFTC) of the upcoming bitcoin futures contract. In an open letter to CFTC chairman Christopher Giancarlo, the lobby group said the introduction of bitcoin futures “did not allow for proper public transparency and input.”

Although the FIA recognizes that exchanges may self-certify a product without CFTC approval, this does not apply to novel products, such as bitcoin futures.

The letter added: “We believe that this expedited self-certification process for these novel products does not align with the potential risks that underlie their trading and should be reviewed. Given the lack of historical data on these products, it is further concerning to clearing members that they will bear the brunt of the risk associated with them through their guarantee fund contributions and assessment obligations…”

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Both CBOE and CME agreed to launch their bitcoin contracts under a self-certified scheme, which gave regulators little time to review the application fully.

The FIA represents the futures, options and centrally cleared derivatives market, and has offices in London, Singapore and Washington, D.C. Its membership includes clearing firms, exchanges and trading institutes across 48 countries. The lobby group represents all of Wall Street’s major banks, including Goldman Sachs, Morgan Stanley, J.P. Morgan Chase and Citigroup.

The big banks have  approached cryptocurrencies with great caution, opting instead to focus on the underlying blockchain technology. Jamie Dimon of J.P. Morgan Chase has been especially critical of bitcoin, lamenting it as a “fraud” that will “blow up” in due time.

Bitcoin prices have been in a state of euphoria over the past month as investors geared up for institutional accepting of cryptocurrency. The arrival of bitcoin contracts is expected to boost liquidity even further, which could generate huge gains in price. Bitcoin briefly traded above $19,000 on Thursday, with trade volumes so frantic that even Coinbase couldn’t keep up. America’s largest cryptocurrency exchange went down through the midday as trade volumes surged.

Bitcoin has added nearly 60% over the past five days, and was last seen trading around $17,114.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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