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Cryptocurrency Is Top of Mind for at Least One EU Commissioner

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A European Union commissioner is planning to hold a “high level roundtable” on cryptocurrency, according to a press release that was published following Tuesday’s Ecofin meeting. Valdis Dombrovskis, who currently serves as Vice President for Euro and Social Dialogue, says he plans to table the issue with a group of officials that have yet to be named.

Ecofin Addresses Need for Cryptocurrency Regulation

The Economic and Financial Affairs (Ecofin) Council concluded its monthly session on Tuesday with plans to continue a discussion on cryptocurrencies. Remarks published on the EU website quoting Dombrovskis suggested that officials were closely monitoring developments in the cryptocurrency market, and are looking for ways to police the ever-evolving landscape.

“In terms of financial services legislation: I made some suggestions on how the EU should approach cryptocurrencies,” Dombrovskis said, according to the release.

He added: “Make no mistake: We want Europe to embrace the opportunities of blockchain, the technology underlying cryptocurrencies. But to do so, we must be vigilant and prevent cryptocurrencies from becoming a token for unlawful behaviour.”

Dombrovskis also said that the full ramifications of cryptocurrencies are not yet understood. For this reason, he plans to invite “key authorities and the private sector” to a roundtable discussion shortly to assess the situation over the long term.

New Legislation on the Way?

Last week, Luxembourg’s Finance Minister Pierre Gramegna indicated the EU may soon unveil new regulations targeting cryptocurrencies. Although he didn’t specify what measures would be adopted, Gramegna expressed concerns over money laundering.

Despite hinting at new regulations, the Finance Minister didn’t offer any details about whether new legislation was being proposed. In terms of regulations (or lack thereof), the EU has been one of the more favorable jurisdictions for cryptocurrency traders as well as blockchain companies.

Some cryptocurrencies make it difficult or virtually impossible to track payments over the blockchain, a feature that no doubt appeals to elements of the criminal underworld. Monero has already emerged as one of the more popular coins for ransomware attacks. Experts say Zcash also offers unique protection against surveillance because it obscures the actually wallet address of the sender.

South Korea recently became the latest jurisdiction to clamp down on cryptocurrencies, although the new measures pale in comparison to what had been speculated earlier by the media. On Tuesday, Seoul announced it would ban anonymous cryptocurrency accounts beginning Jan. 30.

Elsewhere, China has already banned cryptocurrency trading while Russia is mulling a similar approach. Earlier this month, the Russian Finance Ministry drafted new legislation to legalize cryptocurrency trading on major exchanges, with plans to table the bill to a vote next month.

As recent market activity clearly demonstrated, investors are concerned that lawmakers will go too far in regulating cryptocurrencies. Without access to the major cryptocurrency exchanges, traders won’t be able to fund their accounts as easily as before. Although traders have many ways to circumnavigate a ban, heavy sales usually follow any announcement of new regulatory hurdles.

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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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 551 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Cryptocurrencies

2018 Crypto Exchange Trading Revenue Poised to Double to $4 Billion: Bernstein

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For the most part, the cryptocurrency markets have been operating on all cylinders year-to-date with the exception of one very important metric — price. And now that the bitcoin price appears to have found its footing, today’s slip to $6,410 notwithstanding, that component of the market appears to be cooperating, too. Wall Street research firm Bernstein is acknowledging the industry’s impact, predicting that cryptocurrency exchange revenue may grow more than twofold versus year-ago levels to some $4 billion.

The Bernstein report, as cited in Bloomberg, is entitled: “Crypto Trading — The Next Big Thing Is Here?” The title alone reflects a more open-minded if not sanguine take on the cryptocurrency market, more specifically speculative trading. Last year, leading crypto exchanges generated $1.8 billion in transaction fees, which according to the Sanford analysts is 8% of what Wall Street exchanges made. Based on this metric of transaction fees, cryptocurrency trading was second only to global cash equities.

Courtesy: Bloomberg

The outlook may seem shocking, considering that the bitcoin price is down more than 60% from last year’s peak. But leading cryptocurrency exchange by trading volume Binance, which boasts millions of users, tipped its hand to balance sheet strength. The exchange’s CEO CZ recently provided an outlook, saying the company was on track to deliver record profits this year of as much as $1 billion, as CCN previously reported.  On the low end of its range, Binance is looking at $500 million.

Advantage Goes to Coinbase

Meanwhile, Bernstein analysts are quick to point out that Wall Street banks have largely been on the sidelines of crypto, Goldman Sachs and JPMorgan’s crypto trading and blockchain investments notwithstanding. As a result, the could find themselves in an unusual competitive position where crypto exchanges like Coinbase dominate market share. Coinbase already boasts some “50% of the transaction revenue pool,” according to Bloomberg, and fears of fraud coupled with a murky regulatory climate hold the big banks at bay.

“As the crypto-asset class seasons and institutional demand builds, there are a plethora of opportunities for traditional firms,” according to Bernstein analysts, who then pointed to examples across custody, portfolio management and making markets, for instance.

Indeed, the persistent downturn in the cryptocurrency market, particularly in the bitcoin price, has had observers wondering how crypto exchanges could offset the damage. After all, they generate revenue based on trading volume.

Exchanges like Coinbase have been adding coins, most recently Ethereum Classic (ETC) but they’ve got several more altcoins waiting in the wings that they’re looking to support. While Coinbase officials have stated that these new altcoin additions are in response to trader demand, it’s also a way for them to continue to collect trading revenues while the bitcoin price has been stalled. Binance, meanwhile, whose trading volume hovers at approximately $1.4 billion in the last 24 hours, supports hundreds of altcoins.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 39 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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CoinShares Bitcoin ETN Adds USD, Markets Rally

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Given the positive trend in the cryptocurrency market today, you might think that a bitcoin ETF somehow slipped through the cracks. While that isn’t the case just yet, you wouldn’t be too far off. CoinShares, a digital asset management firm domiciled in the Channel Island of Jersey, has announced a bitcoin exchange-traded note (ETN) product that Americans can now get their hands on more easily.

CoinShares chief Ryan Radloff is quoted in Bloomberg as saying: “Everyone that’s investing in dollars can now get exposure to these products, whereas before they were only available in euros or Swedish krona. Given the current climate on the regulatory front in the U.S., this is a big win for Bitcoin.”

As Fundstrat’s Tom Lee pointed out, the ETN, which is dubbed Bitcoin Tracker One (CXBTF), is “quoted in USD” despite the fact that it’s a Swedish-based product.  Traders went so far as to suggest that this new product was the catalyst for today’s “green candles,” and if retweets are endorsements, then Fundstrat’s Lee agrees.

Source: CoinMarketCap

The CoinShares ETN is not a new product and has been trading on Nasdaq Stockholm for several years. But now that it’s also based on U.S. dollars, the brokerage community can access it and offer it to U.S.-based clients. Lee likened it to Grayscale’s bitcoin investment trust (GBTC) and noted that it “trades at NAV, so returns are virtually identical to bitcoin.” Indeed, as CoinShares’ bitcoin ETN has shed more than half its value this year alongside the decline in the bitcoin price. Lee provided the following snapshot into Bitcoin Tracker One:

Bitcoin Rivalry

Meanwhile, if you ask CoinShares’ Radloff, the Grayscale product is flawed because of a premium attached to the bitcoin price. Radloff told Bloomberg that CoinShares’ products have managed to avoid the premiums while still providing liquidity.

Wall Street, however, may not be so keen to adopt the product. An investor tweeted that when he attempted to purchase Bitcoin Tracker One in his Merrill Lynch IRA, the product was blocked. This individual was willing to redirect his assets to another firm just to gain access to the ETN and tweeted: “Can someone point me to a new IRA provider that will let me trade this? I’ll move my funds over today.”

Just yesterday, former PayPal CEO Bill Harris said on CNBC that the bitcoin price was headed to zero. But with developments like this bitcoin-esque product making its way into the market, he may have to eat his words.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 39 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Coinbase Chief Brian Armstrong on Bitcoin Bubbles and Corrections

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It’s not often that you have two blockchain pioneers like Coinbase CEO Brian Armstrong and Ethereum Co-Founder Joseph Lubin address the market in the same week. But in recent days, the stars aligned, with Armstrong and Lubin both meeting with Bloomberg for separate interviews.

While each of them has their own take on the state of the market, they appear to agree on overarching themes that have gripped cryptocurrency investors of late surrounding digital currency prices and the bubble theory.

Coinbase’s Armstrong didn’t shy away from questions on bitcoin’s price, which has taken investors on a roller coaster ride since its December 2017 peak of more than $19,000 and recent dip below $6,000. Today, a corrective rally is in place in which the bitcoin price is up more than 6% on CoinMarketCap to $6,455. Armstrong suggested that it’s part of the evolution of the emerging technology.

“This technology is going through a series of bubbles and corrections. We’ve actually been through about four or five of them now where bitcoin made this big run-up in price and there was … irrational exuberance and it corrected back 60-70%. and each time it does that it’s at a new plateau,” said Armstrong.

Joseph Lubin, who in addition to co-founding Ethereum is at the helm of ConsenSys, seems to agree, adding in a discussion with Bloomberg that “each of these bubbles has the advantage to bring attention to our ecosystem.”

Coinbase and Crypto

Coinbase, which launched about six years ago, holds anywhere between $10 billion and $20 billion of clients’ cryptocurrency assets on a given day. In 2017, Coinbase transacted approximately $150 billion in cryptocurrency volume. Armstrong likened the bitcoin bubbles to the growth of Coinbase, which is the most popular U.S.-based cryptocurrency exchange.

For instance, as the bitcoin price has traversed this series of bubbles and corrections, Coinbase’s growth has performed in a similar trajectory, with the number of daily new users rising on the heels of major market corrections.

Armstrong is in the camp of comparing cryptocurrencies to the internet of 2001, pointing to “a lot of good companies that got started in the trough as well,” such as Facebook, for instance. While the expectations for the cryptocurrency prices may be “all over the map,” he said that “the real world adoption and usage is pretty steadily increasing.”

While adoption and usage may be on the rise, don’t expect to walk into your local Starbucks and pay with bitcoin any time soon, at least not in the U.S. The reason, Armstrong suggests, is that payments aren’t a major “pain point” in the U.S. unlike some developing economies. As much as 90% of cryptocurrency usage surrounds investments, leaving a mere 10% for “real world usage.”

Armstrong, who more than once likened Coinbase to the New York Stock Exchange, also addressed topics like regulation and ICOs, saying of the latter that the exchange “is not trying to list everything under the sun.”

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 39 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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