Multiple Disruptions in the Crypto World

Gerry Brady March 24, 2019 31 No Comments

Some people say that the world of Crypto and its so-called “cryptocurrencies” are a disruption to the conventional currency system.  Last week, the world of Crypto was disrupted itself by five events of some significance.

The first event to take note of was the decision by the Chicago Board of Exchange CBOE to halt its Futures markets on Bitcoin. The reason given was that the CBOE  was “reassessing its plans for trading digital asset derivatives amid slumping volumes”.  In a statement on Thursday, the CBOE said that currently listed CBOE Bitcoin futures contracts, which expire in June, remain available for trading but that they will not be trading other contracts after that.

Crypto derivatives such as Futures and ETF’s allow investors and traders to effectively buy and sell Bitcoin (and other cryptos) without ever having to deal with an unregulated online crypto exchange (the wild west) and without ever having to use an eWallet (with its associated security issues). The futures contracts and the ETFs can effectively be purchased with any fiat currency and the sales are settled, likewise, in a fiat currency.

The CBOE is not the only regulated exchange dealing in Bitcoin futures.  The Chicago Mercantile Exchange CME, for example, also runs an exchange dealing in Bitcoin Futures contracts.  You can look at the current contracts here.

The second event to take note of was the announcement that  Swiss company Amun AG and U.S. investment firm Invesco are bringing new crypto and blockchain-centric exchange-traded products (ETPs) to market at Switzerland’s SIX stock exchange and the London Stock Exchange. Currently, they offer ETPs in Bitcoin and Ether on the SIX exchange. They apparently have approval from SIX to soon list ETPs for Bitcoin Cash, EOS, Litecoin and Stellar.

Note: ETP’s are not the same as ETF’s. Please do your own research on that matter.

Late last year, Amun launched its so-called “HODL” crypto basket ETP, a type of ETF, on SIX. HODL tracks the prices of bitcoin, bitcoin cash, litecoin, ether, and XRP in an algorithmic calculated basket and there has been significant trade volumes on the mainstream Swiss exchange since then.

Earlier this year, the SIX Swiss Exchange announced it would be testing blockchain integration for its forthcoming parallel digital trading platform Six Digital Exchange (SDX), and would use the technology to tokenize stocks, bonds and possibly ETFs.

The third disruption event — Invesco, an American firm, and Elwood, a British digital asset investment company launched an Invesco Elwood Global Blockchain ETF on the London Stock Exchange (LSEG) last Monday, March 11th. Invesco’s ETF doesn’t follow crypto prices. It tracks the performance of nearly 50 companies related to the blockchain “industry”. For example, the fund includes companies such as Square, Overstock, GMO Internet,  the CME Group (Chicago Mercantile Exchange), the miner and manufacturing company Taiwan Semiconductor Manufacturing, and other manufacturers such as IBM, Samsung, and other companies like Verizon.  The blockchain ETF is a partnership between Invesco and investment specialists Elwood Asset Management. The trading code is BCHN:LN

The Invesco Elwood Global Blockchain UCITS ETF is an open-end Exchange Traded Fund incorporated in Ireland. The investment objective of the Fund is to achieve the performance of the Elwood Blockchain Global Equity Index, less fees, expenses and transaction costs. Settlement is through ICSD, Clearstream.

Bloomberg Reference:

To date, a crypto-based ETF has yet to be approved for listing in the U.S.  Many applications have been made but all have so far proved unsuccessful. Regulators there are concerned that the unregulated online crypto eschanges are too prone to criminal market manipulation. The U.S. Securities and Exchange Commission (SEC) has said that it is worried about such manipulation infecting the mainstream American markets.

The fourth event — The first Crypto Bond like investment was offered by BitBond in Germany. It is offering a Security Token with a 10 year duration. Interest of 4% is payable annually (1% per quarter) plus a variable bonus coupon payment annually. It is called the BitBond Token (BB1). After 10 years, the BB1 matures and is bought back at its original face value of 1 Euro per token. The funds raised will be used to create loans for SMEs based all around the world.

The issuer of the token is Bitbond Finance GmbH, a company fully owned by Bitbond GmbH. Bitbond is a crypto-currency based lending platform for business loans that operates globally. Founded in 2013, Bitbond now facilitates more than $1 million in business loans every month.

Germany’s first security token will be issued on the Stellar blockchain. With a processing capacity of over 1,000 transactions per second, transaction costs at a fraction of a cent, a built in decentralized exchange and a global network of active partners using the platform, Stellar is one of the most efficient blockchains for payment processing and token issuance.

Who can invest in the BB1 token?   Answer — Anybody around the world who is not a US or Canadian citizen. The project received approval to issue tokenized bonds from Germany’s Federal Financial Supervisory Authority (BaFin) last week.

BitBond are hoping to raise a maximum of US$ 113 Million and a minimum raise of $ 3 Million. They have already raised almost $ 1 Million in the first 24 hours.

And the fifth disruption event (much anticipated) was the news from some sources that the leading Stablecoin, Tether, is perhaps not actually backed by equal amounts of official US Dollar currency deposits. The company now claims that each coin is backed by “reserves, which include traditional currency and cash equivalents and, from time to time may include other assets and receivables from loans made by Tether to third parties.”  As far as I am aware, Tether has previously maintained that the coin was 100% backed by an equal number of U.S. dollars in reserve.

The company now states on its website — “Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD.”

This is significant news as Tether makes up about 70% of the Stablecoin universe supply. It is also the largest Stablecoin based upon daily traded volume.

Further Statement from the Tether Website:

Tether’s Transparency Page:

And Note — Further Statement from the Tether Website: —  “Tether Limited is pleased to confirm that it has established a banking relationship with Deltec Bank & Trust Limited (“Deltec”), a 72-year-old financial institution with headquarters in the Commonwealth of The Bahamas.

The acceptance of Tether Limited as a client of Deltec came after their due diligence review of our company. This included, notably, an analysis of our compliance processes, policies and procedures; a full background check of the shareholders, ultimate beneficiaries and officers of our company; and assessments of our ability to maintain the USD-peg at any moment and our treasury management policies. This process of due diligence, was conducted over a period of several months and garnered positive results, which led to the opening of our bank account with this institution. Deltec reviews our company on an ongoing basis.

Tether Limited is registered with the Financial Crimes Enforcement Network of the US Department of the Treasury and maintains the highest standards of AML/CFT procedures. USDT in the market are fully backed by US dollars that are safely deposited in our bank accounts.”


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